Earnings Release • Aug 31, 2016
Earnings Release
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RNS Number : 4704I
Tekcapital plc
31 August 2016
("Tekcapital", the "Company" or the "Group")
Unaudited Half Year Results
Tekcapital plc (AIM: TEK), an international provider of technology and intellectual property services, announces its unaudited half year results for the six months ended 31 May 2016.
· Half year revenues were $247,262 (H1 2015: $287,488)
· Net loss increased to $997,174 (H1 2015: $659,936), due mainly to the expenses involved with the establishment and launch of Belluscura Ltd ("Belluscura")
· Cash and cash equivalents at period end of $1,937,595 (31 May 2015: $3,786,424)
· Net assets at period end of $3,157,254 (31 May 2015: $4,313,490)
The establishment of Belluscura:
· Post period end, Belluscura completed a private placement raising $1.5 million and issuing 2,500,000 shares. Tekcapital now owns 74.44% of the share capital of Belluscura. On the basis of this placement, the value of Tekcapital's equity in Belluscura is approximately $3.3 million. The Group's strategy is to rapidly grow Belluscura and explore further investment.
Acquisition of Vortechs Group:
· On 28 April 2016, the Group acquired certain assets and business from Vortechs Group, a leading technology transfer placement company in North America. This acquisition expands the range of the Group's business offerings and enables the sourcing of technology transfer professionals as well as new technologies for both corporate clients and university suppliers. The results for the period under review do not reflect any significant impact of the Vortechs Group business, as this acquisition occurred close to the end of the interim accounting period.
Further strengthening of the Group's portfolio of technologies for out-licensing, the Group acquired the exclusive license to, or acquisition of the following intellectual properties:
· The exclusive license to a patent application, entitled "Energy Harvesting from Constrained Buckling of Piezoelectric Beams" from the University of Michigan. After a successful pilot study conducted by the inventors the Group is moving forward with the fabrication and testing of prototype energy harvesting footwear for subsequent out-licensing.
· The exclusively licensed US patent application entitled "Saliva glucose measurement devices and methods" describes a safe, fast and non-invasive method and device to collect and sample glucose in saliva for both human and companion animals. The biosensor device allows trace saliva fluid samples from a biological surface to be obtained for electrochemical analysis and the subsequent detection of analytes using disposable biosensor strips. This commercialisation of this intellectual property patent is currently being progressed by Belluscura.
These 22 intellectual property acquisitions during the reporting period have added to the Group's existing portfolio, which currently numbers 51 patents and applications that the Group has either exclusively licensed or acquired since January 2015.
| Tekcapital Plc Clifford M. Gross, Ph. D., Executive Chairman |
+1 305 200 3450 Ext 305 [email protected] |
| Allenby Capital Limited (NOMAD & Broker) | +44 (0) 20 3394 2972 |
| Jeremy Porter / Alex Brearley / Richard Short | |
| Optiva Securities Limited (Joint-Broker) | +44 (0) 20 3137 1904 |
| Jeremy King / Vishal Balasingham | [email protected] |
| Walbrook PR Limited | +44 (0) 20 7933 8780 |
| Paul Cornelius / Paul McManus / Helen Cresswell | [email protected] |
About Tekcapital plc - The World's Largest University Network for Open Innovation
Tekcapital helps clients profit from new, university-developed intellectual properties. With our proprietary discovery search engine, linked to 4,000+ universities in 160 countries, coupled with expert scientific review, we provide a turn-key service to makes it easy for clients to find and acquire university IP, analyse the market potential and engage the technology transfer professionals they need to create a competitive advantage. Tekcapital plc is listed on the AIM market of the London Stock Exchange (AIM: symbol TEK) and is headquartered in Oxford, in the UK. For more information, please visit www.tekcapital.com
Our strategy is to scale Tekcapital's business to a position that enables us to provide our service offerings to a wide range of clients around the world, with an initial concentration on the US and UK markets.
We have also focused on adding additional services, either organically or through acquisitions, with the aim of enabling the Group to assist its clients in further determining and realising value from IP through the transformative innovations that they represent.
We have successfully expanded our service offerings with the acquisition of certain of the assets and the business of the Vortechs Group that is also expected to contribute to growth in subsequent periods.
Our technology acquisition and out licensing services leverage our core competencies and have enabled Tekcapital to acquire the rights to an additional 22 intellectual properties during the period under review resulting in a total of 51 exclusive intellectual property licenses or acquisitions since January 2015. These acquisitions have been across a diverse range of application areas including:
· wearable optical displays;
· non-invasive glucose monitoring for diabetics;
· improved food processes to enhance the nutritional content of widely-consumed foods;
· portable energy harvesting to power mobile electronics from everyday human movement;
· improved air conditioning efficiency using advanced aeronautical designs; and
· proprietary medical devices.
All of these technology rights have been acquired for either cash or equity in Tekcapital and potentially present significant up-side potential to shareholder value if successfully commercialised. The goal of the Group is to out-license this IP portfolio to major manufacturers, to empower clients to create a competitive advantage from the advancement these technologies can deliver.
Administrative expenses have increased by approximately $256,000 from the prior, year largely as a result of the non-recurring costs involved with the establishment of Belluscura. This new subsidiary, which has its own management team, acquired three exclusive licenses for proprietary medical devices and commenced operations towards the end of the period.
Our start-up investment related to the establishment and launching of Belluscura has resulted in the majority of the increase in the net loss for the period compared to the same period in the prior year. However, based on our recently completed private placement in Belluscura, we believe this investment should lead to a significant increase in the Group's net assets in 2017.
Cash and cash equivalents at the end of the period stood at $1.94 million (FY 2015: $3.14 million), with net assets of the expanded Group at $3.18 million (FY 2015: $3.72 million).
As an entrepreneurial Group, Tekcapital's year to date has been focused on the establishment of Belluscura and the acquisition of the Vortechs Group business, along with the other progress described in this report. By the end of the year (November 2016) we expect to make significant out-license progress, recognise the benefits of the integration of the Vortechs Group business and report progress from our Belluscura investment. We are dedicated and excited to continue the development and commercialization of our IP portfolio investments as well as with the expansion of our market footprint over the coming months. In a market place of such huge unrealised potential, we will remain focused on making prudent investments in intellectual properties for mid and long-term harvest.
Dr. Clifford Gross
Executive Chairman
| Notes | Six months ended 31 May 2016 | Six months ended 31 May 2015 | Year ended 30 November 2015 | |
| Unaudited | Unaudited | Audited | ||
| $ | $ | $ | ||
| Revenue | 247,262 | 287,488 | 407,420 | |
| Cost of sales | - | - | - | |
| Gross profit | 247,262 | 287,488 | 407,420 | |
| Foreign exchange movements | - | (95) | - | |
| Other administrative expenses | (1,244,749) | (947,352) | (1,868,124) | |
| Operating loss | (997,487) | (659,959) | (1,460,704) | |
| Finance income | 313 | 23 | 709 | |
| Loss before taxation | (997,174) | (659,936) | (1,459,995) | |
| Income tax expense | 3 | - | - | (820) |
| Loss after taxation | (997,174) | (659,936) | (1,460,815) | |
| Attributable to : | ||||
| Equity holders of the parent | (990,204) | (659,936) | (1,460,815) | |
| Non-controlling interests | (6,970) | - | - | |
| (997,174) | (659,936) | (1,460,815) | ||
All amounts relate to continuing operations.
Unaudited consolidated statement of comprehensive income for the six month period ended 31 May 2016
| Notes | Six months ended 31 May 2016 | Six months ended 31 May 2015 | Year ended 30 November 2015 | ||
| Unaudited | Unaudited | Audited | |||
| $ | $ | $ | |||
| Loss for the year | (997,174) | (659,936) | (1,460,815) | ||
| Other comprehensive income | |||||
| Currency translation difference | (4,966) | (37,290) | 47,851 | ||
| Other comprehensive income | (4,966) | (37,290) | 47,851 | ||
| Total comprehensive income | (1,002,140) | (697,226) | (1,412,964) | ||
| Attributable to : | |||||
| Equity holders of the parent | (995,170) | (697,226) | (1,412,964) | ||
| Non-controlling interests | (6,970) | - | - | ||
| (1,002,140) | (697,226) | (1,412,964) | |||
| Basic and diluted loss per share ($): | 4 | (0.028) | (0.03) | (0.049) | |
| Notes | As at 31 May 2016 | As at 31 May 2015 | As at 30 November 2015 | |
| Unaudited | Unaudited | Audited | ||
| US$ | US$ | US$ | ||
| Assets | ||||
| Non-current assets | ||||
| Intangible assets | 5 | 1,387,470 | 523,244 | 708,577 |
| Property, plant and equipment | 60,475 | 4,130 | 7,920 | |
| 1,447,945 | 527,374 | 716,497 | ||
| Current assets | ||||
| Trade and other receivables | 134,138 | 188,717 | 105,955 | |
| Cash and cash equivalents | 1,937,595 | 3,786,424 | 3,139,246 | |
| 2,071,733 | 3,975,141 | 3,245,201 | ||
| Total assets | 3,519,678 | 4,502,515 | 3,961,698 | |
| Equity and liabilities | ||||
| Current liabilities | ||||
| Trade and other payables | 361,924 | 189,025 | 241,181 | |
| Current income tax liabilities | 500 | - | 1,300 | |
| Loans and borrowings | - | - | - | |
| Total liabilities | 362,424 | 189,025 | 242,481 | |
| Capital and reserves | ||||
| Share capital | 6 | 228,052 | 223,677 | 224,684 |
| Share premium | 6,377,383 | 5,896,007 | 5,980,751 | |
| Retained earnings | (3,421,560) | (1,734,025) | (2,461,900) | |
| Translation reserve | 42,885 | - | 47,851 | |
| Merger reserve | (72,169) | (72,169) | (72,169) | |
| Total equity attributable to equity holders of the parent | 3,154,591 | 4,313,490 | 3,719,217 | |
| Non-controlling interests | 2,663 | - | - | |
| Total equity and liabilities | 3,519,678 | 4,502,515 | 3,961,698 | |
| Notes | Six months ended 31 May 2016 | Six months ended 31 May 2015 | Year ended 30 November 2015 | |
| Unaudited | Unaudited | Audited | ||
| US$ | US$ | US$ | ||
| Cash flows from operating activities | ||||
| Loss before income tax | (997,174) | (659,936) | (1,459,995) | |
| Adjustments for: | ||||
| Depreciation | 2,071 | 1,870 | 3,057 | |
| Amortisation | 19,781 | 6,803 | 23,087 | |
| Share based payment expense | 36,577 | 2,779 | 38,493 | |
| Finance costs (net) | (313) | (23) | (709) | |
| Net foreign exchange difference | (4,966) | (47,488) | 47,851 | |
| Operating profit before working capital changes | (944,024) | (695,995) | (1,348,216) | |
| Changes in working capital: | ||||
| Increase in trade and other receivables | (28,183) | (98,150) | (15,387) | |
| Increase in trade and other payables | 120,750 | 88,973 | 141,129 | |
| Tax paid | (800) | (1,300) | (820) | |
| Net cash used in operating activities | (852,257) | (706,472) | (1,223,294) | |
| Cash flows from investing activities | ||||
| Acquisition of property, plant and equipment | (54,632) | (55) | (4,349) | |
| Disposals of property, plant and equipment | - | 419 | - | |
| Acquisition of intangible assets | (295,075) | - | (162,080) | |
| Interest received | 313 | 23 | 709 | |
| Net cash (used in)/from investing activities | (349,394) | 387 | (165,720) | |
| Cash flows from financing activities | ||||
| Proceeds from issuance of Ordinary Shares | - | 3,286,060 | 3,286,060 | |
| Costs of raising finance | - | (164,456) | (164,456) | |
| Proceeds from the exercise of warrants | - | - | 35,751 | |
| Net cash from financing activities | - | 3,121,604 | 3,157,355 | |
| Net increase in cash and cash equivalents | (1,201,651) | 2,415,519 | 1,768,341 | |
| Cash and cash equivalents at the beginning of the period | 3,139,246 | 1,370,905 | 1,370,905 | |
| Cash and cash equivalents at the end of the period | 1,937,595 | 3,786,424 | 3,139,246 |
During the period ended 31 May 2016 the Company's material non-cash transactions consisted of shares issued on acquisition of licences, as disclosed in note 5.
| Attributable to equity holders of the parent |
| Share capital | Share Premium | Translation Reserve | Merger Reserve | Retained Earnings | Total | Non-controlling interest | Total Equity | ||
| US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | ||
| Unaudited | |||||||||
| Balance at 1 December 2015 | 224,684 | 5,980,751 | 47,851 | (72,169) | (2,461,900) | 3,719,217 | - | 3,719,217 | |
| Comprehensive income | |||||||||
| Loss for the period | - | - | - | - | (990,204) | (990,204) | (6,970) | (997,174) | |
| Other comprehensive income | - | - | (4,966) | - | - | (4,966) | - | (4,966) | |
| Total comprehensive income for the period | - | - | (4,966) | - | (990,204) | (995,170) | (6,970) | (1,002,140) | |
| Share based payments | - | - | - | - | 36,577 | 36,577 | - | 36,577 | |
| Issue of ordinary shares | 3,368 | 396,632 | - | - | - | 400,000 | - | 400,000 | |
| New funds into non-controlling interest | - | - | - | - | - | - | 3,600 | 3,600 | |
| (Loss)/Gain arising from change in non-controlling interest | - | - | - | - | (6,033) | (6,033) | 6,033 | - | |
| Balance at 31 May 2016 | 228,052 | 6,377,383 | 42,885 | (72,169) | (3,421,560) | 3,154,591 | 2,663 | 3,157,254 | |
| Unaudited | |||||||||
| Balance at 1 December 2014 | 154,842 | 2,673,905 | - | (72,169) | (1,039,578) | 1,717,000 | - | 1,717,000 | |
| Issue of Ordinary Shares, net of issue costs | 68,835 | 3,222,102 | - | - | - | 3,290,937 | - | 3,290,937 | |
| Share based payments | - | - | - | - | 2,779 | 2,779 | - | 2,779 | |
| Comprehensive income | |||||||||
| Loss for the period | - | - | - | - | (659,936) | (659,936) | - | (659,936) | |
| Other comprehensive expense | |||||||||
| Currency translation differences | - | - | - | - | (37,290) | (37,290) | - | (37,290) | |
| Total comprehensive expense | - | - | - | - | (697,226) | (697,226) | - | (697,226) | |
| Balance at 31 May 2015 | 223,677 | 5,896,007 | - | (72,169) | (1,734,025) | 4,313,490 | - | 4,313,490 | |
| Audited | |||||||||
| Balance at 1 December 2014 | 154,842 | 2,673,905 | - | (72,169) | (1,039,578) | 1,717,000 | - | 1,717,000 | |
| Comprehensive income | |||||||||
| Loss for the period | - | - | - | - | (1,460,815) | (1,460,815) | - | (1,460,815) | |
| Other comprehensive income | - | - | 47,851 | - | - | 47,851 | - | 47,851 | |
| Total comprehensive income for the period | - | - | 47,851 | - | (1,460,815) | (1,412,964) | - | (1,412,964) | |
| Share based payments | - | - | - | - | 38,493 | 38,493 | - | 38,493 | |
| Issue of ordinary shares | 69,270 | 3,436,126 | - | - | - | 3,505,396 | - | 3,505396 | |
| Costs of share issue | - | (164,456) | - | - | - | (164,456) | - | (164,456) | |
| Warrants exercised | 572 | 35,176 | - | - | - | 35,748 | - | 35,748 | |
| Balance at 30 November 2015 | 224,684 | 5,980,751 | 47,851 | (72,169) | (2,461,900) | 3,719,217 | - | 3,719,217 | |
Share capital represents the amount subscribed for share capital at nominal value.
Share premium represents the amount subscribed for share capital in excess of nominal value and net of any issue costs.
The merger reverse relates to the share for share exchange undertaken by the Company with Tekcapital Europe Limited on 18 February 2014.
Accumulated losses represent all other net gains and losses and transactions with owners not recognised elsewhere.
Tekcapital PLC is a company incorporated in England and Wales and domiciled in the UK. The Company's registered office is at 5 Fleet Place, London, EC4M 7RD. The nature of the Company's operations and its principal activities are to act as the holding company of a group of companies engaged in international technology and intellectual property services provider.
The financial information for the six months ended 31 May 2016 set out in this interim financial information is unaudited and does not constitute statutory financial statements.
The interim condensed financial information has been presented in US Dollars ("$").
The principal accounting policies used in preparing the interim results are those the Group expects to apply in its financial statements for the year ending 30 November 2016.
No charge to taxation has arisen in the six month period ended 31 May 2016 (31 May 2015: $nil).
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of Ordinary Shares outstanding during the period.
In calculating the weighted average number of Ordinary Shares outstanding (the denominator of the earnings per share calculation) during the period in which the share transaction occurs:
· The number of Ordinary Shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted average number of Ordinary Shares of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement; and
· The number of Ordinary Shares outstanding from the acquisition date to the end of that period shall be the actual number of Ordinary Shares of the legal acquirer (the accounting acquiree) outstanding during the period.
The basic earnings per share for each comparative period before the acquisition date presented in the consolidated financial information following a share for share exchange shall be calculated by dividing:
· The profit or loss of the legal acquiree attributable to ordinary shareholders in each of those periods; by
· The legal acquiree's historical weighted average number of ordinary shares outstanding multiplied by the exchange ratio established in the acquisition agreement.
| Six months ended 31 May 2016 | Six months ended 31 May 2015 | Year ended 30 November 2015 | |
| US$ | US$ | US$ | |
| Losses attributable to equity holders of the Company ($) | (997,174) | (659,936) | (1,460,815) |
| Weighted average number of Ordinary Shares in issue: | |||
| Basic | 34,948,117 | 25,032,898 | 29,901,585 |
| Diluted | 34,948,117 | 25,032,898 | 29,901,585 |
| Basic loss per share ($) | (0.028) | (0.03) | (0.049) |
| Diluted loss per share ($) | (0.028) | (0.03) | (0.049) |
At 31 May 2016 and 31 May 2015 the Company had no dilutive financial instruments in place and therefore diluted earnings per share is the same as basic earnings per share.
| Purchased intangible assets | |||||
| Licenses US $ |
Website development US $ |
Vortechs US $ |
Invention Evaluator US $ |
Total US $ |
|
| Costs | |||||
| At 1 December 2014 | - | 33,306 | - | 320,550 | 353,856 |
| Additions during the period | 179,796 | - | - | - | 179,796 |
| At 31 May 2015 | 179,796 | 33,306 | - | 320,550 | 533,652 |
| At 1 December 2014 | - | 33,306 | - | 320,550 | 353,856 |
| Additions during the period | 378,228 | - | - | 3,185 | 381,413 |
| At 30 November 2015 | 378,228 | 33,306 | - | 323,735 | 735,269 |
| At 1 December 2015 | 378,228 | 33,306 | - | 323,735 | 735,269 |
| Additions during the period | 190,800 | - | 500,000 | 7,875 | 698,675 |
| At 31 May 2016 | 569,028 | 33,306 | 500,000 | 331,610 | 1,433,944 |
| Accumulated amortisation and impairment | |||||
| As 1 December 2014 | - | (3,605) | - | - | (3,605) |
| Amortisation for the period | (1,493) | (5,310) | - | - | (6,803) |
| At 31 May 2015 | (1,493) | (8,915) | - | - | (10,408) |
| As 1 December 2014 | - | (3,605) | - | - | (3,605) |
| Amortisation for the period | (12,467) | (10,620) | - | - | (23,087) |
| At 30 November 2015 | (12,467) | (14,225) | - | - | (26,692) |
| At 1 December 2015 | (12,467) | (14,225) | - | - | (26,692) |
| Amortisation for the period | (14,790) | (4,992) | - | - | (4,992) |
| At 31 May 2016 | (27,257) | (19,217) | - | - | (31,684) |
| Net book value | |||||
| At 31 May 2015 | 178,303 | 24,391 | - | 320,550 | 523,244 |
| At 30 November 2015 | 365,761 | 19,081 | - | 323,735 | 708,577 |
| At 31 May 2016 | 541,771 | 14,089 | 500,000 | 331,610 | 1,387,470 |
During the period the Group acquired certain assets and business for Vortechs Group Inc, a leading technology transfer executive search firm. The Company issued 577,868 new ordinary shares of 0.4 pence at an issue price of 47.5 pence and paid $100,000 cash as consideration for this acquisition.
The Company's ordinary shares are of £0.004 par value.
| Issued and fully paid | Shares | Share capital | Share premium | ||
| Number | US$ | US$ | |||
| Ordinary shares of £0.004 each | |||||
| At 1 December 2014 | 23,383,747 | 154,842 | 2,673,905 | ||
| Shares issued for the acquisition of Licenses | 544,792 | 3,114 | 166,219 | ||
| Shares issued in further public offering | 10,750,000 | 65,721 | 3,055,883 | ||
| As at 31 May 2015 | 34,678,539 | 223,677 | 5,896,007 | ||
| At 1 December 2014 | 23,383,747 | 154,842 | 2,673,905 | ||
| Shares issued for the acquisition of Licenses | 614,592 | 3,549 | 215,784 | ||
| Shares issued in further public offering | 10,750,000 | 65,721 | 3,055,883 | ||
| Shares issued on exercise of warrants | 95,000 | 572 | 35,179 | ||
| As at 30 November 2015 | 34,843,339 | 224,684 | 5,980,751 | ||
| At 1 December 2015 | 34,843,339 | 224,684 | 5,980,751 | ||
| Share issue (28 April 2016) | 577,868 | 3,368 | 396,632 | ||
| As at 31 May 2016 | 35,421,207 | 228,052 | 6,377,383 |
All of the Company's issued ordinary shares have full voting, dividend and capital distribution (including winding up) rights; they do not confer any rights of redemption. The Company does not hold any ordinary shares in treasury.
On 28 April 2016 the Company issued 577,868 Ordinary Shares for $400,000 on acquisition of certain assets and business of the Vortechs Group.
During the period the Company employed the services of MMM Consulting Ltd, a company of which Tekcapital's Finance Director Malcolm Groat is a director and minority shareholder. The fees paid were $10,444 (31 May 2015: $12,196). The balance outstanding at the end of period was $10,552 (31 May 2015: $Nil)
On 16 June 2016 Belluscura, a then 95% owned subsidiary of the Company, completed a private placement raising $1.5 million and issuing 2,500,000 shares. This placement has resulted in a dilution of the Group's ownership interest to 74.44%.
The interim results for the six months ended 31 May 2016 will be available on the Company's website at http://tekcapital.com/investors/.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
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