BYOT.L Regulatory News (BYOT)

25 June 2013

Byotrol plc

AUDITED FINAL RESULTS

FOR THE YEAR ENDED 31 MARCH 2013

Byotrol plc ('Byotrol', the 'Company' or the 'Group'), the leading AIM listed anti-microbial hygiene company, is pleased to announce its audited final results for the 12 months ended 31 March 2013. 

Highlights of the year include

·; Revenues up 12% year on year £2.19m (2012: £1.96m)

·; Revenue growth in second half up by 14% 

·; Full year Gross Margin up by 7% to 29%, maintaining growth seen in H1 

·; Gross Profit increased by 47% on prior year

·; Administrative expenses excluding depreciation and amortisation reduced by £856k (28%) in comparison to 2012

·; 38% improvement over prior year in EBITDA - loss reduced by £1.03m

·; Cash outflow from operating activities reduced by £537k (30%) from prior year

·; First profit contribution in full year from joint venture, Byotrol Consumer Products Ltd ('BCP')

·; Adoption of Byotrol products across entire Marks & Spencer UK store estate

·; BCP enters joint development agreement with Albaad Ltd and also anticipates further product launches with Tesco via Robert McBride plc

·; Following the year end the Company strengthened its balance sheet with a limited placing of new ordinary shares valued at approximately £500,000

Commenting on the results and prospects, Gary Millar, Chief Executive of Byotrol, said:

"This year has seen Byotrol achieve a number of key strategic goals in addition to performance improvements across the business. Byotrol's technology is now at the core of our clients' products and operations, increasingly demonstrating the value proposition that complements the superior efficacy of the technology. 

"With the support of our major shareholders we have strengthened our balance sheet in preparation for the next phase of development. This important step enables the Board to confidently pursue Byotrol's growth agenda."

Enquiries:

Notes to Editors:

Byotrol plc (BYOT.L), quoted on AIM, is a leading microbial technology hygiene company, operating globally in the Healthcare, Food and Consumer sectors, providing a low toxicity product with a broad-based and long lasting efficacy across all microbial classes; bacteria, viruses, fungi, moulds, mycobacteria and algae.

Powerful, long lasting and gentle, Byotrol's products can be used stand alone or as an ingredient brand where, as a complementary addition within existing products, Byotrol can significantly improve their performance in personal hygiene, domestic and industrial disinfection, odour control, food production and food management.

Founded in 2005, the Company has prioritised the development of a technology that creates easier, safer and cleaner lives through partnering with providers of essential goods and services. Byotrol is the catalyst behind the global 'Hygiene Revolution'.

For more information, please go to www.byotrol.co.uk

Chairman's statement 

The 2012/13 financial year has seen Byotrol take some major steps forward, though still at a slower pace than the Board would like. The Board remains confident about the Group's ability to accelerate growth in 2013/14.

The past financial year has seen some notable achievements. Double-digit revenue growth reflects the growing recognition of the attractiveness of the Byotrol technology. Gross margins are significantly up, with potential for further improvement. Combined with a pronounced reduction in the cost base, this has led to a material reduction of the Group's EBITDA loss and a marked reduction in cash consumption. The Board remains determined to see the Group achieve cash break-even at the earliest opportunity.

The adoption of Byotrol's technology by Marks & Spencer across all their UK stores for their in-store cleaning is particularly noteworthy, both for the potential revenue generation and for the important Marks & Spencer endorsement of Byotrol. The Group is actively developing other business opportunities with new partners, which are expected to come to fruition in 2013/14. We are delighted by the development agreement between Byotrol Consumer Products (BCP) - our 50% joint venture - and Albaad Ltd., for the future development of the wipes business.

Kimberly-Clark Corporation (Kimberly-Clark) has unfortunately decided to adopt a new strategic direction, with implications for the agreement that BCP signed with them in 2012. This is clearly disappointing although we are still hopeful that a joint market initiative with Kimberly-Clark might take place in the future. The release from our exclusive agreement with Kimberly-Clark means that BCP is now free to pursue other opportunities in the US and elsewhere. BCP is already in discussions with several companies to that end.

