1 November 2022
Vulcan Industries plc
("Vulcan" or the "Company")
Interim Results for the 6 Months ended 30 September 2022
Vulcan Industries plc (AQSE: VULC) is pleased to announce its unaudited interim
results for the 6-month period ended 30 September 2022.
Principal activity
The Company was established to develop an innovative platform from which to
service a global client base. Vulcan's strategy is based on identifying
businesses which represent opportunities for operational synergies to ensure
shareholder value regardless of prevailing economic conditions."
Review of business and future developments
Since admission, the focus has been to restructure the existing businesses to
recover from the financial impact of COVID-19 and lay the foundations to
develop the Group going forward. The initial step in this process was the
acquisition on 24 March 2022 of the entire share capital of Aftech Limited
("Aftech"). Aftech brings additional complementary areas of fabrication skills
and product offering.
Whilst demand picked up in the second quarter of the year ended 31 March 2022,
the continued operating losses placed significant strains on working capital.
In particular, M&G Olympic Products Limited ("MGO") which, like many smaller
suppliers to the major construction companies, struggled to balance the cash
flow fluctuations across multiple large projects. This placed strain on both
its processes and its workforce and it was a continued demand on Group cash
resources. In order to stem continued cash outflows, MGO was disposed of on 30
March 2022.
For similar reasons, the Board explored exit alternatives from IVI Metallics
Limited ("IVI") and Orca Doors Limited ("Orca") in the first quarter of the
current year and concluded their disposal for a nominal consideration in July
2022.
Accordingly, the comparative results and cash-flows of the Group have been
restated to reflect these disposals.
The financial results for the Group for the 6-month period to 30 September 2022
("HY22") show continuing revenue of £1,226,000 for the period (HY21: £491,000).
The loss before interest, tax, depreciation and amortization is £275,000 (HY21:
£392,000). After depreciation and amortization of £37,000 (HY21: £18,000) and
finance costs of £235,000 (HY21: £199,000) the Group is reporting a loss after
taxation on continuing activities of £547,000 (HY21: 609,000). As a result of
the disposals, the Group is reporting a profit on discontinued activities of £
1,271,000 (HY21: loss £341,000)
At 30 September 2022, the Group balance sheet shows cash balances of £91,000
(HY21: £42,000) and net debt was £3,275,000 (HY21: £4,239,000). Net liabilities
at 30 September 2022 were £2,089,000 (HY21 Net liabilities £2,891,000).
Outlook
In the first half of the year, the Group has continued to lay the foundations
for its future development by disposing of the loss-making legacy businesses of
IVI and Orca. On 13 October 2022, the Company announced that it had entered
into binding Heads of Terms, subject to documentation, to acquire the entire
share capital of Peregrine X limited ("Peregrine"). The documentation is in
course of preparation and a further announcement will be made in due course.
This acquisition will enable the Group to focus on building a profitable
trading business over the coming years.
The Company has identified further potential additional acquisition
opportunities and will make further announcements should these progress.
Unaudited Consolidated Statement of
Comprehensive Income
The comparatives have been restated
to reflect discontinued activities
6 Months to 6 Months to Year ended
30 30 31 March
September September 2022
2022 2021
Note £'000 £'000 £'000
Continuing activities
Revenue 1,226 491 1,084
Cost of sales (929) (436) (938)
Gross profit 297 54 146
Operating expenses (609) (464) (933)
Other gains and losses - - (263)
Impairment charge 3 - - (572)
Finance costs 4 (235) (199) (420)
Loss before tax (547) (609) (2,042)
Income tax - - -
Loss for the period from continuing (547) (609) (2,042)
activities
Discontinued activities
Profit / (loss) for the period from 5 1,271 (342) (1,645)
discontinued activities
Profit / (loss) for the period 724 (951) (3,687)
attributable to the owners of the
Company
Other Comprehensive Income for the - - -
period
Total Comprehensive Income for the 724 (951) (3,687)
period attributable to owners of
the Company
Earnings per share
- Basic and Diluted earnings 6 (0.1p) (0.20p) (0.59p)
per share for loss from continuing
operations attributable to the
owners of the Company (pence)
- Basic and Diluted earnings 6 0.13p (0.32p) (1.06p)
per share attributable to the
owners of the Company (pence)
Unaudited Consolidated Statement of
Financial Position
At At At
30 September 30 September 31 March
