27th Feb 2008 07:00
Sinclair Pharma plc Interim Results - Highlights
Godalming, UK, 27 February 2007: Sinclair Pharma plc (SPH.L), the specialty pharma company, today announces its half yearly results for the six months ended 31 December 2007 and a summary of post-period activity.
Highlights Financial highlights * Revenues increased by 15% to ‚£10.4m (H1 FY07: ‚£9.1m). * Improved gross margin of 64% (H1 FY07: 63%). * Operating loss reduced ‚£0.9m (H1 FY07: ‚£2.6m loss).
* EBITDA loss before exceptional items reduced to ‚£1.6m (H1 FY07: ‚£2.4m).
* Loss per share reduced to 1.1p (H1 FY07: 3.1p loss per share).
Operating highlights
H1 saw a 15% increase in revenues despite delays in the US launch of Decapinoland flat sales of Atopiclair in the US. We have refocused the company tooptimise the management of our marketing network as well as streamlining ourown marketing operations in France, Italy and the UK. Line extensions andlaunches across operations in H1 have strengthened our portfolio of products.We continue to work with our US partner, Orapharma, on the new formulation ofDecapinol.There have been a number of new agreements signed with marketing partners inH1. These include the appointment of Dr Reddy's Laboratories, Inc. as Sebclairmarketing partner in the US. We have seen 13 further product launches throughmarketing partners across Europe.
Pipeline advancement
Sinclair has acquired products from Derma Omnium and Syrio Pharma for the Groupto sell through its own European sales operations and our partner network.There have been three new product registrations in the first half of the yearand post period. Sinclair is also approaching completion of development of ananti-wrinkle product with clinical trial back-up, and a product for intensivetreatment of infected gum pockets together with further product registrationsanticipated in the EU and US.
Steve Harris, Chairman of Sinclair Pharma plc, commented:
"These figures demonstrate Sinclair's continuing growth. We are committed togrowing sales in line with expectations during the second half of the year,while keeping costs under control. We have already seen a strong start to thesecond half, with a record order book." -ends-
For further information please contact:
Sinclair Pharma plc Tel: +44 (0)1483 410 600Dr Michael Flynn, CEOJerry Randall, CFOHalina Kukula, Investor Relations [email protected] MS&LAnna Mitchell / Joanna Whineray Tel +44 (0)20 7307 5346
A meeting and conference call for analysts will be held today at 9am at Landsbanki Securities (UK) Limited, Beaufort House, 15 St Botolph Street, London, EC3A 7QR. Please contact Anna Mitchell at Capital MS&L for further information, on Tel +44 (0)20 7307 5340.
Notes to editors:Sinclair Pharma plcSinclair Pharma plc is an international specialty pharmaceutical company. Ithas a growing sales and marketing operation that is already present in France,Italy, UK, Spain and Portugal, and a complementary marketing partner networkthat spans more than 80 countries.
Sinclair has proven expertise in acquiring or developing commercially attractive and undervalued products, registering these products and bringing them to market within a short time frame. The company focuses on niche therapeutic areas and its current portfolio includes products for dermatological conditions and oral health.
In April 2007, Sinclair completed a dual listing on the Official List of the London Stock Exchange and Euronext Paris.
"Safe Harbor" Statement under the US Private Securities Litigation Reform Actof 1995: Some or all of the statements in this document that relate to futureplans, expectations, events, performances and the like are forward-lookingstatements, as defined in the US Private Securities Litigation Reform Act of1995. Actual results of events could differ materially from those described inthe forward- looking statements due to a variety of factors.
Sinclair Pharma plc Half Yearly Results for the period to 31 December 2007
CHIEF EXECUTIVE'S REVIEW
The last six months has been a period of focus to allocate a greater proportionof our resource to sales, marketing and alliance management. We are continuingto increase our commercial focus in the second half of the year.Revenues increased by 15% compared to H1 FY07. Sinclair has deliveredconsistent revenue growth since the IPO in 2003, which has been driven both bysales of our products through marketing partners, and contributions from ouracquired sales & marketing companies. Historically our results have been biasedtowards H2 and we expect this to continue to be the case.
