TIDMMSYS
RNS Number : 0309S
Microsaic Systems plc
28 September 2017
28 September 2017
Microsaic Systems plc
("Microsaic", "Microsaic Systems" or the "Company")
Interim Results and Management Update for the six months ended
30 June 2017
Microsaic Systems plc (AIM: MSYS), the developer of chip-based
mass spectrometry ("MS") instruments designed to improve the
efficiency of pharmaceutical R&D, announces its unaudited
interim results for the six months ended 30 June 2017 ("H1 2017")
and an update on trading since the period end.
Overview of Activities in H1 2017
-- Further improvements delivered to overall products and services, including:
o The world's first on-line desalting module for real-time
bioprocessing applications
o Mass-range extension enabling larger biomolecule detection
o Increased environmental robustness for point-of-use
applications
-- Refocused strategy on the bioprocessing market where point of
use MS has the potential to reduce analysis times
significantly:
o Validated a significant market opportunity with multiple
points of entry
o Product enhancements delivered to enable real-time analysis of
therapeutic proteins and other biologics
o Completed feasibility phase with a global partner in
bioprocessing which co-funded R&D
-- Difficult trading conditions in existing traditional markets for small molecule detection
o Revenue down to GBP0.13m in H1 2017 (H1 2016: GBP0.47m)
-- Streamlined organisation to maintain rigorous capital management:
o Operating expenses in H1 2017 of GBP1.56m down 16% over H1
2016 (GBP1.87m)
o Loss pre tax in H1 2017 is a 15% improvement over H1 2016
o Cash of GBP4.08m at 30 June 2017 (31 December 2016:
GBP5.73m)
-- Eric Yeatman appointed Interim Non-Executive Chairman
Post-Period end update
-- Appointment of Glenn Tracey as Chief Executive Officer ("CEO")
-- Completed development of new extended mass range product
offering, the 4500 MiD(R), and first delivery of units to
customers
-- H2 2017 revenues from instruments and consumables are
anticipated to be above H1 2017 based on current performance in
Q3.
Glenn Tracey, CEO commented:
"Following a strategic review, the Board of Microsaic began
implementing its revised life sciences strategy early in H1 2017,
which is currently focused on the application of its unique
miniaturised, point-of-analysis MS instruments for the detection of
therapeutic proteins and antibodies ("biologic molecules") in the
bioprocessing market.
"The Board sees significant opportunities for its MS instruments
to be integrated into the attractive area of bioprocessing, and for
diagnostics (disease biomarker detection) in the longer term. MS
has a critical role in providing the reliable characterisation
needed, and the high deployability and ease of use of Microsaic's
technology makes it ideal for these applications compared to
traditional instruments.
"Bioprocessing is a crucial stage in the production of biologic
drugs, and aims to ensure that they are produced and purified
correctly to retain the specific activity given their complex
structures, without introducing harmful substances or degrading the
biologic product. Point of use MS can be a very powerful tool in
this process and recent development initiatives in the application
of Microsaic's technology has demonstrated significant improvements
in bioprocessing workflows.
"The Board believes that Microsaic's technology is well placed
to exploit opportunities in life sciences and is very encouraged
with the progress made so far with one of our global partners,
hence we are committed to focusing technical and financial
resources on opportunities in bioprocessing."
Technological enhancements
The Company has a compelling product development pipeline in
support of its bioprocessing applications and in maintaining its
leading position in miniaturised MS instruments and technologies.
Such enhancements aim to further extend the mass range for
biologics detection, and introduce new capabilities, such as
on-line desalting, which allows for the purification of
biomolecules in real time. In doing so, analysis times can be
reduced from weeks to hours, which offers the potential for
significant savings in operational costs of bioprocessing.
The Company has also developed a working prototype of a
miniaturised "triple quadrupole" instrument, and is welcoming
interest from partners for further product development and channels
to market for this technology, in life science applications.
Traditional markets
The Company is committed to working with its current OEM
partners in small molecule detection. These partnerships provide
important insights about customer needs and technology
enhancements, as well as the capabilities and robustness of the
Company's MS instruments in a real-world environment. Although H1
2017 was a very challenging period for revenues we are pleased to
see these increasing again through continued close relationships
with our partners. H2 2017 revenues from instruments and
consumables are anticipated to be above H1 2017 based on current Q3
performance.
