Preliminary Results

RNS Number : 1340Q

Angle PLC

29 July 2010

 



                                                                                                         29 July 2010

 

ANGLE plc

Preliminary Audited Results for the year ended 30 April 2010

Encouraging progress with the portfolio.  New contracts awarded in Management services 

ANGLE plc ('ANGLE' or the 'Company'), which focuses on the commercialisation of technology and the development of technology-based industry, today announces audited results for the year ended 30 April 2010. 

Financial Highlights

 

Total comprehensive income £0.3 million (2009: loss £3.6 million)

 

Profit before controlled investments and tax £0.1 million (2009: loss £2.3 million)

 

Loss before tax reduced to £0.2 million (2009: £3.4 million)

Cash realisations of £1.4 million (2009: nil) from sale of Provexis investment, giving a fair value gain of £0.9 million 

Operating costs to manage and develop the Ventures portfolio reduced by 26% to £0.7 million (2009: £0.9 million) 

Planned expenditure on controlled investments reduced to £0.3 million (2009: £1.1 million) reflecting ANGLE's partnership approach and the stage of development of the portfolio 

 

Fair value of investment portfolio £3.7 million (30 April 2009 £4.4 million).  Disposals accounted for £0.5 million of the reduction.  This fair value does not include the value of controlled investments

 

Normalised cash balance at 30 April 2010 increased to £0.5 million (30 April 2009: £0.3 million) 

Operational Highlights 

Management services

 

Profits from the UK Management services business were maintained during the year at £0.3 million. 

 

Carbon Trust contract renewal awarded worth up to £450,000 per annum for a minimum of two years from August 2009 and with the potential for extension to four years 

London Manufacturing Advisory Services contract awarded worth approximately £0.7 million over three years from August 2009

Innovation Programme contract in Lincolnshire awarded worth £2.3 million over three years

 

Sold order book worth £4.5 million at 30 April 2010.  There is significant pressure on the Company's UK Government contracts and this may result in a drop in UK revenues.  In anticipation of this, during the year ANGLE invested substantially in developing its Middle East markets. 

Portfolio

 

Geomerics (47%) (computer games middleware) has agreed a corporate partnership since the year end with one of the world's leading technology companies.  The partnership comprises both a cash investment and an ongoing partnership arrangement.  The deal includes investment of up to £2.3 million into Geomerics. 

 

NeuroTargets (25%) (neuropathic pain) has agreed a licensing deal with the University of Bristol, and the Wellcome Trust has since the year end awarded the University a further £3.8 million to progress the galanin programme.   

 

Novocellus (82%) (IVF embryo viability), together with its corporate partner Origio, has completed the extensive work necessary to develop the protocol for its clinical study.      

Parsortix (80%) (medical diagnostics / foetal cell capture) has initiated discussions regarding a corporate partnership with key industry players.      

 

Garth Selvey, Chairman, commented:

"In the face of continuing tough economic conditions, ANGLE produced an improved portfolio position and maintained profitability in its UK Management services business.  The Board is particularly pleased to note that its corporate partnership approach has, shortly after the year end, resulted in a value-added investment into Geomerics and in funding for further development of the technology developed by NeuroTargets." 

Enquiries:

ANGLE plc	01483 685830
Andrew Newland, Chief Executive Ian Griffiths, Finance Director
Collins Stewart Europe Limited Stewart Wallace	0207 523 8350
Scott Harris Stephen Scott, James O'Shaughnessy, Harry Dee	0207 653 0030

These Preliminary Results may contain forward looking statements. These statements reflect the Board's current view, are subject to a number of material risks and uncertainties and could change in the future. Factors which could cause or contribute to such changes include, but are not limited to, the general economic climate and market conditions, as well as specific factors relating to the financial or commercial prospects or performance of individual portfolio companies within the Group's portfolio of investments.

Notes to Editors

Founded in 1994, ANGLE focuses 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's specialist Management services business provides support on a fee-for-service basis to major clients around the world involved in incubation, IP commercialisation, SME innovation and growth and the operation of science & technology parks.

ANGLE also owns a portfolio of company holdings with high growth potential in the medical and technology sectors.  These have been developed whilst subsidiaries of ANGLE using its proprietary Progeny® process.  ANGLE seeks to retain a substantial shareholding in these companies with a view to ongoing returns from dividend, milestone, royalty and capital returns.   

