Half-yearly report
(Thomson Reuters ONE) - Summit Corporation plc("Summit" or "the Company")INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 JULY 2009Oxford, UK, 23 October 2009 - Summit Corporation plc (AIM: SUMM), aUK drug discovery company, announces its interim results for the sixmonths ended 31 July 2009.HighlightsOperational: New window of opportunity created* Major restructuring programme completed* Additional working capital raised through divestment of non-core business operations* Operational cash-burn more than halved with full benefit of restructuring to be reflected in the six months ending 31 January 2010* Group now focussed on iminosugar platform development and dealsScientific: Advances in iminosugar drug discovery platform* Generation of positive data in therapeutic focus areas of metabolic diseases (diabetes) and anti-virals (hepatitis C)* Continued expansion of iminosugar collection with increased protection through additional patent filingsCommercial: Continuing expansion of the Product Portfolio* Three new cross license agreements signed with Orient Pharma for acne (SMT D002), glaucoma (SMT D003) and AMD (SMT D004) programmes* Total of seven programmes in the portfolio: No future costs to Summit with contractual, success based milestones potentially exceeding $160m plus sales royalties* Interest in potential license for diabetes programme shown by several international pharmaceutical companiesFinancial: Extension of cash life* Loss from continuing operations for the six months ended 31 July 2009 down to £2.95m (2008: £6.68m); total loss for the period: £3.18m (2008: £7.09m)* Cash position of £0.86m at 31 July 2009 (31 Jan 2009: £2.72m)* Sale proceeds from divestment of zebrafish of £0.50m and post period £0.95m from divestment of Dextra Laboratories* Receipt of R&D tax credit claims totalling £0.75m expected in Q4 2009* Cash life extended into Q2 2010 on current cash burn and additional activities on-going to secure long-term future of the business* Option to radically cut costs remains, in absence of new deals, to extend cash life to receipt of existing deal milestonesSteven Lee, PhD, Chief Executive Officer at Summit said, "Summitemerges from a challenging period as a streamlined business with aprimary focus on novel therapeutics from our iminosugar drugdiscovery platform. The completion of our restructuring programmeprovides us with a window of opportunity in which to completeadditional activities that will further strengthen the financialposition of the Company."Summit looks forward to realising increasing value from our existingcollaborative agreements, with their contractual success-basedmilestones worth over $160 million plus sales royalties, and fromfuture programme deals. From our current position, I have confidencethat the business will deliver value to our shareholders." -- ENDS --For more information, please contact:Summit plcSteven Lee, PhDRichard Pye, PhDTel: +44 (0)1235 443939Panmure GordonAndrew Burnett / Rakesh Sharma (Corporate Finance)Ashton Clanfield (Corporate Broking)Tel: +44 (0)207 459 3600About Summit plcSummit plc is a UK based drug discovery company with a major focus ondeveloping new therapeutics from its iminosugar drug discoveryplatform.Summit believes iminosugars are the key to gaining access to severaldisease mechanisms where classical drug candidates have had littlesuccess, and therefore offer a major opportunity for the discoveryand development of new medicines.Carbohydrates play critical roles in maintaining correct function ofmany normal processes in healthy individuals and provide a wealth ofnew targets for drug discovery. Iminosugars have the capability ofaccessing such targets and offer the potential of generating newmedicines in a variety of major therapy areas. Summit is currentlyfocussed on metabolic diseases, including diabetes, and anti-virals.Commercially, Summit has a track record of signing programmeagreements and currently has an out-licensed product portfoliocomprising of seven drug programmes with BioMarin, Orient Pharma,Evolva and the Lilly TB Drug Discovery Initiative. In the futurethese programmes may generate success based milestone payments androyalties for Summit.The company listed on the alternative investment market (AIM) of theLondon Stock Exchange in October 2004 - symbol: SUMM. Furtherinformation about the company is available at www.summitplc.com.Chairman and Chief Executive's StatementIntroductionFollowing the difficulties of last year your Board has undertaken arestructuring of the Summit Group to re-focus its activities on thedevelopment of its iminosugar drug discovery platform and to reduceits cost base.The Board believes that Summit has a valuable product portfolio oflicensed drug programmes, an innovative and validated iminosugartechnology platform, and a strategy to create value from these assetsfor our shareholders. The Company now has a clear window ofopportunity to enter into new commercial agreements with one or morepartners in major disease areas of high unmet medical need.Strategy: Targeting early-stage licensing dealsSummit aims to create value through the selection and early-stagedevelopment of novel product candidates from its proprietaryiminosugar platform in areas of high unmet medical need includingdiabetes, hepatitis and other viral diseases and infections. At theappropriate stage of development, we will seek to out-license theseproduct candidates with partners who will undertake the expensiveregistration studies and product commercialisation. Our approach issupported by Ernst & Young's 2009 global biotechnology report, BeyondBorders, which stated that in 2008, 11 of the 15 largest Europeandeals were signed at the discovery or preclinical development stage.Summit will continue to protect its intellectual property byexpanding its strong patent portfolio.Summit continued to fulfil this licensing strategy during the periodby signing three new commercial agreements and increased the numberof partnered programmes to seven. These seven programmes coulddeliver in excess of $160 million of success-based development andregulatory milestones plus royalties on any future sales, with thefirst milestone payment for the Duchenne muscular dystrophy (DMD)programme anticipated to be in the second half of 2010. Theportfolio programmes require no further investment from Summit.The data from our iminosugar diabetes programme suggests that wecould have a novel product with "disease modifying" potential and theability to generate significant licensing revenues in the future. Weanticipate completing an initial deal in this indication in 2010.A period of accelerated restructuringDuring the last six month