30th Aug 2007 07:00
Stem Cell Sciences plc30 August 2007 Press Release Half Year Financial Results Stem Cell Sciences plc (SCS, AIM:STEM, ASX:STC), the global biotechnologycompany focused on the commercialisation of stem cells and stem celltechnologies in research and cell-based therapies, is pleased to announceinterim results for the half year ending 30 June 2007. 2007 2006 Revenue from ordinary activities £0.5m/AU$1.25m £0.5m/AU$1.25m Operating loss for year (£1,75m/AU$4.38m) (£1,12m/AU$2.8m) Loss per share (6.3p) (5.0p) Rate of Exchange £1:AU$2.50 No dividends have been declared or are expected to be declared. Half-Year Highlights • Q1 launch of HEScGRO(TM) animal component-free medium for human embryonic stem cell research by Millipore Corporation. • Q1 licensing of novel mouse neural stem cell technology to Merck & Co., Inc. for research use. • Q2 in-license of breakthrough technology for the production of human stem cells. • Q2 successful dual listing on the Australian Stock Exchange raising £4.8 million/AU$12 million. • The cash position of £5.3m/AU$13.25m as at 30 June 2007(2006: £3.5m) is after allowing for expenditure of £0.8m/$2.0m on R&D activities Peter Mountford, President and CEO of Stem Cell Sciences, said: "With our mouse NS cell platform established, and the license with Merckprogressing well, we expect to see a wider customer base emerging for anexpanding range of products offered by the SCS portfolio. All products areprogressing well through the development pipeline with the launch of our humanNS cell platform expected for Q4 this year, adipose cell and bone cell platformto follow shortly thereafter. Overall, SCS expects to see faster revenue growth across most sectors of thestem cell research market with large industry seeking a mixture of licensing ofin-house development as well as more strategic alliances through collaborativeresearch and development with expert providers of stem cells and stem celltechnology." - Ends - For further information, please contact: Stem Cell Sciences plc (United Kingdom) Hugh Ilyine, Vice President and Chief Operating Officer +44 131 662 9829Sue Furber, Finance Director Weber Shandwick Financial Louise Robson or James White +44 207 067 0700 Stem Cell Sciences (Australia) pty ltd Peter Mountford, President and CEO +61 3 9905 0600 Talk Biotech Fay Weston +61 4 2220 6036 Stem Cell Sciences llc (USA) David A. Dodd, Chairman of SCS plc +1 678 641 4029George Murphy, General Manager North America +1 415 495 7340 Notes to Editors Stem Cell Sciences plc (SCS, AIM: STEM, ASX: STC) is a global biotechnologycompany providing stem cells and cell culture media to the burgeoning stem cellresearch market. Stem Cell Sciences' long term objective is to develop safe and effectivecell-based therapies for currently incurable diseases. SCS retains all rights toits technology for therapeutic use and is targeting cell-based therapies forneurodegenerative disease and injury. Revenues from Stem Cell Sciences' research business are delivered via anintegrated network of business teams and regional offices in Edinburgh andCambridge (UK), Melbourne (Australia) and San Francisco (USA). This global reachprovides the Company with the direct access to markets through experiencedpersonnel and local business networks needed to drive SCS business growth ineach region. The key challenge for the successful application of stem cells in both researchand clinical applications is the reproducible supply of pure, fullycharacterized stem cells and stem cell-derived specialised cells such as nervesand muscle. This represents a significant technological challenge that willrequire access to multiple technologies and a globally integrated stem cellinitiative. To access cutting edge technologies on a rapid and on-going basis, Stem CellSciences has built a network of interactive collaborations with academic centresof excellence in the stem cell field. These collaborations have been the sourceof our founding technologies and continue to provide an expanding pipeline ofproducts and intellectual property that are central to the Company's strategyand success. To facilitate research and technology transfer with its major collaboratingacademic institutions, Stem Cell Sciences' business and scientific teams areusually co-located on site or adjacent to the centre of excellence inindependent company facilities. The Company's key collaborating institutesinclude the Wellcome Trust Centre for Stem Cell Research (University ofCambridge), the Institute of Stem Cell Research (University of Edinburgh), RIKENCentre for Developmental Biology (Kobe) and the Australian