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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Biocare | LSE:BSN | London | Ordinary Share | GB00B1528F83 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 1.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:6812E Biocare Solutions PLC 28 September 2007 BIOCARE SOLUTIONS PLC ("Biocare" or the "Group" or the "Company") Interim results for the six months ended 30 June 2007 The Board of Biocare Solutions plc (BSN.L) is pleased to announce its results for the first half of the year 2007. Financial highlights * Revenues held steady at #1.1 million (H1 2006 #1.2 million) * Gross margins increase to 54 per cent. (H1 2006 49 per cent.; H2 2006 41per cent.) * Attributable loss reduced to #1.04 million (H1 2006 loss of #1.12 million) * Results presented on IFRS basis Operational Highlights * Production commencing at new Ferrandina facility * New highly-automated production equipment now installed * Output and sales in first half held back despite double shift working * New hypoallergenic laundry products launched, * Higher product specifications introduced in partnership with major Italian client * Two products trialed with Morrisons Supermarkets in the UK Post-period events * New loan financing agreed with RAB Special Situations to finance Ferrandina * Board significantly strengthened by new Finance Director and non-executive director appointment * New all-natural Lime descaler and Heavy Duty dirt and grime buster launched * Italian government confirms regional investment incentive tax regime including Ferrandina Commenting on the results Chairman, Stuart Anderson, said: "Considerable progress has been made in bringing the new plant at Ferrandina to the point of production. The delays have been frustrating for shareholders and management alike but we look forward to bedding in Ferrandina during the coming weeks, transferring all production from Meda at the end of October, and building sales significantly from 2008 onwards." For further information: Biocare Solutions plc 020 7448 5211 Stuart Anderson, Chairman Tony Higson, Managing Director Martin Graham Shelley, Finance Director KBC Peel Hunt Ltd 020 7418 8900 Richard Kauffer Deon Veldtman SPA Way James Poole 020 7354 0356 Chairman's Statement Overview I'm pleased to report a satisfactory first half to trading in 2007 particularly in light of the distraction of commencing production in Ferrandina. The momentum created a year ago from our listing in September in 2006 has been visibly built upon providing further validation of the Group's commercial strategy and development approach which the board are focussed on delivering. Commissioning of our new freehold production facility in Ferrandina, Southern Italy, proved to be more drawn out than we expected. It is gratifying therefore that we can report that production is now commencing and we expect acceptance by our customers in the next few weeks and thereafter a significant build up in sales. Against this background it is gratifying to be able to report maintained progress in the results of the Company for the first half of the year 2007. Operating margin was improved to a very creditable 54 per cent., from the dip in the second half of 2006. In an important development it has been confirmed that investment tax credits will be available to the Company for the investment in the new plant at Ferrandina. After initial challenge by the EU competition commission the investment incentive regime for the Basilicata region, in which our new plant is situated, has been announced by the Italian government, backdated to 1st January 2007. It is envisaged that tax credits of between 45 and 50 per cent. of the capital invested will be available against corporate, VAT, local and social taxes and this is expected to make a positive contribution to cash flow in 2008. In addition to the considerable efforts directed towards the new production plant at Ferrandina, the Company has continued to develop and test new products and to bring them to market. In Italy two exciting new products have just been launched after testing. These include a new safe lime descaler and a heavy duty dirt and grime remover. Both of these have considerable potential in the market. Revenues have held up despite the diversion of management and staff by the build up in Ferrandina. This was achieved through double shift working at the existing plant at Meda which operated throughout the period to new higher quality and production specifications introduced since the beginning of the year. Losses attributable to shareholders were held within tight limits, notwithstanding the additional expenses involved in setting up a new production location. On 30 July Martin Shelley joined the board as Finance Director and William van Klaveren became our new Non-Executive Director, both of whom are fluent Italian speakers and each has already made a substantial contribution to the Company. Financial review Gross profit for the period was unchanged at #0.6 million (H1 2006: #0.6 million). Sales at #1.1 million for the first six months of the year were marginally lower than the equivalent period a year ago (#1.2 million). During the first six months cost of