Final Results
Stem Cell Sciences plc
07 February 2007
Stem Cell Sciences plc
Preliminary Results for the year ended 31 December 2006
("Stem Cell Sciences", "SCS, "the Company" or "the Group")
7 February 2007
Stem Cell Sciences plc, the global biotechnology company focused on the
commercialisation of stem cells and stem cell technologies in research and novel
cell-based therapies, is pleased to announce preliminary results for the year
ended 31 December 2006.
Highlights
• Revenues generating in three of four SCS business units:
- SC Proven(R) - supply of growth formulations and other reagents for
stem cell-based research
- SC Services - custom engineering and supply of cells for drug
discovery and development
- SC Licensing - provides access to proprietary SCS technologies
• SC Therapies - stem cell-based therapeutics
- Programmes to test SCS' proprietary stem cells in animal models of
spinal cord injury and age-related macular degeneration initiated and in
preparation respectively.
• Exclusive license agreement signed with Millipore Corporation to develop
and market the Company's serum free media for the growth of human embryonic
stem cells ("hESCs") - a further licensing deal between the two companies.
HEScGRO medium is the first commercially available animal component free
medium for human ES growth.
• Two new licensing deals signed with major pharmaceutical companies
including one evaluation license and one non-exclusive research license.
Both licenses provide SCS with up-front fees, the latter also providing
milestone payments and SCS technology licensing options to improvements in
SCS technology.
• Opening of the new automated stem cell production facility at the
Babraham Research Campus in Cambridge (UK), enabling the Company to grow and
supply its novel stem cell based drug discovery and development assays for
the world pharmaceutical industry. The facility also includes a state of the
art robotic cell culture machine, the CompacT SelecT(TM).
• Strengthening of the Board with appointment of Jeremy Scudamore and David
Dodd as Non-Executive Directors. Subsequent to his appointment, David Dodd
was appointed Non-Executive Chairman effective 1 January 2007 with Michael
Dexter continuing to serve as Senior Independent Non-Executive Director.
David's significant commercial and corporate life sciences experience,
having held a number of executive positions with companies such as
Serologicals Corporation, Solvay Pharmaceuticals, Wyeth, Bristol-Myers
Squibb and Abbott Laboratories, and excellent track record in US commercial
and financial markets will be instrumental in taking Stem Cell Sciences
forward to the next stage of its development.
• Expansion of US academic and commercial networks via U.S. subsidiary SCS llc
(San Francisco, CA). SCS llc is focused on building sustainable academic
and commercial collaborations throughout North America.
• Successful co-applicant in the European Commission approved 'ESTOOLS'
programme, a world leading €12 million stem cell research programme
involving both academic and commercial researchers. Stem Cell Sciences is
one of three commercial partners taking part in this Framework Programme
(FP) VI initiative which is being led by the University of Sheffield.
• Shareholders' approval of proposed dual listing on the Australian Stock
Exchange ("ASX") in the first half of 2007 to raise up to AUS$10m, whilst
continuing to trade on the Alternative Investment Market of the London Stock
Exchange ("AIM").
Peter Mountford, President and CEO of SCS, commenting on the outlook for 2007,
said:
"The Company made significant progress in pursuing its strategy, particularly
strengthening the infrastructure and business development. Importantly, with
these solid foundations, and the successful in-licensing of several new
products, SCS expects to see revenue growth in the coming year. The Board
continues to be optimistic on the opportunities available to SCS and looks
forward to an exciting 2007."
- Ends-
For further information, please contact:
Stem Cell Sciences plc
Peter Mountford, President and CEO 0131 662 9829
Hugh Ilyine, Vice President and Chief Operating Officer
Sue Furber, Director of Finance & Company Secretary
Weber Shandwick Financial
Louise Robson or James White 020 7067 0700
About Stem Cell Sciences plc
Stem Cell Sciences plc (SCS, AIM: STEM) is a global biotechnology company,
established in Melbourne, Australia in 1994, providing products in the
burgeoning stem cell research and drug discovery markets, in addition to the
targeted development of cell-based therapies for neurodegenerative disease and
injury.
The Company has established a leading intellectual property (IP) and technology
portfolio that enables the commercial application of stem cells in drug
discovery, providing the Company with early-stage revenue streams and technology
development for at scale cell production of SCS cell-based therapeutics. SCS
principal focus is in neurological disease. Revenues in the neurotech market,
including pharmaceuticals, devices and diagnostics, grew 10% in 2005 to US$110
billion Neurotech Insights, Volume 2/3 April 30 2006.
