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Synairgen plc, Mailpoint 810, Level F, South Block, Southampton General Hospital, Tremona Road, Southampton, SO16 6YD United Kingdom
© Synairgen plc
Annual Report
and Accounts
2012
Targeting the causes
of respiratory disease
When I get a cold…
GEoRGE, AGED 74
who hAS CoPD
G A i L ,
A G E D 3 9
w h o h A S A S T h m A
“It wears me
down and drains
my energy”
“I have to take
days off work”
PoLLy, AGED 16
who hAS ASThmA
“I have to have
time off school”
Stock symbol: LSE:SNG
www.synairgen.com
Synairgen is a respiratory drug discovery
and development company with a focus on viral
defence of the lungs. It is developing inhaled
interferon beta (‘IFN-β’) in two programmes:
• To prevent asthma and COPD patients
suffering severe exacerbations as a result
of cold or flu infections
• To treat other patients who have been
hospitalised with severe viral lung infections
Patents protecting the use of inhaled iFN-β to treat exacerbations
of asthma and CoPD induced by rhinovirus (the common cold)
have been granted in the USA, the EU and Japan.
in 2012 Synairgen announced positive data from its Phase ii
proof of concept trial of inhaled iFN-β in asthma and is
aiming to secure the right partnership arrangement to enable
commencement of follow-on clinical trial activity during the
2013-14 virus season.
Exacerbations (acute deteriorations of symptoms) represent the
greatest unmet clinical need in asthma and CoPD. The common
cold plays a major role in exacerbations, causing up to 80% of
asthma exacerbations. For CoPD patients 50% of colds result
in exacerbations. The annual direct healthcare cost of treating
asthma and CoPD is very significant. in the USA it amounts
to $54 billion1, of which $16 billion is for hospitalisations and
Emergency Room visits.
Viruses are parasites which take over cells and use the cells’
‘machinery’ to replicate. The normal host cell response to viral
infection is to trigger iFN-β production, which in turn orchestrates
an anti-viral response (see page 10). Deficiencies in iFN-β
production following infection explain why some patient groups
(such as those with asthma and CoPD) are more susceptible to
infection. many pathogenic respiratory viruses, such as
influenza and SARS, can suppress iFN-β production, allowing
infections to spread to the lungs and cause severe illness.
By delivering iFN-β to the lungs, Synairgen aims to overcome
the iFN-β deficiency and restore/boost the lungs’ anti-viral
defence mechanism.
Reference
1. National Heart, Lung, and Blood Institute. Morbidity & Mortality: 2012
Chart Book on Cardiovascular, Lung, and Blood Diseases.
www.synairgen.com
Contents
Introduction
Overview of interferon beta programmes
Operational and financial highlights
Business Review
Chairman’s and Chief Executive
Officer’s Report
Financial Review
Scientific Review
Governance
Directors
Synairgen’s Founders and
Scientific Advisors
Directors’ Report
Corporate Governance
Directors’ Remuneration Report
Financials
Statement of Directors’ responsibilities
in respect of the Annual Report and the
Finanicial Statements
Independent Auditor’s Report
Consolidated Statement
of Comprehensive Income
Consolidated Statement of
Changes in Equity
16
18
20
23
24
25
25
1
2
3
8
9
13
15
Consolidated Statement of
Financial Position
Consolidated Statement of Cash Flows
Notes to the Consolidated
Financial Statements
Parent Company Balance Sheet
Notes to the Parent Company
Financial Statements
Other
Corporate Directory
Glossary
26
27
28
39
40
43
43
1 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 46
I have suffered with asthma since I was
10 years old. I lead a very normal life
(swim 3 times a week and run regularly)
until I get a cold. When I get a cold it
goes straight to my chest and I get very
wheezy and have to take my inhaler about
20 times a day. I usually end up on oral
steroids and/or antibiotics when I have a
cold and have to have days off work. My
colds seem to last a lot longer than any of
my friends, and I often feel as though the
entire winter is spent with a bad chest and
not leading a normal life. Asthma is a
chronic condition but it doesn’t affect my
life until I get a cold.
Gail aged 39
Highlights for the year ended
31 December 2012
Operational highlights
● Positive data announced in April 2012 from the Phase II proof
of concept trial of inhaled interferon beta (SNG001) being
developed for the treatment or prevention of virus-induced
asthma exacerbations, which showed:
● We are continuing to map out the different regulatory and
clinical paths required to progress SNG001 to market in
asthma and COPD. This is being progressed in parallel
with our business development discussions
● British Thoracic Society Step 4/5 patients (estimated
to represent between 10% and 20% of adult asthma
sufferers, who are the greatest healthcare burden)
suffer most due to cold viruses
● Significant benefit across multiple endpoints in the
Step 4/5 population
● Inhaled interferon beta is well tolerated
● The positive Phase II clinical trial data triggered comprehensive
business development activity. Multiple parties are conducting
detailed technical and commercial evaluations of SNG001. We
aim to finalise arrangements with a primary partner to enable
commencement of follow-on clinical trial activity during the
2013 – 2014 virus season
● Biomarker analysis of Phase II study samples commenced
● We have commenced engagement with the US government
to investigate the potential of SNG001 as a broad spectrum
anti-viral treatment
● Expansion of patent portfolio, including grant of US patent
for compounds that induce interferon beta to treat or prevent
rhinovirus (common cold)-induced exacerbations
in asthma or COPD
Financial highlights
● Balance sheet strengthened with fundraising of £2.5 million
(gross) completed in July 2012
● Research and development expenditure for the year:
£1.5 million (six months ended 31 December 2011:
£1.8 million)
● Post-tax loss for the year: £2.3 million (six months
ended 31 December 2011: £2.0 million)
● Cash at 31 December 2012: £3.1 million (31 December 2011:
£3.4 million)
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 2
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 2
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 2
Chairman’s and
Chief Executive Offi cer’s Report
This has been a pivotal year for Synairgen, as its primary
programme, SNG001 (inhaled interferon beta) to treat
or prevent exacerbations of asthma and COPD, has
produced positive Phase II clinical trial data. We also
raised further funds to strengthen the balance sheet
whilst we explore partnering opportunities.
Exacerbations cause loss of lung function even whilst
on ‘gold standard’ inhaled corticosteroid therapy
–
)
)
i
n
m
/
L
(
F
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P
(
n
o
i
t
c
n
u
F
g
n
u
L
800
700
600
500
400
300
200
100
0
Uncontrolled
asthma
with very
variable and
reduced lung
function
Controlled asthma as a result
of inhaled corticosteroid
Lung function restored and
previous variability removed
Virus
exacerbation
In spite of taking
corticosteroid,
patient’s lung function
is significantly reduced
by exacerbation
0
4
8
12
16
20
24
28
32
Adapted from Reddel et al. Lancet 1999;
353: 364–69 Reproduced with permission
Weeks of inhaled corticosteroid use (budesonide)
Synairgen’s inhaled SNG001 is being developed as a broad
spectrum anti-viral therapy to be taken by asthmatic and
COPD patients at the onset of cold (or infl uenza) symptoms.
