DHAIS plc
LSE : DHAP

November 30, 2010 07:14 ET

Final Results Year to 30 June 2010

          
          
          
          
                                          DHAIS Plc ("DHAIS" or the "Company")
                                                            
                                     Final Results for the year ended 30th June 2010
        
Chairman's Statement
        
I  am pleased to report on the second full year of trading since DHAIS was admitted to PLUS Market in
June 2008. Despite the loss for the year I feel we can claim a modicum of success.
        
Historically  the Company had operated as a freelance marketing company, generating sales  leads  for
digital  hearing aid retailers, manufacturers and distributors in the United Kingdom. This "original"
DHAIS  marketing  activity  has  been so successful for its customers  in  recent  years  that  major
competitors  have attempted to copy this success by using similar style of advertising and  marketing
activities.
        
Fortunately  the policy of the directors to diversify and capitalise on their overall  experience  to
convert  fragmented free standing mobility stores to encompass hearing aid centres has  ensured  that
the  original marketing based activity of the group is now dominated by retail trade.  The  group  is
no longer dependent on any one area of expertise.
        
The  independent living and mobility sector is a rapidly growing market, with retail sales in the  UK
worth  around  GBP500 million a year and the business-to business market (such as care homes,  health
clinics  and  hospitals) worth an additional GBP1.1 billion a year. The directors believe  that  this
sector  is  set  for  further  strong  growth  as  an  ageing  population  seeks  to  maintain  their
independence, improve their quality of life and stay in their own homes.
        
The  hearing aid sector has attracted large retailers like Specsavers and Boots Opticians  in  recent
years.  There  has  been  some  consolidation of smaller players as  manufacturers  also  jockey  for
position in the UK in what they see as one of the world's largest markets, uniquely composed of  both
private and National Health distribution networks.
        
The  shared  overhead  methodology adopted in the optical sector is similar to  the  shared  overhead
method  pioneered  by DHAIS to combine the retailing of hearing and mobility in  recognition  of  the
reality  that  free standing one product operations struggle today to gain footfall and economies  of
scale.
        
Sales  for  the year were GBP9,392,688 compared to GBP4,802,490 last year with a loss of GBP1,524,986
this year compared to GBP437,426 last year, after interest and depreciation.
        
The  carefully planned acquisition of Hearing Health & Mobility Ltd ("HHML") in November 2008 and the
subsequent opportunist acquisition of the business of Keepable in March 2009 provided the group  with
a  springboard to become the UK's leading retail chain of mobility centres.  However, the year  under
review  which began with 27 stores has seen significant consolidation and restructuring in  order  to
ensure that synergies and economies of scale are maximised and waste minimised.
        
The  present portfolio of 16 outlets carries with it many years of accumulated goodwill,  some  5,000
customers  visit our stores monthly.  We estimate the historical cost to prior owners  in  developing
this chain would have been some GBP10 million and many years of experimentation.
        
Our  decisive action to exit 11 loss making branches during the year and one further store since  the
year end has been challenging but successful with the benefits coming through after the year end.  We
have retained the profitable stores and do not envisage any further closures in the short term.
        
There  is  now a modern electronic point of sale system (EPOS) in all the stores providing management
with  real  time financial information.  The group's business on a monthly basis, even with  seasonal
adjustments,  has  moved from loss to profit at this point in time.  The historic costs  of  merging,
redundancies,  writing off of obsolete stock, rationalising and consolidating the estate  contributed
significantly  to  the mobility division's GBP816k pre tax loss.  These costs  are,  of  course,  non
recurring.
        
The Directors are now once again able to consider acquisitions to expand.
Opportunities  to acquire other fair sized operations are abound and the directors  are  unlikely  to
consider green field sites.
        
The barriers to entry in our sectors are significant.  Our business model is robust and difficult  to
replicate.  Substantial demonstration stocks are required in large stores with consulting  rooms  for
hearing  aids.   Goodwill comes from professional relationships, advertising  and  value  for  money.
These  can  only  be  achieved  with economies of scale for buying and administration  which  we  are
enjoying today.
        
We  are the largest group of mobility stores that qualify for the government backed Motability Scheme
in which we have a 4 star rating.
        
