The directors present the strategic report for the year ended 31 December 2023.
The profit after tax for the period is £1,785,443 (2022: £65,604), underlying EBITDA for the group totalled £9,843,071 (2022: £3,515,787). Included within these results are a number non-recurring costs including re-structuring, recruitment and re-branding fees. The underlying EBITDA excluding these non-recurring costs totalled £11,184,157.
ALS Dental Laboratories Group Limited ("ALS") has continued to grow positively in 2023 both organically and through acquisition. ALS acquired 10 laboratories in 2023 widening its coverage throughout the UK. If all of these acquisitions were accounted for the full year (e.g. on a last twelve month basis) the revenue would be £59,275k and the underlying EBITDA excluding non-recurring costs would total £13,760k.
Throughout 2023 ALS has successfully built its central resources with a number of key roles recruited which deepen the commercial and technological capabilities of the group. ALS has also created a training academy hosting a wide range of education events in support of people development. The group has also continued to promote digital manufacturing technologies within its laboratories making capital investments in a number of areas including digital denture manufacturing. Overall the group has recorded strong year on year revenue and profit improvement.
Following a share for share exchange in March 2023, ALS Dental Laboratories Group Limited became the ultimate parent company of the group previously headed by Amalgamated Laboratory Solutions Limited. The company has chosen to apply the principles of merger accounting to this business combination as the ultimate controlling party and relative rights of equity holders remained the same both before and after the combination, no non-controlling interests were altered by the combination, and the adoption of merger method accords with generally accepted accounting principles.
Under merger accounting, the results and cash flows of the combining entities are brought into the accounts from the beginning of the financial year in which the combination occurred. Comparatives are restated to combine the results of the entities for the previous period. As such, the comparative period presented in the primary financial statements and notes now includes the results of the combined group as if it had always been together with consolidated results presented for the year to 31 December 2023 and year to 31 December 2022.
ALS Continues to recognise its responsibilities for ESG (Environmental, Social, Governance) and has introduced fully recyclable packaging for its own brand orthodontic products as well as the use of more biodegradable plastics. ALS has promoted employee welfare though a group wide staff engagement survey the results of which were used to drive improvements in overall staff employment satisfaction.
The group are excited about future opportunity and 2024 financial results to date are ahead of budget. The group continues to invest digitally and expand through acquisition in 2024 courtesy of the continued support of its investors via both equity and debt funding as needed.
The group takes a responsible approach to risk management whether those be financial and or operational risks.
The group has a limited value of contracted custom as is commonplace within the industry. This risk is mitigated by the thin spread of customer concentration with a high volume of non contracted customers leaving the group resilient to individual customer loses.
The group has an exposure to interest rate risk relating to the group's financing activities. The group does not consider this however to be a significant risk.
The group trades primarily within the UK and as such exchange rate risk is minimal.
The Directors of the group manage performance by reference to a number of key performance indicators. All areas of financial performance are measured against an annual budget which is reviewed monthly at a Board and lab level. Liquidity measures are also monitored at least quarterly to ensure sufficient cashflow to debt service cover. The headline KPI for the group is EBITDA as a % of sales being 20% for the year ended Dec 2023 (2022 - 14%).
Our financial risk management objective are to ensure there is sufficient working capital and cashflow to meet the operating needs of the group and to ensure there is sufficient support for its growth strategy. This is achieved through careful management of our cash resources and by obtaining loan facilities where necessary. No treasury transactions of derivatives are entered into.
The Directors of the Group believe that they have acted in the way they consider to be both in good faith and would be most likely to promote the success of the group for the benefit of its members as a whole. The Directors duties are fully detailed in section 172 of the UK Companies Act 2006. This is summarised as follows:
• The likely consequences of any decisions in the long-term;
• The interests of the company’s employees;
• The need to foster the company’s business relationships with suppliers, customers and others;
• The impact of the company’s operations on the community and environment;
• The desirability of the company maintaining a reputation for high standards of business conduct; and
• The need to act fairly as between shareholders of the company.
Business conduct and relationships
We understand the importance of engaging with all our stakeholders and the directors regularly discuss issues concerning employees, clients, suppliers, community and environment, health and safety and shareholders which inform our decision making processes. The directors are aware that their strategic decisions can have long term implications for the business and its stakeholders, and these implications are carefully assessed.
Employees
We believe the core strength of the group is its people and we are committed to being a responsible business and employer. The group aims to recruit, develop, motivate and retain the best talent. For the business to succeed we need to engage and enable our people to perform at their best, develop their skills and capabilities, while ensuring we operate as efficiently and productively as possible.
Community and environment
The group's environmental commitment is to adopt and promote industry standards and best practices, enhancing awareness of environmental responsibilities and a reduction in harmful emissions. The group remains committed to exploring methods to enhance the sustainability of our business and its supply chain. This includes evaluating energy consumption within our production facilities, optimising waste management practices, making eco-friendly choices in packaging materials, and reducing our carbon footprint during product distribution.
Stakeholders
The directors are committed to openly engaging with our stakeholders, as we recognise the importance of transparency and a continuing effective dialogue. It is important to us that all stakeholders understand our strategy and objectives, and the group is committed to considering properly their questions, issues or feedback received
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 9.
