Operating segments

IFRS 8 "Operating Segments" requires the disclosure of segmental information for the Group on the basis of information reported internally to the chief operating decision-maker for decision-making purposes.  The Group considers that the role of chief operating decision-maker is performed collectively by the Board of Directors.

 

Volvere plc is a holding company that identifies and invests principally in undervalued and distressed businesses and securities as well as businesses that are complementary to existing Group companies.  Its customers are based primarily in the UK and Europe.

 

Financial information (including revenue and profit before tax and intra-group charges) is reported to the Board on a segmental basis.  Segment revenue comprises sales to external customers and excludes gains arising on the disposal of assets and finance income.  Segment profit reported to the Board represents the profit earned by each segment before tax and intra-group charges.  For the purposes of assessing segment performance and for determining the allocation of resources between segments, the Board reviews the non-current assets attributable to each segment as well as the financial resources available.  All assets are allocated to reportable segments.  Assets that are used jointly by segments are allocated to the individual segments on a basis of revenues earned. 

 

All liabilities are allocated to individual segments.  Information is reported to the Board of Directors on a segmental basis as management believes that each segment exposes the Group to differing levels of risk and rewards due to their varying business life cycles.  The segment profit or loss, segment assets and segment liabilities are measured on the same basis as amounts recognised in the financial statements.  Each segment is managed separately.

 

Where one company within a segment incurs costs which relate wholly or partly to, or shares resources with, another company within that or another segment, a proportion of such costs are recharged to that other company. The effect is to reduce the costs of the incurring company and to increase the costs of the benefitting company.

 

Leasing

 

The Company applies IFRS 16 Leases. Accordingly leases are all accounted for in the same manner:

-         A right of use asset and lease liability is recognised on the statement of financial position, initially measured at the present value of future lease payments;

-         Depreciation of right-of-use assets and interest on lease liabilities are recognised in the statement of comprehensive income;

-         The total amount of cash paid is recognised in the statement of cash flows, split between payments of principal (within financing activities) and interest (also within financing activities)    

The initial measurement of the right of use asset and lease liability takes into account the value of lease incentives such as rent free periods.

The costs of leases of low value items and those with a short term at inception are recognised as incurred.

Foreign currencies

Transactions in currencies other than sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date.  Gains and losses arising on retranslation are included in net profit or loss for the period.

 

Retirement benefit costs

The Group's subsidiary undertakings operate defined contribution retirement benefit schemes.  Payments to these schemes are charged as an expense in the period to which they relate.  The assets of the schemes are held separately from those of the relevant company and Group in independently administered funds.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.  The tax currently payable is based on taxable profit for the year.  Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.   

Deferred tax is the tax expected to be payable or recoverable on temporary 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 balance sheet 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 goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

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 measured on an undiscounted basis using the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.  Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Property, plant and equipment

Items of property, plant and equipment are stated at cost or valuation less accumulated depreciation and any recognised impairment loss.  Freehold property is revalued on a periodic basis.  Depreciation is charged so as to write off the cost or valuation of assets, less their residual values, over their estimated useful lives, using the straight line method, on the following bases:

Freehold property                                                          -           1.5% per annum

Plant and machinery                                                      -           4%-33% per annum

 

Investments

Investments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, including transaction costs.  Available for sale current asset investments are carried at fair value with adjustments recognised in other comprehensive income.

Investment income

Income from investments is included in the income statement at the point the Group becomes legally entitled to it.  Interest income and expenses are reported on an accruals basis using the effective interest method.

Impairment of property, plant and equipment and intangible assets (including 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 in order to determine the extent of the impairment loss (if any). 

Recoverable amount is the higher of fair value less costs to sell 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 any 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 as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

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 only 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 as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Share-based payments

The Group issues equity-settled share-based payments to certain directors and employees.  Equity-settled share-based payments are measured at fair value at the date of grant.  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 options that will ultimately vest.

Fair value is measured by use of a Black-Scholes pricing model.  The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

Inventories

 

Inventories are stated at the lower of cost and net realisable value. Raw materials are valued at purchase price and the costs of ordinarily interchangeable items are assigned using a weighted average cost formula. The cost of finished goods comprises raw materials directly attributable to manufacturing processes based on product specification and packaging cost.  Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses.

Cash and cash equivalents

 

Cash and cash equivalents comprise cash balances, overnight deposits and treasury deposits.  The Group considers all highly liquid investments with original maturity dates of three months or less to be cash equivalents.

Financial assets

Recognition and derecognition

 

Financial assets and financial instruments are recognised when the Group becomes a party to the contractual provisions of the financial asset.

 

Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire, or when the financial asset and substantially all of the risks and rewards are transferred.  A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

 

Classification and initial recognition of financial assets

 

Except for trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

 

Financial asset, other than those designated and effective as hedging instruments are classified into the following categories:

 

-       Amortised cost

-       Fair value through profit or loss (FVTPL)

-       Fair value through other comprehensive income (FVOCI)

 

The classification is determined by both:

 

-       The entity's business model for managing the financial asset

-       The contractual cash flow characteristics of the financial asset

 

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within administrative expenses.

