logo-loader
Chemistree Technology Inc.

Chemetall PLC - Annual Report and Accounts

RNS Number:4438S Chemetall PLC 16 April 2008 Chemetall PLC Report and financial statements 31 December 2007 Company Registration No. 252864 Page 1 Officers and professional advisers 2 Chairman's report 3 Directors' report 4 Statement of directors' responsibilities 7 Independent auditors' report - group 8 Consolidated income statement 10 Consolidated statement of recognised income and expense 11 Consolidated balance sheet 12 Consolidated cash flow statement 14 Notes to the accounts 15 Independent auditors' report - company 48 Company balance sheet 49 Notes to the company accounts 50 Page 2 Officers and professional advisers DIRECTORS Kurt Wenzel (age 58) Matthias Stoermer (age 43) Per Vannerberg (age 46) Rob Rydings (age 54) Secretary Rob Rydings Registered Office 65 Denbigh Road Bletchley Milton Keynes MK1 1PB Stockbrokers Cazenove & Co. 12 Tokenhouse Yard London EC2R 7AN Principal Bankers Barclays Bank PLC Eagle Point 1 Capability Green Luton LU1 3US Registrars Capita IRG 34 Beckenham Road Beckenham Kent BR3 4TU Auditors Deloitte & Touche LLP Chartered Accountants St Albans Chemetall PLC Page 3 Chairman's report I am pleased to report another good year, with sales showing an increase of over 7.5% on the previous year. This is an excellent result considering the continuing difficulties in the UK manfacturing sector. The increase comes mainly through increased sales from the small acquistion made during the year. We have though maintained sales in all traditional sectors with a combination of new accounts and improved service to existing customers. Results and dividends During the year the Group generated a profit on ordinary activities before taxation of #5.6 million (2006: #3.2 million) with a turnover of #20.1 million (2006: #18.7 million). The Group's loan assets, including any exchange movements and interest accrued thereon, totalled #89.9 million at 31 December 2007 (31 December 2006: #84.6 million). Preference dividends continue to be paid on the normal due dates. Board There have been no changes to the Board. Employees On behalf of the board I would like to thank our employees for their continuing commitment to our business. Chemetall PLC continues to invest in both internal and external training and development of all employees. The company has maintained its Investors in People registration. Outlook The volatile world market for raw materials continues to impact our manufacturing costs, but we have taken and will continue to take steps to limit the pressure on margins. We have set ambitious but realistic targets to increase sales over the coming year, in all sectors. We also continue with our tight control over all operating costs. Kurt Wenzel Chairman Chemetall PLC Page 4 Director's report The directors present their annual report and the audited financial statements for the year ended 31 December 2007. Activities The principal activities of the Group are the development, manufacture and marketing of specialised industrial chemicals. A review of the year's operations and significant financial aspects of the year's trading, together with an indication of the Group's future prospects, are included in the Chairman's report. The result for the year and the state of affairs of the Group are shown in the accounts and related notes. Dividends No ordinary dividends were paid during the period (31 December 2006: #nil). Preference dividends of #1,080,000 (31 December 2006: #1,080,000) were payable in the period. Key performance indicators The Company observes key financial indicators such as sales, earnings before interest tax depreciation and amortisation (EBITDA), and profit after tax. The Company also uses non-financial indicators in monitoring its business, such as customer satisfaction surveys, delivery on time, and first time pass rate. Significant risks and uncertainties The Company operates in a competitive market place where continuing growth is achieved by increased business at existing customers, by developing new income streams through offering new technologies, and by winning new clients. The Company is confident that it can achieve these objectives and minimise the risk of falling short of its targets by providing sector leading service quality to its customers at competitive prices. Acquisition of company's own preference shares At the end of the year, the directors had the authority to purchase through the market, by tender or by private treaty, at any time the preference shares of the company. The price shall not exceed the average of the middle market quotation during the period of ten business days immediately prior to the purchase, or at the market price provided it is not more than 5% higher than the aforementioned average price. The distributable reserves of the company are sufficient to pay the preference dividends. Policy and practice on payment of creditors The Group has adopted the Confederation of British Industry Code of Practice regarding the payment of suppliers and has a clear and consistent policy to ensure that it honours all its contractual payment terms to suppliers and liaises with suppliers without delay when invoices, or parts of invoices are contested so that a reasonable settlement can be negotiated. Details of the Code of Practice and the Group's policy can be obtained from the Company Secretary at the Company's registered office. At the year end there were 49 days' (31 December 2006: 49 days') purchases in trade creditors. Chemetall PLC Page 5 Director's report Going concern After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason the directors continue to adopt a going