28th Sep 2005 06:30
S R PHARMA PLC UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 Chairman's StatementDear Shareholder,I am delighted to report that the first stage of an effective turnaround ofyour Company has now been completed, with the acquisition of Atugen AG and thecompletion of a ‚£10 million fundraising in July 2005. On a personal basis Iwould like to welcome our new shareholders and to thank the existingshareholders for their support and patience over the last 12 months.Acquisition of Atugen AGAt an EGM held on 11 July 2005 the acquisition of Atugen AG was approvedthereby providing SR Pharma plc with a leading position in the exciting fieldof RNA interference technology. RNAi has the potential to be a new paradigm inthe development of therapeutic products and although the sector is relativelyyoung already major pharmaceutical players have begun to form developmentcollaborations with companies in this field.Atugen AG, which has already provided contract development services to over 20leading pharma and biotech companies, has first class research and pre-clinicalcapabilities based in Berlin, Germany. It is your Board's intention toestablish serious third party collaborations in the RNAi field with biotech andpharmaceutical companies in order to accelerate the development andcommercialisation of therapeutic products emerging from this technology. Whilstwe intend to continue to generate contract research revenues as appropriateutilising our proprietary technology the primary focus will be to establishRNAi therapeutic product collaborations. Currently we are in early discussionswith a number of companies and anticipate making further announcements over thenext six months.M.vaccaeIn terms of M.vaccae I can confirm that the Company has initiated discussionswith third parties firstly, to ensure that robust manufacturing processes aredeveloped as appropriate and secondly, to investigate the future development ofthis product through effective development collaborations.New FundingOn 28 July 2005 the enlarged company announced the completion of a ‚£10 millionfundraising, which brought in some of the best performing UK small cap fundsand included a strategic investment by Introgen Therapeutics Inc, furtheremphasising the interest in our RNAi technology. Notwithstanding the raising ofthe new investment funds your Board will continue to explore M&A and additionalfunding opportunities, in order to further strengthen the financial position ofthe Group and to minimise the dependence on any one product or technology. Iwould expect to be able to make further announcements about this over the next12 months.FinancialsThe Group's interim figures for the six months to 30 June 2005 relate to theperiod prior to both the acquisition of Atugen AG and the ‚£10 millionfundraising completed in July 2005. The figures show a post tax loss for thesix months of approximately ‚£725,000, and bank balances of ‚£1.75 million. Thecost figures demonstrate the continued scaling back of the Research andDevelopment costs in the early part of the year as resources were divertedduring the period to the pursuit of M&A opportunities.As a result of these transactions there are now approximately 90.3m shares inissue, compared to 23.9m at 30 June, trading at 30p at the time of writing.After paying all transaction costs and normal running costs for bothoperational entities since June, the bank balances currently stand atapproximately ‚£10 million.Strengthened BoardAs a result of the corporate activity completed during the period your Boardhas been further strengthened with the appointment of Jeremy Curnock-Cook,David U'Prichard and Bernd Wetzel as non-executive directors. Each of thesegentlemen brings extensive experience of the healthcare sector and I lookforward to working closely with them. In addition I am very pleased to welcomefrom Atugen Dr Klaus Giese as Chief Scientific Officer and Thomas Christely asChief Operating Officer. Also I can confirm that upon completion of the recentfundraising I agreed to take on the role of Executive Chairman.The new executive management team is already working well together and we aremaking significant progress on the integration of the two businesses.In conclusion, when I became Chairman last year I indicated that my goal was towork with the stakeholders of SR Pharma plc to improve the long term viabilityand prosperity of the Company. I recognise that some tough decisions have hadto be taken but I believe that over the last six months we have madeconsiderable progress towards achieving this goal. With the first stagecompleted I, along with the executive management team, now relish the challengeof further developing this business.Iain G RossChairmanSR Pharma plc27 September 2005SR PHARMA PLCCONSOLIDATED INCOME STATEMENTSIX MONTHS ENDED 30 JUNE 2005 Six months Six months Year ended ended ended 30 June 2005 30 June 2004 31 December 2004 ‚£ ‚£ ‚£ Revenue - 76,788 159,211 Research and development (373,778) (1,292,979) (1,697,509) direct costs Gross Loss (373,778) (1,216,191) (1,538,298) Administrative expenses (419,216) (835,765) (1,788,061) Operating Loss (792,994) (2,051,956) (3,326,359) Interest received 31,983 78,927 133,513 Loss for the period (761,011) (1,973,029) (3,192,846) before taxation Taxation credit for the 40,000 174,082 350,255 period Retained loss for the period after taxation attributable to Equity Holders (721,011) (1,798,947) (2,842,591) transferred from reserves Loss per Ordinary Equity (3.02)p (7.54)p (11.91)p Share ==== ==== ===== All transactions arose from continuing activities.SR PHARMA PLCCONSOLIDATED BALANCE SHEETAT 30 JUNE 2005 30 June 31 December 30 June 2005 2004 2004 ‚£ ‚£ ‚£ Non-current assets Property, plant and 23,638 39,950 40,494 equipment Current assets Trade and other 787,689 518,370 254,729 receivables Cash and cash equivalents 1,754,699 2,632,002 3,907,096 2,542,388 3,150,372 4,161,825 Total Assets 2,566,026 3,190,322 4,202,319 Liabilities Current liabilities Trade and other payables 515,786 324,231 818,954 Provisions 189,680 189,680 - 705,466 513,911 818,954 Non-current liabilities Provisions 237,100 