12th Sep 2006 07:04
Allergy Therapeutics PLC12 September 2006 Allergy Therapeutics plc Preliminary Results Statement (for the year ended 30 June 2006) SIGNIFICANT PROGRESS IN CLINICAL DEVELOPMENT PROGRAMMES HEALTH CANADA ACCEPTS POLLINEX(R) QUATTRO RAGWEED FOR SUBMISSION Allergy Therapeutics plc, the specialist pharmaceutical company focused onallergy vaccines, today announces its preliminary results for the year ended 30June 2006. The company also today announces that it has received confirmation from HealthCanada that its application for marketing authorisation has been accepted forassessment. Pollinex Quattro Ragweed is formally 'in registration'. Highlights • Further significant progress in the clinical development programmes: • FDA accepted plans taking Pollinex(R) Quattro Grass into phase III; study G301 commissioned • Successful meeting with the Pharmaceutical and Medical Devices Agency (PMDA) in Japan for Pollinex(R) Quattro Grass • Eight phase I & II studies completed • £19m gross proceeds (£18.3m net) raised from a placing of 19m shares in May • Second manufacturing unit on target to open by the end of 2006 • Extensive manufacturing upgrade commenced • Gross sales increased by 7% to £24.4m (2005: £22.9m) • Gross sales of Pollinex(R) Quattro up 7% to £7.7m (2005: £7.2m) • Granted a broad technology patent for the combination of MPL(R) with tyrosine and an antigen by the European Patent Office, covering 24 countries in Europe • Senior management team strengthened with three key appointments • New bank facilities of £4m available • Expansion of EU sales and marketing infrastructure in Poland, Austria, the UK, and the Czech and Slovak Republics Keith Carter, CEO of Allergy Therapeutics, commented: "With this morning's announcement from Canada I am delighted to report that as aresult of our efforts and investment over the year, our leading product,Pollinex Quattro, has passed three major milestones : conclusive proof ofefficacy, acceptance by the FDA that it is prepared for Phase III studies tocommence, and now the progression of the product beyond phase III intoregistration in the Canadian market. Allergy Therapeutics has again increased its sales and the core businessperformed solidly. The profits generated were reinvested in improving themanufacturing and sales and marketing infrastructures as preparations for thefull launch of Pollinex Quattro build in pace. I am strongly optimistic about the opportunities which we anticipate will flowfrom the achievements of this year and the development of Pollinex Quattro." - ends - For further information: Allergy Therapeutics 01903 844720Keith Carter / Ian Postlethwaite Bell Pottinger 020 7861 3232Dan de Belder / Rosanne Perry Chairman's Statement As we approach the end of our second year as a public company, I am pleased toreport that Allergy Therapeutics plc (the Company) is a much strengthenedbusiness in every field, and progress continues to be made across the board. In the clinic Pollinex(R) Quattro, the ultra-short course four-shot vaccineagainst allergies causing hay fever, achieved a number of key milestones. • A very successful pivotal Phase II/III study decisively validated the technology with convincing proof of efficacy after only four injections and only three weeks. This will allow us to make a submission for registration in Canada. • With this impetus, our planning for the critical Phase III programme moved forward dramatically and discussions with regulatory agencies - in particular the US FDA - progressed markedly. • Substantial progress was made on the practical process of commencing the Phase III work, with a leading CRO engaged, centres being selected, investigator meetings planned, and the 'Caution: Allergen' awareness- raising campaign being initiated across North America and Europe. The Company is now entering the most exciting phase of development with theflagship product line, Pollinex(R) Quattro. We believe that Pollinex(R) Quattro has the potential to transform the treatmentof allergy, one of the major chronic therapy areas. The potential we see in ourbusiness, in particular the development pipeline based upon the unique patentedvaccine adjuvant, MPL(R), requires us to invest to unlock the success that canbe ours. Not only do the clinical trials require significant financialresources, but as an integrated pharmaceutical company we have the opportunityto make and sell our own new products. Success only comes about if it isanticipated and planned for. Our manufacturing operations team already haswell-developed plans in place that will ensure our preparedness for theforthcoming launches of Pollinex(R) Quattro world-wide. We are on plan to ensurethe supply to all markets reliably and to the highest Good ManufacturingPractice (GMP) standards. In addition, our commercial operations must bestrengthened further - both organically and otherwise - in advance of the launchof the new products. In order to fund the next phase of unlocking the Company's potential, a placingof shares was completed in May, raising £19m gross. The proceeds will beinvested mainly in the world-wide clinical studies for Pollinex(R) Quattrovaccines for up to three allergens - Grasses, Trees and Ragweed - being themajor causes of hay fever. In addition there is extensive investment inmanufacturing plant, processes and personnel, and in the strategic marketingefforts for Pollinex(R) Quattro. During the year Allergy Therapeutics (the Group) made further progress in itsmarkets, with sales in excess of £23m, 14% up on the previous year despite somesupply difficulties encountered in balancing the demands of both the developmentactivity and market supply. Measures have already been taken to ensure norepetition of these supply issues, not least the investment in a secondmanufacturing facility planned to be operational by the end of 2006. Before R&D,the Group made profits of £3.4m, a slight decrease of 8% on last year owing tothe increased strategic investments alluded to above. We anticipate two furtheryears of increased investment to impact our profitability, and are confidentthat this is the best route to increasing shareholder value. Board changes As previously announced, Dr Virinder Nohria joined the Board of AllergyTherapeutics plc in November 2005 as a non-executive director. His background inpharmaceutical development has already proved very useful, especially as theCompany's development programmes move forward and there has been moreinteraction with the regulatory bodies such as the FDA. Also at the turn of theyear Andrew Turnbull resigned as director responsible for Supply Operations andBusiness Development, to return to his native New Zealand. Andrew had been withthe Company since 1999, serving on the board from 2002; his contributions weremany and wide-ranging, but above all his energy and determination will bemissed. We all thank him for what he brought to Allergy Therapeutics and wishhim well. Our People The progress we have achieved this year is a reflection of the skill andenthusiasm of our team members. I would like to take this opportunity to thankall of my colleagues throughout the Group for their commitment over the year. In a year characterised by planning for success and putting in place theresources required to deliver on these plans, we have made four key appointmentsat a senior level. As well as Dr Virinder Nohria, Ray Keeling joined us inNovember to take charge of our supply operations, a major task to ready theCompany for the anticipated world-wide launches and large-scale sales ofinnovative vaccines whilst continually improving GMP standards in line with thechanging regulatory requirements. Ray has a wealth of experience in sterilepharmaceuticals manufacture gained over many years with Aventis. Dr ManjitRahelu is our new Head of Business Development; a qualified immunologist, Manjithas valuable pharmaceutical business