Final Results
Proteome Sciences PLC ("the Company")
29th June, 2007
RESULTS FOR THE YEAR ENDED 31st DECEMBER 2006
HIGHLIGHTS
- Commercialisation
- Allowances for TMT1 and TMT2 patents for isobaric tandem mass tags in US and
Europe.
- Substantial revenues should be generated from licence payments, back-licence
payments, product sales and royalties for the manufacture and use of any type
of isobaric mass tags.
- Market for isobaric tandem mass tags growing disproportionately fast.
- Biological reference materials - new consumable products for TMT in high volume
/high value applications for clinical trials and compound development.
- Multiplex assays using proprietary tags can be developed quickly and
inexpensively.
- Broad mass spectrometry user base to open up significant new revenues and
markets.
- Targeting to have licences concluded and TMT products launched in 2007.
- Three licences announced for high throughput screening in stroke.
- Discussions with other global top twenty clinical diagnostics companies.
- NDKA - new blood biomarker for early diagnosis, treatment and management of
stroke.
- Grant of FABP patents for stroke in US and Europe.
- Novel biomarkers in colorectal cancer and AD.
- Highly accurate quantitative TMT® sixplex data from plasma samples of renal
rejection.
- ProteoSHOP®
- ProteoSHOP® marketing campaign continued.
- Strong levels of interest will be reflected in revenue in the first half of
2007.
- Cross-platform protein validation increases coverage and data confidence.
- Veri-Q Inc.
- Development of further antibodies against the de-protecting groups underway.
- High profile scientific papers in Analytical Biochemistry and Nucleic Acid
Research.
- Intronn Inc.
- Issuance of SMaRT® patents in US, Europe, Australia and Canada.
- NIH grant awarded for SMaRT® with RNAi.
- In-vivo proof of principle for haemophilia.
- Seeking the right strategic partner/alliances for clinical and commercial
development and funding for clinical trials.
- Financial
- Headline loss (excluding non-cash items and associates) £4.66m (2005 : £4.17m).
- Loss after tax £6.38m (2005 : £6.90m).
- Net cash outflow from operating activities £4.47m (2005: £4.91m).
- Cash balance £0.30m (2005 : £2.59m).
- Additional £4m working capital provided by loan facility from CEO
- Consistent and predictable cash burn expected.
- Current Outlook
- Highest short term priority is to complete the out-licensing of TMT® and have
TMT® products launched in 2007.
- Earlier stroke biomarker research licenses should convert into full commercial
licenses
- Licensing activity in Alzheimer's disease biomarkers.
- Benefits of the addition of TMT®, biological reference materials and MRM to
ProteoSHOP® to be seen in revenue in the first half of 2007.
- Ideally positioned to exploit the strong growth projected for biomarkers and
isobaric tandem mass tagging and to convert it into revenue and profits.
Commenting on these results, Christopher Pearce, Chief Executive of Proteome
Sciences, said:
"We are delighted to have now obtained allowances for our TMT® patents that
provide us with broad protection for the manufacture and use of any type of
isobaric mass tags. The market for isobaric tandem mass tags is growing
disproportionately fast and we expect to generate substantial revenues from
licence payments, back-licence payments, product sales and royalties for TMT®
and it is our intention to have TMT® products launched and to complete the
outlicencing process in the second half of the year.
Our ProteoSHOP® activities have benefited from the expanded technical
developments and applications from the addition of TMT®, biological reference
materials and MRM that will, for the first time, take us into high volume/high
value applications for clinical trials and compound development. This will be
reflected in ProteoSHOP® revenue in the first half of 2007.
With a substantial number of patents granted and new applications filed over
the period covering discoveries made across a range of different diseases, we
expect to see further licencing activity for our biomarkers. We are optimistic
that the earlier research licences in stroke should convert into full
commercial licences when their integration processes are coming to completion
later this year. This should be reflected through significant licence fees and
royalties.
With a similar pattern of cash burn expected and the prospect of substantial
revenue being derived from TMT®, ProteoSHOP® and our biomarker portfolio, we
are ideally positioned to exploit the strong growth projected for biomarkers
and isobaric tandem mass tagging and to convert that potential into revenue and
profit."
ENDS
Attached: Full text of Chairman's statement, consolidated profit and loss
account, consolidated balance sheet, consolidated cashflow statement and notes
to the financial information.
