RNS Number : 1449E
Venteco PLC
24 September 2008
Venteco Plc
('Venteco' or 'the Group')
Interim report and financial statements
for the six months ended 30 June 2008
Chairman's Statement
In the first half of the current financial year, Venteco has continued to reduce costs as previously reported in our annual report for
2007, while at the same time utilising synergies within the Group where appropriate. Venteco's two acquisitions completed during 2007,
Silvandersson and Valiguard, have had a divergent development in 2008.
In the first half of the current year, Valiguard has continued to show good growth, with sales up by 29% on the same period last year
and improved its results relative to last year. Silvandersson on the contrary has been faced with a negative impact from the declining value
of the UK pound and weaker demand, in especially Germany and Switzerland. Albeit still being profitable in the first half, a programme for
improving results has been implemented which will lower the fixed cost base by about 15% when the full effect has been realised. The full
effect of these measures is not expected to be achieved until 2009, given that these measures were realised gradually in 2008. In addition,
price increases have also been implemented during the summer 2008. Silvandersson is also actively looking at lowering the cost through
purchasing from other suppliers.
The Cryonite operations have now been fully integrated into Silvandersson's professional segment in order to utilise more efficiently
the marketing resources within the Group. This has enabled a significant cost reduction which will be fully realised in the first half of
2009. The co-operation with Linde has been reviewed and finally terminated in May 2008, resulting in Venteco taking over the leasing
portfolio into its own balance sheet. During the year, larger orders have been received by companies such as Terminix (US), ISS (Italy),
Desinfecta (Switzerland), while the first units also were deployed in Singapore and the Philipines. In addition, a leading tobacco company
in the Asian region has also deployed Cryonite units. After successful introduction in the US market by Terminix, Cryonite is receiving
significant attention from pest control companies in the US, especially as a method of controlling bed bugs, which is increasing rapidly in
the US. Hence, we expect Croynite to have positive profit contribution in 2009.
At the parent company level, cost reductions have also been implemented.
Financial results
Group sales have declined by 11% with a mixed development in core markets, where Venteco Group companies operate. Group operating loss
for the period was GBP �21,000, representing a �508,000 decrease relative to first half of last year, which benefited from a one off gain of
�471,000.
Cash generated from operations was a negative �324,000 and �35,000 was spent on plant and equipment. In Silvandersson, a working capital
reduction programme is underway, which should reduce net working capital considerably towards the end of 2008.
Financing, Acquisitions and Divestitures
In the first half of 2008, focus have been on improving the operating performance and expanding the Cryonite operations, while at the
same time try to preserve the cash position. The turbulent financial markets also mean that it is more difficult to pursue the acquisition
led business model, as acquisitions are harder to finance. Given the continued deterioration of financial markets and the fact that the
Group has been cash-flow negative in the first half, we are also at this moment reviewing proposals from other players to acquire parts of
Venteco Group companies. Venteco is also in discussions with third parties with a view to raising additional funds for the Company.
Earnings per share, and dividends
The loss per share in the first half was 0.50 p compared to a profit of 2.28p in the same period 2007. The Directors are not
recommending the payment of dividend.
Employees
In the first half of 2008, the number of employees in the Group has been reduced by about 10% and we expect an additional decline in our
headcount by the end of 2008. We are grateful that our dedicated workforce continues to work hard given the difficult circumstances.
Outlook
The installed base of Cryonite equipment is up by approximately 40% in the year to date compared to the end of last year. With the
ongoing efforts to expand our geographical presence, especially in the US and Germany, we believe that the growth rate in deployment is
likely to continue going forward. However, the overall economic climate is tough and trading is likely to be challenging in the next
financial year.
