AMP.L Regulatory News (AMP)

12 Sep 2007 07:01

Amphion Innovations PLC12 September 2007 12 September 2007 Amphion Innovations plc Interims Results for the 6 months to 30 June 2007 35.7% increase in Net Asset Value per Share Strong Partner Company progress London and New York, 12 September 2007- Amphion Innovations plc (LSE: AMP) ("Amphion" or the "Company"), the developer of medical and technologybusinesses, today announces its unaudited interim results for the six months to30 June 2007. Financial Highlights • Revenues up 48% to US $672,656 at 30 June 2007 (US $455,377 at 30 June 2006) • Net profit increased by 89% to US $3.4 million at 30 June 2007 (US $1.8 million at 30 June 2006) • Earnings per share of US $0.04 at 30 June 2007 (US $0.02 at 30 June 2006) • Fair value* of Amphion's investment portfolio increased 48% to US $37.9 million (US $25.6 million at 30 June 2006) • Net asset value per share increased by 35.7% to US $0.38 at 30 June 2007 (US $0.28 at 30 June 2006) * Fair value refers to the aggregate value of Amphion's holdings based on thelast quoted closing price for publicly held Partner Companies and the offeringprice on the most recently executed financing transactions for privately heldPartner Companies. Operating Highlights • £2.1 million fundraising for Amphion through a placing of 9,690,000 new Ordinary Shares at 22p in June 2007 • Durham Scientific Crystals Ltd. raised £1.6 million in a Series F financing • MSA, the Gulf-based joint venture, successfully incorporated in Bahrain • AXCESS International Inc. reported its third consecutive year of record revenue growth with revenues for Q2 2007 increasing 368% on 2006 to US $1,658,758 • Motif BioSciences, Inc. raised US $1 million in a Series C financing Developments since 30 June 2007 • Durham Scientific Crystals Ltd., raised £3.5 million in over-subscribed Series H financing at £4 per share. Amphion now owns approximately 22% of DSC on a fully diluted basis. DSC is now valued at £22.16 million • Myconostica Ltd. raised £570,000 in a Series C Preferred financing at £40 per share, which was over twice the valuation of the previous financing Amphion's Chief Executive Officer, Richard C.E. Morgan, said: "Amphion and our Partner Companies continued to make strong progress in thefirst half of the year and we were pleased by the response of our shareholdersin the placing that closed in June, giving us additional resources with which toexecute on our plan. "The successful fundraisings this year have shown both the progress made and thecontinued support for our portfolio. During the period, Amphion has increasedits stake in several of our Partner Companies aimed at generating greatershareholder value. Since we completed the IPO in August of 2005 we have grownour Net Asset Value by 27.5% per annum (compound growth rate) from 12.1p perShare to 18.9p per Share at 30 June 2007. This strong performance reflects thecontinued growth and development of our Partner Companies. "We continue to see positive trends and developments in our portfolio and we nowhave three new exciting initiatives that are not fully reflected on our balancesheet with MSA in the Gulf, the development of Energy Trading International ("ETI"), and a new initiative in the development of intellectual property ("IP")in Amphion and our Partner Companies. We remain very positive in ourexpectations for the rest of the year." For further information, please contact: Amphion Innovations plc +1 212 210 6224Charlie Morgan Financial Dynamics +44 20 7831 3113Ben AtwellJohn Gilbert Charles Stanley Securities (Nominated Adviser) +44 20 7149 6000Mark Taylor / Freddy Crossley Notes to editors About Amphion Innovations plc Amphion Innovations plc (LSE: AMP) builds shareholder value in high growthcompanies in the medical and technology sectors. Amphion uses a focused,hands-on company building approach based on decades of experience in both the USand UK. On the web: www.amphionplc.com Chief Executive's Report Amphion has made steady progress so far this year and our Partner Companies havemade promising developments and shown good growth. The success this half isreflected in the 35.7% increase in net asset value per share and over 48% gainin fair value of our investment portfolio over this time last year. The Companyalso announces successful fundraisings for our Partner Companies, DurhamScientific Crystals and Motif BioSciences during the period ended 30 June 2007and Myconostica and Durham Scientific Crystals post 30 June 2007. In line with our corporate strategy of realising our investments to provide asignificant return for our shareholders, we continued to liquidate our positionin Beijing Med-Pharm. By the end of the reporting period, we sold 649,935shares for US $3,265,959, realising an encouraging return of 4.4 times on ouroriginal investment. Throughout this period, Amphion has invested further time and funds into thedevelopment of two new projects, MSA and Energy Trading International ("ETI").Both of these companies are progressing extremely well and we believe that theyhave the future potential to become important Partner Companies for Amphion andultimately