28 Aug 2013 09:40
OXFORD ADVANCED SURFACES GROUP PLC
(AIM: OXA)
Half Year results for the period ended 30 June 2013 and strategic update
Oxford Advanced Surfaces Group ("OAS") the AIM listed technology developer targeting engineered materials and surface modification applications in the automotive, aerospace, communications and renewable energy markets announces its half year results for the period ended 30 June 2013 and also an update to strategic direction.
Highlights:
· Group has continued to make good technical and commercial progress.
· Costs remain tightly controlled despite an increase in development activity. The half year loss before tax stands at £932,000.
· The Group retains a strong balance sheet with cash balances of £3.46m at 30 June 2013.
· A number of applications utilising OntoTM are currently being developed with a number of global corporations who are leaders in the adhesion, renewable energy, automotive and aerospace sectors.
· Following a strategic review, further investment in the VISARCTM antireflection coating technology is to be suspended due to market and competitive changes. Additional resource will be focussed on our highly differentiated and proprietary OntoTM technology platform, for which we believe there is significant market potential.
· Targeted annual cost savings of £0.8m by 2014 driven by headcount reduction, merging of development groups and reduction in support costs.
· Investigation of adjacent and synergistic technologies aimed at strengthening the OAS technology portfolio, including additional uses of our MPS nanoparticles.
Adrian Meldrum, CEO said:
"During the first half of 2013 we have seen strong interest in our OntoTM technology across a number of targeted global industries and progress is promising. Our OntoTM strategy and development plans will continue with our primary focus on adhesion promotion applications within our targeted markets.
The decision to suspend development on our VISARCTM technology platform will enable us to increase investment in our proprietary OntoTM technology where we believe there is strong market potential. This growth opportunity is being driven by an increased use of plastics and polymers, with surface functionalisation and adhesion requirements, in automotive, aerospace, communications and renewable energy markets.
We believe these changes will strengthen OAS's position and accelerate delivery in our development and customer engagement plans in areas where we hold differentiating and enabling technology."
28 August 2013
Enquiries:
Oxford Advances Surfaces Group Plc
www.oxfordsurfaces.com
Adrian Meldrum, Chief Executive Officer
Philip Spinks, Chief Financial Officer T: 01865 854 807
W H Ireland Limited
www.wh-ireland.co.uk
John Wakefield T: 0117 945 3471
REVIEW OF THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER
The Group has continued to make good technical and commercial progress in the six months to 30 June 2013 in addition to keeping a tight control on our cash spend. Our balance sheet remains strong and we have £3.46m to support our continued development and commercialisation.
During the period we took the positive results of our work on OntoTM to a number of companies operating in our identified target markets where the unique adhesion promotion offered by OntoTM has the potential to yield major benefits to end users. We are now testing OntoTM variants with global market leaders in the automotive, aerospace, communications and renewable energy sectors. We anticipate that these development programmes will move towards commercialisation this year.
Following a strategic review by the Board in August, we have decided to increase our focus on commercialisation of our OntoTM technology and to suspend further VISARCTM investment at the present time. This reflects a strong belief in our proprietary OntoTM technology and a need to focus our resources in differentiated technology areas.
Strategic Review
The strategic review and resultant repositioning provides OAS with a long term business proposition based on a clearly differentiated and disruptive technology offering, together with a reduced cash burn and strong cash position.
The strategic decisions made as part of this review are as follows:
· Increased investment in our proprietary OntoTM technology development platform for adhesion promotion and other surface functionalisation applications
· Suspension of investment in the development of the VISARCTM antireflection coating offering
· Significant reduction in annual development spend with targeted costs savings of £0.8m driven by headcount reduction, simplification of the business structure, merging of development groups and reduction in support function costs
· Investigation of adjacent and synergistic technology offerings aimed at strengthening the OAS technology portfolio, including our MPS nanoparticle offering
We believe these changes will result in OAS being in a strong position to accelerate and deliver on our development and customer engagement plans in areas where we hold differentiating and enabling technology.
The individual technology offerings along with the rationale for the changes are detailed below.
OntoTM Technology Offering
Our OntoTM strategy and development plans are primarily focussed on adhesion promotion and surface modification applications. We are seeing increasing market demand for new and novel lightweight polymer materials and associated adhesion promoters, driven by energy efficiency and regulatory changes in automotive, aerospace, communications and renewable energy. OAS's key intellectual property in this area is an important strategic factor supporting development.
A number of key customer programmes are progressing well across multiple applications and we aim to develop these to commercialisation in late 2013. Short term technical milestones will need to be met to allow this to happen, along with further customer developments as we strengthen the focus on our OntoTM technology platform.
VISARCTM Technology Offering
Following the decision to suspend development on our VISARCTM technology platform, the basis of which is a mesoporous silica (MPS) nanoparticle, we will undertake a full evaluation of how best to generate value from our particle manufacture know-how and the intellectual property portfolio we have established for this technology.
In addition we believe that our nanoparticle IP and know-how also offers significant value in non-ARC applications which we will endeavour to exploit.
Outlook
The OAS board and management team believe that the strategic review, repositioning and associated changes put OAS in the best position to drive forward with development and customer engagement plans in order to maximise shareholder value. Increased focus on differentiated and proprietary technology offerings will drive our ability to succeed. Strong market pull and emerging applications will provide significant commercial opportunities for the company when combined with focussed internal technology execution.
We would like to take this opportunity to thank our shareholders for their continued support and patience. We would also like to thank our committed staff who continue to work tirelessly to progress our technology to commercial success.
