Last checked at 13 May 2010 07:00
| Press Release | 13 May 2010 |
Volvere plc
("Volvere" or the "Group")
Final Results for the year ended 31 December 2009
Volvere plc (AIM:VLE) the turnaround investment company, announces its final results for the year ended 31 December 2009.
Highlights
| ·; | Cash and marketable securities: £20.4 million (2008: £12.5 million) |
| ·; | Group net assets: £18.2 million (2008: £11.6 million), stated after deducting a £1.1m non-cash liability (2008: nil) in respect of share capital classified as debt |
| ·; | Group revenue from continuing businesses: £10.9 million (2008: £3.0 million) |
| ·; | Group operating profit for the year from continuing businesses: £0.6 million (2008: loss £0.6 million) |
| ·; | Investment revenues and other gains on investments £0.9m (2008: nil) |
| ·; | Total basic and diluted earnings per share 113.57p (2008: 5.69p) |
| ·; | Operating businesses trading satisfactorily in a challenging economic environment |
| ·; | Environment for turnaround investing continues to generate potential opportunities |
Chairman's statement
It is with pleasure that I report the continuing strength of the Group in what continue to be challenging economic times. 2009 saw excellent trading performances from our principal businesses, the successful exit from our certification activities and an excellent return on our investments.
The Group's net assets at the year end were £18.3 million (2008: £11.6 million). This is essentially unchanged from the level at the time of our interim statement, before adjusting for the non-cash cost of the management incentive shares. We entered 2010 with cash and investments totalling £20.4 million (2008: £12.5 million). We continue to examine a wide range of potential opportunities - and I am confident that we will make further value-enhancing acquisitions.
Lord Kalms
Chairman12 May 2010
For further information:
| Volvere plc |
|
| Jonathan Lander, CEO | Tel: +44 (0) 20 7634 9707 |
|
| www.volvere.co.uk |
| Arbuthnot Securities Limited |
|
| Ed Gay, Corporate Finance | Tel: +44 (0) 20 7012 2000 |
| edwardgay@arbuthnot.co.uk | www.arbuthnot.co.uk |
Media enquiries:
| Abchurch |
|
| Henry Harrison-Topham / Mark Dixon | Tel: +44 (0) 20 7398 7702 |
| henry.ht@abchurch-group.com | www.abchurch-group.com |
Chief Executive's statement
Introduction
I am pleased to report that 2009 was another successful year for the Group. All our principal businesses and investments performed well and our balance sheet remains strong.
Operating review
During the year the Group operated in three segments: certification services, security solutions and online marketing and data services. The certification services segment was discontinued following the sale of Sira in July 2009. The financial performance of each segment is summarised in the financial review and detailed in note 5 to the preliminary announcement.
Online marketing and data services
Our online marketing and data services business, IPT, traded strongly in 2009 with revenue and profit before interest, tax and amortisation of £10.4 million and £1.7 million respectively (3 months to 31 December 2008: £2.7 million and £0.4 million).
The Group has now recouped its original investment cost of £1.3 million plus a further £0.65 million in dividends received from IPT since it was acquired in September 2008. As a result of the achievement of certain performance targets, our stake in IPT will reduce to approximately 45% following the expected exercise of share options by the management team.
Despite the strong performance for the year, this sector remains challenging. During the second half of 2009 the effects of the recession were evident, resulting in both price pressure and increased customer churn. Market conditions in 2010 thus far are less favourable than those in the second half of 2009, although profitability remains significant. We remain committed to this segment and believe that, as marketing spend increases in line with an improved economy, we will see attractive growth.
Security solutions
Sira Defence & Security delivered a similar performance to the prior year. During 2009 we continued to increase the awareness and adoption of SiraView, the multi-format digital CCTV viewer targeted at the police and judicial services. We also launched SiraView+, which includes audio functionality and we have received a number of orders for bespoke modifications to our core software. Our surveillance solutions business has undertaken successful projects during the period and received follow-on work in 2010 as a result.
Certification services - discontinued
We acquired our Sira certification businesses for £1.4 million in late 2005/early 2006 and in July 2009 we reported their disposal for a minimum cash consideration of £8.1 million. In the 6 months prior to its disposal, Sira Certification performed strongly, with an unaudited profit before tax and amortisation of £0.6 million (2008 full year: £0.9 million).
Investments
In accordance with our investment strategy of investing in distressed securities, as well as in distressed companies, we invested in certain non-investment grade bank debt and preference shares during 2009. We also invested in other investment grade corporate bond and asset-backed securities funds of mainly UK and US issuers. During the year we realised gains of approximately £0.5 million and earned income of £0.3 million from these investments. At the year end our investments at cost were approximately £11.1 million, and had a value of approximately £11.6 million. We continue to manage our investment portfolio actively.
Acquisitions and future strategy
We have seen increased deal flow in 2010 and whilst the quality of deal flow is, on the whole, good, we remain cautious on economic recovery, particularly in the UK. We remain committed to enhancing shareholder value using our strong balance sheet to capitalise on opportunities as they arise.
Jonathan Lander
Chief Executive
12 May 2010
Financial review
This financial review covers the Group's performance for the year ended 31 December 2009. It should be read in conjunction with the Chairman's and Chief Executive's statements.
Accounting policies and basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The Group's accounting policies are set out in note 1 to the preliminary announcement.
A and B Shares
The Company has in issue convertible shares (A Shares and B Shares, the "Incentive Shares"), which at the year end were capable of being converted into 424,739 Ordinary shares (as set out more fully in note 23 to the preliminary announcement). The Incentive Shares can only be converted into Ordinary shares and have no cash alternative. However, because the Incentive Shares convert into a variable (rather than fixed) number of Ordinary shares, they have been classified as liabilities rather than equity in accordance with International Accounting Standard 32 ("IAS 32"). This has had the effect of reducing net assets by approximately £1.1 million. The A and B shares were not classified as liabilities in previous years as their fair value at that time was insignificant. There is no requirement to pay cash upon exercise of the Incentive Shares and, if and when the Incentive Shares are converted (whether in whole or in part) into Ordinary shares, there will be, ceteris paribus, a reduction in current liabilities.
Disposal
On 3 July 2009 the Group disposed of Sira Certification, which represented the Group's Certification segment. The consideration was an initial cash payment of £8.1 million (following agreement of the net assets subject to the disposal), with up to an additional £0.6 million dependent upon the performance of Sira Certification for the years ended 31 December 2009 and 2010. The Group has assumed, at this stage, that the fair value of the total consideration receivable will be the initial consideration of £8.1 million. When the Group has better visibility of the relevant periods' results, the fair value will be reassessed.
For the period until disposal, the Certification segment performed strongly, with revenue and pre-tax profit (before amortisation and Group management charges) of £2.63 million and £0.60 million respectively (12 months to 31 December 2008: £4.25 million and £0.87 million) respectively. The Certification activities had been acquired in September 2005 and March 2006 for approximately £1.4 million and had subsequently repaid their initial consideration to the Group from operating cash flow. After costs (including performance incentives relating to the disposal) the gain on sale was approximately £6.4 million. Detailed information about the disposal is included in note 6 to the preliminary announcement.
Following the disposal, the Group undertook a review of its central costs to ensure that the central services team is appropriately sized for the remaining operations. This has resulted in a reduction in central administration staff.
Revenue and operating performance
Detailed information about the Group's segments is set out in note 5 to this preliminary announcement and should be read in conjunction with this financial review. As noted above, the Group disposed of its certification services businesses and these have been classified as discontinued. IPT, of which the Group owns 50%, achieved certain financial milestones and this has resulted in the vesting of options in IPT that would, upon exercise, dilute the Group's shareholding to approximately 45%. The Group has continued to consolidate IPT as a subsidiary in view of the level of control exercisable by it.
Revenue from continuing operations was £10.9 million for the year (2008: £3.0 million). The growth arose principally due to the inclusion of IPT for a full twelve months (it was acquired in September 2008 and the results for that year reflected only three months trading). Revenue by segment is shown in note 5 to the preliminary announcement. The operating profit (before costs of share-based payment expenses) from continuing businesses was £0.67 million (2008: loss £0.63 million), which again reflected the full-year contribution from IPT.
Investment revenues, other gains and losses and finance income and expense
The Group adopted a proactive treasury management strategy in response to the reduced interest rates prevailing during the year. This resulted in investment revenues, other gains and losses (which arose from disposals made and revaluation of underlying investments to market value) and net interest receivable totalling £0.97 million (2008: £0.46 million).
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 services that are dependent on the continued employment of the Group's employees and availability of suitable profitable workload. In addition, the online marketing and data services segment is particularly heavily dependent on IT systems and infrastructure, the unavailability of which could impact the Group materially.
More information on the Group's financial risks are disclosed in notes 20 and 21 to the preliminary announcement.
Key performance indicators
The Group uses key performance indicators suitable for the nature and size of the Group's businesses. These are primarily monthly reports of profitability, levels of working capital and workload. In the online marketing and data services segment, the Group monitors traffic statistics both in terms of yield and cost as well as overall profitability. Order intake and chargeable staff utilisation was/is monitored weekly and reported monthly in respect of the certification and security solutions segments respectively. The segmental analysis in note 5 to this preliminary announcement summarises the performance of each segment.
