TIDMAKG
RNS Number : 3514X
Astek Group PLC
12 August 2009
Astek Group plc / Epic: AKG / Index: AIM / Sector: Medical Supplies
12 August 2009
Astek Group plc ('The Company' or 'Astek')
Astek Group Plc, the AIM listed dental equipment designer, manufacturer and
distributor announces its results for the year ended 31 March 2009.
Overview
* Turnover up 25% to GBP1,371,297 (2008: GBP1,096,213)
* Pre tax loss decreased to GBP155,287 (2008: loss GBP552,651)
* No exceptional costs
* Cash balance of GBP95,678 at 31 March 2009 (2008: GBP215,466)
* Sales of Pro-Tip have recovered strongly
* more than 50% up on year ended 31 March 2008 although still not back to the
level of year ended 31 March 2007
* New product InSafe(TM) launched in UK, Eire and Germany and other
distributorships under negotiation.
* The auditors' report contains an emphasis of matter in relation to going concern
but gives an unqualified audit opinion
CHAIRMAN'S STATEMENT
The Group's results for the year ended 31 March 2009 show turnover up 25% to
GBP1,371,297 (2008:GBP1,096,213) and gross margin remaining steady at 43%. The
pre-tax loss has reduced to GBP155,287 (2008: GBP552,651).
However the year has also been a difficult one for Astek with various factors
negatively impacting these results including the general downturn in the economy
which has also affected the dental sector of the market.
Much of Astek's production is sourced from the Far East several months ahead of
its eventual sale and priced and paid for in US dollars. The Company's major
market for sales after the UK is the USA. The Group has hedged the dollar and
euro to the best of its limited financial ability, but the strength of the US
dollar and in particular its volatility has materially affected the results. The
management team has responded by revising the price list and selling in dollars
and euros wherever possible and appropriate.
inSafe(TM) has been launched only in UK, Eire and Germany to date in order to
ensure that processes are acceptable. Other distributors will be signed up on a
country by country basis but only when management is sure they are suitable
partners and able to service their respective territories satisfactorily. The
performance of existing distributors for other products is kept under constant
review.
I referred last year to a fall in sales of Pro-Tip , our proprietary product. I
am pleased to say that sales have recovered strongly and in FY2009 were more
than 50% up on FY2008 although still not back to the level of FY2007. We are
working hard to try and drive sales back to where they were and then beyond.
Work also continues on strengthening our new product pipeline and further new
product launches are planned in the coming months.
During the year the Company was awarded a grant for Research and Development
equivalent to 60% of eligible costs from the North West Development Agency
(NWDA). During the year GBP52,981 was received in respect of revenue expenditure
and GBP19,050 in respect of capital expenditure. Further grant funding is
available in principle from the NWDA. The Company is assessing the projects
under way at present and will apply for further grants if the Board considers
they are eligible.
We are fortunate in having a small but dedicated team and I would like to thank
every member of staff for their continued efforts on Astek's behalf.
Details of all our products and further information on the Group can be found on
our website at www.astekgroup.co.uk.
Jeffrey Rubins
Chairman
12 August 2009
CONSOLIDATED INCOME STATEMENT
+-------------+--------+--------+-------------+--------+-----------+
| | | | Year | | Year |
+-------------+--------+--------+-------------+--------+-----------+
| | | | ended | | ended |
+-------------+--------+--------+-------------+--------+-----------+
| | | | 31 | | 31 |
| | | | March | | March |
| | | | 2009 | | 2008 |
+-------------+--------+--------+-------------+--------+-----------+
| | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| | | | GBP | | GBP |
+-------------+--------+--------+-------------+--------+-----------+
| Revenue | | | 1,371,297 | | 1,096,213 |
| | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Cost | | | (777,714) | | (623,771) |
| of | | | | | |
| sales | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Gross | | | 593,583 | | 472,442 |
| Profit | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Trading | | | (742,177) | | (900,965) |
| costs | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Non | | | 2,580 | | 2,580 |
| trading | | | | | |
| income | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Operating | | | (146,014) | | (425,943) |
| loss | | | | | |
| before | | | | | |
| exceptional | | | | | |
| items | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Exceptional | | | - | | (137,212) |
| expenses | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Operating | | | (146,014) | | (563,155) |
