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1st Dental Laboratories Plc

Interim Results for the half year to 31st May 2009

Chairman's Statement and financial highlights

We are pleased to report that Group revenues increased by 5.3% against 2008 half year, which whilst operating from a low base is a creditable performance in a difficult market where discretionary spend is low. In particular, at this time last year we reported that disruptions at our Blackpool and Stourport laboratories had exacerbated a declining revenue trend in the Group, revenues having declined by some 12% against 2007 levels overall. These laboratories have now stabilised with Stourport contributing positively compared with the same time last year. Blackpool has been slower to recover but is starting to come in line with our expectations, beating budget for May.

  

We can report that we have seen in the last six months new clients increase by 6.4% and spend per client across the group increase by 6.3%.

The most significant factor in reversing this trend was to build a centralised sales team, which now totals 10 staff. We are able to report that the sales team is 30% ahead of their internal financial targets having recruited some 102 new clients to the end of June. Whilst still early in the investment cycle, there is good evidence that these clients are returning and increasing their level of spend with us. The increased volumes are absorbing unutilised capacity in the laboratories. The net investment of £147,000 has been absorbed into the current period and its breakeven point is visible.

Since the turn of the year the Group has also invested in new production processes and staff training for metal free restorations in each and every laboratory. The number of Zirconia restorations during this period has almost tripled.

The Eteeth online service business continues to grow, with half year revenues having more than doubled that taken at the same point in 2008. Investment into Eteeth in the current period was £59,000 (2008: £53,000).  

With the exception of the investments in the centralised sales team, new production processes and Eteeth, we are mindful of the current economic climate and we remain very alert and active in considering cost controls and labour efficiencies throughout the Group.

After stripping out the investment in the centralised sales team, new production processes and Eteeth, the underlying operating loss of the Group for the half year was £59,000 (2008: £10,000) but we are reporting an increased headline operating loss of £265,000 at the half year (2008: £63,000). The loss before tax was £326,000 (2008: £141,000).

Despite the headline loss before tax of £326,000 for the period, debt has fallen by £106,000 to £1,885,000 from £1,991,000 at 30 November 2008. Net cash outflow was £283,000 and is relatively low because of the improved working capital management.  

Our Board has been further strengthened with the addition of an experienced FD, Jonathan Foxcroft. As previously reported, Jonathan joined the Board in April and has made a real contribution to date.  

In conclusion, the Board has worked diligently to reverse the sales attrition in difficult economic conditions and this has been achieved. The cost of this has been absorbed into the current period and this has increased the loss against the same period last year.  

With a stronger executive management team now in place and the improved operational and financial controls that this brings, the Board is confident of further growth and profitability for the second half year and beyond. Now being able to report in the combined first two months of the second half not just profits but profits over and above that of the Directors expectations as a result of our actions, even after some restructuring costs.  

Financial results and highlights

Turnover £5,134k an increase of 5.3% (2008: £4,874k)

Gross profit £1,656k (2008: 1,634k)

Gross margin 32.3% (2008: 33.5%)

Operating loss for period £265k after sales force and continued Eteeth net investment equivalent £206k (2008: loss of £63k)

Net profit contributions from Laboratories £435k (2008: £487k)

Net bank debt reduction in period to £1,221k (2008: £1,285k)

Andrew Garner

Chairman 20th August 2009

1st Dental Laboratories plc
Consolidated income statement
for the 6 months ended 31 May 2009
	Unaudited 6 months ended			Unaudited 6 months ended			Audited year ended
	31 May 09			31 May 08			30 Nov 08
	£'000			£'000			£'000
Revenue	5,134			4,874			10,065
Cost of sales	(3,478)			(3,240)			(6,409)
Gross profit	1,656			1,634			3,656
	32.3%			33.5%			36.3%
Administrative expenses	(1,921)			(1,697)			(3,743)
Operating loss	(265)			(63)			(87)
Finance costs
Finance income	2			22			37
Finance costs	(63)			(100)			(215)
Loss on ordinary activities before tax	(326)			(141)			(265)
Tax on loss on ordinary activities	-			-			16
Loss for the period from continuing operations	(326)			(141)			(249)
Loss per share:
Basic and diluted	(0.78)	p		(0.34)	p		(0.59)	p
Note : there is no dilution as the share options have not been exercised

