Anpario Regulatory News (ANP)

25 Sep 2007 07:01

Kiotech International plc25 September 2007 25 September 2007 KIOTECH INTERNATIONAL plcInterim Results for 6 months to 30 June 2007 Kiotech International plc, which supplies high-performance natural feedadditives to enhance health, growth and sustainability in aquaculture andagriculture, is pleased to announce its interim results for the six months to 30June 2007, during which the Company moved into profit for the first time, sincebecoming a public company. The results include a full six months contributionfrom Agil, which was purchased in November 2006. Key points: Financial • Maiden profit before tax of £251,602 (2006: loss £111,367). • Sales of £2,806,470 (2006: £33,447) • Cash balance of £934,919 at 30 June 2007. Key points: Operations • Integration of Agil on track • Aquatice (chemosensory stimulant for fish feeding) registration being pursued in China and Thailand following successful trials • Undertaking trials in new species in the Far East. Exploratory discussions underway with major shrimp producers in Central and South America. • Kiotech's blending and warehousing operations consolidated into Agil's facility • Gross margin improvement at Agil • Distributor appointed for Agil products in Vietnam; a number of new products are under development and undergoing farm trials. • Stronger account management processes introduced to manage Agil's distributors. Chairman's statementSix months to 30 June 2007 I am delighted to report on the first profitable period for Kiotech sincebecoming a public company 10 years ago. Kiotech has made good progress with itsaquaculture development programme and bedding in the Agil acquisition. We arenow taking the steps needed for commercialisation of Aquatice, our fish feedingstimulant and have started the registration process in China and Thailand. Wehave also set up further commercial pond trials in those countries to supportthis process and prove the efficacy of the product with other species. Agil'sfocus has been on raising management efficiency, developing new products andbroadening further its international network of distributors and agents. Agil As part of the integration process, Agil's management has focused on increasinggross margins. Encouraging progress has been made despite the strength ofsterling against the dollar. We have introduced a stronger account managementprocess into Agil with a new incentive scheme. This approach is helpingmanagement to better understand the requirements of its distributors and alsothe characteristics of the local agricultural markets in terms of technicalrequirements and competition. In addition, we have strengthened the team byrecruiting a nutritionist, with experience in both the pig and poultry markets,and a business development director who will focus on rebuilding Agil'sunderperforming territories. Agil's development programme, which is key to the growth of the business, isintroducing a number of exciting new products, one of which has just started aseries of farm trials. New products are crucial to the development of thebusiness as they open new customer segments and geographical markets. In thiscontext, Agil had new business from Sri Lanka and the Ukraine during the tradingperiod and has just appointed a distributor in Vietnam; registration of Agil'skey products in Vietnam is already underway. In July, after the half year end, Agil's warehouse and production site wasseriously disrupted by the flooding which occurred in the Thames Valley. Agilexperienced some business interruption through the loss of raw materials andfinished stock. We are most grateful to all our team who worked extremely hardto ensure that the company was able to overcome this problem quickly. We arecurrently working with our loss assessors on the insurance claim. Rising grain prices are having an impact on the profitability of productionanimals. Agil's natural feed additives improve the feed conversion ratio inanimals and therefore are of particular value to farmers by creating overallcost savings. Aquaculture Kiotech has commenced the registration of its Aquatice product in both China andThailand. In China, we are close to incorporating a joint venture, with Kiotechbeing the majority shareholder. This joint venture will submit the applicationfor and also hold the registration of our Aquatice product, as well assupporting further trial work within China. In May, we commenced trialsnecessary for compiling the farm trial report, which will be endorsed by aregional government institute in collaboration with CEFAS, before beingsubmitted to the Chinese Department of Agriculture. In Thailand, Kiotech is setting up a wholly owned subsidiary through which ourapplication for registration is being made to the authorities. We have hadsignificant interest in our developments from around the world following apublic relations campaign earlier this year. As a result, we have developed anumber of new relationships with commercial companies interested in undertakinglocal trial work and submitting the product for registration in their respectivecountries. In addition to the trials in China and Thailand, we have also agreed toundertake commercial trials in other species including catfish, eel, sea bassand sea bream. These trials will be conducted in the Far East and the trialprotocols will be designed