Diversified Firm, BPH Energy Released Preliminary Final Report

Australian-headquartered company holding investments in different sectors (resources, biotechnology and medical cannabis), BPH Energy Limited (ASX: BPH) is marketing a portfolio of Australian biomedical technologies evolving from collective research by leading medical institutes, hospitals and universities across Australia. The company provides project management, early-stage funding and commercialisation strategies for a spin-out company, a direct collaboration or to secure a license.

BPH has recently released its preliminary final report for the financial year ended 30 June 2019. Let us take a deep dive into the BPH’s annual results via its operational and financial performance below:

BPH’s Operational Activities

There were significant developments observed in the BPH’s investments, including Cortical Dynamics Ltd and Advent Energy Ltd during the period. Let us take a look at each one of them in some detail below:

Cortical Dynamics Ltd

BPH holds 4.43 per cent stake in Cortical Dynamics Ltd, an Australian based medical device technology company. The core product of Cortical is the Brain Anaesthesia Response (BAR) monitor that was created to better identify the impact of anaesthetic agents on brain activity, helping anaesthetists in keeping patients optimally anaesthetised. The approach used is primarily different from its competitors with its underlying algorithm producing electroencephalogram (EEG) indexes that are directly related to the physiological state of the patient’s brain.

During the period, Cortical announced the following developments:

• Mr Gary Todd was hired as the Managing Director of Cortical on 16 October 2018. He holds extensive sales experience of over 30 years both in Australia and internationally in FMCG, IT&T and Medical Devices markets.
• Cortical’s Chief Technical Officer, Mr Louis Delacretaz attended the Korea Anesthesia 2018 congress in Seoul in early November. The regulatory compliance process to enable distribution of the BARM in Korea has now been significantly advanced.
• Cortical’s BARM was tested in Sydney by the Sydney Adventist Private Hospital during the initial two weeks of July 2019. The company received positive feedback from all the anaesthetists that tested BARM.
• BARM is also currently tested by the LiDCO Ltd UK at Southampton University Hospital through September 2019.
• BARM’s successful trials were conducted at Strathfield Private Hospital and St. Luke’s Private Hospital in Sydney. Dr Adrian Sultana, a consultant anaesthetist and the Director of ISPCOP (International Society for the Perioperative Care of the Obese Patient), conducted the BARM trials that demonstrated the following conclusions:

The company informed that the BARM has now been used with ~160 patients at St Luke’s and Strathfield Hospitals. According to Cortical, these conclusions resulting from BARM trials have the following noteworthy implications for hospital operations:

• Optimising the dose of anaesthetic agent used can enhance patient turn-around times, lower the usage of anaesthetic agents and lead to cost savings.
• Promotes the delivery of more reliable and higher quality service to patients and hospitals.

Advent Energy Ltd

BPH Energy has a direct interest of 22.6 per cent in the Perth-based unlisted oil and gas exploration and production company, Advent Energy Ltd. Advent’s assets include PEP11 (85 per cent) in the offshore Sydney Basin, and RL1 and EP386 (100 per cent) in the onshore Bonaparte Basin in the north of WA and Northern territory.

Advent conducted a high resolution 2D seismic data over its one of the core prospects in PEP11, Baleen prospect in April 2018. The 2D seismic data was designed to assess shallow geohazard indications incorporating shallow gas accumulations that can impact subsequent potential drilling activities. MEC Resources Limited (ASX: MMR), that has 50 per cent interest in Advent, informed on 31 December 2018 that there were “no seismically specific geohazard indications” over the proposed location on the Baleen Prospect.

BPH’s Operational Activities After FY19

Subsequent to the financial year ended 30^th June 2019, the company witnessed the following developments:

• Pursuing its strategy of making an investment in the medical cannabis sector, BPH completed an initial investment in the craft cannabis company, Patagonia Genetics Pty Ltd (PG Aust). The company acquired 10 per cent interest in PG Aust, with an option to acquire a total shareholding of 49 per cent.
• The company informed about the settlement of legal disputes with MEC Resources Limited regarding the oppression proceedings it began in Western Australia’s Supreme Court. In addition to this settlement, MEC, BPH, Trandcorp, GBA, and Mr Breeze settled several other proceedings and contracted a deed of settlement and release with Advent and other relevant parties.

BPH’s Financial Performance

Performing substantially well during FY19, the company reported a rise of 17.8 per cent in its revenue from ordinary activities from AUD 235,824 in FY18 to AUD 278,227 in FY19. The improvement in revenue was reportedly due to the accumulation of interest on BPH’s secured loans to its investee companies. The consolidated entity recorded a significant unaudited NPAT of AUD 304,165 in FY19 against a loss of AUD 1,506,758 reported in the prior corresponding period. The company’s cash balance at the end of the financial year stood at AUD 437,316.

During the year, the company issued ~1.18 billion shares under Rights Issue at a price of AUD 0.001 per share, of which AUD 158,536 was satisfied by debt set-off, and AUD 1.027 million was received in cash. The company also raised AUD 1,48,000 cash by issuing 100 million shares in exchange for 5.56 million shares in MEC, issuing 20 million shares as part of director remuneration and issuing 123 million shares as settlement of consulting fees.

It can be inferred that BPH delivered a remarkable performance during FY19, with impressive profit and revenue figures. The significant developments made by its investee companies illuminated the company’s operational performance during the period.

Stock Performance: BPH’s stock is trading at AUD 0.002 on 17^th September 2019 (as at 12:02 PM AEST). The stock has generated a YTD return of 100 per cent.

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