Corporate governance
The Board gives careful consideration to the principles of corporate governance as set out in the Combined Code on Corporate Governance issued by the Financial Reporting Council in 2008 (the "Revised Combined Code"). However, the Company is relatively small and it is the opinion of the Directors that not all the provisions of the Revised Combined Code are relevant or desirable for a company of Volvere's size.
The Company has established an Audit Committee and a Remuneration Committee with formal terms of reference and which comprise the Chairman and Non-Executive Directors. The Board meets regularly and has ultimate responsibility for the management of the Company.
Earnings per share
The basic and diluted earnings per ordinary share were 113.57p (2008: basic and diluted 5.69p). During the year the Company continued the operation of a share option scheme in which certain staff are entitled to participate, subject to the scheme's terms and conditions.
Cash management
Cash balances at the year end totalled £8.8 million (2008: £3.0 million). The Group's cash includes (by virtue of its full consolidation) the amount of £1.1 million (2008: £1.5 million) held in its 50% owned subsidiary, Interactive Prospect Targeting Limited.
As part of the Group's active treasury management strategy, a total of £11.1 million was invested at the year end in various bank securities and corporate bond funds; the year end valuation including accrued interest was £11.6 million. In 2008 £9.4 million had been invested in UK Government bonds, which had a 2008 year end valuation of £9.5 million.
Hedging
It is not the Group's policy to enter into derivative instruments to hedge interest rate risk. During 2009 the Group invested $4 million in an investment grade debt fund and has entered into a foreign exchange contract in respect of the forward sale of $4 million at a rate of $1.5783/£1 with a sale date of 12 October 2010.
Dividends
In accordance with the policy set out in the prospectus on admission to AIM, the Board does not currently intend to recommend payment of a dividend and prefers to retain profits as they arise for investment in future opportunities. During the year, however, Interactive Prospect Targeting Limited paid dividends totalling £1.7 million, of which £0.85 million was paid to third party (i.e. non-Group) shareholders.
Nick Lander
Chief Financial & Operating Officer
12 May 2010
Consolidated income statement for the year ended 31 December 2009
|
| Note |
|
|
2008 |
|
|
|
| 2009 | Restated |
|
|
|
| £'000 | £'000 |
| Continuing operations |
|
|
|
|
| Revenue | 5 |
| 10,890 | 3,045 |
| Cost of sales |
|
| (3,761) | (978) |
|
|
|
|
|
|
| Gross profit |
|
| 7,129 | 2,067 |
|
|
|
|
|
|
| Administrative expenses |
|
|
|
|
| Before goodwill and share based payments charge |
|
| (6,526) | (2,693) |
| Realisation of negative goodwill |
|
| 67 | - |
| Costs of share-based payments |
|
| (90) | (9) |
| Administrative expenses |
|
| (6,549) | (2,702) |
|
|
|
|
|
|
| Operating profit/(loss) | 2 |
| 580 | (635) |
|
|
|
|
|
|
| Investment revenues | 7 |
| 299 | 1 |
| Other gains and losses | 7 |
| 591 | 8 |
| Finance expense | 7 |
| (1,030) | (9) |
| Finance income | 7 |
| 85 | 457 |
|
|
|
|
|
|
| Profit/(loss) before tax |
|
| 525 | (178) |
| Income tax | 8 |
| (128) | (4) |
|
|
|
|
|
|
| Profit/(loss) for the year from continuing operations |
|
| 397 | (182) |
|
|
|
|
|
|
| Discontinued operations |
|
|
|
|
| Profit for the year from discontinued operations | 6 |
| 6,862 | 691 |
|
|
|
|
|
|
| Profit for the year |
|
| 7,259 | 509 |
|
|
|
|
|
|
| Attributable to: |
|
|
|
|
| - Equity holders of the parent | 24 |
| 6,459 | 323 |
| - Minority interests | 30 |
| 800 | 186 |
|
|
|
|
|
|
|
|
|
| 7,259 | 509 |
|
|
|
|
|
|
| Earnings/(loss) per share | 10 |
|
|
|
|
|
|
|
|
|
| Continuing operations |
|
|
|
|
| - Basic |
|
| (7.08)p | (6.48)p |
| - Diluted |
|
| (7.08)p | (6.48)p |
|
|
|
|
|
|
| Discontinued operations |
|
|
|
|
| - Basic |
|
| 120.65p | 12.17p |
| - Diluted |
|
| 120.65p | 12.17p |
|
|
|
|
|
|
| Total |
|
|
|
|
| - Basic |
|
| 113.57p | 5.69p |
| - Diluted |
|
| 113.57p | 5.69p |
|
|
|
|
|
|
Consolidated statement of other comprehensive income for the year ended 31 December 2009
|
| Note |
| 2009 |
2008 |
|
|
|
| £'000 | £'000 |
|
|
|
|
|
|
| Profit for the year |
|
| 7,259 | 509 |
|
|
|
|
|
|
| Other comprehensive income |
|
|
|
|
| Fair value gains and losses on available for sale financial assets |
|
|
|
|
| - current period gains |
|
| 351 | 97 |
| - reclassified to profit |
|
| (97) | - |
|
|
|
|
|
|
| Other comprehensive income |
|
| 254 | 97 |
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income for the year |
|
| 7,513 | 606 |
|
|
|
|
|
|
| Attributable to: |
|
|
|
|
| - Equity holders of the parent |
|
| 6,713 | 420 |
| - Minority interests |
|
| 800 | 186 |
|
|
|
|
|
|
|
|
|
| 7,513 | 606 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of changes in equity for the year ended 31 December 2009
|
| Share capital £'000 | Share premium £'000 |
Revaluation reserve £'000 | Share option reserve £'000 | Retained earnings £'000 | Total £'000 | Minority interest £'000 | Total £'000 |
| Changes in equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revaluation of available for sale investments and total income recognised directly in equity |
- |
- |
97 |
- |
- | 97 |
- |
97 |
| Profit for the year | - | - | - | - | 323 | 323 | 186 | 509 |
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income for the year | - | - | 97 | - | 323 | 420 | 186 | 606 |
| Balance at 1 January 2008 | 50 | 3,586 | - | 15 | 6,887 | 10,538 | 283 | 10,821 |
| Equity share options issued | - | - | - | 1 | 8 | 9 | - | 9 |
| Minority interest arising on acquisition | - | - | - | - | - | - | 201 | 201 |
|
|
|
|
|
|
|
|
|
|
| Balance at 31 December 2008 | 50 | 3,586 | 97 | 16 | 7,218 | 10,967 | 670 | 11,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revaluation of available for sale investments and total income recognised directly in equity | - | - | 254 | - | - | 254 | - | 254 |
| Profit for the year | - | - | - | - | 6,459 | 6,459 | 800 | 7,259 |
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income for the year | - | - | 254 | - | 6,459 | 6,713 | 800 | 7,513 |
| Balance at 1 January 2009 | 50 | 3,586 | 97 | 16 | 7,218 | 10,967 | 670 | 11,637 |
| Equity shares issued | - | 49 | - | - | - | 49 | - | 49 |
| Shares reclassified as financial liabilities | (50) | - | - | - | - | (50) | - | (50) |
| Equity share options cancelled | - | - | - | (16) | 16 | - | - | - |
| Share based payments charge | - | - | - | 90 | - | 90 | - | 90 |
| Reduction in minority share | - | - | - | - | - | - | (157) | (157) |
| Dividends paid by subsidiaries | - | - | - | - | - | - | (850) | (850) |
|
|
|
|
|
|
|
|
|
|
| Balance at 31 December 2009 | - | 3,635 | 351 | 90 | 13,693 | 17,769 | 463 | 18,232 |
|
|
|
|
|
|
|
|
|
|
Consolidated statement of financial position as at 31 December 2009
|
|
|
| 2009 | 2008 |
|
| Note |
| £'000 | £'000 |
| Assets |
|
|
|
|
| Non-current assets |
|
|
|
|
| Goodwill | 12 |
| 305 | 532 |
| Other intangible assets | 13 |
| - | 476 |
| Property, plant & equipment | 14 |
| 331 | 495 |
| Deferred tax asset | 22 |
| 52 | 88 |
|
|
|
|
|
|
| Total non-current assets |
|
| 688 | 1,591 |
|
|
|
|
|
|
| Current assets |
|
|
|
|
| Trade and other receivables | 16 |
| 1,566 | 3,264 |
| Cash and cash equivalents | 31 |
| 8,837 | 2,999 |
| Available for sale investments | 15 |
| 11,601 | 9,497 |
|
|
|
|
|
|
| Total current assets |
|
| 22,004 | 15,760 |
|
|
|
|
|
|
| Total assets |
|
| 22,692 | 17,351 |
|
|
|
|
|
|
| Liabilities
|
|
|
|
|
| Current liabilities |
|
|
|
|
| Trade and other payables | 17 |
| (3,204) | (4,758) |
| Taxation |
|
| (183) | (21) |
| Other financial liabilities | 18 |
| (1,073) | (720) |
|
|
|
|
|
|
| Total current liabilities |
|
| (4,460) | (5,499) |
|
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Financial liabilities | 19 |
| - | (215) |
|
|
|
|
|
|
| Total non-current liabilities |
|
| - | (215) |
|
|
|
|
|
|
| Total liabilities |
|
| (4,460) | (5,714) |
|
|
|
|
|
|
| TOTAL NET ASSETS |
|
| 18,232 | 11,637 |
|
|
|
|
|
|
| Equity |
|
|
|
|
| Share capital | 23 |
| - | 50 |
| Share premium account | 24 |
| 3,635 | 3,586 |
| Revaluation reserve | 24 |
| 351 | 97 |
| Share option reserve | 24 |
| 90 | 16 |
| Retained earnings | 24 |
| 13,693 | 7,218 |
|
|
|
|
|
|
| Capital and reserves attributable to equity holders of the Company |
|
| 17,769 | 10,967 |
| Minority interests | 30 |
| 463 | 670 |
|
|
|
|
|
|
| TOTAL EQUITY | 25 |
| 18,232 | 11,637 |
|
|
|
|
|
|
Consolidated statement of cash flows for the year ended 31 December 2009
|
|
| 2009 | 2009 | 2008 | 2008 |
|
| Note | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
| Profit for the year |
|
| 7,259 |
| 509 |
| Adjustments for: |
|
|
|
|
|
| Investment revenues |
| (299) |
| (1) |
|
| Other gains and losses |
| (591) |
| (8) |
|
| Finance expense |
| 1,030 |
| 35 |
|
| Finance income |
| (85) |
| (475) |
|
| Gain arising on disposal of discontinued operations |
| (6,379) |
| - |
|
| Income tax expense/(credit) |
| 128 |
| (67) |
|
| Depreciation (continuing operations) |
| 250 |
| 68 |
|
| Realisation of negative goodwill (continuing operations) |
| (67) |
| - |
|
| Depreciation (discontinued operations) |
| 41 |
| 69 |
|
