Final Results
Allergy Therapeutics PLC
12 September 2006
Allergy Therapeutics plc
Preliminary Results Statement
(for the year ended 30 June 2006)
SIGNIFICANT PROGRESS IN CLINICAL DEVELOPMENT PROGRAMMES
HEALTH CANADA ACCEPTS POLLINEX(R) QUATTRO RAGWEED FOR SUBMISSION
Allergy Therapeutics plc, the specialist pharmaceutical company focused on
allergy vaccines, today announces its preliminary results for the year ended 30
June 2006.
The company also today announces that it has received confirmation from Health
Canada that its application for marketing authorisation has been accepted for
assessment. Pollinex Quattro Ragweed is formally 'in registration'.
Highlights
• Further significant progress in the clinical development programmes:
• FDA accepted plans taking Pollinex(R) Quattro Grass into phase III;
study G301 commissioned
• Successful meeting with the Pharmaceutical and Medical Devices Agency
(PMDA) in Japan for Pollinex(R) Quattro Grass
• Eight phase I & II studies completed
• £19m gross proceeds (£18.3m net) raised from a placing of 19m shares in May
• Second manufacturing unit on target to open by the end of 2006
• Extensive manufacturing upgrade commenced
• Gross sales increased by 7% to £24.4m (2005: £22.9m)
• Gross sales of Pollinex(R) Quattro up 7% to £7.7m (2005: £7.2m)
• Granted a broad technology patent for the combination of MPL(R) with tyrosine
and an antigen by the European Patent Office, covering 24 countries in Europe
• Senior management team strengthened with three key appointments
• New bank facilities of £4m available
• Expansion of EU sales and marketing infrastructure in Poland, Austria, the UK,
and the Czech and Slovak Republics
Keith Carter, CEO of Allergy Therapeutics, commented:
"With this morning's announcement from Canada I am delighted to report that as a
result of our efforts and investment over the year, our leading product,
Pollinex Quattro, has passed three major milestones : conclusive proof of
efficacy, acceptance by the FDA that it is prepared for Phase III studies to
commence, and now the progression of the product beyond phase III into
registration in the Canadian market.
Allergy Therapeutics has again increased its sales and the core business
performed solidly. The profits generated were reinvested in improving the
manufacturing and sales and marketing infrastructures as preparations for the
full launch of Pollinex Quattro build in pace.
I am strongly optimistic about the opportunities which we anticipate will flow
from the achievements of this year and the development of Pollinex Quattro."
- ends -
For further information:
Allergy Therapeutics 01903 844720
Keith Carter / Ian Postlethwaite
Bell Pottinger 020 7861 3232
Dan de Belder / Rosanne Perry
Chairman's Statement
As we approach the end of our second year as a public company, I am pleased to
report that Allergy Therapeutics plc (the Company) is a much strengthened
business in every field, and progress continues to be made across the board.
In the clinic Pollinex(R) Quattro, the ultra-short course four-shot vaccine
against allergies causing hay fever, achieved a number of key milestones.
• A very successful pivotal Phase II/III study decisively validated the
technology with convincing proof of efficacy after only four injections
and only three weeks. This will allow us to make a submission for
registration in Canada.
• With this impetus, our planning for the critical Phase III programme
moved forward dramatically and discussions with regulatory agencies - in
particular the US FDA - progressed markedly.
• Substantial progress was made on the practical process of commencing the
Phase III work, with a leading CRO engaged, centres being selected,
investigator meetings planned, and the 'Caution: Allergen' awareness-
raising campaign being initiated across North America and Europe.
The Company is now entering the most exciting phase of development with the
flagship product line, Pollinex(R) Quattro.
We believe that Pollinex(R) Quattro has the potential to transform the treatment
of allergy, one of the major chronic therapy areas. The potential we see in our
business, in particular the development pipeline based upon the unique patented
vaccine adjuvant, MPL(R), requires us to invest to unlock the success that can
be ours. Not only do the clinical trials require significant financial
resources, but as an integrated pharmaceutical company we have the opportunity
to make and sell our own new products. Success only comes about if it is
anticipated and planned for. Our manufacturing operations team already has
well-developed plans in place that will ensure our preparedness for the
forthcoming launches of Pollinex(R) Quattro world-wide. We are on plan to ensure
the supply to all markets reliably and to the highest Good Manufacturing
Practice (GMP) standards. In addition, our commercial operations must be
strengthened further - both organically and otherwise - in advance of the launch
of the new products.
In order to fund the next phase of unlocking the Company's potential, a placing
of shares was completed in May, raising £19m gross. The proceeds will be
invested mainly in the world-wide clinical studies for Pollinex(R) Quattro
vaccines for up to three allergens - Grasses, Trees and Ragweed - being the
major causes of hay fever. In addition there is extensive investment in
manufacturing plant, processes and personnel, and in the strategic marketing
efforts for Pollinex(R) Quattro.
During the year Allergy Therapeutics (the Group) made further progress in its
markets, with sales in excess of £23m, 14% up on the previous year despite some
supply difficulties encountered in balancing the demands of both the development
activity and market supply. Measures have already been taken to ensure no
repetition of these supply issues, not least the investment in a second
manufacturing facility planned to be operational by the end of 2006. Before R&D,
the Group made profits of £3.4m, a slight decrease of 8% on last year owing to
the increased strategic investments alluded to above. We anticipate two further
years of increased investment to impact our profitability, and are confident
that this is the best route to increasing shareholder value.
Board changes
As previously announced, Dr Virinder Nohria joined the Board of Allergy
Therapeutics plc in November 2005 as a non-executive director. His background in
pharmaceutical development has already proved very useful, especially as the
Company's development programmes move forward and there has been more
interaction with the regulatory bodies such as the FDA. Also at the turn of the
year Andrew Turnbull resigned as director responsible for Supply Operations and
Business Development, to return to his native New Zealand. Andrew had been with
the Company since 1999, serving on the board from 2002; his contributions were
many and wide-ranging, but above all his energy and determination will be
missed. We all thank him for what he brought to Allergy Therapeutics and wish
him well.
Our People
The progress we have achieved this year is a reflection of the skill and
enthusiasm of our team members. I would like to take this opportunity to thank
all of my colleagues throughout the Group for their commitment over the year.
In a year characterised by planning for success and putting in place the
resources required to deliver on these plans, we have made four key appointments
at a senior level. As well as Dr Virinder Nohria, Ray Keeling joined us in
November to take charge of our supply operations, a major task to ready the
Company for the anticipated world-wide launches and large-scale sales of
innovative vaccines whilst continually improving GMP standards in line with the
changing regulatory requirements. Ray has a wealth of experience in sterile
pharmaceuticals manufacture gained over many years with Aventis. Dr Manjit
Rahelu is our new Head of Business Development; a qualified immunologist, Manjit
has valuable pharmaceutical business development experience gained at Pfizer and
UCB. His engagement will support the Company as it moves into the key final
stages of the strategy to bring Pollinex(R) Quattro to markets across the World
- which will involve partnerships and collaborations with other companies with
complementary strengths. Kevin Wilkinson joined Allergy Therapeutics in June as
Head of Strategic Marketing. Kevin has been in the pharmaceutical industry in a
variety of roles for over ten years, including leading commercial positions with
Eli Lilly. His role is important as we progress with the development of Pollinex
(R) Quattro and make our preparations for its launch world-wide, including
planning EU launches through our own sales and marketing infrastructure.
