TIDMBYOT
RNS Number : 3983X
Byotrol PLC
19 December 2019
19 December 2019
Byotrol Plc
("Byotrol" or the "Group")
Interim results
Byotrol Plc (AIM: BYOT), the anti-microbial technology company,
is pleased to announce today its interim results for the six months
ended 30 September 2019.
Highlights
-- Sales of GBP2.17m v. GBP1.12m in H1 2018 (as restated for application of IFRS15)
-- Adjusted operating loss before share based charges (and
including cash receivable for R & D tax credits) of GBP0.51m
versus GBP0.92m in H1 2018
-- Gross cash and cash equivalents of GBP2.01m at period end,
sufficient to complete growth plans
-- All business units and strategic initiatives progressing satisfactorily.
-- Medimark running ahead of previous year
-- Continued confidence in positive EBITDA at year end
John Langlands, non-executive Chairman of Byotrol commented:
"We are pleased with progress in the year to date
Trading losses are reducing rapidly and will continue to do so
as the formal integration with Medimark concludes at year end. The
team is also working on a number of business development and
monetisation opportunities that should improve results for the full
year. The board remains confident that the Company is on target to
deliver sustainable operating profits.
We remain very excited about the business outlook for
Byotrol."
For further information contact:
Byotrol Plc
David Traynor, Chief Executive +44 (0)1925 742 000
Nic Hellyer, Chief Financial Officer
finnCap Limited (Nominated Adviser and
Broker) +44 (0)20 7220 0500
Geoff Nash/Kate Bannatyne - Corporate Finance
Richard Chambers - ECM
This announcement is released by Byotrol Plc and, prior to
publication, the information contained herein was deemed to
constitute inside information under the Market Abuse Regulations
(EU) No. 596/2014. Such information is disclosed in accordance with
the Company's obligations under Article 17 of MAR. The person who
arranged for the release of this announcement on behalf of Byotrol
Plc was Nic Hellyer, CFO.
Notes to editors
Byotrol plc (BYOT.L), quoted on AIM, is a specialist
anti-microbial technology company, operating globally in the Food,
Industrial, Healthcare and Consumer sectors, providing low toxicity
products with a broad-based and targeted efficacy across all
microbial classes; bacteria, viruses, fungi, moulds, mycobacteria
and algae.
Byotrol's products can be used stand-alone or as ingredients
within existing products, where Byotrol can significantly improve
their performance, especially in personal hygiene, domestic and
industrial disinfection, odour control, food production and food
management.
Byotrol develops and commercialises technologies that create
easier, safer and cleaner lives for everyone.
For more information, please go to www.byotrol.co.uk
Chief Executive's report
I am pleased to report that performance in the period under
review in our enlarged group has improved versus the comparable
period in 2018:
-- Sales increased to GBP2.17m versus GBP1.12m in H1 2018 (as
restated for the application of IFRS 15)
-- Adjusted operating loss before share based charges (and
including R&D tax credits) of GBP0.51m versus GBP0.92m
(restated)
-- H1 results include US losses of GBP0.12m for the period (GBP0.14m in H1 2018)
-- Cash and cash equivalents of GBP2.01m at period end.
All strategic initiatives are progressing satisfactorily across
the Group. In the US, we continue to seek a partner for Byotrol24
and are now engaged in a number of early-stage discussions. As this
process continues we are reducing marketing spend linked to the
Target retail trial and are now expecting the in-store trial to
lapse at the end of March 2020. We hope to be in an alternative
relationship with a better risk/reward profile by this time.
Results by segment
As part of the continued improvements in the Group we are now
simplifying our reporting segments into two - Professional (Byotrol
and Medimark products for use within businesses and institutions)
and Consumer (Byotrol and Medimark products for individual
consumers, including their pets).
Professional
H1 revenues increased to GBP1.77m from GBP0.67m, boosted by six
months of contribution from Medimark, against a one month
contribution in the comparable period. On the same basis, gross
profit increased from GBP0.2m to GBP0.75m. Gross margins in
Professional are already benefiting from the greater scale and
pricing power that Medimark brings and we expect that to accelerate
as we rationalise and focus the product portfolio across the
Group.
Invirtu, our alcohol-free hand sanitiser, has excellent brand
potential and its sales continue to increase year on year: SC
Johnson Professional has now launched our products under their
brand in UK and Irish hospitals and we are very excited about the
potential of this relationship. Sales into elite sports teams are
also gathering momentum, including international cricket teams,
Tour de France cycling teams, English Premier League football teams
and British Olympic athletes.
Medimark is performing well across all of its market sectors,
with sales, gross profit and costs all improved on the comparable
period in 2018. Highlights include new launches into the UK
dentistry segment, with a range of products for decontaminating and
protecting dental facilities, and successful transition of
Medimark's medical device portfolio into an EU accredited
regulatory body for post Brexit sales.
Consumer
Headline H1 revenues in this segment were GBP0.41m versus
GBP0.45m in H1 2018 (as restated). Petcare remains the largest
element of day-to-day sales in consumer, accounting for 92% of
consumer sales in the period. Regulatory changes in EU petcare are
now affecting all petcare suppliers and customers are migrating to
our new, approved formulations, solidifying relationships and
consolidating product ranges. A particular win was with European
pet healthcare brand Beaphar, extending their range of Byotrol
surface care products into the UK pet market.
A similar process of regulatory change is now starting in
South-East Asia. We are pleased to see this happening and expect to
take advantage of the new opportunities that will emerge, just as
we have been doing in the EU
Despite very limited resource investment in non-pet consumer, we
are making good progress in household products with some new,
initially small, launches expected in the New Year:
-- Following the acquisition of Hero Pet Brands earlier this
year, Manna Pro's UK division is launching a Multi-Surface
Disinfectant Cleaner, powered by Byotrol, under their
market-leading Simple Solution brand into the UK pet market in
February 2020
-- Iconic British heritage brand, Swan, has added Byotrol carpet
detergents into its new floorcare offering. Marketed under the new
Swan Dirtmaster brand, the range launches into retail stores in the
UK in March 2020
-- RK Wholesale Ltd have selected Byotrol formulations for their
new range of UK floorcare products marketed under their
long-standing Tower brand, which has provided consumers with home
appliances since 1912, the new range will be launched in March
2020.
We understand that Solvay is making good progress with Actizone
surface care products, in which we have an ongoing financial
interest via a royalty linked to Solvay's sales. We are not party
to the detail of their commercial discussions but we know that
Solvay's resource commitment remains strong and our relationship
healthy, especially in new product development, and we see
potential upside from this relationship for calendar 2020 and
beyond.
We continue our search for a partner for Byotrol24 in the US and
have engaged professional advice to assist. Sales at Target
continue to increase year on year and month on month, but are not
large enough to justify continued, national marketing spend by us
even at very small levels. We are now preparing for the trial at
Target to finish at the end of March 2020.
Implementation of IFRS 16
Byotrol has adopted IFRS 16 Leases for the financial year ending
31 March 2020 and has chosen to use the modified retrospective
approach to adoption which means there are no restatements to the
prior year figures. IFRS 16 introduces a single lessee accounting
model, whereby the Group will recognise lease liabilities and
"right of use" assets at 1 January 2019 for leases previously
classified as operating leases. Within the income statement rental
expense is replaced by depreciation and interest expense. The
adoption of IFRS 16 has resulted in aggregate right of use assets
of GBP80,000 with corresponding liabilities of GBP82,000 being
recognised as at 30 September 2019
In order to allow users of the accounts to see how the impact of
IFRS 16 has affected adjusted EBITDA, we present a reconciliation
below:
Adjusted Adjusted
EBITDA EBITDA
6 months 6 months
to to
30 September 30 September
2019 2018
GBP'000 GBP'000
Consistent with FY 2019 presentation
and accounting policy (502) (660)
Changes due to IFRS 16 21 -
_______ _______
Consistent with H1 2020 presentation
and accounting policy (481) (660)
Expenditure on non-current assets
Expenditure of GBP0.12m (H1 2018: GBP0.09m) on relevant product
development, and patent and license costs was capitalised in the
period.
Medimark acquisition - contingent payments
Part of the consideration for the Medimark Acquisition in August
2018 was contingent on the achievement of certain EBITDA targets in
the two years following the acquisition. The total contingent
amount payable under these arrangements was between GBPnil and
GBP1.8m, payable half in cash and half in Byotrol shares, depending
on Medimark's audited profitability in the two financial years to
31 March 2020. We are currently in discussions with Medimark's
vendors on the payment for the year to 31 March 2019, and we expect
the discussions to conclude in the first quarter of 2020, with the
cash payment shortly thereafter.
Outlook
This was a satisfactory half year, with steady progress on all
fronts. All key performance metrics continue to improve across the
business - sales, gross profit, gross margin - before any financial
synergies with Medimark and with negligible one-off/technical or
licensing deals so far. Integration planning is underway but
synergies will not be realised until next financial year once the
earnout on Medimark as completed. This is another area of upside
that we see in the business, both on cost and revenue.
One area of focus at present is product rationalisation across
the Group. We intend to focus on a small number of underlying
technologies for our core products and sales across Professional
and Consumer, and looking for alliances and partnerships for the
remainder. At the moment we have seven technologies in house, all
of which are valuable, but we know we must now focus resources.
The good news is that the Byotrol team now has very much the
right mix of sales and technical personnel, cost control and cash
reserves. We are now working hard on relaunching as a unified
company from April 2020 and expect all the recent efforts to then
become visible in results and projections. We remain very positive
on our outlook and confident that we are doing the right things
strategically and tactically.
Byotrol's results are typically weighted towards the second half
and this characteristic is now amplified by the Medimark business
which operates with a similar degree of seasonality, but with
significantly higher sales than pre-acquisition Byotrol
Professional. However, based on progress since period end, the
Directors remain confident in reporting EBITDA positive results for
the full year, with the degree of profitability dependent on
trading in the New Year.
David Traynor
Chief Executive
Group statement of comprehensive income
6 months 6 months Year to
to to 31 March
30 September 30 September 2019
2019 2018
Note GBP'000 GBP'000 GBP'000
(unaudited) (unaudited, (audited)
restated)
Revenue 2 2,174 1,123 5,660
Cost of sales and provision
of services (1,259) (670) (2,055)
_______ _______ _______
Gross profit 915 453 3,605
Sales and marketing costs (557) (405) (963)
Research and development costs (177) (268) (436)
Other administrative costs (662) (558) (1,328)
Share-based payments (25) (37) (60)
_______ _______ _______
Earnings before interest, tax,
depreciation and amortisation (506) (815) 818
Depreciation (33) (11) (24)
Amortisation (57) (131) (363)
_______ _______ _______
--------------------------------------- ----- -------------- -------------- ----------
Adjusted operating (loss)/profit (596) (957) 431
Amortisation of acquisition
intangibles (146) - (175)
Exceptional items
Fair value movement on contingent 142 - -
consideration liabilities
_______ _______ _______
--------------------------------------- ----- -------------- -------------- ----------
Operating (loss)/profit (600) (957) 256
Finance income 4 14 4 41
Finance expense 5 (101) (19) (80)
R&D tax credits 63 - 124
_______ _______ _______
(Loss)/profit before taxation (624) (972) 341
Income tax credit/(expense) (11) 3 11
_______ _______ _______
(LOSS)/PROFIT FOR THE PERIOD (635) (969) 352
Other comprehensive income/(expense):
Items that may be reclassified
subsequently to profit or loss:
Exchange differences (4) (10) 7
_______ _______ _______
Other comprehensive income/(expense),
net of tax (4) (10) 7
TOTAL COMPREHENSIVE (LOSS)
/ INCOME FOR THE PERIOD (639) (979) 359
Earnings per share
Basic 6 (0.15p) (0.24)p 0.08p
Diluted 6 (0.15p) (0.24)p 0.08p
Group statement of financial position
As at As at As at
30 September 30 September 31 March
2019 2018 2019
Note GBP'000 GBP'000 GBP'000
(unaudited) (unaudited, (audited)
restated)
Assets
Non-current assets
Intangible assets 7 3,782 4,068 3,862
Property, plant and equipment 66 60 58
Right-of-use assets 8 80 - -
Contract assets - - 176
_______ _______ _______
3,928 4,128 4,096
Current assets
Contract assets 461 - 275
Inventories 384 326 416
Trade and other receivables 1,253 1,154 1,521
Cash and cash equivalents 2,007 3,552 2,797
_______ _______ _______
4,105 5,032 5,009
Total assets 8,033 9,160 9,105
Liabilities
Non-current liabilities
Deferred tax liabilities 421 460 441
Other financial liabilities - 276 297
Lease liabilities 10 42 - -
Other payables - 110 -
_______ _______ _______
463 846 738
Current liabilities
Lease liabilities 10 40 - -
Other financial liabilities 11 752 485 520
Contract liabilities - 1,000 -
Trade and other payables 817 1,521 1,193
Invoice discounting facility 168 260 245
