Half-year Report

RNS Number : 3601A

Volvere PLC

29 September 2020

 

-	29 September 2020

Volvere plc

("Volvere" or the "Group")

Interim Results for the six months ended 30 June 2020

Volvere plc (AIM: VLE), the growth and turnaround investment company, announces its unaudited Interim Results for the six months ended 30 June 2020.

Highlights

£ million except where stated	Six months ended		Year ended
	30 June 2020	30 June 2019	31 December 2019
Group revenue	12.95	10.10	23.04
Group (loss)/profit before tax from continuing operations Group (loss)/profit for the period (including discontinued operations)	(0.97) (0.97)	(0.62) 2.45	0.14 3.18
	As at 30 June 2020	As at 30 June 2019	As at 31 December 2019
Consolidated net assets per share (excluding non-controlling interests)(1)	£13.29	£13.56	£13.85
Group net assets	26.02	26.36	26.99
Cash and marketable securities	16.11	19.65	19.32

· Good underlying performance from Shire Foods, the Group's frozen savoury products manufacturer

· Integration of Indulgence Patisserie, the Group's frozen desserts manufacturer, underway

· Strong financial position with high liquidity

Forward-looking statements:

This report may contain certain statements about the future outlook for Volvere plc.  Although the directors believe their expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

This announcement contains information which, prior to its disclosure, was considered inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR).

Notes

1  Based on the net assets attributable to owners of the parent company and the respective period end shares in issue (excluding treasury shares), which were 1,834,182 at 30 June 2020, 30 June 2019 and 31 December 2019.

2  Profit before intra-group management and interest charges is considered to be a relevant and useful interpretation of the trading results of the business such that its performance can be understood on a basis which is independent of its ownership by the Group.  Further information is included in the Chief Executive's statement and Financial Review.

For further information:

Volvere plc
Jonathan Lander, CEO	Tel: [phone]
	www.volvere.co.uk
Cairn Financial Advisers LLP Sandy Jamieson/James Lewis	Tel: + 44 (0) 20 7213 0880
Hobart Capital Markets LLP Lee Richardson	Tel: [phone]

Chairman's Statement

I am pleased to report another set of good results for the Group, in what can only be described as unprecedented times due to the current COVID-19 pandemic.  Shire Foods has again grown revenue and profits year-on-year in spite of the downturn in the foodservice sector due to lockdown, whilst the integration and turnaround of Indulgence Patisserie is underway.

Net assets per share have fallen slightly to £13.29 in the period due to the trading losses at Indulgence (30 June 2019: £13.56, 31 December 2019: £13.85) but the Group remains in a strong financial position with significant cash reserves.  The current environment is expected to provide increasing opportunities for investment.

David Buchler

Chairman

29 September 2020

*Net assets attributable to owners of the parent company divided by total number of ordinary shares outstanding at the reporting date

(less those held in treasury) - see note 8.

Chief Executive's Statement

The Group entered 2020 with one trading subsidiary, Shire Foods Limited ("Shire"), following the disposal in 2019 of the Group's CCTV-viewing software business.

On 7 February 2020 the Group acquired the business and assets of Indulgence Patisserie Limited ("Indulgence" or "Indulgence Patisserie"), which manufactures premium frozen desserts and cakes.  Indulgence, along with Shire, is discussed in more detail below.

The COVID-19 pandemic has dominated much of 2020, creating unprecedented uncertainty in many industries, even those that would normally be considered low risk (such as commercial real estate).  The Group entered the crisis engaged solely in the manufacture of frozen food products, and the demand for food does not fundamentally change, although the channels through which it is sourced and enjoyed have altered.  As a result, whilst our businesses have not been immune to the effects of trading restrictions and lockdowns imposed by the UK and other governments, the effects have been relatively muted.

Shire has grown once again in H1 2020, increasing retail sales by more than the reduction in foodservice sales.  Indulgence's performance is broadly in line with our expectations, although it has been hit harder because of its historically significant foodservice sales and it is being rebuilt essentially from scratch following its acquisition in February.

Overall Group revenue was £12.95 million for the period (30 June 2019: £10.10 million, 31 December 2019: £23.04 million).  The Group's loss before tax from continuing operations was £0.97 million (30 June 2019: £0.62 million, year to 31 December 2019: profit £0.14 million).

The performance of each of the Group's segments is set out below.

