Final results for the period

RNS Number : 1574Y

Adalta Real PLC

28 August 2009

 



FOR IMMEDIATE RELEASE

28 August 2009

Adalta Real plc ('Adalta' or 'the Company')

(Formerly Dawmed Systems plc)

Final Results for the period ended 31 March 2009

The Company today announces its final results for the year ended 31 March 2009. The Annual Report and Accounts are being posted to shareholders today, and are also available on the Company's web-site www.adaltareal.com.

CHAIRMAN'S STATEMENT

I present the Final Audited Results for the 18 month period ended 31 March 2009.

Whilst the Directors believed that the Second Interim Results were relatively satisfactory and pointed to an anticipated continuation of growth and profitability up to the 18 month period ended 31 March 2009, the Board considered that there were fundamental reasons why the business of the Company's trading subsidiary, Dawmed International Limited ('DIL'), did not provide a long-term basis for the Company's future viability as an independent entity. 

These factors led the Directors to the conclusion that, rather than attempt to continue to trade predominantly as a capital equipment supplier to the NHS, it was in the best interests of the Company and its shareholders to realise as much value as possible from DIL's business through the sale of that company.

As announced on 3 July 2009, your Board agreed terms and signed a conditional Share Purchase Agreement ('Agreement') with Wassenburg & Co BV ('Wassenburg') to sell to Wassenburg all the issued share capital in the Company's trading subsidiary DIL. The consideration for the sale was agreed at £0.95 million, subject to adjustment depending on the net assets of DIL as at 30 June 2009. Under this adjustment, Wassenburg and the Company share any shortfall or excess of such net assets below or above £75,000. The sale was subsequently approved by ordinary resolution passed with a substantial majority at a General Meeting of the Company held on 30 July 2009 and the transaction was completed on 6 August 2009, following the Second General Meeting at which a special resolution to change the name of the Company to Adalta Real Plc was passed by a substantial majority.  

In accordance with the terms of the Agreement, the Company's Managing Director, John Crispin, and its Financial Director, Mark Adamson ceased to be Directors of the Company on 6 August 2009.

The Continuing Directors considered that a better future for the Company lay outside the scope of the business as carried on by DIL and accordingly have developed a New Investing Policy which was also approved by ordinary resolution passed with a substantial majority at the General Meeting held on 30 July 2009.

Financials

The 18 month period experienced substantial growth in total revenue from discontinued operations, increasing to £12.2M, representing an annualised increase of 64% over the previous year. Annualised sales of the AERclens machine decreased marginally during the period but were offset by a corresponding increase in annualised sales of the Clinic machine. Activities in Support Services and in the sales of spare parts have shown reasonable growth in the period. At an annualised increase in revenue in excess of 150%, sales of Wassenburg machines have been especially buoyant as a result of the removal of spending restrictions within the NHS, previously imposed by central government. Annualised sales of chemicals also increased satisfactorily as a result of the high levels of equipment sales.

Within the discontinued operations, the effect of the increase in revenue has been offset in part by increased competition combined with a significant decline in the Sterling Euro exchange rate over the 18 month period. Also, the substantial change in the mix of sales between new machine sales and ongoing after sales services has impacted upon the reported gross profit of the discontinued operations. In the 18 month period, gross profit has increased to £3.89M from £1.89M in the year ended 30 September 2007, an annualised increase of 37%. In line with these market conditions, the overall gross margin percentage decreased from 38% to 32%.

The expenditure on total overheads was £4.17M, which on an annualised basis was in line with the level of overheads of the previous year, but if the foreign exchange loss incurred in the period amounting to £276k (2007: gain of £72k) is excluded, annualised overheads actually fell by 9%. Within the context of growth in the overall levels of business, the Directors believe that maintaining overheads at such levels is a creditable achievement and demonstrates that the Board's commitment to investing in the infrastructure of the business was based on sound principles. Of this expenditure on overheads, £187k is attributable to the continuing operations (2007: £181k).

The net loss after interest and taxation fell from £578k in the previous year to a loss of £390k in the 18 months ended 31 March 2009. Of this loss, £187k is attributable to continuing operations (2007: £181k).

The balance sheet showed total equity attributable to shareholders of £135k at 31 March 2009, a reduction of £378k in the period reflecting the net loss incurred after share based payments are offset.

The working capital position altered in line with the substantial changes in the level of activity during the period and due to the change of year end. Net current assets fell by £378k, cash balances increased by £59k to £64k and net debt at the year end had been eliminated from a position of £1,015k at 30 September 2007.

Outlook and Future Prospects

The Company's New Investing Policy is based predominantly upon commercial property agency, the acquisition and development of and/or investment in commercial property and the acquisition of land and development of high end residential property, together with potential corporate acquisitions, the latter mainly in the property sector. It is anticipated that the commercial property agency business will commence without delay and materially assist in the Company's cash flow in the early stages whereas clearly the acquisitions and development activities will occur later and be subject to available opportunities from time to time.

There have been recent and significant falls in the value of commercial and residential property as well as associated land in the UK and many companies in the property sector are still suffering in the downturn. The Continuing Directors believe therefore that there are exciting opportunities not only to rapidly establish and implement the commercial property agency to produce early cash flow for alleviation of early stage overheads but also in medium and long term to acquire development land, built property and/or property companies, with the potential for significant uplifts from the current low levels of property values and for ongoing generation of profit over the long term. 

The New Investing Policy is intended to be split on a divisional basis between (i) commercial property agency (ii) commercial property development and investment and (iii) high end residential property development for sale.  

The Company will be an active investor. Such investments may result in the Company acquiring the whole or part of a company or project. The Company's investments may take the form of equity, joint venture, convertible instruments, licence rights, or other financial instruments as the Continuing Directors deem appropriate. 

The Continuing Directors consider that the New Investing Policy will enable the Company to pursue and exploit the following opportunities in the UK:

• commercial and industrial agency services for early revenues as described above;

• commercial development (including acquisition and refurbishment opportunities) subject to pre-lets to prime covenant tenants; 

• sales of such completed and let developments as profit generators; 

• acquisition of existing individual residential property with expansion and/or refurbishment potential for early profit from sales;

• acquisition of high end value individual residential land and development for the generation of later and greater profit from sales;

• future retention of its own completed and let commercial developments as held investments for medium and/or long term quality revenue generation;

• subject to tenant covenant status, future acquisition of existing completed and let property as an active investor for long term quality revenue generation; 

• future acquisition of a compatible property company for potential expansion; and

• future corporate investment for passive or active gain.

There is no limit on the number of projects in which the Company may invest. The Continuing Directors are currently reviewing potential investment and acquisition opportunities in line with the Company's New Investing Policy. The Company intends to be both a short-term and a long-term investor and the Continuing Directors will place no minimum or maximum limit on the length of time that any investment may be held. 

The change of direction set out in the New Investing Policy has been supported by the First General Meeting held on 30 July 2009, at which the two resolutions for the sale of the subsidiary trading company and for the New Investing Policy were passed by substantial majorities and by the Second General Meeting held on 6 August 2009, at which the single resolution to change the name of the Company from Dawmed Systems Plc to Adalta Real plc was passed, also by a substantial majority.

The New Investing Policy has yet to be implemented in practice and, since any attempt to forecast the Company's performance in respect of the 7 months balance of the financial year ahead ending 31 March 2010 would be not only impossible, but also unwise. That said, the Continuing Directors believe that the portents for the remaining 7 months are reasonably good in terms of laying the foundations for future activity and generating sufficient revenue to cover a reasonable proportion of the initial but not unsubstantial overhead costs which will of course include the one off setting up costs. 

In the longer term, the Board is confident that the New Investing Policy will be implemented within the required 12 months from the General Meeting held on 30 July 2009, or otherwise make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules, and will bear reasonable returns on the investments made. 

