27th Sep 2007 07:01
Densitron Technologies PLC27 September 2007 Densitron Technologies plc Unaudited Interim Report For the Six months ended 30th June 2007 Highlights O Orders booked in the first half of 2007 increased by 4% on the first half of 2006 and by 28% on the second half of 2006. O Increase in orderbook of £1.6m since 31st December 2006. O Appointment of new Distributors in Sweden and Spain. O Relationships forged with new Suppliers. O Completion of the disposal of the Gaming Division. Financial Highlights on continuing operations 6 months to 6 months to 30th June 2007 30th June 2006 Continuing Continuing Unaudited Unaudited £m £m Revenue 7.0 7.9Operating profit 0.1 0.2(Loss)/profit before taxation (0.0) 0.1(Loss) per share (0.07)p (0.00)pOrderbook £6.7m £6.4m For enquiries, please contact: Tim Pearson, Group Finance DirectorDensitron Technologies plc Tel: 0207 648 4200 John Wakefield, Director of Corporate FinanceBlue Oar Securities Plc Tel: 0117 933 0020 Chairman's Statement The first half of 2007 has seen the Group complete its disposal of its lossmaking divisions and enabled focus to be concentrated on its Display Solutionsbusiness. The results for the first half of 2007 are in line with the Group'sbudgets and show a profit for the period of £381,000 compared with a loss of£396,000 for the same period in 2006 and a profit of £43,000 for the second halfof 2006. Densitron Displays Solutions Sales for the period have decreased by 12% compared with the same period of 2006and by 7% on the second half of 2006. This is in line with the Group's budgetsand is the result of poor order intake during the second half of 2006 and theweakness of the US dollar against the pound. Orders booked in the first half of2007 amounted to £8.7m an increase of 4% on the same period in 2006 and anincrease of 28% on the second half of 2006. The orderbook at the 30 June 2007has increased by £1.6m since 31st December 2006. The outlook for the Division remains positive and during the 6 months to 30thJune 2007 work has continued to increase both the spread of product offeringsand the geographical reach of the Division. To that end new distributors havebeen appointed in Sweden and Spain and relationships have been forged with newsuppliers including a plastics factory in Malaysia that give the Division accessto complete products. This has enabled a strong pipeline of potential futurebusiness to be built. The focus of the Division remains adding value to customers' projects bybringing both product know how and project management skills to achieve goodmargins. This ethos continues to attract new talent to the Division. VBest Electronics Co. Limited The Group owns 24.48% of the share capital of VBest Electronics Co. Limited(VBest), a Taiwanese manufacturer of Liquid Crystal Displays and Liquid CrystalModules. With factories in China VBest is well placed to capitalize on thedemand for these products. The Group's policy under adopted IFRSs is to treatthis investment as a financial asset at cost due to the fact that the Group doesnot have significant influence over the financial or operating policies of thecompany (due to a minority presence on the VBest Board) and there being noactive market for the shares. At the end of 2006 and the beginning of 2007 VBest saw a large increase in itsorderbook for deliveries during 2007 which resulted in a requirement to recruitaround 300 additional production personnel in its Kunshan factory in China. Theintroduction of these additional operatives has resulted in a deterioration inproduction yields due to inadequate training and supervision which has resultedin the Company making a loss in the first half of 2007. Corrective measures havenow been implemented and the VBest Board is confident that the second half of2007 will show an improvement. At the July Board Meeting the VBest Boardapproved changing the Company's name to Evervision Limited. While the Group is unable to exert significant influence over the financial andoperating policies of VBest, it remains an important investment to the Group. Inorder to manage the investment Densitron maintains two seats on the VBest Boardand are represented by two senior members of staff, Grahame Falconer and VincentLinn, with at least one attending each VBest Board Meeting. In addition regularvisits are made by senior members of staff to both VBest Headquarters in Taipeiand the main LCD and LCM factory in China with findings being reported back tothe Densitron Board. Blackheath Land The Company continues to own 5.5 acres of land at Blackheath in the LondonBorough of Greenwich. Over the past few years the Company has been innegotiations with the Local Authority over a potential land swap. Negotiationswith the Local Authority are ongoing and have now been taken up by more seniorpersonnel within