 

Subsequent measurement of financial assets

 

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

 

-       They are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows

-       The contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding

 

After initial recognition, these are measured at amortised cost using the effective interest method.  Discounting is omitted where its effect is immaterial.  The Group's cash and cash equivalents, trade and most other receivables fall into this category.  This category also includes investments in equity instruments. 

 

Financial assets which are designated as FVTPL are measured at fair value with gains or losses recognised in profit or loss.  The fair values of financial assets in this category are determined with reference to active market transactions or using a valuation technique where no active market exists.

 

Impairment of financial assets

 

IFRS 9's impairment requirements use forward looking information to recognise expected credit losses - the 'expected credit loss (ECL) method'.  Recognition of credit losses is no longer dependent on first identifying a credit loss event, but considers a broader range of information in assessing credit risk and credit losses including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

 

In applying this forward looking approach, a distinction is made between:

 

-       Financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk ('stage 1') and

-       Financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low ('stage 2').

 

Stage 3 would cover financial assets that have objective evidence of impairment at the reporting date. 

 

12 month expected credit losses are recognised for the first category while lifetime expected credit losses are recognised for the second category.  Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial asset.

 

Trade and other receivables and contract assets

 

The group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses.  These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument.  In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

 

The Group assesses impairment of trade receivables on a collective basis, as they possess shared credit risk characteristics, they have been grouped based on the days past due. 

 

Classification and measurement of financial liabilities

 

FVTPL:  This category comprises only out-of-the-money derivatives.  They are carried in the statement of financial position at fair value with changes in fair value recognised in the income statement.

 

Other financial liabilities:  Other financial liabilities include trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

 

Bank and other borrowings are initially recognised at the fair value of the amount advanced net of any transaction costs directly attributable to the issue of the instrument.  Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest method.  Interest expense in this context includes initial transaction costs and premia payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

 

Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.  An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

 

Invoice discounting

 

The Group uses an invoice discounting facility and retains all significant benefits and risks relating to the relevant trade receivables.  The gross amounts of the receivables are included within assets and a corresponding liability in respect of proceeds received from the facility is included within liabilities.  The interest and charges are recognised as they accrue and are included in the income statement with other interest charges.

 

Significant management judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses.  The nature of the Group's business is such that there can be unpredictable variation and uncertainty regarding its business.  The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates. 

 

Significant management judgements (other than estimates)

 

The judgements that have a significant impact on the carrying value of assets and liabilities are discussed below:

 

Consolidation

 

Management have concluded that it is not appropriate to utilise the exemption from consolidation available to investment entities under IFRS 10 as the Company is not considered to meet all of the essential elements of the definition of an investment entity as performance is not measured or evaluated on a fair value basis.  Accordingly the consolidation includes all entities which the Company controls.

 

Deferred tax asset

 

The Group recognises a deferred tax asset in respect of temporary differences relating to capital allowances, revenue losses and other short term temporary differences when it considers there is sufficient evidence that the asset will be recovered against future taxable profits.

 

This requires management to make decisions on such deferred tax assets based on future forecasts of taxable profits. If these forecast profits do not materialise, or there is a change in the tax rates or to the period over which temporary timing differences might be recognised, the value of the deferred tax asset will need to be revised in a future period.

 

The most sensitive area of estimation risk is with respect to losses.  The Group has losses for which no value has been recognised for deferred tax purposes in these financial statements, as future economic benefit of these temporary differences is not probable. If appropriate profits are earned in the future, recognition of the benefit of these losses may result in a reduced tax charge in a future period.

 

Significant estimates

 

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

 

Useful lives of depreciable assets

 

The depreciation charge for an asset is derived using estimates of its expected useful life and expected residual value, which are reviewed annually. Increasing an asset's expected life or residual value would result in a reduced depreciation charge in the consolidated income statement.

 

Management determines the useful lives and residual values for assets when they are acquired, based on experience with similar assets and taking into account other relevant factors such as any expected changes in technology or regulations.

 

Inventories

 

In determining the cost of inventories management has to make estimates to arrive at cost and net realisable value.

 

Furthermore, determining the net realisable value of the wider range of products held requires judgement to be applied to determine the saleability of the product and estimations of the potential price that can be achieved. In arriving at any provisions for net realisable value management take into account the age, condition and quality of the product stocked and the recent sales trend. The future realisation of these inventories may be affected by market-driven changes that may reduce future selling prices.

 

Fair value measurement

 

Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.

 

Recognition and calculation of right of use assets

 

Management assesses the discount rate to be applied to the leases held on an annual basis. They ensure the discount rate is in line with market rate.

 

New and revised standards and interpretations applied

 

The following amendments are effective for the period beginning 1 January 2022:

•      Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);

•      Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS

16);

•      Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9,

IFRS 16 and IAS 41); and

•      References to Conceptual Framework (Amendments to IFRS 3).

