14 October 2022
Vulcan Industries plc
("Vulcan" or the "Company")
Audited Results
Vulcan Industries plc (AQSE: VULC) is pleased to announce its audited results
for the year ended 31 March 2022.
Trading in the Company's shares will resume on Monday 17 October which is the
first business day following the publication of this announcement.
The full audited financial statements will be uploaded to the Company website.
A further announcement will be made when the financial statements are sent to
shareholders together with a notice of the Annual General Meeting.
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 as
well as broadening product offerings and extending to new markets.
Review of business and future developments
On the 1 June 2020, the share capital of the Company was admitted to trading on
the Aquis Stock Exchange Growth Market ("AQSE"). This enables the Company to
raise additional equity to fund its growth and acquisition strategy. 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") (note 12).
Aftech brings additional complementary areas of fabrication skills and product
offering.
COVID-19 has had a significant impact on the financial performance of the Group
since admission. The results for the year ended 31 March 2021, the first period
since admission, reflected the challenging market conditions and the impact of
various lock downs. 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.
Consequently, the results for MGO are disclosed as discontinued activities and
the comparatives for the prior year have been restated accordingly. The
financial results for the Group for the year ending 31 March 2022, show an
increase in continuing revenue of £2,927,000 (2021: £2,327,000) and a fall in
the continuing loss before interest, tax, depreciation, amortization and
impairments to £1,221,000 (2021: £1,605,000). After continuing depreciation and
amortization of £396,000 (2021: £256,000), impairment charges of £2,040,000
(2021: £150,000) continuing finance costs of £490,000 (2021: £551,000) and a
tax credit of £68,000 (2021: £nil), the Group is reporting a loss after
taxation on continuing activities of £4,078,000 (2021: £2,562,000). The
disposal of MGO generated a profit on discontinued activities of £391,000 after
reporting a loss before tax to the date of disposal of £262,000 (2021: £
861,000). The reported loss after tax for the Group is £3,687,000 (2021: £
3,423,000).
At 31 March 2022, the Group balance sheet shows net liabilities of £3,155,000
(2021: £2,559,000). Since the year end to the date of this report, the Company
has issued new equity of £323,000 before expenses.
The auditors have made reference to going concern in their audit report by way
of a material uncertainty. Their opinion is not modified in respect of this
matter.
The audit opinion was qualified. The qualification was related to certain of
the group's subsidiaries that were disposed of and where the auditors 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 Olympic Products Limited;
· - the cut off for the revenue of IVI Metallics Limited: the sales cut
off sample for which the auditors did not receive information was £89,000,
including post year end sales of £59,000
· - The auditors 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.
In accordance with Rule 4.3 of the AQSE Growth Market Access Rulebook, the
Company will announce management statements within one month of the quarter end
for each quarter until an audit report is published without modification.
Accordingly, the Company will release the following quarterly reports:
· A report for the two quarters ended 30 June 2022 and 30 September 2022
by 30 October 2022
· A report for the quarter ending 30 December 2022 by 31 January 2023
· A report for the quarter ending 31 March 2023 by 30 April 2023
Outlook
Since the year end, the Group has continued to lay the foundations for its
future development by disposing of the loss making legacy businesses of IVI
Metallics Limited ("IVI") and Orca Doors Limited ("Orca"). These disposals are
expected to have a significant benefit to the Group balance sheet in the first
half of the current year. On 14 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"). This acquisition
will enable the Group to focus on building a profitable trading business over
the coming years.
