TIDMFGN
RNS Number : 7934Z
Futuragene PLC
29 September 2009
FUTURAGENE PLC
Interim Results
29 September 2009. FuturaGene PLC, ("FuturaGene" or "the Group", AIM: FGN), a
leader in plant genetic research and development for global forestry, biofuel
and agricultural markets, announces its unaudited interim results for the six
months ended 30 June 2009.
Results highlights
* Secured additional investment of GBP1.37m from International Institute of
BioScience Research and Development (IIBRD), increasing its shareholding in the
Group to 9%
* On course to securing material recurring revenues within the next two to three
years
* Extension of agreement for development of disease-resistant eucalyptus with
China Academy of Forestry
* Signed agreement for development of enhanced poplar with the China Academy of
Forestry for domestic market
* Management team strengthened
* Second field trial of the modified eucalyptus with Suzano in Brazil produced
strong initial results
* Field trials initiated in corn and alfalfa
* Loss after tax of GBP832,000 (30 June 2008: loss GBP876,000)
* Cash at period end of GBP829,000 (30 June 2008: GBP1.4 million)
Dr. Stanley Hirsch, Group Chief Executive of FuturaGene commented:
"As the pressure on resources, particularly land and water, and the demand for
renewable plant-based energy continue to increase worldwide, we are extremely
well positioned to provide sustainable, ecologically sound technologies to
enhance plant yields and enable marginal land to be more effectively used.
"We are one of the leaders in developing two major clean technology crops:
sustainable, plantation eucalyptus, the key crop for the pulp and paper
industry; and poplar which is used for carbon neutral energy combustion and the
production of liquid biofuel.
"The first half of the year has seen us sign a number of notable development
agreements in strategic crops. The IIBRD investment and the linked conversion of
commercialisation options by a major strategic partner, consummate years of
development work and place us on the path to achieving material recurring
revenues within two to three years."
Enquires:
+-------------------------------------+------------------------------+
| FuturaGene Plc | |
+-------------------------------------+------------------------------+
| Mark Pritchard, Chairman | +44 (0) 7802 827 846 |
+-------------------------------------+------------------------------+
| Dr. Stanley Hirsch, Group Chief | +972 544 56 2724 |
| Executive | |
+-------------------------------------+------------------------------+
| | |
+-------------------------------------+------------------------------+
| Evolution Securities | |
+-------------------------------------+------------------------------+
| Neil Elliot | +44 (0) 20 7071 4300 |
+-------------------------------------+------------------------------+
| | |
+-------------------------------------+------------------------------+
| College Hill | +44 (0)20 7457 2020 |
+-------------------------------------+------------------------------+
| Adrian Duffield/Rozi Morris | |
+-------------------------------------+------------------------------+
Note to Editors:
FuturaGene PLCwww.futuragene.com.
FuturaGene is a leader in plant genetic research and development for the global
forestry, biofuel, and agricultural markets. The Group develops sustainable,
ecologically sound technology to meet the ever increasing demands for fibre,
fuel and food crops in the face of declining and deteriorating land and water
resources.
FuturaGene aims to be the leading crop technology company for biomass, second
generation biofuel and biopower, through two main technology platforms: Cell
Wall Modification, which helps crops grow faster, enhancing yield and
processability; and Abiotic Stress Tolerance which enables plants to grow in
harsh, dry, salty environments or protects yield when plants are stressed by
these factors.
The Group has established broad applications of its technology in key crops
including eucalyptus, which is the largest sustainable plantation forest species
for the pulp and paper industry; and poplar, which is increasingly used as wood
chip for biopower, through direct combustion, the co-firing of coal power
stations or for the production of liquid biofuel. FuturaGene's technology is
also being used in alfalfa and corn, both of which are aimed at the animal feed
and biofuel markets.
The Group's most advanced technologies are for yield improvement in sustainable
industrial forestry. The Group has successfully completed field trials in this
area and is now in regulatory phases prior to commercial deployment. FuturaGene
is one of only a very limited number of biotech companies to have taken a
genetic trait from discovery to the pre-launch stage. The ability to take a
novel gene this far is almost unique outside of the major agricultural-industry
players.
