RNS Number:0994Z
Biotrace International PLC
01 March 2006
FOR IMMEDIATE RELEASE 1st March 2006
BIOTRACE INTERNATIONAL PLC
ANNOUNCES PRELIMINARY RESULTS
for the year ended 31 December 2005
Biotrace International Plc ('Biotrace', the "Company" or the "Group"), a leading
manufacturer of industrial microbiology products, today announces its
preliminary results for the year ended 31 December 2005.
Highlights
Financial
* Revenue up 10% to #29.3 million (2004: #26.6 million) and a Compound Annual
Growth Rate (CAGR) since 2000 of 31%
* Profit before tax, restructuring costs and intangible asset amortisation
up 19% to #3.5 million (2004: #2.9 million)
* Operating profit up 10% to #2.8 million (2004: #2.6 million) after
incurring losses of #0.3 million in Ruskinn
* Earnings per share before restructuring costs and intangible asset
amortisation up 17% to 5.95p (2004: 5.07p)
* Operating cash flow up 12% at #3.9 million (2004: #3.5 million)
* Total dividend for the year increased by 11% to 1.55p (2004: 1.40p)
Operational
* Acquisition of MicroSafe in September 2005 enhancing presence in
pharmaceutical market
* Appointment of Group Operations Director and re-structuring of European
operations
* Purchase of remaining shares in Biotrace SA
* Post year-end, sale of Ruskinn Life Sciences business
* Collaboration with Pall Corporation for pharmaceutical market
Commenting on the results, Terry Clements, Non-Executive Chairman of Biotrace,
said:
"Good progress was made in 2005 as the Group continued to consolidate its
position in the industrial microbiology market with strategic acquisitions.
Underlying profitability increased as a result of acquisitions, further
integration initiatives and improved operational efficiency.
"We have made a positive start to 2006 with top line growth generated from the
contribution of MicroSafe acquired in September 2005 and through organic growth.
The recent disposal of the Ruskinn Life Science business will provide greater
focus on the highly profitable industrial business and drive further
improvements in financial performance in the coming year. The collaboration with
Pall Corporation, announced in January, is a great endorsement of our
proprietary technologies and will help expand our business in the pharmaceutical
market.
"Biotrace continues to be a profitable, highly cash generative business with
strong growth potential and the Board remains optimistic regarding the Group's
prospects."
For further information:
Biotrace International Tel: +44 (0) 1656 641 400
Ian Johnson, Chief Executive Officer
Peter Morgan, Finance Director
Buchanan Communications Tel: +44 (0) 207 466 5000
Tim Anderson / Mary Jane Johnson / James Strong
BIOTRACE INTERNATIONAL PLC
ANNOUNCES PRELIMINARY RESULTS
for the year ended 31 December 2005
OVERVIEW:
Group revenue #29.3 million (2004: #26.6 million)
Industrial #27.2 million (2004: #24.9 million)
Life Science #1.1 million (2004: #1.0 million)
Defence #1.0 million (2004: #0.7 million)
The Group continued to prioritise investment in its core Industrial business
during 2005. A sustained commitment to R&D across all brands led to the launch
of new and improved products for environmental monitoring and quality control
solutions for the food, pharmaceutical and water industries. Further investment
was made in expanding direct customer access with the purchase of the remaining
47% of the shares in the French sales subsidiary, Biotrace SA. In September
2005, the Italian microbiology group, MicroSafe, was acquired to expand the
Group's direct sales organisation in Europe and to build a significant presence
in the pharmaceutical market.
The Group's Life Science business, Ruskinn Life Sciences, which manufactures
innovative products for medical microbiology and life science research, was sold
on 9 February 2006.
The Defence business unit develops and manufactures biological weapon detection
equipment and consumables, leveraging the Group's rapid detection technology.
These systems are supplied to the UK MoD and several other governments and
defence organisations either directly or through larger defence partners. The
acquisition of MicroSafe expanded sales within Europe during the year and
reduces the Group's dependency on UK MoD sales going forward.
Overall, sales increased 10% to #29.3 million (2004: #26.6 million) with
operating profits also increasing 10% over the prior year to #2.8 million (2004:
#2.6 million). Pre tax profit before restructuring costs and intangible asset
amortisation increased 19% on the prior year to #3.5 million (2004: #2.9
million), whilst profit before tax increased to #2.6 million (2004: #2.5
million). Earnings per share increased marginally in 2005 to 4.39p (2004:
4.38p), with earnings before restructuring costs and intangible asset
amortisation increasing 17% from 5.07p in 2004 to 5.95p in the period.
