April 14, 2011
Kiotech International plc has announced a significant increase in sales, profit and earnings per share in its preliminary results for the year ended December 31, 2010.
During the year, the Group largely completed the integration of the Optivite Group, whose results are included for the full year.
Sales nearly doubled to GBP21.565 million (US$35.3 million) boosted by a maiden full year contribution from Optivite coupled with organic growth (2009: three months contribution).
Total underlying profit before tax and exceptional items more than doubled to GBP1.877 million (US$3.1 million) with Profit before tax of GBP1.517 million (US$2.5 million) includes exceptional costs of GBP0.261 million (US$0.4 million) relating to the restructuring of the Group.
Underlying earnings per share increased 58% to 7.27 pence per share (2009: 4.60 pence per share) and diluted underlying earnings per share rose 59% to 7.20 pence per share (2009: 4.53 pence per share). A final dividend of 2.00 pence per share is proposed, an increase of 74% over the previous year's final dividend of 1.15 pence.
Richard Edwards, Chief Executive, commented, "This has been a very successful year during which the management team has worked hard to integrate the Optivite acquisition of September 2009. The Group is now well placed to build on its trading brands, supplying natural animal feed additives for global agricultural markets with specialty products, which improve the health and output of animals, thereby increasing profits for the farmer. The success of the Optivite deal gives us the confidence to pursue similar opportunities in addition to developing and promoting our existing brands in global markets."
The production of feed additive products has now been consolidated at Manton Wood. This plant has almost trebled its production throughput, with the additional Agil volume and growth from international operations. A recently commissioned third production line at Manton Wood, has enabled the transfer of omega-3 supplements from Optivite's North Scarle site, as well as providing additional capacity for the acid product range. The North Scarle site has just been closed leaving the Group operating from two production sites: Manton Wood for the functional feed additive business and Boroughbridge, in North Yorkshire, where the Vitrition, organic feed business is located.
The international division, operating under the Optivite and Kiotechagil brands, continued to make progress during the year. Of the 61 countries supplied, there were particularly strong performances in Argentina, Bangladesh, Japan, Korea, Malaysia, Mexico and Turkey.
The main focus continues to be to introduce a number of new products to distributors around the world. Malaysia demonstrated the potential of Agil's Neutox, new feed safety product and other new products being launched include a new range of enzymes and omega-3 supplements; the latter enhancing fertility, viability of young animals, growth rate and also increase the omega-3 content of meat and eggs. Genex®, an Optivite registered performance enhancing acid and essential oil combination, is currently under trial with a number of major pig producers in China.
In the UK, sales are now focused on higher margin feed additive products to the major integrators, vitamin and mineral premixers and the pig and poultry home-mix segment.
The organic feed brand Vitrition had a solid year and it is expected that the more stringent EU legislation, relating to the proportion of use of solely organic raw materials in feed, coming into force over the next 12 months, will favour Vitrition owing to its dedicated organic feed content, mill and formulations.
Work is being undertaken with a number of farmers and hatcheries on shrimp, tilapia and Asian sea bass species. The product technology has been well received although, as expected, trial data is mixed, reflecting the inherent nature of trialing at fish farm level, where disease and events such as flooding can undermine results.
Trials with one of South East Asia's largest feed mill and farm groups will start soon and the company is continuing to work with a major multi-national, whose aquaculture team understands the potential of Aquatice®, and are continuing to test the product to assess its scope.
Aquatice® is a unique technology and requires focused sales support in order for it to gain acceptance in the aquaculture industry. Kiotech is conscious that it may be some time before it can generate significant sales from this technology, but it will continue to work with key partners to achieve this.
Following the success of the Optivite acquisition and subsequent integration, it is appropriate to speed up acquisition process by redefining roles and responsibilities at board level.
Richard Edwards, who has been Chief Executive since November 2006, becomes Executive Vice-Chairman and will be responsible for implementing the Group's acquisition strategy. Richard will also retain responsibility for Aquatice® to ensure continuity of its commercial development.
David Bullen, currently Chief Operating Officer, will become Chief Executive, responsible for executive management of the Kiotech Group. David has played a key role in managing the successful integration of Optivite, and has a clear understanding of the combined business. These appointments take effect immediately.
The group has made a solid start to the year, with further sales growth in the international division. Management's focus is to capture the cross-selling opportunities between the Optivite and Kiotechagil brands as well as the launch of a number of new product ideas across the group. Territory expansion initiatives will concentrate on China and Brazil which between them account for over 40% of world pig and poultry meat production.
The Group is continuing a search to identify suitable acquisitions, at the right price, which offer both strategic and commercial benefits to the group.
