TIDMCIR
RNS Number : 5190F
Circassia Group Plc
22 March 2022
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")
PRELIMINARY RESULTS FOR THE YEARED 31 DECEMBER 2021
Oxford, UK - 22 March 2022: Circassia Group plc ("Circassia" or
"the Group"; AIM: CIR), a medical device company focused on point
of care asthma diagnosis and management, today announces its
audited results for the year ended 31 December 2021.
Financial highlights
-- Revenues were up 17% to GBP27.9 million (20% on a constant
currency basis), approximately 84% being recurring consumable
revenues
-- Group adjusted EBITDA positive for the first time at GBP0.6
million, ahead of upgraded consensus estimates
-- Profit for the financial year GBP3.6 million after a deferred
tax credit of GBP4.4 million (2020: loss of GBP33.5 million)
-- Net cash GBP12.6 million (31 December 2020: GBP7.4 million)
Financial progress
Audited 2021 2020
GBPm GBPm
------------------ ------------------
Revenue 27.9 23.9
------------------ ------------------
Gross margin 68% 68%
------------------ ------------------
Total expenditure(1) (18.4) (25.4)
------------------ ------------------
Adjusted EBITDA(2) 0.6 (9.1)
------------------ ------------------
Operating loss (4.3) (17.3)
------------------ ------------------
Loss before tax (2.1) (18.4)
------------------ ------------------
Profit/ (loss) for the year
from discontinued operations 1.3 (6.7)
------------------ ------------------
Profit/ (loss) for the financial
year 3.6 (33.5)
------------------ ------------------
Cash(3) at year end 12.6 7.4
------------------ ------------------
(1) Excludes depreciation, amortisation, impairment
and share option charge.
(2) Earnings before interest, tax, depreciation,
amortisation, impairment and share option charge.
(3) Includes cash and cash equivalents.
Operational highlights
-- Solid recovery in revenues despite continuing Covid-19 disruption
-- Ongoing transition to distributor-led business model with new
arrangements in the USA and China expected to drive scalable
revenue growth
-- Transition period for COPD business complete
-- Global Health & Pharma Awards named Circassia as Global Leaders in FeNO testing in 2021
-- Updated American Thoracic Society guidelines recommend FeNO
testing for diagnosis and ongoing management of asthma
Ian Johnson, Circassia's Executive Chairman, said: "The Group
passed some significant milestones in 2021, achieving positive
adjusted EBITDA and a profit after tax for the first time, as well
as generating positive cash flow from our operating activities. The
Group is debt free and has the cash resources to continue
implementing its business strategy of accessing a large and
underserved population of patients suffering from asthma.
We anticipate the global pandemic will continue to have some
impact on our markets, however, the much-reduced cost base, high
levels of recurring revenues and high gross margins will continue
to provide a considerable degree of resilience going forward. The
business has made a positive start to 2022 with NIOX(R) clinical
revenues up 24% in the first two months of the year on the
equivalent period in 2021 and has continued to generate positive
operating cash flow. The Board believes that the ongoing transition
to a distributor led business model will drive top line growth and
deliver further shareholder value over the medium term."
Contacts
Circassia
Ian Johnson, Executive Chairman via Singer Capital Markets
Michael Roller, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Broker)
Aubrey Powell/ Jen Boorer Tel: +44 (0) 20 7496 3000
About Circassia
Our ambition is to improve the quality of life of millions of
people suffering from asthma. Circassia is a medical device company
focused on point of care asthma diagnosis and management. Our
market-leading NIOX(R) products are used by physicians around the
world to improve asthma diagnosis and management and also 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 .
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.
Executive Chairman's statement
A year of significant progress
Following the wide-ranging business and management changes in
2020, 2021 saw both the continued implementation of the strategy to
focus on the Group's market-leading NIOX(R) business and the final
hand back of the COPD business to AstraZeneca in line with the
agreement signed in April 2020.
The NIOX(R) business was significantly affected by the impact of
the Covid-19 pandemic in Q2 2020, however, although revenues have
built back steadily since then, they have not yet recovered to the
levels achieved in 2019, thanks to ongoing disruption associated
with the pandemic. Despite this, the restructuring of the cost base
and associated restructuring of the sales model has permitted the
achievement of profitability at the adjusted EBITDA level for the
Group as a whole. As the effects of the pandemic wane, and the new
distribution arrangements put in place in the US and China begin to
take effect, we envisage consistent sales growth without the need
to add significant fixed costs.
Management continues to focus on building a profitable business
around its NIOX(R) products and has a clear strategy to grow the
business. The Company intends to drive revenues in its core medical
and clinical trials markets with the VERO(R) device and is
examining the possibility of launching additional products for
patients to self-test at home.
Equity financing
On 24 March 2021, the Company announced it had raised an
additional GBP5 million by way of a subscription for new ordinary
shares, by three major shareholders at a price of 25 pence per
share to strengthen its balance sheet. Given the successful
reduction of costs and close ongoing controls on operating
expenditure, the Company is well financed for its anticipated
needs.
NIOX(R) business
Revenues for the continuing NIOX(R) business for the year ended
31 December 2021 were up 17% to GBP27.9 million (2020: GBP23.9
million), and up 20% on a constant currency basis. H1 revenues were
GBP14.6 million, benefitting from a one-off revenue item of GBP0.6
million in China and a strong Q1 for research sales driven by the
start of clinical trials that were delayed in 2020 due to Covid-19,
with H2 revenues of GBP13.3 million. Given the geographically
diverse nature of the NIOX(R) business, different markets suffered
disruption from lockdowns and other pandemic effects at different
times during the year.
After reducing the cost base significantly in 2020, further cost
reductions were effected in the current year, principally in the
area of sales and marketing costs. This was mostly the result of
the move to a distributor led model for sales. Group headcount,
which started the year at 156, ended the year at 111. While
management will remain alert to the possibility of further cost
reductions where these can be identified, the bulk of the cost
savings have now been achieved.
Discontinued operations
The transfer of the COPD products back to AstraZeneca completed
on 31 March 2021. In the first three months of 2021, this business
made an operating profit / EBITDA of GBP1.3 million. Circassia
retains legal liability for rebates payable to third parties
(primarily Medicare) for the period during which it operated the
COPD business. GBP4.2 million of rebates have been paid since 31
March 2021 and an accrual for additional rebates of GBP3.7 million
remains in the Group's balance sheet at 31 December 2021. Rebate
claims totalling GBP0.8 million have been received since 31
December 2021.
Circassia also retains legal liability for returns of product
sold during the period when it operated the COPD business. An
accrual of GBP1.9 million has been included to cover this
eventuality in the Group's balance sheet at 31 December 2021. The
value of returns to date has been very low, but this liability
remains with Circassia until late 2023.
