TIDMCIR
RNS Number : 9142L
Circassia Group Plc
16 September 2021
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR. The persons
taking responsibility for this announcement are the Company
contacts named below.
CIRCASSIA GROUP PLC
("Circassia" or the "Company" and, together with its
subsidiaries, the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Oxford, UK - 16 September 2021: Circassia Group plc (LSE: CIR),
a medical device company focused on point of care asthma diagnosis
and management, today announces its unaudited interim results for
the six months ended 30 June 2021 ("H1 2021").
Financial highlights
-- NIOX(R) sales increased 28% to GBP14.6 million (H1 2020:
GBP11.4 million) following the post COVID-19 recovery
-- NIOX(R) business (excluding corporate overheads of GBP0.7
million (H1 2020: GBP1.3 million)) generated an EBITDA profit for
the first time of GBP0.6 million (H1 2020: GBP4.9 million loss),
reflecting substantial reduction in cost base
-- Discontinued COPD business traded profitably, generating
profit of GBP1.1 million (H1 2020: GBP8.6 million loss)
-- Net cash of GBP11.3 million as of 30 June 2021 (30 June 2020:
GBP9.6 million, 31 December 2020: GBP7.4 million)
Financial progress
Key performance indicators (KPIs) for the Group H1 2021 H1 2020
GBPm GBPm
Revenue 14.6 11.4
------------------- -------------------
Gross margin 68% 68%
------------------- -------------------
Total expenditure(1) (10.0) (14.0)
------------------- -------------------
Adjusted EBITDA(2) (0.1) (6.2)
------------------- -------------------
Operating loss (2.6) (8.7)
------------------- -------------------
Loss before tax from continuing operations (2.0) (9.4)
------------------- -------------------
Profit/(loss) for the financial period from
discontinued operations 1.1 (8.6)
------------------- -------------------
Loss for the financial period (0.9) (18.0)
------------------- -------------------
Net cash(3) at period end 11.3 9.6
------------------- -------------------
(1) Excludes depreciation, amortisation and impairment.
(2) Earnings before interest, tax, depreciation, amortisation
and impairment.
(3) Includes cash and cash equivalents.
Operational highlights
-- The transfer of the COPD products (Tudorza(R) and Duaklir(R))
back to AstraZeneca completed on 31 March 2021
-- Settlement reached with Beyond Air, Inc. in May 2021 which,
subject to FDA approval of their product may provide further cash
resources of up to $16.5 million
-- Surpassed 40 million FeNO tests since launch
-- Expansion of distribution in China
-- Named 'Global Leaders in FeNO Testing 2021' by Global Health & Pharma Awards
Ian Johnson, Circassia's Executive Chairman, said: "We are
pleased to report that the Company has reached a significant
milestone with the continuing NIOX(R) business now profitable at
the EBITDA level. Management has made substantial progress in
implementing a new strategy, right sizing the business and ensuring
it has the capability to generate profitable revenue growth. The
cost base is now stable and plans to expand international
distribution are being executed.
Trading in July and August has been slightly above EBITDA
breakeven for the Group (including corporate overheads). Despite
revenue visibility continuing to be limited and testing volumes in
several of our major markets continuing to be held back by the
effects of the pandemic, given the Group's reduced cost base, the
Board believes the full year EBITDA performance is likely to be
materially ahead of current market expectations."
Contacts
Circassia
Ian Johnson, Executive Chairman Tel: +44 (0) 1865 405 560
Michael Roller, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Broker)
Aubrey Powell/ Jen Boorer/ Hannah Woodley Tel: +44 (0) 20 7496
3000
About Circassia
Circassia is a medical device company focused on point of care
asthma diagnosis and management. Our market-leading NIOX(R)
products are used in clinical settings by physicians around the
world to improve asthma diagnosis and management and by leading
research organisations conducting clinical studies on behalf of
pharmaceutical companies. At present, Circassia provides products
and services in around 50 countries. For more information please
visit www.circassia.com .
The Company's interim results report is available online at
www.circassia.com/investors/financial-reports/
Forward-looking statements
This press release contains certain projections and other
forward-looking statements with respect to the financial condition,
results of operations, businesses and prospects of Circassia. The
use of terms such as "may", "will", "should", "expect",
"anticipate", "project", "estimate", "intend", "continue", "target"
or "believe" and similar expressions (or the negatives thereof) are
generally intended to identify forward-looking statements. These
statements are based on current expectations and involve risk and
uncertainty because they relate to events and depend upon
circumstances that may or may not occur in the future. There are a
number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements. Any of the assumptions underlying these
forward-looking statements could prove inaccurate or incorrect and
therefore any results contemplated in the forward-looking
statements may not actually be achieved. Nothing contained in this
press release should be construed as a profit forecast or profit
estimate. Investors or other recipients are cautioned not to place
undue reliance on any forward-looking statements contained herein.