None of these had an impact on the Group.

 

New and revised Standards and Interpretations in issue but not yet effective

 

At the date of authorisation of these financial statements, the Company has not early adopted the following amendments to Standards and Interpretations that have been issued but are not yet effective and have not been adopted early by the Group.

 

The following amendments are effective for the period beginning 1 January 2023:

 

•      Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

 

•      Definition of Accounting Estimates (Amendments to IAS 8); and

 

•      Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

The following amendments are effective for the period beginning 1 January 2024:

 

•      IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback)

 

•      IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-current)

 

•      IAS 1 Presentation of Financial Statements (Amendment - Non-current Liabilities with Covenants)

As yet, none of these have been endorsed for use in the UK and will not be adopted until such time as endorsement is confirmed. The Directors do not expect any material impact as a result of adopting the standards and amendments listed above in the financial year they become effective.

 

2          Operating profit

 

Operating profit is stated after charging:

	2022 £'000	2021 £'000 (as restated)
Staff costs	6,038	5,420
Depreciation of property, plant and equipment	933	922
Auditor's fees - audit services	42	38
The analysis of audit fees is as follows:
- for the audit of the Company's annual accounts	10	9
- for the audit of the Company's subsidiaries' accounts	32	29
	42	38

3      Staff costs

 

Staff costs comprise:

	2022 £'000	2021 £'000 (as restated)
Wages and salaries	5,443	4,885
Employer's National Insurance contributions	448	394
Defined contribution pension cost	147	141
	6,038	5,420

 

The average number of employees (including Directors) in the Group was as follows:

 

	2022 Number	2021 Number (as restated)
Engineering, production and professional	181	166
Sales and marketing	11	10
Administration and management	34	33
	226	209

 

4      Directors' remuneration

The remuneration of the Directors was as follows:

	Salaries & fees 2022 £'000	Other benefits 2022 £'000	Total 2022 £'000
David Buchler	45	-	45
Jonathan Lander	10	-	10
Nick Lander	9	1	10
	64	1	65

 

	Salaries & fees 2021 £'000	Other benefits 2021 £'000	Total 2021 £'000
David Buchler	45	-	45
Jonathan Lander	11	-	11
Nick Lander	11	1	12
	67	1	68

 

The services of Jonathan Lander and Nick Lander are provided under the terms of a Service Agreement with D2L Partners LLP.  The amount due under these agreements, which is in addition to the amounts disclosed above, for the year amounted to £650,000 (2021: £650,000). Amounts owed to D2L Partners LLP at the year end totalled £nil (2021: £nil).

 

The amount paid to David Buchler in the year was paid to DB Consultants Limited (which is controlled by him and is therefore a related party) and the amount outstanding at the year end was £nil (2021: £nil).

 

None of the Directors were members of the Group's defined contribution pension plan in the year (2021: none).

 

5        Operating segments

 

Analysis by business segment:

 

An analysis of key financial data by business segment is provided below.  The Group's food manufacturing segment is engaged in the production and sale of food products to third party customers, and the investing and management services segment incurs central costs, provides management services and financing to other Group segments and undertakes treasury management on behalf of the Group.  A more detailed description of the activities of each segment is given in the Strategic Report.

 

	Food manufacturing 2022 £'000	Investing and management services 2022 £'000	Total 2022 £'000
Revenue	38,027	-	38,027
Profit/(loss) before tax(1)	2,777	(448)	2,329
	Food manufacturing 2021 £'000 (as restated)	Investing and management services 2021 £'000	Total 2021 £'000 (as restated)
Revenue	30,701	-	30,701
Profit/(loss) before tax(1)	2,139	(1,066)	1,073

 

 

	Food manufacturing 2022 £'000	Investing and management services 2022 £'000	Total 2022 £'000
Assets	25,692	18,430	44,122
Liabilities and provisions	(8,874)	504	(8,370)
Net assets(2)	16,818	18,934	35,752
	Food manufacturing 2021 £'000	Investing and management services 2021 £'000	Total 2021 £'000
Assets	22,929	21,506	44,435
Liabilities and provisions	(7,850)	465	(7,385)
Net assets(2)	15,079	21,971	37,050

 

(1)   stated before intra-group management and interest charges

(2)   assets and liabilities stated excluding intra-group balances

 

Continuing operations	Food manufacturing 2022 £'000	Investing and management services 2022 £'000	Total 2022 £'000
Capital spend	1,014	-	1,014
Depreciation	932	1	933
Interest income (non-Group)	(8)	-	(8)
Interest expense (non-Group)	138	-	138
Tax credit/(expense)	(50)	50	-
Continuing operations	Food manufacturing 2021 £'000 (as restated)	Investing and management services 2021 £'000 (as restated)	Total 2021 £'000 (as restated)
Capital spend	270	-	270
Depreciation	921	1	922
Interest income (non-Group)	-	-	-
Interest expense (non-Group)	137	-	137
Tax credit/(expense)	(114)	175	61

