Auditors’ warning for HCEG

AUDITORS handling the medical research company Healthcare Enterprise Group (HCEG) have warned the business may not meet its liabilities if future fundraising schemes fail.

In the group’s annual accounts for the year to June its auditor, BDO, said continuing losses meant it is reliant on further funding.

The auditors said the directors have a “reasonable expectation” that shareholders will continue to support the business but the raising of these funds is “not certain”.

“Should the group be unable to raise these funds, it may not be able to meet its ongoing operating costs and liabilities,” said the statement.

“These conditions… indicate the existence of a material uncertainty which may cast significant doubt about the group’s and company’s ability to continue as a going concern.”

HCEG has two main subsidiaries Ebiox, which specialises in hygiene and decontamination products, and Reproductive Sciences which is developing fertility aids.

The accounts show it made a pre-tax loss of £2.2m in the year to June on sales of £500,000. This compares with a loss of £13.2m on sales of £800,000 in the 16 months to June 30, 2008.

Its directors have now positioned the AIM-listed business as an “investing company” and say there is real potential to act as a consolidator of smaller quoted and unquoted companies in the healthcare sector.

They say the ongoing capital requirements of the group will be funded through further fundraisings or further realisations of existing investments.

The company spent much of its second half with its shares suspended as it sought to reach an agreement on its debts, returning to the market in July after shareholders backed a £3.2m debt-for-equity deal.

Last month it raised £206,000 from shareholders to reduce debt and enhance general working capital.