RNS Number:4249S
Biofusion PLC
16 April 2008
For immediate release 16 April 2008
BIOFUSION PLC
("Biofusion", "the Company" or "the Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 JANUARY 2008
Biofusion plc (AIM: BFN), the university IP commercialisation company that turns
world class research into business, is pleased to announce its Interim Results
for the six months ended 31 January 2008.
Highlights
Business and Portfolio Highlights:
- Exclusive licence agreement signed by Lifestyle Choices Ltd with Repromedix
Inc, a leading US reproductive testing laboratory, to sell the Plan Ahead
test in the USA and Canada
- Sale of Biofusion's 50% stakes in each of Cardiff Protides Ltd and Cardiff
Biologicals Ltd
- �200,000 investment in Abcellute Ltd
- Q-Chip Ltd's successful �2.0m funding round
- Co-investment Memorandum of Understanding (MoU) signed with Finance Wales
under which all Cardiff Investments will be reviewed and considered for
investment by Finance Wales, who manage funds of more than �130m.
Financial Highlights:
- Cash balances at 31 January 2008 �8.6m (Jan 07: �12.1m; FY July 07: �10.6m)
- Cash invested in spin-out companies �1.2m (Jan 07: �0.9m; FY July 07:
�1.7m)
- Revenue �0.2m (Jan 07: �0.1m; FY July 07: �0.4m)
- Loss for the period �1.9m (Jan 07: �0.7m; FY July 07: �3.1m)
Post Period End Highlights:
- New spin-out company launched: Demasq Ltd - first spin-out from partnership
with Cardiff University and a company which Biofusion believes has the
potential to add significant value to the Group
- �400,000 investment into imaging company, Phase Focus Ltd
- �265,000 investment into biotechnology company, Asterion Ltd.
- Plan Ahead test launched in the US by Lifestyle Choices Ltd
- Phoqus Pharmaceuticals plc announced successful Phase 2 clinical trial
incorporating Diurnal Ltd Intellectual Property (IP)
Commenting on these interim results, David Baynes, Chief Executive Officer of
Biofusion, said: "I am delighted to report another set of results that
demonstrate the progress we have made at Biofusion. Our portfolio of companies
continues to grow as we exploit some of the world's most advanced and exciting
university based research. We continue to focus on increasing the value of our
portfolio based upon clear value enhancing milestones, in preparation for
releasing value through appropriate exit routes when the companies and market
conditions are right. The University technology transfer market continues to
remain active and despite the current economic climate, we look forward to a
busy period ahead."
For further information please contact:
Biofusion +44 (0)114 275 5555
David Baynes, CEO
Buchanan Communications +44 (0)20 7466 5000
Mary-Jane Johnson / Lisa Baderoon / Catherine Breen
Nomura Code Securities +44 (0)20 7776 1200
Phil Walker, Clare Terlouw
About Biofusion
Biofusion was established in 2002 to commercialise university-generated IP.
Biofusion has signed long-term agreements with two of the UK's top ten research
intensive universities (University of Sheffield and Cardiff University) giving a
combined R&D spend attributable to Biofusion of approximately �114 million a
year.
Biofusion's first agreement was a ten-year exclusive arrangement with the
University of Sheffield for the commercialisation of IP owned by the University
in the area of medical life sciences. Biofusion has shareholdings in a portfolio
of Sheffield University spin-out companies including Asterion, Axordia,
Biohydrogen, Lifestyle Choices, Diurnal and Phase Focus. The University of
Sheffield was ranked 5th in the UK for the quality of its life sciences research
and will be spending an estimated �0.5bn of research funding over the lifetime
over the life of the Sheffield Agreement.
In January 2007, Biofusion completed a long-term exclusive agreement with
Cardiff University, to commercialise 100% of all Cardiff University's
research-generated IP. Biofusion has shareholdings in a portfolio of Cardiff
University spin-out companies including Abcellute, Q-Chip and Morvus. Cardiff
University was ranked 7th in the UK in the most recent research rankings and
will be spending more than �1.0bn of research funding over the lifetime over the
life of the Cardiff Agreement.
In September 2007 Biofusion signed a Memorandum of Understanding with Finance
Wales, the provider of commercial funding to Wales-based SMEs, detailing a
co-investment strategy for investing in opportunities arising from Biofusion's
exclusive IP pipeline agreement with Cardiff University. Finance Wales already
manages funds of more than �130m and has to date invested approximately �85m in
Wales.
Chairman's Statement
I am pleased to present our interim results for the six month period to 31
January 2008, in which we have focused on increasing the value of our
investments in companies derived from our top class research intensive
universities.
Key events
* The sale of Cardiff Protides and Cardiff Biologicals;
* Investment of �200,000 in Abcellute's successful �400,000 fundraising;
* Lifestyle Choices signing an exclusive agreement with Repromedix Inc. to
distribute the Plan Ahead test in North America;
* Investment of �125,000 in Q-Chip's successful �2.0m funding round;
* Signing an investment MoU with Finance Wales; and
* Subsequent to the period end we announced:
o In February 2008, we launched Demasq, a medical imaging business
that enables surgeons to visualise the soft tissue in joints such
as the knee by the proprietary and innovative use of traditional
digital x-rays;
o In March 2008 we made a �600,000 investment into our imaging
company, Phase Focus;
o In March 2008 we made a �265,000 Investment into our
biotechnology company, Asterion; and
o In March 2008 Phoqus Pharmaceuticals plc announced successful
Phase 2 clinical trial incorporating Diurnal Intellectual
Property (IP)
The Portfolio
Biofusion currently has more than 20 companies in its portfolio, one of which
was added subsequent to the period end. Successes from the portfolio during the
period include:
Demasq
Demasq is developing a range of innovative bone and soft tissue imaging products
based on its advanced medical imaging technology.
