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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Eirx Therap. | LSE:ERX | London | Ordinary Share | GB00B0XQBS97 | ORD 0.001P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.015 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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EiRx Therapeutics PLC
30 December 2008
EiRx Therapeutics Plc ("the Company")
Final Results For the year ended 30 June 2008
Macclesfield, Cheshire - EiRx Therapeutics plc (AIM: ERX), the drug discovery company developing targeted therapies for the treatment of
cancer, releases extracts of its annual results for the year ended 30th June 2008.
Copies of the full accounts, along with the notice of the Annual General Meeting and Form of Proxy, will been sent to shareholders on 30
December 2008 and will be available on the Company's website www.eirx.com, and for a period of one month at 50 Broadway, Westminster, London
SW1H 0BL.
For further information, please contact:
EiRx Therapeutics plc +44 (0)7740 696142
John Pool , Chairman
Grant Thornton UK LLP +44 (0)20 7383 5100
Philip Secrett / Colin Aaronson
Chairman's statement
At the half year I was able to report good progress with the scientific research of the group. Unfortunately, since then all research
has ceased as a result of the need to put EiRx Therapeutics Limited ("ETL") into liquidation following the unexpected withdrawal of
facilities by our bankers, Bank of Scotland.
The group now comprises the company and its one subsidiary, Auvation Limited. It currently has no staff and no premises. Thus ongoing
costs are as low as they can be and Auvation Limited continues to enjoy revenues from out-licensed technology and royalties.
We are negotiating potential contracts with external organisations wherein the IP of the group can be commercialised. We are also
monitoring the existing contracts to ensure the group revenues are maintained. The outcome of these discussions represent the key risks to
the group.
Financial Review
In February 2008, Bank of Scotland had indicated a willingness to increase its lending facility to the group from £200,000 to £350,000
based on a personal guarantee provided by a major shareholder. In March 2008 Bank of Scotland had been repaid the £200,000 advanced under
their previous facility from the proceeds of the share placing that had been made that month. In July 2008, when draw-down of the agreed,
increased facility was requested Bank of Scotland refused. The directors obtained and communicated legal advice to Bank of Scotland that
they had a strong case to seek specific performance of the lending facility but the bank disagreed with this position and indicated it would
defend itself in Court vigorously. The group lacked the resources and the time that were required to seek legal redress. Alternative sources
of funding were sought over the next four weeks but to no avail.
As a result of the circumstances described in the preceding paragraph, on 18 August 2008, the directors of ETL, having considered ETL's
financial condition and future prospects carefully, concluded that ETL could not continue to trade by reason of its insolvency. As a
consequence the directors passed a resolution to cease trading with immediate effect and at a meeting of creditors held in Dublin on 2
September 2008 Michael McAteer of Foster McAteer, Chartered Accountants, was appointed liquidator.
The key feature of the results for the year ended and the balance sheet at 30 June 2008 is therefore that all of the groups assets
relating to ETL, including goodwill, have been fully written off. Thus, the consolidated profit & loss account reflects the trading of the
group as it was for the financial year ended 30 June 2008 plus the write-off of ETL. The consolidated balance sheet at 30 June 2008 is the
consolidation of the holding company and Auvation Limited, its remaining subsidiary. The holding company's own balance sheet reflects the
write-off of its entire investment in ETL.
During the financial year, revenues of £59,504 were generated from services provided to third party research pharmaceutical companies
and £3,221 was earned in royalties. Auvation Limited earned these revenues.
At the end of the financial year cash at bank and in hand attributable to the ongoing group amounted to £75,352.
Key Performance Indicators ("KPI's")
1) Our business KPI has been to carry out our research programme in accordance with plans approved by the Board of Directors.
2) Our financial KPI was to ensure that we had adequate funding in place to accomplish 1.
The circumstances outlined above have resulted in the group being unable to meet these KPIs. The board will reassess the KPIs once the
future of the group has been determined.
John Pool
Chairman
29 December 2008
Consolidated Income Statement
Note 2008 2007
£ £
Continuing operations
Revenue 2 62,725 79,146
Administrative expenses (228,549) (2,814,905)
Other operating income - rent receivable - 48,148
Operating loss (165,824) (2,687,611)
Finance income 3 2,747 11,613
Finance costs 4 (21,227) (17,517)
Loss on ordinary activities before taxation 2 (184,304) (2,693,515)
Taxation 6 21,885 69,780
Loss for the year from continuing activities (162,419) (2,623,735)
Discontinued operation
Loss for the year from discontinued operation 7 (3,108,170) (1,083,322)
Loss on ordinary activities after taxation 17 (3,270,589) (3,707,057)
for the year
Basic and diluted loss per share - Total 8 (0.0738)p (0.1330)p
- Continuing operations (0.0036)p (0.0941)p
Consolidated statement of recognised income and expense
2008 2007
£ £
Loss for the financial period (3,270,589) (3,707,057)
Currency difference on foreign currency net (157,681) 83,519
investments
Total recognised gains and losses for the period (3,428,270) (3,623,538)
The currency difference on foreign currency net investments is taken directly to equity.
