Volvere Regulatory News (VLE)

30 Sep 2005 08:53

Volvere PLC30 September 2005 30 September 2005 VOLVERE PLC INTERIM RESULTS FOR THE SIX MONTHS TO 1 JULY 2005 AND ACQUISITION Volvere plc ("Volvere" or "the Company", or "the Group"), the turnaroundinvestment company, announces its interim results for the six months ended 1July 2005. Highlights: • Turnover £5.1m (2 July 2004: £5.4m), all arising from the Group's subsidiary, Vectra Group Limited ("Vectra") • Pre-tax and post-tax profit £0.03m (2 July 2004 loss: £0.22m) • Acquisition of Sira Test & Certification announced for an estimated net consideration of £1.42m • Net assets of £3.87m (2 July 2004: £3.83m) • Cash on hand £2.67m (2 July 2004: £3.01m) • Earnings per share 0.8p (2 July 2004 loss per share: 6.02p) • Investment in NMT Group PLC of £0.39m (2 July 2004: nil) increased significantly after the period end • Successful election of officers of Volvere to NMT board • Vectra profitable before Group management charges for the six months to 1 July 2005 • No dividend proposed Chairman, Lord Kalms, said: "The Group has successfully expanded its operatingand investment activities and is ready for its next stage of development." For further information, please contact:Volvere plc +44 (0) 20 7575 7596Jonathan Lander, Chief Executive Officer Weber Shandwick Square Mile +44 (0) 20 7067 0700Terry Garrett / Nick Dibden About Volvere Volvere was floated on AIM in December 2002 as an activist investor both inundervalued companies and also in companies that offer the possibility of aturnaround. Its executive directors are the executives of the venture capitaland advisory firm Dawnay Day Lander Ltd. Its non-executive directors are LordKalms, Neil Ashley and David Buchler. Website: www.volvere.co.uk CHIEF EXECUTIVE'S STATEMENT The Board is pleased to present the interim statement for the six months ending1 July 2005. Since we last reported, we have expanded both the Group's operating andinvestment activities. On 29 September 2005 we acquired Sira Test and Certification ("Sira"), a business which is complementary to our existing subsidiary, Vectra. Sira's services are driven by UK and European legislation for improving safety in hazardous environments. In pursuit of the strategy set out when Volvere was admitted to AIM, we havealso built a stake in NMT Group PLC ("NMT"), a company that we considered tohave a poor financial performance and where an activist investor such as Volverecould bring about a change of management and enhance value for shareholders. Asa result, over the period (and continuing thereafter) we increased our stake inNMT and, since the period end, were successful in removing that company's boardwith the support of like-minded shareholders. We are now working hard to create value through Vectra, NMT and now Sira. Results Turnover for the six months to 1 July 2005 was £5.1m (2 July 2004: £5.4m), allof which arose from the company's subsidiary, Vectra. Table A below summarisesthe financial information in relation to Vectra. The Group's profit after taxfor the six months was £0.03m (2 July 2004: loss £0.22m). At the end of theperiod the Group's net assets were £3.87m (2 July 2004: £3.83m) of which cashrepresented £2.67m (2 July 2004: £3.01m). The Group's investment in NMT GroupPLC was £0.38m at the period end (2 July 2004: nil) and this principallyaccounts for the reduction in cash on hand. Vectra Vectra has moved from an operating loss to an operating profit (before Groupmanagement charges) on reduced turnover, in line with our strategy of exitingunprofitable areas and focussing on our key strengths. From the start of theyear there have been additional costs associated with strengthening Vectra'smanagement team. Vectra's performance has varied from sector to sector. TheNuclear business had a strong start to the year, in both the consulting anddecommissioning areas, but since the start-up of the Nuclear DecommissioningAuthority on 1 April workflow has been more erratic. The Property business,which deals mainly with disability access consultancy, started the year quitewell but the market has diminished since April as most public bodies havecompleted their access improvement programmes. As a consequence, the Propertygroup has been reduced in size. The Oil & Gas market has been buoyant, driven by the high price of oil, and goodorders won from clients including Shell and Centrica in the North Sea, andTechnip, GUPCO and Dolphin Energy in the Middle East. As a result theinternational portion of our business has grown. We have seen a strengthening of the Transport market, particularly in the UK, asinfrastructure companies require increased resources to deliver theircontractual obligations. The principal clients for continuing work have beenNetwork Rail, Tube Lines in the UK and ProRail and Infraspeed in TheNetherlands. Overall, the safety and engineering consultancy activities have improved, butthe pace of improvement has been constrained by a competitive recruitmentmarket.Table A Vectra - Summary of Note 1 January to 1 1 January to 2 1 January to 31Performance July 2005 July 2004 December 2004 £000 £000 £000 Turnover 5,130 5,447 10,501Average monthly turnover 855 908 875 ===== ===== =====Operating profit/(loss) (a) 92 (116) (43)Average monthly operatingprofit/(loss) (a) 15 (19) (4) ===== ===== ===== Note (a): the Operating loss is stated exclusive of Group