Annual Report and Accounts

Byotrol PLC 20 June 2007 For release at 07.00 hours 20 June 2007 BYOTROL PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2007 Byotrol plc ('Byotrol' or the 'Company'), the anti-microbial technology company, announces its preliminary results for the year ended 31 March 2007. Highlights: • Environmental Protection Agency (EPA) registration successfully gained in USA • Fundraising completed in November 2006 - raising £4.6m net of expenses • Significant licensing deal signed with Synergy Healthcare plc in November 2006 • Product ranges launched over target markets Financials: • Turnover increased to £673,542 (2006: £90,014) • Year end cash balance £3.55m (2006: £1.21m) • Pre-tax loss of £1.74m (2006: Loss of £1.99m) • Loss per share reduced to 4.56 pence (2006: Loss per share 8.59p) Chairman of Byotrol, Wesley Devoto, said: 'We are optimistic that the foundations created in the last 20 months since flotation have provided the bedrock for the successful development and growth of the Company. Initial trading this year supports that assertion and we are confident that the Group will continue its growth pattern in the current financial year. We will continue to drive forward in our six target markets, increasing our use of resources to achieve our objectives.' ...Ends... For further information, please contact: Byotrol plc Tel: 0161 277 9518 Stephen Falder, Deputy Chairman www.byotrol.com David McRobbie, Chief Executive Richard Bell, Finance Director Rawlings Financial PR Limited Tel: 01756 770 376 Catriona Valentine catriona@rawlingsfinancial.co.uk www.rawlingsfinancial.co.uk Charles Stanley Securities Tel: 020 7149 6457 Philip Davies / Anthony Noakes CHAIRMAN AND CHIEF EXECUTIVE'S REVIEW It gives us great pleasure to announce the results for the year ended 31 March 2007 - the first full year's trading for Byotrol plc. The Group has continued to make progress throughout the year and we are pleased to report broadening and growing interest in our patented anti microbial technology amongst significant global businesses. In addition to progress in the Company's original target markets, further recognition of the benefits of Byotrol's technology was generated in other key market sectors. This initiated the Board's decision in November 2006 to seek further resources from investors via a Placing, that raised £4.6 million net of expenses, to ensure that the opportunities in these markets could be captured. It also broadened our institutional shareholder base, bringing new investors to the Company. The Board has used and continues to use the new money carefully and judiciously to secure further patent protections and prepare the Group for expansion into new markets. Financial Results The Group turnover for the year was £673,542 (2006: £90,014)(, which was in line with our expectations). The loss after taxation for the year was £1,743,904 (2006: £1,983,750), which was slightly more than that anticipated at the time of the Placing due to the accelerated incurral of certain patent and marketing costs and an FRS 20 charge of £94,231 on the granting of share options to certain directors and staff. Turnover is divided into three forms of sale: product sales, licence fees and royalties. Product sales were £471,025 (2006: £90,014) and licence fees £202,517 (2006: £Nil). Cash inflow was £2,339,985 (2006: £1,254,150) and the balance sheet showed a net worth of £4,157,720 (2006: £1,043,837). The year end cash balance was £3,553,038 (2006: £1,213,053). Strategy Byotrol is a combination of polymers and biocides which increases the effectiveness of the biocides and gives significant residual efficacy. It was originally developed in the research for an anti-microbial paint but was found to have a myriad of other applications. The Company's strategy is to build Byotrol into a globally recognised brand associated with the highest standards of safe, effective and long lasting microbial control. Originally three market sectors were identified and pursued - Healthcare, Food & Beverage and Industrial & Technical. However, progress has been made in three other major markets - Consumer Products, Hospitality & Leisure and Agriculture. We intend to move at an accelerating rate into these key markets through the development of strategic partnerships with major global players. Our aim is to partner, rather than compete, with organisations whose financial and marketing muscle and global reach will enable Byotrol, as an ingredient brand, to achieve worldwide presence rapidly. We will pursue a variety of partnership styles, as appropriate, either making direct product sales or licensing the use of Byotrol to generate licence fees and royalties or through joint ventures. Healthcare A major concern, as widely reported in the media, is the risk in hospitals of patients getting Hospital Acquired Infections. A significant efficacy study, conducted