| loss | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Investment | | | 3,489 | | 24,680 |
| revenue - | | | | | |
| interest | | | | | |
| receivable | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Finance | | | (12,762) | | (14,176) |
| costs | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Loss | | | (155,287) | | (552,651) |
| before | | | | | |
| taxation | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Tax on | | | 88,783 | | - |
| loss | | | | | |
| on | | | | | |
| ordinary | | | | | |
| activities | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Retained | | | (66,504) | | (552,651) |
| loss for | | | | | |
| the year | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
| Loss | | | 0.1p | | 0.8p |
| per | | | | | |
| share-basic | | | | | |
| and diluted | | | | | |
| (in pence) | | | | | |
+-------------+--------+--------+-------------+--------+-----------+
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
CONSOLIDATED
+--------+--------+--------+---------+---------+-------------+-------------+-----------+
| | | | Share | Share | Reverse | Profit | Total |
| | | | capital | premium | | | equity |
| | | | | account | acquisition | and | |
| | | | | | reserve | loss | |
| | | | | | | account | |
+--------+--------+--------+---------+---------+-------------+-------------+-----------+
| | | | GBP | GBP | GBP | GBP | GBP |
+--------+--------+--------+---------+---------+-------------+-------------+-----------+
| | | | | | | | |
+--------+--------+--------+---------+---------+-------------+-------------+-----------+
| At 1 April 2007 | 350,000 | 823,319 | 966,889 | (1,019,220) | 1,120,988 |
| | | | | | |
+--------------------------+---------+---------+-------------+-------------+-----------+
| Adjustment for share | | | | | |
| based payments | - | - | - | 44,724 | 44,724 |
+--------------------------+---------+---------+-------------+-------------+-----------+
| Loss | | | - | - | - | (552,651) | (552,651) |
| for | | | | | | | |
| year | | | | | | | |
+--------+--------+--------+---------+---------+-------------+-------------+-----------+
| | | | | | | | |
+--------+--------+--------+---------+---------+-------------+-------------+-----------+
| At 31 March 2008 | 350,000 | 823,319 | 966,889 | (1,527,147) | 613,061 |
| | | | | | |
+--------------------------+---------+---------+-------------+-------------+-----------+
| Adjustment for share | - | - | - | 19,731 | 19,731 |
| based payments | | | | | |
+--------------------------+---------+---------+-------------+-------------+-----------+
| Loss for year | - | - | - | (66,504) | (66,504) |
+--------------------------+---------+---------+-------------+-------------+-----------+
| At 31March 2009 | 350,000 | 823,319 | 966,889 | (1,573,920) | 566,288 |
+--------+--------+--------+---------+---------+-------------+-------------+-----------+
CONSOLIDATED BALANCE SHEET
+-------------+--------+--------+-------------+-------------+
| | | | At 31 | At 31 |
| | | | March | March |
| | | | 2009 | 2008 |
+-------------+--------+--------+-------------+-------------+
| Assets | | | GBP | GBP |
+-------------+--------+--------+-------------+-------------+
| Non-current | | | | |
| assets | | | | |
+-------------+--------+--------+-------------+-------------+
| Goodwill | | | 105,837 | 105,837 |
+-------------+--------+--------+-------------+-------------+
| Other | | | 107,504 | 102,658 |
| intangible | | | | |
| assets | | | | |
+-------------+--------+--------+-------------+-------------+
| Property, | | | 209,516 | 203,673 |
| plant and | | | | |
| equipment | | | | |
+-------------+--------+--------+-------------+-------------+
| | | | 422,857 | 412,168 |
+-------------+--------+--------+-------------+-------------+
| Current | | | | |
| assets | | | | |
+-------------+--------+--------+-------------+-------------+
| Inventories | | | 142,317 | 137,654 |
+-------------+--------+--------+-------------+-------------+
| Trade | | | 302,179 | 258,024 |
| and | | | | |
| other | | | | |
| receivables | | | | |
+-------------+--------+--------+-------------+-------------+
| Cash | | | 95,678 | 215,466 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
+-------------+--------+--------+-------------+-------------+
| | | | 540,174 | 611,144 |
+-------------+--------+--------+-------------+-------------+
| Total | | | 963,031 | 1,023,312 |
| assets | | | | |
+-------------+--------+--------+-------------+-------------+
| | | | | |
+-------------+--------+--------+-------------+-------------+
| | | | | |
+-------------+--------+--------+-------------+-------------+
| | | | | |
+-------------+--------+--------+-------------+-------------+
| Current | | | | |
| liabilities | | | | |
+-------------+--------+--------+-------------+-------------+
| Trade | | | (159,954) | (231,101) |
| and | | | | |
| other | | | | |
| payables | | | | |
+-------------+--------+--------+-------------+-------------+
| Borrowings | | | (107,652) | (25,006) |