Consolidated Statement of Comprehensive
Income
Restated
Year ending Year ending
31 March 31 March
2022 2021
Note £'000 £'000
Continuing activities
Revenue 2,927 2,327
Cost of sales (2,568) (1,958)
Gross profit 359 369
Operating expenses (1,684) (2,013)
Other gains and losses 4 (291) (217)
Impairment charge 5 (2,040) (150)
Finance costs 6 (490) (551)
Loss before tax (4,146) (2,562)
Income tax 68 -
Loss for the year from continuing (4,078) (2,562)
activities
Discontinued activities
Profit / (loss) for the year from 7 391 (861)
discontinued activities
Loss for the year attributable to the (3,687) (3,423)
owners of the Company
Other Comprehensive Income for the period - -
Total Comprehensive Income for the period (3,687) (3,423)
attributable to owners of the Company
Earnings per share
Basic and Diluted earnings per share for 8 (1.17) (1.04)
loss from continuing operations
attributable to the owners of the Company
(pence)
Basic and Diluted earnings per share loss 8 (1.06) (1.39)
attributable to the owners of the Company
(pence)
Consolidated Statement of Financial Note At At
Position 31 March 31 March
2022 2021
£'000 £'000
Non-current assets
Goodwill 9 945 1,571
Other intangible assets 9 317 825
Investments 500 -
Property, plant and equipment 295 409
Right of use assets 403 842
Total non-current assets 2,460 3,647
Current assets
Inventories 252 628
Trade and other receivables 833 1,927
Cash and bank balances 69 86
Total current assets 1,154 2,641
Total assets 3,614 6,288
Current liabilities
Trade and other payables (2,698) (4,305)
Lease liabilities (125) (263)
Borrowings 10 (2,968) (433)
Provisions - (62)
Total current liabilities (5,791) (5,063)
Non-current liabilities
Lease liabilities (266) (526)
Borrowings 10 (674) (3,220)
Deferred tax liabilities (38) (38)
Total non-current liabilities (978) (3,784)
Total liabilities (6,769) (8,847)
Net liabilities (3,155) (2,559)
Equity
Share capital 11 211 112
Shares to be issued 11 293 -
Share premium account 11 6,645 3,946
Retained earnings (10,304) (6,617)
Total equity attributable to the (3,155) (2,559)
owners of the company
Consolidated statement of Share Shares to Share Retained Total
changes in equity Capital be issued Premium earnings Equity
£'000 £'000 £'000 £'000 £'000
At 1 April 2020 80 - 1,812 (3,194) (1,302)
Loss for the period - - - (3,423) (3,423)
Other comprehensive income for - - - - -
the period
Total Comprehensive income for - - - (6,617) (4,725)
the period
Transactions with shareholders
Issue of shares 32 - 2,134 - 2,166
Total transactions with 32 - 2,134 - 2,166
shareholders for the period
At 1 April 2021 112 - 3,946 (6,617) (2,559)
Loss for the period - - - (3,687) (3,687)
Other comprehensive income for - - - - -
the period
Total Comprehensive income for - - - (3,687) (3,687)
the period
Transactions with shareholders
Issue of shares 99 293 2,699 - 3,091
Total transactions with 99 293 2,699 - 3,091
shareholders for the period
At 31 March 2022 211 293 6,645 (10,304) (3,155)
The notes to the financial statements on pages 20 to 46 form an integral part
of these financial statements.
Consolidated Statement of Cash Flows Restated
Year Year
ending 31 ending 31
March 2022 March 2021
£'000 £'000
Loss for the period (4,146) (2,562)
Adjusted for:
Finance costs 490 550
Depreciation of property, plant and equipment 147 108
Depreciation of right of use assets 129 144
Amortisation of intangible assets 104 116
Impairment of Goodwill and intangible assets 1,714 150
(Decrease) / increase in provisions (62) 62
Share based payment 499 34
Loss on disposal of property plant and equipment 11 -
Operating cash flows before movements in working (1,114) (1,398)
capital
Decrease / (increase) in inventories 11 (149)
Decrease / (increase) in trade and other receivables 276 (417)
Increase in trade and other payables 942 341
Cash from / (used in) operating activities - 115 (1,623)
continuing
Cash (used in) / from operating activities - (301) 143
discontinued
Cash used in operating activities (186) (1,480)
Investing activities
Proceeds on disposal of property, plant and equipment 35 -
Purchases of property, plant and equipment - (8)
Acquisition of subsidiary net of cash acquired 46 (350)
Cash from / (used in) investing activities - 81 (358)
continuing
Cash used in investing activities - discontinued (4) (34)
Cash from / (used in) investing activities 77 (392)
Financing activities
Interest paid (490) (550)
Proceeds from loans and borrowings 50 1,033
Repayment of loans and borrowings (208) (116)
Repayment of lease liabilities (181) (139)
Proceeds on issue of shares 1,041 1,807
Net cash from financing activities - continuing 212 2,035
Net cash from financing activities - discontinued (120) (131)
Net cash from financing activities 92 1,904
Net increase in cash and cash equivalents (17) 32
Cash and cash equivalents at beginning of year 86 54
Effect of foreign exchange rate changes - -
Cash and cash equivalents at end of year 69 86
1. General information
Vulcan Industries PLC is incorporated in England and Wales as a public company
with registered number 11640409.
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 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. 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 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 to date with an emphasis on volume growth to increase
gross margins and synergies resulting in cost reductions. On 1 June 2021 the
Company was admitted to trading on the AQSE Growth Market. This has already
facilitated the ability of the Company to raise new equity, with £4,750,000
raised before expenses from admission to the date of this report.
