TIDMFDT
RNS Number : 1107N
1st Dental Laboratories PLC
11 February 2009
1st Dental Laboratories plc
("1st Dental" or the "Company" or "the Group")
Unaudited preliminary results for the year ended 30 November 2008
1st Dental Laboratories plc (AIM; FDT) the UK's largest and leading provider of
dental laboratory products to the dental profession, announces its preliminary
results for the year ended 30 November 2008:
Chairman's Statement
The year to November 2008 has presented the business with a number of
challenges, namely the business disruptions at Blackpool and Stourport that were
outside the control of management and, which in the year has equalled a loss of
turnover approaching GBP1m. We also saw a change in senior management with the
appointment of Nigel Spring as Managing Director.
During the year we saw an unsolicited offer being made for the company. This was
a distraction for senior management that we could have done without. In addition
there was the cost of the process for the company having to employ a rule 3
advisor and legal advice which together came at a cost to the company in excess
of GBP80k (forming part of non-recurring cost of GBP172k).
Despite the above I am pleased to report that the disruptions and loss of
turnover are being mitigated with recovery on course at Blackpool, and Stourport
almost fully recovered to previous trading and profit contribution levels.
Other core laboratories continued to perform as generally expected with some
very pleasing results being turned in, especially from our Sheffield, Ripley and
Bedlington Laboratories, all of whom provided results in both turnover and
profit contribution significantly over budget. We are pleased with these efforts
especially given the backdrop of the UK's current economic environment.
In the year we have also seen investment of GBP0.2m in our Paignton Laboratory
with a move to new state of the art laboratory premises. The move was completed
with no disruption at all, which is testament to all the effort of the staff and
management involved.
With regard to eteeth, since the launch in 2007, we have seen significant growth
yet again with sales having increased 647% on the previous year. Since launch we
have, and continue to witness, a cumulative average growth rate of 13.2% month
on month. This product has enhanced our relationship with current and new
dentist clients. We have gained a large amount of confidence from what has been
a limited product offering. It is our intention to expand the offering to UK
dentists and we are currently considering further overseas opportunities. The
market competition to eteeth is regarded by us to be poor, which in turn is
creating a level of spin-off business back to eteeth as the UK's market leader.
As we closed the year and after much market analysis, we have made the decision
to invest in all our laboratories with regard to the introduction of new and
advanced restoration techniques and equipment, especially with regards to
Zirconia production, and to follow this up with extensive investment in
technician and technical training programmes. It is our wish to have all of our
laboratories becoming regional centres of technical excellence, providing an
unprecedented service to our new and established client base.
We see very real opportunity of moving forward with what we believe to be new
and innovative products and services that will be rolled out in 2009. Further,
in order to protect our turnover and grow organically, we have put in place a
regional sales force of seven staff, the size of which is a first for our
industry, and early results are ahead of the Board's expectations.
In summary, 2008 was a troublesome year with the results being below market
expectations as well as those of the Directors. The disruptions encountered
could not have been anticipated, but the changes made during the year, including
the strengthening of management, and the plans for 2009 and beyond are, we
believe, based on a strong market analysis and anticipate the requirements of
the market place and the environment in which we operate.
AW Garner
Executive Chairman
11 February 2009
Overview of results are as follows:
Recurring EBITDA of GBP420k on turnover of GBP10,053k (2007: EBITDA GBP831k on
turnover of GBP10,794k)
Gross margin reduced to 36.4.% (2007: 37.9%)
Administrative expenses controlled with a saving of GBP30k to GBP3,236k (2007:
GBP3,266k)
Non-recurring exceptional costs: GBP172k
Total operating loss GBP87k (2007: operating profit of GBP335k)
Pre tax loss of GBP265k (2007:profit GBP146k)
Net cash generated from operating activities of GBP311k
Bank debt reduction of GBP266k to GBP1,991k (2007: GBP2,257k)
For Further Information:
Andrew Garner, 1st Dental Laboratories plc; andrew@maximcorporate.co.uk
Nicola Marrin, Seymour Pierce 020 7107 8000
Copies of the Report and Accounts will be sent to shareholders in due course and
a further announcement will be made at that time.
