Preliminary Results
Microsaic Systems plc
("Microsaic", "Microsaic Systems" or the "Company")
Preliminary Results for the year ended 31 December 2012
15 April 2013
Microsaic Systems plc (AIM: MSYS), the developer of chip-based scientific instruments, announces its preliminary results for the year ended 31 December 2012 and an update on trading since the year end.
2012 Highlights
· Signing of OEM agreement with Biotage AB for application of MiD® in flash purification and unveiling of the Biotage-Microsaic combined system
· Commencement of regular production and shipments of systems to customers and other potential OEM partners
· Development of the 4000 MiD® and of future products, including working prototype of next-generation system, to address new market areas
· First shipments of the 4000 MiD® to Biotage and orders for further systems
· Appointment of Colin Jump as Chief Executive Officer
· Microsaic's 3500 MiD® wins R&D 100 award
Post-period update
· OEM agreement signed for the sale of the 4000 MiD®as a stand-alone instrument
· 4000 MiD® launched at Pittcon international trade fair in Philadelphia, USA
· Biotage-Microsaic joint product, the 'Isolera Dalton' presented at the American Chemical Society National Meeting
Financial summary
· Revenue up 126% to £0.61 million (2011: £0.27 million)
· Placing of 3,867,248 ordinary shares in June 2012 raising £1.45 million net
· Cash at 31 December 2012 £1.79 million (2011: £1.82 million)
· Loss for the year to 31 December 2012 £1.87 million (2011: £1.90 million)
Colin Jump, Chief Executive of Microsaic Systems plc, commented:
"Microsaic had a positive year in 2012. We have built a solid platform for growth and have gained significant market traction for our innovative MS technology within an established, naturally conservative market. The progress we are making with existing and potential new partners continues to give the Board confidence in the future prospects of the Company and its ability to deliver significant shareholder value over the coming year and beyond. We look forward to reporting further progress in due course."
Contacts
|
Microsaic Systems Colin Jump, CEO
|
Via Citigate Dewe Rogerson |
|
Numis Securities Limited Stuart Skinner (Nominated Adviser) James Serjeant (Broker)
|
+44 (0)20 7260 1000 |
|
Citigate Dewe Rogerson Mark Swallow, Malcolm Robertson, Chris Gardner
|
+44 (0)20 7282 2948/2867/2995
|
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.
CHAIRMAN'S STATEMENT
2012 was a year of good progress for the Company. We signed an OEM (Original Equipment Manufacturer) agreement with Biotage AB, and developed our first integrated product with them which has been introduced to the market at trade fairs and is being very well received by customers.
We also welcomed Colin Jump as our new Chief Executive to lead the Company in capturing the opportunities that lie ahead. Colin brings many years' experience with him from the scientific instrument sector. He joined us from Shimadzu UK where he was Managing Director and we are delighted to have him on board. In his first months he has already brought his expert knowledge of the industry to bear in our external relationships and our planning for the future. Colin's first statement as Chief Executive outlines the achievements of the Company over the past year and the strategy for delivering value to our shareholders over the coming year and beyond.
Peter Selway, a Non-executive Director of Microsaic for ten years, retired at the 2012 Annual General Meeting having reached the age of 70. We owe Peter a debt of gratitude for his contribution and wise counsel over that time and wish him a long and happy retirement.
On a personal note, I would like to take the opportunity to thank the Board and staff for their support whilst I was Acting CEO, and particularly to Colin Nicholl who took on the role of Chairman for that period. Following Colin Jump's appointment, I have resumed the role of Chairman and Colin Nicholl has reverted to Deputy Chairman.
I would also like to thank our shareholders for their support during 2012 and I look forward with confidence to 2013 as the Company, led by Colin Jump, advances towards achieving our business goals.
Eric Yeatman
Chairman
CHIEF EXECUTIVE'S STATEMENT
It is with great pleasure that I provide my first report as Chief Executive of Microsaic Systems. Since joining in November 2012, I have had the opportunity to better understand the business, its technology, its people, its customers and the markets in which it operates. I am very excited about the opportunities that are opened up by the Company's technology in the field of chemical analysis, and the high level of market interest.
I would like to report on last year's achievements, including those before my appointment, and also provide a summary of ongoing activities and our intended direction for the business.