_______ _______ _______
1,777 3,266 1,958
Total liabilities 2,240 4,112 2,696
NET ASSETS 5,793 5,048 6,409
Issued share capital and reserves
Share capital 1,077 1,077 1,077
Share premium 28,282 28,282 28,282
Merger reserve 1,065 1,065 1,065
Retained earnings (24,631) (25,376) (24,015)
_______ _______ _______
TOTAL EQUITY 5,793 5,048 6,409
Group statement of cash flows
6 months 6 months Year to
to to 31 March
30 September 30 September 2019
2019 2018
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited, (audited)
restated)
Cash flows from operating activities
Profit/(loss) for the period (635) (969) 352
Adjustments for:
Depreciation of tangible non-current
assets 33 11 24
Amortisation of intangible non-current
assets 203 131 538
Finance income (14) (4) (41)
Finance costs 101 19 80
Share-based payments 25 37 60
Income tax recognised in profit
or loss 31 - 13
(Decrease) in deferred tax (20) (3) (24)
_______ _______ _______
Operating cash flows before movements
in working capital (276) (778) 1,002
(Increase)/decrease in inventories 32 19 (70)
(Increase)/decrease in trade and
other receivables 268 201 (390)
(Increase)/decrease in contract
assets (10) - (451)
Increase/(decrease) in trade and
other payables (550) (81) 239
Increase in contract liabilities - 1,000 -
_______ _______ _______
Net cash (used in)/generated from
operating activities (536) 361 330
Cash flows from investing activities
Development of intangible assets (123) (82) (283)
Cash (outflow) on acquisition of
subsidiaries net of cash acquired - (554) (1,131)
Acquisition of property, plant
and equipment (21) (13) (23)
Interest income 14 4 41
Finance costs (23) (3) (13)
_______ _______ _______
Net cash used in investing activities (153) (648) (1,409)
Cash flows from financing activities
Repayments of principal on lease (20) - -
liabilities
Movement in invoice discounting
facility (77) (3) 16
_______ _______ _______
Net cash (used in)/ generated by
financing activities (97) (3) 16
Net (decrease)/increase in cash
and cash equivalents (786) (290) (1,063)
Net foreign exchange differences (4) (10) 7
Cash and equivalent at beginning
of period 2,797 3,852 3,853
_______ _______ _______
Cash and cash equivalents at end
of period 2,007 3,552 2,797
Group statement of changes in equity
Share Share Merger Retained Total
capital premium reserve profits
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March
2018 as previously
reported 1,007 27,468 1,065 (23,114) 6,426
Effect of change of
accounting policy (IFRS
15) - - - (1,320) (1,320)
_____ _____ _____ _____ _____
Balance at 31 March
2018 as restated 1,007 27,468 1,065 (24,434) 5,106
Loss after taxation
for the period - - - (969) (969)
Other comprehensive
income:
Exchange differences - - - (10) (10)
Share-based payments - - - 37 37
Transactions with owners:
Shares issued by Byotrol
plc 70 814 - - 884
_____ _____ _____ _____ _____
Balance at 30 September
2018 1,077 28,282 1,065 (25,376) 5,048
Profit after taxation
for the period - - - 1,321 1,321
Other comprehensive
income:
Exchange differences - - - 17 17
Share-based payments - - - 23 23
_____ _____ _____ _____ _____
Balance at 31 March
2019 1,077 28,282 1,065 (24,015) 6,409
Effect of change of
accounting policy (IFRS
16) - - - (2) (2)
_____ _____ _____ _____ _____
Balance at 31 March
2019 as restated 1,077 28,282 1,065 (24,017) 6,407
Profit/(loss) after
taxation for the period - - - (639) (639)
Share-based payments - - - 25 25
Other comprehensive
income:
Exchange differences - - - - -
_____ _____ _____ _____ _____
Balance at 30 September
2019 1,077 28,282 1,065 (24,631) 5,793
Notes to the Group financial statements
1 Basis of preparation
The Group has prepared its interim financial statements for the
6 months ended 30 September 2019 (the "interim results") in
accordance with the recognition and measurement principles of
International Financial Reporting Standards ("IFRS") as adopted by
the European Union and also in accordance with the recognition and
measurement principles of IFRS issued by the International
Accounting Standards Board, but do not include all the disclosures
that would otherwise be required. They have been prepared under the
historical cost convention as modified to include the revaluation
of certain non-current assets. Other than the adoption of IFRS 16
Leases the accounting policies adopted in the interim financial
statements are consistent with those adopted in the Group's Annual
Report and Financial Statements for the year ended 31 March 2019
and those which will be adopted in the preparation of the annual
report for the year ending 31 March 2019.