 

Geographical analysis:

 

	External revenue by location of customers		Non-current assets by location of assets
	2022	2021	2022	2021
	£'000	£'000 (as restated)	£'000	£'000
UK	36,830	29,612	8,142	9,306
Rest of Europe	1,197	954	-	-
USA	-	135	-	-
	38,027	30,701	8,142	9,306
The Group had 4 (2021: 4) customers (all in the food manufacturing segment) that individually accounted for in excess of 10% of the Group's revenues as follows:

 

	2022 £'000	2021 £'000 (as restated)
First customer	17,860	12,122
Second customer	6,252	6,783
Third customer	5,530	3,732
Fourth customer	4,547	3,672

Revenue is recognised when goods are delivered and there is minimal uncertainty over the timing and amount of revenue recognition. The Group has no material balances which arise from contracts with customers save for trade receivables as set out in note 13.

 

6     Discontinued operations

 

On 8 November 2022, two subsidiary undertakings in the Group, Indulgence Patisserie Limited and Indulgence Foods Limited, ceased operations and have been classified as assets held for sale.

 

The loss relating to these subsidiaries (before intra-Group management charges) in the year was as follows:

 

	2022	2021
	£'000	£'000
Revenue	3,532	4,878
Cost of sales	(4,300)	(4,294)
Gross (loss)/profit	(768)	584
Administrative expenses	(1,363)	(1,360)
Distribution expenses	(237)	(230)
Operating loss	(2,368)	(1,006)
Loss on sale of tangible fixed asset investments	(199)	-
Loss before tax	(2,567)	(1,006)
Income tax credit/(expense)	176	(73)
Loss from discontinued operations	(2,391)	(1,079)

Cash flows generated by Indulgence Patisserie Limited and Indulgence Foods Limited for the reporting periods under review was as follows:

	2022	2021
	£'000	£'000
Operating activities	(1,051)	(955)
Investing activities	29	(197)
Financing activities	(51)	(49)
Cash flows from discontinued operations	(1,073)	(1,201)

At 31 December 2022, the assets and liabilities of Indulgence Patisserie Limited and Indulgence Foods Limited (stated net of intra-Group balances), were as follows:

	2022
	£'000
Non-current assets
Assets held for sale	2,103
Property, plant and equipment	6
Total non-current assets	2,109
Current assets
Inventories	414
Trade and other receivables	826
Cash and cash equivalents	72
Total current assets	1,312
Total assets	3,421
Current liabilities
Loans and other borrowings	(6,519)
Leases	(5)
Trade and other payables	(486)
Total liabilities	(7,010)
Provisions - deferred tax	(169)
Net liabilities	(3,758)

 

7     Investment revenues, other gains and losses and finance income and expense

 

	2022	2021
	£'000	£'000
Finance income
Bank interest receivable	8	-
Investment revenues	109	-
Other gains & losses	581	-
	698	-

 

Finance expense
Bank interest	(41)	(42)
Lease interest	(44)	(47)
Other interest and finance charges	(53)	(48)
	(138)	(137)

 

8      Income tax

	2022	2021
	£'000	£'000 (as restated)
Deferred tax credit recognised in income statement - current year	-	(61)
Total tax credit recognised in income statement	-	(61)
Deferred tax expense recognised in equity	297	140
Total deferred tax recognised	297	79

 

The reasons for the difference between the actual tax expense in the income statement for the year and the standard rate of corporation tax in the UK applied to profits for the year are as follows:

	2022 £'000	2021 £'000 (as restated)
Profit before tax	2,329	1,073
Expected tax charge based on the prevailing rate of corporation tax in the UK of 19%	443	204
Effects of:
Income not taxed	(21)	-
Super deduction and capital allowance adjustments	(27)	15
Other adjustments	19	18
Losses utilised	(8)	-
Effect of changes in rate of tax	5	(9)
Group relief from discontinued operations	(386)	(233)
Adjustments relating to prior periods	(25)	(56)
Total tax recognised in income statement	-	(61)

 

Deferred tax assets and liabilities are recognised at rates of tax substantively enacted as at the balance sheet date. Deferred tax assets are recognised to the extent that they are considered recoverable. See also note 20.

 

9      Earnings per share

 

The calculation of the basic and diluted earnings per share is based on the following data:

 

Earnings for the purposes of earnings per share:	2022 £'000	2021 £'000 (as restated)
Profit/(loss) attributable to equity holders of the parent company: From continuing operations From discontinued operations	1,854 (2,391)	780 (1,079)

 

EEa Weighted average number of shares for the purposes of earnings per share:	2022 No.	2021 No.
Weighted average number of ordinary shares in issue	2,493,592	2,571,132
Dilutive effect of potential ordinary shares	-	-
Weighted average number of ordinary shares for diluted EPS	2,493,592	2,571,132

 

There were no share options (or other dilutive instruments) in issue during the year or the previous year.

