Interim Results

RNS Number : 9309S

Microsaic Systems plc

30 September 2014

 



Microsaic Systems plc

("Microsaic", "Microsaic Systems" or the "Company")

Interim Results for the six months ended 30 June 2014

30 September 2014

Microsaic Systems plc (AIM: MSYS), the developer of chip-based scientific instruments, announces its interim results for the six months ended 30 June 2014 and an update on trading since the period end.

Key points

·     Revenues up 67% to £610,985 (2013: £365,234)

·     Sales of the 4000 MiD® up 58% to £543,294 (2013: £343,090)

·     Consumable sales up by 206% to £67,691 (2013: 22,144)

·     Cash balances of £1.8m at 30 June 2014 compared to £3.2m at 31 December 2013

·     Loss before share-based payments, interest and tax of £1,431,194 (2013: £1,076,150)

·     Continuing progress in developing further OEM sales channels

Developments since 30 June 2014

·     Signing of an OEM agreement with a leading global scientific company for our triple quadrupole mass spectrometry technology for use in applied markets

·     Signing of an OEM agreement with Gilson Inc. for Microsaic's 4000 MiD® to be combined with Gilson's high performance liquid chromatography instruments

·     Agreement signed with Plexus for the outsourcing of the manufacturing of the 4000 MiD®

Colin Jump, Chief Executive of Microsaic Systems plc, commented:

"Microsaic Systems is making good progress in the three strategic areas that underpin our ambitions for 2014 and beyond. First, in developing OEM partnerships, where we have made good progress with a number of organisations for our single and triple quadrupole mass spectrometry technologies in discrete applications. Second, in stepping up marketing communications to potential partners via multiple routes, and third, in outsourcing the manufacture of the 4000 MiD® in preparation for production scale up. Based on this progress, the Board remains confident that Microsaic is well-positioned to capitalise on its leadership in its field and grow the business over the coming years."

Contacts

Microsaic Systems Colin Jump, CEO Andrew Darby, FD	Via Citigate Dewe Rogerson
Numis Securities Limited Stuart Skinner (Nominated Adviser) James Serjeant (Broker)	[phone]
Citigate Dewe Rogerson Mark Swallow, Malcolm Robertson, Chris Gardner	[phone]/2867/2995

About Microsaic Systems

Microsaic Systems develops and sells chip-based scientific instruments for the chemical identification of substances. The Company's products are based on the 'gold-standard' scientific technique of mass spectrometry.

Microsaic Systems has developed a miniaturised mass spectrometer based on its patented, chip-based technologies (ionchip®, spraychip® and vac-chip™), that is smaller, lighter, quieter, more energy efficient and cheaper to run than conventional mass spectrometer systems.

Mass spectrometry is used across many industry sectors, including government, energy, utilities, pharmaceutical, diagnostics and healthcare, environmental, food and drink, security and defence, and industrial chemicals - a combined market of $3 billion in 2012.

Microsaic Systems was established in 2001 by a team including founders from Imperial College London, and was admitted to AIM in April 2011 under the symbol MSYS.

www.microsaic.com

Chairman & Chief Executive statement

We are pleased to report Microsaic Systems has made good progress during the six months to 30 June 2014, and since that date.

SALES AND PRODUCTION OF THE 4000 MID®

The Microsaic 4000 MiD®, our miniature, fully self-contained mass spectrometer, was launched in March 2013. To date, we have sold over 50 units, with the majority of these units being sold through our OEM partner, Biotage AB, which has incorporated the 4000 MiD® into their Isolera™ Dalton product, a fully integrated system for flash chromatography and mass identification. Unit sales continue to grow, in line with our expectations.

Outsourcing the manufacture of the 4000 MiD® has been a key strategic aim and we have made considerable investment over the last year to ensure that we are in a position to hand this over to our chosen partner in preparation for production scale up. We are, therefore, delighted to confirm the recent signing of an agreement with Plexus, a leading manufacturer to technology companies. The handover process is well under way and we expect Plexus to ship their first finished products to us in the first quarter of the 2015 calendar year.

We are also pleased to announce that in the period since 30 June 2014, we have achieved ISO 9001 accreditation.

CONSUMABLE SALES

The plug and play nature of the 4000 MiD® is a key competitive differentiator in the market place, offering enhanced usability, speed of setup and cost-efficiency. We expect these product-specific consumables to become a significant part of our revenues moving forward.    Early signs indicate that the consumables deployed per machine per annum are in line with our initial expectations when we launched the 4000 MiD®.

