Physiomics PLC - Interim Results

RNS Number:0542R
Physiomics PLC
31 March 2008

Physiomics plc

("Physiomics" or "the Company")

Interim Results Statement
for the six month period ended 31 December 2007

Oxford, UK 28 March 2008: The Board of Physiomics plc (AIM:PYC), a European
systems biology simulation company, today announces the financial results for
the six months ended 31st December 2007. Physiomics plc is a computational
systems biology services company, applying simulations supporting pharmaceutical
decision making throughout the entire drug discovery process, particularly for
cancer therapies.

Highlights of the period:

• Turnover of £55,271
• Losses after tax of £194,160
• September 2007: Collaboration announced with Eli Lilly, a global
pharmaceutical company
• December 2007: Memorandum of Understanding (MoU) with Swansea University
for access to their IBM supercomputer, "Blue C"
• Significant technical progress made in developing virtual tumour models
• Appointment of Dr Paul Harper as non-executive Chairman

Post-period end highlights:

• Appointment of Mr Roger Jones as Financial Controller and Company
Secretary

Dr Paul Harper, Chairman of Physiomics commented:

The six months to December has been a very positive period, with the achievement
of significant commercial and technological milestones. Eli Lilly, a major
pharmaceutical company has joined our growing list of partners and our
SystemCell(R) Technology has been adapted to enable simulation on supercomputer
architecture, reducing tasks that would take many hours to complete to just a
few minutes. Following a strategic review of technology progress, the
competitive environment and the improvement in business prospects engendered by
the landmark deal with Lilly, we have aligned our internal programmes to match
new opportunities. This has resulted in a re-structuring of the board, in
particular the appointment of myself as Chairman and of Mr. Roger Jones as Group
Financial Controller and Company Secretary.

In August 2007 we completed a project for ValiRx Plc (formally Cronos
Therapeutics). Our apoptosis model technology has supported both "no-go" and
"go" decisions for therapeutic targets in record time (seven months). As a
result of this project, we are in the process of filing a joint patent
application on a combination of drug targets.

In September 2007 we secured a contract with the US-based pharmaceutical company
Eli Lilly. We are obviously excited about the possibilities of working with a
prestigious global company such as Eli Lilly. The Directors see this as an
important endorsement of our technology platform by a pharmaceutical company
that already has major in-house investment in systems biology and therefore is
well able to assess the quality of the Physiomics' package.

We have continued to further our relationship with the Institute of Life Science
at Swansea University, with the signature of 3 year MoU to secure access to
their IBM supercomputer. This is one of the most powerful computers in the world
dedicated to life science and will reinforce Physiomics' modelling framework and
help address the ever increasing computing requirements in the field of systems
biology.

During the period we have also reached a long-term agreement with Bayer
Technical Services over the use of their ground breaking "MoBi" technology to
assist us in the pharmacokinetics (PK)/pharmacodynamics (PD) analysis of our
work. Physiomics has continued to develop its oncology model portfolio and
virtual tumour project by extending our expertise to include the apoptosis
processes. Apoptosis is one of the processes in living cells which leads to cell
death and the biochemical pathways responsible for this are primary targets for
anti-cancer treatments. We are currently integrating this new apoptosis model
with our existing cell cycle model to provide a more complete picture of the
balance between cell proliferation and cell death, which is the key to attacking
diseases such as cancer.

In recent months we have also seen a significant increase in expressions of
interest from pharmaceutical and biotechnology companies concerning our
fee-for-service consultancy. We are looking forward to securing additional
contracts and repeat business from existing partners and to adding new customers
to our portfolio.

Dr Paul Harper

Non-executive Chairman

28 March 2008

Physiomics plc

Unaudited Income Statement for the half year ended 31 December 2007

Unaudited Unaudited Audited
Half year to Half year to Year ended
31-Dec-07 31-Dec-06 30-Jun-07
£'000 £'000 £'000

Revenue 55 48 216

Net operating expenses -262 -202 -466

Other operating income 6 - -

Operating loss -201 -154 -250

Finance income 1 - 1
Finance costs -4 -3

Loss before taxation -204 -154 -252

UK corporation tax 10 - 59

Loss for the period attributable to equity -194 -154 -193
shareholders

Loss per share (pence)
Basic and diluted 0.05 p 0.04 p 0.06 p

Physiomics plc

Unaudited Balance Sheet as at 31 December 2007

Unaudited Unaudited Audited
Half year to Half year to Year ended
31-Dec-07 31-Dec-06 30-Jun-07
£'000 £'000 £'000

Non current assets
Intangible assets 43 49 46
Property, plant and equipment 4 7 8
47 56 54

Current assets
Trade and other receivables 156 56 173
Cash and cash equivalents 3 263 75
159 319 248

