Statement re. Suspension


 

TIDMFDT 
 
RNS Number : 2015T 
1st Dental Laboratories PLC 
23 September 2010 
 

                          1ST DENTAL LABORATORIES PLC 
 
                       Statement re Suspension of Trading 
 
The directors wish to update shareholders on the progress of 1st Dental 
Laboratories Plc ("1st Dental" or "Group") since the half year announcement made 
on 14th July 2010. 
 
While the results for the half year to 31st May 2010 were satisfactory overall, 
the directors stated that the Group and its key customers had "experienced 
weaker demand in recent months". The Group also stated that while NHS revenues 
had remained stable, there had been "a decline in private work, which in part 
includes dental work of a more discretionary nature." 
 
As expected, the months of July and August were soft months from a revenue 
viewpoint. However, there has been no evidence of any significant increase in 
revenues in September, which traditionally is a stronger month for revenues. It 
is expected that revenues for September will be well short of internal budgets. 
 
While the directors over the last 12 months have taken steps to improve 
operating margins and to reduce operating expenses, they have had to manage an 
arrears of creditors which required careful management and ultimately settlement 
through the generation of cash flow arising from operating profits. 
 
During the first half year, the Group saw a decline in revenues of 4.1% compared 
with the previous year, although achieved a profit before tax of GBP10k. The 
Management Accounts for the month of August showed a decline of 6% versus the 
previous year and feedback from other laboratories around the country has also 
indicated that they have experienced a decline in revenues, especially from 
private work. 
 
The decline of revenues YTD has now reached 3% compared with the first nine 
months of the previous year. Gross margin percentages YTD are similar to the 
previous year, despite lower revenues. The costs of laboratory operations and 
central costs have been reduced compared with the previous year, but the revenue 
shortfall has resulted in the Group making a loss for the first nine months of 
GBP123k (a 63% reduction in losses from the previous year) and so the overall 
cash position has deteriorated. 
 
The Group has come under severe pressure from HMRC and other creditors in recent 
weeks to meet financial obligations. The directors have recently set up of an 
invoice discounting facility and taken actions wherever practicable to generate 
cash. 
 
The directors have taken advice from insolvency experts to look at the options 
for the Group, given the overall worsening of the market situation and the 
financial position of the Group and have considered possible methods of 
refinancing the Group. The directors have also taken into account that there 
appears to be little likelihood of trading conditions improving in the near 
future. Further, the business model limits the immediate impact that any sales 
actions might have given the nature of the Group's activities, being to meet 
demand from dentists arising from patient visits. 
 
Therefore the directors have reluctantly come to the view that the Group is in 
danger of trading while insolvent and cannot raise additional funds within the 
short term and have consequently decided to appoint an Administrator. 
 
This should provide a window of opportunity for the Group to protect itself from 
claims from creditors, to look at options for realising value and with the 
objective of meeting creditor obligations as far as possible in due course. 
 
The directors have requested and AIM has granted a suspension in trading of the 
ordinary shares of 1 penny each in 1st Dental with immediate effect, pending 
clarification of the company's financial position. 
 
 
For more information please contact: 
 
1st Dental Laboratories 
Nigel Spring                  +44 (0)1423 812 703 
Grahame Sewell            +44 (0)7767 350 372 
www.1stdental.co.uk 
 
Astaire Securities 
William Vandyk              +44 (0)20 7492 4750 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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