15th Sep 2010 07:00
KIOTECH INTERNATIONAL PLC (AIM: KIO)
("Kiotech" or "the Company")
Kiotech International plc, the international supplier of natural high performance feed additives to enhance growth, health and sustainability in agriculture and aquaculture, is pleased to announce its interim results for the 6 months to 30 June 2010.
Key points: Financial
Optivite, acquired in September 2009, makes a full six months contribution. 157% increase in profit before tax to £0.777m (2009: £0.302m). Threefold advance in sales to £11.082m (2009: £3.468m). Cash balance of £4.554m at 30 June 2010.Key points: Operational
Integration of Optivite progressing well with consolidation of our operations starting to deliver the planned benefits. Good performance from our international agriculture division. Contracts exchanged to acquire the Manton Wood production and head office site for £1.450m. Aquatice® given approval to market for both fin fish and shrimp in the Philippines.Richard Rose, Chairman, commented:
"We are encouraged by our trading performance to date and remain confident going forward given the good progress in integrating the Optivite acquisition. Management remains focused on consolidating our operations into a single unit to deliver the planned benefits, whilst retaining and promoting separate brands in the marketplace."
| Enquiries: | |||
| Kiotech International plc | |||
| Richard Edwards, Chief Executive | +44 (0)77 7641 7129 | ||
| Karen Prior, Group Finance Director | +44 (0)1909 478919 | ||
| FinnCap | +44 (0)20 7600 1658 | ||
| Matthew Robinson / Henrik Persson - Corporate Finance | |||
| Stephen Norcross - Corporate Broking | |||
KIOTECH INTERNATIONAL plcInterim results for 6 months to 30 June 2010
Chairman's Statement
I am delighted to report a strong performance in the period under review, boosted by good progress integrating last September's acquisition of Optivite. A great deal of work has been undertaken in consolidating our finance and operational activities into Optivite's main production site and office at Manton Wood. There are still a number of projects underway and we expect these to be completed by the end of this year.
Results
In the six months to 30 June 2010 profit before tax increased significantly to £0.777m (2009: £0.302m). Sales also advanced strongly to £11.082m (2009: £3.468m). This performance reflects continued organic growth and a full six months contribution from the Optivite acquisition.
Income tax expense has benefited from a credit of £0.128m resulting from favourable adjustments to prior year computations. On 3 September 2010 we exchanged contracts to acquire for £1.45m, a long leasehold interest in our head office and main manufacturing site at Manton Wood, Worksop, previously occupied on a short lease.
The balance sheet remains strong with good cash generation and the Company ended the period with a cash balance of £4.554m (30 June 2009: £1.780m; 31 December 2009: £5.015m).
Optivite integration
Our production activities have been consolidated into Optivite's modern feed additive plant at Manton Wood. This plant has now doubled its production throughput, with additional Agil volume and a strong performance from Optivite International, and we are starting to experience improved efficiencies. Further investment has been made to increase warehousing capacity, and we are currently extending the offices to accommodate staff transferred from Optivite's International team, who were located in offices nearby.
Optivite's UK business comprises higher margin functional feed additives but also lower margin fats and concentrates, some of which was unprofitable due to the very competitive nature of the fats business. Consolidating production will go some way to improve our margins in this product group. We have also improved our sales management structure in the UK by identifying and focusing on key market segments where we have a strong value proposition for the customer. These changes have also included recruiting a new sales team with responsibility for driving growth in these specific segments.
The integration is progressing well and we expect to have completed all major projects by the end of this year, and although we are beginning to experience some of the benefits of the integration it will inevitably be a while before the full impact is felt.
We have also taken the decision to close Optivite's North Scarle site at the end of the year, when we will transfer its fats and concentrates business to Manton Wood. These changes mean that our operations will now be focused on just two sites: Manton Wood for the functional feed additive business and Boroughbridge, in North Yorkshire, where Vitrition, our organic feed business is located. Manton Wood, which also contains the head office, is a strategic site for the Company hence the decision to buy the land and buildings to give security of tenure on which to make long term investment decisions.