over a six month period in the Glasgow Royal Infirmary ('GRI'), showed reductions of over 50 per cent in environmental MRSA in a working test ward when Byotrol wipes were used once daily on a fraction of the surfaces. The Company was delighted with the results of this important study, which were presented to an international professional audience in Holland in October 2006. A study was also completed by recently opened Monroe Hospital in Indiana, USA, producing similar results to the GRI study. Monroe is part of a significant hospital group, so the success of the study bodes well for our US healthcare development. They are now using Byotrol products as part of their regular cleaning regime. A significant licensing deal was completed with Synergy Healthcare plc in November 2006, which initially granted exclusivity for certain healthcare markets in the UK. However, this is scalable into global markets subject to additional licence fees. The arrangement with Synergy healthcare is a clear example of how we intend to expand the reach of Byotrol's technology quickly through partnerships with existing successful businesses. Food and Beverage A principal issue on production lines is hygiene and the control of diseases, such as listeria, salmonella and e-coli, against which Byotrol's efficacy is already proven. A complete suite of products, the Nanosphere range, has been launched in the UK for commercial food and drink businesses. This sector has a need for both bespoke and stocked items which the Nanosphere range provides directly and through our growing network of distribution partners. In the USA, following Environmental Protection Agency registration in 2006, in order to capitalise on this progress our sales and marketing team has been strengthened by the appointment of an experienced industry expert from a major company within the market place. Industrial and Technical We launched products into a number of niche markets in this sector during the year. Byotrol's technology is principally presented to customers in these markets as an ingredient brand, which adds value to existing products or creates new product opportunities. An example includes the Pets at Home grooming and deodorising range of products, which gained the Pets at Home new product of the year award. We concluded very successful trials with one of the world's leading security printers, giving rise to the availability of anti-microbial currency notes in the future. Widespread concern over avian flu resulted in the sale of 20,000 emergency kits for use in strategic office environments in the last quarter of the financial year. Since the year end, Fellowes Inc, a worldwide provider of accessories and business machines, has announced the launch of Virashield including Byotrol in a range of wipes and disinfectants for the office workplace. Consumer Products Public awareness and concern about the potential threats from micro organisms provide a strong stimulus for development in this very significant market sector. The consumer is very concerned about domestic hygiene and this provides a significant market opportunity. By ensuring that Byotrol's technology has been carefully positioned into the pioneer markets, the Board believes that important value can be added to the Byotrol brand. As this market is vast and contains very material players, the Board has decided that the optimum solution is to seek an arrangement with an organisation with specialist expertise in accessing the global leaders in consumer products. The team is working hard to ensure that, as soon as is practicable, Byotrol will achieve an association with a major international consumer brands company to bring the Group's technology within the reach of a significant mass of the global population. Hospitality and Leisure Considerable potential exists in this very large market, which includes hotels and restaurants as well as cruise ships and sports facilities. On cruise ships, there have been significant outbreaks of Norovirus and in sports centres a variety of microbial related infections have been reported. A very successful field trial on a working German-based cruise ship, part of one of the largest fleets of international cruise lines, has initiated a focused programme of testing and product refinement that is on course to produce a range of Byotrol solutions to combat serious microbial outbreaks that occur in the cruise ship environment, as well as public transport systems and hotels. Contec Inc., in the USA, continues to enjoy success with its Athletix range of wipes products with Byotrol, developed for the hygienic maintenance of gymnasium and sports equipment. Agriculture This is one of the world's largest markets for anti-microbial agents, from fruit and crop protection to animal welfare and poultry hygiene. The Company believes that this market will be most effectively satisfied by an existing player in