It is designed to treat and/or attenuate a deterioration
of asthma or COPD symptoms and prevent severe
exacerbations that require intensive treatment with oral
therapies such as steroids or antibiotics. It has long been
established that common viruses are a major cause
of exacerbations and hospitalisations in these diseases.
The rationale for developing inhaled SNG001 came from
the observation that cells from asthmatic patients and
COPD patients’ lungs respond poorly to viruses, and do not
produce enough of the key anti-viral protein interferon beta.
Adding interferon beta to the cells restores and boosts the
anti-viral defences.
3 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
When I get a cold it lasts a couple of days
and then goes, then a few days later it
hits me again and that’s when my chest is
really bad. I cough a lot more than usual
and have a lot of mucus. It is much worse
when I get up. I can't do a great deal,
especially in the morning, and then it
gets better as the day goes on. I have to
take my inhalers more regularly. I don't
like going to the doctors and it takes me a
long time to get an appointment. They often
give me steroids and antibiotics. I just feel
drained and it takes me a long time to get
back to normal again. I haven't really been
back to normal since Christmas. It wears
me down and drains my energy.
George aged 74
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 4
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 4
Chairman’s and
Chief Executive Offi cer’s Report (continued)
Phase II trial structure
Screening
Pre-Treatment
Baseline (Day 1)
Treatment
14 Days
Follow-Up
5 Weeks
Pool of screened
asthma patients (approx. 300)
wait to get a respiratory
virus infection
Onset of
cold/flu
symptoms
• Dosed within 24 hours of
reporting cold/flu symptoms
• 147 patients were treated,
of whom 134 developed a
confirmed cold, thereby
meeting the mITT criteria
Objectives/Endpoints
• Asthma symptoms
• Lung function
• Exacerbations
• Virus load
• Safety
Results of Phase II trial
In April we announced preliminary results from the trial. Since then
we have continued to review the mass of data generated by this
study alongside key opinion leaders in the fi eld. The results were
presented by Prof. Ratko Djukanovic at the European Respiratory
Society in September 2012 and were well received. The results
have also recently been submitted for publication.
In the trial, 147 patients with a wide range of asthma severity were
treated with either SNG001 or placebo at the early signs of a cold
infection. Of the 147, 134 went on to develop a full cold (the other
13 patients either did not provide data to be able to confi rm a cold,
or the cold symptoms did not materialise).
Various endpoints were assessed to establish whether SNG001
was providing benefi t to these asthmatic patients during
respiratory virus infections. The primary endpoint was a measure
of change in asthma symptoms during the fi rst week of treatment
using the shortened Asthma Control Questionnaire (sACQ).
In the treated population who got colds, there appeared to be
minimal benefi t. Essentially the cold infection was not impacting
on patients’ asthma as seriously as expected, thus there was little
opportunity for an intervention to demonstrate effi cacy and there
was no statistically signifi cant difference. However for lung function
(morning peak expiratory fl ow, a secondary/exploratory endpoint)
there was a statistically signifi cant benefi t for patients receiving
SNG001. This in itself is very encouraging.
A review of patients whose asthma deteriorated to the point where
they were prescribed oral steroids (or antibiotics) to treat their
exacerbation showed that fi ve patients receiving placebo and
one patient receiving SNG001 required this more serious level of
intervention to treat their asthma exacerbation. One of the patients
on placebo was hospitalised for fi ve days for their asthma.
Of particular interest to us was that all fi ve of the placebo patients
who received oral corticosteroids or antibiotics to treat their
exacerbation were in the British Thoracic Society (BTS) Step 4
classifi cation. The BTS Step classifi cation system ranges from 1
to 5, with Step 1 patients being least intensively treated to Step 5
being the most intensively treated. BTS Step 4 patients, who are
recognised as ‘diffi cult to treat’, receive close to maximal routine
inhaled therapies (i.e. higher doses of inhaled corticosteroids - an
anti-infl ammatory - and a long acting beta agonist (bronchodilator)
as a minimum). None of the Step 4 or Step 5 SNG001-treated
patients required this higher level of intervention (i.e. oral steroids
or antibiotics). This led us to investigate the possibility that this
population may be the patient group who not only suffer most
during respiratory virus infections, but also respond best to
SNG001 treatment.
5 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Change in sACQ from
Pre-Treatment Baseline to Day 8
in BTS Step 4/5 Group (mITT)
difference 0.63, p = 0.004
Clinically relevant
worsening of
asthma symptoms
Baseline
R
F
E
P
g
n
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r
o
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i
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*
)
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/
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(
*
2
y
a
D
m
o
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f
80
60
40
20
0
-20
-40
Change in Home Morning Peak
Expiratory Flow Rate from Day 2
in BTS Step 4/5 Group (mITT)
No change
Placebo
(n = 30)
SNG001
(n = 24)
* LS Mean±SEM
32
54
76
98
Study day
10
11
12
13
14
Placebo
SNG001
* LS Mean±SEM
1.0
0.5
0.0
-0.5
m
o
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C
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-
e
r
P
Analysis of sub populations according to BTS Step group
The first observation was that there were disproportionately
more (approaching half) Step 4 and Step 5 patients in the trial
than one would find in the general asthma population, where
10% to 20% would be expected. We believe the trial radio advert
recruitment wording, “Does your asthma get worse when you
get a cold?”, created a positive bias that resulted in the selection
of patients whose asthma deteriorates most when they get a
cold.
An assessment of asthma control using the sACQ (as used for
the primary endpoint) showed that in the first week of the cold
there was a marked worsening in patients on placebo, whereas
patients on SNG001 showed a movement returning towards
their screening (uninfected) level of control. The difference on
the sACQ scale of 0.63 in favour of SNG001 exceeded the
threshold considered to be clinically relevant (> 0.5) and was
statistically significant (p=0.004).
A similar subgroup analysis of the lung function (morning peak
expiratory flow) changes, which were significantly better for the
overall population in the trial (as referred to above), showed that
the positive effects of SNG001 were minimal for the ‘milder’
Step 2 patients (difference of 6 litres/min), approaching clinical
relevance (17 litres/min) for the Step 3 patients, and exceeding
the clinically relevant difference of 20 litres/min in the Step 4
patients (31 litres/min).
This trial has been successful on three counts:
• Firstly, we have identified the patient group which appears to
suffer most due to cold viruses; this is the Step 4 and Step
5 patients. Patients at lower Steps have other therapeutic
options: they have greater scope to increase the doses of their
existing routine daily medication, and it is also quite possible
that compliance to medication may increase at times of
infection.
It appears that Step 4 patients are more likely to use more
potent drugs, such as oral corticosteroids.
• Secondly, in these Step 4/5 patients, treatment with SNG001
was beneficial in terms of the number of patients requiring oral
therapies, improvement in asthma control, and accelerating the
recovery in lung function.