Adrian Meldrum
Chief Executive Officer
Dr Peter Rowley
Non-executive Chairman
28 August 2013
Company Number: 5845469
INTERIM CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME
Unaudited interim condensed consolidated financial statements to 30 June 2013
Six months to 30 June 2013 | Six months to 30 June 2012 | Year to 31 December 2012 | ||
Unaudited | Unaudited | Audited | ||
£'000 | £'000 | £'000 | ||
CONTINUING OPERATIONS | ||||
Revenue | 3 | 69 | 86 | |
Cost of sales | (90) | (89) | (169) | |
GROSS PROFIT | (87) | (20) | (83) | |
Research and development costs | (412) | (474) | (909) | |
Other administrative costs | (417) | (380) | (803) | |
Share based payments | (60) | (1) | (27) | |
Total administrative costs | (889) | (855) | (1,739) | |
LOSS FROM OPERATIONS | (976) | (875) | (1,822) | |
Finance income | 44 | 67 | 126 | |
LOSS BEFORE TAX | (932) | (808) | (1,696) | |
Income tax credit | 75 | 68 | 159 | |
LOSS FOR THE YEAR AND TOTAL COMPREHENSIVE LOSS FOR THE YEAR | (857) | (740) | (1,537) | |
Loss per share attributable to the equity holders of the company: Total and continuing: | ||||
- Basic and diluted (pence) | (0.44) | (0.38) | (0.79) | |
There were no items of other comprehensive income for the periods covered by these statements and therefore the loss for the year is also the total comprehensive loss for the year net of tax.
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited interim condensed consolidated financial statements to 30 June 2013
30 June 2013 | 30 June 2012 | 31 December 2012 | ||||
Unaudited | Unaudited | Audited | ||||
£'000 | £'000 | £'000 | ||||
ASSETS | ||||||
NON-CURRENT ASSETS | ||||||
Intangible assets | 428 | 346 | 396 | |||
Plant and equipment | 178 | 227 | 191 | |||
606 | 573 | 587 | ||||
CURRENT ASSETS | ||||||
Stocks | - | 9 | - | |||
Trade and other receivables | 327 | 420 | 295 | |||
Short-term investments and cash and cash equivalents | 3,464 | 4,993 | 4,304 | |||
3,791 | 5,422 | 4,599 | ||||
LIABILITIES | ||||||
CURRENT LIABILITIES | ||||||
Trade and other payables | 153 | 185 | 145 | |||
NET CURRENT ASSETS | 3,638 | 5,237 | 4,454 | |||
LIABILITIES | ||||||
NON-CURRENT LIABILITIES | ||||||
Provisions | 10 | 10 | 10 | |||
NET ASSETS | 4,234 | 5,800 | 5,031 | |||
SHAREHOLDERS EQUITY | ||||||
Called up share capital | 1,977 | 1,957 | 1,977 | |||
Share premium | 10,603 | 10,423 | 10,603 | |||
Merger reserve | 6,369 | 6,369 | 6,369 | |||
Reverse acquisition reserve | (6,831) | (6,831) | (6,831) | |||
Retained earnings | (8,214) | (7,017) | (7,365) | |||
Share based payments reserve | 330 | 899 | 278 | |||
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY | 4,234 | 5,800 | 5,031 |
INTERIM CONSOLIDATED CASH FLOW STATEMENT
Unaudited interim condensed consolidated financial statements to 30 June 2013
Six months to 30 June 2013 | Six months to 30 June 2012 | Year to 31 December 2012 | ||||
Unaudited | Unaudited | Audited | ||||
£'000s | £'000s | £'000s | ||||
Loss before tax | (932) | (808) | (1,696) | |||
Depreciation and amortisation charges | 64 | 72 | 141 | |||
(Profit)/Loss on disposal of property, plant and equipment | (1) | 1 | 1 | |||
Share based payment expense | 60 | 1 | 27 | |||
Finance income | (44) | (67) | (126) | |||
(853) | (801) | (1,653) | ||||
(Increase)/Decrease in stocks | - | (8) | 1 | |||
(Increase)/Decrease in trade and other receivables | (24) | (15) | 29 | |||
Increase in trade and other payables | 8 | 8 | (32) | |||
Cash outflow from operations | (869) | (816) | (1,655) | |||
Income tax received | 49 | - | 145 | |||
Net cash outflow from operating activities | (820) | (816) | (1,510) | |||
Cash flows from investing activities | ||||||
Purchase of intangible assets | (48) | (20) | (84) | |||
Purchase of property, plant and equipment | (35) | (40) | (59) | |||
Decrease in cash placed on long-term deposit | 1,680 | 735 | 1,570 | |||
Interest received | 63 | 64 | 150 | |||
Net cash inflow from investing activities | 1,660 | 739 | 1,577 | |||
Net cash from financing activities | ||||||
Share issue | - | - | 2 | |||
Net cash inflow from financing activities | - | - | 2 | |||
Increase/(Decrease) in cash and cash equivalents | 840 | (77) | 69 | |||
Cash and cash equivalents at beginning of year | 624 | 555 | 555 | |||
| ||||||
Cash and cash equivalents at end of year | 1,464 | 478 | 624 | |||
Short term investments | 2,000 | 4,515 | 3,680 | |||
Short-term investments and cash and cash equivalents | 3,464 | 4,993 | 4,304 | |||
Under IAS 7 cash held on long-term deposits that cannot readily be converted into cash has been classified as short term investments. These investments range between three and 12 months.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A copy of these interim condensed consolidated financial statements will be available on the Group's website www.oxfordsurfaces.com.