www.allergytherapeutics.com
AllergyTherapeutics plc
Annual Report
& Accounts 2010 02 AllergyTherapeutics Annual Report 2010
Allergy
Therapeutics
is a European-
based specialty
pharmaceutical
company focused
upon the treatment
and prevention
of allergy. 03 www.allergytherapeutics.com
Our Business
Highlights 04
Our Strategy 06
Chairman’s Statement 08
CEO’s Review 12
Our Markets 16
Our Products 20
Research and Development 24
Messages from the Board 28
Financial Review 34
Financial Statements
Directors’ Report 38
Directors’ Remuneration Report 47
Nominations Committee Report 50
Independent Auditor’s Report 51
to the Members of Allergy
Therapeutics plc (Group)
Consolidated Income Statement 52
Consolidated Statement of 52
Comprehensive Income
Consolidated Balance Sheet 53
Consolidated Statement 54
of Changes in Equity
Consolidated Cashflow Statement 56
Notes to the Financial Statements 57
Independent Auditor’s Report 91
to the Members of Allergy
Therapeutics plc (Company)
Company Balance Sheet 92
Notes to the Company 93
Balance Sheet
Shareholder Information 98
Contents 04 AllergyTherapeutics Annual Report 2010 05 Our Business – Highlights www.allergytherapeutics.com
Highlights
• Maiden operating profit of
£1.5 million (2009 restated:
loss £5.1 million)
• Cash generated by operations
of £1.1 million (2009: used
£0.1 million)
• Pollinex Quattro named-patient
sales increased by 16% to
£21.1 million
• Revenues increased by 8% to
£40.8 million (2009: £37.8 million)
• Revenues increased by 5% on
a constant currency basis
• Gross profit increased by 22%
to £29.6 million (2009: £24.2 million)
• Profit after tax increases to
£0.6 million (2009: loss £11.8 million)
• £11.7 million debt outstanding
(2009: £30.9 million)
• Net debt reduced by £23.7 million
to £7.2 million (2009: £30.9 million)
• Acquisition of Teomed AG on
1 July 2010
Highlights 06 AllergyTherapeutics Annual Report 2010
Our Strategy
• Continue to build our European
commercial infrastructure
• Continue developing improved
allergy vaccines with novel
adjuvants, improved dosing
characteristics and hence patient
compliance and new delivery
formulations generating a
patent protected, registered
product portfolio
• Broaden the portfolio through the
in-licensing and co-development
of selected products
• Identify strong commercial
partners for non-European markets
“To create a sustainable,
fast-growing and profitable
European pharmaceutical
business with a substantial
franchise in the allergy sector
by developing innovative,
patented, registered therapies
for both the treatment and
prevention of allergy-related
conditions. ” 07 Our Business – Our Strategy www.allergytherapeutics.com
Our Strategy 08 AllergyTherapeutics Annual Report 2010 Chairman’s
Statement
“The last twelve months has
seen AllergyTherapeutics
pass a significant milestone.
The Group is in a strong
financial position, now profit-
making and with a transformed
balance sheet. Operationally
the Group is stronger, not only
in the targeted sales and marketing
areas but also across the board in
manufacturing and regulatory
activities. I am proud of all that
we have achieved and that our
people have not only risen to their
many challenges but identified
the opportunities contained
within them. ”
Chairman’s
Statement
09 Our Business – Chairman’s Statement www.allergytherapeutics.com 10 AllergyTherapeutics Annual Report 2010 Our Business – Chairman’s Statement www.allergytherapeutics.com
I am very pleased to report that in the
financial year ended 30 June 2010,
AllergyTherapeutics has delivered against
its strategy: for the first time as a public
company it is now profitable, both at
the operating and profit after tax levels.
This has been achieved by investing in our
European sales and marketing operations
whilst improving the efficiency of the cost
base. Immediately after the year-end the
European commercial infrastructure was
further strengthened by the acquisition
ofTeomed AG in Switzerland.
It was vital for the Group’s success that
it should achieve operating profitability.
A £6.6m turnaround from an operating
loss of £5.1m in the previous year to
an operating profit this year of £1.5m
is a tremendous achievement. Allergy
Therapeutics is now one of few in its
life sciences peer-group to be able to
claim to be a profitable company. It is a
milestone and I would like to thank each
and every one of our employees for their
efforts in helping to make this happen.
It also merits highlighting that our
manufacturing and supply operations
delivered considerable cost reductions
and efficiencies whilst maintaining its
excellent service to our customers with
continued compliance and quality.
Investment continues in improved
methods and equipment both to reduce
risk and further improve future margins.
On 1 July 2010 we announced the
acquisition ofTeomed AG, a Swiss
speciality distribution company.
Teomed is the first acquisition following
the increased emphasis in the Group’s
strategy towards strengthening its
European market position and will
provide additional revenue growth and
an opportunity to improve earnings.
Chairman’s Statement
”AllergyTherapeutics is now one of
few in its life sciences peer-group to be
able to claim to be a profitable company. ” 11 AllergyTherapeutics Annual Report 2010 Our Business – Chairman’s Statement www.allergytherapeutics.com
The Group raised £25.7m in the year
from its shareholders. £20.3m was
raised from shareholders in July 2009,
with a cornerstone investment from
theWeinstein family, whose interests in
pharmaceuticals span over 20 countries
from their South American base. A further
£3.4m was received from the exercise of
warrants by theWeinstein family and a
further £2.0m fundraising in March.
We thank all our shareholders, new and old,
for their support.The refinancing in July
2009 enabled the Group to make a £9.4m
repayment of debt to RBS and resulted
in a revision of the loan facilities terms.
As a consequence of the financing there
were changes to the board. Keith Carter
agreed to step down as CEO in September
2009 to allow Manuel Llobet, a highly
experienced executive from theWeinstein
family pharmaceutical businesses, to take
over the role. AlejandroWeinstein joined
the board as non-executive director as the
senior representative of theWeinstein
family. As we progress during the next
year it is our aim to reduce the total size of
the board and appoint a new independent
non-executive director.
On the regulatory front, the submission
in March 2009 of Pollinex Quattro
Grass, our ultra-short course four
injection grass allergy vaccine, remains
under assessment by the Paul-Ehrlich
Institute in Germany. Marketing approval
is planned for Germany in early 2011
and subsequently elsewhere in Europe.
This will enable AllergyTherapeutics
to accelerate sales growth in its
current markets as well as entering
new European markets. Plans for the
submission of 10 further marketing
authorisations in Germany remain on
track to achieve the end of November
2010 deadline, ultimately strengthening
the Group’s position in its most
important market.
The last twelve months has seen Allergy
Therapeutics pass a significant milestone.
The Group is in a strong financial position,
now profit-making and with a transformed
balance sheet. Operationally the Group is
stronger, not only in the targeted sales and
marketing areas but also across the board
in manufacturing and regulatory activities.
I am proud of all that we have achieved
and that our people have not only risen to
their many challenges but identified the
opportunities contained within them.
Ignace Goethals
Chairman
17 September 2010 CEO’s Review
12 AllergyTherapeutics Annual Report 2010
“I am still as excited today by
the opportunities available to
AllergyTherapeutics as I was
the day I took over as CEO.
It is now a strong Group
operating in a dynamic market;
I believe that, thanks to a great
team, we will build on this
base and create significant
value for shareholders and
all stakeholders. ” CEO’s Review
13 Our Business – CEO’s Review www.allergytherapeutics.com 14 AllergyTherapeutics Annual Report 2010 Our Business – CEO’s Review www.allergytherapeutics.com
I have enjoyed my first year as CEO and
I am pleased that the Group is progressing
well and in line with its strategy. One of our
key ambitions for this year was for the Group
to make a profit and I am very pleased to
report that this has been achieved.
Operating profit for the year is £1.5m (2009:
loss £5.1m) and profit after tax for the year
is £0.6m (2009: loss £11.8m).
During the year, one of the key areas I
have focused on was sales and marketing,
with the aim of strengthening sales
performance in our markets.Total net sales
for the year are £40.8m, an increase over
the prior year by 8%; at a constant currency
the growth was 5%. In Germany, the Group’s
most important market, we have simplified
our portfolio in order to prepare the Group
for the new regulatory environment and,
despite the resulting reduction in the
number of products we offer, sales grew
by 5% at a constant currency.With the
restructuring of the sales and marketing
team now complete and an excellent
marketing campaign focusing on the
clinical benefits of Pollinex Quattro,
we are doing all of the right things to
improve sales in Germany further in the
future. Sales teams in other key markets
have also been reinforced and performance
in most markets has been good.
The Group has a broad product portfolio
that addresses the needs of the market:
injectable (both short and longer course),
oral and diagnostics.The flagship product
is Pollinex Quattro; an injectable short
course vaccine which requires only
4 injections over a period of 3 weeks.
Pollinex Quattro is currently sold across
a number of European countries on a
named patient basis. Completion of the
regulatory process outlined below will
open up new markets to Pollinex Quattro
and enable AllergyTherapeutics to
improve pricing and market share in
those countries where only named
patient sales are currently possible.
On the day after the year-end the Group
acquiredTeomed AG of Switzerland for
a consideration of CHF1.2m (£0.7m).
Teomed specialises in the field of allergy
and was the distributor for the Group’s
products and other companies’ products
in the Swiss market.Teomed was
established in 1989 and employs
12 people with an office in Zurich. In its
last full trading yearTeomed delivered
revenues of CHF3.1m (£1.9m) and made
a small operating profit. Following this
transaction AllergyTherapeutics will have
a direct sales and marketing presence
in 7 countries: Germany, Italy, Spain,
UK, Austria,The Netherlands and
Switzerland. The allergy vaccine market
in Switzerland is sophisticated and well
established, worth around€10-15 million
per annum.This is a great opportunity
to improve earnings and provides us
with an established infrastructure from
which to launch Pollinex Quattro in
the future.
The Group has also recently set up its
own operation in the Netherlands where
we expect to benefit not only from the
sales of our own products but also from
in-licensing complementary products
to those already in our portfolio.
Another significant focus for the Group
has been to improve its gross margin.
Naturally, increasing the top line helps
achieve this objective, but we have also
been engaged in improving our
manufacturing cost base.Through
improving efficiencies within the cost
base, focussing on the reduction of
waste and rationalising the portfolio,
the gross margin percent has improved
from 64% to 73%. In turn, improving
efficiency in the manufacturing plant
will release production capacity
permitting future growth without
adding resources.
CEO’s Review
“One of our key ambitions for this year
was for the Group to make a profit and
I am very pleased to report that this
has been achieved. ” 15 AllergyTherapeutics Annual Report 2010 Our Business – CEO’s Review www.allergytherapeutics.com
The year opened with the granting of two
key patents in Europe and Japan and then
later in the US for Pollinex Quattro but for
the majority of the year the R&D focus has
been on regulatory activities.TheTherapeutic
Allergen Regulation in Germany will change
the allergy vaccination sector and we have
made great progress to begin to meet the
challenge in the preparation of regulatory
dossiers for 10 products to be submitted in
November 2010. In Germany, the Pollinex
Quattro grass 0.5ml submission remains
under the review of the Paul-Ehrlich
Institute whilst further exciting data from
the G301 study emphatically confirms the
benefit of the product.The situation in the
US is still on hold although, following the
approval of GlaxoSmithKline plc’s (GSK)
Cervarix
®
(containing the same
monophosphoryl-lipid A (MPL)
®
adjuvant
as Pollinex Quattro), we have now
re-opened discussions with the Food and
Drug Administration (FDA).
Outlook
As a result of the new regulations in
Europe, a new global market of registered
allergy vaccine products is going to be
created. Immunotherapy is receiving
more attention and is the only segment of
the Allergic Rhinitis market that is expected
to show significant growth in the next few
years according to a recent Datamonitor
report.We are preparing the Group to
take advantage of this opportunity.
The first objective was to make the
Group profitable; this we have achieved.
Secondly, we have to strengthen our
position in Europe.This process is now
underway; restructuring of the German
operation is now complete, marketing
spend has been increased, a portfolio
strategy has been adopted and new market
operations have been set up in Switzerland
andThe Netherlands. Lastly we need to
prepare the Group to move into new
markets outside Europe and further
develop our portfolio of products.
We are very excited by the opportunities
we have in the dynamic marketplace,
we believe we can create value from it
and I am sure we will succeed thanks to
the great team we have.
The current economic climate may affect
certain markets: in reimbursed markets
there are pressures on authorities to lower
the cost of medicines for the state and
where products are not fully reimbursed
there is pressure on the patient’s pocket.
I am still as excited today by the
opportunities available to Allergy
Therapeutics as I was the day I took over
as CEO. It is now a strong Group operating
in a dynamic market; I believe that,
thanks to a great team, we will build on
this base and create significant value for
shareholders and all stakeholders.
Manuel Llobet
Chief Executive
17 September 2010 Our Markets
“The quality and quantity
of our efforts in sales and
marketing within our affiliates
has improved dramatically
and we expect to benefit
from this in the coming years. ”
16 AllergyTherapeutics Annual Report 2010 17 Our Business – Our Markets www.allergytherapeutics.com
Our Markets This year has seen change for our Group
with an expansion of our own sales
infrastructure in Europe and further
investment in our existing markets.
AllergyTherapeutics conducts commercial
operations in most of the major immuno-
therapy markets in the world.We have
a particularly strong presence in Europe
with our own operations in important
markets including Germany, Italy, Spain,
Austria and the United Kingdom;
and through a recent acquisition and
a new enterprise now have operations
in Switzerland and The Netherlands.
In markets where we do not have a direct
presence, we often make our products
available through partners.The most
important distributor markets for us are
Canada, Czech and Slovak Republics and
South Korea.This year, we have seen
growth in all distributor markets.
Our goal is to improve on this growth,
investing profit back into the business to
sustain and increase this growth in sales.
The quality and quantity of our efforts in
sales and marketing within our affiliates
has improved dramatically and we expect
to benefit from this in the coming years.
Germany
The most important market for the
Group, Germany is also the single largest
immunotherapy market in the world by
value with annual sales in this market
of over€300 million. Germany has been
a key focus for the Group this year and
improvements have been made in a
number of areas of the operation including
management structure, new marketing
material and employing a portfolio
approach to marketing the products.
The market continues to show strong
growth but the environment is challenging
due to the changes being brought about by
theTherapeutic Allergen Regulation by the
Paul-Ehrlich Institute (PEI), the Regulatory
Authority for biological products in
Germany.The introduction of this new
regulation signifies the beginning of
a fundamental change in the allergy
vaccine sector.This led during the year
to a rationalisation of the product
portfolio in Germany in anticipation
of the new regulations coming into effect.
Our Markets
18 AllergyTherapeutics Annual Report 2010 Our Business – Our Markets www.allergytherapeutics.com
Net Sales by Country
Germany – 75%
Italy – 8%
UK & Export Market – 8%
Spain – 5%
Austria – 2%
The Netherlands – 2%
Switzerland – <1% Italy
We estimate the total Italian immuno-
therapy market to be worth€55 million
in sales per year; although growth is
somewhat limited due to negative
economic conditions impacting patients
and their ability to pay for vaccines.
Italy is largely a sublingual market.
With a stronger organisation in place,
we believe there is a great opportunity
to continue to grow our business despite
the flat market performance.
Spain
Total market sales per year in Spain are
estimated to be€61 million with a mid
single digit growth in value during the
past year although growth in this market
has recently been negatively impacted by
the economic slowdown. It still remains
a very large market in terms of volume
with approximately 150,000 patients a
year estimated to receive immunotherapy.
Injectable immunotherapy products
continue as treatment of choice by
Spanish physicians.
United Kingdom
The United Kingdom, our home
market, is an important marketplace
and a potential area of future growth
for the Group, yet is one of our most
challenging markets. Whilst there is
limited use of allergy vaccines in this
market, this is a changing picture and
there has been an increased focus at
a government level with the release
of the secondWhite Paper and with the
recent reforms now being experienced
within the NHS.
We are working with several groups
who are actively seeking solutions
to the lack of existing allergy services
and it is envisaged that this will
become an improving picture in the
near future. Our business in the United
Kingdom has been growing quickly
in a complex market.There is a focus
on pharma-economics and this is a
significant benefit of Pollinex Quattro.
The short duration of treatment reduces
direct and indirect costs.This leads to
high rates of compliance and makes
for compelling pharmaeconomic
outcomes.
Austria
Austria is an established market with total
market sales of about€18 million per year
and our own operation is performing well
with double-digit growth.
The Netherlands
This represents a new opportunity for the
Group as we have set up our own operations
here.The total market size is close to
€50 million annual sales. Like other
European countries, new regulations
require that only registered products will
be able to be sold.This should be to our
advantage as we already have registrations
in this market for Pollinex products.
Switzerland
The allergy vaccine market in Switzerland
is sophisticated and well established,
worth around€10-15 million per annum.
Our recent acquisition ofTeomed AG
provides a great opportunity to improve
earnings and gives us an established
infrastructure from which to launch
Pollinex Quattro in the future.
19 AllergyTherapeutics Annual Report 2010 Our Business – Our Markets www.allergytherapeutics.com
”This year has seen change for our Group with an
expansion of our own sales infrastructure in Europe
and further investments in our existing markets. ” Our Products
“The Group sells a wide range of
allergy vaccines and diagnostics.
The main sales of the Group are
in allergy vaccines and we sell
both injectable vaccines and
sublingual vaccines. ”
20 AllergyTherapeutics Annual Report 2010 Our Products
21 Our Business – Our Products www.allergytherapeutics.com The Group sells a wide range of allergy
vaccines and diagnostics.The main sales of
the Group are in allergy vaccines and we
sell both injectable vaccines and sublingual
vaccines. Our vaccines and diagnostics
trade under certain brand names, however,
under each brand name is a product that is
produced in many different forms depending
upon the specific allergy needs of the
patient as determined by the doctor.
The majority of our sales are for the
treatment of pollen related allergies
particularly to allergies to grasses and trees.
According to the current opinion of expert
immunologists, IgE mediated allergies
(type one allergies) are due to
dysregulation of theT helper lymphocyte
(TH) cell.Whereas healthy people develop
tolerance to allergens, allergy sufferers
have aTH2-dominated immune response
with increased IgE and corresponding
clinical symptoms.This dysregulation of
the immune system can be counteracted
efficiently using specific immunotherapy
(SIT). By administering high doses of
allergen, the balance betweenTH1 and TH2
response to the allergen can be restored.
Since SIT was first carried out successfully
by Leonard Noon in 1911, it has become
established as the only therapy addressing
the cause of type one allergies.
Injectable vaccines form the largest
segment of our vaccines portfolio and
are comprised of one key product,
Pollinex Quattro, which is the largest and
the fastest growing product in our portfolio
and various other longer course products.
These other products trade under different
names in different markets and include
Pollinex,TA Mix top andVenomil.
Pollinex Quattro, launched in 1999, began
a transformation of immunotherapy by
introducing allergy vaccination with only
four injections per course.The short
treatment period is due to the use of
L tyrosine absorbed allergoids and the
innovative adjuvant, monophosphoryl-
lipid A (MPL). An adjuvant is a substance
which improves the immune response
to an antigen or allergen. MPL is derived
from a lipopolysaccharide (LPS) which is
obtained from the cell wall of Salmonella
Minnesota R595 using a process of
extraction, purification and detoxification.
Our Products
22 AllergyTherapeutics Annual Report 2010 Our Business – Our Products www.allergytherapeutics.com
”Pollinex Quattro, launched in 1999,
began a transformation of immunotherapy
by introducing allergy vaccination with
only four injections per course. ” 2008
33.8
2009
38.6
2010
42.0
2008
12.9
2009
18.2
2010
21.1
Pollinex Quatro Sales £m
HowWe’re Doing
Tyrosine Pollinex Grasses & Rye PollinexTrees Oralvac (sublingual)
Gross Sales £m
As a vaccine adjuvant, MPL has been
used for many years.Vaccines with
systems containing MPL have been
evaluated in various indications such
as cervical cancer and malaria at Glaxo-
SmithKline.Two vaccines with an adjuvant
system containing MPL include a hepatitis
B vaccine and an HPV vaccine to protect
against cervical cancer – Fendrix and
Cervarix respectively – have received
broad approval in Europe, the US, Japan
and Canada.These modern, successful
vaccines are already widely used.
The adjuvant effect of MPL in SIT has
been documented in numerous studies
and is seen in its essential role of
promoting the switch from aTH2-directed
immune response (with IgE induction)
to aTH1-directed immune response.
Our sublingual product is Oralvac.