Stem Cell Centre(Melbourne). Academic and commercial use of stem cells in basic research and drug discoveryprovides the Company with revenue streams offsetting the costs of technologydevelopment. For further information on the company please visit: www.stemcellsciences.com Chairman's and Chief Executive's Statement The first half of 2007 has seen a number of exciting developments throughout theCompany, providing confidence in the growth and development prospects for StemCell Sciences plc. In April the Company dual listed on the Australian StockExchange raising £4.8 million/AU$12 million. The placement was oversubscribedand received excellent support from the Australian investment community. The Company expanded its US based business team and, separately, appointedadditional scientific staff to accelerate development of key productopportunities. While revenues were slightly below those for the same period lastyear, the Company believes the pharmaceutical research and development marketfor SCS' products is expanding and that the Company will deliver increasedrevenues this year. The validation of our core competency in industrial scale stem cell productionis attracting new pharmaceutical company business interest. Key uses for thetechnology include target identification and validation studies, as well assmall molecule library screening applications. In February we announced an agreement with Merck & Co. for the use of ourproprietary rodent neural stem (NS) cell technology and cell culture media. Theagreement is progressing well and the upfront licence fee is recorded inrevenues reported for the first six months of 2007. Ongoing discussions with arange of pharmaceutical companies are expected to expand licensing and revenueopportunities related to these cells. At the same time, the successful development of automated cell productionsystems and creation of assay-ready formats provides the option of cell-basedassay supply to customers. The ability to have a consistent and high quality setof cell lines enables expansion of in-house use, such as our participation incollaborative European Union FP VI projects, as well as core internal researchactivities. Our assay development team is developing miniaturised format, 384well plates, to meet market demand to enable faster throughput and more datapoints per day. The ability to supply stem cells for large scale compoundlibrary screening is becoming a reality. Reproducible, large scale production of stem cells and stem cell-derivedproducts is a key requirement for commercial success and a highly competitivearea within which SCS is focused on achieving market leadership. The significantinvestment in 2006 made in our automated, large-scale cell production facilityin Cambridge, UK, as well as proprietary stem cell culture and differentiationmedia has been successful. Human and mouse stem cell lines have now beensuccessfully adapted to automated growth and differentiation on the platform. Atthe same time, SCS continues to build strongly on its core competency in theneural cell field, and expects to launch its human NS cell platform in thefourth quarter of 2007. Robust stem cell supply is also essential to realizing the Company's longer termobjective to be a leading supplier of stem cell based therapeutics. The Companysupported two proof of concept animal studies to investigate potential value ofits propriety neural stem cells in the treatment of spinal cord injury and eyedisease. While both studies provided evidence of recovery of function in celltransplanted animals, and none showed any evidence of unregulated cellproliferation or tumor formation, some results were not statisticallysignificant and the Company will need to undertake further analysis of theresearch. In January we launched the second product bearing the Company's SC Proven(R)trademark with our manufacturing and distribution partner Millipore Corporation.This product, HEScGRO(TM), is the first commercially available animalcomponent-free medium tested successfully for human embryonic stem cell cultureand shown to maintain human embryonic stem cells in their undifferentiatedstate. The strong growth of research into human stem cells now underway isexpected to generate significant growth in sales of HEScGRO(TM) in the comingyears. During the year, through the SC Services division, the conversion of refractorymouse embryonic stem cell lines from serum and feeder based protocols to serumfree and feeder free growth conditions took place. This improvement providessignificant benefits to the efficient production of mice with knocked out genes,which are