The Board and the Company would like to express their appreciation to Adrian Smith, Stephen Falder and Richard Bell, who stood down from the Board during the past year. They have all made a valuable contribution to Byotrol over many years, and leave with our sincere thanks. I am pleased that Stephen, the founder of Byotrol, is continuing his close connection with the business, and that Richard has agreed to stay on as Company Secretary.

I would like to welcome Nicholas Martel as a non-executive member of the Board. Nicholas joined the Board in April 2013 and his appointment has returned the Board to a composition reflecting a majority of independent directors.

I would like to express my appreciation on behalf of the Board to Gary Millar and the Byotrol team for their continued hard work and achievements in the past year. In challenging conditions, they continue to make progress and to establish the basis for the future success that we are all striving to achieve. The increasing recognition of the superiority of Byotrol's unique anti-microbial technology gives the Board continued confidence in the future prospects of the business.

Ralph Kugler

Chairman

Chief Executive's report

I am pleased to present our results for the year ended 31 March 2013. The year under review has delivered improved financial results, most notably reducing EBITDA losses by thirty eight percent. Progress includes double digit revenue growth, with accelerated momentum in the second half of the year, which is encouraging. We have now posted double digit revenue growth in the last three consecutive half year reporting periods, which together with significant improvements in gross margins and reduced fixed costs, are all flowing through to the markedly better underlying operational performance, contributing to a significantly reduced cash outflow. The year has been one of positive changes and positions the business well to move forward.

The business has achieved these positive results by delivering on a number of key objectives, principal amongst which is a focus on maintaining and securing new customer relationships which deliver long term repeat business.

In that respect, progress within our Food & Beverage and Pet Care business sectors has been especially pleasing and has partially offset slower than anticipated growth elsewhere, particularly with Rentokil Initial. A notable achievement has been the adoption of Byotrol as the in-store hygiene solution across the entire UK estate of Marks & Spencer stores; this revenue stream will commence in 2013/14.

Overall, I am confident that the business remains well positioned to accelerate growth in 2013/14, and thus achieve break even and profitability in the near term, despite slower than planned progress in this difficult economic climate. 

Throughout the course of the year, the Byotrol team has worked tirelessly to deliver these improved results, and I would like to thank them for their commitment and hard work.

Overview

Sales for the year were £2.19m (2012: £1.96m) representing a 12% year on year improvement, driven by second half growth of 14%, with even better momentum carried forward into the 2013/14 financial year. The reported loss for the period was £1.7m (2012: loss of £2.8m). The balance sheet at 31 March 2013 had cash and cash equivalents of £0.3m (2012: £1.6m).

Gross margin for the full year was up 7% on the previous year to 29%, meaning the margin uplift reported at the half year was maintained across the full reporting period. However, this fell short of the targeted improvement in gross margin due to a variance from the expected product mix. Nevertheless the impact of increased volume at these higher margins resulted in an overall gross profit increase of £0.2m (up 47%). Combined with exceeding our targeted expense reductions by ca. £0.1m, at an overall reduction of ca. £0.9m, this led to the 38% improvement in EBITDA.

I am pleased also to continue to report good progress across our core sectors, and in the growing number of high quality partners with whom we work.

Markets

Food & Beverage

We continue to make good progress in the UK food sector, with an increasing number of high quality food processing and distribution groups adopting our technology. Year on year revenues grew by an impressive 48%, compared with 9% in the previous reporting period. Growth occurred in both direct sales to end users and also via our strategic distribution partners.

Underpinning this encouraging progress, in a highly competitive sector, has been our strategy of collaborating with food safety opinion formers. In particular, our engagement with the Food Standards Agency and industry representatives on combating the threats posed by Campylobacter and Listeria has created opportunities that have translated into repeatable revenue streams.