SCS operates as a group of independent operations with laboratories in Scotland,
Japan and Australia, each of which is affiliated with an academic centre of
excellence. These include the Institute of Stem Cell Research (ISCR), Edinburgh,
UK, RIKEN Centre for Development Biology, Kobe, Japan and the Australian Stem
Cell Centre, Melbourne, Australia.
SCS has four business units focused on key sustainable business strategies.
SC Proven(R) provides cell culture media (liquid formulations) and reagents that
enable the growth and differentiation of stem cells. The first commercially
available product, a novel, serum free, stem cell growth medium, has been
exclusively licensed for manufacture and marketing to Chemicon, part of
Millipore Corporation.
SC Licensing licenses SCS proprietary technologies, such as Internal Ribosome
Entry Site (IRES) and Stem Cell Selection, for application in laboratory-based
research and discovery. SCS has licensed technology to major pharmaceutical and
biotechnology companies including Pfizer, Sanofi Aventis, GSK, Deltagen Inc and
Lexicon Genetics Inc.
SC Services provides specialised stem cell production for basic research and
drug discovery, including high-throughput applications.
SC Therapies' goal is to develop safe and effective cell-based therapies for
currently incurable diseases. SCS is conducting preclinical evaluations of its
neural stem cell lines in a number of therapeutic applications. The first
preclinical programme being undertaken by SCS is in spinal cord injury repair.
Its Japanese affiliate SCS KK will conduct preclinical studies for the treatment
of Duchenne Muscular Dystrophy in 2007-8. For further information on the company
please visit: www.stemcellsciences.com
Stem Cell Sciences plc
Preliminary Results for the year ended 31 December 2006
("Stem Cell Sciences", "SCS", "the Company" or "the Group")
7 February 2007
Chairman's Statement
I am pleased to provide you with this update on the continued successful
developments of Stem Cell Sciences during 2006, our first full year as a public
company.
SCS is focused on the commercial application of stem cell biology, achieving
current revenues through the application of our technologies in stem cell
research and drug discovery, while continuing to invest our efforts long-term
into the development of novel stem cell therapies for targeted neurological
diseases.
This year has been highly significant for SCS operationally and in terms of
growing the business. During the year the Company met a number of milestones
including new agreements and collaborations, the launch of the first commercial
product and the opening of new sites in Cambridge, UK and California, USA.
The opening of the new automated stem cell production facility in December 2006
at the Babraham Research Campus in Cambridge enables the Company to grow and
supply its novel stem cell-based drug screens and assays for the world pharmaceutical
industry using state of the art robotic cell culture equipment.
The Company also established a U.S. subsidiary in San Francisco, California
which is focused on building sustainable research, development and commercial
collaborations throughout North America in order to expand its global presence
and pursue further developments in the US market.
Under the Company's exclusive license agreement with Millipore Corporation, the
first commercial product, ESGRO(R) Complete, was launched in February 2006.
Later in the year the Company signed a second exclusive agreement with Millipore
to develop and market the Company's serum free media for the growth of human
embryonic stem cells ("hESCs"). This product, HEScGRO(R) was launched in January
2007.
In November the SC Therapies unit commenced the Company's therapeutic programme
in spinal cord injury signing a collaboration with the Regenerative Medicine
Institute at the National University of Ireland, Galway, with the Group's NS
cells entering preclinical testing for spinal cord injury at the Institute.
As part of Stem Cells Sciences' ongoing involvement in Government initiatives
the Company announced its participation in the European Commission approved
'ESTOOLS' programme, a world leading €12 million stem cell research programme
involving both academic and commercial researchers. Stem Cell Sciences is one of
three commercial partners taking part in this Framework Programme ("FP") VI
initiative which is being led by the University of Sheffield.
Stem cells hold great promise to deliver longer-term potential as safe and
effective treatments for a variety of human illnesses that are currently without
cures. The Company aims to be a key provider of the cellular materials needed
for these therapies. By using stem cells, scientists are already able to
investigate and better understand normal body processes and those of human
disease, by testing specific genes to identify their role in cells, and to
discover and test new drugs in a representative 'human' environment. The ability
to grow and use stem cells in the laboratory is accelerating basic research and
will ensure faster and more successful drug discovery and development. The key
challenges for the successful application of stem cells are robust and
reproducible growth and differentiation (generation of pure populations of the
desired cell type). Stem Cell Sciences has developed, and continues to
methodically develop, the products and technologies needed to overcome these
challenges. During 2006, the Company initiated the therapeutic evaluation of its
proprietary NS cells in several areas of neurological diseases including,
collaborations and evaluations to test cells in animal models of spinal cord
injury, age-related macular degeneration and Duchenne's Muscular Dystrophy.
