Interim Results

Byotrol plc Byotrol plc 07.01GMT 15 December 2005 Byotrol plc (the 'Company') Byotrol is an anti microbial technology company. The patented technology has already generated a range of materials that have been extensively tested and found to safely reduce or eliminate the threats caused by micro-organisms. The Company is now engaged in the process of obtaining key regulatory approvals and developing sales channels in its target markets. Unaudited interim results for the nine month period ended 30 September 2005 HIGHLIGHTS -- Results are presented for the first nine months of the Company's operation including six months prior to the Company's flotation on AIM on 6 July 2005; -- The Company successfully raised £3 million gross, £2.5 million net of expenses, by way of the placing completed on 6 July 2005; -- The loss for the period of £462,808 is in line with the Directors' plan for this period; -- Net cash as at 30 September 2005 was £2,035,279; -- Progress has been made toward achieving EPA registration; -- A trial has commenced with a major NHS hospital; -- The sales and marketing team has been strengthened; -- Sales channels in key healthcare and food processing markets have been developed; and -- New customers have been acquired in specialist markets where additional regulatory approvals are not required. Commenting on the Company's performance to date, David McRobbie, CEO of Byotrol plc, said: 'I am extremely pleased with the progress we have made since becoming a quoted company in July 2005. We have made good initial progress with sales slightly ahead of target and our costs have come in under budget. We are making important steps in our key markets of healthcare, food processing and the industrial sector and our focus has been on securing key approvals, establishing product trials in selected markets, generating long term sales opportunities and recruiting key individuals to help us meet our objectives. I am confident that much of the progress we have made in the past six months will start to deliver significant growth over the next six to twelve months in line with our business plan'. Financial Enquiries To: Stephen Falder, Deputy Chairman Byotrol plc 0870 609 4480 Or Oli Rayner Merchant Capital 0207 332 2200 Media calls to: Jim Rothnie McCann Erickson T: 01625 822540 M: 07836 559305 E:jim.rothnie@europe.mccann.com CHAIRMAN'S STATEMENT The Company intends to make Byotrol one of the world's most trusted brands associated with the safe control of micro-organisms and so create outstanding value for its investors. The period ended 30 September 2005 was a highly significant one for the Company as it marked the transformation from a highly focussed research and development company in private ownership to an AIM quoted public company. The successful placing and admission to AIM on 6 July 2005 resulted in the Company issuing 13,043,478 shares at 23 pence each to new investors raising £2.5 million net of expenses. FINANCIAL REVIEW The nine months reflected in this interim report represented a period of significant change for the Company and spans a timeframe that completed the transition from a research, development and evaluation company with private and family investors to a markets focussed, technology based enterprise with public shareholders. Since the flotation the Company has established a new corporate structure in order to service customers in its key markets more effectively and to better protect shareholder interests. The Company continues to own all relevant intellectual property associated with Byotrol but now trades through two new wholly-owned subsidiaries, Byotrol Inc. in the United States and, in Europe, through Byotrol Technology Limited based in the United Kingdom. Sales budgets for the period following flotation were modest but I am pleased to report that we exceeded that budget with actual sales of £23,862. This included orders from a number of new customers slightly ahead of our expectations. Total sales for the nine month period were £47,409. The loss for the nine month period was £462,808 which was slightly better than our expectations. Net cash at 30 September 2005 was £2,035,279. BUSINESS OVERVIEW Since the flotation in July the Company has: -- won new customers in areas where regulatory approvals are in place or not required; -- obtained approval from the Norwegian Food Safety Authority (Mattylsnet); -- commenced a trial with a major NHS hospital; -- initiated and progressed key approval, registration and testing programmes in North America, Mainland Europe and the UK; -- completed the move into premises in Manchester; -- strengthened the sales and marketing team; and -- secured the services of specialist advisors to support the drive into the key healthcare, food processing and industrial markets. In the healthcare market, the Directors continue to believe that the spread of MRSA and other pathogens represents a major risk in clinical and other healthcare environments. The Company is actively pursuing opportunities to demonstrate the efficacy of its products in the healthcare environment