Kevin M Gilmore

Executive Chairman

28 August 2009

Enquiries:

Adalta Real plc                                                  Tel: [phone]

Kevin M Gilmore, Executive Chairman            Mob: [phone]

Beaumont Cornish Limited                                Tel: [phone]

Roland Cornish 

DIRECTORS' REPORT

The directors present their Annual Report and the audited financial statements for the period ended 31 March 2009.

Principal activities

In the period ended 31 March 2009, the Company's principal activities were that of a holding and management company. Its subsidiary company, Dawmed International Limited, was engaged in the design, development, manufacture, sale, distribution, testing and servicing of washer disinfectors and washer disinfector dryers for the primary and secondary healthcare sectors.

Following the implementation of the new investment policy since the period end date, the Company's principal activities have become commercial property agency, the acquisition and development of and/or investment in commercial property and the acquisition of land and development of high end residential property, together with potential corporate acquisitions, the latter mainly in the property sector.

Change of accounting reference date

During the period, the accounting reference date of the Company was changed from 30 September to 31 March. The business of Dawmed International Limited is geared heavily towards the provision of products to the NHS whose year end is 31 March. The Board believes that this change made financial sense for the Company's financial year to fit in with the NHS budgetary cycle. Accordingly, these financial statements are for the 18 month period to 31 March 2009.  

Events since the period end date

On 6 August 2009, the Company completed the sale of its operating subsidiary Dawmed International Limited ('DIL') to Wassenburg & Co BV ('Wassenburg') for a consideration of £950,000 in cash, subject to adjustment depending on the net assets of DIL as at 30 June 2009. Under such adjustment, Wassenburg and the Company will share any shortfall or excess of such net assets below or above £75,000. Following completion of the sale, the Company's share capital continues to be admitted to trading on AIM and the Company has developed a New Investing Policy which is set out in the Chairman's statement.

Change of name

On 6 August 2009, the name of the Company was changed from Dawmed Systems plc to Adalta Real Plc.

Dividends

The directors do not recommend the payment of a dividend in respect of the period ended 31 March 2009 (year ended 30 September 2007: £nil).

Review of business 

A review of the business has been given in the Chairman's Statement on pages 1 and 2.

Under the Companies Act, the Board is required to report against key financial performance indicators for the period. These were determined prior to the start of the period and were further assessed at the end of each half year. The achievements against these indicators for the financial period ended 31 March 2009 are summarised below:

• The Company's loss for the period ended 31 March 2009 amounted to £390,233 (2007: loss £577,517). However, this loss is stated after incurring a foreign exchange loss for the period of £276,308 (2007: gain of £71,953). The trend throughout the period has been one of consistent growth, with revenue from discontinued operations increasing from £3,608k in the six months ended 31 March 2008 to £3,819k in the six months ended 30 September 2008 and to £4,783k in the six months ended 31 March 2009. In the equivalent periods, gross profit derived from discontinued operations has increased from £1,129k to £1,307k and then to £1,455k.

• There was a target to grow the sales of manufactured equipment in the period, in particular the AERclens and Clinic. This was achieved successfully for the Clinic, with annualised revenue increasing by 7%, although sales of the AERclens showed a marginal decrease of 5%. The objective to increase direct sales of chemicals was also achieved with a 36% increase. Most importantly, the objective of increasing the sales of all Wassenburg machine products was achieved comfortably, with annualised sales growth of 168%. In line with the increased sales of equipment, the intention to develop further the revenue from the Support Services Department was also achieved with an increase of 12%.  

• It was also the Company's intention to increase both gross margin value and margin percentage. During the financial period, the annualised gross margin increased by 37% in monetary terms. However, the margin percentage decreased by 6 percentage points principally due to the decline in the value of Sterling compared to the Euro substantially increasing the cost of goods and to the general level of competition within the marketplace.

Future developments

Following the successful completion of the sale of Dawmed International Limited to Wassenburg & Co BV on 6 August 2009, the Company has started to implement its New Investing Policy in the property sector, details of which are set out in the Chairman's statement.

Principal risks and uncertainties and financial risk management

The Company's discontinued operations exposed it to a variety of financial risks that included the effects of competitors, the impact of manufacturing and testing operations, retention and development of employees, reliance on the NHS as a major customer and exposure to foreign exchange rate fluctuations.

• Market trends and competitors' activities were continually tracked, monitored and analysed and it is against these underlying sources of information that the Board undertook a process of continuous product development. In order to alleviate the ever present risk of competition and low product margins, your Company was engaged in measures to reduce the costs of manufacture, thus to maintain and improve competitiveness, whilst simultaneously increasing margins.

• As part of its discontinued operations, the Company carried out manufacturing and testing activities at its premises and whilst it is aware of its environmental responsibilities, it does not believe that it carried out any abnormal hazardous or dangerous activities affecting either its employees or adjacent third parties. However, annual risk assessments were carried out by external qualified personnel to ensure the Company complied with all regulatory and statutory requirements.

• The success of the Company's discontinued operations relied on the development and retention of its key employees. In order to ensure that adequate resources were made available in the appropriate areas to achieve these objectives, the Board for some years operated a personnel appraisal system and selected individually focussed training programmes, using both external and internal resources. Together with a Human Resources Management System operated within the Company, this provided a structure for employee development and progression, whilst at the same time ensuring compliance with all current and proposed employment legislation.

• The future performance of the Company's discontinued operations is subject to the assessment and management of any risks and/or uncertainties that may face the business. The degree of reliance on the NHS was regarded as one such risk, but substantial efforts continued to be expended to widen the customer base both in the UK and abroad by developing products specific for both major and niche markets. A further risk was the reliance on a comparatively specialised range of products with related sales and services. Opportunities for diversification were regularly appraised to address this issue.

• The Company's discontinued operations were exposed to foreign exchange risks arising from future commercial transactions and recognised liabilities. Although the Company did not hedge its foreign exchange risk, significant movements in exchange rates were compensated for through longer term changes to selling prices of associated products. At the period end, the Company had current liabilities of £2,570k in respect of transactions denominated in foreign currencies. Since the period end, £2,066k of these liabilities have been settled at exchange rates that have generated an overall surplus. In view of the prevailing exchange rates, the remaining period end liabilities of £504k are expected to be settled at rates that will not incur a financial loss to the Company.

Research and development

The discontinued operations of the Company maintained a number of research and development projects. In the opinion of the directors, continuity of investment in this area was essential for the future growth of the company. 

Financial instruments

The Company does not enter into derivative transactions and does not undertake trading in financial instruments.

The Company's financial instruments comprise cash, short-term deposits, factoring and stock advances, hire purchase agreements and short-term debtors and creditors that arise directly from its operations. The directors consider that the Company faces few risks in respect of its financial instruments.

The Company was exposed to price risk on imported goods as a result of currency fluctuations causing the potential for increases or decreases in buying prices of many of the Company's previous core products.  

Creditor payment policy

The Company does not have a written code or standard on payment practice. It negotiates settlement terms with each of its suppliers. Payments are then made to suppliers in accordance with those terms, provided the supplier has carried out the agreed obligations in a satisfactory manner. At the period end the Company had an average of 81 days (2007: 44 days) purchases outstanding in trade creditors.

Directors and their interests in shares of the company

The directors of the Company during the period and their interests in the shares of the Company were as follows:

	Number of ordinary shares of  5 pence each
	31March 2009	30 September 2007
Executive directors:
K M Gilmore	7,334,092	7,347,200
J M Crispin	1,243,500	1,243,500
M A Adamson	-	-
Non-executive directors:
N P Trigg	104,755	104,755
G F Arbib	1,800,000	1,800,000

Following the successful completion of the sale of Dawmed International Limited to Wassenburg & Co BV, Mr J M Crispin and Mr M A Adamson resigned as directors of the Company on 6 August 2009. 

