REG - Volvere PLC - Final results to 31 December 2023
22/05/2024 07:00
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RNS Number : 3754P Volvere PLC 22 May 2024
22 May 2024
Volvere plc
("Volvere" or the "Group")
Final Results for the year ended 31 December 2023
Volvere plc (AIM: VLE), the growth and turnaround investment company,
announces its audited Final Results for the year ended 31 December 2023.
Highlights
£ million except where stated Six months ended
Year ended
31 December 31 December 2022 30 June
2023 2023
(unaudited)
Group revenue - continuing operations 42.95 38.03 19.09
Group profit/(loss) before tax - continuing operations
3.64 2.33 0.44
Profit/(loss) from discontinued operations((1)) 0.23 (2.39) -
Group profit/(loss) after tax 2.73 (0.06) 0.44
As at As at As at
31 December 2023
31 December 2022
30 June
2023
Consolidated net assets per share
(excluding non-controlling interests)((2))
£14.83 £13.90 £14.00
Group net assets 37.51 35.75 35.33
Cash and available-for-sale investments 23.74 20.79 21.41
· Excellent financial performance, underpinned by an encouraging
trading performance from Shire Foods;
· Continued growth in net assets per share of the Group; and
· Strong balance sheet with high liquidity.
Forward-looking statements:
This report may contain certain statements about the future outlook for
Volvere plc. Although the Directors believe their expectations are based on
reasonable assumptions, any statements about future outlook may be influenced
by factors that could cause actual outcomes and results to be materially
different.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").
Note
1 Discontinued operations relate to the business of Indulgence
Patisserie, which was discontinued during 2022.
2 Based on the net assets attributable to owners of the parent
company and the respective period end shares in issue (excluding treasury
shares), which were 2,327,922 at 31 December 2023 and 2,364,422 at 31 December
2022.
For further information:
Volvere plc
Nick Lander, Co-founder & Director Tel: +44 (0) 20 7634 9707
www.volvere.co.uk (http://www.volvere.co.uk)
Cairn Financial Advisers LLP (Nominated Adviser) Tel: + 44 (0) 20 7213 0880
Sandy Jamieson / James Caithie
Canaccord Genuity Limited (Joint Broker) Tel: + 44 (0) 207 523 8000
Bobbie Hilliam
Hobart Capital Markets LLP (Joint Broker)
Lee Richardson
Tel: +44 (0) 20 7070 5691
Notes to editors:
Volvere plc (AIM: VLE), is a growth and turnaround investment company. The
Group's current trading business is involved in food manufacturing. The Group
currently employs approximately 290 people.
For further information, please visit www.volvere.co.uk
(http://www.volvere.co.uk) .
Chairman's statement
I am pleased to report on the results for the year ended 31 December 2023.
The year's results reflect the continued progress being made in Shire Foods
and the resolution of various matters, particularly relating to properties, of
the former Indulgence Patisserie business (now discontinued).
Group revenue from continuing operations (all of which related to Shire Foods)
was £42.95 million (2022: £38.03 million) and the profit before tax from
continuing operations was £3.64 million (2022: £2.33 million). Overall
profit after tax for the year was £2.73 million (2022: loss £0.06 million).
Group total net assets were £37.51 million (2022: £35.75 million), with net
assets per share* increasing to £14.83 (2022: £13.90). Of this, cash and
available for sale investments were £23.74 million (2022: £20.79 million).
The Board is conscious of the Group's share price, which it does not believe
reflects the underlying value of the Group's assets. These are principally
cash, liquid investments and the investment in Shire Foods. We are considering
a number of ways through which to unlock this value for shareholders and will
update investors on these developments at the appropriate time.
David Buchler
Chairman
22 May 2024
*Net assets attributable to owners of the parent company divided by total
number of ordinary shares outstanding at the reporting date (less those held
in treasury), see note 21.
Executive Management statement
Principal activities
The Company is a holding company that identifies and invests in undervalued
and/or distressed businesses and securities as well as businesses that are
complementary to existing Group companies. The Company provides management
services to those businesses. The sole activity during the year of the
Group's continuing trading subsidiary, Shire Foods Limited ("Shire"), was that
of food manufacturing.
Overview
As shareholders will know, the loss of my brother and business partner,
Jonathan, in August 2023 was a blow not only to the Group but to all that knew
him. The passage of time has allowed us all to settle into a new norm,
supporting one another throughout to build on Jonathan's legacy. I am
enormously grateful to the team that have been steadfast in pushing our
business forward whilst themselves undoubtedly carrying a sense of sadness and
loss.
It is, therefore, with much pleasure that we report a year of excellent
financial performance, underpinned by trading at Shire Foods.
Overall Group revenues from continuing operations (which relate to Shire
Foods) were £42.95 million (2022: £38.03 million), an increase of 12.9%.
Group profit before tax from continuing operations for the year was £3.64
million (2022: £2.33 million) and the Group's overall profit after tax
(including discontinued operations) for the year was £2.73 million (2022:
loss £0.06 million). These results are explained further below.
Financial performance
Food manufacturing segment - Shire Foods
Shire, in which the Group has an 80% stake, was acquired in 2011 and
manufactures frozen pies, pasties and other pastry products for food retailers
and food service customers from its factory in Royal Leamington Spa. The
company's strategy has remained largely unchanged over recent years and is
focused on providing quality products as efficiently as possible.
We want to be our customers' supplier of choice through product innovation and
quality and are focused on making products that end consumers will repeatedly
purchase. Striving to be, and remain, at the forefront of our category is
what keeps us challenged and we believe this, along with our strong financial
position, enables our customers to feel confident in our ability to support
their growth.
Revenues increased to £42.95 million (2022: £38.03 million). Profit before
tax, intra-group interest and management charges* was approximately £3.86
million (2022: £2.78 million). Profit before tax was £3.51 million (2022:
£2.43 million) - with the difference being intra-group interest and
management charges.
The 5-year financial performance of Shire is summarised in the table below:
Year ended Year ended Year ended 31 December Year ended 31 December Year ended 31 December
31 31 2021 2020 2019
December December £'000 £'000 £'000
2023 2022
£'000 £'000
Revenue 42,950 38,027 30,605 27,189 23,036
Underlying profit before tax, intra-group interest and management charges*
3,861 2,777 2,139 1,813 1,384
Intra-group interest and management charges (350) (348) (252) (200) (200)
________ ________ ________ ________ ________
Profit before tax 3,511 2,429 1,887 1,613 1,184
* profit before intra-group interest and management charges is considered to
be a relevant, useful interpretation of the trading results of the business
such that its performance can be understood on a basis which is independent of
its ownership by the Group.
In 2024 we are continuing to invest in Shire's site capacity to improve
efficiency and broaden product packing options for our customers. This
should help ensure the best mix of products being available for sale on our
customers' shelves. Capital expenditure in 2023 totalled £0.79 million, of
which £0.31 million was financed by way of debt (2022: £1.01 million, debt
£0.13 million).
In recent months we have found the recruitment market easing somewhat and have
been able to recruit for additional shift requirements that are needed to
support growth, particularly for the second half of the year when our volumes
are traditionally higher. Labour and energy costs are expected to increase
this year and, whilst we will endeavour to recover these through increased
gross margins, there is no certainty that these will be mitigated in full.
Increases in raw materials' costs have, however, largely stabilised and this
is expected to remain the norm in 2024.
During 2023 Shire paid a dividend of £2.50 million, of which the Group
received £2.00 million. This brings total dividends received by the Group
to date to £2.40 million. The Group's investment cost in respect of Shire
is £0.53 million and there is no indebtedness with the Group.
Further information about Shire can be found at
www.shirefoods.com (http://www.shirefoods.com)
.
Indulgence Patisserie Limited - discontinued
Activities in relation to the former business of Indulgence were focused on divesting the remaining assets and negotiating and settling creditor obligations. Our hands-on approach has undoubtedly resulted in a more favourable outcome for the Group than if we had placed the trading business into administration as we were able to sell stock and equipment and recover debt in a more controlled way. All three properties owned by the Group were sold for a total cash consideration (net of costs) of £2.25 million (31 December 2022: carrying value £2.10 million). These had been purchased in 2020 for £0.95 million.
Investing and management services segment
This segment represents our central functions covering Group management,
treasury, finance and IT services. The segment result is the net of the
underlying costs of these Group activities, offset by investment revenues and
other gains and losses.
The loss before tax and intra-Group interest and management charges for the
period was £0.23 million (31 December 2022: loss £0.45 million). The reduced
loss in the year reflects slightly higher investment returns, which totalled
£0.81 million (31 December 2022: £0.70 million) along with a reduction in
Board costs for the latter part of the year. Further information is shown in
note 5.
The Group continued its approach of using leverage within trading companies
whenever appropriate and without recourse to the remainder of the Group.
Earnings per share
Basic and diluted profit per ordinary share from continuing operations was
80.69p (31 December 2022: 74.36p). Basic and diluted profit per ordinary
share from discontinued operations was 9.60p (31 December 2022: loss
(95.89)p). Total basic and diluted profit per ordinary share was 90.29p (31
December 2022: loss (21.53)p).
Statement of financial position
Cash and available-for-sale investments
Cash at the year end was £22.14 million (31 December 2022: £19.14
million). Full details of cash movements are shown in the consolidated
statement of cash flows.
At the year end there was an investment in available-for-sale investments with
a carrying value of £1.60 million (31 December 2022: £1.65 million). The
carrying value of this is below the original cost and the unrealised loss of
£0.85 million has been debited to reserves.
Assets held for sale
As noted above, during the year the Group sold all three properties formerly
occupied by Indulgence Patisserie.
Purchase of own shares
The Company acquired 36,500 ordinary shares for a total consideration
including costs of £427,000 during the period (31 December 2022: 204,000
shares for £2,090,000). Since the year end, a further 79,000 shares have
been purchased for a total consideration of £918,000. To date, the Company
has purchased 3,958,152 shares for total consideration of £35.58 million.
Dividends
In accordance with the policy set out at the time of admission to AIM, the
Board is not recommending the payment of a dividend at this time and prefers
to retain such profits as they arise for investment in future opportunities,
or to purchase its own shares for treasury where that is considered to be in
the best interests of shareholders.
Hedging
It is not the Group's policy to enter into derivative instruments to hedge
interest rate or foreign exchange risk.