Haresh Kanabar
Chairman
Enquiries:
Venteco plc
Stefan Hansson +44 (0) 207 977 0020
Libertas Capital
Sandy Jamieson +44 (0) 207 569 9650
Corfin Communications
William Cullum, Alexis Gore +44 (0) 207 977 0020
Consolidated Income Statement for the six months ended June 2008
6 months to 30 June 6 months to 30 June 12 months to 31 December
2008 2007 2007
Unaudited Unaudited Audited
Notes �'000 �'000 �'000
Revenue 2,774 3,106 4,454
Cost of sales (1,330) (1,522) (2,269)
Gross profit 1,444 1,584 2,185
Administrative expenses (1,504) (1,526) (4,393)
Other gains and losses 40 471 486
Profit/(Loss) from operations 3 20 529 (1,722)
Finance income 11 34 26
Finance costs (84) (55) (79)
Profit/(Loss) before taxation (93) 508 (1,775)
Taxation - (89) 45
Profit/(Loss) attributable to (93) 419 (1,730)
equity shareholders
Earnings per share
Basic and fully diluted profit 4 (0.50p) 2.28p (9.34p)
(loss) per share
Consolidated Balance Sheet at 30 June 2008
30 June 30 June 31 December
2008 2007 2007
Unaudited Unaudited Audited
Assets Notes �'000 �'000 �'000
Non-current assets
Goodwill 710 1,596 710
Other intangible assets 319 432 245
Furniture, fittings and 1,484 1,689 1,477
equipment
Deferred tax asset - - -
2,513 3,717 2,432
Current assets
Inventories 1,236 1,075 1,288
Trade and other receivables 1,843 1,974 1,051
Cash and cash equivalents 401 1,348 944
3,480 4,397 3,283
Total assets 5,993 8,114 5,715
Equity and liabilities
Equity attributable to equity
holders of the company
Called up share capital 1,852 1,852 1,852
Share premium account 2,634 2,634 2,634
Reverse acquisition reserve 306 306 306
Currency translation reserve 207 2 154
Accumulated losses (2,366) (99) (2,273)
Total equity 2,633 4,695 2,673
Current liabilities
Trade payables 635 657 429
Tax liabilities 232 3 191
Bank loans and overdrafts 989 - 837
Other liabilities 88 99 5
Accrued expenses and deferred 480 338 479
income
2,424 1,097 1,941
Non-current liabilities
Bank loans 775 1,649 941
Deferred tax liability 161 354 160
Creditors greater than one - 319 -
year
936 2,322 1,101
Total liabilities 3,360 3,419 3,042
Total equity and liabilities 5,993 8,114 5,715
Consolidated Statement of Changes in Equity for the six months ended 30 June 2008
ShareCapital SharePremiumAccount ReverseAcquisitionRe CurrencyTranslationR
AccumulatedLosses Total
serve eserve
Balance at 1 January 2007 1,744 2,366 306 9
(543) 3,882
Profit for the period
419 419
Share based payments
25 25
Exchange rate translation (7)
(7)
Share issue-acquisition of Silvandersson 108 268
376
Balance at 30 June 2007 (Unaudited) 1,852 2,634 306 2
(99) 4,695
Loss for the period
(2,174) (2,174)
Exchange rate translation 152
152
Balance at 31 December2007 (Audited) 1,852 2,634 306 154
(2,273) 2,673
Profit for the period
(93) (93)
Exchange rate translation 53
53
Balance at 30 June2008 (Unaudited) 1,852 2,634 306 207
(2,366) 2,633
Consolidated Cash Flow Statement for the 6 months ended 30 June 2008
6 months to 30 June 6 months to 30 June 12 months to 31 December
2008 2007 2007
Unaudited Unaudited Audited
Notes �'000 �'000 �'000
Net cash from operating (324) (588) (1,058)
activities
Investing activities
Purchase of furniture, (35) (45) -
fittings & equipment
Purchase of patents and - (7) -
trademarks
Acquisition of subsidiary - (1,657) (1,624)
Deferred consideration paid - (18) -
into Escrow account
Interest received 11 34 26
Net cash used in investment (24) (1,693) (1,598)
activities
Financing activities
Net proceeds of share issues - - -
Net cash inflow arising on - 133 133
acquisition
New bank loan received - 1,320 1,331
Repayment of borrowings (85) - (76)
Interest paid (44) (55) (79)
Net cash from financing (129) 1,398 1,309
activities
Cash flow for the year
Net (decrease)/ increase in (477) (883) (1,347)
cash and cash equivalents
Effect of foreign exchange (66) - 60
rate changes
Cash and cash equivalents at 944 2,231 2,231
beginning of period
Cash and cash equivalents at 401 1,348 944
end of period
Notes to the financial statements for the six months ended 30 June 2008
1. Basis of preparation and accounting policies
These consolidated interim financial statements were approved by the Board of Directors on 23rd of September 2008.
Basis of preparation
The consolidated interim financial statements for the six months ended 30 June 2008 have been prepared in accordance with the
recognition and measurement criteria of International Financial Reporting Standards and Interpretations issued by the International
Accounting Standards Board as adopted by the European Union ("IFRS").
These consolidated interim financial statements have been prepared under the historical cost convention.
The financial information for the year ended 31 December 2007 does not constitute statutory information. A copy of the statutory
accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did
not contain a statement under section 15(4) or (6) of the Companies Act 1982.
Accounting policies
The accounting policies applied in the preparation of these interim financial statements are consistent with those used in the
preparation of the audited annual accounts for the year ended 31 December 2007.
Notes to the financial statements for the six months ended 30 June 2008
2. Segmental information
For management purposes, the Group is currently organised as one operating division. The principal activity of the division is the
supply of pest control products and services.
