Final Results
Allergy Therapeutics PLC
13 September 2005
Allergy Therapeutics plc Preliminary Results Statement
(for the year ended 30 June 2005)
SALES UP 20%, R&D PROGRAMME COMMENCED
Allergy Therapeutics plc, the specialty pharmaceuticals company focused on
allergy vaccines, today announces its maiden preliminary results.
Highlights
* Total gross sales up 20% to £22.9m (2004: £19.1m) and net sales up 15% at
£20.6m (2004: £18.0m)
* Operating profit including milestone income but before R&D, rebates and
exceptionals up 97% to £6.1m (2004: £3.1m), highlighting an impressive
performance from the Company's core business
* Gross sales of flagship product, Pollinex(R) Quattro, up 41% to £7.2m
(2004: £5.1m)
* Successful IPO, raising £15m net of expenses
* Market share growing in Germany, Spain and Italy
•Germany: sales up 28% to £16.4m
•Italy: sales up 17% to £2.1m
•Spain: sales up 24% to £1.4m
* Commencement of R&D programme
* Out-licence agreement for Pollinex(R) Quattro with Canadian
pharmaceuticals company Allerpharma for exclusive rights to Canadian market
* 13 clinical trials approved under 8 Canadian and 2 EU CTAs and 2 INDs with
the FDA
Keith Carter, CEO of Allergy Therapeutics, commented:
"We are delighted with our first full-year results. The company continues to
expand in all its chosen markets and has made strong progress in the continued
development of Pollinex(R) Quattro.
The company's core business has progressed well, contributing significant cash
to the investment in R&D in line with our stated strategy. Allergy Therapeutics
is now in a good position to deliver further results in the coming months, both
in the clinic and in the market."
- ends -
For further information:
Allergy Therapeutics
Keith Carter / Ian Postlethwaite 01903 844720
Bell Pottinger
Dan de Belder / Emma Charlton 020 7861 3232
Chairman's Statement
This has been a year of significant change for Allergy Therapeutics. We have
undergone a major transition from being a privately-owned company to a public
company listed on the London Stock Exchange. From having plans for clinical
trials, we now have patients enrolled and being treated in a first pivotal
study.
In October 2004 Allergy Therapeutics Group listed on the Alternative Investment
Market of the London Stock Exchange, raising £15 million net of expenses. The
declared use of proceeds was to accelerate the clinical development of the
Pollinex(R) Quattro family of products, the Company's innovative
ultra-short-course (4 shots total pre-seasonally) allergy vaccines based on the
TRL4 agonist vaccine adjuvant MPL(R). Since then excellent progress has been
made; relationships with various regulatory bodies established, the 'path to
registration' clarified and a first pivotal clinical trial commenced. The
Company is on track to commence full Phase III studies on vaccines against
allergy to the most common pollens during the 2006 pollen season.
Allergy Therapeutics is a fully integrated pharmaceutical company. This gives us
great strength in further developing the business in tandem with the new
products. Furthermore, Pollinex(R) Quattro - our main development product - is
currently being sold on a 'Named Patient' basis in Germany, Italy and Spain,
where such sales of pre-registration products are permitted. We have sold over
115,000 units of the product to date, giving us great and increasing confidence
in the efficacy and safety of these vaccines.
The Company has made good progress in its commercialisation activities. Gross
sales are £22.9 million, up 20% against the previous year, driven chiefly by a
41% increase in sales of Pollinex(R) Quattro. This includes our first
out-licence agreement for Pollinex(R) Quattro, with Allerpharma for the Canadian
market. One million pounds of milestone income was booked in the year, with a
further £7 million to be paid over the development period of the vaccines,
subject to the achievement of certain development objectives. Operating profit
including milestone income but before German sales rebate, R&D and exceptional
items has nearly doubled to £6.1 million (2004:£3.1 million).
One of the attractions of Allergy Therapeutics' business model is that the
extensive R&D programme now under way is funded in part by the profits from our
commercial operations. Consequently, despite R&D investment of £5.6 million
compared with £0.5million last year, the loss after tax amounted to £1.9 million
compared to last year's profit of £1.2 million. We anticipate a further
substantial increase in R&D investment this year as the Phase III programme for
Pollinex(R) Quattro vaccines for Allergic Rhinitis (AR) to major pollens, and
the sublingual programme gets under way.