No ordinary dividends were paid.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group's policy is to consult and discuss with employees matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Information in respect of the Energy and Carbon Reporting is presented below for ALS Dental Laboratories Group Limited and its subsidiaries. As this is the first year of reporting, no comparatives have been presented.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per employee, the recommended ratio for the sector.
Key measures taken by the Group for the purpose of increasing our energy efficiency;
i.) Evaluation of packaging for branded products.
ii.) Evaluation of impression materials which give substantial recycling benefits.
We have audited the financial statements of ALS Dental Laboratories Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Other matters which we are required to address
In the previous accounting period, the directors took advantage of audit exemption under s480 of the Companies Act 2006 as the company was dormant. Therefore the prior period financial statements were not subject to audit.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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 auditor's 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £0 (2022 - £0 profit).
ALS Dental Laboratories Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 85 Great Portland Street, London, United Kingdom, W1W 7LT.
The group consists of ALS Dental Laboratories Group Limited and all of its subsidiaries.
Following a share for share exchange in March 2023, ALS Dental Laboratories Group Limited became the ultimate parent company of the group previously headed by Amalgamated Laboratory Solutions Limited. This group reconstruction has been accounted for under merger accounting and as a result, the comparative group financial statements have been prepared on the basis this group structure has been in existence with consolidated results presented for the year to 31 December 2023 and year to 31 December 2022.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
Subsidiaries exempt from audit
The following subsidiaries are exempt from the requirements of the UK Companies Act 2006 relating to the audit of individual accounts by virtue of s479A of the Act;
Dental Technique Laboratory Limited (Company number - SC235237)
Casterbridge Solutions Limited (Company number - 04185393)
Apple G.B. Limited (Company number - 06203764)
Cardiff Orthodontic Services Limited (Company number - 04312911)
Passion Dental Design Studio (Laboratory) Limited (Company number - 09920681)
Woodlands Dental Laboratory Limited (Company number - 06489798)
CB Ceramics Dental Lab Ltd (Company number - 06855958)
Norwich Orthodontics Limited (Company number - 08935604)
ALS Dental Direct Limited (Company number - SC665245)
The Denture Centre (Wales) Limited (Company number - 05547801)
Veus Limited (Company number - 06701553)
Ken Poland Dental Studios Limited (Company number - 06053144)
Ken Poland Milling Limited (Company number - 06402407)
Precedental Limited (Company number - 02793485)
The Bristol Crown Company Limited (Company number - 04160229)
I.W. Dental Laboratory Limited (Company number - 07030717)
Halo Dental Laboratory Limited (Company number - 06153046)
Waterside Dental Laboratory Limited (Company number - 09494257)
Reiner Implants Limited (Company number - 10725321)
IP Dental Milling Limited (Company number - 10769135)
Dental Excellence Laboratory Services Limited (Company number - 13589208)
Dent8 Dental Laboratory Limited (Company number - 06711908)
A Plus Management Limited (Company number - 04746731)
Aesthetic World Laboratory Limited (Company number - 04140648)
Aesthetic World Holdings Limited (Company number - 06695954)
Prodent Laboratories Limited (Company number - 02573112)
S D C Laboratory Limited (Company number - 02945293)
Oak View Restorations Limited (Company number - 04878720)
Central Dental Laboratory (Kempston) Limited (Company number - 04325220)
AMDECC Limited (Company number - 02892597)
Lodge Dental Laboratory Limited (Company number - 04186110)
Ceroplast Limited (Company number - 00863416)
European Dental Laboratory Limited (Company number - 02726779)
Innovate Dental Laboratory Limited (Company number - 09277800)
Fident Implant Laboratory Limited (Company number - 07810857)
The consolidated group financial statements consist of the financial statements of the parent company ALS Dental Laboratories Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Merger method
Following a share for share exchange in March 2023, ALS Dental Laboratories Group Limited became the ultimate parent company of the group previously headed by Amalgamated Laboratory Solutions Limited. The company has chosen to apply the principles of merger accounting to this business combination as the ultimate controlling party and relative rights of equity holders remained the same both before and after the combination, no non-controlling interests were altered by the combination, and the adoption of merger method accords with generally accepted accounting principles.
Under merger accounting, the assets and liabilities of the business combination are not adjusted to fair value on consolidation. Instead, the results and cash flows of the combining entities are brought into the accounts from the beginning of the financial year in which the combination occurred. Comparatives are restated to combine the results of the entities for the previous period. The difference between the value of the share for share exchange and the nominal value, and share premium on the shares received in exchange is shown as a movement to the merger reserve within equity. The merger reserve is further adjusted to remove the pre acquisition trading from before the companies were under the control of the ultimate parent entity.
Purchase method
In respect of all other business combinations, subsidiaries are consolidated using the purchase method and their results are incorporated from the date that control passes.
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.
Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.
