RNS Number:9894Q
Osmetech PLC
28 March 2008
Osmetech plc
('Osmetech' or the 'Company')
Osmetech plc (OMH.L), the fast developing international molecular diagnostics
business announces preliminary results for the 12 months ended 31 December 2007
Highlights
* Profit after tax of £4.0 million (2006 - loss of £13.3 million)
* £17.6 million profit on sale of Critical Care Division generates
substantial return on investment
* Continuing operations:
- Revenues increases to £169,000 (2006 - £49,000)
- Loss after tax of £12.0 million (2006 - loss of £12.3 million)
* Cash and cash equivalents increase to £13.9 million at 31 December 2007
(2006 - £7.1 million)
* Growth of installed base of eSensor(R) 4800 instruments running FDA
approved Cystic Fibrosis Carrier Detection tests
* Second generation eSensor(R) XT-8 system with Warfarin sensitivity test
currently under review by FDA - clearance and launch expected during the
first half of 2008
* Extended Warfarin sensitivity test, including exclusively licenced 4F2
biomarker, scheduled for second half of 2008
* New licencing agreements and strategic partnership collaborations under
negotiation
James White, Chief Executive, Osmetech plc, said:
"The molecular diagnostics market continues to experience high growth rates and
offer prospects of very attractive margins. The on-going decentralisation of
testing is increasing demand for FDA-cleared tests in a cost-effective, compact
and easy to use format. Osmetech is set to launch its new XT-8 instrument
platform shortly and remains one of a small group of companies able to meet
these market requirements. We expect further progress and significant
developments during the current year."
Osmetech plc +44 (0)207 849 6027
James White, Chief Executive Officer
David Sandilands, Chief Financial Officer
Hoare Govett Limited +44 (0) 207 678 8000
Andrew Foster (Corporate Broking)
Justin Jones (Corporate Finance)
Madano Partnership +44 (0) 207 593 4000 / 07887 561 050
Mark Way/Graham Moonie
Chairman's statement
The sale of our Critical Care Division to IDEXX Laboratories, Inc. ('IDEXX') for
£23.1 million ($45.4 million) in cash before costs was completed on 31 January
2007, representing a substantial return on the £1.7 million ($2.7 million)
purchase price when the blood gas and electrolyte analyser business was acquired
from Roche Diagnostics Inc in 2003. As a result of Osmetech's active management
of the business, considerable value was created through the acquisition of this
non-core asset from a major company by Osmetech.
Osmetech is now making excellent progress towards replicating this success in a
market with much more attractive growth prospects. We are now wholly focussed on
exploiting the considerable opportunities in the rapidly developing molecular
diagnostics market sector. This is centred on our proprietary technology and
substantial intellectual property portfolio built around the acquisition of
Clinical Micro Sensors, Inc. from Motorola, Inc in 2005.
The market dynamics for molecular diagnostics continue to be attractive with
high growth rates and the prospect of high margins. Osmetech has directed its
development at products that meet the requirements of a decentralising
diagnostics market which is demanding FDA-cleared tests in a cost-effective,
compact and easy to use format. Many of the existing players in the wider
molecular testing market have expensive and specialised instruments designed for
the more complex demands of the research market and are finding the transition
to diagnostics difficult to achieve.
Osmetech remains one of a small number of companies with the capability of
meeting the requirements for this growing market. We have proven technology and
products that have successfully passed key scientific and regulatory milestones
and are now making sound commercial progress in achieving market acceptance of
our first generation eSensor(R) 4800 platform.
We have completed the development of our second generation eSensor(R) XT-8
platform and are very excited about its commercial prospects. The system, along
with the Warfarin sensitivity test, is currently under review by the FDA and
following the anticipated FDA clearance we expect to launch the product in the
first half of 2008. We plan to commercialise the product throughout the
remainder of 2008 and into 2009 which will involve continued investment in
Group's infrastructure and product pipeline. We anticipate that further funding
will be required during this period in order to fully execute our
commercialisation plans. Not withstanding the matter of emphasis disclosed
within note 2, based upon ongoing negotiations and discussions with potential
strategic partners, licencees, commercial and other third parties we are
confident that further funds will be available to the Group enabling us to
optimise value from our products. We plan to pursue the alternative which
delivers most shareholder value at the time and I look forward to updating
shareholders in due course.
Gordon Hall
Chairman
28 March 2008
Chief Executive Officer's Review
Introduction
We have continued to make strong progress in the year towards our aim of
commercialising our proprietary electrochemical detection technology to provide
a low cost, easy to use instrument platform for molecular diagnostics testing.
Commercialisation achieved with first generation system
A limited number of eSensor 4800 DNA Detection instruments were inherited when
the Clinical Micro Sensors, Inc. business was acquired from Motorola in 2005.
Our strategy has been to use this first generation eSensor 4800 platform to
achieve regulatory and commercial acceptance of our technology.
We are pleased to report considerable progress in this regard. Following FDA
regulatory clearance for our eSensor Cystic Fibrosis Carrier Detection test and
eSensor 4800 DNA Detection instrument in 2006, 14 available instruments are now
with customers either on a commercial basis or under evaluation. Customers range
from large to small hospitals and small reference laboratories and we have
experienced a 100% conversion rate from the evaluation stage through to
commercial contract. Whilst customer satisfaction levels remain high we plan to
replace these eSensor 4800 systems with our second generation platform, the
eSensor XT-8, following clearance by the FDA.
Throughout this commercialisation process we have established a core U.S. sales
and marketing team in addition to an effective manufacturing base and supply
chain. Valuable feedback and experience from the market has been gained allowing
us to incorporate product enhancements into the development of our second
generation eSensor XT-8 system.
Submission of second generation platform
The development of our second generation eSensor XT-8 electrochemical DNA
analysis system has been completed and the product has been very successfully
exhibited at a number of trade shows. Following highly successful pre-clinical
trial studies, the system is currently under review by the FDA together with our
Warfarin sensitivity test. Following FDA clearance, we plan to launch the
platform in the first half of 2008.
FDA clearance for the XT-8 platform will simplify the regulatory pathway for
future assay submissions. These submissions will be for new tests with no
further review of the instrument being required.
The XT-8 system is based on the FDA-cleared eSensor 4800 product with several
additional features to provide enhanced performance capabilities. It is a
compact bench-top workstation with an integrated touch screen computer and
disposable test cartridges that can process up to 3,000 tests a week. Using
prepared samples, the eSensor XT-8 System can run up to 24 different tests
independently (with variable throughput capacity dependent upon the user's
requirements) providing a definitive result within 30 minutes with limited
operator involvement. The system incorporates several key features which we
believe will make the XT-8 attractive to a wide range of laboratories,
including:
* Simplicity. Our eSensor XT-8 System eliminates the need for sophisticated
instrumentation or complex reagent kits. Automation of a number of key
process steps eliminates manual intervention in the detection process and
algorithms provide test results without the need for operator interpretation
or data manipulation, making molecular diagnostic testing widely available to
both large and small hospital laboratories worldwide
* Cost-Effectiveness. Our eSensor XT-8 System is a low cost platform that is
accessible to smaller hospitals and reference laboratories. Our versatile,
cartridge-based design eliminates the need for multiple testing platforms.
