Volvere Regulatory News (VLE)

Volvere plc

("Volvere" or the "Group")

Interim Results for the six months ended 30 June 2011

Volvere plc (AIM:VLE) the growth and turnaround investment company, announces its Interim Results for the six months ended 30 June 2011.

Highlights

For further information:

Chairman's Statement

At the AGM in June this year, I was elected by the Board to be your Chairman, following the retirement of Lord Kalms of Edgware.

We entered the second half of 2011 with £18 million of funds available for investment. This was after spending over £2 million on buying back our own shares in May.

There is no doubt that the current investment environment is challenging. Turnarounds in particular are often roller-coaster rides. However this is the kind of environment for which I think your management team is most suited, and, based on our long-term track record, I have confidence that we will, in time, deliver value for shareholders.

David Buchler

Chairman

27 September 2011

Chief Executive's Statement

I am pleased that net assets per share grew, albeit modestly, in the first half of 2011. This was a period during which our subsidiaries and our investment portfolio performed satisfactorily. 

Online marketing and data services

Interactive Prospect Targeting Limited ("IPT"), our online marketing and data services company, which is 45.5% owned by Volvere performed satisfactorily. For the first half of 2011, revenue and operating profit were £4.37 million and £0.26 million respectively (6 months ended 30 June 2010: £4.27 million and £0.63 million). Revenues were slightly higher than the corresponding period in 2010, and also higher than the level in the second half of 2010. Profits were lower, however, as there was significantly less List Rental revenue in the period to 30 June 2011. This activity has the highest gross margin. List Rental revenues tend to correlate with the general level of economic activity, and that has, at best, been lacklustre. During the period, IPT also invested considerable amounts in a new quiz site "Quizfactor" which is not expected to contribute to revenues until 2012. IPT is not immune to the sluggish economic environment, however the company's continued profitability is testament to the hard work of the management and staff whom we continue to support.

Security solutions

The security solutions business, Sira Defence and Security Limited ("SDS") undertook a number of extensions to existing projects as well as new ones. Whilst revenues and pre-tax profits for the period were broadly static at £0.28 million and £0.04 million, the results were ahead of the second half of 2010 (Year ended 31 December 2010: £0.47 million and £0.04 million). Although public sector spending continues to be uncertain, there has been encouraging successes on projects this year which, funding permitting, will most probably lead to follow on work. Sales of SiraView, the digital CCTV-viewer, have continued steadily and we are continuing to enhance and develop the product.

Further information is set out in the financial review and in note 2, segmental information.

Cash and investments

At the period end, the Group had cash of £13.08 million and available for sale investments, with a valuation of £5.36 million. During the period the Group purchased £2.05 million of its own shares.

The financial performance of each of the Group's businesses and its investments is set out in detail in the financial review below.

Acquisitions and future strategy

Following the period end we acquired a majority stake in Shire Foods, a manufacturer of frozen pies, pasties and sausage rolls. We are working hard to put the business on a more solid foundation and some progress is being made in that regard, although, as in any turnaround, it is much too early to be confident of success. In August the financial markets started to fall as fears over the solvency of some European states, and banks, increased. Falls in, and the volatility of, markets is negative for the assets and businesses that we own, but conversely is very good for assets that we seek to buy. The current risk aversion of most investors and acquirers means that investment holding periods for us may be longer and the requirement to rely on our own sources of funding a sine qua non. I do not see any end in the near term to this investment environment.

Jonathan Lander

Chief Executive

27 September 2011

Financial Review

This financial review covers the Group's performance during the period ended 30 June 2011. It should be read in conjunction with the Chairman's and Chief Executive's Statements.

Revenue and operating performance

Detailed information about the Group's segments is set out in note 2 to these interim results and should be read in conjunction with this financial review.

Online marketing and data services

IPT's like-for-like revenue increased by 2.3% from £4.27 million to £4.37 million but the higher-margin List Rental business did not perform as strongly. This, coupled with investments made in new customer acquisition channels, resulted in reduced profitability. The profit before interest and tax was £0.26 million (30 June 2010: £0.63 million; 31 December 2010: £1.14 million).

Dividends paid by IPT in the period were £0.55 million, of which non-controlling interests received £0.3 million and Volvere £0.25 million.

Security solutions

Security solutions revenue was virtually unchanged from the prior period at £0.28 million for the period (6 months ended 30 June 2010: £0.29 million; Year ended 31 December 2010: £0.47 million). Development work continued on key projects for clients with encouraging results. SiraView continued to make steady progress as more police forces adopted it, with the recent riots in the UK highlighting its usefulness in reviewing CCTV footage. Revenues improved over the second half of 2010 and, although the final result will depend on the extent to which certain client projects are funded in the second half, it is expected that overall earnings for the year as a whole will be enhanced. The profit before tax for the period was £0.04 million ( 6 months ended 30 June 2010: £0.05 million; Year ended 31 December 2010: £0.04 million).

Statement of financial position

Cash and cash equivalents

Cash at the period end was £13.08 million (30 June 2010: £9.95 million, 31 December 2010: £3.11 million). The increase compared to 31 December 2010 was a result principally of the disposal of certain available for sale investments, offset by the purchase by the Group of its own shares. The total value of shares purchased in the six months to 30 June 2011 was £2.05 million, bringing the total to date to £2.9 million.