this sector, using Byotrol's technology where safety, residual efficacy and broad spectrum action are a highly attractive combination of features. Early progress has been made to demonstrate the significant advantages of using Byotrol and, following highly encouraging scoping tests, an eight month crop trial commenced in February 2007 under the supervision of the Plant Medicine programme of the University of Florida, headed by Professor Robert J McGovern. During the year we launched the Agrisphere range, which includes teat wipes, for farmers in the UK. These wipes improve quality in milk production and results to date have been encouraging. Another key benefit of the Agrisphere wipes, unlike other traditional products which are iodine based, is that they do not cause irritation when used on dairy cows. Also in the USA, excellent results have been seen in studies supervised by the United States Department of Agriculture regarding the control of salmonella in fertilised eggs through the use of Byotrol in the egg washing process. Intellectual Property and Quality Management The Company continued its policy of taking active steps to protect its intellectual property. This important work resulted in the filing of six new inventions, including two devices and three important use patents. The Company obtained ISO 13485 approval, which is the medical device quality management standard. This is expected to expedite the supply of Byotrol products to healthcare and medical customers worldwide. During the year, we were also awarded the CE Mark for medical and disinfectant products and achieved USA Environmental Protection Agency approval. The Byotrol Team We have developed our team significantly through the addition of experienced personnel in the key fields of sales and marketing, research and development, regulatory approvals and product development. Our UK operation has grown faster than the US but we expect this trend to change as our US business starts to increase in size. We also appointed Richard Bell, who joined us as Finance Director having previously acted as a financial consultant for the Company. Richard brings solid plc and City experience to the Board. We would like to express our thanks to all our staff for their hard work and commitment, which have enabled us to achieve significant goals this year. Current Trading and Outlook We are optimistic that the foundations created in the last 20 months since flotation have provided the bedrock for the successful development and growth of the Company. Initial trading this year supports that assertion and we are confident that the Group will continue its growth pattern in the current financial year. We will continue to drive forward in our six target markets, increasing our use of resources to achieve our objectives. Finally, we would like to thank all our shareholders for their support and enthusiasm. Wesley Devoto David McRobbie Chairman Chief Executive 20 June 2007 Unaudited Consolidated Profit and Loss Account For the year ended 31 March 2007 Year ended Period ended 31 March 31 March 2007 2006 (Restated) Notes £ £ Group turnover 2 Product sales 471,025 90,014 Licence fees & royalties 202,517 - --------- -------- 673,542 90,014 Cost of sales (194,703) (47,902) --------- -------- Gross profit 478,839 42,112 Administrative expenses (2,215,041) (1,424,793) Share based payment charge (94,231) (652,774) --------- -------- Operating loss on ordinary activities before interest and taxation (1,830,433) (2,035,455) Net interest receivable 86,293 50,215 --------- -------- Loss on ordinary activities before taxation (1,744,140) (1,985,240) Taxation 3 - - --------- -------- Loss on ordinary activities after taxation (1,744,140) (1,985,240) Minority interest 236 1,490 --------- -------- Loss for the period for the Group (1,743,904) (1,983,750) --------- -------- Loss per ordinary share Basic and diluted (p) 4 (4.56) (8.59) --------- -------- The loss for the period arises from the Group's continuing operations. Unaudited Consolidated Statement of Total Recognised Gains and Losses for the year ended 31 March 2007 Year ended Period ended 31 March 31 March 2007 2006 (Restated) £ £ Loss for the financial period (1,743,904) (1,983,750) Currency translation differences on foreign currency net investments 46,678 (42,184) ------------ ----------- Total recognised losses relating to the financial year (1,697,226) (2,025,934) ----------- Prior year adjustment (652,774) ------------ Total recognised losses since last annual report (2,350,000) ------------ Unaudited Consolidated Balance Sheet at 31 March 2007 2007 2006 (Restated) Notes £ £ £ £ Fixed assets Intangible assets 39,083 9,583 Tangible assets 69,909 50,645 Investments - 5,000 --------------- --------------- 108,992 65,228 Current assets Stocks 46,173 21,180 Debtors 727,065 118,177 Cash at bank and in hand 3,553,038 1,213,053 --------------- --------------- 