period your Board has continued with therestructuring programme, which was started in mid-2008, to reducecosts and dispose of non-core assets to generate additional cash forthe iminosugar business.This programme included the disposal of the Zebrafish and, post theperiod under review, the Dextra service divisions. In addition,Summit has reduced the number of sites it operates from five to one,with more favourable terms of rent having been renegotiated for theremaining site.Headcount has been cut by 75%. This was a necessary action to helpsecure the future of the business and on behalf of the Board, wesincerely thank the staff affected for their efforts during theirtime with the Company and wish them well in their future careers.Finally, the Board have reduced their costs from the start of theperiod under review, with the Executive Directors reducing theirbasic salary by a quarter and the Non-executives also reducing theirfees.Following the restructuring and reduced cash-burn, the Companyextended its cash resources into Q2 2010 and created a window ofopportunity in which to complete additional activities, including thesigning of an iminosugar licensing deal, aimed at securing itslong-term financial future. If necessary, the cash resources may befurther extended to 2011 by additional cost reductions as outlined inthe Working Capital section below.Research & development activities: Focused on creating future valueSummit's primary focus for creating future value is now representedby our proprietary iminosugar drug discovery platform. It is ourbelief that this innovative technology provides a major opportunityfor the discovery of new medicines in a number of major therapeuticareas with high unmet medical needs and the potential to generatesignificant future value.Our main activities in this platform target two major therapeuticareas: diabetes, a type of metabolic disease, and infectious diseaseswhere we are targeting a range of indications including hepatitis C.The potential and scope of the platform is further highlighted byiminosugars also expecting to find utility in a number of other majortherapeutic areas including neurological diseases and immunologicaldisorders.We are already generating positive data from the programmes in ourtwo focus disease areas and activity around these has increasedduring the period. We look forward to reporting on the scientificprogress being made in these areas over the coming weeks and monthsas we continue to develop these early-stage programmes into near-termcommercial opportunities.In addition, we have an established programme targeting C. difficilewhich is building on our expertise in the area of infectiousdiseases. Currently we are applying for external grant funding tosupport the future development of this programme.A valuable portfolio of partnered programmesDuring the period, Summit increased the number of programmes in itspartnered portfolio to seven through the signing of three newagreements. The portfolio has contractual, success-based milestonestotalling over $160 million, plus royalties on any future sales, butrequires no further investment from Summit.Expansion of the Product Portfolio: Three new co-developmentagreementsThe period under review saw three new agreements signed with Taiwanbased company, Orient Pharma, and cover our clinical and preclinicalprogrammes in acne, glaucoma and wet age-related macular degeneration(AMD). The agreements provide Orient with exclusive development andcommercialisation rights in Asia-Pacific and Australasia and theywill be responsible for all development costs and also manufacturingand distribution costs within its territories. Summit retainsvaluable rights to the products in North America, Europe and the restof the world and has rights to access data generated by Orient.Renegotiation of DMD and sialorrhoea deals as part of restructuringworkIn March 2009, Summit amended its exclusive worldwide licensingagreement with the US biotechnology company BioMarin PharmaceuticalsInc. for the programme targeting the fatal genetic disease Duchennemuscular dystrophy (DMD). Summit is eligible to receivesuccess-based development and regulatory milestones of up to $50million plus sales milestones of $85 million and tiered royaltypayments rising to a low-teen percentage. BioMarin reported in July2009 that development of the programme remains on course andtherefore Summit anticipates receiving a milestone payment worth $3million in H2 2010 and a further $10 million on commencement of thepivotal clinical study.In September 2008, Summit entered into a co-development agreementwith Orient Pharma for our sialorrhoea programme. This agreement wassuperseded in May 2009 with the signing of a new agreement that sawOrient take full ownership of the programme. The terms of this dealinvolved Orient making an equity investment in Summit shares of$500,000 at a price of 13.5 pence, which was approximately 2.5 timesthe share price at that time. In addition, Summit is eligible toreceive undisclosed royalties on worldwide sales of the product.Financial ReviewThe financial performance for the half year was heavily influenced bythe restructuring programme outlined above.The Zebrafish division was sold to Evotec AG for the consideration of£0.50 million in May 2009 while Dextra Laboratories was sold to NewZealand Pharmaceuticals in September 2009, post the period underreview, for £0.95 million. As a result of the transactions, therevenues and costs associated with the two divisions appear in theIncome Statement as a single line entitled 'Loss attributable todiscontinued activities'. The results for the comparative periodshave been restated accordingly.In addition, as the sale of Dextra was pending at the period end, theBalance Sheet includes all the assets related to Dextra, and theirassociated liabilities, in the lines, 'Assets of disposal groupclassified as held-for-sale' and 'Liabilities of disposal groupclassified as held-for-sale'.The core operating costs of the remaining drug discovery businessfell by half to £2.72 million (2008: £5.55 million) beforedepreciation and amortisation charges. Research and developmentinvestment was lower at £1.18 million (2008: £2.95 million), generaland administration costs reduced to £1.37 million (2008: £2.37million) and sales and marketing expenditure was £0.17 million (2008:£0.24 million).Following the lease renegotiations, an outstanding loan from one ofour landlords for leasehold improvement work was released resultingin a positive credit of £1.21 million to the Income Statement.Associated with this was inclusion of an accelerated depreciationcharge of £1.36 million and is due to our expectation of having tovacate