Final Results
Monday 21 September 2009
Allergy Therapeutics plc
("Allergy Therapeutics" or "the Company")
Preliminary Results for the year ended 30 June 2009
Allergy Therapeutics plc (AIM: AGY), the allergy vaccination company with a growing sales base, a substantial manufacturing facility and a European sales and marketing infrastructure, announces preliminary results for the year ended 30 June 2009.
Operational Highlights
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Pollinex® Quattro Grass dossier submitted for Regulatory Review in EU in March 2009
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Pollinex Quattro Grass will become the first short course vaccine for hayfever registered across Europe following the process of mutual recognition
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Financial Highlights
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Revenues increased by 22% to £37.8 million (2008: £31.0m), on a constant currency basis net sales increased by 6%
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Pollinex Quattro named-patient sales increased by 41% to £18.2 million, on a constant currency basis net sales increased by 21%
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Gross profit increased by 20% to £24.2 million (2008: £20.2m)
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Operating loss reduced to £6.2m (2008: £15.6 m)
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R&D expenditure reduced to £5.3 million (2008: £16.3m)
Post Period Events
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In July 2009 194,131,937 new shares issued, raising £22.1m net of expenses
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On 3 July 2009 the Company repaid £9.4m of debt and revised and amended the terms of its bank agreement
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On 1 September Manuel Llobet became Chief Executive Officer
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Whilst it is not possible to prejudge the outcome of the FDA discussion, there is increased optimism regarding lifting of FDA Clinical Hold following progress made by GSK toward gaining approval for Cervarix®
Manuel Llobet, Chief Executive of Allergy Therapeutics, said:
"Since 2004 Allergy Therapeutics has invested heavily to complete one of the most extensive product development programmes in the field of allergy vaccines culminating in March in the submission of Pollinex Quattro Grass for approval in Europe; we expect product launch in Germany in time for the 2010 peak treatment period. The potential of Pollinex Quattro is underlined by the growth in its named-patient sales this year.
"Shortly after the period end we successfully refinanced the Group and strengthened the board. With a stronger balance sheet and large scale R&D expenditure at an end, the focus is on marketing strategies to accelerate sales growth especially as Pollinex Quattro proceeds through the registration process in Europe. We are confident that Allergy Therapeutics is now well placed to capitalise on the investments of the past."
For further information
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Allergy Therapeutics |
+44 (0) 1903 845 820 |
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Manuel Llobet, Chief Executive Officer |
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Ian Postlethwaite, Finance Director |
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Nomura Code Securities |
+44 (0) 207 776 1200 |
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Juliet Thompson/ Clare Terlouw |
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Financial Dynamics |
+44 (0) 207 831 3113 |
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Ben Brewerton/ Susan Quigley |
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ALLERGY THERAPEUTICS PLC
Chairman's Statement
This financial year has been an eventful one in which we submitted Pollinex Quattro Grass for approval in Europe, grew year on year sales by 22%, funded the conclusion of a significant R&D programme, have been granted two further patents, enjoyed the best ever supply performance from our manufacturing units, and just after the year-end, in July, we refinanced the Group and strengthened the board.
Allergy Therapeutics is a strong business and we were able to raise £22.1m from shareholders in July 2009, with the Weinstein family, whose interests in pharmaceuticals span over 20 countries from their South American base, acting as a cornerstone investor. It is largely to the credit of our shareholders that they overwhelmingly approved the transaction and several shareholders increased their investment in the Company in a difficult market. We thank all the shareholders, new and old, for their support.
The refinancing in July involved a £9.4m repayment of debt to RBS and a revision of the terms of the loan facilities, providing the Company with ample financial headroom for the foreseeable future. The Group is now in a strong and stable financial position and is able to focus on the business of growing sales, achieving a profit and treating allergy sufferers across Europe.
As a consequence of the financing there have been changes to the board, with Keith Carter agreeing to step down as CEO to allow Manuel Llobet, a highly experienced executive from the Weinstein family pharmaceutical businesses, to take over the role. Keith will remain on the board as a non-executive and be joined in that capacity by Alejandro Weinstein as senior representative of the Weinstein family which now owns over 40% of the Company. Keith is one of the founders of Allergy Therapeutics, having played a leading role in the buy-in from SmithKline Beecham in 1998 and under his leadership the Group grew from £11m to £37m in sales, completed its IPO, raised over £90m in funding, conducted two successful development programmes, made a submission for regulatory approval and comprehensively upgraded all its operations. I thank Keith for his great contribution.
I welcome Manuel and Alejandro to the board. They are both pharmaceuticals professionals, with a wealth of experience in many markets, geographical and therapeutic. Their expertise, in particular with respect to sales and marketing, will be valuable to the Group as it continues its drive to grow sales and increase market share.
A major achievement was the submission in March 2009 of Pollinex Quattro Grass our ultra-short course four injection grass allergy vaccine for marketing approval in Europe. This represents the culmination of a ten year journey from a pre-clinical idea through an exhaustive series of clinical trials to the successful completion of Phase III efficacy and safety studies. Product launch is expected in Germany in the second half of 2010 and subsequently elsewhere in Europe and will enable Allergy Therapeutics to increase prices and accelerate sales growth in its current markets as well as entering new European markets.
Other highlights include another good year from our manufacturing and supply operations, providing excellent service to our customers and continued compliance and quality excellence. Investment continues in improved methods and equipment to both de-risk the business and improve future margins. Revenues grew 22% year-on-year supported by a stronger Euro, but despite a low pollen season which impacts Allergy Therapeutics as our main Pollinex Quattro product exclusively addresses the hay-fever market.
These last twelve months have been very eventful and have presented many challenges to the management and staff at Allergy Therapeutics. I am proud and unsurprised to say that the team has risen to these challenges, identified the opportunities contained within them, and that the Group is now much stronger as a result. We have strengthened the balance sheet with major financing; and added to our development strength with a major product submission; as well as improving manufacturing, sales and marketing operations capabilities.
Ignace Goethals
Chairman
18 September 2009
CEO's Review
Following a period of heavy investment since the IPO in 2004 - completing one of the most extensive product development programmes in the field of allergy vaccines and also upgrading both the supply and the commercial operations - the Group is now capitalising on those investments. With a strengthened balance sheet and a new cornerstone investor, a product proceeding through the registration process in Europe (the biggest market for allergy vaccines), and a new Chief Executive with extensive and appropriate experience in the sales and marketing of pharmaceuticals, the Company is starting anew its voyage to transform allergy treatment.
Allergy vaccination continues its progress from a niche treatment into the mainstream of the pharmaceuticals industry. We welcome this development, as we have long believed in evidence-based medicine and registered products. This transition, as with all change, does bring challenges, one of which is responding to the requirements of the Paul Ehrlich Institut ('PEI'). The PEI Ordinance, which aims to implement the EU Directive on pharmaceutical regulation and so bring allergy vaccination into regulatory line with mainstream pharmaceuticals, will require Allergy Therapeutics and other market participants to undertake some work, quality and clinical, as well as administrative, to achieve national registration of products treating the most common allergies. We have an extensive plan to meet these new requirements and anticipate that the competitive scene will change favourably in Germany over coming years as the PEI Ordinance is implemented and some products are removed from the market.
Our development programmes in the USA remain on FDA Clinical Hold. The situation is still likely to be determined by the outcome of an FDA review of vaccine adjuvants in general. It is notable that although the FDA has never approved a vaccine adjuvant, vaccines containing our adjuvant, MPL, have been granted marketing approvals in approximately 100 countries and, in GSK's Cervarix, MPL has been approved by the World Health Organisation. Following the recent positive FDA Advisory Committee meeting we remain optimistic that GSK's recent resubmission of Cervarix for US approval will be successful and will mark the end of the FDA adjuvant review, thereby providing an opportunity for us to open discussions with the FDA regarding lifting of our Clinical Hold. Such a discussion will cover the risk:benefit profile of our products and their 'place in treatment'. It would be our hope to conclude these discussions with an agreed way forward to continue our development programme, which will involve further safety and efficacy trials. It is however, not possible to pre-judge the outcome.
It is worth remembering that for allergy vaccines manufactured under GMP by ethical pharmaceutical companies, Europe remains the biggest market by far and that other markets are generally considered to be undeveloped. We were pleased to announce earlier this year the granting of two further patents; one for Japan, covering the technology behind Pollinex Quattro, with the other covering the entire EU for the sub-lingual use of our MPL adjuvant for the oral vaccine delivery with any antigen. Our strategy remains to further develop the Company's intellectual property with the assistance of partners who will provide the financial resources required.
Allergy can be a debilitating condition, and moderate to severe patients often do not respond to pharmacotherapies such as antihistamines. In these cases, specialist treatment is required. Injected allergy vaccines such as Pollinex Quattro are well-suited to these patients. Compliance is excellent and in the rare case of serious adverse events the physician's office is the right place for these to be handled. The European market for allergy vaccines exceeds €600m; Allergy Therapeutics' market share approximately 6%. We believe that with Pollinex Quattro, which offers efficacy comparable to that of traditional allergy desensitising immunotherapy which often requires 20 or more shots, and to that of sublingual allergy vaccines (SLIT), which requires daily dosing for several months, this market share can be grown.
Our Markets
Allergy Therapeutics has established commercial operations in most of the major immunotherapy markets in the world. We have a particularly strong presence in Europe with our own operations in important markets including Germany, Italy, Spain, Austria and the United Kingdom.
In markets where we do not have a direct presence, we often make our products available through partners. The most important distributor markets for us are Canada, The Netherlands and South Korea.
We have recently completed the restructuring of many of our operations across Europe and have begun to see indications of success coming from these changes. A major part of the restructuring, while including changes to our processes and focus, was the appointment of new talented and experienced management teams in our most important markets. Our goal is to not just continue to grow sales but to accelerate the growth of our business. The quality and quantity of our efforts in sales and marketing within our affiliates has improved dramatically and we expect to reap rewards from this in the coming years.
Germany
The most important market for the Group, Germany is also the single largest immunotherapy market in the world by value with annual sales in this market of €284 million. The market continues to show strong growth with annual increases in total sales continuing in the mid single digits. The market also continues to have a strong preference towards injectable rather than sublingual immunotherapy and this favours Pollinex Quattro. This preference is only increasing with the injectable market growing faster than the sublingual market despite recent product launches into the sublingual market.
The Group completed much of the restructuring of the business in Germany in 2007 and we continue to see changes in the business and results related to this activity. We were particularly impacted, however, in Germany by a poor pollen season in 2008 which resulted in lower patient flows into allergy clinics which lead to lower than expected sales of allergy vaccines during the following prescribing season. Despite the poor pollen season, Pollinex Quattro has become one of the fastest growing allergy vaccines in this marketplace.
Italy
We estimate the total Italian immunotherapy market to be worth €55 million in sales per year. The Italian market as a whole has experienced little growth in recent years due to negative economic conditions impacting patients and their ability to pay for vaccines.
We have a much stronger organisation in place in Italy following our recent review. We believe there is a great opportunity to continue to grow our business despite the poor overall market performance as we move more prescriptions in this market away from sublingual therapy and towards injectable immunotherapy.
We now have the personnel and systems structures in place to continue to accelerate our growth and gain market share. This accelerated growth will come through improved Pollinex Quattro sales and support of our existing portfolio.
Spain
Total market sales per year in Spain are estimated to be €61 million with a mid single digit growth in value during the past year. Growth in this market has recently been negatively impacted by the economic slowdown as in Italy. It remains a very large market in terms of volume with approximately 150,000 patients a year estimated to receive immunotherapy. Injectable immunotherapy products continue as treatment of choice by Spanish physicians.