Demasq is a new spin-out company from Biofusion's partnership with Cardiff
University and is the result of work carried out by Professor Hechmi Toumi, a
specialist at the School of Biosciences. The company is being advised by a
Medical Advisory Board led by Professor John Fairclough, consultant orthopaedic
surgeon at University Hospital Wales and a leading knee specialist, in the UK
and by Prof Tom Best, a leading knee specialist, in the US.
Demasq's first product, the Knee Imaging System (KIS), aims to provide surgeons,
radiologists, physiotherapists and GPs with the soft tissue detail achievable
with MRI combined with the bone detail of an X-ray at considerably less cost. In
the US nearly 20 million people visit their physician with knee pain per year.
Demasq is currently working towards its main commercial milestone, which is FDA
clearance of KIS by Q1 2009, which will enable it to launch KIS in the UK and US
in 2009. In parallel, Demasq is generating a pipeline of additional products for
a range of imaging applications.
The Directors of Biofusion believe that this new company, with its large
potential market and the proximity of its product launch, has the potential to
add significant value to the Group.
Biofusion has a 50% shareholding in Demasq.
Cardiff Biologicals
In September 2007, as part of the Cardiff University pipeline agreement, we took
over Cardiff's 25% share holding in Cardiff Biologicals, a company which
specialises in anti-angiogenesis research for the treatment of cancer and
invested �200,000, increasing our shareholding to 50%.
Cardiff Protides
Cardiff Protides develops cutting edge nucleoside based pharmaceuticals targeted
at areas of unmet medical need, initially for the treatment of cancer. In
September 2007 Biofusion invested �200,000 in the company, increasing our
shareholding to 50%.
Sale of Cardiff Protides and Cardiff Biologicals to Morvus Technology ("Morvus")
In October 2007 Morvus, a privately owned pharmaceutical company specialising in
the discovery and development of novel oncology therapies, acquired Biofusion's
shareholdings in Cardiff Protides and Cardiff Biologicals. Morvus' facilities at
its new laboratories in Wales, combined with its expertise in pharmaceutical
development, should enable the newly combined company to become a world leader
in the provision of specialist oncology drugs, and provided the best opportunity
for bringing the lead compounds of Cardiff Protides and Cardiff Biologicals to
market. As a result of the sale, Biofusion now owns an 18% shareholding in the
enlarged company. However, given that these shares are privately held, the
Directors of Biofusion have taken a conservative view to recognising this value
in Biofusion's accounts. Our intention is to reassess the value of the shares
at Morvus' next third party funding round.
Magnomatics
Magnomatics operates in the wind turbine and hybrid vehicle market, specialising
in new magnetic gearbox technology which enables the production of lighter,
smaller and more energy efficient motors and gearboxes. The company is working
on a number of undisclosed global collaborations and expects to commence work on
the first pre-production prototypes before the year end.
Biofusion has a 52% shareholding in Magnomatics.
Phase Focus
Phase Focus continues to progress production of its first "lensless" prototype
optical microscope, which is anticipated to be completed by July 2008. This is
expected to be the first value enhancing milestone for Phase Focus, with the
second milestone of full proof of principle of the electron microscope
technology, expected to be completed by December 2008. Post period end, the
company successfully completed a �600,000 investment in conjunction with
Biofusion, who invested �400,000 and White Rose Technology Seedcorn Fund, who
invested �200,000.
Biofusion has a 63% shareholding in Phase Focus.
Simcyp
Simcyp, a profitable pharmacokinetic modelling and simulation business, has
continued to grow its share of the market with strong sales performance to the
major pharmaceutical companies. Simcyp is confident that this growth will
continue during 2008 as it expands sales of its simulation platform and
consultancy services that enable pharmaceutical companies to model the fate of
drugs in the human body before undertaking clinical testing programmes.
Predicting outcomes in virtual patient populations allows individuals at extreme
risk from adverse drug reaction to be identified, and unnecessary drug exposure
to human volunteers and animals to be minimised. The limitations of candidate
compounds, including potential drug-drug interactions, can be assessed and
managed prior to human clinical studies, allowing better focus of drug
development resources.
Simcyp's clients form a Consortium which guides the company's scientific
development. This ensures that Simcyp's products and services continue to meet,
and exceed, industry need. Currently, nine of the top ten pharmaceutical
companies worldwide are members of the Consortium.
Biofusion has a 24% shareholding in Simcyp.
Asterion
Asterion is developing a range of third-generation therapeutic proteins that
will improve the current treatment options for patients with chronic diseases.
Using its novel, patented ProFuseTM therapeutic platform, Asterion is generating
and developing long-acting biopharmaceutical products that can be administered
at a lower dose, less frequently and with fewer side effects than existing
marketed drugs.
Under the guidance of the senior management team, including a Chairman and CEO
drawn from the Pharmaceutical sector (ex-Chiron, and Astra Zeneca) the company
has seven products under development including growth hormone (x2 - partnered
with Ipsen Ltd who continue to invest in these programmes), erythropoietin (EPO
- a treatment for anaemia), and granulocyte colony stimulating factor (GCSF -
needed to boost white blood cells e.g. after chemotherapy).
In September 2007, the results from its internally-generated research were
published in the peer-reviewed, medical journal Nature Medicine. The Nature
Medicine journal demonstrated that the new molecule developed by Asterion
promotes growth after a single injection and that growth continues over a
minimum of ten days in-vivo compared to the current standard of care where daily
injections of growth hormone are required to promote growth. The Asterion
technology has the added attraction of simplicity for manufacture and
applicability to other cytokine hormones.
Subsequent to the period end, Biofusion invested �265,000 in Asterion to
accelerate a number of internal development programmes to extend the utility of
the company's platform technology.
Post the conversion of this investment, which was made as a convertible loan,
Biofusion has a 43% shareholding in Asterion before the effect of share options.