Share options have been granted to certain of the directors as follows:

	Number of shares
	At 1 October 2007	At 31March 2009	Exercise price	Date of grant
N P Trigg	100,000	100,000	25p	19 December 2000
G F Arbib	300,000	300,000	25p	24 January 2002
J M Crispin	400,000	400,000	20p	1 July 2004
K M Gilmore	100,000	100,000	20p	1 July 2004
J M Crispin	160,000	160,000	12.5p	8 February 2006
J M Crispin	250,000	250,000	10.0p	23 August 2007
M A Adamson	200,000	200,000	10.0p	23 August 2007
R Salter (director of Dawmed International Limited)	50,000	50,000	20p	1 July 2004

Those options held by K M Gilmore, J M Crispin and R Salter at 1 October 2006 are exercisable during a seven year period from 1 July 2007. The remaining options are exercisable during a 10 year period following the date of granting the option.

Major interests in shares

As at 21 August 2009, the Company had been notified that the following shareholders held more than 3% of the Company's issued ordinary share capital:

	Number of ordinary shares of 5p	Percentage
K M Gilmore	4,027,852	19.54%
M L Gilmore	3,306,240	16.04%
G F Arbib	1,950,000	9.46%
J M Crispin	1,243,500	6.03%

Third party indemnity provision for directors

Qualifying third party indemnity provision is in place for the benefit of all directors of the Company, and directors of the subsidiary, Dawmed International Limited.

Statement as to disclosure of information to auditors

The directors who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, that there is no relevant audit information of which the auditors are unaware. Each of the directors have confirmed that they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.

Auditors

Baker Tilly UK Audit LLP has indicated its willingness to continue in office.

CONSOLIDATED INCOME STATEMENT

for the period ended 31 March 2009

	Notes	Period ended 31 March 2009	Restated year ended     30 September     2007
		£	£
Continuing operations
Revenue		-	-
Cost of sales		-	-
Gross profit		-	-
Administrative expenses		(186,823)	(181,009)
Operating loss	7	(186,823)	(181,009)
Finance costs		-	-
Loss before tax	7	(186,823)	(181,009)
Taxation	9	-	-
Loss for the period from continuing operations		(186,823)	(181,009)
Discontinued operations
Loss for the period after tax from discontinued operations	4	(203,410)	(396,508)
Loss for the period attributable to shareholders		(390,233)	(577,517)
Loss per share from continuing operations
Basic	10	(0.91)p	(0.88)p
Diluted	10	(0.91)p	(0.88)p

CONSOLIDATED BALANCE SHEET 

31 March 2009

	Notes	Group 31 March 2009	30 September 2007
		£	£
ASSETS
Non-current assets
Intangible assets	11	-	165,642
Property, plant and equipment	12	-	103,365
		-	269,007
Current assets
Inventories	13	-	1,062,003
Trade and other receivables	14	54,618	1,249,872
Cash and cash equivalents		9,948	5,156
Total current assets		64,566	2,317,031
Non-current assets and disposal groups held for sale	4	5,162,375	-
Total assets		5,226,941	2,586,038
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables	15	10,624	1,052,226
Financial liabilities	16	-	1,020,204
		10,624	2,072,430
Liabilities directly associated with non-current assets and disposal groups held for sale	4	5,081,170	-
Total liabilities		5,091,794	2,072,430
Equity
Called up share capital	18	1,030,665	1,030,665
Share premium account		1,558,079	1,878,239
Other reserve		(30,360)	(350,520)
Profit and loss account		(2,423,237)	(2,044,776)
Total equity		135,147	513,608
Total equity and liabilities		5,226,941	2,586,038

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

for the period ended 31 March 2009

	Share capital	Share premium	Other reserve	Retained earnings	Total
	£	£	£	£	£
At 1 October 2006	1,023,165	1,872,239	(350,520)	(1,481,707)	1,063,177
Loss for the year	-	-	-	(577,517)	(577,517)
Reserve movement arising from share based payment	-	-	-	14,448	14,448
Issue of shares in the period	7,500	6,000	-	-	13,500
At 30 September 2007	1,030,665	1,878,239	(350,520)	(2,044,776)	513,608
Loss for the period	-	-	-	(390,233)	(390,233)
Reserve movement arising from share based payment	-	-	-	11,772	11,772
Reclassification	-	(320,160)	320,160	-	-
At 31 March 2009	1,030,665	1,558,079	(30,360)	(2,423,237)	135,147

CONSOLIDATED STATEMENT OF CASH FLOWS

for the period ended 31 March 2009

	Notes	Period ended 31 March 2009	Restated year ended 30 September 2007
		£	£
Cash flows generated from operating activities
Loss before taxation		(186,823)	(181,009)
Adjustments for share based payment expense		11,772	27,948
Cash flows from operations before changes in working capital		(175,051)	(153,061)
Changes in working capital
Increase in trade and other receivables		(30,161)	(16,577)
Decrease in trade and other payables		(37,784)	(14,505)
Total changes in working capital		(67,945)	(31,082)
Cash absorbed by continuing operations		(242,996)	(184,143)
Cash generated from/(absorbed by) discontinued operations		1,877,100	(717,672)
Cash generated from/(absorbed by) total operating activities		1,634,104	(901,815)
Net cash used in investing activities of discontinued operations		(80,453)	(71,509)
Cash flows from financing activities
Other loans		(199,579)	199,579
Net cash (used)/generated in financing activities of continuing operations		(199,579)	199,579
Net cash (used)/generated in financing activities of discontinued operations		(1,208,216)	177,191
Net cash (used)/generated in financing activities		(1,407,795)	376,770
Net increase/(decrease) in cash and cash equivalents		145,856	(596,554)
Cash and cash equivalents at beginning of period		(81,773)	514,781
Cash and cash equivalents at end of period	17	64,083	(81,773)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 31 March 2009

 

1.    Authorisation of financial statements

 

Adalta Real plc is a public limited company ('Company') incorporated and domiciled in the United Kingdom under the Companies Act 1985 (Registration number 4075473), whose shares are publicly traded on the Alternative Investment Market (AIM). The address of the registered office is Church Court, Stourbridge Road, Halesowen, West Midlands, B63 3TT, United Kingdom.

The financial period represents the 18 month period ended 31 March 2009.

During the financial period, the Group's principal activities were the design, development, manufacture, sale, distribution, testing and servicing of washer disinfectors and washer disinfector dryers for the primary and secondary healthcare sectors.

2. Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and International Financial Interpretation Committee (IFRIC) interpretations as endorsed by the European Union and those parts of the Companies Acts 1985 and 2006 as applicable to companies reporting under IFRS.

3. Significant accounting policies

Basis of accounting

The financial statements have been prepared on the historical cost basis. The accounting policies set out below have been applied consistently to all periods presented in this consolidated report and in preparing an opening IFRS balance sheet at 1 October 2006 for the purposes of the transition to IFRS.

The financial statements are presented in Pounds Sterling, the functional currency of the Group. The functional currency is the currency of the primary economic environment in which the Group operates. 

Basis of preparation

For all periods to 30 September 2007, the Group prepared its audited financial statements under UK Generally Accepted Accounting Principles (UK GAAP). For the period ending 31 March 2009 the Group is required to prepare its annual consolidated financial statements in accordance with accounting standards adopted for use in the European Union (International Financial Reporting Standards (IFRS)).

This 18 month report has been prepared in accordance with the accounting policies set out below, taking into account the requirements and options in IFRS 1 'First-time adoption of International Financial Reporting Standards'. The transition date for the Group's application of IFRS is 1 October 2006. A reconciliation of the consolidated income statement (previously consolidated profit and loss account) and consolidated balance sheet (previously consolidated balance sheet) from previously reported UK GAAP to IFRS is not required as the transition to IFRS has not resulted in any changes being required to the amounts already disclosed.