management charges butafter restructuring costs of £33,000 (2 July 2004: £89,000 and 31 December 2004:£98,000). Acquisition of Sira Test and Certification We are pleased to announce the acquisition of the Safety Compliance business ofthe Sira Group, a research association with an 80-year track record ofinnovation in optics, sensors and instrumentation. The new business will beowned by a new subsidiary of Volvere, called Sira Test and Certification Limited("Sira"). Sira provides certification services covering the safety of products that areused within potentially explosive environments (such as chemical plants, minesand other hazardous areas). The business also provides training for personnelthat work in these environments. The requirement of clients to have productscertified as suitable for use in these areas is underpinned by UK and Europeansafety legislation. Like Volvere's existing subsidiary Vectra, safetylegislation underpins the activities of the new subsidiary. Sira and Vectra willshare the group's financial, administration and information technology services. Sira employs 34 staff and is based in Chester, England. The site includes alaboratory and facilities for the controlled testing of client products insimulated hazardous environments. For the 52 weeks ended 31 March 2005 Sira's unaudited turnover was £2.34m andits profit before tax and group management charges was £0.3m. In the 21-weekperiod ended 26 August 2005 (the most recently available information) theunaudited turnover was £0.9m and the profit before tax and group managementcharges was £0.18m. The estimated consideration of £1.42m, which is stated net of certain tradecreditors assumed by Volvere, is being satisfied as to £1.12m from existing cashresources and by the issue of 148,148 Ordinary Shares of £0.0000001 each.Application will be made for the admission of these Ordinary Shares to AIM. Thefinal consideration will be dependent on the value of the business's assets andcertain assumed liabilities as at the acquisition date. The estimated fair valueof the net assets acquired is £0.3m. The acquisition of Sira is complementary to our existing activities at Vectraand adds another profit stream to the Group. Holding in NMT Group PLC Starting in October 2004 we accumulated a holding of 2,269,024 ordinary sharesof £4 each in NMT Group PLC ("NMT") representing 26.04% of the total issuedordinary share capital of that company for an aggregate cash consideration of£1.47m. At the end of the period the investment in NMT was £0.39m (2 July 2004:nil). NMT is a licensing and development company for safety needle-based medicaldevices. For the six months ending 30 June 2005 NMT's interim results showed aloss before tax of £0.5m on sales of £nil. At that date NMT's net assetsamounted to £6.76m, of which cash represented £6.51m. In view of NMT's poor financial performance, Volvere requisitioned anExtraordinary General Meeting of NMT in order to remove that company's board andreplace it with executives from Volvere. On 14 September 2005, NMT shareholders voted in support of Volvere's resolutions and your Chairman, Chief Executive and Chief Operating Officer were duly elected to the board of NMT. Since that date Volvere re-financed part of its holding by disposing of 1,306,600 shares in NMT and entering into a long Contract for Difference ("CFD") over the shares sold. TheCFD provides us with an economic interest in the share price of the shares soldwhilst freeing up cash for other investments. Following the sale Volvere holds962,424 shares, or 11.05 pct of NMT's issued share capital but with an economicinterest in 2,269,024 (26.04%). At the average price at which the Company acquired its shares (including theshares subject to the CFD) we consider the shareholding in NMT to represent anattractive investment opportunity.We are working hard to maximise the value of this investment and will report onour progress in due course. Future Strategy We continue to seek activist or turnaround investment opportunities as well asacquisitions that are complementary to Vectra, and now Sira. Summary The acquisition of Sira and the investment in NMT should add further profitstreams to the Group which will enable us to accelerate future growth. Jonathan Lander Chief Executive Officer30 September 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT 1 January 1 January to 1 July to 2 July Year ended 31 2005 2004 December 2004 Unaudited Unaudited Audited Note £000 £000 £000 Turnover 2 5,130 5,447 10,501Cost of sales (2,818) (3,052) (5,787) ------- ------- -------Gross profit 2,312 2,395 4,714 Administrative Expenses:- before realisation ofnegative goodwill (2,352) (2,690) (5,075)- realisation of negativegoodwill 12 38 60 ------- ------- -------Operating loss before financecharges (28) (257) (301) Profit on sale of tangiblefixed asset investments 10 - -Interest receivable 50 39 90 ------- ------- -------Profit/(loss) on ordinaryactivities before and after tax 32 (218) (211) ===== ===== =====Earnings/(Loss) per shareBasic 5 0.8p (6.02p) (5.82p)Diluted 5 0.8p (6.02p) (5.82p) The operating loss for period arises from the Group's continuing operations. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 1 January 1 January to 1 July to 2 July Year ended 31 2005 2004 December 2004 Unaudited Unaudited Audited £000 £000 £000 Profit/(loss)for the period 32 (218) (211) Total recognised gains/(losses) recognised since last financial statement 32 (218) (211) ====== ====== ====== CONSOLIDATED BALANCE SHEET 31 December 1 July 2005 2 July 2004 2004 Unaudited Unaudited Audited Note £'000 £'000 FIXED ASSETSIntangible fixed assets -negative goodwill 3 (78) (112) (90)Tangible fixed assets 139 178 153Investments 385 - 192 -------- -------- -------- 446 66 255 ====== ====== ======CURRENT ASSETSDebtors 4 3,028 3,213 2,790Cash at bank and in hand 2,667 3,015 3,003 -------- -------- -------- 5,695 6,228 5,793CREDITORS: amounts fallingdue within one year (2,269) (2,461) (2,208) -------- -------- --------NET CURRENT ASSETS 3,426 3,767 3,585TOTAL ASSETS LESS CURRENTLIABILITIES 3,872 3,833 3,840 ====== ====== ======CAPITAL AND RESERVESCalled up share capital 50 50 50Share premium account 50 50 50Profit and loss account 3,772 3,733 3,740 -------- -------- --------EQUITY SHAREHOLDERS' FUNDS 3,872 3,833 3,840 ====== ====== ====== CONSOLIDATED CASH FLOW STATEMENT 1 January to 1 January to Year ended 31 1 July 2005 2 July 2004 December 2004 Unaudited Unaudited Audited £000 £000 £000 Net cash inflow/(outflow) fromoperating activities (190) (346) (206) Returns on investment andservicing of financeInterest received 50 39 90 Capital expenditure and financialinvestmentPurchase of tangible fixed assets (14) (14) (25)Sale of tangible fixed assets - 3 3 Purchase of equity investment (227) - (192) Sale of equity investment 45 - - -------- -------- --------Cash outflow before management ofliquid resources and financing (336) (318) (330) FinancingIssue of ordinary share capital - 50 50 -------- -------- ---------Decrease in cash in period (336) (268) (280) ====== ====== ====== RECONCILIATION OF OPERATING LOSS TO NET CASH FLOW FROM OPERATING ACTIVITIES 1 January to 1 January to Year ended 31 1 July 2005 2 July 2004 December 2004 Unaudited Unaudited Audited £000 £000 £000Operating loss (28) (257) (301)Depreciation 27 48 84Realisation of negativegoodwill (12) (38) (60)Decrease in stocks - 5 5(Increase)/decrease indebtors (238) (276) 147Increase/(decrease) increditors 61 172 (81) -------- -------- --------Net cash inflow/(outflow) fromoperating activities (190) (346) (206) ====== ====== ====== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 1 January to 1 January to Year ended 31 1 July 2005 2 July 2004 December 2004 Unaudited Unaudited Audited £000 £000 £000 Increase/(decrease) in cash in period (336) (268) (280) Net funds at start ofperiod 3,003 3,283 3,283 -------- -------- --------Net funds at end of period 2,667 3,015 3,003 ====== ====== ====== The Group had no debt during the period or at the period end. RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS 1 January to 1 January to Year ended 31 1 July 2005 2 July 2004 December 2004 Unaudited Unaudited Audited £000 £000 £000 Opening shareholders'funds 3,840 4,001 4,001Issue of share capital - 50 50Profit/(loss) for the period 32 (218) (211) -------- -------- --------Closing shareholders'funds 3,872 3,833 3,840 ====== ====== ====== NOTES TO INTERIM STATEMENT 1. The financial information contained in this interim report does notconstitute statutory accounts within the meaning of s240 of the Companies Act1985, and has not been audited or reviewed. The interim statement has beenprepared on the basis of accounting policies expected to be applied consistentlyfor the foreseeable future, of which the principal ones are explained below. Theinterim accounts were approved by the directors on 29 September 2005. 2. Turnover Turnover is recognised on a basis appropriate to the income source. Turnoverearned on time and materials contracts is recognised as costs are incurred.Income from fixed price contracts is recognised in proportion to the stage ofcompletion of the relevant contract. 3. Intangible asset - negative goodwill Negative goodwill, representing the excess of the fair value of the separablenet assets acquired over the fair value of the consideration given, iscapitalised as an intangible asset and credited to the profit and loss accountover the periods in which the assets acquired are consumed or realised as cash. 4. Debtors Debtors includes amounts recoverable under contracts of £1,031,000 (1 July 2004:£1,361,000 and 31 December 2004: £876,000). 5. Earnings per share The basic and diluted loss per share are based on the profit on ordinaryactivities after taxation of the company attributable to ordinary shareholdersof £31,000 and on 3,865,993 shares, being the weighted average number ofordinary shares in the period. At the end of the period 3,638,440 (1 July 2004:3,638,705; 31 December 2004: 3,638,440) ordinary shares were in issue. Inaddition, 99,470 convertible shares (1 July 2004: 100,000; 31 December 2004:99,470) were in issue and options for 277,483 shares (1 July 2004: 145,274; 31December 2004: 237,741). Diluted profit per share is equivalent to basic profitper share since the effect of including potential shares within the calculationof diluted weighted average number of shares would be anti-dilutive. 6. Dividend The Board is not recommending payment of an interim dividend for the periodended 1 July 2005. 7. The interim report will be sent to shareholders shortly and will be availablefrom the Company's registered office at 9-11 Grosvenor Gardens, London SW1W 0BD. This information is provided by RNS The company news service from the London Stock Exchange