04 January 2022
Vulcan Industries plc
("Vulcan" or the "Company")
Interim Results for the 6 Months ended 30 September 2021
Vulcan Industries plc (AQSE: VULC) is pleased to announce its unaudited interim
results for the 6-month period ended 30 September 2021.
Principal activity
The Company was established to develop a precision engineering group of
companies, manufacturing and fabricating products for a global client base. The
acquisition strategy is based on establishing targets that represent
opportunities for synergies, helping to streamline existing operations and
contributing to centralised purchasing, supply chain and operational savings.
Review of business and future developments
Activity in the first half of the current financial year continued to be
impacted by COVID-19. All operations experienced outbreaks of COVID, adversely
impacting output. Demand has yet to return to pre pandemic levels.
The financial results for the Group for the 6-month period to 30 September 2022
("HY22") show revenue of £2,724,000 for the period (HY21: £2,188,000). The loss
before interest, tax, depreciation and amortization is £447,000 (HY21: £
1,030,000). After depreciation and amortization of £269,000 (HY21: £224,000)
and finance costs of £235,000 (HY21: £306,000) the Group is reporting a loss
after taxation of £951,000 (HY21: 1,560,000). Of this £525,000 (HY21: £
973,000) relates to central costs, including professional fees of £nil (HY21: £
339,000) in respect of listing expenses and acquisition costs, and £235,000
(HY21: £242,000) of finance costs. Cash balances at 30 September 2021 were £
42,000 (HY21: £632,000) and net debt was £4,239,000 (HY21: £3,818,000).
At 30 September 2021, the Group balance sheet shows net liabilities of £
2,891,000 (HY21 Net liabilities £1,626,000). Since the period end to the date
of this report, the Company has issued new equity of £797,000 before expenses.
Outlook
Activity levels in the third quarter of the current financial year have
improved and forward order books at both M&G Olympic Products Limited ("M&G")
and Orca Doors Limited ("Orca") remain strong indicating an improved outlook
for the second half.
The acquisition of Aftech Limited previously announced on 2nd November 2021, is
expected to complete in early January 2022. It brings additional breadth to our
fabrication capabilities and offers opportunities for manufacturing synergies
and overhead efficiencies. With an effective date of 1 December 2021 this will
also contribute to an improved second half. The acquisition is expected to be
immediately earnings enhancing and as the consideration is the issue of new
ordinary shares, is expected to further reduce the net liabilities;
The Company has identified potential additional acquisition opportunities and
will make further announcements as negotiations progress.
Unaudited Consolidated Statement of
Comprehensive Income
6 Months to 6 Months to Year ended
30 30 31 March
September September 2021
2021 2020
Note £'000 £'000 £'000
Revenue 2,724 2,188 5,225
Cost of sales (2,172) (1,805) (4,375)
Gross profit 552 383 850
Operating expenses (1,354) (1,445) (3,082)
Other gains and losses 3 86 (192) (446)
Impairment charge - - (150)
Finance costs 4 (235) (306) (595)
Loss before tax (951) (1,560) (3,423)
Income tax - - -
Loss for the period attributable to (951) (1,560) (3,423)
owners of the Company
Other Comprehensive Income for the period - - -
Total Comprehensive Income for the period (951) (1,560) (3,423)
attributable to owners of the Company
Earnings per share
- Basic earnings per share (pence) 5 (0.32p) (0.68p) (1.39p)
Unaudited Consolidated Statement of
Financial Position
At At At
30 September 30 September 31 March
2021 2020 2021
Note Note £'000
Non?current assets
Goodwill 1,571 1,271 1,571
Other intangible assets 762 786 825
Property, plant and equipment 342 425 409
Right of use assets 717 977 842
Total non-current assets 3,392 3,459 3,647
Current assets
Inventories 578 418 628
Trade and other receivables 2,243 1,851 1,927
Cash and bank balances 42 632 86
Total current assets 2,863 2,902 2,641
Total assets 6,255 6,361 6,288
Current liabilities
Trade and other payables (4,765) (3,499) (4,305)
Lease liabilities (228) (332) (263)
Provisions (62) (62)
Borrowings 6 (2,736) (258) (433)
Total current liabilities (7,791) (4,089) (4,241)
Non?current liabilities
Lease liabilities (429) (582) (526)
Borrowings 6 (888) (3,278) (3,220)
Deferred tax liabilities (38) (38) (38)
Total non-current liabilities (1,355) (3,898) (3,784)