sales were held down, declining 17 per cent., leading to a recovery in gross margin to 54 per cent. compared to 49 per cent. in the first half of 2006 and 41 per cent. in the second half of that year. Overheads were held to #1.6 million, despite higher expenses from double shift working and new systems of production at Meda; leading to an attributable loss for shareholders of #1.0 million a marginal improvement on the equivalent loss of #1.1 million in 2006. This was equivalent to a loss per share of 1.13p which compared to a restated 2.93 p loss per share in the first half of 2006. These interim results are presented on the IFRS basis of accounting for the first time. Prior period comparatives have been restated to the new basis as from January 1 2006. Changes in accounting do not alter the cash flows of the Company. A restated opening balance sheet is shown below. The result of these restatements has only a marginal impact on numbers previously reported. The principal effect has been the writing back to profit and loss account of sums previously amortised for goodwill.. Dividend No interim dividend is being recommended. Operating Review As previously reported Sales from Meda in the first six months of the year were limited by the existing plant's double shift capacity. Equipment delays and deferred operating permits from local government agencies at Ferrandina held back the Company's ability to meet demand for its products in all markets, but especially in Italy, where a number of new customers are awaiting the increased production capacity. After further delays during the summer holiday period waiting for infrastructure completion the Board is pleased to confirm that commissioning has started at Ferrandina, and the Board is confident that significant new business is expected over the next few weeks to reflect the investment the Group has made. Transfer from Meda of the existing production and establishment of distribution facilities in Northern Italy has been scheduled for the end of October. The commencement of production in Ferrandina and the transfer of existing functions from Meda, which is expected to be completed during the coming two months, have been accompanied by a planned restructuring of the Company. Taking advantage of the transition, the Company plans to streamline management and introduce greater operating efficiencies. Overhead savings are anticipated to be in the region of #0.3 million in 2008. In addition to the two products for heavy duty degreasing and descaling announced above, the Company received certification during the first half of 2007 for two new laundry products that meet exacting hypoallergenic standards and test negative for skin irritation. Deliveries have commenced and customer acceptance is enthusiastic. These products are expected to be an important source of future revenue and competitive advantage. Shortage of production capacity has limited the planned expansion in the UK market. We continue to test product specification with the major supermarkets and to trial sales in selected stores. The Company recruited a senior sales executive to develop the UK market and in May we received confirmation of acceptance of two products to be carried by Morrison's, in addition to existing listings with Sainsbury's and Coop UK. Post-period events The balance sheet at June 30 2007 shows no borrowings following the cash raised at the time of listing. During the past year investment in building production in Italy has been substantial. The Company therefore decided to raise supplementary financing in June and agreed a short-term loan facility for up to #1.03 million with RAB Special Situations Master Fund. To date approx. #0.5 million of this facility has been drawn down. The Company plans to replace this facility with longer term asset financing in Italy at an appropriate time. Outlook Considerable progress has been made in bringing the new plant at Ferrandina to the point of production. The delays have been frustrating for shareholders and management alike but we look forward to bedding in Ferrandina during the coming weeks, transferring all production from Meda at the end of October, and building sales significantly from 2008 onwards Stuart Anderson Chairman 28 September 2007 Consolidated income statement for the period from 1 January 2007 to 30 June 2007 30 June 30 June 31 2007 2006 December 2006 Unaudited Unaudited Audited #'000 #'000 #'000 Continuing operations Revenue 1,103 1,213 2,398 Cost of sales (512) (620) (1,321) Gross profit 591 593 1,077 Administrative expenses (1,646) (1,614) (3,531) Operating loss (1,055) (1,021) (2,454) Interest receivable 18 2 17 Loan interest payable (4) (99) (231) Exceptional finance charges - - (1,210) Interest payable and similar (4) (99) (1,441) charges Loss on ordinary activities before (1,041) (1,118) (3,878) taxation Tax on loss on ordinary - - - activities Loss for the period attributable to (1,041) (1,118) (3,878) shareholders Earnings per share As restated Loss per share - basic and diluted (1.13)p (2.93)p (7.19)p Consolidated statement of changes in shareholders' equity for the period from 1 January 2006 to 30 June 2007 Share Share Revaluation Other Share Retained Total capital premium