RNS Number:6949E
MICAP PLC
28 September 2007
For Release 7.00am 28 September 2007
Micap plc (MIC.L)
Preliminary results for the twelve months to 31st March 2007
Micap plc, the AIM-quoted developer and producer of value added
microencapsulated ingredients to industry, ("Micap" or the "Company") today
reports its Preliminary results for the twelve months to 31st March 2007.
"Refocussed Sales Infrastructure"
"A Year of Significant Progress and Change for Micap"
HIGHLIGHTS
* Turnover on continuing operations up by 120% to #0.71 million (2006: #0.32
million).
* Reduced loss per ordinary share of 1.1p (2006: loss 3.3p);
* Operating loss on continuing operations reduced by 34 % to #0.95 million
(2006: loss #1.44 million); After tax loss of #0.96 million (2006 - loss
#1.52m).
* Profile of the benefits of microencapsulation continues to rise
* Direct sales of Micap yeast encapsulated ingredients making good progress
* Formal launch of Micap Ingredients range into the food industry planned
for Autumn 2007
* Good progress in Licensing and Development division with new and existing
customers
* Following a strategic review, non-executive Chairman Bill Mapstone to take
a more active executive role to leverage upon his knowledge and contacts in
the food market, so as to optimise the impact of Micap's launch of its food
ingredient range.
Post Period End
* Disposal of business of loss making subsidiary, Applied Analysis Ltd
Commenting on the results, Michael Norris, Chief Executive of Micap, said:
"This has been a year of significant progress and change for Micap during which,
we have moved away from the research and development led business of the past
and focussed on generating revenues from our own channels, specifically with our
direct sales of Micap Ingredients into the food market".
"These changes have given us more control over our own destiny, and it is my
challenge to ensure that the correct infrastructure is in place to allow Micap
to achieve its potential in selling products to the market, developing new
opportunities both for Micap and our partners, and achieving the necessary
progress to reach the market with our agrochemical partners".
Contact:
Micap plc Tel: 01942 625590
Michael Norris, CEO Mob: 07966 341802
Adventis Financial PR Tel: 020 7034 4758 / 020 7034 4759
Tarquin Edwards Mob: 07879 458 364
Chris Steele Mob: 07979 604 687
HB Corporate Tel: 020 7510 8600
Jim McGeever
Rory Creedon
Chairman's statement
When I joined the Board of Micap in January of this year, my stated intention
was to help the Company move from its previous business model of providing
technical services and support for its business partners to a more commercial,
sales driven model, which would enable Micap to capitalise on the latent
opportunities within the business much more quickly.
Specifically, the licence agreement with Firmenich, which came to an end on 31st
March 2007, had precluded Micap from directly marketing its high value yeast
encapsulated ingredients to customers in the food industry, and the structure of
the business reflected this.
We plan to put in place an infrastructure, which enables us to obtain maximum
value from our direct sales opportunities, whilst at the same time to continue
to attract blue chip clients to work with our licensing and development team, as
the latter's reputation for effective solutions grows. Initially, we are
launching our range of yeast encapsulated products into the savoury food market,
with the aim ultimately of converting more of our development projects into
direct sales opportunities.
Within the development and licensing division we continue to make progress on
many fronts. Our agrochemical partners have extended their evaluation agreements
with us, and we continue to win development contracts from major blue chip
companies for our services. I am confident that these will lead to repeat
business and ultimately licensing or production opportunities.
Following a strategic review of the business, it has been decided that I will
take a more active role in the Company, and as such, I will become Executive
Chairman on a part time basis with effect from the AGM.
We have been considering the options available to us to achieve the business
model we require and are currently reviewing alternatives. In order to provide
working capital to the Company, my fellow director, Neil Crabb, and I have
provided loans of #40,000 and #60,000 respectively to the company. We have
agreed that we will convert these into equity at the next corporate event.
In conclusion, I am very excited about the opportunities which exist within
Micap. The Company continues to move satisfactorily towards commercial success
and I am hopeful that with further input from myself and a refocused sales
infrastructure, we can accelerate this progress and deliver benefit to all
stakeholders.