Board and Management Changes
Glenn Tracey was appointed as CEO in September, 2017 replacing
Jim Ramage, who retired as CEO and as a Board Member at the AGM in
May 2017. Mr Tracey previously held the post of Chief Operating
Officer since joining the Company in March 2015 and he was
appointed to the board in December 2015.
Mr Tracey has 20 years of experience in product marketing and
research and development, for both small and large companies in the
healthcare technology industry, including PerkinElmer where he was
central to the development, scale-up and commercialisation of
disruptive sensing and detection technologies across multiple
emerging application areas.
As previously announced, following the retirement of Colin
Nicholl, Eric Yeatman was appointed Interim Chairman, in January
2017.
FINANCIAL REVIEW
Comprehensive income:
In H1 2017, total revenues of GBP128,884 were 72.7% down on H1
2016 (H1 2016: GBP472,072). H1 2017 revenues have been impacted by
difficult trading conditions and therefore lower than expected unit
sales which were communicated to the market in a trading update on
19 June 2017. Consumable revenue and service income at GBP60,254
were in line with last year (H1 2016: GBP62,024). In recognition of
the limited potential in the application areas of small molecule
detection that the Company has historically focused on, the Company
is targeting its resources on high value opportunities in
bioprocessing.
Gross profit for the period of GBP50,007 is down on H1 2016 by
GBP122,021 or 70.9% reflecting the decline in revenues. The gross
margin percentage of 38.8% is above the 36.4% recorded last year,
mainly due to the higher proportion of consumable revenue and
service income in H1 2017, which attract a higher margin.
Other operating income during the period of GBP51,004 was
principally due to the amended collaboration agreement the Company
signed in April 2017 with a long standing global partner (H1 2016:
GBPNil).
Operating expenses were GBP1,562,664 in the period (H1 2016:
GBP1,868,900) down 16% over H1 2016. The fall in operating expenses
of GBP306,236 was mainly due to a cost reduction programme that was
introduced in Q1 2017 to address the reduction in revenues.
The loss for the period, before share-based payments, tax and
interest, was GBP1,461,653, an improvement of GBP235,219 or 13.9%
over last year (H1 2016: GBP1,696,872).
The comprehensive loss for the period of GBP1,477,060 (H1 2016:
GBP1,697,836) is 13.0% or a GBP220,776 improvement over last year.
This improvement was achieved through higher other operating income
and operating expense savings. The basic loss per share fell from
2.31p in H1 2016 to 0.81p in H1 2017.
Statement of Financial Position:
Total assets at GBP5,462,421 are GBP1,668,199 below 31 December
2016, mainly due to a lower cash balance, which is down
GBP1,649,761.
Total equity is GBP5,060,288 down GBP1,452,785 compared to 31
December 2016. The main movement since the year end has been in
retained earnings with the balance increasing to GBP16,151,397 due
to the comprehensive loss incurred in H1 2017 (GBP1,477,060) and
the transfer in respect of lapsed share options in H1 2017
(GBP72,143).
Total liabilities at GBP402,133 are GBP215,414 lower than at 31
December 2016. The reduction is due to lower trade and other
payables which are down GBP219,378 over the 2016 year-end
figure.
Statement of Cash Flows:
The comprehensive loss for the period was lower in H1 2017
compared with last year by GBP220,776, principally due to operating
expense savings which were partly off-set by a fall in gross
profit. However, after adjustments for non-cash items plus an
outflow on working capital, net cash used in operating activities
for H1 2017 of GBP1,623,043, is in line with H1 2016.
Net cash used in investing activities in H1 2017 of GBP26,718
compares with GBP22,889 in H1 2016. The main movement was in
interest received which was GBP3,572 lower in H1 2017.
The net decrease in cash and cash equivalents in H1 2017
amounted to GBP1,649,761 compared with a decrease for the same
period last year of GBP1,653,093. The closing cash balance at 30
June 2017 is GBP4,078,783.
OUTLOOK
The Board sees significant opportunities for its MS instruments
being integrated into multiple areas of bioprocessing, and for
diagnostics in the longer term.
The Company is transforming the way it operates. It has a vision
to help solve some of the major problems in human health. To do
this, the Company aims to work with global partners with similar
aspirations, which are prepared to co-fund R&D development
costs and ensure that new product opportunities are adequately
validated so they meet customer needs.
The Company expects its full year 2017 revenue to be
significantly lower than 2016. The shortfall in revenue is expected
to be off-set by lower overheads as a result of cost reduction
plans implemented in H1 2017 and that the full year loss before tax
will be broadly in line with 2016. Progress has been made in
addressing the difficult trading conditions and H2 2017 revenues
are anticipated to be above H1 2017 based on current Q3
performance.
This announcement is released by Microsaic Systems plc and
contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 ("MAR"), encompassing
information relating to the trading update described herein, and is
disclosed in accordance with the Company's obligations under
Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by Bevan Metcalf, Finance Director.
Enquiries:
Microsaic Systems plc
Glenn Tracey, CEO
Bevan Metcalf, FD +44 (0) 1483 751577
N+1 Singer (Nominated Adviser
& Broker)
Shaun Dobson
Liz Yong +44 (0)20 7496 3000
Citigate Dewe Rogerson
(Financial PR)
Mark Swallow
Shabnam Bashir +44 (0)20 7638 9571
Cautionary Statement
This presentation contains forward-looking statements regarding
the Company's plans, expectations, estimates and beliefs.
Forward-looking statements are typically identified by words such
as "believes", "anticipates", "intends", "will", "may" and other
similar expressions. These forward-looking statements may include,
among other things, projections of the Company's financial
performance, anticipated growth, characterization of and the
Company's ability to control contingent liabilities, and
anticipated trends in the Company's businesses. These statements
are only predictions, based on the Company's current expectation
about future events. Although the Company believes the expectations
reflected in the forward-looking statements are reasonable, it
cannot guarantee future results performance or achievements or that
predictions or current expectations will be accurate. These
forward-looking statements involve risks and uncertainties.
About Microsaic Systems
Microsaic Systems plc (AIM: MSYS) is a high technology company
developing chip-based, bench-top and point-of-analysis mass
spectrometry ("MS") instruments that are designed to improve the
efficiency of pharmaceutical R&D. The Company is working with
established global life science companies to co-develop new
solutions to improve productivity in the development of small
molecule and novel biologic (peptides, antibodies) medicines. MS is
a powerful method of analysis to enable earlier decision making
relating to product identification, purity and bioactivity, and is
the analytical technique of choice for biochemists across many
industry sectors.
Microsaic's core product, the 4000 MiD(R), is one of the
smallest MS systems in the world, retaining the functionality of
larger conventional MS systems, is easier to use by
non-specialists, consumes less energy and has lower running costs.
For more information, please go to www.microsaic.com.
STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
FOR THE SIX MONTHSED 30 JUNE 2017
6 months 6 months Year
to 30 to 30 to 31
June June December
2017 2016 2016
Notes Unaudited Unaudited Audited
GBP GBP GBP
------------------------------------ ------ --------------- --------------- ------------
Revenue 6 128,884 472,072 851,180
Cost of sales (78,877) (300,044) (549,179)
------------------------------------ ------ --------------- --------------- ------------
Gross profit 50,007 172,028 302,001
Other operating income 51,004 - 55,941
Other Operating expenses (1,562,664) (1,868,900) (3,666,315)
Loss from operations before
share based payments (1,461,653) (1,696,872) (3,308,373)
Share based payments (24,275) (51,069) (109,963)
Loss from operations after
share based payments (1,485,928) (1,747,941) (3,418,336)
------------------------------------ ------ --------------- --------------- ------------
Finance income 8,868 8,996 12,532
------------------------------------ ------ --------------- --------------- ------------
Loss before tax (1,477,060) (1,738,945) (3,405,804)
Tax on loss on ordinary activities - 41,109 303,819
------------------------------------ ------ --------------- --------------- ------------
Total comprehensive loss for
the period (1,477,060) (1,697,836) (3,101,985)
------------------------------------ ------ --------------- --------------- ------------
Loss per share attributable
to the equity holders of the
Company
Basic and diluted loss per
ordinary share 4 (0.81)p (2.31)p (2.93)p
------------------------------------ ------ --------------- --------------- ------------
STATEMENT OF FINANCIAL POSITION (UNAUDITED)
AS AT 30 JUNE 2017
30 June 30 June 31
December
2017 2016 2016
Notes Unaudited Unaudited Audited
GBP GBP GBP