At the balance sheet date the group has net current liabilities of £4,855,122.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end 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). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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 (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or 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 for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end 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 profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
Research and Development credit
Research and development tax credits are recognised on a systematic basis as the business recognises the costs for which the research & development tax credits are intended to incentivise, but only to the extent amounts have been claimed by the company and accepted by HMRC.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
- Use of merger accounting
On 24 March 2023, ALS Dental Laboratories Group Limited acquired 100% of the share capital of Amalgamated Laboratory Solutions Limited in a share for share exchange. The directors consider that the substance of these transactions is one group reorganisation which meets the requirements of FRS 102 in order for it to be accounted for using the merger method.
The key sources of estimation uncertainty in applying accounting policies in the financial statements arise during business combinations. These are considered to be:
- Assessing the fair value of assets & liabilities acquired
Fair values of assets & liabilities acquired in business combinations are assessed by management based on their knowledge of the industry and physical conditions of the assets acquired.
- Consideration payable
Business combinations typically involve an initial payment on acquisition with further amounts payable based on future trading results. This deferred consideration requires management estimates on future profitability based on their knowledge of the industry and financial forecasts for the entity being acquired.
- Useful life of goodwill
Management assess the useful life of goodwill arising on a business combination and amortise the goodwill over this period. Based on knowledge of the industry and experience of previous acquisitions, management typically assess this as being 10 years.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
Current tax is calculated at 23.5% of the estimated taxable profit / (loss) for the year (2022 - 19%). Finance Act 2021 was 'substantively enacted' on 24 May 2021. The increase in the main rate of corporation tax applicable to 25% from 1 April 2023, replacing the 20% previously effective from that date. The closing deferred tax assets and liabilities have been calculated in accordance with the rates substantively enacted at the Balance Sheet date.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
More information on impairment movements in the year is given in note 11.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
On 24 March 2023, ALS Dental Laboratories Group Limited entered into a share for share exchange to acquire 100% of the share capital of Amalgamated Laboratory Solutions Limited.
Details of the company's subsidiaries at 31 December 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
£18,585,478 of the bank loans relate to a loan facility from Investec Bank plc as part of an £36m acquisition facility available. 60% of this loan is repayable over the next 3 years with a final bullet repayment due in Dec-28. Interest accrues at 5.75% above SONIA.
In the prior year, £9,550,000 of the other loans represented convertible loan notes issued to Ansor IB LP which were repaid in full in March 2023 as part of a corporate restructuring exercise.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The lease terms range from 18 to 60 months. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above relates to accelerated capital allowances that are expected to mature over the useful life of the underlying assets.
Deferred grant income relates to amounts received from The Northern Powerhouse Investment Fund in relation to capital spend in one of the subsidiary companies. All conditions have been met by the group and the income is being released over the estimated useful life of the related assets.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Ordinary A and B shares carry one vote each, rank equally for dividends, rank equally on distributions and are non-redeemable.
Preferences shares do not confer any rights to dividends and have no voting rights. They have attached to them full capital distribution rights on a return of capital or liquidation on and IPO, the preference shares entitle the holders to be issued share as following the completion of all such issues. These shares were redeemed during the year.
During the year 1 Ordinary share was subdivided into 10,000 Ordinary A shares.
During the year under review, the company entered into a share for share exchange with the shareholders of Amalgamated Laboratory Solutions Limited and issued 13,953,024 Ordinary A shares, 1,435,850 Ordinary B shares and 665 Ordinary C shares as part of this exchange creating a share premium of £11,299,913.
During the year the company allotted a further 4,023,088 Ordinary A shares, 66,080 Ordinary B shares and 125 Ordinary C shares. Ordinary A and Ordinary B shares were issued at management's assessment of fair value at the time creating a share premium of £12,767,095. This ranged from £3.03 to £4.97 per share. Ordinary C shares were issued at a price of £95 per share which was management's assessment of fair value.
The merger reserve was created upon the acquisition of the Amalgamated Laboratory Solutions Limited Group and represents the difference between the value of the share for share exchange and the nominal value, and share premium on the shares received in exchange, adjusted to remove pre acquisition trading from before the companies were under the control of the ultimate parent entity.
Upon issue of the shares for the acquisition in the current year, the relative amount has been released from the merger reserve.
Management have reviewed the net assets acquired as part of each business combination and confirmed that there are no material fair value adjustments required.
The goodwill arising on the acquisitions of these subsidiaries is all attributable to the anticipated profitability of the distribution of the company's products in new markets and the future operating synergies from the combinations.
Management have reviewed the net assets acquired as part of each business combination and confirmed that there are no material fair value adjustments required.
The goodwill arising on the acquisitions of these subsidiaries is all attributable to the anticipated profitability of the distribution of the company's products in new markets and the future operating synergies from the combinations.
Management have reviewed the net assets acquired as part of each business combination and confirmed that there are no material fair value adjustments required.
The goodwill arising on the acquisitions of these subsidiaries is all attributable to the anticipated profitability of the distribution of the company's products in new markets and the future operating synergies from the combinations.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Subsequent to the year end the Group has completed the acquisition of 3 futher subsidiaries. The directors estimate the total consideration payable in relation to these acquisitions will be £2.9m.
During the year the company entered into the following transactions with related parties outside of the group: