17 Jun 2008 07:00
BYOTROL PLC
UNAUDITED PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 MARCH 2008
Chairman's and Chief Executive's Report
This year has seen continuing progress by the Company. Sales continued to grow and we achieved our modest sales target; a combination of direct sales revenues together with income from royalties and licences. We continued to strengthen the protection of our intellectual property with new patents applied for and existing ones granted. During the last quarter of the year there were some important approvals received and contracts won. The scale of those orders which were met on time proved our manufacturing partnership was capable of meeting the rapid growth and scaling of quantities that our current plans demand.
Highlights of the year include:
Sales in March 2008 in excess of £400,000
Marks & Spencer approval of Byosan for the food industry
European patent granted for Byotrol's technology
Consumer Products joint venture formed and fully functional
Two igniter brands, Fellowes and Byofresh, sell over 1,000,000 and 500,000 SKUs respectively
Financial Results
During the year, the company achieved revenues of £947,873 (2007:£673,542) which was an increase of 40.7% and recorded a loss of £2,773,186 compared with a loss of £1,744,140 in the previous year. The balance sheet reflects total assets of £2,696,399 at the year end and the cash in hand was £1,312,960.
.
The Board is aware that continued progress is needed in building revenue and every effort is being made to ensure sales growth.
Margins achieved during the year have met targets and expenses have closely followed the budgeted expectations.
Strategy
We believe that Byotrol's technology is creating a hygiene revolution. The properties of Byotrol combine to give the potential to beneficially affect the lives of virtually everyone on the planet. There have been no significant breakthroughs in generally available hygiene materials for over 25 years. Byotrol's powerful, safe, long lasting/residual, broad spectrum, ecologically benign technology creates vast opportunities across a huge number of extremely large global markets.
To properly exploit the potential the company aims to:
Work in partnership with key providers in target markets
Be a globally recognised expert in the field of safe microbial control
Target certain markets for small scale direct sales as igniter brands
Target niche areas and use success there to demonstrate larger market potential and the technology's wide applicability
Create a global brand that is synonymous with safe effective trusted microbial control
Healthcare
This year has seen progress, albeit occasionally frustrating, in this very cautious but highly visible market.
Restated and focused partnership with Synergy plc which led to a £125,000 order in March 2008 and expansion and re-energising of their Byotrol product ranges for the UK and into their international network which has expanded substantially over the last 9 months to over 60 countries.
Synergy installed circa 4,000 Byotrol hand mousse dispensers throughout Care UK's care home network
Initial supplies to small numbers of USA hospitals of EPA approved Polysphere and FDA hand sanitiser
Lord Norman Warner joined the company as an advisor
Health Protection Agency's Rapid Review Panel level 3 recommendation with a consequent major study commenced in Manchester Royal Infirmary
Food & Beverage
This key target market has shown good progress in the UK during the year. Our major task has been to differentiate Byotrol from older less efficient technologies by a combination of high level approvals and rigorous testing in situ.
First new disinfectant product approved by Marks and Spencer in 9 years in January 2008
Heinz adopts Byotrol mousse and disinfectants in its high risk baby food facility in Kendal
Opening orders received from Perdue Poultry in the US
Supplies to US restaurants through distributor network
£150,000 worth of teat wipes and dips for agricultural milking parlours were delivered in March 2008
Industrial & Technical
Our main objective in this field is to prove our technology's adaptability and acceptability in a selection of niches chosen to demonstrate Byotrol's exceptional features in difficult and or highly visible sectors.
Our partner Byofresh achieved sales of over 500,000 units of Byotrol containing pet grooming products, winning new product of the year from Pets at Home
Fellowes have distributed over 1 million Byotrol SKUs with Byotrol in their Virashield range to office retailers in over 25 countries in the EU and the rest of the world
Byotrol materials have successfully been used to protect Venetian architecture from algal risk and damage, the first chemical product this century to be approved for use.
Unipart, the marine and leisure company, launched a range of Byotrol based cleaners and protectors after the financial year end
Consumer Products
This is the largest potential market for Byotrol technology, and considerable resource has been applied with highly satisfactory results. Following the successful completion of our joint venture with ?What If!, the world's largest innovations company in July 2007, several important steps were undertaken and important discussions and negotiations continue including:
Two new patents were scoped and submitted to ensure maximum possible protection of our IP in this sector
Consumer market research on the claims made possible by Byotrol was undertaken in China, India, Western Europe and the USA
Discussions were opened with four of the world's global consumer suppliers; of those discussions three are still ongoing
Talks commenced with a small number of international companies that are sector leaders or similar in major consumer fields. Board level conversations are taking place with four of them.
Hospitality & Leisure
During the year we have achieved a few small but very significant "Igniter brand" opportunities. We recognised the need for focus on other key markets and this applied a constraint on human resources available for this large market.
Working with our distributor Integrated Resources International, we achieved Boeing approval for use on and in aircraft and Polysphere is now part of the routine cleaning of Alaskan Airways
In the UK Techclean Plc, an office hygiene service company, signed a supply contract for office equipment contract sanitisation products based on Byotrol.
