1st May 2007 07:03
Angle PLC01 May 2007 For Immediate Release 1 May 2007 ANGLE plc ('ANGLE' or the 'Company') Trading Update for the year ended 30 April 2007 ANGLE plc (AIM:AGL), the intellectual property and technology commercialisationcompany, today announces the following trading update for the year ended 30April 2007 ahead of the Preliminary Results, which are expected to be announcedon 5 July 2007. During the year, the Company significantly increased its level of investment inexpanding and developing the controlled investments portfolio. Because theseinvestments are made in companies in which we have a majority stake, accountingstandards determine that the expenditure on these investments is charged to theincome statement with no value recognised on the balance sheet. A profit isreported and the fair value of the investments is recognised on the balancesheet when the holdings are reduced and the companies are no longer controlled. The loss before tax for the second half is expected, largely as a result of theabove, to be c. £4.4 million, giving a loss before tax for the year of c. £9.3million. Some £5.9 million of this loss represents expenditure covering directinvestment in the controlled investment portfolio companies and operating coststo establish, develop and create value in Progeny(R) companies. The remaining£3.4 million reflects a decrease in fair value of non-controlled investments,share based payments, a loss on the consulting and management business andrestructuring costs. The cash position at the year end was £2.6 million, which,in the Board's opinion, is sufficient for the foreseeable future. Progress across the business has generally been slower than expected and plansto complete external funding into two of the controlled investments have beendelayed. Profits relating to fair value gains which may arise from these eventsare now expected to occur in the new financial year. A review of the business has been undertaken with the objective of acceleratingprofitability. To achieve this, the primary focus will be on realising valuefrom the existing portfolio of companies, rather than on the establishment ofadditional new companies. An immediate improvement in profitability is expected to be achieved as follows: • investment in new Progeny(R) companies not yet established will be deferred to focus efforts on the existing portfolio. This will reduce the operating loss in respect of direct investments in Progeny(R) companies in the next financial year. • operating costs and staffing will be substantially reduced and prioritised on development of the existing portfolio and realising value from these investments rather than on sourcing, evaluating and setting up new companies. • the fee-for-service business will focus on the profitable Management business, which has long term contracts already in place, rather than short term consulting work. This will also result in significant savings in staff costs. Portfolio update ANGLE's portfolio currently comprises eight Progeny(R) companies. With theexception of NeuroTargets and Provexis, these companies are all controlledinvestments being majority owned by ANGLE. After evaluation costs of £0.2million, investment in Innomatica has ceased as it has failed to meet ourongoing Progeny(R) investment criteria. The majority of ANGLE's residual holdingin AIM-listed Corpora plc, acquired as a result of the trade sale of ourportfolio company Exago to Corpora in 2004, was also sold in the second half forc. £0.3 million. During the second half, ANGLE's Progeny(R) company Acolyte Biomedica was sold to3M Corporation. ANGLE's share of the proceeds was an initial £0.9 million incash and an earn-out of up to £4.7 million receivable early in 2010. Theinitial payment delivered a 1.3x cash multiple on ANGLE's investment, which willincrease to an 8x cash multiple should the maximum earn-out be achieved. ANGLE founded and developed Acolyte using its Progeny(R) process. However, ourequity holding in Acolyte at exit was 11.5%, which is far less than the expectedposition with our key portfolio companies established since 2004 where wecurrently hold more than 4x as much equity in each company. To date ANGLE has directly invested £5.5 million in its controlled investmentsand incurred operating costs to establish, develop and create value in theseProgeny(R) companies during the timeframe of their development of a further £6.9million. None of this investment is shown on ANGLE's balance sheet. The Boardbelieves that this represents significant unrealised value in the business. The status of the portfolio companies, all of which have been founded anddeveloped by ANGLE, is summarised below: • Aberro (65% holding) provides automated software testing products that enable customers to increase the overall reliability of their software while reducing both time to market and development costs. The company expects to make its first significant sales in the second half positioning the company to secure third party funding. See www.aberrosoftware.com for product details. • Geomerics (55% holding) has developed its patent protected radiosity product during the year. This provides rapid computation of light reflection and refraction in computer animation. The result is greater realism and dramatically improved visual quality of computer games. A demonstration can be seen on www.geomerics.com. The radiosity product was launched at the Game Developers Conference in San Francisco in March and the company is now in discussions with a range of potential customers, who are focused on the Sony, Microsoft and other major games platforms. • Kaloptics (100% holding) is commercialising technology from New York University and the University of Southern California that enables the rapid capture and recreation of photo-realistic surface images. The technology has a wide range of commercial applications in high value industries, including special effects, animation, computer gaming and medical devices. • NeuroTargets (25% holding) is developing therapeutics for pain and nerve injury in the areas of neuropathic and inflammatory pain. The company is operating on a low cost basis whilst options for its development are evaluated. • Novocellus (63% holding) has developed a diagnostic technology that enables the selection of the most viable pre-implantation human embryos for use in IVF treatment. This has the potential to improve the success of IVF rates by at least a third and facilitate the move to routine single embryo transfer, which is an objective of regulatory authorities and subject to considerable press comment at present. Novocellus is in discussions with a number of potential partners for completion of its clinical trials and launch of its product in the market. • Parsortix (68% holding) is developing its prenatal diagnostic device based on the isolation of foetal cells within maternal blood eliminating the need for invasive procedures such as amniocentesis. Large scale validation of the product is expected by the end of the calendar year and thereafter it is believed that FDA approval can be secured within six months enabling product launch by mid 2008. • Provexis (AIM:PXS) (20% holding) develops scientifically-proven functional and medical foods. It has a current market capitalisation of £9.9 million at the mid price. During the year Provexis has expanded sales of its heart health drink Sirco(R) to Tesco, Waitrose, Asda and Morrisons supermarkets. In April it completed a £2.1m fund raising, in which ANGLE invested £0.3 million, and announced a long-term collaboration agreement with Unilever plc to develop a new format of its patented Fruitflow(R) heart-health technology. See www.provexis.com for more information. • Synature (55% holding) launched its internet personalisation products during the year. The first commercial sale of product was made to a leading player in the package holidays market, who are using the product to make holiday recommendations to customers of their web site. The product is being expanded into the fast growing social networking market, which offers substantial growth at low investment. See www.synature.com for more information. The portfolio companies continue to have strong proprietary positions offeringthe potential for highly profitable products addressing major markets. ANGLEcontinues to work closely with the respective management teams that have beenput in place in each Progeny(R) company to manage the investments and minimiseany failures. Ongoing investment in the portfolio will be controlled with thirdparty investors being brought into portfolio companies as appropriate to managerisk and maximise ANGLE shareholder value. Enquiries:ANGLE plc 01483 295830Andrew Newland, Chief Executive Ian Griffiths, Finance Director Buchanan Communications 020 7466 5000Richard Darby, Suzanne Brocks, James Strong Notes to Editors Founded in 1994, ANGLE is an international venture management company focusingon the commercialisation of technology and the development of technology-basedindustry. ANGLE creates, develops and advises technology businesses on its ownbehalf and for its clients. ANGLE is listed on AIM (AGL.L); further informationcan be found on www.ANGLEplc.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Angle