Russia and Ukraine
Circassia has no operations in Russia and generates no revenue
in Russia. In 2021, revenues derived from Ukraine were less than 1%
of Group revenues.
BeyondAir
On 26 May 2021 we announced that our dispute with Beyond Air
Inc. relating to the Group's rights to their LungFit (R) product
had been settled. Upon FDA approval of the product, which to date
has not been received, a total of $10.5 million is payable to
Circassia in stage payments and up to a further $6 million in
royalties on future sales.
Employees
On behalf of the Board, I would like to thank all employees
within the Group for their hard work and commitment during what has
been another difficult year for everyone. For a second consecutive
year, I would like to offer particular thanks to those employees
who continued to attend our offices and logistics facilities to
ensure the continued smooth operation of the business during
periods of lockdown.
Summary and outlook
The Group passed some significant milestones in 2021, achieving
positive EBITDA and a profit after tax for the first time, as well
as generating positive cash flow from our operating activities. The
Group is debt free and has the cash resources to continue
implementing its business strategy of accessing a large and
underserved population of patients suffering from asthma.
We anticipate the global pandemic will continue to have some
impact on our markets, however, the much-reduced cost base, high
levels of recurring revenues and high gross margins will continue
to provide a considerable degree of resilience going forward. The
business has made a positive start to 2022 with NIOX(R) clinical
revenues up 24% in the first two months of the year on the
equivalent period in 2021 and has continued to generate positive
operating cash flow. The Board believes that the ongoing transition
to a distributor led business model will drive top line growth and
deliver further shareholder value over the medium term.
OPERATING REVIEW
Key strategic drivers of the Group
The opportunity
Asthma affects over 340 million people worldwide with a further
100 million estimated to be affected by 2025. There are an
estimated 1,000 deaths globally due to asthma every day. In some
50% of cases, asthma is either not diagnosed or misdiagnosed, which
leads to a delay in asthma patients receiving the care that they
need. Following a diagnosis of asthma, it is important to be able
to regularly monitor the condition and ensure the correct
medication is taken.
FeNO
Asthma is a condition that is characterised by inflammation of
the airways and lungs. Nitric oxide is produced by inflammatory
cells and can be precisely measured in exhaled breath, this is
known as FeNO (fraction of exhaled nitric oxide). Measuring FeNO
helps understand the level of inflammation in the lungs of an
asthmatic and is a precise biomarker of type 2 airway inflammation.
Clinicians use FeNO measurements to diagnose and manage asthma in
order to improve quality of life of asthma sufferers.
The American Thoracic Society (ATS) recommended that FeNO
testing should be part of the ongoing care of asthmatics as well as
being used as a tool for diagnosing asthma. This is the latest
example from an increasing body of highly credible, influential
evidence based medical guidelines around the world that have
recommended the use of FeNO testing as a routine part of diagnosing
and managing asthma. The guidelines are based on a substantial body
of published clinical trials that demonstrate the benefits of FeNO
testing.
Further impetus is coming from a new class of biologic
anti-inflammatory medicines for the treatment of type 2
inflammatory asthma. These medicines have the potential to replace
or reduce the use of inhaled steroids, which have long been the
standard of care for inflammatory asthma. Biologic medicines are
targeted at asthmatics with increased inflammation and therefore
elevated FeNO. The cost of these new medicines is significant. This
means that some pharmaceutical companies are investing resources to
raise the awareness and usage of FeNO testing in order to identify
the patients that are most likely to respond to treatment as they
seek to establish this new class of drugs as an effective line of
therapy.
Our products
The Company's NIOX VERO(R) is the market leading device for
measuring FeNO. This is a non-invasive, point-of-care system which
accurately measures the patient's FeNO level. It is quick, easy to
use and reliable. The system comprises a small portable device and
test kits containing sensors and individual disposable mouthpieces.
The quality and innovation of NIOX VERO(R) has been recognised with
several awards over recent years, most recently the Global Health
& Pharma Awards, where Circassia was named as Global Leaders in
FeNO Testing 2021.
NIOX(R) is registered and reimbursed in all major markets and
available in more than 50 countries via Circassia's international
network of distribution partners.
Our business
The NIOX VERO(R) dominates FeNO testing currently with
approximately 17,000 devices and with over 40 million FeNO tests
sold to date.
NIOX(R) revenues in 2021 for medical diagnosis and management of
asthma were GBP23.4 million (2020: GBP21.5 million). Approximately
90% of these revenues are from recurring sales of consumables (test
kits) used for routine testing.
In addition to routine use by clinicians, the NIOX VERO(R) is
almost exclusively specified as the device of choice by clinical
research organisations (CROs) who manage clinical trials on behalf
of large pharma. Our principal CRO customer established a number of
new trials in the early part of the year, after a slowdown in sales
in 2020 during the early stages of the pandemic.
Revenues in 2021 from CROs were GBP4.5 million (2020: GBP2.4
million). Approximately 55% of these revenues are from sales of
consumables (test kits) driven by the length of the trial and the
number of patients recruited and are not classified as
recurring.
Principal challenges
Today around 5% of eligible asthmatics receive a FeNO test,
meaning that there is a huge untapped potential in the FeNO testing
market. The primary challenge the NIOX(R) business faces is to
increase the awareness and usage of FeNO testing, particularly in
the medical community that treat asthma on a day to day basis (e.g.
primary care or general practice). The customer base is inherently
conservative, and their adoption of new technology or techniques
tends to reflect this.
The Company continues to engage with respiratory professionals
to promote the use of FeNO tests in new and under-served customer
segments such as primary care settings and pharmacies. Use by CROs
also raises the profile of FeNO testing and NIOX(R) in
particular.
Management intends to expand the number of distribution partners
in our major markets, such as the US and China, to further raise
awareness and levels of education regarding the benefits of FeNO
testing and to make NIOX(R) more easily available.
Covid-19 impact
During 2021 the impact of the Covid-19 pandemic was less severe
than 2020, however, it continued to affect our major markets in
varying degrees. The overall effect has been to disrupt routine
testing of asthma patients, with revenues for the year reaching
approximately 85% of pre-pandemic levels. As time passes our sales
patterns indicate that different healthcare systems are developing
strategies to reduce the level of disruption to routine healthcare
services.
Conclusion
Our ambition is to improve the quality of life of millions of
people suffering from asthma. The Group has a robust strategy in
place to expand the business and generate profitable growth from
this large underserved market; this includes the ongoing evaluation
of a product for home use.