A further key focus is on Decapinol in the US. We are working with our US partner, Orapharma, on the new formulation and are intent on facilitating the US launch as early as possible.
Operations: Own sales and marketing operations
France:
Sinclair's French sales & marketing operation has gone through a period of review and streamlining, culminating with the appointment of a new experienced Managing Director Christophe Foucher, in January 2008.
We launched three new line extensions of existing dermatology products. In November 2007 we also had a pre-launch of Sebclair.
In November 2007, Sinclair acquired a new range of products for skindyspigmentation from Derma Omnium, the French pharmaceutical marketing company.This acquisition extends Sinclair's suite of products in this area and weexpect to be able to add these products to our portfolio for sale in our otherEuropean territories with immediate effect, subject to launch scheduling.
Italy:
Following last year's restructuring to focus on its core prescription dermatology products, our Italian business launched four new products in H1.
In December 2007, Sinclair also acquired a high quality portfolio of dermo-cosmetic products from the Italian company Syrio Pharma which further expanded the portfolio of dermatology products available for the Group.
In January 2008 we launched the acne product Papulex which was acquired as part of the CS Dermatologie acquisition.
UK:
Since its acquisition in September 2006, this business has contributed significantly to Sinclair's sales & marketing presence in its home market.
In September 2007 we launched our atopic dermatitis product Atopiclair and the radiation dermatitis product Xclair.
Operations: Marketing partner network
Sinclair now has a marketing partner network that spans more than 80 countriesincluding the main EU territories, the US, China, Russia and Latin America.Sinclair products have so far been launched in about half of these countries.In the remaining countries, our partners are in the registration process orpreparing to launch, providing the foundation for additional revenue growth. Wehave now built a substantial network of commercial partners and a managementstructure to optimise revenues and drive the growth of sales through thenetwork. The commercial partner network is managed by a dedicated team of`alliance managers' based in the UK, responsible for ensuring the distributorsmeet their obligations under the agreements and supported by product managersresponsible for generating and providing product related information andensuring that it is available for our marketing partners.
We have a healthy order book for sales to marketing partners that is growing in line with expectations.
Our commercial partners now include Orapharma Inc., Dr Reddy's, Bayer's Intendis, 3M ESPE and Graceway Pharmaceuticals.
Since December we have further strengthened our network with several new agreements.
The Middle East is also proving to be a rapid growth market for some of our dermatology products with sales to this region of derma cosmetic products in particular growing strongly.
A list of all Sinclair's marketing partners can be found at the Sinclair website at:
http://www.sinclairpharma.com/business_development.php
Products
Atopiclair¢â€ž¢
In December 2007, Atopiclair cream, for the treatment of atopic dermatitis, waslaunched by marketing partner Medisan in Hungary, and launched in Portugal byIntendis in January 2008. Four further Atopiclair launches are anticipated inH2.We anticipate that for the full year Atopiclair revenues will be less than inFY 2007, which was boosted by milestone payments and stock building in severalcountries. In the US there has been a significant reduction in the atopicdermatitis market compared with the previous year. However our US partnerGraceway has successfully maintained Atopiclair monthly sales levels whilst ourkey competitors - Elidel and Mimyx - have both seen a sales reduction ofapproximately 30%.
Patient satisfaction with Atopiclair remains high and we anticipate a further very positive clinical trial publication in a US journal on the use of Atopiclair in paediatric patients in this half year.
Sebclair¢â€ž¢
Sebclair¢â€ž¢ is for the treatment of seborrheic dermatitis. In September 2007, DrReddy's Laboratories, Inc. became exclusive Sebclair marketing partner in US.Under the agreement Sinclair will receive event related milestone payments.Upon commercialisation of the product, Sinclair will also receive royaltypayments based on net sales. Dr Reddy's is focused on building a presence indermatology in the US, a sector worth an estimated $5bn annually.
We have launched Sebclair ourselves in Italy, and introduced the product in preparation for launch in France. With timing subject to re-imbursement approval we anticipate launching Sebclair in the UK ourselves in this calendar year.
