Share Name Share Symbol Market Type Share ISIN Share Description
Byotrol Plc LSE:BYOT London Ordinary Share GB00B0999995 ORDS 0.25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.01 0.31% 3.24 3.20 3.28 3.24 3.23 3.23 250,612 09:00:20
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Chemicals 5.7 0.2 0.1 64.8 13

Byotrol PLC Interim Results

19/12/2019 7:00am

UK Regulatory (RNS & others)


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RNS Number : 3983X

Byotrol PLC

19 December 2019

19 December 2019

Byotrol Plc

("Byotrol" or the "Group")

Interim results

Byotrol Plc (AIM: BYOT), the anti-microbial technology company, is pleased to announce today its interim results for the six months ended 30 September 2019.

Highlights

   --              Sales of GBP2.17m v. GBP1.12m in H1 2018 (as restated for application of IFRS15) 

-- Adjusted operating loss before share based charges (and including cash receivable for R & D tax credits) of GBP0.51m versus GBP0.92m in H1 2018

-- Gross cash and cash equivalents of GBP2.01m at period end, sufficient to complete growth plans

   --              All business units and strategic initiatives progressing satisfactorily. 
   --              Medimark running ahead of previous year 
   --              Continued confidence in positive EBITDA at year end 

John Langlands, non-executive Chairman of Byotrol commented:

"We are pleased with progress in the year to date

Trading losses are reducing rapidly and will continue to do so as the formal integration with Medimark concludes at year end. The team is also working on a number of business development and monetisation opportunities that should improve results for the full year. The board remains confident that the Company is on target to deliver sustainable operating profits.

We remain very excited about the business outlook for Byotrol."

For further information contact:

 
 Byotrol Plc 
 David Traynor, Chief Executive                   +44 (0)1925 742 000 
 Nic Hellyer, Chief Financial Officer 
 
 finnCap Limited (Nominated Adviser and 
  Broker)                                         +44 (0)20 7220 0500 
 Geoff Nash/Kate Bannatyne - Corporate Finance 
 Richard Chambers - ECM 
 

This announcement is released by Byotrol Plc and, prior to publication, the information contained herein was deemed to constitute inside information under the Market Abuse Regulations (EU) No. 596/2014. Such information is disclosed in accordance with the Company's obligations under Article 17 of MAR. The person who arranged for the release of this announcement on behalf of Byotrol Plc was Nic Hellyer, CFO.

Notes to editors

Byotrol plc (BYOT.L), quoted on AIM, is a specialist anti-microbial technology company, operating globally in the Food, Industrial, Healthcare and Consumer sectors, providing low toxicity products with a broad-based and targeted efficacy across all microbial classes; bacteria, viruses, fungi, moulds, mycobacteria and algae.

Byotrol's products can be used stand-alone or as ingredients within existing products, where Byotrol can significantly improve their performance, especially in personal hygiene, domestic and industrial disinfection, odour control, food production and food management.

Byotrol develops and commercialises technologies that create easier, safer and cleaner lives for everyone.

For more information, please go to www.byotrol.co.uk

Chief Executive's report

I am pleased to report that performance in the period under review in our enlarged group has improved versus the comparable period in 2018:

-- Sales increased to GBP2.17m versus GBP1.12m in H1 2018 (as restated for the application of IFRS 15)

-- Adjusted operating loss before share based charges (and including R&D tax credits) of GBP0.51m versus GBP0.92m (restated)

   --              H1 results include US losses of GBP0.12m for the period (GBP0.14m in H1 2018) 
   --              Cash and cash equivalents of GBP2.01m at period end. 

All strategic initiatives are progressing satisfactorily across the Group. In the US, we continue to seek a partner for Byotrol24 and are now engaged in a number of early-stage discussions. As this process continues we are reducing marketing spend linked to the Target retail trial and are now expecting the in-store trial to lapse at the end of March 2020. We hope to be in an alternative relationship with a better risk/reward profile by this time.

Results by segment

As part of the continued improvements in the Group we are now simplifying our reporting segments into two - Professional (Byotrol and Medimark products for use within businesses and institutions) and Consumer (Byotrol and Medimark products for individual consumers, including their pets).

Professional

H1 revenues increased to GBP1.77m from GBP0.67m, boosted by six months of contribution from Medimark, against a one month contribution in the comparable period. On the same basis, gross profit increased from GBP0.2m to GBP0.75m. Gross margins in Professional are already benefiting from the greater scale and pricing power that Medimark brings and we expect that to accelerate as we rationalise and focus the product portfolio across the Group.

Invirtu, our alcohol-free hand sanitiser, has excellent brand potential and its sales continue to increase year on year: SC Johnson Professional has now launched our products under their brand in UK and Irish hospitals and we are very excited about the potential of this relationship. Sales into elite sports teams are also gathering momentum, including international cricket teams, Tour de France cycling teams, English Premier League football teams and British Olympic athletes.

Medimark is performing well across all of its market sectors, with sales, gross profit and costs all improved on the comparable period in 2018. Highlights include new launches into the UK dentistry segment, with a range of products for decontaminating and protecting dental facilities, and successful transition of Medimark's medical device portfolio into an EU accredited regulatory body for post Brexit sales.