the part of the premises that benefited from the leaseimprovement work by the end of 2009.As a result, the loss attributable to continuing activities for thesix months ended 31 July 2009 more than halved to £2.95 million(2008: £6.68 million) and the total loss for the period dropped to£3.18m (2008: £7.09m). The full benefit of the restructuringprogramme will be reflected in the six months ending 31 January 2010.The cash outflow for the six months to 31 July 2009 was £1.86 million(31 July 2008: £2.09 million). During the period, the Companyreceived £0.32 million (31 July 2008: £3.90 million) from the issueof new shares and £0.50 million from the proceeds of the sale of theZebrafish services business to Evotec AG. At the 31 July 2009, theGroup had cash reserves of £0.86 million (31 January 2009: £2.72million). These reserves have been supplemented post the periodunder review following the sale of Dextra Laboratories. In addition,the Company expects to receive the research and development taxcredit of £0.75 million that was recognised during the year ended 31January 2009 in Q4 2009.Working CapitalThe financial position of the Group has been improved through thesale of the Dextra business in September 2009 and current cashresources are expected to last into Q2 2010. The marketing campaignaround a potential iminosugar licensing deal continues to progresswell. An application for grant funding for one of our projects hasbeen made and we expect to hear whether this has been successful byearly 2010. In addition, discussions with our financial advisersremain on-going to consider a fundraise. Should the Group be unableto secure additional funding as outlined above by Q1 2010 then yourBoard would consider alternative actions until either milestones fromexisting collaborative deals become due or a possible sale of theGroup's remaining business and assets is achieved. These actionscould include curtailing our activities to all but essentialprogrammes and otherwise reducing our costs to a care and maintenancelevel, which could enable existing cash resources to last through toearly 2011, and in the process, enable it to receive the benefit ofmilestone payments from existing collaborative deals. Based on thisassessment, the Board have prepared these statements on a goingconcern basis.SummaryAs a consequence of recent activities, Summit emerges from thischallenging period as a streamlined, more efficient business with afocus on innovative therapeutics from its proprietary iminosugarplatform.The additional working capital raised from the restructuringprogramme provides the Group with a window of opportunity to deliveran iminosugar deal that will aim to illustrate the value creationpotential of this technology and further increase the size of ourvaluable portfolio of partnered programmes.We again wish to thank shareholders for their continuing support andlook forward to reporting on the progress within the business, mostnotably from our iminosugar platform, over the coming months.Finally, on behalf of the Board, we thank all our staff for theirdedication and hard work as we continue to work towards developingSummit into a successful and sustainable drug discovery company.Barry Price, PhD Steven Lee, PhDChairman Chief Executive Officer22 October 2009Consolidated Statement of Comprehensive Income (unaudited)For the six months ended 31 July 2009+-------------------------------------------------------------------+| | | Six | Six months | Year || | | months | ended | ended || | | ended | 31 July | 31 January || | | 31 July | 2008 | 2009 || | | 2009 | (Restated) | (Restated) || | | | | ||------------------------+------+---------+------------+------------|| | Note | £000s | £000s | £000s ||------------------------+------+---------+------------+------------|| Continuing Operations | | | | ||------------------------+------+---------+------------+------------|| Revenue | | 108 | - | 185 ||------------------------+------+---------+------------+------------|| | | | | ||------------------------+------+---------+------------+------------|| Cost of sales | | - | - | (4) ||------------------------+------+---------+------------+------------|| Gross profit | | 108 | - | 181 ||------------------------+------+---------+------------+------------|| | | | | ||------------------------+------+---------+------------+------------|| Other operating income | | 104 | 137 | 195 ||------------------------+------+---------+------------+------------|| | | | | ||------------------------+------+---------+------------+------------|| Administrative | | | | || expenses | | | | ||------------------------+------+---------+------------+------------|| Research and | | (1,182) | (2,946) | (5,119) || development | | | | ||------------------------+------+---------+------------+------------|| General and | | (1,368) | (2,372) | (3,490) || administration | | | | ||------------------------+------+---------+------------+------------|| Sales and marketing | | (167) | (236) | (779) ||------------------------+------+---------+------------+------------|| Depreciation and | | (472) | (1,004) | (1,555) || amortisation | | | | ||------------------------+------+---------+------------+------------|| Accelerated | | | | || depreciation of | 3 | (1,361) | - | - || leasehold improvements | | | | ||------------------------+------+---------+------------+------------|| Impairment of | | - | (1,034) | (2,597) || intangible assets | | | | ||------------------------+------+---------+------------+------------|| Share based payment | | 31 | (193) | (154) ||------------------------+------+---------+------------+------------|| Release of loan | 3 | 1,211 | - | - ||------------------------+------+---------+------------+------------|| Total administrative | | (3,308) | (7,785) | (13,694) || expenses | | | | ||------------------------+------+---------+------------+------------|| Operating loss | | (3,096) | (7,648) | (13,318) ||------------------------+------+---------+------------+------------|| | | | | ||------------------------+------+---------+------------+------------|| Finance income | | 7 | 193 | 299 ||------------------------+------+---------+------------+------------|| Finance costs | | (46) | (43) | (81) ||------------------------+------+---------+------------+------------|| Loss before taxation | | (3,135) | (7,498) | (13,100) ||------------------------+------+---------+------------+------------|| | | | | ||------------------------+------+---------+------------+------------|| Taxation | | 183 | 823 | 1,747 ||------------------------+------+---------+------------+------------|| Loss for the period | | | | || from continuing | | (2,952) | (6,675) | (11,353) || operations | | | | ||------------------------+------+---------+------------+------------|| Loss for the period | | | | || from discontinued | 4 | (232) | (415) | (11,050) || operations | | | | ||------------------------+------+---------+------------+------------|| Loss and total | | | | || comprehensive income | | (3,184) | (7,090) | (22,403) || and expense for the | | | | || period | | | | ||------------------------+------+---------+------------+------------|| | | | | ||------------------------+------+---------+------------+------------|| Basic and diluted loss | | | | || per Ordinary share for | 2 | 5.20p | 13.15p | 21.26p || continuing operations | | | | ||------------------------+------+---------+------------+------------|| Basic and diluted loss | | | | || per Ordinary share for | 2 | 0.41p | 0.82p | 20.70p || discontinued | | | | || operations | | | | |+-------------------------------------------------------------------+Consolidated Balance Sheet (unaudited)As at 31 July 2009+-------------------------------------------------------------------+| | | 31 July | 31 July | 31 January || | | 2009 | 2008 | 2009 || | | | (Restated) | ||-----------------------+------+----------+------------+------------|| | Note | £000s | £000s | £000s ||-----------------------+------+----------+------------+------------|| ASSETS | | | | ||-----------------------+------+----------+------------+------------|| Non-current assets | | | | ||-----------------------+------+----------+------------+------------|| Goodwill | | - | 9,767 | - ||-----------------------+------+----------+------------+------------|| Other intangible | | 4,650 | 6,634 | 4,820 || assets | | | | ||-----------------------+------+----------+------------+------------|| Property, plant and | | 534 | 4,159 | 3,714 || equipment | | | | ||-----------------------+------+----------+------------+------------|| | | 5,184 | 20,560 | 8,534 ||-----------------------+------+----------+------------+------------|| Current assets | | | | ||-----------------------+------+----------+------------+------------|| Inventories | | 227 | 506 | 391 ||-----------------------+------+----------+------------+------------|| Trade and other | | 317 | 1,312 | 1,495 || receivables | | | | ||-----------------------+------+----------+------------+------------|| Current tax | | 886 | 1,138 | 805 ||-----------------------+------+----------+------------+------------|| Cash and cash | | 861 | 7,996 | 2,717 || equivalents | | | | ||-----------------------+------+----------+------------+------------|| Assets of disposal | | | | || group classified as | 4 | 1,341 | - | - || held-for-sale | | | | ||-----------------------+------+----------+------------+------------|| | | 3,632 | 10,952 | 5,408 ||-----------------------+------+----------+------------+------------|| Total assets | | 8,816 | 31,512 | 13,942 ||-----------------------+------+----------+------------+------------|| | | | | ||-----------------------+------+----------+------------+------------|| LIABILITIES | | | | ||-----------------------+------+----------+------------+------------|| Current liabilities | | | | ||-----------------------+------+----------+------------+------------|| Trade and other | | (619) | (2,561) | (1,732) || payables | | | | ||-----------------------+------+----------+------------+------------|| Provisions | | - | (299) | - ||-----------------------+------+----------+------------+------------|| Borrowings | 3 | (15) | (214) | (135) ||-----------------------+------+----------+------------+------------|| Liabilities of | | | | || disposal group | 4 | (401) | - | - || classified as | | | | || held-for-sale | | | | ||-----------------------+------+----------+------------+------------|| Total current | | (1,035) | (3,074) | (1,867) || liabilities | | | | ||-----------------------+------+----------+------------+------------|| | | | | ||-----------------------+------+----------+------------+------------|| Non-current | | | | || liabilities | | | | ||-----------------------+------+----------+------------+------------|| Deferred income | 5 | - | (136) | (141) ||-----------------------+------+----------+------------+------------|| Provisions | | (1,180) | (1,730) | (1,180) ||-----------------------+------+----------+------------+------------|| Borrowings | 3 | - | (1,250) | (1,181) ||-----------------------+------+----------+------------+------------|| Deferred tax | | (970) | (1,475) | (1,020) ||-----------------------+------+----------+------------+------------|| Total non-current | | (2,150) | (4,591) | (3,522) || liabilities | | | | ||-----------------------+------+----------+------------+------------|| Total liabilities | | (3,185) | (7,665) | (5,389) ||-----------------------+------+----------+------------+------------|| Net assets | | 5,631 | 23,847 | 8,553 ||-----------------------+------+----------+------------+------------|| | | | | ||-----------------------+------+----------+------------+------------|| EQUITY | | | | ||-----------------------+------+----------+------------+------------|| Share capital | 6 | 5,830 | 5,597 | 5,597 ||-----------------------+------+----------+------------+------------|| Share premium account | | 25,867 | 25,785 | 25,785 ||-----------------------+------+----------+------------+------------|| Share based payment | | 1,123 | 1,157 | 1,176 || reserve | | | | ||-----------------------+------+----------+------------+------------|| Merger reserve | | 12,654 | 12,654 | 12,654 ||-----------------------+------+----------+------------+------------|| Retained earnings | | (39,843) | (21,346) | (36,659) ||-----------------------+------+----------+------------+------------|| Equity attributable | | | | || to the equity | | 5,631 | 23,847 | 8,553 || shareholders of the | | | | || parent | | | | |+-------------------------------------------------------------------+Consolidated Cash Flow Statement (unaudited)For the six months ended 31 July 2009+-------------------------------------------------------------------+| | | Six months | Six | Year || | | ended | months | ended || | | 31 July | ended | 31 January || | | 2009 | 31 July | 2009 || | | | 2008 | ||------------------------+------+------------+---------+------------|| | Note | £000s | £000s | £000s ||------------------------+------+------------+---------+------------|| Cash flows from | | | | || operating activities | | | | ||------------------------+------+------------+---------+------------|| Loss before tax from | | (3,135) | (7,498) | (13,100) || continuing activities | | | | ||------------------------+------+------------+---------+------------|| Loss before tax from | | | | || discontinued | | (232) | (415) | (11,027) || activities | | | | ||------------------------+------+------------+---------+------------|| Total loss before tax | | (3,367) | (7,913) | (24,127) ||------------------------+------+------------+---------+------------|| | | | | ||------------------------+------+------------+---------+------------|| Adjusted for: | | | | ||------------------------+------+------------+---------+------------|| Provision for closure | | - | 882 | - || costs | | | | ||------------------------+------+------------+---------+------------|| Finance income | | (7) | (196) | (304) ||------------------------+------+------------+---------+------------|| Finance cost | | 48 | 44 | 85 ||------------------------+------+------------+---------+------------|| Foreign exchange loss | | 22 | - | 2 ||------------------------+------+------------+---------+------------|| Depreciation | | 1,811 | 642 | 1,182 ||------------------------+------+------------+---------+------------|| Amortisation of | | | | || intangible fixed | | 181 | 481 | 718 || assets | | | | ||------------------------+------+------------+---------+------------|| (Profit)/Loss on | | (357) | - | 198 || disposal of assets | | | | ||------------------------+------+------------+---------+------------|| Impairment of | | - | 1,034 | 12,464 || intangible assets | | | | ||------------------------+------+------------+---------+------------|| Remeasurement of | | | | || assets in disposal | 4 | 503 | - | - || group | | | | ||------------------------+------+------------+---------+------------|| Cancellation of loan | | (1,211) | - | - ||------------------------+------+------------+---------+------------|| Share based payment | | (53) | 193 | 212 ||------------------------+------+------------+---------+------------|| Adjusted loss from | | | | || operations before | | (2,430) | (4,833) | (9,570) || changes in working | | | | || capital and provisions | | | | ||------------------------+------+------------+---------+------------|| | | | | ||------------------------+------+------------+---------+------------|| Decrease / (Increase) | | | | || in trade and other | | 646 | (82) | 86 || receivables | | | | ||------------------------+------+------------+---------+------------|| (Increase) in | | (50) | (169) | (54) || inventories | | | | ||------------------------+------+------------+---------+------------|| (Decrease) in trade | | (806) | (558) | (1,489) || and other payables | | | | ||------------------------+------+------------+---------+------------|| Cash used by | | (2,640) | (5,642) | (11,027) || operations | | | | ||------------------------+------+------------+---------+------------|| | | | | ||------------------------+------+------------+---------+------------|| Taxation received | | 75 | - | 898 ||------------------------+------+------------+---------+------------|| Net cash used in | | (2,565) | (5,642) | (10,129) || operating activities | | | | ||------------------------+------+------------+---------+------------|| | | | | ||------------------------+------+------------+---------+------------|| Investing activities | | | | ||------------------------+------+------------+---------+------------|| Proceeds from disposal | | 525 | - | - || of assets | | | | ||------------------------+------+------------+---------+------------|| Purchase of property, | | (22) | (534) | (997) || plant and equipment | | | | ||------------------------+------+------------+---------+------------|| Purchase of intangible | | (16) | (18) | (150) || assets | | | | ||------------------------+------+------------+---------+------------|| Interest received | | 7 | 189 | 304 ||------------------------+------+------------+---------+------------|| Net cash generated | | | | || from investing | | 494 | (363) | (843) || activities | | | | ||------------------------+------+------------+---------+------------|| | | | | ||------------------------+------+------------+---------+------------|| Financing activities | | | | ||------------------------+------+------------+---------+------------|| Proceeds from issue of | | 315 | 3,900 | 3,900 || share capital | | | | ||------------------------+------+------------+---------+------------|| Repayment of debt | | (45) | (31) | (204) || during the period | | | | ||------------------------+------+------------+---------+------------|| Repayment of finance | | (7) | - | (10) || lease costs | | | | ||------------------------+------+------------+---------+------------|| Interest paid | | (48) | 44 | (85) ||------------------------+------+------------+---------+------------|| Net cash received from | | 215 | 3,913 | 3,601 || financing activities | | | | ||------------------------+------+------------+---------+------------|| Net decrease in cash | | (1,856) | (2,092) | (7,371) || and cash equivalents | | | | ||------------------------+------+------------+---------+------------|| Cash and cash | | | | || equivalents at | | 2,717 | 10,088 | 10,088 || beginning of period | | | | ||------------------------+------+------------+---------+------------|| | | | | ||------------------------+------+------------+---------+------------|| Cash and cash | | | | || equivalents at end of | | 861 | 7,996 | 2,717 || period | | | | |+-------------------------------------------------------------------+Consolidated Statement of Changes in Equity (unaudited)Six months ended 31 July 2009+----------------------------------------------------------------------------+| | | | Share-| | | || | | Share| Based| | | || | Share|Premium|Payment| Merger|Retained| || |Capital|Account|reserve|reserve|earnings| Total||Group | £000s| £000s| £000s| £000s| £000s| £000s||---------------------------+-------+-------+-------+-------+--------+-------||At 1 February 2009 | 5,597| 25,785| 1,176| 12,654|(36,659)| 8,553||---------------------------+-------+-------+-------+-------+--------+-------||Loss for the period from | -| -| -| -| (2,952)|(2,952)||continuing operations | | | | | | ||---------------------------+-------+-------+-------+-------+--------+-------||Loss for the period from | -| -| -| -| (232)| (232)||discontinued operations | | | | | | ||---------------------------+-------+-------+-------+-------+--------+-------||Total comprehensive income | -| -| -| -| (3,184)|(3,184)||and expense | | | | | | ||---------------------------+-------+-------+-------+-------+--------+-------||New share capital issued | 233| 82| -| -| -| 315||---------------------------+-------+-------+-------+-------+--------+-------||Share based payment | | | (53)| | | (53)||---------------------------+-------+-------+-------+-------+--------+-------||At 31 July 2009 | 5,830| 25,867| 1,123| 12,654|(39,843)| 5,631|+----------------------------------------------------------------------------+Twelve