2022 2021 2022
Note Note £'000
Non?current assets
Goodwill 945 1,571 945
Other intangible assets 292 762 317
Investments 500 - 500
Property, plant and equipment 156 342 295
Right of use assets - 717 403
Total non-current assets 1,893 3,392 3,647
Current assets
Inventories 51 578 252
Trade and other receivables 731 2,243 833
Cash and bank balances 91 42 69
Total current assets 873 2,863 1,154
Total assets 2,766 6,255 3,614
Current liabilities
Trade and other payables (1,451) (4,765) (2,698)
Lease liabilities - (228) (125)
Provisions - (62) -
Borrowings 7 (3,366) (2,736) (2,968)
Total current liabilities (4,817) (7,791) (5,791)
Non?current liabilities
Lease liabilities - (429) (266)
Borrowings 7 - (888) (674)
Deferred tax liabilities (38) (38) (38)
Total non-current liabilities (38) (1,355) (978)
Total liabilities (4,855) (9,146) (6,769)
Net liabilities (2,089) (2,891) (3,155)
Equity
Share capital 8 234 138 211
Share premium account 7,257 4,539 6,645
Shares to be issued - - 293
Retained earnings (9,580) (7,568) (10,304)
Total equity attributable to the (2,089) (2,891) (3,155)
owners of the company
Unaudited Consolidated Share Shares to Share Retained Total
statement of changes in Capital be issued Premium earnings Equity
equity
£'000 £'000 £'000 £'000 £'000
At 1 April 2021 112 - 3,946 (6,617) (2,559)
Total Comprehensive income - - - (951) (951)
for the period
Transactions with -
shareholders
Issue of shares 26 - 593 - 619
Total transactions with 26 - 593 - 619
shareholders for the period
At 30 September 2021 138 - 4,539 (7,568) (2,891)
Total Comprehensive income - - - (2,763) (2,763)
for the period
Transactions with
shareholders
Issue of shares 73 2,106 - 2,179
Shares to be issued - 293 - - 293
Total transactions with 73 293 2,106 - 2,472
shareholders for the period
At 31 March 2022 211 293 6,645 (10,304) (3,155)
Total Comprehensive income - - - 724 724
for the period
Transactions with
shareholders
Issue of shares 23 (293) 612 - 342
Total transactions with 23 (293) 612 - 619
shareholders for the period
At 30 September 2022 234 - 7,257 (9,580) (2,089)
Unaudited Consolidated Statement of 6 Months to 6 Months to Year Ended
Cash Flows 30 September 30 September 31March
2022 2021 2022
Note £'000 £'000 £'000
Loss for the period from continuing (547) (609) (2,042)
activities
Adjustments for:
Finance costs 235 207 216
Depreciation of property, plant and 12 2 5
equipment
Depreciation of right of use assets - - -
Amortisation of intangible assets 25 22 49
Impairment of goodwill - - 572
Share based payment 69 48 499
(206) (330) (701)
Operating cash flows before movements
in working capital
(Increase) / decrease in inventories (39) - 12
Increase in trade and other receivables (266) (27) (67)
Increase in trade and other payables 600 104 15
Cash from / (used in) operating 89 (253) (741)
activities -continuing
Cash from operating activities 219 175 556
-discontinued
Investing activities
Purchases of property, plant and (1) - -
equipment
Consideration on acquisition of - - 46
subsidiaries net of cash acquired,
Net cash from investing activities - (1) - 46
continuing
Net cash (used in) / from investing - (14) 31
activities - discontinued
Financing activities
Interest paid (235) (207) (216)
Proceeds from loans and borrowings 6 - 11 50
Repayment of borrowings 6 (78) - -
Proceeds on issue of shares 275 445 1,041
Net cash (used in) / from financing (38) 249 875
activities-continuing
Net cash used in financing (247) (200) (784)
activities-discontinued
Net increase in cash and cash 22 (44) (17)
equivalents
Cash and cash equivalents at beginning 69 86 86
of year
Effect of foreign exchange rate changes - - -
Cash and cash equivalents at end of 91 42 69
year
Notes to the unaudited consolidated financial statements
for the 6-month period ended 30 September 2022
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 2022. 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 2022
(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 2022 is based on the statutory
accounts for the year then ended. The Auditors reported on those accounts.
Their report was qualified as follows:
Due to the disposal of some of the group's subsidiaries they were unable to
obtain sufficient appropriate audit evidence on the following areas:
* the discontinued operations in the Consolidated Statement of Comprehensive
Income relating to M&G Olypmic Products Limited:
* the cut off for the revenue of IVI Metallics Limited: the sales cut off
sample for which we did not receive information was £89,000, including post
year end sales of £59,000
* we were appointed subsequent to the year end and were not able to observe
the counting of the physical inventory and were unable to verify by
alternative means the inventory quantities held at the year end.
