TIDMVULC
27 November 2023
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 2023.
Trading in the Company's shares will resume on Tuesday 28 November 2023, 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
Vulcan seeks to acquire and consolidate industrial and renewable SMEs and
projects for value and to enhance performance in part through group synergies,
but primarily by unlocking growth which is not being achieved as a standalone
private company.
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"). Aftech
brings additional complementary areas of fabrication skills and product
offering. On 6 March 2023, the Company broadened its activities into the energy
sector with the acquisition of the entire share capital of Forepower Lincoln
(250) Limited ("FPL(250)"). FPL(250) is a 248 MW Battery Energy Storage System
("BESS") project, currently seeking formal planning consent.
COVID-19 had a significant impact on the financial performance of the Group
since admission. The results for the years ended 31 March 2021 and 31 March
2022, reflected the impact of various lock downs and the subsequent.
challenging market conditions. Whilst demand picked up in the second half 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.
In order to stem continued cash outflows, MGO was disposed of on 30 March 2022.
A strategic review, lead the board to conclude that, in order to lay firm
foundations for future growth, it was necessary to dispose of the remaining loss
making businesses. Both Orca Doors Limited ("Orca") and IVI Metallics Limited
("IVI") were disposed of in July 2022 and Time Rainham Limited ("TRR") was
disposed of in November 2022.
Consequently, the results for Orca, IVI and TRR 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
2023, show an increase in continuing revenue to £1,165,000 (2022: £46,000) and a
fall in the continuing loss before interest, tax, depreciation, amortization and
impairments to £523,000 (2022: £897,000). After continuing depreciation and
amortization of £59,000 (2022: £nil), impairment charges of £nil (2022: £12,000)
continuing finance costs of £463,000 (2022: £390,000), the Group is reporting a
loss before taxation on continuing activities of £1,020,000 (2022: £1,299,000).
The disposals of Orca, IVI and TRR generated a profit on discontinued activities
of £1,588,000 (2022: Loss £2,389,000) after reporting a loss after tax to the
date of disposal of £216,000 (2022: £3,042,000). The reported profit after tax
for the Group is £639,000 (2022: Loss £3,687,000).
At 31 March 2023, the Group balance sheet shows net assets of £510,000 (2022:
net liabilities £3,155,000).
Outlook
The disposals of the loss making legacy businesses of Orca, IVI and TRR during
the year ended 31 March 2023 added significant benefit to the Group balance
sheet and stemmed continued cash outflows. Since the year end, the Group has
continued to lay the foundations for its future development. The acquisition of
the FPL(250) project has broadened the sectors of Group activities. As announced
on 25 October 2023, the Company has disposed of 49.9% of its holding in FPL
(250) in order to fund the development of the project and value is expected to
be generated as the project moves through the planning process and obtains a
firm connection date to the national grid. The development phase of the project
offers potential to expand the fabrication activities of Aftech. In addition
there is a strong pipeline of further BESS and other opportunities which the
Company will seek to bring into the Group in due course.
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.
