RNS Number:3013D
Sagentia Group AG
05 September 2007
5th September 2007
SAGENTIA GROUP AG ('SAGENTIA GROUP')
INTERIM RESULTS 2007
Sagentia Group, a leading integrated technology consulting, development and
venturing organisation, today announces its results for the six months to 30
June 2007.
Summary:
* First half revenues of #10.8m, although 17% down on the corresponding
period in 2006 (#13.0m), are 2% ahead of preceding six months (H2 2006:
#10.6m)
* Ongoing costs in Consulting and IP Exploitation reduced by #1.3m per
annum
* Consulting and IP Exploitation operating loss of #0.5m (H1 2006:
operating profit of #0.2m) reflecting breakeven consulting activities, cost
of options and #0.4m in one-off restructuring costs
* Positive order intake momentum in the second quarter with year to date
order intake now tracking 2006
* Decrease in fair value of venture portfolio assets of #1.9m (H1 2006:
increase in fair value of #0.2m) primarily reflecting a #1.4m decrease in
the balance sheet value of AIM-listed CMR Fuel Cells plc (#2.3m - H2 2006:
#3.7m). Period end balance sheet valuation of portfolio #9.5m (H2 2006:
#11.3m)
* Group loss from continuing activities before taxation of #3.0m (H1 2006:
#0.3m). Losses are stated after charging a loss of #0.6m incurred by venture
subsidiary companies (H1 2006: #0.3m), a decrease in fair value of financial
assets of #1.9m (H1 2006 increase of #0.2m), net central costs of #0.2m (H1
2006: #0.3m) and the cost of share options of #0.1m (H1 2006: #0.1m)
* Outlook for the second half of the year encouraging with a forecast
return to profitability in the consulting operations and positive cash flow
throughout the Group.
Chris Masters, Sagentia Group Chairman said:
"Although in terms of overall profitability the results for the first six months
of 2007 are disappointing, we have ended the period with order intake at a
higher level than in the same period for 2006, with costs, after restructuring,
running at a lower level than previously and with our consulting activity
profitable in Q2. Added to which, an increase in licensing activity over the
last few months should start to generate increased income during the second half
of 2007. Given the changes implemented over the last six months, we are now
confident that we have a sound platform from which to profitably grow our core
Consulting and IP business.
On the venturing side of our business, the investment portfolio has suffered
principally from the share price movement of CMR Fuel Cells plc which has fallen
significantly during the last six months. Notwithstanding the share price
movement and its continuing volatility, the value of our holding in CMR still
represents a multiple of over five times our original investment and the company
has recently announced a key corporate relationship with Samsung. Across the
rest of the portfolio, strong technical and commercial progress has also been
made in both TurfTrax and Sphere Medical.
The Board and management team remain totally committed to delivering profitable
and sustainable growth from the Group's Consulting and IP operations. The focus
for the future will be on increasing licensing income while at the same time
reducing our dependence on venturing activities. The Consulting and IP
operations are expected to be profitable in H2 2007, with full year fee income
recovering to the same level as achieved in FY 2006. Actions are also underway
to sell a number of our portfolio holdings which will improve both the trading
and cash position of the business by the end of the year.
Overall, in terms of increasing operational efficiency and reinvigorating the
sales effort, the Group has made good progress over the last six months and we
look to the future with added confidence"
Enquiries:
The Sagentia Group AG
Martin Frost
(44) 1223 875 200
www.sagentiagroup.com
Hansard Group
Andy Tan
(44) 207 245 1100
THE SAGENTIA GROUP AG
PRELIMINARY RESULTS STATEMENT
CHIEF EXECUTIVE'S review
The following table analyses the sources of turnover and operating profits and
losses on ordinary activities across the Group, and is extracted from the
segmental information set out in the notes to this report.
------------------ ------------ ------------ ------------
#000s Six months ended Six months ended Year ended
30 June 2007 30 June 2006 31 December 2006
------------------ ------------ ------------ ------------
Revenue Profit / (Loss) Revenue Profit / (Loss) Revenue Profit / (Loss)
------------------ ------- ------- ------- ------- ------- -------
Consulting and
IP exploitation 9,716 (32) 11,945 285 21,472 (409)
Venture
Subsidiaries 239 (552) 315 (330) 531 (657)
Asset Management 204 19 240 (38) 485 64
Property and
Centre 657 (214) 548 (239) 1,158 (495)
------- ------- ------- ------- ------- -------
Revenues :
Gross profit
(loss) 10,816 (779) 13,048 (322) 23,646 (1,497)
(Loss) profit
on disposals
of investments (25) (22) 392
Change in fair
value on financial
assets (1,880) 209 (876)
Related bonus
accrual 190 (60) 384
Rebranding - - (632)
Reorganisation (420) - -
Cost of options (52) (119) (235)
------- ------- -------
Operating loss (2,966) (314) (2,464)
------------------ ------- ------- ------- ------- ------- -------
Revenue
Revenue is stated net of inter-company activity. Total revenues for the period
decreased by 17% to #10.8m (H1 2006: #13.0m) due primarily to a fall in order
intake within technology consulting services at the end of 2006.
Technology Consulting Services saw a reduction in fees, from #9.7m to #8.7m, as
well as in recharged project expenses from #2.2m to #1.0m which, while large,
does not affect profits. Revenues from technology consulting including recharged
expenses representing 90% of Group revenue (H1 2006: 92%).
Property and Centre revenues continue to see growth from Manage5Nines, our IT
outsourcing business, and rental income at Harston Mill.
Operating profit (loss)
Gross loss for the period of #0.8m increased from #0.3m in H1 2006. The core
consulting and IP business, excluding movements on investments, made a profit of
#0.3m in H1 2006, before making a #0.7m loss in the second half. H1 2007
therefore includes costs of restructuring principally in the consulting sector
at the beginning of 2007. The consulting and IP activity returned to profit in
Q2 2007 and is expected to be profitable in the second half of the year. Venture
subsidiaries costs have increased in Intrasonics, Atranova, and a new Sensor
business, Sagentia Sensors, increasing the net cost from #0.3m to #0.6m. In the
second half of 2007 it is anticipated that losses will reverse as licence and
other income increase in all three businesses.
