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Henderson Morley PLC (HML)

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Wednesday 06 January, 2010

Henderson Morley PLC

Interim Results

RNS Number : 0795F
Henderson Morley PLC
06 January 2010
 



6 January 2010


HENDERSON MORLEY PLC

(AIM: HML)


("HENDERSON MORLEY" or "THE COMPANY")


INTERIM RESULTS FOR THE SIX MONTHS TO 31 OCTOBER 2009




The Board of Henderson Morley plc, the AIM quoted biotechnology company, announces its interim results for the six months to 31 October 2009. 


KEY POINTS

  • Continues to work towards becoming a ‘Pure Play’ vaccine company by 2011
  • The Company is in negotiation for the divestment of some of its ICVT Human application portfolio
  • Over the last six months the Company has made a number of grant applications which could secure non-dilutive funds for its research projects
  • Koi Herpes Virus (‘KHV’) vaccine field study produced positive results utilising two successful candidates
  • Successfully produced vaccine candidates for Epstein Barr Virus (‘EBV’)
  • Collaborative agreement with the University of Georgia Research Foundation to examine L-particles as an adjuvant for naked DNA vaccines against flu virus infections, including H1N1 (swine flu)



POST PERIOD HIGHLIGHTS 

 

  • Grant application submitted to the Queensland Government Research Industry Partnership Programme (“RIPP”) to aid progress of Cytomegalovirus vaccine development programme
  • Appointment of Professor Anant Sharma to the Scientific Advisory Board
  • The Company has applied for Orphan Drug Status for the slow release injectable formulation of ICVT for use in Recurrent Respiratory Papillomatosis (RRP)
  • £273,751 was received in November 2009 from the placing made on 20 October 2009



Executive Chairman Andrew Knight said: "This has been a busy six months for the Company as we continue with our strategy of becoming a 'Pure Play' vaccine company.
 
"We are working towards the divestment of some of our anti-viral platform. Negotiations with a potential purchaser for some of our ICVT Human technologies have been extended for a further 60 days we believe that we remain on course to achieve the divestment within this period


"We are excited about the prospects for the Company as a 'Pure Play' vaccine company and look forward to the future with confidence."



---ENDS---



ENQUIRIES:


HENDERSON MORLEY PLC                                                          0121 442 4600

Andrew Knight, Chairman            


BISHOPSGATE COMMUNICATIONS LTD                                      0207 562 3350

(Public Relations)    
Maxine Barnes
Nick Rome


BREWIN DOLPHIN INVESTMENT BANKING                                 0845 213 4726

(Nominated Adviser)

Neil Baldwin


                        

RIVINGTON STREET CORPORATE FINANCE                               0207 562 3380 

Dru Edmonstone


Notes to Editors:

 

Henderson Morley was founded in 1996 with the objective of developing its anti viral application (Ionic Contra Viral Therapy (ICVT). ICVT is the Lead Platform and has been developed in-house and HML wholly owns the patent IPR.
This report is available on the Company's website at www.henderson-morley.com. Copies are available upon request from the Company's registered office at Metropolitan House, 2 Salisbury Road, Moseley, Birmingham, West Midlands, B13 8JS.






CHAIRMAN'S STATEMENT



Financial Summary

 

Turnover for the period under review was £1,821 (2008: £41,128) which, after expenses and R&D costs, showed a pre tax loss of £579,502 (2008: £547,984). Cash at Bank as at 31 October 2009 was £94,717 (2008: £203,786). The total number of shares in issue is now 1,154,722,463.
Overview 
The six months under review has been another busy period and includes the important strategic decision to refocus the Company as a ‘Pure Play’ vaccine company. The vaccine market is growing rapidly and according to Datamonitor (Dec 2008), the global vaccine market grew by 46% between 2006 and 2007, and this growth continues to outpace other areas of the pharmaceutical market. Considerable growth is also predicted in cancer vaccines and cancer immunotherapies.
In addition, post the period end, we appointed Professor Anant Sharma to the Scientific Advisory Board. Professor Sharma has a wealth of experience, especially in the field of corneal surgery and disease. He currently acts as a consultant ophthalmic surgeon at the Moorfields Eye Hospital, and is Visiting Professor at Carnfield University. It is anticipated that Professor Sharma will play an active role in the continued development of the ophthalmic indications of ICVT.
Furthermore, on 25 November (post period end) the Company announced that it has applied for Orphan Drug status for the slow release injectable formulation of ICVT for use in Recurrent Respiratory Papillomatosis (RRP).
If Orphan Drug Status is granted the slow release injectable formulation of ICVT could receive numerous benefits including protocol assistance, fee waivers and scientific advice during its approval process. The Company expects to receive a decision on this application in early 2010.



