Interim Results

29th Sep 2008 07:00



29 September 2008

Oxford Advanced Surfaces Group PLC (the 'Group' )

Interim Accounts as at 30 June 2008

CHAIRMAN'S STATEMENT 

I am delighted to report on your Group's performance for the six months to 30 June 2008 in this first Interim Financial Report since the successful reverse acquisition of Kanyon plc and the readmission to AIM as Oxford Advanced Surfaces Group plc. 

Group revenue in the 6 month period ended 30 June 2008 was £84,000 compared to £55,000 for the six months to 30 June 2007. The loss before tax was £1,547,000 compared to £59,000. Excluding the non-cash share based payment cost attributable to share options of £929,000, the loss before tax for the period ended 30 June 2008 was £618,000 (period to 30 June 2007: £58,000). Research and development costs directed towards valuable and practical opportunities increased from £26,000 to £179,000.

Cash balances at 30 June 2008 amounted to £6.0 million and continue to be managed prudently, with tight cost controls. The balance sheet was further strengthened in August 2008 when the Company successfully raised an additional £5 million before expenses with the issue of 7,695,600 new ordinary shares at a price of £0.65. This placing was a great success especially considering the difficult market conditions at the time and underlines the strength of the company's technology and business plans.

The fundraising will enable the Group to take advantage of the many attractive development opportunities that are currently available. Good progress was made in the first half of the year with staff numbers growing from 7 to 15, the addition of some necessary extra laboratory space at our Oxford HQ and the recruitment of an experienced Commercial Director who will be responsible for the significant Electronics and Alternative Energy markets.

I am pleased to report that during the period a number of new Joint Development Agreements with major international customers, including DuPont Advanced Fibre Systems, were signed. We are now engaged in a wide range of projects with market leading collaborators targeted at potentially large and valuable global markets including flat screen displays, printed circuit boards, advanced materials and fast moving consumer goods. 

We have also started to develop applications of the Onto™ technology for use in photovoltaic devices and solid state lighting and will be seeking appropriate development partners in the next few months. 

In June 2008 the Group announced its involvement in an important collaborative research and development project with the University of Manchester's Organic Materials Innovation Centre and the Centre for Process Innovation Ltd (CPI), a project which is to be supported by over £600,000 of funding from the Technology Strategy Board over the next 24 months. The project brings together the Group's OntoTM technology with leading edge research and process development skills from Manchester and the CPI. The target market opportunities will include the field of plastic electronics, ranging from radio frequency identification (RFID) to printed photovoltaic devices. 

 

The Board is confident that the successes of the first half of 2008 will continue and expect to progress a number of existing Joint Development Agreements to initial commercial projects with key industry players in our target markets and to conclude new Joint Development Agreements with leading companies in 2009.

I would like to thank all our staff for their commitment and hard work which has allowed us to make excellent progress in developing the exciting potential commercial success of your company.

Jeremy Scudamore  Chairman 29 September 2008

Contact:

Oxford Advanced Surfaces Group plc Marcelo Bravo, Chief Executive www.oxfordadvancedsurfaces.com	Tel: 01865 845807
Novum Securities Limited - Broker Henry Turcan Michael Brennan	Tel: 020 7562 4700
Zimmerman Adams International - Nominated Adviser Ray Zimmerman/Jonathan Evans	Tel: 020 7060 1760

		Six Months to 30 June 2008		Six Months to 30 June 2007		Five Months to 31 December 2007
		(Unaudited)		(Unaudited)		(Audited)
		£'000		£'000		£'000
	Notes
CONTINUING OPERATIONS
Revenue		84		55		65
Cost of sales		(32)		(2)		(8)
GROSS PROFIT		52		53		57
Administrative expenses		(1,752)		(124)		(683)
LOSS FROM OPERATIONS	2	(1,700)		(71)		(626)
Finance income		153		12		11
LOSS BEFORE TAX		(1,547)		(59)		(615)
Income tax expense	3	-		-		-
LOSS FOR PERIOD ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY		(1,547)		(59)		(615)

Loss per share attributable to the equity holders of the Company during the year:

 

Total and continuing:
— Basic and diluted	4	(0.87)p	(0.08)p	(0.83)p

 

			Share
			Based	Reverse
	Share	Share	Payment	Acquisition	Merger	Retained	Total
	Equity	Premium	Reserve	Reserve	Reserve	Earnings	Equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2007	2	694	-	-	-	(67)	629
Loss for the 6 month period to 30 June 2007	-	-	-	-	-	(59)	(59)
Share based payments	-	-	1	-	-	-	1
At 30 June 2007	2	694	1	-	-	(126)	571
Loss for the 6 month period to 31 December 2007	-	-	-	-	-	(631)	(631)
Share based payments	-	-	394		-	-	394
Share options cancelled or exercised	-	-	(8)	-	-	8	-
Reverse acquisition (see note 1)	1,777	5,123	-	(6,831)	22,514	-	22,583
At 31 December 2007	1,779	5,817	387	(6,831)	22,514	(749)	22,917
Loss for the 6 month period to 30 June 2008	-	-	-	-	-	(1,547)	(1,547)
Share based payments	-	-	929	-	-	-	929
At 30 June 2008	1,779	5,817	1,316	(6,831)	22,514	(2,296)	22,299