ANGLE's technology commercialisation skills are of increasing relevance as global economies focus on regeneration, innovation and value added components to their industries.  ANGLE's technology skills in IT and software, medical and life sciences, clean tech and renewable energies are directly relevant to major growth markets of the future and are marketed as specialised Management services. 

ANGLE is quoted on AIM (AGL.L); further information can be found on www.ANGLEplc.com 

 

CHAIRMAN'S STATEMENT

Introduction

In the face of continuing tough economic conditions, ANGLE produced an improved portfolio position and maintained profitability in its UK Management services business.  The Board is particularly pleased to note that its corporate partnership approach has, shortly after the year end, resulted in a value-added investment into Geomerics and in funding for further development of the technology developed by NeuroTargets.

Results

Total comprehensive income for the year was £0.3 million (2009: loss £3.6 million).

During the year, ANGLE moved back into profitability before controlled investments and tax of £0.1 million (2009: loss £2.3 million).

After expenditure on controlled investments, the loss before tax reduced to £0.2 million (2009: £3.4 million).

The sale of the residual shareholding in Provexis generated cash realisations of £1.4 million (2009: nil) with a fair value gain of £0.9 million.

Operating costs to manage and develop the Ventures portfolio were reduced by 26% to £0.7 million (2009: £0.9 million).  Reflecting ANGLE's partnership approach and the stage of development of the portfolio, continued expenditure on controlled investments was kept low at only £0.3 million (2009: £1.1 million).  Conversely, business development costs were substantially increased in the Management services business to support the development of new sources of revenue. 

The cash balance increased during the year to £0.8 million at 30 April 2010.  However this included an advance receipt of £0.3 million in relation to the SME innovation programme, which was defrayed shortly after the year end.  The normalised cash balance was therefore £0.5 million (30 April 2009: £0.3 million). 

The Company continues to focus on the level of cash resources available to it and will continue to reduce its cost base and seek new management contracts.

Management services 

Profits from the UK Management services business were maintained during the year at £0.3 million (2009: £0.3 million).

There is currently significant pressure on the Company's UK Government contracts and this may result in a drop in UK revenues.  In anticipation of this, during the year ANGLE invested substantially in developing Middle East markets.  It is also winding down its US Management services business in order to focus on the Middle East and the UK markets.

The business development efforts undertaken to date have established a number of strong client relationships in the Middle East.  These have so far delivered a number of smaller contracts and it is expected they will translate into major management contracts in the future.    

Portfolio companies

ANGLE has continued its tight focus on its existing portfolio, with emphasis on its leading investments.  A key strategy of the Company is to seek corporate partnership deals for its portfolio companies, so that they can benefit from the sales, marketing and technology support of a major industry player as well as gaining access to additional funds for development. 

This strategy has proven successful with two new corporate deals being secured shortly after the year end for Geomerics and NeuroTargets.

ANGLE's controlled investments are consolidated so that their fair value is not included in the investment portfolio fair value in the statement of financial position and their operating costs are expensed in the results.  

During the year, encouraging progress was made with four of the portfolio companies:

Geomerics (47%) (computer games middleware) has agreed a corporate partnership since the year end with one of the world's leading technology companies.  The partnership comprises both a cash investment and an ongoing partnership arrangement.  The deal includes investment of up to £2.3 million into Geomerics. 

 

NeuroTargets (25%) (neuropathic pain) has agreed a licensing deal with the University of Bristol, and the Wellcome Trust has since the year end awarded the University a further £3.8 million to progress the galanin programme.   

 

Novocellus (82%) (IVF embryo viability), together with its corporate partner Origio, has completed the extensive work necessary to develop the protocol for its clinical study.      

Parsortix (80%) (medical diagnostics / foetal cell capture) has initiated discussions regarding a corporate partnership with key industry players.     

Outlook

At the present time, there is pressure on UK Government contracts.  It is not yet fully clear how policy decisions will impact ANGLE in the nearer term.    

Recognising the inherent risks within the UK economy, ANGLE implemented a proactive business development programme over a year ago to grow its specialist Management services business in the Middle East.  There are promising signs that major international Management services contracts may be secured over the next twelve months to substantially increase the scale of this business. 