FuturaGene also has strong partnerships with leading international forestry and
agriculture companies, such as Suzano, Forage Genetics (Land 'O Lakes), China
Academy of Forestry (CAF), AA Alliance and Targeted Growth.
Business Overview
The first half of the year saw FuturaGene make considerable progress in its aim
to be a leading source of plant genetic solutions for the global forestry,
biofuel and agriculture industries with the Group passing a significant
milestone towards the commercialisation of genes in its portfolio.
In May 2009, the IIBRD raised its shareholding in the Group to 9% by investing
an additional GBP1.37 million. IIBRD is a subsidiary of a major forestry group.
This investment also exercised pre-existing commercialisation options between
the Group and IIBRD for the commercial use of genes developed by FuturaGene's
subsidiary CBD Technologies.
The directors expect this to lead to the first commercial deployment of
FuturaGene's products for eucalyptus by a significant operator in a major
plantation-forestry market and put the Group on course to begin booking
recurring revenues within the next two to three years.
Additional milestones achieved in the first half of 2009 included an extension
of the Group's agreement with the Research Institute of Tropical Forestry (RITF)
of the CAF, for the development of growth-enhanced eucalyptus. RITF is the
principal research institute for the eucalyptus industry in
southern, sub-tropical China and is a major provider of improved germplasm to
this fast-growing industry. The eucalyptus estate in southern China has become
plagued by a disease, bacterial Wilt, which is killing large numbers of trees.
The Group is developing a genetic approach which it believes will be effective
against the disease and it extended the agreement with RITF to include this new
approach.
The management team was strengthened by the appointment of Dr. Ziv Shani to the
Board and by appointment of Dr. Nissim Chen as Director of Business Development
at CBD Technologies.
Financial results
The unaudited financial results for the six months to 30 June 2009 record an
operating loss of GBP832,000 (30 June 2008: loss GBP876,000). The loss per share
was 1.9p (30 June 2008: loss 2p). No dividend is being declared. Cash reserves
at 30 June 2009 were GBP829,000 (30 June 2008: GBP1.4 million). The current cash
burn is at the rate of GBP160,000 per month. The projected cash burn in the
second half is expected to be at a level in line with the first six months of
the financial year.
Strategic Crops
Eucalyptus
Eucalyptus is the largest sustainable plantation forest species for the pulp and
paper industry and represents a major market opportunity for FuturaGene. A
second field trial of the Group's modified eucalyptus is underway with the
Suzano forestry company in Brazil. The trial has produced strong initial
results, which have verified results from earlier trials. With the acquisition
of biosafety data, there has been a positive relaxation in the regulatory
regimes surrounding the conduct of the trials, including permission for enhanced
duration of trials, which allows better data accumulation. The authorities have
now also allowed the planting of eucalyptus in the substantial exclusion
zones that previously surrounded the trial sites.
FuturaGene and Suzano continue to collaborate on an extensive R&D programme to
introduce new genes and improved gene constructs into additional Suzano clones.
This research is reinforcing the Group's position as a leader in commercial
eucalyptus transformation.
Poplar
FuturaGene's R&D group has successfully developed new transformation methods for
the first clones of commercial poplar, which were imported from the USA. All
aspects of the Group's technology, including yield, processability, salt
tolerance and drought tolerance, will be introduced into poplar.
In addition to this in-house work, the Group has recently announced a
Collaborative Development Agreement with the CAF to develop new and enhanced
poplar for the Chinese domestic market.
The Group is in the process of developing additional research and commercial
partnerships for poplar in the USA in order to strengthen its global position in
the crop, which will soon play an important role in the renewable energy
market.
There is a growing demand for wood pellets made from poplar woodchip to co-fire
coal-fired power stations in the USA and Europe. As poplar can be grown in
renewable, sustainable plantations, it provides a carbon neutral source of
combustible material for electricity generation.
