15 January 2021
Vulcan Industries plc
("Vulcan" or the "Company")
Audited Results
Vulcan Industries plc (AQSE: VULC) is pleased to announce its audited results
for the period from its incorporation on 24 October 2018 to 31 March 2020.
These results supersede the unaudited preliminary results announced on 29
December 2020. Reported revenue is £5,670,000 and the reported loss after tax
is £3,194,000 following final audit adjustments as compared to the preliminary
results which reported revenue of £5,742,000 and a loss of £2,962,000.
This period pre-dates the company listing on Aquis on 1st June 2020. The
preparations for, and audit of the financial statements have been severely
impacted by a series of local and regional lockdowns due to COVID-19.
The full annual report is available on the Company's website. A further
announcement will be made when the annual report together with a notice for the
Annual General Meeting is sent to shareholders.
The Company will issue its interim results for the 6 months to 30 September
2020 on 18 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 Company completed four acquisitions and a fifth
acquisition was announced on 21 October 2020. In line with the Company's buy
and build strategy, these acquisitions have been accounted for under IFRS 3
'Business Combinations', using acquisition accounting.
On 1 June 2020, the entire share capital of the Company was admitted to trading
on the Aquis Exchange Growth Market ("AQSE"). In conjunction with the
Admission, the Company raised £746,500 gross, £508,000 after expenses relating
to the admission.
The financial results for the Group for the 18-month period from incorporation
to 31 March 2020, show revenue of £5,670,000 and loss before interest, tax
depreciation and amortization £2,011,000. After depreciation and amortization
of £561,000 and finance costs of £622,000 the Group is reporting a loss after
taxation of £3,194,000. Of this £1,459,000 relates to central costs, including
professional fees of £399,000 in respect of listing expenses and acquisition
costs, and £431,000 of finance costs. Cash balances at 31 March 2020 were £
54,000 and net debt was £3,668,000.
At 31 March 2020, the Group balance sheet shows net liabilities of £1,302,000.
Since the period end to the date of this report, the Company has raised new
equity of £2,507,000 before expenses and drawn down on a CBIL facility of £
905,000.
Outlook
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. This progress has continued into the
third quarter.
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 any negotiations progress. The board are now
focused on raising additional equity to strengthen the balance sheet and to
fund the cash component of future acquisition consideration.
Consolidated Statement of Comprehensive Income
Period 24 October 2018
to 31 March 2020
Note £'000
Revenue 5,670
Cost of sales (4,627)
Gross profit 1,043
Operating expenses (3,007)
Other gains and losses 5 (608)
Finance costs 6 (622)
Loss before tax (3,194)
Income tax -
Loss for the period attributable to owners of the (3,194)
Company
Other Comprehensive Income for the period -
Total Comprehensive Income for the period attributable (3,194)
to owners of the Company
Earnings per share
- Basic and Diluted earnings per share (pence) 7 (1.82)
Consolidated Statement of Financial Position
Note At
31 March
2020
£'000
Non-current assets
Goodwill 8 1,271
Other intangible assets 8 841
Property, plant and equipment 9 484
Right of use assets 10 1,086
Total non-current assets 3,682
Current assets
Inventories 357
Trade and other receivables 1,457
Cash and bank balances 54
Total current assets 1,868
Total assets 5,550
Current liabilities
Trade and other payables (3,092)
Lease liabilities (317)
Borrowings 11 (832)
Total current liabilities (4,241
Non-current liabilities
Lease liabilities (748)
Borrowings 11 (1,825)
Deferred tax liabilities (38)
Total non-current liabilities (2,611)
Total liabilities (6,852)
Net liabilities (1,302)
Equity
Share capital 12 80
Share premium account 12 1,812
Retained earnings (3,194)
Total equity attributable to the owners of the (1,302)
company
Consolidated statement of changes Share Share Retained Total
in equity Capital Premium earnings Equity
£'000 £'000 £'000 £'000
At 24 October 2018 - - - -
Loss for the period - - (3,194) (3,194)
Other comprehensive income for the - - - -
period
Total Comprehensive income for the - - (3,194) (3,194)
period
Transactions with shareholders
Issue of shares 80 1,812 - 1,892
Total transactions with 80 1,812 - 1,892
shareholders for the period
At 31 March 2020 80 1,812 (3,194) (1,302)
Consolidated Statement of Cash Flows Period 24 October 2018
to 31 March 2020
Note £'000
Loss for the period (3,194)
Adjusted for:
Finance costs 622
Depreciation of property, plant and equipment 153
Depreciation of right of use assets 281
Amortisation of intangible assets 126
Loss on disposal of property plant and equipment 12
(2,000)
Operating cash flows before movements in working
capital
Decrease in inventories 134
Increase in trade and other receivables (237)
Increase in trade and other payables 1,777
Cash used in operating activities (326)
