Final Results

RNS Number : 9339N

Tekcapital plc

21 May 2015

 



21 May 2015

Tekcapital plc

("Tekcapital", "the Company" or "the Group")

Final results for the period ended 30 November 2014

Tekcapital plc (AIM: TEK), an international provider of technology and intellectual property services, announces its results for the period ended 30 November 2014.

Highlights

-       Number of retained clients for Technology Transfer service increased by 143% to 17 clients

-       Continued strong progress made towards the strategic objectives as set out in the AIM Admission Document, including:

o  expansion of the Group's technical, sales and marketing team

o  expansion of the service offering

o  extension of Tekcapital's international reach

-       Acquisition of InventionEvaluator^® and its successful integration, which continues to expand its sales with research institutions and corporate clients

-       Launch of technology out-licensing service

-       Science Advisory Board strengthened with 31 expert advisors at period end

-       New offices opened in Florida and Singapore in addition to our office in Oxford, U.K.

Post period end highlights 

-       Acquisition of exclusive rights to 16 intellectual properties in the areas of food processing, diabetic monitoring and advanced optics

-       Successful placing raising £2.15 million ($3.25 million) from new and existing investors

Commenting on the results, Dr. Clifford Gross, Executive Chairman of Tekcapital plc, said: 

"During the year, we have made solid progress towards a number of the goals that we set out when we came to the AIM market in April 2014.

"We are proud of our international client base and recent wins demonstrate that our offering continues to gain the attention of significant blue chip global companies as well as young, dynamic businesses. We have expanded our technical and sales team, developed alliances with new strategic partners and continued to extend the areas of coverage of our science advisory board.

"We believe our technology out-licensing service provides significant, additional upside for our shareholders and post-period end, the Group has acquired the exclusive rights to 16 exciting and potentially disruptive technologies.  With our successful fundraising post period end, we have a solid foundation which places us in a good position to grow the business and facilitate the creation of value from university intellectual capital."

For further information please contact:

Tekcapital plc	[phone] Ext 305
Clifford M. Gross	[e-mail]
Allenby Capital Ltd (Nominated Adviser & Joint Broker)	[phone]
Jeremy Porter / Alex Brearley
Optiva Securities Limited (Joint Broker)	[phone]
Jeremy King / Vishal Balasingham/ Graeme Dixon	[e-mail]
FTI Consulting, LLP	[phone]
Chris Lane / Emma Appleton / Roger Newby	[e-mail]

Tekcapital plc - The World's Largest University Network for Open Innovation

Tekcapital helps clients profit from new, university-developed intellectual properties. With its proprietary discovery search engine, linked to 4,000+ universities in 160 countries, coupled with expert scientific review, Tekcapital provides a turn-key service to make it easy for clients to find and acquire the IP they need to create a competitive advantage. Tekcapital is listed on the AIM market of the London Stock Exchange (AIM: symbol TEK) and is headquartered in Oxford, UK. For more information, please visit www.tekcapital.com

Chairman's Statement

Review of the Business

I am pleased to report our first annual results since Tekcapital was admitted to AIM on 4 April 2014. Tekcapital PLC was formed in early 2014 as the holding company for two trading entities, one based in the UK and one based in the USA. As a Group, Tekcapital is engaged in helping clients to profit from university intellectual property (IP).

We have continued to deliver against our strategy, as set out in the Group's AIM admission document, having further scaled the business globally with an initial concentration on established markets, in particular North America. Significant progress has been made to enhance our offering by adding additional services to further assist our clients to determine and extract value from IP. We have continued to take advantage of our early-mover status and benefited from positive market dynamics with companies seeking to identify and acquire IP from external or alternative sources in order to both protect and grow their businesses.

During the year, the Group enhanced its search, selection and evaluation capabilities. Our proprietary global innovation discovery network search engine, which is capable of identifying IP acquisition opportunities relevant to the client's search parameters, now has access to over 4,000 universities in 160 countries. We have also continued to strengthen the Group's Science Advisory Board, which at the period end totalled 31 expert advisers.

Divisional Review

The Group operates three IP monetisation services:

·        Technology Transfer offering which is focused on enabling clients to cost-effectively access relevant, scientifically screened and available university IP worldwide;

·        InventionEvaluator, which was acquired in July 2014, and provides clients with a high quality bespoke report which contains an in-depth analysis of the commercial opportunity associated with a specific new innovation; and

·        Technology out-licence service to purchase disruptive IP opportunities for future value creation.

