SkyePharma PLC Interim Financial Results for the six months ended 30 June 2004

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 6-K

 


 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a—16 OR 15d—16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of September, 2004

 

SkyePharma PLC


(Translation of registrant’s name into English)

 

SkyePharma PLC, 105 Piccadilly, London W1J 7NJ England


(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40F.

Form 20-F  x         Form 40-F  ¨

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes   ¨     No  x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-             


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

SkyePharma PLC
By:  

/s/ Douglas Parkhill


Name:           Douglas Parkhill
Title:           Company Secretary

 

Date: September 15, 2004


For Immediate Release   15, September 2004

 

SkyePharma PLC

 

Interim Financial Results

for the six months ended 30 June 2004

 

Financial Highlights

 

  Turnover up by 26% to £28.5 million (2003:£22.6 million)

 

  Royalty income up by 28% to £10.3 million (2003: £8.0 million)

 

  Gross profit up by 52% to £15.0 million (2003: £9.9 million)

 

  R&D down 13% to £14.4 million (2003: £16.4 million)

 

  Operating loss after exceptionals down by 44% to £9.6 million (2003: £17.0 million)

 

  Deferred income up by £1.0 million to £16.9 million (as of 31 December 2003: £15.9 million)

 

  Net loss after exceptionals down by 45% to £10.2 million (2003: £18.7 million)

 

  Loss per share 1.7p (2003: 3.1p)

 

  Net cash £29.0 million (as of 31 December 2003: £22.0 million)

 

  Convertible bond refinancing completed, including raising £20 million of new money

 

Operating Highlights

 

  FDA approves DepoDur - US marketing to commence before end-year

 

  DepoDur licensed to Medeus Pharma for Europe

 

  Trigenesis licenses dermatology products, pipeline and topical delivery technologies

 

  Discussions with potential partners for pulmonary package ongoing

 

  Foradil® Certihaler® approved in Switzerland and certain other European countries

 

  Paxil® CR (GlaxoSmithKline) holds US market share despite generic competition for Paxil®

 

  Uroxatral® (Sanofi-Aventis) launched to primary care physicians in USA

 

  Xatral OD approved in Europe for second indication, Acute Urinary Retention

 

  DepoCyte® (Mundipharma) launched in Europe

 

  DepoCyt® Phase IV trial patient enrolment completed

 

  Pulmicort® HFA (AstraZeneca) completes Phase III trials

 

  Requip OD (GlaxoSmithKline) Phase III trial patient enrolment completed

 

  FDA completes review of Phase II trials of Propofol IDD-D

 

Ian Gowrie-Smith, SkyePharma’s Non-Executive Chairman, said: “The most important event in the first half of 2004 was the US Food & Drug Administration’s approval of DepoDur (the new name for DepoMorphine) on 18 May. After taking the decision in 2001 to undertake full clinical development ourselves and completing the clinical studies and regulatory filings for DepoDur on time, it is highly gratifying to see this crowned by approval by the FDA. Importantly this was the first possible date on which the product could be approved. Few new drugs are approved by the FDA at the first opportunity so this achievement is a real tribute to both the quality of the product and the skill of our clinical and regulatory teams. DepoDur is the first product for which we have undertaken full development ourselves and we expect it to be a major contributor to the company’s future.”

 

For further information please contact:

 

SkyePharma PLC    
Michael Ashton, Chief Executive Officer    
Donald Nicholson, Finance Director    
Peter Laing, Director of Corporate Communications    
Today on Tel:   0207 466 5000
Thereafter on Tel:   0207 491 1777
Sandra Haughton, US Investor Relations Tel:   +1 212 753 5780
Buchanan Communications    
Tim Anderson / Mark Court    
Tel:   0207 466 5000

 

About SkyePharma

 

SkyePharma PLC uses its world-leading drug delivery technology to develop easier-to-use and more effective formulations of drugs. The majority of challenges faced in the formulation and delivery of drugs can be addressed by one of the Company’s proprietary technologies in the areas of oral, injectable, inhaled and topical delivery, supported by advanced solubilisation capabilities. For more information, visit http://www.skyepharma.com.

 

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Except for the historical information herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may vary significantly based upon a number of factors, which are described in SkyePharma’s 20-F and other documents on file with the SEC. These include without limitation risks in obtaining and maintaining regulatory approval for existing, new or expanded indications for its products, other regulatory risks, risks relating to SkyePharma’s ability to manufacture pharmaceutical products on a large scale, risks that customer inventory will be greater than previously thought, risks concerning SkyePharma’s ability to manage growth, SkyePharma’s marketing partners’ ability to market a pharmaceutical product on a large scale and manage their sales and marketing organisation and maintain or expand sales and market share for its products, risks relating to the ability to ensure regulatory compliance, risks related to the research, development and regulatory approval of new pharmaceutical products, risks related to research and development costs and capabilities, market acceptance of and continuing demand for SkyePharma’s products and the impact of increased competition, risks associated with anticipated top and bottom line growth and the possibility that upside potential will not be achieved, competitive products and pricing, and risks associated with the ownership and use of intellectual property rights. SkyePharma undertakes no obligation to revise or update any such forward-looking statement to reflect events or circumstances after the date of this release.

 

CHAIRMAN’S STATEMENT

 

The most important event in the first half of 2004 was the US Food & Drug Administration’s approval of DepoDur (the new name for DepoMorphine) on 18 May. After taking the decision in 2001 to undertake full clinical development ourselves and completing the clinical studies and regulatory filings for DepoDur on time, it is highly gratifying to see this crowned by approval by the FDA. Importantly this was the first possible date on which the product could be approved. Few new drugs are approved by the FDA at the first opportunity so this achievement is a real tribute to both the quality of the product and the skill of our clinical and regulatory teams. DepoDur is the first product for which we have undertaken full development ourselves and we expect it to be a major contributor to the company’s future.

 

Apart from the exciting news about DepoDur, I am also pleased to report that Foradil® Certihaler® has received its first approvals in Europe. Following the FDA “approvable” letter issued in October last year, a response has been filed. Our royalty income continues to grow rapidly, driven by continuing progress by Paxil CR and Xatral® OD/Uroxatral®. Our new partner Mundipharma launched DepoCyte® in Europe and US sales of Solaraze® are expected to benefit from an expanded sales force following the recent acquisition of Quintiles’ Bioglan unit by Bradley Pharmaceuticals. In our pipeline, the HFA-MDI version of Pulmicort® we are developing for AstraZeneca has now completed its Phase III trials.