Consolidated income statement
for the year ended 30 November 2008
+-----------------------------------------+------+---------------+---------------+
| | | Unaudited | As restated |
| | | | Unaudited |
+-----------------------------------------+------+---------------+---------------+
| | | 30 November | 30 November |
| | | 2008 | 2007 |
+-----------------------------------------+------+---------------+---------------+
| | | GBP000 | GBP000 |
+-----------------------------------------+------+---------------+---------------+
| | | | |
+-----------------------------------------+------+---------------+---------------+
| Revenue | | 10,065 | 11,022 |
+-----------------------------------------+------+---------------+---------------+
| Cost of sales | | (6,409) | (6,840) |
+-----------------------------------------+------+---------------+---------------+
| | | ------------- | ------------- |
+-----------------------------------------+------+---------------+---------------+
| Gross profit | | 3,656 | 4,182 |
+-----------------------------------------+------+---------------+---------------+
| Administrative expenses | | (3,743) | (3,847) |
+-----------------------------------------+------+---------------+---------------+
| | | ------------- | ------------- |
+-----------------------------------------+------+---------------+---------------+
| Operating profit before amortisation | | 95 | 555 |
| and non-recurring administrative | | | |
| expenses | | | |
+-----------------------------------------+------+---------------+---------------+
| Amortisation | | (10) | (10) |
+-----------------------------------------+------+---------------+---------------+
| Non-recurring administrative expenses | 3 | (172) | (210) |
+-----------------------------------------+------+---------------+---------------+
| | | ------------- | ------------- |
+-----------------------------------------+------+---------------+---------------+
| Total operating (loss) / profit | | (87) | 335 |
+-----------------------------------------+------+---------------+---------------+
| | | | |
+-----------------------------------------+------+---------------+---------------+
| Finance income | | 37 | 53 |
+-----------------------------------------+------+---------------+---------------+
| Finance expenses | | (215) | (242) |
+-----------------------------------------+------+---------------+---------------+
| | | ------------- | ------------- |
+-----------------------------------------+------+---------------+---------------+
| (Loss) / profit before taxation | | (265) | 146 |
+-----------------------------------------+------+---------------+---------------+
| Taxation | | 16 | - |
+-----------------------------------------+------+---------------+---------------+
| | | ------------- | ------------- |
+-----------------------------------------+------+---------------+---------------+
| (Loss) / profit for the year | | (249) | 146 |
+-----------------------------------------+------+---------------+---------------+
| | | ------------- | ------------- |
+-----------------------------------------+------+---------------+---------------+
| (Loss) / profit per ordinary share : | | | |
+-----------------------------------------+------+---------------+---------------+
| - Basic and diluted | 4 | (0.59p) | 0.35p |
+-----------------------------------------+------+---------------+---------------+
| | | ------------- | ------------- |
+-----------------------------------------+------+---------------+---------------+
There were no recognised gains or losses in the year other than the loss for the
year and therefore no statement of recognised income and expenses is presented.
All of the results of the Group are derived from continuing operations.
Consolidated statement of changes in equity
as at 30 November 2008
+--------------------------------+---------+---------+---------------+---------------+---------------+
| | | | Unaudited | Unaudited | Unaudited |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| | | | Share | Share | Retained |
| | | | capital | premium | earnings |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| | | | GBP000 | GBP000 | GBP000 |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| | | | | | |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| At 1 December 2006 (as | | | 4,202 | 6,358 | (2,491) |
| restated) | | | | | |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| Result for the year | | | - | - | 146 |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| Share based payment charges | | | - | - | 15 |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| | | | ------------- | ------------- | ------------- |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| At 30 November 2007 (as | | | 4,202 | 6,358 | (2,330) |
| restated) | | | | | |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| Result for the year | | | - | - | (249) |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| Share based payment charges | | | - | - | 16 |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| | | | ------------- | ------------- | ------------- |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| At 30 November 2008 | | | 4,202 | 6,358 | (2,563) |
+--------------------------------+---------+---------+---------------+---------------+---------------+
| | | | ------------- | ------------- | ------------- |
+--------------------------------+---------+---------+---------------+---------------+---------------+
Consolidated balance sheet
as at 30 November 2008
+----------------------------------------+------+----------------+---------------+
| | | Unaudited | As restated |
| | | | Unaudited |
+----------------------------------------+------+----------------+---------------+
| | | As at 30 | As at 30 |
| | | November 2008 | November |
| | | | 2007 |
+----------------------------------------+------+----------------+---------------+
| | | GBP000 | GBP000 |
+----------------------------------------+------+----------------+---------------+
| | | | |
+----------------------------------------+------+----------------+---------------+
| Non-current assets | | | |
+----------------------------------------+------+----------------+---------------+
| Property, plant & equipment | | 2,069 | 1,832 |
+----------------------------------------+------+----------------+---------------+
| Intangible assets | | 7,067 | 7,077 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| | | 9,136 | 8,909 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| Current assets | | | |
+----------------------------------------+------+----------------+---------------+
| Inventories | | 295 | 296 |
+----------------------------------------+------+----------------+---------------+
| Trade and other receivables | | 1,596 | 1,553 |
+----------------------------------------+------+----------------+---------------+
| Cash and cash equivalents | | 563 | 1,067 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| | | 2,454 | 2,916 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| Total assets | | 11,590 | 11,825 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| Current liabilities | | | |
+----------------------------------------+------+----------------+---------------+
| Interest bearing loans and borrowings | | 703 | 632 |
+----------------------------------------+------+----------------+---------------+
| Trade and other payables | | 1,602 | 1,322 |
+----------------------------------------+------+----------------+---------------+
