Venteco PLC
30 March 2007
30 March 2007
Venteco plc
Preliminary Results for the year to 31 December 2006
Venteco plc ('Venteco' or 'the Company'), the UK-based non-toxic pest control
provider, announces its financial results for the year ended 31 December 2006
which have been prepared in accordance with IFRS.
Highlights
•Raised £3.1m before expenses from admission to AIM in March 2006
•Completed £7.4m reverse takeover of CTS Technologies, leading provider of
non-toxic pest control services to the food industry
•Made breakthrough into important US market following leasing agreement
with Terminix, the leading pest control specialist, for CTS' Cryonite
technology
•Secured global marketing agreement with RIWA Ltd for Cryonite
•Cryonite made inroads into hotel market with successful deployment into
major London hotel
•Beginning of 2007, two acquisitions, Silvandersson AB and Valiguard AB
have been completed increasing pro-forma revenues by approx. GBP 4.3m.
•Strong balance sheet, including £2.2m in cash, a healthy platform for
growth in 2007 and beyond
Commenting on the results Stefan Hansson, CEO of Venteco, said: 'We are
assembling the building blocks of a business with strong potential for growth in
the near future. In 2006, Venteco made significant progress towards achieving
our ambition of establishing a leading supplier of non-toxic pest control
products and services. The combination of our excellent,
environmentally-friendly technology and blue chip distribution and sales
partners have provided us with a solid foundation on which to build a strong and
growth business in a vibrant market.'
Venteco was incorporated on 1 March 2006 and completed the legal acquisition of
CTS technologies AG on 11 August 2006. For accounting purposes this acquisition
has been treated as a reverse acquisition and accordingly comparative financial
information and that relating to the pre-acquisition period relates entirely to
CTS. Post the date of acquisition the financial information is presented on a
consolidated basis applying reverse acquisition accounting.
Enquiries:
Venteco plc
Stefan Hansson, CEO +44 (0)20 7929 8989
Corfin Communications
Ben Hunt, Clare Perks +44 (0)20 7929 8989
Overview
Venteco announces its maiden results since admission to AIM following an active
year that heralds an exciting period of growth for the Company.
The Company was incorporated on March 1 2006 with the intention of building a
leading provider of non-toxic pest control products and services. Global changes
in the regulatory landscape, growing public concern about the effect of toxins
on the environment as well as increasing awareness among corporations about
their social responsibilities have combined to produce an evident market need
for environmentally-friendly solutions in the pest control industry.
Increasingly, poisonous substances are no longer tolerated by the public, by
industry or by government.
The Board therefore believed Venteco had the potential to address a nascent
market of significant potential through a carefully planned strategy of selected
acquisitions and investments.
To facilitate this in March 2006, Venteco raised £3.1m and was subsequently
listed on the AIM market of the London Stock Exchange, providing the Company
with funds for potential acquisitions, and a means to reward employees through
stock incentive schemes and enhancing its global profile.
In August, the Company completed its first acquisition, that of Swiss-based CTS
Technologies AG, whose Cryonite method of pest control, which is largely
deployed in hospitality industries, freezes pests using carbon dioxide snow in a
process that causes no harm to the environment and causes far less operational
disruption than traditional methods of pest control.
With the acquisition of CTS, Venteco's management was strengthened as Stefan
Hansson, CTS' chief executive, assumed the same role for the entire group.
Under Mr. Hansson's direction Venteco has set about achieving its aims of
strengthening its position within the pest control sector through a combination
of organic growth, geographical expansion, internal product innovations and
acquisition of complementary technologies and/or companies.
Later in 2006 two further opportunities for acquisition arose: Silvandersson, a
leading Swedish provider of non-toxic fly control products, and SIK Valiguard, a
food industry certification and services body. Both were completed in early 2007
strengthening Venteco's product portfolio, customer base and market penetration
and accelerating the Company's development as a leading provider in the sector.
Operating review
Venteco had no trading activities until August and the completion of the
acquisition of CTS Technologies. In the four and half months of trading in the
period after that, CTS made strong operational progress.