Operations - Agriculture
Agil continued to make progress during the period with some particularly strong performances from Argentina, Bangladesh, Malaysia, Peru and Poland. In Malaysia we successfully launched a new mycotoxin binder product, called Neutox, which in addition to removing harmful mycotoxins in the animal feed also prevents future mould growth and consequently new toxin development. The success of this value-add product has encouraged us to market it in other territories around the world.
A number of strong performers last year have struggled to maintain their momentum in the first six months of this year for differing reasons. Chile's poultry integrators have been affected by the earthquake earlier this year, and Vietnam's aquaculture industry, into which we sold significant volumes of our pellet binder, Aquacube®, suffered a poor market towards the end of 2009. It is a feature of the business that being geographically diverse means short-term poor performance in a territory can be offset by strength elsewhere in the world.
We now have four acidifier products registered in Brazil, where our distributor is focusing on marketing Salkil to some of the world's largest poultry integrators, where feed volumes are significant. In China, we now have a number of products registered, for which we have embryonic sales. Again, our Chinese sales team is focusing on some of the larger meat producers where the volumes are significant but the selling process can be lengthy and sometimes complex.
Vitrition, our organic feed brand, which operates from one of only two dedicated organic feed mills in the UK, and accounts for around 17% of Group turnover, has been focused on improving margins in the business.
The Optivite acquisition brought a range of more nutritionally based products to our portfolio, which complement Agil's strength in products for biosecurity applications. The Agil sales team has started to market a number of these new products such as the omega-3 supplements, which Optivite developed and leads the market. These supplements enhance fertility, viability of young animals, growth rate and also increase the omega-3 content of meat and eggs for human consumption. Human health is an important consideration in household purchasing decisions around the world; especially as developing nations move towards a more meat protein based diet.
Operations - Aquaculture
We have a number of customer trials underway in Thailand for both Tilapia and Shrimp Aquatice®. Our Head of Aquaculture, based in Thailand, has set up and is overseeing these trials jointly with the farmers to ensure we learn as much as possible about the practicalities of farmers using Aquatice®. These trials will complete later in the year when the ponds are fully harvested, by which time the farmer will be able to evaluate the benefits of the product. We are also working with a number of partners in China and the Philippines and have recently been granted registration for Tilapia and Shrimp Aquatice® for the Philippines.
Board Membership
Mark Nicholls retired from the Board on 26 April 2010; the Board would like to record the Company's appreciation of his contribution to the development of Aquatice®. Richard Scragg, the founder and Chairman of Optivite, joined the Kiotech Board last October following the acquisition. Now that the integration is well established and proceeding according to plan, Richard will become a non-executive director of the Company with effect from 1 October 2010. I am delighted that the Company will continue to benefit from Richard's extensive knowledge and experience of our industry.
Outlook
We are encouraged by the trading performance so far this year. We are continuing to generate organic growth while also successfully further integrating the Optivite acquisition. Management is also working on new business development opportunities including territory expansion and product development, while also maintaining close links with Thai aquaculture farmers to demonstrate the benefits of Aquatice®.
We look forward with confidence backed by a strong balance sheet and cash position, which allows us to consider further acquisition opportunities to broaden our product and geographic spread and enhance shareholder value.
Richard S RoseChairman15 September 2010
Principal risks and uncertainties
The group set out in its 2009 Annual Report and Financial Statements the principal risks and uncertainties that could impact its performance; these remain unchanged since the annual report was published.