331,940 - Total Liabilities 942,566 845,851 818,954 Net assets 1,623,460 2,344,471 3,383,365 Capital and Reserves attributable to the Company's Equity Holders Share capital 238,857 238,857 238,607 Share premium account 19,983,303 19,983,303 19,978,803 Merger reserve 183,916 183,916 183,916 Profit and loss account (18,782,616) (18,061,605) (17,017,961) Equity Holders' funds 1,623,460 2,344,471 3,383,365 SR PHARMA PLCCONSOLIDATED STATEMENT OF CHANGES IN NET EQUITYFOR THE SIX MONTHS ENDED 30 JUNE 2005 Share Share Merger Profit and Total Capital Premium Reserve Loss Reserve Account ‚£ ‚£ ‚£ ‚£ ‚£ At 1 January 2004 238,607 19,978,803 183,916 (15,219,014) 5,182,312 Retained loss for - - - (1,798,947) (1,798,947)the Period attributable to Equity Holders At 30 June 2004 238,607 19,978,803 183,916 (17,017,961) 3,383,365 Share issue in 250 4,500 - - 4,750 period Retained loss for - - - (1,043,644) (1,043,644)the Period attributable to Equity Holders At 31 December 238,857 19,983,303 183,916 (18,061,605) 2,344,471 2004 Retained loss for - - - (721,011) (721,011) the Period attributable to Equity Holders At 30 June 2005 238,857 19,983,303 183,916 (18,782,616) 1,623,460 SR PHARMA PLCCONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 30 JUNE 2005 Six months Year ended Six months to to 30 June 2005 31 December 30 June 2004 2004 ‚£ ‚£ ‚£ Cash flows from operating activities Loss before taxation (761,011) (3,192,846) (1,973,029) Adjustments for: Depreciation charges 16,312 37,623 18,309 Loss on sale of fixed assets - 556 556 (Increase)/decrease in trade (229,319) 843,886 931,374 receivables Increase/(decrease) in trade 96,715 (373,824) (400,740) payables Investment income (31,983) (133,513) (78,927) Cash absorbed by operations (909,286) (2,818,118) (1,502,457) Income taxes received - 237,375 237,375 Net cash outflow from operating (909,286) (2,580,743) (1,265,082) activities Cash flows from investing activities Purchase of plant and equipment - (18,769) - Proceeds from sale of equipment - 500 500 Interest received 31,983 133,513 78,927 Cash generated from investing 31,983 115,244 79,427 activities Cash flows from financing activities Proceeds from issue of capital - 4,750 - - 4,750 - Net decrease in cash and cash (877,303) (2,460,749) (1,185,655) equivalents Cash and cash equivalents at 2,632,002 5,092,751 5,092,751 beginning of period Cash and cash equivalents at end 1,754,699 2,632,002 3,907,096 of period SR PHARMA PLCNOTES1. The above financial information does not constitute statutory accountswithin the meaning of Section 240, Companies Act 1985. The information relatingto the six months ended 30 June 2005 is neither audited nor reviewed.Information relating to the year ended 31 December 2004 has been extracted fromthe statutory accounts of the Group which have been audited by the Group'sauditors Grant Thornton UK LLP and whose report thereon is unqualified.2. Basis of preparationSR Pharma plc has previously prepared its financial statements under UKgenerally accepted accounting principles (UK GAAP). However, the Group hasdecided to adopt International Financial Reporting Standards (IFRS), includingInternational Accounting Standards (IAS), with effect from 1 January 2005. ThisInterim Report is drawn up in accordance with the requirements of IAS 34"Interim Financial Reporting".The results for the six months to 30 June 2005 represent the first interimfinancial statements that the Group has prepared in accordance with itsaccounting policies under IFRS. In this Interim Report the Group is required toapply all relevant standards that will be in force at the first annualreporting date, which will be the year ending 31 December 2005. As aconsequence, these results have been prepared on the basis that all IFRSs willbe adopted by the European Commission. Should the European Commission notapprove these in time for the financial reporting for 2005, or further IFRSs,interpretations or amendments are issued in advance of the reporting date, thiscould result in the need to change the basis of accounting or presentation ofcertain financial information from that presented in this document.3. Impact of change of accounting basisThere has been no material change to the Group's reported loss or EquityHolders funds other than for presentational purposes due to the adoption ofIFRS.4. Loss per share is based on the loss for the period after taxationattributable to Equity Holders of ‚£721,011 (year ended 31 December 2004 - loss‚£2,842,591; six months ended 30 June 2004 - loss ‚£1,798,947) and on theweighted average of 23,885,714 ordinary shares in issue during the period (yearended 31 December 2004 - 23,872,872; six months ended 30 June 2004 -23,860,714). The options outstanding at 30 June 2005, 31 December 2004 and 30June 2004 are considered to be antidilutive in that their conversion intoordinary shares would decrease the net loss per share. Consequently, there isno diluted earnings per share to report for either year.5. The credit for UK Corporation Tax arises from the Group taking advantage ofthe legislation regarding the treatment and surrender of tax losses arisingfrom certain qualifying research and development expenditure.6. Post Balance Sheet EventsOn 21 June 2005 the Group announced that it had entered into a conditionalcontract for the acquisition of Atugen AG by issuing further SR Pharma shares,subject to shareholder and Stock Exchange approval. The shareholders approvedthe acquisition at an Extraordinary General Meeting on 11 July, and theacquisition and issue of shares was completed on that date. As part of theprocess, the Group issued a further 22,820,736 shares in SR Pharma plc. Fulldetails of the financial status of Atugen AG for the previous three years wereprovided in a circular sent to shareholders on 24 June 2005.Subsequent to the acquisition, the Group carried out a fundraising exercise byway of an institutional placement. The success of the placing was announced on28 July 2005. The Group raised ‚£10,008,000 before costs through the issue of43,513,044 shares at 23p per share.ENDSR PHARMA PLCRelated Shares:
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