Interim Results
Angle PLC
31 January 2008
For Immediate Release 31 January 2008
ANGLE plc
Interim Results for the six months ended 31 October 2007
ANGLE plc ('ANGLE' or the 'Company'), the intellectual property and technology
commercialisation company, today announces its unaudited interim results for the
six months ended 31 October 2007.
Financial Highlights
• ANGLE has moved into profitability with profit before tax of £2.8
million (H1 2006: loss £4.9 million)
• Strong financial progress made within the investment portfolio:
- Fair value of portfolio more than doubled during H1 2007 to £8.4
million (30 April 2007 £3.7 million)
- Value of quoted investments increased to £2.5 million at 31 October
2007 (30 April 2007: £1.8 million)
- Operating costs to manage and develop the portfolio reduced by 33% to
£0.9 million (H1 2006: £1.4 million)
• Management services business moved into profitability of £0.5m
(H1 2006: loss £0.1 million) through a combination of cost reduction
and a focus on long-term contracts.
• Cash balance at 31 October 2007 of £1.1 million (30 April
2007: £2.6 million).
Operational Highlights
• Strong operational progress made with the investment
portfolio. Highlights include:
- Geomerics (enhanced computer game graphics): successful market
launch of 'Enlighten' product. Attracted £2.0 million of
investment from new investors.
- Parsortix (prenatal foetal cell diagnostics): significant progress
in the separation of foetal cells from maternal blood. Results to
date support the viability of the technology for clinical
applications.
- Aguru (rapid capture and recreation of photo-realistic surface
images): products launched to the movie animation industry - first sales
under negotiation.
• Large equity stakes retained in portfolio companies with highest
growth potential.
• Other investments have been restructured so that they have a low
cash dependency on ANGLE whilst retaining upside potential from the
investment.
• Management contract secured with Innovation Lincolnshire
worth £0.9 million over 21 months.
• Realisation of cash through partial divestment of Provexis.
Garth Selvey, Chairman, commented:
'This has been a period during which ANGLE has made significant further
progress. Having moved ANGLE into overall profitability and reduced ongoing
demands on cash both for operations and for follow-on investment, the major
focus continues to be the delivery of substantial cash returns from our
investments.
Further progress has also been made with a number of the underlying portfolio
companies and the Board believes that several have the potential to deliver high
cash returns to ANGLE.'
Enquiries:
ANGLE plc 01483 295830
Andrew Newland, Chief Executive
Ian Griffiths, Finance Director
Buchanan Communications
Richard Darby, Suzanne Brocks, James Strong 0207 466 5000
Notes to Editors
Founded in 1994, ANGLE is an international venture management company focusing
on the commercialisation of technology and the development of technology-based
industry. ANGLE creates, develops and advises technology businesses on its own
behalf and for its clients. ANGLE is listed on AIM (AGL.L); further information
can be found on www.ANGLEplc.com
ANGLE plc
CHAIRMAN'S STATEMENT
Profitable Results
ANGLE made strong progress in the first half of the year, both operationally and
financially. As highlighted in the pre-close trading update in November 2007,
the restructuring process initiated in May 2007 has been implemented generating
key benefits for ANGLE and its shareholders.
I am pleased to report a Group profit before tax of £2.8 million (H1 2006: loss
£4.9 million) in the half year to 31 October 2007. The fair value of the
investment portfolio has more than doubled principally as a result of the
increase in fair value of Geomerics.
Overheads have been substantially reduced across the business. Consequently,
ongoing cash requirements across the Group are now lower, more predictable and
more sustainable.
Activity
ANGLE's principal activity remains the management of the portfolio of companies
which it has founded and developed. During the initial development stage ANGLE
takes direct operational control of its investments, whilst maintaining majority
ownership. However, as investments become more mature ANGLE looks to encourage
third party participation by other investors in order to control the level of
investment required in the future.
ANGLE's Management services business is important in its own right as well as
being cash generative and providing unique access to new investment
opportunities.
Restructured Portfolio
In the last six months the portfolio has been restructured with the intention of
maximising ANGLE's investment return and minimising the investment risk and cash
requirements. The investment portfolio has continued to develop under this
regime and can now be categorised as follows:
• Mature investments (2 companies): these require no further investment
from ANGLE and are being held pending their realisation into cash. During
the last 12 months, £1.5 million was realised from these investments.
• High potential returns (4 companies): these are investments which
have made progress and are considered to have the potential to deliver
exceptional cash returns to ANGLE. Where appropriate, cash requirements
are reduced by attracting third party investment but high equity stakes
are maintained.