Operating losses in the period have been further impacted by the reduction in
the fair value adjustments (net of bonus accrual) of #1.7m from an increase of
#0.1m in H1 2006, principally as a result of the significant reduction in the
share price of CMR Fuel Cells plc. A further non cash cost of #0.1m (H1 2006:
#0.1m), relating to the cost of options granted, is charged to the operating
results. The share price of CMR Fuel Cells plc has further reduced since the
half year.
Consulting and intellectual property ('IP') exploitation
The Group's international technology consulting and IP exploitation activities
are primarily carried out through its wholly owned subsidiary, Sagentia Ltd.
("Sagentia") The technology and business consulting services offer customised
product and process solutions and advice on new technology opportunities to a
wide range of international clients, from start-ups to multinationals.
Sagentia's wide and interdisciplinary skill base means that the business can
take a broad approach to issues surrounding new business development, including
technological, financial, marketing and strategic aspects.
The results for H1 2007 reflect a slowly recovering trading position from
reduced order intake highlighted at the end of 2006. Revenues for the period
have declined in comparison to 2006, however, costs have also been reduced
during Q1 2007, leaving the consulting activities in profit during Q2. Order
intake has however recovered and is expected to improve performance in H2 2007.
Notable successes during H1 2007 include the launch of a breakthrough mobile
payment solution for remittances in Kenya, which was developed in conjunction
with Vodafone for Safaricom. The service enables customers to send money safely
and cheaply using a mobile phone and provides cost effective access to financial
services for people without bank accounts in economies where it is unsafe,
difficult and expensive to hold cash and move money around. By building on the
rapidly growing mobile networks in emerging markets and linking with finance
institutions, merchants and employee payment facilities, this provides a
uniquely robust, reliable and efficient tool for organisations to distribute and
receive money, their customers to access it and for individuals to move money
around the country, and around the world.
The new service is available to anyone with a mobile phone, regardless of
whether they have a bank account. Worldwide, there are more than twice as many
people who have a mobile phone than have a bank account. Specifically this
provides mobile phone users with a secure platform which uses simple, tailored
menus on their phone to send fully encrypted and PIN locked messages to a
thoroughly audited financial accounting system.
The culmination of a two year multi million pound programme, M-PESA was
extensively tested on the Safaricom network. Following the successful roll-out
in Kenya, the collaboration is expected to continue for at least a further two
years.
Other projects are available from The Gen, our quarterly magazine, which may be
downloaded from our web site (www.sagentia.com).
Non time-related income continues to be an important part of our business model.
Licensing activity is increasing, and a number of license deals within the Group
are expected to close during 2007. Specific to the consulting and IP sector, the
next $0.5m payment regarding the AutosheathTM licence pends grant of the US
patent, expected to be at the turn of the year. All expenditure on patent fees
and the creation and development activities has been written off as incurred.
Spend on patent fees during H1 2007was #0.1m (H1 2006 #0.4m).
Venture subsidiaries
Venture subsidiaries are majority owned spin-out companies created by Sagentia
for the purpose of exploiting a particular technology, intellectual property or
business opportunity. Sagentia's goal with its venture portfolio is to realise
value through IPO or trade sale. Under IFRS, controlled investments are
consolidated as subsidiaries. Costs incurred are therefore expensed through the
profit and loss account and the fair value of controlled investments is not
shown on the balance sheet. Controlled investments currently being exploited
include Intrasonics Ltd, Sensopad Ltd, AtraNova Ltd, and now Sagentia Sensors
Ltd.
The net costs of venture subsidiaries in H1 were #0.6m (H1 2006: #0.3m).
Sagentia Sensors Ltd
Sagentia Sensors was created as a vehicle to exploit IP in Sagentia's
Cap-trackTM and Mu-trackTM sensor patent families. During 2007 it has entered
into negotiations to licence the technology broadly in automotive and industrial
sectors, and is anticipating closing at least one such deal in H2 2007.
Intrasonics Limited
Intrasonics is Sagentia's venture in interactive media services. Intrasonics
develops and markets mobile-media interactivity solutions to broadcasters, media
companies and content owners, based on its proprietary communications
technology. Protected by a substantial patent portfolio, Intrasonics' unique
'Sound Link and Sync' system creates a completely new data channel for mobile
devices, opening up a range of sophisticated, yet easy to use 'one touch' media
applications that drives new revenues for content and media owners, advertisers
and broadcasters, mobile operators and service providers.
Sagentia owns approximately 90% of Intrasonics, the balance being held by
founders. Intrasonics is seeking to license and sell its technology into a
variety of applications.
Sensopad Limited
The automotive applications of Sensopad Technologies were sold to a subsidiary
of TT electronics plc in March 2004 for a consideration of #1.2m together with
anticipated future royalties. Net royalties of #1.7m have been recognised to
date through the consolidated income statement. TT has announced that it has
taken #100m of orders secured for its AutopadTM sensor. Royalty receipts are
expected to commence in H1 2008. Sensopad has further licensed its technology in
the field of fuel level sensing to TT for #0.15m in H1 2007.
Non-automotive applications for the contact-less inductive sensing technology
are being exploited in the industrial, aerospace and gaming controller market
via a closer marketing and operating arrangement with Sagentia Ltd.
Sagentia Group owns 77% of the equity in Sensopad.
AtraNova Limited
Hived out of Sagentia Group's portfolio company, Atraverda Ltd, AtraNova is seeking to
commercialise Ebonex outside of the battery markets being exploited by
Atraverda. During H1 2007 AtraNova has supplied water treatment test equipment
within the UK which can significantly reduce the Mogden charge levied by water
companies to manufacturers. It will seek to commercialise this market during the
remainder of 2007.