Abcellute
Abcellute exploits a patent protected cell stabilising platform technology to
enable the non-frozen preservation and transportation of live organ-derived
cells without the loss of viability or function. The Abcellute product is
currently being sold to pharmaceutical companies in the UK for pre-clinical drug
testing and the company is actively expanding these sales outside the UK. In the
long-term, the company plans to develop the preservation technology to provide
products for cell-based therapeutics.
In September 2007, Biofusion increased its holding in Abcellute to 34% through a
�200,000 investment as part of Abcellute's successful �400,000 fundraising.
Finance Wales, which has a co-investment MOU with Biofusion, invested �200,000.
Subsequent to the period end, in April 2008, Abcellute announced it had signed a
European distribution agreement with LGC, the UK's leading independent provider
of analytical and diagnostic services, which it believes is a potentially
significant commercial milestone for the company.
Axordia
Axordia, one of the UK's leading stem cell companies, continues to work in
collaboration with the University of Sheffield and Lombard Medical Technologies,
through a �0.9m grant from the Department of Trade and Industry and the Medical
Research Council, for the development, through to clinical trials, of a
regenerative stent, a new generation treatment for cardiovascular disease. In
addition, Axordia continues its participation in the Euro12m European Commission "
ESTOOLS" stem cell research programme and is a major partner in a project to
cure Age Related Macular Degeneration (AMD), to which Axordia will be supplying
clinical grade human embryonic stem cells in order to produce therapeutic "
retinal" RPE cells. This project has funding of �4m and plans to complete human
trials for within four years.
Biofusion has a 49% shareholding in Axordia.
Lifestyle Choices
Lifestyle Choices sells a female fertility test that helps give women an early
warning of whether they are at risk of having too few eggs to conceive a child.
In November 2007, Lifestyle Choices signed an exclusive agreement with
Repromedix, one of America's leading fertility diagnostic laboratories, to
distribute the test in North America. In January 2008, Repromedix announced that
they had commenced the beta launch of the product and that they expected to
complete the national launch by the summer to coincide with the expected FDA
clearance of the test. In December 2007, South Yorkshire Investment Fund
invested �150,000 in Lifestyle Choices.
Biofusion has a 51% shareholding in Lifestyle Choices.
Biohydrogen
Biohydrogen is developing novel methods of producing commercial quantities of
industrial hydrogen from waste sugars using genetically modified e-coli. The
company has established laboratory fermentation facilities in Sheffield and is
exemplifying its initial discoveries on a small scale production level before it
progresses with an anticipated major funding round at the end of 2008.
Biofusion has a 60% shareholding in Biohydrogen.
Q Chip
Q Chip is a leading developer of micro-encapsulation solutions and in September
2007 announced the successful completion of a �2m investment funding round from
new and existing shareholders, including Biofusion, who invested �125,000. Other
investors included E-Synergy's Early Growth Fund, individual shareholders such
as Jon Moulton (also Managing Partner of Alchemy Partners), Geneva headquartered
Forum des Entrepreneurs, a high net worth group of angel investors, London based
Sustainable Technology Fund and Finance Wales, who made their first investment
under their investment MoU with Biofusion. In addition, Ken Powell, founder and
former CEO of Arrow Therapeutics, became Executive Chairman of Q Chip in January
2008, which is an important milestone for the company.
Biofusion has an 11% shareholding in Q Chip.
Diurnal
Diurnal develops endocrine (e.g. steroids) replacement therapy that has been
optimised to deliver the natural physiologically relevant levels of the
endocrine substance in blood. Its first programme has led to IP covering the
delivery of hydrocortisone in a manner that mimics the normal physiological
circadian rhythm of cortisol in the blood. This clearly defined rhythm, with
high levels in the morning and low levels at night, is lost in patients
suffering from adrenal insufficiency (e.g. cancer of the adrenal gland) and
congenital adrenal hyperplasia (e.g. inability to make the physiologically
important steroid - cortisol). Current therapies cannot adequately control the
condition, so the Diurnal management team believes that this product should
offer a much needed improvement in treatment for patients.
Chronocort is being developed by Phoqus Pharmaceuticals plc, an emerging UK
speciality pharmaceutical company, which has an exclusive licence to the "
delayed and sustained release therapy" patent. In 2005 Professor Richard Ross,
founding Director of Diurnal received Orphan Medicinal Product designation for
this product from the European Medicines Agency, which affords ten years of
market exclusivity after the grant of a marketing authorisation in Europe.
Subsequent to the period end in March 2008, Phoqus Pharmaceuticals announced
positive results from a Phase 2 study of Chronocort in Congenital Adrenal
Hyperplasia.
Diurnal has a pipeline of programs aimed at addressing the unmet needs of
endocrine patients using its physiological hormone replacement.
Biofusion has a 60% shareholding in Diurnal.
Biofusion takes a rigorous approach to its investments and, where appropriate,
will withdraw funding support where it is considered that the financial returns
do not justify it. Consistent with this approach:
CellTran
CellTran, the advanced wound care business, has been unable to raise the
significant funds that are required to progress the business. Biofusion's
strategic exit route from this investment is uncertain and therefore the value
of CellTran has been written down over recent periods and is now fully provided
for in Biofusion's books reflecting the Directors' belief that there will not be
a return on this investment.
Biofusion has a 15% shareholding in CellTran.
MoU with Finance Wales
In September 2007 we signed a MoU with Finance Wales, the provider of commercial
funding to Wales-based businesses, detailing a co-investment strategy for
investing in opportunities arising from Biofusion's exclusive IP pipeline
agreement with Cardiff University. Finance Wales already manages funds of more
than �130m and has to date invested approximately �85m in Wales. During the
period Finance Wales co-invested in two Biofusion companies.
Outlook
Our portfolio of companies continues to grow as we exploit some of the worlds
most advanced and exciting university based research. Our focus continues to be
to increase the value of our portfolio based upon clear value enhancing
milestones, in preparation for releasing value through an appropriate exit
route.