FINANCIAL REVIEW
This has been a significant year for Circassia. Despite the
performance of the NIOX(R) business still being affected by the
impact of the Covid-19 pandemic on the level of FeNO testing
carried out by our customers, the Group achieved positive adjusted
EBITDA for the first time. The continuing activities of the Group
also generated GBP1.3 million in cash.
On 27 May 2020, the Group handed back 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.
2021 2020
GBPm GBPm
====================================== ======= =======
Revenue 27.9 23.9
Cost of sales (8.9) (7.6)
Gross profit 19.0 16.3
Gross margin 68% 68%
Research and development costs (4.6) (6.8)
Sales and marketing costs (11.9) (16.6)
Administrative expenses (6.8) (10.2)
Adjusted EBITDA(1) 0.6 (9.1)
Operating loss (4.3) (17.3)
Other gains and (losses) - net 1.6 (0.9)
Other income 0.9 -
Net finance costs (0.3) (0.2)
Loss before tax (2.1) (18.4)
Taxation 4.4 (8.4)
Profit/(loss) for the financial year
from continuing operations 2.3 (26.8)
Profit/ (loss) for the financial
year from discontinued operations 1.3 (6.7)
Profit/(loss) for the financial year 3.6 (33.5)
--------------------------------------- ------- -------
Cash and cash equivalents 12.6 7.4
--------------------------------------- ------- -------
(1) Earnings before interest, tax, depreciation, amortisation,
impairment and share option charge.
Revenue
NIOX(R) revenue for the year was GBP27.9 million (2020: GBP23.9
million) which includes clinical revenue of GBP23.4 million (2020:
GBP21.5 million) and research revenue of GBP4.5 million (2020:
GBP2.4 million). NIOX(R) c linical revenue represents sales to
physicians and hospitals for use in clinical practice and to the
Company's distributors, while research revenue is from
pharmaceutical companies and contract research organisations (CROs)
for use in clinical studies.
The increase in NIOX(R) revenue 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) revenue was GBP19.0 million (2020:
GBP16.3 million), with a gross margin of 68% (2020: 68%). Gross
margin was in line with prior year. A higher proportion of
relatively high margin revenue in China was largely offset by a
higher proportion of lower margin research revenue.
Research and development
Research and development costs decreased to GBP4.6 million
(2020: GBP6.8 million). Included in this category are GBP1.2
million of Device Development costs (2020: GBP1.5 million), GBP0.6
million of Quality costs (2020: GBP1.3 million), GBP0.4 million of
Medical Affairs costs (2020: GBP0.6 million), GBP0.3 million of
Regulatory costs (2020: GBP0.5 million) and GBP2.1 million of
depreciation, amortisation and impairment (2020: GBP2.9
million).
The prior year costs include a GBP0.9 million impairment charge
against internal device development costs due to a change in the
strategic roadmap for product development. Excluding depreciation,
amortisation and impairment, research and development costs
decreased to GBP2.5 million (2020: GBP3.9 million) which is mainly
due to lower headcount.
Sales and marketing
Sales and marketing costs decreased markedly to GBP11.9 million
(2020: GBP16.6 million) which was mainly due to a reduction in the
number of dedicated NIOX(R) sales representatives across the Group
as a result of the switch to a distributor led sales model, in
particular in the US and China, combined with lower third-party
marketing costs incurred during the Covid-19 pandemic. Given that
the full impact of the headcount reductions did not impact 2021,
but will impact 2022, we expect sales and marketing costs in the
aggregate to continue to fall in 2022, notwithstanding a modest
increase in third-party marketing costs as the impact of the
Covid-19 pandemic eases.
Administrative expenditure
Administrative expenditure, which includes overheads relating to
corporate functions, centrally managed support functions and
corporate costs, decreased to GBP6.8 million (2020: GBP10.2
million). This was mainly due to lower salary costs as a result of
lower headcount.
Other income
Other income includes a GBP0.7 million grant received from the
US government under the Payment Protection Program (2020: GBPnil).
There are no contingencies or conditions attaching to this grant,
and the amounts are not repayable.
Taxation
Taxation for the year was a credit of GBP4.4 million (2020:
GBP8.4 million charge) which arose due to an increase in the amount
of recognised carried-forward tax losses in the Group generated in
Sweden by Circassia AB.
Earnings per share
Basic and diluted profit per share for the year was 1p (2020: 9p
loss) reflecting a profit of GBP3.6 million (2020: GBP33.5 million
loss), with the increase mainly as a result of the reduction in the
cost base of the Group. Basic and diluted profit per share from
continuing operations was 1p (2020: 7p loss) reflecting a profit
for the financial year of GBP2.3 million (2020: GBP26.8 million
loss).
Profit/(loss) from discontinued operations
Profit from discontinued operations was GBP1.3 million (2020:
GBP6.7 million loss).
The transitional run-off period of the discontinued COPD
business 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 COPD licence assets.
Other comprehensive income/(expense)
The Group's other comprehensive expense of GBP7.8 million (2020:
GBP7.8 million income) relates to exchange differences on the
translation of foreign operations into British pound sterling.
The current year expense is mainly due to the strengthening of
the British pound against the Swedish krona. The expense consists
of a GBP3.7 million loss (2020: GBP4.3 million gain) on the
translation of intangible assets, a GBP3.6 million loss (2020:
GBP3.0 million gain) on the translation of overseas subsidiaries'
net assets, and a GBP0.5 million loss (2020: GBP0.5 million gain)
on the translation of goodwill.
Statement of financial position
The Group's net assets at 31 December 2021 were GBP66.8 million
(2020: GBP66.1 million).
Current liabilities at the end of the year were GBP10.8 million
(2020: GBP26.7 million). The decrease is mainly due to lower trade
payables, in particular lower rebate accruals relating to the
discontinued COPD business.
Cash flow
The Group's cash position (including cash and cash equivalents)
increased from GBP7.4 million at 31 December 2020 to GBP12.6
million at 31 December 2021.
Cash generated from operations during the year aggregated GBP1.5
million, of which GBP0.2 million was generated in the COPD
discontinued operations.