Consumer

Headline H1 revenues in this segment were GBP0.41m versus GBP0.45m in H1 2018 (as restated). Petcare remains the largest element of day-to-day sales in consumer, accounting for 92% of consumer sales in the period. Regulatory changes in EU petcare are now affecting all petcare suppliers and customers are migrating to our new, approved formulations, solidifying relationships and consolidating product ranges. A particular win was with European pet healthcare brand Beaphar, extending their range of Byotrol surface care products into the UK pet market.

A similar process of regulatory change is now starting in South-East Asia. We are pleased to see this happening and expect to take advantage of the new opportunities that will emerge, just as we have been doing in the EU

Despite very limited resource investment in non-pet consumer, we are making good progress in household products with some new, initially small, launches expected in the New Year:

-- Following the acquisition of Hero Pet Brands earlier this year, Manna Pro's UK division is launching a Multi-Surface Disinfectant Cleaner, powered by Byotrol, under their market-leading Simple Solution brand into the UK pet market in February 2020

-- Iconic British heritage brand, Swan, has added Byotrol carpet detergents into its new floorcare offering. Marketed under the new Swan Dirtmaster brand, the range launches into retail stores in the UK in March 2020

-- RK Wholesale Ltd have selected Byotrol formulations for their new range of UK floorcare products marketed under their long-standing Tower brand, which has provided consumers with home appliances since 1912, the new range will be launched in March 2020.

We understand that Solvay is making good progress with Actizone surface care products, in which we have an ongoing financial interest via a royalty linked to Solvay's sales. We are not party to the detail of their commercial discussions but we know that Solvay's resource commitment remains strong and our relationship healthy, especially in new product development, and we see potential upside from this relationship for calendar 2020 and beyond.

We continue our search for a partner for Byotrol24 in the US and have engaged professional advice to assist. Sales at Target continue to increase year on year and month on month, but are not large enough to justify continued, national marketing spend by us even at very small levels. We are now preparing for the trial at Target to finish at the end of March 2020.

Implementation of IFRS 16

Byotrol has adopted IFRS 16 Leases for the financial year ending 31 March 2020 and has chosen to use the modified retrospective approach to adoption which means there are no restatements to the prior year figures. IFRS 16 introduces a single lessee accounting model, whereby the Group will recognise lease liabilities and "right of use" assets at 1 January 2019 for leases previously classified as operating leases. Within the income statement rental expense is replaced by depreciation and interest expense. The adoption of IFRS 16 has resulted in aggregate right of use assets of GBP80,000 with corresponding liabilities of GBP82,000 being recognised as at 30 September 2019

In order to allow users of the accounts to see how the impact of IFRS 16 has affected adjusted EBITDA, we present a reconciliation below:

 
                                              Adjusted        Adjusted 
                                                EBITDA          EBITDA 
                                              6 months        6 months 
                                                    to              to 
                                          30 September    30 September 
                                                  2019            2018 
                                               GBP'000         GBP'000 
 Consistent with FY 2019 presentation 
  and accounting policy                          (502)           (660) 
 Changes due to IFRS 16                             21               - 
                                               _______         _______ 
 Consistent with H1 2020 presentation 
  and accounting policy                          (481)           (660) 
 

Expenditure on non-current assets

Expenditure of GBP0.12m (H1 2018: GBP0.09m) on relevant product development, and patent and license costs was capitalised in the period.

Medimark acquisition - contingent payments

Part of the consideration for the Medimark Acquisition in August 2018 was contingent on the achievement of certain EBITDA targets in the two years following the acquisition. The total contingent amount payable under these arrangements was between GBPnil and GBP1.8m, payable half in cash and half in Byotrol shares, depending on Medimark's audited profitability in the two financial years to 31 March 2020. We are currently in discussions with Medimark's vendors on the payment for the year to 31 March 2019, and we expect the discussions to conclude in the first quarter of 2020, with the cash payment shortly thereafter.

Outlook

This was a satisfactory half year, with steady progress on all fronts. All key performance metrics continue to improve across the business - sales, gross profit, gross margin - before any financial synergies with Medimark and with negligible one-off/technical or licensing deals so far. Integration planning is underway but synergies will not be realised until next financial year once the earnout on Medimark as completed. This is another area of upside that we see in the business, both on cost and revenue.

One area of focus at present is product rationalisation across the Group. We intend to focus on a small number of underlying technologies for our core products and sales across Professional and Consumer, and looking for alliances and partnerships for the remainder. At the moment we have seven technologies in house, all of which are valuable, but we know we must now focus resources.

The good news is that the Byotrol team now has very much the right mix of sales and technical personnel, cost control and cash reserves. We are now working hard on relaunching as a unified company from April 2020 and expect all the recent efforts to then become visible in results and projections. We remain very positive on our outlook and confident that we are doing the right things strategically and tactically.

Byotrol's results are typically weighted towards the second half and this characteristic is now amplified by the Medimark business which operates with a similar degree of seasonality, but with significantly higher sales than pre-acquisition Byotrol Professional. However, based on progress since period end, the Directors remain confident in reporting EBITDA positive results for the full year, with the degree of profitability dependent on trading in the New Year.

