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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bioquell | LSE:BQE | London | Ordinary Share | GB0004992003 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 597.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMBQE
RNS Number : 6623Y
Bioquell PLC
07 March 2017
Bioquell PLC - 2016 Preliminary Results
Bioquell PLC (LSE symbol:BQE), the provider of specialist bio-decontamination systems and services to the international Life Sciences and Healthcare markets, today announces its preliminary results for the year ending 31(st) December 2016.
Financial highlights
-- Core bio-decontamination business revenues up 7.7% to GBP25.2 million (2015: GBP23.4 million), flat at constant currency rates
-- Overall revenues including the defence business were broadly flat at GBP26.5 million (2015: GBP26.9 million), down 7.8% at constant currency rates
-- Gross Profit Margins improved to 48% from 42% in 2015 -- Pre-exceptional EBITDA* increased 21% to GBP4.1 million (2015: GBP3.4 million) -- Pre-exceptional Profit before tax was up 78% to GBP1.6 million (2015: GBP0.9 million)
-- Exceptional charges totalling GBP1.5 million; GBP0.8 million relating to board restructuring and GBP0.7m of non-cash impairment of intangible assets (2015: GBP0.2m, relating to management reorganisation)
-- Profit before tax fell to GBP0.1 million (2015: GBP0.6 million) -- Adjusted Earnings per share** up 195% to 5.6p (2015: 1.9p) -- Earnings per share 1.3p (2015:1.5p)
-- Net cash was GBP8.8 million (2015: GBP47.6 million); GBP40.8 million returned to shareholders via tender offer in June 2016.
* earnings before interest, tax, depreciation, amortisation and exceptional items.
** based on pre-exceptional earnings after tax
Key developments
-- New executive team installed in August 2016 comprising Ian Johnson as Executive Chairman and Jay LeCoque as Commercial Director
-- Strategic review completed. Decision taken to continue to build a world class bio-decontamination business and focus on further improving its financial performance
-- Business restructuring mid-way through second half contributed to improvements in financial performance by year end. The full impact should be felt in the year ending 31 December 2017.
-- The Group now consists of two divisions: Bioquell Bio-Decontamination products and services and MDH Defence providing CBRN products to major defence contractors.
-- New bio-decontamination product introductions generating revenue in the fourth quarter. -- A number of sales and marketing initiatives in place to drive sales growth in 2017
Ian Johnson, Executive Chairman of Bioquell PLC, said:
"I am pleased to report substantial improvements in the financial performance of the Group for 2016. Following the conclusion of the strategic review in late August 2016 we made changes to the board and restructured the Company, placing greater emphasis on building a world class bio-decontamination business. The reported improvements are in part the result of these changes, but predominantly the result of a number of other factors including lower manufacturing costs, targeted cost reduction programmes and the effect of the Brexit vote on Sterling, which given our high level of export business enhanced gross margin."
"Management continue to focus on generating top line growth from the international Life Sciences market and on improving financial performance through further efficiency initiatives and generating additional recurring revenues from the Services business."
Chairman's Statement
INTRODUCTION
The Group achieved total revenues of GBP26.5 million and continues to generate the majority of its revenues from its core Bio-Decontamination business. A relatively small and historically unpredictable amount is derived from the Defence sector.
For the 12 months ended 31 December 2016, the split of revenues between these businesses was:
-- Bio-Decontamination: GBP25.2 million (2015: GBP23.4 million) - a 7.7% increase year on year and accounting for 95% of Group revenues; and
-- Defence: GBP1.3 million (2015: GBP3.5 million) - a decline of 63% and accounting for 5% of Group revenues.
The Group's strategy is focussed on increasing revenues generated from customers in the bio-decontamination business and we would anticipate that, over the medium term, defence revenues will decline as a proportion of total revenues.
FINANCIAL RESULTS
Hot Features
Premium
2016 GBPm 2015 GBPm Growth Constant
% currency
growth
%
Bio-decontamination 25.2 23.4 +8% +0%
Defence 1.3 3.5 -63% -63%
---------- ---------- ------- ----------
TOTAL 26.5 26.9 -1% -8%
---------- ---------- ------- ----------
Bio-Decontamination Service-related revenues, including consumables, increased 9.7% to GBP14.7 million (2015: GBP13.4 million), representing some 58% of bio-decontamination revenues (2015: 57%).
Bio-Decontamination System (equipment) revenues increased by 5.0% to GBP10.5 million (2015: GBP10.0 million) representing 42% of bio-decontamination revenues.
The level of recurring revenues within the services business was 57% in 2016 (2015: 56%) and was 33% (2015: 32%) in the total bio-decontamination business.
Revenues from total non-UK sales in the period amounted to GBP20.0 million (2015: GBP21.4 million), amounting to 76% (2015: 80%) of total revenues. The equivalent data for the bio-decontamination business shows that non-UK revenues were GBP18.7 million (2015: GBP18.0 million), representing approximately 74% of this business' revenues. Virtually all defence revenues are non-UK based.
Sterling has weakened significantly against the US dollar since the Brexit vote. Approximately 46% of bio-decontamination revenues were denominated in US dollars in the year, with a further 28% denominated in Euros. At constant currency rates, revenue in the bio-decontamination business was flat year-on-year.
Gross margin in the year was up 6% to 48% (2015: 42%). This meaningful increase in gross margin reflects a number of additional factors besides exchange rates including: (i) the results of targeted cost-reduction programmes associated with our products; (ii) price increases for certain products; and (iii) a reallocation of certain costs from cost of sales to overheads.
Research & development costs
As is set out in the table below, the accounting charge for Research & Development ("R&D") costs in the period increased by 21% to GBP1.8 million (2015: GBP1.5 million). Cash R&D costs were GBP1.3 million in the year (2015: GBP1.4 million), representing a 7% decrease.
