Anpario Regulatory News (ANP)

2 Apr 2008 07:00

Kiotech International plc02 April 2008 2 April 2008 KIOTECH INTERNATIONAL plcPreliminary results for year to 31 December 2007 Kiotech International plc, which supplies high-performance natural feedadditives to enhance health, growth and sustainability in aquaculture andagriculture, is pleased to announce its preliminary results for the twelvemonths to 31 December 2007. The Company moved into profit for the first time,since becoming a public company in 1997. These results include a maiden twelvemonths contribution from Agil, which was purchased in November 2006. Key points: Financial • Profit before tax and share-based payments of £494,191 (2006: loss £287,268). • Sales of £5,352,224 (2006: £421,636) • Cash balance of £1,665,709 at 31 December 2007. Key points: Operations • Integration of Agil completed. • Profitability improvement at Agil. • New Agil agricultural products undergoing farm trials and showing promising results. • Approval granted by Department of Environment, Food and Rural Affairs (DEFRA) for sale of aquaculture products (Aquatice(R)) in the European Union. • Aquatice(R) continues to prove its efficacy in new trials in the Far East. • Enhanced management focus on the commercialisation of aquaculture products. Richard Rose, Chairman, commented: "The Company is now profitable with a strong balance sheet and significant cashresources. We are well placed to finance our major product and marketdevelopment programmes. Product and sales development in Agil, combined withexciting developments in establishing our aquaculture range, offer the Company asignificant number of profit opportunities which the team is working hard tocapitalise on." Enquiries: Richard Rose, Chairman Kiotech International plc 07836 250464 Matthew Robinson / Charles Cunningham, JMFinn Capital Markets Ltd 020 7600 1660 A copy of Kiotech International plc's full audited financial results for theyear to 31 December 2007 will be available at www.kiotech.com KIOTECH INTERNATIONAL plcPreliminary results for year to 31 December 2007 Chairman's statement I am delighted to report that the Company has achieved its first profitable fullyear result since becoming a public company 10 years ago. This encouragingperformance reflects good progress in both our product divisions supplyinghigh-performance natural feed additives to enhance health, growth andsustainability in aquaculture and agriculture. Management has completed the integration of Agil, following its acquisition inNovember 2006. The focus at Agil has been on improving profitability, developingnew products and strengthening its team, which supports our internationalnetwork of distributors and agents. Kiotech continues to make good progress withits aquaculture development programme. The granting by DEFRA of the Manufactureand Free Sale Certificate for Aquatice(R) is a very important step in thecommercialisation of the product. This approval enables Kiotech to marketAquatice(R) throughout the member states of the European Union and will alsofacilitate the registration process in many other countries. Discussions arealready underway with various distributors and feed producers about the right todistribute the Aquatice(R) range of products. We have also been encouraged bythis year's trial programme, which has confirmed the efficacy of the product interms of growth rate and feed conversion and also improved water quality withinthe ponds. Results Trading for the twelve months to 31 December 2007 saw sales of £5,352,224;compared with £421,636 in the equivalent period last year. The pre-tax profitbefore share-based payments was £494,191 compared to last year's loss of£287,268. The significant increase in sales and profitability was driven by themaiden full year contribution from Agil. Agil performed well improving marginsin a very competitive market where the weakness of the US dollar and rawmaterial price increases were significant burdens. Cash generation was strong,the year ended with a positive cash balance of over £1.6 million. This was dueto a combination of working capital improvements and the cash generative qualityof the Agil business. Operations - Agriculture Agil's management focus has been on increasing profitability through bettersupply deals, tighter cost control and raising management quality andefficiency. A new management structure was introduced in the second half of theyear to place more emphasis on new product development and more effectivemanagement of our distributor network. We have changed distributors in a numberof territories and appointed distributors in new territories where registrationof our products is currently underway. In the UK and Ireland we reorganised our sales structure where there are goodopportunities for our enlarged technical sales support team. With a strongeraccount management process implemented in the first half of the year, we arebetter understanding