As permitted, the interim results have been prepared in
accordance with the AIM Rules of the London Stock Exchange and not
in accordance with IAS34 Interim Financial Reporting. They do not
constitute full statutory accounts within the meaning of section
434 of the Companies Act 2006 and are unaudited.
Change in accounting policy - application of IFRS 16 Leases
In the current period the Group has applied IFRS 16 Leases (as
issued by the IASB in January 2016) for the first time ("IFRS 16"
or the "Standard"). The Group has applied the definition of a lease
and related guidance set out in the Standard to all lease contracts
entered into or modified on or after 1 January 2014, with the date
of initial application as 1 April 2019. The Group has applied IFRS
16 using the modified retrospective approach, with no restatement
of comparative information.
IFRS 16 changes how the Group accounts for leases previously
classified as operating leases under IAS 17, which were off balance
sheet. Applying IFRS 16, for all leases (except as noted below),
the Group:
(i) recognises right-of-use assets and lease liabilities in the
consolidated statement of financial position, initially measured at
the present value of future lease payments;
(ii) recognises depreciation of right-of-use assets, and
interest on lease liabilities, in the consolidated statement of
comprehensive income; and
(iii) separates the total amount of cash paid in respect of
lease obligations into a principal portion and interest (both
presented within financing activities) in the consolidated
statement of cash flows.
Lease payments under (i) are discounted using the interest rate
implicit in the lease, if that rate can be determined, or the
Group's estimated incremental borrowing rate. The finance cost is
charged to the Consolidated Statement of Comprehensive Income over
the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
The right-of-use asset is depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.
Additionally under IFRS 16, right-of-use assets are tested for
impairment in accordance with IAS 36 Impairment of Assets. This
replaces the previous requirement to recognise a provision for
onerous lease contracts. For the leases taken on balance sheet at 1
April 2019 the Group has used a weighted average interest rate of
3.3%.
For short-term leases (lease term of 12 months or less) and
leases of low-value assets the Group has opted to recognise a lease
expense on a straight-line basis as permitted by the Standard. This
expense is presented within other expenses in the consolidated
statement of profit or loss.
Financial effect of initial application of IFRS 16
The tables below show the amount of adjustment for each
financial statement line item affected by the application of IFRS
16 for the current period. As the Group has adopted the modified
retrospective approach the prior year and period are not restated
for its application and hence there is no effect shown.
6 months
to
30 September
2019
GBP'000
(unaudited)
Increase in depreciation 20
Increase in finance costs 1
Decrease in other expenses (21)
_______
Increase in profit for the period -
Impact on earnings per share for the period
The impact on earnings per share is too small to be reflected in
disclosure to the nearest 0.01p,
Impact on assets, liabilities and equity as at 1 April 2019
As previously IFRS 16 As restated
reported adjustments
GBP'000 GBP'000 GBP'000
(audited) (unaudited) (unaudited)
Right-of-use assets - 99 99
_______ _______ _______
Net impact on total assets - 99 99
Lease liabilities - 101 101
___________ _______ _______
Net impact on total liabilities - 101 101
Retained earnings - (2) (2)
_______ _______ _______
Net impact on total liabilities
and equity - 99 99
The recognised right-of-use assets relate to the following types
of assets:
As at As at
30 September 1 April
2019 2019
GBP'000 GBP'000
(unaudited) (unaudited)
Leasehold properties 53 65
Motor vehicles 27 35
_______ _______
Total right-of-use assets 80 100
The associated right-of-use assets for leases were measured on a
retrospective basis as if the new rules had always been applied.
There were no onerous lease contracts that would have required an
adjustment to the right-of-use assets at the date of initial
application.
Impact on consolidated statement of cash flows
The application of IFRS 16 has an impact on the consolidated
statement of cash flows of the Group as under the Standard lessees
must present:
-- Short-term lease payments, payments for leases of low-value
assets and variable lease payments not included in the measurement
of the lease liability as part of operating activities (such
payments have no material effect on these financial
statements);
-- Cash paid for the interest portion of lease liabilities as
part of financing activities; and
-- Cash payments for the repayment of the principal portions of
leases liabilities as part of financing activities.
Under IAS 17, all lease payments on operating leases were
presented as part of cash flows from operating activities.
Consequently, for the 6 months ended 30 September 2019, the net
cash generated by operating activities has increased by GBP21,000
and net cash used in financing activities decreased by the same
amount.