• Thirdly, SNG001 appears to be well tolerated, and there was
no evidence of systemic absorption.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 6
Chairman’s and
Chief Executive Officer’s Report (continued)
Business Development
The positive data from the Phase II clinical trial has triggered
comprehensive business development activity. This process has
identified multiple parties with established commercial respiratory
franchises who are interested in this therapeutic area. During the
period, we have devoted significant time and resource to enable
potential partners to conduct technical and commercial evaluations
of SNG001. Given the novelty of this potential treatment we have
worked up a number of options regarding clinical and regulatory
development pathways for SNG001. We aim to secure the right
partnership arrangement to enable commencement of follow-on
clinical trial activity during the 2013 – 2014 virus season and we are
confident that this process can achieve that goal.
Biomarker analysis of Phase II samples
We are also progressing well with the analysis of samples from
our Phase II study in asthma. A panel of possible gene and protein
biomarkers have been identified and are the subject of further
investigations. We shall provide updates on this activity which is
designed to underpin the clinical observations, and also identify
potential prognostic biomarkers.
Intellectual property
During the year, a US patent was granted for compounds that
induce interferon beta to treat or prevent rhinovirus (common
cold)-induced exacerbations in asthma or COPD. This is important
intellectual property for the Company, as it prevents inducers of
interferon beta, such as toll-like receptor agonists, being developed
to do the same role as SNG001.
Severe viral lung infections
We submitted an application to the US National Institutes of Health
to support activity that will progress inhaled SNG001 towards
the non-asthma, non-COPD market, which is to treat patients
hospitalised with severe viral lung infections. We expect to hear
whether we have been successful during this summer.
In summary
In 2012 our interferon beta programme achieved a significant
milestone, generating persuasive efficacy data within the group of
asthma patients that we are seeking to treat. We are now planning
the further development of this exciting therapy and are focussed on
securing the right partnership to help us deliver it.
Clinical development plan
We are making very good progress with regard to preparation
of materials (e.g. protocols) for follow-on studies in asthma and
COPD. These are being progressed in parallel with our business
development discussions. Each potential partner has a slightly
different view on how this should be progressed, but all are still valid
approaches for this innovative programme.
Simon Shaw
Chairman
Richard Marsden
Chief Executive Officer
12 February 2013
7 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Financial Review
The Financial Review should be read in conjunction with the
consolidated financial statements of the Company and Synairgen
Research Limited (together the ‘Group’) and the notes thereto
on pages 25 to 38. The consolidated financial statements are
presented under International Financial Reporting Standards
as adopted by the European Union. The financial statements
of the Company continue to be prepared in accordance with
UK Generally Accepted Accounting Practice and are set out
on pages 39 to 42. During the previous accounting period, the
Group brought forward its financial year-end from 30 June to 31
December and as a result comparative financial information in this
annual report is for the six months ended 31 December 2011.
Statement of Comprehensive Income
The loss from operations for the year ended 31 December 2012
was £2.49 million (six months ended 31 December 2011: £2.24
million). Research and development expenditure for the year
amounted to £1.51 million (six months ended 31 December
2011: £1.82 million). The proportionate reduction in research
and development expenditure was due to the completion early
in the year of both the asthma Phase II study (SG005) and the
pre-clinical study in viral pneumonia. The most significant item of
continuing research and development during the year has been
the analysis of data and samples collected from SG005.
Other administrative costs for the year amounted to £0.98 million
(six months ended 31 December 2011: £0.42 million). The research
and development tax credit for the year, in line with the reduction
in expenditure, was £0.21 million (six months ended 31 December
2011: £0.25 million). The loss after tax for the year was £2.25
million (six months ended 31 December 2011: £1.97 million) and
the loss per share was 3.12p (six months ended 31 December
2011: loss of 2.83p).
Treasury policy and financial risk management
Credit risk
The Group follows a risk-averse policy of treasury management.
Sterling deposits are held with one or more approved UK-based
financial institutions. The Group’s primary treasury objective is to
minimise exposure to potential capital losses whilst at the same
time securing prevailing market rates.
Interest rate risk
The Group’s cash held in current bank accounts is subject to the
risk of fluctuating base rates. A substantial element of the Group’s
financial assets is placed on fixed-term interest deposits. The interest
rate profile of financial assets is illustrated in note 16 to the financial
statements.
Currency risk
During the year under review, the Group was exposed to Euro
and Australian dollar exposure as a small element of its research
and development expenditure is denominated in these currencies.
The Group does not routinely hedge against this exposure.
Capital structure and funding
The Group is funded by equity capital, reflecting the early stage
nature of its discovery and development programmes.
The Group considers its capital to be its total equity, which at 31
December 2012 amounted to £3.42 million (31 December 2011:
£3.12 million). The Group’s objectives when managing capital are
to safeguard the Group’s ability to continue as a going concern
in order to provide returns to equity holders of the Company and
benefits to other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital. The Group manages this
objective through tight control of its cash resources and, upon
reaching significant drug development programme milestones
(to decrease investment risk), by raising additional equity from
shareholders to meet its forecast future cash requirements.
Fundraising
In July 2012, the Company raised £2.50 million (gross) through the
issue of 5.56 million shares at a price of 45p per share. Costs of
the issue amounted to £0.15 million (6.0%).
Net funds held by the Group at 31 December 2012 amounted to
£3.09 million and comprised cash and cash equivalents, short-term
deposits (with original maturities of greater than three months and
less than one year) as shown below:
Statement of Financial Position and cash flows
At 31 December 2012, net assets amounted to £3.42 million
(31 December 2011: £3.12 million), including net funds, as detailed
below in Capital structure and funding, of £3.09 million
(31 December 2011: £3.35 million).
The principal elements of the £0.26 million decrease over the year
ended 31 December 2012 (six months ended 31 December 2011:
£1.54 million decrease) in net funds were:
• Cash used in operations of £2.75 million (six months ended
31 December 2011: £1.93 million outflow);
• Research and development tax credits received of £0.25 million
(six months ended 31 December 2011: £0.40 million);
• Investment into intangible assets (patents and licences) £0.14
million (six months ended 31 December 2011: £0.02 million); and
• Share issue proceeds (net of costs) £2.35 million (six months
ended 31 December 2011: £nil).
Short-term deposits
Cash and cash equivalents
Net funds
31 Dec
2011
£m
2.45
0.90
3.35
2012
£m
1.43
1.66
3.09
2011
£m
3.40
1.49
4.89
30 June
2009
£m
1.98
5.96
7.94
2010
£m
3.68
1.33
5.01
The Group did not have any bank borrowings as at 31 December
2012 (31 December 2011: £nil).
There have been five significant issues of shares with the following
amounts (net of costs) raised: £0.62 million (August 2003); £8.98
million (from IPO on AIM in October 2004); £6.20 million (June
2009); £2.50 million (June 2011); and £2.35 million (July 2012).
The other major sources of funding received by the Group from
the formation of the business until 31 December 2012 have been:
research and development tax credits of £2.22 million, bank
interest of £1.60 million, and revenues from collaborative work
of £0.60 million.
John Ward
Finance Director
12 February 2013
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 8
Scientific Review – The key role of interferons
in defending the body against infection
Interferons (‘IFNs’) are proteins made and released by cells as
part of the body’s immune response to infection and cancer.
Historically IFNs were named because of their ability to ‘interfere’
with viral replication within cells1.
