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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Densitron Tech. | LSE:DSN | London | Ordinary Share | GB0002637394 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 10.75 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jul 2019 to Jul 2024
TIDMDSN
RNS Number : 2466F
Densitron Technologies PLC
22 May 2013
DENSITRON TECHNOLOGIES PLC
PRELIMINARY UNAUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012
Densitron Technologies plc ("Densitron" or the "Company" or the "Group"), the designer, developer and distributor of electronic displays is pleased to announce its preliminary unaudited results for the year ended 31 December 2012.
-- Orders booked increased by 9% to GBP23.1 million (2011: GBP21.2 million). -- Profit from continuing operations of GBP0.6 million (2011: GBP1.1 million). -- Dividends for the year totaling 0.3p per share (2011: 0.6p per share). -- Earnings per share of 0.36p (2011: 1.18p).
-- Gross margin decreased from 29.6% to 28.6% reflecting the mix of sales made during the year.
-- New branch office in India has progressed well in the year. -- Optical Bonding Facility in Taiwan has been set up. -- A suite of software and smart TFT Solution (Ripdraw(TM)) has been introduced.
Jan G Holmstrom, Chairman of Densitron, commented:
"2012 was a difficult year for the Company but I am confident that with the introduction of new products and services the business will grow, as business confidence returns to the marketplace."
Enquiries:
Densitron Westhouse Securities Grahame Falconer / Tim Pearson Martin Davison / Jonathan Haines Tel: 0207 648 4200 Tel: 020 7601 6100
Chairman's Statement
Introduction
It is disappointing to report on the results for the year ended 31st December 2012 as I do not believe that they truly reflect the positive progress that the business has made over the last five years. The results reflect a general lack of confidence in the economy and caution exercised by customers, which has resulted in delays to orders which themselves have been at lower levels than originally anticipated. Together with some additional supply issues this has caused revenues to be at a lower level than expected and consequently operating profit to be lower than that achieved in the previous year. Nevertheless, I am pleased to report that the investment made over the year will enable the business to progress during the ensuing years.
Densitron Displays
The year was an extremely challenging and ultimately frustrating one for the displays business. Right up until the end of the year there was an expectation that certain revenues would be achieved but for reasons outside the Group's control these were delayed causing a shortage in the expected revenues and consequently operating profit for the year.
I outlined in my statement in the 2011 Annual Report that four specific business objectives had been identified and would be incorporated into the business plan:
-- Increase in market share from the existing business; -- Geographical expansion of the business; -- Introduction of new products to the current product offerings; and
-- Creation of more value by development of the Group's own products and intellectual property.
The first three of these objectives reflect how the business had been grown over the previous years and as objectives they remain unchanged but due to the global recession it has been difficult to increase our market share. However, at the beginning of 2012 we opened an office in India and this has progressed satisfactorily with a strong pipeline of business opportunities being developed. It is a complex marketplace and one that we will look to develop further as we see revenues being generated over the next 12 months. At the end of 2012 we appointed a commissioned agent to exclusively represent the business in The Netherlands and we are already seeing new opportunities for business in that region. We have also continued to expand on our existing product offering including our new range of E-Paper technology that generated its first sales during the year.
The final objective is an intention to differentiate the business from its competitors by offering either internally developed products or by providing additional services. During the year we have opened an Optical Bonding facility in Taiwan that will enable the business to offer a service to customers to improve the quality of the images displayed by their product. In addition we have developed a suite of software (Ripdraw(TM)) and smart TFT line that will enable customers to develop their own design to display their information without the requirement for employing "expensive" software developers. We anticipate that both of these new developments will enable our business to not only develop new customers but also retain existing ones by ensuring the business is offering more to customers than its competitors.
Land at Blackheath
The Group owns a 1.25 acre piece of land that the Group owns in Blackheath, South East London.
I reported in my statement last year that we were working on the reclassification of the land through the Local Development Framework and also exploring existing use rights on the site. This continues to be the case with the Local Development Framework issuing its consultancy document on 14 February 2013 with a consultation period of 3 months. We have lodged representations detailing the reasons that we consider that the land should no longer be designated as Metropolitan Open Land. Following the consultation period the plan will be revised and passed to a Planning Inspector who will review the plan and the key issues during a period of public examination prior to submitting the final plan to the Secretary of State for approval. It is likely that the timescales involved in the process will mean that the final plan will not be adopted by the Council until next year.