Financial Review
Adoption of International Financial Reporting Standards (IFRS)
In accordance with the AIM Rules, Biofusion plc will report under IFRS, as
adopted by the EU. The most significant change from the adoption of IFRS is the
way the Group accounts for its financial assets being investments in associates
and other equity investments, which are not consolidated. The Group now measures
its investments at fair value in accordance with IAS 39 "Financial instruments:
recognition and measurement". Realised and unrealised gains and losses on
financial assets at fair value are included in the income statement in the
period they arise.
The increase to equity arising from the introduction of IFRS is �490,000 (as at
1 August 2006) rising to �615,000 as at 31 July 2007.
Changes in fair values
The Group reported a change in fair value of �86,000 (H1 Jan 07: �nil) in
relation to its investments in associates and other equity investments. The
change in fair value reflects an uplift in fair value of �487,000 arising from
increased valuations in two unquoted funding rounds, offset by unrealised losses
against an investment in unquoted portfolio company.
Investments
At 31 January 2008, the Group had investments and loans in 14 associates carried
at a fair value of �5,969,000 (31 July 2007: �5,091,000). During the period the
Group invested �792,000 in follow-on funding (H1 Jan 07: �425,000).
In addition the Group has nine spin-out subsidiaries which are consolidated.
During the year the Group provided early stage funding of �268,000 to these
subsidiaries (H1 Jan 07: �393,000).
Results from operating activities
The Group reported a loss from operating activities of �2,114,000 compared to a
loss of �764,000 for the six months to 31 January 2007. The increases result
from several factors and can be summarised as follows:
* increase in corporate operating expenses from primarily expansion of Cardiff �451,000
operations;
* increase in subsidiary spin-out operating expenses primarily due to continued �438,000
growth in the number of subsidiary spin-outs;
* increase in amortisation due to a full six month charge on the Cardiff IP �696,000
rights; and
* favourable increase in revenues and fair value/disposal of investments. �(235,000)
Finance income/expenses
Finance income on cash balances held amounted to �314,000 (H1 Jan 07: �151,000)
as a result of higher cash balances during the period from the Cardiff
agreement. Finance expenses of �119,000 (H1 Jan 07: �72,000) relate to accrued
interest loan notes owed to the University of Sheffield and Cardiff University.
Cash balances
Cash balances of the Group as at 31 January 2008 were �8,615,000 (31 July 2007:
�10,600,000). Cash balances are separately maintained to fund spin-out
investments from the University of Sheffield and Cardiff University. These cash
balances amounted to �1,885,000 and �6,445,000 respectively (31 July 2007:
�2,660,000 and �7,630,000 respectively) and are also used to fund central
overheads on an equal basis. Cash balances held within consolidated subsidiary
spin-outs amounted to �285,000 (31 July 2007: �310,000). The Group will consider
a number of options to increase the Sheffield fund as and when additional funds
are required.
The cash outflow of �1,985,000 is primarily can be summarised as outflows on
operating activities �1,325,000, additional portfolio investments in associates
�1,017,000 and net interest received �286,000.
Post 31 January 2008
Trading has continued in line with expectations since the period end.
Consolidated Interim Income Statement
For the six months ended 31 January 2008
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2008 2007 2007
Note �000 �000 �000
Revenue 182 106 351
Change in fair value of investments 2 86 - (557)
Gain on disposal of investments 81 8 66
Operating expenses
- coperating expenses (971) (520) (1,580)
- subsidiary spin-out operating expenses (689) (251) (797)
- amortisation of intangible assets (803) (107) (898)
(2,463) (878) (3,275)
Results from operating activities (2,114) (764) (3,415)
Finance income 314 151 535
Finance expenses (119) (72) (195)
Loss before income tax (1,919) (685) (3,075)
Income tax expense - - -
Loss for the period (1,919) (685) (3,075)
Attributable to:
Equity holders of the parent (1,858) (665) (3,053)
Minority interest (61) (20) (22)
Loss for the period (1,919) (685) (3,075)
Basic loss per share 3 (5.23)p (3.16)p (10.30)p
Consolidated Interim Balance Statement
As at 31 January 2008
As at As at As at
31 January 31 January 31 July
2008 2007 2007
�000 �000 �000
Assets
Non-current assets
Property, plant and equipment 105 24 41
Intangible assets 14,427 16,026 15,238
Investments 5,969 5,698 5,091
Total non-current assets 20,501 21,748 20,370
Current assets
Trade and other receivables 967 575 795
Cash and cash equivalents 8,615 12,148 10,600
Total current assets 9,582 12,723 11,395
Total assets 30,083 34,471 31,765
Equity
Called up share capital 367 367 367
Capital reserve 2 2 2
Share premium 31,671 31,671 31,671
Capital redemption reserve 1 1 1
Retained earnings (5,806) (1,592) (3,972)
Total equity attributable to equity holders of the parent 26,235 30,449 28,069
Minority interest - - -
Total equity 26,235 30,449 28,069
Non-current liabilities
Amounts owed to related parties 3,159 3,488 3,293
Current liabilities
Trade and other payables 689 534 403
Total liabilities 3,848 4,022 3,696
Total equity and liabilities 30,083 34,471 31,765
Consolidated Interim Cash Flow Statement
For the six months ended 31 January 2008
Six months Six months Year
ended ended ended
31 January 31 January 31 July
2008 2007 2007
�000 �000 �000
Cash flows from operating activities
Loss for the period (1,919) (685) (3,075)
Adjustments for:
Depreciation of property, plant and equipment 16 4 12
Amortisation of intangible assets 803 107 898
Net finance costs/(income) (195) (79) (340)
Share-based payments 24 8 16
Gain on disposal of investments (81) (8) (8)
Negative goodwill acquired with subsidiary - (25) (25)
Fair value movement on investments (86) - 557
Changes in working capital:
(Increase)/decrease in trade and other receivables (172) 44 (176)
Increase/(decrease) in trade and other payables 285 44 (138)
Net cash flows used in operating activities (1,325) (590) (2,279)
Cash flows from investing activities