David Traynor

Chief Executive

Group statement of comprehensive income

 
                                                   6 months        6 months       Year to 
                                                       to              to         31 March 
                                                  30 September    30 September      2019 
                                                      2019            2018 
                                          Note      GBP'000         GBP'000       GBP'000 
                                                  (unaudited)     (unaudited,    (audited) 
                                                                   restated) 
 Revenue                                   2             2,174           1,123       5,660 
 Cost of sales and provision 
  of services                                          (1,259)           (670)     (2,055) 
                                                       _______         _______     _______ 
 Gross profit                                              915             453       3,605 
 
 Sales and marketing costs                               (557)           (405)       (963) 
 Research and development costs                          (177)           (268)       (436) 
 Other administrative costs                              (662)           (558)     (1,328) 
 Share-based payments                                     (25)            (37)        (60) 
                                                       _______         _______     _______ 
 Earnings before interest, tax, 
  depreciation and amortisation                          (506)           (815)         818 
 Depreciation                                             (33)            (11)        (24) 
 Amortisation                                             (57)           (131)       (363) 
                                                       _______         _______     _______ 
---------------------------------------  -----  --------------  --------------  ---------- 
 Adjusted operating (loss)/profit                        (596)           (957)         431 
 Amortisation of acquisition 
  intangibles                                            (146)               -       (175) 
 Exceptional items 
 Fair value movement on contingent                         142               -           - 
  consideration liabilities 
                                                       _______         _______     _______ 
---------------------------------------  -----  --------------  --------------  ---------- 
 Operating (loss)/profit                                 (600)           (957)         256 
 Finance income                            4                14               4          41 
 Finance expense                           5             (101)            (19)        (80) 
 R&D tax credits                                            63               -         124 
                                                       _______         _______     _______ 
 (Loss)/profit before taxation                           (624)           (972)         341 
 Income tax credit/(expense)                              (11)               3          11 
                                                       _______         _______     _______ 
 (LOSS)/PROFIT FOR THE PERIOD                            (635)           (969)         352 
 
 Other comprehensive income/(expense): 
 Items that may be reclassified 
  subsequently to profit or loss: 
 Exchange differences                                      (4)            (10)           7 
                                                       _______         _______     _______ 
 Other comprehensive income/(expense), 
  net of tax                                               (4)            (10)           7 
 
 TOTAL COMPREHENSIVE (LOSS) 
  / INCOME FOR THE PERIOD                                (639)           (979)         359 
 
 Earnings per share 
 Basic                                     6           (0.15p)         (0.24)p       0.08p 
 Diluted                                   6           (0.15p)         (0.24)p       0.08p 
 

Group statement of financial position

 
                                                 As at           As at         As at 
                                              30 September    30 September    31 March 
                                                  2019            2018          2019 
                                      Note      GBP'000         GBP'000       GBP'000 
                                              (unaudited)     (unaudited,    (audited) 
                                                               restated) 
 Assets 
 Non-current assets 
 Intangible assets                     7             3,782           4,068       3,862 
 Property, plant and equipment                          66              60          58 
 Right-of-use assets                   8                80               -           - 
 Contract assets                                         -               -         176 
                                                   _______         _______     _______ 
                                                     3,928           4,128       4,096 
 
 Current assets 
 Contract assets                                       461               -         275 
 Inventories                                           384             326         416 
 Trade and other receivables                         1,253           1,154       1,521 
 Cash and cash equivalents                           2,007           3,552       2,797 
                                                   _______         _______     _______ 
                                                     4,105           5,032       5,009 
 
 Total assets                                        8,033           9,160       9,105 
 
 Liabilities 
 Non-current liabilities 
 Deferred tax liabilities                              421             460         441 
 Other financial liabilities                             -             276         297 
 Lease liabilities                     10               42               -           - 
 Other payables                                          -             110           - 
                                                   _______         _______     _______ 
                                                       463             846         738 
 
 Current liabilities 
 Lease liabilities                     10               40               -           - 
 Other financial liabilities           11              752             485         520 
 Contract liabilities                                    -           1,000           - 
 Trade and other payables                              817           1,521       1,193 
 Invoice discounting facility                          168             260         245 
                                                   _______         _______     _______ 
                                                     1,777           3,266       1,958 
 
 Total liabilities                                   2,240           4,112       2,696 
 
 NET ASSETS                                          5,793           5,048       6,409 
 
 Issued share capital and reserves 
 Share capital                                       1,077           1,077       1,077 
 Share premium                                      28,282          28,282      28,282 
 Merger reserve                                      1,065           1,065       1,065 
 Retained earnings                                (24,631)        (25,376)    (24,015) 
                                                   _______         _______     _______ 
 TOTAL EQUITY                                        5,793           5,048       6,409 
 

