9th Nov 2006 07:01
BTG PLC09 November 2006 BTG plc: Interim Results for the Six Months Ended 30 September 2006 London, UK, 9 November 2006: BTG plc (LSE: BGC), the medical innovationscompany, today announces its interim results for the six months ended 30September 2006. Financial highlights • Revenue net of revenue sharing of £12.5m (H1 05/06: £14.1m) includes a 30% increase in underlying net recurring royalties o 21% increase in gross royalties o Royalties net of revenue sharing up 30% to £12.2m (H1 05/06: £9.4m) o Reduction in the average revenue share paid to 40% of gross revenues as a result of income mix (H1 05/06: 44%, FY 05/06: 41%) o One-off income of £0.3m net (H1 05/06: £4.7m including Zimmer settlement of £4.1m)• Additional returns generated from £2.3m profits on sale of assets (H1 05/06: £1.6m)• Operating & administrative expenses continue to reduce to £9.1m (H1 05/06: £10.7m)• Research & development expenses of £4.5m (H1 05/06: £5.5m), reflecting lower Varisolve(R) expenses of £1.7m (H1 05/06: £2.7m). R&D investment expected to rise in second half• Profit before tax of £1.7m (H1 05/06: loss of £1.9m)• Cash reserves of £43m compared to "free" cash at 1 April 2006 of £44m Operating highlights • Significant progress in value generation from building pipeline o Growth in existing revenues, proceeds from physical science deals, simplified structure, cost containment o BTG's extensive pipeline now has 4 clinical stage and 4 preclinical stage development programmes, plus 3 programmes at lead identification stage o Of 11 licensed programmes, 1 is in Phase III, 8 in Phase II, 1 in Phase I and 1 at lead identification• Varisolve(R) US Phase II safety study on track to treat 1st patient in Q1 07• Phase I/II gastric cancer trial of Plevitrexed successfully completed• Good results from single dose Phase I study of BGC20-1259, targeting Alzheimer's disease• Genzyme report positive 2nd interim results from Phase II trial of Campath(R) in multiple sclerosis• TolerRx plan to start Phase III trial of TRX4 in type 1 diabetes by end of 2006 Louise Makin, BTG's Chief Executive Officer, commented: "BTG has made continued strong progress in its business during the first half ofthe financial year. The Company is operating on a firm financial footing, withincreasing royalty revenues exceeding reduced operating costs. With this andcash reserves of £43m, BTG is able to accelerate pipeline growth by investing innew programmes, portfolios and platforms and, where appropriate, by developingselected programmes further to retain an increasing share of the value wecreate. We expect the good momentum in BTG's development pipeline and in our licensedpipeline to continue, with a number of significant development milestonesanticipated during the second half and through 2007." Contacts: BTG Financial DynamicsChristine Soden, Chief Financial Officer Ben Atwell+44 (0)20 7575 1591 +44 (0)20 7831 3113Andy Burrows, Director of Investor Relations+44 (0)20 7575 1741 Notes BTG's interim results presentation for analysts will take place today at 9.30amat BTG plc, 10 Fleet Place, Limeburner Lane, London EC4M 7SB. This will befollowed at 10.15am with a Research & Development update for analysts. Bothpresentations will be webcast live on www.btgplc.com and will be available bythe end of the day as archived presentations. About BTG BTG in-licenses, develops and commercialises pharmaceuticals and other medicaltechnologies. With a substantial and growing revenue stream of royalties andmilestone payments from out-licensed products, BTG continues to strengthen itspipeline of preclinical and clinical development programmes. Active in thefields of oncology, diseases of ageing, neuroscience, drug repositioning andmedical devices, BTG works from its offices in London, Philadelphia and Osakawith a global partner network of healthcare companies and researchorganisations. For further information, visit: www.btgplc.com. Overview Over the past 18 months, BTG has transformed itself into a focused life sciencescompany that is building a valuable pipeline of drugs and other medicaltechnologies capable of generating future