valuable in drug discovery. The Company also continues to develop itsspecialized stem cell contract research activities, identified by the Company asoffering revenue growth prospects in this emerging field. Large scale production of stem cells remains a significant challenge for thebiomedical industry. SCS continues to build on its capabilities in this area sothat it can successfully become a leader in the automated production of stemcell-based products. The Company's prospects for successful scale up andassociated control of a substantial portion of the human ES cell market werefurther improved this year through an exclusive in-licensing of a breakthroughtechnology that is expected to greatly improve industrial scale production (ROCKinhibitor technology, announced 19/6/07). SCS is now undertaking commercialdevelopment of the technology. The first half of 2007 has also seen potentially revolutionary advances in otherareas of the ES cell field with three groups confirming that they can producethe mouse ES cells by simply adding four genes to adult skin cells. Such anapproach, if reproduced in human cells, would eliminate the need to source EScells from human embryos and thereby bypass the ethical concerns that somegroups currently have in this field. Two of the published research teams use SCSproprietary technology in achieving their results and the Company continues tosupport the efforts of academic researchers in the field. IFRS Reporting Stem Cell Sciences plc has adopted the International Financial ReportingStandards (IFRS) in its Group reporting from the beginning of 2007. As of the 1January 2007, Stem Cell Sciences has prepared its Interim Reports applying therecognition and valuation principles of the IFRS standards. The comparativefigures in respect of the interim period ended 30 June 2006 and the year ended31 December 2006 have been restated to reflect the adoption of these standards,the transition date being 1 January 2006. Financial Review: For the six months ended 30 June 2007, the Company received revenues of £0.5m/AU$1.25m (2006:£0.5m), which comprised of £0.15m SC Proven; £0.03m SC Servicesand £0.3m SC Licensing. Other operating income of £0.16m (2006: £0.2m)represented grant income. Total revenue for the comparable half year to 2006remained stable and proved revenue streams from the business units. Loss beforetax for the six months was £1.75m (2006:£1.12m) and the loss per share was 6.3p(2006:5.0p). With the expansion of the US based business team and investment in strengtheningthe IP portfolio through in-licensing Admin expenses for the comparative sixmonth period to 2006 have increased. Similarly, with the opening of the Cambridge site Research expenses haveincreased to £0.8m for the period. Cash balances at 30 June 2007 were £5.3m/AU$13.25m (2006: £3.5m) Post Period Events: Since the half year end Stem Cell Sciences received notification from the USPatent and Trade Mark Office (USPTO) that one of its key patents had beengranted in the USA with expanded claims relating to stem cell selection. Claimsgranted to SCS by the USPTO cover all methods of purifying any type of mammalianstem cell via any introduced gene and all stem cells purified by the method.With the ever increasing importance of stem cells in the US biopharmaceuticalindustry, the extension of SCS' patent position reinforces a key income streamand productivity advantage held by the Company. In a post period announcement, SCS reported a restructuring of its commercialrelationship with its associate company SCS KK in Kobe, Japan. The technologybuy-back and rights exchange means that, with some minor exceptions, SCS nowholds the exclusive right to commercialize all its technology on a global basis.Rights to commercialize certain SCS KK technologies, including the right tocommercialize therapeutic products based on SCS KK's adipose-derived stem celltechnology outside of Asia, were returned to SCS KK in the exchange. SCS plcretains all its existing rights to commercialize adipose-derived stem cells inthe basic and applied research markets. Outlook: The progress made over the past six months indicates that stem cell discovery isadvancing at an ever increasing pace. SCS believes that progress in basic andapplied stem cell research is providing two fundamental incentives for growingpharmaceutical industry investment - a new source of leads for potential newdrugs, and the opportunity to screen for additional leads using stem cell basedassays produced at industrial scale. With our mouse NS cell platform established, and the license with Merckprogressing well, we expect to see a