TIDMSALV
RNS Number : 8320N
SalvaRx Group plc
26 September 2019
FOR IMMEDIATE RELEASE
SalvaRx Group plc ("SalvaRx", or the "Company")
Unaudited Interim Results for the 6 months to 30 June 2019
SalvaRx Group plc (AIM: SALV) announces its unaudited interim
results for the six months ended 30 June 2019.
Chairman's Statement
On 14 August 2018, the Company announced that it had entered
into a conditional sale agreement for the disposal of its 94.2%
interest in SalvaRx Limited to Portage Biotech Inc. ("Portage"),
for a consideration of US$67.5 million, to be satisfied by Portage
issuing and allotting 757,943,784 new Portage shares. The
transaction was finally completed on 8 January 2019. The Company
retained approximately 57 million Portage shares for its operating
needs and distributed the remaining shares to its shareholders.
I believe that the disposal and the demerger was the best way to
unlock and maximise value for shareholders without causing the
dilution inherent in raising additional funds at a price which I
did not believe reflected the value of the Company's underlying
oncology assets.
Board changes
Following the conclusion of the AGM on 8 January 2019, Dr Ian
Walters, Kam Shah, Richard Armstrong and Colin Weinberg resigned as
directors of the Company. Denham Eke has been appointed as Chief
Financial Officer and as a Director of the Company. The Board now
comprises Jim Mellon (Non-executive Chairman), Dr Greg Bailey
(Non-executive Director) and Denham Eke (Chief Financial Officer).
As a result, the Board has no independent directors. However, the
Directors are in the advanced stages of recruiting an independent
non-executive director and the Company expects to provide an update
on the progress of such appointment in due course.
Financial results
During the period ended 30 June 2019, the Company incurred a net
profit of GBP61.3 million (2018: loss of GBP0.2 million). Net
assets stood at GBP5.7 million (2018: GBP1.4 million), which
includes investments of GBP4.7 million (2018: GBP0). The net asset
value per share of 167 pence represents a 18x premium to the share
price of 9 pence per share at 30 June 2019.
AIM Rule 15 Cash Shell
The disposal and the demerger resulted in the divestment of
substantially all of the Company's existing business, assets and
investments. As such, the Company is now classified as an AIM Rule
15 cash shell and is required to make an acquisition or
acquisitions which constitut1e a reverse takeover under AIM Rule 14
(or seek re-admission as an investing company (as defined under the
AIM Rules)).
As the Board had not identified a suitable acquisition by 9 July
2019, the shares were suspended. However, the Board is currently
evaluating a number of potential acquisition opportunities and will
make a further announcement as soon as practicable.
In the event that no suitable acquisition is made before 9
January 2020, admission to trading on AIM of the Company's shares
will be cancelled.
Jim Mellon
Non-executive Chairman
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
For further information, please contact
SalvaRX Group PLC S.P. Angel Corporate Finance LLP Peterhouse Capital Limited
The Company Nominated Adviser & Broker Broker
Denham Eke Matthew Johnson / Jamie Spotswood Lucy Williams / Duncan
+44 (0) 1624 639396 +44 (0) 20 3470 0470 Vasey
+44 (0) 20 7469 0932
Condensed Statement of Profit or Loss
30 June 30 June 2018 31 December
2019 GBP'000 2018
GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Notes (Note 1) (as restated (as restated
- Note 1) - Note 1)
Income
Unrealized investment gain/(loss) 11,447 - -
Realized investment gain/loss 53,052 - -
64,499
Other operating costs (3,195) (190) (549)
Operating profit/(loss) 61,304 (190) (549)
Net finance cost 5 (27) - (28)
Profit/(loss) before tax 61,277 (190) (577)
Tax - - -
Net profit/(loss) for the period/year 61,277 (190) (577)
Basic and diluted profit/(loss),
GBP per share 1.67 (0.005) (0.016)
Condensed Statement of Financial Position
30 June 30 June 2018 31 December
2019 GBP'000 2018
GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Notes (Note 1) (as restated (as restated
- Note 1) - Note 1)
Assets
Non-current assets
Financial assets at fair value
through profit and loss 2 4,678 - -
Current assets
Trade and other receivables 37 53 36
Related party balances 2,061 2,312 2,069
Total current assets 2,098 2,365 2,105
Total assets 6,776 2,365 2,105
Liabilities
Current liabilities
Trade and other payables 286 207 226
Other loans 822 758 762
Total liabilities 1,108 965 988
Net assets 5,668 1,400 1,117
Equity
Share capital 3 917 911 917
Share premium 3 66 - 66
Reverse acquisition reserve - 2,125 2,125
Treasury shares - (215) (215)
Share-based payment reserves 3 386 507 540