There are three types of IFN, each type activates different
receptors on the surface of cells resulting in different biological
responses. Type I IFNs (IFN-α and IFN-β) are essential for
immunity against most viruses. The more recently identified Type
III IFNs (IFN-λ 1, IFN-λ2 and IFN-λ3) also play a role in anti-viral
defence, although their relative importance to Type I IFNs is still to
be fully understood. IFN-γ is the only Type II IFN and it is important
for immunity against bacteria, fungi, and parasites.
Defects in the production of, or response to, IFNs are associated
with an increased susceptibility to infection. For example, mice
lacking the Type I IFN are highly susceptible to infection with a
range of viruses despite an otherwise intact immune system2.
Similarly, people with genetic defects in IFN pathways are prone
to serious life-threatening infections3.
Anti-viral activities of Type I IFNs
Viruses are microscopic organisms consisting of genetic
material (RNA or DNA) surrounded by a protein coat. They are
not capable of replicating on their own (unlike bacteria) and so
have to invade cells and ‘hijack’ their replication machinery.
After latching onto a cell, a virus will insert its genetic material
into the cell and direct it to make copies of the viral genetic
material, structural components and the enzymes needed
to produce and assemble new virus particles (virions).
Having made many thousands of new virions, the cell finally
dies, releasing the new viral particles, which can then infect
surrounding cells.
Synairgen is developing an inhaled form of IFN-β. IFN-β
plays an indispensable role in limiting viral infection within
the body. Production and release of IFN-β is triggered when
viral genetic material is detected by receptors inside cells.
IFN-β can then bind to and activate Type I IFN receptors on
the surface of nearby cells, resulting in the ‘switching on’ of
hundreds of Interferon Stimulated Genes (‘ISG’), including
Type I IFN genes, which orchestrate the anti-viral response
within cells and the wider immune response to infection
(Figure 1).
Prof. Stephen Holgate
Non-executive Director
Dr Phillip Monk
Chief Scientific Officer
9 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Figure 1. Anti-viral activities of IFN-β
IFN-(cid:31)
Cell cannot limit viral replication
Infection has not taken hold
Infected cells
Uninfected cells
Immune cells
B cells
T cells
NK cells
Macrophages
DC cells
Controlled cell death
Removal of virus-infected cells
Anti-viral state
Inhibition of viral replication
➊
➋
➌
Immune response
Elimination of virus-infected cells
CD4/8 CD4/8
mDC
CD4/8
NK
NK
Production of antibodies against the virus
B
B
➊ In cells which cannot limit viral replication IFN-β causes
controlled cell death or ‘cell suicide’ in a process known
as apoptosis. By dying, the cell can no longer support viral
replication, thus limiting the spread of the infection. Cells
which die by apoptosis can be cleared by immune cells
(macrophages) without causing further infl ammation.
➋ In uninfected cells and infected cells in which the infection
has not yet taken hold, IFN-β switches the cell into an
‘Anti-viral State’ by driving the expression of numerous
Interferon Stimulated Genes (ISG) products that act together
to limit replication of many different virus types. By switching
on anti-viral defences in surrounding uninfected cells IFN-β
prevents the spread of the infection.
➌ IFN-β and ISG products also have additional benefi cial
effects on the wider immune response including promoting
the recruitment of immune cells (NK cells and CD8+ T-cells)
to the site of infection to eliminate virus infected cells and
mechanisms leading to the production of antibodies against
virus (by B-cells) which prevent the virus binding to and
infecting cells. Antibodies not only limit the ongoing infection
but can also provide long lasting immunity against the virus.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 10
Scientific Review – The key role of
interferons in defending the body
against infection (continued)
Type I IFNs as anti-viral treatments
Recognising the potential of Type I IFNs to modify the body’s
immune response, a number of man-made mimics have been
successfully developed as drugs. These include a number of
injectable IFN-α related products (such as Intron-A®, Roferon®,
Infergen®, Pegasys® and Pegintron®) that have been developed
as anti-virals for the treatment of hepatitis and/or treatments for
cancers. Injectable IFN-β related products have been developed
as treatments for the nervous system disease multiple sclerosis
(‘MS’), these include Rebif®, Avonex®, Betaferon®/Betaseron® and
Extavia®. MS is a disease in which the nerves of the brain and
spinal cord are mistakenly targeted by the immune system. The
way IFN-β works in MS in not fully understood but it is believed to
involve modulation of the immune response resulting in reduced
inflammation and damage4.
Inhaled IFN-β as a treatment for virus induced
exacerbations of respiratory disease
Respiratory virus infections such as the common cold and
influenza are strongly associated with exacerbations of respiratory
diseases such as asthma, chronic obstructive pulmonary disease
(COPD) and cystic fibrosis. There is growing evidence that this
association can be explained by a local increase in susceptibility to
viral infection in the lungs of these patients, caused by a deficiency
to produce IFN-β in response to a viral infection5-10.
In the laboratory it has been observed that the addition of small
amounts of human IFN-β to lung cell cultures from patients with
chronic respiratory disease can restore their anti-viral responses
and protect cells from respiratory viruses associated with asthma
exacerbations (especially rhinoviruses but also others such as
respiratory syncytial virus and influenza). These findings have been
translated to clinical application by Synairgen to see if IFN-β can
be used as a potential treatment for virus-induced exacerbations
of chronic lung disease. In our recent clinical trial we found that
when compared to placebo, the administration of inhaled IFN-β
could prevent worsening asthma symptoms and exacerbations,
and improve lung function in “more difficult to treat” asthmatics
suffering from an upper respiratory tract infection (such as the
common cold). Thus, by administering IFN-β directly to the
lungs of asthmatics we could correct the deficiency and restore
anti-viral defences thus preventing the spread of the infection and
worsening lung inflammation. Further clinical studies are planned
to confirm the result of this study in asthma and explore the
potential of adopting a similar approach in COPD.
Professor Stephen Holgate CBE
Founder and Non-executive Director
Dr Phillip Monk
Chief Scientific Officer
12 February 2013
References
1.
Isaacs, A. and Lindenmann, J. (1957) Virus
interference. I. The interferon. Proc R Soc
Lond B Biol Sci., 147(927):258-67.
2. Müller, U. et al. (1994) Functional role of type
I and type II interferons in anti-viral defense.
Science, 264(5167):1918-21.
3. Dupuis, S. et al. (2003) Impaired response to
interferon-alpha/beta and lethal viral disease
in human STAT1 deficiency. Nat Genet.,
33(3):388-91.
4. Dhib-Jalbut, S. and Marks, S. (2010)
Interferon-beta mechanisms of action in
multiple sclerosis. Neurology, 74 Suppl
1:S17-24.
5. Wark, P. et al. (2005) Asthmatic bronchial
epithelial cells have a deficient innate
immune response to infection with
rhinovirus. J Exp Med., 201(6): 937-47.
6. Sykes, A. et al. (2012) Rhinovirus
16-induced IFN-α and IFN-β are deficient
in bronchoalveolar lavage cells in
asthmatic patients. J Allergy Clin Immunol.,
129(6):1506-1514.