Our restructuring in Spain is complete and we expect to continue to gain market share as we have done during the past four years. This development will result from the accelerated growth of Pollinex Quattro and the continued support of our legacy products.
United Kingdom
The United Kingdom, our home market, is an important marketplace and a potential area of future growth for the Group. While currently there is limited use of allergy vaccines, this is changing and there has been an increased focus at a government level and in the media on the benefits of immunotherapy. It is hoped that allergy services will improve in the near future. It is also a market with a disproportionately large number of opinion leaders and our work here leads to improving the Group's profile and that of Pollinex Quattro in other markets including the United States.
Our business in the United Kingdom has been growing quickly in a complex market. There is a focus on pharmaeconomics and this is a significant benefit of Pollinex Quattro. The short duration of treatment reduces direct and indirect costs. This leads to high rates of compliance and makes for compelling pharmaeconomic outcomes.
Our Products
The Group sells a wide range of allergy vaccines and diagnostics. The main sales of the Group are in allergy vaccines and we sell both injectable vaccines and sublingual vaccines. Our vaccines and diagnostics trade under certain brand names, however, under each brand name is a product that is produced in many different forms depending upon the specific allergy needs of the patient as determined by the doctor. The majority of our sales are for the treatment of pollen related allergies related especially to allergies to grasses and trees.
According to current opinion, IgE mediated allergies (type one allergies) are due to dysregulation of the T helper lymphocyte (TH) cell. Whereas healthy people develop tolerance to allergens, allergy sufferers have a TH2-dominated immune response with increased IgE and corresponding clinical symptoms. This dysregulation of the immune system can be counteracted efficiently using specific immunotherapy (SIT). By administering high doses of allergen, the balance between TH1 and TH2 response to the allergen can be restored. Since SIT was first carried out successfully by Leonard Noon in 1911, it has become established as the only causal therapy for type 1 allergies.
Injectable vaccines form the largest segment of our vaccines portfolio and are comprised of one new product, Pollinex Quattro, which is the largest and the fastest growing product in our portfolio and other legacy products. These legacy products trade under different names in different markets and include Pollinex, TA Mix top and Venomil.
Pollinex Quattro, launched in 1999, began a transformation of immunotherapy by introducing allergy vaccination with only four injections per course. The short treatment period is due to the use of L tyrosine absorbed allergoids and the innovative adjuvant, monophosphoryl-lipid A (MPL). An adjuvant is a substance which improves the immune response to an antigen or allergen. MPL is derived from a lipopolysaccharide (LPS) which is obtained from the cell wall of Salmonella Minnesota R 595 using a process of extraction, purification and detoxification.
As a vaccine adjuvant, MPL has been used for many years in vaccine studies and has been tested on over 30,000 subjects with more than 100,000 doses. Vaccines with systems containing MPL have been evaluated in various indications such as cervical cancer and malaria at GlaxoSmithKline. Two vaccines with an adjuvant system containing MPL have received broad approval, including in Europe: a hepatitis B vaccine and an HPV vaccine to protect against cervical cancer - Fendrix and Cervarix, respectively. These modern, successful vaccines are already widely used.
The adjuvant effect of MPL in SIT has been documented in numerous studies and is seen in its essential role of promoting the switch from a TH2-directed immune response (with IgE induction) to a TH1-directed immune response.
Our sublingual product is Oralvac. Recently we relaunched this product in a new and improved form as Oralvac Compact. Oralvac Compact's dosing schedule allows for a more rapid and simpler escalation of dosage making treatment more convenient for patients and doctors. The product launched in 2009 in Germany and is being launched into other European markets. We expect that this product will be very competitive and attract interest in the sublingual market at a time in which competitors are launching new products.
R&D
The most significant event for Allergy Therapeutics during the year has been the Pollinex Quattro Grass 0.5ml marketing authorisation application (MAA). It was submitted on schedule on the 3 March 2009. This new product licence application is the first in a new generation of ultra short course adjuvinated allergy vaccines. The submission to the leading regulatory authority in the field, the Paul Ehrlich Institute (PEI) in Germany, is now under review. We anticipate approval to support product launch in our biggest market, Germany, in the second half of 2010. Subsequent to PEI national approval we will extend the submission under the EU Mutual Recognition Procedure. Key markets under consideration are Italy, Spain, Austria, UK, France and the Netherlands.
The continued analyses of the landmark Pollinex Quattro Grass 0.5ml G301 Phase III study continues and the consistency of the positive outcomes underlines the robustness of the overall study result. Valuable additional information on important sub-groups of patients and various outcomes has been gathered. Of particular note is the 32% benefit (p=0.034) in the combined symptom and medication score (CSMS) demonstrated in European patients (completed cases dataset). The additional G301 data have been presented at the key scientific meetings ACAAI, AAAAI and EAACI.
The Pollinex Quattro Ragweed 0.5ml R301 analyses have also provided more information on the benefit of the Pollinex Quattro Range of products. In the full-dose group, efficacy has been proven over the entire season, a 13.5% difference (p=0.012). It is significant that this was accompanied by a marked change in immunology with a >11 fold increase in IgG after treatment, a benefit largely maintained throughout the season. The accompanying Quality of Life improvements were statistically and clinically significant (p<0.016) both in total score and in several individual domains. The positive outcome of the R301 study combined with the successful R204 study constitutes a package of clinical data potentially suitable for a new drug submission in Canada and thus combined with the G301 results are attractive to possible partners in Canada for both Pollinex Quattro Ragweed 0.5ml and Grass 0.5ml.
The FDA's review of new vaccine adjuvants continues with two important milestones during the period. First Allergy Therapeutics participated in a workshop held by FDA/ NIH in Washington in December 2008 at which the potential utility and safety-in-use of several vaccine adjuvants was evident. Second GSK have re-submitted their new drug application (NDA) for Cervarix, an MPL adjuvant vaccine for the prevention of cervical cancer. Following the recent positive FDA Advisory Committee meeting we are optimistic that US approval of Cervarix will result and will mark the end of the FDA adjuvant review, thereby providing an opportunity for us to re-open discussions with the FDA regarding lifting of our Clinical Hold. Such a discussion will cover the risk: benefit profile of our products and involve reviewing their safety, efficacy and 'place in treatment'. It would be our hope to conclude these discussions with an agreed way forward to continue our development programmes, which will involve further safety and efficacy trials. It is however, not possible to pre-judge the outcome.
In November 2008, the PEI introduced the Therapy Allergen Regulation, a statutory instrument to extend the German Drug Law (following incorporation of the EU Directive 2001/83/EC) to cover licensure of particular allergen products supplied on a Named Patient Product basis. Allergy Therapeutics has implemented a clear strategy and put in place the resources to submit marketing authorisation applications for 10 leading products.
Outlook
We are confident that the Company will thrive in the changing environment of EU regulation and of apparent increasing acceptance of vaccine adjuvants in North America, and that with new commercially-experienced board representation and leadership, Allergy Therapeutics is well placed to capitalise on the investments of the past, win market share within Europe and grow profitably.
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Keith Carter Non-executive Director (Chief Executive up to 31 August 2009) 18 September 2009 |
Manuel Llobet Chief Executive 18 September 2009 |
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.
Revenue
For the year ended 30 June 2009 total gross sales increased by 14% to £38.9m (2008: £34.2m). Sales included the receipt of milestone payments from our Canadian licensees of £0.3m (2007: £2.7m). After statutory rebates in the German market net sales were £37.8m (2007: £31.0m), an increase over the previous year of 22%. Sales benefited from the increasingly strong Euro; the relative strength of the Euro over the previous year adding £5.0m to the net sales.
Own markets
The Group competes directly in eight European markets, including three of Europe's four most important for allergy vaccination: Germany, Italy and Spain.
The Group has a significant presence in Germany, which is the largest market in the world for allergy vaccines. The allergy vaccine market in Germany continued to grow during the year, albeit at a slower rate due to the low pollen count in the 2008 season, at the rate of 9% (2008: 20%). Company gross sales in Germany were £28.9m (2008: £23.8m), an increase over the previous year of 21% supported by the strong Euro. The rebate on pharmaceutical sales, which is market wide, has since May 1st 2006, included 100% of any price increases since 1 November 2005 on top of the basic rate of 6%. On 1st May 2008 the rebate reverted back to its original form of a basic 6%.
In Italy and Spain, supported by the strong Euro, the Group has demonstrated a positive performance. In Italy annual sales were £3.0m (2008: £2.5m), an increase of 21% and in Spain sales were £2.2m (2008: £1.9m), an increase of 16%.
Operations in the UK, the Czech and Slovak Republics, Poland and Austria performed well contributing £2.6m to sales (2008: £1.5m).
Licensees
The Group also sells through licensees and distributors, accounting for 6% of the gross sales. Total sales for the year were £2.1m (2008: £4.5m) a decrease of 53% on the previous year due to the inclusion last year of a large milestone receipt of £2.7m (2009 £0.3m). These milestone receipts were from the Group's Canadian licensees for Pollinex Quattro and were triggered by reaching certain development activities.
Product sales
The Group's flagship product, Pollinex Quattro continued to sell very well, with gross sales of £18.2m (2008: £12.9m), an increase of 41% over the previous year. On a constant currency basis the increase was 21%.
Cost of sales and net operating expenses
In general, manufacturing costs have increased as a result of an increase in general operating expenditure such as utility and maintenance costs together with an increase in heads to ensure compliance with recommended good manufacturing practice (GMP). As a consequence of these increases, cost of goods sold was £13.6m (2008: £10.9m), an increase of 25% over the previous year.
Marketing, promotion and selling costs increased in the year (£13.6m against the previous year figure of £11.8m) largely due to the stronger Euro making overseas purchases more expensive against Sterling. Distribution costs also grew for this reason and as a result of the increasing sales.
Administrative expenses have increased by 56% to £10.3m (2008: £6.6m) due to the impact of valuing financial derivatives under IFRS (£1.0m), foreign exchange losses on forward contracts (£1.8m), consultancy and professional fees in connection with the Company's refinancing activities (£0.6m) and additional regulatory fees to comply with the new EU directives (£0.4m).
As the development programme for Pollinex Quattro nears its end, R&D costs have decreased by 67% to £5.3m (2008: £16.3m). Most of the activity relates to the extensive Phase III programme for Grass and Ragweed.
Results of operation
As a consequence of investment in the development programmes in preparation for the launch of Pollinex Quattro the Group recorded an operating loss on ordinary activities of £6.2m (2008: loss £15.6m).
Taxation
The Group in total has tax losses to carry forward of £71m (2008: £59m). However these losses are primarily in the UK and it is likely that corporation taxes will become payable in overseas subsidiaries in the near future.
Net assets
Due primarily to investments in R&D the balance sheet had net liabilities at 30 June 2009 of £23.2m (2008, liabilities: £11.3m), an increase of £11.9m.
Capital expenditure on plant, property and equipment in the year was £1.3m (2008: £2.3m); contributing to the increase in the book value of tangible fixed assets to £7.2m from £6.9m. The main component of this spend is the improvement to the manufacturing capacity through the purchase of a new vial filling machine.
Inventory values increased marginally by 3% during the year to £6.0m (2008: £5.8m). Current liabilities have increased significantly to £21.8m (2008: £8.1m). This is primarily due to the reclassification of £9.4m of debt repaid on 3 July as a short term liability at the balance sheet date. Trade and other payables also rose to £9.0m (2008: £4.8m) as careful cash management strategies were actioned whilst awaiting the outcome of the funding negotiations.
