Ark Therapeutics : Final Results

Ark Therapeutics Group plc

Preliminary Announcement - Final results for the year ended 31 December 2013

London, UK, 30 April 2014 - Ark Therapeutics Group plc (LSE: AKT) today announces its audited results for the year ended 31 December 2013.

Financial highlights

·      Total revenues and other income for the year ended 31 December 2013 of £0.3m (31 December 2012:  £1.9m)

·      Net assets at 31 December 2013 of £0.9m (31 December 2012: net liabilities of £0.2m)

·      Cash and short-term deposits of £0.8m (31 December 2012: £1.7m)

·      Profit for the year after tax was £1.1m (31 December 2012: loss after tax was £2.5m)

·      On 15 March 2013 the Company disposed of its operating subsidiaries

·      Post-period the Company signed heads of terms in connection with the possible acquisition of a revenue-generating and profitable UK-based private company in the healthcare support services sector

A full copy of the Company's Annual Report and Accounts for the year ended 31 December 2013 is available on its website atwww.arktherapeutics.comwithin the Investor Relations section.  In accordance with Listing Rule 9.6.1, the Annual Report and Accounts have also been uploaded to National Storage Mechanism, and will shortly be available for viewing.

Disclosure & Transparency Rule ("DTR") 6.3.5 requires the Company to disclose to the media certain information from its Annual Report, if that information is of a type that would be required to be disseminated in a half-yearly report.  Accordingly, this announcement should be read in conjunction with and is not a substitute for reading, the full Annual Report and Accounts. Together these constitute the information required by DTR 6.3.5, which is required to be communicated in unedited full text through a Regulatory Information Service.

The information included in this announcement is extracted from the 2013 Annual Report which was approved by the Directors on 29 April 2014.  Defined terms used in the announcement refer to terms as defined in the 2013 Annual Report unless the context otherwise requires.

Annual General Meeting

The Notice convening the next Annual General Meeting, which is expected to take place by the end of June 2014 at the offices of Ashurst, Broadwalk House, 5 Appold Street, London EC2A 4HA will be posted separately to shareholders nearer the time.

For further information please contact:

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding Ark's financial position, business strategy, plans and objectives of management for future operations, and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Ark's control that could cause the actual results, performance or achievements of Ark to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Ark's present and future business strategies and the environment in which Ark will operate in the future. These forward-looking statements speak only as at the date of this announcement. Ark expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in Ark's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, readers are cautioned not to rely on any forward-looking statement.

Dear Shareholder

·      We finished the year with cash and short-term deposits of £0.8m compared to £1.7m at the end of December 2012.

·      Total revenues and other income for the year ended 31 December 2013 were £0.3m compared with £1.9m last year and related to a payment received from Crawford Woundcare Limited relating to the disposal of our woundcare business in 2011.

·      The profit for the year before tax was £1.1m compared to a loss of £2.5m in 2012.

·      Net assets at 31 December 2013 amounted to £0.9m compared to net liabilities of £0.2m at 31 December 2012.

·      On 15 March 2013 the Company disposed of its trading subsidiaries.

As detailed in the Company's financial results for the year ended 31 December 2012 published on 30 April 2013, the first interim management statement issued on 17 May 2013, the half yearly report issued on 9 August 2013 and the second interim management statement issued on 6 November 2013, the key events for the reporting year have been as follows:

·      On 30 January 2013 the Company announced that, having failed to gain sufficient support for an institutional fundraising in late 2012/early 2013, it had appointed WG Partners to assist the Company in reviewing and evaluating a number of strategic options open to the Company to maximise value for Shareholders. These options included a formal sale process, which was initiated on 30 January 2013.

·      On 28 February 2013 the Company announced that it had not received any indicative offers pursuant to the formal sale process.  In parallel, the Board had attempted at various points to obtain finance from clients, direct competitors, banks and via the disposal of non-core product assets. However, all such steps proved unsuccessful.

·      On 7 March 2013 Wölbern Private Equity ("WPE") made a formal offer for the acquisition of the operating subsidiaries of the Company - Ark Therapeutics Limited, Ark Therapeutics Oy and Lymphatix Oy (the "Subsidiaries") (the "Disposal").  This offer was expressly conditional on the UKLA (UK Listing Authority) agreeing to apply a waiver under Listing Rule 10.8 to the Disposal, therebynot requiring the Company to obtain the approval of its shareholders for the Disposal as it had no alternative but immediately to dispose of the Subsidiaries in order to avoid an insolvency process .  WPE therefore confirmed to the Board on 10 March 2013 that the transaction had to be completed on or before 15 March 2013 otherwise its offer would lapse.