Available for sale investments

At the period end the Group had available for sale investments with a market value of £5.36 million (30 June 2010: £10.8 million, 31 December 2010: £17.8 million); the base cost of these investments was £4.8 million (30 June 2010: £9.9 million, 31 December 2010: £16.4 million). The investments are in a mixture of non-investment grade bank fixed income securities as well as other investment grade corporate bond and asset-backed securities funds of mainly US issuers.

Certain of the investments are denominated in US dollars (base cost $4 million, valuation $4.3 million) and the Group has entered into a foreign exchange contract for the sale of $4.25 million for sterling in November 2011. The difference between the foreign exchange contract rate and the spot rate has resulted in an increase in the fair value of the derivative contract and hence a credit to the income statement of £95,000 has been recognised in the period.

Other financial liabilities

During the period most of the company's issued A and B shares (the "Incentive Shares") were converted into Ordinary Shares. In prior periods, due to the treatment of the Incentive Shares as liabilities rather than equity (in accordance with International Accounting Standard 32), there existed financial liabilities of £1.38 million (30 June 2010) and £1.36 million (31 December 2010). At 30 June 2011, this liability had been reduced to £13,000. The credit arising from the conversion has been credited directly to reserves, with a corresponding reduction in current liabilities.

Earnings per share and share capital

The basic and diluted earnings per ordinary share were 13.35 pence and 13.31 pence respectively (6 months ended 30 June 2010: loss per share 1.74 pence; Year ended 31 December 2010: basic and diluted earnings per share 19.44 pence and 19.39 pence respectively).

During the period the Group purchased a further 725,284 of its ordinary shares of £0.0000001 each ("Ordinary Shares"), which were subsequently held in treasury, for a total consideration including costs of £2.05 million, representing an average price per Ordinary Share of 283 pence.

Hedging

It is not the Group's policy to enter into derivative instruments to hedge interest rate risk.

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 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 heavily dependent on IT systems and infrastructure, the unavailability of which could impact the Group materially.

Key performance indicators

The Group uses key performance indicators suitable for the nature and size of the Group's businesses. This is primarily monthly reports of profitability, levels of working capital and workload. Order intake and chargeable staff utilisation is monitored weekly and reported monthly in respect of the security solutions segment. 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. The segmental analysis in note 2 to this interim report summarises the financial performance of each segment.

Corporate governance

The Board gives careful consideration to the principles of corporate governance as set out in the UK Corporate Governance Code issued by the Financial Reporting Council in May 2010 (the "Corporate Governance Code"). However, the Company is relatively small and it is the opinion of the Directors that not all the provisions of the Corporate Governance 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.

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 and to make purchases of the Company's own shares where the Directors consider these to represent value for shareholders.

Nick Lander

Chief Financial & Operating Officer

27 September 2011

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated statement of changes in equity

Consolidated statement of financial position

Consolidated statement of cash flows

Volvere plc

Notes forming part of the unaudited interim results for the period ended 30 June 2011

1 Financial information

The financial information for the period ended 30 June 2011 and the comparative figures for the period ended 30 June 2010 have not been reviewed or audited by the Group's auditors and have been prepared on the basis of the accounting policies adopted by the Group under IFRS. The same accounting policies and methods of computation are followed in the interim financial report as published by the company on 31 March 2011 in its annual financial statements, which are available on the Company's website at www.volvere.co.uk.

The comparative figures for the year ended 31 December 2010 have been prepared under IFRS. They do not constitute statutory accounts as defined by the Companies Act 2006. The accounts for the 12 months ended 31 December 2010 received an unmodified auditor's report and have been filed with the Registrar of Companies.

The Group has estimated an annualised effective tax rate of 11%. The effective rate is significantly lower than prevailing corporation tax rates in the UK because of the availability of accumulated tax losses in certain Group companies.

Copies of this statement will be available to members of the public at the Company's registered office: York House, 74-82 Queen Victoria Street, London, EC4N 4SJ and on its website www.volvere.co.uk.

2 Segmental information

All revenue arose through services rendered in the principal activities of online marketing and data services, security solutions and investing and management services.

The Group's primary reporting format for reporting segment information is business segments.

2 Segment information (continued)

Note (a): The segment result has been stated before tax, interest, amortisation of intangible assets and Group management charges.

Note (b): Segment assets and liabilities have been stated excluding inter-segment balances.

3 Other gains and losses

Other gains and losses are the gains and losses arising on investments disposed of in the period as part of the Company's treasury management activities.

4 Finance expense

The Company's finance expense relates to the movement in the fair value of the Company's A and B shares. During the period almost all of these were converted into equity and the resulting credit has been taken directly to reserves. The fair value of the remaining A and B shares has been included under current liabilities (£0.01 million, 30 June 2010: £1.38 million, 31 December 2010: £1.36 million).

5 Discontinued operations

Discontinued operations referred to in the 2010 results related to the activities of Sira Certification, which was sold on 3 July 2009.

6 Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

In the period to 30 June 2010 there was no dilutive effect from share options in issue in view of the loss from continuing operations. Employee share options totalling 35,166 were therefore excluded at that time. At 30 June 2011 a total of 34,000 share options remained outstanding.

7 Goodwill