Investing activities
Proceeds on disposal of property, plant and 4
equipment
Purchases of property, plant and equipment (36)
Acquisition of subsidiary net of cash acquired 13 (908)
Net cash used in investing activities (940)
Financing activities
Interest paid (622)
Proceeds from loans and borrowings 2,414
Repayment of loans and borrowings (240)
Repayment of lease liabilities (324)
Proceeds on issue of shares 92
Net cash from financing activities 1,320
Net increase in cash and cash equivalents 54
Cash and cash equivalents at beginning of year -
Effect of foreign exchange rate changes -
Cash and cash equivalents at end of year 54
Notes to the unaudited consolidated financial statements
for the period ended 31 March 2020
1. General information
Vulcan Industries PLC was incorporated in England and Wales as a public company
on 24 October 2018 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 financial statements are extracted from the audited financial statements
which have been posted on the Company's web site and do not constitute
statutory accounts.
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).
2. Adoption of new and revised Standards
New and amended IFRS Standards that are effective for the current year
Impact of initial application of IFRS 16 Leases
In the current period, the Group has applied IFRS 16 Leases (as issued by the
IASB in January 2016) that is effective for annual periods that begin on or
after 1 January 2019.
The Company was incorporated on 24 October 2018 and has no leases. The first
acquisition was on 6 February 2019. In preparing the Company accounts IFRS 16
was adopted on incorporation and in preparing the Group accounts the impact of
the adoption of IFRS 16 was reflected in the statement of financial position of
each subsidiary at the date of acquisition. Consequently, there is no impact on
the Group financial statements from the adoption of IFRS 16. Details of the
Group's accounting policy for leases are set out in note 3.
3. Significant accounting policies
Going concern
The Group has prepared forecasts covering the period of 12 months from the date
of approval of these financial statements. These forecasts are based on
assumptions including, inter alia, that there are no further significant
disruptions due to COVID-19 to the supply of input materials or the ability to
maintain operating capability in order to meet its projected sales volumes and
that key assumptions are achieved, such as forecast volumes, selling prices and
budgeted cost reductions. They further take into account working capital
requirements and currently available borrowing facilities.
These forecasts show that the Group is projected, in the short term, to
continue to experience net cash outflows rather than inflows and is contingent
on securing additional funding either through additional loan facilities or
through raising cash through capital transactions to remain a going concern.
The Group's focus is on continued improvements to operational performance of
the acquisitions made during the period with an emphasis on volume growth to
increase gross margins and synergies resulting in cost reductions. As disclosed
in note 14, on 1 June 2020 the Company was admitted to trading on the AQSE
Growth Market. This has already facilitated the ability of the Company to raise
new equity. The acquisition of Romar Process Engineering Limited is expected to
immediately contribute positively to the Group's cashflow. Additional
acquisitions are under review.
COVID-19: The Group does not anticipate any planned closures of sites or
cessation of revenues. However, the future impacts of COVID-19 are inherently
unknown and therefore a sensitised version of the Group's forecasts have been
prepared which both increases the shortfall against pre-existing facilities and
shortens the timing before a shortfall arises.
As set out in notes 11, the Group is funded by a combination of short and
long-term borrowing facilities. Following the period end, the loans falling due
within one year were consolidated into a convertible loan note that now falls
due in March 2022. The factoring facility, of which £243,000 was fully drawn at
31 March 2020, may be withdrawn with 6 months' notice.
Based on the above, whilst there are no contractual guarantees, the directors
are confident that the existing financing 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.
Nonetheless, the forecasts show that the Group requires further funding to meet
its commitments as they fall due and in addition to this the Group is reliant
on maintaining its existing borrowings. If the Group's forecasts are adversely
impacted by COVID 19 or other factors then the Group may require further
funding earlier than expected. These conditions and events indicate the
existence of material uncertainties that may cast significant doubt upon the
Group's ability to continue as a going concern and the Group may therefore be
unable to realise their assets and discharge their liabilities in the ordinary
course of business. These financial statements do not include the adjustments
that would result if the Group were unable to continue as a going concern.
