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NextGen Group PLC

Preliminary results

NextGen Group plc, (AIM: NGG, 'the Group', 'NextGen'), a provider of biomarker testing services, announces its published preliminary results for the year to 31 December 2008.  In accordance with Company's articles, a summary of the report and accounts will be sent to shareholders, and this will be posted tomorrow.   The full report and accounts are available on the Group's website: www.nextgensciences.com

 

For further details please contact:

 

Dr Michael Pisano 

CEO, NextGen Group PLC            +1 734 973 7914

 

 Adrian Duffield

College Hill Associates Ltd              +44 20 7457 2815

Nicola Marrin

Seymour Pierce Limited                  +44 20 7107 8018

CEO's Statement

Strategic overview

In 2008 Nextgen Sciences mostly completed the divestment of the non-core businesses and continued to develop the biomarker business with the addition of key personnel, and investment in operational infrastructure. NextGen also continued the expansion of its service portfolio, including biomarker discovery, assay development and testing. 

The Group's headquarters were moved to its Ann Arbor, Michigan, USA facility. As its business is now operated in US dollars, the Group reports in US dollars.

Trading Review

Please note that all figures include discontinued operations, see note 2(c).

Group revenue for the 12 months ended 31 December 2008 was $3.6 million (2007: $3.4 million), an increase of 7.8%. The Board had set a target that the Group would achieve revenue over $3 million for 2008.

Gross margin increased from 56.2% to 72.2% due to higher volumes of services particularly biomarkers at higher margins and also sales of equipment subject to write down in 2007 in connection with the divestment of the instrumentation UK-based businesses. Total operating charges decreased by 20% to $6.7 million (2007: $8.5 million).

After an interest charge of $0.09 million, the Group reported a pre-tax loss of $3.19 million (2007: loss $6.66 million) and a loss per share of 0.17 cents (2007: loss 0.66 cents).

Biomarker services

A biomarker is an entity used as an indicator of a biologic state. A biomarker can be measured objectively from a clinical sample, such as blood or urine, and evaluated as a gauge of normal biologic processes, pathogenic processes, or pharmacologic response to therapeutic intervention. The pharmaceutical industry's interest in biomarkers is increasing as they can be used to understand the mechanism of a disease, as well as aid the development of therapeutics, diagnostics and personalized medicine. Biomarkers are critical in helping to reduce costs in the drug discovery and development process.

In clinical applications, biomarkers can be used for patient selection in a drug trial, measuring drug efficacy, monitoring adverse events and studying alternative indications for a drug in development. They can also be used in translational medicine as prognostic indicators of the success of a lead compound in clinical trials. Pre-clinical applications include target discovery and validation, lead compound optimization and safety assessment of new compounds. Personalized medicine also requires the use of biomarkers for the selection of sub-populations of patients for selected therapies such as partner diagnostics.

In 2007 the US Food and Drug Administration's (FDA) Critical Path Initiative detailed a clear message to the industry to integrate the use of biomarkers in the development of new drugs. I believe by making the biomarker services NextGen Sciences core business we have placed the Group in a strong position to attain a significant market share in this emerging market.

  NextGen Sciences' biomarker business, which utilizes the Group's technology and know-how, includes the following services for customers:

• Biomarker discovery - the discovery of new putative biomarkers

• Biomarker assay development - the development of assays for biomarker validation

• Biomarker testing - the application of the validated assay to clinical samples

Current trading and outlook

NextGen's biomarker services business includes discovery, assay development and importantly biomarker testing, a service which has real growth opportunities. NextGen has built an impressive reputation for the quality and scope of its contract research services for proteomics and biomarkers and has taken advantage of this reputation to establish itself in this emerging related market. 

Biomarker discovery companies have delivered potentially interesting markers to their customers, however, they have failed to offer the ability to help develop these biomarkers through validation. NextGen differentiates itself from these other companies in offering the ability to very rapidly develop targeted assays that advance the markers to validation while offering methods and capacity to test clinical samples.  

NextGen has, during the first quarter of 2009, already signed master service agreements with a number of major pharmaceutical companies and delivered multiple projects to an expanding list of pharmaceutical and biotechnology clients in various therapeutic areas including oncology, inflammation and neuroscience. In addition, discussions are underway for multi-year contracts with academic and government institutions around the world.

NextGen continues to develop new services and disease specific biomarker assays. At the same time working relationships with the major pharmaceutical companies and technology providers continues to expand and name branding is becoming solidified. This is supported in the continued growth of our client list, expressions of interest and orders coming from around the globe and that our clients now reach into different life science sectors such as veterinary medicine and agriculture.

 

The far-reaching benefits to R&D of biomarkers are clear and they have moved to the front-line of medical research. It has been recognized that integration of biomarkers through the different phases of drug development can yield safer drugs with enhanced therapeutic efficacy in a cost-effective manner. NextGen's biomarker services offer a way to vastly improve the biomarker pipeline for all applications.

Biomarker-based tests have been in existence for a few decades now but their relevance to drug development applications in particular has gained momentum only recently. This is apparent from the increased research interest, and patent and regulatory activity with regards to biomarkers.

With the closure of the last parts of the non core UK businesses during Q1 2009, the Board expects the Group to be profitable and cash generating in H1 2010.

Dr. Michael R. Pisano         

Chief Executive Officer

29 June 2009

Consolidated 
Income Statement 

For the year ended 31 December 2008

	Note	2008	2007(i)
		$	$
Revenue
	2	1,751,170	1,785,813
Cost of sales		(39,046)	(228,823)
Gross profit		1,712,124	1,556,990
Other operating charges		(4,908,411)	(3,929,665)
Operating loss	3	(3,196,287)	(2,372,675)
Finance income		101	328
Finance costs	4	(103,341)	(29,482)
Loss before taxation		(3,299,527)	(2,401,829)
Income tax income / expense	7	-	(1,021)
Loss after taxation		(3,299,527)	(2,402,850)
Profit/Loss of discontinued operations	2	259,956	(4,253,587)
Net loss attributable to shareholders' equity		(3,039,571)	(6,656,437)
Basic loss per share	9	0.16c	0.66c
Basic loss per share from continuing operations	9	0.18c	0.24c

(i) Comparative period figures have been restated following a change in presentational currency from UK pounds to US dollars with effect from 1 July 2008. See note under principal accounting policies on page 18.