Cash generated from/(used in) operations in the year by business
unit was as follows:
NIOX (R) COPD (Discontinued) Head office Group
GBPm
GBPm GBPm GBPm
------------------------------- --------- -------------------- ----------- -----
Adjusted EBITDA 2.4 1.0 (1.8) 1.6
Net working capital movements 0.2 (0.8) - (0.6)
Other non-cash movements - - 0.5 0.5
Cash generated from/(used
in) operations by business
unit 2.6 0.2 (1.3) 1.5
------------------------------- --------- -------------------- ----------- -----
Non-operating cash movements aggregated GBP3.7 million (2020:
GBP4.3 million):
2021 2020
GBPm GBPm
-------------------------------------------- ------ -------
Cash generated from/(used in) operations 1.5 (23.9)
Interest paid (0.1) (0.2)
Tax credit received - 0.2
Payments for property, plant and equipment (0.1) (0.1)
Payments for intangible assets (0.1) (0.4)
Proceeds from issue of shares net of share
issue transaction costs 4.9 5.0
Principal elements of lease payments (0.8) (0.7)
Exchange (losses)/gains on cash and cash
equivalents (0.1) 0.5
-------------------------------------------- ------ -------
Net increase/(decrease) in cash and cash
equivalents 5.2 (19.6)
-------------------------------------------- ------ -------
Michael Roller
Chief Financial Officer
22 March 2022
Consolidated statement of comprehensive income
for the year ended 31 December 2021
2021 2020
Notes GBPm GBPm
Continuing operations
Revenue from contracts with customers 27.9 23.9
Cost of sales (8.9) (7.6)
--------------------------------------------- ------ ------- -------
Gross profit 19.0 16.3
Research and development costs (4.6) (6.8)
Sales and marketing costs (11.9) (16.6)
Administrative expenses (6.8) (10.2)
Operating loss 4 (4.3) (17.3)
Other gains and (losses) - net 1.6 (0.9)
Other income 0.9 -
Finance costs 5 (0.3) (0.3)
Finance income 5 - 0.1
Loss before tax (2.1) (18.4)
Taxation 7 4.4 (8.4)
--------------------------------------------- ------ ------- -------
Profit/(loss) from continuing operations 2.3 (26.8)
--------------------------------------------- ------ ------- -------
Profit/(loss) from discontinued
operations (attributable to equity
holders of Circassia Group plc) 6 1.3 (6.7)
Profit/(loss) for the year 3.6 (33.5)
--------------------------------------------- ------ ------- -------
Other comprehensive (expense)/income
Items that may be subsequently reclassified
to profit or loss
Exchange differences on translation
of foreign operations 12 (7.8) 7.8
Other comprehensive (expense)/income
for the year, net of tax (7.8) 7.8
--------------------------------------------- ------ ------- -------
Total comprehensive expense for
the year (4.2) (25.7)
--------------------------------------------- ------ ------- -------
Earnings per share attributable to owners of the parent during
the year (expressed in GBP per share)
2021 2020
Basic earnings per share GBP GBP
-------------------------------------------- ----- -------
Basic earnings per share for profit/(loss)
from continuing operations 8 0.01 (0.07)
Basic earnings per share for profit/(loss)
for the year 8 0.01 (0.09)
-------------------------------------------- ----- -------
2021 2020
Diluted earnings per share GBP GBP
---------------------------------------------- ----- -------
Diluted earnings per share for profit/(loss)
from continuing operations 8 0.01 (0.07)
Diluted earnings per share for profit/(loss)
for the year 8 0.01 (0.09)
---------------------------------------------- ----- -------
The notes below are an integral part of these financial
statements.
Consolidated statement of financial position
as at 31 December 2021
2021 2020
Notes GBPm GBPm
------------------------------- ------ -------- --------
Assets
Non-current assets
Property, plant and equipment 0.2 0.1
Right-of-use assets 1.2 1.3
Goodwill 9 4.8 5.3
Intangible assets 10 37.3 45.1
Deferred tax assets 23.1 21.6
66.6 73.4
------------------------------- ------ -------- --------
Current assets
Inventories 2.7 4.0
Trade and other receivables 4.5 18.3
Cash and cash equivalents 12.6 7.4
------------------------------- ------ -------- --------
19.8 29.7
------------------------------- ------ -------- --------
Total assets 86.4 103.1
------------------------------- ------ -------- --------
Equity
Share capital 0.3 0.3
Share premium 640.3 635.4
Other reserves 12 16.7 24.5
Accumulated losses (590.5) (594.1)
Total equity 66.8 66.1
------------------------------- ------ -------- --------
Liabilities
Non-current liabilities
Lease liabilities 0.9 0.8
Deferred tax liabilities 7.9 9.5
8.8 10.3
------------------------------- ------ -------- --------
Current liabilities
Trade and other payables 11 10.4 25.6
Lease liabilities 0.4 0.8
Contingent consideration - 0.3
10.8 26.7
------------------------------- ------ -------- --------
Total liabilities 19.6 37.0
------------------------------- ------ -------- --------
Total equity and liabilities 86.4 103.1
------------------------------- ------ -------- --------
The notes below are an integral part of these financial
statements.
Ian Johnson Michael Roller
Executive Chairman Chief Financial Officer
Circassia Group plc Circassia Group plc
Registered number: 05822706
Consolidated statement of cash flows
for the year ended 31 December 2021
2021 2020
Notes GBPm GBPm
--------------------------------------------------------------- ------ ------ -------
Cash flows from operating activities
Cash generated from/(used in) operations 13 1.5 (23.9)
Interest paid 5 (0.1) (0.2)
Tax credit received 7 - 0.2
--------------------------------------------------------------- ------ ------ -------
Net cash generated from/(used in) operating activities 1.4 (23.9)
--------------------------------------------------------------- ------ ------ -------
Cash flows from investing activities
Payments for property, plant and equipment (0.1) (0.1)
Payments for intangible assets 10 (0.1) (0.4)
Grant of loans to subsidiary undertakings - -
Net cash used in investing activities (0.2) (0.5)
--------------------------------------------------------------- ------ ------ -------
Cash flows from financing activities
Proceeds from issue of shares 5.0 5.0
Share issue transaction costs (0.1) -
Principal elements of lease payments (0.8) (0.7)
Net cash generated from financing activities 4.1 4.3
--------------------------------------------------------------- ------ ------ -------
Net increase/(decrease) in cash and cash equivalents 5.3 (20.1)
Cash and cash equivalents at 1 January 7.4 27.0
Effects of exchange rate changes on cash and cash equivalents (0.1) 0.5
--------------------------------------------------------------- ------ ------ -------
Cash and cash equivalents at 31 December 12.6 7.4
--------------------------------------------------------------- ------ ------ -------
The notes below are an integral part of these financial
statements.