The comparative figures for the year ended 30 September 2007 have been restated for the adoption of IFRS, these changes are presentational only. The comparative figures for the consolidated income statement in respect of the year ended 30 September 2007 have also been restated and for the implementation of IFRS 5 'Non-current assets held for sale and discontinued operations'.

Transition to IFRS

IFRS 1 grants certain exemptions from the full requirements of IFRS in the transition period. The following exemptions have been taken in these consolidated financial statements:

IFRS 3 - Business combinations

The Group has elected not to apply IFRS 3 'Business Combinations' retrospectively to business combinations that took place prior to 1 October 2006. As a result, business combinations that have previously been accounted for as mergers have not been reclassified. The Group has adopted the principles of FRS 6 and accounted for the combination of Adalta Real Plc and Dawmed International Limited as a group reconstruction using the principles of merger accounting.

IFRS 2 - Share-based payment

IFRS 2 has not been applied to share-based payments granted before 7 November 2002 nor those granted after 7 November 2002 that had vested prior to 1 October 2006. The Group has adopted IFRS 2 'Share Based Payment' for share options granted after 7 November 2002 which had not vested at 1 October 2006. The adoption of IFRS 2 has not required numerical adjustments to be made to the balance sheet at 1 October 2006 or to the income statement for the year ended 30 September 2007.

Going concern

The directors have reviewed the cash flow commitments that will be required during the next twelve months to implement the new investing policy of the Company. This review indicated that the cash generated from the sale of the subsidiary, Dawmed International Limited, should provide adequate resources to meet the ongoing requirements of the Company. On this basis, the directors consider it appropriate to prepare the financial statements on the going concern basis.

Basis of consolidation

The consolidated financial information incorporates those of Adalta Real plc and its subsidiary undertaking for each reporting period.

In preparing this report, any intra-group balances, unrealised gains and losses or income and expenses arising from intra-group trading are eliminated. 

Subsidiaries are entities over which the Group has the power to govern the financial and operating policies to obtain economic benefit to the Group. Subsidiary companies acquired after the date of transition to IFRS will be consolidated using the purchase method. The results of subsidiary companies acquired are included in the consolidated income statement from the effective date of acquisition.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date.

The excess of cost of acquisition over the fair values of the Group's share of identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair value of identifiable net assets acquired (ie discount on acquisition) is recognised directly in the income statement.

Disposal group

In line with IFRS 5 'Non-current assets held for sale and discontinued operations', the company classified as held for sale its operating subsidiary Dawmed International Limited. At 31 March 2009, agreement had been reached for the sale of the business for a consideration of £950,000 to Wassenburg & Co BV. Accordingly, Dawmed International Limited is treated as a disposal group in these financial statements.

Use of assumptions and judgements

The preparation of these financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future period which is affected.

The significant areas in which estimates and assumptions are made relate to the useful life of property, plant and equipment, useful economic life of research and development, assumptions for measuring the value of share based payments, provisions for warranty costs and the net realisable value of inventories.

Revenue recognition

Group revenue is the fair value of the consideration received or receivable by the Group for goods supplied and services provided, excluding VAT and trade discounts.

Where services are provided on annual contracts, revenue is spread evenly over the duration of the contract. Where annual contracts do not apply then revenue is recognised at fair value by reference to the stage of completion of the provision of services.

Sales of goods are recognised when goods are delivered and title has passed.

Interest income is accrued on a time-apportioned basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

Operating profit

Operating profit is stated after depreciation and amortisation but before finance income and finance costs.

Research and development

Where the future recoverability of development expenditure on a particular project can be foreseen with reasonable certainty, such expenditure is capitalised at cost under intangible assets in the balance sheet.  These development costs are then amortised through administrative expenses in the income statement, commencing from the date that revenues begin to be earned from the project, over the expected useful economic life. The useful economic life is determined such that the expenditure is then matched with the revenues then earned.

All other research and development expenditure is recognised as an expense as incurred.

Property, plant and equipment

Property, plant and equipment assets are stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost of assets, over their estimated useful economic lives. The rates used for each major asset category, which are reviewed annually, are:

Leasehold improvements	25%
Plant and machinery	25%
Fixtures, fittings and computer equipment	25%
Motor vehicles	25%

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement.

  Impairment of assets

At each balance sheet date the Group reviews the carrying value of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.

An impairment loss is only reversed if there is a subsequent increase in the recoverable amount that can be related objectively to an event occurring after the impairment loss was recognised. 

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the Group. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability is to be included in the balance sheet as a finance lease obligation. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the income statement over the period of the lease.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. 

Borrowing costs

Borrowing costs are recognised as an expense when incurred.

Inventories

Inventories comprise goods held for resale, component parts and work in progress. Inventories are valued at the lower of cost and net realisable value using the first in first out basis. Cost is defined as standard cost or purchase cost and includes all direct costs incurred in bringing each product to its present condition. Net realisable value is based on an estimated selling price less any further costs expected to be associated with the sale.

Trade receivables

Trade receivables are recognised and carried at the lower of original invoice amount and recoverable amount. A provision for doubtful amounts is made where there is a realistic belief that the full amount of the debt is no longer recoverable. Balances are written off when the probability of recoverability is assessed as remote. As the Group is principally a supplier to the NHS, it does not have a significant record of bad and doubtful debts. Payment terms are typically 30 days net, although these terms are sometimes breached when an invoice is delayed in the approval process.

Cash and cash equivalents

Cash and cash equivalents in the balance sheet consist of cash at bank, cash in hand and short term deposits with an original maturity of three months or less. For the purposes of the statement of cash flows, cash and cash equivalents are stated net of any outstanding bank overdrafts.

Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through sale rather than continuing use. This condition is considered to be reached only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale and completion should be expected within one year from the period end date.

Non-current assets and disposal groups are measured at the lower of carrying amount and fair value less costs to sell.

Taxation

The tax expense represents the sum of the current tax expense and deferred tax expense.

The current tax payable is based on an estimation of the amount due on the taxable profit for the period. Taxable profit is different from net profit as reported in the income statement because it excludes items of income or expenditure which are not taxable or deductible in the period as a result of either the nature of the item or the fact that it is taxable or deductible in another period. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantially enacted by the period end date.

Deferred tax is accounted for on the basis of temporary differences arising from the differences between the tax base and accounting base of assets and liabilities.

Deferred tax is recognised for all taxable temporary differences, except to the extent where it arises from the initial recognition of an asset or liability in a transaction that is not a business combination. Deferred tax is not provided for on the initial recognition of goodwill. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised.

Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case it is dealt with within equity. It is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Bank borrowings

Interest bearing bank loans and overdrafts are recorded at their fair value. Finance charges are allocated to the income statement using an effective interest rate, on the outstanding carrying value of the instrument.

Trade payables

Trade payables are not interest bearing and are stated at their amortised cost.

Foreign exchange

Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange prevailing at the period end date. Transactions in foreign currencies are recorded at a rate approximating to the rate prevailing at the date of the transaction. All differences are taken to the income statement.

  Warranty costs

Provision is not made for the warranty costs on goods bought for re-sale as the liability for those warranty costs lies with the manufacturer. Provision is not made for warranty costs on manufactured equipment as such costs are considered to be insignificant.

Equity instruments

Equity instruments are initially measured at fair value.

Government grants

Grants received towards the purchase of property, plant and equipment are carried in the balance sheet as deferred income and credited to the income statement over the expected useful lives of the assets acquired. Grants receivable for revenue expenditure are credited to revenue when received.

Retirement benefits

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Any contributions unpaid at the period end date are included as an accrual as at that date. The Group has no further payment obligations once the contributions have been paid.

Share based payments

The Group has applied the requirements of IFRS 2 Share-based Payment. In accordance with the IFRS1 exemption, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that had not been vested prior to 1 October 2006.

