RNS Number:4520D
Evolutec Group PLC
07 September 2007
07 September 2007
Interim Results for the six months ended 30 June 2007
Evolutec Group plc (AIM: EVC) announces Interim Results for the six months ended
30 June 2007. The document is also published in full on the Company's web site.
Highlights
* Cash and held to maturity investments of #6.2 million at 30 June 2007
(31 December 2006: #8.7 million)
* Loss for the period was #2.1 million (Year to 31 December 2006 : #11.8
million)
* Evolutec is now an investment company under AIM rules
* Cost base of the Company minimised by terminating contracts of all
employees
* Reading office closed
* Gordon Hall and Mark Hawtin joined the Board; Mark Carnegie Brown,
Nicholas Badman, John Burke and Malcolm Darvell resigned
* The Company is actively seeking a single investment opportunity
Enquiries:
Evolutec: 07771 525 875
David Bloxham, Chairman:
www.evolutec.co.uk
Numis Securities: 0207 260 1277
Michael Meade
www.numiscorp.com
Chairman's review of operations
Following the disappointing clinical results with rEV131at the end of 2006 and
the subsequent collapse of the Company's share price, the Company undertook a
review of its strategic options and discussed these with its shareholders. It
became clear that there was no appetite for the risk involved in continuing the
Company as an independent entity and it was decided to look for alternative
solutions.
Numis Securities Limited was appointed to assist the Company with the review of
its strategic options, merging with another company being the most obvious.
After an exhaustive search and the identification of a potential merger partner,
these discussions collapsed at the last minute. The Company was then left with
a very difficult decision. After further consultation with major institutional
shareholders it was felt that the majority opinion was in favour of a return of
cash by way of a Member's Voluntary Liquidation. The Board felt that the
proposed distribution of net cash by way of liquidation provided shareholders
with certainty as to quantum and timing.
Appropriate steps were taken to begin this process and on 6 June the Company
sent out a Circular convening an Extraordinary General Meeting (EGM) for 6th
July 2007. During this period the Company took all steps to reduce its
expenditure to the minimum and to settle all its outstanding debts. This
involved ending the contracts of all employees and terminating the lease on the
Company's premises in Reading. Effectively the Company became a cash shell with
a listing on the Alternative Investment Market (AIM).
After sending the Circular, the Board received written confirmation from
Gartmore Investment Limited (Gartmore) that they had increased their holding in
Evolutec through market purchases and that they held 23.9 per cent of the issued
share capital of Evolutec. Furthermore, Gartmore advised the Board that they
would not vote in favour of the Resolutions proposed in the Circular. The
Resolutions were special and extraordinary requiring the approval of
three-quarters of those shareholders voting in person or by proxy. As another
institutional shareholder indicated that it too would vote against the
Resolutions, the Board was of the view that the Resolutions would not be passed.
This proved to be the case when the EGM was held. Following the EGM, Nicholas
Badman, Dr Mark Carnegie Brown, John Burke and Malcolm Darvell resigned as
Directors of the Company.
Graeme Hart and I have continued as Directors and in addition Gartmore proposed
that Gordon Hall and Mark Hawtin should join the Board to assist the Company
with its future. These appointments were subsequently confirmed. It is a
pleasure to welcome Gordon and Mark to the Board. They have considerable
experience in the healthcare and fund management fields, respectively, and this
will be of considerable benefit to the Company in reviewing future
opportunities.
Gartmore have proposed that Evolutec continues as a listed entity with a view to
considering possible transactions which would involve reversing another business
into Evolutec.
The regulatory team at AIM have confirmed that Evolutec will be classed as an
investment company under the AIM Rules pending any further transaction. The
Board intend that the investment policy of Evolutec will be to seek a single
investment, most probably of a UK or European business, in either the
technology, healthcare or service related sectors. The Board believes that it
will have the necessary experience in order to evaluate any potential
acquisitions and any proposed acquisition will be subject to shareholder
approval. If no transaction is announced prior to the next annual general
meeting of the Company, the Board intends to propose a resolution at such
meeting for shareholders to consider in relation to the future strategy of the
Company. If any transaction is announced, such a transaction is likely to be a
reverse takeover and would be conditional on shareholder approval. Evolutec will
continue to remain as a company listed on AIM.
I would like to take this opportunity to thank all the former employees of
Evolutec for their continued efforts during this period on behalf of the Company
despite the considerable personal and professional difficulties that they faced.