Total assets 206 375 302

Current liabilities
Trade and other payables -164 -136 -84
Short-term provisions -24 -13 -38
Bank and other loans -5 - -
Government grants - - -
-193 -149 -122
Non current liabilities
Other non-current liabilities -107 -100 -82

Total liabilities -300 -249 -204

Net assets -94 126 98

Capital and reserves
Share capital 150 151 150
Share premium account 1,611 1,617 1,611
Other reserves 20 - 18
Profit & loss account -1,875 -1,642 -1,681
Equity shareholders' funds -94 126 98

Physiomics plc

Unaudited reconciliation of Income Statement for the half year ended 31 December 2007

There are no conversion effects arising from the transition from UK GAAP to IFRS.

Unaudited reconciliation of Balance Sheet for the half year ended 31 December 2007

Unaudited Unaudited Audited
Half year to Half year to Year ended
31-Dec-07 31-Dec-06 30-Jun-07
£'000 £'000 £'000

Conversion effects comprise:
IAS38 - reclassification of software from tangible to intangible
assets
Non current assets

Intangible assets
UK GAAP 42 46 44
Effect of transition to IFRS 1 3 2
IFRS 43 49 46

Property, plant and equipment
UK GAAP 5 10 10
Effect of transition to IFRS -1 -3 -2
IFRS 4 7 8

There are no other conversion effects arising from the transition from UK GAAP to IFRS.

Statement of changes in equity for the half year ended 31 December 2007

Share Total
Share premium Other Retained shareholders'
capital account reserves earnings funds
£'000 £'000 £'000 £'000 £'000

At 30 June 2006 as previously stated 93 1,329 - -1,488 -66
Prior period effect of adoption of IFRS - - - - -
At 30 June 2006 as restated 93 1,329 - -1,488 -66

Share issue 57 282 - - 339
Equity element of loan notes - - 18 - 18
Loss for the year - - - -193 -193
At 30 June 2007 150 1,611 18 -1,681 98

Equity element of loan notes - - 2 - 2
Loss for the period - - - -194 -194

At 31 December 2007 150 1,611 20 -1,875 -94

Physiomics plc

Unaudited Cash Flow Statement for the half year ended 31 December 2007

Unaudited Unaudited Audited
Half year to Half year to Year ended
31-Dec-07 31-Dec-06 30-Jun-07
£'000 £'000 £'000

Cash flows from operating activities:

Operating loss -201 -154 -252
Amortisation and depreciation 6 6 14
(Increase) decrease in debtors - - -58
Increase (decrease) in creditors 85 -50 -104
Increase (decrease) in provisions -14 -12 13

Cash generated from operations -124 -210 -387

UK corporation tax received 27 - -

Net cash generated from operating activities -97 -210 -387

Cash flows from investing activities:

Purchase of non-current assets, net of grants - - -4
received
Disposal of non-current assets - 1 -

Net cash used by investing activities - 1 -4

Cash inflow (outflow) before financing -97 -209 -391

Cash flows from financing activities:
Issue of equity share capital - 429 429
Payment for share issue costs - -83 -89
Loans from related parties 25 100 100

Net cash from (used by) financing activities 25 446 440

Net increase (decrease) in cash and cash -72 237 49
equivalents

Cash and cash equivalents at beginning of period 75 26 26

Cash and cash equivalents at end of period 3 263 75

Physiomics plc

Notes to the Interim Financial Statements

1. General information

Physiomics plc is a public limited company ("the Company") incorporated in the
United Kingdom under the Companies Act 1985 (registration number 4225086). The
Company is domiciled in the United Kingdom and its registered address is The
Magdalen Centre, Robert Robinson Avenue, Oxford Science Park, Oxford OX4 4GA.
The Company's ordinary shares are traded on the AIM Market of the London Stock
Exchange ("AIM"). Copies of the interim report are available from the Company's
website, www.physiomics-plc.com . Further copies of the Interim Report and
Annual Report and Accounts may be obtained from the address above.

The Company's principal activity is providing services to pharmaceutical
companies in the areas of outsourced systems and computational biology.

2. Basis of preparation

Physiomics plc has adopted International Financial Reporting Standards ("IFRS")
with effect from 1 July 2006. The Company will apply IFRS in its financial
statements for the year ending 30 June 2008. Therefore, these interim statements
are the Company's first financial statements prepared in accordance with IFRS.
These financial statements may need updating for subsequent amendments to IFRS
required for first time adoption or for new standards issued post balance sheet
date.

The basis of preparation and accounting policies followed in this interim report
differ from those set out in the Annual Report and Accounts 2007 which were
prepared in accordance with United Kingdom accounting standards (UK GAAP). A
summary of the significant accounting policies used in preparation of this
interim report under IFRS is provided in note 3 below.