revenues. BTG in-licenses promisingprogrammes, manages their development through preclinical and clinical studies,finally licensing them to other biotechnology and pharmaceutical companies tocomplete development and gain product marketing approvals. The Company has overthe same period restructured itself so that it now operates as a sustainablebusiness from a solid financial platform. Underlying revenues from royalties on licensed products on the market aregrowing and the base costs of the business have reduced significantly. Duringthe first half of the year, gross recurring royalty revenues grew by 21% andoperating and administrative costs were 15% lower in comparison to those in thesame period last year. Additional returns have been generated from commercialising several physicalscience technologies that BTG retained after restructuring. A small number ofthese remain and are expected to provide one-off returns over the short tomedium term from a small cost base. Good progress has been made in BTG's and its licensees' and associates'pipelines, with overall pipeline development on track. Whilst competition to acquire new high quality programmes is strong, BTG is wellpositioned against the competition with its financial, technical and projectmanagement resources and capabilities. Detailed due diligence is under way on anumber of promising opportunities. In addition to in-licensing individual programmes and developing existingprogrammes, the Company is also seeking to acquire portfolios and platforms tofurther build and balance its pipeline. Moving forward, BTG will aim to retain agreater proportion of the value of selected programmes in its pipeline. This maymean, for example, taking certain programmes beyond proof of concept stage andthrough later stage pivotal efficacy studies. Research & development activities BTG's development pipeline BTG's development pipeline comprises four clinical stage programmes, fourpreclinical stage programmes and three programmes in lead identification. Varisolve(R) Following BTG's decision to proceed with the US Phase II safety study ofVarisolve(R), good progress has been made in signing up investigators. Sixcentres are expected to participate in the study, with the first patienttreatment planned for March 2007. The study will use magnetic resonance imagingtechniques to assess any effects in the brain of treatment on 50 patients withknown circulating arterial microbubbles. BTG also met with the Cardio-Renal Division of the US Food & Drug Administration(FDA), to which all venous sclerosant products have been reassigned, to agreethe clinical plan leading to the New Drug Application (NDA) filing. To gainapproval as a treatment for varicose veins and venous stasis ulcers, threepivotal studies will be required in which approximately 900 patients aretreated. A safety database of some 1500 patients is anticipated, which willinclude the 550 patients who have already been treated - 435 of whomparticipated in the EU Phase III trials and have now been followed up for ayear. The results of the EU Phase III trial are to be published in the journalPhlebology at the end of 2006. Plevitrexed Plevitrexed, a thymidylate synthase (TS) inhibitor targeting gastrointestinal(GI) and other tumours, completed a Phase I/II trial in gastric cancer. Intotal, 49 patients were enrolled and treated. A higher maximum tolerated dosewas achieved than in a previous gastric cancer study, and objective responsesand stable disease were observed. The study results have been submitted to anAmerican Society of Cancer Organisation GI Cancer Symposium in January 2007. BGC20-1259 Single ascending and multiple dose studies of BGC20-1259 were completed. Thismultifunctional compound, which targets Alzheimer's disease and otherage-related dementias, was well tolerated and showed a dose-dependent inhibitionof acetylcholinesterase - an enzyme implicated in Alzheimer's disease. A repeatdose tolerability study in elderly volunteers is due for completion by the endof 2006. BGC20-0166 Recruitment to the proof of mechanism study of BGC20-0166 in people with sleepapnoea has continued. Although