TIDMRGT
For immediate release3 June 2010
Audited Report and Accounts and Notice of Meeting
The Board of ReGen Therapeutics Plc (AIM:RGT) today announces that the Audited
Annual Report and Accounts for the year to December 31 2009 ("the Accounts")
together with the Notice of Meeting have been posted to Shareholders.
The Annual General Meeting will take place at 11.00 am on Monday 28 June 2010 at
the offices of Bird & Bird LLP, 15 Fetter Lane, London EC4A 1JP.
Both the Accounts and Notice or Meeting are available on the Company's website:
www.regentherapeutics.com <http://www.regentherapeutics.com/>
Final Results
CHAIRMAN'S STATEMENT
Highlights
* Breakeven point of the Company has substantially reduced due to cost
reduction. Administration costs down by 39% and development costs down by
81%.
* Major new licensees appointed.
* Improved balance sheet. Current liabilities reduced by 23% despite credit
crunch.
Financials
We can take some significant positives for the future from 2009 despite showing
a disappointing drop of 39% in sales. In particular these positives were as we
spell out below - a dramatic reduction in costs, bringing the Company's
breakeven point down significantly, an improved balance sheet and further
distributors signed up.
The sales drop was primarily the result of the fact that we had received very
large orders from our North American licensee in the first half of 2008, which
satisfied its demand into 2009. As we then only had Metagenics and Golgi as
distributors, clearly our sales pattern was significantly influenced by this.
Since then, however, we have signed further contracts with new licensees and
this makes us much less dependent on any one single distributor. As sales in
the second half of 2009 were GBP46,000 (the fourth quarter were GBP26,000), and
quarterly sales in the first quarter of 2010 are above that level, we may now
have reached a situation where we have sufficient contracts to even out
quarterly sales.
Most importantly, however, our loss before tax for the year was almost halved
from GBP1.5m to GBP758,000. This was achieved by significant reduction in costs and
allowed the Company to continue to operate on reduced parameters and also
lowered the breakeven point for the Company. I would remind shareholders that
the loss in 2007 was GBP2.6m. This fall in costs reflects the action taken in
early 2008 to enable the Company to survive the very difficult funding
conditions following the severe economic crisis. This continues although
perhaps lessening in severity. In specific terms the items were:
1. Administrative costs reduced by 39% from GBP1,176,224 to GBP719,569. Included
within administrative costs are non-cash items of GBP238,774 so the cash
expenditure on administration was actually GBP480,795. The largest reduction
within this item was staff costs, which in cash terms were reduced from
GBP457,056 to GBP262,271 in 2009.
2. Development costs reduced by 81% from GBP411,938 to GBP79,648. This reflected
the slowing down of our development programme as we seek to exploit it
commercially. As we show under Scientific Development there was actually
some further development work taking place which was of no cost to ReGen.
Turning now to the balance sheet our total current liabilities have been reduced
by 23% from GBP541,491 to GBP416,511. In view of the restricted capital markets
during 2009 we regard this as a significant achievement and have plans in hand
to reduce this still further. During 2009 we raised GBP691,185 and this enabled
the Company to continue rolling out Colostrinin(TM) and improving its balance
sheet to a limited extent.
Commercial development
Colostrinin(TM) roll out widens - New Developments:
Cyprus
The agreement with Golgi Pharmaceuticals Ltd of Cyprus under the brand name
'Cognase' was extended on 25 March 2009 to allow them to distribute
Colostrinin(TM) in Greece and other Balkan countries. On the same day a further
agreement was signed with Golgi to allow them to tablet and package
Colostrinin(TM) in Cyprus. As part of this arrangement Golgi directly invested
GBP28,000 in cash into ReGen in exchange for 700,000 shares priced at 4p per
share. This represented at the time 3.4% of the enlarged share capital of the
Company and was a 33% premium to the previous placing on 2 March 2009.
Poland
Following the test marketing by Tagerr, a professional services and trading
company established in Cologne, Germany, Tagerr has successfully launched
Colostrinin(TM) in Poland and has been slowly increasing its demand.
