Final Results
Volvere PLC
25 March 2004
25 March 2004
VOLVERE PLC
FINAL RESULTS FOR THE PERIOD TO 31 DECEMBER 2003
Volvere PLC ('Volvere' or 'the Company'), the activist and turnaround investment
company, announces its final results for the period ended 31 December 2003.
Highlights
* Pre-tax profit for the period of £546,000 on turnover of £7,061,000
* Group net assets increased 22.4% to £4,001,000 (30 June 2003: £3,269,000)
* Group net cash inflow from operating activities of £1,356,000 resulting in
cash on hand of £3,283,000 at 31 December 2003 (30 June 2003: £2,136,000)
* Significant contract win with Shell Group companies worth estimated £2.3m over
3 years
* No dividend proposed
Sir Stanley Kalms, Chairman of Volvere plc, said:
'I am pleased to report Volvere's first full year of profit, a result which
underlines the merits of the strategy set out in late 2002 and which sets a
firm foundation for future growth.'
For further information, please contact:
Jonathan Lander, Chief Executive Officer
Nick Lander, Chief Operating and Financial Officer
Volvere PLC +44 (0) 20 7979 7596
Terry Garrett / Christian Taylor-Wilkinson
Weber Shandwick Square Mile +44 (0) 20 7067 0700
Jeff Keating
Teather & Greenwood +44 (0) 20 7426 9000
CHAIRMAN'S STATEMENT
I am pleased to report on the results for the period ended 31 December 2003.
Volvere was admitted to the Alternative Investment Market ('AIM') at the end of
2002 with the objective of acquiring companies with market capitalisations below
the net realisable value of their assets or alternatively companies that were in
distress but offered the possibility of a turnaround. At that time global equity
markets were at or near five-year lows and optimism appeared scarce.
Since then equity markets have rebounded making it more difficult for us to acquire
companies in our sphere of activity. Conversely it has helped to increase the value
of assets that we already own.
In May 2003 we acquired a company that fitted our criteria, namely Vectra Group
Limited ('Vectra'). We acquired Vectra from Amey plc when Amey was disposing of
non-core assets and was itself the subject of a takeover. We believe our timing
was good and that significant value has been, and will continue to be, created
for shareholders.
Vectra has presented many of the challenges that are typical of companies in
distress. Investing in such companies requires clarity of purpose and comprehensive,
multi-faceted action to deliver a turnaround in an acceptable timescale.
Nevertheless, despite trading losses, one-off restructuring costs and Volvere's
own operating expenses, the Group has delivered a profit of £546,000 for the
period and an increase in Group net assets to £4,001,000. As a result of our
instigation of more rigorous management of working capital, Vectra has also been
highly cash generative. Group year-end cash on hand was £3,283,000.
We believe that the changes that we have made to Vectra's operations put it on a
platform for growth and the achievement of profitability that it has not enjoyed
for some time. Following the period end, I am pleased to report that Vectra has
won a number of important contracts. This reflects the quality of the staff in
Vectra and the rigour of our management of the business.
In December we welcomed David Buchler to the Board. David has some 30 years
experience in the field of corporate turnaround, being a former Chairman of Kroll
for Europe and Africa and a past President of R3, the association of business
recovery professionals.
OUTLOOK
The trading performance of Vectra is encouraging and the outlook for the Group
enhanced by its acquisition. In accordance with the policy outlined in the interim
statement in June, we continue to seek to acquire companies that are complementary
to Vectra.
Sir Stanley Kalms
Chairman
CHIEF EXECUTIVE'S STATEMENT
During the period we have been active in turning around the Group's sole
operating company, Vectra.
OPERATING REVIEW - VECTRA
Vectra is a leading provider of safety, risk and other consulting and field
services to clients in, and regulators of, regulated industries. The business is
split into two divisions: Consulting, and Environment, Infrastructure and
Resourcing ('EIR').
For the period from 24 May 2003 to 31 December 2003 Vectra's turnover was
£7,061,000 and its operating loss before Group management charges was £444,000.