Consolidated statement of recognised income and expense

For the year ended 31 December 2008

		2008	2007(i)
		$	$
	Note
Currency retranslation gains/(losses) recognised directly in equity		(804,202)	(59,189)
Net loss attributable to shareholders' equity		(3,039,571)	(6,656,437)
Total recognised income and expense attributable to shareholders' equity	23	(3,843,773)	(6,715,626)

(i)   Comparative period figures have been restated following a change in presentational currency from UK pounds to US dollars with effect from 1 July 2008. See note under principal accounting policies on page 18.

Consolidated Balance Sheet 

At 31 December 2008

 

	Note		2008	2007(i)
			$	$
Non-current assets
Goodwill	10		1,015,724	1,015,724
Property, plant and equipment	11		615,036	1,087,400
Investment	12		35	-
			1,630,795	2,103,124
Current assets
Inventories	13		335,239	158,035
Trade and other receivables	14		474,093	441,261
Cash and cash equivalents	15		251,344	257,064
			1,060,676	856,360
Total assets			2,691,471	2,959,484
Equity
Called up share capital	23		4,646,784	2,606,673
Share premium account	23		10,276,362	7,894,031
Merger relief reserve	23		109,385	109,385
Merger reserve	23		9,917,065	9,917,065
Other reserves	23		938,329	937,704
Foreign currency translation reserve	23		(706,825)	97,377
Profit and loss account	23		(24,980,162)	(22,041,171)
Equity shareholders' funds			200,938	(478,936)
Liabilities
Non-current liabilities
Financial liabilities	17		291,257	677,522
Current liabilities
Trade payables and other current liabilities	16		1,860,521	2,213,039
Financial liabilities	17		331,165	398,712
Provisions	18		7,590	149,147
			2,199,276	2,760,898
Total liabilities			2,490,533	3,438,420
Total equity and liabilities			2,691,471	2,959,484

(i) Comparative period figures have been restated following a change in presentational currency from UK pounds to US dollars with effect from 1 July 2008. See note under principal accounting policies on page 18.

The accompanying accounting policies and notes are an integral part of these financial statements. The financial statements were approved by the Board of Directors on 29 June 2009.

Dr Michael Pisano                             Frank Matthäi
Director                                            Director

 

Consolidated cash flow statement

For the year ended 31 December 2008

 

	Note		2008	2007(i)
			$	$
Cash flows from operating activities	24		(4,185,632)	(4,542,735)
Taxation received			152,552	221,571
Net cash flow from operating activities			(4,033,080)	(4,321,164)
Cash flows from investing activities
Interest received			490	727
Purchase of property, plant and equipment			(13,873)	(321,529)
Purchase of investment in associate undertaking			(35)	-
Sale of property, plant and equipment			189,943	25,001
Net cash flow from investing activities			176,525	(295,801)
Cash flows from financing activities
Interest paid			(11,207)	(45,639)
Finance lease interest paid			(106,590)	(45,875)
Repayment of borrowing			(31,033)	(122,608)
Capital element of finance lease rentals			(422,779)	(146,564)
Issue of shares/debentures			4,422,443	5,033,387
Net cash flow from financing activities			3,850,834	4,672,701
Net (decrease)/increase in cash and cash equivalents			(5,721)	61,736
Cash and cash equivalents at the beginning of the year			257,065	195,329
Cash and cash equivalents at the end of the year	15		251,344	257,065

(i)   Comparative period figures have been restated following a change in presentational currency from UK pounds to US dollars with effect from 1 July 2008. See note under principal accounting policies on page 18.

The accompanying accounting policies and notes are an integral part of these financial statements.

Notes to the consolidated accounts

1. Going concern

The financial statements have been prepared on a going concern basis, which assumes that the Group will continue to trade for the foreseeable future. During the year the Group incurred losses after taxation of $3,039,571 and had an accumulated profit and loss account loss of $24,980,162 at 31 December 2008.  

The nature and stage of the Group's business are such that substantial losses have been incurred and there can be considerable unpredictable variations in the timing of cash inflows. Significant steps have been taken to reduce the cost base of the company, including the closure of the UK operation and disposal of non-core businesses. The directors have prepared projected cash flow information, which incorporates their best estimate of the timing and value of sales revenue and consequential external funding requirements. The Directors are in the final stage of negotiations with the majority shareholders of Group to arrange further funding in order to support the continued operation and growth of the Group.  The response of the investors in providing a convertible loan of $400k since the year end gives the Directors confidence that these funds will be available and the group would receive these when necessary. On the basis of the anticipated additional funding and these forecasts the directors expect the Group to continue to meet its liabilities as they fall due. For this reason the Directors continue to adopt the going concern basis in preparing the financial statements. This assumes that required levels of sales revenue and forecast external funding are achieved by the Group. The financial statements do not include any adjustments that would result should the Group not generate forecast sales revenue or raise adequate funding.  

2. SEGMENT information

(a)    Primary reporting format - geographical segments

The Group determines its reportable segments based on the structure of the internal financial reports that are used by senior management for decision-making purposes and its primary segment reporting format is by geographical segment.

At 31 December 2008, the Group is organised into two main geographical segments which the directors consider are the most appropriate to explain the Group's activities. The segments are the United Kingdom and the United States of America.  

The analysis of revenue below is based on the country in which the customer is located.  