4,326,276 1,352,410 Creditors Amounts falling due within one year (277,548) (373,801) --------------- --------------- Net current assets 4,048,728 978,609 --------------- --------------- Total assets less current liabilities 4,157,720 1,043,837 --------------- --------------- Capital and reserves Called up share capital - equity 5 109,073 87,182 Share premium account 6 7,640,752 2,945,529 Merger reserve 6 1,064,712 1,064,712 Profit and loss account 6 (4,657,964) (3,054,969) --------------- --------------- Equity shareholders' funds 4,156,573 1,042,454 Minority interest 6 1,147 1,383 --------------- --------------- Total capital employed 4,157,720 1,043,837 --------------- --------------- Unaudited Consolidated Statement of Cash Flows for the year ended 31 March 2007 Year ended Period ended 31 March 31 March 2007 2006 (Restated) Notes £ £ Net cash (outflow) from operating activities 7(a) (2,387,969) (1,335,945) ----------- ----------- Returns on investments and servicing of finance Interest paid (1,572) (2,983) Interest received 87,865 53,198 ----------- ----------- Net cash inflow from returns on investments and servicing of finance 86,293 50,215 ----------- ----------- Capital expenditure and financial investment Payment to acquire tangible fixed assets (45,456) (54,691) Payment to acquire intangible fixed assets (30,000) - ----------- ----------- Net cash outflow from capital expenditure (75,456) (54,691) ----------- ----------- Acquisitions and disposals Purchase of investments - - ----------- ----------- Net cash outflow from acquisitions and disposals - - ----------- ----------- Net cash (outflow) before use of liquid resources and financing (2,377,132) (1,340,421) ----------- ----------- Financing Issue of ordinary share capital 5,107,428 3,119,360 Share issue costs (390,314) (533,875) Increase in directors' loans - 24,537 Repayment of other loans - (15,451) ----------- ----------- Net cash inflow from financing 4,717,114 2,594,571 ----------- ----------- Movement in cash 7(b) 2,339,982 1,254,150 ----------- ----------- Reconciliation of net cash flow to movement in net funds Movement in cash 7(b) 2,339,985 1,254,150 Cash inflow from decrease/(increase) in debt 7(b) 152,262 (9,086) ----------- ----------- Change in Net Debt resulting from cash flows 7(b) 2,492,247 1,245,064 Loans converted into shares 7(b) - 488,811 ----------- ----------- Movement in net funds in the period 2,492,247 1,733,875 Net funds/(debt) at 1 April 2006/1 January 2005 1,060,791 (673,084) ----------- ----------- Net funds at 31 March 2007/31 March 2006 7(b) 3,553,038 1,060,791 ----------- ----------- Notes to the Preliminary Results for the year ended 31 March 2007 1. BASIS OF THE ANNOUNCEMENT The preliminary financial statements for the year ended 31 March 2007 were approved by the Board of Directors on 20 June 2007. The financial information set out above does not constitute the Company's statutory accounts for the financial year ended 31 March 2007 or the financial period ended 31 March 2006 but is derived from those accounts (subject to restatement for the effect of FRS 20). Statutory accounts for the financial period ended 31 March 2006 have been filed with the Registrar of Companies. The auditors have reported on those accounts; their report was unqualified and did not contain statements under section 237(2) or (3) ot the Companies Act 1985. The statutory accounts for the financial year ended 31 March 2007 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. Basis of preparation The preliminary financial statements are prepared under the historical cost convention in accordance with applicable accounting standards. Basis of consolidation The preliminary group financial statements consolidate the financial statements of Byotrol plc and all its subsidiary undertakings drawn up to 31 March 2007. No profit and loss account is presented for Byotrol plc as permitted by section 230 of the Companies Act 1985. 2. TURNOVER AND SEGMENTAL ANALYSIS The total turnover of the group for the period has been derived from its principal continuing activity. Year ended Period ended 31 March 31 March 2007 2006 £ £ Analysis by geographical area The analysis by geographical area of the turnover by destination is set out as below: United Kingdom 206,157 34,906 Rest of the World 434,712 16,082 North America 32,673 39,026 ----------- ---------- Group turnover 673,542 90,014 ----------- ---------- The directors consider that the business generates revenues from three distinct sources: product sales, licence fees and royalties. These revenue streams are disclosed on the face of the consolidated profit and loss account. The three revenue streams have a shared, and largely inseparable, cost base and thus the directors consider that there is only one business segment. 