In summary, I am delighted with the progress the Company is making. Ours is a
growth company, with prospects and potential out of proportion to its size. The
challenge we face is unlocking that potential for the benefit of patients,
healthcare payers, physicians and all the stakeholders in Allergy Therapeutics.
We look forward to this challenge with relish.
Ignace Goethals
Chairman
11 September 2006
Chief Executive's Review
Allergy Therapeutics passed two major milestones this year: conclusive proof of
efficacy of its lead development product - Pollinex(R) Quattro - and acceptance
by the FDA that it was prepared for Phase III studies to commence. It would be
hard to overstate the implications of these achievements for the Company. We
have moved on to a new, advanced stage as a business.
We are proud of having a profitable core business, which has again delivered
record sales results during the period. The Board believes that continued
positive trial results and future commercial opportunities afforded by the
Pollinex(R) Quattro product are hugely exciting and represent an opportunity for
the Company to achieve an international position of market leadership in allergy
treatment, thereby delivering material shareholder value. Consequently, the
Company's strategy will be focused on concluding the clinical trial process for
Pollinex(R) Quattro and making the operational investments required to support
its launch and sale. The profits and cash flow generated by the current
commercial products can be applied to these growth objectives and hence reduce
the dependence on external funding.
Strategic background
Allergy Therapeutics is maturing as an organisation. It is already a fully
integrated pharmaceutical company on a modest scale, with Sales and Marketing,
and Manufacturing operations as well as the R&D programmes developing our proven
MPL(R)-based technology. The time has come to begin to leverage these assets in
preparation for the completion of our continued clinical trial programme aimed
at world-wide registration of Pollinex(R) Quattro in the major hay fever
allergens.
During the year we made a number of R&D related announcements tracking certain
exciting milestones as they occurred; perhaps the greatest achievement was the
completion of our first pivotal study with Pollinex(R) Quattro, the Ragweed 204
(R204) study. As we enjoy success in the clinic and embark on the final phase of
clinical trials, the success and size of our new product development activities
and the potential for the new vaccines which will result from them is remarkable
for a company of our size. Matching the potential of the new products and the
commitment to clinical trials dictates that we develop the other major
components of the business to ensure full exploitation of the opportunity that
we have. We are confident that Pollinex(R) Quattro has the potential to
transform allergy treatment - currently a $12.6 billion market (IMS, 2005 Sales)
which leaves many patients and their physicians unsatisfied. It is important
that we recognise the scale of the opportunity and hence the challenges in
seizing it.
Our strategy will continue to focus on partnering solutions for sales and
marketing in the USA and Japan - the two largest markets in the world - and to
seek ways of being in a position to commercialise ourselves in the EU. This
requires intense focus on business development activities.
We maintain the independent manufacturing strategy of supplying our own markets
and partners with products manufactured under stringent GMP conditions in our
Worthing facilities. To this end we have commenced a major programme of
refurbishment and expansion of facilities and hiring of additional key staff. By
maintaining control of manufacturing, we retain that part of the margin on sales
ascribed to supply, and retain control of a very specialised process which also
represents further protection of our technology. Furthermore, we ensure
effective communication between the development activities and marketing launch
planning activities to deliver our planned product launches on schedule.
In this review I will highlight some of the key milestones achieved since the
last annual report, and outline what we believe they mean for the Company in the
coming years.
Product development
As noted above, possibly the highlight of the year was the success of the
Pollinex(R) Quattro Ragweed study R204. This study was 'pivotal' for Canada -
meaning that its outcome can be submitted in support of an application for
Marketing Authorisation: the process commonly referred to as 'registration'.
Furthermore, data from this study will be supportive for the ongoing process
aimed at achieving a registration from the FDA for this product to be sold in
the US market.
R204 was a double-blind placebo-controlled study conducted in an Environmental
Exposure Chamber ('EEC'), a controlled way of exposing patients to allergen
challenge equivalent to that encountered on a high pollen count day. Patients
were exposed in the EEC for three hours on four consecutive days in advance of
treatment and whilst in the EEC they kept a periodic record of their symptoms;
this set the symptom 'baseline'. The patients were then given four injections of
either Pollinex(R) Quattro Ragweed or placebo and three weeks later returned to
the EEC, again for four consecutive days and again keeping a periodic record of
their symptoms. The primary end-point of the study was the comparison of the
change from base-line in the active group compared to that in the placebo group.
The result was a compelling confirmation of the efficacy of Pollinex(R) Quattro:
The reduction of symptom score against baseline was large, at 42%. The clinical
significance of this can be appreciated by considering how the scores are
compiled: 8 different nose and eye symptoms are each given a score of 0 - 3:
0 = no symptoms,
1 = mild symptoms (which do not interfere with everyday activities),
2 = moderate symptoms (which do) and
3 = severe.
Therefore at baseline, the patients recorded an average total symptom score of
16 equating to an average of 2 for each of the 8 symptoms scored - whereas after
treatment the average was 1. Pollinex(R) Quattro therefore reduced the patients'
average symptoms from 'moderate, interferes with everyday life' to 'mild, does
not interfere with everyday activities'. This is real, tangible patient benefit.
The relative improvement over placebo was 48%. The statistical significance was
very high, with a 'p score' (a measure of confidence that the result was not
mere chance) of less than 0.01. The generally accepted threshold for
significance is 0.05.
The study also clearly demonstrated the positive contribution made to allergy
vaccines by MPL(R), our patent-protected adjuvant. A further assessment of this
study looked at the patients' quality of life. Allergic Rhinoconjuntivitis, or
hay fever, is known to have bad effects on sufferers beyond the nose and eye
symptoms typically measured as the pivotal end-point of the studies. These
elements contribute to the most relevant thing for patients - the interruption
to their ability to participate fully in everyday life. Pollinex(R) Quattro
showed statistically significant improvement over placebo on the important
'practical problems' and 'overall assessment' scores.
R204 was the first study of its kind in allergy vaccination and we hope that our
success with this well-controlled method of testing allergy vaccines will lead
to increased sponsor and regulator acceptance of the EEC as a useful alternative
to relying on natural pollen flight to provide the allergen challenge.
Because allergy vaccines act at the immunological level, correcting the
imbalances which underlie allergy, they are considered to confer long-term
benefit - and indeed, doctors normally stop treatment after three to five years
and observe that the patients' reduced symptoms and use of medication is
maintained into the following years. As part of our investigation of Pollinex(R)
Quattro we are interested to know how much of the protection offered to the
patients after three weeks (far faster than any other vaccine on the market) is
retained after 12 months and whether re-treating the patients gives incremental
benefit. This is the purpose of R205, a follow-up study to R204, where the same
patients were invited to return to the EEC and potentially have a second year's
treatment. This study was commenced in June and is due to be completed in
December 2006.