• Other investments (3 companies): these investments have been
restructured so that they have a low cash dependency on ANGLE whilst
retaining upside potential from the investment.
• Development portfolio (1 company): newly created portfolio
companies with high potential and modest cash requirements.
Investment Priority
The aim in the second half is to ensure that cash generated from
the Management services business exceeds the cost of managing
the investment portfolio. This is important as it leaves the
business in a cash generative condition prior to discretionary
investment spend. Further investment in developing companies can
be covered through cash released from more mature investments.
This strategy is designed to ensure that ANGLE can generate
major returns from its existing investments.
As further cash is realised from the investment portfolio the
Board will review opportunities to create further portfolio
companies and, where cash returns have been considerable, to
return cash to shareholders. The Board believes there to be
significant unrealised value for shareholders in the venture
portfolio.
Outlook for the full financial year
The second half has started well and the Company expects to
deliver positive results for the year in both the investment
portfolio and the Management services business. The Board
believes that the Company plays a vital role in the development
and commercialisation of its intellectual property and
technology and that potential exists within the portfolio for
fair value gains and cash realisations that will create
significant value for ANGLE shareholders.
Garth Selvey
Chairman
30 January 2008
ANGLE plc
OPERATIONS SUMMARY
Introduction
During the half year, ANGLE has restructured its business to reduce costs and
increase focus on its high potential return portfolio companies.
There has been strong progress in the development of value in the portfolio with
the fair value of the portfolio, comprising non-controlled investments and other
receivables, increasing by 126% during the half year to £8.4 million (30 April
2007 £3.7 million), principally as a result of the increase in fair value of
Geomerics. This excludes any value for the six portfolio companies which were
majority owned at the half year. The aggregate cost of investment into these
companies at the half year end was £5.2 million.
Large equity stakes are being maintained in the portfolio companies with high
potential return, although in some cases, third party investors have been
introduced to share the investment cost and minimise the risk.
Results
ANGLE has moved into profitability in the half year reflecting the maturing of
the investment portfolio and increased focus on realising value from the
existing portfolio companies.
The profit before tax for the half year of £2.8 million (2006: loss £4.9
million), representing a profit per share of 10.6p (2006: loss 17.5p), is as a
result of:
• an increase in fair value of non-controlled investments of £4.8 million
(2006: decrease £1.9 million);
• expenditure on controlled investments in the half year of £1.5
million (2006: £1.4 million);
• operating costs to establish, develop and create value in
Progeny(R) companies decreasing by 33% to £0.9 million (2006: £1.4
million);
• a profit on the Management services business of £0.5 million
(2006: loss £0.1 million); and
• a share based payments charge of £0.2 million (2006:
£0.2 million).
Portfolio company status
During the half year, a coherent strategy has been deployed
across the portfolio with the intention of maximising ANGLE's
investment return, whilst controlling the investment risk and
cash requirements.
The strategy adopted has involved categorising the investments and
adopting a defined investment process for the category as follows:
• Mature investments: require no further investment from ANGLE but
continue to be held where dealing restrictions apply or when value
enhancing events are expected. Cash will be realised if required for
investment in other portfolio companies. Over the last 12 months,
£1.5 million has been realised from these investments.
• High potential return: investments which have made progress
and are demonstrating the potential to deliver exceptional cash
returns to ANGLE. The investment strategy is to retain
substantial equity stakes, normally exceeding 40%, to ensure
that significant financial return is secured when the investment
achieves its potential. ANGLE's investment cash is prioritised
to this category of investment with the aim of holding the
investment through to a major valuation event. It is intended
that when an exceptional cash return is secured, a proportion
will be distributed to shareholders by way of dividend or share
buy-back with the balance allocated to the establishment of new
investments. Speed to exit will be balanced against the time
needed to achieve a high exit value.
• Other investments: investments that have been
restructured so that they have a low cash dependency on
ANGLE whilst retaining upside potential from the investment.
The strategy is either to secure third party investment so
that the company can progress without further cash from
ANGLE or develop the business by generating initial sales
and limiting the costs. In the former case it is accepted
that ANGLE's equity stake will fall, probably to less than
25% over time, but this is considered sensible in the
context of reducing ANGLE's follow-on investment
requirements so as to prioritise resources towards the
biggest potential winners.
• Development portfolio: newly created companies where
the investment is considered to have potential but this
has not yet been demonstrated. Pending a major cash
realisation, investment into this category is limited in
order to prioritise investment on high potential return
investments already in the portfolio. During the half
year only one new company was developed within this
category. This was progressed as it was an exceptional
opportunity and ANGLE's Progeny(R) business model was
adapted to allow development of the company for under
£0.1 million. Once a major cash realisation has been
made, we expect to establish several new companies to
exploit the pipeline of opportunities available to
ANGLE.