Circassia undertakes no obligation to update or revise (publicly or
otherwise) any forward-looking statement, whether as a result of
new information, future events or other circumstances.
OPERATING REVIEW
Introduction
The first half of 2021 saw a much improved performance by the
continuing NIOX(R) business, which is now the sole focus of the
Group. Revenues grew by 28% to GBP14.6 million (H1 2020: GBP11.4
million) and for the first time in its history, the NIOX(R)
business made a profit at EBITDA level of GBP0.6 million before
corporate overheads (H1 2020: GBP4.8 million loss).
Business Review
NIOX(R) is the market leader in point of care FeNO testing for
asthma and has a dominant market share outside China, with over
17,000 devices sold worldwide and the Company recently having
passed 40 million tests carried out since launch.
Clinical sales grew by 11% compared with the first half of 2020
and were 10% higher than the second half of 2020. Recurring
revenues from test kit sales were 90% of total clinical sales in H1
2021 (H1 2020: 85%). Notwithstanding ongoing disruption by the
COVID-19 pandemic, the clinical business has continued to recover
from its low point in the second quarter of 2020 with revenues now
approximately 84% of pre pandemic levels.
In our major geographic regions H1 2021 revenues in EMEA were up
17% to GBP4.2 million (H1 2020: GBP3.6 million); Americas H1 2021
revenues were up 4% to GBP2.9 million (H1 2020: GBP2.8 million) and
revenues in APAC were up 24% to GBP5.1 million (H1 2020: GBP4.1
million), benefitting from a one-off recovery in China of GBP0.6
million from prior years. Recognising the competitive nature of the
market in China, Circassia restructured the business in H1 2021,
rapidly expanding indirect distribution to extend reach and breadth
across the healthcare system whilst reducing direct costs.
Research sales more than doubled to GBP2.4 million in H1 2021
(H1 2020: GBP0.9 million) and were 50% up on H2 2020. Clinical
studies have resumed, adapting to the constraints imposed by the
pandemic. One of our major customers placed significant orders for
devices in H1 2021 for new clinical trials starting during the
course of the current year. While we do not expect this business to
continue at quite such a high level in the second half and revenue
flow is less predictable than Clinical sales, the medium-term
outlook for this business is good. Recurring revenues from test kit
sales were 54% of total research sales in H1 2021 (H1 2020: 65%),
reflecting the higher number of new devices purchased in this half
compared with H1 2020.
COPD
The transition period involving the COPD products, Tudorza(R)
and Duaklir(R), came to an end, as expected, at the end of March
2021, whereupon the products were handed back to AstraZeneca. All
amounts owing to the Group from customers have now been collected,
but accrued rebate payments (principally due to Medicare and
Medicaid) were GBP6.9 million at the end of June. These have since
reduced to GBP5.6 million by the end of August.
The COPD business traded profitably in the first half of the
year.
Beyond Air
We were pleased to be able to conclude our dispute with Beyond
Air without recourse to formal arbitration proceedings, which would
have been both time-consuming and expensive for both parties.
Under the terms of the original licence agreement, Circassia
issued $10.5 million of Circassia shares to Beyond Air during the
first half of 2019. Under the terms of the Settlement, Circassia
will surrender its rights to the LungFit(R) product in exchange for
payments by Beyond Air for up to a maximum of $16.5 million,
payable in cash as follows:
-- $2.5 million within 60 days of the approval of LungFit(R) by
the FDA ("FDA approval")
-- $3.5 million within 60 days of the first anniversary of FDA
approval
-- $4.5 million within 60 days of the second anniversary of FDA
approval
Circassia will also be entitled to a further royalty of 5% of
net sales of LungFit(R) , commencing on the second anniversary of
FDA approval and capped at a maximum of $6 million.
Outlook
The Group is now exclusively focussed on point-of-care asthma
diagnosis and management and having restructured the business
appropriately in terms of size and capability, our attention is now
to drive top-line growth. Management have developed and are at the
early stages of implementing a NIOX growth strategy that will raise
the awareness of the benefits of FeNO testing and NIOX(R),
significantly improve the availability of NIOX(R) worldwide by
expanding distribution, optimise reimbursement and pricing and, in
the medium term, explore its use in the home and workplace as
greater emphasis is placed on managing patients in non-hospital
locations. While the reshaping of the cost base that we have
undertaken in the last 18 months is substantially complete, we will
continue to ensure that good cost disciplines are maintained to
permit further top-line growth to translate into increased
profitability and thereby greater shareholder value.