Capital structure
The Group finances its operations through equity and debt. In July 2009, £22.1m net of expenses was raised by means of a Subscription, Offer and Placing at a price of 12p per Ordinary share, approved by members in a General Meeting on 30 June 2009. At the same time, the terms of the loan agreement were revised and amended; the Group now has a fixed term loan of €11m (fully drawn down in July 2009) and a revolving credit facility of €15.5m.
Cash flows
As at 30 June 2009 the cash / overdraft position was an overdrawn balance of £26k, a decrease of £2.3m from a £2.3m cash balance at 30 June 2008 due primarily to the significant investment in the year in the R&D programme. For the year, net cash used in operations amounted to £0.1m (2008: £19.1m).
ALLERGY THERAPEUTICS PLC
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Consolidated income statement for the year ended 30 June 2009 |
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|
|
|
|
|
|
|
Year to 30 June |
Year to 30 June |
Year to 30 June |
Year to 30 June |
|
|
|
2009 |
2009 |
2008 |
2008 |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Note |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
3 |
|
37,757 |
|
31,022 |
|
|
|
|
|
|
|
|
Cost of sales |
|
|
(13,563) |
|
(10,865) |
|
Gross profit |
|
|
24,194 |
|
20,157 |
|
|
|
|
|
|
|
|
Distribution costs |
|
|
(14,893) |
|
(12,852) |
|
|
|
|
|
|
|
|
Administration expenses - other |
|
(10,250) |
|
(6,640) |
|
|
Research and development costs |
|
(5,297) |
|
(16,300) |
|
|
Administration expenses |
|
|
(15,547) |
|
(22,940) |
|
|
|
|
|
|
|
|
Other income |
|
|
- |
|
42 |
|
Operating loss |
|
|
(6,246) |
|
(15,593) |
|
|
|
|
|
|
|
|
Finance income |
9 |
|
30 |
|
201 |
|
Finance expense |
8 |
|
(5,222) |
|
(4,852) |
|
Loss before tax |
|
|
(11,438) |
|
(20,244) |
|
Income tax |
10 |
|
(326) |
|
(53) |
|
|
|
|
|
|
|
|
Loss for the period |
28 |
|
(11,764) |
|
(20,297) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
Basic & diluted (pence per share) |
12 |
|
(14.3p) |
|
(24.8p) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The results for the year are derived solely from continuing operations
ALLERGY THERAPEUTICS PLC
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Consolidated balance sheet |
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|
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|
30 June |
30 June |
|
|
|
2009 |
2008 |
|
|
|
£'000 |
£'000 |
|
|
Note |
|
|
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
15 |
7,191 |
6,883 |
|
Intangible assets - Goodwill |
13 |
2,555 |
2,468 |
|
Intangible assets - Other |
14 |
1,065 |
1,073 |
|
Investments |
16 |
1,824 |
1,400 |
|
Derivative financial instruments |
23 |
- |
42 |
|
Total non-current assets |
|
12,635 |
11,866 |
|
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables |
18 |
3,440 |
3,199 |
|
Derivative financial instruments |
23 |
- |
3 |
|
Inventories |
17 |
6,002 |
5,817 |
|
Cash and cash equivalents |
19 |
- |
2,298 |
|
|
|
|
|
|
Total current assets |
|
9,442 |
11,317 |
|
|
|
|
|
|
Total assets |
|
22,077 |
23,183 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
20 |
(8,950) |
(4,760) |
|
Current borrowings |
21 |
(11,652) |
(2,422) |
|
Derivative financial instruments |
23 |
(1,172) |
(923) |
|
|
|
|
|
|
Total current liabilities |
|
(21,774) |
(8,105) |
|
|
|
|
|
|
Net current assets |
|
(12,332) |
3,212 |
|
|
|
|
|
|
Non current liabilities |
|
|
|
|
Retirement benefit obligation |
25 |
(2,821) |
(2,324) |
|
Non current borrowings |
21 |
(19,255) |
(23,413) |
|
Derivative financial instruments |
23 |
(1,126) |
(382) |
|
Non current provisions |
22 |
(277) |
(249) |
|
|
|
|
|
|
Total non current liabilities |
|
(23,479) |
(26,368) |
|
|
|
|
|
|
Total liabilities |
|
(45,253) |
(34,473) |
|
|
|
|
|
|
Net liabilities |
|
(23,176) |
(11,290) |
|
Consolidated balance sheet continued |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
Capital and reserves |
|
|
|
|
Issued capital |
26 |
92 |
92 |
|
Share premium |
28 |
33,193 |
33,173 |
|
Merger reserve - shares issued by subsidiary |
28 |
40,128 |
40,128 |
|
Reserve - shares held by EBT |
28 |
67 |
(1) |
|
Reserve - share based payments |
28 |
1,291 |
1,031 |
|
Revaluation reserve |
28 |
189 |
165 |
|
Foreign exchange reserve |
28 |
(1,113) |
(628) |
|
Retained earnings |
28 |
(97,023) |
(85,250) |
|
|
|
|
|
|
Total equity |
|
(23,176) |
(11,290) |
|
|
|
|
|
ALLERGY THERAPEUTICS PLC
Consolidated statement of recognised income and expense
|
|
|
|
|
|
|
|
Year to 30 June |
Year to 30 June |
|
|
|
2009 |
2008 |
|
|
|
£'000 |
£'000 |
|
|
Note |
|
|
|
|
|
|
|
|
Actuarial gain/(loss) on defined benefit pension scheme |
25 |
(9) |
576 |
|
Exchange differences on translation of foreign operations |
|
(485) |
(495) |
|
Revaluation gains / (losses) |
|
24 |
(61) |
|
Net (losses) / profits recognised directly in equity |
|
(470) |
20 |
|
|
|
|
|
|
Loss for the period |
|
(11,764) |
(20,297) |
|
|
|
|
|
|
Total recognised income and (expense) |
|
(12,234) |
(20,277) |
|
|
|
|
|
ALLERGY THERAPEUTICS PLC
|
Consolidated cash flow statement |
|
|
|
|
|
|
Year to 30 June |
Year to 30 June |
|
|
|
2009 |
2008 |
|
|
|
£'000 |
£'000 |
|
|
Note |
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Loss before tax |
|
(11,438) |
(20,244) |
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
Foreign exchange gain |
28 |
(485) |
(495) |
|
Finance income |
9 |
(30) |
(201) |
|
Finance expense |
8 |
3,236 |
1,972 |
|
Exchange loss on retranslation of loan |
8 |
1,986 |
2,880 |
|
Non cash movements on defined benefit pension plan |
|
107 |
158 |
|
Depreciation and amortisation |
14,15 |
1,315 |
1,159 |
|
Charge for share based payments |
|
260 |
356 |
|
Financial derivative instruments |
|
1,038 |
1,261 |
|
Disposal of property, plant and equipment |
|
41 |
(1) |
|
Decrease in trade and other receivables |
18 |
(241) |
174 |
|
Increase in inventories |
17 |
(185) |
(906) |
|
(Decrease) / increase in trade and other payables |
|
4,313 |
(5,246) |
|
|
|
|
|
|
Net cash used in operations |
|
(83) |
(19,133) |
|
|
|
|
|
|
Interest paid |
|
(31) |
(136) |
|
Income tax paid |
10 |
(326) |
(53) |
|
|
|
|
|
|
Net cash used in operating activities |
|
(440) |
(19,322) |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Interest received |
9 |
30 |
201 |
|
Investments |
16 |
(296) |
(256) |
|
Payments for intangible assets |
|
(295) |
(151) |
|
Payments for property plant and equipment |
|
(1,426) |
(2,472) |
|
|
|
|
|
|
Net cash used in investing activities |
|
(1,987) |
(2,678) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issue of equity shares |
28 |
88 |
35 |
|
Net proceeds from borrowings |
|
2,262 |
20,411 |
|
Bank loan fees and interest paid |
|
(2,247) |
(1,844) |
|
|
|
|
|
|
Net cash generated by financing activities |
|
103 |
18,602 |
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(2,324) |
(3,398) |
|
Cash and cash equivalents at the start of the period |
|
2,298 |
5,696 |
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
19,21 |
(26) |
2,298 |
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006.
The consolidated balance sheet at 30 June 2009 and the consolidated income statement, consolidated statement of changes in equity, consolidated cash flow statement and associated notes for the year then ended have been extracted from the Group's 2009 statutory financial statements upon which the auditors opinion is unqualified and does not include any statement under Section 498(2) or (3) of the Companies Act 2006.
Those financial statements have not yet been delivered to the registrar of companies.
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) in issue as adopted by the European Union ('EU') and applied in accordance with the Companies Act 2006.
The consolidated financial statements have been prepared under the historical cost convention except for derivative financial instruments and investment assets which have been measured at fair value.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group in the 30 June 2009 financial statements
At the date of authorisation of these financial statements, certain new Standards, amendments and interpretations to existing standards have been published but are not yet effective. The Group has not adopted any of these pronouncements early. The new Standards, amendments and Interpretations that are expected to be relevant to the Group's financial statements are as follows:
IAS 1 Presentation of Financial Statements (Revised 2007) (effective for reporting periods beginning on or after 1 January 2009)
This amendment affects the presentation of owner changes in equity and introduces a statement of comprehensive income. Preparers will have the option of presenting items of income and expense and components of other comprehensive income either in a single statement of comprehensive income with subtotals, or in two separate statements (a separate income statement followed by a statement of other comprehensive income). This amendment does not affect the financial position or results of the Group but will give rise to additional disclosures. Management is currently assessing the detailed impact of this amendment on the Group's financial statements.
IAS 23 (Revised) Borrowing Costs (effective for accounting periods beginning on or after 1 January 2009)
The option to recognise immediately, as an expense, the borrowing costs that relate to assets that take a substantial period of time to get ready for use or sale is removed. All borrowing costs thus arising must therefore be capitalised. Management is currently assessing the detailed impact of this amendment on the Group's financial statements.
IFRS 3 Business Combinations (Revised 2008) and IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective for reporting periods beginning on or after 1 July 2009)
The revised Standards introduce major changes to the accounting treatment for business combinations, transactions with non-controlling interests (a new term for minority interests) and a loss of control of a subsidiary. Management are currently assessing the detailed impact of this amendment on the Group's financial statements.
IFRS 8 Operating segments (effective for reporting periods beginning on or after 1 January 2009)
This IFRS specifies how an entity should report information about its operating segments in its financial statements. Generally, financial information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. Implementation of this standard is expected to increase the number of reportable segments as well as the manner in which the segments are reported. i.e in a manner that is consistent with the internal reporting provided to the chief operating decision-maker. As goodwill is allocated to groups of cash generating units based on segment level, the change will also require the reallocation of goodwill to the newly identified operating segments. Management does not anticipate that this will result in any material impairment of goodwill.
IFRIC 14 - IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective 1 January 2009)
This IFRIC addresses the interaction between minimum funding requirements (which are commonly imposed by laws and regulations in some jurisdictions) and the measurement of a defined benefit asset. Management are currently assessing the detailed impact of this amendment on the Group's financial statements.
IFRS 2 amendment to share based payments.
The revised Standard will apply retrospectively from 1st January 2009 and specifies that all cancellations of share based payment arrangements, including those by an employee or other counterparty, should receive the same accounting treatment of requiring immediate recognition in the income statement of the charge that would otherwise have been recognised over the remainder of the service period.
Management anticipate that all the above pronouncements will be adopted in the Group's financial statements for the period beginning 1 July 2009.
Other new Standards and Interpretations have been issued but are not expected to have a material impact on the Group's financial statements.
Going concern
The Group incurred losses for the financial years ended 2007 to 2009 primarily as a consequence of its investment in research and development activities; these losses have been funded by equity issues, debt facilities and cash generated by the operating business.