The status of the portfolio companies, all of which have
been founded and developed by ANGLE, is summarised
below.
Mature investments
ANGLE's mature investments require no further investment from
ANGLE and are being held pending their realisation into cash.
• Acolyte Biomedica, ANGLE's 'hospital super-bug' company was
sold to 3M Corporation in February 2007 at a multiple of up to
8x ANGLE's investment, assuming the earn-out is received in
full. See www.acolytebiomedica.com for more information. ANGLE
received £0.9 million in cash at exit and has an outstanding
earn-out of up to £4.7 million receivable early in 2010. Only
£1.9 million of this potential £4.7 million is entered on
ANGLE's balance sheet, although there is no indication that the
full earn-out will not be achieved.
• Provexis (AIM:PXS) (18% holding) develops
scientifically-proven functional and medical foods. During
the half year Provexis has announced agreements for its
patented Fruitflow(R) anti-thrombotic technology with
Unilever (owner of Becel/Flora brands) for spreads and
Coca-Cola (owner of the Minute Maid brand) for beverages.
See www.provexis.com for more information. During the six
months to 30 January 2007, ANGLE successfully realised £0.5
million from this investment having made an average of 2.5x
the related investment cost in under nine months.
High potential return investments
These companies have the potential to deliver exceptional cash
returns to ANGLE.
• Geomerics (48% holding) is attracting corporate interest in
its computer graphics products and underlying technology
platform. Rapid computation of direct and indirect lighting in
computer graphics is a key factor in creation of greater realism
in computer games. With strong demand anticipated from Asia
Pacific and EMEA regions, the computer gaming market is forecast
to grow at an average 11.4% compound annual rate. The market
size for North America and Europe alone was $14 billion in 2006
(Source: International Development Group), of which Geomerics'
current addressable market is estimated to be $1.4 billion. The
company is poised to make its first sales. During the half year
Geomerics received £2.0 million in investment funding from new
investors. For more information see www.geomerics.com.
• Parsortix (66% holding) is developing its prenatal
diagnostic device based on the isolation of foetal cells
within maternal blood, eliminating the need for invasive
procedures such as amniocentesis. Since the half year
Parsortix has made substantial progress in work to separate
foetal cells in maternal blood. Results to date support the
viability of the technology for clinical applications.
Success in this area would be a major technical breakthrough
and is the company's priority at present. The next step will
be to optimise the design to provide a uniquely non-invasive
product for the prenatal diagnostic market. In the high risk
category, there are over 375,000 prenatal tests undertaken
each year in the US alone costing over $100 million per
annum. The non-invasive nature of Parsortix's test suggests
that the market may extend to low risk pregnancies with the
potential for 2.6 million tests per annum in the US alone.
For more information see www.parsortix.com.
• Aguru Images (81% holding) is commercialising
technology from New York University and the University
of Southern California that enables the rapid capture
and recreation of photo-realistic surface images. The
technology has a wide range of commercial applications
in high value industries, including special effects,
animation, computer gaming and medical devices. Since
the half year end, Aguru has launched its products to
the movie animation special effects industry and is in
the process of negotiating its first sales. This
industry alone provides a $300 million market for Aguru.
The company's first service bureau opened in January
2008 in Los Angeles to service the film industry. For
more information see www.aguruimages.com.
• Novocellus (82% holding) The lead product,
EmbryoSureTM, has the potential to improve pregnancy
success rates in IVF by at least a third through the
selection of the best embryos for transfer to the
uterus. The global IVF market is expected to exceed
1.1 million cycles by 2010 representing a potential
global market opportunity of over $1 billion. The
market is evolving as the UK's regulatory body for
IVF, the Human Fertilisation and Embryology
Authority (HFEA) and other international authorities
are moving towards a requirement for single embryo
transfer, for which Novocellus is particularly
relevant. In the meantime, ANGLE is exploring the
potential for a strong, ideally international,
co-development partner for Novocellus. For more
information see www.novocellus.com.
Other investments
Third party shareholders have been brought into these
companies and the businesses structured to reduce the
further requirement for investment from ANGLE. The
investments offer the potential for reasonable returns
on ANGLE's investment without any significant further
cash commitment.
• Synature (55% holding) has secured initial
investment from Amadeus, the leading Cambridge based IT
investors since the half year end and is progressing its
internet personalisation products. See www.synature.com
for more information.