R&D costs (GBP000) 2016 2015 Amount of R&D expensed in period 0.9 0.7 Amortisation of previously capitalised development costs 0.9 0.8 ------------------------------------------ ----- ----- Total R&D charge under IFRS 1.8 1.5 ------------------------------------------ ----- ----- Total R&D cash expenditure 1.3 1.4 Amount of development costs capitalised 0.4 0.7 ------------------------------------------ ----- -----
In the short to medium term we anticipate that R&D costs will continue at the lower level of cash spend reflecting the completion of the current Bioquell product range; however, we are working on appropriate product line extensions to complement the existing product portfolio.
Overheads
Overheads increased by 5% to GBP11.2 million (2015: GBP10.6 million). However, these overhead costs include the net cost of foreign exchange movements which, largely due to the significant decline in the value of Sterling post the Brexit vote, resulted in a charge in the period of GBP276,000 (2015: profit of GBP34,000).
The underlying cash-based overhead costs - adjusted to reflect the cash cost of R&D as well as removing the net FX cost - were GBP10.4 million in the year (2015: GBP10.5 million), flat as reported and a reduction of 6.4% in constant currency terms.
Pre exceptional EBITDA (earnings before interest, tax, depreciation, amortisation and exceptional items) increased by 21% in the year to GBP4.1 million (2015: GBP3.4 million).
Profit before tax and exceptional items was GBP1.6 million (2015: GBP0.9 million). Profit before tax was GBP0.1 million (2015: GBP0.6 million).
Exceptional costs were recognised in respect of board restructuring (GBP0.8 million) and also in respect of the impairment of certain intangible assets. GBP0.5 million of the book value of the Group's patents was impaired following the outcome of a review of the group's patents to establish which of its patents should continue to be maintained and in which jurisdictions. GBP0.2 million of intangible assets relating to two products in the defence sector were impaired following a decision not to continue to offer these products for sale. In 2015 there was an exceptional item of GBP0.2 million relating to a business reorganisation.
Basic earnings per share were 1.3 pence (2015: 1.5 pence excluding the profit on disposal of TRaC).
Capital expenditure continues to run significantly below the depreciation charge, reflecting the Board's belief that the substantial investments needed to support the growth of the business in the short to medium term have been made over recent years.
In the year, purchases of tangible fixed assets totalled GBP0.7million (2015: GBP1.0 million). Depreciation in the period was GBP1.6 million (2015: GBP1.6 million).
Balance sheet
The Group has a strong balance sheet. GBP40.8 million of cash generated from the sale of the TRaC business in 2015 was returned to shareholders by way of a tender offer in June 2016. The Group spent a further GBP1.3 million on share buybacks in December 2016.
There was a net cash inflow before share buybacks in the second half of the year of GBP2.5 million.
Net cash at 31 December 2016 was GBP8.8 million (2015: GBP47.6 million)
The Group expects to return further cash to shareholders by way of share buybacks during the course of 2017 in lieu of paying a dividend. Further details of these buybacks will be announced in due course.
BUSINESS ACTIVITIES
Bio-Decontamination
The bio-decontamination business has introduced a number of new products in the past three years, notably including the Pod, a method of producing a single occupancy semi-permanent room in a hospital ward in a rapid and cost-effective manner, and the Qube, a modular aseptic workstation incorporating Hydrogen Peroxide Vapour bio-decontamination technology.
Over recent years a number of customers have requested fixed decontamination systems, with increasing demand for such systems linked, in part, to evolving regulatory requirements. Given that space is typically at a premium in our customers' premises, a fixed system, occupying a minimal footprint and fast to install and validate will have distinct advantages over conventional portable systems. In the second half of 2016 we launched a new fixed, wall-mounted decontamination system incorporating the use of Bioquell's proprietary hydrogen peroxide captive consumable cartridges. Sales of this unique product have been encouraging with a significant number installed at a major French life sciences company.
Looking forward to 2017, the main challenge for the Group is to drive revenue growth from this new suite of products, as well as driving additional growth from the sale of related services and consumables.
Defence
Historically defence revenues have been extremely difficult to forecast, however, there continues to be demand for Bioquell's expertise in specialist Chemical, Biological, Radiological and Nuclear ("CBRN") filtration equipment from a number of major overseas defence contractors. In recent years defence revenues had been managed within the overall Bioquell business. Consequently, this business had lost its former identity as 'MDH Defence' with a 50 year legacy of serving the defence sector. In December 2016, MDH Defence was re-launched as a division of the Group with additional sales resource to provide better visibility and to increase our defence-related order book. We do not expect any short term growth from this initiative however longer term we hope to realise a firmer and larger order book.
EMPLOYEES
On behalf of the Board I would like to thank all employees within the Group for their hard work and commitment during 2016.
BOARD CHANGES
As noted at the time of the interim results, the executive management of the Group was restructured in August. I became Executive Chairman and Jay LeCoque was appointed Commercial Director. Both Jay and I have spent our careers in the Life Science sector and have previously worked together at Celsis plc.
Michael Roller, the Group's Finance Director, has agreed with the Board that he will reduce his time commitment to Bioquell to three days per week with effect from 1 April 2017. Michael is supported by Georgina Pope, Company Secretary and also the Finance Director of Bioquell's UK operations.
On behalf of all Bioquell shareholders I would like to thank Nigel Keen for his seven years as Chairman.
I would also like to thank Nick Adams for his substantial contribution as Chief Executive. Under his leadership Bioquell has changed beyond all recognition from a low technology manufacturer of safety cabinets to a leader in specialist bio-decontamination.
OUTLOOK AND PROSPECTS
As we stated at the half year the Board believes that Bioquell shareholders' interests would best be served by continuing to build a world class bio-decontamination business and focussing on further improving its financial performance.