Consolidated Statement of
Comprehensive Income
Year ending 31 March 2023 Restated
Year ending
31 March 2022
Note £'000 £'000
Continuing activities
Revenue 1,165 46
Cost of sales (674) (29)
Gross profit 491 17
Operating expenses (849) (609)
Other gains and losses 4 (224) (305)
Impairment charge 5 - (12)
Finance costs 6 (438) (390)
Loss before tax (1,020) (1,299)
Income tax 71 -
Loss for the year from (949) (1,299)
continuing activities
Discontinued activities
Profit / (loss) for the year 7 1,588 (2,388)
from discontinued activities
Profit / (loss) for the year 639 (3,687)
attributable to the owners
of the Company
Other Comprehensive Income - -
for the period
Total Comprehensive Income 639 (3,687)
for the period attributable
to owners of the Company
Earnings per share
Basic and Diluted earnings 8 (0.16) (0.37)
per share for loss from
continuing operations
attributable to the owners
of the Company (pence)
Basic and Diluted earnings 8 0.11 (1.06)
per share loss attributable
to the owners of the Company
(pence)
Consolidated Note At At
Statement of
Financial 31 March 31 March
Position
2023 2022
£'000 £'000
Non-current
assets
Goodwill 9 718 945
Other 9 3,178 317
intangible
assets
Investments 500 500
Property, 131 295
plant and
equipment
Right of use - 403
assets
Total non 4,527 2,460
-current
assets
Current
assets
Inventories 32 252
Trade and 511 833
other
receivables
Cash and bank 2 69
balances
Total current 545 1,154
assets
Total assets 5,072 3,614
Current
liabilities
Trade and (1,344) (2,698)
other
payables
Lease - (125)
liabilities
Borrowings 10 (3,187) (2,968)
Total current (4,531) (5,791)
liabilities
Non-current
liabilities
Lease - (266)
liabilities
Borrowings 10 - (674)
Deferred tax (31) (38)
liabilities
Total non (31) (978)
-current
liabilities
Total (4,562) (6,769)
liabilities
Net assets / 510 (3,155)
(liabilities)
Equity
Share capital 11 348 211
Shares to be 11 - 293
issued
Share premium 11 9,827 6,645
account
Retained (9,665) (10,304)
earnings
Total equity 510 (3,155)
attributable
to the owners
of the
company
Consolidated statement of changes in equity
Share Shares to Share Retained Total
be issued Premium earnings Equity
Capital
£'000 £'000 £'000 £'000 £'000
At 1 April 2021 112 - 3,946 (6,617) (2,559)
Loss for the year - - - (3,687) (3,687)
Other comprehensive - - - - -
income for the year
Total Comprehensive - - - (3,687) (3,687)
income for the year
Transactions with
shareholders
Issue of shares 99 293 2,699 - 3,091
Total transactions with 99 293 2,699 - 3,091
shareholders for the
year
At 1 April 2022 211 293 6,645 (10,304) (3,155)
Profit for the year - - - 639 639
Other comprehensive - - - - -
income for the year
Total Comprehensive - - - 639 639
income for the year
Transactions with
shareholders
Issue of shares 137 (293) 3,182 - 3,026
Total transactions with 137 (293) 3,182 - 3,026
shareholders for the
year
At 31 March 2023 348 - 9,827 (9,665) 510
Consolidated Statement of Year ending Restated
Cash Flows 31 March
2023 Year ending 31 March 2022
£'000 £'000
Loss for the period from (949) (1,299)
continuing activities
Adjusted for:
Finance costs 463 389
Depreciation of property, 29 1
plant and equipment
Amortisation of intangible 30 104
assets
Impairment of Goodwill and - 369
intangible assets
(Decrease) / increase in - (62)
provisions
Share based payment 100 499
Operating cash flows before (327) 1
movements in working capital
Decrease / (increase) in (6) 5
inventories
Decrease / (increase) in (118) (149)
trade and other receivables
Increase in trade and other 139 327
payables
Cash (used in) / from (312) 184
operating activities
Income tax credit received 28 -
Income tax paid (3) -
Cash (used in) / from (287) 184
operating activities -
continuing
Cash (used in) / from (278) (370)
operating activities -
discontinued
Cash used in operating (565) (186)
activities
Investing activities
Purchases of property, plant (2) -
and equipment
Disposal of subsidiaries - 731 -
net debt retained
Acquisition of subsidiary - 46
net of cash acquired
Cash from / (used in) 729 46
investing activities -
continuing
Cash used in investing - 31
activities - discontinued
Cash from / (used in) 729 77
investing activities
Financing activities
Interest paid (271) (388)
Drawdown of loans and 70 -
borrowings
Repayment of loans and (169) -
borrowings
Proceeds on issue of shares 258 1,041
Net cash from financing (112) 653
activities - continuing
Net cash from financing (119) (561)
activities - discontinued
Net cash from financing (231) 92
activities
Net decrease in cash and (67) (17)
cash equivalents
Cash and cash equivalents at 69 86
beginning of year
Cash and cash equivalents at 2 69
end of year
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 following the part disposal of FPL (250) Limited, the
Group is projected to have sufficient cash resources to fund the budgeted
project expenditure and Group overheads. However delays in the planning process
would require additional funding either through additional loan facilities or
through raising cash through capital and project finance 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 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.