Microsaic's chip-based technology has allowed us to miniaturise the mass spectrometer (MS) - the gold standard for chemical analysis - far beyond any other product on the market. This miniaturisation greatly simplifies deployment, drastically cuts power consumption and other running costs, and makes MS practical for a wide range of new users and applications. 2012 saw the first regular shipments of our breakthrough compact MS product, the 3500 MiD®, following its launch in 2011. This is the only MS on the market for liquid analysis that requires no external pumps, being completely self-contained within the size of a desktop computer.
Our main route to market for the MiD® is to partner with companies that have established sales channels and complementary products, with an initial focus on the areas of pharma and biotechnology. A key milestone in this strategy was reached in May 2012 with the signing of an OEM arrangement with Biotage AB. Biotage, listed on the NASDAQ OMX Stockholm, is a well-established supplier in the areas of analytical and medicinal chemistry, with a global sales and service capability. Biotage is a leader in the supply of flash chromatography, a widely used separation and purification method in chemical synthesis. In collaboration with Microsaic, Biotage is introducing a fully integrated system incorporating the MiD® with its flash systems, which will greatly increase the power and effectiveness of flash, allowing, for example, automated mass-directed separation. This will be the first such product on the market, and early feedback from customers has been positive.
Since signing of the agreement, the 'Isolera Dalton' integrated system has been developed by Biotage in collaboration with Microsaic, and initial marketing has begun, with presentations having been given at international trade shows of the American Chemical Society in the USA and JASIS in Japan. Interest in this new integrated system has been extremely encouraging and has exceeded our initial expectations.
A key technical milestone in 2012 was our development of an enhanced version of the 3500 MiD®, namely the 4000 MiD®. To ensure that MiD®s and the integrated Biotage systems can fit comfortably within fume hoods - an important capability for flash as well as other applications - the 4000 has a significantly reduced footprint compared to the 3500. Other enhancements were also incorporated and the first system was shipped to Biotage to support the development programme in Q3 2012. Since then we have taken the 4000 through final development stages, including outsourcing of major sub-components, and continue to prepare the system for volume manufacture so we can benefit from economies of scale. Regular shipments of the 4000 MiD® have been made, and in March 2013 we launched the 4000 MiD® officially at Pittcon, the major international trade fair focused on scientific and laboratory equipment, which took place in Philadelphia, USA.
In addition to Biotage, we have been continuing to develop our relationships with a range of other potential commercial partners in the pharma, biotech and related sectors. Two major analytical instrument suppliers have conducted evaluations of 3500 systems; these led to proposed enhancements in hardware and software which have recently been implemented. Two other major scientific instrument suppliers contracted with us to develop versions of the MiD® with extended measurement capability to meet the requirements of their specific applications, and in both cases key technical targets have been met. These partner discussions and collaborations continue to advance towards the goal of OEM agreements to supply the MiD® in combined products. We are also pursuing funded development opportunities in other industry sectors. For example, our interest in security applications continues, where we have recently been awarded a grant to develop advanced MS instruments for on-site analysis of explosives and narcotics.
Our strategy for direct sales is to focus on new application areas and to ensure we have direct contact with users, so as to inform our product development and R&D programmes. To further build this channel in 2013 we are enhancing our business development and customer support functions with a number of key hires in these areas.
Technical progress continued in 2012 including significant enhancements to our production capability. Production of the key chip-based components is retained in-house and our productivity levels have been significantly increased. Sub-systems have been transferred to external suppliers and full system assembly will also be out-sourced later this year. Further enhancements have also been made to the user-replaceable components to make handling of these increasingly simple, as part of our 'Plug & Play' approach.
A further major technical milestone for the Company was the first demonstration of a working prototype of a triple quadrupole MS system that can analyse more complex materials such as medical samples, for example, blood or saliva. This system will give us the capability needed for our next generation of MS products and further broaden the range of applications that our miniaturised MS instruments can address.
The importance of our products and their breakthrough capabilities were acknowledged by several external agencies in 2012. In June, the 3500 MiD® received a prestigious R&D 100 award, given to the most significant technological advances of the year across all sectors. We also published results in collaboration with a prestigious laboratory at Cambridge University in a leading peer-reviewed journal (Browne, D.L. et al., Rapid Communications in Mass Spectrometry 26, pp 1999-2010, 2012) on new capabilities in continuous reaction monitoring facilitated by the 3500 MiD®.