Chief Executive's report
Overview
This has been a year of significant progress and change for Micap during which,
we have moved away from the research and development led business of the past
and focussed on generating revenues from our own channels, specifically with our
direct sales of Micap Ingredients into the food market. These changes have given
us more control over our own destiny, and it is my challenge to ensure that the
correct infrastructure is in place to allow Micap to achieve its potential in
selling products to the market, developing new opportunities both for Micap and
our partners, and achieving the necessary progress to reach the market with our
agrochemical partners.
Financial review
The loss after tax was #0.96m (2006: loss #1.52m), which represents a loss per
ordinary share of (1.1)p (2006: loss (3.3)p). Turnover on continuing operations
was up 120% to #0.71m (2006: #0.32m), and the operating loss on continuing
operations fell 34% to #0.95m (2006:1.44m). Year end cash balances totalled #
(0.05)m, with short term debtors (including R&D tax credits of #0.10m) of
#0.26m. Our Bankers, NatWest, have supported our business through the provision
of an overdraft facility to help us manage our short term cash requirements.
In Spring of this year we concluded the assignment of our former Head Office
premises at Haydock, UK which removed a major drain on our resources. We
continue to analyse all our overheads on a regular basis to ensure we are
receiving value for money in all cases.
During the year we raised #0.80m of equity to support the working capital of the
business. In addition, as mentioned in the Chairman's statement above, we have
received a loan of #0.10m from two of our non-executive Directors. The Directors
have stated their intention to convert these loans to equity at the next
opportunity.
Direct sales
Over the past months, we have invested significant time and effort into creating
a quality range of products for the savoury food market. Having evaluated many
flavours and oils over the period, we have concentrated on a small number of
high volume opportunities where the benefits we bring of heat stability, flavour
retention and ease of handling allow us to differentiate our products from our
competitors.
We have retained a specialist development kitchen to carry out application
trials, comparing our products with our peers and evaluating their respective
performances, and at the same time a number of target customers have been
running live trials using our ingredients in end-products. Feedback from these
sources has been very positive.
Our production facility in Athlone, Ireland has proven very effective in
producing, drying and blending the ingredients, and we are developing technical
and marketing documentation to support the product launch, along with a
redesigned website.
We now feel that we are in a position where we can plan a full launch of our
product range, which we intend to coincide with this year's Food Ingredients
Exhibition in London on 30th October 2007.
In addition to our yeast ingredients, our development team in Bremerhaven,
Germany have produced a natural Jojoba bead, which is a premium cosmetic
product, used as an exfoliant in creams, gels and washes. We have signed
distribution agreements with two major distributors, Rahn AG and CQMasso SA, to
launch the jojoba beads across many markets worldwide, and we will be working
very closely with them to ensure the product is actively promoted.
The next challenge for Micap is to develop the next generation of its own
products for direct sales.
Licensing and development
We continue to work with major companies on the use of our yeast encapsulation
system for delivery of agrochemical actives One of our agrochemical partners,
part of a worldwide organisation, has agreed an extension to our evaluation
agreement recently to enable us to measure the performance of the Micap product
against a commercially available standard.. Nufarm, the major Australian
pesticide company, are awaiting results of crop trials, and we will be entering
negotiations regarding the next steps very soon.
It is very heartening that we have reached our initial milestones in these
relationships. The technical challenges we face as we move through the process
towards regulation are great, and it is a tribute to the technical team at Micap
and at our partners that we continue to make progress.
As the use of microencapsulation techniques becomes more widely known, the
reputation of our development team is attracting a number of major blue-chip
companies to Micap. In recent months we have won contracts from a world leading
animal health company, an international nutritional ingredients manufacturer and
one of Europe's leading sugar businesses amongst many others to assist in the
development of new products.
It is our intention to cultivate these relationships with a view to continuing
our involvement through the development and scale up process to full product
creation and launch.
Applied Analysis Ltd
It has become apparent in recent months that our business model did not lend
itself to activity in the highly regulated pharmaceutical market. Our key growth
areas have been in food, feed and nutrition and in industrial products. As such
our involvement with Applied Analysis Ltd has been outside our core activities.