and marketing its products to key public and private customers. As announced in November 2005, the Company has commenced a trial with a major NHS hospital to study the efficacy of its technology in reducing the spread of hospital acquired MRSA. This trial is initially expected to run until March 2006 and the Directors expect to be able to provide more detail as results become known over the next few months. Products containing Byotrol have been developed and tested by Quill International Industries plc ('Quill') and passed several internationally recognised tests for biocidal efficacy. These include: -- EN 1276 Bacteria including MRSA -- EN 13704 Bacterial Spores including Clostridium difficile -- CEN TC 216 Viruses including Norovirus and SARS -- EN 1650 Fungi including Aspergillus niger -- EN 1500 Hygienic Hand Rub These tests will be used to support Quill's Supernova® range of hygiene products containing Byotrol. This range will be launched early in 2006. Quill currently sells a diverse range of products into many industries from healthcare and leisure to oil and shipping. Quill's customers include the National Blood Service, Sunlight Service Group, Rolls Royce and JCB. In line with its strategy to take advantage of immediate revenue opportunities for products in areas that require no additional regulatory or institutional approvals while continuing to progress key additional approvals, the Company has developed a new range of sanitisation and deodorisation products specifically designed to combat the spread of a broad spectrum of micro-organisms (including MRSA) in care homes. The new range is due to be launched at Europe's leading conference and exhibition for the care home sector, 'The Healthcare Event 2006' in January 2006 in Marbella, Spain. An example of Byotrol's success in developing and marketing applications in specialist markets is the products developed for street furniture. Following a successful trial in Bournemouth, a Byotrol-based coating has been specified for use in the maintenance of street furniture and lampposts by Southern Electric Contracting Limited, the public lighting and maintenance contracting subsidiary of Scottish and Southern Energy plc. The addition of Byotrol's anti-microbial products was found to have considerable cost and public safety advantages. While this represents a less significant opportunity than those in the healthcare and food processing markets, it provides additional validation of the technology and provides early revenue while the Company continues to develop regulated products for those larger markets. REGULATORY APPROVALS The Company considers applications to the relevant authorities for product registrations in the United States and, in particular, gaining EPA approval to be of key importance. The product development programme has resulted in the Company having completed scoping trials on time. These trials not only delivered highly satisfactory results against MRSA and other organisms but also showed efficacy against viruses including SARS and Norovirus simulants. These additional benefits to users of Byotrol will now be part of the EPA application resulting in significantly greater opportunities upon registration, but with the effect of a five to seven week extension in the anticipated date for completion. Registration is still anticipated in the second quarter of 2006. To support the higher-level health uses of the Company's products a CE mark registration has been commenced for safe high-performance hand cleansers and surface wipes. As announced on 31 August 2005, Byotrol-based products have been granted approval by Mattilsynet, the Norwegian Food Safety Authority, to be used by the Norwegian fish processing industry. Byotrol-based products are already approved in Iceland and deployed in the fishing and fish processing industries. Our Scandinavian distribution partners are expected to make progress in the food industry following regulatory approval in Norway building on continued sales in Iceland. STRENGTHENING SALES AND MARKETING INFRASTRUCURE Two experienced market specialists Paul Vasey, in the healthcare market, and Dr David Baker, in the food processing market, have recently joined Byotrol and the Company is close to completing the recruitment of a specialist sales manager. At this stage in the Company's development the board is satisfied that the market segment based strategy, that combines direct sales and indirect sales (via concentrates), is the best way to optimise sales and profitability. The Company has also reviewed and strengthened Byotrol's branding and is advancing the production of a 'branding bible' to safeguard the use of and values that the Company is building with Byotrol. INTELLECTUAL PROPERTY The Company has continued to pursue the current patent applications in the US and Europe and supporting data has been provided to advance those two patents. A PCT application has been filed for a use patent using the Company's technology in a specialist application. CURRENT TRADING The Company's initial sales, although modest, are better than expected at this