Key performance indicators (KPIs)
The Group uses key performance indicators suitable for the nature and size of
the Group's businesses. The key financial performance indicators are revenue
and profit before tax. The performance of the Group and the individual
trading businesses against these KPIs is outlined above, in the Executive
Management statement and disclosed in note 3.
Internally, management uses a variety of non-financial KPIs in respect of the
food manufacturing segment, including order intake, manufacturing output and
sales, all of which are monitored weekly and reported monthly. These are not
considered to be as important as profit before tax but provide useful
information to the Board in advance of receiving monthly financial reports.
Principal risk factors
The Company and Group face a number of specific business risks that could
affect the Company's or Group's success. The Company and Group invests in
distressed businesses and securities, which by their nature often carry a
higher degree of risk than those that are not distressed. The Group's
businesses are principally engaged in the provision of goods and services that
are dependent on the continued employment of the Group's employees and
availability of suitable, profitable workload. In the food manufacturing
segment, there is a dependency on a small number of customers and a reduction
in the volume or range of products supplied to those customers or the loss of
any one of them could impact the Group materially. Rising inflation,
including increases in raw materials and overhead costs, may not be able to be
passed on to customers through increased prices and this could result in
reduced profitability. Any pandemic or other such similar event which could
affect the consumers, suppliers, customers or staff may limit or inhibit the
Group's operations.
These risks are managed by the Board in conjunction with the management of the
Group's businesses.
Acquisitions and future strategy
In our interim results I said that shareholder returns remained at the
forefront of the Board's strategy. I want to reassure shareholders that this
remains the case, not least in view of the Company's share price which, we
believe, does not fully recognise the Group's underlying assets. We are
reviewing the best way to resolve this and are considering a number of
options, which will be notified to shareholders when appropriate. In the
short term, the Group will continue to buy in its own shares whenever possible
in order to narrow the Group's share price to NAV per share.
As shareholders know, we are selective in our investment decisions and screen
many more potential opportunities than we select for further investigation.
We continue to do so, and whilst the level and quality of deal flow has
improved compared to two years ago, we have not yet completed a further
investment. However, we remain committed to seeking new opportunities where
we think we can add value or which are complementary to an existing business.
Finally, I would like to thank shareholders, many of whom have been with us
from the inception of the Company, for their continued support. In addition,
without the hard work of our loyal staff, we would not have achieved the
success that we continue to have.
Nick Lander
Co-founder & Director
22 May 2024
Corporate governance report
All members of the Board believe in the value and importance of good corporate
governance and in our accountability to all the Group's stakeholders,
including shareholders, staff, clients and suppliers. In the statement below,
we explain our approach to governance, and how the Board and its committees
operate.
The corporate governance framework which the Group operates, including Board
leadership and effectiveness, Board remuneration, and internal control is
based upon practices which the Board believes are proportionate to the size,
risks, complexity and operations of the business and is reflective of the
Group's values. We have partially adopted and partially comply with the
Quoted Companies Alliance's ("QCA") Corporate Governance Code for small and
mid-size quoted companies (revised in April 2018 to meet the requirements of
AIM Rule 26).
The QCA Code is constructed around ten broad principles and a set of
disclosures. We have considered how we apply each principle to the extent
that the Board judges these to be appropriate in the circumstances, and below
we provide an explanation of the approach taken in relation to each. Except as
set out below, the Board considers that it does not depart from any of the
principles of the QCA Code. The information below was last updated on 20 May
2024.
The following paragraphs set out the Group's compliance (or otherwise) with
the ten principles of the QCA Code.
1. Establish a strategy and business model which promote long-term value
for shareholders
Explanation
The Company's strategy is to identify and invest in undervalued and/or
distressed businesses and securities as well as businesses that are
complementary to existing Group companies. The Company provides management
services to those businesses.
Since 2002 the Company's shares have been traded on the Alternative Investment
Market ("AIM") of the London Stock Exchange (ticker VLE).
In order to execute the Company's strategy successfully, the following key
issues are addressed:
Investment Identification - the Company's Executive Director is responsible
for identifying potential investments. This is done through maintaining
relationships with intermediaries and through personal networks.
Investment Assessment - the Company's Executive Director is responsible for
assessing potential investments as a basis for delivering long-term
shareholder value. This is done principally by undertaking due diligence on
such investments, such work being done largely by the Executive Director.
Where considered necessary, cost-effective and practicable, external advisers
may be used.
Investment Structuring - the Company's Executive Director is responsible for
determining the initial investment structure relating to potential
investments. Investments have individual management teams and risk and
reward profiles and the Company puts in place an investment structure that
seeks to balance the risks and potential rewards for all such stakeholders.
Investment Performance Improvement - the Company's Executive Director is
responsible for implementing a strategy that improves the performance of
investments (where such investments are not simply held for treasury
purposes). This will typically involve Board leadership and an appropriate
level of operational involvement to ensure that financial and operational
risks are minimised through increased profitability and cash generation.
This is typically done by improving customer service and quality, clearer
financial reporting and control, increasing management responsibility and
target setting.
Investment Exit - the Board is responsible for assessing the optimum time to
exit from an investment. This is determined based on a range of factors,
including the potential divestment valuation, the nature of any potential
acquirer, the external environment and other stakeholder intentions.
Compliance Departure and Reason - None.
2. Seek to understand and meet shareholder needs and expectations
Explanation
Responsibility for investor relations rests with the Executive Director. The
Company communicates in different ways with its shareholders to ensure that
shareholder needs and expectations are clearly understood.
Communication with shareholders is principally through the Annual Report and
Accounts, full-year and half-year announcements, trading updates and the
annual general meeting ("AGM"). A range of corporate information (including
all Company announcements) is also available to shareholders, investors and
the public on our website. The AGM is the principal opportunity for dialogue
with private shareholders, and all Board members seek to attend it and answer
shareholder questions. The Notice of Meeting is sent to shareholders at
least 21 days before the meeting. In addition, the Executive Director
attends potential investor shows in order to increase the Company's profile.
Compliance Departure and Reason - None.
3. Take into account wider stakeholder and social responsibilities and
their implications for long-term success
Explanation
The Group's ability to deliver on its strategy is dependent partly upon its
effective engagement with stakeholders and a wider recognition of the social
implications of its operations. In all businesses, the typical key
stakeholders are shareholders, customers, staff and suppliers.
Customers - in all businesses the Group seeks to provide clients with products
and services that are differentiated from competitors. This is done through
meeting clients to understand their needs and through understanding
competitors' offerings.
Staff - the Group's staff are critical to delivering client satisfaction over
the longer term. All Group companies have in place staff communication
forums and flat management structures, which aid communication. Group
management is accessible to company staff. In situations where individual
subsidiary decisions would impact on staff security or morale, the relevant
company will seek to minimise the impact on staff.
Suppliers - to varying degrees the Group is dependent upon the reliable and
efficient service of its supply chain. In the case of significant suppliers,
each Group company will meet periodically with them to review and determine
future trading arrangements and to share the relevant company's requirements
of that supplier.
Compliance Departure and Reason - None.
4. Embed effective risk management, considering both opportunities and
threats, throughout the organisation
Explanation
Recognising and managing business risks is key to ensuring the delivery of
strategy and the creation of long-term shareholder value.
As part of the Group's annual reporting to shareholders, specific financial
risks are evaluated, including those related to foreign currency, interest
rates, liquidity and credit. The Group's key risks are set out in the Annual
Report & Accounts.
The nature of the Group's operations is such that individual companies are
organised independently and operate business and IT systems that are
appropriate to their individual businesses. The Audit Committee reviews the
findings of the Group's auditors and considers whether there are remedial
actions necessary to improve the control environment in each company.
The Group has in place an Anti-Bribery Policy and a Share Dealing Code that
apply to staff.
Compliance Departure and Reason - None.
5. Maintain the Board as a well-functioning, balanced team led by the
Chair
Explanation
Board members have a collective responsibility and legal obligation to promote
the interests of the Company and are collectively responsible for defining
corporate governance arrangements. Ultimate responsibility for the quality
of, and approach to, corporate governance lies with the chair of the Board.
The Board currently consists of three directors of which one is executive and
two are non-executive. The Chairman and Independent non-executive Director
are both considered independent and independent directors will stand for
re-election on an annual basis in the event of having more than 10 years
continuous board service. The QCA Code requires that the Company has two
non-executive directors.
The Board is supported by both Audit and Remuneration committees, the member
of each of which is the Chairman.
The Board meets formally on a regular basis (typically 4 times per annum),
with interim meetings convened on an as-required basis. The Audit committee
undertakes an annual review and the Remuneration committee undertakes reviews
on an as-required basis. All Directors commit the required time to meet the
needs of the Group from time-to-time.
Compliance Departure and Reason - None, as currently the Board includes two
non-executive Directors.
6. Ensure that between them the Directors have the necessary up-to-date
experience, skills and capabilities
Explanation
The Company's Directors are David Buchler (Chairman), Nick Lander
(Co-founder/Director) and Michael Tzirki (Non-executive Director). All
members of the Board have experience relevant to delivering the Company's
strategy.
The Board believes that, as currently constituted, it has a blend of relevant
experience, skills and personal qualities to enable it to successfully execute
its strategy.
The Directors' biographies are in the Annual Report and Accounts and
incorporated here by reference.
Compliance Departure and Reason - The QCA Code requires, inter alia, that the
Company describes the relevant experience, skills, personal qualities and
capabilities that each Director brings to the Board. The Board believes the
individual's biography as noted above, coupled with their successful service
to date with the Company, is sufficiently objective evidence that the Board
has the necessary requirements to fulfil their roles individually and
collectively.
7. Evaluate board performance based on clear and relevant objectives,
seeking continuous improvement
Explanation
The Board does not formally review the effectiveness of itself as a unit nor
of the Remuneration and Audit committees. The small size of the Board means
that individual Directors' contributions are transparent. Where the Company
identifies potential Board members, these are noted for any possible future
vacancies as part of succession planning or to bring in additional skills or
capabilities.
Compliance Departure and Reason - Where the need for Board changes has become
evident in the past, the necessary changes have been implemented. It is not
considered necessary to formally review performance given this embedded
approach, whereby review of effectiveness is continuous.
