BYOT.L Regulatory News (BYOT)

19 June 2012

Byotrol plc

AUDITED PRELIMINARY RESULTS

FOR THE YEAR ENDED 31 MARCH 2012

Byotrol plc ('Byotrol', the 'Company' or 'the Group'), the leading AIM listed anti-microbial hygiene company, is pleased to announce its audited preliminary results for the 12 months ended 31 March 2012. 

Highlights of the year include

·; Revenues of £1.96m (2011: £1.93m)

·; Strong second half revenue growth of 12%

·; Petcare revenues up 12% with expansion into Asian markets

·; Reduction in annual overhead costs on an ongoing basis of about £0.75m for 2012/13

·; A successful fund raising of £2.46m in 2011

·; Cash at year end ahead of expectation at £1.62m

·; Cash used in operating activities has reduced to £1.78m (2011: £3.1m)

·; Significant improvements in operational effectiveness

·; Launch of Rentokil Initial plc UltraProtect TM range , powered by Byotrol, in the UK, France and Germany

·; Adoption across entire Holland America fleet of cruise liners to combat Norovirus in high contact touch areas

·; Through our joint venture Byotrol Consumer Products Ltd; further product extensions with Tesco plc, via Robert McBride plc, and Boots. An extension to the Joint Development Agreement with our Fortune 150 Company.

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

"We have maintained the momentum of positive change in our business and are starting to deliver the anticipated results of our refocused strategy. I am confident the business is well placed to achieve its goal of reaching positive cash generation at the earliest opportunity."

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 2011/12 financial year has been one of encouraging progress for Byotrol, albeit at a slower pace than we anticipated at the start of the year. The sales profile during the year reflects these changes, with stronger growth in the second half of 2011-12 and good momentum carried into the new financial year.

The more focused strategy implemented in the previous year has led to a stronger performance. One off sales activity has been replaced by sustainable repeat business with strategic customers. Important new supply agreements have been implemented, notably with Rentokil Initial, and new agreements with Office Depot and Marks & Spencer that have the potential for good growth.

Revenues in our joint venture, Byotrol Consumer Products Limited, grew strongly in the year from a low base. The work with our Fortune 150 partner has progressed well, resulting in a further JDA at the start of 2012, with an expectation that the current phase of work will be completed by the second half of the year. Following the integration of the Petcare business and the achievement of planned synergies, good growth was achieved in the year.

Margins were lower than budgeted for in the year at 21.7% (2011: 35.9%). This was caused partly by product mix, and by investment in major efficiency initiatives. These measures, including a significant reduction in the cost base, streamlining of the supply chain and sourcing, and reductions in overall headcount, have resulted in a much lower ongoing cost base which will benefit margins from the start of the new financial year.

All of our operations have now been consolidated at our Daresbury site along with the innovation resource, which has enhanced effectiveness at lower cost. There is a growing recognition of the uniqueness and benefits of Byotrol, as exemplified by the contract with Rentokil and the positioning of their UltraProtectTM brand with Byotrol. This recognition was capped by Byotrol's success in winning the prestigious Chemicals North-West 2012 Innovation Award.

My thanks, and those of the board, go to Gary Millar and all the Byotrol team for their hard work and achievements in the past year. Much progress has been made, and the board firmly believes that the Group will show substantial progress in 2012/13, moving to cash generation from operations at the earliest opportunity.

Ralph Kugler

Chairman

Chief Executive's report

I am delighted to present our results for the year ended 31 March 2012. The year under review clearly demonstrates that Byotrol's refocused commercial strategy is starting to deliver the anticipated results, with more repeatable and sustainable revenues with our key partners, further improvements in Byotrol's operational capability and supply chains, continued investment in technology development and the cessation of under-performing arrangements. Although progress has been slower than expected in difficult financial conditions, I am confident that the business is now in a position to achieve its stated aim of sustainable profitability.

These changes are fundamental to the success of our strategy. They have been undertaken in challenging market conditions and are already leading to a stronger business performance. The Byotrol team has worked ceaselessly throughout the year to help bring about these improvements, and I would like to thank them for their unstinting commitment.