| Amortisation (discontinued operations) |
| 120 |
| 240 |
|
| Foreign exchange revaluation gain |
| (23) |
| - |
|
| Share based payment expenses |
| 90 |
| 9 |
|
|
|
|
|
|
|
|
|
|
|
| (5,785) |
| (130) |
|
|
|
|
|
|
|
| Operating cash flows before movements in working capital |
|
| 1,474 |
| 379 |
|
|
|
|
|
|
|
| Decrease in trade and other receivables |
|
| 745 |
| 307 |
| Increase in trade and other payables |
|
| 260 |
| 343 |
|
|
|
|
|
|
|
| Cash generated by operations |
|
| 2,479 |
| 1,029 |
|
|
|
|
|
|
|
| Interest paid |
|
| (11) |
| (32) |
|
|
|
|
|
|
|
| Net cash from operating activities |
|
| 2,468 |
| 997 |
|
|
|
|
|
|
|
| Investing activities |
|
|
|
|
|
| Acquisition of subsidiary undertaking including associated costs, net of cash acquired |
| - |
| (1,373) |
|
| Purchase of additional shares in subsidiary |
| (82) |
| (2) |
|
| Amounts received in respect of prior acquisition |
| 85 |
| - |
|
| Disposal of subsidiary, net of costs of disposal and cash disposed | 6 | 6,252 |
| - |
|
| Shares issued to minority interest |
| - |
| 200 |
|
| Purchase of available for sale investments |
| (18,902) |
| (9,400) |
|
| Income from available for sale investments |
| 106 |
| 1 |
|
| Disposal of available for sale investments |
| 17,831 |
| 57 |
|
| Proceeds on disposal of property, plant and equipment |
| 5 |
| - |
|
| Purchases of property, plant and equipment |
| (306) |
| (175) |
|
| Interest received |
| 86 |
| 476 |
|
|
|
|
|
|
|
|
| Net cash generated from/(used in) investing activities |
|
| 5,075 |
| (10,216) |
|
|
|
|
|
|
|
| Financing activities |
|
|
|
|
|
| Issue of share capital |
| 48 |
| - |
|
| Loan advances |
| - |
| 600 |
|
| Repayment of borrowings |
| (903) |
| (120) |
|
| Dividend paid |
| (850) |
| - |
|
|
|
|
|
|
|
|
| Net cash (used in)/ generated from financing activities |
|
| (1,705) |
| 480 |
|
|
|
|
|
|
|
| Net increase/(decrease) in cash and cash equivalents | 31 |
| 5,838 |
| (8,739) |
| Cash and cash equivalents at beginning of year | 31 |
| 2,999 |
| 11,738 |
|
|
|
|
|
|
|
| Cash and cash equivalents at end of year | 31 |
| 8,837 |
| 2,999 |
|
|
|
|
|
|
|
Notes forming part of the preliminary announcement for the year ended 31 December 2009
The financial information set out in this announcement does not constitute statutory accounts as defined in the Companies Act 2006.
The financial information for the year ended 31 December 2008 has been extracted from the consolidated financial statements to that date which received an unmodified auditor's report and have been delivered to the Registrar of Companies. The financial information for the year ended 31 December 2009 has been extracted from the consolidated financial statements to that date which have received an unmodified auditor's report but have not yet been delivered to the Registrar of Companies.
Copies of the financial statements will be sent to shareholders shortly and will be available from the Company's registered office, York House, 74-82 Queen Victoria Street, London, EC4N 4SJ and website at www.volvere.co.uk.
1 Accounting policies
Basis of accounting
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC interpretations) as adopted by the European Union ("adopted IFRS") and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under adopted IFRS.
During the year, the Group has adopted the amendments to IAS 1 'Presentation of Financial Statements' which has resulted in some minor changes to the primary statements.
IAS 1 "Presentation of Financial Statements" (Revised 2007) requires presentation of an additional comparative statement of financial position as a result of the retrospective adoption of this standard. The Directors consider this to be unnecessary for the year ended 31 December 2009 on the basis that the 31 December 2007 statement of financial position remains the same as that previously published.
The following principal accounting policies have been applied consistently, in all material respects, in the preparation of these 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.
On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to the income statement in the period of acquisition. The interest of minority shareholders is stated at the minority's proportion of the fair values of the assets and liabilities recognised. Subsequently, any losses applicable to the minority interest in excess of the minority interest are allocated against the interests of the parent.
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.
Goodwill
Goodwill arising on consolidation represents the excess of the costs of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition.
Goodwill is recognised as an asset and reviewed for impairment at least annually. The carrying value is assessed for impairment based on value in use. Any impairment is recognised immediately in the income statement and is not subsequently reversed.
On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.
Sales of goods are recognised when goods are delivered and title has passed.
Revenue earned on time and materials contracts is recognised as costs are incurred. Income from fixed price contracts is recognised in proportion to the stage of completion of the relevant contract.
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 classified 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.
Adoption of IFRS 8 'Operating Segments'
The Group has adopted IFRS 8 'Operating Segments' during the year. The standard supersedes IAS 14 'Segment Reporting' and is effective for the year ended 31 December 2009. IFRS 8 provides 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 by the board of Directors. IAS 14 required segmental information to be reported for business segments and geographical segments based on assets and operations that provided products or services subject to different risks and returns. The adoption of IFRS 8 has not had any impact on the performance or position of the Group.
Operating segments
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 in the UK, Europe and the USA. The Group disposed of its certification businesses during the year. Financial information (including revenue and operating profits) 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 the allocation of goodwill, amortisation, investments revenues, other gains and losses, finance expense and income and tax. 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.
Leasing
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and the reduction of lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
Foreign currencies
Transactions in currencies other than pounds 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 defined contribution retirement benefit schemes are charged as an expense as they fall due. 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. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
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 plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. 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:
Improvements to short-term leasehold property: Over the life of the lease
Plant and machinery: 20%-33%
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 cost, including transaction costs. Available for sale current asset investments are subsequently carried at fair value with adjustments recognised in reserves.
Investment income
Income from investments is included in the income statement at the point the Group becomes legally entitled to it.
Impairment of tangible and intangible assets excluding goodwill
At each reporting date the Group reviews the carrying amounts of its tangible 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 the 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 (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 (cash-generating unit) is increased to the revised estimate of its recoverable amount, but 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 (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.
Intangible assets - customer relationships
Customer relationship intangible assets acquired in a business combination are initially measured at fair value, based on discounted cash flows and amortised over their estimated useful lives of 5 years on a straight line basis. Amortisation is included in administrative expenses.
Share-based payments
The Group has applied the requirements of IFRS 2, Share-based Payments. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2005.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of options that will eventually vest.
Fair value is measured by use of a Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
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
The Group classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:
Fair value through profit or loss: This category comprises only in-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. The Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.
Loans and receivables: These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method less any provision for impairment.
Held-to-maturity investments: These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's management has the positive intention and ability to hold to maturity. These assets are measured at amortised cost, using the effective interest rate method less any impairment, with revenue recognised on an effective yield basis.