8. Promote a corporate culture that is based on ethical values and
behaviours
Explanation
The nature of the Group's businesses are diverse and, by their nature, may
have different cultures and values relevant to their sector. However, there
are some core values that the Group adopts throughout all its businesses,
irrespective of their nature and size.
These values are: honesty, integrity, openness and respect. The Board leads
by example, demonstrating through its collective actions and individually as
Directors through theirs, to local management teams and staff. The Company
has an Anti-bribery Policy and makes an annual Modern Slavery statement.
Compliance Departure and Reason - None.
9. Maintain governance structures and processes that are fit for purpose
and support good decision-making by the Board
Explanation
The Board provides strategic leadership for the Group and operates within
the scope of a robust corporate governance framework. Its purpose is to ensure
the delivery of long-term shareholder value, which involves setting the
culture, values and practices that operate throughout the Group's businesses
as well as defining its strategic goals. The Board has approved terms of
reference for its Audit and Remuneration committees to which certain
responsibilities are delegated.
The individual roles and responsibilities of the Board, the Board members and
the Audit and Remuneration Committees are set out below.
Role and Responsibilities of Chairman The Chairman is independent and from an external perspective, engages with
shareholders at the Company's Annual General Meeting to reinforce the fact
that the Board is being run with the appropriate level of engagement and time
commitment. From an internal perspective, he ensures that the information
which flows within the Board and its sub committees is accurate, relevant and
timely and that meetings concentrate on key operational and financial issues
which have a strategic bias, together with monitoring implementation plans
surrounding commercial objectives.
In relation to corporate governance, his responsibility is to lead the board
effectively and to oversee the adoption, delivery and communication of the
Company's corporate governance model. He also aims to foster a positive
governance culture throughout the Company.
Roles and Responsibilities of Co-founder/Director The Co-founder/Director is responsible for recommending and ensuring effective
delivery of the Group's strategy and achieving financial performance
commensurate with that strategy.
The Co-founder/Director works with the Chairman and non-executive director in
an open and transparent way and keeps them up to date with matters of
importance and relevance to delivering the strategy.
The Co-founder/Director is responsible for the operational aspects of the
Group's businesses and for maintaining a robust financial control and
reporting environment throughout.
Roles and Responsibilities of Non-executive Director The Non-executive Director is responsible as part of the Board for discharging
the Board's responsibilities. The Non-executive Director provides challenge to
the other members of the Board, offering advice where appropriate.
Role of the Board The Board of a company is responsible for setting the vision and strategy for
the Company to deliver value to its shareholders by effectively putting in
place its business model. The Board members are collectively responsible for
defining corporate governance arrangements to achieve this purpose, under
clear leadership by the Chairman.
Role of the Board (continued) The Board is authorised to manage the business of the Company on behalf of its
shareholders and in accordance with the Company's Articles of Association. The
Board is responsible for overseeing the management of the business and for
ensuring high standards of corporate governance are maintained throughout the
Group.
The Board meets several times a year and at other times as necessary, to
discuss a formal schedule of matters specifically reserved for its decision.
These matters routinely include:
- Group strategy and associated risks
- Financial performance of the Group's businesses and approval of
annual budgets, the half year results, annual report and accounts and
dividends
- Changes relating to the Group's capital structure or share
buy-backs
- Appointments to and removal from the Board and Committees of the
Board given the absence of a separate nomination committee
- Acquisitions, disposals and other material transactions
- Actual or potential conflicts of interest relating to any Director
are routinely identified at all Board discussions
Role of Audit Committee The Audit Committee provides confidence to shareholders on the integrity of
the financial results of the Company expressed in the Annual Report and
Accounts and other relevant public announcements of the company. The Audit
Committee challenges both the external auditors and the management of the
Company. It keeps the need for internal audit under review. It is responsible
for the assessing recommendations to the Board on the engagement of auditors
including tendering and the approval of non-audit services, for reviewing the
conduct and control of the annual audit and for reviewing the operation of the
internal financial controls.
It also has responsibility for reviewing financial statements prior to
publication and reporting to the Board on any significant reporting issues,
estimates and judgements made in connection with the preparation of the
Company's financial statements.
The Audit Committee, in conjunction with the rest of the Board, also has a key
role in the oversight of the effectiveness of the risk management and internal
control systems of the Company.
Members: David Buchler
Role of Remuneration Committee It is the role of the Remuneration Committee to ensure that remuneration
arrangements are aligned to support the implementation of Company strategy and
effective risk management for the medium to long-term, and to take into
account the views of shareholders.
The Company's remuneration policy has been designed to ensure that it
encourages and rewards the right behaviours, values and culture.
The Remuneration Committee reviews the performance of the executive directors,
sets the scale and structure of their remuneration and the basis of their
service agreements with due regard to the interests of shareholders and
reviews and approves any proposed bonus entitlement. It also determines the
allocation of share options to employees.
Members: David Buchler
The Board has approved the adoption of the QCA Code as its governance
framework against which this statement has been prepared and will monitor the
suitability of this code on an annual basis and revise its governance
framework as appropriate as the Group evolves. The Board is satisfied that the
current framework will evolve in line with the current growth plans of the
Group.
Compliance Departure and Reason - None.
10. Communicate how the Company is governed and is performing by maintaining
a dialogue with shareholders and other relevant stakeholders
Explanation
A healthy dialogue should exist between the Board and all of its stakeholders,
including shareholders, to enable all interested parties to come to informed
decisions about the Company. In particular, appropriate communication and
reporting structures should exist between the Board and all constituent parts
of its shareholder base. This will assist:
· the communication of shareholders' views to the Board; and
· the shareholders' understanding of the unique circumstances and
constraints faced by the Company. It should be clear where these communication
practices are described (annual report or website).
The Group's Annual Report and Accounts and other governance-related material,
along with notices of all general meetings over the last five years (as a
minimum) are accessible via the Company's website.
Audit Committee Report - the Audit Committee's annual meeting is minuted. All
matters raised by the Group's auditors are carefully considered and actions
implemented where considered appropriate. The approach and role of the Audit
Committee is noted in section 9 above.
Remuneration Committee Report - the Remuneration Committee's meetings are
minuted. The remuneration of the Board is set out in the Annual Report and
Accounts. The approach and role of the Remuneration Committee is noted in
section 9 above.
Compliance Departure and Reason - The Audit Committee and Remuneration
Committee have not prepared formal reports as required by the Code. Given the
small size of the Board, such formal reporting is not considered necessary.
Statement by the Directors relating to their statutory duties under s172(1)
Companies Act 2006
The Board of Directors considers, both individually and together, that they
have acted in the way they consider, in good faith, would be most likely to
promote the success of the company for the benefit of the members as a whole
(having regard to the stakeholders and the matters set out in s172(1)(a-f) of
the Act) in the decisions taken during the year ended 31 December 2023.
The Company is a holding company for which the investing strategy is approved
by members annually at the Company's Annual General Meeting. The Company's
success in following this investing strategy is measurable in terms of the
value arising over time from the Company's investments.
The Board of Directors had regard, amongst other matters, to the:
· likely consequences of any decision on the long term;
· interests of the Group's employees;
· need to foster relationships with customers, suppliers and
others;
· impact of the Group's operations on the communities in which the
Group's businesses operate;
· impact of the Group's operations on the environment;
· desirability of maintaining a reputation for high standards of
business conduct;
· need to act fairly between the members of the Company.
The broad range of stakeholders and their interests means that it may not be
possible to deliver outcomes that meet all individual interests. Whilst
there is an inherent and probable interdependency between the success of the
Company's underlying investments and the Company itself over time, there may
be occasions where actions in relation to those investments taken, or not
taken, in the interests of the Company's stakeholders by the Board could be
perceived as, or be, in conflict with stakeholder interests in the investments
themselves.
The Board engages with the Group's stakeholders both directly and indirectly
at an operational level through the Group's management responsibility
structure. Direct engagement includes members of the Board communicating
with stakeholders personally in appropriate circumstances. In addition, the
Board reviews and challenges the strategies and financial and operational
performances of its individual trading businesses, including risk management,
legal and regulatory compliance, through periodic reporting processes and
management review meetings. The Company makes Stock Market announcements
whenever required or considered necessary.
The Board:
· ensures that any recommendations from relevant regulators are
properly considered;
· assesses risk in the application of capital when making
investment decisions and in making follow-on investments, whether by way of
equity or debt;
· through its own and its subsidiaries' employment practices seeks
to reward employees fairly and to create a safe and secure environment;
· encourages its subsidiaries to maintain regular, open and honest
contact with their customers and suppliers, working collaboratively;
· encourages subsidiaries to support charitable activities in their
local communities and to consider the impact of their operations on the local
community;
· seeks to minimise negative effects of the Company's operations on
the environment by minimising travel and encouraging its subsidiaries to
minimise waste and recycle materials wherever practicable.
These activities give the Board an overview of stakeholder engagement and
effectiveness, including opportunities to improve further, and enables the
Directors to comply with their legal duty under s172 of the Companies Act
2006.