By eliminating the need for skilled technicians and multiple complex
platforms, hospitals and laboratories of all sizes can reduce their costs and
obtain results from tests in their own laboratories at a significantly lower
cost than through systems generally available today. Assuming current
Medicare reimbursement rates for genetic tests remain the same, the eSensor
XT-8 system should provide hospitals and reference laboratories with an
additional revenue source while allowing them to better serve their patients
and clients with faster and more accurate test results
* True Random Access Testing. The eSensor XT-8 System allows laboratories to
economically run different tests from different patient samples when received
and on demand, unlike other systems where laboratories must process patient
samples in batches to control reagent and labor costs. True random access
results in faster sample turn-around times, improved patient care and timely
service to the ordering clinician waiting to act on the patient result.
* Multiplexing. The eSensor XT-8 System enables scalable multiplexing of up
to 72 target molecules on the same patient sample in a single assay
cartridge. Potential applications include genomic and infectious disease
test panels on a single use cartridge that allows for the simultaneous
detection of multiple genetic mutations associated with complex diseases
such as cystic fibrosis or respiratory infections.
* Accuracy and Reliability. The eSensor XT-8 System utilises a proprietary
electrochemical method to detect nucleic acids with high levels of
sensitivity and specificity. Electrochemistry is far more robust than
optical recognition methods providing results that are less subject to
variation from contamination or vibration and dust.
* Low maintenance. We believe that the eSensor XT-8 requires less maintenance
than any other competitor instrument. No set-up procedures are necessary
allowing an extremely convenient 'plug and play' approach. Ongoing or
regular maintenance is minimal.
* Validated Technology. The eSensor XT-8 System is based on our proprietary
electrochemical technology, a technology which has been used in other
clinical applications, most notably in blood glucose measurement for
diabetes management. The XT-8 instrument utilises the same core technology
as our eSensor 4800 system, which has been approved by the FDA and is
currently in use in laboratory settings for cystic fibrosis carrier detection.
* Clinical Lab Ready System. The XT-8 is designed specifically for the
molecular diagnostics market using our experience of successful new blood gas
products previously launched in our Critical Care Division, rather than
attempting to adapt a complex research based instrument to meet the very
different demands of the clinical environment.
Unique content in-licenced
We have obtained an exclusive licence from the Marshfield Clinic for an
important newly discovered genetic marker for Warfarin, the CYP450 4F2
biomarker. The Marshfield Clinic has recently had an article published in the
peer-reviewed journal, Blood Online, entitled "CYP4F2 Genetic Variant Alters
Required Warfarin Dose" which describes clinical studies demonstrating that the
4F2 biomarker significantly influences Warfarin requirements. Gaining access to
unique content through exclusive licencing is highly unusual in the molecular
diagnostics industry and gives us a significant competitive advantage, confirmed
by the numerous enquiries we have subsequently received from third parties
seeking a sub-licence.
Together with the licences necessary for our marketed Cystic Fibrosis Carrier
Detection test, we have also successfully completed the in-licencing of
biomarkers for our Warfarin sensitivity and 2C9 pharmacogenomics tests planned
for launch later this year. In addition to the unique 4F2 marker we have also
obtained the rights to other genetic markers related to Warfarin metabolism
which should form the basis of an Extended Warfarin Panel test also targeted for
launch later in 2008.
Osmetech has recently been granted a broad non-exclusive worldwide diagnostics
licence from Roche to use chemically modified thermostable polymerases for
applications including existing marketed products, other genetic predisposition
assays, companion diagnostics and infectious diseases such as HPV. This enables
improved control over the amplification of select segments of nucleic acids,
including genomic DNA, so that sufficient signal is available for diagnostic
processing, resulting in a highly efficient and sensitive amplified assay. This
licence will benefit both new and existing customers who will not be required to
obtain this licence from Roche and pay royalties on tests performed when using
Osmetech products. This is a good example where Osmetech is simplifying
molecular diagnostics by including this critical component in an easy to use kit
format for customers.
Expansion of our intellectual property portfolio and outlicencing activities
We believe that our intellectual property portfolio provides a significant
barrier to the development of similar electrochemical based detection systems.
We own or have exclusive worldwide rights to more than 150 patents worldwide
mostly in the field of electrochemical detection of biological entities such as
DNA, RNA, and proteins.
Our strong intellectual property portfolio for its core electrochemical
detection technology was built through the combination of the Clinical Micro
Sensors acquisition from Motorola and a series of worldwide exclusive licences
most notably from CalTech (where most of the electrochemical detection
technology originated), University of North Carolina, Harvard University and
MIT. To date there are more than 80 issued U.S. patents protecting the
company's electrochemical detection technology covering a diverse collection of
areas including electrochemical DNA detection, self-assembling monolayer
technology, signal processing and extraction methods.
We believe that our eSensor electrochemical technology is ideally suited to the
decentralising molecular diagnostics market, enabling testing in less
sophisticated laboratories outside of research institutions and large hospitals.
It should also provide us with the ability to develop intuitive and robust
point-of-care testing instrumentation and ultimately portable testing devices
that are not subject to the limitations of photon (optical) based platforms.
We have licenced technology to Ohmx Corporation and Minerva Biotechnologies Corp
on a non-exclusive basis. We see further opportunities to leverage our
considerable patent portfolio to generate licencing income from commercial
agreements, while maintaining our competitive advantage for applications in our
core markets.
Business repositioned in the most attractive segment of the diagnostics
industry: Molecular Diagnostics
The sale of our Critical Care Division ('CCD') blood gas and electrolyte
analyser business early in 2007 completed the cycle of acquiring and developing
a non-core undervalued asset from a major company through to the generation of
significant returns. Osmetech was successful in creating considerable value with
CCD in a mature, slow growing market with modest profit margins. We are now
developing a molecular diagnostics business with higher growth and higher margin
opportunities in a market sector of increasing strategic importance.
The molecular diagnostics market is the fastest growing segment of the overall
in-vitro diagnostics (IVD) market. The global market for in vitro diagnostic
products was estimated to be $34 billion in 2006 according to Boston Biomedical
Consultants. Molecular diagnostics generally refers to the use of genomic
analysis of individuals to diagnose disease and treat patients and, as a
sub-segment of the IVD market, includes diagnostic testing for infectious
diseases, pharmacogenomics, genetics and cancer. This new and expanding part of
the IVD market has emerged in response to a need for more rapid, sensitive and
specific diagnostic tests than were previously available using traditional
techniques, such as immunoassays. Our market opportunity in molecular
diagnostics is more than $2.3 billion. We believe that the following factors,
among others, are contributing to the growth of this market:
* Decentralization. The diagnostics market is beginning the conversion from
traditional methods of detection that are required to be performed in outside
laboratories to molecular testing performed in hospital laboratories.
