Final Results

RNS Number : 5113G

CareCapital Group plc

29 June 2012

 



29 June 2012

CARECAPITAL GROUP PLC

("CareCapital", "the Group" or "the Company")

Financial statements for the year to 31 December 2011

CareCapital plc (AIM: CARE) announces its audited financial statements for the year to 31 December 2011.

Highlights

·     Our deleveraging strategy was completed with the sale of the German portfolio in November 2011 for €27.35 million. The repayment of the Euro denominated debt was both timely and prudent given the subsequent difficulties of the Euro debt markets and exchange rate fluctuations.

·     The entire remaining pipeline of UK property developments will be pre-sold before construction commences to reduce risk and secure development profits.

·     The Group has commenced management restructuring to reflect its strategy to reposition CareCapital Plc primarily as an investor in, and provider of, advanced cancer services.

·     Full planning permission for the UK's first Proton Beam Centre was secured in the City of London in September 2011.

·     Our 28.75% ownership of Advanced Proton Solutions (Holdings) Ltd establishes CareCapital Plc as a major participant in the development and operation of Proton Beam Therapy centres for cancer treatment in the UK and USA.

·     As of 31 December 2011 the value of our property developments in progress was £6.5m (2010: £ 4.9 million).

·     Rental income from the completed investment properties for the year was £1.9m (2010: £2.2 million) following the disposal of the German portfolio in November 2011.

·     The sale of the German property portfolio resulted in the repayment of €23 million of senior debt, and approximately £2.9 million of short term mezzanine debt.

·     The loss for the year after tax was £6.73 million (2010: loss £4.18 million). The loss included losses on disposal of the German portfolio of £5.4million and the write off of £0.3million development costs.

·     The Group is developing a managed service for the NHS and private healthcare sector in the UK and Ireland for the treatment of early stage breast cancer, skin cancer and gynaecological related cancer conditions. The group has obtained exclusivity on the Xoft Electronic Brachytherapy technology for a three year period which is renewable. The technology enables clinicians to treat patients locally and more cost effectively with clinical outcomes having been shown to be comparable to other currently available radiotherapy treatments.

·     The Group occupies a pivotal role in the development and operation of Proton Beam Therapy Centres on two continents.  Full planning permission was granted by the City of London (UK) in September 2011 and demolition is planned to commence in 4th Quarter 2012. This purpose built facility will be a 50,000 sq. ft. dedicated proton beam centre with two treatments rooms and a capacity of approximately 800 patients per annum. Other projects are planned in partnership with three leading medical centres in the United States.

For further information please visit www.carecapital.co.uk or contact:

Mike Sinclair, Chief Executive	Sandy Jamieson	Simon Hudson, Kelsey Traynor
CareCapital Group Plc	Libertas Capital Corporate Finance Ltd	Tavistock Communications
Tel: [phone]	Tel: [phone]	Tel: [phone]
[e-mail]		[e-mail]

Chairman's and Chief Executive's statement

We are pleased to present the 2011 year end financial results of CareCapital Group Plc and to highlight the Group's new activities which will position us to introduce the first fully operational proton beam therapy centre in the UK.

The Group has successfully delivered strong gross margins on its UK medical property developments whilst building the foundations to deliver cutting edge cancer treatment services in 2012 and beyond.

Following the sale of the German property portfolio, the Board has been focused on the clear strategy to capitalise on the growing expectations of patients to have a choice of the best possible treatment options for their cancer. Their increasing access to information from around the world means that patients and doctors expect to be offered a range of treatment options available. Our strategy going forward is to address this market need.

As mentioned above, there are advanced cancer treatments available overseas which have not yet been introduced to the United Kingdom. We have decided to embrace this opportunity by becoming first to the UK market with our exclusive Xoft Electronic Brachytherapy technology and proton beam therapy; both of which are well established technologies in healthcare markets around the world.

The decision to fully de-risk the property development business enables CareCapital to deliver profitable projects which will be pre-sold to institutional investors

In September 2011, we agreed the sale of our German portfolio to North West Venture Partners for an aggregate consideration of €27.35 million. This transaction was the subject of a circular to shareholders whose approval of the sale was given at a general meeting of the Company on 19 September 2011. The transaction was notarised on 9 November 2011. The receipt of proceeds to date has resulted in the repayment of approximately €23 million and approximately £2.9 million of debt. The Board believes that the repayment of (for us) a substantial Euro denominated debt was both timely and prudent given the subsequent difficulties of the Euro debt markets and exchange rate fluctuations. The surplus cash generated by this sale has been utilised to provide working capital to advance our Proton Beam Therapy business with Advanced Proton Solutions, APS.

CareCapital has a significant pipeline of UK medical centre developments which it has mostly secured through competitive tender. The projects currently under construction have been pre-sold to Healthcare investment funds, and further projects will be subject to similar arrangements. It is anticipated that construction will commence on two further schemes in 2012.