CTS' Cryonite technology is in the early stages of commercialisation but more
than 350 units have already been distributed in 20 countries across four
continents.
CTS's business model varies between markets but is founded on securing marketing
and distribution agreements with pest control operators (PCOs). In Europe, for
example, this is done through a distribution agreement with Linde, the
industrial gases group, which leases Cryonite units to PCOs and end customers,
such as food industries and hotels.
Throughout 2006, CTS and partners have continued to extend the penetration of
Cryonite and have secured a number of agreements.
In September it entered into an agreement with Cheshire-based Riwa Ltd, an
existing partner in the UK, which gave the firm the responsibility to market
Cryonite on a global basis (in partnership with CTS' distribution partner Linde
in Western Europe).
In October, Terminix, the largest pest control company in the world alongside
Orkin, reaffirmed its commitment to Cryonite, with its decision to market the
product in the US market. Initially, Terminix chose to deploy 50 Cryonite units
across its branch offices in the US from the beginning of 2007. Terminix has
devoted significant resources towards a successful launch. In parallel, CTS
continues its efforts to extend Cryonite's deployment into other major US pest
control companies.
In Europe, similar efforts are being made to broaden the customer base. During
the year, ISS, Igrox and others started to use Cryonite commercially.
Furthermore a number of leading multinational food manufacturers have also
started using Cryonite on a regular basis in their factories. Successful
implementation could therefore lead to significant order volumes.
Substantial progress has also been made in penetrating the hotel market, which
the Board believes offers considerable potential for Cryonite.
Our discussions with leading hotel chains indicate that the bedbug problem is
escalating as a result of the increased global travelling, less effective
pesticides being applied, and in some cases the bedbugs becoming increasingly
resistant to some pesticides being widely used.
Cryonite has the potential to increase revenues for hotels affected by this pest
by reducing the time a room is taken out of use during treatment as well as the
direct costs associated with an infestation. CTS has completed its first
successful deployment of Cryonite into hotels and is now actively pursuing
routes into this market. This is highlighted by the fact that currently approx
50% of deliveries in the UK are leased to pest control companies for use in the
hotel industry.
The first deployment in Scandinavia has also been made and very strong interest
has been shown in the US and Australia after successful field tests, which are
expected to lead to deployment within these markets shortly. Given that these
hotels are often part of major hotel groups, and the fact that pay-back for a
hotel using Cryonite is extremely short, implies that sales could increase
rapidly if the current positive response towards Cryonite continues.
Financial Review
CTS' sales for the year (which represent the totality of Venteco's trading) fell
slightly to £244,000 from £248,000 in 2005. This fall was in part because of a
delay in the delivery of new Cryonite units following a technical upgrade of the
apparatus and in part through the delay of new sales channels coming on stream.
Operating loss amounted to £450,000 (2005 (CTS): £247,000) reflecting the
additional costs associated with the Company being listed on AIM.
Loss before tax amounted to £365,000 compared to a loss of £247,000 in 2005.
Basic and fully diluted loss per share amounted to 0.13p per share.
Cash and cash equivalents as at 31 December 2006 were £2.2m.
Venteco was incorporated on 1 March 2006 and completed the legal acquisition of
CTS technologies AG on 11 August 2006. For accounting purposes this acquisition
has been treated as a reverse acquisition and accordingly comparative financial
information and that relating to the pre-acquisition period relates entirely to
CTS. Post the date of acquisition the financial information is presented on a
consolidated basis applying reverse acquisition accounting.
Outlook
Venteco's financial performance fell short of management's internal expectations
for 2006, as delays to the launch of an improved Cryonite units and the
slower-than-expected development of our sales channel held up our marketing
campaign for the product. In addition, focus also had to be made on establishing
an organisation that could live up to the expectations of a listed company.
The Board is confident, however, that these teething problems have now been
overcome and that the Company has built a strong platform for growth in 2007 and
beyond. In particular, following a number of distribution and marketing
agreements agreed in 2006, the Board is optimistic that 2007 provides
significant opportunities for Cryonite in the US, UK, Italy, German and the
Nordic regions.