Trading in July and August has been slightly above EBITDA
breakeven for the Group (including corporate overheads). Given the
Group's reduced cost base, and notwithstanding continued limited
revenue visibility, the Board expects that EBITDA for the year will
be materially ahead of current market expectations and with
continuing cost discipline the Board is confident that the business
is now capable of delivering profitable growth and achieving
greater shareholder value.
FINANCIAL REVIEW
The first half of 2021 has been a period of recovery for
Circassia following the COVID-19 pandemic. On 31 March 2021, the
Group completed the hand back of the rights to its COPD products to
AstraZeneca, and as such the results of the COPD business are
classified as a discontinued operation in the table below. The
NIOX(R) business represents the continuing operations of the
Group.
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
======================================== =========== =========== ==============
Revenue 14.6 11.4 23.9
Cost of sales (4.7) (3.6) (7.6)
Gross profit 9.9 7.8 16.3
Gross margin 68% 68% 68%
Research and development costs (2.6) (2.9) (6.8)
Sales and marketing costs (6.7) (8.6) (16.6)
Administrative expenses (3.2) (5.0) (10.2)
Adjusted EBITDA(1) (0.1) (6.2) (11.1)
Operating loss (2.6) (8.7) (17.3)
Other gains and (losses) - net 0.1 (0.6) (0.9)
Other income 0.7 - -
Net finance costs (0.2) (0.1) (0.2)
Loss before tax (2.0) (9.4) (18.4)
Taxation - - (8.4)
Loss for the financial period from
continuing operations (2.0) (9.4) (26.8)
Profit/(loss) for the financial period
from discontinued operations 1.1 (8.6) (6.7)
Loss for the financial period (0.9) (18.0) (33.5)
---------------------------------------- ----------- ----------- --------------
Cash(2) 11.3 9.6 7.4
---------------------------------------- ----------- ----------- --------------
(1) Earnings before interest, tax, depreciation, amortisation
and impairment.
(2) Includes cash and cash equivalents.
Revenue
NIOX(R) revenues for the period were GBP14.6 million (H1 2020:
GBP11.4 million) which include clinical sales of GBP12.2 million
(H1 2020: GBP10.5 million) and research sales of GBP2.4 million (H1
2020: GBP0.9 million). NIOX(R) c linical revenues represent sales
to physicians and hospitals for use in clinical practice and to the
Company's distributors, while research sales are those to
pharmaceutical companies and contract research organisations (CROs)
for use in clinical studies. The increase in NIOX(R) sales was due
to the recovery following the COVID-19 pandemic, combined with the
implementation of the Company's business strategy to focus efforts
entirely on the NIOX(R) product.
Gross profit
Gross profit on NIOX(R) sales was GBP9.9 million (H1 2020:
GBP7.8 million), with a gross margin of 68% (H1 2020: 68%). Gross
margin was in line with prior year due to a higher proportion of
higher margin direct sales in China and a higher proportion of
lower margin Research sales.
Sales and marketing
Sales and marketing costs decreased to GBP6.7 million (H1 2020:
GBP8.6 million) which was mainly due to a reduction in the number
of dedicated NIOX(R) sales representatives across the Group,
combined with lower third-party marketing costs incurred during the
COVID-19 pandemic.
Other income
Other income relates to a GBP0.7 million grant received from the
US government under the Payment Protection Program. There are no
contingencies or conditions attaching to this grant, and the
amounts are not repayable.
Loss after tax and loss per share
Basic loss per share for the period was 0p (H1 2020: 5p)
reflecting a loss for the financial period of GBP0.9 million (H1
2020: GBP18.0 million). The loss per share for continuing
operations of 0p (H1 2020: 3p) reflecting a loss for the financial
period of GBP2.0 million (H1 2020: GBP9.4 million).
Profit from discontinued operations
Profit from discontinued operations was GBP1.1 million (H1 2020:
GBP8.6 million loss). The transitional run-off period ended in
March 2021, during which time minimal operating expenditure was
incurred. The prior period includes several one-off items including
the AstraZeneca loan write-off, offset by the associated impairment
charge of the licence assets.