Available-for-sale: Non-derivative financial assets not included in the above categories are classified as available-for-sale and comprise the Group's investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. They are carried at fair value with changes in fair value recognised directly in equity. Fair value is determined by reference to independent valuation statements provided by the investment manager or broker (as the case may be) through whom such investments are made. Where the underlying investments are exchange-traded, the mid price of the investment is used.
Where a decline in the fair value of an available-for-sale financial asset constitutes objective evidence of impairment, the amount of the loss is removed from equity and recognised in the income statement.
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:
Fair value through profit or loss: 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 the following items:
·; 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.
The Group has in issue A and B shares which are convertible into ordinary shares at the option of the shareholder based upon a formula contained in the Company's Articles of Association. The A and B shares do not have a cash alternative. However, because the shares convert into a variable number of ordinary shares, dependent inter alia on the share price of the ordinary shares in issue, the terms of IAS 32 require them to be classified as debt. Accordingly, the fair value has been included under current liabilities. This reclassification has been processed in the current period. It was not processed in previous periods (nor have previous periods financial statements been restated) because the fair value of the A and B shares at 31 December 2007 and 31 December 2008 was insignificant.
Critical accounting 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 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. The critical judgements and key sources of estimation that have a significant impact on the carrying value of assets and liabilities are discussed below:
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.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and VAT. Sales of goods are recognised when goods are delivered and title has passed. Revenue is recognised when the significant risks and rewards associated with ownership of the goods have been transferred. Sales of services are recognised with reference to the stage of completion.
Due to the nature of certain of the Group's businesses the recoverability of receivables can be subject to some uncertainty until client acceptance of services delivered has been determined. Whilst the Group has a thorough process for reviewing the requirement for receivables provisions, this area is inherently subjective.
New standards and interpretations
During the year, the Group has adopted the amendments to IAS 1 'Presentation of Financial Statements' and has adopted IFRS 8 "Operating Segments", the effect of which has been explained above.
A number of new standards and amendments to standards are not yet effective for the year ended 31 December 2009, and have not been applied in preparing these consolidated statements. The most significant of these are listed below:
·; IFRS 3 "Business Combinations" (Revised 2008) effective for periods commencing 1 July 2009
·; Amendments to IFRS 2 "Share Based Payments" effective for periods commencing 1 January 2010
·; Amendment to IFRS 5 "Non-current assets held for sale" effective for periods commencing 1 July 2009
·; IAS 27 "Consolidated and Separate Financial Statements (Revised)" effective for periods commencing 1 July 2009
IFRS 3 "Business Combinations" (Revised 2008) when adopted will require professional fees relating to business combinations to be expensed through the income statement rather than recorded as a cost of acquisition which may impact the Group's results if significant acquisitions are made in the future.
The Directors do not anticipate that the adoption of the other standards will have a material impact on the Group's financial statements in the year of initial application. The Directors do not intend to apply any of these standards and interpretations early.
2 Operating profit/(loss)
|
|
| 2009 £'000 | 2008 Restated £'000 |
|
| Operating profit/(loss) has been arrived at after charging/(crediting): |
|
|
|
|
|
|
|
|
| Staff costs (see note 3) | 5,190 | 1,687 |
|
| Depreciation of property, plant and equipment |
|
|
|
| - owned assets | 238 | 68 |
|
| - leased asset | 12 | 3 |
|
| Realisation of negative goodwill | (67) | - |
|
| Exchange (gains)/losses | (8) | 6 |
|
| Operating lease expense |
|
|
|
| - Other | 31 | 72 |
|
| Audit fees | 36 | 40 |
|
| Fees paid to the Company's auditor for non-audit services | 2 | - |
|
|
|
|
|
|
| The analysis of auditor's remuneration is as follows: |
|
|
|
| Fees payable to the Company's auditor |
|
|
|
| - for the audit of the Company's annual accounts | 14 | 14 |
|
| - for the audit of the Company's subsidiaries | 22 | 26 |
|
| - for financial reporting advice | 2 | - |
|
|
|
|
|
|
|
| 38 | 40 |
|
|
|
|
|
3 Staff costs
|
| Staff costs in respect of continuing operations (including Directors) comprise: | 2009 £'000 | 2008 Restated £'000 |
|
|
|
|
|
|
| Wages and salaries | 4,550 | 1,503 |
|
| Employer's national insurance contributions and similar taxes | 524 | 150 |
|
| Defined contribution pension cost | 26 | 25 |
|
| Share-based payment expense | 90 | 9 |
|
|
|
|
|
|
|
| 5,190 | 1,687 |
|
|
|
|
|
The average number of employees (including Directors) in the Group was as follows:
|
|
| 2009 Number | 2008 Number |
|
|
|
|
|
|
| Engineering and production | 18 | 19 |
|
| Sales and marketing | 24 | 24 |
|
| Administration and management | 35 | 38 |
|
|
|
|
|
|
|
| 77 | 81 |
|
|
|
|
|
4 Directors' remuneration
|
| The remuneration of the directors was as follows: | 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Lord Kalms of Edgware | 108 | 37 |
|
| Neil Ashley | 84 | 20 |
|
| David Buchler | 80 | 20 |
|
| Richard Kalms | 101 | 40 |
|
| Jonathan Lander | 315 | 12 |
|
| Nick Lander | 320 | 12 |
|
|
|
|
|
|
|
| 1,008 | 141 |
|
|
|
|
|
The services of Jonathan Lander and Nick Lander are provided under the terms of a Service Agreement with Dawnay, Day Lander Limited. The amount due under this agreement, which is in addition to the amounts disclosed above, for the year amounted to £480,000 (2008: £277,000). In addition, the amount paid to David Buchler in the year was to a third party on an invoice basis. None of the directors were members of the Group's defined contribution pension plan in the year (2008: none).
5 Segment information
All revenue arose through services rendered in the principal activities of online marketing and data services, certification services, security solutions and investing and management services.
|
|
| Online marketing & data services 2009 £'000 | Certification services 2009 £'000 | Security solutions 2009 £'000 | Investing and management services 2009 £'000 | Eliminations 2009 £'000 | Total 2009 £'000 | Discontinued activities 2009 £'000 |
|
| Revenue |
|
|
|
|
|
|
|
|
| External | 10,404 | - | 374 | 112 | - | 10,890 | 2,635 |
|
| Inter-segment | - | - | - | 338 | (338) | - | - |
|
|
|
|
|
|
|
|
|
|
|
| Total | 10,404 | - | 374 | 450 | (338) | 10,890 | 2,635 |
|
|
|
|
|
|
|
|
|
|
|
| Segment result (note (a)) |
1,685 | - | (42) | (1,130) | - | 513 | 606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit from operations before goodwill and amortisation of intangible assets |
|
| 513 | 606 | |||
|
| Amortisation of intangible assets |
|
| - | (120) | |||
|
| Investment revenues |
|
| 299 | - | |||
|
| Other gains and losses |
|
| 591 | - | |||
|
| Negative goodwill released to income |
|
| 67 | - | |||
|
| Net finance expense (note 7) |
|
| (945) | (3) | |||
|
|
|
|
|
|
| |||
|
| Profit on ordinary activities before tax |
|
| 525 | 483 | |||
|
| Gain on disposal of discontinued operation (note 6) |
|
| - | 6,379 | |||
|
|
|
|
|
|
| |||
|
| Profit for the year before tax |
|
| 525 | 6,862 | |||
|
| Income tax expense |
|
| (128) | - | |||
|
|
|
|
|
|
| |||
|
| Profit for the year |
|
| 397 | 6,862 | |||
|
|
|
|
|
|
| |||
In the Group's online marketing & data services segment, the revenue from the top five customers exceeded 50% of the total revenue, with the top 20 customers representing approximately 70% of the total.
