Hygiene group Byotrol confident in its ‘long game’ plans

Byotrol, the Daresbury-based hygiene group, published six month resuls for the period to September 30, today, which it said were below management expectations, although ahead of pre-COVID levels.

It said the six month performance showed “substantial and ongoing improvements” compared with its performance pre-COVID, but was below expectations, matching the experience of other companies in its markets and reflecting slower than expected and overstocked markets post the peak of the pandemic demand.

Revenues were halved, from £6.657m at the same point last year, to £3.173m this year. A pre-tax profit of £1.042m in 2020 compared with a pre-tax loss of £141,000 this year.

By comparison, sales for the first half in 2019, prior to the coronavirus pandemic, were £2.1m, restated for the closure of the group’s US business this October.

The group said it had cash of £1.9m at the current period end.

During the reporting period the sale of Byotrol24 in the Americas was concluded for gross cash of $1.4m over two years, plus three years of ongoing royalty and potentially significant extra payments to be made to Byotrol, contingent on the purchaser’s future revenues.

Solvay continues with its global launch of Actizone 24 hours surface sanitiser and has now received US EPA approval for long-lasting germ kill claims. This is a highly significant step and opens up global supply opportunities for Solvay, from which Byotrol will benefit through its ongoing commission arrangements.

The group also reported it is nearing completion of the academic programme into the mode of action behind brown seaweed’s potency as an antiviral technology. The potential for this technology continues to be exciting for the group, it said.

Byotrol also reported today it is close to the imminent appointment, for the first time, of a full time chief financial officer to the board.

It also said that, while the pandemic is far from over, it finds itself in a much better position than it was in late 2019. It has an increasingly integrated, profitable, IP-rich and cash generative business in a much expanded market with enhanced annualised growth.

Accordingly, the board remains highly confident in medium and long term growth and, with the benefit of a stronger balance sheet and contractual cash flows from prior IP sales or licenses, is investing further in the team to deliver it, particularly at leadership level in sales and marketing.

It said after a challenging first half, particularly in hand hygiene products, sales in October and November have been ahead of the average for half one and the order book is now building strongly, sitting currently at £850,000 versus an average of £300,000 in half one and approximately £350,000 pre-COVID. Notably this demand includes a number of sizable orders from new customers in both the UK and overseas.

Market demand and gross margin, however, is likely to remain volatile in the short term and is subject to a potential negative impact of full and partial lockdowns on the demand for consumables. This is especially so at the current time with the current uncertainty introduced by the new Omicron variant of COVID.

The group said that, while it expects to be both profitable and cash generative in the second half of the year, with these uncertainties it is difficult to predict the quantum at this juncture.

Chief executive, David Traynor, said: “As we expected mid-pandemic, sales are now settling at a significantly higher rate than pre-COVID. This underlying growth has been hidden slightly by unusually high overstocking, especially in hand sanitisers, one-off market factors such as Brexit and the resultant pricing pressures in the first half of the year, but this challenge does now seem to be unwinding and our order book has more than doubled since period end.

“IP sales and activity remains very strong, and incoming levels of enquiry remain high.

“We have been busy investing our resources in an upgraded team, with track records of developing new business streams and growing sales generally and this is leading to significantly higher annualised projected annual cost base compared to pre-COVID, before supporting spend on items such as market research and marketing.”

He added: “This is the right thing to do to maximise shareholder returns over the medium term and we are highly confident that payback will accrue in the new financial year, if not earlier. The long term outlook for your company remains excellent.”