RNS Number:1062K
MICAP PLC
18 December 2007
For Release 7.00am 18 December 2007
Micap plc (MIC.L)
Interim results for the six months to 30th September 2007
Micap plc, the AIM-quoted developer and producer of value added
microencapsulated ingredients to industry, ("Micap" or the "Company") today
reports its interim results for
the six months to 30th September 2007.
HIGHLIGHTS
Commercial highlights
* Successful launch of the Micap Ingredients range of products at Food
Ingredients (Europe) Exhibition on 30th October 2007
* Improvements to production facility in Athlone, Ireland has led to an
increase in orders for sub-contract drying services as customers welcome
process efficiency gains
* New contracts won by Licensing and Development team
* With focus on food ingredients business, Micap is carrying out full review
of non-core operations to ensure that shareholder value is maximised
Financial highlights
* Loss for period after tax for continuing operations was �358,000 in line
with last year (2006: �347,000) despite no contribution of royalty following
termination of Licence agreement with Firmenich. Our direct sales as a
result currently continue to grow alongside our new strategy being
implemented
Post Period End
* Successful placing of new Ordinary shares to raise �950,000 gross.
Commenting on the results, Michael Norris, Chief Executive of Micap, said:
"In line with our stated strategy, as outlined in the last Annual Report, we
have continued to concentrate our efforts on the launch of our food ingredient
range, Micap Ingredients, and on generating further opportunities in the food
sector through our development services.
Our Ingredients launch was very well received, and we continue to see interest
from major companies for our microencapsulation services. Furthermore our
production facility in Ireland is now fully operational following further
investment in the plant to enhance quality and flexibility.
As a consequence of our focus on the food ingredients business, we are carrying
out a full review of our other business interests and sectors to ensure that
resources are provided to maximise shareholder value."
Contact:
Micap plc Tel: 01942 625590
Michael Norris, CEO Mob: 07966 341802
HB Corporate Tel: 020 7510 8600
Jim McGeever
Rory Creedon
Adventis PR Tel: 020 7034 4758 / 020 7034 4759
Tarquin Edwards Mob: 07879 458 364
Chris Steele Mob: 07979 604 687
Chief Executive's Statement
In line with our stated strategy, as outlined in the last Annual Report, we have
continued to concentrate our efforts on the launch of our food ingredient range,
Micap Ingredients, and on generating further opportunities in the food sector
through our development services.
Our Ingredients launch was very well received, and we continue to see interest
from major companies for our microencapsulation services. Furthermore our
production facility in Ireland is now fully operational following further
investment in the plant.
As a consequence of our focus on the food ingredients business, we are carrying
out a full review of our other business interests to ensure that shareholder
value is maximised in all cases.
Financial review
The loss from continuing operations after tax of �0.36m (2006: loss �0.35m)
represents a loss per ordinary share of 0.26p (2006: loss 0.66p). Turnover of
�0.31m (2006: �0.36m) was generated by all continuing divisions, however the
loss of the Firmenich royalty (2006: �0.05m) to Micap Flavours was not
compensated for and recovered via direct sales due to the lead times in
recruiting new customers.
Post period end we successfully completed a placing of new shares with new and
existing investors to raise �950,000 gross (�900,000 net of expenses). This was
used to convert loans from the Directors into equity, repay a bank overdraft and
provide additional working capital for the company.
Micap Ingredients
Micap has developed a range of high value food ingredients, which deliver
excellent stability when under heat or during other processing steps. These
qualities accordingly offer significant cost advantages and new product
opportunities to a wide range of food companies. Specific benefits to industry
have been applied within the field of savoury spice extracts, such as garlic,
mustard and onion. These products are currently being marketed as Micap
Ingredients, and address and satisfy the food industry's increasing desire for
more "Natural" ingredients.
We officially launched Micap Ingredients at the Food Industry Europe Exhibition
in London at the end of October, and we received an excellent response from a
range of potential customers. As a result of this, Micap is now in discussions
with almost 50 companies who have received samples of our ingredients, many of
whom are looking at new product opportunities. I expect to see this interest
crystallise into orders in the New Year.
Production
We have continued to upgrade our Production facility in Athlone, Ireland in
response to customer needs. Most recently, in October, we have installed two
6,000 gallon clad stainless steel silos to the plant which enables us to accept
full tanker loads of liquid product from our customers rather than one tonne
octoboxes. This action has brought significant savings in transport costs and
increasing processing efficiency through longer production runs. We are
delighted to report that one major customer has doubled their monthly orders in
response to this investment.
The key aim of the plant, however, is to manufacture yeast encapsulated products
for our Micap Ingredients range. We have produced a variety of flavour options
to expand our standard range, such as Black Pepper, Coriander, Basil and Thyme,
and have also investigated alternative sources of yeast and flavour oils. These
initiatives will enable us to support our Direct Sales efforts more fully.
Development services
Interest in our contract development services continues to be strong. Currently
a number of major companies are considering proposals for bespoke
microencapsulation projects, both in the food sector and also in the industrial
chemicals field, and we will be looking to widen our customer base in the New
Year. Particularly interesting projects in recent months include a natural
health product for the pet market and a taste masking challenge for human
health.
To build upon our expertise in problem solving for industry, we feel we need to
become more proactive in taking our story to potential customers. To achieve
this we will look to increase our involvement in conferences, seminars and
exhibitions, where we will meet our target customers and promote our offer to
them directly.
We continue to work in the agrochemical field with our partner, Nufarm.
Currently field trials are underway using the Micap technology as a delivery
mechanism for specific pesticides. We will receive feedback from these trials
early in the New Year and I will advise shareholders of any significant news.
Unfortunately the second agrochemical partner with whom we were carrying out
trials has decided not to continue with the development programme. We continue
to look for new opportunities within the agrochemical field as we seek to create
shareholder value from all our opportunities.
Prospects
This year to date has seen Micap concentrate it efforts on creating the Micap
Ingredients range of products following the termination of the food licence with
Firmenich. Considerable investment in time and money has gone into creating a
high quality range of products, which offer specific benefits to customers.
Investment has also gone into marketing, logistics and the quality control
support needed to successfully take the product to market.
Following the formal launch of Micap Ingredients we now have many times more
customer interest than ever before, with over 50 new contacts evaluating our
products. We shall continue to manage these relationships so as to convert this
interest into firm orders, and I look forward to reporting on new customer
activity early in the New Year.
Michael Norris
Chief Executive
18 December 2007
Micap plc
Consolidated interim income statement
for the six months ended 30 September 2007
Restated Restated
Notes Six months ended Year ended 31 Six months ended
30 September 2007 March 2007 30 September 2006
�'000 �'000 �'000
Continuing operations
Revenue 314 712 363
Cost of sales (294) (562) (236)
Gross profit 20 150 127
Other gains and losses 0 40 25
Occupancy expenses (77) (155) (84)
Administration costs (331) (650) (453)
Finance cost (26) (23) (7)
Other expenses 3 (322) 0
Loss before tax (414) (960) (392)
Income tax 4 56 123 45
Loss for the period from continuing operations 7 (358) (837) (347)
Discontinued operations
Loss for the period from discontinued operations (20) (65) (22)
Loss for the period (378) (902) (369)
Loss per share
From continuing and discontinued operations
- basic and diluted (pence) 5 (0.26) (1.06) (0.66)
From continuing operations
- basic and diluted (pence) (0.25) (0.98) (0.62)
Micap plc
Consolidated interim balance sheet
as at 30 September 2007
Restated Restated
Notes 30 September 31 March 2007 30 September
2007 2006
�'000 �'000 �'000
Assets
Non-current assets
Property, plant and equipment 6 376 343 369
Goodwill 7 847 847 1,028
1,223 1,190 1,397
Current assets
Inventories 59 41 10
Trade and other receivables 289 213 228
Current tax asset 55 105 50
Cash and cash equivalents - 0 -
403 359 288
Total assets 1,626 1,549 1,685
Liabilities
Non current liabilities
Borrowings 19 21 -
Other liabilities - - 109
19 21 109
Current liabilities
Borrowings 141 26 49
Trade and other payables 937 603 857
1,078 629 906
Total liabilities 1,097 650 1,015
Equity
Share capital 11,479 11,479 10,604
Share premium 6,423 6,423 6,489
Other reserves - - 50
Employee benefit trust reserve (188) (188) (188)
Retained losses 7 (17,185) (16,815) (16,285)
529 899 670
Total equity and liabilities 1,626 1,549 1,685
Micap plc
Consolidated interim statement of changes in equity
for the six months ended 30 September 2007
Share Share Other Employee Retained Total
capital premium reserve benefit losses equity
trust
reserve
�'000 �'000 �'000 �'000 �'000 �'000
Balance as at 31 March 2006 10,604 6,497 50 (188) (15,916) 1,047
Total recognised income and expenses (369) (369)
Expenses (8) (8)
Balance at 30 September 2006 10,604 6,489 50 (188) (16,285) 670
Total recognised income and expenses (533) (533)
Issue of shares 875 875
Expenses on share issue (66) (66)
Movement on other reserve (50) (50)
Exchange gain on consolidation 3 3
Balance at 31 March 2007 11,479 6,423 - (188) (16,815) 899
Total recognised income and expenses (378) (378)
Exchange gain on consolidation 8 8
Balance at 30 September 2007 11,479 6,423 - (188) (17,185) 529
Micap plc
Consolidated interim cash flow statement
for the six months ended 30 September 2007
Restated Restated
Six months ended Year ended 31 Six months ended
30 September 2007 March 2007 30 September 2006
�'000 �'000 �'000
Cash flows from operating activities
Receipts from customers and grants received 263 1,018 639
Payments to suppliers and employees (410) (2,020) (837)
Cash used in operating activities (147) (1,002) (198)
Interest paid (30) (31) (9)
Income tax received 107 174 151
Net cash used in operating activities (70) (859) (56)
Cash flows from investing activities
Purchase of property, plant and equipment (91) (5) -
Proceeds from disposal of property, plant and equipment 48 28 -
Net cash used in investing activities (43) 23 -
Cash flows from financing activities
Proceeds from issue of share capital - 801 -
Share premium expenses - - (8)
Repayment of borrowings (3) - -
Net cash flows from financing activities (3) 801 (8)
Net (decrease)/ increase in cash and cash equivalents (116) (35) (64)
Cash and cash equivalents at beginning of period (20) 15 15
Cash and cash equivalents at end of period (136) (20) (49)
Micap plc
Notes to the interim financial statements
for the six months ended 30 September 2007
1. Significant accounting policies
Basis of preparation
The interim results have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the EU. These are the
Group's first interim financial statements prepared under IFRS and are in
accordance with IAS 34 "Interim Financial Reporting". The disclosures required
by FRS1 "First time adoption of IFRS" concerning the transition from UK GAAP to
IFRS have been included in these notes.
These interim results are unaudited, but have been reviewed by the Group's
auditors. They were approved by the Board of Directors on 17th December 2007.
The statutory accounts for the period ended 31 March 2007, which were prepared
under UK GAAP, have been reported on by the Group's auditors and delivered to
the registrar of companies. The report of the auditors was unqualified and did
not contain the statements under section 237(2) or (3) of the Companies Act
1985.
The accounting policies applied by the Group resulting from changes for IFRS are
set out below. In all other respects, they are the same as those applied in the
consolidated financial statements for the period ended 31 March 2007.
Goodwill
Acquisitions are accounted for using the acquisition method. Goodwill is stated
at cost less any accumulated impairment losses.
2. Seasonality
In the directors' opinion there are no seasonal variations in business
operations.
3. Other expenses
Other expenses in March 2007 represent the write off of dormant intercompany
accounts.