For further information please contact:
Proteome Sciences plc
www.proteomics.com Tel: +44 (0)1932 865065
Christopher Pearce, Chief Executive
Email: christopher.pearce@proteomics.com
James Malthouse, Finance Director
Email: james.malthouse@proteomics.com
Public Relations
IKON Associates
Adrian Shaw
Tel: +44 (0)1483 535102
Mobile: +44 (0)797 9900733
Email: adrian@ikonassociates.com
Coast Communications
Matt Baldwin
Tel: +44 (0)1233 503200
Mobile: +44 (0)7930 439739
Email: matt@coastcommunications.co.uk
Nominated Adviser
Teather & Greenwood Tel: +44 (0)20 7426 9000
Gareth Price / Thilo Hoffman
Notes to Editors:
Proteome Sciences plc applies high sensitivity proteomics to identify and
characterise differential protein expression in diseases for diagnostic,
prognostic and therapeutic applications. It has discovered blood biomarkers
principally for stroke, vCJD, BSE, brain damage, solid organ transplant
rejection and Alzheimer's disease. The main focus of its research currently
addresses neurological, neurodegenerative, oncology and cardiovascular
conditions.
In addition to its own proprietary biomarkers, Proteome Sciences has developed
ProteoSHOP® (Proteome Sciences High Output Proteomics), a toolbox that offers
high sensitivity and high throughput gel and gel-free proprietary technologies
for the identification and validation of potential biomarkers and drug targets,
including specialisation in membrane proteins and protein phosphorylation.
The Company has developed a range of specialist reagents to improve the
performance and quantitation of protein separation and characterisation with
mass spectrometry, bioinformatics, statistics and pattern recognition. These
include Sensitizer®, PST®, qPST™ and TMT®. Proteome Sciences has patent
allowances in the major global jurisdictions for isobaric tandem mass tags (TMT
®) for the manufacture and use of any type of isobaric mass tags.
Commercialisation is actively pursued across the portfolio of the Company's
programmes and technologies with licensing deals signed in biomarkers for
Stroke and TSEs and for ProteoSHOP®.
Proteome Sciences has its headquarters in Cobham, Surrey in the UK and has
laboratories at Kings College Hospital, London and Frankfurt Innovations
Zentrum (FIZ), Frankfurt. It employs 32 full time scientists in addition to its
corporate and business development staff, and has collaborative research
agreements with leading academic institutes. The Company is listed on the
Alternative Investment Market.
Chairman's Statement
For the year ended 31st December 2006
Dear Shareholder,
I am pleased to report that good progress has been made in the year under
review, a period in which considerable advances have been made commercially,
scientifically and in the company's intellectual property portfolio. This
momentum has continued into 2007.
The profile of and interest in biomarkers has grown rapidly on the back of the
US FDA's Critical Path Initiative and the major clinical problems which have
resulted in a number of major drug withdrawals. Industry estimates forecast
that the biomarker market is expected to quadruple to around $21.2bn by 2012
from just over $5.4bn in 2005. Proteome Sciences should be particularly well
placed to exploit the prolific growth projected from biomarkers, having its
core activities centred on biomarker discovery and, in particular, on biomarker
validation.
The rapid expansion and acceptance of isobaric tandem mass tags to deliver
quantitative mass spectrometry has provided the ideal backcloth against which
Proteome Sciences has obtained allowances for its TMT1 and TMT2 patents and
should enable it to conclude commercial licences for the manufacture and use of
any type of isobaric tandem mass tags (TMT®). Completion of the TMT® licences
remain our highest short term priority and the grants of the TMT1 and TMT2
patents put the company in an outstanding position to generate substantial
revenues from a combination of licence payments, back-licence payments, product
sales and royalties. The market for isobaric tandem mass tags continues to
grow disproportionately fast and earlier estimates of the revenue that may be
generated over the patent lives appear to have considerably underestimated the
scale and importance of quantitative mass spectrometry.
An extensive marketing campaign was launched for ProteoSHOP® in the second
quarter of 2006 and this has resulted in a strong level of enquiries and
contracts under discussion that will be reflected in revenue in the first half
of 2007 and beyond. The marketing efforts have been augmented again in the
current year, with attendances and presentations more focussed towards the main
biomarker and mass spectrometry conferences and meetings.
In biomarkers, further research licences were concluded in stroke and another
two licences were announced in high throughput screening (HTS) in the first
half of the year with two of the top ten global companies in clinical
diagnostics (BioMerieux was one) and a subsequent research licence agreement
with another global diagnostics player was concluded in the second half of
2006. The remaining in-vitro diagnostics companies in the global top twenty
have been targeted and, as some of the earlier research licences may convert
into full commercial licences later in the year, further and additional
licences and licencees are expected.