Agriculture
Byotrol's safety (it can safely be sprayed directly onto living plants) combined with its other properties led to some very encouraging results in field trials in the USA. These tests were designed to support future products for fruit, vegetable and cereal growers. Our focus in the food and beverage sector also resulted in our launch of a highly effective "hoof" foot bath for sheep and cattle, improving farm animal welfare in line with European initiatives and improving milk production.
50% reduction in use of heavy metal fungicide when used in rotation with Byotrol gave significant performance improvement against citrus canker
UK niche success in the treatment of equestrian hoofs led to the launch in January 2008 of Byotrol containing hoof guard for farmers where we are seeing significant progress
Intellectual property
In total the company has six patent streams; three covering core technology, one dealing with applications, one with test methods and one with detection. These are being actively supported and maintained across the globe.
European Patent granted
Australian patent granted
A specialist patent was granted in the field of tissue preservation.
Two specialist patent applications were submitted one to protect a unique testing protocol the other a device for rapid assay of microbes present on a surface.
Byotrol is a registered trademark in the EU, USA and several other important target nations
The company has protected a number of its product trademarks worldwide
Quality Management
The company maintains high standards of quality assurance, management oversight, and supply chain diligence. These were audited during the year by TŰV, international quality standard auditors.
The Byotrol Team
During the year the Byotrol team was placed under intense pressure to deliver our strategy. The stringent standards we set ourselves for partnership and the brand values we are developing demand extraordinary talent. This has meant a continuing process of upgrading and training our staff to meet the challenges of our business. We are proud to say that those very same values have acted as a magnet to some of the very best and most able people in our industry who have strengthened our small but outstandingly qualified group.
It our very pleasant duty to thank all of that team and to express our fullest confidence in their ability to deliver our future successes
Current Trading and Outlook
The business has an almost overwhelming degree of interest in its products. This comes from both our primary and secondary target markets. Significant workstreams are developing regularly and the prioritising of these is a challenging task.
There is a hugely significant balance to be struck between sales revenues in the short term and business value in the long term. It is certain that the best and most significant deals and partnerships are almost without exception the ones that take greater time, effort and data to bring to fruition.
We are extremely confident of success for Byotrol and are committed to the maximisation of the company's value for our shareholders and will continue to work diligently to implement our strategy.
Wesley Devoto David McRobbie
Chairman Chief Executive
17 June 2008
Byotrol plc
UNAUDITED CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2008
| 2008 | 2007 | |||
| Notes | £ | £ |
| REVENUE : |
| Group and share of joint venture's revenue | 947,873 | 673,542 |
| Less: share of joint venture's revenue | - | - |
| ---------------- | ---------------- | |
| REVENUE | 947,873 | 673,542 |
| Cost of sales | (310,246) | (194,703) |
| ---------------- | ---------------- | |
| GROSS PROFIT | 637,627 | 478,839 |
| Administrative expenses excluding depreciation and amortisation | (3,201,470) | (2,188,349) | ||
| Share scheme charges | 5 | (326,361) | (94,231) | |
| ---------------- | ---------------- | |||
| EARNINGS BEFORE INTEREST, DEPRECIATION, AMORTISATION AND TAX | 1 | (2,890,204) | (1,803,741) | |
| Amortisation | (16,651) | (11,579) | |
| Depreciation | (21,621) | (15,113) | |
| Finance income | 156,090 | 87,865 | |
| Finance costs | (800) | (1,572) | |
| ---------------- | ---------------- | ||
| LOSS BEFORE TAX EXPENSE | (2,773,186) | (1,744,140) | |
| Tax expense | - | - | |
| ---------------- | ---------------- | ||
| LOSS FOR THE FINANCIAL YEAR | (2,773,186) | (1,744,140) | |
| ---------------- | ---------------- | ||
| LOSS ATTRIBUTABLE TO : | |||
| Equity holders of Parent company | (2,774,333) | (1,743,904) | |
| Minority Interests | 1,147 | (236) | |
| ---------------- | ---------------- | ||
| (2,773,186) | (1,744,140) | ||
| =========== | =========== | ||
| Basic and fully diluted earnings per share - pence | 3 | (6.24) | (4.56) |
The loss from operations arises from the Group's continuing operations.