patient enrolment has been slower thananticipated, steps have been taken to increase the rate of recruitment and thestudy is now expected to end in mid 2007. BGC945 A targeted TS inhibitor for broad cancer applications, BGC945 is progressingthrough preclinical development towards a Phase I study, which is expected tocommence in the second half of 2007. This compound uses a proven mechanism tokill tumour cells, but evidence suggests it is selectively taken up into thetumour cell and spares normal tissues. Developing a process to scale-up thecompound for clinical studies was challenging, but manufacture of the activepharmaceutical ingredient to GMP standards is now under way. Several programmes continued preclinical development: • Pharmacokinetic studies were completed for BGC20-1531, an EP4 receptor antagonist that aims to block the process of dilation of blood vessels in the brain that is involved in migraine attacks. These studies indicate that the compound is suitable for oral dosing. A Clinical Trials Application (CTA) is expected to be filed in the second half of 2007. • A novel class of compounds that act on cannabinoid receptors in the thymus and the brain have been shown to have analgesic activity in a preclinical model of inflammatory pain and to reduce the neurological disability score in a standard model of multiple sclerosis. BTG expects to select candidates for development during 2007. • Novel iron chelators for the treatment of neurodegenerative disorders such as Alzheimer's and Parkinson's diseases and other iron-overload disorders such as thalassaemia and rare anaemias have been shown in preclinical models to protect cortical neurones and synapses against iron-induced damage. The compounds are in late-stage development candidate selection. BTG's licensed pipeline In addition to the programmes BTG is developing, the Company has a broadportfolio of 11 licensed programmes being developed and funded by BTG'slicensees. These currently include one product in Phase III, eight in Phase II,one in Phase I and one at lead identification stage as shown in the followingtable. Programme Indication Clinical status Licensee Campath(R) CLL 1st line Phase III Genzyme MS Phase IIMisopessTM Cervical ripening Phase III Cytokine PharmasciencesTRX4 Type 1 diabetes Phase II TolerRx, Inc. Psoriasis Phase IJuvidexTM Scar improvement Phase II RenovoSymadexTM Breast & colorectal cancer Phase II Xanthus PharmaceuticalsBanoxantrone Solid tumours Phase I/II AstraZeneca/NovaceaABIO-0801 Anxiety Phase II Abiogen PharmaModafinil Drug-induced sleepiness Phase II Victory PharmaInfecton(R) Imaging bacterial infection Phase II DraximageAbiraterone Prostate cancer Phase I Cougar BiotechnologyBeta-amyloid Alzheimer's disease Lead ID Senexisinhibitors Campath(R) BTG's licensee Genzyme Corporation reported the results of the 2nd scheduledinterim analysis of the Phase II trial of Campath(R) versus Rebif(R) in 334patients with active relapsing-remitting multiple sclerosis. Patients takingCampath(R) experienced at least a 75% reduction in the risk of relapse after atleast two years compared with patients treated with Rebif(R). Campath(R)patients also experienced at least a 65% reduction in the risk of progression ofclinically significant disability compared with patients treated with Rebif(R).Genzyme has also implemented a risk management plan to help identify and manageimmune thrombocytopenic purpura (ITP), a treatable condition in which patientsexperience a low platelet count. Following these results and implementation ofthe ITP risk management plan, Genzyme anticipates the current clinical holdbeing lifted and a Phase III trial commencing in the first half of 2007. TRX4 TRX4 is a humanised monoclonal antibody that binds to the CD3 receptor involvedin T-cell signalling. Its mode of action suggests it may provide long-termantigen-specific immunotolerance without the side effects associated withchronic immunosuppression. BTG's licensee TolerRx, Inc. has shown in a Phase IItrial of patients with new-onset type 1 diabetes that a single course of TRX4significantly reduces insulin requirements for at least 18 