In 2006, 25 patents have been granted including oesophageal cancer, acute
rejection, protein sequence tags, sensitizer and tandem mass tags, and new
patent applications have been made for discoveries made in colorectal cancer,
renal rejection, brain damage, stroke, Alzheimer's disease and tandem mass
tags.
Reagents
Not surprisingly, over the last year the rapid expansion and acceptance of
isobaric tandem mass tags has attracted considerable interest from the field of
research and shareholders alike. In the short term, the commercial priority
for our company is concentrated on Tandem Mass Tags® and the different streams
of revenue that will be generated principally from the TMT® reagent products on
one side and from licencing the intellectual property relating to the field of
isobaric mass labelling on the other.
The TMT® isobaric tandem mass tagging has advanced considerably over the last
twelve months. A duplex reagent was initially developed that is complemented
by TMTzero and a fully functioning six-plex set of mass tags. The six-plex
tags provide accurate differential quantitation of protein expression in six
samples simultaneously within one experiment. Powerful data using TMT®
six-plex in complex samples of human plasma in renal transplant rejection was
presented at the 7th Siena Meeting, 'From Genome to Proteome : Back to the
Future', in September 2006.
New and different applications for TMT® have been, and continue to be,
developed. At the Biomarker World Congress in Philadelphia, USA in May 2007
Proteome Sciences demonstrated the use of Tandem Mass Tags® to generate
universal biological reference materials, a novel application for isobaric
tandem mass tags for which further patent applications have been filed.
This heralds a range of universal reference materials based on TMT®, the
development of which has been validated with complex human samples to show
dramatic improvements in the reproduceability and comparability of proteomics
studies for biomarker discovery. Biological reference materials for exact and
reliable absolute quantitation for biomarker validation and measurement have
also been demonstrated that will add to this growth. In light of these
developments, TMT®, for the first time, can now be applied as a consumable
product in the high volume/high value applications in clinical trials and
compound development/testing.
Highly specialist skills are required to undertake protein separation and
identification for biomarker discovery. Notwithstanding these, the real
bottleneck hampering most biomarker studies is no longer the discovery process
but the ability to undertake biomarker validation efficiently and in a timely
and effective manner. Using chemical mass tags and peptide synthesis,
ProteoSHOP® is now able to provide proprietary solutions to these issues. The
cost and timescales for developing multiplex assays in drug development
restrict the use of antibody methods, which typically can cost between $1 and
$3m per protein and take between 18 to 36 months to implement. Proteome
Sciences has established and presented strategies for new multiplex assays
using proprietary chemical tags that can be developed quickly (in three months)
and inexpensively. These provide high value applications to a very broad mass
spectrometry user base and with the ability to measure a number of biomarkers
simultaneously. This will address and open up substantial new revenues and
markets.
Since December 2006, the encouraging progress reflected in the patent
prosecution process for TMT1 and TMT2 has been crystallised with the grants and
/or allowances of TMT1 patents in the US, Europe and Canada and the grants for
TMT2 in Europe and Canada. The allowances of these patents in the US and
Europe have provided Proteome Sciences broad claims across the field of
isobaric tandem mass tagging with the ability to exploit TMT® in these
substantial markets, both as a product in its own right and for third party
licences for the manufacture or use of any type of isobaric mass tags.
Initial estimates for isobaric tandem mass tags in 2005 projected sales into
hundreds of millions dollars over the TMT® patent lives. These figures appear
conservative and with three products currently available, the market continues
to grow at a rapid pace and may have already increased to between $600m and
$1.4bn. The latest patent grants should now enable Proteome Sciences to
complete commercialisation of TMT® through outlicencing and thus to generate
strong revenue through licence income, product sales and royalties. The goal
is to have licences concluded and to have TMT® products launched in the market
in the second half of the year.
Biomarkers
The proprietary research undertaken internally and through collaborative
partners is applied to discover and validate a broad portfolio of biomarkers
for diagnostic and prognostic uses in major human and veterinary diseases, for
the evaluation of new compounds and for measuring and monitoring the efficacy
of treatment.
