Biome Tech Regulatory News (BIOM)

10 Sep 2007 07:02

Stanelco PLC10 September 2007 10th September 2007 Stanelco Plc ("Stanelco","the Company" or "the Group") Interim Results for the six months ended 30 June 2007 Highlights • Revenues £3.9m; trading loss before exceptional items (£1.7m)• Cash position £9.7m• Loss per share (0.11p)• John Standen appointed as Non-Executive Chairman and Paul Mines appointed as Chief Executive Officer• Continued review of operations John Standen, Chairman said: "Our new CEO, together with his team, have put considerable efforts intoidentifying the areas we must focus on to deliver shareholder value and theseare the areas that we plan to put most effort into over the next two years todeliver tangible results. We are in the process of structuring the businessaccordingly. Our priority is to grow our product sales and we remain encouragedby market trends." - Ends - For further information please contact: Jonathon Brill/Caroline Stewart, Tel: +44 (0) 20 7831 3113Financial Dynamics Chairman's Statement Financial performance Group revenues increased from £2.6m to £3.9m for the period ended 30 June 2007compared with the 6 months ended 30 April 2006. This increase is due to sales of biodegradable resin at the Group's Biotecsubsidiary which have grown by 28.6%, driven by increasing sales to SPhere. The Group has taken measures to reduce its costs and to reorganise internally inorder to focus on growing its sales. The headcount at its headquarters hashalved since last year and running costs have reduced accordingly. The Group made a loss before exceptional items of £1.7m compared with a loss of£2.3m for the 6 months to 30 April 2006. Business management The six months to 30 June 2007 have seen significant re-evaluation of theStanelco business activities by the Board. Building on the preliminary review of the business operations of the Companyannounced on 29 May, Paul Mines, the CEO, and his team have continued theirrigorous examination of where value lies in each of the business areas. This has resulted in changes to the Group's approach, organisation and structurethat are summarised below. Whilst some conclusions can now be drawn aboutstrategic direction, the review has also identified areas where further analysisand decision making is required by the Board. Considering each of the business areas individually: Biotec The Biotec subsidiary at Emmerich in Germany is a 50/50 Joint Venture withSPhere S.A. Stanelco holds a "Golden Share" in this arrangement that is due toexpire on 31 December 2009. Biotec has seen considerable change to its operations in the first half with£1.3m investment in new production capacity. Technical commissioning is stillto be completed but the effective capacity is now 7,500 tonnes per annum. The Board is monitoring patent challenges lodged against some of Biotec'sproducts and continues, with SPhere, to evaluate the significance of thesechallenges. Stanelco BioPlastics A single Stanelco BioPlastics operating unit has been established whichincorporates Biotec, the global sales function for BioPlastic resins, and theAquasol products and technologies. BioPlastic products formerly sold under the Starpol brand are now being marketedas BioPlast products in line with Biotec and SPhere branding. The European sales team has been strengthened with the addition of anexperienced sales consultant in the markets of Continental Europe. A substantial internal reorganisation has taken place within the UK operationswith some job losses and significant changes in responsibilities and objectives. However, it is clear to the Board that a number of obstacles still remain toachieving sustainable sales growth from the BioPlastics business. These arebeing addressed by your Board and further updates will be provided in duecourse. Aquasol The Aquasol products and technologies are being developed and marketed withinStanelco BioPlastics. Following a review of the Aquasol patent portfolio by PricewaterhouseCoopers andsubsequent analysis and market testing by the Group, the main areas of focus forfuture development have been identified. Stanelco RF Applications The radio frequency applications business remains robust with some areasidentified as having good potential growth prospects. Sales in the first 6months of £0.5m were maintained at the same level as the corresponding periodlast year. To develop this business we have recruited a General Manager who will haveresponsibility for leading the