months ended 31 January 2009+---------------------------------------------------------------------------------------+| | | | | Share-| | | || | | Share| Shares| Based| | | || | Share|Premium| to be|Payment| Merger|Retained| || |capital|account| issued|reserve|reserve|earnings| Total||Group | £000s| £000s| £000s| £000s| £000s| £000s| £000s||-----------------------------+-------+-------+-------+-------+-------+--------+--------||At 1 February 2008 | 4,967| 22,750| 1,443| 964| 11,328|(14,256)| 27,196||-----------------------------+-------+-------+-------+-------+-------+--------+--------||Loss for the year | -| -| -| -| -|(22,403)|(22,403)||-----------------------------+-------+-------+-------+-------+-------+--------+--------||Total comprehensive income | -| -| -| -| -|(22,403)|(22,403)||and expense | | | | | | | ||-----------------------------+-------+-------+-------+-------+-------+--------+--------||New share capital issues | 630| 3,035| (117)| -| -| -| 3,548||-----------------------------+-------+-------+-------+-------+-------+--------+--------||Share based payment | -| -| -| 212| -| -| 212||-----------------------------+-------+-------+-------+-------+-------+--------+--------||Share issue eligible for | -| -|(1,326)| -| 1,326| -| -||merger relief | | | | | | | ||-----------------------------+-------+-------+-------+-------+-------+--------+--------||At 31 January 2009 | 5,597| 25,785| -| 1,176| 12,654|(36,659)| 8,553|+---------------------------------------------------------------------------------------+Six months ended 31 July 2008+--------------------------------------------------------------------------------------+| | | | | Share-| | | || | | Share| Shares| Based| | | || | Share|Premium| to be|Payment| Merger|Retained| || |capital|account| issued|reserve|reserve|earnings| Total||Group | £000s| £000s| £000s| £000s| £000s| £000s| £000s||-----------------------------+-------+-------+-------+-------+-------+--------+-------||At 1 February 2008 | 4,967| 22,750| 1,443| 964| 11,328|(14,256)| 27,196||-----------------------------+-------+-------+-------+-------+-------+--------+-------||Loss for the period | -| -| -| -| -| (7,090)|(7,090)||-----------------------------+-------+-------+-------+-------+-------+--------+-------||Total comprehensive income | -| -| -| -| -| (7,090)|(7,090)||and expense | | | | | | | ||-----------------------------+-------+-------+-------+-------+-------+--------+-------||New share capital issues | 630| 3,035| (117)| -| -| -| 3,548||-----------------------------+-------+-------+-------+-------+-------+--------+-------||Share based payment | -| -| -| 193| -| -| 193||-----------------------------+-------+-------+-------+-------+-------+--------+-------||Share issue eligible for | -| -|(1,326)| -| 1,326| -| -||merger relief | | | | | | | ||-----------------------------+-------+-------+-------+-------+-------+--------+-------||At 31 July 2008 | 5,597| 25,785| -| 1,157| 12,654|(21,346)| 23,847|+--------------------------------------------------------------------------------------+Notes to the Financial StatementsFor the six months ended 31 July 20091. Basis of accountingThe interim accounts, which are unaudited, have been prepared on thebasis of the accounting policies expected to apply for the financialyear to 31 January 2010 and have been prepared in accordance with theprinciples of International Financial Reporting Standards (IFRSs) asendorsed by the European Union and implemented in the UK.The IFRSs that will be effective in the financial statements for theyear to 31 January 2010 are still subject to change and to the issueof additional interpretation(s) and therefore cannot be determinedwith certainty. Accordingly, the accounting policies for that annualperiod that are relevant to this interim financial information willbe determined only when the IFRS financial statements are prepared at31 January 2010.The interim financial statements do not include all of theinformation required for full annual financial statements and do notcomply with all the disclosures in IAS 34 'Interim FinancialReporting'. Accordingly, whilst the interim statements have beenprepared in accordance with IFRS they cannot be construed as being infull compliance with IFRS.The financial information for the year ended 31 January 2009 does notconstitute the full statutory accounts for that period. The AnnualReport and Financial Statements for 31 January 2009 have been filedwith the Registrar of Companies. The Independent Auditors' Report onthe Annual Report and Financial Statement for 2009 was unqualifiedand did not contain a statement under 237(2) or 237(3) of theCompanies Act 1985. The Independent Auditors' Report did drawattention to going concern by way of emphasis.Disposal groups held for saleThe assets and liabilities of disposal groups are classified as heldfor sale when their carrying amount is to be recovered principallythrough a sale transaction and a sale is considered highly probable.They are stated at the lower of the carrying value less costs to sellif their carrying amount is to be recovered principally through asale transaction rather than through continuing use.Exceptional itemsItems that are both material and non-recurring and whose significanceis sufficient to warrant separate disclosure and identificationwithin the financial statements are referred to as exceptional itemsand disclosed within their relevant Consolidated Statement ofComprehensive Income category. Events and transactions that may giverise to classification as exceptional, include but are not limitedto, asset impairment charges, accelerated depreciation charges andthe forgiveness of material loans.Going concernSince the release of the Preliminary Results for the year ended 31January 2009, the financial position of the Group has been improvedthrough the sale of the Dextra business in September 2009 and currentcash resources are expected to last into Q2 of 2010. Additionalfunding still needs to be raised through commercial out-licensingagreements, project funding and/or the issue of new equity. Themarketing campaign around a potential iminosugar licensing dealcontinues to progress well. An application for grant funding for oneof the Group's projects has been made and a decision on whether ithas been success is anticipated by early 2010. In addition,discussions with the Company's financial advisers remain on-going toconsider a fundraise. The Board are confident that its plans willallow the Group to continue its operations for the foreseeablefuture. Should the Group be unable to secure additional funding asoutlined above by Q1 2010 then the Board would consider alternativeactions to secure the future