Byotrol plc
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 31 March 2008
| 2008
| 2007 | |||
| Notes | £ | £ |
ASSETS
Non-current assets
| Property, plant and equipment | 41,699 | 46,792 | ||
| Intangible assets | 54,299 | 62,200 | ||
| ---------------- | ---------------- | |||
| 95,998 | 108,992 | |||
| ---------------- | ---------------- | |||
| Current assets | ||||
| Inventory | 122,172 | 46,173 | ||
| Trade and other receivables | 1,081,164 | 727,065 | ||
| Cash and cash equivalents | 1,312,960 | 3,553,038 | ||
| ---------------- | ---------------- | |||
| 2,516,296 | 4,326,276 | |||
| ---------------- | ---------------- | |||
| TOTAL ASSETS | 2,612,294 | 4,435,268 | ||
| =========== | =========== | |||
| LIABILITIES | ||||
| Current liabilities | ||||
| Trade and other payables | 590,825 | 277,548 | ||
| Joint venture | 4 | 77,348 | - | |
| Equity | ||||
| Share capital | 111,655 | 109,073 | ||
| Share premium account | 7,875,772 | 7,640,752 | ||
| Merger reserve | 1,064,712 | 1,064,712 | ||
| Retained earnings | (7,108,018) | (4,657,964) | ||
| ---------------- | ---------------- | |||
| TOTAL EQUITY | 1,944,121 | 4,156,573 | ||
| Minority interests | - | 1,147 | ||
| ---------------- | ---------------- | |||
| 2,612,294 | 4,435,268 | |||
| =========== | =========== | |||
Byotrol plc
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2008
Group
| Share Capital | Share Premium Account | Merger Reserve | Retained Earnings | Total | |
| £ | £ | £ | £ | £ | |
| At 1 April 2006 | 87,182 | 2,945,529 | 1,064,712 | (3,054,969) | 1,042,454 |
| Placing of shares | 20,850 | 4,983,150 | - | - | 5,004,000 |
| Placing costs | - | (390,314) | - | - | (390,314) |
| Conversion of warrants | 1,041 | 102,387 | - | - | 103,428 |
| Loss for the year | - | - | - | (1,743,904) | (1,743,904) |
| Exchange difference | - | - | - | 46,678 | 46,678 |
| Share scheme charges | - | - | - | 94,231 | 94,231 |
| --------------- | --------------- | --------------- | --------------- | --------------- | |
| At 31 March 2007 | 109,073 | 7,640,752 | 1,064,712 | (4,657,964) | 4,156,573 |
| Conversion of warrants | 2,582 | 235,020 | - | - | 237,602 |
| Loss for the year | - | - | - | (2,773,186) | (2,773,186) |
| Exchange difference | - | - | - | (3,229) | (3,229) |
| Share scheme charges | - | - | - | 326,361 | 326,361 |
| --------------- | --------------- | --------------- | --------------- | --------------- | |
| At 31 March 2008 | 111,655 | 7,875,772 | 1,064,712 | (7,108,018) | 1,944,121 |
| ========== | ========== | ========== | ========== | ========== |
Parent Company
| Share Capital | Share Premium Account | Merger Reserve | Retained Earnings | Total | |
| £ | £ | £ | £ | £ | |
| At 1 April 2006 | 87,182 | 2,945,529 | 1,064,712 | (2,559,682) | 1,537,741 |
| Placing of shares | 20,850 | 4,983,150 | - | - | 5,004,000 |
| Placing costs | - | (390,314) | - | - | (390,314) |
| Conversion of warrants | 1,041 | 102,387 | - | - | 103,428 |
| Loss for the year | - | - | - | (891,961) | (891,961) |
| Share scheme charges | - | - | - | 94,231 | 94,231 |
| --------------- | --------------- | --------------- | ----------------- | --------------- | |
| At 31 March 2007 | 109,073 | 7,640,752 | 1,064,712 | (3,357,412) | 5,457,125 |
| Conversion of warrants | 2,582 | 235,020 | - | - | 237,602 |
| Loss for the year | - | - | - | (4,776,540) | (4,776,540) |
| Share scheme charges | - | - | - | 326,361 | 326,361 |
| --------------- | --------------- | --------------- | ----------------- | --------------- | |
| At 31 March 2008 | 111,655 | 7,875,772 | 1,064,712 | (7,807,591) | 1,244,548 |
| ========== | ========== | ========== | =========== | ========== |
Byotrol plc
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2008
| 2008 | 2007 | |
| £ | £ |
| CASH FLOW FROM OPERATING ACTIVITIES |
| Loss for the year | (2,774,333) | (1,743,904) |
Adjustments for:
| Share based compensation | 326,361 | 94,231 | |
| Depreciation | 21,621 | 15,113 | |
| Amortisation | 16,651 | 11,579 | |
| Finance income | (155,290) | (86,293) | |
| Exchange gain or loss | (3,229) | 46,678 | |
| Provision against investment | - | 5,000 | |
| Changes in working capital | |||
| Increase in inventories | (75,999) | (24,993) | |
| Increase in trade and other receivables | (398,203) | (608,888) | |
| Increase/(decrease) in trade and other payables | 458,543 | (96,489) | |
| ---------------- | ---------------- | ||
| NET CASH USED IN OPERATING ACTIVITIES | (2,583,878) | (2,387,966) | |
| ---------------- | ---------------- |
| CASH FLOWS FROM INVESTING ACTIVITIES |
| Payments to acquire property, plant and equipment | (16,528) | (45,456) | |
| Payments to acquire intangible assets | (8,750) | (30,000) | |
| Payment to acquire interest in joint venture | (23,814) | - | |
| ---------------- | ---------------- | ||
| NET CASH USED IN INVESTING ACTIVITIES | (49,092) | (75,456) | |
| ---------------- | ---------------- |
| CASH FLOWS FROM FINANCING ACTIVITIES |
| Proceeds on issue of ordinary shares | 237,602 | 5,107,428 | |
| Share issue costs | - | (390,314) | |
| Net interest received | 155,290 | 86,293 | |
| ---------------- | ---------------- | ||
| NET CASH INFLOW FROM FINANCING | 392,892 | 4,803,407 | |
| ---------------- | ---------------- |
| Net increase in cash and cash equivalents | (2,240,078) | 2,339,985 |
| Cash & cash equivalents at the beginning of the financial year | 3,353,038 | 1,213,053 |
| ---------------- | ---------------- | ||
| Cash & cash equivalents at the end of the financial year | 1,312,960 | 3,553,038 | |
| ========== | ========== |
Byotrol plc
ACCOUNTING POLICIES
BASIS OF PREPARATION
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs"), and International Finance Reporting Interpretation Committee ("IFRIC") interpretations, as adopted by the European Union (EU) and in accordance with those parts of the Companies Act 1985 applicable to companies reporting under IFRSs for the first time.
