TIDMSUMM
Summit Corporation plc
("Summit" or "the Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2010
Oxford, UK, 6 May 2010, Summit (AIM: SUMM), a UK drug discovery Company with
partner funded programmes and an innovative SeglinTM (Second Generation Lead
Iminosugar) technology platform for the discovery of new medicines, today
reports its preliminary results for the year ended 31 January 2010.
Highlights
Partner Funded Portfolio: Good progress made in key programmes
* BMN-195 for Duchenne Muscular Dystrophy entered into Phase I clinical trials
by partner BioMarin Pharmaceuticals Inc; top-line results now expected in Q2
2010.
* SMT 19969 selected as lead compound against C. difficile pathogen in
Wellcome Trust grant funded programme.
SeglinTM Technology: Identifying medicines from new chemistry space
* Advances in development of technology platform with active Seglins
identified against a range of major disease areas.
* Progress in diabetes programme following identification of SMT 14224 as lead
candidate with potential new mechanism of action.
* Breakthrough in hepatitis C programme following identification of hits
against previously intractable NS3 helicase protein target.
Operational and Financial: A refocused, restructured and well-funded business
* Successful GBP5.4m Placing and Open Offer funds business until at least
December 2011, which is beyond projected receipt of milestones from deals.
* Completion of extensive restructuring programme to reduce net cash used in
operating activities by approximately 70%.
* Loss for period reduced by 75% to GBP5.4m (2008/09: GBP22.4m).
* Cash position of GBP6.1 million on 31 January 2010 (31 January 2009: GBP2.7m).
Steven Lee, PhD, Chief Executive Officer commented, "Summit has emerged from a
challenging year as a focused business with a financial base from which to
deliver significant value growth for our shareholders.
"Over the coming year, I look forward to key developments from within our
partner funded programmes, including the Phase I clinical trial results for
BMN-195 targeting Duchenne Muscular Dystrophy. In addition, we are building on
the exciting scientific results generated from our SeglinTM technology which
will further exemplify the potential of this innovative platform as a source of
new medicines."
- END -
For more information, please contact:
Summit
Steven Lee, PhD
Richard Pye, PhD Tel: +44 (0)1235 443939
Singer Capital Markets (Nominated Adviser)
Shaun Dobson / Claes Spång Tel: +44 (0)20 3205 7500
Peckwater PR
Tarquin Edwards Tel: +44 (0)7879 458 364
tarquin.edwards@peckwaterpr.co.uk
About Summit
Summit is an Oxford, UK based drug discovery company with a portfolio of partner
funded drug programmes and an innovative technology platform called SeglinsTM
for the discovery of new medicines.
Summit's partnered drug programmes require no further investment from the
Company but have contractual, success-based milestones potentially worth in
excess of $160 million and sales royalties rising to a low teen percentage.
Partners include leading orphan drug specialist BioMarin Pharmaceuticals
(Duchenne Muscular Dystrophy programme) and the Wellcome Trust (C. difficile
programme).
SeglinTM technology
SeglinTM technology is using new chemistry to access biological drug targets
that cannot be exploited by conventional drug discovery approaches. Summit's
internal research is currently focussed in the high value therapy areas of type
II diabetes and infectious diseases and the Company will further exploit the
technology's wider potential through strategic alliances.
Summit is listed on the AIM market of the London Stock Exchange and trades under
the ticker symbol SUMM. Further information is available at www.summitplc.com
<http://www.summitplc.com/>.
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT
INTRODUCTION
We are pleased to report that your Company ended the Financial Year in much
better health than it started, in spite of the difficult prevailing economic
conditions.
The improvement stems from a refocusing and restructuring of the Company's
operations, alongside an aggressive cost reduction programme, a successful
Placing and Open Offer that raised GBP5.4 million, before costs, the award of a
grant from the Wellcome Trust of up to GBP2.2 million and also advances in a
number of drug discovery programmes. Summit now has cash resources that are
anticipated to last until at least the end of December 2011.
We believe that the Company is now well placed to generate value from its
portfolio of partner funded drug programmes and from its innovative SeglinTM
technology platform for the discovery of new medicines.
