18 January 2021
Vulcan Industries plc
("Vulcan" or the "Company")
Interim Results for the 6 Months ended 30 September 2020
Vulcan Industries plc (AQSE: VULC) is pleased to announce its unaudited interim
results for the 6-month period ended 30 September 2020.
This is the first reporting period following the company's listing on Aquis
Exchange Growth Market ("AQSE") on 1st June 2020. These interim financial
statements follow the publication of the Audited Financial Statements for the
period from incorporation to 31 March 2020 which were announced on 15 January
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
In the period under review the entire share capital of the Company was admitted
to trading AQSE on 1 June 2020. In conjunction with the Admission, the Company
raised £746,500 gross, £508,000 after expenses relating to the admission.
Activity in the first quarter of the current financial year was severely
impacted by the initial COVID-19 lockdown. Nonetheless M&G Olympic Products
Limited ("M&G") operated, albeit at reduced levels, throughout the period and
the remaining operations resumed activity towards the end of June 2020. By the
end of the second quarter, activity levels were ahead of internal forecasts
made at the time of admission to AQSE.
The financial results for the Group for the 6-month period to 30 September 2020
("HY21") show revenue in the quarter to 30 June 2020 of £772,000, reflecting
the significant impact of the initial lockdowns, increasing to £1,416,000 in
the second quarter as activity levels resumed, giving total revenue of £
2,188,000 for the period (HY20: £3,015,000). The loss before interest, tax,
depreciation and amortization is £1,030,000 (HY20: £448,000). After
depreciation and amortization of £224,000 (HY20: £219,000) and finance costs of
£306,000 (HY20; £330,000) the Group is reporting a loss after taxation of £
1,560,000 (HY20: £997,000). Of this £973,000 relates to central costs,
including professional fees of £339,000 in respect of listing expenses and
acquisition costs, and £242,000 of finance costs. Cash balances at 30 September
2020 were £632,000 (HY20: £158,000) and net debt was £3,818,000 (HY20: £
2,882,000).
At 30 September 2020, the Group balance sheet shows net liabilities of £
1,626,000 (HY20 Net assets £692,000). Since the period end to the date of this
report, the Company has raised new equity of £1,135,000 before expenses.
Outlook
Activity levels in the third quarter of the current financial year continued to
improve and forward order books have been rebuilt as the economy recovers.
The acquisition of Romar Process Engineering Limited on 21st October 2020 is
the first since admission. It brings additional breadth to our fabrication
capabilities and offers opportunities for manufacturing synergies and overhead
efficiencies.
The Company has identified potential further acquisition opportunities and will
make further announcements as negotiations progress. The board is now focused
on raising additional equity to strengthen the balance sheet and to fund the
cash component of future acquisition consideration.
Unaudited Consolidated Statement of
Comprehensive Income
6 Months to 6 Months to Period 24
30 30 October 2018
September September to 31 March
2020 2019 2020
Note £'000 £'000 £'000
Revenue 2,188 3,015 5,670
Cost of sales (1,672) (1,989) (4,627)
Gross profit 516 1,026 1,043
Operating expenses (1,445) (1,412) (3,007)
Other gains and losses 3 (325) (280) (608)
Finance costs 4 (306) (330) (622)
Loss before tax (1,560) (997) (3,194)
Income tax - - -
Loss for the period attributable to (1,560) (997) (3,194)
owners of the Company
Other Comprehensive Income for the period - - -
Total Comprehensive Income for the period (1,560) (997) (3,194)
attributable to owners of the Company
Earnings per share
- Basic earnings per share (pence) 5 (0.68p) (0.54p) (1.82p)
Unaudited Consolidated Statement of
Financial Position
At At At
30 September 30 September 31 March
2020 2019 2020
Note Note £'000
Non?current assets
Goodwill 1,271 1,271 1,271
Other intangible assets 786 899 841
Property, plant and equipment 425 543 484
Right of use assets 977 630 1,086
Total non-current assets 3,459 3,343 3,682
Current assets
Inventories 418 423 357
Trade and other receivables 1,851 1,751 1,457
Cash and bank balances 632 158 54
Total current assets 2,902 2,332 1,868
Total assets 6,361 5,675 5,550
Current liabilities
Trade and other payables (3,499) (1,819) (3,092)
Corporation tax - (82) -
Lease liabilities (332) (358) (317)
Borrowings 6 (273) (627) (832)
Total current liabilities (4,104) (2,886) (4,241)
Non?current liabilities
Lease liabilities (582) (230) (748)
Borrowings 6 (3,263) (1,825) (1,825)
Deferred tax liabilities (38) (42) (38)
Total non-current liabilities (3,883) (2,097) (2,611)
Total liabilities (7,987) (4,893) (6,852)
Net liabilities (1,626) 692 (1,302)
Equity
Share capital 7 98 74 80
Share premium account 7 3,030 1,812 1,812
Retained earnings (4,754) (1,194) (3,194)
Total equity attributable to the owners (1,626) 692 (1,302)
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 2019 24 1,812 (197) 1,639
Total Comprehensive income for the period - - (997) (997)
Transactions with shareholders
Issue of shares 50 - - 50
Total transactions with shareholders for 50 - - 50
the period
At 30 September 2019 74 1,812 (1,194) 692
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 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)
Unaudited Consolidated Statement of Cash 6 Months to 6 Months to Period 24th
Flows 30 September 30 September October 2018
2020 2019 to 31March
2020
Note £'000 £'000 £'000
Loss for the period (1,560) (997) (3,194)
Adjustments for:
Finance costs 306 330 622
Depreciation of property, plant and 62 59 153
equipment
Depreciation of right of use assets 107 104 281
Amortisation of intangible assets 55 53 126
Loss on disposal of property plant and (15) - 12
equipment
(1,045) (451) (2,000)
Operating cash flows before movements in
working capital
(Increase) / decrease in inventories (62) 141 134
(Increase) / decrease in trade and other (394) 79 (237)
receivables
Increase / (decrease) in trade and other 474 (159) 1,777
payables
Cash used in operating activities (1,026) (391) (326)
Investing activities
Proceeds on disposal of property, plant 15 - 4
and equipment
Purchases of property, plant and equipment - - (36)
Consideration on acquisition of (67) (934) (908)
subsidiaries net of cash acquired,
Net cash used in investing activities (52) (934) (940)
Financing activities
Interest paid (306) (330) (622)
Proceeds from loans and borrowings 6 927 2,089 2,414
Repayment of borrowings 6 (48) (150) (240)
Repayment of lease liabilities (153) (177) (324)
Proceeds on issue of shares 1,237 50 92
Net cash from financing activities 1,657 1,482 1,320
Net increase in cash and cash equivalents 578 157 54
Cash and cash equivalents at beginning of 54 1 -
year
Effect of foreign exchange rate changes -
Cash and cash equivalents at end of year 632 158 54
Notes to the unaudited consolidated financial statements
for the 6-month period ended 30 September 2020
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.