months. TolerRxraised $35.6m in August 2006 to further develop TRX4, and the company plans tocommence a pivotal Phase III trial in type 1 diabetes by the end of 2006. BTG also benefits from developments in companies in which it holds investments.These include: • Senexis Ltd, which is developing novel inhibitors of amyloid-related toxicity. BTG licensed two compounds to Senexis that are under development for Alzheimer's disease. Senexis is currently raising £5m to further develop its pipeline, with the objective of progressing one to a CTA filing and two candidates into preclinical development. • Protez Pharmaceuticals, Inc., a company that is developing new antibiotics to overcome resistance and improve efficacy. Protez has recently started a Phase I study of its broad spectrum antibiotic PZ-601 and has raised $21m in funding to progress development. • Xention Ltd, which is developing drugs that modulate ion channel function. Xention has started a Phase I study of XEN-D0101 for the prevention of atrial fibrillation. Financial review Revenues Total revenues were £20.8m of which £20.3m arose from recurring royalties andthe remainder from some one-off settlements. Revenues in the equivalent periodlast year of £25.1m benefited from a one-off receipt of £7.5m arising from asettlement over the two-part hip cup with Zimmer Holdings, Inc. Underlying recurring royalties grew by 21% to £20.3m (H1 05/06: £16.8m). Afterrevenue sharing, net revenues were £12.5m (H1 05/06: £14.1m) with net recurringroyalty revenues of £12.2m (H1 05/06: £9.4m). Revenue sharing decreased to 40%of the total revenues received, compared to 41% for the full year to March 06and 44% for the first half of last year, reflecting a change in mix of sourcesof revenues. The major contributors to recurring royalties were sales of BeneFIX(R), therecombinant Factor IX product for haemophilia B, which generated gross royaltiesof £8.0m (H1 05/06: £7.5m), the two-part hip cup, which contributed £3.8m (H1 05/06: £2.1m), Campath(R) at £2.3m (H1 05/06: £2.0m) and the antibody humanisationpatents licensed to the Medical Research Council (MRC), which generated £2.0m(H1 05/06: £0.9m). The increase in the hip-cup royalties reflects the fact thatZimmer now pay royalties on their product sales. The strong increase in thehumanisation patent revenues reflects both increases in products covered by thepatents and fluctuations in the timing of receipts from certain of MRC'slicensees, with two payments falling into the current period. BTG completed the sale of its radio frequency ID (RFID) patent portfolio toZebra Technologies Corporation for a gross payment of $3.8m and also sold itsWebNav online navigation tracking patents to TwinTech E.U. II for a grosspayment of $5.0m. After the deduction of costs and revenue sharing, BTGrecognised a profit on disposal of these assets of £2.3m. In the first half of05/06 BTG recorded net gains of £1.6m from an earlier sale of RFID patents toZebra. An additional $1.0m is receivable in relation to the sale of the RFID patentsupon completion of certain conditions. BTG will also earn a share of futureprofits earned by TwinTech E.U. II from commercialisation of the WebNav patentsunder a similar structure to the sale of the Teleshuttle patents to TwinTechE.U. I in March 2006. Exchange Rates Significant amounts of BTG's earnings come from royalties on US$ denominatedsales. The weak dollar has had an adverse impact of some £0.2m on net royaltyrevenues compared to the same period last year. In order to provide more forecasting certainty, the Company has sold forwardpredictable net revenues for the second half of the year at exchange rates of$1.90:£1. Expenses Operating and administrative expenses reduced by 15% to £9.1m (H1 05/06: £10.7m)and are now at a stable level following the restructuring over the past twoyears, the costs of which in H1 05/06 were £2.2m but nil this period. Thesurplus of net recurring royalties over internal costs for the period was £3.1m. Investment in research and development was £4.5m (H1 05/06: £5.5m), of which£1.7m related to Varisolve(R) development and £2.4m to the development