Food manufacturing

This segment comprises Shire, the Group's 80%-owned frozen pie and pasty manufacturing business which was acquired in 2011, and Indulgence Patisserie, a premium frozen desserts and cakes manufacturer.  Detailed financial information relating to the two businesses, including the acquisition terms, is included in the Financial review below.

Shire Foods

Shire today employs approximately 230 people and is based in Leamington Spa, United Kingdom.

Revenue grew by 19% to reach £12.02 million (30 June 2019: £10.10 million).  Profit before tax and intra-Group management and interest charges** was £0.35 million, compared to £0.24 million for the six months to 30 June 2019 (31 December 2019: profit £1.38 million).  Both margins and volume increased but this was offset to a large extent by higher direct labour and distribution and warehousing costs. Foodservice sales fell due to the closure of schools in particular, but retail sales were stronger.

Our efforts to develop class-leading vegan products have been rewarded with a number of new vegan lines with customers.  I am delighted to announce that the Naughty Vegan brand is launching in a "big-4" retailer imminently. This is our first foray into developing a new brand in Shire.

As shareholders will know from previous years, we would ordinarily expect Shire's performance to be stronger in the second half of the year given the weighting of sales towards the colder months.  Clearly, any impact of further lockdowns at a local or national level are hard to predict, but given the first half's performance, we remain quietly confident for the year as a whole. 

The effects of Brexit on imported raw materials (both in terms of pricing and availability) are as yet unclear.  Shire does export directly to EU countries currently, but these sales were less than 1.5% of revenue in 2020.

A new production line is being commissioned currently which we expect will enable us to deliver more growth in 2021.

Indulgence Patisserie

Indulgence employs approximately 35 people and is located in Colchester, United Kingdom.  During the period since acquisition to 30 June, the company had revenue of £0.93 million and made a loss before tax and intra-Group management and interest charges** of £0.60 million.  The business was acquired out of administration in February.

We have been pleased with the breadth and quality of the products that Indulgence is able to manufacture, which provides a strong foundation for rebuilding the business.  However, its financial condition prior to our involvement meant that the business had been starved of investment in several areas, affecting production capacity, health and safety and internal systems.  As a result, the business has been in many respects a ground up restart.

Our turnaround involves investing in areas that are essential to create a safe, well-managed environment for staff and to ensure that product quality is consistently high.  We have put in place a new business system, addressed health and safety matters and have flattened the reporting lines to increase individual responsibility and autonomy.  These changes are ongoing and not without their challenges, however, we know from experience that they are essential to rebuilding customer and staff trust.

We are investing in new product development, which is fundamental to growth.  We aim to differentiate at a product level - much as we have with Shire.  Some new products in development have never been manufactured by Indulgence before and there is much work to do.

The short-term re-balancing towards retail customers (due to COVID-19, whilst not reducing the interest in foodservice) has resulted in encouraging new incremental business with two national retailers and it is expected that new products will launch in 2021.  Finally, we are working with the Group's Naughty Vegan brand to bring indulgent vegan desserts to market.

Investing and management services

This segment represents our central functions covering Group management, finance and IT services.  The loss before tax and intra-Group management and interest charges** for the period was £0.73 million (30 June 2019: loss £0.86 million, 31 December 2019: loss £1.25 million).

Further segmental information is set out in the financial review below and in note 3.

Acquisitions and future strategy

We have a track record of identifying under-performing businesses, improving them, safeguarding jobs, whilst delivering excellent returns for shareholders.  Although our short-term strategy is to deliver further growth in our food businesses, the wider opportunities opening up as a result of the global pandemic and Brexit, are engaging. The future is anything but certain, but I believe this is the kind of environment that plays to Volvere's strengths.

Jonathan Lander

Chief Executive

29 September 2020

**Profit before intra-Group management and interest charges is considered to be a relevant and useful interpretation of the trading results of the business such that its performance can be understood on a basis which is independent of its ownership by the Group.

Financial Review

This financial review covers the Group's performance during the period ended 30 June 2020.  It should be read in conjunction with the Chairman's and Chief Executive's Statements.

Overview

Group revenue for the period increased by £2.86 million to £12.95 million (30 June 2019: £10.10 million, 31 December 2019: £23.04 million).  Of the increase, £0.93 million arose from the acquisition of Indulgence Patisserie in February 2020, with a further £1.93 million arising from growth in Shire Foods.