development experience gained at Pfizer andUCB. His engagement will support the Company as it moves into the key finalstages of the strategy to bring Pollinex(R) Quattro to markets across the World- which will involve partnerships and collaborations with other companies withcomplementary strengths. Kevin Wilkinson joined Allergy Therapeutics in June asHead of Strategic Marketing. Kevin has been in the pharmaceutical industry in avariety of roles for over ten years, including leading commercial positions withEli Lilly. His role is important as we progress with the development of Pollinex(R) Quattro and make our preparations for its launch world-wide, includingplanning EU launches through our own sales and marketing infrastructure. In summary, I am delighted with the progress the Company is making. Ours is agrowth company, with prospects and potential out of proportion to its size. Thechallenge we face is unlocking that potential for the benefit of patients,healthcare payers, physicians and all the stakeholders in Allergy Therapeutics.We look forward to this challenge with relish. Ignace GoethalsChairman11 September 2006 Chief Executive's Review Allergy Therapeutics passed two major milestones this year: conclusive proof ofefficacy of its lead development product - Pollinex(R) Quattro - and acceptanceby the FDA that it was prepared for Phase III studies to commence. It would behard to overstate the implications of these achievements for the Company. Wehave moved on to a new, advanced stage as a business. We are proud of having a profitable core business, which has again deliveredrecord sales results during the period. The Board believes that continuedpositive trial results and future commercial opportunities afforded by thePollinex(R) Quattro product are hugely exciting and represent an opportunity forthe Company to achieve an international position of market leadership in allergytreatment, thereby delivering material shareholder value. Consequently, theCompany's strategy will be focused on concluding the clinical trial process forPollinex(R) Quattro and making the operational investments required to supportits launch and sale. The profits and cash flow generated by the currentcommercial products can be applied to these growth objectives and hence reducethe dependence on external funding. Strategic background Allergy Therapeutics is maturing as an organisation. It is already a fullyintegrated pharmaceutical company on a modest scale, with Sales and Marketing,and Manufacturing operations as well as the R&D programmes developing our provenMPL(R)-based technology. The time has come to begin to leverage these assets inpreparation for the completion of our continued clinical trial programme aimedat world-wide registration of Pollinex(R) Quattro in the major hay feverallergens. During the year we made a number of R&D related announcements tracking certainexciting milestones as they occurred; perhaps the greatest achievement was thecompletion of our first pivotal study with Pollinex(R) Quattro, the Ragweed 204(R204) study. As we enjoy success in the clinic and embark on the final phase ofclinical trials, the success and size of our new product development activitiesand the potential for the new vaccines which will result from them is remarkablefor a company of our size. Matching the potential of the new products and thecommitment to clinical trials dictates that we develop the other majorcomponents of the business to ensure full exploitation of the opportunity thatwe have. We are confident that Pollinex(R) Quattro has the potential totransform allergy treatment - currently a $12.6 billion market (IMS, 2005 Sales)which leaves many patients and their physicians unsatisfied. It is importantthat we recognise the scale of the opportunity and hence the challenges inseizing it. Our strategy will continue to focus on partnering solutions for sales andmarketing in the USA and Japan - the two largest markets in the world - and toseek ways of being in a position to commercialise ourselves in the EU. Thisrequires intense focus on business development activities. We maintain the independent manufacturing strategy of supplying our own marketsand partners with products manufactured under stringent GMP conditions in ourWorthing facilities. To this end we have commenced a major programme ofrefurbishment and expansion of facilities and hiring of additional key staff. Bymaintaining control of manufacturing, we retain that part of the margin on salesascribed to supply, and retain control of a very specialised process which alsorepresents further protection of our technology. Furthermore, we ensureeffective communication between the development activities and marketing launchplanning activities to deliver our planned product launches on schedule. In this review I will highlight some of the key milestones achieved since thelast annual report, and outline what we believe they mean for the Company in thecoming years. Product development As noted above, possibly the highlight of the year was the success of thePollinex(R) Quattro Ragweed study R204. This study was 'pivotal' for Canada -meaning that its outcome can be submitted in support of an application forMarketing Authorisation: the process commonly referred to as 'registration'.Furthermore, data from this study will be supportive for the ongoing processaimed at achieving a registration from the FDA for this product to be sold inthe US market. R204 was a double-blind placebo-controlled study conducted in an EnvironmentalExposure Chamber ('EEC'), a controlled way of exposing patients to allergenchallenge equivalent to that encountered on a high pollen count day. Patientswere exposed in the EEC for three hours on four consecutive days in advance oftreatment and whilst in the EEC they kept a periodic record of their symptoms;this set the symptom 'baseline'. The patients were then given four injections ofeither Pollinex(R) Quattro Ragweed or placebo and three weeks later returned tothe EEC, again for four consecutive days and again keeping a periodic record oftheir symptoms. The primary end-point of the study was the comparison of thechange from base-line in the active group compared to that in the placebo group.The result was a compelling confirmation of the efficacy of Pollinex(R) Quattro: The reduction of symptom score against baseline was large, at 42%. The clinicalsignificance of this can be appreciated by considering how the scores arecompiled: 8 different nose and eye symptoms are each given a score of 0 - 3: 0 = no symptoms,1 = mild symptoms (which do not interfere with everyday activities),2 = moderate symptoms (which do) and3 = severe. Therefore at baseline, the patients recorded an average total symptom score of16 equating to an average of 2 for each of the 8 symptoms scored - whereas aftertreatment the average was 1. Pollinex(R) Quattro therefore reduced the patients'average symptoms from 'moderate, interferes with everyday life' to 'mild, doesnot interfere with everyday activities'. This is real, tangible patient benefit. The relative improvement over placebo was 48%. The statistical significance wasvery high, with a 'p score' (a measure of confidence that the result was notmere chance) of less than 0.01. The generally accepted threshold forsignificance is 0.05. The study also clearly demonstrated the positive contribution made to allergyvaccines by MPL(R), our patent-protected adjuvant. A further assessment of thisstudy looked at the patients' quality of life. Allergic Rhinoconjuntivitis, orhay fever, is known to have bad effects on sufferers beyond the nose and eyesymptoms typically measured as the pivotal end-point of the studies. Theseelements contribute to the most relevant thing for patients - the interruptionto their ability to participate fully in everyday life. Pollinex(R) Quattroshowed statistically significant improvement over placebo on the