OEM PARTNERS

On 14 April 2014 we announced the signing of a pre-contract commercial agreement with a major international healthcare equipment company for a customised version of our 4000 MiD® to be deployed, together with our MiDas interface unit, as a stand-alone instrument for use in protein separation applications. The process called for the completion of various technical milestones and a contractual process to be completed by the end of the 2014 calendar year. Both remain on track.

We are engaged in on-going discussions at various stages with companies covering a range of application areas for our single quadrupole technology.  So we were pleased to announce yesterday that we have signed an OEM agreement with Gilson Inc. for Microsaic's 4000 MiD® to be combined with Gilson's high performance liquid chromatography instruments.

In addition, and as announced recently, we have signed our first OEM agreement with a leading global scientific company for our triple quadrupole technology for use in applied markets. Triple quadrupole technology provides us with an opportunity to extend the application of mass spectrometry (MS) to the analysis of more complex materials.

Sales of the 4000 MiD® as a stand-alone instrument through an OEM agreement previously announced in April 2013, have been slower than anticipated but the company believes sales opportunities continue to exist for this channel and will provide useful levels of sales going forward.  In this respect, the company is working with the customer to help them achieve these sales.

The increasing recognition of the 4000 MiD® allied to our attendance at global exhibitions and the ideas being put forward by our Scientific Advisory Group are all generating sales leads, which we are addressing on the basis of where we see the greatest potential return to the Company.

DIRECT SALES OPPORTUNITIES

While we see the majority of our future revenue being generated from our OEM partnerships, we continue to build a pipeline for direct sales. In addition to revenue, direct sales provide us with good market research on product development and strengthen our brand. To reinforce and take advantage of this sales pipeline we have commenced discussions with a UK-based distributor to work alongside our direct sales team.  

RESEARCH & DEVELOPMENT

Our research & development has been directed towards resolving technical milestones in our OEM partnership opportunities, as well as developing next-generation products to expand our range of applications. Accordingly, as previously announced, in January 2014, we launched the MiDas compact interface module to extend the use of MS in the laboratory from specialist analytical chemists to the wider research community. The MiDas connects to the 4000 MiD® and offers automated sample preparation and injection for direct MS analysis in real time at the lab bench or in the fume hood.

FINANCIAL REVIEW

In line with the Company's transition from grant-generated revenues to product sales, an accounting policy change has been made to make the financial information more relevant.  This will also make it easier for users to understand the financial statements.  Accordingly, non-product sales are now presented under 'Other operating income' and cost of sales and operating expenses have been re-categorised so that cost of sales now includes only the raw materials cost of products sold. Operating expenses represents the cost base of the business. As a result of this accounting policy change, comparative figures have been restated.

Revenues increased by 67% to £610,985 in the six-month period to June 2014 (2013: £365,234). Sales of the 4000 MiD® increased by 58% to £543,294 (2013: £343,090). Consumable sales increased by 206% to £67,691 (2013: £22,144). In line with the Company's transition from being reliant on income from EU grants and prototype sales, other operating income was lower at £79,538 (2013: £176,295). Gross margins were 41% (2013: 37%) and, accordingly gross profit was £248,714 (2013: £135,492).

Operating expenses (excluding share-based payments) were £1,759,446 (2013: £1,387,937). The increase in operating expenses was mainly due to the Company's investment in the building of OEM partnerships, all of which are located overseas, and the investment in the manufacturing process to make it capable of being outsourced and ready for mass production.

Therefore, the loss for the period, before share-based payments, tax and interest, was £1,431,194 (2013: £1,076,150).

The cash balances at 30 June 2014 totalled £1.8m (2013: £3.2m), in line with our expectations.

BOARD

On 15 July 2014, we announced that Peter Edwards, Technical Director, had stepped down from the Board. On behalf of the Board, we would like to thank Peter for his technical leadership and commitment during his time with the Company and wish him every success in the future.

As previously announced, Andrew Darby joined the Board on 16 April 2014 as Finance Director, replacing Malcolm Bateman.

OUTLOOK 

The Board remains fully committed to completing the transition of Microsaic from university spinout to successful commercial enterprise. We continue to make good progress, and the sales opportunities with which the Company is currently engaged, together with its rich R&D heritage and expertise, give the Board considerable comfort that the Company's ambitions will be achieved.