Decapinol‚®Decapinol‚®isfor the treatment and prevention of gum disease. As part ofSinclair's strategy to address the whole gum care market, a portfolio ofproducts is being developed that include the Decapinol technology. DecapinolSpray offers a convenient alternative to the oral rinse presentation, and hasbeen approved in the EU as a Medical Device Class IIa. Decapinol Toothpastewith fluoride and Decapinol Toothpaste gel with fluoride have also beenapproved in the EU.
Meanwhile, Sinclair is continuing to work with Orapharma on a revised formulation for the US market, and anticipates further launches of the Decapinol rinse, gel, toothpaste and spray within the EU in H2.
Aloclair‚®
In October 2007, marketing partner OMNI Preventive Care (a 3M ESPE Company),launched Aloclair (launched in US as brand name Ameseal) oral lesion reliefspray. Aloclair‚®is for the treatment of mouth ulcers. Sales of our Aloclair gelproduct are also growing well in the US through Sunstar Butler. In about 20countries in the long-term interests of the product we are renegotiating ourdistribution agreements for Aloclair and this has had an impact on H1 Aloclairrevenues as distributors reduce their stock levels however we anticipate asignificant increase in H2. We also anticipate launches of one or more of theAloclair range in three more countries during H2.
Pipeline
SPHR980
SPHR980 Sinclair's pipeline product for head lice, was registered as a medicaldevice in the EU in December 2007. This product is designed to meet a marketneed for a novel, safe and effective treatment for head lice. The OTC marketfor the five main EU territories and the US is worth an estimated ‚£120m.SPHR980 uses proprietary barrier technology to coat and suffocate head lice andtheir eggs, killing them and making them easy to remove. Sinclair applied itsexpertise in topical and barrier formulations to develop SPHR980, entering anew therapeutic area for the company. The product can be sold without aprescription in the EU and we anticipate first revenues in the next financialyear.SPHR900In January 2008, Sinclair announced the EU registration of its pipeline productSPHR900 for herpes simplex. SPHR900 is a proprietary topical treatment aimed atreducing the symptoms of herpes simplex cold sores and accelerating the healingprocess. The product is registered as Medical Device Class IIa and can be soldwithout a prescription in the EU. The OTC market for herpes simplex products inthe UK, France and Germany is valued at ‚£83m. In Spain and Italy, products forcold sores are commonly prescribed, opening up a new sector of the market forSinclair in these regions. SPHR900 is an important addition to the company'sproduct range and its commercialisation will contribute to our growing presencein the EU market.SPHO220In December, Sinclair announced EU registration of its pipeline product forsymptom relief for teething infants, SPHO220. Sinclair is now free to sell theproduct in all EU territories. SPHO220 has been designed to meet a market needfor symptom relief during teething, without the use of topical pharmacologicalagents in infants. SPH0220 builds on the proven, patented technology ofSinclair's existing mouth ulcer product, Aloclair. The market is currentlydominated by gels that contain the topical anaesthetic lignocaine/lidocaine, orthe analgesic choline salicylate. SPHO220 is free from these pharmacologicalagents. The formulation includes hyaluronic acid, which has demonstratedefficacy in maintaining the integrity of the oral mucosa (mouth lining) andproviding barrier-based pain relieving qualities. SPHO220 is registered as aClass IIa medical device and can therefore be sold without a prescription inthe EU. Sinclair plans to commercialise the product through marketing partners.
Clinical Update
In October 2007, Sinclair presented positive data at the World Congress of Dermatology on the following products: SPHD420 designed to treat acne; SPH911 for Corrective dermatology; Xclair to treat radiation dermatitis; SPHD400 Sinclair's pipeline psoriasis product and a poster on its atopic dermatitis study.
Further information can be found at: http://www.sinclairpharma.com/documents//WCD%20HA%20acne%203%20oct%2007%20Sinclair.pdf
Financial Review
Revenue for the six months ended 31 December 2007 increased by 15% to ‚£10.4m(2006: ‚£9.1m). This comprised revenue from our own sales & marketing operationsof ‚£6.7m (2006:‚£6.4m), up 4%, and marketing partner revenue of ‚£3.7m (2006: ‚£2.7m), up 39%.Revenue from our sales & marketing operations was helped by a full six monthcontribution from Ashbourne, acquired in September 2006, and by sales of ourown products, including the first UK revenues from Atopiclair, launched byAshbourne in September 2007. We anticipate a strong second half, boosted bycontributions from the new product ranges acquired, and from synergies betweenthese and our existing ranges.