Allergy Therapeutics has a first-class team of people whose efforts have
produced these excellent results in every area; I thank each one for his or her
efforts.
If, as we anticipate, our development activities over the next few years are
successful, we will be in the position of having the first ever innovative,
ultra-short-course allergy vaccines registered both in Europe and with the FDA
for sale in the USA. This outcome would be extremely positive for the company
and would represent a major change to the opportunities and challenges facing
us. In preparation, during the course of the year we have strengthened our team
in sales and marketing, R&D, manufacturing and regulatory. Further investment in
the team will be required over the coming years to meet our strategic goals - to
develop world-beating products, manufacture them for all markets and sell them
through our own sales and marketing infrastructure across the European Union,
working with partners elsewhere.
We are looking forward to another year full of accomplishments in 2005/6.
Ignace Goethals
Chairman
12 September 2005
Chief Executive's Review
Allergy is the 'epidemic of the 21st Century'. A large and growing proportion of
the population is suffering in different degrees to allergy to common,
unavoidable substances such as pollens, mites and the dander of domestic pets.
In the USA, 54% of the total population show positive responses to skin tests
for one or more of the 10 most prevalent allergens(1); such sensitisation is an
indication of allergy or the potential to develop the symptoms of allergy. The
numbers suffering are also growing rapidly; the same US survey conducted 12
years earlier put the number of positive skin tests at just over 20% of the
population. The same patterns are seen across the developed world.
Allergy can be a minor irritation of short duration, or it can seriously impair
the quality of life of the sufferer - rendering work, exams, leisure and even
sleep impossible. Furthermore, Allergic Rhinitis (AR) is now recognised to be a
precursor of asthma, a life-threatening condition, in many patients(2). Allergic
people have three times greater risk of becoming asthmatic than non-allergics(3)
, a phenomenon known as the 'Allergic March'.
Allergy is also very costly - $11 billion is spent annually by patients and
health insurance systems on symptomatic treatment(4), and the economic costs to
society in terms of lost days of work and hospitalisation due to asthma attacks
are thought to be even greater.
Transforming Allergy Treatment
As recognised by the World Health Organisation(5), unlike any other available
treatment, allergy vaccines (also referred to as specific immunotherapy or
'allergy shots') act at the immunological source of the disease, have the unique
potential to offer long term relief to successfully treated patients and arrest
the Allergic March.
Allergy Therapeutics plc ('ATp') is at the leading edge in developing new
vaccines to treat AR. Currently, allergy vaccines represent a small niche area:
less than 3% of allergic patients are offered vaccines. This is mainly because
the existing products require many injections over a long period - in the USA up
to 200 shots over five years is not unusual - and carry greater risks of side
effects than many physicians and patients are willing to tolerate.
Allergy Therapeutics' pipeline of MPL(R)-based products is designed to overcome
these shortcomings, allowing allergy vaccination to become a mainstream
treatment rather than a last resort. With our ultra-short-course, efficacious
and well-tolerated vaccines our mission is to transform allergy treatment.
Registration
In mainstream pharmaceuticals the products prescribed by physicians across the
world must have marketing authorisations, granted by national regulatory
authorities such as the FDA. The granting of such authorisations is commonly
referred to as 'registration' and requires rigorous proof of product quality,
safety and efficacy through clinical trials culminating in pivotal 'Phase III'
studies.
Allergy vaccines have traditionally been made to order for individual
prescription according to which allergens cause the patient's symptoms. This has
meant that, in general, allergy vaccines fall outside the normal registration
system and are sold as 'named patient products' (NPP) - another reason why this
treatment has been relegated to a niche.
Footnotes:
--------------------------
(1) Journal of Allergy and Clin Immunol., August 2005: 'Prevalences of positive
skin test responses to 10 common allergens in the US population: Results from
the 3rd National Health and Nutrition Examination Survey'
(2) 'Bousquet J, van Cauwenberge P, Khaltaev N. Allergic rhinitis and its impact
on asthma. ('ARIA') Journal of Allergy and Clinical Immunology - 2001
(3) ditto
(4) Datamonitor: Pipeline Insight: Asthma, COPD and Allergic Rhinitis April 05.