Colin Nicholl                                                                                      Colin Jump

Chairman                                                                                           Chief Executive

29 September 2014

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

For the six months ended 30 June 2014

	Notes	6 months to 30 June 2014		6 months to 30 June 2013
		Unaudited		Unaudited
		£		£
Revenue		610,985		365,234
Cost of sales		(362,271)		(229,742)
Gross profit		248,714		135,492
Other operating income		79,538		176,295
Operating expenses		(1,785,377)		(1,425,054)
Loss from operations		(1,457,125)		(1,113,267)
Finance income		3,094		2,172
Loss before tax		(1,454,031)		(1,111,095)
Taxation	4	54,414		70,516
Total comprehensive loss for the period		(1,399,617)		(1,040,579)
Loss per share attributable to the equity holders of the Company
Basic and diluted loss per ordinary share	5	(2.67)p		(2.36)p

All of the revenue and loss above is derived from continuing operations.

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

For the six months ended 30 June 2014

			Share
	Share	Share	option	Retained	Total
	capital	premium	reserve	earnings	equity
	£	£	£	£	£
At 1 January 2013	106,349	4,651,410	499,570	(3,480,022)	1,777,307
Shares issued	24,922	4,259,698	-	-	4,284,620
Share issue expenses	-	(286,614)	-	-	(286,614)
Share options lapsed	-	-	(190,761)	190,761	-
Total comprehensive loss for the period	-	-	-	(1,040,579)	(1,040,579)
Share based payments-share options	-	-	37,117	-	37,117
At 30 June 2013	131,271	8,624,494	345,926	(4,329,840)	4,771,851
At 1 January 2014	131,271	8,629,494	382,812	(5,574,419)	3,569,158
Shares issued	145	14,854	-	-	14,999
Total comprehensive loss for the period	-	-	-	(1,399,617)	(1,399,617)
Share based payments-share options	-	-	25,931	-	25,931
At 30 June 2014	131,416	8,644,348	408,743	(6,974,036)	2,210,471

STATEMENT OF FINANCIAL POSITION (UNAUDITED)

As at 30 June 2014

	Notes	30 June 2014		30 June 2013
		Unaudited		Unaudited
		£		£
ASSETS
Non-current assets
Intangible assets		118,164		134,859
Property, plant and equipment		164,419		117,299
Total non-current assets		282,583		252,158
Current assets
Inventories		324,324		232,967
Trade and other receivables		371,410		328,530
Corporation tax receivable		-		30,000
Cash and cash equivalents		1,811,659		4,793,307
Total current assets		2,507,393		5,384,804
Total assets		2,789,976		5,636,962
Current liabilities
Trade and other payables		579,505		865,111
Total liabilities		579,505		865,111
NET ASSETS		2,210,471		4,771,851
EQUITY AND LIABILITIES
Equity
Share capital	6	131,416		131,271
Share premium		8,644,348		8,624,494
Share option reserve		408,743		345,926
Retained earnings		(6,974,036)		(4,329,840)
Total equity		2,210,471		4,771,851

STATEMENT OF CASH FLOWS (UNAUDITED)

For the six months ended 30 June 2014

	Notes	6 months to		6 months to
		30 June 2014		30 June 2013
		Unaudited		Unaudited
		£		£
Loss from operations		(1,457,125)		(1,113,267)
Amortisation of intangible assets		24,521		26,839
Depreciation of property, plant and equipment		68,250		35,395
Disposal of property, plant and equipment		7,976		-
Share based payments		25,931		37,117
(Increase) in inventories		(119,483)		(42,615)
Decrease/(Increase) in trade and other receivables		43,810		(147,001)
(Decrease)/Increase in trade and other payables		(133,058)		118,808
Cash used in operations		(1,539,178)		(1,084,724)
Taxation received		134,414		190,516
Net cash used in operating activities		(1,404,764)		(894,208)
Cash flows from investing activities
Purchases of intangible assets		(10,854)		(68,429)
Purchases of property, plant and equipment		(30,099)		(32,813)
Interest received		3,094		2,172
Net cash used in investing activities		(37,859)		(99,070)
Cash flows from financing activities
Proceeds from share issues	6	14,999		4,284,620
Share issue costs		-		(286,614)
Net cash from financing activities		14,999		3,998,006
Net (decrease)/increase in cash and cash equivalents		(1,427,624)		3,004,728
Cash and cash equivalents at beginning of period		3,239,283		1,788,579
Cash and cash equivalents at the end of the period		1,811,659		4,793,307

NOTES TO THE INTERIM FINANCIAL INFORMATION (UNAUDITED)

1. General information

The condensed financial information set out in this statement does not constitute statutory accounts as defined by section 434 of the Companies Act 2006 and has not been audited.

