Ark Therapeutics : Half Yearly Report and Change of Registered Office

Interim Results for the First Half of 2014 and Change of Registered Office

London, UK, 1 August 2014 - Ark Therapeutics Group plc ("Ark" or the "Company") today announces its interim results for the six months ended 30 June 2014. 

The Company also announces that it has changed its registered office to 11 Staple Inn, London WC1V 7QH with immediate effect.

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INTERIM MANAGEMENT REPORT

To the members of Ark Therapeutics Group plc

Cautionary statement

This Interim Management Report ("IMR") has been prepared to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed.  The IMR should not be relied on by any other party or for any other purpose. 

The IMR contains certain forward-looking statements.  These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report, but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information.

Following the disposal of its trading subsidiaries on 15 March 2013 (the "Disposal") the Company had received approaches from a number of third parties interested in possible transactions with the Company.  Each of these discussions involved a considerable amount of analysis and consideration by the Board and its advisers.  As a result, on 28 March 2014 the Company announced that it 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. 

Board and Management

Post-period on 1 July 2014 the Company announced the retirement of Charles Spicer as a Non-Executive Director with effect from its annual general meeting held on 30 June 2014.  The Board of Ark once again offers its thanks to Mr Spicer for the contribution he made to the Company and wishes him success in his other continuing business interests.  At the same time, the Company was also pleased to announce the appointment of Sue Steven as a Non-Executive Director of the Company with effect from 30 June 2014.  Mrs Steven has worked with Ark for over 10 years , having been an employee of the Company prior to the Disposal, and consequently has an in-depth knowledge of the Company.  Mrs Steven also acts as Ark's Company Secretary alongside her directorship. 

Financial and non-financial key performance indicators ("KPIs")

As set out in our most recent annual report, the Board considers cash to be the Company's sole financial KPI.  Following the Disposal, the Company has no non-financial key performance indicators.

Financial Review

The Company's loss after tax for the six months ended 30 June 2014 was £0.5m (six months ended 30 June 2013: a profit after tax of £1.4m and for the year ended 31 December 2013: a profit of £1.1m).  The loss during the period under review largely related to the costs incurred as a result of the progression of the proposed reverse takeover.

Other administrative expenses for the period totalled £0.5m (six months ended 30 June 2013: £0.9m and £1.0m for year ended 31 December 2013).

The share-based compensation charge for the period was £0.03m (six months ended 30 June 2013: £0.04m and £0.06m for the year ended 31 December 2013).

Net assets were £0.5m at 30 June 2014 (at 30 June 2013: £1.2m and £0.9m at 31 December 2013).

Cash and short-term deposits were £0.7m as at 30 June 2014 (at 30 June 2013: £0.8m and £0.8m at 31 December 2013).

Net cash outflow from operating activities for the period was £0.1m (six months ended 30 June 2013: £1.4m and year ended 31 December 2013: £1.6m).  Net cash inflow from investing activities was £nil (six months ended 30 June 2013: £0.5m and year ended 31 December 2013: £0.7m).

Post-retirement benefits

Prior to the Disposal the Company made contributions to employees' personal pension plans which were defined contribution schemes.  The amount charged to the income statement in respect of pension costs is the contribution payable in the year ended 31 December 2013.  Differences between contributions payable in the year and contributions actually paid are shown either as accruals or prepayments in the balance sheet

Events after balance sheet date

There have been no events after the balance sheet date which require adjustment or disclosure in these interim financial statements.

Related party transactions

There have been no material changes in the related party transactions described in the last annual report.

In the event that the proposed reverse takeover cannot for any reason be put to shareholders, or shareholders reject the proposed transaction, the Board intends to return the remaining funds to shareholders through a solvent liquidation process as soon as practicable.

The Company's risk management objectives and exposure to various risks are as above and detailed in note 16 of the annual report.

Going concern

Following the Disposal 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. 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.

Future outlook

As stated in the RNS announcement issued on 1 July 2014, we can confirm that all matters in connection with the proposed reverse takeover are progressing well and the Board will send further information to shareholders in due course.

By order of the Board

We confirm to the best of our knowledge:

(a)        the set financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";

(b)        the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c)        the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

A list of current Directors is maintained on the Company's website:www.arktherapeutics.com.

By order of the Board

Condensed income statement

For the six months ended 30 June 2014 (unaudited)

All results for the six months ended 30 June 2014 relate wholly to continuing activities.

Condensed balance sheet

As at 30 June 2014 (unaudited)

Condensed statement of changes in equity

Notes to the financial information

1        General information

This interim financial information was authorised for issue on 31 July 2014. The information for the year ended 31 December 2013 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  A copy of the statutory accounts for the year ended 31 December 2013 has been delivered to the Registrar of Companies. Although the Auditor's report on those accounts was not qualified, it drew attention to a matter by way of emphasis relating to the preparation of those financial statements other than on a going concern basis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

A copy of the interim results for the six months ended 30 June 2014 can be found on the Company's website atwww.arktherapeutics.com.

2        Basis of preparation

The annual financial statements of Ark Therapeutics Group plc were prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half- yearlyreport has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.

Following the Disposal 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. 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.

At 30 June 2014, the Company had net assets of £0.5m (31 December 2013: £0.9m) and cash and cash equivalents of £0.7m (31 December 2013: £0.8m).

The same accounting policies, presentationand methods of computation have been followed in the condensed set of financial statements as applied in the Company's latest annual audited financial statements for the year ended 31 December 2013. Seasonal changes to the Company's operations are not material.

3        Subsidiaries

The Company controls the operations of the Ark Therapeutics Family Benefit Trust ("FBT") and, therefore, it has been accounted for as if it were a subsidiary. 

4        (Loss)/profit per share

International Accounting Standards require presentation of diluted earnings per share when a company could be called upon to issue shares that woulddecrease net profit or increase net loss per share.

From continuingand discontinued operations

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

5        Related party transactions

The Company provided loans to the Ark Therapeutics Family Benefit Trust ("FBT") for the purchase of shares in the Company.  No interest was charged on these loans.  Details of interest income for the year and outstanding balances at year end are shown below:

The following transactions withCompany Directors took place during the period at arm's length:

6        Commitments and liabilities

On 28 March 2014 the Company announced that it had signed heads of terms in connection with the possible acquisition of a revenue-generating and profitable UK-based private company.   On completion of the transaction the Company expects to pay additional professional fees of £123,000 in relation to work expected to be completed post period end.

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 which comprises the condensed income statement, the condensed statement of changes in equity, the condensed balance sheet, the condensed cash flow statement and related notes 1 to 6 . We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors.  The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Emphasis of matter - interim financial statements prepared other than on a going concern basis

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 2 to the financial statements, which explains that the financial statements have been prepared on a basis other than that of a going concern.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

Cambridge, United Kingdom

31 July 2014