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
period 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 (both
tangible and intangible) 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.
When the consideration transferred by the Group in a business combination
includes a contingent consideration arrangement, the contingent consideration
is measured at its acquisition-date fair value and included as part of the
consideration transferred in a business combination. Changes in fair value of
the contingent consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments against goodwill.
Measurement period adjustments are adjustments that arise from additional
information obtained during the 'measurement period' (which cannot exceed one
year from the acquisition date) about facts and circumstances that existed at
the acquisition date.
If the initial accounting for a business combination is incomplete by the end
of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement period (see above), or
additional assets or liabilities are recognised, to reflect new information
obtained about facts and circumstances that existed as of the acquisition date
that, if known, would have affected the amounts recognised as of that date.
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.
Leases
The Group as a lessee
The Group assesses whether a contract is or contains a lease, at inception of
the contract. The Group recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of 12
months or less) and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For these leases,
the Group recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another systematic basis
is more representative of the time pattern in which economic benefits from the
leased assets are consumed.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the
lessee uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
• Fixed lease payments (including in-substance fixed
payments), less any lease incentives receivable;
• Variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement date;
• The amount expected to be payable by the lessee under
residual value guarantees;
• The exercise price of purchase options, if the lessee is
reasonably certain to exercise the options; and
• Payments of penalties for terminating the lease, if the
lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated
statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount
to reflect interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment
to the related right-of-use asset) whenever:
• The lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of exercise of
a purchase option, in which case the lease liability is remeasured by
discounting the revised lease payments using a revised discount rate.
• The lease payments change due to changes in an index or rate or a
change in expected payment under a guaranteed residual value, in which cases
the lease liability is remeasured by discounting the revised lease payments
using an unchanged discount rate (unless the lease payments change is due to a
change in a floating interest rate, in which case a revised discount rate is
used).
• A lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease liability is
remeasured based on the lease term of the modified lease by discounting the
revised lease payments using a revised discount rate at the effective date of
the modification.
The Group did not make any such adjustments during the period presented.
The right-of-use assets comprise the initial measurement of the corresponding
lease liability, lease payments made at or before the commencement day, less
any lease incentives received and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment
losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a
leased asset, restore the site on which it is located or restore the underlying
asset to the condition required by the terms and conditions of the lease, a
provision is recognised and measured under IAS 37 'Provisions, Contingent
liabilities and Contingent assets'. To the extent that the costs relate to a
right-of-use asset, the costs are included in the related right-of-use asset,
unless those costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of lease term and
useful life of the underlying asset. If a lease transfers ownership of the
underlying asset or the cost of the right-of-use asset reflects that the Group
expects to exercise a purchase option, the related right-of-use asset is
depreciated over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in the consolidated
statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired
and accounts for any identified impairment loss as described in the 'Property,
Plant and Equipment' policy.
Variable rents that do not depend on an index or rate are not included in the
measurement of the lease liability and the right-of-use asset. The related
payments are recognised as an expense in the period in which the event or
condition that triggers those payments occurs.
The Group has applied IFRS 16 using the cumulative catch-up approach. As the
Company has no leases and it is the first period since incorporation that
Company and Group accounts are being presented, any impact of the initial
adoption of IFRS 16 is included in the pre-acquisition reserves of the relevant
subsidiary and in the goodwill arising on acquisition.
Property, plant and equipment
Plant, machinery, fixtures and fittings are stated at cost less accumulated
depreciation and accumulated impairment loss.
Depreciation is recognised so as to write off the cost or valuation of assets
less their residual values over their useful lives, using the straight-line
method or reducing balance methods, on the following bases:
Plant and machinery 10 per cent - 25 per cent per annum
Fixtures and 10 per cent - 30 per cent per annum
fittings
Motor Vehicles 20 per cent - 25 percent per annum
The estimated useful lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.
Right-of-use assets are depreciated over the shorter period of the lease term
and the useful life of the underlying asset. If a lease transfers ownership of
the underlying asset or the cost of the right-of-use asset reflects that the
Group expects to exercise a purchase option, the related right-of-use asset is
depreciated over the useful life of the underlying asset.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials and, where applicable, direct labour costs and those
overheads that have been incurred in bringing the inventories to their present
location and condition. Cost is calculated using the weighted average cost
method. Net realisable value represents the estimated selling price less all
estimated costs of completion and costs to be incurred in marketing, selling
and distribution.