Sagentia Group owns 91% of the equity in AtraNova.
The fair value of the Venture Subsidiaries is not shown in the consolidated
balance sheet. The combined BVCA value of the Group holdings in the Venture
Subsidiaries is #0.9m.
Asset management, property and central services
The combined net cost of asset management activities, the freehold property and
central services in H1 was #0.2m (H1 2006: #0.3m). The current book value of the
building is both supported by existing tenants and the improved commercial
property market in Cambridge.
Change in fair value of investments
The reduction in fair value of investments of #1.9m includes a decrease in fair
value of AIM listed CMR Fuel Cells plc of #1.4m; Sensor Technologies LLC #0.2m;
and Turftrax #0.2m following a funding round. The TurfTrax adjustment will
reverse in H2 2007 following a funding round closed in September 2007. Sagentia
Group owns 11% of the issued share capital in CMR. At the end of H1 2007, CMR share
price was #1.03 (H2 2006: #1.645). The price of CMR at 3 September was #0.695.
Bonus accrual on change in fair value
Bonus accrual of #190k has been written back in H1 (H1 2006: #60k) against the
decrease in fair value of investments, to be paid out on cash realisation of
investments under the authority of the Sagentia Group's remuneration committee.
Cost of options
Under IFRS the Group has provided for the cost of options issued and outstanding
at the end of H1 of #52k (H1 2006: #119k).
Analysis of balance sheet
At 30 June 2007 the Group had shareholders funds of #17.8m (H2 2006: #20.7m)
which was equivalent to approximately 8.2p per share (H2 2006: 9.7p per share).
This includes freehold land and buildings with a net book value of #14.2m (H2
2006: #14.2m), against which the Group has an outstanding loan of #8.4m (H2
2006: #6.6m), in addition to cash of #1.2 m (H2 2006: #2.0m).
The fair value of investments and other loans to investee companies was #9.5m
(H2 2006: #11.3m). This represents the BVCA or market valuation of all
non-controlled investments. The BVCA valuation of controlled investments -
venture subsidiaries - is #0.9m (H2 2006: #1.1m). The difference between the
BVCA valuation and the net asset value at the year-end for venture subsidiaries
is equivalent to approximately 0.5p per share (2006: 0.5p).
Investments
The following investee companies now comprise 66 per cent of the fair/BVCA value
of the portfolio capitalised on the Sagentia Group's balance sheet at 30 June
2007:
--------------------- -------- --------
Investee company Group fully diluted BVCA valuation of
equity interest * Group interest
% #m
--------------------- -------- --------
CMR Fuel Cells plc 9.6 2.3
Sphere Medical Holding Ltd 10.0 1.5
Atraverda Ltd 17.0 1.3
Sensortec Ltd 12.1 1.2
--------------------- -------- --------
Total 6.3
--------------------- -------- --------
* Fully diluted interest assumes that granted options have been exercised
Progress during H1 in the above investee companies was as follows:
CMR Fuel Cells ('CMR')
CMR exploits a revolutionary flow-through fuel cell utilising mixed reactants,
developed at Sagentia. CMR's patented technology involves electrochemical
devices, which convert fuel directly into electricity at higher efficiency rates
and have the potential for higher power storage capacity. CMR was admitted to
AIM in December 2005 with a market capitalisation of #35.7m. Sagentia retain an
11% equity stake in CMR. On 30th June 2007 the mid-market price of CMR was #1.03
(price on admission #1.76).
During 2007 CMR has entered into a non-exclusive Joint Development Agreement
('JDA') with Samsung SDI Co. Ltd. ('Samsung') of Korea. Under the terms of the
JDA, Samsung and CMR will collaborate to produce a Direct Methanol Fuel Cell
system demonstrator incorporating CMR's mixed reactant stack technology. The
system will be evaluated as a potential alternative and replacement for today's
conventional battery solutions. CMR has already delivered the first such stack
to Samsung.
CMR also announced, together with its partners Johnson Matthey Plc and Accelrys
Inc, the formation of a UK based Research Consortium. Funding has been awarded
through the Autumn 05 Technology Programme competition for funding. The DTI will
make available to the Consortium a total of #1.15 million over the duration of
the three-year contract.
In its interim report issued in August 2007, CMR commented that demand for
small, cost-effective and efficient portable fuel cell systems continues to grow
- driven by the need to overcome the stagnating power density and safety issues
associated with Lithium batteries. The Company believes that many OEMs will
field-trial Methanol powered portable fuel cell systems into Asian markets in
2008/9 ahead of mass-market launches from 2010 onwards. However, price
volatility of platinum and ruthenium metals, commonly used to make catalysts, is
a significant concern for these OEMs, and the elimination of these materials has
become a key objective across the industry. This should enhance the prospects
for CMR.
Sphere Medical Holding ('Sphere')
Sphere was established by Sagentia with Siemens to develop a series of unique
chip-based micro sensors for use in intensive care medicine. Based on cutting
edge micro- and nano-technology, Sphere is developing highly innovative
monitoring products to provide clinical and economic benefits in the critical
care environment, based on the company's proprietary technology. The products
allow minimally invasive, real time measurement of clinical chemistry parameters
and therapeutic drug concentrators, giving healthcare professionals the
information they require to more effectively manage therapy and optimise patient
outcomes.
Sphere commercialised products will be marketed globally through multi-national
marketing and distribution agreements. The costs associated with the conditions
and complications addressed by its products are in the order of tens of billions
of US$ in the Intensive Care Unit alone. With limited alternative solutions
currently available, Sphere estimates that the total market addressed by its
initial products is around US $2.2 billion a year.
During 2007, Sphere achieved EN ISO 13485:2003 for the Design and Development of
Medical Monitoring Systems. EN ISO 13485 is the international quality management
standard for the medical device industry and is based on ISO 9001, and is
essential for companies developing medical devices for the market.