Recently we relaunched this product
in a new and improved form as Oralvac
Compact. Oralvac Compact’s dosing
schedule allows for a more rapid and
simpler escalation of dosage making
treatment more convenient for patients
and doctors.The product launched in 2009
in Germany and is being launched into
other European markets.We expect that
this product will be very competitive
and attract interest in the sublingual
market at a time in which competitors
are launching new products.
23 AllergyTherapeutics Annual Report 2010 Our Business – Our Products www.allergytherapeutics.com Research and
Development
“Having submitted the MAA
(Marketing Authorisation
Application) for Pollinex Quattro
Grass 0.5ml last year, the Group
is on course now to submit
10 MAA’s during the next year. ”
24 AllergyTherapeutics Annual Report 2010 25 Our Business – Research and Development www.allergytherapeutics.com
Research and
Development This year, much of the R&D effort has
been focussed on regulatory activity.
Last year’s annual report mentioned the
introduction of theTherapeutic Allergen
Regulation by the Paul-Ehrlich Institute
(PEI), the Regulatory Authority for
biological products in Germany.
The introduction of this new regulation
signifies the beginning of a fundamental
change in the allergy vaccine sector and
a new phase in AllergyTherapeutics’
business.The regulation requires that
in Germany products to treat common
allergies (eg bee or wasp sting, grass
or tree pollen or house dust mite allergy)
will require licensing and lays out a
timeframe for a transition period for such
products currently in use on a named
patient basis to become approved.
To that end, the preparation of Marketing
Authorisation Applications (MAAs) for our
key products has been a major activity
throughout this year. A multidisciplinary
team was formed and, following a
commercial prioritisation of the appropriate
products in our portfolio, set about the
generation and collation of the required
data. Having submitted the MAA for
Pollinex Quattro Grass 0.5ml last year,
the Group is on course now to submit
10 more MAAs during the next year.
Finally regarding the Pollinex Quattro
Grass 0.5ml MAA submission made last
year, the Group is still closely tracking
progress of the review by the PEI but they
have not produced an update on the
assessment.
Further analyses of the G301 study were
presented at the European Academy of
Allergy Asthma and Immunology meeting
in London in June 2010.These have
allowed us to look at the data from
different angles including, for example,
‘Well days’ (the proportion of the season
where patients have minimal symptoms
and do not require relief medication) which
demonstrated a 78% relative benefit
(p=0.0066) of Pollinex Quattro.
Furthermore, the unique geography of G301
enabled a re-definition of ‘peak season’
by placebo score which demonstrated a
benefit in the combined symptom +
medication score of 19.4% and a benefit
in ‘Well subjects’ (patients with minimal
average symptom + medication score
during the peak season) of 105% relative
to placebo (p=0.0001).
26 AllergyTherapeutics Annual Report 2010 Our Business – Research and Development www.allergytherapeutics.com
Research and Development Pre-clinical
Japanese Cedar
Phase 1
Sublingual MPL
Phase 2
Trees
(US / Canada /
Europe)
Phase 3
Grasses (US /
Canada)
Ragweed (US /
Canada)
Registration
Grasses
(Europe)
Our Product Pipeline
”This year, much of the R&D effort has been
focussed on Regulatory activity. ”
27 AllergyTherapeutics Annual Report 2010 Our Business – Research and Development www.allergytherapeutics.com
Also on the regulatory front, during
the course of the year GSK’s cervical
cancer vaccine Cervarix
®
(which, like
Pollinex Quattro, also contains the
adjuvant MPL
®
) was approved in the
US (and Japan and Canada).This is
the first time that the US regulatory
authority, the FDA, has approved a
vaccine containing a new adjuvant.
Subsequent to this, we have re-opened
discussions with the FDA concerning
the lifting of the clinical hold on Pollinex
Quattro in the US and are providing them
with further information and evaluation.
We hope to be able to agree a way
forward for the conduct of further
safety and efficacy trials which would
stimulate further partnership discussions,
although it is not possible to predict the
outcome and the timing of this.
Finally, the Group has been granted three
key patents, two relating to Pollinex Quattro
in Japan and the US and the third relating
to vaccines involving the sub-lingual use
of MPL. AllergyTherapeutics will continue
to seek to extend and defend its intellectual
property. Messages from
the Board
28 AllergyTherapeutics Annual Report 2010 Messages
from the Board
29 Our Business – Board of Directors www.allergytherapeutics.com 30 AllergyTherapeutics Annual Report 2010 Our Business – Board of Directors www.allergytherapeutics.com
Ignace Goethals
Non-Executive Chairman (65)
Ignace has had a successful career in
the pharmaceutical industry, with Eli Lilly,
Squibb/Bristol Myers Squibb and
SmithKline Beecham rising to the highest
levels prior to retiring at the end of 1998
when he was Head ofWorld-wide Supply
Operations. His experience is exceptionally
broad, covering sales and marketing,
country and regional general management
positions, licensing and business
development, business unit management
(Biologicals and Animal Health) and
supply. Ignace has a degree in Applied
Economics from the University of Louvain
(Belgium) and an MBA from the University
of Chicago.
As Non-Executive Chairman, Ignace is
responsible for leadership of the Board
by ensuring Board effectiveness, good
corporate governance and effective
communication with shareholders.
Ignace sits on the Audit, Nomination
and Remuneration Committees.
Manuel Llobet
Chief Executive Officer (46)
Manuel Llobet joined the Company in
September 2009 following the successful
refinancing by AzureVentures Limited.
Prior to this appointment, Manuel was
the Principal Consultant for Biohealth LLC
and CEO of International Operations of the
Weinstein family’s group of companies.
Manuel was responsible for international
development of theWeinstein family’s
group of pharmaceutical companies in
20 countries. Mr Llobet has over ten years
experience working in the pharmaceutical
industry, primarily in South America and
has served as Executive Director of
Corporación Drokasa where he was
responsible for a US$25 million AAA-rated
bond issue to finance the group’s expansion
plans; CEO of Laboratorios Andrómaco
where he led the Company to an IPO on
the Santiago Stock Exchange; and Business
Development Manager for Laboratorio
Chile. Manuel participated in the Executive
Program at the Graduate Business School
of Stanford University and has an MBA
from IESE, Universidad de Navarra,
Barcelona. Manuel also has degrees in
Industrial Business Management and
Chemical Engineering from Universitat
Ramon Llull, Barcelona.
As Chief Executive Officer, Manuel is
responsible for the executive management
of Group operations, investor relations,
and implementation of the Board’s
collective decisions overseeing all
operational aspects of the Group and
directing the long-term strategy.
Ian Postlethwaite
Finance Director (47)
Ian Postlethwaite joined Allergy
Therapeutics in April 2002 as Finance
Director. Prior to this he worked for
Ellerman Investments (1997 – 2002),
a UK private equity house, undertaking
the roles of Chief Executive Officer with
AFS, one of the largest independent
finance houses in the UK, and Finance
Director with a number of successful start
up technology companies. Previously he
held senior finance positions with Ericsson,
from 1994 – 1997 , and Philips Electronics
from 1989 – 1994. He is a qualified
accountant and a Fellow of the Chartered
Association of Certified Accountants.
Ian has a BSc (Hons) in Geological
Sciences from Aston University.
As Finance Director Ian is responsible
for Group financial reporting and control,
tax, finance systems and internal audit.
Ian is also the Company Secretary,
a position he has held since 2004.
Board of Directors 31 AllergyTherapeutics Annual Report 2010 Our Business – Board of Directors www.allergytherapeutics.com
Thomas Holdich
R & D Director (51)
Tom is a pharmaceutical physician whose
specialty is global drug development.
Tom joined AllergyTherapeutics in August
2004. He has been involved in clinical
research in both large pharmaceutical
companies, such as AstraZeneca,
and smaller companies such as Shire
Pharmaceuticals for the last 20 years.
He has directed international research
projects from Phase I (first time into man)
to Phase IV (life cycle management) in
therapeutic areas ranging from epilepsy
and schizophrenia to HIV and inflammatory
bowel disease.
As R&D Director,Tom is responsible
for establishing and maintaining the
Group’s R&D programmes.
Christian Grätz
Director, Market Operations (57)
Christian joined the Company in July
1998. Prior to this he was Marketing
& Sales Director at Akzo Nobel/
Organon GmbH between 1996 and
1998. During his time at Organon he
restructured the Company, in-licensed
the entire gynaecology product portfolio
from Orion (Finland) and successfully
managed a JointVenture with Janssen-
Cilag. Previously Christian was Business
Unit Director at American Cyanamid/
Lederle GmbH (1991 – 1996). He brought
Lederle's vaccines from the USA to Europe
where they were launched in 1994 and
rapidly gained significant market share.
When Lederle and American Home Corp.
merged, Christian was responsible for
restructuring the new Company and
appointed Division Director Germany.
Before joining Lederle he held a number
of senior management positions with
large companies including BASF/Knoll
AG and Beiersdorf AG. Christian lectured
on economics at Universities of Hagen
and Gelsenkirchen and has a Dr. (rer. oec.)
from Bochum University.
As Market Operations Director, Christian
is responsible for Marketing and Sales
in Europe.
Stephen Smith
Non-Executive Director (57)
Stephen Smith is a Chartered Management
Accountant, Fellow of the Association of
CorporateTreasurers and Member of the
Institute forTurnaround. Since 1995, he has
operated as an independent consultant,
Non-Executive Director and interim
manager (CRO/CEO/COO/FD) on an
international basis. Up to 1995 Stephen
held various senior financial positions in
UK based international public companies
including six years as GroupTreasurer of
The Rank Organisation and three years
as Group Finance Director of a quoted
hotel Company.
Stephen chairs the Audit, Nomination
and Remuneration Committees and is
the Senior Non-Executive Director. 32 AllergyTherapeutics Annual Report 2010 Our Business – Board of Directors www.allergytherapeutics.com
AlejandroWeinstein Jr
Non-Executive Director (52)
AlejandroWeinstein Jr. is CEO of
Laboratorios Recalcine Chile, a position
held since 2000, and is responsible for
the entireWeinstein family group of
pharmaceutical companies. Alejandro
has been responsible for transforming
the Recalcine Group from a local Chilean
pharmaceutical Company into a global
family pharmaceutical Company with
a presence in 20 countries and double
digit sales growth for the last five years.
Alejandro has been active in developing
and managing several businesses and
start ups in the pharmaceutical industry
and the healthcare sector, including
Genomika Foundation, a stem cell
research organisation; Biomedical
Research Consortium, a joint venture
between a biotech R&D Company and
a university;Vidacel and Banco deVida,
public and private stem cell banks in
Chile; and several other joint ventures
with local and foreign R&D companies.
Alejandro has a BA, is a Certified Public
Accountant and participated in the
Owner/President Management Program
(OPM) at Harvard Business School.
Alejandro sits on the Nomination
Committee.
Virinder Nohria
Non-Executive Director (55)
Virinder works as a strategic consultant in
international drug development. He has
led teams in many successful interactions
with regulatory bodies in several countries,
particularly the US FDA. He is founder
and Chief Medical Officer of Alaven
Pharmaceutical LLC, a privately held
specialty pharmaceutical Company in
the areas of gastroenterology and women’s
health.Virinder served as Chief Medical
Officer andVice President of Xcel
Pharmaceuticals, Inc., a US specialty
pharmaceutical Company until the sale
of the Company toValeant Pharmaceutical
International in early 2005. Prior to joining
Xcel,Virinder held several positions in
biotechnology and pharmaceutical
companies including UCB Pharma and
Eli Lilly and Company.Virinder is a board
certified paediatric neurologist and
received his medical degree from
Cambridge University and doctorate
in neuropharmacology from University
of Bradford. He is currently based in the
US and has an affiliation with Mercer
University.
Virinder sits on the Remuneration
Committee.
Keith Carter
Non-Executive Director (51)
Keith is an entrepreneur and a strategic
consultant in business development to
life sciences companies. He is a founder
of AllergyTherapeutics and was part of
the team that orchestrated the acquisition
of the Company from SmithKline Beecham
in 1998. Prior to this his career was spent
in investment banking with Lloyds
Merchant Bank, Drexel Burnham Lambert
and NatWest Markets, where he was a
director in corporate finance and headed
the Pharma Group. He began specialising
in advice to the pharmaceuticals industry
in 1990, when he ran his own corporate
finance boutique. Keith has a First Class
Honours degree in Economics from
Cambridge University.
Keith sits on the Audit Committee and
was CEO of AllergyTherapeutics plc
from 2004 to 2009. 33 AllergyTherapeutics Annual Report 2010 Our Business – Board of Directors www.allergytherapeutics.com Financial
Review
34 AllergyTherapeutics Annual Report 2010
“The results for the twelve months
to 30 June have been very good
with the Group posting its maiden
operating profit. ” Financial
Review
35 Our Business – Fiancial Review www.allergytherapeutics.com 36 AllergyTherapeutics Annual Report 2010 Our Business – Financial Review www.allergytherapeutics.com
The results for the twelve months to
30 June 2010 have been very good with the
Group posting its maiden operating profit
of £1.5m (2009 restated due to the transfer
of derivative costs from administration
expenses to finance expenses: loss £5.1m)
and a profit after tax of £0.6m (2009:
loss £11.8m).
Gross sales for the period, before the
statutory sales rebate in Germany of
£1.3m, were £42.0m (2009: £38.9m).
This represents an increase of 8% over
the previous year and at constant currency
a growth rate of 5%.This growth is driven
primarily by an increase of 13% in
named-patient sales of Pollinex Quattro
at a constant currency, and by the
increasing strength of the Euro which
added £1.1m to the sales over the prior
year. After the rebate, group net sales
increased by 8% to £40.8m (2009: £37 .8m).
Gross profit increased by 22% to £29.6m
(2009: £24.2m), representing a gross
margin of 73% of sales; a 9 percentage
point increase from the previous year
at 64%.This is a strong performance,
delivered largely by reduced scrapping
costs, closely managing overhead and
material costs, and also marginally
benefiting by the manufacture of £0.5m
of validation batches; used for the
marketing authorisation submissions
in Germany (charged to administration
expenses).The improvements in gross
margin reflect the efforts the Group has
made to improve its productivity through
a cost reduction exercise initiated at the
beginning of the financial period.
Sales and marketing expenses, the major
component of distribution costs, have
increased by 9% over the previous period
due to the strategy of improving our
marketing capabilities in all of our key
markets.Total distribution costs increased
to £16.1m (2009: £14.9m), an increase of
8% over the previous year. Administration
costs of £10.2m (2009 restated: £9.1m)
were higher by £1.1m than in the previous
period due to increased costs for preparing
marketing authorisations in Germany of
£1.4m and £0.5m relating to compensation
payments for the outgoing CEO (Mr Carter)
offset by a provision release of £1.2m
(2009: £0.1m) on the movement in fair
value of foreign exchange derivative
financial instruments.
Research and development costs
decreased significantly during the period
to £2.2m (2009: £5.3m) as the development
activity for the MPL based vaccine range
has now completed its current programme.
Other income represents funds received
from a partner to build in-house specific
manufacturing plant.
The operating profit for the period was
£1.5m (2009 restated: loss £5.1m)
Finance expense costs are significantly
lower than the prior year at £1.6m
(2009 restated: £6.4m) with the lower
cost being due to a smaller revaluation
loss of £0.1m in the current year compared
to a revaluation loss of £2.0m in the
previous year on the Euro denominated
loan, a £1.4m reduced loss (2010: gain
of £0.3m, 2009: loss of £1.1m) in the
fair value of the interest rate swap and
a lower charge on interest and fees of
£1.8m (2009: £3.2m) on the bank facility
due to lower outstanding balances
throughout the year. During the year
a research and development tax credit
was received for the previous financial
year for £0.8m, offset by a small tax
charge in Germany.The profit after tax for
the period was £0.6m (2009: loss £11.8m).
Spend on capital items was broadly in
line with the charges for depreciation
and amortisation in the year. Property,
plant and equipment however, increased
Financial Review 37 AllergyTherapeutics Annual Report 2010 Our Business – Financial Review www.allergytherapeutics.com
by £1.7m, to £8.9m due mainly to the
revaluation upwards of the Italian freehold
to market value.
Net current assets excluding cash are
£0.3m (2009: net liability of £12.3m).
This improvement of £12.6m is due
principally to the repayment of £9.4m
in July 2009 following the equity
fundraising with current borrowings
reducing to £1.1m (2009: £11.7m) and
the write back of £1.2m regarding the fair
valuation of financial derivatives.The last
hedging contract expired in June 2010
thus leaving no further liabilities. Stock
also rose by £0.9m due to a stock-build
exercise in anticipation of the high
season in the autumn.
Net assets of £3.9m (2009: net liability of
£23.2m) show an increase in assets of
£27 .1m due primarily to cash received from
the equity financing used to repay debt.
Net cash generated by operations for the
period was an inflow of £1.1m (2009:
outflow £0.1m), better than the previous
period by £1.2m due principally to an
improvement in operating performance
offset by an increase in working capital,
with the opening working capital balance
being lower than in the previous period.
Financing
Trends in the currency markets over the
past 12 months, with the Euro weakening
against Sterling, have been unfavourable
to the Group’s operations. Over 90% of our
sales are denominated in Euros whereas
roughly 50% of costs are incurred in the
United Kingdom and denominated in
Sterling. Furthermore, changes in the
reimbursement regime in Germany,
our key market, whereby there will be a
price freeze on reimbursed products from
the prices in the market on 1 August 2009
and the rebate paid to sick-funds increasing
from the current level of 6% to 16%, will
increase the cost of the rebate.
The Group raised £25.7m from
shareholders during the year; using some
of the proceeds to repay £9.4m of debt in
July 2009. Following the fundraisings and
warrant exercises, the Group’s issued share
capital as at 30 June 2010 is 320,604,947
composed of 310,756,614 ordinary shares
of 0.1p each with voting rights attached
(one vote per ordinary share) and 9,848,333
deferred shares of 0.1p each with no voting
rights attached.The Group has no shares
inTreasury; therefore the total number of
voting rights in AllergyTherapeutics as
at 30 June 2010 is 310,756,614.
The Group meets its ongoing financing
obligations through a combination of
a term loan facility of€11m, a revolving
credit facility of€15.5m and a small bank
overdraft. At the balance sheet date
£11.7m was drawn on these facilities
(2009: £30.9m).The Directors believe that
the Company and the Group will have
access to adequate facilities for the
foreseeable future and accordingly,
they continue to adopt the going concern
basis in preparing the full year results.
Ian Postlethwaite
Finance Director
17 September 2010
”The improvements in gross margin
reflect the efforts the Group has made
to improve its productivity. ” Directors’
Report
38 AllergyTherapeutics Annual Report 2010 Directors’
Report
39 Financial Statements – Directors’ Report www.allergytherapeutics.com The Directors present their annual report and the audited financial
statements for the 12 months ended 30 June 2010.The financial
statements are for AllergyTherapeutics plc (the “Company”)
and its subsidiary companies (together, the “Group”).
Principal activities
The Group is engaged in the development, manufacture,
marketing and sale of a range of pharmaceutical vaccine
products designed for the immunological treatment of the
allergic condition.Vaccinations take the form of allergen-specific,
named-patient-specific and standard products in injectable and
sublingual presentations.The business is headquartered in
Worthing,West Sussex, where development and manufacturing
is based, with sales and marketing subsidiaries in Germany,
Austria, Italy, Spain,The Netherlands and Switzerland and
representative offices in Poland and the Slovak Republic.
Results
The profit for the year after taxation was £586,000 (2009: loss
£11,764,000).The results for the year are set out on page 52
and are dealt with in more detail in the Financial Review.
Business review
The purpose of this business review is to inform members of
the Company and help them to assess the Group’s performance
during the year, through financial and non-financial activities,
outlining the trends and factors which are likely to influence
future developments. A review of development and performance
of the Group, including important events, progress during the
year, the financial performance during the year and likely future
developments, can be found in the Chairman’s Statement on
page 10 and 11, the Chief Executive’s Review on pages 14 and
15 and the Financial Review on pages 36 and 37 and are
incorporated in this report by reference.
Fair review of the company’s business
Revenue in the year increased to £40.8m compared to £37 .8m
in the previous year, an increase of 8%.
The operating profit was £1.5m (2009: loss £5.1m), the reduction
being largely a consequence of reduced research and
development costs in the year.
Staff turnover in the UK during the year was 18.7% (2009:
19.2%), compared to an average UK staff turnover rate of
19.2% (2009: 19.2%) (data supplied by the Chartered Institute
of Personnel and Development.)
A more detailed review of development and performance of
the Group, including important events, progress during the
year, the financial performance during the year and likely future
developments, can be found in the Chairman’s Statement on
page 10 and 11, the Chief Executive’s Review on pages 14 and
15 and the Financial Review on pages 36 and 37 and are
incorporated in this report by reference.