Significant progress has been made across each of these three offerings. The Group has added both retained and project clients to its Technology Transfer service. The Group's current clients, which are located in North America, Europe and Israel, include both significant blue-chip global companies as well as young, dynamic businesses. Throughout the year, Tekcapital has made several key hires to strengthen further its technology transfer and client teams and during the period, the number of clients for the Technology Transfer service increased to 17 from 7, an increase of 143%.

Demand for the Group's InventionEvaluator service remains strong with customers consisting of universities, research centres and corporations worldwide. The service has been successfully integrated with our existing offering and has attracted significant interest. Post period end, we have been engaged by one of the world's largest corporate patent filers to provide InventionEvaluator reports.

In November 2014, the Group launched a technology out-licensing service to leverage its competencies to identify, screen and acquire particularly promising new IP which management believes can be readily out-licensed to corporations. This new service extends Tekcapital's impact on reducing the inefficiency of the global market for commercialising innovative university-developed technologies and also has the potential to capture for the Group's own benefit more of the value realised when innovative ideas are successfully commercialised.

Current Trading and Outlook

Post period end, in the first four months of 2015, the Group has successfully acquired the exclusive rights to 16 separate intellectual properties in the areas of reduced-fat food production, non-invasive glucose measurement for diabetics and advanced optics.

As Tekcapital approaches its third year in business with an exciting range of IP monetisation services, the Board of Directors is confident of continued growth in its portfolio of proprietary university-developed IP assets, expanding its client base and continued refinement of the Group's service offering.

As previously announced on 21 November 2014, the Directors have been focusing on optimising the Group's monthly fixed costs. This has been successful and the implementation of a scalable per report, variable costs structure has significantly reduced fixed operating costs.

The Directors are confident that meaningful revenues will arise from the sub-licensing or on-sale of rights held in its new IP portfolio. With an increasing number of companies making ever faster and more disruptive use of innovative ideas sourced exogenously, and with patented university technologies an increasingly valued currency, the market opportunity for the Group is both very large and continuing to grow.

Financial Review

The Group is still in its early stages of development. After its IPO in April 2014, some of the proceeds were applied to growing the business, with costs therefore running ahead of revenues. Group losses for the period to 30 November 2014 were US$ 994,869 on initial revenues of US$ 210,337.

The Group's assets grew during the period mainly thanks to shareholder investment at the time of the IPO. The Group's liabilities are very low at the end of the period because its costs have been settled without delay, using funds from the cash reserves invested at IPO.

Subsequent to the end of the period, the Company announced on 6 May 2015 that it had raised gross proceeds of £2.15 million ($3.25 million), by way of a placing (the "Placing") of a total of 10,750,000 new ordinary shares of 0.4p each at a price of 20 pence per share. The Placing, which was conducted by Allenby Capital Limited and Optiva Securities Limited, was oversubscribed.

Net proceeds of the Placing amount to a total of £2.02 million ($3,162,503) net of expenses, excluding VAT. The net proceeds of the Placing will be used for two purposes:

·        To expand Tekcapital's sales force to accelerate the growth of its client base for technology transfer and InventionEvaluator services; and

·        To enable Tekcapital to acquire and sell-on the licences for additional university intellectual properties.

I would like to take this opportunity to thank all our staff and consultants for their continued hard work and contribution, as well as our shareholders for their continued support.

The Board looks forward to the future with confidence.

Clifford M Gross Chairman and CEO

21 May 2015

Consolidated Statement of comprehensive income

For the period ended 30 November 2014

						Year ended		Period from 27 June 2012 to
						30 November		30 November
						2014		2013
		Note				US $		US $
Continuing Operations
Revenue						210,337		35,213
Gross Profit						210,337		35,213
Administrative  expenses
Foreign exchange movements						(80,112)		-
Other administrative expenses						(1,123,936)		(79,922)
Operating loss						(993,711)		(44,709)
Finance income						142		-
Loss before tax						(993,569)		(44,709)
Income tax expense						(1,300)		-
Loss after tax						(994,869)		(44,709)
Loss for the year attributable to owners of the parent company						(994,869)		(44,709)
Other comprehensive income for the year, net of tax						-		-
Total comprehensive income for the year attributable to owners of the parent company						(994,869)		(44,709)

The Group has used the exemption under s408 of the Companies Act 2006 not to disclose the Company income statement.

Items in the statement above are disclosed net of tax.