concern basis in preparing the financial statements. Directors The directors who held office during the year were as follows: MW Stoermer Appointed 12 August 2004 K Wenzel Appointed 19 April 2005 PGM Vannerberg Appointed 2 January 2006 RS Rydings Appointed 2 January 2006 The directors of the Company are covered by Directors' and Officers' Liability insurance. Employees It is the Group's policy not to discriminate against the disabled or racial minorities in recruitment, career development and promotion. There is close consultation between management and other employees on matters of concern. The Group has, over a period of years, established various ways of providing information to its people by the use of regular newsletters and the provision of copies of the annual report and accounts. Political and charitable contributions The group made no political contributions during the period. Donations to UK charities amounted to #505 (31 December 2006: #1,000). ISO accreditation Chemetall PLC has achieved accreditation to ISO 14001-2004 the world recognised environmental management system, continuing the process started in 1996. During 2005 Chemetall PLC received their permit from the Environment Agency under IPPC (integrated pollution, prevention, and control) regulation. In 2004 Chemetall PLC was accredited to the new automotive industry standard TS16949. Taxation The Group's tax charge on profit is #1.6 million. Details of the tax charge are given in note 11. Chemetall PLC Page 6 Directors' report Treasury Policies The Group's treasury policies, which are approved by the board, seek to eliminate risk from currency movements affecting sales and purchases denominated in foreign currencies. We use instruments such as forward currency sale or purchase contracts where practical and cost effective. Where appropriate, the Group's financial systems are able to transact business denominated in foreign currencies. No forward contracts were used in the year, and the year end exposure is nil. Exemption from Corporate Governance disclosures As the Group has only debt securities listed on the London Stock Exchange, it has availed itself of an exemption from the financial services authority's requirement to make corporate governance disclosures and from auditor review thereof. Disclosure of information to auditors Each of the persons who is a director at the date of approval of this report confirms that: so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware; and the director has taken all the steps that he/she ought to have taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the company's auditors are aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of s234A of the Companies Act 1985. Auditors In accordance with Section 384 of the Companies Act 1985, a resolution for the re-appointment of Deloitte & Touche LLP as auditors of the company is to be proposed at the forthcoming Annual General Meeting. Approved by the Board of Directors and signed on behalf of the Board on 4 April 2008 Rob Rydings Director Chemetall PLC Page 7 Statement of directors' responsibilities The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. The directors are required by the IAS Regulation to prepare the group financial statements under International Financial Reporting Standards (IFRS's) as adopted by the European Union. The group financial statements are also required by law to be properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation. International Accounting Standard 1 requires that IFRS financial statements present fairly for each financial year the company's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's 'Framework for the preparation and presentation of financial statements'. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. However, directors are also required to: properly select and apply accounting policies; present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance. The directors have elected to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The parent company financial statements are required by law to give a true and fair view of the state of affairs of the company. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the parent company financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Chemetall PLC Page 8 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CHEMETALL PLC We have audited the group financial statements of Chemetall PLC for the year ended 31 December 2007 which comprise the Group Income Statement, the Group Balance Sheet, the Group Cash Flow Statement, the Group Statement of Recognised Income and Expense and the related notes 1 to 33. These group financial statements have been prepared under the accounting policies set out therein. We have reported separately on the parent company financial statements of Chemetall PLC for the year ended 31 December 2007. This report is made solely to the company's members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the Annual Report and the group financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are set out in the Statement of Directors' Responsibilities. Our responsibility is to audit the group financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the group financial statements give a true and fair view, whether the group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation. We also report to you whether in our opinion the information given in the Directors' Report is consistent with the group financial statements. In addition we report to you if, in our opinion, we have not received all the information and explanations we require for our audit, or if information specified by law regarding director's remuneration and other transactions is not disclosed. We read the other information contained in the Annual Report as described in the contents section and consider whether it is consistent with the audited group financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the group financial statements. Our responsibilities do not extend to any further information outside the Annual Report. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the group financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the group financial statements, and of whether the accounting policies are appropriate to the group's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the group financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the group financial statements. Chemetall PLC Page 9 INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CHEMETALL PLC (continued) Opinion In our opinion: the group financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the group's affairs as at 31 December 2007 and of its profit for the year then ended; the group financial statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation; and the information given in the Directors' Report is consistent with the group financial statements. Separate opinion in relation to IFRSs As explained in Note 1 to the group financial statements, the group in addition to complying with its legal obligation to comply with IFRSs as adopted by the European Union, has also complied with the IFRSs as issued by the International Accounting Standards Board. In our opinion the group financial statements give a true and fair view, in accordance with IFRSs, of the state of the group's affairs as at 31 December 2007 and of its profit for the year then ended. Deloitte & Touche LLP Chartered Accountants and Registered Auditors St Albans, United Kingdom 9 April 2008 Chemetall PLC Page 10 Consolidated income statement Year ended 31 December 2007 Note Year ended 31 December 2007 Year ended 31 December 2006 #000 #000 Revenue 4 20,065 18,687 Cost of sales (12,310) (11,659) Gross profit 7,755 7,028 Distribution costs (4,219) (4,163) Administrative expenses (1,466) (1,710) Other operating expenses (143) (84) Profit from operations 6 1,927 1,071 Investment revenue 9 4,766 3,292 Finance costs 10 (1,080) (1,131) Profit before tax 5,613 3,232 Tax 11 (1,646) 105 Profit for the year 3,967 3,337 The results for the current and preceding financial periods are derived from continuing operations. Under Section 230(A) of the Companies Act 1985 the company is exempt from the requirement to present its own income statement. Chemetall PLC Page 11 Consolidated statement of recognised income and expense Year ended 31 December 2007 Year ended 31 December 2007 Year ended 31 December 2006 #000 #000 Exchange gain/(loss) on translation of foreign operations 3,734 (779) Actuarial gains on defined benefit pension schemes 3,488 1,318 Tax on items taken directly to equity (977) (395) Net gain recognised directly in equity 6,245 144 Profit for the year 3,967 3,337 Total recognised income and expense for the year 10,212 3,481 Chemetall PLC Page 12 Consolidated balance sheet 31 December 2007 Note 31 December 2007 31 December 2006 #000 #000 Non-current assets Goodwill 13 2,475 2,475 Other intangible assets 14 1,238 261 Property, plant and equipment 15 1,304 1,196 Trade and other receivables 17 29,695 - Deferred tax assets 19 3,550 4,654 38,262 8,586 Current assets Inventories 16 1,442 1,443 Trade and other receivables 17 64,380 88,292 Cash and cash equivalents 3,236 2,157 69,058 91,892 Total assets 107,320 100,478 Current liabilities Trade and other payables 21 (6,284) (5,815) Tax liabilities (1,566) (1,879) Provisions 22 (154) (197) Interest bearing loans and borrowings 20 (12,000) - (20,004) (7,891) Net current assets 49,054 84,001 Chemetall PLC Page 13 Consolidated balance sheet (continued) 31 December 2007 Note 31 December 2007 31 December 2006 #000 #000 Non-current liabilities Interest bearing loans and borrowings 20 - (12,000) Retirement benefit obligation 29 (3,567) (7,312) Long-term provisions 22 (1,364) (1,102) (4,931) (20,414) Net assets 82,385 72,173 Equity Share capital 23 6,889 6,889 Share premium account 24 29,757 29,757 Translation reserve 26 1,899 (1,835) Retained earnings 25 43,840 37,362 Total equity 82,385 72,173 The financial statements were approved by the board of directors and authorised for issue on 4 April 2008 They were signed on its behalf by: Rob Rydings Director Chemetall PLC Page 14 Consolidated cash flow statement Year ended 31 December 2007 Note Year ended 31 December Year ended 31 December 2007 2006 #000 #000 Net cash from operating activities 27 1,485 825 Investing activities Interest received 4,766 3,292 Amounts loaned to group undertakings (2,593) (43,900) Purchases of property, plant and equipment (308) (130) Acquisition of trade and assets (1,191) - Net cash used in investing activities 674 (40,738) Financing activities Interest paid - (51) Preference dividend paid (1,080) (1,080) Net cash from financing activities (1,080) (1,131) Net increase/(decr ease) in cash and cash equivalents 1,079 (41,044) Cash and cash equivalents at beginning of year 2,157 43,201 Cash and cash equivalents at end of year 3,236 2,157 The 2006 comparative figures have been restated as follows, the additional loans made to group undertakings and the interest received have been reclassified from Financing Activities to Investing Activities. Chemetall PLC Page 15 Notes to the accounts Year ended 31 December 2007 1.General information Chemetall PLC is a company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is given on page 2. The nature of the group's operations