Regulatory
These two studies are merely part of an extensive pre-Phase III programme
Allergy Therapeutics has completed in the past year. All our clinical work is
ultimately aimed at one objective: the registration of Pollinex(R) Quattro in
all the major markets, allowing it to be offered to the 150 million people who
are estimated to suffer from allergic rhinitis across the world. We made a major
step in this direction when we attended an 'End of Phase II' meeting with the US
FDA at the end of June. This meeting was for the FDA to consider the pre-Phase
III data and the Company's proposals for Phase III for Pollinex(R) Quattro
Grasses. The outcome of this meeting was very favourable, with the FDA accepting
our readiness to move into Phase III and conduct one large, well-controlled
study in North America as the basis for registration in the USA. We have
concurrently been working with EU authorities to progress to EU-wide
registration and have had our first contacts with the Japanese PMDA where we
were able to establish their view on our development programme and the next
steps required on the path to registration in Japan. Pollinex(R) Quattro is the
only allergy vaccine in truly world-wide development. We believe we will be
'first in class' onto the major markets of the world, and that the product has a
clear 'best in class' profile for patients, payers and physicians.
Manufacturing
Our Supply Operations strategy has four key aims:
1. to increase capacity and flexibility;
2. to introduce a new Pollinex(R) Quattro manufacturing capability;
3. to gain formal FDA approval of the manufacturing plant in time for
product launches;
4. to support the growth of the core business.
This strategy is underpinned by a capital investment programme of over £5m over
the next 3 years.
These aims are being implemented initially by commissioning an additional
facility to liberate the space required for manufacturing, packaging, Quality
and Science, and administrative accommodation for the projected business growth,
compliance needs and product launch requirements.
The key objectives and milestones required to deliver our supply operations
strategy have been carefully planned, including the ongoing recruitment of
people with the key skills required in a highly regulated aseptic environment
for the manufacture of injectible products. Such resources are required in
support of the R&D timelines and, in recognition of the lead-time to recruit and
train the best people, in readiness for our planned growth and exciting product
launches. These timely investments in resources will impact costs. In
particular, direct headcount will inevitably increase in the short term.
However, our indirect-to-direct ratio will improve and positively impact our
margins in the mid to long term, when additional sales volumes have the effect
of reducing our unit costs.
The strategy in Supply Operations is working and already delivering significant
business benefits, not least the improvement in Customer Service performance in
support of the core business.
Sales and marketing; financial
During the year Allergy Therapeutics increased its net sales by 14% to £23.6
million and made progress in all its markets. This was achieved despite supply
problems encountered where key products went out of stock owing primarily to
precedence being given to the materials being manufactured for clinical trials -
21% of all batches were manufactured for this purpose in 2005/6. New offices
were also opened to enter the Austrian, UK, Polish, Czech and Slovak markets;
this is part of our programme to expand the EU commercial infrastructure. We
remain determined to have a significant presence in all the key EU markets by
2009, in time for the launch of registered Pollinex(R) Quattro.
From the financial point of view, the highlight of the year was undoubtedly the
£19 million share placing we completed in May. With net proceeds of £18.3
million raised primarily in the London market, we increased our access to liquid
resources to £24 million. The providers of these funds share the management's
firm belief in the value of the MPL(R) pipeline, underpinned by a solid core
business generating sales and cash before the future investment activities.
We have had a year of achievement. Allergy Therapeutics is now in a strong,
unique position, with an advanced R&D programme and a core business being
prepared to exploit the opportunities, which we anticipate will flow from the
development of Pollinex(R) Quattro.
I am pleased by the progress we are making, assembling the components required
to make the most of the assets we have so painstakingly developed. Our
challenges are excellent ones to have: those of building on strength and
maximising the benefits of our assets for our shareholders and other
stakeholders which, satisfyingly, include the patients whose lives will be
improved thanks to our efforts.
Keith Carter
Chief Executive Officer
11 September 2006
Financial Review
The following review should be read in conjunction with the Group's consolidated
financial statements and related notes appearing elsewhere in this annual
report.
Turnover
For the year ended 30 June 2006 total gross sales increased by 7% to £24.4m
(2005: £22.9m); after statutory rebates in the German market net sales were
£23.6m (2005: £20.6m) an increase over the previous year of 14%.
Own markets
The Group competes directly in 8 European markets, including 3 of Europe's 4
most important for allergy vaccination: Germany, Italy and Spain.
The Group has the third largest allergy vaccine company in Germany, which is the
largest market in the world for 'finished form' allergy vaccines. The allergy
vaccine market in Germany was affected during the year, as doctors reacted to
new rules over their spending and reimbursement for treatment, slowing the rate
of market growth to 7% (2005: 30%). Company gross sales in Germany were £17m
(2005: £16.4m), an increase over the previous year of 4%, and less than expected
due to some supply difficulties as a consequence of the demands placed upon the
manufacturing facility in preparing material for clinical trials. Action has now
been taken to minimise the repetition of these supply issues. The rebate on
pharmaceutical sales, which is market wide, was decreased in January 2005 to 6%
from the 16% in force the preceding year. This has significantly reduced costs
to the Group, since approximately 70% of sales originate in Germany, to a charge
of £0.8m for the year (2005: £2.3m). However, in a further change to the rules,
on 1 May 2006 it was announced that any price rise since 1 November 2005 would
be added to the rebate, thus increasing costs.
In Italy and Spain the Group has continued to increase its market share. In
Italy annual sales were £2.3m (2005: £2.1m) an increase of 10% and in Spain
sales were £1.5m (2005: £1.4m) an increase of 7%. Both of these markets were
affected by the supply difficulties highlighted earlier.
New operations in the UK, the Czech and Slovak Republics, Poland and Austria
were set up during the year and contributed £0.9m to sales.
Licensees
The Group also sells through licensees and distributors, accounting for 11% of
the gross sales. Total sales for the year were £2.7m (2005: £2.9m) a decrease of
7% on the previous year. Included in licensee sales are milestone receipts from
the Company's Canadian licensee for Pollinex(R) Quattro; in the year three
milestones totalling £0.8m (2005: £1m) were received, triggered by reaching
certain development activities.
Product sales
The Group's flagship product, Pollinex(R) Quattro continued to sell well,
despite difficult market conditions and supply problems, with gross sales of
£7.7m (2005 £7.2m) an increase of 7% over the previous year.
Cost of sales and net operating expenses
In general, manufacturing costs have increased as a result of higher fuel costs
and an increase in compliance with recommended good manufacturing practice
(GMP). However costs increased further as the headcount in the manufacturing
area increased by 25 full time equivalents, an increase of 25% in the year, to
support the growth of the business and prepare for world-wide market launches of
Pollinex(R) Quattro. Moreover, investments in new plant and machinery and a
second manufacturing facility has led to increased depreciation costs. This
investment will help provide greater capacity for the current named-patient
sales of Pollinex(R) Quattro, whilst at the same time enabling the existing
building to be upgraded without interfering with supply. As a consequence of the
environmental cost increases and improvements for the future, cost of goods sold
was £6.5m (2005: £4.9m) an increase of 32% over the previous year.
Investments in the commercial strategy, including new market spend of £0.7m and
the creation of a business development function plus continued support for
existing markets created uplift in the marketing and promotion spend by 22% to
£9.8m (2005: £8.0m). Administrative expenses have increased by 7% to £4.6m
(2005: £4.3m) with the inclusion of a provision for the 2005 Long Term Incentive
Plan. As discussed in the CEO's statement, the development programme for
Pollinex(R) Quattro was initiated in the preceding year and, as the programme
has moved forwards towards Phase III, the costs have increased in the year by
71% to £9.6m (2005: £5.6m). Most of the activity relates to the extensive Phase
II programme for Grass, Tree and Ragweed.