Outline planning consent has been obtained for 2 projects - Buckley, North Wales and Glynneath Full town planning applications are in progress for the Buckley and Bishops Stortford projects. Phase II development on the NHS site Allesley, Coventry, is on budget and on schedule for completion in August 2012. The West Wirral project was completed as planned on budget with tenant handover in February 2012.

Proton Beam Therapy is widely recognised worldwide as the most effective treatment for a variety of cancer conditions and is particularly appropriate in the paediatric treatment of such conditions as a result of its accuracy in targeting tumours and its limited side effects when compared to existing conventional treatments. There are currently 32 centres worldwide with a requirement, according to industry sources, of over 1,000 in the next 10 to 15 years. Currently, the NHS sends paediatric cases to the United States for treatment. Proton beam therapy is suitable for cancers in both children and adults.

During 2011 Advanced Proton Solutions (APS) has with CareCapital's assistance, secured planning approval for its first London based Proton Beam Therapy centre off Moorgate in the City of London - within easy access to a number of London's major hospitals. The centre is planned to be fully operational in 2016.

In addition, APS is involved with 3 further projects in the USA, including one partnership with the prestigious UCLA (University of California, Los Angeles) Medical Centre. APS and CareCapital have put in place a first class and highly experienced management team that includes some of the leading experts in the field of proton beam therapy.

In the UK and Ireland, CareCapital will also focus on the development of a managed service for early stage breast cancer, skin and endometrial cancer. The service will be based on exclusive access to the Xoft Axxent Electronic Brachytherapy System® ('the Xoft System').

The managed service has the potential to benefit both the NHS and the private sector by enabling patients to receive therapy locally and more cost- effectively due to the reduced need for shielding (allowing clinical staff to remain with the patient during treatment) and, in the case of IORT, the ability to provide a one-off dose rather than the conventional daily radiotherapy for up to six weeks.

CareCapital, its management and its Board have worked hard to overcome the Group's funding issues post the 2008 crash and in the difficult financial markets which continue to persist. We are now in a position to start to rebuild value for shareholders in the fast growing cancer treatment sector.

We would particularly like to welcome Don Baladasan, our new Finance Director to the Board. Don joins us with a breadth of experience across major corporations, SME's and start-ups and a depth of experience in major industries including fund management, healthcare, telecoms, media, property and technology.

We are pleased to report that Karen Bullivant has joined us as Director of Marketing and Business Development. Karen has a wealth of experience in the establishment and operation of cancer services.

David Evans

Chairman

Dr. Michael Sinclair

Chief Executive

29 June 2012

Consolidated statement of comprehensive income

For the year ended 31 December 2011

	Group 2011	Group 2010
	£	£
Revenue	6,160,695	1,379,814
Cost of sales	(5,208,039)	(1,179,806)
Gross profit	952,656	200,008
Administrative expenses	(1,624,818)	(1,385,236)
Net (loss)/gain on revaluation of investment properties	-	(54,851)
Loss on disposal of UK portfolio	-	(1,050,205)
Net portfolio (losses)/gains	-	(1,105,056)
Development costs written off	(300,000)	(504,172)
Operating loss	(972,162)	(2,794,455)
Finance income	-	149
Finance costs	(696,495)	(742,331)
Loss on ordinary activities before taxation	(1,668,657)	(3,536,637)
Taxation	288,066	118,888
Loss after taxation from continuing operations	(1,380,591)	(3,417,749)
Discontinued Operations
Loss for the year from discontinued operations	(5,349,168)	(757,739
Loss after discontinued operations	(6,729,759)	(4,175,488)
Loss for the period
Attributable to equity shareholders	(6,493,395)	(4,094,292)
Non-controlling interests	(235,864)	(81,196)
Other comprehensive income	(6,729,759)	(4,175,488)
Exchange differences on translation of foreign operations	56,537	(332,071)
Total comprehensive loss for the year net of tax	(6,673,222)	(4,507,559)
Total comprehensive loss attributable to:
Equity shareholders	(6,443,011)	(4,393,156)
Non-controlling interests	(230,211)	(114,403)
	(6,673,222)	(4,507,559)
Loss per ordinary share Basic and diluted
Continuing operations	(1.81)p	(4.60)p
Discontinued operations	(6.96)p	(0.73)p
	(8.77)p	(5.33)p
Weighted average number of shares (000s)	76,754	76,754