			30 June 2008		30  June  2007		31 December 2007
			(Unaudited)		(Unaudited)		(Audited)
			£'000		£'000		£'000
ASSETS
NON-CURRENT ASSETS
Intangible assets			16,335		184		16,340
Property, plant and equipment			181		30		52
			16,516		214		16,392
CURRENT ASSETS
Trade and other receivables			141		2		109
Cash and cash equivalents			5,967		396		6,866
			6,108		398		6,975
LIABILITIES
CURRENT LIABILITIES
Trade and other payables			325		41		368
Bank overdrafts			-		-		82
			325		41		450
NET CURRENT ASSETS			5,783		357		6,525
NET ASSETS			22,299		571		22,917
SHAREHOLDERS EQUITY
Called up share capital			1,779		2		1,779
Share premium			5,817		694		5,817
Merger reserve			22,514		-		22,514
Reverse acquisition reserve			(6,831)		-		(6,831)
Retained earnings			(2,296)		(126)		(749)
Share based payments reserve			1,316		1		387
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY			22,299		571		22,917

The financial statements were approved by the Board of Directors and authorised for issue on 29 September 2008 and were signed on its behalf by: 

M L Bravo - Director P G Spinks - Director

			Six Months to 30 June 2008		Six Months to 30 June 2007		Five Months to 31 December 2007
			£'000		£'000		£'000
			(Unaudited)		(Unaudited)		(Audited)
	Notes
Cash flows from operating activities
Cash generated from operations	5		(823)		(42)		(197)
Net cash inflow / (outflow) from operating activities			(823)		(42)		(197)
Cash flows from investing activities
Purchase of intangible assets			-		-		(15)
Purchase of property, plant and equipment			(148)		(31)		(20)
Acquisition of subsidiaries			-		-		6,633
Interest received			154		12		11
Net cash inflow from investing activities			6		(19)		6,609
Net cash from financing activities
Share issues			-		-		6
Net cash inflow from financing activities			-		-		6
Increase in cash and cash equivalents			(817)		(61)		6,418
Cash and cash equivalents at beginning of period			6,784		457		366
Cash and cash equivalents at end of period			5,967		396		6,784

 

Basis of preparation

The accounting policies adopted in these interim financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the period to 31 December 2007. The interim financial information for the six months ended 30 June 2008 and 30 June 2007 is unaudited and does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. These interim financial statements include audited comparatives for the period to 31 December 2007. The 2007 Annual Report and Accounts received an unqualified audit opinion and have been filed with the Registrar of Companies. These interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and have been prepared under the historical cost convention. 

Basis of consolidation and reverse acquisition

The Company was incorporated on 13 June 2006 as Kanyon Two plc. On 10 July 2006 the Company changed its name to Kanyon plc and on 28 December 2007 it was changed to Oxford Advanced Surfaces Group plc. On 31 December 2007 following the readmission to AIM the Company became the legal parent of Oxford Advanced Surfaces Limited.

The combination has been accounted for as a reverse acquisition as if Oxford Advanced Surfaces Limited acquired Oxford Advanced Surfaces Group plc. Although this Interim Financial Report has been issued in the name of the legal parent, the Group's activity is in substance a continuation of that of the legal subsidiary, Oxford Advanced Surfaces Limited, because after the transaction the former Board of Oxford Advanced Surfaces Limited were deemed to have control of the Group and of the legal parent. The following accounting treatment has been applied in respect of the reverse acquisition: 

 

Operating loss is stated after charging

	Period to 30 June 2008		Period to 30 June  2007		Period to 31 December  2007
	£'000		£'000		£'000
Research and development costs	179		26		82
Share based payments	929		1		394
Depreciation of property, plant and equipment - owned	19		2		5
Amortisation of intangible assets - patents	5		5		4

 

3. INCOME TAX EXPENSE

No tax charge has been recognised in the accounts as the Group is currently in a net loss position. No deferred tax asset has been recognised in respect of the losses as recoverability is currently uncertain.