provide a good return for our shareholders. We continue to stickclosely to our business model of adding at least one new Partner Company a year.We look forward to making further announcements in the future regarding thesedevelopments. With a Heads of Agreement signed at the beginning of the reporting period aswell as the recent incorporation at the beginning of June, we have moved forwardwith setting up the Gulf-based joint venture, MSA. MSA will provide Amphionwith key business opportunities in the region as well as alternative sources offunding. We believe that the Gulf is a largely untapped region in terms ofEuropean investment, and this new joint venture will enable Amphion and ourshareholders to gain access to the vast pool of talent and investment thatexists in the region. Energy Trading International ("ETI"), a spin-out from FireStar Software, wascreated to leverage the significant untapped market for electronic automation ofbilateral structured trading of energy commodities. Amphion addressed its own capital needs with the close of a successful round offinancing in June in which it raised gross proceeds of £2.1 million through aplacing of 9,690,000 ordinary shares at a price of 22 pence per Ordinary Share. Financial Summary Amphion's revenue, net profit and Earnings per Share each increased in the firstsix months of 2007 as compared to the first six months of 2006. Revenueincreased to US $0.7 million, net profit to US $3.4 million, and Earnings perShare increased to US $0.04. Revenues increased due to increased financing andretainer fees and the growth in net profit is mostly due to the fair value gainson investments of US $4.4 million which is mainly made up of the increase inprice per share of Motif (US $2.2 million), WellGen (US $1.6 million) and AXCESS(US $0.6 million). Fair value of investments increased to US $37.9 million from US $25.6 million at30 June 2006, primarily as a result of additional investments of US $3.9 millionand changes in unrealised gains during the twelve months of US $9.3 million.The unrealised gains are mainly due to increases in price per share of Motif (US$6.4 million), DSC (US $1.9 million), and WellGen (US $1.6 million). Partner Company Highlights • AXCESS International Inc., (OTCBB: AXSI) is a leading provider of security and transportation logistics solutions that utilise radio frequency identification (RFID) technology. AXCESS reported its third consecutive year of record revenue growth in August2007. Revenue for Q2 2007 was up substantially at US $1,658,758, which is a368% increase Q2 of 2006. During the reporting period, AXCESS completed the fulfillment of the enhancedport security systems for Barbados, worth US $2 million. The company was alsoawarded two new patents. Amphion currently owns 8.9% of AXCESS. • Durham Scientific Crystals Ltd. ("DSC"), a Durham University spin-out, produces semiconductor materials based upon Cadmium Telluride (CdTe) and Cadmium Zinc Telluride (CZT), the x-ray detector material of choice. DSC uses a vapour phase growth method to produce crystals instead of a liquid phase method used by crystal manufacturers worldwide. During this period DSC proved the vapour phase method. During the reporting period, DSC demonstrated its second generation technologyof producing CdTe on GaAs seed, which would significantly enhance DSC's productdifferentiation in all of the company's target markets. This breakthroughtechnology will allow production of significantly larger area crystals whichwould meet long term unmet need in the defense and medical markets. This is theprincipal milestone that was promised during the 2006 fund raising and wasdelivered before time, exceeding the target technical specifications. Also during the reporting period, there has been significant development ofDSC's proprietary XRATM (x-ray animation) imaging technology for the securityindustry. Five new patents have been filed on this technology. This technologycombined with DSC's CdTe detectors will significantly enhance identification ofthreat items in aviation security applications in addition to dramaticimprovement in imaging capability. This technology also has potentialapplications in the industrial inspection and medical markets. Contracts are successfully progressing for the European Space Agency and CENAMPS(national centre for nanotechnology). DSC is currently pursuing a number ofstrong expressions of interest from other government agencies, the medical, andthe industrial markets. After the reporting period, DSC appointed Mr. Mike Creedon as Chief FinancialOfficer, Mr. Ian Radley as Technical Operations Director, and Dr. Gary Gibson asIntegrated Systems Manager. Amphion currently owns approximately 22% of DSC. • FireStar Software Inc. develops software that assists institutions in automating business transactions between multiple companies. During the reporting period, FireStar spun-out a trading system solution basedon their EdgenodeTM technology for automating the structuring and negotiationbetween multiple parties for complex, structured trades. Energy TradingInternational ("ETI") was formed to provide a trading service for trading energy(e.g. natural gas, electricity, and oil) and emissions on a world-wide basis.FireStar has completed the customisation of the solution for trading in naturalgas and electricity and has started recruiting and signing customers toparticipate in the pilot, which is scheduled to begin in September 2007. FireStar has also entered into a letter of intent with Marsoft Inc. to develop asimilar service for trading maritime shipping capacity. In addition to the development of ETI, FireStar, along with SWIFT, SAP, and VISAhas developed an industry standard for converting and translating differentpayment messages, which can be utilised by FireStar's EdgenodeTM technology.FireStar and VISA are now in discussions for the use of this technology in a newVISA application. Amphion currently owns 10.75% of FireStar. • m2m Imaging Corporation is a spin-out from Columbia University and the University of Queensland, Australia. m2m specialises in developing high performance magnetic resonance imaging ("MRI") coils and accessories, including cryogenic coils, that allow for enhanced imaging without escalating costs. Over the course of the reporting period, m2m attained continuing qualitycertification for ISO13485 (medical device manufacturer) and ISO9001 (qualitymanagement system). The company has had orders and sales to some of the world'slargest original equipment manufacturers in various market segments, includingSiemens, Philips, and Bruker as well as many big brand end customers such asProcter and Gamble, Duke University, and Johnson & Johnson. m2m formed a new collaboration with the University of Pennsylvania for access toMRI test platforms and scientific expertise. The company achieved prototypepreclinical neuro images demonstrating at least 50% gain in sensitivity duringtesting at Massachusetts General Hospital. Amphion currently owns 23.03% of m2m. • Motif BioSciences, Inc. is a population genetics company focused on discovering genes causing common diseases by utilising human genetics data from the Persian Gulf region. During this period, Motif successfully raised US $1 million in a Series C roundof financing at US $3 per share. These proceeds will support Motif's researchtaking place in the areas of type-2 diabetes and asthma. Motif has begun its candidate gene study of Post Traumatic Stress Disorder inKuwait under an agreement with the Harvard School of Public Health. The companyhas also completed plans to conduct studies on the genetics of adult asthma,Type 2 Diabetes, Metabolic Syndrome, Osteoporosis, Obesity and various cancers,beginning in Q4 2007. Amphion currently owns 41.47% of Motif. • MSA is a Gulf-based joint venture between Amphion and two prominent Kuwaiti families, the Al-Mutawa and Al-Sayer families. MSA's objective is to create new markets and strategic partnerships for Amphion's Partner Companies, to identify new investment opportunities in the region in areas of particular Amphion expertise, and provide strong access to capital and opportunities from both new and existing Gulf investors. After signing a Heads of Agreement at the beginning of the year, MSA wasincorporated in Bahrain on 6 June 2007. The company has now almost completedthe local incorporation of MSA's initial Partner Companies: Saydanah, and Suvani/TagStone, which will trigger an additional US $3.5 million investment into MSAand its Partner Companies. Saydanah is being established in order to bring "functional foods" to a sizeableand wealthy Arab market based on traditional Arab pharmacology. Saydanah willbe built upon Amphion's expertise in the field of nutrigenomics through ananticipated strategic partnership with Partner Company, WellGen. Suvani will be merged with the Gulf-based RFID company, TagStone, with the aimof servicing a growing Gulf RFID market. It is expected that the new companywill acquire an exclusive right to distribute Partner Company AXCESS' productsin the Gulf. Amphion currently owns 50% of MSA. • Myconostica Ltd. is a Manchester University spin-out that specialises in a new type of 'molecular' diagnostic test for infectious diseases, particularly life-threatening respiratory fungal infections. The company closed on a first round of £570,000 for a Series C Preferredfinancing after the reporting period. The capital raised will support thelaunch and marketing of Myconostica's first products, the MycXtra fungal DNAextraction system and PneuMyco, a real-time molecular test for Aspergillus andPneumocystis, which will formally be launched at the Trends in Medical Mycologymeeting in Turin, Italy on 30 October, 2007. Over the course of the reporting period, Myconostica appointed Mr. DavidBeswetherick, formally of Manchester United, as Chief Financial Officer. Amphion currently owns 34% of Myconostica. • WellGen Inc., a Rutgers University spin-out, applies proprietary nutrigenomics technology to the discovery of food and dietary supplement ingredients from plants and foods for the health and wellness markets. In July 2007, after the reporting period, WellGen received the award of USPatent Number 7,238,376, "Black Tea Extract for Prevention of Disease" thatcovers, among other things, its proprietary product WG0401, an enriched extractfrom black tea which has demonstrated inflammation fighting properties. Thepatent also covers the uses of WG0401 for arthritis, inflammation, and cancer. WellGen continues to develop launch plans for WG0401 into the dietary supplementchannel as they await GRAS status, which permits the use of the ingredient infoods in the US. The company is currently pursuing opportunities forcollaborations based on its products and technology with major food and beveragecompanies. During the reporting period, WellGen moved into new headquarters and operatingfacilities located in the Commercialisation Centre for Innovative Technologiesat the Technology Centre of New Jersey in North Brunswick, NJ. Amphion currently owns 16.95% of WellGen. Outlook and Summary In 2007, Amphion delivered another half year of good progress in all of itsPartner Companies. The rise in net asset value and fair value is testament tothe strength of Amphion's team and innovative value creation process. We havecontinued to closely follow our business model of seeking and investing inexciting early-stage companies, as illustrated by the development of MSA andETI, and also in realising a good return from these investments as seen by theliquidation of Beijing Med-Pharm. We remain on track to retain the number ofPartner Companies between seven and ten. The outlook for the remainder of the year is very encouraging with a steadystream of exciting developments, which will all help deliver further growth andvalue for Amphion and its shareholders. Amphion Innovations plcCondensed consolidated income statementFor the six months ended 30 June 2007 Unaudited Notes Six months Six months ended ended Year ended 30 June 2007 30 June 2006 31 December 2006Continuing operations US $ US $ US $ Revenue 672,656 455,377 1,238,040 Other operating income - 1,650 1,650Administrative expenses (1,894,214) (1,917,682) (4,092,028) ______ ______ ______ Operating loss (1,221,558) (1,460,655) (2,852,338) Fair value gains on investments 6 4,384,828 2,849,016 7,774,172Realized gains on sale of investments 286,633 367,261 1,906,932Interest income 31,057 78,880 170,490Other gains and losses 4,140 26,535 37,337 ______ ______ ______ Profit before tax 3,485,100 1,861,037 7,036,593 Tax on profit 4 (76,000) (53,750) (83,214) ______ ______ ______ Profit for the period 3,409,100 1,807,287 6,953,379 ______ ______ ______ Earnings per share 5 Basic US $ 0.04 US $ 0.02 US $ 0.07 ______ ______ ______ Diluted US $ 0.04 US $ 0.02 US $ 0.07 ______ ______ ______ Amphion Innovations plc Condensed consolidated balance sheet At 30 June 2007 Unaudited Audited Notes 30 June 2007 31 December 2006 US $ US $ Non-current assetsFixtures, fittings and equipment 29,388 30,116Security deposit 121,694 121,694Investments 6 37,928,061 32,254,563 ______ ______ 38,079,143 32,406,373 ______ ______ Current assetsPrepaid expenses and other receivables 3,144,883 1,258,941Cash and cash equivalents 1,495,795 1,848,539 ______ ______ 4,640,678 3,107,480 ______ ______ Total assets 42,719,821 35,513,853 ______ ______ Current liabilitiesTrade and other payables 874,705 1,349,986 ______ ______ Total liabilities 874,705 1,349,986 ______ ______ Net assets 41,845,116 34,163,867 ______ ______ EquityShare capital 7 2,009,671 1,808,983Share premium account 27,184,702 23,114,093Translation reserve 12,845 11,993Retained earnings 12,637,898 9,228,798 ______ ______ Total equity 41,845,116 34,163,867 ______ ______ Amphion Innovations plcCondensed consolidated statement of changes in equityFor the six months ended 30 June 2007 Unaudited Share Share premium Translation Retained capital account reserve earnings Total US $ US $ US $ US $ US $ Balance at 31 December 2005 1,685,160 20,101,328 2,220 2,275,419 24,064,127 Recognition of share-based payments - 27,540 - - 27,540 Exchange differences arising on translation of foreign - - 6,009 - 6,009operations Profit for the period - - - 1,807,287 1,807,287 ______ ______ ______ ______ ______ Balance at 30 June 2006 1,685,160 20,128,868 8,229 4,082,706 25,904,963 Issue of share capital 123,823 3,047,600 - - 3,171,423 Incremental costs directlyattributable to issue of shares - (150,950) - - (150,950) Recognition of share-based payments - 88,575 - - 88,575 Exchange differences arising on translation of foreign operations - - 3,764 - 3,764 Profit for the period - - - 5,146,092 5,146,092 ______ ______ ______ ______ ______ Balance at 31 December 2006 1,808,983 23,114,093 11,993 9,228,798 34,163,867 Issue of share capital 200,688 4,233,282 - - 4,433,970 Incremental costs directlyattributable to issue of shares - (195,245) - - (195,245) Recognition of share-based payments - 32,572 - - 32,572 Exchange differences arising on translation of foreign - - 852 - 852operations Profit for the period - - - 3,409,100 3,409,100 ______ ______ ______ ______ ______ Balance at 30 June 2007 2,009,671 27,184,702 12,845 12,637,898 41,845,116 ______ ______ ______ ______ ______ Amphion Innovations plc Condensed consolidated cash flow statement For the six months ended 30 June 2007 Unaudited Six months Six months ended ended Year ended 30 June 2007 to 30 June 2006 31 December 2006 US $ US $ US $ Operating activities Operating loss (1,221,558) (1,460,655) (2,852,338) Adjustments for: Depreciation of fixtures, fittings and equipment 5,657 4,209 9,210 Advisory fees received in equity instruments - (3,432) - Advisory fees settled in equity instruments 32,572 27,540 116,115 Decrease (increase) in prepaid & other (1,885,942) 41,652 (615,453)receivables Increase (decrease) in trade & other payables (475,281) 240,531 995,667 Income tax (76,000) (53,750) (75,894) ______ ______ ______ Net cash used in operating activities (3,620,552) (1,203,905) (2,422,693) ______ ______ ______ Investing activities Interest received 31,057 78,880 170,490Proceeds on disposal of investments 360,240 585,886 2,905,719Purchases of investments (1,362,277) (1,954,334) (4,937,763)Proceeds from repayment of note - 200,000 637,000Purchases of equipment (4,859) (5,101) (12,899) ______ ______ ______ Net cash used in investing activities (975,839) (1,094,669) (1,237,453) ______ ______ ______ Financing activities Proceeds on issue of shares, net of share issuance 4,238,725 - 3,020,473costs ______ ______ ______ Net cash from financing activities 4,238,725 - 3,020,473 ______ ______ ______ Net decrease in cash and cash equivalents (357,666) (2,298,574) (639,673) Cash and cash equivalents at the beginning of the 1,848,539 2,448,422 2,448,422period Effect of foreign exchange rate changes 4,922 32,544 39,790 ______ ______ ______ Cash and cash equivalents at the end of the period 1,495,795 182,392 1,848,539 ______ ______ ______ Amphion Innovations plc Notes to the condensed consolidated financial statements (Unaudited) For the six months ended 30 June 2007 1. General information The condensed consolidated interim financial statements for the six months ended30 June 2007 are unaudited and do not constitute statutory accounts within themeaning of the Isle of Man Companies Acts 1931 to 2004. The statutory accountsof Amphion Innovations plc for the year ended 31 December 2006 have been filedwith the Registrar of Companies and contain a qualified audit report. Copiesare available on the company's website at www.amphionplc.com/ir_results.htm. 2. Accounting policies These condensed consolidated interim financial statements have been prepared inaccordance with the recognition and measurement requirements of InternationalFinancial Reporting Standards (IFRS). The accounting policies applied by the Group are consistent with those followedin the preparation of the Group's annual financial statements for the year ended31 December 2006. 3. Segment information For management purposes, the Group is currently organized into two businesssegments - advisory services, and investing. These business segments are thebasis on which the Group reports its primary segment information. Segment information about these businesses is presented below. Advisory Investing services activities Eliminations Consolidated Six months Six months Six months Six months ended ended ended ended 30 June 2007 30 June 2007 30 June 2007 30 June 2007 US $ US $ US $ US $REVENUEExternal advisory fees 672,656 - - 672,656Inter-segment fees - 327,056 (327,056) - ______ ______ ______ ______ Total revenue 672,656 327,056 (327,056) 672,656Administrative expenses (446,956) (1,774,314) 327,056 (1,894,214) ______ ______ ______ ______ Segment result 225,700 (1,447,258) - (1,221,558) Fair value gain on investments - 4,384,828 - 4,384,828Realized gains on sales of - 286,633 - 286,633investmentsInterest income 222 30,835 - 31,057Other gains and losses - 4,140 4,140 ______ ______ ______Profit before tax 225,922 3,259,178 - 3,485,100Income taxes (76,000) - - (76,000) ______ ______ ______ ______ Profit after tax 149,922 3,259,178 - 3,409,100 Advisory Investing services activities Eliminations Consolidated Six months Six months Six months Six months ended ended ended ended 30 June 2007 30 June 2007 30 June 2007 30 June 2007 US $ US $ US $ US $ OTHER INFORMATIONSegment assets 762,482 42,271,781 (314,442) 42,719,821 Segment liabilities 222,326 961,567 (309,188) 874,705 Additions to fixtures, fittings & 3,864 995 - 4,859equipmentDepreciation 2,336 3,321 - 5,657Advisory fees settled in equity - 32,572 - 32,572instruments Advisory Investing services activities Eliminations Consolidated Six months Six months Six months Six months ended ended ended ended 30 June 2006 30 June 2006 30 June 2006 30 June 2006 US $ US $ US $ US $REVENUEExternal advisory fees 455,377 - - 455,377Inter-segment fees 152,895 - (152,895) - ______ ______ ______ ______ Total revenue 608,272 - (152,895) 455,377Other operating income 1,650 - 1,650Administrative expenses (533,842) (1,536,735) 152,895 (1,917,682) ______ ______ ______ ______ Segment result 76,080 (1,536,735) - (1,460,655) Fair value gain on investments 109,136 2,739,880 - 2,849,016Realized gains on sales of - 367,261 - 367,261investmentsInterest income 1,950 76,930 - 78,880Other gains and losses - 26,535 26,535Profit before tax 187,166 1,673,871 - 1,861,037Income taxes (53,750) - - (53,750) ______ ______ ______ ______ Profit after tax 133,416 1,673,871 - 1,807,287 Advisory Investing services activities Eliminations Consolidated Six months Six months Six months Six months ended ended ended ended 30 June 2006 30 June 2006 30 June 2006 30 June 2006 US $ US $ US $ US $ OTHER INFORMATIONSegment assets 585,577 26,038,956 (124,720) 26,499,813 Segment liabilities 227,093 491,746 (123,989) 594,850 Additions to fixtures, fittings & 5,101 - - 5,101equipmentDepreciation 1,440 2,769 - 4,209Advisory fees settled in equity - 27,540 - 27,540instruments Geographical segments The Group's operations are located in the United States and the United Kingdom. The following table provides an analysis of the Group's advisory fees bygeographical location of the investment. Advisory fees by geographical location Six months ended Six months ended 30 June 2007 30 June 2006 US $ US $ United States 528,875 424,833United Kingdom 143,781 30,544 ______ ______ 672,656 455,377 ______ ______ The following is an analysis of the carrying amount of segment assets, andadditions to fixtures, fittings and equipment, analysed by the geographical areain which the assets are located: Carrying amount Additions to fixtures, of segment assets fittings and equipment Six months ended Six months ended Six months ended Six months ended 30 June 2007 30 June 2006 30 June 2007 30 June 2006 US $ US$ US $ US$ United States 36,278,063 26,463,208 3,864 1,821United Kingdom 6,441,758 36,605 995 3,280 _______ _______ _______ _______ 42,719,821 26,499,813 4,859 5,101 _______ _______ _______ _______ 4. Income tax expense Six months Six months ended ended Year ended 30 June 2007 30 June 2006 31 December 2006 US $ US $ US $ Isle of Man income tax - - -Tax on US subsidiary 76,000 53,750 70,899Tax on UK subsidiary - - 12,315 ______ ______ ______ Current tax 76,000 53,750 83,214 ______ ______ ______ From 6 April 2006, a standard rate of corporate income tax of 0% applies to Isleof Man companies, with exceptions taxable at the 10% rate, namely licensed banksin respect of deposit-taking business, companies that profit from land andproperty in the Isle of Man and companies that elect to pay tax at the 10% rate. No provision for Isle of Man taxation is therefore required. The Company istreated as a Partnership for U.S. federal and state income tax purposes and,accordingly, its income or loss is taxable directly to its partners. The Company has two subsidiaries in the USA and UK, respectively. The USsubsidiary, Amphion Innovations US Inc., is a Corporation and therefore taxeddirectly. The US subsidiary suffers US federal tax, state tax and New York Citytax on its taxable net income. The UK subsidiary, Amphion Innovations UKLimited, is liable to UK Corporation tax at rates up to 30% on its taxableprofits and gains. The Group charge for the period can be reconciled to the profit per theconsolidated income statement as follows: US $ Profit before tax 3,485,100 _____ Tax at the Isle of Man income tax rate of 0% - Effect of different tax rates of subsidiariesoperating in other jurisdictions 76,000 _____ Current tax 76,000 _____ 5. Earnings per share The calculation of the basic and diluted earnings per share attributable to theordinary equity holders of the parent is based on the following data: Earnings Six months Six months ended ended Year ended 30 June 2007 30 June 2006 31 December 2006 US $ US $ US $Earnings for the purposes of basic and diluted earnings pershare (profit for the year attributable to equity holders of 3,409,100 1,807, 287 6,953,379the parent) _____ _____ _____ Number of shares Six months Six months ended ended Year ended 30 June 2007 30 June 2006 31 December 2006 Weighted average number of ordinary shares for the purposes of basic earnings per share 100,490,169 93,639,455 95,175,992 Effect of dilutive potential ordinary shares: Share options 1,969,197 600,000 1,357,725 _____ _____ _____ Weighted average number of ordinary shares for the purposes of diluted earnings per share 102,459,366 94,239,455 96,533,717 ______ ______ ______ 6. Investments At fair value through profit or loss 30 June 2007 Fair Value Cost Unrealised US $ US $ US $ Public companies:AXCESS International Inc. 3,329,064 2,409,521 919,543Beijing Med-Pharm Corporation 256,774 39,707 217,067 Private companies:Durham Scientific Crystals Ltd. 4,306,000 2,330,673 1,975,327Energy Trading International Inc. 320,000 320,000 -FireStar Software Inc. 4,300,034 4,430,784 (130,750)Motif BioSciences Inc. 12,983,405 4,652,298 8,331,107m2m Imaging Corp. 3,745,026 1,386,268 2,358,758Myconostica Limited 2,087,758 2,087,758 -WellGen, Inc. 6,600,000 4,561,958 2,038,042 37,928,061 22,218,967 15,709,094 ______ ______ ______ 30 June 2007 Fair Value Cost Unrealised US $ US $ US $ Stocks 28,525,000 16,218,204 12,306,796Promissory notes 2,094,036 2,094,036 -Warrants & options 7,309,025 3,906,727 3,402,298 ______ ______ ______ 37,928,061 22,218,967 15,709,094 ______ ______ ______ (continued from table above) 31 December 2006 Fair Value Cost Unrealised US $ US $ US $ Public companies:AXCESS International Inc. 2,686,210 2,409,521 276,689Beijing Med-Pharm Corporation 446,388 113,314 333,074 Private companies:Durham Scientific Crystals Ltd. 4,110,000 2,134,673 1,975,327Energy Trading International Inc. - - -FireStar Software Inc. 4,060,284 4,155,784 (95,500)Motif BioSciences Inc. 10,346,655 4,252,279 6,094,376m2m Imaging Corp. 3,736,026 1,386,268 2,349,758Myconostica Limited 1,929,000 1,929,000 -WellGen, Inc. 4,940,000 4,549,458 390,542 ______ ______ ______ 32,254,563 20,930,297 11,324,266 ______ ______ ______ 31 December 2006 Fair Value Cost Unrealised US $ US $ US $ Stocks 25,065,759 15,683,292 9,382,467Promissory notes 1,340,278 1,340,278 -Warrants & options 5,848,526 3,906,727 1,941,799 ______ ______ ______ 32,254,563 20,930,297 11,324,266 ______ ______ ______ At 30 June 2007 the two publicly traded companies, AXCESS International Inc. ("AXCESS") and Beijing Med-Pharm Corporation ("Beijing"), are valued based ontheir last quoted closing prices. In regard to the Group's valuation of AXCESSand Beijing, the Directors have assumed an orderly sale of the stock over anextended period of time and have therefore chosen not to apply a discount to thequoted market price. Myconostica Ltd. and Energy Trading International Inc. arevalued at cost. Durham Scientific Crystals Ltd, FireStar Software, Inc., MotifBioSciences Inc., m2m Imaging Corp, and WellGen Inc. are valued using the latestoffering price from recently executed financing transactions by those companies. Warrants for all companies are valued at the valuation price less the warrantexercise price plus a factor for the time value of the warrant. The time valuefactor is based on the premise that an in-the-money ten year warrant is worthhalf the exercise price. During the six months ended 30 June 2007, the Company sold 44,610 shares ofBeijing Med-Pharm Corporation for total proceeds of $360,240. The Group's ownership percentages of the investments are as follows: Fully-diluted ownership Country of incorporation % AXCESS International, Inc. United States of America 8.09Beijing Med-Pharm Corporation United States of America .08Durham Scientific Crystals Ltd. England & Wales 24.39Energy Trading International Inc. United States of America (1) .00FireStar Software, Inc. United States of America 10.75Motif BioSciences, Inc. United States of America 41.47m2m Imaging Corporation United States of America 23.03Myconostica Limited England & Wales 33.85WellGen, Inc. United States of America 16.88 (1) Amphion Innovations plc currently holds a convertible promissory note of$320,000. The convertible promissory note is convertible at Amphion's optioninto Series A Preferred shares and would represent approximately a 3% interest.In addition, upon final formation Amphion will own 15% of Common shares whichthey will receive for being founders of Energy Trading International Inc. 7. Share capital 30 June 2007 £ Authorised: 150,000,000 ordinary shares of 1p each 1,500,000 ______ £ US $Issued and fully paid: 110,110,224 ordinary shares of 1p each 1,101,102 2,009,671 ______ ______ During the six months ended 30 June 2007, the following changes occurred to theshare capital of the Company: On 22 January 2007, the Company issued 320,000 ordinary 1p shares at a premiumof 24p per share. On 29 June 2007, the Company issued 9,690,000 ordinary 1p shares at a premium of21p per share. 8. Share based payments In 2006 the Group established the 2006 Unapproved Share Option Plan and it wasadopted pursuant to a resolution passed on 8 June 2006. Under this plan, theCompensation Committee may grant share options to eligible employees, includingDirectors, to subscribe for ordinary shares of the Company. The number ofShares over which options may be granted under the Unapproved Plan cannot exceedten percent of the ordinary share capital of the Company in issue on a fullydiluted basis. The Plan will be administered by the Compensation Committee.The number of shares, terms, performance targets and exercise period will bedetermined by the Compensation Committee. During 2007, 1,100,000 options were issued under the "2006 Unapproved ShareOption Plan" and 136,472 options were issued that were not in the plan. 2007 Weighted average Number of exercise share options price (in £) Outstanding at beginning of period 1,357,725 0.25Granted during the period 1,236,472 0.21Forfeited during the period (625,000) 0.25 ______ ______Outstanding at the end of the period 1,969,197 0.22 ______ ______Exercisable at the end of the period 869,197 0.25 The options are recorded at fair value on the date of grant using theBlack-Scholes model. The inputs into the model are as follows: 2007 US$ Weighted average share price 0.43Weighted average exercise price 0.42Expected volatility 37%Expected life 5 - 10 yearsRisk free rate 4.81% - 5.25%Expected dividends - The Group recognized total costs of US$32,572 relating to equity-settled sharebased payment transactions in 2007. Of the total costs, $22,282 was chargedagainst equity as the share-based payments were directly attributable to theissue of the equity instruments. The remaining US$10,291 was expensed in theincome statement during the period. 