Vectra's operating loss before Group management charges has been reduced
significantly from an average 2003 pre-acquisition loss of approximately
£201,000 per month to an average of approximately £63,000 per month for the
period following acquisition. This has been achieved in spite of lower turnover
and significantly increased insurance costs.
Following restructuring of the acquired business, the Consulting division is
larger as a percentage of the turnover of the overall business and the EIR
division therefore smaller. Vectra employs fewer people - staff numbers have
fallen from approximately 183 at 30 June 2003 to 156 at 31 December 2003 - but
the people it employs are more concentrated on higher value-added services in
the market sectors of Nuclear, Transportation, Oil and Gas, Aviation and
Property. This is a key part of our strategy for delivering a successful
turnaround.
During 2003 and since the period end a number of new projects have been won
including contracts with ProRail (The Netherlands), Tube Lines Limited, Marathon
Oil and ABB (The Netherlands). In particular, following the period end, we won a
significant contract with Shell Group (in respect of the UK and The Netherlands)
worth approximately £2.3m over three years. This is in addition to our
continuing work with BNFL and UKAEA amongst others.
During the period we opened offices in Crawley, Aberdeen and the Middle East and
strengthened the management of our Den Haag and London offices.
EMPLOYEES
The performance improvements we have seen in Vectra have been due to the hard
work of all the staff during a difficult time following the acquisition from
Amey, for which I thank them.
ACQUISITIONS AND FUTURE STRATEGY
The successful turnaround of Vectra remains the focus of our current efforts to
enhance shareholder value. I believe that this is on course. The rise in equity
markets, as noted in the Chairman's remarks, has made acquiring related
businesses more difficult. During the period we considered a number of
acquisitions that would be complementary to Vectra. Nothing that we have
considered has met the stringent criteria that the Board has set for evaluating
such transactions although we remain in discussions with a number of potential
targets.
Jonathan Lander
Chief Executive
FINANCIAL REVIEW
This Financial Review covers the Group's performance during the period ended 31
December 2003. It should be read in conjunction with the Chairman's and Chief
Executive's statements.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial statements have been prepared in accordance with UK Accounting
Standards and the Group's principal accounting policies, which are set out in
note 1 of the Notes to the Financial Statements below. The Group has applied
robust and transparent accounting policies since its formation in 2002. The
Group carries out regular reviews of its accounting policies in accordance with
the requirement of Financial Reporting Standard ('FRS') 18 'Accounting
Policies'.
TURNOVER AND OPERATING PERFORMANCE
As noted in the Chief Executive's report, Vectra's operating performance
improved significantly during the period compared to pre-acquisition. Table A
below summarises key financial information in relation to Vectra.
Turnover in the period was £7,061,000, all of which was generated by Vectra.
Vectra's average monthly turnover fell by 14.7% during the post-acquisition
period from 24 May 2003 to 31 December 2003 when compared with the pre-
acquisition period from 1 January 2003 to 23 May 2003. This was due principally
to lower volumes in the EIR division, which represented 51.1% of 2003's pre-
acquisition turnover and only 42.8% in the post-acquisition period.
Operating profit exclusive of one-off reorganisation costs and Group management
charges is the key measure used to assess the operating performance of the Group
and its subsidiary company. Realisation of negative goodwill has been a
significant factor in the reporting of an operating profit in the Group and
reflects the Group's ability to buy and manage the working capital of its
acquisitions.
Vectra's average monthly operating loss has reduced compared to the pre-
acquisition period due to the improvement in gross margins and reduction in
overheads.
Table A 24 May 2003 1 January 2003 Year ended
to 31 December to 23 May 31 December
2003 2003 2002
Turnover (note 1) £000 7,061 5,833 19,721
Average monthly turnover
(note 1) £000 1,009 1,183 1,643
Operating loss
(notes 1 and 2) £000 (444) (1,006) (2,869)
Average monthly operating
loss (notes 1 and 2) £000 (63) (201) (239)
============= ============= =============
Note 1: the turnover and operating loss for the periods 1 January to 23 May 2003
and the year ended 31 December 2002 have been restated to exclude certain
activities not acquired by Volvere. Further information is contained in note 11
of the Notes to the Financial Statements. The operating loss for the period 24
May to 31 December 2003 is before group management charges of £616,000.