ANGLE's corporate partnership strategy for its portfolio companies helps to protect these investments and provide them with the necessary conditions for success.  We will continue to work with these companies to develop value for ANGLE shareholders.

………………….

Garth Selvey

Chairman

28 July 2010

CHIEF EXECUTIVE'S STATEMENT

Introduction

During the year, ANGLE developed its Management services business, progressed four of its portfolio companies through key milestones and the cash balance increased. 

Management services

Profits from the UK Management services business were maintained during the year at £0.3 million (2009: £0.3 million). 

ANGLE's business is focused on long term management contracts, typically three years or more in duration, and this gives good visibility on future revenues.

ANGLE has maintained substantial business development efforts over the last year to grow the business in the Middle East and the medium term plan anticipates that continued growth will come from international markets.  In the longer term, we believe there will be new opportunities, which will emerge in the UK market as Government seeks to contract out activities to drive down overall costs and focuses on economic development activities to grow the economy.

The Middle East region is seeking to expand their activities in ANGLE's core areas of activity including incubation, innovation, support for SMEs (small and medium sized enterprises) and developing the knowledge-based economy.

Three significant new contracts were secured during the year, all of which were subject to competitive tendering.  These are described below.  As a result, the business had a solid sold order book worth £4.5 million at 30 April 2010.  At the present time there is pressure on all UK Government contracts.  It is not yet fully clear how this may impact ANGLE in the future. Further comments are given in Note 3 Going Concern.  Set against this, major business development efforts continue, particularly in the Middle East, where substantial opportunities are being developed.

Carbon Trust ANGLE Incubator

ANGLE has delivered incubation support services on behalf of the Carbon Trust since 2004 and was awarded a further contract starting in August 2009, worth up to £450,000 per annum for a minimum of two years and up to four years.   

London Manufacturing Advisory Services (MAS)

ANGLE partnered with Grant Thornton, PERA and Unipart to win the London MAS contract commissioned by the London Development Agency in September 2009. ANGLE's share of the contract is worth an estimated £0.7 million over three years.

Lincoln Innovation

Following ANGLE's successful delivery of Innovation Lincolnshire since May 2007, during the year ANGLE won a highly competitive proposal to deliver Innovation Advice and Guidance in Lincolnshire, worth £2.3 million over three years.

Portfolio value

ANGLE's portfolio of investments comprises both non-controlled investments and other receivables (shown at fair value in the statement of financial position), and controlled investments (whose fair value, which the Board considers substantial, is excluded from the fair value in the statement of financial position). 

In arriving at valuations, the Board has taken into account the need to mark to market, an extremely difficult fund raising and exit environment and uncertainties as to how businesses will be able to develop in the present climate.

The fair value of the Investment Portfolio at 30 April 2010 was £3.7 million (30 April 2009 £4.4 million).  Disposals accounted for £0.5 million of the reduction.

Non-controlled investments and other receivables

Acolyte Biomedica

The deferred consideration of up to £4.7 million due in respect of the sale of the investment in Acolyte Biomedica (medical diagnostics / MRSA detection) remains subject to dispute between the former Acolyte shareholders and the purchaser.  ANGLE is awaiting the outcome of legal action by the major former Acolyte shareholder.  It is understood that a Court date has been set in October 2010.  Once the outcome of this action is known, ANGLE expects to pursue its own claim against the purchaser.  At present ANGLE has no exposure to legal costs.

Geomerics (47%) (computer games middleware)

Geomerics has successfully developed and launched its 'Enlighten' product, dramatically improving the lighting of computer games and enhancing the user experience.

Sales have been secured from key reference customers including Electronic Arts (DICE), CCP and FunCom. Underlying Geomerics' products is a unique lighting technology platform, which has a range of potential applications in further markets including CGI (computer generated imagery) and Architectural Visualisation.  The first games incorporating Geomerics' technology are expected to be released by Christmas. 

Subsequent to the year end, Geomerics agreed to a corporate partnership with one of the world's leading technology companies ("Corporate Partner").   