| | | | | |
+-------------+--------+--------+-------------+-------------+
| | | | (267,606) | (256,107) |
+-------------+--------+--------+-------------+-------------+
| Non-current | | | | |
| liabilities | | | | |
+-------------+--------+--------+-------------+-------------+
| Borrowings | | | (129,137) | (154,144) |
+-------------+--------+--------+-------------+-------------+
| Total | | | (396,743) | (410,251) |
| liabilities | | | | |
+-------------+--------+--------+-------------+-------------+
| Net | | | 566,288 | 613,061 |
| assets | | | | |
+-------------+--------+--------+-------------+-------------+
| | | | | |
| Equity | | | | |
+-------------+--------+--------+-------------+-------------+
| Share | | | 350,000 | 350,000 |
| capital | | | | |
+-------------+--------+--------+-------------+-------------+
| Share | | | 823,319 | 823,319 |
| premium | | | | |
| account | | | | |
+-------------+--------+--------+-------------+-------------+
| Reverse | | | 966,889 | 966,889 |
| acquisition | | | | |
| reserve | | | | |
+-------------+--------+--------+-------------+-------------+
| Retained | | | (1,573,920) | (1,527,147) |
| earnings | | | | |
+-------------+--------+--------+-------------+-------------+
| Total | | | 566,288 | 613,061 |
| equity | | | | |
+-------------+--------+--------+-------------+-------------+
CONSOLIDATED CASH FLOW STATEMENT
+-------------+--------+--------+--------+-----------+--------+-----------+
| | | | | Year | | Year |
+-------------+--------+--------+--------+-----------+--------+-----------+
| | | | | ended | | ended |
+-------------+--------+--------+--------+-----------+--------+-----------+
| | | | | 31 | | 31 |
| | | | | March | | March |
| | | | | 2009 | | 2008 |
+-------------+--------+--------+--------+-----------+--------+-----------+
| | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| | | | | GBP | | GBP |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Cash | | | | (173,939) | | (333,178) |
| absorbed | | | | | | |
| by | | | | | | |
| operations | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Interest | | | | (12,762) | | (14,176) |
| paid | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Corporation | | | | 88,783 | | - |
| tax refund | | | | | | |
| received | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Net | | | | (97,918) | | (347,354) |
| cash | | | | | | |
| absorbed | | | | | | |
| from | | | | | | |
| operating | | | | | | |
| activities | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| | | | | | | |
| Investing | | | | | | |
| activities | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Interest | | | | 3,489 | | 24,680 |
| received | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Purchases | | | | (57,182) | | (63,161) |
| of | | | | | | |
| intangible | | | | | | |
| fixed | | | | | | |
| assets | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Grants | | | | 19,050 | | - |
| received | | | | | | |
| in | | | | | | |
| respect | | | | | | |
| of | | | | | | |
| intangible | | | | | | |
| assets | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Purchases | | | | (44,866) | | (123,702) |
| of | | | | | | |
| property, | | | | | | |
| plant and | | | | | | |
| equipment | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Net | | | | (79,509) | | (162,183) |
| cash | | | | | | |
| used | | | | | | |
| in | | | | | | |
| investing | | | | | | |
| activities | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Financing | | | | | | |
| activities | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Invoice | | | | 82,646 | | |
| discounting | | | | | | |
| finance | | | | | | |
| advances | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Bank | | | | (25,007) | | (25,006) |
| loans | | | | | | |
| repaid | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Net | | | | 57,639 | | (25,006) |
| cash | | | | | | |
| generated | | | | | | |
| from/(used | | | | | | |
| in) | | | | | | |
| financing | | | | | | |
| activities | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| | | | | (119,788) | | (534,543) |
| Net | | | | | | |
| decrease | | | | | | |
| in cash | | | | | | |
| and cash | | | | | | |
| equivalents | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Cash | | | | 215,466 | | 750,009 |
| and | | | | | | |
| cash | | | | | | |
| equivalents | | | | | | |
| at | | | | | | |
| beginning | | | | | | |
| of year | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
| Cash | | | | 95,678 | | 215,466 |
| and | | | | | | |
| cash | | | | | | |
| equivalents | | | | | | |
| at end of | | | | | | |
| year | | | | | | |
+-------------+--------+--------+--------+-----------+--------+-----------+
1Status of this announcement
The financial information is unaudited and does not constitute statutory
accounts within the meaning of Section 240(5) of the Companies Act 1985 ('the
Act'), but have been extracted there from. The financial statements for the year
