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Venteco PLC (VTO)

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Wednesday 24 September, 2008

Venteco PLC

Interim Results

RNS Number : 1449E
Venteco PLC
24 September 2008
 



Venteco Plc

('Venteco' or 'the Group')


Interim report and financial statements

for the six months ended 30 June 2008


Chairman's Statement


In the first half of the current financial year, Venteco has continued to reduce costs as previously reported in our annual report for 2007, while at the same time utilising synergies within the Group where appropriate. Venteco's two acquisitions completed during 2007, Silvandersson and Valiguard, have had a divergent development in 2008. 


In the first half of the current year, Valiguard has continued to show good growth, with sales up by 29% on the same period last year and improved its results relative to last year. Silvandersson on the contrary has been faced with a negative impact from the declining value of the UK pound and weaker demand, in especially Germany and Switzerland. Albeit still being profitable in the first half, a programme for improving results has been implemented which will lower the fixed cost base by about 15% when the full effect has been realised. The full effect of these measures is not expected to be achieved until 2009, given that these measures were realised gradually in 2008. In addition, price increases have also been implemented during the summer 2008. Silvandersson is also actively looking at lowering the cost through purchasing from other suppliers.


The Cryonite operations have now been fully integrated into Silvandersson's professional segment in order to utilise more efficiently the marketing resources within the Group. This has enabled a significant cost reduction which will be fully realised in the first half of 2009. The co-operation with Linde has been reviewed and finally terminated in May 2008, resulting in Venteco taking over the leasing portfolio into its own balance sheet. During the year, larger orders have been received by companies such as Terminix (US), ISS (Italy), Desinfecta (Switzerland), while the first units also were deployed in Singapore and the Philipines. In addition, a leading tobacco company in the Asian region has also deployed Cryonite units. After successful introduction in the US market by Terminix, Cryonite is receiving significant attention from pest control companies in the US, especially as a method of controlling bed bugs, which is increasing rapidly in the US. Hence, we expect Croynite to have positive profit contribution in 2009.


At the parent company level, cost reductions have also been implemented.


Financial results


Group sales have declined by 11% with a mixed development in core markets, where Venteco Group companies operate. Group operating loss for the period was GBP £21,000, representing a £508,000 decrease relative to first half of last year, which benefited from a one off gain of £471,000. 


Cash generated from operations was a negative £324,000 and £35,000 was spent on plant and equipment. In Silvandersson, a working capital reduction programme is underway, which should reduce net working capital considerably towards the end of 2008. 


Financing, Acquisitions and Divestitures


In the first half of 2008, focus have been on improving the operating performance and expanding the Cryonite operations, while at the same time try to preserve the cash position. The turbulent financial markets also mean that it is more difficult to pursue the acquisition led business model, as acquisitions are harder to finance. Given the continued deterioration of financial markets and the fact that the Group has been cash-flow negative in the first half, we are also at this moment reviewing proposals from other players to acquire parts of Venteco Group companies. Venteco is also in discussions with third parties with a view to raising additional funds for the Company.


Earnings per share, and dividends


The loss per share in the first half was 0.50 p compared to a profit of 2.28p in the same period 2007. The Directors are not recommending the payment of dividend.  


Employees


In the first half of 2008, the number of employees in the Group has been reduced by about 10% and we expect an additional decline in our headcount by the end of 2008. We are grateful that our dedicated workforce continues to work hard given the difficult circumstances.


Outlook


The installed base of Cryonite equipment is up by approximately 40% in the year to date compared to the end of last year. With the ongoing efforts to expand our geographical presence, especially in the US and Germany, we believe that the growth rate in deployment is likely to continue going forward. However, the overall economic climate is tough and trading is likely to be challenging in the next financial year.


Haresh Kanabar

Chairman


Enquiries:


Venteco plc


Stefan Hansson

+44 (0) 207 977 0020

Libertas Capital


Sandy Jamieson

+44 (0) 207 569 9650

Corfin Communications


William Cullum, Alexis Gore

+44 (0) 207 977 0020



Consolidated Income Statement for the six months ended June 2008





6 months to 30 June 

2008

Unaudited


6 months to 30 June

 2007

Unaudited


12 months to 31 December

2007

Audited



Notes

£'000


£'000


£'000








Revenue


2,774


3,106


4,454








Cost of sales


(1,330)


(1,522)


(2,269)








Gross profit


1,444


1,584


2,185








Administrative expenses


(1,504)


(1,526)

   

(4,393)

Other gains and losses


40


471


486








Profit/(Loss) from operations

3

20


529


(1,722)








Finance income


11


34


26

Finance costs


(84)


(55)


(79)








Profit/(Loss) before taxation


(93)


508


(1,775)








Taxation


-


(89)

  

45








Profit/(Loss) attributable to equity shareholders


(93)


419


(1,730)















Earnings per share














Basic and fully diluted profit (loss) per share

4

(0.50p)