The Group has prepared detailed budgets, including cash flow projections, for the periods ending 30 June 2010 to 30 June 2012. These projections include assumptions on the trading performance of the operating business and the continued availability of the existing debt facilities. After making appropriate enquiries, which included a review of the annual budget, by considering the cash flow requirements for the foreseeable future and the effects of sales and other sensitivities on the Company's funding plans, the Directors continue to believe that the Group will have adequate resources to continue in operational existence for the foreseeable future and accordingly have applied the going concern principle in drawing up the financial statements. In reaching this view, the Directors have considered and prioritised the actions that could be taken to offset the impact of any shortfall in operating performance.
2. ACCOUNTING POLICIES
Consolidation
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of over one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated on the date control ceases.
The Group uses the purchase method of accounting for the acquisition of a subsidiary. The cost of an acquisition is measured by the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired the difference is recognised directly in the income statement.
Inter-Company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated except for unrealised losses if they show evidence of impairment.
Goodwill
Goodwill arising from business combinations is the difference between the fair value of the consideration paid and the fair value of the assets and liabilities and contingent liabilities acquired. It is initially recognised as an intangible asset at cost and is subject to impairment testing on an annual basis or more frequently if circumstances indicate that the asset may have been impaired. Details of impairment testing are described in the accounting policies.
Intangible assets
Acquired as part of a business combination
Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses.
Internally generated intangible assets
An internally generated intangible asset arising from development (or the development phase) of an internal project is recognised if, and only if, all of the following have been demonstrated:
-
the technical feasibility of completing the intangible asset so that it will be available for use or sale
-
the intention to complete the intangible asset and use or sell it
-
the ability to use or sell the intangible asset
-
how the intangible asset will generate probable future economic benefits
-
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset
-
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognised, research and development expenditure is charged to profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation of these assets is calculated on a straight line basis over the useful economic life using the following annual rates:
|
Manufacturing know-how |
15 years |
|
Non-competing know-how |
4 years |
|
Other intangibles |
15 years |
|
Computer software |
7 years |
These periods were selected to reflect the various assets' useful economic lives to the Group.
The cost of amortising intangible assets is included within administration costs on the consolidated income statement.
Segmental reporting
A business segment is a group of assets and operations engaged in production that is subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in production within a particular economic environment that is different from that in segments operating in other economic environments.
The Group's one principal activity is the research, development, manufacturing, marketing and sales of allergy treating drugs. This forms the single business stream and primary reporting segment. The Group's secondary reporting segment is geographical and is based both on customer location and country of origin.
Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The Group's presentational currency is Sterling.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at reporting period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Group companies
The results and financial position of all Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
-
Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet;
-
Income and expenses for each income statement are translated at actual exchange rates or using an average rate as an approximation;
-
All resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities are taken to equity. The Group has taken advantage of the exemption in IFRS 1 which allows all foreign exchange differences on consolidation to be set at zero at transition and the foreign exchange reserve therefore only shows post transition foreign exchange differences.
Income recognition
Revenue is measured by reference to the fair value of consideration received or receivable by the Group for goods supplied and services provided, net of statutory rebates paid in Germany and excluding value added tax. Revenue is recognised upon the performance of services or transfer of risk to the customer.
Sale of goods
Revenue from the sale of goods is recognised when all the following conditions have been satisfied:
-
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods which is generally when the customer has physically received the goods.
-
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold which is again when the customer has physically received the goods.
-
the amount of revenue can be measured reliably.
-
it is probable that the economic benefits associated with the transaction will flow to the Group, and
-
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Royalties
Royalties are recognised on an accruals basis in accordance with the substance of the relevant agreement.
Milestones
Revenues with performance milestones are received from our licensees in Canada and are treated as royalties. These are recognised on the satisfactory occurrence of critical events as pre-defined in the relevant agreement.
Expenditure recognition
Operating expenses are recognised in the income statement upon utilisation of the service or at the date of their origin.
Borrowing costs
All borrowing costs are expensed to the income statement on an accruals basis using the effective interest method.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Provision for depreciation of all tangible assets of the Group is made over their estimated useful lives, principally using the following annual rates:
|
Buildings |
10 years |
|
Computer equipment |
3 - 7 years |
|
Motor vehicles |
4 years |
|
Fixtures and fittings |
5 - 10 years |
|
Plant and equipment |
5 - 10 years |
Asset residual values and useful lives are reviewed annually and amended as necessary. Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the fixed asset may not be recoverable. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount exceeds the higher of the asset's fair value less costs to sell or value in use.
Assets under course of construction are capitalised but not depreciated. Once the asset is ready for use, it is transferred to the relevant heading and depreciated accordingly. This category consists of plant and machinery which is being constructed with the intention of bringing these assets into the production line over the next two to three years.
Impairment
The Group's goodwill, other intangible assets and property plant & equipment are subject to impairment testing.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Goodwill is allocated to those cash generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management controls the related cash flows.
Individual assets or cash generating units that include goodwill with an indefinite useful life or those not yet available for use are tested for impairment at least annually. All other individual assets or cash generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the assets or cash generating units carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell and value in use, based on an internal discounted cash flow evaluation. Impairment losses recognised for cash generating units, to which goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.
Inventories
Inventory is carried at the lower of cost or net realisable value. The costs of raw materials, consumables, work in progress and finished goods are measured by means of weighted average cost using standard costing techniques. Cost of finished goods comprises direct production costs such as raw materials, consumables, utilities and labour, and production overheads such as employee costs, depreciation, maintenance and indirect factory costs. Standard costs are reviewed regularly in order to ensure relevant measures of utilisation, production lead time and appropriate levels of manufacturing expense are reflected in the standards.
Net realisable value is calculated based on the revenue from sale in the normal course of business less any costs to sell.
Leases
Operating leases are deemed to be those leasing agreements which do not transfer to the Group substantially all the benefits and risks of ownership of an asset.
Operating lease rentals are charged to the income statement over the term of the lease. There are no finance leases.
Financial assets
Financial assets consist of loans and receivables, which consist of cash and trade and other receivables. Financial assets are assigned to their different categories by management on initial recognition, depending on the contractual arrangements.
Cash and cash equivalents comprise cash on hand, demand deposits and overdrafts, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument and are initially recognised at fair value plus transaction costs, and subsequently at amortised cost.
Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.
Financial liabilities
The Group's financial liabilities include bank loans, trade and other payables.
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. All interest related charges are recognised as an expense in 'Finance costs' in the income statement.
Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings comprise secured bank borrowings, and are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowings. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method.
Derivative financial instruments
The Group uses interest rate swaps, Euro forward contracts and Euro exchange swaps to manage the exposure to changes in interest and translation rates and these are classified as derivative financial instruments. All derivative financial instruments are initially measured at fair value on acquisition and are subsequently restated to fair value at each reporting date. Any change in the fair value of the instruments is recognised in the Income Statement.
Equity
Equity comprises the following:
-
"Issued capital" represents the nominal value of equity shares that have been issued.
-
"Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.
-
"Merger reserve" represents shares issued by the subsidiaries.
-
"Reserve - Shares held in EBT" represent the shares acquired by a trust set up for the benefit of the Group's employees. These shares are deducted from shareholders funds at the cost that the shares were acquired. The net proceeds received from the issue of these shares through the exercise of options are also recognised through this reserve.
-
"Share based payments reserve" represents equity-settled share-based employee remuneration until such share options are exercised.
-
"Revaluation reserve" represents the revaluations of investment assets.
-
"Foreign Exchange reserve" represents the foreign currency translation differences that have occurred since the transition date in respect of the retranslation of foreign operations. Exchange differences prior to this date are included within retained earnings.
-
"Retained earnings" represents retained profits and losses.
Income taxes
Current income tax assets and liabilities comprise those obligations to fiscal authorities in the countries in which the Group carries out its operations. They are calculated according to the tax rates and tax laws applicable to the fiscal period and the country to which they relate. All changes to current tax liabilities are recognised as a component of tax expense in the income statement.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity (such as the revaluation of land) in which case the related deferred tax is also charged or credited directly to equity.
Defined Benefit Pension Scheme
Scheme assets are measured at fair values. The expected return on plan assets is determined based on market expectations. Scheme liabilities are measured on an actuarial basis using the projected unit credit method and are discounted at appropriate high quality corporate bond rates that have terms to maturity approximating to the terms of the related liability. Appropriate adjustments are made for past service costs. Past service cost is recognised as an expense on a straight-line basis over the average period until the benefits become vested. To the extent that benefits are already vested the Group recognises past service cost immediately.
Actuarial gains and losses are recognised immediately through the statement of recognised income and expense (SORIE). The net surplus or deficit is presented with other net assets on the balance sheet. The related deferred tax is shown with other deferred tax balances. A surplus is recognised only to the extent that it is recoverable by the Group.
The current service cost, past service cost and costs from settlements and curtailments are charged against administrative expenses in the income statement. Interest on the scheme liabilities and the expected return on scheme assets are included in other finance costs.
Short-term employee benefits, including holiday entitlement are included in current pension and other employee obligations at the undiscounted amount that the Group expects to pay as a result of the unused entitlement.
Defined Contribution Pension Scheme
The amounts charged as expenditure for the defined contribution scheme represent the contributions payable by the Group for the accounting period in respect of this scheme.
Investments
Investments relate to long-term insurance policies that cannot be directly deducted from the German pension obligation. These are recognised as a separate asset, rather than as a deduction in determining the defined benefit liability. Investment gains and losses are taken via the statement of recognised income and expense to the revaluation reserve except where they relate to foreign exchange gains and losses when they are taken to the foreign exchange reserve.
Provisions
Provisions are recognised when the present obligations arising from legal or constructive obligations resulting from past events, will probably lead to an outflow of economic resources from the Group which can be estimated reliably.
Provisions are measured at the present value of the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the balance sheet date.
All provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Share based employee compensation
The Group operates equity settled share based compensation plans for remuneration of its employees.
All employee services received in exchange for the grant of any share based compensation are measured at their fair values. These are indirectly determined by reference to the share rights awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (e.g. profitability or sales growth targets).
All share based compensation is ultimately recognised as an expense in profit and loss with a corresponding credit to the share based payments reserve, net of deferred tax where applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of shares options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment to expense recognised in prior periods is made if fewer share options ultimately are exercised than estimated.
Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium.
Employee Benefit Trust
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 equity on the balance sheet at the cost of acquisition.
Use of accounting estimates and judgements
Many of the amounts included in the financial statements involve the use of judgement and/or estimation. These judgements and estimates are based on management's best knowledge of the relevant facts and circumstances, having regard to prior experience, but actual results may differ from the amounts included in the financial statements. Information about such judgements and estimation is contained in the accounting policies and/or the notes to the financial statements and the key areas are summarised below:
Judgements in applying accounting policies
a) Identification of functional currencies requires analysis of the economic environments of the subsidiaries of the Group and the selection of the presentational currency must reflect the requirements of the users of those statements.
b) During the year the Group earned milestone payments to the value of £282k (2008: £2,701k). This has been recognised as revenue in accordance with the terms of the contract.
c) Capitalisation of development costs requires analysis of the technical feasibility and commercial viability of the project concerned. Capitalisation of the costs will be made only where there is evidence that an economic benefit will accrue to the Group. To date no development costs have been capitalised and all costs have been expensed in the Income statement as research and development expenditure, £5.3m (2008: £16.3m).