These financial statements are covered by IFRS 1 'First time adoption of International Accounting Standards'. The financial statements have been prepared in accordance with IFRS standards and IFRIC interpretations issued and effective, or issued and early adopted as at the time of preparing these statements. Reconciliations and descriptions of the effect of the transition from UK GAAP to IFRS are given in note 23 of these financial statements.
Byotrol plc is incorporated and domiciled in the United Kingdom.
The financial statements have been prepared on the historical cost basis, except for the costs of share based payments, which are stated at fair value at the grant date. The principal accounting policies adopted are set out below.
IFRS 1 FIRST TIME ADOPTION
IFRS 1 sets out the procedures that the Group must follow when it adopts IFRS for the first time as the basis for preparing its financial information. The Group is required to establish its IFRS accounting policies as at 31 March 2008 and in general apply these retrospectively to determine the IFRS opening balance sheet at its date of transition.
This standard provides a number of optional exemptions to this general principle. Set out below is a description of the significant first time adoption choices made by the Group:
Business combinations before the transition date (IFRS 3 "Business Combinations")
The Group has elected not to apply IFRS 3 retrospectively to business combinations that took place prior to the date of transition. As a result, in the opening balance sheet, goodwill arising from business combinations remained at the value at the transition date of 1 April 2006. No amortisation has been charged to the income statement since the date of transition. Adjustments to cost have been recognised under IFRS in the same way as under UK GAAP.
BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Associates and jointly controlled entities are accounted for using the equity method (equity accounted investees) and are initially recognised at cost. The Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group's share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group's share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.
The Company Income Statement has not been disclosed in accordance with section 230 of the Companies Act 1985. The loss for the year of the parent company amounted to £4,776,540.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the financial information in conformity with IFRS requires management to make judgement, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are both readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and judgements that have a significant effect on the amounts recognised in the financial statements are detailed below.
Going concern
The directors have prepared cash flow forecasts for the Group that reflect the Group's forecast revenues and costs. It is envisaged by the directors that these forecast revenue streams will provide adequate funds for Byotrol plc and all its subsidiary companies for the foreseeable future.
In the event that the Group is unable to achieve its forecast revenues, further funding would be required. The directors have reviewed the availability of debt and equity funding and anticipate being able to raise additional funds should this be necessary. As a result, the directors have formed a view that adequate funds will be available for Byotrol plc and all its subsidiary companies for at least the next year.
The financial statements have therefore been prepared on a going concern basis. The financial statements do not contain any adjustments which would result if the Group does not generate sufficient revenue and free cash flows from its trading activities or if any future fund raising exercise was not successful.
Impairment of assets
In line with the policy stated below on impairment, the directors have considered the carrying value of assets. They have determined that it would be prudent to reflect an impairment in the value of loans made to its subsidiaries by the parent company. This impairment has been reflected in the accounts of the parent company. All other assets are considered to be unimpaired.
INTERPRETATIONS OF STANDARDS
The following accounting standards, interpretations and amendments thereto became effective during the period:
IFRS 7 - Financial Instruments: Disclosure
Amendment to IAS 1 - Capital disclosures
IFRIC 10 - Interim financial reporting and impairment
IFRIC 11 - IFRS 2 Group and treasury share transactions
During the period, the Group has adopted the disclosures of IFRS 7 and IAS 1 amended. The amendments are of a disclosure nature and as such have had no material impact on the current or preceding periods' financial position or performance.
IFRIC 10 and IFRIC 11 also became effective during the period. The Group's accounting policies in the preceding accounting period were consistent with the guidance issued and therefore implementation of these interpretations has had no effect upon the current or preceding financial period.
The Group has adopted IFRS 8 Operating Segments early. However, as described in the notes to the accounts, this standard has had no impact on the financial period due to the segments being below the reportable thresholds.