Consolidated statement of financial position

As at 31 December 2011

	Group 2011	Group 2010
	£	£
Non-current assets
Investment properties	3,049,357	31,009,083
Development properties	2,384,258	3,072,761
Leasehold improvements	-	64,087
Plant and equipment	10,160	37,951
Trade and other receivables	168,000	-
	5,611,775	34,183,882
Current assets
Amounts recoverable on contracts	1,123,066	1,789,648
Trade and other receivables	315,722	759,658
Cash and cash equivalents	24,158	148,442
	1,462,946	2,697,748
Total assets	7,074,721	36,881,630
Current liabilities
Trade and other payables	(2,793,800)	(2,617,938)
Borrowings	(3,801,871)	(7,383,476)
	(6,595,671)	(10,001,414)
Non-current liabilities
Borrowings	-	(19,439,878)
Deferred tax	-	(288,066)
	-	(19,727,944)
Total liabilities	(6,595,671)	(29,729,358)
Net assets	479,050	7,152,272
Equity
Share capital	767,541	767,541
Share premium reserve	1,397,500	1,397,500
Share option reserve	557,996	557,996
Reverse acquisition reserve	11,038,204	11,038,204
Exchange movements reserve	(388,330)	(439,213)
Accumulated losses	(12,893,861)	(6,300,810)
Equity attributable to shareholders of the Parent Company	479,050	7,021,218
Non-controlling interests	-	131,054
Total equity	479,050	7,152,272

Consolidated statement of changes in equity

For the year ended 31 December 2011

	Share capital £	Share premium £	Share options reserve £	Reverse acquisition reserve £	Exchange rate movement reserve £	Accumulated losses £	Equity shareholders' interest £	Non-controlling interest £	Total £
Balance at 1 January 2010	767,541	1,397,500	412,254	11,038,204	(140,349)	(2,206,518)	11,268,632	245,457	11,514,089
Exchange rate movement	-	-	-	-	(298,864)	-	(298,864)	(33,207)	(332,071)
Loss for the year	-	-	-	-	-	(4,094,292)	(4,094,292)	(81,196)	(4,175,488)
Total comprehensive income	-	-	-	-	(298,864)	(4,094,292)	(4,393,156)	(114,403)	(4,507,559)
Share based payment
- employee services	-	-	21,648	-	-	-	21,648	-	21,648
-cost of raising finance	-	-	124,094	-	-	-	124,094	-	124,094
Balance at 31 December 2010	767,541	1,397,500	557,996	11,038,204	(439,213)	(6,300,810)	7,021,218	131,054	7,152,272
Balance at 1 January 2011	767,541	1,397,500	557,996	11,038,204	(439,213)	(6,300,810)	7,021,218	131,054	7,152,272
Exchange rate movement	-	-	-	-	50,883	-	50,883	5,654	56,537
Loss for the year	-	-	-	-	-	(6,493,895)	(6,493,895)	(235,864)	(6,729,759)
Total comprehensive income	-	-	-	-	50,883	(6,493,895)	(6,443,012)	(230,210)	(6,673,222)
Group provision for minority interest	-	-	-	-	-	(99,156)	(99,156)	99,156	-
Balance at 31 December 2011	767,541	1,397,500	557,996	11,038,204	(388,330)	(12,893,861)	479,050	-	479,050

