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Share Name Share Symbol Market Type Share ISIN Share Description
Byotrol Plc LSE:BYOT London Ordinary Share GB00B0999995 ORDS 0.25P
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Chemicals 6.1 -0.0 0.1 81.3 29

Byotrol PLC Interim Results

07/12/2020 7:00am

UK Regulatory (RNS & others)


Byotrol (LSE:BYOT)
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TIDMBYOT

RNS Number : 6750H

Byotrol PLC

07 December 2020

7 December 2020

Byotrol Plc

("Byotrol" or the "Group")

Interim results

Byotrol Plc (AIM: BYOT), the specialist infection prevention and control company, is pleased to announce today its interim results for the six months ended 30 September 2020.

Highlights

Significant improvement in financial performance:

-- Sales trebled to GBP6.7m compared to GBP2.2m in H1 2020 (and GBP6.1m for the full year to 31 March 2020)

   --           Gross profit on product sales increased to GBP2.3m from GBP0.9m 
   --           Adjusted EBITDA * increased to GBP1.2m compared to a loss of GBP0.4m in H1 2020 

-- Net cash and cash equivalents of GBP1.7m at period end after substantial investment in stock

   --           Balance sheet strengthened by repayment of all financial debt 

All strategic initiatives progressing to plan:

-- Completion of licensing-out of Byotrol24 surface sanitizer to Integrated Resources Inc. in the US -expected to provide significant returns to Byotrol for minimal ongoing US costs

-- Solvay has globally launched Actizone 24 hour surface sanitizer, referring to it as a "blockbuster technology"

   --           Grant of GBP350,000 secured for seaweed research programme 

Market demand for our products remains high and we continue to expect future demand to settle substantially above pre-COVID levels. The outlook for our industry is highly positive and Byotrol's positioning within it remains very strong.

John Langlands, non-executive Chairman of Byotrol commented:

"This was a very strong first half performance. The business has delivered sustainable profits, benefitting from our long term strategy and of course the significant demand for our infection control products arising from the COVID-19 pandemic. Our employees all delivered under very difficult circumstances as we faced restrictions in movement and shortages in raw materials.

Byotrol remains extremely well positioned to benefit from the long term demand for infection control products both during and following the pandemic "

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 
 
 Flagstaff Strategic and Investor Communications           +44 (0)20 7129 1474 
 Tim Thompson/Andrea Seymour/Fergus Mellon          byotrol@flagstaffcomms.com 
 

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.

* Adjusted EBITDA is defined as Earnings before Interest, Tax, Depreciation and Amortisation and exceptional items, plus revenue recognised as interest under IFRS 15

Notes to editors

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

Byotrol's products can be used stand-alone or as ingredients within existing products, where they 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 byotrol.co.uk

Chief Executive's report and financial review

Byotrol continues to develop rapidly, with improvements being made across all key business performance indicators.

Our financial performance in the period has obviously been boosted by the COVID-19 outbreak, as has the outlook for the rest of the year. The Directors have long identified the need for high performance biocides against viruses and have been steadily positioning for changes in infection control markets for many years; whilst COVID-19 could not have been expected, in our view its impact is accelerating and increasing the size of the opportunity rather than introducing something completely new. Biocides are now recognised globally as important things that can help protect lives and our societies in tandem with vaccines, drugs and hygiene practices.

Financial highlights

   --           Sales trebled to GBP6.7m compared to GBP2.2m in H1 2020 

-- Adjusted EBITDA (our key long-term management target) increased to GBP1.2m compared to a loss of around GBP0.4m in H1 2020

-- Operating profit increased to c. GBP1.0m compared to an operating loss of GBP0.5m in H1 2020

   --           Result include GBP0.6m of royalty and licensing income 

-- Net cash of GBP1.7m at period end, compared to GBP1.4m at 31 March 2020, after repaying all borrowings and investing significantly in stocks both to satisfy customer demand and provide a buffer for Brexit

Our strong financial performance has been achieved with relatively small increases in underlying costs - cash operating costs in the period increased to around GBP1.9m compared to around GBP1.5m in the comparable period, validating our commercial strategy to maximise Byotrol's operating gearing and hence long term flexibility. This, combined with the large amount of optionality that we are steadily building into the business via licensing and technical development agreements, should make for excellent returns as we grow further.

