TIDMRTS
RNS Number : 7602P
Robotic Technology Systems PLC
31 March 2009
Robotic Technology Systems PLC
Preliminary results for the year ended 31 December 2008
RTS is a high technology business supplying products and integrated systems to
automate scientific and industrial processes. RTS today announces its
preliminary results for the year ended 31 December 2008.
+----------------------+----------------+---------------+---------------+---------------+
| | 2008 | 2008 | 2008 | 2007 |
| | H1 | H2 | TOTAL | TOTAL |
| | GBPM | GBPM | GBPM | GBPM |
+----------------------+----------------+---------------+---------------+---------------+
| | | | | |
+----------------------+----------------+---------------+---------------+---------------+
| Revenue | 4.6 | 5.9 | 10.5 | 11.2 |
| | | | | |
+----------------------+----------------+---------------+---------------+---------------+
| | | | | |
+----------------------+----------------+---------------+---------------+---------------+
| Operating | (1.1) | 0.4 | (0.7)* | (2.0) |
| (loss)/profit before | | | | |
| 'exceptional' items | | | | |
| | | | | |
+----------------------+----------------+---------------+---------------+---------------+
| | | | | |
+----------------------+----------------+---------------+---------------+---------------+
| 'Exceptional' costs | (1.0) | (4.6) | (5.6)** | (2.8) |
+----------------------+----------------+---------------+---------------+---------------+
| Net finance income | 0.3 | 1.2 | 1.5* | 0.7 |
+----------------------+----------------+---------------+---------------+---------------+
| Loss before taxation | (1.8) | (3.0) | (4.8) | (4.1) |
+----------------------+----------------+---------------+---------------+---------------+
| Loss after taxation | (1.8) | (2.7) | (4.5) | (3.9) |
| | | | | |
+----------------------+----------------+---------------+---------------+---------------+
| Loss per share | (2.90)p | (4.30)p | (7.20)p | (6.24)p |
+----------------------+----------------+---------------+---------------+---------------+
| Net cash | 2.9 | 2.8 | 2.8 | 3.7 |
+----------------------+----------------+---------------+---------------+---------------+
* see notes 3 & 5 for the exchange movement effect
** See note 4 to the financial statements
KEY POINTS
* Against the current background of unprecedented financial and economic turmoil
Group operating performance showed an improvement in the second half of the
year, with an operating profit before 'exceptionals' of GBP0.4m. This reduced
the full year loss to GBP0.7m (2007: loss of GBP2.0m).
* The balance sheet remains strong with closing cash position of GBP2.8m (2007:
GBP3.7m), after the payment of a final dividend of GBP1.2m in June 2008.
* The cash position at 29 March 2009 was GBP3.8m.
* The overall Group order book increased to GBP6.5m, a 45% increase on the mid
year amount, with 85% of the value expected to be earned out in 2009.
* The Life Science business successfully launched four new products in 2008,
expected to lead to sales growth in 2009.
Chris Brown, Chairman of RTS, said:
"With a strong opening order book, and a more competitive position from the
weaker pound we expect the Life Science business to continue its improved
performance in 2009.
Flexible Systems enters 2009 with a reduced cost base and a more focused
strategy and despite weaker market conditions we remain confident in the medium
term outlook for the business.
We anticipate the group's strong net cash position will continue in 2009, due to
the improving performance of the operating businesses. The directors do not
recommend the payment of a final dividend, but it continues to be the Board's
intention to return surplus cash to shareholders, whilst retaining sufficient
money in the business to take advantage of opportunities to enhance shareholder
value."
31 March 2009
Enquiries:
+----------------------------------------+----------------------------------+
| Robotic Technology Systems PLC | Tel: 0161 777 2000 |
+----------------------------------------+----------------------------------+
| Chris Brown, Chairman | |
+----------------------------------------+----------------------------------+
| Jon Sharrock, Finance Director | |
+----------------------------------------+----------------------------------+
| | |
+----------------------------------------+----------------------------------+
| College Hill | Tel: 020 7457 2020 |
+----------------------------------------+----------------------------------+
| Jamie Ramsay | |
+----------------------------------------+----------------------------------+
| | |
+----------------------------------------+----------------------------------+
| Collins Stewart Europe Limited | Tel: 020 7523 8350 |
+----------------------------------------+----------------------------------+
| Stewart Wallace, Owen Price | |
+----------------------------------------+----------------------------------+
| | |
+----------------------------------------+----------------------------------+
Chairman's statement
Introduction
We continue to make the necessary changes to the group with a focus on cost
reduction and developing our capabilities to fit with the markets we serve.
Consistent with its stated strategy it remains the Board's intention to continue
to return surplus cash to shareholders, whilst maintaining sufficient cash
within the Group to take advantage of opportunities to enhance shareholder
value.
Business Results
The overall group turnover for the second half of the year increased to GBP5.9m
(H2 2007: GBP5.8m). This left the full year sales 6% lower at GBP10.5m (Full
year 2007: GBP11.2m).
The underlying Group operating performance correspondingly improved in the
second half of the year to an operating profit (before "exceptional" items) of
GBP0.4m (2007: loss of GBP0.7m). The operating profit including exchange gains
of GBP0.6m led to a reduced operating loss for the year of GBP0.7m (2007: loss
of GBP2.0m).
Despite an improving operating performance and a positive exchange movement due
to the strengthening of the dollar, the exceptional costs noted below led to an
overall Group loss after taxation for the year of GBP4.5m (2007: loss GBP3.9m),
and a resulting loss per share of 7.20 pence (2007: loss per share of 6.24
pence).
RTS Life Science
Life Science, as anticipated, experienced stronger volumes in the second half of
the year, resulting in full year sales down only GBP0.5m at GBP6.9m (2007:
GBP7.4m). The higher sales in the second half of the year led to an improved
operating profit before "exceptional" items and exchange gains of GBP0.3m and
consequently reduced the loss for the year to GBP0.2m (2007: loss of GBP0.8m).
The loss includes GBP0.3m of development costs (2007: GBP0.3m costs) and does
not reflect the full year effect of the GBP0.3m of estimated annualised savings
made in the last quarter of the year.
The business increased its order book in the period to GBP5.9m (2007: GBP3.5m),
and with the new products launched in 2008, and a more competitive position due
to the weakened value of sterling, we are expecting an improved performance in
2009.
RTS Flexible Systems
In a weakening market Flexible Systems sales fell to GBP3.5m (2007: GBP3.8m).