Turkey
On 29 January 2009 ReGen signed an agreement with Eczacibasi Ilac Pazarlama
A.S., a leading Turkish industrials group, as the exclusive distributor of its
nutraceutical product Colostrinin(TM), under the brand name 'Dyna' in the
Republic of Turkey. Eczacibasi is now launching 'Dyna' in Turkey and has paid
ReGen a $50,000 milestone payment. Net revenues to ReGen from Eczacibasi
pursuant to the minimum annual purchase commitments in the distribution
agreement are estimated to be $52,000 in the first year after regulatory
approval is obtained and $104,000 in the second year.
India
On 27 April 2010 ReGen signed a Supply Agreement with an Indian Company based in
Mumbai, India.
The ReGen Board regards this as a crucial step for two reasons. Firstly, it
provides entry into the second most heavily populated market in the world and
one where self treatment is an integral part of healthcare. Secondly, India,
along with China, is one of the two major growth drivers of the world economy.
Thus, for these reasons a consumer launch in this market has significant
potential for ReGen's long term profitability.
UK
PRG Nutraceuticals Limited launched 'MemoryAid' in the UK via the internet on
the 1st October 2009.
China
China, with India, is a major potential market for ReGen, both because of its
size and a tradition of self medication. We are currently engaging ICUK (a UK
based British and Chinese Government Consultancy) to introduce us to key players
in the Chinese market.
Existing Licensees
Our major partner is still Metagenics Inc., who were taken over by Alticor
during 2009. This takeover would have contributed to the fact that they did not
reorder active material from us for almost one year. An additional problem was
that for a period of time Colostrinin(TM) fell foul of a review of the
Australian regulations relating to colostrum products which meant it could not
be sold in Australia, by Metagenics's subsidiary company who order through the
US. This problem has now been resolved. We now are led to believe there will be
a relaunch of Colostrinin(TM) in the US in the latter half of 2010.
Scientific development
Although ReGen has cut back its research spending, as it now believes it is time
to capitalise on its research output, some research carried out in prior periods
was reported in 2009. Also some of our former paid collaborators have continued
to produce research out of their own funding.
Colostrinin(TM):
In the autumn of 2007 we announced that a micro array analysis of peptides
derived from Colostrinin(TM) at the University of Texas Medical Branch (UTMB)
had shown that certain peptides had a capacity to change gene expression in
areas involved in obesity and Alzheimer's disease. It was therefore decided to
explore certain peptides further with a view to developing them to the status of
pre-clinical pharmaceutical candidates. On 12 March 2009 we announced the
successful completion of the first stage of this exercise.
Alzheimer's disease:
In an in-vitro study using neuronal cells two synthetic peptides (RG-01 and
RG-018) have shown significant impact on expression of genes involved in
beta-amyloid generation and degradation pathways. Controlling beta-amyloid
generation could have important implications in Alzheimer's disease.
Anti-obesity:
In an in-vivo study on obesity Colostrinin(TM), as well as three peptides in
combination, have been shown to significantly reduce the body weight gain of
mice when fed a high fat diet (HFD).
The obesity data could be used to create another nutraceutical product and
indeed a large European food company is considering doing further work on this.
Backing up the work in Alzheimer's disease Professor Michael Stewart of the Open
University has co-authored a paper showing further evidence of Colostrinin(TM)
activity in reducing cytotoxicity related to Alzheimer's disease. Professor
Stewart said:
"Alzheimer's disease is the most common form of dementia affecting 18 million
people worldwide. It is characterised by extra cellular senile plaques
consisting mainly of aggregated amyloid-beta and intracellular neurofibrillary
tangles containing the cytoskeletal protein tau. A recent study by Froud et al.
in Journal of Alzheimer's Disease[1] has demonstrated that Colostrinin(TM)
significantly relieves amyloid-beta induced cytoxicity".
Zolpidem:
A study confirming the zolpidem effect in brain damage was presented at the 4th
International Congress on Brain and Behaviour on 3 - 6 December 2009 in
Thessaloniki, Greece by Dr Ralf Clauss. 23 of 41 consecutive adult patients, at
least 6 months after brain damage, were selected as neurologically disabled
patients after scoring less than 100/100 on the Barthel Index. Causes of brain
damage included stroke (12 subjects), traumatic brain injury (7 subjects),
anaphylaxis (2 subjects), drug overdose (1 subject) and birth injury (1
subject). The selected 23 patients had a baseline SPECT scan before starting
daily zolpidem therapy and a second within two weeks of therapy, performed 1
hour after receiving 10 mg oral zolpidem. Scans were designated as improved
when at least two of three independent assessors detected improvement after
zolpidem. The rest were designated non-improved.