Atraverda Ltd ('Atraverda')
Atraverda has developed an innovative lead acid battery design using EbonexTM
bipolar membranes. Atraverda's plates are based on a novel and patented ceramic
material, which enables a performance increase of over 30% compared with
standard lead acid batteries, while reducing weight by at least 25%. Atraverda's
patented Ebonex technology is the first commercially viable bi-polar product to
enter the market that makes lead-acid batteries smaller, lighter and more
reliable. Ebonex technology signifies a new era for the battery manufacturing
industry and its customers. Markets that the company is addressing include power
tools, small UPS, military, aviation, telecoms, consumer electronics, and
automotive including hybrid electric vehicles. Ebonex bi-polar batteries are an
environmentally strong technology with significantly less lead used than
conventional batteries.
During 2007 the company has entered into a commercial relationship with Exide
Industries Ltd, the largest manufacturer or lead-acid storage batteries in South
Asia. The agreement will see the two companies work together to develop bi-polar
lead acid batteries for a range of power storage applications using Atraverda's
Ebonex technology. This news followed the Company's announcement in September
2006 that it was working with East Penn Manufacturing Company Inc., the world's
largest independent battery manufacturer.
In the same period Atraverda's technology won awards from both Frost & Sullivan,
a global consulting company and Red Herring for its ability to make bipolar
batteries which are smaller, lighter and longer-lasting than conventional
technology.
Sensortec Ltd ('Sensortec')
Sensortec, a Jersey registered company, has developed a robust and adaptable
platform technology for use in disposable biosensors based on immuno-assay
techniques. Sensortec's proprietary technology enables the miniaturisation of a
wide range of common format assays traditionally performed at clinical reference
laboratories, all in a simplified form and at a competitive price.
The unique design of the Sensortec sensor chips mean that low cost materials and
methods can be used to produce the disposable cartridge incorporating the
sensors and fluidics required to manipulate the blood sample and perform the
tests, which has not been possible with alternative sensor technologies. This
novel biosensor technology has multiple applications and has already been
validated by use in the environmental and food quality assurance sectors for
detecting such contaminants as mycotoxins and drug residues.
Other investments
TurfTrax Ltd primarily provides data to the betting market, media and consumer
on horse racing. In particular the company has developed, with Sagentia, and
introduced the TurfTrax Tracking System capturing and broadcasting horse race
data to multiple clients. During H2 TurfTrax has completed a further financing
round of approximately #1m at a premium to the previous round of financing.
Sagentia presently holds an equity position of approximately 9% in TurfTrax.
It remains the Company's goal to seek the disposal of a number of portfolio
assets by trade sale, license or IPO in the short to medium term.
Cash and cash flow
Cash at H1 2007 was #1.2m (2006 #2.0m). Borrowings increased from #7.0m to
#8.9m. #2.6m of the bank loan remains available to be drawn down.
Net cash outflow from operating activities increased to #2.4m (H1 2006: #0.6
million). Of this, the loss less non cash items (depreciation, change in fair
value, bonus accrual and options) accounted for #1.1m (2006 H1: #0.2m). Working
capital (debtor and creditor movement's) accounted for a further #1.3m (2006 H1:
#0.4m), which we would expect to reduce in H2 2007. Capital expenditure and
financial investment was limited to a net #0.2m (2006: #1.0m). The cash movement
was funded by the drawing down on the loan facility.
Building
The principal tenant of the Group's 77,000 square feet freehold headquarters in
Harston remains the Group's consulting business, Sagentia Limited, which
occupies 40,000 square feet on arms length terms. The remaining space is now let
or under contract on short to medium term leases.
Board and management changes
Per Ludvigsson retired at the last AGM. The Board would like to offer its thanks
to Per for the help and advice given over the last six years and wish him well
in his retirement.
Daniel Flicos, a director of Sagentia Ltd, was appointed to the Board at the
Annual General Meeting in April 2007.
Group Auditor
The audit operations of RSM Robson Rhodes, the Group Auditor, have merged with
those of Grant Thornton UK LLP with effect from 1 July 2007. The Board has
therefore appointed Grant Thornton as Group Auditor.
Outlook
The outlook for the technology development consulting market together with
licence/royalty income remains positive. Order intake for Sagentia was in line
with expectations for the first six months following a difficult end to 2006 and
is now expected to exceed the prior year.
Notwithstanding the fall in value of CMR Fuel Cells plc and associated lack of
liquidity, we anticipate improvement in H2 2007 within several portfolio
companies, and believe that the prospects for a number of the investments,
including Sphere Medical and TurfTrax are strong.
Attachments
The Sagentia Group AG
Consolidated income statement
For the period ended 30 June 2007
--------------------------- ----- -------- ------- -------- -------- --------
Notes Core Venture Six months Six months Year
operations subsidiaries ended ended 30 ended
30 June 2007 June 2006 31 December
(Unaudited) (Unaudited 2006
Restated)
#000 #000 #000 #000 #000
--------------------------- ----- -------- ------- -------- -------- --------
Continuing operations
Revenue
Core operations 10,577 - 10,577 12,733 23,115
Venture subsidiaries - 239 239 315 531
--------------------------- ----- -------- ------- -------- -------- --------
4 10,577 239 10,816 13,048 23,646
Operating expenses
Core operations (10,804) - (10,804) (12,725) (23,955)
Venture subsidiaries - (791) (791) (645) (1,188)
--------------------------- ----- -------- ------- -------- -------- --------
4 (10,804) (791) (11,595) (13,370) (25,143)
--------------------------- ----- -------- ------- -------- -------- --------
Gross loss 4 (227) (552) (779) (322) (1,497)
Profit (loss) on disposal
of investments (25) (22) 392
Change in fair value on
financial assets (1,880) 209 (876)
Bonus accrual on change in
fair value 190 (60) 384
Rebranding - - (632)
Reorganisation (420) - -
Cost of options* (52) (119) (235)
--------------------------- ----- -------- ------- -------- -------- --------
Operating loss 4 (2,966) (314) (2,464)
Finance charges (net) 2 21 (59)
--------------------------- ----- -------- ------- -------- -------- --------
Loss on continuing
operations before
Income tax (2,964) (293) (2,523)
Income tax expense (12) 4 51
--------------------------- ----- -------- ------- -------- -------- --------
Loss on continuing
operations for the period 4 (2,976) (289) (2,472)
Attributable to:
Equity holders of the parent (2,978) (344) (2,531)
Minority interests 2 55 59
--------------------------- ----- -------- ------- -------- -------- --------
Loss for the period (2,976) (289) (2,472)
--------------------------- ----- -------- ------- -------- -------- --------
Loss per share (basic) 5 (1.4p) (0.1p) (1.1)p
Loss per share (diluted) 5 (1.4p) (0.1p) (1.1)p
--------------------------- ----- -------- ------- -------- -------- --------
* See Consolidated Statement of Changes in Equity.