Generally, genetic testing required complex instrumentation utilising highly
trained operators, expensive equipment and dedicated facilities. There is
growing demand from U.S. hospitals looking to build laboratory revenues and
profitability through the reimbursement system by performing molecular
testing on new, cost effective and easy to use platforms in their own
laboratories.
* Conversion to FDA-Approved Molecular Testing Methods. The FDA is encouraging
the molecular diagnostic industry to develop tests that are cleared by the
FDA rather then using ASR-based tests not submitted for clearance. It is
expected that over time that many of these ASR tests and "home brew" tests
created by laboratories will be phased out in favour of FDA-approved tests.
* Expansion of Human Genetic Testing. Medical advances in the understanding
of the relationship between genetics and disease and the disease process
have led to the development of human genetic tests for diseases such as
cystic fibrosis and inherited diseases. As understanding and technology
advance, we expect that additional genetic tests will become available to
establish a person's predisposition to a wide range of diseases.
* Pharmacogenomics. Research is uncovering more information about the impact
of genetics on patients' ability to tolerate, metabolise and respond to many
drugs. The importance of this research is highlighted by the fact that,
according to the Institute of Medicine, over 100,000 people die each year in
the U.S. alone as a result of adverse drug reactions. As a result, we
expect that genetic testing will increasingly be used to guide treatment
methods and dosages through the development of companion drug tests. The FDA
has noted an increase in pharmaceutical companies seeking clearance of
products with accompanying diagnostic tests and over the next decade there is
expected to be substantial growth in the companion molecular diagnostics
market with companies focusing their development of drugs for patients who
are more likely to respond favourably to that particular drug and drugs that
focus on targeting a specific gene. In addition, the FDA is seeking
pharmacogenomic information from pharmaceutical companies on their currently
marketed products, which could lead to the development of new tests for other
pharmaceuticals.
* Increasing Reliance on Genetic Testing. Future growth in the molecular
diagnostics market will be driven by continued development of new tests and
the growing acceptance of, and reliance on, these tests by physicians and
other practitioners in their decision making process and patients' awareness
of the potential of these tests. We expect that as these tests become more
accessible as a result of the lowering of barriers to entry to hospital
laboratories for test processing, physicians and patients will come to
include these tests as an important factor in prevention, diagnosis and
treatment of many diseases.
Our applications
We are commercializing or have in development several genomic assays including
the following:
APPLICATION PRODUCT DESCRIPTION STATUS
Warfarin metabolism XT-8 Warfarin Test Genetic test for CYP2C9/ VKOR 510(k)
application
biomarkers associated with submitted
December 2007.
Warfarin metabolism Assuming
FDA clearance,
commercial launch projected
in the
first half of 2008
Warfarin metabolism XT-8 Extended Warfarin Genetic test for additional
Development and clinical
Test CYP2C9/ VKOR biomarkers trials
complete. 510(k)
associated with Warfarin
application to be submitted
metabolism including following
FDA clearance of
exclusively licenced CYP450 the XT-8
Warfarin Test
4F2 biomarker
Commercial launch projected
in the
second half of 2008
2C9 drug metabolism CYP 450 2C9 Test for Genetic test for CYP2C9
Development and clinical
eSensor XT-8 system biomarkers associated with trials
complete. 510(k)
metabolism of Phenytoin
application to be submitted
(epilepsy) and most following
FDA clearance of
non-steroidal the XT-8
Warfarin Test
anti-inflammatory drugs
Commercial launch projected
(including COX-2) in the
second half of 2008
Cystic Fibrosis Cystic Fibrosis Test for FDA-cleared test for On
market
eSensor 4800 System pre-conception screening of
cystic fibrosis gene carriers.
Cystic Fibrosis Cystic Fibrosis Test for Test for pre-conception In
development.
eSensor XT-8 system screening of cystic fibrosis
gene carriers. 510(k)
application to be
submitted
early 2009
Respiratory viruses Respiratory viral panel Identification of the major In
development
for eSensor XT-8 system respiratory viruses. Aids
identification of bacterial
infections
Warfarin metabolism
Our eSensor Warfarin Test is a pharmacogenomic test for the detection of genetic
mutations that determine an individual's ability to metabolize the oral
anticoagulant Warfarin, also known as Coumadin. Warfarin decreases the blood's
clotting ability and is the most widely prescribed oral anticoagulant in North
America and Europe. Individuals metabolize Warfarin differently, and if its
administration is not managed carefully, life threatening side effects may
occur.
In the U.S. alone there are an estimated 2 million new Warfarin patients each
year. Warfarin is the second most likely drug, after insulin, to send Americans
to the Emergency Room, resulting in an estimated 43,000 visits a year in the
U.S. A recent economic study concluded that widespread use of Warfarin testing
in the U.S. could avoid 85,000 serious-bleeding events and 17,000 strokes a
year, and so save the healthcare system approximately $1.1 billion annually.
In August 2007, the FDA announced the relabelling of Coumadin (generic name -
Warfarin), which was reported on the front page of the Wall Street Journal. It
is significant that the FDA has taken such a proactive stance to promote the use
of genetic factors to predict how individuals will react to medicines. We
believe this is a significant milestone for the adoption of pharmacogenomics
tests. The potential for Warfarin testing is a good illustration of the
significant commercial opportunities for pharmacogenomics tests targeting
specific drugs which are capable of being performed on Osmetech's XT-8 platform.
The eSensor Warfarin Test, which is currently under review by the FDA together
with the eSensor XT-8 System, detects three genetic markers that are known to
play a critical role in metabolizing Warfarin. Through detection of these
genetic markers, doctors are able to determine the appropriate initial Warfarin
dosage level in a safer and more efficient manner.
We recently obtained an exclusive licence from the Marshfield Clinic for an
important newly discovered genetic marker for Warfarin, the CYP450 4F2
biomarker. Clinical studies demonstrate that the 4F2 biomarker significantly
influences Warfarin requirements. We have already conducted clinical trials
incorporating this 4F2 marker and other additional genetic markers into our
eSensor Extended Warfarin Test, which we expect to submit for FDA 510(k)
clearance shortly after receiving clearance for our three marker Warfarin Test.