After four months of daily zolpidem therapy, the clinical condition of subjects
was rated on the Tinetti Falls Efficacy Scale (TFES) before and after zolpidem.
The TFES ratings of all subjects and scan improvers and non-improvers were
compared statistically.
Mean overall improvement after zolpidem on TFES was 11.3% from 73.4/100 (SD
25.4) to 62.1/100 (SD 28.8) (p=0.0006). 10/23 (43%) improved on SPECT scan
after zolpidem. Their mean TFES improvement was 19.4% (SD 16.75) compared with
5.17% (SD 5.167) in 13/23 non improvers (p=0.0081).
Summary
The Company has survived the credit crunch by implementing a severe cost
reduction programme, but as my review of the year shows the business side has
been expanded despite this. We still continue to believe that during 2010 the
Company will move to sustainable profitability.
I would like to thank the shareholders and in particular our funders during
2009 for their very significant support at a time when money was very difficult
to raise.
For further information contact:
Percy Lomax
ReGen Therapeutics Plc
Executive Chairman
Tel: 020 7153 4920
Roland Cornish
Beaumont Cornish Limited
Tel: 020 7628 3396
Nick Bealer/David Scott
Alexander David Securities Limited
Tel: 020 7448 9820
ReGen Therapeutics Plc
Independent auditor's Report to the members of ReGen Therapeutics Plc
We have audited the Group and parent company financial statements (the
"financial statements") of ReGen Therapeutics Plc for the year ended 31 December
2009 which comprise the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated statement of financial
position, the parent company balance sheet, the consolidated statement of cash
flows, the consolidated statement of changes in equity and the related notes.
The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union for the consolidated financial statements and
United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice) for the parent company financial statements and, as regards
the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities Statements set out on
page 17 the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's (APB's)
Ethical Standards for Auditors. This report is made solely to the Company's
members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an auditor's report
and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company and the
Company's members as a body for our audit work, for this report, or for the
opinions we have formed.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on
the APB's website at www.frc.org.uk/apb/scope/UKNP.
Opinion on the financial statements
In our opinion:
* the Group financial statements give a true and fair view of the state of the
Group's affairs as at 31 December 2009 and of the Group's loss for the year
then ended;
* the Group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
* the parent company financial statements give a true and fair view of the
state of the parent company's affairs as at 31 December 2009 and of the
parent company's loss for the year then ended;
* the parent company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting Practice and as
applied in accordance with the provisions of the Companies Act 2006; and
* the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Emphasis of matter - Going concern
In forming our opinion, which is not qualified, we have considered the adequacy
of the disclosures made in note 2 to the financial statements concerning the
ability of the Group to continue as a going concern.
The financial statements have been prepared on the going concern basis, which
depends on the outcome of future fund raising and the generation of revenues
from licensing deals. These conditions indicate the existence of a material
uncertainty, which may cast significant doubt on the ability of the Group to
continue as a going concern. The financial statements do not include the
adjustments that would result if the Group was unable to continue as a going
concern.
Opinion on the other matters prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report for the financial
year for which the financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
* adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
* the parent company financial statements are not in agreement with the
accounting records and returns; or
* certain disclosures of directors' remuneration specified by law are not
made; or
* we have not received all the information and explanations we require for our
audit.