 

10    Subsidiaries

 

The subsidiaries of Volvere plc, all of which have been included in these consolidated financial statements, are as follows:

           

Name	Registered address	Principal Activity	Proportion of ownership interest in ordinary shares at 31 December 2022
Volvere Central Services Limited	Note 1	Group support services	100%
NMT Group Limited	Note 2	Investment	98.6%
Shire Foods Limited	Note 1	Food manufacturing	80%
Impetus Automotive Solutions Limited	Note 1	Dormant	100%
New Medical Technology Limited Zero-Stik Limited	Note 3 Note 3	Dissolved on 01/03/2022 Dissolved on 01/03/2022	98.6% 98.6%
Indulgence Foods Limited	Note 1	Property holding company (Note 4)	100%
Indulgence Patisserie Limited	Note 1	Food Manufacturing, now ceased trading	100%
Naughty Vegan Limited Volvere Asset Management Limited	Note 1 Note 1	Branded food supplier Dormant	100% 100%

Note 1 - Registered at Shire House, Tachbrook Road, Leamington Spa, Warwickshire, CV31 3SF, England.

Note 2 - Registered at 4th Floor 115 George Street, Edinburgh, EH2 4JN, Scotland.

Note 3 - Formerly registered at c/o Wright, Johnston & Mackenzie LLP, 302 St Vincent St, Glasgow, G2 5RZ, Scotland.

Note 4 -  The property owned by this company related solely to the activities undertaken by Indulgence Patisserie Limited.

 

11         Property, plant and equipment

 

	Freehold Property £'000	Plant & Machinery £'000	Total £'000
Cost or valuation
At 1 January 2021	4,700	9,090	13,790
Additions	-	467	467
Disposals	-	18	18
Revaluation	-	(8)	(8)
At 31 December 2021 and 1 January 2022	4,700	9,567	14,267
Additions	-	1,082	1,082
Disposals	-	(799)	(799)
Revaluation	1,188	-	1,188
Reclassified to asset held for sale	(2,138)	-	(2,138)
At 31 December 2022	3,750	9,850	13,600
Accumulated depreciation
At 1 January 2021	13	3,821	3,834
Charge for the year	72	1,059	1,131
Eliminated on disposal	-	(4)	(4)
At 31 December 2021 and 1 January 2022	85	4,876	4,961
Charge for the year	65	987	1,052
Disposals	-	(520)	(520)
Reclassified to asset held for sale	(35)	-	(35)
At 31 December 2022	115	5,343	5,458
Net book value
At 31 December 2022	3,635	4,507	8,142
At 31 December 2021	4,615	4,691	9,306

 

The freehold property owned by Shire Foods Limited was revalued by an independent valuation specialist to £3,750,000 in May 2021 and this valuation was included as at 31 December 2020. During 2020, the company acquired freehold properties as part of the Indulgence business combination. The properties were purchased for £950,000. 

 

In the 2022 financial year, the properties owned by Indulgence Foods Limited were revalued to £2,138,000. Following Indulgence Patisserie Limited ceasing to trade, these properties were subsequently reclassified as assets held for sale.

 

Under the historical cost model, the carrying value of freehold property would be £2,173,700. All other property, plant and equipment is carried at cost less accumulated depreciation. At the year end, the Directors consider that the fair value of the properties is not materially different from their carrying values.

 

Management considers there to be no indicators to suggest that any items of property, plant and equipment are impaired.  Property, plant and equipment (which is all held within Shire Foods Limited) with a net book value of £8.14 million is pledged as collateral for Group borrowings (all of which are within Shire Foods Limited).

 

Right of use assets

The Group leases certain plant and equipment. The average remaining lease term across all leases is 1.5 years. In all cases, the lease obligations are secured by the lessor's title to the leased assets. The right-of-use assets included in the statement of financial position are as follows:

 

Amounts recognised in the statement of financial position

 

Group	2022		2021
	£'000		£'000
Net book values	1,770		1,883

 

Amounts recognised in the statement of comprehensive income

 

Group	2022		2021
	£'000		£'000
Interest expense on lease liabilities	44		47
Expense relating to short-term leases	-		-
Depreciation charge for the year	329		365

 

The aggregate undiscounted commitments for short-term and low value leases at the year-end was £nil (2021 - £nil).

 

12    Inventories

 

	2022 £'000	2021 £'000
Raw materials                                 Finished products	1,961 1,816	1,515  2,869
	3,777	4,384

 

The total amount of inventories consumed in the year and charged to cost of sales was £24.62 million (2021: £18.73 million).

 

13    Trade and other receivables

	2022 £'000	2021 £'000
Trade receivables	8,466	8,195
Less: provision for impairment of trade receivables	-	-
Net trade receivables	8,466	8,195
Other receivables	283	228
Prepayments and accrued income	566	451
	9,315	8,874

Certain of the Group's subsidiaries have invoice discounting arrangements for their trade receivables which are pledged as collateral.  Under these arrangements it is considered that the subsidiaries remain exposed to the risks and rewards of ownership, principally in the form of credit risk, and so the assets continue to be recognised.  The associated liabilities arising restrict the subsidiaries' use of the assets. 