The Group issues equity-settled share-based payments to certain employees, whereby employees render services in exchange for share options.

Where employees are rewarded using share based payments, the fair values of employees' services are determined indirectly by reference to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date using an option-pricing model (Black-Scholes) and excludes the impact of non-market vesting conditions.

Equity-settled share based payments are expensed in the income statement. Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium.

  New standards, amendments and interpretations not yet applicable

The following standards and interpretations have been issued by IASB and IFRIC with an effective date after the date of these financial statements:

 

·   Amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting Standards’, effective for annual periods commencing on or after 1 January 2009.

 

·   Amendments to IAS 27 ‘Consolidated and Separate Financial Statements’, effective for annual periods commencing on or after 1 January 2009.

 

·   Amendments to IAS 32 ‘Financial Instruments: Presentation’ and IAS 1 ‘Presentation of Financial Statements relating to puttable financial instruments and obligations arising on liquidation’, effective for annual periods commencing on or after 1 January 2009.

 

·   Amendment to IAS 1 ‘Presentation of Financial Statements’, effective for annual periods commencing on or after 1 January 2009.

 

·   Amendment to IFRS 2 ‘Share-based payment – Vesting Conditions and Cancellations’, effective for annual periods commencing on or after 1 January 2009.

 

·   Amendment to IAS 23 ‘Borrowing Costs’, effective for annual periods commencing on or after 1 January 2009.

 

·   Amendment to IAS 39 ‘Financial Instruments: Recognition and Measurement’ and IFRS 7 ‘Financial Instruments: Disclosure – Reclassification of Financial Assets’, effective for annual periods commencing on or after 1 July 2008.

 

·   Amendment to IAS 39 ‘Financial Instruments: Recognition and Measurement – reassessment of embedded derivatives’, effective for annual periods ending on or after 30 June 2009.

 

·   IFRS 8 ‘Operating Segments’, effective for annual periods commencing on or after 1 January 2009.

 

·   Amendments to ‘IFRS 7 Financial Instruments: Disclosures’, effective for annual periods commencing on or after 1 January 2009.

 

·   Amendment to IAS 39 ‘Eligible Hedged Items’, effective for annual periods commencing on or after 1 July 2009.

 

The directors do not anticipate that adoption of these standards and interpretations will have a material impact on the Group's financial statements in the period of initial application.

4. Discontinued operations

At 31 March 2009, the Company was in advanced negotiations for the sale of its operating subsidiary, Dawmed International Limited. The directors believed that it was highly probable the sale would complete and that the transaction would be finalised within the following year. Completion of the sale was achieved on 6 August 2009. Accordingly, Dawmed International Limited is treated as a disposal group in these financial statements and the consolidated income statement for the prior year reflects this treatment. The income, expenses, assets and liabilities attributable to the disposal group are as follows:

	Notes	Period ended 31 March 2009	Year ended      30 September     2007
		£	£
Revenue	5	12,209,849	4,976,158
Cost of sales		(8,318,641)	(3,085,990)
Gross profit		3,891,208	1,890,168
Administrative expenses		(3,980,678)	(2,605,696)
Other operating income		-	396,147
Operating loss	5	(89,470)	(319,381)
Finance costs	6	(113,940)	(77,127)
Loss before tax	7	(203,410)	(396,508)
Taxation		-	-
Loss after tax from discontinued operations		(203,410)	(396,508)
Loss per share
Basic		(0.99)p	(1.93)p
Diluted		(0.99)p	(1.93)p

	Notes	31 March 2009
		£
ASSETS
Non-current assets
Intangible assets	11	37,685
Property, plant and equipment	12	110,975
		148,660
Current assets
Inventories		1,743,594
Trade and other receivables		3,215,986
Cash and cash equivalents		54,135
Total assets		5,162,375
LIABILITIES
Current liabilities
Trade and other payables		5,081,170
Financial liabilities		-
Total liabilities		5,081,170

5.  Segmental reporting

Primary format - business segments

The Group operates from its UK base supplying goods into two main segments, the supply of medical devices as capital equipment and the ongoing supply of after sales goods and services derived from those capital sales.  

The segmental results for the period ended 31 March 2009 are as follows:

		Continuing Unallocated	Discontinued medical devices	Discontinued after sales	Discontinued unallocated	Total
		£	£	£	£	£
Revenue		-	6,308,261	5,901,588	-	12,209,849
Segment operating profit/(loss)		(186,823)	387,270	1,833,597	(2,310,337)	(276,293)
Finance cost		-	(3,997)	-	(109,943)	(113,940)
Tax expense		-	-	-	-	-
Profit/(loss) for the period		(186,823)	383,273	1,833,597	(2,420,280)	(390,233)
Balance sheet
Segment assets		61,901	2,635,716	657,556	1,871,768	5,226,941
Segment liabilities		10,624	2,807,275	536,033	1,737,862	5,091,794
Other segment information
Capital expenditure
	Intangible assets	-	5,308	-	-	5,308
	Property, plant and equipment	-	-	51,478	24,467	75,945
Depreciation		-	-	29,349	38,986	68,335
Amortisation of intangible assets		-	133,265	-	-	133,265

The segmental results for the year ended 30 September 2007 are as follows:
		Continuing Unallocated	Discontinued medical devices	Discontinued after sales	Discontinued unallocated	Total
		£	£	£	£	£
Revenue		-	1,901,032	3,075,126	-	4,976,158
Segment operating profit/(loss)		(181,009)	(283,245)	1,057,499	(1,093,635)	(500,390)
Finance cost		-	(4,687)	-	(72,440)	(77,127)
Tax expense		-	-	-	-	-
Profit/(loss) for the period		(181,009)	(287,932)	1,057,499	(1,166,075)	(577,517)
			Medical devices	After sales	Unallocated	Total
			£	£	£	£
Balance sheet
Segment assets			1,337,392	175,850	1,072,796	2,586,038
Segment liabilities			374,279	125,257	1,572,894	2,072,430
Other segment information
Capital expenditure
	Intangible assets		12,855	-	-	12,855
	Property, plant and equipment		-	36,753	21,901	58,654
Depreciation			-	13,073	25,256	38,329
Amortisation of intangible assets			185,430	-	-	185,430
Segment assets consist primarily of intangible assets, inventories and trade receivables.
Unallocated assets comprise of property, plant and equipment, cash and cash equivalents and other receivables.
Segment liabilities consist primarily of deferred income.

Secondary format - geographical segments

The Group's two main business segments operate in two main geographical areas, the UK and the rest of the world. All transactions are invoiced in Pounds Sterling.  

External revenue by location of customers
	Continuing period ended 31 March 2009	Discontinued period ended 31 March 2009	Total period ended 31 March 2009	Continuing year ended  30 September 2007	Discontinued year ended  30 September 2007	Total year ended  30 September 2007
	£	£	£	£	£	£
United Kingdom	-	12,111,264	12,111,264	-	4,802,901	4,802,901
Rest of the world	-	98,585	98,585	-	173,257	173,257
	-	12,209,849	12,209,849	-	4,976,158	4,976,158

Total assets by location of customers
	Continuing  31 March 2009	Discontinued 31 March 2009	Total 31 March  2009	30 September 2007
	£	£	£	£
United Kingdom	64,566	5,153,353	5,217,919	2,565,806
Rest of the world	-	9,022	9,022	20,232
	64,566	5,162,375	5,226,941	2,586,038

Capital expenditure by location of assets
			Continuing period ended 31 March 2009	Discontinued period ended 31 March 2009	Total period ended 31 March 2009	30 September 2007
			£	£	£	£
United Kingdom			-	81,253	81,253	71,509
Rest of the world			-	-	-	-
			-	81,253	81,253	71,509

6.  Finance costs

	Period ended 31 March  2009	Year ended  30 September 2007
	£	£
Interest payable on bank overdraft	2,450	19,721
Interest payable on factoring and stock advances	63,091	45,373
Interest payable on finance leases and hire purchase contracts	519	12,033
Other interest payable	47,880	-
	113,940	77,127

All finance costs relate to discontinued operations.

