Half Yearly Report

RNS Number : 8122O

Advanced Oncotherapy PLC

25 September 2013

 



25 September 2013

Advanced Oncotherapy Plc

("Advanced Oncotherapy" or the "Company")

Half Year Results for the Six Months Ended 30 June 2013

Advanced Oncotherapy announces its financial results for the six months ended 30^th June 2013.

Highlights

·     Advanced Oncotherapy completed the purchase of ADAM which firmly establishes the Group as the most cost effective provider of 3 room treatment centres in a growing world market of proton therapy which is expected to treble by 2018*.  The Group's new equipment - Linac Image Guided Hadron Technology - LIGHT - has an order pipeline at £200+ million and an anticipated net profit margin of 10% on this future revenue stream.

* MEDraysintell in its new Proton Therapy World Market Report Edition 2013: global Proton Therapy market to reach US$ 2.5 billion in 2030, annual growth of 10%.

·     Milestone payments are anticipated from purchasers of the LIGHT equipment, which will make significant contributions to Group's cash flow.

·     There has been a slower than expected start in establishing a sales pipeline for ORL, and ORL has begun to see an increasing demand for SD-IORT in early stage breast in a number of leading hospitals throughout the UK, including BMI Healthcare and Spire Healthcare groups.

For further information, please visit www.advancedoncotherapy.com or contact:

Michael Sinclair, Chief Executive	Sandy Jamieson	Jon Levinson/ Lucy Williams	Simon Hudson
Advanced Oncotherapy Plc	Libertas Capital Corporate Finance Ltd	Peterhouse Corporate Finance	Tavistock Communications
	(NOMAD & Joint Broker)	(Joint Broker)	(Financial PR & IR)
[phone]	[phone]	[phone]	[phone]

Statement

The first half of the year has seen some significant progress within the Group, and a number of key milestones have been reached.

The figures contained in this report should be read in the context of the excellent underpinning medical technology and sales pipeline that the Group has managed to secure.  The Board believes that Advanced Oncotherapy is at the start of a very promising journey, and while there is some delay in securing key positions, reflected by the figures the Directors are confident that an inflection point of the business has been reached that will see the Group through to profitable growth.

During the six month period ended 30 June 2013 the Group had revenues of £18,790 (30 June 2012: £9,433; year to 31 December 2012: £100,000.).  The loss on ordinary activities before taxation was £0.78 million (30 June 2012: £1.06 million; year to 31 December 2012: £1.88 million).  The comprehensive loss for the period was £0.85 million (30 June 2012: £1.02 million; year to 31 December 2012: £2.74 million.)  Total assets at 30 June 2013 were £6.01 million (30 June 2012: £8.82 million; at 31 December 2012: £5.64 million).  Net Assets at 30 June 2013 were £0.51 million (2012: £0.54 million; at 31 December 2012: negative £0.14 million).

Acquisition of ADAM SA

Over the course of 2013 to date, significant progress has been made in establishing the Group's in a competitive position within the next generation of cancer treatment, namely proton beam therapy.  This has occurred principally through the proposed acquisition of ADAM SA - a CERN spin-off company based on the campus of CERN in Geneva, Switzerland.

Advanced Oncotherapy has today completed the purchase of ADAM.  Together with the current shareholders of ADAM, the Group has accelerated the acquisition due to real momentum in the marketplace for affordable proton beam therapy equipment seen over the last six months.

During that period, agreements have been signed to provide eight LIGHT machines - the next generation of proton therapy - to locations in both the UK and the USA.  The order pipeline now stands at over £200 million. The anticipated net profit margin is 10% on this future revenue.

The current plan is to commence delivery of the first machines in Q4 2016/Q1 2017. Revenues from these projects are expected to be received by the Company over 2017 and 2018. Milestone related stage payments are anticipated from purchasers of the technology, which will make significant contributions to Group cash flow.

Financing for growth

The market response to LIGHT - the next generation of proton therapy- has resulted in the Board reassessing overall financing plans. A number of new and attractive financing options have been presented, including the provision of scientific grants, and it is hoped that these can be finalised and reported to shareholders during Q1/Q2 2014.