The segment results are as follows:

	United	United
	Kingdom	States	Total
2008	$	$	$
Revenue	-	1,751,170	1,751,170
Operating loss	(1,607,076)	(1,589,211)	(3,196,287)
Net finance costs	(6,583)	(96,657)	(103,240)
Loss before taxation	(1,613,659)	(1,685,868)	(3,299,527)
Taxation
Net loss			(3,299,527)

2007
Revenue	-	1,785,813	1,785,813
Operating loss	(1,243,455)	(1,129,220)	(2,372,675)
Net finance costs		(29,154)	(29,154)
Loss before taxation	(1,243,455)	(1,158,374)	(2,401,829)
Taxation			(1,021)
Net loss			(2,402,850)

Total assets and capital expenditure are allocated based on where the assets are located.

Assets	United	United
	Kingdom	States	Total
2008	$	$	$
Segment assets	472,897	1,967,230	2,440,127
Corporate assets:
Cash and cash equivalents			251,344
Total assets			2,691,471

2007
Segment assets	467,381	2,235,039	2,702,420
Corporate assets:
Cash and cash equivalents			257,064
Total assets			2,959,484

Liabilities	United	United
	Kingdom	States	Total
2008	$	$	$
Segment liabilities	1,524,214	966,319	2,490,533
Corporate liabilities:
Borrowings			-
Total liabilities			2,490,533

2. SEGMENT information(continued)

2007
Segment liabilities	1,849,230	1,558,157	3,407,387
Corporate liabilities:
Borrowings			31,033
Total liabilities			3,438,420

Capital expenditure
2008	393	13,480	13,873
2007	128,140	1,125,402	1,253,542

Depreciation of property, plant and equipment
2008	31,239	440,855	472,094
2007	147,237	322,864	470,101

Amortisation of finite-lived intangible assets
2008	-	-	-
2007	9,400	-	9,400

Impairment of property, plant and equipment
2008	-	-	-
2007	173,224	-	173,224

Impairment of finite-lived intangible assets
2008	-	-	-
2007	43,877	-	43,877

 

 

(b)     Secondary reporting format - business segments

The Group business segments operate in four main business segments, principally Proteomic services, Instrumentation, Contract express and Consumables.

Revenues for instrumentation are recognized after the instrument has been shipped, installed and accepted. Services revenue are recognized after the completion of services which is noted by the delivery of a report. Consumables revenue are recognized after shipment of the order. Contract express revenues are recognized after the delivery of the recombinant proteins and the report. 

Proteomic services includes analytical services, biomarker discovery and assay development work;

Instrumentation includes expressionfactory, expressionworkstation both including orchestrator IMS software and the optimizer product;

Contract express comprises a gene cloning and protein expression service;

Consumables include a range of reagents and optigels used in 2D gel electrophoresis work. 

2. SEGMENT information(continued)

The business segment that will continue to operate is the Proteomic services business. This includes Analytical services and Biomarker services.

Revenue, assets and capital expenditure are allocated based on where the operations and assets are located.

	Proteomic services	Instrument-ation	Contract express	Consumables	Total
Revenue	$	$	$	$	$
2008	1,191,940	1,588,558	420,711	438,621	3,639,830
2007	1,282,128	1,317,804	680,911	96,305	3,377,148

Assets	Proteomic services	Instrument-ation	Contract express	Consumables	Total
2008	$	$	$	$	$
Segment assets	902,615	1,537,512	-	-	2,440,127
Corporate assets:
Cash and cash equivalents					251,344
Tax receivable
Total assets					2,691,471

2007
Segment assets	2,128,832	245,296	312,535	15,757	2,702,420
Corporate assets:
Cash and cash equivalents					257,064
Total assets					2,959,484

Capital expenditure
2008	13,480	393			13,873
2007	1,125,404	75,577	52,561	-	1,253,542

(c)    Third reporting format - discontinued operations

The Group decided to sell their software and automation UK-based business to close its protein production fee for service business unit and to wind down the a2d business.

Discontinued operations		2008	2007
		$	$
Turnover: discontinuing operations		1,891,798	1,591,335
Cost of sales		(973,114)	(1,250,058)
Gross profit		(914,746)	341,277
Operating costs: discontinuing operations		(793,275)	(4,533,232)
Operating loss	3	121,471	(4,191,955)
Finance income		389	399
Finance costs	4	(14,456)	(62,032)
Loss before taxation		107,404	(4,253,588)
Income tax income / expense		152,552	-
Loss of discontinued operations		259,956	(4,253,587)

3. OPErating loss

The operating loss, including discontinued operations, is stated after charging:

	2008	2007
	$	$
Fees payable to the company's auditors for the audit of the company's annual report	41,771	52,145
Fees payable to the company's auditors for other services:
Audit of the company's subsidiaries pursuant to legislation	18,565	42,118
Other services pursuant to legislation	3,713	34,095
Share based payments charge	101,205	722,700
Depreciation of property, plant and equipment	472,094	470,101
Amortisation of licences	-	9,400
Research and development expenditure	197,380	686,483
Foreign exchange losses/(gains)	1,003,940	10,722
Operating leases:
Plant and machinery	254,743	4,693
Land and buildings	159,592	219,809

Inventory expenses recognised within cost of sales in the year amounted to $811,548 (2007:$939,331)

4. FINANCE COSTS

Finance costs during the year, including discontinued operations, were as follows:

 

	2008	2007
	$	$
Interest on bank loans and overdrafts	11,207	45,639
Interest on finance leases and hire purchase contracts	106,590	45,875
	117,797	91,514

5. STAff costs

Staff costs during the year, including discontinued operations, were as follows:

 

	2008	2007
	$	$
Wages and salaries	2,793,651	4,092,730
Social security costs	110,993	308,754
Other pension costs	73,616	113,561
Share based remuneration charge	101,205	722,700
	3,079,465	5,237,745

The average number of employees of the Group during the year was:

	2008	2007
	Number	Number
Technical	18	25
Sales and marketing	5	11
Administration	7	6
	30	42

6. directors' remuneration

Remuneration in respect of directors was as follows:

 

	2008	2007
	$	$
Emoluments	455,406	662,839
Compensation for loss of office	-	144,403
Pension contributions to money purchase pension schemes	8,792	80,663
	464,198	887,905
	Number	Number
The number of directors who were members of a money purchase pension scheme during the year (at the year end 1; 2007: 1)	1	4
Highest paid director - emoluments	241,288	222,740
- pension costs	8,792	47,946
	250,080	270,686

Further details of the Directors' Remuneration and share options are given in the Directors' Remuneration Report.