the Authority. The emphasis of the negotiations has changed andis now in the form of a straightforward purchase of part of the land. One offerhas been received and negotiations are continuing. Outlook The markets in which the Group operates remain competitive but the Directors areconfident that with the Team that we have in place and the trading strategy thathas been adopted will enable the Group to grow its Displays businessorganically. The Directors continue to explore ways of maximizing Shareholdervalue for the Land at Blackheath and the investment in VBest and will adviseShareholders when there are further developments. Ralph BaberInterim Chairman26 September 2007 Unaudited Consolidated Income statement For the six months ended 30th June 2007 6 months to 6 months to Year to 30th June 30th June 31st December 2007 2006 2006 £000 £000 £000Continuing operationsSales revenue 6,996 7,948 15,441Cost of sales (4,767) (5,589) (10,807)Gross profit 2,229 2,359 4,634Other operating income 124 31 52Distribution costs (15) (34) (54)Administrative expenses (2,209) (2,186) (4,526)Profit from operations 129 170 106Financial income 2 28 53Financial expenses (149) (99) (245)Net finance costs (147) (71) (192)(Loss)/profit before tax (18) 99 (86)Income tax expense (15) (95) (66)(Loss)/profit for the period from continuingoperations (33) 4 (152) Discontinued operationsProfit/(loss) for the period from discontinued operations 414 (400) (201) Profit/(loss) for the period 381 (396) (353) Attributable to:Equity holders of the parent 366 (401) (364)Minority interests 15 5 11 381 (396) (353) Basic and diluted earnings per shareProfit/(loss) per share from continuing anddiscontinued operations 0.57p (0.62)p (0.56)p (Loss) per share on continuing operations (0.07)p (0.00)p (0.25)p Unaudited Statement of recognised income and expense For the six months to 30th June 2007 6 months to 6 months to Year to 30th June 30th June 31st December 2007 2006 2006 £000 £000 £000 Foreign exchange adjustments (12) (44) (111)Profit/(loss) for the financial period 381 (396) (353) Total recognised income and expense for the period 369 (440) (464) Attributable to:Equity holders of the parent 354 (445) (475)Minority interests 15 5 11 369 (440) (464) Unaudited Consolidated Balance Sheet As at 30th June 2007 30th June 30th June 31st December 2007 2006 2006 £000 £000 £000Non current assetsProperty, plant and equipment 134 410 127Goodwill 143 168 143Financial assets 7,711 7,235 7,501Deferred tax assets 44 74 67 8,032 7,887 7,838 Current assetsInventories 614 1,329 637Trade and other receivables 3,641 3,905 4,010Income tax recoverable 122 34 160Cash and cash equivalents 1,447 1,729 1,292 5,824 6,997 6,099 Non current assets classified as held for sale 218 0 559 Total assets 14,074 14,884 14,496 Current liabilitiesShort term borrowings and overdrafts 4,144 2,160 2,812Trade and other payables 2,632 4,007 2,949Current tax payable 38 58 66Provisions 11 75 75 6,825 6,300 5,902 Non current liabilitiesLong term borrowings 197 1,853 1,707Long term financial liabilities 14 33 24Long term provisions 260 252 260Deferred tax liabilities 17 - - 488 2,138 1,991Liabilities directly associated with non currentassets classified as held for sale - - 194 Total liabilities 7,313 8,438 8,087 6,761 6,446 6,409 EquityShare Capital 3,233 3,233 3,233Share premium account 21,204 21,204 21,204Retained earnings (17,603) (18,005) (17,969)Translation reserve (123) (44) (111)Equity attributable to shareholders of Densitron 6,711 6,388 6,357Minority interests 50 58 52 Total equity 6,761 6,446 6,409 Unaudited Consolidated Cash flow Statement For the 6 months ended 30th June 2007 Six months to Six months to Year to 30th June 30th June 31st December 2007 2006 2006 £000 £000 £000 Cash flows from operating activities(Loss)/profit before taxation (18) 99 (86) Adjustments for:Depreciation 29 37 79Results from discontinued activities (66) (400) (949)Interest receivable (2) (28) (53)Interest payable 149 99 245Interest payable relating to discontinued activity - 35 79(Increase)/decrease in inventories (14) (56) 193(Increase)/decrease in trade and other receivables (205) 225 (154)(Decrease)/Increase in trade and other payables (130) 7 (374)(Decrease) in provisions (64) - -Exchange adjustments 33 9 46Cash (absorbed by)/generated from operations (288) 27 (974) Interest paid (149) (134) (286)Tax recovered/(paid) 37 (74) (146) (112) (208) (432) Net cash absorbed by operating activities (400) (181) (1,406) Cash flows from investing activitiesProceeds from sales of investments 843 47 291Purchases of plant, property and equipment (18) (69) (19)Sales of plant, property and equipment - - 2Interest received 2 25 53 827 3 327 Cash flows from financing activitiesInception of new loans - 1,494 1,500Repayment of borrowings (221) (237) (470)Inception