TIDMAKT
RNS Number : 9124M
Ark Therapeutics Group PLC
24 August 2011
Ark Therapeutics Group plc
Interim Results for the First Half of 2011
Part 2
Condensed consolidated income statement
For the six months ended 30 June 2011 (unaudited)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Note GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 3 382 406 757
Cost of sales (108) (161) (303)
------------------------------ ----- ----------- ----------- -------------
Gross profit 274 245 454
Research and development
expenses (4,251) (6,074) (11,068)
Selling, marketing and
distribution costs (5) (124) (186)
------------------------------ ----- ----------- ----------- -------------
Other administrative expenses (1,779) (2,919) (6,499)
Share-based compensation
charge (48) (85) 550
------------------------------ ----- ----------- ----------- -------------
Administrative expenses (1,827) (3,004) (5,949)
------------------------------ ----- ----------- ----------- -------------
Other income 634 162 404
Other expenses (1,069) (672)
Operating loss (5,175) (9,864) (17,017)
Investment income 22 84 103
Finance costs (12) (12) (22)
------------------------------ ----- ----------- ----------- -------------
Loss on ordinary activities
before taxation (5,165) (9,792) (16,936)
Taxation 468 670 1,033
------------------------------ ----- ----------- ----------- -------------
Loss from continuing
operations after taxation (4,697) (9,122) (15,903)
------------------------------ ----- ----------- ----------- -------------
Discontinued operations
Profit/(loss) from
discontinued operations
after taxation 4 398 (312) (269)
------------------------------ ----- ----------- ----------- -------------
Loss on ordinary activities
after taxation, being
retained loss for the
period (4,299) (9,434) (16,172)
------------------------------ ----- ----------- ----------- -------------
Loss per share (basic and
diluted)
From continuing operations 7 2.1 pence 4.5 pence 7.7 pence
From continuing and 7 2.1 pence 4.4 pence 7.6 pence
discontinued operations
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2011 (unaudited)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Loss on ordinary activities after
taxation, being retained loss
for the period (4,299) (9,434) (16,172)
Exchange differences on translating
foreign operations recognised
directly in equity 47 (91) (47)
Total comprehensive income for
the period (4,252) (9,525) (16,219)
------------------------------------- ----------- ----------- -------------
Condensed consolidated balance sheet
As at 30 June 2011 (unaudited)
30 June 30 June 31 December
2011 2010 2010
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 1,213 2,411 1,157
Other intangible assets 661 747 780
Property, plant and equipment 8,392 9,865 9,113
--------------------------------- ----- ---------- ---------- ------------
10,266 13,023 11,050
--------------------------------- ----- ---------- ---------- ------------
Current assets
Inventories - 480 -
Trade and other receivables 4,286 1,470 673
Research and development
tax credits receivable 1,502 1,972 1,034
Money market deposits 2,003 9,544 2,856
Cash and cash equivalents 3,403 4,543 7,720
Assets held for sale 4 - - 997
--------------------------------- ----- ---------- ---------- ------------
11,194 18,009 13,280
--------------------------------- ----- ---------- ---------- ------------
TOTAL ASSETS 21,460 31,032 24,330
--------------------------------- ----- ---------- ---------- ------------
Non-current liabilities
Deferred income 1,066 1,309 1,051
Obligations under finance
leases 36 43 17
Loans 345 524 548
--------------------------------- ----- ---------- ---------- ------------
1,447 1,876 1,616
--------------------------------- ----- ---------- ---------- ------------
Current liabilities
Trade creditors and accruals 2,305 2,824 3,284
Current tax payable - 6 -
Deferred income 167 152 318
Obligations under finance
leases 16 20 30
Loans 2,926 49 51
Liabilities directly associated
with assets classified as
held for sale 4 - - 228
--------------------------------- ----- ---------- ---------- ------------
5,414 3,051 3,911
--------------------------------- ----- ---------- ---------- ------------
TOTAL LIABILITIES 6,861 4,927 5,527
--------------------------------- ----- ---------- ---------- ------------
Equity
Share capital 2,093 2,090 2,093
Share premium 118,937 118,874 118,937
Merger reserve 38,510 38,510 38,510
Foreign currency translation
reserve 243 139 191
Share-based compensation
reserve 3,858 4,498 3,815
Reserve for own shares (2,286) (2,287) (2,286)