We are particularly pleased that Marks & Spencer has chosen to adopt Byotrol's unique surface sanitising solution across their entire in-store operations in the UK. This agreement will see Byotrol anti-microbial technologies rolled across the 477 Marks & Spencer retail outlets, following the successful earlier adoption within Marks & Spencer's newly launched Deli operations.  

We plan to use this significant endorsement to develop further opportunities as Byotrol technology becomes increasingly recognised as the leading solution for overall hygiene control. Product development efforts are focused on unlocking this significantly larger market opportunity.

Business services

We were delighted to announce during the period that Byotrol had been selected as the lead hygiene partner for Office Depot's facilities management supply initiative. The products were launched towards the end of the reporting period, and we continue to work closely together to maximise this significant growth opportunity.

There were, however, much slower than expected sales of Rentokil Initial's UltraProtect range, powered by Byotrol. This was partly due to additional regulatory approvals required in certain European territories. Work continues to support this opportunity and the underlying agreement which has multiple market, product and geographic expansion potential.

We continue to enjoy some growth in the leisure sector, from the fleet-wide use of Byotrol in high contact touch areas by the Holland America cruise liner fleet.

Consumer products

Byotrol Consumer Products (BCP), our joint venture with ?What If! Ventures, has continued to develop its successful retail supply position with Tesco plc (via Robert McBride plc). Further range variants and new product launches have increased the number of stock keeping units offered by Tesco to seven. Following the end of the reporting period Tesco has launched a refresh of the entire range that is powered by Byotrol.

BCP also announced during the period that it had entered into a Joint Development Agreement (JDA) with Albaad Ltd, one of the three largest producers of wet wipes in the world. The JDA is targeted at developing Byotrol-based consumer products for UK and European markets.

The Byotrol Petcare business made excellent progress over the year, recovering the impact of an overstocking in the first half period at a key UK customer. Introduction of supply into Sainsbury's and re-establishing a strong performance with the customer involved were notable features. Revenue growth of 31% in the second half was also achieved and included supply of first orders against our previously announced licensing deal in sub-Saharan Africa and a range launch in China.

Healthcare

We continue to invest in both product and resource capability as part of our engagement strategy within the healthcare sector. Success has been achieved with first sales into North African healthcare markets. Gaining entry into the UK NHS continues to be very much on our agenda, and progress here is now direct via the NHS procurement process.

Outlook

The outlook for Byotrol is encouraging. As a disruptive anti-microbial technology operating in a traditionally conventional market, we offer our commercial partners a unique opportunity. The momentum being achieved with partners who are increasingly generating longer term repeat revenues gives the Board confidence that this establishes the bedrock for a substantial business.

One attraction for our clients and commercial partners is the adaptability of the technology. This flexibility inevitably results in bespoke product development of one sort or another, depending on the targeted market sector or geography, to arrive at the optimum product solution.

Due to a recent strategic review, and despite its substantial development investment to date, Kimberly-Clark has elected not to proceed with a product launch with our consumer products joint venture, Byotrol Consumer Products Ltd (BCP), on the timescales originally envisaged.

As a result, BCP's Intellectual Property License Agreement with Kimberly-Clark announced in August 2012 has been renegotiated. Under the new terms, Kimberly-Clark has agreed to accelerate certain partner payments to BCP and release the rights of exclusivity to the Byotrol technology initially granted to them under the Licensing Agreement. In addition, BCP has negotiated the retention of the intellectual property on its technology resulting from the development project to date. BCP will now regain control over and responsibility for any further development work between the two companies and whilst there still remains the potential to jointly launch products, the time frame for any such collaboration is uncertain.

Our core Business to Business activities, including our UK food and beverage and business services sectors, continue to show real progress. The opportunity for further growth, arising from Marks & Spencer's adoption of Byotrol as its in-store hygiene solution, is particularly exciting.