Results of operation
As a consequence of investment in the development programmes in preparation for
the launch of Pollinex(R) Quattro on a world-wide basis the Group recorded a
loss on ordinary activities before taxation of £6.1m (2005: loss £1.9m).
However, before development costs and rebates, the operating profit including
milestones was £3.7m (2005: £5.5m), which allows for a more reasonable
appreciation of the core business performance this year; the reduction in profit
highlighting that preparation is now well underway for the manufacturing
infrastructure and commercial team to be ready for market launches of Pollinex
(R) Quattro.
Taxation
As a result of its investment in research and development, the Company has
benefited from making R&D claims. These claims have given the Company enhanced
deductions for tax purposes and the possibility of benefiting from the receipt
of R&D tax credits. A R&D tax credit has been claimed for the year ending June
05. The Budget announcement in April 2006 put forward proposals to revise the
definition for small and medium sized entities regarding the number of
employees; the number being increased from 250 to 500. The Group's average
headcount for this year has increased to 275, lifting it above the current 250
threshold for the first time, so allowing it to make a R&D tax credit claim for
the year. The Budget proposals have yet to be approved by the European
Commission, however, if passed the Company may be able to make further R&D tax
credit claims in the future.
The Group in total has losses to carry forward of £23.3m, although in Germany it
is likely that corporation taxes will fall due before other entities in the
Group.
Net assets
Net assets at 30 June 2006 were £32.7m (2005: £20.1m), an increase of £12.6m due
primarily to the £18.3m net proceeds raised from the placing of new shares in
May 2006. 19,000,000 new ordinary shares were issued, having been placed with
existing and new investors. This additional capital will primarily fund the
Company's development pipeline of innovative ultra-short course allergy
vaccines, Pollinex(R) Quattro. The new shares rank pari passu with the existing
shares. Following admission of the new shares the Company has 81,950,632
ordinary shares in issue.
Intangible assets comprise goodwill and know-how and continue to be amortised
over 15 years.
Capital expenditure on tangible fixed assets in the year was £2.2m (2005;£0.9m);
contributing to the increase in the value of tangible fixed assets to £3.6m from
£2.1m. The main component of this spend (£0.9m), the development of the second
manufacturing unit in Worthing, will equip the Company with the appropriate
processing capability to meet the anticipated post-registration increased
volumes of Pollinex(R) Quattro for the US and European markets. Other
expenditure typically included upgrades to plant and machinery.
In order to manage better demand from the markets higher levels of key stock
items are being held, increasing the stock value by 37% during the year to £3.7m
(2005: £2.7m) Debtors falling due within 1 year increased marginally by 13% to
£3.6m (2005: £3.2m) due to higher VAT balances.
Creditors falling due within 1 year are lower at the year end by 20% to £4.9m
(2005: £6.1m), primarily due to an increase in accruals relating to development
activities at the end of the preceding year.
Capital structure
The Group finances its operations through cash generated from its core business,
the net proceeds raised from the placing of new shares in May 2006 and bank
lines.
The Group's funding requirements depend on a number of factors, including the
Group's product development programmes, which increased further in activity this
year and are set to rise further in the following financial year. The Group
currently has no debt on its balance sheet but having agreed new bank lines will
consider using them for working capital finance in the future as a means of
financing its core business growth.
Cash flows
As at the 30 June 2006 cash totalled £23.9m, an increase of £8.8m from £15.1m at
30 June 2005 due primarily to the net proceeds of £18.3m raised from the placing
of new shares. For the year, net cash outflow from operating activities amounted
to £8.1m (2005: nil). Net cash outflow includes significant product development
costs of £9.6m and strategic investments in manufacturing and commercial
infrastructure.
Ian Postlethwaite
Finance Director
11 September 2006
Consolidated Profit and Loss Account
for the year ended 30 June 2006
Year ended Year ended Year ended Year ended
30 June 2006 30 June 2006 30 June 2005 30 June 2005
Note £'000 £'000 £'000 £'000
Turnover 2 23,558 20,606
Cost of sales (6,513) (4,853)
-------- --------
Gross profit 17,045 15,753
Distribution costs (9,833) (8,012)
Administrative
expenses - other (4,572) (4,303)
Research and
development costs (9,560) (5,620)
Exceptional costs 4 - (614)
------- -------
Administrative expenses (14,132) (10,537)
Other operating income 260 378
-------- --------
Operating loss (6,660) (2,418)
Interest receivable
and similar income 545 531
Interest payable on
loans and overdrafts (4) (42)
------- -------
541 489
-------- --------
Loss on ordinary
activities before tax 3 (6,119) (1,929)
Tax on loss on
ordinary activities 7 - -
-------- --------
Retained loss for
the financial year 20,21 (6,119) (1,929)
======== ========
Basic loss per share 9 (9.3p) (3.4p)
All amounts relate to continuing activities
Consolidated Balance Sheet
at 30 June 2006
Note 30 June 2006 30 June 2005
£'000 £'000
Fixed assets
Intangible assets 10
Goodwill 2,326 2,617
Other intangible assets 829 951
-------- --------
3,155 3,568
Tangible assets 11 3,637 2,111
-------- --------
6,792 5,679
Current assets
Stocks 13 3,651 2,741
Debtors: amounts falling due
within one year 14 3,577 3,160
Cash at bank and in hand 23,860 15,080
-------- --------
31,088 20,981
Creditors: amounts falling due
within one year 15 (4,939) (6,121)
-------- --------
Net current assets 26,149 14,860
-------- --------
Total assets less current liabilities 32,941 20,539
Creditors:
amounts falling due after one year 16 (239) (455)
-------- --------
Net assets 32,702 20,084
======== ========
Capital and reserves
Called up share capital 19 92 73
Share premium account 20 33,173 14,924
Other reserves - shares issued
by subsidiary 20 40,128 40,128
Other reserves - shares held in EBT 20 (60) (322)
Other reserves - Long Term Incentive Plan 20 178 -
Profit and loss account 20 (40,809) (34,719)
-------- --------
Shareholders' funds 21 32,702 20,084
======== ========
These financial statements were approved by the board of directors on
11 September 2006 and were signed on its behalf by:
K Carter I Postlethwaite
Chief Executive Officer Finance Director
Company Balance Sheet
at 30 June 2006
30 June 2006 30 June 2005
Note £'000 £'000
Fixed assets
Investments 12 51 -
-------- --------
51
Current assets
Debtors: amounts falling due
within one year 14 14 6
Creditors: amounts falling due
within one year 15 (312) (239)
-------- --------
Net current liabilities (298) (233)
Total assets less current liabilities (247) (233)
-------- --------
Net liabilities (247) (233)
======== ========
Capital and reserves
Called up share capital 19 92 73
Share premium 20 33,173 14,924
Other reserve - shares held in
Employee Benefit Trust 20 (60) (322)
Other reserve - Long Term Incentive Plan 20 178 -
Profit and loss account 20 (33,630) (14,908)
-------- --------
Shareholders' deficiency (247) (233)
======== ========
These financial statements were approved by the board of directors on
11 September 2006 and were signed on its behalf by:
K Carter I Postlethwaite
Chief Executive Officer Finance Director
Consolidated Cash Flow Statement
for the year ended 30 June 2006
Year to Year to Year to Year to
30 June 2006 30 June 2006 30 June 2005 30 June 2005
Note £'000 £'000 £'000 £'000
Cash outflow from operating
activities 22 (8,099) (15)
Returns on investment and
servicing of finance
Interest received 545 531
Interest paid (4) (42)
------ -------
541 489
Capital expenditure and
financial investment
Purchase of tangible fixed
assets 11 (2,192) (903)
------- -------
Cash outflow before
financing (9,750) (429)
Financing 23
Gross funds raised on issue
of shares 19,000 16,000
Bank loans repaid - (945)
Sale of EBT shares 262 51
Expenses paid in connection
with issue of shares (732) (1,054)
------ -------
18,530 14,052
------- -------
Increase in cash in year 8,780 13,623
======= =======
Reconciliation of Net Cash Flow to Movement in Net Funds
Year to Year to
30 June 2006 30 June 2005
£'000 £'000
Increase in cash in the year 8,780 13,623
Net loans repaid - 945
------ ------
Movement in net funds in year 24 8,780 14,568
Net funds at beginning of year 15,080 512
------ ------
Net funds at end of year 24 23,860 15,080
====== ======
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 30 June 2006
Year to Year to
30 June 2006 30 June 2005
£'000 £'000
Loss for the financial year (6,119) (1,929)
Currency translation differences on foreign
currency net investment 29 (60)
------- -------
Total recognised gains and losses relating to the year (6,090) (1,989)
======= =======
Notes to the Financial Statements
1 Accounting policies
Change in accounting policies
In preparing the financial statements for the current year, the Company has
adopted the following Financial Reporting Standards:
- FRS 21 'Events after the Balance Sheet date (IAS 10)'; and
- the presentation requirements of 'FRS 25 Financial Instruments:
Disclosure and Presentation (IAS 32)'.