7. TaxATION

The tax credit is based on the loss for the year and represents:

 

	2008	2007
	$	$
Loss before taxation: continued operations	(3,299,527)	(2,401,829)
Loss before taxation: discontinued operations	107,404	(4,253,587)
Total loss before taxation	(3,192,123)	(6,655,416)
Expected corporation tax on loss at 20.75% (2007:19.75%)	(662,567)	(1,314,445)
Effects of:
Expenses not deductible for tax purposes	51,987	(43,891)
Difference between capital allowances and depreciation	(18,311)	45,244
Tax losses carried forward	631,040	1,624,837
Other temporary differences	(2,149)	(183)
Research and development tax credit	(152,552)	(164,804)
Rate differences	-	(145,737)
Total tax (credit)/charge for the year	(152,552)	1,021

Unrealised tax losses of approximately $22,583 million (2007: approximately $20 million) remain available to offset against future taxable trading profits. A deferred tax asset of approximately $4,516,763 (2007: $3,878,144) calculated at 20% (2007: 20%) in respect of trading losses has not been recognised as an asset as the future benefit cannot be determined at 31 December 2008.

8. Dividends

No dividends have been declared or paid in 2008 and 2007.

9. LOSS PER SHARE

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.

Reconciliation of the loss and weighted average number of shares used in the calculations are set out below:

	2008	2007
	$	$
Loss attributable to ordinary shareholders: continued operations	(3,229,327)	(2,401,829)
Loss attributable to ordinary shareholders: discontinued operations	259,956	(4,253,587)
Loss attributable to ordinary shareholders	(2,969,371)	(6,655,416)
Weighted average number of shares - basic	1,859,147,898	1,004,555,014
Weighted average number of shares - diluted	1,985,760,914	1,163,846,996
Basic	(0.16 cents)	(0.66 cents)
Continuing operating:
Basic	(0.18 cents)	(0.24 cents)
Discounting operating:
Basic	0.14 cents	(0.42 cents)
Diluted	0.13 cents	-

10.  INTANGIBLE ASSETS

Intangible assets represent goodwill arising on the consolidation of former Proteomic Research Services Inc. now NextGen Sciences Inc. and a licence with Gene Oracle.

 

	Goodwill	Licence	Total
Cost	$	$	$
At 1 January 2008	1,015,724	52,758	1,068,482
Exchange differences	-	(14,296)	(14,296)
At 31 December 2008	1,015,724	38,462	1,054,186

Amortisation
At 1 January 2008	-	52,758	52,758
Impairment	-	-	-
Exchange differences	-	(14,296)	(14,296)
At 31 December 2008	-	38,462	38,462
Net book amount at 31 December 2008	1,015,724	-	1,015,724

	Goodwill	Licence	Total
Cost	$	$	$
At 1 January 2007	1,015,724	52,241	1,067,965
Exchange differences	-	517	517
At 31 December 2007	1,015,724	52,758	1,068,482

Amortisation
At 1 January 2007	-	-	-
Amortisation in the year	-	9,400	9,400
Impairment	-	43,877	43,877
Exchange differences	-	(519)	(519)
At 31 December 2007	-	52,758	52,758

Net book amount at 31 December 2007

1,015,724

-

1,015,724

Goodwill amortisation and impairment are included in other operating charges in the income statement.

Goodwill on the acquisition of Proteomic Research Services Inc. is represented by the assembled workforce, the synergies that the Group considers it gained by acquiring PRS, the speed to market that the Group gained by acquiring PRS rather than establishing its own similar operations and the modus operandi which generates profits.

10. INTANGIBLE ASSETS (continued)

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.  

The goodwill arose on acquisition of Proteomic Research Services Inc (PRS), which is now operating as NextGen Sciences Inc. The goodwill is represented by the assembled workforce, the synergies that the Group considers it gained by acquiring PRS, the speed to market that the Group gained by acquiring PRS rather than establishing its own similar operations and the modus operandi which generates profits.

In assessing whether a write-down of goodwill is required, the carrying value of the cash generative unit (CGU) is compared with its recoverable amount. The recoverable amount of goodwill has been determined on a value in use calculation using cash flow forecasts based on projected future trading, discounted to arrive at a net present value.

The goodwill has been entirely allocated to US operations of NextGen Sciences Inc, which is the CGU. The cash flow forecasts are not based on a conventional growth forecast model because management expects revenues to grow rapidly in the short-term, based on current anticipated order levels.

The key assumptions in the cash flow forecast are as follows:

• Revenues are determined by managements expectations of sales levels achievable based on their knowledge of current order levels, recent budget and forecasts for the next three years

• The forecast gross margin is based on existing manufacturing margins

• The expected increase in sales values is deliverable using the current infrastructure without significant investment in capital expenditure

• The pre-tax discount rate applied to the cash flow projections is 19% to reflect current market estimates of the value of money and the Groups weighted average cost of capital.

The sensitivity analysis performed on the cash flow forecasts has confirmed that the carrying value of the goodwill would still be exceeded by the net present value of the future cashflows if there was a reasonably possible change in the above key assumptions.