As set out in notes 10, the Group is currently funded by a combination of short
and long-term borrowing facilities. At 31 March 2022 the loans of £2,329,000
fall due for repayment between April and July 2022. Since the year end their
term has been extended to April 2023 to September 2023.. The factoring
facilities, of which £448,000 (2021: £321,000) was fully drawn at 31 March
2022, may be withdrawn with 3 to 6 months' notice. As set out in Note 14, on 30
August 2022, the Company has received a demand under a cross guarantee of the
outstanding principal of the CBIL originally drawn down by IVI. The Company is
in negotiations to restructure this loan.
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. 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.
The auditors have made reference to going concern by way of a material
uncertainty within their audit report.
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.
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. In the case of asset acquisition, it is the excess of
the sum of the consideration transferred 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.
Government grants
Government grants are recognised in profit or loss on a systematic basis over
the periods in which the Group recognises as expenses the related costs for
which the grants are intended to compensate. Specifically, government grants
whose primary condition is that the Group should purchase, construct or
otherwise acquire non-current assets (including property, plant and equipment)
are recognised as deferred income in the consolidated statement of financial
position and transferred to profit or loss on a systematic and rational basis
over the useful lives of the related assets. Government grants that are
receivable as compensation for expenses or losses already incurred or for the
purpose of giving immediate financial support to the Group with no future
related costs are recognised in profit or loss in the period in which they
become receivable. Furlough claims under the Job Retention Scheme, have been
disclosed as other income and not netted against the related salary expense.
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.
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.
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.
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:
Leasehold improvements Over the life of the lease
Plant and machinery 10 per cent - 25 per cent per annum
Fixtures and fittings 10 per cent - 30 per cent per annum
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.
Impairment of property, plant and equipment and intangible assets excluding
goodwill
At each reporting date, the Group reviews the carrying amounts of its property,
plant and equipment and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated to
determine the extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
When a reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating units, or
otherwise they are allocated to the smallest group of cash-generating units for
which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value
in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to
the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit or loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease and to the extent that the impairment loss is greater than
the related revaluation surplus, the excess impairment loss is recognised in
profit or loss.
Trade and other receivables
Trade receivables are accounted for at amortised cost. Trade receivables do not
carry any interest and are stated at their nominal value as reduced by
appropriate expected credit loss allowances for estimated recoverable amounts
as the interest that would be recognised from discounting future cash payments
over the short payment period is not considered to be material. Other
receivables are accounted for at amortised cost and are stated at their nominal
value as reduced by appropriate expected credit loss allowances.
Borrowings
Borrowings are included as financial liabilities on the Group balance sheet at
the amounts drawn on the particular facilities net of the unamortised cost of
financing. Interest payable on those facilities is expensed as finance cost in
the period to which it relates.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle that obligation and a reliable estimate can be made of
the amount of the obligation.
3. 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.
Identified intangible assets
Identified intangible assets arising on acquisition are disclosed in note 14
and comprise; marketing related assets such as brands and domain names;
customer related assets such as customer relationships, lists and existing
order books. Their existence is established in a post-acquisition review which
also estimates their value and the period over which they are amortised;
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, were considered to be indications of impairment and a
formal impairment review was undertaken. The review uses a discounted cash
flow model to estimate the net present value of each cash generating unit.
Management consider each operating subsidiary to be a separately identifiable
cash generating unit.
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.
Details of the reviews are set out in note 9.
Receivables
In applying IFRS 9 the directors make a judgement in assessing the Group's
exposure to credit risk. The Group has recognised a loss allowance of 100 per
cent against all receivables over 120 days past due where historical experience
has indicated that these receivables are generally not recoverable. 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.
Discontinued activities
The Group disposed of M & G Olympic Products Limited ("MGO") on 30 March 2022.
The profit on disposal is disclosed in note 7. The trading loss and net assets
of MGO have been derived from the accounting records at the date of disposal.
However, the auditors have not been able to gain access to the documentary
evidence and therefore have brought this limitation in scope to the attention
of members in their audit report. Any misstatement of income, expenditure,
assets or liabilities will effect neither the profit on disposal of
discontinued activities disclosed on the income statement nor the Net
Liabilities of the Group at 31 March 2022.
The Group took the decision to dispose of IVI and Orca after the year end.
Consequently, IVI and Orca are included within continuing activities for the
year ended 31 March 2022. However, provision has been made at 31 March 2022 for
impairments in Goodwill and Identified intangible assets (notes 5 and 9).