Note 2: the operating loss is stated before an exceptional credit in the period
1 January to 23 May 2003 totalling £1,270,000, relating to the settlement of
litigation and the sale of tax losses offset by a charge associated with the
transfer to Amey plc of a lease obligation.
TAXATION
The Group had no tax charge in the period.
EARNINGS PER SHARE
The basic and diluted earnings per share were 16.53p and 15.44p respectively.
In 2004 the Group will implement a share option scheme.
NEGATIVE GOODWILL
Negative goodwill arising on the acquisition of Vectra has been capitalised as
an intangible asset and credited to the profit and loss account during the period
in so far as the assets acquired have been consumed or realised as cash. In the
period an amount of £1,402,000 was capitalised and £1,252,000 credited to the
profit and loss account.
CASH MANAGEMENT
The Group had no borrowings during the period. Cash of £3,455,000 (net of expenses)
was raised pursuant to the issues of share capital in November and December 2002
and at 31 December 2003 cash balances totalled £3,238,000.
HEDGING
It is not the Group's policy to enter into derivative instruments to hedge
interest rate risk.
DIVIDENDS
In accordance with the policy set out in our prospectus on our admission to AIM,
the Board does not currently intend to recommend payment of a dividend but
prefers to retain profits as they arise for investment in future opportunities.
CANCELLATION OF SHARE PREMIUM ACCOUNT
On 27 November 2003 the company's share premium account was cancelled to
increase distributable reserves.
Nick Lander
Chief Operating & Financial Officer
Volvere plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Period from 5 July 2002 to 31 December 2003
Period
from 5 July 2002
to 31 December
2003
Note £000 £000
TURNOVER - ACQUIRED OPERATIONS 2 7,061
Cost of sales - Acquired Operations (4,090)
-------
GROSS PROFIT - ACQUIRED OPERATIONS 2,971
Administrative expenses
- before realisation of negative goodwill (3,768)
- realisation of negative goodwill 1,252
-------
(2,516)
-------
OPERATING PROFIT - ACQUIRED OPERATIONS 455
Finance income - interest receivable 91
-------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX 2 546
Tax on profit on ordinary activities 5 -
PROFIT ON ORDINARY ACTIVITIES AFTER TAX,
BEING RETAINED PROFIT FOR THE PERIOD 15 546
========
EARNINGS PER ORDINARY SHARE OF 0.00001p:
- Basic 7 16.53p
--------
- Diluted 7 15.44p
--------
All results are derived from continuing operations.
There are no unrecognised gains or losses other than the profit for the period.
Accordingly, a statement of total recognised gains and losses has not been
presented.
Volvere plc
BALANCE SHEETS
31 December 2003
Note Group Company
2003 2003
£000 £000
FIXED ASSETS
Intangible fixed assets - negative goodwill 8 (150) -
Tangible fixed assets 9 215 -
Investment 10 & 11 - 2,124
------- -------
65 2,124
CURRENT ASSETS
Stocks 5 -
Debtors 12 2,937 645
Cash at bank and in hand 3,283 1,258
------- -------
6,225 1,903
CREDITORS: amounts falling due
within one year 13 (2,289) (184)
------- -------
NET CURRENT ASSETS 3,936 1,719
------- -------
TOTAL ASSETS LESS CURRENT LIABILITIES 4,001 3,843
======= =======
CAPITAL AND RESERVES
Called up share capital 14 50 50
Profit and loss account 15 3,951 3,793
------- -------
EQUITY SHAREHOLDERS' FUNDS 16 4,001 3,843
======= =======
These financial statements were approved by the Board of Directors on 25 March 2004
Volvere plc
CONSOLIDATED CASH FLOW STATEMENT
Period from 5 July 2002 to 31 December 2003
Note 2003
£000
Net cash inflow from operating activities 17 1,356
-------
Returns on investments and servicing of finance 18 91
Capital expenditure and financial investment 18 (59)
Acquisitions and disposals 18 (1,560)
-------
Cash outflow before management of liquid resources and
financing (172)
Financing 18 3,455
-------
Increase in cash in the year 3,283
=======
Volvere plc
NOTES TO THE FINANCIAL STATEMENTS
Period from 5 July 2002 to 31 December 2003
1. ACCOUNTING POLICIES
A summary of the principal accounting policies, all of which have been applied
during the period from incorporation, is set out below.