wider customer base emerging for anexpanding range of products offered by SCS. All products are progressing wellthrough the development pipeline with the launch of our human NS cell platformexpected for Q4 this year, adipose cell and bone cell platform to follow shortlythereafter. A core competency in large scale production of high quality stem cells and stemcell derived products is central to SCS' business. With the infrastructure andbiological processes now in place for our first cell lines, we expect to seegrowing interest and a widening of our customer base. The Company expects to continue its cautious approach to investigating thecell-based therapy potential of its NS cell platform in collaboration withacademic centres of excellence in selected therapeutic fields; providingprimarily technological support and low level cash investment. Overall, SCS expects faster growth across most sectors of the stem cell researchmarket, with large industry seeking a mixture of licensing of in-housedevelopments as well as more strategic alliances with expert providers of stemcells and stem cell technologies. CONSOLIDATED INCOME STATEMENT FOR THE 6 MONTHS ENDED 30 JUNE 2007 Restated Restated 6 months 6 months Year ended ended ended 30 June 30 June 31 December Notes 2007 2006 2006 £'000 £'000 £'000 Unaudited Unaudited Unaudited REVENUE 2 460 494 742 Cost of sales - (159) (157) -------------------------------------GROSS PROFIT 460 335 585 Other operating income 159 235 367Administrative expenses (1,455) (1,031) (2,505)Research and development costs (768) (544) (1,197) -------------------------------------Loss from operations (1,604) (1,005) (2,750)Investment income 66 100 178FINANCE COSTS (4) - -Share of results of associates (211) (215) (468) -------------------------------------LOSS BEFORE TAXATION (1,753) (1,120) (3,040) INCOME TAX EXPENSE - - 62 -------------------------------------LOSS FOR THE YEAR (1,753) (1,120) (2,978) ===================================== Loss per shareBasic (6.3)p (5.0)p (13.3)pDiluted (6.3)p (5.0)p (13.3)p Turnover and loss on ordinary activities before taxation for the current andprevious year relate wholly to continuing activities. CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2007 Restated Restated As at As at As at 30 June 30 June 31 December Notes 2007 2006 2006 £'000 £'000 £'000 Unaudited Unaudited Unaudited NON-CURRENT ASSETSProperty, plant and equipment 568 410 656Investments accounted forusing the equity method 4 67 545 284 ------------------------------------- 635 955 940 -------------------------------------Current assetsTrade and other receivables 244 448 646Cash and cash equivalents 5,305 3,500 2,463 ------------------------------------- 5,549 3,948 3,109 ------------------------------------- Total Assets 6,184 4,903 4,049 ------------------------------------- CURRENT LIABILITIESTrade and other payables (766) (325) (1,253) ------------------------------------- Total Liabilities (766) (325) (1,253) ------------------------------------- Net Assets 5,418 4,578 2,796 ===================================== EQUITYShare capital 5 335 11,151 223Share premium account 6,537 2,297 2,297Capital redemption reserve 10,928 - 10,928Foreign exchange reserve (126) (106) (119)Merger reserve (1,248) (1,248) (1,248)Accumulated deficit (11,008) (7,516) (9,285) ------------------------------------- Total Equity and Liabilities 5,418 4,578 2,796 ===================================== CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTHS ENDED 30 JUNE 2007 Attributable to equity holders of the company Capital Foreign Share Share redemption exchange Merger Accumulated Total capital premium reserve reserve reserve deficit equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 2006 11,151 2,297 - - (1,248) (6,563) 5,637 Exchange differences arising on translation of overseasoperations - - - (106) - - (106)Retained loss for the period - - - - - (1,120) (1,120)Unrealised gain on dilution ofinvestment - - - - - 135 135Share based payments - - - - - 32 32 ---------------------------------------------------------------------------------Balance at 30 June 2006 11,151 2,297 - (106) (1,248) (7,516) 4,578 --------------------------------------------------------------------------------- Exchange differences arising on translation of overseasoperations - - - (13) - - (13)Retained loss for the period - - - - - (1,858) (1,858)Unrealised (loss) on dilution of investment - - - - - (9) (9)Share based payments - - - - - 98 98Capital reconstruction (10,928) - 10,928 - - - - ---------------------------------------------------------------------------------Balance