Financial results
Revenues in 2012 rose to £606,281 (2011: £267,999) having benefited from sales of our MiD® products on top of grant income streams funding future product development. We expect sales volumes to significantly grow in 2013 as our joint product with Biotage is rolled out internationally and market interest in our product increases.
Research and development expenditure in the year amounted to £1,298,129 (2011: £1,314,851) reflecting continuing investment in product development including enhancements to our existing products and future products.
The Company's manufacturing, sales and after-sales capabilities are being steadily built up. Operating expenses reported for the year increased to £1,179,516 (2011: £1,090,718), however this includes a one-off write back of £81,901 of prior year share-based payment charges following the lapsing of unexercised share options.
In June, the Company placed 3,867,248 ordinary shares with existing and new shareholders. This represented a 10% increase in the Company's issued share capital and we gratefully acknowledge the on-going support shown by our investors. The net proceeds raised from the issue amounted to £1.45 million. These funds have enabled us to enhance our capability in several areas, particularly software development, production and applications development. We have made hires in each of these areas and these new employees are already adding to our capability to address market requirements and opportunities.
The loss for the year after tax was £1,867,069 (2011: £1,899,253) and the cash position at 31 December 2012 of £1,788,579 was at a similar level to a year previous (2011: £1,818,319), as the net cash used in operating activities was offset by that raised through the share issue.
As with previous years, the going concern basis has continued to be adopted in preparing the financial statements. Following the progress made by the Company to date and the progress anticipated in the near term, the Directors have a reasonable expectation of securing suitable additional funding as may be required to continue operations and provide for future expansion.
Outlook
Since the end of the financial year we have signed a second OEM agreement to provide the Microsaic 4000 MiD® as a stand-alone instrument on a non-exclusive basis. This agreement resulted directly from expressions of interest from customers and represents the first of what we anticipate will be a number of sales channels of this type, which will add significantly to our overall sales.
This new agreement together with good progress across other areas of our business and a growing profile within the scientific analytical instrumentation market, gives us confidence as we address three distinct business strategies that underpin our ambitions for 2013 and beyond:
· Developing OEM partnerships with synergistic companies, which can provide Microsaic with access to enhanced sales distribution channels alongside our own direct sales channel.
· Stepping up our marketing communications and the promotion of the core brand values of Microsaic.
· Outsourcing the manufacture of the main product ensuring high quality build, reliability and high volume capacity.
We will continue discussions with interested OEM partners who have established global sales distribution channels, in order to advance those relationships towards commercial agreements.
Further innovations around the concept of 'Plug & Play' components are planned. Within the MS market, our 'Plug & Play' designs are unique and will largely dispense with the need for highly technical operators or support/service staff, therefore increasing the operational use of system (reducing system down-time) and reducing cost to the user. This concept will provide a clearer differentiator between us and any other current vendors of MS instrumentation.
The Company has a wealth of committed expertise in its people. They have built a solid platform for growth and gained invaluable experience introducing new technology within an established, naturally conservative market. It is my and my fellow Directors' belief that these strengths and our shared vision can make Microsaic Systems a highly successful company moving forward.