Consolidated statement of changes in equity
for the year ended 31 December 2021
Share Share Other Accumulated Total
capital premium reserves(1) losses equity
Notes GBPm GBPm GBPm GBPm GBPm
---------------------------- ------ --------- --------- ------------- ------------ --------
At 1 January 2020 0.3 630.4 14.7 (560.6) 84.8
Loss for the year - - - (33.5) (33.5)
Exchange differences
on translation of foreign
operations 12 - - 7.8 - 7.8
---------------------------- ------ --------- --------- ------------- ------------ --------
Total comprehensive
income/(expense) - - 7.8 (33.5) (25.7)
Transactions with owners:
Issue of new shares - 5.0 - - 5.0
Employee share scheme
issues - - 2.0 - 2.0
---------------------------- ------ --------- --------- ------------- ------------ --------
At 31 December 2020 0.3 635.4 24.5 (594.1) 66.1
---------------------------- ------ --------- --------- ------------- ------------ --------
At 1 January 2021 0.3 635.4 24.5 (594.1) 66.1
Profit for the year - - - 3.6 3.6
Exchange differences
on translation of foreign
operations 12 - - (7.8) - (7.8)
Total comprehensive
(expense)/income - - (7.8) 3.6 (4.2)
Transactions with owners:
Issue of new shares - 4.9 - - 4.9
At 31 December 2021 0.3 640.3 16.7 (590.5) 66.8
---------------------------- ------ --------- --------- ------------- ------------ --------
(1) Other reserves include share option reserve, translation
reserve, treasury shares reserve, and transactions with NCI
reserve.
The notes below are an integral part of these financial
statements.
Notes to the financial statements
1. General information
Basis of preparation
The consolidated financial statements of Circassia Group plc
have been prepared on the going concern basis and in accordance
with EU adopted International Financial Reporting Standards (IFRS),
IFRIC interpretations and the Companies Act 2006 applicable to
companies reporting under IFRS. The consolidated financial
statements have been prepared under the historical cost
convention.
The financial information set out in this preliminary
announcement does not constitute the Company's statutory financial
statements for the years ended 31 December 2021 or 2020 but is
derived from those financial statements. Statutory financial
statements for 2020 have been delivered to the registrar of
companies and those for 2021 will be delivered in due course. The
auditors have reported on those financial statements; their reports
were (i) unqualified (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
The preliminary announcement will be published on the Company's
website. The maintenance and integrity of the website is the
responsibility of the directors. The work carried out by the
auditors does not involve consideration of these matters.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
2. 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 the results of this segment is
provided in note 6; information regarding its assets is presented
below.
The table below presents operating loss information regarding
the Group's operating segments for the years ended 31 December 2021
and 2020. Only the results for the Group's continuing activities
are included in order to aid comparison.
Segment operating loss
Year ended 31 December 2021 NIOX(R) Head office Total
GBPm GBPm GBPm
----------------------------------------------------------------------------- -------- ------------ -------
Revenue (from external customers, based on the destination of the customer)
US 7.1 - 7.1
UK 1.7 - 1.7
EU 8.2 - 8.2
Asia Pacific 10.6 - 10.6
Rest of world 0.3 - 0.3
----------------------------------------------------------------------------- -------- ------------ -------
Total segment revenue 27.9 - 27.9
Cost of sales (8.9) - (8.9)
----------------------------------------------------------------------------- -------- ------------ -------
Research and development costs (4.6) - (4.6)
Sales and marketing costs (11.9) - (11.9)
Administrative expenses (5.0) (1.8) (6.8)
Operating loss from continuing operations (2.5) (1.8) (4.3)
----------------------------------------------------------------------------- -------- ------------ -------
Depreciation, amortisation and impairment included above (4.9) - (4.9)
----------------------------------------------------------------------------- -------- ------------ -------
Year ended 31 December 2020 NIOX(R) Head office Total
GBPm GBPm GBPm
----------------------------------------------------------------------------- -------- ------------ -------
Revenue (from external customers, based on the destination of the customer)
US 6.5 - 6.5
UK 1.3 - 1.3
EU 6.9 - 6.9
Asia Pacific 8.9 - 8.9
Rest of world 0.3 - 0.3
----------------------------------------------------------------------------- -------- ------------ -------
Total segment revenue 23.9 - 23.9
Cost of sales (7.6) - (7.6)
----------------------------------------------------------------------------- -------- ------------ -------
Research and development costs (6.8) - (6.8)
Sales and marketing costs (16.6) - (16.6)
Administrative expenses (5.9) (4.3) (10.2)
Operating loss from continuing operations (13.0) (4.3) (17.3)
----------------------------------------------------------------------------- -------- ------------ -------
Depreciation, amortisation and impairment included above (6.2) - (6.2)
----------------------------------------------------------------------------- -------- ------------ -------
Assets by segment
As at 31 December 2021 NIOX(R) COPD Total
(Discontinued)
GBPm GBPm GBPm
------------------------------- -------- ---------------- ------
Cash and cash equivalents 12.6 - 12.6
Property, plant and equipment 0.2 - 0.2
Right-of-use assets 1.2 - 1.2
Goodwill 4.8 - 4.8
Intangible assets 37.3 - 37.3
Deferred tax assets 23.1 - 23.1
Inventories 2.7 - 2.7
Trade and other receivables 4.3 0.2 4.5
Total assets 86.2 0.2 86.4
------------------------------- -------- ---------------- ------
As at 31 December 2020 NIOX(R) COPD Total
(Discontinued)
GBPm GBPm GBPm
------------------------------- -------- ---------------- ------
Cash and cash equivalents 7.4 - 7.4
Property, plant and equipment 0.1 - 0.1
Right-of-use assets 1.3 - 1.3
Goodwill 5.3 - 5.3
Intangible assets 45.1 - 45.1
Deferred tax assets 21.6 - 21.6
Inventories 3.0 1.0 4.0
Trade and other receivables 6.4 11.9 18.3
Total assets 90.2 12.9 103.1
------------------------------- -------- ---------------- ------
3. Employees and directors
Average number of people employed
Monthly average number of people (including Executive and Non-Executive Directors) employed:
2021 2020
Number Number
------------------------------------------------------------------------ ---------------------- --------
Office and management 31 38
Sales and marketing 81 184
Research and development 16 25
------------------------------------------------------------------------- ---------------------- --------
Total average headcount 128 247
------------------------------------------------------------------------- ---------------------- --------
Average headcount includes 1 (2020: 44) sales and marketing and
1 (2020: 4) research and development person employed solely for the
discontinued operation.
The Group's total headcount at 31 December 2021 was 111 (2020:
156).
Employee benefit costs
2021 2020
GBPm GBPm
------------------------------ ------ ------
Wages and salaries 10.6 14.5
Social security costs 1.2 1.5
Other pension costs 0.5 0.8
Share option charge - 2.0
------------------------------ ------ ------
Total employee benefit costs 12.3 18.8
------------------------------ ------ ------
Key management personnel
Key management personnel during the year included directors
(Executive and Non-Executive), Regional VP APAC, Regional VP
Americas, VP Product Development, VP Supply Chain and Technical
Operations, Regional VP EMEA, VP Research Business and Senior VP
Global Human Resources. Key management personnel in the prior year
also included the VP Global Marketing. The compensation paid or
payable to key management is set out below.