of finance leases - 57 -Payment of finance leases (11) (14) (25)Increase/(decrease) in trade finance creditor 15 (264) (225)Decrease in letters of credit (66) (174) (161)Dividends paid to minorities (17) - (11)Net (cash used in)/generated by financing activities (300) 862 608 Net increase/(decrease) in cash and cash equivalents 127 684 (471) Cash and cash equivalents at beginning of the Period (641) (170) (170) Cash and cash equivalents at the end of the period (514) 514 (641) Notes to the Unaudited Interim Report For the six months ended 30th June 2007 1. General information Densitron Technologies plc is a public limited company ("the Company")incorporated in the United Kingdom under the Companies Act 1985 (registrationnumber 1962726). The Company is domiciled in the United Kingdom and its registered address is 5thFloor, 145 Cannon Street, London, EC4N 5BP. The Company's Ordinary Shares aretraded on the Alternative Investment Market ("AIM"). The Group's principalactivities are the design, development and delivery of display and displayrelated technologies. 2. Basis of preparation Densitron Technologies Plc ('the Group') has previously prepared its financialstatements under UK Generally Accepted Accounting Principles ('UK GAAP').Following a revision in the AIM Rules, the Group is required to prepare its 2007consolidated financial statements in accordance with International FinancialReporting Standards ('IFRSs') as adopted by the European Union ('AdoptedIFRSs'). Accordingly, this Interim Report has been prepared using accounting policiesconsistent with those which management expect to apply in the Group's firstAdopted IFRS Annual Report for the year ending 31st December 2007. IFRSs currently in issue are subject to ongoing review and endorsement by theEuropean Commission, or possible amendment by the IASB, and are thereforesubject to possible change. Further standards or interpretations may also beissued that could be applicable for the full year consolidated financialstatements. These potential changes could result in the need to change the basisof accounting or presentation of certain financial information from thatpresented in this document. This Interim Report, for the six-months ended 30th June 2007, does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. Statutory consolidated financial statements for the Group for the yearended 31 December 2006, prepared in accordance with UK GAAP, on which theauditors gave an unqualified opinion, did not include a reference to any mattersto which the auditors drew attention by way of emphasis without qualifying theirreport, and did not include a statement under section 237(2) or (3) of theCompanies Act 1985, have been filed with the Registrar of Companies. The financial information in the Interim Report is presented in Sterling and allvalues are rounded to the nearest thousand pounds (£'000) except when otherwiseindicated. The financial effects of the transition from UK GAAP to Adopted IFRSs are shownin the appendices to the Interim Report, which includes reconciliations ofprofit for the comparative period and of equity for the comparative balancesheet dates and the date of transition to Adopted IFRSs (1st January 2006). The results contained within this report have not been subject to audit. Sincethe results for the year ended 31st December 2006 have been amended to takeaccount of the change from UK GAAP to Adopted IFRSs the statements containedwithin this report have been shown as being Unaudited. A full audit of thetransition to Adopted IFRSs will be carried out on the results for the year to31st December 2007 and reported on by the Companies Auditors in the 2007 AnnualReport. The results for the six months ended 30th June 2007 have also beenamended to take account of the change from UK GAAP to Adopted IFRSs. 3. Accounting policies Basis of consolidation Where the Company has the power, either directly or indirectly, to govern thefinancial and operating policies of another entity or business so as to obtainbenefits from its activities, it is classified as a subsidiary. The consolidatedfinancial information presents the results of the Company and its subsidiaries(the 'Group') as if they formed a single entity. Subsidiaries are included inthe consolidation from the date that control commences until the date thatcontrol ceases. Where the Company has the power to significantly influence the operating andfinancial policies of another business it is treated as an associate and itsresults are accounted for on an equity basis. Where this power does not existthe Company will recognise the investment at either fair value or cost withinnon current assets. Revenue recognition Revenue consists of sales of displays and display related products to theGroup's customers. Revenue is recognised when