Purchase of property, plant and equipment (80) (3) (28)
Purchase of investments (1,017) (425) (833)
Acquisition of investments in subsidiary undertakings - (8) (6)
Net cash acquired with subsidiary - 29 29
Proceeds from disposal of investments 151 - 377
Purchase of intangible fixed assets - (113) (118)
Interest received 314 151 535
Net cash flows used in investing activities (632) (369) (44)
Cash flows from financing activities
Proceeds from issue of share capital - 7,757 7,757
Share issue costs - (533) (717)
Interest paid (28) - -
Net cash flows (used in)/from financing activities (28) 7,224 7,040
Net (decrease)/increase in cash and cash equivalents (1,985) 6,265 4,717
Cash and cash equivalents at the beginning of the period 10,600 5,883 5,883
Cash and cash equivalents at the end of the period 8,615 12,148 10,600
Consolidated Interim Statement of Changes in Equity
For the six months ended 31 January 2008
Attributable to equity holders of the Group Minority Total
Share Capital Share Capital Retained Total Interests
Capital Reserve Premium Redemption Earnings
Reserve
�000 �000 �000 �000 �000 �000 �000 �000
At 1 August 2006 203 2 8,906 1 (935) 8,177 - 8,177
Consolidated loss for - - - - (665) (665) (20) (685)
the period to 31
January 2007
Issue of share capital 164 - 22,765 - - 22,929 - 22,929
Share-based payments - - - - 8 8 - 8
Disposal of subsidiary - - - - - - (8) (8)
Introduced on - - - - - - 28 28
acquisition
At 31 January 2007 367 2 31,671 1 (1,592) 30,449 - 30,449
Consolidated loss for - - - - (2,388) (2,388) (2)
the period to 31 July
2007 (2,390)
Share-based payments - - - - 8 8 - 8
Disposal of subsidiary - - - - - - 2 2
At 31 July 2007 367 2 31,671 1 (3,972) 28,069 - 28,069
Consolidated loss for - - - - (1,858) (1,858) (61) (1,919)
the period to 31
January 2008
Shared-based payments - - - - 24 24 - 24
Disposal/change in - - - - - - 61 61
stake of subsidiaries
At 31 January 2008 367 2 31,671 1 (5,806) 26,235 - 26,235
Notes to the Interim Results
For the six months ended 31 January 2008
1. Accounting policies
Basis of preparation
The interim results of Biofusion plc (the Group) are for the six months to 31
January 2008.
The AIM Rules require that the next annual consolidated financial statements of
the Company, for the year ending 31 July 2008, be prepared in accordance with
International Financial Reporting Standards as adopted by the EU (adopted IFRS).
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of IFRS in issue that either are
endorsed by the EU and effective (or available for early adoption) at 31 January
2008. Based on these adopted and unadopted IFRS, the Directors have made
assumptions about the accounting policies expected to be applied, which are as
set out below, when the first annual IFRS financial statements are prepared for
the year ending 31 July 2008.
In addition, the adopted IFRS that will be effective (or available for early
adoption) in the annual financial statements for the year ending 31 July 2008,
are still subject to change and to additional interpretations and therefore
cannot be determined with certainty. Accordingly, the accounting policies for
that annual period will be finally determined only when the annual financial
statements are prepared for the year ending 31 July 2008.
The comparative figures for the financial year ended 31 July 2007 are not the
Company's statutory accounts for that financial year. Those accounts, which were
prepared under UK GAAP, have been reported on by the Company's auditors and
delivered to the registrar of companies. The report of the auditors was (i)
unqualified, (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report, and
(iii) did not contain a statement under Section 237(2) or (3) of the Companies
Act 1985.
The Group's results were prepared in accordance with UK GAAP until the year
ended 31 July 2007. UK GAAP differs in a number of areas from IFRS. In preparing
the Group's interim results for the period to 31 January 2008, the Directors
have amended certain accounting, valuation and consolidation methods applied in
the UK GAAP financial statements. The comparative figures in respect of 2007
have been restated to reflect these IFRS adjustments.
The effects of the transition from UK GAAP to IFRS on the Group's profit, net
assets and cash flows for the periods ended 31 July 2007 and 31January 2008 are
provided in the numerical reconciliation and narrative statements in note 7 to
the interim results.
The consolidated financial statements have been prepared under the historical
cost convention, as modified by the revaluation of certain financial assets at
fair value, as required by IAS 39 "Financial instruments: recognition and
measurement". The basis of consolidation is set out below.
These interim financial statements are presented in pounds Sterling, rounded to
the nearest thousand.
Basis of consolidation
The Group's consolidated financial statements consist of Biofusion plc and all
of its subsidiaries. The consolidated financial statements exclude intra-group
transactions.
Subsidiaries are consolidated from the date of their acquisition, being the date
on which the Group obtains control and continues through to the date control
ceases. Control consists of the power to govern the financial and operating
policies of the entity in order to obtain benefit from its activities, usually
by holding more than 50% of the voting rights or by way of contractual
agreement.
The cost of acquisition is measured at fair value of assets given, equity
instruments issued and liabilities incurred or assumed at the date of exchange
plus costs directly attributable to the transaction. The excess of the cost of
acquisition over the fair value of the group's share of the identifiable assets,
liabilities and contingent liabilities is recorded as goodwill.
As permitted by IFRS1 the group has elected not to apply IFRS 3 "Business
combinations" retrospectively to business combinations that took place before 1
August 2006.
Revenue recognition
Revenue comprises:
- fees for various advisory and fund management services which are recognised in
the income statement when the related services are performed and when
considered recoverable; and
- licence fees which are recognised in full upon signing once all the group's
obligations have been completed, in accordance with the substance of the
agreement.