(5) WHO Position Paper 1997. Allergen Immunotherapy: therapeutic vaccines for
allergic diseases
As part of Allergy Therapeutics' aim of transforming allergy treatment by
modernising allergy vaccination, we have embarked on a programme of clinical
trials with the objective of gaining registration in all the major markets
world-wide for standardised products suitable for a broad range of patients. As
far as we are aware, no other allergy vaccines are being developed on this
world-wide basis which requires the highest standard of evidence of efficacy and
safety. The money raised at the IPO was required to fund this programme of
studies.
Allergy Therapeutics strategy
Allergy Therapeutics has continued to pursue its strategy as an integrated,
Europe-based, specialty pharmaceutical company and over the last 12 months has
made major steps forward. The Company is building its EU sales and marketing
infrastructure and has made significant progress in its development pipeline of
innovative, ultra-short-course allergy vaccines based on MPL(R), the TLR4
agonist which acts as a vaccine adjuvant. The guiding principle of the
development pipeline is to create efficacious and safe allergy vaccines with
improved product characteristics for patient and payers, as they can be
administered over a short period of time, with few injections or possibly
injection-free, as a sublingual treatment.
Progress
Allergy Therapeutics performed well in the twelve months ended June 2005, both
in delivering strong financial results and taking strategic actions that will
underpin the delivery of long-term future performance of the group.
In particular, the move into life as a publicly listed company in October 2004
has been a major highlight. The raising of £15 million, net of expenses, was the
most advantageous means of securing funds to accelerate the clinical development
of Pollinex(R) Quattro. The Company has since made progress with establishing
the 'path to registration' for the family of vaccines and building relationships
with various regulatory bodies. Subject to further regulatory approval, the
Company is on track to commence full Phase III studies on vaccines against
allergy to certain common pollens during the 2006 pollen season.
The financial performance of the business reflects significant advances made in
the year throughout the Company. The Company has benefited from good progress in
its commercialisation activities - for the year ended 30 June 2005 gross sales,
before milestone income, of £21.9 million were generated, up 15% against the
previous year, driven chiefly by a 41% increase in sales of Pollinex(R) Quattro.
Operating profit including milestone income but before German sales rebate, R&D
and exceptional items , a key measure of performance of the core business, has
nearly doubled to £6.1 million for the financial year (2004: £3.1 million).
We have also signed our first out-licence agreement for Pollinex(R) Quattro,
with Canadian pharmaceuticals company Allerpharma, to whom Allergy Therapeutics
granted exclusive rights for the Canadian market. £1 million of milestone income
was earned in the year, with a further £7 million to be paid over the
development period of the vaccines, subject to the achievement of certain
development objectives.
Pollinex(R) Quattro
Description: Ultra-short-course vaccines for allergy to major pollens
Dosing: 4 subcutaneous injections administered pre-seasonally by specialist for
same season efficacy.
Composition: MPL(R) (TLR4 agonist adjuvant) combined with allergoids (chemically
modified allergens) with L- tyrosine as depot carrier
Pollinex(R) Quattro, which on a NPP basis is both a marketed product in certain
territories and our flagship development product, has generated sales of £7.2
million (2004: £5.1million). We have achieved this growth through a targeted
approach to marketing in key areas. In Germany, winning the prestigious MMW
Award for pharmaceutical innovation has had a noticeably positive effect on
sales.
The company received a further boost regarding the North American market, in
June when it received clearance from Health Canada to commence pivotal studies
on Pollinex(R) Quattro Ragweed, a vaccine for seasonal rhinitis caused by
Ragweed pollen, the major allergen in North America. If successful, the study
will allow submission for registration in H1 2006, offering the possibility of a
first marketing authorisation for a Pollinex(R) Quattro product in time for the
2007 season. Should such a registration be achieved, Allergy Therapeutics
intends to conduct post-marketing studies to collect further safety and efficacy
data which will be supportive to the registration applications to be made in
other territories, in particular the USA.
