Preliminary Results for the year ended 31 March 2007
Proventec Plc (AIM:PROV), a provider of specialist steam cleaning and coatings
technologies, today announces its Preliminary Results for the year ended 31
March 2007 which have been prepared in accordance with International Financial
Reporting Standards (IFRS).
Highlights
* Turnover up 46% to £4.96 million (2006: £3.4 million)
* EBITDA doubled to £2.26 million (2006: £1.1 million)
* Profit after tax increased to £1.07 million (2006: £474,000)
* Established French Joint Venture
* Sales of the OspreyDeepClean machines increased by more than 30%
* Post year end acquisition of Contico Manufacturing Limited
David Chestnutt, Chief Executive of Proventec Plc, commented: 'This has been a
significantly important year for the Group and I am pleased to report
improvements in our revenues and profits. According to our strategy we have
divested ourselves of non core assets, with the exits from Hardide plc and Ultra
Motor Company Limited, whilst expanding our core offering with complimentary
acquisitions. The acquisition of Contico in June was an important milestone for
the Group, which will have a significant impact on our figures in 2008.'
For further information, please contact:
Proventec Plc
David Chestnutt, Chief Executive Tel: + 44 (0) 151 706 0626
dchestnutt@proventecplc.com www.proventecplc.com
Dawnay, Day Corporate Finance Limited
David Rae, Corporate Finance Tel: + 44 (0) 20 7509 4570
david.rae@dawnayday.com www.dawnayday.com
Media enquiries:
Abchurch
Henry Harrison-Topman / Gareth Mead Tel: +44 (0) 20 7398 7700
gareth.mead@abchurch-group.com www.abchurch-group.com
Copies of this announcement are available for collection from the Group's head
office at 49 Rodney Street, Liverpool, L1 9EW and electronic copies can be
obtained from the Group's website www.proventecplc.com
CHAIRMAN'S STATEMENT
During the last twelve months the Group has continued to expand and develop the
core trading businesses of OspreyDeepClean and Magma.
The strategy of selling our non core investments has continued and during the
year we completed our exit from Hardide plc and disposed of our shareholding in
Ultra Motor Company Limited.
The funds from those disposals, together with our own resources, have been used
to promote and expand the OspreyDeepClean brand. In February 2007, we
established a joint venture vehicle in France and over the year, we have also
progressed talks with other potential partners in mainland Europe to position us
best to develop the distribution network that is required for the Group's
continued growth.
To that end we were able to complete an acquisition of 80% of Contico
Manufacturing Limited ('Contico') in June 2007, which will change the profile
and distribution network for OspreyDeepClean in the United Kingdom and further a
field. Contico is a manufacturer and distributor of cleaning and hygiene
products with an established distribution network throughout the United Kingdom.
It also has trading relationships in Europe, the Middle East and the Far East.
The Board, mindful of the cost of the acquisition of Contico, secured a private
placing of 5% of the share capital at 9 pence per share, which the directors
considered to be an appropriate discount to the market price of the shares; this
transaction was completed on 29 June 2007. The proceeds of that placing have
substantially replenished the Group's cash reserves which were used to finance
the acquisition of Contico.
Looking forward, a new steam cleaning machine should be available in the second
half of this year and in full manufacture by October 2007. The development,
manufacture and supply of which was commissioned just over a year ago, should be
available in the second half of this year and in full manufacture by October
2007.
The development team in the Group's flame retardant business, Magma, has made an
exciting technical breakthrough in collaboration with a major paint manufacturer
and new product lines arising from this cooperation are expected to be available
before the end of 2007.
In conclusion, I believe that during the financial year ended 31 March 2007 we
have enjoyed a number of successes upon which to develop the businesses and the
portents for the coming financial year and beyond.
I would like to express my thanks to my colleagues on the board together with
all the Group's employees for their hard work in driving Proventec forward, both
over the last year to date and in anticipation of their efforts in the future.