Animal Health Division


Koi Herpes Virus ("KHV") 

 

In August, we announced that the KHV vaccine field study had now been completed and had produced positive results.
Two of the vaccine groups showed significant responses to the vaccine. In these two groups 96% and 93% of the vaccinated fish survived and remained healthy. The two successful vaccine candidates have been fully analysed by the Company’s in-house scientists.

In 2006 the World Organisation of Animal Health gave KHV disease 'Notifiable Disease' status. As a Notifiable Disease there is a legal obligation to report any suspicion of a clinical outbreak of KHV disease to the Fish Health Inspectorate (FHI).  KHV is therefore a pathogen of growing economic and environmental importance.


Human Health Division


Sale of Ionic Contra viral Therapy ("ICVT") 
 
We received a Letter of Intent ("LOI") in early October from a specialist Pharmaceutical company based outside the EU, for the purchase of some of Henderson Morley's human applications of ICVT. It was originally expected that a transaction would be completed within 3 months however the Company has now agreed with this potential purchaser to extend the LOI period for a further 60 days from 8 January 2010
. 
   


Cytomegalovirus ("CMV") and Grant Applications 


 

National Institute of Health Grant Application
We are continuing to work closely with the Australian Centre for Vaccine Development (“ACVD”), and we have submitted a joint grant application to the US Government funded National Institute of Health (“NIH”).
The grant has been submitted with the goal of securing non-diluted funding to further develop the Cytomegalovirus (“CMV”) vaccine candidate (part of the PREPS and L-particles vaccine platform). The NIH has specifically highlighted CMV as a disease of importance and has announced a “Request for Applications” specifically in the field of vaccines against disease considered to be of significant importance.
If successful, this grant could be worth up to $500,000 (US) per annum for five years.


Queensland Government Research Industry Partnership Programme Grant Application
Post period end (5 November), we submitted a second grant application to the Queensland Government Research Industry Partnership Programme (“RIPP”) in order to assist with our CMV vaccine development programme. This application has been written in conjunction with the Queensland Institute of Medical Research (“QIMR”).
The RIPP programme aims to facilitate the development of new or improved products processes and systems that will achieve a commercial return or deliver a public good within four years.
If successful, this grant application could be worth approximately £1.35m (GBP) over a three year period and it is expected that the Company will be notified of the application’s outcome by Spring 2010.
This grant is supplementary to the NIH grant application made in August 2009, and the Company expects that other grants will be applied for during the early part of 2010.

Collaborative Agreement with the University of Georgia Research Foundation
In September we announced that we signed a collaborative agreement with the University of Georgia Research Foundation, under the leadership of Professor Ralph Tripp, (Professor of Infectious Diseases at the University of Georgia).
The agreement is to study PREPS and L-particles as a vaccine adjuvant for naked DNA vaccine against flu virus infections. This study will include the H1N1 strain of flu which is commonly known as swine flu.
These will be the first studies to examine the use of PREPS and L-particles as a vaccine adjuvant in influenza and will be carried out at no extra cost to the Company.  
 
Outlook
This has been a busy six months for the Company as we continue with our strategy of becoming a ‘Pure Play’ vaccine company.
We are continuing to work towards the divestment of some of our anti-viral platform.
Although negotiations with a potential purchaser for some of our ICVT Human technologies have been extended for a further 60 days we believe that we remain on course to achieve the divestment within this period.
We are excited about the prospects for the future of the Company as a ‘Pure Play’ vaccine company and look forward to the future with confidence.