Retained earnings/(deficit) 4,299 (1,928) (2,316)
Total equity 5,668 1,400 1,117
Condensed Statement of Cash Flows
30 June 30 June 2018 31 December
2019 GBP'000 2018
GBP'000 GBP'000
(unaudited) (unaudited) (audited)
Notes (Note 1) (as restated (as restated
- Note 1) - Note 1)
Profit/(loss) for the period/year 61,277 (190) (577)
Adjustments for:
Share-based payments 3,095 49 93
Fair value gain on investments (11,447) - -
Realised gain on disposal of (53,052) - -
investment
Finance cost 3 27 - 65
Foreign exchange adjustment on 25 - -
loans
Operating cash flows before movements
in working capital (75) (141) (419)
Change in receivables (2) (35) (17)
Change in payables 68 65 84
Cash used in operations - (111) (352)
Taxation received - - -
Net cash outflow from operating
activities (9) (111) (352)
Investing activities
Investment in associates - - -
Purchase of investments - - -
Prepaid equity option - - -
Net cash used in investing activities - - -
Financing activities
Decrease/(increase) in related
party receivables 9 (646) (405)
Proceeds on issue of ordinary - -
shares
Proceeds from the issue of other
short-term loans - 757 757
Proceeds from the issue of convertible - - -
loan notes
Net cash from financing activities 9 111 (352)
Net increase in cash and cash - - -
equivalents
Cash and cash equivalents at - - -
beginning of period/year
Effect of exchange rate on cashflow - - -
Cash and cash equivalents at - - -
end of period/year
Condensed Statement of Change in Equity
Share capital Share Reverse Purchase Accumulated Share-based Total
premium acquisition of own deficit payments equity
reserve shares reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2018 911 - 2,125 (215) (1,738) 457 1,540
Share based
payments
charge - - - - - 50 50
Net loss for
the
period - - - - (190) - (190)
At 30 June 2018
(as
restated -
note 1) 911 - 2,125 (215) (1,928) 507 1,400
Share based
payment
charge - - - - - 33 33
Issue of equity
for
cash 6 66 - - - - 72
Net loss for
the
period - - - - (388) - (388)
At 31 December
2018
(as restated -
note
1) 917 66 2,125 (215) (2,316) 540 1,117
Net profit for
the
period - - - - 61,277 - 61,277
Share based
payment
charge - - - - - 3,095 3,095
Transfer -
options
cancelled - - - - 540 (540) -
Exercise of
options - - - - - (2,709) (2,709)
Transfer to
retained
earnings -
disposal
of investment - - (2,125) 215 1,910 - -
Distribution of
redeemable
shares - - - - (57,112) - (57,112)
At 30 June 2019 917 66 - - 4,299 386 5,668
1 General information
SalvaRx Group plc (the 'Company' and, together with its
subsidiaries, the 'Group') is incorporated in the Isle of Man,
British Isles under the Isle of Man Companies Act 2006. The address
of the registered office is Commerce House, 1 Bowring Road, Ramsey,
Isle of Man, British Isles, IM8 2LQ.
Until 8 January 2019, the principal activity of the Group was
drug pre-clinical development with particular focus on developing a
series of compounds for cancer immunotherapy. Following the
disposal of SalvaRx Limited, the Company became an AIM Rule 15 cash
shell.
The comparative information for the year ended 31 December 2018
and period ended 30 June 2018 comprise the Group. On 8 January
2019, the Company disposed of its interest in SalvaRX Limited. From
this date, the financial statements of the Company have been
prepared on a stand-alone basis. The comparative financial
information for the period ended 30 June 2018 and year ended 31
December 2018 has been restated to reflect that of the Company
only.
Basis of preparation
The interim financial information has been prepared using
policies based on International Financial Reporting Standards
('IFRSs') as issued by the International Accounting Standards Board
(the 'IASB') and as adopted by the European Union (the 'EU'). These
policies and practices are consistent with those adopted in the
Group's financial statements for the year ended 31 December
2018.
The interim financial statements have not been audited, and have
not been prepared in compliance with International Accounting
Standard ('IAS') 34, 'Interim Financial Reporting'. In the opinion
of the Directors, the interim financial information for the period
represents fairly the financial position, results from operation
and cash flows for the period in conformity with generally accepted
accounting principles consistently applied.
These interim financial statements include the accounts of the
Company and its subsidiaries up until the date of disposal on 8
January 2019.
The Group's interim financial statements are presented in pounds
sterling, which is the Group's functional and presentational
currency, and all values are rounded to the nearest thousands
(GBP000) except loss per ordinary share and figures and numbers in
the Notes.