Six months ended Six months ended
----------------------------------
30 June 2021 30 June 2020
----------------------------------
GBPm GBPm
Underlying trading profit/(loss) 1.1 (17.7)
Loan write-off - 123.1
Intangible asset impairment - (114.0)
---------------------------------- ----------------- ----------------
Profit/(loss) from discontinued
operations 1.1 (8.6)
---------------------------------- ----------------- ----------------
Statement of financial position
The Group's net assets at 30 June 2021 were GBP65.2 million (31
December 2020: GBP66.1 million).
Current liabilities at 30 June 2021 were GBP13.7 million (31
December 2020: GBP26.7 million). The decrease is mainly due to
lower trade payables, in particular lower rebate accruals relating
to the returned COPD products.
Cash flow
The Group's cash position (including cash and cash equivalents)
increased from GBP7.4 million at 31 December 2020 to GBP11.3
million at 30 June 2021.
Cash used in operations during the year aggregated GBP0.4
million, of which GBP0.8 million was used in the COPD discontinued
operations.
GBP5.0 million of equity finance was raised in the period (H1
2020: GBP0.2 million).
Exchange differences on cash and cash equivalents arose as a
result of translation of foreign currency balances at the beginning
and end of the relevant period. The exchange loss for the period
was GBP0.2 million (H1 2020: GBP2.5 million gain).
Michael Roller
Chief Financial Officer
16 September 2021
PRINCIPAL RISKS AND UNCERTAINTIES
Circassia has considered the principal risks and uncertainties
facing the Group for the first six months of 2021 and does not
consider them to have changed from those set out on pages 32 to 39
of the 2020 Annual Report and accounts. A summary of these risks is
as follows:
Commercial success
The Group's competitors, many of whom have considerably greater
financial and human resources, may develop safer or more effective
products or be able to compete more effectively in the markets
targeted by the Group. New companies may enter these markets and
novel products and technologies may become available which are more
commercially successful than those being developed by the
Group.
Compliance with healthcare regulations
The Group must comply with complex regulations in relation to
the marketing of its devices. These regulations are strictly
enforced. Failure by the Group (or its commercial partners) to
comply with relevant legislation and regulations, including the US
Physician Payment Sunshine Act (and equivalent legislation in other
countries), the US False Claims Act, the Anti-Kickback Statute and
the US Foreign and Corrupt Practices Act and regulations relating
to data privacy (amongst others) and similar legislation in
countries outside the United States, such as China, may result in
criminal and civil proceedings against the Group.
Regulatory approvals
The Group may not obtain regulatory approval for its products
that are in development. Even where products are approved,
subsequent regulatory difficulties may arise, or the conditions
relating to the approval may be more onerous or restrictive than
the Group expects, or existing approvals might be withdrawn.
Supply Chain
The Group relies on third parties for the supply of key
materials, finished products and services, including shipping.
Problems at these contractors, such as technical issues,
contamination, and regulatory actions may lead to delays or even
loss of supply or inadequate supply of these materials, products
and services during commercialisation. Some materials may only be
available from one source, as is currently the case for the NIOX(R)
devices and the sensors contained in those devices, and regulatory
requirements may make substitution costly and time-consuming.
Research and development risks
The Group relies upon its collaborations with various
counterparties for the development of the NIOX(R) device and
sensors contained in the NIOX(R) devices.
Intellectual property, knowhow, and trade secrets
The Group may be affected by challenges relating to the validity
of those patents which it owns or licenses. If these challenges are
successful, then the Group may be exposed to generic
competition.
The Group could also be sued for infringement of third-party
patent rights. If these actions are successful, then it would have
to pay substantial damages and potentially remove its products from
the market. Such litigation, particularly in the United States,
involves significant costs and uncertainties.
The Group may rely upon knowhow and trade secrets to protect its
products and maintain a competitive advantage. This may be
especially important where patent protection is limited or
lacking.
The Group licenses certain intellectual property rights from
third parties. If the Group fails to comply with its obligations
under these licence agreements, it may enable the other party to
terminate the agreement.
Organisational capabilities and capacity
The Group may be unable to successfully implement its plans for
growth if it does not attract and retain employees with the
requisite capabilities and experience, in appropriate numbers.
Financial operations
The Group has incurred significant losses since the inception of
its various businesses. However, it anticipates that it should
become profit making in the near future once the effects of
COVID-19 on the short-term trading of the NIOX(R) business have
ceased.
Foreign exchange fluctuations may adversely affect the Group's
results and financial condition.
COVID-19
The COVID-19 pandemic has had and continues to have an impact on
healthcare systems around the world and in particular upon their
ability to conduct FeNO testing at normalised pre-pandemic
levels.