As part of the process of accelerating the completion of the ADAM acquisition, BRAHMA AG, the current owner of ADAM, has waived the Financing Condition in the purchase contract.   BRAHMA will be issued with shares in Advanced Oncotherapy to give it a 29.9% holding in the Company on completion.

When the financing mentioned above has been completed as anticipated, in Q1/Q2 2014, BRAHMA will be issued with additional Advanced Oncotherapy shares to provide it with a maximum 25.1% shareholding in the enlarged share capital of the Company.

Women's Cancer Centre in Folkestone

Advanced Oncotherapy owns a building established for medical purposes in a prime location in Folkestone.

When it was initially decided to develop this property it was pre-let to a Dental Company with financial backing from Lehman Brothers. The demise of Lehman forced the Group to review plans for the building, which has a mortgage from Bank of Ireland against it.

Having investigated a number of healthcare services options, it has been decided to operate the premises as a Women's Cancer Centre.  This activity is consistent with the Group's overall strategy, and local market research supports its future viability.  Once fully operational it is intended to refinance the building by way of a sale and lease back.  This plan creates the best opportunity to realise the value derived from the medical planning use of the building.   Alternative uses, such as office or commercial, would not support a rental level necessary to maintain the carrying value of the property in the Balance Sheet.

Oncotherapy Resources Ltd ("ORL")

While there has been a delay in establishing a sales pipeline for ORL, it is pleasing to report that treatment for breast cancer has now commenced in a number of leading hospitals throughout the UK, including the key relationships with BMI Healthcare and Spire Healthcare groups.

These relationships facilitate the adoption of the SD-IORT s within these hospital groups, and combined with the appointment of an additional radiographer to help promote the service, there is a strong flow of patients being booked in for this single dose radiation treatment for early stage breast cancer.

Furthermore, the service is being adopted by veterinarians for use in small animal cancers.  Using a designated Xoft machine and consumables, key vet cancer centres are utilising ORL's managed service as an option to purchasing other forms of radiation equipment.  This sector is potentially high volume, with reimbursement rates that provide healthy profit margins, and it is hoped to further grow and develop this service.

Consolidated statement of comprehensive income
For the period ended 30 June 2013
	Interim	Group	Interim	Group
	June-13	2012	June-12	2011
	£	£	£	£
Revenue	18,790	100,000	9,433	71,000
Cost of sales	(41,154)	(713)
Gross Profit	(22,364)	99,287	9,433	71,000
Administrative expenses	(664,869)	(1,159,024)	(913,466)	(1,642,626)
Development costs written off		(504,779)	-	(300,000)
Operating loss	(687,233)	(1,564,516)	(904,033)	(1,871,626)
Finance income		3,723	-	-
Finance costs	(89,790)	(322,940)	(156,900)	(694,091)
Loss on ordinary activities before taxation	(777,023)	(1,883,733)	(1,060,934)	(2,565,717)
Taxation	-	-	-	288,066
Loss after taxation from continuing operations	(777,023)	(1,883,733)	(1,060,934)	(2,277,651)
Discontinued operations
Loss for the period from discontinued operations	(47,539)	(852,997)	36,108	(4,452,108)
Loss after discontinued operations	(824,562)	(2,736,730)	(1,024,826)	(6,729,759)
Loss for the period
Attributable to equity shareholders	(822,185)	(2,713,612)	(1,024,826)	(6,493,895)
Non-controlling interests	(2,377)	(23,118)	-	(235,864)
	(824,562)	(2,736,730)	(1,024,826)	(6,729,759)
Other comprehensive income
Exchange differences on translation of foreign operations	(24,243)	-	-	56,537
Total comprehensive loss for the year net of tax	(848,805)	(2,736,730)	(1,024,826)	(6,673,222)

