YGEN.L Regulatory News (YGEN)

27 Sep 2006 10:30

Original Investments PLC27 September 2006 Original Investments PLC (Formerly BioProjects International PLC) ("Original Investments" or the "Company") Financial results for the year ended 31 March 2006 Chairman's Statement______________________________________________________________________________ I am pleased to report on the financial results of Original Investments (OI orthe Company) for the year ended 31 March 2006 and to announce that we havereached an important milestone in our history. You will recall that at the last AGM shareholders approved the change in theCompany's investment policy and the change of name from BioProjectsInternational to Original Investments. Neither of our existing investments, TheAcrobot Company (Acrobot) or ViaLogy Corp (ViaLogy), were in the business ofbiotechnology. We wanted a company name that more accurately reflected ourinvestments and our expanded investment policy. We spent considerable time at the beginning of the year doing due diligence on anumber of investment opportunities in various sectors but it soon becameapparent that the greatest potential for shareholder value lay with ViaLogy, abusiness in which we had already made our largest investment. You may rememberthat in last year's Chairman's Statement I foreshadowed this possibility. Wehave therefore worked diligently with our fellow directors and ViaLogy'smanagement to guide ViaLogy's progress and, with our co-investors Aeris Holdingsand others, we have continued to provide financial support to ViaLogy. As you will see from the admission document being sent to shareholders today,the board of directors of OI is now recommending that OI purchases the remainingshare capital of ViaLogy, by way of a merger of ViaLogy into a wholly ownedsubsidiary of the Company. OI already owns 43.76% of ViaLogy (on a fully dilutedbasis). The consideration for the acquisition will be the issue to the ViaLogyshareholders (other than OI) of 92,034,214 ordinary shares in the capital of theCompany. The acquisition is subject to the approval of OI shareholders at theAnnual General Meeting. The purpose of the Admission Document is to explain the proposal and to sharewith you the reasons the Directors believe it is in the best interests of theCompany. ViaLogy Corp In the Admission Document you will find a detailed description of ViaLogy andits activities. Since the beginning of this year a team of ViaLogy scientists, led by technicaldirector Dr Sandeep Gulati, has been working with Cisco to incorporate ViaLogytechnology into a number of new Cisco products. For commercial and securityreasons much of the detail of their work must remain confidential but we haveCisco's permission to reveal some general information concerning the plannedapplications. It is a fascinating array - border surveillance, homelandsecurity, early detection of air and water contamination, instantinter-communication between emergency authorities. In addition, ViaLogy is working with other companies to integrate its technologyfor their purposes. It has a development contract with Evolution Petroleum, anAmerican oil exploration company, adapting the technology to improve the processfor the detection of oil and gas deposits. And last month ViaLogy signed anagreement with Boeing related to missile seeker development. These strong commercial beginnings are the result of five years' developmentwork to refine the technology, which has its origins in Caltech/NASA's JetPropulsion Laboratory. The technology evolved from the need to identify andunderstand information contained in radar signals sent from space but so weakthat they were blurred by background 'noise'. Lateral thinking and commercialco-operation has honed the technology so that it now has the potential to beapplied in a variety of different industries. The Acrobot Company Limited Acrobot develops precision surgical systems for minimally invasive, boneconserving, orthopaedic surgery. During the year it has made steady progress inconverting its technology, which has its origins in the laboratories of ImperialCollege, London, to a firm commercial proposition. In this task it has benefitedfrom a strong partnership with Corin, the London Stock Exchange-quotedhealthcare company which is a world leader in the field of hip implants. Thecollaboration has resulted in the successful adaptation of Acrobot's patentedNavigation device to suit Corin's Cormet implants. A commercial agreementbetween the two organisations has now been signed and Corin has furthervalidated its belief in Acrobot by joining OI and Imperial College assignificant shareholders in Acrobot. In these circumstances the OI boardbelieves that our investment in Acrobot will increase in value in the mediumterm. Finances & Performance OI considers the key performance indicators of it's business to be profits onsale of investments and the book value of investments. The Company's activities during the year have shown a net loss for the year of£71,445. This compares with the previous year's £593,306 profit, which wasachieved mainly from the sale of our holding