22nd May 2007 07:01
Timestrip PLC22 May 2007 TIME.L Timestrip Plc PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 Timestrip Plc ("Timestrip") develops, manufactures and sells two technologies inthe field of time and temperature measurement. The patented Timestrip smartlabel monitors for how long perishable food and other replaceable products havebeen open or in use. The patent pending iStrip undergoes an irreversible colourchange when exposed to freezing temperatures and is designed to indicate thatthe efficacy of products, such as vaccines, has been compromised. Key points: • Results in line with the trading update issued 2nd February 2007 • Significant progress achieved towards commercialising Timestrip's technology • Deals and alliances have been announced during the period under review with; • Henkel • Whirlpool • Curver • Plastek • CCL Label • Hygolet • DryandStore • PATH • Advanced discussions and trials underway with other major international companies. • Steady progress across core targeted international markets Paul Freedman, Timestrip's joint CEO, commented: "During the period under review, Timestrip has achieved some major milestoneswith a number of international companies looking to adopt the technology. Wehave seen some encouraging uptake of the technology in the appliance andconsumables market, most notably with Whirlpool and with our existing customerssuch as Hamilton Beach/Febreze. Alliances with leading packaging companies arehelping to accelerate progress in the food and pharmaceutical markets and we areoptimistic that the deal pipeline currently in place is capable of generatingsignificant ongoing revenues for the Group. We look forward to updating themarket with further progress in due course." For further information: Paul Freedman, Joint CEO and founding Director, Timestrip 01462 440 700Shane Dolan, Biddicks 020 7448 1000Fergus Marcroft, Evolution Securities 020 7071 4300 TIMESTRIP PLCCHAIRMAN'S STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006 The Company has reached an exciting point in its drive towards widespreadadoption of its core technology, the Timestrip(R), and has also made excellentprogress with its more recent development, the iStrip(R). During 2006 we have continued to focus on improving our technology throughextensive R&D activity. As a result, Timestrip is now more versatile, easier tointegrate into packaging and products, and less expensive to manufacture.Recently announced strategic partnerships with global packaging companiesPlastek and CLL Label are the direct consequence of these developments and theability to deliver fully customised packaging solutions will accelerate thewidespread adoption of the technology in key markets. During 2006, Timestrip has demonstrated its ability to satisfy the technologyrequirements and production standards of major international customers and hasestablished the foundation for significant growth. We are greatly encouraged bythe range of potential customers that the Company is now dealing with and thestrength of many of these relationships. The Company is focused on securing large contracts with major corporations andlengthy evaluation periods and decision-making processes are unavoidable. Thedeal pipeline is continually reviewed and despite the seemingly lengthy process,we remain very confident of securing some major contracts at the end of it. Financial Results We have seen a near four-fold increase in turnover for the year to 31st December2006 of £378,975 (2005 - £103,303). At the pre-tax level the Company recorded aloss of £1,494,502 (2005 - £1,325,343 as restated) including a charge relatingto FRS20 amounting to £113,966 (2005 - £66,308 as restated). The resultant lossper share is 0.46p (2005 - 0.52p). The liquidity position remains healthy withcash resources in excess of £2.5m as at end December 2006. Current Trading and Prospects Although sales in the first quarter of 2007 have remained at similar levels toprevious quarters, some significant milestones have been reached in a number ofkey projects, which we are confident will convert into significant levels ofrevenue in the near future. These milestones include the successful completionof product testing, agreement on graphics and integration methods, and, incertain cases, the start of in home trials and consumer tests. It is importantto stress the quality and reliability of the revenues behind these potentialcontracts, which for the most part relate to products which will adopt theTimestrip technology but which have an established track record in theirindividual markets. S.V.OakesChairman 21 May 2007 TIMESTRIP PLCJOINT CHIEF EXECUTIVES' STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006 Operating Review The Company currently develops and markets two technologies in the