OPERATIONAL REVIEW:
Group revenue #29.3 million (2004: #26.6 million)
Europe #13.7 million (2004: #12.6 million)
Americas #13.1 million (2004: #12.5 million)
Asia Pacific # 2.5 million (2004: #1.5 million)
European sales grew 9% in 2005, with the contribution from MicroSafe in the last
quarter offsetting a 7% decline in underlying sales. European operations were
restructured during the second half of the year to optimise the sales
organisation and improve manufacturing efficiency. Sales in the Americas
continued to grow steadily, improving by 5% on 2004 to #13.1 million, whilst
Asia-Pacific sales grew 67% to #2.5 million, largely as a result of a full
year's contribution from Tecra sales in the region.
Sales of the Group's own brands in 2005 increased to 83% of turnover (2004:
82%), as a result of the contributions by Tecra and MicroSafe. Direct sales,
from the Group's sales subsidiaries, accounted for 86% of turnover (2004: 87%),
with the balance derived from the Group's network of international distributors.
Recurring revenues from reagents, consumables and service business increased
from 89% in 2004 to 90% in 2005.
Industrial
Revenue #27.2 million (2004: #24.9 million)
The industrial business, which accounted for 93% of Group revenues in the
period, is focussed on delivering innovative solutions that reduce testing time
or provides automation or convenience for customers to achieve high standards of
product quality and safety, optimise process performance and safeguard human
health. It serves small and multi-national companies within the food, dairy,
beverage, pharmaceutical, personal care products, water quality and industrial
processing sectors, wherever they operate worldwide. Biotrace hygiene
monitoring, Tecra pathogen detection and IBP sampling and prepared media
products account for the majority of sales in the industrial business,
predominantly in the food sector.
Overall, Industrial sales grew 9% to #27.2 million in 2005 (2004: #24.9 million)
with the three month contribution from MicroSafe and a full year's effect of
Tecra driving the growth and offsetting a small decline in European industrial
sales.
The food and beverage sector has historically generated the highest proportion
of revenues and in 2005 accounted for 78% of industrial turnover (2004: 81%).
Over the past two years the Group has been steadily building revenues in
non-food sectors to broaden the business base and reduce the risks associated
with a high concentration of earnings from a single sector. The Company intends
to build a significant presence in and derive a higher proportion of revenues
from the pharmaceutical, personal care and cosmetics sector. The acquisition of
MicroSafe in the last quarter of the year increases the Group's presence in this
sector substantially. Ascotec air samplers and Biotrace PPM prepared media
products together provide a powerful solution for environmental monitoring in
pharmaceutical manufacturing. It is anticipated that revenues from this sector
in 2006 will account for approximately a quarter of Group turnover.
Defence
Revenue #1.0 million (2004: #0.7 million)
As anticipated, underlying UK defence sales remained flat in 2005 at #0.7
million, however, the acquisition of MicroSafe contributed approximately #0.3
million of sales generated from the Italian military and homeland security
market, which gave rise to an overall increase in defence sales of 43% compared
with 2004. The current visibility would suggest a continuing low level of UK
business in the absence of any further conflicts, however, opportunities for
sales growth are being developed within Europe from an expanded product offering
and geographic coverage.
Life Science
Revenue #1.1 million (2004: #1.0 million)
Life Science's sales increased 10% in the period with Ruskinn contributing #0.9
million and MicroSafe adding #0.2 million from the date of acquisition. As
announced in February this year, the Ruskinn business was sold to the life
science management team for #1.05 million in cash plus 10% equity in the ongoing
new business, resulting in the termination of the Group's direct activity in
this market.
Product Development
Expenditure on R&D during the year was similar to 2004 at #1.2 million. A
number of new and improved products were launched during the year. These
included new allergen tests from Tecra to meet the increasing concern from
manufacturers to detect the presence of minute traces of contaminating
allergenic substances. The Company continued to improve the performance of the
Air-trace(TM) air sampler to meet major pharmaceutical manufacturers'
requirements.
Corporate Development
Tecra, acquired in June 2004 has been integrated into the Group and now forms
the base for Asia Pacific sales. MicroSafe acquired in September 2005, is
currently being integrated into the revised European structure and is playing a
global role in developing business in the pharmaceutical market. As mentioned
previously, the sale of Ruskinn will allow management to focus on growing the
core industrial business utilising the cash generated from the deal.
