Interim Results

RNS Number : 7428I

Byotrol PLC

24 November 2008

 

Byotrol plc

(the 'Company')

Unaudited interim results for the six months ended 

30 September 2008

Chairman's Statement

I am pleased to report that, on 19 November, shareholders approved the resolutions necessary to enable the Company to raise £3.75m , net of expenses, through a placing of 36,363,636 new ordinary shares with certain institutional and other investors (the 'Fundraising'), to finance the future development of the business. This Fundraising was achieved against a market backdrop the like of which has not been seen for many years and I must congratulate my fellow directors on their hard work in achieving this success as well as thank our shareholders for their support.

The six month period has seen the Company continue to make satisfactory progress across its target market sectors. The Company is developing Byotrol as a globally trusted brand in the field of microbial control and the core focus of the past six months has been to develop sales channels to enable us to exploit our technology in key markets.

The Company has decided to concentrate on three market areas in the short term and to focus on driving sales in these markets. The markets are, firstly, healthcare through our relationship with Synergy Health plc in Europe and through distributors in the US, secondly food and agriculture, both through distributors and direct sales and thirdly consumer products via our joint venture, Byotrol Consumer Products.

Despite the progress made, the Board is disappointed with the sales in the period, albeit revenues have increased to £387,852 from £214,995 over the same period last year.

Finally I would like to express my thanks to all staff, partners and suppliers who have supported us throughout the period and especially to my fellow director, Ian Mainman, who has stepped down from the Board after three years loyal service. Ian has seen the company through its flotation and two successful fundraisings and we are indebted to him for his wise counsel.

Prospects

The Board remains confident of the significant benefits of the adoption of Byotrol's technology, albeit that we must of course remain cautious in our optimism. We are delighted that our shareholders showed their support through the success of the Fundraising in very difficult market circumstances.

Wesley Devoto OBE

Chairman

24 November 2008

  Chief Executive's Report

I am pleased to be able to provide shareholders with an update across each of our core target market sectors. As explained in the circular to shareholders dated 30 October 2008, we are focussing on three of our six core market sectors to enable the Company to develop sales rapidly to fund the business for the future. The sectors that we are focussing on are healthcare, food and agriculture and consumer products.

Healthcare

Supply to the NHS can be frustratingly difficult and progress has indeed been slower than anticipated. However we were delighted that Synergy Health's Azo Active range containing Byotrol has been included in the Department of Health purchasing catalogue. This has already generated interest as inclusion makes purchasing by NHS Trusts simpler.

Synergy has also made the first of the three licence payments due in respect of their European licence which in total amount to £1m; the other two being due in September 2009 and 2010. We look forward to working with them to launch Byotrol based healthcare products throughout Europe through their distribution network.

As announced last month the Manchester Royal Infirmary trial showed positive results at the interim stage and we look forward to the conclusion of that trial and the resulting academic paper which we hope to receive early next year. At the same time we informed shareholders of the success of the use of Byotrol in a disciplined cleaning regime in Monroe hospital in the US which has had no incidence of Hospital Acquired Infection for two years. We believe this evidence will assist our sales push in North America.

Food and Agriculture 

We continue to make progress with food factories, albeit slowly because of the desire of most major food groups to trial the product for a period of time prior to purchasing and rolling out across their operations. A number of these trials are reaching conclusion and we are hopeful that this will lead to Byotrol based products being used on a wider commercial scale.

We have always said that direct selling to these companies was not part of our long term plans and we are pleased to have signed our first distribution agreements with two major distributors to the food industry based in the North of England. These companies have their own sales forces and customer bases and should greatly assist in widening the attack on the ready to eat food preparation sector. Both companies have annual sales targets and we have been training their staff in the features of the Byotrol range.

In agriculture we continue to develop both teat dip and hoof guard products and there are a number of farms in both the UK and Eire that are trialling the products and the initial results are promising. There has been reluctance by farmers, similar to that of food factories, to use the product without extensive trials. We have developed our own protocols for working on farms and, if followed, the results have been encouraging.