4. Other gains and losses
Year ending Year ending
31 March 31 March
2022 2021
£'000 £'000
Listing expenses - 486
Acquisition and disposal costs 25 5
Loss allowance on trade receivables 104 69
Job Retention Scheme Furlough grants (31) (233)
Other expenses 187 119
285 446
Of which relating to:
Continuing activities 291 217
Discontinued activities (6) 229
285 446
5. Impairment charge
Year Year ending
ending 31 31 March
March 2022 2021
£'000 £'000
Goodwill (note 9) 1,142 150
Identified intangible assets (note 9) 571 -
Other receivables 327 -
2,040 150
6. Finance costs
Year Year ending
ending 31 31 March
March 2022 2021
£'000
Interest on bank overdrafts and loans 444 434
Interest on lease liabilities 32 69
Loan arrangement fees and other finance 26 92
costs
502 595
Of which relating to:
Continuing activities 490 551
Discontinued activities 12 44
502 595
7. Discontinued activities
Year Year ending
ending 31 31 March
March 2022 2021
£'000 £'000
Revenue 2,168 2,898
Cost of sales (1,522) (2,417)
Gross margin 646 481
Operating expenses (901) (1,298)
Other Income 6 1
Finance costs (13) (45)
Loss before tax on discontinued activities (262) (861)
Profit on disposal of discontinued 653 -
activities
Profit / (loss) on discontinued activities 391 (861)
On 30 March 2022, the Company disposed of M&G Olympic Products Limited.
The comparatives in the Consolidated Statement of Comprehensive Income and
Consolidated Statement of Cash Flows and several notes have been restated to
separate continuing and discontinued operations.
8. Earnings per share
Year ending Year ending
31 March 2022 31 March
2021
£'000 £'000
The calculation of the basic earnings per
share is based on the following data:
Loss for the year for the purposes of
basic loss per share attributable to
equity holders of the Company:
* From continuing operations (4,078) (2,562)
* From discontinued operations (861)
391
* Total (3,687) (3,423)
Weighted average number of Ordinary Shares 346,819,139 246,159,692
for the purposes of basic loss per share
Basic earnings per share(pence)
* From continuing operations (1.17p) (1.04p)
* From discontinued operations 0.11p (0.35p)
* Total (1.06p) (1.39p)
9. Goodwill and other intangible assets
Goodwill
£'000
Cost
At 31 March 2020 1,271
Recognised on acquisition 450
At 31 March 2021 1,721
Recognised on acquisition (note 25) 718
Disposal (202)
At 31 March 2022 2,237
Accumulated Impairment Losses
At 31 March 2020 -
Impairment charge 150
At 31 March 2021 150
Impairment charge `1,142
At 31 March 2022 1,292
Carrying value at 31 March 2022 945
Carrying value at 31 March 2021 1,571
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.
Identified intangible assets
£'000
Cost
At 31 March 2020 967
Recognised on acquisition 100
At 31 March 2021 1,067
Recognised on acquisition (note 25) 300
Disposal (167)
At 31 March 2022 1,200
Amortisation
At 31 March 2020 126
Charge for the period 116
At 31 March 2021 242
Charge for the period 120
Impairment charge 571
Disposal (50)
883
Carrying value at 31 March 2022 317
Carrying value at 31 March 2021 825
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. Continues losses incurred by the subsidiaries, were considered to be
indications of impairment and an impairment review was undertaken.
Impairment Year ended Year ending
charge 31 March 31 March
2022 2021
£'000 £'000
Goodwill
IVI Metallics Limited 548 -
Orca Doors Limited 294 -
Romar Process Engineering Limited 300 150
1,142 150
Identified intangible assets
IVI Metallics Limited 478 -
Orca Doors Limited 8 -
Romar Process Engineering Limited 85 -
571 -
The Company disposed of its shareholdings in IVI and Orca after the year end.
Accordingly full impairment of goodwill and identifiable intangible assets has
been made at 31 March 2022
In reviewing the goodwill and identified intangible assets attributable to the
acquisition of RPE, the impairment review base case showed that in the short
term there is no significant business attributable to RPE. Accordingly, full
provision for impairment of goodwill and identifiable intangible assets has
been made at 31 March 2022.
Sensitivity analysis
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.
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 at least 5%.
The forecasts did indicate an impairment when a discount rate of 18% was
applied of approximately £220,000.