The Sagentia Group AG
Consolidated statement of changes in equity
For the period ended 30 June 2007
----------------- ----- ------ ------ ------ ------ ------ -------- ------ ------
Group Issued Share Investment Translation Share Retained Total - Minority Total
capital premium In own reserve based earnings Shareholders Interest equity
shares payment funds 2005
reserve
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
----------------- ----- ------ ------ ------ ------ ------ -------- ------ ------
Balance at 1
January 2006 9,289 13,095 (74) (52) 113 640 23,011 45 23,056
Profit (loss)
for the year - - - - - (344) (344) 55 (289)
New shares issued 18 38 - - - - 56 - 56
Issue of shares to
minorities - - - - - - - 11 11
Disposal of
own shares - - 13 - - - 13 - 13
Share options
adjustment - - - - 119 - 119 - 119
Exchange differences
on translating
foreign operations - - - 26 - - 26 (5) 21
Balance at 30
June 2006 9,307 13,133 (61) (26) 232 296 22,881 106 22,987
----------------- ----- ------ ------ ------ ------ ------ -------- ------ ------
Balance at 1
July 2006 9,307 13,133 (61) (26) 232 296 22,881 106 22,987
Profit (loss)
for the year - - - - - (2,187) (2,187) 4 (2,183)
Dividends payable
to minorities - - - - - - - (8) (8)
Share options
adjustment - - - - 116 - 116 - 116
Exchange differences
on translating
foreign operations - - - (103) - - (103) (10) (113)
----------------- ----- ------ ------ ------ ------ ------ -------- ------ ------
Balance at 31
December 2006 9,307 13,133 (61) (129) 348 (1,891) 20,707 92 20,799
----------------- ----- ------ ------ ------ ------ ------ -------- ------ ------
Balance at 1
January 2007 9,307 13,133 (61) (129) 348 (1,891) 20,707 92 20,799
Loss for the year - - - - - (2,978) (2,978) 2 (2,976)
Share options
adjustment - - - - 52 - 52 - 52
Exchange differences
on translating
foreign operations - - - (4) - - (4) (4)
----------------- ----- ------ ------ ------ ------ ------ -------- ------ ------
Balance at 30
June 2007 9,307 13,133 (61) (133) 400 (4,869) 17,777 94 17,871
----------------- ----- ------ ------ ------ ------ ------ -------- ------ ------
The Sagentia Group AG
Consolidated balance sheet
At 30 June 2007
------------------------- -------- -------- --------
Six months ended Six months ended Year ended
30 June 2007 30 June 2006 31 December
(Unaudited) (Unaudited 2006
Restated)
#000 #000 #000
------------------------- -------- -------- --------
ASSETS
Non-current assets
Intangible assets 7 11 9
Goodwill - - -
Property, plant and
equipment 14,663 14,940 14,787
Investments 9,501 12,046 11,279
Deferred income tax
assets 3,014 2,984 3,014
------------------------- -------- -------- --------
27,185 29,981 29,089
------------------------- -------- -------- --------
Current assets
Trade and other receivables 6,286 6,562 5,212
Current tax asset - - 30
Investments - 23 23
Cash and cash equivalents 1,222 1,977 1,963
------------------------- -------- -------- --------
7,508 8,562 7,228
------------------------- -------- -------- --------
Total assets 34,693 38,543 36,317
------------------------- -------- -------- --------
EQUITY AND LIABILITIES
Shareholders' equity
Called-up share capital* 9,307 9,307 9,307
Share premium account* 13,133 13,133 13,133
Investment in own
shares* (61) (61) (61)
Translation reserves* (133) (26) (129)
Share based payment
reserve* 400 232 348
Retained earnings* (4,869) 296 (1,891)
------------------------- -------- -------- --------
Total Shareholders'
equity 17,777 22,881 20,707
Minority interest* 94 106 92
------------------------- -------- -------- --------
Total equity 17,871 22,987 20,799
------------------------- -------- -------- --------
Non-current liabilities
Borrowings 6,950 6,946 6,948
Other creditors 64 - 41
Financial instruments 16 255 181
Deferred income tax
liabilities 3,014 2,984 3,014
------------------------- -------- -------- --------
10,044 10,185 10,184
------------------------- -------- -------- --------
Current liabilities
Trade and other
payables 4,796 5,300 5,250
Current income tax
liabilities 60 26 43
Borrowings 1,922 45 41
------------------------- -------- -------- --------
6,778 5,371 5,334
------------------------- -------- -------- --------
------------------------- -------- -------- --------
Total liabilities 16,822 15,556 15,518
------------------------- -------- -------- --------
------------------------- -------- -------- --------
Total equity and
liabilities 34,693 38,543 36,317
------------------------- -------- -------- --------
* See Consolidated Statement of Changes in Equity.