field of timeand temperature measurement; the Timestrip(R) and the iStrip(R). Timestrip smart labels address the relatively new problem created by theproliferation of "period after opening" instructions such as "once opened usewithin xx days" or "replace every month" which feature in a number ofinternational mass markets, including; Appliances and Consumables, Food andBeverage, Catering/ Foodservice, Cosmetics, Pharmaceuticals and Medical Devices,all of which have been specifically targeted by Timestrip. Appliances and Consumables In this sector, Timestrip has developed a visual reminder system which ispositioned as a cost effective method of improving customer compliance withmanufacturer's instructions such as "replace every 3 months". We have secured deals with Hamilton Beach/Febreze(R) (air filters), Hygolet(washroom devices), DryandStore(R) (hearing aids) and most recently Whirlpool(fridge filters). Customer feedback indicates that the incorporation of theTimestrip has been well received by end users and is helping increase thefrequency of repeat purchase. We are confident that existing developmentcontracts and new supply contracts currently under negotiation will establishTimestrip as the technology of choice, leading to growing revenues in this broadranging sector. Food and Beverage In the F&B sector, Timestrips are positioned as a tool to help consumers gaugethe freshness of products, as well as avoid unnecessary waste by providing theopportunity to consume products before they expire. Despite the length of time required to gain a foothold in this market, therevenue potential is considerable and our effort has been concentrated onmethods of seamlessly incorporating the Timestrip technology into, for example,customised label and bottle closure applications. This has culminated inrecently announced partnerships with Plastek (closures) and CCL Label. Althoughthese partnerships have only recently been formed, the extra resource nowavailable to us as well as the added credibility, has enabled us to accelerate anumber of ongoing projects with major F&B brands. In parallel, the distribution of consumer packs of Timestrips which can bepurchased at retail outlets, through catalogues and online remains key to ourstrategy to increase awareness of the technology. The product continues to sellonline in the UK with Ocado and trials with QVC in the US have shown that morework is required to identify the key messages and price points. Our recentlyannounced partnership with Curver will see Timestrips introduced as apromotional item in ranges of Curver food storage containers, which is seen asan important pre-cursor to a retail launch in Europe. A Direct TV campaign thatstarts shortly will help to refine our proposition for the US market, where weare pleased to report there is significant retail interest in the product. Catering / FoodService In this sector, Timestrips are positioned as a simple and fool-proof system tohelp catering businesses comply with the food safety (HACCP) principlesenshrined in the EU Directive on Food Hygiene and in State regulations acrossNorth America. Timestrips currently feature on a range of sauces sold by NestleFoodservices UK and have attracted the attention of other brand owners in thiscategory. In addition, Timestrips are distributed in Northern Europe via ourpartner NSD / Labellord and in the US by our partner Daymark. We remain confident that the continued investment in marketing by our partnerswill lead to Timestrip gaining increased traction in this challenging sector. Cosmetics, Pharmaceuticals and Medical Devices A high level of interest in Timestrip continues to be shown in the cosmetic,pharmaceutical and medical device sectors. There is evidence that the EUDirective, requiring all personal care products with a shelf life over 3 yearsto also state the Period after Opening instruction, is starting to be seen as amarketing opportunity in the cosmetics sector. In pharmaceuticals, we lookforward to being able to provide updates on current tests and trials withcertain leading pharmaceutical companies. We have also recently appointed agentswith specific expertise in the pharmaceutical and medical device sectors in theUS, who are already reporting high levels of interest in the technology. Webelieve our partnerships with packaging experts Plastek and CCL Label will proveinvaluable as we continue to make progress in these sectors. iStrip Developed late in 2006, iStrip is a unique, patent pending label that changescolour irreversibly if an accidental freezing event takes place in the coldchain. This cost effective solution can be applied at single unit/dose level onproducts such as vaccines and blood and can then be individually monitoredthroughout the cold chain. The Company has been included in an