The Board is encouraged by strategic progress at Byotrol and looks forward to providing further updates to the market at the earliest opportunity.

Gary Millar

Chief Executive

The loss before income tax credit arises from the Group's continuing operations.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2013

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2013

1. SEGMENTAL INFORMATION

The Group has three reportable segments; being product sales, licence fees and royalties. This disclosure correlates with the information which is presented to the Group's Chief Decision Maker, the Board. The Group's revenue, result before taxation and net assets were all derived from its principal activities.

Segmental information is presented using Group policies.

1 SEGMENTAL INFORMATION (continued)

The Group generated total revenues, which comprise both in 2013 and 2012 UK product sales from its largest customer of £360,323 (2012: £459,182).

1 SEGMENTAL INFORMATION (continued)

2. TAXATION ON ORDINARY ACTIVITIES

There is no tax charge as the Group has made losses in both the current and the previous year. At 31 March 2013 the Group had an unrecognised deferred tax asset relating to unutilised trading losses and other temporary differences of £3,562,257 (2012: £3,407,190).

3. LOSS PER SHARE

The weighted average number of shares and the loss for the year for the purposes of calculating the fully diluted earnings per share are the same as for the basic loss per share calculation. This is because the outstanding share options and warrants would have the effect of reducing the loss per ordinary share and would, therefore, not be dilutive under the terms of IAS 33.

4. BASIS OF THE ANNOUNCEMENT

The audited preliminary results for the year ended 31 March 2013 were approved by the Board of Directors on 24 June 2013. The preliminary results do not constitute full accounts within the meaning of section 434 of the Companies Act 2006 but are derived from accounts for the year ended 31 March 2013 and year ended 31 March 2012.

The preliminary announcement is prepared on the same basis as set out in the statutory accounts for the year ended 31 March 2013. Those accounts upon which the auditors issued an unqualified opinion, also had no statement under section 498(2) or (3) of the Companies Act 2006.

Statutory accounts for the financial year ended 31 March 2012 have been filed with the Registrar of Companies. The auditors have reported on those accounts; their report was unqualified, and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards, as adopted by the European Union (EU) (IFRS), this announcement does not in itself contain sufficient information to comply with IFRS.

Byotrol plc is a company incorporated and domiciled in the United Kingdom. The consolidated financial information of Byotrol plc set out in this announcement is presented in Pounds Sterling (£), which is also the functional currency of the parent.

The statutory accounts for the financial year ended 31 March 2013 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

Going concern

Byotrol plc has prepared financial statements on a going concern basis, which assumes the Group will continue in operational existence for the foreseeable future. The Group's ability to meet its future funding and working capital requirements, and therefore continue as a going concern, is dependent upon being able to generate sustainable revenues and free cash flow. The Directors have prepared projected cash flow information for the period ending 12 months from the date of approval of these financial statements. The projections take into account the new business opportunities highlighted in the Chairman's and Chief Executive's Statements, the timing and quantum of which will affect the Group's cash requirements, which are continually monitored by the Board. The Directors have taken account of the funds raised of £0.4m net of expenses, through a placing with existing shareholders.

On the basis of these projections and having undertaken sensitivity analysis in respect of future sales growth and planned cost savings, the Directors are satisfied that the Group can meet its operational requirements and discharge its liabilities as and when they fall due. Accordingly they continue to adopt the going concern basis in preparing the annual report and accounts.

In the event that the Group is unable to achieve its forecast cash inflows, the Directors have a plan in place under which they will make adjustments to costs so that the business can continue to exist within its current funding arrangements. As a result, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence of for the foreseeable future and for this reason they continue to adopt the going concern basis of accounting.

5. REPORT AND FINANCIAL INFORMATION

Copies of the financial statements for the Group for the year ended 31 March 2013 will be available from the Company's registered office and will be posted to shareholders and on the Company's website on 2 July 2013.