ended 31 March 2008 have been filed with the Registrar of Companies and contain
no statement under Sections 237(2) or (3) of the Act. The auditors have reported
their opinion on the financial statements for the year ended 31 March 2009
today. The auditors gave an unqualified opinion, and contain no statement under
Sections 237(2) or (3) of the Act. The auditors report included the following
paragraph by way of emphasis of matter -
Emphasis of matter-going concern
In forming our opinion on the financial statements, which is not qualified, we
have considered the adequacy of the disclosures in note 1 to the financial
statements concerning the Group's ability to continue as a going concern. The
Company incurred a net loss of GBP66,504. This result depleted the Group's
available cash resources and this, together with the other matters explained in
note 1 to the financial statements, indicates the existence of a material
uncertainty which may affect the Group's ability to continue as a going concern.
The financial statements do not include any adjustments that would result if the
Group was unable to continue as a going concern.
The relevant section of note 1 referred to is reproduced below -
Going concern
The financial statements have been prepared on the going concern basis which
assumes that the Group and the Company will have sufficient financial resources
to enable it to continue trading for the foreseeable future. Since the initial
placing of the Company's shares on AIM in October 2006 the Group's cash
resources were unexpectedly depleted by a combination of factors, including:
* delays in the process of bringing one of the Group's key products to market (the
inSafe(TM) syringe);
* a temporary downturn in the sales of another key product (Pro-Tip ) following a
change in ownership of the distributor of this product; and
* the professional costs of an aborted acquisition.
The Group is close to achieving a cash break even position but until that time
the available cash resources remaining are required to enable it to continue
trading.
The directors took a number of positive steps to secure the position of the
Group and on the basis of these measures, and others to be implemented this
year, consider it appropriate that the financial statements should be prepared
on the going concern basis. These measures include:
* The directors' ongoing agreement to a reduction in the level of their
remuneration by 50% for last Financial Year which will continue until cash
breakeven is achieved;
* Further reductions in professional fees
A number of new products are being introduced to the market, distributorships
have been agreed for the inSafe(TM) in UK, Eire and Germany while more in other
countries are under negotiation. The provider of the Invoice Discounting
Facility granted last year has agreed an increase in the cap to GBP300,000 in
order to cope with the volumes of inSafe(TM) sales expected later this year.
Based on their forecasts, the directors believe that the combination of these
factors will provide sufficient working capital to enable the Company to
continue trading. However, these forecasts are necessarily based on the
achievement of timing and targets some of which, although believed to be
reasonable by the directors, are nevertheless outside the Group's direct
control. If significant delays or underperformance by distributors were to take
place, these may render the Group's cash resources insufficient.
If, as a result, the Group were to be unable to continue as a going concern then
adjustments would be necessary to write assets down to their recoverable
amounts, non-current assets and liabilities would be re-classified as current
assets and liabilities and provisions would be required for any costs associated
with closure.
The financial statements have not yet been filed with the Registrar of
Companies.
Copies of the Report and Financial Statements for the year ended 31 March 2009
will be sent to shareholders by 21 August 2009, and will be available for
collection from 24 August 2009.
2. Summary of significant accounting policies
2.1Basis of
consolidation
The consolidated financial information incorporates the financial information of
Astek Group plc ("the Company"), and all entities controlled by the Company (its
subsidiaries).
On 25 October 2006 the Company became the legal parent company of Astek
Innovations Limited in a share for share transaction. Astek Group plc was a
non-trading cash shell at that date. Due to the relative size of the companies,
Astek Innovations Limited shareholders became the majority holders of the
enlarged share capital. The Board of Astek Innovations Limited also replaced the
Board of Astek Group plc. Accordingly, the substance of the combination was that
Astek Innovations Limited acquired Astek Group plc in a reverse acquisition. The
directors have adopted reverse acquisition accounting as required by IFRS 3 in
accounting for this transaction.