Subject to regulatory approval, Allergy Therapeutics is on track to commence the
pivotal Phase III clinical trial programme during the 2006 pollen season. These
studies will be multi-centre, multi-national, conducted in both North America
and Europe - Allergy Therapeutics is the only allergy vaccine company known to
have such a programme of world-wide studies, including in the USA.
Oralvac(R) Plus
Description: Sublingual vaccines for allergy to major pollens, house dust mite
and cat
Dosing: Daily drops of liquid under the tongue continued for 1 - 5 years subject
to physician advice.
Composition: Standardised sterile aqueous allergen extracts, Raspberry flavour.
Sales of Oralvac(R) have increased to £3.9 million (2004: £2.9 million).
Sublingual allergy vaccines have the advantage of easy administration; following
diagnosis and prescription by the specialist, the patients self-administer at
home. This also makes these products preferable for paediatric use. Sublingual
vaccines, however, are generally considered to be less efficacious than injected
allergy vaccines, and require unsupervised long-term repeat administration so
patient compliance is questionable. By including MPL(R) in a sublingual
formulation, Allergy Therapeutics is planning to develop new products to address
these issues; first-in-man Phase I/II studies are planned to start in the
financial year 2005/6.
Other products
For patients with allergy to less common allergens and for markets where
short-course injected and sublingual vaccines are not yet accepted, Allergy
Therapeutics has the Tyrosine TU Top and Venomil products. For markets where the
NPP route is not possible, we offer the registered Pollinex(R) Grass, Tree and
Ragweed products. Combined sales of these vaccines amounted to £7.9million in
the year (2004: £8.5million).
Key markets
For GMP-manufactured allergy vaccines, Germany, Italy, Spain and France are the
biggest markets in the world. Germany is the largest market and it remains
Allergy Therapeutics' most important source of revenue, accounting for nearly
69% of sales. Italy and Spain are of growing importance to us and we continue to
invest in these businesses, which represent 10% and 7% of sales respectively.
During the course of the year we initiated plans to set up our own commercial
operations in Austria, the UK, Poland, and the Czech and Slovak Republics. We
also entered into new distribution agreements for Canada (Allerpharma) and
Greece (Kite Hellas).
The US is a prime target market for Allergy Therapeutics; it represents over 40%
by value of the world pharmaceutical market and allergy is a major and growing
health problem; added to this, current allergy vaccine treatment practice is
old-fashioned, invasive and not controlled by the FDA - potentially making
Allergy Therapeutics new MPL(R) containing vaccines very attractive. Therefore
we continue to work hard to progress to Phase III clinical trials with the FDA.
Corporate and social responsibility
Allergy Therapeutics recognises its responsibilities to its employees, the wider
community and the environment. We are determined to be regarded as a
well-managed, responsible company in all the communities in which we operate
world-wide.
We are committed to supporting our employees and aim to help them flourish by
providing an enjoyable and safe workplace free from discrimination where all
employees can receive the training they require to further their development. We
also value our relationships with the local community, as indicated by our links
with The University of Brighton.
We have a responsibility to consider our impact on the environment and are
committed to managing our environmental performance and minimising risk.
Strategy and Prospects
Our strategy going forward can be simply summarised. We will develop modern,
registered allergy vaccines which are attractive for patients, physicians and
payers, thereby widening considerably the markets for which these treatments are
appropriate. We will build on our strength in the EU to prepare for full
commercialisation of Pollinex(R) Quattro on our own account when the
registrations are achieved. At the appropriate time we will seek partners for
markets outside the EU, in particular the USA and Japan. With respect to
sublingual allergy vaccines, which should be a General/Family Practitioner
product and therefore require a larger sales force than a company of the size of
Allergy Therapeutics can reasonably muster, we will seek partners world-wide -
again at the appropriate time. We will continue to manufacture our own products
for sale across the world.
The strategy is ambitious, requiring continued achievement in every area of the
business. 2004/5 was a very busy year for Allergy Therapeutics; 2005/6 promises
to bring even more challenges and opportunities.
Keith Carter
Chief Executive Officer
12 September 2005
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 2005 total gross sales increased by 20% to
£22.9million (2004: £19.1million); after statutory rebates in the German market
net sales were £20.6million (2004: £18.0million) an increase over the previous
year of 14%.