As set out in notes 20, the Group is currently funded by a combination of short
and long-term borrowing facilities. At 31 March 2023 the loans of £1,854,000
were subject to a rolling standstill agreement and £475,000 fell due for
repayment in September 2023. Since the year end their term has been extended and
they now fall due between April and June 2025. The liquidity profile of the
Group's debt is set out in note 27. The factoring facilities, of which £145,000
(2022: £447,000) was fully drawn at 31 March 2023, may be withdrawn with 3
months' notice. As set out in Note 20, 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 has recognised the obligation as
a liability and 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
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 will need to meet its operating
targets and that delays would require further funding to meet its commitments as
they fall due. 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 2023. 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. 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.
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.
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.
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.
Foreign currencies
Transactions in currencies other than the functional currency are recognised at
the rates of exchange on the dates of the transactions. At each balance sheet
date, monetary assets and liabilities are retranslated at the rates prevailing
at the balance sheet date with differences recognised in the Statement of
comprehensive income in the period in which they arise.
Retirement and termination benefit costs
Payments to defined contribution retirement benefit plans are recognised as an
expense when employees have rendered service entitling them to the
contributions. Payments made to state-managed retirement benefit plans are
accounted for as payments to defined contribution plans where the Group's
obligations under the plans are equivalent to those arising in a defined
contribution retirement benefit plan.
There are no defined benefit plans in place.
Taxation
The income tax expense represents the sum of the tax currently payable and
deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. The Group's
liability for current tax is calculated using tax rates that have been enacted
or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the liability method. Deferred tax liabilities
are generally recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realized.
Current and deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off.
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.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years. A reversal of
an impairment loss is recognised immediately in profit or loss to the extent
that it eliminates the impairment loss which has been recognised for the asset
in prior years. Any increase in excess of this amount is treated as a
revaluation increase
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.
Financial instruments
Initial recognition
A financial asset or financial liability is recognised in the statement of
financial position of the Group when it arises or when the Group becomes part of
the contractual terms of the financial instrument.
Financial assets
Financial assets are classified as either financial assets at amortised cost, at
fair value through other comprehensive income ("FVTOCI") or at fair value
through profit or loss ("FVPL") depending upon the business model for managing
the financial assets and the nature of the contractual cash flow characteristics
of the financial asset.
A loss allowance for expected credit losses is determined for all financial
assets, other than those at FVPL, at the end of each reporting period. The Group
applies a simplified approach to measure the credit loss allowance for trade
receivables using the lifetime expected credit loss provision. The lifetime
expected credit loss is evaluated for each trade receivable taking into account
payment history, payments made subsequent to year-end and prior to reporting,
past default experience and the impact of any other relevant and current
observable data. The Group applies a general approach on all other receivables
classified as financial assets. The general approach recognises lifetime
expected credit losses when there has been a significant increase in credit risk
since initial recognition.
The Group derecognises a financial asset when the contractual rights to the cash
flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another
party. The Group derecognises financial liabilities when the Group's obligations
are discharged, cancelled or have expired.
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.
Financial liabilities
The classification of financial liabilities at initial recognition depends on
the purpose for which the financial liability was issued and its
characteristics.
All purchases of financial liabilities are recorded on trade date, being the
date on which the Group becomes party to the contractual requirements of the
financial liability. Unless otherwise indicated the carrying amounts of the
Group's financial liabilities approximate to their fair values.
The Group's financial liabilities consist of financial liabilities measured at
amortised cost and financial liabilities at fair value through profit or loss.
A financial liability (in whole or in part) is derecognised when the Group has
extinguished its contractual obligations, it expires or is cancelled. Any gain
or loss on derecognition is taken to the statement of comprehensive income.
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.
Trade and other payables
Trade and other payables are initially recorded at fair value and subsequently
carried at amortised cost.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date.
The fair value measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either in the principal
market for the asset or liability or, in the absence of a principal market, in
the most advantageous market for the asset or liability. The principal or the
most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that
market participants would use when pricing the asset or liability, assuming that
market participants act in their economic best interest.