2021 2020
GBPm GBPm
------------------------------------------------ ------------------ ------
Short-term employee benefits (including bonus) 3.0 2.9
Post-employment benefits - 0.1
Share based payment 0.3 0.3
Total 3.3 3.3
------------------------------------------------ ------------------ ------
4. Breakdown of expenses by nature
Notes 2021 2020
GBPm GBPm
------------------------------------------------------ ------ -------------------------- ------
Employee benefit costs 3 12.3 18.8
Depreciation charge of property, plant and equipment - 0.3
Depreciation charge of right-of-use assets 0.8 0.8
Amortisation charge of intangible assets 10 4.1 4.2
Impairment of intangible assets 10 - 0.8
Impairment of property, plant and equipment - 0.1
Loss on disposal of property, plant and equipment - 0.1
------------------------------------------------------ ------ -------------------------- ------
5. Finance costs and income
2021 2020
GBPm GBPm
---------------------------------------- ------ ------
Finance costs:
Bank charges (0.2) (0.2)
Interest charges for lease liabilities (0.1) (0.1)
Total finance costs (0.3) (0.3)
---------------------------------------- ------ ------
Finance income:
Bank interest receivable - 0.1
Total finance income - 0.1
---------------------------------------- ------ ------
6. Discontinued operations
On 9 April 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.
Profit/(loss) for the year
2021 2020
GBPm GBPm
----------------------------------------------------------- ---- ---------- --------
Revenue 2.5 22.1
Cost of sales (0.3) (6.4)
----------------------------------------------------------------- ---------- --------
Gross profit 2.2 15.7
----------------------------------------------------------------- ---------- --------
Expenditure (1.2) (20.0)
Goodwill and intangible asset impairment - (114.0)
----------------------------------------------------------------- ---------- --------
Operating profit/(loss) 1.0 (118.3)
----------------------------------------------------------------- ---------- --------
Other gains and (losses) - net 0.3 114.8
Finance costs - (3.2)
----------------------------------------------------------------- ---------- --------
Profit/(loss) from discontinued operations 1.3 (6.7)
----------------------------------------------------------------- ---------- --------
Cash flow 2021 2020
GBPm GBPm
------------------------------------------------------------ --- ---------- --------
Net cash inflow/(outflow) from operating activities 0.2 (9.8)
Net cash generated from/(used in) discontinued operations 0.2 (9.8)
------------------------------------------------------------ --- ---------- --------
Other gains and losses includes a GBPnil (2020: GBP123.1
million) gain relating to the forgiveness of the AstraZeneca loan
and accrued interest, GBPnil (2020: GBP8.3 million) loss on foreign
exchange, and GBP0.3 million (2020: GBPnil) gain on the change in
fair value of the contingent royalty consideration.
Finance costs include GBPnil (2020: GBP3.0 million) of interest
charged on the loan from AstraZeneca , and GBPnil (2020: GBP0.2
million) relating to the unwinding of discounts on amounts payable
to AstraZeneca.
7. Taxation
2021 2020
GBPm GBPm
------------------------------------------------- ------ ------
Deferred tax
(Increase)/decrease in deferred tax assets (2.8) 8.2
(Decrease)/increase in deferred tax liabilities (1.6) 0.2
------------------------------------------------- ------ ------
Total deferred tax (credit)/charge (4.4) 8.4
------------------------------------------------- ------ ------
Tax is attributable to:
Loss from continuing operations (4.4) 8.4
------------------------------------------------- ------ ------
The tax credit (2020: charge) for the year is lower (2020:
higher) than the standard rate of corporation tax in the UK of
19.00% (2020: 19.00%). The differences are explained below:
2021 2020
GBPm GBPm
Loss from continuing operations before tax (2.1) (18.4)
Profit/(loss) from discontinued operations before tax 1.3 (6.7)
------------------------------------------------------------------ ------ -------
Loss before tax (0.8) (25.1)
------------------------------------------------------------------ ------ -------
Tax at the UK tax rate of 19.00% (2020: 19.00%) (0.2) (4.8)
Expenses not deductible for tax purposes (0.2) -
Employee share options (0.1) 0.4
Tax losses for which no deferred income tax asset was recognised (3.9) 12.8
Tax (credit)/charge for the year (4.4) 8.4
------------------------------------------------------------------ ------ -------
At 31 December 2021, the Group has tax losses to be carried
forward of approximately GBP541.7 million (2020: GBP513.7 million).
These can be utilised against future taxable profits. A proportion
of these tax losses have been recognised as a deferred tax
asset.
At 31 December 2021, Circassia Group plc and Circassia Limited
had tax losses to be carried forward of approximately GBP166.3
million (2020: GBP162.6 million). These losses have no expiry date,
however, the utilisation of these losses will be restricted to 50%
of profits generated in the United Kingdom.
8. Earnings per share
Basic earnings per share 2021 2020
GBP GBP
--------------------------------------------- ----- -------
From continuing operations 0.01 (0.07)
From discontinued operations 0.00 (0.02)
--------------------------------------------- ----- -------
Total basic earnings per share attributable
to the ordinary equity holders of the
company 0.01 (0.09)
--------------------------------------------- ----- -------
Diluted earnings per share 2021 2020
GBP GBP
----------------------------------------------- ----- -------
From continuing operations 0.01 (0.07)
From discontinued operations 0.00 (0.02)
----------------------------------------------- ----- -------
Total diluted earnings per share attributable
to the ordinary equity holders of the
company 0.01 (0.09)
----------------------------------------------- ----- -------
Reconciliation of earnings used in calculating 2021 2020
earnings per share GBPm GBPm
---------------------------------------------------- ------ -------
Basic and diluted earnings per share
Profit/(loss) attributable to the ordinary
equity holders of the company used in calculating
basic and dilutive earnings per share:
From continuing operations 2.3 (26.8)
From discontinued operations 1.3 (6.7)
3.6 (33.5)
---------------------------------------------------- ------ -------
The earnings used in calculating basic and diluted earnings per
share is the same.
Weighted average number of shares 2021 2020
---------------------------------------------- -------------------- -----------------------
Weighted average number of ordinary shares
used as the denominator in calculating
basic earnings per share 412,604,673 381,859,840
Adjustments for calculation of diluted
earnings per share:
Share options 23,212,517 -
Deferred shares 823,467 -
Weighted average number of ordinary shares
and potential ordinary shares used as the
denominator in calculating diluted earnings
per share 436,640,657 381,859,840
---------------------------------------------- -------------------- -----------------------
As net losses are recorded in the previous financial year, there
are no dilutive potential shares in that year.