 7.  Income and expenses

		Period ended 31 March  2009	Year ended  30 September 2007
		£	£
Loss before taxation of the discontinued operation is stated after charging/(crediting):
Costs of inventories recognised as an expense		6,535,154	2,161,201
Depreciation of property, plant and equipment		68,335	38,330
Amortisation of intangible assets		133,265	185,430
Profit on disposal of property, plant and equipment		(800)	-
Operating lease expenses:
	plant and equipment	347,317	184,994
	property	83,490	55,200
Amortisation of grant received		(24,335)	(37,379)
Grants received for revenue expenditure		-	(10,740)
Foreign exchange losses/(gains)		276,308	(71,953)
Research and development costs expensed		171,048	94,191
Provision for doubtful debt		993	7,154
Compensation for breach of contract by trade debtor		-	(396,147)
Auditor's remuneration
During the financial period, the following services were obtained from the group's auditor, Baker Tilly UK Audit LLP and its associates:
Auditor services
	statutory audit of parent company and consolidated financial statements	14,175	9,120
Other services
	statutory audit of subsidiary undertaking	25,000	13,680
	taxation	18,200	3,161

8. Staff costs and directors' emoluments

	Continuing period ended 31 March 2009	Discontinued period ended 31 March 2009	Total period ended 31 March 2009	Continuing year ended  30 September 2007	Discontinued year ended  30 September 2007	Total year ended  30 September 2007
	£	£	£	£	£	£
Staff costs
Wages and salaries	247,831	2,471,253	2,719,084	162,893	1,665,406	1,828,299
Employer's national insurance contributions	-	286,465	286,465	-	197,795	197,795
Defined contribution pension costs	-	56,924	56,924	-	36,235	36,235
Share based payments	-	11,772	11,772	-	27,948	27,948
	247,831	2,826,414	3,074,245	162,893	1,927,384	2,090,277
Directors' emoluments
Directors' emoluments	247,831	262,700	510,531	162,893	207,849	370,742
Defined contribution pension costs	-	22,500	22,500	-	12,716	12,716
Compensation for loss of office	-	-	-	18,000	-	18,000
	247,831	285,200	533,031	180,893	220,565	401,458
Directors' emoluments have been allocated between continuing and discontinued operations to reflect the situation following the disposal of the subsidiary.
	Continuing period ended 31 March 2009	Discontinued period ended 31 March 2009	Total period ended 31 March 2009	Continuing year ended  30 September 2007	Discontinued year ended  30 September 2007	Total year ended  30 September 2007
	Number	Number	Number	Number	Number	Number
Number of directors accruing retirement benefits	-	2	2	-	2	2
	Continuing period ended 31 March 2009	Discontinued period ended 31 March 2009	Total period ended 31 March 2009	Continuing year ended  30 September 2007	Discontinued year ended  30 September 2007	Total year ended  30 September 2007
	£	£	£	£	£	£
Directors emoluments disclosed above include the following payments to the highest paid director:
Emoluments	202,831	-	202,831	132,893	-	132,893
Pension contributions	-	-	-	-	-	-
	202,831	-	202,831	132,893	-	132,893
Remuneration of key management
Wages and salaries	247,831	360,822	608,653	162,893	280,419	443,312
Employer's national insurance contributions	-	40,622	40,622	-	24,731	24,731
Defined contribution pension costs	-	27,433	27,433	-	15,535	15,535
Share based payments	-	11,772	11,772	18,000	9,948	27,948
	247,831	440,649	688,480	180,893	330,633	511,526
The key management of the group comprises the directors of the company and of its subsidiary.

	Period ended 31 March  2009	Year ended  30 September 2007
	Number	Number
The average number of persons (including executive directors) employed by the group during the period was:
Discontinued operations
Service and support	36	33
Sales and sales administration	7	11
Management and administration	7	4
Manufacturing	6	5
	56	53
Continuing operations
Management and administration	3	3
	59	56

9. Taxation

The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax applied to the losses for the period are as follows:
	Period ended 31 March  2009	Year ended  30 September 2007
	£	£
Loss before tax	(186,823)	(181,009)
Expected tax charge based on the standard rate of corporation tax of 28.67% (2007: 30%)	(53,562)	(54,303)
Items not allowable for tax purposes	3,375	4,334
Group relief	(27,222)	(2,531)
Income not taxable	77,409	52,500
Total tax charged to income statement	-	-
The total tax charged to the income statement is attributable to:
Continuing operations	-	-
Discontinued operations	-	-
	-	-

The standard rate of corporation tax was reduced from 30% to 28% with effect from 1 April 2008.

The group has tax losses of approximately £2.2 million (2007: £2.0 million), which are being carried forward to offset against future trading profits.  The deferred tax asset of approximately £616k (2007:£600k) has not been provided in respect of these losses since there is deemed to be sufficient uncertainty as to their recoverability against future profits.

10. Loss per share

The calculation of earnings per share is based upon the loss after taxation of £186,823 (2007: loss £181,009) and on 20,613,292 shares (2007: 20,513,292 shares) being the weighted average number of ordinary shares in issue during the period.

Since the exercise price of the 2,470,000 (2007: 2,846,676) share options is above the average fair price for the period and the prior year, the diluted earnings per share is equivalent to the basic earnings per share.

11. Intangible assets

	Development costs
	£
Cost
At 1 October 2007	767,308
Additions	5,308
Included in disposal group classified as held for sale	(772,616)
At 31 March 2009	-
Amortisation
At 1 October 2007	601,666
Charge in the period	133,265
Included in disposal group classified as held for sale	(734,931)
At 31 March 2009	-
Net book value
At 31 March 2009	-

	Development costs
	£
Cost
At 1 October 2006	754,453
Additions	12,855
At 30 September 2007	767,308
Amortisation
At 1 October 2006	416,236
Charge in the year	185,430
At 30 September 2007	601,666
Net book value
At 30 September 2007	165,642
The above development costs relate to the Clinic, Aerclens and Opticlens machines.  Development costs are being amortised on a straight line basis over a period of four years following the point of initial sale of the machines.

There were no intangible fixed assets (2007: £2,557) held under finance leases contracts. Amortisation charges in respect of assets held under finance leases during the period amounted to £2,557 (2007: £11,000).

12.  Property, plant and equipment

	Leasehold improvements	Plant and  machinery	Fixtures, fittings and computer equipment	Motor vehicles	Total
	£	£	£	£	£
Cost
At 1 October 2007	6,081	91,628	129,403	15,485	242,597
Additions	11,151	50,704	14,090	-	75,945
Disposals	-	-	-	(15,485)	(15,485)
Included in disposal group classified as held for sale	(17,232)	(142,332)	(143,493)	-	(303,057)
At 31 March 2009	-	-	-	-	-
Depreciation
At 1 October 2007	4,775	38,728	80,244	15,485	139,232
Charged in the period	2,309	30,859	35,167	-	68,335
Disposals	-	-	-	(15,485)	(15,485)
Included in disposal group classified as held for sale	(7,084)	(69,587)	(115,411)	-	(192,082)
At 31 March 2009	-	-	-	-	-
Net book value
At 31 March 2009	-	-	-	-	-

	Leasehold improvements	Plant and  machinery	Fixtures, fittings and computer equipment	Motor vehicles	Total
	£	£	£	£	£
Cost
At 1 October 2006	6,081	48,891	113,486	15,485	183,943
Additions	-	42,737	15,917	-	58,654
At 30 September 2007	6,081	91,628	129,403	15,485	242,597
Depreciation
At 1 October 2006	3,478	25,394	56,546	15,485	100,903
Charged in the year	1,297	13,334	23,698	-	38,329
At 30 September 2007	4,775	38,728	80,244	15,485	139,232
Net book value
At 30 September 2007	1,306	52,900	49,159	-	103,365

There was no plant, property and equipment (2007: £15,086) held under finance leases contracts. Depreciation charges in respect of assets held under finance leases during the period amounted to £12,167 (2007: £8,112).