|
|
|
| Online marketing & data services 2009 £'000 | Certification services 2009 £'000 | Security solutions 2009 £'000 | Investing and management services 2009 £'000 | Eliminations 2009 £'000 | Total 2009 £'000 |
|
| Statement of financial position (note (b)) |
|
|
|
|
|
|
|
|
| Assets |
| 3,122 | - | 117 | 19,453 | - | 22,692 |
|
| Liabilities |
| (2,443) | - | (83) | (1,934) | - | (4,460) |
|
|
|
|
|
|
|
|
|
|
|
| Net assets |
| 679 | - | 34 | 17,519 | - | 18,232 |
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
| Capital expenditure |
| 265 | - | 2 | 26 | - | 293 |
|
| Depreciation |
| 226 | - | 7 | 17 |
| 250 |
|
| Amortisation |
| - | - | - | - | - | - |
|
| Realisation of negative goodwill |
|
- | - | - | 67 | - | 67 |
|
|
|
|
|
|
|
|
|
|
|
|
| Online marketing & data services 2008 £'000 | Certification services 2008 £'000 | Security solutions 2008 £'000 | Investing and management services 2008 £'000 | Eliminations 2008 £'000 | Total 2008 £'000 | Discontinued activities 2008 £'000 |
|
| Revenue |
|
|
|
|
|
|
|
|
| External | 2,658 | - | 356 | 31 | - | 3,045 | 4,213 |
|
| Inter-segment | - | - | - | 713 | (713) | - | 41 |
|
|
|
|
|
|
|
|
|
|
|
| Total | 2,658 | - | 356 | 744 | (713) | 3,045 | 4,254 |
|
|
|
|
|
|
|
|
|
|
|
| Segment result (note (a)) | 406 | - | (13) | (1,028) | - | (635) | 868 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Loss)/profit from operations before goodwill and amortisation of intangible assets |
|
| (635) | 868 | |||
|
| Amortisation of intangible assets |
|
| - | (240) | |||
|
| Investment revenues |
|
| 1 | - | |||
|
| Other gains and losses |
|
| 8 | - | |||
|
| Negative goodwill released to income |
|
| - | - | |||
|
| Net finance income (note 7) |
|
| 448 | (8) | |||
|
|
|
|
|
|
| |||
|
| (Loss)/profit on ordinary activities before tax |
|
| (178) | 620 | |||
|
| Gain on disposal of discontinued operation (note 6) |
|
| - | - | |||
|
|
|
|
|
|
| |||
|
| (Loss)/profit for the year before tax |
|
| (178) | 620 | |||
|
| Income tax expense |
|
| (4) | 71 | |||
|
|
|
|
|
|
| |||
|
| (Loss)/profit for the year |
|
| (182) | 691 | |||
|
|
|
|
|
|
| |||
|
|
|
|
Online marketing & data services 2008 £'000 | Certification services 2008 £'000 | Security solutions 2008 £'000 | Investing and management services 2008 £'000 | Eliminations 2008 £'000 | Total 2008 £'000 |
|
| Statement of financial position (note (b)) |
|
|
|
|
|
|
|
|
| Assets |
| 4,117 | 2,293 | 119 | 10,822 | - | 17,351 |
|
| Liabilities |
| (2,539) | (2,532) | (73) | (570) | - | (5,714) |
|
|
|
|
|
|
|
|
|
|
|
| Net assets |
| 1,578 | (239) | 46 | 10,252 | - | 11,637 |
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
|
|
|
|
| Capital expenditure |
| 48 | 92 | 11 | 24 | - | 175 |
|
| Depreciation |
| 50 | 69 | 7 | 11 | - | 137 |
|
| Amortisation |
| - | 240 | - | - | - | 240 |
|
|
|
|
|
|
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|
Note (a): The segment result has been stated before tax, interest, amortisation of intangible assets and Group management and similar charges.
Note (b): Segment assets and liabilities have been stated excluding inter-segment balances.
|
|
| External revenue by location of customers | Non-current assets (excluding deferred tax) by location of assets | ||
|
|
| 2009 | 2008 | 2009 | 2008 |
|
|
| £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
|
| UK | 9,918 | 2,751 | 636 | 1,503 |
|
| Rest of Europe | 716 | 240 | - | - |
|
| USA | 120 | - | - | - |
|
| Other | 136 | 54 | - | - |
|
|
|
|
|
|
|
|
|
| 10,890 | 3,045 | 636 | 1,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The discontinued operations in 2008 and 2009 related to the Company's then subsidiaries, Sira Test and Certification Limited, Sira Environmental Limited and Sira Certification Service, which were sold in July 2009. Further information is given in note 6.
6 Discontinued operations
On 3 July 2009 the Group sold Sira Test and Certification Limited, Sira Environmental Limited and Sira Certification Service, which together represented the Group's certification services segment.
The profit for the period from discontinued operations is as follows:
|
|
| £'000 |
|
|
|
|
| Profit for period after tax (before group management and other charges) |
| 483 |
| Gain on discontinued operations after tax (see below) |
| 6,379 |
|
|
|
|
|
|
| 6,862 |
|
|
|
|
The gain from discontinued operations is as follows:
|
| £'000 | £'000 |
| Consideration: |
|
|
| Cash receivable | 8,118 |
|
| Less: disposal costs | (1,657) |
|
|
|
|
|
|
|
| 6,461 |
| Less: net assets disposed of |
|
|
| Property, plant and equipment | 203 |
|
| Intangible assets | 356 |
|
| Trade and other receivables | 1,328 |
|
| Other financial assets | 88 |
|
| Cash | 640 |
|
| Trade and other payables | (2,533) |
|
|
|
|
|
|
|
| (82) |
|
|
|
|
| Gain on disposal of discontinued operation |
| 6,379 |
|
|
|
|
|
|
|
|
| The net cash inflow comprises: |
|
|
| Cash received |
| 8,118 |
| Cash disposed of |
| (640) |
| Disposal costs |
| (1,226) |
|
|
|
|
|
|
|
|
|
|
| 6,252 |
|
|
|
|
The consideration has been determined by reference to the fair value of the expected consideration receivable. There are additional elements of deferred consideration which are receivable upon certain milestones being achieved by the discontinued businesses for the years ending 31 December 2009 and 2010, with a total maximum payable of £0.6 million over two years. Until such time as the achievement of those milestones has been determined, the Group has assumed that the amount of consideration receivable will be that received to date (namely £8.1 million).
The statement of cash flows includes the following amounts relating to discontinued operations:
|
|
| 2009 £'000 |
|
|
|
|
| Operating activities |
| 748 |
| Investing activities |
| (2) |
| Financing activities |
| (300) |
|
|
|
|
|
|
| 446 |
|
|
|
|
7 Investment revenues, other gains and losses and finance income and expense
|
|
| 2009 | 2008 |
|
|
| £'000 | £'000 |
|
|
|
|
|
|
| Investment revenues | 299 | 1 |
|
|
|
|
|
|
| Other gains and losses | 591 | 8 |
|
|
|
|
|
|
| Finance income |
|
|
|
| Bank interest receivable | 85 | 457 |
|
|
|
|
|
|
| Finance expense |
|
|
|
| Changes in fair value of share capital classed as financial liabilities | (1,023) | - |
|
| Shareholder loan interest in subsidiary | (4) | (9) |
|
| Finance lease interest | (3) | - |
|
|
|
|
|
|
|
| (1,030) | (9) |
|
|
|
|
|
Investment revenues and other gains and losses represent respectively interest (paid and accrued) on, and the gains arising upon disposal of, investments made pursuant to the Group's investing policy.
The changes in the fair value of share capital classed as liabilities in the year reflects the required treatment under IAS 32 of the Company's convertible A and B shares as liabilities rather than equity. There is no cash alternative upon conversion of these shares and therefore no cash liability arises.
8 Income tax
|
|
|
|
| 2009 | 2008 Restated |
|
|
|
|
| £'000 | £'000 |
|
|
|
|
|
|
|
|
| Current tax expense |
|
| 180 | 4 |
|
| Deferred tax credit |
|
| (52) | - |
|
|
|
|
|
|
|
|
| Total tax charge |
|
| 128 | 4 |
|
|
|
|
|
|
|
The reasons for the difference between the actual tax expense for the year and the standard rate of corporation tax in the UK applied to profits for the year are as follows:
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Profit/(loss) before tax | 525 | (178) |
|
|
|
|
|
|
| Expected tax charge based on the standard rate of corporation tax in the UK of 28% (2008 - 28.5%) |
147 |
(51) |
|
| Expenses not deductible for tax purposes | 382 | 9 |
|
| Gains on disposal of discontinued activities | 1,946 | - |
|
| Income not subject to tax | (84) | - |
|
| Depreciation for period in excess of capital allowances | 2 | 13 |
|
| Losses not utilised | 60 | 151 |
|
| Utilisation of previously unrecognised losses | (379) | (118) |
|
| Gains not chargeable | (1,946) | - |
|
|
|
|
|
|
| Tax charge | 128 | 4 |
|
|
|
|
|
9 Business Combinations - 2008
Upon acquisition of Interactive Prospect Targeting Limited in 2008, goodwill of £532,000 was recognised. With the benefit of information becoming known subsequent to the publication of the previous financial statements, adjustments to the fair values of certain assets and liabilities have been made. The table below sets out the changes to the fair values of the identifiable assets and liabilities acquired:
|
|
|
|
|
| 2009 |
|
|
|
|
|
| £'000 |
|
|
|
|
|
|
|
|
| Goodwill at 1 January |
|
|
| 532 |
|
|
|
|
|
|
|
|
| Revisions in respect of: |
|
|
|
|
|
| Trade receivables and other debtors |
|
|
| (127) |
|
| Trade payables |
|
|
| (88) |
|
| Accruals and deferred income |
|
|
| (12) |
|
|
|
|
|
|
|
|
| Goodwill at 31 December |
|
|
| 305 |
|
|
|
|
|
|
|
10 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
|
| 2009 £'000 | 2008 £'000 |
| Including discontinued operations |
|
|
|
Earnings |
|
|
| Earnings for the purposes of basic and diluted earnings per share | 6,459 | 323 |
|
|
|
|
|
| 2009 No. | 2008 No. |
| Number of shares |
|
|
| Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share |
5,687,457 |
5,675,232 |
|
|
|
|
| From continuing operations | 2009 £'000 | 2008 £'000 |
|
|
|
|
| Net profit for the year attributable to equity holders of the parent | 6,459 | 323 |
| Adjustment to exclude profit for the period from discontinued operations | (6,862) | (691) |
|
|
|
|
| Loss from continuing operations for the purposes of basic and diluted earnings per share excluding discontinued operations |
(403) |
(368) |
|
|
|
|
|
|
|
|
There is no dilutive effect from the options in issue in view of the loss from continuing operations.