• Aberro (65% holding) provides automated software
testing that enable customers to increase the
overall reliability of their software while reducing
both time to market and development costs. See
www.aberrosoftware.com for product details. The
business model has been adjusted to focus on driving
revenues and the product sales through consulting.
• NeuroTargets (25% holding) is developing
therapeutics for pain and nerve injury in the
areas of neuropathic and inflammatory pain. The
company has completed in vivo trials of its lead
compounds and is presently seeking collaboration
partners to develop its small molecules.
Development Portfolio
During the half year, ANGLE developed one additional
company from its pipeline. This was developed under
a reduced investment model costing less than £0.1
million in total. The business model for the new
company is predicated on its delivery of early
product sales.
• Mogility (100% holding) utilises US military
technology for agile mobile telephone applications.
The company's technology platform makes it easy for
anyone to create, modify and deploy applications
running on standard data plans or as SMS text
messages. Several US police forces are presently
considering applications. See www.mogilitytech.com
for more information.
The percentage shareholdings are based on issued
share capital as at 31 October 2007.
Pipeline
ANGLE's major focus is the realisation of value from the
existing portfolio. Operating costs have been streamlined
and focused on this key activity. At present we are not
progressing the pipeline of new opportunities.
We are confident that when it is appropriate to reactivate the
establishment of new ANGLE companies, the pipeline available to
us will be strong as a result of ANGLE's long-term management
contracts. For example, the Carbon Trust ANGLE Incubator is now
one of the largest clean energy incubators in the world when
measured by number of companies assisted, according to the
October 2007 New Energy Finance (NEF) report titled 'Global
Clean Energy Incubators' that presents the results of the NEF's
third worldwide survey of incubation activity in the clean
energy industry. This is one example of the pipeline of
opportunities available to ANGLE in its investment business as a
result of its Management services business.
Consistent with our focus on the existing portfolio, we have agreed
with the University of Reading to move our relationship on to a
non-exclusive transactional basis. This approach is consistent with
that used successfully by ANGLE to set up companies with the UK
universities of Bristol, Cambridge and York and the US universities
of New York, Southern California and Virginia as well as other major
research organisations including Dstl Porton Down, Rowett Institute
and British Telecom.
Management services
The Management services business is developing well. It has continued to win
new business, is profitable and cash generative.
The business has been re-shaped during the half year to reduce dependency on
short-term consulting contracts and place the major emphasis on long-term
management contracts. This has led to increased profitability.
During the half year the Management services business delivered a profit of £0.5
million on turnover of £1.8 million, which compares to a £0.1 million loss on
similar turnover for the same period in the previous year.
Plans are being put in place to grow the business over the next two years in
order to build critical mass and to replace the management contract in Qatar,
which completes in 2009. During the half year, ANGLE won the Innovation
Lincolnshire contract worth £0.9 million over 21 months and the Mansfield
iCentre was renewed with a base value of £0.6 million for a five year term.
Outlook
The outlook for the full year is encouraging. Continued development and growth
in the investment portfolio is expected. There are a number of exciting
opportunities under discussion, which may well lead to significant gains or
realisations in the short to medium term.
ANGLE plc
CONSOLIDATED INTERIM INCOME STATEMENT
FOR THE SIX MONTHS ENDED 31 OCTOBER 2007
Note Six months ended Year ended
31 October 31 October 30 April
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
£ £ £
Turnover 3 1,836,634 1,799,113 3,377,354
Change in fair value 6 4,837,686 (1,891,088) (2,036,814)
Operating costs
Management services (1,324,983) (1,862,293) (3,769,204)
Ventures (938,097) (1,399,779) (2,994,989)
Controlled investments (1,487,857) (1,417,592) (3,126,480)
Share based payments (156,593) (222,241) (414,741)
Restructuring charges - - (540,814)
_____________ _____________ _____________
(3,907,530) (4,901,905) (10,846,228)
Operating profit / (loss) 2,766,790 (4,993,880) (9,505,688)
Net finance income 29,299 122,354 196,821
_____________ _____________ _____________
Profit / (loss) before tax 2,796,089 (4,871,526) (9,308,867)