| Current taxes | | - | 16 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| | | 2,305 | 1,970 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| Non-current liabilities | | | |
+----------------------------------------+------+----------------+---------------+
| Interest bearing loans and borrowings | | 1,288 | 1,625 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| | | 1,288 | 1,625 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| Total liabilities | | 3,593 | 3,595 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| Net assets | | 7,997 | 8,230 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| Equity attributable to equity holders | | | |
| of the Group | | | |
+----------------------------------------+------+----------------+---------------+
| Called up share capital | | 4,202 | 4,202 |
+----------------------------------------+------+----------------+---------------+
| Share premium account | | 6,358 | 6,358 |
+----------------------------------------+------+----------------+---------------+
| Retained earnings | | (2,563) | (2,330) |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
| | | | |
+----------------------------------------+------+----------------+---------------+
| Total equity | | 7,997 | 8,230 |
+----------------------------------------+------+----------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------+------+----------------+---------------+
Consolidated cash flow statement
for the year ended 30 November 2008
+----------------------------------------------+--+---------------+---------------+
| | | Unaudited | Unaudited |
+----------------------------------------------+--+---------------+---------------+
| | | 30 November | 30 November |
| | | 2008 | 2007 |
+----------------------------------------------+--+---------------+---------------+
| | | GBP000 | GBP000 |
+----------------------------------------------+--+---------------+---------------+
| | | | |
+----------------------------------------------+--+---------------+---------------+
| Operating activities | | | |
+----------------------------------------------+--+---------------+---------------+
| (Loss) / profit for the year | | (249) | 146 |
+----------------------------------------------+--+---------------+---------------+
| Amortisation | | 10 | 10 |
+----------------------------------------------+--+---------------+---------------+
| Depreciation | | 280 | 264 |
+----------------------------------------------+--+---------------+---------------+
| Loss on sale of plant and equipment | | 32 | 4 |
+----------------------------------------------+--+---------------+---------------+
| Share based payment charges | | 16 | 15 |
+----------------------------------------------+--+---------------+---------------+
| Net finance expense | | 178 | 189 |
+----------------------------------------------+--+---------------+---------------+
| Income tax credit | | (16) | - |
+----------------------------------------------+--+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------------+--+---------------+---------------+
| Operating cash inflow before changes in | | 251 | 628 |
| working capital | | | |
+----------------------------------------------+--+---------------+---------------+
| Movement in inventories | | 1 | 15 |
+----------------------------------------------+--+---------------+---------------+
| Movement in trade and other receivables | | (43) | 384 |
+----------------------------------------------+--+---------------+---------------+
| Movement in trade and other payables | | 242 | 76 |
+----------------------------------------------+--+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------------+--+---------------+---------------+
| Operating cash inflow from operations | | 451 | 1,103 |
+----------------------------------------------+--+---------------+---------------+
| Interest received | | 37 | 53 |
+----------------------------------------------+--+---------------+---------------+
| Interest paid on borrowings | | (168) | (217) |
+----------------------------------------------+--+---------------+---------------+
| Interest element of hire purchase payments | | (9) | (10) |
+----------------------------------------------+--+---------------+---------------+
| Income tax received | | - | 52 |
+----------------------------------------------+--+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------------+--+---------------+---------------+
| Net cash inflow from operating activities | | 311 | 981 |
+----------------------------------------------+--+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------------+--+---------------+---------------+
| Investing activities | | | |
+----------------------------------------------+--+---------------+---------------+
| Purchase of plant and equipment | | (302) | (169) |
+----------------------------------------------+--+---------------+---------------+
| Sale of plant and equipment | | 12 | 22 |
+----------------------------------------------+--+---------------+---------------+
| Acquisition of subsidiaries | | - | (75) |
+----------------------------------------------+--+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------------+--+---------------+---------------+
| Net cash flow from investing activities | | (290) | (222) |
+----------------------------------------------+--+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------------+--+---------------+---------------+
| Financing activities | | | |
+----------------------------------------------+--+---------------+---------------+
| Capital element of Interest bearing loans | | (525) | (868) |
| and borrowings paid | | | |
+----------------------------------------------+--+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------------+--+---------------+---------------+
| Net cash flow from financing activities | | (525) | (868) |
+----------------------------------------------+--+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------------+--+---------------+---------------+
| Net decrease in cash and cash equivalents | | (504) | (109) |
+----------------------------------------------+--+---------------+---------------+
| Cash and cash equivalents at the beginning | | 1,067 | 1,176 |
| of the year | | | |
+----------------------------------------------+--+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------------+--+---------------+---------------+
| Cash and cash equivalents at the end of the | | 563 | 1,067 |
| year | | | |
+----------------------------------------------+--+---------------+---------------+
| | | ------------- | ------------- |
+----------------------------------------------+--+---------------+---------------+
Notes to the unaudited preliminary results
1. The financial information set out herein does not constitute the Group's
statutory accounts for the year ended 30 November 2008 but is derived from those
financial statements. The statutory accounts will be finalised on the basis of
the financial information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies following the
Annual General Meeting. The comparative information in respect of the year
ended 30 November 2007 has been derived from the audited statutory accounts for
the year ended on that date, as restated for the first time adoption of
International Financial Reporting Standards ("IFRS") as referred to below, upon
which an unqualified audit opinion was expressed and which did not contain a
statement under section 237 (2) or (3) of the Companies Act 1985. The audited
financial statements will be available by contacting the Company Secretary at
the Company's Registered Office.