of the business including furtherreductions in operating costs until either milestones from existingcollaborative deals become due or a possible sale of the Group'sremaining business and assets is achieved. The Board believes that bycurtailing the Group's activities to all but essential programmes andotherwise reducing its costs to a care and maintenance level, theGroup could see existing cash resources last through to early 2011,and in the process, enable it to receive the benefit of milestonepayments from existing collaborative deals. The amount and timing ofincome from any new licensing deal, or any fund-raisingtransaction, represents a material uncertainty related to events orconditions that may cast significant doubt on the Group's ability tocontinue as a going concern.Based on the assessment above, the Board have prepared thesestatements on a going concern basis.2. Loss per share calculationThe loss per share has been calculated by dividing the loss for theperiod for both the loss attributable to the continuing activitiesand also the loss attributable to the discontinued operations by theweighted average number of shares in issue during the six monthperiod to 31 July 2009: 56,779,928 (for the six month period ended 31July 2008: 50,753,029; for the year ended 31 January 2009:53,389,132).Since the Group has reported a net loss, diluted loss per share isequal to basic loss per share.3. Release of loan commitment and accelerated depreciationFollowing a deed of variation signed on 16 June 2009, the landlord ofone of the properties has released the Group from its obligations torepay the remaining loan balance outstanding as at 29 September 2009.This has resulted in a credit to the income statement of £1,211,000,leaving only the loan repayments relating to the period prior to 29September remaining within the Balance Sheet. In conjunction withthis release, management have reassessed the useful economic lifeassociated with the leasehold improvements funded by the loan and asa result an accelerated depreciation charge of £1,361,000 has beencharged in the period. This is due to the expectation of having tovacate the part of the premises that benefited from the leaseimprovement work by the end of 2009. Both these items are consideredto be exceptional in nature.4. Discontinued OperationsOn 7 May 2009, the Group completed the sale of its Zebrafish businessto Evotec AG. On 2 September 2009 (post period) the Group completedthe sale of Dextra Laboratories Limited to NZP Holdings Limited, withthis business being accounted for as an asset held for sale at periodend in accordance with IFRS 5.The results of the discontinued operations and the result recognisedon the remeasurement of the assets of the disposal group which havebeen included in the Consolidated Statement of ComprehensiveIncome were as follows:+-------------------------------------------------------------------+| | Six months | Six months | Year || | ended | ended | ended || | 31 July | 31 July | 31 January || | 2009 | 2008 | 2009 ||------------------------+------------+----------------+------------|| | £000 | £000 | £000 ||------------------------+------------+----------------+------------|| Revenue | 1,161 | 788 | 1,771 ||------------------------+------------+----------------+------------|| Expenses | (1,188) | (1,203) | (12,798) ||------------------------+------------+----------------+------------|| Loss before tax of | | | || discontinued | (27) | (415) | (11,027) || operations | | | ||------------------------+------------+----------------+------------|| Tax | 23 | | (23) || | | - | ||------------------------+------------+----------------+------------|| Loss after tax of | | | || discontinued | (4) | (415) | (11,050) || operations | | | ||------------------------+------------+----------------+------------|| | | | ||------------------------+------------+----------------+------------|| Profit on disposal of | 275 | - | - || business segment | | | ||------------------------+------------+----------------+------------|| Loss on remeasurement | (503) | - | - || of disposal group | | | ||------------------------+------------+----------------+------------|| | (228) | - | - ||------------------------+------------+----------------+------------|| Tax | - | - | - ||------------------------+------------+----------------+------------|| | (232) | - | - ||------------------------+------------+----------------+------------|| Loss for the period on | | | || discontinued | (232) | (415) | (11,050) || operations | | | |+-------------------------------------------------------------------+The loss on disposal of discontinued operations of £228,000 includesa profit on disposal of the Zebrafish business of £275,000, being theproceeds of disposal less the carrying amount of the businesssegment's net assets, together with a loss of £503,000 beingrecognised on the adjustment to fair value, being the sale proceedsless attributable costs on the sale of Dextra Laboratories Limited.During the period, the discontinued operations absorbed £395,000 ofthe Group's net operating cash flows, £23,000 in respect of investingactivities and £7,000 in respect of financing activities.The major classes of assets and liabilities comprising the operationsclassified as held for sale are as follows:+-------------------------------------------------------------------+| | Year || | ended || | 31 July || | 2009 ||---------------------------------------------------------+---------|| | £000 ||---------------------------------------------------------+---------|| Property, plant and equipment | 635 ||---------------------------------------------------------+---------|| Inventories | 214 ||---------------------------------------------------------+---------|| Trade and other receivables | 492 ||---------------------------------------------------------+---------|| Total assets classified as held for sale | 1,341 ||---------------------------------------------------------+---------|| | ||---------------------------------------------------------+---------|| Trade and other payables | (401) ||---------------------------------------------------------+---------|| Total liabilities associated with assets classified as | (401) || held for sale | ||---------------------------------------------------------+---------|| | ||---------------------------------------------------------+---------|| Net assets of the disposal group | 940 |+-------------------------------------------------------------------+5. Change of comparativesAn adjustment has been made to correctly reflect the split betweencurrent and non-current liabilities for the deferred income resultingfrom the contributions made from a landlord of one