| Unaudited consolidated income statement | |||||||||
| For the six months ended 30 June 2010 | |||||||||
| Six months to | Six months to | Year ended | |||||||
| 30.06.10 | 30.06.09 | 31.12.09 | |||||||
| Note | £000 | £000 | £000 | ||||||
| Revenue | 3 | 11,082 | 3,468 | 10,955 | |||||
| Cost of sales | (8,193) | (2,210) | (7,823) | ||||||
| Gross profit | 2,889 | 1,258 | 3,132 | ||||||
| Administrative expenses | (2,135) | (980) | (2,429) | ||||||
| Gains on sale of intellectual property | - | - | 675 | ||||||
| Operating profit | 754 | 278 | 1,378 | ||||||
| Interest receivable (net) | 23 | 24 | 31 | ||||||
| Profit before income tax | 777 | 302 | 1,409 | ||||||
| Income tax expense | (105) | (85) | (194) | ||||||
| Profit for the period from continuing operations | 672 | 217 | 1,215 | ||||||
| Profit for the year attributable to: | |||||||||
| Owners of the parent | 660 | 217 | 1,211 | ||||||
| Minority Interest | 12 | - | 4 | ||||||
| 672 | 217 | 1,215 | |||||||
| The consolidated income statement has been prepared on the basis that all operations are continuing operations. | |||||||||
| Earnings per share attributable to the equity holders of the company: | |||||||||
| Basic earnings per share (pence) | 4 | 0.16 | 0.09 | 0.41 | |||||
| Diluted earnings per share (pence) | 4 | 0.16 | 0.09 | 0.41 | |||||
| Unaudited consolidated statement of comprehensive income | |||||||||
| For the six months ended 30 June 2010 | |||||||||
| Six months to | Six months to | Year ended | |||||||
| 30.06.10 | 30.06.09 | 31.12.09 | |||||||
| £000 | £000 | £000 | |||||||
| Profit for the period | 672 | 217 | 1,215 | ||||||
| Currency translation differences | - | - | 1 | ||||||
| Total comprehensive income for the year | 672 | 217 | 1,216 | ||||||
| Attributable to: | |||||||||
| Owners of the parent | 660 | 217 | 1,212 | ||||||
| Minority Interest | 12 | - | 4 | ||||||
| Total comprehensive income for the year | 672 | 217 | 1,216 | ||||||
| The above consolidated income statement should be read in conjunction with the accompanying notes. | |||||||||
| Unaudited consolidated balance sheet | ||||||||||||||
| For the six months ended 30 June 2010 | ||||||||||||||
| As at | As at | As at | ||||||||||||
| 30.06.10 | 30.06.09 | 31.12.09 | ||||||||||||
| Note | £000 | £000 | £000 | |||||||||||
| Non current assets | ||||||||||||||
| Intangible assets | 5 | 6,829 | 4,363 | 6,773 | ||||||||||
| Property, plant and equipment | 877 | 367 | 662 | |||||||||||
| 7,706 | 4,730 | 7,435 | ||||||||||||
| Current assets | ||||||||||||||
| Inventories | 1,217 | 432 | 1,291 | |||||||||||
| Trade and other receivables | 5,255 | 2,150 | 4,911 | |||||||||||
| Cash and cash equivalents | 4,554 | 1,780 | 5,015 | |||||||||||
| 11,026 | 4,362 | 11,217 | ||||||||||||
| Total Assets | 18,732 | 9,092 | 18,652 | |||||||||||
| Equity and Liabilities | ||||||||||||||
| Called up share capital | 4,209 | 2,511 | 4,209 | |||||||||||
| Share premium account | 2,957 | - | 2,957 | |||||||||||
| Other reserves | 517 | 256 | 508 | |||||||||||
| Special reserve | 4,441 | 4,441 | 4,441 | |||||||||||
| Retained earnings | 2,105 | 451 | 1,445 | |||||||||||
| 14,229 | 7,659 | 13,560 | ||||||||||||
| Minority Interests | 57 | - | 45 | |||||||||||
| Total Equity | 14,286 | 7,659 | 13,605 | |||||||||||
| Non-current liabilities | ||||||||||||||
| Borrowings | 13 | - | 30 | |||||||||||
| Deferred Income tax liabilities | 498 | - | 493 | |||||||||||
| 511 | - | 523 | ||||||||||||