9. Goodwill
2021 2020
GBPm GBPm
------------------------- ------- -------
At 1 January
Cost 88.3 87.8
Accumulated impairment (83.0) (83.0)
------------------------- ------- -------
Net book amount 5.3 4.8
------------------------- ------- -------
Year ended 31 December
------------------------- ------- -------
Opening net book amount 5.3 4.8
Impairment 83.0 -
Disposal (83.0) -
Exchange differences (0.5) 0.5
------------------------- ------- -------
Closing net book amount 4.8 5.3
------------------------- ------- -------
At 31 December
------------------------- ------- -------
Cost 4.8 88.3
Accumulated impairment - (83.0)
------------------------- ------- -------
Net book amount 4.8 5.3
------------------------- ------- -------
Following the cessation of the run-off period on 31 March 2021,
the fully impaired COPD goodwill assets have been disposed of.
The carrying value of goodwill is allocated to the NIOX(R) CGU
and was generated in June 2015 on the acquisition of Aerocrine. The
recoverable amount of a CGU is assessed using a value in use model.
The value in use for the NIOX(R) CGU was calculated over a
five-year period using a discount factor of 11.5% (being a weighted
average cost of capital rate for the CGU). The calculations use
post-tax cash flow projections. Cash flows over five years have
been considered appropriate based on the product lifecycle. Cash
flows beyond the five-year period were extrapolated using the
estimated terminal growth rate stated below. The growth rate does
not exceed the long-term average growth rate for the business. The
discount rate used is post-tax and reflects specific risks relating
to the Group and uncertainties surrounding the cash flow
projections.
The key assumptions used for the valuation of the NIOX(R) CGU
are as follows:
Assumption Approach used to determine values
----------------------------------------- ---------------------------------------------------------------------------
Valuation basis Value in use
----------------------------------------- ---------------------------------------------------------------------------
Sales Based on past performance and management's expectations of market
development. Sales in 2022
are expected to return towards pre-pandemic levels. The growth rate for
2023-2026 reflects
a more cautious growth level than historic CAGR.
----------------------------------------- ---------------------------------------------------------------------------
Gross margin Based on past performance and management's expectations for the future
----------------------------------------- ---------------------------------------------------------------------------
Operating costs Management forecasts these costs based on the current structure of the
business, adjusting for inflationary increases but not reflecting any
future
restructurings or cost-saving measures
----------------------------------------- ---------------------------------------------------------------------------
Period of specified projected cash flows 2021 - 5 years
2020 - 5 years
----------------------------------------- ---------------------------------------------------------------------------
Long-term growth rate Terminal growth rates based on management's estimate of future long-term
average growth rate
2021 - 1%
2020 - 1%
----------------------------------------- ---------------------------------------------------------------------------
Discount rate Reflects specific risks relating to the relevant segments and the
countries in which they
operate
2021 - 11.5%
2020 - 11.5%
----------------------------------------- ---------------------------------------------------------------------------
Impact of possible changes in key assumptions - NIOX(R) CGU
If the budgeted NIOX(R) sales in the value in use calculation
had been 25% lower than management's estimates at 31 December 2021,
the Group would have had to recognise an impairment against the
carrying amount of goodwill and intangible assets of GBP3.8
million. This steep hypothetical reduction in sales represents a
slower recovery post the Covid-19 pandemic.
10. Intangible assets
Total intangible
Customer Intellectual assets
CMP relationships Technology property Other
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
At 1 January 2020
Cost 259.3 34.6 50.3 44.0 3.9 392.1
Accumulated
amortisation and
impairment (141.6) (11.3) (30.6) (44.0) (1.6) (229.1)
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
Net book amount 117.7 23.3 19.7 - 2.3 163.0
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
Year ended 31
December 2020
Opening net book
amount 117.7 23.3 19.7 - 2.3 163.0
Additions - - - - 0.4 0.4
Amortisation charge (3.7) (1.8) (2.0) - (0.4) (7.9)
Impairment - - - - (0.8) (0.8)
Disposal (114.0) - - - - (114.0)
Exchange
differences - 2.5 2.0 - (0.1) 4.4
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
Closing net book
amount - 24.0 19.7 - 1.4 45.1
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
At 31 December 2020
Cost 259.3 34.4 31.2 44.0 4.3 373.2
Accumulated
amortisation and
impairment (259.3) (10.4) (11.5) (44.0) (2.9) (328.1)
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
Net book amount - 24.0 19.7 - 1.4 45.1
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
Year ended 31
December 2021
Opening net book
amount - 24.0 19.7 - 1.4 45.1
Additions - - - - 0.1 0.1
Amortisation charge - (1.8) (1.9) - (0.4) (4.1)
Impairment 259.3 - - 44.0 - 303.3
Disposal (259.3) - - (44.0) - (303.3)
Exchange
differences - (2.1) (1.7) - - (3.8)
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
Closing net book
amount - 20.1 16.1 - 1.1 37.3
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
At 31 December 2021
Cost - 31.4 28.5 - 4.4 64.3
Accumulated
amortisation and
impairment - (11.3) (12.4) - (3.3) (27.0)
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
Net book amount - 20.1 16.1 - 1.1 37.3
-------------------- -------- ------------------- ------------- ------------------- -------- -------------------
The amortisation charge of GBP4.1 million (2020: GBP7.9 million)
is included on the face of the statement of comprehensive income.
GBP2.0 million (2020: GBP2.0 million) is included within research
and development costs, GBP1.8 million (2020: GBP1.8 million) is
included within sales and marketing costs, GBP0.3 million (2020:
GBP0.4 million) is included within administrative expenses and
GBPnil (2020: GBP3.7 million) is included within profit/(loss) from
discontinued operations.
The Group tests at least annually whether intangible assets have
suffered any impairment. Key assumptions and sensitivities used in
the impairment review at a CGU level are disclosed in note 9.
Currently marketed products ("CMP")
CMP comprises the Tudorza(R) and Duaklir(R) products. The CMP
assets were partially impaired in 2019 following an
underperformance in sales of Tudorza(R) and Duaklir(R), and
subsequently fully impaired in the 2020 financial year as the
licences were handed back to AstraZeneca on 27 May 2020. Following
the cessation of the run-off period on 31 March 2021, the fully
impaired assets have been disposed of.
Customer relationships
Customer relationships represent the existing customers as at
June 2015, being the date of the acquisition of Aerocrine, that are
expected to continue to support the NIOX(R) business. A remaining
useful life of 18 years was determined at acquisition. Amortisation
has been calculated on a straight-line basis over this period from
the date of acquisition.
Technology
Aerocrine developed its technology to measure fractional exhaled
nitric oxide ("FeNO") in the mid-1990s. The company was the first
to develop an instrument for the measurement of FeNO as a valuable
tool in the management of airway inflammation. This technology is
used by the Group in its NIOX(R) devices. The valuation of the
Technology was based on a pre-determined hypothetical royalty rate
attributable to the use of the Technology. A remaining useful life
of 15 years was determined at acquisition in June 2015.