STRATEGY
Summit's strategy remains focused on creating value through the selection and
early-stage development of novel product candidates from its SeglinTM technology
platform in areas of high unmet medical need. At the appropriate stage of
development, Summit will seek to out-license these product candidates with
partners who will be responsible for the expensive registration studies and
product commercialisation. We currently have a number of partnered programmes
that are funded by third parties and these have yielded over $7 million in
upfront payments in the last two years. In addition, Summit is eligible to
receive contractual, success based milestone payments potentially worth in
excess of $160 million and sales royalties rising to a low teen percentage.
Our focus for entering into new commercial agreements is our SeglinTM (Second
Generation Lead Iminosugar) technology platform. This innovative technology,
which has the potential to identify medicines in a range of major therapy areas,
was the primary focus of our internally funded research and development
activities during the period. As discussed later, Summit is developing this
technology in the areas of type II diabetes and infectious diseases and also
aims to exploit the wider potential of this technology in other major therapy
areas through strategic alliances.
REFOCUSED, RESTRUCTURED AND REFINANCED
Summit completed its restructuring programme during the period under review.
The programme was started in mid-2008 as part of the Company's strategy to
refocus operations on drug discovery activities and on developing our SeglinTM
technology, which we believe represents an excellent opportunity for the
business to create significant value growth.
In December 2009, we were pleased to announce the successful Placing and Open
Offer raising GBP5.4 million, before expenses, and this has provided the business
with cash resources until at least December 2011, excluding the receipt of any
milestones from existing or new deals.
The restructuring programme included the divestment of Summit's non-core
Zebrafish and Dextra service divisions in May 2009 and September 2009
respectively, a reduction in the number of sites in operation from five to one
with more favourable terms of rent being renegotiated for the remaining site,
and the renegotiating of certain existing licensing agreements. This is
discussed in more detail in the Financial Review. These activities reduced the
Company's operational cash burn by approximately 70%.
In addition, headcount was reduced by 75% while the Board and Executive
management reduced their fees or took pay-cuts of between 20 and 55%. These
were necessary actions to secure the future of the business. On behalf of the
Board, we again thank the staff who were made redundant for their commitment
during their time with the business and wish them well in their future careers.
PORTFOLIO OF PARTNER FUNDED PROGRAMMES
During the period, Summit's portfolio of partnered drug programmes, which
requires no further investment from the Company, has made good progress.
DMD Programme advances into clinical trials
Summit's programme targeting the fatal genetic disorder Duchenne Muscular
Dystrophy ('DMD') could provide a major benefit to patients and represents a
significant value creation opportunity for Summit in the near and medium term.
In January 2010, Summit received a major boost when BioMarin Pharmaceuticals
Inc. announced that it had initiated a Phase I clinical study of BMN-195
(formerly SMT C1100) for the treatment of DMD. BMN-195 was discovered by our
scientists and its progression into clinical trials represents a major
achievement for the Company and is testament to the scientific expertise that
exists within the business. Importantly, BMN-195 has the potential to become a
first-in-class disease modifying medicine that could treat the entire spectrum
of patients with this deadly disease.
BioMarin reported recently that they expect initial results from this Phase I
trial in Q2 2010, and if successful, a Phase II patient trial could start in Q1
2011.
The programme was exclusively licensed to BioMarin in July 2008. Summit is
eligible to receive success based development and regulatory milestones of up to
$50 million in addition to sales milestones of $85 million and tiered sales
royalties rising to a low-teen percentage.
GBP2.2m Wellcome Trust Grant to Fund C. difficile Programme
In December 2009, Summit was awarded a grant worth up to GBP2.2 million from the
Wellcome Trust to fund the development of the Company's C. difficile infectious
disease programme. The grant was awarded following a highly competitive and
rigorous application process and it provides a major endorsement of the
scientific innovation and expertise that exists within Summit.