2.28p


(9.34p)






Consolidated Balance Sheet at 30 June 2008





30 June 

2008

Unaudited


30 June

2007

Unaudited



31 December

2007

Audited


Assets

Notes

£'000


£'000


£'000








Non-current assets







Goodwill


710


1,596


710

Other intangible assets


319


432


245

Furniture, fittings and equipment


1,484


1,689


1,477

Deferred tax asset


-


-


-



2,513


3,717


2,432

Current assets







Inventories


1,236


1,075


1,288

Trade and other receivables


1,843


1,974


1,051

Cash and cash equivalents


401


1,348


944



3,480


4,397


3,283








Total assets


5,993


8,114


5,715








Equity and liabilities







Equity attributable to equity holders of the company







Called up share capital


1,852


1,852


1,852

Share premium account


2,634


2,634


2,634

Reverse acquisition reserve


306


306


306

Currency translation reserve


207


2


154

Accumulated losses


(2,366)


(99)


(2,273)








Total equity


2,633


4,695


2,673








Current liabilities







Trade payables


635


657


429

Tax liabilities


232


3


191

Bank loans and overdrafts


989


-


837

Other liabilities


88


99


5

Accrued expenses and deferred income


480


338


479



2,424


1,097


1,941








Non-current liabilities







Bank loans


775


1,649


941

Deferred tax liability


161


354


160

Creditors greater than one year


-


319


-



936


2,322


1,101








Total liabilities


3,360


3,419


3,042








Total equity and liabilities


5,993


8,114


5,715











        

Consolidated Statement of Changes in Equity for the six months ended 30 June 2008

        

 
Share
Capital
 
Share
Premium
Account
 
Reverse
Acquisition
Reserve
 
Currency
Translation
Reserve
 
Accumulated
Losses
 
Total
Balance at 1 January 2007
1,744
 
2,366
 
306
 
9
 
(543)
 
3,882
Profit for the period
 
 
 
 
 
 
 
 
419
 
419
Share based payments
 
 
 
 
 
 
 
 
25
 
25
Exchange rate translation
 
 
 
 
 
 
(7)
 
 
 
(7)
Share issue-acquisition of Silvandersson
108
 
268
 
 
 
 
 
 
 
376
Balance at 30 June
 2007 (Unaudited)
1,852
 
2,634
 
306
 
2
 
(99)
 
4,695
 
 
 
 
 
 
 
 
 
 
 
 
Loss for the period
 
 
 
 
 
 
 
 
(2,174)
 
(2,174)
Exchange rate translation
 
 
 
 
 
 
 
152
 
 
 
152
Balance at 31 December
2007 (Audited)
1,852
 
2,634
 
306
 
154
 
(2,273)
 
2,673
 
 
 
 
 
 
 
 
 
 
 
 
Profit for the period
 
 
 
 
 
 
 
 
(93)
 
(93)
Exchange rate translation
 
 
 
 
 
 
53
 
 
 
53
Balance at 30 June
2008 (Unaudited)
1,852
 
2,634
 
306
 
207
 
(2,366)
 
2,633
 
 
 
 
 
 
 
 
 
 
 
 
 


Consolidated Cash Flow Statement for the 6 months ended 30 June 2008




6 months to 30 June 2008

Unaudited


6 months to 30 June

2007

Unaudited


12 months to 31 December

2007

Audited


Notes

£'000


£'000


£'000








Net cash from operating activities


(324)


(588)


(1,058)








Investing activities







Purchase of furniture, fittings & equipment


(35)


(45)


-

Purchase of patents and trademarks


-


(7)


-

Acquisition of subsidiary


-


(1,657)


(1,624)

Deferred consideration paid into Escrow account


-


(18)


-

Interest received


11


34


26

Net cash used in investment activities


(24)


(1,693)


(1,598)








Financing activities







Net proceeds of share issues


-


-


-

Net cash inflow arising on acquisition


-


133


133

New bank loan received


-


1,320


1,331

Repayment of borrowings


(85)


-


(76)

Interest paid


(44)


(55)


(79)

Net cash from financing activities


(129)


1,398


1,309








Cash flow for the year







Net (decrease)/ increase in cash and cash equivalents


(477)


(883)


(1,347)








Effect of foreign exchange rate changes


(66)


-


60

Cash and cash equivalents at beginning of period


944


2,231


2,231








Cash and cash equivalents at end of period


401


1,348


944




Notes to the financial statements for the six months ended 30 June 2008

 

1.    Basis of preparation and accounting policies


These consolidated interim financial statements were approved by the Board of Directors on 23rd of September 2008.


Basis of preparation

The consolidated interim financial statements for the six months ended 30 June 2008 have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards and Interpretations issued by the International Accounting Standards Board as adopted by the European Union ('IFRS').


These consolidated interim financial statements have been prepared under the historical cost convention.