the requirements of our distributors worldwide and theindividual characteristics of their diverse local markets. Agil has beenrebranded to Kiotechagil to ensure that our marketing communications reflectequally our agriculture and aquaculture interests. Agil's technical team has developed a new acidifier product targeted at theearly growth stage for pigs and poultry, which for the first time can also beincorporated into premixes. This development opens a new market segment forAgil. Early indications from the farm trials have been encouraging withimprovements in feed conversion and the health of the animals. We have alreadyhad some early sales of the product and expect these to build during the currentyear. Overseas interest has been good with registration work commencing in anumber of territories. Further trials are planned in order to strengthen ourmarketing proposition for this innovative new range. Agil has experienced an increase in demand for Mastercube its animal feed pelletbinder. As feed producers switch to lower quality grains to counter risingprices this has adversely affected pellet quality. Mastercube counters thisquality issue and through its chemical binding attributes helps lower the amountof energy consumed in pellet production. In July 2007 flooding seriously disrupted Agil's warehouse and production sitein the Thames Valley. I am pleased to report that although we experienced somebusiness interruption and loss of sales, our insurers covered almost all of theloss and costs associated with the damaged raw materials and finished products. Operations - Aquaculture After the year-end DEFRA granted Kiotech a Manufacture and Free Sale Certificatefor its Aquatice(R) fish feeding attractant product range. This verysignificant approval allows Kiotech to market Aquatice(R) throughout the memberstates of the European Union and the company has already established contactwith potential distributors. The granting of the Certificate in the UK shouldsignificantly accelerate the registration process in other countries, especiallyin the important Asian and Latin America markets, which account for around 80per cent of world aquaculture production. The Certificate legitimises the product for potential overseas customers some ofwhom export their fish to Europe. It is also a key document required by theregistration departments of many countries when considering local registration. Kiotech's initial targets for product registration and sales are to the majorproducers of farmed fish in the Asia Pacific region, namely China, Thailand andVietnam. Kiotech has established a representative office in China, whichcurrently accounts for nearly 70% of world aquaculture production by quantityand 50% by value. The office will enable the company to manage productregistration and product development in association with the regional Governmentfisheries institute and marine universities. Vietnam is the third largest aquaculture producer accounting for 2.6% of totalworld production and is one of the fastest growing producers. Kiotech has signedan agreement to work with Bayer HealthCare, which is carrying out a series ofAquatice(R) trials in that country under the direction of Cefas which, ifsuccessful, will lead to both companies signing a distribution agreement for theVietnamese aquaculture market. In Thailand, which accounts for 2.5% of worldaquaculture production, we have appointed a local aquaculture specialist companyto manage our trials programme and product registration, and also assist Kiotechwith the selection of suitable distributors. Early discussions are underwaywith a potential distributor. In our 2007 trial programme, Aquatice(R) continued to prove its efficacy notonly for growth rate and feed conversion, but also in terms of improving waterquality. The product is also proving to have additional benefits in what aretermed 'life-cycle bottlenecks' such as survival rate during first feeding,weaning and when transferring from the hatchery to the pond. Theseenvironmental safety aspects are of significant importance to government bodieswishing to ensure their aquaculture products are both safe for consumption andexport and that intensive fish farming is sustainable in the surroundingenvironment. Kiotech has agreed an ambitious research and development programme with Cefasfor 2008/2009. The programme will support the registration process, whichrequires data to authenticate the efficacy and safety of the product and developproducts for a range of new species. Unlike in previous years where thisdevelopment work was restricted to South East Asia, trials have also been agreedand will shortly commence in Europe and Latin America. Commercial farmers whoare significant producers in their respective markets are carrying out thesetrials. We are delighted with the strong results from further trials undertaken withAquatice(R). These results and the additional new benefits Aquatice(R) canbring