The partnership comprises both a cash investment and an ongoing partnership arrangement.  The deal includes investment of up to £2.3 million of which approximately £1.0 million will be subject to the achievement of certain milestones.  The name of Geomerics' Corporate Partner and other terms of the deal are subject to strict confidentiality.

ANGLE believes that the partnership arrangement places Geomerics in a significantly stronger position to further develop and capitalise on its Enlighten product and underlying technology platform.  It is expected that, over the course of the agreement, ANGLE's holding will remain above 30%.      

NeuroTargets (25%) (neuropathic pain)

NeuroTargets has had a successful year by working with the University of Bristol to secure significant funding subsequent to the year end to progress its galanin programme and completing research work demonstrating the potential to apply its patented technology in treatment of Multiple Sclerosis (MS) and Alzheimer's Disease (AD) in addition to the company's established neuropathic pain applications.

NeuroTargets has licensed its intellectual property in relation to neuropathic pain therapeutic molecules to the University of Bristol, who have used that background IP to successfully raise further funds to advance the galanin programme (galanin is a protein used by nerve cells to communicate with each other).   

Following the success of the first phase work, the Wellcome Trust have now agreed a second phase funding of a further £3.8 million for the research project at the University of Bristol bringing the total funding to £4.3 million.  The second phase funding is intended to complete the pre-clinical work over the next two years to allow the small molecules to enter human trials.  If this work is successful, the small molecules can then be licensed to a major pharmaceutical company for clinical trials as a therapeutic for neuropathic pain.  The neuropathic pain relief drug market represents a multi billion dollar market.

Controlled investments

Controlled investments are consolidated as subsidiaries and are not shown at fair value on the statement of financial position.  Their value, which the Board considers substantial, is excluded from the fair value of £3.7 million discussed above.   

Novocellus (82%) (medical diagnostics IVF embryo viability)  

Novocellus has developed a patent protected system, EmbryoSure®, for selecting those embryos most likely to lead to a successful pregnancy.   The system has been tested on a total of more than 1,200 human embryos in research studies and two retrospective pilot clinical studies. 

It is expected that amino acid profiling (AAP) of spent culture medium using EmbryoSure® will lead to a 25% uplift in the clinical pregnancy rate ("pregnancy uplift") for IVF encouraging the adoption of single embryo transfer (SET) with consequent reduction in health risks associated with multiple births.

Novocellus has secured a corporate deal with Origio a/s to complete the necessary trials work and bring the product to market.  Origio are well placed to do this as they supply around one in five of the global IVF clinics with culture media and related products, giving Novocellus access to the largest IVF customer base in the world.

During the year, Novocellus has worked with Origio to develop the product and establish the clinical trials process.  A detailed study protocol has been developed, participating IVF clinics have been confirmed, statistical procedures have been developed to analyse the results and the regulatory processes are being completed.

As a result of new regulatory requirements, it is now expected that the study process will take place in two parts on a longer timescale than previously envisaged.  The first part of the study, which is expected to be completed by Summer 2011, is intended to enable the product definition to be finalised and to confirm the pregnancy uplift that may be achieved.   

Following completion of the first part of the study, the product development will be completed and the second part of the study process finalised.  This will involve a trial utilising the final EmbryoSure® product to select embryos for transfer and comparing this against existing clinical success rates.  Assuming successful completion of the second part of the study, the EmbryoSure® product will then meet all the requirements for both the EU and US markets and will be backed up by strong clinical data to support the rapid growth in sales of EmbryoSure® worldwide.

Both ANGLE and Origio believe that EmbryoSure® continues to offer a strong commercial proposition and that the clinical data that the study will generate, assuming it is positive, will be vastly superior to any other available process for embryo selection.  

Parsortix (80%) (medical diagnostics / foetal cell capture)

Parsortix has developed the first ever non-invasive testing platform for the unborn baby. Pregnant women have a very small number of their baby's cells circulating in their blood; at most one foetal cell for 500 million maternal cells.  Parsortix has developed a separation device, which can isolate intact foetal cells (as opposed to merely DNA fragments) in peripheral maternal blood when only 1.5ml of maternal blood is flowed through the device.

At present, testing for early definitive diagnosis for chromosomal abnormalities associated with Down's, Turner, and Klinefelter syndromes, as well as other disorders due to genetic abnormalities such as spina bifida is limited to high risk category patients where an invasive procedure such as amniocentesis or chorionic villi sampling can be justified.

During the year, Parsortix initiated a formal process to secure a corporate partner for the exploitation of its foetal cell capture technology, by engaging a leading medical diagnostic specialist firm, McDonald & Associates LLC. to manage a transaction for a strategic alliance of Parsortix's particle separation technology.    

Parsortix has developed functional prototypes of the particle separation device ("cassette") and continues to generate data demonstrating capture of foetal cells from maternal blood.   Although to date the particle separation device has not been used for other medical applications, it is believed that the technology/device can be used for cancer/tumour cell capture, immunology and infectious disease sample collection. 

Formal discussions have commenced with a number of leading medical diagnostic companies.  The objective is to secure a partnership similar to that established for Novocellus, in which the ongoing costs to develop and take the product to market are covered by the partner, whilst a substantial share of the upside from resulting revenues is retained by Parsortix.  The aim is to conclude a corporate deal for Parsortix during the financial year to 30 April 2011.

*Percentage shareholdings based on issued share capital as at 30 April 2010.

………………….

Andrew Newland

Chief Executive

28 July 2010

ANGLE PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 APRIL 2010

	Note	2010	2009
		£	£
Revenue	5	2,699,690	5,064,381
Change in fair value	6	640,228	(2,931,460)
Operating costs
Management services		(2,518,960)	(3,364,063)
Ventures		(650,580)	(880,052)
Controlled investments		(283,083)	(1,082,145)
Share based payments		(60,568)	(185,599)
		(3,513,191)	(5,511,859)
Operating profit / (loss)		(173,273)	(3,378,938)
Finance income		348	13,940
Finance costs		(8,346)	(286)
Net finance income / (cost)		(7,998)	13,654
Profit / (loss) before tax		(181,271)	(3,365,284)
Profit / (loss) before controlled investments and tax		79,260	(2,317,836)
Controlled investments		(260,531)	(1,047,448)
Tax	7	136,516	(230,205)
Profit / (loss) for the year attributable to owners of the parent		(44,755)	(3,595,489)
Other comprehensive income
Exchange differences on translating foreign operations		319,210	(23,570)
Other comprehensive income		319,210	(23,570)
Total comprehensive income for the year attributable to owners of the parent		274,455	(3,619,059)
		=========	==========
Earnings / (loss) per share	8
Basic and Diluted (pence per share)		(0.17)	(13.42)
All activity arose from continuing operations

ANGLE PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 APRIL 2010

	Note	2010	2009
		£	£
ASSETS
Non-current assets
Non-controlled investments	9	2,200,311	2,395,000
Other receivables	9	1,548,942	1,520,239
Property, plant and equipment		19,446	47,846
Intangible assets		124,781	163,853
Total non-current assets		3,893,480	4,126,938
Current assets
Non-controlled investments	9	-	499,165
Trade and other receivables		650,308	491,616
Tax		12,809	12,809
Cash and cash equivalents		846,784	319,819
Total current assets		1,509,901	1,323,409
Total assets		5,403,381	5,450,347
		==========	==========
EQUITY AND LIABILITIES
Equity
Issued capital		2,713,293	2,713,293
Share premium account		13,701,935	13,701,935
Share based payments reserve		1,156,874	1,523,488
Other reserves		2,553,356	2,553,356
Translation reserve		(1,671)	(320,881)
Retained earnings		(15,625,605)	(16,008,032)
ESOT shares		(342,115)	(342,115)
Total equity attributable to owners of the parent		4,156,067	3,821,044
Liabilities
Non-current liabilities
Controlled investments - convertible loans		98,001	321,011
Total non-current liabilities		98,001	321,011
Current liabilities
Trade and other payables		1,149,313	1,065,274
Taxation		-	243,018
		_________	_________
Total current liabilities		1,149,313	1,308,292
Total liabilities		1,247,314	1,629,303
		_________	_________
Total equity and liabilities		5,403,381	5,450,347
		==========	==========

ANGLE PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 APRIL 2010

	2010	2009
	£	£
Operating activities
Profit / (loss) before tax	(181,271)	(3,365,284)
Adjustments for:
Depreciation of property, plant and equipment	29,984	39,563
(Profit) / loss on disposal of fixed assets	865	1,116
Amortisation and impairment of intangible assets	33,555	16,323
Exchange differences	15,602	21,799
Net finance (income) / cost	7,998	(13,654)
Change in fair value	(640,228)	2,931,460
Share based payments	60,568	185,599
Operating cash flows before movements in working capital:	(672,927)	(183,078)
(Increase) / decrease in trade and other receivables	(90,750)	106,942
Increase / (decrease) in trade and other payables	151,564	(757,987)
Operating cash flows	(612,113)	(834,123)
Research and development tax credits received	-	44,960
Corporation tax paid	(106,502)	-
Net cash from / (used in) operating activities	(718,615)	(789,163)
Investing activities
Purchase of property, plant and equipment	(10,795)	(11,909)
Disposal of property, plant and equipment	-	20
Purchase of intangible assets	-	(2,214)
Provision of convertible loans	(95,175)	(13,250)
Purchase of non-controlled investments	(16,865)	-
Proceeds from sale of investments	1,368,785	20,249
Interest received	485	15,759
Net cash from / (used in) investing activities	1,246,435	8,655
Financing activities
Capital elements of finance lease contracts	-	(4,560)
Proceeds from issue of convertible loans	-	135,753
Interest paid	(855)	(1,063)
Net cash from / (used in) financing activities	(855)	130,130
Net increase / (decrease) in cash and cash equivalents	526,965	(650,378)
Cash and cash equivalents at start of year	319,819	970,197
Cash and cash equivalents at end of year	846,784	319,819
	=========	=========

ANGLE PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 APRIL 2010

			Share based
	Issued	Share	payments	Other	Translation	Retained	ESOT	Total
	capital	premium	reserve	reserve	reserve	earnings	shares	equity
	£	£	£	£	£	£	£	£
At 1 May 2008	2,713,293	13,701,935	1,522,429	2,553,356	(297,311)	(12,617,357)	(355,453)	7,220,892
For the year  to 30 April 2009
Consolidated profit / (loss)						(3,595,489)		(3,595,489)
Other comprehensive income
Exchange differences in translating foreign operations					(23,570)			(23,570)
Total comprehensive income					(23,570)	(3,595,489)		(3,619,059)
Share based payments			185,599					185,599
Released on forfeiture / lapse			(184,540)			184,540		-
Utilised on share schemes							13,338	13,338
Partial disposal of subsidiaries						20,274		20,274
	__________	__________	__________	_________	__________	____________	_________	___________
At 30 April 2009	2,713,293	13,701,935	1,523,488	2,553,356	(320,881)	(16,008,032)	(342,115)	3,821,044
For the year  to 30 April 2010
Consolidated profit / (loss)						(44,755)		(44,755)
Other comprehensive income
Exchange differences in translating foreign operations					319,210			319,210
Total comprehensive income					319,210	(44,755)		274,455
Share based payments			60,568					60,568
Released on forfeiture / lapse			(378,469)			378,469		-
Deemed disposal of subsidiaries			(48,713)			48,713		-
	__________	______ ____	__________	_________	__________	____________	_________	___________
At 30 April 2010	2,713,293	13,701,935	1,156,874	2,553,356	(1,671)	(15,625,605)	(342,115)	4,156,067
	==========	===========	==========	=========	=========	============	=========	===========

Share based payments reserve

The share based payments reserve account is used for the corresponding entry to the share based payments charged through a) the statement of comprehensive income for staff incentive arrangements in the Group; b) the statement of comprehensive income for staff incentive arrangements in the controlled investments; and c) the statement of financial position for acquired intangible assets in the controlled investments comprising intellectual property (IP).

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 (a deemed disposal).

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 and used to assist in meeting obligations under employee remuneration schemes.