Neither standard has had an impact on the Group's financial statements.
Basis of preparation
These financial statements have been prepared under the historical convention of
accounting and in accordance with applicable UK accounting standards. The
accounts are prepared on a going concern basis.
Basis of consolidation
The consolidated financial statements have been prepared using merger accounting
principles and include the financial statements of the Company and its
subsidiary undertakings made up to 30 June 2006.
"Other reserves - shares issued by subsidiary" relates to the premium on shares
previously issued by Allergy Therapeutics (Holdings) Ltd.
The profit and loss reserve includes all profits and losses for the Group
formerly headed by Allergy Therapeutics (Holdings) Ltd prior to its merger with
the Company in October 2004.
Goodwill
Purchased goodwill (representing the excess of the fair value of the
consideration given over the fair value of the separable net assets acquired)
arising on consolidation in respect of acquisitions is capitalised. Positive
goodwill is amortised to nil by equal instalments over its estimated useful life
(15 years).
Intangible fixed assets and amortisation
Intangible fixed assets are valued at cost. Non-competing know-how is amortised
over 4 years reflecting its estimated useful life to the Group. Acquired
trademarks, licences, patents and manufacturing know-how are capitalised and
amortised over their estimated useful economic lives (15 years). Any development
costs which are incurred by the Group and are associated with an acquired
trademark, licence, patent and know-how are written off to the profit and loss
account when incurred.
Depreciation
All assets except land are depreciated. Depreciation has been provided on a
straight line basis in order to write off the cost less the estimated residual
value of depreciable fixed assets over their estimated useful lives.
The rates applicable are:
Plant and machinery - 5 - 10 years
Fixtures and fittings - 5 years
Motor vehicles - 4 years
Computer equipment - 3-7 years
Buildings - 10 years
Operating leases
Costs in respect of operating leases are charged on a straight line basis over
the lease term.
Pension
The Group operates a private personal pension for employees in the UK and
Germany. The assets of the UK scheme are held separately from those of the Group
in an independently administered fund. The amount charged against profits
represents the contributions payable to the scheme in respect of the accounting
period. The pension liability in Germany is 'insured' through a reinsurance
contract with an independent insurance company.
Stock valuation
Stocks have been valued at the lower of cost and net realisable value. Costs
include materials, direct labour and an appropriate proportion of manufacturing
overheads based on normal levels of activity.
Research and development
Laboratory equipment used for research and development is capitalised as plant
and equipment and written off in accordance with the Group's depreciation
policy. Other research and development expenditures are written off in the year
they occur.
Foreign currencies
Transactions in foreign currencies, including those covered by forward exchange
contracts, are recorded using the rate of exchange ruling at the preceding
month-end. Monetary assets and liabilities denominated in foreign currencies are
translated using the rate of exchange ruling at the balance sheet date and the
gains or losses on translation are included in the profit and loss account.
The assets and liabilities of overseas subsidiary undertakings are translated at
the closing exchange rates. Profit and loss accounts of such undertakings are
consolidated at the average rates of exchange during the period. Gains and
losses arising on these translations are taken to reserves.
Deferred taxation
Deferred tax is recognised without discounting in respect of all timing
differences, in the following year, between the treatment of certain items for
taxation and accounting purposes, which have arisen but not reversed by the
balance sheet date except as otherwise required by FRS 19.
Turnover
Turnover represents the amounts (excluding value added tax) derived from the
provision of goods and services to third party customers, net of statutory
rebates paid in Germany.
Revenue recognition
Revenue is recognised when contractual obligations are met and a right to
consideration is earned, normally when goods are despatched or royalties become
due. Where a right to consideration is dependent on the occurrence of a critical
event (i.e. when the Group has fulfilled all relevant conditions to be entitled
to the revenue), such as for milestone payments, revenue is not recognised until
that event occurs.
Cash and liquid resources
Cash, for the purpose of the cash flow statement, comprises cash in hand and
deposits repayable on demand, less overdrafts payable on demand.
Liquid resources are current asset investments which are disposable without
curtailing or disrupting the business and are either readily convertible into
known amounts of cash at or close to their carrying values or traded in an
active market.
Employee Benefit Trust (EBT)
The financial statements include the assets and liabilities of a trust, set up
for the benefit of the Group's employees. The employee benefit trust has
acquired shares in the Company and these are deducted from shareholders funds on
the balance sheet within 'other reserve' initially at the cost that the shares
were acquired. The net proceeds received from the issue of these shares through
the exercise of options are recognised through this reserve.
Investments
Investments are included at cost less amounts written off.
Financial instruments
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of an entity after
deducting all of its financial liabilities. Where the contractual obligations
of financial instruments (including share capital) are equivalent to a similar
debt instrument, those financial instruments are classed as financial
liabilities. Financial liabilities are presented as such in the balance sheet.
Finance costs and gains or losses relating to financial liabilities are included
in the profit and loss account. Finance costs are calculated so as to produce a
constant rate of return on the outstanding liability. Where the contractual
terms of share capital do not have any terms meeting the definition of a
financial liability then this is classed as an equity instrument. Dividends and
distributions relating to equity instruments are debited direct to equity.
R&D tax credits
R&D tax credits are recognised in the profit and loss account when received.
2 Turnover
Turnover is attributable to the principle activities of the Group, as defined in
the Directors' Report. An analysis of turnover by geographical market and by
country of origin is given below.