Sources of estimation uncertainty
a) Depreciation rates are based on estimates of the useful lives and residual values of the assets involved.
b) Estimates of future profitability are required for the decision whether or not to create a deferred tax asset.
c) Estimates are required as to asset carrying values and impairment charges.
d) Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating unit to which the goodwill has been allocated. This value in use calculation requires an estimation of the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate the present value.
3. REVENUE
An analysis of revenue by category is set out in the table below:
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Sale of goods |
35,643 |
26,476 |
|
Royalties |
1,832 |
1,845 |
|
Milestones |
282 |
2,701 |
|
|
|
|
|
|
37,757 |
31,022 |
4. SEGMENTAL REPORTING
The Group's sole principal activity is the research, development, manufacturing, marketing and sale of allergy treating pharmaceuticals. This forms the single business stream and primary reporting segment.
The Group's secondary reporting segments are based on geographical location. The following table provides a breakdown of the Group's sales by geographical market irrespective of the origin of the products and are shown net of inter-segmental sales of £31,145k (2008: £23,602k):
|
|
Year to 30 Jun |
Year to 30 Jun |
|
|
2009 |
2008 |
|
|
|
|
|
|
£'000 |
£'000 |
|
|
|
|
|
Germany |
27,724 |
20,596 |
|
Rest of Europe |
8,798 |
6,763 |
|
North America |
894 |
3,346 |
|
Asia |
341 |
317 |
|
|
|
|
|
|
37,757 |
31,022 |
|
|
|
|
The following table provides a breakdown of the Group's sales by the country of origin of the products sold:
|
|
Year to 30 Jun |
Year to 30 Jun |
|
|
2009 |
2008 |
|
|
|
|
|
|
£'000 |
£'000 |
|
|
|
|
|
Germany |
27,724 |
20,596 |
|
Rest of Europe |
5,846 |
4,734 |
|
UK |
4,187 |
5,692 |
|
|
|
|
|
|
37,757 |
31,022 |
|
|
|
|
The following analysis shows the carrying value of the assets, excluding cash and cash equivalents, and the additions to those assets in each of the segments:
|
|
Carrying amount of segment assets |
Additions to property, plant & equipment and intangible assets |
||
|
|
Year to 30 Jun |
Year to 30 Jun |
Year to 30 Jun |
Year to 30 Jun |
|
|
2009 |
2008 |
2009 |
2008 |
|
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Germany |
4,111 |
3,511 |
70 |
96 |
|
Rest of Europe |
1,282 |
1,539 |
47 |
19 |
|
UK |
16,684 |
15,835 |
1,516 |
2,289 |
|
|
|
|
|
|
|
|
22,077 |
20,885 |
1,633 |
2,404 |
|
|
|
|
|
|
5. LOSS BEFORE TAX
|
|
2009 |
2008 |
|
Loss for the period has been arrived at after charging / (crediting): |
£'000 |
£'000 |
|
|
|
|
|
Foreign exchange loss |
485 |
495 |
|
|
|
|
|
Depreciation and amortisation: |
|
|
|
Depreciation of property plant and equipment (note 15 ) |
1,008 |
909 |
|
Amortisation of intangible assets (note 14 ) |
307 |
250 |
|
|
|
|
|
Research and development |
5,297 |
16,300 |
|
|
|
|
|
Employee benefits expense: |
|
|
|
Employee costs (Note 7) |
16,110 |
14,092 |
|
|
|
|
|
Land and buildings held under operating leases |
518 |
387 |
|
Other operating leases |
620 |
448 |
|
|
|
|
|
Audit and non-audit services: |
|
|
|
Fees payable to the Company's auditor for the audit of the Group accounts |
21 |
25 |
|
Fees payable to the Company's auditor and its associates for other services: |
|
|
|
The audit of the Company's subsidiaries pursuant to legislation |
75 |
97 |
|
Tax services |
11 |
(6) |
|
Other services pursuant to legislation |
51 |
31 |
|
|
|
|
|
Share based payment expense (note 27 ) |
260 |
356 |
|
|
|
|
6. REMUNERATION OF KEY MANAGEMENT PERSONNEL
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Salaries and short-term employee benefits |
865 |
753 |
|
Post employment benefits - defined benefit plans |
42 |
28 |
|
Post employment benefits - defined contribution plans |
53 |
49 |
|
Share based payment |
104 |
194 |
|
|
|
|
|
|
1,064 |
1,024 |
7. EMPLOYEES
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Employee costs: |
|
|
|
Wages and salaries |
13,473 |
11,611 |
|
Social security costs |
1,970 |
1,713 |
|
Share based payments |
260 |
356 |
|
Pension costs - defined benefit plans |
233 |
204 |
|
Pension costs - defined contribution plans |
174 |
208 |
|
|
|
|
|
|
16,110 |
14,092 |
|
|
|
|
|
The average number of employees during the period was made up as follows: |
|
|
|
|
|
|
|
R & D, marketing and administration |
125 |
126 |
|
Sales |
71 |
69 |
|
Production |
178 |
167 |
|
|
|
|
|
|
374 |
362 |
8. FINANCE EXPENSE
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Interest on facility borrowing and short term loans |
3,045 |
1,724 |
|
Bank interest on overdraft |
24 |
120 |
|
Employee defined benefit scheme interest expense |
167 |
128 |
|
Other charges |
1,986 |
2,880 |
|
|
|
|
|
|
5,222 |
4,852 |
Other charges represent the exchange loss arising on the year-end translation of the Euro denominated borrowing facility.
9. FINANCE INCOME
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Bank interest |
30 |
201 |
10. INCOME TAX EXPENSE
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Current Tax: |
|
|
|
Overseas tax |
326 |
53 |
|
|
|
|
|
Tax charge for the period |
326 |
53 |
|
|
|
|
The tax assessed for the period is higher than the standard rate of corporation tax as applied in the respective trading domains where the Group operates. The differences are explained below:
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Loss for the period before tax |
(11,438) |
(20,244) |
|
|
|
|
|
Loss for period multiplied by the respective standard rate of corporation tax applicable in each domain (average 28%). |
(3,203) |
(5,972) |
|
|
|
|
|
Effects of: |
|
|
|
Disallowable expenses |
184 |
365 |
|
Capital allowances in excess of depreciation |
(170) |
(228) |
|
Other differences, adjustments and movements |
52 |
51 |
|
Tax losses (utilised) |
51 |
(349) |
|
Allowances for R&D expenditure |
(778) |
(55) |
|
Tax losses not utilised |
4,170 |
6,266 |
|
Adjustment for different tax rates |
67 |
32 |
|
Relief for shares acquired by employees and Directors |
(47) |
(57) |
|
|
|
|
|
Tax charge for the period |
326 |
53 |
11. UNRECOGNISED DEFERRED TAX
|
|
2009 |
2009 |
2008 |
2008 |
||||
|
|
Deferred tax assets |
Deferred tax liabilities |
Deferred tax assets |
Deferred tax liabilities |
||||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
||||
|
Non Current Assets |
|
|
|
|
||||
|
Property, plant and equipment |
- |
(652) |
- |
(520) |
||||
|
Derivative financial instruments |
- |
- |
258 |
- |
||||
|
Current Liabilities |
|
|
|
|
||||
|
Derivative financial instruments |
328 |
|
|
|
||||
|
Non Current Liabilities |
|
|
|
|
||||
|
Pension and other employee obligations |
789 |
- |
270 |
- |
||||
|
Derivative financial instruments |
315 |
- |
107 |
- |
||||
|
Unused tax losses |
20,262 |
|
16,458 |
- |
||||
|
|
21,694 |
(652) |
17,093 |
(520) |
||||
|
Offset |
(652) |
652 |
(520) |
520 |
||||
|
|
|
|
|
|
||||
|
Total |
21,042 |
- |
16,573 |
- |
||||
|
|
|
|
|
|
||||
No deferred tax has been provided for in respect of these temporary differences.
12. LOSS PER SHARE
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Loss for the period attributable to equity shareholders |
(11,764) |
(20,297) |
|
|
|
|
|
|
Shares |
Shares |
|
|
'000 |
'000 |
|
|
|
|
|
Issued ordinary shares at start of the period |
81,951 |
81,951 |
|
Ordinary shares issued in the period |
416 |
- |
|
Issued ordinary shares at end of the period |
82,367 |
81,951 |
|
|
|
|
|
Weighted average number of shares in issue for the period. |
81,985 |
81,951 |
|
|
|
|
|
Basic and diluted loss per share (pence) |
(14.3p) |
(24.8p) |
The diluted loss per share does not differ from the basic loss per share as the exercise of share options would have the effect of reducing the loss per share and is therefore not dilutive under the terms of IAS 33.
On 1 July 2009 181,631,937 ordinary shares of 0.1p each issued pursuant to an Offer, Placing and Subscription at a price of 12p per ordinary share were admitted to trading on AIM having been approved by shareholders of the Company in General Meeting on 30 June 2009. On 10 July, 12,500,000 ordinary shares of 0.1p each issued pursuant to the exercise of a Warrant by Azure Ventures Limited were admitted to trading on AIM. The total issued share capital of the Company on 10 July was 276,498,551 ordinary shares.