Total liabilities (9,146) (7,987) (8,847)
Net liabilities (2,891) (1,626) (2,559)
Equity
Share capital 7 138 98 112
Share premium account 7 4,539 3,030 3,946
Retained earnings (7,568) (4,754) (6,617)
Total equity attributable to the owners (2,891) (1,626) (2,559)
of the company
Unaudited Consolidated statement of changes Share Share Retained Total
in equity Capital Premium earnings Equity
£'000 £'000 £'000 £'000
At 1 April 2020 80 1,812 (3,194) (1,302)
Total Comprehensive income for the period - - (1,560) (1,560)
Transactions with shareholders
Issue of shares 18 1,218 - 1,236
Total transactions with shareholders for 18 1,218 - 1,236
the period
At 30 September 2020 98 3,030 (4,754) (1,626)
Total Comprehensive income for the period - - (2,000) (2,000)
Transactions with shareholders
Issue of shares 6 - - 6
Total transactions with shareholders for 6 - -
the period
At 31 March 2021 112 3,946 (6,617) (2,559)
Total Comprehensive income for the period - - (951) (951)
Transactions with shareholders
Issue of shares 26 593 - 619
Total transactions with shareholders for 26 593 - 619
the period
At 30 September 2021 138 4,539 (7,568) (2,891)
Unaudited Consolidated Statement of Cash 6 Months to 6 Months to Year Ended
Flows 30 September 30 September 31March
2021 2020 2021
Note £'000 £'000 £'000
Loss for the period (951) (1,560) (3,423)
Adjustments for:
Finance costs 235 306 595
Depreciation of property, plant and 81 62 117
equipment
Depreciation of right of use assets 125 107 244
Amortisation of intangible assets 63 55 116
Impairment of goodwill - - 150
Increase in provisions - - 62
Share based payment 48 - 34
Loss on disposal of property plant and - (15) -
equipment
(399) (1,045) (2,105)
Operating cash flows before movements in
working capital
Decrease) / (increase) in inventories 50 (62) (272)
(Increase) / decrease in trade and other (190) (394) (470)
receivables
Increase / (decrease) in trade and other 460 474 1,367
payables
Cash used in operating activities (79) (1,026) (1,480)
Investing activities
Proceeds on disposal of property, plant - 15 -
and equipment
Purchases of property, plant and equipment (14) - (42)
Consideration on acquisition of - (67) (350)
subsidiaries net of cash acquired,
Net cash used in investing activities (14) (52) (392)
Financing activities
Interest paid (235) (306) (595)
Proceeds from loans and borrowings 6 11 927 1,083
Repayment of borrowings 6 (41) (48) (116)
Repayment of lease liabilities (131) (153) (275)
Proceeds on issue of shares 445 1,237 1,087
Net cash from financing activities 49 1,657 1,904
Net increase in cash and cash equivalents (44) 578 32
Cash and cash equivalents at beginning of 86 54 54
year
Effect of foreign exchange rate changes -
Cash and cash equivalents at end of year 42 632 86
Notes to the unaudited consolidated financial statements
for the 6-month period ended 30 September 2021
1. General information
Vulcan Industries PLC is incorporated in England and Wales as a public company
with registered number 11640409. The address of the Company's registered office
is 8th Floor, The Broadgate Tower, 20 Primrose Street, London, EC2A 2EW.
These summary financial statements are presented in Sterling and are rounded to
the nearest £'000. which is also the currency of the primary economic
environment in which the Company and Group operate (their functional currency).
Basis of accounting
The condensed consolidated financial statements of the Group for the 6 months
ended 30 September 2021. which are unaudited and have not been reviewed by the
Company's Auditor, have been prepared in accordance with the International
Financial Reporting Standards ('IFRS'), and accounting policies adopted by the
Group as set out in the annual report for the period ended 31 March 2021
(available at www.vulcanplc.com). The Group does not anticipate any significant
change in these accounting policies for the year ended 31 March 2022.
This interim report has been prepared to comply with the requirements of the
Access Rulebook of the AQSE Growth Market. In preparing this report, the Group
has adopted the guidance in the Access Rulebook for interim accounts which do
not require that the interim condensed consolidated financial statements are
prepared in accordance with IAS 34, 'Interim financial reporting'. Whilst the
financial figures included in this report have been computed in accordance with
IFRSs applicable to interim periods, this report does not contain sufficient
information to constitute an interim financial report as that term is defined
in IFRSs.