We are also awaiting the trial results of tests done by TEASGAC, the Irish food and agriculture agency.

Consumer Products

Byotrol Consumer Products ('BCP'), our joint venture with What If Ventures established in July 2007, continues to pursue its aim of entering the consumer products market. The progress of BCP continues to be in line with expectations and we are making progress on a number of fronts.

We continue to be in active discussions with some of the global FMCG companies but, although the response generated thus far is satisfactory, the long lead times associated with the development and launch of new consumer products makes progress slower than we might like.

We are also in detailed discussions with other major international players in the FMCG market to enter into Joint Development Agreements ('JDAs'). These JDAs will enable us to work with these companies towards a commercial agreement and resultant product launch. We hope to sign at least one such JDA in the near future. 

The other three core areas, industrial and technical, hospitality and leisure, and general agriculture remain in the background. We will continue to make sales to existing customers but will not seek new opportunities nor enter into time costly trials in these sectors. Once the core business is established, we will then consider devoting resource to these areas. 

Intellectual Property and Quality Management 

We have signed an inexpensive short term lease on excellent laboratory facilities at Daresbury Science and Innovation Park. This will enable us to develop and test formulations for both consumer product target companies and our business to business market sectors.

We have continued to ensure that our patent protection is improved and we have filed further technology patents. We are looking to strengthen our regulatory and licensing skills to enable us a better understanding of the needs of potential significant customers.

We are very conscious of the value of our intellectual property and are taking advice from a significant IP valuation consultancy to ensure that we optimise the value recognised in any licensing deals.

Cost control

We are continually looking to drive down costs whilst developing business opportunities and, after the successful Fundraising, are very conscious of the need to deploy our cash resources conservatively.

David McRobbie

Chief Executive

24 November 2008

Enquiries

Byotrol plc                                                                 0161 277 9518

Stephen Falder              Deputy Chairman                  07767 404629

David McRobbie          Chief Executive                      07739 549226

Richard Bell                  Finance Director                    07825 204110

Charles Stanley Securities                                          020 7149 6000

Nominated Adviser & Broker

Philip Davies / Carl Holmes

Byotrol plc

UNAUDITED CONSOLIDATED INCOME STATEMENT

for the period ended 30 September 2008

		6 Mths 30-Sep-08 £	6 Mths 30-Sep-07 £	12 Mths 31-Mar-08 £
Revenue		387,852	214,995	947,873
Cost of sales		(76,573)	(68,333)	(310,246)
Gross profit		311,279	146,662	637,627
Administration expenses excluding depreciation and amortisation		(1,517,738)	(1,489,291)	(3,056,204)
Share scheme charges		(153,461)	(162,493)	(326,361)
Loss before joint venture, interest, depreciation, amortisation and tax		(1,359,920)	(1,505,122)	(2,744,938)
Amortisation		(8,984)	(7,719)	(16,651)
Depreciation		(10,508)	(10,266)	(21,621)
Share of results of joint venture		(94,822)	-	(145,266)
Finance income		18,059	85,846	156,090
Finance costs		(311)	(330)	(800)
Loss before tax expense		(1,456,486)	(1,437,591)	(2,773,186)
Tax credit		31,385	-	-
Loss for the period attributable to:   - equity shareholders of parent company  - minority interests		(1,425,101) -	(1,437,591) -	(2,774,333) 1,147
Loss for the financial period		(1,425,101)	(1,437,591)	(2,773,186)
Loss per share
Basic per share (pence)		(3.14)	(3.26)	(6.24)
Diluted per share (pence)		(3.14)	(3.26)	(6.24)