Consolidated income statement
for the year ended 31 December 2023
Note
2023 2022
£'000 £'000
Continuing operations
Revenue 5 42,950 38,027
Cost of sales (35,044) (31,921)
Gross profit 7,906 6,106
Distribution costs (2,665) (2,181)
Administrative expenses (2,274) (2,174)
Operating profit 2 2,967 1,751
Finance expense 7 (172) (138)
Finance income 7 805 698
Profit on sale of tangible fixed assets 36 18
Profit before tax 3,636 2,329
Income tax expense 8 (1,129) -
Profit for the year from continuing operations 2,507 2,329
Profit/(loss) for the year from discontinued operations 6 226 (2,391)
Profit/(loss) for the year 2,733 (62)
Attributable to:
- Equity holders of the parent (537)
2,118
- Non-controlling interests 615 475
2,733 (62)
Earnings/(loss) per share 9
Basic and diluted 80.69p 74.36p
- from continuing operations 9.60p (95.89)p
- from discontinued operations
Total 90.29p (21.53)p
Consolidated statement of comprehensive income
for the year ended 31 December 2023
2023
2022
£'000 £'000
Profit/(loss) for the year 2,733 (62)
Other comprehensive income
Revaluation of freehold land and buildings - 1,188
Revaluation of available for sale investments (49) (36)
Deferred tax recognised directly in equity - (297)
Total comprehensive income for the year 2,684 793
Attributable to:
- Equity holders of the parent 2,069 318
- Non-controlling interests 615 475
2,684 793
Consolidated statement of changes in equity
Share Share Retained Total Non-controlling interests Total
£'000
capital premium Revaluation earnings £'000 £'000
£'000 £'000 reserve £'000
£'000
2023
Profit for the year - - - 2,118 2,118 615 2,733
Transfer of revaluation reserve - - (891) 891 - - -
Revaluation of available for sale investments - - - (49) (49) - (49)
Deferred tax recognised directly in equity - - - - - - -
Total comprehensive income for the year - - (891) 2,960 2,069 615 2,684
Balance at 1 January 50 7,885 1,718 23,222 32,875 2,877 35,752
Transactions with owners:
Dividends paid to non-controlling interests - - - - - (500) (500)
Purchase of own treasury shares - - (427) (427) - (427)
-
Total transactions with owners - - - (427) (427) (500) (927)
Balance at 31 December 50 7,885 827 25,755 34,517 2,992 37,509
Share Share Retained Total Non-controlling interests Total
£'000
capital premium Revaluation earnings £'000 £'000
£'000 £'000 reserve £'000
£'000
2022
Loss for the year - - - (537) (537) 475 (62)
Revaluation of property - - 1,188 - 1,188 - 1,188
Revaluation of available for sale investments - - - (36) (36) - (36)
Deferred tax recognised directly in equity - - (297) - (297) - (297)
Total comprehensive income for the year - - 891 (573) 318 475 793
Balance at 1 January 50 7,885 827 25,886 34,648 2,402 37,050
Transactions with owners:
Purchase of own treasury shares - - (2,091) (2,091) - (2,091)
-
Total transactions with owners - - - (2,091) (2,091) - (2,091)
Balance at 31 December 50 7,885 1,718 23,222 32,875 2,877 35,752
Consolidated statement of financial position
2023 2022
Note £'000 £'000
Assets
Non-current assets
Property, plant and equipment 11 7,905 8,142
Total non-current assets 7,905 8,142
Current assets
Inventories 12 5,925 3,777
Trade and other receivables 13 7,843 9,315
Cash and cash equivalents 14 22,139 19,136
Assets held for sale 15 - 2,103
Available for sale investments 16 1,599 1,649
Total current assets 37,506 35,980
Total assets 45,411 44,122
Liabilities
Current liabilities
Loans and other borrowings 19 (269) (1,258)
Leases 19 (362) (372)
Trade and other payables 17 (4,955) (4,807)
Total current liabilities (5,586) (6,437)
Non-current liabilities
Loans and other borrowings 19 (698) (818)
Leases 19 (373) (452)
Total non-current liabilities (1,071) (1,270)
Total liabilities (6,657) (7,707)
Provisions - deferred tax 20 (1,245) (663)
Net assets 37,509 35,752
Equity
Share capital 21 50 50
Share premium account 22 7,885 7,885
Revaluation reserves 22 827 1,718
Retained earnings 22 25,755 23,222
Capital and reserves attributable to equity holders of the Company 34,517 32,875
Non-controlling interests 25 2,992 2,877
Total equity 37,509 35,752
Consolidated statement of cash flows
2023 2022
2023 2022
Note £'000 £'000 £'000 £'000
Profit/(loss) for the year 2,733 (62)
Adjustments for:
Finance expense 7 172 138
Finance income 7 (805) (698)
Depreciation 11 1,011 933
Operating lease rentals (15) (14)
Income tax expense 8 1,129 -
Gain on disposal of fixed assets (36) (18)
Loss from discontinued operations (226) 2,391
1,230 2,732
Operating cash flows before movements in working capital 3,963 2,670
Decrease/(increase) in trade and other receivables 543 (1,116)
Increase in trade and other payables 95 1,126
(Increase)/decrease in inventories (2,564) 291
Operating cash generated from continuing operations 2,037 2,971
Operating cash flows generated from/(used by) discontinued operations 964 (1,051)
Net cash generated from operations 3,001 1,920
Investing activities
Interest received 7 725 8
Income from investments 7 80 109
Purchase of property, plant and equipment 11 (470) (889)
Sale of property, plant, equipment 34 42
Purchase of available for sale investments - (6,886)
Disposal of available for sale investments - 5,782
Cash generated from/(used by) continuing investing activities 369 (1,834)
Cash generated from discontinued investing activities 2,238 29
Net cash generated from/(used by) investing activities 2,607 (1,805)
Financing activities
Interest paid 7 (172) (132)
Purchase of own shares (treasury shares) 21 (427) (2,090)
Dividends paid (500) -
Net (repayment) of borrowings (1,501) (577)
Cash used by continuing financing activities (2,600) (2,799)
Cash used by discontinued financing activities (5) (51)
Net cash used by financing activities (2,605) (2,850)
Net increase/(decrease) in cash 3,003 (2,735)
Cash at beginning of year 19,136 21,871
Cash at end of year 22,139 19,136
Notes forming part of the consolidated financial statements
1 Material accounting policies
The financial information set out above, which was approved by the Board on 21
May 2024, is derived from the full Group accounts for the year ended 31
December 2023 and does not constitute the statutory accounts within the
meaning of section 434 of the Companies Act 2006. The Group accounts on which
the auditors have given an unqualified report, which does not contain a
statement under section 498(2) or (3) of the Companies Act 2006 in respect of
the accounts for 2023, will be delivered to the Registrar of Companies in due
course. Copies of the Company's Annual Report and Financial Statements are
expected to be sent to shareholders on 29 May 2024 and will be available
online at www.volvere.co.uk.
Basis of accounting
These financial statements have been prepared in accordance with UK adopted
International Accounting Standards ("adopted IFRS") and with those parts of
the Companies Act 2006 applicable to companies preparing their accounts under
adopted IFRS.
The following material accounting policies have been applied consistently in
the preparation of these financial statements:
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Strategic
Report. In addition, note 18 to the financial statements includes the
Group's objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial instruments and
hedging activities; and its exposures to credit risk and liquidity risk.
The Group has considerable financial resources and, as a consequence, the
Directors believe that the Group is well placed to manage the business risks
inherent in its activities despite the current uncertain economic outlook.
The Directors have a reasonable expectation that the Group has adequate
resources to enable it to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31 December each year. Control is achieved where the Company has the
power to govern the financial and operating policies of an investee entity so
as to obtain benefits from its activities. All subsidiaries have a reporting
date of 31 December.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate. All
intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Non-controlling interests, presented as part of equity, represent the portion
of a subsidiary's profit or loss and net assets that is not held by the Group.
The Group attributes total comprehensive income or loss of subsidiaries
between the owners of the parent and the non-controlling interests based on
their respective ownership interests.
The results and net assets of subsidiaries whose accounts are denominated in
foreign currencies are retranslated into Sterling at average and year-end
rates respectively.
Business combinations
The Group applies the acquisition method of accounting for business
combinations. The consideration transferred by the Group to obtain control
of a subsidiary is calculated as the sum of the acquisition-date fair values
of assets transferred, liabilities incurred and equity interests issued by the
Group, which includes the fair value of any asset or liability arising from a
contingent consideration arrangement. Acquisition costs are expensed as
incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a
business combination regardless of whether they have been previously
recognised in the acquiree's financial statements prior to the acquisition.
Assets acquired and liabilities assumed are measured at their acquisition-date
fair values.
Goodwill is stated after separate recognition of identifiable intangible
assets. It is calculated as the excess of the sum of the fair value of
consideration transferred, the recognised amount of any non-controlling
interest in the acquiree and the acquisition-date fair value of any existing
equity interest in the acquiree, over the acquisition-date fair values of
identifiable net assets. If the fair values of identifiable net assets exceed
the sum calculated above, the excess amount (i.e. gain on a bargain purchase)
is recognised in profit or loss immediately.
The purchase of a non-controlling interest is not a business combination
within the scope of IFRS 3, since the acquiree is already controlled by its
parent. Such transactions are accounted for as equity transactions, as they
are transactions with equity holders acting in their capacity as such. No
change in goodwill is recognised and no gain or loss is recognised in profit
or loss.
Goodwill
Goodwill represents the future economic benefits arising from a business
combination that are not individually identified and separately recognised.
See above for information on how goodwill is initially determined. Goodwill is
carried at cost less accumulated impairment losses and is reviewed annually
for impairment.
Revenue recognition
Revenue from contracts with customers is recognised when control of the goods
or services is transferred to the customer at an amount that reflects the
consideration to which the Group expects to be entitled in exchange for those
goods or services net of discounts, VAT and other sales-related taxes. The
Group concludes that it is the principal in its revenue arrangements, because
it typically controls the goods or services before transferring them to the
customer. Payment is typically due within 60 days. Contracts with customers
do not contain a financing component or any element of variable
consideration. The Group does not offer an option to purchase a warranty.
Revenue from the sale of goods is recognised at the point in time when control
of the asset is transferred to the customer, generally when the customer has
taken undisputed delivery of the goods. There are no service obligations
attached to the sale of goods. Customer rebates are deducted from revenue.
If it is probable that total contract costs will exceed total contract
revenue, the expected loss is recognised immediately in profit or loss.
Discontinued operations
Discontinued operations represent cash generating units or groups of cash
generating units that have either been disposed of or classified as held for
sale and represent a separate major line of business or are part of a single
co-ordinated plan to dispose of a separate major line of business. Cash
generating units forming part of a single co-ordinated plan to dispose of a
separate major line of business are classified within continuing operations
until they meet the criteria to be held for sale. The post-tax profit or
loss of the discontinued operation is presented as a single line on the face
of the consolidated income statement, together with any post-tax gain or loss
recognised on the re-measurement to fair value less costs to sell or on the
disposal of the assets or disposal group constituting the discontinued
operation. On changes to the composition of groups of units comprising
discontinued operations, the presentation of discontinued operations within
prior periods is restated to reflect consistent classification of discontinued
operations across all periods presented.
Operating segments
IFRS 8 "Operating Segments" requires the disclosure of segmental information
for the Group on the basis of information reported internally to the chief
operating decision-maker for decision-making purposes. The Group considers
that the role of chief operating decision-maker is performed collectively by
the Board of Directors.