goods are physically transferredto customers or services have been provided in accordance with the terms andconditions of the order that has been placed. The value is recognised to theextent that it is probable that the economic benefits will flow to the Group andthe revenue can be reliably measured. Revenue is measured at the fair value ofconsideration, net of returns and value-added taxes and recognised when thesignificant risks and rewards of ownership have been transferred to the buyer. Goodwill Goodwill arising on consolidation represents the excess of the cost of anacquisition over the fair value of the Group's share of the identifiable netassets of the acquired subsidiary at the date of acquisition. Goodwill isrecognised as an asset on the Group's balance sheet in the year in which itarises. Goodwill is tested for impairment at least annually and more frequentlyif events or changes indicate that the carrying value may be impaired and iscarried at cost less accumulated impairment losses. Any impairment is recognisedimmediately in the consolidated income statement and is not subsequentlyreversed. Goodwill arising on acquisitions before 1st January 2006 (the date oftransition to IFRS) has been retained at the previous UK GAAP amounts subject tobeing tested for impairment at that date. Property, plant and equipment Property, plant and equipment assets are carried at cost less accumulateddepreciation and any recognised impairment in value. Depreciation is calculatedto write down the cost of the assets to their residual values, on astraight-line method on the following bases: - Freehold buildings 2%- Long and short leasehold land and buildings over the period of lease- Plant and machinery 15%- Fixtures and fittings 10%- Motor vehicles 20%- Computers and software 15-25% The assets' residual values, useful lives and methods of depreciation arereviewed, and adjusted if appropriate on an annual basis. An item of property,plant and equipment is derecognised upon disposal or when no future economicbenefits are expected from its use or disposal. Any gain or loss arising onderecognition of the asset (calculated as the difference between the netdisposal proceeds and the carrying amount of the asset) is included in theincome statement in the year that the asset is derecognised. All tangible fixedassets are reviewed for impairment in accordance with IAS 36, Impairment ofAssets, when there are indications that the carrying value may not berecoverable. Financial assets In accordance with IAS39 the Company is required to measure financial assets attheir fair values. The exception to this is investments in equity instrumentsthat do not have a quoted market price in an active market and whose fair valuecannot be reliably measured, and these are therefore measured at cost. Deferred consideration relating to asset disposals of the Company is includedwithin financial assets where the consideration is not due for more than oneyear. Inventories Inventories are valued at the lower of cost and net realisable value. Cost isdetermined on a first in, first out basis and includes carriage and duty costs.Net realisable value is based on estimated selling price less any further costsexpected to be incurred to disposal. Trade and other receivables Trade and other receivables are initially recognised at fair value andthereafter at amortised cost less provision for impairment. Cash and cash equivalents Cash and cash equivalents in the balance sheet comprise cash at bank and inhand. Bank overdrafts that are repayable on demand and form an integral part ofthe Group's cash management are included as components of cash and cashequivalents for the purposes of the cash flow statement. Non-current assets held for sale Non-current assets are classified as held for sale if their carrying amount willbe recovered through sales rather than continuing use. This condition isregarded as met if the asset is available for immediate disposal in its presentcondition. Non-current assets classified as held for sale are measured at thelower of carrying amount and fair value less estimated costs to sell. Assets and liabilities relating to operations where negotiations for disposalare in an advanced position are included as discontinued operations within noncurrent assets held for sale. Foreign currencies Foreign operations The income and expenses of overseas subsidiaries are translated at the averagerate of exchange ruling during the year. The balance sheet of the overseassubsidiary undertaking is translated into sterling at the rate of exchangeruling at the balance sheet date. Exchange differences arising, if any, areincluded within equity and transferred to the Group's translation reserve. Suchtranslation differences are recognised as income or as expenses in the period inwhich the operation