Retained loss (146,756) (135,719) (142,457)
--------------------------------- ----- ---------- ---------- ------------
TOTAL EQUITY 14,599 26,105 18,803
--------------------------------- ----- ---------- ---------- ------------
TOTAL LIABILITIES AND EQUITY 21,460 31,032 24,330
--------------------------------- ----- ---------- ---------- ------------
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2011 (unaudited)
Foreign
currency Reserve
Share Share Merger translation Share-based for own Retained
capital premium reserve reserve compensation shares loss Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance
as at 31
December
2009 2,071 118,630 38,510 221 4,422 (2,023) (126,285) 35,546
Total
comprehensive
income for
the period - - - (82) (9) - (9,434) (9,525)
Share-based
compensation - - - - 85 - - 85
Issue of
share capital 19 244 - - - - - 263
Purchase
of own shares
by Family
Benefit
Trust - - - - - (264) - (264)
Balance
as at 30
June 2010 2,090 118,874 38,510 139 4,498 (2,287) (135,719) 26,105
Total
comprehensive
income for
the period - - - 52 (8) - (6,738) (6,694)
Share-based
compensation - - - - (675) - - (675)
Issue of
share capital (2) 3 - - - - - 1
Equity share
options
issued 5 (5) - - - - - -
Reduction in
prior period
share issue
expenses - 65 - - - - - 65
Purchase
of own shares
by Family
Benefit
Trust - - - - - 1 - 1
Balance
as at 31
December
2010 2,093 118,937 38,510 191 3,815 (2,286) (142,457) 18,803
Total
comprehensive
income for
the period - - - 52 (5) - (4,299) (4,252)
Share-based
compensation - - - - 48 - - 48
Balance
as at 30
June 2011 2,093 118,937 38,510 243 3,858 (2,286) (146,756) 14,599
--------------- -------- -------- -------- ------------ ------------- -------- ---------- --------
Condensed consolidated cash flow statement
For the six months ended 30 June 2011 (unaudited)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Operating loss from continuing
operations (5,175) (9,864) (17,017)
Operating profit/(loss) from
discontinued operations 398 (312) (269)
------------------------------------- ----------- ----------- -------------
Total Operating loss (4,777) (10,176) (17,286)
Adjustment for non-cash items
Depreciation and amortisation 1,403 1,387 2,868
Impairment of goodwill - - 1,306
Share-based compensation 48 85 (590)
Gain on disposal of subsidiary (398) - -
Gain on disposal of property,
plant and equipment (13) - -
Government grants and other deferred
income (236) (267) (404)
Unrealised exchange (gains)/
losses (315) 853 489
Changes in working capital
(Increase)/decrease in receivables (3,163) 1,187 1,220
Decrease/(increase) in inventories 6 (51) 92
Increase/(decrease) in payables 1,744 (487) 258
Net cash used in operations (5,701) (7,469) (12,047)
Research and development tax
credit received 1,295
Income taxes received 23 22
Net cash used in operating
activities (5,701) (7,446) (10,730)
------------------------------------- ----------- ----------- -------------
Investing activities
Interest received 52 105 137
Net maturities of money market
investments 856 5,046 11,735
Disposal of subsidiary 765 - -
Purchases of property, plant
and equipment (82) (60) (104)
Rebate on prior period additions
of property, plant and equipment - - 10
Purchases of intangible assets (16) - (194)
Net cash generated from investing
activities 1,575 5,091 11,584
------------------------------------- ----------- ----------- -------------
Financing activities
Proceeds from borrowings 42 - -
Repayments of borrowings (70) (70) (91)
Finance costs (6) (13) (19)
Grants received 34 - 87
Net cash generated from/(used
in) financing activities (83) (23)
------------------------------------- ----------- ----------- -------------
Net (decrease)/increase in cash
and cash equivalents (4,126) (2,438) 831
Cash and cash equivalents at
beginning of period 7,720 6,866 6,866
Effect of exchange rate changes (191) 115 23
Cash and cash equivalents at
end of period 3,403 4,543 7,720
------------------------------------- ----------- ----------- -------------
Notes to the financial information
1 General information
This interim financial information was authorised for issue on
24 August 2011. The information for the year ended 31 December 2010
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006. A copy of the statutory accounts for the
year ended 31 December 2010 has been delivered to the Registrar of
Companies. The Auditor's report on those accounts was not
qualified, did not draw attention to any matters by way of emphasis
and did not contain a statement under section 498(2) or (3) of the
Companies Act 2006.