Venteco made great strides in 2006 establishing the building blocks for long
term success and the Board is confident that it will begin to demonstrate the
evidence of that in 2007.
Consolidated Income Statement
for the year ended 31st December 2006
2006 2005
£'000 £'000
Revenue 244 248
Cost of sales (98) (133)
Gross profit 146 115
Administrative expenses ( 600) ( 361)
Net foreign exchange differences 4 ( 1)
Loss from operations ( 450) ( 247)
Interest and similar income receivable 86 1
Interest and similar charges payable ( 1) ( 1)
Loss before taxation ( 365) ( 247)
Taxation - 26
Loss attributable to equity shareholders ( 365) ( 221)
Loss per share
Basic and fully diluted loss per share (0.13p)
Consolidated Balance Sheet
At 31 December 2006
2006 2005
Assets £'000 £'000
Non-current assets
Goodwill 1,382 -
Other intangible assets 200 176
Furniture, fittings and equipment 7 10
Deferred tax asset 25 26
1,614 212
Current assets
Inventories 2 3
Trade and other receivables 136 30
Cash and cash equivalents 2,231 11
2,369 44
Total assets 3,983 256
Equity and liabilities
Equity attributable to equity holders of the company
Called up Share capital 1,744 596
Share Premium account 2,366 -
Reverse acquisition reserve 306 (149)
Share based payments reserve 43 -
Currency translation reserve 9 -
Accumulated losses ( 586) ( 221)
Total equity 3,882 226
Current liabilities
Trade payables 53 25
Tax liabilities - 1
Other liabilities 1 1
Accrued expenses and deferred income 47 3
Total current liabilities 101 30
Total equity and liabilities 3,983 256
Consolidated Statement of changes in equity
for the year ended 31 December 2006
Share Share Reverse Share
Capital Premium acquisition based
account reserve payments
£'000 £'000 £'000 £'000
Balance at 31 December 2004 596 - (149) -
Loss for the period - - - -
Balance at 31 December 2005 596 - (149) -
Loss for the period - - - -
Exchange rate translation - - - -
adjustment
CTS Technologies AG - Share issue 10 82 -
Acquisition of CTS 1,138 2,366 373 43
Balance at 31 December 2006 1,744 2,366 306 43
continued...
Consolidated Statement of changes in equity
for the year ended 31 December 2006
Currency Accumulated
translation losses Total
reserve
£'000 £'000 £'000
Balance at 31 December 2004 - - 447
Loss for the period - ( 221) ( 221)
Balance at 31 December 2005 - ( 221) 226
Loss for the period - ( 365) ( 365)
Exchange rate translation adjustment 9 - 9
CTS Technologies AG - Share issue - - 92
Acquisition of CTS - - 3,920
Balance at 31 December 2006 9 ( 586) 3,882
Consolidated Cash Flow Statement
for the year ended 31 December 2006
2006 2005
£'000 £'000
Net cash from operating activities ( 474) ( 235)
Investing activities
Purchase of furniture, fittings and equipment - ( 12)
Purchase of patents and trademarks ( 47) 188)
Acquisition of subsidiary (428) -
Interest received 86 1
Net cash used in investment activities (389) ( 199)
Financing activities
Net proceeds of share issues 92 447
Net cash inflow arising on acquisition 2,994 -
Interest paid ( 1) ( 1)
Net cash from financing activities 3,085 446
Cash flow for the year
Net increase in cash and cash equivalents 2,222 12
Effect of foreign exchange rate changes ( 2) ( 1)
Cash and cash equivalents at beginning of year 11 -
Cash and cash equivalents at 31 December 2006 2,231 11
Notes
1. The preliminary report for the period to 31 December 2006 was approved by
the Directors on 28 March 2007. The preliminary results for the year ended
31 December 2006 are unaudited. The financial information set out in the
announcement does not constitute the Group's statutory annual report for the
year ending 31 December 2006. The annual report for the period ended 31 December
2006 will be finalised on the basis of the financial information presented by
the directors in this preliminary announcement and will be posted to
shareholders in April 2007. It will be delivered to the Registrar of Companies
following the Company's annual general meeting.