The accompanying accounting policies and notes form an integral part of these financial statements.
Consolidated balance sheet
Note 2008 2007
£ £
Non current assets
Goodwill 9 133,850 2,667,024
Other intangible assets 10 7,743 106,405
Property, plant and equipment 11 - 170,429
141,593 2,943,858
Current assets
Inventories 12 - 16,563
Trade and other receivables 13 18,784 98,362
Cash at bank and in hand 75,352 188,474
94,136 303,399
Total assets 235,729 3,247,257
Current liabilities
Trade and other payables 14 (283,312) (328,945)
Convertible debt (306,000) (306,000)
(589,312) (634,945)
Total assets less current liabilities (353,583) 2,612,312
Capital and reserves
Called up share capital 16 5,991,486 5,951,486
Share premium account 17 2,009,917 1,587,542
Merger reserve 17 97,722 1,310,186
Share based compensation reserve 17 123,615 123,615
Exchange translation reserve 17 (93,865) 63,816
Profit and loss account 17 (8,482,458) (6,424,333)
Shareholders' funds (353,583) 2,612,312
The accompanying accounting policies and notes form an integral part of these financial statements.
Consolidated cash flow statement
2008 2007
£ £
Cash flows from operating activities
Loss after tax (3,270,589) (3,707,057)
Adjustment for exchange difference (182,524) 78,832
Depreciation and amortisation 305,949 66,508
Proceeds on sale of tangible assets - 32,551
Impairment of goodwill 2,533,174 2,446,762
Share based compensation - 22,690
Change in inventories 16,563 4,402
Change in receivables 79,578 69,458
Change in payables (42,566) (184,421)
Net interest 18,479 5,904
Income taxes credit (21,885) (69,780)
Cash generated from operations (563,821) (1,234,151)
Interest paid (20,121) (17,517)
Income taxes paid (4,182) (2,875)
Income taxes received 22,345 71,698
Net cash flow from operating activities (565,779) (1,182,845)
Net cash inflows from investing activities
Purchase of intangible assets (11,325) (9,890)
Purchase of property, plant and equipment (690) (1,103)
Interest received 2,862 11,613
Net cash flow from investing activities (9,153) 620
Cash flows from financing activities
Proceeds from issue of shares 600,000 1,081,138
Share issue costs (137,625) (50,000)
Proceeds from long term borrowings - 48,750
Payment of financial lease liabilities (565) (6,863)
Net cash flow from financing activities 461,810 1,073,025
Net decrease in cash and cash equivalents (113,122) (109,200)
Cash and cash equivalents at start of period 188,474 297,674
Cash and cash equivalents at end of period 75,352 188,474
The accompanying accounting policies and notes form an integral part of these financial statements.
The financial information set out in this announcement does not constitute the Company's statutory accounts for the period ended 30 June
2008 but is derived from those accounts. Statutory accounts for the period will be delivered to Companies House following the Company's next
Annual General Meeting. The Group's auditors have reported on these accounts; their report was unqualified and did not contain statements
under section 237(2) or (3) of the Companies Act 1985. Their report did contain an emphasis of matter statement concerning the disclosure in
note 1 below concerning the group's ability to continue as a going concern.
Notes to the consolidated financial statements
1. Basis of preparation
These financial statements have been prepared on the going concern basis, which assumes that the company will continue in operational
existence for the foreseeable future.
The liabilities of the Group exceed the assets by £353,583 at 30 June 2008. On 2 July 2008 £236,000 of those liabilities were converted
into share capital. The Group's ability to continue as a going concern is dependent upon being able to generate revenue in excess of
expenses, in order to meet the groups liabilities as they fall due. The Group has certain confirmed income streams, through licence and
royalty income, but the directors are negotiating contracts with external organisations in order to maximise the commercialisation of the
groups intellectual property. The outcome of these discussions, and therefore the future revenues of the group, are uncertain. In addition
it has been assumed in the forecasts that the remaining monies due to the convertible debt holder will not be repayable in the foreseeable
future.
On this basis, the directors believe that it is appropriate for the accounts to be prepared on the going concern basis. The accounts do
not include any adjustments that would result should the company be unable to continue as a going concern.
2. Turnover and loss on ordinary activities before taxation
The turnover is attributable to contract research and licence fees in regard to out licensing of intellectual property all from within
the European Union.