The  marketing operation itself has widened its range of product offering and increased its  customer
base whilst embellishing its core creative and production capability.
        
Within  the  hearing  aid division the net financial outcome of the acquisition of  the  business  of
Hearsavers  Limited, which operated from Matalan stores, added to the losses of that  division  which
amounted to GBP808k pre tax for the year.  The main costs were in relation to the delayed closure  of
the  Southport  administration operation and the withdrawal from 54 Matalan stores.  The  management,
sales  service and marketing of this division has been transferred to Kettering, the Head  Office  of
HHML.  We believe we have now stemmed the losses and these changes should begin to bear fruit in  the
New Year.
        
There  has been a full re-launch of hearing aids under the Hear Focus brand name, the stores are  now
fully fledged Hearing and Mobility outlets with significant cross selling opportunities.
        
The  introduction  of  full  time foot care in the Cardiff branch has  been  very  successful.   This
experience  is to be repeated at the other stores in order to achieve further quality store  traffic.
The  widening of our range of quality branded hearing aids has also been well received by  dispensers
and customers alike.
        
In  summary,  the  core  business is now very firmly hearing, health and mobility  products  supplied
inside  and outside stores throughout the UK supported by highly skilled national and local marketing
and  advertising  activities.  Those areas where we do not have direct  representation  are  uniquely
handled by a growing network of extremely motivated independent dealers.
        
Outlook
Going  forward our objective is to eliminate group losses and to grow sales and profits  organically,
but as before, with well timed acquisition activity.
        
We  have  carefully  studied  how the historic losses can be funded  and  whilst  not  ruling  out  a
conventional fund raising exercise, given the present economic climate and the inflexible  stance  of
most  of  the  major  banks today, the shareholder directors have made available loans  from  related
companies for cash flow and future development. This is evidence of our belief in the DHAIS  business
model.
        
As  we  reach  the  end of this calendar year and see signs of the move from loss to  profit  on  the
mobility  side, consolidation of the advertising and marketing profits and the stemming of losses  in
the hearing aid division, we anticipate the second half of the year to be profitable.
        
We  are  considering a name change to reflect more fully the Health content of the business alongside
a reclassification of our main activity
        
We  thank  shareholders and suppliers for their support.  Losses to date have partly been covered  by
loans  from directors via their related companies and we expect a reduction in such a need in  future
as costs reduce and sales and profits increase.
        
Mark Moss
Chairman
        
30 November 2010
 
Enquiries:
        
DHAIS Plc                                          029 2066 6888
Amin Kiddy, Finance Director
                 
PLUS Advisor:                                      020 7251 3762
Alfred Henry Corporate Finance Ltd
www.alfredhenry.com
Jon Isaacs/Nick Michaels
        
The Directors accept responsibility for this announcement.
        
        
Statutory Information
        
The  financial information set out below does not constitute the Group's statutory accounts for the  year  ended
30 June 2010 but is derived from those accounts.
        
The  financial  information has been extracted from the statutory accounts of DHAIS Plc and is  presented  using
the  same  accounting policies, which have not yet been filed with the Registrar of companies, but on which  the
auditors, Williams & Co, gave an unqualified report on 30th November 2010.
        
The  Annual  Report  of  DHAIS  Plc for year ended 30 June 2010 is available upon  request  from  the  Company's
registered office at 61 Cowbridge Road East, Cardiff, CF11 9AE.
        
        
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2010
          
                                                                    2010                            2009
                                               Notes           GBP            GBP             GBP             GBP
          
     TURNOVER                                                              9,392,688                       4,802,490
     Continuing operations                                 9,392,688                      2,460,464
      Acquisitions                                                 -                      2,342,026
                                                           ---------                      ---------               
                                                           9,392,688                      4,802,490
                                                           =========                      =========               
          
     Cost of sales                                                         4,349,008                       2,745,202
                                                                           ---------                       ---------
     GROSS PROFIT                                                          5,043,680                       2,057,288
          
     Net operating expenses                                                6,335,162                       2,432,428
                                                                           ---------                       ---------
     OPERATING LOSS                                                       (1,291,482)                       (375,140)
      Continuing operations                               (1,291,482)                       117,393
       Acquisitions                                                -                       (492,533)
                                                           ---------                       --------
                                                          (1,291,482)                      (375,140)
                                                           =========                       ========              
          