As we exited 2016 the financial performance of our core bio-decontamination business was beginning to improve as can be seen in the financial information set out above. There are a number of different drivers of growth which are positively affecting our business, including the need for customers to achieve regulatory compliance, the increasing threat posed by antibiotic resistance and continuing growth in research and small scale production associated with cell-based healthcare products.
We remain focussed on improving the financial performance of the Company through further efficiency measures and generating top line growth.
The business has had a good start to the year and the board remains confident in delivering further growth in revenue and profits.
Prior to publication, the information contained within this announcement was deemed to constitute inside information under the Market Abuse Regulations (EU) No. 596/2104 ("MAR").
Ian Johnson
Chairman
Bioquell PLC
7(th) March, 2017
Strategic report
This report should be read in conjunction with the Chairman's statement which provides information on the financial performance of the Group in 2016.
The Group will henceforward have two operating segments for accounting purposes. The principal segment is the bio-decontamination business, . The business model of this segment incorporates the sale of equipment and consumables and the provision of speciality services to the international Life Sciences & Healthcare sectors. The second segment is the defence business recently rebranded as MDH Defence which sells CBRN filtration equipment to a number of major overseas defence contractors.
The Group has developed a world-class range of technologies for the markets it serves. The primary strategic objective for the business is to increase its revenues and profits via improved and more effective selling of its market-leading range of products & services.
The Board currently considers it appropriate to monitor progress on its strategy by reference to three key performance indicators ("KPIs"): revenues, earnings before interest, tax, depreciation and amortisation ("EBITDA") and pre-tax profit. These are adjusted for exceptional costs where such costs are identified. As the business develops the Board will consider adding, as appropriate, further KPIs to monitor progress against a broader range of objectives. KPIs are monitored monthly and reviewed on a year to date and trailing twelve months basis.
Key strategic drivers
Microorganisms - bacteria, viruses and fungi - are ubiquitous and can be the cause of significant problems for individuals, companies and organisations around the world. Bioquell's strategy is to generate revenues from the provision of cost-effective technology-based solutions for microbiological contamination control and eradication.
Historically our product offerings for Life Sciences and Healthcare were based solely around the Group's specialist hydrogen peroxide vapour decontamination technology; however, over recent years we have added a number of complementary products and services which enable us to offer a broader range of solutions to our customers, most of whom operate in highly and increasingly regulated environments.
Life Sciences sector
The principal drivers of growth for Bioquell's bio-decontamination business include:
-- an increasingly complex, onerous and rapidly expanding international regulatory environment relating to the safe production of biologically-sensitive therapeutic products;
-- demand for cost effective, fast-to-deploy aseptic environments;
-- improved methods and technology for the swift and aseptic transfer of heat-sensitive materials into clean-rooms;
-- interest by customers in the use of technology to achieve cost reductions;
-- growth in research activities and small-scale production associated with cell-based healthcare products; and
-- demand for the mitigation of risks and liabilities associated with complex, and often biologically-sensitive, therapies historically prepared in hospital pharmacies.
Bioquell is proactively positioning itself to take advantage of the opportunities arising as a result of the drivers noted above and intends to grow revenues from this market by expanding its global life science sales and marketing team with particular focus in the USA.
Bioquell is also able to deliver technologies other than Hydrogen Peroxide Vapour decontamination systems and services. For example, the Bioquell QUBE comprises a novel, modular aseptic work-station incorporating Hydrogen Peroxide Vapour technology. The QUBE is used to provide an aseptic environment for a range of applications including: sterility testing; the production of toxic, intravenous oncology drugs; and the production of small-scale cell-based healthcare products. Over time we expect the range of specialist applications for the QUBE to increase.
We are also proactively working to maximise the level of recurring revenues generated from service activities including consumable sales.
Changes to regulations
There are an increasing number of regulations affecting the markets into which we sell. Such regulations can cover both decontamination equipment and/or the associated consumables. Typically we find more onerous regulation tends to help increase demand for Bioquell's high quality decontamination technology as our clients remain focussed on attaining - and retaining - regulatory compliance.
Healthcare sector
Bioquell's healthcare strategy is to provide technology-based solutions which help hospitals reduce their hospital acquired infection ("HAI") rates and combat the significant issues associated with antibiotic resistance. For example, the Bioquell POD enables hospitals to convert multi-bed, open-plan units at high risk of the spread of HAIs into single-occupancy rooms. PODs can be decontaminated using Bioquell's Hydrogen Peroxide Vapour technology.
Defence sector
We manufacture specialist chemical, biological, radiological and nuclear ("CBRN") filtration systems and environmental control equipment for military vehicles and fixed facilities. Interest in our CBRN products has been helped over the last few years by increased levels of conflict in the Middle East as well as instability in Eastern Europe.
Principal challenges
We are seeking to grow the Group's revenues by promoting the use of Bioquell's technology to solve microorganism-related problems for highly regulated customers in the Life Sciences and Healthcare sectors. Microorganism-related problems are becoming more challenging, largely due to increasing drug resistance. Many new, on-patent biotech drugs are highly susceptible to bioburden contamination and are governed by increasingly complex regulations.
In implementing our strategy we encounter a number of challenges, including the international nature of our markets, highly conservative customers (who may be reluctant to adopt new technology), large competitors (with better established sales footprints and customer relationships), an increasingly fragmented and heterogeneous Life Sciences sector as well as hospitals which are often reluctant to discuss - and therefore act on - the costs and clinical impact of HAIs.
Conclusion: the Bioquell Group
The Group has a robust strategy in place to generate high margin revenues from customers in two large, growing and highly regulated sectors: Life Sciences & Healthcare.