important'practical problems' and 'overall assessment' scores. R204 was the first study of its kind in allergy vaccination and we hope that oursuccess with this well-controlled method of testing allergy vaccines will leadto increased sponsor and regulator acceptance of the EEC as a useful alternativeto relying on natural pollen flight to provide the allergen challenge. Because allergy vaccines act at the immunological level, correcting theimbalances which underlie allergy, they are considered to confer long-termbenefit - and indeed, doctors normally stop treatment after three to five yearsand observe that the patients' reduced symptoms and use of medication ismaintained into the following years. As part of our investigation of Pollinex(R)Quattro we are interested to know how much of the protection offered to thepatients after three weeks (far faster than any other vaccine on the market) isretained after 12 months and whether re-treating the patients gives incrementalbenefit. This is the purpose of R205, a follow-up study to R204, where the samepatients were invited to return to the EEC and potentially have a second year'streatment. This study was commenced in June and is due to be completed inDecember 2006. Regulatory These two studies are merely part of an extensive pre-Phase III programmeAllergy Therapeutics has completed in the past year. All our clinical work isultimately aimed at one objective: the registration of Pollinex(R) Quattro inall the major markets, allowing it to be offered to the 150 million people whoare estimated to suffer from allergic rhinitis across the world. We made a majorstep in this direction when we attended an 'End of Phase II' meeting with the USFDA at the end of June. This meeting was for the FDA to consider the pre-PhaseIII data and the Company's proposals for Phase III for Pollinex(R) QuattroGrasses. The outcome of this meeting was very favourable, with the FDA acceptingour readiness to move into Phase III and conduct one large, well-controlledstudy in North America as the basis for registration in the USA. We haveconcurrently been working with EU authorities to progress to EU-wideregistration and have had our first contacts with the Japanese PMDA where wewere able to establish their view on our development programme and the nextsteps required on the path to registration in Japan. Pollinex(R) Quattro is theonly allergy vaccine in truly world-wide development. We believe we will be'first in class' onto the major markets of the world, and that the product has aclear 'best in class' profile for patients, payers and physicians. Manufacturing Our Supply Operations strategy has four key aims: 1. to increase capacity and flexibility; 2. to introduce a new Pollinex(R) Quattro manufacturing capability; 3. to gain formal FDA approval of the manufacturing plant in time for product launches; 4. to support the growth of the core business. This strategy is underpinned by a capital investment programme of over £5m overthe next 3 years. These aims are being implemented initially by commissioning an additionalfacility to liberate the space required for manufacturing, packaging, Qualityand Science, and administrative accommodation for the projected business growth,compliance needs and product launch requirements. The key objectives and milestones required to deliver our supply operationsstrategy have been carefully planned, including the ongoing recruitment ofpeople with the key skills required in a highly regulated aseptic environmentfor the manufacture of injectible products. Such resources are required insupport of the R&D timelines and, in recognition of the lead-time to recruit andtrain the best people, in readiness for our planned growth and exciting productlaunches. These timely investments in resources will impact costs. Inparticular, direct headcount will inevitably increase in the short term.However, our indirect-to-direct ratio will improve and positively impact ourmargins in the mid to long term, when additional sales volumes have the effectof reducing our unit costs. The strategy in Supply Operations is working and already delivering significantbusiness benefits, not least the improvement in Customer Service performance insupport of the core business. Sales and marketing; financial During the year Allergy Therapeutics increased its net sales by 14% to £23.6million and made progress in all its markets. This was achieved despite supplyproblems encountered where key products went out of stock owing primarily toprecedence being given to the materials being manufactured for clinical trials -21% of all batches were manufactured for this purpose in 2005/6. New officeswere also opened to enter the Austrian, UK, Polish, Czech and Slovak markets;this is part of our programme to expand the EU commercial infrastructure. Weremain determined to have a significant presence in all the key EU markets by2009, in time for the launch of registered Pollinex(R) Quattro. From the financial point of view, the highlight of the year was undoubtedly the£19 million share placing we completed in May. With net proceeds of £18.3million raised primarily in the London market, we increased our access to liquidresources to £24 million. The providers of these funds share the management'sfirm belief in the value of the MPL(R) pipeline, underpinned by a solid corebusiness generating sales and cash before the future investment activities. We have had a year of achievement. Allergy Therapeutics is now in a strong,unique position, with an advanced R&D programme and a core business beingprepared to exploit the opportunities, which we anticipate will flow from thedevelopment of Pollinex(R) Quattro. I am pleased by the progress we are making, assembling the components requiredto make the most of the assets we have so painstakingly developed. Ourchallenges are excellent ones to have: those of building on strength andmaximising the benefits of our assets for our shareholders and otherstakeholders which, satisfyingly, include the patients whose lives will beimproved thanks to our efforts. Keith CarterChief Executive Officer11 September 2006 Financial Review The following review should be read in conjunction with the Group's consolidatedfinancial statements and related notes appearing elsewhere in this annualreport. Turnover For the year ended 30 June 2006 total gross sales increased by 7% to £24.4m(2005: £22.9m); after statutory rebates in the German market net sales were£23.6m (2005: £20.6m) an increase over the previous year of 14%. Own markets The Group competes directly in 8 European markets, including 3 of Europe's 4most important for allergy vaccination: Germany, Italy and Spain. The Group has the third largest allergy vaccine company in Germany, which is thelargest market in the world for 'finished form' allergy vaccines. The allergyvaccine market in Germany was affected during the year, as doctors reacted tonew rules over their spending and reimbursement for treatment, slowing the rateof market growth to 7% (2005: 30%). Company gross sales in Germany were £17m(2005: £16.4m), an increase over the previous year of 4%, and less than expecteddue to some supply difficulties as a consequence of the demands placed upon themanufacturing facility in preparing material for clinical trials. Action has nowbeen taken to minimise the repetition of these supply issues. The rebate onpharmaceutical sales, which is market wide, was decreased in January 2005 to 6%from the 16% in force the preceding year. This has significantly reduced coststo the Group, since approximately 70% of sales originate in Germany, to a chargeof £0.8m for the year (2005: £2.3m). However, in a further change to the rules,on 1 May 2006 it was announced that any price rise since 1 November 2005 wouldbe added to the rebate, thus increasing costs. In Italy and Spain the Group has continued to increase its market share. InItaly annual