Consolidated statement of financial position
As at 30 June 2013	Interim	Group	Interim	Group
	June-13	2012	June-12	2011
	£	£	£	£
Non-current assets
Investment properties	3,049,357	3,049,357	3,049,357	3,049,357
Development properties	-	-	1,961,192	2,384,258
Plant and equipment	901,780	205,422	-	10,160
Trade & Other Receivables	872,441	872,441	-	168,000
Investments	50,234	-	13,431	-
	4,873,813	4,127,220	5,023,980	5,611,775
Current Assets
Amounts receivable on contracts	-	-	2,547,887	1,123,066
Trade and other receivables	383,486	1,451,961	1,245,407	315,722
Stock	39,060	-	-	-
Cash and cash equivalents	717,697	57,767	3,366	24,158
	1,140,243	1,509,728	3,796,660	1,462,946
Total assets	6,014,056	5,636,948	8,820,640	7,074,721
Current liabilities
Trade and other payables	(1,798,060)	(1,972,217)	(3,974,682)	(2,793,800)
Borrowings	(3,709,084)	(3,804,013)	(4,310,001)	(3,801,871)
	(5,507,144)	(5,776,230)	(8,284,683)	(6,595,671)
Non-current liabilities
Borrowings	-	-	-	-
Deferred tax	-	-	-	-
Total liabilities	(5,507,144)	(5,776,230)	(8,284,683)	(6,595,671)
Net assets	506,911	(139,282)	535,957	479,050
Equity
Share capital	3,844,104	2,594,104	1,634,104	767,541
Share premium reserve	1,910,998	1,665,998	1,612,670	1,397,500
Share option reserve	581,333	581,333	557,996	557,996
Reverse acquisition reserve	11,038,204	11,038,204	11,038,204	11,038,204
Exchange movements reserve	(388,330)	(388,330)	(388,330)	(388,330)
Accumulated losses	(16,479,398)	(15,630,591)	(13,918,687)	(12,893,861)
Equity attributable to shareholders of the Parent Company	506,911	(139,282)	535,957	479,050
Non-controlling interests	-	-	-	-
Total equity	506,911	(139,282)	535,957	479,050
These consolidated financial statements have been approved and were authorised for issue by the Board
of Directors on 23 September 2013
Dr Mike Sinclair, Chief Executive Officer		Registered number: 05564418