active programme by PATH (the Seattle basedinternational non-profit organisation) that seeks to identify the incidence ofaccidental freezing in vaccines. The Company has filed a patent to protect thetechnology and has been conducting thorough research and development to ensurethat the technology is robust. Manufacturing trials have commenced and samplesfor further field trials and customer testing will shortly become available. The Board believes that the potential revenue from this technology issignificant and our ability to bring it to market has been greatly enhanced bythe partnership with CCL Label who have unrivalled access to pharmaceuticalcustomers as well as being able to provide tailored delivery solutions. Staff We greatly appreciate the efforts of everyone in the organisation, including ournumerous distributors and agents across the world. We are continually looking tostrengthen our R&D team, which is key to the Company's future success, as itstrives not only to improve its core products but also to develop newtechnologies in this field. Strategy The manufacturing process and prevailing market dynamics for both Timestrip andiStrip lend themselves to a strategy under which Timestrip will license therights to manufacture and distribute in local markets to customers, jointventure partners and distributors. The implementation of this strategy requiresus to maintain in-house production capacity, at a sufficient level to seedmarkets in the early stages and ensure production machinery is kept at levelsthat will enable the Company to satisfy initial contracts. Royalty revenues willbe enhanced through the supply of key raw materials and technical support tolicensees. The Company has received a number of approaches from companieswishing to manufacture under license and will enter into such arrangements atthe earliest opportunity The Company stipulates the use of its registered trademark on all Timestrip(R)products, and there has been, to date, no objection to this policy from even thelargest of international brand owners. It is the Directors' belief that theexposure to be gained by Timestrip(R) within the marketing campaigns of leadingbrands will lead to the creation, over time, of an internationally recognisedbrand. Competition It is anticipated that the ongoing commercialisation of Timestrip will stimulatecompetition at some point in the future. However, the Directors are currentlynot aware of any competing technologies. Although competition exists for theiStrip technology it is generally represented by devices that are designed andcosted for use at case level, not unit level. When used at unit level onproducts such as vaccines, the iStrip will enable the product condition to bemonitored more accurately and allow brand owners to reduce the cost ofrejection. The award of the main patent for Timestrip in the US announced earlier this yearextends the protection for the technology which already exists in Europe, SouthAfrica and Hong Kong. Applications in other territories are expected to beawarded in the current financial year. As the Company gains more exposure to theneeds of different markets it continually reviews and, if necessary, expands itsIntellectual Property portfolio to protect the technologies as they evolve. Paul Freedman Reuben IsbitskyJoint Chief Executive Officer Joint Chief Executive Officer 21 May 2007 21 May 2007 TIMESTRIP PLCCONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 As restated £ £ Turnover 378,975 103,303 Cost of sales (281,069) (66,181) ---------- ----------Gross profit 97,906 37,122 Administrative expenses (1,706,730) (1,412,556) ---------- ----------Operating loss (1,608,824) (1,375,434) Other interest receivable and similarincome 122,651 55,064Interest payable and similar charges (8,329) (4,973) ---------- ----------Loss on ordinary activitiesbefore taxation (1,494,502) (1,325,343) Tax on loss on ordinaryactivities 89,564 93,999 ---------- ----------Loss on ordinary activities after tax (1,404,938) (1,231,344) ========== ========== 2006 2005 £ £Loss per share (0.0046) (0.0052) The profit and loss account has been prepared on the basis that all operationsare continuing operations. There is no difference between basic and diluted loss per share. TIMESTRIP PLCSTATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 As restated £ £ Loss for the financial year (1,404,938) (1,231,344) Prior year adjustment (66,308) - ---------- ---------- (1,471,246) (1,231,344) ========== ========== TIMESTRIP PLCBALANCE SHEETSAS AT 31 DECEMBER 2006 Group 2006 2005 As restated £ £Fixed AssetsIntangible assets 6,308,550 6,339,333Tangible assets 371,702 304,239Investments - - ----------- ----------- 6,680,252 6,643,572 ----------- ----------- Current assetsStocks 183,317 66,067Debtors 380,865 194,735Cash at