Last checked at 23 Apr 2009 07:00
Avacta Group plc
Interim results for the six months ended 31 January 2009
Avacta Group plc ("Avacta" or the "Company"), the company providing innovative, high value technologies and services to the pharmaceutical and diagnostics markets, announces its interim results for the six months ended 31 January 2009.
KEY POINTS
Completion of development of lead product, Optim
Successful integration of Oxford Medical Diagnostics - first revenues from a commercialisation deal for toxic gas detection within the petrochemical sector recognised
Second product, Midas, on target for launch later in the year
Loss for the period was £972,000 (2008 : loss £542,000)
Loss per share of 0.12p (2008 : loss 0.06p)
Cash at bank of £1.4m (2008 : £1.9m)
Acquisition of Theragenetics Limited completed on 15 January 2009
Acquisition of YorkTest Veterinary Services Limited completed on 9 February 2009
Acquisition of Curidium Medica plc completed on 6 March 2009
The Company's interim results are available on its website www.avacta.com
Alastair Smith, Chief Executive Officer, commented:
"Avacta is in the transition period from a research and development phase toward being a revenue generating, high value products and services company. In almost all regards it has met our ambitious expectations within the short period since our formation and we believe that in our field, our expertise is world leading. We look forward to the remainder of the year with eagerness and to updating you as we progress."
23 April 2009
Enquiries:
| Avacta Group plc | Tel: 0870 835 4367 |
| Alastair Smith, Chief Executive Officer |
|
| Tim Sykes, Chief Financial Officer |
|
| Haggie Financial LLP | Tel: 020 7417 8989 |
| Nicholas Nelson / Kathy Boate | Nicholas.nelson@haggie.co.uk |
| Daniel Stewart & Company plc | Tel: 020 7776 6550 |
| Simon Leathers / Charlotte Stranner |
|
| Novum Securities Limited | Tel: 020 7562 4700 |
| Henry Turcan |
|
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S REPORT
We are delighted to report the interim results for the six month period ended 31 January 2009.
Overview
We are extremely pleased with the progress made during the first six months of the financial year. During this time we completed the acquisition of Theragenetics Limited and, between the end of the reporting period and the date of this report, we also completed the acquisitions of YorkTest Veterinary Services Limited and Curidium Medica plc. On the product development front, we launched a new biopharmaceutical detection service and will shortly announce the completion and launch of the Company's flagship product Optim, with another product, MIDAS, nearing the final stages of development.
The Company has delivered on targets as set out at the time of its admission to AIM in 2006 through technological development and commercialisation, and through an acquisitive strategy has succeeded in increasing Avacta's IP, expertise, scope and presence in the clinical diagnostics market - all resulting in increased value for shareholders.
Technology
It has been a strongly progressive period for the Company, with numerous technological milestones achieved along with the delivery of a number of new product prototypes targeting a variety of fields. We are shortly to announce the commercial launch of our flagship product Optim.
Optim is a high value specialised analytical instrument which will provide drug developers with vital information at an early stage of the drug development process and is designed to reduce the risk of late stage failure and help to bring successful drugs to market more quickly and more cheaply and with optimised properties. Optim is unique in its ability to provide multiple different measurements which are carried out simultaneously on very small sample volumes, automatically handled within Avacta's own design of disposable micro-fluidic chips.
Optim has been designed to appeal to a wide range of end users avoiding the need for expert operators and ensuring that it can be adopted by a broad range of potential customers across the sector. Furthermore, Optim augments the Company's analytical services business which will work with Optim customers providing on-line access to Avacta's scientific team to assist in data interpretation, when required. The Company intends to go to market directly with Optim, believing that its brand and reach in the biopharmaceutical/biotech market is sufficiently established.
Having the imminent launch of Optim is an important turning point for Avacta, this being the lead product in the Company's portfolio and delivering on objectives set out at the time of admission to AIM. By working with the established networks of Avacta's analytical services division and customer base, it is hoped that Optim will see strong sales demand as well as further raise the Company's profile. Several further analytical products that will join the Optim product range in due course are currently in development or in the design phase.
MIDAS is the Company's rapid immunodiagnostic device prototype aimed at detecting disease markers in biological fluids such as blood and urine. MIDAS will be focused initially on the veterinary diagnostics market and is the natural application of Avacta's core analysis technologies and commercialisation skills in the diagnostics sector. As the route to market is easier for veterinary products, this will allow the Company to generate revenues more quickly, while continuing to develop and adapt the tests for human diagnostics use. As announced post period end, Avacta acquired YorkTest Veterinary Services Limited with a view to developing MIDAS and launching the product later in the year and has secured an extensive network of potential clients throughout the EU and the UK with the acquisition.
Avacta has delivered two gas detection prototypes based on the infra-red absorption technology acquired with Oxford Medical Diagnostics in 2008 to its commercial partners. Both prototype devices, one to quantify moisture content in complex gas mixtures and the other to detect the presence of a toxic gas, have outperformed the technical specifications set by the commercial partners and the directors anticipate that product engineering will proceed with these partners during the rest of 2009 leading to product launches in 2010.
Clinical gas analysis collaboration : Currently clinical headspace gas analysis to detect bacterial infections requires large and very expensive centralised equipment. Avacta's infra-red gas detection technology has the potential to replace these with a low cost headspace analysis product and, to this end Avacta has signed a collaboration agreement with V&F, an Austrian producer of high quality mass spectrometers. This collaboration agreement concerns a programme of research and development to identify key headspace gases for selected bacterial infections and to determine the performance requirements for such a product with a view to a full co-development agreement being signed.
Analytical services
Our analytical services business continues to deliver high quality contract analysis to a range of international clients creating market awareness of and a sales channel for Optim and the future pipeline of laboratory analytical instruments. Despite the economic downturn which has slowed revenues against the prior period, we continue to see strong interest from the biopharmaceutical sector for its expert contract services and in the specific area of biophysical analysis.
Acquisitions
Theragenetics Limited ("Theragenetics")
In January 2009 Avacta completed the acquisition of Theragenetics, a personalised medicine diagnostics company which is developing tests to improve the treatment of patients with central nervous system ("CNS") disorders such as schizophrenia and depression. A principal objective of personalised medicine is to identify which patients will respond more effectively to any given drug treatment. In this way the most appropriate drugs can be administered leading to improved patient outcomes. Drugs that previously may not have been taken to market by pharmaceutical companies because they were not effective for the majority of patients can then be commercialised for use with specific patient sub-groups. Mental illness, for example, represents an area that would benefit greatly from personalised medicine both in terms of diagnostics and treatment.
Curidium Medica plc ("Curidium")
In March 2009, Avacta completed the acquisition of Curidium that operates in the clinical diagnostics field, developing personalised tests for CNS diseases. Curidium and Theragenetics operate in the same field and with complementary technology and expertise. With the combined IP, expertise and technology of these two companies Avacta has gained a position within the personalised CNS testing and diagnostics field. Integration of these two companies into Avacta is currently underway.
YorkTest Veterinary Services Limited ("YTVS")
In February 2009 Avacta completed the acquisition of YTVS, a company that provides a complete allergy testing service to veterinary practices in the UK, EU and worldwide. The technology enables the analysis of blood samples from dogs, cats and horses to assist in the diagnosis and treatment of adverse reactions to foods, pollens, insects and moulds. YTVS has established itself as a leading animal allergy testing provider by maintaining rigorous quality control and high levels of customer support. It now provides its services to around 55% of UK veterinary clinics and has distributors and partners in the EU, Middle East and Far East. YTVS provides an important marketing and developmental synergy with Avacta's benchtop analytical device, Midas, in the final stage of completion.
Financial overview
Revenues remained flat at £203,000 for the six month period (2008 : £225,000). There is no particular seasonality to the business. The operating loss before non-recurring items and share based payment charges was £1,041,000 (2008 : £593,000).
As at 31 January 2009 the Group had net cash of £1.4m.
The Company has made three separate acquisitions since its last report, Theragenetics, YTVS and Curidium. The acquisition of Theragenetics is recognised in the financial information included within this report. The acquisitions of YTVS and Curidium completed after 31 January 2009 and therefore will be recognised within the annual report and accounts to be announced during October 2009.
The consideration paid for the entire issued ordinary share capital of Theragenetics was 18,622,912 Ordinary shares of Avacta Group plc, a loan note of approximately £409,000 convertible into 13,644,055 Ordinary shares and £23,000 cash. Further deferred consideration becomes payable upon the agreement of the net asset value of Theragenetics. The maximum amount payable in addition to that above is 20,336,481 Ordinary shares and a loan note of approximately £440,000 convertible into 14,663,519 Ordinary shares.
The consideration paid for the entire issued ordinary share capital of YTVS was £825,000 in cash.
The consideration paid for the entire issued ordinary share capital of Curidium was approximately 275,000,000 ordinary shares of Avacta.
Outlook
Avacta is in the transition period from a research and development phase toward being a revenue generating, high value products and services company. In almost all regards it has met our ambitious expectations within the short period since our formation and we believe that in our field, our expertise is world leading. We look forward to the remainder of the year with eagerness and to updating you as we progress.
Gwyn Humphreys Alastair Smith
Chairman Chief Executive Officer
Consolidated income statement
for the six months ending 31 January 2009
|
| Unaudited | Unaudited | Audited | |
| 6 months to 31 Jan 2009 | 6 months to 31 Jan 2008 | Year ended 31 July 2008 | ||
| £000 | £000 | £000 | ||
|
| ||||
| Revenue | 203 | 225 | 466 | |
| Operating costs | (1,270) | (843) | (2,118) | |
| ------------- | ------------- | ------------- | ||
| Operating loss before non recurring items and share based payment charges | (1,041) | (593) | (1,529) | |
| Share based payment charges | (26) | (25) | (123) | |
| ------------- | ------------- | ------------- | ||
| Total operating loss | (1,067) | (618) | (1,652) | |
| Finance income | 10 | 57 | 83 | |
| Finance expenses | (2) | (2) | (4) | |
| ------------- | ------------- | ------------- | ||
| Loss before taxation | (1,059) | (563) | (1,573) | |
| Taxation | 87 | 21 | 105 | |
| ------------- | ------------- | ------------- | ||
| Loss for the period | (972) | (542) | (1,468) | |
| ------------- | ------------- | ------------- | ||
| Loss per ordinary share : | ||||
| - Basic and diluted | (0.12p) | (0.07p) | (0.18p) | |
| ------------- | ------------- | ------------- |
There were no recognised gains or losses in the period other than the profit for the period and therefore no statement of recognised income and expenses is presented.
Consolidated statement of changes in equity
as at 31 January 2009
| Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | |
| Share capital | Share premium | Other reserve | Capital reserve | Retained earnings | |
| £000 | £000 | £000 | £000 | £000 | |
|
| |||||
| At 1 August 2007 | 856 | 4,882 | (1,729) | - | (1,380) |
| Result for the period | - | - | - | - | (542) |
| Shares issued | 22 | 930 | - | - | - |
| Shares to be issued as consideration for business combinations | - | - | - | 2,633 | - |
| Share based payment charges | - | - | - | - | 25 |
| ------------- | ------------- | ------------- | ------------- | ------------- | |
| At 31 January 2008 | 878 | 5,812 | (1,729) | 2,633 | (1,897) |
| Result for the period | - | - | - | - | (926) |
| Shares issued | 22 | 712 | - | (734) | - |
| Share based payment charges | - | - | - | - | 98 |
| ------------- | ------------- | ------------- | ------------- | ------------- | |
| At 1 August 2008 | 900 | 6,524 | (1,729) | 1,899 | (2,725) |
| Result for the period | - | - | - | - | (972) |
| Shares issued | 20 | 307 | - | - | - |
| Shares to be issued in respect of the acquisition of TheraGenetics Limited | - | - | - | 487 | - |
| Share based payment charges | - | - | - | - | 26 |
| ------------- | ------------- | ------------- | ------------- | ------------- | |
| At 31 January 2009 | 920 | 6,831 | (1,729) | 2,386 | (3,671) |
| ------------- | ------------- | ------------- | ------------- | ------------- |
Consolidated balance sheet
as at 31 January 2009
| Unaudited | Unaudited | Unaudited | ||
| As at 31 Jan 2009 | As at 31 Jan 2008 | As at 31 July 2008 | ||
| £000 | £000 | £000 | ||
| Non-current assets | ||||
| Property, plant & equipment | 300 | 249 | 290 | |
| Intangible assets | 3,920 | 3,545 | 3,581 | |
| ------------- | ------------- | ------------- | ||
| 4,220 | 3,794 | 3,871 | ||
| ------------- | ------------- | ------------- | ||
| Current assets | ||||
| Trade and other receivables | 324 | 331 | 92 | |
| Income taxes | - | - | 84 | |
| Cash and cash equivalents | 1,403 | 1,925 | 1,097 | |
| ------------- | ------------- | ------------- | ||
| 1,727 | 2,256 | 1,273 | ||
| ------------- | ------------- | ------------- | ||
| Total assets | 5,947 | 6,050 | 5,144 | |
| ------------- | ------------- | ------------- | ||
| Current liabilities | ||||
| Trade and other payables | (925) | (306) | (234) | |
| Convertible loan notes | (250) | - | - | |
| Hire purchase agreements | (12) | (12) | (11) | |
| ------------- | ------------- | ------------- | ||
| (1,187) | (318) | (245) | ||
| ------------- | ------------- | ------------- | ||
| Non-current liabilities | ||||
| Hire purchase agreements | (23) | (35) | (30) | |
| ------------- | ------------- | ------------- | ||
| (23) | (35) | (30) | ||
| ------------- | ------------- | ------------- | ||
| Total liabilities | (1,210) | (353) | (275) | |
| ------------- | ------------- | ------------- | ||
| Net assets | 4,737 | 5,697 | 4,869 | |
| ------------- | ------------- | ------------- | ||
| Equity attributable to equity holders of the Company | ||||
| Called up share capital | 920 | 878 | 900 | |
| Share premium account | 6,831 | 5,812 | 6,524 | |
| Other reserve | (1,729) | (1,729) | (1,729) | |
