TIDMABH
RNS Number : 0921T
Angel Biotechnology Holdings Plc
10 December 2012
10 December 2012
Angel Biotechnology Holdings Plc ("Angel" or "the Group")
Interim results for the six month period ended 30 September
2012
Angel Biotechnology Holdings Plc (AIM: ABH), the specialist
contract manufacturer of advanced biologics, announces its interim
results for the six month period ended 30 September 2012.
Summary points:
-- The loss for the period was GBP2,862k. The majority
(GBP2,037k) is attributable to a combination of write back of
accrued revenue and contract liabilities for the period, related to
the proposed transfer of contracts with OOO "NPF Materia Medica
Holding" ("MMH") from ABH to a joint venture company ("Joint
Venture Company") to be established by Angel and Mapix s.a.r.l.
("Mapix"), a company associated with MMH.
-- Net liabilities at the end of the period are GBP117k
including GBP1,692k which is the net liability owed to the Joint
Venture Company on transfer of MMH contracts. Settlement of this
liability, most of which is expected to be written back in
subsequent periods, does not involve the payment of cash.
-- Angel acquired the necessary assets to allow the formation of
Angel Biomedical Limited ("ABL") in Glasgow. ABL also established a
supply agreement with Cardium Therapeutics for the supply of bulk
collagen material for its FDA-approved 510K Excellagen product to
the value of GBP400k over the first 12 months.
-- ABH retained its MHRA (IMP and MIA) licences for its
Pentlands facility, and extended these licences to include its
Cramlington operations in Q2 2012.
-- Dr Paul Harper stood down as Executive Chairman, with Mr
Nicholas Smith appointed as Non-Executive Chairman.
Dr Stewart White, Commercial Director and Acting CEO of Angel
Biotechnology Holdings plc said: "The first half of 2012 has been a
challenging period for Angel. The operational review of our
business, measured against client requirements, has been thorough
and has resulted in what we believe is the best outcome in the
circumstances for our customers, staff and shareholders. The main
outcome has been to progress the formation of the Joint Venture
Company with MMH, using our Pentlands facility, in addition to the
proposed transfer of existing MMH contracts from Angel to the Joint
Venture Company.
In parallel with these challenges, Angel continues to service
its existing clients securing the additional GMP manufacturing
contracts to complete the ReNeuron phase I clinical trial, in
addition to establishing an exciting new subsidiary company, ABL,
providing access to a wider range of markets and customers within
the regenerative medicine and medical device sectors."
Mr Nicholas Smith, Non-Executive Chairman of Angel Biotechnology
Holdings plc said: "Looking back, it is disappointing to see how
events beyond Angel's control such as the global funding squeeze
and technical problems with the MMH contracts have derailed the
promising business plan that delivered its maiden profit less than
two years ago. My disappointment reinforces my determination to
reduce Angel's exposure to uncontrollable risks, to build on its
strengths to provide a broader commercial offering and, in
particular, to focus on strategic partnerships with those looking
for a manufacturing base for their products.
I look forward to the delivery of the Joint Venture Agreement
and to helping the Joint Venture Company achieve its goals in the
future.
I would like to thank all members of staff who have played a
part in the Angel business in this difficult half-year, especially
for the professional way they have dealt with the challenges whilst
pragmatically accepting a reduction in pay. I would also like to
thank our patient shareholders and assure them that every effort of
the board is devoted to the development of a resilient and robust
business model and the delivery of sustainable earnings."
For further information:
Angel Biotechnology Holdings plc
Nicholas Smith, Non-Executive Chairman +44 (0) 131 445 6077
www.angelbio.com
Grant Thornton, Corporate Finance
Colin Aaronson / Melanie Frean +44 (0) 20 7383 5100
Hybridan LLP (Broker)
Claire Noyce, Deepak Reddy +44 (0) 20 7947 4350
Media enquiries:
The Communications Portfolio Ltd
Philip Ranger / Caolan Mahon +44 (0) 20 7536 2028 / 2029
Non-Executive Chairman and Acting CEO's Statement
The first half of the financial year has been dominated by
issues arising from contracts undertaken by Angel for MMH, the
protracted negotiations for the transfer of the MMH contracts into
a new Joint Venture Company and by difficult market conditions
caused by funding restraints for many of our existing and
prospective clients.