Description of the principal risks and uncertainties facing
the company
In common with many pharmaceutical companies the Group
faces a number of risks and uncertainties. Internal controls
are in place to help identify, manage and mitigate these risks.
The main risks have been identified as follows:
Risk that the group is unable to provide effective commercially
successful products
Continued development of viable new products and their
successful registration and marketing is key to the success of
the Group and is a costly and lengthy process. Rationale for new
product development may indicate potential, however, following
significant investment there is no guarantee that a product will
be successful. Board approval is sought for all development
projects and business cases which are scrutinised to ensure
budgets are maintained.
The clinical hold imposed by the FDA in the USA on Pollinex
Quattro in 2007 remains and the Group maintains an open
dialogue with the FDA. A key risk facing the Group with respect
to new development in the US is whether the clinical hold is
lifted and if so, on what terms.The registration of Pollinex
Quattro in Europe is a key priority.
Product liability risk
Despite extensive product testing prior to market launch,
products may produce unanticipated adverse side effects that
may hinder their marketability.The Group may be insufficiently
Directors’ Report
40 AllergyTherapeutics Annual Report 2010 Financial Statements – Directors’ Report www.allergytherapeutics.com covered for any potential litigation which in some cases
can potentially be open-ended.The Group’s manufacturing
facilities and those of some of its suppliers are subject to
regulatory requirements and there is a risk that such facilities
may not comply with such requirements.
Intellectual property risk
Group patents may be challenged at any time and any
unsuccessful defence may cause the Group to lose protection
for its products and subsequently affect further development
and sales.The Group is reliant on some intellectual property
owned by external stakeholders that, if lost, will hinder or
cease production for some of it products.
Economic risks
A high level of risk is attached to the research, development
and commercialisation of innovative drugs.The Group ensures
that business cases are scrutinised before Board approval and
that any increases in costs are justified. Key suppliers may be
unable to execute contractual requirements that hamper product
development and/or the route to markets, but the Group
maintains appropriate measures to protect its supply chains.
The Group may be unable to attract partners or licencees on
favourable terms or recruit the right staff to help develop and
market its products. Approximately 70% of Group sales are
made in Germany and therefore Group results are sensitive
to German legislation and government policies, such as the
recent increase in rebates that will affect future revenue in
2010/11 onwards.
Pharmaceutical products are subject to far greater controls on
price in certain markets than other products in the marketplace.
Some governments intervene directly in setting price levels and
rebates paid into public sick funds, especially with an increasing
aged population in developed countries.The Group cannot
accurately predict when, where and how such controls and
restrictions may be altered, either to its benefit or detriment.
In recent months new legislation in Germany increased the
sick fund rebate by 10 percentage points to 16% of sale price
with a price moratorium imposed for at least two years.
Financial risks
Adequate funding may not be available to the Group, either
through reserves or external partners for the advancement
of clinical trials, manufacturing and marketing. Failure to obtain
further funding may lead to postponement or cancellation of
programmes and a scale back of operations.The Board actively
review the financial requirements of the Group on a regular
basis to preserve a routine level of investment. Currency risk
is regularly reviewed and foreign currency forward contracts
are initiated when and where appropriate.
A majority of the Group’s sales are denominated in Euros and
therefore is exposed to volatility in exchange rate fluctuations.
The Group monitors exchange rates constantly and implements
hedges when appropriate to mitigate such risks.
National budget deficits in countries in which the Group operates
mean that increases in taxation are more likely.The increase in
corporation tax and national insurance rates in the UK will mean
the Group must absorb such costs as it is unable to pass these
onto the consumer due to price controls in certain markets.
As the Group moves towards sustained profitability and utilises
past tax losses, it will increasingly be more sensitive to such
increases in tax.
Clinical and regulatory
The Group operates in a highly regulated environment for the
testing, manufacture and supply of its products. Compliance
with clinical and regulatory requirements within the EU affects
not only the cost of product development and resource use,
but also the time required to comply. Increased regulation may
require products to be amended to comply with regulations
and/or products have to be withdrawn, reducing revenues
and/or increasing costs. Regulatory authorities such as the FDA
are increasingly focussed on the benefit/risk of pharmaceutical
products and safety data making it more onerous to obtain
regulatory approval.
Financial risk management objectives and policies
Note 24 in the Notes to the Financial Statements gives details
of the Group’s objectives and policies for risk management
of financial instruments.
Development and performance of the Company’s business
during the financial year
Pollinex Quattro, the Group’s flagship product, continued to
sell well with sales increasing by 16% over the previous year
(at a constant currency growth was 13%). In R&D, the dossier
for registration of Pollinex Quattro Grass was submitted in
Germany in March last year.
Position of the Group’s business at the end of the year
The implementation of commercial and marketing initiatives
across all territories has helped to maintain and strengthen
the Group.The submission of Pollinex Quattro Grass dossier
in Germany in March 2009 will allow the Group to focus on
European markets and further strengthen its core business.
Main trends and factors likely to affect the future development,
performance and position of the Group’s business
Allergy remains a fast growing market with largely unmet
market needs.The allergy “epidemic” continues to grow and
it is increasingly recognised that for many suffering from
hayfever, it is far from being a trivial matter.There are currently
very few competitors in the niche market in which the Group
performs with none at such advanced stages of product
development.The Board is confident of achieving registration
within Europe for Pollinex Quattro Grass and expects further
expansion of product sales worldwide.
Environmental matters
The Board is committed to minimising the Group’s impact on
the environment and ensuring compliance with environmental
legislation.The Board considers that its activities have a low
environmental impact.The Group strives to ensure that all
emissions including the disposal of gaseous, liquid and solid
waste products are controlled in accordance with applicable
legislation and regulations. Disposal of hazardous waste is
handled by specialist agencies.
41 AllergyTherapeutics Annual Report 2010 Financial Statements – Directors’ Report www.allergytherapeutics.com Employees
The Group currently employs over 350 people in seven countries
and is committed to achieving equality of opportunity in all
employment practices. A thorough review of all employees is
performed annually to identify and promote areas that require
development and growth; feedback is encouraged and sought.
Staff are motivated by performance related incentives, which
help to attract and retain the right people, and are encouraged
to achieve business targets through market-rate pay, discretionary
performance based bonuses and long term incentive programmes.
The Board is committed to retaining staff as a high priority for the
Group and implementing well balanced, challenging incentives
makes this possible.Training and development appropriate to
individual and business needs is offered and remuneration for
professional development is considered on a case by case basis.
The Group places considerable value on the involvement of its
employees and has continued to keep them informed on matters
affecting them as employees and on the various factors affecting
the performance of the Group.This is achieved through formal and
informal meetings and email updates. Family friendly employment
policies conform to statutory requirements and the adoption of
flexible working practices are adopted where viable.
The Group implements equality of opportunity in all of its
employment practices, policies and procedures. Employees are
highly valued and their rights and dignity are respected.The Group
practices equal treatment of all staff and potential staff irrespective
of their race, creed, colour, sexual orientation, nationality, ethnic
origin, religion, disability, age, gender or marital status.The equal
opportunities section of the Staff Handbook covers all permanent
and temporary employees, job applicants, agency staff, consultants
and contractors.
A full review of the Group’s activities, important events affecting
the Group and its development programme is contained in the
Chief Executive’s Review on pages 14 and 15 and the Financial
Review on pages 36 and 37 , both of which form part of this report.
Corporate social responsibility
The Directors recognise the increasing importance of corporate
social responsibility and endeavour to take into account the
interests of the Group’s stakeholders, including its investors,
employees, customers, suppliers and business partners when
operating its business.The Group is committed to empowering
responsible employees who display sound judgement and
awareness of the consequences of corporate decisions and
actions, and who act in an ethical and moral way.
Directors and Directors’ interests
The Directors who held office during the period were as follows:
Date of appointment
Ignace Goethals
Non-Executive chairman 8 September 2004
Manuel Llobet
Chief Executive Officer 1 July 2009
Ian Postlethwaite
Finance Director 1 July 2004
Thomas Holdich
R&D Director 8 September 2004
Christian Grätz
Market operations Director 8 September 2004
Stephen Smith
Non-Executive Director 8 September 2004
AlejandroWeinstein
Non-Executive director 1 July 2009
Virinder Nohria
Non-Executive Director 1 November 2005
Keith Carter
Non-Executive Director 1 September 2009*
*Refers to date of appointment as a Non-Executive Director
The dates of appointment above refer to appointment as Directors
of AllergyTherapeutics plc. All the Directors, with the exception of
Dr Nohria, Mr Llobet and MrWeinstein were previously Directors
of AllergyTherapeutics (Holdings) Limited.
Under a Compromise Agreement and Letter of Appointment
between Mr Carter and the Company dated 11 June 2009,
Mr Carter stepped down as Chief Executive Officer and became
a Non-executive Director on 1 September 2009.
Under a Service Agreement dated 11 June 2009 between
Mr Manuel Llobet and the Company, Mr Llobet assumed the role
of Chief Executive Officer on 1 September 2009 and relinquished
his position as a Non-Executive Director held from 1 July 2009.
Under a Letter of Appointment dated 11 June 2009, Mr Alejandro
Weinstein was appointed a Non-Executive Director of the
Company effective from 1 July 2009.
42 AllergyTherapeutics Annual Report 2010 Financial Statements – Directors’ Report www.allergytherapeutics.com The Directors who held office at the end of the financial year had
the following interests in the ordinary shares of the Company:
At beginning of year:
Name Ordinary shares Options + LTIPs
Ignace Goethals* 2,897 ,912 150,000
Manuel Llobet* - -
Ian Postlethwaite - 3,714,690
Thomas Holdich - 568,471
Christian Grätz 510,658 2,409,986
Stephen Smith 756,513 150,000
AlejandroWeinstein* - -
Virinder Nohria 5,211 100,000
Keith Carter* 3,172,669 1,662,654
At end of year:
Name Ordinary shares Options + LTIPs
Ignace Goethals 4,897 ,912 150,000
Manuel Llobet* 3,125,000 750,000
Ian Postlethwaite 493,000 2,833,191
Thomas Holdich - 874,205
Christian Grätz 510,658 2,386,820
Stephen Smith 756,513 150,000
AlejandroWeinstein* 140,568,287 -
Virinder Nohria 462,160 100,000
Keith Carter* 3,347 ,669 231,000
*All or part are shares held in trust of which the Director is a beneficiary
Directors’ indemnity
The Directors and officers of the Company are insured against
any claims arising against them for any wrongful act in their
capacity as a Director, officer or employee of the Company,
subject to the terms and conditions of the policy.
Structure of the company’s capital
The Company’s share capital traded on the AIM market of the
London Stock Exchange comprises a single class of ordinary
shares of 0.1pence each, each carrying one voting right and all
ranking equally with each other. At 30 June 2010 310,756,614
shares were allotted and fully paid. Details of movements in
the Company’s share capital during the period are shown in
note 27 to the financial statements.
Details of employee share option schemes are set out in note
28 to the financial statements. Participants in employee share
schemes have no voting or other rights in respect of the shares
subject to their awards until the options are exercised, at which
time the shares rank pari passu in all respects with shares
already in issue.
Substantial shareholders
At 6 September 2010 the Company had been notified of the
following major interests, each representing 3% or more
of the existing issued ordinary share capital:
Shareholder Ordinary shares % Held
AzureVentures Limited 140,568,287 45.23
Fidelity Limited 18,522,976 5.96
Prudential Corporation 17 ,773,135 5.72
Group of Companies
Highclere International 11,851,363 3.81
Investors Limited
Southern Fox Investments 10,366,666 3.34
Smithkline Beecham 10,118,748 3.26
Biologicals Manufacturing S.A
Changes to interest in own shares
Neither the Company nor any Employee BenefitTrust holds any
shares in the Company.
The Board
Members Director since Meeting
attendance
2009-10
Ignace Goethals September 2004 12 / 12
Manuel Llobet July 2009 12 / 12
Ian Postlethwaite July 2004 11 / 12
Tom Holdich September 2004 12 / 12
Christian Graetz September 2004 11 / 12
Stephen Smith September 2004 11 / 12
AlejandroWeinstein July 2009 12 / 12
Virinder Nohria November 2005 11 / 12
Keith Carter September 2004 11 / 12
The Board is led by the Chairman and comprises the Chief
Executive Officer, the Finance Director, two further Executive
Directors and four Non-Executive Directors. Biographical details
of all Board members are shown on pages 30 to 32.The roles of
Chairman, who is non-executive, and Chief Executive Officer are
separate.The Directors feel that given the current size of the
Group, the roles of Company Secretary and Finance Director
are not deemed necessary to be separated.All Directors have
direct access to the services and advice of the Company Secretary
and to external independent professional advice at the expense
of the Group.
43 AllergyTherapeutics Annual Report 2010 Financial Statements – Directors’ Report www.allergytherapeutics.com The Board has a formal schedule of matters specifically reserved
to it for decision at Board meetings.This covers strategy and
management, financial reporting and controls, internal controls,
major contracts, external communications with investors, executive
committee appointments and remuneration, appropriate delegation
of authority, corporate governance matters and appropriate
policies for key areas including health and safety, corporate
social responsibility and the environment.
The Board delegates certain other responsibilities to committees,
details of which are set out below.
Board Committees
The Company has an Audit Committee, a Remuneration
Committee and a Nominations Committee with formally
delegated duties and responsibilities. The chairman of each
committee reports directly to the Board.
The Audit Committee, with written terms of reference, comprised
Stephen Smith (Chairman), Ignace Goethals and Keith Carter.
The Audit Committee meets at least twice each year and is
responsible for ensuring that the financial performance of the
Group is properly reported and monitored, meeting with the
auditors, reviewing the reports from the auditors relating to the
financial statements and monitoring the internal control function.
The Remuneration Committee, also with written terms of
reference, comprised Stephen Smith (Chairman), Ignace Goethals
andVirinder Nohria. The Human Resources manager takes the
minutes of the meeting and acts as an employee representative.
It reviews the compensation policy and strategy for the Group
as a whole and the scale and structure of the executive Directors’
remuneration packages including the terms of their service
contracts. No Director takes part in the discussion of his own
remuneration.This committee is also responsible for grant of
shares under the Group’s LongTerm Share Incentive Plan.
The Nomination Committee comprises Stephen Smith
(Chairman), Ignace Goethals and AlejandroWeinstien.
The Committee held three meetings during the past financial
year.The Nominations Committee was established in September
2009 and its principle purpose is to consider and proffer proposals
for the composition and size of the Board and its Committees
as well as Board refreshment and succession planning. It also
has written terms of reference.
Full details of Directors’ remuneration and a statement of the
Company’s remuneration policy are set out in the Directors’
Remuneration Report on pages 47 to 49.
Internal control
The Board has ultimate responsibility for the system of internal
control maintained by the Group.The system is designed to
manage rather than eliminate risk. It can provide only reasonable
and not absolute assurance against material misstatement or loss
and includes the safeguarding of assets, the maintenance of
proper accounting records, the reliability of financial information,
compliance with appropriate legislation, regulation and best
practice and the identification and management of business risk.
The Group has an internal audit function, reporting directly to the
Audit Committee, which carries out reviews periodically of the
Company’s subsidiaries in the UK, Germany, Austria, Italy and
Spain.The Group also has a budgeting and reporting system in
place, with results compared to annual budgets and quarterly
forecasts using variance analysis.
Shareholder relations
The Company maintains a policy of open dialogue with
all shareholders to ensure that the objectives of the Group
are understood.The Chief Executive Officer, R&D Director and
the Finance Director make regular presentations to stakeholders
and discuss any areas of concern and meet regularly with
analysts and major shareholders to provide updated information
about the Group. Press releases, general information on the
Group, shareholder presentations and investor information
are to be accessed via the Group’s website,
www.allergytherapeutics.com.
Annual General Meeting
The notice convening and giving details of the Annual General
Meeting of the Company accompanies this report.
Engagement of auditor for the supply of non-audit services
It is the Group’s policy that it will only engage the Group’s
auditor to supply other professional services to the Group
and its subsidiary undertakings if it is satisfied that all the
usual conditions of engagement and benchmarks are met.
Any agreement to purchase services costing more than
£10,000 per engagement must have the prior approval of
the Audit Committee.
In determining the policy, the Audit Committee has taken into
account relevant ethical guidance regarding the provision of
non-audit services by the external audit firm and does not agree
to the auditor providing a service if, having regard to the ethical
guidance, the result is that the external auditor audits its own
work, the external auditor makes management decisions for
the Group, a mutuality of interest is created or the external
auditor is put in the role of advocate for the Group.
Research and development
The Group will continue its policy of investment in research and
development, although this will be at a lower level of spend than
that seen in previous years, in order to improve its competitive
position in the market. In accordance with International Financial
Reporting Standards (IFRS), during the year the Group expensed
to the income statement £2.2m (2009: £5.3m) on research and
development. Further details on the Group’s research and
development are included in the Chief Executive’s Review
on pages 14 and 15.
44 AllergyTherapeutics Annual Report 2010 Financial Statements – Directors’ Report www.allergytherapeutics.com Going concern
The Group’s business activities, together with the factors likely
to affect its future development, performance and position are
set out in the Chairman’s Statement on page 10 and 11, the Chief
Executive’s Review on pages 14 and 15 and the Financial Review
on pages 36 and 37 . The financial position of the Group, its cash
flows, liquidity position and borrowing facilities are also
described in the Finance Director’s Financial Review on pages
36 and 37 . In addition, note 24 to the financial statements includes
the Group’s objectives, policies and processes for managing its
capital, its financial risk management objectives, details of its
financial instruments and its exposures to foreign currency
risk, interest rate risk and liquidity risk.
After making appropriate enquiries, which included a review of
the annual budget, considering the cash flow requirements for
the foreseeable future and the effects of sales and foreign
exchange sensitivities on the Group’s funding plans, the Directors
continue to believe that the Group will have adequate resources
to continue in operational existence for the foreseeable future and
accordingly have applied the going concern principle in drawing
up the financial statements. In reaching this view, the Directors
have considered and prioritised the actions that could be taken
to offset the impact of any shortfall in operating performance.
Market value of land and buildings
The book values of all properties are at market value.
Creditors’ payment policy and practice
The Group agrees payment terms with suppliers when it enters
into contracts for the purchase of goods or services and generally
seeks to abide by those terms when it is satisfied that the supplier
has provided the goods or services in accordance with the agreed
terms and conditions. During the last quarter of the year terms
with some trade creditors were temporarily renegotiated but
shortly after the year end returned to the normal terms.The number
of trade creditor days at 30 June 2010 was 72 days (2009: 55 days).
Dividend
The Company is unable to declare a dividend.
Charitable and political contributions
The Group made no political or charitable contributions during
the year.
Employment policies
Equal opportunities
The Group is committed to providing equal opportunities in
employment irrespective of background, age, sexual orientation,
religion, gender, nationality, marital status or disability. Our aim
is to attract the best people in the industry and we believe in
maximising every employee’s potential.The Group does not
tolerate any harassment or discrimination.
Disabled people
The Group, in considering applications for employment from
disabled people, seeks to ensure that fair consideration is given
to the abilities and aptitudes of the applicant while having regard
to the requirements of the job for which he or she has applied.
Employees who become unable to carry out the requirements of
the job for which they have been employed are given individual
consideration and, depending on the nature, severity and duration
of the disability may be considered for alternative work.
Communication
The Group has an open communication policy with its employees.
Regular communication on the strategy, plans and performance
of the Group is undertaken and reinforced by site meetings of
staff as well as briefings by Directors and line management. In the
UK, employees have access to Group information on the intranet.
Information about the Group is also available on the internet at
www.allergytherapeutics.com.
Health & Safety
The Group is committed in providing a safe environment for its
employees and others who are engaged in or may be impacted
by the Group’s operations and considers Health & Safety a priority.
Policies relating to Health & Safety are set out on the Group’s
Intranet and Staff Handbook. Procedures are monitored and
improvements identified through periodic audits and safety
inspections.The Group’s Health & Safety Committee meets
regularly to discuss issues and promote good practice with
Health & Safety Officers promoting and monitoring safe working
conditions.
Statement of Directors’ responsibilities – Group Financial Statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare financial statements in accordance with
International Financial Reporting Standards (IFRS’s) as adopted by
the European Union.The financial statements are required by law
to give a true and fair view of the state of affairs of the Group and
of the profit or loss of the Group for that period. In preparing
these financial statements, the Directors are required to:
• Select suitable accounting policies and then apply
them consistently.
• Make judgments and estimates that are reasonable
and prudent.