In the meantime the Council has confirmed the existing use class of the land and club house as D2 and accordingly issued an appropriate certificate of lawful use for both the land and club house. This confirmation was received in April 2013 and it is now our intention to submit a planning application to develop the footprint of the clubhouse into a residential dwelling. We will continue to advise shareholders when there is further information to report.
Shareholders
Capital growth - It is disappointing that the share price fell 25% during the year and has further weakened since the year end. I believe that this was in part due to operational performance and in part due to the uncertainty caused by the ongoing issue of the claim against the Company in respect of the lease of a property in Newcastle. The Executives have continued to meet with investors and potential investors during the year to present our business and future expectations and will continue to do so throughout the year.
Dividends - An interim dividend of 0.2p per share was paid to Shareholders in September 2012. Considering the results for the full year I think it is appropriate to propose a final dividend for the year of 0.1p per share (2011: 0.4p per share) resulting in a total dividend payment for the year of 0.3p per share (2011: 0.6p per share). This represents a return to Shareholders of 85% of profit for the year (2011: 51%). The Board remains committed to paying dividends to its Shareholders but will do so taking into account the requirements of the Group to ensure continued and sustained growth.
Claim against the Company
I reported in my statement in the 2011 Annual Report that the Company had received a writ in respect of unpaid rents on a property occupied by a former Group Company. Having reviewed all of the documentation surrounding the lease, some of which dates back more than 10 years with our Lawyers, we believe that there is considerable uncertainty surrounding the lease. We believe that the most appropriate way forward is to achieve a negotiated settlement with the Landlord to bring this matter to a close in order to avoid further substantial costs accruing on both sides and to make it possible to let the property which currently stands empty. At this stage we are unable to say at what level that settlement would be achieved.
Outlook and strategy
The Board regularly reviews the medium and long term strategy for the business and believes the main driver of the business should remain organic growth. I have already written about the strategy in my review of the business above and consider that the results from this strategy have yet to be realised to their maximum potential.
During the year, through internal development, we have added two potentially significant revenue streams with the Optical Bonding line and Ripdraw(TM) software and smart TFT line. We begin 2013 with little or no revenue from these two new products but consider that the demand for optical bonding in particular will grow rapidly during the year. However, we expect that Ripdraw(TM) will take longer to generate significant levels of business due to its complexity and consider that revenues will start to be made in the second half of the year and beyond.
The addition of an office in India provides a great opportunity for the business but it is a difficult market so it is taking time to develop. At the beginning of 2013 we have a good pipeline of business opportunities and we expect to see those opportunities being turned into orders and revenues during the current year.
Overall the first four months of 2013 have been mixed with parts of the Group exceeding expectations while other parts have found closing business to be particularly difficult. The pipeline of new business remains strong and we expect to see this being converted into new orders over the next few months. We have addressed certain operational issues which should mean that the business is more focussed and able to support its customers more effectively going forward.
I would like to thank the Directors and staff throughout the Group for their continued dedication during what has turned out to be a very difficult year. Despite the difficulties of 2012 the Group is in a far better position to move forward than it was even three years ago.
Finally I would like to thank the Company's Shareholders for their continued support.