11 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
7. Xiao, C. et al. (2012) Duration of protective
anti-viral effect of exogenous interferon-β
against rhinovirus infection in primary
bronchial epithelial cells from patients
with COPD. Am J Respir Crit Care Med.,
185:A3295
8. Mallia, P. et al. (2011) Experimental rhinovirus
infection as a human model of chronic
obstructive pulmonary disease exacerbation.
Am J Respir Crit Care Med.,183(6):734-42.
9. Edwards, M. et al. (2012) Impaired innate
interferon induction in severe therapy
resistant atopic asthmatic children. Mucosal
Immunol., Epub ahead of print.
10. Vareille, M. et al. (2012) Impaired type I and
type III interferon induction and rhinovirus
control in human cystic fibrosis airway
epithelial cells. Thorax, 67(6):517-25.
My name is Polly and I have suffered with asthma for 12 years.
When I get a cold I get bad asthma and sometimes a chest infection.
I tend to start with cold symptoms (sore throat and runny nose)
and then within a day it has gone to my chest. I get very wheezy and
produce a lot of mucus. I often have to take oral steroids and antibiotics
and use my inhalers more frequently. I have to stop playing sport and
have time off school. It takes a little while before I can start playing sport
again and get back to normal.
Polly aged 16
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 12
Directors
Simon Shaw
Non-executive Chairman
Simon Shaw joined Synairgen as executive Chairman on its inception in
June 2003 and became non-executive Chairman in October of that year. He
is Group Chief Financial Officer of Savills plc. He was Chief Financial Officer
of Gyrus Group PLC from 2003 until its sale to Olympus Corporation in
2008, having previously been Chief Operating Officer of Profile Therapeutics
plc between 1998 and 2003. Between 1991 and 1997 he was a corporate
financier, latterly at Hambros Bank Limited. He is a chartered accountant.
Richard Marsden
Chief Executive Officer
Richard Marsden joined Synairgen in a consulting role as General Manager
in November 2003, was appointed to the Board as Managing Director
in June 2004 and appointed Chief Executive Officer in September 2009.
Richard is a non-executive Director of Southampton Asset Management
Limited. Between 1998 and 2003 he worked as Projects Manager and
Cystic Fibrosis Business Development Manager at Profile Therapeutics plc,
where he managed the Cystic Fibrosis business and played a major role
in the development of its proprietary pharmaceutical unit, Profile Pharma
Limited. Prior to this, he worked for Zimmer Limited, Genentech (UK)
Limited and Roche Products Limited.
Dr Phillip Monk
Chief Scientific Officer
John Ward
Finance Director
Phillip Monk joined Synairgen in October 2006 as Head of Bioscience
Development and was appointed to the Board as Chief Scientific Officer
in September 2009. Phillip was previously Director of the Respiratory and
Inflammation Biology group at Cambridge Antibody Technology (‘CAT’)
and led the scientific development of CAT-354, an anti-IL-13 antibody
being developed for the treatment of severe asthma. Prior to joining
CAT, he worked at Bayer AG within the respiratory disease therapeutic
area, focusing on the development of novel therapies for asthma,
COPD and cystic fibrosis.
John Ward joined Synairgen in October 2004 as Finance Director. From
December 1999 to July 2004 he was Chief Financial Officer and Company
Secretary of Profile Therapeutics plc and was appointed to the Profile
Therapeutics board in March 2003. From 1996 to 1999 he was Finance
Director of Rapid Deployment Group Limited, the UK holding company
for the healthcare operations of Ventiv Health, Inc. Prior to joining Rapid
Deployment he was a Director of Corporate Finance at Price Waterhouse.
He is a chartered accountant.
13 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Iain Buchanan
Non-executive Director
Dr Bruce Campbell
Non-executive Director
Iain Buchanan was appointed as a non-executive Director in June 2010
and is currently Chief Executive Officer of NOXXON Pharma AG based in
Berlin. Previously he was Chief Executive Officer of Novexel SA (‘Novexel’),
a specialty pharmaceutical company focused on novel anti-infectives, from
its formation in 2004 until 2010, when it was sold to AstraZeneca. He has
some 35 years’ commercial experience in the pharmaceutical and biotech
industries. He joined Novexel from Vertex Pharmaceuticals (Europe) Limited,
where he was Managing Director. Prior to Vertex, Iain was the Regional
Licensing Director of Cilag A.G. International, a division of Johnson &
Johnson based in Switzerland, where he managed Cilag’s international
licensee business from 1987 to 1994.
Bruce Campbell joined Synairgen as a non-executive Director in
April 2006. He has 40 years of drug development experience and has
developed many drugs in a wide range of indications which are now on
the market. He is currently a scientific advisor to IP Group plc and acts as
a consultant to various companies including Proximagen Limited. Formerly
he was Senior VP of International Development at Neurocrine Biosciences,
Inc. (‘Neurocrine’). Prior to joining Neurocrine he worked for 27 years at
Servier (United Kingdom), latterly as Scientific Director. In addition, he
has also been a Director and European Chairman of the Drug Information
Association and a member of the European ICH Safety Working Party.
He is a visiting Professor in Pharmacology at King’s College, London.
Paul Clegg
Non-executive Director
Paul Clegg was appointed as a non-executive Director in September 2009.
He is Chief Executive Officer of Accsys Technologies PLC, Chairman of
Tricoya Technologies Ltd and a non-executive Director of Peel Hunt LLP.
Paul was previously Managing Director and Chief Executive Officer of
Cowen International Limited and Director of Cowen Asset Management
Limited until June 2008. Paul has over twenty years’ senior investment
banking experience.
Prof. Stephen Holgate CBE
Non-executive Director
Stephen Holgate is a co-founder of Synairgen and was appointed a non-
executive Director in June 2003. After qualifying in Medicine at Charing
Cross Hospital Medical School, London he has pursued an academic
career leading to his appointment in 1987 to his current position as Medical
Research Council Clinical Professor of Immunopharmacology at the University
of Southampton. His research interests have been largely focused on the
cellular and molecular mechanisms of asthma that has involved use of both
epidemiological and genetic approaches. He has published over 900 papers
in peer-reviewed literature. He is currently Member of the newly formed
Science Europe Medical Committee; Chairman of the European Respiratory
Society Scientific Committee; Treasurer of the World Allergy Organisation;
Chairman of Defra’s Hazardous Substances Advisory Committee; Member of
the Department of Health Committee on the Medical Effects of Air Pollution;
and a scientific board member or advisor to eleven companies, including
Amgen, Boehringer Ingelheim, Merck, and Novartis. In 2010, he was
appointed by the Higher Education Funding Council for England to be the
Chair of the Research Excellence Framework (REF) Main Panel A covering
Medicine, Health and Life Sciences.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 14
Synairgen’s Founders and Scientifi c Advisors
Synairgen’s Founders
Prof. Stephen Holgate CBE is MRC Clinical
Professor of Immunopharmacology at the
University of Southampton
Prof. Donna Davies is Professor of
Respiratory Cell and Molecular Biology
at the University of Southampton
Prof. Ratko Djukanovic is Professor
of Medicine at the University of
Southampton and Director of the
Southampton NIHR Respiratory
Biomedical Research Unit
Scientific Advisors
Prof. James Gern is Professor in
the Department of Pediatrics at
the University of Wisconsin and his
research focusses on the role of viral
infections in the initiation and disease
activity of asthma
Prof. Sebastian Johnston is Professor
of Respiratory Medicine & Allergy at
the National Heart and Lung Institute,
Imperial College, London
Prof. Wisia Wedziche is Professor of
Respiratory Medicine at UCL Medical
School and her work is centered on
the causes and mechanisms of COPD
exacerbations
15 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Directors’ Report
The Directors present their report and the audited fi nancial
statements for Synairgen plc (the ‘Company’) and its subsidiary
(together the ‘Group’) for the year ended 31 December 2012.