2. Basis of preparation
The financial information has been prepared and approved by the directors in
accordance with IFRS as adopted by the European Union and IFRIC interpretations
issued and effective at the time of preparing these statements. The first time
adoption of IFRS has impacted on the year's results. The principal changes
relate to the acquisition of subsidiaries (treatment of goodwill and intangible
assets).
The rules for first time adoption of IFRS are set out in IFRS1 'First time
adoption of international financial reporting standards'. In accordance with
IFRS1, the Company has determined its IFRS accounting policies and has applied
these retrospectively to determine its opening balance sheet under IFRS. The
accounting policies adopted are set out at Note 6.
The Group has taken the business combination exemption, which allows that IFRS3
not be applied to business combinations that took place prior to 1 December
2006, the date of transition to IFRS. Estimates under IFRS at the date of
transition are consistent with the estimates made at the same time under UK
GAAP. The Group has also taken the share based payments exemption and,
accordingly, IFRS2 has only been applied to awards granted after 7 November
2002.
Reconciliations and explanations of the effect of the transition from UK GAAP to
IFRS on the Group's equity and its profit or loss are set out at Note 5. As a
result of adopting IFRS, there have also been numerous changes to the
presentation of the financial statements.
Further, the Group has identified the need to recognise a prior year restatement
in respect of two matters.
1. A provision of GBP435,000 has been made at 30 November 2007 for a potential VAT
liability relating to income recognised in 2007 and 2006. This includes a charge
of GBP210,000 arising in each of the years ended 30 November 2007 and 2006, plus
interest of GBP15,000 in 2007 relating to accrued interest on overdue amounts.
This has reduced opening reserves at 1 December 2006 by GBP210,000 with a
corresponding increase in creditors. The profit for the year ended 30 November
2007 has been reduced by GBP225,000 relating to accrued VAT of GBP210,000 and
interest of GBP15,000 and a corresponding increase in creditors by the same
amount. The Directors consider that there are potentially mitigating
circumstances that may offset this liability in part or in whole, but have
prudently not recognised any of this potential mitigation until it is agreed
with HMRC.
2. GBP25,000 has been provided against the value of inventories as a result of
non-compliance with SSAP9 and IAS2.
The financial impact of these matters along with the financial impact of the
translation to IFRS is set out at Note 5.
The following Standards and Interpretations have been issued, but are not yet
effective and have not been adopted early by the Group :
+-------+------------------------------------------+------------+-------------+
| | Title | Effective | Date of EU |
| | | date - | endorsement |
| | | reporting | |
| | | periods | |
| | | starting | |
| | | on or | |
| | | later than | |
+-------+------------------------------------------+------------+-------------+
| IFRS | Business Combinations (Revised 2008) | 1 July | - |
| 3 | | 2009 | |
+-------+------------------------------------------+------------+-------------+
| IAS | Consolidated and Separate Financial | 1 July | - |
| 27 | Statements | 2009 | |
+-------+------------------------------------------+------------+-------------+
| IFRS | Amendment to IFRS 2 Share Based Payment | 1 January | - |
| 2 | : Vesting Conditions and Cancellations | 2009 | |
+-------+------------------------------------------+------------+-------------+
| IAS | Presentation of Financial Statements | 1 January | - |
| 1 | | 2009 | |
+-------+------------------------------------------+------------+-------------+
| IAS | Revision to IAS 23 Borrowing costs | 1 January | - |
| 23 | | 2009 | |
+-------+------------------------------------------+------------+-------------+
| IAS | Amendment to IAS 32 Financial | 1 January | - |
| 32 | Instruments : Presentation and IAS 1 | 2009 | |
| | Presentation of Financial Statements - | | |
| | Puttable Financial Instruments and | | |
| | Obligations arising on Liquidation | | |
+-------+------------------------------------------+------------+-------------+
| IFRS | Operating Segments | 1 January | 21 |
| 8 | | 2009 | November |
| | | | 2007 |
+-------+------------------------------------------+------------+-------------+
| IFRIC | Service Concession Arrangements | 1 January | - |
| 12 | | 2008 | |
+-------+------------------------------------------+------------+-------------+
| IFRIC | Customer Loyalty Programmes | 1 July | - |
| 13 | | 2008 | |
+-------+------------------------------------------+------------+-------------+
| IFRIC | IAS 19 - The Limit on a Defined Benefit | 1 January | - |
| 14 | Asset, Minimum Funding Requirements and | 2008 | |
| | their Interaction | | |
+-------+------------------------------------------+------------+-------------+
| IFRIC | Agreements for the Construction of Real | 1 January | - |
| 15 | Estate | 2009 | |
+-------+------------------------------------------+------------+-------------+
| IFRIC | Hedges of a Net Investment in a Foreign | 1 October | - |
| 16 | Operation | 2008 | |
+-------+------------------------------------------+------------+-------------+
| IFRIC | Distributions of Non-cash Assets to | 1 July | - |
| 17 | Owners | 2009 | |
+-------+------------------------------------------+------------+-------------+
The directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on the financial
statements of the Group when the relevant standards come into effect for periods
commencing on or after 1 December 2008.