13. GOODWILL
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
At 1 July |
2,468 |
2,295 |
|
Exchange difference |
87 |
173 |
|
|
|
|
|
At 30 June |
2,555 |
2,468 |
For the purposes of impairment testing of goodwill, the directors recognise the Group's Cash Generating units ("CGU") to be the following:
|
|
2009 |
2008 |
||
|
|
£'000 |
£'000 |
||
|
|
|
|
||
|
Germany |
2,555 |
2,468 |
||
The recoverable amount for the cash-generating unit above was determined based on a value-in-use calculation, covering a detailed three-year forecast of future cash flows using budgeted projections assuming a 12% discount rate reflecting the Group's weighted average cost of capital. Key assumptions include sales growth, which has been determined based on past experience in this market. The Group's management believes that this is the best available input for forecasting this mature market. Apart from the considerations described in determining the value in use of the cash generating unit described above, the Group's management is not currently aware of any other probable changes that would necessitate changes in its key estimates. At each half-year end the directors have reviewed the goodwill for possible impairment and concluded that no impairment provision is required.ALLERGY THERAPEUTICS PLC
14. INTANGIBLE ASSETS
|
|
Manufacturing know-how |
Non-competing know-how |
Other intangibles |
Computer software |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Cost |
|
|
|
|
|
|
At 1 July 2007 |
1,000 |
2,978 |
954 |
1,066 |
5,998 |
|
Additions |
- |
- |
- |
151 |
151 |
|
Foreign exchange |
- |
438 |
38 |
60 |
536 |
|
At 30 June 2008 |
1,000 |
3,416 |
992 |
1,277 |
6,685 |
|
Additions |
- |
- |
- |
295 |
295 |
|
Foreign exchange |
- |
218 |
19 |
32 |
269 |
|
At 30 June 2009 |
1,000 |
3,634 |
1,011 |
1,604 |
7,249 |
|
|
|
|
|
|
|
|
Amortisation |
|
|
|
|
|
|
At 1 July 2007 |
600 |
2,978 |
640 |
621 |
4,839 |
|
Charge for the year |
67 |
- |
51 |
132 |
250 |
|
Foreign exchange |
- |
438 |
36 |
49 |
523 |
|
At 30 June 2008 |
667 |
3,416 |
727 |
802 |
5,612 |
|
Charge for the year |
66 |
0 |
51 |
190 |
307 |
|
Foreign exchange |
0 |
218 |
18 |
29 |
265 |
|
At 30 June 2009 |
733 |
3,634 |
796 |
1,021 |
6,184 |
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
At 1 July 2007 |
400 |
- |
314 |
445 |
1,159 |
|
At 30 June 2008 |
333 |
- |
265 |
475 |
1,073 |
|
At 30 June 2009 |
267 |
- |
215 |
583 |
1,065 |
15. PROPERTY, PLANT AND EQUIPMENT
|
|
Plant & machinery |
Fixtures & fittings |
Motor vehicles |
Computer equipment |
Assets under course of construction |
Freehold land & buildings |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Cost or valuation |
|
|
|
|
|
|
|
|
At 1 July 2007 |
4,179 |
2,920 |
16 |
1,571 |
- |
263 |
8,949 |
|
Additions |
424 |
420 |
- |
228 |
1,182 |
- |
2,254 |
|
Asset reclassification |
(647) |
(7) |
- |
(267) |
921 |
- |
- |
|
Foreign exchange |
14 |
76 |
- |
14 |
- |
46 |
150 |
|
Disposals |
6 |
(3) |
- |
- |
- |
- |
3 |
|
At 30 June 2008 |
3,976 |
3,406 |
16 |
1,546 |
2,103 |
309 |
11,356 |
|
Additions |
810 |
116 |
20 |
161 |
231 |
- |
1,338 |
|
Asset reclassification |
204 |
(11) |
- |
214 |
(407) |
- |
- |
|
Foreign exchange |
8 |
40 |
- |
36 |
0 |
23 |
107 |
|
Disposals |
- |
(3) |
- |
(60) |
0 |
- |
(63) |
|
At 30 June 2009 |
4,998 |
3,548 |
36 |
1,897 |
1,927 |
332 |
12,738 |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
At 1 July 2007 |
1,616 |
848 |
5 |
754 |
- |
240 |
3,463 |
|
Charge for the year |
276 |
420 |
3 |
184 |
- |
26 |
909 |
|
Foreign exchange |
9 |
45 |
- |
3 |
- |
42 |
99 |
|
Disposals |
5 |
(3) |
- |
- |
- |
- |
2 |
|
At 30 June 2008 |
1,906 |
1,310 |
8 |
941 |
- |
308 |
4,473 |
|
Charge for the year |
360 |
442 |
6 |
200 |
- |
- |
1,008 |
|
Foreign exchange |
5 |
28 |
- |
32 |
- |
23 |
88 |
|
Disposals |
- |
(1) |
- |
(21) |
- |
- |
(22) |
|
At 30 June 2009 |
2,271 |
1,779 |
14 |
1,152 |
- |
331 |
5,547 |
|
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
|
At 1 July 2007 |
2,563 |
2,072 |
11 |
817 |
- |
23 |
5,486 |
|
At 30 June 2008 |
2,070 |
2,096 |
8 |
605 |
2,103 |
1 |
6,883 |
|
At 30 June 2009 |
2,727 |
1,769 |
22 |
745 |
1,927 |
1 |
7,191 |
|
|
|
|
|
|
|
|
|
All assets in the UK are secured under the Group's UK borrowings..
In June 2009 an impairment review has been carried out on the assets under course of construction. The recoverable amount for these assets was determined based on a value-in-use calculation, covering a detailed three-year forecast of future cash flows using budgeted projections assuming a 12% discount rate reflecting the Group's weighted average cost of capital. Key assumptions include sales growth, which has been determined based on past experience. The Group's management believes that this is the best available input for forecasting this mature market. Apart from the considerations described in determining the value in use of the cash generating unit described above, the Group's management is not currently aware of any other probable changes that would necessitate changes in its key estimates. At each half-year end the directors have reviewed the assets under the course of construction for possible impairment and concluded that no impairment provision is required.
16. INVESTMENTS
The Group carries an insurance policy which is designed to contribute towards the obligation in respect of the defined benefit pension scheme. It is valued at fair value (market price) by the Group's actuaries each year.
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
At 1 July |
1,400 |
1,011 |
|
Additions |
296 |
256 |
|
Gains / (losses) in the investment |
24 |
(61) |
|
Gains in foreign exchange |
104 |
194 |
|
|
|
|
|
|
1,824 |
1,400 |
|
|
|
|
17. INVENTORIES
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Raw materials and consumables |
1,643 |
1,763 |
|
Work in progress |
3,707 |
3,620 |
|
Finished goods |
652 |
434 |
|
|
|
|
|
|
6,002 |
5,817 |
The cost of inventories recognised as an expense during the year was £13.6m (2008: £10.9m) including write-downs in the year amounting to £2.7m (2008: £2.9m)
18. TRADE AND OTHER RECEIVABLES
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Trade receivables |
1,742 |
1,956 |
|
Other receivables |
378 |
447 |
|
VAT |
164 |
296 |
|
Prepayments |
1,156 |
500 |
|
|
|
|
|
|
3,440 |
3,199 |
|
|
|
|
All amounts due as shown above are short-term. The carrying value of trade receivables is considered a reasonable approximation of fair value. All trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and a provision of £144k (2008: £267k) has been recorded accordingly. Of the £144k, £132k is in addition to the provision of £258k booked last year in relation to the impaired receivable which arose due to the non-performance of a supplier to Allergy Therapeutics Italia s.r.l. In addition, some of the unimpaired trade receivables are past due as at the reporting date. The age of financial assets past due but not impaired is as follows:
|
The following financial assets were overdue by: |
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Trade receivables |
|
|
|
Not more than 3 months |
304 |
494 |
|
More than 3 months but not more than 6 months |
66 |
43 |
|
More than 6 months but not more than 1 year |
58 |
229 |
|
More than one year |
135 |
8 |
|
|
|
|
|
|
563 |
774 |
|
|
|
|
|
Bad and doubtful debt provision |
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Balance b/f |
267 |
57 |
|
Foreign exchange adjustments |
10 |
- |
|
Charge for the year |
144 |
267 |
|
Utilised |
- |
(57) |
|
Balance c/f |
421 |
267 |
|
|
|
|
19. CASH AND CASH EQUIVALENTS
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Cash at bank and in hand |
- |
2,298 |
20. TRADE AND OTHER PAYABLES
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Trade payables |
3,742 |
2,312 |
|
Social security and other taxes |
1,302 |
403 |
|
Other creditors |
187 |
292 |
|
Accrued expenses and deferred income |
3,719 |
1,753 |
|
|
|
|
|
|
8,950 |
4,760 |
21. BORROWINGS
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Due within one year |
|
|
|
Facility borrowing |
9,376 |
1,582 |
|
Short term loans |
2,250 |
840 |
|
Overdraft |
26 |
- |
|
|
11,652 |
2,422 |
|
|
|
|
|
Due after more than one year |
|
|
|
Facility borrowing |
19,048 |
22,444 |
|
Long term loan |
207 |
969 |
|
|
19,255 |
23,413 |
|
|
|
|
|
|
|
|
The facility borrowing is denominated in Euros and provided by The Royal Bank of Scotland plc. The interest on the loan is Euribor plus a variable margin. The loan is secured in favour of The Royal Bank of Scotland plc by means of a debenture over the Group's assets, an Intellectual Property Rights Agreement with Bencard Allergie
GmbH and share pledge agreements with Bencard Allergie GmbH, Allergy Therapeutics Italia s.r.l. and Allergy Therapeutics Iberica S.L
On 3 July 2009 £9.4m of the outstanding balance was repaid, classifying this amount of the loan as short-term at the balance sheet date. At the same time, the terms of the loan agreement were revised and amended; the Group now has a fixed term loan of €11m (fully drawn down in July 2009) and a revolving credit facility of €15.5m..
22. PROVISIONS
The provision refers to a leaving indemnity reserve in Allergy Therapeutics Italia s.r.l. Under Italian law, alongside each monthly salary payment an amount is paid into this reserve for each employee. When the employee leaves the Company the accrued amount is paid in the form of a deferred salary payment.
|
|
2009 |
|
|
£'000 |
|
At 1 July 2008 |
249 |
|
Additions in year |
28 |
|
At 30 June 2009 |
277 |
|
|
|
23. FINANCIAL INSTRUMENTS
Risk management
The Group manages its capital to ensure that entities within the Group will be able to continue as a going concern whilst maximising the return to stakeholders through the effective management of liquid resources raised through share issues and facility loan arrangements. The IAS 39 categories of financial assets and liabilities included in the balance sheet and the headings under which they are shown are as follows:
|
Categories of financial instrument |
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Financial assets |
|
|
|
Current |
|
|
|
Derivative instruments at fair value through profit and loss |
- |
3 |
|
Loans and receivables (including cash and cash equivalents) |
2,284 |
4,997 |
|
Non current |
|
|
|
Derivative instruments at fair value through profit and loss |
- |
42 |
|
|
2,284 |
5,042 |
|
|
|
|
|
Financial liabilities |
|
|
|
Current |
|
|
|
At amortised cost (including borrowings and payables) |
(15,581) |
(5,026) |
|
Derivative instruments at fair value through profit and loss |
(1,172) |
(923) |
|
Non current |
|
|
|
At amortised cost (including borrowings and payables) |
(19,532) |
(23,662) |
|
Derivative instruments at fair value through profit and loss |
(1,126) |
(382) |
|
|
(37,411) |
(29,993) |
|
|
|
|
Derivative financial instruments
The Group uses derivative financial instruments to mitigate the effects of exchange rate exposure through the use of forward exchange contracts and interest rate volatility through the use of interest rate swap arrangements. The fair value is calculated by reference to market rates and supported by counterparty confirmation.
Interest rate swap
Although management consider the interest rate swaps as an effective hedging tool they are not formally designated as such. They are arranged to convert 60% of the Group's loan borrowings from floating to fixed rates.
Euro forward contracts
The Group has Euro forward contracts with its bank that are arranged for the sale of €14,275k to purchase Sterling at an average blended rate of £1:€1.2985 at future dates from July 2009 to June 2010.
23. FINANCIAL INSTRUMENTS (continued)
|
Analysis of derivative financial instruments |
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Current assets |
|
|
|
Derivative financial instruments |
|
|
|
- Euro exchange swap - held for trading |
- |
3 |
|
|
|
|
|
|
- |
3 |
|
Non current assets |
|
|
|
Derivative financial instruments |
|
|
|
- Interest rate swap - held for trading |
- |
42 |
|
|
|
|
|
Current liabilities |
|
|
|
Derivative financial instruments |
|
|
|
- Euro forward contracts - held for trading |
1,172 |
897 |
|
- Interest rate swap - held for trading |
- |
26 |
|
|
|
|
|
|
1,172 |
923 |
|
Non current liabilities |
|
|
|
Derivative financial instruments |
|
|
|
- Euro forward contracts - held for trading |
- |
382 |
|
- Interest rate swap - held for trading |
1,126 |
- |
|
|
|
|
|
|
1,126 |
382 |
|
|
|
|
Foreign currency risk
The Group conducts most of its day to day financial activities in either the Euro, which is the functional currency of the majority of the active subsidiaries, or Sterling. In addition some costs are denominated in US dollars and Canadian dollars.