Principal activities
Synairgen plc is the holding company for Synairgen Research Limited,
a respiratory drug discovery and development company with a
particular focus on viral defence.
Review of the business and future developments
A review of the business and anticipated future developments is
included in the Chairman’s and Chief Executive Offi cer’s Report and
the Financial Review set out on pages 3 to 8.
Research and development
During the year ended 31 December 2012, the Group has invested
£1,508,000 (six months ended 31 December 2011: £1,815,000) in
research and development activities and a review of this expenditure
is included in the Financial Review.
Principal risks and uncertainties
The Board considers that the principal risks and uncertainties facing
the Group may be summarised as follows:
• Reliance on the interferon beta programmes
All of the Group’s resources are focused on the three interferon beta
programmes. Whilst these are three separate indications (asthma,
COPD and severe viral lung infections), there is a risk that failure in
one indication may have a negative impact upon the others.
• Failure to generate innovative discoveries
There can be no guarantee that the Group will successfully develop
new pharmaceutical products.
• Clinical development and regulatory risk
The development of pharmaceutical drugs requires the necessary
safety and effi cacy to be demonstrated in clinical programmes in
order to meet the requirements of the appropriate regulatory bodies.
There can be no guarantee that the necessary safety or effi cacy will be
demonstrated or that the clinical trials will not be delayed or extended.
There can be no guarantee that any of the Group’s therapies will be
able to obtain or maintain the necessary regulatory approvals. The
Group seeks to reduce this risk by closely monitoring the progress
of recruitment on its clinical trials, drawing on the experience of
its Founders, seeking advice from regulatory advisers, and holding
consultations with the appropriate regulatory bodies.
• Intellectual property risk
The commercial success of the Group depends on its ability to obtain
patent protection for its pharmaceutical discoveries in the US, Europe
and other countries and to preserve the confi dentiality of its know-
how. There is no guarantee that patent applications will succeed or
be broad enough to provide protection for the Group’s intellectual
property rights and exclude competitors with similar pharmaceutical
products. The success of the Group is also dependent on non-
infringement of patents, or other intellectual property rights, held
by third parties. Competitors and third parties may hold intellectual
property rights which the Group may not be able to license upon
favourable terms, potentially inhibiting the Group’s ability to develop
and exploit its own business. Litigation may be necessary to protect
the Group’s intellectual property which may result in substantial costs.
The Group seeks to reduce this risk by seeking patent attorney advice
that patent protection will be available prior to investing in a project,
by seeking patent protection where appropriate and by minimising
disclosure to third parties.
• Commercial risk
There can be no guarantee that the Group will succeed in securing
and maintaining the necessary contractual relationships with
licensing partners for its programmes under development. Even if
the programmes are successfully out-licensed and pharmaceutical
products are brought to market by a partner, there is no guarantee that
such products will succeed in the marketplace.
The Group seeks to reduce this risk by structuring its development
programmes to meet the needs and requirements of its potential
partners and by engaging with partners who have the appropriate
experience, resource and interest to bring such pharmaceutical
products to the global marketplace.
• Competition risk
The Group’s current and potential competitors include pharmaceutical
and biotechnology companies and academic institutions, many of
whom have signifi cantly greater fi nancial resources than the Group.
There can be no assurance that competitors will not succeed in
developing products that are more eff ective or economic than any
developed by the Group, or which would render the Group’s products
non-competitive or obsolete.
• Funding risk
The Group continues to consume cash resources. Until the Group
generates positive net cash infl ows from successful out-licensing
transactions and commercialisation of its products, it remains
dependent upon securing additional funding through the injection
of capital from share issues. The Group may not be able to generate
positive net cash fl ows in the future or attract such additional funding
required at all, or on suitable terms. In such circumstances, the
Group’s discovery and development programmes may be delayed or
cancelled and the business operations curtailed.
The Group seeks to reduce this risk through tight fi nancial control,
prioritising programmes which will generate the best returns and
keeping shareholders informed on progress.
• Dependence on Founders, senior management and key staff
The Founders and certain members of staff are highly skilled
scientists and clinicians. The Group has deliberately pursued a
lean headcount policy to conserve fi nancial resources. Failure to
continue to attract and retain such individuals could adversely aff ect
operational results.
The Group seeks to reduce this risk by appropriate incentivisation of
staff through participation in long term equity incentive schemes.
Key performance indicators (‘KPIs’)
The Board considers that the most important KPIs are non-fi nancial
and relate to the progress of the scientifi c programmes which are
discussed in the Chairman’s and Chief Executive Offi cer’s Report.
The most important fi nancial KPIs are the cash position and the
operating loss of the Group. At 31 December 2012 cash and deposit
balances amounted to £3.09 million and were above budgeted
levels. The operating loss of £2.49 million was also favourable to
the budgeted loss for the year.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 16
Directors’ Report (continued)
Results and dividends
The Group’s loss after taxation for the year ended 31 December 2012
amounted to £2,250,000 (six months ended 31 December 2011: loss of
£1,967,000). A Financial Review is set out on page 8. The Directors do
not propose the payment of a dividend.
Financial instruments
The Group’s use of financial instruments is discussed in the Financial
Review on page 8 and in note 16 to the financial statements.
Substantial shareholdings
As at 12 February 2013, the Company had been advised of the following
shareholders with interests of 3% or more in its ordinary share capital:
Name of shareholder
Number of
ordinary shares
% of share
capital
Lansdowne Partners Limited
IP Group plc
F&C Asset Management plc
IP Venture Fund LP
Mr MR Underwood
Southampton Asset Management Limited
15,023,111
8,135,921
6,480,512
5,564,020
3,970,588
3,600,000
20.0%
10.8%
8.6%
7.4%
5.3%
4.8%
Directors
The Directors of the Company during the year ended 31 December
2012 were:
Executive Directors:
Richard Marsden
Dr Phillip Monk
John Ward
Non-executive Directors:
Simon Shaw
Iain Buchanan
Dr Bruce Campbell
Paul Clegg
Prof. Stephen Holgate
Directors’ interests in ordinary shares
The Directors, who held office at 31 December 2012, had the following
interests in the ordinary shares of the Company:
31 December 2012
Number of shares
1 January 2012
Number of shares
Directors’ remuneration and share options
Details of Directors’ remuneration and share options are given in the
Directors’ Remuneration Report on pages 20 to 22.