Loss per share

Basic and diluted earnings per share
Loss per share			5										(0.050)			(0.003)

Consolidated Statement of Financial position

At 30 November 2014

									30 November			30 November
									2014			2013
		Note							US $			US $
Assets
Non-current assets
Intangible assets		7							350,251			-
Property, plant and equipment									6,628			-
									356,879			-
Current assets
Trade and other receivables									90,568			11,883
Cash and cash equivalents		9							1,370,905			13,900
									1,461,473			25,783
Total assets									1,818,352			25,783
Current liabilities
Trade and other payables									100,052			47,698
Current income tax liabilities									1,300			-
									101,352			47,698
Total liabilities									101,352			47,698
Net Assets									1,717,000			(21,915)
Equity attributable to the owners of the parent
Ordinary shares		8							154,842			94,953
Share premium		8							2,673,905			-
Retained earnings									(1,039,578)			(44,709)
Merger reserves									(72,169)			(72,159)
Total Equity									1,717,000			(21,915)

Consolidated Statement of cash flows

For the period ended 30 November 2014

						Period from 1 December 2013 to 30 November 2014		Period from 27 June 2012 to 30 November 2013
		Note					US $		US $
Cash flows from operating activities
Cash generated from operations							(1,014,434)		(8,894)
Net cash generated from operating activities							(1,014,434)		(8,894)
Cash flows from investing activities
Purchases of property, plant and equipment							(8,631)		-
Purchases of intangible assets		7					(33,306)		-
Interest received							142		-
Net cash used in investing activities							(41,795)		-
Cash flows from financing activities
Proceeds from issuance of ordinary shares		8					3,337,882		22,794
Costs of raising finance							(924,648)		-
Net cash used in financing activities							2,413,234		22,794
Net increase in cash and cash equivalents							1,357,005		13,900
Cash and cash equivalents at beginning of year							13,900		-
Cash and cash equivalents at end of year							1,370,905		13,900

Consolidated and Company Statements of changes in equity

For the period ended 30 November 2014

			Attributable to owners of the parent company
			Ordinary	Share	Merger	Retained	Total
GROUP	Note		Shares	Premium	Reserve	Earnings	Equity
			US $	US $	US $	US $	US $
Balance as at 27 June 2012			-	-	-	-	-
Deemed issue of shares on acquisition of subsidiary company			94,953	-	(72,159)	-	22,794
Loss for the period			-	-	-	(44,709)	(44,709)
Balance at 30 November 2013			94,953	-	(72,159)	(44,709)	(21,915)
Balance as at 1 December 2013			94,953	-	(72,159)	(44,709)	(21,915)
Loss for the year			-	-	-	(994,869)	(994,869)
Acquired with new subsidiary			-	-	(10)	-	(10)
Share capital issued on initial public offering		8	59,889	3,598,553	-	-	3,658,442
Costs of share issue		8	-	(924,648)	-	-	(924,648)
Balance at 30 November 2014			154,842	2,673,905	(72,169)	(1,039,578)	1,717,000

		Attributable to owners of the parent company
		Ordinary	Share	Retained		Total
COMPANY	Note	Shares	Premium	Earnings		Equity
		US $	US $	US $		US $
Loss for the period		-	-	(435,235)		(435,235)
Proceeds from shares issued	8	154,842	3,598,553	-		3,753,395
Costs of share issue	8	-	(924,648)	-		(924,648)
Balance at 30 November 2014		154,842	2,673,905	(435,235)		2,393,512

Notes to the consolidated financial statements

1.       General information

The registered office address is detailed on page 1 of the financial statements. Tekcapital PLC ("the Company") was incorporated in England and Wales, on 3 February 2014 and is domiciled in the UK. The Company entered into an agreement to acquire the issued and to be issued share capital of Tekcapital Europe Limited, a company incorporated in England and Wales on 18 February 2014, and Tekcapital LLC, a company incorporated in the State of Delaware, USA on 19 February 2014. The acquisition was effected by way of issue of shares.

In determining the appropriate accounting treatment for this transaction, the Director's considered IFRS 3 "Business Combinations" (Revised 2008). However they concluded that this transaction fell outside the scope of IFRS 3 (Revised) since the transactions described above represents a combination of entities under common control.

Accordingly the Directors have adopted the pooling of interest method by using the nominal value of shares exchanged in the business combination and that there is no fair value adjustment.

The consolidated financial statements are presented as if the Group structure has always been in place, including the activity from incorporation of the Group's principal subsidiaries. The entities had the same management as well as majority shareholders.

On 4 April 2014, Tekcapital PLC listed on the UK AIM with an initial public offering.