The loss on ordinary activities before taxation is 2008 2007
stated after:
£ £
Research and development:
Current year expenditure including depreciation and
amortisation of patents,
hire of equipment and operating lease rentals 897,191 750,848
Grants receivable in respect of research and (243,358) (79,489)
development
Auditors' remuneration:
Audit services 16,000 16,000
Non-audit services- tax compliance services 4,500 12,000
Non-audit services- nominated adviser 26,000 22,221
Redundancy payment to former director - 45,970
Depreciation and amortisation:
Other intangible fixed assets - patents 119,064 34,330
Property, plant & equipment, owned 182,847 29,838
Property, plant & equipment, leased 4,038 2,340
Impairment of goodwill 2,533,174 2,446,762
Provisions for diminution in value:
Provision for permanent diminution in value of fixed - 32,551
assets - patents
Foreign currency (gains)/losses (1,136,764) 93,323
Other operating lease rentals 163,621 163,621
3. Finance income
2008 2007
£ £
Interest receivable on bank deposits 2,747 11,613
4. Finance costs
2008 2007
£ £
Interest payable on Convertible Loan Notes (15,300) (15,300)
Interest payable on bank overdrafts (5,927) (2,217)
(21,227) (17,517)
5. Directors and employees
Staff costs during the period were as follows:
2008 2007
£ £
Wages and salaries 267,311 354,361
Social security costs 42,148 46,460
Other pension costs 26,910 19,875
336,369 420,696
The average number of employees by category was as follows:
2008 2007
Number Number
Research staff 9 10
Administrative staff 2 3
Management 2 2
13 15
Remuneration in respect of directors who constitute the key management personnel, was as follows:
2008 2007
£ £
Emoluments 84,318 76,728
Pension contributions to money purchase pension schemes 5,866 1,604
90,184 78,332
Payments to third parties for directors' services 88,380 83,665
178,564 161,997
During the period one (2007: one) director participated in defined money purchase pension schemes.
During the period no directors exercised share options.
The amounts set out above include remuneration in respect of the highest paid director as follows:
2008 2007
£ £
Emoluments 84,318 76,728
Pension contributions to money purchase pension schemes 5,866 1,604
90,184 78,332
6. Taxation
There is a charge to taxation of £460 arising in the holding company. Auvation Limited received a Research & development tax credit
refund of £22,345. No other charge to corporation tax arose. The reduction in tax losses is as a result of the liquidation of EiRx
Therapeutics Limited.
Unrelieved tax losses of approximately £ 0.5 million (2007: £4.6 million) remain available to offset against future taxable trading
profits of the company's subsidiary company.
Factors affecting the tax charge for the period.
The tax assessed for the period is higher than the standard rate of corporation tax in the UK of 30%.
The differences are explained as follows:
2008 2007
£ £
Loss on ordinary activities before taxation (3,270,589) (3,776,837)
Loss on ordinary activities multiplied by standard (981,177) (1,133,051)
rate of corporation tax at 30%
Effect of:
Expenses incurred not deductible for tax purposes 1,798,233 750,189
Overprovision brought forward - 302
Income not chargeable for tax purposes (894,103) (23,847)
Income tax withheld 461 -
Research & development tax credit (22,345) (71,698)
Tax losses carried forward on UK operating loss at 70,970 137,970
30%
Tax losses carried forward on overseas operating loss 2,532 112,648
at 12.5%
Lower tax rates on overseas loss 3,544 157,707
Tax credit for period (21,885) (69,780)
7. Discontinued operation
In August 2008 the company's subsidiary, EiRx Therapeutics Limited, ceased trading and on 2 September 2008 was placed into liquidation.
The directors consider that this entity meets the definition of a discontinued operation. The amounts included in the income statement in
respect of this operation are:
2008 2007
£ £
Revenue - -
Administrative expenses (3,162,449) (1,083,322)
Other operating income - rent receivable 54,279 -
Loss before taxation (3,108,170) (1,083,322)
Taxation - -
Loss for the year from discontinued operations (3,108,170) (1,083,322)
The cash flows generated by the above business were as follows:
2008 2007
£ £
Net cash outflow from operating activities (21,094) 76,802
Net cash outflow from investing activities (12,014) (10,639)
Net cash outflow from financing activities (618) (58,320)
(33,726) 7,843
The assets, liabilities, capital additions, depreciation and amortisation and impairment of goodwill split between the continuing and
discontinued activities are as follows:
2008 Continuing Discontinued Total
£ £ £
Assets 235,729 - 235,729
Liabilities (353,583) - (353,583)
Capital additions - 12,015 12,015
Depreciation and amortisation 1,772 304,177 305,949
Impairment of goodwill - (2,533,174) (2,533,174)
2007 Continuing Discontinued Total
£ £ £
Assets 588,858 2,838,669 3,427,527
Liabilities (480,510) (154,435) (634,945)
Capital additions 354 10,639 10,993
Depreciation and amortisation 15,723 63,106 78,829
Impairment of goodwill 2,446,762 - 2,446,762
8. Loss per share
The calculation of the basic earnings per share is based on the loss attributable to ordinary shareholders divided by the weighted
average number of shares in issue during the period.
Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below.