• State whether applicable IFRS’s have been followed,
subject to any material departures disclosed and explained
in the financial statements.
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
will continue in business.
45 AllergyTherapeutics Annual Report 2010 Financial Statements – Directors’ Report www.allergytherapeutics.com The Directors are responsible for keeping adequate accounting
records that disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that
the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
In so far as each of the Directors is aware:
• There is no relevant audit information of which the Group’s
auditors are unaware; and
• the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit
information and to establish that the auditors are aware
of that information.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Group’s website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare financial statements in accordance with
United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice).The financial statements
are required by law to give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company
for that period. In preparing these financial statements, the
Directors are required to:
• Select suitable accounting policies and then apply
them consistently.
• Make judgments and estimates that are reasonable
and prudent.
• State whether applicable UK Accounting Standards have
been followed, subject to any material departures disclosed
and explained in the financial statements.
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities
In so far as the Directors are aware:
• There is no relevant audit information of which the
company's auditors are unaware; and
• the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit
information and to establish that the auditors are aware
of that information.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Auditors
GrantThornton UK LLP offer themselves for reappointment
as auditors in accordance with section 489 of the Companies
Act 2006. A resolution for their reappointment is to be proposed
at the forthcoming Annual General Meeting.
By order of the Board on 17 September 2010.
Ian Postlethwaite
Company Secretary
46 AllergyTherapeutics Annual Report 2010 Financial Statements – Directors’ Report www.allergytherapeutics.com Directors’ Remuneration Report
The remuneration committee
The Remuneration Committee comprised Stephen Smith
(Chairman), Ignace Goethals and DrVirinder Nohria.
The Committee held four meetings during the past financial year.
The principle purpose of the Committee is to determine and agree
the directors’ salary increases, annual bonuses, scope of pension
arrangements and any changes in benefits. In addition, the
Committee also agrees the share-related compensation for the
directors and other executive management and other executive
compensation matters.
Members Member since Attendance
at meetings 2009-10
Stephen Smith November 2004 4 / 4
Ignace Goethals November 2004 4 / 4
Virinder Nohria November 2005 4 / 4
Remuneration policy
The Committee’s policy is to set remuneration packages for
Executive Directors that are competitive with the market, allowing
the Company to attract, motivate and retain executives of the
highest calibre. Remuneration packages are designed to reward
executives for performance via annual bonus payments and
awards of share-related compensation, which together constitute
a potentially significant proportion of the total remuneration
opportunity.
The remuneration of Executive Directors comprises the following
elements:
(i) Basic salary
Basic salary reflects the market rate for each position and the
individual director’s experience and value to the business.
Salaries are reviewed annually as at 1 October, taking into
account personal performance, and are benchmarked against
the Comparator Group.
(ii)Taxable benefits
Taxable benefits represent the provision of a car allowance
and private medical insurance.
(iii) Share options
The share options granted to individual Executive Directors
to date are disclosed later in this report and comprise grants
made in prior years under previous approved and unapproved
option schemes. Share options previously granted by Allergy
Therapeutics (Holdings) Limited were surrendered on 5 October
2004 for share options in AllergyTherapeutics plc, on substantially
the same terms.
(iv) LongTerm Incentive Plan
During the year ended 30 June 2010 provisional shares were
awarded to directors and senior management under the Allergy
Therapeutics plc 2005 LongTerm Incentive Plan. Distribution of
shares under the Plan is conditional on the Group’s performance
over the 3-year Plan Cycle.The number of provisional shares
awarded to Executive Directors under the Plan is shown in the
Directors’ share option table.
(v) SAYE plan
The 2005 SAYE Plan was open to all employees and full-time
Executive Directors who had completed 12 months continuous
service at the offer date. Share options were granted at a discount
to the share price at the date of grant.The number of options
granted to each participant is related to the amount which the
participant has contracted to save over the 3-year term of the
Plan.The number of share options granted to Executive Directors
under the Plan is shown in the Directors’ share options table.
During the year ended 30 June 2010 no offer was made to
employees or executives under the SAYE scheme.
(vi) Bonus
In the case of the executive team, the Group operates a
performance-related cash bonus based upon individual
performance and achievement of personal and corporate
objectives. Annual bonus payments are capped under service
contracts at 40% for Manuel Llobet and 30% for all other directors
except Christian Grätz, whose bonus is uncapped.The bonus is
determined and agreed by the Remuneration Committee in
September each year for the preceding financial year.
(vii) Pension arrangements
The UK Company operates a defined-contribution Personal
Pension scheme and currently makes pension contributions
equal to 10% of salary for Executive Directors, with the exception
of Manuel Llobet for whom the Company contributes 15% of
salary. Christian Grätz is a member of the Bencard Allergie
GmbH pension scheme in Germany.
Service contracts
Executive Directors Date of contract* Notice period
Manuel Llobet 1 July 2009 6 months
Ian Postlethwaite 7 May 2002 12 months
Christian Grätz 1 April 2001 12 months
Tom Holdich 2 August 2004 6 months
*The above dates for Ian Postlethwaite andTom Holdich refer to service
contracts with AllergyTherapeutics (Holdings) Limited and for Christian
Grätz, with Bencard Allergie GmbH.The service contracts for Ian
Postlethwaite andTom Holdich, were amended on 5 October 2004 to reflect
the change of employer to AllergyTherapeutics plc.
Non-Executive Directors Date of contract* Notice period
Ignace Goethals 8 September 2004 3 months
Stephen Smith 8 September 2004 3 months
Virinder Nohria 1 November 2005 3 months
AlejandroWeinstein 1 July 2009 3 months
Keith Carter 1 September 2009 3 months
*The above contracts for Ignace Goethals and Stephen Smith replaced
previous service contracts in respect of Non-Executive Director roles in
the Group’s former holding Company.
47 AllergyTherapeutics Annual Report 2010 Financial Statements – Directors Remuneration Report www.allergytherapeutics.com Directors’ remuneration (audited information)
Details of remuneration of those who served as directors during the year are set out below.
Christian Grätz’ salary is paid in Euros and is shown here converted at a rate of £1:€1.13836.
A severance payment of £542,000 was paid to Keith Carter in the year.
This figure is included in the fees column within the table above.
The audited information detailed above is summarised in note 6 to the accounts.
Basic Bonus for Taxable Fees Total Pension Year ended 30 June 2009
salary the year benefits Total Pension
££££££ ££
Manuel Llobet 155,233 64,000 9,308 - 228,541 21,100 --
Ian Postlethwaite 143,420 45,000 10,782 - 199,202 14,484 191,032 14,492
Christian Grätz 187,849 22,000 31,136 - 240,985 40,957 197,507 42,277
Tom Holdich 148,470 19,000 11,170 - 178,640 14,994 191,420 14,525
Ignace Goethals 36,000 - - - 36,000 - 33,500 -
Stephen Smith - - - 36,000 36,000 - 27,000 -
AlejandroWeinstein 36,000 - - - 36,000 - --
Virinder Nohria 36,167--- 36,167 31,750 -
Keith Carter 34,559 - 1,862 676,060 712,481 20,265 192,920 23,627
Totals 777,698 150,000 64,258 712,060 1,704,016 111,800 865,129 94,921
48 AllergyTherapeutics Annual Report 2010 Financial Statements – Directors Remuneration Report www.allergytherapeutics.com * SAYE ** Long term incentive plan
Options lapsed during the year includes 2,563,329 which were
cancelled and 680,400 new options issued under a share option
replacement programme for underwater share options which was
a voluntary programme open to all option holders.The number of
options issued was based on a Black-Scholes model under which
the value of options granted equalled those which were cancelled.
The options were granted at an exercise price of 18.5 pence which
was the market price at the date of grant and are exercisable in
tranches of one third every year starting on the anniversary of the
date of grant.
The aggregate amount of gains made by Directors upon the
exercise of share options in the year ended 30 June 2010 was
£153,813 (year ended 30 June 2009 £166,250). At 30 June 2010
the London Stock Exchange market value of shares was 11.5p
per share.The range of values during the period from 1 July 2009
to 30 June 2010 was 9.5p to 20.25p per share.
Stephen Smith
Chairman, Remuneration Committee
17 September 2010
49 AllergyTherapeutics Annual Report 2010 Financial Statements – Directors Remuneration Report www.allergytherapeutics.com
Directors’ share options
Options Options Options Options Options Subscription Exercise Exercise
held at 1 granted exercised lapsed held at 30 price (pence) date from date
July 2009 in the year in the year in the year June 2010
Executive Directors
Manuel Llobet - **750,000 - - **750,000 - - -
Ian Postlethwaite 400,000 - - - 400,000 30.0 03/06/2002 03/06/2012
1,000,000 - 1,000,000 - - 0.1 02/10/2002 02/10/2012
1,500,000 - - - 1,500,000 5.0 17/12/2002 17/12/2012
450,000 - - 450,000 - 45.0 26/02/2005 26/02/2014
99,999 - - 99,999 - 100.4 03/03/2008 08/03/2015
*14,609 - - *14,609 - 64.0 01/03/2009 01/09/2009
- 163,500 - - 163,500 18.5 18/10/2009 18/10/2019
**264,691 **600,000 - **95,000 **769,691 - - -
Christian Grätz 200,000 - - 200,000 - 120.0 31/07/2002 31/07/2011
1,400,000 - - - 1,400,000 5.0 18/12/2002 18/12/2012
450,000 - - 450,000 - 45.0 26/02/2005 26/02/2014
66,666 - - 66,666 - 100.4 08/03/2008 08/03/2015
- 188,500 - - 188,500 18.5 18/10/2009 18/10/2019
**293,320 **600,000 - **95,000 **798,320---
Tom Holdich 222,222 - - 222,222 - 45.0 02/08/2005 02/08/2014
7 ,778 - - 7 ,778 - 45.0 02/08/2005 02/08/2014
66,666 - - 66,666 - 100.4 08/03/2008 08/03/2015
- 97 ,400 - - 97 ,400 18.5 18/10/2009 18/10/2019
**271,805 **600,000 - **95,000 **776,805 - - -
Non-Executive Directors
Ignace Goethals 150,000 - - - 150,000 45.0 26/02/2005 26/02/2014
Stephen Smith 150,000 - - - 150,000 45.0 26/02/2005 26/02/2014
Virinder Nohria 100,000 - - - 100,000 45.0 15/12/2003 15/12/2013
Keith Carter 350,000 - - 350,000 - 120.0 31/07/2002 31/07/2011
175,000 - 175,000 - - 5.0 18/12/2002 18/12/2012
450,000 - - 450,000 - 45.0 26/02/2005 26/02/2014
199,998 - - 199,998 - 100.4 08/03/2008 08/03/2015
*14,609 - - *14,609 64.0 01/03/2009 01/09/2009
- 231,000 - - 231,000 18.5 18/10/2009 18/10/2019
**487 ,656 - - **487 ,656----
Totals 8,785,019 3,230,400 1,175,000 3,365,203 7,475,216 Nominations Committee Report
The Nominations Committee comprises Stephen Smith
(Chairman), Ignace Goethals and AlejandroWeinstein.
The Nominations Committee was established in September
2009 and held three meetings during the past financial year.
Its principle purpose is to consider and proffer proposals for
the composition and size of the Board and its Committees as
well as Board refreshment and succession planning.
Members Member since Attendance at
meetings 2009-10
Stephen Smith September 2009 3 / 3
Ignace Goethals September 2009 3 / 3
AlejandroWeinstein September 2009 3 / 3
When proposing appointments of Directors, the Committee
considers the skills, knowledge and experience that a candidate
possesses compared to the skill sets and experience of the Board
as it currently stands. Selection of candidates also takes into
consideration the breadth of knowledge that the Board has and
that it may require to provide a well balanced environment which
encourages scrutiny and appropriate challenge of the Executive
management. Independence of Non-Executive Directors is of
paramount importance being a cornerstone of good corporate
governance. During the year under report, the Committee
concentrated on reducing the size of the Board and searching
for a new independent Non-Executive Director.
Professional search agencies are engaged to ensure that the
best candidates are sourced and appointments of high calibre
individuals take place. Candidates are short listed from a suitable
pool for interview on merit and against objective criteria and
relevant qualifications. Executive Director appointments are made
taking into account the required qualification and experience of
the job role, considering both internal and external candidates
before making a recommendation. For the purpose of sourcing
appropriate Non-Executive Director candidates, the Committee
used the services of Hanson Green during the financial year.
Stephen Smith
Chairman, Nomination Committee
17 September 2010
50 AllergyTherapeutics Annual Report 2010 Financial Statements – Nominations Committee Report www.allergytherapeutics.com Independent Auditor’s Report to the Members of Allergy Therapeutics plc (Group)
51 AllergyTherapeutics Annual Report 2010 Financial Statements – Independent Auditor’s Report to the Members of AllergyTherapeutics plc (Group)
Independent auditor's report to the members of
AllergyTherapeutics plc
We have audited the group financial statements of Allergy
Therapeutics plc for the year ended 30 June 2010 which comprise
the consolidated income statement, the consolidated statement
of comprehensive income, the consolidated balance sheet, the
consolidated statement of changes in equity, the consolidated
cashflow statement and the related notes.The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities
Statement, set out on page 45 and 46, the directors are
responsible for the preparation of the group financial statements
and for being satisfied that they give a true and fair view.
Our responsibility is to audit the group financial statements
in accordance with applicable law and International Standards
on Auditing (UK and Ireland).Those standards require us to
comply with the Auditing Practices Board’s (APB’s) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the APB's website at www.frc.org.uk/apb/
scope/UKNP . Opinion on financial statements. In our opinion the
group financial statements:
• Give a true and fair view of the state of the group's affairs
as at 30 June 2010 and of its profit for the year then ended;
• have been properly prepared in accordance with IFRS as
adopted by the European Union; and
• have been prepared in accordance with the requirements
of the Companies Act 2006.
Opinion on other matter prescribed by the CompaniesAct 2006
In our opinion the information given in the Directors’ Report
for the financial year for which the group financial statements
are prepared is consistent with the group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if,
in our opinion:
• Certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit.
Other matter
We have reported separately on the parent company financial
statements of AllergyTherapeutics plc for the year ended
30 June 2010.
Stephen P .S.Weatherseed
Senior Statutory Auditor for and on behalf of GrantThornton
UK LLP Statutory Auditor, Chartered Accountants Gatwick
17 September 2010. Consolidated income statement for the year ended 30 June 2010 Year to Year to Year to Year to
30 June 30 June 30 June 30 June
2010 2010 2009 2009
Restated Restated
£’000 £’000 £’000 £’000
Note
Revenue 3 40,750 37 ,757
Cost of sales (11,164) (13,563)
Gross profit 29,586 24,194
Distribution costs (16,141) (14,893)
Administration expenses – other (10,235) (9,108)
Research and development costs (2,210) (5,297)
Administration expenses (12,445) (14,405)
Other income 8 456 -
Operating profit / (loss) 1,456 (5,104)
Finance income 10 9 30
Finance expense 9 (1,581) (6,364)
Loss before tax 5 (116) (11,438)
Income tax 11 702 (326)
Profit/(loss) for the period 586 (11,764)
Earnings / (loss) per share 13
Basic (pence per share) 0.20p (14.35p)
Diluted (pence per share) 0.19p (14.35p)
Consolidated statement of comprehensive income for the
year ended 30 June 2010
Profit / (loss) for the period 586 (11,764)
Actuarial loss on defined benefit pension scheme 26 (612) (9)
Exchange differences on translation of foreign operations (79) (485)
Revaluation gains 1,265 24
Income tax relating to components of other comprehensive income (31) -
Total comprehensive income / (expense) 1,129 (12,234)
52 AllergyTherapeutics Annual Report 2010 Financial Statements – Consolidated Income Statement www.allergytherapeutics.com
Consolidated Income Statement
Consolidated Statement of Comprehensive Income 53 AllergyTherapeutics Annual Report 2010 Financial Statements – Consolidated Balance Sheet www.allergytherapeutics.com
Consolidated balance sheet 30 June 2010 30 June 2009
Note £’000 £’000
Assets
Non-current assets
Property, plant and equipment 16 8,938 7,191
Intangible assets – Goodwill 14 2,496 2,555
Intangible assets – Other 15 860 1,065
Investments – Retirement benefit asset 17 2,017 1,824
Total non-current assets 14,311 12,635
Current assets
Trade and other receivables 19 3,390 3,440
Inventories 18 6,894 6,002
Cash and cash equivalents 20 4,520 -
Total current assets 14,804 9,442
Total assets 29,115 22,077
Liabilities
Current liabilities
Trade and other payables 21 (8,875) (8,950)
Current borrowings 22 (1,109) (11,652)
Derivative financial instruments 24 - (1,172)
Total current liabilities (9,984) (21,774)
Net current assets / (liabilities) 4,820 (12,332)
Non current liabilities
Retirement benefit obligation 26 (3,573) (2,821)
Non current borrowings 22 (10,596) (19,255)
Derivative financial instruments 24 (830) (1,126)
Non current provisions 23 (246) (277)
Total non current liabilities (15,245) (23,479)
Total liabilities (25,229) (45,253)
Net assets / (liabilities) 3,886 (23,176)
Equity
Capital and reserves
Issued capital 27 321 92
Share premium 58,704 33,193
Merger reserve – shares issued by subsidiary 40,128 40,128
Reserve – shares held by EBT 67 67
Reserve – share based payments 1,323 1,291
Revaluation reserve 1,381 189
Foreign exchange reserve (62) (1,113)
Retained earnings (97,976) (97 ,023)
Total equity 3,886 (23,176)
These financial statements were approved by the Board of
Directors on 17 September 2010 and were signed on its behalf by
Manuel Llobet
Chief Executive Officer
Ian Postlethwaite
Finance Director
Registered number: 5141592
Consolidated Balance Sheet Issued Share Merger Reserve – Reserve – Revaluation Foreign Retained Total
Capital premium reserve shares held share based reserve exchange earnings equity
– shares issued in EBT payments reserve
by subsidiary
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 30 June 2008 92 33,173 40,128 (1) 1,031 165 (628) (85,250) (11,290)
Exchange differences
on translation of
foreign operations (485) (485)
Actuarial losses (9) (9)
Valuation gains
taken to equity 24 24
Net income recognised
directly in equity - - - - - 24 (485) (9) (470)
Loss for the period
after tax (11,764) (11,764)
Total comprehensive
income - - - - - 24 (485) (11,773) (12,234)
Share based payments 260 260
Sale of shares by
Employee BenefitTrust 68 68
Shares issued - 20 20
At 30 June 2009 92 33,193 40,128 67 1,291 189 (1,113) (97,023) (23,176)
54 AllergyTherapeutics Annual Report 2010 Financial Statements – Consolidated Statement of Changes in Equity www.allergytherapeutics.com
Consolidated Statement of Changes in Equity 55 AllergyTherapeutics Annual Report 2010 Financial Statements – Consolidated Statement of Changes in Equity www.allergytherapeutics.com
Consolidated statement of changes in equity (continued)
Issued Share Merger Reserve – Reserve – Revaluation Foreign Retained Total
Capital premium reserve shares held share based reserve exchange earnings equity
– shares issued in EBT payments reserve
by subsidiary
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 30 June 2009 92 33,193 40,128 67 1,291 189 (1,113) (97,023) (23,176)
Exchange differences
on translation of
foreign operations (79) (79)
Actuarial losses (612) (612)
Valuation gains
taken to equity 1,265 1,265
Income tax relating
to components of other
comprehensive income (31) (31)
Net income recognised
directly in equity - - - - - 1,234 (79) (612) 543
Profit / (Loss) for the
period after tax 586 586
Total comprehensive
income - - - - - 1,234 (79) (26) 1,129
Share based
payments 193 193
Shares issued 229 25,511 25,740
Transfer of
depreciation on
revalued property (42) 42 -
Transfer of foreign
exchange loss to
retained earnings 1,130 (1,130) -
Transfer of lapsed
options to retained
earnings (161) 161 -
At 30 June 2010 321 58,704 40,128 67 1,323 1,381 (62) (97,976) 3,886 Year to Year to
30 June 2010 30 June 2009
Note £’000 Restated £’000
Cash flows from operating activities
Loss before tax (116) (11,438)
Adjustments for:
Foreign exchange loss - (485)
Finance income 10 (9) (30)
Finance expense 9 1,499 4,378
Revaluation loss on loan 9 82 1,986
Non cash movements on defined benefit pension plan 155 107
Depreciation and amortisation 15,16 1,427 1,315
Charge for share based payments 193 260
Financial derivative instruments (1,172) (104)
Disposal of property, plant and equipment - 41
Increase in trade and other receivables (112) (241)
Increase in inventories (911) (185)
Increase in trade and other payables 14 4,313
Net cash generated by / (used in) operations 1,050 (83)
Interest paid (15) (31)
Income tax refunded / (paid) 667 (326)
Net cash generated by / (used in) operating activities 1,702 (440)
Cash flows from investing activities
Interest received 9 30
Investments 17 (319) (296)
Payments for intangible assets (56) (295)
Payments for property plant and equipment (1,642) (1,426)
Net cash used in investing activities (2,008) (1,987)
Cash flows from financing activities
Proceeds from issue of equity shares 25,740 88
Repayment of borrowings (41,040) (814)
Proceeds from borrowings 22,442 3,076
Bank loan fees and interest paid (2,248) (2,247)
Net cash generated by financing activities 4,894 103
Net increase / (decrease) in cash and cash equivalents 4,588 (2,324)
Effects of exchange rates on cash and cash equivalents (42) -
Cash and cash equivalents at the start of the period (26) 2,298
Cash and cash equivalents at the end of the period 20,22 4,520 (26)
56 AllergyTherapeutics Annual Report 2010 Financial Statements – Consolidated Cashflow Statement www.allergytherapeutics.com
Consolidated Cashflow Statement 57 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
Notes to the Financial Statements
1. Basis of preparation
The Group’s financial statements have been prepared in
accordance with International Financial Reporting Standards
(IFRS) in issue as adopted by the European Union (‘EU’).