The decision to form a Joint Venture Company with Mapix
involving the development and manufacture of active antibody
products for MMH was announced in October 2011. The intention was
that Angel should finish the development of the five products (then
subject to pre-existing contracts) with new product lines and
repeat business for existing products to be dealt with in the Joint
Venture Company. It was then anticipated that the Joint Venture
Company would occupy a dedicated development and GMP space at
Angel's Cramlington Facility and that the development of that space
and the resources to occupy it would be financed by the Joint
Venture Company. The five projects would be finished at both the
Pentlands and Cramlington facilities and further projects would be
undertaken at our Cramlington facility. By May 2012 it had become
apparent to Angel that a number of technical difficulties were
producing outlying deviations which could severely disrupt the
progress of the five MMH contracts and involve Angel in open-ended
costs to completion. Resources were devoted to finding solutions
and reducing disruption but in the end proved fruitless. Angel
commenced discussions with MMH in May 2012 with a view to
re-pricing and rescheduling the five MMH contracts to close off the
potential losses for Angel. These discussions concluded at the end
of August 2012 with an agreement for Angel to continue working on
the five MMH contracts, subject to a monthly payment to cover cash
costs of Angel, on a temporary basis until the five contracts could
be transferred into the Joint Venture Company. During this time it
was agreed that the Joint Venture Company would be located in
Pentlands to utilise the staff and resources currently working on
the five contracts and to reduce the development budget of the
Joint Venture Company so as to compensate for the additional
liabilities it was to assume.
In August 2012, MMH appointed technical auditors to review the
completion stage of the on-going contracts. They estimated a
difference of approximately GBP2.6 million between amounts invoiced
and settled to date and contract completeness based on the
proportion of contract costs incurred and Angel's entitlements in
line with a strict interpretation of the contractually defined
milestones. The terms of the contracts allow for the reduction of
the net liability to just under GBP1.7 million, which is recognised
as a loss in the profit and loss account for the six months to 30
September 2012. In addition Angel is writing off an accrued income
balance of GBP0.35 million at the half year stage in relation to
the contracts as it will not be invoicing this amount. Under the
terms of the prospective Joint Venture Agreement, the GBP1.7
million would be recognised as a loan from the Joint Venture
Company which will, in turn, assume the GBP1.7 million contractual
liability to MMH. The loan balance will be offset by approximately
GBP0.5 million on the transfer of assets and systems from Angel
into the Joint Venture Company. The balance of the loan shall be
offset by value derived on the obtaining of licencing and from
future profits from the delivery of project milestones by the Joint
Venture Company. Full details of the Joint Venture Company
arrangements will be disclosed as soon as the Joint Venture
Agreement is signed, which is expected to be before the end of this
month.
Market conditions remain difficult and hard to predict with
funding being the main constraint on client activity. Revenues for
H1 2012 reduced to GBP1,070k compared with GBP1,402k in H1 2011. In
the last 6 months Angel has seen a number of promising contracts
fall away or be deferred due to funding issues and this has often
happened after Angel has devoted significant time and resources to
developing the technical aspects of potential projects, including
technical audits and multiple and sequential requests for
proposals. During the first half of the financial year Angel has
entered into contracts worth only about GBP1.3 million and the
major part of this is a contract with TransGenRx, the start of
which has not been communicated to us by the client. The current
pipeline of projects that are judged to be near order total about
GBP3.0 million.
Angel has responded to the unpredictable market conditions by
not over-committing resources and reducing the consumption of cash.
During the period Angel had to make staff redundant at Cramlington
who had been recruited for the Joint Venture Company work,
following the decision to relocate the Joint Venture Company to
Pentlands. Staff numbers at Pentlands have also reduced with a
present total complement for all sites of 24, of whom two are
administrative. Capital investment programmes have been pared to
the minimum necessary for maintenance of capability and
discretionary expenditure has been curtailed. Angel is well aware
of the continued heightened risk that the projects in the pipeline
may not be delivered in the expected timeframe. Angel is putting
more business development focus on smaller-value niche projects
which may be less susceptible to funding issues. At the same time,
Angel is actively pursuing strategic partnerships in its cell
therapy, biologics and biomedical businesses in order to advance
shareholder value. In this way, Angel expects that it can overcome
its current low cash position and build a more resilient business
model.