This reduced volume together with cost overruns to complete a major end-of-line
bread packing system, highlighted in the interim statement, led to an operating
loss before "exceptionals" of GBP0.7m (2007: loss of GBP0.6m)
Despite a lower opening order book of GBP0.6m (2007: GBP1.5m), the business
enters 2009 with an increased level of enquiries, notably in the food sector,
and therefore with the reductions in its cost base carried out in the last
quarter of the year, we are expecting the business to show an improved
performance in 2009.
"Exceptional" Items
The Group recorded "exceptional" operating costs in the year of GBP5.6m as
explained in note 4 to the financial statements.
Cash management and the realisation of non-operating assets
Further progress in the realisation of the Doerfer loan notes in the period led
to cash inflow of $2.3m (GBP1.2m) from capital and interest payments, although
this was predominantly received in the first half of the year.
The overall net cash balance reduced to GBP2.8m (2007: GBP3.7m), following the
payment of the special final dividend of GBP1.2m and cash used in operations of
GBP1.7m, which includes GBP0.9m of legal payments relating to the dispute in
Flexible Systems. These outflows were partially offset by the loan note
repayments noted above and the proceeds from the sale of the final parcel of US
land for GBP0.4m.
Outlook
With a strong opening order book, and a more competitive position from the
weaker pound we expect the Life Science business to continue its improved
performance in 2009.
Flexible Systems enters 2009 with a reduced cost base and a more focused
strategy, and despite weaker market conditions we remain confident in the medium
term outlook for the business.
We anticipate that the group's strong net cash position will continue in 2009,
due to the improving performance of the operating businesses. The directors are
not recommending the payment of a final dividend, but it continues to be the
Board's intention to return surplus cash to shareholders, whilst retaining
sufficient money in the business to take advantage of opportunities to enhance
shareholder value.
Chris Brown
Chairman
31 March 2009
RTS is structured into two market-focused businesses which are based in the UK
and support their customers wherever they operate internationally.
RTS Life Science
Performance in 2008
We continued our successful realignment of the business during 2008 with orders
up on the previous year resulting in an improved year end order book of GBP5.9m
(2007: GBP3.5m).
Despite a low order intake in the first half of the year, a much improved second
half resulted in full year turnover of GBP6.9m (2007: GBP7.4m), and an operating
loss before exceptional costs and exchange movements of GBP0.2m (2007: loss of
GBP0.8m). The loss includes GBP0.3m of development costs.
We made good progress with our product development plans in both sample
management and sample preparation applications, launching four new products in
the year. These products combined with our systems integration and automation
expertise widen our available markets. In 2009 we intend to exploit this by
expanding our sales coverage in key territories.
With improved operational performance and strong customer relationships we
continued to generate increased sales from our existing pharmaceutical client
base. This achievement is testament to our highly skilled and loyal staff who
have played a major part in the improvements that have been made in our core
business.
Markets and technologies
Our key customers, large pharmaceutical companies, are under significant
pressure to reduce costs and develop alternative methods of bringing new drugs
to market. We continue to work closely with them to ensure that the investments
that they have made in large scale automation are developed in line with changes
in demand. This provides recurring revenue and serves as a foundation to our
business.
Our storage product range is targeted at the pharmaceutical, biotechnology and
academic market sectors in Europe and the USA. We are optimistic that with more
favourable pricing based on improving currency exchange rates for export
markets, an increasing installed base and an expanding number of excellent
reference sites, we are now better positioned to increase our share of the
automated storage market.
The market for biobanking continues to grow with an increasing number of
countries opting to sponsor initiatives for the collection, storage and data
management of biological specimens for scientific and clinical research.
Our success with the worlds largest such initiative, the UK Biobank, helped our
entry into this new and growing market. We completed the development of our new
blood fractionation instrument, the ABF500, and launched it at two biobanking
events in Europe and the US. We successfully completed and delivered the first
production unit of the ABF500 to a prestigious client based in North America.
Dedicated sales effort was targeted at this sector in 2008 to lay the
foundations for new business as several biobanking projects around the World get
underway. We anticipate further orders from leading Biobanks during 2009.
The Drug Delivery Automation business successfully delivered and commissioned
the first units in its new "Walkaway Specialist" inhaler testing system range in
the year. In 2009 we intend to grow market share of the product through a series
of sales and marketing initiatives.
Investment in the development of the new tablet testing product range continued
in 2008. This resulted in prototype sales and several technology evaluations of
the "benchtop" solution to a number of leading pharmaceutical organisations. We
are entering an established market in which our solution has demonstrated
indisputable benefit for the initial customers for these prototype systems. We
therefore believe the product has substantial growth potential. In 2009, further
market penetration and the development of sales channels are our key objectives.
Outlook
Our focus will continue to be on sample management and sample preparation
applications in the Life Science sector. Sales and marketing of our range of new
products that have seen initial sales will be central to our strategy. We
continue to assess corporate development opportunities that would assist in the
long term development of the business.
Despite the difficult global economic environment we are entering 2009 with a
sizeable order book and with favourable signs of the market acceptance of
several new product offerings. We expect new product sales to have a positive
impact on the performance of the business in the 2009 financial year.
Gary Walsh
Managing Director
31 March 2009
RTS Flexible Systems
Performance in 2008
RTS Flexible Systems had a difficult year in 2008, marked by a strong prospect
list that failed to convert fully into orders, and higher than anticipated costs
to complete on the first order for the automation of end-of-line bread packing
for a major UK baker. This highly flexible solution is now in full production,
but its implementation took longer than anticipated.
We continued to expand the use of our innovative vision-based technology in the
food industry, securing a major order for automating the packing of poppudums.
This challenging application has been a major technical achievement, and the
gripper development contributed to us winning the Salford Business Award for
Innovation, with the system now in full production. In the industrial area we
successfully completed the second line to automate packaging of contact lenses.
We observed a change in our customers' business priorities during the year with
a reduction in new capital projects and a growing focus on maintaining and
improving existing production lines. We have responded by shifting our focus
towards these repair and maintenance opportunities providing upgrades and
refurbishment of existing equipment.
This change has helped us to broaden our scope to cover all aspects of
automation with a renewed interest in production control systems. As a result
the business reliance on the successful completion of a small number of large
orders, and a more robust prospect list including a number of key orders arising
from the new strategy.
Markets & applications
Consultancy and solution development
With over a decade of experience in the demanding fields of automation, machine
vision, robotics and remote handling we have developed many areas of expertise
which we routinely use in each of the sectors we serve. Customers who are unsure
about how to improve their business have been willing to place relatively small
orders for feasibility studies, prototyping, simulation trials and physical
tests and the excellent results from these are now leading to bigger projects in
our Systems and Controls business.