C. difficile is a life threatening pathogen for which current therapy options
are limited. In 2008 in the UK, C. difficile was responsible for over three
times more deaths than the MRSA superbug while cost of care in the US is
estimated at $1.1 billion and rising. From initial studies, Summit has
indentified a novel class of small molecules, including the leading compound SMT
19969, which have an attractive activity profile. SMT 19969 is highly but
selectively active only against all clinically relevant C. difficile strains
including the endemic, hyper-virulent 027 strain that is associated with higher
mortality rates. This selectivity is a key property for any new antibiotic
treatment against this pathogen as it means the other bacterium that naturally
exists in a healthy human gut would be unharmed.
The award of the grant by Wellcome has allowed Summit to advance SMT 19969 into
proof of concept studies in the gold standard in vivo model. In addition, a
range of in depth bacterial resistance and mechanism of action studies have
commenced. The results from all these studies are expected in the second half
of this year, and if successful, we would anticipate having a package of data
that could be attractive to potential commercial partners. We look forward to
reporting on the progress of this exciting programme over the coming months.
Signing of New Co-development Agreements
In May 2009, Summit signed three new co-development agreements with the
Taiwan-based company, Orient Pharma for the reprofiled drug programmes in acne
(SMT D002), glaucoma (SMT D003) and wet age-related macular degeneration (AMD,
SMT D004). The agreements provide Orient with exclusive development and
commercialisation rights in Asia-Pacific and Australasia and they will be
responsible for all development, manufacturing and distribution costs within
those territories.
In addition, and as part of the restructuring programme, Summit signed a new
agreement for the sialorrhoea programme (SMT D001) that entailed Orient taking
full ownership of the programme. The terms of the deal involved Orient making
an equity investment in Summit of $500,000 at a price of 13.5 pence per share,
which was approximately 2.5 times the Company's share price at that time.
Although Summit's future research and development activities are now primarily
focused on the SeglinTM technology, these programmes remain a potential source
of future value upside that requires no investment from the Company.
SEGLINTM TECHNOLOGY: Identifying medicines from new chemistry space
Our SeglinTM technology represents the major area of research and development
investment for the business. This innovative technology uses new chemistry to
access biological targets that cannot be exploited by conventional drug
discovery approaches.
It is our belief that SeglinTM technology provides a major opportunity for the
discovery of new medicines in a number of therapeutic areas and has the
potential to deliver significant value growth. This belief was supported by new
and existing shareholders, who invested during the recent fundraising. These
new funds help ensure that the business has the resources to develop the Seglin
platform to the point where we believe it will deliver new licensing and
collaboration deals.
Summit has validated the platform through the identification of a number of
advanced Seglin compounds in a range of therapy areas. This includes our Seglin
compound targeting malignant melanoma cancer, which has been given the
preclinical development candidate identity SMT C2100, SMT 14224 for type II
diabetes and SMT 15000 as a biodefence countermeasure. In addition, SeglinTM
technology has generated hits in a wide range of other disease areas.
Collectively, these data exemplify the potential power of the platform.
Summit's main therapeutic areas of focus are in metabolic diseases and
infectious diseases and good progress was made in both of these areas during the
period. In addition, we aim to exploit the wider potential of this innovative
technology beyond our focus areas by collaborating with other parties through
strategic alliances. It is pleasing to report that we are receiving increasing
levels of interest from major pharmaceutical and biotechnology companies about
the technology and are currently exploring potential collaborations with
interested parties.
The coming year represents an important period in the development of the
technology and we look forward to reporting on its progress in due course.
Seglin Focus Areas: Metabolic diseases
Our focus in metabolic diseases is on the development of potential treatments
for type II diabetes, which affects over 18 million patients in the US alone and
has a global market worth in excess of $25 billion.
During the period under review, this programme has made good progress and a
package of data has been generated that has already garnered interest from
potential commercial partners. Our lead Seglin compound, SMT 14224, has
demonstrated in vivo proof of concept in chronic and acute efficacy models and
significantly, the results generated to date indicate it may operate via a new
mechanism of action. Furthermore, a set of additional compounds have been
identified from in vitro screening and these are now undergoing optimisation
work.
It is the belief of the Board that further value can be added to the programme,
and having received the financial support from our investors, additional studies
are underway to reinforce data already generated to confirm the potential unique
position of SMT 14224 and additional compounds. We expect to report results
from these studies in the second half of 2010.
Seglin Focus Areas: Infectious diseases
Our second focus area targets infectious diseases and specifically viral
diseases. Multiple hit compounds against a range of viral diseases have been
identified using the SeglinTM technology and the most advanced of these
programmes targets the life threatening disease hepatitis C ('HCV'), which the
World Health Organisation estimates affects 170 million people worldwide.
Summit is using the SeglinTM technology against a set of hepatitis C targets
including the NS3 helicase protein, an enzyme that unwinds the double-stranded
RNA complex allowing the virus to replicate. HCV helicase is a well validated
target that has proved to be intractable despite major efforts being made over
the last decade by the pharmaceutical industry. Summit has identified a number
of active Seglins against this enzyme. This represents a breakthrough towards
finding new drugs to treat hepatitis C, and importantly, exemplifies the wider
potential of Seglins to access intractable targets. Results from this, and
other on-going studies, are expected in the second half of 2010.
BOARD AND MANAGEMENT CHANGES
Mr Raymond Spencer ACA joined Summit in March 2009 as interim Chief Financial
Officer. Raymond has provided valuable strategic support and input to the Board
during the year. In addition, his financial expertise in operational management
and corporate transactions has helped ensure that the business has emerged from
the challenges of the year in a stronger position. The Board is pleased that
Raymond has agreed to continue in this role on a permanent, part-time basis. In
March 2009, Mr Anthony Weir left the Company by mutual consent.
SUMMARY
It is the belief of the Board that the Company has emerged from this challenging
period with a solid foundation from which to deliver value growth for our
investors.
The restructuring and refocusing of the business ensures the Company has the
necessary resources in place so as to benefit from the receipt of milestone
payments from existing deals and is also in a position to exploit the exciting
potential offered by our innovative SeglinTM technology.
On behalf of the Board, we wish to thank our loyal and dedicated staff who
worked hard to ensure the business came through a difficult year. Finally, we
thank all our shareholders for their continuing support and we look forward to
reporting on future progress of Summit during what we anticipate will be an
exciting period for your Company.
Barry Price, PhDSteven Lee, PhD
ChairmanChief Executive Officer
5 May 2010
FINANCIAL REVIEW
During the period under review, Summit has made good progress in strengthening
the financial position of the Group in spite of the challenging economic
conditions.
The Group has ended the year with GBP6.1 million in cash following completion of
the Placing and Open Offer in December 2009 and, together with the radical
action taken by your Board to reduce costs, the Group now has sufficient cash to
last until at least December 2011.
The cost savings have been achieved through a combination of a reduction in head
count (and associated salaries), Directors' remuneration, lease of premises,
general overheads and a more focused approach in research and development
investment. Total operating costs on continuing operations have fallen by GBP7.5
million to GBP5.8 million (2008/09: GBP13.3 million). Consequently, the loss
attributable to continuing operations fell by over 50% to GBP5.5 million (2008/09:
GBP11.3 million), with the total loss for the period falling by approximately 75%
to GBP5.4 million (2008/09: GBP22.4 million). It is expected that the full benefit
of the restructuring programme will be reflected in the coming financial year.
As noted in the Chairman and Chief Executive's Statement, your Board is pleased
to report the progress made by BioMarin Pharmaceuticals Inc. in progressing the
DMD product BMN-195 into Phase I human clinical studies. BioMarin expect a
readout from this trial in the second quarter of 2010. The subsequent entry into
a Phase II study will trigger a $3 million milestone due to Summit and, if this
is successful, a pivotal study will generate an additional $10 million milestone
payment to Summit.
We were pleased with the support of shareholders in the GBP5.4 million, before
expenses, raised in the Placing and Open Offer in December 2009 and particularly
from the Company's largest shareholder, Lansdowne, who provided a cornerstone
investment and increased their ownership in the Company to 29.9%. In December
2009 the Group was awarded a grant from the Wellcome Trust for its C. difficile
programme of up to GBP2.2 million. GBP558,000 of this grant was received in January
2010.