-------------------- ----- ----------- ---------- ----------
Profit/ (loss) before
Controlled investments and
tax 4,329,620 (3,454,448) (6,120,766)
Controlled investments (1,533,531) (1,417,078) (3,188,101)
-------------------- ----- ----------- ---------- ----------
Tax 4 68,841 131,777 201,184
_____________ _____________ _____________
Profit / (loss) for the
period 2,864,930 (4,739,749) (9,107,683)
=========== =========== ===========
Profit / (Loss) per share 5
Basic and Diluted (pence
per share) 10.56 (17.47) (33.57)
ANGLE plc
CONSOLIDATED BALANCE SHEET
AS AT 31 OCTOBER 2007
Note 31 October 31 October 30 April
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
£ £ £
ASSETS
Non-current assets
Non-controlled
investments 6 3,991,667 1,732,831 -
Other
receivables 6 1,902,724 - 1,902,724
Property,
plant and
equipment 91,410 140,750 122,863
Intangible
assets 270,330 7,713 389,159
______________ _______________ _______________
_
Total
non-current
assets 6,256,131 1,881,294 2,414,746
Current assets
Non-controlled
investments 6 2,490,099 2,976,989 1,812,197
Trade and
other
receivables 604,235 1,474,108 964,293
Cash and cash
equivalents 1,068,702 4,327,383 2,551,168
_______________ _______________ _______________
Total current
assets 4,163,036 8,778,480 5,327,658
_______________ _______________ ______________
Total assets 10,419,167 10,659,774 7,742,404
============== ============== =============
EQUITY AND LIABILITIES
Equity
Issued capital 2,713,293 2,713,293 2,713,293
Share premium
account 13,701,935 13,701,935 13,701,935
Share based
payment
reserve 1,788,458 1,141,117 1,713,289
Other reserves 2,553,356 2,553,356 2,553,356
Translation
reserve (193,478) (99,499) (193,813)
Retained
earnings (11,452,438) (10,052,704) (14,420,638)
ESOT shares (370,000) (370,000) (370,000)
_______________ _______________ _______________
Total equity 8,741,126 9,587,498 5,697,422
_______________ _____________ _____________
Liabilities
Non-current liabilities
Obligations
under finance
leases - 13,681 4,560
Controlled
investments -
convertible
loans 72,202 - -
_____________ _____________ _____________
Total
non-current
liabilities 72,202 13,681 4,560
Current liabilities
Trade and
other payables 1,592,158 1,040,165 2,022,180
Obligations
under finance
leases 13,681 18,430 18,242
_____________ _____________ _____________
Total current
liabilities 1,605,839 1,058,595 2,040,422
_____________ _____________ _____________
Total
liabilities 1,678,041 1,072,276 2,044,982
_____________ _____________ _____________
Total equity
and
liabilities 10,419,167 10,659,774 7,742,404
=============== =============== ===============
=== === ===
ANGLE plc
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 OCTOBER 2007
Six months ended Year ended
31 October 31 October 30 April
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
£ £ £
Operating activities
Operating profit / (loss) 2,766,790 (4,993,880) (9,505,688)
Depreciation of property,
plant and equipment 30,004 29,227 63,964
Amortisation of intangible
assets 90,189 1,898 4,164
(Profit) / loss on disposal of
property (1,338) 429 -
Exchange differences (10,477) (50,268) (121,562)
(Increase) / decrease in trade
and other receivables 125,890 (199,415) 283,908
Increase / (decrease) in trade
and other payables (296,821) (438,481) 454,887
Income tax received 118,882 - 142,506
Change in fair value of
Non-controlled investments (4,837,686) 1,891,088 2,036,814
Share based payments 156,593 222,241 414,741
_____________ _____________ _____________
Net cash from operating
activities (1,857,974) (3,537,161) (6,226,266)
Investing activities
Purchase of property, plant
and equipment (6,004) (24,755) (43,268)
Disposal of property, plant
and equipment 776 - 2,756
Purchase of intangible assets (36,252) (5,188) (10,117)
Purchase of Non-controlled
investments - - (262,500)
Provision of convertible loans (47,000) (90,780) (90,780)
Proceeds from sale of
investments 360,848 - 1,111,673
Purchase of ESOT shares - (350,000) (350,000)
Net interest received 40,058 129,478 208,935
_____________ _____________ _____________
Net cash used in investing
activities 312,426 (341,245) 566,699
Financing activities
Net proceeds from issue of
share capital - (14,255) -
Capital elements of finance
lease contracts (9,120) (14,809) (24,118)
Proceeds from issue of
convertible loans 72,202 - -
_____________ _____________ _____________
Net cash from financing
activities 63,082 (29,064) (24,118)
Net increase / (decrease) in
cash and cash equivalents (1,482,466) (3,907,470) (5,683,685)
Cash and cash equivalents at
start of period 2,551,168 8,234,853 8,234,853
_____________ _____________ _____________
Cash and cash equivalents at
end of period 1,068,702 4,327,383 2,551,168
=========== =========== ===========
ANGLE plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 OCTOBER 2007
Attributable to equity holders of the Group
Share based