3. Non-recurring administrative expenses
+------------------------------------------------+---------------+---------------+
| | Unaudited | As |
| | | restated |
| | | Unaudited |
+------------------------------------------------+---------------+---------------+
| | 30 | 30 |
| | November | November |
| | 2008 | 2007 |
+------------------------------------------------+---------------+---------------+
| | | |
+------------------------------------------------+---------------+---------------+
| Aborted takeover costs | 80 | - |
+------------------------------------------------+---------------+---------------+
| Professional advisers fees in relation to the | 20 | - |
| potential VAT liability | | |
+------------------------------------------------+---------------+---------------+
| Professional advisers fees in relation to | 30 | - |
| Staff issues -Stourport and Blackpool | | |
+------------------------------------------------+---------------+---------------+
| Re-organisation redundancy costs | 42 | - |
+------------------------------------------------+---------------+---------------+
| VAT liability (see Note 2) | - | 210 |
+------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+------------------------------------------------+---------------+---------------+
| Non-recurring administrative expenses | 172 | 210 |
+------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+------------------------------------------------+---------------+---------------+
4. (Loss)/profit per ordinary share
+------------------------------------------------+---------------+---------------+
| | Unaudited | As |
| | | restated |
| | | Unaudited |
+------------------------------------------------+---------------+---------------+
| | 30 | 30 |
| | November | November |
| | 2008 | 2007 |
+------------------------------------------------+---------------+---------------+
| | | |
+------------------------------------------------+---------------+---------------+
| Retained (loss) / profit for the year (GBP000) | (249) | 146 |
+------------------------------------------------+---------------+---------------+
| Weighted average number of shares ('000) | 42,017 | 42,017 |
+------------------------------------------------+---------------+---------------+
| Basic and diluted loss / (profit) per ordinary | (0.59p) | 0.35p |
| share (pence per share) | | |
+------------------------------------------------+---------------+---------------+
| | ------------- | ------------- |
+------------------------------------------------+---------------+---------------+
5. Reconciliation of profit and equity under UK GAAP with equity and profit
under IFRS
Reconciliation of profit - year ended 30 November 2007
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | Audited | Unaudited | Unaudited | Unaudited | Unaudited |
| | UK GAAP | Prior year | UK GAAP | IFRS adjustments | IFRS |
| | | adjustment | (after | | |
| | | | restatement) | | |
+-----------------+---------------+-------------------------------+---------------+-------------------------------+---------------+
| Note | | a | b | | c | d | |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | | | |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Revenue | 11,022 | - | - | 11,022 | - | - | 11,022 |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Cost of sales | (6,840) | - | - | (6,840) | - | - | (6,840) |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Gross profit | 4,182 | - | - | 4,182 | - | - | 4,182 |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Administrative | (4,052) | (210) | - | (4,262) | 415 | - | (3,847) |
| costs | | | | | | | |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Operating | 555 | - | - | 555 | - | - | 555 |
| profit before | | | | | | | |
| amortisation | | | | | | | |
| and | | | | | | | |
| non-recurring | | | | | | | |
| administrative | | | | | | | |
| expenses | | | | | | | |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Amortisation | (425) | - | - | (425) | 415 | - | (10) |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Non-recurring | - | (210) | - | (210) | - | - | (210) |
| administrative | | | | | | | |
| expenses | | | | | | | |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Operating | 130 | (210) | - | (80) | 415 | - | 335 |
| profit | | | | | | | |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | | | |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Finance income | 53 | - | - | 53 | - | - | 53 |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Finance | (227) | (15) | - | (242) | - | - | (242) |
| expenses | | | | | | | |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Profit before | (44) | (225) | - | (269) | 415 | - | 146 |
| taxation | | | | | | | |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Taxation | - | - | - | - | - | - | - |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Loss for the | (44) | (225) | - | (269) | 415 | - | 146 |
| year | | | | | | | |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+-----------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
Reconciliation of equity at 30 November 2007
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | Audited | Unaudited | Unaudited | Unaudited | Unaudited |
| | | Prior year | UK GAAP | IFRS adjustments | IFRS |
| | UK GAAP | adjustment | (after | | |
| | | | restatement) | | |
+--------------------+---------------+-------------------------------+---------------+-------------------------------+---------------+
| Note | | a | b | | c | d | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Non-current assets | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Property, plant & | 1,832 | - | - | 1,832 | - | - | 1,832 |
| equipment | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Goodwill | 6,662 | - | - | 6,662 | 415 | - | 7,077 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 8,494 | - | - | 8,494 | 415 | | 8,909 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Current assets | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Inventories | 321 | - | (25) | 296 | - | - | 296 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Trade and other | 1,553 | - | - | 1,553 | - | - | 1,553 |
| receivables | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Cash and cash | 1,067 | - | - | 1,067 | - | - | 1,067 |
| equivalents | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 2,941 | - | (25) | 2,916 | - | - | 2,916 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Total assets | 11,435 | - | (25) | 11,410 | 415 | - | 11,825 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Current | | | | | | | |