10. Borrowings
At 31 At 31
March March
2022 2021
Non-current liabilities £'000 £'000
Secured
Other Loans - 1,854
Corona virus business interruption loan 634 799
(CBIL)
634 2,653
Unsecured
Convertible loan note - 473
Bounce back loans (BBL) 40 94
674 3,220
Current liabilities
Secured
Factoring facility 447 321
Other Loans 1,854 -
Corona virus business interruption loan 182 106
2,483 427
Unsecured
Convertible loan note 475
Bounce back loans 10 6
2,968 433
3,642 3,653
Other loans of £1,854,000 (2021: £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. Since the year end the Company extended term and
the principal now falls due for repayment between April and July 2023.
Since the year end the term of the convertible note has been extended to 30
September 2023. 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.
11. Share capital
Number £'000
Issued and fully paid:
At 31 March 2020 198,900,000 80
Issued during the period 81,886,938 32
At 31 March 2021 280,786,938 112
Issued during the period 245,547,664 99
At 31 March 2022 526,334,602 211
The Company has one class of ordinary share with a nominal value of 0.04p and
which carries no right to fixed income.
Number £'000
Shares issued during the year
For Cash (net of fees) 117,638,322 1,041
In settlement of fees and expenses 27,909,342 499
Acquisition consideration 100,000,000 1,257
245,547,664 2,797
Share premium £'000
At 31 March 2020 1,812
Premium arising on issue of new equity 2,134
during the period
At 31 March 2021 3,946
Premium arising on issue of new equity 2,699
during the period
At 31 March 2022 6,645
Shares to be issued £'000
At 31 March 2020 and 2021 -
Acquisition Consideration 293
At 31 March 2022 293
At completion of the acquisition of Aftech Limited on 24 March 2022 (note 12),
the Company did not have sufficient authority to issue all the consideration
shares. Once the authority had been received at the Annual General Meeting held
on 13 May 2022, the remaining consideration shares were issued on 16 June 2022.
12. Acquisition of subsidiaries
In the year to 31 March 2022, the Company completed one acquisition:
Aftech Limited
On 24 March 2022, the Group purchased the entire share capital of Ruobrah Five
Aftech Limited ("Aftech") for £1,550,000 which was satisfied by the issue and
allotment by the Company of 123,307,433 Shares at an issue price of 1.257p per
share. The acquisition has been treated as a business combination. Aftech
specialises in all areas of metal fabrication and complements other business
within the group. The amounts recognised in respect of the identifiable assets
acquired and liabilities assumed in the acquisition is as set out in the table
below.
Net assets Fair value Total
acquired Adjustments
£'000 £'000 £'000
Investments 500 - 500
Tangible assets 158 - 158
Current assets 445 (60) 385
Cash 43 - 43
Current liabilities (410) (144) (554)
736 (204) 532
Identifiable intangible assets:
- Marketing related 20
- Customer related 280
Goodwill 718
1,550
Consideration
Issue of equity 1,550
Total consideration 1,550
Acquisition costs of £21,000 have been included in other gains and losses in
the consolidated statement of profit and loss and comprehensive income. Since
the year end, the Company has issued 24,661,487 warrants to the vendor, with an
exercise price of 3p and an expiry date of 30 June 2023. They have been valued
using the Black Scholes model and the cost is not material so has not been
accrued and included in acquisition costs.
13. Post balance sheet events
Since the year end the Company has issued shares as follows:
Number £'000
For Cash (before of fees) 25,261,243 254
In settlement of fees and expenses 6,513,216 69
Acquisition consideration (note 12) 23,307,433 293
55,081,892 616
On 24 May 2022, the Group loaned £250,000 to a company which it may acquire, £
50,000 was subsequently repaid.
On 18 July 2022, the Company disposed of Orca Doors Limited for a nominal
consideration. Orca was subsequently placed into a creditors voluntary
liquidation on 25th August 2022. Any eventual proceeds will be paid to the
charge holder and reduce the Company's debt to Ablrate.
On 31 July 2022, the Company disposed of IVI Metallics limited for a nominal
consideration. IVI was subsequently placed into administration on 25th August
2022 and sold to new owners. Net proceeds after costs will be applied to the
Company's debt with Ablrate.
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.
14. Contingent liability
The Company has provided a cross guarantee to HSBC Bank in respect of the
corona virus business interruption loan ("CBIL") taken out by IVI. On 30 August
2022, the Company received a formal demand for repayment of the outstanding
principal. The balance outstanding as of the date of this report is £704,000.
This may be further reduced by settlements from the liquidator of IVI. The
Company is in the course of negotiations with the bank to restructure this loan