For all other financial instruments not traded in an active market, the fair
value is determined by using valuation techniques deemed to be appropriate in
the circumstances. Valuation techniques include the market approach (i.e. using
recent arm's length market transactions adjusted as necessary and reference to
the current market value of another instrument that is substantially the same)
and the income approach (i.e. discounted cash flow analysis and option pricing
models making as much use of available and supportable market data as possible).
All assets and liabilities for which fair value is measured or disclosed in the
financial statements are categorised within the fair value hierarchy, described
as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical
assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly observable.
Level 3 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a
recurring basis, the Group determines whether transfers have occurred between
levels in the hierarchy by re-assessing the categorisation (based on the lowest
level input that is significant to the fair value measurement as a whole) at the
end of each reporting year.
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.
Share-based payments
Equity-settled share-based payments to employees and others providing similar
services are measured at the fair value of the equity instruments at the grant
date. The fair value excludes the effect of non-market-based vesting conditions.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight- line basis over the vesting period, based on
the Group's estimate of the number of equity instruments that will eventually
vest. At each reporting date, the Group revises its estimate of the number of
equity instruments expected to vest as a result of the effect of non-market
-based vesting conditions. The impact of the revision of the original estimates,
if any, is recognised in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to reserves.
Equity-settled share-based payment transactions with parties other than
employees are measured at the fair value of the goods or services received,
except where that fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments granted, measured at
the date the entity obtains the goods or the counterparty renders the service.
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;
Other intangible assets
The BESS project has been valued at costs incurred to date on the project and a
fair value adjustment has been made on acquisition (note 25). The fair valuation
adjustment reflects a discount from comparable market values for similar
projects to take into account the early stage of development.
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 14.
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 and is
disclosed in note 19. In addition, the directors have assessed the
recoverability of other receivables on a case by case basis.
Discontinued activities
The Group disposed of Orca, IVI and TRR during the year. The trading loss and
net assets have been derived from the accounting records at the date of
disposal.
4. Other gains and losses
Year ending Restated
31 March
2023 Year ending 31 March 2022
£'000 £'000
Acquisition and 140 25
disposal costs
Loss allowance on 52 104
trade receivables
Government grants (1) (31)
Other expenses 34 187
225 285
Of which relating
to:
Continuing 224 305
activities
Discontinued 1 (20)
activities
225 285
5. Impairment charge
Year ending Restated
31 March
2023 Year ending 31 March 2022
£'000 £'000
Goodwill (note 14) - 1,142
Identified - 571
intangible assets
(note 14)
Other receivables - 327
- 2,040
Of which relating
to:
Continuing - 12
activities
Discontinued - 2,028
activities
- 2,040
6. Finance costs
Year ending Restated
31 March
2023 Year ending 31 March 2022
£'000 £'000
Interest receivable:
Interest on quoted 25 -
bond
25 -
Interest payable:
Interest on bank 426 444
overdrafts and loans
Interest on lease 8 32
liabilities
Loan arrangement fees 68 26
and other finance
costs
502 502
Net Finance costs 477 502
Of which relating to:
Continuing activities 438 389
Discontinued 39 113
activities
477 502
7. Discontinued activities
Year ending Restated
31 March
2023 Year ending 31 March 2022
£'000 £'000
Revenue 943 5,049
Cost of sales (873) (4,061)
Gross margin 70 988
Operating expenses (280) (2,082)
Other Income 33 125
Impairment loss - (2,028)
Finance costs (39) (113)
Loss before tax on (216) (3,110)
discontinued
activities
Tax credit on - 68
discontinued
activities
Loss after tax on (216) (3,042)
discontinued
activities
Profit on disposal of 1,804 654
discontinued
activities
Profit / (loss) on 1,588 (2,388)
discontinued
activities
On 30 March 2022, the Company disposed of M&G Olympic Products Limited. Orca
Doors Limited was disposed of on 18 July 2022, IVI Metallics was disposed of on
31 July 2022 and Time Rainham Limited was disposed of on 8 November 2022
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 31 March 2023 Restated
Year ending 31 March 2022
The calculation £'000 £'000
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 (949) (1,299)
continuing
operations
- From 1,588 (2,388)
discontinued
operations
- Total 639 (3,687)
Weighted average 595,784,173 346,819,139
number of
Ordinary Shares
for the purposes
of basic loss
per share
Basic earnings
per share(pence)
- From (0.16p) (0.37p)
continuing
operations
- From 0.27p (0.69p)
discontinued
operations
- Total 0.11p (1.06p)
The Company has issued options over ordinary shares which could potentially
dilute basic loss 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. Details of options are set out in note 24.