The Company recognises that the development of new cell-based therapies will
require the support and participation of multiple organisations and individuals
including governments, universities, clinicians, financiers, patients and
patient support groups, on a world-wide and collaborative basis. To this
purpose, the Company continues to build a global network of operations to
facilitate interaction and access to key contributing academic and commercial
organisations around the world.
In addition to achieving commercial progress and in several areas of research
and development, the Company continued to strengthen its board of Directors
through new additions and organising for the long-term commercial success. In
July 2006, Jeremy Scudamore joined our board as a Non-Executive Director, which
was followed by my joining in October, 2006 and subsequent appointment as
Non-Executive Chairman on 1 January 2007.
It is an honour to work with my fellow board members and the management team in
continuing to successfully develop Stem Cell Sciences. On behalf of the board, I
would like to thank Dr Mike Dexter for his leadership and service as Chairman
over the past 3 1/2 years. We are pleased that Mike will continue to serve on
the board as Senior Independent Non-Executive Director.
Finally, the Board would like to thank the Company's employees for their
continued commitment in building the success of SCS, as well as, thank you, our
shareholders, for your continued support of this exciting company. It is the
Board's focus to build increased shareholder value, while developing a highly
competitive organisation, serving customers world wide through the successful
application of our products, technologies and services in stem cell biology.
David A Dodd 6 February 2007
Chairman
Operating and Financial Review
Stem Cell Sciences was pleased to celebrate numerous significant milestones in
2006 including several new collaborative research and licensing agreements,
additional technology in-licensing and the openings of our new US office and our
automated cell production facility in Cambridge, UK.
Our agreements with organisations such as NeuroDiscovery Ltd, the Regenerative
Medicine Institute ("REMEDI") at the National University of Ireland, Galway,
Millipore Inc., the University of Nice, Sophia Antipolis, the Centre National de
la Recherche Scientifique ("CNRS") and additional new technologies in-licensed
from the University of Edinburgh, provide a mixture of revenue generating
licenses, new product opportunities and technology development programmes for
SCS.
Importantly, our achievements in 2006 are consistent with the Company's business
plan and efforts to further expand Stem Cell Sciences' position as a leader in
the stem cell field. A delay in anticipated revenue flow, in part due to
the delay in commissioning our automated production facility and the late
closure of a recent pharmaceutical company out-licensing deal have limited SCS
total revenues (including other operating income) to a marginal increase over our
2005 figures.
Financial Review
The Company reports turnover of £0.7m (2005: £0.8m) for the year ended 31
December 2006, comprising £0.5m project deliverables and royalties and £0.2m
product sales. The delay in anticipated revenue flow has resulted in a slight
decrease over our 2005 figures. However, we were pleased to report an increase in
royalties received and an associated broadening of our revenue base from our core
business units, SC Proven and SC Services.
Other operating income of £0.4m (2005: £0.2m) represents grant income from the
UK and European research consortia. Expansion to Research and Development
activities led to an increase in operating costs of 12% to £3.7m. Capital
expenditure for the year of £0.6m represented the considerable investment made
in the Cambridge automated cell-production facility.
Net cash outflow from operations was £2.4m and, after allowing for cash inflows
from investment returns and taxation received, the cash outflow before new
financing was £2.8m. The overall decrease in cash in the year was £2.8m; net
funds at the end of the year were £2.5m. Cash balances held are invested in
interest bearing accounts. The current cash resources are forecast by the
directors to be sufficient to enable the Group to continue to trade until August
2007.
In October 2006, SCS announced it was considering a dual listing on the
Australian Stock Exchange to raise up to AUS$10m which will be used to fund and
accelerate current business development and research activities. As the shares
were trading at below nominal value in order to facilitate the fundraising the
Company undertook a capital reorganisation which was approved by shareholders at
the EGM held on 1 November 2006. Each of the issued and unissued Ordinary
Shares of £0.50 each in the capital of the Company were subdivided into one
Ordinary Share of £0.01 and one Deferred Share of £0.49. On 9 November 2006 the
Company issued one Ordinary Share for £0.46 and used part of the proceeds
received from that issue to buy back all of the Deferred Shares that were in
issue. Following the buyback of the Deferred Shares by the Company all of the
Deferred Shares were cancelled.