business, identifying new areas for developmentand growth, and creating a clearly defined path forward. Assets and cash We have also reviewed our intangible assets and goodwill. Since there has beenno further progress in developing a sales stream from our Greenseal technology,it has been decided to fully impair this intangible asset resulting in anexceptional charge of £0.5m. Other intangible assets have also been impairedtotalling £0.2m. Furthermore, a review of the patent portfolio in the Aquasolsubsidiary has determined that an impairment charge of £1.6m against the £2.1mgoodwill held on the Group's balance sheet is required. The Group also made a£0.3m profit on disposal of certain assets of Adept. The Group started the period with cash balances of £12.9m. During the period itreleased £3.2m in respect of the final stage payment for the Biotec acquisition,having received £1.6m from joint owner SPhere. £1.4m of the funds were held inescrow at 30 June 2007 and used to settle the balance of the liability after theperiod end. Biotec obtained £1.3m of asset finance and the balance of fundingwas used to fund the working capital of the Group. The Group closed the periodwith cash balances of £9.7m. Shareholders' funds reduced by £3.5m to £19.6m in the 6 month period. Future Outlook Our CEO, together with his team, have put considerable efforts into identifyingthe areas we must focus on to deliver shareholder value and these areas must begiven further support over the next two years to deliver tangible results. Weremain encouraged by market trends and customer interest in the Company's RFApplications and BioPlastic business areas. The outlook for the second half remains consistent with the trading statementreleased on 29 May 2007. The Biotec division remained the core source of theGroup's sales for the period and is subject to some variability as this marketdevelops. Generating sales growth in the BioPlastics business remains the single mostimportant focus for the Group and rests on matching product capability and pricewith the growing but as yet incohesive demand for sustainable plastics. John StandenChairman 10 September 2007 CONDENSED CONSOLIDATED INCOME STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2007 Audited Unaudited Unaudited 14 month 6 months 6 months period ended ended ended 31 December 30 June 2007 30 April 2006 2006 Note £'000 £'000 £'000 Revenue 3,868 2,620 6,670 Cost of sales (2,709) (1,539) (4,668) Gross profit 1,159 1,081 2,002 Distribution costs (69) (87) (220)Administrative expenses (2,793) (3,331) (8,201) Loss from operations before (1,703) (2,337) (6,419)exceptional itemsExceptional items 3 (2,006) - (8,416) Loss from operations (3,709) (2,337) (14,835)Investment revenue 289 39 134Finance costs (55) (34) (163) Loss before tax (3,475) (2,332) (14,864)Tax - - 446 Loss for the period (3,475) (2,332) (14,418) Attributable to:Equity holders of the Parent (3,366) (2,341) (14,289)Minority interest (109) 9 (129) Retained for the period (3,475) (2,332) (14,418) Earnings per share Basic and diluted loss 1 (0.117) (0.249) (1.179)per share - pence CONDENSED CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007 Note Unaudited Unaudited Audited Audited At 30 June At 30 June At 31 December At 31 December 2007 2007 2006 2006 £'000 £'000 £'000 £'000Non-current assetsGoodwill 12,484 14,067Other intangible assets 206 979Property, plant and equipment 4,296 4,018 16,986 19,064Current assetsInventories 3,480 1,854Trade and other receivables 1,931 1,152Amounts due on part disposal - 1,597of subsidiaryFunds held in escrow 4 1,371 -Corporation tax 439 439Cash and cash equivalents 9,680 12,916 16,901 17,958 Total assets 33,887 37,022 Current liabilitiesTrade and other payables 2,086 1,479Amounts due to third party in 4 1,371 3,194respect of purchase ofsubsidiaryPromissory notes 5,218 5,205Obligations under finance 253 40leaseBank overdrafts and loans - 5Short term provisions 607 857 9,535 10,780 Non-current liabilitiesObligations under finance 1,014 27lease 1,014 27 Total liabilities 10,549 10,807 Net assets 23,338 26,215 CONDENSED CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007 (CONTINUED) Unaudited Audited At At 30 June 2007 31 December 2006 £'000 £'000 EquityShare capital 3,012 2,978Share premium account 38,207 37,932Shares to be issued 487 800Share options reserve 904 1,016Hedging and translation reserves 231 243Retained losses (23,194) (19,826) Equity attributable to equity holders of the 19,647 