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Daysoft profit hit by change to islands tax regime

PRE-tax profit at Scottish contact-lens maker Daysoft, the only online seller of daily disposable lenses, has plunged by one-quarter after it was hit by a Government tax crackdown on retailers that ship from the Channel Islands.

The company secured a 4% rise in sales to £9.3 million for the 2012 calendar year, accounts filed with Companies House reveal.

But its bottom line was hit by the abolition of Low Value Consignment Relief (LCVR) in March which had allowed goods under £15 to be sold VAT-free from the Channel Islands to the UK.

Pre-tax profit fell to £983,070 from £1.3m the previous year.

Daysoft's directors led by founder Ron Hamilton wrote in their review of the business: "The abolition of LVCR in March had the effect of increasing VAT/prices by 20% on all B2C (business to consumer) purchases.

"Growing sales value against such a price/tax impact required careful management of advertising and promotion spend in Q1 and Q2.

"As a consequence this pushed these spends to later in the year without the full benefit accruing to the sales/PBT (profit before tax) in the year."

Continued expansion allowed Daysoft, which is based in Blantyre, South Lanarkshire, to increase its workforce from 203 to an average of 221 last year.

"The directors are again very pleased with progress in all areas of business development," the company said.

They added: "The directors are firmly of the view that the Daysoft Group has now established sound foundations for future profitable growth."

The company started the year with net debt of £1.2m, but finished with net funds of £2.9m.

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