4. Critical accounting judgements and key sources of estimation
uncertainty
In applying the Group's accounting policies, which are described in note 3, 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.
Other intangible assets
Identified intangible assets arising on acquisition are disclosed in note 8 and
comprise; marketing related assets such as brands and domain names; customer
related assets such as customer relationships, lists and existing order books.
Carrying value of goodwill, other intangible assets and property plant and
equipment
Impairment reviews for non-current assets are carried out at each balance sheet
date in accordance with IAS 36, Impairment of assets. Reported losses in the
subsidiary companies, for the period since acquisition, were considered to be
indications of impairment and a formal impairment review was undertaken.
The impairment reviews are sensitive to various assumptions, including the
expected sales forecasts, cost assumptions, capital requirements, and discount
rates among others. The forecasts of future cash flows for each subsidiary were
derived from the operational plans in place. Real prices were assumed to remain
constant at current levels.
Discount rate: The Group's borrowings have a current nominal rate of interest
ranging from 5% to 18% per annum. It is intended to refinance the loan at 18%
at more reasonable long-term rates. The real rate assumed in these forecasts is
estimated to be 10%, a blended rate, taking into account the timing required to
arrange the refinancing.
Sensitivities were applied to each forecast. In order for a potential
impairment to arise, either to goodwill and identifiable intangible assets
arising on acquisition or to non-current assets in the subsidiaries, forecast
sales volumes would have to fall by 4% to 15%. The forecasts did not indicate
an impairment when a discount rate of 18% was applied.
Receivables
In applying IFRS 9 the directors make a judgement in assessing the Group's
exposure to credit risk. As it is the first year of trading for certain
subsidiaries, there is no history on which to base the allowance for expected
credit losses on trade receivables. The Group has recognised a loss allowance
of 100 per cent against all receivables over 120 days past duewhere historical
experience has indicated that these receivables are generally not recoverable.
Certain contracts are subject to contractual retentions with terms up to 2
years that are expected to be recoverable. Provision for expected losses on
retentions are made on a contract by contract basis. The allowance for expected
credit losses follows an internal assessment of customer credit worthiness and
an estimate as to the timing of settlement. In addition, the directors have
assessed the recoverability of other receivables on a case by case basis.
5. Other gains and losses
Period 24 October 2018
to 31 March 2020
£'000
Listing expenses 243
Acquisition costs 156
Loss allowance on trade receivables 157
Other 52
608
6. Finance costs
Period 24 October 2018
to 31 March 2020
£'000
Interest on bank overdrafts and loans 444
Interest on lease liabilities 54
Loan arrangement fees and other finance costs 124
622
7. Loss per share
Period 24 October 2018
to 31 March 2020
The calculation of the basic loss per share is based on the £'000
following data
Loss for the year for the purposes of basic loss per (3,194)
share attributable to equity holders of the Company
Weighted average number of Ordinary Shares for the 175,835,336
purposes of basic loss per share
Basic loss per share (1.82p)
At 31 March 2020, there were no options or warrants in issue and therefore no
potential dilution.
8. Goodwill and other intangible assets
Goodwill
£'000
Cost
At 24 October 2018 -
Recognised on acquisition of subsidiaries 1,271
At 31 March 2020 1,271
Accumulated Impairment Losses
At 24 October 2018 and 31 March 2020 0
Carrying value at 31 March 2020 1,271
Carrying value at 24 October 2018 0
Goodwill arising on acquisition comprises the expected synergies to be realised
form the benefits of being a member of a group rather than stand-alone company.
These include shared services, economies from pooled procurement, leveraging
skillsets across the group and other intangible assets, such as the workforce
knowledge, experience and competences across the group that cannot be
recognised separately as intangible assets.
Other intangible assets
£'000
Cost
At 24 October 2018 -
Recognised on acquisition of subsidiaries 967
At 31 March 2020 967
Amortisation
At 24 October 2018 -
Charge for the period 126
31 March 2020 126
Carrying value at 31 March 2020 841
Carrying value at 24 October 2018 0
Identified intangible assets arising on acquisition comprise; marketing related
assets such as brands and domain names; customer related assets such as
customer relationships, lists and existing order books. These are amortised,
depending upon the nature of the asset and the business acquired over 1 to 10
years on a straight line basis.