The Group's loss before tax from continuing operations was £0.97 million (30 June 2019: £0.62 million, year to 31 December 2019: profit £0.14 million).  Included in this period were one-off incentive costs amounting to £0.29 million relating to the sale of a former subsidiary, Impetus Automotive, following the receipt of the final consideration due.

Further comment on each segment is set out below and d etailed information about the Group's segments is set out in note 3 to these interim results, which should be read in conjunction with this financial review.

Food manufacturing

With the purchase of the Indulgence Patisserie business in the period, this segment now comprises two businesses: Shire Foods and Indulgence Patisserie.  The results of both businesses are shown in the tables below, which together form the food manufacturing segment.

Shire Foods

A summary of Shire's recent financial performance is set out in Table A below.

Table A	6 months to 30 June 2020 £'000	6 months to 30 June 2019 £'000	Year ended 31 December 2019 £'000	Year ended 31 December 2018 £'000	Year ended 31 December 2017 £'000
Revenue	12,018	10,095	23,036	18,344	15,869
Underlying profit before tax, intra-group management and interest charges	352	237	1,384	854	635
Intra-group management and interest charges	(75)	(75)	(200)	(200)	(200)
Profit/(loss) before tax	277	162	1,184	654	435

The increase in Shire's revenue compared to the comparable period in 2019 was coupled with a slightly improved gross margin. This was in spite of increased direct labour costs, which were significantly higher year-on-year by £0.54 million.  Similarly, comparable transportation and warehousing costs increased by £0.19 million compared to the comparable period in 2019.  There is a scarcity of frozen food storage in the UK currently, with Brexit planning and COVID-19 undoubtedly impacting on availability.  Shire is currently extending its own in-house storage to meet volume growth but will remain dependent on 3^rd party logistics and warehousing partners.

Investment in plant and machinery continued in 2020, with plant and equipment additions of £0.25 million in Shire.  A new production line is being commissioned currently to further increase capacity.  Shire continues to be largely self-funding utilising 3^rd party working capital and debt facilities where necessary, and there were no Group loans outstanding at 30 June 2020 (30 June 2019: nil, 31 December 2019: nil).

Shire's unaudited net assets at the period end amounted to £7.88 million (30 June 2019: £7.06 million; 31 December 2019: £7.60 million), of which 20% is attributable to non-controlling interests.

Indulgence Patisserie

The acquisition of the business and assets of Indulgence Patisserie was effected through two wholly-owned subsidiaries, with the properties and certain plant assets held in a separate company from the trading operations.  The results below reflect the totality of the Indulgence operations.  The consideration paid, excluding incidental transaction and related costs of £0.07 million, was £1.25 million (which forms part of intercompany debt due to the parent company).  The provisional fair values of the assets and liabilities acquired are explained further in note 7.

A summary of Indulgence's recent financial performance is set out in Table B below.  There is no comparative data for the periods prior to the acquisition date.

Table B	6 months to 30 June 2020 £'000
Revenue	934
Underlying loss before tax, intra-group management and interest charges	(601)
Intra-group management and interest charges	-
Loss before tax	(601)

The loss in Indulgence is not entirely unexpected, though it has been challenging to reduce it in the current environment. The business had been loss-making prior to acquisition and steps to grow the business's sales were underway when the COVID-19 pandemic took hold.  The effect was to reduce to virtually zero the company's foodservice sales, with a knock-on effect on profitability, and before new retail customer products could be launched.  In addition, the company was essentially a start-up in operational terms as the business had been managed to a point where there was virtually no stock to serve those customers that it did have.  Consequently, there was a cash-demanding and labour-intensive exercise to rebuild inventory levels.

Indulgence is being financially and operationally supported by the Group for the time-being.  It requires further investment to increase capacity and broaden the product range. Group loans outstanding at the period end (including the original acquisition price and incidental costs) amounted to £2.84 million.

Indulgence's combined unaudited net assets, excluding the Group loan noted above, amounted to £2.24 million at the period end.  The Group has continued to support Indulgence in the second half of 2020.

Finance income and expense

The Group's net finance income was nil in the period, reflecting lower cash deposits and interest rates (30 June 2019: £0.05 million, 31 December 2019: net income £0.06 million). In line with previous years, individual Group trading companies utilise leverage wherever appropriate and possible, and without recourse to the remainder of the Group.

Statement of financial position

Cash

Cash at the period end was £16.11 million (30 June 2019: £19.65 million, 31 December 2019: £19.32 million).  The reduction in cash compared to the end of 2019 reflects the investment and loan made to Indulgence.  Details of cash movements are shown in the consolidated statement of cash flows.