 

We have also completed some important new agreements. We appointed Medeus Pharma as our European licensee for DepoDur, on excellent terms, and also licensed to First Horizon a cardiovascular product currently under review by the FDA. Approval this year would bring us a substantial milestone payment and a very attractive royalty rate. We entered a collaboration with Critical Therapeutics to develop a controlled release version of zileuton for asthma. This is a near-term opportunity, with filing expected in 2005. We also licensed our entire dermatology portfolio to Trigenesis Therapeutics following a strategic review that concluded that we could obtain a greater return from this technology if we licensed the portfolio to a company focused in this therapeutic area.

 

For our package of pulmonary products, we are seeking to appoint a partner with proven marketing ability in the respiratory field. We have a short-list of partners (including our preferred candidate) who are completing their enquiries in this complex area. Although this has taken longer than we had hoped, potential partners have required very extensive due diligence investigations to satisfy themselves fully before committing to the project given the development cost and timescale involved. We remain confident of completing a satisfactory agreement.

 

Our revenues in the first half were 26% above the 2003 level even though, as in previous years, we expect the majority of our revenues to arise in the second half of the year. However I must point out that whether we make a profit for the second half, and for the year as a whole, will depend on the structure and timing of the signature of the above pulmonary deal and the timing of FDA approval of the cardiovascular pipeline product.

 

Finally we are pleased to report that we have recently completed an exchange offer for our 2005 convertible bonds. Over 80% of holders accepted the offer to exchange their bonds for new bonds with a higher conversion price of £1.00 and first conversion in 2009. The remaining £10 million of 2005 bonds will either be redeemed next year or converted into ordinary shares. We also raised £20 million of new money in May, also at a conversion price of £1.00. These successful issues demonstrate belief in the value of Skyepharma and greatly enhance our financial flexibility.

 

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Ian Gowrie-Smith

Non-executive Chairman

 

REVIEW OF OPERATIONS

 

This has been a busy period for SkyePharma. The most important event was the exciting news of the FDA approval of DepoDur in May. We have also made encouraging progress with our other near-term pipeline products and announced a number of important new agreements. We are still in late-stage discussions with several parties wishing to license our package of pulmonary products, including our preferred partner, and remain confident of achieving a satisfactory agreement. Our total revenues increased by some 26% over the first half of the previous year and more importantly our royalty income has continued to grow rapidly, continuing the trend of the past few years.

 

Products on the market

 

Paxil® CR, our improved formulation of GlaxoSmithKline’s Paxil®, was launched in the USA in April 2002 and currently holds just under 8% of all new US prescriptions for SSRI antidepressants. This share has been largely unaffected by the onset of US generic competition for the older version Paxil®, which started in September last year. GlaxoSmithKline’s total sales of Paxil® CR were £196 million ($356 million) in the first half of 2004, up by 29% in constant exchange rate terms. As disclosed in the 2003 Annual Report, SkyePharma is in discussions with GlaxoSmithKline over the rate of the royalty we receive on sales of Paxil® CR.

 

Xatral® OD (Uroxatral® in the USA), our once-daily version of Sanofi-Aventis’s Xatral® (alfuzosin), is a treatment for the urinary symptoms of benign prostatic hypertrophy. Xatral® OD has been on the market outside the USA since April 2000 and has now largely replaced the older multidose versions of Xatral®. Uroxatral® was launched in the USA in November 2003 and has already captured just under 10% of the combined new prescriptions written for it and for its main competitor, an encouraging start. Xatral® OD has now been approved in Europe for a second indication, acute urinary retention, with Phase III trials ongoing for the USA. Sales of all forms of Xatral® were €138 million in the first half of 2004, up by 35% in constant exchange rate terms. This included US sales of Uroxatral® of €14 million.

 

Our European partner Mundipharma launched DepoCyte® (known as DepoCyt® in the USA) in February at an oncology meeting in Barcelona and has had an encouraging initial response. Mundipharma shares our view that the market for DepoCyte® is largely under-developed. We have now completed enrolment in the Phase IV trial that will be used to support a filing for a more common form of neoplastic meningitis, associated with solid tumours.

 

Solaraze®, our topical gel treatment for actinic keratosis, is now marketed in the US by Bradley Pharmaceuticals. Bradley, a fast-growing US specialty pharmaceuticals company, acquired the Bioglan dermatology unit of Quintiles in August 2004. This will more than double the number of sales representatives detailing Solaraze®. The transfer of rights to market Solaraze® from Quintiles to Bradley required our consent and in August we received a $5 million payment from Quintiles as part of this transaction. Solaraze® is marketed in Europe and certain other territories by Shire Pharmaceuticals. In Australia we have recently completed a clinical trial of patients with multiple actinic keratoses. This will be used as the pivotal trial for submission to the Australian regulatory authorities.

 

Products in late-stage development

 

On 18 May, we received the exciting news that the US FDA had formally approved DepoDur, our new injectable analgesic for the treatment of pain after surgery. DepoDur is the first product that we decided to develop ourselves. The recent FDA approval validates that decision and also bodes well for approval in Europe. Having now completed licensing deals in North America and Europe on excellent terms, we expect DepoDur to be a major contributor to the company’s future.

 

In DepoDur we have used our DepoFoam sustained-release delivery technology to improve morphine for relief of post-surgical pain. Given as a single epidural injection before or during surgery, DepoDur provides highly effective pain relief for the following 48 hours – normally the period of peak post-operative pain. Our clinical trials, involving more than 1000 patients, convincingly demonstrated the potential of DepoDur to improve the treatment of pain after major surgery. There is widespread recognition that pain relief is an under-served market and current approaches to control of post-operative pain leave much to be desired.

 

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We now look forward to the US launch of DepoDur by our partner Endo Pharmaceuticals later this year. We are now in the process of supplying full launch quantities to Endo, which will satisfy the conditions for receipt of a milestone payment due to us on US approval. DepoDur was filed with the UK regulatory authorities in November 2003 and on normal regulatory review timelines we would expect approval by the end of the year. This will be used as the basis for approval throughout European Union using the EU’s “mutual recognition” procedure. Our new European partner Medeus Pharma (appointed in April) is eagerly awaiting approval of DepoDur to commence marketing.

