RNS Number:2529W
Galileo Innovation PLC
22 May 2002
Press Release 22 May 2002
Galileo Innovation plc
Interim Results for the six months ended 31 March 2002
Galileo Innovation plc, the Cheshire-based business accelerator, today reports
its maiden interim results for the six months to 31 March 2002.
Highlights
• successful admission to the Alternative Investment Market raising £5.2
million in February 2002
• pre-tax loss of £181,687 in line with Board's expectations and budgets
• strong cash position of £5.27 million
• terms agreed on new investment -Scientific Detectors Ltd
• Fluid Conditioning Systems (first investment) appoints John Kempster,
ex-MD of Rolls-Royce Power Engineering plc
Commenting on the Results, Martin Varley, Chief Executive of Galileo Innovation
plc, said:
"Since our recent Admission to AIM the Company has progressed well. Galileo
has already seen a number of excellent investment opportunities and we have
recently agreed terms with Scientific Detectors Limited, a company that offers
High Performance Liquid Chromatography equipment in the pharmaceutical, food
manufacturing and environmental monitoring sectors.
"MagnomTM the key product of FCS Limited is on target and we are delighted to
welcome John Kempster, as non-executive Chairman. John brings with him a wealth
of industry knowledge and experience and will play a key role in our forward
strategy for the development of the MagnomTM. Galileo's strategy is to identify
products or inventions that have defensible intellectual property rights and a
potential market valuation of £50 million. At present we are extremely
comfortable with the availability of a substantial deal flow and we believe the
Company is well positioned for significant future growth."
- Ends -
For further information, please contact:
Galileo Innovation plc
Martin Varley, Chief Executive Tel: + 44 (0) 1625 538 100
Email: martin.varley@galileoinnovation.co.uk www.galileoinnovation.co.uk
Media Enquiries:
Bankside Consultants Limited
Henry Harrison-Topham / Heather Salmond Tel: +44 (0) 20 7444 4140
Email: henry.ht@bankside.com
- Ends -
Chairman's Statement
The Interim Results of Galileo Innovation Plc for the six months to 31 March
2002 are the Company's maiden set of results since the successful Placing and
Admission to trading on the Alternative Investment Market (AIM) of the London
Stock Exchange in February 2002, which raised £5.2 million net of expenses.
The Company's strategy is to identify products or inventions that have
defensible intellectual property rights (IPR) and a potential market valuation
of £50 million pounds. Following the decision to invest, Galileo will take a
majority stake in a new company established to develop and commercialise the
product. Once Galileo has developed the business, it has benefited from
investment in management and financial resource and has a produced a
comprehensive business plan, an exit will be sought either by flotation or trade
sale.
In the short time since the flotation much progress has been made in a number of
areas.
We are encouraged by the increasingly positive reaction to MagnomTM, the key
product of Fluid Conditioning Systems Ltd ("FCS"), which is our first
investment. The FCS management team has been strengthened by the recent
appointment of John Kempster as Chairman and interim CEO, previously Managing
Director of the Energy business at Rolls-Royce Power Engineering plc, and also,
of Dr Ted Smith recently appointed as a Non-Executive Director, previously The
Dean of Engineering at Coventry University and a Professor in Tribology the
study of friction, lubrication, and wear We have also added sales resources and
are finalising a number of other key appointments which I hope to update you on
shortly.
Independent verification of the MagnomTM opportunity within the filtration
market has encouraged us to initially target segments totalling $2.80 billion of
annual spend out of an addressable market of $11.5 billion globally. We are
currently in discussion with a number of major distributors that have shown
great interest in the product, and have reviewed the supply chain to ensure
margins are comfortable and supply routes robust.
We have agreed terms on a brand new investment, Scientific Detectors Ltd, (SDL)
which are subject to contract and SDL shareholder approval. This agreement will
culminate in Galileo being a major shareholder of a specialist company in high
performance liquid chromatography instrumentation. Global sales in this market
are estimated at $400 million growing by 10-12% a year, and the Board feels
confident that a significant sales opportunity can be realised due to the unique
attributes of their key product, the Unimas201 HPLC detector. We are encouraged
to note that a significant number of enquiries have already been received from
market leading companies in the Pharmaceutical, Food manufacturing and
Environmental Monitoring sectors.