Colin Jump
Chief Executive Officer
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2012
Year to Year to
Note 31 Dec 2012 31 Dec 2011
£ £
|
Revenue |
|
|
606,281 |
267,999 |
|
Cost of sales |
|
|
(1,486,490) |
(1,314,851) |
|
Gross loss |
|
|
(880,209) |
(1,046,852) |
|
Operating expenses |
|
|
(1,179,516) |
(1,090,718) |
|
Loss from operations |
|
|
(2,059,725) |
(2,137,570) |
|
Finance income |
|
|
10,493 |
28,605 |
|
Loss before tax |
|
|
(2,049,232) |
(2,108,965) |
|
Tax on loss on ordinary activities |
|
|
182,163 |
209,712 |
|
Total comprehensive loss for the year |
|
|
(1,867,069) |
(1,899,253) |
|
|
|
|
|
|
|
Loss per share attributable to the equity shareholders of the Company |
|
|
|
|
All operations are continuing operations.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2012
Share
Share Share option Retained Total
capital premium reserve earnings equity
£ £ £ £ £
|
At 1 January 2011 |
216 |
4,904,283 |
828,153 |
(4,857,333) |
875,319 |
|
Bonus issue |
62,323 |
(62,323) |
- |
- |
- |
|
Capital reduction |
- |
(4,841,960) |
- |
4,841,960 |
- |
|
Shares issued |
34,142 |
3,969,258 |
- |
- |
4,003,400 |
|
Share issue and initial public offering costs |
- |
(755,005) |
- |
- |
(755,005) |
|
Share options exercised |
- |
- |
(202,121) |
202,121 |
- |
|
Total comprehensive loss for the year |
- |
- |
- |
(1,899,253) |
(1,899,253) |
|
Share based payments - share options |
- |
- |
21,658 |
- |
21,658 |
|
At 31 December 2011 |
96,681 |
3,214,253 |
647,690 |
(1,712,505) |
2,246,119 |
|
Shares issued |
9,668 |
1,537,231 |
- |
- |
1,546,899 |
|
Share issue costs |
- |
(100,074) |
- |
- |
(100,074) |
|
Share options lapsed |
- |
- |
(99,552) |
99,552 |
- |
|
Total comprehensive loss for the year |
|
|
|
|
|
|
Share based payments - share options |
|
|
|
|
|
|
At 31 December 2012 |
106,349 |
4,651,410 |
499,570 |
(3,480,022) |
1,777,307 |
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2012
Note 31 Dec 2012 31 Dec 2011
£ £
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Intangible assets |
|
|
128,885 |
|
137,372 |
|
Property, plant and equipment |
|
|
84,265 |
|
87,494 |
|
Total non-current assets |
|
|
213,150 |
|
224,866 |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Inventories |
|
|
190,352 |
|
149,125 |
|
Trade and other receivables |
|
|
181,529 |
|
311,441 |
|
Corporation tax receivable |
|
|
150,000 |
|
190,000 |
|
Cash and cash equivalents |
|
|
1,788,579 |
|
1,818,319 |
|
Total current assets |
|
|
2,310,460 |
|
2,468,885 |
|
Total assets |
|
|
2,523,610 |
|
2,693,751 |
|
|
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
7 |
|
106,349 |
|
96,681 |
|
Share premium |
|
|
4,651,410 |
|
3,214,253 |
|
Share option reserve |
|
|
499,570 |
|
647,690 |
|
Retained earnings |
|
|
(3,480,022) |
|
(1,712,505) |
|
Total equity |
|
|
1,777,307 |
|
2,246,119 |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
|
|
746,303 |
|
447,632 |
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
2,523,610 |
|
2,693,751 |
|
|
|
|
|
|
|
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2012
Year to Year to
31 Dec 2012 31 Dec 2011
£ £
|
Loss from operations |
|
|
(2,059,725) |
|
(2,137,570) |
|
Amortisation of intangible assets |
|
|
67,169 |
|
52,463 |
|
Depreciation of property, plant and equipment |
|
|
58,513 |
|
55,929 |
|
Share based payments |
|
|
(48,568) |
|
21,658 |
|
(Increase) in inventories |
|
|
(41,227) |
|
(141,818) |
|
Decrease/(Increase) in trade and other receivables |
|
129,912 |
|
(127,205) |
|
|
Increase in trade and other payables |
|
|
298,671 |
|
3,559 |
|
Cash used in operations |
|
|
(1,595,255) |
|
(2,272,984) |
|
Taxation received |
|
|
222,163 |
|
239,840 |
|
Net cash used in operating activities |
|
|
(1,373,092) |
|
(2,033,144) |
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Purchases of intangible assets |
|
|
(58,682) |
|
(59,893) |
|
Purchases of property, plant and equipment |
|
|
(55,284) |
|
(39,856) |
|
Interest received |
|
|
10,493 |
|
28,605 |
|
Net cash used in investing activities |
|
|
(103,473) |
|
(71,144) |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from share issues |
|
|
1,546,899 |
|
4,003,400 |
|
Share issue and initial public offering costs |
|
|
(100,074) |
|
(755,005) |
|
Net cash from financing activities |
|
|
1,446,825 |
|
3,248,395 |
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the year |
|
1,818,319 |
|
674,212 |
|
|
Cash and cash equivalents at the end of the year |
|
1,788,579 |
|
1,818,319 |
|
|
|
|
|
|
|
|
NOTES TO THE PRELIMINARY FINANCIAL INFORMATION
1. General information
The 2012 financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. This preliminary financial information is also prepared on this basis.