2.       Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1     Statement of compliance

The financial statements of Tekcapital PLC have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial instruments are disclosed in note 3.

2.2     Consolidation

As stated under note 1 the Directors adopted the pooling of interest method to account for the business combinations. The consideration transferred for the acquisition of the subsidiary is the fair values of the shares transferred by the former owners of the acquiree in exchange for an identical equity interest issued by the Group.

The Group came into existence during this accounting period, attributable to the nature of the share exchange that maintained the same management and share structure. Accordingly the new Group reflects its financial statements as if the Group had been in existence in the comparative period and relate to those of its subsidiaries.

The associated acquisition costs are expensed as incurred.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform to the Group's accounting policies.

IFRS 13 did not affect any fair value measurements of the Group's assets or liabilities and therefore had no effect on the Group's financial position or performance.

2.3    Foreign currencies

(a)      Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in US Dollars which is the Group's presentation and functional currency.

(b)      Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within 'finance income or costs'.

(c) Group companies

The results and financial position of all Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i)   assets and liabilities for each balance sheet presented are translated at the closing exchange rates at the date of that balance sheet

(ii)   income and expense for each income statement are translated at the average rates of exchange during the period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

(iii)  all resulting exchange differences are recognised in other comprehensive income.

3.         Critical accounting estimates and assumptions

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Directors make estimates and assumptions concerning the future. The resulting accounting estimates will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value of the assets and liabilities within the next financial year are detailed below.

(a)        Deferred taxes

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the balance sheet date.

Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

(b)        Useful life of InventionEvaluator website

The Directors have considered the useful life of the InventionEvaluator website to be indefinite because of the uniqueness of the service it provides and that there is no competitor in the market in which the Group operates who is able to provide a similar service. The Directors will undertake an annual review that considers any impairment and if required make a provision in the financial statements.

4.       Segmental reporting

At this early stage in development, the Directors consider the business to have only one segment for reporting purposes under IFRS 8 which is Monthly service fees. The Directors consider there to be a future potential second segment which has not occurred in the current period. This is Specialist fees regarding the transfer of rights to intellectual property.

Segmental revenues and results

There is currently only one segment. Details of revenues and results can be found in the consolidated statement of comprehensive income.

Segment assets and liabilities

There is currently only one segment. Details of assets and liabilities can be found in the consolidated statement of financial position.

All assets are allocated to reportable segments other than current and deferred tax assets.

All liabilities are allocated to reportable segments other than current and deferred tax liabilities.

Geographical information

The Group operates from its office in the United Kingdom and three locations in the USA, namely Florida, New York and California.

5.       Loss per share

										2014		2013
										US $		US $
Loss from continuing operations attributable to owners of the parent										(994,869)		(44,709)
Total										(994,869)		(44,709)
Basic and diluted earnings per share
Weighted average number of ordinary shares in issue (thousands)										20,078		14,504
Loss per share										(0.050)		(0.003)

Any options and warrants do not have a dilutive effect on the EPS as the Group is loss-making.

6 .      Investments in subsidiaries

Company			Shares in subsidiaries		Loans to Subsidiaries							2014			2013
												US $			US $
Cost and net book value
Additions during the period				94,954		2,276,866						2,371,820			-
Balance at 30 November 2014				94,954		2,276,866						2,371,820			-
Principal subsidiaries                                                                                                                name			Country of Incorporation and place of business		Proportion of ordinary shares directly held							Nature of business
Tekcapital Europe Limited				England and Wales		100%						Provision of Intellectual property research services
Tekcapital LLC				USA		100%						Provision of Intellectual property research services

The Group owns 100% of the above subsidiaries and consequently has full control over them. As at the period end, the Group has no interest in the ownership of any other entities, or exerts any significant influence over or provides funding which constitutes an "unconsolidated structured entity".

7.       Intangible Assets

							Purchased intangible assets
GROUP						Website development			Invention Evaluator		Total
							US $		US $		US $
At 1 December 2013							-		-		-
Additions							33,306		320,550		353,856
At 30 November 2014							33,306		20,550		353,856
Accumulated amortisation and impairment
At 1 December 2013							-		-		-
Amortisation charge for the period							(3,605)		-		(3,605)
At 30 November 2014							(3,605)		-		(3,605)
Net Book Value
At 30 November 2014							29,701		320,550		350,251
At 30 November 2013							-		-		-

Under IAS38, the Group's InventionEvaluator is regarded by the Directors as being an intangible asset with an indefinite useful life. The Directors believe that the asset is special in that no competitor offering currently exists, the service is already proven in a few months to have appeal globally to many types of clients including Fortune 100 companies, there is no expectation of obsolescence in the foreseeable future, and the service generates ongoing revenue streams. The Directors have carried out an impairment review and believe that the value in use is significantly greater than book value.