In stroke, two research licences for high throughput screening (HTS) were
announced with top ten global companies in clinical diagnostics in the first
half of 2006, one of which was BioMerieux. A further research licence
agreement with another global diagnostics player was reported in September,
taking the number of stroke licences concluded to date to four. It is expected
that these earlier research licences may convert into full commercial licences
when the testing and integration processes are completed later this year, and
further additional licences and licencees are anticipated with the remaining
global top 20 diagnostics companies. Good new data has been generated from the
recently sourced stroke and stroke mimic samples to validate further existing
biomarkers and to identify additional biomarkers for inclusion on the HTS
stroke panels. A new biomarker in blood, NDKA, that discriminates stroke from
a range of mimic pathologies, correlates with the clinical outcome of patients
and could further improve the performance of our stroke panel for stroke
treatment and management.
Patents were granted in the US and Europe in December 2006 and January 2007
respectively for 'Diagnostic Assay for Stroke' by measuring the levels of heart
fatty acid binding protein or brain fatty acid binding protein (FABPs, two of
our proprietary biomarkers found in the blood of stroke patents). This was
further validation of the patentability of proteomic biomarkers in the two
largest economic markets and underpins the value and importance of Proteome
Sciences' extensive intellectual property portfolio in biomarkers. This will
enhance the continuing licensing process and should stimulate a number of other
major global players in clinical diagnostics to include and develop our
biomarkers as in-vitro diagnostic tests.
The research effort in brain diseases using cerebrospinal fluid has been highly
successful with the identification of approximately 200 novel candidate
biomarkers with potential applications across a diverse range of brain
disorders. A targeted approach to extend and leverage this valuable resource
is underway. The data, results and intellectual property from this research
should create outstanding opportunities for commercial exploitation over many
years which will arise from research reagents and disease specific diagnostic
and prognostic markers.
A study demonstrating the power of the TMT® sixplex isobaric tandem mass tags
for biomarker discovery using mass spectrometry was undertaken in plasma from
renal transplant samples. This demonstrated the power and accuracy of relative
quantitation across several hundred proteins and resulted in the discovery of
novel differentially expressed biomarkers that confirmed and extended the
validation of results previously announced and added significantly to the
candidate biomarkers discovered from an earlier 2-DE study.
The advantage of the TMT® sixplex was that it identified a greater number of
novel candidate biomarkers of renal transplant rejection and provided direct
quantitative comparison of protein abundance when compared with the previous
2-DE study of the same samples. This confirms the power and utility of
isobaric mass labels for the rapid discovery and validation of biomarkers and
the impact that they will have on the future of proteomics.
In Alzheimer's disease (AD), Proteome Sciences co-authored a high profile
publication in the peer reviewed journal 'Brain' with Kings College, Institute
of Psychiatry, London that confirmed the identification of two protein
biomarkers in blood from a 500 patient study in the UK. This has been followed
by another study comparing 50 disease versus 50 control patients using a
combination of three different proteomic approaches that has revealed 36
differentially expressed proteins in blood, ten of which were common to more
than one method. These are being evaluated for their utility to diagnose and
monitor AD progression.
Following the previous identification of 37 tau phosphorylation sites, a
virtual library of small molecule 'hits' was built to validate the new
targets. A selection of compounds with drug-like properties has been
established and the subsequent stage will involve testing the compound
activities.
From the vCJD programme, patents have been filed for plasma protein markers in
vCJD and Huntington's disease and a patent filed for a novel test identifying
disease specific peptide fragmentation. These protein markers are being
further validated as are the large set of BSE samples, where candidate
biomarkers are being assessed for suitability for panel inclusion.
In lung and oesophageal cancer research, Proteome Sciences has developed a
quality-controlled immunohistochemical assay for assessing the levels of
Annexin 1 and 2 protein expression in tissue from patients with various types
of lung cancer. The expression of Annexins in non-small cell lung cancers may
provide an important new diagnostic for the early identification of tumour
cells from lung biopsies compared with normal cells and for inflammatory cells
migrating to the lung. Plasma samples have been received and processed from
patients with colon cancer to be added to and to further validate the 22
differentially expressed proteins discovered in tissue earlier in the year.
ProteoSHOP®
The development and availability of qPST to increase the coverage of proteins
in combination with 2-DE in the second quarter of 2006 was the catalyst to
embark on an extensive marketing campaign for ProteoSHOP®. Moving into 2007
this process has been augmented by the introduction of a family of TMT®
isobaric tandem mass tags (TMT®zero, TMT®duplex and TMT®sixplex) and the
introduction of TMT® calibrator for absolute quantitation with
multipoint-calibration, TMT® labelled reference materials and TMT® with MRM to
accelerate biomarker candidate evaluation for clinical diagnostics,
pre-clinical and clinical drug development and systems biology approaches.