----------------------------- ------ ------------- ------------- -------------
ASSETS
Non-current assets
Intangible assets 75,040 93,056 84,377
Property, plant and
equipment 160,757 137,968 196,970
Total non-current
assets 235,797 231,024 281,347
----------------------------- ------ ------------- ------------- -------------
Current assets
Inventories 638,959 647,738 694,288
Trade and other receivables 246,172 440,753 163,731
Corporation tax receivable 262,710 308,484 262,710
Cash and cash equivalents 4,078,783 1,954,498 5,728,544
Total current assets 5,226,624 3,351,473 6,849,273
----------------------------- ------ ------------- ------------- -------------
TOTAL ASSETS 5,462,421 3,582,497 7,130,620
----------------------------- ------ ------------- ------------- -------------
EQUITY AND LIABILITIES
Equity
Share capital 5 453,413 183,413 453,413
Share premium 20,504,071 15,714,258 20,504,071
Share based payment
reserve 254,201 243,173 302,069
Retained earnings (16,151,397) (13,342,329) (14,746,480)
Total Equity 5,060,288 2,798,515 6,513,073
----------------------------- ------ ------------- ------------- -------------
Current liabilities
Trade and other payables 208,364 583,632 427,742
Non-Current liabilities
Provisions 193,769 200,350 189,805
Total liabilities 402,133 783,982 617,547
----------------------------- ------ ------------- ------------- -------------
TOTAL EQUITY AND
LIABILITIES 5,462,421 3,582,497 7,130,620
----------------------------- ------ ------------- ------------- -------------
STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
AS AT 30 JUNE 2017
Share
Share Share Based Retained Total
payment
capital premium reserve Earnings equity
GBP GBP GBP GBP GBP
---------------------------- -------- ----------- ---------------- ------------- --------------
At 1 January 2016 183,413 15,714,258 445,258 (11,897,647) 4,445,282
Total comprehensive
loss for the period - - - (1,697,836) (1,697,836)
Transactions with owners:
Transfer in respect
of lapsed share options - - (253,154) 253,154 -
Share based payments-share
options - - 51,069 - 51,069
At 30 June 2016 183,413 15,714,258 243,173 (13,342,329) 2,798,515
----------------------------- -------- ----------- ---------------- ------------- --------------
Total comprehensive
loss for the period - - 2 (1,404,151) (1,404,149)
Transactions with owners:
Shares issued 270,000 5,130,000 - - 5,400,000
Share issue costs - (340,187) - - (340,187)
Transfer in respect - - - - -
of lapsed share options
Share based payments-share
options - - 58,894 - 58,894
At 31 December 2016 453,413 20,504,071 302,069 (14,746,480) 6,513,073
----------------------------- -------- ----------- ---------------- ------------- --------------
Total comprehensive
loss for the period - - - (1,477,060) (1,477,060)
Transactions with owners:
Transfer in respect
of lapsed share options - - (72,143) 72,143 -
Share based payments-share
options - - 24,275 - 24,275
At 30 June 2017 453,413 20,504,071 254,201 (16,151,397) 5,060,288
----------------------------- -------- ----------- ---------------- ------------- --------------
STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHSED 30 JUNE 2017
6 months 6 months Year
to 30 to 30 to 31
June June December
2017 2016 2016
Unaudited Unaudited Audited
GBP GBP GBP
----------------------------------------- ---------------- ---------------- ------------
Total comprehensive loss
for the period (1,477,060) (1,697,836) (3,101,985)
Amortisation of intangible
assets 21,270 20,738 41,509
Depreciation of property,
plant and equipment 56,473 57,669 109,419
Loss on disposal of intangibles - - 2,029
Profit on disposal of property,
plant and equipment (50) - (1,288)
Provision for leasehold dilapidations 3,964 22,093 16,779
Provision for warranty - 33,000 27,769
Provision for bad and doubtful
debts - (1,989) (1,989)
Share based payments 24,275 51,069 109,963
General inventory provision - 30,654 (25,000)
Tax on loss on ordinary activities - (41,110) (303,819)
Interest received (5,424) (8,996) (12,532)
Decrease/(Increase) in inventories 55,329 (78,124) (69,020)
(Increase)/Decrease in trade
and other receivables (82,441) 6,981 284,003
Decrease in trade and other
payables (219,379) (24,353) (180,243)
----------------------------------------- ---------------- ---------------- ------------
Cash used in operations (1,623,043) (1,630,204) (3,104,405)
Taxation received - - 308,483
Net cash used in operating
activities (1,623,043) (1,630,204) (2,795,922)
----------------------------------------- ---------------- ---------------- ------------
Cash flows from investing
activities
Purchases of intangible assets (11,933) (11,489) (25,611)
Purchases of property, plant
and equipment (20,259) (20,396) (131,359)
Proceeds from sale of property,