Group statement of cash flows

 
                                             6 months        6 months       Year to 
                                                 to              to         31 March 
                                            30 September    30 September      2019 
                                                2019            2018 
                                              GBP'000         GBP'000       GBP'000 
                                            (unaudited)     (unaudited,    (audited) 
                                                             restated) 
 Cash flows from operating activities 
 Profit/(loss) for the period                      (635)           (969)         352 
 Adjustments for: 
 Depreciation of tangible non-current 
  assets                                              33              11          24 
 Amortisation of intangible non-current 
  assets                                             203             131         538 
 Finance income                                     (14)             (4)        (41) 
 Finance costs                                       101              19          80 
 Share-based payments                                 25              37          60 
 Income tax recognised in profit 
  or loss                                             31               -          13 
 (Decrease) in deferred tax                         (20)             (3)        (24) 
                                                 _______         _______     _______ 
 Operating cash flows before movements 
  in working capital                               (276)           (778)       1,002 
 
 (Increase)/decrease in inventories                   32              19        (70) 
 (Increase)/decrease in trade and 
  other receivables                                  268             201       (390) 
 (Increase)/decrease in contract 
  assets                                            (10)               -       (451) 
 Increase/(decrease) in trade and 
  other payables                                   (550)            (81)         239 
 Increase in contract liabilities                      -           1,000           - 
                                                 _______         _______     _______ 
 Net cash (used in)/generated from 
  operating activities                             (536)             361         330 
 
 
 Cash flows from investing activities 
 Development of intangible assets                  (123)            (82)       (283) 
 Cash (outflow) on acquisition of 
  subsidiaries net of cash acquired                    -           (554)     (1,131) 
 Acquisition of property, plant 
  and equipment                                     (21)            (13)        (23) 
 Interest income                                      14               4          41 
 Finance costs                                      (23)             (3)        (13) 
                                                 _______         _______     _______ 
 Net cash used in investing activities             (153)           (648)     (1,409) 
 
 Cash flows from financing activities 
 Repayments of principal on lease                   (20)               -           - 
  liabilities 
 Movement in invoice discounting 
  facility                                          (77)             (3)          16 
                                                 _______         _______     _______ 
 Net cash (used in)/ generated by 
  financing activities                              (97)             (3)          16 
 
 Net (decrease)/increase in cash 
  and cash equivalents                             (786)           (290)     (1,063) 
 Net foreign exchange differences                    (4)            (10)           7 
 Cash and equivalent at beginning 
  of period                                        2,797           3,852       3,853 
                                                 _______         _______     _______ 
 Cash and cash equivalents at end 
  of period                                        2,007           3,552       2,797 
 
 

Group statement of changes in equity

 
                             Share     Share     Merger   Retained   Total 
                             capital   premium   reserve   profits 
                            GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
Balance at 31 March 
 2018 as previously 
 reported                    1,007     27,468    1,065    (23,114)   6,426 
Effect of change of 
 accounting policy (IFRS 
 15)                           -         -         -      (1,320)   (1,320) 
                             _____     _____     _____     _____     _____ 
Balance at 31 March 
 2018 as restated            1,007     27,468    1,065    (24,434)   5,106 
Loss after taxation 
 for the period                -         -         -       (969)     (969) 
Other comprehensive 
 income: 
Exchange differences           -         -         -        (10)     (10) 
Share-based payments           -         -         -         37       37 
Transactions with owners: 
Shares issued by Byotrol 
 plc                           70       814        -         -        884 
                             _____     _____     _____     _____     _____ 
Balance at 30 September 
 2018                        1,077     28,282    1,065    (25,376)   5,048 
Profit after taxation 
 for the period                -         -         -       1,321     1,321 
Other comprehensive 
 income: 
Exchange differences           -         -         -         17       17 
Share-based payments           -         -         -         23       23 
                             _____     _____     _____     _____     _____ 
Balance at 31 March 
 2019                        1,077     28,282    1,065    (24,015)   6,409 
Effect of change of 
 accounting policy (IFRS 
 16)                           -         -         -        (2)       (2) 
                             _____     _____     _____     _____     _____ 
Balance at 31 March 
 2019 as restated            1,077     28,282    1,065    (24,017)   6,407 
Profit/(loss) after 
 taxation for the period       -         -         -       (639)     (639) 
Share-based payments           -         -         -         25       25 
Other comprehensive 
 income: 
Exchange differences           -         -         -         -         - 
                             _____     _____     _____     _____     _____ 
Balance at 30 September 
 2019                        1,077     28,282    1,065    (24,631)   5,793 
 
 

Notes to the Group financial statements

   1              Basis of preparation 

The Group has prepared its interim financial statements for the 6 months ended 30 September 2019 (the "interim results") in accordance with the recognition and measurement principles of International Financial Reporting Standards ("IFRS") as adopted by the European Union and also in accordance with the recognition and measurement principles of IFRS issued by the International Accounting Standards Board, but do not include all the disclosures that would otherwise be required. They have been prepared under the historical cost convention as modified to include the revaluation of certain non-current assets. Other than the adoption of IFRS 16 Leases the accounting policies adopted in the interim financial statements are consistent with those adopted in the Group's Annual Report and Financial Statements for the year ended 31 March 2019 and those which will be adopted in the preparation of the annual report for the year ending 31 March 2019.

As permitted, the interim results have been prepared in accordance with the AIM Rules of the London Stock Exchange and not in accordance with IAS34 Interim Financial Reporting. They do not constitute full statutory accounts within the meaning of section 434 of the Companies Act 2006 and are unaudited.