and supervised by CEFAS. We are currently engaged inexploratory discussions with major shrimp producers in Central and South Americaregarding product testing, registration and distribution, with a view toreplicating our Asian product development strategies in these territories. We are now confident that there is a significant commercial global opportunityfor Aquatice and are looking forward to commencing manufacture and sales onceregulatory approvals have been given. In June Kiotech relocated its outsourced blending and warehousing operationsinto Agil's production facility. This move will lower overheads, enhanceproduction efficiency and control and brings all our operations under one roof. Sports Fishing Our Ultrabite fish attractant is supplied exclusively to Rapala VMC Corporation,a leading manufacturer and distributor to the global sports and leisure fishingmarket. Rapala has been developing a range of baits, sprays, gels and softlures incorporating Ultrabite, which enhances Rapala's product proposition overits competitors. Although this development programme has taken longer thananticipated, Rapala has recently launched a spray, gel and dough bait under itsTrigger X brand in Europe; this follows success in Australia and New Zealand.Although a significant increase in orders from Rapala is not expected in theshort term, additional product development and product launches over the next 12months, if successful, should see some improved results from this. Results Trading for the six months to 30 June 2007 saw sales of £2,806,470, comparedwith £33,447 in the equivalent period last year. The pre-tax profit was£251,602 compared to last year's loss of £111,367. The increase in sales andprofitability was driven by the Agil acquisition. Agil has performedsatisfactorily and has been able to improve margins in what is a competitivemarket given the weakness of the US dollar and the unprecedented grain priceincreases which have placed pig and poultry producers under significant costpressures around the world. Our balance sheet is strong and we are well placedto finance the major product and market development programmes of our Agil andKiotech businesses. Investor communications The Board is a strong advocate of investor communications and strives to ensurethat all shareholders are kept informed of Kiotech's progress. Kiotech iscompliant with the new AIM Rule 26 in that detailed investor information can befound on its website www.kiotech.com. Board Changes On 28 August, after the period end, we announced the appointment of MarkNicholls as a Director. Mark has been involved with the business for some timeand has been instrumental in setting up the commercial trials in the Far Eastfor the company's aquaculture feed attractant products. He is now negotiatingjoint venture and distribution agreements with potential partners as Kiotechprogresses towards registration and commercialisation of its products. Outlook We are encouraged by the worldwide interest in Aquatice and are optimistic thatgood progress will be made in gaining registrations and setting up commercialventures, although the timing of such approvals is out of our hands. We haveintroduced a step change in management's attitude towards commercialisation ofour unique technology which bodes well for the future We have strengthened management to take advantage of the numerous opportunitieswhich we believe exist in the global markets that we serve. We are alsofocusing on developing new products and territories, which should enable Agil tomake solid progress, as well as playing a key role in driving our Kiotechaquaculture operations. Richard S RoseChairman25 September 2007 Enquiries: Richard Rose, Chairman Kiotech International plc07836 250464 Matthew Robinson/Charles Cunningham, J.M. Finn & Co Ltd020 7600 1660 KIOTECH INTERNATIONAL PLC CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS TO 30 JUNE 2007 Six months ended Six months ended Year ended 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £ £ £REVENUEContinuing Operations 2,806,470 33,447 89,480Acquisitions - - 332,156 2,806,470 33,447 421,636 Cost of sales (1,918,263) (19,832) (306,901) GROSS PROFIT 888,207 13,615 114,735 Administrative expenses (661,053) (167,222) (472,942) OPERATING PROFIT/(LOSS):Continuing Operations 227,154 (153,607) (384,740)Acquisitions - - 26,533 Interest received 24,448 42,240 71,122 PROFIT/(LOSS) FOR THE PERIOD BEFORE TAXATION 251,602 (111,367) (287,085) Taxation (82,008) - - ___________ ___________ ___________ PROFIT/(LOSS) FOR THE PERIOD AFTER TAXATION 169,594 (111,367) (287,085) ___________ ___________ ___________ BASIC PROFIT/(LOSS) PER SHARE (pence) 0.07 (0.17) (0.34)FULLY DILUTED PROFIT/(LOSS) PER SHARE (pence) 0.07 (0.16) (0.32) CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE SIX MONTHS TO 30 JUNE 2007ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY Share Share Other Retained Total Capital £ Premium £ Reserves £ Earnings £ Equity £Balance at 1 January 2006 2,503,529 6,504,675 147,500 (7,293,597) 1,862,107Arising on issue of shares 1,848,333 3,339,523 - - 5,187,856Arising on grant of options - - (183) - (183)Loss for the year - - - (287,085) (287,085) Balance at 1 January 2007 4,351,862 9,844,198 147,317 (7,580,682) 6,762,695 Profit for the period - - - 169,594 169,594 Share based payments - - 14,455 - 14,455 ___________ ___________ ___________ ___________ ___________Balance at 30 June 2007 4,351,862 9,844,198 161,772 (7,411,088) 6,946,744 ___________ ___________ ___________ ___________ ___________ CONSOLIDATED BALANCE SHEETAS AT 30 JUNE 2007 As at As at As at 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £ £ £ASSETSNon current assets Property, Plant, and Equipment 366,247 1,979 367,904Goodwill and other intangibles 3,873,666 - 3,742,419 _________ _______ _________ 4,239,913 1,979 4,110,323 Current assetsInventories 381,794 39,415 444,241Trade and other receivables 2,630,863 18,340 2,576,172Corporation tax - 1,977 1,977Other taxes and social security 137,576 17,246 -Cash and cash equivalents 934,919 1,634,650 1,346,758 _________ _______ _________ 4,085,152 1,711,628 4,369,148 _________ _______ _________Total Assets 8,325,065 1,713,607 8,479,471 _________ _______ _________EQUITYCapital and reserves attributable toequity holders of the company Called up share capital 4,351,862 2,503,529 4,351,862Share premium account 9,844,198 6,504,675 9,844,198 Other reserves 161,772 147,500 147,317Retained earnings (7,411,088) (7,500,136) (7,580,682) Total Equity 6,946,744 1,655,568 6,762,695 LIABILITIES Current LiabilitiesTrade and other payables 1,278,873 54,650 1,700,482Corporation tax 82,008 - - Other taxes and social security 17,440 3,389 16,294 _________ _______ _________ Total Equity and Liabilities 8,325,065 1,713,607 8,479,471 _________ _______ _________ CONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS TO 30 JUNE 2007 Six months ended Six months ended Year ended 30.06.07 30.06.06 31.12.06 (unaudited) (unaudited) (audited) £ £ £Profit from operations 227,154 (153,607) (358,207) Adjustment for:Depreciation of plant and equipment 4,504 424 4,735Amortisation of intangible assets 13,340 - 12,606Share based payments 14,455 - (183) ________ _________ _________ Operating cash flow before movement ofworking capital 259,453 (153,183) (341,049) Decrease/(increase) in inventories(Increase)/decrease in receivables 62,447 (8,514) (413,340)(Decrease)/increase in payables (190,290) 56,981 (2,483,603) (420,463) (87,902) 1,570,835Net cash outflow from operatingactivities (288,853) (192,618) (1,667,157) Cash flows from investing activities Interest received 24,448 42,240 71,121Purchase of goodwill and research anddevelopment (144,587) - (3,659,850)Purchase of plant and equipment (2,847) (262) (370,502)Net cash (used in)/received frominvesting activities ________ _______ _________ (122,986) 41,978 (3,959,231)Cash flows from financing activities Issue of shares - - 5,187,856 Net (decrease) in cash and cashequivalents (411,839) (150,640) (438,532) Cash and cash equivalents at the beginning of the period 1,346,758 1,785,290 1,785,290 Cash and cash equivalents at the end of ________ _______ _________ the period 934,919 1,634,650 1,346,758 NOTES TO THE PRELIMINARY RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 1. Basis of preparation The group has historically prepared its audited annual accounts and unauditedinterim results in accordance with UK generally accepted accounting practice (UKGAAP).Following new accounting standards the group is now required to presentits annual report and accounts in accordance with International Accounting andFinancial Reporting Standards (IFRS). The IFRS information in this report for the six months ended 30 June 2007 is arestatement of information extracted from the statutory financial statementsprepared under UK GAAP on a historical cost basis. Those statutory accounts werefiled with the Registrar of Companies. The auditors report on those accounts wasunqualified and did not contain a statement under section 237 (2) or section 237(3) of the Companies Act 1985.The restated IFRS information provided for theyear ended 31 December 2006 does not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985. However these are anticipatedto form the comparative period in the statutory accounts for the year ending 31December 2007, the Group's first report to be prepared in accordance with IFRS. The unaudited interim results for the six months ended 30 June 2006 and 30 June2007 have been prepared by the Group in accordance with IFRS and accountingpolicies that will be applied when the Group prepares its first IFRS financialstatements for the year ending 31 December 2007.The financial information forthe six months ended 30 June 2007 does not constitute statutory accounts asdefined by Section 240 of the Companies Act 1985. 2. Revenue is derived from the Group's chemosensory attractant and animal feedadditive business. 3. Earnings per share June 2007 June 2006 December 2006 unaudited unaudited AuditedWeighted average number of share in issue (000's) 251,079 66,245 83,463Fully diluted weighted average number of shares in issue 257,356 70,971 89,740Profit/(loss) attributable to equity holders of the company 169,594 (111,367) (287,085)Basic earnings per share (pence) 0.07 (0.17) (0.34)Fully diluted earnings per share (pence) 0.07 (0.16) (0.32) 4. This financial information was approved by the Board on 25th September 2007 5. Copies of this interim report are being sent to all of the Company's shareholders. Further copies can be obtained from the Company's registered office at 78 Coombe Road, New Malden, Surrey, KT3 4QS. This information is provided by RNS The company news service from the London Stock Exchange