2008
Weighted average Per share
Loss number of amount
£ shares pence
Basic and Diluted Earnings per
share attributable
to ordinary shareholders - (162,419) 4,429,294,673 (0.0036)
Continuing
- Discontinued (3,108,170) 4,429,294,673 (0.0702)
- Total (3,270,589) 4,429,294,673 (0.0738)
2007
Weighted average Per share
Loss number of Amount
£ shares pence
Basic and Diluted Earnings per
share attributable
to ordinary shareholders - (2,623,735) 2,787,777,108 (0.0941)
Continuing
- Discontinued (1,083,322) 2,787,777,108 (0.0389)
- Total (3,707,057) 2,787,777,108 (0.1330)
There is no dilutive effect on the loss per share as a result of the issue of options and consequently this has not been shown.
9. Goodwill
Total
£
Cost at 1 July 2006 5,113,786
Impairment during the year (2,446,762)
At 30 June 2007 2,667,024
Impairment during the year (2,533,174)
At 30 June 2008 133,850
As a result of the liquidation of EiRx Therapeutics Limited, one of the subsidiaries of the Group, as further disclosed in Note 21, the
goodwill allocated to that cash generating unit has been impaired to £nil.
The remaining goodwill relates to the Group's other cash generating unit, Auvation Limited. An impairment review has been performed,
considering the cash forecast to be generated by Auvation Limited over a period of 2 years, discounted at a rate of 10%. No impairment was
identified.
10. Other intangible assets
9. Patents
£
Cost
At 1 July 2006 243,408
Additions 9,890
Disposals (79,202)
Foreign exchange differences (6,150)
At 30 June 2007 167,946
Additions 11,325
Foreign exchange differences 28,673
Eliminated on liquidation of subsidiary (195,907)
At 30 June 2008 12,037
Amortisation
At 1 July 2006 (75,832)
Provided in the year (34,330)
Disposals 46,651
Foreign exchange differences 1,970
At 30 June 2007 (61,541)
Provided in the year (119,064)
Foreign exchange differences (19,596)
Eliminated on liquidation of subsidiary 195,907
At 30 June 2008 (4,294)
Net book amount at 30 June 2008 7,743
Net book amount at 30 June 2007 106,405
The remaining amortisation period for the patents is 5 years.
11. Property, plant and equipment
Leasehold Laboratory Office
property equipment equipment Total
£ £ £ £
Cost
At 1 July 2006 212,479 360,999 61,202 634,680
Additions - 354 749 1,103
Foreign exchange differences (5,698) (1,743) (1,642) (9,083)
At 30 June 2007 206,781 359,610 60,309 626,700
Additions - - 690 690
Foreign exchange differences 36,785 48,509 10,782 96,076
Eliminated on liquidation of (243,566) (408,119) (71,781) (723,466)
subsidiary
At 30 June 2008 - - - -
Depreciation
At 1 July 2006 (51,655) (335,602) (54,786) (442,043)
Provided in the year (8,280) (21,160) (2,738) (32,178)
Foreign exchange differences 1,394 15,084 1,472 17,950
At 30 June 2007 (58,541) (341,678) (56,052) (456,271)
Provided in the period (162,003) (19,544) (5,338) (186,885)
Foreign exchange differences (23,022) (46,897) (10,391) (80,310)
Eliminated on liquidation of 243,566 408,119 71,781 723,466
subsidiary
At 30 June 2008 - - - -
Net book amount at 30 June 2008 - - - -
Net book amount at 30 June 2007 148,240 17,932 4,257 170,429
Net book amount at 30 June 2006 160,824 25,397 6,416 192,637
Included above are assets held under finance lease with a net book value of £nil (2007: £3,699). Depreciation charged in respect of such
assets amounted to £ 3,699 (2007: £2,337)
12. Inventories
2008 2007
£ £
Research materials and consumable stores - 16,563
13. Trade and other receivables
2008 2007
£ £
Amounts due on calls on shares - 50,000
Trade receivables 985 10,175
Corporation tax recoverable - 659
VAT recoverable 8,902 7,134
Prepayments and accrued income 8,897 30,394
18,784 98,362
14. Trade and other payables
2008 2007
£ £
Trade payables 159,362 148,922
Social security and other taxes 321 27,341
Accruals 123,629 152,117
Amounts due under finance leases - 565
283,312 328,945
15. Commitments under finance leases and hire purchase agreements
Future cash flow commitments under finance leases and hire purchases agreements are as follows:
2008 2007
£ £
Amounts payable within 1 year - 666
Less future interest not accrued - (101)
- 565
16. Share capital
2008 2007
£ £
Authorised
407,827,190,760 ordinary shares of 0.001pence each 4,078,272 -
2,975,742,760 deferred shares of 0.199 pence each 5,921,728 -
2007: 5,000,000,000 ordinary shares of 0.2 pence each - 10,000,000
10,000,000 10,000,000
Allotted, called up and fully paid
6,975,742,760 ordinary shares of 0.001 pence each 69,758 -
2,975,742,760 deferred shares of 0.199 pence each 5,921,728 -
2007: 2,975,742,760 ordinary shares of 0.2 pence each - 5,951,486
5,991,486 5,951,486
On 5 December 2007, the issued and allotted share capital of the company that comprised 2,975,742,760 ordinary shares of 0.2 pence each
was subdivided into 2,975,742,760 ordinary shares of 0.001 pence each and 2,975,742,760 deferred shares of 0.199 pence each. Each of the
authorised and unissued shares at that date, 2,024,257,240 ordinary shares of 0.2 pence each, was subdivided into 200 ordinary shares of
0.001 pence each.