The financial information contained in this report also does not constitute
statutory accounts under the Companies Act 2006, as amended. The financial
information for the period ended 31 March 2021 is based on the statutory
accounts for the year then ended. The Auditors reported on those accounts.
Their report was unqualified and referred to going concern as a key audit
matter. They drew attention to note 3 in the financial statements, which shows
conditions which indicate that a material uncertainty exists that may cast
significant doubt on the company's ability to continue as a going concern.
Their opinion was not modified in respect of this matter.
The financial statements have been prepared on the historical cost basis,
except for the certain financial instruments that are measured at fair values
at the end of each reporting period, as explained in the accounting policies
below. Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
The principal accounting policies adopted are set out below.
Significant accounting policies
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
for the period ended 31 March 2021. Control is achieved when the Company has
the power:
* over the investee;
* is exposed, or has rights, to variable returns from its involvement with
the investee; and
* has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the
subsidiary and ceases when the Company loses control of the subsidiary.
Specifically, the results of subsidiaries acquired or disposed of during the
year are included in profit or loss from the date the Company gains control
until the date when the Company ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with the Group's
accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows
relating to transactions between the members of the Group are eliminated on
consolidation.
Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of assets
transferred by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interest issued by the Group in exchange
for control of the acquiree. Acquisition-related costs are recognised in profit
or loss as incurred. At the acquisition date, the identifiable assets acquired
and the liabilities assumed are recognised at their fair value at the
acquisition date, except that deferred tax assets or liabilities and assets or
liabilities related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 and IAS 19 respectively.
Goodwill is measured as the excess of the sum of the consideration transferred,
the amount of any non-controlling interests in the acquiree, and the fair value
of the acquirer's previously held equity interest in the acquiree (if any) over
the net of the acquisition-date amounts of the identifiable assets acquired and
the liabilities assumed.
Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is reviewed for impairment at least annually. For
the purpose of impairment testing, goodwill is allocated to each of the Group's
cash-generating units (or groups of cash-generating units) expected to benefit
from the synergies of the combination. Cash-generating units to which goodwill
has been allocated are tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired. If the recoverable amount
of the cash-generating unit is less than the carrying amount of the unit, the
impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset in the unit. An
impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a cash-generating unit, 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 for goods and services provided in the normal course of business,
net of discounts, value added taxes and other sales related taxes.
Performance obligations and timing of revenue recognition:
All of the Group's revenue is derived from selling goods with revenue
recognised at a point in time when control of the goods has transferred to the
customer. This is generally when the goods are collected or delivered to the
customer, or in the case of fabrication project work, when the project has been
accepted by the customer. There is limited judgement needed in identifying the
point control passes: once physical delivery of the products to the agreed
location has occurred, the Group no longer has physical possession, usually it
will have a present right to payment. Consideration is received in accordance
with agreed terms of sale.
Determining the contract price:
The Group's revenue is derived from:
a) sale of goods with fixed price lists and therefore the amount of
revenue to be earned from each transaction is determined by reference to those
fixed prices; or
b) individual identifiable contracts, where the price is defined
Allocating amounts to performance obligations:
For most sales, there is a fixed unit price for each product sold. Therefore,
there is no judgement involved in allocating the price to each unit ordered.
There are no long-term or service contracts in place. Sales commissions are
expensed as incurred. No practical expedients are used.
Current and deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off.
2. Critical accounting judgements and key sources of estimation
uncertainty
In applying the Group's accounting policies, the directors are required to make
judgements (other than those involving estimations) that have a significant
impact on the amounts recognised and to make estimates and assumptions about
the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on
historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Going concern
The directors are confident that the existing financing set out in note 6 will
remain available to the Group and, as demonstrated by equity raised since the
period end, that additional sources of finance will be available. The
directors, with the operating initiatives already in place and funding options
available, are confident that the Group will achieve its cash flow forecasts.
Therefore, the directors have prepared the financial statements on a going
concern basis. These financial statements do not include the adjustments that
would result if the Group were unable to continue as a going concern.