A copy of the interim results for the six months ended 30 June
2011 can be found on the Company's website at
www.arktherapeutics.com.
2 Basis of preparation
The annual financial statements of Ark Therapeutics Group plc
are prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union. The condensed
set of financial statements included in this half-yearly report has
been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting', as adopted by the European
Union.
In determining the appropriate basis of preparation of the
interim statement, the Directors are required to consider whether
the Group can continue in operational existence for the foreseeable
future, being a period of not less than twelve months from the date
of the approval of the interim statement.
As at 30 June 2011, the Group had net assets of GBP14.6m
including cash and money market investments of GBP5.4m.
Management prepares detailed cash flow forecasts which are
reviewed by the Board on a regular basis. The forecasts include
assumptions regarding future income and expenditure together with
various scenarios which reflect opportunities, risks and
appropriate mitigating actions. These scenarios recognise the
current regulatory and commercial status of the Group's product
portfolio, and the outcome of the strategic review and
restructuring, considering the various options available to the
Group at present and resulting actions, taking into account
existing cash resources. Whilst there are inherent uncertainties
regarding the cash flows associated with product development and
commercialisation, the Directors are satisfied that there is
sufficient discretion and control as to the timing and quantum of
cash outflows to ensure that the Group is able to meet its
liabilities as they fall due for the foreseeable future.
Therefore, having made relevant enquiries, including
consideration of the Group's current cash resources and the cash
flow forecasts, the Board has a reasonable expectation that, at the
time of approving the interim statement, the Group has adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, the Board continues to adopt the going concern
basis in preparing the interim statement.
The longer term sustainability of the Group will be dependent
upon generating cash flows from successful development and
commercialisation of the Group's product portfolio and
manufacturing assets.
The same accounting policies, presentation and methods of
computation have been followed in the condensed set of financial
statements as applied in the Group's latest annual audited
financial statements for the year ended 31 December 2010. Seasonal
changes to the Group's operations are not material.
3 Business and geographical segments
In accordance with IFRS 8, the Group is required to define its
operating segments based on, inter alia, the internal reports
presented to its chief operating decision maker in order to
allocate resources and assess performance. These reports focus on
the Group's only business activity, being the discovery,
development and commercialisation of products in areas of
specialist medicine, with particular focus on vascular disease and
cancer, and therefore no segmental information has been shown.
The principal sources of revenue for the Group are as
follows:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Discontinued operations
UK
Sales of woundcare products - 967 2,313
Continuing operations
Rest of Europe
Contract manufacturing 382 406 757
Total Revenues 382 1,373 3,070
----------------------------- ----------- ----------- -------------
Revenue from a single customer within contract manufacturing
totalled GBP382,000 in the six months ended 30 June 2011 (six
months ended 30 June 2010: GBP338,000; year ended 31 December 2010:
GBP636,000).
An analysis of the Group's geographical non-current assets is
shown below:
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
UK 6,982 10,940 7,603
Finland 10,111 11,570 10,842
Inter-segment eliminations
(being inter-company loans) (6,827) (9,487) (7,395)
------------------------------ --------- --------- ------------
10,266 13,023 11,050
------------------------------ --------- --------- ------------
Non-current assets comprise goodwill, property, plant and
equipment, other intangible assets and inter-company loans and are
attributed to the location where they are situated.
4 Discontinued operations
On 8 February 2011, the group entered into a formal sale
agreement for the sale of certain assets which comprise the
majority of its woundcare business. The disposal completed on 1
March 2011.
The results of the discontinued operations, which have been
included in the consolidated income statement, were as follows:
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Revenue - 967 2,313
Expenses - (1,279) (2,582)
---------------------------------------- ---------- --------- ------------
Profit/(loss) before tax - (312) (269)
Attributable tax - - -
---------------------------------------- ---------- --------- ------------
Profit/(loss) attributable
to discontinued operations
after taxation, being retained
loss for the period - (312) (269)
---------------------------------------- ---------- --------- ------------
Profit on disposal of discontinued 398 - -
operations
---------------------------------------- ---------- --------- ------------
Net profit attributable to 398 - -
discontinued operations (attributable
to owners of Company)
---------------------------------------- ---------- --------- ------------
The major classes of assets and liabilities comprising the
operations classified as held for sale were as follows:
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Intangible assets - - 7
Property, plant and equipment - - 5
Inventories - - 338
Trade and other receivables - - 647
--------------------------------- ---------- ---------- ------------
Total assets classified as
held for sale - - 997
--------------------------------- ---------- ---------- ------------
Trade and other payables - - 228
--------------------------------- ---------- ---------- ------------
Total liabilities associated
with assets classified as held
for sale - - 228
--------------------------------- ---------- ---------- ------------
Net assets of disposal group - - 769
--------------------------------- ---------- ---------- ------------
5 Disposal of woundcare business
As referred to in note 4, on 8 February 2011 the Group entered
into an agreement to dispose of certain assets which represented
its woundcare business.