The Board will continue to seek ways to enhance the value of its shares and to
return value to shareholders. We have begun the process of looking for reverse
opportunities and it is our intention to bring one of these to a fruitful
conclusion prior to the next AGM of the Company.
Dr David P Bloxham
Financial Review
Evolutec had cash and cash equivalents of #6.2 million as at 30 June 2007. The
operating loss for the six month period was #2.1 million (6 months to 30 June
2006: #5.7 million). The principal expenditure in the period related to closure
costs of the operating business and settlement of outstanding obligations
relating to the completion of the clinical trials. . All known closure costs
have been included in these financial statements.
Balance Sheet
Share Capital
No further equity was issued during the period. Upon the termination of the
staff contracts, they all signed Compromise Agreements and these terminated all
existing options. The majority of these options were cancelled prior to vesting
and the cancellation has been accounted for by reversing employment costs of
#0.5 million.
Liquidity
The Group had cash and cash equivalents of #6.2 million as at 30 June 2007 as
compared to #8.7 million as at the 31 December 2006. This decrease reflects the
expenditure involved in completing the two clinical trials involving rEV131 and
terminating the contracts of employees. The net cash outflow from operating
activities was #2.7 million (6 months to 30 June 2006: #4.5 million) reflecting
the Group's expenditure for the period.
The Group had no borrowings during the year.
Treasury
As at 30 June 2007 the Group had #6.1 million on Treasury deposit. The Group's
policy is to split its deposits between two banks each with a minimum credit
rating of F1/A. The objective is to derive the maximum interest whilst
safeguarding the asset. Given that the cost base of the Group has been reduced
substantially it is anticipated that interest from the Treasury deposit should
cover its expenditure and therefore the cash asset should be reasonably stable.
Cash Flow
Net cash outflow from operating activities in the period was #2.7 million (six
months to 30 June 2006: #4.5 million). The principal cash inflow items were net
interest receipts of #0.2 million (six months to 30 June 2006: #0.33 million).
There was no capital expenditure and the entire cash outflow represented
operating expenditure.
Income Statement
Revenue
The Group received revenue of #15k during the period in connection with its
collaboration with Merial.
Selling and Marketing
Costs in this area amounted to #0.2 million and related to costs incurred in
licensing discussions for rEV576.
Research and Development
The costs in this area were related to completion costs for the clinical trials
with rEV131 in rhinitis and post-cataract inflammation. The Group also had
costs related to the termination of its manufacturing agreement for rEV576
carried out by Wacker Biotech GmbH.
Interest receivable and interest payable
Interest receivable in the period was #0.2 million (6 months to 30 June 2006:
#0.33 million). The decrease in interest reflects the reduced average cash
balance during 2007.
Taxation
No significant research and development tax credit is expected in this period.
INDEPENDENT REVIEW REPORT TO EVOLUTEC GROUP PLC
INTRODUCTION
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2007 which comprises the consolidated income
statement, consolidated balance sheet, consolidated cash flow statement,
consolidated statement of changes in shareholders equity and the related notes 1
to 6. We have read the other information contained in the interim report which
comprises only the Chairman's Review and the Financial Review and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information. Our responsibilities do not extend to any other
information.
This report is made solely to the Company in accordance with guidance contained
in APB Bulletin 1999/4 "Review of Interim Financial Information". Our review
work has been undertaken so that we might state to the company those matters we
are required to state to them in a review 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 conclusion we have formed.
DIRECTORS' RESPONSIBILITIES
The interim report including the financial information contained therein is the
responsibility of, and has been approved by, the directors. They are
responsible for preparing the interim report and ensuring that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
REVIEW WORK PERFORMED
We conducted our review in accordance with guidance contained in Bulletin 1999/4
"Review of Interim Financial Information" issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data and, based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Standards of Auditing (UK & Ireland) and therefore provides a
lower level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.
REVIEW CONCLUSION
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
GRANT THORNTON UK LLP
CHARTERED ACCOUNTANTS
OXFORD
(Date)
Unaudited consolidated income statement
For the six-month period ended 30 June 2007
Notes Six months Six months Year ended 31
ended 30 June ended 30 June December
2007 2006 2006
#000 #000 #000
Revenue 2 15 14 14
Cost of sales (1) (1) (1)
_____ _____ _____
Gross profit 14 13 13
Selling and marketing costs (158) (52) (189)
Research and development expenditure (1,045) (5,087) (10,509)
Administrative expenses (1,088) (1,007) (2,172)
_____ _____ _____
Operating loss (2,277) (6,133) (12,857)
Finance income 3 196 339 749
Finance costs 3 (13) (137) (364)
_____ _____ _____
Loss before tax (2,094) (5,931) (12,472)
Taxation - 251 645
_____ _____ _____
Loss for the period (2,094) (5,680) (11,827)
_____ _____ _____
Basic and diluted loss per ordinary share 6 (8.1)p (24.1)p (49.3)p
The results for the period are derived from discontinued activities.