    Interest receivable and similar income                                        240                         31,773
                                                                           ----------                       --------
                                                                           (1,291,242)                      (343,367)
          
    Interest payable and similar charges                                     (233,744)                       (94,059)
                                                                           ----------                       --------
    LOSS ON ORDINARY ACTIVITIES
    BEFORE TAXATION                                                        (1,524,986)                      (437,426)
          
     Tax on loss on ordinary activities                                             -                        (24,372)
                                                                           ----------                       --------
    LOSS FOR THE FINANCIAL YEAR
    AFTER TAXATION                                                         (1,524,986)                      (413,054)
                                                                           ==========                       ========   

    Earnings per share expressed
    in pence per share:                        2
    Basic                                                                    (2.62)                          (0.80)
    Diluted                                                                  (2.62)                          (0.80)
                                                                             ======                          ======  
    TOTAL RECOGNISED GAINS AND LOSSES
          
    The  group has no recognised gains or losses other than the losses for the current year or previous
    year.
          
        
    CONSOLIDATED BALANCE SHEET
    30 JUNE 2010
          
                                                                    2010                            2009
                                                               GBP            GBP             GBP             GBP
    FIXED ASSETS
    Intangible assets                                                     1,826,576                       1,934,478
    Tangible assets                                                         515,877                         462,834
                                                                          ---------                       ---------
                                                                          2,342,453                       2,397,312
          
    CURRENT ASSETS
    Stocks                                                    455,353                        701,920
    Debtors                                                 1,143,480                      1,929,780
    Cash at bank and in hand                                  229,519                        620,008
                                                            ---------                      ---------              
                                                            1,828,352                      3,251,708
    CREDITORS
    Amounts falling due within one year                    (2,456,528)                    (1,916,683)
                                                            ---------                      ---------

    NET CURRENT (LIABILITIES)/ASSETS                                        (628,176)                     1,335,025
                                                                           ---------                      ---------
    TOTAL ASSETS LESS CURRENT
    LIABILITIES                                                            1,714,277                      3,732,337
          
    CREDITORS
    Amounts falling due after more than one                                             
    year                                                                  (2,111,426)                    (1,904,500)
                                                                           ---------                      --------- 
    NET (LIABILITIES)/ASSETS                                                (397,149)                     1,827,837
                                                                           =========                      =========

    CAPITAL AND RESERVES
    Called up share capital                                                  56,941                          59,486
    Share premium                                                         1,425,514                       1,425,514
    Capital redemption reserve                                                2,545                               -
    Other reserves                                                           11,210                          11,210
    Profit and loss account                                              (1,893,359)                        331,627
                                                                          ---------                       ---------
    SHAREHOLDERS' FUNDS                                                    (397,149)                      1,827,837
                                                                          =========                       =========    
          
    CONSOLIDATED CASH FLOW STATEMENT
    FOR THE YEAR ENDED 30 JUNE 2010
                                                                               2010                            2009
                                                                                GBP                             GBP
    Net cash inflow/(outflow)
    from operating activities                                              (453,664)                       (297,249)
          
    Returns on investments and
    servicing of finance                                                   (140,817)                        (62,286)
            
    Taxation                                                                 51,012                        (168,498)
          
    Capital expenditure                                                    (252,489)                     (2,394,773)
                                                                           --------                       ---------                                                                           (795,958)                     (2,922,806)
          
    Financing                                                               405,469                       3,414,220
                                                                           --------                       ---------
    (Decrease)/Increase in cash in the period                              (390,489)                        491,414
                                                                           ========                       =========
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
          
1.    ACCOUNTING POLICIES
      Accounting convention
      The financial statements have been prepared under the historical cost convention and are  in
      accordance with applicable accounting standards.

      Basis of consolidation
      The  group financial statements consolidate the accounts of Dhais Plc and all its subsidiary
      undertakings  made  up  to  30 June 2010.  The group profit and loss  account  includes  the
      results  of  all  subsidiary undertakings.  Turnover and profits arising on trading  between
      group companies are excluded.

      Turnover
      Turnover  represents the amount generated from the ordinary activities of the group  and  is
      stated after trade discounts and excludes value added tax.
                 