11 Subsidiaries
The principal subsidiaries of Volvere plc, all of which have been included in these consolidated financial statements, are as follows:
|
| Name | Country of incorporation | Proportion of ownership interest |
|
| Volvere Central Services Limited | England and Wales | 100% |
|
| NMT Group Limited | Scotland | 97.75% |
|
| Interactive Prospect Targeting Limited | England and Wales | 50% |
|
| Postal Preference Service Limited | England and Wales | 50% (Note i) |
|
| Sira Defence & Security Limited | England and Wales | 100% |
|
| The following subsidiaries were disposed of in the year: |
|
|
|
| Sira Test and Certification Limited | England and Wales | 100% |
|
| Sira Environmental Limited | England and Wales | 100% |
|
| Sira Certification Service Limited | England and Wales | 100% (Note ii) |
Note (i): Postal Preference Service Limited is 100% owned by Interactive Prospect Targeting Limited.
Note (ii): Sira Certification Service Limited is a company limited by guarantee. The Group controlled all the member shares.
The Company has the power to control Interactive Prospect Targeting Limited (and hence Postal Preference Service Limited) by virtue of the terms of a shareholder agreement.
During the year Interactive Prospect Targeting Limited ("IPT") granted share options to certain management and staff with performance conditions relating to the financial performance achieved in 2009. These performance conditions have been met but as of the year end the options had not been exercised. Exercise would have the effect of reducing Volvere plc's interest in IPT to approximately 45.4% and the consideration payable to IPT for issue of the underlying shares would be £40,000.
12 Goodwill
|
|
| 2009 £'000 |
|
| Cost |
|
|
| At 1 January 2008 | - |
|
| Business combination | 532 |
|
|
|
|
|
| At 31 December 2008 | 532 |
|
| Revisions to fair value (note 9) | (227) |
|
|
|
|
|
| At 31 December 2009 | 305 |
|
|
|
|
|
| Accumulated impairment losses |
|
|
| At 1 January 2008 | - |
|
| Impairment loss | - |
|
|
|
|
|
| At 31 December 2008 | - |
|
| Impairment loss | - |
|
|
|
|
|
| At 31 December 2009 | - |
|
|
|
|
|
| Carrying Amount |
|
|
| At 31 December 2009 | 305 |
|
|
|
|
|
| At 31 December 2008 | 532 |
|
|
|
|
|
| At 1 January 2008 | - |
|
|
|
|
|
|
|
|
Goodwill represents that arising from the acquisition of Interactive Prospect Targeting Limited's business and assets, being the difference between the fair value of the consideration paid and the fair value of the net assets acquired.
The goodwill has been reviewed for impairment at 31 December 2009 and the directors are satisfied that no impairment has taken place. The impairment review was performed by reference to the net present value of expected future cash flows, treating the acquired business as a single cash generating unit. In performing the review, the directors took a conservative view in assuming zero growth in cash generation and using a discount rate of 20% per annum.
13 Other intangible assets
|
|
| Contractual and non-contractual customer relationships £'000 |
|
|
|
|
|
| At 31 December 2009 |
|
|
| Cost | - |
|
| Accumulated amortisation | - |
|
|
|
|
|
| Net book value | - |
|
|
|
|
|
| At 31 December 2008 |
|
|
| Cost | 1,197 |
|
| Accumulated amortisation | (721) |
|
|
|
|
|
| Net book value | 476 |
|
|
|
|
|
|
|
|
|
| Year ended 31 December 2009 |
|
|
| Opening net book value | 476 |
|
| Amortisation | (120) |
|
| Disposal | (356) |
|
|
|
|
|
| Closing net book value | - |
|
|
|
|
|
| Year ended 31 December 2008 |
|
|
| Opening net book value | 716 |
|
| Amortisation | (240) |
|
|
|
|
|
| Closing net book value | 476 |
|
|
|
|
14 Property, plant and equipment
|
|
| Short Leasehold Property £'000 | Plant & Machinery £'000 | Total £'000 |
|
| Cost |
|
|
|
|
| At 1 January 2008 | 42 | 808 | 850 |
|
| Additions | 1 | 174 | 175 |
|
| Business combination | - | 254 | 254 |
|
|
|
|
|
|
|
| At 31 December 2008 | 43 | 1,236 | 1,279 |
|
|
|
|
|
|
|
| Additions | 9 | 284 | 293 |
|
| Disposals | - | (9) | (9) |
|
| Disposal of subsidiaries | (43) | (836) | (879) |
|
|
|
|
|
|
|
| At 31 December 2009 | 9 | 675 | 684 |
|
|
|
|
|
|
|
| Accumulated depreciation |
|
|
|
|
| At 1 January 2008 | 7 | 640 | 647 |
|
| Depreciation | 7 | 130 | 137 |
|
|
|
|
|
|
|
| At 31 December 2008 | 14 | 770 | 784 |
|
|
|
|
|
|
|
| Depreciation | 1 | 249 | 250 |
|
| Disposals | - | (5) | (5) |
|
| Disposal of subsidiaries | (14) | (662) | (676) |
|
|
|
|
|
|
|
| At 31 December 2009 | 1 | 352 | 353 |
|
|
|
|
|
|
|
| Net book value |
|
|
|
|
|
|
|
|
|
|
| At 31 December 2009 | 8 | 323 | 331 |
|
|
|
|
|
|
|
| At 31 December 2008 | 29 | 466 | 495 |
|
|
|
|
|
|
|
| At 1 January 2008 | 35 | 168 | 203 |
|
|
|
|
|
|
The net book value in respect of property, plant and equipment held on finance leases was £10,000 (2008: £25,000).
15 Financial assets (current)
|
|
| 2009 £'000 | 2008 £'000 |
|
| Available-for-sale investments | 11,601 | 9,497 |
|
|
|
|
|
During the year the Group invested actively in a mixture of non-investment grade bank debt and preference shares as well as other investment grade corporate bond and asset-backed securities funds of mainly UK and US issuers. At the year end the cost of these investments was £11,062,000; the revalued amount stated above reflects the increased values of these investments along with accrued income.
16 Trade and other receivables
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Trade receivables | 1,805 | 4,083 |
|
| Less: provision for impairment of trade receivables | (634) | (1,192) |
|
|
|
|
|
|
| Net trade receivables | 1,171 | 2,891 |
|
| Other receivables | 169 | 56 |
|
| Accrued income | 129 | 143 |
|
| Prepayments | 97 | 174 |
|
|
|
|
|
|
|
| 1,566 | 3,264 |
|
|
|
|
|
The fair value of trade receivables approximates to book value at 31 December 2009 and 2008.
The Group is exposed to credit risk with respect to trade receivables due from its customers. Until the disposal of the certification services segment in 2009, the Group had a large number of customers spread across a variety of industries and geographic locations, and hence the concentration of credit risk was limited due to the large and diverse customer base. In addition, a substantial proportion of the Group's continuing sales derived from, or were related to, customers' needs to comply with statutory safety requirements, and the Directors felt that this mitigated the risk of non-payment further. However, since the disposal of this segment, the Group's trading activities are principally those undertaken by the marketing services segment. Whilst this segment is characterised by a large number of small customers who place small orders, there is a significant dependency on a small number of large customers who can and do place significant contracts with the business. 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.
Trade receivables denominated in foreign currencies do not represent a material element of the year end balance and as such the directors do not hedge the currency risk that arises. The Group's approach to managing currency risk is detailed in note 20, financial instruments. The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Pound Sterling | 1,566 | 3,001 |
|
| Euro | - | 3 |
|
| US Dollar | - | 230 |
|
| Canadian Dollar | - | 30 |
|
|
|
|
|
|
|
| 1,566 | 3,264 |
|
|
|
|
|
The value of trade receivables due and not impaired at 31 December 2009 was £1,171,000, (2008: £2,891,000). The ageing analysis of these receivables is disclosed below:
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Up to 3 months | 1,105 | 2,740 |
|
| 3 to 6 months | 41 | 59 |
|
| 6 to 12 months | - | 77 |
|
| Over 12 months | 25 | 15 |
|
|
|
|
|
|
|
| 1,171 | 2,891 |
|
|
|
|
|
17 Trade and other payables - current
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Trade payables | 927 | 770 |
|
| Other tax and social security | 514 | 578 |
|
| Obligations due under finance leases | 28 | 27 |
|
| Other payables | 460 | 313 |
|
| Accruals | 953 | 1,262 |
|
|
|
|
|
|
| Total financial liabilities excluding loans and borrowings carried at amortised cost | 2,882 | 2,950 |
|
| Deferred income | 322 | 1,808 |
|
|
|
|
|
|
|
| 3,204 | 4,758 |
|
|
|
|
|
The fair value of trade and other payables approximates to book value at 31 December 2009 and 2008.
