RNS Number:0324A
Biotrace International PLC
7 March 2001
FOR IMMEDIATE RELEASE: 07.00am, Wednesday 7 March, 2001
BIOTRACE INTERNATIONAL PLC
ANNOUNCES PRELIMINARY RESULTS
for the year ended 31 December 2000 and the
ACQUISITION OF ULTRASOURCE INC
Biotrace International Plc ("Biotrace"), leader in the manufacture and
marketing of rapid response systems for hygiene control and microbial
detection, today announces its preliminary results for the year ended 31
December 2000.
Highlights
* Pre tax profit of #0.53m after exceptional costs (1999: pre tax loss
of #1.69m)
* Earnings per share of 1.35p after exceptional costs (1999: loss of
5.00p per share)
* Volumes of reagents up 10% at record high of 8 million tests for
period under review
* Second half growth of 9% on first half, with 400% increase in profit
overall
* Gross margins improved by 3% to 68%
* #1.21m cash inflow resulting in #0.73m cash in hand
* Acquisition of assets of UltraSource Inc
* Successful launch of new product Pro-tecta into catering sector
* Substantial progress with the development of www.biotrace-direct.com
Commenting on the results, Terry Clements, Non-Executive Chairman of Biotrace
said:
"I am pleased to report a substantial improvement in the performance of the
Company and, as predicted, a return to profitability. With the return to
growth in the second half and current trading continuing this trend, I am
confident that 2001 will show further improvement in financial performance.
The Board remains convinced that the Company has excellent future prospects
and that Management can build on the solid platform created in 2000."
____________________________________________________________________________
For further information:
Biotrace International On 07.03.01: +44 (0) 207 466 5000
Ian Johnson, Chief Executive Office Thereafter: +44 (0) 1656 641 400
Peter Morgan, Finance Director
Buchanan Communications Tel: +44 (0) 207 466 5000
Nicola How / Tim Anderson
BIOTRACE INTERNATIONAL PLC
ANNOUNCES PRELIMINARY RESULTS
for the year ended 31 December 2000 and the
ACQUISITION OF ULTRASOURCE INC
Overview
The results for the year ended 31 December 2000 go some way towards
demonstrating the value and potential of Biotrace's core business activities.
With the exception of the turnover, all the key business measures and
indicators have moved positively; gross margin has improved 3 percentage
points; earnings per share of 1.35p were achieved compared with a loss per
share of 5.00p in 1999; net cash inflow of #1.21 million was realised compared
with a net cash outflow of #1.03 million in 1999, turning net borrowings of #
0.50 million into #0.73 million cash in hand; equity shareholder's funds
increased by 17%.
The performance in 2000 and the finalisation of the restructuring programme
are positive signals that the Group's revised strategy, for delivering
sustainable growth in sales and profits, is reaping benefits.
Turnover of #7.62 million was broadly flat (1999: #7.68 million), however,
this masks second half growth of 9% on the first half, as sales regained
momentum in the fourth quarter following the changes in distribution in late
1999. Reagent volumes have grown 10% year on year and reached a record level
of 8 million tests, with reagent and supporting product sales to the installed
base of instruments accounting for 94% of turnover.
The Group responded well to continuing price pressure from competitors with
gross margin increasing by 3% to 68%. When coupled with a 30% reduction in
total operating expenses, pre-tax profits (before exceptional costs) of #0.60
million were achieved (1999; loss of #0.69 million). After exceptional costs,
pre-tax profits were #0.53 million (1999; loss of #1.69 million). The second
half increase in sales and the full impact of the reduction in overheads, led
to a profit of #0.5 million, an increase of 400% on the first half.
Food Safety Division
Towards the latter part of 2000, the food and beverage unit together with the
food service and catering unit, including Ruskinn Data Systems Limited (RDS)
acquired in March 2000, merged to form a single food safety division. This
led to a further streamlining of management and greater alignment with our
global customers and distribution partners.
The Group's expanded product offering to customers in this sector consists of
rapid ATP hygiene testing instruments and reagents ( Xcela & Clean-Tracea),
aimed at the food processing companies, non-instrument rapid hygiene tests
(Pro-tecta & Check-Ita) predominantly sold to the food service and catering
business and rapid ATP end product testing instruments and reagents for dairy
UHT milk and juice production (BMLS system & kits).
Overall, sales of #5.0 million were achieved in 2000 (1999: #5.0 million),
which accounted for 66% of Group turnover. This flat overall performance,
however, masks a significant second half growth from #2.3 million in the first
half to #2.7 million in the second half, a 17% increase. Whilst instrument
revenue reduced by #0.3 million, this was entirely offset by 18% growth in
reagent revenue. North America shows positive signs of recovering former
growth rates with a 10% increase over 1999. Continental Europe has been slower
to recover from the distribution changes, with revenues down by 22% compared
to the same period last year. There was, however, evidence of recovery in the
fourth quarter of the year as the Company experienced higher demand for its
hygiene testing instruments.
Hygiene testing revenues reduced year on year by 7%, however, this masks a
strong second half performance, which saw revenues increasing by 19% on the
first half. Pro-tecta sales have made good progress during the initial launch,
boosted by the expansion of business with Johnson Wax Professional following
an agreement signed in August 2000 to distribute Pro-tecta under their '
Hygenius' brand.
The growth in end product testing was particularly good, with sales to
strategic partner, Cogent Technologies of the USA, and key dairy accounts
increasing year on year by 100% to #0.4 million. There are significant
opportunities to expand this business, which Management will focus on in 2001.
Industrial & Environmental Division
Sales of #0.89 million (1999: #0.88 million) accounted for 12% of Group
turnover. Reagent revenue increased by 7% compared with the same period in
1999, offsetting a slight decline in instrument sales. The Company maintained
a strong position in the paper and pulp industry, where the majority of sales
are derived. Revenues grew strongly in Europe, up 35% on 1999, whilst
remaining flat in North America.
In light of experience gained over the last year in this business sector, we
have taken the decision to increase resources in North America and to invest
in developing further sales. Accordingly, we are pleased to announce that we
have acquired the assets of UltraSource Inc., a specialist supplier of rapid
microbiology products to the sector. The company's founder, Mr Ron Aube, will
take up the position of Vice President of Biotrace Inc. and General Manager of
the division. Further details are given under acquisition below. It is
anticipated that under his leadership, the division will develop a strategy to
achieve higher growth rates through a combination of expanding products and
international sales.
Civil Defence & Military Division
With the growing awareness of the threat of terrorism, governments around the
world are establishing civil preparedness programmes to detect and defend
against biological and chemical attacks on major cities. These governments
are also equipping their armed forces with the capability to detect such
attacks in conflicts.
Biotrace has established a leading position in the rapid detection of
biological agents, built up over ten years of working under contract to the
Defence Evaluation Research Agency (DERA) and CBD, Porton Down, both UK
Ministry of Defence (MoD) agencies. The Company has supplied MoD with
detection systems and reagents, utilising unique, patented technology, for
many years, and is currently working closely with DERA and Graseby Dynamics
Limited, part of Smiths Industries Plc, to develop, under contract, second
generation detection systems and reagents.
Sales revenue in 2000 was #1.70 million, (1999: #1.76 million). Reagent sales
of #1.50 million together with sales of supporting products were similar to
1999. This level of sales reflects current use of the installed base of first
generation detection systems. Although reagent revenues can fluctuate
according to the level of threat and training requirements, it is anticipated
that the general level of testing will expand as larger numbers of new
generation systems are brought into service. Future sales growth will also
arise from export sales. The Company is currently in discussions to enter
into a marketing co-operation agreement with a well-known military supplier.
Product Development
It was particularly pleasing to announce, in January 2000, the alliance with
Konica Corporation of Japan. This led to the development of an initial
product, Pro-tecta, which combines the technological strengths of each
company, namely, Konica's colour change protein chemistry and Biotrace's
unique, user-friendly, disposable reagent device.
In the fourth quarter of 2000 we launched another new product, Check-Ita, an
instant hygiene test aimed specifically at the food catering market.
In October, the Company announced the development and launch of
www.biotrace-direct.com, a novel interactive hygiene management system using
the internet. Substantial technical progress has been made during the year.
In 2001, we will continue the development of this system and conduct
international customer trials and plan to introduce an initial product and
service in the second half of the year.
Biotrace continued the same level of investment in new products as in previous
years and has a very active development programme to fuel organic growth of
each of its three key divisions.
Acquisition
As mentioned above, Biotrace announces today that it has acquired UltraSource
Inc., a young company based in Atlanta, USA, specialising in supplying the
industrial water treatment sector with rapid microbiology products and
services. The company's founder and President, Ron Aube, will take up the
position of Vice President of Biotrace Inc. and General Manager of the Group's
Industrial and Environmental Division. Mr Aube's previous experience includes
Vice President of Sales for Dubois/Diversey Chemicals in Canada, Regional
Sales Manager for Texo Corporation in USA and Vice President Global Accounts
for Biotrace Inc. Biotrace has purchased the company's assets carrying a
nominal book value, by the payment of $50,000 and a warrant over 250,000
ordinary shares of 10p, which was issued at the closing price on 6 March 2001.
UltraSource's running rate of turnover at the time of the acquisition was
$0.2 million. The acquisition will provide strong sales management, located
in the largest market for the division, plus additional customers as well as
new products for the enlarged Group's combined customer base.
Financial review
2000 marked an important year for Biotrace delivering a significant
improvement in financial performance by a number of measurements:
* return to profitability
* the Americas business, through Biotrace Inc, becoming profitable for
the first time
* improved gross margins
* reduction in operating expense
* resumption of sales growth
* positive cashflow
Sales
Sales growth resumed in 2000 after the dislocation experienced to our
distribution arrangements in 1999 as previously reported. This becomes more
apparent when reviewing sales by half year rather than the flat position
reported in the headline annual result. Sales in the 2nd half of 2000 at #3.97
million were 9% ahead of the #3.65 million reported for the 1st half and 7%
ahead of the corresponding period in 1999.
Sales for the year were #7.62 million (1999: #7.68 million). Reagent revenues
increased by #0.53 million from #6.20 million in 1999 to #6.73 million, whilst
instrument revenue decreased from #1.02 million in 1999 to #0.52 million in
2000. The decrease in instrument sales was attributable to a fall in the
average selling price of instruments combined with a fall in the number of
instruments sold.
Gross Margins
Gross margin improved to 68.0% in 2000 (1999: 65.2%) reversing the decline
experienced in 1999. This was attributable in the main to improved
manufacturing efficiencies within the Group.
Expenses
The cost cutting programme implemented in July 1999 has delivered significant
reductions in expenses. The full effect of this reduction has become apparent
during 2000 with administrative expenses, excluding exceptional costs, falling
to #3.68 million in 2000 from #4.78 million in 1999. This has been achieved
without sacrificing any efforts in product development with spending in that
area being maintained at #0.89 million in 2000, the same level as in 1999.
Administrative expenses continued to fall during 2000 and the Group exited the
year running at an annualised running rate of #3.30 million, which would
improve the result by a further #0.4 million in a full year.
Exceptional Costs
During the period exceptional costs arose from #0.07 million (1999: #1.00
million) spent on further restructuring to implement and achieve the cost
reductions noted above.
Result for the Year
The combination of the improvement in gross margins together with the
reduction in administrative costs delivered a significant improvement to the
bottom line with a turnaround of #2.22 million to a profit before taxation of
#0.53 million (1999: loss #1.69 million)
Taxation
There is a small tax charge arising in the period amounting to #0.07 million
(1999: #0.03 million credit) representing a consolidated tax charge of 12%.
This arises after utilising #0.30 million of brought forward losses in the UK.
The restructuring has resulted in Biotrace Inc, the Group's North American
subsidiary, becoming profitable for the first time enabling the Group to
utilise some of the significant tax losses available there amounting to $6.0
million. Continued utilisation of these losses should result in low Group tax
charges for future periods. The tax losses are not recognised as an asset on
the Group balance sheet.
Balance Sheet
561,136 shares were issued in the year. Of these, 246,136 were issued on the
exercise of share options and the balance of 315,000 shares, were issued on
the acquisition of RDS. 135,000 shares remain to be issued in March 2001
representing the balance of the consideration due on the acquisition of RDS.
These issues increased share capital and reserves by #0.4 million. This,
combined with the retained profit for the year increased shareholders' funds
by #0.80 million.
Tangible fixed assets decreased by #0.39 million, with capital expenditure at
#0.19 million, lower than depreciation of #0.58 million. The Group has
invested heavily in prior years to increase capacity and this has obviated the
need to invest in further capital expenditure in the period. Intangible assets
increased due to the goodwill arising on the acquisition of RDS of #0.35
million. Debtors decreased due to a reduction in average days sales
outstanding from 81 days at the end of 1999 to 74 at the end of 2000. Stocks
decreased by #0.28 million despite the acquisition of RDS stocks and the
working capital investment necessary for the introduction of new product
lines.
Net cash balances increased significantly by #1.21 million to #0.73 million
cash in hand with the Group now ungeared. This improvement represented a #2.24
million turnaround from the #1.03 million outflow experienced in 1999.
The Group is paying a dividend of #1.00 million from its UK subsidiary
company, Biotrace Limited to the holding company, which will eliminate the
deficit brought forward on the holding company's profit and loss account.
This will give the Board the flexibility to pay dividends in future periods if
appropriate. The Board does not recommend a dividend in respect of 2000.
Outlook
The second half of 2000 signalled a significant growth in sales as the effects
of the distribution changes receded. This increase in sales coupled with the
lower running rate of expenses yielded a marked increase in profit in the
second half. The Company is now well positioned to take advantage of the
opportunities for growth across each of its divisions, which over the next
twelve months is expected to lead to further improvements in the Company's
financial performance.
Food safety is a large and growing market and provides Biotrace with
opportunities for expansion of the existing end product testing business, and
with the new product range of hygiene tests beginning to impact on expanding
the market, growth in sales revenues should be sustainable. Much of our effort
has been focused on regaining lost market share in North America and Europe.
There were clear signs in the second half that momentum was returning in the
hygiene testing business. Customers lost in the past eighteen months are
beginning to return, in recognition of the superior product performance and
customer service offered by Biotrace and it's new distribution partners.
Biotrace continues to lead the way in innovative products for rapid hygiene
testing and microbial detection and has recently introduced additional
products and services to assist the adoption of its products and technology.
To supplement organic growth in the business, we will continue to seek out
synergistic acquisitions that will add to our already impressive customer base
or provide additional products to this customer base. The acquisition of
UltraSource Inc. will strengthen the commercial team and spearhead a revival
of sales growth in the Company's Industrial division. Management is actively
working on further business expansion initiatives, which include better use of
the Company's assets to fund this expansion and further acquisitions for the
food safety division.
2001 has started well, with sales and profit up on the corresponding period
last year. In January, the Company secured deals in the USA with a well known
fast food chain and a supermarket chain. Both organisations will use Pro-tecta
to monitor hygiene standards.