at 31 December 2006 223 2,297 10,928 (119) (1,248) (9,285) 2,796 --------------------------------------------------------------------------------- Exchange differences arising on translation of overseasoperations - - - (7) - - (7)Retained loss for the period - - - - - (1,753) (1,753)Unrealised (loss) on dilution of investment - - - - - - -Share based payments - - - - - 30 30Issue of share capital 112 4,240 - - - - 4,352 ---------------------------------------------------------------------------------Balance at 30 June 2007 335 6,537 10,928 (126) (1,248) (11,008) 5,418 ================================================================================= CONSOLIDATED CASH FLOW STATEMENT FOR THE 6 MONTHS ENDED 30 JUNE 2007 Restated Restated 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Cash flows from operating activitiesLoss before taxation (1,753) (1,120) (3,040) Interest receivable (66) (100) (178)Interest payable 4 - -Share of result of associate 211 215 468Depreciation of plant and equipment 98 34 91Share based payments 30 32 130Decrease/(increase) in debtors 401 (126) (633)(Decrease)/increase in creditors (487) (412) 766 -------------------------------------Cash expended by operations (1,562) (1,477) (2,396) Income taxes paid - - 121 -------------------------------------Net cash used in operating activities (1,562) (1,477) (2,275) ------------------------------------- Cash flows from investing activitiesInterest received 66 100 152Interest paid (4) - -Purchases of property, plant andequipment (8) (332) (636) -------------------------------------Net cash used in investing activities 54 (232) (484) -------------------------------------Financing activitiesProceeds from issue of share capital 4,352 - - -------------------------------------Net cash from financing activities 4,352 - - -------------------------------------Net increase/(decrease) in cash andcash equivalents 2,844 (1,709) (2,759) Effect of foreign exchange rate changes (2) (18) (5)Cash and cash equivalents atbeginning of period 2,463 5,227 5,227 -------------------------------------Cash and cash equivalents at end ofperiod 5,305 3,500 2,463 ===================================== 1. Basis of Preparation These interim financial statements do not constitute statutory accounts and areunaudited. These condensed consolidated financial statements of Stem Cell Sciences plc havebeen prepared in accordance with International Accounting Standard (IAS) 34,Interim Financial Reporting, and are covered by International FinancialReporting Standard (IFRS) 1, First-time Adoption of IFRS, because they are partof the period covered by the group's first IFRS financial statements for theyear ending 31 December 2007. The policies set out below have been consistently applied to all the periodspresented and will apply for the full year. Consolidated financial statements of Stem Cell Sciences plc until 31 December2006 have been prepared in accordance with U.K. Generally Accepted AccountingPrinciples (U.K. GAAP). UK GAAP differs in certain respects from IFRS. Whenpreparing the consolidated interim financial statements for 2007, management hasamended certain accounting, valuation and consolidation methods applied in theU.K. GAAP financial statements to comply for IFRS. In the current period, thegroup has adopted all of the new and revised Standards and Interpretationsissued by the International Accounting Standards Board (IASB) and theInternational Financial Reporting Interpretations Committee (IFRIC) of the IASBthat are relevant to its operations and effective for accounting periodsbeginning on or after 1 July 2006. The change in accounting policy relates to research and development expenditure.Research and development costs include personnel charges in respect of personsworking wholly or exclusively on process or product development. Under UK GAAP, expenditure on research and development was written off to theincome statement in the period in which it was incurred. Under IFRS, expenditureon research is written off to the income statement in the period in which it isincurred and development expenditure is capitalised as an intangible asset whenthe Company can demonstrate all of the following criteria: • The technical feasibility of completing the intangible asset so that it will be available for use or sale. • It's intention to complete the intangible asset and use or sell it. • It's ability to use or sell the intangible asset. • How the intangible asset will generate probable future economic benefits. • The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. • Its ability to measure reliably the