Sales into the Life Sciences sector currently remain key to the profitability of the Group - and we have taken clear and robust steps to re-focus the sales and marketing efforts of the Group onto what is by far the Group's single largest market.
Ian Johnson
Executive Chairman
7 March 2017
Risks and uncertainties
The Group faces a number of risks and uncertainties associated with its activities. It has put in place formal risk-review structures and mechanisms to help assess and monitor such risks and uncertainties; and, as appropriate, has taken steps to mitigate the identified risks and/or uncertainties to the extent practicable. However, it is not possible to identify or anticipate all risks and uncertainties; nor is it possible to mitigate all such identified risks and uncertainties.
Set out below is a summary of the principal risks and uncertainties which the Board believes the Group faces, over and above those which are inherent with carrying out commercial activities. The description of these principal risks and uncertainties should be read in conjunction with, and considered taking into account of, the description of the activities of the Group set out elsewhere in this document and on the Group's websites.
The Board has undertaken a robust assessment of the principal risks facing the Group including those that would threaten its business model, future performance, solvency or liquidity.
A summary of how the Group seeks to mitigate some or all of these principal risks and uncertainties is also set out in the table below.
Risk and/or uncertainty Mitigation
---------------------------------------------- ----------------------------------------------
Commercial. In order to prosper the The Group is spending more time talking
Group needs to sell its products with actual and prospective customers
and services to sufficient customers to try and anticipate market trends
at an appropriate margin. This requires - and is working with customers to
good marketing and effective selling develop new products and services
of attractive products & services attractive to such customers.
into the Group's markets.
---------------------------------------------- ----------------------------------------------
Competition. Some of the Group's The Group monitors the activities
competitors are substantially larger of existing, new and potential competitors
than the Group and have, among other closely and is constantly reviewing
things, greater financial, selling and, as appropriate, refining its
and political lobbying resources. strategies, business models, sales
Accordingly there is a risk that and marketing activities, execution
the Group's business could be adversely plans and new product development
affected by actions undertaken by depending on, among other things,
these large competitors. competitor activities.
---------------------------------------------- ----------------------------------------------
Regulatory. The Group operates in The Group endeavours to work closely
a number of countries and sectors and establish a dialogue, either
which are highly regulated. There directly or through its third party
is a risk that the relevant regulations, distribution partners and/or clients,
or their interpretation, could be with the relevant regulators in the
changed and such changes could significantly territories in which it operates.
adversely affect the Group's business
in that country or sector.
---------------------------------------------- ----------------------------------------------
Political. The regulatory risks and Generally the Group adopts a cautious,
uncertainties summarised above can low profile and conservative approach
be closely linked to prevailing policies with its activities, particularly
or strategies being pursued by politicians with those where there may be a political
or civil servants. These policies dimension. When considered necessary,
or strategies can be affected by the Group may seek to develop relationships,
effective lobbying, including lobbying either directly or indirectly, with
by the Group's competitors or customers, politicians and civil servants to
which could adversely affect the assist with its dialogue with governments
Group. and counter the risk posed by competitor
lobbying.
---------------------------------------------- ----------------------------------------------
Technological. The Group is dependent The Group provides focussed products
on its technology - and products and services within
and services - continuing to be efficacious, its markets and accordingly is able
cost effective and attractive to to monitor relevant technological
the marketplace. There is the risk developments carefully - whether
that new technologies, products or by competitors or third party research
services are developed by competitors organisations, including universities.
which perform better, are easier The Group takes into account such
to use or are more cost effective technological developments when reviewing
than those of the Group. and adjusting its strategy.
---------------------------------------------- ----------------------------------------------
Financial. The Group has a number The Group has standardised, detailed
of international subsidiaries and monthly management reporting packs
trades with companies located throughout which all of its subsidiaries are
the world. The international nature required to complete. These submissions
of many of its business activities are reviewed centrally and the key
results in elevated financial risk, points discussed at regular subsidiary
including, but not limited to: foreign or divisional management meetings.
exchange exposure, credit risk and As appropriate, foreign exchange
cash collection/retention/ management hedging is undertaken centrally.
(together "Key Financial Risks"). In addition, there are detailed delegated
management authority levels which
cover, among other things, Key Financial
Risks.
---------------------------------------------- ----------------------------------------------
Reliance on suppliers. Due to the The Group seeks to work closely and
complexity of many of its manufactured in partnership with its key suppliers.
products, the Group is dependent It also has a key supplier review/audit
on a number of key suppliers. These programme which helps the Group make
suppliers could supply components strategic decisions about working
late, supply poor quality components, more closely with a given supplier
refuse to supply or cease trading. or, if appropriate, take the decision
Such disruptions to the Group's supply to identify an alternative supplier.
chain could cause major issues to High risk items are where possible
the trading activities of the Group. developed for internal manufacture,
therefore reducing the risk of excessive
reliance on suppliers.
---------------------------------------------- ----------------------------------------------
Reliance on customers within a given The Group monitors carefully the
sector. Although the Group is not revenue it generates from any single
significantly dependent upon one customer (or customer group) and
single customer, changes within a if appropriate takes proactive steps
sector or sub-sector could adversely to reduce the proportion of such
affect the trading performance of revenues within the subsidiary or
the Group division - or seeks to sell other
product lines to such customers in
order to diversify this risk.
---------------------------------------------- ----------------------------------------------
Retention of key employees. The Group The Group has in place a number of
has a number of key employees working measures which are designed to optimise
for it. The loss of certain of these key employee retention including,
employees could be problematic for but not limited to ensuring that
the Group. their work is stimulating and interesting;
their remuneration is competitive;
and the work place environment and
culture is attractive.