Poplar is also indicated by the US Department of Agriculture as a preferred
source of raw material for second generation (cellulose-to-ethanol) liquid
biofuel production.
Research & Development Activities
The Group's licensees continue to report good progress in the work they are
doing with FuturaGene's intellectual property.
Forage Genetics Inc.
Forage Genetics is progressing well with development of alfalfa
varieties incorporating the Group's genes to enhance digestibility,
processability and to shorten crop rotation times. Initial modified plants were
produced and introduced into preliminary field trials in 2009. Alfalfa is the
fourth biggest crop in the United States and is principally used for
animal feed. Alfalfa will also be tested as a second-generation biofuel crop.
Targeted Growth Inc.
Targeted Growth (TGI) has progressed rapidly with corn transformations using the
Group's licensed genes to enhance plant processability, digestibility and other
agronomic properties. In May 2009, Targeted Growth initiated preliminary field
trials with a number of modified corn lines. The trials are aimed at screening
for corn lines showing positive traits to take forward in the development
pathway.
The agreement was amended to reflect TGI's intention to focus on the enhancement
of corn using the Group's technology, rather than begin trials on soybean. As a
result, all rights for the soy technology were returned to the Group.
Oregon State University
In May 2009, FuturaGene entered into an agreement with Dr. Steven H. Strauss, a
Distinguished Professor of Forest Biotechnology at Oregon State University
(OSU), under which FuturaGene will provide Dr. Strauss's research group with a
proprietary eucalyptus clone and a highly efficient eucalyptus transformation
protocol developed by the Group. The collaboration will enable rapid and
efficient evaluation of genes for flowering control and other biosafety aspects
of tree modification.
Intellectual Property
FuturaGene continues to build its intellectual property portfolio both through
filings based on in-house discoveries and through licensing relationships with
universities and other organisations. The highlight for the first half of 2009
was the granting in Japan of a main cell wall modification patent with broad
claims - an unusual step for the Japanese patent office.
Current trading and outlook
The Group has had an active first half with its energies focused on building the
business and raising profile in key markets. The business development pipeline
for the two strategic crops, eucalyptus and poplar, is very active with the
Group looking to expand its eucalyptus business model to additional territories.
FuturaGene is also actively developing its presence in the USA poplar market
where it is establishing research collaborations and exploring potential
commercial opportunities for this crop.
Additionally, the Group is progressing towards executing its first outlicensing
agreements for technology from its Abiotic Stress platform. Overall the Board is
confident that FuturaGene will continue to build on and develop the momentum it
has built over the last nine months.
Income Statement for the six months ended 30 June 2009
+-------------------------------------+--------------+--------------+------------+
| | Six months | Six months | Year ended |
| | ended | ended | |
| | 30 Jun 2009 | 30 Jun 2008 | 31 Dec |
| | | | 2008 |
+-------------------------------------+--------------+--------------+------------+
| | Unaudited | Unaudited | Audited |
+-------------------------------------+--------------+--------------+------------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------+--------------+--------------+------------+
| Revenue | 28 | 150 | 40 |
+-------------------------------------+--------------+--------------+------------+
| Administrative expenses | (861) | (1,058) | (1,577) |
+-------------------------------------+--------------+--------------+------------+
| Share of losses of Joint Venture | - | - | (69) |
+-------------------------------------+--------------+--------------+------------+
| | | | |
+-------------------------------------+--------------+--------------+------------+
| Operating Loss | (833) | (908) | (1,606) |
+-------------------------------------+--------------+--------------+------------+
| | | | |
+-------------------------------------+--------------+--------------+------------+
| Finance income | 1 | 32 | 45 |
+-------------------------------------+--------------+--------------+------------+
| | | | |
+-------------------------------------+--------------+--------------+------------+
| Loss before tax | (832) | (876) | (1,561) |
+-------------------------------------+--------------+--------------+------------+
| Income Tax | - | - | - |
+-------------------------------------+--------------+--------------+------------+
| | | | |
+-------------------------------------+--------------+--------------+------------+