Marketing partner revenues of ‚£3.7m included the initial licence fee received from Dr Reddy's for Sebclair, and a 46% growth in product revenues from non flagship products.
Gross profit of ‚£6.7m increased 16% from ‚£5.8m in 2006. This equates to a margin of 64% compared to 63% last year and has been helped by licence fee and milestone income of ‚£1.5m (2006: ‚£0.4m).
Operating expenses excluding exceptional items increased by only 5% in the period to ‚£9.1m, compared to 2006 (‚£8.7m), reflecting our focus on controlling costs while delivering increases in revenue and gross margin.
Exceptional net income was ‚£1.6m for the period (2006: ‚£0.3m). This includecosts of ‚£0.3m, as previously highlighted, associated with preparing for amajor acquisition in July 2007 where Sinclair decided that the actual purchaseprice was not justified, and a ‚£1.9m foreign exchange gain on the translationof the intra-group loan with Sinclair France resulting from the significantstrengthening of the Euro during the last six months.The operating loss of ‚£0.9m is reduced from ‚£2.6m in 2006. Operating lossesexcluding exceptional net income was ‚£2.5m, reduced from an operating loss of ‚£2.9m in 2006. The EBITDA loss before exceptional items for the period of ‚£1.6mwas reduced by 33% from the ‚£2.4m recorded in 2006
Loss per share was 1.1p (2006: 3.1p), excluding exceptional items the loss per share was 3.0p (2006: 3.5p).
Management
A number of senior management appointments have been made in the last sixmonths. Christophe Foucher appointed as Managing Director of Sinclair France tosupport its next period of operational growth. Jean-Charles Tshcudin appointedas Non-Executive Director, bringing considerable additional commercialexpertise to the board.
Paul Phull promoted to Managing Director (Europe) & Executive VP to lead Sinclair's growth of European sales and marketing operations.
Zoe McDougall, Director of Communications, left the company to pursue other opportunities.
Outlook
Our aim is to build a profitable and growing international pharmaceuticalcompany whilst avoiding the risks traditionally associated with research anddevelopment in our sector and to demonstrate the success of this model as soonas we can. After five years of building a portfolio of effective, patentedproducts and establishing the means to sell these products in our home marketsand some 80 plus export markets Sinclair is now in the process of demonstratingthat it can execute and deliver profitable sales growth.Our business development team now has an enlarged portfolio of fully developedand registered new products to be licensed which promises a continued momentumin signing agreements to build on growing revenues in those markets where ourproducts have already been launched and more than 25 further launchesanticipated during H2 through marketing partners and our own operations.Meanwhile our strong pipeline will provide further fuel for subsequent years.
During the last four years H2 revenues have been consistently greater than H1 and with a record order book we are confident that the same will apply this year.
The management and employees are focused on ensuring Sinclair delivers in linewith its strategy and continues its progression to a profitable internationalpharma company.Dr. Michael Flynn Jerry Randall ACAChief Executive Officer Chief Financial Officer
Unaudited consolidated income statement
Notes Six months Six months Year ended ended ended 31 December 31 December 30 June 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 Revenue 4 10,434 9,109 23,178 Cost of sales (3,762) (3,354) (8,087) Gross profit 6,672 5,755 15,091 Selling, marketing and distribution (3,629) (3,377) (7,195)costs Other administrative expenses (3,906) (4,944) (11,842) Analysed as: Other administrative expenses (5,548) (5,321) (10,375)before exceptional items Exceptional administrative expenses 5 1,642 377 (1,467) (3,906) (4,944) (11,842) Total operating expenses (7,535) (8,321) (19,037) Operating loss (863) (2,566) (3,946) Finance income 32 68 95 Finance costs (79) (46) (129) Loss before income tax (910) (2,544) (3,980) Income tax expense (22) (172) (226) Loss for the period (932) (2,716) (4,206) Attributable to: Minority interest - 3 2 Equity holders of the Company (932) (2,719) (4,208) (932) (2,716) (4,206)
Loss per share (basic and diluted) 6 (1.1)p (3.1)p (4.8)p
The notes on pages 12 to 17 form an integral part of this condensed consolidated half-yearly financial information.
Unaudited consolidated balance sheet
31 December 31 December 30 June 2007 2006 2007 Notes ‚£'000 ‚£'000 ‚£'000 Non-current assets Goodwill 7 46,019 43,165 43,418 Intangible assets 8 13,387 8,882 10,042 Property, plant and equipment 1,843 2,052 1,976 Non-current tax assets 1,617 1,898 1,512 Other non-current assets 502 64 78 63,368 56,061 57,026 Current assets Inventories 3,165 3,007 2,163 Trade and other receivables 9 6,982 6,199 7,800 Current tax receivables 50 - 22 Cash and cash equivalents 411 2,545 2,791 10,608 11,751 12,776 Total assets 73,976 67,812 69,802 Current liabilities Financial liabilities - borrowings 11 (1,681) (441) (567) Trade and other payables 10 (8,962) (5,256) (7,134) Deferred income (280) (277) (423) Current tax liabilities (22) - (66) (10,945) (5,974) (8,190) Non-current liabilities Financial liabilities - borrowings 11 (1,639) (419) (709) Non-current tax liabilities (1,296) (1,154) (1,146) Deferred income (429) (677) (822) Other non-current liabilities - (529) (547) Provisions - (116) - (3,364) (2,895) (3,224) Total liabilities (14,309) (8,869) (11,414) Net assets 59,667 58,943 58,388 Equity Share capital 935 934 935 Share premium account 21,472 21,433 21,472 Merger reserve 50,474 50,404 50,474 Other reserves 2,358 (418) 271 Retained deficit (15,583) (13,418) (14,775) Total shareholders' equity 59,656 58,935 58,377 Minority interests 11 8 11 Total equity 59,667 58,943 58,388
The notes on pages 12 to 17 form an integral part of this condensed consolidated half-yearly financial information.
Unaudited consolidated statement of changes in equity
Share Share Merger Other Retained
Attributable Minority Total
capital premium reserve reserves deficit to equity interest equity holders of the parent ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Balance at 1 July 933 21,386 50,404 749 (10,807) 62,665 5 62,6702006 Exchange differences - - - (1,167) - (1,167) - (1,167)arising on translation of overseas subsidiaries Loss for the period - - - - (2,719) (2,719) 3 (2,716) Total recognised - - - (1,167) (2,719) (3,886) 3 (3,883)expense for the period Share based payments - - - - 108 108 - 108- value of employee services Options and warrants 1 47 - - - 48 - 48exercised Balance at 31 934 21,433 50,404 (418) (13,418) 58,935 8 58,943December 2006 Exchange differences - - - 689 - 689 - 689arising on translation of overseas subsidiaries Loss for the period - - - - (1,489) (1,489) - (1,489) Total recognised - - - 689 (1,489) (800) - (800)(expense)/ income for the period Share based payments - - - - 132 132 - 132- value of employee services Options and warrants - 39 - - - 39 - 39exercised Shares issued on 1 - 70 - - 71 3 74purchase of minority interest Balance at 30 June 935 21,472 50,474 271 (14,775) 58,377 11 58,3882007 Exchange differences - - - 2,087 - 2,087 - 2,087arising on translation of overseas subsidiaries Loss for the period - - - (932) (932) - (932) Total recognised - - - 2,087 (932) 1,155 - 1,155expense for the period Share based payments - - - - 124 124 - 124- value of employee services Balance at 31 935 21,472 50,474 2,358 (15,583) 59,656 11 59,667December 2007
The notes on pages 12 to 17 form an integral part of this condensed consolidated half-yearly financial information.
Unaudited consolidated cash flow statement
Six months Six months Year ended ended ended 31 December 31 December 30 June 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 Cash flows from operating activities Loss before tax (910) (2,544) (3,980) Interest receivable (32) (68) (95) Interest payable 79 46 129 Share based payment - value of 124 108 240employee services Depreciation 261 203 442 Amortisation of intangible assets 633 384 975 Impairment charges - - 28 Profit on disposal of property, plant (2) - (9)& equipment Profit on sale of product rights (40) (1,295)
(1,237)
(Decrease)/increase in provision for (709) - 749doubtful debts Exchange (gain)/loss (2,105) (152) 611 (2,701) (3,317) (2,147) Changes in working capital (excluding effects of acquisitions) (Increase)/decrease in inventories (831) (370)
484
Decrease/(increase) in receivables 1,784 1,657
(358)
Increase/(decrease) in payables 71 (315)
651
(Decrease)/increase in deferred income (536) (21)
185
Net cash outflow from operations (2,213) (2,366) (1,185) Interest paid (51) (40) (68) Interest paid on finance leases (28) (6) (43) Income tax paid (50) (107) (303) Net cash used in operating activities (2,342) (2,519) (1,599) Investing activities Interest received 32 88 115 Purchases of property, plant and (52) (292) (444)equipment Proceeds from sale of property, plant 10 36 74and equipment Purchase of intangible assets (2,154) (15)
(952)
Proceeds from sale of product rights - 1,383
1,315
Acquisition of subsidiary undertaking, - (612) (612)net of cash acquired Net cash (used in)/from investing (2,164) 588 (504)activities Financing activities Repayments of obligations under (110) (44) (103)finance leases Proceeds from issue of new loans 1,654 54 506 Repayments of borrowings (288) - (184) Proceeds from issue of share capital - 47
88
Net cash from financing activities 1,256 57
307
Net decrease in cash and cash (3,250) (1,874) (1,796)equivalents Cash and cash equivalents at 1 July 2,604 4,470
4,470
Effect of foreign exchange rate 211 (51) (70)changes Cash and cash equivalents at end of (435) 2,545 2,604period/year Cash and cash equivalents includes: Cash and cash equivalents 411 2,545 2,791 Bank overdrafts (846) - (187) Cash and cash equivalents (435) 2,545 2,604
The notes on pages 12 to 17 form an integral part of this condensed consolidated half-yearly financial information.
Notes to the unaudited condensed consolidated half-yearly financial information
1. General Information
These interim financial results do not comprise statutory accounts within themeaning of Section 240 of the Companies Act 1985. Statutory accounts for theyear ended 30 June 2007 were approved by the board of directors on 7 November2007 and delivered to the Registrar of Companies. The report of the auditors onthose accounts was unqualified, did not contain an emphasis of matter paragraphand did not contain any statement under Section 237 of the Companies Act 1985.
This condensed consolidated half-yearly financial information was approved for issue on 26 February 2008.
2. Basis of preparationThis condensed consolidated half-yearly financial information for the half-yearended 31 December 2007 has been prepared in accordance with the Disclosures andTransparency Rules of the Financial Services Authority and with IAS 34,`Interim financial reporting' as adopted by the European Union. The half-yearlycondensed consolidated financial report should be read in conjunction with theannual financial statements for the year ended 30 June 2007, which have beenprepared in accordance with IFRSs as adopted by the European Union.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 June 2007, as described in those annual financial statements, and the following new accounting standards and interpretations.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year ending 30 June 2008.
IFRIC 10, `Interims and impairment'
IFRIC 11, `IFRS 2 Group and treasury share transactions'
IFRS 7, `Financial instruments: Disclosures'
IAS 1, `Amendments to capital disclosures'
As this interim report contains only condensed financial statements, and as there are no material financial instrument related transactions in the period, full IFRS 7 disclosures are not required at this stage. The full IFRS 7 disclosures, including the sensitivity analysis to market risk and capital disclosures required by the amendment of IAS 1, will be given in the annual financial statements.
None of these has had a material impact on the current or prior periods.
Principal risks and uncertainties
There are a number of risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected results. The principal risks remain those set out on page 29 of the Group's Annual Report for 2007, a copy of which is available on the Group's website www.sinclairpharma.com.