Consolidated statement of cash flows

For the year ended 31 December 2011

	Group continuing operations 2011 £	Group discontinued operation 2011 £	Group 2011 £	Group continuing operations 2010 £	Group discontinued operations 2010 £	Group 2010 £
Cash flow from operating activities
Loss after taxation	(1,380,591)	(5,349,168)	(6,729,759)	(3,417,749)	(757,739)	(4,175,488)
Adjustments:
Taxation	(288,066)	-	(288,066)	(118,888)	-	(118,888)
Finance costs	696,495	726,381	1,422,876	742,331	864,992	1,607,323
Finance income	-	(403)	(403)	(149)	(499)	(648)
Net portfolio losses	-	5,649,762	5,649,762	1,105,056	1,010,012	2,115,068
Depreciation	98,977	-	98,977	27,318	-	27,318
Write off of development costs incurred	300,000	-	300,000	504,172	-	504,172
Share based payments	-	-	-	145,742	-	145,742
Cash flows from operations before changes in working capital	(573,185)	1,026,572	453,387	(1,012,167)	1,116,766	104,599
Change in amounts recoverable on contracts	666,582	-	666,582	(1,789,648)	-	(1,789,648)
Change in trade and other receivables	(371,465)	21,676	(349,789)	(356,110)	109,024	(247,086)
Change in trade and other payables	487,261	(397,611)	89,650	614,468	(252,192)	362,276
Cash generated/(utilised) from operations	209,194	650,637	859,831	(2,543,457)	973,598	(1,569,859)
Interest paid	(463,815)	(726,381)	(1,190,196)	(813,480)	(864,992)	(1,678,472)
Costs associated with disposal of companies	-	(443,828)	(443,828)	(1,050,205)	-	(1,050,205)
Cash flows from operating activities	(254,621)	(519,572)	(774,193)	(4,407,142)	108,606	(4,298,536)
Cash flows from investing activities:
Disposal of investment properties	-	22,903,434	22,903,434	23,249,001	-	23,249,001
Disposal of development property	-	711,124	711,124	296,497	-	296,497
Cash received on disposal of subsidiary	-	844,388	844,388	-	-	-
Capital expenditure on investment  properties	-	-	-	-	(115,844)	(115,844)
Capital expenditure on development properties	(322,621)	-	(322,621)	(82,697)	-	(82,697)
Purchase of plant and equipment	(11,530)	-	(11,530)	(8,532)	-	(8,532)
Interest received	-	403	403	149	499	648
Cash flows from investment activities	(334,151)	24,459,349	24,125,198	23,454,418	(115,345)	23,339,073
Cash flows from financing activities:
New mortgage loans raised (net of transaction costs)	-	-	-	742,950	-	742,950
Development loans	(1,524,120)	-	(1,524,120)	1,524,120	-	1,524,120
Repayment of loans	(75,726)	(22,645,824)	(22,721,550)	(21,401,231)	(683,540)	(22,084,771)
Directors' loans (net of costs)	-	-	-	26,816	-	26,816
Other short term loans	804,250	-	804,250	243,000	-	243,000
Intra-group cash transfers	1,187,021	(1,187,021)	-	(593,252)	593,252	-
Cash flows from financing activities	391,425	(23,832,845)	(23,441,420)	(19,457,597)	(90,288)	(19,547,885)
(Decrease)/increase in cash and cash equivalents	(197,347)	106,932	(90,415)	(410,321)	(97,027)	(507,348)
Cash and cash equivalents at 1 January 2011	(131,843)	(106,932)	(238,775)	278,478	(9,905)	268,573
Cash and cash equivalents at 31 December 2011	(329,190)	-	(329,190)	(131,843)	(106,932)	(238,775)

Financial Statements & Audit Opinion

These financial statements have been prepared under International Financial Reporting Standards ("IFRS") as adopted by the European Union and applied in accordance with the Companies Act 2006. The financial statements have been prepared on the historical cost basis modified to include certain assets and liabilities at fair value.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and opinions or statements received from competent professional advisors. These advisors include qualified valuers and financial institutions which have provided senior debt and associated facilities.

The most significant assumptions in the financial statements relate to the values ascribed to investment and development properties. The investment property is valued at cost less an impairment considered necessary by the Directors to reduce the property to market value. Development properties are valued at cost prior to the commencement of construction. During the period of construction, properties are valued at fair value having regard to the overall estimated value and the stage of construction.  This is only done if the market value can be determined with sufficient certainty during the period of construction.

An asset of £305,387 has been recognised in respect of a deferred receivable relating to the sale of the German subsidiaries as disclosed in note 18. Included within this balance are amounts that have been estimated in respect of the closing net assets of the subsidiaries at the date of disposal.

The Directors have taken advantage of the exemption offered by Section 408 of the Companies Act not to present a separate statement of comprehensive income for the Parent Company.

As at 31 December 2011, the Group had current liabilities of £6.6 million including Short term loans of £0.3 million which, at the date of approval of these accounts were overdue. This figure also includes the £2.6 million proportion of a loan which is due in over 1 year, but where several covenant breaches have occurred, putting the loan into default. The position is being managed with the lender although a formal waiver of the covenant breaches has not been received.

On 31 October 2011 the Group sold its German property portfolio for a consideration of €27.35 million, after obtaining Shareholder approval.

The cash proceeds of the disposal were used to repay the debt secured on the property assets within the German Portfolio amounting to €26.31 million at the date of the announcement.  This amount includes £1.9 million in respect of the outstanding amount of the loan provided by Dr Michael Sinclair and £500,000 will be applied to the repayment of a second loan due to a private investor. The remainder of the proceeds from the disposal amounting to approximately £1.15 million will be used to discharge professional fees, to progress the development of the Company's UK healthcare property pipeline and for working capital purposes.

In addition, the Directors have prepared trading and cash flow forecasts for the Group for the period to 31 December 2013 as part of a five year plan. The forecasts indicate that additional funding will be required within the next twelve months to deliver the business plans and the Directors are in discussions with current and potential new investors to raise new equity to provide the necessary funding. The Directors believe that the trading forecasts are realistic and that a fund raising will be able to be completed and, accordingly, the Financial Statements have been prepared on a going concern basis. However, due to the need to successfully identify investors and complete a placing, including obtaining shareholder consent in general meeting for the issue of new equity, there is a material uncertainty which may cast significant doubt about the ability of the Group and the Company to continue as a going concern.

Publication of the Annual Report & Accounts

A copy of the Annual Report & Accounts will be shortly available on the Company's web site at www.carecapital.co.uk.  Printed copies of the financial statements are being sent to shareholders today.

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