On 1 June 2020, the entire issued share capital of the Company was admitted to
trading on the Aquis Stock Exchange Growth Market (AQSE Growth market).
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 2020. 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'), as adopted by the European Union, and
accounting policies adopted by the Group as set out in the annual report for
the period ended 31 March 2020 (available at www.vulcanplc.com). The Group does
not anticipate any significant change in these accounting policies for the year
ended 31 March 2021.
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 2020 is based on the statutory
accounts for the period 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 2020. 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 11 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 Period 24th
30 September 30 September October 2018
2020 2019 to 31March
2020
£'000 £'000 £'000
Listing expenses 334 132 243
Acquisition costs 6 140 156
Loss allowance on trade receivables - - 157
Other (14) 8 52
325 280 608
4. Finance costs
6 Months to 6 Months to Period 24th
30 September 30 September October 2018
2020 2019 to 31March
2020
£'000 £'000 £'000
Interest on loans, bank overdrafts and 254 215 498
leases
Loan arrangement fees and other finance 52 115 124
costs
306 330 622
5. Loss per share
The calculation of the basic loss per 6 Months to 6 Months to Period 24th
share is based on the following data 30 September 30 September October 2018
2020 2019 to 31March
2020
£'000 £'000 £'000
Loss for the period for the purposes of (1,560) (997) (3,194)
basic loss per share attributable to
equity holders of the Company
Weighted average number of Ordinary Shares 229,600,485 184,327,869 175,835,336
for the purposes of basic loss per share
Basic loss per share (pence) (0.68p) (0.54p) (1.82p)
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
2020 2019 2020
£'000 £'000 £'000
Non-current liabilities
Secured
CBIL 890 - -
Convertible loan note 548 - -
Other Loans 1,825 1,825 1,825
3,263 1,825 1,825
Current liabilities
Secured
CBIL 15 - -
Factoring facility 258 360 243
Other loans - 264 548
Unsecured
Bank Overdraft - 3 41
3,536 2,452 2,657
The CBIL was drawn down in September 2020. It is repayable over 6 years,
commencing September 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 other loans falling due in less than one year at 31 March 2020 are secured
by means of a cross guarantee given by the Company and all subsidiaries. On 19
May 2020, the loan was replaced by a convertible loan note with 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 after more than one year of £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
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
At 24 On Drawn Repaid At 31
October Acquisition down March
2018 2020
£'000 £'000 £'000 £'000 £'000
Secured borrowings - - 1,825 - 1,825
Other loans - - 548 - 548
Factoring facilities - 483 - (240) 243
Bank overdraft - - 41 - 41
Total borrowings - 483 2,414 (240) 2,657
7. Share capital
Number £'000
Issued and fully paid:
At 24 October 2018 - -
Issued during the period 60,000,000 24
At 31 March 2019 60,000,000 24
Issued during the period 123,000,000 50
At 30 September 2019 183,000,000 74
Issued during the period 15,900,000 6
At 31 March 2020 198,900,000 80
Issued during the period 47,093,215 18
At 30 September 2020 245,993,215 98
On 11 May 2020, the Company issued 6,666,667 shares at 3p for cash.
On 1 June 2020 the entire share capital of the Company was admitted trading on
the Aquis Exchange Growth Market. In conjunction with the admission, the
Company issued 21,408,331 new shares by way of a placing and subscription,
raising £577,500 before expenses. The Company also issued 5,633,333 fee shares
at 3p in respect of fees amounting to £169,000.
On 17 June 2020, the Company issued 3,250,000 shares at 2p to employees for
cash and 166,667 shares at 3p for cash in respect of a late subscription. In
addition, 5,833,333 shares were issued at 3p in settlement of outstanding fees.
On 17 June 2020 the Company issued 2,564,706 shares at 4.25p for cash.
On 8 July 2020 the company issued 1,570,178 shares at 4.5p for cash.
8. Post balance sheet events
On 21 October 2020, the Group acquired the business and assets of Romar Process
Engineering Limited for £550,000 comprising the issue of 2,500,000 shares at 6p
per share, initial cash consideration of £350,000 and deferred consideration of
£50,000.
On 25 November 2020 the Company issued 5,567,316 shares at 5p and 1,036,364
shares at 5.5p for cash.
On 16 December 2020 the Company issued 6,636,363 shares at 5.5p per share for
cash.
On 8 January 2021 the Company issued 2,650,000 shares at 5p and 272,727 shares
at 5.5p for cash.
On 14 January 2021 the Company issued 2,222,222 shares at 4.5p for cash.