Change in accounting policy - application of IFRS 16 Leases

In the current period the Group has applied IFRS 16 Leases (as issued by the IASB in January 2016) for the first time ("IFRS 16" or the "Standard"). The Group has applied the definition of a lease and related guidance set out in the Standard to all lease contracts entered into or modified on or after 1 January 2014, with the date of initial application as 1 April 2019. The Group has applied IFRS 16 using the modified retrospective approach, with no restatement of comparative information.

IFRS 16 changes how the Group accounts for leases previously classified as operating leases under IAS 17, which were off balance sheet. Applying IFRS 16, for all leases (except as noted below), the Group:

(i) recognises right-of-use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of future lease payments;

(ii) recognises depreciation of right-of-use assets, and interest on lease liabilities, in the consolidated statement of comprehensive income; and

(iii) separates the total amount of cash paid in respect of lease obligations into a principal portion and interest (both presented within financing activities) in the consolidated statement of cash flows.

Lease payments under (i) are discounted using the interest rate implicit in the lease, if that rate can be determined, or the Group's estimated incremental borrowing rate. The finance cost is charged to the Consolidated Statement of Comprehensive Income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Additionally under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. This replaces the previous requirement to recognise a provision for onerous lease contracts. For the leases taken on balance sheet at 1 April 2019 the Group has used a weighted average interest rate of 3.3%.

For short-term leases (lease term of 12 months or less) and leases of low-value assets the Group has opted to recognise a lease expense on a straight-line basis as permitted by the Standard. This expense is presented within other expenses in the consolidated statement of profit or loss.

Financial effect of initial application of IFRS 16

The tables below show the amount of adjustment for each financial statement line item affected by the application of IFRS 16 for the current period. As the Group has adopted the modified retrospective approach the prior year and period are not restated for its application and hence there is no effect shown.

 
                                        6 months 
                                            to 
                                       30 September 
                                           2019 
                                         GBP'000 
                                       (unaudited) 
 
 Increase in depreciation                        20 
 Increase in finance costs                        1 
 Decrease in other expenses                    (21) 
                                            _______ 
 Increase in profit for the period                - 
 

Impact on earnings per share for the period

The impact on earnings per share is too small to be reflected in disclosure to the nearest 0.01p,

Impact on assets, liabilities and equity as at 1 April 2019

 
                                    As previously      IFRS 16      As restated 
                                       reported       adjustments 
                                       GBP'000         GBP'000        GBP'000 
                                      (audited)      (unaudited)    (unaudited) 
 Right-of-use assets                             -             99            99 
                                           _______        _______       _______ 
 Net impact on total assets                      -             99            99 
 
 
 Lease liabilities                               -            101           101 
                                       ___________        _______       _______ 
 Net impact on total liabilities                 -            101           101 
 
 Retained earnings                               -            (2)           (2) 
                                           _______        _______       _______ 
 Net impact on total liabilities 
  and equity                                     -             99            99 
 

The recognised right-of-use assets relate to the following types of assets:

 
                                  As at          As at 
                               30 September     1 April 
                                   2019           2019 
                                 GBP'000        GBP'000 
                               (unaudited)    (unaudited) 
 Leasehold properties                    53            65 
 Motor vehicles                          27            35 
                                    _______       _______ 
 Total right-of-use assets               80           100 
 

The associated right-of-use assets for leases were measured on a retrospective basis as if the new rules had always been applied. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

Impact on consolidated statement of cash flows

The application of IFRS 16 has an impact on the consolidated statement of cash flows of the Group as under the Standard lessees must present:

-- Short-term lease payments, payments for leases of low-value assets and variable lease payments not included in the measurement of the lease liability as part of operating activities (such payments have no material effect on these financial statements);

-- Cash paid for the interest portion of lease liabilities as part of financing activities; and

-- Cash payments for the repayment of the principal portions of leases liabilities as part of financing activities.

Under IAS 17, all lease payments on operating leases were presented as part of cash flows from operating activities. Consequently, for the 6 months ended 30 September 2019, the net cash generated by operating activities has increased by GBP21,000 and net cash used in financing activities decreased by the same amount.

IFRIC 23 Uncertainty over Income Tax Treatments

IFRIC 23 is effective for periods beginning on or after 1 January 2019 and requires:

-- The Group to determine whether uncertain tax treatments should be considered separately, or together as a group, based on which approach provides better predictions of the resolution;

-- The Group to consider if it is probable that the tax authorities will accept the uncertain tax treatment; and

-- If it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainty based on the most likely amount or expected value, depending on whichever method better predicts the resolution of the uncertainty

The Group does not believe that it is impacted by IFRIC 23 and therefore opening retained earnings remain unaffected.

Going concern

The Directors have considered trading and cash flow forecasts prepared for the Group, and based on these, and confirmed banking facilities, are satisfied that the Group will continue to be able to meet its liabilities as they fall due for at least one year from the date of these results. On this basis, they consider it appropriate to have adopted the going concern basis in the preparation of the interim results, which were approved by the Board of Directors on 18 December 2019.