Whilst management is focussing on achieving operational excellence within the
existing Group, further opportunities that will strengthen the Company's
position in the industrial market will be evaluated, provided they meet strict
criteria for adding value to shareholders.
OUTLOOK:
Biotrace is developing and executing well-defined plans to gain worldwide
leadership in the large and growing industrial microbiology market. A great
deal has been achieved over the last twelve months and in particular during the
early part of this year, to strengthen the Company's position and to improve
financial performance. The addition of MicroSafe and its collaboration with
Pall Corporation to develop business in the pharmaceutical sector is progressing
well and a substantial order has been placed by Pall recently to commence their
sales campaign. The recent disposal of the loss making Ruskinn unit will
improve profitability and allow management to concentrate on growing the
profitable industrial business.
It is anticipated that Biotrace will continue to grow above the overall market
growth rate currently at approx. 5-6%. This will be achieved through a
combination of organic growth - generated from the sale of rapid tests which are
growing faster; expansion of sales into the high growth potential pharmaceutical
sector; and through acquisitions, as the market continues to consolidate. The
Defence business will, as in the past, continue to perform better in some years
than others but provides high quality and profitable business when contracts are
won. A stronger and more dependable business base has been achieved over the
course of last year by significantly reducing the Company's dependency on
unpredictable or unsustainable revenues, providing greater visibility of
earnings from the high level of revenues generated from direct sales, own brands
and repeat consumables.
Biotrace is a profitable and strongly cash generative business, now with more
focus, it is well positioned to take advantage of the opportunities for
profitable growth that will add value for shareholders. A positive start has
been made in 2006 with current trading in line with expectations. The Board
remains confident of the prospects for the Group and that further improvements
in financial performance will be delivered this year.
FINANCIAL REVIEW:
Revenue:
Sales for the year were #29.3 million (2004: #26.6 million), a growth of 10%
over 2004 and a compound annual growth rate since 2000 of 31%.
The improvement in sales resulted from the full year effect of the acquisition
of Tecra in June 2004, combined with just over three months' contribution from
Biotrace MicroSafe, acquired in September 2005. Sales for the 2nd half were up
11% on the corresponding period in 2004 and up 16% on the 1st half of 2005.
During the year, the US dollar appreciated by 11% relative to sterling following
declines of 17% and 11% in 2004 and 2003 respectively. The average rate used to
translate the results of our US operations declined by 1% from 1.83 to 1.82,
benefiting the Group by #0.1 million in turnover on a like for like basis.
Gross Margins:
Overall gross margins for the year were 50% (2004: 51%) falling due to the
inclusion of lower margin turnover related to Biotrace MicroSafe and product mix
changes.
Expenses:
Selling and administrative costs, including intangible amortisation, were #10.3
million (2004: #9.7 million) before restructuring charges. These costs
increased as anticipated over 2004 with the inclusion of a full year of costs of
Tecra, together with the selling and administration costs of Biotrace MicroSafe
from September onwards. Intangible asset amortisation during the period
amounted to #0.5 million (2004: #0.2 million). Excluding the additional costs
and amortisation noted above, underlying overheads were reduced by #0.8 million
from 2004 levels.
Result for the Year:
Operating profit before amortisation and restructuring costs was up 25% at #3.7
million in 2005 (2004: #2.9 million).
The results have been reported under IFRS's as adopted by the European Union. As
the Group has made significant investments in acquiring the business of Biotrace
MicroSafe Srl in 2005 this has given rise to additional intangible assets in the
period. The majority of these relate to distribution and business connections
and a 10 year amortisation period has been adopted. As reported above charges
for amortisation of intangible assets were #0.5 million (2004: #0.2 million).
Restructuring costs of #0.3 million (2004: #0.2 million) were incurred in
relation to the restructuring of the business on a geographical basis after the
acquisition of Tecra. This included transfer of customer service operations from
Runcorn to Bridgend, merging UK operations into one operating company and
closure of Tecra's French subsidiary. In addition costs were incurred in
closing the Ruskinn facility near Leeds and moving manufacturing to Bridgend.
Taking these restructuring costs and intangible asset amortisation into account
gave an operating profit of #2.8 million up 10% on 2004 (#2.6 million).
Net financing costs rose to #0.3 million (2004: #0.1 million) through a
combination of the full year interest charges for the loan taken out to finance
the acquisition of Tecra in 2004 and the new euro denominated loan for the
financing of the acquisition of the 62% stake in Biotrace MicroSafe Srl in 2005.