Amortisation has been calculated on a straight-line basis over this
period from the date of acquisition.
Intellectual property
Intellectual property comprises the LungFit(R) licence which was
acquired from Beyond Air Inc. in 2019. The asset was initially
valued at GBP44.0 million, being the fair value of consideration.
This includes GBP8.0 million paid upfront in the form of shares and
contingent milestone and royalty payments valued at GBP36.0
million.
The intellectual property was fully impaired following an
announcement made by Beyond Air Inc. in December 2019 purporting to
terminate the agreement for the commercial licence of LungFit(R).
During the year, Circassia settled its contractual dispute with
Beyond Air Inc and surrendered its right to the LungFit(R) product
in exchange for consideration and therefore the fully impaired
asset was disposed of.
Other
Other intangible assets relate to software and internally
generated capitalised device development costs. Amortisation on the
ERP software has been calculated on a straight-line basis over the
period from which the software was fully developed and operational.
An impairment loss of GBP0.8 million was recognised in the prior
year against the capitalised device development costs following a
change in the strategic roadmap for product development.
11. Trade and other payables
2021 2020
GBPm GBPm
--------------------------------- ------ ------
Trade payables 0.5 5.2
Social security and other taxes 0.6 0.5
Accruals 9.0 18.9
Other payables 0.3 1.0
Total trade and other payables 10.4 25.6
--------------------------------- ------ ------
Trade payables are unsecured and are usually paid within 30 days
of recognition.
The carrying amounts of trade and other payables are considered
to be the same as their fair values, due to their short-term
nature.
12. Other reserves
Transactions with
Share option Treasury shares non-controlling
reserve Translation reserve interests Total other
reserve reserves
------------------
GBPm GBPm GBPm GBPm GBPm
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
At 1 January 2020 13.0 8.7 (0.9) (6.1) 14.7
Employee share
option scheme 2.0 - - - 2.0
Exchange
differences on
translation of
foreign
operations - 7.8 - - 7.8
At 31 December
2020 15.0 16.5 (0.9) (6.1) 24.5
Exchange
differences on
translation of
foreign
operations - (7.8) - - (7.8)
At 31 December
2021 15.0 8.7 (0.9) (6.1) 16.7
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Treasury shares
Treasury shares are shares in Circassia Group plc that are held
by the Circassia Pharmaceuticals plc Employee Benefit Trust for the
purpose of issuing shares under the various employee share schemes.
Shares issued to employees are recognised on a first in, first out
basis.
The number of shares acquired by the Trust is as follows:
Scheme Nominal value of shares Amount of consideration paid
Number of shares
GBP GBPm
------------------------------------ ------------------- -------------------------- -------------------------------
DSBP 2014 110,845 0.0008 0.3
DSBP 2015 156,036 0.0008 0.4
DSBP 2017 251,377 0.0008 0.2
DSBP 2018 412,706 0.0008 -
Total as at 31 December 2020 and 31
December 2021 930,964 0.0008 0.9
------------------------------------ ------------------- -------------------------- -------------------------------
The shares to satisfy the DSBP 2018 scheme were allotted as new
ordinary shares in Circassia Group plc, rather than being purchased
by the Trust.
13. Cash generated from/(used in) operations
Reconciliation of profit/(loss) before tax to net cash used in
operations:
Notes 2021 2020
GBPm GBPm
------------------------------------------------------- ------ ------- --------
(Loss)/profit from continuing operations before tax (2.1) (18.4)
Profit/(loss) from discontinued operations before tax 6 1.3 (6.7)
------------------------------------------------------- ------ ------- --------
(Loss)/profit before tax (0.8) (25.1)
Adjustments for:
Finance income 5 - (0.1)
Finance costs 5 0.1 3.5
Depreciation charge of property, plant and equipment - 0.3
Depreciation charge of right-of-use assets 0.8 0.8
Amortisation charge of intangible assets 10 4.1 7.9
Impairment of intangible assets 10 - 0.8
Impairment of property, plant and equipment - 0.1
Loss on disposal of intangible assets 10 - 114.0
Gain on loan write off - (123.0)
Share based payment charge 3 - 2.0
Foreign exchange on non-operating cash flows (2.1) 8.7
Changes in working capital:
Decrease/(increase) in trade and other receivables 13.4 (3.9)
Decrease in inventories 1.1 2.9
Decrease in trade and other payables (15.1) (12.8)
------------------------------------------------------- ------ ------- --------
Cash generated from/(used in) operations 1.5 (23.9)
------------------------------------------------------- ------ ------- --------
14. Related party transactions
There is no ultimate controlling party of the Group as ownership
is split between the Company's shareholders. The most significant
shareholders as at 31 December 2021 and 2020 are as follows:
Ownership interest
Name 2021 2020
--------------------- ---------- ---------
Griffiths R I 29.88% 28.15%
Harwood Capital LLP 18.59% 17.62%
AstraZeneca PLC 16.99% 17.88%
On 24 March 2021, the Company executed a Subscription for a
total of GBP5 million in additional equity finance at a price of
25.0p per share with three of its major institutional shareholders,
being North Atlantic Smaller Companies Investment Trust plc (to
which Harwood Capital LLP acts as investment adviser/manager),
Richard Griffiths and Lombard Odier Asset Management (Europe)
Limited. Each of the investments by Harwood Capital LLP and Richard
Griffiths constituted a related party transaction under the AIM
Rules for Companies and was disclosed as such at the time.
On 2 June 2020, the Company executed an equity financing
facility for up to GBP5 million of additional equity finance at a
price of 24.6p per share with two of its major institutional
shareholders, being North Atlantic Small Companies Investment Trust
plc (to which Harwood Capital LLP acts as investment
adviser/manager) and Richard Griffiths, to provide the Company with
access to additional liquidity should it be required. On 17
September 2020 the Board decided to draw down this equity
financing. The foregoing equity financing facility constitutes a
related party transaction under the AIM Rules for Companies.
Employee benefit trust
In 2014 the Company set up an employee benefit trust for the
purposes of buying and selling shares on the employees' behalf.
Nothing was paid into the Trust by the Company during the year
ended 31 December 2021 and 2020.
No shares were purchased by the Trust during the years ended 31
December 2021 and 31 December 2020. No shares were allotted to the
Trust (2020: 412,706) during the year ended 31 December 2021.
15. Events occurring after the reporting date
No events occurred after the reporting date.
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(END) Dow Jones Newswires
March 22, 2022 03:00 ET (07:00 GMT)
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