AllergyTherapeutics Plc is the Group’s ultimate parent company.
The Company is a limited liability company incorporated and
domiciled in England.The address of AllergyTherapeutics Plc’s
registered office and its principal place of business is Dominion
Way,Worthing,West Sussex and its shares are listed on the
Alternative Investment Market (AIM).
The consolidated financial statements for the year ended
30 June 2010 (including comparatives) have been prepared under
the historical cost convention except for land and buildings and
derivative financial instruments which have been measured at
fair value.They were approved and authorised for issue by the
Board of Directors on 17 September 2010.
Change of accounting policy
The accounting policy in respect of the measurement basis,
subsequent to initial recognition, of the Group’s freehold land
and buildings has been changed from depreciated cost to the
revaluation basis.This change in accounting policy has been
applied from the date of change of accounting policy as required
by IAS 8 ‘Accounting policies, accounting estimates and errors’,
and has resulted in an increase in the carrying amount of the
Group’s freehold land and buildings by £1,281,000.
Revaluations are performed by independent qualified valuers
periodically. In the intervening years between independent
revaluations, the directors review the carrying values of the
freehold land and buildings and adjustments are made if the
carrying values differ significantly from their respective fair
values. Increases in the carrying value from revaluations are
credited to the revaluation reserve. Decreases in the carrying
values arising from revaluations are first offset against increases
from earlier revaluations in respect of the same assets and are
thereafter charged to the consolidated income statement.
Restatement of previous year figures
A decision was made in the year to reclassify the movement in
the fair value of the interest rate swap financial derivative from
administration expenses to finance expenses.The reason for this
change is to report the derivative valuation changes in the same
place as the actual interest rate swap charges. In order to present
a fully comparable position, the 2009 comparative information
has been restated on the same basis as detailed in note 33.This
restatement has had no effect on profit after tax nor total equity.
New standards adopted
The Group has adopted the following new interpretations, revisions
and amendments to IFRS issued by the International Accounting
Standards Board which are relevant to and effective for the Group’s
financial statements for the year beginning 1 July 2009.
IAS 1 Presentation of Financial Statements (Revised 2007)
The adoption of IAS 1 (Revised 2007) does not affect the financial
position or profits of the Group, but gives rise to additional
disclosures.The measurement and recognition of the Group’s
assets, liabilities, income and expenses are unchanged, however
some items that were recognised directly in equity are now
recognised in other comprehensive income, for example
revaluation of property, plant and equipment. IAS 1 (Revised
2007) affects the presentation of owner changes in equity and
introduces a ‘Statement of comprehensive income’. In accordance
with the new standard the entity does not present a ‘Statement
of recognised income and expenses (SORIE)’, as was presented
in the 2009 consolidated financial statements. Further, a ‘Statement
of changes in equity’ is presented.
In addition, two comparative periods are presented for the
consolidated balance sheet when the Group:
• Applies an accounting policy retrospectively;
• makes a retrospective restatement of items in its financial
statements; or
• reclassifies items in the financial statements.
Whilst there has been a restatement of certain items in the
consolidated income statement (see note 33) this has had no
impact on the consolidated balance sheet at 30 June 2008 and
therefore only one comparative period has been presented for
the consolidated balance sheet.
IAS 23 (Revised Borrowing Costs)
The revised standard requires the capitalisation of borrowing costs,
to the extent that they are directly attributable to the acquisition,
production or construction of qualifying assets that need a
substantial period of time to get ready for their intended use or
sale.This has had no significant effect on the Group’s results as
all relevant borrowing costs were already being capitalised as is
now required. 1. Basis of preparation (continued)
IFRS 3 Business Combinations (Revised 2008) and
IAS 27 Consolidated and Separate Financial Statements
(Revised 2008)
The revised Standards introduce major changes to the
accounting treatment for business combinations, transactions
with non-controlling interests and a loss of control of a
subsidiary.There has been no activity in the year under review,
however a business combination that has taken place shortly
after the year-end and all subsequent combinations will follow
this new standard (see note 32).
Adoption of amendments to IFRS 7 Financial Instruments:
Disclosures – improving disclosures about financial instruments
The amendments require additional disclosures for financial
instruments that are measured at fair value in the consolidated
balance sheet.These fair value measurements are categorised
into a three level fair value hierarchy (see note 24) which reflects
the extent to which they are based on observable market data.
A separate quantative maturity analysis (see note 24) must be
presented for derivative financial liabilities that shows the
remaining contractual maturities, where these are essential for
an understanding of the timing of cashflows.The Group has
taken advantage of the transitional provisions in the amendments
and has not provided comparative information in respect of the
new requirements.
IFRS 8 Operating segments
This IFRS specifies how an entity should report information
about its operating segments in its financial statements. Generally,
financial information is required to be reported on the same basis
as is used internally for evaluating operating segment performance
and deciding how to allocate resources to operating segments.
Implementation of this standard has not increased the number
of reportable segments, but has brought them in line with the
way in which the segments are reported in the Group’s monthly
management accounts as reviewed by the chief operating
decision-maker (see note 4).This change only affects presentational
aspects of the financial statements and there is no impact on
earnings per share.
IFRIC 14 – IAS 19 –The Limit on a Defined BenefitAsset,
Minimum Funding Requirements and their Interaction
This IFRIC addresses the interaction between minimum funding
requirements (which are commonly imposed by laws and
regulations in some jurisdictions) and the measurement of
a defined benefit asset. Application of this IFRIC has not given
rise to any change in the Group’s results.
IFRS 2 amendment to share based payments
This amendment clarifies that vesting conditions are service
conditions and performance conditions only, and specifies that
all cancellations, whether by the entity or by other parties, should
receive the same accounting treatment.This amendment does
not have a material effect upon the Group’s financial statements.
Standards, amendments and interpretations to existing
standards that are not yet effective and have not been early
adopted by the Group in the 30 June 2010 financial statements
At the date of authorisation of these financial statements,
certain new standards, amendments and interpretations to
existing standards have been published but are not yet effective.
The Group has not adopted any of these pronouncements early.
The new standards, amendments and interpretations that are
expected to be relevant to the Group’s financial statements
are as follows:
• IAS 39/IFRIC 9 Financial Instruments: Recognition and
measurement on hedged items.
• This IFRIC addresses the treatment of embedded derivatives
and whether an assessment should be made only at the
commencement of such a contract or throughout the life of
the contract. Management are currently assessing the detailed
impact on the Group’s financial statements.
• IFRIC 16 Hedges of Net Investments in Foreign Assets
This IFRIC addresses the consistency of treatment of hedges
of net investments in overseas operations. Management are
currently assessing the detailed impact on the Group’s
financial statements.
Management anticipate that the above pronouncements will
be adopted in the Group’s financial statements for the period
beginning 1 July 2010.These developments are not expected
to have a material impact on the Group’s financial statements.
Other new standards and Interpretations have been issued but
are not expected to have a material impact on the Group’s
financial statements.
Going concern
For the year ended 2010 the Group has reported a profit,
however for the financial years ended 2007 to 2009 primarily
as a consequence of its investment in research and development
activities, it reported losses.These losses have been funded
by equity issues, debt facilities and cash generated by the
operating business.
The Group has prepared detailed budgets, including cash
flow projections, for the periods ending 30 June 2011 and 30
June 2012.These projections include assumptions on the trading
performance of the operating business and the continued
availability of the existing debt facilities. After making appropriate
enquiries, which included a review of the annual budget,
by considering the cash flow requirements for the foreseeable
future and the effects of sales and other sensitivities on the
Company’s funding plans, the Directors continue to believe
that the Group will have adequate resources to continue in
operational existence for the foreseeable future and accordingly
have applied the going concern principle in drawing up the
financial statements. In reaching this view, the Directors have
considered and prioritised the actions that could be taken to
offset the impact of any shortfall in operating performance.
58 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 59 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
2. Accounting Policies
Consolidation
The Group’s financial statements consolidate those of the parent
company and all of its subsidiaries drawn up to 30 June 2010.
Subsidiaries are all entities over which the Group has the power
to govern the financial and operating policies, generally
accompanying a shareholding of over one half of the voting
rights.The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when
assessing whether the Group controls another entity. Subsidiaries
are fully consolidated from the date on which control is
transferred to the Group.They are deconsolidated on the date
control ceases.
The Group uses the purchase method of accounting for the
acquisition of a subsidiary.The cost of an acquisition is measured
by the fair value of the assets given, equity instruments issued
and liabilities incurred or assumed at the date of exchange.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination that meet the conditions for
recognition under IFRS 3 Revised Business Combinations, are
recognised at their fair values at the acquisition date.The excess
of the cost of acquisition over the fair value of the Group’s share
of the identifiable net assets acquired is recorded as goodwill.
If the cost of the acquisition is less than the fair value of the net
assets of the subsidiary acquired the difference is recognised
directly in the income statement.
Inter-company transactions, balances and unrealised gains and
losses on transactions between Group companies are eliminated
except for unrealised losses if they show evidence of impairment.
Goodwill
Goodwill arising from business combinations is the difference
between the fair value of the consideration paid and the fair value
of the assets and liabilities and contingent liabilities acquired.
It is initially recognised as an intangible asset at cost and is
subject to impairment testing on an annual basis or more
frequently if circumstances indicate that the asset may have
been impaired. Details of impairment testing are described in
the accounting policies.
Intangible assets
Acquired as part of a business combination
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where they
satisfy the definition of an intangible asset and their fair values
can be measured reliably.The cost of such intangible assets is
their fair value at the acquisition date.
Subsequent to initial recognition, intangible assets acquired
in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses.
Internally generated intangible assets
An internally generated intangible asset arising from
development (or the development phase) of an internal project
is recognised if, and only if, all of the following have been
demonstrated:
• The technical feasibility of completing the intangible asset
so that it will be available for use or sale.
• The intention to complete the intangible asset and use
or sell it.
• The ability to use or sell the intangible asset.
• How the intangible asset will generate probable future
economic benefits.
• The availability of adequate technical, financial and other
resources to complete the development and to use or sell
the intangible asset.
• The ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The amount initially recognised for internally generated intangible
assets is the sum of the expenditure incurred from the date when
the intangible asset first meets the recognition criteria listed
above.Where no internally generated intangible asset can be
recognised, research and development expenditure is charged
to profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally generated intangible
assets are reported at cost less accumulated amortisation and
accumulated impairment losses. Amortisation of these assets is
calculated on a straight line basis over the useful economic life
using the following annual rates:
Manufacturing know-how 15 years
Non-competing know-how 4 years
Other intangibles 15 years
Computer software 7 years
These periods were selected to reflect the various assets’
useful economic lives to the Group.
The cost of amortising intangible assets is included within
administration costs in the consolidated income statement. 2. Accounting Policies (continued)
Segmental reporting
In identifying its operating segments, management follow the
Group’s revenue lines which represent the main geographical
markets within which the Group operates.These operating
segments are managed separately as each requires different
local expertise, regulatory knowledge and a specialised marketing
approach. An operating segment is a group of assets and
activities engaged in operations that is subject to risks and
returns that are different from those of other business segments.
A market based operating segment is engaged in production,
marketing and selling within a particular economic environment
that is different from that in segments operating in other
economic environments. All inter-segment transfers are
carried out at arm’s length prices.
The Group’s operating segments are market based and are
reported in a manner consistent with the internal reporting
provided to the Group’s Chief Operating Decision Maker
(CODM) who has been identified as the Board of Directors.
The CODM is responsible for allocating resources and assessing
the performance of the operating segments.
Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (the functional
currency).The Group’s presentational currency is Sterling.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at
reporting period end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in
the income statement.
Group companies
The results and financial position of all Group entities that have
a functional currency different from the presentation currency
are translated into the presentation currency as follows:
• Assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of the balance sheet
with all resulting exchange differences being recognised as
a separate component of equity.
• Income and expenses for each income statement are
translated at actual exchange rates or using an average
rate as an approximation with resulting exchange differences
recognised within the income statement.
The Group has taken advantage of the exemption in IFRS 1 which
allows all foreign exchange differences on consolidation to be set
at zero at transition and the foreign exchange reserve therefore
only shows post transition foreign exchange differences.
Income recognition
Revenue is measured by reference to the fair value of
consideration received or receivable by the Group for goods
supplied and services provided, net of statutory rebates paid in
Germany and excluding value added tax. Revenue is recognised
upon the performance of services or transfer of risk to the
customer.
Sale of goods
Revenue from the sale of goods is recognised when all the
following conditions have been satisfied:
• The Group has transferred to the buyer the significant
risks and rewards of ownership of the goods which is
generally when the customer has physically received
the goods.
• The Group retains neither continuing managerial
involvement to the degree usually associated with ownership
nor effective control over the goods sold which is again
when the customer has physically received the goods.
• The amount of revenue can be measured reliably.
• It is probable that the economic benefits associated with
the transaction will flow to the Group, and
• the costs incurred or to be incurred in respect of the
transaction can be measured reliably.
A small proportion of the Group’s overseas sales are made
though licensees and distributors.
For all licensee arrangements, the licensee is invoiced at the
time of delivery and title to the product passes upon full and
final settlement of the invoice to which the delivery relates.
The licensee has full discretion over the setting of the final selling
price to the end customer and pays a fixed percentage of the final
selling price back to the Group as ‘royalties’ as and when those
sales are made.The licensee is responsible for all customer
returns of product.
It is considered that the significant risks and rewards of ownership
of the product are transferred to the licensee at the point of
delivery and therefore revenue is recognised at this point in
accordance with IAS 18. Royalties are recognised on an accruals
basis as the licensee books the sale to the end customer in
accordance with IAS 18 paragraph 30 (b).
For all distributor agreements, the distributor places orders with
the Group, at which point goods are shipped to them.The Group
however, holds title to these products until they are sold on to a
third party with the distributor effectively acting as an agent.The
selling price to the end user is set by the relevant Government
body and the distributor receives a fixed percentage of this selling
price.The distributor notifies the Group monthly on stock levels
and this is reconciled to a statement which generates an invoice
for payment by the distributor.The Group is responsible for any
customer returns of product.
60 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 61 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
It is considered that the significant risks and rewards of ownership
of the product are not transferred from the Group until the
distributor has sold the product to a third party and therefore
revenue on these sales is recognised at this point by the Group in
accordance with IAS 18 appendix 2 (c).
Royalties
Royalties are recognised on an accruals basis in accordance with
the substance of the relevant agreement.
Milestones
Revenues with performance milestones are received from our
licensees in Canada and are treated as royalties.These are
recognised on the satisfactory occurrence of critical events as
pre-defined in the relevant agreement.
Expenditure recognition
Operating expenses are recognised in the income statement upon
utilisation of the service or at the date of their origin.
Borrowing costs
Borrowing costs primarily comprise interest on the Group’s
borrowings. Borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset
are capitalised during the period of time that is necessary to
complete and prepare the asset for its intended use or sale.
Other borrowing costs are expensed in the period in which
they are incurred and reported in ‘finance costs’.
Property, plant and equipment
The accounting policy in respect of the measurement basis,
subsequent to initial recognition, of the Group’s freehold land
and buildings has been changed from depreciated cost to the
revaluation basis.This change in accounting policy has been
applied from the date of change of accounting policy as required
by IAS 8 ‘Accounting policies, accounting estimates and errors’,
and has resulted in an increase in the carrying amount of the
Group’s freehold land and buildings by £1,281,000.
The estimated useful life of the Group’s land and buildings has
been increased from ten years to thirty three years. Prior to the
revaluation, the assets had been fully depreciated.The effect of
the revaluation through the consolidated income statement has
been calculated as a charge of £39,000.
Revaluations are performed by independent qualified valuers
periodically. In the intervening years between independent
revaluations, the directors review the carrying values of the
freehold land and buildings and adjustments are made if the
carrying values differ significantly from their respective fair
values. Increases in the carrying value from revaluations are
credited to the consolidated statement of comprehensive income.
Decreases in the carrying values arising from revaluations are
first offset against increases from earlier revaluations in respect
of the same assets and are thereafter charged to the consolidated
income statement.
Plant and equipment are stated at historical cost less accumulated
depreciation and accumulated impairment losses. Provision for
depreciation of all tangible assets of the Group is made over their
estimated useful lives, on a straight line basis principally using
the following annual rates:
Land and buildings 33 years
Computer equipment 3 – 7 years
Motor vehicles 4 years
Fixtures and fittings 5 – 10 years
Plant and equipment 5 – 10 years
Asset residual values and useful lives are reviewed annually
and amended as necessary. Assets are reviewed for impairment
whenever events or changes in circumstances indicate that
the carrying amount of the fixed asset may not be recoverable.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount exceeds the
higher of the asset’s fair value less costs to sell or value in use.
Assets under course of construction are capitalised but not
depreciated. Once the asset is ready for use, it is transferred
to the relevant heading and depreciated accordingly.
Impairment
The Group’s goodwill, other intangible assets, freehold land
and buildings and plant & equipment are subject to impairment
testing.
For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash generating units). Goodwill is allocated to those
cash generating units that are expected to benefit from synergies
of the related business combination and represent the lowest
level within the Group at which management controls the related
cash flows.
Individual assets or cash generating units that include goodwill
with an indefinite useful life or those not yet available for use
are tested for impairment at least annually. All other individual
assets or cash generating units are tested for impairment
whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the assets
or cash generating units carrying amount exceeds its recoverable
amount.The recoverable amount is the higher of fair value,
reflecting market conditions less costs to sell and value in use,
based on an internal discounted cash flow evaluation. Impairment
losses recognised for cash generating units, to which goodwill has
been allocated, are credited initially to the carrying amount of
goodwill. Any remaining impairment loss is charged pro rata to the
other assets in the cash generating unit.With the exception of
goodwill, all assets are subsequently reassessed for indications
that an impairment loss previously recognised may no longer exist. 2. Accounting Policies (continued)
Inventories
Inventory is carried at the lower of cost or net realisable value.
The costs of raw materials, consumables, work in progress
and finished goods are measured by means of weighted average
cost using standard costing techniques. Cost of finished goods
comprises direct production costs such as raw materials,
consumables, utilities and labour, and production overheads
such as employee costs, depreciation, maintenance and indirect
factory costs. Standard costs are reviewed regularly in order
to ensure relevant measures of utilisation, production lead
time and appropriate levels of manufacturing expense are
reflected in the standards.
Net realisable value is calculated based on the revenue from
sale in the normal course of business less any costs to sell.
Leases
Operating lease rentals are charged to the income statement
over the term of the lease.There are no finance leases.
Financial assets
Financial assets consist of cash and other receivables. Financial
assets are assigned to their different categories by management
on initial recognition, depending on the contractual arrangements.
Cash and cash equivalents comprise cash on hand, demand
deposits and overdrafts, together with other short-term, highly
liquid investments that are readily convertible into known
amounts of cash and which are subject to an insignificant
risk of changes in value.
All financial assets are recognised when the Group becomes
a party to the contractual provisions of the instrument and
are initially recognised at fair value plus transaction costs,
and subsequently at amortised cost.
Derecognition of financial assets occurs when the rights to receive
cash flows from the investments expire or are transferred and
substantially all of the risks and rewards of ownership have been
transferred. An assessment for impairment is undertaken at least
at each balance sheet date whether or not there is objective
evidence that a financial asset or a group of financial assets
is impaired.