Associates
Associates are entities over which the Group has significant influence, but not
control, generally accompanied by a shareholding of 20% to 50% of the equity or
voting rights. Investments in associates that are held by the Group with a view
to the ultimate realisation of capital gains are accounted for in accordance
with IAS 39 "Financial instruments: recognition and measurement" and upon
initial recognition are designated at fair value through profit or loss.
Other equity investments
Investments in undertakings which do not meet the criteria of an associated
undertaking and are held by the Group with a view to the ultimate realisation of
capital gains are also designated as financial assets at fair value through
profit or loss on initial recognition.
Treatment of gains and losses arising on fair value
Realised and unrealised gains on financial assets at fair value through profit
or loss are included in the income statement in the period they arise.
The fair value of unlisted securities is established using British Venture
Capital Association (BVCA) guidelines. The valuation methodology used most
commonly by the group is the "price of recent investment" contained in the BVCA
valuation guidelines. The following considerations are used when calculating the
fair value using the price of recent investment guidance:
- where the investment being valued was itself made recently, its cost will
generally provide a good indication of fair value;
- where there has been any recent investment by third parties, the price of that
investment will provide a basis for the valuation; and
- where a fair value cannot be estimated reliably the investment is reported at
the carrying value at the previous reporting date unless there is evidence
that the investment has since been impaired.
Intangible assets - goodwill
Goodwill arising on the acquisition of subsidiary undertakings, representing the
excess fair value of the consideration given over the fair value of the
identifiable assets, liabilities and contingent liabilities acquired. Goodwill
is tested annually for impairment and is carried at cost less accumulated
impairment losses.
Goodwill in respect of acquisitions prior to 1 August 2006 is included on the
basis of its deemed cost, which represents the amount recorded under UK GAAP.
Negative goodwill arising on an acquisition is recognised directly in the income
statement.
Intangible assets - Intellectual property (IP) rights
IP rights comprises IP, patents and licences purchased by the group together
with the IP pipeline with Cardiff University. The Group's view is that these
assets have a finite life of ten years and to that extent they should be
amortised over their respective unexpired periods with provision made for any
impairment when required. IP rights are tested annually for impairment and are
carried at cost less accumulated impairment losses.
Impairment of intangible assets
Goodwill and intangible assets that have an indefinite useful life are not
subject to amortisation and are tested annually for impairment and whenever
events or circumstances indicate that the carrying amount may not be
recoverable. Assets that are subject to amortisation are tested for impairment
when events or a change in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which the
carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of the asset's fair value less costs to sell and the value in use. For
the purposes of assessing impairments, assets are grouped at the lowest levels
for which there are largely independent cash flows (cash-generating units -
CGUs).
Research and development expenditure
Expenditure on research activities is recognised in the income statement as an
expense as incurred.
Expenditure on development activities is capitalised if the product or process
is technically and commercially feasible and the Group intends to, and has the
technical ability and sufficient resources to complete development, and if the
Group can measure reliably the expenditure attributable to the intangible asset
during its development. The expenditure capitalised includes the cost of
materials, direct labour and an appropriate proportion of overheads. Other
development expenditure is recognised in the income statement as an expense as
incurred.
Property, plant and equipment
All property, plant and equipment is shown at cost less depreciation and
impairment. Depreciation is provided to write off the cost, less the estimated
residual value by equal instalments over the estimated useful economic lives as
follows:
- computer equipment - 4 years
- office/laboratory equipment - 3 to 5 years
Deferred taxation
Deferred tax arises from temporary differences as a result of the different
treatment for accounts and taxation purposes of transactions and events
recognised in the financial statements of the current period and previous
periods. Deferred tax assets are not currently recognised in the accounts
because of the uncertainty of future taxable profits against which they may be
recovered.
Foreign currency translation
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated to
pounds Sterling at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in profit or loss.
Pensions
The Group does not operate any pension schemes for employees but makes
contributions to employee personal pension schemes on an individual basis. The
Group has no further payment obligations once the contributions have been paid.
The contributions are recognised as employee benefit expenses when they are due.
Share-based payments
Share-based incentive arrangements are provided to Directors and certain
employees. Share options granted are valued at the date of grant using the
Black-Scholes option pricing model and are expensed on a straight-line basis
over the vesting period to operating profit.
Trade receivables
Trade receivables are recognised initially in the balance sheet at fair value
and subsequently at amortised cost.
Payments on account
Payments on account are recorded with trade and other receivables and represent
the transfer of funds in advance to the University of Sheffield held on the
balance sheet of Biofusion Trading Limited. The payments on account are held at
cost, less any amounts transferred to investments on account of the acquisition
of interests in spin-out companies from the University of Sheffield Life Science
department.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an
original maturity of three months or less.
Non-current liabilities owed to related parties
Non-current liabilities owed to related parties relate to loan notes and accrued
interest due to the University of Sheffield and Cardiff University arising from
the purchase of the Group's interest in its portfolio of spin-out companies.
These amounts are repayable on the earlier of the sale by Biofusion of the
underlying share capital in the company, or the company making dividend payments
or ten years from the day of issue. These amounts are only payable to the extent
that any gain or dividend is received by Biofusion, and can be cancelled by
Biofusion by the return of the shares to which they relate to the University of
Sheffield or Cardiff University respectively.
Segmental reporting
A business segment is a group of assets and operations engaged in providing
services that are subject to risks and returns that are different from those of
other business segments. A geographical segment is engaged in providing services
within a particular economic environment that is subject to different risks and
returns from other segments in other economic environments. All of the Group's
revenues and losses arise within the UK and from a single business segment,
being the commercialisation of intellectual property.
