Hygiene group treading water ahead of ‘significant profitability’ in 2025

Slower than expected growth in Europe means hygiene group, Byotrol, is likely to break even this financial year – but it predicts “significant profitability” in fiscal year 2025.

This July the AIM-listed group, based on Thornton Science Park near Chester, announced annual results that showed a fall in sales, at £4.592m, and deeper losses of £1.825m, which it said was in line with expectations.

In a trading update this morning it declared its operating strategy remains unchanged.

This comprises a focus on its four core technology platforms including the cruise ship platform that it believes will receive regulatory approval across Europe in early 2025.
Byotrol’s plan to monetise this is by product sales in animal and human health segments, IP sales in other segments, or where cost of market entry is high, such as the US, and radical improvement in operations and systems across the whole company, further increasing efficiency and profit margins.

The group announced good progress in the current financial year in most of its activities, including:

• Strong growth on the new Anigene formulation in animal health, which launched in November 2022 and year to date is growing 31% versus the prior year.
• The launch of the new Chemgene MedLab formulation in human health in August 2023, the second launch in the UK based on the ‘Cruise; technology platform.
• Further operational improvements through embedding of service levels, key account management and ecommerce expansion, resulting in further gross margin improvement of one per cent so far this financial year.
• Continued tight management of costs and budgeting, keeping costs flat versus FY 2023 at £2.8m, despite the wage and input cost inflation impacting the UK.

However, Byotrol said, despite this continued progress, it has seen revenue fall behind expectations in two areas.

In Europe it is seeing slower growth in product sales than expected due to longer timelines of registration and key account uptake.

While it has secured registration and its first sales for Anigene in France, it now expects to secure the registration in Germany, and of Chemgene in the second half of FY 2024.

It also revealed the impact of discontinuations of some legacy products, including medical devices, has been greater than expected. While this remains a key part of the strategy, the discontinuations have impacted overall revenues.

IP sales remain encouraging, with traction now being gained by the group’s biggest licensees and alliance partners.

Byotrol said, as normal, it is unable to predict, with certainty, the impact this will have on its profits in the current year, but it is already confident of generating approximately £1m alone in cash from IP.

Given the continued volatile market environment – and the group’s wish to continue investing in growth – it said it will continue to focus IP efforts this year on cash rather than new multi-year agreements with minimum guaranteed royalties.

Looking ahead, the group said the combination of slower growth in Europe and prioritising cash from IP means it now expects to be around break even this current financial year, with significant profitability in FY2025.

Based on current projections the directors say they remain confident that the company has sufficient cash resources to execute on its current strategy.

This morning the group also announced the appointment of Ashley Head to the board as an independent non-executive director, with effect from the AGM on September 13, 2023.

He began his career with Chase Manhattan Bank, where he rose through the ranks of technology and online banking. He then joined MasterCard, where he became responsible for the African region of the group.

After recognising the opportunities within eCommerce he founded Proc Cyber, growing the business to a valuation of more than £60m in three years and then merging with Datacash in 2006 where he assumed the role of chairman.

Under his leadership, Datacash grew to a market-leading position with MasterCard purchasing the company in 2010.

He continues to lead a vibrant portfolio career and currently serves as chairman of The AI Corporation, MySense Group and Champagne Piaff, in addition to other director positions. He is also a trustee for the National Emergency Trust, Epsom College and Stonegate Foundation.

Byotrol chairman, Trevor Francis, said: “When John Langlands retired we committed as a board to appoint another non-executive director, especially with small cap public market experience.

“I am delighted that Ashley Head has now agreed to join the board and will now be bringing his significant experience and commercial acumen to our company. We welcome Ashley to the team and we look forward to working with him in our determination to drive the business forward and to capitalise on the continuing and substantial opportunities in infection control markets.”