The benefits of the expanded technical developments and applications will be
reflected in the revenue line in the first half of 2007 and we expect that the
additional interest generated will convert into further ProteoSHOP® strategic
alliances and contracts. In April 2007, a ProteoSHOP® research contract was
announced with Onconome Inc for the analysis of prostate and colon cancer
materials.
A co-marketing agreement was announced in March 2006 with Medical Solutions
plc, a company specialising in immunohistochemistry with automated image
analysis in histopathology. The combination of the two companies complementary
technologies provides customers with a one-stop-shop from biomarker discovery
through to implementation in diagnostics and drug development.
Veri-Q
No material events of significance have taken place at Veri-Q since last
September.
The quality of oligonucleotides is often compromised by the incomplete removal
(de-protection) of certain chemical groups required for proper chemical
synthesis which creates inaccurate and misleading results. Veri-Q has shown
that the presence of these impurities also has a substantial effect on the
performance of gene expression analysis using microarrays.
Two high profile scientific papers have now been published, one in Nucleic
Acids Research 'Assessing incomplete deprotection of microarray
oligonucleotides in situ' and the second, in Analytical Biochemistry entitled
'Quality assessment of commercial small interfering RNA and DNA : Monoclonal
antibodies and a high-throughput chemiluminescence assay'. The content of
these articles, and pilot projects undertaken highlight the prospects of these
QC reagents and should accelerate the outlicencing process for RNAi and DNA
microarrays. The programme to develop further antibodies against the
deprotecting groups is underway and this process should be concluded shortly.
Intronn
Since the publication of the interim results, steady progress has continued
through 2006 into the current year. This follows the outstanding performance
of the science in the previous year with in-vivo proof of principle for
dyslipidemia, AAT and haemophilia nearly 12 months ahead of schedule.
With the development of the high throughput screen and the in-vivo proof of
principles completed for SMaRT®, the research was focused accordingly to
contain costs by moving to smaller facilities and to make Intronn self
sufficient from grants and its other resources in order to concentrate on the
preparation and design of clinical trials for two high-value lead programmes,
dyslipidemia and haemophilia.
Intronn continues to work hard to establish the right strategic partners/
alliances for the clinical and commercial development of SMaRT®, and is in
negotiations to secure further funding to move it into clinical trials. This
process has been assisted by the recent issuance of SMaRT® patents in the US,
Europe, Australia and Canada. Intronn was awarded a NIH grant to use SMaRT® in
combination with RNAi and has submitted a major NIH grant application in July.
Further developments are expected in the second half of the year.
Results
The financial results for the twelve month period ended 31st December 2006 show
a headline loss (being the loss for the financial year excluding non-cash costs
and share of associate company's losses) of £4,656,000 compared with £4,166,673
in 2005. Non cash costs (amortisation of goodwill, amounts written off fixed
asset investments, depreciation and National Insurance on notional share option
gains, as extracted from the profit and loss account) were £855,987 against £
1,262,689. The period to 31st December 2006 also contains a share of
associate's losses at Intronn Inc. of £372,487 (2005: £735,684). Under FRS 20
"share-based payment" the Company is required to recognise an expense in the
profit and loss account in respect of share options and awards under the Long
Term Incentive Plan. The charge is based on the fair value of the option at
the time of grant, calculated using the Black Scholes option pricing model and
expensed to the profit and loss account over the related vesting period of the
option. The resulting charge in 2006 was £462,661 compared to £731,659 in
2005.
The loss on ordinary activities after taxation for the twelve month period
ended 31st December 2006 was £6,377,135 (2005: £6,896,705). The net cash
outflow from operating activities for the year was £4,465,256
(2005: £4,908,985).
At the year end, cash held on deposit stood at £304,225 (2005: £2,587,155).
The cash spend in 2006 was consistent with previous years and this pattern is
expected to continue in 2007. The licences announced and the commercialisation
anticipated, combined with grant income and the R&D tax credit, should provide
significant cash inflows and have a positive effect on the financial
requirements of the Company. As previously announced, a loan facility of up to
£4 million has been made available to the Company from C.D.J. Pearce, the Chief
Executive, details of which are disclosed in Notes 18 and 30 to the accounts.