On 19 February 2008, a placing of shares resulted in the issue and allotment of 4,000,000,000 ordinary shares of 0.001 pence each at a
price of 0.015 pence per share. The funds raised amounted to £600,000 of which £170,125 was a debt for equity swap. As a result of the issue
a net £422,375 was credited to share premium account after deducting expenses of the issue of £137,625. Subscribers under the placing were
granted one warrant for every three shares subscribed. Each warrant is exercisable at a price of 0.015pence per share.
17. Statement of changes in equity
Conver- Called Share Share based
Exchange Profit
tible debt up share premium Merger compens-ation
translation and loss Total
capital account reserve reserve
reserve account equity
£ £ £ £ £
£ £ £
Balance at 30 June 2006 - 4,970,348 1,537,542 2,999,768 100,925
(19,703) (4,406,858) 5,182,022
Differences on foreign exchange investments
- - - - -
83,519 - 83,519
Net income recognised directly in equity
- - - - -
83,519 - 83,519
Loss for the year - - - - -
- (3,707,057) (3,707,057)
Total recognised income and expense for the year
- - - - -
83,519 (3,707,057) (3,623,538)
Issue of shares & related costs
- 981,138 50,000 - -
- - 1,031,138
Share option charge - - - - 22,690
- - 22,690
Reserve transfers - - - (1,689,582) -
- 1,689,582 -
Issue of convertible debt 306,000 - - - -
- - 306,000
Balance at 30 June 2007 as previously stated
306,000 5,951,486 1,587,542 1,310,186 123,615
63,816 (6,424,333) 2,918,312
Prior year adjustment (306,000) - - - -
- - (306,000)
Balance at 30 June 2007 as restated
- 5,951,486 1,587,542 1,310,186 123,615
63,816 (6,424,333) 2,612,312
Differences on foreign exchange investments
- - - - -
(157,681) - (157,681)
Net income recognised directly in equity
- - - - -
(157,681) - (157,681)
Loss for the year - - - - -
- (3,270,589) (3,270,589)
Total recognised income and expense for the year
- - - - -
(157,681) (3,270,589) (3,428,270)
Issue of shares & related costs
- 40,000 422,375 - -
- - 462,375
Reserve transfers - - - (1,212,464) -
- 1,212,464 -
Balances at 30 June 2008 - 5,991,486 2,009,917 97,722 123,615
(93,865) (8,482,458) (353,583)
Prior year adjustment
The balance sheet as at 30 June 2007 has been restated to reflect a reclassification in respect of convertible debt. The convertible
debt has been reclassified from equity to debt, in accordance with IAS 32: Financial Instruments: Presentation, as a result of this
adjustment. The effect of restating the accounting is a reduction in net assets of £306,000.
18. Financial instruments
The group uses financial instruments, other than derivatives, comprising borrowings, cash on deposit and in current accounts and other
items, such as trade debtors, trade creditors, etc. that arise directly from its operations. The main purpose of these financial instruments
is to raise finance for the group's operations.
The main risk arising from the group financial instruments is currency risk. The board reviews and
agrees policies for managing each of these risks and they are summarised below.
It is and has been throughout the period under review, the group policy that no trading in financial instruments shall be undertaken.
Interest rate risk
The group has financed its operations to date from cash raised from issues of shares. Cash surplus to immediate requirements is placed
on interest bearing deposit with the group's bankers.
The table below shows the extent to which the group had cash on deposit and in current accounts and the rates of interest applicable to
deposits at 30 June 2008.
At 30 June 2008
Deposit at 30 day Current
Functional currency of operation call deposits accounts Total
£ £ £ £
Sterling (note 1) 75,279 - 73 75,352
At 30 June 2007
Deposit at 30 day Current
Functional currency of operation call deposits accounts Total
£ £ £ £
Sterling (note 1) 99,470 - 56,687 156,157
Euro (note 2) 1 - 32,286 32,287
99,471 - 88,973 188,444
Note 1: As at 30 June 2007 & 2008, the sterling deposit at call was at a rate of 1% being LIBOR minus 3.5%. Deposit interest rates
depend on both LIBOR and the value of funds on deposit.
Note 2: As at 30 June 2007 & 2008, the Euro 30-day deposit was at a rate of 1.68% being 30 day EURIBOR minus 0.4%. The rate of interest
depends on both EURIBOR and the value of funds on deposit.
Liquidity risk
The group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash
assets safely and profitably. All liabilities held by the company are due within one year.
Currency risk
The group does not hedge its exposure of foreign investments held in foreign currencies.
The group is exposed to translation and transaction foreign exchange risk. In relation to translation risk, assets held in foreign
currency are currently left exposed. Transaction exposures are hedged when known, mainly using the forward hedge market.