bank and in hand 2,517,341 2,979,268 ----------- ----------- 3,081,523 3,240,070 Creditors: amounts falling duewithin one year (430,465) (222,513) Net current assets 2,651,058 3,017,557 ----------- ----------- Total assets less current liabilities 9,331,310 9,661,129 Creditors: amounts falling due after more than one year (70,556) (66,666) 9,260,754 9,594,463 =========== =========== Capital and reservesCalled up share capital 3,606,621 3,603,331Share premium account 27,541,931 26,587,956Share Option Reserve 180,274 66,308Profit and loss account (22,068,072) (20,663,132) Shareholders' funds 9,260,754 9,594,463 =========== =========== Equity interests 5,716,907 6,050,616Non-equity interests 3,543,847 3,543,847 ----------- ----------- 9,260,754 9,594,463 =========== =========== TIMESTRIP PLCCONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 As restated £ £ £ £ Net cash outflow from operatingactivities (1,382,455) (1,294,053) Returns on investments and servicingof financeInterest received 122,651 55,064Interest paid (8,329) (4,973) ---------- ----------Net cash inflow for returns oninvestments and servicing offinance 114,322 50,091 Taxation recovered - 79,853 Capital expenditure and financial investmentPayments to acquire intangibleassets (10,272) (120,971)Payments to acquire tangibleassets (116,700) (16,122) ---------- ----------Net cash outflow for capitalexpenditure (126,972) (137,093) Acquisition and disposalsNet cash acquired on acquisition - 43,288 ---------- ----------Net cash outflow before managementof liquid resources and financing (1,395,105) (1,257,914) FinancingIssue of ordinary share capital 957,096 4,521,750Cost of share issue - (272,543)Repayment of long term bank loan (23,918) (11,905) ---------- ----------Net cash inflow from financing 933,178 4,237,302 ---------- ----------(Decrease)/ Increase in cash in the period (461,927) 2,979,388 ========== ========== TIMESTRIP PLCNOTES TO THE CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006 1 Reconciliation of operating profit to net cash inflow from operating activities 2006 2005 As restated £ £ Operating loss (1,608,824) (1,375,434) Depreciation, amortisation and impairment charges of intangible assets 52,668 276,269 Depreciation of tangible assets 66,845 40,889 Increase in stocks (117,252) (8,050) (Increase) in debtors (96,566) (47,834) Decrease/ (increase) in creditors within one year 206,708 (246,201) Cost of Share Options 113,966 66,308 ---------- ---------- Net cash outflow from operating activities (1,382,455) (1,294,053) ========== ========== 2 Analysis of net funds Other non- 31 1 January cash December 2006 Cash flow changes 2006 £ £ £ £ Net cash: Cash at bank and in hand 2,979,268 (461,927) - 2,517,340 ---------- ---------- ---------- ---------- Bank Loans Debts falling due within one year (14,286) (6,244) - (20,530) Debts falling due after one year (66,666) (3,885) - (70,551) ---------- ---------- ---------- ---------- (80,952) (10,129) - (91,081) ---------- ---------- ---------- ---------- Net (debt) / funds 2,898,316 (472,057) - 2,426,259 ---------- ---------- ---------- ---------- 3 Reconciliation of net cash flow to movement in net funds 2006 2005 £ £ (Decrease)/increase in cash in the period (461,928) 2,979,388 Cash outflow from increase in debt and lease financing (10,129) (80,952) ---------- ---------- Movement in net (debt)/funds in the period (472,057) 2,898,436 Opening net funds/(debt) 2,898,316 (120) ---------- ---------- Closing net funds 2,426,259 2,898,316 ========== ========== TIMESTRIP PLCNOTES FOR THE YEAR ENDED 31 DECEMBER 2006 1 Basis of consolidation The consolidated profit and loss account and balance sheet include the financial statements of the company and its subsidiary undertakings made up to 31 December 2006. The results of subsidiaries sold or acquired are included in the profit and loss account up to, or from, the date control passes. Intra-group sales and profits are eliminated fully on consolidation. 2 Goodwill The goodwill is the difference between the amount paid on the acquisition of Timestrip UK Limited and the aggregate assets. The directors have concluded that goodwill arising on the acquisition of Timestrip UK Limited should not be amortised as it has an indefinite useful economic life. The goodwill is considered to have indefinite durability that can be demonstrated and its value can be reliably measured. The acquired business has a product which is unique in the market place and is able to cheaply and easily provide a record of elapsed time in the key ambient temperatures of room, fridge and freezer. In addition, the company has also spent many years working on the research and development associated with the underlying diffusion technology and it is believed that this creates a significant barrier to