Mazars LLP, Chartered Accountants (Statutory auditor)
Tower Bridge House
St Katharine's Way
London
E1W 1DD
REGEN THERAPEUTICS PLC
Consolidated income statement for the year ended 31 December 2009
2009 2008
GBP GBP
Continuing operations
Revenue 56,055 91,716
Cost of sales 11,034 20,447
________ ________
Gross Profit 45,021 71,269
+------------------------------------------------------------------------------+
|Research and development costs 79,648 411,938|
| |
|Other administrative costs 719,569 1,176,224|
+------------------------------------------------------------------------------+
Administrative expenses 799,217 1,588,162
________ ________
Operating loss (754,196) (1,516,893)
Finance income 46 10,308
Finance costs (4,138) (3,436)
________ ________
Loss before taxation (758,288) (1,510,021)
Taxation 28,350 80,590
________ ________
Loss after taxation for continuing activities (729,938) (1,429,431)
________ ________
Discontinued operations
Loss after taxation from discontinued operations - (33,936)
________ ________
Loss after taxation for the
year (729,938) (1,463,367)
_________ _________
Basic and diluted loss per 3 (2.67p) (12.27p)
share
Basic and diluted loss per share on continuing (2.67p) (11.98p)
operations
Basic and diluted loss per share on discontinued - (0.28p)
operations
Consolidated statement of comprehensive income for the year ended 31 December
2009
2009 2008
GBP GBP
Loss for the year (729,938) (1,463,367)
Other comprehensive income for the year - -
________ ________
Total comprehensive income for the year (729,938) (1,463,367)
_________ _________
Attributable to:
Equity holders of the parent (729,938) (1,463,367)
_________ _________
Consolidated Statement Of Changes In Equity
for the year ended 31 December 2009
Share Share Other Retained
capital premium reserves earnings Total
GBP GBP GBP GBP GBP
Audited
At 1 January 2008 6,323,835 13,969,394 265,745 (18,118,878) 2,440,096
Loss for the year - - - (1,463,367) (1,463,367)
________ ________ ________ ________ ________
Total comprehensive
income for the year - - - (1,463,367) (1,463,367)
Issue of share
capital 281,168 395,970 - - 677,138
Share issue costs - (218,151) - - (218,151)
Share based
payments/(credits) - - - (95,532) (95,532)
________ ________ ________ ________ ________
Closing equity as at
31 December 2008 6,605,003 14,147,213 265,745 (19,677,777) 1,340,184
Unaudited
Loss for the year - - - (729,938) (729,938)
________ ________ ________ ________ ________
Total comprehensive
income for the year - - - (729,938) (729,938)
Share issue costs - (88,340) - - (88,340)
________ ________ ________ ________ ________
Balance at 31 6,607,166 14,747,895 265,745 (20,407,715) 1,213,091
December 2009
________ ________ ________ ________ ________
Consolidated statement of financial position as at 31 December 2009
2009 2009 2008 2008
GBP GBP GBP GBP
2009 2009 2008 2008
GBP GBP GBP GBP
Assets
Non current assets
Property, plant and 177 1,017
equipment
Intangible assets 1,564,205 1,759,250
________ ________
1,564,382 1,760,267
Current assets
Inventories 38,219 28,571
Trade and other receivables 80,573 87,090
Tax receivable 16,043 80,590
Cash and cash equivalents 30,385 25,157
________ ________
Total current assets 165,220 221,408
________ ________
Total assets 1,729,602 1,981,675
________ ________
Liabilities
Current liabilities
Trade and other payables 367,805 489,699
Loans and borrowings 48,706 51,792
________ ________
Total current liabilities 416,511 541,491
Non current liabilities
Provisions 100,000 100,000
________ ________
Total liabilities 516,511 641,491
________ ________
Total net assets 1,213,091 1,340,184
________ ________
Equity
Share capital 6,607,166 6,605,003
Share premium 14,747,895 14,147,213
Other reserves 265,745 265,745
Retained earnings (20,407,715) (19,677,777)
________ ________
Total equity 1,213,091 1,340,184
________ ________
Consolidated statement of cash flows for the year ended 31 December 2009
2009 2009 2008 2008
GBP GBP GBP GBP
Loss after tax from continuing (729,938) (1,429,431)
activities
Loss after tax from discontinued
activities - (33,936)
________ ________
Loss after tax for the financial year (729,938) (1,463,367)
Amortisation of intangible assets 237,934 298,256
Depreciation of property, plant and 840 1,656
equipment
Share option credit - (95,532)
Finance costs 4,138 7,830
Finance income (46) (10,311)
Taxation credit (28,350) (80,590)
Taxation received 92,897 145,833
________ ________
Operating cash flows before movements
in working capital and provisions (422,525) (1,196,225)
Increase in inventories (9,648) (21,922)
Decrease in receivables 6,517 125,689
(Decrease)/increase in payables (121,894) 178,064
________ ________
Net cash flows from operating (547,550) (914,394)
activities
________ ________
Net cash flows from investing
activities
Interest received 46 10,311
Purchase of intangible assets (42,889) (110,947)
________ ________
Net cash flows used in investing (42,843) (100,636)
activities
________ ________
Cash flows from financing activities
Proceeds from issue of share capital 691,185 677,138
Expenses paid on share issue (88,340) (218,151)
Interest paid (4,138) (7,830)
________ ________
Net cash from financing activities 598,707 451,157 _
________ ________
Net increase/(decrease) in cash and
cash equivalents 8,314 (563,873)
Opening cash and cash equivalents (26,635) 537,238
________ ________
Closing cash and cash equivalents (18,321) (26,635)
________ ________
ReGen Therapeutics Plc
Extracts from Notes forming part of the financial statements
for the year ended 31 December 2009
1General information
The principal activity of ReGen Therapeutics Plc is the development of
healthcare products both nutraceutical and ethical pharmaceuticals. The Company
is registered in the UK and was incorporated on 11 February 1998 under the
Companies Act. The address of its registered office is Suite 306, 73 Watling
Street, London, EC4M 9BJ. The registered number of the company is 03508592.