Overview

Product sales for the year were £1.96m (2011: £1.90m), representing a 3.2% year on year improvement, but more importantly driven by second half growth of 12% with good momentum carried forward into the 2012/13 financial year. This was supported by a 9% increase in direct sales into the UK food sectors where our strategy of wider adoption of Byotrol is proving successful.

We also continued to see good progress within our Petcare business with year on year revenue growth of 12%. Both of these income streams offer a more predictable and stable demand that is central to achieving our overall goals.

During the year we have taken action to reduce inventory holdings, coupled with a clear focus on creating a leaner organisation with less cash employed in working capital and significantly lower fixed costs. These benefits are already starting to show in financial performance since the period end. Throughout the year we have maintained a close focus on expenses and cash management and have maintained the underlying savings gained last year. The focus on cash management led to the cash balance of £1.62m at the year-end which was ahead of our budget expectation. We have continued to invest in our technical and operational capability and to restructure the business into a leaner operation. We have targeted an annual reduction in costs from the restructuring of c£0.75m, and we anticipate improvement in overall margins by up to 15% in 2012/13.

We strengthened our balance sheet during the year raising £2.46m through a share placing at a time of significant market uncertainty. The continued support of our shareholders endorses our belief that Byotrol's refocused strategy bodes well for the future.

Operational effectiveness

During the period we have implemented a more focused and leaner enterprise. A new enterprise resource planning system provides more transparent management information, which we are using to guide decision making on market sector and product profitability.

During the year we relocated our sales and administration functions to the Daresbury Science and Innovation Campus, where our research and development laboratories were already based. This has resulted in our being able to realise a number of headcount efficiencies. In addition it has provided an environment where the innovation which characterises our business is enhanced through greater co-operation and integration between our marketing and technical teams.

We continue to invest in technology and IP protection to enhance our technical capability. Our commitment to innovation has led to Byotrol receiving industry accolades for its revolutionary technology. During the year, Byotrol received the prestigious 'Chemicals North-West 2012 Innovation Award' and was shortlisted for a number of other awards. I remain enthused by the real and continued progress towards each of our strategic initiatives and our goal of making Byotrol the leading global ingredient brand for microbial control.

Core market sector review

Industrial

During the year we signed a potentially transformational contract with Rentokil Initial plc and worked successfully with them to launch their UltraProtectTM hygiene product range, which was achieved in Q1 2012. The four year contract is for the supply of hand hygiene and surface sanitisation products across 16 European countries with the Initial Hygiene division ('Initial'). Initial provides hygiene services to a range of clients including Government, health and commercial organisations. This deal represents not only a landmark commercial deal for Byotrol, but is a hugely significant validation by a leading services organisation of the unique benefits of Byotrol technology. 

This progress is particularly pleasing as we reported last year a significantly more focused marketing strategy based on third party endorsement of Byotrol's unique product attributes - Better, Faster, Kinder, Safer. Initial has put these claims at the heart of their UltraProtectTM rangepowered by Byotrol, exemplifying our strategy of creating Byotrol as the 'Intel of Hygiene'.

Progress with UltraProtectTM is encouraging and the potential exists for wider adoption of Byotrol across the Rentokil Initial group. This could lead to market, product and geographic expansion opportunities incremental to the 16 country agreement reached in July 2011. Under the agreement with Rentokil, we expect to see revenues for UltraProtectTM increase in both 2012 and 2013.

Consumer Products

We continue to make significant progress in the consumer sector, which we serve via Byotrol Consumer Products (BCP), our joint venture with ?What If! Ventures. The momentum achieved following the successful launch of products last year with a range of leading consumer suppliers has been maintained and further product extensions, in particular with Tesco (via Robert McBride) and Boots, were introduced.

During the year, significant resource has been invested in moving the initiative with our Fortune 150 consumer partner from the developmental to the commercial phase. A Joint Development Agreement ('JDA') between our Fortune 150 partner and BCP was announced in May 2011. The goal of this agreement was to develop a range of products containing Byotrol's unique technology for global consumer markets. In January 2012, BCP agreed terms for a six month extension of the JDA for which BCP received a further US$0.3m. This followed the achievement of all technical milestones and the successful assessment of Byotrol's technological performance in the May 2011 JDA. The two companies are now completing consumer research and commercial analysis with the prospect of a full commercial agreement thereafter.