Own markets
The Group competes directly in three markets, 3 of Europe's 4 most important for
allergy vaccination: Germany, Italy and Spain.
The Group is the third largest allergy vaccine company in Germany, with annual
gross sales of £16.4million (2004: £12.8million), an increase over the previous
year of 28%. The German market is the largest in the world for 'finished form'
allergy vaccines; the Group's share is growing and last year amounted to 13%.
Trading in Germany improved during the year as the effects of patient
co-payment, which temporarily reduced the frequency of patients' doctor visits
when introduced in 2003, diminished. The rebate on pharmaceutical sales, which
was market-wide, was increased in January 2004 to 16% from the 6% in force the
preceding year. This has been costly to the Group, since approximately 70% of
sales originate in Germany, with a charge of £2.3million for the year (2004:
£1.1million). As from 1 January 2005, the rebate has reverted to 6% and is now
calculated using current list prices, instead of the October 2002 prices used
previously.
In Italy and Spain the Group has continued to increase its market share. In
Italy annual sales were £2.1million, an increase of 17%, and in Spain annual
sales increased by 24% to £1.4million..
Licencees
The Group also sells through licencees and distributors, accounting for 13% of
the gross sales. Total sales for the year were £3.0million (2004: £3.4million) a
decrease of 12% on the previous year, and included a milestone of £1million from
the Company's Canadian licencee for Pollinex(R) Quattro.
Lower sales have been recorded in some territories. In line with the strategy of
building a pan European sales force, the contract with Pliva, who had the rights
to the Central and Eastern Europe (CEE) markets, was terminated. Consequently
any unsold stock in the CEE market was bought back from Pliva and sales that had
been recorded in June of the previous year were not repeated this year.
Product sales
The Group's flagship product, Pollinex(R) Quattro, continued to sell
exceptionally well, with gross sales of £7.2million (2004 £5.1million) an
increase of 41% over the previous year.
Cost of sales and net operating expenses
Despite the rebate on sales in Germany of £2.3million the gross margin has
improved to 76% due to: the use of production resources in supporting the R&D
activities, the one-off release of a stock obsolescence provision and the
inclusion of £1million of upfront milestones with no associated cost of goods.
Cost of goods sold were 12% lower than in the previous year at £4.9million.
An investment in additional sales people and an uplift in the marketing and
promotion spend increased the distribution costs by 22% in the year to
£8.0million. However administration costs were held at the same level as the
preceding year at £4.3million. As discussed in the Chief Executive's Review, the
development programme for Pollinex(R) Quattro was initiated this year and as a
result development costs are significantly higher than in the previous year at
£5.6million (2004: £0.5million),. This expenditure supported the ongoing early
phase development activity associated with grass, tree and ragweed allergens and
the pivotal ragweed study in Canada, designed to achieve the registration of
Pollinex(R) Quattro in Canada for ragweed earlier than anticipated at the time
of the IPO in October 2004. Of the total R&D expenditure £1.5million relates to
internal development costs.
Results of operation
The Group recorded an operating loss of £2.4million (2004: profit £1.6million).
However, before development costs, the German rebates and exceptional items, the
operating profit was £6.1million (2004: £3.1million) including milestone income
of £1million (2004:NIL); which allows for a more reasonable comparison of
performance and highlights an impressive result from the core business this
year. Interest receivable was significantly higher at £0.5million (2004:
£0.1million) as a result of higher cash balances following the IPO.
Taxation
As a result of the investment in development, the Group has the option to
receive a tax credit of £0.7million which, if claimed, is expected to be
received in the following financial year. In the previous year no tax credit was
claimed but tax losses surrendered to a shareholder under consortium relief
legislation, less the release of a deferred tax credit, resulted in a charge of
£0.4million. The Group has losses to carry forward for the current year of
£8.9million.
Net assets
Net assets at 30 June 2005 were £20.1million (2004: £7.1million), an increase of
£13.0million due primarily to the £15million net proceeds raised from the IPO in
October 2004.