2.2 Revenue recognition
Sales of goods represent the amounts invoiced during the year exclusive of Value
Added Tax ("VAT").venue is measured at the fair value of the consideration
received or receivable (excluding VAT and discounts) derived from the provision
of goods and services to customers during the period. The Group derives revenue
from the supply of dental equipment and products.
The Group recognises the revenue from the sale of goods upon delivery. Where
appropriate the Group makes a provision for estimated liabilities for returns
under the standard acceptance terms at the time the revenue is recognised.
Payment terms are agreed separately with each customer.
2.3 Research and development
Research expenditure is written off in the year in which it is incurred.
Development expenditure is written off in the same way unless the directors are
satisfied as to the technical, commercial and financial viability of individual
projects. In this situation, the expenditure is deferred and amortised over the
period during which the Group is expected to benefit from the project which is
estimated to be five years unless separately stated.
2.4 Other intangible assets
When an acquisition is made, a review is undertaken to identify separately
identifiable non-monetary assets that meet the definition under IAS 38
"Intangible assets". No acquisitions have been made in the period since
transition to IFRS.
The costs of the initial registration of patents and trademarks are valued at
cost less accumulated amortisation. Amortisation is calculated to write off the
cost in equal annual instalments over the estimated useful life of 4 years.
2.5 Goodwill
Goodwill arising on consolidation represents the excess of the cost of the
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary at the date of acquisition. Goodwill is
initially recognised as an asset at cost and is subsequently measured at cost
less any accumulated impairment losses. Goodwill which is recognised as an asset
is reviewed for impairment at least annually. Any impairment is recognised
immediately in the profit or loss.
For the purpose of impairment testing, goodwill is allocated to each of the
Group's cash generating units expected to benefit from the synergies of the
combination. Cash generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable amount of the cash
generating unit is less
than the carrying amount of the unit, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the
other assets of the unit pro rata on the basis of the carrying amount of each
asset in the unit. An impairment loss recognised for goodwill is not reversed in
a subsequent period.
Goodwill arising on acquisition before the date of transition to IFRS has been
retained at the previous UK GAAP amounts subject to being tested for impairment
at that date.
The directors have taken advantage of the transitional provisions set out in
IFRS1 and have not restated business combinations arising before 1 April 2006 in
accordance with IFRS.
2.6 Plant and equipment and depreciation
Plant and equipment is stated at cost less depreciation.
Depreciation is provided on all tangible fixed assets at rates calculated to
write off the cost less estimated residual value over their expected useful
lives at the following rates:
Plant and equipment 15% reducing balance for all additions after 1
October 2004 and 25% straight line for additions prior to that date, except for
computer equipment which is 25% straight line.
Fixtures and fittings 15% reducing balance.
2.7 Impairment of non current assets (excluding goodwill)
At each balance sheet date, the Group reviews the carrying amounts of its non
current assets to determine whether there is any indication that those assets
have suffered an impairment loss. If any such indications exist, the recoverable
amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs. An intangible asset with an
indefinite useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried at
a revalued amount in which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognised as income immediately, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
2.8Investment in subsidiary company
The exemption given in IFRS 1 has been applied with regards to the carrying
value of the investment in subsidiary in the Company's separate financial
statements. This investment is included at its deemed cost, being the previous
UK GAAP carrying amount. This carrying amount is equal to the nominal value of
shares issued by Astek Group plc in exchange for shares in Astek Innovations
Limited together with the deemed fair value of employee services incurred
through share options issued to employees of the subsidiary.
2.9Inventories
Inventories are stated at the lower of cost and net realisable value, after
making due allowance for obsolete and slow
moving items.
2.10 Operating lease agreements
Rentals applicable to operating leases where substantially all of the benefits
and risks of ownership remain with the lessor are charged against profits on a
straight line basis over the period of the lease.
2.11 Foreign currencies
Monetary assets and liabilities denominated in foreign currencies are translated
into sterling at the rates of exchange ruling at the balance sheet date.
Transactions denominated in foreign currencies are translated into sterling at
the rate of exchange ruling at the date of transaction. All revaluation
differences and realised foreign exchange differences are taken to the profit
and loss account.
2.12 Exceptional items
Exceptional items are those significant items which are separately disclosed by
virtue of their size or incidence to enable a full understanding of the Group's
financial performance.
