Audited Results

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 continuing activities		(949)		(1,299)
Discontinued activities
Profit / (loss) for the year from discontinued activities	7	1,588		(2,388)
Profit / (loss) for the year attributable to the owners of the Company		639		(3,687)
Other Comprehensive Income for the period		-		-
Total Comprehensive Income for the period attributable to owners of the Company		639		(3,687)
Earnings per share
Basic and Diluted earnings per share for loss from continuing operations attributable to the owners of the Company (pence)	8	(0.16)		(0.37)
Basic and Diluted earnings per share loss attributable to the owners of the Company (pence)	8	0.11		(1.06)

Consolidated Statement of Financial Position		Note	At 31 March 2023		At 31 March 2022
			£’000		£’000
Non-current assets
Goodwill		9	718		945
Other intangible assets		9	3,178		317
Investments			500		500
Property, plant and equipment			131		295
Right of use assets			-		403
Total non-current assets			4,527		2,460
Current assets
Inventories			32		252
Trade and other receivables			511		833
Cash and bank balances			2		69
Total current assets			545		1,154
Total assets			5,072		3,614
Current liabilities
Trade and other payables			(1,344)		(2,698)
Lease liabilities			-		(125)
Borrowings		10	(3,187)		(2,968)
Total current liabilities			(4,531)		(5,791)
Non-current liabilities
Lease liabilities			-		(266)
Borrowings		10	-		(674)
Deferred tax liabilities			(31)		(38)
Total non-current liabilities			(31)		(978)
Total liabilities			(4,562)		(6,769)
Net assets / (liabilities)			510		(3,155)
Equity
Share capital		11	348		211
Shares to be issued		11	-		293
Share premium account		11	9,827		6,645
Retained earnings			(9,665)		(10,304)
Total equity attributable to the owners of the company			510		(3,155)

Consolidated statement of changes in equity

	Share Capital	Shares to be issued	Share Premium	Retained earnings		Total Equity
	£’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 income for the year	-	-	-	(3,687)		(3,687)
Transactions with shareholders
Issue of shares	99	293	2,699	-		3,091
Total transactions with shareholders for the year	99	293	2,699	-		3,091
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 income for the year	-	-	-	639		639
Transactions with shareholders
Issue of shares	137	(293)	3,182	-		3,026
Total transactions with shareholders for the year	137	(293)	3,182	-		3,026
At 31 March 2023	348	-	9,827	(9,665)		510

Consolidated Statement of Cash Flows		Year ending 31 March 2023		Restated Year ending 31 March 2022
		£’000		£’000
Loss for the period from continuing activities		(949)		(1,299)
Adjusted for:
Finance costs		463		389
Depreciation of property, plant and equipment		29		1
Amortisation of intangible assets		30		104
Impairment of Goodwill and intangible assets		-		369
(Decrease) / increase in provisions		-		(62)
Share based payment		100		499
Operating cash flows before movements in working capital		(327)		1
Decrease / (increase) in inventories		(6)		5
Decrease / (increase) in trade and other receivables		(118)		(149)
Increase in trade and other payables		139		327
Cash (used in) / from operating activities		(312)		184
Income tax credit received		28		-
Income tax paid		(3)		-
Cash (used in) / from operating activities – continuing		(287)		184
Cash (used in) / from operating activities – discontinued		(278)		(370)
Cash used in operating activities		(565)		(186)
Investing activities
Purchases of property, plant and equipment		(2)		-
Disposal of subsidiaries – net debt retained		731		-
Acquisition of subsidiary net of cash acquired		-		46
Cash from / (used in) investing activities – continuing		729		46
Cash used in investing activities – discontinued		-		31
Cash from / (used in) investing activities		729		77
Financing activities
Interest paid		(271)		(388)
Drawdown of loans and borrowings		70		-
Repayment of loans and borrowings		(169)		-
Proceeds on issue of shares		258		1,041
Net cash from financing activities – continuing		(112)		653
Net cash from financing activities – discontinued		(119)		(561)
Net cash from financing activities		(231)		92
Net decrease in cash and cash equivalents		(67)		(17)
Cash and cash equivalents at beginning of year		69		86
Cash and cash equivalents at end of year		2		69