During the course of the year we also maintained the excellent progress following the successful integration of our Petcare business. In particular, we expanded our geographic reach into Asia with appointment of distributors in Singapore, Thailand and Japan. Progress there is encouraging and contributed to the year on year revenue growth of 12%.

These advances generated an improved performance from the joint venture resulting in a 100% increase in its revenues to £0.62m on a reduced cost base and an associated improvement of £0.16m, or 88%, on the loss for the year, as reflected in our accounts. 

Food and beverage

I am pleased to report that we have achieved real success in this core market sector with a 9% year on year revenue growth. Progress has been particularly evident in our direct sales into the UK and Ireland food processing supply chain, where key food groups, including the Bakkavor group, have increasingly adopted Byotrol as the anti-microbial technology of choice.

Our gross margins in servicing this sector, particularly via distribution partners, have come under pressure during the period. As a result we have taken action to accelerate our lean supply approach with more efficient operational execution, including the adoption of agreed minimum order quantities, delivery lead-times and stocking policies with key customers.

We were delighted to be chosen as the total hygiene solution for the Marks & Spencer's in-store Deli pilot project launched earlier this year. This has progressed well and Byotrol will now be introduced into further stores as this program is rolled out across stores nationwide. During the period we also signed a new agreement with Office Depot to service this, and the broader facilities management sector, which has the potential for good growth.

Healthcare

During the period we executed our change in strategic direction with the cessation of a previously under-performing licensing arrangement. Healthcare remains an important target sector for Byotrol, and we have been working to develop a new strategy and routes to market. The uncertainty around funding changes within the NHS has made this a challenge for our UK operations but discussions are progressing with a number of interested parties.

Consequently Byotrol is well positioned to develop additional routes to market in the Healthcare sector, both in the UK and internationally, and to realise the level of adoption we believe is possible.

Agriculture and Leisure

Agriculture sales development continues to show steady growth, particularly in South Africa. On a broader front, Byotrol continues to be recognised as the leading, preventative, anti-microbial solution to emerging pathogens threatening food safety. This recognition was confirmed during the year when Byotrol was identified as the primary anti-microbial contributor to the UK Food Standards Agency retail initiative in combating the rise in Campylobacter in the food chain.

In the Leisure sector, Byotrol has now been endorsed across the entire fleet of cruise line operator Holland America as the anti-microbial control of choice against Norovirus. Initially adopted in high contact touch areas, we are now seeking to expand this across other areas of infection control on these specified ships and onto other cruise operators. 

People

Finally I would like to pay tribute to the entire Byotrol staff for their hard work this year. We have achieved a number of our strategic goals, and that is down to their efforts. We remain on a journey as we seek to transform our business, and I remain confident that we have the people, commitment and appetite to deliver the commercial success which we all believe Byotrol technology merits.

The improvements to our business over the year have strengthened our position and the Company is well placed to achieve our goal of reaching positive cash generation at the earliest opportunity.

Gary Millar

Chief Executive

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2012

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2012

ASSETS

Non-current assets

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2012

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 March 2012

Adjustments for:

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2012

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 2012 and 2011 UK product sales from its largest customer of £459,182 (2011: £440,880).

2. TAXATION ON ORDINARY ACTIVITIES

There is no tax charge as the Group has made losses in both the current and the previous year. The tax credit in 2011 related to research and development expenditure. At 31 March 2012 the Group had an unrecognised deferred tax asset relating to unutilised trading losses and other temporary differences of £3,407,190 (2011: £3,223,641).

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 2012 were approved by the Board of Directors on 18 June 2012. 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 2012 and year ended 31 March 2011.

The preliminary announcement is prepared on the same basis as set out in the statutory accounts for the year ended 31 March 2012. 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 2011 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 but did draw attention to matters by way of emphasis without qualifying their report.

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 2012 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

5. REPORT AND FINANCIAL INFORMATION

Copies of the financial statements for the Group for the year ended 31 March 2012 will be available from the Company's registered office and will be posted to shareholders and on the Company's website in due course.