 

The carrying amount of the assets and associated liabilities is as follows:

	2022 £'000	2021 £'000
Trade receivables	8,466	8,195
Borrowings	(1,143)	(1,452)
	7,323	6,743

Because of the normal credit periods offered by the subsidiaries, it is considered that the fair value matches the carrying value for the assets and associated liabilities.

 

The Group is exposed to credit risk with respect to trade receivables due from its customers, primarily in the food manufacturing segment.  This segment has a significant dependency on a small number of large customers who can and do place significant contracts.  Provisions for bad and doubtful debts are made based on management's assessment of the risk taking into account the ageing profile, experience and circumstances.  There were no significant amounts due from individual customers where the credit risk was considered by the Directors to be significantly higher than the total population.

 

During the year, several customers were invoiced in foreign currency. The Group does not hedge its exposure to foreign exchange risk but monitors product margins and foreign exchange gains and losses each month. In the event of a permanent and unfavourable movement in exchange rates, the Group would review foreign currency-based selling prices. At the balance sheet date, trade receivables consisted of customers invoiced in Euros and sterling as follows:

 

Trade receivables	2022 £'000	2021 £'000
Denominated in sterling	8,118	7,933
Denominated in Euros	348	262
	8,466	8,195

 

The ageing analysis of trade receivables is disclosed below:

 

	2022 £'000	2021 £'000
Up to 3 months	8,088	7,382
3 to 6 months	104	446
6 to 12 months	274	347
Over 12 months	-	20
	8,466	8,195

 

14    Cash and cash equivalents

	2022 £'000	2021 £'000
Cash at bank and in hand	19,136	21,871

 

15    Assets held for sale

 

Assets held for sale relate to the land and buildings owned by Indulgence Foods Limited, a subsidiary in the food manufacturing segment, which are no longer in use as the company has discontinued operations.  The Group expects that these will be sold within 12 months.

 

In the 2022 financial year, the properties owned by Indulgence Foods Limited were revalued to £2,138,000. Following Indulgence Patisserie Limited ceasing to trade, these properties were subsequently reclassified as assets held for sale.

 

16    Available for sale investments

 

During the year the Group invested in equity securities pursuant to its treasury management policies.  The investments held at year end are carried at fair value (£1.65 million, 2021: nil) and been classified as available for sale. The cost of the securities was £1.69 million (2021: nil).

 

	2022 £'000	2021 £'000
Available for sale investments	1,649	-

 

 

17    Trade and other payables (current)

	2022 £'000	2021 £'000
Trade payables	2,638	1,630
Other tax and social security	211	197
Other payables	54	34
Accruals	1,904	1,518
	4,807	3,379

 

The fair value of all trade and other payables approximates to book value at 31 December 2022 and at 31 December 2021.

 

18    Financial instruments - risk management

 

The Group's principal financial instruments are:

 

·      Trade receivables

·      Cash at bank

·      Loans and right of use leases

·      Trade and other payables

 

The Group is exposed through its operations to the following financial risks:

 

·      Cash flow interest rate risk

·      Foreign currency risk

·      Liquidity risk

·      Credit risk

·      Other market price risk

 

Policy for managing these risks is set by the Board following recommendations from the Chief Financial & Operating Officer.  Certain risks are managed centrally, while others are managed locally following guidelines communicated from the centre.  The policy for each of the above risks is described in more detail below.

 

Interest rate risk

 

Due to the relatively low level of borrowings, the Directors do not have an explicit policy for managing cash flow interest rate risk.  All current and recent borrowing (other than in respect of leasing) has been on variable terms, with interest rates of between 3% and 4% above base rate, and the Group has cash reserves sufficient to repay all borrowings promptly in the event of a significant increase in market interest rates.  All cash is managed centrally and subsidiary operations are not permitted to arrange borrowing independently.

 

The Group's investments may attract interest at fixed or variable rates, or none at all.  The market price of such investments may be impacted positively or negatively by changes in underlying interest rates.  It is not considered relevant to provide a sensitivity analysis on the effect of changing interest rates since, at the year end, none of the Group's investments were interest bearing.

 

Foreign currency risk     

 

Foreign exchange risk arises when individual Group operations enter into transactions denominated in a currency other than their functional currency (sterling).  The Directors monitor and review their foreign currency exposure on a regular basis. The Directors are of the opinion that the exposure to foreign currency risk is not significant.

 

Liquidity risk

 

The Group maintains significant cash reserves and therefore does not require facilities with financial institutions to provide working capital.  Surplus cash is managed centrally to maximise the returns on deposits. 

 

Credit risk

 

The Group is mainly exposed to credit risk from credit sales.  The Group's policy for managing and exposure to credit risk is disclosed in note 13.