During the last four years H2 revenues have been consistently greater than H1 and with a record order book we are confident that the same will apply this year.
4. Segment informationThe Group is organised into two operating segments; development, registrationand commercialisation of products through marketing partners and direct salesand marketing of pharmaceutical products. These segments are on the basis onwhich the group reports its primary segment information. Six months ended 31 December 2007 Six months ended 31 December 2006 Business Segments Marketing Direct Total Marketing Direct Total partners partners ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Revenue 3,745 6,689 10,434 2,691 6,418 9,109 Segmental operating (1,473) (1,032) (2,505) (2,614) (329) (2,943)loss before exceptional items Exceptional items 1,642 377 Operating loss (863) (2,566) Year ended 30 June 2007 Business Segments Marketing Direct Total partners ‚£'000 ‚£'000 ‚£'000 Revenue 9,074 14,104 23,178
Segmental operating loss before exceptional items (2,518) 39 (2,479)
Exceptional items (1,467) Operating loss (3,946)Revenue analysis - an analysis of revenue by category is set out in the tablebelow: Six months Six months Year ended ended ended 31 December 31 December 30 June 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 Product revenue 8,597 8,292 20,091 Royalties 312 376 747 Licence fees and milestones 1,525 441 2,340 10,434 9,109 23,1785. Exceptional ItemsExceptional items represent significant items of income and expense which dueto their nature or the expected infrequency of the events giving rise to them,are presented separately on the face of the income statement to give a betterunderstanding to shareholders of the elements of financial performance in theperiod, so as to facilitate comparison with prior periods and to better assestrends in financial performance. Six months Six months Year ended ended ended 31 December 31 December 30 June 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 Goodwill adjustment - (147) - Provision for doubtful debt - (771) (736) Income from sale of product rights - 1,295 1,237 Listing costs - - (885) Aborted acquisition costs (321) - - Foreign exchange gains/(losses) 1,963 - (1,083) 1,642 377 (1,467)Exceptional acquisition related costs were incurred in preparing for a majoracquisition in July 2007. Sinclair decided that the actual purchase price wasnot justified which resulted in a charge of ‚£321,000 to cover professionalfees.Foreign exchange gains and losses include all trading gains and losses for theperiod and include a gain of ‚£1,963,000 (30 June 2007: loss of ‚£823,000) in thetranslation of an intra-group loan balance. This is a non cash item.
6. Loss per share
The basic loss earnings per share has been calculated by dividing the loss forthe period/year, by the weighted average number of shares in existence for theperiod/year.Shares held by the Employee's Share Trust, including shares over which optionshave been granted to Directors and staff, have been excluded from the weightedaverage number of shares for the purposes of calculation of the loss per share.The loss and weighted average number of shares for the purpose of calculatingthe diluted loss per share are identical to those used for the loss per shareat 31 December 2007, 31 December 2006 and 30 June 2007, as the exercise ofshare options would have the effect of reducing the loss per share and istherefore not dilutive. Six months Six months Year ended ended ended 31 December 31 December 30 June 2007 2006 2007 Basic and diluted EPS Net loss before exceptional items (‚£ (2,574) (3,093) (2,739)000) Exceptional items (‚£000) 1,642 377 (1,467) Net loss (‚£000) (932) (2,716) (4,206)
Weighted average number of shares 87,047,526 86,967,261 86,915,094
Loss per share before exceptional items (3.0)p (3.5)p (4.8)p
Exceptional items 1.9p 0.4p - Basic and diluted loss per share (1.1)p (3.1)p (4.8)p7. Goodwill 31 December 31 December 30 June 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 Cost At 1 July 45,929 46,203 46,203 Additions through business combinations - 368 368 Purchase of minority interest in - - 74Sinclair Pharma AB Goodwill adjustment - (147) - Exchange adjustments 2,601 (748) (716) At period end 48,530 45,676 45,929 Accumulated amortisation and impairment At 1 July 2,511 2,511 2,511 At period end 2,511 2,511 2,511 Net book value at period end 46,019 43,165 43,4188. Intangible Assets 31 December 31 December 30 June 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 Cost At 1 July 11,511 9,826 9,826 Additions 3,274 15 1,908 Disposals (423) - (19) Exchange adjustments 1,133 (91) (204) At period end 15,495 9,750 11,511 Amortisation and impairment At 1 July 1,469 490 490 Charge for the year 633 384 975 Disposals (22) - (19) Impairment charge - - 28 Exchange adjustments 28 (6) (5) At period end 2,108 868 1,469 Net book value at period end 13,387 8,882 10,042
Additions in the current period relate to the products acquired from Syrio Pharma SpA and Laboratoires Derma Omnium. The disposals realised no cash proceeds as they were made in part settlement of the outstanding liability in respect of prior period additions.