---------------------------------------------- ----------------------------------------------
Dependence on key employees. As with The Group actively seeks ways in
any group of its size, the Group which the Group can reduce its dependence
is dependent on certain key employees. upon key employees by developing
Their sudden or unexpected departure other employees' skills or, where
from the Group can have a disruptive necessary, hiring in supplementary
effect upon the Group's activities. employees with the necessary skill
sets. Additionally, the Group's remuneration
structure is designed so as to foster
employee loyalty.
---------------------------------------------- ----------------------------------------------
Cybersecurity. Cybersecurity threats The Group has had a third party carry
come from a wide variety of sources out an assessment of the Group's
and may target a wide range of different principal systems and their vulnerability
systems for diverse purposes. This to attack; key findings of this review
makes such risks notably difficult have been actioned and this review
to mitigate. Besides business disruption will be performed at regular intervals
risk, there is also a threat to the on an ongoing basis.
Group's own and third party sensitive The Group actively considers the
data which may, in the ordinary course IT security connotations associated
of business, be held on the Group's with any new systems developments
systems. and/or business operations.
---------------------------------------------- ----------------------------------------------
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report and the risks and uncertainties which affect the business are summarised above. The Group has sufficient financial resources to cover budgeted future cash-flows, together with contracts with its customers and suppliers across different geographic areas and industries.
In accordance with the Corporate Governance requirements the Directors confirm that they have a reasonable expectation that the Group has adequate financial resources to continue to trade for the foreseeable future. Thus, they continue to adopt the going concern basis in preparing the financial statements.
Responsibility statement
This responsibility statement has been prepared in connection with the Group's full Annual Report and Accounts for the year ended 31 December 2016, certain parts therefore are not included within this Preliminary Announcement.
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;
-- the strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
-- the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.
This responsibility statement was approved by the Board of Directors on 7 March 2017 and is signed on its behalf by:
Ian Johnson Michael Roller Executive Chairman Group Finance Director
Consolidated income statement
for the year ended 31 December 2016
2016 2015
Continuing operations Notes GBP'000 GBP'000
----------------------------------------------------------------------------------------------------------------------------------------------------- ----- -------- --------
Revenue 2 26,485 26,877
Cost of sales (13,740) (15,466)
----------------------------------------------------------------------------------------------------------------------------------------------------- ----- -------- --------
Gross profit 12,745 11,411
Gross profit margin 48% 42%
Operating expenses:
Sales & marketing costs (5,154) (5,485)
Administration costs (4,191) (3,648)
R&D and engineering costs (1,826) (1,507)
----------------------------------------------------------------------------------------------------------------------------------------------------- ----- -------- --------
Profit from operations before exceptional Items 1,574 771
Impairment of intangible assets (662) -
Costs associated with reorganisation - (220)
Costs associated with Board restructuring (858) -
----------------------------------------------------------------------------------------------------------------------------------------------------- ----- -------- --------
Operating profit 5 54 551
Investment revenues 132 150
Finance costs (110) (69)
Profit before tax 76 632
Tax 6 321 5
----------------------------------------------------------------------------------------------------------------------------------------------------- ----- -------- --------
Profit for the year 11 397 637
----------------------------------------------------------------------------------------------------------------------------------------------------- ----- -------- --------
Discontinued operations
Profit for the period from discontinued operations
and disposal 4 & 7 - 34,501
----------------------------------------------------------------------------------------------------------------------------------------------------- ----- -------- --------
Profit for the period
Profit for the period attributable to equity holders
of the parent 11 397 35,138
----------------------------------------------------------------------------------------------------------------------------------------------------- ----- -------- --------
Earnings per share from continued operations excluding
profit on disposal - basic 8 1.3p 1.5p
-
diluted 1.2p 1.5p
Earnings per share attributable to the owners of
the parent - basic 1.3p 82.5p
-
diluted 1.2p 81.8p
----------------------------------------------------------------------------------------------------------------------------------------------------- ----- -------- --------
Consolidated statement of comprehensive income
for the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
----------------------------------------------------------- -------- --------
Net profit for the year 397 35,138
Exchange differences on translation of foreign operations* 510 (120)
----------------------------------------------------------- -------- --------
Total recognised income 907 35,018
----------------------------------------------------------- -------- --------
* May be reclassified subsequently to profit and loss in accordance with IFRS.
Consolidated balance sheet
as at 31 December 2016
2016 2015
Notes GBP'000 GBP'000
----------------------------------------------------- ----- -------- --------
Non-current assets:
Other intangible assets 7,568 8,785
Property, plant & equipment 4,572 5,349
Deferred tax assets 90 175
----------------------------------------------------- ----- -------- --------
12,230 14,309
----------------------------------------------------- ----- -------- --------
Current assets:
Inventories 2,773 3,547
Trade and other receivables 6,847 5,429
Derivative financial instruments 44 -
Cash and cash equivalents 9 8,756 47,573
----------------------------------------------------- ----- -------- --------
18,420 56,549
----------------------------------------------------- ----- -------- --------
Total assets 30,650 70,858
----------------------------------------------------- ----- -------- --------
Current liabilities:
Trade and other payables (5,404) (4,282)
Derivative financial instruments (72) (68)
Current tax liabilities (210) (152)
Provisions (240) (84)
----------------------------------------------------- ----- -------- --------
Net current assets 12,494 51,963
----------------------------------------------------- ----- -------- --------
Non-current liabilities:
Deferred tax liabilities (890) (1,354)
Total liabilities (6,816) (5,940)
----------------------------------------------------- ----- -------- --------
Net assets 23,834 64,918
----------------------------------------------------- ----- -------- --------
Equity:
Share capital 10 2,294 4,266
Share premium account 1,496 919
Equity reserve 1,780 2,079
Capital reserve 255 255
Translation reserve 273 (237)
Retained earnings 11 17,736 57,636
----------------------------------------------------- ----- -------- --------
Equity attributable to equity holders of the Company 23,834 64,918
----------------------------------------------------- ----- -------- --------
The financial statements of Bioquell PLC, registered number 00206372, were approved by the Board of Directors and authorised for issue on 7 March 2017.