9. Goodwill and other intangible assets
Goodwill
£'000
Cost
At 31 March 2021 1,721
Recognised on acquisition 718
Disposal (202)
At 31 March 2022 2,237
Disposal (1,519)
At 31 March 2023 718
Accumulated Impairment Losses
At 31 March 2021 150
Impairment charge 1,142
At 31 March 2022 1,292
Disposal (1,292)
At 31 March 2023 -
Carrying value at 31 March 2023 718
Carrying value at 31 March 2022 945
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 BESS Project Identified intangible assets Total
intangible
assets
£'000 £'000
Cost
At 31 March - 1,067 1,067
2021
Recognised on - 300 300
acquisition
Disposal - (167) (167)
At 31 March - 1,200 1,200
2022
On acquisition 274 - 274
of subsidiary
Recognised on 2,600 - 2,600
acquisition
Additions 34 - 34
Disposal - (900) (900)
At 31 March 2,908 300 3,208
2023
Amortisation
At 31 March - 242 242
2021
Charge for the - 120 120
period
Impairment - 571 571
charge
Disposal - (50) (50)
At 31 March - 883 883
2022
Charge for the - 40 40
period
Disposal (893) (893)
- 30 30
Carrying value 2,908 270 3,178
at 31 March
2023
Carrying value - 317 317
at 31 March
2022
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.
BESS Project
£'000
Fair value on acquisition (note 25) 2,874
Additions 34
At 31 March 2023 2,908
Forepower Lincoln (250) Limited is a 248MW Battery Energy Storage System Project
("BESS") which was acquired on 6 March 2023. The value at 31 march 2023
represents the project costs incurred by FPL(250) together with a fair value
adjustment on acquisition of £2.6 million, being the consideration paid by the
company. The fair valuation adjustment reflects a discount from comparable
market values for similar projects to take into account the early stage of
development of the project. On 25 October 2023, the Company disposed of 49.9% of
its holding in FPL (250) in order to fund the development of the project and
value is expected to be generated as the project moves through the planning
process and obtains a firm connection date to the national grid. Further uplifts
in value are expected as project mile-stones are achieved.
The Group tests goodwill and other intangible assets annually for impairment, or
more frequently if there are indications that they might be impaired. Aftech
Limited made a small profit before taxation on consolidation, nonetheless its
result was considered to be an indication of impairment and an impairment review
was undertaken.
The recoverable amount of the goodwill and identified intangible assets 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.
Impairment Year ended 31 March Year ending 31 March 2022
charge
2023
£'000 £'000
Goodwill
IVI Metallics - 548
Limited
Orca Doors - 294
Limited
Romar Process - 300
Engineering
Limited
- 1,142
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 in July 2022.
Accordingly full impairment of goodwill and identifiable intangible assets was
made at 31 March 2022. The Company disposed of its shareholding in Time Rainham
in November 2022. In the prior year, goodwill and identifiable intangible assets
in respect of the acquisition by Time Rainham of the business and assets of
Romar Process Engineering Limited were fully impaired.
In reviewing the goodwill and identified intangible assets attributable to the
acquisition of Aftech Limited the impairment review base case showed that there
was no need for impairment.
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 Aftech, forecast sales volumes would have to fall by 1% And if the discount
rate rose to 11%.
10. Borrowings
At 31 At 31 March 2022
March
2023
Non-current liabilities £'000 £'000
Secured
Corona virus business interruption loan (CBIL) - 634
- 634
Unsecured
Bounce back loans (BBL) - 40
- 674
Current liabilities
Secured
Factoring facility 145 447
Other Loans 1,854 1,854
Convertible loan note 475 475
Corona virus business interruption loan 700 182
3,174 2,958
Unsecured
Other loans 13
Bounce back loans - 10
3,187 2,968
3,187 3,642
Other loans of £1,854,000 (2022: £1,854,000) are secured by means of a
debenture, chattels mortgage and cross guarantee entered into by the Company. At
31 March 2023, there was a rolling 12 month standstill agreement in place. Since
the year end the Company extended the term and the principal now falls due for
repayment between April and July 2025.