Financial liabilities
The Group’s financial liabilities include bank loans, trade and
other payables.
Financial liabilities are recognised when the Group becomes
a party to the contractual agreements of the instrument.
All interest related charges are recognised as an expense
in ‘Finance costs’ in the income statement.
Trade and other payables are recognised initially at their fair
value and subsequently measured at amortised cost using
the effective interest method.
Borrowings comprise secured bank borrowings, and are initially
recognised at the fair value of the consideration received net
of issue costs associated with the borrowings. After initial
recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the effective
interest rate method.
Derivative financial instruments
The Group uses interest rate swaps, Euro forward contracts
and Euro exchange swaps to manage the exposure to changes
in interest and translation rates and these are classified as
derivative financial instruments. All derivative financial
instruments are initially measured at fair value on acquisition
and are subsequently restated to fair value at each reporting
date. Any change in the fair value of the instruments is recognised
in the Income Statement.
Equity
Equity comprises the following:
• “Issued capital” represents the nominal value of equity
shares that have been issued.
• “Share premium” represents the excess over nominal value
of the fair value of consideration received for equity shares,
net of expenses of the share issue.
• “Merger reserve” represents shares issued by the
subsidiaries.
• “Reserve – Shares held in EBT” represent the shares acquired
by a trust set up for the benefit of the Group’s employees.
These shares are deducted from shareholders funds at the
cost that the shares were acquired.The net proceeds received
from the issue of these shares through the exercise of
options are also recognised through this reserve.
• “Share based payments reserve” represents equity-settled
share-based employee remuneration until such share options
are exercised.
• “Revaluation reserve” represents the revaluations of
investment assets and land and buildings.
• “Foreign Exchange reserve” represents the foreign currency
translation differences that have occurred since the transition
date. Exchange differences prior to this date are included
within retained earnings.
• “Retained earnings” represents retained profits and losses.
Equity is any contract which evidences a residual interest in
the assets of the Group after deducting all its liabilities.
62 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 63 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
Income taxes
Current income tax assets and liabilities comprise those
obligations to fiscal authorities in the countries in which the
Group carries out its operations.They are calculated according
to the tax rates and tax laws applicable to the fiscal period and
the country to which they relate. All changes to current tax
liabilities are recognised as a component of tax expense in
the income statement.
Deferred income taxes are calculated using the liability method
on temporary differences. Deferred tax is generally provided
on the difference between the carrying amounts of assets and
liabilities and their tax bases. However, deferred tax is not
provided on the initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related transaction
is a business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with shares
in subsidiaries and joint ventures is not provided if reversal of
these temporary differences can be controlled by the Group and
it is probable that reversal will not occur in the foreseeable future.
In addition, tax losses available to be carried forward as well as
other income tax credits to the Group are assessed for recognition
as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting.
Deferred tax assets are recognised to the extent that it is probable
that the underlying deductible temporary differences will be able
to be offset against future taxable income. Current and deferred
tax assets and liabilities are calculated at tax rates that are expected
to apply to their respective period of realisation, provided they
are enacted or substantively enacted at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the income statement, except
where they relate to items that are charged or credited directly
to the consolidated statement of comprehensive income (such
as the revaluation of land and buildings) in which case the related
deferred tax is also charged or credited directly to the
consolidated statement of comprehensive income.
Defined Benefit Pension Scheme
Scheme assets are measured at fair values. Scheme liabilities
are measured on an actuarial basis using the projected unit credit
method and are discounted at appropriate high quality corporate
bond rates that have terms to maturity approximating to the
terms of the related liability. Appropriate adjustments are made
for past service costs. Past service cost is recognised as an
expense on a straight-line basis over the average period until the
benefits become vested. To the extent that benefits are already
vested the Group recognises past service cost immediately.
Actuarial gains and losses are recognised immediately
through the consolidated statement of comprehensive income.
The net surplus or deficit is presented with other net assets
on the balance sheet. The related deferred tax is shown
with other deferred tax balances. A surplus is recognised
only to the extent that it is recoverable by the Group.
The current service cost, past service cost and costs from
settlements and curtailments are charged against administrative
expenses in the income statement. Interest on the scheme
liabilities and the expected return on scheme assets are included
in other finance costs.
Short-term employee benefits, including holiday entitlement
are included in current pension and other employee obligations
at the undiscounted amount that the Group expects to pay as
a result of the unused entitlement.
Investments
Investments relate to long-term insurance policies that
cannot be directly deducted from the German pension
obligation.These are recognised as a separate asset, rather
than as a deduction in determining the defined benefit liability.
They are held at fair value with any gains or losses on valuation
charged or credited to the consolidate statement of
comprehensive income.
Provisions
Provisions are recognised when the present obligations arising
from legal or constructive obligations resulting from past events,
will probably lead to an outflow of economic resources from the
Group which can be estimated reliably.
Provisions are measured at the present value of the estimated
expenditure required to settle the present obligation, based on
the most reliable evidence available at the balance sheet date.
All provisions are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
Share based employee compensation
The Group operates equity settled share based compensation
plans for remuneration of its employees.
All employee services received in exchange for the grant of
any share based compensation are measured at their fair values.
These are indirectly determined by reference to the share option
awarded.Their value is appraised at the grant date and excludes
the impact of any non-market vesting conditions (e.g. profitability
or sales growth targets). 2. Accounting Policies (continued)
All share based compensation is ultimately recognised as an
expense in the consolidated income statement with a
corresponding credit to the share based payments reserve,
net of deferred tax where applicable. If vesting periods or other
vesting conditions apply, the expense is allocated over the vesting
period, based on the best available estimate of the number of
share options expected to vest. Non market vesting conditions
are included in assumptions about the number of options that
are expected to become exercisable. Estimates are subsequently
revised if there is any indication that the number of share options
expected to vest differs from previous estimates. No adjustment
to expense recognised in prior periods is made if fewer share
options ultimately are exercised than estimated.
Upon exercise of share options, the proceeds received, net of
any directly attributable transaction costs, up to the nominal
value of the shares issued are allocated to share capital with
any excess being recorded as share premium.
Employee BenefitTrust
The financial statements include the assets and liabilities of a trust
set up for the benefit of the Group’s employees. The employee
benefit trust has acquired shares in the Company and these are
deducted from the shareholders’ funds on the balance sheet at
the cost of acquisition.
Use of accounting estimates and judgements
Many of the amounts included in the financial statements involve
the use of judgement and/or estimation.These judgements and
estimates are based on management’s best knowledge of the
relevant facts and circumstances, having regard to prior
experience, but actual results may differ from the amounts
included in the financial statements. Information about such
judgements and estimation is contained in the accounting policies
and/or the notes to the financial statements and the key areas are
summarised below:
Judgements in applying accounting policies
a) Identification of functional currencies requires analysis of the
economic environments of the subsidiaries of the Group and
the selection of the presentational currency must reflect the
requirements of the users of those statements.
b) During the year the Group earned no milestone payments
(2009: £282k).The amount in the previous year had been
recognised as revenue because it was considered that a
significant milestone had been reached for which the earnings
process, based on cumulative sales, had been completed.
c) Capitalisation of development costs requires analysis of the
technical feasibility and commercial viability of the project
concerned. Capitalisation of the costs will be made only where
there is evidence that an economic benefit will accrue to the
Group.To date no development costs have been capitalised
and all costs have been expensed in the Income statement as
research and development expenditure, £2.2m (2009: £5.3m)
d) Land and buildings were not revalued to fair value at the
reporting date as management determined that the effect of
the changes in market prices between the dates of revaluation
and the reporting dates were immaterial.
Sources of estimation uncertainty
a) Depreciation rates are based on estimates of the useful lives
and residual values of the assets involved.
b) Estimates of future profitability are required for the decision
whether or not to create a deferred tax asset.
c) Estimates are required as to asset carrying values and
impairment charges.
d) Determining whether goodwill is impaired requires an
estimation of the value in use of the cash generating unit
to which the goodwill has been allocated.This value in use
calculation requires an estimation of the future cash flows
expected to arise from the cash generating unit and a suitable
discount rate in order to calculate the present value.
e) Determining the goodwill position on the acquisition of
Teomed AG on 1 July 2010 requires an estimation of the future
cashflows relating to distributor agreements in place with
Teomed AG on that date. It also requires estimation of a
suitable discount rate in order to calculate the present value.
3. Revenue
An analysis of revenue by category is set out in the table below:
2010 2009
£’000 £’000
Sale of goods 38,735 35,643
Royalties 2,015 1,832
Milestones - 282
40,750 37 ,757
64 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com Revenue by segment Revenue Inter segment Total segment Revenue Inter segment Total segment
from external revenue revenue from external revenue revenue
customers customers
2010 2010 2010 2009 2009 2009
£’000 £’000 £’000 £’000 £’000 £’000
Germany and Austria 30,906 30,906 28,349 28,349
Italy and Spain 5,562 5,562 5,227 5,227
UK 490 35,024 35,514 329 31,152 31,481
Other 3,792 3,792 3,852 3,852
40,750 35,024 75,774 37 ,757 31,152 68,909
4. Segimental reporting
The Group has implemented the amended (2007) IFRS 8
“Operating Segments” with effect from 1 July 2009.This has
resulted in a change to the segmental information reported.
Comparative information has been presented on a consistent
basis.
The Group’s operating segments are being reported based on
the financial information provided to the Board of Directors,
which is the Chief Operating Decision-Maker (CODM), to enable
it to allocate resources and make strategic decisions.
The CODM reviews information based on geographical market
sectors and assesses performance at an operating profit level.
Management have identified that the operating segments are
Germany and Austria; Italy and Spain; the UK and Other.
Revenues from external customers in all segments are derived
from the sale of a range of pharmaceutical products designed
for the immunological treatment of the allergic condition.
Other revenues include licensee and distributor sales and
royalties through several world-wide markets including Czech
and Slovak Republics, Netherlands and Canada.
The CODM also reviews revenue by segment on a constant
currency basis to provide relevant year on year comparisons.
The following revenue table is based on a constant currency rate
of€1.11: £1.00 which was the rate used in the 2010 budget.
Revenue from External Customers Revenue from External Customers
2010 2009
£’000 £’000
Germany and Austria 31,539 29,858
Italy and Spain 5,687 5,507
UK 490 329
Other 3,792 3,852
41,508 39,546
Depreciation and amortisation by segment
2010 2009
£’000 £’000
Germany and Austria 58 70
Italy and Spain 99 62
UK 1,270 1,183
1,427 1,315
65 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 66 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
4. Segimental reporting (continued)
Operating profit / (loss) by segment
2010 2009
Allocated operating profit / (loss) £’000 £’000
Germany and Austria 463 801
Italy and Spain 214 (39)
UK 779 (5,866)
Allocated operating profit / (loss) 1,456 (5,104)
Finance income 9 30
Finance expense (1,581) (6,364)
Loss before tax (116) (11,438)
Taxation 702 (326)
Profit / (loss) for the year 586 (11,764)
Total assets by segment
2010 2009
£’000 £’000
Germany and Austria 6,538 6,395
Italy and Spain 3,255 1,733
UK 34,810 30,344
44,603 38,472
Inter-Segment Assets (1,620) (2,525)
Inter-Segment Investments (13,868) (13,870)
Total assets per balance sheet 29,115 22,077
Total liabilities by segment
2010 2009
£’000 £’000
Germany and Austria (5,633) (6,588)
Italy and Spain (1,289) (1,202)
UK (19,927) (39,988)
(26,849) (47 ,778)
Inter-Segment Liabilities 1,620 2,525
Total liabilities per balance sheet (25,229) (45,253) 5. Loss before tax
Loss for the period has been arrived at after charging / (crediting): 2010 2009
£’000 £’000
Restated
Foreign exchange loss 730 3,533
Depreciation and amortisation:
Depreciation of property plant and equipment (note 16) 1,172 1,008
Amortisation of intangible assets (note 15) 255 307
Research and development 2,210 5,297
Employee benefits expense:
Employee costs (note 7) 19,029 16,110
Land and buildings held under operating leases 398 518
Other operating leases 520 620
Consultancy and professional fees relating to Group refinancing - 620
Audit and non-audit services:
Fees payable to the Company’s auditor for the audit of the Group accounts 21 21
Fees payable to the Company’s auditor and its associates for other services:
The audit of the Company’s subsidiaries pursuant to legislation 62 75
Tax services 2 11
Other services pursuant to legislation 11 51
Share based payment expense (note 28) 193 260
The Foreign exchange loss in 2009 has been restated from that which
was previously reported (£485,000 to £3,533 000).
67 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 68 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
6. Remuneration of key management personnel
2010 2009
£’000 £’000
Salaries and short-term employee benefits 1,162 865
Severance payments 542 -
Post employment benefits – defined benefit plans 41 42
Post employment benefits – defined contribution plans 71 53
1,816 960
Over accrual of bonuses (50) -
Share based payment 75 104
1,841 1,064
Full details of key management personnel remuneration
are set out in the audited information included in the
Directors’ Remuneration Report on pages 47 to 49.
7. Employees
2010 2009
£’000 £’000
Wages and salaries 16,093 13,473
Social security costs 2,278 1,970
Share based payments 193 260
Pension costs – defined benefit plans 244 233
Pension costs – defined contribution plans 221 174
19,029 16,110
The average number of employees during the period was made up as follows:
R & D, marketing and administration 136 125
Sales 72 71
Production 186 178
394 374 8. Other Income
2010 2009
£’000 £’000
Contribution from third party 456 -
9. Finance expense
2010 2009
£’000 £’000
Restated
Interest on borrowing facility 1,580 3,045
Change in fair value of financial derivative instrument (289) 1,142
Bank interest 6 24
Employee defined benefit scheme interest expense 193 167
Other interest and charges 9 -
1,499 4,378
Revaluation loss on Euro denominated borrowing facilities 82 1,986
1,581 6,364
The revaluation loss represents the translation difference on the
Group’s Euro based borrowing facility caused by the movement
of the Euro against Sterling throughout the year.
A decision was made in the year to show the change in value
brought about by the fair valuation of the interest rate swap
financial derivative from administration expenses to finance
expenses.The reason for this change is to report the derivative
valuation changes in the same place as the actual interest swap
charges. In order to present a fully comparable position,
the 2009 comparative information has been restated on the
same basis (see note 33).
10. Finance income
2010 2009
£’000 £’000
Bank interest 9 30
69 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
During the year a facility has been constructed to manufacture a
product component; previously this stage in the manufacturing
process was carried out by the Company’s supplier. A contribution
of £456,000 has been made towards the cost of this construction
by the supplier. Under IFRS, this contribution is included in the
consolidated income statement as other income whilst the asset
is included under fixed assets in the consolidated balance sheet
and depreciation is charged annually on the gross amount. 11. Income tax expense
2010 2009
CurrentTax: £’000 £’000
Prior period tax (831) -
Overseas tax 129 326
Tax (credit) / charge for the period (702) 326
The tax credit assessed for the period is higher than the standard rate
of corporation tax as applied in the respective trading domains where
the Group operates.The differences are explained below:
2010 2009
£’000 £’000
Loss for the period before tax (116) (11,438)
Loss for period multiplied by the respective standard rate (32) (3,203)
of corporation tax applicable in each domain (average 28%)
Effects of:
Disallowable adjustments (437) 184
Capital allowances in excess of depreciation (147) (170)
Other fixed asset temporary differences, adjustments and movements 31 52
Tax (utilised)/losses (26) 51
Allowances for R&D expenditure (386) (778)
Tax losses not utilised 243 4,170
Adjustment for difference tax rates 26 67
Relief for shares acquired by employees and Directors (43) (47)
Tax loss surrendered to R&D tax credit 900 -
R&D tax credit received in the period (831) -
Tax (credit) / charge for the period (702) 326
70 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 12. Unrecognised deferred tax
2010 2010 2009 2009
Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities
£’000 £’000 £’000 £’000
Non CurrentAssets
Property, plant and equipment - (697) - (652)
Current Liabilities
Derivative financial instruments -- 328 -
Non Current Liabilities
Pension and other employee obligations 436 - 789 -
Derivative financial instruments 232 - 315 -
Unused tax losses 18,776 - 20,262 -
19,444 (697) 21,694 (652)
Offset (697) 697 (652) 652
Total 18,747 - 21,042 -
No deferred tax has been provided for in respect of these
temporary differences.
13. Earnings / (loss) per share
2010 2009
£’000 £’000
Profit / (loss) after tax attributable to equity shareholders 586 (11,764)
Shares Shares
‘000 ‘000
Issued ordinary shares at start of the period 82,367 81,951
Ordinary shares issued in the period 228,390 416
Issued ordinary shares at end of the period 310,757 82,367
Weighted average number of shares in issue for the period 293,143 81,985
Weighted average number of shares for diluted earnings per share 305,581 93,952
Basic earnings / (loss) per share (pence) 0.20p (14.35p)
Diluted earnings / (loss) per share (pence) 0.19p (14.35p)
The diluted loss per share in the prior year does not differ from the
basic loss per share as the exercise of share options would have
the effect of reducing the loss per share and is therefore not dilutive
under the terms of IAS 33.
71 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 14. Goodwill
2010 2009
£’000 £’000
At1July 2,555 2,468
Exchange difference (59) 87
At 30 June 2010 2,496 2,555
For the purposes of impairment testing of goodwill, the directors
recognise the Group’s Cash Generating Units (“CGU”) to be
the following:
2010 2009
£’000 £’000
Germany 2,496 2,555
The recoverable amount for the CGU above was determined
based on a value-in-use calculation, covering a detailed three-year
forecast of future cash flows using budgeted projections
assuming a 12% discount rate which the Group has estimated to
be the approximate weighted average cost of capital to the Group.
Management’s key assumptions include sales growth (average
4%), which has been determined based on past experience in this
market.The Group's management believes that this is the best
available input for forecasting this mature market.
Apart from the considerations described in determining the value
in use of the CGU described above, the Group's management is
not currently aware of any other probable changes that would
necessitate changes in its key estimates.
72 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 15. Intangible assets
Manufacturing Non-competing Other Computer Total
know-how know-how intangibles software
£’000 £’000 £’000 £’000 £’000
Cost
At 1 July 2008 1,000 3,416 992 1,277 6,685
Additions - - - 295 295
Foreign exchange - 218 19 32 269
At 30 June 2009 1,000 3,634 1,011 1,604 7 ,249
Additions - - - 53 53
Foreign exchange - (150) (14) (20) (184)
At 30 June 2010 1,000 3,484 997 1,637 7,118
Amortisation
At 1 July 2008 667 3,416 727 802 5,612
Charge for the year 66 - 51 190 307
Foreign exchange - 218 18 29 265
At 30 June 2009 733 3,634 796 1,021 6,184
Charge for the year 67 - 51 137 255
Foreign exchange - (150) (12) (19) (181)
At 30 June 2010 800 3,484 835 1,139 6,258
Net book value
At 1 July 2008 333 - 265 475 1,073
At 30 June 2009 267 - 215 583 1,065
At 30 June 2010 200 - 162 498 860
73 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 74 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
16. Property, plant and equipment
Plant & Fixtures Motor Computer Assets under Freehold land Total
machinery & fittings vehicles equipment construction & buildings
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Cost or valuation
At 1 July 2008 3,976 3,406 16 1,546 2,103 309 11,356
Additions 810 116 20 161 231 - 1,338
Asset reclassification 204 (11) - 214 (407) - -
Foreign exchange 8 40 - 36 - 23 107
Disposals - (3) - (60) - - (63)
At 30 June 2009 4,998 3,548 36 1,897 1,927 332 12,738
Revaluation - - - - - 950 950
Additions 150 184 - 78 1,238 - 1,650
Asset reclassification 7 - - 105 (112) - -
Foreign exchange (6) (28) - (24) - (17) (75)
Disposals (6) (50) - (10) - - (66)
At 30 June 2010 5,143 3,654 36 2,046 3,053 1,265 15,197
Depreciation
At 1 July 2008 1,906 1,310 8 941 - 308 4,473
Charge for the year 360 442 6 200 - - 1,008
Foreign exchange 5 28 - 32 - 23 88
Disposals - (1) - (21) - - (22)
At 30 June 2009 2,271 1,779 14 1,152 - 331 5,547
Charge for the year 409 450 8 266 - 39 1,172
Revaluation - - - - - (331) (331)
Foreign exchange (4) (20) - (22) - (17) (63)
Disposals (6) (50) - (10) - - (66)
At 30 June 2010 2,670 2,159 22 1,386 - 22 6,259
Net book value
At 1 July 2008 2,070 2,096 8 605 2,103 1 6,883
At 30 June 2009 2,727 1,769 22 745 1,927 1 7 ,191
At 30 June 2010 2,473 1,495 14 660 3,053 1,243 8,938
All assets are secured against the Group’s bank borrowings. In June 2010 an impairment review has been carried out on the
assets under construction.The recoverable amount for these
assets was determined based on a value-in-use calculation covering
a detailed three-year forecast of future cash flows using budgeted
projections assuming a 12% discount rate which the Group has
estimated to be the approximate weighted average cost of capital to
the Group. Key assumptions include sales growth, which has been
determined based on past experience.The Group’s management
believes that this is the best available input for forecasting this
mature market.