The Group carries bank balances in the following currencies:
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Sterling |
862 |
1,812 |
|
Euro |
(1,084) |
(624) |
|
US dollars |
1 |
418 |
|
Canadian dollars |
191 |
671 |
|
Slovak koruna |
- |
13 |
|
Polish zloty |
4 |
8 |
|
|
(26) |
2,298 |
|
|
|
|
|
|
|
|
The risks resulting from transaction exposure are mitigated by the use of forward contracts which are used to eliminate approximately 70% of the exposure on a 12 month basis. Foreign currency denominated financial assets and liabilities, translated into Sterling at closing rates, are as follows:
|
|
2009 |
2008 |
||||
|
|
Sterling |
Euro |
Other |
Sterling |
Euro |
Other |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Financial assets |
299 |
1,626 |
359 |
2,698 |
1,192 |
1,110 |
|
Financial liabilities |
(2,016) |
(13,850) |
(887) |
(2,393) |
(3,556) |
- |
|
|
|
|
|
|
|
|
|
Short term exposure |
(1,717) |
(12,224) |
(528) |
305 |
(2,364) |
1,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets |
- |
- |
- |
- |
42 |
- |
|
Financial liabilities |
- |
(20,658) |
- |
(382) |
(23,662) |
- |
|
|
|
|
|
|
|
|
|
Long term exposure |
- |
(20,658) |
- |
(382) |
(23,620) |
- |
The following table illustrates the sensitivity of the net result for the year and the equity of the Group with regard to its financial assets and liabilities and the Euro to Sterling exchange rate. Foreign exchange movements over the last three years have been considered and an average taken, and on this basis a 5% movement is considered to be a reasonable benchmark.
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
If Sterling had strengthened against the Euro by 5% |
|
|
|
Net results for the year |
763 |
895 |
|
Equity |
778 |
405 |
|
|
|
|
|
|
1,546 |
1,300 |
|
|
|
|
|
If Sterling had weakened against the Euro by 5% |
|
|
|
Net results for the year |
(842) |
(639) |
|
Equity |
(860) |
(448) |
|
|
|
|
|
|
(1,702) |
(1,087) |
Interest rate risk
The Group finances its operations through both equity and debt. The main debt facility is at a floating rate of interest with an interest rate swap covering 60% of the debt which converts floating to fixed rates of interest. The following table illustrates the sensitivity of the net result for the year and equity to possible changes in interest rates of + 1% and - 1%, with effect from the beginning of the year on the remaining element of borrowings. These changes are considered to be reasonable given the current market conditions and the calculations are based on the financial instruments held at each balance sheet date, all other variables being held constant:
|
|
2009 |
2008 |
||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
+ 1% |
- 1% |
+ 1% |
- 1% |
|
|
|
|
|
|
|
Net results for the year |
(138) |
138 |
(83) |
83 |
|
Equity |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
(138) |
138 |
(83) |
83 |
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. In order to minimise this risk the Group endeavours only to deal with companies which are demonstrably creditworthy and this, together with the aggregate financial exposure, is continuously monitored. The maximum exposure to credit risk is the value of the outstanding amount.
Credit risk on cash and cash equivalents is considered to be small as the counterparties are all substantial banks with high credit ratings. The maximum exposure is the amount of the deposit.
Liquidity risk
The Group does not hold substantial cash balances but does have the ability to make further drawings against its facilities with its bank as agreed on 3 July 2009. Management also continues to have the option to raise funds from the issue of equity shares.
As at 30 June 2009 the Group's undiscounted cashflows are summarised as follows:
|
Current liabilities |
2009 |
2008 |
||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Within 6 months |
6 to 12 months |
Within 6 months |
6 to 12 months |
|
|
|
|
|
|
|
Borrowing Facility |
11,230 |
1,149 |
- |
2,422 |
|
Trade payables |
3,725 |
17 |
2,506 |
9 |
|
Other short term liabilities |
5,208 |
|
2,245 |
- |
|
Derivatives |
836 |
336 |
555 |
368 |
|
|
|
|
|
|
|
|
20,999 |
1,502 |
5,306 |
2,799 |
|
Non-current liabilities |
2009 |
2008 |
||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
1 to 5 years |
Later than 5 years |
1 to 5 years |
Later than 5 years |
|
|
|
|
|
|
|
Borrowing Facility |
18,472 |
3,912 |
23,413 |
- |
|
Other long term liabilities |
- |
3,098 |
- |
2,573 |
|
Derivatives |
1,126 |
- |
382 |
- |
|
|
|
|
|
|
|
|
19,598 |
7,010 |
23,795 |
2,573 |
There is no material difference between the fair values and the book values of these financial instruments.
24. OPERATING LEASE COMMITMENTS
The following payments are due to be made on operating lease commitments:
|
|
Land & buildings |
Other |
Total |
|||
|
|
2009 |
2008 |
2009 |
2008 |
2009 |
2008 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
Within one year |
413 |
384 |
413 |
276 |
826 |
660 |
|
Two to five years |
763 |
836 |
397 |
436 |
1,160 |
1,272 |
|
Over five years |
340 |
431 |
- |
- |
340 |
431 |
|
|
|
|
|
|
|
|
|
|
1,516 |
1,651 |
810 |
712 |
2,326 |
2,363 |
|
|
|
|
|
|
|
|
Of the operating lease commitments for land and buildings of £1,516k, £866k relates to the UK based premises. The production facility accounts for £614k of this commitment and expires in February 2016.
Premises in Spain account for £320k expiring in 2020 and in Germany for £316k expiring in December 2010.
Of the other commitments, £703k relates to leased vehicles, all expiring within 3 years.
25. RETIREMENT BENEFIT OBLIGATIONS
Defined contribution scheme
The Group operates a defined contribution pension scheme for certain employees in the UK. The assets of the scheme are held separately from those of the Group in an independently administered fund. The amount charged against the profits represents the contributions payable under the scheme in respect of the accounting period totalling £174k (2008: £208k).
Defined benefit scheme
The Group operates a defined benefit pension scheme for certain employees in Germany. The actuarial valuation was carried out by Swiss Life Pensions Management GmbH at 30 June 2009. The major assumptions used were as follows:
|
|
2009 |
2008 |
|
|
% pa |
%pa |
|
|
|
|
|
Retail price inflation |
2.0 |
3.3 |
|
Salary increases |
4.0 |
4.0 |
|
Pension increases in payment |
2.0 |
2.0 |
|
Discount rate at the beginning of the year |
6.0 |
5.0 |
|
Discount rate at the end of the year |
6.0 |
6.0 |
|
Expected return on assets |
4.1 |
4.1 |
|
Increase of social security contribution ceiling |
2.0 |
3.25 |
|
|
|
|
|
Average life expectancies |
|
|
|
Male, 65 years of age at the balance sheet date |
18.2 |
18.0 |
|
Female, 65 years of age at the balance sheet date |
22.3 |
22.2 |
|
Male, 45 years of age at the balance sheet date |
40.9 |
40.8 |
|
Female, 45 years of age at the balance sheet date |
44.9 |
44.8 |
The assets in the scheme and the expected rates of return were as follows:
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Fair value of plan assets |
1,104 |
932 |
|
Present value of scheme liabilities |
(3,925) |
(3,256) |
|
|
|
|
|
Deficit in the scheme |
(2,821) |
(2,324) |
|
|
|
|
|
Experience gains / (losses) on plan assets |
(10) |
23 |
|
Experience gains / (losses) on plan liabilities |
1 |
201 |
|
|
|
|
The plan assets consist of long-term insurance policies that cannot be directly deducted from the German pension obligation. These are recognised as a separate asset, rather than as a deduction in determining the defined benefit liability. The basis used to determine the overall expected rate of return is the expected market return as determined by Swiss Life Pensions Management GmbH using the projected unit credit method. The actual return on plan assets for the year is £32k (2008: £54k). The pension charge generates an unrecognised deferred tax asset of £279k (2008: £270k), however this is unrecognised in the Group accounts as there is uncertainty over the recoverability.
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Amounts charged to operating loss |
|
|
|
Current service costs |
233 |
222 |
|
|
|
|
|
Amounts included in other finance costs |
|
|
|
Expected return on pension scheme assets |
(42) |
(31) |
|
Interest on pension scheme liabilities |
209 |
159 |
|
Net charge |
167 |
128 |
|
|
|
|
|
Amounts recognised in the statement of recognised income and expense |
|
|
|
Actual return less expected return on pension scheme assets |
(10) |
23 |
|
Experience gains and losses arising on scheme liabilities |
1 |
201 |
|
Changes in assumptions underlying the present value of scheme liabilities |
- |
352 |
|
Total amount relating to year |
(9) |
576 |
|
|
|
|
|
Opening cumulative (losses) |
(525) |
(1,101) |
|
Actuarial loss recognised |
(534) |
(525) |
|
|
|
|
|
Net movement recognised |
(534) |
(525) |
Movement in assets in the year
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Balance as at 1 July |
932 |
718 |
|
Foreign currency differences |
70 |
95 |
|
Expected return |
42 |
31 |
|
Actuarial (loss)/gain |
(10) |
23 |
|
Contributions |
70 |
64 |
|
|
|
|
|
Balance at 30 June |
1,104 |
932 |
|
|
|
|
|
Movement in liabilities in the year |
|
|
|
|
2009 |
2008 |
|
|
£'000 |
£'000 |
|
Balance as at 1 July |
(3,256) |
(2,901) |
|
Foreign currency differences |
(242) |
(539) |
|
Service cost |
(233) |
(222) |
|
Interest cost |
(209) |
(159) |
|
Actuarial gains |
1 |
201 |
|
Benefits paid |
14 |
12 |
|
Changes in assumptions |
- |
352 |
|
|
|
|
|
Balance at 30 June |
(3,925) |
(3,256) |
|
|
|
|
The expected contributions over the forthcoming year are £226,097.
History of experience gains and losses
|
|
2009 |
2009 |
2008 |
2008 |
2007 |
2007 |
|
|
% |
£'000 |
% |
£'000 |
% |
£'000 |
|
Scheme assets |
|
|
|
|
|
|
|
Difference between the expected and actual return |
(0.9) |
(10) |
2.6 |
23 |
1.5 |
(11) |
|
|
|
|
|
|
|
|
|
Scheme liabilities |
|
|
|
|
|
|
|
Experience gains and (losses) |
- |
1 |
6.7 |
201 |
1.0 |
(30) |
|
|
|
|
|
|
|
|
|
Changes in assumptions underlying present value |
|
- |
|
352 |
|
174 |
|
|
|
|
|
|
|
|
|
Total amount recognised |
(0.2) |
(9) |
17.7 |
576 |
4.6 |
133 |
The Group has taken advantage of the exemption from the requirement to disclose the history of experience prior to the date of transition contained within IFRS 1.
26. ISSUED SHARE CAPITAL
|
|
2009 |
2009 |
2008 |
2008 |
|
|
Shares |
£'000 |
Shares |
£'000 |
|
Authorised share capital |
|
|
|
|
|
Ordinary shares of 0.10p each |
|
|
|
|
|
1 July and 30 June |
790,151,667 |
790 |
790,151,667 |
790 |
|
|
|
|
|
|
|
Deferred shares of 0.10p each |
|
|
|
|
|
1 July and 30 June |
9,848,333 |
10 |
9,848,333 |
10 |
|
|
|
|
|
|
|
Issued and fully paid |
|
|
|
|
|
Ordinary shares of 0.10p |
81,950,632 |
82 |
81,950,632 |
82 |
|
At 1 July |
|
|
|
|
|
Issued during the year |
415,982 |
0 |
- |
- |
|
|
|
|
|
|
|
At 30 June |
82,366,614 |
82 |
81,950,632 |
82 |
|
|
|
|
|
|
|
Issued and fully paid |
|
|
|
|
|
Deferred shares of 0.10p |
|
|
|
|
|
At 1 July |
9,848,333 |
10 |
9,848,333 |
10 |
|
Issued during the year |
- |
- |
- |
- |
|
|
|
|
|
|
|
At 30 June |
9,848,333 |
10 |
9,848,333 |
10 |
|
|
|
|
|
|
|
Issued share capital |
92,214,947 |
92 |
91,798,965 |
92 |
|
|
|
|
|
|
The deferred shares have no voting rights, dividend rights or value attached to them.