| Loss for the period attributable to | (832) | (876) | (1,561) |
| equity holders of the company | | | |
+-------------------------------------+--------------+--------------+------------+
| | | | |
+-------------------------------------+--------------+--------------+------------+
| Loss per ordinary share | | | |
+-------------------------------------+--------------+--------------+------------+
| Basic and Diluted | (1.9p) | (2.0p) | (3.6p) |
+-------------------------------------+--------------+--------------+------------+
Statement of comprehensive income for the six months ended 30th June 2009
+--------------------------------------------------+------------+------------+----------+
| | Six months | Six months | Year |
| | ended | ended | ended |
| | 30 Jun | 30 Jun | 31 Dec |
| | 2009 | 2008 | 2008 |
+--------------------------------------------------+------------+------------+----------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------------------+------------+------------+----------+
| Loss for the period | (832) | (876) | (1,561) |
+--------------------------------------------------+------------+------------+----------+
| | | | |
+--------------------------------------------------+------------+------------+----------+
| Exchange movements | (74) | 16 | 32 |
+--------------------------------------------------+------------+------------+----------+
| | | | |
+--------------------------------------------------+------------+------------+----------+
| Total recognised loss for the year | (906) | (860) | (1,529) |
+--------------------------------------------------+------------+------------+----------+
| | | | |
+--------------------------------------------------+------------+------------+----------+
| Total comprehensive income attributable to | (906) | (860) | (1,529) |
| owners of the parent | | | |
+--------------------------------------------------+------------+------------+----------+
Consolidated Balance Sheet at 30 June 2009
+--------------------------------+-----------+-----------+------------+
| | 30 Jun | 30 Jun | 31 Dec |
| | 2009 | 2008 | 2008 |
+--------------------------------+-----------+-----------+------------+
| | Unaudited | Unaudited | Audited |
+--------------------------------+-----------+-----------+------------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+-----------+-----------+------------+
| Assets | | | |
+--------------------------------+-----------+-----------+------------+
| Non-current assets | | | |
+--------------------------------+-----------+-----------+------------+
| Plant, property & equipment | 158 | 72 | 172 |
+--------------------------------+-----------+-----------+------------+
| | 158 | 72 | 172 |
+--------------------------------+-----------+-----------+------------+
| | | | |
+--------------------------------+-----------+-----------+------------+
| Current assets | | | |
+--------------------------------+-----------+-----------+------------+
| Receivables | 49 | 39 | 198 |
+--------------------------------+-----------+-----------+------------+
| Cash and cash equivalents | 829 | 1,436 | 597 |
+--------------------------------+-----------+-----------+------------+
| | 878 | 1,475 | 795 |
+--------------------------------+-----------+-----------+------------+
| Total assets | 1,036 | 1,547 | 967 |
+--------------------------------+-----------+-----------+------------+
| | | | |
+--------------------------------+-----------+-----------+------------+
| Liabilities | | | |
+--------------------------------+-----------+-----------+------------+
| Current liabilities | | | |
+--------------------------------+-----------+-----------+------------+
| Trade and other payables | (548) | (859) | (1,007) |
+--------------------------------+-----------+-----------+------------+
| Net current | 330 | 616 | (212) |
| (liabilities)assets | | | |
+--------------------------------+-----------+-----------+------------+
| | | | |
+--------------------------------+-----------+-----------+------------+
| Net (liabilities)assets | 488 | 688 | (40) |
+--------------------------------+-----------+-----------+------------+
| | | | |
+--------------------------------+-----------+-----------+------------+
| Equity | | | |
+--------------------------------+-----------+-----------+------------+
| Share capital | 236 | 215 | 215 |
+--------------------------------+-----------+-----------+------------+
| Share premium account | 20,364 | 18,951 | 18,951 |
+--------------------------------+-----------+-----------+------------+
| Capital redemption reserve | 2,415 | 2,415 | 2,415 |
+--------------------------------+-----------+-----------+------------+
| Profit and loss account - | (22,519) | (20,893) | (21,687) |
| deficit | | | |
+--------------------------------+-----------+-----------+------------+
| Foreign Exchange Reserve | (8) | - | 66 |
+--------------------------------+-----------+-----------+------------+