| liabilities | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Interest bearing | 632 | - | - | 632 | - | - | 632 |
| loans and | | | | | | | |
| borrowings | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Trade and other | 862 | 435 | - | 1,297 | - | 25 | 1,322 |
| payables | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Current taxes | 16 | - | - | 16 | - | - | 16 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 1,510 | 435 | - | 1,945 | - | 25 | 1,970 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Non-current | | | | | | | |
| liabilities | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Interest bearing | 1,625 | - | - | 1,625 | - | - | 1,625 |
| loans and | | | | | | | |
| borrowings | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | 1,625 | - | - | 1,625 | - | - | 1,625 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Total liabilities | 3,135 | 435 | - | 3,570 | - | 25 | 3,595 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Net assets | 8,300 | (435) | (25) | 7,840 | 415 | (25) | 8,230 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Equity attributable to equity holders of the | | | | |
| Group | | | | |
+--------------------------------------------------------------------+---------------+---------------+---------------+---------------+
| | | | | |
+--------------------------------------------------------------------+---------------+---------------+---------------+---------------+
| Called up share | 4,202 | - | - | 4,202 | - | - | 4,202 |
| capital | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Share premium | 6,358 | - | - | 6,358 | - | - | 6,358 |
| account | | | | | | | |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Retained earnings | (2,260) | (435) | (25) | (2,720) | 415 | (25) | (2,330) |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| Total equity | 8,300 | (435) | (25) | 7,840 | 415 | (25) | 8,230 |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
| | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
+--------------------+---------------+---------------+---------------+---------------+---------------+---------------+---------------+
Reconciliation of equity at 1 December 2006
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | Audited | Unaudited | Unaudited | Unaudited | Unaudited |
| | | UK GAAP | Prior year adjustment | UK GAAP | IFRS | IFRS |
| | | | | (after | adjustments | |
| | | | | restatement) | | |
+-----------------+---+---------------+-------------------------------+---------------+---------------+---------------+
| | | | a | b | | c | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Non-current | | | | | | | |
| assets | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Property, plant | | 1,953 | - | - | 1,953 | - | 1,953 |
| & equipment | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Intangible | | 7,087 | - | - | 7,087 | - | 7,087 |
| assets | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | 9,040 | - | - | 9,040 | - | 9,040 |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Current assets | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Inventories | | 336 | - | (25) | 311 | - | 311 |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Trade and other | | 1,973 | - | - | 1,973 | - | 1,973 |
| receivables | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Cash and cash | | 1,176 | - | - | 1,176 | - | 1,176 |
| equivalents | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | 3,485 | - | (25) | 3,460 | - | 3,460 |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Total assets | | 12,525 | - | (25) | 12,500 | - | 12,500 |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Current | | | | | | | |
| liabilities | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Trade and other | | 1,071 | 210 | - | 1,281 | 25 | 1,306 |
| payables | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Interest | | 996 | - | - | 996 | - | 996 |
| bearing loans | | | | | | | |
| and borrowings | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | 2,067 | 210 | - | 2,277 | 25 | 2,302 |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Non-current | | | | | | | |
| liabilities | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Interest | | 2,129 | - | - | 2,129 | - | 2,129 |
| bearing loans | | | | | | | |
| and borrowings | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | 2,129 | - | - | 2,129 | - | 2,129 |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Total | | 4,196 | 210 | - | 4,406 | 25 | 4,431 |
| liabilities | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Net assets | | 8,329 | (210) | (25) | 8,094 | (25) | 8,069 |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Equity attributable to equity holders of the Group | | | |
+---------------------------------------------------------------------+---------------+---------------+---------------+
| Called up share | | 4,202 | - | - | 4,202 | - | 4,202 |
| capital | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Share premium | | 6,358 | - | - | 6,358 | - | 6,358 |
| account | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Retained | | (2,231) | (210) | (25) | (2,466) | (25) | (2,491) |
| earnings | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| Total equity | | 8,329 | (210) | (25) | 8,094 | (25) | 8,069 |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
| | | ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| | | | | | | | |
+-----------------+---+---------------+---------------+---------------+---------------+---------------+---------------+
* A provision of GBP435,000 has been made at 30 November 2007 for a potential VAT
liability relating to income recognised in 2007 and 2006. This includes a charge
of GBP210,000 arising in each of the years ended 30 November 2007 and 2006, plus
interest of GBP15,000 in 2007 relating to accrued interest on overdue amounts.
This has reduced opening reserves at 1 December 2006 by GBP210,000 with a
corresponding increase in creditors. The profit for the year ended 30 November
2007 has been reduced by GBP225,000 relating to accrued VAT of GBP210,000 and
interest of GBP15,000 and a corresponding increase in creditors by the same
amount. The Directors consider that there are potentially mitigating
circumstances that may offset this liability in part or in whole, but have
prudently not recognised any of this potential mitigation until it is agreed
with HMRC.
* The Group's inventory valuation policy did not comply with SSAP9 and IAS2. The
adjustment above of GBP25,000 reflects compliance with SSAP9 as at 30 November
2006 and as at 30 November 2007, hence there is no impact on the consolidated
income statement for the year ended 30 November 2007.