Directors’ and officers’ liability insurance
Qualifying indemnity insurance cover has been arranged in respect
of the personal liabilities which may be incurred by Directors and
officers of the Group during the course of their service with the Group.
This insurance has been in place during the year and on the date of this
report.
Payment of creditors
It is the policy of the Group and the Company that payments to
suppliers are made in accordance with those terms and conditions
agreed between the Group and its suppliers, provided that all trading
terms and conditions have been complied with. At 31 December 2012
the Group had an average of 26 days’ purchases outstanding in trade
creditors (31 December 2011: 22 days’ purchases).
Post balance sheet events
There are no events occurring post 31 December 2012 requiring
disclosure.
Charitable and political donations
During the year ended 31 December 2012, the Group made no charitable
donations (six months ended 31 December 2011: £nil) and no political
donations (six months ended 31 December 2011: £nil).
Disabled employees
The Group gives every consideration to applications for employment
from disabled persons where the requirements of the job may be
adequately covered by a handicapped or disabled person. Should any
employee become disabled, every practical effort is made to provide
continued employment.
Auditors
All of the current Directors have taken all the steps that they ought to
have taken to make themselves aware of any information needed by the
Company's auditors for the purposes of their audit and to establish that
the auditors are aware of that information. The Directors are not aware
of any relevant audit information of which the auditors are unaware.
Richard Marsden
Dr Phillip Monk
John Ward
Simon Shaw (i)
Iain Buchanan
Dr Bruce Campbell
Paul Clegg (ii)
Prof. Stephen Holgate (iii)
110,972
28,592
243,912
1,408,879
112,741
294,259
204,244
858,360
By order of the Board
John Ward
Company Secretary
12 February 2013
95,860
18,518
228,788
1,368,580
92,592
253,960
184,095
852,316
(i) Simon Shaw’s shareholding includes 40,299 shares held in his pension plan.
(ii) Paul Clegg’s shareholding includes 200,299 shares held in his pension plan.
(iii) Prof. Stephen Holgate’s shareholding includes 1,923 shares owned by his wife,
Elizabeth Holgate.
Between 31 December 2012 and the date of this report there has been
no change in the interests of Directors in shares or share options as
disclosed in this report.
17 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Corporate Governance
The Board is accountable to the Company’s shareholders for good
corporate governance and it is the objective of the Board to attain a high
standard of corporate governance. As an AIM-quoted company, full
compliance with The UK Corporate Governance Code (the ‘Code’) is not
a formal obligation. The Company has not sought to comply with the full
provisions of the Code, however it has sought to adopt the provisions that
are appropriate to its size and organisation and establish frameworks for
the achievement of this objective. This statement sets out the corporate
governance procedures that are in place.
Board of Directors
On 31 December 2012 the Board of Directors (the ‘Board’) consisted
of a non-executive Chairman (Simon Shaw), three executive
Directors (Richard Marsden, Dr Phillip Monk and John Ward), and
four non-executive Directors (Iain Buchanan, Dr Bruce Campbell,
Paul Clegg and Prof. Stephen Holgate). Brief details about the
Directors are given on pages 13 and 14. The responsibilities of the
non-executive Chairman and the Chief Executive Officer are clearly
divided. The non-executive Directors bring relevant experience
from different backgrounds and receive a fixed fee for their services
and reimbursement of reasonable expenses incurred in attending
meetings.
The Board retains full and effective control of the Group. This includes
responsibility for determining the Group’s strategy and for approving
budgets and business plans to fulfil this strategy. The full Board
ordinarily meets bi-monthly. It also meets on any other occasions it
considers necessary. During the year ended 31 December 2012, the
Board met ten times, with each member attending as follows:
Director
Simon Shaw
Richard Marsden
Dr Phillip Monk
John Ward
Iain Buchanan
Dr Bruce Campbell
Paul Clegg
Prof. Stephen Holgate
Number of meetings held
whilst a Board member
Number of
meetings attended
10
10
10
10
10
10
10
10
10
10
8
10
9
7
8
3
It is the duty of the Chairman to ensure that all Directors are properly
briefed on issues arising at Board meetings. Prior to each Board
meeting, Directors are sent an agenda and Board papers for each
agenda item to be discussed. Additional information is provided
when requested by the Board or individual Directors.
The Company Secretary is responsible to the Board for ensuring
that Board procedures are followed and that the applicable rules and
regulations are complied with. All Directors have access to the advice
and services of the Company Secretary, and independent professional
advice, if required, at the Company’s expense. Removal of the
Company Secretary would be a matter for the Board.
As appropriate, the Board has delegated certain responsibilities to
Board committees.
Audit Committee
The Audit Committee currently comprises Simon Shaw (Chairman)
and Dr Bruce Campbell. Whilst it is not normal in larger companies
for the chairman of the Company to chair the Audit Committee, the
Company considers it appropriate for Simon Shaw to be Chairman as
he is considered to have the most significant, recent and relevant
financial experience of the non-executive Directors.
The committee has primary responsibility for ensuring that the
financial performance of the Group is properly measured and
reported on and it reviews the interim financial information and
annual financial statements before they are submitted to the Board.
The committee reviews accounting policies and material accounting
judgements. The committee also reviews, and reports on, reports
from the Group’s auditors relating to the Group’s accounting controls.
It makes recommendations to the Board on the appointment of
auditors and the audit fee. The committee monitors the scope, results
and cost-effectiveness of the audit. It has unrestricted access to the
Group’s auditors. In certain circumstances it is permitted by the
Board for the auditors to supply non-audit services (in the provision
of tax advice, or on specific projects where they can add value).
The committee has approved and monitored the application of this
policy in order to safeguard auditor objectivity and independence.
The overall fees paid to the auditors are not deemed to be of such
significance to them as to impair their independence. The Group does
not have an internal audit function, but the Board considers that this
is appropriate, given the size of the Group. The committee keeps this
matter under review annually. During the year ended 31 December
2012, the committee met four times and all meetings were attended
by Simon Shaw and Dr Bruce Campbell.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee currently comprises
Paul Clegg (Chairman), Dr Bruce Campbell and Simon Shaw. The
committee is responsible for making recommendations to the Board
on remuneration policy for executive Directors and the terms of their
service contracts, with the aim of ensuring that their remuneration,
including any share options and other awards, is based on their
own performance and that of the Group generally. The committee
administers the Long-Term Incentive Plan, the staff share option
scheme and the Qualifying Non-Employee Option Scheme and
approves grants under all three schemes. It also advises on the
remuneration policy for the Group’s employees. The committee is
responsible for all senior appointments that are made within the
Group. During the year ended 31 December 2012, the committee
met four times, with each member attending as follows:
Director
Paul Clegg
Dr Bruce Campbell
Simon Shaw
Number of meetings held
whilst a Committee member
Number of
meetings attended
4
4
4
4
3
4
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 18
Corporate Governance (continued)
Investor relations
The Directors seek to build a mutual understanding of objectives
between the Company and its shareholders by meetings with major
institutional investors and analysts after the Company’s preliminary
announcement of its year-end results and its interim results. The
Company also maintains investor relations pages on its website (www.
synairgen.com) to increase the amount of information available to
investors. During the year, with the assistance of its retained financial
public relations adviser (Newgate Threadneedle), the Directors have
also had meetings with a number of private client stockbrokers around
the UK to raise awareness of the Company.