Earnings per share and share capital

Total basic and diluted loss per ordinary share were (56.1) pence (30 June 2019: earnings 81.1 pence; year ended 31 December 2019: earnings 122.2 pence).

The total basic and diluted loss per ordinary share from continuing operations was (56.1) pence (30 June 2019: (22.0) pence; year ended 31 December 2019: (5.7) pence).

Purchase of own shares

The Company did not acquire any of its own ordinary shares during the period (30 June 2019 and 31 December 2019: 1,283,927 shares for £16.57million).  As of 30 June 2020, since the start of its buyback programme, the Group has returned £32.06 million to shareholders.

Hedging

It is not the Group's policy to enter into derivative instruments to hedge interest rate or foreign exchange risk.

Key performance indicators (KPIs)

The Group uses key performance indicators suitable for the nature and size of the Group's businesses.  The key financial performance indicators are revenue and profit before tax.  The performance of the Group and the individual trading businesses against these KPIs is outlined above, in the Chief Executive's statement and disclosed in note 3.

Internally, management uses a variety of non-financial KPIs in respect of the food manufacturing segment, including order intake, manufacturing output and sales, all of which are monitored weekly and reported monthly.

Principal risk factors

The Company and Group face a number of specific business risks that could affect the Company's or Group's success.  The Company and Group invests in distressed businesses and securities, which by their nature often carry a higher degree of risk than those that are not distressed.  The Group's businesses are principally engaged in the provision of goods and services that are dependent on the continued employment of the Group's employees and availability of suitable, profitable workload.  In the food manufacturing segment, there is a dependency on a small number of customers and a reduction in the volume or range of products supplied to those customers or the loss of any one of them could impact the Group materially.  The current COVID-19 pandemic could impact on the Group's employees, customers, suppliers and financial position but has not had a material effect to date except in reducing Indulgence's sales and profitability, where foodservice volumes have fallen without an equivalent increase in retail sales in the period.

These risks are managed by the Board in conjunction with the management of the Group's businesses.

Nick Lander

Chief Financial & Operating Officer

29 September 2020

Consolidated income statement

	Note	6 months to 30 June 2020	6 months to 30 June 2019	Year ended 31 December 2019
		£'000	£'000	£'000
Continuing operations
Revenue	3	12,952	10,095	23,036
Cost of sales		(11,230)	(8,831)	(19,454)
Gross profit		1,722	1,264	3,582
Distribution costs		(770)	(543)	(1,225)
Administrative expenses		(1,923)	(1,394)	(2,281)
Operating (loss)/profit		(971)	(673)	76
Investment revenues	4	-	-	-
Other gains and losses	4	-	-	-
Finance expense	4	(69)	(67)	(118)
Finance income	4	66	116	179
(Loss)/profit before tax		(974)	(624)	137
Income tax credit/(expense)		-	-	(31)
(Loss)/profit for the period from continuing operations		(974)	(624)	106
Profit for the period from discontinued operations	5	-	3,078	3,078
Profit for the period		(974)	2,454	3,184
Attributable to:
- Equity holders of the parent		(1,029)	2,422	2,942
- Non-controlling interests	8	55	32	242
		(974)	2,454	3,184
Earnings per share	6
Basic and Diluted - loss from continuing operations		(56.1)p	(22.0)p	(5.7)p
- earnings from discontinued operations		-	103.1p	127.9p
Total		(56.1)p	81.1p	122.2p

Consolidated statement of comprehensive income

		6 months to 30 June 2020	6 months to 30 June 2019	Year ended 31 December 2019
		£'000	£'000	£'000
(Loss)/profit for the period		(974)	2,454	3,184
Other comprehensive income		-	-	-
Total comprehensive income for the period		(974)	2,454	3,184
Attributable to:
Equity holders of the parent		(1,029)	2,422	2,942
Non-controlling interests		55	32	242
		(974)	2,454	3,184

Consolidated statement of changes in equity

	Share capital £'000	Share premium £'000	Revaluation reserve £'000	Retained earnings £'000	Total £'000	Non-controlling interests £'000	Total £'000
Six months to 30 June 2020
Other comprehensive income	-	-	-	-	-	-	-
Loss for the period	-	-	-	(1,029)	(1,029)	55	(974)
Total comprehensive income for the period	-	-	-	(1,029)	(1,029)	55	(974)
Balance at 1 January	50	3,640	100	21,610	25,400	1,589	26,989
Transactions with owners:
Purchase of own shares	-	-	-	-	-	-	-
Total transactions with owners	-	-	-	-	-	-	-
Balance at 30 June	50	3,640	100	20,581	24,371	1,644	26,015