 13.   Inventories

	31 March  2009	30 September 2007
	£	£
Raw materials and consumables	-	619,299
Work in progress	-	60,840
Finished goods	-	381,864
	-	1,062,003
Inventories classified as part of a disposal group	1,743,595	-
	1,743,594	1,062,003
There was no provision for impairment of inventories at the period end (2007: £nil) as all finished goods are of current specification and all raw materials and consumables are considered to be usable either as components in the production of complete machines or saleable as spare parts.

14.   Trade and other receivables

	31 March  2009	30 September 2007
	£	£
Trade receivables	-	1,211,816
Other debtors	-	-
Prepayments	54,618	38,056
	54,618	1,249,872
Trade and other receivables classified as part of a disposal group	3,215,986	-
	3,270,604	1,249,872
Analysis of trade receivables
Neither impaired nor past due date	-	1,061,425
Past due date but not impaired	-	150,391
	-	1,211,816
Ageing of past due but not impaired trade receivables
Up to three months	-	59,695
Between three and six months	-	90,696
More than six months	-	-
	-	150,391
Movements on the provision for impairment of trade receivables are as follows:
At beginning of period	-	10,040
Provided during the period	-	7,154
Amounts written off against provision	-	-
Unused amounts released	-	-
At end of the period	-	17,194
The carrying amounts of trade and other receivables approximates to their fair values.

15.   Trade and other payables

	31 March  2009	30 September 2007
	£	£
Trade payables	-	567,520
Other taxation and social security	-	117,315
Other payables	-	343,056
Accruals	10,624	-
Deferred government grants	-	24,335
	10,624	1,052,226
Trade and other payables classified as part of a disposal group	5,081,170	-
	5,091,794	1,052,226

The carrying amounts of trade and other payables approximates to their fair values.

16.  Financial liabilities

	31 March  2009	30 September 2007
	£	£
Bank overdraft (secured)	-	86,929
Factoring and stock advances (secured)	-	730,613
Obligations under finance lease contracts (secured)	-	3,083
Other loans	-	199,579
	-	1,020,204

The group has a bank overdraft facility which is secured by a fixed and floating charge over the assets of the group.

Factoring and stock advances are secured against trade debtors and finished goods, and finance leases against the assets to which they relate.

Other loans are not secured.

17.  Cash and cash equivalents

	31 March  2009	30 September 2007
	£	£
Cash at bank and in hand	64,083	5,156
Bank overdraft	-	(86,929)
	64,083	(81,773)

18.   Share capital

						31 March  2009	30 September 2007
						£	£
Authorised:
25,000,000 shares of 5p each						1,250,000	1,250,000
Allotted, called up and fully paid:
20,613,292 (2007: 20,613,292) ordinary shares of 5p each						1,030,665	1,030,665
There were no shares issued during the year.
During the year ended 30 September 2007, the Company issued 150,000 ordinary shares of 5p each to Mr B G Dale as part of his compensation for loss of office as a director. The shares were issued at a price of 9p per share.
The company has issued share options as follows:
	At 1 October 2007	Lapsed	At  31 March 2009	Exercise price	Date of Grant			Expiry date
	Number	Number	Number	p
Ordinary shares of 5p each:	660,000	(660,000)	-	25.0	19 December 2000			10 years
	100,000	-	100,000	25.0	26 April 2001			10 years
	300,000	-	300,000	25.0	24 January 2001			10 years
	376,676	(376,676)	-	25.0	19 December 2000			18 June 2008
	800,000	(250,000)	550,000	20.0	1 July 2004			7 years from  1 July 2007
	160,000	-	160,000	12.5	8 February 2006			10 years
	450,000	-	450,000	10.0	23 August 2007			10 years

Share based payments
The Group plan provides for a grant price equal to the average quoted market price of the Group shares on the date of grant. The vesting period is generally 3 to 4 years. If options remain unexercised after a period of 10 years from the date of grant, the options expire. Furthermore, options are forfeited if the employee leaves the Group before the options vest.
	31 March 2009		30 September 2007
	Options Number	Weighted average exercise price (p)	Options Number	Weighted average exercise price (p)
Outstanding at 1 October	2,846,676	20.5	2,396,676	22.5
Granted during the period	-	-	450,000	10.0
Forfeited during the period	(1,286,676)	24.0	-	-
Exercised during the period	-	-	-	-
Expired during the period	-	-	-	-
Outstanding at 31 March	1,560,000	17.6	2,846,676	20.5
Exercisable at 31 March	950,000	22.1	2,236,676	23.2
The options outstanding at 31 March 2009 had a weighted average remaining contractual life of 5 years (30 September 2007: 6 years).

There were no options granted in the period. The weighted average fair value of options granted in the year ended 30 September 2007 using the Black-Scholes option pricing model was £17,388. The inputs into the Black-Scholes model are as follows:
30 September 2007
Weighted average share price at date of grant	15.6p
Weighted average exercise price	16.0p
Expected volatility	25%
Expected life (years)	6
Risk free rate	4.75%
Expected dividends	-
Expected volatility was determined by calculating the historical volatility of the Group's share price over the previous five years.   During the period ended 31 March 2009 the Group recognised total share-based payment expenses of £11,772 (year ended 30 September 2007: £27,948). The share-based payment expense did not include any amount related to equity-settled share-based payment transactions (2007: £13,500) and no options were exercised during the period (2007: nil).

19.  Reserves

The nature and purpose of each reserve within equity is as follows:

Reserve	Description and purpose
Share premium	Amount subscribed for share capital in excess of nominal value
Merger reserve	Premium to the nominal value of shares issued to acquire a subsidiary undertaking
Retained earnings	Cumulative net gains and losses recognised in the consolidated income statement

20.  Capital commitments

There were no capital commitments at the period end or at the prior year end.

21.  Operating lease commitments

The total future minimum rentals payable under non-cancellable operating leases are as follows:

		31 March  2009	30 September 2007
		£	£
Land and buildings
	Within one year	55,660	55,660
	Within two to five years	97,635	181,125
	After five years	-	-
Other
	Within one year	198,124	153,269
	Within two to five years	132,050	102,034
	After five years	-	-

Operating lease payments represent rentals payable for office and warehouse facilities and for certain other assets such as motor vehicles and office equipment. The leases have varying terms and renewal rights.

All operating lease commitments at 31 March 2009 relate to discontinued operations.

 22.  Retirement benefits

The group operates a defined contribution pension scheme. The charge represents contributions payable by the group and amounted to £56,924 (2007: £36,235). Contributions totalling £Nil (2007: £Nil) were prepaid to the fund at the year end and are included in debtors.