BIOTRACE INTERNATIONAL PLC
Preliminary Results
GROUP PROFIT AND LOSS ACCOUNT
for the year ended 31 December 2000
Note 2000 2000 1999 1999
#'000 #'000 #'000 #'000
TURNOVER 1 7621 7688
COST OF SALES (2439) (2672)
GROSS PROFIT 5182 5016
Administrative expenses - ordinary (3683) (4778)
- exceptional 2 (72) (1002)
(3755) (5780)
Development costs (887) (906)
OPERATING PROFIT/(LOSS) 540 (1670)
Profit on the sale of tangible fixed assets 5 7
Interest receivable and similar income 4 4
Interest payable and similar charges (18) (33)
Profit/(loss) on ordinary activities before 603 (690)
exceptional costs
(72) (1002)
Exceptional costs
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE 531 (1692)
TAXATION
Tax on profit on ordinary activities 3 (66) 28
PROFIT/(LOSS) FOR THE FINANCIAL YEAR 465 (1664)
EARNINGS/(LOSSES) PER -basic 4 1.35p (5.00)p
SHARE -before exceptional 1.35p (5.00)p
costs
- fully diluted 1.52p (2.04)p
GROUP STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2000
2000 1999
#'000 #'000
Profit/(loss) for the financial year 465 (1664)
Difference in net investment in foreign enterprises
arising
from changes in foreign currency exchange rates (64) 76
TOTAL RECOGNISED GAINS AND LOSSES 401 (1588)
BIOTRACE INTERNATIONAL PLC
Preliminary Results
GROUP BALANCE SHEET
At 31 December 2000
2000 1999
#'000 #'000
FIXED ASSETS
Intangible assets 554 255
Tangible assets 1892 2285
2446 2540
CURRENT ASSETS
Stocks 1706 1989
Debtors 1672 1904
Cash at bank and in hand 731 146
4109 4039
CREDITORS - Amounts falling
due within one year (1083) (1883)
NET CURRENT ASSETS 3026 2156
CREDITORS - Amounts falling
due after more than 1 year (12) (39)
TOTAL ASSETS LESS CURRENT LIABILITIES 5460 4657
CAPITAL AND RESERVES
Called up share capital 3440 3384
Shares to be issued 104 -
Share premium account 5779 5537
Profit and loss account (3863) (4264)
SHAREHOLDERS' FUNDS 5460 4657
BIOTRACE INTERNATIONAL PLC
Preliminary Results
GROUP CASH FLOW STATEMENT
for the year ended 31 December 2000
2000 1999
#'000 #'000
NET CASH FLOW FROM OPERATING ACTIVITIES 1324 (278)
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 4 4
Interest paid (14) (30)
Interest paid in respect of hire purchase agreements (4) (3)
(14) (29)
TAXATION -
Amounts received/(paid) in respect of UK Corporation Tax 84 (626)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire intangible fixed assets - (3)
Payments to acquire tangible fixed assets (192) (411)
Receipts from sale of tangible fixed assets 14 28
(178) (386)
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings (15) -
Net overdraft acquired with subsidiary (22) -
(37) -
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 1179 (1319)
FINANCING
Issue of ordinary share capital 55 313
Amounts paid in respect of hire purchase agreements (22) (23)
33 290
INCREASE/(DECREASE) IN NET FUNDS 1212 (1029)
BIOTRACE INTERNATIONAL PLC
Preliminary Results
Notes
1. TURNOVER
An analysis of turnover by geographical area is as follows:
2000 1999
#'000 #'000
Europe 5122 5275
Americas 2065 2012
Rest of The World 434 401
7621 7688
2. EXCEPTIONAL ITEMS
Included in administration expenses in 2000 are exceptional items of #0.07
million (1999: #1.00 million) of costs associated with the continued
restructuring of the Group following the disruption of distributor
arrangements and implementation of the new strategy in 1999.
3. TAXATION
The Group has a liability to tax for 2000 of #0.17million (1999: #nil). An
amount of #0.10million (1999: #0.03million) has been released arising from an
over provision for corporation tax in earlier periods.
4. EARNINGS PER SHARE
Earnings per share is based on the profit after taxation of #0.47million
(1999: loss #1.66 million) and the weighted average number of shares in issue
during the year of 34,359,698 (1999: 33,299,315 ) . Fully diluted earnings
per share is based on the profit after taxation of #0.47 million (1999: loss
#1.66 million ) and 34,369,113 (1999: 34,044,149) ordinary shares.
Earnings per share before exceptional costs is based on profit after taxation
before exceptional costs of #0.52 million (1999: loss #0.68 million ) and
the weighted average number of shares in issue during the year of 34,359,698
(1999: 33,299,315).
5. The financial information set out above does not constitute
statutory accounts for the years ended 31 December 2000 or 1999. The
information relating to the year ended 31 December 1999 is based upon full
accounts of the Group which have been filed with the Registrar of Companies
and upon which the auditors expressed an unqualified opinion.
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