Profitable daily operations – Legal dispute affects earnings negatively
by Hans Christian Leren | Aug 16, 2017
Aqua Bio Technology ASA (ABT) continues to deliver profits
on the day-to-day operations. Non-recurring costs relating
to the company's dispute with a former US-based customer
nevertheless resulted in a loss after tax of NOK 2.8 million
in the first half of 2017 and EBITDA of minus NOK 3.3
million. The corresponding figures for the corresponding
period the previous year were NOK 2.8 million and NOK 6.7
million, respectively.
Significant costs related to the dispute with a former
American customer still have a negative impact on ABT's
financial performance. It is nevertheless good to register
that the results of the day-to-day operations, isolated, are
positive. Following the implementation of an expanded
business model and an expectation of a positive outcome of
the dispute within short and by year end, ABT is positive to
the further development of the company.
The case filed against ABT was rejected by a US court in two
rounds in 2016 and sent to a final decision by arbitration
in the United Kingdom, the dispute resolution mechanism
originally agreed between the parties. The case was
originally scheduled for arbitration in London in September
2017, however, due to certain unforeseen delays at the
arbitrators office, the case may be slightly delayed and
expected to take place later in 2017. ABT's opinion is that
the company has a strong case and looks forward to the
decision by the arbitrator so that the company's management
can focus fully on day-to-day operations and on creating
value for its owners.
In total the dispute has so far resulted in costs of
approximately NOK 17 million in 2016 and 2017.
ABT's revenues in the first half of 2017 were NOK 8.9
million, compared to NOK 25.1 million in the same period
last year. This change is largely due to a change of the
minimum royalty payment structure per the original agreement
with the American partner Restorsea. Royalty-based revenues
to ABT are, from January of this year and onwards, based on
actual sales.
During the first half of the year, ABT implemented an
expanded business model, now including the marketing and
sales of skin care products for consumers and professional
users. New ingredients for the cosmetics industry are still
central to the company's business, but a more diversified
business model will, according to the company, result in
reduced risk and increased income potential.
In the first half of the year, ABT signed agreements
granting exclusive sales and distribution rights for two
skin care brands within the EMEA region (Europe, Middle East
and Africa), Moana Skincare and Cuvget. Per end of the
period Cuvget has been introduced in Norway, Sweden, Finland
and Portugal, while Moana has been introduced in Norway. The
company is in the process of expanding the distribution of
both brands to other important European markets as well.
Both brands are available via the company's online shops for
sale throughout Europe (EU).
ABT strongly believes in the expanded business model and
that it provides a solid fundament and a positive
development for the company going forward.
For further information, please contact CEO Arvid Lindberg,
telephone +47 98 24 54 10.
Aqua Bio Technology (ABT) is developing and commercializing
sustainable biotechnology for use in skin care products.
ABT's cosmetics ingredients are highly effective and they
provide the cosmetics industry with natural alternatives to
traditional ingredients. ABT is also marketing and
distributing natural skin care end products developed by
partners towards consumers and professional users. Aqua Bio
Technology is listed on the Axess market of the Oslo Stock
Exchange.
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