2Accounting policies
Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs and IFRIC interpretations) issued by the
International Accounting Standards Board (IASB) as adopted by European Union
("adopted IFRSs") and with those parts of the Companies Act 2006 applicable to
companies preparing their accounts under IFRS.
Going concern
The financial statements have been prepared on a going concern basis. However,
the Group's ability to continue as a going concern is reliant upon successfully
obtaining funds as it moves towards self sustainability and to finance its
ongoing development. In considering the appropriateness of this basis of
preparation the directors have reviewed the Company's working capital forecasts.
They believe that the funds raised recently, including new equity funds of
GBP431,000 in aggregate raised between the statement of financial position date
and the date of approval of these financial statements, together with further
options being considered and taken in conjunction with revenues from licensing,
will be sufficient for the Group's purposes for a minimum of 12 months from the
date of the approval of the financial statements. If the Group was unable to
secure sufficient funding to enable it to continue on a going concern basis then
adjustments would be necessary to write down assets to their recoverable
amounts, reclassify fixed assets and long term liabilities as current and
provide for additional liabilities.
Adoption of new standards during the year
In the current financial year, the Group has adopted IFRS 8 "Operating Segments"
and IAS 1 Presentation of Financial Statements (revised).
IFRS 8 replaces IAS 14 "Segment Reporting" effective from 1 January 2009. The
accounting policy for identifying operating segments is now based on internal
management reporting information that is regularly reviewed by the chief
operating decision maker. Previously IAS 14 required the Group to identify two
sets of segments (business and geographical) based on risks and rewards of the
operating segments. As a result of the application of IFRS 8, the Group's
segmental information has been presented as discussed in note 2 and comparative
information has been represented accordingly.
IAS 1 (revised) requires non-owner changes in equity to be presented separately
from owner changes in equity within a performance statement. The Group have
chosen to present two performance statements, the consolidated income statement
and the consolidated statement of comprehensive income. The statement of changes
in equity has been included as a primary statement and presents all owner
changes in equity and non-owners changes in equity.
Standards, amendments and interpretations to published standards not yet
effective
The Directors anticipate that the adoption of IFRS 3, IFRS 9, IAS 17, IAS 31,
IAS 32, IAS 39, IFRIC 14, IFRIC 17 and IFRIC 18 in future periods will have no
material impact on the financial information of the Group or Company.
The Group will adopt the following as and when they become effective.
+-------+----------------------------------------------------------------------+
|IAS 7 |Statement of Cash Flows, revised 2009 (effective 1 January 2010) |
+-------+----------------------------------------------------------------------+
|IAS 24 |Related Party Disclosures, revised 2009 (effective I January 2011) |
+-------+----------------------------------------------------------------------+
|IAS 27 |Consolidated and Separate Financial Statements arising from amendments|
| |to IFRS3 (effective 1 July 2009) |
+-------+----------------------------------------------------------------------+
|IAS 36 |Impairment of Assets, revised 2009 (effective 1 January 2010) |
+-------+----------------------------------------------------------------------+
|IFRC 19|Extinguishing Financial Liabilities with Equity Instruments (effective|
| |1 July 2010) |
+-------+----------------------------------------------------------------------+
The Group has already commenced the assessment of the impact to the Group and is
not yet in a position to state whether these would have a significant impact on
its results of operations and financial position.