3. Other gains and losses
6 Months to 6 Months to Year ended
30 September 30 September 31March
2021 2020 2021
£'000 £'000 £'000
Listing expenses - 334 486
Acquisition costs - 6 5
Loss allowance on trade receivables (28) - 69
Job retention Scheme Furlough grants (51) (133) (233)
Other (7) (15) 119
(86) 192 446
4. Finance costs
6 Months to 6 Months to Year ended
30 September 30 September 31March
2021 2020 2021
£'000 £'000 £'000
Interest on loans, bank overdrafts and 235 254 503
leases
Loan arrangement fees and other finance - 52 92
costs
235 306 595
5. Loss per share
The calculation of the basic loss per 6 Months to 6 Months to Year ended
share is based on the following data 30 September 30 September 31March
2021 2020 2021
£'000 £'000 £'000
Loss for the period for the purposes of (951) (1,560) (3,423)
basic loss per share attributable to
equity holders of the Company
Weighted average number of Ordinary Shares 299,050,167 229,600,485 246,159,692
for the purposes of basic loss per share
Basic loss per share (pence) (0.32p) (0.68p) (1.39p)
The Company has issued options over ordinary shares which could potentially
dilute basic earnings per share in the future. There is no difference between
basic loss per share and diluted loss per share as the potential ordinary
shares are anti-dilutive.
6. Borrowings
At At At
30 September 30 September 31 March
2021 2020 2021
£'000 £'000 £'000
Non-current liabilities
Secured
Corona virus business interruption loan 799 905 799
(CBIL)
Convertible loan note - 548 -
Other Loans - 1,825 1,854
Unsecured
Bounce back loan (BBL) 89 - 94
Convertible loan note - - 473
888 3,278 3,220
Current liabilities
Secured
CBIL 106 106
Factoring facility 292 258 321
Other Loans 1,854 - -
Unsecured
BBL 11 6
Convertible loan note 473 - -
2,736 258 433
Total Borrowings 3,624 3,536 3,653
The CBIL was drawn down in September 2020. It is repayable over 6 years,
commencing October 2021. Interest rate is 3.99%. The loan is secured by a
debenture over the Company and IVI Metallics Limited and cross guarantees from
the Company and certain subsidiaries.
The convertible loan note has a coupon of 5%. The lender has the right to
convert the outstanding principal into ordinary share of the Company at a price
of 3p per share. In the event that the lender does not exercise its conversion
rights by 31 March 2022, the loan shall become immediately repayable by the
Company.
Other loans falling due in less than one year of £1,854,000 (HY21 £1,825,000)
are secured by means of a debenture, chattels mortgage and cross guarantee
entered into by the Company and each of its subsidiaries. The lender has agreed
to waive the maturity date, so long as the other terms of the agreement
continue to be adhered to. The loans bear an interest rate of 18% per annum.
The factoring facility is secured on certain trade receivables. There is a
factoring charge of 1% of the Gross debt and a discount rate of 5% above Lloyds
bank base rate on net advances. The agreement provides for 6 months' notice by
either party and certain minimum fee levels.
Reconciliation to cash flow statement
At 1 Drawn Repaid At 30
April down September
2021 2021
£'000 £'000 £'000 £'000
Secured borrowings - 2,759 - - 2,759
Convertible loan note - 473 - - 473
Factoring facilities - 321 11 (40) 292
BBL 100 - 100
Total borrowings 3,653 11 (40) 3,624
At 1 Drawn Repaid At 30
April down September
2020 2020
£'000 £'000 £'000 £'000
Secured borrowings - 1,825 905 - 2,730
Convertible loan note - 548 - - 548
Factoring facilities - 243 22 (7) 258
Bank overdraft - 41 - (41) -
Total borrowings 2,657 927 (48) 3,536
7. Share capital
Number £'000
Issued and fully paid:
At 31 March 2020 198,900,000 80
Issued during the period 47,093,215 18
At 30 September 2020 245,993,215 98
Issued during the period 14
At 31 March 2021 280,786,938 112
Issued during the period 64,108,222 26
At 30 September 2021 344,895,160 138
8. Post balance sheet events
On 16 November 2021 the Company issued 5,771,875 new ordinary shares for cash
at 1.6p.
On 29 November 2021 the Company issued 906,250 new ordinary shares for cash at
1.6p and 6,531,250 new ordinary shares in settlement of fees at 1.6p.
On 30 November 2021 the Company issued 4,636,750 new ordinary shares in
settlement of directors' fees at 1.6p.
On 3 December 2021 the Company issued 8,680,000 new ordinary shares for cash at
1.5p and 6,320,000 new ordinary shares in settlement of fees at 1.5p.
On 6 December 2021 the Company issued 2,250,000 new ordinary shares for cash at
1.6p and 3,125,000 new ordinary shares in settlement of fees at 1.5p.
On 24 December 2021 the Company issued 4,000,000 new ordinary shares in
settlement professional fees subject to a legal claim at 1.8p.