very early phase of its business plan and this is very encouraging. Certain industrial customers have commenced purchasing Byotrol for smaller specialised uses including use in materials which have been enhanced by Byotrol's technology. In healthcare and food processing there have been significant trials, market and product testing activity. The board is very encouraged by the early sales but is focussed on the key tasks associated with securing the product registrations, personnel and marketing channels to capitalise on the more substantial opportunities for Byotrol in the healthcare and food processing markets with a focus on building significant shareholder value. Public concern about micro-organisms is at a significant and apparently growing level. This is extremely favourable to the Company's future and the board is keenly aware of the opportunities this brings. The early sales indicators have served to reinforce the significant latent demand for the Company's technology and products in this area. MOVING FORWARD IN 2006 The Company is looking forward to the next six months of operation to continue with the sales growth plan. The team identified and recruited in the past three months will be used to generate sales and to deliver on the regulatory and approval objectives that we have set. By March 2006, our extensive NHS trial is expected to be concluded and this will allow the Company to progress with increased sales into health markets. The sales cycles here can be longer than in other sectors but the needs and customer interest shown are commensurately high. I am pleased that Byotrol has successfully completed the first and formative stage of its business plan, and made significant progress in all the areas we have identified as important for our future success. The board has regularly reviewed the Company's performance in the context of its financial, commercial and regulatory objectives and I am pleased to say that, on all measures, we are in line with, or slightly ahead of, our business plan at this stage. Clearly Byotrol has some important and challenging tasks ahead but I am satisfied that the Byotrol team will embrace and meet those challenges over the next financial period and continue to progress. Much has been achieved in the short period since our flotation. This is a result of careful strategic planning undertaken prior to our flotation. Now that those plans are starting to bear fruit I am confidently looking forward to building the Company's position and its financial strength. Wesley Devoto OBE Chairman, 14 December 2005 Byotrol PLC UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT for the period ended 30 September 2005 9 Mths 9 Mths 12 Mths 30-Sep-05 30-Sep-04 31-Dec-04 £ £ £ Group turnover 47,409 43,552 52,226 Cost of sales (26,132) (15,455) (10,478) ------------------------------------------ Gross profit 21,277 28,097 41,748 Administrative expenses (498,763) (311,091) (417,878) Exceptional cost - (154,504) (159,348) Other operating income - 23 5,481 ------------------------------------------ Operating loss (477,486) (437,475) (529,997) Net interest receivable/(payable) 14,011 (2,858) (5,266) ------------------------------------------ Loss on ordinary activities before taxation (463,475) (440,333) (535,263) Taxation - - - ------------------------------------------ Loss on ordinary activities after taxation (463,475) (440,333) (535,263) Minority interest 667 - - ------------------------------------------ Loss on ordinary activities after minority interest (462,808) (440,333) (535,263) ------------------------------------------ Retained loss for the period (462,808) (440,333) (535,263) ------------------------------------------ Loss per share Basic (per share pence) (3.05) (238.28) (289.64) Diluted (per share pence) (3.05) (238.28) (289.64) ========================================== The loss for the period arises from the group's continuing operations Byotrol PLC UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES for the period ended 30 September 2005 9 Mths 9 Mths 12 Mths 30-Sep-05 30-Sep-04 31-Dec-04 £ £ £ Loss for the financial period (462,808) (440,333) (535,263) Currency translation differences on foreign currency net investments (37,822) 21,939 26,416 ------------------------------------------ Total recognised gains and losses relating to the year (500,630) (418,394) (508,847) ========================================== Byotrol PLC UNAUDITED CONSOLIDATED BALANCE SHEET as at 30 September 2005 30 September 30 September 31 December 2005 2004 2004 £ £ £ FIXED ASSETS Intangible assets 9,833 - - Tangible assets 45,671 2,042 2,171 Investments 5,425 5,000 5,000 ------------------------------------------ 60,929 7,042 7,171 ------------------------------------------ CURRENT ASSETS Stock 48,256 36,986 35,518 Debtors 119,901 29,231 15,753 Cash at bank and in hand 2,187,541 6,346 5,898 ------------------------------------------ 2,355,698 72,563 57,169 CREDITORS: Amounts falling due within one year 502,310 192,517 158,049 ------------------------------------------ NET CURRENT ASSETS 1,853,388 (119,954) (100,880) ------------------------------------------ TOTAL ASSETS LESS CURRENT LIABILITIES 1,914,317 (112,912) (93,709) CREDITORS: Amounts falling due within one year - 566,542 631,987 ------------------------------------------ 1,914,317 (679,454) (725,696) ========================================== CAPITAL AND RESERVES Share capital 87,182 462 462 Share premium account 2,945,529 - - Merger reserves 1,064,712 955,651 955,651 Profit and loss reserve (2,182,439) (1,635,567) (1,681,809) Minority interest (667) - - ------------------------------------------ EQUITY SHAREHOLDERS' FUNDS 1,914,317 (679,454) (725,696) ========================================== Byotrol PLC UNAUDITED CONSOLIDATED CASH FLOW STATEMENT for the period ended 30 September 2005 30 September 30 September 31 December 2005 2004 2004 £ £ £ Net cash (outflow)/inflow from operating activities (334,435) (280,238) (317,617) Returns on investments and servicing of finance Interest received 17,566 - - Interest paid (3,555) (2,858) (5,266) --------------------------------------- Net cash outflow from returns on investments and servicing of finance 14,011 (2,858) (5,266) Taxation - - - Capital expenditure Purchase of tangible fixed assets (45,509) - - --------------------------------------- Net cash outflow for capital expenditure (45,509) - - --------------------------------------- Acquisitions Purchase of investments - (26,835) (26,835) --------------------------------------- Net cash outflow from acquisitions - (26,835) (26,835) --------------------------------------- Net cash outflow before use of liquid resources and financing (365,933) (309,931) (349,718) --------------------------------------- Financing Issue of ordinary share capital 3,119,360 - - Expenses of share issue (533,875) - - Cash received for units - 97,451 97,451 Repayment of other loans (15,451) - - Increase in other loans - 92,379 104,474 Increase in directors' loans 24,537 124,743 158,988 --------------------------------------- Net cash inflow from financing 2,594,571 314,573 360,913 --------------------------------------- --------------------------------------- Increase in cash 2,228,638 4,642 11,195 --------------------------------------- Byotrol plc Notes to the Interim Financial Statements for the period to 30 September 2005 1 This interim statement for the period to 30 September 2005 is unaudited and was approved by the Directors on 14 December 2005. The information set out does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. 2 Turnover Turnover and loss before taxation were all derived from the Group's principal activities and arose principally in the following geographical markets: 9 Mths 9 Mths 12 Mths 30-Sep-05 30-Sep-04 31-Dec-04 £ £ £ UK 19,012 14,916 14,916 USA 28,397 28,636 37,310 -------------------------------------- 47,409 43,552 52,226 -------------------------------------- The Group will in future report on a segmental basis analysed between industry sectors. At the period end the sales had largely been made in the specialised industrial sector. Overhead costs continue to relate largely to research and development, primarily in relation to obtaining NHS and EPA approvals. 3 The interim statement has been prepared on the basis of the accounting policies set out in the Group's Admission Document dated 6 July 2005. No financial statements have been issued for the Group or the Company as Byotrol plc is a newly incorporated entity whose first accounting reference period ends on 31 March 2006. 4 Basis of Consolidation The Group interim statements have been prepared using merger accounting, in accordance with FRS 6, to show the effects of the Group reorganisation carried out prior to flotation, which involved adding a UK public limited company as the parent company of Byotrol LLC. The results are presented on a proforma basis as if Byotrol plc had been in existence throughout both the current and prior periods. All other subsidiaries are consolidated using the acquisition method, incorporating results from the date that control passed. The difference between the cost of acquisition of shares in subsidiaries and the fair value of the separable net assets acquired is capitalised and written off on a straight line basis over its estimated economic life. Provision is made for impairment. 5 Loss per ordinary share The loss per ordinary share is based on the losses for the period of £462,808 (nine months ended 30 September 2004: £440,333 loss; year ended 31 December 2004 £535,263 loss) and the weighted average number of ordinary shares in issue during the period of 15,206,662 (nine months ended 30 September 2004: 184,800; year ended 31 December 2004: 184,800). The loss for the period and the weighted average number of ordinary shares for calculating the diluted earnings per share for the nine months ended 30 September 2005 is identical to those used for the basic earnings per share. This is because the outstanding share options would have the effect of reducing the loss per ordinary share and would therefore not be dilutive under the terms of Financial Reporting Standard No 22 (FRS 22). 