The table below shows the extent to which group companies had monetary assets and liabilities in currencies other than their local
currency. Foreign exchange differences on retranslation of these assets and liabilities are taken to profit and loss account of the group
companies and the group.
At 30 June 2008
Functional currency of operation Sterling US Dollar Euro Total
£ £ £ £
Sterling - - - -
Euro - - - -
- - - -
At 30 June 2007
Functional currency of operation Sterling US Dollar Euro Total
£ £ £ £
Sterling - - - -
Euro 3,618 9,105 - 12,723
3,618 9,105 - 12,723
The fair value of the financial instruments is not considered to be materially different from the book values shown.
19. Leasing commitments
The gross amount of the Group's future minimum operating lease payments are as follows:
Land and buildings
2008 2007
£ £
Between two and five years - 440,040
In five years or more - 1,407,752
- 1,847,792
20. Retirement benefits
Defined Contribution Pension Scheme
The group operates a defined contribution pension scheme for the benefit of the employees and full-time executive directors of EiRx
Therapeutics Limited. The assets of the scheme are administered by trustees in a fund independent from those of the group.
The contributions of the company and its subsidiary undertakings and employees will remain at 7% and 5% of earnings respectively.
21. Post balance sheet events
In February 2008, Bank of Scotland had indicated a willingness to increase its lending facility to the group from £200,000 to £350,000
based on a personal guarantee provided by Peter Hoskins, a major shareholder in the company. In March 2008 Bank of Scotland had been repaid
the £200,000 advanced under their previous facility from the proceeds of the share placing that had been made that month. In July 2008, when
draw-down of the agreed, increased facility was requested Bank of Scotland refused. The directors obtained and communicated legal advice to
Bank of Scotland that they had a strong case to seek specific performance of the lending facility but the bank disagreed with this position
and indicated it would defend itself in Court vigorously. The group lacked the resources and the time that were required to seek legal
redress. Alternative sources of funding were sought over the next four weeks but to no avail.
As a result of the circumstances described in the preceding paragraph, on 18 August 2008, the directors of EiRx Therapeutics Limited
("ETL"), having considered ETL's financial condition and future prospects carefully, concluded that ETL could not continue to trade by
reason of its insolvency. As a consequence the directors passed a resolution to cease trading with immediate effect and at a meeting of
creditors held in Dublin on 2 September 2008 Michael McAteer of Foster McAteer, Chartered Accountants, was appointed liquidator.
As are result, all of the group's assets relating to ETL, including goodwill, have been fully written off at 30 June 2008, in these
financial statements. This has resulted in a loss of £3,108,170 in respect of ETL, recognised in these financial statements, and disclosed
as the loss for the year for discontinued operations.
On 2 July 2008, EiRx Pharma Limited, holder of the convertible debt, opted to convert £236,600, including £30,600 of accrued interest,
of the convertible debt to share capital and was issued 1,573,333,333 shares.
22. Transactions with directors and other related parties
Included in directors' remuneration in note 5 to the financial statements are payments to third parties as follows:
(i) £30,300 (2007: £28,000) was payable to Wellbeach Associates, a partnership in which John Pool has an interest. This amount
remains outstanding for payment.
(ii) £29,040 (2007: £23,265) was payable for scientific consultancy to Prof. Thomas Cotter. This amount
remains outstanding for payment.
(iii) £29,040 (2007: £32,400) was payable to a business in which Nicholas Strong is the principal shareholder,
for financial consultancy. This amount remains outstanding for payment.
In each case, the directors are responsible for their own tax and national insurance in respect of such fees and have indemnified the
company and its subsidiary accordingly. This amount remains outstanding for payment.
Except as disclosed above, no director or other related party had a loan from the company at any time during the year.
23. Ultimate holding company
No other corporate entity holds a majority of the issued shares in the capital of this company. Therefore, the largest and smallest
entity in which the company's results are consolidated is that represented by these financial statements.
24. Transition to International Financial Reporting Standards
The following statements show the reconciliation of the group's results as originally reported under UK GAAP to revised reporting under
International Financial Reporting Standards ("IFRS") from 1 July 2006, the date of adoption of IFRS, to 30 June 2008.
One adjustment has been made to restate the figures previously reported under UK GAAP:
1 In the UK GAAP financial statements to 30 June 2007 £1,250,000 impairment to goodwill in previous years was reversed as a result of
further scientific developments and a collaboration with Professor Anita Maguire which had resulted in increased forecast cash flows. IAS 36
Impairment of Assets does not allow an impairment loss recognised for goodwill to be reversed in subsequent periods. As a result the loss
for the year ended 30 June 2007 has been increased by £1,250,000 and the net assets at 30 June 2007 have been decreased by £1,250,000.