All strategic initiatives continue to progress well and some key long-term projects have now been completed successfully, especially the licensing out of our EPA registered Byotrol24 surface sanitiser in the US and a resulting reduction of costs in the US to a negligible level.

Research and development

Our research programme continues on several fronts and is making particularly good progress in investigating seaweed as a sustainable but effective biocide. This is an area of huge interest in our industry at the moment and we believe we have a lead in a technology with excellent commercial potential in our core sanitising markets and elsewhere. We were very pleased to have been awarded a GBP350,000 UK Innovate grant in September 2020 to investigate the mode of action of the extracts in achieving the excellent anti-viral performance we have discovered in our own lab testing to date.

Prior to period end we finalised the readiness of a dedicated virology lab in our head office in Thornton Science Park, Cheshire, staffed by two specialist virologists. This is a very important investment for the Group and we believe will provide significant returns to the Group in the long-term. In total the Group invested some GBP138,000 across its technology portfolio in the period (H1 2020: GBP123,000).

Results by segment

Professional

H1 revenues increased to GBP5.66m from GBP1.77m, including GBP0.59m of royalty and licensing revenue compared to GBP35,000 in the comparable period. Gross profit on product sales (excluding license revenue) increased to GBP1.86m from GBP0.71m.

Product mix remained broadly consistent, whilst customer mix varied slightly in this period as sales into veterinary groups were held back due to temporary practice closures during lockdowns, although we are already seeing vets now go back towards normal buying profiles. Over the period some 70% of our product sales were into human health environments, of which 17% was under Medical Device Directive rules in the UK and EU.

The Group's efforts (across management, sales, technology and supply chain) have been largely focused on servicing existing Professional customers' heightened demand, within periods of variable supply caused by interruptions in the national flows of packaging and materials. A particular difficulty in the early days of the pandemic was sourcing plastic bottles and pump dispensers, the majority of which originate in China. Supplier prices in the period fluctuated wildly and in certain cases we had to absorb short term increases to keep the supply going - this resulted in the Professional gross margin on product sales slipping to 37% compared to 41% in the comparable period, all based on outsourced manufacturing. The supply chain has now largely returned to pre-COVID normality. I am very pleased with the team's response to the crisis and with the results achieved

We have also been doing what we can for the community by servicing emergency and medical services alongside long-standing customers but above all other new segments. We have also been trying where appropriate to keep our prices stable, although of course we have increased prices where supply chain changes and costs demand it, or when we have a new niche to pursue where the value equation still works for the customer, such as the AIRGENE Aerosol Disinfectant Cannister which has proved popular in clinical environments.

In licensing and IP sales we have also made further progress, and we continue to work on many new opportunities worldwide. Of the current agreements in place, the two most notable progressions are:

-- Solvay has now launched globally Actizone, the long-lasting antimicrobial surface sanitiser that Byotrol co-developed and that will pay Byotrol an ongoing commission on all Solvay sales. It was pleasing to hear the Solvay CEO describe this as a "potential blockbuster" technology on Solvay's recent investor calls. We are expecting to report our first sales-based income from this relationship in FY22 and believe it will cover both Professional and Consumer markets worldwide;

-- On 13 May 2020 we signed a license agreement with Integrated Resources Inc., a newly-formed associate of our hand sanitiser licensee in the US, over the Byotrol24 surface sanitiser. The agreement will pay us a royalty payment each year, underpinned by minimum guarantees. If they are successful, we will benefit from significantly lower costs to shareholders than continuing to operate in the US by ourselves with minimal resource. We are very encouraged by progress so far and expect further news on deal flow this financial year

Consumer

H1 revenues more than doubled to GBP1.01m from GBP0.41m, including a small amount of IP-based income, versus nil IP income in the comparable period. Gross profit (on products) increased to GBP0.43m from GBP0.17m. Resource invested in Consumer remains relatively light compared to Professional, which in the period was taking up the majority of our management and supply chain capacity.

One particular success was working with Boots to increase our alcohol-free, anti-viral hand sanitising foam into all 2,500 Boots UK stores. We are now looking to build on our retail and direct-to-consumer presence and have a variety of internal projects underway to formulate how best to do that with exactly what product proposition.

Elsewhere, sales across existing customers all increased in this segment, especially into Japan via our long-standing agents in pet and healthcare.

Balance sheet

Given the hugely increased sales, we have necessarily increased our investment in working capital: long-term trade receivables have increased from GBP0.71m at the end of FY20 to GBP1.1m at the end of H121 as a result of long-term IP licensing deals signed; although short-term debtors (largely arising from product sales) reduced marginally from GBP2.2m to GBP2.1m (in part due to the GBP0.3m under a licensing deal which was due on 31 March 2020 but paid after the year end and hence appeared in debtors). Trade and other payables increased concomitantly from GBP1.3m to GBP1.7m; notably, however, we used the significantly increased cash flow to repay all Group borrowings, with a consequent saving in finance and other charges of c. GBP40,000 on an annualised basis. Cash remains strong at over GBP1.7m (FY20: GBP1.4m net), notwithstanding an incremental investment of around GBP0.9m in stock.

Outlook

This was an extraordinary six months and we think the post COVID-19 world will look significantly different compared to pre-COVID. Notwithstanding that vaccines seem to be close to readiness, we expect sales to settle at levels significantly higher than pre-COVID, and our order book remains consistently higher now than at any other point in our history.

Our commercial opportunity has certainly increased in magnitude and continues to be supported by the changes we have been talking about for many years - increasing global demand, reduced supply as regulations bite and resultant industry structural change. However, we can now add to that a new awareness of the damage viruses can do if uncontained, and an increasing understanding of the risks that individuals and society run if not protecting themselves proactively. The opportunities for growth are now numerous and sizeable.

Within Byotrol we have effectively gone through several years of growth in 8 months and have had one eye at all times on scaling in a controlled way that supports long-term growth. We have done all this whilst the team has been working within the lockdown rules, at their most stringent in the north-west UK where our labs and many staff are based. Despite these constraints we have made significant changes to our team, management structure, processes and supply chain and have now started investing in marketing, advertising and promotion, PR and product proposition development research. We will report more on those initiatives at the year end.

We are pleased that the financial returns on our investments are now starting to come through - as shown by these interim results - and we remain very confident for our year end results We are now carefully investing some of the returns in Byotrol's future and remain very confident in our outlook. These are exciting times for all Byotrol stakeholders and we look forward to further progress in 2021 and beyond.

David Traynor

Chief Executive

Group statement of comprehensive income

 
                                                   6 months        6 months       Year to 
                                                       to              to         31 March 
                                                  30 September    30 September      2020 
                                                      2020            2019 
                                          Note      GBP'000         GBP'000       GBP'000 
                                                  (unaudited)     (unaudited)    (audited) 
 Revenue                                   2             6,673           2,174       6,069 
 Cost of sales                                         (3,777)         (1,259)     (3,179) 
                                                       _______         _______     _______ 
 Gross profit                                            2,896             915       2,890 
 
 Adjusted administrative expenses                      (1,815)         (1,423)     (2,920) 
                                                       _______         _______     _______ 
 Adjusted operating profit/(loss)                        1,081           (508)        (30) 
 Exceptional items                                           -             142         382 
 Amortisation of acquisition-related 
  intangibles                                            (121)           (146)       (279) 
 Share-based payments                                     (10)            (25)        (47) 
                                                       _______         _______     _______ 
 Operating (loss)/profit                                   950           (537)          26 
 
 Finance income                            4                27              14          59 
 Finance expense                           5              (18)           (101)       (128) 
                                                       _______         _______     _______ 
 Profit/(loss) before taxation                             959           (624)        (43) 
 Income tax credit/(expense)                                48            (11)         377 
                                                       _______         _______     _______ 
 PROFIT/(LOSS) FOR THE PERIOD                            1,007           (635)         334 
 
 Other comprehensive income/(expense): 
 Items that may be reclassified 
  subsequently to profit or loss: 
 Exchange differences                                     (29)             (4)           7 
                                                       _______         _______     _______ 
 Other comprehensive income/(expense), 
  net of tax                                              (29)             (4)           7 
 
 TOTAL COMPREHENSIVE INCOME/(LOSS) 
  FOR THE PERIOD                                           978           (639)         359 
 
 Earnings per share 
 Basic                                     6             0.23p         (0.15p)       0.08p 
 Diluted                                   6             0.22p         (0.15p)       0.08p 
 

Group statement of financial position

 
                                                 As at           As at         As at 
                                              30 September    30 September    31 March 
                                                  2020            2019          2020 
                                      Note      GBP'000         GBP'000       GBP'000 
                                              (unaudited)     (unaudited)    (audited) 
 Assets 
 Non-current assets 
 Intangible assets                     7             3,625           3,782       3,691 
 Tangible assets                                        57              66          54 
 Right-of-use assets                   8                50              80          69 
 Deferred tax assets                                   431               -         431 
 Trade receivables                                   1,082               -         714 
                                                   _______         _______     _______ 
                                                     5,245           3,928       4,959 
 
 Current assets 
 Inventories                                         1,146             384         285 
 Trade and other receivables                         2,073           1,714       2,185 
 Cash and cash equivalents                           1,755           2,007       1,712 
                                                   _______         _______     _______ 
                                                     4,974           4,105       4,182 
 
 Total assets                                       10,219           8,033       9,141 
 
 Liabilities 
 Non-current liabilities 
 Lease liabilities                     10               16              42          31 
 Deferred tax liabilities                              371             421         394 
                                                   _______         _______     _______ 
                                                       387             463         425 
 
 Current liabilities 
 Lease liabilities                     10               33              40          39 
 Other financial liabilities                             -             752           - 
 Trade and other payables                            1,671             817       1,319 
 Short-term borrowings                 9                 -             168         296 
                                                   _______         _______     _______ 
                                                     1,704           1,777       1,654 
 
 Total liabilities                                   2,091           2,240       2,079 
 
 NET ASSETS                                          8,128           5,793       7,062 
 
 Issued share capital and reserves 
 Share capital                                       1,107           1,077       1,101 
 Share premium                                      28,493          28,282      28,423 
 Merger reserve                                      1,065           1,065       1,065 
 Retained earnings                                (22,537)        (24,631)    (23,527) 
                                                   _______         _______     _______ 
 TOTAL EQUITY                                        8,128           5,793       7,062 
 

Group statement of cash flows

 
                                              6 months        6 months       Year to 
                                                  to              to         31 March 
                                             30 September    30 September      2020 
                                                 2020            2019 
                                               GBP'000         GBP'000       GBP'000 
                                             (unaudited)     (unaudited)    (audited) 
 Cash flows from operating activities 
 Profit/(loss) for the period                       1,007           (635)         334 
 Adjustments for: 
 Finance income                                      (27)            (14)        (59) 
 Finance costs                                         18             101         128 
 Depreciation of tangible non-current 
  assets                                               12              33          28 
 Amortisation of intangible non-current 
  assets                                              203             203         467 
 Income tax recognised in profit 
  or loss                                            (48)              11       (377) 
 Fair value adjustment on contingent 
  consideration                                         -           (142)       (363) 
 Share-based payments                                  10              25          47 
                                                  _______         _______     _______ 
 Operating cash flows before movements 
  in working capital                                1,175           (418)         205 
 
 (Increase)/decrease in trade and 
  other receivables                                 (315)             258       (995) 
 (Increase)/decrease in inventories                 (860)              32       (131) 
 Increase/(decrease) in trade and 
  other payables                                      533           (408)         202 
                                                  _______         _______     _______ 
 Cash (used in)/generated from operating 
  activities                                          533           (536)       (457) 
 Income tax refund received                            25               -           - 
                                                  _______         _______     _______ 
 Net cash (used in)/generated from 
  operating activities                                558           (536)       (457) 
 
 Cash flows from investing activities 
 Development of intangible assets                   (138)           (123)       (295) 
 Acquisition of property, plant 
  and equipment                                      (14)            (21)        (24) 
 Cash (outflow) on acquisition of 
  subsidiaries net of cash acquired                     -               -       (290) 
                                                  _______         _______     _______ 
 Net cash used in investing activities              (152)           (144)       (609) 
 
 Cash flows from financing activities 
 Movement in invoice discounting 
  facility                                          (296)            (77)          51 
 Repayments of principal on lease 
  liabilities                                        (21)            (20)        (39) 
 Interest expense on lease liabilities                (1)               -         (3) 
 Finance income                                         -              14           6 
 Finance costs                                       (18)            (23)       (142) 
                                                  _______         _______     _______ 
 Net cash (used in)/ generated by 
  financing activities                              (336)           (106)        (27) 
 
 Net (decrease)/increase in cash 
  and cash equivalents                                 70           (786)     (1,093) 
 Net foreign exchange differences                    (27)             (4)           8 
 Cash and equivalent at beginning 
  of period                                         1,712           2,797       2,797 
                                                  _______         _______     _______ 
 Cash and cash equivalents at end 
  of period                                         1,755           2,007       1,712 
 
 

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 2019          1,077     28,282    1,065    (24,015)    6,409 
Effect of change of accounting 
 policy (IFRS 16)                   -         -         -        (1)         (1) 
                                  _____     _____     _____     _____      _____ 
Balance at 31 March 2019 
 as restated                      1,077     28,282    1,065    (24,016)    6,408 
Profit/(loss) after taxation 
 for the period                     -         -         -       (635)      (635) 
Share-based payments                -         -         -         25          25 
Other comprehensive income: 
Exchange differences                -         -         -        (4)         (4) 
                                  _____     _____     _____     _____      _____ 
Balance at 30 September 
 2019                             1,077     28,282    1,065    (24,631)    5,793 
Profit after taxation 
 for the period                         -         -         -       967      967 
Other comprehensive income: 
Deferred tax on share-based 
 payment transactions                   -         -         -       101      101 
Exchange differences                    -         -         -        11       11 
Share-based payments                -         -         -         25          25 
Transactions with owners: 
Shares issued as part 
 of a business combination          24       141        -         -          165 
                                  _____     _____     _____     _____      _____ 
Balance at 31 March 2020          1,101     28,423    1,065    (23,527)    7,062 
Profit/(loss) after taxation 
 for the period                     -         -         -       1,007      1,007 
Share-based payments                -         -         -         10          10 
Other comprehensive income: 
Exchange differences                -         -         -        (27)       (27) 
Transactions with owners: 
Shares issued for cash              6         70        -         -           76 
                                  _____     _____     _____     _____      _____ 
Balance at 30 September 
 2020                             1,107     28,493    1,065    (22,537)    8,128 
 

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 2020 (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. 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 2020 and those which will be adopted in the preparation of the annual report for the year ending 31 March 2021.

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.

Going concern

The Directors have considered trading and cash flow forecasts prepared for the Group, and based on these 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 6 December 2020.

Comparative financial information

The comparative financial information presented herein for the year ended 31 March 2020 does not constitute full statutory accounts for that period. The statutory accounts for the year ended 31 March 2020 carried an unqualified Auditor's Report, did not 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.

   2           Segmental analysis 

6 months ended 30 September 2020

 
                                 Professional   Consumer     Total 
 Revenue                              GBP'000    GBP'000   GBP'000 
 Product sales                          5,067        997     6,064 
 Royalty and licensing income             591         18       609 
                                      _______    _______   _______ 
 Total revenue                          5,658      1,015     6,673 
 
 Gross profit 
 Product sales                          1,856        431     2,287 
 Royalty and licensing income             591         18       609 
                                      _______    _______   _______ 
 Total gross profit                     2,447        449     2,896 
 

6 months ended 30 September 2019

 
                                 Professional   Consumer     Total 
                                      GBP'000    GBP'000   GBP'000 
 Revenue 
 Product sales                          1,730        409     2,139 
 Royalty and licensing income              35          -        35 
                                      _______    _______   _______ 
 Total revenue                          1,765        409     2,174 
 
 Gross profit 
 Product sales                            709        171       880 
 Royalty and licensing income              35          -        35 
                                      _______    _______   _______ 
 Total gross profit                       744        171       915 
 

Revenue by geography

The Group recognises revenue in 3 geographical regions based on the location of customers, as follows:

6 months ended 30 September 2020

 
                   Professional   Consumer     Total 
                        GBP'000    GBP'000   GBP'000 
 United Kingdom           4,542        456     4,998 
 North America              445          -       445 
 Rest of World              671        559     1,230 
                        _______    _______   _______ 
 Total revenue            5,658      1,015     6,673 
 

6 months ended 30 September 2019

 
                   Professional   Consumer     Total 
                        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 
 

Management makes no allocation of costs, assets or liabilities between these segments since all trading activities are operated as a single business unit.

License revenue and finance income

License contracts (and certain other contracts relating to the sale of IP) typically provide for fixed payments to be made by customers over a given term (typically between three and five years but which may extend longer). Under IFRS 15, in order to reflect the time value of money, such contracts are recognised as the capitalised value of the income stream plus notional interest accruing for the year on the credit deemed to be extended to the customer (on a reducing balance basis). For the 6 months to 30 September 2020 this figure amounts to license revenue of GBP0.38m and related notional interest income of GBP27,000.

   3           Non-GAAP profit measures and exceptional items 

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

 
                                          6 months        6 months       Year to 
                                              to              to         31 March 
                                         30 September    30 September      2020 
                                             2020            2019 
                                           GBP'000         GBP'000       GBP'000 
 
 Operating profit/(loss)                          950           (537)          26 
 Adjusted for: 
 Amortisation and depreciation                    215             236         495 
 Revenue recognised as interest 
  under IFRS 15                                    27              10          33 
 Exceptional items: 
  - gain on adjustment of contingent 
   liability                                        -           (142)       (443) 
 - audit expenses relating to 
  2019                                              -              31          61 
 Expensed share-based payments                     10              25          47 
                                              _______         _______     _______ 
 Adjusted EBITDA                                1,202           (377)         219 
 

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.

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      2020 
                                                 2020            2019 
                                               GBP'000         GBP'000       GBP'000 
 
 Interest receivable on interest-bearing 
  deposits                                              -               4          26 
 Finance income arising from unwinding 
  of discounting of discounted 
  trade receivables                                    27              10          33 
                                                  _______         _______     _______ 
 Total finance income                                  27              14          59 
 
   5           Finance expense 
 
                                       6 months        6 months       Year to 
                                           to              to         31 March 
                                      30 September    30 September      2020 
                                          2020            2019 
                                        GBP'000         GBP'000       GBP'000 
 
 Interest and finance charges 
  paid or payable on borrowings                 17              23          45 
 Interest on lease liabilities 
  under IFRS 16                                  1               1           3 
 Acquisition-related financing 
  expense - unwinding of discount 
  on financial liabilities                       -              77          80 
                                           _______         _______     _______ 
 Total finance expense                          18             101         128 
 
   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       2020 
                                            2020            2019 
                                          GBP'000         GBP'000        GBP'000 
 Profit attributable to equity 
  holders of the parent: 
 Profit attributable to ordinary 
  equity holders of the parent 
  for basic earnings                           1,007           (635)           334 
 
 Weighted number of ordinary shares 
  in issue                               441,345,756     430,885,271   432,424,400 
 Effect of dilutive potential 
  ordinary shares                          9,665,218               -       703,183 
                                             _______         _______       _______ 
                                         451,010,974     430,885,271   433,127,583 
 
 Earnings per share attributable 
  to shareholders - basic                      0.23p         (0.15p)         0.08p 
 Earnings per share attributable 
  to shareholders - diluted                    0.22p         (0.15p)         0.08p 
 
 

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 to          6 months to         Year to 
                                                                  30 September 2020    30 September 2019     31 March 
                                                                                                               2020 
                                                                      GBP'000              GBP'000           GBP'000 
 Profit attributable to ordinary equity holders of the parent 
  for basic earnings                                                          1,007                (635)           334 
 Adjusting items: 
  - exceptional items                                                             -                (142)         (382) 
  - share-based payments                                                         10                   25            47 
  - finance expense on liabilities relating to contingent 
   consideration                                                                  -                   77            80 
 - amortisation of acquisition-related intangibles                              121                  146           243 
  - deferred tax credit arising from acquisition-related 
   intangibles                                                                 (48)                 (11)          (47) 
  - exceptional tax credit                                                        -                    -         (377) 
                                                                            _______              _______       _______ 
 Adjusted earnings attributable to owners of the Parent                       1,090                (540)         (102) 
 
 Weighted number of ordinary shares in issue 
  - basic                                                               441,345,756          430,885,271   432,424,400 
  - diluted                                                             451,010,974          430,885,271   433,127,583 
 
 Adjusted earnings per share attributable to shareholders 
  - basic                                                                     0.25p              (0.01)p       (0.02)p 
  - diluted                                                                   0.24p              (0.01)p       (0.02)p 
 

The criteria for inclusion of adjusting items in the calculation of adjusted EPS are the same as those relating to the calculation of adjusted EBITDA as set out in Note 3. Additionally, finance expense on liabilities relating to contingent consideration are non-cash costs reflecting the time value of money in arriving at the fair value of such liabilities and the effluxion of time over the period for which they are outstanding. Amortisation of acquisition-related intangibles (and the associated tax credit) relates to the amortisation of intangible assets in respect of customer relationships and brands which are recognised on a business combination and are non-cash in nature.

   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 2020         502              4,529     5,031 
 Additions                 -                138       138 
                       _____            _______   _______ 
 At 30 September 
  2020                   502              4,667     5,169 
 
 Amortisation 
  or impairment 
 At 1 April 2020           -            (1,340)   (1,340) 
 Charge for the 
  period                   -              (204)     (204) 
                     _______            _______   _______ 
 At 30 September 
  2020                     -            (1,544)   (1,544) 
 
 Net carrying 
  amount 
 At 30 September 
  2020                   502              3,123     3,625 
 
 At 1 April 2020         502              3,189     3,691 
 

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 2020          114            1,861       567         1,207             780     4,529 
 Additions                  -                -         -            97              41       138 
                      _______          _______   _______       _______         _______   _______ 
 At 30 September 
  2020                    114            1,861       567         1,304             821     4,667 
 
 Amortisation 
  or impairment 
 At 1 April 2020        (114)            (299)      (91)         (271)           (565)   (1,340) 
 Charge for the 
  period                    -             (93)      (29)          (60)            (22)     (204) 
                      _______          _______   _______       _______         _______   _______ 
 At 30 September 
  2020                  (114)            (392)     (120)         (331)           (587)   (1,544) 
 
 Net carrying 
  amount 
 At 30 September 
  2020                      -            1,469       447           973             234     3,123 
 
 At 1 April 2020            -            1,562       476           936             215     3,189 
 
   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 2020                   103         47       150 
 Additions in the period             -          -         - 
                               _______    _______   _______ 
 At 30 September 2020              103         47       150 
 
 Depreciation 
 At 1 April 2020                  (52)       (29)      (81) 
 Charge for the period            (11)        (8)      (19) 
                               _______    _______   _______ 
 At 30 September 2020             (63)       (37)     (100) 
 
 Net carrying amount 
 At 30 September 2020               40         10        50 
 At 1 April 2020                    52         18        70 
 
   9           Loans and borrowings 
 
                                     As at            As at         As at 
                                  30 September     30 September    31 March 
                                      2020             2019          2020 
                                    GBP'000          GBP'000       GBP'000 
 
 Invoice discounting facility                 -             168         296 
                                        _______         _______     _______ 
 
 Total loans and borrowings                   -             168         296 
 
   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 2020                              24         15        39 
 Repayments of principal                    (13)        (8)      (21) 
 Transfers from long to short term 
  liabilities                                 13          2        15 
                                         _______    _______   _______ 
 At 30 September 2020                         24          9        33 
 
 
 Amounts due in more than one year        Office   Vehicles     Total 
                                       equipment 
                                         GBP'000    GBP'000   GBP'000 
 At 1 April 2020                              29          2        31 
 Transfers from long to short term 
  liabilities                               (13)        (2)      (15) 
                                         _______    _______   _______ 
 At 30 September 2020                         16          -        16 
 
   11          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

[END]

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December 07, 2020 02:00 ET (07:00 GMT)

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