Basis of accounting
The financial statements are prepared under the historical cost convention and
in accordance with applicable United Kingdom accounting standards.
The group financial statements consolidate the financial statements of Volvere
plc and its subsidiary undertaking drawn up to 31 December 2003. The results of
subsidiaries acquired or sold are consolidated for the periods from or to the
date on which control passed. Acquisitions are accounted for under the
acquisition method.
Goodwill
Goodwill, representing the excess of the fair value of consideration given over
the fair value of separable net assets acquired, is capitalised as an intangible
asset and is amortised over a period of 20 years, being the directors assessment
of its likely future life. Provision is made for any impairment.
Negative goodwill, representing the excess of the fair value of the separable
net assets acquired over the fair value of the consideration given, is
capitalised as an intangible asset and credited to the profit and loss account
over the periods in which the assets acquired are consumed or realised as cash.
Tangible fixed assets
The cost of tangible fixed assets is their purchase cost, together with any
incidental costs of acquisition. Depreciation is calculated so as to write off
the cost of tangible fixed assets, less their estimated residual values, on a
straight line basis over the expected useful economic lives of the assets
concerned. The principal annual rates used for this purpose are:
Improvements to short leasehold property Over the life of the lease
Plant and machinery 20% - 33%
Investments
Investments are carried in the balance sheet at cost less provision for
diminution in value.
Stocks and work in progress
Stock is valued at the lower of cost and net realisable value. Provision is made
for obsolete, slow moving and defective stocks. Net realisable value is based on
estimated selling price less the estimated cost of disposal.
Amounts recoverable on contracts
Amounts recoverable on short-term contracts include the cost of direct materials
and labour plus attributable overheads. Full provision is made on uncompleted
contracts for anticipated losses to completion.
Turnover
Turnover is recognised on a basis appropriate to the nature of the income
source. Turnover earned on time and materials contracts is recognised as costs
are incurred. Income from fixed price contracts is recognised in proportion to
the stage of completion of the relevant contract.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at
amounts expected to be paid (or recovered) using the tax rates and laws that
have been enacted or substantially enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future, or a right to
pay less tax in the future, have occurred at the balance sheet date. Timing
differences are differences between the group's taxable profits and its results
as stated in the financial statements. These arise from including gains and
losses in different periods from those recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised
only when, on the basis of all available evidence, it can be regarded as more
likely than not that there will be suitable taxable profits from which the
future reversal of the underlying timing difference can be deducted.
Foreign currencies
All transactions denominated in foreign currencies are translated into sterling
at the actual rate of exchange ruling on the date of the transaction. Assets and
liabilities denominated in foreign currencies are translated into sterling at
rates of exchange ruling at the balance sheet date at the end of the financial
year. All exchange differences arising are taken to the profit and loss account
in the year in which they arise.
Investment income
Income from investments is included in the profit and loss account on an
accruals basis, before deduction of any related tax credit.
Pension costs
The group's subsidiary undertaking, Vectra, operates a defined contribution
scheme. Vectra's contributions are charged against profits in the years in which
they fall due. The assets of the scheme are held separately from those of the
company and group in independently administered funds.
The group provides no other post retirement benefits to its employees.
Operating leases
Costs in respect of operating leases are charged to the profit and loss account
on a straight line basis over the lease term.