Going concern
As part of their going concern assessment, the Directors have
followed the guidelines published by the Financial Reporting
Council entitled "Guidance on Risk Management and Internal Control
and Related Financial and Business Reporting".
At 30 June 2019, the Group had cash and cash equivalent of
GBPNil. The Company is in a net current asset position of
GBP990,000, and an overall net asset position of GBP5,668,000.
Following the disposal and demerger, the Company has limited cash
reserves and its principal assets are up to 56,657,531 Retained
Shares in Portage Biotech Inc. worth approximately US$5,099,178
(approximately, GBP4,015,325). As shares in a Canadian listed
entity, these are readily convertible into cash and are to be set
aside for general working capital requirements.
As a cash shell, the Company has a low level of underlying
overhead. The Directors have prepared forecasts that demonstrate
that the Company has adequate resources (comprising cash in hand
and the Retained Shares) to cover these costs for at least the next
twelve months from the date of this report. The Directors have
therefore concluded that it remains appropriate to prepare these
interim financial statements on a going concern basis.
2 Significant accounting policies
Financial assets and financial liabilities
Classification of financial assets
When the Company first recognises a financial asset, it
classifies it based on the business model for managing the asset
and the asset's contractual cash flow characteristics, as
follows:
-- Amortised cost - a financial asset is measured at amortised
cost if both of the following conditions are met:
o the asset is held within a business model whose objective is
to hold assets in order to collect contractual cash flows; and
o the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
-- Fair value through profit or loss - any financial assets that
are not held as amortised costs assets are measured at fair value
through profit or loss.
Financial assets are not reclassified subsequent to their
initial recognition, unless the Company changes its business model
for managing financial assets, in which case it must reclassify all
affected financial assets.
Classification of financial liabilities
The Company makes an assessment of the objective of the business
model in which a financial asset is held at a portfolio level
because this best reflects the way the business is managed and
information is provided to management.
All financial liabilities are classified and measured at
amortised cost.
1. Recognition
The Company recognises financial assets and financial
liabilities on the date it becomes a party to the contractual
provisions of the instrument.
2. Subsequent measurement
Equity and preference share investments are stated at fair value
through profit or loss. Loans and receivables are stated at
amortised cost less any impairment losses.
The Company determines asset fair values using IPEV guidelines
and other valuation methods with reference to the valuation
principles of IFRS 13. The valuation principles adopted are
classified as Level 3 for unquoted investments and Level 1 for
quoted investments in the IFRS 13 fair value hierarchy. IPEV
guidelines recommend the use of an appropriate valuation
methodology based on the investments held.
The Company then seeks to determine whether holding the
investment at recent available transaction price is appropriate
given the implied value, or whether an adjustment should be made to
achieve fair value: whether this be in the form of an impairment or
a write-up.
'Fair value' is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the
principal or, in its absence, the most advantages market to which
the Company has access at that date. The fair value of a liability
reflects its non-performance risk.
When available, the Company measures the fair value of an
instrument using the quoted price in an active market for that
instrument. A market is regarded as 'active' if transactions for
the asset or liability take place with sufficient frequency and
volume to provide pricing information on an ongoing basis. The
Company measures instruments quoted in an active market at
mid-price.
If there is no quoted price in an active market, then the
Company uses valuation techniques that maximise the use of relevant
observable inputs and minimise the use of unobservable inputs. The
chosen valuation technique incorporates all of the factors that
market participants would take into account in pricing a
transaction.
The Company recognises transfers between levels of the fair
value hierarchy as at the end of the reporting period during which
the change has occurred.
The amortised cost of a financial asset or financial liability
is the amount at which the financial asset or financial liability
is measured at initial recognition, minus principal repayments,
plus or minus the cumulative amortisation using the effective
interest method of any difference between the initial amount
recognised and the maturity amount, minus any reduction for
impairment. Financial assets that are not carried at fair value
though profit and loss are subject to an impairment test.
2. Impairment
12-month expected credit losses
12-month expected credit losses are calculated by multiplying
the probability of a default occurring in the next 12 months with
the total (lifetime) expected credit losses that would result from
that default, regardless of when those losses occur. Therefore,
12-month expected credit losses represent a financial asset's
lifetime expected credit losses that are expected to arise
from default events that are possible within the 12-month period
following origination of an asset, or from each reporting date for
those assets in initial recognition stage.
Lifetime expected credit losses
Lifetime expected credit losses are the present value of
expected credit losses that arise if a borrower defaults on its
obligation at any point throughout the term of a lender's financial
asset (that is, all possible default events during the term of the
financial asset are included in the analysis). Lifetime expected
credit losses are calculated based on a weighted average of
expected credit losses, with the weightings being based on the
respective probabilities of default.