Interest rates on the US dollar have risen significantly in the period
increasing the interest charges despite the reduction in capital outstanding
through a short term repayment schedule over five years. After finance costs,
profit before tax was up 2% at #2.6 million, whilst profit before restructuring
charges was up 9% to #2.9 million.
Disposal of Ruskinn:
The Group announced on the 9 February 2006 the disposal of the Ruskinn business.
During 2005 this operation lost #0.3 million at the operating level and its
disposal will lead to an improvement in operating profits in the current year.
Taxation:
The tax charge for the year of #0.9 million (2004: #0.9 million), represents an
equivalent consolidated tax charge of 35%. As expected the US tax losses
available to the Group have now been fully utilised and the Group does now pay
federal taxes on profits in the US. The charge represents a high percentage
relative to profit before tax due to higher tax rates outside the UK and the
inability to utilise losses arising from our operations in Denmark.
Earnings per share:
Earnings per share for 2005 were 4.39p (2004: 4.38p). To inform shareholders of
the underlying position of the Group's results earnings per share have also been
calculated before restructuring costs and secondly before restructuring costs
and intangible asset amortisation:
Pence per share 2005 2004 growth
Earnings 4.39 4.38 -
Earnings before restructuring 5.00 4.67 7%
costs
Earnings before restructuring costs 5.95 5.07 17%
and intangible asset amortisation
Dividend:
The Board is recommending a final dividend of 1.15p per share, which combined
with the interim dividend of 0.40p paid in October, gives a total dividend of
1.55p per share for the year amounting to #0.6 million. This represents an
increase of 11% over 2004.
Cash flow:
Cash flow from operating activities remains strong, increasing by 12% over 2004
to #3.9 million (2004: #3.5 million) and has grown at a compound annual growth
rate of 24% since 2000. The net cash inflow from operating activities was offset
by the investment of #3.2 million in acquiring Biotrace MicroSafe and acquiring
the remaining shares in Biotrace SA not already owned by the Company. #0.7
million (2004: #0.7 million) was invested in capital expenditure. Income tax
payments of #1.2 million (2004: #0.9 million) were made and #0.6 million of
dividends paid to shareholders.
Balance Sheet:
Equity shareholders' funds have increased by 12% to #19.3 million arising from
the retained profits for the period of #1.1 million, combined with a foreign
currency exchange gain of #0.5 million and the issue of #0.3 million worth of
new shares.
387,478 ordinary shares were issued in the year, to satisfy part of the
consideration paid to the vendors of the Biotrace MicroSafe businesses acquired
in Italy.
Capital investment totalled #0.7 million for the year (2004: #0.7 million).
Intangible assets increased to #18.0 million arising from the acquisition of the
Biotrace MicroSafe business in Italy and the purchase of the minority
shareholding of Biotrace SA in France.
Inventories increased in the period by #1.5 million to #5.4 million, arising
from the acquisition of the Biotrace MicroSafe businesses combined with
increased stockholding in the regions following the creation of the geographical
hubs at the start of the year. Receivables increased due principally to the
addition of Biotrace MicroSafe balances during the year.