Issued Share payment Other Translation Retained ESOT Total
capital premium reserve reserves reserve earnings shares Equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
£ £ £ £ £ £ £ £
At 1 May 2,713,293 13,701,935 918,876 2,553,356 (73,159) (5,312,955) (20,000) 14,481,346
2006
For the
period to 31
October
2006
Consolidated
profit /
(loss) (26,340) (4,739,749) (4,766,089)
Share based
payments 222,241 222,241
ESOT (350,000) (350,000)
shares
___ _____ ___ _____ ___ _____ ___ _____ ___ _____ ___ _____ ___ _____ ___
_____
----------- ----------- ----------- ----------- ----------- ----------- -----------
-----------
At 31
October 2,713,293 13,701,935 1,141,117 2,553,356 (99,499) (10,052,704) (370,000) 9,587,498
2006
For the
period to 30
April 2007
Consolidated
profit /
(loss) (94,314) (4,367,934) (4,462,248)
Share based
payments 572,172 572,172
___ _____ ___ _____ ___ _____ ___ _____ ___ _____ ___ _____ ___ _____ ___
_____
----------- ----------- ----------- ----------- ----------- ----------- -----------
-----------
At 1 May 2,713,293 13,701,935 1,713,289 2,553,356 (193,813) (14,420,638) (370,000) 5,697,422
2007
For the
period to 31
October
2007
Consolidated
profit /
(loss) 335 2,864,930 2,865,265
Share based
payments 178,439 178,439
Deemed
disposal of
subsidiary (103,270) 103,270
___ _____ ___ _____ ___ _____ ___ _____ ___ _____ ___ _____ ___ _____ ___
_____
--- ----------- ----------- ----------- ----------- ----------- ----------- -----------
-----------
At 31
October 2,713,293 13,701,935 1,788,458 2,553,356 (193,478) (11,452,438) (370,000) 8,741,126
2007
========== ========== ========== ========== ========= =========== ==========
Share based payment reserve
The share based payment reserve account is used for the corresponding entry to
the share based payments charged through: a) the income statement for staff
incentive arrangements in the Group; b) the income statement for staff incentive
arrangements in the Controlled investments; and c) the balance sheet for
acquired intangible assets in the Controlled investments comprising intellectual
property (IP). These components are separately identified in the table below.
Transfers are made from this reserve to retained earnings as the related share
options are exercised, lapse or expire or as a Controlled investment becomes
non-controlled.
Share based payments Controlled Controlled
reserve Group investments investments
employees employees IP Total
£ £ £ £
At 1 May 2006 904,629 14,247 - 918,876
Charge for the period 198,029 24,212 - 222,241
-------------- -------------- -------------- -------------
At 31 October 2006 1,102,658 38,459 - 1,141,117
Acquired intellectual
property 379,672 379,672
Charge for the period 157,496 35,004 - 192,500
-------------- -------------- -------------- -------------
At 30 April 2007 1,260,154 73,463 379,672 1,713,289
Acquired intellectual
property 27,014 27,014
Deemed disposal of
subsidiary - (19,937) (83,333) (103,270)
Charge for the period 113,816 42,777 156,593
Exchange movement - (1,420) (3,748) (5,168)
-------------- -------------- -------------- -------------
At 31 October 2007 1,373,970 94,883 319,605 1,788,458
========== ========== ========= =========
Translation reserve
The translation reserve account comprises cumulative exchange differences
arising on consolidation from the translation of the financial statements of
international operations. Under IFRS this is separated from retained earnings.
ESOT shares
These relate to shares purchased by the ANGLE Employee Share Ownership Trust.
ANGLE plc
NOTES TO THE INTERIM FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 OCTOBER 2007
1 Basis of preparation and accounting policies
The Condensed Interim Financial Statements in this document does not constitute
statutory financial statements for the purposes of s240 of the Companies Act
1985. The Statutory Financial Statements for the year ended 30 April 2007
('Report and Accounts 2007') have been filed with the Registrar of Companies.
The auditor's report on those Financial Statements, which were prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted by
the European Union (EU), was unqualified and did not contain statements under
s237(2) or s237(3) of the Companies Act 1985.
This Condensed Interim Financial Statements is the unaudited interim
consolidated financial statements (the 'Condensed Interim Financial Statements')
of ANGLE plc, a company incorporated in Great Britain and registered in England
and Wales, and its subsidiaries (together referred to as the 'Group') for the
six month period ended 31 October 2007 (the 'interim period'). The condensed
interim financial statements are unaudited but have been reviewed by the
Auditors in accordance with the International Standard on Review Engagements (UK
and Ireland) 2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the 'Entity' issued by the Auditing Practices Board for
use in the United Kingdom.
