REG - Byotrol PLC - Half-year Report
07/12/2023 07:00
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RNS Number : 9269V Byotrol PLC 07 December 2023
Byotrol Plc
("Byotrol" or the "Company")
Interim results
Byotrol Plc (AIM: BYOT), the specialist infection prevention and control
company, is pleased to announce its unaudited interim results for the six
months ended 30 September 2023. The results are in line with the trading
update of mid-November.
Highlights
· Headline product sales of £2.02m, flat versus the comparable
period (H1, FYE March 2023), reflecting the impact of discontinued items. No
new IP sales, versus £0.22m in the comparable period.
· Substantial increase (17%) in like-for-like product sales after
allowing for discontinuations.
· Increasing concentration of activities in our chosen primary
market of animal health (65.0% of product sales versus 47.5% in the previous
year and 38.5% pre-pandemic FYE2020).
· Underlying gross margin of 44.5% on product sales, versus 42.6%
for the year ended 31 March 2023.
· EBITDA loss of £0.45m versus £0.3m in the comparable period.
· Cash in bank of £0.51m, versus £0.68m at 31 March 2023.
· Operational KPIs all improving, including OTIF (On Time In Full
delivery) now consistently exceeding 90%.
Projected returns from existing IP agreements remain encouraging, supported by
recent or upcoming product launches of long-lasting sanitisers in the US, UK
and EU. Commission and royalties are now expected to be material to our
finances from FYE March 2024.
Dr Trevor Francis, Non-Executive Chairman of Byotrol commented:
"The Directors are pleased with Byotrol's recent progress, despite the
continued difficult economic and market background and the need to make senior
management changes. Byotrol's products are all now fit for purpose with
regulators in our targeted markets and our product sales efforts are
benefiting from the increased focus and operational efficiencies."
For further information contact:
Byotrol Plc
Dr Trevor Francis, Non Executive Chairman +44 (0)1925 742 000
David Traynor, Interim Chief Executive Officer
Chris Sedwell, Chief Financial Officer
finnCap Limited (Nominated Adviser and Broker) +44 (0)20 7220 0500
Geoff Nash/George Dollemore - Corporate Finance
Nigel Birks/Harriet Ward - ECM
Flagstaff Strategic and Investor Communications +44 (0)20 7129 1474
Tim Thompson/Andrea Seymour/Fergus Mellon byotrol@flagstaffcomms.com (mailto: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 Chris Sedwell, CFO.
* Adjusted EBITDA is defined as Earnings before Interest, Tax, Depreciation
and Amortisation and exceptional items, share-based payments, non-trading
items such as profit or loss on disposal of assets, 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 that develops and commercialises high performance, broad
spectrum, low toxicity biocidal technologies for animal and human healthcare
markets. Our products are designed for domestic and international uses, with
regulatory approval for each market that we operate in, including under the EU
Biocide Products Regulation regime.
Byotrol technologies can be used as stand-alone products or as ingredients
within existing products, especially in surface care, personal care and odour
control uses.
Byotrol develops and commercialises technologies that create easier, safer and
cleaner lives for everyone.
For more information, go to byotrol.com
Chairman's Review
I have been Chairman of Byotrol now for 7 months, having been with the Company
originally in 2008 and then in various roles since late 2013, which included
seven years as Chief Technology Officer and two as an NED.
In the last year it feels as though we have been through a lengthy period of
turbulence, including raw material inflation, energy price hikes, political
uncertainty, as well as some internal difficulties. Despite these challenges,
we are continuing to make good progress in positioning our Company for the
future.
In my time as Chairman, along with my co-directors, I have reviewed our
strategy, positioning and management team, and we have reached the following
conclusions:
· Our science and regulatory-led strategy is on-point in a
valuable, global, growing market and we are building a company of value in
both product sales and underlying IP.
· Historically, we have been strong at commercialising IP, but less
so at selling our own products. We have learned at first-hand how hard it is
to build a product trading business from scratch, but with the recent increase
in focus we are now improving radically across all functions including sales
(where we still need to do a lot more), customer services and supporting
functions, especially supply chain and quality. I urge stakeholders to
review the detail of the CEO's report, which I believe shows real development
of the Company.
· Our leadership over the last 12 months has faced some challenges,
with one specifically enforced on us by some serious (and thankfully in the
end temporary) health issues within the senior team. I am glad to say the
changes are now behind us and we have a very focused and experienced
management team.
· Such issues have been addressed against a highly volatile
economic environment and in our experience an almost complete disappearance of
AIM as a funding solution for micro caps, except for tax-based investment in
new issues. Byotrol has no further capacity for EIS or VCT investment fund
raising, having exhausted the tax efficient capacity in earlier years. Over
recent years we have needed to finance our development almost completely from
internally generated sources, especially via existing IP agreements, which has
stifled growth and increased our risk profile.
In spite of these challenges like-for-like product sales over this review
period are up by 17%, underlying product gross margin is now above 44% despite
a 100% outsourced manufacturing model and our IP agreements are slowly coming
to fruition. We now need to solidify and accelerate these positive
developments.
The Board regularly reviews whether we can achieve our targets as an
independent, listed company and has concluded for the time being that we
can. We are now keeping this conclusion under frequent review and will not
hesitate to take a different route if it will lead to better returns for
shareholders.
Dr Trevor Francis
Non-Executive Chairman
Interim CEO's report and financial review
Byotrol's long-term strategy has been to build an IP-based biocide technology
company, founded on strong science, regulatory approvals and segmental
expertise, generating sustainable profits from its own product sales and from
monetizing IP.
Our roots are very much in R&D. Pre-pandemic we used IP activities to
generate cashflow, together with support from shareholders by way of
occasional equity issuance. During this period we also invested significant
resources into building a product trading business with products that would
meet the challenging regulatory requirements of the EU Biocides Products
Regulations and that would reduce volatility in earnings projections. This
led to us buying Medimark Scientific Limited, completed in January 2020, which
instantly provided a presence in animal health product sales in the UK and
also in some niche human health categories. The plan at the time was to
upgrade Medimark products using Byotrol technologies and then to expand into
Europe and adjacent product areas.
Covid put those plans on hold for two years, firstly due to the short period
of extraordinary demand for all sanitising products in all markets, and then
due to the extreme oversupply that followed. Since FYE2022 we have modified
the pre-Covid plan as post pandemic a number of our markets had changed, with
a continued clear intent of upgrading across all areas of the business but now
frustratingly against a backdrop of political and economic turmoil, not least
in financing markets.
Byotrol is now taking the shape that we have been working towards for many
years and the detail of our results in the period under review show the
progression well:
· 17% increase in like-for-like product sales after allowing for
regulatory-enforced discontinuations.
· Increasing concentration of activities in our chosen primary
market of animal health (65.0% of product sales versus 47.5% in the previous
year and 38.5% pre-pandemic FYE2020). Human health remains an area of focus
but is yet to fully benefit from the imminent launch of Cruise-based
technologies.
· Underlying gross margin of 44.5% on product sales, after
stripping out disposal costs for obsolete and discontinued stocks, versus
42.6% for the year ended 31 March 2023
· Operational KPIs all improving, including OTIF (On Time In Full
delivery) now consistently exceeding 90%
We recognise that we are reporting headline numbers below initial guidance,
which included some over-ambition on new product launches and led to senior
management change at the end of the period. However, that should not obscure
the fact that the refocusing programme is now in its final stages and that
business performance is improving in leaps and bounds.
The upside from continuing on our current path remains substantial as: (a) all
of our products have been designed for export into Europe, while our sales are
currently 90% UK; (b) we have not yet fully launched our new formulations into
human health; and (c) we have temporarily de-prioritised IP commercialization
- a historic strength - to focus on solidifying the products business.
Results by segment
Professional
H1 product revenues increased by 8% to £1.81m versus £1.68m in the
comparable period (6 months of September 2022). No royalty income was
received in H1, compared to £0.22m in the comparable period.
Gross profit on product sales was flat at £0.74m.
As has been long planned since the acquisition of Medimark, but delayed by and
to some degree a result of the pandemic, our Professional division has now
undergone a reorientation towards animal and (niche) human healthcare, with
continued tightening of focus on three core technology platforms, reduced
skus, regulatory acceptance across Europe, and operational excellence.
In the period under review Professional product revenue was split 73% animal
health, 22%% human health, 5% FM and other, versus 56%, 32% and 12% in the
previous full year. We are very encouraged by recent successes in the UK,
having secured favoured-supplier status with some of the UK's best known
animal welfare charities as well as leading wholesalers and corporate vet
groups.
We have now completed the upgrade of all our core formulations in animal
health surface care, to chemistries based on our proprietary Cruise
formulation and sold under the brands Anigene and Processus. Next summer we
will be launching a ready-to-use formulation for smaller customers and will
then also be able to look afresh at consumer markets, where we already have
some brand equity.
Our human health product offerings are due for upgrade to the Cruise platform,
to be sold under Chemgene branding. We have already launched a Cruise-based
surface disinfectant product as a range extension to Processus instrument
decontamination products, which we are selling into animal and human health
markets.
Export sales were behind plan in the period under review and we are now
seeking dedicated international sales resource. There is a substantial upside
here for the Company and its existing products and technologies, almost all of
which have been designed to satisfy UK and EU regulators.
Consumer
H1 revenues decreased to £0.21m from £0.34m and gross profit to £0.11m from
£0.14m, with gross margin increasing to 51.4% from 41.4%, a result (as in the
Professional segment) of focusing on higher margin product areas.
Consumer remains niche for us in product sales at present, without a dedicated
commercial and/or marketing lead except of course for longstanding customers
Boots (alcohol free hand sanitisers) and Goodsmile (petcare and human
healthcare in Japan).
We are also gradually increasing our presence on Amazon and we now expect to
launch consumer versions of our new technologies, especially Cruise, direct to
consumers on that platform. Sales on Amazon have grown very rapidly in the
last 6 months and are now a top 3 consumer customer, and a top 10 Byotrol
customer overall, with new listings to come.
Technology Portfolio
Our portfolio continues to strengthen, having now fixed on three core
platforms that we intend to support through the final regulatory approvals in
the EU:
· 'Cruise' technology platform is now formulated and in-market in
concentrate form and shortly in ready-to-use format. It is a high
performance, regulatory compliant (UK and EU) surface disinfectant with low
cost-in-use for multiple surfaces and healthcare environments. We would like
to think it is leading edge compared to most competitive products in the
market and in various iterations is already replacing a number of legacy
formulations.
· Artemis surface disinfection - natural and sustainable technology
with excellent anti-microbial performance, especially against viruses, which
we are now targeting to surface care environments including humans, animals
and specialist food environments. This technology fits with market trends
towards sustainability and in the near future we will be working hard to
achieve accelerated UK and EU regulatory approval, with faster roll-out at a
significantly lower cost than normal routes. (For information: accelerated
approval routes require that formal approval is achieved before products can
be put into market, a 12-month process).
· Invirtu hand sanitisers - alcohol free skin sanitisation with an
upgraded and more robust formulation, but with the same germ kill and
dermatological benefits.
Given the Company's current focus on its trading business, we have temporarily
but substantially reduced investment in developing new IP. We continue to see
substantial value in seaweed-based antivirals and in other natural
anti-microbials, but resource constraints mean we remain early in the
dedicated sales cycle.
Intellectual Property Sales and Licensing
The two most active IP-based projects remain live and are progressing
steadily:
· Actizone - the long-lasting antimicrobial surface sanitiser IP
that Byotrol co-developed and then sold to Solvay SA in 2018, with an ongoing
sales commission payable to Byotrol on Solvay's sales. This now has multiple
global regulatory approvals. To date, commissions to Byotrol have been
non-material, but recent projections suggest it will become financially
material to Byotrol by FYE 2025, assuming continued customer traction and
further product launches in both retail and institutional segments.
· Integrated Resources ("IRI")/Byotrol24 - the EPA registered
long-lasting antimicrobial that Byotrol sold to IRI in 2022. This sale was
conditional on IRI paying to Byotrol US$1.4m over 4 years to February 2026,
plus low single-digit royalties and a material percentage of the additional
sales proceeds should IRI onward sell the formulation. Since the agreement,
IRI has sub-licensed the formulation to a globally recognised US hygiene
brand, which is currently test-marketing and expecting to proceed to a full US
launch in Autumn 2024. Royalties received from IRI have however been
negligible to date.
As reported in recent trading updates, the team's recent efforts have been
focused more on monetizing current IP agreements than generating new
transactions, to (a) support the Company's investment in growing a sustainable
trading business and (b) reflect current trading at licensee and alliance
partners in their core markets. One such agreement has been reached since
period end, with Byotrol agreeing to terminate by mutual consent a historic
license with Turtle Wax Europe Limited in return for a cash payment. This was
a 5 year license agreement signed in January 2021 over Byotrol long-lasting
anti-microbial surface technology for in-car use, and sold to EU consumers.
Turtle Wax has since de-listed the product due to a change in strategy and
agreed with us a settlement sum for future guaranteed minimum royalties.
Balance sheet
Our balance sheet at the end of the first half shows net assets of £4.9m,
down £0.7m from £5.6m at the end of FY23. Of this £3.2m is held within our
intangible assets, in line with the previous year-end, and represents assets
created on the acquisition of Medimark combined with the value of our own
internally generated IP.
We have continued to develop our technical and operational capabilities and
have invested £0.18m in our IP and associated regulatory costs in the first
six months of FY24 (see Note 7). In addition, we invested in our finished
goods to support the Chemgene Medlab launch as well as other sales
initiatives, with inventory increasing to £632k at the end of September,
compared to £0.49m at the end of March 2023. We expect our inventory to
fall back again in the second half of the year as these launches and
initiatives gain momentum.
Our cash balance at the end of September was £0.51m, down £0.18m from
£0.69m at the FY23 year-end, reflecting careful management of our cash
balance, despite the investments noted above.
Management Changes
Byotrol has announced a series of Board changes in the period:
· Dr Trevor Francis was appointed Non-Executive Chairman of the
Company on 26 April 2023
· Ashley Head, serial entrepreneur and long-standing Byotrol
shareholder joined the Board as a Non-Executive Director on 13 September 2023
· Vivan Pinto, CEO since 22 November 2022 left the Company on 26
September 2023 to pursue other interests. David Traynor, Vivan's predecessor
and still on the Company board stepped in as Interim CEO, with expectations of
handing over to a newly hired CEO by mid-2024.
Outlook
The Directors remain completely focused on Byotrol moving to sustainable
profits. We recognize this has taken longer than expected and with a level
of operating costs to bring about these improvements that are undoubtedly
hurting, but we have done so during an exceptionally long duration of market
volatility, and no external equity capital raising since 2018. We are
encouraged by the radical improvements in margins, operational KPIs and by the
delivery of a product range that is future-proofed against EU and UK
regulatory environments.
Our challenge now is to improve sales execution further, especially in export
and in niche human health, and to then reallocate more resources back to
monetise our outstanding IP portfolio.
David Traynor
Interim CEO
Group statement of comprehensive income
6 months to 6 months to Year to
30 September 2023 30 September 2022 31 March
2023
Note £'000 £'000 £'000
(unaudited) (unaudited) (audited)
Revenue 2 2,022 2,232 4,592
Cost of sales pre-exceptional item (1,173) (1,129) (2,475)
_______ _______ _______
Gross profit pre-exceptional item 849 1,103 2,117
Cost of sales - exceptional item - - (258)
_______ _______ _______
Gross profit 849 1,103 1,859
Adjusted administrative expenses (1,441) (1,586) (3,383)
_______ _______ _______
Adjusted operating loss (592) (483) (1,524)
Amortisation of acquisition-related intangibles (114) (169) (300)
Share-based payments (57) (-) (33)
_______ _______ _______
Operating loss (763) (652) (1,857)
Finance income 4 43 50 103
Finance expense 5 (56) (21) (71)
_______ _______ _______
Loss before taxation (776) (623) (1,825)
Income tax credit 34 44 133
_______ _______ _______
Loss for the period (742) (579) (1,692)
Items that may be reclassified subsequently to profit or loss:
Exchange differences (38) 156 107
_______ _______ _______
Other comprehensive (expense)/income, net of tax (38) 156 107
Total comprehensive loss for the period (780) (423) (1,585)
Earnings per share - from loss for the period
Attributable to the owners of Byotrol plc (basic) 6 (0.16)p (0.13)p (0.37)p
Attributable to the owners of Byotrol plc (diluted) 6 (0.16)p (0.13)p (0.37)p
The accompanying notes 1 to 10 are an integral part of these financial
statements.
Group statement of financial position
As at As at As at
30 September 2023 30 September 2022 31 March
2023
Note £'000 £'000 £'000
(unaudited) (unaudited) (audited)
Assets
Non-current assets
Intangible assets 7 3,201 3,433 3,218
Tangible assets 50 76 61
Right-of-use assets 8 9 17 13
Deferred tax assets 163 134 163
Trade receivables 1,356 1,804 1,436
_______ _______ _______
4,779 5,464 4,891
Current assets
Inventories 632 627 494
Trade and other receivables 1,215 1,649 1,669
Cash and cash equivalents 508 1,158 687
_______ _______ _______
2,355 3,434 2,850
Total assets 7,134 8,898 7,741
Liabilities
Non-current liabilities
Lease liabilities 9 - 8 4
Deferred tax liabilities 266 360 299
Convertible loan stock 962 962 962
_______ _______ _______
1,228 1,330 1,265
Current liabilities
Trade and other payables 1,016 827 863
Lease liabilities 9 8 8 8
_______ _______ _______
1,024 835 871
Total liabilities 2,252 2,165 2,136
NET ASSETS 4,882 6,733 5,605
Issued share capital and reserves
Share capital 1,135 1,135 1,135
Share premium 457 457 457
Other reserves 856 981 932
Retained earnings 2,434 4,160 3,081
_______ _______ _______
TOTAL EQUITY 4,882 6,733 5,605
The accompanying notes 1 to 10 are an integral part of these financial
statements.
Group statement of cash flows
6 months to 6 months to Year to
30 September 2023 30 September 2022 31 March
2023
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Cash flows from operating activities
Loss for the period (742) (579) (1,692)
Adjustments for:
Finance income (43) (50) (103)
Finance costs 56 21 71
Depreciation of tangible non-current assets 15 18 34
Amortisation of intangible non-current assets 191 275 642
Loss on disposal of assets 6 1 64
Income tax recognised in profit or loss (34) (44) (100)
Share-based payments 57 - 33
_______ _______ _______
Operating cash flows before movements in working capital (494) (358) (1,051)
(Increase)/decrease in trade and other receivables 392 57 421
(Increase)/decrease in inventories (140) (227) (95)
Increase/(decrease) in trade and other payables 345 (377) (428)
_______ _______ _______
Cash generated/(used in) from operating activities 103 (905) (1,153)
Income tax refund received - 21 125
_______ _______ _______
Net cash generated/(used in) from operating activities 103 (884) (1,028)
Cash flows from investing activities
Development of intangible assets (180) (202) (419)
Acquisition of property, plant and equipment (4) (20) (22)
_______ _______ _______
Net cash used in investing activities (184) (222) (441)
Cash flows from financing activities
Proceeds from issue of convertible loan stock - 1,000 1,000
Repayments of principal on lease liabilities (4) (4) (12)
Finance costs (56) (20) (70)
Interest expense on lease liabilities - - (1)
_______ _______ _______
Net cash (used in)/ generated by financing activities (60) 976 917
Net decrease in cash and cash equivalents (141) (130) (552)
Net foreign exchange differences (38) 156 107
Cash and equivalent at beginning of period 687 1,132 1,132
_______ _______ _______
Cash and cash equivalents at end of period 508 1,158 687
Group statement of changes in equity
Share capital Share premium Other reserve Retained profits Total
Exchange reserve
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 March 2022 1,135 457 787 - 4,739 7,118
Loss after taxation for the period - - - - (579) (579)
Other comprehensive income:
Exchange differences - - 156 - - 156
Transactions with owners:
Convertible Loan Stock Issue - - - 38 - 38
_____ _____ _____ _____ _____ _____
Balance at 30 September 2022 1,135 457 943 38 4,160 6,733
Loss after taxation for the period - - - - (1,113) (1,113)
Other comprehensive income:
Exchange differences - - (49) - - (49)
Transactions with owners:
Share-based payments - - - - 33 33
Deferred tax on share-based payment transactions - - - - 1 1
_____ _____ _____ _____ _____ _____
Balance at 31 March 2023 1,135 457 894 38 3,081 5,605
Loss after taxation for the period - - - - (742) (742)
Other comprehensive income:
Exchange differences - - (38) - - (38)
Transactions with owners:
Share-based payments - - - - 57 57
_____ _____ _____ _____ _____ _____
Balance at 30 September 2023 1,135 457 856 38 2,396 4,882
Reserve Description and purpose
Share capital Nominal value of issued shares
Share premium Amount subscribed for share capital in excess of nominal value less associated
costs
Other Reserve Equity component arising from issue of Convertible Loan Note
Exchange reserve The difference arising on the translation of foreign operations denominated in
currencies other than UK Sterling into the presentational currency of the
Group
Merger reserve Amounts arising on the consolidation of historic acquisitions under merger
accounting principles
Retained earnings All other net gains and losses not recognised elsewhere
The accompanying notes 1 to 10 are an integral part of these financial
statements.
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 2023 (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 2023 and those which will be adopted in
the preparation of the Annual Report for the year ending 31 March 2024.
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, assuming a continued marginal increase in product sales and some
further reasonable reductions in costs. Based on these, and a continued
confidence in being able to accelerate cash from existing IP agreements or
potentially a modest fundraise, the Directors are satisfied that the Group
will continue to be able to meet its liabilities as they fall due for at least
twelve months 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 5 December
2023.
Comparative financial information
The comparative financial information presented herein for the year ended 31
March 2023 constitute full statutory accounts for that period. The statutory
accounts for the year ended 31 March 2023 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
Revenue and gross profit by segment
6 months ended 30 September 2023 Continuing Total
operations
Professional Consumer
£'000 £'000 £'000
Revenue
Product sales 1,810 212 2,022
Royalty and licensing income - - -
_______ _______ _______
Total revenue 1,810 212 2,022
Gross profit
Product sales 740 109 849
Royalty and licensing income - - -
_______ _______ _______
Total gross profit 740 109 849
6 months ended 30 September 2022 Continuing Total
operations
Professional Consumer
£'000 £'000 £'000
Revenue
Product sales 1,678 336 2,014
Royalty and licensing income 218 - 218
_______ _______ _______
Total revenue 1,896 336 2,232
Gross profit
Product sales 746 139 885
Royalty and licensing income 218 - 218
_______ _______ _______
Total gross profit 964 139 1,103
Revenue by geography
The Group recognises revenue in three geographical regions based on the
location of customers, as follows:
6 months ended 30 September 2023 Professional Consumer Total
£'000 £'000 £'000
United Kingdom 1,674 88 1,762
North America 15 - 15
Rest of World 121 124 245
_______ _______ _______
Total revenue 1,810 212 2,022
6 months ended 30 September 2022 Professional Consumer Total
£'000 £'000 £'000
United Kingdom 1,575 140 1,715
North America 43 - 43
Rest of World 278 196 474
_______ _______ _______
Total revenue 1,896 336 2,232
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 period on the credit deemed to be extended to the
customer (on a reducing balance basis). For the 6 months to 30 September 2023
this figure amounts to license revenue of £nil and notional interest income
of £42,000.
3 Non-GAAP profit measures and exceptional items
Reconciliation of operating profit to adjusted EBITDA (earnings before
interest, taxation, depreciation and amortisation):
6 months to 6 months to Year to
30 September 2023 30 September 2022 31 March
2023
£'000 £'000 £'000
Operating loss (763) (652) (1,857)
Adjusted for:
Amortisation and depreciation 210 301 689
_______ _______ _______
EBITDA (553) (351) (1,168)
Loss on disposal of assets 6 1 64
Revenue recognised as interest under IFRS 15 42 49 101
Expensed share-based payments 57 - 33
Exceptional items:
- Inventory Provision - - 258
Total exceptional items - - 258
_______ _______ _______
Adjusted EBITDA (448) (301) (712)
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 to 6 months to Year to
30 September 2023 30 September 2022 31 March
2023
£'000 £'000 £'000
Interest receivable on interest-bearing deposits 1 1 2
Notional interest accruing on contracts with a significant financing component 42 49 101
_______ _______ _______
Total finance income 43 50 103
5 Finance expense
6 months to 6 months to Year to
30 September 2023 30 September 2022 31 March
2023
£'000 £'000 £'000
Interest and finance charges 56 21 70
Interest on lease liabilities under IFRS 16 - - 1
_______ _______ _______
Total finance expense 56 21 71
6 Earnings per share
The following sets out the earnings and share data used in the basic and
diluted earnings per share computations:
Denominator for earnings per share ("EPS") calculations
6 months to 6 months to Year to
30 September 2023 30 September 2022 31 March
2023
Weighted number of ordinary shares in issue 453,890,405 453,890,405 453,890,405
Effect of dilutive potential ordinary shares - Share Options 2,275,340 522,444 2,059,553
_______ _______ _______
456,165,745 454,412,849 455,949,958
The Group has two categories of potentially dilutive ordinary share. The
first is share options granted to employees where the exercise price (plus the
remaining expected charge to profit under IFRS 2 per option) 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.
The second relates to the Convertible Bond. The Group issued a Convertible
Bond for £1m in July 2022 to new and existing investors in the Company,
including Board directors. The Loan Notes have a term of five years, are
senior in ranking, unsecured and convertible at investors' option into
ordinary shares in the capital of the Company ("Ordinary Shares") at a price
of 3.25 pence per Ordinary Share, representing a 30% premium to the mid-price
of the Company's share price at close of business on 26 July 2022. The Loan
Notes carry a coupon of 9% per annum, payable quarterly in arrears. Based on
the issue size of £1,000,000, the Loan Notes would, if converted, represent
approximately 30,769,230 Ordinary Shares, amounting to 6.8% of the current
issued share capital of the Company. However, as the average Byotrol share
price since the issue of the Convertible Bond has been below the 3.25p
conversion price, these are currently classed as non-dilutive and do not
feature in the Denominator calculation above.
Numerator for EPS calculations
6 months to 30 September 2023 Total
£'000
Profit/(loss) attributable to ordinary equity holders of the Company (742)
(numerator for basic EPS calculation)
Adjusting items:
- share-based payments 57
- amortisation of acquisition-related intangibles 114
- deferred tax credit arising from acquisition-related intangibles (33)
_______
Adjusted earnings attributable to owners of the Parent (604)
(numerator for adjusted EPS calculation)
6 months to 30 September 2022 Total
£'000
Profit/(loss) attributable to ordinary equity holders of the Company (579)
(numerator for basic earnings per share calculation)
Adjusting items:
- share-based payments -
- amortisation of acquisition-related intangibles 169
- deferred tax credit arising from acquisition-related intangibles (24)
_______
Adjusted earnings attributable to owners of the Parent (434)
Year to 31 March 2022 Total
£'000
Profit/(loss) attributable to ordinary equity holders of the Company (1,692)
(numerator for basic earnings per share calculation)
Adjusting items:
- share-based payments 33
- exceptional items 258
- amortisation of acquisition-related intangibles 300
- deferred tax credit arising from acquisition-related intangibles (85)
_______
Adjusted earnings attributable to owners of the Parent (1,186)
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. 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.
EPS - reported
6 months to 6 months to Year to
30 September 2023 30 September 2022 31 March
2023
£'000 £'000 £'000
Reported earnings per share attributable to shareholders
- basic (0.16)p (0.13)p (0.37)p
- diluted (0.16)p (0.13)p (0.37)p
EPS - adjusted
6 months to 6 months to Year to
30 September 2023 30 September 2022 31 March
2023
£'000 £'000 £'000
Adjusted earnings per share attributable to shareholders
- basic (0.13)p (0.10)p (0.26)p
- diluted (0.13)p (0.10)p (0.26)p
7 Intangible assets
Intangible assets comprise capitalised development costs, acquired software,
customer relationships and goodwill.
Goodwill Other Intangible Assets Total
£'000 £'000 £'000
Cost
At 1 April 2023 502 5,335 5,837
Additions - 179 179
(Disposals) - (8) (8)
_____ _______ _______
At 30 September 2023 502 5,506 6,008
Amortisation
At 1 April 2023 - (2,619) (2,619)
Charge for the period - (190) (190)
Eliminated on disposal - 2 2
_______ _______ _______
At 30 September 2023 - (2,807) (2,807)
Net carrying amount
At 30 September 2023 502 2,699 3,201
At 1 April 2023 502 2,716 3,218
Other Intangible Assets comprise:
Customer Relationships Brands Development Costs Patents and licenses Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 April 2023 1,861 567 2,244 663 5,335
Additions - - 154 25 179
(Disposals) - - - (8) (8)
_______ _______ _______ _______ _______
At 30 September 2023 1,861 567 2,398 680 5,506
Amortisation
At 1 April 2023 (857) (337) (933) (492) (2,619)
Charge for the period (93) (21) (64) (12) (190)
Eliminated on disposal - - - 2 2
_______ _______ _______ _______ _______
At 30 September 2023 (950) (358) (997) (502) (2,807)
Net carrying amount
At 30 September 2023 911 209 1,401 178 2,699
At 1 April 2023 1,004 230 1,311 171 2,716
8 Right-of-use assets
Right-of-use assets comprise leases over office buildings and vehicles.
Vehicles Total
£'000 £'000
Cost
At 1 April 2023 26 26
Additions in the period - -
(Disposals) in the period - -
_______ _______
At 30 September 2023 26 26
Depreciation
At 1 April 2023 (13) (13)
Charge for the period (4) (4)
Eliminated on disposal - -
_______ _______
At 30 September 2023 (17) (17)
Net carrying amount
At 30 September 2023 9 9
At 1 April 2023 13 13
9 Lease liabilities
Lease liabilities comprise liabilities arising from the committed and expected
payments on leases over office buildings and vehicles.
Amounts due in more than one year Vehicles Total
£'000 £'000
At 1 April 2023 4 4
Transfers from long to short term liabilities (4) (4)
At 30 September 2023 _______ _______
- -
Amounts due in less than one year Vehicles Total
£'000 £'000
At 1 April 2023 8 8
Repayments of principal (4) (4)
Transfers from long to short term liabilities 4 4
_______ _______
At 30 September 2023 8 8
10 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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