Within this framework, our Advanced Robotics work has continued to provide
advanced software to SIL2 standards for the MoD's next generation of Explosive
Ordnance Disposal "EOD" vehicle which is due to enter production in 2009, at
which point Flexible Systems will earn royalty revenue for each unit sold.
Our aim is to maintain and exploit our unique skill set, strengthening existing
relationships and seeking new ones by promoting our expertise in providing high
quality and innovative solutions.
Automation systems and controls
Although we have seen a reduction in capital project opportunities, the food and
healthcare industries are generally less affected by the current economic
climate. We can therefore take advantage of our existing presence in these more
recession-tolerant and still largely untapped manufacturing sectors.
In particular, multiple opportunities exist in the food and consumer goods
industries where flexible, cost-effective solutions for high speed end-of-line
picking and packing applications remain under-exploited. Significant potential
for robotic automation exists and is an excellent match for our capabilities.
Also, our increased focus on small scale paid consultancy and solutions
development allows customers a 'soft start' in their improvement process -
allowing us to supply the skills they lack - but unlike a 'pure consultancy' we
then follow through with delivery of a working system.
This initiative is helping to find additional markets to capitalise on our
skills and technology as part of our ongoing strategy for growth. One notable
success of this strategy has been in the mature market for industrial automation
where engineering and production process expertise are critical success factors.
Another new initiative has been to partner with key manufacturers of control
systems and vision systems in order to utilize our core skills and deliver
'pure' control systems and 'pure' vision-based verification systems that have no
robotics hardware content as such. Indeed, the vision verification area is
growing fast as major supermarket demands on quality / verification increase.
With further repeat contracts also expected we anticipate continued growth in
vision-based work in 2009 and beyond.
Customer service
We have made significant advances in our customer-service capability in the
year, increasing our designated resource and extending our offering to support
"24-7" operations. With an increasing level of orders from both existing
customers, and non-RTS customers for flexible contracts to support a growing
range of equipment, this has resulted in a three-fold growth in revenue in the
year for our after-sales business. We anticipate further growth in 2009 from
this important part of the business mix.
Outlook
Flexible Systems has initiated a turnaround strategy, reducing the cost base and
redirecting our focus to make better use of our core consultancy, engineering
and control system capabilities. We believe these changes have re-positioned the
company to secure a broader range of automation opportunities, and as a result
we expect to see an improving performance in 2009.
David Bradford
Managing Director
31 March 2009
Consolidated income statement
for the year ended 31 December 2008
+-------------------------------------------------------+-------+---------+---------+
| | | 2008 | 2007 |
+-------------------------------------------------------+-------+---------+---------+
| |Notes | GBP'000 | GBP'000 |
+-------------------------------------------------------+-------+---------+---------+
| | | | |
+-------------------------------------------------------+-------+---------+---------+
| Revenue | 3 | 10,475 | 11,189 |
+-------------------------------------------------------+-------+---------+---------+
| Cost of sales | | (7,919) | (8,414) |
+-------------------------------------------------------+-------+---------+---------+
| Gross profit | | 2,556 | 2,775 |
+-------------------------------------------------------+-------+---------+---------+
| Distribution costs | | (1,256) | (1,404) |
+-------------------------------------------------------+-------+---------+---------+
| Administrative expenses | | (7,725) | (6,262) |
+-------------------------------------------------------+-------+---------+---------+
| Other operating income | | 102 | 114 |
+-------------------------------------------------------+-------+---------+---------+
| Operating loss | | (6,323) | (4,777) |
+-------------------------------------------------------+-------+---------+---------+
| Operating loss before exceptional items | | (743) | (1,962) |
+-------------------------------------------------------+-------+---------+---------+
| Exceptional items included in administrative expenses | 4 | (5,580) | (2,815) |
| above | | | |
+-------------------------------------------------------+-------+---------+---------+
| Operating loss | | (6,323) | (4,777) |
+-------------------------------------------------------+-------+---------+---------+
| Finance income | 5 | 1,620 | 965 |
+-------------------------------------------------------+-------+---------+---------+
| Finance expense | 6 | (74) | (250) |
+-------------------------------------------------------+-------+---------+---------+
| Net finance income | | 1,546 | 715 |
+-------------------------------------------------------+-------+---------+---------+
| Loss before taxation | | (4,777) | (4,062) |
+-------------------------------------------------------+-------+---------+---------+
| Taxation | | 286 | 171 |
+-------------------------------------------------------+-------+---------+---------+
| Loss for the year, attributable to equity | | (4,491) | (3,891) |
| shareholders of the parent | | | |
+-------------------------------------------------------+-------+---------+---------+
| | | | |
+-------------------------------------------------------+-------+---------+---------+
| Loss per share | | | |
+-------------------------------------------------------+-------+---------+---------+
| Total basic and diluted loss per share attributable | 7 | (7.20)p | (6.24)p |
| to equity shareholders of the parent | | | |
+-------------------------------------------------------+-------+---------+---------+
Statements of changes in equity
year ended 31 December 2008
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| | | | Currency | | | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| | Share | Share | translation | Retained | Minority | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| | capital | premium | reserve | earnings | interest | Total |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Group 2008 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Share options | - | - | - | 52 | - | 52 |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Dividend paid | - | - | - | (1,247) | - | (1,247) |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Net expense recognised | - | - | - | (1,195) | - | (1,195) |
| directly in equity | | | | | | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Loss for the year | - | - | - | (4,491) | - | (4,491) |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Total recognised expense | - | - | - | (5,686) | - | (5,686) |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Opening shareholders' funds at | 623 | 680 | (126) | 8,320 | 15 | 9,512 |
| 1 January 2008 | | | | | | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Closing shareholders' funds at | 623 | 680 | (126) | 2,634 | 15 | 3,826 |
| 31 December 2008 | | | | | | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| | | | | | | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Group 2007 | | | | | | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Share options | - | - | - | 20 | - | 20 |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Exchange differences | - | - | 2 | - | - | 2 |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Dividend paid | - | - | - | (1,247) | - | (1,247) |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Net income/(expense) | - | - | 2 | (1,227) | - | (1,225) |
| recognised directly in equity | | | | | | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Loss for the year | - | - | - | (3,891) | - | (3,891) |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Total recognised income and | - | - | 2 | (5,118) | - | (5,116) |
| (expense) | | | | | | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Opening shareholders' funds at | 623 | 680 | (128) | 13,438 | 15 | 14,628 |
| 1 January 2007 | | | | | | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
| Closing shareholders' funds at | 623 | 680 | (126) | 8,320 | 15 | 9,512 |
| 31 December 2007 | | | | | | |
+--------------------------------+---------+---------+-------------+----------+----------+---------+
Consolidated balance sheet
at 31 December 2008
+------------------------------------------------------+-------+----------+---------+
| | | 2008 | 2007 |
+------------------------------------------------------+-------+----------+---------+