Accordingly, we have sold the business and goodwill of Applied Analysis Ltd to
FDAS Ltd, a young analytical business based in Nottingham, UK. We will continue
to receive an income based upon the sales from our customer list for a three
year period. We have subsequently closed down our operation in Beverley, and I
would like to take this opportunity to thank all the members of the team for
their efforts whilst part of the Micap Group.
Outlook
We are focussed on delivery of a successful Direct Sales operation, and I am
pleased with the positive feedback we are receiving from customers who are using
our ingredients in new product developments. Combining these short and medium
term revenue opportunities with the longer term projects in agrochemicals
creates a balanced business which is capable of generating good returns for
Shareholders, and I look forward to progress in all these areas.
MICAP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2007
-------------------------------------------------------------------------------------
2007 2006
Note # #
TURNOVER
Continuing operations 712,039 323,143
Discontinued operations 144,754 237,803
-------------------------------------------------------------------------------------
856,793 560,946
Cost of sales (144,069) (215,437)
-------------------------------------------------------------------------------------
GROSS PROFIT 712,724 345,509
Administrative expenses (1,749,548) (1,818,160)
-------------------------------------------------------------------------------------
Other operating income 29,247 -
OPERATING LOSS
__________________________
Continuing operations (950,619) (1,439,589)
Discontinued operations (56,958) (33,062)
__________________________
TOTAL OPERATING LOSS (1,007,577) (1,472,651)
-------------------------------------------------------------------------------------
EXCEPTIONAL ITEMS
Other exceptional items 6 (17,000) (195,000)
-------------------------------------------------------------------------------------
LOSS ON ORDINARY ACTIVITIES BEFORE INTEREST (1,024,577) (1,667,651)
Amounts written off investments (43,896) -
Interest receivable 8 5,258
Interest payable (17,687) (5,644)
-------------------------------------------------------------------------------------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,086,152) (1,668,037)
TAX ON LOSS ON ORDINARY ACTIVITIES 122,401 147,600
-------------------------------------------------------------------------------------
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (963,751) (1,520,437)
-------------------------------------------------------------------------------------
Earnings per share - basic 3 (1.13p) (3.34p)
- diluted 3 (1.13p) (3.34p)
There were no recognised gains and losses for 2007 or 2006 other than those
included in the profit and loss account.
MICAP PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2007
-------------------------------------------------------------------------------------
31 March 31 March
2007 2006
Note # # # #
FIXED ASSETS
Goodwill 846,301 1,027,597
Negative Goodwill (61,600) -
Net Goodwill 784,701 1,027,597
Intangible fixed assets 784,701 1,027,597
Tangible fixed assets 343,394 422,104
---------- ---------
1,128,095 1,449,701
CURRENT ASSETS
Stocks 41,250 218
Debtors 317,360 564,486
Cash at bank and in hand 324 41,131
--------- ---------
358,934 605,835
CREDITORS: amounts falling due (628,740) (899,745)
within one year
--------- ---------
NET CURRENT (LIABILITIES)/ (269,806) (293,910)
ASSETS
---------- ---------
TOTAL ASSETS LESS CURRENT 858,289 1,155,791
LIABILITIES
CREDITORS: amounts falling due (21,467) (109,000)
after more than one year
---------- ---------
NET ASSETS 836,822 1,046,791
---------- ---------
CAPITAL AND RESERVES
Called up share capital 4 11,478,627 10,603,627
Share premium account 4 6,423,468 6,497,040
Employee Benefit Trust reserve 4 (188,333) (188,333)
Other reserves 4 - 50,000
Profit and loss account (16,876,940) (15,915,543)
---------- ---------
SHAREHOLDERS' FUNDS - ALL 836,822 1,046,791
EQUITY
---------- ---------
MICAP PLC
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
-------------------------------------------------------------------------------------
2007 2006
Note # #
Net cash flow from operating activities 5 (1,007,205) (1,207,274)
Returns on investments and servicing of finance (17,429) (386)
Taxation 152,324 223,172
Capital expenditure and financial investment 25,555 (105,163)
Acquisitions and disposals - (126,267)
-------------------------------------------------------------------------------------