 

Foradil® Certihaler® is a new version of Novartis’ long-acting bronchodilator Foradil® (formoterol). We developed not only the multi-dose dry-powder inhaler device but also the formulation used in it that ensures dose consistency regardless of storage conditions. These technologies are also involved in a new collaboration with Novartis to jointly develop another bronchodilator, QAB149. Novartis filed Foradil® Certihaler® with the FDA and European regulatory authorities in December 2002. The FDA issued an “approvable” letter in October 2003 and Novartis has filed a response. In March this year the product received its first European approval, in Switzerland, and it has since been approved in several other countries. Novartis is responsible for marketing Foradil® Certihaler® outside the USA. The US Foradil® franchise has been licensed to Schering-Plough Corporation.

 

We have now completed the enrolment of patients for the Phase III trial of our once daily version of the Parkinson’s drug Requip® which we are conducting for our partner GlaxoSmithKline. This is on track for the target filing planned for next year.

 

We are developing several other asthma drugs in metered-dose inhalers (MDIs) powered by a hydrofluoroalkane (HFA) propellant gas. We have now completed the Phase III trial of an HFA-MDI version of AstraZeneca’s inhaled steroid Pulmicort® (budesonide). We expect AstraZeneca to file this for approval in the first country in Europe around the end of the year. We will receive double digit royalties on sales of Pulmicort® HFA-MDI. Our own HFA-MDI version of formoterol will commence Phase III trials around the end of this year and our fixed-dose combination product Flutiform (combining formoterol with the inhaled steroid fluticasone) will also start its Phase II trial in the autumn.

 

Propofol IDD-D is our novel formulation of propofol, a widely-used injectable anaesthetic and sedative. Our formulation has been designed not to support microbial growth, a recognised problem with current versions, and should provide uninterrupted sedation for 24 hours, ideal for the fast-growing intensive care market. In April the FDA completed its review of the Phase II trials, triggering a milestone payment from our North American partner Endo, and we are now in dialogue with the FDA on the design of the additional trials required for approval. We are also in current discussion with potential licensees for Europe and certain other markets.

 

New corporate developments

 

Apart from the European licence for DepoDur with Medeus referred to above, we have also licensed a cardiovascular product in the US to First Horizon Pharmaceutical Corporation. This oral product is currently under review by the FDA. We will receive up to $50 million in milestone payments, of which up to $20 million is dependent on the timing and conditions of FDA approval, anticipated by the end of this year. We will also receive 25% of First Horizon’s net sales of this product in the form of royalty income and manufacturing revenues.

 

In January we announced a collaboration with Critical Therapeutics to develop zileuton for asthma and COPD. We had developed a twice-daily version for Abbott Laboratories which completed Phase III development for asthma but has not been filed. Critical Therapeutics has now licensed zileuton from Abbott. We expect the controlled release product to be filed with the FDA by the end of next year.

 

In April we licensed our dermatology products, pipeline and topical delivery technologies to a US dermatology company, Trigenesis Therapeutics. In a strategic review last year we concluded that we would gain a greater return by outlicensing this technology portfolio to a company with a development and market focus in this area. We retain our existing licences and can also continue to use the delivery technologies under certain conditions. If all the pipeline products reach the market, milestone payments will exceed US$20 million. SkyePharma will also receive a 10% royalty. Trigenesis is now part of the fast-growing Indian pharmaceutical company, Dr Reddy’s Laboratories.

 

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In June we agreed a strategic alliance with the UK company Vectura for pulmonary delivery technologies. We have obtained certain rights to Vectura’s Aspirair® dry-powder inhaler, which is particularly suitable for the delivery of macromolecules. We invested £2 million for a 4% equity stake in Vectura. Vectura has recently completed an initial public offering on the AIM market.

 

Finally King Pharmaceuticals (in the process of being acquired by Mylan Laboratories, a leading US generic company) has informed us that it wishes to terminate the agreement signed in May 2003 to develop a modified-release formulation of Altace® (ramipril). This product was in an early stage of development.

 

The future

 

We are determined to maximise the long-term return from our products and to move away from reliance on one-off milestone payments, which historically have made up the majority of our revenues. This has meant a change in the structure of our agreements to optimise royalty rates and to make milestone payments more tied to product revenue targets. Inevitably this will bring a short-term penalty in terms of revenues and cashflow but we are confident that this is the correct approach, which will greatly enhance the value of our products to the company.

 

Michael Ashton

Chief Executive

 

FINANCIAL REVIEW

Turnover

 

Revenues for the half year were 26% higher at £28.5 million compared with £22.6 million in the same period in 2003. This is primarily due to an increase in milestone payments as well as higher royalty income. This does not include milestone payments of £5.5 million received in the first half from Endo and First Horizon which have been fully deferred. Revenues have increased by a cumulative annual growth rate of 38% since 1996.

 

Contract development and licensing revenues increased 26% to £14.4 million for the period (H1 2003: £11.4 million). Revenues recognised from milestone payments and payments received on the signing of agreements in the period amounted to £11.5 million and included revenues from Medeus for the European marketing and distribution rights for DepoDur and Trigenesis for the rights to certain dermatological assets. In addition, £3.5 million of revenue was recognised from GlaxoSmithKline on the phase III clinical trials of Requip® (ropinirole); AstraZeneca on the phase III clinical trials of Budesonide HFA and Novartis on the first European approval of Foradil® Certihaler® and the phase II clinical trials of QAB 149.

 

Royalty income, principally from Paxil CR, Xatral® OD, DepoCyt® and Solaraze®, increased by 28% to £10.3 million compared with the first half of 2003.

 

Manufacturing and distribution revenues increased by 22% to £3.8 million for the period mainly due to higher production of the Foradil® Certihaler® for Novartis, compared with £3.2 million in H1 2003.

 

Deferred income

 

During the period, a further net £1.0 million of turnover and other income was deferred under SkyePharma’s revenue recognition policy. Amounts received included the milestones from Endo and First Horizon noted above which have been fully deferred. Total deferred income of £16.9 million as at 30 June 2004 comprised:

 

     31 December
2003
£ million
   Received *
£ million
 
 
  Recognised
£ million
 
 
  30 June
2004
£ million

Contract development and licensing revenue

   7.1    16.7     (14.4 )   9.4

Other operating income

   8.8    (0.3 )   (1.0 )   7.5
    
     15.9    16.4     (15.4 )   16.9
    

* Includes exchange adjustments

 

Deferred income will be released in subsequent periods as the related costs are incurred or as any associated obligations under the relevant contracts are satisfied.