6 Taxation No liability to corporation or overseas income taxes arises for the period due to losses incurred. The directors have assessed the position in relation to deferred tax and concluded that no provision or asset should be created at this stage in respect of deferred tax in view of the timescale and uncertainty of the recovery of tax losses. This position will be reviewed again at 31 March 2006. 7 Exceptional items The exceptional cost of £nil (nine months ended 30 September 2004: £154,504; year ended 31 December 2004 £159,348) relates to a bad debt expense and an investment written off. 8 Reconciliation of Movement in Group Shareholders' funds For the period to 30 September 2005 Share Share Merger Minority Profit & loss Total capital premium reserve interest account At 31 December 2004 £ £ £ £ £ £ Previously reported - Byotrol LLC 956,113 - - - (1,681,809) (725,696) Merger adjustment (955,651) - 955,651 - - - Issue of units by LLC prior to merger 79,360 - - - - 79,360 Merger adjustment (79,322) - 79,322 - - - Issue of shares for intellectual property 10,000 - - - - 10,000 Issue of shares for cash 40,000 - - - - 40,000 Capitalisation of directors' loan accounts 4,073 484,738 - - - 488,811 Capitalisation of royalties owed - 27,275 29,739 - - 57,014 Issue of shares in placing 32,609 2,967,391 - - - 3,000,000 Issue costs - (533,875) - - - (533,875) Loss for the period - - - - (462,808) (462,808) Exchange difference on consolidation - - - - (37,822) (37,822) Minority interest - - - (667) - (667) ------------------------------------------------------------------------- At 30 September 2005 87,182 2,945,529 1,064,712 (667) (2,182,439) 1,914,317 ========================================================================= 9 Cashflows Reconciliation of Operating (Loss) To Net Cash Inflow from Operating Activities Notes 9 Mths 9 Mths 12 Mths 30-Sep-05 30-Sep-04 31-Dec-04 £ £ £ Operating loss (477,486) (437,475) (529,997) Depreciation 1,822 1,516 1,516 Amortisation of intangible assets 167 - - Increase in stock (12,738) (35,431) (33,963) (Increase)/decrease in debtors (104,148) 148,696 162,174 Increase/(decrease) in creditors 296,008 (6,318) 29,402 Provision against investment - 26,835 26,835 Exchange gain or loss (38,060) 21,939 26,416 ------------------------------------------- Net cash outflow from operating activities (334,435) (280,238) (317,617) ------------------------------------------- Reconciliation of net cash flow to movement in Net Debt 9 Mths 9 Mths 12 Mths 30-Sep-05 30-Sep-04 31-Dec-04 £ £ £ Increase in cash in the period 2,228,638 4,642 11,195 Cash inflow from increase in debt and lease financing (9,086) (217,122) (263,462) ------------------------------------------- Change in Net Debt resulting from cash flows 2,219,552 (212,480) (252,267) Loans converted into shares 488,811 - - ------------------------------------------- Movement in net cash/(debt) in the period 2,708,363 (212,480) (252,267) Net (debt) at start of period (673,084) (420,817) (420,817) ------------------------------------------- Net cash/(debt) at end of period 2,035,279 (633,297) (673,084) ------------------------------------------- As at 1 January At 30 Sept 2005 Cash Flows Other Changes 2005 £ £ £ £ Analysis of net debt Net Cash: Cash at bank and in hand 5,898 2,181,643 - 2,187,541 Overdraft (46,995) 46,995 - - ---------------------------------------------------------------- (41,097) 2,228,638 - 2,187,541 Debts falling due within 1 year - 15,451 (167,713) (152,262) Debts falling due after 1 year (631,987) (24,537) 656,524 - Finance Lease Obligations - ---------------------------------------------------------------- (631,987) (9,086) 488,811 (152,262) ---------------------------------------------------------------- Net cash/(debt) (673,084) 2,219,552 488,811 2,035,279 ---------------------------------------------------------------- Independent Review Report to Byotrol plc Introduction We have been instructed by the company to review the financial information for the nine months ended 30 September 2005, which comprises the Group Profit and Loss Account, Group Statement of Total Recognised Gains and Losses, Group Balance Sheet, Group Statement of Cash Flows, and the related notes and we have read the other information in the interim statement and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of its interim statement and for no other purpose. We do not, therefore, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Directors' responsibilities The interim statement, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Interim Statement in accordance with the AIM Rules which require that the accounting policies and presentation applied to the interim figures must be consistent with those that will be adopted in the company's annual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board as if that Bulletin applied. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the nine months ended 30 September 2005. BAKER TILLY Chartered Accountants Brazennose House Lincoln Square Manchester M2 5BL 14 December 2005

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