Year to Year to
30 June 2006 30 June 2005
£'000 £'000
By geographical destination
Germany 16,155 14,175
Rest of Europe 5,666 4,714
North America 1,430 1,371
Asia 307 346
------ ------
23,558 20,606
====== ======
By country of origin
Germany 16,155 14,175
Rest of Europe 3,823 3,481
UK 3,580 2,950
------ ------
23,558 20,606
====== ======
3 Loss on ordinary activities before tax
Loss on ordinary activities before tax Year to Year to
is stated after charging: 30 June 2006 30 June 2005
£'000 £'000
Auditors' remuneration:
Group audit 89 62
Company audit 7 7
Non-audit fees paid to the auditor in
respect of other services:
Tax compliance and assurance 31 26
Review of interim statements 6 5
Transfer pricing and international tax projects 35 60
Depreciation of tangible assets 668 436
Amortisation of intangible assets 450 448
Research and development 9,560 5,620
Operating lease rentals - plant & machinery 7 7
- other 592 625
Foreign currency exchange gains (350) (262)
In addition to the June 2005 charges above, an amount of £97,000 was paid to the
auditors for work as reporting accountants in connection with the Company's
admission to AIM and the issue of shares. The costs were offset against the
share premium account as part of the cost of issuing shares in the year.
4 Exceptional items Year to Year to
30 June 2006 30 June 2005
£'000 £'000
Cost of consultancy services provided in 2000,
payable on an initial public offering (IPO) or 'exit'. - 614
Consultancy services included assistance with the development of a business
strategy regarding entry into the US market.
5 Remuneration of directors
Year to Year to
30 June 2006 30 June 2005
£'000 £'000
Directors' emoluments 789 805
Pension contributions 74 73
----- -----
863 878
===== =====
Emoluments of highest paid director (£'000) 189 207
Group contribution to pension plan:
Pension contributions paid by the Group for
highest paid director (£'000) 20 20
The number of directors for whom pension
payments are made 5 5
Gains made by directors on exercise of options (£'000) 2,395 -
Two (2005: nil) directors exercised options in the year albeit the options were
exercised prior or after the date they were appointed or resigned as directors.
6 Staff numbers and costs
The average number of full-time equivalent persons employed by the Group
(including directors) during the year, analysed by category was as follows:
Number of employees
Year to Year to
30 June 2006 30 June 2005
R & D, Marketing and Administration 98 81
Sales 59 52
Production 118 96
------ -----
275 229
====== =====
The aggregate payroll costs for these persons
were as follows: Year to Year to
30 June 2006 30 June 2005
£'000 £'000
Aggregate wages and salaries 8,605 7,292
Social security costs 1,394 1,168
Other pension costs 378 382
------ -----
10,377 8,842
====== =====
The average number of employees involved in pension schemes across the Group for
2006 was 128 (2005: 127).
7 Tax on loss on ordinary activities
There is no tax charge arising on the results for the year.
Year to Year to
Current tax reconciliation: 30 June 2006 30 June 2005
£'000 £'000
Loss before tax (6,119) (1,929)
_______ _______
Tax at standard rate of 30% on loss for year (1,836) (579)
Expenses not deductible for tax purposes 33 99
Capital allowances in excess of depreciation (177) (104)
Overseas adjustments not taxable - (60)
Utilisation of tax losses (47) (419)
Tax losses not utilised 3796 1,824
Allowances for R&D expenditure (1036) (593)
Relief for shares acquired by employees & directors (733) (168)
------- -------
Current tax charge - -
======= =======
Unrelieved Group losses of £23m (2005: £16m) remain available to offset against
future taxable profits. These comprise non-trading losses of £3m and trading
losses of £20m.
8 Loss for the financial period
The parent company has taken advantage of section 230 of the Companies Act 1985
and has not included its own profit and loss account in these financial
statements. The parent company's loss for the period was £18,722,000.
9 Loss per share
Year to Year to
30 June 2006 30 June 2005
Loss for the year (£'000) (6,119) (1,929)
Weighted number of shares in issue 66,117,299 57,471,180
Basic loss per share (pence) (9.3) (3.4)
10 Intangible fixed assets - Group
Non-
Goodwill Manufacturing competing Other Total at
£'000 know-how know-how intangibles 30 June 2006
£'000 £'000 £'000 £'000
Cost
Cost brought forward 4,906 1,000 2,963 953 9,822
Exchange difference 71 - 83 7 161
------- ------- ------- ------- -------
Balance carried 4,977 1,000 3,046 960 9,983
forward
_______ _______ _______ _______ _______
Amortisation
Balance brought
forward 2,289 468 2,963 534 6,254
Charge for year 328 69 - 53 450
Exchange difference 34 - 83 7 124
------- ------- ------- ------- -------
Balance carried
forward 2,651 537 3,046 594 6,828
------- ------- ------- ------- -------
Net book value
At 30 June 2006 2,326 463 - 366 3,155
======= ======= ======= ======= =======
At 30 June 2005 2,617 532 - 419 3,568
======= ======= ======= ======= =======
The fair values of intangible assets acquired as part of a business are
determined by the realisable market value. The directors consider each
acquisition separately for the purpose of determining the amortisation period of
any goodwill and other intangible assets that arise. The following sets out the
periods over which intangible assets are amortised and reasons for the periods
chosen:
• Goodwill, manufacturing know-how and other intangible assets arising on
the acquisition of Allergy Therapeutics Limited and Bencard Allergie GmbH
in June 1998 have been amortised over 15 years. The directors have
estimated that this is the useful economic life of the assets, reflecting
the expected financial benefits.
'Other intangibles' comprises trademarks and associated acquisition costs.
11 Tangible fixed assets - Group
Plant & Fixtures & Motor Computer Freehold
Machinery Fittings Vehicles Equipment Land & Total at
Buildings 30 June 2006
£'000 £'000 £'000 £'000 £'000 £'000
Cost
Balance brought forward 2,282 743 8 2,842 252 262 6,137
Additions 689 1,210 - 293 - 2,192
Disposals (35) (3) - (66) - (104)
Exchange difference 5 10 - 21 8 44
----- ----- ----- ----- ------- -----
Balance carried forward 2,941 1,960 8 3,090 270 8,269
===== ===== ===== ===== ======= =====
Depreciation
Balance brought forward 1,251 386 6 2,206 177 4,026
Charge for period 159 176 1 300 32 668
Disposals (31) (3) - (59) - (93)
Exchange difference 4 4 - 17 6 31
----- ------ ----- ----- ------- -----
Balance carried forward 1,383 563 7 2,464 215 4,632
===== ====== ===== ===== ======= =====
Net book value
At 30 June 2006 1,558 1,397 1 626 55 3,637
===== ====== ===== ===== ======= =====
At 30 June 2005 1,031 357 2 636 85 2,111
===== ====== ===== ===== ======= =====
12 Investments - Company
Shares in subsidiary
undertaking
£'000
Cost
Brought forward and carried forward 51
=====
Provision
Brought forward (51)
Adjustment in year 51
-----
Carried forward -
=====
Net book value
At 30 June 2006 51
=====
The provision was reversed in the year as the subsidiary in which shares are
held now has sufficient net assets to cover the investment.