11. PROPERTY, PLANT AND EQUIPMENT

	Plant and machinery	Office equipment fixtures and fittings	Computer Equipment	Motor Vehicle	Total
	$	$	$	$	$
Cost
At 1 January 2008	3,452,408	175,145	723,358	58,971	4,409,882
Additions	3,947	-	9,926	-	13,873
Disposals	(1,327,202)	(125,503)	(381,661)	(55,123)	(1,889,489)
Exchange differences	(73,030)	(10,441)	(27,667)	(3,848)	(120,986)
At 31 December 2008	2,050,123	39,201	323,956	-	2,413,280
Depreciation
At 1 January 2008	2,524,538	160,973	602,264	34,707	3,322,482
Provided in the year	421,600	6,799	43,695	-	472,094
Disposals	(1,324,486)	(120,568)	(378,262)	(55,125)	(1,878,441)
Reclassification	(88,163)	-	63,897	24,266	-
Exchange differences	(78,272)	(9,850)	(25,921)	(3,848)	(117,891)
At 31 December 2008	1,455,217	37,354	305,673	-	1,798,244
Net book amount at 31 December 2008	594,906	1,847	18,283	-	615,036

 

	Plant and machinery	Office equipment fixtures and fittings	Computer Equipment	Motor Vehicle	Total
	$	$	$	$	$
Cost
At 1 January 2007	2,741,283	133,874	341,309	58,392	3,274,858
Additions	1,162,211	9,023	82,308	-	1,253,542
Disposals	(128,362)	-	(2,692)	-	(131,054)
Reclassification	(333,593)	30,971	299,706	-	(2,916)
Exchange differences	10,869	1,277	2,727	579	15,452
At 31 December 2007	3,452,408	175,145	723,358	58,971	4,409,882
Depreciation
At 1 January 2007	2,395,035	126,321	258,159	20,146	2,799,661
Provided in the year	362,722	7,484	85,393	14,502	470,101
Impairment	173,224	-	-	-	173,224
Disposals	(128,362)	-	(449)	-	(128,811)
Reclassification	(286,083)	25,955	257,212	-	(2,916)
Exchange differences	8,002	1,213	1,949	59	11,223
At 31 December 2007	2,524,538	160,973	602,264	34,707	3,322,482
Net book amount at 31 December 2007	927,870	14,172	121,094	24,264	1,087,400

12. Investment

On 1 December 2008 a 24% investment into eXeTek Limited was made.  

	2008
	$
Cost	35
Net book value	35

13. inventories

 

	2008	2007
	$	$
Finished goods	335,239	158,035
	335,239	158,035

14. trade and other receivables

	2008	2007
	$	$
Trade receivables	198,610	192,723
Provision for doubtful receivables	(1,846)	(25,039)
VAT	2,979	5,498
Prepayments, accrued income and other receivables	274,350	268,079
	474,093	441,261

 

The ageing analysis of trade receivables is as follows:

	2008	2007
	$	$
Less than 3 months	186,437	100,514
3 to 6 months	10,327	83,967
Over 6 months	1,846	8,242
	198,610	192,723

15. cash and cash equivalents

	2008	2007
	$	$
Cash at bank and in hand	251,344	257,064

16. trade and other payables

 

	2008	2007
	$	$
Trade payables	662,300	505,542
Social security and sundry taxes	21,804	65,551
Other payables	68,071	455,816
Accruals and deferred income	1,108,346	1,186,130
	1,860,521	2,213,039

 

The ageing analysis of trade payables is as follows:

	2008	2007
	$	$
Less than 3 months	513,084	446,916
3 to 6 months	149,217	45,790
Over 6 months	-	12,836
	662,300	505,542

17. financiAl liabilities

	2008	2007
	$	$
Current
Bank loans	-	31,033
Finance leases	331,165	367,679
	331,165	398,712
Non-current
Finance leases	291,256	677,522
Total financial liabilities	622,422	1,076,234

 

All non-current finance leases mature between two and five years from the balance sheet date.

There are no material differences between the total of the future minimum lease payments and their present values of the finance leases at either year end.

The finance leases do not contain any unusual clauses or arrangements such as purchase options.

18. Provisions

Provisions comprise warranty provisions due within one year as follows:

		$
At 1 January 2008		149,147
Charged/(credited) to the income statement:
Additional provisions		127,578
Recognised against profits		(269,135)
At 31 December 2008		7,590

The Group has not applied discounting to the calculation of the provision.

19. Financial instruments and treasury risk management

Financial instruments in the Group comprise borrowings as follows:

Borrowing facility

An overdraft facility was not available at 31 December 2008 (2007: $397,220). The interest rate was 4 per cent per annum above the Barclays base rate. The amount drawn down on this facility at 31 December 2007 was nil. The facility was secured over trade receivables of the Group.

Classification and fair values of financial assets and liabilities

The table sets out the Group's accounting classification of each class of financial asset and financial liability. The directors consider that the carrying value of financial assets and liabilities represent their fair value.

	Loans and receivables
$	2008	2007
Financial assets
Trade receivables	198,610	192,723
Provision for doubtful receivables	(1,846)	(25,039)
Cash and cash equivalents	251,344	257,064
Total financials assets	448,108	424,748
	Other financial liabilities
Financial liabilities	2008	2007
Current liabilities
Trade payables	662,300	505,542
Other payables	68,071	455,816
Accruals	209,131	649,099
Bank loans	-	31,033
Total financial liabilities	939,502	1,641,490
Net financial liabilities	(491,394)	(1,216,742)

Treasury risk management

The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk and currency risk. The directors review and agree policies for managing each of these risks and they are summarised below:

Interest rate risk - the Group finances its operations through a mixture of bank borrowings and leasing. The Group's exposure to interest rate fluctuations on its borrowings is managed by the use of both fixed and floating facilities. For obligation under a bank loan, the fixed rate interest rate is 7.6% (2007: 7.6%). For obligation under finances leases, the weighted average fixed interest rate is 10.1% (2007: 10.1%), and the weighted average period for which the rate is fixed is 1.88 years (2007: 2.74 years). The income statement sensitivity to changes in interest rates on the variable rate overdraft facility (say 1%) is $1,559 (2007: $2,975). The income statement sensitivity to changes in interest rates on the variable rate bank deposits (say 1%) is $271.21 (2007: $nil).