Results
The unaudited results for the half-year are in line with the Board's
expectations and budgets as detailed in the Company's AIM Admission Document
dated February 2002. Losses for the six months were £181,687. Revenues were
£280,203 consisting primarily of fees charged for the provision of management
services.
Bank balances at the end of March 2002 were £5.27 million, in line with budget.
These funds provide a secure financial base for the Company to continue its
funding of the Fluid Conditioning Systems business, the development of
Scientific Detectors Ltd and for future investments.
In line with the policy set out in the placing document, the Board is not
declaring an interim dividend.
Future
The Company has a unique business model that is focussed on identifying and
commercially exploiting Intellectual Property relating to tangible products
primarily in the engineering sector.
A number of opportunities are at various stages of negotiation, and we are
extremely comfortable that a substantial deal flow is available to us such that
we can continue to select only the very best of investments.
I expect to be able to confirm details of further opportunities in the near
future.
Angus Monro
Chairman
22 May 2002
PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDING 31 MARCH 2002
Acquisitions Continuing Total
Unaudited Unaudited Unaudited
period ended period ended period
31 March 2002 31 March ended
2002 31 March
2002
£ £ £
TURNOVER 5,203 275,000 280,203
Cost of sales (64) - (64)
GROSS PROFIT 5,139 275,000 280,139
Administrative expenses (73,180) (382,430) (455,610)
Distribution expenses (5,313) (29,705) (35,018)
OPERATING LOSS (73,354) (137,135) (210,489)
Interest receivable and similar income - 30,096 30,096
Interest payable and similar charges - (1,294) (1,294)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (73,354) (108,333) (181,687)
Tax loss on ordinary activities - - -
LOSS ON ORDINARY ACTIVITIES (73,354) (108,333) (181,687)
Dividends - - -
LOSS TRANSFERRED TO RESERVES (73,354) (108,333) (181,687)
LOSS PER SHARE, BASIC AND DILUTED (PENCE) (1.49)
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2002
Unaudited 31
March 2002
£
FIXED ASSETS
Tangible assets 52,779
CURRENT ASSETS
Stock 10,009
Debtors 169,835
Cash at bank and in hand 5,272,881
5,452,725
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (349,827)
NET CURRENT ASSETS 5,102,898
NET ASSETS 5,155,677
CAPITAL AND RESERVES
Called up share capital 87,500
Share premium account 5,249,864
Profit and loss accounts (181,687)
TOTAL EQUITY SHAREHOLDERS' FUNDS 5,155,677
CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDING 31 MARCH 2002
Unaudited
31 March
2002
£
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (76,045)
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest paid (1,294)
Interest received 30,096
Net cash inflow from returns on investments and servicing of finance 28,802
TAXATION -
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (23,915)
Net cash outflow from capital expenditure and financial investment (23,915)
EQUITY DIVIDENDS PAID -
CASH OUTFLOW BEFORE FINANCING (71,158)
FINANCING
Proceeds of share issue - net of issue costs 5,344,039
MANAGEMENT OF LIQUID RESOURCES
Increase in term deposits (5,000,000)
INCREASE IN CASH AND CASH EQUIVALENTS 272,881
NOTES TO THE FINANCIAL INFORMATION FOR THE PERIOD ENDING 31 MARCH 2002
1. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
Period ending
31 March
2002
£
Operating loss (210,489)
Depreciation charged 7,440
Increase in stocks (10,009)
Increase in debtors (169,835)
Increase in creditors 306,848
Net cash outflow from operating activities (76,045)
2. RECONCILIATION OF NET CASH INFLOW TO MOVEMENT IN NET FUNDS
Period ending
31 March
2002
£
Increase in cash in the period 272,881
Increase in short term deposits 5,000,000
Net funds at beginning of period -
Net funds at end of period (note 3) 5,272,881
3. ANALYSIS OF CHANGE IN NET FUNDS
At
On 31 March
incorporation Cash flow 2002
£ £ £
Cash at bank and in hand - 272,881 272,881
- 272,881 272,881