Comparative financial information

The comparative financial information presented herein for the year ended 31 March 2019 does not constitute full statutory accounts for that period. Statutory accounts for the year ended 31 March 2019 have been filed with the Registrar of Companies. These statutory accounts were reported on by the Group's auditors and received a qualified auditor's report, which included the following wording:

"The Group's cash and cash equivalents balance included in the Consolidated Statement of Financial Position of GBP2,797,000 as at 31 March 2019 consists of various bank accounts across more than one bank. Included within the Group cash and cash equivalents balance was GBP89,000 across four Lloyds Bank Plc accounts within two subsidiary entities. We have not received a response from Lloyds Bank Plc to our request for confirmation of bank account balances and of any other facilities or arrangements that the Group has with Lloyds Bank Plc other than an acknowledgment of receipt, which confirms that an account previously held by the parent company with a trivial balance recognised in the Company statement of financial position is closed.

We were able to review bank reconciliations for three of the four open Lloyds Bank Plc accounts referred to above, with the fourth account having a trivial balance for which bank statements indicate trivial movement during the year. However we were unable to perform all our planned audit procedures and we considered that alternative audit procedures did not fully address the risk of completeness of bank facilities across the Group and parent company financial statements."

These statutory accounts did not otherwise draw attention to any matters by way of emphasis and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006.

Comparative information for the 6 months ended 30 September 2018 has been restated for the impact of the application of IFRS 15 (as a new accounting standard) and IFRS 3.

   2              Segmental analysis 

Revenue by geography

The Group recognises revenue in 3 geographical regions based on the location of customers, as set out in the following table:

 
                                            Professional   Consumer     Total 
 6 months ended 30 September 2019                GBP'000    GBP'000   GBP'000 
 United Kingdom                                    1,483        168     1,651 
 North America                                         -         29        29 
 Rest of World                                       282        212       494 
                                                 _______    _______   _______ 
 Total revenue                                     1,765        409     2,174 
 Cost of sales                                   (1,013)      (246)   (1,259) 
                                                 _______    _______   _______ 
 Gross profit                                        752        163       915 
 Centrally incurred income and 
  expenditure not attributable 
  to individual segments: 
 Sales and marketing costs                                              (557) 
 Research and development costs                                         (177) 
 Other administrative costs excluding 
  costs directly attributable to 
  acquisition of subsidiary                                             (662) 
 Depreciation and amortisation                                           (90) 
 Share-based payments                                                    (25) 
 Amortisation of acquisition intangibles                                (146) 
 Fair value movement on contingent 
  consideration liabilities                                               142 
 Finance income                                                            14 
 Finance costs                                                          (101) 
 Research and development (R & 
  D) tax credits                                                           63 
                                                                      _______ 
 (Loss) for the period                                                  (624) 
 
 
                                         Professional   Consumer     Total 
 6 months ended 30 September 2018             GBP'000    GBP'000   GBP'000 
 United Kingdom                                   664        222       886 
 North America                                      2         53        55 
 Rest of World                                      4        178       182 
                                              _______    _______   _______ 
 Total revenue                                    670        453     1,123 
 Cost of sales                                  (465)      (205)     (670) 
                                              _______    _______   _______ 
 Gross profit                                     205        248       453 
 Centrally incurred income and 
  expenditure not attributable 
  to individual segments: 
 Sales and marketing costs                                           (405) 
 Research and development costs                                      (268) 
 Other administrative costs excluding 
  costs directly attributable to 
  acquisition of subsidiary                                          (440) 
 Costs directly attributable to 
  acquisition of subsidiary                                          (118) 
 Depreciation and amortisation                                       (142) 
 Share-based payments                                                 (37) 
 Finance income                                                          4 
 Finance costs                                                        (19) 
 Research and development (R &                                           - 
  D) tax credits 
                                                                   _______ 
 (Loss) for the period                                               (972) 
 
   3              Non-GAAP profit measures and exceptional items 

Reconciliation of earnings before interest, taxation, depreciation and amortisation ("EBITDA") to adjusted EBITDA:

 
                              6 months        6 months       Year to 
                                  to              to         31 March 
                             30 September    30 September      2019 
                                 2019            2018 
                               GBP'000         GBP'000       GBP'000 
                             (unaudited)     (unaudited)    (audited) 
 EBITDA                             (506)           (815)         818 
 Adjusted for: 
  - acquisition expenses                -             118         118 
  - share-based payments               25              37          60 
                                  _______         _______     _______ 
 Adjusted EBITDA                    (481)           (660)         996 
 

The criterion for adjusting items in the calculation of adjusted EBITDA is operating income or expenses that are material and either (i) arise from an irregular and significant event or (ii) are such that the income/cost is recognised in a pattern that is unrelated to the resulting operational performance. Materiality is defined as an amount which, to a user, would influence decision-making based on, and understandability of, the financial statements. Adjustment for share-based payment expense is made because, once the cost has been calculated, the Directors cannot influence the share based payment charge incurred in subsequent years, and the value of the share option to the employee differs considerably in value and timing from the actual cash cost to the Group.

Exceptional items are treated as exceptional by reason of their size or nature and are excluded from the calculation of adjusted EBITDA (and adjusted earnings per ordinary share) to allow a better understanding of comparable year-on-year trading and thereby an assessment of the underlying trends in the Group's financial performance. These measures also provide consistency with the Group's internal management reporting. Exceptional items in 2019 comprise legal and other costs relating to the acquisition of Medimark Scientific Limited and its subsidiary.