The directors have assumed that the timing of the cash inflows from the
anticipated commercial income will be appropriate to meet the cash requirements
of the business; however, due to the current cash burn, the timing of receipt
of the aforementioned cash inflows is important and therefore there can be no
certainty regarding the availability of funding for the next 12 months.
Having regard to the assumptions made in respect of the timing of receipt of
the anticipated commercial income, combined with grant income, and the R&D tax
credit and other cash inflows, including the loan facility of up to £4 million
made available by C.D.J. Pearce, the directors continue to adopt the going
concern basis in preparing the accounts, and accordingly the financial
statements do not contain any adjustments that would result if sufficient
commercial income were not to be received on a timely basis.
In relation to the loan facility from C.D.J. Pearce, the Directors of the
Company, (with the exception of C.D.J. Pearce who, in view of his interest in
the transaction, has taken no part in the consideration thereof), having
consulted with its nominated adviser, consider that the terms of this
transaction are fair and reasonable insofar as shareholders are concerned.
As previously announced, the Company filed a claim on 29th December 2005 in the
District Court of Frankfurt am Main ("the Court") against Sanofi-Aventis
Deutschland GmbH ("Sanofi-Aventis") under which it is seeking damages of up to
€30 million for, amongst other things, the breach of certain warranties
provided by Sanofi-Aventis at the time of the acquisition of Xzillion
Proteomics GmbH & Co KG (now Proteome Sciences R&D GmbH & Co KG) on 4th July
2002. The process has moved ahead in the second half of 2006 and into 2007,
but, to date, there have been no major developments.
Full provision of all costs arising in 2006 in connection with the claim has
been made in the 2006 financial statements. Whilst it is not possible to
predict the outcome of this matter, the Directors are pursuing this action
vigorously and will keep shareholders informed of material developments.
Current Outlook
The considerable advances that have been made by the Company over the period,
particularly in respect to TMT®, both in terms of the development of a family
of TMT® products and through the grant of patents should enable us to now
fulfill the commercial expectations that have been anticipated for some time.
Our goal is to have TMT® products launched in the market in the second half of
the year and to complete the outlicencing of TMT® to generate strong revenue
through licence income, product sales and royalties.
On the biomarker activities, we are optimistic that the earlier research
licences that have been concluded in stroke should convert into full commercial
licences when the testing and integration processes are nearing completion
later this year and that additional licences will be forthcoming from further
of the global top 20 diagnostics companies and that we should also start to see
licencing activity from the biomarkers that we have discovered in Alzheimer's
disease.
The development and availability of qPST, provided the catalyst to embark on an
extensive marketing campaign for ProteoSHOP®. This has been continued in 2007
with the introduction of the TMT® family, in particular for use in absolute
quantitation, for biological reference materials and with MRM to accelerate
biomarker candidate evaluation for clinical drug development and trials. The
benefits of the expanded technical developments and applications will be seen
in revenue in the first half of 2007 and that the additional interest generated
will convert into further ProteoSHOP® strategic alliances and contracts.
Proteome Sciences is ideally positioned to exploit the prolific growth
projected for biomarkers and to maximise its opportunities from Tandem Mass
Tagging®, both from TMT® as a product and from the manufacture and use of any
type of isobaric tandem mass tags.
Against this background, the prospects for our company look very promising and
we look forward to realizing that potential in the current year.
Finally, I would like to take this opportunity to thank our employees in the UK
and overseas, and our collaborators for their determination and commitment to
the progress achieved over the last twelve months.
Steve Harris
Chairman
29th June, 2007
Unaudited consolidated profit and loss account
For the year ended 31st December 2006
2005
2006 (as
re-stated)
£ £
Turnover - continuing operations 68,469 16,200
Cost of sales (47,928) (11,340)
__________ __________
Gross profit 20,541 4,860
Administrative expenses excluding non-cash (5,054,848) (4,764,026)
items
Amortisation of goodwill (648,960) (648,960)
Depreciation (291,682) (425,843)
National Insurance on notional share option 54,655 (75,008)
gains
Share-based payment (462,661) (731,659)
Administrative expenses (6,403,496) (6,645,496)
__________ __________
Operating loss - continuing operations (6,382,955) (6,640,636)
Share of associate's operating loss (372,487) (735,684)
__________ __________
Group operating loss - continuing operations (6,755,442) (7,376,320)
Interest receivable and similar income 44,835 140,628
Amounts written off fixed asset investment - (112,878)
Interest payable and similar charges (36,637) (882)
__________ __________
Loss on ordinary activities before taxation (6,747,244) (7,349,452)
Tax credit on loss on ordinary activities 370,109 452,747
__________ __________
Loss for the financial year (6,377,135) (6,896,705)
__________ __________
Headline loss (4,656,000) (4,166,673)
__________ __________
Loss per share
Basic and diluted loss per share (4.85p) (5.34p)
Headline loss per share (3.54p) (3.22p)
__________ __________
Unaudited reconciliation of loss per share to headline loss per share
The headline loss and headline loss per share is presented by the Directors as
an additional measurement of financial performance. The calculations of
headline loss per ordinary share are based on the following losses and on the
numbers of shares shown in note 3 to this statement.