is disposed. Foreign currency transactions Transactions denominated in foreign currencies are translated at the exchangerate on the date of the transaction. Monetary assets and liabilities denominatedin foreign currencies at the balance sheet date are translated at the exchangerate ruling at that date. Foreign exchange differences arising on translationare recognised in the income statement for the period. Provisions Provisions are recognised when there is a present legal or constructiveobligation as a result of past events, for which it is probable that an outflowof economic benefit will be required to settle the obligation, and where theamount of the obligation can be reliably measured. Leased Assets Leases are classified as finance leases when the terms of the lease transfersubstantially all the risks and rewards of ownership to the Group. All otherleases are classified as operating leases. Assets held as finance leases arerecognised as assets of the Group at their fair value or, if lower, at thepresent value of the minimum lease payments during the lease term at theinception of the lease. Lease payments are apportioned between the reduction ofthe lease liability and finance charges in the income statement so as to achievea constant rate of interest in the remaining balance of the liability. Assetsheld under finance leases are depreciated over the shorter of the estimateduseful life of the assets and the lease term. Assets leased under operatingleases are not recorded on the balance sheet. Rental payments are chargeddirectly to the income statement. Lease incentives, primarily up-front cashpayments or rent-free periods, are capitalised and spread over the period of thelease term. Payments made to acquire operating leases are treated as prepaidlease expenses and amortised over the life of the lease. Pensions The Group contributes to the personal pension plans of certain staff. Thecontributions are charged as an expense as they fall due. Any contributionsunpaid at the balance sheet date are included as an accrual at that date. TheGroup has no further payment obligations once the contributions have been paid. Income Taxes Current tax assets and liabilities are measured at the amount expected to berecovered or paid to the taxation authorities, based on tax rates and laws thatare enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised using the balance sheet liability method,providing for temporary differences between the tax bases and the accountingbases of assets and liabilities. Deferred tax is calculated on an undiscountedbasis at the tax rates that are expected to apply in the period when theliability is settled or the asset is realised, based on tax rates and lawsenacted or substantively enacted at the balance sheet date. Deferred income taxliabilities are recognised for all temporary differences, except where thedeferred income tax liability from the initial recognition of goodwill or of anasset or liability in a transaction that is not a business combination and atthe time of the transaction, affects neither the accounting profit nor taxableprofit or loss. Deferred tax is charged or credited to the income statement, except when itrelates to items charged or credited directly to equity, in which case thedeferred tax is also dealt with in equity. Deferred tax assets and liabilitiesare offset against each other when they relate to income taxes levied by thesame tax jurisdiction and when the Group intends to settle its current taxassets and liabilities on a net basis. Use of assumptions and estimates The Group makes judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets and liabilities, incomeand expenses. The resulting accounting estimates calculated using thesejudgements and assumptions will, by definition, seldom equal the related actualresults but are based on historical experience and expectations of futureevents. The estimates and underlying assumptions are reviewed on an ongoingbasis. Revisions to accounting estimates are recognised in the period in whichthe estimate is revised if the revision effects only that period, or in theperiod of revision and future periods if the revision affects both current andfuture periods. The estimates and assumptions that have a significant effect onthe amounts recognised in the interim report are those related to establishingdepreciation and amortisation periods for the Group, and the estimates inrelation to future cash flows and discount rates utilised in impairment testing. 4. Taxation Taxation for the 6 months ended 30th June 2007 has been calculated by applyingthe estimated tax rate for the current financial year ending 31st December 2007. 