2. Investments - designated at fair value through profit and loss
Unquoted associated Loans Total
Spin-out companies
�000 �000 �000
At 1 August 2007 4,209 882 5,091
Additional investments/loans 486 306 792
Unrealised gains on investments 487 - 487
Losses on revaluation of investments (401) - (401)
At 31 January 2008 4,781 1,188 5,969
3. Loss per share
The basic loss per share is calculated on the basis of the losses attributable
to equity shareholders and the average number of shares in issue being
36,663,967 for the period ended 31 January 2008 (29,852,493 for 31 July 2007 and
21,678,724 for 31 January 2007). Share options are non-dilutive for the period
because of the loss. There were no dividends for the period ended 31 January
2008.
4. Share-based payments
Shared-based incentives are provided to Directors and senior employees. In
addition, share-based warrants were issued in 2006 to NPI Ventures. The terms
and conditions of the share options and warrants made during the year ended 31
July 2007 are disclosed in the most recent annual financial statements. The
basis of measuring fair value is consistent with that disclosed in the
consolidated financial statements for the year ended 31 July 2007.
The fair value of the share-based options and warrants are recognised as an
expense through the income statement over the relevant vesting periods. The
charge in the current period was �24,000 (�8,000 for the period to 31 January
2007 and �16,000 for the year ended 31 July 2007).
5. Related party transactions
During the period, Biofusion provided support services to Sheffield University
Enterprises Ltd (SUEL), a wholly owned subsidiary of the University of
Sheffield, totalling �60,000 (2007: �60,000). In addition under the terms of the
agreement dated January 2005, Biofusion paid the University of Sheffield �60,000
(2007: �60,000) as payments on account for IP. At 31 January 2008, Biofusion
owed the University of Sheffield �1,805,000 (2007: �1,754,000) relating to loan
notes and accrued interest arising from the purchase of interests in portfolio
spin-out companies.
Under the terms of the agreement dated January 2007, Biofusion paid Cardiff
University �105,000 (2007: �nil) as payments to support the management of the IP
pipeline. At 31 January 2008, Biofusion owed Cardiff University �1,287,000
(2007: �1,474,000) relating to loan notes and accrued interest arising from the
purchase of interests in portfolio spin-out companies.
6. Impact of the first time adoption of IFRS/IAS
For all periods up to and including the year ended 31 July 2007, the Group
prepared its financial statements in accordance with UK GAAP. The Group's
financial statements for the year ended 31 July 2008 will be the first annual
financial statements that comply with International Financial Reporting
Standards as adopted by the EU (adopted IFRS). These transition statements have
been prepared on the basis set out in note 1 to the interim financial
statements.
In preparing these financial statements, the Group has started from an opening
balance sheet as at 1 August 2006, the Group's date of transition to IFRS and
made those changes in accounting policies and other restatements required by
IFRS 1 "First-time adoption of International Financial Reporting Standards" for
the first -time adoption of IFRS.
The reconciliations within note 7 explain the principal adjustments made by the
Group in the transition to IFRS on the income statements and balance sheets. The
adoption of IFRS does not impact the amount of cash previously disclosed under
UK GAAP in any of the periods of account in the interim results.
6. Impact of the first-time adoption of IFRS/IAS continued
Balance sheet reconciliation at 1 August 2006
Effect of
transition
UK GAAP To IFRS IFRS
Note �000 �000 �000
Assets
Non-current assets
Property, plant and equipment 25 - 25
Intangible assets A 68 5 73
Investments B 3,370 485 3,855
Total non-current assets 3,463 490 3,953
Current assets
Trade and other receivables 576 - 576
Cash and cash equivalents 5,883 - 5,883
Total current assets 6,459 - 6,459
Total assets 9,922 490 10,412
Equity
Called up share capital 203 - 203
Capital reserve 2 - 2
Share premium 8,906 - 8,906
Capital redemption reserve 1 - 1
Retained earnings (1,370) 435 (935)
Total equity attributable to equity holders of the 7,742 435 8,177
parent
Minority interest C (55) 55 -
Total equity 7,687 490 8,177
Non-current liabilities
Amounts owed to related parties 2,038 - 2,038
Current liabilities
Trade and other payables 197 - 197
Total liabilities 2,235 - 2,235
Total equity and liabilities 9,922 490 10,412
A Goodwill acquired on business combinations is carried at cost less
impairment in value under IFRS 3. Previously amortised goodwill has been
reversed as there is no impairment in cost (�5,000).
B Equity investments have been increased to reflect a fair value uplift
(�485,000).
C Minority interests have been restated to comply with requirements of IAS
27 (�55,000).
6. Impact of the first-time adoption of IFRS/IAS continued
Reconciliation of income statement six months ended 31 January 2007
Effect of
transition
UK GAAP To IFRS IFRS
Note �000 �000 �000
Revenue 106 - 106
Change in fair value of investments - - -
Gain on disposal of investments 8 - 8
Operating expenses
- corporate operating expenses (520) - (520)
- subsidiary spin-out operating expenses D (276) 25 (251)
- amortisation of intangible assets E (109) 2 (107)
(905) 27 (878)
Results from operating activities (791) 27 (764)
Finance income 151 - 151
Finance expenses (72) - (72)
Loss before income tax (712) 27 (685)
Income tax expense - - -
Loss for the period (712) 27 (685)
Attributable to:
Equity holders of the parent (611) (54) (665)
Minority interest F (101) 81 (20)
Loss for the period (712) 27 (685)
D Negative goodwill generated on the acquisition of a spin-out company,
previously within intangible assets in the balance sheet has been
derecognised at the date of acquisition and taken through the income
statement in the period (�25,000).
E Amortisation of goodwill on business combinations (�2,000) has been
reversed under IFRS 3 (see A).
F Minority interests have been restated to comply with requirements of IAS 27
(�81,000).