18 Other financial liabilities - current
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Share capital classed as financial liabilities (note 23) | 1,073 | - |
|
| Bank loans |
|
|
|
| - secured | - | 120 |
|
| Shareholder loans in subsidiary undertaking (Interactive Prospect Targeting Limited) |
|
|
|
| - secured | - | 600 |
|
|
|
|
|
|
|
| 1,073 | 720 |
|
|
|
|
|
The bank loan related to a term loan drawn down by Sira Test and Certification Limited in 2006. The total balance at 31 December 2008 of £300,000 included an amount of £180,000 classified as non-current (note 19). The borrowing was secured by a debenture granting the bank a fixed and floating charge over all the Group's assets. An analysis of the interest rates payable on financial liabilities and information about fair values is given in note 21.
19 Non-current financial liabilities
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Bank loans | - | 180 |
|
| Obligations due under finance leases | - | 35 |
|
|
|
|
|
|
|
| - | 215 |
|
|
|
|
|
An analysis of the interest rates payable on financial liabilities and information about fair values is given in note 21.
20 Financial instruments - risk management
The Group is exposed through its operations to one or more of the following financial risks:
·; Cash flow interest rate risk
·; Foreign currency risk
·; Liquidity risk
·; Credit risk
·; Market price risk
Policy for managing these risks is set by the Board following recommendations from the Chief Financial & Operating Officer. 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.
The Group's principal financial instruments are (or have been):
·; Trade receivables
·; Cash at bank
·; Investments in government bonds, sub-investment grade securities of UK banks and investment grade corporate bond and asset-backed securities funds of mainly UK and US issuers
·; Trade and other payables
Cash flow interest rate risk
Due to the relatively low level of borrowings that has existed from time to time within the Group (with none at the year end), the Directors do not have an explicit policy for managing cash flow interest rate risk. All recent borrowing had been on variable terms. Although the Board accepts that this policy neither protects the Group entirely from paying rates in excess of current market rates nor eliminates fully cash flow risk associated with interest payments, the Directors feel that given circumstances where interest rates were to increase significantly the Group has cash reserves of such an extent that any borrowings could be repaid immediately thus mitigating the impact of such risk. In addition all cash is managed centrally and subsidiary operations are not permitted to arrange borrowing independently.
The Group's investments may have fixed or variable interest 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 practicable to provide a sensitivity analysis on the effect of changing interest rates. At the year end, the Group's investments had the following interest profiles:
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Fixed interest | 4,693 | 9,497 |
|
| Unspecified interest | 6,908 | - |
|
|
|
|
|
|
|
| 11,601 | 9,497 |
|
|
|
|
|
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; they are of the opinion that as the Group's trading exposure is limited to transactions with a small number of customers and suppliers it is not appropriate to actively hedge that element of its foreign currency exposure. However, during 2009 the Group invested $4 million in an investment grade debt fund and has entered into a foreign exchange contract in respect of the sale of $4 million at a rate of $1.5783/£1 with a sale date of 12 October 2010.
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 16.
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. Investments have been in a mixture of term deposits, government bonds, sub-investment grade securities of UK banks and investment grade corporate bond and asset-backed securities funds of mainly UK and US issuers, all of which have been made having regard to the Group's need to access capital. Market price movements of these investments could materially affect the value of the Group's assets. The directors believe that the exposure to market price risk from this activity is acceptable in the Group's circumstances.
The Group's convertible A and B shares (which have been classified as financial liabilities) are convertible into ordinary shares based upon a predetermined conversion formula. The conversion formula includes as one variable the Group's share price.
Capital management
The Group's main objective when managing capital is to protect returns to shareholders by ensuring the Group will continue to 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 and adjusting the level of dividends paid to ordinary shareholders.
The Group considers its capital to include share capital, share premium, revaluation reserve, retained earnings and net debt as noted.
Net debt includes short and long-term borrowings (including lease obligations) net of cash and cash equivalents.
The Group has not made any changes to its capital management during the year.
An analysis of the Group's gearing is shown in the table below.
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Total debt | 1,101 | 935 |
|
| Less cash and cash equivalents | (11,601) | (2,999) |
|
|
|
|
|
|
| Net debt | (10,500) | (2,064) |
|
|
|
|
|
|
| Total equity | 17,769 | 10,967 |
|
| Less: reserves not included in definition of capital | (90) | (16) |
|
|
|
|
|
|
| Adjusted capital | 17,679 | 10,951 |
|
|
|
|
|
|
| Debt to adjusted capital ratio | (59.4%) | (18.8%) |
|
|
|
|
|
The Group does not have any externally imposed capital requirements.
21 Financial assets and liabilities - numerical information
Maturity of financial assets
The maturities and denominations of financial assets at the year end, other than loans and receivables (note 16 above) are as follows:
|
|
| 2009 £'000 | 2008 £'000 |
|
| Sterling |
|
|
|
| 0 to 3 months | - | 9,497 |
|
| No fixed maturity | 9,022 | - |
|
|
|
|
|
|
|
| 9,022 | 9,497 |
|
| US dollar |
|
|
|
| No fixed maturity | 2,579 | - |
|
|
|
|
|
|
|
| 11,601 | 9,497 |
|
|
|
|
|
Maturity of financial liabilities
The carrying amounts of all financial liabilities, excluding loans and borrowings, being carried at amortised cost is as follows:
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| In less than six months | 4,277 | 4,758 |
|
|
|
|
|
|
| Loans and borrowing facilities:
| 2009 £'000 | 2008 £'000 |
|
| Current |
|
|
|
| Bank loans (secured) | - | 120 |
|
| Shareholder loans in Interactive Prospect Targeting Limited (secured) | - | 600 |
|
|
|
|
|
|
|
| - | 720 |
|
|
|
|
|
|
| Non-current |
|
|
|
| Bank loans (secured) | - | 180 |
|
|
|
|
|
|
| Total borrowings | - | 900 |
|
|
|
|
|
The principal terms and the debt repayment schedule of the Group's loans and borrowings were as follows:
|
|
| Currency | Nominal rate % | Year of maturity | Security |
|
|
|
|
|
|
|
|
| Secured bank loan | GBP | 2.0-2.25% over Bank of Scotland base rate | 2011 | See note 20 |
|
| Unsecured shareholder loan in Interactive Prospect Targeting Limited |
GBP |
3.0% over Bank of Scotland base rate |
Note (i) |
Note (i) |
Note (i): The shareholder loans in Interactive Prospect Targeting Limited ("IPT") were subject to a loan agreement, the terms of which specified that these lenders were only entitled to repayment once the loans made by Volvere plc equalled the shareholder loans. All loans (to Volvere plc and other shareholders in IPT) were repaid in full during the course of the year.
The maturity analysis for all loans and borrowings is analysed below:
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| In less than one year | - | 720 |
|
| In more than one year but not more than two years | - | 120 |
|
| In more than two years but not more than five years | - | 60 |
|
|
|
|
|
|
|
| - | 900 |
|
|
|
|
|
All loans and borrowings were denominated in sterling (2008: sterling). There were no undrawn committed borrowing facilities that had been agreed at 31 December 2009 (2008: nil). The share capital classed as financial liabilities has no cash alternative (more information is set out in note 23).
22 Deferred tax
A deferred tax asset of £52,000 (2008: £88,000) has been recognised in the year in respect of temporary differences between depreciation and capital allowances. In addition, there are unrecognised deferred tax assets in respect of the following:
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Tax losses carried forward | 1,456 | 1,756 |
|
| Excess of depreciation over capital allowances | 8 | 16 |
|
| Short term temporary differences | 16 | 2 |
|
| Goodwill | (7) | (7) |
|
|
|
|
|
|
|
| 1,473 | 1,767 |
|
|
|
|
|
The unrecognised deferred tax asset is not recognised because there is insufficient evidence that the asset will be recovered against future taxable profits.
Deferred tax assets and liabilities have been calculated using the rate of corporation tax expected to apply when the relevant temporary differences reverse.
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.
23 Share capital
|
|
| Authorised | |||
|
|
| 2009 Number | 2009 £'000 | 2008 Number | 2008 £'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 | |||
|
|
| 2009 Number | 2009 £'000 | 2008 Number | 2008 £'000 |
|
|
|
|
|
|
|
|
| Ordinary shares of £0.0000001 each | 5,708,720 | - | 5,675,232 | - |
|
| A shares of £0.49999995 each | 49,735 | 25 | 49,735 | 25 |
|
| B shares of £0.49999995 each | 49,735 | 25 | 49,735 | 25 |
|
| Deferred shares of £0.00000001 each | 26,499,985,533 | - | 26,499,985,533 | - |
|
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|
|
|
|
|
|
|
|
|
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|
|
| 50 |
| 50 |
|
| A and B shares reclassified as financial liabilities |
| (50) |
| - |
|
|
|
|
|
|
|
|
|
|
| - |
| 50 |
|
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|
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|
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|
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| Movements in share capital | Issued and fully paid | |||
|
|
| 2009 Number | 2009 £'000 | 2008 Number | 2008 £'000 |
|
| Ordinary shares of £0.0000001 each |
|
|
|
|
|
| At beginning of the year | 5,675,232 | - | 5,675,232 | - |
|
| Other issues during the year | 33,488 | - | - | - |
|
|
|
|
|
|
|
|
| At end of the year | 5,708,720 | - | 5,675,232 | - |
|
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|
|
No Group companies held shares in the Company at any time during the year.