Cystic Fibrosis
Our Cystic Fibrosis Carrier Detection Test is a qualitative, multiplexed
genotyping assay that detects a 23-marker panel of mutations associated with
cystic fibrosis based on guidelines published by the American College of Medical
Genetics and the American College of Obstetricians and Gynecologists for
screening of adult couples contemplating pregnancy. Our eSensor Cystic Fibrosis
Test for the eSensor 4800 System received 510(k) clearance from the FDA in 2006
and is currently on the market. We anticipate that we will submit our eSensor
Cystic Fibrosis Test for the eSensor XT-8 System for FDA clearance in early
2009.
The U.S. market for Cystic Fibrosis Carrier Screening is currently estimated to
be 1.5 million tests, growing at 15% with less than 50% market penetration. We
expect that the launch of additional low-cost, FDA-approved tests will drive
market expansion through increased testing by small and medium-sized
laboratories as approximately 60% of tests are currently performed in large
reference labs. We anticipate that by 2010, approximately 2.5 million tests
will be performed in the U.S., creating a total market of up to $300 million.
2C9 drug metabolism
CYP2C9 is a member of the cytochrome P450 mixed-function system of enzymes
involved in the metabolism of several important groups of drugs including many
non-steroidal anti-inflammatory drugs (NSAIDs) and anti-diabetic drugs.
We have conducted clinical trials on a 2C9 drug metabolism test. We expect to
submit for FDA 510(k) clearance for 2C9 later this year following clearance of
our Warfarin Test.
Other assays
We have a respiratory virus panel currently in development which has the
potential of addressing a large market. A test that differentiates between a
number of common respiratory viruses and bacteria is well suited to the XT-8's
capabilities for multiplex detection from a single patient sample.
We are currently evaluating a number of opportunities to broaden our test menu.
We are focussing on validated content with clear market requirements and
anticipate that we will enter into licencing and commercial agreements with
partners enabling further assays to be added to the eSensor XT-8 instrument
platform. We expect that this pipeline will include pharmaceutical companion
diagnostics and validated cancer markers.
Competitive landscape
Much of the molecular diagnostic testing today is performed on large, expensive
and complex research-based instruments requiring highly skilled staff to perform
tests and interpret results. In order to achieve acceptable financial returns,
large volume batch testing is often required. As a consequence, testing is
largely concentrated in reference laboratories and large hospitals with other
hospitals and institutions forced to out-source testing, resulting in lengthy
waits for results and the lost opportunity of performing potentially profitable
tests in-house.
Many of the existing methods, including certain more recently developed
technologies, are susceptible to contamination and inaccuracy because of the
need for specialist involvement in every stage of the process which can lead to
inconclusive results and incorrect interpretation. Furthermore, many new
technologies in molecular diagnostics have failed to provide the ease of use and
cost-effectiveness that we believe is necessary to make molecular diagnostic
instruments attractive to hospitals and reference laboratories that do not
currently have the capacity to perform molecular diagnostics in their
laboratories.
Market domination in this sector of the Diagnostics market by a limited number
of key players has not yet occurred, and M&A and cross-licencing activity
remains strong with many large players looking to increase their presence or
enter the market for the first time.
We are one of a small number of companies with the capability of meeting the
requirements for this growing market. We are also one of an even smaller group
with FDA cleared tests and validated core technology necessary for widespread
adoption by all sizes of customer in this decentralising market.
GeneSensor
During 2007 the development of the GeneSensor instrument platform was
discontinued with the Group's resources fully focused on the eSensor technology
and XT-8 platform. We remain very encouraged by the market acceptance of eSensor
system and now believe that the eSensor XT-8 instrument and our electrochemical
detection technology generally have the ability to address many of the market
requirements originally targeted by our GeneSensor instrument system.
Financial review
IFRS
This is the first year that the Group has presented its financial statements
under International Financial Reporting Standards ('IFRS'). The last financial
statements under UK GAAP were for the year ended 31 December 2006 and the date
of transition to IFRS was therefore 1 January 2006. The major areas of impact of
IFRS are summarised below:
* Goodwill is not amortised under IFRS but rather subject to annual
impairment reviews.
* Intangible assets (other than goodwill) are stated at cost less
accumulated amortisation and are amortised over their useful lives on a
straight-line basis.
* Recognition and potential remeasurements of disposal groups under IFRS 5
'Non Current Assets Held For Sale and Discontinued Operations'.
The effect of these adjustments on the income statements, balance sheets and
equity of the Group are set out in the notes to the preliminary announcement.
Discontinued Operations
The results for Critical Care Division sold in January 2007 together with the
gain on disposal have been disclosed as 'discontinued operations' in the income
statement for both 2006 and 2007. Discontinued operations also include results
relating to GeneSensor which was discontinued in 2007.
A net profit on disposal of the Critical Care Division (CCD) of £17.6 million
was recorded in the year, representing a significant return on the original
investment. The total net income after tax attributable to CCD including the
trading result for January 2007 was £17.3 million.
The loss attributable to the discontinued GeneSensor operation of £1.2 million
included an impairment of assets amounting to £1.1 million, principally
comprising the write off of goodwill of £1.0 million.
Continuing operations
The loss before taxation in the year from continuing operations in the year
decreased by 3% to £12,031,000 (2006 - £12,340,000). Gross profit (revenue less
changes in inventories) increased to £76,000 (2006 - £17,000) on higher sales
revenues of £169,000 (2006 - £49,000); it is too early in the commercialisation
stage for the business to provide any meaningful analysis of the reported gross
profit margin of 45%.
The operating loss for the year increased by 2% to £13,048,000 (2006 -
£12,751,000). With the development of the XT-8 completed in 2007, our instrument
development costs were lower than in 2006, although this cost reduction was
offset by an increase in assay development activity to ensure that we have a
good progression of new tests in the pipeline for the XT-8. We anticipate that
assay development costs will continue at this new higher level in 2008 and we
plan to increase our sales and marketing resource as we launch the XT-8.
At 31 December 2007, cash and cash equivalents were £13.9 million and were
boosted during the year by the proceeds from the sale of the Critical Care
Division. Approximately 90% of the Group's cash is held in U.S. dollars, a
proportion which broadly matches the likely currency funding requirements for
the business.
Cash flow
The increase in cash and cash equivalents in the year before the effect of
foreign exchange rate changes was £7,184,000 compared to a total Group profit
for the year of £3,984,000. The principle reasons for the difference are the
cash received from IDEXX for the sale of net assets plus cumulative exchange
reserve of the Critical Care Division, which amounted to £3,775,000 at 31
December 2006.
Redemption of warrants
On 19 March 2007, 7,811,428 warrants held by Motorola were repurchased and
subsequently cancelled by Osmetech at a price of six pence per warrant for a
total of £468,686 before costs of £12,159. The warrants were issued to Motorola
in consideration for Osmetech's acquisition of Clinical Micro Sensors Inc. in
2005. The warrants entitled Motorola to subscribe for up to 7,811,428 ordinary
shares of 0.1 pence each in the capital of Osmetech (representing 3.85% of the
current issued share capital) at a price of 17.5 pence per share at any time up
to 26 July 2010.