 

Cost of sales

Cost of sales comprises research and development expenditures, including the costs of certain clinical trials incurred on behalf of our collaborative partners, the direct costs of contract

 

5


manufacturing, direct costs of licensing arrangements and royalties payable. Cost of sales increased by 6% to £13.5 million in the first six months of 2004 (H1 2003: £12.7 million). This was mainly due to an increase of £0.6 million in royalty expenses due under our agreement with Paul Capital. The resulting gross profit increased 52% to £15.0 million compared with £9.9 million in the first half of 2003.

 

Expenses

Selling, marketing and distribution expenses decreased to £1.1 million (H1 2003: £2.5 million), reflecting the significant savings resulting from the Group reorganisation announced last year.

 

Amortisation of intangible assets decreased slightly by £0.1 million to £3.1 million. Other administration expenses before exceptionals fell to £6.5 million in the first half, compared with £7.5 million in H1 2003. This reduction is mainly due to the release of a portion of a provision held against the Group’s investment in GeneMedix plc, as well as the prior year expense of reacquiring the DepoCyt® European rights from Elan. The exceptional charge of £0.5 million relates to the continuing reorganisation of some research and development operations and other business functions which commenced during 2003. No further significant reorganisation expenses are anticipated, and the reorganisation is expected to be completed during 2004.

 

SkyePharma’s own research and development expenses in the period decreased by £2.1 million to £14.4 million mainly due to a reduction in expenditure on DepoDur when compared with the significant expenditure incurred in the prior period in preparation for its July 2003 filing with the FDA.

 

Other operating income

Under the Paul Capital agreements, other operating income recognised in the first half was £1.0 million (H1 2003: £4.2 million). All of the income under the first Paul Capital agreement has now been recognised, and there is £7.5 million of deferred income under the second Paul Capital agreement as at June 2004. Royalty payments to Paul Capital of £1.9 million (H1 2003: £1.3 million) were expensed during the period.

 

Operating results

The increase in revenue mentioned above is the most significant factor contributing to the Group’s 44% reduction in operating loss after exceptionals to £9.6 million (H1 2003: £17.0 million) in the first six months of 2004. The reduction in operating loss before exceptionals amounted to 52%. Other factors, including the decrease in the Group’s own research and development of £2.1 million also contributed to the reduced loss. The Group made an exceptional £2.0 million profit on disposal of its entire holding of Transition Therapeutics shares. Similarly, the retained loss for the period decreased by 45% to £10.2 million (H1 2003: £18.7 million), after net interest payable of £2.5 million (H1 2003: £1.6 million). Earnings before interest, tax, depreciation and amortisation (‘EBITDA’), a commonly used indicator, improved by 85% to a loss of £1.6 million in the period (H1 2003: £10.5 million loss).

 

The loss per share for the period was 1.7 pence, which represents a 45% reduction compared with a loss of 3.1 pence for the same period in 2003.

 

Foreign currency movements did not have a material impact on the results of operations in 2004 compared with 2003.

 

Cash balances and cash flow

 

In April 2004 the Group issued £20 million 6% convertible bonds, with a first right of conversion after five years by the holder of the bonds, and a final maturity of May 2024. This raised approximately £18.9 million net of expenses. The bonds are convertible at the option of the holder into SkyePharma Ordinary Shares at a conversion price of £1.00.

 

At 30 June 2004 SkyePharma had cash and short-term deposits of £29.9 million and a bank overdraft of £0.9 million, compared with £23.2 million cash and a £1.2 million bank overdraft at 31 December 2003.

 

There was a net cash outflow from operating activities of £5.1 million for the half year (H1 2003: £7.0 million inflow). During the first half of 2004 purchases of tangible fixed assets were £2.8 million. Purchases of intangible fixed assets of £1.2 million mainly relate to the strategic alliance with Vectura in the area of pulmonary delivery technologies. The proceeds on disposal of the Group’s holding of Transition Therapeutics shares were £2.6 million. The resulting cash outflow before financing for the period was £10.4 million (H1 2003: £4.5 million).

 

Balance sheet

 

The balance sheet at 30 June 2004 shows shareholders’ funds of £77.2 million, with cumulative goodwill written off to the profit and loss account reserve of £147.6 million.

 

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In May 2004 SkyePharma issued 3.25 million Ordinary Shares to the Research Development Foundation as a result of a restructuring of the historic arrangements with RDF existing at the time of the DepoTech acquisition in 1999. In addition, the Group settled the £0.5 million Chiron promissory note in June 2004.

 

In July 2004 the Group exchanged £49.6 million of its convertible bonds due 2005 for convertible bonds due 2024, leaving £9.8 million of the 2005 bonds outstanding. Accordingly the unamortised issue costs on the exchanged 2005 convertible bonds were written off during the period. In September 2004 the £49.6 million 2024 convertible bonds were consolidated to form a single series with the £20 million 2024 bonds issued in May 2004.

 

Bank and other non-convertible debt amounted to £11.3 million at 30 June 2004, consisting principally of a £7.2 million property mortgage secured by the assets of Jago. Net debt amounted to £60.4 million (31 December 2003: £49.5 million).

 

International Financial Reporting Standards

SkyePharma will be required to prepare consolidated financial statements under International Financial Reporting Standards (‘IFRS’) from 1 January 2005 and to restate the 2004 results for comparison.

 

The transition to IFRS could have a material impact on the Group’s financial position and reported results from this date. The Group’s project team is managing its conversion to IFRS and is in the process of assessing the potential impact.