and its principal activities are set out in note 4 and in the directors' report. These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the group operates. Foreign operations are included in accordance with the policies set out in note 2. At the date of authorisation of these financial statements, the following Standards, amendments to standards and Interpretations, which have not been applied in these financial statements, were in issue but not yet effective for the year ended 31 December 2007: IFRS 8 Operating Segments IAS 23 (Revised) Borrowing Costs IFRIC 11 IFRS 2 Group and Treasury Share Transactions IFRIC 12 Service Concession Arrangements IFRIC 13 Customer Loyalty Programmes IFRIC 14 IAS 19 The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the company except for additional disclosures on capital and financial instruments and the additional requirement of IFRS 8, when the relevant standards come into effect for periods commencing on or after 1 January 2008. 2.Significant accounting policies Basis of accounting The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs), adopted for use in the European Union. The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The principal accounting policies adopted are set out below. Chemetall PLC Page 16 Notes to the accounts Year ended 31 December 2007 2.Significant accounting policies (continued) Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to profit and loss in the period of acquisition. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. A list of the significant investments in subsidiaries, including the name, country of incorporation and proportion of ownership interest is given in note 7 to the company's separate financial statements. Goodwill Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed. Goodwill arising on acquisitions before the date of transition to IFRSs has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has not been reinstated and is not included in determining any subsequent profit or loss on disposal. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes. Sales of goods are recognised when goods are delivered and title has passed. Interest income is accrued on a time 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. Leasing Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight line basis over the lease term. Chemetall PLC Page 17 2. Significant accounting policies (continued) Financial income and expenses Financial income comprises interest receivable on cash balances, deposits and loans to group undertakings as well as foreign currency gains. Interest income is recognised as it accrues, using the effective interest rate method. Financial expenses comprise interest payable on bank loans, unwinding of the discount on provisions, financial costs of post-retirement benefit plans and foreign currency losses. Interest payable is recognised on an accruals basis, based on effective interest rate method. Foreign currency gains and losses are reported on a net basis. Foreign currencies The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purposes of the consolidated financial statements, the results and financial position of each group company are expressed in pounds sterling, which is the functional currency of the Company and the presentation currency for the consolidated financial statements. Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in net profit or loss for the period, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity. Non monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. On consolidation, the assets and liabilities of the group's overseas operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if any, are classified as equity and transferred to the group's translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of. Borrowing costs Borrowing costs are recognised in profit or loss in the period in which they are incurred. Post-retirement benefits The Group accounts for pensions and post-retirement benefits under IAS 19 Employee benefits. For defined benefit plans, obligations are measured at present value, while plan assets are recorded at fair value. The operating and financing costs of such plans are recognised in the income statement. Current service costs are spread systematically over the lives of employees and financing costs are recognised in the periods in which they arise. Actuarial gains and losses are recognised in the period in which they arise in the statement of recognised income and expense. Inventories Inventory and work in progress is valued at the lower of cost, including appropriate overheads, and net realisable value. Provisions are made against excess and obsolete inventories. Chemetall PLC Page 18 Notes to the accounts Year ended 31 December 2007 2.Significant accounting policies (continued) Intangible assets Patents are initially recognised at cost and then amortised in line with the stated life of the patents, between 1 and 20 years. Customer contracts are amortised over the length of the contract. All other intangible assets are amortised over their estimated useful life, not exceeding 20 years, starting in the year after acquisition. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any provision for impairments in value. Depreciation is provided to write off cost less the estimated residual value of property, plant and equipment by equal instalments over their estimated useful economic lives as follows: Leasehold Improvements-life of the lease Plant and machinery-10-33% per annum Fixtures and equipment-20% per annum The directors regularly consider the carrying value of property, plant and equipment for impairment. Any reduction in value arising from the impairment of the property, plant and equipment is charged to the income statement for the year. Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the group reviews the carrying amounts of its tangible 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 (if any). The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised as income immediately, unless the relevant asset is carried at the revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Financial instruments Trade receivables - Trade receivables are recognised initially at fair value, thereafter measured at amortised cost using the effective interest rate method. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Trade payables - Trade payables are recognised initially at fair value, thereafter measured at amortised cost using the effective interest rate method. Trade payables are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. Chemetall PLC Page 19 Notes to the accounts Year ended 31 December 2007 2.Significant accounting policies (continued) Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Share capital Preference share capital is classified as a liability as dividend payments are not discretionary. Dividends on the preference shares are disclosed as interest charges and are accounted for on an accrual basis. Other dividends are recognised as a liability only in the period in which they are declared. Interest Interest receivable is recognised in the income statement using the effective interest method as defined in IAS 39 Financial instruments: recognition and measurement. Taxation The tax expense represents the sum of tax currently payable and deferred tax. Provision for taxation is made at the current rate and for deferred taxation at the tax rate expected to apply on all temporary differences between the treatment of certain items for taxation and for accounting purposes. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity. Provisions A provision is created and recognised as a liability when the Group has a present obligation (legal or constructive) as a result of a past event and it is expected that a transfer of economic benefits will be required to settle that obligation and a reliable estimate of the amount of the transfer can be made. Vacant leasehold properties A provision is maintained in respect of vacant leasehold properties to take account of the lease commitments over the remaining term of the lease. In determining the net present value, cash flows have been discounted using an appropriate nominal, risk-free, pre-tax rate of return. Chemetall PLC Page 20 Notes to the accounts Year ended 31 December 2007 2.Significant accounting policies (continued) Critical accounting judgements and key sources of estimation uncertainty In the process of applying the company's accounting policies, which are described in Note 2, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements. Stock and Bad debt provisions The group policy for provisions is noted above. 3.Financial risk management Overview Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, trade and other payables and loans, borrowings and debt instruments. Accounting for finance income and expense is discussed in note 2. The Group has exposure to the following risks from its use of financial instruments: credit risk liquidity risk market risk currency risk This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The primary method by which risks are monitored and managed by the Group is through the monthly Executive Committee. Prior to each monthly meeting the attendees will review the risk matrices and update them. At the meeting, any significant new risks or change in status to existing risks will be discussed and actions taken as appropriate. The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Executive Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. Chemetall PLC Page 21 Notes to the accounts Year ended 31 December 2007 3.Financial risk management (continued) Credit risk Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations. The group's principal financial assets are bank balances and cash and trade and other receivables, which represent the group's maximum exposure to credit risk in relation to financial assets. The group's credit risk is primarily attributable to its trade and amounts from group undertakings receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables, estimated by the group's management based on prior experience and their assessment of the current economic environment. The group has no significant concentration of credit risk, with exposure spread over a large number of customers. Any new customers are subject to credit checks (in many cases through Dun & Bradstreet credit reports). Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 28 days, this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. Market risk Market risk is the risk that changes in market prices, such as foreign exchange and interest rates will affect the Group's income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Currency risk The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities, primarily the Pound Sterling (GBP), but also the Euro. The currencies in which these transactions primarily are denominated are GBP and Euro. Interest on borrowings is denominated in currencies that match the cash flows generated by the underlying operations of the Group, primarily GBP. This provides an economic hedge and no derivatives are entered into. 100 percent of the Group's sales are denominated in sterling. Capital management The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board monitors the spread of shareholders, as well as the return on capital, and the level of dividends to ordinary shareholders. There were no changes in the Groups' approach to capital management during the year. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. Chemetall PLC Page 22 Notes to the accounts Year ended 31 December 2007 4.Analysis of revenue All activities are derived from the development, manufacture and marketing of specialised industrial chemicals. All revenue recorded represents sale of goods. 5.Business and geographical segments The primary reporting format is deemed to be business segments. All activities are derived from the development, manufacture and marketing of specialised industrial chemicals. As such, the directors deem that there is only one reportable segment. The secondary reporting format is therefore deemed by the directors to be geographical segments. No separate geographical segment consists of more than 10% of total revenue or total assets; therefore no further analysis of geographical segments is presented. 6.Profit from operations Profit from operations has been arrived at after charging: 2007 2006 #000 #000 Depreciation of property, plant and equipment 200 184 Amortisation of intangible assets 29 152 Staff costs (see note 8) 4,331 4,302 Auditors' remuneration and other audit services - statutory audit 42 31 Total non-audit fees were #nil (2006:#nil). Chemetall PLC Page 23 Notes to the accounts Year ended 31 December 2007 7.Acquisitions On 19 February 2007 Chemetall PLC acquired the trade and assets of the chemical division business of Wirral Fospray Limited for a consideration of #1,191,000. The acquired business was integrated into the operations of Chemetall PLC. All intangible assets were recognised at their respective fair values. Stock was valued at its carrying value plus a fair value adjustment of #20,000 as detailed below: Carrying value Fair value Fair Value pre-acquisition adjustments #000 #000 #000 Non-current assets Intellectual property - 300 300 Non-compete agreement - 50 50 Customer relationships - 656 656 - 1,006 1,006 Current assets Inventory including step up 180 20 200 Other receivables 35 - 35 215 20 235 Current liabilities (50) - (50) Fair value of net assets acquired 165 1,026 1,191 --- Consideration 1,191 No goodwill arose on this acquisition. Chemetall PLC Page 24 Notes to the accounts Year ended 31 December 2007 8.Staff costs The average monthly number of employees (including executive directors) analysed by category was: 2007 2006 Number Number Specialised industrial chemicals 91 93 #000 #000 Their aggregate remuneration comprised: Wages and salaries 3,242 3,242 Social security costs 362 373 Other pension costs 727 687 4,331 4,302 Remuneration of directors Year ended 31 December 2007 Year ended 31 December 2006 #000 #000 Wages and salaries 104 110 Social security costs 13 14 Other pension costs 18 17 135 141 Retirement benefits are accruing to one director (31 December 2006: one). 9.Investment revenue 2007 2006 #000 #000 Interest on loans to group undertakings 4,720 918 Interest on cash and other balances 21 2,374 Retirement Benefit net finance income 25 - 4,766 3,292 Chemetall PLC Page 25 Notes to the accounts Year ended 31 December 2007 10.Financial costs 2007 2006 #000 #000 Dividends on preference shares 1,080 1,080 Retirement benefit net interest cost - 51 1,080 1,131 11.Tax 2007 2006 #000 #000 Current tax: UK corporation tax 1,413 978 Adjustments related to earlier years 106 (85) 1,519 893 Deferred tax (note 19): Current year 227 (998) Adjustments related to earlier years (100) - 127 (998) 1,646 (105) Corporation tax is calculated at 30 % (2006: 30 %) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The charge for the year can be reconciled to the profit per the income statement as follows: 2007 2007 2006 2006 #000 % #000 % Profit before tax 5,613 n/a 3,232 n/a Tax at the UK corporation tax rate of 1,684 30 970 30 30% (2006: 30%) Tax effect of expenses that are not deductible 33 1 64 2 in determining taxable profit Tax effect of utilisation of items previously - - (388) (12) disallowed for tax Adjustments related to earlier years 6 - (85) (3) Preference dividend 324 6 324 10 Increased recognition of losses (725) (13) (990) (30) Rate Change 324 5 Tax expense and effective tax rate for 1,646 29 (105) (3) the year ======== ======== ======== ======== Chemetall PLC Page 26 Notes to the accounts Year ended 31 December 2007 12.Dividends The dividend distributed to the equity holders is nil (2006: nil). The dividend paid at interim to the holders of 9% redeemable preference shares was #540,000 (2006: #540,000). The final dividend proposed is #540,000 (2006: #540,000). Dividends on the 9% redeemable preference shares are presented as financial costs in the income statement in accordance with IAS 32 'Presentation of financial instruments'. 13.Goodwill #000 Cost At 1 January 2006, 1 January 2007 and 31 December 2007 2,475 No impairment losses have been recognised on the above goodwill balance. All of the goodwill shown above relates to a single Cash Generating Unit ('CGU'). The group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amounts from the CGU are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. Chemetall PLC Page 27 Notes to the accounts Year ended 31 December 2007 14.Other intangible assets Customer Patents Customer Intellectual Non-compete Total contracts #000 and relationships Property Agreement #000 trademarks #000 #000 #000 #000 Cost At 1 January 2006 and 1 January 2007 250 1,108 - - - 1,358 Additions in the year - - 656 300 50 1,006 At 31 December 250 1,108 656 300 50 2,364 2007 Amortisation At 1 January 2006 130 815 - - - 945 Charge for the 120 32 - - - 152 year At 1 