* Under IFRS, the Group is required not to amortise goodwill but to capitalise it
as at 1 December 2006 and to annually test it for permanent impairment.
Accordingly, the adjustment above reflects the write back of amortisation of
goodwill charged to the consolidated income statement under UK GAAP of
GBP415,000 for the year ended 30 November 2007.
* Under IFRS, the Group is required to recognise all employment related
liabilities. Accordingly, the Group has accrued for holiday pay earned but not
paid. This amount of the accrual required is GBP25,000 as at 30 November 2006
and as at 30 November 2007, hence there is no impact on the consolidated income
statement for the year ended 30 November 2007.
.
6.Significant accounting policies
Basis of consolidation
Subsidiaries are entities controlled by the Company. Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control
commences until the date that control ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority
interest. The excess of the cost of acquisition over the fair value of the
Group's share of the identifiable net assets acquired is recorded as goodwill.
If the cost of acquisition is less than the fair value of net assets of the
subsidiary acquired, the difference is recognised directly in the income
statement.
All intra-group balances and transactions, including unrealised profits arising
from intra-group transactions, are eliminated fully on consolidation.
Changes in accounting policies
The Group has adopted the following standards in the year:
IFRS 7, "Financial Instruments Disclosures" which introduces new disclosures
relating to financial instruments and does not have any impact on the
classification and valuation of the Group or Company's financial instruments, of
the disclosures relating to taxation and trade and other payables.
Significant accounting judgements, estimates and assumptions
The key assumptions concerning the future, and other sources of estimation
uncertainty at the balance sheet date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below:
Impairment of goodwill - The Group determines whether goodwill is impaired at
least on an annual basis. This requires an estimation of the "value in use" of
the cash generating units to which the goodwill is allocated. Estimating a value
in use amount requires management to make an estimate of the expected future
cash flows from the cash generating unit and also to choose a suitable discount
rate in order to calculate the present value of those cash flows.
Deferred tax assets - Deferred tax assets are recognised for all unused tax
losses to the extent that it is more likely than not that taxable profit will be
available against which the losses can be utilised. Significant management
judgement is required to determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and level of future taxable profits.
Share based payment - The estimation of the fair value of share options and
other equity instruments at their date of grant requires management to make
estimates concerning the expected volatility of the underlying shares, the
dividends payable on the shares and the time at which employees are likely to
exercise vested options.
Debtors - Debtors are recognised to the extent that they are judged recoverable.
Management reviews are performed to estimate the level of reserves required for
irrecoverable debt. Provisions are made specifically against invoices where
recoverability is uncertain.
Segmental reporting
The directors consider that the Group operates only one class of business, being
the manufacture of dental appliances. All turnover and operating losses
originate in the UK therefore geographical analysis has not been presented.
Property, plant and equipment
Property, plant and equipment are held at cost less accumulated depreciation and
impairment charges. The cost of property, plant and equipment is the purchase
price, together with any directly attributable costs of acquisition.
Depreciation is provided at the following annual rates in order to write off the
cost less estimated residual value, which is based on up to date prices, of
property, plant and equipment over their estimated useful lives as follows:
+----------------------------------------------+-----------------------------------+
| Freehold land | - Nil |
+----------------------------------------------+-----------------------------------+
| Leasehold improvements | - shorter of remaining life or |
| | 50 years |
+----------------------------------------------+-----------------------------------+
| Plant and machinery | -10 years |
+----------------------------------------------+-----------------------------------+
| Fixtures and fittings | -4 years |
+----------------------------------------------+-----------------------------------+
| Computer equipment | -4 years |
+----------------------------------------------+-----------------------------------+
Intangible assets - Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value
of the net identifiable assets of the acquired subsidiary at the date of
acquisition. The cost of acquisition represents the fair value of all
consideration given in return for the assets acquired. Goodwill on acquisition
of subsidiaries is included in intangible assets. Goodwill is tested annually
for impairment and carried at cost less accumulated impairment losses.
Intangible assets - Licences
Software licences are capitalised and amortised over their useful economic life
of five years. The cost of the licence is the purchase price plus any incidental
costs of acquisition.
Impairment
The carrying amount of the Group's non-financial assets are reviewed at each
balance sheet date to determine whether there is any indication of impairment.
If any such indication exists, the asset's recoverable amount is estimated.
For goodwill, assets that have an indefinite useful life and intangible assets
that are not yet available for use, the recoverable amount is estimated at each
balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its
cash generating unit exceeds its recoverable amount. Impairment losses are
recognised in the consolidated income statement.
An impairment loss is recognised for the amount by which the carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of the
asset's fair value less costs to sell and the value in use. For the purposes of
assessing impairments, assets are grouped at the lowest levels for which there
are identifiable cash flows.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to cash-generating
units (group of units) and then, to reduce the carrying amount of the other
assets of the unit (group of units) on a pro-rata basis.
Trade and other receivables
Trade receivables are recognised and carried at original invoice amount less
allowance for any uncollectible amounts. Where receivables are considered to be
irrecoverable an impairment charge is included in the income statement.