IFRIC 23 Uncertainty over Income Tax Treatments
IFRIC 23 is effective for periods beginning on or after 1
January 2019 and requires:
-- The Group to determine whether uncertain tax treatments
should be considered separately, or together as a group, based on
which approach provides better predictions of the resolution;
-- The Group to consider if it is probable that the tax
authorities will accept the uncertain tax treatment; and
-- If it is not probable that the uncertain tax treatment will
be accepted, measure the tax uncertainty based on the most likely
amount or expected value, depending on whichever method better
predicts the resolution of the uncertainty
The Group does not believe that it is impacted by IFRIC 23 and
therefore opening retained earnings remain unaffected.
Going concern
The Directors have considered trading and cash flow forecasts
prepared for the Group, and based on these, and confirmed banking
facilities, are satisfied that the Group will continue to be able
to meet its liabilities as they fall due for at least one year from
the date of these results. On this basis, they consider it
appropriate to have adopted the going concern basis in the
preparation of the interim results, which were approved by the
Board of Directors on 18 December 2019.
Comparative financial information
The comparative financial information presented herein for the
year ended 31 March 2019 does not constitute full statutory
accounts for that period. Statutory accounts for the year ended 31
March 2019 have been filed with the Registrar of Companies. These
statutory accounts were reported on by the Group's auditors and
received a qualified auditor's report, which included the following
wording:
"The Group's cash and cash equivalents balance included in the
Consolidated Statement of Financial Position of GBP2,797,000 as at
31 March 2019 consists of various bank accounts across more than
one bank. Included within the Group cash and cash equivalents
balance was GBP89,000 across four Lloyds Bank Plc accounts within
two subsidiary entities. We have not received a response from
Lloyds Bank Plc to our request for confirmation of bank account
balances and of any other facilities or arrangements that the Group
has with Lloyds Bank Plc other than an acknowledgment of receipt,
which confirms that an account previously held by the parent
company with a trivial balance recognised in the Company statement
of financial position is closed.
We were able to review bank reconciliations for three of the
four open Lloyds Bank Plc accounts referred to above, with the
fourth account having a trivial balance for which bank statements
indicate trivial movement during the year. However we were unable
to perform all our planned audit procedures and we considered that
alternative audit procedures did not fully address the risk of
completeness of bank facilities across the Group and parent company
financial statements."
These statutory accounts did not otherwise draw attention to any
matters by way of emphasis and did not contain a statement under
Section 498(2) or 498(3) of the Companies Act 2006.
Comparative information for the 6 months ended 30 September 2018
has been restated for the impact of the application of IFRS 15 (as
a new accounting standard) and IFRS 3.
2 Segmental analysis
Revenue by geography
The Group recognises revenue in 3 geographical regions based on
the location of customers, as set out in the following table:
Professional Consumer Total
6 months ended 30 September 2019 GBP'000 GBP'000 GBP'000
United Kingdom 1,483 168 1,651
North America - 29 29
Rest of World 282 212 494
_______ _______ _______
Total revenue 1,765 409 2,174
Cost of sales (1,013) (246) (1,259)
_______ _______ _______
Gross profit 752 163 915
Centrally incurred income and
expenditure not attributable
to individual segments:
Sales and marketing costs (557)
Research and development costs (177)
Other administrative costs excluding
costs directly attributable to
acquisition of subsidiary (662)
Depreciation and amortisation (90)
Share-based payments (25)
Amortisation of acquisition intangibles (146)
Fair value movement on contingent
consideration liabilities 142
Finance income 14
Finance costs (101)
Research and development (R &
D) tax credits 63
_______
(Loss) for the period (624)
Professional Consumer Total
6 months ended 30 September 2018 GBP'000 GBP'000 GBP'000
United Kingdom 664 222 886
North America 2 53 55
Rest of World 4 178 182
_______ _______ _______
Total revenue 670 453 1,123
Cost of sales (465) (205) (670)
_______ _______ _______
Gross profit 205 248 453
Centrally incurred income and
expenditure not attributable
to individual segments:
Sales and marketing costs (405)
Research and development costs (268)
Other administrative costs excluding
costs directly attributable to
acquisition of subsidiary (440)
Costs directly attributable to
acquisition of subsidiary (118)
Depreciation and amortisation (142)
Share-based payments (37)
Finance income 4
Finance costs (19)
Research and development (R & -
D) tax credits
_______
(Loss) for the period (972)
3 Non-GAAP profit measures and exceptional items
Reconciliation of earnings before interest, taxation,
depreciation and amortisation ("EBITDA") to adjusted EBITDA:
6 months 6 months Year to
to to 31 March
30 September 30 September 2019
2019 2018
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
EBITDA (506) (815) 818
Adjusted for:
- acquisition expenses - 118 118
- share-based payments 25 37 60
_______ _______ _______
Adjusted EBITDA (481) (660) 996
The criterion for adjusting items in the calculation of adjusted
EBITDA is operating income or expenses that are material and either
(i) arise from an irregular and significant event or (ii) are such
that the income/cost is recognised in a pattern that is unrelated
to the resulting operational performance. Materiality is defined as
an amount which, to a user, would influence decision-making based
on, and understandability of, the financial statements. Adjustment
for share-based payment expense is made because, once the cost has
been calculated, the Directors cannot influence the share based
payment charge incurred in subsequent years, and the value of the
share option to the employee differs considerably in value and
timing from the actual cash cost to the Group.