CASH OUTFLOW BEFORE FINANCING (849,755) (1,215,918)
Financing 800,495 746,376
-------------------------------------------------------------------------------------
DECREASE IN CASH IN THE YEAR (49,260) (469,542)
-------------------------------------------------------------------------------------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
FOR THE YEAR ENDED 31 MARCH 2007
-------------------------------------------------------------------------------------
2007 2006
# #
Decrease in cash in the year (49,260) (469,542)
Cash outflow from decrease in debt and lease 933 9,000
financing
-------------------------------------------------------------------------------------
CHANGE IN NET DEBT RESULTING FROM CASH FLOWS (48,327) (460,542)
New finance lease (28,000) -
-------------------------------------------------------------------------------------
MOVEMENT IN NET DEBT IN THE YEAR (76,327) (460,542)
Net funds at 1 April 2006 29,250 489,792
-------------------------------------------------------------------------------------
NET DEBT AT 31 MARCH 2007 (47,077) 29,250
-------------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
1. Preparation of the financial statements
The preliminary results have been prepared in accordance with the accounting
policies set out in the Group's annual accounts to 31st March 2007.
2. The financial information set out above does not comprise the company's
statutory financial statements. Statutory financial statements for the previous
financial year ended 31 March 2006 have been delivered to the Registrar of
Companies. The auditors' report on those financial statements was unqualified
and did not contain any statement under section 237(2) or (3) of the Companies
Act 1985. The auditors have not yet reported on financial statements for the
year ended 31 March 2007, nor have any such financial statements been delivered
to the Registrar of Companies. The financial statements were approved by a duly
appointed and authorised committee of the Board of Directors on 19th September
2007.
3. Earnings per share
Basic earnings per share are calculated on loss for the financial year of
#963,751 (2006: #1,520,347) and on the weighted average number of shares in
issue during the year of 85,330,704 (2006: 45,496,355). Diluted earnings per
share are calculated on loss for the financial year of #963,751 (2006:
#1,520,347) and on the weighted average number of shares in issue during the
year of 85,330,704 (2006: 45,496,355).
4. Movements in reserves
Share Employee Other Profit and
premium benefit trust reserves loss account
account reserve
GROUP # # #
At 1 April 2006 6,497,040 (188,333) 50,000 (15,915,543)
Loss retained for the - - - (963,751)
year
Expenses incurred on (73,572) - - -
shares issued during the
year
Exchange gain on - - - 2,354
consolidation
Movement on other - - (50,000) -
reserves
AT 31 MARCH 2007 6,423,468 (188,333) - (16,876,940)
--------------------------------------------------------------------------------
5. Reconciliation of operating loss to net cash flow from operating activities
2007 2006
# #
Operating loss (1,007,577) (1,472,651)
Exceptional items (17,000) (195,000)
Amortisation of intangibles 75,000 40,000
Depreciation of tangible fixed assets 99,485 126,447
Profit on disposal of tangible fixes assets (15,330) (1,355)
(Increase) / decrease in stocks (41,032) 10,497
Decrease in debtors 217,203 82,976
Foreign exchange gain 2,354 -
(Decrease) / increase in creditors (320,308) 201,812
NET CASH OUTFLOW FROM OPERATIONS (1,007,205) (1,207,274)
--------------------------------------------------------------------------------
6. Exceptional items
2007 2006
# #
Provisions for subsidiary disposal 17,000 -
costs
Dilapidation costs - 195,000
17,000 195,000
The dilapidation costs arose as a result of the decision to relocate offices and
laboratories. The charge relates to the revision of the costs estimate in
respect of such works.
The subsidiary disposal costs represent redundancy provisions expected to be
made following its closure. The activities of the subsidiary have been shown as
discontinued in the financial statement.
7. Dividend
The Directors have not declared a dividend.
Copies of the annual report will be sent to all shareholders shortly and will
also be available to the public at the Company's registered office, Enterprise
House, Richmond Hill, Pemberton, Wigan, WN5 8AA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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