Outlook
In addition to securing FDA clearance of the eSensor 4800 DNA Detection
instrument, we have been successful in recruiting new customers thereby
establishing market acceptance of our technology. These are key milestones that
have been met and the principal focus for the business is now execution.
Sales revenues have been increasing as the number of instrument placements has
grown. Moving into 2008 we also expect to see an increase in test usage per
instrument from existing customers looking to promote the Cystic Fibrosis test
within their local communities to increase the revenues and profitability of
their laboratories through established and attractive reimbursement rates.
We plan to build on this success by launching our second generation eSensor XT-8
system upon FDA clearance for our Warfarin sensitivity test expected shortly. By
the end of 2008 we expect to have expanded our test menu to include two
additional FDA cleared tests creating the basis to produce annual sales revenues
in excess of $100,000 per instrument. We will also be preparing to increase our
installed base of instruments further with international launch through a
network of distributors.
We are currently in discussions or negotiations with a number of potential
partners attracted by the broad appeal of our XT-8 instrument platform and
electrochemical detection technology. We anticipate that this will result in new
genetic and pharmacogenomic tests to expand our test menu as well as
opportunities to develop a system that can process results directly from the
patient sample, without the need for sample preparation to significantly improve
the processing time of our tests.
We believe that market success is likely to be driven by a combination of
strength in technology, intellectual property, instrumentation, installed base
and assay menu. Given these factors, the Board considers that Osmetech is
building a strong position in this increasingly important market providing
considerable scope to create further value in the business.
James White
Chief Executive Officer
28 March 2008
Consolidated income statement for the year ended 31 December 2007
(unaudited)
(unaudited)
Note Year ended
Year ended
31 December 2007
31 December 2006
Continuing operations £
£
Revenue 169,273
48,635
Changes in inventories of finished goods and (92,818)
(31,350)
work in progress
Employee benefits (5,607,046)
(4,633,119)
Research and development costs (2,595,179)
(3,034,323)
Depreciation and amortisation (589,611)
(363,184)
Share compensation charges (614,773)
(781,296)
Impairment losses (1,057,832)
-
Other expenses (2,660,414)
(3,956,523)
(13,217,673)
(12,799,795)
Operating loss 3 (13,048,400)
(12,751,160)
Interest on bank balances and term deposits 864,143
284,582
Loss before taxation (12,184,257)
(12,466,578)
Taxation 153,633
126,211
Loss for the year from continuing operations (12,030,624)
(12,340,367)
Discontinued operations
Profit / (loss) for the year from
discontinued operations net of tax 4 16,014,425
(937,161)
Profit / (loss) for the year 3,983,801
(13,277,528)
Earnings per share: 5
From continuing and discontinued operations
Basic and diluted 1.96p
(8.02p)
From continuing operations
Basic and diluted (5.93p)
(7.46p)
Consolidated statement of total recognised income and expense for the 12 months
ended 31 December 2007
(unaudited)
(unaudited)
Year ended
Year ended
31 December 2007
31 December 2006
£
£
Exchange differences on translation of foreign operations (383,633)
(903,185)
Realisation of merger reserve (1,885,533)
-
Transfers:
Cumulative translation adjustment on disposal of
discontinued operations 713,901
-
(1,171,632)
(903,185)
Profit / (loss) for the year 3,983,801
(13,277,528)
Total recognised income and expense for the year 2,812,169
(14,180,713)
Consolidated balance sheet at 31 December 2007
(unaudited)
(unaudited)
2007
2006
£ £
£ £
Assets
Non current assets
Goodwill -
977,095
Other intangible assets 1,162,747
933,947
Property, plant and equipment 976,220
878,017
Current assets 2,138,967
2,789,059
Inventories 445,806 397,633
Trade and other receivables 367,328 293,920
Current tax assets 465,220 126,146
Cash and cash equivalents 13,910,710 7,089,106
15,189,064 7,906,805
Assets held for sale - 4,597,628
15,189,064
12,504,433
Total assets 17,328,031
15,293,492
Liabilities
Current liabilities
Trade and other payables (1,273,428) (2,068,811)
Current tax liabilities (8,478) (9,524)
(1,281,906)
(2,078,335)
Liabilities directly associated with assets
classified as held for sale -
(1,536,460)
(1,281,906)
(3,614,795)
Non-current liabilities
Provisions (171,095)
(173,280)
Total liabilities (1,453,001)
(3,788,075)
Net assets 15,875,030
11,505,417
Equity
Called up share capital 7,028,892
7,028,640
Share premium account 51,756,252
51,703,745
Merger reserve -
1,885,533
Other reserves 2,138,806
2,136,021
Cumulative exchange reserve (572,917)
(903,185)
Accumulated deficit (44,476,003)
(50,345,337)
Total equity 15,875,030
11,505,417
Cash flow statements for the 12 months ended 31 December 2007
(unaudited)
(unaudited)
2007
2006
£
£
Net cash used in operating activities (14,121,176)
(10,770,118)
Net cash generated from / (used in) investing activities 21,864,855
(1,007,742)
Net cash (used in)/ generated from financing activities (559,228)
12,120,676
Net increase / (decrease) in cash and cash equivalents 7,184,451
342,816
Cash and cash equivalents at beginning of year 7,089,106
7,207,177
Effect of foreign exchange rate changes (362,847)
(460,887)
Cash and cash equivalents at end of year 13,910,710
7,089,106
Notes to the Cash Flow Statements
Reconciliation of operating loss to net cash outflow from operating activities
(unaudited)
(unaudited)
2007
2006
£
£
Profit for the year 3,983,801
(13,277,528)
Adjustments for:
Depreciation of property, plant and equipment 479,611
597,943
Amortisation of other intangible assets 110,000
12,684
Loss on disposal of property, plant and equipment 18,779
8,064
Impairment losses 1,057,832
-
Share compensation charge 614,772
781,296
Interest on bank balances and term deposits (864,143)
(284,582)
Income tax (153,633)
(126,211)
Gain on disposal of discontinued operations net of tax (17,648,646)
-
Decrease in provisions 2,185
153,280
Operating cash outflow before movements in working capital (12,399,442)
(12,135,054)
Decrease / (increase) in inventories 64,032
(738,290)
Decrease in receivables 134,927
499,828
(Decrease) / increase in payables (1,741,293)
1,219,305
Cash used in operations (13,941,776)
(11,115,211)
Income taxes (paid)/received (179,400)
384,093
Net cash used in operating activities (14,121,176)
(10,770,118)
Net cash used in continuing operations (12,611,140)
(10,430,752)
Net cash used in discontinued operations (1,510,036)
(339,366)
Net cash used in operating activities (14,121,176)
(10,770,118)
Analysis of cash flows - Gross cash flows
(unaudited)
(unaudited)
2007
2006
£
£
Net cash generated from / (used in) investing activities
Interest received 890,497
277,996
Purchases of property, plant and equipment (658,577)
(488,662)
Purchases of other intangible assets (388,750)
(257,580)
Net cash used in investing activities (continuing operations) (156,830)
(468,246)
Net cash generated from / (used in) investing activities
(discontinued operations) 22,021,685
(539,496)
21,864,855
(1,007,742)
Net cash (used in) / generated from financing activities
Proceeds on issues of shares 52,759
12,120,676
Cash payments to redeem share warrants (480,844)
-
Cash settlements of repurchased share options (131,143)
-
Net cash (used in) / generated from financing activities
(continuing operations) (559,228)
12,120,676
Net cash generated from financing activities (discontinued
operations) -
-
(559,228)
12,120,676
Notes
1 Results
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 December 2007 or 2006. The
financial information for the year ended 31 December 2006 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was
unqualified, did not draw attention to any matters by way of emphasis without
qualifying their report and did not contain a statement under s498(2) or (3)
Companies Act 2006.