2006 2006 2005 2005
Loss per (as
share re-stated)
Loss per
share
£ pence £ pence
Loss for the financial year (6,377,135) (4.85) (6,896,705) (5.34)
Add back/(deduct):
Amortisation of goodwill 648,960 0.50 648,960 0.50
Amounts written off fixed asset - - 112,878 0.09
investment
Depreciation 291,682 0.22 425,843 0.33
National Insurance on notional (54,655) (0.04) 75,008 0.06
share option gains
Share of associate's operating 372,487 0.28 735,684 0.57
loss
Share based payment 462,661 0.35 731,659 0.57
__________ _______ __________ __________
Headline loss (4,656,000) (3.54) (4,166,673) (3.22)
__________ _______ __________ __________
Unaudited consolidated balance sheet
As at 31st December 2006
2006 2005
(as re-stated)
£ £
Fixed assets
Intangible assets 3,569,281 4,218,241
Tangible assets 546,509 489,058
Investments in associates 562,328 954,837
Other investments - -
__________ __________
4,678,118 5,662,136
__________ __________
Current assets
Debtors 673,998 1,326,592
Cash held on deposit as short term investment - 1,900,000
Cash at bank and in hand 304,225 687,155
__________ __________
978,223 3,913,747
__________ __________
Creditors: Amounts falling due within
one year (3,570,290) (1,433,260)
__________ __________
Net current (liabilities)/assets (2,592,067) 2,480,487
__________ __________
Total assets less current liabilities 2,086,051 8,142,623
(188,043) (188,043)
Provisions for liabilities and charges (49,282) (103,937)
__________ __________
Net assets 1,848,726 7,850,643
__________ __________
Capital and reserves
Called-up share capital 1,314,654 1,314,512
Share premium account 29,150,563 29,145,773
Equity reserve 1,795,971 1,333,310
Other reserve 10,755,000 10,755,000
Profit and loss account (41,167,462) (34,697,952)
__________ __________
Shareholders' funds 1,848,726 7,850,643
__________ __________
Unaudited consolidated statement of total recognised gains and losses
For the year ended 31st December, 2006
2006 2005
(as
re-stated)
£ £
Loss for the financial year (6,377,135) (6,896,705)
(Loss)/Gain on foreign currency translation (92,375) 73,840
Gain on deemed part disposal of associate - 111,536
__________ ___________
Total recognised gains and losses relating to the (6,469,510) (6,711,329)
year
___________
Prior year adjustment (1,333,310)
__________
Total recognised gains and losses since last (7,802,820)
annual report
__________
Unaudited consolidated cash flow statement
For the year ended 31st December 2006
2006 2005
£ £
Net cash outflow from operating activities (4,465,256) (4,908,985)
Returns on investments and servicing of 8,198 139,746
finance
Taxation 891,968 -
Capital expenditure and financial investment (357,411) (181,334)
__________ __________
Cash outflow before use of liquid resources (3,922,501) (4,950,573)
and financing
Management of liquid resources 1,900,000 (100,000)
Financing 1,639,571 5,111,785
__________ __________
(Decrease)/increase in cash in the year (382,930) 61,212
__________ __________
Reconciliation of operating loss to operating cash flows
2006 2005
(as re-stated)
£ £
Operating loss (6,382,955) (6,640,636)
Depreciation charges 291,682 425,843
Amortisation charges 648,960 648,960
Share-based payment 462,661 731,659
(Decrease)/increase in provisions (54,655) 75,008
Profit on sale of tangible fixed - (5,805)
assets
Increase in debtors (924) (139,862)
Increase/(decrease) in creditors 569,975 (4,152)
__________ __________
Net cash outflow from operating (4,465,256) (4,908,985)
activities
Notes to the financial information
1. The Group has changed its accounting policy during the year in
respect of the adoption of FRS20 "share-based payment". The comparative
figures in this unaudited statement and notes have been restated to reflect the
new policy. The adoption of FRS 20 for the year to 31st December 2005 has
impacted upon the results and financial position of the Company as follows:
Group 2005
£
Profit and loss account
Administrative expenses (731,659)
________
Decrease in profit for the (731,659)
financial year
Balance Sheet
Equity reserve 1,333,310
Profit and loss deficit (1,333,310)
________
Increase / (decrease) in net -
assets
2. Following the loss for the financial year of £6,377,135, the Directors do
not recommend the payment of a dividend.