	Share capital £'000	Share premium £'000	Revaluation reserve £'000	Retained earnings £'000	Total £'000	Non-controlling interests £'000	Total £'000
Six months to 30 June 2019
Other comprehensive income	-	-	-	-	-	-	-
Profit for the period	-	-	-	2,422	2,422	32	2,454
Total comprehensive income for the period	-	-	-	2,422	2,422	32	2,454
Balance at 1 January	50	3,640	100	35,180	38,970	1,447	40,417
Transactions with owners:
Purchase of own shares	-	-	-	(16,512)	(16,512)	-	(16,512)
Total transactions with owners	-	-	-	(16,512)	(16,512)	-	(16,512)
Balance at 30 June	50	3,640	100	21,090	24,880	1,479	26,359

	Share capital £'000	Share premium £'000	Revaluation reserve £'000	Retained earnings £'000	Total £'000	Non-controlling interests £'000	Total £'000
Year ended 31 December 2019
Other comprehensive income	-	-	-	-	-	-	-
Profit for the year	-	-	-	2,942	2,942	242	3,184
Total comprehensive income for the year	-	-	-	2,942	2,942	242	3,184
Balance at 1 January	50	3,640	100	35,180	38,970	1,447	40,417
Transactions with owners:
Purchase of own shares	-	-	-	(16,512)	(16,512)	-	(16,512)
Dividend paid to non-controlling interests	-	-	-	-	-	(100)	(100)
Total transactions with owners	-	-	-	(16,512)	(16,512)	(100)	(16,612)
Balance at 31 December	50	3,640	100	21,610	25,400	1,589	26,989

Consolidated statement of financial position

		30 June 2020	30 June 2019	31 December 2019
	Note	£'000	£'000	£'000
Assets
Non-current assets
Property, plant & equipment		8,328	6,085	7,331
Total non-current assets		8,328	6,085	7,331
Current assets
Inventories		4,316	2,424	2,204
Trade and other receivables		4,280	4,432	4,816
Cash and cash equivalents		16,105	19,649	19,317
Total current assets		24,701	26,505	26,337
Total assets		33,029	32,590	33,668
Liabilities
Current liabilities
Loans and other borrowings		(459)	(709)	(1,154)
Finance leases		(466)	(324)	(466)
Trade and other payables		(3,723)	(3,184)	(2,408)
Total current liabilities		(4,648)	(4,217)	(4,028)
Non-current liabilities
Loans and other borrowings		(1,100)	(1,205)	(1,151)
Finance leases		(1,098)	(674)	(1,334)
Total non-current liabilities		(2,198)	(1,879)	(2,485)
Total liabilities		(6,846)	(6,096)	(6,513)
Provisions - deferred tax		(168)	(135)	(166)
NET ASSETS		26,015	26,359	26,989
Equity
Share capital		50	50	50
Share premium account		3,640	3,640	3,640
Revaluation reserves		100	100	100
Retained earnings		20,581	21,090	21,610
Capital and reserves attributable to equity holders of the Company		24,371	24,880	25,400
Non-controlling interests	8	1,644	1,479	1,589
TOTAL EQUITY		26,015	26,359	26,989