19. Financial instruments and treasury risk management(continued)

Liquidity risk - the Group seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Surplus cash is invested in overnight deposit accounts.

Currency risk - the Group is exposed to translation and transaction foreign exchange risk primarily from inter-company transactions between its UK and US companies. The note below shows the extent to which Group companies have monetary assets and liabilities other than their local currency. Foreign exchange differences on retranslation of those assets and liabilities are taken to the income statement of the Group companies and the Group.

Net foreign currency monetary (liabilities)/assets:

Financial liabilities, in the form of finance leases, denominated in pounds sterling (GBP) at 31 December 2008 amounted to $38,311 (2007: $179,059). The income statement sensitivity to changes in US exchange rates (Approx. 5%) is $(1,916) (2007: $(8,953)).

Credit risk - The principal credit risk arises from the Group's trade receivables. In order to manage credit risk the directors review the potential customer's organisation type, for example; pharmaceutical company, university or research company and the prospect of cash collection within the agreed payment terms. 

The credit risk for liquid funds is considered negligible since the counterparties are reputable banks with high credit ratings.

20. Deferred taxation 

No deferred taxation is provided for at 31 December 2008 (2007: nil).  Deferred taxation, which has not been provided for in the financial statements, is set out below.

 

	2008	2007
	$	$
Tax losses carried forward	4,516,763	3,878,144
Unprovided deferred tax asset	4,516,763	3,878,144

 

21. CALLED UP Share capital

 

	2008	2007
	$	$
Authorised
2,000,000,000 Ordinary Shares of 0.1p each	3,441,600	3,441,600
Allotted, called up and fully paid
2,546,978,644 (2007: 1,394,752,584) Ordinary Shares of 0.1p each	4,646,784	2,606,673

21. CALLED UP Share capital(continued)

Share Placing

On 20 January 2008 2,892,726 ordinary shares with an aggregate nominal value of $5,658 were issued raising $41,072 after expenses.

On 1 April 2008 500,000,000 ordinary shares with an aggregate nominal value of $991,000 were issued raising $2,824,350 after expenses.

On 22 May 2008 13,333,334 ordinary shares with an aggregate nominal value of $26,226 were issued raising $78,684 after expenses.

On 17 October 2008 210,000,000 ordinary shares with an aggregate nominal value of $362,250 were issued raising $516,206 after expenses.

On 1 December 2008 426,000,000 ordinary shares with an aggregate nominal value of $654,975 were issued raising $982,463 after expenses.

22. SHARE OPTIONS

The following share options were outstanding over 0.1p ordinary shares in respect of NextGen Group Plc share option schemes.

 

Date of grant	Expiry date	No of options	Exercise price
12 Dec 2001	12 Dec 2011	580,000	£0.1034
16 Apr 2003	16 Apr 2013	324,249	£0.0010
16 Apr 2003	16 Apr 2013	1,038,838	£0.1034
16 Apr 2003	16 Apr 2013	324,249	£0.1724
3 Feb 2004	3 Feb 2014	60,407	£0.0010
3 Feb 2004	3 Feb 2014	68,469	£0.2759
23 Sep 2004	23 Sep 2014	1,977,539	£0.0276
9 Mar 2005	9 Mar 2015	1,448,550	£0.0276
31 Mar 2005	29 Mar 2010	57,449	£0.1034
6 Jul 2005	6 Jul 2010	53,882,348	£0.0010
7 Jul 2005	7 Jul 2010	43,877	£0.1034
10 Feb 2006	10 Feb 2011	2,000,000	£0.0300
10 Feb 2006	10 Feb 2011	8,095,012	£0.0425
12 Oct 2007	10 Feb 2011	2,000,000	£0.0300

IFRS 2 has been applied to share options granted on 10 February 2006 and 12 October 2007. All other options vested prior to 1 January 2006. 

 

The right to exercise share options is subject in all cases to service conditions as specified in the detailed scheme rules. The market price of the 0.1p ordinary shares at 31 December 2008 was 0.14p (2007: 0.365p). The market price ranged from 0.4p to 0.08p during year (2007: 1.02p to 0.25p).

22. SHARE OPTIONS (continued)

At 31 December 2008, the Group had the following outstanding options and exercise prices:

 

	2008 Average exercise price per share	2008 Options	2008 Weighted average remaining  contractual  life	2007 Average exercise price per share	2007 Options	2007 Weighted average remaining contractual  life
Expiry dates	£	No.	Months	£	No.	Months
2010	0.00119	53,983,674	18	0.00119	53,983,674	30
2011	0.04134	12,675,012	26	0.04169	14,104,522	38
2013	0.09698	1,687,336	52	0.09701	1,694,789	64
2014	0.03491	2,106,415	68	0.03449	2,235,581	80
2015	0.02760	1,448,550	74	0.02760	1,448,550	86
Total	0.01204	71,900,987	23	0.01271	73,467,116	35

 

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

 

	2008 Weighted average exercise price per share	2008 Options	2007 Weighted average exercise price per share	2007 Options
Outstanding at 31 December 2007	0.0245	73,467,116	0.0164	137,458,520
Number granted	-	-	-	-
Number lapsed	0.04363	(1,566,129)	0.0067	(63,991,404)
Outstanding at 31 December 2008	0.01204	71,900,987	0.01271	73,467,116

The inputs into the Black-Scholes option pricing model are as follows:

 

			2008	2007
			£	£
Share price			0.01	0.01
Exercise price			0.0077-0.0425	0.0077-0.0425
Expected volatility			65.00%	65.00%
Expected life			3 years	3 years
Risk-free rate			4.17%	4.17%
Expected dividends			Nil	Nil

Expected volatility was determined by calculating the historical volatility of the new to AIM competitor companies. The expected life used in the model has been adjusted, based upon management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.        