2.13 Cash and cash equivalents
Cash and cash equivalents in the balance sheet are included at cost and comprise
cash at bank, cash in hand and short term deposits with an original maturity of
three months or less.
2.14 Trade receivables
Trade receivables do not carry any interest and are stated at their fair value
as reduced by appropriate allowances for estimated irrecoverable amounts.
2.15 Trade payables
Trade payables are not interest bearing and are stated at their fair value and
subsequently measured at amortised cost using the effective interest rate
method.
2.16 Equity instruments
Equity instruments issued by the Group are recorded at the proceeds
received, net of direct issue costs.
2.17 Taxation
The tax expense represents the sum of the tax currently payable and
deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted by the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements.
Deferred tax assets and liabilities are measured on an undiscounted basis at the
tax rates that are expected to apply when the related asset is realised or
liability is settled, based on tax rates and laws enacted or substantively
enacted at the balance sheet date.
Deferred tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be
utilised.
2.18 Share based payments
The Group has issued share options and warrants to directors and certain
employees. The Group has applied the requirement of IFRS 2 "Share Based
Payments" to determine the fair value of employee services received in exchange
for the grant of options which is recognised as an expense. The total amount to
be expensed over the vesting period is determined by reference to the fair value
of the options. Non-market vesting conditions are included in assumptions about
the number of options that are expected to become exercisable. This estimate is
revised at each balance sheet date and the difference is charged or credited to
the profit and loss account, with a corresponding adjustment to equity.
Where share options are granted by the parent company in consideration for
services rendered by employers of the subsidiary company the fair value of the
options granted is added to the carrying value of the investment in the
subsidiary company and to equity (share option reserve).
2.19Financial Instruments
Qualitative and quantitative information about exposure to risks arising from
financial instruments are set out in the disclosure notes in accordance with
IFRS 7, including specified minimum disclosures about credit risk, liquidity
risk and market risk, including sensitivity analysis to market risk.
3. Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the Group's accounting policies
In the process of applying the Group's accounting policies, which are described
in note 2, management has made the following judgements that have the most
significant effect on the amounts recognised in the financial information.
Impairment of goodwill
The Group tests annually for impairment or more frequently if there are
indications that goodwill might be impaired.
The recoverable amount of the goodwill is determined from value in use
calculations. The key assumptions and estimates for the value in use
calculations are those regarding the discount rates, growth rates and expected
changes to sales during the period. Management estimates discount rates using
pre-tax rates that reflect current market assessments of the time value of money
and the risks specific to the cash-generating units. A pre tax discount rate of
17% was assumed for the purpose of the calculation.
The Group prepares cash flow forecasts derived from the most recent financial
budgets approved by management for the next three years and extrapolates cash
flows for the following three years assuming no growth from that date.
A substantial increase in the pre-tax discount rate would not impact the results
of the review. A decrease in forecast earnings of 83% in years two and three
onwards would result in a provision for impairment in value of goodwill being
necessary.
Share Based Payments
The Group has made awards of options on its un-issued share capital to certain
directors and employees as part of their remuneration package.
The valuation of these options involved making a number of critical estimates
relating to price volatility, future dividend yields, expected life of the
options and interest rates.
4. Revenue
The revenue and loss are attributable to the one principal activity of the Group
and relates solely to sales originated in the United Kingdom.
An analysis of revenue by geographical market by destination is given below:
+---------+--------+--------+-----------+--------+-----------+
| | | | 2009 | | 2008 |
+---------+--------+--------+-----------+--------+-----------+
| | | | GBP | | GBP |
+---------+--------+--------+-----------+--------+-----------+
| United | | | 622,212 | | 540,661 |
| Kingdom | | | | | |
+---------+--------+--------+-----------+--------+-----------+
| Europe | | | 256,433 | | 175,825 |
+---------+--------+--------+-----------+--------+-----------+
| United | | | 340,317 | | 197,609 |
| States | | | | | |
| of | | | | | |
| America | | | | | |
+---------+--------+--------+-----------+--------+-----------+
| Rest | | | 152,335 | | 182,118 |
| of | | | | | |
| World | | | | | |
+---------+--------+--------+-----------+--------+-----------+
| | | | 1,371,297 | | 1,096,213 |
+---------+--------+--------+-----------+--------+-----------+
The directors consider the Group to be a single operating segment with all
revenue originated in the United Kingdom from a single activity. It does not
separately report internally the results, assets or revenues derived from sales
to different geographical markets.