Consolidated statement of cash flows

		6 months to 30 June 2020	6 months to 30 June 2020	6 months to 30 June 2019	6 months to 30 June 2019	Year ended 31 December 2019	Year ended 31 December 2019
	Note	£'000	£'000	£'000	£'000	£'000	£'000
(Loss)/profit for the period			(974)		2,454		3,184
Adjustments for:
Finance expense	5	69		67		118
Finance income	5	(66)		(116)		(179)
Profit from discontinued operations		-		(3,078)		(3,078)
Depreciation		436		288		633
Income tax expense		-		-		31
			439		(2,839)		(2,475)
Operating cash flows before movements in working capital			(535)		(385)		709
Decrease/(increase) in trade and other receivables			537		37		(349)
Increase/(decrease) in trade and other payables			1,323		750		(18)
Increase in inventories			(2,018)		(650)		(430)
Tax paid			-		(50)		(50)
Cash used by continuing operations			(693)		(298)		(138)
Operating cash flows from discontinued operations			-		(316)		(315)
Net cash used by operating activities			(693)		(614)		(453)
Investing activities
Proceeds from sale of discontinued operations net of cash sold		-		3,138		3,138
Purchase of business and assets		(1,234)		-		-
Purchase of property, plant and equipment		(300)		(307)		(916)
Interest received		66		116		179
Net cash (used by)/generated from investing activities			(1,468)		2,947		2,401
Financing activities
Interest paid		(69)		(67)		(118)
Purchase of own shares (treasury shares)	9	-		(16,571)		(16,575)
Dividend paid by subsidiary		-		-		(100)
Net (repayment)/increase of borrowings		(982)		(183)		25
Net cash used by financing activities			(1,051)		(16,821)		(16,768)
Net (decrease)/ increase in cash			(3,212)		(14,488)		(14,820)
Cash at beginning of period			19,317		34,137		34,137
Cash at end of period			16,105		19,649		19,317

Volvere plc

Notes forming part of the unaudited interim results for the period ended 30 June 2020

1  Financial information and basis of accounting

These interim financial statements have been prepared using accounting policies consistent with IFRSs as adopted by the European Union.

These interim financial statements should be read in accordance with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2019.  They do not include all the information required for a complete set of IFRS financial statements.  However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.  AIM-listed companies are not required to comply with IAS 34 Interim Financial Reporting and accordingly the Group has taken advantage of this exemption.

The comparative figures for the year ended 31 December 2019 have been prepared under IFRS.  They do not constitute statutory accounts as defined by the Companies Act 2006.  The accounts for the 12 months ended 31 December 2019 received an unmodified auditor's report and have been filed with the Registrar of Companies.

Copies of this statement will be available to members of the public at the Company's registered office: Shire House, Tachbrook Road, Leamington Spa CV31 3SF and on its website www.volvere.co.uk .

2  Significant accounting policies

The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2019.

3  Operating segments

An analysis of key financial data by business segment (excluding intra-Group interest and management charges and balances) is provided below.  During 2019 the Group's security solutions segment was sold and its results are included within Profit from discontinued operations.

Analysis by business segment:

Period ended 30 June 2020			Food manufacturing £'000	Investing and  Management  services £'000	Total £'000
Revenue			12,952	-	12,952
(Loss) before tax from continuing operations(1)			(249)	(725)	(974)
Period ended 30 June 2019			Food manufacturing £'000	Investing and Management  services £'000	Total £'000
Revenue			10,095	-	10,095
Profit/(Loss) before tax from continuing operations (1)			237	(861)	(624)
Year ended 31 December 2019			Food manufacturing £'000	Investing and management services £'000	Total £'000
Revenue			23,036	-	23,036
Profit/(loss) before tax from continuing operations (1)			1,384	(1,247)	137
As at 30 June 2020
			Food manufacturing £'000	Investing and management services £'000	Total £'000
Assets			17,178	15,851	33,029
Liabilities/provisions			(7,041)	27	(7,014)
Net assets(2)			10,137	15,878	26,015
As at 30 June 2019			Food manufacturing £'000	Investing and management services £'000	Total £'000
Assets			13,365	19,225	32,590
Liabilities/provisions			(6,303)	72	(6,231)
Net assets(2)			7,062	19,296	26,359
As at 31 December 2019			Food manufacturing £'000	Investing and management services £'000	Total £'000
Assets			14,336	19,332	33,668
Liabilities/provisions			(6,732)	51	(6,681)
Net assets(2)			7,604	19,383	26,987
Six months to 30 June 2020			Food manufacturing £'000	Investing and management services £'000	Total £'000
Capital spend			300	-	300
Depreciation			436	-	436
Interest income (non-Group)			-	66	66
Interest expense (non-Group)			(69)	-	(69)
Tax credit			-	-	-
Six months to 30 June 2019			Food manufacturing £'000	Investing and management services £'000	Total (as restated) £'000
Capital spend			310	2	312
Depreciation			287	-	287
Interest income (non-Group)			-	116	116
Interest expense (non-Group)			(67)	-	(67)
Tax expense			-	-	-
Year ended 31 December 2019			Food manufacturing £'000	Investing and management services £'000	Total £'000
Capital spend			1,904	-	1,904
Depreciation			632	1	633
Interest income (non-Group)			-	179	179
Interest expense (non-Group)			118	-	118
Tax expense			38	(69)	(31)