January 2007 250 847 - - - 1,097 Charge for the - 29 - - - 29 year At 31 December 250 876 - - - 1,126 2007 Carrying amount At 31 December - 232 656 300 50 1,238 2007 At 31 December - 261 - - - 261 2006 The amortisation period for customer contracts is 2 years. Patents and trademarks are amortised over their estimated useful lives, until expiry of legal rights. Other intangible assets are amortised over their estimated useful life, not exceeding 20 years, starting in the year after acquisition. Chemetall PLC Page 28 Notes to the accounts Year ended 31 December 2007 15.Property, plant and equipment Leasehold Plant and Fixtures Total improvements machinery and #000 #000 equipment #000 #000 Cost At 1 January 2006 2,481 2,370 779 5,630 Additions 87 43 - 130 At 1 January 2007 2,568 2,413 779 5,760 Additions 42 266 - 308 Disposals (2) - - (2) At 31 December 2007 2,608 2,679 779 6,066 Accumulated depreciation and impairment At 1 January 2006 (1,562) (2,047) (771) (4,380) Charge for the year (130) (49) (5) (184) At 1 January 2007 (1,692) (2,096) (776) (4,564) Charge for the year (145) (52) (3) (200) Disposals 2 - - 2 At 31 December 2007 (1,835) (2,148) (779) (4,762) Carrying amount At 31 December 2007 773 531 - 1,304 At 31 December 2006 876 317 3 1,196 16.Inventories 31 December 2007 31 December 2006 #000 #000 Raw materials and consumables 380 403 Work in progress 24 20 Finished goods and goods for resale 1,038 1,020 1,442 1,443 Chemetall PLC Page 29 Notes to the accounts Year ended 31 December 2007 17.Trade and other receivables 31 December 2007 31 December 2006 #000 #000 Trade receivables 3,428 2,995 Amounts due from group undertakings 90,426 85,140 Prepayments and accrued income 221 157 94,075 88,292 Of the amounts due from group undertakings, #60,731,000 is due on or before 31 December 2008 (2006: #85,140,000 due on or before 31 December 2007) unless those parties agree to extend the terms. #29,695,000 is due after 31 December 2008 (2006: #nil due after 31 December 2007). An allowance has been made for estimated irrecoverable amounts from the sale of goods of #200,000 (2006: #244,000). This allowance has been determined by reference to past default experience. The average credit period taken on sales of goods/services is 61 days (2006: 59 days). The directors consider that the carrying amount of trade and other receivables approximates to their fair value. The Group's exposure to credit and currency risks and impairment losses related to trade and other receivables are disclosed in note 31. 18.Other financial assets Bank balances and cash Bank balances and cash comprise cash held by the group and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value. Chemetall PLC Page 30 Notes to the accounts Year ended 31 December 2007 19.Deferred tax The following are the major deferred tax assets recognised by the group during the current and prior reporting period. Accelerated Short term Retirement Tax Total capital timing benefit losses allowance differences obligations #000 #000 #000 #000 #000 Cost or valuation At 1 January 62 425 2,613 951 4,051 2006 Credit/ (charge) 65 (33) (24) 990 998 to income Credit/ (charge) - - (395) - (395) to equity At 1 January 127 392 2,194 1,941 4,654 2007 Credit/ (charge)to income and effect 58 50 (218) (17) (127) of change in tax rate Credit/ (charge) - - (977) - (977) to equity At 31 December 185 442 999 1,924 3,550 2007 At the balance sheet date, the group has unused tax losses of #6,872,000 (2006: 9,133,000) available for offset against profits. A deferred tax asset has been recognised in respect of #6,872,000 (2006: #6,470,000) of such losses. In 2006 no deferred tax was recognised in respect of an amount of #2,415,000 due to unpredictability of future profit streams. The tax losses can be carried forward indefinitely. Chemetall PLC Page 31 Notes to the accounts Year ended 31 December 2007 20.Interest bearing loans and borrowings 31 December 2007 31 December 2006 No. #000 No. #000 Authorised Non-equity: 9% redeemable preference shares of #1 each 15,000,000 15,000 15,000,000 15,000 Allotted, called up and fully paid Non equity: 9% redeemable preference shares of #1 each 12,000,000 12,000 12,000,000 12,000 The Company issued 12,000,000 9% redeemable preference shares of #1 each. These preference shares entitle their holders to a fixed cumulative preference dividend at a rate of 9% per annum, per share. On a winding up the preference shareholders are entitled to a sum equal to the nominal capital paid up or credited as paid up, on the preference shares held by them, together with all arrears (if any) of the preference dividend. They carry the right to receive notice of, or attend, or vote at General Meetings only in special circumstances such as when the preference dividend is six months or more in arrears or if redemption has not been made on the due date, or in such cases as a winding up of the Company or a reduction in its share capital. The preference shares have to be redeemed at par on 3 July 2008. The 9% redeemable preference shares are presented as current liabilities in the balance sheet and the associated dividend payable as interest expense in the income statement in order to comply with IAS 32 'Presentation of financial instruments'. 