plant and equipment 50 - 1,500
Interest received 5,424 8,996 12,532
Net cash used in investing
activities (26,718) (22,889) (142,938)
----------------------------------------- ---------------- ---------------- ------------
Cash flows from financing
activities
Proceeds from share issues - - 5,400,000
Share issue costs - - (340,187)
Net cash from financing activities - - 5,059,813
----------------------------------------- ---------------- ---------------- ------------
Net (decrease)/increase in
cash and cash equivalents (1,649,761) (1,653,093) 2,120,953
Cash and cash equivalents
at beginning of the year 5,728,544 3,607,591 3,607,591
Cash and cash equivalents
at the end of the period 4,078,783 1,954,498 5,728,544
----------------------------------------- ---------------- ---------------- ------------
NOTES TO THE INTERIM FINANCIAL INFORMATION (UNAUDITED)
1. Nature of Operations
Microsaic Systems plc (the "Company") is registered in England
and Wales. The Company's registered office is GMS House, Boundary
Road, Woking, GU21 5BX. The Company has no subsidiaries so the
financial information relates to the Company only. Microsaic is a
high technology company developing chip-based, bench-top MS
instruments that are designed to improve the efficiency of
pharmaceutical R&D.
2. General Information
The interim financial information has been prepared on the basis
of the recognition and measurement requirements of International
Financial Reporting Standards (IFRS) as adopted by the European
Union (EU) and implemented in the UK. The accounting policies,
methods of computation and presentation used in the preparation of
the interim financial information are the same as those used in the
Company's audited financial statements for the year ended 31
December 2016.
The interim financial information in this statement does not
constitute full statutory accounts as defined by Section 434 of the
Companies Act 2006 and has not been audited.
The interim financial information for the six months to 30 June
2017 has been prepared using extracts from the financial statements
prepared for the year ended 31 December 2016. Those financial
statements have been filed with the Registrar of Companies. The
auditor's report on those financial statements was unqualified.
3. Basis of preparation
The financial statements are presented in GB Pounds Sterling.
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.
The financial information has been prepared on a going concern
basis, as the directors consider that, the Company based on its
latest forecasts has sufficient resources to continue operations
for at least the next 12 months.
4. Loss per share
6 months
to 30 12 months
6 months June to 31
to 30 June 2016 Dec 2016
2017 Unaudited Unaudited Audited
Comprehensive loss attributable
to equity shareholders (1,477,060) (1,697,836) (3,101,985)
Weighted average number
of 0.25p ordinary shares
for the purpose of basic
and diluted loss per
share 181,365,146 73,365,146 105,824,162
Basic and diluted loss
per share (0.81)p (2.31)p (2.93)p
--------------------------------- ------------------ -------------- -------------
NOTES TO THE INTERIM FINANCIAL INFORMATION (UNAUDITED)
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.
5. Called up share capital
30 June 30 June 31 Dec
2017 2016 2016
Unaudited Unaudited Audited
GBP GBP GBP
Allotted, issued and
fully paid
Ordinary shares of 1p
each 453,413 183,413 453,413
The number of shares in issue was as follows:
Number
of shares
Balance at 1 January 2016 73,365,146
Issued during the period -
------------
Balance at 30 June 2016 73,365,146
Issued during the period 108,000,000
------------
Balance at 31 December 2016 181,365,146
Issued during the period -
------------
Balance at 30 June 2017 181,365,146
------------
6. Segmental reporting
Throughout the period the Company operated in one business
segment, that of research, development and commercialisation of
scientific instruments. All of the Company's assets are held in the
UK and all of its capital expenditure arises in the UK. The
geographical analysis of revenue was as follows:
6 months 6 months 12 months
to 30 to 30 to 31
June June Dec 2016
2017 2016 Audited
Unaudited Unaudited
GBP GBP GBP
-------- ----------- ----------- ----------
UK 6,282 7,412 12,347
Non-UK 122,602 464,660 838,833
-------- ----------- ----------- ----------
128,884 472,072 851,180
-------- ----------- ----------- ----------
A further breakdown of the non-UK revenue is not possible due to
the nature of the sales via OEM's which are then distributed
globally. One customer represented 58% of total revenue in the
period (H1 2016: 50%).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKODQCBKDDCB
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