| Current Liabilities | ||||||||||||||
| Trade and other payables | 3,420 | 1,203 | 4,109 | |||||||||||
| Corporation tax | 515 | 230 | 415 | |||||||||||
| 3,935 | 1,433 | 4,524 | ||||||||||||
| Total Liabilities | 4,446 | 1,433 | 5,047 | |||||||||||
| Total Equity and Liabilities | 18,732 | 9,092 | 18,652 | |||||||||||
| The above consolidated balance sheet should be read in conjunction with the accompanying notes. | ||||||||||||||
| Unaudited consolidated statement of cashflows | ||||||||||
| For the year ended 30 June 2010 | ||||||||||
| Six months to | Six months to | Year ended | ||||||||
| 30.06.10 | 30.06.09 | 31.12.09 | ||||||||
| £000 | £000 | £000 | ||||||||
| Cash generated from operating activities | (154) | 31 | 2,421 | |||||||
| Interest paid | - | - | (1) | |||||||
| Income tax paid | - | 14 | (340) | |||||||
| Net cash generated from operating activities | (154) | 45 | 2,080 | |||||||
| Cash generated from investing activities | ||||||||||
| Acquisition of subsidiary net of cash acquired | - | - | (3,127) | |||||||
| Payments to acquire intangible fixed assets | (67) | (141) | (226) | |||||||
| Purchases of plant and equipment | (254) | (15) | (44) | |||||||
| Proceeds from disposals of plant and equipment | 8 | - | - | |||||||
| Interest received | 23 | 24 | 31 | |||||||
| Net cash used in investing activities | (290) | (132) | (3,366) | |||||||
| Cashflows from financing activities | ||||||||||
| Proceeds from issuance of shares | - | - | 4,541 | |||||||
| Dividend paid to Company's shareholders | - | - | (101) | |||||||
| Repayment of borrowings | (17) | - | (7) | |||||||
| Net cash used in financing activities | (17) | - | 4,433 | |||||||
| Net (decrease)/increase in cash and cash equivalents | (461) | (87) | 3,147 | |||||||
| Cash and cash equivalents at the beginning of the period | 5,015 | 1,867 | 1,868 | |||||||
| Cash and cash equivalents at the end of the period | 4,554 | 1,780 | 5,015 | |||||||
| Six months to | Six months to | Year ended | ||||||||
| 30.06.10 | 30.06.09 | 31.12.09 | ||||||||
| £000 | £000 | £000 | ||||||||
| Profit before income tax | 777 | 302 | 1,409 | |||||||
| Adjustments for: | ||||||||||
| Finance costs | (23) | (24) | (31) | |||||||
| Depreciation and amortisation | 50 | 65 | 82 | |||||||
| Profit on disposal of plant and equipment | (8) | - | - | |||||||
| Share based payments | 9 | 7 | 30 | |||||||
| Changes in working capital: | ||||||||||
| Inventories | 74 | 37 | (183) | |||||||
| Trade and other receivables | (344) | (455) | 350 | |||||||
| Trade and other payables | (689) | 99 | 764 | |||||||
| Cash generated from operations | (154) | 31 | 2,421 | |||||||
| The above consolidated statement of cashflows should be read in conjunction with the accompanying notes. | ||||||||||
| Unaudited consolidated statement of changes in equity | ||||||||||||||||
| for the period ended 30 June 2010 | ||||||||||||||||
| Attributable to the owners | Share | Share | Special | Other | Retained | Minority | Total | |||||||||
| of the parent | Capital | Premium | Reserve | Reserves | Earnings | Interests | Equity | |||||||||
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | ||||||||||
| Balance at 1 January 2009 | 2,511 | - | 4,441 | 249 | 335 | - | 7,536 | |||||||||
| Profit | - | - | - | - | 217 | 217 | ||||||||||
| Total comprehensive income for the half year | - | - | - | - | 217 | - | 217 | |||||||||
| Transactions with owners | ||||||||||||||||