Business Development
The continued investment from both the private and public sector
in regenerative medicine demonstrates clear opportunities for early
stage entrants such as Angel who have long established clinical GMP
capabilities. Indeed, Angel's track record in delivering both
autologous and allogeneic material for clinical trials provides the
necessary credibility for Angel to interact with potential clients
operating across the wide spectrum of regenerative medicine.
Recent research has shown that the number of cell based products
described as "tools and technologies" is broadly equivalent to
those in preclinical and phase I clinical trials. The capability
across the Angel group will allow the company to offer its
established manufacturing services to such clients with
non-clinical cell based products but also to the medical device and
in-vitro diagnostics sectors. Importantly for Angel, the regulatory
process for such products is generally shorter as is the time to
market.
Despite a challenging environment, we believe that the interest
we are receiving from the broader spectrum of life science and
medical device companies will reduce the potential risk to revenue
of over-reliance on the success of early stage cellular therapies
and indeed competition from other GMP contract manufacturers.
Business development activities remain focussed on the USA and
Europe where Angel will continue with its established strategy of
early stage engagement with clients at the pre-GMP process/product
development stage. In addition, Angel will have a presence at
conferences in both locations during H2 2012, in addition to
hosting a number of on-site visits by potential clients.
Outlook
During the remainder of 2012, Angel will seek to complete the
Joint Venture Agreement with MMH. This will reduce the Group's cost
base and will result in a lower fixed cost profile for the Group
and allow it to gradually scale up resources to match revenue
opportunities. It is the aim of the board to provide a cash neutral
H2 outturn at year end 2013 and to move towards positive free cash
flow in 2013-14. At the same time, Angel is actively seeking
strategic partnership opportunities for elements of its businesses
to provide necessary contingencies and to convert market potential
into earnings at an early stage.
Mr Nicholas Smith
Non-Executive Chairman, Angel Biotechnology Holdings Plc
Dr Stewart White
Acting CEO, Angel Biotechnology Holdings Plc
Angel Biotechnology Holdings Plc
Unaudited Consolidated Statement of Comprehensive Income
for the six months ended 30 September 2012
Unaudited Unaudited Audited
Half year to Half year to Period ended
30-Sept-12 30-Jun-11 31-Mar-12
GBP'000 GBP'000 GBP'000
Revenue 1,070 1,402 3,456
Cost of sales -872 -818 -2,249
Gross profit 198 584 1,207
Net operating expenses -1,018 -793 -2,473
Costs relating to transfer of contracts -2,037 - -
------------- ------------- -------------
Operating loss -2,857 -209 -1,266
Finance income - 8 2
Finance costs -5 -40 -35
Profit/loss before taxation -2,862 -241 -1,299
UK corporation tax - - -
Loss for the period attributable to equity shareholders -2,862 -241 -1,299
Loss per share (pence)
Basic and diluted -0.08 p -0.009 p -0.047 p
Angel Biotechnology Holdings Plc
Unaudited Consolidated Statement of Financial Position as at 30 September 2012
Unaudited Unaudited Audited
As at As at As at
30-Sept-12 30-Jun-11 31-Mar-12
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 3 6 4
Property, plant and equipment 1,284 436 989
1,287 442 993
Current assets
Trade and other receivables 699 630 1,127
Cash and cash equivalents 496 902 580
1,195 1,532 1,707
Total assets 2,482 1,974 2,700
----------- ---------- ----------
Current liabilities
Trade and other payables -514 -183 -383
Amounts payable on contract transfer -1,692 - -
Finance leases -135 - -50
Loans -14 -49 -14
Deferred income -109 -35 -312
-2,464 -267 -759
Non-current liabilities
Other non-current liabilities -135 - -135
Total liabilities -2,599 -267 -894
----------- ---------- ----------
Net assets/liabilities -117 1,707 1,806
----------- ---------- ----------
Capital and reserves
Share capital 3,774 2,685 3,274
Share premium account 962 5,683 523
Profit and loss account -4,853 -6,661 -1,991
Equity shareholders' funds -117 1,707 1,806
----------- ---------- ----------
Angel Biotechnology Holdings Plc
Statement of changes in equity for the 6 months ended 30 September 2012
Share Total
Share premium Retained shareholders'