Cash and indebtedness:
During the year the Group took on an additional loan denominated in euros of
#2.8 million to assist with the purchase of the Biotrace MicroSafe businesses in
Italy, thus providing a hedge against the euro denominated assets acquired. Cash
balances at the year end amounted to #0.5 million and the net debt position of
the Group amounted to #6.3 million, representing gearing of 32%. As announced
since the year end, the Group has sold its Ruskinn business for #1.1m cash, #0.6
million payable on completion and the remaining proceeds payable in the second
half of the year.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2005
Note 2005 2005 2004 2004
#'000 #'000 #'000 #'000
Revenue 1 29,336 26,639
Cost of Sales (14,655) (13,108)
Gross Profit 14,681 13,531
Selling, marketing & administrative costs before (10,327) (9,664)
restructuring
Restructuring costs 2 (337) (157)
Total selling, marketing & administrative costs (10,664) (9,821)
Research & development costs (1,215) (1,155)
(11,879) (10,976)
Operating profit 2,802 2,555
Financial income - interest receivable 38 83
Financial expenses - interest payable (298) (164)
Net financing costs (260) (81)
Share of profit and loss in joint venture and 64 76
associate
Profit before restructuring costs 2,943 2,707
Restructuring costs (337) (157)
Profit before income tax 2,606 2,550
UK tax (240) (375)
Overseas tax (663) (490)
Income tax expense 4 (903) (865)
Profit for the year 1,703 1,685
Attributable to :
Equity holders of the company 1,711 1,694
Minority interests (8) (9)
1,703 1,685
Dividend paid and proposed 5 606 543
Earnings per ordinary share 6
- basic 4.39p 4.38p
- diluted 4.37p 4.35p
Dividend per share 5 1.55p 1.40p
Note: All results are reported under International Financial Reporting
Standards (IFRS). 2004 results, as permitted by IFRS1, are not restated in
respect of IAS 32/39, financial instruments. The basis of preparation of the
financial information is set out in note 8.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2005
DECEMBER 2005 Attributable to equity holders of the parent
company
Share Other Retained Total Minority Total
Capital Reserves Earnings Interest Equity
(see below)
#'000 #'000 #'000 #'000 #'000 #'000
Balance at 1 January 2005 3,887 10,622 2,766 17,275 483 17,758
Opening balance IAS 39 adjustment - 20 - 20 - 20
Revised balance at 1 January 2005 3,887 10,642 2,766 17,295 483 17,778
Fair value losses on hedging - (43) - (43) - (43)
Currency translation & hedging - 565 - 565 (5) 560
Net income recognized directly in - 522 - 522 (5) 517
equity
Profit for the year - - 1,711 1,711 (8) 1,703
Dividends paid - - (619) (619) - (619)
Minority interest purchased - - - - (265) (265)
Equity settled transactions - - 74 74 - 74
Shares issued 38 300 - 338 - 338
Balance at 31 December 2005 3,925 11,464 3,932 19,321 205 19,526
OTHER RESERVES - DECEMBER 2005
Share Revaluation Merger Translation Hedging Total
Premium Reserve Reserve Reserve Reserve Other
Reserves
#'000 #'000 #'000 #'000 #'000 #'000
Balance at 1 January 2005 9,921 29 390 282 - 10,622
Opening balance IAS 39 adjustment - - - - 20 20
Revised balance at 1 January 2005 9,921 29 390 282 20 10,642
Fair value losses - - - - (43) (43)
Currency translation & hedging - - - 565 - 565
Net income recognised directly in - - - 565 (43) 522
equity
Shares issued 300 - - - - 300
Balance at 31 December 2005 10,221 29 390 847 (23) 11,464
Note: All results are reported under International Financial Reporting Standards
(IFRS). 2004 results, as permitted by IFRS1, are not restated in respect of IAS
32/39, financial instruments. The basis of preparation of the financial
information is set out in note 8.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2005
Attributable to equity holders of the parent
company
DECEMBER 2004 Share Other Retained Total Minority Total
Capital Reserves Earnings Interest Equity
(see below)
#'000 #'000 #'000 #'000 #'000 #'000
Balance at 1 January 2004 3,829 10,126 1,574 15,529 492 16,021
Currency translation & hedging - 282 - 282 - 282
Net income recognized directly in - 282 - 282 - 282
equity
Profit for the year - - 1,694 1,694 (9) 1,685
Dividends paid - - (543) (543) - (543)
Equity settled transactions - - 41 41 - 41
Shares issued 58 214 - 272 - 272
Balance at 31 December 2004 3,887 10,622 2,766 17,275 483 17,758
OTHER RESERVES - DECEMBER 2004
Share Revaluation Merger Translation Hedging Total
Premium Reserve Reserve Reserve Reserve Other
Reserves
#'000 #'000 #'000 #'000 #'000 #'000
Balance at 1 January 2004 9,707 29 390 - - 10,126
Currency translation & hedging - - - 282 - 282
Net income recognised directly in - - - 282 - 282
equity
Shares issued 214 - - - - 214
Balance at 31 December 2004 9,921 29 390 282 - 10,622
Note: All results are reported under International Financial Reporting Standards
(IFRS). 2004 results, as permitted by IFRS1, are not restated in respect of IAS
32/39, financial instruments. The basis of preparation of the financial
information is set out in note 8.