reserve Reserves option earnings Equity reserve Balance at 1 January 681 3,236 - - - (4,671) (754) 2006 Issue of shares 128 1,370 1,498 Profit for the 6 months (1,118) (1,118) ended 30 June 2006 Exchange differences on - translation Balance at 30 June 2006 809 4,606 - - - (5,789) (374) Profit for the 6 months (2,760) (2,760) to 31 December 2006 Issue of shares 108 3,002 3,110 Revaluation of freehold 1,138 1,138 properties Reserve arising from 5,011 5,011 Reverse acquisition Share based payments 64 64 Exchange differences on 8 8 translation Balance at 31 December 917 7,608 1,138 5,011 64 (8,541) 6,197 2006 Profit for the 6 months (1,041) (1,041) to 30 June 2007 Issue of shares - Revaluation of freehold - properties Reserve arising from - Reverse acquisition Share based payments - Exchange differences on 6 6 translation Balance at 30 June 2007 917 7,608 1,138 5,011 64 (9,576) 5,162 Consolidated balance sheet as at 30 June 2007 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited # 000 # 000 # 000 on-current Assets Intangible assets 429 456 439 Property, plant and 3,419 1,054 3,290 equipment Total non-current 3,848 1,510 3,729 assets Current assets Inventories 799 717 818 Trade and other 2,389 2,558 2,290 receivables Cash and cash 466 640 1,231 equivalents Total current assets 3,654 3,915 4,339 Total assets 7,502 5,425 8,068 Current liabilities Trade and other 2,219 5,799 1,711 payables Total current 2,219 5,799 1,711 liabilities Non-current liabilities Other non-current 121 - 160 liabilities Total non-current 121 - 160 liabilities Total liabilities 2,340 5,799 1,871 Net assets 5,162 (374) 6,197 Equity Called up share capital 917 809 917 Share premium 7,608 4,606 7,608 Revaluation reserve 1,138 - 1,138 Merger reserve 5,011 - 5,011 Share option reserve 64 64 Retained earnings (9,576) (5,789) (8,541) Total equity 5,162 (374) 6,197 Consolidated cash flow statement for the period from 1 January 2007 to 30 June 2007 30 June 2007 30 June 2006 31 December 2006 Unaudited Unaudited Audited # # # Cash flows from operating activities Operating loss (1,055) (1,021) (2,455) Depreciation charges 103 114 210 Amortisation of Intangibles 9 9 18 Exchange differences arising on consolidation 45 - 18 Share option charges - 64 -------- -------- -------- (898) (898) (2,145) Movements in working capital Decrease/(Increas e) in inventories 19 (97) (197) (Increase) intrade debtors and other receivables (99) (1,171) (909) Increase /(Decrease) in trade creditors and other payables 508 839 (227) -------- -------- -------- Net cash outflow used in operating activities (470) (1,327) (3,478) -------- -------- -------- Cash flows from investing activities Interest received 18 2 16 Purchase of property, plant and equipment (270) (343) (1,328) -------- -------- -------- Net cash outflow used in investing activities (252) (341) (1,312) -------- -------- -------- Cash flows from financing activities Interest paid (4) - (305) Proceeds from issues of equity shares - 1,498 9,947 Proceeds from issues of convertible loan notes - 577 - Expenses paid in connection with share issue - - (1,538) Repayments of borrowings - - (2,304) Capital element of finance lease rental payments (39) - (12) -------- -------- -------- Net cash flows (used in)/generated from financing activities (43) 2,075 5,788 -------- -------- -------- Net (decrease)/increa se in cash and cash equivalents (765) 407 998 Cash and cash equivalents at the beginning of the period 1,231 233 233 -------- -------- -------- Cash and cash equivalents at the end of the period 466 640 1,231 -------- -------- -------- Notes to the interim Report For the six months ended 30 June 2007 1. Accounting policies Basis of preparation The condensed financial statements have been prepared in accordance with International Financial Reporting standards ('IFRS') as adopted by the European Union. The disclosures required by IFRS 1 - 'First-time Adoption of International Financial Reporting Standards' concerning the transition from UK GAAP to IFRS are given in note 5. The date of transition to IFRS is 1 January 2006. The impacts of IFRSs issued but not yet effective at the balance sheet date would not have a significant impact on these financial statements. A summary of the Company's and the Group's accounting policies is given below. Accounting convention The financial statements have been prepared on the historical cost basis, except as disclosed in the accounting policies set out below. First time adoption of International Financial Reporting Standards IFRS 1 - 'First-time Adoption of International Financial Reporting Standards' sets out the requirements for the first time adoption of IFRS. The standard permits a number of optional exemptions to this general principle. The Group has adopted the following approach to the key exemptions: * The Company has elected not to apply IFRS 3 to all business combinations that occurred before 1st January 2005. However after the transition date, the adoption of IFRS 3 resulted in a change of accounting policy for goodwill. Under UK GAAP goodwill on consolidation was capitalised and subject to an annual impairment review and was otherwise written off over five years from the year of acquisition. In accordance with