Peter Teerlink
Chairman
CHIEF EXECUTIVE'S REPORT
I am pleased to report the results for the year ended 31 March 2007. The
numbers tell only part of the story but do not reflect the time and hard work
that has gone into the Group's development over the last twelve months.
Financial Highlights
In the year to 31 March 2007, highlights of the Group's results included:-
* Turnover up to £4.96 million (2006: £3.4 million)
* EBITDA increased to £2.26 million (2006: £1.17 million)
* Profit after tax increased to £1.07 million (2006: £474,000)
The Group's cash balances stood at £5.4 million at the end of March but since
then £3.7 million has been utilised as part of the consideration for Proventec's
acquisition of an 80% interest in Contico Manufacturing Limited. To supplement
our cash balances, on 29 June 2007, we placed 11,500,000 shares at 9p raising
£1,003,950 (net of expenses).
Hygiene
Sales of the OspreyDeepClean range of Industrial and Commercial steam cleaning
machines increased by more than 30% on an annual basis.
Under the leadership of Thomas Stuecken, OspreyDeepClean operates through three
trading companies:-
* UK sales - based in Cheltenham
* International sales (excluding Benelux and Germany) - based in Cheltenham
* Benelux and Germany - based in Rotterdam
The growth in sales has been encouraging but we are especially pleased with the
establishment and initial growth in the North American market which has formed a
sound platform for further expansion. The Group is over halfway to its target
of developing fifteen new distributors to cover the United States. Sales of
industrial steam cleaning machines in the United States grew from a standing
start to more than £400,000 in the year and further growth has been identified
and targeted for the present year.
In February, we entered into a joint venture with a partner in France and
although it was too late in the financial year to impact on the results to 31
March 2007, there are encouraging signs that in this current year, the trading
results will meet the Board's expectations.
Sales in the Czech Republic grew by 20% in the year and new distributors in
Poland, Hungary and Singapore were appointed, extending the global coverage of
OspreyDeepClean.
In the Netherlands, the marketing approach was re-structured to compliment the
UK trading model and the range of machines has now been extended to twenty, with
the number of distributors increased to fourteen.
New specialist accessories for the healthcare market have been developed, tested
and patented and these will be available from the Autumn 2007.
In the UK, the continuing healthcare studies, in conjunction with the University
College London Hospital, are nearing successful completion. Many of these tests
are being replicated and approved in Europe by TNO, the Dutch organisation for
applied scientific research.
OspreyDeepClean has also received approval and preferred supplier status with a
number of large organisations, such as Carillion Pall Mall, Mitie and Interserve
MacLellan.
Our steam cleaning equipment has also been adopted by Carnival, the world's
largest cruise line company, and other cruise lines, including Fred Olsen and
Norwegian Shipping.
Through attendance at trade shows and similar events, we have continued to
promote and champion the awareness of steam as an efficient and cost effective
cleaning medium and as the cleaning system of choice in the fight to eradicate
healthcare acquired infections.
Since the end of the year, we have completed an acquisition of an 80% interest
in Contico Manufacturing Limited ('Contico'), a manufacturer and distributor of
cleaning and hygiene equipment and liquid dispensing systems, for £5.5 million.
We financed this with borrowings of £1.8 million from our bankers, The Royal
Bank of Scotland, as well as with cash from our own resources.
Contico has an excellent reputation in the UK cleaning equipment and materials
sector, and was ranked thirteenth largest and fifth most profitable (independent
survey, May 2006). The company operates from an 80,000 square foot site in
Cornwall and services over 1,000 customer accounts from its range of over 2,000
products. We see Contico as providing routes to market for our OspreyDeepClean
product range by enhancing our UK distributor network, and the additional buying
strength and logistics operation will provide improved efficiencies for the roll
out of OspreyDeepClean's UK sales over the next few years. The senior
management in Contico, Vernon Holmes and Philip Macey, retain 20% of Contico and
bring with them to the Group more than twenty years and twelve years of
experience at Contico respectively.