In addition the Company raised GBP315,000 from an issue of shares to Orient Pharma
as part of a renegotiation of the commercial arrangements with them. In May
2009, the Zebrafish business was sold for GBP500,000 and in September 2009 the
Dextra business was sold for GBP950,000. In each case the proceeds were in cash
and subject to either a working capital adjustment or net asset adjustment. The
Group also received GBP815,000 (2008/09: GBP898,000) in R&D tax credits during the
year.
Your Board believes that the Group now has sufficient resources to develop its
core programmes over the next two years and establish whether they have
potential medical utility and also to chart the progress of the DMD programme
with BioMarin.
For continuing operations during the period under review, research and
development costs fell by 55% to GBP2.3 million (2008/09: GBP5.1 million) while
combined general and administrative and sales and marketing expenses fell by
33% to GBP2.9 million (2008/09: GBP4.3 million). Headcount has fallen from an
average of 142 in the year ended 31 January 2009 to 31 employees as at 31
January 2010. The Chief Executive Officer and Chief Scientific Officer also
agreed to cuts in their basic salaries of 25% and 20% respectively; the members
of the Board also reduced their fees by between 27% and 55%. The cost of leasing
premises has fallen from over GBP1.0 million per annum to approximately GBP200,000
per annum from January 2010. In total, the cash burn from operating activities
has fallen from GBP10.1 million to GBP3.1 million.
Working Capital
Following the fundraise, grant receipts, sales of Dextra and Zebrafish, R&D tax
credit and the significant cost reductions during the year, the Group had GBP6.1
million in cash at 31 January 2010 (31 January 2009: GBP2.7 million) which is
sufficient on current projections until at least December 2011 excluding any
revenues other than the Wellcome Trust grant. These financial statements have,
therefore, been prepared on a Going Concern basis.
Summary
The Group has emerged from the year as a streamlined and refocused drug
discovery business that is funded beyond the point where it anticipates
receiving additional revenues from existing or new deals.
It is the belief of the Board that a solid foundation has been laid from which
the Group will be able to provide value growth for our investors through the
progression of the partner funded programmes and development of our innovative
SeglinTM technology platform.
Raymond Spencer, ACA
Chief Financial Officer
5 May 2010
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive income
For the year ended 31 January 2010
Year Year
ended ended
31 January 31 January
2010 2009
(Restated)
GBP000s GBP000s
=-------------------------------------------------------------------------------
Revenue 189 185
Cost of sales - (4)
=-------------------------------------------------------------------------------
Gross profit 189 181
Other operating income 196 195
Administrative expenses
Research and development (2,302) (5,119)
General and administration (2,630) (3,490)
Sales and marketing (233) (779)
Depreciation and amortisation (826) (1,555)
Accelerated depreciation of leasehold improvements (1,361) -
Impairment - (2,597)
Release of loan 1,211 -
Share-based payment (4) (154)
=-------------------------------------------------------------------------------
Total administrative expenses (6,145) (13,694)
Operating loss (5,760) (13,318)
Finance income 8 299
Finance cost (67) (81)
=-------------------------------------------------------------------------------
Loss before taxation (5,819) (13,100)
Taxation 372 1,747
=-------------------------------------------------------------------------------
Loss for the year from continuing operations (5,447) (11,353)
Profit/(loss) for the year from discontinued operations 28 (11,050)
=-------------------------------------------------------------------------------
Loss and total comprehensive expense for the year (5,419) (22,403)
attributable to owners of the parent
=-------------------------------------------------------------------------------
Basic and diluted loss per ordinary share for continuing
operations (8.13)p (21.26)p
Basic and diluted profit / (loss) per ordinary share for
discontinued operations 0.04p (20.70)p
The comparatives have been restated as a result of the discontinued operations
(Note 2).
Consolidated Statement of Financial Position
As at 31 January 2010
31 January 2010 31 January
2009
GBP000s GBP000s
=-------------------------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 4,535 4,820
Property, plant and equipment 335 3,714
=-------------------------------------------------------------------------------
4,870 8,534
Current assets
Inventories - 391
Trade and other receivables 246 1,495
Current tax 306 805
Cash and cash equivalents 6,082 2,717
=-------------------------------------------------------------------------------
6,634 5,408
=-------------------------------------------------------------------------------
Total assets 11,504 13,942
=-------------------------------------------------------------------------------
LIABILITIES
Current liabilities
Trade and other payables (1,104) (1,732)
Borrowings - (135)
=-------------------------------------------------------------------------------
Total current liabilities (1,104) (1,867)
Non-current liabilities
Deferred income - (141)
Provisions (1,180) (1,180)
Borrowings - (1,181)
Deferred tax (942) (1,020)
=-------------------------------------------------------------------------------
Total non-current liabilities (2,122) (3,522)
=-------------------------------------------------------------------------------
Total liabilities (3,226) (5,389)
=-------------------------------------------------------------------------------
=-------------------------------------------------------------------------------
Net assets 8,278 8,553
=-------------------------------------------------------------------------------
EQUITY
Share capital 6,910 5,597
Share premium account 29,633 25,785
Share-based payment reserve 1,159 1,176
Merger reserve (1,943) 12,654
Retained earnings (27,481) (36,659)
=-------------------------------------------------------------------------------
Total equity attributable to the equity shareholders
of the Parent 8,278 8,553
=-------------------------------------------------------------------------------
Consolidated Statement of Cash Flows
For the year ended 31 January 2010
Year ended Year ended
31 January 31 January
2010 2009
GBP000s GBP000s
=-------------------------------------------------------------------------------
Cash flows from operating activities
Loss before tax from continuing activities (5,819) (13,100)
Profit before tax from discontinued activities 28 (11,027)
=-------------------------------------------------------------------------------
(5,791) (24,127)
Adjusted for:
Finance income (8) (304)
Finance cost 69 85
Foreign exchange loss 22 2
Depreciation 2,045 1,182
Amortisation of intangible fixed assets 323 718
Loss on disposal 7 198
Impairment loss - 12,464
Cancellation of loan (1,211) -
Share-based payment (18) 212
=-------------------------------------------------------------------------------
Adjusted loss from operations before changes in working (4,562) (9,570)
capital and provisions
Decrease in trade and other receivables 923 86
Decrease/(Increase) in inventories 181 (54)
(Decrease) in trade and other payables (451) (1,489)
=-------------------------------------------------------------------------------
Cash used by operations (3,909) (11,027)
Taxation Received 815 898
=-------------------------------------------------------------------------------
Net cash used in operating activities (3,094) (10,129)
=-------------------------------------------------------------------------------
Investing activities
Proceeds from disposal of discontinued operations 1,507 -
Proceeds from disposal of property, plant and equipment 8 -
Purchase of property, plant and equipment (48) (997)
Purchase of intangible assets (40) (150)
Interest received 8 304
=-------------------------------------------------------------------------------
Net cash used in investing activities 1,435 (843)
=-------------------------------------------------------------------------------
Financing activities
Proceeds from issue of share capital 5,706 3,900
Transaction costs on share capital issued (552) -
Repayment of debt during the period (53) (204)
Repayment of finance lease costs (8) (10)
Interest paid (69) (85)
=-------------------------------------------------------------------------------
Net cash generated from financing activities 5,024 3,601
=-------------------------------------------------------------------------------
Net increase/(decrease) in cash and cash equivalents 3,365 (7,371)
Cash and cash equivalents at beginning of period 2,717 10,088
=-------------------------------------------------------------------------------
Cash and cash equivalents at end of year 6,082 2,717
=-------------------------------------------------------------------------------
Consolidated Statement of Changes in Equity
For the year ended 31 January 2010
Share Share-based
Share premium payment Merger Retained
capital account reserve reserve earnings Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 1 February
2009 5,597 25,785 1,176 12,654 (36,659) 8,553
Loss for the
year from
continuing
operations - - - - (5,447) (5,447)
Profit for the
year from
discontinued
operations - - - - 28 28
=-------------------------------------------------------------------------------
Total
comprehensive
expense for the
year - - - - (5,419) (5,419)
New share
capital issued 1,313 4,400 - - - 5,713
Transaction
costs on share
capital issued (552) (552)
Transfer
following
realisation on
disposal of
discontinued
operations (14,597) 14,597 -
Share-based
payment - - (17) - - (17)
=-------------------------------------------------------------------------------
At 31 January
2010 6,910 29,633 1,159 (1,943) (27,481) 8,278
For the year ended 31 January 2009
Share Shares Share-based
Share premium to be payment Merger Retained
capital account issued reserve reserve earnings Total
Group GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
At 1 February
2008 4,967 22,750 1,443 964 11,328 (14,256) 27,196
Loss for the
year - - - - - (22,403) (22,403)
=-------------------------------------------------------------------------------
Total
comprehensive
expense for
the year (22,403) (22,403)
New share
capital issued 630 3,035 (117) - - - 3,548
Share-based
payment - - - 212 - - 212
Share issue
eligible for
merger relief (1,326) 1,326 -
=-------------------------------------------------------------------------------
At 31 January
2009 5,597 25,785 - 1,176 12,654 (36,659) 8,553
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 January 2010
1. Basis of accounting
The financial information set out above does not constitute the Company's full
statutory accounts for the year ended 31 January 2010 or 2009 for the purposes
of section 435 of the Companies Act 2006, but it is derived from those accounts
that have been audited. Statutory accounts for 2009 have been delivered to the
Registrar of Companies and those for 2010 will be delivered after the
forthcoming AGM. The auditors have reported on those accounts; their report was
unqualified, did not draw attention to any matters by way of emphasis without
qualifying their report and did not contain statements under s498(2) or (3)
Companies Act 2006 in 2010 or under s237 (2) or (3) Companies Act 1985 in 2009.
While the financial information for the year ended 31 January 2010 is prepared
in accordance with the recognition and measurement requirements of International
Financial Reporting Standards (IFRSs) as endorsed by the European Union and
implemented in the UK, this announcement does not itself contain sufficient
information to comply with IFRSs. The Company expects to publish full financial
statements that comply with IFRSs later in May 2010. These financial statements
have also been prepared in accordance with the accounting policies set out in
the 2010 Annual Report and Financial Statements, as amended by the following new
accounting standards:
International Accounting Standards (IAS/IFRS)
=--------------------------------------------------------
IAS 1 Presentation of Financial Statements (Revised)
IFRS 8 Operating segments
IAS 1(Revised) has led to changes in the format of the primary statements.
Primarily, the reconciliation of the movement in equity is now a primary
statement and not a note to the accounts and the Consolidated Statement of
Income is now shown as Consolidated Statement of Comprehensive Income. The Group
has adopted a '1' statement approach.
The Group early adopted IFRS 8 'Operating Segments' for the year ended 31
January 2008 on its transition to IFRS. Further details about how the Group has
identified its segments and chief operating decision maker are detailed in the
full financial statements.
The financial information in these financial statements has been prepared on a
going concern basis which assumes that the Group will continue in operational
existence for the foreseeable future. Management are confident about the Group's
ability to continue as a going concern as a result of the cost reductions made
over the last year, the successful fund raise in December 2009 and the future
opportunities for the business that are outlined in the Chairman and Chief
Executive's Statement and Financial Review.
2. Discontinued operations
On 7 May 2009, the Zebrafish business, which was held within part of Summit
(Oxford) Limited and the whole of the subsidiary Summit Asia Pte Limited, was
sold to Evotec AG. The proceeds for the sale were GBP500,000, plus a working
capital adjustment of GBP57,000, which resulted in an overall profit of GBP275,000.
On 2 September 2009 Dextra Laboratories Limited, the carbohydrate services
business was, sold to NZP Holding Limited. The proceeds for the sale were
GBP950,000 plus a final net asset adjustment of GBP29,000 and resulted in an overall
loss of GBP240,000. For further details regarding these transactions please see
the Chairman and Chief Executive's Statement.
The profit on the sale of the discontinued operations was calculated as follows:
Carbohydrates Services
Zebrafish business business Total
GBP000 GBP000 GBP000
CONSIDERATION
RECEIVED:
Cash 557 979 1,536
--------------------------------------------------------
LESS ASSETS DISPOSED
OF:
17 17
Cash -
Net assets (other than
cash):
Property, plant and 225 1,107 1,332
equipment
Intangibles - 3 3
Trade and other 40 286 326
receivables
Other financial assets - 210 210
Trade and other - (142) (142)
payables
Other financial - (245) (245)
liabilities
--------------------------------------------------------
265 1,219 1,484
--------------------------------------------------------
Pre-tax gain / (loss)
on disposal of 275 (240) 35
discontinued
operations
Related tax expense - - -
--------------------------------------------------------
275 (240) 35
--------------------------------------------------------
The results of the discontinued operations which have been included in the
Consolidated Statement of Comprehensive Income were as follows:
Year ended Year ended
31 January 31 January
2010 2009
GBP000s GBP000s
=-------------------------------------------------------------------------------
Revenue 1,283 1,646
Expenses (1,313) (12,673)
=-------------------------------------------------------------------------------
Loss before tax of discontinued
operations (30) (11,027)
Tax 23 (23)
=-------------------------------------------------------------------------------
Loss after tax of discontinued operations (7) (11,050)
Profit on sale of discontinued operations 35 -
Tax - -
=-------------------------------------------------------------------------------
35 -
=-------------------------------------------------------------------------------
Profit / (loss) on discontinued
operations 28 (11,050)
=-------------------------------------------------------------------------------
During the period, the discontinued operations absorbed GBP184,000 of the Group's
net operating cash flows (2009: GBP1,720,000), GBP15,000 (2009: GBP526,000) in respect
of investing activities and GBP8,000 (2009: GBP10,000) in respect of financing
activities.
3. Share capital
On 29 May 2009 Orient Pharma Limited made a $500,000 ( GBP314,820) equity
investment via a subscription for 2,332,000 new Ordinary 10 pence shares at a
price of 13.5 pence per share. This was in exchange for full ownership of the
clinical candidate SMT D001, which is being developed to treat sialorrhoea, a
non-motor symptom of Parkinson's disease. The shares issued to Orient are
subject to a 12 month lock-in period followed by a 12 month orderly market
agreement.
On 20 August 2009 the shareholders approved a reorganisation of the share
capital, the effect of which is that for each issued Ordinary share of 10p held,
shareholders were issued with one new Ordinary share of 1p and nine deferred
shares of 1p each. The remaining authorised but unissued share capital was also
subdivided into 10 new Ordinary shares of 1p each. The deferred shares have no
voting or dividend rights and on a return of capital there is the right to
receive the amount paid up after the holders of Ordinary shares have received
the amount paid up on those Ordinary shares and an additional GBP1 million of
return of capital per Ordinary share.
On 30 December 2009 the number of Ordinary shares in issue increased to
166,249,806 following the placing of 107,949,569 Ordinary 1p shares. The shares
rank pari passu with existing Ordinary shares. The equity placing raised net
proceeds of GBP4,845,717.
4. Annual General Meeting
The Annual General Meeting is due to be held at 10:00am on Thursday, 17 June at
the Milton Park Innovation Centre, 99 Milton Park, Abingdon, Oxfordshire, OX14
4RY.
Forward Looking Statements
This document contains "forward-looking statements" within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as "anticipates", "intends", "plans",
"seeks", "believes", "estimates", "expects" and similar references to future
periods, or by the inclusion of forecasts or projections.
Forward-looking statements are based on the Company's current expectations and
assumptions regarding our business, the economy and other future conditions.
Because forward-looking statements relate to the future, by their nature, they
are subject to inherent uncertainties, risks and changes in circumstances that
are difficult to predict. The Company's actual results may differ materially
from those contemplated by the forward-looking statements. The Company cautions
you therefore that you should not rely on any of these forward-looking
statements as statements of historical fact or as guarantees or assurances of
future performance. Important factors that could cause actual results to differ
materially from those in the forward-looking statements and regional, national,
global political, economic, business, competitive, market and regulatory
conditions.
[HUG#1411847]
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