expenditure attributable to the intangible asset during its development. This change in accounting policy has had no financial impact on these interimfinancial statements. There have been no other changes to accounting policies. The comparative figures in respect of the interim period ended 30 June 2006 andthe year ended 31 December 2006 have been restated to reflect these adjustments.Reconciliations and descriptions of the effect of the transition from UK GAAP toIFRS on the group's equity and its net income are given in note 5 to the interimstatements. Comparative U.K. GAAP figures for the year ended 31 December 2006 have beenextracted from the statutory accounts of the Company on which the auditors gavean unqualified report and which have been filed with the Registrar of Companies. 2. Segment Information Six Months Ended 30 June 2007 Revenue Segment Result £ '000 £ '000 SC Proven 142 5SC Services 32 (206)SC Licensing 286 286 -------------------------------------Consolidated 460 85 Unallocated Items (1,900)Finance Income 66Finance Costs (4) -------------Loss Before Taxation (1,753)Taxation - -------------Loss for Period (1,753) ============= Six Months Ended 30 June 2006 Revenue Segment Result £ '000 £ '000 SC Proven 197 52SC Services - (108)SC Licensing 297 297 -------------------------------------Consolidated 494 241 Unallocated Corporate Items (1,461)Finance Income 100Finance Costs - -------------Loss Before Taxation (1,120)Taxation - -------------Loss for Period (1,120) ============= Year Months Ended 31 December 2006 Revenue Segment Result £ '000 £ '000 SC Proven 259 (65)SC Services 19 (271)SC Licensing 464 464 -------------------------------------Consolidated 742 128 Unallocated Corporate Items (3,346)Finance Income 178Finance Costs - -------------Loss Before Taxation (3,040)Taxation 62 -------------Loss for Period (2,978) ============= Six Months Ended Six Months Ended Year Ended 30 June 2007 30 June 2006 31 December 2006 £ '000 £ '000 £ '000 Total Assets Total Assets Total Assets SC Proven 18 49 25SC Services 490 264 564SC Licensing - - - Unallocated CorporateItems 5,676 4,590 3,460 --------------------------------------------------- Total Assets 6,184 4,903 4,049 =================================================== 3. Taxation At 30 June 2007, the Group has significant tax losses that will be carriedforward for utilisation against future taxable profits. 4. Fixed Asset Investment The Company holds a 24.85% interest in Stem Cell Sciences KK, a companyincorporated in Japan and involved in research and development activities. Thegroup's share of the results and net assets are included in the financialstatements on the equity accounting basis. 5. Share Capital On 13 April 2007, the Company issued 11,214,954 ordinary shares of 1p each at44p per share. This resulted in funds of £4.8m being raised. Issue costsincurred in this transaction were £654k. 6. Explanation of Transition to IFRS Reconciliation of income statement for year end 31 December 2006 UK Total Restated GAAP effect of under IFRS transition to IFRS £'000 £'000 £'000 Revenue 742 - 742 Cost of sales (157) - (157) Research and development (1,197) - (1,197) Administrative expenses (2,505) - (2,505) Other operating income 367 - 367 ----------------------------------------- Operating loss (2,750) - (2,750) Net finance costs 178 - 178 Share of results of associates (468) - (468) ----------------------------------------- Loss before tax (3,040) - (3,040) Taxation 62 - 62 ----------------------------------------- Loss for period (2,978) - (2,978) ----------------------------------------- Reconciliation of income statement for six months ended 30 June 2006 UK Total Restated GAAP effect of under IFRS transition to IFRS £'000 £'000 £'000 Revenue 494 - 494 Cost of sales (159) - (159) Research and development (544) - (544) Administrative expenses (1,031) - (1,031) Other operating income 235 - 235 ----------------------------------------- Operating profit (1,005) - (1,005) Net finance costs 100 - 100 Share of results of associates (215) - (215) ----------------------------------------- Loss before tax (1,120) - (1,120) Taxation - - - ----------------------------------------- Loss for period (1,120) - (1,120) ----------------------------------------- The transition from UK GAAP to IFRS has had no impact on the figures containedwithin the Income Statement. Reconciliation of equity as at 31 December 2006 UK IAS 1 IRFS 1 Total Restated GAAP effect of under IFRS transition to IFRS £'000 £'000 £'000 £'000 £'000 NON-CURRENT ASSETS Property, plant and equipment 656 - - - 656 Investments accounted for using