| Capital reserve | 2,386 | 2,633 | 1,899 | |
| Retained earnings | (3,671) | (1,897) | (2,725) | |
| ------------- | ------------- | ------------- | ||
| Total equity | 4,737 | 5,697 | 4,869 | |
| ------------- | ------------- | ------------- |
Consolidated cash flow statement
for the six months ending 31 January 2008
| Unaudited | Unaudited | Unaudited | ||
| 6 months to 31 Jan 2009 | 6 months to 31 Jan 2008 | Year ended 31 July 2008 | ||
| Note | £000 | £000 | £000 | |
| Operating activities | ||||
| Loss before tax | (1,059) | (563) | (1,573) | |
| Depreciation | 37 | 19 | 57 | |
| Net finance income | (8) | (55) | (79) | |
| Share based payment charges | 26 | 25 | 123 | |
| ------------- | ------------- | ------------- | ||
| Operating cash outflow before changes in working capital | (1,004) | (574) | (1,472) | |
| Movement in trade and other receivables | (204) | (88) | 78 | |
| Movement in trade and other payables | 367 | 113 | 82 | |
| ------------- | ------------- | ------------- | ||
| Operating cash outflow from operations | (841) | (549) | (1,312) | |
| Interest received | 10 | 57 | 83 | |
| Interest paid | (2) | (2) | (4) | |
| Income tax received /(paid) | 87 | 21 | 21 | |
| ------------- | ------------- | ------------- | ||
| Net cash flow from operating activities | (746) | (473) | (1,212) | |
| ------------- | ------------- | ------------- | ||
| Investing activities | ||||
| Purchase of plant and equipment | (40) | (119) | (138) | |
| Acquisition of subsidiaries | 2 | 1,098 | (4) | (69) |
| ------------- | ------------- | ------------- | ||
| Net cash flow from investing activities | 1,058 | (123) | (207) | |
| ------------- | ------------- | ------------- | ||
| Financing activities | ||||
| Payments to acquire tangible fixed assets under finance lease agreements | (6) | (6) | (11) | |
| ------------- | ------------- | ------------- | ||
| Net cash flow from financing activities | (6) | (6) | (11) | |
| ------------- | ------------- | ------------- | ||
| Net decrease in cash and cash equivalents | 306 | (602) | (1,430) | |
| Cash and cash equivalents at the beginning of the period | 1,097 | 2,527 | 2,527 | |
| ------------- | ------------- | ------------- | ||
| Cash and cash equivalents at the end of the period | 1,403 | 1,925 | 1,097 | |
| ------------- | ------------- | ------------- |
Notes to the half yearly financial information
1. Basis of preparation
This consolidated half-yearly financial information for the half year ended 31 January 2009 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The half-yearly consolidated financial report should be read in conjunction with the annual financial statements for the year ended 31 July 2008, which have been prepared in accordance with IFRS as adopted by the European Union.
The financial information contained in the interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 July 2008 have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement made under Section 237(2) or Section 237(3) of the Companies Act 1985.
There were no recognised gains or losses in the six month period ended 31 January 2009 other than the profit for the period and therefore no statement of recognised income and expenses is presented.
Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 July 2008, as described in those annual financial statements.
2. Acquisition
On 15 January 2009, the Company acquired the entire issued ordinary share capital of Theragenetics by way of a share for share exchange with approximately £23,000 of cash. The Company allotted and issued 18,922,612 new ordinary shares of 0.1p ("Ordinary Shares") fully paid to the shareholders of Theragenetics and issued a loan note of approximately £409,000 convertible into 13,644,055 new Ordinary Shares. Further, the Company agreed to allot upto a further 20,336,481 new Ordinary Shares to the shareholders of Theragenetics and a second loan note of approximately £440,000 convertible into 14,663,519 new Ordinary Shares, deferred subject to the agreement of the completion net asset value of Theragenetics. The assets and liabilities of Theragenetics have been consolidated at their book values to Avacta as set out below.
| £000 | ||||
| Tangible fixed assets | 7 | |||
| Trade receivables | 27 | |||
| Cash at bank and in hand | 1,121 | |||
| Creditors | (395) | |||
| ------------- | ||||
| Net assets acquired | 760 | |||
| ------------- | ||||
| Purchase consideration | ||||
| Fair value of shares issued and to be issued | 487 | |||
| Fair value of convertible loan notes issued | 250 | |||
| Cash | 23 | |||
| ------------- | ||||
| 760 | ||||
| ------------- |