2. TURNOVER AND PROFIT ON ORDINARY ACTIVITIES BEFORE TAX
The turnover is attributable to the continuing operations and principal activity
of safety, risk and other consulting and field services.
2003
By destination £000
United Kingdom 6,197
Rest of Europe 555
United States of America 23
Other 286
-------
7,061
=======
Profit on ordinary activities before taxation is stated after charging/
(crediting):
2003
£000
Profit on sale of fixed assets 1
Depreciation on owned assets 80
Realisation of negative goodwill (see note 8) (1,252)
Auditors' remuneration:
- audit services 48
- non-audit services 24
Operating lease costs
- plant and machinery 131
- other 218
Exchange gains (19)
=======
In addition to the amounts shown above, Deloitte & Touche LLP received fess
totalling £22,000 in connection with the listing of the Company on the
Alternative Investment Market. These fees were charged to the share premium
account. Deloitte & Touche received further fees totalling £51,000 for due
diligence services on the acquisition of Vectra Group Limited, these fees being
included with the cost of this investment.
3. DIRECTORS' EMOLUMENTS
The remuneration of the directors was as follows:
2003
£000
Emoluments 91
=======
The services of Jonathan Lander, Nick Lander and Richard Kalms are provided
under the terms of a Service Agreement dated 19 December 2002 with Dawnay, Day
Lander Limited. The amount charged under this agreement (which is included in
the amount stated above) for the period amounted to £77,000.
None of the directors were members of the group's defined contribution pension
plan in the period.
4. STAFF COSTS
2003
£000
Wages and salaries 4,111
Social security costs 429
Pension costs 148
-------
4,688
=======
The average monthly number of persons employed by the group during the period
was 184 (management and administration 38, consultants 146).
The group's subsidiary undertaking, Vectra, operates a defined contribution
pension plan to which it and its employees contribute.
5. TAX ON LOSS ON ORDINARY ACTIVITIES
2003
£000
UK corporation tax -
=======
The standard rate of tax for the year, based on the UK standard rate of
corporation tax is 30%. The actual tax charge for the period exceeds the
standard rate for the reasons set out in the following reconciliation.
2003
£000
Profit on ordinary activities before tax 546
Tax charge on loss on ordinary activities at standard rate (164)
Factors affecting charge for the period:
Income not chargeable for tax purposes 336
Capital allowances in excess of depreciation (3)
Tax losses not recognised (167)
Movement in short term timing differences (2)
-------
Total actual amount of current tax -
=======
At 31 December 2003 a deferred tax asset has not been recognised in respect of
timing differences relating to capital allowances, revenue losses and other
short term timing differences as there is insufficient evidence that the asset
will be recovered. The amount of the asset not recognised is £396,000.
6. PROFIT ATTRIBUTABLE TO THE COMPANY
The profit for the financial year dealt with in the financial statements of the
parent company was £388,000. As permitted by Section 230 of the Companies Act
1985, no separate profit and loss account is presented in respect of the parent
company.
7. EARNINGS PER SHARE
The weighted average number of shares and earnings used to calculate earning per
share are given below:
2003
Number
Number of shares used for basic earnings per share 3,303,602
Number of shares deemed to be issued at nil consideration
under incentive share scheme 232,053
----------
Number of shares used for diluted earnings per share 3,535,655
----------
£000
Earnings attributable to shareholders 546
----------
8. INTANGIBLE FIXED ASSETS - NEGATIVE GOODWILL
Negative
Goodwill
£000
Cost
Acquisition of subsidiary undertaking (note 11) (1,402)
----------
At 31 December 2003 (1,402)
----------
Amortisation
Realised in the period 1,252
----------
At 31 December 2003 1,252
----------
Net book value
At 31 December 2003 (150)
==========
The balance of negative goodwill is being realised over the periods in which the
assets to which it relates are consumed by the Group. This period is expected to
extend out five years.