      The  group turnover comprises income from two main sources. The first represents income from
      the  supply  of leads to various companies in the hearing and mobility industry. The  second
      source  of  income  arises  from the sale of hearing, mobility and  other  related  products
      direct to the public.

      Goodwill
      Goodwill,  being  the amount paid in connection with the acquisition of  various  business's
      during  the year. In the opinion of the directors the goodwill will have an estimated useful
      life of twenty years and is being amortised evenly over its estimated useful life.
      
      Goodwill arising on consolidation is also capitalised and amortised over twenty years  along
      with the group's policy noted above.
                  
      Tangible fixed assets
      Depreciation  is  provided at the following annual rates in order to write  off  each  asset
      over  its  estimated  useful life or, if held under a finance lease, over  the  lease  term,
      whichever is the shorter.
 
      Fixtures and fittings          - 25% on cost
      Motor vehicles                 - 25% on cost
      Computer equipment             - 25% on cost
 
      Stocks
      Stocks  are valued at the lower of cost and net realisable value, after making due allowance
      for obsolete and slow moving items.
 
      Foreign currencies
      Assets  and liabilities in foreign currencies are translated into sterling at the  rates  of
      exchange  ruling  at  the  balance  sheet  date.  Transactions  in  foreign  currencies  are
      translated  into  sterling  at  the rate of exchange ruling  at  the  date  of  transaction.
      Exchange differences are taken into account in arriving at the operating result.
 
      Hire purchase and leasing commitments
      Assets  obtained  under  hire purchase contracts or finance leases are  capitalised  in  the
      balance  sheet.  Those  held  under  hire  purchase contracts  are  depreciated  over  their
      estimated  useful  lives.   Those  held under finance  leases  are  depreciated  over  their
      estimated useful lives or the lease term, whichever is the shorter.

      The  interest  element of these obligations is charged to the profit and loss  account  over
      the relevant period. The capital element of the future payments is treated as a liability.

      Rentals  paid  under  operating  leases are charged to the profit  and  loss  account  on  a
      straight line basis over the period of the lease.

      Segmental Reporting
      The  directors  have chosen not to publish full details of the group's turnover  and  profit
      activities as detailed in SSAP 25. The basis for this is that the directors do not  wish  to
      publish  details  which  could be commercially sensitive and provide  competitors  with  any
      advantage.
                 
      Going Concern
      The  group  balance  sheet  shows a negative position and this  is  due  to  trading  losses
      incurred by the subsidiary company, Hearing Health & Mobility Limited. The directors are  of
      the  opinion  that Dhais Plc will continue to support its subsidiary for  at  least  the  12
      month  period from the date of approval of these financial statements and they are confident
      that the group will return to profitability.


2.    EARNINGS PER SHARE
      Basic  earnings  per share is calculated by dividing the earnings attributable  to  ordinary
      shareholders  by  the  weighted  average number of ordinary shares  outstanding  during  the
      period.
          
      Diluted  earnings  per  share is calculated using  the weighted  average  number  of  shares
      adjusted to assume the conversion of all dilutive potential ordinary shares.
          
      Reconciliations are set out below.
          
         
                                                                                     2010
                                                                                   Weighted
                                                                                   average
                                                                                    number        Per-share
                                                                   Earnings           of            amount
                                                                     GBP            shares          pence
      Basic EPS
      Earnings attributable to ordinary shareholders             (1,524,986)      58,223,747        (2.62)
      Effect of dilutive securities                                       -                -            -
                                                                  ---------       ----------        ------
      Diluted EPS
      Adjusted earnings                                          (1,524,986)      58,223,747        (2.62)
                                                                  =========       ==========        ======
                    
                                                                                      2009
                                                                                   Weighted
                                                                                    average
                                                                                    number        Per-share
                                                                   Earnings           of            amount
                                                                     GBP            shares          pence
     Basic EPS
     Earnings attributable to ordinary shareholders                (413,054)      51,896,494        (0.80)
     Effect of dilutive securities                                        -                -            -
                                                                  ---------       ----------        ------  
     Diluted EPS
     Adjusted earnings                                             (413,054)      51,896,494        (0.80)
                                                                  =========       ==========        ======          

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