1st Dental Laboratories plc
Consolidated Balance Sheet
	Unaudited		Unaudited		Audited
	31 May 09		31 May 08		30 Nov 08
Assets	£'000		£'000		£'000
Non Current Assets
Intangible assets	7,062		7,087		7,067
Property, plant and equipment	2,062		1,894		2,069
	9,124		8,981		9,136
Current assets
Inventories	322		302		295
Trade and other receivables	1,506		1,367		1,596
Cash and cash equivalents	280		712		563
	2,108		2,381		2,454
Total assets	11,232		11,362		11,590
Current liabilities
Trade creditors & other payables	1,670		731		1,602
Interest bearing loans & borrowings	696		642		553
	2,366		1,373		2,155
Non-current liabilities
Interest bearing loans & borrowings	1,189		1,460		1,438
Total Liabilities	3,555		2,833		3,593
Net assets	7,677		8,529		7,997
Equity
Called up share capital	4,202		4,202		4,202
Share premium account	6,358		6,358		6,358
Retained earnings	(2,883)		(2,031)		(2,563)
Total Equity	7,677		8,529		7,997
These financial statements were approved by the board of directors on 20th August 2009 and were signed on its behalf by:
AW Garner
Executive Chairman

1st Dental Laboratories plc
Consolidated Statement of changes in equity as at 31 May 2008
			Share capital	Share premium	Retained earnings	Total
			£'000	£'000	£'000	£'000
At 1 December 2007 (restated)			4,202	6,358	(2,330)	8,230
Result for the year			-	-	(249)	(249)
Share based payment charges			-	-	16	16
At 30 November 2008			4,202	6,358	(2,563)	7,997
Result for the period					(326)	(326)
Share based payment charges					6	6
Balance as at 31 May 2009			4,202	6,358	(2,883)	7,677
There is no material tax impact of share based payment charges recognised directly in equity.

1st Dental Laboratories plc
Consolidated cash flow statement
for the six months ended 31 May 2009
	Unaudited for the 6 months ended		Unaudited for the 6 months ended		Audited year ended
	31 May 09		31 May 08		30 Nov 08
	£'000		£'000		£'000
Operating activities
Loss for the period	(326)		(141)		(249)
Amortisation	5		-		10
Depreciation	158		133		280
(Profit)/loss on sale of plant and equipment	(11)		13		32
Share based payment charges	6		13		16
Net finance expense	61		78		178
Income tax credit	-		-		(16)
Operating cash inflow before changes in working capital	(107)		96		251
Movement in inventories	(27)		19		1
Movement in trade and other receivables	90		186		(43)
Movement in trade and other payables	68		(215)		242
Operating cash inflow from operations	24		86		451
Interest received	2		22		37
Interest paid on borrowings	(55)		(97)		(168)
Interest element of hire purchase payments	(8)		(3)		(9)
Net cash inflow from operating activities	(37)		8		311
Investing activities
Purchase of plant and equipment	(77)		(154)		(302)
Sale of plant and equipment	11		13		12
Net cash flow from investing activities	(66)		(141)		(290)
Financing activities
Capital element of interest bearing loans and borrowings paid	(180)		(222)		(525)
Net cash flow from financing activities	(180)		(222)		(525)
Net decrease in cash and cash equivalents	(283)		(355)		(504)
Cash and cash equivalents at the beginning of the period	563		1,067		1,067
Cash and cash equivalents at the end of the period	280		712		563

  1st Dental Laboratories plc 

Notes to the interim financial statements 

for the six months ended 31 May 2009

 

1. Significant accounting policies 

Basis of preparation 

The interim results have been prepared and approved by the directors in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and IFRIC interpretations issued and effective at the time of preparing these statements.

 

These interim results are unaudited and have not been reviewed by the Group's auditors. They were approved by the Board of Directors on 20th August 2009. 

The statutory accounts for the year ended 30 November 2008, which were prepared under IFRS, have been reported on by the Group's auditors and delivered to the registrar of companies. The report of the auditors was unqualified and did not contain the statements under section 237(2) or (3) of the Companies Act 1985. The interim financial information does not constitute statutory accounts as defined under Section 240 of the Companies Act 1985.

The accounting policies applied by the Group are the same as those applied in the consolidated financial statements for the period ended 30 November 2008.

 

2. Seasonality 

In the directors' opinion there are no seasonal variations in business operations. 

3. 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.

4. Taxation 

There is no taxation in the periods.

5. Loss per share 

The calculation of loss per share is based on loss of £326k in May 2009, loss of £249k in November 2008 and loss of £141k in May 2008, and 42 million shares (Nov 2008: 42m, May 2008: 42m), being the average number of shares in issue.  

The share options are non-dilutive. The potential increase in ordinary shares from the exercise of any of the share options at each balance sheet date presented would be anti-dilutive as the Group reported a net loss for each of those periods. These potential ordinary shares were therefore excluded from the calculation at that date and the diluted loss per share figure reported is the same as the basic earnings per share.

6. Property, plant and equipment

		£'000
Net book value at 1 December 2008		2,069
Additions		151
Depreciation		(158)
Net book value at 31 May 2009		2,062

7. Copies of the Interim Report

Copies of the interim report are available to the public from the company's website and head office - Company Secretary, 1st Dental Laboratories plc, 112 Wetherby Road, Harrogate HG2 7AB.

Further Information: 

 

Andrew Garner, Executive Chairman:  01509-650111 

 

William Vandyk, Astaire Securities:  020 7448 4400

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