Jan G Holmstrom
Chairman
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Densitron Technologies plc
Consolidated income statement
For the year ended 31 December 2012
2012 2011
GBP000 GBP000
Continuing operations
Revenue 22,612 23,130
Cost of sales (16,139) (16,274)
--------- ---------
Gross profit 6,473 6,856
Other operating income 12 78
Distribution costs (69) (72)
Administrative expenses (5,851) (5,769)
Profit from operations 565 1,093
Financial income - 1
Financial expenses (45) (33)
--------- ---------
Profit before tax 520 1,061
Income tax expenses (276) (245)
--------- ---------
Profit for the year 244 816
--------- ---------
Attributable to:
Equity holders of the parent 248 818
Non-controlling interests (4) (2)
--------- ---------
244 816
--------- ---------
Basic and diluted earnings per share 0.36p 1.18p
--------- ---------
Densitron Technologies plc
Consolidated statement of comprehensive
income
For the year ended 31 December 2012
2012 2011
GBP000 GBP000
Profit for the year 244 816
------- -------
Other comprehensive (expense)/income
Exchange (losses)/gains on translation
of foreign operations (483) 50
Total other comprehensive(expense)/income (483) 50
------- -------
Total comprehensive (loss)/profit for
the year (239) 866
------- -------
Total comprehensive (loss)/profit attributable
to:
Owners of the parent (234) 870
Non-controlling interests (5) (4)
------- -------
(239) 866
------- -------
Densitron Technologies plc
Consolidated Statement of Financial
Position
At 31 December 2012
2012 2011
GBP000 GBP000
Non current assets
Property, plant and equipment 839 806
Goodwill 143 143
Other intangible assets 388 174
Deferred tax assets 29 48
------- -------
1,399 1,171
------- -------
Current assets
Inventories 1,282 1,311
Trade and other receivables 5,132 4,673
Financial assets - 74
Income tax recoverable 116 130
Cash and cash equivalents 1,577 1,809
------- -------
8,107 7,997
------- -------
Total assets 9,506 9,168
------- -------
Current liabilities
Borrowings and overdrafts 2,132 1,694
Trade and other payables 3,234 2,503
Current tax payable 62 232
Provisions 9 134
------- -------
5,437 4,563
------- -------
Non current liabilities
Borrowings 134 25
Provisions 117 117
Deferred tax liabilities 54 44
------- -------
305 186
------- -------
Total liabilities 5,742 4,749
------- -------
3,764 4,419
------- -------
Equity
Share Capital 697 697
Retained earnings 2,750 2,907
Special reserve 97 107
Revaluation reserve 450 450
Translation reserve (260) 223
------- -------
Equity attributable to shareholders
of Densitron 3,734 4,384
Non-controlling interests 30 35
Total equity 3,764 4,419
------- -------
Densitron Technologies plc
Consolidated Cash Flow Statement
For the year ended 31 December 2012
2012 2011
GBP000 GBP000
Cash flows from operating activities
Profit before taxation 520 1,061
Adjustments for:
Depreciation 82 60
Amortisation 27 -
Net finance expense 45 32
674 1,153
Change in financial assets - (74)
Change in inventories (17) 23
Change in trade and other receivables (897) 243
Change in trade and other payables 813 (928)
Change in provisions (122) 100
------- --------
451 517
Income tax paid (388) (299)
------- --------
Net cash from operating activities 63 218
------- --------
Cash flows from investing activities
Interest received - 1
Deferred consideration on past disposal
of discontinued operations 74 165
Payment for intangible asset (243) (87)
Acquisition of property, plant and equipment (126) (111)
------- --------
Net cash (used in)/generated from investing
activities (295) (32)
------- --------
Cash flows from financing activities
Inception of new loans 237 83
Repayment of borrowings (24) (24)
Interest paid (45) (33)
Change in invoice discounting creditor (14) (675)
Change in letters of credit (71) (128)
Dividend paid to the owners of the Company (415) (968)
Repayment of capital to the owners of
the Company - (2,821)
------- --------
Net cash (used in)/generated from financing
activities (332) (4,566)
------- --------
Net (decrease)/increase in cash and
cash equivalents (564) (4,380)
Cash and cash equivalents at 1(st) January 1,616 6,002
Effect of exchange rate fluctuations
on cash held (91) (6)
------- --------
Cash and cash equivalents at 31(st)
December 961 1,616
------- --------
Densitron
Technologies
plc
Statement of Changes in
Shareholder's
Equity
For the year
ended 31
December 2012
Share Translation Special Revaluation Retained Total Non-controlling Total
Capital reserve reserve reserve earnings attributable interest Equity
to equity
holders
of parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at
1(st) January
2011 3,483 171 117 450 3,082 7,303 39 7,342
Profit/(loss)
for the
year - - - - 818 818 (2) 816
Other total
comprehensive
income - 52 - - - 52 (2) 50
Payment of
dividends - - - - (968) (968) - (968)
Capital
reduction (2,786) - - - 2,806 20 - 20
Return of
capital to
shareholders - - - - (2,786) (2,786) - (2,786)
Costs
associated
with
capital
reduction - - - - (55) -55 - (55)
Transfer from
special
reserve - - (10) - 10 - - -
-------- ------------ --------- ------------ --------- ------------- ---------------- --------
Balance at
31(st)
December
2011 697 223 107 450 2,907 4,384 35 4,419
-------- ------------ --------- ------------ --------- ------------- ---------------- --------
Balance at
1(st) January
2012 697 223 107 450 2,907 4,384 35 4,419
Profit/(loss)
for the
year - - - - 248 248 (4) 244
Other total
comprehensive
income - (483) - - - (483) (1) (484)
Payment of
dividends - - - - (415) (415) - (415)
Transfer from
special
reserve - - (10) - 10 - - -
-------- ------------ --------- ------------ --------- ------------- ---------------- --------
Balance at
31(st)
December
2012 697 (260) 97 450 2,750 3,734 30 3,764
-------- ------------ --------- ------------ --------- ------------- ---------------- --------
Densitron Technologies plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2012
1. Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union (Adopted IFRSs) and are in accordance with IFRS as issued by the IASB.