The Directors also do not consider the adoption of the amendments resulting from
the May 2008 and April 2009 Annual Improvement project will result in a material
impact on the financial information of the Group.
Except as noted above, the following principal accounting policies have been
applied consistently in the preparation of these financial statements:
Research and development
Research expenditure is recognised in the income statement in the year in which
it is incurred. Development expenditure is recognised in the income statement in
the year in which it is incurred unless it meets the recognition criteria of IAS
38 "Intangible Assets". Regulatory and other uncertainties generally mean that
such criteria are not met. Where, however the recognition criteria are met,
intangible assets are capitalised and amortised on a straight-line basis over
their useful economic lives from product launch. This policy is in line with
industry practise.
Revenue
Revenue represents amounts invoiced during the year for goods and services
provided in the normal course of business, exclusive of Value Added Tax.
Sales of Colostrinin(TM) are recognised when goods are delivered and title has
passed.
Operating loss
Operating loss is stated after crediting all operating income and charging all
operating expenses but before crediting/charging financial income/expense.
Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the
financial and operating policies of another entity or business so as to obtain
benefits from its activities, it is classified as a subsidiary. The consolidated
financial statements present the results of the Company and its subsidiaries
("the Group") as if they formed a single entity. Intercompany transactions and
balances between Group companies are therefore eliminated in full.
Business combinations
The consolidated financial statements incorporate the results of business
combinations using the purchase method. In the consolidated balance sheet, the
acquiree's identifiable assets, liabilities and contingent liabilities are
initially recognised at their fair values at the acquisition date. The results
of the acquired operations are included in the consolidated income statement
from the date on which control is obtained.
Goodwill
Goodwill represents the excess of the cost of a business combination over the
interest in the fair value of the identifiable assets, liabilities and
contingent liabilities acquired. Cost comprises the fair values of assets given,
liabilities assumed and equity instruments issued, plus any direct costs of
acquisition.
Goodwill is capitalised as an intangible asset with any impairment in carrying
value being charged to the consolidated income statement. Where the fair value
of identifiable assets, liabilities and contingent liabilities exceed the fair
value of consideration paid, the excess is credited in full to the consolidated
income statement on the acquisition date.
Impairment of non-financial assets
Impairment tests on goodwill and other intangible assets with indefinite useful
economic lives are undertaken annually on 31 December. Other non-financial
assets are subject to impairment tests whenever events or changes in
circumstances indicate that their carrying amount may not be recoverable. Where
the carrying value of an asset exceeds its recoverable amount (ie the higher of
value in use and fair value less costs to sell), the asset is written down
accordingly.
Where it is not possible to estimate the recoverable amount of an individual
asset, the impairment test is carried out on the asset's cash-generating unit
(ie the lowest group of assets in which the asset belongs for which there are
separately identifiable cash flows). Goodwill is allocated on initial
recognition to each of the Group's cash-generating units that are expected to
benefit from the synergies of the combination giving rise to the goodwill (see
note 16).
Segment reporting
The Group has adopted IFRS 8 "Operating Segments" effective from 1 January
2009. IFRS 8 requires operating segments to be reported in a manner consistent
with the internal reporting provided to the chief operating decision-maker. The
chief operating decision-maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the
Board of Directors. The Board reviews the business from both a geographic and
product perspective. The provision of clinical research services was effectively
discontinued in 2008, but it was felt necessary to continue to report this as a
segment for comparative purposes even though there was insignificant amounts
involved in 2009.The Board assesses the performance of the operating segments
based on revenues and profit before taxation for products and revenues only by
geographical location. The Board do not review the information about total
assets and total liabilities or capital expenditure for each reportable segment
and therefore this information has not been separately provided.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well
as the purchase price, cost directly attributable costs and the estimated
present value of any future unavoidable costs of dismantling and removing items.
All items of property, plant and equipment are carried at depreciated cost.
Depreciation is provided to write off the carrying value of items over their
expected useful lives. It is applied at the following rate:
Office equipment - 25% per annum on cost.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of
cost and net realisable value. Cost comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their present
location and condition. In determining the cost of inventories sold, the batches
are identified and the actual cost of the inventories is used.
Foreign currency
Foreign currency transactions of individual companies are translated at the
rates ruling when they occurred. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the statement of financial
position dates. Any differences are taken to the profit and loss account.