in Acolyte Biomedica. Investment book value stands at £4.7m compared to £3.5m in the prior year. Thisincrease is a result of capitalization of loans to ViaLogy into preferenceshares. Changing Faces During the year we said goodbye to Mark Jones, company secretary and financialcontroller of the Company since its formation. Mark has joined a major bank inhis home city, Edinburgh. His successor is Mark Collingbourne, a charteredaccountant who, in anticipation of the acquisition of ViaLogy, was appointed asChief Finance Officer of ViaLogy. The acquisition of ViaLogy will see changes to the board of directors of theCompany. At the Annual General Meeting I intend to relinquish my position asChairman and to resign from the board. I am now 77 and make a point of avoidingoverseas travel as much as possible. ViaLogy's headquarters are in Californiaand its products have international appeal. Following the acquisition of ViaLogythe Company will benefit from having an executive chairman who is prepared totravel whenever necessary. As was announced on 11 September 2006, Dr. JohnBroome, who is 75 and lives on the east coast of America, resigned as a directorof Original Investments and ViaLogy. I'm pleased to say that the Company willcontinue to benefit from his wide experience because he has agreed to joinViaLogy's Scientific Advisory Board. Two non-executive directors of OI will also be resigning. Dr. Richard Dixey andJulian Viggars have been staunch supporters of the Company since its formationand I thank them for their help. Like me, they recognize the need for morespecialist direction now that the Company is to become an international tradingentity. I should emphasise that I have no present intention of selling my personalshareholding in the Company. On the contrary I have every confidence in the newteam and believe their efforts will be very rewarding. I am happy to hand overthe Chairman's reins to my good friend Terry Bond who has to a large degreemasterminded the acquisition of ViaLogy. I wish him, his colleagues andshareholders every success in the future. Jim Slater Chairman27 September 2006 Original Investments PLC (Formerly BioProjects International PLC) Profit and Loss Account for the year ended 31 March 2006 Note 2006 2005 £ £ Turnover 2 6,852 19,110Administrative expenses 264,511 271,035 ________ ________ Operating loss 5 (257,659) (251,925)Profit on disposal of fixed asset - 746,117investments ________ ________ (Loss)/Profit on ordinary (257,659) 494,192activities before interest andother incomeInterest receivable 186,214 99,114 ________ ________ (Loss)/Profit on ordinary 6 (71,445) 593,306activities before and aftertaxation ________ ________ Earnings per shareBasic earnings per share 7 (0.023)p 0.21p ________ ________ Diluted earnings per share 7 (0.023)p 0.19p ________ ________ All amounts relate to continuing activities.All recognised gains and losses are included in the profit and loss account. Original Investments PLC (Formerly BioProjects International PLC) Balance Sheet at 31 March 2006 Note 2006 2006 2005 2005 £ £ £ £Fixed assets 3,809 Tangible assets 8 2,866Investments 9 4,782,284 3,535,056 ________ ________ 4,785,150 3,538,865 Current assetsDebtors 10 22,523 749,066Cash at bank and in hand 19 2,813,558 3,176,484 ________ ________ 2,836,081 3,925,550Creditors: amounts falling 11 36,446 38,185due within one year ________ ________ Net current assets 2,799,635 3,887,365 ________ ________Total assets less current 7,584,785 7,426,230liabilities ________ ________ Capital and reservesCalled up share capital 13 3,112,222 2,882,222Share premium account 14 7,639,013 7,601,513Share scheme reserve 14 - 87,500Warrant reserve 14 - 66,240Profit and loss account 14 (3,166,450) (3,211,245) ________ ________Shareholders' funds 15 7,584,785 7,426,230 ________ ________ Original Investments PLC (Formerly BioProjects International PLC) Cash Flow Statement for the year ended 31 March 2006 Note 2006 2006 2005 2005 £ £ £ £Net cash outflow from 17 (303,095) (310,842)operatingactivities Returns on investments andservicing of financeInterest received 186,213 99,114 Capital expenditure andfinancialinvestmentIncrease in loans to Investee (476,118) (542,936)CompanyPayments to acquire tangible - (2,581)fixed assetsReceipt from sale of fixed - 2,495,745asset investments ________ ________ (476,118) 1,950,228Management of liquidresourcesCash (outflow)/inflow from 1,119 (9,393)increase in liquid resources ________ ________Cash inflow/(outflow) before (591,881) 1,729,107financingFinancingCash inflow from exercise of 230,000 1,010,000warrantsIssue costs incurred on issue - (18,695)of shares ________ ________ 230,000 991,305 ________ ________(Decrease)/Increase in cash 19 (361,881) 2,720,412 ________ ________ Original Investments PLC (Formerly BioProjects International PLC) Notes forming part of the Financial Statements for the year ended 31 March 2006 1 Accounting policies The financial statements have been prepared under the historical cost conventionand are in accordance with applicable accounting standards. The followingprincipal accounting policies have been applied: Turnover Turnover represents sales to outside customers at invoiced amounts less valueadded tax. Turnover is recognised when the consultancy services are provided. Depreciation Depreciation is provided to write off the cost, less estimated residual values,of all fixed assets, evenly over their expected useful lives. It is calculatedat the following rates: Office equipment - 20% per annum, reducing balance Valuation of investments Investments held as fixed assets are stated at cost less any provision forpermanent impairment in value. Deferred taxation Deferred tax balances are recognised in respect of all timing differences thathave originated but not reversed by the balance sheet date except that therecognition of deferred tax assets is limited to the extent that the Companyanticipates to make sufficient taxable profits in the future to absorb thereversal of the underlying timing differences. Deferred tax balances are not discounted. Options and warrants Where share options are issued to employees and directors a profit and lossaccount charge is made equal to the difference between the fair value of sharesat the date the award was made and the exercise price of the share options. Thecharge is spread in accordance with UITF17. Warrants issued by the company arerecorded at the fair value of the consideration received and are reported in thereconciliation of movement in shareholders' funds in the period in which theyare issued. Foreign currency Foreign currency transactions are translated at the rates ruling when theyoccurred. Foreign currency monetary assets and liabilities are translated at therates of exchange ruling at the balance sheet dates. Any differences are takento the profit and loss account. Liquid Resources For the purposes of the cash flow statement, liquid resources are defined as thebalances on short term deposit foreign currency accounts. Accounting Standards During the year the company adopted FRS 21 'Events after the balance sheetdate', FRS 22 'Earnings per share', FRS 28 'Corresponding amounts' and thepresentational requirements of FRS 25 'Financial instruments (Disclosure andPresentation)'. None of these standards had any impact on the net assets of theCompany nor on its loss for the year. Financial Liability and Equity Financial liability and equity are classified according to the substance of thefinancial instrument's contractual obligations, rather than the financialinstrument's legal form. Financial InstrumentsFinancial instruments are measured initially and subsequently at cost. Shortterm debtors and creditors are excluded from the financial instrumentdisclosures in note 12. 2 Segmental analysis Turnover is wholly attributable to the consultancy activity provided byDirectors of the Company to trade investments and arises within the UnitedKingdom (except for US$12,000 (2005 - US$12,000) relating to the United States). 2006 2005 £ £The split of assets by location are:UK 3,002,501 3,367,317USA 4,582,284 4,058,913 ________ ________Net Assets 7,584,785 7,426,230 ________ ________ 3 Employees 2006 2005 £ £Staff costs consist of:Wages and salaries 120,000 110,000Social security costs 28,122 9,761 ________ ________ 148,122 119,761 ________ ________ The average number of employees, including Directors, during the year was 6(2005 - 6). The Company does not have a pension scheme and does not pay any pensioncontributions on behalf of employees. 4 Directors' remuneration Directors' remuneration was as follows: 2006 2005 £ £ Directors' emoluments 100,000 90,000Gains on the exercise of warrants 90,000 - ________ ________ 190,000 90,000 ________ ________ Emoluments of the highest paid director were £85,000 (2005:£31,667) 5 Operating loss 2006 2005 £ £This has been arrived at after charging:Depreciation of tangible fixed assets 716 952Auditors' remuneration 11, 500 14,200- audit services- non audit services 2,000 6,500Foreign exchange differences (47,325) 17,559 ________ ________ 6 Taxation on profit from ordinary activities 2006 2005 £ £Current taxUK corporation tax on profits of the year - - ________ ________ - - ________ ________(Loss)/Profit on ordinary activities before (71,445) 593,306tax ________ ________(Loss)/Profit on ordinary activities at thestandard rateof corporation tax in the UK of 30% (2005 - (21,434) 177,99230%) Effects of:Expenses not deductible for tax purposes 2,058 638Capital allowances for year in deficit/ 214 (163)(excess) of depreciationProfit on disposal of investments - (223,835)extinguished by capital lossesExercise of share options (40,499) -Increase in excess management expensescarried forward 59,661 45,368 ________ ________Current tax charge for year - - ________ ________Factors that may affect future tax charges Deferred tax assets relating to excess management expenses and capital losses of£1,150,000 and £1,934,000 respectively (2005 - £950,000, £1,293,000) have notbeen recognised as these losses can only be offset against future taxableprofits and at present there is insufficient evidence to justify recognition. 