CONSOLIDATED BALANCE SHEET
At 31 December 2005
2005 2004
#'000 #'000
ASSETS
Intangible assets 17,971 14,050
Property, plant and equipment 2,561 2,737
Investments in joint venture and associate 380 154
Deferred tax asset 171 460
Other receivables 100 100
Total non current assets 21,183 17,501
Inventories 5,380 3,905
Trade and other receivables 7,627 5,047
Cash and cash equivalents 466 758
Total current assets 13,473 9,710
Total assets 34,656 27,211
EQUITY
Issued share capital 3,925 3,887
Share premium 10,221 9,921
Other reserves 1,243 701
Retained earnings 3,932 2,766
Total equity attributable to shareholders of the parent 19,321 17,275
Minority interest share in net assets 205 483
Total equity 19,526 17,758
LIABILITIES
Interest bearing loans and borrowings 4,289 2,917
Deferred tax liabilities 356 579
Other payables - deferred consideration 1,200 -
Provisions 120 212
Total non current liabilities 5,965 3,708
Trade and other payables 4,890 3,711
Interest bearing loans and borrowings 2,534 1,143
Current tax liabilities 247 183
Derivative financial instruments 23 -
Provisions 1,471 708
Total current liabilities 9,165 5,745
Total liabilities 15,130 9,453
Total equity and liabilities 34,656 27,211
Note: All results are reported under International Financial Reporting Standards
(IFRS). 2004 results, as permitted by IFRS1, are not restated in respect of IAS
32/39, financial instruments. The basis of preparation of the financial
information is set out in note 8.
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2005
2005 2004
#'000 #'000
Profit for the year 1,703 1,685
Adjustment for:
Depreciation 1,047 889
Amortisation 531 221
Amortisation of share options issued to employees 74 41
Foreign exchange losses (93) (138)
Financial income (38) (83)
Financial expenses 298 164
Share in associate results (64) (19)
Gain on sale of property, plant and equipment 16 77
Income tax expense 903 865
Operating profit before changes in working capital
and provisions 4,377 3,702
(Increase)/decrease in accounts receivable (308) 325
Increase in inventories (885) (249)
Increase/(decrease) in accounts payable 741 (259)
Cash generated from operations 3,925 3,519
Interest paid (298) (152)
Income tax paid (1,175) (866)
Net cash from operating activities 2,452 2,501
Acquisition of subsidiaries, net of cash acquired (3,147) (5,468)
Acquisition of minority interest share in (474) -
subsidiary
Payments to acquire property, plant and equipment (708) (726)
Receipts from sales of property, plant and 53 57
equipment
Payments to acquire intangible assets (156) (4)
Interest received 38 83
Net cash used in investing activities (4,394) (6,058)
Proceeds from issue of ordinary shares - 272
Proceeds from borrowings 2,793 1,151
Repayments of borrowings (1,341) (789)
Payment of finance lease liabilities (18) (18)
Dividend paid to equity shareholders (625) (539)
Net cash used in financing activities 809 77
Net cash outflow (1,133) (3,480)
2005 2004
#'000 #'000
Net cash outflow (1,133) (3,480)
Cash and cash equivalents at start of year 758 4,221
Effect of exchange rate fluctuation on cash held - 17
Cash and cash equivalents at end of year (375) 758
2005 2004
#'000 #'000
Cash and cash equivalent consists of:
Cash and cash equivalents 466 758
Overdrafts (841) -
(375) 758
Notes
1. SUMMARY SEGMENTAL INFORMATION
Segmental information is presented in respect of the Group's geographical
segments which are the primary basis of segmental reporting.
The results below are allocated based on the region from which the businesses
are located; this reflects the group's management and internal reporting
structure.
Inter segment pricing is determined on an arms length basis. Segment results
include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
For the purposes of this analysis the following definitions are used:
Europe - includes all of Europe, Middle East and Africa and Russia
Americas - includes all of North and South America and the Caribbean
APAC (Asia Pacific region) - includes Australasia, New Zealand, China, India,
Far East, Asia (apart from Russia).
Corporate - includes the activities of the directors of the Company and certain
central finance and marketing costs not attributable to the individual regions.