Segment information about this activity is as follows:
Six months ended 30 June Six months ended 30 June Year ended 31 December 2007
2008 2007 Audited
Unaudited Unaudited
Pest control Total Pest control Total Pest control Total
products and products and products and
services services services
�'000 �'000 �'000 �'000 �'000 �'000
Revenue 2,744 2,744 3,106 3,106 4,454 4,454
External sales
Total sales 2,744 2,744 3,106 3,106 4,454 4,454
Result
Segment result 46 46 236 236 (301) (301)
Unallocated corporate expenses (106) (178) (1,907)
Loss from operations (60) 58 (301) (2,208)
Other gains and losses 40 471 486
Finance costs (84) (55) (79)
Finance income 11 34 26
Loss before tax (93) 508 (1,775)
Taxation - (89) 45
Loss after tax (93) 419 (1,730)
Other Information
Tangible asset additions 35 - 2,978
Intangible asset additions 95 7 341
Depreciation and Amortisation 103 86 1,609
Balance Sheet
Assets
Segment assets 4,100 4,100 5,427 5,427 3,625 3,625
Unallocated corporate assets 1,893 2,717 2,090
Consolidated total assets 4,100 5,993 5.427 8,144 3,625 5,715
Liabilities
Segment liabilities 1,809 1,809 1,501 1,501 1,506 1,506
Unallocated corporate 1,551 1,918 1,536
liabilities
Consolidated total liabilities 1,809 3,360 1,501 3,419 1,506 3,042
Notes to the financial statements for the six months ended 30 June 2008
Geographical
The Group's operations are carried out in Western Europe. The entire turnover and all the Group's assets and liabilities are
generated and based in Western Europe. The Group's main line of business is the provision of environmentally friendly pest control
technology services. All the transactions and business activities occur in Western Europe.
The following table provides an analysis of the Group's sales by geographical market.
For the Group Six months ended 30 Six months ended 30 Year ended 31 December
June June 2007
2008 2007 Audited
Unaudited Unaudited
�'000 �'000 �'000
Sweden 447 417 417
Rest of Europe 1,762 2,232 3,388
Rest of the World 565 457 649
2,774 3,106 4,454
Product
The Group's turnover consists of sales of Cryonite units, the development and manufacturing of pest control devises and consultancy
services.
The following table provides an analysis of the Group's sales by product.
For the Group Six months ended 30 Six months ended 30 Year ended 31 December
June June 2007
2008 2007 Audited
Unaudited Unaudited
�'000 �'000 �'000
Cryonite units 35 45 170
Consultancy services 264 204 369
Pest control products 2,475 2,736 3,915
Other Income - 121 -
2,774 3,106 4,454
Notes to the financial statements for the six months ended 30 June 2008
3. Loss from operations
Loss from operations has been arrived at after charging/(crediting).
For the Group Six months ended 30 Six months ended 30 Year ended 31 December
June June 2007
2008 2007 Audited
Unaudited Unaudited
�'000 �'000 �'000
Staff costs 781 689 1,517
Cost of inventories recognised - - -
as an expense
Operating lease rentals 8 7 15
Research and development 73 95 894
Depreciation 101 76 1,508
Amortisation of patents and 5 22 101
trademarks
Write down of investment in - - 871
CTS Technologies AG
Write up of negative goodwill - 484 (498)
Foreign exchange gains and (40) (13) 12
losses
4. Earnings per share
Six months ended 30 Six months ended 30 Year ended 31
June June December
2008 2007 2007
Unaudited Unaudited Audited
�'000 �'000 �'000
Profit / (Loss)
Loss for the purpose of basic (93) 419 (1,730)
and diluted loss per share
Number of shares
Weighted average number of 18,515,244 18,391,517 18,515,244
ordinary shares in issue
during
the period
Basic and fully diluted profit (0.50p) 2.28p (9.34p)
(loss) per share
Notes to the financial statements for the six months ended 30 June 2008
5. Cash flow statement
Net cash from operating activities
Six months ended 30 Six months ended 30 Year ended 31
June June December
2008 2007 2007
Unaudited Unaudited Audited
Loss after tax (93) 419 (1,730)
Tax - 89 (45)
Write up of negative goodwill - (484) (498)
Interest received (11) (34) (26)
Interest paid 84 55 79
Share based payments - 25 -
Investment write down - - 871
Adjustment for depreciation 106 97 448
and amortisation
Operating cash flows before 86 167 (901)
movements in working capital
(Increase)/decrease in 52 (52) (265)
inventories
Increase in receivables (793) (1,008) (77)
Increase in payables 331 305 185
Cash used by operations (324) (588) (1,058)
This information is provided by RNS
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