9. TANGIBLE FIXED ASSETS
Group Short
Leasehold Plant and
property machinery Total
£000 £000 £000
Cost
Acquisition of subsidiary undertaking 414 942 1,356
Additions - 64 64
Disposals - (12) (12)
---------- ---------- ----------
At 31 December 2003 414 994 1,408
---------- ---------- ----------
Depreciation
Acquisition of subsidiary undertaking 271 848 1,119
Charge for the period 23 57 80
Disposals - (6) (6)
---------- ---------- ----------
At 31 December 2003 294 899 1,193
---------- ---------- ----------
Net book value
At 31 December 2003 120 95 215
========== ========== ==========
10.FIXED ASSET INVESTMENTS
2003
Group Company
£000 £000
Investments - 2,124
========== ==========
The Company's investment represents 100% of the ordinary share capital of Vectra
Group Limited.
11.ACQUISITION OF SUBSIDIARY UNDERTAKING
On 24 May 2003 the company acquired 100% of the issued share capital of Vectra
Group Limited for a cash consideration of £2.0m. On completion of this
acquisition Vectra Group Limited granted Amey plc an option to acquire 5% of the
existing equity in Vectra Group Limited for a consideration of £115,000 in the
three year period following the acquisition. Volvere plc granted to Amey plc an
option to require Volvere plc to purchase Amey plc's shareholding acquired under
the terms of the Vectra option. The option is exercisable during the period
commencing on the 57th month anniversary and ending on the 60th month
anniversary of the acquisition date and the consideration would be £115,000. The
fair value of the total consideration was £2,124,000 (including £124,000 of
associated expenses).
The following table sets out the book values of the identifiable assets and
liabilities acquired and their fair value to the group:
Fair value
Book value Fair value to group at
at acquisition adjustments acquisition
£000 £000 £000
Fixed assets
Intangible - Purchased goodwill 879 (879) -
Tangible 405 (168) 237
Current assets
Debtors (incl.amounts recoverable
under contracts) 4,341 85 4,426
Cash 564 - 564
---------- ---------- ----------
Total assets 6,189 (962) 5,227
---------- ---------- ----------
Creditors
Corporation tax (23) - (23)
Other creditors including social
security (614) - (614)
Trade creditors (427) (36) (463)
Accruals and deferred income (595) (6) (601)
---------- ---------- ----------
Total liabilities (1,659) (42) (1,701)
---------- ---------- ----------
Net assets acquired 4,530 (1,004) 3,526
---------- ----------
Negative goodwill capitalised (1,402)
----------
Purchase consideration, including
certain costs 2,124
==========
Satisfied by
Cash 2,124
==========
Details of the fair value adjustments are as follows:
Intangible assets - Purchased goodwill
Purchased goodwill related to the acquisition of the net assets of Enviresponse.
The directors performed a review for impairment and concluded that this goodwill
had been impaired and no residual value to the group.
Tangible fixed assets
The directors performed a review for impairment of tangible fixed assets. This
review resulted in an impairment charge against plant and machinery of £168,000.
Debtors
The directors performed a review of the recoverability of debtors (including
amounts recoverable under contracts) and this has resulted in an increase in the
carrying values.
Trade creditors and accruals
The directors performed a review of the valuation of creditors and accruals
which has resulted in certain creditors and accruals being restated.
Cash
Net cash in respect of the acquisition comprised:
£000
Purchase consideration including certain costs 2,124
Cash at bank acquired (564)
--------
Net cash 1,560
========
The profit and loss accounts for Vectra Group Limited for the 21-week period to
24 May 2003 and the year ended 31 December 2002, based on unaudited management
accounts, are summarised below. Prior to the acquisition of Vectra Group Limited
by Volvere, Vectra Group Limited transferred certain business activities to Amey
plc - financial information relating to these business activities is shown
separately below. Information relating to cash flows for Vectra Group Limited
for the period following acquisition is contained in note 18 to these financial
statements.