Exceptional items are treated as exceptional by reason of their
size or nature and are excluded from the calculation of adjusted
EBITDA (and adjusted earnings per ordinary share) to allow a better
understanding of comparable year-on-year trading and thereby an
assessment of the underlying trends in the Group's financial
performance. These measures also provide consistency with the
Group's internal management reporting. Exceptional items in 2019
comprise legal and other costs relating to the acquisition of
Medimark Scientific Limited and its subsidiary.
Adjusted EPS
The calculation of adjusted EPS is shown in Note 6.
4 Finance income
6 months 6 months Year to
to to 31 March
30 September 30 September 2019
2019 2018
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Interest receivable on interest-bearing
deposits 4 4 21
Finance income arising from unwinding
of discounting of contract assets 10 - 20
_______ _______ _______
Total finance income 14 4 41
5 Finance expense
6 months 6 months Year to
to to 31 March
30 September 30 September 2019
2019 2018
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Interest and finance charges
paid or payable on borrowings 23 3 13
Acquisition-related financing
expense - unwinding of discount
on financial liabilities 77 16 67
Interest on lease liabilities 1 - -
under IFRS 16
_______ _______ _______
Total finance expense 101 19 80
6 Earnings per share
Earnings per share - reported ("EPS")
The calculation of basic and diluted EPS is based on the
following data:
6 months 6 months Year to
to to 31 March
30 September 30 September 2019
2019 2018
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Earnings
Earnings for the purposes of
basic and diluted earnings per
share being net profit attributable
to equity holders of the parent (635) (969) 352
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
and diluted earnings per share 430,885,271 408,507,564 419,742,617
Effect of dilutive potential
ordinary shares:
- in-the-money share options - - 2,050,000
_______ _______ _______
430,885,271 408,507,564 421,792,617
The Group has one category of potentially dilutive ordinary
share, being those share options granted to employees where the
exercise price (plus the remaining expected charge to profit under
IFRS 2) is less than the average price of the Company's ordinary
shares during the period. The weighted average number of shares for
the calculation of diluted earnings per share is computed using the
treasury share method.
Adjusted earnings per share
The calculation of basic and diluted adjusted EPS is based on
the following data:
6 months 6 months Year to
to to 31 March
30 September 30 September 2019
2019 2018
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Earnings attributable to owners
of the Parent (635) (969) 352
Adjusting items:
- exceptional items - 118 118
- amortisation of acquisition-related
intangibles 146 - 175
- share-based payments 25 - 60
-finance charge on liabilities
relating to contingent consideration 77 16 67
R&D tax credits (63) - (124)
_______ _______ _______
Adjusted earnings attributable
to owners of the Parent (450) (835) 648
Weighted number of ordinary shares
in issue 430,885,271 408,507,564 419,742,617
Effect of dilutive potential
ordinary shares:
- in-the-money share options - - 2,050,000
________ ________ _______
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 430,885,271 408,507,564 421,792,617
The Group has one category of potentially dilutive ordinary
share, being those share options granted to employees where the
exercise price (plus the remaining expected charge to profit under
IFRS 2) is less than the average price of the Company's ordinary
shares during the period. The weighted average number of shares for
the calculation of diluted earnings per share is computed using the
treasury share method.
7 Intangible assets
Intangible assets comprise capitalised development costs,
acquired software, customer relationships and goodwill.