4. Taxation
The tax credit for the period is the UK corporation tax Research and Development
expenditure tax credit on expenditure in the period.
5. Loss per share
The calculation of loss per share is based on losses of �0.378m (Mar 2007:
�0.902m, Sep 2006: �0.369m) and 143.3 million shares (Mar 2007: 85.3m, Sep 2006:
55.8m), being the average number of shares in issue. The share options are non-
dilutive.
6. Property, plant and equipment
Net book value at 1 April 2007 �'000
Additions 343
Disposals 91
Depreciation (26)
Net book value at 30 September 2007 (32)
376
7. Explanation of transition to IFRS
Micap plc's consolidated financial statements were prepared in accordance with
United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice) until 31 March 2007. The date of transition to IFRS was 1
April 2006. The comparative figures in respect of 2006 have been restated to
reflect changes in accounting policies as a result of adoption of IFRS. IFRS 1
permits companies adopting IFRS for the first time to take certain exemptions
from the full requirements of IFRS in the transition period. These interim
financial statements have been prepared on the basis of taking the following
exemptions:
- cumulative translation differences on foreign operations are deemed to be nil
at 1 April 2006. Any gains or losses recognised in the consolidated income
statement on subsequent disposal of foreign operations will exclude translation
differences arising prior to the transition date.
- Business combinations prior to 1 April 2006 have not been restated to comply
with IFRS 3 "Business combinations". Accordingly there has been no adjustment to
the accounting treatment adopted by the Group for previous acquisitions.
Material adjustments to the cash flow statement
Application of IFRS has resulted in reclassification of the following items in
the cash flow statement:
- Under UK GAAP, payments to acquire property, plant and equipment were
classified as part of 'Capital expenditure and financial investment'. Under
IFRS, these are part of 'Investing activities'.
- Income taxes received by the Group in respect of Research and Development tax
credits are now classified as an operating cash flow under IFRS, however these
were included in a separate category of tax cash flows under UK GAAP.
Material adjustments to the balance sheet and income statement
31 March 2007 30 September
2006
�'000 �'000
Income statement
Loss for the period under UK GAAP (964) (389)
Negative goodwill 62 -
Restate amortisation 75 20
Further impairment of goodwill (75) -
Loss for the period under IFRS (902) (369)
Balance sheet
Goodwill under UK GAAP 785 1,008
Negative goodwill 62 -
Restate amortisation 75 20
Further impairment of goodwill (75) -
Goodwill under IFRS 847 1,028
Retained losses under UK GAAP (16,877) (16,305)
Negative goodwill 62 -
Restate amortisation 75 20
Further impairment of goodwill (75) -
Retained losses under IFRS (16,815) (16,285)
The only other changes have been to the order and presentation of certain
balances.
8. Post Balance sheet events
Post period end the Company successfully completed a placing to raise �950,000
gross (�900,000 net). These proceeds were used to convert Directors' loans,
remove a bank overdraft and provide additional working capital for the Company.
9. Related party transactions
During the period, fees amounting to �17,500 (Mar 2007: �35,000, Sep 2006:
�17,500) were paid to Sigma Technology Limited, a shareholder.
10. Copies of the Interim Report
Copies of the Interim report are being sent to shareholders and are also
available to the public from the Company's head office: Pemberton Business
Centre, Enterprise House, Richmond Hill, Pemberton, Wigan, WN5 8AA. The results
will also be available for viewing on the Company's website:
www.micap.co.uk
INDEPENDENT REVIEW REPORT TO MICAP PLC
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2007 which comprises the income statement, balance sheet, statement of
changes in equity, cashflow statement and notes.
We have read the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the AIM rules.
As disclosed in note 1, the annual financial statements of the group will be
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, ''Interim Financial Reporting,'' as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information
Performed by the Independent Auditor of the Entity'' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 September 2007 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union.
TENON AUDIT LIMITED
Registered Auditor
88-96 Market Street West
Preston
PR1 2EU
Date:
This information is provided by RNS
The company news service from the London Stock Exchange
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