Registered number: 05732681
MICHELSON DIAGNOSTICS LTD
FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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MICHELSON DIAGNOSTICS LTD
REGISTERED NUMBER: 05732681
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2024
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Net current (liabilities)/assets
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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MICHELSON DIAGNOSTICS LTD
REGISTERED NUMBER: 05732681
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 30 SEPTEMBER 2024
The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of income and retained earnings in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 3 to 14 form part of these financial statements.
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
Michelson Diagnostics Limited ("the company") is a private company, limited by shares, incorporated in England and Wales with registered number 05732681. The company's registered head office is at 80 Mount Street, Cumberland Court, Nottingham, England, NG1 6HH.
The company's principal activities continue to be the development, manufacture and supply of the patented, Optical Coherence Temography (OCT) instrumentation (the VivoSight scanner) to the dermatology markets, and aesthetic laser treatment markets, and the supply of associated services.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' and the requirements of the Companies Act 2006. The disclosure requirements of Section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The following principal accounting policies have been applied:
The company has recorded a net loss after tax of £835,016 and has cash reserves of £119,362, however it is in the development phase and has the support of its investors during this phase. The Directors are progressing a multi year business plan, which, if achieved, would reduce operating losses and achieve profitability in subsequent years. Should the company not meet its budget or business plan it could extinguish its cash reserves earlier than planned. Post year end in November 2024 the company completed a fund-raise of £250,000 which has been taken into account in the Directors' assessment of cash sufficiency.
Based on these assessments and having regard to the resources available to the entity, the Directors have concluded that they can continue to adapt the going concern basis in preparing the accounts.
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of income and retained earnings within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Company has transferred the significant risks and rewards of ownership to the buyer;
∙the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
Equipment rental income
Rentals paid under operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of income and retained earnings in the same period as the related expenditure.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Company's Statement of financial position when the Company becomes party to the contractual provisions of the instrument.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
2.Accounting policies (continued)
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Financial instruments (continued)
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Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
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The average monthly number of employees, including directors, during the year was 8 (2023 - 8).
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Strategic expenditure are expenditure in relation to projects the company is currently working on towards new lines and projects.
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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Charge for the year on owned assets
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Investments in subsidiary companies
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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Prepayments and accrued income
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Amounts owed to group undertakings are unsecured, due on demand, and not subject to interest.
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Creditors: Amounts falling due after more than one year
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Other loans in the prior year related to amounts due under Kent County Council's Escalate loan programme, on which no interest was charged.
*The Company has received an unsecured loan under the UK Government Bounce Back Loan Scheme, which has the financial backing of the Secretary of State for Business, Energy and Industrial Strategy. Repayments commenced in August 2021. Interest charge for the first twelve months of the loan were covered by the UK Government.
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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Analysis of the maturity of loans is given below:
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Amounts falling due within one year
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Amounts falling due 1-2 years
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Amounts falling due 2-5 years
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
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Allotted, called up and fully paid
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192,424 (2023 - 192,424) Ordinary shares of £1.000 each
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116,630 (2023 - 116,630) 'A' Ordinary shares of £1.000 each
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125,677 (2023 - 125,677) 'A1' Ordinary shares of £0.100 each
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253,399 (2023 - 253,400) 'A2' Ordinary shares of £0.001 each
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269,862 (2023 - 269,860) 'B' Ordinary shares of £0.001 each
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2,321,860 (2023 - 2,321,860) 'C' Ordinary shares of £0.001 each
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2,326,693 (2023 - 2,326,690) 'C1' Ordinary shares of £0.001 each
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The Company operated a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £4,945 (2023 - £4,796). Contributions totalling £1,240 (2023 - £1,214) were payable to the fund at the reporting date and are included in creditors.
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Post balance sheet events
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On 1 November 2024 the Company successfully raised £250,000 of additional capital through the issuance of 166,667 D ordinary shares at a price of £1.50 per share. The issuance was authorised by a shareholder resolution passed on 2 September 2024, which disapplied pre-emption rights and granted authority for the directors to allot and issue the shares.
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MICHELSON DIAGNOSTICS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
The auditor's report on the financial statements for the year ended 30 September 2024 was unqualified.
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In their report, the auditor emphasised the following matter without qualifying their report:
We draw attention to note 2.2 in the financial statements, which indicates that the Company incurred a net loss after tax of £835,016 during the year ended 30 September 2024 and, as of that date the Company's cash balance was £119,362. The directors are progressing a multi year business plan, which, if achieved, would reduce operating losses and achieve profitability in subsequent years. Consequently the directors are of the opinion that the Company has sufficient resources to operate as a going concern for a period of no less than twelve months from the date of approval of the financial statements. However should the business plan not be achieved, the Company may extinguish its cash reserves earlier than anticipated. These events or conditions, along with the other matters as set forth in note 2.2, indicate that a material uncertainty exists that may cast doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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The audit report was signed on 5 February 2025 by Duncan Cochrane-Dyet BSc BFP FCA (Senior statutory auditor) on behalf of MHA.
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