Volvere plc is a holding company that identifies and invests principally in
undervalued and distressed businesses and securities as well as businesses
that are complementary to existing Group companies. Its customers are based
primarily in the UK and Europe.
Financial information (including revenue and profit before tax and intra-group
charges) is reported to the Board on a segmental basis. Segment revenue
comprises sales to external customers and excludes gains arising on the
disposal of assets and finance income. Segment profit reported to the Board
represents the profit earned by each segment before tax and intra-group
charges. For the purposes of assessing segment performance and for
determining the allocation of resources between segments, the Board reviews
the non-current assets attributable to each segment as well as the financial
resources available. All assets are allocated to reportable segments.
Assets that are used jointly by segments are allocated to the individual
segments on a basis of revenues earned.
All liabilities are allocated to individual segments. Information is
reported to the Board of Directors on a segmental basis as management believes
that each segment exposes the Group to differing levels of risk and rewards
due to their varying business life cycles. The segment profit or loss,
segment assets and segment liabilities are measured on the same basis as
amounts recognised in the financial statements. Each segment is managed
separately.
Where one company within a segment incurs costs which relate wholly or partly
to, or shares resources with, another company within that or another segment,
a proportion of such costs are recharged to that other company. The effect is
to reduce the costs of the incurring company and to increase the costs of the
benefitting company.
Leasing
The company applies IFRS 16 Leases. Accordingly leases are all accounted for
in the same manner:
- A right of use asset and lease liability is recognised on
the statement of financial position, initially measured at the present value
of future lease payments;
- Depreciation of right-of-use assets and interest on lease
liabilities are recognised in the statement of comprehensive income;
- The total amount of cash paid is recognised in the statement of
cash flows, split between payments of principal (within financing activities)
and interest (also within financing activities)
The initial measurement of the right of use asset and lease liability takes
into account the value of lease incentives such as rent free periods.
The costs of leases of low value items and those with a short term at
inception are recognised as incurred.
Foreign currencies
Transactions in currencies other than sterling are recorded at the rates of
exchange prevailing on the dates of the transactions. At each reporting date,
monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting date. Gains and losses
arising on retranslation are included in net profit or loss for the period.
Retirement benefit costs
The Group's subsidiary undertakings operate defined contribution retirement
benefit schemes. Payments to these schemes are charged as an expense in the
period to which they relate. The assets of the schemes are held separately
from those of the relevant company and Group in independently administered
funds.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on taxable profit for the year.
Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is measured on an undiscounted basis using the tax rates that are
expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Property, plant and equipment
Items of property, plant and equipment are stated at cost or valuation less
accumulated depreciation and any recognised impairment loss. Freehold
property is revalued on a periodic basis. Depreciation is charged so as to
write off the cost or valuation of assets, less their residual values, over
their estimated useful lives, using the straight line method, on the following
bases:
Freehold
property
- 1.5% per annum
Plant and
machinery
- 4%-33% per annum
Investments
Investments are recognised and derecognised on a trade date where a purchase
or sale of an investment is under a contract whose terms require delivery of
the investment within the timeframe established by the market concerned, and
are initially measured at fair value, including transaction costs. Available
for sale current asset investments are carried at fair value with adjustments
recognised in other comprehensive income.
Investment income
Income from investments is included in the income statement at the point the
Group becomes legally entitled to it. Interest income and expenses are
reported on an accruals basis using the effective interest method.
Impairment of property, plant and equipment and intangible assets (including
goodwill)
At each reporting date the Group reviews the carrying amounts of its property,
plant and equipment and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and any risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but only so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit) in prior years.
A reversal of an impairment loss is recognised as income immediately, unless
the relevant asset is carried at a revalued amount, in which case the reversal
of the impairment loss is treated as a revaluation increase.
Inventories
Inventories are stated at the lower of cost and net realisable value. Raw
materials are valued at purchase price and the costs of ordinarily
interchangeable items are assigned using a weighted average cost formula. The
cost of finished goods comprises raw materials directly attributable to
manufacturing processes based on product specification and packaging cost.
Net realisable value is the estimated selling price in the ordinary course
of business less any applicable selling expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, overnight deposits and
treasury deposits. The Group considers all highly liquid investments with
original maturity dates of three months or less to be cash equivalents.
Financial assets
Recognition and derecognition
Financial assets and financial instruments are recognised when the Group
becomes a party to the contractual provisions of the financial asset.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial assets expire, or when the financial asset and
substantially all of the risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or
expires.
Classification and initial recognition of financial assets
Except for trade receivables that do not contain a significant financing
component and are measured at the transaction price in accordance with IFRS
15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging
instruments are classified into the following categories:
- Amortised cost
- Fair value through profit or loss (FVTPL)
- Fair value through other comprehensive income (FVOCI)
The classification is determined by both:
- The entity's business model for managing the financial asset
- The contractual cash flow characteristics of the financial asset
All income and expenses relating to financial assets that are recognised in
profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented
within administrative expenses.
Subsequent measurement of financial assets
Financial assets are measured at amortised cost if the assets meet the
following conditions (and are not designated as FVTPL):
- They are held within a business model whose objective is to hold
the financial assets and collect its contractual cash flows
- The contractual terms of the financial assets give rise to cash
flows that are solely payments of principal and interest on the principal
amount outstanding
After initial recognition, these are measured at amortised cost using the
effective interest method. Discounting is omitted where its effect is
immaterial. The Group's cash and cash equivalents, trade and most other
receivables fall into this category. This category also includes investments
in equity instruments.
Financial assets which are designated as FVTPL are measured at fair value with
gains or losses recognised in profit or loss. The fair values of financial
assets in this category are determined with reference to active market
transactions or using a valuation technique where no active market exists.
Impairment of financial assets
IFRS 9's impairment requirements use forward looking information to recognise
expected credit losses - the 'expected credit loss (ECL) method'.
Recognition of credit losses is no longer dependent on first identifying a
credit loss event, but considers a broader range of information in assessing
credit risk and credit losses including past events, current conditions,
reasonable and supportable forecasts that affect the expected collectability
of the future cash flows of the instrument.
In applying this forward looking approach, a distinction is made between:
- Financial instruments that have not deteriorated significantly
in credit quality since initial recognition or that have low credit risk
('stage 1') and
- Financial instruments that have deteriorated significantly in
credit quality since initial recognition and whose credit risk is not low
('stage 2').
Stage 3 would cover financial assets that have objective evidence of
impairment at the reporting date.
12 month expected credit losses are recognised for the first category while
lifetime expected credit losses are recognised for the second category.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the
financial asset.
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other
receivables as well as contract assets and records the loss allowance as
lifetime expected credit losses. These are the expected shortfalls in
contractual cash flows, considering the potential for default at any point
during the life of the financial instrument. In calculating, the Group uses
its historical experience, external indicators and forward-looking information
to calculate the expected credit losses using a provision matrix.
The Group assesses impairment of trade receivables on a collective basis, as
they possess shared credit risk characteristics and they have been grouped
based on the days past due.
Classification and measurement of financial liabilities
FVTPL: This category comprises only out-of-the-money derivatives. They are
carried in the statement of financial position at fair value with changes in
fair value recognised in the income statement.
Other financial liabilities: Other financial liabilities include trade
payables and other short-term monetary liabilities, which are initially
recognised at fair value and subsequently carried at amortised cost using the
effective interest method.
Bank and other borrowings are initially recognised at the fair value of the
amount advanced net of any transaction costs directly attributable to the
issue of the instrument. Such interest bearing liabilities are subsequently
measured at amortised cost using the effective interest method. Interest
expense in this context includes initial transaction costs and premia payable
on redemption, as well as any interest or coupon payable while the liability
is outstanding.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
Invoice discounting
The Group uses an invoice discounting facility and retains all significant
benefits and risks relating to the relevant trade receivables. The gross
amounts of the receivables are included within assets and a corresponding
liability in respect of proceeds received from the facility is included within
liabilities. The interest and charges are recognised as they accrue and are
included in the income statement with other interest charges.
Significant management judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and reported amounts of assets and
liabilities, income and expenses. The nature of the Group's business is such
that there can be unpredictable variation and uncertainty regarding its
business. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
Significant management judgements (other than estimates)
The judgements that have a significant impact on the carrying value of assets
and liabilities are discussed below:
Consolidation
Management have concluded that it is not appropriate to utilise the exemption
from consolidation available to investment entities under IFRS 10 as the
Company is not considered to meet all of the essential elements of the
definition of an investment entity as performance is not measured or evaluated
on a fair value basis. Accordingly the consolidation includes all entities
which the Company controls.
Deferred tax asset
The Group recognises a deferred tax asset in respect of temporary differences
relating to capital allowances, revenue losses and other short term temporary
differences when it considers there is sufficient evidence that the asset will
be recovered against future taxable profits.
This requires management to make decisions on such deferred tax assets based
on future forecasts of taxable profits. If these forecast profits do not
materialise, or there is a change in the tax rates or to the period over which
temporary timing differences might be recognised, the value of the deferred
tax asset will need to be revised in a future period.
The most sensitive area of estimation risk is with respect to losses. The
Group has losses for which no value has been recognised for deferred tax
purposes in these financial statements, as future economic benefit of these
temporary differences is not probable. If appropriate profits are earned in
the future, recognition of the benefit of these losses may result in a reduced
tax charge in a future period.
Significant estimates
Information about estimates and assumptions that have the most significant
effect on recognition and measurement of assets, liabilities, income and
expenses is provided below. Actual results may be substantially different.
Useful lives of depreciable assets
The depreciation charge for an asset is derived using estimates of its
expected useful life and expected residual value, which are reviewed annually.
Increasing an asset's expected life or residual value would result in a
reduced depreciation charge in the consolidated income statement.
Management determines the useful lives and residual values for assets when
they are acquired, based on experience with similar assets and taking into
account other relevant factors such as any expected changes in technology or
regulations.
Inventories
In determining the cost of inventories management has to make estimates to
arrive at cost and net realisable value.
Furthermore, determining the net realisable value of the wider range of
products held requires judgement to be applied to determine the saleability of
the product and estimations of the potential price that can be achieved. In
arriving at any provisions for net realisable value management take into
account the age, condition and quality of the product stocked and the recent
sales trend. The future realisation of these inventories may be affected by
market-driven changes that may reduce future selling prices.
Fair value measurement
Management uses valuation techniques to determine the fair value of financial
instruments (where active market quotes are not available) and non-financial
assets. This involves developing estimates and assumptions consistent with how
market participants would price the instrument. Management bases its
assumptions on observable data as far as possible but this is not always
available. In that case management uses the best information available.
Estimated fair values may vary from the actual prices that would be achieved
in an arm's length transaction at the reporting date.
Recognition and calculation of right of use assets
Management assesses the discount rate to be applied to the leases held on an
annual basis. They ensure the discount rate is in line with market rate.
New and revised standards and interpretations applied
The following amendments are effective for the period beginning 1 January
2023:
Insurance contracts (IFRS 17)
IFRS 17 establishes the principles for the recognition, measurement,
presentation and disclosure of insurance contracts and supersedes IFRS 4
Insurance Contracts.
IFRS 17 outlines a general model, which is modified for insurance contracts
with direct participation features, described as the variable fee approach.
The general model is simplified if certain criteria are met by measuring
the liability for remaining coverage using the premium allocation approach.
The general model uses current assumptions to estimate the amount, timing and
uncertainty of future cash flows and it explicitly measures the cost of that
uncertainty. It takes into account market interest rates and the impact of
policyholders' options and guarantees.
The Group does not have any contracts that meet the definition of an insurance
contract under IFRS 17.
Deferred tax relating to Assets and Liabilities arising from a Single
Transaction (amendments to IAS 12)
The Group has adopted the amendments to IAS 12 for the first time in the
current year. The amendments introduce a further exception from the initial
recognition exemption. Under the amendments, an entity does not apply the
initial recognition exemption for transactions that give rise to equal taxable
and deductible temporary differences. Depending on the applicable tax law,
equal taxable and deductible temporary differences may arise on initial
recognition of an asset and liability in a transaction that is not a business
combination and affects neither accounting profit nor taxable profit.
Following the amendments to IAS 12, an entity is required to recognise the
related deferred tax asset and liability, with the recognition of any deferred
tax asset being subject to the recoverability criteria in IAS 12.
International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12)
The scope of IAS 12 is amended to clarify that the Standard applies to income
taxes arising from tax law enacted or substantively enacted to implement the
Pillar Two model rules published by the OECD, including tax law that
implements qualified domestic minimum top-up taxes described in those rules.
The amendments introduce a temporary exception to the accounting requirements
for deferred taxes in IAS 12, so that an entity would neither recognise nor
disclose information about deferred tax assets and liabilities related to
Pillar Two income taxes.
The Pillar Two rules are not applicable to the Group.
Definition of Accounting Estimates (Amendments to IAS 8)
The Group has adopted the amendments to IAS 8 for the first time in the
current year. The amendments replace the definition of a change in accounting
estimates with a definition of accounting estimates. Under the new definition,
accounting estimates are "monetary amounts in financial statements that are
subject to measurement uncertainty". The definition of a change in accounting
estimates was deleted. There is no impact on the accounting estimation
reporting of the entity.
Disclosure of Accounting policies (Amendments to IAS 1 and IFRS Practice
Statement 2)
The IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making
Materiality Judgements, providing guidance to help entities meet the
accounting policy disclosure requirements. The amendments aim to make
accounting policy disclosures more informative by replacing the requirement to
disclose 'significant accounting policies' with 'material accounting policy
information'. The amendments also provide guidance under what circumstance,
the accounting policy information is likely to be considered material and
therefore requiring disclosure.
The Group has adopted the amendments to IAS 1 for the first time in the
current year.
New and revised Standards and Interpretations in issue but not yet effective
At the date of authorisation of these financial statements, the Company has
not early adopted the following amendments to Standards and Interpretations
that have been issued but are not yet effective and have not been adopted
early by the Group.
The following amendments are effective for the period beginning 1 January
2024:
IAS 1 Presentation of Financial Statements - Classification of Liabilities as 1 January 2024
Current or Non-current (1)
IFRS 16 Leases - Lease liability in a Sale and leaseback (1) 1 January 2024
IAS 11 Presentation of Financial Statements - non-current liabilities with 1 January 2024
covenants (1)
IAS 7 and IFRS 7 - Supplier finance amendments 1 January 2024
IAS 10 and IAS 28 - Sale of contribution of assets between an investor and its 1 January 2024
Associate or Joint Venture
(1) These have been endorsed and adopted for use in the UK.
The directors do not expect any material impact as a result of adopting the
standards and amendments listed above in the financial year they become
effective.
2 Operating profit
Operating profit is stated after charging:
2023 2022
£'000 £'000
Staff costs 7,450 6,038
Depreciation of property, plant and equipment 1,011 933
Auditor's fees - audit services 41 42
The analysis of audit fees is as follows:
- for the audit of the Company's annual accounts 9 10
- for the audit of the Company's subsidiaries' accounts 32 32
41 42
3 Staff costs
Staff costs comprise:
2023 2022
£'000 £'000
Wages and salaries 6,746 5,443
Employer's National Insurance contributions 545 448
Defined contribution pension cost 159 147
7,450 6,038
The average number of employees (including Directors) in the Group was as
follows:
2023 2022
Number Number
Engineering, production and professional 209 181
Sales and marketing 12 11
Administration and management 40 34
261 226
4 Directors' remuneration
The remuneration of the Directors was as follows:
Salaries & fees Other
2023 benefits Total
£'000 2023 2023
£'000 £'000
David Buchler 45 - 45
Jonathan Lander (until 28 August 2023) 7 - 7
Nick Lander 9 1 10
Michael Tzirki 6 - 6
67 1 68
Salaries & fees Other
2022 benefits Total
£'000 2022 2022
£'000 £'000
David Buchler 45 - 45
Jonathan Lander 10 - 10
Nick Lander 9 1 10
64 1 65
The services of Jonathan Lander and Nick Lander were provided under the terms
of a Service Agreement with D2L Partners LLP. The amount due under this
agreement, which is in addition to the amounts disclosed above, for the year
amounted to £549,000 (2022: £650,000). Amounts owed to D2L Partners LLP at
the year end totalled £nil (2022: £nil).
The amount paid to David Buchler in the year was paid to DB Consultants
Limited (which is controlled by him and is therefore a related party) and the
amount outstanding at the year end was £nil (2022: £nil).
None of the Directors were members of the Group's defined contribution pension
plan in the year (2022: none).
5 Operating segments
Analysis by business segment:
An analysis of key financial data by business segment is provided below. The
Group's food manufacturing segment is engaged in the production and sale of
food products to third party customers, and the investing and management
services segment incurs central costs, provides management services and
financing to other Group segments and undertakes treasury management on behalf
of the Group. A more detailed description of the activities of each segment
is given in the Strategic Report.
Investing and management services
Food manufacturing 2023
2023 £'000 Total
£'000 2023
£'000
Revenue 42,950 - 42,950
Profit/(loss) before tax((1)) 3,861 (225) 3,636
Investing and management services
Food manufacturing 2022
2022 £'000 Total
£'000 2022
£'000
Revenue 38,027 - 38,027
Profit/(loss) before tax((1)) 2,777 (448) 2,329
Investing and management services
Food manufacturing 2023
2023 £'000 Total
£'000 2023
£'000
Assets 22,175 23,236 45,411
Liabilities and provisions (7,766) (136) (7,902)
Net assets((2)) 14,409 23,100 37,509
Investing and management services
Food manufacturing 2022
2022 £'000 Total
£'000 2022
£'000
Assets 25,692 18,430 44,122
Liabilities and provisions (8,874) 504 (8,370)
Net assets((2)) 16,818 18,934 35,752
(1) stated before intra-group interest and management charges
(2) assets and liabilities stated excluding intra-group balances
Continuing operations Investing and management services
Food manufacturing 2023
2023 £'000 Total
£'000 2023
£'000
Capital spend 785 - 785
Depreciation 1,010 1 1,011
Interest income (non-Group) - (725) (725)
Interest expense (non-Group) 172 - 172
Tax expense 442 687 1,129
Continuing operations Investing and management services
Food manufacturing 2022
2022 £'000 Total
£'000 2022
£'000
Capital spend 1,014 - 1,014
Depreciation 932 1 933
Interest income (non-Group) (8) - (8)
Interest expense (non-Group) 138 - 138
Tax credit/(expense) (50) 50 -
Capital spend
1,014
-
1,014
Depreciation
932
1
933
Interest income (non-Group)
(8)
-
(8)
Interest expense (non-Group)
138
-
138
Tax credit/(expense)
(50)
50
-
Geographical analysis:
External revenue by Non-current assets by
location of customers location of assets
2023 2022 2023 2022
£'000 £'000 £'000 £'000
(as restated)
UK 41,758 36,830 7,905 8,142
Rest of Europe 1,192 1,197 - -
42,950 38,027 7,905 8,142
The Group had 4 (2022: 4) customers (all in the food manufacturing segment)
that individually accounted for in excess of 10% of the Group's revenues as
follows:
2023 2022
£'000 £'000
First customer 20,337 17,860
Second customer 7,453 6,252
Third customer 6,552 5,530
Fourth customer 6,129 4,547
Revenue is recognised when goods are delivered and there is minimal
uncertainty over the timing and amount of revenue recognition. All revenue has
been recognised in one instance in the current and prior year. The Group has
no material balances which arise from contracts with customers save for trade
receivables as set out in note 13.
6 Discontinued operations
On 8 November 2022, two subsidiary undertakings in the Group, Indulgence
Patisserie Limited and Indulgence Foods Limited, ceased operations and have
been classified as assets held for sale.