International Financial Reporting Standards and Interpretations issued but not yet effective.
At the date the financial statements were authorised for issue, the following standards, interpretations and amendments thereto were in issue but have not been adopted as they are not yet effective.
IAS 1 'Presentation of financial statements' - Revision. Amendments to the standard include changes to titles of some of the financial statements and presentational changes to the components of financial statements. The revision is effective for periods commencing on or after 1 January 2009.
IAS 23 'Borrowing costs' - Revision. This revision eliminates the option to expense borrowing costs to the income statement as incurred and is effective for periods commencing on or after 1 January 2009.
IAS 27 'Consolidated and separate financial statements' - Revision. The main amendments relate to the accounting for minority interests and the loss of control of a subsidiary. The revision is effective for periods commencing on or after 1 July 2009.
IAS 32 'Financial Instruments: Presentation' - Revision. This revision provides guidance in relation to the presentation of certain puttable financial instruments and financial instruments that impose an obligation on the entity to deliver a pro rata share of the net assets of the entity on liquidation. The revision is effective for periods commencing on or after 1 January 2009.
IFRS 2 'Share based payment' - Revision. The amendment redefines vesting conditions and clarifies the accounting treatment in respect of cancellations and non-vesting conditions. The revision is effective for periods commencing on or after 1 January 2009.
IFRS 3 'Business combinations' - Revision. The board proposes changes to the scope of the standard, the accounting for goodwill, the cost of the business combination and the accounting for business combinations achieved in stages. The revision is effective for periods commencing on or after 1 July 2009.
IFRIC 12 'Service concession arrangements' provides guidance on the accounting treatment relating to service arrangements over public infrastructures and is effective for periods beginning on or after 1 January 2008.
IFRIC 13 'Customer loyalty programmes' provides guidance on the accounting treatment of rewards awarded as part of a customer loyalty programme and is effective for periods beginning on or after 1 July 2008.
IFRIC 14 'IAS 19 - the limit on a defined benefit asset, minimum funding requirements and their interaction' provides guidance on accounting for a pension surplus and is effective for periods beginning on or after 1 January 2008.
The directors anticipate that the adoption of these Standards and Interpretations will have no material impact on the financial statements when the relevant Standards and Interpretations come into effect
REVENUE
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for products provided and license fees and royalties earned in the normal course of business, net of discounts and other sales related taxes.
SEGMENTAL REPORTING
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.
INTANGIBLE ASSETS
Research and development
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from the Group's development expenditure can be recognised only if all of the following conditions are met:
an asset is created that can be identified;
it is probable that the asset created will generate future economic benefits;
the development cost of the asset can be measured reliably;
the product or process is technically and commercially feasible; and
sufficient resources are available to complete the development and to either sell or use the asset.
Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.
The directors do not consider that any of the group's development expenditure currently meets the requirements which would result in it being capitalised.
Patents and trademarks
Purchased licenses and patents are measured at cost, net of any amortisation and any provision for impairment. Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:
Intellectual property - patents and licences over 10 to 20 years on a straight line basis
Software over 3 years on a straight line basis
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Cost comprises purchase price and other directly attributable costs. Depreciation is charged so as to write off the cost or valuation of assets to their residual values over their estimated useful lives, using the straight-line method, on the following bases:
Leasehold property over 3 years on a straight line basis
Office equipment, plant and equipment over 5 years on a straight line basis
Computer equipment over 3 years on a straight line basis
Motor vehicles over 4 years on a straight line basis
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
IMPAIRMENT
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and intangibles to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss if any. Where the asset does not generate cash flows that are independent from other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have been adjusted.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
INVESTMENTS
Investments are initially recorded at cost, being the fair value of the consideration given and including directly attributable charges associated with the investment. Subsequently they are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable.
INVENTORY
Inventory is valued at the lower of cost and net realisable value on a FIFO basis. Net realisable value is determined as estimated selling price less all costs of completion.
Provision is made where necessary for obsolete, slow moving inventory where it is deemed that the costs incurred may not be recoverable.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised on the balance sheet when the Group has become a party to the contractual provisions of the instrument.
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate.
Financial liability
Financial liabilities are classified according to the substance of the contractual arrangements entered into. An instrument will be classified as a financial liability when there is a contractual obligation to deliver cash or another financial asset to another enterprise.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of any outstanding bank overdraft where a right of set off exists.
Borrowings
Interest-bearing bank loans and overdrafts are initially recorded at fair value, which represents the fair value of the consideration received, net of any issue costs associated with other borrowings. Borrowings are subsequently stated at amortised cost.
Finance charges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
OPERATING LEASE COMMITMENTS
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
TAXATION
Current tax is the expected corporation tax payable or receivable in respect of the taxable profit/loss for the financial year using tax rates enacted or substantively enacted at the balance sheet date, less any adjustments to tax payable or receivable in respect of previous periods.