9. Trade and other receivables
31 December 31 December 30 June 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 Trade receivables 5,657 4,887 7,433 Less provision for impairment of trade (102) - (809)receivables Trade receivables-net 5,555 4,887 6,624 Other receivables 638 440 400 Prepayments and accrued income 789 872 776 6,982 6,199 7,800
10. Trade and other payables
31 December 31 December 30 June 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 Trade payables 4,703 3,306 5,258 Other tax and social security 550 532 506 Other payables 2,054 427 331 Accruals 1,655 991 1,039 8,962 5,256 7,13411. Borrowings 31 December 31 December 30 June 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 Bank loans 1,496 156 507 Obligations under finance leases 143 263 202 Non-current borrowings 1,639 419 709 Obligations under finance leases 230 192 214 Bank loans 605 249 166 Bank overdrafts 846 - 187 Current borrowings 1,681 441 567 Total borrowings 3,320 860 1,276 Borrowings included above are repayable as follows: On demand or within one year 1,681 441 567 Over one and under two years 644 225 215 Over two and under five years 989 194 494 Beyond five years, by installments 6 - - Total borrowings 3,320 860 1,276
12. Related party transactions
During the period ended 31 December 2007, the Group was charged ‚£176,738 (inthe period to 31 December 2006, ‚£140,837 and in the year ended 30 June 2007 ‚£362,935) by Axcan Pharma (Ireland) Ltd for the cost of Photofrin‚® sold in theperiod less reimbursable costs. At 31 December 2007 the amount owing to Axcanwas ‚£182,029 (31 December 2006 ‚£61,496 and at 30 June 2007 ‚£128,632).
Dr MJ Flynn, Chief Executive Officer is a remunerated Non Executive Director of Axcan Pharma (Ireland) Ltd.
Statement of directors' responsibilities
The directors' confirm that this condensed set of financial statements has beenprepared in accordance with IAS 34 as adopted by the European Union, and thatthe interim management report herein includes a fair review of the informationrequired by DTR 4.2.7 and DTR 4.2.8.The directors of Sinclair Pharma Plc are listed in the Group's Annual Reportfor the year ended 30 June 2007, with the exception of the following changes inthe period: Mr J-C Tschudin was appointed on 8 November 2007 and Mr AJ Sinclairretired on 3 December 2007.By order of the BoardDr MJ FlynnChief Executive OfficerJAP RandallChief Financial Officer26 February 2008
Independent review report to Sinclair Pharma Plc
Introduction
We been engaged by the company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 31December 2007, which comprises the income statement, balance sheet, statementof changes in equity, cash flow statement and related notes. We have read theother information contained in the half-yearly financial report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport has been prepared in accordance with International Accounting Standard34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. This report, including the conclusion, has been prepared for and onlyfor the company for the purpose of the Disclosure and Transparency Rules of theFinancial Services Authority and for no other purpose. We do not, in producingthis report, accept or assume responsibility for any other purpose or to anyother person to whom this report is shown or into whose hands it may come savewhere expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, `Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us tobelieve that the condensed set of financial statements in the half-yearlyfinancial report for the six months ended 31 December 2007 is not prepared, inall material respects, in accordance with International Accounting Standard 34as adopted by the European Union and the Disclosure and Transparency Rules ofthe United Kingdom's Financial Services Authority.PricewaterhouseCoopers LLPChartered AccountantsCambridge26 February 2008Notes:(a) The maintenance and integrity of the Sinclair Pharma Plc website is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the financialstatements since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
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