The results of overseas operations are translated at the rate when the
transaction took place and the statement of financial position translated into
Sterling at the rate of exchange ruling on the statement of financial position
date. Exchange differences, which arise from translation of the opening net
assets and results of foreign subsidiary undertakings, are taken to reserves.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet at fair value when the Group becomes a party to the contractual provisions
of the instrument.
Trade receivables
Trade receivables represent amounts due from customers in the normal course of
business. These are recognised at fair value and subsequently at amortised cost
unless the effect of discounting is immaterial. Appropriate allowance is made
for impairment.
Cash and cash equivalents
Cash and cash equivalents include cash at hand and deposits held at call with
banks with original maturities of three months or less.
Trade payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Internally generated intangible assets (research and development costs)
Research expenditure is recognised in the income statement in the year in which
it is incurred. Development expenditure is recognised in the income statement in
the year in which it is incurred unless it meets the recognition criteria of IAS
38 "Intangible Assets", namely:
?it is technically feasible to develop the product for it to be sold;
?adequate resources are available to complete the development;
?there is an intention to complete and sell the product;
?the Group is able to sell the product;
?sale of the product will generate future economic benefits; and
?expenditure on the project can be measured reliably.
Regulatory and other uncertainties generally mean that such criteria are not
met. Where, however, the recognition criteria are met, intangible assets are
capitalised and amortised on a straight-line basis over their useful economic
lives from product launch.
Externally generated intangible assets (Patents and trademarks)
Externally acquired intangible assets are initially recognised at cost and
subsequently amortised on a straight-line basis over their useful economic
lives. The amortisation expense is included within the administrative expenses
line in the consolidated income statement.
The significant intangibles recognised by the Group and their useful economic
lives are as follows:
TrademarksIndefinite
PatentsLength of patent - up to 20 years
Costs to obtain patent rights for the use of Colostrinin(TM) have been
capitalised and will be amortised on a straight line basis over the expected
useful life of the patent from the date the patent is granted.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of
an asset or liability in the statement of financial position differs from its
tax base, except for differences arising on:
?the initial recognition of goodwill;
?the initial recognition of an asset or liability in a transaction which is not
a business combination and at the time of the transaction affects neither
accounting or taxable profit; and
?investments in subsidiaries and jointly controlled entities where the Group is
able to control the timing of the reversal of the difference and it is probable
that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is
probable that taxable profit will be available against which the difference can
be utilised.
The amount of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the statement of financial position
date and are expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered).
Leased assets
Where substantially all of the risks and rewards incidental to ownership are not
transferred to the Group (an "operating lease"), the total rentals payable under
the lease are charged to the consolidated income statement on a straight-line
basis over the lease term. The aggregate benefit of lease incentives is
recognised as a reduction of the rental expense over the lease term on a
straight-line basis.
The land and buildings elements of property leases are considered separately for
the purposes of lease classification and are classified as operating leases.
Share based payment
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to the income statement over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number of
equity investments expected to vest at each statement of financial position date
so that, ultimately, the cumulative amount recognised over the vesting period is
based on the number of options that eventually vest. Market vesting conditions
are factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition.
Where terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and after
the modification, is also charged to the income statement over the remaining
vesting period.
Where equity instruments are granted to persons other than employees, the income
statement is charged with the fair value of goods and services received.
Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents are
defined as cash available on demand and short-term deposits.
Provisions
Provisions are recognised for liabilities of uncertain timing or amounts that
have arisen as a result of past transactions.
3Earnings per share
20092008
Numerator
Loss for the year729,9381,463,367
____________________
Denominator
Weighted average number of shares 27,331,69511,926,992
____________________
The Company has instruments that could potentially dilute basic earnings per
share in the future, but that have not been included in the calculation of
diluted earnings per share because they are antidilutive for the periods
presented. These instruments are disclosed per note 25.
General information
The financial information set out above for the years to 31 December 2008 and
31 December 2009 does not constitute statutory accounts as defined in Section
240 of the Companies Act 1985, but is derived from those accounts. Whilst the
financial information contained in this announcement has been compiled in
accordance with International Reporting Standards ("IFRS"), this announcement
itself does not contain sufficient financial information to comply with IFRS. A
copy of the statutory accounts for 2008 has been delivered to the Registrar of
Companies, and those for 2008 have been posted to Shareholders.
[HUG#1421518]
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