The Sagentia Group AG
Consolidated cash flow statement
For the year ended 30 June 2007
-------------------------------- -------- -------- -------
Six months Six months Year
ended ended ended
30 June 2007 30 June 2006 31 December
(Unaudited) (Unaudited 2006
Restated)
#000 #000 #000
-------------------------------- -------- -------- -------
Loss before income tax (2,964) (293) (2,523)
Depreciation charges 242 246 422
Profit on disposal of investments 25 22 (392)
Change in fair value 1,880 (209) 876
Change in fair value of
interest rate swap (152) (168) (242)
Bonus accrual on change in
fair value (190) 60 (384)
Cost of options 52 119 235
(Increase) decrease in
trade and other receivables (1,073) 710 2,059
(Decrease) increase in
trade and other payables (237) (1,080) (747)
UK corporation tax (paid)
received (net) 42 - 35
Foreign corporation tax paid (net) (7) 4 3
-------------------------------- -------- -------- -------
Cash flows from operating
activities (2,382) (589) (658)
-------------------------------- -------- -------- -------
Purchase of property, plant and
equipment (131) (187) (212)
Loan repayments received from
third parties 30 - -
Purchase of financial assets
through the income statement (163) (822) (1,279)
Sale of financial assets
through the income statement 6 - 540
Sale of current asset investments 23 - -
-------------------------------- -------- -------- -------
Cash flow from investing
activities (235) (1,009) (951)
-------------------------------- -------- -------- -------
-------------------------------- -------- -------- -------
Issue of ordinary share
capital / options - 56 56
Disposal of own shares - 13 13
Issue of shares by
subsidiary undertakings - 11 11
to minority interests
Issue of loans by minority interests
to subsidiary undertakings 2 (13) (11)
Net Loan drawn down (repaid) 1,881 (60) (64)
-------------------------------- -------- -------- -------
Cash flows from financing
activities 1,883 7 5
-------------------------------- -------- -------- -------
-------------------------------- -------- -------- -------
Decrease in cash and cash
equivalents in the year (734) (1,591) (1,604)
Cash and cash equivalents at
the beginning of the year 1,963 3,567 3,567
Exchange gains (losses) on cash (7) 1 -
Cash and cash equivalents at
the end of the year 1,222 1,977 1,963
-------------------------------- -------- -------- -------
Extracts from notes to the financial statements
1. Accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
1.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in
accordance with International Financial Reporting Standards (IFRS) and IFRC
interpretations issued and effective or issued at the time of preparing these
statements.
These financial statements have been prepared under the historical cost
convention, as modified by the revaluation of certain assets at fair value, as
allowed by IAS39 Financial Instruments: Recognition and Measure. The basis of
consolidation is set out below:
Subsidiaries - Subsidiaries are entities over which the Group has the power to
govern the financial and operating policies accompanying a shareholding of more
than one half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They
are de-consolidated from the date that control ceases. These acquisitions are
accounted for using the purchase method of accounting.
Venture subsidiaries - Venture subsidiaries are investments in which the Group
holds control, but holds these investments for ultimate disposal and capital
gain. The Group accounts for such investments as subsidiaries until either they
are disposed of or the Group issues shares to minorities and allows control to
pass.
Investments - Investments are investments in which the Group does not hold
significant influence. Where the Group holds these investments for ultimate
disposal and capital gain, they are accounted for in accordance with IAS39, and
are designated as at fair value through profit and loss.
1.2 Research and development expenditure
Research expenditure is written off as incurred.
Development expenditure is also written off as incurred, except where the
Directors are satisfied that the technical, commercial and financial viability
of individual projects under relevant IAS 38 criteria are met that would allow
such costs to be capitalised. Under IAS 38, the Group recognise an intangible
asset if it believes it can demonstrate the following:
* The technical feasibility of completing the intangible asset so that it
will be available for use or sale.
* Its ability to use or sell the intangible asset.
* How the intangible asset will generate probable future economic
benefits; either by the existence of a market for the output of the
intangible asset or the intangible asset itself or, if it is to be used
internally, the usefulness of the intangible asset.
* The availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset.
* Its ability to measure reliably the expenditure attributable to the
intangible asset during its development.
Identifiable expenditure is then capitalised and amortised over the period
during which benefits are expected.
1.3 Investments
The Directors consider that a substantial measure of the performance of the
Group is assessed through changes in fair value arising from the investment
activity of the Group. Consequently the Group classifies its investments that
are not controlled investments as being financial assets at fair value through
profit or loss, loans and receivables and available for sale financial assets.
Treatment of gains and losses arising on fair value investments that are not
controlled investments are shown on the balance sheet at their fair value and
any associated changes in fair value are included in the income statement in the
period they arise.
Valuation policy - in determining fair value, investments have been valued by
the Directors in compliance with the principles of the International Private
Equity and Venture Capital Guidelines, updated and effective 1 January 2005, as
recommended by the British Venture Capital Association (BVCA).
Listed investments - the fair values of quoted investments are based on bid
prices at the balance sheet date
Unlisted investments - the valuation methodology used most commonly by the Group
is the "price of recent investment", reflecting the early stage nature of the
investments. The following considerations are used when calculating the fair
value using the "price of recent investment" guidelines:
* Where the investment being valued was itself made recently, its cost
will generally provide a good indication of fair value; and
* Where there has been any recent investment by third parties, the price
of that investment will provide a basis of the valuation.
* 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.
Convertible loan notes - Under IAS 28 financial instruments that are presently
exercisable are taken into account in determining control and significant
influence and this may affect the basis of consolidation.
Under IAS 39 convertible loan notes are financial assets and are defined as
compound financial instruments consisting of a liability component and an equity
component. At the date of issue there is a requirement to split the instrument
between its debt and equity components.
The debt component is classified under investments as "Loans and receivables"
and subsequently carried in the balance sheet at cost less any impairment.