| |Notes | GBP'000 | GBP'000 |
+------------------------------------------------------+-------+----------+---------+
| Non-current assets | | | |
+------------------------------------------------------+-------+----------+---------+
| Property, plant and equipment | | 680 | 793 |
+------------------------------------------------------+-------+----------+---------+
| Intangible assets | 8 | 1,284 | 1,359 |
+------------------------------------------------------+-------+----------+---------+
| Other receivables | | - | 1,541 |
+------------------------------------------------------+-------+----------+---------+
| Deferred tax asset | | 371 | 371 |
+------------------------------------------------------+-------+----------+---------+
| Total non-current assets | | 2,335 | 4,064 |
+------------------------------------------------------+-------+----------+---------+
| Current assets | | | |
+------------------------------------------------------+-------+----------+---------+
| Inventories | | 179 | 166 |
+------------------------------------------------------+-------+----------+---------+
| Current tax receivable | | 283 | 11 |
+------------------------------------------------------+-------+----------+---------+
| Trade and other receivables | 9 | 5,718 | 6,275 |
+------------------------------------------------------+-------+----------+---------+
| Cash and cash equivalents | | 2,824 | 3,708 |
+------------------------------------------------------+-------+----------+---------+
| Assets classified as held for sale | | - | 428 |
+------------------------------------------------------+-------+----------+---------+
| Total current assets | | 9,004 | 10,588 |
+------------------------------------------------------+-------+----------+---------+
| Total assets | | 11,339 | 14,652 |
+------------------------------------------------------+-------+----------+---------+
| Current liabilities | | | |
+------------------------------------------------------+-------+----------+---------+
| Trade and other payables | | (6,291) | (4,224) |
+------------------------------------------------------+-------+----------+---------+
| Total current liabilities | | (6,291) | (4,224) |
+------------------------------------------------------+-------+----------+---------+
| Non-current liabilities | | | |
+------------------------------------------------------+-------+----------+---------+
| Other liabilities | | (750) | (419) |
+------------------------------------------------------+-------+----------+---------+
| Provisions | | (472) | (497) |
+------------------------------------------------------+-------+----------+---------+
| Total non-current liabilities | | (1,222) | (916) |
+------------------------------------------------------+-------+----------+---------+
| Total liabilities | | (7,513) | (5,140) |
+------------------------------------------------------+-------+----------+---------+
| Net assets | | 3,826 | 9,512 |
+------------------------------------------------------+-------+----------+---------+
| | | | |
+------------------------------------------------------+-------+----------+---------+
| Equity | | | |
+------------------------------------------------------+-------+----------+---------+
| Share capital | | 623 | 623 |
+------------------------------------------------------+-------+----------+---------+
| Share premium | | 680 | 680 |
+------------------------------------------------------+-------+----------+---------+
| Currency translation reserve | | (126) | (126) |
+------------------------------------------------------+-------+----------+---------+
| Retained earnings | | 2,634 | 8,320 |
+------------------------------------------------------+-------+----------+---------+
| Total equity attributable to equity shareholders | | 3,811 | 9,497 |
+------------------------------------------------------+-------+----------+---------+
| Equity minority interest | | 15 | 15 |
+------------------------------------------------------+-------+----------+---------+
| Total equity attributable to equity shareholders of | | 3,826 | 9,512 |
| the Group | | | |
+------------------------------------------------------+-------+----------+---------+
Consolidated cash flow statement
for the year ended 31 December 2008
+-----------------------------------------------------------+----------+---------+
| | 2008 | 2007 |
+-----------------------------------------------------------+----------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------------------------------------+----------+---------+
| Continuing operations | | |
+-----------------------------------------------------------+----------+---------+
| Loss for the year | (4,491) | (3,891) |
+-----------------------------------------------------------+----------+---------+
| Adjusted for: | | |
+-----------------------------------------------------------+----------+---------+
| Taxation | (286) | (171) |
+-----------------------------------------------------------+----------+---------+
| Depreciation charge | 158 | 132 |
+-----------------------------------------------------------+----------+---------+
| Amortisation | 78 | 335 |
+-----------------------------------------------------------+----------+---------+
| Loss/(profit) on sale of fixed asset | 23 | (2) |
+-----------------------------------------------------------+----------+---------+
| Impairment of intangible assets | - | 2,109 |
+-----------------------------------------------------------+----------+---------+
| Impairment of asset held for sale | - | 80 |
+-----------------------------------------------------------+----------+---------+
| Provision against loan notes | 3,418 | - |
+-----------------------------------------------------------+----------+---------+
| Foreign exchange (gains)/losses | (601) | 63 |
+-----------------------------------------------------------+----------+---------+
| Equity-settled share-based payment charges | 52 | 20 |
+-----------------------------------------------------------+----------+---------+
| Finance income | (1,620) | (965) |
+-----------------------------------------------------------+----------+---------+
| Finance expense | 74 | 250 |
+-----------------------------------------------------------+----------+---------+
| | (3,195) | (2,040) |
+-----------------------------------------------------------+----------+---------+
| Changes in working capital | | |
+-----------------------------------------------------------+----------+---------+
| (Increase)/decrease in inventories | (13) | 404 |
+-----------------------------------------------------------+----------+---------+
| (Increase)/decrease in receivables | (1,022) | 2,185 |
+-----------------------------------------------------------+----------+---------+
| Increase/ (decrease) in payables | 2,453 | (1,061) |
+-----------------------------------------------------------+----------+---------+
| Increase/(decrease) in provisions | 69 | (55) |
+-----------------------------------------------------------+----------+---------+
| Cash used in operations | (1,708) | (567) |
+-----------------------------------------------------------+----------+---------+
| | | |
+-----------------------------------------------------------+----------+---------+
Consolidated cash flow statement
for the year ended 31 December 2008
+-------------------------------------------------------------+---------+---------+
| | 2008 | 2007 |
+-------------------------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+-------------------------------------------------------------+---------+---------+
| Cash used in operations | (1,708) | (567) |
+-------------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------------+---------+---------+
| Finance expense paid | (74) | (151) |
+-------------------------------------------------------------+---------+---------+
| Finance income received | 982 | 965 |
+-------------------------------------------------------------+---------+---------+
| Taxation received | 24 | 553 |
+-------------------------------------------------------------+---------+---------+
| Net cash (used in)/generated from operating activities | (776) | 800 |
+-------------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------------+---------+---------+
| Cash flows from investing activities | | |
+-------------------------------------------------------------+---------+---------+
| Payments to acquire property, plant and equipment | (45) | (145) |
+-------------------------------------------------------------+---------+---------+
| Payments to acquire intangible fixed assets | (3) | (88) |
+-------------------------------------------------------------+---------+---------+
| Receipt from sale of tangible fixed assets | - | 2 |
+-------------------------------------------------------------+---------+---------+
| Receipt from sale land | 448 | - |
+-------------------------------------------------------------+---------+---------+