23,143parentMinority interest 3,691 3,072 Total equity 23,338 26,215 The Interim Accounts were approved by the Board of Directors and authorised forissue on 10 September 2007 They were signed on behalf of the Board of Directors by: Paul Mines (Chief Executive Officer) Clive Warner (Finance Director) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2007 Share Share Shares to Share Hedging & capital premium be issued options translation account reserve reserves £'000 £'000 £'000 £'000 £'000 Balance at 1 November 2005 929 19,899 1,050 393 19 Exchange differences arising - - - - (196)on translation of overseasoperation Net income recognised - - - - (196)directly in equityLoss for the period - - - - - Total recognised income and - - - - (196)expense for the periodNew share capital subscribed 15 1,407 - - -Share option charges in - - - 254 -periodShare options exercised in - - - (41) -period Balance at 30 April 2006 944 21,306 1,050 606 (177) Balance at 1 January 2007 2,978 37,932 800 1,016 243 Exchange differences arising - - - - (12)on translation of overseasoperation Net income recognised - - - - (12)directly in equityLoss for the period - - - - - Total recognised income and - - - - (12)expense for the periodNew share capital subscribed 34 275 - - -Minority share of increase - - - - -in subsidiaries capitalreserveShares issued in respect of - - (313) - -purchase of subsidiaryShare option (credit) in - - - (112) -period Balance at 30 June 2007 3,012 38,207 487 904 231 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2007(CONTINUED) Retained losses Attributable to Minority interest Total equity equity holders of the parent £'000 £'000 £'000 £'000 Balance at 1 November 2005 (5,600) 16,690 2,498 19,188 Exchange differences arising on - (196) - (196)translation of overseas operation Net income recognised directly in - (196) - (196)equityLoss for the period (2,341) (2,341) 8 (2,333) Total recognised income and (2,341) (2,537) 8 (2,529)expense for the periodNew share capital subscribed - 1,422 - 1,422Share option charges in period - 254 - 254Share options exercised in period 41 - - - Balance at 30 April 2006 (7,900) 15,829 2,506 18,335 Balance at 1 January 2007 (19,826) 23,143 3,072 26,215 Exchange differences arising on (2) (14) 47 33translation of overseas operation Net income recognised directly in (2) (14) 47 33equityLoss for the period (3,366) (3,366) (109) (3,475) Total recognised income and (3,368) (3,380) (62) (3,442)expense for the periodNew share capital subscribed - 309 - 309Minority share of increase in - - 681 681subsidiaries capital reserveShares issued in respect of - (313) - (313)purchase of subsidiaryShare option (credit) in period - (112) - (112) Balance at 30 June 2007 (23,194) 19,647 3,691 23,338 CONDENSED CONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2007 Unaudited Unaudited Audited 6 months 6 months 14 month period ended ended ended 30 June 30 April 31 December 2007 2006 2006 Note £'000 £'000 £'000 Net cash outflow from operating activities 6 (3,568) (3,551) (6,926) Investing activitiesInterest received 289 39 134Proceeds on disposal of property, plant and 565 7 34equipmentInvestment in intangible assets (7) (582) (1,406)Purchase of property, plant and equipment (823) (1,262) (2,067)Purchase of Biotec Holdings GmbH (1,823) - (3,438)Part disposal of Biotec Holdings GmbH 1,597 - 1,719 Net cash used in investing activities (202) (1,798) (5,024) Financing activities Repayment of bank overdrafts and loan (5) (14) (132)capitalRepayment of obligations under finance lease (100) (42) (83)Proceeds (costs) of issue of ordinary share (4) 1,422 19,682capitalProceeds from minority share of increase in 681 - 682subsidiaries capital reserveProceeds from finance lease 1,300 76 76Funds held in escrow 4 (1,371) - - Net cash from financing activities 501 1,442 20,225 Net (decrease)/ increase in cash and cash (3,269) (3,907) 8,275equivalents Cash and cash equivalents at beginning of 12,916 4,396 4,396periodEffect of foreign exchange rate changes 33 (197) 245 Cash and cash equivalents at end of period 9,680 292 12,916 NOTES TO THE CONDENSED CONSOLIDATED INTERIM ACCOUNTSFOR THE SIX MONTHS ENDED 30 JUNE 2007 Notes 1. Earnings per share from continuing operations The basic loss per share is based on a loss after tax of £3,475,000 (2006:£2,332,000) and on the basic weighted average ordinary shares in issue duringthe period of 2,982,371,367 (2006: 937,779,292). 