At 30 June 2006 the Company's subsidiary undertakings were:
Subsidiary undertaking Country of Principal activity Percentage of Class of
incorporation shares held shares
held
Allergy Therapeutics UK Holding company 100% ordinary and
(Holdings) Ltd deferred
Allergy Therapeutics UK Manufacture and sale of 100% ordinary
(UK) Ltd pharmaceutical products
Allergy Therapeutics UK Dormant 100% ordinary
Development Ltd
Bencard Allergie GmbH Germany Sale of pharmaceutical 100% ordinary
products
Bencard Allergie Austria Sale of pharmaceutical 100% ordinary
(Austria) GmbH products
Allergy Therapeutics Italy Sale of pharmaceutical 100% ordinary
Italia s.r.l. products
Allergy Therapeutics Spain Sale of pharmaceutical 100% ordinary
Iberica S.L. products
Allergy Therapeutics Canada Dormant 100% ordinary
(Canada) Ltd
Allergy Therapeutics (Holdings) Ltd is owned directly by Allergy Therapeutics
plc. All other subsidiary undertakings except Bencard Allergie (Austria) GmbH
are owned by Allergy Therapeutics (Holdings) Ltd. Bencard Allergie (Austria)
GmbH is owned by Bencard Allergie GmbH.
13 Stocks
Group
30 June 2006 30 June 2005
£'000 £'000
Raw materials and consumables 1,081 961
Work in progress 2,029 1,252
Finished goods 541 528
----- -----
3,651 2,741
===== =====
There is no material difference between the value of stock above and its
replacement cost.
14 Debtors
Group Company
30 June 2006 30 June 2005 30 June 2006 30 June 2005
£'000 £'000 £'000 £'000
Amounts falling due within
one year
Trade debtors 1,777 2,206 - -
Taxation and social security 435 55 - -
Prepayments and accrued income 1,095 348 14 -
Other debtors 270 551 - 6
----- ----- ----- -----
3,577 3,160 14 6
===== ===== ===== =====
15 Creditors: amounts falling due within one year
Group Company
30 June 2006 30 June 2005 30 June 2006 30 June 2005
£'000 £'000 £'000 £'000
Trade creditors 1,671 1,478 - -
Taxation and social security 893 372 93 -
Other creditors 150 485 - -
Accruals and deferred income 2,225 3,786 219 239
----- ----- --- ---
4,939 6,121 312 239
===== ===== === ===
16 Creditors: amounts falling due after more than one year
Group
30 June 2006 30 June 2005
£'000 £'000
Other long term creditors 239 455
---- ----
239 455
==== ====
17 Financial instruments and derivatives
The Group uses financial instruments comprising borrowings, cash and various
items, such as trade debtors and trade creditors that arise directly from its
operations. The main purpose of these financial instruments is to raise finance
for the Group's operations.
The Group also enters into derivative transactions such as forward foreign
currency contracts. The purpose of such transactions is to manage the currency
risks arising from the Group's operations and its sources of finance.
The main risk arising from the Group financial instruments is foreign currency
risk while to a lesser extent there is interest rate risk and liquidity risk.
The board reviews and agrees policies for managing each of these risks and they
are summarised below. These policies have remained unchanged from previous
years.
All transactions in derivatives, principally forward foreign currency contracts,
are undertaken to manage the risks arising from underlying business activities
and no transactions of a speculative nature are undertaken.
It is, and has been in previous years, the Group policy that no trading in
financial instruments shall be undertaken.
Short-term debtors and creditors
Short-term debtors and creditors have been excluded from all the following
disclosures, other than the currency risk disclosures.
Currency risk
The Group does not hedge its exposure of foreign investments held in foreign
currencies.
The Group is exposed to translation and transaction foreign exchange risk. In
relation to translation risk the repatriation of assets is insignificant and the
only exposure is revaluation of the assets at year end for accounting purposes.
Therefore, group policy does not deem it necessary to cover this risk.
Transaction exposures are hedged, mainly using the forward hedge market. The
Group seeks to hedge its exposures using a variety of financial instruments,
with the objective of minimising fluctuations in exchange rates on future
transactions and cash flows.
The majority of the Group's revenue is denominated in Euros. A large part of the
manufacturing cost base is denominated in Sterling but some R&D and other costs
are denominated in US Dollars, Canadian Dollars and Euros. The Group policy is
to eliminate approximately 50 per cent of currency exposures on a rolling twelve
month basis through the use of forward currency contracts.
Gains and losses on hedges
The Group policy is to hedge exposures to currency risk. The table below shows
the extent to which the Group has unrecognised and/or deferred gains and losses
in respect of financial instruments used as hedges at the beginning and end of
the year. The table also shows the amount of gains and losses which have been
included in the profit and loss account for the year and those that are expected
to be recognised in future profit and loss accounts.
Gains Losses Total net
gains/
(losses)
£'000 £'000 £'000
Unrecognised gains and losses on
hedges at 1 July 2005 207 - 207
Gains and losses arising in previous
years that were recognised in 2005/06 (207) - (207)
Unrecognised gains and losses brought forward - - -
Gains and losses on hedges arising in 2005/06 52 - 52
Gains and losses on hedges arising in 2005/06
that were recognised in the year (46) - (46)
----- ----- -----
Unrecognised gains and losses on hedges
at 30 June 2006 6 - 6
===== ===== =====
Of which:
Gains and losses expected to be
recognised in 2006/07 6 - 6
Interest rate risk
The directors do not consider that the business is exposed to material interest
rate risk. The Group finances its operations through cash reserves. The cash
reserves held by the Group since October 2004 have negated the need to use
significant interest bearing short-term borrowings, whereas previously
short-term borrowings were held.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably. Surplus cash is invested in various deposit accounts to spread the
risk and to generate a higher return of interest.
The amounts below show the monetary assets held by the Group in currencies other
than Sterling.
Group
Currency 30 June 2006 30 June 2005
£'000 £'000
Euro 1,446 883
US Dollar 52 48
Canadian Dollar 29 25
Slovak Koruna 3 -
Polish Zloty 1 -
----- -----
1,531 956
===== =====
Borrowing facilities
The Group has undrawn committed borrowing facilities at 30 June 2006 of
€362,000; £250,000 (2005: €362,000; £242,000), expiring within one year.
Additional borrowing facilities of £4 million were agreed but not signed at
30 June 2006.
18 Deferred taxation
Deferred tax assets have not been recognised due to the uncertainty of future
profits.
19 Called up share capital
30 June 2006 30 June 2005
£'000 £'000
Authorised
Equity: 790,151,667 ordinary
shares of 0.1p each 790 790
Equity: 9,848,333 deferred
shares of 0.1p each 10 10
----- -----
800 800
===== =====
Allotted, called up and fully paid
Equity: 81,950,632 ordinary
shares of 0.1p each
(2005: 62,950,632) 82 63
Equity: 9,848,333 deferred shares
of 0.1p each 10 10
----- -----
92 73
===== =====
On 4 May 2006 19,000,000 ordinary shares of 0.1p each were issued for cash
consideration of £19,000,000. The difference between the consideration of
£19,000,000 and the aggregate nominal value of £19,000 has been credited to the
share premium account.
The deferred shares have no voting rights or dividend rights attached to them.