Adjusted EPS

The calculation of adjusted EPS is shown in Note 6.

   4              Finance income 
 
                                              6 months        6 months       Year to 
                                                  to              to         31 March 
                                             30 September    30 September      2019 
                                                 2019            2018 
                                               GBP'000         GBP'000       GBP'000 
                                             (unaudited)     (unaudited)    (audited) 
 Interest receivable on interest-bearing 
  deposits                                              4               4          21 
 Finance income arising from unwinding 
  of discounting of contract assets                    10               -          20 
                                                  _______         _______     _______ 
 Total finance income                                  14               4          41 
 
   5              Finance expense 
 
                                       6 months        6 months       Year to 
                                           to              to         31 March 
                                      30 September    30 September      2019 
                                          2019            2018 
                                        GBP'000         GBP'000       GBP'000 
                                      (unaudited)     (unaudited)    (audited) 
 
 Interest and finance charges 
  paid or payable on borrowings                 23               3          13 
 Acquisition-related financing 
  expense - unwinding of discount 
  on financial liabilities                      77              16          67 
 Interest on lease liabilities                   1               -           - 
  under IFRS 16 
                                           _______         _______     _______ 
 Total finance expense                         101              19          80 
 
   6              Earnings per share 

Earnings per share - reported ("EPS")

The calculation of basic and diluted EPS is based on the following data:

 
                                           6 months        6 months        Year to 
                                               to              to          31 March 
                                          30 September    30 September       2019 
                                              2019            2018 
                                            GBP'000         GBP'000        GBP'000 
                                          (unaudited)     (unaudited)     (audited) 
 Earnings 
 Earnings for the purposes of 
  basic and diluted earnings per 
  share being net profit attributable 
  to equity holders of the parent                (635)           (969)           352 
 
 Number of shares 
 Weighted average number of ordinary 
  shares for the purposes of basic 
  and diluted earnings per share           430,885,271     408,507,564   419,742,617 
 Effect of dilutive potential 
  ordinary shares: 
  - in-the-money share options                       -               -     2,050,000 
                                               _______         _______       _______ 
                                           430,885,271     408,507,564   421,792,617 
 
 

The Group has one category of potentially dilutive ordinary share, being those share options granted to employees where the exercise price (plus the remaining expected charge to profit under IFRS 2) is less than the average price of the Company's ordinary shares during the period. The weighted average number of shares for the calculation of diluted earnings per share is computed using the treasury share method.

Adjusted earnings per share

The calculation of basic and diluted adjusted EPS is based on the following data:

 
                                             6 months        6 months        Year to 
                                                 to              to          31 March 
                                            30 September    30 September       2019 
                                                2019            2018 
                                              GBP'000         GBP'000        GBP'000 
                                            (unaudited)     (unaudited)     (audited) 
 
 Earnings attributable to owners 
  of the Parent                                    (635)           (969)           352 
 Adjusting items: 
  - exceptional items                                  -             118           118 
 - amortisation of acquisition-related 
  intangibles                                        146               -           175 
 - share-based payments                               25               -            60 
  -finance charge on liabilities 
   relating to contingent consideration               77              16            67 
 R&D tax credits                                    (63)               -         (124) 
                                                 _______         _______       _______ 
 Adjusted earnings attributable 
  to owners of the Parent                          (450)           (835)           648 
 
 
 Weighted number of ordinary shares 
  in issue                                   430,885,271     408,507,564   419,742,617 
 Effect of dilutive potential 
  ordinary shares: 
  - in-the-money share options                         -               -     2,050,000 
                                                ________        ________       _______ 
 Weighted average number of ordinary 
  shares for the purposes of diluted 
  earnings per share                         430,885,271     408,507,564   421,792,617 
 

The Group has one category of potentially dilutive ordinary share, being those share options granted to employees where the exercise price (plus the remaining expected charge to profit under IFRS 2) is less than the average price of the Company's ordinary shares during the period. The weighted average number of shares for the calculation of diluted earnings per share is computed using the treasury share method.

   7              Intangible assets 

Intangible assets comprise capitalised development costs, acquired software, customer relationships and goodwill.

 
                          Goodwill   Other Intangible    Total 
                                               Assets 
                           GBP'000            GBP'000   GBP'000 
 Cost 
 At 1 April 2019               502              4,234     4,736 
 Additions                       -                123       123 
 Fair value adjustment 
                             _____            _______   _______ 
 At 30 September 
  2019                         502              4,357     4,859 
 
 Amortisation 
  or impairment 
 At 1 April 2019                 -              (874)     (874) 
 Charge for the 
  period                         -              (203)     (203) 
                           _______            _______   _______ 
 At 30 September 
  2019                           -            (1,077)   (1,077) 
 
 Net carrying 
  amount 
 At 30 September 
  2019                         502              3,280     3,782 
 
 At 1 April 2019               502              3,360     3,862 
 

Other Intangible Assets comprise:

 
                          Framework         Customer    Brands   Development         Patents     Total 
                             Access    Relationships                   Costs    and licenses 
                             Rights 
                            GBP'000          GBP'000   GBP'000       GBP'000         GBP'000   GBP'000 
 Cost 
 At 1 April 2019                114            1,861       567           958             734     4,234 
 Additions                        -                -         -            96              27       123 
 Fair value adjustment            -                -         -             -               -         - 
                            _______          _______   _______       _______         _______   _______ 
 At 30 September 
  2019                          114            1,861       567         1,054             761     4,357 
 
 Amortisation 
  or impairment 
 At 1 April 2019              (114)            (113)      (34)         (109)           (504)     (874) 
 Charge for the 
  period                          -             (93)      (28)          (52)            (30)     (203) 
                            _______          _______   _______       _______         _______   _______ 
 At 30 September 
  2019                        (114)            (206)      (62)         (161)           (534)   (1,077) 
 
 Net carrying 
  amount 
 At 30 September 
  2019                            -            1,655       505           893             227     3,280 
 
 At 1 April 2019                  -            1,748       533           849             230     3,360 
 
   8              Right-of-use assets 

Right-of-use assets comprise leases over office buildings and vehicles.

 
                                            Office     Vehicles    Total 
                                           buildings 
                                           GBP'000     GBP'000    GBP'000 
 Cost 
 At 1 April 2019                                   -          -         - 
 Effect of change of accounting policy 
  (IFRS 16)                                       95         47       142 
 Additions in the period                           -          -         - 
                                             _______    _______   _______ 
 At 30 September 2019                             95         47       142 
 
 Depreciation 
 At 1 April 2019                                   -          -         - 
 Effect of change of accounting policy            30         12        42 
 Charge for the period                            12          8        20 
                                             _______    _______   _______ 
 At 30 September 2019                             42         20        62 
 
 Net carrying amount 
 At 30 September 2019                             53         27        80 
 At 1 January 2019                                 -          -         - 
 
   9              Loans and borrowings 
 
                                     As at           As at         As at 
                                  30 September    30 September    31 March 
                                      2019            2018          2019 
                                    GBP'000         GBP'000       GBP'000 
                                  (unaudited)     (unaudited)    (audited) 
 
 Invoice discounting facility              168             260         245 
                                       _______         _______     _______ 
 
 Total loans and borrowings                168             260         245 
 
   10           Lease liabilities 

Lease liabilities comprise liabilities arising from the committed and expected payments on leases over office buildings and vehicles.

 
 Amounts due in less than one year            Office   Vehicles     Total 
                                           equipment 
                                             GBP'000    GBP'000   GBP'000 
 At 1 April 2019                                   -          -         - 
 Effect of change of accounting policy            23         16        39 
 Leases taken on in the period                     -          -         - 
 Repayments of principal                        (12)        (7)      (19) 
 Transfers from long to short term 
  liabilities                                     12          8        20 
                                             _______    _______   _______ 
 At 30 September 2019                             23         17        40 
 
 
 Amounts due in more than one year            Office   Vehicles     Total 
                                           equipment 
                                             GBP'000    GBP'000   GBP'000 
 At 1 April 2019                                   -          -         - 
 Effect of change of accounting policy            43         19        62 
 Leases taken on in the period                     -          -         - 
 Repayments of principal                           -          -         - 
 Transfers from long to short term 
  liabilities                                   (12)        (8)      (20) 
                                             _______    _______   _______ 
 At 30 September 2019                             31         11        42 
 
   11           Other financial liabilities 

Other financial liabilities comprise the fair value of potential liabilities for the contingent payments due in respect of the Medimark acquisition.

 
                                          As at           As at         As at 
                                       30 September    30 September    31 March 
                                           2019            2018          2019 
                                         GBP'000         GBP'000       GBP'000 
                                       (unaudited)     (unaudited)    (audited) 
 Contingent consideration on the 
  acquisition of Medimark assets 
 - potentially due within one 
  year                                          752             485         520 
 - potentially due after one year                 -             276         297 
                                            _______         _______     _______ 
 Total other financial liabilities              752             761         817 
 

Part of the consideration for the Medimark Acquisition in August 2018 was contingent on the achievement of certain EBITDA targets in the two years following the acquisition. The total contingent amount payable under these arrangements was between GBPnil and GBP1.8m. The amounts disclosed above are fair value estimates based on a probability-weighted analysis of the potential outturns for the EBITDA for the relevant years which determines the amount payable.

Following the completion of the measurement period at 31 March 2019 the contingent consideration liability for payments potentially due in the period 2019 to 2020 was valued at GBP817,000 (as discounted to the then present value at an imputed cost of funds). At 30 September 2019 the value of this liability was revised downwards to GBP752,000, a GBP65,000 decrease (net of the unwinding of the present value discount). This reduction reflected revised expectations of sales and profitability from the business based on the performance in the 6 month period and updated business projections, as well as certain reassessments of accounting classifications in the Medimark business which affect the EBITDA on which the earn-out calculation is based but not underlying cash flow. Accordingly an exceptional gain of GBP142,000 has been taken to profit and loss, offset by the notional cost of financing of GBP77,000. The carrying value of these liabilities will continue to be reassessed at future reporting dates.

   12           Post balance sheet events 

There have been no events subsequent to the reporting date which would have a material impact on these interim financial results

[]

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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