Reconciliation of consolidated income statement for the year ended 30 June 2007
UK GAAP Adjustment IFRS
£ £ £
Turnover 79,146 - 79,146
Administrative expenses (2,648,227) (1,250,000) (3,898,227)
Other operating income - rent 48,148 - 48,148
receivable
Operating loss (2,520,933) (1,250,000) (3,770,933)
Net interest (5,904) - (5,904)
Loss on ordinary activities before (2,526,837) (1,250,000) (3,776,837)
taxation
Taxation 69,780 - 69,780
Loss on ordinary activities after (2,457,057) (1,250,000) (3,707,057)
taxation for the year
Loss per share 0.0881p 0.0550p 0.1330p
The amounts shown in the IFRS column above do not agree to the comparative in the income statement on page 17, as the detailed amounts
on page 17 exclude the results from ETL, which has been treated as a discontinued activity.
Reconciliation of equity at 1 July 2006
UK GAAP Adjustment IFRS
£ £ £
Non-current assets
Intangible assets
Goodwill 5,113,786 - 5,113,786
Patents 167,576 - 167,576
5,281,362 - 5,281,362
Tangible assets 192,637 - 192,637
5,473,999 - 5,473,999
Current assets
Inventories 20,965 - 20,965
Trade and other receivables 167,820 - 167,820
Cash and cash equivalents 297,674 - 297,674
486,459 - 486,459
Trade and other payables (520,753) - (520,753)
Convertible debt (257,250) - (257,250)
Net current (liabilities) (291,544) - (291,554)
Total assets less current liabilities 5,182,455 - 5,182,455
Non-current-liabilities (433) - (433)
Net assets 5,182,022 - 5,182,022
Equity
Called up share capital 4,970,348 - 4,970,348
Share based compensation reserve 100,925 - 100,925
Share premium account 1,537,542 - 1,537,542
Merger reserve 2,999,768 - 2,999,768
Exchange translation reserve (19,703) - (19,703)
Profit & loss account (4,406,858) - (4,406,858)
Total equity 5,182,022 - 5,182,022
Reconciliation of equity at 30 June 2007
UK GAAP
as restated Adjustment IFRS
£ £ £
Non-current assets
Intangible assets
Goodwill 3,917,024 (1,250,000) 2,667,024
Patents 106,405 - 106,405
4,023,429 (1,250,000) 2,773,429
Tangible assets 170,429 - 170,429
4,193,858 (1,250,000) 2,943,858
Current assets
Inventories 16,563 - 16,563
Trade and other receivables 98,362 - 98,362
Cash and cash equivalents 188,474 - 188,474
303,399 - 303,399
Trade and other payables (328,945) - (328,945)
Convertible debt (306,000) - (306,000)
Net current (liabilities) (331,546) - (331,546)
Total assets less current 3,862,312 (1,250,000) 2,612,312
liabilities
Non-current-liabilities - - -
Net assets 3,862,312 (1,250,000) 2,612,312
Equity
Called up share capital 5,951,486 - 5,951,486
Share based compensation reserve 123,615 - 123,615
Share premium account 1,587,542 - 1,587,542
Merger reserve 2,999,768 (1,689,582) 1,310,186
Exchange translation reserve 63,816 - 63,816
Profit & loss account (6,863,915) 439,582 (6,424,333)
Total equity 3,862,312 (1,250,000) 2,612,312
The UK GAAP figures at 30 June 2007 have been restated from those previously reported as a result of the prior year adjustment, as
disclosed in Note 17.
Reconciliation of condensed consolidated cash flow statement for the twelve months ended 30 June 2007
UK GAAP Adjustment IFRS
£ £ £
Cash flows from operating activities
Loss after tax (2,457,057) (1,250,000) (3,707,057)
Adjustment for exchange difference 78,832 - 78,832
Depreciation and amortisation 32,178 - 32,178
Impairment of goodwill 1,263,643 1,250,000 2,513,643
Share based compensation 22,690 - 22,690
Change in inventories 4,402 - 4,402
Change in receivables 68,799 - 68,799
Change in payables (181,058) - (181,058)
Net interest 5,904 - 5,904
Income taxes charge/(credit) (69,780) - (69,780)
Cash generated from operations (1,231,447) - (1,231,447)
Interest paid (17,517) - (17,517)
Income taxes paid (2,875) - (2,875)
Income taxes received 71,698 - 71,698
Net cash flow from operating (1,180,141) - (1,180,141)
activities
Cash flows from investing activities
Purchase of intangible assets (9,890) - (9,890)
Purchase of property, plant & (1,103) - (1,103)
equipment
Interest received 11,613 - 11,613
Net cash flow from investing 620 - 620
activities
Cash flows from financing activities
Proceeds from issue of shares 1,081,138 - 1,081,138
Share issue costs (50,000) - (50,000)
Proceeds from long term borrowings 48,750 - 48,750
Payment of financial lease (6,863) - (6,863)
liabilities
Net cash flow from financing 1,073,025 - 1,073,025
activities
Net decrease in cash and cash (106,496) - (106,496)
equivalents at end of period
Cash and cash equivalents at start 294,405 - 294,405
of period
Cash and cash equivalents at end of 187,909 - 187,909
period
NOTICE OF ANNUAL GENERAL MEETING OF
EIRX THERAPEUTIC PLC
(Company No. 04927339)
NOTICE is given that the Annual General Meeting of EiRx Therapeutics plc will be held at the offices of Shepherd and Wedderburn, 5th
Floor, 10 St Paul's Churchyard, London EC4M 8AL on Thursday 29 January 2009 at 11.00 am for the following purposes:
ORDINARY BUSINESS
To consider and if thought fit, to pass the following resolutions which will be proposed as ordinary resolutions:
To receive and adopt the Company's annual accounts for the financial year ended 30 June 2008 together with the directors' report and
auditors' reports on those accounts.