| Share based payment adjustments | - | - | 7 | - | - | 7 | ||||||||||
| Dividends relating to 2008 | - | - | - | (101) | - | (101) | ||||||||||
| Transactions with owners | - | - | - | 7 | (101) | - | (94) | |||||||||
| Balance at 30 June 2009 | 2,511 | - | 4,441 | 256 | 451 | - | 7,659 | |||||||||
| Profit | - | - | - | - | 994 | 4 | 998 | |||||||||
| Total comprehensive income for the year | - | - | - | - | 994 | 4 | 998 | |||||||||
| Transactions with owners | ||||||||||||||||
| Issue of shares | 1,698 | 2,957 | - | 229 | - | - | 4,884 | |||||||||
| Share based payment adjustments | - | - | - | 23 | - | - | 23 | |||||||||
| Transactions with owners | 1,698 | 2,957 | - | 252 | - | - | 4,907 | |||||||||
| Minority interests arising | - | - | - | - | - | 41 | 41 | |||||||||
| Balance at 1 January 2010 | 4,209 | 2,957 | 4,441 | 508 | 1,445 | 45 | 13,605 | |||||||||
| Profit | - | - | - | - | 660 | 12 | 672 | |||||||||
| Total comprehensive income for the half year | - | - | - | - | 660 | 12 | 672 | |||||||||
| Transactions with owners | ||||||||||||||||
| Share based payment adjustments | - | - | - | 9 | - | - | 9 | |||||||||
| Transactions with owners | - | - | - | 9 | - | - | 9 | |||||||||
| Minority interests arising | - | - | - | - | - | - | - | |||||||||
| Balance at 30 June 2010 | 4,209 | 2,957 | 4,441 | 517 | 2,105 | 57 | 14,286 | |||||||||
| The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. | ||||||||||||||||
Notes to the financial statements
1. General information KiotechInternational plc ("the company") and its subsidiaries (together "the group") manufacture and supply products to enhance the health, growth and sustainability in agriculture and aquaculture.
The company acquired the Optivite Group on 30 September 2009.The company is traded on the London Stock Exchange Aim market and is incorporated and domiciled in the UK. The address of the registered office is Unit 5 Manton Wood Enterprise Park, Worksop, Nottinghamshire, S80 2RS.
2. Basis of preparationThe consolidated interim financial statements comprise the accounts of the company and its subsidiaries drawn up to 30 June 2010.
The consolidated interim financial statements have been prepared on the basis of the accounting policies set out in the group's annual financial statements for the year ended 31 December 2009, which are available on the company's web site at www.kiotech.com.
Of the new standards, amendments and interpretations that are in issue and mandatory for the financial year end to 31 December 2010, there is no financial impact on these consolidated interim financial statements.
This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2009 were approved by the Board of Directors on 25 May 2010 and delivered to the Registrar of companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
The consolidated interim financial information for the period ended 30 June 2010 is unaudited.
3. Segment informationAll revenues from external customers are derived from the sale of goods in the ordinary course of business to the agricultural and aquacultural markets and are measured in a manner consistent with that in the income statement.
Management has determined the operating segments based on the reports reviewed by the Board that are used to make strategic decisions. The Board considers the business from a geographic perspective.
Management considers adjusted EBITDA, which comprises Earnings before interest, tax , depreciation and amortisation adjusted for share-based payments.