The loss relating to these subsidiaries (before intra-Group management
charges) in the year was as follows:
2023 2022
£'000 £'000
Revenue 101 3,532
Cost of sales (133) (4,300)
Gross loss (32) (768)
Administrative expenses (36) (1,363)
Distribution expenses (22) (237)
Operating loss (90) (2,368)
Profit/(loss) on sale of tangible fixed asset investments 130 (199)
Loss before tax 40 (2,567)
Income tax credit 186 176
Loss from discontinued operations 226 (2,391)
Cash flows generated by Indulgence Patisserie Limited and Indulgence Foods
Limited for the reporting periods under review were as follows:
2023 2022
£'000 £'000
Operating activities 964 (1,051)
Investing activities 2,238 29
Financing activities (5) (51)
Cash flows from discontinued operations 3,197 (1,073)
At 31 December 2023, the assets and liabilities of Indulgence Patisserie
Limited and Indulgence Foods Limited (stated net of intra-Group balances),
were as follows:
2023
£'000
Non-current assets
Assets held for sale -
Property, plant and equipment -
Total non-current assets -
Current assets
Inventories -
Trade and other receivables 403
Cash and cash equivalents 21
Total current assets 424
Total assets 424
Current liabilities
Loans and other borrowings (4,623)
Leases -
Trade and other payables (396)
Total liabilities (5,019)
Provisions - deferred tax 16
Net liabilities (4,579)
7 Investment revenues, other gains and losses and finance income and
expense
2023 2022
£'000 £'000
Finance income
Bank interest receivable 725 8
Investment revenues 80 109
Other gains & losses - 581
805 698
Finance expense
Bank interest (38) (41)
Lease interest (52) (44)
Other interest and finance charges (82) (53)
(172) (138)
8 Income tax
2023 2022
£'000 £'000
Corporation tax charge recognised in income statement - current year 356 -
Deferred tax charge recognised in income statement - current year 773 -
Total tax charge recognised in income statement 1,129 -
Deferred tax charge recognised in equity - 297
Total tax charge recognised 1,129 297
The reasons for the difference between the actual tax expense in the income
statement for the year and the standard rate of corporation tax in the UK
applied to profits for the year are as follows:
2023 2022
£'000 £'000
Profit before tax 3,636 2,329
Expected tax charge based on the prevailing rate of corporation tax in the UK 855 443
of 23.5% (2022- 19%)
Effects of:
Income not taxed (19) (21)
Super deduction and capital allowance adjustments (15) (27)
Other adjustments 12 19
Losses utilised - (8)
Effect of changes in rate of tax 47 5
Group relief from discontinued operations 258 (386)
Adjustments relating to prior periods (9) (25)
Total tax recognised in income statement 1,129 -
Deferred tax assets and liabilities are recognised at rates of tax
substantively enacted as at the balance sheet date. Deferred tax assets are
recognised to the extent that they are considered recoverable. See also note
20.
9 Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings for the purposes of earnings per share:
2023 2022
£'000 £'000
Profit/(loss) attributable to equity holders of the parent company:
From continuing operations 1,892 1,854
From discontinued operations 226 (2,391)
EEa
Weighted average number of shares for the purposes of earnings per share: 2023 2022
No. No.
Weighted average number of ordinary shares in issue 2,345,696 2,493,592
Dilutive effect of potential ordinary shares - -
Weighted average number of ordinary shares for diluted EPS 2,345,696 2,493,592
There were no share options (or other dilutive instruments) in issue during
the year or the previous year.
10 Subsidiaries
The subsidiaries of Volvere plc, all of which have been included in these
consolidated financial statements, are as follows:
Proportion of ownership interest in ordinary shares at 31 December 2023
Registered address Principal
Name Activity
Volvere Central Services Limited Note 1 Group support services 100%
NMT Group Limited Note 2 Investment 98.6%
Shire Foods Limited Note 1 Food manufacturing 80%
Impetus Automotive Solutions Limited Note 1 Dormant 100%
Indulgence Foods Limited Note 1 Dormant 100%
Indulgence Patisserie Limited Note 1 Food Manufacturing, now ceased trading 100%
Naughty Vegan Limited Note 1 Dormant 100%
Volvere Asset Management Limited Note 1 Dormant 100%
Note 1 - Registered at Shire House, Tachbrook Road, Leamington Spa,
Warwickshire, CV31 3SF, England.
Note 2 - Registered at 4th Floor 115 George Street, Edinburgh, EH2 4JN,
Scotland.
11 Property, plant and equipment
Freehold Plant & Machinery
Property
£'000 Total
£'000
£'000
Cost or valuation
At 1 January 2022 4,700 9,567 14,267
Additions - 1,082 1,082
Disposals - (799) (799)
Revaluation 1,188 - 1,188
Reclassified to asset held for sale (2,138) - (2,138)
At 31 December 2022 and 1 January 2023 3,750 9,850 13,600
Additions - 785 785
Disposals - (509) (509)
Revaluation - - -
At 31 December 2023 3,750 10,126 13,876
Accumulated depreciation
At 1 January 2022 85 4,876 4,961
Charge for the year 65 987 1,052
Eliminated on disposal - (520) (520)
Reclassified to asset held for sale (35) - (35)
At 31 December 2022 and 1 January 2023 115 5,343 5,458
Charge for the year 58 953 1,011
Disposals - (498) (498)
At 31 December 2023 173 5,798 5,971
Net book value
At 31 December 2023 3,577 4,328 7,905
At 31 December 2022 3,635 4,507 8,142
The freehold property owned by Shire Foods Limited was revalued by an
independent valuation specialist to £3,750,000 in May 2021 and this valuation
was included as at 31 December 2020. During 2020, the company acquired
freehold properties as part of the Indulgence business combination. The
properties were purchased for £950,000.
In the 2022 financial year, the properties owned by Indulgence Foods Limited
were revalued to £2,138,000. Following Indulgence Patisserie Limited ceasing
to trade, these properties were subsequently reclassified as assets held for
sale. See note 15 for further details.
Under the historical cost model, the carrying value of freehold property would
be £2,157,000. All other property, plant and equipment is carried at cost
less accumulated depreciation. At the year end, the Directors consider that
the fair value of the properties is not materially different from their
carrying values.
Management considers there to be no indicators to suggest that any items of
property, plant and equipment are impaired. Property, plant and equipment
(which is all held within Shire Foods Limited) with a net book value of £7.91
million is pledged as collateral for Group borrowings (all of which are within
Shire Foods Limited).
Right of use assets
The Group leases certain plant and equipment. The average remaining lease term
across all leases is 1.5 years. In all cases, the lease obligations are
secured by the lessor's title to the leased assets. The right-of-use assets
included in the statement of financial position are as follows:
Amounts recognised in the statement of financial position
Group 2023 2022
£'000 £'000
Net book values 1,724 1,770
Amounts recognised in the statement of comprehensive income
Group 2023 2022
£'000 £'000
Interest expense on lease liabilities 52 44
Expense relating to short-term leases - -
Depreciation charge for the year 364 329
The aggregate undiscounted commitments for short-term and low value leases at
the year-end was £nil (2022 - £nil).
12 Inventories
2023 2022
£'000 £'000
Raw materials 2,857 1,961 1,816
Finished products 3,068
5,925 3,777
The total amount of inventories consumed in the year and charged to cost of
sales was £25.91 million (2022: £24.62 million).
13 Trade and other receivables
2023 2022
£'000 £'000
Trade receivables 6,936 8,466
Less: provision for impairment of trade receivables - -
Net trade receivables 6,936 8,466
Other receivables 185 283
Prepayments and accrued income 722 566
7,843 9,315
Certain of the Group's subsidiaries have invoice discounting arrangements for
their trade receivables which are pledged as collateral. Under these
arrangements it is considered that the subsidiaries remain exposed to the
risks and rewards of ownership, principally in the form of credit risk, and so
the assets continue to be recognised. The associated liabilities arising
restrict the subsidiaries' use of the assets.
The carrying amount of the assets and associated liabilities is as follows:
2023 2022
£'000 £'000
Trade receivables 6,936 8,466
Borrowings (149) (1,143)
6,787 7,323
Because of the normal credit periods offered by the subsidiaries, it is
considered that the fair value matches the carrying value for the assets and
associated liabilities.
The Group is exposed to credit risk with respect to trade receivables due from
its customers, primarily in the food manufacturing segment. This segment has
a significant dependency on a small number of large customers who can and do
place significant contracts. Provisions for bad and doubtful debts are made
based on management's assessment of the risk taking into account the ageing
profile, experience and circumstances. There were no significant amounts due
from individual customers where the credit risk was considered by the
Directors to be significantly higher than the total population.
During the year, several customers were invoiced in foreign currency. The
Group does not hedge its exposure to foreign exchange risk but monitors
product margins and foreign exchange gains and losses each month. In the event
of a permanent and unfavourable movement in exchange rates, the Group would
review foreign currency-based selling prices. At the balance sheet date, trade
receivables consisted of customers invoiced in Euros and sterling as follows:
Trade receivables 2023 2022
£'000 £'000
Denominated in sterling 6,936 8,118
Denominated in Euros - 348
6,936 8,466
The ageing analysis of trade receivables is disclosed below:
2023 2022
£'000 £'000
Up to 3 months 6,843 8,088
3 to 6 months 12 104
6 to 12 months 9 274
Over 12 months 72 -
6,936 8,466
14 Cash and cash equivalents
2023 2022
£'000 £'000
Cash at bank and in hand 22,139 19,136
15 Assets held for sale
Assets held for sale related to the land and buildings owned by Indulgence
Foods Limited, a subsidiary in the food manufacturing segment, which are no
longer in use as the company has discontinued operations. The Group sold the
assets in the 2023 financial year.
16 Available for sale investments
During the year the Group invested in equity securities pursuant to its
treasury management policies. The investments held at year end are carried
at fair value £1.60 million (2022: £1.65 million), and have been classified
as available for sale. The cost of the securities was £1.69 million (2022:
£1.69 million).
2023 2022
£'000 £'000
Available for sale investments 1,599 1,649
17 Trade and other payables (current)
2023 2022
£'000 £'000
Trade payables 2,483 2,638
Other tax and social security 873 211
Other payables 34 54
Accruals 1,565 1,904
4,955 4,807
The fair value of all trade and other payables approximates to book value at
31 December 2023 and at 31 December 2022.
18 Financial instruments - risk management
The Group's principal financial instruments are:
· Trade receivables
· Cash at bank
· Loans and right of use leases
· Trade and other payables
The Group is exposed through its operations to the following financial risks:
· Cash flow interest rate risk
· Foreign currency risk
· Liquidity risk
· Credit risk
· Other market price risk
Policy for managing these risks is set by the Board following recommendations
from the Co-founder/Director. Certain risks are managed centrally, while
others are managed locally following guidelines communicated from the
centre. The policy for each of the above risks is described in more detail
below.