To reappoint Nick Strong, who retires by rotation, as a director of the Company.
To reappoint Grant Thornton UK LLP as auditors to hold office from the conclusion of the meeting to the conclusion of the next meeting
at which the accounts are laid before the Company at a remuneration to be determined by the directors.
SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolutions, of which the resolution numbered 4 will be proposed as an ordinary
resolution and the resolution numbered 5 will be proposed as a special resolution:-
THAT, in substitution for any existing authority under section 80 of the Companies Act 1985 (as amended) (the "Act") but without
prejudice to the exercise of any such authority prior to the time at which this resolution takes effect, the directors be generally and
unconditionally authorised pursuant to and in accordance with section 80 of the Act to allot relevant securities (within the meaning of
section 80(2) of the Act) up to an aggregate nominal amount equal to £100,000, such authority to expire on the conclusion of the Company's
next Annual General Meeting following the date of the passing of this resolution or, if earlier, on the expiry of 15 months from the date of
the passing of this resolution, save that the Company may, before this authority expires or is replaced or revoked, make an offer or enter
into an agreement which would or might require relevant securities to be allotted after such expiry or replacement or revocation and the
directors may allot relevant securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired or, as the case may be, been replaced or revoked.
THAT, conditional upon resolution 4 being passed, and in substitution for any existing power under section 95 of the Companies Act 1985
(as amended) (the "Act"), but without prejudice to the exercise of any such power prior to the time at which this resolution takes effect,
the directors be empowered, pursuant to section 95(1) of the Act, to allot equity securities (within the meaning of section 94(2) of the
Act) for cash pursuant to the articles of association of the Company as if section 89(1) of the Act did not apply to any such allotment,
such power to expire on the conclusion of the Company's next Annual General Meeting following the date of the passing of this resolution or,
if earlier, on the expiry of 15 months from the date of the passing of this resolution, save that the Company may, before this power expires
or is replaced or is revoked, make an offer or enter into an agreement which would or might require relevant securities to be allotted after
such expiry or replacement or revocation and the directors may allot relevant securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired
or, as the case may be, been replaced or revoked; provided always that such power shall be limited to:
* the allotment of equity securities for cash in connection with or pursuant to a rights issue, open offer or any other offer in
favour of the holders of equity securities (excluding any holder of treasury shares) where the equity securities respectively attributable
to the interest of all the holders of equity securities are proportionate (as nearly as may be practicable) to the respective numbers of
such securities held by them on a fixed record date, but subject to such exclusions or other arrangements as the directors may consider
necessary, expedient, desirable or appropriate to deal with any fractional entitlements or legal or practical difficulties which may arise
under the laws of any overseas territory or the requirements of any regulatory body or stock exchange or otherwise; and
* the allotment of equity securities, other than pursuant to sub-paragraph (i) above, up to an aggregate nominal amount equal to
£100,000.
Registered office:
50 Broadway BY ORDER OF THE BOARD
Westminster Nicholas Strong
London Company Secretary
Sw1H 0BL 29 December 2008
Notes:
* A member of the Company entitled to attend and vote is entitled to appoint one or more proxies to attend, speak and vote at the
meeting instead of him/her. A member may appoint more than one proxy provided that each proxy is appointed to exercise rights attached to
different shares. A member may not appoint more than one proxy to exercise rights attached to any one share. A proxy need not be a member of
the Company. A form of proxy is enclosed with this notice of extraordinary general meeting.
To be valid a duly executed form of proxy (together with any authority, if any, under which it is executed, or a certified copy of such
power or authority) must be sent or delivered to the Company's registrars, Capita Registrars (Proxies), The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU, so as to be received by no later than 48 hours before the time appointed for the meeting (or, if the meeting is
adjourned, not more than 48 hours before the time appointed for the adjourned meeting).
Completion, signature and submission of a form of proxy will not preclude a member of the Company entitled to attend and vote from
attending and voting, in substitution for his/her proxy, should he/she so wish.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those shareholders of the
Company on the register of members at 6.00p.m. on Tuesday 27th January 2009 or, if the meeting is adjourned, shareholders entered on the
register of members not later than 48 hours before the time fixed for the adjourned meeting, shall be entitled to attend or vote at the
extraordinary general meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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