| Total equity | 488 | 688 | (40) |
+--------------------------------+-----------+-----------+------------+
Consolidated cash flow statement for the six months ended 30 June 2009
+-------------------------------------------+--------------+--------------+------------+
| | Six months | Six months | Year ended |
| | ended | ended | |
| | 30 Jun 2009 | 30 Jun 2008 | 31 Dec |
| | | | 2008 |
+-------------------------------------------+--------------+--------------+------------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------------+--------------+--------------+------------+
| | Unaudited | Unaudited | Audited |
+-------------------------------------------+--------------+--------------+------------+
| Cash Flows from operating activities | | | |
+-------------------------------------------+--------------+--------------+------------+
| Cash flows from operations | (1,129) | (708) | (1,506) |
+-------------------------------------------+--------------+--------------+------------+
| Interest received | 1 | 32 | 45 |
+-------------------------------------------+--------------+--------------+------------+
| Net cash used in operating activities | (1,128) | (676) | (1,461) |
+-------------------------------------------+--------------+--------------+------------+
| | | | |
+-------------------------------------------+--------------+--------------+------------+
| Cash from investing activities | | | |
+-------------------------------------------+--------------+--------------+------------+
| Purchase of property, plant and equipment | - | (15) | (89) |
+-------------------------------------------+--------------+--------------+------------+
| Proceeds from sale of property, plant and | - | - | 30 |
| equipment | | | |
+-------------------------------------------+--------------+--------------+------------+
| Equity capital raised | 1,434 | | |
+-------------------------------------------+--------------+--------------+------------+
| Loans granted to joint ventures | - | (13) | - |
+-------------------------------------------+--------------+--------------+------------+
| Net cash flows used in investing | 1,434 | (28) | (59) |
| activities | | | |
+-------------------------------------------+--------------+--------------+------------+
| | | | |
+-------------------------------------------+--------------+--------------+------------+
| Net increase(decrease) in cash and cash | 306 | (704) | (1,520) |
| equivalents | | | |
+-------------------------------------------+--------------+--------------+------------+
| Cash and cash equivalents at beginning of | 597 | 2,124 | 2,124 |
| the period | | | |
+-------------------------------------------+--------------+--------------+------------+
| Exchange difference | (74) | 16 | (7) |
+-------------------------------------------+--------------+--------------+------------+
| | | | |
+-------------------------------------------+--------------+--------------+------------+
| Cash and cash equivalents at end of the | 829 | 1,436 | 597 |
| period | | | |
+-------------------------------------------+--------------+--------------+------------+
Reconciliation of net loss to net cash flows from operating activities
+------------------------------------------+----------+--------+---------+
| Loss before tax | (832) | (876) | (1,561) |
+------------------------------------------+----------+--------+---------+
| Interest received | (1) | 32) | (45) |
+------------------------------------------+----------+--------+---------+
| Depreciation of property, plant and | 14 | 17 | 27 |
| equipment | | | |
+------------------------------------------+----------+--------+---------+
| Profit on sale of property plant and | | | (28) |
| equipment | | | |
+------------------------------------------+----------+--------+---------+
| Impairment of loan to joint venture | | 13 | |
+------------------------------------------+----------+--------+---------+
| (Increase)Decrease in trade and other | 149 | 58 | (100) |
| receivables | | | |
+------------------------------------------+----------+--------+---------+
| Increase/(Decrease) in trade and other | (473) | 112 | 191 |
| payables | | | |
+------------------------------------------+----------+--------+---------+
| | | | |
+------------------------------------------+----------+--------+---------+
| Equity settled share based payment | 14 | | 10 |
| expense | | | |
+------------------------------------------+----------+--------+---------+
| Cash used in operating activities | (1,129) | (708) | (1,506) |
+------------------------------------------+----------+--------+---------+
Notes to the Interim report for the six months ended 30 June 2009
1. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and IFRIC interpretations endorsed by the
European Union (EU) and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
A summary of the more important Group accounting policies is given below.