capital account earnings funds
GBP'000 GBP'000 GBP'000 GBP'000
At 31 December 2010 2,111 4,384 -6,420 75
Share issue (net of costs) 1,163 1,823 2,986
Share based payments 44 44
Capital reduction -5,684 5,684 -
Loss for the year -1,299 -1,299
At 31 March 2012 3,274 523 -1,991 1,806
Share issue (net of costs) 500 439 939
Loss for the period -2,862 -2,862
At 30 September 2012 3,774 962 -4,853 -117
Angel Biotechnology Holdings Plc
Unaudited Consolidated Cash Flow Statement for the 6 months ended 30 September 2012
Unaudited Unaudited Audited
Half year to Half year to Period ended
30-Sept-12 30-Jun-11 31-Mar-12
GBP'000 GBP'000 GBP'000
Cash flows from operating activities:
Operating loss/profit -2,857 -209 -1,266
Amortisation and depreciation 57 32 107
Share-based payment expense - - 44
Increase/(decrease) in receivables 428 31 -594
Increase/(decrease) in payables 132 -194 5
Decrease in deferred income -203 -852 -445
Increase in provision 1,692 - -
Cash used in operations -751 -1,192 -2,149
UK corporation tax received - - -
Interest paid -5 -40 -35
Net cash used in operating activities -756 -1,232 -2,184
Cash flows from investing activities:
Interest received - 8 2
Purchase of non-current assets -248 -51 -491
Net cash used by investing activities -248 -43 -489
-------------- ------------- -------------
Cash (outflow) before financing -1,004 -1,275 -2,673
Cash flows from financing activities:
Repayment of loans - -309 -344
Finance lease payments -20 - -1
Issue of ordinary share capital 939 1,873 2,985
Net cash from financing activities 919 1,564 2,640
-------------- ------------- -------------
Net (decrease)/increase in cash and cash equivalents -85 289 -33
Cash and cash equivalents at beginning of period 580 613 613
Cash and cash equivalents at end of period 495 902 580
-------------- ------------- -------------
Angel Biotechnology Holdings Plc
Notes to the Interim Financial Statements
1. General information
Angel Biotechnology Holdings Plc is a public limited company
("the Company") incorporated in the United Kingdom under the
Companies Act 1985 (registration number: 5383314). The Company is
domiciled in the United Kingdom and its registered address is 50
Broadway, London SW1H 0BL. The Company's ordinary shares are traded
on the AIM market of the London Stock Exchange ("AIM"). Copies of
the interim report are available from the Company's website,
www.angelbio.com. Further copies of the interim report and annual
report and accounts can be obtained from the address above.
The Company's principal activity is the manufacture and supply
of bio-materials for use in clinical trials and at product
launch.
Angel Biomedical Ltd is a wholly owned subsidiary of Angel
Biotechnology Holdings Plc incorporated in the United Kingdom under
the Companies Act 2006 (registration number: 7999919). The Company
is domiciled in the United Kingdom and its registered address is 44
Colbourne Crescent, Nelson Industrial Estate, Cramlington, NE23
1WB.
The Company's principal activity is the manufacture and supply
of clinical grade collagen based bio-materials.
2. Basis of preparation
The consolidated interim financial statements of the Group for
the six months ended 30 September 2012, which are unaudited, have
been prepared in accordance with the accounting policies set out in
the annual report and accounts for the period ended 31 March
2012.
The financial information contained in the interim report does
not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The financial information for the full
preceding year is based on the statutory accounts for the period
ended 31 March 2012. Those accounts, upon which the auditors, Baker
Tilly UK Audit LLP, issued an unqualified audit opinion, and whose
report did not contain any matters to which they drew attention by
way of emphasis, nor contained a statement under Section 498(2) or
498 (3) of the Companies Act 2006, have been delivered to the
Registrar of Companies.
As permitted, this interim report has been prepared in
accordance with the AIM Rules for Companies and not in accordance
with IAS 34 "Interim Financial Reporting", therefore, it is not
fully compliant with International Financial Reporting Standards
(IFRS).
The interim financial statements are presented in sterling and
all values are rounded to the nearest thousand pounds (GBP'000)
except when otherwise indicated.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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