Europe Americas APAC Corporate Group
#'000 #'000 #'000 #'000 #'000
12 months to 31 December 2005
Revenue - external 13,682 13,167 2,487 - 29,336
- intra group 5,998 3,433 2,413 - 11,844
Total segment revenue 19,680 16,600 4,900 - 41,180
Operating profit 2,006 1,701 343 (1,248) 2,802
Share of profit in associates & joint 64
ventures
Net financing costs (260)
Profit before income tax 2,606
Income tax (903)
Profit for period 1,703
Included in the above:
Depreciation 587 262 198 - 1,047
Amortisation 145 - 386 - 531
Balances at 31 December 2005
Segment assets 14,540 12,119 7,331 115 34,105
Investment in associates & joint venture 380 380
Unallocated assets 171
Total assets 34,656
Segment liabilities (5,655) (884) (710) (1,313) (8,562)
Unallocated liabilities (6,568)
Total liabilities (15,130)
Capital expenditure
- property, plant and equipment 416 69 279 - 764
- intangible 257 - 42 - 299
Europe Americas APAC Corporate Group
#'000 #'000 #'000 #'000 #'000
12 months to 31 December 2004
Revenue - external 12,592 12,544 1,503 - 26,639
- intra group 5,017 77 1,011 - 6,105
Total segment revenue 17,609 12,621 2,514 - 32,744
Operating profit 1,985 1,502 386 (1,318) 2,555
Share of profit in associates & joint 76
ventures
Net financing costs (81)
Profit before income tax 2,550
Income tax (865)
Profit for period 1,685
Included in the above:
Depreciation 526 292 71 - 889
Amortisation 74 - 147 - 221
Balances at 31 December 2004
Segment assets 8,159 10,930 7,379 129 26,597
Investment in associates & joint venture 154 - - - 154
Unallocated assets 460
Total assets 27,211
Segment liabilities (2,157) (891) (641) (942) (4,631)
Unallocated liabilities (4,822)
Total liabilities (9,453)
Capital expenditure
- property, plant and equipment 543 128 55 - 726
- intangible - - 274 - 274
2. RESTRUCTURING COSTS
Restructuring costs comprise the following:-
2005 2004
#'000 #'000
Relocation of Lucigen Ltd - 31
Restructure to regional basis following acquisition of Tecra 264 94
Change to direct distribution in N America - 32
Restructuring of Ruskinn division 73 -
337 157
Provision for restructuring costs at the year end 31 -
3. ACQUISITIONS
During the year the Group made the following investments:
On 14 September 2005 the Company acquired an Italian subsidiary company Biotrace
MicroSafe srl which in turn acquired the trade and assets of a group of
companies comprising MicroSafe srl, MicroSafe Servizi srl, Ascotec srl, Gruppo
Carli srl and Themis srl for #2.9 million. This acquisition was achieved through
an initial acquisition of 62% of Biotrace MicroSafe srl. Biotrace has the
option in 2008 to purchase and the vendor has the option to sell the remaining
shares for an additional sum of up to Euro2.3 million (#1.6 million) based upon the
achievement of certain profit targets by 31 December 2007. An amount of #1.0m
has been accrued in respect of this remaining consideration based on current
best estimates of the likely profitability of the company in this period.
Biotrace MicroSafe srl has been treated as a wholly owned subsidiary and is
fully consolidated into these group accounts. The provisional fair value of
100% of the assets acquired with the company were:
Book value Adjustments Fair value
#'000 #'000 #'000
Fixed assets - property, plant and equipment 105 - 105
- patents 65 - 65
- other intangible - 2,926 2,926
- investment in associate 211 - 211
Inventory 378 - 378
Accounts receivable 2,040 - 2,040
Accounts payable (2,217) - (2,217)
582 2,926 3,508
Goodwill 203
3,711
Note: The adjustment shown above represents the valuation of the company's
distribution network at the date of acquisition. The goodwill arising on
acquisition relates to the amount paid in respect of key members of the existing
workforce.
Satisfied by the following consideration: #'000
Cash 1,601
Deferred cash payments 508
Accrued consideration for remaining shares 1,003
Shares issued at market price 339
Acquisition costs 398
Net cash acquired (138)
3,711
Biotrace MicroSafe's contribution to the operating profits since acquisition is
set out below:
15 September
31 December
2005
#'000
Turnover 1,983
Cost of sales (1,155)
Gross profit 828
Selling and administrative expenses (684)
Operating profit 144
4. Taxation
2005 2004
#'000 #'000
Current taxation
- UK 240 288
- Overseas 597 207
Deferred taxation
- UK - 87
- Overseas 66 283
Total charge 903 865
5. DIVIDEND
The dividends declared in the relevant periods are as follows:
Dividend description Amount per Payment date Total Based on
share dividend register
#'000 dated
Final dividend 2003 1.15p 14/05/04 440 23/04/04
Interim dividend 2004 0.25p 08/10/04 97 10/09/04
Final dividend 2004 1.15p 16/05/05 446 15/04/05
Interim dividend 2005 0.40p 11/10/05 155 16/09/05
Final dividend 2005 - proposed 1.15p 15/05/06 451 18/04/06
6. EARNINGS PER SHARE
Earnings per share is based on the profit after taxation attributable to equity
holders of the parent of #1.7 million (2004: #1.7 million) and the weighted
average number of shares in issue during the year of 38,978,738 (2004:
38,633,574). Diluted earnings per share is based on the profit after taxation of
#1.7 million (2004: #1.7 million) and 39,124,737 (2004: 38,899,921) ordinary
shares.