Consolidated statement of cash flows
For the period ended 30 June 2013	Group	Group		Group	Group		Group	Group		Group	Group
	continuing	discontinued		continuing	discontinued		continuing	discontinued		continuing	discontinued
	operations	operations	Group	operations	operations	Group	operations	operations	Group	operations	operations	Group
	June-13	June-13	June-13	2012	2012	2012	June-12	June-12	June-12	2011	2011	2011
	£	£	£	£	£	£	£	£	£	£	£	£
Cash flow from operating activities
Loss after taxation	(777,023)	(71,782)	(848,805)	(1,883,733)	(852,997)	(2,736,730)	(1,060,934)	36,108	(1,024,826)	(2,277,651)	(4,452,108)	(6,729,759)
Adjustments:
Taxation	-	-	-	-	-	-	-	-	-	(288,066)	-	(288,066)
Finance costs	88,915	7,647	96,562	322,972	28,992	351,964	156,900	3,379	160,280	696,495	726,381	1,422,876
Finance income	-	-	-	(3,723)	-	(3,723)	-	-	-	-	(403)	(403)
Net portfolio losses / (gains)	-	-	-	-	244,516	244,516	-	-	-	-	5,649,762	5,649,762
Depreciation	33,408	-	33,408	-	-	-	1,364	-	1,364	98,977	-	98,977
Loan Cost Amortisation	875		875
Write-off of development costs incurred	-	-	-	504,779	610,774	1,115,553	-	-	-	300,000	-	300,000
Share based payments	-	-	-	23,340	-	23,340	-	-	-	-	-	-
Cash flows from operations before changes in working capital	(653,825)	(64,135)	(717,960)	(1,036,364)	31,285	(1,005,079)	(902,669)	39,487	(863,182)	(1,470,245)	1,923,632	453,387
Change in amounts receivable on contracts	-	-	-	-	204,115	204,115	-	(1,103,093)	(1,103,093)	-	666,582	666,582
Change in trade and other receivables	(176,525)	-	(176,525)	(230,320)	(142,500)	(372,821)	101,839	(863,525)	(761,686)	(718,862)	369,073	(349,789)
Change in Stock	(39,060)	-	(39,060)	-	-	-	-	-	-	-	-	-
Change in trade and other payables	(485,053)	(4,940)	(489,993)	(276,244)	172,020	(104,224)	105,532	998,842	1,104,374	429,767	(340,117)	89,650
Cash (used) / generated from operations	(1,354,463)	(69,075)	(1,423,538)	(1,542,928)	264,919	(1,278,009)	(695,298)	(928,290)	(1,623,587)	(1,759,340)	2,619,170	859,830
Interest paid	(160,383)	-	(160,383)	(70,225)	(28,992)	(99,217)	(80,393)	(3,379)	(83,772)	(463,815)	(726,381)	(1,190,196)
Costs associated with disposal of companies	-	-	-	-	-	-	-	-	-	-	(443,828)	(443,828)
Cash flows from operating activities	(1,514,846)	(69,075)	(1,583,921)	(1,613,153)	235,927	(1,377,226)	(775,691)	(931,669)	(1,707,359)	(2,223,154)	1,448,961	(774,193)
Cash flows from investing activities:
Disposal of investment properties	-	-	-	-	-	-			-	-	22,903,434	22,903,434
Disposal of development properties	-	-	-	-	-	-			-	-	711,124	711,124
Loss on disposal of investment and development property	-	-	-	-	-	-			-	-	844,388	844,388
Disposal of subsidiary	-	1,550,000	1,550,000						-
Cash disposed with subsidiary	-	-	-	-	(5,292)	(5,292)			-	-	-	-
Investment in acquisition	(50,234)	-	(50,234)						-
Capital expenditure on development properties	-	-	-	-	(485,809)	(485,809)		101,338	101,338	-	(322,621)	(322,621)
Capital expenditure on plant and machinery	(350,109)	-	(350,109)	(190,983)	-	(190,983)	(1,907)		(1,907)	(11,530)	-	(11,530)
Interest received			-	-	-	-			-	-	403	403
Cash flows from investment activities	(400,343)	1,550,000	1,149,657	(190,983)	(491,101)	(682,084)	(1,907)	101,338	99,431	(11,530)	24,136,728	24,125,198
Cash flows from financing activities:
Amounts raised through new equity	1,495,000	-	1,495,000	1,318,885	-	1,318,885	496,889	-	496,889	-	-	-
Development loans	-	-	-	-	-	-	-	-	-	-	(1,524,120)	(1,524,120)
Repayment of loans	-	-	-	-	-	-		579,033	579,033	(75,726)	(22,645,824)	(22,721,550)
Other short term loans	(400,669)	-	(400,669)	1,127,247	-	1,127,247	(79,454)	644,419	564,965	804,250	-	804,250
Intra group cash transfers	1,480,925	(1,480,925)	-	(234,538)	234,538	0	413,518	(413,518)	-	1,288,177	(1,288,177)	-
Cash flows from financing activities	2,575,256	(1,480,925)	1,094,331	2,211,594	234,538	2,446,132	830,953	809,934	1,640,887	2,016,701	(25,458,121)	(23,441,420)
Decrease in cash and cash equivalents	660,066	-	660,066	407,458	(20,636)	386,822	53,356	(20,397)	32,959	(217,983)	127,568	(90,415)
Cash and cash equivalents at 01 January 2013	57,632	-	57,632	(349,826)	20,636	(329,190)	(349,826)	20,636	(329,190)	(131,843)	(106,932)	(238,775)
Cash and cash equivalents at 30 June 2013	717,697	-	717,697	57,632	-	57,632	(296,470)	239	(296,231)	(349,826)	20,636	(329,190)

 

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