Apart from the considerations described in determining the value-in-
use of the cash generating unit described above, the Group’s
management is not currently aware of any other probable changes that
would necessitate changes in its key estimates.At each half year end
the Directors have reviewed the assets under construction for possible
impairment and concluded that no impairment provision is required.
The Group’s land and buildings were revalued in July 2009
by independent valuers.The land and buildings were previously
valued using the cost model and had a carrying value of £1.
Fair values were estimated based on recent market transactions,
which were then adjusted for specific conditions relating to the
land and buildings.
The land and buildings were not revalued to fair value at the
reporting date as management determined that the effect of
changes in market prices between the date of revaluation and
reporting dates were immaterial.
If the cost basis was used, the carrying amounts of the revalued
land and buildings would be £1.The revalued amounts include
a revaluation surplus of £1,281,000 before tax (of which £331,000
writes back the accumulated depreciation) which is not available
for distribution to the shareholders of the Group.
2010 2009
£’000 £’000
At 1 July 1,824 1,400
Additions 319 296
(Loss) / gain on the investment (15) 24
(Loss) / gain on foreign exchange (111) 104
2,017 1,824
18. Inventories
2010 2009
£’000 £’000
Raw materials and consumables 2,072 1,643
Work in progress 4,474 3,707
Finished goods 348 652
6,894 6,002
The cost of inventories recognised as an expense in cost of sales during
the year was £11.2m (2009: £13.6m) including write-downs in the year
amounting to £1.5m (2009: £2.7m).
The value of inventories measured at fair value less cost to sale was
£175,000 (2009: £236,000).
17. Investments
The Group carries an insurance policy which is designed to
contribute towards the obligation in respect of the defined benefit
pension scheme. It is valued at fair value (market price) by the
Group’s actuaries each year.
75 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 19. Trade and other receivables
2010 2009
£’000 £’000
Trade receivables 2,132 1,742
Other receivables 373 378
VAT 158 164
Prepayments 727 1,156
3,390 3,440
The following financial assets were 2010 2009
overdue by: £’000 £’000
Trade receivables
Not more than 3 months 334 304
More than 3 months but not more than 6 months 138 66
More than 6 months but not more than 1 year 42 58
More than one year 119 135
633 563
Bad and doubtful debt provision
Balance b/f 421 267
Foreign exchange adjustments (21) 10
Charge for the year 84 144
Utilised - -
Balance c/f 484 421
20. Cash and cash equivalents
2010 2009
£’000 £’000
Cash at bank and in hand 4,520 -
21. Trade and other payables
2010 2009
£’000 £’000
Trade payables 3,948 3,742
Social security and other taxes 1,657 1,302
Other creditors 134 187
Accrued expenses and deferred income 3,136 3,719
8,875 8,950
76 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
All amounts due as shown above are short-term.
The carrying value of trade receivables is considered a
reasonable approximation of fair value. All trade and other
receivables have been reviewed for indicators of impairment.
Certain trade receivables were found to be impaired and a
provision increase of £84,000 (2009: £144,000) has been
recorded accordingly. In addition, some of the unimpaired trade
receivables are past due as at the reporting date.The age of
financial assets past due but not impaired is as follows: The facility borrowing is denominated in Euros and provided by
Royal Bank of Scotland plc.The interest on the loan is a floating
rate of Euribor plus a variable margin.The loan is secured in
favour ofThe Royal Bank of Scotland plc by means of a
debenture over the Group’s assets, an Intellectual Property
Rights Agreement with Bencard Allergie GmbH and share pledge
agreements with Bencard Allergie GmbH, AllergyTherapeutics
Italia s.r.l. and AllergyTherapeutics Iberica S.L.
77 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
22. Borrowings
2010 2009
£’000 £’000
Due within one year
Facility borrowing 891 9,376
Short term loans 218 2,250
Overdraft - 26
1,109 11,652
Due after more than one year
Facility borrowing 10,596 19,048
Long term loan - 207
10,596 19,255
2010 2009
£’000 £’000
At 1 July 277 249
Additions 36 31
Utilisation (56) (18)
Foreign exchange movement (11) 15
At 30 June 246 277
23. Provisions
The provision refers to a leaving indemnity reserve in Allergy
Therapeutics Italia s.r.l.. Under Italian law, alongside each monthly
salary payment an amount is paid into this reserve for each
employee.When the employee leaves the Company the accrued
amount is paid to him in the form of a deferred salary payment. 2010 2009
£’000 £’000
Total equity 3,886 (23,176)
Cash and cash equivalents (4,520) -
Capital (634) (23,176)
Total equity 3,886 (23,176)
Borrowings 11,705 30,907
Overall financing 15,591 7 ,731
Capital-to-overall financing ratio (0.04) (3.00)
The IAS 39 categories of financial assets and liabilities included in
the balance sheet and the headings under which they are shown
are as follows:
Categories of financial instrument 2010 2009
£’000 £’000
Financial assets
Current
Loans and receivables (including cash and cash equivalents) 7,183 2,284
Financial liabilities
Current
At amortised cost (including borrowings and payables) (5,191) (15,581)
Fair value through profit and loss - (1,172)
Non current
At amortised cost (including borrowings and payables) (10,842) (19,532)
Fair value through profit and loss (830) (1,126)
(16,863) (37 ,411)
24. Financial instruments
The Group has adopted the amendments to IFRS 7 Improving
Disclosures about Financial Instruments effective from 1 January
2009.These amendments require the Group to present certain
information about financial instruments measured at fair value
in the consolidated balance sheet. In the first year of application
comparative information need not be presented for the
disclosures required by the amendment. Accordingly,
the disclosure for the fair value hierarchy is only presented for
the year ended 30 June 2010.
Risk management
The Group manages its capital to ensure that entities within
the Group will be able to continue as a going concern whilst
maximising the return to stakeholders through the effective
management of liquid resources raised through share issues
and facility loan arrangements.
78 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com Analysis of Derivative Financial Instruments 2010 2009
£’000 £’000
Credit / (Charge) to the Income Statement
Euro forward contacts – held for trading 1,172 104
Euro forward contracts – matured in the period (1,755) (1,820)
(583) (1,716)
Interest rate swap – held for trading 296 (1,172)
Interest rate swap – charges in the period (689) (311)
(393) (1,483)
Derivative of financial instrument 2010 2009
£’000 £’000
Current liabilities
Derivative financial instruments
– Euro forward contracts – held for trading - 1,172
- 1,172
Non current liabilities
Derivative financial instruments
– Interest rate swap – held for trading 830 1,126
830 1,126
The credits / (charges) above were included under administration
expenses in the 2009 income statement. However, in 2010, the
interest rate swap credit has now been included under finance
expense in the income statement and the 2009 figures restated
accordingly (see note 33).
Forward exchange contracts are considered by management to be
part of economic hedge arrangements but have not been formally
designated as such.
Derivative financial instruments
The Group uses derivative financial instruments to mitigate the
effects of exchange rate exposure through the use of forward
exchange contracts and interest rate volatility through the use
of interest rate swap arrangements.
The fair value is calculated by reference to market rates and
supported by counterparty confirmation.
Interest rate swap
Although management consider the interest rate swaps as an
effective hedging tool they are not formally designated as such.
They were arranged to convert 60% of the Company’s loan
borrowings from floating to fixed rates.Within the fair value
hierarchy, this financial derivative is classified as level 2.
Euro forward contracts
As at 30 June 2010 the Group has no currency forward hedges.
In the previous year, it had Euro forward contracts with its bank
that were arranged for the sale of Euros to purchase GBP .
79 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com The following table illustrates the sensitivity of the net result for
the year and the equity of the Group with regard to its financial
assets and liabilities and the Euro to Sterling exchange rate.
Foreign exchange movements over the last two years have been
considered and an average taken, and on this basis a 10%
movement is considered to be a reasonable benchmark.
For 2009, a 5% movement was used.
Foreign currency denominated financial assets and liabilities,
translated into Sterling at closing rates, are as follows:
2010 2010 2010 2009 2009 2009
Sterling Euro Other Sterling Euro Other
£’000 £’000 £’000 £’000 £’000 £’000
Financial assets 1,824 4,099 1,260 299 1,626 359
Financial liabilities (1,408) (2,325) (1,458) (2,016) (13,850) (887)
Short term exposure 416 1,774 (198) (1,717) (12,224) (528)
Financial assets - - ----
Financial liabilities - (11,672) - - (20,658) -
Long term exposure - (11,672) - - (20,658) -
2010 2009
£’000 £’000
If Sterling had strengthened against the Euro by 10% 5%
Net results for the year 984 768
Other comprehensive income (211) 778
773 1,546
If Sterling had weakened against the Euro by 10% 5%
Net results for the year (720) (842)
Other comprehensive income 254 (860)
(466) (1,702)
80 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
2010 2009
£’000 £’000
Sterling 1,582 862
Euro 2,114 (1,084)
US dollars 17 1
Canadian dollars 8 191
Swiss franc 795 -
Polish zloty 4 4
4,520 (26)
24. Financial instruments (continued)
Foreign currency risk
The Group conducts most of its day to day financial activities
in either the Euro, which is the functional currency of the active
subsidiaries in Germany, Italy, Spain and Austria, or Sterling
which is the functional currency of the UK subsidiary. Some costs
are denominated in US dollars and some income is denominated
in Canadian dollars. In addition a balance of Swiss Francs
was obtained during the year to help finance the acquisition
ofTeomed AG (whose functional currency is Swiss Francs)
on 01 July 2010 (see note 32).The Group carries bank balances
in the following currencies: Interest rate risk
The Group finances its operations through equity fundraising
and bank facilities. Interest is charged at a floating rate on the
borrowing facility; hedged by an interest rate swap covering
60% of the total outstanding, converting floating to fixed rates of
interest.This borrowing facility was amended on 03 July 2009 and
is now tailored in such a way as to give greater flexibility to the
Group.This allows the Group to utilise a higher proportion of the
facility in the low sales season and pay down the debt in the high
sales season.The following table illustrates the sensitivity of the
net result for the year and equity to possible changes in interest
rates of + 1% with effect from the beginning of the year on the
remaining element of borrowings. Due to the current low interest
rates it is unfeasible to illustrate the results were the interest rates
to fall by 1%.The changes are considered to be reasonable given
the current market conditions and the calculations are based on
the financial instruments held at each balance sheet date, all other
variables being held constant.
2010 2010 2009 2009
£’000 £’000 £’000 £’000
+1% -1% +1% -1%
Net results for the year 19 n/a (138) 138
Equity -n/a --
19 n/a (138) 138
Current liabilities 2010 2010 2009 2009
£’000 £’000 £’000 £’000
Within 6 months 6 to 12 months Within 6 months 6 to 12 months
Borrowing Facility 996 1,413 11,230 1,149
Trade payables 3,948 - 3,725 17
Other short term liabilities 4,927 - 5,208 -
Derivatives -- 836 336
9,871 1,413 20,999 1,502
Non-current liabilities 2010 2010 2009 2009
£’000 £’000 £’000 £’000
1 to 5 years Later than 1 to 5 years Later than
5 years 5 years
Borrowing Facility 13,859 - 18,472 3,912
Derivatives 830 - 1,126 -
14,689 - 19,598 3,912
There is no material difference between the fair values and the
book values of these financial instruments.
81 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group.
In order to minimise this risk the Group endeavours only to deal
with companies which are demonstrably creditworthy and this,
together with the aggregate financial exposure, is continuously
monitored.The maximum exposure to credit risk is the value of
the outstanding amount.
Credit risk on cash and cash equivalents is considered to be small
as the counterparties are all substantial banks with high credit
ratings.The maximum exposure is the amount of the deposit.
Liquidity risk
The Group’s capital management objectives are to ensure the
Group’s ability to continue as a going concern, and to provide
adequate funding for its day to day operations. Management has
access to funding through a bank facility and continues to have
the option to raise funding from the issue of equity shares to
ensure the Group remains able to meet its commitments as they
fall due. As at 30 June 2010 the Group’s contractual maturities
are summarised as follows: 26. Retirement benefit obligations
Defined contribution scheme
The Group operates a defined contribution pension scheme for
certain employees in the UK.The assets of the scheme are held
separately from those of the Group in an independently
administered fund.The amount charged against the profits
represents the contributions payable under the scheme in respect
of the accounting period totalling £221,000 (2009: £174,000).
Defined benefit scheme
The Group operates a defined benefit pension scheme for
certain employees in Germany.The actuarial valuation was
carried out by Swiss Life Pensions Management GmbH at
30 June 2010.The major assumptions used were as follows:
2010 2009
%pa %pa
Retail price inflation 1.5 2.0
Salary increase rate 4.0 4.0
Rate of pension increase 1.5 2.0
Discount rate at the beginning of the year 6.0 6.0
Discount rate at the end of the year 5.0 6.0
Expected return on assets 4.1 4.1
Increase of social security contribution ceiling 2.0 2.0
Average life expectancies
Male, 65 years of age at the balance sheet date 18.3 18.2
Female, 65 years of age at the balance sheet date 22.4 22.3
Male, 45 years of age at the balance sheet date 41.0 40.9
Female, 45 years of age at the balance sheet date 45.0 44.9
The assets in the scheme and the expected rates of return were as follows:
2010 2009
£’000 £’000
Fair value of planned assets 1,076 1,104
Present value of scheme liabilities (4,649) (3,925)
Deficit in the scheme (3,573) (2,821)
Experience losses on plan assets (9) (10)
Experience (losses) / gains on plan liabilities (108) 1
82 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
25. Operating lease commitments
The following payments are due to be made on operating lease commitments:
Land & buildings Land & buildings Other Other Total Total
2010 2009 2010 2009 2010 2009
£’000 £’000 £’000 £’000 £’000 £’000
Within one year 315 413 409 413 724 826
Two to five years 733 763 335 397 1,068 1,160
Over five years 821 340 8 - 829 340
1,869 1,516 752 810 2,621 2,326
Of the operating lease commitments for the land and buildings of
£1,869,000 (2009: £1,516,000) £1,453,000 relates to the UK based
premises.The production facility accounts for £784,000 (2009
£614,000) of this commitment and expires in December 2018.
Premises in Spain account for £330,000 (2009 £320,000) expiring
in 2020 and in Germany for £114,000 (2009: £316,000) expiring
in December 2010.
Of the other commitments, £581,000 (2009: £703,000) relates
to leased vehicles all expiring within 3 years. 83 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
The plan assets consist of long-term insurance policies that
cannot be directly deducted from the German pension obligation.
These are recognised as a separate asset, rather than as a
deduction in determining the defined benefit liability.The basis
used to determine the overall expected rate of return is the
expected market return as determined by Swiss Life Pensions
Management GmbH using the projected unit credit method.
The actual return on plan assets for the year is £37,000 (2009:
£32,000).The pension charge generates an unrecognised deferred
tax asset of £436,000 (2009: £279,000), however this is
unrecognised in the Group accounts as there is uncertainty
over the recoverability.
2010 2009
£’000 £’000
Amounts charged to operating profit/(loss)
Current service costs 244 233
Amounts included in other finance expenses
Expected return on pension scheme assets (46) (42)
Interest on pension scheme liabilities 239 209
Net charge 193 167
Amounts recognised in the statement of comprehensive income
Actual return less expected return on pension scheme assets (9) (10)
Experience gains and (losses) arising on scheme liabilities (108) 1
Changes in assumptions underlying the present value of scheme liabilities (495) -
Total amount relating to year (612) (9)
Opening cumulative losses (534) (525)
Actuarial loss recognised (1,146) (534)
Net movement recognised (1,146) (534)
Movement in assets during the year 2010 2009
£’000 £’000
Balance as at 1 July 1,104 932
Foreign currency differences (56) 70
Expected return 46 42
Actuarial losses (9) (10)
Contributions 74 70
Assets transferred to finance benefits paid (83) -
Balance as at 30 June 1,076 1,104
Movement in liabilities in the year 2010 2009
£’000 £’000
Balance as at 1 July (3,925) (3,256)
Foreign currency differences 265 (242)
Service cost (244) (233)
Interest cost (239) (209)
Actuarial (losses)/gains (108) 1
Benefits paid by employer 15 14
Benefits paid from assets 83 -
Changes in assumptions (495) -
Balance as at 30 June (4,648) (3,925)
The expected contributions over the forthcoming year are £230,500. 26. Retirement benefit obligations (continued)
History of experience gains and losses
2010 2010 2009 2009 2008 2008 2007 2007
% £’000 % £’000 % £’000 % £’000
Scheme assets
Difference between (0.7) (9) (0.9) (10) 2.6 23 1.5 (11)
the expected and
actual return
Scheme liabilities
Experience gains (2.1) (108) - 1 6.7 201 1.0 (30)
and (losses)
Changes in (495) - 352 174
assumptions
underlying present
value
Total amount (12.1) (612) (0.2) (9) 17 .7 576 4.6 133
recognised
27. Issued share capital
2010 2010 2009 2009
Shares £’000 Shares £’000
Authorised share capital
Ordinary shares of 0.10p each
1 July and 30 June 790,151,667 790 790,151,667 790
Deferred shares of 0.10p each
1 July and 30 June 9,848,333 10 9,848,333 10
Issued and fully paid
Ordinary shares of 0.10p 82,366,614 82 81,950,632 82
At1July
Issued during the year 228,390,000 229 415,982 -
At 30 June 310,756,614 311 82,366,614 82
Issued and fully paid
Deferred shares of 0.10p
At1July 9,848,333 10 9,848,333 10
Issued during the year - ---
At 30 June 9,848,333 10 9,848,333 10
Issued share capital 320,604,947 321 92,214,947 92
84 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
The deferred shares have no voting rights, dividend rights or
value attached to them.
On 1 July 2009 181,631,937 ordinary shares of 0.1p each were
issued pursuant to an Offer, Placing and Subscription at a price
of 12.00p per ordinary share and were admitted to trading on
AIM having been approved by shareholders of the company in
General Meeting on 30 June 2009. Following the exercise
ofWarrants by AzureVentures Limited, 12,500,000 ordinary
shares were admitted to trading on 10 July 2009 at a price of
12.00p and 16,273,393 ordinary shares on 1 October 2009 at a
price of 12.29p. On 9 March 2010, 16,809,670 ordinary shares
were issued pursuant to a Placing and Subscription at a price
of 12.50p. 85 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
28. Share based payments
The Group has a Savings Related Share Option Plan (‘SAYE’)
for the benefit of all employees and Executive directors with
12 months continuous service. No options were granted in
2008/09 or 2009/10 under this scheme. (The 2007 SAYE carried
a 15% discount while the 2008 SAYE carried a 10% discount to
the average market share price on the date of grant).The vesting
period is three years and options are settled in equity once
exercised. If the options remain unexercised after a period of
six months from the end of the vesting period, the options
expire. Options are forfeited if the employee leaves the Group
before the options vest.
The Group has a LongTerm Incentive Plan (‘LTIP’) under which
Executive directors and senior employees may receive annual
provisional awards of performance vesting shares.The number
of shares that vest depends on the Group’s performance during
the Plan cycle in terms of total shareholder return (TSR)
compared to theTSR performance of the companies in the
Plan’s peer group. If the Group’s position in the peer group
at the end of the Plan cycle is at or above the 75th percentile,
100% of the shares provisionally awarded may vest; between
the 75th and 50th percentile the percentage of shares that may
vest will be calculated on a straight-line basis between 100%
and 33.33%; below the 50th percentile no shares will vest.
Each Plan cycle will comprise not less than three consecutive
financial years. Awards are forfeited if the employee leaves
the Group before the shares vest.
Share options were granted to employees and Directors under
earlier schemes.The vesting periods are usually from one to
three years.The vesting of some options is dependent on the
Group’sTSR performance as for the LTIP detailed above.
The options are settled in equity once exercised. If the options
remain unexercised after a period of 10 years from the date of
the grant, the options expire. Options are forfeited if the
employee leaves the Group before the options vest.
During the year a new grant under the LTIP was provisionally
awarded.This scheme falls under the initial 2005 award and
therefore, all calculations and assumptions have been performed
under the same conditions as the previous LTIPs.