The notes on pages 11 to 13 form part of these consolidated interim financial
statements.
Unaudited consolidated balance sheet
As at 30 June 2007
30 June 30 June 31 December 2006
2007 2006
ASSETS Notes #000 #000 #000
Non-current assets
Property, plant and equipment - 152 140
_____ _____ _____
- 152 140
_____ _____ _____
Current assets - 251 645
Research and development tax credits
Trade and other receivables 4 100 746 203
Held-to-maturity investments - 2728 -
Cash and cash equivalents 6,164 10,512 8,682
_____ _____ _____
6.264 14,237 9,530
_____ _____ _____
Total assets 2 6,264 14,389 9,670
_____ _____ _____
EQUITY
Capital and reserves attributable to the equity
holders of the Company
Share capital 27,037 24,402 27,037
Other reserves 8,561 8,948 9,083
Retained deficit (29,933) (21,692) (27,839)
_____ _____ _____
Equity shareholders' funds 5,665 11,658 8,281
_____ _____ _____
LIABILITIES
Non current liabilities 5 1 - 34
Trade and other payables
Current liabilities
Trade and other payables 5 598 2,731 1,355
_____ _____ _____
Total liabilities 599 2,731 1,389
_____ _____ _____
Total equity and liabilities 6,264 14,389 9,670
_____ _____ _____
The notes on pages 11 to 13 form part of these consolidated
interim financial statements.
Unaudited consolidated cash flow statement
For the six-month period ended 30 June 2007
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2007 2006 2006
Notes #000 #000 #000
Cash flows from operating activities
Loss for the period (2,094) (5,680) (11,827)
Taxation - (251) (645)
Depreciation 140 40 87
Interest received (196) (339) (595)
Unrealised foreign exchange losses - 138 81
Share options - value of employee services (reversed) (522) 155 290
Decrease in trade and other receivables 103 73 616
Increase/(decrease) in trade and other payables (790) 816 (526)
_____ _____ _____
Cash used by operations (3,359) (5,048) (12,519)
Taxation credit received 645 502 502
_____ _____ _____
Net cash outflow from operating activities (2,714) (4,546) (12,017)
_____ _____ _____
Cash flows from investing activities
Purchase of property, plant and equipment. 2 - (31) (66)
Interest received 3 196 339 595
Decrease in held-to-maturity investments - 13,118 15,877
_____ _____ _____
Net cash generated from investing activities 196 13,426 16,406
_____ _____ _____
Cash flows from Financing activities
Proceeds from issuance of shares - - 2,635
Net cash generated from financing activities - - 2,635
_____ _____ _____
Net increase/(decrease) in cash and cash equivalents (2,518) 8,880 7,024
Cash and cash equivalents at the start of the period 8,682 1,739 1,739
Exchange losses on cash and cash equivalents - (107) (81)
_____ _____ _____
Cash and cash equivalents at the end of the period 6,164 10,512 8,682
_____ _____ _____
The notes on pages 11 to 13 form part of these consolidated interim financial
statements.
Unaudited consolidated statement of changes in shareholders' equity
For the six-month period ended 30 June 2007
Share Share Other Retained Total
Capital Premium reserves deficit
#000 #000 #000 #000 #000
Balance at 31 December 2005 2,359 22,043 8,793 (16,012) 17,183
_____ _____ _____ _____ _____
Loss for the period - - - (5,680) (5,680)
Fair value of share-based payments - - 155 - 155
_____ _____ _____ _____ _____
Balance at 30 June 2006 2,359 22,043 8,948 (21,692) 11,658
_____ _____ _____ _____ _____
Loss for the period - - - (6,147) (6,147)
Issue of ordinary shares 236 2,399 - - 2,635
Fair value of share-based payments - - 135 - 135
_____ _____ _____ _____ _____
Balance at 31 December 2006 2,595 24,442 9,083 (27,839) 8,281
_____ _____ _____ _____ _____
Loss for the period - - - (2,094) (2,094)
Fair value of share-based payments - - (522) - (522)
_____ _____ _____ _____ _____
Balance at 30 June 2007 2,595 24,442 8,561 (29,933) 5,665
_____ _____ _____ _____ _____
The notes on pages 11 to 13 form part of these consolidated interim financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
For the six-month period ended 30 June 2007
1 Accounting policies
These interim financial statements have been prepared in accordance with IAS 34
and in accordance with the recognition measurement principles of IFRS as adopted
in the European Union ("EU").