Brexit
There continues to be political and economic uncertainties
following the United Kingdom leaving the European Union (EU) on 31
January 2020. The Group continues to face a range of risks
associated with this decision. For example, the vote to leave the
EU may lead to changes in the regulatory system by which medical
devices are approved for use. The Group's NIOX(R) product is
currently CE marked in accordance with European regulations. Now
that the United Kingdom has left the EU, there is a plan in place
to change this registration in line with the MHRA published
timelines to permit sales of the device to continue in the United
Kingdom.
Brexit may also result in restrictions on the movement of people
which may make it harder for the Group to attract the talent it
needs to support the business. The general economic uncertainty
created by the process may also make it harder to enter into
strategic partnerships with European companies.
The uncertainties surrounding Brexit also caused a significant
depreciation in the value of sterling and continue to result in
further foreign exchange volatility. This may affect the Group as
indicated in the more general risk relating to financial operations
set out above.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX MONTHSED 30 JUNE 2021
Six months Six months Twelve months
ended ended ended
30 June 2021 30 June 31 December
2020 2020
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
Continuing operations
Revenue from contracts with customers 3 14.6 11.4 23.9
Cost of sales (4.7) (3.6) (7.6)
--------------------------------------- ------ -------------- ------------ --------------
Gross profit 9.9 7.8 16.3
Research and development costs (2.6) (2.9) (6.8)
Sales and marketing costs (6.7) (8.6) (16.6)
Administrative expenses (3.2) (5.0) (10.2)
Operating loss 3 (2.6) (8.7) (17.3)
Other gains and (losses) - net 0.1 (0.6) (0.9)
Other income 0.7 - -
Finance costs (0.2) (0.2) (0.3)
Finance income - 0.1 0.1
Loss before tax (2.0) (9.4) (18.4)
Taxation - - (8.4)
--------------------------------------- ------ -------------- ------------ --------------
Loss from continuing operations (2.0) (9.4) (26.8)
--------------------------------------- ------ -------------- ------------ --------------
Profit/(loss) from discontinued
operations (attributable to equity
holders of Circassia Group plc) 4 1.1 (8.6) (6.7)
Loss for the period (0.9) (18.0) (33.5)
--------------------------------------- ------ -------------- ------------ --------------
Other comprehensive income
Items that may be subsequently
reclassified to profit or loss
Exchange differences on translation
of foreign operations 4.7 6.2 7.8
Other comprehensive income for
the period, net of tax 4.7 6.2 7.8
--------------------------------------- ------ -------------- ------------ --------------
Total comprehensive income/(expense)
for the period 3.8 (11.8) (25.7)
--------------------------------------- ------ -------------- ------------ --------------
Loss per share attributable to owners of the parent during the
period (expressed in GBP per share)
Six months Six months Twelve months
ended ended ended
30 June 2021 30 June 31 December
2020 2020
Unaudited Unaudited Audited
Basic and diluted loss per share GBP GBP GBP
------------------------------------ ------ -------------- ------------ --------------
Loss per share from continuing
operations 7 (0.00) (0.03) (0.07)
Total loss per share 7 (0.00) (0.05) (0.09)
------------------------------------ ------ -------------- ------------ --------------
The notes below are an integral part of these condensed interim
consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 2021
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Notes Unaudited Unaudited Audited
------------------------------- ------ ---------- ---------- ------------
Assets
Non-current assets
Property, plant and equipment 0.1 0.2 0.1
Right-of-use assets 1.5 1.7 1.3
Goodwill 5.0 5.2 5.3
Intangible assets 40.6 46.7 45.1
Deferred tax assets 5 20.9 28.3 21.6
68.1 82.1 73.4
------------------------------- ------ ---------- ---------- ------------
Current assets
Inventories 2.2 7.1 4.0
Trade and other receivables 7.9 23.2 18.3
Current tax assets - 0.2 -
Cash and cash equivalents 11.3 9.6 7.4
------------------------------- ------ ---------- ---------- ------------
21.4 40.1 29.7
------------------------------- ------ ---------- ---------- ------------
Total assets 89.5 122.2 103.1
------------------------------- ------ ---------- ---------- ------------
Equity and liabilities
Share capital 0.3 0.3 0.3
Share premium 640.3 630.6 635.4
Other reserves 19.6 21.6 24.5
Accumulated losses (595.0) (578.6) (594.1)
------------------------------- ------ ---------- ---------- ------------
Total equity 65.2 73.9 66.1
Liabilities
Non-current liabilities
Lease liabilities 1.1 1.3 0.8
Deferred tax liabilities 5 9.5 9.3 9.5
10.6 10.6 10.3
------------------------------- ------ ---------- ---------- ------------
Current liabilities
Trade and other payables 6 13.1 36.6 25.6
Lease liabilities 0.6 0.6 0.8
Contingent consideration - 0.5 0.3
13.7 37.7 26.7
Total liabilities 24.3 48.3 37.0
------------------------------- ------ ---------- ---------- ------------
Total equity and liabilities 89.5 122.2 103.1
------------------------------- ------ ---------- ---------- ------------
The notes below are an integral part of these condensed interim
consolidated financial statements.
Ian Johnson Michael Roller
Executive Chairman Chief Financial Officer
Circassia Group plc Circassia Group plc
Registered number: 05822706
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2021
Six months ended Six months ended Twelve months ended
30 June 2021 30 June 2020 31 December 2020
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
-------------------------------------------------- ------ ----------------- ----------------- --------------------
Cash flows from operating activities
Cash used in operations 8 (0.4) (19.3) (23.9)
Interest paid (0.1) (0.1) (0.2)
Tax credit received - - 0.2
Net cash used in operating activities (0.5) (19.4) (23.9)
-------------------------------------------------- ------ ----------------- ----------------- --------------------
Cash flows from investing activities
Payments for property, plant and equipment - - (0.1)
Payments for intangible assets - (0.3) (0.4)
Interest received - 0.1 -
Net cash used in investing activities - (0.2) (0.5)
-------------------------------------------------- ------ ----------------- ----------------- --------------------
Cash flows from financing activities
Proceeds from issue of shares 5.0 0.2 5.0
Principal elements of lease payments (0.4) (0.5) (0.7)
Net cash generated from/ (used in) financing
activities 4.6 (0.3) 4.3
-------------------------------------------------- ------ ----------------- ----------------- --------------------
Net increase/(decrease) in cash and cash
equivalents 4.1 (19.9) (20.1)
Cash and cash equivalents at 1 January 7.4 27.0 27.0
Effects of exchange rate changes on cash and cash
equivalents (0.2) 2.5 0.5
-------------------------------------------------- ------ ----------------- ----------------- --------------------
Cash and cash equivalents at end of period 11.3 9.6 7.4
-------------------------------------------------- ------ ----------------- ----------------- --------------------
The notes below are an integral part of these condensed interim
consolidated financial statements.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
1. General information
Circassia Group plc is a public limited company which is listed
on the AIM Market of the London Stock Exchange and incorporated and
domiciled in England and Wales. The address of its registered
office is Northbrook House, Robert Robinson Avenue, Oxford Science
Park, Oxford, Oxfordshire, England, OX4 4GA.
The condensed consolidated interim financial statements were
approved for issue on 16 September 2021.
The condensed consolidated interim financial statements have not
been audited or reviewed. The condensed consolidated interim
financial statements do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2020 were approved by the
Board of Directors on 24 March 2021 and delivered to the Registrar
of Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under section 498 of the Companies
Act 2006.
Basis of preparation
This condensed consolidated interim financial report for the
period ended 30 June 2021 has been prepared in accordance with
Accounting Standard IAS 34 Interim Financial Reporting.
The interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the Annual Report and
accounts for the year ended 31 December 2020 and any public
announcements made by Circassia Group plc during the interim
reporting period.
Going concern
In assessing the appropriateness of the going concern
assumption, the Board has considered the availability of funding
alongside the possible cash requirements of the Group and Company,
taking into account the unprecedented circumstances caused by
COVID-19. After due consideration, the directors have concluded
that there is a reasonable expectation that the Group has adequate
resources to continue in operational existence for at least 12
months from the date of this report.
Accounting policies
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting
period.
The below accounting policy has been adopted in the current
financial period:
Government grants
Government grants are recognised at their fair value when there
is reasonable assurance that the grant will be received and is not
repayable, and the Group will comply with all attached conditions.
The grant is recognised as other income in the statement of
comprehensive income in the period which the costs are incurred
that the grant is intended to compensate.
Use of estimates and assumptions
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the annual financial
statements for the year ended 31 December 2020.
Financial instruments
The Group's financial instruments comprise cash and cash
equivalents, receivables and payables arising directly from
operations, and derivatives. The directors consider that the fair
values of the Group's financial instruments do not differ
significantly from their carrying values.