During the year an Option Replacement Programme (ORP) was
approved by the Board and was offered to share option-holders
in September 2009.The programme permitted share option-
holders, whose options had an exercise price below the market
share price as at the date of the offer, to voluntarily revoke that
original grant of options and replace them with new options.
The new grant was made under an existing share option plan
at an exercise price equal to the market share price at the date
of grant, 18 October 2009.The ORP was structured so as to
have no additional costs attached bar a clause which stated
that participants were guaranteed a minimum of 15% of their
original options.
The model used to calculate the amounts was the Black Scholes
Model.The inputs into this model were obtained from an
independent advisor and included the volatility of the options,
the risk free interest rate, the exercise price and the expected
life of the options.The net effect of this grant is a cost to the
Company of £4,455 in this financial year and a further cost of
£4,877 spread over the next three years
For the following outstanding share options disclosure, LTIP
awards, with a nil exercise price have been disclosed separately
to avoid distorting the weighted average exercise price (WAEP):
2010WAEP 2010WAEP 2009WAEP 2009WAEP
Number Price (£) Number Price (£)
Outstanding at the beginning of the year 9,497,620 0.36 11,453,300 0.31
Granted during the year 740,656 0.18 --
Exercised during the year (1,175,000) 0.01 (1,794,275) 0.05
Forfeited during the year (353.508) 0.64 (161,405) 0.66
Cancelled during the year (2,941,563) 0.75 --
Outstanding at the year end 5,768,713 0.19 9,497 ,620 0.36
Exercisable at the year end 4,399,245 0.17 8,769,055 0.35
Included in the above numbers outstanding at 30 June 2010
are 3,993,386 (2009: 6,901,478) share options granted before
7 November 2002 or vested before 1 July 2006 which have been
excluded from the share-based payments charge in accordance
with the IFRS 1 ‘First-time Adoption of International Financial
Reporting Standards’ transitional provisions. 28. Share based payments (continued)
86 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
• Awards granted under the LTIP are valued at the market price
at the date of grant.
• The share-based payment charge assumes an employee
attrition rate of 5% per annum and a vesting probability
of 41.5%.
The Group recognised total expenses of £193,000 (2009: £260,000)
related to equity-settled share based payment transactions during
the year.
Date of Vesting Date of Expected Exercise Risk-free Share price Volatility of Fair value Number
grant period (yrs) vesting life (yrs) price (£) rate at grant (£) share price (£) outstanding
10/04/08 3 01/05/11 3.2 0.3060 5% 0.34 42% 0.13 628,812
26/03/07 3 01/05/10 3.2 0.9945 5% 1.17 30% 0.41 99,753
11/01/06 3 01/03/09 3.2 0.6400 5% 0.75 30% 0.26 -
30 June 2010 30 June 2009
Exercise price (p) Number Number
0.1-5 3,258,580 4,441,486
6-45 2,276,136 3,135,480
46-120 233,997 1,920,654
5,768,713 9,497 ,620
Date of Vesting Date of Expected Exercise Risk-free Share price Volatility of Fair value Number
grant period (yrs) vesting life (yrs) price (£) rate at grant (£) share price (£) outstanding
20/07/09 3 20/07/12 3 0.0000 n/a 0.148 n/a 0.148 5,544,000
21/12/07 3 27/12/10 3 0.0000 n/a 0.385 n/a 0.385 1,125,124
09/10/06 3 09/10/09 3 0.0000 n/a 1.000 n/a 1.000 -
14/12/05 3 14/12/08 3 0.0000 n/a 0.695 n/a 0.695 -
Options exercised during the year had a weighted average share
price at date of exercise of 14p (2009: 14p).
The share options outstanding at the end of the year have a
weighted average remaining contractual life of 3.2 years (2009:
3.4 years) and have the following range of exercise prices:
The fair value of options granted under the Savings Related Share
Option Plan has been arrived at using the Black-Scholes model.
The assumptions made to value options granted were as follows:
• Expected volatility was based on historic volatility at the
date of grant.
• The share-based payment charge assumes an expected
option life of 3.2 years, an employee attrition rate of 5%
per annum and an early surrender risk of 5% per annum.
• The expected number of shares vesting was ‘trued-up’
for actual leavers at the balance sheet date.
Details of the shares provisionally awarded under the LongTerm
Incentive Plan are as follows: 29. Contingent liabilities
AllergyTherapeutics (UK) Ltd, a subsidiary of AllergyTherapeutics
plc, has guaranteed the deposits required for leases on Group
cars and rented office space occupied by a fellow subsidiary,
Bencard Allergie GmbH.The amount as at 30 June 2010 was
€107 ,426; £86,999 (2009:€107 ,568; £91,469).
A cross-guarantee exists between AllergyTherapeutics (Holdings)
Ltd, AllergyTherapeutics (UK) Ltd, Bencard Allergie GmbH, Allergy
Therapeutics Italia s.r.l. and AllergyTherapeutics Iberica S.L. in
which the liabilities of each entity under the RBS loan agreement
are guaranteed by all the others.
30. Capital commitments
The Group’s capital commitments at the end of the financial
period, for which no provision has been made, are as follows:
Included in the above is £192,000 for ongoing factory
refurbishments in the UK (2009: £389,000); £29,000 for new plant
and machinery (2009: £72,000) and £31,000 for IT equipment and
systems upgrades (2009: £21,000).
87 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
30 June 2010 30 June 2009
£’000 £’000
Capital commitments 252 482 88 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
31. Related party transactions
AllergyTherapeutics plc’s related parties include its subsidiary
companies and its key management. Key management personnel
are the Company’s directors, and as such full disclosure of their
remuneration can be found in the Directors’ Remuneration
report on pages 47 to 49. At 30 June 2010, the Company’s
subsidiary undertakings were:
Subsidiary undertaking Country of Principal activity Percentage of Class of shares held
incorporation shares held
AllergyTherapeutics UK Holding Company 100 Ordinary and deferred
(Holdings) Ltd
AllergyTherapeutics UK Manufacture and sale of 100 Ordinary
(UK) Ltd pharmaceutical products
AllergyTherapeutics UK Dormant 100 Ordinary
Development Ltd
Bencard Allergie GmbH Germany Sale of pharmaceutical 100 Ordinary
products
Bencard Allergie (Austria) GmbH Austria Sale of pharmaceutical 100 Ordinary
products
AllergyTherapeutics Italia s.r.l. Italy Sale of pharmaceutical 100 Ordinary
products
AllergyTherapeutics Iberica S.L. Spain Sale of pharmaceutical 100 Ordinary
products 32. Events after the balance sheet date
On 1 July 2010, AllergyTherapeutics plc acquired 100% of the
issued share capital ofTeomed AG.Teomed was established in
1989 and specialises in the field of allergy and is the distributor
for the Company’s products and other company’s products in
the Swiss market. It employs 12 people with offices in Zurich.
Teomed is the first acquisition following the increased emphasis
in the Group’s strategy towards strengthening its European
market position and will provide additional revenue growth
and an opportunity to improve earnings.
The total consideration was CHF1,200,000 (£740,000) and
comprises an initial cash payment of CHF800,000 (£494,000)
on signing, and a deferred payment of CHF400,000 (£246,000),
paid into an escrow account, payable twelve months from date
of completion.The deferred consideration is contingent on the
basis that existing distributor agreements continue for a period
of at least one year from the acquisition date.
The allocation of the purchase price to the assets and liabilities
ofTeomed AG at the acquisition date are as follows:
Acquisition costs incurred up to 30 June 2010 relating to the
purchase ofTeomed AG of £120,000 have been expensed under
administration costs within the consolidated income statement
in the year ended 30 June 2010.
The adjustment to fair value on trade and other receivables
relates to trade debtors which existed at the acquisition date.
The acquisition gave rise to a gain on bargain purchase primarily
due to the fair valuation of the existing distribution agreements
exceeding the consideration paid.These intangible assets
represent the potential future discounted cashflows lost to the
Group should these existing agreements be terminated within the
next 12 months.They were not recognised on the balance sheet
of the acquired company.The gain will be included in the Group’s
consolidated income statement in the year ending 30 June 2011.
The pre-existing distributor agreement between the Group and
Teomed AG had expired prior to the acquisition taking place.
Also in July 2010, the Group terminated its relationship with
its existing distributor in the Netherlands and set up its own
Limited Company.
Pre-acquisition carrying amount Adjustment to fair value Recognised at acquisition date
£’000 £’000 £’000
Property, plant and equipment 15 - 15
Intangible assets - 884 884
Total non-current assets 15 884 899
Trade and other receivables 217 (10) 207
Inventories 133 - 133
Cash and cash equivalents 3 - 3
TotalAssets 368 874 1,242
Trade and other payables (139) - (139)
Deferred taxation liability - (177) (177)
Net identifiable assets and liabilities 229 697 926
Gain on bargain purchase (186)
Cost of acquisition 740
89 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com 90 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Financial Statements www.allergytherapeutics.com
33. Restatement of prior year figures
A decision was made in the year to reallocate the fair valuation
of the interest rate swap financial derivative from administration
expenses to finance expenses.The reason for this change is to
report the derivative valuation changes in the same place as the
actual interest swap charges. In order to present a fully
comparable position, the 2009 comparative information has
been restated on the same basis.The amount of the restatement
for each financial statement line item is as follows:
Consolidated income statement
As Originally Reported Amount of Restatement As Restated
2009 2009 2009
£’000 £’000 £’000
Gross Profit 24,194 24,194
Distribution costs (14,893) (14,893)
Administrative expenses – other (10,250) 1,142 (9,108)
Research and development costs (5,297) (5,297)
Administrative expenses (15,547) 1,142 (14,405)
Other income - -
Operating loss (6,246) (5,104)
Finance income 30 30
Finance expense (5,222) (1,142) (6,364)
Loss before tax (11,438) (11,438)
Consolidated cash flow statement
Finance expenses 3,236 1,142 4,378
Financial derivative instruments 1,038 (1,142) (104)
Finance Expense note
Change in fair value of financial derivative 3,045 1,142 4,187
instrument
Total Finance Expenses 5,222 1,142 6,364 Independent Auditor’s Report to the Members of Allergy Therapeutics plc (Company)
91 AllergyTherapeutics Annual Report 2010 Financial Statements – Independent Auditor’s Report to the Members of AllergyTherapeutics plc (Company)
We have audited the parent company financial statements of
AllergyTherapeutics plc for the year ended 30 June 2010 which
comprise the parent company balance sheet and the related
notes.The financial reporting framework that has been applied
in their preparation is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted
Accounting Practice).
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state
to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities
Statement, set out on page 45 and 46, the directors are
responsible for the preparation of the parent company financial
statements and for being satisfied that they give a true and fair
view. Our responsibility is to audit the parent company financial
statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland).Those standards require
us to comply with the Auditing Practices Board’s (APB’s) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is
provided on theAPB’s website at www.frc.org.uk/apb/scope/UKNP .
Opinion on financial statements
In our opinion the parent company financial statements:
• Give a true and fair view of the state of the company's affairs
as at 30 June 2010 and of its loss for the year then ended;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements
of the Companies Act 2006.
Opinion on other matter prescribed by the CompaniesAct 2006
In our opinion the information given in the Directors’ Report for
the financial year for which the financial statements are prepared
is consistent with the parent company financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if,
in our opinion:
• Adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the parent company financial statements are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and explanations
we require for our audit.
Other matter
We have reported separately on the group financial statements
of AllergyTherapeutics plc for the year ended 30 June 2010.
Stephen P .S.Weatherseed
Senior Statutory Auditor for and on behalf of GrantThornton
UK LLP Statutory Auditor, Chartered Accountants
Gatwick
17 September 2010 30 June 30 June
2010 2009
Note £’000 £’000
FixedAssets
Investments 3 51 51
Current assets
Debtors: amounts falling due within one year 4 646 795
Current liabilities
Creditors: amounts falling due within one year 5 (39) (463)
Net current assets 607 332
Total assets less current liabilities 658 383
Net assets 658 383
Capital and reserves
Called up share capital 6 321 92
Share premium 7 58,704 33,193
Other reserves – shares held by EBT 7 67 67
Other reserves – share based payments 7 1,324 1,291
Profit and loss account 7 (59,758) (34,260)
Total equity 658 383
These financial statements were approved by the Board of
Directors on 17 September 2010 and were signed on its behalf by
Manuel Llobet
Chief Executive Officer
Ian Postlethwaite
Finance Director
Registered number: 5141592
Company Balance Sheet
92 AllergyTherapeutics Annual Report 2010 Financial Statements – Company Balance Sheet www.allergytherapeutics.com 1.Accounting policies
Basis of preparation
The separate financial statements of the Company are presented
as required by the Companies Act 2006. As permitted by that Act,
the separate financial statements have been prepared in accordance
with applicable United Kingdom accounting standards and under
the historical cost convention.
Going Concern
For the year ended 2010 the Group has reported a profit,
however for the financial years ended 2007 to 2009 primarily as
a consequence of its investment in research and development
activities, it reported losses.These losses have been funded by
equity issues, debt facilities and cash generated by the operating
business.
The Group has prepared detailed budgets, including cash flow
projections, for the periods ending 30 June 2011 and 30 June
2012.These projections include assumptions on the trading
performance of the operating business and the continued
availability of the existing debt facilities. After making appropriate
enquiries, which included a review of the annual budget,
by considering the cash flow requirements for the foreseeable
future and the effects of sales and other sensitivities on the
Company’s funding plans, the Directors continue to believe that
the Group and Company will have adequate resources to continue
in operational existence for the foreseeable future and
accordingly have applied the going concern principle in drawing
up the financial statements. In reaching this view, the Directors
have considered and prioritised the actions that could be taken
to offset the impact of any shortfall in operating performance.
Investments
Investments in shares in subsidiary undertakings are included
at cost less amounts written off.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of
exchange ruling at the preceding month-end. Monetary assets
and liabilities denominated in foreign currencies are translated
using the rate of exchange ruling at the balance sheet date and
the gains or losses on translation are included in the profit and
loss account.
Deferred taxation
Deferred tax is recognised without discounting in respect of all
timing differences, in the following year, between the treatment
of certain items for taxation and accounting purposes, which have
arisen but not reversed by the balance sheet date except as
otherwise required by FRS 19.
Employee BenefitTrust (EBT)
The financial statements include the assets and liabilities of
a trust, set up for the benefit of the Company’s employees.
The Employee BenefitTrust has acquired shares in the Company
and these are deducted from shareholders funds on the balance
sheet within 'Other reserves' initially at the cost that the shares
were acquired. The net proceeds received from the issue of these
shares through the exercise of options are recognised through
this reserve.There are no shares remaining in the EBT.
Share based payments
The Company adopted FRS 20 with effect from 1 July 2006. FRS 20
requires the recognition of a charge to the profit and loss account
for all applicable share based payments, including share options,
SAYE schemes and share based LongTerm Incentive Plan.
The Company has equity-settled share based payments but no
cash-settled share based payments. All share based payment
awards granted after 7 November 2002 which had not vested
prior to 1 July 2006 are recognised in the financial statements.
All goods and services received in exchange for the grant of
any share-based payment are measured at their fair values.
Where employees are rewarded using share-based payments,
the fair values of employees’ services are determined indirectly
by reference to the fair value of the instrument granted to the
employee.This fair value is appraised at the grant date and
excludes the impact of non-market vesting conditions (for
example, profitability and sales growth targets).
If vesting periods or non-market based vesting conditions apply,
the expense is allocated over the vesting period, based on the
best available estimate of share options expected to vest.
Estimates are revised subsequently if there is any indication
that the number of share options expected to vest differs from
previous estimates. Any cumulative adjustment prior to vesting
is recognised in the current period.
If market based vesting conditions apply, the expense is allocated
over the relevant period, usually the period over which
performance is measured.Vesting assumptions and resulting
expenses are fixed at the date of grant, regardless of whether
market conditions are actually met. Any adjustment for options
which lapse prior to vesting is recognised in the current period.
2. Loss for the financial period
The Company has taken advantage of s.408 of the Companies
Act 2006 and has not included its own profit and loss account
in these financial statements.The Company’s loss for the period
was £25,658,000 (2009: £514,000).
Notes to the Comapany Balance Sheet
93 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Company Balance Sheet www.allergytherapeutics.com 94 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Company Balance Sheet www.allergytherapeutics.com
3. Investments
The Group’s capital commitments at the end of the financial period, for which no provision has been made, are as follows:
Shares in subsidiary
undertaking £’000
Cost
Investment brought forward and carried forward 51
Provision
Provision brought forward and carried forward -
Net book value at 30 June 2010 51
At 30 June 2010 the Company’s subsidiary undertakings were:
Subsidiary undertaking Country of Principal activity Percentage of Class of shares held
incorporation shares held
AllergyTherapeutics UK Holding Company 100 Ordinary and deferred
(Holdings) Ltd
AllergyTherapeutics (UK) Ltd UK Manufacture and sale of 100 Ordinary
pharmaceutical products
AllergyTherapeutics UK Dormant 100 Ordinary
Development Ltd
Bencard Allergie GmbH Germany Sale of pharmaceutical 100 Ordinary
products
Bencard Allergie (Austria) GmbH Austria Sale of pharmaceutical 100 Ordinary
products
AllergyTherapeutics Italia s.r.l. Italy Sale of pharmaceutical 100 Ordinary
products
AllergyTherapeutics Iberica S.L. Spain Sale of pharmaceutical 100 Ordinary
products
AllergyTherapeutics (Holdings) Ltd is fully owned by Allergy
Therapeutics plc. All other subsidiary undertakings except
Bencard Allergie (Austria) GmbH, are fully owned by Allergy
Therapeutics (Holdings) Ltd. Bencard Allergie (Austria) GmbH
is fully owned by Bencard Allergie GmbH.
In July 2010 the Company acquired a 100% owned subsidiary in
Switzerland and also set up a new 100% owned Limited Company
in the Netherlands. See note 32 in the consolidated financial
statements for further details. 95 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Company Balance Sheet www.allergytherapeutics.com
4. Debtors
30 June 2010 30 June 2009
£’000 £’000
Amounts falling due within one year
Amounts owed by subsidiary undertakings 642 305
Other debtors - 66
Prepayments 4 424
646 795
The amount owed by subsidiary undertakings is stated net
of provisions of £58,055,000 (2009: £32,732,000).
5. Creditors – amounts falling due within one year
30 June 2010 30 June 2009
£’000 £’000
Taxation and social security 39 39
Accruals and deferred income - 424
39 463
6. Called up share capital
Full details of the Company’s share capital are set out in
note 27 of the consolidated financial statements. 96 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Company Balance Sheet www.allergytherapeutics.com
7. Reserves
Profit and loss account
£’000
At 30 June 2009 (34,260)
Retained loss for the year (25,658)
Lapsed share based payments recycled to retained losses 160
At 30 June 2010 (59,758)
Share premium account
£’000
At 30 June 2009 33,193
Shares issued in the year 25,511
At 30 June 2010 58,704
Other reserve – share based payments
£’000
At 30 June 2009 1,291
Provision in year for share based payments 193
Lapsed share based payments recycled from retained losses (160)
At 30 June 2010 1,324
Other reserve – EBT
£’000
At 30 June 2009 67
Sale of shares by EBT -
At 30 June 2010 67 8. Share based payments
Full details of the Company’s share based payments are set
out in note 28 of the consolidated financial statements.
9. Director’s emoluments
Full details of the Company’s directors' emoluments are set out in
the Directors' Remuneration Report in the Report of the Directors.
10. Reconciliation of movement in shareholders’ funds
Year to Year to
30 June 2010 30 June 2009
£’000 £’000
Loss for the financial year (25,658) (20)
Issue of shares from EBT - 68
Share based payments 193 260
Shares Issued 25,740 20
Net addition to shareholders’ funds 275 328
Opening shareholders’ funds 383 55
Closing shareholders’ funds 658 383
11. Contingent liabilities
Full details of the Company’s contingent liabilities are set out
in note 29 of the consolidated financial statements.
12. Events after the balance sheet date
Full details of events after the balance sheet date are set out
in note 32 of the consolidated financial statements.
97 AllergyTherapeutics Annual Report 2010 Financial Statements – Notes to the Company Balance Sheet www.allergytherapeutics.com Registered office
DominionWay
Worthing
West Sussex
BN14 8SA
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Public RelationsAdvisers
Financial Dynamics
Holborn Gate
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PatentAttorneys
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Shareholder Information
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AllergyTherapeutics plc
DominionWay
Worthing
West Sussex
BN14 8SA
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44 (0)1903 844720
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