            Intangible Assets (continued)

							Purchased intangible assets
Company								Website development			Total
									US $		US $
At 3 February 2014									-		-
Additions									33,306		33,306
At 30 November 2014									33,306		33,306
Accumulated amortisation and impairment
At 3 February 2014									-		-
Amortisation charge for the period									(3,605)		(3,605)
At 30 November 2014									(3,605)		(3,605)
Net Book Value
At 30 November 2014									29,701		29,701

8.         Share capital and premium

Share capital

GROUP and Company								Number of shares		Ordinary Shares		Total
Authorised share capital
Ordinary shares with a nominal value per share of £0.004							29,348,397			£117,394		£117,394
Issued and fully paid up
At 30 November 2013 (Deemed)								14,503,977		94,953		$94,953
At 30 November 2014								23,383,747		154,842		$154,842

The shares have full voting, dividend and capital distribution (including on winding up) rights; they do not confer any rights of redemption.

The following shares were issued during the period:

18 February 2014	14,503,977 shares were issued as part of the acquisition of Tekcapital Europe Limited
4 April 2014	8,000,000 shares were issued as part of the initial public offering raising US $3,730,602
23 July 2014	879,770 shares were issued as consideration for the purchase of the Invention Evaluator.

The Company issued the following warrants and options as part of the initial public offering:

Options of 700,000 ordinary shares with full voting, dividend and capital distribution rights with a nominal value of £0.004 per share were issued on 4 April 2014. They were issued with a term of five years, to vest in equal tranches on the first, second and third anniversary of grant at a price of £0.25 per share. 

Broker warrants were granted on 31 March 2014 to Northland Capital Partners Limited (95,000 shares exercisable up to five years from date of admission on 4 April 2014) and Optiva Securities Limited (265,000 shares exercisable up to three years from date of admission on 4 April 2014).

The options and warrants are not treated as giving rise to share based payment transactions.

Share premium

										Share
GROUP and Company										Premium		Total
										US $		US $
Share issued on acquisition of subsidiary on 3 February 2014										-		-
Premium on shares issued										3,598,553		3,598,553
Share issue costs										(924,648)		(924,648)
At 30 November 2014										2,673,905		2,673,905

9.         Cash and cash equivalents

GROUP											2014		2013
											US $		US $
Cash at bank and in hand											1,370,905		13,900
Total cash and cash equivalents											1,370,905		13,900

10.        Related party transactions

Trading transactions

During the year, the Company entered into the following transactions with Dr. Clifford Gross, who is a related party due to his role as Executive Chairman / Director, employee and major shareholder. He also provided loans to the Group during the period as follows:

Related party relationship		Type of Transaction							Transaction amount	Balance owed
									2014	2014
									US $	US $
Mr Clifford Mark Gross		Provision of loans to the Group							9,411	9,411

The Group has taken advantage of the exemption in IAS 24 "related parties" not to disclose transactions with other Group companies.

11.        Events after the reporting period

At the time of signing these accounts, the Directors had completed a funding round raising gross proceeds of £2.15 million (approximately US $3.2 million), by way of a placing (the "Placing") of a total of 10,750,000 new ordinary shares of £0.004p each (the "Placing Shares").

•    Gross proceeds of the Placing amount to a total of £2.15 million (approximately US $3.2 million), estimated to be £2.02 million (approximately US $3.1 million) net of expenses, excluding VAT.

•    The net proceeds of the Placing will be used for two purposes:

·    To expand Tekcapital's sales force to accelerate the growth of its client base for technology transfer and InventionEvaluator services; and

·    To enable Tekcapital to acquire and sell-on the licences for additional university intellectual properties  

•    The Placing Shares were issued to a range of institutional and other investors, including existing and new shareholders in the Company.

12.        Copies of Annual Report and Accounts

The Company's Annual Report and Accounts for the year ended 30 November 2014, a notice of general meeting ("GM") and proxy form for the GM will be posted to shareholders today.  These documents will be available later today to download from the Company's website at http://tekcapital.com/investors/. The GM will be held at 6 New Street Square, London EC4A 3LX on Friday 12 June 2015 at 11.00 a.m.

 

END

 

 

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