the provision of IFRS 3 the Group ceased the amortisation of the goodwill from the date of transition, 1 January 2006 and as a consequence any amortisation of goodwill charged after the transition date has been reversed to the profit and loss. The shareholders of Biocare Solutions (UK) Limited (formerly Biocare Solutions Limited) exchanged the entire shareholdings in Biocare Solutions (UK) Limited for shares in Biocare Solutions Plc on 21 August 2006, as part of a share for share exchange in consideration for the entire share capital of Biocare Solutions (UK) Limited. On that day, Biocare Solutions (UK) Limited became a wholly owned subsidiary of Biocare Solutions Plc. Under UK GAAP the transaction qualified as a group reconstruction within the meaning of FRS 6 "Acquisitions and Mergers", and had been accounted for using the merger accounting method in the year ended 31 December 2006. However, the introduction of the new holding company does not result in the addition of any new businesses to the group, and as such the reconstruction falls outside of the scope of IFRS 3. Therefore, merger accounting principles have continued to be applied. As a result, although the group reconstruction did not become effective until August 2006, the consolidated financial statements of Biocare Solutions Plc are presented as if Biocare Solutions Plc and Biocare Solutions (UK) Limited had always been part of the same group. Accordingly, the financial statements for the current and prior period had been prepared as if Biocare Solutions (UK) Limited had been owned by Biocare Solutions Plc throughout the current and comparative accounting periods. * share-based payments: the Group has not adopted the exemption to apply IFRS 2 - 'Share-Based Payments' only to awards made after 7 November 2002. However no adjustment was necessary since the principles of IFRS2 - 'Share-based Payments' had already been applied by the Company in previous years. Critical accounting judgements and key sources of estimation uncertainty The preparation of financial information in conformity with generally accepted accounting practice requires management to make estimates and judgements that affect the reported amounts of current and contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Estimates and judgements are continually reviewed and are based on historical experience and other factors, and expectations of future events that are believed to be reasonable under the circumstances. The judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty are: * Property, plant and equipment These are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is provided at rates calculated to write off the value of each asset over its estimated useful life. The value of the assets is reviewed for impairment if events or circumstances indicate the carrying values may not be recoverable. * Impairment of Goodwill Determining whether goodwill is impaired requires an estimation of the value in use, which is calculated by estimating the future cash flow expected to arise from the cash-generating unit and discounted by a suitable discount rate in order to calculate the present value. No provision for impairment was made in the period and the carrying value at the balance sheet date was #298,000. * Share based payments In determining the fair value of equity settled share based payments and the related charge to the income statement, the Group makes assumptions about the future events and market conditions. The fair value is determined using a valuation model, which is dependent on future estimates including timing with which the options will be exercised and the future volatility of the Group's share price. These assumptions are based on publicly available information and reflect market expectations and the advice of qualified experts. Different assumptions about these factors could affect the reported value of share-based payments. Basis of consolidation The financial information incorporates the results of the Company and entities controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition, or from the date of disposal, as appropriate. Where necessary, adjustments are made to the results of the subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-Group transactions are eliminated on consolidation. Goodwill Goodwill arising on consolidation is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed. Other intangible assets Acquired intangible assets values are held on the balance sheet at cost and amortised on a straight-line basis over their estimated useful lives. Any impairment in value is recognised immediately in the income statement. Property plant and equipment Plant and equipment are stated at cost less accumulated depreciation and impairment losses. Properties are stated at revalued amount less accumulated depreciation and impairment losses. 