21.Other financial liabilities Trade and other payables 31 December 2007 31 December 2006 #000 #000 Trade creditors 1,476 1,619 Amounts owed to group undertakings 2,202 1,908 Accruals and deferred income 2,066 1,748 Preference dividend payable 540 540 6,284 5,815 The directors consider that the carrying amount of trade and other payables approximates to their fair value. Policy and practice on the payment of creditors is disclosed in the directors' report. Chemetall PLC Page 32 Notes to the accounts Year ended 31 December 2007 22.Provisions Vacant property provision Other provision Total #000 #000 #000 Cost At 1 January 2007 1,211 88 1,299 Additional provision 376 - 376 Provision utilised (109) (48) (157) At 31 December 2007 1,478 40 1,518 31 December 31 December 2007 2006 Included in current liabilities 154 197 Included in non current liabilities 1,364 1,102 1,518 1,299 The vacant property provision represents management's best estimate of the Group's liability to take account of the residual lease commitments over the remaining term of the lease. 23.Share capital 31 December 2007 31 December 2006 No. #000 No. #000 Authorised Equity: Ordinary shares of 10p 91,948,000 9,195 91,948,000 9,195 each Issued and fully paid Equity: Ordinary shares of 10p 68,888,817 6,889 68,888,817 6,889 each The company has one class of ordinary shares which carry no right to fixed income. 24.Share premium account Share premium #000 Balance at 1 January 2006, 1 January 2007 and 31 December 2007 29,757 Chemetall PLC Page 33 Notes to the accounts Year ended 31 December 2007 25.Retained earnings #000 Balance at 1 January 2006 33,102 Actuarial gain on defined benefit pension scheme (net of tax) 923 Net profit for the year 3,337 Balance at 1 January 2007 37,362 Actuarial gain on defined benefit pension scheme (net of tax) 2,511 Net profit for the year 3,967 Balance at 31 December 2007 43,840 26.Translation reserve #000 Balance at 1 January 2006 (1,056) Exchange difference on translation of overseas operations (779) Balance at 1 January 2007 (1,835) Exchange difference on translation of overseas operations 3,734 Balance at 31 December 2007 1,899 27.Notes to the cash flow statement 31 December 31December 2007 2006 #000 #000 Profit before taxation 5,613 3,232 Adjustments for: Depreciation of property, plant and equipment 200 184 Amortisation of intangible assets 29 152 Movement in provisions 219 (84) Interest income (4,766) (3,292) Interest expense 1,080 1,131 Operating cash flows before movements in working capital 2,375 1,323 Movement in inventories 201 (97) Movement in receivables 637 (853) Movement in payables 161 19 Cash generated by operations 3,374 392 Income taxes (paid)/received (1,889) 433 Net cash from operating activities 1,485 825 Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank. Chemetall PLC Page 34 Notes to the accounts Year ended 31 December 2007 28.Commitments 31 December 31 December 31 December 31 December 2007 2007 2006 2006 Land and Other Land and Other Buildings #000 Buildings #000 #000 #000 Minimum lease payments under operating leases recognised in the income statement for the year 457 260 456 262 At the balance sheet date, the group had outstanding commitments for future minimum lease payments under non cancellable operating leases, which fall due as follows: Within one year 457 217 456 185 In the second to fifth years inclusive 1,788 260 1,799 173 After five years 1,913 - 2,353 - 4,158 477 4,608 358 29.Retirement benefit schemes The Group operates two funded defined benefit schemes which provide for their liabilities through trustee operated funds. The Chemetall UK Pension Scheme, provides benefits based on final pensionable pay. The Process Ink Scheme is a closed scheme. The assets of both schemes are held separately from those of the Group in a trustee administered fund. The trustees comprise senior group employees and retired members. The Group does not have any health and medical plans providing post-retirement benefits. The pension costs relating to the Chemetall UK and Process Ink schemes are assessed in accordance with the advice of Aon Limited, the independent actuaries, using, in the case of the Chemetall UK scheme, the projected unit method. Scheme Last Assumed Average Total Funding level value actuarial Investment salary market of assets as valuation Return per increase per value of percentage of annum annum assets liabilities at latest valuation dates Chemetall UK 1 January 7.4%(1) 4.4% #19.5m(4) 85% Pension 2005 scheme Process Ink Company Limited Pension and 1 January 7.9%(2) 2.9%(3) #2.8m 82% Death 2005 Benefits Plan Chemetall PLC Page 35 Notes to the accounts Year ended 31 December 2007 29.Retirement benefit schemes (continued) (1) The rate of return is assumed to reduce to between 5.1% and 5.5% per annum from each member's normal retirement age. (2) The rate of return is assumed to reduce to between 4.6% and 5% per annum from each member' normal retirement age. (3) This is the assumed rate of revaluation of deferred pensions up to normal retirement date (4) The market value of the assets includes additional voluntary contributions. The pension increases were assumed to be equal to those specified in the rules of the schemes. Increases in pensions in payment, in line with retail prices but capped at 5% were assumed to be 2.9% per annum. The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out at 1 January 2005 and updated to 31 Decemer 2007 by Aon Consulting. The estimated amount of contributions expected to be paid to the scheme during the current financial year is #728,000. 31 ...truncated

Quick facts: Chemistree Technology Inc.

Price: $0.20

Market: CSE
Market Cap: $6.7 m
Follow

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Chemistree Technology preparing to build greenhouse and production facility...

Chemistree Technology (CSE:CHM) President Karl Kottmeier came in to the Vancouver Studio of Proactive Investors to tell Steve Darling about the company and more specific their soon to be built infrastructure.  Kottmeier also talked about their work in California and Washington state...

on 12/12/18