Deferred tax is recognised in respect of all temporary differences between the carrying amounts of assets and liabilities included in the financial statements and the amounts used for tax purposes that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions:
No provision is made relating to the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than those acquired as part of a business combination.
Provision is made for deferred tax that would arise on all taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, except where the Group can control the reversal of the temporary differences.
Deferred tax assets are recognised only to the extent that the directors consider that it is probable that there will be suitable taxable profits from which the future reversal of the underlying temporary differences and unused tax losses and credits can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
FOREIGN CURRENCIES
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at foreign exchange rates ruling at the date the fair value was determined.
The presentational and functional currency adopted by the group is Sterling.
DEFINED CONTRIBUTION PLANS
Obligations for contributions to defined contribution retirement benefit plans are charged as an expense as they fall due.
SHARE-BASED PAYMENTS
The Group has applied the requirements of IFRS 2 Share-based payments.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of share options that will eventually vest, or warrants that will be exercised, and a corresponding amount credited to share based payments reserve.
Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions and behavioural considerations.
A liability equal to the portion of the deemed value received is recognised at the current fair value determined at each balance sheet date for cash-settled share based payments.
The proceeds received on exercise of share options and warrants are credited to share capital (for the nominal value) and share premium account (for the excess over nominal value).
Byotrol plc
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2008
SEGMENTAL INFORMATION
For management purposes, the group's primary segments are analysed by business segment. The group's risks and rates of return are affected predominantly by the products and services it provides. As a result the group's primary reporting format is business segments. The group's revenue, profit before taxation and net assets were all derived from its principal activities.
The joint venture is included in the product sales segment. Segmental information is presented using group policies.
| Primary reporting format: Business segments | Product sales | Licence fees | Royalties | Total |
| Year ended 31 March 2008 | £ | £ | £ | £ |
| External revenue | 873,000 | 60,000 | 14,873 | 947,873 |
| Cost of sales | (310,246) | - | - | (310,246) |
| Other expenses - net | (3,345,818) | (64,994) | - | (3,410,813) |
| ----------------- | ---------------- | --------------- | ---------------- | |
| Profit/(loss) before tax expense | (2,783,064) | (4,994) | 14,873 | (2,773,186) |
| ========= | ========= | ========= | ========= | |
| Segment assets | 2,607,620 | - | 4,674 | 2,612,294 |
| Segment liabilities | 653,173 | 15,000 | - | 668,173 |
| Segment capital expenditure | 16,528 | - | - | 16,528 |
| ========= | ========= | ========= | ========= |
| Product sales | Licence fees | Royalties | Total | |
| Year ended 31 March 2007 | £ | £ | £ | £ |
| External revenue | 471,025 | 200,000 | 2,517 | 673,542 |
| Cost of sales | (194,703) | - | - | (194,703) |
| Other expenses - net | (2,212,979) | (10,000) | - | (2,222,979) |
| ----------------- | ---------------- | --------------- | ---------------- | |
| Profit/(loss) before tax expense | (1,936,657) | 190,000 | 2,517 | (1,744,140) |
| ========= | ========= | ========= | ========= | |
| Segment assets | 4,432,751 | - | 2,517 | 4,435,268 |
| Segment liabilities | 277,548 | - | - | 277,548 |
| Segment capital expenditure | 45,456 | - | - | 45,456 |
| ========= | ========= | ========= | ========= |
1 SEGMENTAL INFORMATION (continued)
| Secondary reporting format: Geographical segments | United Kingdom | North America | Rest of the World | Total |
| Year ended 31 March 2008 | £ | £ | £ | £ |
| External revenue | 654,670 | 73,245 | 219,958 | 947,873 |
| Segment assets | 2,210,093 | 128,565 | 273,636 | 2,612,294 |
| Segment liabilities | 592,376 | 75,797 | - | 668,173 |
| Capital expenditure | 13,185 | 3,343 | - | 16,528 |
| ========== | ========== | ========== | ========== | |
| United Kingdom | North America | Rest of the World | Total | |
| Year ended 31 March 2007 | £ | £ | £ | £ |
| External revenue | 206,157 | 32,673 | 434,712 | 673,542 |
| Segment assets | 4,231,671 | 48,118 | 155,479 | 4,435,268 |
| Segment liabilities | 271,968 | 5,580 | - | 277,548 |
| Capital expenditure | 45,456 | - | - | 45,456 |
| ========== | ========== | ========== | ========= |
2 PARTICULARS OF EMPLOYEES
The average number of staff employed by the Group, including executive directors, during the financial period amounted to:
| 2008 | 2007 | |
| No | No | |
| Executive Directors | 3 | 2 |
| Administration | 26 | 19 |
| --------------- | --------------- | |
| 29 | 21 | |
| ========== | ========== |
The aggregate payroll costs, including directors' emoluments, of the above were:
| 2008 | 2007 | |
| £ | £ | |
| Wages and salaries | 1,235,327 | 971,040 |
| Social security costs | 105,285 | 77,713 |
| Other pension costs | 55,278 | 37,339 |
| Share based compensation | 326,361 | 94,231 |
| --------------- | --------------- | |
| 1,722,251 | 1,180,323 | |
| ========== | ========== |
3 LOSS PER SHARE
| 2008 | 2007 | |
| £ | £ | |
| Loss on ordinary activities after taxation | (2,773,186) | (1,744,140) |
| =========== | =========== |
| Weighted average number of shares (No) | ||
| For basic and fully diluted loss per ordinary share | 44,407,857 | 38,242,833 |
| =========== | =========== | |
| Earnings per ordinary share - basic and fully diluted | (6.24)p | (4.56)p |
| =========== | =========== |
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 FINANCIAL ASSET INVESTMENTS
| GROUP | Investment in joint venture | Total | |
| £ | £ | ||
| At 1 April 2007 | - | - | |
| Additions | 23,814 | 23,814 | |
| Share of joint venture losses | (145,266) | (145,266) | |
| Share of amount owed by joint venture | 44,104 | 44,104 | |
| ----------------- | ----------------- | ||
| At 31 March 2008 | (77,348) | (77,348) | |
| =========== | =========== |
Share of assets of joint venture
| 2008 | 2007 | |
| £ | £ | |
| Share of gross assets | - | - |
| Share of gross liabilities | (145,266) | - |
| ---------------- | ---------------- | |
| Share of net assets | (145,266) | - |
| ========== | ========== |
The Company owns 50% of the issued share capital of the joint venture, Byotrol Consumer Products Limited which was formed on 30 July 2007. The company's investment in Byotrol Consumer Products Limited comprises the legal costs incurred in the setting up of the joint venture. This company's principal place of business is The Glassworks 3-4 Ashland Place London W1U 4AH. Its principal activity is to market and sell consumer products. This company is jointly managed by its 6 directors, 3 from Byotrol plc and 3 from its other investor, What If Innovation Capital Nominees Limited. During 2008 the group recharged salary and other administrative costs amounting to £88,208 (2007: £Nil).
5 SHARE BASED PAYMENTS
The Company has granted equity settled share options to selected employees. The exercise price is the market value of the shares at the date of grant. The vesting period is two years. If the options remain unexercised after a period of ten years from the date of grant the options expire.
The Company granted warrants to certain shareholders on 5 July 2005, exercisable at 23p converting each warrant into one ordinary share. At 31 March 2008 there were 3,979,175 warrants outstanding.
Details of the share options and warrants outstanding during the year are as follows:
| 2008 | 2007 | ||||
| Number of share options and warrants | Weighted average exercise price (in p) | Number of share options and warrants | Weighted average exercise price (in p) | ||
| Outstanding at beginning of year | 6,210,633 | 31.6 | 5,412,061 | 23.0 | |
| Share options granted during the year | 910,000 | 45.3 | 1,198,000 | 67.6 | |
| Share options lapsed during the year | (179,000) | 56.7 | - | - | |
| Warrants exercised in the year | (1,033,458) | 23.0 | (399,428) | 23.0 | |
| --------------- | ------------ | --------------- | --------- | ||
| Outstanding at the end of the year | 5,908,175 | 34.5 | 6,210,633 | 31.6 | |
| =========== | ========= | =========== | ======== | ||
The Group recognised the following expenses related to share-based payments:
| 2008 | 2007 | |||
| £ | £ | |||
| Charged to Consolidated Income Statement | 326,361 | 94,231 | ||
| ======== | ======== | |||
5 SHARE BASED PAYMENTS (continued)
The fair value of options granted under the employee option schemes is measured using the Black-Scholes model. The inputs to the model are as follows:
| Grant date | 11.09.06 | 21.02.07 | 31.07.07 | 5.09.07 | 24.09.07 | ||||
| Share price at grant date | 58.0p | 79.5p | 50.0p | 41.0p | 42.5p | ||||
| Exercise price | 59.0p | 79.5p | 50.0p | 41.0p | 42.5p | ||||
| Number of employees | 13 | 3 | 5 | 1 | 12 | ||||
| Share options granted | 698,000 | 500,000 | 350,000 | 50,000 | 510,000 | ||||
| Vesting period (years) | 2 | 2 | 2 | 2 | 2 | ||||
| Expected volatility | 58.1% | 53.4% | 54.5% | 54.3% | 55.8% | ||||
| Option life (years) | 10 | 10 | 10 | 10 | 10 | ||||
| Expected life (years) | 10 | 10 | 10 | 10 | 10 | ||||
| Risk free rate | 5.24% | 5.80% | 6.36% | 6.22% | 6.22% | ||||
| Expected dividends expressed as a dividend yield | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||
| Fair value per option | 42.0p | 56.0p | 36.0p | 30.0p | 31.0p |
The options outstanding at 31 March 2008 had a weighted average exercise price of 58p and a weighted average remaining contractual life of 8.9 years.
The aggregate of the estimated fair values of the options granted in the year is £299,100.