The auditors 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 2022. 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. Impairment charge
6 Months to 6 Months to Year ended
30 September 30 September 31March
2022 2021 2022
£'000 £'000 £'000
Goodwill - - 1,142
Identified intangible assets - - 571
Other receivables - - 327
- - 2,040
Of which relating to: £'000 £'000 £'000
Continuing activities - - 572
Discontinued activities - - 1,468
- - 2,040
4. Finance costs
6 Months to 6 Months to Year ended
30 September 30 September 31March
2022 2021 2022
£'000 £'000 £'000
Interest on loans, bank overdrafts and 247 217 476
leases
Loan arrangement fees and other finance 19 18 26
costs
266 199 502
Of which relating to: £'000 £'000 £'000
Continuing activities 235 199 420
Discontinued activities 31 36 82
266 235 502
5. Discontinued activities
6 Months to 6 Months to Year ended
30 September 30 September 31March
2022 2021 2022
£'000 £'000 £'000
Revenue 396 2,233 4,011
Cost of sales (319) (1,736) (3,152)
Gross margin 77 497 859
Operating expenses (171) (888) (1,653)
Other Income 25 85 (22)
Impairment charge - - (1,468)
Finance costs (32) (36) (83)
Loss before tax on discontinued activities (101) (342) (2,367)
Tax credit on discontinued activities - - 68
Profit on disposal of discontinued 1,372 - 654
activities
Profit / (loss) on discontinued activities 1,271 (342) (1,645)
The Company disposed of M&G Olympic products Limited on 30 March 2022, Orca
Doors Limited on 18 July 2022 and IVI Metallics Limited on 31 July 2022
6. Earnings per share
The calculation of the basic earnings loss 6 Months to 6 Months to Year ended
per share is based on the following data 30 September 30 September 31March
2022 2021 2022
£'000 £'000 £'000
Loss for the period from continuing (547) (609) (2,042)
activities
Earnings / (loss) for the period for the 724 (951) (3,687)
purposes of basic loss per share
attributable to equity holders of the
Company
Weighted average number of Ordinary Shares 554,051,792 299,050,167 346,819,139
for the purposes of basic loss per share
Basic loss per share (pence) from (0.01p) (0.20p) (0.6p)
continuing activities
Earnings / (loss) per share (pence) 0.13p (0.32p) (1.07p)
attributable to equity holders of the
Company
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.
7. Borrowings
At At At
30 September 30 September 31 March
2022 2021 2022
£'000 £'000 £'000
Non-current liabilities
Secured
Corona virus business interruption loan - 799 634
(CBIL)
Convertible loan note - - -
Other Loans - - -
Unsecured
Bounce back loan (BBL) - 89 40
Convertible loan note - - -
- 888 674
Current liabilities
Secured
CBIL 704 106 182
Factoring facility 333 292 447
Other Loans 1,854 1,854 1854
Unsecured
BBL - 11 10
Convertible loan note 475 473 475
3,366 2,736 2,968
Total Borrowings 3,366 3,624 3,642
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.
Following the disposal of IVI and its subsequent administration, pursuant to
the cross guarantee, HSBC issued a final demand for repayment for the
outstanding principal. The final sum payable will depend on the outcome of the
administration and the Company is in negotiations with the bank to reschedule
the loan. Pending the outcome, the outstanding capital is classified as
falling due within one year. An interim payment has been made by the
administrator has been made to Ablrate and this has been offset against
interest payments due to them.
The impact on the income statement has been to reduce the profit on disposal of
discontinued activities for the period ended 30 September 2022 by £646,000.
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 1p per share. In the event that the lender does not exercise its conversion
rights by 30 September 2023, the loan shall become immediately repayable by the
Company.
Other loans falling due in less than one year of £1,854,000 (HY21 £1,854,000)
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 facilities are 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 On Repaid At 30
April disposal September
2022 2022
£'000 £'000 £'000 £'000
Secured borrowings
Other Loans 1,854 - - 1,854
CBIL 816 - (112) 704
Factoring facilities 447 (81) (33) 333
3,117 (81) (145) 2,891
Convertible loan note 475 - - 475
BBL 50 (40) (10) -
Total borrowings 3,642 (121) (155) 3,366
8. Share capital
Number £'000
Issued and fully paid:
At 31 March 2021 280,786,938 112
Issued during the period 64,108,222 26
At 30 September 2021 344,895,160 138
Issued during the period 181439,442, 80
At 31 March 2022 526,334,602 218
Issued during the period 55,081,892 16
At 30 September 2022 581,416,494 234
9. Post balance sheet events
On 12 October 2022, the Company announced binding heads of terms, subject to
documentation, for the acquisition of the entire share capital of Peregrine X
Limited.