ANGLE PLC

NOTES TO THE PRELIMINARY ANNOUNCEMENT

FOR THE YEAR ENDED 30 APRIL 2010

1       Preliminary announcement

The preliminary announcement set out above does not constitute the Company's statutory financial statements for the years ended 30 April 2010 or 2009 within the meaning of section 434 of the Companies Act 2006 but is derived from those audited financial statements.  The accounting policies used are unchanged from those used for the statutory financial statements for the year ended 30 April 2009 except as referred to in Note 2. The 2010 statutory accounts will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The auditors' report on the consolidated financial statements for the year ended 30 April 2010 is unqualified and did not contain statements under s498(2) or (3) of the Companies Act 2006. The auditors' report does include reference to matters to which the auditors draw attention by way of emphasis, without qualifying their report, in respect of a material uncertainty with respect to going concern.  Further information in respect of the material uncertainty is set out in Note 3 below.

2       Compliance with accounting standards

While the financial information included in this preliminary announcement has been computed in accordance with IFRS, this announcement does not itself contain sufficient information to comply with IFRS.

During the year the accounting standards IFRS 7 (revised 2009) - Financial Instruments, IFRS 8 - Operating Segments and IAS1 (revised 2007) - Presentation of Financial statements were adopted for the first time

At the date of authorisation of these Financial Statements, the following Standards and Interpretations (International Financial Reporting Interpretation Committee - IFRIC), which have not been applied in these Financial Statements, were in issue but not yet effective:

IFRS 9	Financial Instruments
IFRIC 17	Distributions of non-cash assets to owners
IFRIC 18	Transfers of Assets from Customers
IFRIC 19	Extinguishing Financial Liabilities with Equity Instruments

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group when the relevant standards and interpretations come into effect.

3       Going concern

       The Financial Statements have been prepared on a going concern basis which assumes that the Group will be able to continue its operations for the foreseeable future.

       The Group's business activities, together with the factors likely to affect its future development, performance and financial position are set out in the Chairman's and Chief Executive's Statements. 

       In order to improve the Group's working capital position the Directors have implemented a number of initiatives which have or will reduce costs and improve cash flows, including discontinuing the US operations.  Business development efforts have built a strong sales pipeline and the Directors are confident of winning new contracts as a result although timing is uncertain. With the expected level of new sales and continuing strong management of overheads, the cash generated by the Management services business will more than cover the ongoing operating costs of the business.  The Group's forecasts and projections show that in the event that the expected level of new sales does not materialise, or the UK Government makes significant cuts to the Group's contracts, or there is an unexpected working capital requirement caused by delayed revenue receipts, there may be a need for short term funding. The Group currently has no bank facilities and the Directors have the option to apply for bank funding.  The Company believes that funds are also available if required from committed shareholder support.

       The Directors have reviewed the projections for the forthcoming 12 month period from the date of signing of these Financial Statements and, having taken these uncertainties into account, based on the level of existing cash, projected income and expenditure and other sources of funding the Directors have a reasonable expectation 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 Financial Statements.

4       Critical accounting estimates and judgements

       The preparation of the 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, and to the fair value of other receivables - see Note 9.

5       Revenue

The breakdown of revenue by operating segment is set out below: 

	2010	2009
	£	£
Management services	2,614,537	4,921,800
Ventures	58,938	52,688
Controlled investments	26,215	89,893
	_________	_________
	2,699,690	5,064,381
	========	========

Revenue from Management services represents fees received from clients for management consulting services.  Revenue from Ventures represents fees received from non-controlled investments for accounting and other services provided by the Group.  Revenue from controlled investments represents the consolidated revenue of those businesses.

6       Change in fair value through statement of comprehensive income

                                                                                   Year ended 30 April

                                                                                            2010                 2009

                                                                                          £                   £

Fair value gain on deemed disposal of subsidiaries                   5,526                     -

Change in fair value of investments                                   634,702      (2,501,421)

Change in fair value of Other receivables                                     -         (402,724)

Change in fair value of intangible assets                                       -          (27,315)

                                                                           __________      __________

Change in fair value                                                             640,228    (2,931,460)

                                                                          ========    ========

7       Tax

The Group is eligible for and takes advantage of 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%, and subject to certain other tests, being free of corporation tax. 

Tax is therefore based on the net of profits in the Management services business as relieved by losses incurred in the establishment and development of new ventures.  Loss relief may not absorb the tax in relation to all of the profits and where this occurs tax is provided on the basis of the estimated effective tax rate for the full year.

Controlled investments undertake research and development activities.  In the UK these activities qualify for tax relief and result in tax credits.