The proposed flotation, which has received the approval of shareholders of the
Company in a general meeting, is at an advanced stage and has been publicly
announced. Costs of £230,000 are held in prepayments in relation to work carried
out by professional advisers in relation to the flotation to the extent that
these are costs which will be treated as issue costs in relation to the new
shares to be issued on the proposed flotation. While there can be no certainty
either that the proposed flotation will be successful or that it will raise the
required funds, the Directors are of the opinion that, taking into account
existing facilities available to the Company and the expected proceeds from the
Australian flotation, the funds available to the Group will be sufficient for
trading requirements for at least twelve months from the date of these financial
statements. The Company is progressing with the Listing and a further update
will be provided in due course.
Share Based Payments
During the year the Company has implemented FRS20 Share Based payments, which
increased administrative expenses by £130,000. This represents a notional charge
in respect of employee and director share options. The notional charge has not
impacted on the reported net assets, since the charge in the profit and loss
account is balanced by a credit to the reserves. Group cash flow is also
unaffected.
Performance of SC Business Units
SC Proven(R): Supply of growth media and reagents
SC Proven is responsible for the development and commercialisation of stem cell
culture media, cell lines and other reagents required to grow, differentiate and
apply stem cells to a variety of research applications. SC Proven(R) is a
registered trademark of the Company and products released under this trademark
generate trade mark fees, upfront licensing and renewal fees, milestone payments
and royalty income for SCS.
In 2005 the Company's SC Proven(R) business unit established a manufacturing and
distribution channel with Chemicon Inc., now part of Millipore Corporation, for
its serum free stem cell culture media products. The first SC Proven(R) product
for growth of mouse embryonic stem cells, ESGRO(R) Complete, was launched in
February 2006 and has been well received and broadly adopted by those
organisations trialling the product.
A further agreement for HEScGRO(R), a serum free cell culture media to enable
improved growth of human embryonic stem cells, was announced with Chemicon in
October 2006 and commercial sales commenced in January 2007. SCS believes that
this product is the first commercially available animal component-free medium in
the industry that offers improved methods for growing human embryonic stem cells
without the need for animal serum.
The current world market for cell culture media and reagents has been estimated
at US$950m, rising to US$1.8bn by 2010. Stem cell media products represent a
small component of this market although this is expected to grow as research in
this relatively new area of science expands through increasing government
research investment.
The Company is continuing to develop new cell culture media products suitable
for use with its mouse and human NS cells, and is also refining and developing
media for the production and differentiation of human multi-potentadipocyte-derived
stem ("hMADS") cells into fat, bone and muscle cells. SCS will continue to source
new discoveries to improve and expand on its SC proven(R) range.
SC Licensing: Providing access to proprietary stem cell technologies
This SC business unit sub-licenses the Company's proprietary portfolio of stem
cell technologies to the biotechnology and pharmaceutical industries.
Over the course of the year SCS continued to develop and strengthen its existing
licensing arrangements, signing two pharmaceutical licencing deals, as well as
seeking additional avenues for out licensing its technology. To develop market
penetration in the USA, SCS established a U.S. subsidiary in San Francisco,
California, and expanded its global business team with the addition of a Group
Business Development Manager.
The Company completed two pharmaceutical licensing deals in 2006 including its
first out-licensing evaluation programme for NS cells and a non-exclusive
licensing agreement. Both licenses provide SCS with up-front fees, the latter
also providing milestone payments and SCS technology licensing options to
improvements in SCS technology.
In July 2006, the Company in-licensed a novel human stem cell, hMADS cell, from
the University of Nice, Sophia Antipolis and the Centre National de la Recherche
Scientifique ("CNRS"). The cells are capable of producing fat and bone at very
high efficiency, and will be suited for drug discovery in such areas as obesity
and osteoporosis. SCS holds world-wide exclusive rights to commercialise these
cells for drug discovery in the field of obesity and an exclusive option in the
field of osteoporosis. SCS is currently progressing negotiations to out-license
the hMADS technology.