 

Donald Nicholson

Finance Director

 

CONSOLIDATED PROFIT AND LOSS ACCOUNT

for the six months ended 30 June 2004

 

     Notes    Unaudited
6 months to
30 June 2004
£’000
   Exceptional
items and
amortisation
(note 4)
£’000
   Unaudited
6 months to
30 June 2004
£’000

Turnover

   2    28,523    —      28,523

Cost of sales

   2    (13,507)    —      (13,507)

Gross profit

        15,016    —      15,016

Selling, marketing and distribution expenses

        (1,133)    —      (1,133)

Administration expenses

                   

Amortisation

        —      (3,072)    (3,072)

Other administration expenses

        (6,526)    (537)    (7,063)
         
          (6,526)    (3,609)    (10,135)

Research and development expenses

        (14,362)    —      (14,362)

Other operating income

   3    1,016    —      1,016

Operating loss

        (5,989)    (3,609)    (9,598)

Profit on disposal of investment

        —      2,021    2,021

Loss on ordinary activities before interest and taxation

        (5,989)    (1,588)    (7,577)

Interest receivable

        370    —      370

Interest payable

        (2,554)    (338)    (2,892)

Loss on ordinary activities before taxation

   2    (8,173)    (1,926)    (10,099)

Taxation

        (95)    —      (95)

Retained loss

        (8,268)    (1,926)    (10,194)

Earnings per Ordinary Share

   5               

Basic

        (1.4p)    (0.3p)    (1.7p)

Diluted

        (1.4p)    (0.3p)    (1.7p)

 

There was no material difference between the loss on ordinary activities before taxation and the historical cost loss before taxation in 2004 and 2003. All results represent continuing activities.

 

See Notes to the Interim Financial Statements

 

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CONSOLIDATED PROFIT AND LOSS ACCOUNT Continued

for the six months ended 30 June 2004

 

     Notes    Unaudited
6 months to
30 June 2003
£’000
   Exceptional
items and
amortisation
£’000
   Unaudited
6 months to
30 June 2003
£’000

Turnover

   2    22,586    —      22,586

Cost of sales

   2    (12,702)    —      (12,702)

Gross profit

        9,884    —      9,884

Selling, marketing and distribution expenses

        (2,518)    —      (2,518)

Administration expenses

                   

Amortisation

        —      (3,226)    (3,226)

Other administration expenses

        (7,478)    (1,409)    (8,887)
         
          (7,478)    (4,635)    (12,113)

Research and development expenses

        (16,420)    —      (16,420)

Other operating income

   3    4,173    —      4,173

Operating loss

        (12,359)    (4,635)    (16,994)

Profit on disposal of investment

        —      —      —  

Loss on ordinary activities before interest and taxation

        (12,359)    (4,635)    (16,994)

Interest receivable

        512    —      512

Interest payable

        (2,131)    —      (2,131)

Loss on ordinary activities before taxation

   2    (13,978)    (4,635)    (18,613)

Taxation

        (76)    —      (76)

Retained loss

        (14,054)    (4,635)    (18,689)

Earnings per Ordinary Share

   5               

Basic

        (2.3p)    (0.8p)    (3.1p)

Diluted

        (2.3p)    (0.8p)    (3.1p)

 

CONSOLIDATED PROFIT AND LOSS ACCOUNT continued

for the six months ended 30 June 2004

 

     Notes    Audited
12 months to
31 December
2003

£’000
   Exceptional
items and
amortisation
£’000
   Audited
12 months to
31 December
2003

£’000

Turnover

   2    53,152    —      53,152

Cost of sales

   2    (29,786)    —      (29,786)

Gross profit

        23,366    —      23,366

Selling, marketing and distribution expenses

        (4,348)    —      (4,348)

Administration expenses

                   

Amortisation

        —      (6,669)    (6,669)

Other administration expenses

        (17,987)    (9,487)    (27,474)
         
          (17,987)    (16,156)    (34,143)

Research and development expenses

        (30,520)    —      (30,520)

Other operating income

   3    6,126    —      6,126

Operating loss

        (23,363)    (16,156)    (39,519)

Profit on disposal of investment

        —      —      —  

Loss on ordinary activities before interest and taxation

        (23,363)    (16,156)    (39,519)

Interest receivable

        1,029    —      1,029

Interest payable

        (4,493)    —      (4,493)

Loss on ordinary activities before taxation

   2    (26,827)    (16,156)    (42,983)

Taxation

        (240)    —      (240)

Retained loss

        (27,067)    (16,156)    (43,223)

Earnings per Ordinary Share

   5               

Basic

        (4.4p)    (2.7p)    (7.1p)

Diluted

        (4.4p)    (2.7p)    (7.1p)

 

8


CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

for the six months ended 30 June 2004

 

     Unaudited
6 months to
30 June 2004
£’000
   Unaudited
6 months to
30 June 2003
£’000
   Audited
12 months to
31 December
2003

£’000

Loss attributable to shareholders

   (10,194)    (18,689)    (43,223)

Net currency translation effect

   75    (37)    (175)

Unrealised gain on contract development

   128    1,645    2,029

Total recognised gains and losses for the period

   (9,991)    (17,081)    (41,369)

 

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS

for the six months ended 30 June 2004

 

     Unaudited
6 months to
30 June 2004
£’000
   Unaudited
6 months to
30 June 2003
(restated)
£’000
   Audited
12 months to
31 December
2003 (restated)

£’000

Shareholders’ funds at the beginning of the period as previously stated

   84,870    124,270    124,270

Restatement for UITF Abstract 38; Accounting for ESOP trusts

   —      (1,028)    (1,028)

Shareholders’ funds at the beginning of the period as restated

   84,870    123,242    123,242

Total recognised gains and losses for the period

   (9,991)    (17,081)    (41,369)

Purchase of own shares for ESOP

   —      (925)    (925)

ESOP credit

   271    201    558

Equity shares issued, net of expenses

   1,869    —      2,560

Exercise of share options, net of expenses

   181    61    765

Increase in shares and warrants to be issued

   —      2,565    —  

Issue of warrants

   —      —      39

Net movement in the period

   (7,670)    (15,179)    (38,372)

Shareholders’ funds at the end of the period

   77,200    108,063    84,870

 

CONSOLIDATED BALANCE SHEET

as at 30 June 2004

 

     Notes    Unaudited
30 June 2004
£’000
   Unaudited
30 June 2003
(restated)
£’000
   Audited
31 December
2003 (restated)
£’000

Fixed assets

                   

Intangible assets

   6    94,688    101,572    95,096

Tangible assets

        40,349    44,533    42,615

Investments

   7    21,563    22,446    22,024
          156,600    168,551    159,735

Current assets

                   