The audit of the statutory accounts for the year ended 31 December 2007 is not
yet complete. These accounts will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and will
be delivered to the Registrar of Companies following the company's annual
general meeting. The auditors are yet to sign their report on the statutory
accounts for the year ended 31 December 2007 but have indicated that their
auditor's report will be modified by the inclusion of an added emphasis
paragraph which highlights the existence of a material uncertainty that casts
significant doubt on the company's and Group's ability to continue as a going
concern. Further information is disclosed in note 2.
2 Going concern
During the year ended 31 December 2007 the Group incurred a loss before tax of
£12.2 million from continuing operations. The Group's directors have prepared
projected cash flow information for the period ending 12 months from the date of
approval of these accounts.
During the year, the Group has completed the development of the second
generation e-Sensor XT-8 electrochemical DNA analysis system. The system, along
with the Warfarin sensitivity test, is currently under review by the FDA.
Following the anticipated FDA clearance the Group expects to launch the product
in the first half of 2008. The directors intend to commercialise the product
throughout the remainder of 2008 and into 2009 which will involve continued
investment in Group's infrastructure and product pipeline. The forecasts
prepared by the directors indicate that further funding will be required in 2009
in order to supplement revenues from the launch of XT-8 and fully enact their
commercialisation plans to optimise value from the Group's products.
The Directors have a reasonable expectation, given these recent achievements and
the current strength of the Group's operations, that the Group will be able to
secure sufficient funding to enable it to properly exploit the commercialisation
opportunities for the e-Sensor XT-8, meet its liabilities as they fall due for
the foreseeable future and are currently evaluating a number of alternatives in
order to achieve this.
However, the absence of agreed funding as at the date of this report indicates
the existence of a material uncertainty which may cast significant doubt about
the Group's ability to continue as a going concern and therefore it may be
unable to realise its assets and discharge its liabilities in the normal course
of business. This disclosure is given in accordance with International Standards
on Auditing (ISA) 570.
3 Operating loss
The following items are charged / (credited) in arriving at the Group's
operating loss from continuing operations and the operating income from
discontinued operations.
2007
2006
Group Continuing Discontinued Group
Continuing Discontinued
Activities Activities
Activities Activities
£ £ £ £
£
Amortisation of other intangible assets 110,000 110,000 - 12,686
8,456 4,230
Depreciation 479,611 479,611 - 597,943
354,728 243,215
Fees payable to the auditors for the
statutory audit of the annual accounts
- Osmetech plc 40,921 40,921 - 39,000
39,000 -
- other group companies 24,479 24,479 - 42,663
21,927 20,736
Fees payable to the auditors for other
services to the Group:
- Tax services 53,695 53,695 - 41,624
41,624 -
- Other 47,483 42,322 5,161 -
-
Operating lease rentals - plant and
machinery 27,152 25,591 1,561 31,966
12,735 19,231
Impairment of goodwill, property plant
and equipment and other intangible
assets 1,057,832 - 1,057,832 -
- -
Research and development 2,748,272 2,595,179 153,093 3,476,110
3,034,323 441,787
Loss on disposal of property, plant and
equipment 18,779 18,779 - 8,064
- 8,064
Staff costs 6,262,399 5,607,046 655,353 9,360,890
4,633,119 4,727,771
Net foreign exchange losses 67,815 67,815 - 523,442
523,442 -
Cost of inventories recognised as 668,618 92,818 575,800 6,979,582
31,350 6,948,232
expense
4 Discontinued operations
Critical Care Division
In December 2006 the Group entered into a sale and purchase agreement to dispose
of the Critical Care Division. The disposal was effected in order to generate
cash flow for the expansion of the Group's other businesses. The disposal was
completed on 31 January 2007 on which date control of the business passed to the
acquirer. The fair value of the consideration received was £22,021,685
($43,294,632) which comprised cash consideration of £23,071,211 ($45,358,000),
less costs of £1,049,526 ($2,063,368).
GeneSensor
During the year the development of the GeneSensor instrument platform was
discontinued with the Group's resources fully focused on the eSensor technology
and XT-8 platform. The GeneSensor technology was obtained as part of the
acquisition of Molecular Sensing plc in 2004. Due to the decision to abandon
the GeneSensor business, the Group has revised its cash flow forecasts for this
cash generating unit ("CGU"). The non-current assets relating to GeneSensor CGU
were therefore reduced to their recoverable amount, being their value in use, of
£NIL, with the related impairment charge being reported within discontinued
operations. The impairment losses of £1,057,832 (2006: £NIL) included the write
down of goodwill arising on the acquisition of Molecular Sensing business
amounting to £977,095 (2006: £NIL), the impairment of the property plant and
equipment amounting to £44,534 (2006: £NIL) and the impairment of other
intangible assets amounting to £36,203 (2006: £NIL). The impairment losses
recorded in the Company amounted to £1,240,942 which included the write down of
the investment £1,159,395 (2006: £nil), the impairment of the Property, Plant
and Equipment £45,344 (2006: £NIL) and other intangible assets £36,203 (2006:
£NIL). All of these impairments have been reported in the loss attributable to
the GeneSensor discontinued operation.
The results of the discontinued operations which have been included in the
consolidated income statement, were as follows:
Critical Care
Division
Year ended 31 December 2007 GeneSensor
Total
£
£
£
Revenue 761,588 -
761,588
Expenses (1,150,052) (187,925)
(1,337,977)
Impairment losses - (1,057,832)
(1,057,832)
Loss from operations (388,464) (1,245,757)
(1,634,221)
Profit on disposal of discontinued operations 18,529,383 -
18,529,383
Attributable tax expense (166,836) -
(166,836)
Realisation of cumulative translation adjustment (713,901) -
(713,901)
Net profit attributable to discontinued operations net
of tax 17,260,182 (1,245,757)
16,014,425
Year ended 31 December 2006 Critical Care
Division GeneSensor
Total
£
£ £
Revenue 10,522,461 -
10,522,461
Expenses (11,102,469) (357,153)
(11,459,622)
Net loss attributable to discontinued operations (580,008) (357,153)
(937,161)
There is no tax income or expense in 2007 and 2006 in respect of the trading
loss from operations attributable to the discontinued operations.