The accounting policies applied are consistent with those set out in the financial statements of Densitron Technologies plc for the year ended 31 December 2011. The financial information in the announcement is unaudited and does not constitute the company's statutory accounts for the years ended 31(st) December 2012 or 2011. The financial information for the year ended 31 December 2011 is derived from the statutory accounts for that year, which were prepared under IFRSs as adopted by the EU, which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 2006.
The statutory accounts for the year ended 31 December 2012, prepared in accordance with IFRSs as adopted by the EU, will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting.
2. Other operating income
2012 2011
GBP000 GBP000
Royalties receivable - 74
Other 12 4
------- -------
12 78
------- -------
3. Financial income and expense
2012 2011
GBP000 GBP000
Financial income
Bank deposit interest - 1
- 1
------- -------
Financial expenses
Bank borrowings 35 18
Invoice discounting charge 10 15
45 33
------- -------
4. Business and geographical segments
The chief operating decision maker in the organization is made up of an Executive Committee comprising the Executive Directors and Chairman, they have determined the operating segments detailed within this report and on which the business is managed.
The Group is managed by the geographical location of its subsidiaries and resources are allocated as required on this basis:
-- Europe - The European market, being so diverse, is serviced by subsidiaries based in four locations:
- UK - the UK is responsible for business conducted in the UK, management of offices in India, Italy and the Netherlands, management of the Group's distribution network and sales into other locations where the Group does not have a physical presence. The UK business contributed 27% (2011: 26%) to Group revenues.
- France - the subsidiary in France is responsible for business conducted in France and with French customers whose manufacturing operations may be located elsewhere in the world. The French business contributed 11% (2011: 15%) to Group revenues.
- Nordic - Densitron Nordic is the Group's subsidiary located in Finland and servicing business locally along with Sweden and customers located in the Baltic region. The Finnish business contributed 2% (2011: 2%) to Group revenues.
- Germany - Densitron Deutschland is the Group's subsidiary based in Germany. It is responsible for business conducted in Germany, Switzerland and Austria and through the Group's distributor based in Germany. The German business contributed 9% (2011: 10%) to Group revenues.
In total the European region represented the largest part of the business contributing 49% (2011: 53%) to Group revenues.
-- US - the US segment is responsible for business conducted in the US, Canada and Central and South America. It represents 35% (2011: 34%) of the Group total revenues.
-- Asia - The Asian segment is made up of subsidiaries located in Japan and Taiwan.
- Japan - Densitron Japan is responsible for sales into Japan. It contributed 13% (2011: 11%) to Group revenues.
- Taiwan - Densitron Asia is the Group's subsidiary located in Taiwan. It is primarily a facilitating function for the rest of the Group managing suppliers located in Taiwan and China. It contributed 2% (2011: 2%) to Group revenues.
Inter-segment transfer pricing is based on the level of work carried out and the risk encountered by each party in order to make a third party sale.