21 weeks to
acquisition on 52 weeks to
24 May 2003 31 December 2002
£000 £000
Turnover
- business activities not acquired 84 5,934
- business activities acquired 5,833 19,721
========== ==========
Total turnover 5,917 25,655
Operating loss - before exceptional items
- business activities not acquired - (1,635)
- business activities acquired (1,006) (2,869)
========== ==========
Operating loss
- before exceptional items (1,006) (4,504)
Exceptional items 1,270 -
---------- ----------
Operating profit/(loss)
- after exceptional items 264 (4,504)
---------- ----------
Net profit/(loss) before taxation 241 (4,559)
Taxation (89) (79)
---------- ----------
Net profit/(loss) after taxation 152 (4,638)
========== ==========
The exceptional credit in the period to 24 May 2003 related to the receipt of
certain sums, net of expenses arising from litigation (£897,000) and income from
the sale of tax losses (£823,000), offset by fees paid upon the transfer to Amey
plc of certain lease obligations (£450,000). The result for the period to 24 May
2003 excludes the effect of the impairment review undertaken at acquisition,
which resulted in an overall write-down of certain balance sheet items amounting
to £1,004,000.
12.DEBTORS
2003
Group Company
£000 £000
Trade debtors 1,383 -
Amounts recoverable on contracts 1,231 -
Amounts due from subsidiary undertaking - 636
Other debtors 49 -
Prepayments and accrued income 274 9
---------- ----------
2,937 645
========== ==========
13.CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2003
Group Company
£000 £000
Trade creditors 655 32
Corporation tax 12 -
Other taxes and social security 211 -
VAT payable 402 90
Other creditors 277 -
Accruals and deferred income 732 62
---------- ----------
2,289 184
========== ==========
14.CALLED UP SHARE CAPITAL
Company 2003
£000
Authorised
100,100,000 Ordinary shares of £0.0000001 each -
50,000 A shares of £0.49999995 each 25
50,000 B shares of £0.49999995 each 25
4,999,999,500,000 Deferred shares of £0.00000001 each 50
==========
Issued, called-up and fully paid
3,609,720 ordinary shares of £0.0000001 each -
50,000 A shares of £0.49999995 each 25
50,000 B shares of £0.49999995 each 25
==========
On incorporation the authorised share capital of the Company was £50,000 divided
into 50,000 ordinary shares of £1 each of which 2 were issued at par (nil paid)
as subscriber shares to the two subscribers. On 19 November 2002, 49,998
ordinary shares of £1 each were issued at par (nil paid). On 25 November 2002
100% of the nominal value of each ordinary share was paid up. On 18 December
2003 each issued £1 ordinary share was subdivided into one £0.0000001 ordinary
share, one £0.49999995 'A' class share and one £0.49999995 'B' class share. On
24 December 2002 3,559,720 £0.0000001 ordinary shares were issued at £1 each,
giving rise to share premium on issue of £3,405,000 net of expenses of the share
issue.
The A and B class shares rank pari passu with the ordinary shares on a return of
capital and have equal voting rights. The A and B shares are capable of being
converted into ordinary shares at the option of the holder on or after 24
December 2003 and 24 December 2004 respectively, on a predetermined conversion
formula based upon share price performance, whereby 15% of the growth in market
capitalisation of Group is attributable to the holders of the A and B shares.
Based on the closing share price of £1.75 at 31 December 2003, the A and B class
shares would be capable of converting into 232,053 ordinary shares. The deferred
shares carry no rights to participate in the profits or assets of the Company
and carry no voting rights.
15.SHARE PREMIUM AND RESERVES
Group Share Profit and
premium loss account Total
£000 £000 £000
At beginning of period - - -
Profit transferred for the period - 546 546
Premium on share issues (net of expenses) 3,405 - 3,405
Cancellation of share premium account (3,405) 3,405 -
---------- ---------- ---------
At end of period - 3,951 3,951
========== ========== =========
Company Share Profit and
premium loss account Total
£000 £000 £000
At beginning of period - - -
Profit transferred for the period - 388 388
Premium on share issues (net of expenses) 3,405 - 3,405
Cancellation of share premium account (3,405) 3,405 -
---------- ---------- ---------
At end of period - 3,793 3,793
========== ========== =========
The cancellation of the parent company's share premium account, which was
confirmed by the Court on 26 November 2003 and became effective on 27 November
2003, has been used to create distributable reserves of the same amount by
transfer to the profit and loss account.