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 £0.9million,
contributing to the increase in the value of tangible fixed assets to
£2.1million from £1.7million. This expenditure included upgrades to plant and
machinery and further payments on the ERP system.
Stock has increased during the year to £2.7million (2004: £1.8million) to
support the increase in sales and after a number of one-off events including the
release of a stock obsolescence provision of £0.3million. The increase in
debtors falling due within 1 year to £3.2million (2004: £2.1million) results
mainly from the milestone invoiced of £1million.
Creditors falling due within 1 year increased significantly at the year end to
£6.1million (2004: £3.3million), primarily due to an increase in accruals
relating to development activities.
Capital structure
The Group finances its operations through cash generated from its core business
and the net proceeds raised from the IPO.
The Group's funding requirements depend on a number of factors, including the
Group's product development programs, which were initiated in the year to June
2005 and are planned to increase further in activity in the following financial
year. The Group currently has no debt on its balance sheet but will in the
future be considering bank debt as a means of financing its manufacturing
related increases in working capital and capital expenditure as the core
business prepares itself for supplying world-wide markets.
Cash flows
As at 30 June 2005 cash totalled £15.1million, an increase of £13.6million from
£1.5million at 30 June 2004. For the year net cash outflow from operating
activities amounted to £0.4million compared to net inflow in the previous year
(2004: £1.1million). Net cash outflow includes significant product development
costs of £3.8million which, when added back to the operating activities,
generates core net cash inflow of £3.4million.
During the previous year, cash generated from operations was used primarily to
fund capital expenditure and a share buy-back for the creation of an employee
benefit trust.
Ian Postlethwaite
Finance Director
12 September 2005
Consolidated Profit and Loss Account
for the year ended 30 June 2005
Year Year Year Year
ended ended ended ended
30 June 30 June 30 June 30 June
2005 2005 2004 2004
Note £'000 £'000 £'000 £'000
Turnover 20,606 18,001
Cost of sales (4,853) (5,513)
------- -------
Gross Profit 15,753 12,488
Distribution
costs (8,012) (6,569)
Administrative
expenses - other (4,303) (4,335)
Research and
development costs (5,620) (451)
Exceptional costs (614) -
------- -------
Administrative expenses (10,537) (4,786)
Other operating
income 378 423
Operating (loss)/profit (2,418) 1,556
Interest receivable
and similar income 531 60
Interest payable on loans
and overdrafts (42) (26)
------- -------
489 34
------- -------
(Loss)/profit on ordinary
activities before tax (1,929) 1,590
Tax on (loss)/profit
on ordinary activities - (372)
--------- -------
Retained (loss)/profit
for the financial
year 3 (1,929) 1,218
======== ======
Basic (loss)/earnings
per share 2 (3.4p) 3.0p
Diluted (loss)/earnings
per share 2 (3.4p) 2.5p
All amounts relate to continuing activities
Consolidated Balance Sheet
at 30 June 2005
30 June 30 June
2005 2004
Note £'000 £'000
Fixed assets
Intangible assets
Goodwill 2,617 2,945
Other intangible assets 951 1,072
------- -------
3,568 4,017
Tangible assets 2,111 1,650
------- -------
5,679 5,667
Current assets
Stocks 2,741 1,825
Debtors: amounts falling due within one
year 3,160 2,062
Debtors: amounts falling due after one
year - 223
Cash at bank and in hand 15,080 1,457
------- -------
20,981 5,567
Creditors: amounts falling due within one
year (6,121) (3,277)
------- -------
Net current assets 14,860 2,290
------- -------
Total assets less current liabilities 20,539 7,957
Creditors: amounts falling due after one
year (455) (881)
----- -----
Net assets 20,084 7,076
====== =====
Capital and reserves
Called up share capital 73 51
Share premium account 14,924 -
Other reserves - shares issued by subsidiary 40,128 40,128
Other reserves - shares held in EBT (322) (373)
Profit and loss account (34,719) (32,730)
------- -------
Shareholders' funds - equity 3 20,084 7,076
====== =====
These financial statements were approved by the board of directors on 12
September 2005 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 2005
Year Year Year Year
to to to to
30 30 30 30
June June June June
2005 2005 2004 2004
Note £'000 £'000 £'000 £'000
Cash (outflow)/inflow from
operating
activities 4 (15) 1,508
Returns on investment and servicing
of finance
Interest received 531 60
Interest paid (42) (26)
---- ----
489 34
Taxation - 364
Capital expenditure and financial
investment
Purchase of tangible fixed assets (903) (760)
----- -----
Cash (outflow)/inflow before
financing (429) 1,146
Acquisitions and disposals
Deferred consideration - (308)
Financing 5
Gross funds raised on issue of
shares 16,000 -
Bank loans repaid (945) (305)
Sale/(purchase) of EBT shares 51 (373)
Premium on shares issued by
subsidiary - 30
Expenses paid in connection with
issue of shares (1,054) -
------- ------
14,052 (648)
------- -----
Increase in cash in year 6 13,623 190
====== ===
Reconciliation of Net Cash Flow to Movement in Net Funds
Year to Year to
30 June 2005 30 June 2004
£'000 £'000
Increase in cash in the year 13,623 190
Net loans repaid 945 305
Movement in net funds in year 14,568 495
Net funds at beginning of year 512 17
Net funds at end of year 15,080 512
Notes to the Financial Statements
1 Basis of preparation
The financial information herein does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985.