23. statement of changes in equity

 

	Share capital	Share premium	Merger  relief reserve	Merger reserve	Other reserves	Foreign currency translation reserve	Profit and loss	Total share-holders funds
	$	$	$	$	$	$	$	$
At 1 January 2007	1,383,548	4,083,769	109,385	9,917,065	1,658,444	156,566	(16,828,174)	480,603
Allotments during the year	1,223,125	4,055,800	-	-	-	-	-	5,278,925
Share issue costs	-	(245,538)	-	-	-	-	-	(245,538)
Share based payments	-	-	-	-	(720,740)	-	1,443,440	722,700
Total recognised income and expense for the year	-	-	-	-	-	(59,189)	(6,656,437)	(6,715,626)
At 31 December 2007	2,606,673	7,894,031	109,385	9,917,065	937,704	97,377	(22,041,171)	(478,936)
Allotments during the year	2,040,111	2,677,207		-	-	-	-	4,717,318
Share issue costs	-	(294,876)	-	-	-	-	-	(294,876)
Share based payments	-	-	-	-	625	-	100,580	101,205
Total recognised income and expense for the year	-	-	-	-	-	(804,202)	(3,039,571)	(3,843,773)
At 31 December 2008	4,646,784	10,276,362	109,385	9,917,065	938,329	(706,825)	(24,980,162)	(200,938)

The share based payment amounts relate to a non-cash charge recorded against operating loss in respect of the fair value of options granted to employees.

24. Notes to the cash flow statement 

	2008	2007
	$	$
Net loss	(3,039,571)	(6,656,437)
Taxation	(152,552)	1,021
Finance income	(490)	(727)
Finance cost	117,797	91,514
Depreciation of property, plant and equipment	472,094	470,101
Impairment of property, plant and equipment	-	173,224
Loss (Profit) on sale of property, plant and equipment	(178,895)	(22,758)
Amortisation of intangible assets	-	9,400
Impairment of intangible assets	-	43,877
Inventories	(177,204)	770,503
Trade and other current receivables	(32,832)	652,999
Trade payables and other current liabilities	(494,076)	(733,698)
Changes in working capital	(704,112)	689,804
Share option charge	101,205	722,700
Effect of exchange rate fluctuations	(801,108)	(64,454)
Cash flow from operating activities	(4,185,632)	(4,542,735)

25. related party transactions

Related party transactions during the period consisted of consultancy payments to Nanotecquity AG, a Company wholly owned by Klaus Rosenau and of which he is a director and OAR GmbH, a Company wholly owned by Klaus Rosenau's mother and of which he is a director. Within the income statement are related party transactions costs amounting to $887,249 (2007: $100,280).  The amount of $887,249 was divided in consultancy $526,789, Travel & expenses $113,063 and commission $247,397. There were no balances with related parties at year-end (2007: £nil).

26. Capital commitments

The Group had no capital commitments at 31 December 2008 or 31 December 2007 for the acquisition of property, plant and equipment or intangible assets.

27. Pensions

The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amount to $73,616 (2007: $113,561). Contributions totalling $3,081 (2007: $16,304) were payable to the fund at the year end and are included in payables.

28. Leasing commitments

The Group has several non-cancellable operating lease agreements for various plant and machinery and land and buildings. The future aggregate minimum lease payments under these agreements are:

			2008	2007
Expiring in:			$	$
In one year or less			112,601	190,217
Between one and five years			340,986	281,217
			453,587	471,434

The operating leases do not contain any unusual clauses or arrangements such as purchase options

Independent auditor's report

To the members of NextGen Group plc

We have audited the parent company financial statements of NextGen Group plc for the year ended 31 December 2008, which comprise the Company Balance Sheet, the accounting policies and notes II to VII. These parent company financial statements have been prepared under the accounting policies set out therein. 

We have reported separately on the group financial statements of NextGen Group plc for the year ended 31 December 2008. That report is modified by the inclusion of an emphasis of matter.

This report is made solely to the Company's members, as a body, in accordance with section 235 of the Companies act 1985. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report or for the opinions we have formed. 

Respective responsibilities of directors and auditors

The directors' responsibilities for preparing the Annual Report and the parent company financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Directors' Responsibilities.

Our responsibility is to audit the parent company financial statements to be audited in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). 

We report to you our opinion as to whether the parent company financial statements give a true and fair view and whether the parent company financial statements to be audited have been properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors' Report is consistent with the parent company financial statements.

In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report and consider whether it is consistent with the audited parent company financial statements. The other information comprises only the Directors' Report, the Directors' Remuneration Report, the Chairman and Chief Executive Officer's report and the Corporate Governance statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the parent company financial statements. Our responsibilities do not extend to any other information.

Basis of audit opinion 

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the parent company financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the parent company financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the parent company financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the parent company financial statements and the part of the Directors' Remuneration Report to be audited.

Opinion

In our opinion:

• the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the company's affairs as at 31 December 2008 and of its loss for the year then ended;

• the parent company financial statements have been properly prepared in accordance with the Companies Act 1985; and

• the information given in the Directors' Report is consistent with the parent company financial statements.

Emphasis of matter - Going concern

In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made in note I of the parent financial statements concerning the Company's ability to meet its liabilities as they fall due. The financial statements have been prepared on the going concern basis, the validity of which depends the Groups funding requirements which will be satisfied by the on receipt of orders and the related sales revenue or injection of funds into the business from further fundraising. If these sales revenues are not received or additional funds are not raised, the Company may be unable to continue as a going concern. The financial statements do not include the adjustments that would result if the Company were unable to continue as a going concern.