·      O n 15 March 2013 the Company made a comprehensive and detailed announcement that it had disposed of the Subsidiaries having been granted a Listing Rule 10.8 waiver. The Company received £1.335m in consideration gross of disposal costs and recognised a profit on disposal of £1.012m.

·      O n 9 July 2013 the Company announced that it had amicably negotiated and settled a potential dispute with Crawford Woundcare Limited.

Since the date of the Disposal the Board has ensured that the Company has maintained its London Stock Exchange listing and met its financial, fiduciary and reporting obligations.

As a result of the Disposal, Professor Seppo Ylä-Herttuala and David Prince both resigned as Non-Executive Directors on 15 March 2013 and Dr David Venables' employment as Chief Executive Officer and my employment as Executive Chairman were terminated on 31 March 2013.  However, both Dr Venables and I, along with Dr David Bloxham and Charles Spicer, continue to serve on the Board as Non-Executive Directors.   The Company no longer has any employees.

As a result of the Disposal, the Company had no subsidiaries at year-end.  In accordance with the Companies Act 2006, the Company is not, therefore, required to consolidate the formerly owned Subsidiaries up to the date of the Disposal.  Accordingly, we present in this annual report and accounts the results of Ark Therapeutics Group plc company only for the 12 months ended 31 December 2013.

Post-period on 28 March 2014, we were pleased to announce that the Company had signed heads of terms in connection with the possible acquisition of a revenue-generating and profitable UK-based private company in the healthcare support services sector ("Target").

The transaction would be structured by way of an acquisition of the Target by Ark in consideration for the issue of new Ark shares to the shareholders of the Target.  Due to its size in relation to Ark, the proposed acquisition of the Target would constitute a 'reverse takeover' for the purposes of the Listing Rules.  

In response to a request by the Company, the UK Listing Authority suspended the listing of Ark's Premium listed shares on the Main Market of the London Stock Exchange on 28 March 2014 pending publication of the required shareholder documents.  Shareholder approval would be required to approve the acquisition of the Target which would be sought at a general meeting to be convened in due course, after which the Company would also expect to seek a lifting of the trading suspension. 

The Board will make further announcements in due course.

Iain G Ross

Chairman

Ark Therapeutics Group plc

29 April 2014

Overview

As a result of the disposal of the trading subsidiaries during 2013 as described more fully in the Chairman's statement on pages 3 and 4 , the Company reports a profit from operations of £1.1m compared to a loss of £2.5m in 2012.

As announced previously, we completed the disposal of our woundcare business to Crawford Woundcare Limited in 2011. Total proceeds recognised in the current year from this disposal totalled £0.3m and are disclosed under discontinued operations on the face of the income statement and also in note 8.

Cash and cash equivalents as at 31 December 2013 totalled £0.8m (2012: £1.7m). 

Impairment charges

Taxation

There was no UK corporation tax charge for the year under review due to a taxable loss being made in the year.

Balance sheet

Total net assets (defined as total assets less total liabilities) have increased by £1.2m to £0.9m as at 31 December 2013, principally as a result of the forgiveness of the intercompany loan as mentioned in note 8 to the financial statements.

Cash flow

The net cash outflow from operating activities for the year was £1.3m (2012: a net cash inflow of £0.2m).  Ark's net cash inflow from investing activities was £0.4m (2012: a cash outflow of £6.7m).

The Board operates an Investment Policy governing the investment of the Company's cash resources, under which the primary objective is to invest in low risk cash or cash equivalent investments to safeguard the principal, ensuring that these resources remain available to fund the Company's operations.

Going concern

As outlined in the Chairman's statement on pages 3 and 4, on 15 March 2013 the Company sold 100% of the ordinary share capital of its subsidiary undertakings, Ark Therapeutics Limited and Lymphatix Oy, to WKD Holding Oy.  Following the sale of those subsidiaries the Company ceased its principal activity.  Ark Therapeutics Group plc will continue in operational existence for the foreseeable future for the purpose of entering into a reverse transaction or, if that transaction were to be unsuccessful, to distribute funds back to shareholders. As required by IAS 1 Presentation of Financial Statements, the Directors have prepared the financial statements on a basis other than that of a going concern given that its principal activity has ceased during the year. The financial statements do not include any provision for the future cost of terminating the business of the Company except to the extent that such were committed at the balance sheet date. No material adjustments arose as a result of ceasing to apply the going concern basis.