UK France Finland Germany US Japan Taiwan Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
2012
Revenue
Total 7,696 2,513 591 2,140 8,033 2,911 6,162 30,046
Intercompany (1,565) (78) (74) (44) (63) - (5,610) (7,434)
-------- -------- -------- -------- -------- -------- -------- ---------
Revenue
from external
customers 6,131 2,435 517 2,096 7,970 2,911 552 22,612
-------- -------- -------- -------- -------- -------- -------- ---------
Profit/(loss)
before tax (13) 76 (20) 69 656 331 (97) 1,002
-------- -------- -------- -------- -------- -------- -------- ---------
Balance
Sheet
Assets 2,351 791 187 749 2,307 1,333 1,074 8,792
Liabilities (1,937) (236) (47) (109) (1,066) (210) (1,314) (4,919)
-------- -------- -------- -------- -------- -------- -------- ---------
Net assets 414 555 140 640 1,241 1,123 (240) 3,873
-------- -------- -------- -------- -------- -------- -------- ---------
Other
Interest
payable 26 5 - - 7 2 - 40
Capital
expenditure
- Property,
plant and
equipment - 10 - 1 26 29 60 126
- Depreciation 1 4 1 1 63 7 - 77
- Capitalised
development
expenditure 29 - - 19 185 - 10 243
- Amortisation 27 - - - - - - 27
-------- -------- -------- -------- -------- -------- -------- ---------
UK France Finland Germany US Japan Taiwan Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
2011
Revenue
Total 7,794 3,516 472 2,328 7,997 2,434 7,045 31,586
Intercompany (1,703) (50) (21) - (158) - (6,524) (8,456)
-------- -------- -------- -------- -------- -------- -------- ---------
Revenue
from external
customers 6,091 3,466 451 2,328 7,839 2,434 521 23,130
-------- -------- -------- -------- -------- -------- -------- ---------
Profit/(loss)
before tax 338 81 (14) 55 779 306 71 1,616
-------- -------- -------- -------- -------- -------- -------- ---------
Balance
Sheet
Assets 1,899 1,137 209 734 2,255 1,438 565 8,237
Liabilities (1,777) (268) (44) (101) (910) (263) (766) (4,129)
-------- -------- -------- -------- -------- -------- -------- ---------
Net assets 122 869 165 633 1,345 1,175 (201) 4,108
-------- -------- -------- -------- -------- -------- -------- ---------
Other
Interest
payable 39 8 - - 3 1 - 51
Capital
expenditure
- Property,
plant and
equipment - 7 - - 89 15 - 111
- Depreciation 1 3 1 1 51 - - 57
- Capitalised
development
expenditure 87 - - - - - - 87
- Amortisation - - - - - - - -
-------- -------- -------- -------- -------- -------- -------- ---------
Reconciliation of reportable segments, profit and loss, assets and liabilities to the Group's corresponding amounts:
2012 2011
GBP000 GBP000
Revenue
Total revenue for reported segments 30,046 31,586
Elimination of inter-segmental
revenues (7,434) (8,456)
--------- ---------
Group's revenue per consolidated
statement of comprehensive income 22,612 23,130
--------- ---------
2012 2011
GBP000 GBP000
Profit/(loss) after income
tax expense
Total profit for reporting
segments 1,002 1,616
Costs associated with
head office (482) (555)
Income tax expenses (276) (245)
--------- ---------
Profit/(loss) after income
tax expense 244 816
--------- ---------
2012 2011
GBP000 GBP000
Assets
Total assets for reportable
segments 8,792 8,237
Assets attributable to
Head Office 215 432
Land at Blackheath 499 499
Group assets 9,506 9,168
--------- ---------
Liabilities
Total liabilities for reportable
segments 4,919 4,129
Liabilities attributable
to Head Office 823 620
--------- ---------
Group liabilities 5,742 4,749
--------- ---------
The analysis of the Group's segmental information by geographical location is:
External revenue Non current Capital expenditure
by location assets by location by location
of customers of asset of assets
2012 2011 2012 2011 2012 2011
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Total operations
UK 2,549 2,349 615 617 30 14
France 2,114 3,466 24 18 10 7
Finland 517 451 9 10 - -
Germany 1,848 2,328 119 100 20 -
Portugal 785 703 - - - -
Italy 428 557 - - - -
Other European 824 740 - - - -
USA 6,443 6,392 476 381 211 162
Canada 990 785 - - - -
Other Americas 15 22 - - - -
Japan 2,206 1,909 36 17 29 15
Taiwan 557 531 99 28 69 -
Malaysia 335 523 - - - -
China 1,736 1,405 - - - -
Other Asia 1,099 512 - - - -
Tunisia - 326 - - - -
Other Rest of the
world 166 131 - - - -
--------- -------- ---------- ---------- ---------- ----------
22,612 23,130 1,378 1,171 369 198
--------- -------- ---------- ---------- ---------- ----------
5. Tax expense
2012 2011
GBP000 GBP000
Current tax expense
UK corporation tax and income tax of overseas operations
on profits for the year 294 408
Adjustments for over provision in
prior periods 11 (59)
------- -------
305 349
Deferred tax expense
Origination and reversal of temporary
differences (29) (104)
------- -------
Total tax charge 276 245
------- -------
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the UK applied to profits for the year are as follows:
2012 2011
GBP000 GBP000
Profit before tax 520 1,061
------- -------
Expected tax charge based on the
standard rate of corporation tax
in the UK of 24% (2011: 26%) 125 276
Losses carried forward 99 4
Disallowed expenses 28 37
Utilisation of tax losses brought
forward (66) (85)
Adjustments for overseas rate 79 72
Adjustments to prior years tax charge 11 (59)