5. Exceptional expenses
There were no exceptional expenses incurred in the year ended 31 March 2009.
Exceptional expenses in the year ended 31 March 2008 relate to professional
costs in connection with a proposed takeover of an independent third party which
was ultimately aborted.
6. Loss per share
The calculation of loss per share is based on the loss on ordinary activities
after taxation and the weighted average number of shares as set out below:
+--------------+--------+--------+------------+--------+------------+
| | | | Year | | Year |
+--------------+--------+--------+------------+--------+------------+
| | | | ended | | ended |
+--------------+--------+--------+------------+--------+------------+
| | | | 31 | | 31 |
| | | | March | | March |
| | | | 2009 | | 2008 |
+--------------+--------+--------+------------+--------+------------+
| | | | GBP | | GBP |
+--------------+--------+--------+------------+--------+------------+
| Loss | | | (66,504) | | (552,651) |
| for | | | | | |
| year | | | | | |
| attributable | | | | | |
| to equity | | | | | |
| holders of | | | | | |
| the parent | | | | | |
| company | | | | | |
+--------------+--------+--------+------------+--------+------------+
| Weighted | | | 70,000,000 | | 70,000,000 |
| average | | | | | |
| number | | | | | |
| of | | | | | |
| shares | | | | | |
+--------------+--------+--------+------------+--------+------------+
The exercise of outstanding options and warrants would reduce the loss
per share and hence have an anti-dilutive
effect.
There are potentially 44,300,000 shares that could be issued under the
terms of options and warrants agreements.
7. Notes to the cash flow statement
Reconciliation of operating loss to net cash outflow from operating
activities
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| | | | Year ended | | Year ended |
| | | | 31 March | | 31 March |
| | | | 2009 | | 2008 |
| | | | | | |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| | | | GBP | | GBP |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| Operating loss | | | (146,014) | | (563,155) |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| Adjustments for: | | | | | |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| Amortisation and impairment provisions | | | 33,286 | | 28,050 |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| Depreciation | | | 39,023 | | 23,236 |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| Share based payment expense | | | 19,731 | | 44,724 |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| Operating cash flows before movements in | | | (53,974) | | (467,145) |
| working capital | | | | | |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| (Increase)/decrease in inventories | | | (4,663) | | 1,472 |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| (Increase)/decrease in receivables | | | (44,155) | | 114,597 |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| (Decrease)/increase in payables | | | (71,147) | | 17,898 |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| | | | | | |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
| Cash absorbed by operations | | | (173,939) | | (333,178) |
+--------------------------------------------+-----------------+---+----------------+---+----------------+
8. Analysis of net funds
+--------------------------------------------+----------------+---+----------------+---+----------------+
| | At 1 April | | Cash Flow | | At 31 March |
| | 2008 | | | | 2009 |
+--------------------------------------------+----------------+---+----------------+---+----------------+
| | GBP | | GBP | | GBP |
+--------------------------------------------+----------------+---+----------------+---+----------------+
| Cash | | | | | |
| Cash and cash equivalents | 215,466 | | (119,788) | | 95,678 |
+--------------------------------------------+----------------+---+----------------+---+----------------+
| Debt | | | | | |
+--------------------------------------------+----------------+---+----------------+---+----------------+
| Invoice discounting advances | - | | (82,646) | | (82,646) |
+--------------------------------------------+----------------+---+----------------+---+----------------+
| Bank debt due within one year | (25,006) | | - | | (25,006) |
+--------------------------------------------+----------------+---+----------------+---+----------------+
| Bank debt due after one year | (154,144) | | 25,007 | | (129,137) |
+--------------------------------------------+----------------+---+----------------+---+----------------+
| | (179,150) | | (57,639) | | (236,789) |
+--------------------------------------------+----------------+---+----------------+---+----------------+
| Net funds/(debt) | 36,316 | | (177,427) | | (141,111) |
+--------------------------------------------+----------------+---+----------------+---+----------------+
For further information please visit www.astekgroup.co.uk or contact:
Alan Segal Astek Group Plc
0161 942 3900
Alex Clarkson/Tom Rowley Zeus Capital 0161
831 1512
This information is provided by RNS
The company news service from the London Stock Exchange
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