of the premisestowards refurbishment costs. This adjustment resulted in an increaseto non-current liabilities of £136,000 and a subsequent decrease tocurrent liabilities of the same amount in respect of the balances at31 July 2008.As a result of the discontinued operations referred to in Note 4, theConsolidated Statement of Comprehensive Income has been restated forboth the full year to 31 January 2009 and the comparative six monthperiod to 31 July 2008.6. Share issueOn 29 May 2009 Orient Pharma Limited made a $500,000 (£314,820)equity investment via a subscription for 2,332,000 new Ordinary 10pence shares at a price of 13.5 pence per share. This was inexchange for full ownership of the clinical candidate SMT D001, whichis being developed to treat sialorrhoea, a non-motor symptom ofParkinson's disease. Under the agreement Summit will also be eligiblefor royalties on worldwide sales of the product. The share capitalincreased to 58,300,237 due to the placing of 2,332,000 Ordinary 10pence shares which rank pari passu with existing shares. The sharesissued to Orient are subject to a 12 month lock-in period followed bya 12 month orderly market agreement.Independent Review Report to Summit Corporation plcIntroductionWe have been engaged by the company to review the condensed set offinancial statements in the half-yearly financial report for the sixmonths ended 31 July 2009 which comprises the Consolidated Statementof Comprehensive Income, Consolidated Balance Sheet, ConsolidatedCash Flow Statement, Consolidated Statement of Changes in Equity andrelated notes.We have read the other information contained in the half-yearlyfinancial report and considered whether it contains any apparentmisstatements or material inconsistencies with the information in thecondensed set of financial statementsDirectors' responsibilitiesThe interim report, including the financial information containedtherein, is the responsibility of and has been approved by thedirectors. The directors are responsible for preparing the interimreport in accordance with the rules of the London Stock Exchange forcompanies trading securities on the Alternative Investment Marketwhich require that the half-yearly report be presented and preparedin a form consistent with that which will be adopted in the company'sannual accounts having regard to the accounting standards applicableto such annual accounts.Our responsibilityOur responsibility is to express to the company a conclusion on thecondensed set of financial statements in the half-yearly financialreport based on our review.Our report has been prepared in accordance with the terms of ourengagement to assist the company in meeting the requirements of therules of the London Stock Exchange for companies trading securitieson the Alternative Investment Market and for no other purpose. Noperson is entitled to rely on this report unless such a person is aperson entitled to rely upon this report by virtue of and for thepurpose of our terms of engagement or has been expressly authorisedto do so by our prior written consent. Save as above, we do notaccept responsibility for this report to any other person or for anyother purpose and we hereby expressly disclaim any and all suchliabilityScope of reviewWe conducted our review in accordance with International Standard onReview Engagements (UK and Ireland) 2410, ''Review of InterimFinancial Information Performed by the Independent Auditor of theEntity'', issued by the Auditing Practices Board for use in theUnited Kingdom. A review of interim financial information consistsof making enquiries, primarily of persons responsible for financialand accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an auditconducted in accordance with International Standards on Auditing (UKand Ireland) and consequently does not enable us to obtain assurancethat we would become aware of all significant matters that might beidentified in an audit. Accordingly, we do not express an auditopinion.Review ConclusionBased on our review, nothing has come to our attention that causes usto believe that the condensed set of financial statements in thehalf-yearly financial report for the six months ended 31 July 2009is not prepared, in all material respects, in accordance with therules of the London Stock Exchange for companies trading securitieson the Alternative Investment Market.Emphasis of Matter - Going ConcernIn forming our review conclusion, which is not qualified, we haveconsidered the adequacy of the disclosures made in Note 1 to theinterim financial information concerning the Group's ability tocontinue as a going concern. This depends on its ability to secureadditional sources of cash through further out-licensing contractsand/or fund raisings, or upon receipt of milestones from existingcollaborative deals coupled with the further curtailment ofexpenditure levels. This condition, along with other mattersexplained in Note 1 of the interim financial information; indicatethe existence of a material uncertainty which may cast significantdoubt on the Group's ability to continue as a going concern. Theinterim financial information does not include any adjustments thatwould result if the Group were unable to continue as a goingconcern.BDO LLPSouthamptonUnited Kingdom22 October 2009BDO LLP is a limited liability partnership registered in England andWales (with registered number OC 305127)This document contains "forward-looking statements" within themeaning of the U.S. Private Securities Litigation Reform Act of 1995.Forward-looking statements can be identified by words such as"anticipates", "intends", "plans", "seeks", "believes", "estimates","expects" and similar references to future periods, or by theinclusion of forecasts or projections.Forward-looking statements are based on the Company's currentexpectations and assumptions regarding our business, the economy andother future conditions. Because forward-looking statements relate tothe future, by their nature, they are subject to inherentuncertainties, risks and changes in circumstances that are difficultto predict. The Company's actual results may differ materially fromthose contemplated by the forward-looking statements. The Companycautions you therefore that you should not rely on any of theseforward-looking statements as statements of historical fact or asguarantees or assurances of future performance. Important factorsthat could cause actual results to differ materially from those inthe forward-looking statements and regional, national, globalpolitical, economic, business, competitive, market and regulatoryconditions.---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is
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