2. Research and development expenditure Research and development expenditure of £nil (2006: £582,000) has been incurredin the period. Of this expenditure £nil (2006: £582,000) has been capitalised asan intangible asset to be amortised against future revenues. Expenditure of thistype is only capitalised where the Board is of the opinion that future revenueswill exceed the costs incurred over the expected product life in accordance withInternational Accounting Standard 38. 3. Exceptional Items Exceptional items: Unaudited Unaudited Audited 6 months 6 months 14 month ended ended period ended 30 June 30 April 31 December 2007 2006 2006 £'000 £'000 £'000 Impairment of other intangibles assets 674 - 5,529Impairment of goodwill 1,590 - -Impairment of inventories - - 1,416Bad debt provision - - 66Provision for costs related to strategic review - - 709Impairment of property plant and equipment - - 696(Profit) on disposal of property plant and (258) - -equipment 2,006 - 8,416 Further details on these items are explained in the Chairman's statement. An impairment review on the goodwill arising on the consolidation of Aquasol hasresulted in an impairment charge of £1,590,000 reducing the value of thegoodwill to £500,000 for this asset. The basis of this goodwill valuationfollowed a review of the patent portfolio within the Aquasol subsidiary and wasdetermined by assessing the estimated present value of foreseeable futurerevenues. 4. Post balance sheet At 30 June 2007 funds of £1,371,000 where held in an escrow account in respectof the final payment to the vendors of Biotec Holdings GmbH. The correspondingliability of £1,371,000 is recorded in current liabilities. Following the end ofthe accounting period these funds have been released form escrow and the finalamounts due for the acquisition of Biotec Holdings GmbH have been discharged. 5. Changes in accounting policies The principal accounting policies of the Group have remained unchanged as in theGroup's 2006 Annual Report and Financial Statements. 6. Notes to condensed consolidated cash flow statement Unaudited Unaudited Audited 6 months 6 months 14 month ended ended period ended 30 June 30 April 31 December 2007 2006 2006 £'000 £'000 £'000 Loss from operations (3,709) (2,337) (14,835)Adjustment for:-Amortisation and impairment of 2,363 221 6,032intangible fixed assetsDepreciation of property, plant and 234 246 1,276equipmentShare based payments (112) 254 686(Profit)/loss on disposal of (254) 6 49property, plant and equipment(Decrease) in provisions (250) (1,244) (596) Operating cash flows before movement (1,728) (2,854) (7,388)in working capital (Increase)/decrease in inventories (1,626) (540) 750(Increase)/decrease in receivables (779) (28) 218Increase/(decrease) in payables 595 (144) (461) Cash utilised by operations (3,538) (3,566) (6,881) Corporation tax received - 49 59Interest paid (30) (34) (104) Net cash (outflow) from operating (3,568) (3,551) (6,926)activities New finance leases in the period of £1.3m are funding property, plant andequipment. 7. Contingent liabilities As reported in the annual report for the year ended 31 December 2006 anun-quantified claim has been made against the Company by an individual followingtheir departure from the Company during that period. The Board continue tostrenuously believe the claim is unfounded, and accordingly no provision hasbeen made. As reported in the trading statement issued on 29 May 2007, the Board ismonitoring patent challenges lodged against some of Biotec's products andcontinues with SPhere to evaluate the significance of these challenges. 8. Condensed Consolidated Interim Accounts The financial information contained in this interim statement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The results for the period are unaudited. The financial information forthe year to 31 December 2006 and the six months ended 30 April 2006 has beenextracted from the group's 2006 Annual Report and the 2006 interim report. The2006 Annual Report has been filed with the Registrar of Companies. The auditreport on the Annual Report 2006 was unqualified and did not contain a statementunder Section 237 (2) or (3), of the Companies Act 1985. This interim statement is being sent to all shareholders and is also availableupon request from the Company Secretary, Stanelco plc, Starpol TechnologyCentre, North Road, Marchwood, Southampton, SO40 4BL or viewed at http://www.stanelcoplc.com/investor_reports.html. This information is provided by RNS The company news service from the London Stock Exchange