Share options
Details of the share options over the Company's ordinary shares are as follows:
At start of Granted Exercised Lapsed At end of Exercise Exercise Exercise
year during in year year date from date to price
year
5,600 - (800) - 4,800 0.1p 04/10/2004 22/12/2008
25,712 - (5,400) - 20,312 0.1p 04/10/2004 01/10/2009
37,438 - (12,400) - 25,038 0.1p 04/10/2004 01/10/2010
19,200 - (5,250) - 13,950 0.1p 04/10/2004 20/10/2010
250,000 - (50,000) - 200,000 0.1p 04/10/2004 02/01/2011
1,187,350 - - (200,000) 987,350 120p 31/07/2002(1) 31/07/2011
400,000 - - - 400,000 30p 03/06/2002 03/06/2012
2,000,000 - (1,000,000) - 1,000,000 0.1p 02/10/2002 02/10/2012
3,000,000 - (1,500,000) - 1,500,000 5p 17/12/2002(1) 17/12/2012
122,668 - (53,334) - 69,334 5p 17/12/2003(1) 17/12/2012
4,000,000 - - - 4,000,000 5p 18/12/2002(1) 18/12/2012
231,633 - (60,333) - 171,300 5p 04/10/2004 25/01/2013
150,000 - (50,000) - 100,000 45p 15/12/2003(2) 15/12/2013
2,384,004 - (353,323) (150,000) 1,880,681 45p 26/02/2005(1) 26/02/2014
230,000| - - - 230,000 45p 02/08/2005(1) 02/08/2014
2,200,001 - - (300,000) 1,900,001 100.4p 08/03/2008 08/03/2015
- 346,905* - - 346,905 64p 01/03/2009 01/09/2009
----------- --------- ------------ --------- ----------
16,243,606 346,905 (3,090,840)) (650,000) 12,894,671
=========== ========= ============ ========= ==========
*Shares granted under the SAYE 2005 share plan.
In addition, a total of 1,205,871 shares was provisionally allocated to the LTIP
2005 share plan. This is the maximum contingent number of shares that could vest
under the terms of the plan.
(1) One third of share options granted are exercisable from this date, one
third from 12 months after this date and one third from 24 months after this
date.
(2) 30,000 share options granted are exercisable from this date and 10,000 are
exercisable from 1st of each subsequent month until 01/12/2004.
20 Reserves
Group Company
Profit and loss account Profit and loss account
£'000 £'000
At 30 June 2005 (34,719) (14,908)
Retained loss for the year (6,119) (18,722)
Currency translation profit on
foreign currency investments 29 -
-------- --------
At 30 June 2006 (40,809) (33,630)
======== ========
Group and Company Group
Share premium account Shares issued by
subsidiary
£'000 £'000
At 30 June 2005 14,924 40,128
Premium on shares issued in the
year 18,981 -
Expenses paid in connection with
share issue (732) -
------ ------
At 30 June 2006 33,173 40,128
====== ======
Group and Company Group and Company
Other reserve - LTIP Other reserve - EBT
£'000 £'000
At 30 June 2005 - (322)
Sale of shares by EBT - 262
Provision for LTIP 178 -
---- -----
At 30 June 2006 178 (60)
==== =====
'Shares issued by subsidiary' relates to the share premium account of Allergy
Therapeutics (Holdings) Ltd. The reserve arose as a result of the merger.
At 30 June 2006 there were 2,173,269 shares in the Employee Benefit Trust with
an aggregate cost of £60,000 which reduced the shareholders' funds
accordingly. The shares will be allotted as employees exercise share options.
The market value of the shares at 30 June 2006 was £2,151,536.
1,205,871 shares were provisionally allocated to the LTIP 2005 share plan.
This is the maximum contingent number of shares that could vest under the
terms of the plan.
21 Reconciliation of movement in shareholders funds
Group Company
Year to Year to Year to Year to
30 June 2006 30 June 2005 30 June 2006 30 June 2005
£'000 £'000 £'000 £'000
Loss for the financial year (6,119) (1,929) (18,722) (14,908)
Other recognised gains and losses
relating to the period (net) 29 (60) - -
Issue of shares 19,000 16,000 19,000 16,051
Transfer of EBT balance from subsidiary - - - (373)
Sale of shares by EBT 262 51 262 51
Long Term Incentive Plan 178 - 178 -
Expenses paid in connection
with share issue (732) (1,054) (732) (1,054)
------- ------- -------- -------
Net addition to/(deduction from)
shareholders' funds 12,618 13,008 (14) (233)
Opening shareholders' funds 20,084 7,076 (233) -
Closing shareholders' funds 32,702 20,084 (247) (233)
22 Reconciliation of operating loss to operating cash flow
Year to Year to
30 June 2006 30 June 2005
£'000 £'000
Operating loss (6,660) (2,418)
Depreciation 668 436
Amortisation of intangibles 450 448
Loss on disposal of fixed assets 10 5
Effect of foreign exchange rate changes (20) (58)
Provision for Long Term Incentive Plan 178 -
Increase in stocks (910) (916)
Increase in debtors (416) (875)
(Decrease)/increase in creditors (1,399) 3,363
------- -----
Net cash outflow from operating
activities (8,099) (15)
======= =====
23 Analysis of financing
Year to Year to
30 June 2006 30 June 2005
£'000 £'000
Repayment of loans - (945)
Issue of ordinary shares (net of expenses) 18,268 14,946
Issue of shares by EBT 262 51
------ ------
18,530 14,052
====== ======
24 Analysis of change in net funds
At beginning of Cash flow At end of
period period
£'000 £'000 £'000
Cash at bank and in hand 15,080 8,780 23,860
------ ----- ------
15,080 8,780 23,860
====== ===== ======
25 Capital commitments
Capital commitments at the end of the financial period, for which no provision
has been made, are as follows:
Group Group
30 June 2006 30 June 2005
£'000 £'000
1,191 436
===== =====
Included in the above is £806,000 for new facilities and ongoing factory
refurbishments in the UK (2005: £143,000) and £382,000 for new plant and
machinery (2005: £88,000).
Other commitments:
Between November 2005 and March 2006, 7 separate forward foreign exchange
contracts were arranged for the sale of €6,500,000 (£4,517,000) at future dates
ranging from 29 September 2006 to 20 February 2007. At the end of June 2006 a
spot rate foreign exchange contract was arranged for the purchase of
CAD7,000,000 (£3,440,000) in July 2006.
26 Leasing commitments
Operating lease payments amounting to £600,000 (2005: £366,000) are due within
one year. The leases to which these amounts relate expire as follows:
Land and buildings Other
30 June 2006 30 June 2005 30 June 2006 30 June 2005
£'000 £'000 £'000 £'000
In one year or less 17 58 2 45
Between one and five years 170 42 301 204
In five years or more 110 17 - -
----- ----- ----- -----
297 117 303 249
===== ===== ===== =====
27 Contingent liabilities
Allergy Therapeutics (UK) Ltd., a subsidiary of Allergy Therapeutics plc, has
guaranteed the deposits required for leases on company cars and rented office
space occupied by a fellow subsidiary, Bencard Allergie GmbH. The amount as at
30 June 2006 was €78,000; £54,000 (2005: €107,000; £72,000).
This information is provided by RNS
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