23.  Financial risk management

Treasury management
The group's financial instruments comprise cash, short-term deposits, factoring and stock advances, hire purchase agreements and short-term debtors and creditors that arise directly from its operations. The main purpose of these financial instruments is to fund the group's operations as well as to manage working capital requirements.
It is, and has been throughout the period under review, the group's policy not to enter into derivative transactions and no trading in financial instruments has been undertaken. The group faces few risks in respect of its financial instruments.
Interest rate risk
At 31 March 2009 the group had no borrowings (30 September 2007 the group's only borrowings were bank overdraft, factoring and stock advances, finance lease arrangements and other loans).
Short-term receivables and payables
Short-term receivables and payables (other than bank overdraft, factoring and stock advances, finance lease arrangements and other loans) have been excluded from the following disclosures.
Interest rate exposure of financial assets and liabilities
The balance at the bank at 31 March 2009 amounted to £64,083 (2007: £81,773 overdrawn).
Cash at bank (net of overdraft) at 31 March 2009 was £64,083 (2007: £81,773 overdrawn). Of this balance, the overdraft of £nil (2007: £86,929 overdrawn) is interest bearing at a rate linked to bank base rate. The remaining balance is non-interest bearing. Borrowing facilities: The group had undrawn committed borrowing facilities, in respect of which all conditions precedent had been met, as follows:
	31 March  2009	30 September  2007
	£	£
Expiring in one year or less	1,500,000	769,808

The interest rate exposure of the financial liabilities of the group as at 31 March 2009 which related to factoring and stock advances and hire purchase and finance lease agreements was:
	Total			Variable rate	Fixed rate	Average interest rate	Average period until maturity
	£			£	£	£	Years
31 March 2009: Amounts falling due within one year:
(Sterling)
Bank overdraft	-			-	-	2%+ base rate	1
Factoring and stock advances	-			-	-	2.5%+ base rate	1
Finance leases	-			-	-	20%	1
Other loans	-			-	-	3%+ base rate	1
31 March 2009: Amounts falling due in more than one year but not more than two years:
(Sterling)
Finance leases	-			-	-	-	-
30 September 2007: Amounts falling due within one year:
(Sterling)
Bank overdraft	(86,929)			(86,929)	-	2%+ base rate	1
Factoring and stock advances	(730,613)			(730,613)	-	2.5%+ base rate	1
Finance leases	(3,083)			-	(3,083)	20%	1
Other loans	(199,579)			(199,579)	-	3%+ base rate	1
30 September 2007: Amounts falling due in more than one year but not more than two years:
(Sterling)
Finance leases	-			-	-	-	-
Fair value of financial assets and liabilities
The book value of financial instruments held or issued to finance the group's operations are not materially different from the fair value of those instruments.

24.  Related party transactions

Directors' interests are disclosed in the report of the Directors.  Directors' emoluments are disclosed in note 8.

Mr K M Gilmore is a director of Imseco Holdings Limited which received £190,831 (2007: £124,893) for management charges and expenses during the period.  These amounts are all included in directors' emoluments.

25.  Events since the period end date

On 6 August 2009, the Company completed the sale of its operating subsidiary Dawmed International Limited ('DIL') to Wassenburg & Co BV ('Wassenburg') for a consideration of £950,000 in cash, subject to adjustment depending on the net assets of DIL as at 30 June 2009. Under such adjustment, Wassenburg and the Company will share any shortfall or excess of such net assets below or above £75,000.  

Following completion of the sale, the Company's share capital continues to be admitted to trading on AIM and has developed a new investing policy based predominantly upon property agency, the acquisition and development of and/or investment in commercial property, the acquisition of land and development of high end residential property, together with potential corporate acquisitions, the latter mainly in the property sector.

Adalta Real Plc (formerly Dawmed Systems plc)

COMPANY BALANCE SHEET

31 March 2009 

	Notes	31 March  2009	30 September 2007
		£	£
Fixed assets
Investments	4	800,000	467,360
Current assets
Debtors
- due within one year	5	54,618	24,457
- due after more than one year	5	-	2,278,944
Cash at bank and in hand		9,948	85,415
		64,566	2,388,816
Creditors: Amounts falling due within one year	6	(13,289)	(247,987)
Net current assets		51,277	2,140,829
Net assets		851,277	2,608,189
Called up share capital	7	1,030,665	1,030,665
Share premium account	8	1,558,079	1,558,079
Profit and loss account	8	(1,737,467)	19,445
Shareholders' funds	9	851,277	2,608,189

1.  Accounting policies

The accounts have been prepared under the historical cost convention and in accordance with applicable accounting standards under UK Generally Accepted Accounting Principles (UK GAAP).

The following principal accounting policies have been applied.

Deferred taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the company's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements. 

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

Deferred tax assets are recognised to the extent that they are recoverable. They are considered to be recoverable on the basis that it is more likely than not that there will be suitable taxable profits from which the future reversal of timing differences can be deducted.

FRS 20 share based payments

The cost of equity settled transactions with employees is measured by reference to the fair value at the date at which they are granted and is recognised as an expense over the vesting period. In valuing equity settled transactions, no account is taken of any non-market based vesting conditions and no expense is recognised for awards that do not ultimately vest as a result of a failure to satisfy a non-market based vesting condition. None of the Group's equity settled transactions have any market based performance conditions.

Fair value for equity settled share based payments is estimated by use of the Black Scholes pricing model. At each balance sheet date before vesting, the cumulative expense is calculated based on management's best estimate of the number of equity instruments that will ultimately vest taking into consideration the likelihood of achieving non-market based vesting conditions. The movement in this cumulative expense is recognised in the income statement with a corresponding entry in reserves. The Group has taken advantage of the transitional provisions of FRS 20 in respect of the fair value of equity settled awards so as to apply FRS 20 only to those equity settled awards granted after 7 November 2002 that had not vested before 1 January 2006.

Investments

Investments held as fixed assets are stated at cost less any provision for impairment.

2.  Company profit and loss account

In accordance with the exemptions allowed by section 230 of the Companies Act 1985, the company has not presented its own profit and loss account. The loss for the year for the company before taxation was £1,768,684 (2007: loss £6,009).

3.  Taxation

The company has tax losses of approximately £nil (2007: £5,000), which are being carried forward to offset against future trading profits. No deferred tax asset has been provided in respect of these losses since there is deemed to be sufficient uncertainty as to their recoverability against future profits.

  4.  Investments

		£
Cost
At 30 September 2007		467,360
Capital contribution		2,184,500
At 31 March 2009		2,651,860
Impairment
At 30 September 2007		-
Impairment in the period		1,851,860
At 31 March 2009		1,851,860
Net book value
At 31 March 2009		800,000
At 30 September 2007		467,360

At 31 March 2009, the company held 100% of the ordinary shares of Dawmed International Limited, registered in England and Wales. The nature of the business is that of design, development, manufacturing, selling, distributing and servicing of washer disinfectors and washer disinfector dryers for the primary and secondary healthcare sectors.

5.  Debtors

	31 March  2009	30 September 2007
	£	£
Amounts falling due within one year:
Other debtors and prepayments	54,618	24,457
Amounts falling due after more than one year:
Amounts due from subsidiary undertaking	-	2,278,944
	54,618	2,303,401

6.  Creditors

	31 March  2009	30 September 2007
	£	£
Trade creditors	-	204,936
Accruals	10,624	43,051
Amounts due to subsidiary undertaking	2,665	-
	13,289	247,987

The group has a bank overdraft facility which is secured by a fixed and floating charge over the assets of the group.

7.  Share capital

	31 March  2009	30 September 2007
	£	£
Authorised:
25,000,000 shares of 5p each	1,250,000	1,250,000
Allotted, called up and fully paid:
20,613,292 (2007: 20,613,292) ordinary shares of 5p each	1,030,665	1,030,665

Information is respect of share based payments is set out at note 18 of the consolidated financial statements.

8.  Reserves

	Share premium account	Profit and loss account
	£	£
At 1 October 2007	1,558,079	19,445
Retained loss for the period	-	(1,768,684)
Adjustment in respect of employee share scheme	-	11,772
At 31 March 2009	1,558,079	(1,737,467)

9.  Reconciliation of movement in shareholders' funds

	31 March  2009	30 September 2007
	£	£
Loss for the financial period	(1,768,684)	(6,009)
Adjustment in respect of employee share scheme	11,772	14,448
Movement in share capital and share premium	-	13,500
Net movement in shareholders' funds	(1,756,912)	21,939
Opening shareholders' equity funds	2,608,189	2,586,250
Closing shareholders' equity funds	851,277	2,608,189

 

END

 

 

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