Sue Steven

Company Secretary

29 April 2014

The Directors are responsible for preparing the annual report, Directors' remuneration report and the financial statements in accordance with applicable laws and regulations.

Company law requires the Directors to prepare such financial statements for each financial year.  Under IAS Regulation the Directors are required to prepare financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU").  Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.  In preparing these financial statements, the Directors are required to:

·      properly select and apply accounting policies;

·      present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·      provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

·      make an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors confirm to the best of their knowledge that:

(a)        the financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

(b)        the Strategic report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and

(c)        the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the company's performance, business model and strategy.

By order of the Board

The financial statements of Ark Therapeutics Group plc, registered number 04313987, were approved by the Board of Directors and authorised for issue on 29 April 2014. They were signed on its behalf by:

Condensed statement of changes in equity for the year ended 31 December 2013

Selected notes to the financial information

1      Presentation of financial information

These results for the year ended 31 December 2013 are an excerpt from the Annual Report and Accounts 2013 and do not constitute the Company's statutory accounts for 2013 or 2012.  Statutory accounts for 2012 have been delivered to the Registrar of Companies, and those for 2013 will be delivered in due course.  The Auditor has reported on both those accounts: Their report for the year ended 31 December 2012 was unqualified, did not contain statements under Sections 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation but did contain an emphasis of matter in respect of the fact the former Group's financial statements were prepared on a basis other than that of a going concern.  Their report for the year ended 31 December 2013 was unqualified, did not contain statements under Sections 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation but did contain an emphasis of matter in respect of the fact the Company's financial statements were prepared on a basis other than that of a going concern.

Whilst the financial information included in this Annual Results Release has been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS.  Full Financial Statements that comply with IFRS are included in the Annual Report & Accounts 2013 which is available at www.arktherapeutics.com, hard copies of which will be distributed in due course.

The accounting policies adopted are consistent with those followed in the preparation of the Company's Annual Report & Accounts 2013 which are unchanged from those adopted in the former Group's Annual Report & Accounts 2012, except as described below.

In the current financial year, the Company has adopted IFRS 13  "Fair Value Measurement".

IFRS 13 defines fair value and replaces the requirements contained in individual accounting standards. The standard does not change the requirements regarding which items should be measured or disclosed at fair value and as such has no material impact on these financial statements.

The following amendments to Standards are also effective from the current financial year but currently do not materially impact the Company's Financial Statements: IFRS 7 (Amendments) improves disclosure in netting arrangements associated with financial assets and financial liabilities; IAS 1 (Amendments) improves how items of other comprehensive income should be presented in the statement of other comprehensive income; IAS 32 (Amendments) addresses inconsistencies relating to offsetting of financial assets and financial liabilities criteria; and IAS 36 (Amendments) clarifies the disclosure requirements of changes made by the introduction of IFRS 13.

Going concern

As outlined in the Chairman's statement on pages 3 and 4, on 15 March 2014 the Company sold 100% of the ordinary share capital of its subsidiary undertakings, Ark Therapeutics Limited and Lymphatix Oy, to WKD Holding Oy.  Following the sale of those subsidiaries the Company ceased its principal activity. Post-period on 28 March 2014, we were pleased to announce that the Company had signed heads of terms in connection with the possible acquisition of a revenue-generating and profitable UK-based private company in the healthcare support services sector ("Target").  Due to its size in relation to Ark, the proposed acquisition of the Target would constitute a 'reverse takeover' for the purposes of the Listing Rules.  

As required by IAS 1 Presentation of Financial Statements, the Directors have prepared the financial statements on a basis other than that of a going concern given that its principal activity has ceased during the year. The financial statements do not include any provision for the future cost of terminating the business of the Company except to the extent that such costs were committed at the balance sheet date. No material adjustments arose as a result of ceasing to apply the going concern basis.

2          Profit/(loss) per share

From continuingand discontinued operations

The calculation of the basic and diluted earnings per share is based on the following data:

3          Dividends

The Directors are unable to recommend the payment of a dividend (2012: £nil).

4          Events after the balance sheet date

On 28 March 2014 the Company announced that the Company had signed heads of terms in connection with the possible acquisition of a revenue-generating and profitable UK-based private company in the healthcare support services sector ("Target").

The transaction would be structured by way of an acquisition of the Target by Ark in consideration for the issue of new Ark shares to the shareholders of the Target.  Due to its size in relation to Ark, the proposed acquisition of the Target would constitute a 'reverse takeover' for the purposes of the Listing Rules.