The loss for the period arises from the Group's continuing operations

  Byotrol plc

UNAUDITED CONSOLIDATED BALANCE SHEET 

as at 30 September 2008

		30 September 2008 £	30 September 2007 £	31 March 2008 £
ASSETS
Property, plant and equipment		31,813	46,754	41,699
Intangible assets		99,855	57,070	54,299
Investment		-	23,814	-
		131,668	127,638	95,998
Current assets
Inventories		153,681	104,035	122,172
Trade and other receivables		852,804	661,968	1,081,064
Cash and cash equivalents		685,016	2,662,980	1,312,960
		1,691,501	3,428,983	2,516,196
TOTAL ASSETS		1,823,169	3,556,621	2,612,194
LIABILITIES
Current liabilities
Trade and other payables		387,819	416,000	590,825
Joint venture		146,259	-	77,348
		534,078	416,001	668,173
Equity
Share capital		118,382	111,655	111,655
Share premium account		8,487,847	7,875,772	7,875,772
Merger reserve		1,064,712	1,064,712	1,064,712
Retained earnings		(8,381,850)	(5,911,519)	(7,108,018)
TOTAL EQUITY		1,289,091	3,140,620	1,944,121
TOTAL EQUITY AND LIABILITIES		1,823,169	3,556,621	2,612,294

Byotrol plc

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT 

for the period ended 30 September 2008

30 September 2008 £

30 September 2007  £

31 March  2008 £

Cash flow from operating activities
Loss before tax for the period	(1,456,486)	(1,437,591)	(2,774,333)
Adjustments for:
Share based compensation	153,461	162,493	326,361
Depreciation	10,507	10,266	21,621
Foreign exchange gains and losses	(57,585)	-	-
Amortisation	8,984	7,716	16,651
Net finance income	(17,748)	(85,516)	(155,290)
Changes in working capital
(Increase)/decrease  in inventories	(31,509)	(57,862)	(75,999)
Decrease/(increase) in trade and other receivables	195,282	63,950	(398,203)
(Decrease)/increase in trade and other payables	(101,018)	138,453	458,543
Net cash used in operations	(1,296,112)	(1,198,091)	(2,580,649)
Income taxes received	31,385	-	-
Net cash used in operating activities	(1,264,727)	(1,198,091)	(2,580,649)
Cash flows from investing activities
Payments to acquire property, plant and equipment	(621)	(10,228)	(16,528)
Payments to acquire intangible assets	(54,540)	(2,586)	(8,750)
Payment to acquire interest in joint venture	-	(23,814)	(23,814)
Net finance income	17,748	85,516	155,290
Net cash used in investing activities	(37,413)	48,888	106,198
Cash flows from financing activities
Proceeds of issue of ordinary shares	618,802	237,602	237,602
Net cash inflow from financing	618,802	237,602	237.602
Net increase in cash and cash equivalents	(683,338)	(911,601)	(2,236,849)
Effect of foreign exchange on cash and cash equivalents	55,394	21,543	(3,229)
	(627,944)	(890,058)	(2,240,078)
Cash & cash equivalents at the beginning of the financial period	1,312,960	3,553,038	3,553,038
Cash & cash equivalents at the end of the financial period	685,016	2,662,980	1,312,960

  Byotrol plc 

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

as at 30 September 2008

	Share Capital £	Share Premium £	Merger Reserve £	Retained Earnings £	Total £
Balance at 1 April 2007	109,073	7,640,752	1,064,712	(4,657,964)	4,156,573
Exchange differences arising on translation of overseas operations	-	-	-	21,543	21,543
Net gains/(losses) recognised directly in equity	-	-	-	21,543	21,543
Loss for the period	-	-	-	(1,437,591)	(1,437,591)
Total recognised income and expense	-	-	-	(1,416,048)	(1,416,048)
Conversion of warrants	2,582	235,020	-	-	237,602
Share scheme charges	-	-	-	162,493	162,493
Balance at 30 September  2007	111,655	7,875,772	1,064,712	(5,911,519)	3,140,620
Exchange differences arising on translation of overseas operations	-	-	-	(24,772)	(24,772)
Net gains/(losses) recognised directly in equity	-	-	-	(24,772)	(24,772)
Loss for the period	-	-	-	(1,335,595)	(1,335,595)
Total recognised income and expense	-	-	-	(1,360,367)	(1,360,367)
Share scheme charges	-	-	-	163,868	163,868
Balance at 31 March 2008	111,655	7,875,772	1,064,712	(7,108,018)	1,944,121
Exchange differences arising on translation of overseas operations	-	-	-	(2,192)	(2,192)
Net gains/(losses) recognised directly in equity	-	-	-	(2,192)	(2,192)
Loss for the period	-	-	-	(1,425,101)	(1,425,101)
Total recognised income and expense	-	-	-	(1,427,293)	(1,427,293)
Share scheme charges	-	-	-	153,461	153,461
Conversion of warrants	6,727	612,075	-	-	618,802
Balance at 30 September 2008	118,382	8,487,847	1,064,712	(8,381,850)	1,289,091