7 Earnings per share Basic The calculation of earnings per share is based on the loss for the year of£71,445 (2005 - profit £593,306) and on 307,315,374 (2005 -281,785,693) ordinaryshares, being the weighted average number of ordinary shares in issue during theyear. Diluted Diluted earnings per share dilute the basic earnings per share to take intoaccount share options and warrants. The calculation includes the weightedaverage number of ordinary shares that would have been issued on the conversionof all the dilutive share operations and warrants into ordinary shares. Theweighted average number of shares for this purpose is 309,815,374. The lossafter taxation was unchanged from the basic figure. 8 Tangible assets Office equipment £CostAt 1 April 2005 6,576Disposals 227 ________At 31 March 2006 6,349 ________DepreciationAt 1 April 2005 2,767Provided for the year 716 ________At 31 March 2006 3,483 ________Net book valueAt 31 March 2006 2,866 ________At 31 March 2005 3,809 ________ 9 Investments Unlisted investments £CostAt 1 April 2005 4,581,404Additions 1,247,228Disposals (641,848) ________At 31 March 2006 5,186,784 ________ProvisionsAt 1 April 2005 1,046,348Provisions made during the year -Disposals (641,848) ________At 31 March 2006 404,500 ________Net book valueAt 31 March 2006 4,782,284 ________At 31 March 2005 3,535,056 ________ The additions relate to the capitalisation of outstanding loans and accruedinterest into an equivalent number shares in an investee company. The principal undertakings in which the Company has an interest at the year endare as follows: Class of share capital Percentage of share held capital held %Participating interest:The Acrobot Company Ordinary 22.5%Limited, incorporated inEngland ViaLogy Corp. Inc., Ordinary, Series A-1 and 39%incorporated in USA Series B The Company also holds 1,250,000 warrants in Bionex Investments plc exercisableat 2.5p each, at any time before 31 December 2006 and 1,250,000 warrantsexercisable at 2.5p each at any time from 1 January 2007 to 31 December 2010.The fair value of the Bionex warrants has been estimated as nil as the exerciseprice is currently in excess of the quoted Bionex share price. 10 Debtors 2006 2005 £ £ Trade debtors 4,511 12,447 Other debtors and prepayments 18,012 12,762 Loans to investee company - 723,857 ________ ________ 22,523 749,066 ________ ________ The outstanding loans to the investee company were capitalised into anequivalent number of shares. All amounts shown under debtors fall due for payment within one year. 11 Creditors: amounts falling due within one year 2006 2005 £ £ Trade creditors 1,878 17,013 Other creditors 7,568 1,007 Accruals 27,000 20,165 ________ ________ 36,446 38,185 ________ ________ 12 Financial assets & liabilities During the period, the Company's financial instruments comprised cash and itemssuch as trade debtors and creditors that arise directly from operations. The Company does not trade in financial instruments. The Company holds financial instruments for current operations. The principalfinancial risks faced by the Company are interest rate risk, credit risk, fairvalue of investments and liquidity risk. The Board reviews and agrees policiesfor managing its financial risks as necessary. The Company's financial assets to which interest rates apply are: Fixed rate Fixed rate Floating Floating rate rate 2006 2005 2006 2005Sterling - - 2,808,032 3,169,914US$ - - 5,526 6,570 __________ __________ ________ ________ Interest rate risk The Company is exposed to interest rate risk from its interest-earning financialassets. The floating rate assets are held in a money market account earninginterest on a LIBOR based rate. The interest rate risk is mitigated by the factcash is held in short-term deposits allowing rapid transfer of funds toalternative commercial banks to obtain improved interest rates. The Company's current account is swept at the end of each day into a short termmoney market account. A US dollar account is retained for any US investmentopportunities which may arise. The money is placed on weekly deposit. Fair value of investments The fixed asset investments represent investments in unlisted companies and havea carrying value of £4,782,284. The cash flows, and as a result the fair value,of these investments cannot be reliably estimated as the investee companies areinvolved in specialist industries with complex technologies that are still at anearly stage of their development. The fair value of the investments is dependenton a number of factors including the results of clinical trials, the emergenceor activities of competitors, the availability of sufficient funding, thesuccessful marketing of each investee company's technology and the developmentof a customer base. The Directors consider the fair values of the financial assets are notmaterially different from their book values. The risk is mitigated by ensuringthere is representation on the board of all investments to ensure that decisionsmade by the investee companies are for the benefit of shareholders. Liquidity risk The Company holds funds in short-term bank deposits. Overheads are low, meaningthat adequate funds exist to allow the Company to continue to trade for theforeseeable future. Credit risk During the year, the Company's credit risk was primarily attributable to itscash balances, its loans to its investee companies and its trade debtors. Thecredit risk on liquid funds is limited as the funds are held at banks with highcredit ratings and its loans to investees were capitalised during the year.Trade debtors are spread over a range of customers, a factor which helps todilute the concentration of risk but to further help mitigate the exposure,credit worthiness checks are undertaken before entering into contracts with newcustomers and credit limits are set on all new and existing customers. Amountspresented in the balance sheet are stated net of allowances for doubtfulrecovery. 