The Group tests goodwill and identified intangible assets annually for
impairment, or more frequently if there are indications that they might be
impaired
The recoverable amount of the goodwill is determined based on a value in use
calculation which uses cash flow projections based on financial budgets
approved by the directors covering a six-year period, and a discount rate of
10% per cent per annum
Where cash flows have been extrapolated beyond that six-year period, no further
growth has been assumed.
Sensitivity analysis
The Group has conducted an analysis of the sensitivity of the impairment test
to changes in the key assumptions used to determine the recoverable amount of
goodwill and the identified intangible assets (see note 4)
No impairment provisions in respect of goodwill or other identifiable
intangible assets have been made.
9. Property, plant and equipment
Leasehold Plant and Motor Fixtures Total
improvements machinery vehicles and
Equipment
Cost £'000 £'000 £'000 £'000 £'000
At 24 October 2018 - - - - -
On acquisition of Subsidiary 173 1,110 60 122 1,465
Additions - 16 7 13 36
Disposals - - (40) - (40)
At 31 March 2020 173 1,126 27 135 1,461
Accumulated depreciation
At 24 October 2018 - - - - -
On acquisition of Subsidiary 173 543 44 88 848
Charge for the period - 134 4 15 153
Disposals - - (24) - (24)
At 31 March 2020 173 677 24 103 977
Net book value at 31 March 2020 - 449 3 32 484
Net book value at 24 October - - - - -
2018
A charge over all the group's property plant and equipment is held as security
for borrowings falling due after more than one year (see note 11).
10. Right of use assets
Buildings Plant and Motor Fixtures Total
machinery vehicles and
Equipment
Cost £'000 £'000 £'000 £'000 £'000
At 24 October 2018 - - - - -
On acquisition of Subsidiary 451 61 351 18 881
Additions 617 - 23 - 640
Disposals (124) - (8) - (132)
At 31 March 2020 944 61 366 18 1,389
Accumulated depreciation
At 24 October 2018 - - - - -
On acquisition of Subsidiary 29 24 83 12 148
Charge for the period 204 5 67 5 281
Disposals (124) - (2) - (126)
At 31 March 2020 109 29 148 17 303
Net book value at 31 March 2020 835 32 218 1 1,086
Net book value at 24 October
2018
The Group leases several assets including buildings, plant, vehicles and IT
equipment. The average lease term is 4 years.
The Group has options to purchase certain manufacturing equipment for a nominal
amount at the end of the lease term. The Group's obligations are secured by the
lessors' title to the leased assets for such leases.
Period 24th October 2018
Amounts recognised in profit and loss to 31March 2020
£'000
Depreciation expense on right-of-use assets 281
Interest expense on lease liabilities 30
Expense relating to short-term leases and low 29
value assets
340
The total cash outflow for leases (principal and interest) amounts to £
347,000.
11. Borrowings
At 31
March
2020
Non-current liabilities £'000
Secured
Other Loans 1,825
Current liabilities
Secured
Factoring facility 243
Other loans 548
791
Unsecured
Bank Overdraft 41
832
2,657
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. At 31 March 2020, the principal falls due
for repayment between April and July 2021. Subsequent to the period end, 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 the trade receivables amounting to £
377,000. 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.
The other loans falling due in less than one year are secured by means of a
cross guarantee given by the Company and all subsidiaries. It is repayable on
demand. Subsequent to the period end, it has been 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.
12. Share capital
At 31 March At 31
2020 March
2020
Issued and fully paid: Number £'000
At 24 October 2018 - -
Issued during the period 198,900,000 80
At 31 March 2020 198,900,000 80
The Company has one class of ordinary shares which carry no right to fixed
income.
The company was incorporated on 24 October 2018 with an initial share capital £
50,000, being 5 million ordinary shares with a par value of 1p. On 26 February
2019, the share capital was subdivided into shares with a nominal value of
0.04p. All disclosures referring to the number of shares in issue reflect this
subdivision.
On 6 February 2019, the Company issued 12,500,625 ordinary shares in respect of
the consideration of the acquisition of the entire share capital of IVI
Metallics Limited at a price of 12p per ordinary share.
On 26 February 2019 37,500,000 ordinary shares were issued for cash at a price
of 0.04p.
On 26 February 2019 5,000,000 ordinary shares were issued for cash at a price
of 0.04p.