 

Other market price risk

 

The Group has generated a significant amount of cash and this has been held partly as cash deposits and partly invested pursuant to the Group's investing strategy. 

 

Capital management

 

The Group's main objective when managing capital is to protect returns to shareholders by ensuring the Group will trade profitably in the foreseeable future.  The Group also aims to maximise its capital structure of debt and equity so as to minimise its cost of capital.

 

The Group manages its capital with regard to the risks inherent in the business and the sector within which it operates by monitoring its gearing ratio on a regular basis.

 

The Group considers its capital to include share capital, share premium, fair value reserve and retained earnings.  Net debt includes short and long-term borrowings (including lease obligations) and shares classed as financial liabilities, net of cash and cash equivalents.  The Group has not made any changes to its capital management during the year.  The Group is not subject to any externally imposed capital requirements.

 

An analysis of what the Group manages as capital is outlined below:

	2022 £'000	2021 £'000
Total debt	(2,900)	(3,468)
Cash and cash equivalents	19,136	21,871
Net funds	16,236	18,403
Total equity (capital)	35,752	37,050
Net funds to capital ratio	45.4%	49.7%

 

Reconciliation of movement in net cash

 

	Net cash at 1 January 2022	Cash flow	Repayment of borrowings	Other non- cash items	Net cash at 31 December 2022
	£'000	£'000	£'000	£'000	£'000
Cash at bank and in hand	21,871	(2,735)	-	-	19,136
Borrowings	(3,468)	-	628	(60)	(2,900)
Total financial liabilities	18,403	(2,735)	628	(60)	16,236

 

Non-cash items of £60,000 relate to the increase in lease finance arising on the purchase of property, plant and equipment.

 

19         Financial assets and liabilities - numerical disclosures

 

Analysis of financial assets by category:

 

31 December 2022	Amortised cost	FVOCI	Total
	£'000	£'000	£'000
Financial assets
Trade and other receivables	9,315	-	9,315
Cash and cash equivalents	19,136	-	19,136
Assets held for sale	-	2,103	2,103
Available for sale investments	-	1,649	1,649
Total assets	28,451	3,752	32,203
Financial liabilities
Non-current borrowings	1,270	-	1,270
Current borrowings	1,630	-	1,630
Trade and other payables	4,807	-	4,807
Total liabilities	7,707	-	7,707
31 December 2021	Amortised cost	FVOCI	Total
	£'000	£'000	£'000
Financial assets
Trade and other receivables	8,874	-	8,874
Cash and cash equivalents	21,871	-	21,871
Total assets	30,745	-	30,745
Financial liabilities
Non-current borrowings	1,624	-	1,624
Current borrowings	1,844	-	1,844
Trade and other payables	3,379	-	3,379
Total liabilities	6,847	-	6,847

 

Fair values

 

Assets held at fair value fall into three categories, depending on the valuation techniques used, as follows:

 

Level 1:   quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2:   inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices);

Level 3:   inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

The Directors consider the carrying values of all financial assets and liabilities to be a reasonable approximation of their fair values. 

 

All other assets, and all liabilities are carried at amortised cost. 

 

Maturity of financial liabilities

 

The maturity of borrowings (including right of use leases) carried at amortised cost is as follows:

 

	2022 £'000	2021 £'000
Less than six months	1,393	1,592
Six months to one year	237	252
One to two years	418	461
Two to five years	543	719
More than five years	309	444
	2,900	3,468

The above borrowings are analysed on the balance sheet as follows:

	2022 £'000	2021 £'000
Loans and other borrowings (current)	1,258	1,452
Leases (current)	372	392
Loans and other borrowings (non-current)	818	933
Leases (non-current)	452	691
	2,900	3,468

 

Borrowings are secured on certain assets of the Group, and interest was charged at rates of between 2.5% and 3.2% during the year.  Including interest that is expected to be paid, the maturity of borrowings (including leases) is as follows:

	2022 £'000	2021 £'000
Less than six months	1,435	1,637
Six months to one year	276	293
One to two years	486	536
Two to five years	624	839
More than five years	323	472
	3,144	3,777

The above borrowings including interest that is expected to be paid are analysed as follows:

 

	2022 £'000	2021 £'000
Loans and other borrowings (current)	1,294	1,493
Leases (current)	418	437
Loans and other borrowings (non-current)	919	1,068
Leases (non-current)	513	779
	3,144	3,777

 

The maturity of other financial liabilities, excluding loans and borrowings, carried at amortised cost is as follows:

	2022 £'000	2021 £'000
Less than six months	2,849	1,827

20    Deferred tax

 

Movements in deferred tax provisions are outlined below:

 

	Accelerated tax depreciation	Other timing differences	Re-valuations	Losses	Total
	£'000	£'000	£'000	£'000	£'000
At 1 January 2022	(678)	17	(527)	650	(538)
Recognised in P&L during the year	16	(13)	-	169	172
Recognised in equity during the year	-	-	(297)	-	(297)
At 31 December 2022	(662)	4	(824)	819	(663)