The equity component is classified under investments and subsequently carried in
the balance sheet at fair value. The right to convert the loan into equity
represents an embedded derivative (the option) and as such needs to be
re-measured to fair value at each reporting date with any changes in fair value
of this right taken through profit or loss.
Convertible loans issued in a different functional currency to the issuing
entity are treated the same; however, there may also be an associated financial
instrument to manage the risks associated with foreign currency fluctuations.
Controlled investments - The Group also undertake investment activities in
investments that are controlled, the performance of which, therefore, cannot be
measure by changes in fair value arising from the investment activity of the
Group. The Group identify these activities separately as Venture Subsidiaries.
1.4 Property, plant and equipment
Land and buildings comprise offices and laboratories at Harston Mill, Harston
Cambridge, UK. Land and buildings are shown at historical cost less accumulated
depreciation. Historical cost includes expenditure that is directly attributable
to the acquisition of the items. Cost may also include transfers from equity of
any gains/losses on qualifying cash flow hedges of foreign currency purchases of
property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that the future
economic benefit associated with the item will flow to the Group and the cost of
the item can be measured reliably. All other repairs and maintenance are charged
to the income statement during the financial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the
straight line method to allocate their cost or re-valued amounts to their
residual values over their estimated useful lives, as follows:
Buildings 25 years
Furniture and fittings 3-10 years
Equipment 3-4 years
The asset's residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date. An asset's carrying amount is written
down immediately to its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying
amount. These are included in the income statement.
The residual value of the property at Harston Mill has been revised to #10.6m.
This has resulted in a reduction of depreciation for the period from #300k in H1
2005 to #43K in H1 2006.
2. Segmental information
----------------- -------- -------- -------- -------- --------
Period ended 30 Consulting Venture Asset Property Total
June 2007 and IP subsidiaries management and central
exploitation services
#000 #000 #000 #000 #000
----------------- -------- -------- -------- -------- --------
Fees 8,710 239 204 1,193
Recharged project
expenses 978 - - -
Licence / royalty
income 55 - - -
Less: Inter company
trading (27) - - (536)
----------------- -------- -------- -------- -------- --------
Revenue 9,716 239 204 657 10,816
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Expenses (8,797) (791) (313) (1,407)
Recharged project
expenses (978) - - -
Less: Inter company
trading 27 - 128 536
----------------- -------- -------- -------- -------- --------
Expenses (9,748) (791) (185) (871) (11,595)
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Gross (loss) profit (32) (552) 19 (214) (779)
----------------- -------- -------- -------- -------- --------
Profit on disposal
of investments - - (25) - (25)
Change in fair
value on financial
assets - - (1,880) - (1,880)
Bonus accrual on
change in fair value - - 190 - 190
Cost of options (42) - (4) (6) (52)
Rebranding - - - - -
Reorganisation (420) - - - (420)
----------------- -------- -------- -------- -------- --------
Operating (loss) (494) (552) (1,700) (220) (2,966)
----------------- -------- -------- -------- -------- --------
Finance charges 2
----------------- -------- -------- -------- -------- --------
(Loss) before
income tax (2,964)
----------------- -------- -------- -------- -------- --------
Income tax
expense (12)
----------------- -------- -------- -------- -------- --------
(Loss) for the year (2,976)
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Balance sheet
analysis
Intangible assets 9 - - - 9
Intangible assets -
amortisation (2) - - - (2)
Goodwill 312 651 - - 963
Goodwill -
amortisation (312) (651) - - (963)
Property, plant and
equipment 6,819 50 16 14,208 21,093
Property, plant and
equipment -
depreciation (3,814) (50) (16) (2,550) (6,430)
----------------- -------- -------- -------- -------- --------
3,012 - - 11,658 14,670
----------------- -------- -------- -------- -------- --------
Investments (2,518) - 9,501 2,518 9,501
Current assets
(excluding cash) 5,707 180 (1,607) 2,006 6,286
Cash and cash
equivalents 335 19 210 658 1,222
----------------- -------- -------- -------- -------- --------
Total assets 6,536 199 8,104 16,840 31,679
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Total liabilities
(excluding loans
and interest
bearing liabilities) 9,234 3,041 167 (572) 11,870
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Total equity
(excluding loans
and interest
bearing liabilities) (2,698) (2,842) 7,937 17,412 19,809
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Loans and interest
bearing liabilities (1,922) - - (16) (1,938)
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Total equity (4,620) (2,842) 7,937 17,396 17,871
----------------- -------- -------- -------- -------- --------
2. Segmental information (continued)
----------------- -------- -------- -------- -------- --------
Period ended 30 Consulting Venture Asset Property Total
June 2006 and IP subsidiaries management and central
exploitation services
#000 #000 #000 #000 #000
----------------- -------- -------- -------- -------- --------
Fees 9,654 315 240 1,037
Recharged project
expenses 2,239 - - -
Licence /
royalty income 81 - - -
Less: Inter company
trading (29) - - (489)
----------------- -------- -------- -------- -------- --------
Revenue 11,945 315 240 548 13,048
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Expenses (9,450) (645) (278) (1,276)
Recharged project
expenses (2,239) - - -
Less: Inter company
trading 29 - - 489
----------------- -------- -------- -------- -------- --------
Expenses (11,660) (645) (278) (787) (13,370)
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Gross (loss) profit 285 (330) (38) (239) (322)
----------------- -------- -------- -------- -------- --------
Profit on disposal
of investments - - (22) - (22)
Change in fair value
on financial assets - - 209 - 209
Bonus accrual on
change in fair value - - (60) - (60)
Cost of options (40) - (36) (43) (119)
Rebranding - - - - -
----------------- -------- -------- -------- -------- --------
Operating
(loss) profit 245 (330) 53 (282) (314)
----------------- -------- -------- -------- -------- --------