276 245
------- -------
6. Earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of earnings per share are as follows.
2012 2011
GBP000 GBP000
Profit attributable to ordinary shareholders 248 818
2012 2011
Number Number
Weighted average number of ordinary
shares
Issued ordinary shares at 1(st) January 69,669,106 69,669,106
Effect of purchase of Treasury shares on 23 October
2008 (500,000) (500,000)
----------- -----------
Weighted average number of ordinary shares at 31
December 69,169,106 69,169,106
----------- -----------
7. Contingent liabilities
It was reported in the 2011 report and accounts that the Group is a defendant in a legal claim involving a claim for outstanding rent arrears and the rectification of a 2003 lease of a property in Newcastle. The case is complicated and the Group continues to dispute the claim.
The specific areas of doubt and/or dispute are:
-- The validity of the 2003 lease itself.
-- The manner in which terms within the lease were altered after the form of the lease had been agreed but before the lease was actually signed.
-- Although the current Landlord believed there were errors in the signed lease in 2005, before it even bought the lease, it failed to lodge its current claim to change the tenant named in the lease from Ferrograph Limited to Densitron Technologies plc until 2012, 6 years after it had bought the lease when , on its own case, it had apparently alerted itself to the need for rectification, and almost 2 years after it had issued a notice to Ferrograph Limited, the party currently named in the lease as the tenant, to bring Ferrograph Limited's tenancy to an end (after which and, the Board believes, because of which Ferrograph Limited vacated the premises).
-- The manner in which from 2007 until mid-2010 the Landlord ostensibly accepted payment of rent from Ferrograph Limited and otherwise apparently treated it as its tenant following its sale by Densitron Technologies plc.
-- The liability for the fact that after issuing a notice to Ferrograph Limited to bring its tenancy to an end the Landlord delayed in bringing its claim to the attention of Densitron for a period approaching two years and then issued proceedings without complying with its obligation to give adequate notice of its intention to do so.
The Board considers that due to the level of uncertainty it remains inappropriate at present to make a provision against a potential loss. Nevertheless shareholders should note that the Board is attempting to achieve a settlement with the Landlord in order to bring this matter to a close, to avoid further substantial costs accruing on both sides and to make it possible to try to let the property which at present stands empty as a result of the Landlord issuing the notice to Ferrograph Limited in 2010. At present the Landlord's claim continues to escalate in line with the unpaid rent and this will continue to be the case until the matter is resolved in some way. If a settlement is achieved there will be a cost to the Group but at present there have been no substantive negotiations with the Landlord so it is not possible to estimate the cost of a settlement. At present the only information that can be provided is that the matter is expected to come to trial in December 2013 and the Board is trying to bring about a settlement.
In March 2012 it was announced to shareholders that a claim had been received against the Group for approximately GBP300,000 in unpaid back rent and that if the action was successful there would also be a liability for unpaid past business rates of GBP70,000. The announcement further explained that the landlord of the property was seeking rectification of an existing lease on the premises that runs until 2023 with an annual rent of GBP167,000 and annual business rates of approximately GBP60,000 and that, if the claim was successful, the Group would be liable for the unpaid back rent and rates and the ongoing liabilities until the conclusion of the lease in 2023.
As summarised above there is still a significant amount of uncertainty surrounding this dispute and at the date of approving the financial statements the board does not view this potential payment as a probable obligation on which a reliable estimate can be made, albeit it is a possible obligation. For these reasons no provision has been recognised in the financial statements and the Directors will continue to assess the likelihood of any payment becoming probable and reliable to estimate.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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