The comparative information is based on the IFRS accounts of CTS Technologies AG
that were published in the readmission document together with the principle
accounting policies adopted by the group.
2. Venteco Plc was incorporated on 1 March 2006. On 11 August 2006 CTS
Technologies AG entered into an agreement with Venteco that constituted a
reverse acquisition. Under the terms of the agreement, Venteco issued
227,692,308 ordinary shares for all the issued and outstanding shares of CTS
Technologies AG. This resulted in the former shareholders of CTS Technologies
AG obtaining 65.3% of the issued ordinary shares of Venteco. For the purposes of
accounting for this transaction CTS Technologies AG is treated as the acquirer
and Venteco Plc as the acquiree, and accordingly comparative financial
information and that relating to the pre-acquisition period relates entirely
to CTS. Post the date of acquisition the financial information is presented on
a consolidated basis applying reverse acquisition accounting.
3. The calculation of the basic loss per share is based on the weighted
average number of shares of Venteco Plc during the year.
Loss per share calculation
2006
£'000
Loss
Losses for the purpose of basic loss per share ( 365)
Number of shares:
Weighted average number of ordinary shares in issue during the
period 278,178,419
Basic loss per share (0.13p)
As there is a loss for the year the fully diluted loss per share is the same as
the basic loss per share.
The directors do not consider the loss per share for the comparative period to
be a meaningful measure as it relates solely to the acquired CTS business
4. Net cash from operating activities
2006 2005
£'000 £'000
Loss from operations ( 450) ( 247)
Adjustment for depreciation and amortization 20 15
Operating cash flows before movements in working capital ( 430) ( 232)
(Increase)/decrease in inventories 1 ( 3)
(Increase)/decrease in receivables ( 106) ( 30)
Increase/(decrease) in payables 61 30
Cash generated by operations ( 474) ( 235)
5. Segmental information
For management purposes, the Group is currently organised as one operating
division. The principal activity of the division is the supply of pest control
products and services.
Segment information about this activity is as follows:
2006 2005
Pest control Total Pest control Total
products products
and services and services
£'000 £'000 £'000 £'000
--------- --------- --------- --------
Revenue 244 244 248 248
External
sales --------- --------- --------- --------
Total sales 244 244 248 248
--------- --------- --------- --------
Result
Segment (245) (245) (247) (247)
result
Unallocated
corporate
expenses (205) -
--------- --------- --------- --------
Loss from
operations (245) (450) (247) (247)
Finance (1) (1)
costs
Interest
income 86 1
--------- --------- --------- --------
Loss before
tax (365) (247)
Taxation - 26
--------- --------- --------- --------
Loss after (365) (221)
tax --------- --------- --------- --------
Other
Information
Tangible
asset - - 12 12
additions
Intangible
asset
additions 47 47 188 188
Depreciation
and
Amortisation 20 20 15 15
Balance
Sheet
Assets
Segment 394 394 256 256
assets
Unallocated
corporate
assets 3,589 - -
--------- --------- --------- --------
Consolidated
total assets 394 3,983 256 256
--------- --------- --------- --------
Liabilities
Segment
liabilities 31 31 30 30
Unallocated
corporate
liabilities 70 70 - -
--------- --------- --------- --------
Consolidated
total
liabilities 101 101 30 30
--------- --------- --------- --------
Geographical
The entire turnover and all the group's assets and liabilities are generated and
based in Western Europe. The group's main line of business is the provision of
environmentally friendly pest control technology services. All the transactions
and business activities occur in Western Europe.
The following table provides an analysis of the group's sales by geographical
market.
For the group 2006 2005
£'000 £'000
Sweden 225 223
Rest of Europe - -
Rest of the World 19 25
244 248
The turnover in Sweden has arisen entirely from the distribution agreement with
Linde AGA which leases the Cryonite equipment to end users.
This information is provided by RNS
The company news service from the London Stock Exchange