Biocote Limited, part of our investment portfolio, has continued to trade
successfully, adding new partners on a regular basis. Through its marketing and
innovative business approach, the company has continued to gain new customers,
especially in the healthcare sector, including Dyson; who introduced a
revolutionary new hand dryer to the market, the Dyson Airblade, a product that
is manufactured and treated with Biocote.
Preventative Coatings
Magma, based in Rotterdam, which supplies a range of fire retardant coatings, is
now well positioned to expand and develop its sales for timber treatment, and
has recently concluded contracts with two leading timber treatment plants in
Holland, which account for over 80% of the Dutch market for treated timber.
However, during the year ended 31 March 2007, sales were held back by the cost
and time taken to achieve the necessary European Registration classification for
new fire standards for European building legislation. All Magma's products
achieved this classification and, additionally, Magma's products were the only
fire retardants in the EU to pass specific tests for use on plywood.
During recent months, the Magma development team, working in conjunction with a
paint manufacturer, has developed a range of complimentary fire retardant
coatings for the timber market and the prospects for Magma's products have never
looked brighter.
Firestop Chemicals Limited, also part of our investment portfolio, has continued
the development of its two main chemical products, Noflan and Bizon.
Noflan, a treatment for fabrics, predominantly wool, achieved notable success
during the year while cotton has been independently certified to achieve a flame
resistant standard in over fifty washes. This development has enhanced the
market potential for Noflan.
Bizon, a flame retardant product for the plastics industry, has achieved a UL94
rating of V0, the highest international fire retardant rating, thereby
distinguishing Bizon from most of its competitors. Firestop will be seeking
further investment directly from investors over the next few months to support
the costs of establishing a Bizon manufacturing line.
Magma and Firestop's collaboration during the year continued and products from
both companies ensured that a 43 foot high goat made of straw and timber, built
by the people of Gavle in Sweden as part of their annual Christmas festival,
survived the attacks of arsonists and vandals for only the seventh time in 40
years!
Innoshield, a coating applied to plastics, which protects the colours from
fading in ultraviolet light, was again used by Legoland, Windsor, to refurbish
their exhibits. We have produced new marketing material and a new corporate
identity for this product, including marketing Innoshield as a speciality marine
product, which has led to product tests in Italy and Holland and we expect good
growth in sales during this year.
Conclusion
During the last twelve months, the Group has built on the structures put in
place following the Group's re-organisation in 2005.
The acquisition of Contico, the continued expansion to the OspreyDeepClean
network, and the Magma product range, enables the Group to look forward, with
confidence, to the coming year.
David Chestnutt
Chief Executive
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 31 MARCH 2007
2007 2006
Notes £'000 £'000
Assets
Non-current assets
Property, plant and equipment 1 157 96
Goodwill 2 29,873 30,374
Other intangible assets 3 3,292 3,265
Available for sale investments 4 2,816 2,265
_________ _________
36,138 36,000
_________ _________
Current assets
Inventories 5 495 481
Trade and other receivables 6 5,148 2,207
Cash and cash equivalents 7 5,442 4,604
Investments held for sale 8 100 2,586
__________ _________
11,185 9,878
__________ _________
Total assets 47,323 45,878
__________ _________
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital 10 11,565 11,565
Other reserves 10 22,329 22,898
Retained earnings 10 (2,173) (3,249)
__________ _________
31,721 31,214
Minority interest - -
__________ _________
Total equity 31,721 31,214
__________ _________
Non-current liabilities
Long term borrowings 11 10,354 10,354
Deferred tax 773 304
___________ __________
Total non-current liabilities 11,127 10,658
___________ __________
Current liabilities
Trade and other payables 12 1,841 1,358
Current portion of long term borrowings 11 2,634 2,638
Current tax payable - 10
___________ __________
Total current liabilities 4,475 4,006
___________ __________
Total liabilities 15,602 14,664
___________ __________
Total equity and liabilities 47,323 45,878
___________ __________
The financial statements were approved and authorised for issue by the board on
6 July 2007 and were signed on its behalf by D Chestnutt.
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