These policies have been consistently applied to all the periods presented,
unless otherwise stated.
The company is incorporated and domiciled in the UK.
Unaudited accounts for the six months ended 30 June 2009 show that the group
incurred a net loss of GBP0.8 million during that period and that cash balances
at 30 June 2009 were GBP0.8 million.
As part of their considerations of going concern, the directors have prepared
working capital projections for the period to 31 March 2011.
The projections are subject to a number of potentially material variables
including the timing and extent of future revenues, the ability to control
levels of expenditure and the proceeds from potential future fund raising. In
order to execute its plans, the company will require additional funding and is
considering its options in this respect with financial advisors.
Based on these discussions, whilst there remains uncertainty over the group's
future cash flows, the directors are confident of the company's ability to raise
funds and therefore consider it appropriate, to prepare the accounts on a going
concern basis.
The financial statements do not include adjustments that would result if the
company was unable to continue as a going concern.
The information for the year ended 31 December 2008 has been extracted from the
audited accounts for that period which have been delivered to the Registrar of
Companies and which contained an unqualified audit report, but which drew
attention to material uncertainty regarding the Company's and the Group's
ability to continue as going concerns, due to the substantial losses incurred,
and the net current liabilities reflected in the audited accounts to 31 December
2008.
The results for the six months to 30 June 2009, which have been neither reviewed
nor audited, have been prepared on a basis consistent with the accounting
policies disclosed in the company's 2008 accounts and do not constitute
statutory accounts within the meaning of Section 40 of the Companies Act 1985.
2. Loss per ordinary share
The calculation of loss per ordinary share is based on:
+------------------------------------+--------------+--------------+----------------+
| | 6 months to | 6 months to | Year to |
+------------------------------------+--------------+--------------+----------------+
| | 30 June 2009 | 30 June 2009 | 31 Dec 2008 |
+------------------------------------+--------------+--------------+----------------+
| Loss for the period attributable | (GBP832,000) | (GBP876,000) | (GBP1,561,000) |
| to equity holders of the company | | | |
+------------------------------------+--------------+--------------+----------------+
| | | | |
+------------------------------------+--------------+--------------+----------------+
| Weighted average number of | 44,305,644 | 42,736,798 | 42,679,103 |
| ordinary shares in issue during | | | |
| the period | | | |
+------------------------------------+--------------+--------------+----------------+
| | | | |
+------------------------------------+--------------+--------------+----------------+
| Basic and diluted loss per share | (1.9p) | (2.0p) | (3.6p) |
+------------------------------------+--------------+--------------+----------------+
Since the conversion of potential ordinary shares would decrease the net basic
loss per share, they are anti-dilutive. Accordingly, diluted loss per share is
the same as basic loss per share.
3. Called up equity share capital
The issued share capital at 31st December 2008 was 43,054,121 Ordinary Shares of
GBP0.005 each. On 5th May 2009, it was announced that IIBRD had acquired
4,045,100 Ordinary Shares at 34p each, thus making the total issued capital
47,099,221 Ordinary Shares as at 30 June 2009.
On 8th July 2009 a further 2,323,018 Ordinary Shares were issued in connection
with contingent consideration (see Note 5 below) and also on that date, 800,000
new Ordinary Shares were issued to the company's CEO, Dr Stanley Hirsh, as part
of his compensation plan.
4. Contingent Consideration
At 31 December 2008, the Company had an outstanding obligation to issue up to a
total of approximately 11.3 million ordinary shares under the terms of
acquisition agreements, of which approximately 8.6 million contingent shares
related to the acquisition of FuturaGene Inc and approximately 2.7 million
contingent shares related to the acquisition of CBD. On 8th July 2009, it was
announced that agreement had been reached to issue a total of approximately 2.3
million ordinary shares in full and final settlement of all claims relating to
Futuragene Inc.
5. Statement Copies
Copies of the interim statement are available from the Company at its Registered
Office at 10, Dominion Street, London EC2M 2EE.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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