| Receipt in respect of loan notes | 297 | 872 |
+-------------------------------------------------------------+---------+---------+
| Net cash from investing activities | 697 | 641 |
+-------------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------------+---------+---------+
| Cash flows from financing activities | | |
+-------------------------------------------------------------+---------+---------+
| Dividend paid | (1,247) | (1,247) |
+-------------------------------------------------------------+---------+---------+
| Net cash used in financing activities | (1,247) | (1,247) |
+-------------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------------+---------+---------+
| Net (decrease)/increase in cash and cash equivalents | (1,326) | 194 |
+-------------------------------------------------------------+---------+---------+
| | | |
+-------------------------------------------------------------+---------+---------+
| Cash and cash equivalents at beginning of year | 3,708 | 3,566 |
+-------------------------------------------------------------+---------+---------+
| Exchange gains/(losses) on cash and cash equivalents | 442 | (52) |
+-------------------------------------------------------------+---------+---------+
| Cash and cash equivalents at end of year | 2,824 | 3,708 |
+-------------------------------------------------------------+---------+---------+
1. Basis of preparation
The Group financial statements are authorised for issue by the Board of
Directors on 31 March 2009. European Union law (EULAW) (IAS Regulation EC
1606/2002) requires that the financial statements of the Group are prepared in
accordance with International Financial Reporting Standards as adopted by the EU
(EU-IFRS). The financial statements have been prepared on the basis of the
recognition and measurement requirements of EU-IFRS that are endorsed by the EU
and effective at 31 December 2008.
The financial information does not constitute the company's statutory accounts
for the years ended 31 December 2008 or 2007 (but is derived from those
accounts). Statutory accounts for 2007 have been delivered to the registrar of
companies, and those for 2008 will be delivered in due course. The auditors
have reported on those accounts; their reports were (i) unqualified, (ii) did
not include references to any matters to which the auditors drew attention by
way of emphasis without qualifying their reports and (iii) did not contain
statements under section 237 (2) or (3) of the Companies Act of 1985.
Going concern
The financial statements are prepared on a going concern basis which the
directors believe to be appropriate for the reasons set out below.
The Group meets its day to day working capital requirements through cash and
cash equivalents which totalled GBP3.9m as at 19 March 2009 and has a Group
offset arrangement in place with the bank to cover its subsidiaries. The
Directors have prepared projected cash flow information for a period ending more
than twelve months from the date of their approval of these financial
statements. Given the nature of the business, operating losses incurred to date
and the one-off nature of certain circumstances which could have a significant
impact on the cash flow of the business, management have sensitised these
forecasts for a number of stress case scenarios, including a downturn in
forecast trading, adverse effect from ongoing legal proceedings (see below) and
non payment of specific trade receivables.
RTS Flexible Systems, a subsidiary company, is engaged in an ongoing dispute
with a former customer. This is referred to in note 10 as a contingent
liability. In accordance with IAS 1 the Directors have considered the impact of
this contingent liability on the going concern of the Group and do not consider
that the outcome of this contingent liability would have a significant impact on
the going concern of the Group.
Based on the information above and the projected cash flow information,
including the stress case forecasts, the Directors believe they have sufficient
cash to meet the Group and Company's liabilities as they fall due for payment
and therefore the Directors believe that it remains appropriate to prepare the
financial statements on a going concern basis.
2. Exceptional items
Income or costs which are material and non-recurring, whose significance is
sufficient to warrant separate disclosure in the financial statements, are
referred to as exceptional items. These items are included and separately
identified within their relevant Income Statement category.
3 Segmental analysis
Primary reporting format - business segments
Income Statement
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| | |
+----------------+-------------------------------------------------------------------------------+
| | Flexible | Life Science | Other | Total |
| | Systems | | | |
+----------------+-------------------+-------------------+-------------------+-------------------+
| | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Turnover | 3,506 | 3,825 | 6,908 | 7,364 | 61 | - | 10,475 | 11,189 |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Depreciation | (10) | (9) | (69) | (69) | (79) | (54) | (158) | (132) |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Amortisation | (39) | (35) | (36) | (298) | (3) | (2) | (78) | (335) |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Grant income | - | - | - | - | 40 | 40 | 40 | 40 |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Inter-company | (83) | (53) | 40 | 62 | 43 | 9 | - | - |
| transactions | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Operating | (699) | (556) | (220) | (765) | (425) | (578) | (1,344) | (1,899) |
| loss before | | | | | | | | |
| exceptional | | | | | | | | |
| items and | | | | | | | | |
| exchange | | | | | | | | |
| (losses)/gains | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Exchange | (1) | (1) | 439 | (21) | 163 | (41) | 601 | (63) |
| (losses)/gains | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Exceptional | (1,207) | (308) | (1,155) | (1,919) | (3,218) | (588) | (5,580) | (2,815) |
| items | | | | | | | | |
| included in | | | | | | | | |
| administrative | | | | | | | | |
| expenses | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Loss before | (1,907) | (865) | (936) | (2,705) | (3,480) | (1,207) | (6,323) | (4,777) |
| interest and | | | | | | | | |
| taxation | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
| Finance income | 688 | 965 |
+----------------------------------------------------------------------------+---------+---------+
| Foreign exchange gains/(losses) included in finance income | 932 | (99) |
+----------------------------------------------------------------------------+---------+---------+
| Finance expense | (74) | (151) |
+----------------------------------------------------------------------------+---------+---------+
| Total finance income | 1,546 | 715 |
+----------------------------------------------------------------------------+---------+---------+
| Loss before taxation | (4,777) | (4,062) |
+----------------------------------------------------------------------------+---------+---------+
| Taxation | 286 | 171 |
+----------------------------------------------------------------------------+---------+---------+
| Loss for period attributable to equity shareholders of the parent | (4,491) | (3,891) |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+
Balance Sheet
+------------------+---------+---------+---------+---------+---------+----+----+----------+---------+
| | | |
+------------------+------------------------------------------------------+-------------------------+
| | Flexible | Life Science | Other operations | Total |
| | Systems | | | |
+------------------+-------------------+-------------------+-------------------+--------------------+
| | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
+------------------+---------+---------+---------+---------+---------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+---------+---------+---------+---------+---------+---------+----------+---------+
| Segment assets | 2,025 | 1,955 | 6,700 | 3,882 | 5,539 | 8,815 | 14,264 | 14,652 |
| excluding | | | | | | | | |
| inter-company | | | | | | | | |
| balances | | | | | | | | |
+------------------+---------+---------+---------+---------+---------+---------+----------+---------+
| Segment | (3,438) | (1,403) | (5,260) | (1,990) | (1,740) | (1,747) | (10,438) | (5,140) |
| liabilities | | | | | | | | |
| excluding | | | | | | | | |
| inter-company | | | | | | | | |
| balances | | | | | | | | |
+------------------+---------+---------+---------+---------+---------+---------+----------+---------+
| Net segment | (1,413) | 552 | 1,440 | 1,892 | 3,799 | 7,068 | 3,826 | 9,512 |
| assets | | | | | | | | |
+------------------+---------+---------+---------+---------+---------+----+----+----------+---------+
Inter-company assets and liabilities have been removed from each segment.