2. Financial and capital risk management
The condensed interim financial statements do not include all
financial and capital risk management information and disclosures
required in the annual financial statements; they should be read in
conjunction with the Group's annual financial statements for the
year ended 31 December 2020. The viability consideration has been
disclosed in the last Annual Report and the directors believe that
the position remains unchanged.
The majority of operating costs are denominated in British pound
sterling, United States dollar, Swedish krona, euro and Chinese
yuan. Foreign exchange risk arises from future commercial
transactions and recognised assets and liabilities. The directors
expect foreign exchange volatility to continue to affect the
Group's results and the resulting impact will be assessed in the
annual report.
3. Operating segments
The chief operating decision-maker, the Executive Chairman,
examines the Group's performance from a product perspective, and
has identified two reportable segments of the business:
- NIOX(R) relates to the portfolio of products used to improve
asthma diagnosis and management by measuring fractional exhaled
nitric oxide (FeNO); and
- COPD relates to the Tudorza(R) and Duaklir(R) Pressair(R)
products marketed in the United States, where they are indicated
for the maintenance treatment of patients with COPD.
The COPD business has been classified as a discontinued
operation. Information about this discontinued segment is provided
in note 4.
The table below presents operating loss information regarding
the Group's operating segments for the periods ended 30 June 2021
and 2020, and the year ended 31 December 2020. Only the results for
the Group's continuing activities are included in order to aid
comparison.
NIOX(R) Head office Total
costs
GBPm GBPm GBPm
-------------------------- -------- ------------ -------
Six months ended 30 June
2021
Revenue 14.6 - 14.6
Operating loss (1.9) (0.7) (2.6)
-------------------------- -------- ------------ -------
Six months ended 30 June
2020
Revenue 11.4 - 11.4
Operating loss (7.4) (1.3) (8.7)
-------------------------- -------- ------------ -------
Twelve months ended 31
December 2020
Revenue 23.9 - 23.9
Operating loss (13.0) (4.3) (17.3)
-------------------------- -------- ------------ -------
There were no sales between the segments in either reporting
period.
There have been no material changes in total assets or total
liabilities from the amounts disclosed in the previous financial
statements.
4. Discontinued operations
On 27 May 2020, Circassia signed an agreement to hand back the
Tudorza(R) and Duaklir(R) licences to AstraZeneca and as such, the
results of the COPD operating segment are reported as a
discontinued operation.
There were no assets or liabilities classified as held for sale
in relation to the discontinued operation.
Financial information relating to the discontinued operation is
set out below:
Loss for the period
Six months ended 30 June Six months ended 30 June Twelve months ended 31
2021 2020 December 2020
GBPm GBPm GBPm
---------------------------- --------------------------- --------------------------- ---------------------------
Revenue 2.4 11.6 22.1
Cost of sales (0.4) (1.2) (6.4)
----------------------------- --------------------------- --------------------------- ---------------------------
Gross profit 2.0 10.4 15.7
----------------------------- --------------------------- --------------------------- ---------------------------
Expenditure (1.0) (16.6) (20.0)
Goodwill and intangible
asset impairment - (114.0) (114.0)
----------------------------- --------------------------- --------------------------- ---------------------------
Operating profit/(loss) 1.0 (120.2) (118.3)
----------------------------- --------------------------- --------------------------- ---------------------------
Other gains and (losses) -
net 0.1 114.8 114.8
Finance costs - (3.2) (3.2)
----------------------------- --------------------------- --------------------------- ---------------------------
Profit/(loss) from
discontinued operations 1.1 (8.6) (6.7)
----------------------------- --------------------------- --------------------------- ---------------------------
Cashflow
Net cash outflow from
operating activities (0.8) (6.1) (9.8)
Net cash used in
discontinued operations (0.8) (6.1) (9.8)
----------------------------- --------------------------- --------------------------- ---------------------------
Other gains and losses include GBPnil (30 June 2020: GBP123.1
million gain) relating to the write off of the AstraZeneca loan and
accrued interest, and GBP0.1 million gain (30 June 2020: GBP8.3
million loss) on foreign exchange.
Finance costs include GBPnil (30 June 2020: GBP3.0 million) of
interest charged on the loan from AstraZeneca , and GBPnil (30 June
2020: GBP0.2 million) relating to the unwinding of discounts on
amounts payable to AstraZeneca.