3.
a. The calculation of the loss per share for the year ended 31st
December 2006 is based on the loss for the financial period of £6,377,135 and
on 131,467,466 Ordinary Shares, being the weighted average number of shares in
issue and ranking for dividend during the period (year ended 31st December 2005
- re-stated loss £6,896,705, weighted average number of Ordinary Shares in
issue and ranking for dividend, 129,243,696).
b. The losses used to calculate the headline loss per share are as follows:
2006 2006 2005 2005
Loss per (as
share re-stated)
Loss per
share
£ pence £ pence
Loss for the financial year (6,377,135) (4.85) (6,896,705) (5.34)
Add back/(deduct):
Amortisation of goodwill 648,960 0.50 648,960 0.50
Amounts written off fixed - - 112,878 0.09
asset investment
Depreciation 291,682 0.22 425,843 0.33
National Insurance on notional (54,655) (0.04) 75,008 0.06
share option gains
Share of associate's operating 372,487 0.28 735,684 0.57
loss
Share based payment 462,661 0.35 731,659 0.57
__________ ________ __________ ______
Headline loss (4,656,000) (3.54) (4,166,673) (3.22)
__________ ________ __________ ______
The headline loss per share is presented by the Directors as an additional
measure of financial performance.
4. The preceding financial information does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985. The financial information
for the year to 31st December 2005 is based on the statutory accounts for that
year. These accounts, upon which the auditors issued an unqualified opinion,
and which did not contain any statement under Section 237(2) or (3) of the
Companies Act 1985, have been delivered to the Registrar of Companies.
The statutory accounts for the year ended 31st December 2006 will be finalised
on the basis of the financial information presented by the Directors in this
preliminary announcement and will be posted to shareholders today. After that
time, they will also be available at the Company's registered office: Coveham
House, Downside Bridge Road, Cobham, Surrey KT11 3EP.
5. Whilst it is anticipated that the company will receive an unqualified
audit report for the year ended 31st December, 2006, the audit report will
contain the following additional paragraph:
"Emphasis of matter - Going Concern
Without qualifying our opinion, we draw attention to the disclosures made in
note 2(b) of the financial statements concerning the Group's ability to
continue as a going concern. The Group incurred a net loss of £6,377,135 during
the year ended 31st December 2006, with a headline loss of £4,656,000 (being
the loss for the financial year excluding non-cash costs and share of associate
company losses) and a net cash outflow from operating activities of £
4,465,256. This, along with other matters as set forth in note 2(b), indicates
the existence of a material uncertainty which may cast significant doubt about
the company's ability to continue as a going concern. The financial statements
do not include the adjustments that would result if the company was unable to
continue as a going concern."
6. (a) On 29th June, 2006 the company entered into an agreement with C.D.J. Pearce,
the Chief Executive of the company, under which he agreed to provide an unsecured
loan facility of up to £2m to the company. The loan facility will be available
from the 1st August, 2006 and carries interest at 2.5% above the base rate of
Barclays Bank Plc.
It is repayable on seven days notice, or immediately in the event of:
(i) C.D.J. Pearce ceasing to be an executive director of the company.
(ii) A general offer to the shareholders of the company being announced to acquire
its issued share capital.
(iii)The occurrence of any of the usual events of default attaching to this sort of agreement.
(b) On the 21st February 2007 it was announced that C.D.J. Pearce had
agreed to increase the total size of the facility to up to £4m, on the same
terms, save that in view of the size of the loan facility, it was agreed that
security for the loan should be charged against the company's patent portfolio
up to the value of the loan outstanding and that the loan should be
convertible, at Mr. Pearce's option, into ordinary shares of the Company at the
lower of market price on the date of conversion or the average price over the
lowest consecutive ten day trading period since the 29th June 2006 (the date on
which details of the original loan agreement were disclosed).
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