1    Basis of preparation

This interim statement for the period to 30 September 2008 is unaudited and was approved by the Directors on 24 November 2008. The information set out does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985.  The results for the year ended 31 March 2008 are in abbreviated form and have been extracted from the published financial statements. These were audited and reported upon without qualification by Baker Tilly UK Audit LLP and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.

2    Going concern

The directors have prepared cash flow forecasts for the Group that reflect the Group's forecast revenues, costs and financing. It is envisaged by the directors that these forecast cash flow streams will provide adequate funds for Byotrol plc and all its subsidiary companies for the foreseeable future.

The forecast cash flows include the proceeds of a placing which was approved by shareholders on 19 November 2008, raising an additional £4 million before costs to provide additional equity finance for the Group.

The financial statements have therefore been prepared on a going concern basis. 

3    Revenue

Revenue and loss before taxation were all derived from the Group's principal activities. The analysis of revenue by source is:

		6 Mths 30-Sep-08 £	6 Mths 30-Sep-07 £	12 Mths 31-Mar-07 £
	Product sales	184,922	204,181	873,000
	Licence fees	200,000	10,345	60,000
	Royalties	2,930	469	14,873
		387,852	214,995	947,873

The directors consider that the business generates revenues from the above three distinct sources. The three streams have a shared and largely inseparable cost base, and thus the directors consider that there is only one business segment

The geographical analysis of revenue is: 

		6 Mths 30-Sep-08 £	6 Mths 30-Sep-07 £	12 Mths 31-Mar-07 £
	UK	338,128	165,908	654,670
	North America	66,123	25,784	73,245
	Rest of World	(16,399)	23,303	219,958
		387,852	214,995	947,873

4    Loss per ordinary share

The loss per ordinary share is based on the losses for the period of £1,425,101 (six months ended 30 September 2007: £1,437,591 loss; twelve months ended 31 March 2008 £2,773,186 loss) and the weighted average number of ordinary shares in issue during the period of 45,338,516 (six months ended 30 September 2007: 44,151,980; twelve months ended 31 March 2008: 44,407,857).

The loss for the period and the weighted average number of ordinary shares for calculating the diluted earnings per share for the six months ended 30 September 2008 and for the comparative periods are 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.

5   Taxation

No liability to UK 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 2009.

The tax credit relates to research and development repayment claims received from HMRC.

6.   Post balance sheet events

On 19 November 2008 shareholders approved the issue of an additional 36,363,636 ordinary shares of 0.25 pence each at a price of 11 pence per share, raising £4,000,000 before expenses of issue.

7    Interim announcement

The interim report was issued to the Stock Exchange and the press on 24 November 2008. A copy will be posted on the Company's website.

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the six months ended 30 September 2008 which comprises the consolidated income statement, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in equity and the accompanying notes. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report, including the conclusion, has been prepared for and only for the Company for the purpose of meeting the requirements of the AIM Rules for Companies 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 financial report, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing and presenting the interim financial report in accordance with the AIM Rules for Companies.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards and International Financial Reporting Interpretations Committee ('IFRIC') pronouncements as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with the measurement and recognition criteria of International Financial Reporting Standards and IFRIC pronouncements, as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the six months ended 30 September 2008 is not prepared, in all material respects, in accordance with the measurement and recognition criteria of International Financial Reporting Standards and IFRIC pronouncements as adopted by the European Union, and the AIM Rules for Companies.

BAKER TILLY UK AUDIT LLP

Chartered Accountants

Brazennose House
Lincoln Square
Manchester

M2 5BL

24 November 2008

 

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