The financial information has been extracted from the Group's statutory
financial statements upon which the auditors reported on 12 September 2005.
Their opinion is unqualified and does not include any statement under section
237 of the Companies Act 1985. The accounts have been prepared in accordance
with applicable accounting standards and under the historical cost convention.
Copies of the annual report are being posted to shareholders and copies will be
available from the Company's registered office at Dominion Way, Worthing, West
Sussex BN14 8SA.
2 (Loss)/Earnings per share
Year to Year to
30 June 2005 30 June 2004
(Loss)/earnings for the year (£'000) (1,929) 1,218
Weighted number of shares in issue 57,471,180 40,935,583
Diluted weighted number of shares in issue n/a 49,294,066
Basic (loss)/earnings per share (pence) (3.4) 3.0
Diluted (loss)/earnings per share (3.4) 2.5
3 Reconciliation of movement in shareholders' funds
Year to Year to
30 June 2005 30 June 2004
£'000 £'000
(Loss)/profit for the financial year (1,929) 1,218
Other recognised gains and losses
relating to the period (net) (60) 40
Issue of shares 16,000 -
Shares issued by subsidiary - 30
Purchase of shares by EBT - (375)
Transfer of EBT balance from
subsidiary - -
Sale of shares by EBT 51 2
Expenses paid in connection with share
issue (1,054) -
------- ---
Net addition to shareholders' funds 13,008 915
Opening shareholders' funds 7,076 6,161
------ -----
Closing shareholders' funds 20,084 7,076
====== =====
4 Reconciliation of operating (loss)/profit to operating cash flow
Year to Year to
30 June 2005 30 June 2004
£'000 £'000
Operating (loss)/profit (2,418) 1,556
Depreciation 436 319
Amortisation of intangibles 448 333
Loss on disposal of fixed assets 5 -
Effect of foreign exchange rate changes (58) 109
(Increase)/decrease in stocks (916) 90
(Increase)/decrease in debtors (875) (682)
Increase/(decrease) in creditors 3,363 (217)
------ -----
Net cash (outflow)/inflow from operating
activities (15) 1,508
==== =====
5 Analysis of financing
Year to Year to Year to Year to
30 June 2005 30 June 2004 30 June 2003 30 June 2002
£'000 £'000 £'000 £
Repayment of loans (945) (1,305) -
New loan facility - 1,000 -
Issue of ordinary shares
(net of expenses) 14,946 - 27 -
Share premium on shares
issued by subsidiary - 30
Purchase of shares by EBT - (375) -
Issue of shares by EBT 51 2 -
---- ---- ---- ----
14,052 (648) (316) 2,065,958
======= ===== ==== =========
6 Analysis of change in net funds
At beginning At end of
of period Cash flow period
£'000 £'000 £'000
Cash at bank and in hand 1,457 13,623 15,080
Debt due (945) 945 -
----- ---- ---
512 14,568 15,080
====== ====== ======
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