On 29 April 2019 3,000,000 ordinary shares were issued in respect of the
consideration of the acquisition of the entire share capital of Orca Doors
Limited at a price of 10p per ordinary share.
On 4 July 2019 3,000,000 ordinary shares were issued as consideration for the
acquisition of the entire share capital of Time DMG Steelworks Limited. These
were subsequently cancelled on 7 August 2019 when the acquisition agreement was
rescinded.
On 4 July 2019 300,000 ordinary shares were issued at a price of 6.67p on
conversion of a loan note for £20,000.
On 16 September 2019 15,600,000 ordinary shares were issued for cash at a price
of 0.04p.
Share premium
At 31
March
2020
£'000
At 24 October 2018 -
Premium arising on issue of new equity during the 1,812
period
At 31 March 2020 1,812
13. Acquisition of subsidiaries
Vulcan Industries PLC was incorporated to build a group of UK companies
providing products and services to the, manufacturing and engineering sectors,
particularly focussed on metal fabrication and precision engineering, which
have underlying profitability and growth potential and can benefit from being
part of a larger group focussed on similar or complementary sectors to the
target. In the period to 31 March 2020, the Company has completed four
acquisitions.
IVI Metallics Limited
On 6 February 2019, the Company purchased the entire issued share capital of
IVI Metallics Limited ("IVI") for £1,500,000 which was satisfied by the issue
and allotment by the Company of 12,500,000 Shares at an issue price of 12p per
Share. IVI manufactures precision quality tacks and nails, (including threaded,
hardened and plated products) both for the footwear, and other industries
requiring the highest quality standards.
Time Rainham Limited
On 25 February 2019, IVI Metallics purchased the entire issued share capital of
Time Rainham Limited ("Time Rainham"). The consideration was the assignment of
a debt with a book value of £1,300,000. The directors consider that the fair
value of this debt was £400,000 and impaired the carrying value of the
investment in Time Rainham accordingly. Time Rainham manufactures range of
components including selector forks, levers, valve housings, manifolds and
blocks as well as complex gearbox transmission cases. The effective date of
the acquisition was 6 February 2019.
M & G Olympic Products Limited
On 16 April 2019, the Company purchased the entire issued share capital of M&G
Olympics Products Limited ("M&G") for the sum of £950,000 which was satisfied
by £820,000 in cash on completion and £130,000 as deferred consideration. The
deferred consideration will become payable on the receipt by M&G of certain
debtors of the business on a pound for pound basis. M&G design, manufacture,
and install custom-built architectural metalwork. Products include staircases,
balustrades and handrails
Orca Doors Limited
On 29 April 2019 the Company purchased the entire issued share capital of Orca
Doors Limited ("Orca") for of £300,000 which was satisfied by the issue and
allotment by the Company 3,000,000 Shares at an issue price of 10p per Share.
Orca manufactures high-quality doors and frames for the healthcare and
education markets. The effective date of the acquisition was 20 February 2019.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed in these acquisitions are as set out in the table below.
IVI Time M&G Orca Total
Rainham
£'000 £'000 £'000 £'000 £'000
Property, plant and equipment 374 20 115 107 616
Right of use assets 261 - 471 - 732
Identifiable intangible assets:
- Marketing related 200 - 40 240
- Customer related 500 80 127 20 727
Inventory 173 79 213 20 485
Financial assets 532 232 1,162 2 1,928
Financial liabilities (1,090) (237) (1,340) (143) (2,810)
Deferred tax liabilities - - (39) - (39)
Fair value at acquisition 950 174 749 6 1,879
Goodwill 550 226 201 294 1,271
1,500 400 950 300 3,150
Consideration
Issue of equity 1,500 - - 300 1,800
Assignment of assets - 400 - - 400
Cash - - 950 - 950
Total consideration 1,500 400 950 300 3,150
Acquisition costs of £157,000 have been included in other gains and losses in
the consolidated statement of profit and loss and comprehensive income.
Romar Process Engineering Limited
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. An initial assessment of the fair value of assets acquired is £200,000
including identifiable intangible assets of £160,000.
14. Post balance sheet events
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.
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 21 October 2020, 83,333 shares were issued at 6p and 714,286 shares at 4,2p
in settlement of consultancy fees.
On 25 November 2020 the Company issued 5,567,316 shares at 5p and 1,036,364
shares at 5.5pfor cash
On 16 December 2020 the Company issued 6,636,363 shares at 5.5p 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.