On 1 July 2009 181,631,937 ordinary shares of 0.1p each issued pursuant to the Offer, Placing and Subscription at a price of 12p per ordinary share were admitted to trading on AIM having been approved by shareholders of the Company in General Meeting on 30 June 2009. On 10 July, 12,500,000 ordinary shares of 0.1p each issued pursuant to the exercise of a Warrant by Azure Ventures Limited were admitted to trading on AIM. The total issued share capital of the Company on 10 July was 276,498,551 ordinary shares.
27. SHARE BASED PAYMENTS
The Group has a Savings Related Share Option Plan for the benefit of all employees and Executive directors with 12 months continuous service. There were no options granted in 2008/09. (The 2006 and 2007 schemes carried a 15% discount while the 2008 scheme carried a 10% discount to the average market share price on the date of grant). The vesting period is three years. The options are settled in equity once exercised. If the options remain unexercised after a period of six months from the end of the vesting period, the options expire. Options are forfeited if the employee leaves the Group before the options vest.
The Group has a Long Term Incentive Plan under which Executive directors and senior employees may receive annual provisional awards of performance vesting shares. The number of shares that vest depends on the Group's performance during the Plan cycle in terms of total shareholder return (TSR) compared to the TSR performance of the companies in the Plan's peer group. If the Group's position in the peer group at the end of the Plan cycle is at or above the 75th percentile, 100% of the shares provisionally awarded may vest; between the 75th and 50th percentile the percentage of shares that may vest will be calculated on a straight-line basis between 100% and 33.33%; below the 50th percentile no shares will vest. Each Plan cycle will comprise not less than three consecutive financial years. Awards are forfeited if the employee leaves the Group before the shares vest.
Share options were granted to employees and Directors under earlier schemes. The vesting periods are usually from one to three years. The vesting of some options is dependent on the Group's TSR performance as for the Long Term Incentive Plan detailed above. The options are settled in equity once exercised. If the options remain unexercised after a period of 10 years from the date of the grant, the options expire. Options are forfeited if the employee leaves the Group before the options vest.
There were no share based payments issued during the year:
For the following disclosure, Long Term Incentive Plan awards, with a nil exercise price have been disclosed separately to avoid distorting the weighted average exercise price (WAEP):
|
|
2009 WAEP |
2008 WAEP |
||
|
|
Number |
Price (£) |
Number |
Price (£) |
|
Outstanding at the beginning of the year |
11,453,300 |
0.31 |
13,064,761 |
0.38 |
|
Granted during the year |
- |
- |
632,576 |
0.31 |
|
Exercised during the year |
(1,794,275) |
0.05 |
(710,206) |
0.05 |
|
Forfeited during the year |
(161,405) |
0.66 |
(1,533,831) |
0.98 |
|
Outstanding at the year end |
9,497,620 |
0.36 |
11,453,300 |
0.31 |
|
Exercisable at the year end |
8,769,055 |
0.35 |
10,362,224 |
0.30 |
Included in the above numbers outstanding at 30 June 2009 are 6,901,478 (2008: 8,983,191) share options granted before 7 November 2002 or vested before 1 July 2006 which have been excluded from the share-based payments charge in accordance with the IFRS 1 'First-time Adoption of International Financial Reporting Standards' transitional provisions.
Options exercised during the year had a weighted average share price at date of exercise of 14p (2008: 28p).
The share options outstanding at the end of the year have a weighted average remaining contractual life of 3.4 years (2008: 5.4 years) and have the following range of exercise prices:
|
|
30 June 2009 |
30 June 2008 |
|
Exercise price (p) |
Number |
Number |
|
0.1-5 |
4,441,486 |
6,260,261 |
|
6-45 |
3,135,480 |
3,194,244 |
|
46-120 |
1,920,654 |
1,998,795 |
|
|
9,497,620 |
11,453,300 |
The fair value of options granted under the Savings Related Share Option Plan has been arrived at using the Black-Scholes model. The assumptions made to value options granted were as follows:
|
Date of grant |
Vesting period (yrs) |
Date of vesting |
Expected life (yrs) |
Exercise price (£) |
Risk-free rate |
Share price at grant (£) |
Volatility of share price |
Fair value (£) |
Number outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
10/04/08 |
3 |
01/05/11 |
3.2 |
0.3060 |
5% |
0.34 |
41.6% |
0.17 |
628,812 |
|
26/03/07 |
3 |
01/05/10 |
3.2 |
0.9945 |
5% |
1.17 |
30% |
0.41 |
99,753 |
|
11/01/06 |
3 |
01/03/09 |
3.2 |
0.6400 |
5% |
0.75 |
30% |
0.26 |
339,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Expected volatility was based on historic volatility at the date of grant
-
The share-based payment charge assumes an expected option life of 3.2 years, an employee attrition rate of 5% per annum and an early surrender risk of 5% per annum.
-
The expected number of shares vesting was 'trued-up' for actual leavers at the balance sheet date.
Details of the shares provisionally awarded under the Long Term Incentive Plan are as follows:
|
Date of grant |
Vesting period (yrs) |
Date of vesting |
Expected life (yrs) |
Exercise price (£) |
Risk-free rate |
Share price at grant (£) |
Volatility of share price |
Fair value (£) |
Number outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
21/12/07 |
3 |
04/07/10 |
3 |
0.0000 |
n/a |
0.385 |
n/a |
0.385 |
1,680,575 |
|
09/10/06 |
3 |
01/07/09 |
3 |
0.0000 |
n/a |
1.000 |
n/a |
1.000 |
788,733 |
|
14/12/05 |
3 |
14/12/08 |
3 |
0.0000 |
n/a |
0.695 |
n/a |
0.695 |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Awards granted under the LTIP are valued at the market price at the date of grant.
-
The share-based payment charge assumes an employee attrition rate of 5% per annum and a vesting probability of 41.5%.
The Group recognised total expenses of £260,000 (2008: £356,000) related to equity-settled share based payment transactions during the year.
28. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
Issued capital |
Share premium |
Merger reserve - shares issued by subsidiary |
Reserve - shares held in EBT |
Reserve - share based payments |
Revaluation reserve |
Foreign exchange reserve |
Retained earnings |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
At 30 June 2007 |
92 |
33,173 |
40,128 |
(36) |
675 |
226 |
(133) |
(65,529) |
8,596 |
|
Exchange differences on translation of foreign operations |
|
|
|
|
|
|
(495) |
|
(495) |
|
Actuarial gains |
|
|
|
|
|
|
|
576 |
576 |
|
Valuation losses taken to equity |
|
|
|
|
|
(61) |
|
|
(61) |
|
Net income recognised directly in equity |
|
|
|
|
|
(61) |
(495) |
576 |
20 |
|
Loss for the period after tax |
|
|
|
|
|
|
|
(20,297) |
(20,297) |
|
Total recognised income and expense |
|
|
|
|
|
(61) |
(495) |
(19,721) |
(20,277) |
|
Share based payments |
|
|
|
|
356 |
|
|
|
356 |
|
Sale of shares by Employee Benefit Trust |
|
|
|
35 |
|
|
|
|
35 |
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2008 |
92 |
33,173 |
40,128 |
(1) |
1,031 |
165 |
(628) |
(85,250) |
(11,290) |
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
|
|
|
|
|
|
(485) |
|
(485) |
|
Actuarial gains |
|
|
|
|
|
|
|
(9) |
(9) |
|
Valuation losses taken to equity |
|
|
|
|
|
24 |
|
|
24 |
|
Net income recognised directly in equity |
|
|
|
|
|
24 |
(485) |
(9) |
(470) |
|
Loss for the period after tax |
|
|
|
|
|
|
|
(11,764) |
(11,764) |
|
Total recognised income and expense |
|
|
|
|
|
24 |
(485) |
(11,773) |
(12,234) |
|
Share based payments |
|
|
|
|
260 |
|
|
|
260 |
|
Sale of shares by Employee Benefit Trust |
|
|
|
68 |
|
|
|
|
68 |
|
Shares issued |
0 |
20 |
|
|
|
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2009 |
92 |
33,193 |
40,128 |
67 |
1,291 |
189 |
(1,113) |
(97,023) |
(23,176) |
|
|
|
|
|
|
|
|
|
|
|
29. CONTINGENT LIABILITIES
Allergy Therapeutics (UK) Ltd, a subsidiary of Allergy Therapeutics plc, has guaranteed the deposits required for leases on Group cars and rented office space occupied by a fellow subsidiary, Bencard Allergie GmbH. The amount as at 30 June 2009 was €107,568; £91,469 (2008: €78,000; £52,000).
A cross-guarantee exists between Allergy Therapeutics (Holdings) Ltd, Allergy Therapeutics (UK) Ltd, Bencard Allergie GmbH, Allergy Therapeutics Italia s.r.l. and Allergy Therapeutics Iberica S.L. in which the liabilities of each entity under the RBS loan agreement are guaranteed by all the others.
30. CAPITAL COMMITMENTS
The Group's capital commitments at the end of the financial period, for which no provision has been made, are as follows:
|
|
30 June 2009 |
30 June 2008 |
|
|
£'000 |
£'000 |
|
|
|
|
|
Capital commitments |
482 |
1,123 |
Included in the above is £389,000 for ongoing factory refurbishments in the UK (2008: £126,000); £72,000 for new plant and machinery (2008: £623,000) and £21,000 for IT equipment and systems upgrades (2008: £374,000).
31. RELATED PARTY TRANSACTIONS
Allergy Therapeutics plc's related parties include its subsidiary companies and its key management.
Key management personnel are the Company's directors, and as such full disclosure of their remuneration can be found in the Directors' Remuneration report on pages 25 to 27.
Stephen Smith and Virinder Nohria, Non Executive Directors of the Company also received fees during the year in addition to their fees earned as Non Executive Directors of £85k and US$99k respectively for professional advice given to the Company.
At 30 June 2009, the Company's subsidiary undertakings were:
|
Subsidiary undertaking |
Country of incorporation |
Principal activity |
Percentage of shares held |
Class of shares held |
|
Allergy Therapeutics (Holdings) Ltd |
UK |
Holding Company |
100 |
Ordinary and deferred |
|
Allergy Therapeutics (UK) Ltd |
UK |
Manufacture and sale of pharmaceutical products |
100 |
Ordinary |
|
Allergy Therapeutics Development Ltd |
UK |
Dormant |
100 |
Ordinary |
|
Bencard Allergie GmbH |
Germany |
Sale of pharmaceutical products |
100 |
Ordinary |
|
Bencard Allergie (Austria) GmbH |
Austria |
Sale of pharmaceutical products |
100 |
Ordinary |
|
Allergy Therapeutics Italia s.r.l. |
Italy |
Sale of pharmaceutical products |
100 |
Ordinary |
|
Allergy Therapeutics Iberica S.L. |
Spain |
Sale of pharmaceutical products |
100 |
Ordinary |
32. EVENTS AFTER THE BALANCE SHEET DATE
On 1 July 2009 181,631,937 ordinary shares of 0.1p each issued pursuant to the Offer Placing and Subscription were admitted to trading on AIM having been approved by shareholders of the Company in General Meeting on 30 June 2009; raising approximately £22.1m net of expenses. On the same day Alejandro Weinstein and Manuel Llobet were appointed as directors of the Company.
On the 3 July the Company repaid £9.4m of debt and revised and amended the terms of its loan agreement with The Royal Bank of Scotland.
On 10 July, 12,500,000 ordinary shares of 0.1p each issued pursuant to the exercise of a Warrant by Azure Ventures Limited were admitted to trading on AIM raising approximately £1.5m net of expenses.
This information is provided by RNS
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