entry to any potential competition. Timestrip is currently one of the leading companies in the world for understanding micron diffusion. Finally, the company has spent significant money successfully applying for global patents for the technology which further adds to the protection. Hence, based on these facts the directors are of the opinion that it has an indefinite useful economic life. The non-amortisation of goodwill constitutes a departure from the Companies Act 1985, Part 4 Sch 12, for the over-riding purpose of giving a true and fair view of the group's result. If goodwill arising on acquisitions had been written off over a 20 year period, the operating loss would have increased by £282,137 (2005 - £235,154) in the year ended 31 December 2006. The total amortisation to date would have been £517,251 (2005 - £235,114). 3 Intangible Fixed Assets Patents and trademarks are capitalised and classified as intangible assets on the balance sheet and these are amortised over their estimated useful economic life of 20 years. Website development costs are valued at cost less accumulated amortisation. Amortisation is calculated to write off the cost in equal annual instalments over the estimated useful economic life of 3 years. 4 Share-based payments The group has applied the requirements of FRS 20, "Share-based Payments". The group issued equity-settled and cash-settled share-based payments which are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Fair value is measured by use of a binominal model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioral considerations. 5 Dividends No dividend is proposed for the period ended 31 December 2006. 6 Taxation No taxation charge is expected to arise on the results for the period 7 Basic and diluted loss per share Basic and diluted loss per ordinary share has been calculated using the weighted average number of shares in issue during the financial period. The weighted average number of equity shares in issue was 307,944,104 (2005 - 236,786,705) and the loss after tax, was £1,404,938 (2005 - £1,231,344 - as restated). 8 Share capital In March 2006, 58,791 Ordinary shares of 0.02p were issued to raise £2,352 before expenses subsequent to the exercise of "B" Warrants. In March 2006, 501,999 Ordinary shares of 0.02p were issued to raise £30,120 before expenses subsequent to the exercise of Placing Warrants. In April 2006, 263,111 Ordinary shares of 0.02p were issued to raise £10,524 before expenses subsequent to the exercise of "B" Warrants. In May 2006, 14,456,409 Ordinary shares of 0.02p were issued to raise £867,892 before expenses subsequent to the exercise of Placing Warrants. In May 2006, 414,733 Ordinary shares of 0.02p were issued to raise £16,251 before expenses subsequent to the exercise of "B" Warrants. In June 2006, 311,814 Ordinary shares of 0.02p were issued to raise £12,473 before expenses subsequent to the exercise of "B" Warrants. In July 2006, 62,618 Ordinary shares of 0.02p were issued to raise £2,505 before expenses subsequent to the exercise of "B" Warrants. In September 2006, 24,454 Ordinary shares of 0.02p were issued to raise £978 before expenses subsequent to the exercise of "B" Warrants. In October 2006, 31,309 Ordinary shares of 0.02p were issued to raise £1,252 subsequent to the exercise of "B" Warrants. In December 2006, 322,947 Ordinary shares of 0.02p were issued to raise £12,918 subsequent to the exercise of "B" Warrants. 9 Adoption of Financial Reporting Standard (FRS) 20 During the year, the group adopted FRS20 'Share Based Payments'. The adoption of this standard constitutes a change in accounting policy. Therefore, the impact has been reflected as a prior year adjustment in accordance with Financial Reporting Standard 3. The standard required that where shares or rights to shares are granted to third parties, including employees, a charge should be recognised in the profit and loss account based on the fair value of the shares at the date of grant of shares or right to shares is made. 10 Financial statements The announcement set out above does not constitute a full financial statement of the company's affairs for the year ended 31 December 2006. The company's auditors have reported on the full accounts for the said year and have accompanied them with an unqualified report. The accounts have yet to be delivered to the Registrar of Companies. The annual report and accounts will be available from the Company Secretary, 5-7 Cranwood Street, London, EC1V 9EE. The information relating to the year ended 31 December 2005 is extracted from the audited accounts that have been filed at Companies House and on which the auditors issued an unqualified opinion. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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