 
ANDREW KNIGHT
Executive Chairman

  



HENDERSON MORLEY PLC


UNAUDITED CONSOLIDATED INCOME STATEMENT


For the six month period to 31 October 2009


 
Note
6 months
Ended
31 October
2009
6 months
ended
31 October
2008
12 months ended
30 April
 2009
 
 
Unaudited
Unaudited
Audited
 
 
 
 
 
Continuing operations
 
 
 
 
Revenue
 
1,821
41,128
80,019
 
 
 
 
 
Cost of sales
 
(1,087)
(775)
-
Gross profit
 
734
40,353
80,019
Research and development
 
(273,348)
(247,941)
(451,725)
Other administrative expenses
 
(306,655)
(347,435)
(741,125)
Results from operating activities
 
(579,269)
(555,023)
(1,112,831)
 
 
 
 
 
 
 
 
 
 
Finance income
 
20
8,185
9,780
Finance costs
 
(253)
(1,146)
(55)
Net finance income
 
(233)
7,039
9,725
 
 
 
 
 
 
 
 
 
 
Loss before taxation
 
(579,502)
(547,984)
(1,103,106)
 
 
 
 
 
Research and development tax credit
 
50,537
57,842
92,798
Loss from continuing operations
 
(528,965)
(490,142)
(1,010,308)
 
 
 
 
 
Basic and diluted loss per ordinary share
4
(0.06p)
(0.09p)
(0.17p)
 
 
 
 
 



All amounts relate to continuing activities. 





  HENDERSON MORLEY PLC


UNAUDITED CONSOLIDATED BALANCE SHEET


For the six month period to 31 October 2009

 

 

 


 


At

31 October

2009

Unaudited

At

31 October

2008

Unaudited

At

30 April

2009

Audited




£


£

Non current assets




Property, plant and equipment

105,819

140,276

117,896

Goodwill 

58,964

58,964

58,964

Intangible assets 

23,904

29,216

26,560

Total non current assets

188,687

228,456

203,420





Current assets




Inventories

200

200

200

Trade and other receivables

37,100

53,913

73,353

Called up share capital not paid

300,000

-

-

Tax receivable 

49,091

156,699

92,798

Cash and cash equivalents

94,717

203,786

49,999

Total current assets

481,108

414,598

216,350





Total assets

669,795

643,054

419,770





Current liabilities




Bank loans and overdrafts

-

-

-

Trade and other payables 

(184,237)   

(177,705)

(201,251)

Total current liabilities

(184,237)

(177,705)

(201,251)





Net assets

485,558

465,349

218,519





Shareholders' Equity




Called up share capital

1,443,404

719,078

901,578

Share premium

6,652,525

6,307,511

6,398,347

Retained Earnings

(7,610,371)

(6,561,240)

(7,081,406)

Total Equity

485,558

465,349

218,519









  

HENDERSON MORLEY PLC


STATEMENT OF CHANGES IN EQUITY


For the six month period to 31 October 2009







Called

up share

capital

Share

premium

account

Profit and

loss account

Total

equity



£

£

£

£

At start of period

901,578

6,398,347

(7,081,406)

218,519

Issue of shares (net of issue costs)

541,826

254,178

-

796,004

Loss for the period

-

-

(528,965)

(528,965)


________

_____________

_____________

__________

At end of period

1,443,404

6,652,525

(7,610,371)

485,558





For the 12 months ended 30 April 2009



Called

up share

capital

Share

premium

account

Profit and

loss account

Total

equity



£

£

£

£

At start of period

719,078

6,307,511

(6,071,098)

955,491

Issue of shares (net of issue costs)

182,500

90,836

-

273,336

Loss for the year

-

-

(1,010,308)

(1,010,308)






At end of period

901,578

6,398,347

(7,081,406)

218,519

 




For the six months ended 31 October 2008



Called up

 share

capital

Share

premium

account

Profit and

loss account

Total

equity



£

£

£

£

At start of period

719,078

6,307,511

(6,071,098)

955,491

Loss for the period

-

-

(490,142)

(490,142)






At end of period

719,078

6,307,511

(6,561,240)

465,349




On 29th June 2009 the Company issued 283,095,500 shares and on 9th July 2009 350,000 shares following an open offer raised £626,737 gross, £522,252 after expenses.


On 20th October 2009 the Company issued 150,025,000 shares in a placing raising £300,000 gross, £273,751 after expenses.