Classification of financial instruments issued by the Group
Following the adoption of IAS32 'Financial instruments: presentation', financial
instruments issued by the Group are treated as equity only to the extent that
they meet the following two conditions:
-they include no contractual obligations upon the group to deliver cash or other
financial assets or to exchange financial assets or financial liabilities with
another party under conditions that are potentially unfavourable to the group;
and
-where the instrument will or may be settled in the company's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the company's own equity instruments or is a
derivative that will be settled by the company's exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are
classified as a financial liability. Where the instrument so classified takes
the legal form of the company's own shares, the amounts presented in these
financial statements for called up share capital and share premium account
exclude amounts in relation to those shares.
Finance payments associated with financial liabilities are dealt with as part of
finance expenses. Finance payments associated with financial instruments that
are classified in equity are treated as distributions and are recorded directly
in equity.
Financial assets
The Group classifies its financial assets depending on the purpose for which the
asset was acquired. The Group has the following financial assets:
Loans and receivables: These assets are non-derivative financial assets with
fixed and determinable payments that are not quoted in an active market. They
arise principally through the provision of services to customers (trade
receivables). They are carried at fair value on initial recognition less
provision for impairment. Cash and cash equivalents comprise cash in hand,
deposits held at call with banks and bank overdrafts.
Financial liabilities
Financial liabilities are comprised of termed loan facilities and trade
payables, which are recognised at amortised cost.
Interest bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in profit or loss over the
period of the borrowings on an effective interest basis.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received, excluding
discounts and rebates.
Revenue from the sale of goods is recognised when the significant risks and
rewards of ownership of the goods have passed to the buyer, usually on despatch
of the goods.
Leases
Leases where the lessor retains substantially all of the risks and rewards of
ownership are classified as operating leases. Rentals payable under operating
lease rentals are charged to the income statement on a straight line basis over
the term of the lease.
Leases where the Group acts as lessee and obtains substantially all of the risks
and rewards of ownership are classified as finance leases or hire purchase
agreements. Assets held under finance leases or hire purchase agreements are
capitalised and depreciated over their useful economic lives. The capital
element of the future obligations under finance leases and hire purchase
contracts are included as liabilities in the balance sheet. The interest
elements of the rental obligations are charged to the income statement over the
periods of the finance leases and hire purchase agreements and represent a
constant proportion of the balance of capital outstanding.
Inventories
Inventories are stated at the lower of cost and net realiseable value. Cost
includes all costs incurred in bringing each product to its present location and
condition. Raw materials are stated at purchase cost. Work in progress includes
the cost of materials and labour plus attributable overheads based on a normal
activity level. Net realiseable value is based upon estimated selling price less
any further costs expected to be incurred to completion and disposal.
Non-recurring items
Non-recurring items are material items in the Income Statement which derive from
events or transactions which fall within the ordinary activities of the Group
and which individually or, if of a similar type, in aggregate the Group has
highlighted as needing to be disclosed by virtue of their size or incidence if
the financial statements are to give a true and fair view. Such items are
non-recurring, as by their nature they do not occur on a frequent basis.
Post retirement benefits
The Group operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the Group in an independently
administered fund. The amount charged to the income statement represents the
contributions payable to the scheme in respect of the accounting period.
Share based payments and employee benefits
The fair value of awards to employees that take the form of shares or rights to
shares is recognised as an employee expense with a corresponding increase in
equity. The fair value is measured at grant date and spread over the period
during which the employees become unconditionally entitled to the options. The
fair value of the options granted is measured using an option valuation model,
taking into account the terms and conditions upon which the options were
granted. The amount recognised as an expense is adjusted to reflect the actual
number of share options that vest except where forfeiture is due only to share
prices not achieving the threshold for vesting.
Short term employee benefits are recognised when an employee has rendered
service to the Group during an accounting period. The amount recognised is the
undiscounted amount of short term employee benefits expected to be paid in
exchange for that service.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated using the rate of exchange
ruling at the balance sheet date and the gains and losses on translation are
recognised in the income statement.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax.
Income tax is recognised in the income statement except to the extent that it
relates to items recognised directly in equity, in which case it is recognised
in equity.
Current tax is the tax currently payable based on taxable profit for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in previous years.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill, nor on the
initial recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with shares in subsidiaries is
not provided if reversal of these temporary differences can be controlled by the
group and it is probable that reversal will not occur in the foreseeable future.
In addition, tax losses available to be carried forward as well as other income
tax credits to the group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred
tax assets are recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the balance
sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement, except where they relate to items that are
charged or credited directly to equity in which case the related deferred tax is
also charged or credited directly to equity.
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 an outflow of
economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Where the group expects
some or all of a provision to be reimbursed, the reimbursement is recognised as
a separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the income statement net of
any expected reimbursement. If the effect of the time value of money is
material, provisions are discounted using a current pre-tax rate that reflects,
where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of
time is recognised as a finance cost.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KGGMZVGZGLZM
1ST Dental Laboratories (LSE:FDT)
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1ST Dental Laboratories (LSE:FDT)
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