2. Segment reporting Segment information is presented in the consolidated interim financial statements in respect of the Group's geographical segment, which are the primary basis of segment reporting ----------- ------- ------- ------- ------- ------- ------- ------- ------- By Segment Italy UK Malaysia Total Italy UK Malaysia Total 30-Jun-07 30-Jun-07 30-Jun-07 30-Jun-07 30-Jun-06 30-Jun-06 30-Jun-06 30 June 2006 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 ------- ------- ------- ------- ------- ------- ------- ------- Segment 1,027 65 11 1,103 1,099 77 37 1,213 Revenue ------- ------- ------- ------- ------- ------- ------- ------- Segment (604) (47) (57) (708) (348) (116) (84) (548) Results Unallocated expenses (347) (473) ------- ------- ------- ------- ------- ------- ------- ------- Group operating Losses (1,055) (1,021) Interest Receivable 18 2 Interest and similar (4) (99) charges ------- ------- Profit for the (1,041) (1,118) period ------- ------- ------- ------- ------- ------- ------- ------- ----------- 3. Earnings per share The calculation of the basic and diluted earnings per ordinary share is based on losses after tax of #1,039,143 (December 2006: #3,878,835 and June 2006: #1,118,532) and on 91,654,812 ordinary shares (December 2006: 53,942,698 and June 2006: 38,226,557) There were no dilutive potential ordinary shares at 30 June 2007. 4. Current assets - Trade debtors and other receivables 30 June 2007 30 June 2006 31 December 2006 # 000 # 000 # 000 Trade debtors 1,648 1,686 1,318 Other debtors 736 345 787 Prepayments and accrued income 5 527 185 --------- --------- --------- 2,389 2,558 2,290 --------- --------- --------- 5. Trade creditors and other payables 30 June 2007 30 June 2006 31 December 2006 # 000 # 000 # 000 Obligations under finance lease and hire purchase contracts 39 - 39 Trade creditors 1,565 2,207 1,098 Amounts owed to related parties (note 22) - 300 - Other taxes and social security costs - - 33 Convertible loans - 2,881 - Other creditors 279 217 161 Accruals and deferred income 13 194 380 --------- --------- --------- 2,219 5,799 1,711 --------- --------- --------- Effects of adoption of international financial reporting standards Reconciliation of equity At 1 January 2006 At 30 June 2006 At 31 December 2006 Date of transition comparable interim End of last period period presented under UK Gaap UK GAAP Effect Opening UK Effect IFRS UK Effect IFRS of IFRS GAAP of balance GAAP of balance IFRS balance IFRS sheet IFRS sheet sheet # # # # # # # # # Non-current assets Intangible assets 464 464 434 22 456 396 43 439 Property plant and 826 826 1,054 1,054 3,291 3,291 equipment Investments - - - - - - Total non-current 1,290 1,290 1,488 1,510 3,687 3,730 assets Current assets Inventories 620 620 717 717 818 818 Trade and other 1,387 1,387 2,558 2,558 2,290 2,290 receivables Cash and cash 233 233 640 640 1,231 1,231 equivalents 2,240 2,240 3,915 3,915 4,339 4,339 Total assets 3,530 3,530 5,403 5,425 8,026 8,069 Current liabilities Trade and other 4,284 4,284 5,799 5,799 1,712 1,712 payables Total current 4,284 4,284 5,799 5,799 1,712 1,712 liabilities Non-current liabilities - - - - 160 160 Total Non-current - - - - 160 160 liabilities Total liabilities 4,284 4,284 5,799 5,799 1,872 1,872 Net (liabilities)/ (754) (754) (396) (374) 6,154 6,197 assets Equity Called up share capital 681 681 809 809 917 917 Share premium 3,236 3,236 4,606 4,606 7,608 7,608 Revaluation reserve - - - - 1,138 1,138 Merger reserve - - - - 5,011 5,011 Share option reserve 64 64 Profit and loss account (4,671) (4,671) (5,811) 22 (5,789) (8,584) 43 (8,541) Shareholders' funds (754) (754) (396) (374) 6,154 6,197 Reconciliation of Profit At 30 June 2006 At 31 December 2006 comparable interim period End of last period presented under UK Gaap UK GAAP Effect Under UK GAAP Effect Under of IFRS of IFRS IFRS IFRS # # # # # # Turnover 1,213 1,213 2,398 2,398 Cost of sales (620) (620) (1,320) (1,320) Gross profit 593 593 1,078 1,078 Administrative expenses (1,636) 22 (1,614) (3,575) 43 (3,532) Operating loss (1,043) (1,021) (2,497) (2,454) Interest 2 2 17 17 receivable Loan interest payable (99) (99) (231) (231) Exceptional finance charges - (1,210) (1,210) Interest payable and (99) (99) (1,441) (1,441) similar charges Loss on ordinary activities (1,140) (1,118) (3,921) (3,878) before taxation Tax on loss on ordinary - activities Loss for the financial year (1,140) (1,118) (3,921) (3,878) Effects of IFRS a) IFRS 3 - Business combinations The equity and retained earnings have been adjusted by adding back goodwill previously amortised to the Income statement under UK GAAP (note 1). b) Cash flow statement The Group's consolidated cash flow statement was presented in accordance with IAS7. The statements present substantially the same information as that required under UK GAAP, with the following exceptions: *Under UK GAAP, cash flows are presented under nine standard headings, whereas under IFRSs, cash flows are required to be classified under operating, investing and financing activities. + *Under UK GAAP, cash and cash equivalents, which include cash and short term deposits, were shown as cash in hand and deposits repayable on demand. 6. Availability to public Copies of these interim results will be available at the Company's offices at 2 London Wall Buildings, London Wall, London, EC2M 5UU, and at the Company's website at www.biocaresolutions.co.uk This information is provided by RNS The company news service from the London Stock Exchange END IR OKOKPOBKDACB
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