The financial information for the year ended 31 December 2007 does not constitute statutory information. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain a statement under section 15(4) or (6) of the Companies Act 1982.


Accounting policies

The accounting policies applied in the preparation of these interim financial statements are consistent with those used in the preparation of the audited annual accounts for the year ended 31 December 2007.



Notes to the financial statements for the six months ended 30 June 2008


2.     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:



Six months ended 30 June 2008

Unaudited

Six months ended 30 June 2007

Unaudited

Year ended 31 December 2007

Audited


Pest control products and services

Total

Pest control products and services

Total

Pest control products and services

Total


£'000

£'000

£'000

£'000

£'000

£'000

Revenue

External sales

2,744

2,744

3,106

3,106

4,454

4,454

Total sales

2,744

2,744

3,106

3,106

4,454

4,454








Result







Segment result

46

46

236

236

(301)

(301)

Unallocated corporate expenses


(106)


(178)


(1,907)

Loss from operations


(60)


58

(301)

(2,208)

Other gains and losses


40


471


486

Finance costs


(84)


(55)


(79)

Finance income


11


34


26

Loss before tax


(93)


508


(1,775)

Taxation


-


(89)


45

Loss after tax


(93)


419


(1,730)








Other Information







Tangible asset additions


35


-


2,978

Intangible asset additions


95


7


341

Depreciation and Amortisation


103


86


1,609








Balance Sheet







Assets







Segment assets

4,100

4,100

5,427

5,427

3,625

3,625

Unallocated corporate assets


1,893


2,717


2,090

Consolidated total assets

4,100

5,993

5.427

8,144

3,625

5,715

Liabilities







Segment liabilities

1,809

1,809

1,501

1,501

1,506

1,506

Unallocated corporate liabilities


1,551


1,918


1,536

Consolidated total liabilities

1,809

3,360

1,501

3,419

1,506

3,042



Notes to the financial statements for the six months ended 30 June 2008


    Geographical

    The Group's operations are carried out in Western Europe. 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

Six months ended 30 June

2008

Unaudited


Six months ended 30 June

2007

Unaudited


Year ended 31 December

2007

Audited


£'000


£'000


£'000

Sweden

447


417


417

Rest of Europe

1,762


2,232


3,388

Rest of the World

565


457


649


2,774


3,106


4,454



Product


The Group's turnover consists of sales of Cryonite units, the development and manufacturing of pest control devises and consultancy services.


The following table provides an analysis of the Group's sales by product.



For the Group

Six months ended 30 June

2008

Unaudited


Six months ended 30 June

2007

Unaudited


Year ended 31 December

2007

Audited


£'000


£'000


£'000

Cryonite units

35


45


170

Consultancy services

264


204


369

Pest control products

2,475


2,736


3,915

Other Income

-


121


-


2,774


3,106


4,454


Notes to the financial statements for the six months ended 30 June 2008



3.    Loss from operations

    Loss from operations has been arrived at after charging/(crediting).


For the Group

Six months ended 30 June

2008

Unaudited


Six months ended 30 June

2007

Unaudited


Year ended 31 December

2007

Audited


£'000


£'000


£'000

Staff costs 

781


689


1,517

Cost of inventories recognised as an expense

-


-


-

Operating lease rentals

8


7


15

Research and development

73


95


894

Depreciation

101


76


1,508

Amortisation of patents and trademarks

5


22


101

Write down of investment in CTS Technologies AG

-


-


871

Write up of negative goodwill

-


484


(498)

Foreign exchange gains and losses

(40)


(13)


12



4.    Earnings per share



Six months ended 30 June

2008

Unaudited


Six months ended 30 June

2007

Unaudited


Year ended 31 December

2007

Audited


£'000


£'000


£'000

Profit / (Loss)






Loss for the purpose of basic and diluted loss per share

(93)


419


(1,730)







Number of shares






Weighted average number of ordinary shares in issue during

the period

18,515,244


18,391,517


18,515,244







Basic and fully diluted profit (loss) per share

(0.50p)


2.28p


(9.34p)



Notes to the financial statements for the six months ended 30 June 2008



5.    Cash flow statement


Net cash from operating activities




Six months ended 30 June

2008

Unaudited


Six months ended 30 June

2007

Unaudited


Year ended 31 December

2007

Audited















Loss after tax


(93)


419


(1,730)

Tax


-


89


(45)

Write up of negative goodwill


-


(484)


(498)

Interest received


(11)


(34)


(26)

Interest paid    


84


55


79

Share based payments


-


25


-

Investment write down


-


-


871

Adjustment for depreciation and amortisation


106


97


448

Operating cash flows before movements in working capital


86


167


(901)

(Increase)/decrease in inventories


52


(52)


(265)

Increase in receivables


(793)


(1,008)


(77)

Increase in payables


331


305


185

Cash used by operations


(324)


(588)


(1,058)



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