Finance charges 21
----------------- -------- -------- -------- -------- --------
(Loss) before
income tax (293)
----------------- -------- -------- -------- -------- --------
Income tax expense 4
----------------- -------- -------- -------- -------- --------
(Loss) for the year (289)
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Balance sheet
analysis
----------------- -------- -------- -------- -------- --------
Intangible assets 13 - - - 13
Intangible assets -
amortisation (2) - - - (2)
Goodwill 312 651 - - 963
Goodwill -
amortisation (312) (651) - - (963)
Property, plant and
equipment 6,882 134 16 14,287 21,319
Property, plant and
equipment -
depreciation (3,768) (134) (16) (2,461) (6,379)
----------------- -------- -------- -------- -------- --------
3,125 - - 11,826 14,951
----------------- -------- -------- -------- -------- --------
Investments (2,436) - 12,046 2,436 12,046
Current assets
(excluding cash) 5,857 274 (1,782) 2,236 6,585
Cash and cash
equivalents 987 26 207 757 1,977
----------------- -------- -------- -------- -------- --------
Total assets 7,533 300 10,471 17,255 35,559
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Total liabilities
(excluding loans and
interest bearing
liabilities) 8,348 2,725 915 284 12,272
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Total equity
(excluding loans and
interest bearing
liabilities) (815) (2,425) 9,556 16,971 23,287
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Loans and interest
bearing liabilities (45) - - (255) (300)
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Total equity (860) (2,425) 9,556 16,716 22,987
----------------- -------- -------- -------- -------- --------
2. Segmental information (continued)
----------------- -------- -------- -------- -------- --------
Period ended 31 Consulting Venture Asset Property Total
December 2006 and IP subsidiaries management and central
exploitation services
#000 #000 #000 #000 #000
----------------- -------- -------- -------- -------- --------
Fees 18,003 531 764 2,188
Recharged project
expenses 3,392 - - -
Licence /
royalty income 137 - - -
Less: Inter company
trading (60) - (279) (1,030)
----------------- -------- -------- -------- -------- --------
Revenue 21,472 531 485 1,158 23,646
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Expenses (18,549) (1,188) (700) (2,683)
Recharged project
expenses (3,392) - - -
Less: Inter company
trading 60 - 279 1,030
----------------- -------- -------- -------- -------- --------
Expenses (21,881) (1,188) (421) (1,653) (25,143)
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Gross (loss) profit (409) (657) 64 (495) (1,497)
----------------- -------- -------- -------- -------- --------
Profit on disposal
of investments - - 2 390 392
Change in fair value
on financial assets - - (876) - (876)
Bonus accrual on
change in fair value - - 384 - 384
Cost of options (80) - (71) (84) (235)
Rebranding (367) - - (265) (632)
----------------- -------- -------- -------- -------- --------
Operating (loss) (856) (657) (497) (454) (2,464)
----------------- -------- -------- -------- -------- --------
Finance charges (59)
----------------- -------- -------- -------- -------- --------
(Loss) before
income tax (2,523)
----------------- -------- -------- -------- -------- --------
Income tax expense 51
----------------- -------- -------- -------- -------- --------
(Loss) for the year (2,472)
----------------- -------- -------- -------- -------- --------
Balance sheet
analysis
----------------- -------- -------- -------- -------- --------
Intangible assets 13 - - - 13
Intangible assets -
amortisation (4) - - - (4)
Goodwill 312 651 - - 963
Goodwill -
amortisation (312) (651) - - (963)
Property, plant and
equipment 6,757 50 16 14,248 21,071
Property, plant and
equipment -
depreciation (3,713) (50) (16) (2,505) (6,284)
----------------- -------- -------- -------- -------- --------
3,053 - - 11,743 14,796
----------------- -------- -------- -------- -------- --------
Investments (2,474) - 11,279 2,474 11,279
----------------- -------- -------- -------- -------- --------
Current assets
(excluding cash) 4,507 346 (1,792) 2,204 5,265
Cash and cash
equivalents 1,051 82 206 624 1,963
----------------- -------- -------- -------- -------- --------
Total assets 6,137 428 9,693 17,045 33,303
----------------- -------- -------- -------- -------- --------
Total liabilities
(excluding loans and
interest bearing
liabilities) 8,251 2,867 381 783 12,282
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Total equity
(excluding loans and
interest bearing
liabilities) (2,114) (2,439) 9,312 16,262 21,021
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Loans and interest
bearing liabilities (41) - - (181) (222)
----------------- -------- -------- -------- -------- --------
----------------- -------- -------- -------- -------- --------
Total equity (2,155) (2,439) 9,312 16,081 20,799
----------------- -------- -------- -------- -------- --------
3. Earnings per share
The calculations of earnings per share are based on the following losses and
numbers of shares:
-------------------------- ----------- ----------- -----------
Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
(Unaudited) (Unaudited
Restated)
#000 #000 #000
-------------------------- ----------- ----------- -----------
Loss for the financial period (2,976) (289) (2,472)
-------------------------- ----------- ----------- -----------
-------------------------- ----------- ----------- -----------
Weighted average number of shares: Number Number Number
-------------------------- ----------- ----------- -----------
For basic earnings per share 215,654,721 215,654,721 215,158,527
For fully diluted earnings per 215,654,721 216,856,601 215,157,670
share
-------------------------- ----------- ----------- -----------
Options have no dilutive effect in loss-making years, and hence the diluted loss
per share for these periods are shown as the same as the basic loss per share.
4.
The financial information set out above does not constitute full statutory
financial statements within the meaning of Section 240 of the Companies Act
1985.
The financial information for the year ended 31 December 2006 has been abridged
from the 2006 Annual Report and Financial Statements of The Sagentia Group AG.
The auditors' report for the year ended 31 December 2006 was unqualified and did
not contain a statement under S237 (2) or S237 (3) of the Companies Act.
5.
The Annual General Meeting of the company was held in Zurich on April 27 2007.
All resolutions were passed.
END.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKQKBOBKDQCK
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