16.RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
Group Company
2003 2003
£000 £000
Opening shareholders' funds - -
Issue of share capital 3,610 3,610
Expenses associated with issue of share capital (155) (155)
Profit for the period 546 388
---------- ----------
Closing shareholders' funds 4,001 3,843
========== ==========
17.RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS
Group 2003
£000
Operating profit 455
Depreciation 80
Realisation of negative goodwill (1,252)
Loss on sale of fixed assets 1
Increase in stocks (5)
Decrease in debtors 1,489
Increase in creditors 588
----------
Net cash inflow from operating activities 1,356
==========
18.ANALYSIS OF CASH FLOWS
Group 2003
£000
Returns on investments and servicing of finance
Interest received 91
----------
Net cash inflow from returns on investments and servicing of
finance 91
==========
Capital expenditure and financial investment
Purchase of tangible fixed assets (64)
Sale of tangible fixed assets 5
----------
Net cash outflow from capital expenditure and financial
investment (59)
==========
Acquisitions and disposals
Acquisition of subsidiary undertaking (2,124)
Net cash acquired on acquisition of subsidiary undertaking 564
----------
Net cash outflow from acquisition and disposals (1,560)
==========
Financing
Issue of share capital 3,610
Costs associated with issue of share capital (155)
----------
Net cash inflow from financing 3,455
==========
Vectra Group Limited, acquired during the year, contributed £1,510,000 to the
group's net operating cash flows, received £10,000 respect of net returns on
investment and servicing of finance, paid £nil in respect of taxation and
utilised £64,000 for capital expenditure.
19.ANALYSIS AND RECONCILIATION OF NET FUNDS
Group
5 July 31 December
2002 Cashflow 2003
£000 £000 £000
Cash in hand at bank, being net funds - 3,283 3,283
========== ========== ==========
The group had no debt during the period or at the period end.
20.COMMITMENTS AND CONTINGENCIES
Operating leases
The group has the following annual commitments under non-cancellable operating
leases:
2003
Plant and machinery Other
£000 £000
Expiry date
- within one year 47 205
- between two and five years 97 199
---------- ----------
144 404
========== ==========
21.RELATED PARTIES
The company has taken advantage of the exemption available to it under FRS8
paragraph 3(b) relating to transactions and balances with subsidiaries.
As stated in note 3 above, the company's Executive Directors are provided under
the terms of a Service Agreement dated 19 December 2002 with Dawnay, Day Lander
Limited. The amount charged under this agreement in the period amounted to
£77,000. In addition, pursuant to a Facilities Agreement dated 19 December 2002
with Dawnay, Day Lander Limited, the company is provided with certain
administrative and support services. The amount charged under this agreement
during the period amounted to £36,000.
22.SUBSIDIARY UNDERTAKINGS
The subsidiary undertakings at 31 December 2003 are shown below. All subsidiary
undertakings are registered in the United Kingdom and prepare accounts to 31
December each year.
Principal Activity Holding
Vectra Group Limited Provision of safety, risk and other
consulting and field services 100%
Vectra Partners Limited Dormant 100%
Vectra Technologies Limited Dormant 100%
The investments in Vectra Partners Limited and Vectra Technologies Limited are
held by Vectra Group Limited. The proportion of voting rights held is equivalent
to the equity shareholdings. On 9th March 2004 Vectra Technologies Limited
changed its name to Vectra (Middle East) Limited.
23.FINANCIAL INFORMATION
The financial information set out above does not constitute the Company's
statutory accounts for the period ended 31 December 2003, but is derived from
those accounts. Statutory accounts for 2003 will be delivered following the
Company's annual general meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain statements under s237 (2) or
(3) Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange