TIDMBQE
RNS Number : 9537H
Bioquell PLC
24 August 2016
24 August, 2016
Bioquell PLC - 2016 interim results
Bioquell PLC ("Bioquell") (LSE symbol: BQE) - provider of
specialist bio-decontamination products and services for the
international Life Sciences markets today announces its interim
results for the six month period ended 30 June, 2016.
Highlights:
Financial
-- Bio-decontamination revenues (excluding defence sales)
increased by 8% to GBP11.1 million (2015: GBP10.3 million)
-- Overall revenues declined by 3% to GBP12.1 million (2015:
GBP12.5 million)
-- Non-UK revenues amounted to GBP9.0 million (2015: GBP10.0
million) - representing 74% of total revenues
-- Gross margin increased to 46% (2015: 42%)
-- EBITDA increased 14% to GBP1.6 million (2015: GBP1.4
million)
-- Earnings per share were 0.8p (2015: 82.5p, 0.2p excluding the
profit on disposal of TRaC)
-- Following the completion of the June tender offer, GBP40.8
million of cash was returned to shareholders via a share buyback,
leaving net cash of GBP7.3 million at 30 June, 2016 (2015: GBP47.7
million)
Business activities
-- Strategic review concluded; management restructured and focus
on further development and improvement of bio-decontamination
business
-- Strong focus on generating recurring revenues from service
activities and consumables sales
-- Launch of new fixed (wall-mounted) bio-decontamination system
- the Bioquell
'Flat-screen'
-- US salesforce restructured
Commenting on the 2016 interim results, Ian Johnson, Chairman of
Bioquell PLC, said:
"Whilst overall revenues declined slightly as a result of lower
defence sales compared with the first half of 2015, I am pleased to
report that our bio-decontamination business grew by 8%.
Profitability improved as a result of our cost reduction programme
- and management continues to seek further improvements in the
financial performance of the business through greater focus on the
international Life Sciences market and driving up the proportion of
recurring revenues.
The Board has now concluded the Strategic Review announced in
2015 and believes that Bioquell shareholders' interests would best
be served by continuing to build a world class bio-decontamination
business and focussing on further improving its financial
performance. Accordingly the management of the business will be
restructured. I have become Executive Chairman and the current
Chief Executive, Nick Adams, has stepped down. In addition, Jay
LeCoque has joined the board of Bioquell in the new role of
Commercial Director.
On behalf of all Bioquell shareholders I would like to thank
Nigel Keen for his seven years as Chairman.
I would also like to thank Nick Adams for his substantial
contribution as Chief Executive. Under his leadership Bioquell has
changed beyond all recognition from a low technology manufacturer
of safety cabinets to a leader in specialist
bio-decontamination.
The Board is confident that the improved financial performance
seen in the first half of the year will carry through to the full
year."
Enquiries:
Ian Johnson Chairman Bioquell PLC 01264 835900
Michael Roller Finance Director
***********************************************
Notes to Editors:
Bioquell is a UK-headquartered, international technology company
(www.bioquell.com) which sells specialist biological contamination
control products and services into the Healthcare & Life
Sciences sectors, with most of its revenues generated from overseas
customers.
-- Bioquell's bio-contamination control technology incorporates
the use of hydrogen peroxide vapour (HPV) - which is highly
efficacious at eradicating micro-organisms such as bacteria and
viruses at room temperature - and is subsequently broken down at
the end of the bio-decontamination process using specialist
catalysts to water vapour and oxygen (hence an extremely 'green'
technology). Bioquell has a number of patents associated with this
technology.
-- For the last several years Bioquell has invested substantial
sums in developing new service offerings - comprising rental,
service and consumables - which have been designed to increase the
proportion of the Group's recurring revenues rather than those
derived from sales of capital equipment.
-- Bioquell has also developed a number of products which
complement its core HPV technology including the novel, modular
QUBE aseptic work-station (which incorporates HPV), the
fast-to-deploy single patient occupancy POD (which can also be
decontaminated using HPV) as well as a range of biological and
chemical indicators.
-- Bioquell's bio-contamination control technology:
Ø is used by bio-pharmaceutical, biotechnology and research
institutions to provide aseptic equipment and/or aseptic
facilities;
Ø eradicates "superbugs" from hospitals including Clostridium
difficile and carbapenemase producing Enterobacteriaceae (CPE) -
sometimes referred to as carbapenem-resistant Enterobacteriaceae
(CRE). Independent scientific research from, for example, a team at
Johns Hopkins, one of America's top hospitals, has demonstrated
that 'bioquelling' hospital equipment and facilities resulted in a
64% reduction in the rate of hospital acquired infection;
Ø provides tailor-made single patient rooms to hospitals via its
POD product. Currently many hospitals around the world only have
open, multi-bed ward structures which have been linked to high
rates of hospital acquired infection. The POD provides hospitals
with a rapid and cost effective way of providing single occupancy
rooms on open, multi-bed units. In the UK the PODs are rented to
hospitals; and
Ø is sold by wholly-owned Bioquell organisations in the USA,
France, Germany, Ireland, Singapore and China.
Bioquell also sells environmental control equipment into the
defence industry, including chemical, biological, radiological and
nuclear filtration systems.
Further information for investors can be found at
www.bioquellplc.com.
BIOQUELL PLC - CHAIRMAN'S STATEMENT
INTRODUCTION
I am delighted to be writing to shareholders for the first time
as Chairman of Bioquell PLC.
Bioquell currently generates the majority of its revenues from
customers in the Life Sciences and Healthcare sectors. A relatively
small and historically unpredictable amount is derived from the
Defence sector. By way of further information, for the six months
ended 30 June, 2016, the split of revenues between these sectors
was:
-- Life Sciences: GBP8.7 million (2015: GBP8.2 million) - 72% of
H1 revenues and a 6% increase over prior year Life Sciences H1
revenues;
-- Healthcare: GBP2.4 million (2015: GBP2.1 million) - 20% of H1
revenues and a 14% increase over prior year; and
-- Defence: GBP1.0 million (2015: GBP2.2 million) - 8% of H1
revenues and a 55% decrease over prior year.
It is becoming increasingly difficult to allocate revenues with
absolute precision to either the Life Sciences or Healthcare
sectors. For example, a large university-affiliated teaching
hospital may use Bioquell equipment, services and/or consumables
within its:
i. research laboratories;
ii. hospital pharmacy clean-rooms;
iii. intensive care or high dependency units; and
iv. pan-hospital decontamination team.
Moreover, we are seeing increasing demand for Bioquell
technology within hospitals working with cell-based healthcare
products - sometimes referred to as 'cell therapy drugs'.
Accordingly the demarcation of our business between Life Sciences
and Healthcare is becoming increasingly blurred.
Given the trends summarised above, the Board will henceforth
report the financial performance of the business by reference to
the bio-decontamination business without providing a separate
analysis of revenues between Life Sciences and Healthcare. We will
instead provide shareholders with an analysis of the
bio-decontamination business' revenues split between equipment,
service & consumable revenues. We will report the performance
of the wholly-unrelated (in terms of customer base) and 'lumpy'
defence business separately.
The Company's strategy is focussed on increasing our revenues
generated from customers in the bio-decontamination business and we
would anticipate that, over the medium term, defence revenues will
decline as a proportion of total revenues.
FINANCIAL RESULTS
In the six months ended 30 June 2016, total revenues decreased
3% to GBP12.1 million (2015: GBP12.5 million). However,
bio-decontamination revenues increased by 8% to GBP11.1 million
(2015: GBP 10.3 million).
2016 2015 Growth Constant
H1 GBPm H1 GBPm % currency
growth
%
Bio-decontamination 11.1 10.3 +8% +4%
Defence 1.0 2.2 -55% -55%
--------- --------- ------- ----------
TOTAL 12.1 12.5 -3% -6%
--------- --------- ------- ----------
Service-related revenues - which all relate to the
bio-decontamination business activities and include consumable
revenues - increased 7% to GBP6.9 million (2015: GBP6.4 million),
representing some 57% of revenues (2015: 51%). In general terms, we
believe that it is reasonable to characterise Bioquell's service
& consumable revenues as representing recurring, or
quasi-recurring, revenues. Equipment-related revenues excluding
defence sales increased by 8% to GBP4.2 million (2015: GBP3.9
million).
Revenues from non-UK sales in the period amounted to GBP9.0
million (2015: GBP10.0 million), amounting to 74% of total
revenues. The equivalent data for the bio-decontamination business
shows that non-UK revenues were GBP8.0 million (2015: GBP7.8
million), representing approximately 72% of this business'
revenues. Sterling has weakened significantly against the US dollar
since the Brexit vote and we estimate that approximately 46% of
bio-decontamination revenues were denominated in US dollars in the
first half, with a further 26% denominated in Euros. Constant
currency revenue growth in the bio-decontamination business in the
first half was 4%.
Gross margin in the period was up 4% in the first half to 46%
(2015: 42%). This meaningful increase in gross margin reflects a
number of factors including: (i) the results of targeted
cost-reduction programmes associated with our products; (ii) price
increases for certain products; and (iii) a reallocation of certain
costs from cost of sales to overheads.
Research & development costs
As is set out in the table below, the accounting charge for
Research & Development ("R&D") costs in the period
increased by 14% to GBP807k (2015: GBP706k). Cash R&D costs
were GBP673k in the first half (2015: GBP727k), representing a 7%
decrease.
R&D costs (GBP000) H1 2016 H1 2015
Amount of R&D expensed in
period (308) (238)
Amortisation of previously
capitalised development costs (499) (468)
--------------------------------- -------- --------
Total R&D charge under IFRS (807) (706)
--------------------------------- -------- --------
Total R&D cash expenditure (673) (727)
Amount of development costs
capitalised (365) (489)
--------------------------------- -------- --------
In the short to medium term we anticipate that R&D costs
will continue at the lower level of cash spend reflecting the
completion of the current Bioquell product range; however, we are
working on appropriate product line extensions to complement the
existing product portfolio.
Overheads
Overheads increased marginally to GBP5.3 million (2015: GBP5.2
million). However, these overhead costs include the net cost of
foreign exchange movements which, largely due to the significant
decline in the value of Sterling post the Brexit vote, resulted in
a charge in the period of GBP177,000 (2015: profit of
GBP84,000).
The underlying cash-based overhead costs - adjusted to reflect
the cash cost of R&D as well as removing the net FX cost - were
GBP5.0 million in the period (2015: GBP5.3 million), representing a
decline of 6%.
EBITDA (Earnings before interest, tax, depreciation and
amortisation) increased by 14% in the period to GBP1.6 million
(2015: GBP1.4 million). Operating profit was GBP0.3 million
compared to a profit in H1 2015 of GBP0.2 million (and a loss of
GBP1.6 million in H1 2014).
Pre-tax profit totalled GBP0.4 million in the first half (2015:
GBP0.1 million).
Basic earnings per share were 0.8 pence (2015: 82.5 pence, 0.2
pence excluding the effect of the profit on disposal of TRaC).
Capital expenditure continues to run significantly below the
depreciation charge, reflecting the Board's belief that the
substantial investments needed to support the growth of the
business in the short to medium term have been made over recent
years.
In the first half, purchases of tangible fixed assets totalled
GBP0.5 million (2015: GBP0.5 million). Depreciation in the period
was GBP0.8 million (2015: GBP0.8 million).
Balance sheet
Following the return of GBP40.8 million of cash to shareholders
as a result of the Tender Offer which was announced on 29 April,
2016, the Group has a strong balance sheet. At 30 June, 2016 net
assets were GBP24.9 million (2015: GBP64.7 million). Net cash was
GBP7.3 million (2015: GBP47.7 million).
BUSINESS ACTIVITIES
Bio-decontamination business with the majority of sales to Life
Sciences customers
We continue to see a number of evolving drivers of growth for
Bioquell's bio-decontamination business, including:
-- an increasingly complex, onerous and rapidly expanding
international regulatory environment relating to the safe
production of biologically-sensitive therapeutic products;
-- demand for cost effective, fast-to-deploy aseptic
environments;
-- improved methods and technology for the swift and aseptic
transfer of heat-sensitive materials into clean-rooms;
-- demand for effective after-sales service and support, in part
driven by regulatory requirements;
-- increasing pressure from customers on costs, including
interest by customers in the use of technology to achieve cost
reductions;
-- growth in research activities and small-scale production
associated with cell-based healthcare products; and
-- demand for the mitigation of risks and liabilities associated
with complex, and often biologically-sensitive, therapies
historically prepared in hospital pharmacies.
Not all these trends or drivers of growth apply equally in all
territories. For example, in the first half we saw continuing
strong demand in Asia Pacific for the purchase of equipment - and
significant demand for service-based contamination control
solutions in Europe and the USA.
Bioquell is proactively positioning itself within the market to
be more than just a provider of HPV decontamination technologies.
For example:
-- the Bioquell QUBE comprises a novel, modular aseptic
work-station which incorporates HPV technology but is also
manufactured using unique processes at our facilities in the UK.
The QUBE is used to provide an aseptic environment for a range of
applications including: sterility testing; the production of toxic,
intravenous oncology drugs; and the production of small-scale
cell-based healthcare products. Over time we expect the range of
specialist applications for the QUBE to increase; and
-- the Bioquell POD enables hospitals to convert multi-bed,
open-plan units at high risk of the spread of hospital acquired
infection into single-occupancy rooms. PODs can be decontaminated
using Bioquell's HPV technology.
We are also proactively working to maximise the level of
recurring revenues generated from service activities and/or
consumable sales.
New product launch - the Bioquell FS-1 or 'Flatscreen'
On 7 June, 2016 we launched a new fixed, wall-mounted HPV
decontamination system - the Bioquell 'Flatscreen' (formally the
FS-1) - which incorporates the use of Bioquell's proprietary
hydrogen peroxide consumable cartridges.
Prior to the launch of the Flat-screen, our HPV decontamination
product range included our RBDS and BQ Local decontamination
services; and the Z and L range of mobile decontamination units.
However, our product range did not include a fixed HPV
decontamination system. Over recent years a number of customers
have requested fixed decontamination systems, with increasing
demand for such systems linked, in part, to evolving regulatory
requirements.
Given that space is typically at a premium in our customers'
premises, the Flat-screen has been designed to occupy a minimal
footprint. It is also fast to install and validate.
Initial signs of market demand for the Flat-screen are
encouraging. Our first Flat-screen order comprised an order for 16
units, due for delivery in the second half of the year, for a
substantial French Life Sciences company.
Changes to regulations
There are an increasing number of regulations affecting the
markets into which we sell. Such regulations can cover the HPV
decontamination equipment and/or the associated consumables.
Typically we find more onerous regulation tends to help increase
demand for Bioquell's high quality decontamination technology as
our clients remain focussed on attaining - and retaining -
regulatory compliance. It would be inappropriate and
disproportionate to list all the regulations currently forcing
changes in our markets; however, set out below are two examples of
regulatory changes which we believe positively affected our market
position in the first half of 2016.
-- In Europe the new EU NF T 72-281 (2014) regulation, which was
originally a French national standard, comes into force from
February 2017. This European standard requires companies selling
airborne disinfection systems to pass specific, demanding microbial
inactivation tests, including the inactivation of hard-to-kill
fungal spores. Low-concentration hydrogen peroxide nebulisers /
aerosolisers struggle to pass these microbial tests and we
anticipate that, as was the case in France, a number of nebuliser
systems will be removed from the European market when the new
72-281 standard comes into force.
-- In February 2016 the new ISO standard 18362 came into force.
This ISO standard relates to the "Manufacture of cell-based
healthcare products - control of microbial risks during
processing". The standard specifically highlights the challenges
associated with viral vectors used in the production of certain
cell-based healthcare products as well as the advantages of using
closed systems such as the QUBE over more common biological safety
cabinets.
International activities
We experienced significant differences in trading performance by
geographical region in the first half of the year. For example, our
Asia Pacific business was strong and showed good growth over prior
year. European activity levels were, in aggregate, steady. The US
had a weak Q1 but an appreciably stronger Q2.
In the first half we undertook a major restructuring of our US
business. We had been dissatisfied with the sales performance of
our US business for some time and made a number of changes to the
sales-force in the first half. We have, among other things, removed
the generalist, externally-based salesforce and increased our
investment in digital marketing, office-based sales people as well
as the judicious use of experts. This approach has resulted in
materially lower sales-related costs and early signs are
encouraging regarding increased revenues. We are now in the process
of expanding this model in the USA and are also considering how
best it can be applied, as appropriate, elsewhere within the
business.
Defence
As described above, we are continuing to support our customers
in the defence sector; however, it remains extremely difficult to
forecast future defence-related orders.
Chemical warfare agents such as Sarin continue to be a threat in
conflicts in the Middle East. Accordingly there continues to be
demand for Bioquell's expertise in specialist Chemical, Biological,
Radiological and Nuclear ("CBRN") filtration equipment from a
number of customers in this region. Notwithstanding the poor
visibility of future orders, we remain alert to opportunities to
increase our defence-related order book.
OUTLOOK AND PROSPECTS
The Board has now concluded the Strategic Review announced in
2015 and believes that Bioquell shareholders' interests would best
be served by continuing to build a world class bio-decontamination
business and focussing on further improving its financial
performance. Accordingly the management of the business will be
restructured. I have become Executive Chairman and the current
Chief Executive, Nick Adams has stepped down. In addition, Jay
LeCoque has been appointed to the board of Bioquell in the new role
of Commercial Director. Jay was formerly CEO of Celsis
International PLC and has extensive experience sales and marketing
in the Life Sciences industry.
There are no further matters relating to the appointment of Jay
LeCoque requiring disclosure under Listing Rule 9.6.13.
Furthermore, the TRaC business was developed from very modest
beginnings into a world class testing business which was sold for
GBP44m last year.
The financial performance of our bio-decontamination business is
beginning to improve as can be seen in the financial information
set out above. There are a number of different drivers of growth
which are positively affecting our business, including the need for
customers to achieve regulatory compliance and continuing growth in
research and small scale production associated with cell-based
healthcare products.
Historically we have tended to experience a stronger second half
of the year and we see no reason for this to be different this
year.
We remain extremely focussed on seeking to reduce the Company's
cost base wherever possible - but without damaging our ability to
grow revenues or react to new opportunities.
Overall the business is on track to meet the Board's
expectations for the full year.
Prior to publication, the information contained within this
announcement was deemed to constitute inside information under the
Market Abuse Regulations (EU) No. 596/2104 ("MAR")
Ian Johnson
Chairman
Bioquell PLC
24 August, 2016
Consolidated income statement
Unaudited results for the six months ended 30 June 2016
12
6 6 months
months months to
to to 31
30 June 30 June December
2016 2015 2015
Continuing operations Notes GBP'000 GBP'000 GBP'000
---------------------------------------------------------------------------------------------------------------- ----- ------- ------- --------
Revenue 1 12,063 12,525 26,877
Cost of sales (6,473) (7,215) (15,466)
---------------------------------------------------------------------------------------------------------------- ----- ------- ------- --------
Gross profit 5,590 5,310 11,411
Gross profit margin 46% 42% 42%
Operating expenses:
Sales and marketing costs (2,367) (2,784) (5,485)
Administration costs (2,129) (1,713) (3,648)
R&D and engineering costs (807) (706) (1,507)
---------------------------------------------------------------------------------------------------------------- ----- ------- ------- --------
Profit from continuing operations
before exceptional items 287 107 771
Costs associated with reorganisation - - (220)
---------------------------------------------------------------------------------------------------------------- ----- ------- ------- --------
Profit from continuing operations 287 107 551
---------------------------------------------------------------------------------------------------------------- ----- ------- ------- --------
Investment revenues 118 - 150
Finance costs (27) (38) (69)
---------------------------------------------------------------------------------------------------------------- ----- ------- ------- --------
Profit before tax 378 69 632
Tax (charge)/credit on profit
on ordinary activities (47) (3) 5
---------------------------------------------------------------------------------------------------------------- ----- ------- ------- --------
Profit for the period from continuing
operations 331 66 637
Discontinued operations
Profit for the period from discontinued
operations and disposal 2 - 35,068 34,501
---------------------------------------------------------------------------------------------------------------- ----- ------- ------- --------
Profit for the period
Profit for the period attributable
to equity holders of the parent 331 35,134 35,138
---------------------------------------------------------------------------------------------------------------- ----- ------- ------- --------
Earnings per share from continued
operations
excluding profit on disposal
- basic 0.8p 0.2p 1.5p
- diluted 0.8p 0.2p 1.5p
Earnings per share attributable
to the owners of the parent -
basic 0.8p 82.5p 82.5p
-
diluted 0.8p 81.6p 81.8p
---------------------------------------------------------------------------------------------------------------- ----- ------- ------- --------
Supplementary notes
1. The financial information for the six months ended 30 June
2016 and the comparative figures for the six months ended 30 June
2015 have not been reviewed or audited by the Group's auditors and
have been prepared on the basis of the accounting policies adopted
by the Group under IFRS. The same accounting policies and methods
of computation are followed in the interim financial report as were
published by the Company on 29 April 2016 in its annual financial
statements, which are available on the Company's website at
www.bioquellplc.com.
2. The comparative figures for the twelve months to 31 December
2015 have been prepared under IFRS. They do not constitute
statutory accounts within the meaning of section 434 of the
Companies Act 2006. The unqualified audited accounts for the twelve
months ended 31 December 2015 have been filed with the Registrar of
Companies and they did not contain a statement under section 498(2)
or (3) of the Companies Act 2006.
3. The tax charge shown on the income statement represents a
combined corporation tax charge and deferred tax credit. The charge
is based on the Group's anticipated effective tax rate for the full
year of 12.5% (2015: 4.3%).
4. Earnings per share for the half year have been calculated on
the profit on ordinary activities on continuing operations after
taxation and the total earnings attributable to the owners of the
parent divided by the weighted average number of ordinary shares in
issue during the period. The Group's diluted earnings per share are
calculated by including dilutive share options in the
denominator.
5. There have been no related party transactions during the
first six months of the financial year that have materially
affected the financial position or performance of the Group during
that period and there have been no changes in the related party
transactions described in the last Annual Report that could do
so.
6. Copies of this statement will be available to members of the
public at the Company's registered office: 52 Royce Close, West
Portway, Andover, Hampshire SP10 3TS and on the Group's website at
www.bioquellplc.com.
Principal risks and uncertainties
The Board believes that the principal risks and uncertainties
facing the Group have not changed materially from those described
in the 2015 Annual Report, including the summary of risks and
uncertainties set out on pages 9 to 11 therein. The Group provides
complex equipment and specialist services to a large number of
clients in the UK and internationally. Accordingly the Group is
subject to a broad range of strategic, operational and financial
risks and uncertainties, including the following principal
risks:
-- Regulatory Risk
The Group operates in a number of countries and sectors which
are highly regulated. There is a risk that the relevant authorities
or their interpretation could be changed and such change could
significantly adversely affect the Group's business in that country
or sector
-- Technological Risk
The Group is dependent on its technology, and on its products
and services, continuing to be efficacious, cost effective and
attractive to the marketplace. There is the risk that new
technologies, products or services are developed by competitors
which perform better, are easier to use or are more cost effective
than those of the Group
-- Uncertain adoption rate of new products or services
The Group is constantly developing new products and services.
There is inherent uncertainty as to how quickly new products or
services will be adopted by the market.
Going concern
The Group has sufficient financial resources to cover budgeted
future cash flows, together with contracts with a number of
customers and suppliers across different geographic areas and
industries. As a consequence, the Directors believe that the Group
is well placed to manage its business risks successfully despite
the current uncertain economic outlook. The Directors confirm that
they have a reasonable expectation that the Group has adequate
financial resources to continue to trade for the foreseeable
future. Thus, they continue to adopt the going concern basis in
preparing the financial statements.
Responsibility statement
We confirm that to the best of our knowledge: (i) the condensed
set of financial statements has been prepared in accordance with
IAS 34 Interim Financial Reporting; (ii) the financial statements
give a true and fair view of the assets, liabilities, financial
position and profit of the undertakings included in the
consolidation as a whole as required by DTR 4.2.4R; (iii) the
Interim Management Report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the
first six months and a description of principal risks and
uncertainties for the remaining six months of the year); and (iv)
the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
IAN JOHNSON MICHAEL ROLLER
Executive Chairman Group Finance Director
24 August 2016
Consolidated statement of comprehensive income
Unaudited results for the six months ended 30 June 2016
12 months
6 months 6 months to
to to 31 December
30 June 30 June 2015
2016 GBP'000 2015 GBP'000 GBP'000
------------------------------------ ------------- ------------- ------------
Profit for the period 331 35,134 35,138
Exchange differences on translation
of foreign operations * 422 (256) (120)
------------------------------------ ------------- ------------- ------------
Total recognised income for the
period 753 34,878 35,018
------------------------------------ ------------- ------------- ------------
* May be reclassified subsequently to profit or loss in
accordance with IFRS
Consolidated statement of changes in equity
Unaudited results for the six months ended 30 June 2016
12 months
6 months 6 months to
to to 31 December
30 June 30 June 2015
Notes 2016 GBP'000 2015 GBP'000 GBP'000
------------------------------------- ----- ------------- ------------- ------------
Profit for the period 331 35,134 35,138
Exchange differences 422 (256) (120)
------------------------------------- ----- ------------- ------------- ------------
Total comprehensive income in
the period 753 34,878 35,018
Other movements in the period:
Issued share capital 68 10 12
Issued share premium 574 93 118
Acquisition of own shares for
cancellation 6 (41,336) - -
(Charge)/credit to equity reserve
for share-based payments (23) 84 119
Charge to equity on exercise of
share options under the SARS scheme (20) (1) -
Final dividend for year ended
31 December 2014 - (1,406) (1,406)
------------------------------------- ----- ------------- ------------- ------------
Net (decrease)/increase in equity
shareholders' funds (39,984) 33,658 33,861
------------------------------------- ----- ------------- ------------- ------------
Equity shareholders' funds at
beginning of period 64,918 31,057 31,057
Equity shareholders' funds at
end of period 24,934 64,715 64,918
------------------------------------- ----- ------------- ------------- ------------
Consolidated balance sheet
Unaudited results at 30 June 2016
31 December
30 June 30 June 2015
2016 GBP'000 2015 GBP'000 GBP'000
-------------------------------------- -------------- -------------- -----------
Non-current assets
Other intangible assets 8,645 8,928 8,785
Property, plant and equipment 5,023 5,759 5,349
Deferred tax assets 175 175 175
-------------------------------------- -------------- -------------- -----------
13,843 14,862 14,309
-------------------------------------- -------------- -------------- -----------
Current assets
Inventories 3,765 3,830 3,547
Trade and other receivables 5,772 5,734 5,429
Derivative financial instruments - 112 -
Cash and cash equivalents 7,324 48,506 47,573
-------------------------------------- -------------- -------------- -----------
16,861 58,182 56,549
-------------------------------------- -------------- -------------- -----------
Total assets 30,704 73,044 70,858
-------------------------------------- -------------- -------------- -----------
Current liabilities
Trade and other payables (3,961) (5,387) (4,282)
Derivative financial instruments (182) - (68)
Borrowings - (105) -
Current tax liabilities (226) (42) (152)
Provisions (74) (100) (84)
-------------------------------------- -------------- -------------- -----------
Net current assets 12,418 52,548 51,963
-------------------------------------- -------------- -------------- -----------
Non-current liabilities
Deferred tax liabilities (1,327) (1,989) (1,354)
Other non-current liabilities - (706) -
-------------------------------------- -------------- -------------- -----------
Total liabilities (5,770) (8,329) (5,940)
-------------------------------------- -------------- -------------- -----------
Net assets 24,934 64,715 64,918
-------------------------------------- -------------- -------------- -----------
Equity
Share capital 2,294 4,264 4,266
Share premium account 1,493 894 919
Equity reserve 1,767 2,050 2,079
Capital reserve 255 255 255
Translation reserve 185 (373) (237)
Retained earnings 18,940 57,625 57,636
-------------------------------------- -------------- -------------- -----------
Equity attributable to equity holders
of the parent 24,934 64,715 64,918
-------------------------------------- -------------- -------------- -----------
Consolidated cash flow statement
Unaudited results for the six months ended 30 June 2016
6 months 12 months
6 months to to
to 30 June 31 December
Notes 30 June 2015 2015
2016 GBP'000 GBP'000 GBP'000
------------------------------------ ------- ------------- -------- ------------
Net cash from operating activities 1,270 4,494 5.326
------------------------------------ ------- ------------- -------- ------------
Investing activities
Proceeds on disposal of TRaC
Global Ltd net of cash transferred
& costs of disposal - 42,535 43.423
Purchases of property, plant
and equipment (495) (819) (1,030)
Purchases of intangible assets (30) (22) (125)
Expenditure on product development (364) (490) (733)
------------------------------------ ------- ------------- -------- ------------
Net cash (used)/generated from
investing activities (889) 41,204 41,535
------------------------------------ ------- ------------- -------- ------------
Financing activities
Proceeds on issue of ordinary
shares 642 103 130
Acquisition of own shares for
cancellation 6 (41,336) - -
Dividends paid on ordinary shares 3 - - (1,406)
Repayment of borrowings - (116) (863)
Net cash (used)/generated from
financing activities (40,694) (13) (2,139)
------------------------------------ ------- ------------- -------- ------------
(Decrease)/increase in cash and
cash equivalents (40,313) 45,685 44,722
------------------------------------ ------- ------------- -------- ------------
Cash and cash equivalents at
beginning of period 47,573 2,840 2,840
Effect of foreign exchange rate
changes 64 (19) 11
Cash and cash equivalents at
end of period 7,324 48,506 47,573
------------------------------------ ------- ------------- -------- ------------
Notes to the cash flow statement
Unaudited results for the six months ended 30 June 2016
6 months 12 months
to 6 months to
30 June to 31 December
2016 30 June 2015
GBP'000 2015 GBP'000 GBP'000
-------------------------------------- -------- ------------- ------------
Profit for the period 331 35,134 35,138
Adjustments for:
Profit on disposal of discontinued
operations - (34,243) (34,741)
Tax charge/(credit) on continuing
operations 47 216 240
Investment revenues (118) (25) (150)
Finance costs 27 63 69
Depreciation of property, plant
and equipment 821 1,196 1,645
Amortisation of intangible assets 534 508 971
Impairment of goodwill - 169 -
Share-based payments (credit)/charge (23) 84 119
Loss on disposal of fixed assets - - 105
(Decrease)/increase in provisions (10) 12 (4)
-------------------------------------- -------- ------------- ------------
Operating cash flows before movements
in working capital 1,609 3,114 3,392
Increase in inventories (218) (603) (295)
(Increase)/decrease in receivables (343) 1,900 2,324
Increase/(decrease) in payables 131 121 (176)
-------------------------------------- -------- ------------- ------------
Cash generated by operations 1,179 4,532 5,245
Investment revenues 118 25 150
Interest paid (27) (63) (69)
Net cash from operating activities 1,270 4,494 5,326
-------------------------------------- -------- ------------- ------------
Notes to the interim results
1. Geographical analysis
Revenue and profit before taxation in respect of continuing
operations arise from the principal activity of the Group.