 

Previous year movements were as follows:

	Accelerated tax depreciation	Other timing differences	Re-valuations	Losses	Total
	£'000	£'000	£'000	£'000	£'000
At 1 January 2021	(485)	10	(387)	473	(389)
Recognised in P&L during the year	(193)	7	-	177	(9)
Recognised in equity - property revaluation	-	-	(140)	-	(140)
At 31 December 2021	(678)	17	(527)	650	(538)

 

In addition, there are unrecognised net deferred tax assets as follows:

	2022 £'000	2021 £'000
Tax losses carried forward	832	843
Excess of depreciation over capital allowances	-	-
Short term temporary differences	-	-
Net unrecognised deferred tax asset	832	843

Deferred tax assets and liabilities have been calculated using the rate of corporation tax expected to apply when the relevant temporary differences reverse of 25% (2021 - 25%).  Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the balances net.

 

The unrecognised elements of the deferred tax assets have not been recognised because there is insufficient evidence that they will be recovered because such losses are within entities that are not expected to yield future profits. The losses cannot be used to offset against profits in other entities as the losses arose prior to 1 April 2017 and can therefore only be offset against any profits made by the entity that incurred the loss.

 

21         Share capital

	Authorised
	2022 Number	2022 £'000	2021 Number	2021 £'000
Ordinary shares of £0.0000001 each	100,100,000	-	100,100,000	-
A shares of £0.49999995 each	50,000	25	50,000	25
B shares of £0.49999995 each	50,000	25	50,000	25
Deferred shares of £0.00000001 each	4,999,999,500,000	50	4,999,999,500,000	50
		100		100

           

 

	Issued and fully paid
	2022                      Number	2022 £'000	2021 Number	2021 £'000
Ordinary shares of £0.0000001 each	6,207,074	-	6,207,074	-
Deferred shares of £0.00000001 each	4,999,994,534,697	50	4,999,994,534,697	50
		50		50

 

Treasury shares

 

During the year the Company acquired 204,000 (2021: 3,500) of its own Ordinary shares for total consideration of £2,090,000 (2021: £44,000). This brought the total number of Ordinary shares held in treasury to 3,842,652 (2021: 3,638,652) with an aggregate nominal value of less than £1. At the year end the total number of Ordinary shares outstanding (excluding treasury shares) was 2,364,422 (2021: 2,568,422).

 

Rights attaching to deferred shares & A and B shares

 

The Deferred shares carry no rights to participate in the profits of the Company and carry no voting rights.  After the distribution of the first £10 billion in assets in the event of a return of capital (other than a purchase by the Company of its own shares), the Deferred shares are entitled to an amount equal to their nominal value.

 

The Company has no A and B shares in issue.  These shares have conversion rights allowing them to convert into Ordinary shares on a pre-determined formula.  All A and B shares previously in issue have been converted into Ordinary shares.

 

22    Reserves                                                                                                                                                                   

All movements on reserves are disclosed in the consolidated statement of changes in equity.

 

The following describes the nature and purpose of each reserve within owners' equity:

 

Reserve	Nature and purpose
Share premium	Amount subscribed for share capital in excess of nominal value
Revaluation reserves	Cumulative net unrealised gains and short-term losses arising on the revaluation of the Group's available for sale investments and freehold property
Retained earnings	Cumulative net gains and losses recognised in the statement of comprehensive income, other than those included in revaluation reserves.

 

23    Related party transactions

 

Details of amounts payable to Directors, and parties related to the Directors, are disclosed in note 4.  There were no other transactions with key members of management other than in respect of out-of-pocket expenses properly incurred, and no other transactions with related parties.

 

24    Contingent liabilities

 

The Group had no material contingent liabilities as at the date of these financial statements.

 

25   Non-controlling interests

 

The non-controlling interests of £2,877,000 (2021: £2,402,000 ) relate to the net assets attributable to the shares not held by the Group at 31 December 2022 in the following subsidiaries:

 

Name of subsidiary	2022 £'000	2021 £'000
NMT Group Limited	67	68
Shire Foods Limited	2,810	2,334
	2,877	2,402

 

Summarised financial information (before intra-group eliminations) in respect of those subsidiaries with material non-controlling interests is presented below:                                                                                

	Shire Foods Limited
	2022 £'000	2021 £'000
Non-current assets Current assets Non-current liabilities Current liabilities	8,137 13,939 (1,270) (5,532)	8,081 10,955 (1,615) (4,581)
Provisions	(1,202)	(1,150)
Net assets (equity)	14,072	11,690
Group	11,262	9,356
Non-controlling interests	2,810	2,334
	14,072	11,690

 

Revenue	38,175	30,775
Profit for the year after tax (stated after intra-group management and interest charges)	2,382	1,778
Profit for the year attributable to non-controlling interests	475	354

 

-END-