3. Derecognition
The Company derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire or it
transfers the financial asset and the transfer qualifies for
derecognition in accordance with IFRS 9.
A financial liability is derecognised when the obligation
specified in the contract is discharged, cancelled or expired.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits that are subject to an insignificant risk of changes in
fair value.
Trade and other receivables
Trade and other receivables originated by the Company are
initially recognised at fair value and subsequently stated at
amortised cost less impairment losses.
Trade and other payables
Trade and other payables are initially recognised at fair value
less directly attributable transaction costs. Subsequently they are
measured at amortised cost using the effective interest method.
3 Financial assets at fair value through profit or loss
Unaudited Unaudited
30 June 2019 30 June 2018 31 December 2018
GBP'000 GBP'000 GBP'000
Quoted investments - equities 4,678 - -
The Group measures fair values using the following fair value
hierarchy that reflects the significance of the inputs used in
making the measurements:
Level 1: Inputs that are quoted market prices (unadjusted) in
active markets for identical instruments;
Level 2: Inputs other than quoted prices included within Level 1
that are observable either directly (i.e. as prices) or indirectly
(i.e. derived from prices). This category includes instruments
valued using; quoted market prices in active markets for similar
instruments; quoted prices for identical or similar instruments in
markets that are considered less than active; or other valuation
techniques in which all significant inputs are directly or
indirectly observable from market data;
Level 3: Inputs that are unobservable. This category includes
all instruments for which the valuation technique includes inputs
not based on observable data and the unobservable inputs have a
significant effect on the instrument's valuation. This category
includes instruments that are valued based on quoted prices for
similar instruments but for which significant unobservable
adjustments or assumptions are required to reflect differences
between the instruments.
The Directors consider that the investment held is classified as
Level 1 in the fair value hierarchy.
4 Share capital
Unaudited Unaudited
30 June 2019 30 June 2018 31 December
2018
Number GBP'000 Number GBP'000 Number GBP'000
in 000 in 000 in 000
Authorised
Ordinary Shares
of 2.5p
each 80,000 2,000 80,000 2,000 80,000 2,000
Issued and fully
paid
Ordinary Shares
of 2.5p
each 36,700 917 36,467 911 36,467 911
============ ============== ============ ================== =============== ==================
The Company has one class of Ordinary Shares, which carry no
right to fixed income.
As part of the disposal of SalvaRx Limited on 8 January 2019,
the Company completed the purchase of outstanding options over
2,767,470 new Ordinary Shares in consideration of the grant of new
options over a total of 40,692,697 shares (the "Portage Options")
in Portage Biotech Inc ("Portage").
The Company has 9,358,511 Portage Options issued and outstanding
as at 30 June 2019. These options expire on 8 January 2020 and are
convertible into equal number of shares in Portage Biotech Inc
("Portage") at an exercise price of US$ 0.00001 each.
On 8 January 2019, shareholders approved a share split, whereby
each Ordinary Share in issue was split into one Ordinary Share and
one Redeemable B Share. Following the split, shareholders approved
the distribution of all Redeemable B Shares to existing holders,
with the distribution being satisfied by 660,593,556 Portage
Biotech Inc. shares. Following the distribution, the Redeemable B
Shares were cancelled.
5 Profit/(loss) per ordinary share
Basic profit/(loss) per ordinary share is calculated by dividing
the net profit/(loss) for the period/year attributable to Ordinary
equity holders of the Company by the weighted average number of
ordinary shares outstanding during the period/year. The calculation
of the basic and diluted profit/(loss) per ordinary share is based
on the following data:
Unaudited Unaudited
Period ended Period ended 31 December
30 June 2019 30 June 2018 2018
GBP'000 GBP'000 GBP'000
Profit/(loss) for the purposes of
basic loss per share 61,277 (190) (577)
Number of shares Number Number Number
Weighted average number of ordinary
shares for the purposes of basic
profit/(loss) per share 36,699,642 36,467,123 36,506,384
GBP GBP GBP
Profit/(loss) per ordinary share 1.67 (0.005) (0.016)
Dilutive loss per ordinary share equals basic loss per ordinary
share as there is no dilutive effect from the subsisting share
options.
6 Related party transactions
During the period, interest of GBP13,417 each (31 December 2018:
GBP14,000, period to 30 June 2018: GBPnil) was charged on the
outstanding short-term loan balances due to Jim Mellon and Gregory
Bailey respectively.
7 Post balance sheet events
No post balance sheet events have occurred that required
disclosure.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SEDFDMFUSESU
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