The net assets of the Critical Care Division at the date of disposal and at 31
December 2006 were as follows:
31 January
31 December
2007
2006
£
£
Goodwill 271,362
271,362
Property, plant and equipment 862,402
862,402
Inventories 1,751,455
1,863,660
Trade and other receivables 1,365,515
1,600,204
Total assets classified as held for sale 4,250,734
4,597,628
Trade and other payables (591,596)
(1,536,460)
Total liabilities directly associated with assets classified as held for
sale (591,596)
(1,536,460)
Net assets of the disposal group 3,659,138
3,061,168
5 Earnings per share
Year
Year
ended 31
ended 31
December
December
2007
2006
£
£
Profit / (loss) for the year attributable to equity holders of the company 3,983,801
(13,277,528)
- continuing and discontinuing operations
Adjustment for profit / (loss) from discontinued operations 16,014,425
(937,161)
Loss for the year attributable to equity holders of the company -
continuing operations (12,030,624)
(12,340,367)
2007
2006
Pence
Pence
Earnings per share from continuing and discontinued operations
Basic and diluted 1.96
(8.02)
Earning per share from continuing operations
Basic and diluted (5.93)
(7.46)
Earnings per share from discontinued operations
Basic and diluted 7.89
(0.57)
Basic earnings per share is calculated by dividing profit or loss for the
financial year attributable to equity holders by 202,934,689 (2006:
165,457,028), being the weighted average number of shares in issue during the
year.
As the Group reported a loss for the year from continuing operations, all
potential shares relating to share options are viewed as antidilutive. The
number of potential dilutive ordinary shares as at 31 December 2007 was
30,498,838 (2006: 30,004,873).
6 Explanation of the transition to IFRS
This is the first year that the Group has presented its financial statements
under IFRS. The following disclosures are required in the year of transition.
The last financial statements under UK GAAP were the accounts for the year ended
31 December 2006 and the date of transition to IFRS was therefore 1 January
2006.
The major areas of impact of IFRS are summarised below:
* Goodwill is not amortised under IFRS, but rather subject to annual
impairment reviews. This has decreased administrative expenses for the year
from continuing operations for the year ending 31 December 2006 by £111,000.
The net profit from discontinued operations increased by £22,000 as a result
of this IFRS adjustment. The increase in goodwill before reclassification
of the amount in respect of the disposal group was £133,000. The opening
equity reconciliation as at the date of transition is not impacted since the
Directors have elected to select 1 January 2006 as the date of adoption of
IFRS 3 as explained further below. The goodwill was not retranslated at the
transition date.
* Recognition of disposal groups under IFRS 5 'Non Current Assets Held For
Sale and Discontinued Operations'. The impact is shown in the balance sheet
as at 31 December 2006 as the reclassification of certain assets and
liabilities to assets held for sale and liabilities held for sale. The
overall impact on net assets is nil. There is no impact on the opening
balance sheet as at 1 January 2006 as the classification criteria were not
met until 31 December 2006.
* Reclassification of short term amounts held on deposit with a maturity of
less than three months as cash and cash equivalents, which we previously
included in current asset investments under UK GAAP. This has increased
cash and cash equivalents at 1 January 2006 by £6,300,000 and decreased
current asset investments by £6,300,000. As at 31 December 2006, the
impact of this adjustment is an increase in cash and cash equivalents of
£5,686,000 and a reduction in current asset investments of £5,686,000.
* Reclassification of current tax assets to a separate component of current
assets from trade and other receivables and the reclassification of
current tax liabilities to a separate component of current liabilities from
trade and other payables.
Prior year restatements
The Group has revisited its accounting treatment in respect of certain employee
expenses incurred relating to the disposal of the Critical Care Division.
Subsequent to the issuance of its UK GAAP financial statements for the year
ended 31 December 2006 the Group has determined that the costs should be
expensed over the period from when the decision was made until the date of
disposal rather than recognising all the costs upon disposal.
The Group has reclassified the accrued costs in relation to dilapidations
commitments to provisions as the directors believe this provides a better
presentation of the nature and timing of the obligation.
Explanation of the adjustments to conform to IFRS
Impact on the cash flow statement
Under IAS 7 'Cash Flow Statements', movements on cash and cash equivalents are
reconciled. Cash and cash equivalents are defined as amounts which are readily
convertible to known amounts of cash with insignificant risk of changes in
value. Management has defined this as amounts with a maturity of less than three
months. Under UK GAAP the cash flow statement is reconciled cash only. The
change in presentation of the cash flow statement under IAS 7 makes no
difference to the cash and cash equivalents generated by the Group. There is
also no impact on the cash flow statements or notes to the statement.
IFRS transitional arrangements
In accordance with International Financial Reporting Standard 1 'First-time
Adoption of International Financial Reporting Standards' (IFRS 1), the Group's
accounting policies under IFRS have been applied retrospectively at the date of
transition, with the exception of a number of permitted exemptions. These are
summarised below:
* The selection of 1 January 2006 as the date of adoption of IFRS 3 Business
Combinations and, as a consequence, IAS 21 'The Effects of Changes in
Foreign Exchange Rates', IAS 38 'Intangible Assets' and IAS 36 'Impairment
of Assets'; and
* The setting to zero of all cumulative translation differences at
1 January 2006.
The permitted exemption in respect of IFRS 3 that a first-time adopter may elect
not to apply IFRS 3 'Business Combinations' retrospectively to past business
combinations was adopted by the Group in respect of all business combinations.
This resulted in the goodwill recognised on acquisition of the CCD division and
the goodwill recognised on acquisition of the GeneSensor molecular sensing
business was frozen at the amount previously recognised under UK GAAP at the
point of transition.
The permitted exemption under IAS 21 that a first-time adopter need not apply
IAS 21 retrospectively to fair value adjustments and goodwill arising in
business combinations that occurred before the date of transition to IFRSs.
Therefore, goodwill arising on the CCD division are deemed to be non-monetary
foreign currency items, which are reported using the exchange rate applied under
previous GAAP.