The Condensed Interim Financial Statements have been voluntarily prepared in
accordance with International Accounting Standard 34 Interim Financial Reporting
('IAS 34'), as adopted by the EU, and on the basis of the accounting policies
set out in the Report and Accounts 2007. The presentation of the Condensed
Interim Financial Statements is consistent with the Report and Accounts 2007.
Where necessary, comparative information has been reclassified or expanded from
the previously reported Condensed Interim Financial Statements to take into
account any presentational changes made in the Report and Accounts 2007.
The Condensed Interim Financial Statements were approved by the Board and
authorised for issue on 30 January 2008.
Going concern
The Directors have reviewed the projections for the forthcoming 12 month period
from the date of approval of these Interim Financial Statements and based on the
level of existing cash, projected income and expenditure, the Directors are
satisfied that the Company and Group have adequate resources to continue in
business for the foreseeable future. Accordingly the going concern basis has
been used in preparing the Interim Financial Statements.
Critical accounting estimates and judgements
The preparation of the Interim Financial Statements requires the use of
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the Financial Statements and the reported amounts of
revenues and expenses during the reporting period. Although these estimates and
assumptions are based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those estimates.
The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities relate to the
valuation of unlisted investments held at fair value in accordance with IAS39
and on the basis of the accounting policies in the Report and Accounts 2007, and
to the valuation of earn-outs.
2 Summary segmental analysis
The Group operates in one principal area of activity - technology wealth
creation through the commercialisation of intellectual property and the
development of technology industry.
The primary business segments are:
• Management services - provision of management services to clients
including research organisations, corporate and governmental organisations
on a fee-for-service basis. This business segment provides a platform for
the Ventures activities.
• Ventures - activities to establish, develop and create value in
technology companies. The Group uses a proprietary Progeny(R) process to
develop these companies, which are referred to as Progeny(R) companies.
ANGLE's unique business model involves ANGLE founding new companies
which it controls during the critical early stages of development,
before securing third party funding.
Under IFRS, the accounting for Progeny(R) companies divides into
controlled investments and non-controlled investments.
- Controlled investments - Progeny(R) companies where the Group has
control, typically as a result of owning in excess of 50% of the equity.
These are consolidated and the Group's investment costs are expensed in
the Income Statement.
- Non-controlled investments - Progeny(R) companies where the Group does not
have control. These investments are held on the Balance Sheet at fair value,
with changes in fair value passing through the Income Statement.
The nature of these operations is significantly different. The primary format
and segmentation by class of business has been provided on the face of the
Consolidated Interim Income Statement.
3 Turnover
The breakdown of turnover by business segment is set out below:
Six months ended Year ended
31 October 31 October 30 April
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
£ £ £
Turnover
Management services 1,828,877 1,792,290 3,364,547
Ventures 7,757 6,308 11,865
Controlled investments - 515 942
_____________ _____________ _____________
1,836,634 1,799,113 3,377,354
=========== =========== ===========
Turnover from Management represents fees received from clients for Management
services. Turnover from Ventures represents fees received from the
non-controlled investments for accounting and other services provided by the
Company until those companies take those activities in-house. Turnover from
Controlled investments represents the turnover of those businesses, which is
consolidated prior to the company becoming non-controlled.
4 Tax
The Group is eligible for the substantial shareholdings relief UK corporation
tax exemption. This results in the gain from any disposals of UK investments
where the Group has an equity stake greater than 10%, subject to certain other
tests, being free of corporation tax. Tax is therefore based on the profits in
the Management services business as relieved by losses incurred in the
establishment and development of new Ventures.
Controlled investments undertake research and development activities. In the UK
these activities qualify for tax relief and result in tax credits.
5 Earnings / (loss) per share
The basic and fully diluted earnings / (loss) per share is calculated on an
after tax profit of £2.9 million (6 months to 31 October 2006: loss £4.7
million, year to 30 April 2007: loss £9.1 million).
The basic and fully diluted earnings / (loss) per share are based on 27,132,931
weighted average ordinary 10p shares (6 months to 31 October 2006: 27,132,931,
year to 30 April 2007: 27,132,931). Share options are non-dilutive for the
period.
6 Non-controlled investments and Other receivables
The Group's investment portfolio comprises investments in Progeny(R) companies.