8       Earnings / (loss) per share

        The basic and diluted earnings / (loss) per share is calculated on an after tax loss of £0.04 million (2009: loss £3.6 million).

        The basic and diluted earnings / (loss) per share are based on 26,832,667 weighted average ordinary 10p shares (2009: 26,799,442).    Share options are non-dilutive for the respective years.

9       Non-controlled investments and Other receivables

       The Group's investment portfolio comprises investments in Progeny® companies.  Progeny® companies are businesses established by ANGLE to commercialise intellectual property (IP) using ANGLE's proprietary Progeny® process.

       Where the Group has control of a Progeny® company (typically owning more than 50% of the equity), these are defined as 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 in the statement of financial position.  In the year to 30 April 2010 costs relating to controlled investments of £0.3 million (2009: £1.1 million) were charged to the statement of comprehensive income. 

       Where the Group does not control a Progeny® company (typically owning less than 50% of the equity), these are defined as non-controlled investments and held on the statement of financial position at fair value, as set out in the table below:

Non-controlled investments
	Non-current assets		Current assets		Total Non-controlled
	Unquoted		Quoted		investments
	£		£		£
At 1 May 2008	4,373,504		1,042,331		5,415,835
Disposals	-		(20,249)		(20,249)
Change in fair value	(1,978,504)		(522,917)		(2,501,421)
	___________		___________		___________
At 30 April 2009	2,395,000		499,165		2,894,165
Investments	40,229		-		40,229
Disposals	-		(1,368,785)		(1,368,785)
Change in fair value	(234,918)		869,620		634,702
	___________		___________		___________
At 30 April 2010	2,200,311		-		2,200,311
	==========		==========		==========

Investments are made directly and in the form of loans.  The loans are normally convertible into equity and are non-interest bearing.

       The Board has considered a number of factors in determining whether there is evidence that the fair value of an investment has been impaired since its last valuation.  These factors have included 1) the positives and negatives in the progress of the investment 2) the current and forecast financial situation of the investment and its ability to make timely sales 3) the original funding environment and the current funding environment and 4) the performance of various small cap and tech indices including AIM, Techmark and NASDAQ in the relevant period. 

The Directors consider that the Group neither exercised control nor had the potential to control Aguru Images Inc following insolvency which gave creditors preferred rights and it has therefore been de-consolidated during the year and is held at £nil fair value until proceedings are completed.

       Other receivables     

       ANGLE's Progeny^® company Acolyte Biomedica was sold in February 2007.  ANGLE was due an earn-out of up to £4.7 million receivable early in 2010.  A fair value of £1.5 million (2009: £1.5 million) is included in relation to this in the statement of financial position under the "Other receivables" category.

       The deferred consideration of up to £4.7 million due in respect of the sale of the investment in Acolyte Biomedica (medical diagnostics / MRSA detection) remains subject to dispute between the former Acolyte shareholders and the purchaser.  ANGLE is awaiting the outcome of legal action by the major Acolyte shareholder.  It is understood that this action is in the formal information disclosure phase, progressing as planned, and that a Court date has been set in October 2010.  Once the outcome of this action is known, ANGLE expects to pursue its own claim against the purchaser.  At present ANGLE has no exposure to legal costs.

       The company has received legal advice that there is a strong case and that it is highly probable that an action will succeed.  Based on the currently available information and legal advice, the Directors believe there will eventually be a significant return from this investment.  In present circumstances, the Directors believe that it is appropriate to hold the asset as its most recent fair value, but note that the value may be revised in the future as further information becomes available.

10    Shareholder communications

Copies of this announcement are posted on the Company's website www.ANGLEplc.com.

The Annual General Meeting of the Company will be held at 2pm on 29 September 2010 at ANGLE's offices, 3 Frederick Sanger Road, Surrey Research Park, Guildford, GU2 7YD.  Notice of the meeting will be enclosed with the audited statutory financial statements.

The audited statutory financial statements for the year ended 30 April 2010 are expected to be distributed to shareholders by 3 September 2010 and will subsequently be available on the Company's website or from the registered office, 3 Frederick Sanger Road, Surrey Research Park, Guildford, GU2 7YD.

This preliminary announcement was approved by the Board on 28 July 2010.

 

END

 

 

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