3. Segmental analysis continued
Primary reporting format - business segments continued
Cash flow
+-------------------+---+-----+----------+---+-----+---------+---+-----+---------+-----+-----+---------+
| | | | Other | |
| | | | operations | |
+-------------------+----------------------------------------+ + +---------------------+
| | | | | Flexible | | Life | | Total |
| | | | | Systems | | Science | | |
+-------------------+---+-----+--------------+---------------+---+---------------+-----+---------------+
| | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Cash (used | (2,127) | (574) | 948 | 36 | (529) | (29) | (1,708) | (567) |
| in)/generated | | | | | | | | |
| from operating | | | | | | | | |
| activities | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Add back | 75 | (68) | (116) | (10) | 41 | 78 | - | - |
| inter-company | | | | | | | | |
| movements | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Net finance | - | (14) | 35 | 32 | 873 | 796 | 908 | 814 |
| income/(expense) | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Taxation | - | - | 28 | - | (4) | 553 | 24 | 553 |
| received/(paid) | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Net cash (used | (2,052) | (656) | 895 | 58 | 381 | 1,398 | (776) | 800 |
| in)/ generated | | | | | | | | |
| from operating | | | | | | | | |
| activities | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Payments to | (6) | (10) | (13) | (27) | (26) | (108) | (45) | (145) |
| acquire property, | | | | | | | | |
| plant and | | | | | | | | |
| equipment | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Payments to | (3) | (12) | - | (68) | - | (8) | (3) | (88) |
| acquire | | | | | | | | |
| intangible fixed | | | | | | | | |
| assets | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Receipt from sale | - | - | - | - | - | 2 | - | 2 |
| of tangible fixed | | | | | | | | |
| assets | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Cash flows from | - | - | - | - | 745 | 872 | 745 | 872 |
| other investing | | | | | | | | |
| activities | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Cash flows from | - | - | - | - | (1,247) | (1,247) | (1,247) | (1,247) |
| financing | | | | | | | | |
| activities | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Less | (75) | 68 | 116 | 10 | (41) | (78) | - | - |
| inter-company | | | | | | | | |
| movements | | | | | | | | |
+-------------------+---------+----------+---------+---------+---------+---------+-----------+---------+
| Net cash | (2,136) | (610) | 998 | (27) | (188) | 831 | (1,326) | 194 |
| (outflow)/inflow | | | | | | | | |
+-------------------+---+-----+----------+---+-----+---------+---+-----+---------+-----+-----+---------+
4. Exceptional administrative expenses
+---------------------------------------------+-----------+-----------+
| | Year | Year |
| | ended | ended |
+---------------------------------------------+-----------+-----------+
| | 31 | 31 |
| | December | December |
+---------------------------------------------+-----------+-----------+
| | 2008 | 2007 |
+---------------------------------------------+-----------+-----------+
| | Total | Total |
+---------------------------------------------+-----------+-----------+
| | | |
+---------------------------------------------+-----------+-----------+
| | GBP'000 | GBP'000 |
+---------------------------------------------+-----------+-----------+
| Impairment of intangible fixed assets | - | 2,109 |
+---------------------------------------------+-----------+-----------+
| Impairment of assets held for sale | - | 80 |
+---------------------------------------------+-----------+-----------+
| Restructuring costs | 93 | 318 |
+---------------------------------------------+-----------+-----------+
| Legal costs | 950 | 308 |
+---------------------------------------------+-----------+-----------+
| Provision against loan notes | 3,418 | - |
+---------------------------------------------+-----------+-----------+
| One-off project completion costs | 1,119 | - |
+---------------------------------------------+-----------+-----------+
| | 5,580 | 2,815 |
+---------------------------------------------+-----------+-----------+
The exceptional administrative expenses consist of the following:
* Restructuring costs of GBP93,000 consist of GBP37,000 in Life Science and
GBP56,000 in Flexible Systems (2007: GBP318,000 consisted of GBP215,000 in the
Life Science business and GBP103,000 in Group).
* The exceptional legal expense of GBP1.0m (2007: GBP0.3m) relates to a dispute
with a former customer in our Flexible Systems business. As set out in note 10
the Company has reserved its right to not disclose further information required
by IAS 37 on the grounds that it may prejudice the outcome of the claim.
* The provision against loan notes of GBP3.4m is a provision against US loan notes
receivable from the purchaser of the trade and certain assets and liabilities of
RTS Wright Industries, LLC following its sale in 2004. Given the low level of
loan note receipts from Doerfer in the second half of the year, the Directors
have decided to fully provide against the debt. The unprovided amount at 31
December 2008 is GBPnil (2007: GBP3,019,000).
* The one-off project completion costs of GBP1.1m are costs associated with
concluding a project in the Life Science business. The contract is now
completed and the Company has no further liabilities.
* The impairment of intangible assets of GBP2.1m in 2007 consisted of two items,
GBP1.7m relating to a write down in the carrying value of capitalised research
and development costs in the Life Science business. The remaining impairment of
GBP0.4m represented the partial write down of goodwill related to the Life
Science business.
* The impairment of assets held for sale in 2007 represented a GBP0.08m write down
in the book value of the land in Nashville, Tennessee. This land has now been
sold for a consideration of GBP448,000 resulting in a loss on sale of GBP23,000.