The preliminary financial information set out in this report does not constitute statutory accounts as defined by section 434 of the Companies Act 2006 and has not been audited.
The preliminary financial information for the year ended 31 December 2011 is based on the statutory accounts for that period. Those statutory accounts have been delivered to the Registrar of Companies and the auditors' report on those accounts was unqualified, however it included a reference to an emphasis of matter with regard to going concern, and their report did not contain statements under section 498(2) or section 498(3) of the Companies Act 2006.
The preliminary financial information for the year ended 31 December 2012 is based on the statutory accounts for that period. Those statutory accounts will be delivered to the Registrar of Companies in due course. The auditors have reported on those accounts and their report was unqualified, however it included a reference to an emphasis of matter with regard to going concern, and their report did not contain statements under section 498(2) or section 498(3) of the Companies Act 2006.
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.
3. Going concern
The financial statements have been prepared on a going concern basis, which assumes that sufficient funds will be available for the Company to continue in operational existence for at least 12 months.
The Company's business activities together with the factors likely to affect its future development, performance and position are set out in the business review within the annual report.
The Company has been developing its technologies for the market place and as such has been absorbing funds. The Company is now in the early commercialisation phase of its development, and the financing of operations in the future will be from employment of existing cash reserves, revenue from product sales and new funding.
Although there remain uncertainties associated with both the amount of sales revenue and the availability of additional funding, after considering these and assessing the business's prospects, the Directors have a reasonable expectation that the Company will have access to adequate resources to be able to continue in operational existence for at least twelve months from the signing of this report, and consequently they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
4. Segmental reporting
The Company currently has one business segment, being the research, development and commercialisation of scientific instruments. This is undertaken wholly within the United Kingdom, and therefore a segmental analysis of turnover, profits/losses on ordinary activities before tax and net assets has not been presented. The Company is managed on the basis of its performance as a whole and not by any segments.
5. Tax
The Company has recognised taxation receivable in relation to R&D tax credits claimed for the year to 31 December 2011 and expected to be claimed for the year to 31 December 2012.
6. Loss per share
Year to Year to
31 Dec 2012 31 Dec 2011
|
Loss after tax attributable to equity shareholders |
|
£(1,867,069) |
£(1,899,253) |
|
Weighted average number of ordinary 0.25p shares for the purpose of basic and diluted loss per share* |
|
40,935,477 |
|
|
Basic and diluted loss per ordinary share |
|
(4.56)p |
(5.47)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.
*The weighted average numbers of shares have been adjusted to reflect the bonus issue and share sub-division in April 2011.
7. Share capital
Number £
|
Allotted, called up and fully paid ordinary shares of 0.25p each |
|
|
||
|
Ordinary shares as at 31 December 2011 |
|
|
38,672,500 |
96,681 |
|
Ordinary shares issued for cash in the year |
|
|
3,867,248 |
9,668 |
|
Ordinary shares as at 31 December 2012 |
|
|
42,539,748 |
106,349 |
|
|
|
|
|
|
Following adoption of new articles of association in April 2011, the Company does not have a stated authorised share capital. Previously the authorised share capital was £100,000 comprising 10,000,000 ordinary shares of 1p each.
In April 2011 the Company made a bonus issue of 289 ordinary shares of 1p each for each 1p ordinary share held. Subsequently, each 1p ordinary share was subdivided into four ordinary shares of 0.25p each. The Company has just this one class of shares, with each share carrying one vote and equal rights to discretionary dividends.
8. 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.
Year to Year to
31 Dec 2012 31 Dec 2011
|
Share based payments (credit)/charge |
|
|
(48,568) |
21,658 |
|
|
|
|
|
|
The share based payments credit of £48,568 for 2012 is due to the write back of prior year share based payment charges totalling £81,901 following the exit of staff members from the Company's share option schemes.
This information is provided by RNS
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