The A and B shares rank pari passu with the Ordinary shares on a return of capital but do not have voting rights. The A and B shares became capable of being converted into Ordinary shares at the option of the holder on or after 24 December 2003 and 24 December 2004 respectively, on a predetermined conversion formula based upon share price performance and the weighted average issue price of Ordinary share capital, whereby approximately 15% of the growth in market capitalisation of the Group over the weighted average issue price of Ordinary shares issued is attributable to the holders of A and B shares.
Based on the closing share price of 252.5p at 31 December 2009, the A and B shares would have been capable of converting into 424,739 Ordinary shares (2008: None). The fair value of the A and B shares (£1,073,000) has been classified as a financial liability; there is no cash alternative upon conversion of these shares.
The Deferred shares carry no rights to participate in the profits or assets of the Company and carry no voting rights.
24 Reserves
|
|
| Share capital £'000 | Share premium account £'000 |
Revaluation reserve £'000 | Share option reserve £'000 | Retained earnings £'000 |
|
|
|
|
|
|
|
|
|
| At 1 January 2008 | 50 | 3,586 | - | 15 | 6,887 |
|
| Revaluation of available for sale investments | - | - |
97 | - | - |
|
| Premium on shares issued | - | - | - | - | - |
|
| Share-based payments charge | - | - | - | 1 | 8 |
|
| Profit for the year attributable to the equity holders of the parent | - | - |
- | - | 323 |
|
|
|
|
|
|
|
|
|
| At 31 December 2008 | 50 | 3,586 | 97 | 16 | 7,218 |
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
| At 1 January 2009 | 50 | 3,586 | 97 | 16 | 7,218 |
|
| Revaluation of available for sale investments | - | - |
254 | - | - |
|
| Share capital classified as liabilities | (50) | - | - | - | - |
|
| Premium on shares issued | - | 49 | - | - | - |
|
| Share based payments charge | - | - | - | 90 | - |
|
| Equity share options cancelled | - | - | - | (16) | 16 |
|
| Profit for the year attributable to the equity holders of the parent | - | - |
- | - | 6,459 |
|
|
|
|
|
|
|
|
|
| At 31 December 2009 | - | 3,635 | 351 | 90 | 13,693 |
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|
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|
|
The following describes the nature and purpose of each reserve within owners' equity
|
| Reserve | Nature and purpose |
|
|
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|
|
| Share premium | Amount subscribed for share capital in excess of nominal value |
|
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|
|
|
| Revaluation reserve | Cumulative net unrealised gains and losses arising on the revaluation of the Group's available for sale investments |
|
|
|
|
|
| Share option reserve | Aggregate charge in respect of employee share option charges net of lapsed option cost releases |
|
|
|
|
|
| Retained earnings | Cumulative net gains and losses recognised in the consolidated income statement |
25 Changes in shareholders' equity
|
|
| 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| Profit for the year | 6,459 | 323 |
|
| Ordinary shares issued as consideration shares | 49 | - |
|
| A and B shares reclassified as financial liabilities | (50) | - |
|
| Share-based payment expenses | 90 | 9 |
|
| Revaluation of available for sale investments | 254 | 97 |
|
|
|
|
|
|
|
| 6,802 | 429 |
|
| Capital and reserves attributable to equity holders of the parent at the beginning of the period | 10,967 | 10,538 |
|
|
|
|
|
|
| Capital and reserves attributable to equity holders of the parent at the end of the period | 17,769 | 10,967 |
|
|
|
|
|
|
| Minority interests | 463 | 670 |
|
|
|
|
|
|
| Total equity | 18,232 | 11,637 |
|
|
|
|
|
26 Leases
Operating leases - lessee
The Group leases all of its properties. The terms of property leases vary, although they all tend to be tenant repairing with rent reviews every 2 to 5 years; some have break clauses. The total future values of minimum lease payments are due as follows:
|
|
| Land and Buildings 2009 £'000 | Other plant and machinery 2009 £'000 | Land and buildings 2008 £'000 | Other plant and machinery 2008 £'000 |
|
|
|
|
|
|
|
|
| Not later than one year | - | - | 62 | 14 |
|
| Later than one year and not later than five years | 169 | - | 134 | 21 |
|
| Later than five years | - | 2 | - | - |
|
|
|
|
|
|
|
|
|
| 169 | 2 | 196 | 35 |
|
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|
|
|
|
27 Share-based payment
The Company operates two share-based payment schemes, an approved EMI equity-settled share-based remuneration scheme for certain employees and an unapproved equity-settled share scheme for certain management. Under the EMI scheme, the options vest on achievement of employee-specific targets subject to a compulsory 2.5 or 3 year vesting period and can be exercised for a further 7.5 or 7 years after vesting.
The unapproved options granted to management on 13 April 2004 vested during the prior year and can be exercised at any time until 12 April 2014.
Options in issue are summarised below:
|
|
| 2009 Weighted average exercise price | 2009 Number | 2008 Weighted average exercise price | 2008 Number |
|
|
|
|
|
|
|
|
| Outstanding at beginning of the year | 156.3p | 99,920 | 188.7p | 36,720 |
|
| Granted during the year | - | - | 137.5p | 63,200 |
|
| Exercised during the year | 144.5p | (33,488) | - | - |
|
| Lapsed during the year | 138.9p | (31,266) | - | - |
|
|
|
|
|
|
|
|
| Outstanding at the end of the year | 182.6p | 35,166 | 156.3p | 99,920 |
|
|
|
|
|
|
|
During the year no options were granted (2008: 63,200 options were granted at an exercise price of 137.5p) and 33,488 options were exercised for a total consideration of £49,000.
The exercise price of options outstanding at the end of the year ranged between 137.5p and 197.5p (2008: 137.5p and 197.5p) and their weighted average remaining contractual life was 4 years (2008 - 8 years).
Of the total number of options outstanding at the end of the year 35,166 (2008: 36,720) had vested and were exercisable at the end of the year. These options had a weighted average exercise price of 182.6p (2008: 188.7p).
The Company's share price during the year ranged from a low of 98p to a high of 295p, with an average of 191p. At the year end it was 252.5p.
|
|
| 2009 £'000 | 2008 £'000 |
|
| The share-based remuneration expense (note 3) comprises: |
|
|
|
| Equity-settled schemes | 90 | 9 |
|
|
|
|
|
The Group did not enter into any share-based payment transactions with parties other than employees during the current or previous period.
28 Related party transactions
Details of amounts payable to Directors are disclosed in note 4. Other than their remuneration and participation in the Group's share option schemes (note 27), there are no transactions with key members of management.
For the period until 6 March 2009 the Group received support and administrative services from Dawnay, Day Lander Limited (of which Jonathan Lander and Nick Lander are Directors) in accordance with the Facilities Agreement signed 19 December 2002. The amount payable under this agreement for the year to 31 December 2009 was £6,300 (2008: £35,000), in addition to the amounts paid for Directors' services disclosed in note 4. Since this agreement ended, Dawnay, Day Lander Limited pays £5,000 per annum to the Company for administrative services.
29 Contingent liabilities
The Group had no material contingent liabilities as at the date of these financial statements (2008: none), except that it has been agreed with the Group's subsidiary, Interactive Prospect Targeting Limited, that upon a sale of that company, an initial amount of the consideration payable shall be paid to certain management shareholders on a pre-determined basis, following which it will be payable to all shareholders pro-rata to their holdings. This initial amount, as at 31 December 2009, was £252,000.
30 Minority interests
The minority interests of £463,000 (2008: £670,000) relates to the net assets attributable to the shares not held by the Group at 31 December 2009 in the following subsidiary undertakings:
|
|
Name of subsidiary undertaking | 2009 £'000 | 2008 £'000 |
|
|
|
|
|
|
| NMT Group Limited | 127 | 284 |
|
| Interactive Prospect Targeting Limited | 336 | 386 |
|
|
|
|
|
|
|
| 463 | 670 |
|
|
|
|
|
31 Notes supporting cash flow statement
|
|
| 2009 £'000 | 2008 £'000 |
|
| Cash and cash equivalents comprise: |
|
|
|
| Cash available on demand | 8,837 | 2,999 |
|
|
|
|
|
|
|
| 8,837 | 2,999 |
|
|
|
|
|
|
| Net cash increase/(decrease) in cash and cash equivalents | 5,838 | (8,739) |
|
| Cash and cash equivalents at beginning of year | 2,999 | 11,738 |
|
|
|
|
|
|
| Cash and cash equivalents at end of year | 8,837 | 2,999 |
|
|
|
|
|
Included within cash and cash equivalents is £800,000 held in escrow to meet potential warranty claims arising as a result of the Sira Certification disposal during the year. At the date of approval of these financial statements no warranty claims had been made and the escrow funds had been released in full. An amount of £514,000 was similarly included in 2008 in respect of a prior disposal.
- Ends -