At 31 March 2008 there were options outstanding over 1,929,000 (2007: 1,198,000) ordinary shares of 0.25p each which are exercisable at prices in the range from 41p to 78.5p under the company's various share option scheme exercisable at various times analysed as follows:
Expected volatility was based upon the historical volatility over the expected life of the schemes. The expected life is based upon historical data and has been adjusted based on management's best estimates for the effects of non-transferability, exercise restrictions and behavioural considerations.
6. BASIS OF THE ANNOUNCEMENT
The unaudited preliminary financial statements for the year ended 31 March 2008 were approved by the Board of Directors on 17 June 2008. The financial information set out above does not constitute the Company's statutory accounts for the financial year ended 31 March 2008 or the financial period ended 31 March 2007 but is derived from those accounts. Statutory accounts for the financial period ended 31 March 2007 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 237(2) or (3) of the Companies Act 1985. The statutory accounts for the financial year ended 31 March 2008 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
7 EXPLANATION OF TRANSITION TO IFRS
This is the first year that the Group has presented its financial statements under IFRS. The last financial statements under UK GAAP were for the year ended 31 March 2007 and the date of transition to IFRS was therefore 1 April 2006. The only adjustment is a movement in non-current assets. There were no impacts on the Income Statement nor the Cash Flow. There was no impact on any of the Company statements.
Reconciliation of equity at 1 April 2006 (date of transition to IFRS)
| As previously stated under UK GAAP 1 April 2006 £ | Effect of transition to IFRS £ | As restated under IFRS 1 April 2006 £ | |
| Non-current assets | |||
| Property, plant and equipment | 9,583 | 22,706 | 32,289 |
| Intangible assets | 50,645 | (22,706) | 27,939 |
| Investments | 5,000 | - | 5,000 |
| ----------------- | ----------------- | ---------------- | |
| 65,228 | - | 65,228 | |
| ----------------- | ----------------- | ---------------- | |
| Current assets Inventories | 21,180 | - | 21,180 |
| Trade and other receivables | 118,177 | - | 118,177 |
| Cash and cash equivalents | 1,213,053 | - | 1,213,053 |
| ----------------- | ----------------- | ---------------- | |
| 1,352,410 | - | 1,352,410 | |
| ----------------- | ----------------- | ---------------- | |
| Total assets | 1,417,638 | - | 1,417,638 |
| =========== | =========== | ========== | |
| Current liabilities | |||
| Trade and other payables | 373,801 | - | 373,801 |
| Equity | |||
| Share capital Share premium account | 87,182 2,945,529 | - - | 87,182 2,945,529 |
| Merger reserve | 1,064,712 | - | 1,064,712 |
| Retained earnings | (3,054,969) | - | (3,054,969) |
| ----------------- | ----------------- | ---------------- | |
| Total equity | 1,042,454 | - | 1,042,454 |
| Minority interests | 1,383 | - | 1,383 |
| ----------------- | ----------------- | --------------- | |
| Total liabilities and equity | 1,417,638 | - | 1,417,638 |
| =========== | =========== | ========== |
7 EXPLANATION OF TRANSITION TO IFRS (continued)
Reconciliation of equity at 31 March 2007 (date of last UK GAAP Statements)
| As previously stated under UK GAAP 31 March 2007 £ | Effect of transition to IFRS £ | As restated under IFRS 31 March 2007 £ | |
| Non-current assets | |||
| Property, plant and equipment | 69,909 | (23,117) | 46,792 |
| Intangible assets | 39,083 | 23,117 | 62,200 |
| ----------------- | ----------------- | ---------------- | |
| 108,992 | - | 108,992 | |
| ----------------- | ----------------- | ----------------- | |
| Current assets Inventories | 46,173 | - | 46,173 |
| Trade and other receivables | 727,065 | - | 727,065 |
| Cash and cash equivalents | 3,553,038 | - | 3,553,038 |
| ----------------- | ----------------- | ----------------- | |
| 4,326,276 | - | 4,326,276 | |
| ----------------- | ----------------- | ----------------- | |
| Total assets | 4,435,268 | - | 4,435,268 |
| =========== | ============ | =========== | |
| Current liabilities | |||
| Trade and other payables | 277,548 | - | 277,548 |
| Equity | |||
| Share capital Share premium account | 109,073 7,640,752 | - - | 109,073 7,640,752 |
| Merger reserve | 1,064,712 | - | 1,064,712 |
| Retained earnings | (4,657,964) | - | (4,657,964) |
| ----------------- | ---------------- | ---------------- | |
| Total equity | 4,156,573 | - | 4,156,573 |
| Minority interests | 1,147 | - | 1,147 |
| ----------------- | ----------------- | ---------------- | |
| Total liabilities and equity | 4,435,268 | - | 4,435,268 |
| =========== | =========== | =========== |
8. REPORT AND FINANCIAL INFORMATION
Copies of the financial statements for the Group for the year ended 31 March 2008 will be available from the Company's registered office and will be posted to shareholders and on the Company's website in due course.