Short term deposits* - 5,000,000 5,000,000
Net funds (note 2) - 5,272,881 5,272,881
* Short term deposits are included within cash at bank and in hand
4. RECONCILIATION OF MOVEMENT IN EQUITY SHARHOLDERS' FUNDS
31 March
2002
£
Loss for the financial period (181,687)
Issue of shares, net of share issue costs 5,337,364
Net addition to equity shareholders' funds 5,155,677
Opening equity shareholders' funds -
Closing equity shareholders' funds 5,155,677
5. STATEMENT OF MOVEMENTS IN RESERVES
Share
premium
Profit & loss account
account £ Total
£ £
On incorporation - - -
Loss for the financial period (181,687) - (181,687)
Premium on issues of shares - 5,962,500 5,962,500
Issue costs - (712,636) (712,636)
At 31 March 2002 (181,687) 5,249,864 5,068,177
6. SEGMENTAL INFORMATION
The turnover and results for the period are derived entirely from the group's
principle activity carried out within the United Kingdom.
The principal activity of the group is that of a business accelerator.
7. RELATED PARTY TRANSACTIONS
During the period the company charged £250,000 for consultancy services provided
to Cyprotex plc for services provided in relation to that company's AIM
admission. In addition £10,000 was charged for management services provided to
Cyprotex plc. Of the total charged of £265,000 an amount of was £11,750 was
outstanding at 31 March 2002. Cyprotex plc is a related company by virtue of
certain common directors and shareholders.
During the period the company charged £15,000 for management services to
Sense-Sonic Limited. Of the amount charged, £11,750 was outstanding at 31 March
2002. Sense-Sonic Limited is a related company by virtue of certain common
directors and shareholders.
During the period the company was charged £23,687 for various shared office and
common secretariat costs by Oystertec plc, a company related by virtue of
certain common directors and shareholders. At 31 March 2002 an amount of £2,815
was owed to Oystertec plc.
During the period the company was charged £6,300 for consultancy services
provided by J Marlowe, a director of the subsidiary Fluid Conditioning Systems
Limited under the terms of a consultancy agreement. The full amount was paid
during the period.
On 28 January 2002 the company acquired 57,500 ordinary shares of 1 penny each
in Fluid Conditioning Systems Limited. This represented 57.5% of the issued
ordinary share capital of that company. Some of the shares acquired were
purchased from certain directors of Galileo Innovation plc. The ordinary shares
acquired and the amounts owed by the company were as follows:
Name Number of shares £
R W Long 8,217 82
A Monro 16,424 164
M R Varley 8,217 82
M C Warburton 8,217 82
8. ACCOUNTING CONVENTION AND POLICIES
Accounting convention and policies
The period covered by this report is the first period since incorporation on 14
September 2001. The following accounting policies are those which are
considered relevant to this report that have been adopted in preparing this
financial information. These policies, amongst others will be applied in
preparing the financial statements for the period from incorporation to 30
September 2002.
Basis of accounting
The financial information has been prepared in accordance with the historical
cost convention and applicable accounting standards.
Consolidation
The group accounts consolidate the accounts of Galileo Innovation plc and its
subsidiary undertakings drawn up to 30 September each year. The results of
subsidiaries acquired or sold are consolidated for the periods from or to the
date on which control passed. Acquisitions are accounted for under the
acquisition method of accounting.
Goodwill
Goodwill arising on acquisitions is capitalised as asset on the balance sheet
and amortised on a straight line basis over its useful economic life up to a
presumed maximum 20 years. It is reviewed for impairment at the end of its full
financial year following the acquisition and in other periods if events or
changes on circumstance indicate that the carrying value may not be recoverable.