Geographical analysis:

	External revenue by location of customers			Non-current assets by location of assets
	6 months to 30 June 2020	6 months to 30 June 2019	Year ended 31 December 2019	30 June 2020	30 June 2019	31 December 2019
	£'000	£'000	£'000	£'000	£'000	£'000
UK	12,632	9,902	22,522	8,328	6,085	7,331
Rest of Europe	320	193	514	-	-	-
Other	-	-	-	-	-	-
	12,952	10,095	23,036	8,328	6,085	7,331

Notes:

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

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

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

Investment revenues and other gains and losses represent respectively interest and dividends receivable from, and the gains arising upon disposal of, investments made pursuant to the Group's investing and treasury management policies.

5  Profit for the period from discontinued operations

On 23 May 2019, the Group disposed of its wholly-owned subsidiary Sira Defence & Security Limited for £3.0 million in cash.

	6 months to 30 June 2020 £'000	6 months to 30 June 2019 £'000	Year ended 31 December 2019 £'000
(Loss) for the period	-	(352)	(352)
Total gain on disposal	-	3,430	3,430
Profit for the period relating to Sira Defence & Security Limited	-	3,078	3,078

6  Earnings per share

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

	6 months to 30 June 2020 £'000	6 months to 30 June 2019 £'000	Year ended 31 December 2019 £'000
Earnings for the purposes of earnings per share:
From continuing operations	(1,029)	(656)	(136)
From discontinued operations	-	3,078	3,078
Total	(1,029)	2,422	2,942
	No.	No.	No.
Weighted average number of ordinary shares for the purposes of earnings per share:
Weighted average number of ordinary shares in issue	1,834,182	2,986,829	2,405,768
Dilutive effect of potential ordinary shares	-	-	-
Weighted average number of ordinary shares for diluted EPS	1,834,182	2,986,829	2,405,768

There were no share options (or other dilutive instruments) in issue during the period in respect of the parent company's shares (30 June 2019: nil; 31 December 2019: nil).

7  Acquisition of business and assets

On 7 February 2020 the Group acquired the business and assets of a premium frozen desserts manufacturer, Indulgence Patisserie Limited, which was in administration following a period of losses.  The results of this business have been included in the food manufacturing segment.  The Group has acquired the land and buildings used by the business in a separate entity from the trading business, which continues to trade as Indulgence Patisserie Limited.  The property and certain plant items are owned by Indulgence Foods Limited.  Where appropriate, the term "Indulgence" refers to the combined performance of both companies.

The provisional fair values of assets and liabilities acquired and resulting goodwill are summarised below:

	Book value £'000	Fair value adjustments £'000	Fair values £'000
Property	1,000	-	1,000
Plant and equipment	335	(152)	183
Inventories	120	(27)	93
Current liabilities	(40)	14	(26)
Net assets acquired	1,415	(165)	1,250
Consideration (settled in cash)			(1,250)
Goodwill arising			-

Costs of undertaking the transaction amounting to £0.07 million have been charged to the income statement as administrative expenses.

The loss for Indulgence from the date of acquisition to the period end was as set out below.

	7 Feb - 30 June 2020
	£'000
Revenue	934
Cost of sales	(917)
Gross profit	17
Administrative expenses	(618)
Operating loss	(601)
Finance expense	-
Loss before tax	(601)
Income tax expense	-
Loss for the period	(601)

The acquired business' revenue and loss for the period are included in note 5 as part of the food manufacturing segment.

8  Non-controlling interests

The non-controlling interests of £1.64 million relate to the net assets attributable to the shares not held by the Group at 30 June 2020 in the following subsidiaries:

	30 June 2020 £'000	30 June 2019 £'000	31 December 2019 £'000
NMT Group Limited	69	71	70
Shire Foods Limited	1,575	1,408	1,519
	1,644	1,479	1,589

The Group owns approximately 80% of Shire Foods and 98.6% of NMT.

9  Purchase of own shares

The Company did not acquire any of its own shares in the period (30 June and 31 December 2019: 1,283,927 ordinary shares for a total consideration including costs of £16.57 million).  For reference, the total number of ordinary shares held in treasury is 4,372,892 and the number of shares in issue, excluding treasury shares, at the period end was 1,834,182 (30 June 2019 and 31 December 2019: 1,834,182).

10  Dividend

The Board is not recommending the payment of an interim dividend for the period ended 30 June 2020.

- Ends -

 

END

 

 

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