5. Deferred taxation
Intangibles Tax losses Net deferred tax asset
GBPm GBPm GBPm
--------------------- ------------ ----------- -----------------------
At 31 December 2020 9.5 (21.6) (12.1)
--------------------- ------------ ----------- -----------------------
At 30 June 2020 9.3 (28.3) (19.0)
--------------------- ------------ ----------- -----------------------
At 30 June 2021 9.5 (20.9) (11.4)
--------------------- ------------ ----------- -----------------------
30 June 2021 30 June 2020 31 December 2020
GBPm
GBPm GBPm
----------------------------- ------------- ------------- -----------------
Deferred tax liabilities 9.5 9.3 9.5
Deferred tax assets (20.9) (28.3) (21.6)
Total deferred tax position (11.4) (19.0) (12.1)
----------------------------- ------------- ------------- -----------------
The Group has the following unrecognised potential deferred tax
assets as at:
30 June 2021 30 June 2020 31 December 2020
GBPm
GBPm GBPm
--------------------------------------- ------------- ------------- -----------------
Losses 76.2 64.4 76.0
Total unrecognised deferred tax asset 76.2 64.4 76.0
--------------------------------------- ------------- ------------- -----------------
6. Trade and other payables
30 June 2021 30 June 2020 31 December 2020
GBPm
GBPm GBPm
--------------------------------- ------------- ------------- -----------------
Trade payables 1.1 6.3 5.2
Social security and other taxes 0.2 0.6 0.5
Accruals 11.7 18.2 18.9
Other payables 0.1 11.5 1.0
Total trade and other payables 13.1 36.6 25.6
--------------------------------- ------------- ------------- -----------------
7. Loss per share
Basic and diluted loss per share Six months Six months Twelve months
ended 30 ended 30 ended 31
June 2021 June 2020 December
2020
GBP GBP
GBP
------------------------------------- ----------- ----------- --------------
From continuing operations (0.00) (0.03) (0.07)
From discontinued operations (0.00) (0.02) (0.02)
------------------------------------- ----------- ----------- --------------
Total basic and diluted loss per
share attributable to the ordinary
equity holders of the Company (0.00) (0.05) (0.09)
------------------------------------- ----------- ----------- --------------
Six months Six months Twelve months
ended 30 ended 30 ended 31
June 2021 June 2020 December
2020
----------------------------------- ------------ ------------ --------------
Weighted average number of shares 408,599,132 348,722,920 381,859,840
----------------------------------- ------------ ------------ --------------
8. Cash used in operations
Reconciliation of loss before tax to net cash used in
operations
Six months ended 30 June Six months ended 30 June Twelve months ended 31
2021 2020 December 2020
GBPm GBPm GBPm
---------------------------- ---------------------------- ---------------------------- ----------------------------
Loss from continuing
operations before tax (2.0) (9.4) (18.4)
Profit/(loss) from
discontinued operations
before tax 1.1 (8.6) (6.7)
---------------------------- ---------------------------- ---------------------------- ----------------------------
Loss before tax (0.9) (18.0) (25.1)
Adjustment for:
Finance income - (0.1) (0.1)
Finance costs 0.1 3.3 3.5
Depreciation charge of
property, plant and
equipment - 0.2 0.3
Depreciation charge of
right-of-use assets 0.4 0.4 0.8
Amortisation charge of
intangible assets 2.1 5.7 7.9
Impairment of intangible
assets - - 0.8
Impairment of property,
plant and equipment - - 0.1
Loss on disposal of
intangible assets - 114.0 114.0
Gain on loan write off - (123.1) (123.0)
Share based payment
(credit)/charge (0.2) 0.7 2.0
Foreign exchange on
non-operating cash flows (0.9) 7.6 8.7
Changes in working capital:
Decrease/(increase) in
trade and other
receivables 8.5 (6.7) (3.9)
Decrease in inventories 1.7 - 2.9
Decrease in trade and other
payables (11.2) (3.3) (12.8)
Cash used in operations (0.4) (19.3) (23.9)
---------------------------- ---------------------------- ---------------------------- ----------------------------
9. Related party transactions
There have been no new IAS 24 related-party transactions in the
first six months of the current financial year.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required, namely:
- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report. The directors of Circassia
Group plc are listed on pages 42 to 45 of the annual report.
The directors are responsible for the maintenance and integrity
of the Group's website www.circassia.com. Legislation in the UK
governing the preparation and dissemination of interim financial
statements may differ from legislation in other jurisdictions.
On behalf of the Board
Ian Johnson Michael Roller
Executive Chairman Chief Financial Officer
16 September 2021
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END
IR EELFFFKLEBBF
(END) Dow Jones Newswires
September 16, 2021 01:59 ET (05:59 GMT)
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