Negative goodwill is allocated across the non monetary assets acquired and
charged to the profit and loss account as the assets are consumed, through
operation and or sale.
Tangible fixed assets
The cost of tangible fixed assets is their purchase cost, together with any
incidental costs of acquisition.
Depreciation is calculated so as to write off the cost of tangible fixed assets,
less their estimated residual values, on a straight-line basis over the expected
useful economic lives of the assets concerned. The principal annual rates used
for this purpose are:
Leasehold improvements Over the duration of the lease
Furniture, fixtures and fittings 20%
Computer equipment 33.3%
Stocks
Stocks are stated at the lower of cost and net realisable value. Cost includes
all costs incurred in bringing each product to its present location and
condition, as follows:
Raw materials, consumables and goods for resale purchase cost on a first-in first out basis.
Work in progress and finished goods cost of direct materials and labour plus attributable
overheads based on a normal level of activity.
Net realisable value is based on estimated selling price less any further costs
expected to be incurred to completion and disposal.
Financial instruments
The group has a policy of not entering into speculative derivative contracts.
Income and expenditure arising on financial instruments is recognised on the
accruals basis with all income and expenses taken to the profit and loss account
in the financial period to which it relates.
Intangible fixed assets
Intellectual property rights and patent rights acquired separately from a
business are capitalised at cost and amortised on a straight line basis over
their estimated useful lives up to a maximum of 20 years. The carrying value of
intangible fixed assets is reviewed for impairment at the end of the first full
year following acquisition and in other periods if events or changes in
circumstances indicate the carrying value may not be recoverable.
Intangible assets, excluding development costs, created within the business are
not capitalised and expenditure is charged against profits in the year in which
it is incurred.
Research and development
Research and development expenditure is written off as incurred, except that
development expenditure incurred on an individual project is carried forward
when its future recoverability can reasonably be regarded as assured. Any
expenditure carried forward is amortised in line with the expected future sales
from the related project.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay more,
or a right to pay less or to receive more, tax, with the following exceptions:
• provision is made for tax on gains arising from the revaluation (and
similar fair value adjustments) of fixed assets, and gains on disposal of fixed
assets that have been rolled over into replacement assets, only to the extent
that, at the balance sheet date, there is a binding agreement to dispose of the
assets concerned. However, no provision is made where, on the basis of all
available evidence at the balance sheet date, it is more likely than not that
the taxable gain will be rolled over into replacement assets and charged to tax
only where the replacement assets are sold;
• provision is made for deferred tax that would arise on remittance of
the retained earnings of overseas subsidiaries, associates and joint ventures
only to the extent that, at the balance sheet date, dividends have been accrued
as receivable;
• deferred tax assets are recognised only to the extent that the
directors consider that it is more likely than not that there will be suitable
taxable profits from which the future reversal of the underlying timing
differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are
expected to apply in the periods in which timing differences reverse, based on
tax rates and laws enacted or substantively enacted at the balance sheet date.
Capital instruments
Shares are included in shareholders' funds. Other instruments are classified as
liabilities if they contain an obligation to transfer economic benefits and if
not they are included in shareholders' funds. The finance cost recognised in
the profit and loss account in respect of capital instruments other than equity
shares is allotted to periods over then term of the instrument at a constant
rate on the carrying amount.
9. OTHER INFORMATION
Loss per share
The loss per share for the period, basic and diluted, has been calculated using
the loss after taxation of £181,687 divided by 12,185,646 ordinary shares, being
the weighted average number of shares in issue during the period.
Nature of financial information
The interim financial information for the period from incorporation to 31 March
2002 was approved by the board on 20/05/02. The financial information set out
above does not constitute full accounts within the meaning of section 240 of the
Companies Act 1985. As this is the first period reported on since incorporation
no statutory accounts have been reported on or delivered to the Registrar of
Companies. Statutory accounts for the period from incorporation to 30 September
2002 will be delivered to the Registrar of Companies in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
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