HENDERSON MORLEY PLC


UNAUDITED CONSOLIDATED CASH FLOW STATEMENT


For the six month period to 31 October 2009




Note

6 months

Ended 31

October

2009

Unaudited

6 months

 ended 31

October

2008

 Unaudited 

12 months

ended 30

April 

2009

Audited





£

Cash flow from operating activities





Cash generated from operations

5

(537,608)

(501,298)

(1,021,999)






Interest paid


(253) 

(1,146)

(55)

Research and development tax credit received


94,244

-

98,857 






Net cashflow from operating activities


(443,617)

(502,444)

(923,197)






Cashflow from investing activities





Purchases of property, plant and equipment


(5,875)

(6,100)

(15,549)

Sale of tangible fixed assets


-

3,328

3,328

Interest received


20

8,185

9,780






Net cash inflow/outflow from investing activities


 (5,855)

5,413

(2,441)






Cash flow from financing activities





Proceeds from issue of new shares net of expenses


496,004

-

273,336

Amount introduced by Directors


(1,814) 

1,031

2,515






Net cash inflow from financing activities


494,190

1,031

275,851






(Decrease) in cash and cash equivalents)


44,718 

(496,000)

(649,787)






Cash and cash equivalents at beginning of period


49,999

699,786

699,786

Cash and cash equivalents at end of period


94,717

203,786

49,999




£273,751 was received in November 2009 from the placing made on the 20th October 2009.



1.         BASIS OF PREPARATION OF INTERIM REPORT


The information for the period ended 31 October 2009 is not audited and does not constitute statutory accounts. The statutory accounts for the year ended 30 April 2009 were given an unqualified audit report. A copy of the statutory accounts for that year has been delivered to the Register of Companies. The interim accounts for the six month period to 31 October 2008 were also unaudited.


2.         ACCOUNTING POLICIES


The financial report has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS).


The report has been prepared on a going concern basis in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") as well as all interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").The group has not availed itself of early adoption options in such standards and interpretations.


The validity of the going concern basis will depend on the ability of the directors to obtain further working capital to support the activities of the subsidiary undertaking, Henderson Morley Research and Development Limited. 

 


The financial statements have been prepared under the historical cost basis and are presented in sterling. The principal accounting policies adopted are set out below:


New standards and Interpretations of existing standards that are not yet effective and have not been early adopted by the group. 


International Accounting Standards (IFRS/IAS)

 

 

IFRS 2
Share Based Payments
IFRS 3
Business Combinations
IFRS 5
Non current assets held for sale and discontinued operations
IFRS 8
Operating Segments, Segment information should be presented on the same basis as that used for internal reporting purposes.
IAS1
Presentation of Financial Statements (revised 2007)
IAS16
Property plant and equipment
IAS 26
Impairment of assets
IAS 27
Group and Separate Financial Statements
IAS 28
Investments in associates
IAS 32
Financial Instruments: Disclosure and Presentation


 

IFRIC Interpretations

 

           

IFRIC 11
Group and Treasury Share Transactions
IFRIC 12
Service Concessions Arrangements
IFRIC 13
Customer Loyalty programmes


 

 

 

The Group does not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's financial statements on adoption. 


            Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to each period end. Control is achieved where the Company has the power to govern the financial and operating policies so as to obtain benefits from its activities.



The group does not disclose transactions or balances between Group entities that are wholly eliminated on consolidation.


            Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes, and amounts received in accordance with licensing agreements.


Research and Development

The group considers that the regulatory, technical and market uncertainties inherent in the development of new products mean that internal development costs should not be capitalised as intangible non-current assets until commercial viability of a project is demonstratable and appropriate resource is in place to launch the products. Except in those circumstances, research and development expenditure is expensed as incurred.


           Taxation


           The tax charge or credit represents the sum of the current and deferred tax.


Current tax is provided as amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.


Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.


Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.


The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that is no longer probable that sufficient taxable profits will be available to allow all, or part, of the asset to be recovered.


Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.


            Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets are not capitalised until commercial viability of a project is demonstrable and appropriate resource is in place to launch the product. Except in those circumstances expenditure is charged against profit in the year in which the expenditure is incurred. Intangible assets with a future useful life are amortised over their useful economic lives. The intangible assets residual values, useful lives and methods of valuation are reviewed and adjusted, if appropriate, at each financial period end.