of otherprogrammes in BTG's pipeline. The balance of £0.4m was BTG's share of theresults of its associate companies, i.e. those in which BTG owns between 20% and50% of the shares. We anticipate increased R&D costs in the second half of theyear with up to half of the total costs of the Varisolve(R) safety study fallingin the next 6 months and an increase in pre-clinical and clinical costs in theBTG pipeline as programmes progress. The operating profit for the period was £1.2m, compared with an operating lossof £2.7m in H1 05/06. After adjusting for financial income and expenses and tax,BTG made a profit of £1.6m for the period (H1 05/06: loss of £1.9m). Cash At the period end BTG had £43.0m of cash and cash equivalents compared with£51.0m at the beginning of the period of which £7m was used to meet liabilitiesrelating to the sale of Teleshuttle patents just before the year end, hence "free" cash at the start of the period was approximately £44m. Underlying netcash outflows relating to the half year's activities were some £1.0m. In reconciling this figure, the net profit for the period of £1.6m issupplemented by proceeds of option exercises of £0.7m and adding back non-cashcharges of £2.2m. Offsetting these sources of funds were payments to reduce thepension fund liability (£1.1m), to decrease provisions (£1.1m), acquire enhancedpatent rights (£0.9m) and exchange rate fluctuations (£0.4m) in addition toworking capital and other changes of £2.0m. Balance sheet The net assets of the Group at 30 September 2006 increased by £3.6m in theperiod, reflecting the profit for the period, share option exercises andactuarial gains on the pension fund offset by exchange losses of £0.7m arisingon translation. There were no significant fixed asset additions in the period. Intangible assetsreduced from £7.1m to £6.8m with the additions of £0.9m being offset byamortisation and writing off the carrying value of the assets sold in theperiod. Investments in associates and other investments reduced from £7.9m to£7.5m principally reflecting the losses incurred in the underlying developmentcompanies. Trade and other payables reduced from £29.3m to £20.5m in the half year,reflecting in the main the payment of liabilities relating to the sale of theTeleshuttle patents. Provisions reduced from £4.6m to £3.5m reflecting paymentsmade under leases provided for in prior periods. The employee benefits provisionreduced from £9.6m to £6.9m, reflecting additional cash payments made to thedefined benefit pension plan of £1.1m and actuarial adjustments that arereflected through reserves. The issued share capital increased to 150,936,472 shares following the issue of584,510 shares upon the exercise of share options by former employees. Summary and outlook BTG has made continued strong progress in its business during the first half ofthe financial year. The Company is operating on a firm financial footing, withincreasing royalty revenues exceeding reduced operating costs. With this andcash reserves of £43m, BTG is able to invest in additional new programmes,portfolios and platforms to further strengthen its broad pipeline andcapabilities. The good momentum in BTG's and its licensees' development pipelines is expectedto continue, with significant development milestones anticipated during thesecond half of the year and through 2007. CONSOLIDATED INCOME STATEMENTfor the six months ended 30 September 2006 Six months ended Year ended Note 30 September 30 September 31 March 2006 2005 2006 £m £m £mRevenue 3 20.8 25.1 50.2Revenue sharing (8.3) (11.0) (20.7) _____ _____ _____Revenue net of revenue sharing 12.5 14.1 29.5 _____ _____ _____ Operating and administrative expenses 4 (9.1) (10.7) (24.3)Restructuring costs - (2.2) (3.7) _____ _____ _____Operating expenses (9.1) (12.9) (28.0) _____ _____ _____ Varisolve(R) development (1.7) (2.7) (4.5)Other development (2.4) (2.2) (3.6)Share of results of associates (0.4) (0.6) (1.0) _____ _____ _____Research and development expenses (4.5) (5.5) (9.1) _____ _____ _____ Profit on disposal of assets and investments 5 2.3 1.6 11.6Amounts written off associates and investments 6 - - (4.2) _____ _____ _____ 2.3 1.6 7.4 _____ _____ _____ Operating profit/(loss) 3 1.2 (2.7) (0.2) _____ _____ _____ Financial income 0.7 0.8 1.7Financial expenses (0.2) - - _____ _____ _____Net financial income 0.5 0.8 1.7 _____ _____ _____ Profit/(loss) before tax 1.7 (1.9) 1.5Tax 7 (0.1) - (0.1) _____ _____ _____Profit/(loss) after tax for the period 1.6 (1.9) 1.4 _____ _____ _____ Attributable to:Equity holders of the parent 1.6 (1.9) 1.5Minority interest - - (0.1) _____ _____ _____Profit/(loss) after tax for the period 1.6 (1.9) 1.4 _____ _____ _____ Basic earnings/(loss) per share 8 1.1p (1.3p) 1.0p _____ _____ _____Diluted earnings/(loss) per share 8 1.1p (1.3p) 1.0p _____ _____ _____ CONSOLIDATED BALANCE SHEETas at 30 September 2006 Note 30 September 2006 30 September 2005 31 March 2006 £m £m £mNon-current assetsIntangible assets 6.8 8.7 7.1Property, plant & equipment 9.2 10.1 9.6Investments in associates 2.4 3.2 2.7Other investments 5.1 8.0 5.2 _____ _____ _____ 23.5 30.0 24.6 _____ _____ _____ Current assetsTrade and other receivables 10.2 6.6 10.1Cash and cash equivalents 43.0 46.7 51.0 _____ _____ _____ 53.2 53.3 61.1 _____ _____ _____ Total assets 76.7 83.3 85.7 _____ _____ _____ EquityShare capital 9 15.1 14.8 15.0Share premium account 9 186.9 182.8 186.3Other reserves 9 (0.6) (0.8) 1.5Retained earnings 9 (155.6) (161.3) (160.6) _____ _____ _____Equity attributable to equity holders of the 45.8 35.5 42.2parentMinority interest - 0.1 - _____ _____ _____Total equity 9 45.8 35.6 42.2 _____ _____ _____ Non-current liabilitiesTrade and other payables 0.5 - 0.9Employee benefits 6.9 9.9 9.6Provisions 1.9 2.2 2.4 _____ _____ _____ 9.3 12.1 12.9 _____ _____ _____ Current liabilitiesTrade and other payables 20.0 31.7 28.4Provisions 1.6 3.9 2.2 _____ _____ _____ 21.6 35.6 30.6 _____ _____ _____ Total liabilities 30.9 47.7 43.5 _____ _____ _____ Total equity and liabilities 76.7 83.3 85.7 _____ _____ _____ CONSOLIDATED CASH FLOW STATEMENTfor the six months ended 30 September 2006 Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 £m £m £mProfit/(loss) before tax for the period 1.7 (1.9) 1.5Profit on disposal of intangible assets and (2.3) (1.6) (11.7)investmentsAmounts written off associates and investments - - 4.2Loss on sale of property, plant & equipment - - 0.1Investment income (0.7) (0.8) (1.7)Interest expense 0.2 - -Amortisation and impairment of intangible assets 1.0 1.8 3.9Depreciation on property, plant & equipment 0.4 0.5 0.9Share-based payments 0.2 0.5 0.8Pension contributions (1.1) - (2.1)(Increase)/decrease in debtors (0.1) 0.9 (1.8)(Decrease)/increase in creditors (1.6) 11.9 2.0Decrease in provisions (1.1) (1.5) (3.0)Share of associates' losses 0.4 0.6 1.0Other (0.2) (0.6) (1.0) _____ _____ _____Cash used in operations (3.2) 9.8 (6.9) Interest expense (0.1) - -Taxation paid (0.1) - (0.1) _____ _____ _____Net cash from operating activities (3.4) 9.8 (7.0) _____ _____ _____ Investing activitiesInterest received 0.9 0.8 1.6Purchases of intangible assets (0.9) (0.9) (1.3)Proceeds on disposal of intangible assets 4.7 2.9 23.3Payments made in relation to disposal of (9.5) - (3.7)intangible assetsInvestment in associates (0.1) (0.3) (0.7)Expenditure on investments (0.1) (0.7) (1.1)Proceeds on disposal of investments 0.1 - 1.0 _____ _____ _____Net cash from investing activities (4.9) 1.8 19.1 _____ _____ _____ Cash flows from financing activitiesProceeds of share issues 0.7 0.6 4.3 _____ _____ _____Net cash from financing activities 0.7 0.6 4.3 _____ _____ _____ (Decrease)/increase in cash and cash equivalents (7.6) 12.2 16.4Cash and cash equivalents at start of period 51.0 34.5 34.5Effect of exchange rate fluctuations on cash held (0.4) - 0.1 _____ _____ _____Cash and cash equivalents at end of period 43.0 46.7 51.0 _____ _____ _____ CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEfor the six months ended 30 September 2006 Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 £m £m £mForeign exchange translation differences (0.7) (0.4) (0.1)Actuarial gain/(loss) on pension liabilities 1.7 0.2 (1.6)Change in fair value of equity securities available for sale - (2.7) (2.0)Deferred tax due on revaluation of equity securities - (0.2) 0.2available for sale _____ _____ _____Net expense recognised directly in equity 1.0 (3.1) (3.5)Profit/(loss) for the period 1.6 (1.9) 1.4 _____ _____ _____Total recognised income and expense for the period 2.6 (5.0) (2.1) _____ _____ _____ Attributable to:Equity holders of the parent 2.6 (5.0) (2.0)Minority interest - - (0.1) _____ _____ _____ 2.6 (5.0) (2.1) _____ _____ _____ NOTES TO THE ACCOUNTS 1. Basis of preparation and accounting policies This interim statement has been prepared and approved by the directors inaccordance with International Financial Reporting Standards as adopted by the EU("Adopted IFRSs"). The financial statements have been prepared in accordancewith existing Group accounting policies, set out in the Group's 2006 annualreport and accounts. This interim statement was approved by the Board on 8 November 2006. 2. Comparative figures The results for each half year are unaudited. The comparative figures for thefinancial year ended 31 March 2006 are not the company's statutory accounts forthat financial year. Those accounts have been reported on by the company'sauditors and delivered to the Registrar of Companies. The report of the auditorswas (i) unqualified, (ii) did not include a reference to any matters to whichthe auditors drew attention by way of emphasis without qualifying their report,and (iii) did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. 3. Summary segmental analysis Segmental information is presented in respect of the Group's business andgeographical segments. The primary format, business segments, is based on theGroup's management and internal reporting structure. The Group comprises the following main business segments: Medical innovations: The acquisition, development and commercialisation of pharmaceutical and other medical technologies.Technology commercialisation: The commercialisation of technology outside the medical area. Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 £m £m £mRevenue by business segmentMedical innovations 20.3 24.2 46.4Technology commercialisation 0.5 0.9 3.8 _____ _____ _____Revenue 20.8 25.1 50.2 _____ _____ _____ Operating profit/(loss) by business segmentMedical innovations 1.4 3.5 5.7Technology commercialisation 1.1 (2.0) 1.4Restructuring - (2.2) (3.7)Other operating costs (1.3) (2.0) (3.6) _____ _____ _____Operating profit/(loss) 1.2 (2.7) (0.2) _____ _____ _____ The business is split geographically. Medical innovations and technologycommercialisation segments are managed on a worldwide basis, but operate in fourprincipal geographical areas, USA, UK, Europe (excluding UK) and other regions.In presenting information on the basis of geographical segments, revenue isbased on the geographical location of customers. Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 £m £m £mRevenue by geographic segmentUSA 16.6 21.9 42.9UK 3.3 2.0 5.1Europe 0.4 0.5 0.8Other 0.5 0.7 1.4 _____ _____ _____Revenue 20.8 25.1 50.2 _____ _____ _____ 4. Operating and administrative expenses Six months ended Year ended 30 September 30 September 31 March 2006 2005 2006 £m £m £mAmortisation and impairment of intangible assets 0.9 1.8 3.9Patent renewal fees 0.2 0.5 0.7Litigation costs 0.1 1.1 2.9 _____ _____ _____ 1.2 3.4 7.5Administrative expenses 7.9 8.7 18.3Exchange gains - (1.4) (1.5) _____ _____ _____ 9.1 10.7 24.3 _____ _____ _____ 5. Profit on disposal of assets and investments Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 £m £m £mProfit on disposal of intangible assets 2.3 1.6 11.0Profit on disposal of investments - - 0.7Loss on sale of property, plant & equipment - - (0.1) _____ _____ _____ 2.3 1.6 11.6 _____ _____ _____ The profit for the period ended 30 September 2006 is net of £1.6m shared withthe inventive source (30 September 2005: £0.3m; 31 March 2006: £4.9m). Loss relief is expected to absorb the tax due in respect of the profit ondisposal. 