The Group has calculated an undiluted earnings per share before restructuring
costs in order to inform shareholders of the underlying position of the Group's
results. The earnings before restructuring costs is calculated as follows:
2005 2004
#'000 #'000
Earnings before restructuring costs
Profit for the year 1,711 1,694
Add: restructuring costs 337 157
Less: tax on restructuring costs (101) (47)
1,947 1,804
In addition earnings per share before restructuring costs and amortisation has
been calculated as follows:
2005 2004
#'000 #'000
Earnings before restructuring costs and amortisation
Profit for the year before restructuring costs 1,947 1,804
Add: amortisation of intangibles 531 221
Less: tax on amortisation (159) (66)
2,319 1,959
2005 2004
Weighted average number of ordinary shares
Issued ordinary shares at the end of the period 39,252,627 38,865,149
Issued ordinary shares at the start of the period 38,865,149 38,290,149
Weighted average number of shares in period 38,978,738 38,633,574
Diluted number of shares in period 39,124,737 38,899,921
Earnings per ordinary share Pence Pence
per share Per share
Basic 4.39 4.38
Diluted 4.37 4.35
before restructuring costs
- basic 5.00 4.67
- diluted 4.98 4.64
before restructuring costs and amortisation
- basic 5.95 5.07
- diluted 5.93 5.04
7. Financial Instruments
The carrying amount of financial instruments is shown below. The fair value of
these instruments approximates to the carrying value because of the short
maturity of the deposits and borrowings and because the interest rates are based
on floating money market rates in the USA and UK.
To estimate the fair values of forward exchange contracts, they are marked to
market either using listed market prices or by discounting the contractual
forward price and deducting the current spot rate.
Financial Instruments 2005 2004
#'000 #'000
Cash and cash equivalents 466 758
Overdrafts (841) -
Loans - due within 1 year (1,676) (1,143)
Loans - due after more than 1 year (4,289) (2,917)
Finance leases (17) (24)
Loan with joint venture 100 100
(6,257) (3,226)
8. BASIS OF PREPARATION
The preliminary announcement for the full year ended 31 December 2005 has been
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union (EU) ("Adopted IFRSs") at 31 December 2005.
Details of the accounting policies applied are set out in the interim report for
the 6 months ended 30 June 2005. These accounting policies have been applied
consistently in preparing this announcement.
2004 results, as permitted by IFRS 1, are not restated in respect of IAS 32/39
'Financial Instruments'. The opening balances at 1 January 2005 have been
adjusted to reflect a gain on the fair value of forward contracts of #20,000.
This gain was credited to the hedging reserve.
Reconciliations showing the effect of moving from UK GAAP to IFRS on the balance
sheets as at 31 December 2003 and 2004, and on the results for the year ended 31
December 2004, were included in note 11 to the group's interim report for the
six months ended 30 June 2005. This interim report is available at
www.biotrace.co.uk. The directors have revised those reconciliations
subsequently, adjusting the goodwill and deferred tax liabilities arising on an
acquisition completed in 2004 by #458,000 following clarification of the
taxation treatment of certain acquired intangible assets. In addition, a
provision of #96,000 was recognised as of acquisition date relating to the
obligation to return premises to their original condition at the end of a lease
along with goodwill of #67,000 and a deferred tax asset of #29,000.
The effect of the revision is to increase the tax charge and decrease the profit
after tax for the year ended 31 December 2004 by #22,000, to increase goodwill
as at 31 December 2004 by #558,000, to increase deferred tax liabilities as at
31 December 2004 by #479,000 and to increase provisions by #101,000. Revised
versions of the reconciliations will be published in the financial statements
for the year ended 31 December 2005.
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2005 or 2004. Statutory
accounts for 2004, which were prepared under UK GAAP, have been delivered to the
registrar of companies. The auditors have reported on the 2004 accounts; their
report was unqualified and did not contain a statement under section 237(2) or
(3) of the Companies Act 1985. The statutory accounts for 2005, which are being
prepared under International Financial Reporting Standards as adopted by the EU,
will be finalised on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the
registrar of companies in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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