13 Share capital Authorised 2006 2005 2006 2005 Number Number £ £ Ordinary 500,000,000 500,000,000 5,000,000 5,000,000shares of 1peach __________ __________ ________ ________ Allotted, called up and fully paid 2006 2005 2006 2005 Number Number £ £ Ordinary 311,222,223 288,222,223 3,112,222 2,882,222shares of 1peach __________ __________ ________ ________ On 1 June 2005 the Company issued 23,000,000 new ordinary shares of 1p each, fora consideration of £230,000 following the exercise of 23,000,000 warrants at anexercise price of 1p. Warrants At 31 March 2006, the following warrants were outstanding in respect of ordinaryshares. Number Exercise period Exercise price2,500,000 May 2005 to May 2012 6p__________2,500,000__________ 14 Reserves Share Share Warrant Profit premium scheme reserve and loss account reserve account £ £ £ £At 1 April 2005 7,601,513 87,500 66,240 (3,211,245)Arising on the issue 37,500 - - -of sharesTransfer on lapse of - (87,500) (66,240) 116,240share options andwarrantsLoss for the year - - - (71,445) ________ ________ ________ ________At 31 March 2006 7,639,013 - - (3,166,450) ________ ________ ________ ________ 15 Reconciliation of movements in shareholders' funds 2006 2005 £ £(Loss)/Profit for the year (71,445) 593,306New share capital subscribed 230,000 232,222Premium on shares issued during the - 759,083year (net of issue costs) ________ ________Net increase in shareholders' funds 158,555 1,584,611Opening shareholders' funds 7,426,230 5,841,619 ________ ________Closing shareholders' funds 7,584,785 7,426,230 ________ ________16 Related party transactions Related party transactions and balances The Company pays £500 per month (2005 - £500 per month) contribution towardsgeneral office expenses to Artemis Management Services Limited, a company inwhich Jim Slater is a director and in which he has a beneficial interest. TheCompany also contributed towards secretarial and administration services of£9,960 (2005 - £9,130) to Artemis Management Services Limited. The total amountoutstanding at the year end was £nil (2005- £6,451). 17 Reconciliation of operating loss to net cash outflow from operating activities 2006 2005 £ £Operating loss (257,659) (251,925)Depreciation of tangible fixed assets 716 952(Increase)/Decrease in debtors 2,686 (61,099)Decrease in creditors (1,512) (16,329)Foreign exchange movements (47,326) 17,559 ________ ________Net cash inflow/(outflow) from (303,095) (310,842)operating activities ________ ________ Foreign exchange movements include movements of £14,610 relating to loans madeto ViaLogy. 18 Reconciliation of net cash inflow to movement in net funds 2006 2005 £ £(Decrease)/Increase in cash (361,881) 2,720,412Increase in liquid resources 74 9,393Foreign exchange movements (1,119) (2,949)Opening net funds 3,176,484 449,628 ________ ________Closing net funds 2,813,558 3,176,484 ________ ________ 19 Analysis of net funds At Cash Foreign At 1 April flow exchange 31 March 2005 movements 2006 £ £ £ £Cash in hand 3,169,914 (361,881) - 2,808,033and at bankLiquid 6,570 (1,119) 74 5,525resources ________ ________ ________ ________ 3,176,484 (363,00) 74 2,813,558 ________ ________ ________ ________ 20 Post balance sheet events The board of Directors of Original Investments have made a recommendation thatthe Company purchase the remaining share capital of ViaLogy Corp. The proposalwill be put to the Annual General Meeting of the Company. This preliminary announcement does not constitute the Company's statutoryfinancial statements. The financial information for the years ended 31 March2006 and 31 March 2005 has been extracted from the Company's statutory financialstatements for the years then ended. The statutory financial statements for theyear ended 31 March 2005 have been delivered to the Registrar of Companies andthe statutory financial statements for the year ended 31 March 2006 will bedelivered to the Registrar of Companies in due course. The audit reports on thestatutory accounts to 31 March 2005 and 31 March 2006 were unqualified and didnot contain a statement under s237(2) or 237(3) of the Companies act 1985. Copies of the Company's report and accounts for the year ended 31 March 2006will be despatched to shareholders shortly and will be available from: Mark CollingbourneAshcombe CourtWoolsack WayGodalmingSurrey GU7 1LQ This information is provided by RNS The company news service from the London Stock Exchange