the equity method 284 - - - 284 ----------------------------------------------------- 940 - - - 940 ----------------------------------------------------- Current assets Trade and other receivables 646 - - - 646 Cash and cash equivalents 2,463 - - - 2,463 ----------------------------------------------------- 3,109 - - - 3,109 ----------------------------------------------------- Total Assets 4,049 - - - 4,049 ----------------------------------------------------- NON-CURRENT LIABILITIES Trade and other payables 111 (111) - (111) - CURRENT LIABILITIES Trade and other payables 1,142 111 - 111 1,253 ----------------------------------------------------- Total Liabilities 1,253 - - 1,253 1,253 ----------------------------------------------------- Net Assets 2,796 - - - 2,796 ===================================================== CAPITAL AND RESERVES ATTRIBUTABLE TO ORDINARY SHAREHOLDERS Share capital 223 - - - 223 Share premium account 2,297 - - - 2,297 Capital redemption reserve 10,928 - - - 10,928 Foreign exchange reserve (144) - 25 25 (119) Merger reserve (1,248) - - - (1,248) Accumulated profits (9,260) - (25) (25) (9,285) ----------------------------------------------------- Total Equity 2,796 - - - 2,796 ===================================================== Reconciliation of equity as at 30 June 2006 UK IAS 1 IRFS 1 Total Restated GAAP effect of under IFRS transition to IFRS £'000 £'000 £'000 £'000 £'000 NON-CURRENT ASSETS Property, plant and equipment 410 - - - 410 Investments accounted for using the equity method 545 - - - 545 ----------------------------------------------------- 955 - - - 955 ----------------------------------------------------- Current assets Trade and other 448 - - - 448 receivables Cash and cash equivalents 3,500 - - - 3,500 ----------------------------------------------------- 3,948 - - - 3,948 ----------------------------------------------------- Total Assets 4,903 - - - 4,903 ----------------------------------------------------- NON-CURRENT LIABILITIES Trade and other payables - - - - - CURRENT LIABILITIES Trade and other payables (325) - - - (325) ----------------------------------------------------- Total Liabilities (325) - - - (325) ----------------------------------------------------- Net Assets 4,578 - - - 4,578 ===================================================== CAPITAL AND RESERVES ATTRIBUTABLE TO ORDINARY SHAREHOLDERS Share capital 11,151 - - - 11,151 Share premium account 2,297 - - - 2,297 Foreign exchange reserve (131) - 25 25 (106) Merger reserve (1,248) - - - (1,248) Accumulated profits (7,491) - (25) (25) (7,516) ----------------------------------------------------- Total Equity 4,578 - - - 4,578 ===================================================== Reconciliation of equity as at 1 January 2006 UK IAS 1 IRFS 1 Total Restated GAAP effect of under IFRS transition to IFRS £'000 £'000 £'000 £'000 £'000 NON-CURRENT ASSETS Property, plant and equipment 115 - - - 115 Investments accounted for using the equity method 710 - - - 710 ----------------------------------------------------- 825 - - - 825 ----------------------------------------------------- Current assets Trade and other receivables 322 - - - 322 Cash and cash equivalents 5,227 - - - 5,227 ----------------------------------------------------- 5,549 - - - 5,549 ----------------------------------------------------- Total Assets 6,374 - - - 6,374 ----------------------------------------------------- NON-CURRENT LIABILITIES Trade and other payables - - - - - CURRENT LIABILITIES Trade and other payables (737) - - - (737) ----------------------------------------------------- Total Liabilities (737) - - - (737) ----------------------------------------------------- Net Assets 5,637 - - - 5,637 ===================================================== CAPITAL AND RESERVES ATTRIBUTABLE TO ORDINARY SHAREHOLDERS Share capital 11,151 - - - 11,151 Share premium account 2,297 - - - 2,297 Foreign exchange reserve (25) - 25 25 - Merger reserve (1,248) - - - (1,248) Accumulated profits (6,538) - (25) (25) (6,563) ----------------------------------------------------- Total Equity 5,637 - - - 5,637 ===================================================== Notes to the reconciliations of equity a) In compliance with IAS 1 - Presentation of Financial Statements, deferred income has been classified as a current liability. b) The Company has taken advantage of the exemption under IFRS 1 - First Time Adoption of International Financial Reporting Standards to restate cumulative translation differences at the date of transition to zero. 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