Where the Group has control of a Progeny(R) company (typically owning more than
50% of the equity), these are Controlled investments and are consolidated as
subsidiaries. At the point control no longer exists, a deemed profit arises and
the Non-controlled investment is held at fair value on the Consolidated Balance
Sheet In the six months to 31 October 2007 net costs before taxation relating to
Controlled investments of £1.5 million (2006: £1.4 million) were charged to the
Income Statement.
Where the Group does not control a Progeny(R) company (typically owning less
than 50% of the equity), these are defined as Non-controlled investments and
held on the balance sheet at fair value, as set out in the table below:
Non-current Current assets Total - Non
assets controlled
Unquoted Quoted investments
(Unaudited) (Unaudited) (Unaudited)
£ £ £
At 1 May 2006 1,642,051 4,868,077 6,510,128
Investments 90,780 - 90,780
Change in fair
value - (1,891,088) (1,891,088)
_____________ _____________ _____________
At 31 October
2006 1,732,831 2,976,989 4,709,820
Investments - 262,500 262,500
Disposals *(2,733,647) (280,750) (3,014,397)
Change in fair
value 1,000,816 (1,146,542) (145,726)
_____________ _____________ _____________
At 1 May 2007 - 1,812,197 1,812,197
Investments 89,461 - 89,461
Disposals - (360,848) (360,848)
Fair value gain
on deemed
disposal of
subsidiary #3,991,667 - 3,991,667
Change in fair
value (89,461) 1,038,750 949,289
_____________ _____________ _____________
At 31 October
2007 3,991,667 2,490,099 6,481,766
=========== =========== ===========
ANGLE's holding in Provexis plc was valued at £1.3 million at market price on 30
January 2008.
Other receivables
* ANGLE's Progeny(R) company Acolyte Biomedica was sold to 3M Corporation in
February 2007. ANGLE's share of the proceeds was an initial £0.9 million in cash
and an earn-out of up to £4.7 million receivable early in 2010. A fair value of
£1.9 million of this potential £4.7 million earn-out is held on ANGLE's balance
sheet under the 'Other receivables' category.
Change in fair value
# ANGLE's accounting policy is that, in accordance with IAS39 Financial
Instruments: Recognition and Measurement, upon initial recognition of an
investment it is designated at fair value through the Income Statement. As a
result of securing third party funds and reducing the equity position in
Geomerics then this is a 'deemed' disposal as its status changed from a
subsidiary (Controlled Investment) which is consolidated to an associate
(Non-controlled investment) which is held at fair value.
£
Deemed loss from net assets no longer consolidated (103,270)
Fair value gain on deemed disposal of subsidiary 3,991,667
Change in fair value of investments 949,289
_________
Change in fair value 4,837,686
=======
7 Shareholder communications
The announcement is being sent to all shareholders on the register on 31 January
2008. Copies of this announcement are posted on the Company's website
www.ANGLEplc.com and are available from Buchanan Communications and the
Company's registered office: 20 Nugent Road, Surrey Research Park, Guildford,
GU2 7AF.
ANGLE plc
INDEPENDENT REVIEW REPORT TO ANGLE PLC
FOR THE SIX MONTHS ENDED 31 OCTOBER 2007
Introduction
We have been engaged by the Company to review the condensed set of Financial
Statements in the Financial Report for the six months ended 31 October 2007
which comprises the Consolidated Interim Income Statement, the Consolidated
Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement
of Changes in Equity and the Notes to the Interim Financial Information. We have
read the other information contained in the interim financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of Financial
Statements.
This report, including the conclusion, has been prepared for and only for the
Company for the purpose of meeting the requirements of the Alternative
Investment Market (AIM) Rules for companies and for no other purpose. We do not,
therefore in producing this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.
Directors' Responsibilities
The Interim Financial Report is the responsibility of, and has been approved by
the directors. The directors are responsible for preparing and presenting the
Interim Financial Report in accordance with the AIM Rules for Companies.
As disclosed in Note 1, the Annual Financial Statements of the Group are
prepared in accordance with International Financial Reporting Standards and
International Financial Reporting Interpretations Committee (IFRIC)
pronouncements as adopted by the European Union. The condensed set of Financial
Statements included in this Interim Financial
Report has been prepared in accordance with International Accounting Standard
(IAS) 34, 'Interim Financial Reporting' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of Financial Statements in the Interim Financial Report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of Interim Financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and consequently does
not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of Financial Statements in the Interim Financial Report
for the six months ended 31 October 2007 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the European Union, and the
AIM Rules for Companies.
BAKER TILLY UK Audit LLP
Chartered Accountants
Guildford
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