Reconciliation of equity at 1 January 2006 (date of transition to IFRS)
Group Reclassification Effect
of Restatement of
liabilities of Restated transition
to disposal UK to
UK GAAP provision costs GAAP IFRS
IFRS
£ £ £
£ £
£
Goodwill 1,308,701 - - 1,308,701 -
1,308,701
Other intangible 754,248 - - 754,248 -
754,248
assets
Property. Plant 1,451,766 - - 1,451,766 -
1,451,766
and equipment
Total non-current 3,514,715 - - 3,514,715 -
3,514,715
assets
Inventories 1,719,302 - - 1,719,302 -
1,719,302
Trade and other 3,019,365 - - 3,019,365 -
3,019,365
receivables
Investments 6,300,000 - - 6,300,000 (6,300,000)
-
Cash and cash 907,177 - - 907,177 6,300,000
7,207,177
equivalents
Total current 11,945,844 - - 11,945,844 -
11,945,844
assets
Total assets 15,460,559 - - 15,460,559 -
15,460,559
Trade and other (2,676,401) 20,000 - (2,656,401) -
(2,656,401)
payables
Provisions - (20,000) - (20,000)
(20,000)
Total liabilities (2,676,401) - (2,676,401) -
(2,676,401)
-
Total assets less 12,784,158 - 12,784,158 -
12,784,158
total liabilities
-
Issued capital 6,957,640 - - 6,957,640 -
6,957,640
Share premium 39,654,069 - - 39,654,069 -
39,654,069
account
Merger reserve 1,885,533 - - 1,885,533 -
1,885,533
Other reserve 1,354,725 - 1,354,725 -
1,354,725
Accumulated (37,067,809) - (37,067,809) -
(37,067,809)
deficit
Total Equity 12,784,158 - - 12,784,158 -
12,784,158
Reconciliation of equity at 31 December 2006
Group Reclassification Effect
of Restatement of
liabilities of Restated transition
to disposal UK to
UK GAAP provision costs GAAP IFRS
IFRS
£ £ £ £
£ £
Goodwill 1,115,072 - - 1,115,072 (137,977)
977,095
Other intangible 933,947 - - 933,947 -
933,947
assets
Property. Plant 1,740,419 - - 1,740,419 (862,402)
878,017
and equipment
Total non-current 3,789,438 - - 3,789,438 (1,000,378)
2,789,059
assets
Inventories 2,261,293 - - 2,261,293 (1,863,660)
397,633
Trade and other 2,020,270 - - 2,020,270 (1,726,350)
293,920
receivables
Current tax - - - - 126,146
126,146
assets
Investments 5,686,021 - - 5,686,021 (5,686,021)
-
Cash and cash 1,403,085 - - 1,403,085 5,686,021
7,089,106
equivalents
Total current 11,370,669 - - 11,370,669 (3,463,864)
7,906,805
assets
Assets held for - - - - 4,597,628
4,597,628
sale
Total assets 15,160,107 15,160,107 133,385
15,293,492
Trade and other (2,328,575) 173,280 (1,459,500) (3,614,795) 799,484
(2,815,311)
payables
Current tax - - - - (9,524)
(9,524)
liabilities
Provisions - (173,280) - (173,280) -
(173,280)
Total liabilities (2,328,575) - (1,459,500) (3,788,075) 789,960
(2,998,115)
Liabilities held - - - - (789,960)
(789,960)
for sale
Total assets less 12,831,532 - (1,459,500) 11,372,032 133,385
11,505,417
total liabilities
Issued capital 7,028,640 - - 7,028,640 -
7,028,640
Share premium 51,703,745 - - 51,703,745 -
51,703,745
account
Merger reserve 1,885,533 - - 1,885,533 -
1,885,533
Other reserve 2,136,021 - - 2,136,021 -
2,136,021
Cumulative - - - - (903,185)
(903,185)
exchange reserve
Accumulated (49,922,407) - (1,459,500) (51,381,907) 1,036,570
(50,345,337)
deficit
Total equity 12,831,532 - (1,459,500) 11,372,032 133,385
11,505,417
Reconciliation of consolidated loss for the year ended 31 December 2006 for
Osmetech plc and subsidiaries
Effect
Restatement of
of Restated transition
Disposal UK to
UK GAAP Costs GAAP IFRS
IFRS
£ £ £ £
£
Revenue 48,635 - 48,635 -
48,635
Changes in (31,350) - (31,350) -
(31,350)
inventories of
finished goods and
work in progress
Administrative (6,525,032) (713,000) (7,238,032) 130,626
(7,107,406)
expenses
Depreciation and (610,627) - (610,627) -
(610,627)
amortisation
Research and (4,767,767) - (4,767,767) 337,797
(4,429,970)
development costs
Share compensation (620,442) - (620,442) -
(620,442)
charges
(12,491,518) (713,000) (13,268,218) 468,423
(12,799,795)
Operating loss (12,506,583) (713,000) (13,219,583) 468,423
(12,751,160)
Interest on bank 284,582 - 284,582 -
284,582
balances and term
deposits
Loss before taxation (12,222,001) (713,000) (12,935,001) 468,423
(12,466,578)
Taxation 126,211 - 126,211 -
126,211
Profit / (loss) for (12,095,790) (713,000) (12,808,790) 468,423
(12,340,367)
the year from
continuing
operations
Loss for the year 142,872 (746,500) (603,628) (333,533)
(937,161)
from discontinued
operations
Loss for the year (11,952,918) (1,459,500) (13,412,418) 134,890
(13,277,528)
7 Shareholders' equity
Share Cumulative
Group Share premium Merger Other exchange
Accumulated
capital account reserve reserve reserve
deficit Total
£ £ £ £ £
£ £
At 1 January 2006 6,957,640 39,654,069 1,885,533 1,354,725 -
(37,067,809) 12,784,158
Profit for the - - - - -
(13,277,528) (13,277,528)
year
New share capital 71,000 12,709,000 - - -
- 12,780,000
issued
Share issue costs - (659,324) - - -
- (659,324)
Credit to equity - - - 781,296 -
- 781,296
for equity-
settled
share-based
payments
Exchange - - - - (903,185)
- (903,185)
adjustments
At 31 December 7,028,640 51,703,745 1,885,533 2,136,021 (903,185)
(50,345,337) 11,505,417
2006
Profit for the - - - - -
3,983,801 3,983,801
year
New share capital 252 52,507 - - -
- 52,759
issued
Credit to equity - - - 614,773 -
- 614,773
for equity-
settled
share-based
payments
Repurchased - - - (131,143) -
- (131,143)
equity options
Repurchased - - - (480,845) -
- (480,845)
warrants
Exchange - - - - (383,633)
- (383,633)
adjustments
Exchange - - - - 713,901
- 713,901
adjustments taken
to income
statement for
discontinued
operations
Transfer of - - (1,885,533) - -
1,855,533 -
merger reserve to
income statement
At 31 December 7,028,892 51,756,252 - 2,138,806 (572,917)
(44,476,003) 15,875,030
2007
This information is provided by RNS
The company news service from the London Stock Exchange
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