SC Services: Custom engineering and supply of cells for research and drug
discovery
In December 2006 SCS opened a new automated cell production facility at the
Babraham Research Campus in Cambridge, UK, enabling the Company to grow and
supply its novel stem cell based drug screens and assays for the pharmaceutical
industry using state of the art robotic cell culture equipment. The new facility
is equipped with robotic devices for automated, parallel production of multiple
cell lines and the Company will continue to expand services for contract
engineering and cell supply of Embryonic Stem ("ES") cells, hMADS and NS cells.
This significant investment by SCS is central to the Company's near term revenue
flow and longer-term business strategy. So called high throughput screening is
applicable to both drug discovery and discovery of regulatory molecules for
enhancing the production of stem cells in the laboratory; indeed one of SCS'
most promising media products is based on a combination of three molecules first
identified as drug candidates. By up-scaling cell based screening capability for
the drug discovery industry, SCS also enhances its ability to identify the
regulatory molecules which underpin the Company's core competency - stem cell
regulation.
In July 2006, the Company announced a collaborative agreement with
NeuroDiscovery Limited through its UK-based subsidiary, NeuroSolutions Limited.
The collaboration aims to provide high-value contract services to
biopharmaceutical companies and to supply them with native human neurones,
validated for known ion channels and receptors that are tuned to their drug
discovery needs. The initial focus of the collaboration will be on targets that
are relevant to the future treatment of major neurological diseases.
A recent report stated that about half of all pharmaceutical company screening
groups in lead discovery recently expressed an interest in obtaining primary,
stem and progenitor cells for cell-based screening. Under the NeuroSolutions
collaboration, the stem cell derivation, cell growth and differentiation skills
of SCS will be combined with NeuroDiscovery's specialised electrophysiology
techniques. The companies will combine their automated cell production and
high-throughput patch-clamping equipment to produce functionally validated cells
suited for industry's current drug discovery needs.
SC Therapies: Stem Cell-based Therapeutics
The use of stem cells to repair diseased or damaged tissue (termed "Regenerative
Medicine") is expected to lead to significant new therapeutic opportunities in
medicine in the next decade or so. It is thought that many intractable diseases
may be curable using this technology. SC Therapies is focused on the development
of cell therapies for central nervous system ("CNS") diseases. Stem cells of the
CNS represent a core scientific competency of the Company and its collaborating
international network.
Initial research is being directed to developing and characterising cell
lines of potential therapeutic value in the treatment of Parkinson's disease,
age related macular degeneration (eye disease), epilepsy and Duchenne's Muscular
Dystrophy ("DMD"), the latter through its Japanese affiliate, SCS KK.
In November 2006 the Company signed a collaborative agreement with the
Regenerative Medicine Institute ("REMEDI") at the National University of
Ireland, Galway. SCS' NS cells have commenced preclinical testing for spinal
cord injury at the Institute. The initial study will examine the ability of the
NS cells to provide functional improvements in models of spinal cord injury.
Results from the initial study are expected in the first quarter of 2007. If
this study proves successful, SCS and REMEDI plan to expand the collaboration
with more extensive testing.
Intellectual Property
Stem Cell Sciences has secured exclusive rights to a high quality intellectual
("IP") portfolio for efficient production, genetic engineering and the selection
of stem cells for use in drug discovery.
In January 2006 the Company signed a technology transfer agreement with the
University of Edinburgh, which provides the basis for continued formal
collaboration in the area of stem cell research. SCS continues to enhance its IP
portfolio through in-licensing and internal development.
As mentioned above, the Company secured exclusive rights to hMADS cell for use
in drug discovery in the field of obesity and an exclusive option in the field
of osteoporosis. This patent pending technology is expected to have immediate
and significant benefits when used for drug discovery.
Major Government and Not-for-profit Initiatives
Stem Cell Sciences recognises the importance of collaborating with government
and not-for-profit funded initiatives in the stem cell field. The Company has
established itself on a global basis with operations in Europe, Asia and
Australia participating in collaborative research programmes of this nature. A
principle objective of the Company's foundation and on-going operations is to
try to return benefit to those that invest, including regional governments
seeking to build wealth on local innovation.
In August 2006 the Company announced its participation in the European
Commission approved 'ESTOOLS' programme, a world leading €12 million stem cell
research programme involving both academic and commercial researchers. Stem Cell
Sciences is one of three commercial partners taking part in this Framework
Programme ("FP") VI initiative which is being led by the University of
Sheffield. Stem Cell Sciences brings its technologies and expertise to the
project and plans to use any discoveries to supply improved cell based drug
screening and toxicology options to the pharmaceutical and biotechnology
industries. In the longer term, all these technologies will mesh together to
help the Company deliver new stem cell therapies.