The interim financial information has not been audited and does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985
but has been reviewed by the auditors in accordance with Bulletin 1999/4 issued
by the Auditing Practices Board. The Company's statutory accounts for the year
ended 31 December 2006, prepared under IFRS as adopted in EU, have been
delivered to the Registrar of Companies; the report of the auditors on these
accounts was unqualified and did not contain a statement under Section 237 (2)
or (3) of the Companies Act 1985.
2. Segment information
Primary reporting format - business segments
In the six months to 30 June 2007, the Group operated one business segment,
which is the research and development of a range of pharmaceutical product
candidates.
Analysis of revenue by category Six months ended Six months ended Year ended 31
30 June 2007 30 June 2006 December 2006
#000 #000
#000
Sale of goods - - -
Collaborative agreements 15 14 14
_____ _____ _____
Total 15 14 14
_____ _____ _____
Secondary reporting format - geographical segments
The Group operates in four main geographical areas, even though it is managed on
a worldwide basis.
The home country of the Company, and of Evolutec Limited - which is the main
operating company - is the United Kingdom The area of operation is primarily
research and development of a range of pharmaceutical product candidates.
Six months ended Six months ended Year ended 31
30 June 2007 30 June 2006 December 2006
Revenue #000 #000 #000
United Kingdom - - -
Rest of Europe - - -
North America 15 14 14
Rest of the World - - -
_____ _____ _____
Total 15 14 14
_____ _____ _____
Six months ended Six months ended Year ended 31
30 June 2007 30 June 2006 December 2006
Total Assets #000 #000 #000
United Kingdom 6,264 14,389 9,670
Rest of Europe - - -
North America - - -
Rest of the World - - -
_____ _____ _____
Total 6,264 14,389 9,670
_____ _____ _____
Total assets are allocated based on where the assets are located.
Six months ended Six months ended Year ended 31
30 June 2007 30 June 2006 December 2006
Capital Expenditure #000 #000 #000
United Kingdom - 31 66
Rest of Europe - - -
North America - - -
Rest of the World - - -
_____ _____ _____
Total - 31 66
_____ _____ _____
Capital expenditure is allocated based on where the assets are located.
3. Finance income and charges
Six months ended Six months ended Year ended 31
30 June 2007 30 June 2006 December 2006
#000 #000 #000
Interest receivable and other similar income
Interest on cash, cash equivalents and held-to-maturity 196 339 595
assets
Exchange gains on held-to-maturity assets - - 154
_____ _____ _____
Total 196 339 749
_____ _____ _____
Interest payable and other similar charges
Exchange losses on held-to-maturity assets (13) (137) (364)
_____ _____ _____
Total (13) (137) (364)
_____ _____ _____
4. Trade and other receivables
Six months ended Six months ended Year ended 31
30 June 2007 30 June 2006 December 2006
#000 #000 #000
Trade debtors 7 - -
Other debtors 51 89 24
Prepayments and accrued income 42 657 179
_____ _____ _____
100 746 203
_____ _____ _____
5. Trade and other payables
Six months ended Six months ended Year ended 31
30 June 2007 30 June 2006 December 2006
#000 #000 #000
Provision for NI on share options 1 - 34
_____ _____ _____
Non-current trade and other liabilities 1 - 34
_____ _____ _____
Trade creditors 116 1,130 165
Taxation and social security payable 330 49 136
Accruals 152 1,552 1,054
_____ _____ _____
Current trade and other liabilities 598 2,731 1,355
_____ _____ _____
Total trade and other liabilities 599 2,731 1,389
_____ _____ _____
6. Loss per ordinary share
Six months ended Six months ended Year ended 31
30 June 2007 30 June 2006 December 2006
#000 #000 #000
Attributable loss (2,094) (5,680) (11,827)
_____ _____ _____
Weighted average number of shares in issue (000) 25,950 23,591 24,011
_____ _____ _____
Loss per share (basic and diluted) (8.1)p (24.1)p (49.3)p
_____ _____ _____
The calculation of earnings per share is based on the weighted average number of
ordinary shares in issue during the period.
This information is provided by RNS
The company news service from the London Stock Exchange
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