Stock

        1,372    1,156    1,320

Debtors

        16,658    21,973    15,634

Investments

        1,625    1,905    981

Cash and short-term bank deposits

        29,921    22,181    23,240
          49,576    47,215    41,175

Creditors: amounts falling due within one year

                   

Convertible bonds due 2005

   8    (59,336)    —      —  

Deferred income

        (12,705)    (17,310)    (12,926)

Other creditors

        (20,627)    (18,520)    (26,394)
          (92,668)    (35,830)    (39,320)

Net current (liabilities)/assets

        (43,092)    11,385    1,855

Total assets less current liabilities

        113,508    179,936    161,590

Creditors: amounts falling due after more than one year

                   

Convertible bonds due 2005

   8    —      (58,584)    (58,791)

Convertible bonds due 2024

   8    (18,874)    —      —  

Deferred income

        (4,164)    (1,843)    (2,948)

Other creditors

        (11,917)    (10,840)    (12,860)
          (34,955)    (71,267)    (74,599)

Provisions for liabilities and charges

   11    (1,353)    (606)    (2,121)

Net assets

        77,200    108,063    84,870

Capital and reserves

                   

Share capital

   12    63,424    62,559    63,067

Share premium

        320,916    316,467    319,223

Shares and warrants to be issued

        —      2,565    —  

Other reserves

        9,350    9,311    9,350

Profit and loss account

        (316,490)    (282,839)    (306,770)

Shareholders’ funds

                   

Attributable to equity interests

        65,890    96,753    73,560

Attributable to non-equity interests

        11,310    11,310    11,310
          77,200    108,063    84,870

 

See Notes to the Interim Financial Statements

 

9


CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 June 2004

 

     Notes    Unaudited
6 months to
30 June 2004
£’000
 
 
 
 
  Unaudited
6 months to
30 June 2003
(restated)

£’000
 
 
 
 

 
  Audited
12 months to
31 December
2003 (restated)
£’000
 
 
 
 
 

Net cash (outflow)/inflow from operating activities

   9    (5,084 )   6,975     6,615  

Returns on investments and servicing of finance

                       

Interest received

        316     473     1,047  

Interest paid

        (4,107 )   (3,752 )   (4,013 )

Interest element of finance lease payments

        (5 )   (15 )   (70 )
          (3,796 )   (3,294 )   (3,036 )

Taxation

        (95 )   (5 )   (227 )

Capital expenditure and financial investment

                       

Purchase of intangible fixed assets

        (1,168 )   (2,239 )   (2,530 )

Purchase of tangible fixed assets

        (2,760 )   (2,385 )   (4,021 )

Purchase of fixed asset investments

        (168 )   (3,573 )   (4,749 )

Disposal of fixed asset investments

        2,650     —       —    
          (1,446 )   (8,197 )   (11,300 )

Cash outflow before use of liquid resources and financing

        (10,421 )   (4,521 )   (7,948 )

Management of liquid resources

                       

Net (increase)/decrease in amounts held on short-term bank deposit

        (598 )   1,734     183  

Financing

                       

Issue of Ordinary Share capital

        181     61     1,437  

Issue of 2024 convertible bonds

        20,000     —       —    

Expenses of convertible bonds issue

        (1,135 )   —       —    

Issue of warrants

        —       672     39  

Purchase of own shares

        —       (925 )   (925 )

Debt due within one year:

                       

Inception of new loan

        —       —       770  

Repayment of Chiron promissory note

        (549 )   —       —    

Debt due beyond one year:

                       

Inception of new loan

        —       —       1,936  

Repayment of loans

        (592 )   (137 )   (286 )

Capital element of finance lease payments

        (176 )   (550 )   (1,078 )
          17,729     (879 )   1,893  

Increase/(decrease) in cash

   10    6,710     (3,666 )   (5,872 )

 

See Notes to the Interim Financial Statements

 

10


NOTES TO THE INTERIM FINANCIAL STATEMENTS

for the six months ended 30 June 2004

 

1 Accounting policies and the basis of preparation

 

The interim financial statements have been prepared using accounting policies consistent with those adopted by the Group in its financial statements for the year ended 31 December 2003 except as noted below.

 

During 2004 the Group has implemented UITF Abstract 38; Accounting for ESOP trusts and related amendments to Abstract 17; Employee share schemes. UITF 38 changes the presentation of an entity’s own shares held in an ESOP trust from requiring them to be recognised as assets to requiring them to be deducted in arriving at shareholders’ funds. UITF 17 (revised) requires that the minimum expense recognised in respect of an award should be the difference between the fair value of the shares at the date of award and the amount that an employee may be required to pay for the shares (i.e. the intrinsic value of the award). The prior year comparatives have been restated for the adoption of UITF Abstract 38. The effect of adoption of UITF 17 is not material.

 

The interim report is unaudited and does not constitute statutory financial statements within the meaning of section 240 of the Companies Act 1985. The results for the period to 30 June 2004 have been formally reviewed and reported upon by the auditors on page 21 to this report. The figures for the year ended 31 December 2003 are an extract from the audited financial statements for that period which have been delivered to the Registrar of Companies and on which the auditors have issued an unqualified report which contained no statement therein under section 237(2) or section 237(3) of the Companies Act 1985.

 

 

Consolidation

The consolidated financial information includes the financial statements for the Company and its subsidiary undertakings. Intra-group sales and profits are eliminated fully on consolidation. The results of subsidiaries sold or acquired are included in the consolidated profit and loss account up to the date of their sale or from their date of acquisition respectively.

 

Revenue recognition

Turnover comprises contract development and licensing, royalty and manufacturing and distribution income. Contract development and licensing income represents amounts invoiced to customers for services rendered under development and licensing agreements, including milestone payments and technology access fees. Contract revenue is recognised when earned and non-refundable and to the extent that there are no future obligations pursuant to the revenue, in accordance with the contract terms. Refundable contract revenue is treated as deferred until such time as it is no longer refundable. Royalty income represents income earned as a percentage of product sales. Advance royalties received are treated as deferred income until earned, when they are recognised as income. Manufacturing and distribution revenues principally comprise contract manufacturing fees invoiced to third parties and income from product sales.

 

Research and development costs

Research and development costs are charged as an expense in the period in which they are incurred.