Strategy
The Company's strategy is to expand the product pipeline and accelerate the
technology development needed to provide high quality cells for therapeutic use,
by working in partnership with academia, industry and governments. SCS develops
and protects the core technology needed for cell supply in stem cell-based
academic and pharmaceutical research.
The Company intends to continue commercialising its immediate research product
opportunities from its SC Proven(R) business unit (cell culture media and
supportive reagents) via manufacturing, marketing and distribution agreements
with major research product providers such as Millipore. SCS retains all rights
to SCS products and technologies for therapeutic applications.
SCS is developing further business opportunities in stem cell-based industrial
research via technology licensing, custom engineering and production of cells,
and the provision of collaborative research support for biotechnology and
pharmaceutical company partners under its SC Licensing and SC Services business
units.
SCS is also leveraging its technology platform to secure supportive intellectual
property via cross-licensing of its technology with the biotechnology and
pharmaceutical companies.
Current trading and outlook
The Company made significant progress in pursuing its strategy, particularly
strengthening the infrastructure and business development. Importantly, with
these solid foundations, and the successful in-licensing of several
new products, SCS expects to see strong revenue growth in the coming year.
The Board continues to be optimistic on the opportunities available to SCS and
looks forward to an exciting 2007.
Peter Mountford 6 February 2007
President and CEO
- Ends-
For further information, please contact:
Stem Cell Sciences plc
Peter Mountford, President and CEO 0131 662 9829
Hugh Ilyine, Vice President and Chief Operating Officer
Sue Furber, Director of Finance & Company Secretary
Weber Shandwick Financial
Louise Robson or James White 020 7067 0700
Stem Cell Sciences plc
Consolidated profit and loss account
for the year ended 31 December 2006
Note 2006 2005
£'000 £'000
Restated
Turnover 2 742 847
Cost of sales (157) -
-------- --------
Gross profit 585 847
Administrative expenses (2,505) (2,481)
Research and development costs (1,197) (836)
Other operating income 367 194
-------- --------
Group operating loss (2,750) (2,276)
Share of operating loss of associate (468) (512)
-------- --------
Total operating loss (3,218) (2,788)
Other interest receivable and similar income 178 130
-------- --------
Loss on ordinary activities before
taxation (3,040) (2,658)
Tax credit on loss on ordinary activities 3 62 139
-------- --------
Loss for the financial year (2,978) (2,519)
======== ========
Loss per ordinary share
Basic and diluted loss per share 4 (13.3)p (13.6)p
======== ========
Turnover and loss on ordinary activities before taxation for the current and
previous year relate wholly to continuing activities.
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2006
2006 2005
£'000 £'000
Loss for the financial year Restated
Group (2,510) (2,007)
Share of loss of associate (468) (512)
-------- --------
Total loss for the financial year (2,978) (2,519)
Net exchange differences on the
retranslation of overseas investments (119) (11)
Unrealised gain on dilution of
interest in associate 126 776
-------- --------
Total recognised gains and losses
relating to the financial year (2,971) (1,754)
======== ========
Stem Cell Sciences plc
Consolidated balance sheet
at 31 December 2006
2006 2006 2005
£'000 £'000 £'000
Fixed assets
Tangible assets 656 115
Investment in associate 284 710
-------- --------
940 825
Current assets
Debtors 646 322
Cash at bank and in hand 2,463 5,227
-------- --------
3,109 5,549
Creditors: amounts falling due
within one year (1,142) (737)
-------- --------
Net current assets 1,967 4,812
-------- --------
Total assets less current liabilities 2,907 5,637
Creditors: amounts falling due after
more than one year (111) -
Net assets 2,796 5,637
======== ========
Capital and reserves
Called up share capital 223 11,151
Share premium account 2,297 2,297
Capital redemption reserve 10,928 -
Foreign exchange reserve (144) (25)
Merger reserve (1,248) (1,248)
Profit and loss account (9,260) (6,538)
-------- --------
Total shareholders' funds 2,796 5,637
======== ========
Stem Cell Sciences plc
Consolidated cash flow statement
for the year ended 31 December 2006
Note 2006 2005
£'000 £'000
Cash flow statement
Cash outflow from operating activities 6 (2,396) (1,797)
Returns on investments and servicing of
finance 7 152 130
Taxation 121 102
Capital expenditure and financial
investment 7 (636) (34)
-------- --------
Cash outflow before financing (2,759) (1,599)
Financing 7 - 5,809
-------- --------
(Decrease)/increase in cash in the year (2,759) 4,210
======== ========
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash in the year (2,759) 4,210
Foreign exchange movements (5) 3
-------- --------
Movement in net funds in the year 2,764 4,213
Net funds at the start of the year 5,227 1,014
-------- --------
Net funds at the end of the year 8 2,463 5,227
======== ========
Stem Cell Sciences plc
Notes
1 Accounting policies
The preliminary financial information has been prepared on the basis of the
accounting policies set out in the most recent set of financial statements
for the year ended 31 December 2005 except that in this preliminary financial
information FRS 20 'Share-based payments' has been adopted for the first time.