As permitted, this interim report has been prepared in accordance with AIM rules
and not in accordance with IAS34 'Interim Financial Reporting', therefore they
are not fully compliant with IFRS. The interim financial statements do not
constitute statutory accounts as defined by Section 240 of the Companies Act
1985.

3. Accounting policies

Going concern

The Directors consider that the company is a going concern and as a result the
financial statements have been prepared on a going concern basis. This
assumption is made in the expectation of sufficient cash generation from
existing investors, exploitation of the Company's intellectual property assets,
further access to the capital markets in the current period, and substantially
improved prospects of further fee-for- service consultancy.

Revenue recognition

The revenue shown in the income statement relates to amounts received and
receivable from the provision of products and services.

In the event of a lump sum payment being received at the start of a contract,
this sum is deferred over the life of the contract, with an equal amount
released to the income statement each month over the life of the contract to
ensure that the income is recognised in accordance with the services provided.

Intangible Assets

Intangible Patents and Trademarks are included at cost and amortised on a
straight line basis over their useful economic life, which is estimated to be 15
years. It is the opinion of the directors that the value of the company's
intellectual property is not less than the carrying value in these accounts.

Property, plant and equipment

All items are initially recorded at cost

Depreciation

Depreciation is calculated to write off the cost of an asset over its useful
economic life as follows:

Plant and machinery - three years, straight-line basis
Fixtures and computers - three years, straight-line basis

Research and development expenditure

Expenditure on research activity is recognised as an expense in the period in
which it is incurred.

Internally-generated intangible assets arising from the Company's business
development is recognised where it can be readily identified and quantified, of
future value and where resources will be present to complete.

Trade and other receivables

Trade receivables are recognised and carried at the lower of their original
invoiced value and recoverable amount. Balances are written off when the
probability of recovery is considered to be remote.

Financial liability and equity

Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Company
after deducting all of its liabilities.

Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand
and short-term deposits with an original maturity of three months or less.

Foreign currency

Assets and liabilities denominated in foreign currencies are translated into
sterling at the rates of exchange ruling at the balance sheet date. Transactions
in foreign currencies are translated into sterling at the rate of exchange
ruling at the date of the transaction. Exchange differences are taken into
account in arriving at the operating result.

Leased assets and obligations

Payments made under operating lease contracts are charged to the income
statement on a straight-line basis over the lease term.

Retirement Benefits

The Company operates a defined contribution pension scheme for employees. The
assets of the scheme are held separately from those of the Company. The annual
contributions payable are charged to the income statement.

Share based payments

Goods and services received in the course of share-based payment transactions
for material amounts are to be measured at fair value and recognised in the
financial statements with a corresponding credit to equity, unless the
transaction is settled in cash. When applied to employee share-based
compensation, this leads to the recognition of share options which have been
granted and are expected to vest as an expense in the income statement.

Deferred Taxation

Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay
further tax, or a right to pay less tax in future. Deferred tax assets are
recognised only to the extent that the Directors consider that it is more likely
than not that there will be sufficient taxable profits from which the future
reversal of the underlying timing differences can be deducted.

Further notes on reporting under International Financial Reporting Standards.

This interim report is the first to be prepared under IFRS. The comparative
figures have been prepared on the same basis and have therefore been restated
from those previously prepared under UK GAAP. The commentary below details the
key changes that have arisen due to the transition to reporting under IFRS. The
Company's date of transition is 1 July 2006, which is the beginning of the
comparative period for the 2007 financial year. Therefore the opening balance
sheet for IFRS purposes is that reported at 30 June 2006 as amended for changes
due to IFRS.

First time adoption

The Group has applied the provisions of IFRS1 - First Time Adoption of
International Financial Reporting Standards which, generally, requires that IFRS
accounting policies be applied retrospectively in determining the opening
balance sheet at the date of transition.

The following reconciliation is included in these statements:

Reconciliation of unaudited balance sheets at 31 December 2007 and 31 December
2006 and audited balance sheet to 30 June 2007.

The transition from UK GAAP to IFRS does not affect the cash flows generated by
the Company. The IFRS cash flow statement is presented in a different format to
that required under UK GAAP.

The balance sheet has the following reconciling item between the UK GAAP format
and the IFRS format:

Intangible assets

At transition the Company followed the provisions of IAS36 and reclassified
separately identifiable computer software assets from tangible assets to
intangible assets.

There are no reconciling items between the UK GAAP format and the IFRS format
for the income statement and the cash flow statement

For further information:
Physiomics plc +44 (0)7747 842 446
Dr Paul Harper drpaulharper@tiscali.co.uk

Grant Thornton Corporate Finance +44 (0)20 7383 5100
Colin Aaronson

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The company news service from the London Stock Exchange
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