 

 

Intangible fixed assets

Intangible fixed assets comprise goodwill, intellectual property and capitalised development costs. Goodwill, being the difference between the fair value of the purchase consideration and the Group’s share of the fair value of the net assets acquired, is capitalised and amortised over a period of 20 years or less in line with the Directors’ view of its useful economic life. Prior to the introduction of FRS 10; Goodwill and intangible assets, the policy adopted was to write off goodwill to reserves. As permitted by FRS 10 goodwill written off to reserves in previous years has not been reinstated on the balance sheet and adjustments to such goodwill have been taken directly to reserves. Goodwill previously written off to reserves is charged to the profit and loss account in the event of disposal of the related business.

 

Intellectual property comprises acquired patents, trade marks, know-how and other similarly identified rights. These are recorded at their fair value at acquisition date and are amortised in equal instalments over their estimated useful economic lives, from the date when the transfer of technology is complete. The period over which the Group expects to derive economic benefits does not exceed 20 years. Costs associated with internally developed intellectual property are generally treated as research and development costs.

 

11


Fixed asset investments

Investments that are held for continuing use in the business are classified as fixed asset investments and recorded in the balance sheet at cost or Directors’ valuation, less provision for permanent diminution in value.

 

Impairment of fixed assets

The carrying values of fixed assets are reviewed for impairment when there is an indication that the assets may be impaired. First year impairment reviews are conducted for acquired goodwill and intangible assets. Impairment is determined by reference to the higher of net realisable value and value in use, which is measured by reference to discounted future cash flows. Any provision for impairment is charged to the profit and loss account in the year concerned.

 

 

Convertible debt

On issue, convertible debt is stated at the amount of net proceeds after deducting issue costs. On conversion, the amount recognised in shareholders’ funds in respect of the shares issued is equal to the carrying value at the date of conversion. Issue costs on convertible debt and any discount on issue are charged to the profit and loss account at a constant rate over the term of the debt.

 

2 Segmental analysis

 

The Group’s operations relate wholly to one class of business, pharmaceuticals. Further analysis of turnover and loss on ordinary activities before taxation by geographical area is set out below, together with an analysis of cost of sales.

 

     Unaudited
6 months to
30 June 2004

£’000
   Unaudited
6 months to
30 June 2003
£’000
   Audited
12 months to
31 December
2003

£’000

(a)    Turnover

              

By class of business:

              

Pharmaceuticals

              

Contract development and licensing

              

Milestone payments

   11,511    8,581    24,196

Research and development costs recharged

   2,889    2,793    5,456
    
     14,400    11,374    29,652

Royalties receivable

   10,271    8,027    18,701

Manufacturing and distribution

   3,852    3,185    4,799
     28,523    22,586    53,152

By location of customer:

              

North America

   6,129    4,618    10,289

UK

   8,489    7,103    21,327

Europe

   12,276    8,222    18,027

Rest of the world

   1,629    2,643    3,509
     28,523    22,586    53,152

By location of operation:

              

Europe

   24,737    19,019    42,503

North America

   3,786    3,567    10,649
     28,523    22,586    53,152

(b)    Cost of sales

              

By class of business:

              

Pharmaceuticals

              

Contract development and licensing

   (4,529)    (4,076)    (12,085)

Royalties payable

   (2,452)    (1,737)    (4,707)

Manufacturing and distribution

   (6,526)    (6,889)    (12,994)
     (13,507)    (12,702)    (29,786)

(c)    Loss on ordinary activities before taxation

              

By class of business:

              

Pharmaceuticals

   (10,099)    (18,613)    (42,983)

By location of operation:

              

UK

   (3,680)    (5,198)    (5,825)

Europe

   4,379    3,317    (3,424)

North America

   (8,276)    (15,113)    (30,270)

Loss on ordinary activities before interest and taxation

   (7,577)    (16,994)    (39,519)

Net interest payable

   (2,522)    (1,619)    (3,464)

Loss on ordinary activities before taxation

   (10,099)    (18,613)    (42,983)

 

12


3 Other operating income

 

Paul Capital Royalty Acquisition Fund provided a total of $30 million between 2000 and 2002, in return for the sale of a portion of the potential future royalty and revenue streams from DepoDur, Xatral OD, Solaraze and DepoCyt. Income of £Nil million (2003: £1.2 million) was recognised as Other operating income under this agreement on a cost to complete basis. All of the income under this agreement has now been recognised. Royalty payments to Paul Capital of £0.5 million (2003: £0.4 million) have been expensed during the period.

 

Under a second transaction Paul Capital provided a further $30 million during 2002 and 2003, in return for the sale of a portion of the potential future royalty and revenue streams from nine products from the Group’s drug pipeline. Income of £1.0 million (2003: £3.0 million) was recognised as Other operating income under this agreement on a cost to complete basis. Royalty payments to Paul Capital of £1.4 million (2003: £0.9 million) have been expensed during the period.

 

4 Exceptional items

 

Exceptional items include a charge of £0.5 million relating to the reorganisation of some research and development operations and other business functions commenced during 2003. The reorganisation is expected to be completed during 2004 (note 11; Provisions for liabilities and charges). In addition, £2.0 million relates to the profit on disposal of the Group’s investment in Transition Therapeutics (note 7, Fixed asset investments). A further £0.3 million relates to the write off of unamortised issue costs on the 2005 convertible bonds on exchange for 2024 bonds (note 8; Convertible bonds).

 

5 Earnings per ordinary share

 

     Unaudited
6 months to 30
June 2004
£’000
   Unaudited
6 months to 30
June 2003
£’000
   Audited
12 months to 31
December 2003
£’000

Attributable loss before exceptional items and amortisation

   (8,268)    (14,054)    (27,067)

Exceptional items

   1,146    (1,409)    (9,487)

Amortisation

   (3,072)    (3,226)    (6,669)

Attributable loss

   (10,194)    (18,689)    (43,223)
     ’000    ’000    ’000

Basic and diluted weighted average number of shares in issue

   614,209    609,177    609,855

Earnings per Ordinary Share before exceptional items and amortisation

   (1.4p)    (2.3p)    (4.4p)

Exceptional items

   0.2p    (0.2p)    (1.6p)

Amortisation

   (0.5p)    (0.6p)    (1.1p)

Basic earnings per Ordinary Share

   (1.7p)    (3.1p)    (7.1p)

Diluted earnings per Ordinary Share

   (1.7p)    (3.1p)    (7.1p)

 

There is no difference between basic and diluted earnings per Ordinary Share since in a loss making period all potential Ordinary Shares are anti-dilutive. Shares held by the SkyePharma PLC General Employee Benefit Trust are excluded from the weighted average number of shares.