Goodwill Other Intangible Total
Assets
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2019 502 4,234 4,736
Additions - 123 123
Fair value adjustment
_____ _______ _______
At 30 September
2019 502 4,357 4,859
Amortisation
or impairment
At 1 April 2019 - (874) (874)
Charge for the
period - (203) (203)
_______ _______ _______
At 30 September
2019 - (1,077) (1,077)
Net carrying
amount
At 30 September
2019 502 3,280 3,782
At 1 April 2019 502 3,360 3,862
Other Intangible Assets comprise:
Framework Customer Brands Development Patents Total
Access Relationships Costs and licenses
Rights
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 April 2019 114 1,861 567 958 734 4,234
Additions - - - 96 27 123
Fair value adjustment - - - - - -
_______ _______ _______ _______ _______ _______
At 30 September
2019 114 1,861 567 1,054 761 4,357
Amortisation
or impairment
At 1 April 2019 (114) (113) (34) (109) (504) (874)
Charge for the
period - (93) (28) (52) (30) (203)
_______ _______ _______ _______ _______ _______
At 30 September
2019 (114) (206) (62) (161) (534) (1,077)
Net carrying
amount
At 30 September
2019 - 1,655 505 893 227 3,280
At 1 April 2019 - 1,748 533 849 230 3,360
8 Right-of-use assets
Right-of-use assets comprise leases over office buildings and
vehicles.
Office Vehicles Total
buildings
GBP'000 GBP'000 GBP'000
Cost
At 1 April 2019 - - -
Effect of change of accounting policy
(IFRS 16) 95 47 142
Additions in the period - - -
_______ _______ _______
At 30 September 2019 95 47 142
Depreciation
At 1 April 2019 - - -
Effect of change of accounting policy 30 12 42
Charge for the period 12 8 20
_______ _______ _______
At 30 September 2019 42 20 62
Net carrying amount
At 30 September 2019 53 27 80
At 1 January 2019 - - -
9 Loans and borrowings
As at As at As at
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Invoice discounting facility 168 260 245
_______ _______ _______
Total loans and borrowings 168 260 245
10 Lease liabilities
Lease liabilities comprise liabilities arising from the
committed and expected payments on leases over office buildings and
vehicles.
Amounts due in less than one year Office Vehicles Total
equipment
GBP'000 GBP'000 GBP'000
At 1 April 2019 - - -
Effect of change of accounting policy 23 16 39
Leases taken on in the period - - -
Repayments of principal (12) (7) (19)
Transfers from long to short term
liabilities 12 8 20
_______ _______ _______
At 30 September 2019 23 17 40
Amounts due in more than one year Office Vehicles Total
equipment
GBP'000 GBP'000 GBP'000
At 1 April 2019 - - -
Effect of change of accounting policy 43 19 62
Leases taken on in the period - - -
Repayments of principal - - -
Transfers from long to short term
liabilities (12) (8) (20)
_______ _______ _______
At 30 September 2019 31 11 42
11 Other financial liabilities
Other financial liabilities comprise the fair value of potential
liabilities for the contingent payments due in respect of the
Medimark acquisition.
As at As at As at
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Contingent consideration on the
acquisition of Medimark assets
- potentially due within one
year 752 485 520
- potentially due after one year - 276 297
_______ _______ _______
Total other financial liabilities 752 761 817
Part of the consideration for the Medimark Acquisition in August
2018 was contingent on the achievement of certain EBITDA targets in
the two years following the acquisition. The total contingent
amount payable under these arrangements was between GBPnil and
GBP1.8m. The amounts disclosed above are fair value estimates based
on a probability-weighted analysis of the potential outturns for
the EBITDA for the relevant years which determines the amount
payable.
Following the completion of the measurement period at 31 March
2019 the contingent consideration liability for payments
potentially due in the period 2019 to 2020 was valued at GBP817,000
(as discounted to the then present value at an imputed cost of
funds). At 30 September 2019 the value of this liability was
revised downwards to GBP752,000, a GBP65,000 decrease (net of the
unwinding of the present value discount). This reduction reflected
revised expectations of sales and profitability from the business
based on the performance in the 6 month period and updated business
projections, as well as certain reassessments of accounting
classifications in the Medimark business which affect the EBITDA on
which the earn-out calculation is based but not underlying cash
flow. Accordingly an exceptional gain of GBP142,000 has been taken
to profit and loss, offset by the notional cost of financing of
GBP77,000. The carrying value of these liabilities will continue to
be reassessed at future reporting dates.
12 Post balance sheet events
There have been no events subsequent to the reporting date which
would have a material impact on these interim financial results
[]
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BIBDDIBBBGCI
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December 19, 2019 02:00 ET (07:00 GMT)
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