Since the year end the term of the convertible note has been extended to 30 June
2025. 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 June 2025, the loan shall
become immediately repayable by the Company.
The factoring facility is secured on the trade receivables amounting to £208,000
(2022: £786,000). There is a factoring charge of 1% of the Gross debt and a
discount rate of 5% above bank base rates on net advances. The agreement provide
for 3 months' notice by either party and certain minimum fee levels.
On 31 July 2022, the Company disposed of IVI. Subsequently IVI was put into
administration and the Company received a demand from HSBC for the outstanding
principal under a cross guarantee. The CBIL liability is secured by means of a
debenture entered into by the Company.
The movement in borrowings reconciles to the cash flow statement as follows:
At 31 Discontinued Disposal of Assumed Repaid At 31
subsidiary
March March 2023
2022
£'000 £'000 £'000 £'000 £'000 £'000
Secured 1,854 - - - - 1,854
borrowings
Unsecured - - - 70 (57) 13
borrowing
Convertible 475 - - - - 475
loan note
Factoring 447 (2) (248) - (52) 145
facilities
CBIL and 866 (120) (746) 746 (46) 700
BBLs
Total 3,642 (122) (994) 816 (155) 3,187
borrowings
11. Share capital
Number £'000
Issued and fully paid:
At 31 March 2021 280,786,938 112
Issued during the period 245,547,664 99
At 31 March 2022 526,334,602 211
Issued during the period 344,193,003 137
At 31 March 2023 870,527,605 348
The Company has one class of ordinary share with a nominal value of 0.04p and
which carries no right to fixed income.
Shares issued Number £'000
during the year
For Cash (net of 44,372,354 258
fees)
In settlement of 16,513,216 168
fees and expenses
Acquisition 283,307,433 2,893
consideration
344,193,003 3,319
Share premium £'000
At 31 March 2021 3,946
Premium arising 2,699
on issue of new
equity during the
year
At 31 March 2022 6,645
Premium arising 3,182
on issue of new
equity during the
year
At 31 March 2023 9,827
Shares to be issued £'000
At 31 March 2022 293
Issued during the year (293)
At 31 March 2023 -
At completion of the acquisition of Aftech Limited on 24 March 2022, 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
2023, the remaining consideration shares were issued on 16 June 2023.
12. Acquisition of subsidiaries
In the year to 31 March 2023, the Company completed one acquisition:
Forepower Lincoln (250) Limited
On 6 March 2023, the Group purchased the entire share capital of Forepower
Lincoln (250) Limited ("FPL(250)") for £2,600,000 which was satisfied by the
issue and allotment by the Company of 260,000,000 shares at an issue price of 1p
per share. The acquisition has been treated as a business combination. FPL(250)
is a 248MW Battery Energy Storage System ("BESS") project in the early stages of
its planning application. 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 acquired Fair value Adjustments Total
£'000 £'000 £'000
Intangible assets - 274 2,600 2,874
project expenditure
Current liabilities (274) - (274)
- 2,600 2,600
Consideration
Issue of equity 2,600
Total consideration 2,600
Acquisition costs of £1,000 have been included in other gains and losses in the
consolidated statement of profit and loss and comprehensive income.
13. Post balance sheet events
On 25 October 2023, the Company disposed of 49.9% of its holding in FPL (250) in
order to fund the development of the project. Value is expected to be generated
as the project moves through the planning process and obtains a firm connection
date to the national grid.
On 17 May 2023 the Company issued 3,333,333 ordinary shares of £0.0004 each at
£0.0075 per share.
14. Contingent liability
FPL(250) has a consultancy contract concerning the application for a connection
to the national grid in respect of the BESS project. Within 40 days of
receiving planning consent, FPL(250) has an obligation to pay £1.2million to the
contractor and a further £50,000 to another supplier.
This information was brought to you by Cision http://news.cision.com
END
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