The accounting policy under this new standard is set out below together with
an indication of the effects of its adoption.
Annual accounts
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2006 or 2005. Statutory
accounts for 2005 have been delivered to the Registrar of Companies, and those
for 2006 will be delivered in due course. The auditors have reported on those
accounts; their report was (i) unqualified, (ii) included a reference to the
matters referred to in the Basis of Preparation note below to which the 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 the Companies Act 1985.
Basis of preparation
The financial statements have been prepared in accordance with applicable
Accounting Standards and under the historical cost accounting rules.
The financial statements are prepared on a going concern basis which the
directors believe to be appropriate for the following reasons.
The Group is involved in the research, development and commercialisation of stem
cells and stem cell technology. At this stage of its development it has limited
revenue arising from licensing arrangements, contract research and product sales
and its costs exceed its revenue. The Group will continue to absorb cash until
its products are commercialised.
The Group's current cash resources are forecast by the directors as being
sufficient to enable it to continue to trade until August 2007. The Group is
proposing a flotation on the Australian Stock Exchange in H1 2007 to raise up to
AUS$10 million which will be used to fund the start up costs of its
manufacturing facility, develop its presence in the US and begin pre trials into
neural and other cell therapies in addition to supporting its ongoing research
and development activities. The proposed flotation, which has received the
approval of shareholders of the company in a general meeting, is at an advanced
stage and has been announced publicly. Costs of £230,000 are held in prepayments
in relation to work carried out by professional advisers in relation to the
flotation to the extent that these are costs which will be treated as issue
costs in relation to the new shares to be issued on the proposed flotation.
While there can be no certainty either that the proposed flotation will be
successful or that it will raise the required funds, the Directors are of the
opinion that, taking into account existing facilities available to the Group and
the expected proceeds from the Australian flotation, the funds available to the
Group will be sufficient for the Group's trading requirements for at least
twelve months from the date of these financial statements.
However, as noted there can be no certainty in relation to these matters, which
may cast significant doubt on the Group's ability to continue as a going
concern. The Group may, therefore, be unable to continue realising its assets
and discharging its liabilities in the normal course of business but the
financial statements do not include any adjustments that would result from
either its planned flotation not taking place or raising insufficient funds.
Carrying value of investment in associate company
The Group holds 24.8% of an associate company, Stem Cell Sciences KK, a company
incorporated in Japan, which is equity accounted in the consolidated financial
statements. The carrying value of the investment at 31 December 2006 was
£284,000. Stem Cell Sciences KK is also involved in research and development
and currently its costs exceed its revenues. The associate's cash resources are
forecast by the directors of that company to be sufficient to enable it to
continue to trade until July 2007. It has carried out several successful fund
raisings over the last few years and it proposes to carry out a further fund
raising in March 2007. While there can be no certainty that its proposed fund
raising will be successful or will raise the required funds, the Directors of
the Company are of the opinion that, taking into account existing funds
available to the associate and the expected proceeds from its fund raising, the
funds available to that company will be sufficient for its trading requirements
for at least twelve months from the date of these financial statements and that
the carrying value in the Group financial statements is therefore appropriate.
Were the associate's fund raising to fail or be insufficient, the Group's
investment would have to be written down to reflect an impairment.
Share-based payments
FRS 20 Share-based payments has been adopted in the current year. As a result
of the introduction of FRS20, a share-based charge has been made to the loss for
the financial year of £130,000 (December 2005: £138,000). There is a
corresponding credit to the profit and loss reserves, and accordingly there is
no net effect on net assets at the end of each of the periods.