9. Events after the balance sheet date From July through September 2007, the Company advanced US$244,000 under apromissory note from FireStar Software Inc. From July through September 2007, the Company advanced US$660,000 under apromissory note from Motif BioSciences Inc. In July and August 2007, the Company advanced US$345,000 under a promissory notefrom Energy Trading International, Inc. In July 2007, the Company advanced US$250,000 under a promissory note fromWellGen Inc. In August 2007, the Company purchased 6,250 Series C Preferred shares ofMyconostica, Ltd for £250,000. Of that amount, £80,000 was converted from apromissory note. In August 2007, the Company purchased 68,750 H Preferred shares of DurhamScientific Crystals Limited for £275,000. In August 2007, the Company advanced US$75,000 under a promissory note toAmphion Intellectual Property Development, Inc. 10. Related party transactions Transactions between the Company and its subsidiaries, which are related partiesof the Company, have been eliminated on consolidation and are not disclosed inthis note. Details of transactions between the Group and other related partnersare disclosed below. During the period, the Group paid miscellaneous expenses for Motif BioSciences,Inc. ("Motif") such as payroll and other office expenses. At 30 June 2007, theamount owed by Motif to the Group is US$5,687. A subsidiary of the Company has entered into an agreement with AXCESSInternational Inc. ("AXCESS") to provide advisory services. Richard Morgan andRobert Bertoldi, Directors of the Company, are also Directors of AXCESS.Amphion Innovations US Inc. will receive US$10,000 per month pursuant to thisagreement which renews on an annual basis unless terminated by either party.Amphion Innovations US Inc. received US$60,000 during the period ended 30 June2007. A subsidiary of the Company has entered into an agreement with Durham ScientificCrystals, Ltd. ("DSC") to provide advisory and consulting services. RichardMorgan, a Director of the Company, is also a Director of DSC. The monthly feeunder this agreement is the lesser of US$10,000 and 50% of the grosscompensation paid to directors and management of DSC in that month and expireson 21 September 2008. Amphion Innovations US Inc.'s fee for the period ended 30June 2007 was US$60,000 of which $10,000 was still due at 30 June 2007. AmphionInnovations US Inc. also received US$31,922 as a fund raising fee for the periodended 30 June 2007. A subsidiary of the Company has entered into an agreement with FireStar SoftwareInc. ("FireStar') to provide advisory and consulting services. Richard Morgan,a Director of the Company, is also a Director of FireStar. The annual fee underthis agreement is US$240,000 in addition to a $100,000 bonus fee and expires 1January 2008. The total of US$120,000 of the fee was suspended and notrecognized at 30 June 2007. The total of US$360,000 is still due from FireStarat 30 June 2007 which does not include the suspended amounts. A subsidiary of the Company provides advisory and consulting services to MotifBioSciences Inc. ("Motif"). Richard Morgan, a Director of the Company, is alsoa Director of Motif. The annual fee for the services is US$240,000 and thisagreement automatically renews for successive one year periods unless terminatedby either party. Amphion Innovations US Inc. received US$120,000 during theperiod ended 30 June 2007. Amphion Innovations US Inc. also received $42,000 asa fund raising fee during the period ended 30 June 2007. A subsidiary of the Company has entered into an agreement with MyconosticaLimited ("Myconostica") to provide advisory and consulting services. RichardMorgan, a Director of the Company, is also a Director of Myconostica. Themonthly fee for the services is £4,500 and expires 1 December 2008. Thesubsidiary's fee for the period ended 30 June 2007 is £27,000. A subsidiary of the Company has entered into an agreement with m2m Imaging Corp.("m2m") to provide advisory and consulting services. Robert Bertoldi, aDirector of the Company, is also a Director of m2m. The annual fee under thisagreement is US$180,000, in addition to receiving stock options to purchasecommon stock of m2m. The agreement expires on 31 December 2007. AmphionInnovations US Inc received US$90,000 during the period ended 30 June 2007. A subsidiary of the Company has entered into an agreement with WellGen Inc. ("WellGen") to provide advisory and consulting services. Richard Morgan, aDirector of the Company, is also a Director of WellGen. The fee under thisagreement is US$45,000 per quarter for the first two quarters in 2007 andthereafter, US$60,000 per quarter. The agreement renews annually for subsequenttwelve-month periods at an annual rate of US$240,000. Amphion Innovations USInc. received $90,000 during the period ended 30 June 2007. AmphionInnovations US Inc. also received $36,875 as a fund raising fee during theperiod ended 30 June 2007. The Directors' direct ownership in the Partner Companies is as follows: Fully diluted % owned byInvestment company directors AXCESS International Inc. 5.09%Beijing Med-Pharm Corporation 0.21%Durham Scientific Crystals Ltd. .96%FireStar Software, Inc. 1.50%Motif BioSciences, Inc. 3.94%WellGen, Inc. 5.32% This information is provided by RNS The company news service from the London Stock Exchange