The fair value of net assets at the effective date of disposal
and the gain on the disposal were as follows:
GBP'000
Property, plant and equipment 4
Intangible assets 25
Inventories 338
Trade and other receivables 674
Trade and other payables (280)
--------------------------------------------- --------
761
Gain on disposal 398
--------------------------------------------- --------
Consideration recognised as at 30 June 2011 1,159
--------------------------------------------- --------
Satisfied by:
Total consideration recognised 1,427
Transaction costs (268)
--------------------------------------------- --------
1,159
--------------------------------------------- --------
In addition to the consideration recognised above, the Group is
due additional contingent consideration depending on the
achievement of certain revenue levels by the woundcare business
disposed of. Management has decided that it is not appropriate to
recognise any element of this contingent amount on the basis that
achievement of the necessary revenue targets cannot be considered
virtually certain, as per IAS 37 "Provisions, Contingent
Liabilities and Contingents Assets".
6 Exceptional items
During the year ended 31 December 2010 exceptional items
comprised impairment of goodwill and restructuring costs as
follows:
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Restructuring costs - - 447
Impairment of goodwill - - 1,306
- - 1,753
---------- ----------------------------------- ------------
Further information regarding exceptional items was disclosed in
the annual report for the year ended 31 December 2010.
7 Loss per share
International Accounting Standards require presentation of
diluted earnings per share when a company could be called upon to
issue shares that would decrease net profit or increase net loss
per share. Since the Group is loss making, there is no such
dilutive impact.
The calculation of basic and diluted loss per ordinary share is
based on the loss of GBP4,299,000 and the loss from continuing
operations of GBP4,697,000 for the six months ended 30 June 2011
(six months ended 30 June 2010: GBP9,434,000 and the loss from
continuing operations of GBP9,122,000; year ended 31 December 2010:
GBP16,172,000 and the loss from continuing operations of
GBP15,903,000) and on 209,276,676 ordinary shares (June 2010:
208,805,012; December 2010: 209,017,211) being the weighted average
number of ordinary shares in issue.
8 Non-cash investing and financing activities
On 5 January 2010 the Ark Therapeutics Group plc Family Benefit
Trust (the "FBT") subscribed for 1,640,000 ordinary shares in the
Company at a cost of GBP263,000. The Company financed the share
purchase by way of a contribution, totalling GBP131,000, and the
remainder by way of a loan.
9 Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
The following transactions with Company Directors took place
during the period at arm's length:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Consultancy fees earned in period
S Yla-Herttuala 38 38 75
----------------------------------- ----------- ----------- -------------
Consultancy fees owed as at
period end
S Yla-Herttuala 19 19 38
----------------------------------- ----------- ----------- -------------
The remuneration of key personnel in the period was in line with
the amounts disclosed in the annual report for the year ended 31
December 2010.
Statement of Directors' responsibilities
We confirm to the best of our knowledge:
(a) the condensed set of financial statements which has been
prepared in accordance with IAS 34 "Interim Financial Reporting"
gives a true and fair view of the assets, liabilities, financial
position and loss for the period;
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
The Directors of Ark Therapeutics Group plc are listed in the
Ark Therapeutics Group plc annual report for the year ended 31
December 2010, Dr David Bloxham having been appointed to the Board
on 1 March 2011.
A list of current Directors is maintained on the Company's
website: www.arktherapeutics.com.
By order of the Board
Martyn Williams
Chief Executive Officer
24 August 2011
Independent review report to Ark Therapeutics Group plc
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2011 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated statement of changes in equity, the
condensed consolidated cash flow statement and related notes 1 to
9. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2011 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
Cambridge, United Kingdom
24 August 2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KMGZRVFKGMZM
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