They were signed on its behalf by:
Ian Johnson Michael Roller Director Director 7 March 2017 7 March 2017
Consolidated statement of changes in equity
for the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Profit for the year 397 35,138
Exchange differences on translation of foreign operations 510 (120)
---------------------------------------------------------- -------- --------
Total comprehensive income in the year 907 35,018
Other movements in the year:
Issued share capital 68 12
Issued share premium 577 118
Acquisition of own shares for cancellation (41,396) -
Acquisition of own shares to be held in Treasury (1,269)
Credit to equity reserve for share-based payments 35 119
Charge to equity on exercise of share options under
the SARS scheme (6) -
Final dividend - (1,406)
---------------------------------------------------------- -------- --------
Net (decrease)/increase in equity shareholders' funds (41,084) 33,861
---------------------------------------------------------- -------- --------
Equity shareholders' funds at beginning of year 64,918 31,057
Equity shareholders' funds at end of year 23,834 64,918
---------------------------------------------------------- -------- --------
Consolidated cash flow statement
for the year ended 31 December 2016
2016 2015
Note GBP'000 GBP'000
------------------------------------------------------- ---- -------- --------
Net cash from operating activities 12 4,133 5,326
------------------------------------------------------- ---- -------- --------
Investing activities
Proceeds on disposal of TRaC Global Ltd net of
cash transferred & cash costs of disposal - 43,423
Purchases of property, plant and equipment (723) (1,030)
Expenditure on capitalised product development (409) (733)
Purchase of intangible asset (58) (125)
------------------------------------------------------- ---- -------- --------
Net cash generated (used in)/from investing activities (1,190) 41,535
------------------------------------------------------- ---- -------- --------
Financing activities
Proceeds on issue of ordinary shares 645 130
Dividends paid on ordinary shares - (1,406)
Repayment of borrowings - (863)
Acquisition of own shares for cancellation (41,396) -
Acquisition of own shares to be held in Treasury (1,269) -
Net cash used in financing activities (42,020) (2,139)
------------------------------------------------------- ---- -------- --------
Net (decrease)/increase in cash and cash equivalents (39,077) 44,722
------------------------------------------------------- ---- -------- --------
Cash and cash equivalents at beginning of year 47,573 2,840
Effect of foreign exchange rate changes 260 11 Cash and cash equivalents at end of year 8,756 47,573 ------------------------------------------------------- ---- -------- --------
Notes to the consolidated financial statements
for the year ended 31 December 2016
1. Basis of preparation
The financial information for the year ended 31 December 2016 contained in this New Release was approved by the Board on 7 March 2017. This announcement does not constitute statutory financial statements of the Company within the meaning of section 435 of the Companies Act 2006, but is derived from those financial statements, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed and adopted for use by the European Union.
The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had any significant impact on the amounts reported in these financial statements but may impact the accounting for future transactions and arrangements:
IFRS10, IFRS 12 and Investment Entities: Applying the Consolidation
IAS 28 (amendments) Exemption
Accounting for Acquisitions of Interests in Joint
IFRS 11 (amendments) Operations
IAS 1 (amendments) Disclosure Initiative
Clarification of Acceptable Methods of Depreciation
IAS 16 and IAS 38 (amendments) and Amortisation
IAS 27 (amendments) Equity Method in Separate Financial Statements
Amendments to: IFRS 5 Non-current Assets Held
Annual Improvements for Sale and Discontinued Operations, IFRS 7
to IFRSs: 2012-2014 Financial Instruments: Disclosures, IAS 19 Employee
Cycle Benefits and IAS 34 Interim Financial Reporting
Otherwise the principal Group accounting policies are the same as set out in detail in the Annual Report and Accounts 2015 and have been applied consistently throughout the years ended 31 December 2015 and 2016.
Statutory accounts for 2015 have been delivered to the Registrar of companies and those for 2016 will be delivered following the Company's Annual General Meeting on 26 April 2017. The auditors have reported on those financial statements. Their reports were not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
2. Revenue
An analysis of the Group's revenue follows. Revenue from continuing operations is generated from two segments, being
Bio-decontamination (sale of goods and services) and Defence (sale of goods).
2016 2015
GBP'000 GBP'000
--------------------------------------- -------- --------
Sales of goods 15,806 16,012
Revenue from the rendering of services 10,679 10,865
--------------------------------------- -------- --------
26,485 26,877
--------------------------------------- -------- --------
Geographical analysis
The Group's bio-decontamination equipment is manufactured within the UK and sold into the UK, Europe and Rest of World markets. The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods or services:
Year ended Year ended
31 December 31 December
2016 2015
Sales revenue by geographical market GBP'000 GBP'000
------------------------------------- ------------ ------------
UK 6,454 5,501
Rest of Europe 7,676 7,375
Rest of World 12,355 14,001
------------------------------------- ------------ ------------
26,485 26,877
------------------------------------- ------------ ------------
3. Business and geographical segments
For management purposes, the Group is currently organised into two divisions - Bio-decontamination ("BIO") and Defence. These divisions are consistent with the internal reporting as reviewed by the Executive Chairman. Segment information is available only within the Income Statement, the Group does not split out the balance sheet for the Defence business. Segment information about these businesses is presented below:
BIO Defence Consolidated
Year ended 31 December 2016 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- ------------
Revenue
Total revenue 25,170 1,315 26,485
Result
Segment result before exceptional item 2,603 202 2,805
Impairment of intangibles (458) (204) (662)
-------------------------------------------- -------- -------- ------------
Segment result 2,145 (2) 2,143
Costs associated with Board restructuring (858)
-------------------------------------------- -------- -------- ------------
Consolidated result after exceptional items 1,285
-------------------------------------------- -------- -------- ------------
Unallocated head office costs (1,231)
-------------------------------------------- -------- -------- ------------
Profit from operations 54
-------------------------------------------- -------- -------- ------------
Finance costs and investment revenue 22
-------------------------------------------- -------- -------- ------------
Profit before tax 76
-------------------------------------------- -------- -------- ------------
Tax 321
-------------------------------------------- -------- -------- ------------
Profit for the year 397
-------------------------------------------- -------- -------- ------------
The impairment of intangibles has no cash impact on the business but it does create a release of the deferred tax liability adding GBP126,000 to the recognised tax credit on the Income Statement. The costs associated with Board restructuring had a cash impact totalling GBP858,000 and have been recognised as an allowable deduction for tax purposes.