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 31 March 2023		Restated Year ending 31 March 2022
				£’000		£’000
Acquisition and disposal costs				140		25
Loss allowance on trade receivables				52		104
Government grants				(1)		(31)
Other expenses				34		187
				225		285
Of which relating to:
Continuing activities				224		305
Discontinued activities				1		(20)
				225		285

5. Impairment charge

				Year ending 31 March 2023		Restated Year ending 31 March 2022
				£’000		£’000
Goodwill (note 14)				-		1,142
Identified intangible assets (note 14)				-		571
Other receivables				-		327
				-		2,040
Of which relating to:
Continuing activities				-		12
Discontinued activities				-		2,028
				-		2,040

6. Finance costs

				Year ending 31 March 2023		Restated Year ending 31 March 2022
				£’000		£’000
Interest receivable:
Interest on quoted bond				25		-
				25		-
Interest payable:
Interest on bank overdrafts and loans				426		444
Interest on lease liabilities				8		32
Loan arrangement fees and other finance costs				68		26
				502		502
Net Finance costs				477		502
Of which relating to:
Continuing activities				438		389
Discontinued activities				39		113
				477		502

7. Discontinued activities

				Year ending 31 March 2023		Restated 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 discontinued activities				(216)		(3,110)
Tax credit on discontinued activities				-		68
Loss after tax on discontinued activities				(216)		(3,042)
Profit on disposal of discontinued activities				1,804		654
Profit / (loss) on discontinued activities				1,588		(2,388)

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 of the basic earnings per share is based on the following data:				£’000		£’000
Loss for the year for the purposes of basic loss per share attributable to equity holders of the Company:
-          From continuing operations				(949)		(1,299)
-          From discontinued operations				1,588		(2,388)
-          Total				639		(3,687)
Weighted average number of Ordinary Shares for the purposes of basic loss per share				595,784,173			346,819,139
Basic earnings per share(pence)
-          From continuing operations				(0.16p)			(0.37p)
-          From discontinued operations				0.27p		(0.69p)
-          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 intangible assets				BESS Project		Identified intangible assets		Total
						£’000		£’000
Cost
At 31 March 2021			-			1,067		1,067
Recognised on acquisition			-			300		300
Disposal			-			(167)		(167)
At 31 March 2022			-			1,200		1,200
On acquisition of subsidiary			274			-		274
Recognised on acquisition			2,600			-		2,600
Additions			34			-		34
Disposal			-			(900)		(900)
At 31 March 2023			2,908			300		3,208
Amortisation
At 31 March 2021			-			242		242
Charge for the period			-			120		120
Impairment charge			-			571		571
Disposal			-			(50)		(50)
At 31 March 2022			-			883		883
Charge for the period			-			40		40
Disposal						(893)		(893)
			-			30		30
Carrying value at 31 March 2023			2,908			270		3,178
Carrying value at 31 March 2022			-			317		317

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 charge				Year ended 31 March 2023		Year ending 31 March 2022
				£’000		£’000
Goodwill
IVI Metallics Limited				-		548
Orca Doors Limited				-		294
Romar Process Engineering Limited				-		300
				-		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 March  2023		At 31 March 2022
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 March 2022	Discontinued	Disposal of subsidiary	Assumed	Repaid	At 31 March 2023
	£’000	£’000	£’000	£’000	£’000	£’000
Secured borrowings	1,854	-	-	-	-	1,854
Unsecured borrowing	-	-	-	70	(57)	13
Convertible loan note	475	-	-	-	-	475
Factoring facilities	447	(2)	(248)	-	(52)	145
CBIL and BBLs	866	(120)	(746)	746	(46)	700
Total borrowings	3,642	(122)	(994)	816	(155)	3,187

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 during the year							Number			£’000
For Cash (net of fees)							44,372,354			258
In settlement of fees and expenses							16,513,216			168
Acquisition consideration							283,307,433			2,893
								344,193,003		3,319
Share premium										£’000
At 31 March 2021										3,946
Premium arising on issue of new equity during the year										2,699
At 31 March 2022										6,645
Premium arising on issue of new equity during the year										3,182
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 – project expenditure		274	2,600	2,874
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.

 

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