sales were £2.3m (2005: £2.1m) an increase of 10% and in Spainsales were £1.5m (2005: £1.4m) an increase of 7%. Both of these markets wereaffected by the supply difficulties highlighted earlier. New operations in the UK, the Czech and Slovak Republics, Poland and Austriawere set up during the year and contributed £0.9m to sales. Licensees The Group also sells through licensees and distributors, accounting for 11% ofthe gross sales. Total sales for the year were £2.7m (2005: £2.9m) a decrease of7% on the previous year. Included in licensee sales are milestone receipts fromthe Company's Canadian licensee for Pollinex(R) Quattro; in the year threemilestones totalling £0.8m (2005: £1m) were received, triggered by reachingcertain development activities. Product sales The Group's flagship product, Pollinex(R) Quattro continued to sell well,despite difficult market conditions and supply problems, with gross sales of£7.7m (2005 £7.2m) an increase of 7% over the previous year. Cost of sales and net operating expenses In general, manufacturing costs have increased as a result of higher fuel costsand an increase in compliance with recommended good manufacturing practice(GMP). However costs increased further as the headcount in the manufacturingarea increased by 25 full time equivalents, an increase of 25% in the year, tosupport the growth of the business and prepare for world-wide market launches ofPollinex(R) Quattro. Moreover, investments in new plant and machinery and asecond manufacturing facility has led to increased depreciation costs. Thisinvestment will help provide greater capacity for the current named-patientsales of Pollinex(R) Quattro, whilst at the same time enabling the existingbuilding to be upgraded without interfering with supply. As a consequence of theenvironmental cost increases and improvements for the future, cost of goods soldwas £6.5m (2005: £4.9m) an increase of 32% over the previous year. Investments in the commercial strategy, including new market spend of £0.7m andthe creation of a business development function plus continued support forexisting markets created uplift in the marketing and promotion spend by 22% to£9.8m (2005: £8.0m). Administrative expenses have increased by 7% to £4.6m(2005: £4.3m) with the inclusion of a provision for the 2005 Long Term IncentivePlan. As discussed in the CEO's statement, the development programme forPollinex(R) Quattro was initiated in the preceding year and, as the programmehas moved forwards towards Phase III, the costs have increased in the year by71% to £9.6m (2005: £5.6m). Most of the activity relates to the extensive PhaseII programme for Grass, Tree and Ragweed. Results of operation As a consequence of investment in the development programmes in preparation forthe launch of Pollinex(R) Quattro on a world-wide basis the Group recorded aloss on ordinary activities before taxation of £6.1m (2005: loss £1.9m).However, before development costs and rebates, the operating profit includingmilestones was £3.7m (2005: £5.5m), which allows for a more reasonableappreciation of the core business performance this year; the reduction in profithighlighting that preparation is now well underway for the manufacturinginfrastructure and commercial team to be ready for market launches of Pollinex(R) Quattro. Taxation As a result of its investment in research and development, the Company hasbenefited from making R&D claims. These claims have given the Company enhanceddeductions for tax purposes and the possibility of benefiting from the receiptof R&D tax credits. A R&D tax credit has been claimed for the year ending June05. The Budget announcement in April 2006 put forward proposals to revise thedefinition for small and medium sized entities regarding the number ofemployees; the number being increased from 250 to 500. The Group's averageheadcount for this year has increased to 275, lifting it above the current 250threshold for the first time, so allowing it to make a R&D tax credit claim forthe year. The Budget proposals have yet to be approved by the EuropeanCommission, however, if passed the Company may be able to make further R&D taxcredit claims in the future. The Group in total has losses to carry forward of £23.3m, although in Germany itis likely that corporation taxes will fall due before other entities in theGroup. Net assets Net assets at 30 June 2006 were £32.7m (2005: £20.1m), an increase of £12.6m dueprimarily to the £18.3m net proceeds raised from the placing of new shares inMay 2006. 19,000,000 new ordinary shares were issued, having been placed withexisting and new investors. This additional capital will primarily fund theCompany's development pipeline of innovative ultra-short course allergyvaccines, Pollinex(R) Quattro. The new shares rank pari passu with the existingshares. Following admission of the new shares the Company has 81,950,632ordinary shares in issue. Intangible assets comprise goodwill and know-how and continue to be amortisedover 15 years. Capital expenditure on tangible fixed assets in the year was £2.2m (2005;£0.9m); contributing to the increase in the value of tangible fixed assets to £3.6m from £2.1m. The main component of this spend (£0.9m), the development of the second manufacturing unit in Worthing, will equip the Company with the appropriate processing capability to meet the anticipated post-registration increased volumes of Pollinex(R) Quattro for the US and European markets. Other expenditure typically included upgrades to plant and machinery. In order to manage better demand from the markets higher levels of key stockitems are being held, increasing the stock value by 37% during the year to £3.7m(2005: £2.7m) Debtors falling due within 1 year increased marginally by 13% to£3.6m (2005: £3.2m) due to higher VAT balances. Creditors falling due within 1 year are lower at the year end by 20% to £4.9m(2005: £6.1m), primarily due to an increase in accruals relating to developmentactivities at the end of the preceding year. Capital structure The Group finances its operations through cash generated from its core business,the net proceeds raised from the placing of new shares in May 2006 and banklines. The Group's funding requirements depend on a number of factors, including theGroup's product development programmes, which increased further in activity thisyear and are set to rise further in the following financial year. The Groupcurrently has no debt on its balance sheet but having agreed new bank lines willconsider using them for working capital finance in the future as a means offinancing its core business growth. Cash flows As at the 30 June 2006 cash totalled £23.9m, an increase of £8.8m from £15.1m at30 June 2005 due primarily to the net proceeds of £18.3m raised from the placingof new shares. For the year, net cash outflow from operating activities amountedto £8.1m (2005: nil). Net cash outflow includes significant product developmentcosts of £9.6m and strategic investments in manufacturing and commercialinfrastructure. Ian PostlethwaiteFinance Director11 September 2006 Consolidated Profit and Loss Accountfor the year ended 30 June 2006 Year ended Year ended Year ended Year ended 30 June 2006 30 June 2006 30 June 2005 30 June 2005 Note £'000 £'000 £'000 £'000 Turnover 2 23,558 20,606 Cost of sales (6,513) (4,853) -------- --------Gross profit 17,045 15,753 Distribution costs (9,833) (8,012)Administrative expenses - other (4,572) (4,303)Research and development costs (9,560) (5,620)Exceptional costs 4 - (614) ------- ------- Administrative expenses (14,132) (10,537) Other operating income 260 378 -------- --------Operating loss (6,660) (2,418) Interest receivable and similar income 545 531Interest payable on loans and overdrafts (4) (42) ------- ------- 541 489 -------- --------Loss on ordinary activities before tax 3 (6,119) (1,929) Tax on loss on ordinary activities 7 - - -------- --------Retained loss for the financial year 20,21 (6,119) (1,929) ======== ======== Basic loss per share 9 (9.3p) (3.4p) All amounts relate to continuing activities Consolidated Balance Sheetat 30 June 2006 Note 30 June 2006 30 June 2005 £'000 £'000Fixed assetsIntangible assets 10 Goodwill 2,326 2,617 Other intangible assets 829 951 -------- -------- 3,155 3,568 Tangible assets 11 3,637 2,111 -------- -------- 6,792 5,679Current assetsStocks 13 3,651 2,741Debtors: amounts falling due within one year 14 3,577 3,160 Cash at bank and in hand 23,860 15,080 -------- -------- 31,088 20,981Creditors: amounts falling due within one year 15 (4,939) (6,121) -------- --------Net current assets 26,149 14,860 -------- --------Total assets less current liabilities 32,941 20,539 Creditors: amounts falling due after one year 16 (239) (455) -------- --------Net assets 32,702 20,084 ======== ======== Capital and reservesCalled up share capital 19 92 73Share premium account 20 33,173 14,924Other reserves - shares issued by subsidiary 20 40,128 40,128Other reserves - shares held in EBT 20 (60) (322)Other reserves - Long Term Incentive Plan 20 178 -Profit and loss account 20 (40,809) (34,719) -------- --------Shareholders' funds 21 32,702 20,084 ======== ======== These financial statements were approved by the board of directors on 11 September 2006 and were signed on its behalf by: K Carter I PostlethwaiteChief Executive Officer Finance Director Company Balance Sheetat 30 June 2006 30 June 2006 30 June 2005 Note £'000 £'000Fixed assetsInvestments 12 51 - -------- -------- 51Current assetsDebtors: amounts falling due within one year 14 14 6 Creditors: amounts falling due within one year 15 (312) (239) -------- --------Net current liabilities (298) (233) Total assets less current liabilities (247) (233) -------- --------Net liabilities (247) (233) ======== ========Capital and reservesCalled up share capital 19 92 73Share premium 20 33,173 14,924Other reserve - shares held in Employee Benefit Trust 20 (60) (322)Other reserve - Long Term Incentive Plan 20 178 -Profit and loss account 20 (33,630) (14,908) -------- --------Shareholders' deficiency (247) (233) ======== ======== These financial statements were approved by the board of directors on 11 September 2006 and were signed on its behalf by: K Carter I PostlethwaiteChief Executive Officer Finance Director Consolidated Cash Flow Statementfor the year ended 30 June 2006 Year to Year to Year to Year to 30 June 2006 30 June 2006 30 June 2005 30 June 2005 Note £'000 £'000 £'000 £'000 Cash outflow from operating activities 22 (8,099) (15) Returns on investment andservicing of finance Interest received 545 531 Interest paid (4) (42) ------ ------- 541 489 Capital expenditure andfinancial investmentPurchase of tangible fixed assets 11 (2,192) (903) ------- -------Cash outflow before financing (9,750) (429) Financing 23Gross funds raised on issue of shares 19,000 16,000 Bank loans repaid - (945) Sale of EBT shares 262 51 Expenses paid in connection with issue of shares (732) (1,054) ------ ------- 18,530 14,052 ------- ------- Increase in cash in year 8,780 13,623 ======= ======= Reconciliation of Net Cash Flow to Movement in Net Funds Year to Year to 30 June 2006 30 June 2005 £'000 £'000 Increase in cash in the year 8,780 13,623Net loans repaid - 945 ------ ------ Movement in net funds in year 24 8,780 14,568Net funds at beginning of year 15,080 512 ------ ------Net funds at end of year 24 23,860 15,080 ====== ====== Consolidated Statement of Total Recognised Gains and Lossesfor the year ended 30 June 2006 Year to Year to 30 June 2006 30 June 2005 £'000 £'000 Loss for the financial year (6,119) (1,929) Currency translation differences on foreign currency net investment 29 (60) ------- -------Total recognised gains and losses relating to the year (6,090) (1,989) ======= ======= Notes to the Financial Statements 1 Accounting policies Change in accounting policies In preparing the financial statements for the current year, the Company hasadopted the following Financial Reporting Standards: - FRS 21 'Events after the Balance Sheet date (IAS 10)'; and - the presentation requirements of 'FRS 25 Financial Instruments: Disclosure and Presentation (IAS 32)'. Neither standard has had an impact on the Group's financial statements. Basis of preparation These financial statements have been prepared under the historical convention ofaccounting and in accordance with applicable UK accounting standards. Theaccounts are prepared on a going concern basis. Basis of consolidation The consolidated financial statements have been prepared using merger accountingprinciples and include the financial statements of the Company and itssubsidiary undertakings made up to 30 June 2006. "Other reserves - shares issued by subsidiary" relates to the premium on sharespreviously issued by Allergy Therapeutics (Holdings) Ltd. The profit and loss reserve includes all profits and losses for the Groupformerly headed by Allergy Therapeutics (Holdings) Ltd prior to its merger withthe Company in October 2004. Goodwill Purchased goodwill (representing the excess of the fair value of theconsideration given over the fair value of the separable net assets acquired)arising on consolidation in respect of acquisitions is capitalised. Positivegoodwill is amortised to nil by equal instalments over its estimated useful life(15 years). Intangible fixed assets and amortisation Intangible fixed assets are valued at cost. Non-competing know-how is amortisedover 4 years reflecting its estimated useful life to the Group. Acquiredtrademarks, licences, patents and manufacturing know-how are capitalised andamortised over their estimated useful economic lives (15 years). Any developmentcosts which are incurred by the Group and are associated with an acquiredtrademark, licence, patent and know-how are written off to the profit and lossaccount when incurred. Depreciation All assets except land are depreciated. Depreciation has been provided on astraight line basis in order to write off the cost less the estimated residualvalue of depreciable fixed assets over their estimated useful lives. The rates applicable are: Plant and machinery - 5 - 10 yearsFixtures and fittings - 5 yearsMotor vehicles - 4 yearsComputer equipment - 3-7 yearsBuildings - 10 years Operating leases Costs in respect of operating leases are charged on a straight line basis overthe lease term. Pension The Group operates a private personal pension for employees in the UK andGermany. The assets of the UK scheme are held separately from those of the Groupin an independently administered fund. The amount charged against profitsrepresents the contributions payable to the scheme in respect of the accountingperiod. The pension liability in Germany is 'insured' through a reinsurancecontract with an independent insurance company. Stock valuation Stocks have been valued at the lower of cost and net realisable value. Costsinclude materials, direct labour and an appropriate proportion of manufacturingoverheads based on normal levels of activity. Research and development Laboratory equipment used for research and development is capitalised as plantand equipment and written off in accordance with the Group's depreciationpolicy. Other research and development expenditures are written off in the yearthey occur. Foreign currencies Transactions in foreign currencies, including those covered by forward exchangecontracts, are recorded using the rate of exchange ruling at the precedingmonth-end. Monetary assets and liabilities denominated in foreign currencies aretranslated using the rate of exchange ruling at the balance sheet date and thegains or losses on translation are included in the profit and loss account. The assets and liabilities of overseas subsidiary undertakings are translated atthe closing exchange rates. Profit and loss accounts of such undertakings areconsolidated at the average rates of exchange during the period. Gains andlosses arising on these translations are taken to reserves. Deferred taxation Deferred tax is recognised without discounting in respect of all timingdifferences, in the following year, between the treatment of certain items fortaxation and accounting purposes, which have arisen but not reversed by thebalance sheet date except as otherwise required by FRS 19. Turnover Turnover represents the amounts (excluding value added tax) derived from theprovision of goods and services to third party customers, net of statutoryrebates paid in Germany. Revenue recognition Revenue is recognised when contractual obligations are met and a right toconsideration is earned, normally when goods are despatched or royalties becomedue. Where a right to consideration is dependent on the occurrence of a criticalevent (i.e. when the Group has fulfilled all relevant conditions to be entitledto the revenue), such as for milestone payments, revenue is not recognised untilthat event occurs. Cash and liquid resources Cash, for the purpose of the cash flow statement, comprises cash in hand anddeposits repayable on demand, less overdrafts payable on demand. Liquid resources are current asset investments which are disposable withoutcurtailing or disrupting the business and are either readily convertible intoknown amounts of cash at or close to their carrying values or traded in anactive market. Employee Benefit Trust (EBT) The financial statements include the assets and liabilities of a trust, set upfor the benefit of the Group's employees. The employee benefit trust has acquired shares in the Company and these are deducted from shareholders funds on the balance sheet within 'other reserve' initially at the cost that the shares were acquired. The net proceeds received from the issue of these shares through the exercise of options are recognised through this reserve. Investments Investments are included at cost less amounts written off. Financial instruments Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrument isany contract that evidences a residual interest in the assets of an entity afterdeducting all of its financial liabilities. Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity. R&D tax credits R&D tax credits are recognised in the profit and loss account when received. 2 Turnover Turnover is attributable to the principle activities of the Group, as defined inthe Directors' Report. An analysis of turnover by geographical market and bycountry of origin is given below. Year to Year to 30 June 2006 30 June 2005 £'000 £'000By geographical destination Germany 16,155 14,175Rest of Europe 5,666 4,714 North America 1,430 1,371Asia 307 346 ------ ------ 23,558 20,606 ====== ====== By country of origin Germany 16,155 14,175Rest of Europe 3,823 3,481UK 3,580 2,950 ------ ------ 23,558 20,606 ====== ====== 3 Loss on ordinary activities before tax Loss on ordinary activities before tax Year to Year tois stated after charging: 30 June 2006 30 June 2005 £'000 £'000Auditors' remuneration: Group audit 89 62 Company audit 7 7 Non-audit fees paid to the auditor in respect of other services: Tax compliance and assurance 31 26 Review of interim statements 6 5 Transfer pricing and international tax projects 35 60Depreciation of tangible assets 668 436Amortisation of intangible assets 450 448Research and development 9,560 5,620Operating lease rentals - plant & machinery 7 7 - other 592 625Foreign currency exchange gains (350) (262) In addition to the June 2005 charges above, an amount of £97,000 was paid to theauditors for work as reporting accountants in connection with the Company'sadmission to AIM and the issue of shares. The costs were offset against theshare premium account as part of the cost of issuing shares in the year. 4 Exceptional items Year to Year to 30 June 2006 30 June 2005 £'000 £'000 Cost of consultancy services provided in 2000, payable on an initial public offering (IPO) or 'exit'. - 614 Consultancy services included assistance with the development of a businessstrategy regarding entry into the US market. 5 Remuneration of directors Year to Year to 30 June 2006 30 June 2005 £'000 £'000 Directors' emoluments 789 805Pension contributions 74 73 ----- ----- 863 878 ===== ===== Emoluments of highest paid director (£'000) 189 207 Group contribution to pension plan:Pension contributions paid by the Group for highest paid director (£'000) 20 20 The number of directors for whom pension payments are made 5 5 Gains made by directors on exercise of options (£'000) 2,395 - Two (2005: nil) directors exercised options in the year albeit the options wereexercised prior or after the date they were appointed or resigned as directors. 6 Staff numbers and costs The average number of full-time equivalent persons employed by the Group(including directors) during the year, analysed by category was as follows: Number of employees Year to Year to 30 June 2006 30 June 2005 R & D, Marketing and Administration 98 81Sales 59 52Production 118 96 ------ ----- 275 229 ====== ===== The aggregate payroll costs for these persons were as follows: Year to Year to 30 June 2006 30 June 2005 £'000 £'000 Aggregate wages and salaries 8,605 7,292Social security costs 1,394 1,168Other pension costs 378 382 ------ ----- 10,377 8,842 ====== ===== The average number of employees involved in pension schemes across the Group for2006 was 128 (2005: 127). 7 Tax on loss on ordinary activities There is no tax charge arising on the results for the year. Year to Year toCurrent tax reconciliation: 30 June 2006 30 June 2005 £'000 £'000 Loss before tax (6,119) (1,929) _______ _______ Tax at standard rate of 30% on loss for year (1,836) (579)Expenses not deductible for tax purposes 33 99Capital allowances in excess of depreciation (177) (104)Overseas adjustments not taxable - (60)Utilisation of tax losses (47) (419)Tax losses not utilised 3796 1,824Allowances for R&D expenditure (1036) (593)Relief for shares acquired by employees & directors (733) (168) ------- ------- Current tax charge - - ======= ======= Unrelieved Group losses of £23m (2005: £16m) remain available to offset againstfuture taxable profits. These comprise non-trading losses of £3m and tradinglosses of £20m. 8 Loss for the financial period The parent company has taken advantage of section 230 of the Companies Act 1985and has not included its own profit and loss account in these financialstatements. The parent company's loss for the period was £18,722,000. 9 Loss per share Year to Year to 30 June 2006 30 June 2005 Loss for the year (£'000) (6,119) (1,929) Weighted number of shares in issue 66,117,299 57,471,180 Basic loss per share (pence) (9.3) (3.4) 10 Intangible fixed assets - Group Non- Goodwill Manufacturing competing Other Total at £'000 know-how know-how intangibles 30 June 2006 £'000 £'000 £'000 £'000 CostCost brought forward 4,906 1,000 2,963 953 9,822 Exchange difference 71 - 83 7 161 ------- ------- ------- ------- -------Balance carried 4,977 1,000 3,046 960 9,983forward _______ _______ _______ _______ _______Amortisation Balance brought forward 2,289 468 2,963 534 6,254Charge for year 328 69 - 53 450Exchange difference 34 - 83 7 124 ------- ------- ------- ------- -------Balance carried forward 2,651 537 3,046 594 6,828 ------- ------- ------- ------- -------Net book valueAt 30 June 2006 2,326 463 - 366 3,155 ======= ======= ======= ======= ======= At 30 June 2005 2,617 532 - 419 3,568 ======= ======= ======= ======= ======= The fair values of intangible assets acquired as part of a business aredetermined by the realisable market value. The directors consider eachacquisition separately for the purpose of determining the amortisation period ofany goodwill and other intangible assets that arise. The following sets out theperiods over which intangible assets are amortised and reasons for the periodschosen: • Goodwill, manufacturing know-how and other intangible assets arising on the acquisition of Allergy Therapeutics Limited and Bencard Allergie GmbH in June 1998 have been amortised over 15 years. The directors have estimated that this is the useful economic life of the assets, reflecting the expected financial benefits. 'Other intangibles' comprises trademarks and associated acquisition costs. 11 Tangible fixed assets - Group Plant & Fixtures & Motor Computer Freehold Machinery Fittings Vehicles Equipment Land & Total at Buildings 30 June 2006 £'000 £'000 £'000 £'000 £'000 £'000 Cost Balance brought forward 2,282 743 8 2,842 252 262 6,137Additions 689 1,210 - 293 - 2,192Disposals (35) (3) - (66) - (104)Exchange difference 5 10 - 21 8 44 ----- ----- ----- ----- ------- -----Balance carried forward 2,941 1,960 8 3,090 270 8,269 ===== ===== ===== ===== ======= =====DepreciationBalance brought forward 1,251 386 6 2,206 177 4,026Charge for period 159 176 1 300 32 668Disposals (31) (3) - (59) - (93)Exchange difference 4 4 - 17 6 31 ----- ------ ----- ----- ------- -----Balance carried forward 1,383 563 7 2,464 215 4,632 ===== ====== ===== ===== ======= =====Net book valueAt 30 June 2006 1,558 1,397 1 626 55 3,637 ===== ====== ===== ===== ======= ===== At 30 June 2005 1,031 357 2 636 85 2,111 ===== ====== ===== ===== ======= ===== 12 Investments - Company Shares in subsidiary undertaking £'000 CostBrought forward and carried forward 51 =====ProvisionBrought forward (51)Adjustment in year 51 -----Carried forward - ===== Net book valueAt 30 June 2006 51 ===== The provision was reversed in the year as the subsidiary in which shares areheld now has sufficient net assets to cover the investment. At 30 June 2006 the Company's subsidiary undertakings were: Subsidiary undertaking Country of Principal activity Percentage of Class of incorporation shares held shares held Allergy Therapeutics UK Holding company 100% ordinary and(Holdings) Ltd deferred Allergy Therapeutics UK Manufacture and sale of 100% ordinary(UK) Ltd pharmaceutical products Allergy Therapeutics UK Dormant 100% ordinaryDevelopment Ltd Bencard Allergie GmbH Germany Sale of pharmaceutical 100% ordinary products Bencard Allergie Austria Sale of pharmaceutical 100% ordinary(Austria) GmbH products Allergy Therapeutics Italy Sale of pharmaceutical 100% ordinaryItalia s.r.l. products Allergy Therapeutics Spain Sale of pharmaceutical 100% ordinaryIberica S.L. products Allergy Therapeutics Canada Dormant 100% ordinary(Canada) Ltd Allergy Therapeutics (Holdings) Ltd is owned directly by Allergy Therapeuticsplc. All other subsidiary undertakings except Bencard Allergie (Austria) GmbHare owned by Allergy Therapeutics (Holdings) Ltd. Bencard Allergie (Austria)GmbH is owned by Bencard Allergie GmbH. 13 Stocks Group 30 June 2006 30 June 2005 £'000 £'000 Raw materials and consumables 1,081 961Work in progress 2,029 1,252Finished goods 541 528 ----- ----- 3,651 2,741 ===== ===== There is no material difference between the value of stock above and itsreplacement cost. 14 Debtors Group Company 30 June 2006 30 June 2005 30 June 2006 30 June 2005 £'000 £'000 £'000 £'000Amounts falling due withinone yearTrade debtors 1,777 2,206 - -Taxation and social security 435 55 - -Prepayments and accrued income 1,095 348 14 -Other debtors 270 551 - 6 ----- ----- ----- ----- 3,577 3,160 14 6 ===== ===== ===== ===== 15 Creditors: amounts falling due within one year Group Company 30 June 2006 30 June 2005 30 June 2006 30 June 2005 £'000 £'000 £'000 £'000 Trade creditors 1,671 1,478 - - Taxation and social security 893 372 93 -Other creditors 150 485 - -Accruals and deferred income 2,225 3,786 219 239 ----- ----- --- --- 4,939 6,121 312 239 ===== ===== === === 16 Creditors: amounts falling due after more than one year Group 30 June 2006 30 June 2005 £'000 £'000 Other long term creditors 239 455 ---- ---- 239 455 ==== ==== 17 Financial instruments and derivatives The Group uses financial instruments comprising borrowings, cash and variousitems, such as trade debtors and trade creditors that arise directly from itsoperations. The main purpose of these financial instruments is to raise financefor the Group's operations. The Group also enters into derivative transactions such as forward foreigncurrency contracts. The purpose of such transactions is to manage the currencyrisks arising from the Group's operations and its sources of finance. The main risk arising from the Group financial instruments is foreign currencyrisk while to a lesser extent there is interest rate risk and liquidity risk.The board reviews and agrees policies for managing each of these risks and theyare summarised below. These policies have remained unchanged from previousyears. All transactions in derivatives, principally forward foreign currency contracts,are undertaken to manage the risks arising from underlying business activitiesand no transactions of a speculative nature are undertaken. It is, and has been in previous years, the Group policy that no trading infinancial instruments shall be undertaken. Short-term debtors and creditors Short-term debtors and creditors have been excluded from all the followingdisclosures, other than the currency risk disclosures. Currency risk The Group does not hedge its exposure of foreign investments held in foreigncurrencies. The Group is exposed to translation and transaction foreign exchange risk. Inrelation to translation risk the repatriation of assets is insignificant and theonly exposure is revaluation of the assets at year end for accounting purposes.Therefore, group policy does not deem it necessary to cover this risk. Transaction exposures are hedged, mainly using the forward hedge market. TheGroup seeks to hedge its exposures using a variety of financial instruments,with the objective of minimising fluctuations in exchange rates on futuretransactions and cash flows. The majority of the Group's revenue is denominated in Euros. A large part of themanufacturing cost base is denominated in Sterling but some R&D and other costsare denominated in US Dollars, Canadian Dollars and Euros. The Group policy isto eliminate approximately 50 per cent of currency exposures on a rolling twelvemonth basis through the use of forward currency contracts. Gains and losses on hedges The Group policy is to hedge exposures to currency risk. The table below showsthe extent to which the Group has unrecognised and/or deferred gains and lossesin respect of financial instruments used as hedges at the beginning and end ofthe year. The table also shows the amount of gains and losses which have beenincluded in the profit and loss account for the year and those that are expectedto be recognised in future profit and loss accounts. Gains Losses Total net gains/ (losses) £'000 £'000 £'000 Unrecognised gains and losses on hedges at 1 July 2005 207 - 207 Gains and losses arising in previous years that were recognised in 2005/06 (207) - (207) Unrecognised gains and losses brought forward - - - Gains and losses on hedges arising in 2005/06 52 - 52 Gains and losses on hedges arising in 2005/06 that were recognised in the year (46) - (46) ----- ----- -----Unrecognised gains and losses on hedges at 30 June 2006 6 - 6 ===== ===== ===== Of which:Gains and losses expected to be recognised in 2006/07 6 - 6 Interest rate risk The directors do not consider that the business is exposed to material interestrate risk. The Group finances its operations through cash reserves. The cashreserves held by the Group since October 2004 have negated the need to usesignificant interest bearing short-term borrowings, whereas previouslyshort-term borrowings were held. Liquidity risk The Group seeks to manage financial risk by ensuring sufficient liquidity isavailable to meet foreseeable needs and to invest cash assets safely andprofitably. Surplus cash is invested in various deposit accounts to spread therisk and to generate a higher return of interest. The amounts below show the monetary assets held by the Group in currencies otherthan Sterling. GroupCurrency 30 June 2006 30 June 2005 £'000 £'000 Euro 1,446 883US Dollar 52 48Canadian Dollar 29 25Slovak Koruna 3 -Polish Zloty 1 - ----- ----- 1,531 956 ===== ===== Borrowing facilities The Group has undrawn committed borrowing facilities at 30 June 2006 of€362,000; £250,000 (2005: €362,000; £242,000), expiring within one year.Additional borrowing facilities of £4 million were agreed but not signed at 30 June 2006. 18 Deferred taxation Deferred tax assets have not been recognised due to the uncertainty of futureprofits. 19 Called up share capital 30 June 2006 30 June 2005 £'000 £'000AuthorisedEquity: 790,151,667 ordinary shares of 0.1p each 790 790Equity: 9,848,333 deferred shares of 0.1p each 10 10 ----- ----- 800 800 ===== ===== Allotted, called up and fully paidEquity: 81,950,632 ordinary shares of 0.1p each (2005: 62,950,632) 82 63Equity: 9,848,333 deferred shares of 0.1p each 10 10 ----- ----- 92 73 ===== ===== On 4 May 2006 19,000,000 ordinary shares of 0.1p each were issued for cashconsideration of £19,000,000. The difference between the consideration of£19,000,000 and the aggregate nominal value of £19,000 has been credited to theshare premium account. The deferred shares have no voting rights or dividend rights attached to them. Share optionsDetails of the share options over the Company's ordinary shares are as follows: At start of Granted Exercised Lapsed At end of Exercise Exercise Exercise year during in year year date from date to price year 5,600 - (800) - 4,800 0.1p 04/10/2004 22/12/2008 25,712 - (5,400) - 20,312 0.1p 04/10/2004 01/10/2009 37,438 - (12,400) - 25,038 0.1p 04/10/2004 01/10/2010 19,200 - (5,250) - 13,950 0.1p 04/10/2004 20/10/2010 250,000 - (50,000) - 200,000 0.1p 04/10/2004 02/01/2011 1,187,350 - - (200,000) 987,350 120p 31/07/2002(1) 31/07/2011 400,000 - - - 400,000 30p 03/06/2002 03/06/2012 2,000,000 - (1,000,000) - 1,000,000 0.1p 02/10/2002 02/10/2012 3,000,000 - (1,500,000) - 1,500,000 5p 17/12/2002(1) 17/12/2012 122,668 - (53,334) - 69,334 5p 17/12/2003(1) 17/12/2012 4,000,000 - - - 4,000,000 5p 18/12/2002(1) 18/12/2012 231,633 - (60,333) - 171,300 5p 04/10/2004 25/01/2013 150,000 - (50,000) - 100,000 45p 15/12/2003(2) 15/12/2013 2,384,004 - (353,323) (150,000) 1,880,681 45p 26/02/2005(1) 26/02/2014 230,000| - - - 230,000 45p 02/08/2005(1) 02/08/2014 2,200,001 - - (300,000) 1,900,001 100.4p 08/03/2008 08/03/2015 - 346,905* - - 346,905 64p 01/03/2009 01/09/2009 ----------- --------- ------------ --------- ---------- 16,243,606 346,905 (3,090,840)) (650,000) 12,894,671 =========== ========= ============ ========= ========== *Shares granted under the SAYE 2005 share plan. In addition, a total of 1,205,871 shares was provisionally allocated to the LTIP2005 share plan. This is the maximum contingent number of shares that could vestunder the terms of the plan. (1) One third of share options granted are exercisable from this date, one third from 12 months after this date and one third from 24 months after this date. (2) 30,000 share options granted are exercisable from this date and 10,000 are exercisable from 1st of each subsequent month until 01/12/2004. 20 Reserves Group Company Profit and loss account Profit and loss account £'000 £'000 At 30 June 2005 (34,719) (14,908)Retained loss for the year (6,119) (18,722)Currency translation profit on foreign currency investments 29 - -------- -------- At 30 June 2006 (40,809) (33,630) ======== ======== Group and Company Group Share premium account Shares issued by subsidiary £'000 £'000 At 30 June 2005 14,924 40,128 Premium on shares issued in the year 18,981 - Expenses paid in connection with share issue (732) - ------ ------ At 30 June 2006 33,173 40,128 ====== ====== Group and Company Group and Company Other reserve - LTIP Other reserve - EBT £'000 £'000 At 30 June 2005 - (322) Sale of shares by EBT - 262 Provision for LTIP 178 - ---- ----- At 30 June 2006 178 (60) ==== ===== 'Shares issued by subsidiary' relates to the share premium account of Allergy Therapeutics (Holdings) Ltd. The reserve arose as a result of the merger. At 30 June 2006 there were 2,173,269 shares in the Employee Benefit Trust with an aggregate cost of £60,000 which reduced the shareholders' funds accordingly. The shares will be allotted as employees exercise share options. The market value of the shares at 30 June 2006 was £2,151,536. 1,205,871 shares were provisionally allocated to the LTIP 2005 share plan. This is the maximum contingent number of shares that could vest under the terms of the plan. 21 Reconciliation of movement in shareholders funds Group Company Year to Year to Year to Year to 30 June 2006 30 June 2005 30 June 2006 30 June 2005 £'000 £'000 £'000 £'000 Loss for the financial year (6,119) (1,929) (18,722) (14,908)Other recognised gains and losses relating to the period (net) 29 (60) - - Issue of shares 19,000 16,000 19,000 16,051Transfer of EBT balance from subsidiary - - - (373)Sale of shares by EBT 262 51 262 51Long Term Incentive Plan 178 - 178 -Expenses paid in connection with share issue (732) (1,054) (732) (1,054) ------- ------- -------- -------Net addition to/(deduction from) shareholders' funds 12,618 13,008 (14) (233) Opening shareholders' funds 20,084 7,076 (233) - Closing shareholders' funds 32,702 20,084 (247) (233) 22 Reconciliation of operating loss to operating cash flow Year to Year to 30 June 2006 30 June 2005 £'000 £'000 Operating loss (6,660) (2,418)Depreciation 668 436Amortisation of intangibles 450 448Loss on disposal of fixed assets 10 5Effect of foreign exchange rate changes (20) (58)Provision for Long Term Incentive Plan 178 -Increase in stocks (910) (916)Increase in debtors (416) (875)(Decrease)/increase in creditors (1,399) 3,363 ------- -----Net cash outflow from operating activities (8,099) (15) ======= ===== 23 Analysis of financing Year to Year to 30 June 2006 30 June 2005 £'000 £'000 Repayment of loans - (945)Issue of ordinary shares (net of expenses) 18,268 14,946Issue of shares by EBT 262 51 ------ ------ 18,530 14,052 ====== ====== 24 Analysis of change in net funds At beginning of Cash flow At end of period period £'000 £'000 £'000 Cash at bank and in hand 15,080 8,780 23,860 ------ ----- ------ 15,080 8,780 23,860 ====== ===== ====== 25 Capital commitments Capital commitments at the end of the financial period, for which no provisionhas been made, are as follows: Group Group 30 June 2006 30 June 2005 £'000 £'000 1,191 436 ===== ===== Included in the above is £806,000 for new facilities and ongoing factoryrefurbishments in the UK (2005: £143,000) and £382,000 for new plant andmachinery (2005: £88,000). Other commitments: Between November 2005 and March 2006, 7 separate forward foreign exchangecontracts were arranged for the sale of €6,500,000 (£4,517,000) at future datesranging from 29 September 2006 to 20 February 2007. At the end of June 2006 aspot rate foreign exchange contract was arranged for the purchase ofCAD7,000,000 (£3,440,000) in July 2006. 26 Leasing commitments Operating lease payments amounting to £600,000 (2005: £366,000) are due withinone year. The leases to which these amounts relate expire as follows: Land and buildings Other 30 June 2006 30 June 2005 30 June 2006 30 June 2005 £'000 £'000 £'000 £'000In one year or less 17 58 2 45Between one and five years 170 42 301 204In five years or more 110 17 - - ----- ----- ----- ----- 297 117 303 249 ===== ===== ===== ===== 27 Contingent liabilities Allergy Therapeutics (UK) Ltd., a subsidiary of Allergy Therapeutics plc, hasguaranteed the deposits required for leases on company cars and rented officespace occupied by a fellow subsidiary, Bencard Allergie GmbH. The amount as at30 June 2006 was €78,000; £54,000 (2005: €107,000; £72,000). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Allergy Thera.