Following the disposal of TRaC Global Ltd on 7 May 2015 this
represents a single class of business, being the provision of
bio-decontamination control technologies to the international
healthcare, life sciences and defence markets.
The Group's bio-decontamination equipment is manufactured within
the UK and sold into the UK, Europe and Rest of World markets.
The following table provides an analysis of the Group's sales by
geographical market, irrespective of the origination of the goods
or services.
12 months
6 months 6 months to
to to 31 December
30 June 2016 30 June 2015
GBP'000 2015 GBP'000 GBP'000
------ ------------- ------------- ------------
UK 3,054 2,693 5,501
EU 3,172 3,274 7,375
US 2,643 2,990 6,320
ROW 3,194 3,568 7,681
------ ------------- ------------- ------------
Total 12,063 12,525 26,877
------ ------------- ------------- ------------
2. Discontinued operations
On 12 March 2015 the Group entered into a sale agreement to
dispose of TRaC Global Limited, which carried out all of the
Group's Testing, Regulatory and Compliance work. The disposal was
made to simplify the Group and allow focus on the core
decontamination business and to release value for shareholders. The
sale was completed on 7 May 2015, on which date control of TRaC
Global Limited passed to the acquirer.
The results of the discontinued operations which have been
included in the consolidated income statement, were as follows:
Period 12 months
to to
7 May 31 December
2015 2015
GBP'000 GBP'000
-------------------------------------- -------- ------------
Revenue 6,175 6,175
Expenses (5,137) (5,040)
Profit before tax 1,038 1,135
Attributable tax expense (213) (240)
Gain on disposal 34,243 33,606
Profit attributable to discontinued
operations 35,068 34,501
--------------------------------------- -------- ------------
During the period ended 7 May 2015, TRaC Global Ltd contributed
GBP0.6m to the Group's net operating cash flows, paid GBP0.3m in
respect of investing activities and paid GBP2.0m in respect of
financing activities.
A profit of GBP33.6m arose on the disposal of TRaC Global Ltd,
being the net proceeds of disposal less the carrying amount of the
subsidiary's net assets and attributable goodwill.
3. Dividends
12 months
6 months 6 months to
to to 31 December
30 June 30 June 2015
2016 GBP'000 2015 GBP'000 GBP'000
------------------------------------ ------------- ------------- ------------
Amounts recognised as distributions
to equity holders in the period:
Final dividend for the year ended
31 December 2014 of 3.30 pence per
ordinary share - 1,406 1,406
------------------------------------ ------------- ------------- ------------
4. Financial Instruments
It is the policy of the Group to enter into forward foreign
exchange contracts to cover specific foreign currency payments and
receipts within 70 to 80% of the exposure generated. The Group also
enters into forward foreign contracts to manage the risk associated
with anticipated sales and purchase transactions out to six months
within 40 to 50% of the exposure generated. Forward exchange
contracts are carried at fair value through profit and loss.
At the balance sheet date the total notional amount of
outstanding forward foreign exchange contracts to which the Group
has committed are as below:
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
----------------------------------- --------- --------- -------------
Forward foreign exchange contracts 3,377 2,660 3,478
----------------------------------- --------- --------- -------------
At 30 June 2016, the fair value of the Group's forward foreign
exchange contracts is estimated to be approximately GBP(182,000)
(2015: GBP112,000). The fair value has been calculated as the
present value of future expected cash flows at market related
rates, which are current at the balance sheet date. The value is
calculated using readily available market data and represents a
level 2 measurement in the fair value hierarchy under IFRS 7.
Other financial assets
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
--------------------------------------- --------- --------- -------------
Financial assets carried at fair value
through profit and loss (182) 112 (68)
--------------------------------------- --------- --------- -------------
5. Analysis of net cash
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
--------------------------------------- --------- --------- -------------
Cash 7,324 48,506 47,573
Mortgage & loans - due within one
year - (105) -
- due after one year - (706) -
Net cash 7,324 47,695 47,573
--------------------------------------- --------- --------- -------------
6. Acquisition of own shares for cancellation
During the year 20,405,814 ordinary shares of 10p each were
repurchased under the tender offer to purchase own shares announced
on 2 June 2016 and repurchased shares have been cancelled. The
total consideration for the purchase of the shares was
GBP41,396,375 which includes stamp duty of GBP204,060 and
professional fees of GBP232,563.
Of this amount GBP2.04m was treated as a reduction of share
capital, GBP0.06m as a charge to the income statement and the
remaining charge of GBP39.3m included in retained earnings.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUACRUPQGQW
(END) Dow Jones Newswires
August 24, 2016 02:00 ET (06:00 GMT)
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