5. Finance income
+---------------------------------------------+------------+----------+
| | Year ended | Year |
| | | ended |
+---------------------------------------------+------------+----------+
| | 31 | 31 |
| | December | December |
+---------------------------------------------+------------+----------+
| | 2008 | 2007 |
+---------------------------------------------+------------+----------+
| | Total | Total |
+---------------------------------------------+------------+----------+
| | | |
+---------------------------------------------+------------+----------+
| | GBP'000 | GBP'000 |
+---------------------------------------------+------------+----------+
| Bank interest | 48 | 248 |
+---------------------------------------------+------------+----------+
| Loan note interest | 609 | 717 |
+---------------------------------------------+------------+----------+
| Other interest | 31 | - |
+---------------------------------------------+------------+----------+
| Net currency movements on foreign currency | 932 | - |
| denominated assets and liabilities | | |
+---------------------------------------------+------------+----------+
| | 1,620 | 965 |
+---------------------------------------------+------------+----------+
6. Finance expenses
+---------------------------------------------+------------+----------+
| | Year ended | Year |
| | | ended |
+---------------------------------------------+------------+----------+
| | 31 | 31 |
| | December | December |
+---------------------------------------------+------------+----------+
| | 2008 | 2007 |
+---------------------------------------------+------------+----------+
| | Total | Total |
+---------------------------------------------+------------+----------+
| | | |
+---------------------------------------------+------------+----------+
| | GBP'000 | GBP'000 |
+---------------------------------------------+------------+----------+
| Bank loans and overdrafts | 4 | 151 |
+---------------------------------------------+------------+----------+
| Other interest | 70 | - |
+---------------------------------------------+------------+----------+
| Net currency movements on foreign currency | - | 99 |
| denominated assets and liabilities | | |
+---------------------------------------------+------------+----------+
| | 74 | 250 |
+---------------------------------------------+------------+----------+
7. (Loss)/earnings per share
(Loss)/earnings per ordinary share has been calculated using the weighted
average number of shares in issue during the relevant financial years. The
calculations of both basic and diluted loss per share for the year are based
upon a loss after tax and minority interests of GBP4,491,000 (2007: loss of
GBP3,891,000). The weighted average number of equity shares used in the basic
calculation is 62,335,374 (2007: 62,335,374).
The calculation for diluted loss per ordinary share is identical to that used
for the basic loss per share. This is because the exercise of share options
would have the effect of reducing the loss per ordinary share and is therefore
not dilutive under the terms of IAS 33 "Earnings per Share".
+--------------------------------------------------------+------------+------------+
| | Year ended | Year |
| | | ended |
+--------------------------------------------------------+------------+------------+
| | 31 | 31 |
| | December | December |
+--------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+------------+
| Loss for the year (GBP'000) | (4,491) | (3,891) |
+--------------------------------------------------------+------------+------------+
| Exceptional items in administrative expenses (GBP'000) | 5,580 | 2,815 |
+--------------------------------------------------------+------------+------------+
| Profit/(loss) after tax before "exceptional" items | 1,089 | (1,076) |
| (GBP'000) | | |
+--------------------------------------------------------+------------+------------+
| | | |
+--------------------------------------------------------+------------+------------+
| Weighted average ordinary shares in issue | 62,335,374 | 62,335,374 |
+--------------------------------------------------------+------------+------------+
+--------------------------------------------------------+------------+----------+
| | Year ended | Year |
| | | ended |
+--------------------------------------------------------+------------+----------+
| | 31 | 31 |
| | December | December |
+--------------------------------------------------------+------------+----------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+----------+
| | Pence | Pence |
+--------------------------------------------------------+------------+----------+
| Basic/diluted loss per share | (7.20) | (6.24) |
+--------------------------------------------------------+------------+----------+
| Earnings/(loss) per share before "exceptional" items | 1.75 | (1.73) |
+--------------------------------------------------------+------------+----------+
8. Intangible assets
+-----------------------------------------------+-------------+-------------+---------+
| | | Software | |
| | | and | |
+-----------------------------------------------+-------------+-------------+---------+
| | Acquisition | development | |
| | | | |
+-----------------------------------------------+-------------+-------------+---------+
| | goodwill | costs | Total |
+-----------------------------------------------+-------------+-------------+---------+
| Group | GBP'000 | GBP'000 | GBP'000 |
+-----------------------------------------------+-------------+-------------+---------+
| Cost | | | |
+-----------------------------------------------+-------------+-------------+---------+
| At 1 January 2007 | 2,735 | 4,223 | 6,958 |
+-----------------------------------------------+-------------+-------------+---------+
| Additions | - | 88 | 88 |
+-----------------------------------------------+-------------+-------------+---------+
| Disposal | - | (108) | (108) |
+-----------------------------------------------+-------------+-------------+---------+
| At 31 December 2007 and 1 January 2008 | 2,735 | 4,203 | 6,938 |
+-----------------------------------------------+-------------+-------------+---------+
| Additions | - | 3 | 3 |
+-----------------------------------------------+-------------+-------------+---------+
| At 31 December 2008 | 2,735 | 4,206 | 6,941 |
+-----------------------------------------------+-------------+-------------+---------+
| | | | |
+-----------------------------------------------+-------------+-------------+---------+
| Amortisation and impairment losses | | | |
+-----------------------------------------------+-------------+-------------+---------+
| At 1 January 2007 | 1,216 | 1,919 | 3,135 |
+-----------------------------------------------+-------------+-------------+---------+
| Charge for the year | - | 335 | 335 |
+-----------------------------------------------+-------------+-------------+---------+
| Impairment | 405 | 1,704 | 2,109 |
+-----------------------------------------------+-------------+-------------+---------+
| At 31 December 2007 and 1 January 2008 | 1,621 | 3,958 | 5,579 |
+-----------------------------------------------+-------------+-------------+---------+
| Charge for the year | - | 78 | 78 |
+-----------------------------------------------+-------------+-------------+---------+
| At 31 December 2008 | 1,621 | 4,036 | 5,657 |
+-----------------------------------------------+-------------+-------------+---------+
| | | | |
+-----------------------------------------------+-------------+-------------+---------+
| Net book value | | | |
+-----------------------------------------------+-------------+-------------+---------+
| At 1 January 2007 | 1,519 | 2,304 | 3,823 |
+-----------------------------------------------+-------------+-------------+---------+
| At 31 December 2007 | 1,114 | 245 | 1,359 |
+-----------------------------------------------+-------------+-------------+---------+
| At 31 December 2008 | 1,114 | 170 | 1,284 |
+-----------------------------------------------+-------------+-------------+---------+
Amortisation and impairment charges are recognised in administrative expenses
within the income statement.
Goodwill, intangible assets and impairment
For the purposes of impairment testing goodwill, goodwill is allocated to the
Group's operating divisions which represent the lowest level within the Group at
which goodwill is monitored for internal management purposes.