Interest rate risk
Due to the relatively low level of borrowings, the Directors do not have an
explicit policy for managing cash flow interest rate risk. All current and
recent borrowing (other than in respect of leasing) has been on variable
terms, with interest rates of between 3% and 4% above base rate, and the Group
has cash reserves sufficient to repay all borrowings promptly in the event of
a significant increase in market interest rates. All cash is managed
centrally and subsidiary operations are not permitted to arrange borrowing
independently.
The Group's investments may attract interest at fixed or variable rates, or
none at all. The market price of such investments may be impacted positively
or negatively by changes in underlying interest rates. It is not considered
relevant to provide a sensitivity analysis on the effect of changing interest
rates since, at the year end, none of the Group's investments were interest
bearing.
Foreign currency risk
Foreign exchange risk arises when individual Group operations enter into
transactions denominated in a currency other than their functional currency
(sterling). The Directors monitor and review their foreign currency exposure
on a regular basis. The Directors are of the opinion that the exposure to
foreign currency risk is not significant.
Liquidity risk
The Group maintains significant cash reserves and therefore does not require
facilities with financial institutions to provide working capital. Surplus
cash is managed centrally to maximise the returns on deposits.
Credit risk
The Group is mainly exposed to credit risk from credit sales. The Group's
policy for managing and exposure to credit risk is disclosed in note 13.
Other market price risk
The Group has generated a significant amount of cash and this has been held
partly as cash deposits and partly invested pursuant to the Group's investing
strategy.
Capital management
The Group's main objective when managing capital is to protect returns to
shareholders by ensuring the Group will trade profitably in the foreseeable
future. The Group also aims to maximise its capital structure of debt and
equity so as to minimise its cost of capital.
The Group manages its capital with regard to the risks inherent in the
business and the sector within which it operates by monitoring its gearing
ratio on a regular basis.
The Group considers its capital to include share capital, share premium, fair
value reserve and retained earnings. Net debt includes short and long-term
borrowings (including lease obligations) and shares classed as financial
liabilities, net of cash and cash equivalents. The Group has not made any
changes to its capital management during the year. The Group is not subject
to any externally imposed capital requirements.
An analysis of what the Group manages as capital is outlined below:
2023 2022
£'000 £'000
Total debt (1,702) (2,900)
Cash and cash equivalents 22,139 19,136
Net funds 20,437 16,236
Total equity (capital) 37,497 35,752
Net funds to capital ratio 54.5% 45.4%
Reconciliation of movement in net cash
Net cash at 1 January 2023 Repayment of borrowings Other non- cash items Net cash at 31
Cash flow December 2023
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 19,136 3,003 - - 22,139
Borrowings (2,900) - 1,506 (308) (1,702)
Total financial liabilities 16,236 3,003 1,506 (308) 20,437
Non-cash items of £308,000 relate to the increase in lease finance arising on
the purchase of property, plant and equipment.
19 Financial assets and liabilities - numerical disclosures
Analysis of financial assets by category:
31 December 2023 Amortised cost FVOCI Total
£'000 £'000 £'000
Financial assets
Trade and other receivables 7,843 - 7,843
Cash and cash equivalents 22,139 - 22,139
Available for sale investments - 1,599 1,599
Total assets 29,982 1,599 31,581
Financial liabilities
Non-current borrowings 1,071 - 1,071
Current borrowings 631 - 631
Trade and other payables 4,955 - 4,955
Total liabilities 6,657 - 6,657
31 December 2022 Amortised cost FVOCI Total
£'000 £'000 £'000
Financial assets
Trade and other receivables 9,315 - 9,315
Cash and cash equivalents 19,136 - 19,136
Assets held for sale - 2,103 2,103
Available for sale investments - 1,649 1,649
Total assets 28,451 3,752 32,203
Financial liabilities
Non-current borrowings 1,270 - 1,270
Current borrowings 1,630 - 1,630
Trade and other payables 4,807 - 4,807
Total liabilities 7,707 - 7,707
Fair values
Assets held at fair value fall into three categories, depending on the
valuation techniques used, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e., as prices) or
indirectly (i.e., derived from prices);
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Directors consider the carrying values of all financial assets and
liabilities to be a reasonable approximation of their fair values.
All other assets, and all liabilities are carried at amortised cost.
Maturity of financial liabilities
The maturity of borrowings (including right of use leases) carried at
amortised cost is as follows:
2023 2022
£'000 £'000
Less than six months 403 1,393
Six months to one year 234 237
One to two years 294 418
Two to five years 601 543
More than five years 170 309
1,702 2,900
The above borrowings are analysed on the balance sheet as follows:
2023 2022
£'000 £'000
Loans and other borrowings (current) 269 1,258
Leases (current) 368 372
Loans and other borrowings (non-current) 698 818
Leases (non-current) 367 452
1,702 2,900
Borrowings are secured on certain assets of the Group, and interest was
charged at rates of between 2.5% and 3.2% during the year. Including
interest that is expected to be paid, the maturity of borrowings (including
leases) is as follows:
2023 2022
£'000 £'000
Less than six months 447 1,435
Six months to one year 272 276
One to two years 345 486
Two to five years 677 624
More than five years 174 323
1,915 3,144
The above borrowings including interest that is expected to be paid are
analysed as follows:
2023 2022
£'000 £'000
Loans and other borrowings (current) 300 1,294
Leases (current) 419 418
Loans and other borrowings (non-current) 770 919
Leases (non-current) 426 513
1,915 3,144
The maturity of other financial liabilities, excluding loans and borrowings,
carried at amortised cost is as follows:
2023 2022
£'000 £'000
Less than six months 3,356 2,849
20 Deferred tax
Movements in deferred tax provisions are outlined below:
Accelerated tax depreciation Other
timing differences Re-valuations
Losses Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2023 (662) 4 (824) 819 (663)
Recognised in P&L during the year (83) 11 - (701) (773)
Derecognised on discontinued operations (17) 18 297 (107) 191
At 31 December 2023 (762) 33 (527) 11 (1,245)
Previous year movements were as follows:
Accelerated tax depreciation Other
timing differences Re-valuations
Losses Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2022 (678) 17 (527) 650 (538)
Recognised in P&L during the year 16 (13) - 169 172
Recognised in equity during the year - - (297) - (297)
At 31 December 2022 (662) 4 (824) 819 (663)
In addition, there are unrecognised net deferred tax assets as follows:
2023 2022
£'000 £'000
Tax losses carried forward 819 832
Excess of depreciation over capital allowances - -
Short term temporary differences - -
Net unrecognised deferred tax asset 819 832
Deferred tax assets and liabilities have been calculated using the rate of
corporation tax expected to apply when the relevant temporary differences
reverse of 25% (2022 - 25%). Deferred tax assets and liabilities are only
offset where there is a legally enforceable right of offset and there is an
intention to settle the balances net.
The unrecognised elements of the deferred tax assets have not been recognised
because there is insufficient evidence that they will be recovered because
such losses are within entities that are not expected to yield future profits.
The losses cannot be used to offset against profits in other entities as the
losses arose prior to 1 April 2017 and can therefore only be offset against
any profits made by the entity that incurred the loss.
21 Share capital
Authorised
2023 2023 2022 2022
Number £'000 Number £'000
Ordinary shares of £0.0000001 each 100,100,000 - 100,100,000 -
A shares of £0.49999995 each 50,000 25 50,000 25
B shares of £0.49999995 each 50,000 25 50,000 25
Deferred shares of £0.00000001 each 4,999,999,500,000 50 4,999,999,500,000 50
100 100
Issued and fully paid
2023 2023 2022 2022
Number £'000 Number £'000
Ordinary shares of £0.0000001 each 6,207,074 - 6,207,074 -
Deferred shares of £0.00000001 each 4,999,994,534,697 50 4,999,994,534,697 50
50 50
Treasury shares
During the year the Company acquired 36,500 (2022: 204,000) of its own
Ordinary shares for total consideration of £427,000 (2022: £2,090,000). This
brought the total number of Ordinary shares held in treasury to 3,879,152
(2022: 3,842,652) with an aggregate nominal value of less than £1. At the
year end the total number of Ordinary shares outstanding (excluding treasury
shares) was 2,327,922 (2022: 2,364,422).
Rights attaching to deferred shares & A and B shares
The Deferred shares carry no rights to participate in the profits of the
Company and carry no voting rights. After the distribution of the first £10
billion in assets in the event of a return of capital (other than a purchase
by the Company of its own shares), the Deferred shares are entitled to an
amount equal to their nominal value.
The Company has no A and B shares in issue. These shares have conversion
rights allowing them to convert into Ordinary shares on a pre-determined
formula. All A and B shares previously in issue have been converted into
Ordinary shares.
22
Reserves
All movements on reserves are disclosed in the consolidated statement of
changes in equity.
The following describes the nature and purpose of each reserve within owners'
equity:
Reserve Nature and purpose
Share premium Amount subscribed for share capital in excess of nominal value
Revaluation reserves Cumulative net unrealised gains and short-term losses arising on the
revaluation of the Group's available for sale investments and freehold
property
Retained earnings Cumulative net gains and losses recognised in the statement of comprehensive
income, other than those included in revaluation reserves.
23 Related party transactions
Details of amounts payable to Directors, and parties related to the Directors,
are disclosed in note 4. There were no other transactions with key members
of management other than in respect of out-of-pocket expenses properly
incurred, and no other transactions with related parties.
24 Contingent liabilities
The Group had no material contingent liabilities as at the date of these
financial statements.
25 Non-controlling interests
The non-controlling interests of £2,992,000 (2022: £2,877,000 ) relate to
the net assets attributable to the shares not held by the Group at 31 December
2023 in the following subsidiaries:
2023 2022
Name of subsidiary £'000 £'000
NMT Group Limited 68 67
Shire Foods Limited 2,924 2,810
2,992 2,877
Summarised financial information (before intra-group eliminations) in respect
of those subsidiaries with material non-controlling interests is presented
below:
Shire Foods Limited
2023 2022
£'000 £'000
Non-current assets 7,905 8,137
Current assets 14,152 13,939
Non-current liabilities (1,071) (1,270)
Current liabilities (5,059) (5,532)
Provisions (1,285) (1,202)
Net assets (equity) 14,642 14,072
Group 11,718 11,262
Non-controlling interests 2,924 2,810
14,642 14,072
Revenue 42,965 38,175
Profit for the year after tax (stated after intra-group management
and interest charges) 3,071 2,382
Profit for the year attributable to non-controlling interests 614 475
-END-
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