5. Dividend No dividend is to be paid. 6. Earnings per share Six months to Six months to Year to 30th June 30th June 31st December 2007 2006 2006 Unaudited Unaudited Audited £000 £000 £000 These have been calculated on profits/(losses) of: - On continuing and discontinued operations 366 (401) (364) - On continuing operations (48) (1) (163) The weighted average number of shares used was:Basic and diluted 64,669,106 64,669,106 64,669,106 7. Segmental analysis Six months to Six months to Year to 30th June 30th June 31st December 2007 2006 2006 Unaudited Unaudited Audited £000 £000 £000 Revenue by location of reporting entityEurope 3,378 4,115 7,795USA 2,965 3,109 6,205Asia 653 725 1,441 6,996 7,949 15,441 Gross profit by location of reporting entityEurope 1,167 1,113 2,437USA 802 940 1,798Asia 260 306 399 2,229 2,359 4,634 8. Copies of Interim report The Interim report is available to view and download from the Company's websiteat www.densitron.com. If shareholders would like a hardcopy of the interimreport they should contact the Company Secretary, Tim Pearson, on 0207 648 4200. Appendix to the unaudited interim report Reconciliation of the Balance Sheet as at 1st January 2006 from UK GAAP to IFRS UK GAAP as at IFRS 3 IAS 36 IAS 39 IFRS as at 1st January Non recognition Impairment of Financial 1st January 2006 of goodwill goodwill (b) Assets (b) 2006 Amortisation(a) £000 £000 £000 £000 £000Non current assetsProperty, plant and equipment 388 388Goodwill 184 (16) 168Financial assets 6,917 440 7,357Deferred tax assets 100 100Trade and other receivables 440 (440) - 8,029 (16) - 8,013 Current assetsInventories 1,311 1,311Trade and other receivables 4,120 4,120Income tax recoverable 30 30Cash and cash equivalents 2,382 2,382 7,843 7,843 Total assets 15,872 (16) - 15,856 Current liabilitiesShort term borrowings and 4,639 4,639overdraftsTrade and other payables 3,342 3,342Current tax payable 56 56Provisions 75 75 8,112 8,112 Non current liabilitiesLong term borrowings 598 598Long term financial liabilities 11 11Long term provisions 250 250Deferred tax liabilities - - 859 859 Total liabilities 8,971 8,971 6,901 (16) - 6,885 EquityShare Capital 3,233 3,233Share premium account 21,204 21,204Retained earnings (17,589) (16) (17,605)Equity attributable toshareholders of Densitron 6,848 (16) - 6,832Minority interests 53 53 Total equity 6,901 (16) - 6,885 Appendix to the unaudited interim report Reconciliation of the income statement for the year ended 31st December 2006 from UK GAAP to IFRS UK GAAP IFRS 3 IAS 36 IFRS 5 IFRS year ended year ended Non recognition Impairment of Business 31st December 31st December of goodwill goodwill (b) Combinations(c) 2006 2006 Amortisation(a) Audited £000 £000 £000 £000 £000 Revenue 20,314 (4,873) 15,441Cost of sales (14,153) 3,346 (10,807)Gross profit 6,161 (1,527) 4,634Distribution costs (58) 4 (54)Administrative expenses (6,968) 24 (25) 2,443 (4,526)Other operating income 102 (50) 52(Loss)/profit from operations (763) 24 (25) 870 106Profit on the sale of subsidiaries 748 (748) -Financial income 53 53Financial expense (324) 79 (245)Profit before tax (286) 24 (25) 201 (86)Income tax expense (66) (66)Loss after tax (352) 24 (25) 201 (152)Discontinued operationsLoss for the period fromdiscontinued operations - (201) (201)(Loss) for the period (352) 24 (25) - (353) Appendix to the unaudited interim report Reconciliation of the Balance Sheet as at 31st December 2006 from UK GAAP to IFRS UK GAAP IFRS 3 IAS 36 IAS 39 IAS21 IFRS 5 IFRS 5 IFRS as at 31st Non Impairment Financial Cumulative Dis- Non current as at 31st December recognition of goodwill Assets translation continued assets December 2006 of goodwill (b) (b) differences operations classified 2006 £000 Amortisation (e) (c) as held for £000 (a) £000 £000 £000 £000 sale (d) £000 £000 Non current assetsProperty, plant andequipment 364 (1) (236) 127Goodwill 160 24 (41) 143Financial assets 6,917 584 7,501Deferred tax assets 67 67Trade and other 584 (584) -receivables 8,092 24 (41) - (1) (236) 7,838 Current assetsInventories 931 (294) 637Trade and other 4,038 (28) 4,010receivablesIncome tax recoverable 160 160Cash and cash 1,292 1,292equivalents 6,421 (322) 6,099 Non current assetsclassifiedas held for sale - 323 236 559 Total assets 14,513 24 (41) - - - 14,496 Current liabilitiesShort term borrowingsand overdrafts 2,812 2,812Trade and other 3,143 (194) 2,949payablesCurrent tax payable 66 66Provisions 75 75 6,096 (194) 5,902 Non currentliabilitiesLong term borrowings 1,707 1,707Long term financial 24 24liabilitiesLong term provisions 260 260 1,991 1,991 Liabilities directlyassociatedwith non currentassetsclassified as held for 194 194sale Total liabilities 8,087 8,087 6,426 24 (41) - - - 6,409 EquityShare Capital 3,233 3,233Share premium account 21,204 21,204Retained earnings (18,063) 24 (41) 111 (17,969)Translation reserve (111) (111)Equity attributable toshareholdersof Densitron 6,374 24 (41) - - 6,357Minority interests 52 52Total equity 6,426 24 (41) - - 6,409 Appendix to the unaudited interim report Reconciliation of the income statement for the 6 months ended 30th June 2006 from UK GAAP to IFRS UK GAAP IFRS 3 IAS 36 IFRS 5 IFRS 6 months ended Non recognition Impairment of Discontinued 6 months 30th June of goodwill goodwill (b) operations (c) ended 2006 Amortisation 30th June (a) 2006 £000 £000 £000 £000 £000 Revenue 10,601 (2,653) 7,948Cost of sales (7,331) 1,742 (5,589)Gross profit 3,270 (911) 2,359Distribution costs (34) (34)Administrative expenses (3,487) 12 1,289 (2,186)Other operating income 44 (13) 31(Loss)/profit from operations (207) 12 365 170Financial income 28 28Financial expense (134) 35 (99)(Loss)/profit before tax (313) 12 400 99Income tax expense (95) (95)Loss after tax (408) 12 400 4Discontinued operationsLoss for the period fromdiscontinued operations - (400) (400)(Loss) for the period (408) 12 - (396) Appendix to the unaudited interim report Reconciliation of the Balance Sheet as at 30th June 2006 from UK GAAP to IFRS UK GAAP IFRS 3 IAS 36 IAS 39 IAS21 IFRS as at Non Impairment Financial Cumulative as at recognition of goodwill Assets (b) translation 30th June of goodwill (b) £000 differences 30th June 2006 Amortisation £000 (e) 2006 £000 (a) £000 £000 £000 Non current assetsProperty, plant and equipment 410 410Goodwill 172 12 (16) 168Financial assets 6,917 318 7,235Deferred tax assets 74 74Trade and other receivables 318 (318) - 7,891 12 (16) - 7,887Current assetsInventories 1,329 1,329Trade and other receivables 3,905 3,905Income tax recoverable 34 34Cash and cash equivalents 1,729 1,729 6,997 6,997 Total assets 14,888 12 (16) - 14,884 Current liabilitiesShort term borrowingsand overdrafts 2,160 2,160Trade and other payables 4,007 4,007Current tax payable 58 58Provisions 75 75 6,300 6,300Non current liabilitiesLong term borrowings 1,853 1,853Long term financial liabilities 33 33Long term provisions 252 252 2,138 2,138 Total liabilities 8,438 8,438 6,450 12 (16) - 6,446 EquityShare Capital 3,233 3,233Share premium account 21,204 21,204Retained earnings (18,045) 12 (16) 44 (18,005)Translation reserve (44) (44)Equity attributable toshareholders of Densitron 6,392 12 (16) - - 6,388Minority interests 58 58Total equity 6,450 12 (16) - - 6,446 Notes to the unaudited IFRS Adjustments a) Goodwill amortisation Under UK GAAP, goodwill is amortised over its expected useful life, whereasunder IFRS goodwill is considered to have an indefinite life and is notamortised, but is tested for impairment annually. Impairment provisions havebeen made in both the years ended 31st December 2005 and 31st December 2006.Adjustments have been made to reverse the goodwill charged under UK GAAP andimpairment of goodwill. b) Financial assets The investment in VBest has been accounted for as a fixed asset investment atits cost less impairment under UK GAAP. The Directors consider that the fairvalue of this asset is the equivalent of cost less impairment. The Group owns24.48% of the equity of VBest and under adopted IFRS is required to consider itsability to exercise influence on the presumption that it has significantinfluence which would make VBest an associate. The Group does not havesignificant influence over the financial or operating policies of VBest and hasconsequently accounted for its holding as a financial asset at fair valuethrough the profit and loss account under this policy. Deferred consideration due on sales of investments was treated under UK GAAP anddebtors due in more than one year. Under adopted IFRS the substance of thesetransactions result in these amounts being treated as loans within financialassets and accounted for using the effective interest method. c) Discontinued Activities Under adopted IFRS the results of discontinued activities can be shown as anitem after loss for the period on continuing operations. d) Non Current Assets Held for Sale Under IFRS 5 assets whose carrying amount will be recovered principally througha sale transaction rather than continuing use are classified as non currentassets held for sale. The Sportsground that the Company owns in Blackheath isone such asset. At the 31st December 2006 the Company was in advancednegotiations with the Local Authority regarding the disposal of this asset. In addition the sale of the Gaming business took place on 31st January 2007. At31st December 2006 negotiations of the sale were in progress and principal termshad been agreed. As such those assets subject to the sale have been classifiedas non current assets held for sale. e) Cumulative translation differences Under IAS 21 cumulative translation differences for foreign operations should bedisclosed within a translation reserve as a separate part of equity. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
DSN.L