| UK and Eire | International | Total | |||||||||
| £000 | £000 | £000 | |||||||||
| Half year 2010 | |||||||||||
| Total segmental revenue | 5,098 | 6,076 | 11,174 | ||||||||
| Inter-segment revenue | - | (92) | (92) | ||||||||
| Revenue from external customers | 5,098 | 5,984 | 11,082 | ||||||||
| Adjusted EBITDA | 187 | 626 | 813 | ||||||||
| Depreciation and amortisation | 25 | 25 | 50 | ||||||||
| Income tax (credit)/expense | 52 | (157) | (105) | ||||||||
| Total assets | 4,444 | 14,288 | 18,732 | ||||||||
| Total liabilities | (2,095) | (2,351) | (4,446) | ||||||||
| Half year 2009 | |||||||||||
| Total segmental revenue | 204 | 3,264 | 3,468 | ||||||||
| Inter-segment revenue | - | - | - | ||||||||
| Revenue from external customers | 204 | 3,264 | 3,468 | ||||||||
| Adjusted EBITDA | 20 | 330 | 350 | ||||||||
| Depreciation and amortisation | - | 65 | 65 | ||||||||
| Income tax expense | (6) | (79) | (85) | ||||||||
| Total assets | 34 | 9,058 | 9,092 | ||||||||
| Total liabilities | (6) | (1,427) | (1,433) | ||||||||
| Year ended 31 December 2009 | |||||||||||
| Total segmental revenue | 3,762 | 7,644 | 11,406 | ||||||||
| Inter-segment revenue | (440) | (11) | (451) | ||||||||
| Revenue from external customers | 3,322 | 7,633 | 10,955 | ||||||||
| Adjusted EBITDA | 95 | 1,395 | 1,490 | ||||||||
| Depreciation and amortisation | 59 | 23 | 82 | ||||||||
| Income tax expense | (12) | (181) | (193) | ||||||||
| Total assets | 3,665 | 14,987 | 18,652 | ||||||||
| Total liabilities | (2,438) | (2,609) | (5,047) | ||||||||
| A reconciliation of adjusted EBITDA to profit before tax is provided as follows: | |||||||||||
| Six months to | Six months to | Year ended | |||||||||
| 30.06.10 | 30.06.09 | 31.12.09 | |||||||||
| £000 | £000 | £000 | |||||||||
| Adjusted EBITDA for reportable segments | 813 | 350 | 1,490 | ||||||||
| Depreciation, amortisation and impairment provisions | (50) | (65) | (82) | ||||||||
| Share-based payment charges | (9) | (7) | (30) | ||||||||
| Finance income-net | 23 | 24 | 31 | ||||||||
| Profit before tax | 777 | 302 | 1,409 | ||||||||
| 4. Earnings per share | Six months to | Six months to | Year ended | ||||||||||
| 30.06.10 | 30.06.09 | 31.12.09 | |||||||||||
| Weighted average number of shares in issue (000's) | 420,899 | 251,079 | 293,534 | ||||||||||
| Fully diluted weighted average number of shares in issue (000's) | 424,695 | 252,129 | 298,367 | ||||||||||
| Profit attributable to equity holders of the company (£000's) | 660 | 217 | 1,211 | ||||||||||
| Basic earnings per share (pence) | 0.16 | 0.09 | 0.41 | ||||||||||
| Gains on sale of intellectual property (pence per share) | - | - | (0.21) | ||||||||||
| Underlying earnings per share | 0.16 | 0.09 | 0.20 | ||||||||||
| Diluted earnings per share | 0.16 | 0.09 | 0.41 | ||||||||||
| 5. Intangible fixed assets | Goodwill, brands & | Patents & | |||||||||||
| Customer relationships | Developments | Total | |||||||||||
| £000 | £000 | £000 | |||||||||||
| Cost at 1 January 2010 | 5,822 | 1,083 | 6,905 | ||||||||||
| Additions | - | 67 | 67 | ||||||||||
| Cost at 30 June 2010 | 5,822 | 1,150 | 6,972 | ||||||||||
| Amortisation at 1 January 2010 | - | 132 | 132 | ||||||||||
| Charge for the period | 10 | 1 | 11 | ||||||||||
| Amortisation at 30 June 2010 | 10 | 133 | 143 | ||||||||||
| Net book value at 30 June 2010 | 5,812 | 1,017 | 6,829 | ||||||||||
| Net book value at 1 January 2010 | 5,822 | 951 | 6,773 | ||||||||||
Copyright Business Wire 2010
Related Shares:
Anpario