to the aquaculture industry, combined with the discussions we have hadwith commercial companies, reinforce our confidence that a significantcommercial global opportunity exists for our technology. Sports Fishing Our Ultrabite fish attractant is supplied exclusively to Rapala VMC Corporation,for incorporation into its new range of baits, sprays, gels and soft lures,which are under development. This development programme has taken longer thananticipated and sales have been disappointing to date. However, Rapala hasrecently launched a new range, in Europe and plans to launch a range of productsfor the American sports fishing season, which starts in the spring. We do notexpect a significant increase in orders from Rapala in the short term, butfollowing the American product launch and other product developments, Kiotechexpects an improved performance from its sports and leisure fishing distributor. Outlook The Company is now profitable with a strong balance sheet and significant cashresources. We are well placed to finance our major product and marketdevelopment programmes. Product and sales development in Agil, combined withexciting developments in establishing our aquaculture range, offer the Company asignificant number of profit opportunities which the team is working hard tocapitalise on. Richard S RoseChairman2 April 2008 CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2007 2007 2006 £ £ Revenue 5,352,224 421,636 Cost of sales (3,598,425) (306,901) __________ ________ Gross profit 1,753,799 114,735 Administrative expenses (1,347,840) (472,942)Other operating income 10,327 - __________ ________Operating 416,286 (358,207)profit/(loss) Interest 48,127 71,122receivableInterest payable (8) - __________ ________ Profit/(loss) 464,405 (287,085)for the year before taxation Taxation (128,553) - Profit/(loss) 335,852 (287,085)for the year after taxation ========== ========= The consolidated income statement has beenprepared on the basis that all operations arecontinuing operations. Basic earnings/(loss) per 0.13 (0.34)share (pence) Diluted earnings/(loss) 0.13 (0.32)per share (pence) STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSEFOR THE YEAR ENDED 31 DECEMBER 2007 2007 2006 £ £ Profit/(loss)for the financial 335,852 (287,085)year ========== ========= BALANCE SHEETSAS AT 31 DECEMBER 2007 Group 2007 2006 £ £ASSETSNon current assetsIntangible assets 4,076,591 3,742,419Property, plant and 362,464 367,904equipmentInvestments - - _________ __________ 4,439,055 4,110,323 _________ __________Current assetsInventories 394,045 444,241Trade and other receivables 2,447,515 2,576,172Corporation tax - 1,977Cash and cash equivalents 1,665,709 1,346,758 _________ __________ 4,507,269 4,369,148 _________ __________Total Assets 8,946,324 8,479,471 ========= ========== Equity and liabilitiesCalled up share capital 4,351,862 4,351,862Share premium account 9,844,198 9,844,198Other reserves 177,103 147,317Retained earnings (7,244,830) (7,580,682) _________ __________Total equity 7,128,333 6,762,695 Current liabilitiesTrade and other payables 1,691,415 1,716,776Corporation tax 126,576 - _________ __________Total Equity and Liabilities 8,946,324 8,479,471 ========= ========== CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 2007 2006 £ £ £ £ Net cash from/(used in) 650,995 (1,667,157)operating activities Investing activitiesand servicing of financeInterest received 48,127 71,121Interest paid (8) -Payments to acquire (369,905) (3,659,850)intangible assetsPayments to acquire (10,258) (370,502)property, plant & equipment ________ __________ Net cash used in (332,044) (3,959,231)investing activities Financing activitiesIssue of shares (net of - 5,187,856expenses) Net cash inflow from - 5,187,856financing activities __________ ___________ Net increase/(decrease )in cash 318,951 (438,532)and cash equivalents Net cash and cash equivalents at 1,346,758 1,785,290beginning of period __________ ___________ Net cash and cash equivalents at 1,665,709 1,346,758the end of period ========== =========== NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2007 1 Reconciliation of operating profit/(loss) to net cash from/(used in) operating activities 2007 2006 £ £ Operating profit/(loss) 416,286 (358,207) Depreciation of property, 15,698 4,735 plant & equipment Amortisation of intangible assets 35,733 12,606 Share-based payments 29,786 (183) Decrease/(increase) in inventories 50,196 (413,340) Decrease/(increase) in trade and other 128,658 (2,483,603) receivables (Decrease)/increase in trade and other payables (25,362) 1,570,835 __________ __________ Net cash from/(used in) operating activities 650,995 (1,667,157) ========== ========== 2 Analysis of net funds 1 January 31 December 2007 Cash flow 2007 £ £ £ Net funds: Cash and cash equivalents 1,346,758 318,951 1,665,709 ========== ======== ========== This information is provided by RNS The company news service from the London Stock Exchange