The condensed financial information for the six months to 30 June 2013 has been prepared using extracts from the financial statements prepared for the year ended 31 December 2013. Those financial statements have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified with an emphasis of matter reference regarding going concern and did not contain statements under section 498(2) or section 498(3) of the Companies Act 2006.

The financial figures included in this interim statement have been computed in accordance with IFRS as adopted by the European Union ("Adopted IFRS") and on a basis which is consistent with that applied in the preparation of the 2013 annual financial statements. While the financial information included in this interim statement has been computed with Adopted IFRS and includes information required to be disclosed by the AIM rules, this interim statement is not required to be prepared in accordance with IAS 34: Interim financial reporting.

In line with the Company's transition from grant-generated revenues to product sales, an accounting policy change has been made to make the financial information more relevant.  This will also make it easier for users to understand the financial statements.  Accordingly, non-product sales are now presented under 'Other operating income' and cost of sales and operating expenses have been re-categorised so that cost of sales now includes only the raw materials cost of products sold. Operating expenses represents the cost base of the business. As a result of this accounting policy change, comparative figures have been restated.

2. Basis of preparation

The financial information has been prepared on the historical cost basis, except where financial instruments are required to be carried at fair value under IFRS.

The financial information has been prepared on a going concern basis, as the directors consider that the Company has sufficient resources to continue operations for the foreseeable future.

3. Segmental reporting

The Company currently has one business segment, being the commercialisation, research and development of scientific instruments, which is wholly carried out within the United Kingdom. Therefore no segmental analysis of revenue, profits/losses and net assets has been presented.

4. Tax

The Company has recognised R&D tax credits received during the period.

5. Loss per share

			6 months to		6 months to
			30 June 2014		30 June 2013
			Unaudited		Unaudited
Loss after tax attributable to equity shareholders			(1,399,617)		(1,040,579)
Weighted average number of 0.25p ordinary shares for the purpose of basic and diluted loss per share			52,516,387		44,081,700
Basic and diluted loss per share			(2.67)p		(2.36)p

Potential ordinary shares are not treated as dilutive as the Company is loss making, therefore the weighted average number of ordinary shares for the purposes of the basic and diluted loss per share are the same.

6. Share capital

		Unaudited		Unaudited
		Number		£
Allotted, called up and fully paid
Ordinary shares of 0.25p each as at 1 January 2014		52,508,376		131,271
Share options exercised-June 2014		58,000		145
Ordinary shares of 0.25p each as at 30 June 2014		52,566,376		131,416

Following adoption of new articles of association in April 2011, the Company does not have a stated authorised share capital.

7. Share based payments

The Company operates approved and unapproved share option schemes as a means of encouraging ownership and aligning interests of staff and external shareholders.

These share based payments have been measured at their fair value at the date of grant and the fair value expensed to the statement of comprehensive income on a straight line basis over the vesting period. Fair value has been measured using the Black-Scholes model.

		6 months to 30 June 2014		6 months to 30 June 2013
		Unaudited		Unaudited
		£		£
Share based payments charge for the period		25,931		37,117

8. Loss before share based payment charges, interest and tax

		6 months to 30 June 2014		6 months to 30 June 2013
		Unaudited		Unaudited
		£		£
Loss from operations		(1,457,125)		(1,113,267)
Share based payment charges		25,931		37,117
Loss before share based payments, interest and tax		(1,431,194)		(1,076,150)

9. Operating expenses before share based payment charges

		6 months to 30 June 2014		6 months to 30 June 2013
		Unaudited		Unaudited
		£		£
Operating expenses		(1,785,377)		(1,425,054)
Share based payment charges		25,931		37,117
Operating expenses before share based payments		(1,759,446)		(1,387,937)

10. Subsequent events

There were no significant events after the balance sheet date, other than those contained in this statement.

 

END

 

 

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