BIO Defence Consolidated
Year ended 31 December 2015 GBP'000 GBP'000 GBP'000
--------------------------------------- -------- -------- ------------
Revenue
Total revenue 23,363 3,514 26,877
Result
Segment result before exceptional item 1,383 582 1,965
Costs associated with reorganisation (220)
--------------------------------------- -------- -------- ------------
Segment result 1,745
--------------------------------------- -------- -------- ------------
Unallocated head office costs (1,194)
--------------------------------------- -------- -------- ------------
Profit from operations 551
--------------------------------------- -------- -------- ------------
Finance costs and investment revenue 81
--------------------------------------- -------- -------- ------------
Profit before tax 632
--------------------------------------- -------- -------- ------------
Tax 5
--------------------------------------- -------- -------- ------------
Profit for the year 637
--------------------------------------- -------- -------- ------------
4. Discontinued operations
On 12 March 2015 the Group entered into a sale agreement to dispose of TRaC Global Limited, which carried out all of the
Group's Testing, Regulatory and Compliance work. The disposal was made to simplify the Group and allow focus on the core decontamination business and to release value for shareholders. The sale was completed on 7 May 2015, on which date control
of TRaC Global Limited passed to the acquirer.
The results of the discontinued operations which have been included in the Consolidated Income Statement in 2015, were as follows:
Period to
7 May 2015
GBP'000
----------------------------------------------- -----------
Revenue 6,175
Expenses (5,040)
Profit before tax 1,135
Attributable tax expense (240)
Gain on disposal 33,606
Profit attributable to discontinued operations 34,501
----------------------------------------------- -----------
During 2015, TRaC Global Ltd contributed GBP0.6m to the Group's net operating cash flows, paid GBP0.3m in respect of investing activities and paid GBP2.0m in respect of financing activities.
A profit of GBP33.6m arose in 2015 on the disposal of TRaC Global Ltd, being the net proceeds of disposal less the carrying amount
of the subsidiary's net assets and attributable goodwill.
5. Profit from operations
Profit from operations has been arrived at after charging/(crediting):
2016 2015
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Research & development costs 832 559
Impairment of intangible assets 662 -
Depreciation of property, plant and equipment 1,544 1,616
Amortisation of development costs 864 797
Amortisation of trademarks, patents and licence fees 162 178
Cost of inventories recognised as an expense 6,433 8,488
Cost of inventory written off in the year 102 29
Staff costs 10,169 10,563
Loss on disposal of property, plant and equipment 8 105
Net foreign exchange loss/(gain) 276 (34)
----------------------------------------------------- -------- --------
A more detailed analysis of auditors' remuneration is provided below:
2016 2015
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Fees payable to the Company's auditors for the audit
of the Company's annual accounts 43 30
Fees payable to the Company's auditors for the audit
of the subsidiaries pursuant to legislation 63 66
Fees payable for the audit of subsidiaries by other
Deloitte firms (France) 15 -
----------------------------------------------------- -------- --------
Total audit fees 121 99
----------------------------------------------------- -------- --------
Audit related assurance services 9 4
Total non-audit fees 9 4
----------------------------------------------------- -------- --------
6. Tax
2016 2015
GBP'000 GBP'000
----------------------------------- -------- --------
UK corporation tax current year (42) (105)
UK corporation tax prior year (16) (68)
Deferred tax credit current year 418 282
Deferred tax adjustment prior year (39) (104)
----------------------------------- -------- --------
321 5
----------------------------------- -------- --------
Corporation tax is calculated at 20% (2015: 20.25%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The credit for the year can be reconciled to the profit per the income statement as follows:
2016 2015
GBP'000 GBP'000
----------------------------------------------------------- -------- --------
Profit before tax 76 632
Tax at the UK corporation rate of 20% (2015: 20.25%) (17) (128)
Adjusted for:
Tax effect of expenses not deductible in determining
taxable profit (33) (35)
Effect on deferred tax asset of movement in share price 71 -
Effect of research and development relief 204 301
Tax effect of different tax rate of subsidiaries operating
in other jurisdictions (33) (31)
Prior year adjustment (55) (172)
Utilisation of tax losses not recognised 54 -
Effective change in tax rate 130 70
----------------------------------------------------------- -------- --------
321 5
----------------------------------------------------------- -------- --------
Nothing was charged directly to equity in 2016 or 2015.