 

4. LOSS PER SHARE (BASIC AND DILUTED)

The loss per share is based on the loss for the period and the number of ordinary shares of 1 pence each, being the weighted average number of shares in issue during the period. The weighted average number of shares for the period ended 30 June 2008 equates to the shares in issue at the period end. At 31 December 2007 the weighted average number of shares in issue are based on the number of shares issued by Oxford Advanced Surfaces Group plc to acquire Oxford Advanced Surfaces Limited for the period up to the acquisition and the weighted average number of shares in issue for the period since the acquisition. The weighted average number of shares for the period ended 30 June 2007 assumes that the 77,539,907 ordinary shares issued in relation to the reverse acquisition of Oxford Advanced Surfaces Limited are weighted in relation to the number of shares in issue by Oxford Advanced Surfaces Limited during the period.

	30 June	30 June	31 December
	2008	2007	2007
Loss attributable to equity holdersof the Group (£'000)	(1,547)	(59)	(615)
Weighted average number of ordinary shares in issue	177,924,038	73,582,186	74,341,761
Basic & diluted loss per share (pence)	(0.87)	(0.08)	(0.83)

The share options and warrants in issue are anti-dilutive and, therefore, diluted loss per share is equivalent to the basic loss per share.

 

5. RECONCILIATION OF LOSS BEFORE TAX TO CASH GENERATED FROM OPERATIONS

	Period to 30 June 2008		Period to 30 June 2007		Period to 31 December 2007
	£’000s		£’000s		£’000s
Profit/(loss) before tax	(1,547)		(59)		(615)
Depreciation and amortisation charges	24		7		9
Share based payment expense	929		1		394
Finance income	(153)		(12)		(11)
	(747)		(63)		(223)
(Increase) / Decrease in trade and other receivables	(33)		17		54
Increase / (Decrease) in trade and other payables	(43)		4		(28)
Cash generated from operations	(823)		(42)		(197)

6. RELATED PARTIES AND DIRECTORS' TRANSACTIONS

During the period ended 30 June 2008, the Company paid remuneration to the Directors in accordance with their service contracts and letters of appointment. In addition, Dr M G Moloney received fees through Oxford University Consulting in relation to technical support to the Group for the sum of £7,000 (period ending 30 June 2007: £12,000). There was £4,000 outstanding at the end of the period (period ending 30 June 2007: £8,000).

Directors' Interests

The interests of the directors (all of which are beneficial) and persons connected with them in the issued share capital of the Company as at 30 June 2008 were as follows:

				Number of
	Number of			Ordinary Shares
	Ordinary Shares	Percentage		held assuming	Percentage of
	in the Issued	of the Issued	Number of	full exercise	Fully diluted
	Share Capital	Share Capital	Options held	of Options	Share Capital
M A Bretherton	435,000	0.24	-	435,000	0.23
D R Norwood *	9,753,674	5.48	-	9,753,674	5.13
M L Bravo	5,386,502	3.03	5,386,502	10,773,004	5.66
P G Spinks	-	0.00	1,069,794	1,069,794	0.56
J P Scudamore	714,390	0.40	3,886,282	4,600,672	2.42
Dr M G Moloney	10,120,527	5.69	848,219	10,968,746	5.77
Dr A J Naylor **	848,219	0.48	848,219	1,696,438	0.89

* 678,671 of these Ordinary Shares are held by IP2IPO Nominees Limited on behalf of D R Norwood

** All these Ordinary Shares are held by IP2IPO Nominees Limited on behalf of Dr A J Naylor

D R Norwood and M A Bretherton are in addition interested in 3,000,000 and 60,000 shares respectively in Ora Capital Partners plc ("Ora"), representing 3 per cent and 0.06 per cent of Ora's issued ordinary share capital. 

 

7. POST BALANCE SHEET EVENTS 

On 1 August 2008 the Company entered into a placing agreement for 7,311,000 new ordinary shares at the placing price of £0.65 per new share representing an aggregate subscription amount of £4,752,150 before expenses.

Simultaneously the following directors of the Company agreed to subscribe in aggregate for 384,600 new ordinary shares for an aggregate subscription amount of £249,990: 

Director	No. of new ordinary shares subscribed	Amount
		£
M L Bravo	38,500	25,025
P G Spinks	11,500	7,475
J P Scudamore	15,400	10,010
D R Norwood	307,700	200,005
Dr A J Naylor	11,500	7,475

Application was made for the 7,695,600 new ordinary shares to be admitted to trading on AIM which took place on 6 August 2008. The total amount raised was £5,002,140 and cash expenses of the issue amounted to approximately £278,000.

The new ordinary shares issued represented approximately 4% of the previously issued share capital and the new total voting rights of the company are now 185,619,638 ordinary shares.

In addition to the above expenses, the Company issued a warrant instrument to Novum Securities Limited for 230,868 new ordinary shares at a strike price of £0.65, equivalent to the subscription price. The warrants have a life of five years from the date of issue.

 

8. INTERIM FINANCIAL STATEMENTS

These interim financial statements will be distributed to shareholders and are also available on the Company's website at www.oxfordsurfaces.com

ENDIR ILFISASIRFIT

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Related Shares:

DMTR.L