The share option programmes allow employees to acquire shares of the Company.
The fair value of options granted after 7 November 2002 and those not yet vested
as at 1 January 2006 is recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at the date of grant and spread
over the period during which the employees become unconditionally entitled to
options. The fair value of the options granted is measured using an option
pricing model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is adjusted to reflect
the actual number of share options that vest except where variations are due
only to share prices not achieving the threshold for vesting.
2 Segmental information
Australia Japan UK Total
£'000 £'000 £'000 £'000
Year ended and as at 31 December 2005 Restated Restated Restated
Turnover 835 - 12 847
======== ======== ======== ========
Group operating loss (422) - (1,854) (2,276)
Share of operating loss of associate - (512) - (512)
Interest receivable 14 - 116 130
-------- -------- -------- --------
Group loss before taxation (408) (512) (1,738) (2,658)
======== ======== ======== ========
Net assets
Segmental net assets 318 - 4,609 4,927
Associate's net assets - 710 - 710
-------- -------- -------- --------
Total net assets 2005 318 710 4,609 5,637
======== ======== ======== =======
Year ended and as at 31 December 2006
Turnover 651 - 91 742
======== ======== ======== ========
Group operating loss (777) - (1,973) (2,750)
Share of operating loss of associate - (468) - (468)
Interest receivable 10 - 168 178
-------- -------- -------- --------
Group loss before taxation (767) (468) (1,805) (3,040)
======== ======== ======== ========
Net assets/liabilities
Segmental net assets/liabilities (766) - 3,278 2,512
Associate's net assets - 284 - 284
-------- -------- -------- --------
Total net assets/liabilities 2006 (766) 284 3,278 2,796
======== ======== ======== ========
3 Taxation
2006 2005
£'000 £'000
Tax on loss on ordinary activities:
Current tax:
Overseas taxation credit 62 139
======== ========
The tax credit for the year and previous financial year relates to overseas credits
received relating to research and development.
4 Loss per share
Loss per share is calculated as follows:
2006 2005 2006 2005
Loss Loss Loss Loss
£'000 £'000 pence pence
Restated per share per share
Restated
Basic (2,978) (2,519) (13.3)p (13.6)p
======== ======== ======== ========
Diluted (2,978) (2,519) (13.3)p (13.6)p
======== ======== ======== ========
The weighted average number of shares used in each calculation is as follows:
2006 2005
Number of Number of
shares shares
Average number of shares in issue during
the year 22,301,194 18,470,017
======== ========
The loss attributable to ordinary shares and the number of ordinary shares for
the purpose of calculating the diluted earnings per share are identical to those
used for basic earnings per share. The exercise of share options would have the
effect of reducing the loss per share and consequently is not taken into account
in the calculation for diluted loss per share.
5 Reconciliation of movements in shareholders' funds
2006 2005
£'000 £'000
Restated
Loss for the financial year (2,978) (2,519)
Net proceeds from share issues - 5,814
Credit in relation to share based payments 130 138
Unrealised foreign exchange gain/(loss) (119) (11)
Unrealised gain on dilution of interest in associate 126 776
-------- --------
Net addition to/(reduction) in shareholders' funds (2,841) 4,198
Opening shareholders' funds 5,637 1,439
-------- --------
Closing shareholders' funds 2,796 5,637
======== ========
6 Reconciliation of operating loss to operating cash flows
2006 2005
£'000 £'000
Restated
Group operating loss (2,750) (2,276)
Charge in respect of share based
payments 130 138
Depreciation 91 30
Increase in debtors (633) (171)
Increase in creditors 766 482
-------- --------
Net cash outflow from operating activities (2,396) (1,797)
======== ========
7 Analysis of cash flows
2006 2005
£'000 £'000
Returns on investments and servicing of finance
Interest received 152 130
-------- --------
Net cash inflow from returns on investment and
servicing of finance 152 130
======== ========
Capital expenditure and financial investment
Purchase of tangible fixed assets 636 34
-------- --------
Net cash outflow from capital expenditure and
financial investment 636 34
======== ========
Financing
Issue of ordinary share capital - 5,809
-------- --------
Net cash inflow from financing - 5,809
======== ========
8 Analysis of net funds
At
beginning Cash flow At end
of year of year
£'000 £'000 £'000
Cash in hand and at bank 5,227 (2,764) 2,463
======== ======== ========
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 31st May 2024
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