7. Disposal of TRaC
As referred to in note 4, on 7 May 2015 the Group disposed of its interest in TRaC Global Ltd. There were no disposals in the year ended 31 December 2016. The impact of TRaC Global Ltd on the Group's results in the prior period is disclosed in note 4. The net assets of TRac Global Ltd at the date of disposal and the costs of the disposal transaction are shown below:
7 May 2015
GBP'000
---------------------------- ----------
Intangible assets (125)
Property, plant & equipment (8,121)
Inventories (131)
Trade and other receivables (4,155)
Cash and cash equivalents (891)
Trade and other payables 2,537
Current tax liabilities 913
Borrowings 834
Attributable goodwill (691)
Attributable tax expense 240
------------------------------ ----------
(9,590)
Costs of disposal* (1,304)
Gain on disposal 33,606
------------------------------ ----------
Total consideration 44,500
Satisfied by cash 44,500
------------------------------ ----------
* Includes bonuses paid to Directors totalling GBP227k gross
No tax arose on the disposal of TRaC as the transaction fell within the scope of the Substantial Shareholders Exemption (SSE).
8. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Year ended Year ended
31 December 31 December
2016 2015
Earnings GBP'000 GBP'000
-------------------------------------------------------- ------------ ------------
Earnings for the purposes of basic earnings per share
being net profit from continued operations excluding
profit on disposal 397 657
Earnings for the purposes of basic earnings per share
being net profit attributable to equity holders of the
parent 397 35,138
-------------------------------------------------------- ------------ ------------
Year ended Year ended
31 December 31 December
Number of shares 2016 2015
------------------------------------------------------------ ------------ ------------
Weighted average number of ordinary shares for the purposes
of basic earnings per share 31,174,461 42,613,220
Effect of dilutive potential ordinary shares:
- share options 1,019,473 365,485
------------------------------------------------------------ ------------ ------------
Weighted average number of ordinary shares for the purposes
of diluted earnings per share 32,193,934 42,978,705
------------------------------------------------------------ ------------ ------------
9. Analysis of net cash
Year ended Year ended
31 December 31 December
2016 2015
GBP'000 GBP'000
-------------------------- ------------ ------------
Cash and cash equivalents 8,756 47,573
-------------------------- ------------ ------------
10. Share capital
2016 2015
--------------------------------------------- ------------------- -------------------
Number GBP'000 Number GBP'000
--------------------------------------------- ---------- ------- ---------- -------
Authorised
Ordinary shares of 10p each 55,947,780 5,595 55,947,780 5,595
Redeemable deferred ordinary shares of GBP1
each 255,222 255 255,222 255
--------------------------------------------- ---------- ------- ---------- -------
5,850 5,850
--------------------------------------------- ---------- ------- ---------- -------
Called up, allotted and fully paid
Ordinary shares of 10p each 22,004,780 2,200 42,664,082 4,266
Ordinary shares of 10p each held in Treasury 940,000 94 -
--------------------------------------------- ---------- ------- ---------- -------
2,294 4,266
--------------------------------------------- ---------- ------- ---------- -------
During the year 20,405,814 ordinary shares of 10p each were repurchased under the tender offer to purchase own shares announced on 2 June 2016 and repurchased shares have been cancelled. The total consideration for the purchase of the shares was GBP41,396,375 which includes stamp duty of GBP204,060 and professional fees of GBP232,563.
Of this amount GBP2,040,000 was treated as a reduction of share capital, GBP60,000 as a charge to the income statement and the remaining charge of GBP39,396,000 included in retained earnings.
In December 2016 the Company acquired 940,000 shares in the market for GBP1,269,000. These shares are now held in Treasury.
The Company issued a total of 686,512 ordinary shares of 10p each for GBP645,000 on the conversion of options under the Executive Share Option schemes and the Save-as-you-earn scheme.
11. Retained earnings
GBP'000
------------------------------------------------------------ --------
Balance at 1 January 2015 23,869
Net profit for the year from continuing operations 637
Profit on disposal of TRaC and from discontinued activities 34,501
Payment of dividend (1,406)
Exercised share options 35
------------------------------------------------------------ --------
Balance at 1 January 2016 57,636
Net profit for the year from continuing operations 397
Acquisition of own shares for cancellation (39,296)
Acquisition of own shares to be held in Treasury (1,269)
Exercised share options 268
------------------------------------------------------------ --------
Balance at 31 December 2016 17,736
------------------------------------------------------------ --------
12. Notes to the cash flow statement
2016 2015
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Profit for the period 76 35,138
Adjustments for:
Profit on disposal of discontinued operations - (34,741)
Tax charge on discontinued operations - 240
Finance costs 110 69
Investment revenues (132) (150)
Depreciation of property, plant and equipment 1,544 1,645
Amortisation and impairment losses of intangible assets 1,026 971
Impairment of intangible assets 662 -
Accelerated IFRS2 charge 60 -
Share-based payments 35 119
Loss on disposal of property, plant and equipment 8 105
Decrease/(increase) in provisions 156 (4)
--------------------------------------------------------- -------- --------
Operating cash flows before movements in working capital 3,545 3,392
Decrease/(increase) in inventories 976 (295)
(Increase)/decrease in receivables (359) 2,324
Decrease in payables (51) (176)
--------------------------------------------------------- -------- --------
Cash generated by operations 4,111 5,245
Investment revenues 132 150
Interest paid (110) (69)
Net cash from operating activities 4,133 5,326
--------------------------------------------------------- -------- --------
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.
13. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are therefore not disclosed.
Remuneration of key management personnel
The total remuneration for all of the Directors of Bioquell PLC, who are the key management personnel of the Group, is set
out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures. In addition a payment for loss of office was made to Nicholas Adams during the year of GBP 514,000. He was paid a further GBP231,000 as payment in lieu of share options that lapsed upon the termination of his contract.
2016 2015
GBP'000 GBP'000
----------------------------- -------- --------
Short-term employee benefits 724 906
Post-employment benefits 60 75
Share-based payments 33 76
----------------------------- -------- --------
817 1,057
----------------------------- -------- --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QQLFBDXFZBBD
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March 07, 2017 02:00 ET (07:00 GMT)
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