For intangible assets with finite useful lives, amortisation is calculated so as to write off the cost of an asset less its estimated residual value over its useful economic life as follows:


            Know how, patents and licences - over 10 years.


            Goodwill

Goodwill arising on consolidation represents the excess cost of acquisition over the group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition.


Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. Goodwill arising on acquisition before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.


            Impairment of tangible and intangible assets excluding goodwill 

Intangible and tangible assets are reviewed for impairment both annually and when there is an indication that an asset may be impaired when events of changes in circumstances indicate that carrying value may not be recoverable. The recoverable amount of the asset is calculated, this being the higher of the assets fair value less costs to sell and its value in use. Where the carrying amount exceeds the recoverable amount, the intangible assets are considered impaired and written down to their recoverable amounts. 


            Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives on the following bases:

 

          

Equipment and fixtures
25% per annum on reducing balance
Leasehold property
Straight line over 10 years

 

             The gain or loss arising on the disposal or retirement of an asset is determined as the 
             difference between the sales proceeds and the carrying amount of the asset and is recognised
             in income.


             Leases


            Rentals under operating leases are charged against profit as incurred.


            Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.


Share based payments

The only share based payments of the group are equity settled Share options. Options have been granted over the ordinary shares of Henderson Morley to employees and advisors. All options granted had an exercise price of either market value or above at the date of grant. Taking into account all the terms and conditions upon which the options are granted the Directors believe that a fair value for such shares does not exceed the exercise price. As a consequence the amount recognised as an expense and as a share based payment reserve is £Nil.


            Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials. Cost is calculated using the first in first out (FIFO) basis. Net realisable value represents the estimated selling price less all estimated costs to be incurred in marketing and selling.


            Trade receivables

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.


            Trade payables


            Trade payables are not interest-bearing and are stated at their nominal value.


             Employee benefit costs 

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to the income statement in the period to which they relate. 


            Financial Liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual agreements entered in to. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recognised at the amounts of proceeds received net of costs directly attributable to the transaction. To the extent that those proceeds exceed the par value of the shares issued they are credited to share premium account.


            Key sources of estimation uncertainty and critical accounting judgements

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. 


            Valuation of intangibles and impairment of goodwill and valuation of intangibles 


Determining whether a carrying value of goodwill and the other intangibles is impaired requires an estimation of their values. Although there are uncertain cash flows, the directors consider that there is sufficient value in intellectual property and development to justify the carrying values. Therefore there was no impairment during the period. 


In preparing the financial statements of the individual companies, transactions in currencies other than the entity's function currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. 


Research and development expenditure was recognised in the income statement during the year. Management made the judgement not to capitalise this expenditure as it did not meet the criteria of IAS 38 in that it related to costs incurred on the development of products which have not been approved from a regulatory point of view at that stage.


Dividend policy

The directors currently intend to devote the Company's cash resources to its operations and therefore do not anticipate paying dividends in the near future. They will reconsider the Company's dividend policy as and when the Company is in a position to pay dividends. The declaration and payment by the Company of any dividends will depend on the results of the Group's operations, its financial condition, cash requirements, future prospects, profits available for distribution and other factors deemed to be relevant at the time.


3.         Dividends


            The Company will not be declaring an interim dividend.


4.         loss per share 

The calculation is based on the loss attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the period as follows:



6 months

Ended 31

October

2009

6 months

ended 31

October

2008


12 months

ended 30

April 

2009






Numerators; earnings attributable to equity

(528,905)

(490,142)

(1,010,308)





Denominators; weighted average number of equity shares




Basic and Diluted

920,405,452

575,261,963

611,261,963







5.    CASH USED IN OPERATIONS


6 months
ended 31

October 
200
9


6 months

ended 31

October

2008


12 months

ended 30

April

2009


Results from operating activities

(579,269) 

(555,023)

(1,112,831) 

Depreciation and amortisation

20,610

32,117

66,602





Profit disposed of fixed assets

-

(832)

(832) 



-


Decrease/(increase) in receivables

36,251

45,380

25,940 

Increase/(decrease) in payables

(15,200)

(22,940)

(878)

Cash flows generated from operations

(537,608)

(501,298)

(1,021,999)







This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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