6. Amounts written off associates and investments Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006 £m £m £mAmounts written off associates - - 0.5Amounts written off investments - - 3.7 _____ _____ _____ - - 4.2 _____ _____ _____ The amount written off associates represents the reduction in value ofassociates, taken direct to the income statement, following an impairmentreview. The amount written off investments represents the reduction in value ofinvestments available-for-sale, taken direct to the income statement, followingan impairment review. 7. Taxation Taxation for each six-month period has been provided on the basis of theanticipated effective rate for the full year. 8. Earnings/(loss) per share Six months ended Year ended 30 September 2006 30 September 2005 31 March 2006Profit/(loss) attributable to ordinary shareholders 1.6 (1.9) 1.5(£m)Earnings/(loss) per share (p)Basic 1.1 (1.3) 1.0Diluted 1.1 (1.3) 1.0 _____ _____ _____ Number of shares (m)Weighted average number of shares - basic 149.3 146.0 146.6Effect of share options in issue 0.5 - 1.3 _____ _____ _____Weighted average number of shares - diluted 149.8 146.0 147.9 _____ _____ _____ The weighted average number of ordinary shares in issue excludes the shares heldby the BTG Employee Share Trust. 9. Reserves Share Share Other Retained Total capital premium reserves earnings equity £m £m £m £m £mAt 1 April 2006 15.0 186.3 1.5 (160.6) 42.2Transfer of share-based payments reserve - - (1.4) 1.4 - _____ _____ _____ _____ _____At 1 April 2006 restated 15.0 186.3 0.1 (159.2) 42.2 _____ _____ _____ _____ _____ Foreign exchange translation differences - - (0.7) - (0.7)Actuarial gain on pension liabilities - - - 1.7 1.7Profit for the period - - - 1.6 1.6 _____ _____ _____ _____ _____Total recognised income and expense - - (0.7) 3.3 2.6 Movement in shares held by the Trust - - - 0.1 0.1Share-based payments - - - 0.2 0.2Share capital issued 0.1 0.6 - - 0.7 _____ _____ _____ _____ _____At 30 September 2006 15.1 186.9 (0.6) (155.6) 45.8 _____ _____ _____ _____ _____ Other reserves are analysed as follows: Share-based Translation Fair value Total other payments reserve reserve reserves reserve £m £m £m £mAt 1 April 2006 1.4 (0.2) 0.3 1.5Transfer of share-based payments reserve (1.4) - - (1.4) ____ ____ ____ ____At 1 April 2006 restated - (0.2) 0.3 0.1Total recognised income and expense - (0.7) - (0.7) ____ ____ ____ ____At 30 September 2006 - (0.9) 0.3 (0.6) ____ ____ ____ ____ The share-based payments reserve, disclosed in the published accounts under 'other reserves' for the year ended 31 March 2006, is now included withinretained earnings. 10. Posting of interim accounts The announcement is being sent to all shareholders on the register on 17November 2006 and further copies are available from the Company's registeredoffice: 10 Fleet Place, Limeburner Lane, London EC4M 7SB. Independent Review Report to BTG plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 September 2006 which comprises the Group incomestatement, balance sheet, cash flow statement and the statement of recognisedincome and expense and notes 1 to 10. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the Company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted bylaw, we do not accept or assume responsibility to anyone other than the Companyfor our review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the Directors. The Directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual financial statements exceptwhere any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the UK. A review consists principally of making enquiries of groupmanagement and applying analytical procedures to the financial information andunderlying financial data and, based thereon, assessing whether the accountingpolicies and presentation have been consistently applied unless otherwisedisclosed. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. A review is substantiallyless in scope than an audit performed in accordance with International Standardson Auditing (UK and Ireland) and therefore provides a lower level of assurancethan an audit. Accordingly, we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2006. KPMG Audit PlcChartered Accountants8 Salisbury SquareLondon EC4Y 8BB 8 November 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BTG