3. TAXATION a) Tax on loss on ordinary activities There is no tax charge as the Group has made losses in both the current period and the previous year. b) Factors affecting current tax charge There is no deferred tax charge or credit in either the current or prior year. The differences between tax on the Group's loss at the standard rate of corporation tax and the actual charge are reconciled below: Year ended Period ended 31 March 31 March 2007 2006 (Restated) £ £ Loss on ordinary activities before tax (1,744,140) (1,985,240) --------------- --------------- Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% (2004: 30%) (523,242) (595,572) Effect of: Expenses not deductible for tax purposes 44,746 204,069 Capital allowance (less than)/in excess of depreciation (8,963) 1,829 Unrelieved tax losses 487,459 389,674 --------------- --------------- Total current tax - - --------------- --------------- c) Deferred taxation and factors that may affect future tax charges There is no provision for deferred taxation. At 31 March 2007 the Group had unutilised trading losses and other timing differences of £879,133 (2006: £389,674). The deferred tax impact of these losses has not been recognised in the financial statements on the basis that there is insufficient evidence at the current time that the assets will be recoverable. Trading losses and other timing differences will only be available to offset against future interest income, income from activities as a holding Company and trading profits of Byotrol Technology Limited. 4. LOSS PER ORDINARY SHARE The loss per ordinary share is based on the losses for the period of £1,743,904 (2006: losses of £1,983,750). The loss per share is calculated by reference to the average number of ordinary shares in issue of 38,242,833 (2006: 23,090,464). There is no difference between basic and diluted loss per share, as the outstanding warrants would have had the effect of reducing the loss per ordinary share and would therefore not be dilutive under the terms of FRS22. 5. SHARE CAPITAL Authorised Year ended Period ended Year ended Period ended 31 March 31 March 31 March 31 March 2007 2006 2007 2006 No. No. £ £ Ordinary shares of 0.25p each 50,000,000 50,000,000 125,000 125,000 Allotted, called up and fully paid Year ended Period ended Year ended Period ended 31 March 31 March 31 March 31 March 2007 2006 2007 2006 No. No. £ £ Ordinary shares of 0.25p each 43,629,277 34,872,849 109,073 87,182 On 6 November 2006 the Company issued 8,340,000 ordinary shares by way of a placing in the market at 60p per share. On 9 January 2007 the Company issued 17,000 shares to consultants in lieu of fees. During the period 1 January 2007 to 31 March 2007, warrant holders subscribed for 399,428 shares at 23p per share. At 31 March there were 5,012,633 warrants, each convertible into one ordinary share at an exercise price of 23p, still outstanding. 6. SHARE CAPITAL AND RESERVES Share Share Merger Minority Profit & Share- capital premium reserve interest loss holders account account funds £ £ £ £ £ £ At 31 March 2006 87,182 2,945,529 1,064,712 1,383 (3,054,969) 1,043,837 Issue of shares in placing 20,850 4,983,150 - - - 5,004,000 Placing costs - (390,314) - - - (390,314) Conversion of warrants 1,041 102,387 - - - 103,428 Loss for the period - - - - (1,743,904) (1,743,904) Share based payment credit - - - - 94,231 94,231 Exchange difference - - - - 46,678 46,678 Minority interest - - - (236) - (236) _______ _______ _______ _______ _______ _______ At 31 March 2007 109,073 7,640,752 1,064,712 1,147 (4,657,964) 4,157,720 _______ _______ _______ _______ _______ _______ 7. CASH FLOW STATEMENT NOTES (a) Reconciliation of operating loss to net cash outflow from operating activities before exceptional items: Year ended Period ended 31 March 31 March 2007 2006 (Restated) £ £ Group operating loss (1,830,433) (2,035,455) Share based payment charge 94,231 652,744 Depreciation 26,192 6,217 Amortisation 500 417 (Increase)/decrease in stocks (24,993) 14,338 (Increase) in debtors (608,888) (102,424) (Decrease)/increase in creditors and provisions (96,253) 170,372 Provision against investment 5,000 - Exchange gain or loss 46,678 (42,184) ___________ ___________ Net cash outflow from operating activities (2,387,966) (1,335,945) ___________ ___________ (b) Analysis of net funds Period ended Year ended 31 March Non-cash 31 March 2006 Cash flow movement 2007 £ £ £ £ Cash at bank and in hand 1,213,053 2,339,985 - 3,553,038 Debts less than 1 year (152,262) 152,262 - - --------- --------- --------- --------- Net cash 1,060,791 2,492,247 - 3,553,038 --------- --------- --------- --------- 8. REPORT AND FINANCIAL INFORMATION Copies of the financial statements for the Group for the year ended 31 March 2007 will be available from the Company's registered office and will be posted to shareholders in due course. This information is provided by RNS The company news service from the London Stock Exchange

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