The aggregate carrying amounts of goodwill allocated to each unit are as
follows:
+-----------------------------------------------+---------+----------+---------+---------+
| | RTS | RTS | | |
| | Life | Flexible | | |
+-----------------------------------------------+---------+----------+---------+---------+
| | Science | Systems | Others | Total |
+-----------------------------------------------+---------+----------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------------------------------------+---------+----------+---------+---------+
| Acquisition goodwill | 974 | 140 | - | 1,114 |
+-----------------------------------------------+---------+----------+---------+---------+
| Software and development costs | 74 | 91 | 5 | 170 |
+-----------------------------------------------+---------+----------+---------+---------+
| | 1,048 | 231 | 5 | 1,284 |
+-----------------------------------------------+---------+----------+---------+---------+
RTS Life Science
The RTS Life Science unit's impairment test was based on value in use. Value in
use is the present value of the cash flows expected to be generated by the
business unit over a projection period of 10 years. Management believes that
this forecast period is justified due to the nature of the business. Recoverable
amounts are based on value in use projections of the RTS Life Science unit's
performance reflecting the Directors' best estimates of cash flows.
8. Intangible assets continued
Goodwill, intangible assets and impairment continued
In 2007 an impairment charge of GBP405,000 was recorded against the carrying
value of goodwill relating to the RTS Life Science unit. The recoverable amount
of GBP974,000 was determined by discounting the future cash flows expected to be
generated from the RTS Life Science business. The key assumptions in these
forecasts were in respect of revenue growth (based on detailed forecasts in year
1 and then 3% inflationary increase), future margins (based on a detailed
forecast in year 1 and then constant) and cost management (based on a detailed
forecast in year 1 and then 3% inflationary increase year on year). Detailed
2008 budgets were used to forecast cashflows applying a 3% annual inflationary
increase. A risk adjusted pre-tax discount rate of 13.68% was applied to the
projections. The key assumptions in these forecasts were in respect of revenue
growth, future margins and cost management.
In 2008, detailed budgets prepared for 2009 have been used in the cashflow
forecast and an inflationary increase of 3% has been used for subsequent
periods. A risk adjusted pre-tax discount rate of 13.72% (2007:13.68%) has been
applied to the projections. The key assumptions in these forecasts are in
respect of revenue growth (based on a detailed forecast in year 1 and then 3%
inflationary increase), future margins (based on a detailed forecast in year 1
and then constant) and cost management (based on a detailed forecast in year 1
and then 3% inflationary increase year on year). Revenue forecasts for 2009 are
in line with external sources of information and are underpinned by order book
cover with 65% of forecast 2009 revenue already secured.
The recoverable amount in respect of the RTS Life Science unit assessed by the
Directors using the above assumptions is GBP2,133,000 which is GBP1,085,000
greater than the carrying amount and therefore no impairment charge has been
booked in 2008. Management considers that it is not reasonably possible for the
assumptions to change so significantly as to eliminate this excess.
RTS Flexible Systems
The RTS Flexible System unit's impairment test was based on value in use. Value
in use is the present value of the cash flows expected to be generated by the
business unit over a projection period of 15 years. Management believes that
this forecast period is justified due to the nature of the business. Recoverable
amounts are based on value in use projections of the RTS Flexible Systems unit's
performance reflecting the Directors' best estimates of cash flows. Business
forecasts have been used for 2009 projections and an inflationary increase of 3%
has been used for subsequent periods. A risk adjusted pre-tax discount rate of
13.72% (2007:13.68%) has been applied to the projections.
The recoverable amount assessed by the Directors using the above assumptions is
GBP264,000 which is GBP33,000 greater than its carrying amount. Cash flow
projections are principally sensitive to revenue growth, future margins and cost
management. Revenue forecasts for 2009 are partly underpinned by an order book
and 16% of forecast 2009 revenue has been secured to date.
The following summarises the value assigned to these key assumptions and by what
value these key assumptions must change, after incorporating any consequential
effects of that change on the other variables used to measure recoverable
amount, in order for the unit's recoverable amount to be equal to its carrying
value:
Sales:
Year 1 sales are based on a detailed management budget for 2009. Subsequent
years are based on year 1 plus 3% inflationary increase year on year. A 0.5%
reduction in year 1 sales would result in the recoverable amount being equal to
the carrying value of goodwill in respect of the RTS Flexible Systems unit.
Gross margin:
Gross margin in Year 1 is based on a detailed management budget for 2009. A
reduction in gross margin of 0.5% would lead to the recoverable amount being
equal to the carrying value of goodwill in respect of the RTS Flexible Systems
unit.
8. Intangible assets continued
Goodwill, intangible assets and impairment continued
Cost management:
Overheads based on a detailed management budget for 2009 in year 1 of the
cashflow projections and grow at 3% year on year over the forecast period. An
increase in overheads of 0.5% in year 1 would lead to the recoverable amount
being equal to the carrying value of goodwill in respect of the RTS Flexible
Systems unit.
Discount rate:
A 2.28% increase in the discount rate over the forecast period would lead to the
recoverable amount being equal to the carrying value of goodwill in respect of
the RTS Flexible Systems unit
9. Trade and other receivables
+------------------------------------------+----------------+----------------+
| | 31 December | 31 December |
| | 2008 | 2007 |
+------------------------------------------+----------------+----------------+
| | Group | Group |
+------------------------------------------+----------------+----------------+
| | GBP'000 | GBP'000 |
+------------------------------------------+----------------+----------------+
| Trade receivables | 3,735 | 2,942 |
+------------------------------------------+----------------+----------------+
| Amounts receivable on long-term | 1,434 | 1,416 |
| contracts | | |
+------------------------------------------+----------------+----------------+
| Other receivables | 273 | 79 |
+------------------------------------------+----------------+----------------+
| Loan notes receivable | - | 1,585 |
+------------------------------------------+----------------+----------------+
| Prepayments and accrued income | 276 | 253 |
+------------------------------------------+----------------+----------------+
| | 5,718 | 6,275 |
+------------------------------------------+----------------+----------------+
10. Contingent liabilities
RTS Flexible Systems is engaged in an ongoing dispute with a former customer.
This fact was disclosed in the 2006 and 2007 financial statements. The
information usually required by International Accounting Standard 37 is not
disclosed on the grounds that it can be expected to seriously prejudice the
outcome of the dispute. The Directors are of the opinion that the claim can be
successfully resisted by the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAXDEDSFNEFE
Robotic Technology (LSE:RTS)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Robotic Technology (LSE:RTS)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024