GRANT THORNTON UK LLP
REGISTERED AUDITORS, 
CHARTERED ACCOUNTANTS, 
Cambridge

29 June 2009

Company balance sheet 

At 31 December 2008

	Note		2008	2007
			£	£
Fixed assets
Investments	III		299,279	874,886
			299,279	874,886
Current assets
Debtors: due within one year	IV		2,808,549	4,066,792
Cash at bank and in hand			17,293	63,477
			2,825,842	4,130,269
Creditors: amounts falling due within one year	V		(165,649)	(293,525)
Net current assets			2,660,193	3,836,744
Total assets less current liabilities			2,959,472	4,711,630
Capital and reserves
Called up share capital	VI		2,546,979	1,394,753
Share premium account	VII		5,391,406	4,187,559
Merger relief reserve	VII		63,544	63,544
Other reserve	VII		571,394	571,057
Profit and loss account	VII		(5,613,851)	(1,505,283)
Shareholders' funds	VII		2,959,472	4,711,630

The financial statements were approved by the Board of Directors on 29 June 2009

Dr Michael Pisano                       Frank Matthäi

Director                                      Director

 

The accompanying accounting policies and notes are an integral part of these financial statements.

Notes to the Company accounts

I ACCOUNTING POLICIES

Going Concern

The financial statements for the Company have been prepared on a going concern basis, which assumes that the Company will continue in business for the foreseeable future.  The company has funded the operations of the Group which generated losses in the year.  

The nature and stage of the Group's business are such that substantial losses have been incurred and there can be considerable unpredictable variations in the timing of cash inflows. Significant steps have been taken to reduce the cost base of the company, including the closure of the UK operation and disposal of non-core businesses. The directors have prepared projected cash flow information, which incorporates their best estimate of the timing and value of sales revenue and consequential external funding requirements. The Directors are in the final stage of negotiations with the majority shareholders of Group to arrange further funding in order to support the continued operation and growth of the Group.  The response of the investors gives the Directors confidence that these funds will be available and the group would receive these when necessary. On the basis of the anticipated additional funding and these forecasts the directors expect the Group to continue to meet its liabilities as they fall due. For this reason the Directors continue to adopt the going concern basis in preparing the financial statements. This assumes that required levels of sales revenue and forecast external funding are achieved by the Group. The financial statements do not include any adjustments that would result should the Group not generate forecast sales revenue or raise adequate funding.  

Basis of preparation

The separate financial statements of the Company are presented as required by the Companies Act 1985.

They have been prepared under the historical cost convention and in accordance with applicable accounting standards and laws in the United Kingdom. As required under FRS 18 ('Accounting Policies') the Board has reviewed the accounting policies adopted in the accounts and consider them to be the most appropriate for the Company.

Investments

Investments in subsidiary undertakings are stated at cost, less any provision for diminution in value.  

Share based payments

The Company operates an equity-settled share-based compensation plan. In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 January 2006.

The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Fair value is measured by use of the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

Equity-settled share based payments issued by NextGen Group Plc relating to the employees of the subsidiary, NextGen Sciences Ltd are debited to the cost of the investment in subsidiary in the parent company balance sheet.

Profit and loss

As permitted by section 230 of the Companies Act 1985, no separate income statement is presented in respect of the parent company.

Related Party Transactions

The Company has taken advantage of the exemption from disclosing transactions with entities that are part of the group headed by Nextgen Group plc as it is a parent Company publishing consolidated financial statements.

II NET OPERATING CHARGES

Auditors' remuneration for the statutory audit of the Company was £4,000 (2007: £4,000).  

The Directors' remuneration paid by NextGen Group plc, is disclosed on page 15.

The average number of staff employed by the Company including directors was 5 (2007: 7).

III   INVESTMENTS

Principal group investments

The parent company and the group have investments in the following subsidiary undertakings: 

Company	Country of incorporation	Class of share capital held	Proportion held by the company	Nature of business
NextGen Sciences Ltd.	England and Wales	Ordinary	100%	Development, manufacture and sale of products for the protein research industry
NextGen Sciences Inc.	United States of America	Common stock	100%	Sales and service of products for the protein research industry

The trade of NextGen Sciences Limited has been substantially discontinued as at 31 December 2008.

The loss for the financial year dealt with in the financial accounts of the Company was £4,162,745 (2007: £955,535). As provided by section 230 of the Companies Act 1985, no Company profit and loss account is presented in respect of the Company.

 

Subsidiary undertakings
		£
Cost
At 1 January 2008		874,886
Share based payments		37,693
At 31 December 2008		912,579
Provision for impairment
At 31 December 2008		(613,300)
Net book amount at:
At 31 December 2008		299,279
At 31 December 2007		874,886

IV DEBTORS

	2008	2007
Amounts falling due within one year	£	£
Amounts owed by group undertakings	2,790,818	4,057,649
VAT	2,902	3,063
Prepayments and accrued income	14,829	6,080
	2,808,549	4,066,792

V  CREDITORS

	2008	2007
	£	£
Trade creditors	96,227	133,247
Amounts owed to group undertaking	-	57,903
Accruals and deferred income	69,422	102,375
	165,649	293,525

VI   SHARE CAPITAL 

Full details of the Company share capital is given in note 21 to the consolidated financial statements.

VII   RECONCILIATION OF SHAREHOLDERS FUNDS AND MOVEMENT ON RESERVES

	Share capital	Share premium	Merger  relief reserve	Other reserve	Profit and loss	Total shareholders' funds
At 1 January 2008	£	£	£	£	£	£
	1,394,753	4,187,559	63,544	571,057	(1,505,283)	4,711,630
Allotment during the year	1,152,226	1,362,774	-	-	-	2,515,000
Share issue costs	-	(158,927)	-	-	-	(158,927)
Share based payments	-	-	-	337	54,177	54,514
Loss for the year	-	-	-	-	(4,162,745)	(4,162,745)
At 31 December 2008	2,546,979	5,391,406	63,544	571,394	(5,613,851)	2,959,472

The share based payment amounts relate to a non-cash charge recorded in the profit and loss account in respect of the fair value of options granted to employees.

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