6. Impact of the first-time adoption of IFRS/IAS continued
Balance sheet reconciliation at 31 January 2007
Effect of
transition
UK GAAP To IFRS IFRS
Note �000 �000 �000
Assets
Non-current assets
Property, plant and equipment 24 - 24
Intangible assets G 15,994 32 16,026
Investments H 5,213 485 5,698
Total non-current assets 21,231 517 21,748
Current assets
Trade and other receivables 575 - 575
Cash and cash equivalents 12,148 - 12,148
Total current assets 12,723 - 12,723
Total assets 33,954 517 34,471
Equity
Called up share capital 367 - 367
Capital reserve 2 - 2
Share premium 31,671 - 31,671
Capital redemption reserve 1 - 1
Retained earnings (1,973) 381 (1,592)
Total equity attributable to equity holders 30,068 381 30,449
Minority interest I (136) 136 -
Total equity 29,932 517 30,449
Non-current liabilities
Amounts owed to related parties 3,488 - 3,488
Current liabilities
Trade and other payables 534 - 534
Total liabilities 4,022 - 4,022
Total equity and liabilities 33,954 517 34,471
G Goodwill acquired on business combinations is carried at cost less
impairment in value under IFRS 3. Amortisation on goodwill previously
charged has been reversed as there is no impairment in cost (�7,000).
Negative goodwill generated on the acquisition of a spin-out company,
previously within intangible assets in the balance sheet has been
derecognised at the date of acquisition and taken through the income
statement in the period (�25,000).
H Equity investments have been increased to reflect a fair value uplift
(�485,000).
I Minority interests have been restated to comply with requirements of IAS 27
(�136,000).
6. Impact of the first-time adoption of IFRS/IAS continued
Reconciliation of income statement year ended 31 July 2007
Effect of
transition
UK GAAP To IFRS IFRS
Note �000 �000 �000
Revenue 351 - 351
Change in fair value of investments J (653) 96 (557)
Gain on disposal of investments 66 - 66
Operating expenses
- corporate operating expenses (1,580) - (1,580)
- subsidiary spin-out operating expenses K (821) 24 (797)
- amortisation of intangible assets L (903) 5 (898)
(3,304) 29 (3,275)
Results from operating activities (3,540) 125 (3,415)
Finance income 535 - 535
Finance expenses (195) - (195)
Loss before income tax (3,200) 125 (3,075)
Income tax expense - - -
Loss for the period (3,200) 125 (3,075)
Attributable to:
Equity holders of the parent (2,890) (163) (3,053)
Minority interest M (310) 288 (22)
Loss for the period (3,200) 125 (3,075)
J Fair value gains recognised on equity investments during the period
(�96,000).
K Negative goodwill generated on the acquisition of a spin-out company,
previously within intangible assets in the balance sheet has been
derecognised at the date of acquisition and taken through the income
statement in the period (�24,000).
L Amortisation of goodwill on business combinations (�5,000) has been
reversed under IFRS 3 (see A).
M Minority interests have been restated to comply with requirements of IAS 27
(�288,000).
6. Impact of the first-time adoption of IFRS/IAS continued
Balance sheet reconciliation at 31 July 2007
Effect of
transition
UK GAAP To IFRS IFRS
Note �000 �000 �000
Assets
Non-current assets
Property, plant and equipment 41 - 41
Intangible assets N 15,204 34 15,238
Investments O 4,510 581 5,091
Total non-current assets 19,755 615 20,370
Current assets
Trade and other receivables 795 - 795
Cash and cash equivalents 10,600 - 10,600
Total current assets 11,395 - 11,395
Total assets 31,150 615 31,765
Equity
Called up share capital 367 - 367
Capital reserve 2 - 2
Share premium 31,671 - 31,671
Capital redemption reserve 1 - 1
Retained earnings (4,244) 272 (3,972)
Total equity attributable to equity holders 27,797 272 28,069
Minority interest P (343) 343 -
Total equity 27,454 615 28,069
Non-current liabilities
Amounts owed to related parties 3,293 - 3,293
Current liabilities
Trade and other payables 403 - 403
Total liabilities 3,696 - 3,696
Total equity and liabilities 31,150 615 31,765
N Goodwill acquired on business combinations is carried at cost less
impairment in value under IFRS 3. Previously amortised goodwill has been
reversed as there is no impairment in cost (�9,000). Negative goodwill
generated on the acquisition of a spin-out company, previously within
intangible assets in the balance sheet has been derecognised at the date of
acquisition and taken through the income statement in the period (�25,000).
O Equity investments have been increased to reflect a fair value uplift
(�581,000).
P Minority interests have been restated to comply with requirements of IAS 27
(�343,000).
Independent Review Report
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly report for the six months ended 31 January 2008
which comprises the consolidated income statement, the consolidated balance
sheet, the consolidated cash flow statement, the consolidated statement of
changes in equity and the related explanatory notes. We have read the other
information contained in the half-yearly report and considered whether it
contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our
engagement. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been approved by, the
Directors. The Directors are responsible for preparing the half-yearly report in
accordance with the AIM Rules.
As disclosed in note 1, the next annual financial statements of the Group will
be prepared in accordance with IFRS as adopted by the EU.
The accounting policies that have been adopted in preparing the condensed set of
financial statements are consistent with those that the Directors currently
intend to use in the next annual financial statements. There is, however, a
possibility that the Directors may determine that some changes to these policies
are necessary when preparing the full annual financial statements for the first
time in accordance with IFRS as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly report for the
six months ended 31 January 2008 is not prepared, in all material respects, in
accordance with the recognition and measurement requirements of IFRS as adopted
by the EU and the AIM Rules.
KPMG Audit Plc
Chartered Accountants
16 April 2008
Sheffield Office
The Sheffield Bioincubator
40 Leavygreave Road
Sheffield
S3 7RD
Cardiff Office
8th Floor
Eastgate House
35-43 Newport Road
Cardiff
CF24 0AB
www.biofusion.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GUURACUPRGMA
Biofusion (LSE:BFN)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
Biofusion (LSE:BFN)
Historical Stock Chart
Von Jun 2023 bis Jun 2024