 

6 Intangible fixed assets

 

     Goodwill
£’000
   Intellectual
property
£’000
   Development
costs
£’000
   Total
£’000

Cost

                   

At 1 January 2004

   82,730    36,127    1,712    120,569

Exchange adjustments

   —      (396)    (62)    (458)

Additions

   —      2,859    —      2,859

At 30 June 2004

   82,730    38,590    1,650    122,970

Amortisation

                   

At 1 January 2004

   14,025    10,436    1,012    25,473

Exchange adjustments

   —      (233)    (30)    (263)

Charge for the period

   2,067    907    98    3,072

At 30 June 2004

   16,092    11,110    1,080    28,282

Net book value at 31 December 2003

   68,705    25,691    700    95,096

Net book value at 30 June 2004

   66,638    27,480    570    94,688

 

13


7 Fixed asset investments

 

     Unlisted
investments
£’000

Cost

    

At 1 January 2004

   22,024

Additions

   168

Disposals

   (629)

At 30 June 2004

   21,563

 

Astralis Limited

In January 2004 SkyePharma converted all of its 2 million series A convertible preferred shares into 25 million common shares, 12.5 million of these being held in escrow. The resulting holding represents approximately 35.7% of the common shares. The investment is not regarded as an associated undertaking as the Directors have concluded that the Group does not exert significant influence.

 

 

Transition Therapeutics

In May 2004 SkyePharma disposed of its investment in Transition Therapeutics for £2.6 million, resulting in a profit on disposal of £2.0 million (note 4; Exceptional items).

 

 

8 Convertible bonds

 

In April 2004 the Group issued £20 million 6% convertible bonds, with a first right of conversion after five years by the holder of the bonds, and a final maturity of May 2024. The bonds are convertible at the option of the holder into SkyePharma Ordinary Shares at a conversion price of £1.00. Unless previously redeemed or converted, the bonds will be redeemed by the Group at their principal amount in May 2024.

 

In July 2004 the Group exchanged £49.6 million convertible bonds due 2005 for bonds due 2024 in the same amount, leaving £9.8 million 2005 bonds outstanding. The unamortised issue costs on the exchanged 2005 convertible bonds have been written off accordingly (note 4; Exceptional items). In September 2004 the £49.6 million 2024 convertible bonds were consolidated to form a single series with the £20 million 2024 bonds issued in May 2004.

 

As a result of these transactions there are £69.6 million 2024 convertible bonds and £9.8 million 2005 bonds outstanding.

 

9 Reconciliation of operating loss to net cash (outflow)/inflow from operating activities

 

     Unaudited
6 months to
30 June 2004
£’000
   Unaudited
6 months to
30 June 2003
£’000
   Audited
12 months to
31 December
2003

£’000

Operating loss

   (9,598)    (16,994)    (39,519)

Depreciation

   2,929    3,225    6,294

Amortisation

   3,072    3,226    6,669

Increase in stock

   (52)    (100)    (64)

(Increase)/decrease in debtors

   (1,024)    13,234    19,573

Increase/(decrease) in deferred income excluding unrealised gain on contract development

   1,123    2,769    (126)

(Decrease)/increase in other creditors

   (393)    953    4,734

(Decrease)/increase in provisions

   (768)    405    1,920

Impairment of intellectual property

   —      —      2,673

Impairment of tangible fixed assets

   —      —      1,324

Write down of fixed asset investments

   —      —      1,599

Other

   (373)    257    1,538

Net cash (outflow)/inflow from operating activities

   (5,084)    6,975    6,615

 

14


10 Analysis of net debt

 

     At
1 January
2004
£’000
   Cash
flow
£’000
   Non-cash
changes
£’000
   Exchange
movements
£’000
   At 30 June
2004
£’000

Cash at bank and in hand

   3,052    6,441    —      (78)    9,415

Bank overdraft

   (1,198)    269    —      35    (894)

Short-term bank deposits

   20,188    598    —      (280)    20,506
     22,042    7,308    —      (323)    29,027

Debt due within one year

   (3,172)    549    —      (58)    (2,681)

Debt due after one year

   (9,195)    592    —      205    (8,398)

Convertible bonds due 2005

   (58,791)    —      (545)    —      (59,336)

Convertible bonds due 2024

   —      (18,865)    (9)    —      (18,874)

Finance leases

   (366)    176    —      19    (171)
     (71,524)    (17,548)    (554)    166    (89,460)

Total

   (49,482)    (10,240)    (554)    (157)    (60,433)

 

Cash at bank and in hand and short-term bank deposits are aggregated on the balance sheet. Debt includes bank loans, a secured mortgage and convertible bonds.

 

Non cash changes relate to the amortisation of the issue costs on the convertible bonds.

 

11 Provisions for liabilities and charges

 

     Restructuring
£’000
   Pension
£’000
   National
Insurance
£’000
   Total
£’000

At 1 January 2004

   1,829    285    7    2,121

Exchange adjustments

   (69)    (23)    (2)    (94)

Charge for the period

   537    52    5    594

Utilised

   (1,268)    —      —      (1,268)

At 30 June 2004

   1,029    314    10    1,353

 

Restructuring Provision

 

The restructuring provision relates to the reorganisation of research and development operations and other business functions involving reductions in staff at most sites. The remaining provision of approximately £1.0 million is expected to be fully utilised in 2004 (note 4; Exceptional items).

 

12 Share capital

 

Equity share capital

 

     Ordinary
Shares

of 10p each
Number
    
£
Nominal value
’000

Issued, allotted and fully paid

           

At 1 January 2004

   618,669,940      61,867

Exercise of share options

   323,597      32

Issue of shares to Research Development Foundation

   3,250,000      325

At 30 June 2004

   622,243,537      62,224

 

During the period the Group issued 3,250,000 Ordinary Shares to Research Development Foundation as a result of a restructuring of the arrangements with RDF existing at the time of the DepoTech acquisition in 1999.

 

Non-equity share capital

 

     Deferred
‘B’ Shares
of 10p each
Number
   Nominal value
£’000

Authorised and issued

         

At 1 January 2004 and 30 June 2004

   12,000,000    1,200

 

END

 

15