There is an opportunity at the Annual General Meeting for individual
shareholders to question the Chairman, the Chairmen of the Audit
and Remuneration and Nomination committees, and the executive
Directors. Notice of the meeting is sent to shareholders at least 21 clear
days before the meeting. Shareholders are given the opportunity to
vote on each separate issue. The Company counts all proxy votes and
will indicate the level of proxies lodged on each resolution, after it
has been dealt with by a show of hands. Details of the resolutions and
explanations thereto are included with the notice.
Internal control
The Directors are responsible for establishing and maintaining the
Group’s system of internal control and reviewing its effectiveness. The
system of internal control is designed to manage, rather than eliminate,
the risk of failure to achieve business objectives and can only provide
reasonable but not absolute assurance against material misstatement
or loss.
The main features of the internal control system are as follows:
• a control environment exists through the close management of
the business by the executive Directors. The Group has a defined
organisational structure with delineated approval limits.
Controls are implemented and monitored by personnel with the
necessary qualifications and experience;
• a list of matters reserved for Board approval;
• monthly management reporting and analysis of variances;
• financial risks for each major transaction are identified and
evaluated by the Board; and
• standard financial controls operate to ensure that the assets of
the Group are safeguarded and that proper accounting records
are maintained.
By order of the Board
John Ward
Company Secretary
12 February 2013
19 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Directors’ Remuneration Report
This report is non-mandatory for AIM-quoted companies and has
been produced on a voluntary basis. It includes and complies with the
disclosure obligations of the AIM Rules and with the principal disclosure
requirements of Schedule 5 of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008.
Remuneration Committee
The Company’s remuneration policy is the responsibility of the
Remuneration and Nomination Committee (the ‘Committee’), which was
established in October 2004. The terms of reference of the Committee
are outlined in the Corporate Governance Statement on page 18. The
members of the Committee are Paul Clegg (Chairman), Simon Shaw
and Dr Bruce Campbell.
The Committee, which is required to meet at least twice a year, met four
times during the year ended 31 December 2012. The Chief Executive
Officer and certain executives may be invited to attend meetings of the
Committee to assist it with its deliberations, but no executive is present
when his or her own remuneration is discussed.
During the year, the Committee has been advised on Director
remuneration by its retained independent remuneration adviser,
FIT Remuneration Consultants LLP. No other advice has been
provided to the Group by this firm during the year.
Remuneration policy
(i) Executive remuneration
The Committee has a duty to establish a remuneration policy which will
enable it to attract and retain individuals of the highest calibre to run the
Group. Its policy is to ensure that the executive remuneration packages
of Executive Directors and the fee of the Chairman are appropriate given
performance, scale of responsibility, experience, and consideration of
the remuneration packages for similar executive positions in companies
it considers are comparable. Packages are structured to motivate
executives to achieve the highest level of performance in line with
the best interests of shareholders. A significant element of the total
remuneration package, in the form of bonus and LTIP awards,
is performance driven.
Executive remuneration currently comprises a base salary, an annual
performance-related bonus, a pension contribution to the executive
Director’s individual money purchase scheme (at 9% of base salary),
family private health cover, permanent health and life assurance.
Salaries and benefits are reviewed annually in July, taking into account
Group and individual performance, external benchmark information
and internal relativities, but it is the intention of the Company to align
this with the financial year-end of the Company with effect from
1 January 2014. The Company operates a discretionary bonus scheme
for executive Directors for delivery of exceptional performance against
personal and corporate objectives, with the maximum bonus payable
remaining at 200% of base salary. Bonuses payable to executive
Directors in respect of the year ended 31 December 2012 were 34% of
base salary, amounting to £44,000 for Richard Marsden, £33,000 for Dr
Phillip Monk and £40,000 for John Ward. Pay rises awarded to executive
Directors with effect from 1 July 2012 amounted to 3%, which was
broadly consistent with the increase awarded to staff generally.
Executive Directors are also rewarded for improvements in the
performance of the Group sustained over a period of years in the form of
Long-Term Incentive Plan share awards granted on a discretionary basis
by the Committee.
Directors’ remuneration for the year ended 31 December 2012 is set out
on page 22 of this document.
(ii) Chairman and non-executive Director remuneration
The Chairman, Mr Buchanan and Mr Clegg receive a fixed fee of £25,000
per annum. Dr Campbell and Professor Holgate receive a fixed fee of
£15,000 per annum. The fixed fee covers preparation for and attendance
at meetings of the full Board and committees thereof. A fee of £5,000
per annum is also paid for chairing each of the audit and remuneration
committees. The Chairman and the executive Directors are responsible
for setting the level of non-executive remuneration. These fees remain
unchanged from 1 September 2009. The non-executive Directors are
also reimbursed for all reasonable expenses incurred in attending
meetings.
(iii) Equity-based incentive schemes
The Committee strongly believes that equity-based incentive schemes
increase the focus of employees in improving Group performance,
whilst at the same time providing a strong incentive for retaining and
attracting individuals of a high calibre.
Long-Term Incentive Plan (‘LTIP’)
The Synairgen Long-Term Incentive Plan, comprising conditional
(performance-related) share awards (technically structured as nominal
cost options pursuant to which participants must pay 1p per share on
the exercise of their awards), was introduced in 2005 as the primary
long-term incentive vehicle for executive Directors. Senior executives
and other employees may be granted an award which will normally vest
if demanding performance conditions are achieved over a three-year
period and if the grantee remains an employee of the Group.
Grants under the LTIP in any financial year are capped at a maximum of
100% of base salary. Historically, grants have been made in September
following the publication of the final results for the year to June. The last
grants were made in September 2011. Following, the change in year-end
to 31 December, it was not considered appropriate to accelerate the date
of grants so no grants were made during 2012. Instead, it is anticipated
that grants will continue to be made following the publication of the
final results in or around February each year with the next such grant
following the results in February 2013. Executive Directors are expected
to retain no fewer than 50% of shares acquired upon vesting of awards
under the LTIP, net of taxes, until such time as, in combination with any
other shares the executives may have acquired, they hold shares with a
value equivalent to 100% of base salary.
All awards will lapse at the end of the applicable performance period to
the extent that the applicable performance criteria conditions have not
been satisfied with no opportunity for retesting. In the event of a good
leaver event or a change of control of the Company, the LTIP awards may
vest early, but only to the extent that, in the opinion of the Committee,
the performance conditions have been satisfied at that time. The awards
will generally also be subject to a time pro-rated reduction to reflect the
reduced period of time between the grant of the awards and the time of
vesting although this reduction may not be applied in certain cases.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 20
Directors’ Remuneration Report (continued)
Performance conditions for the 2009, 2010 and 2011 LTIP awards
The performance conditions for all three awards were the same. The
awards are subject to two conditions. Firstly, awards will only vest to
the extent that the percentage increase in the total shareholder return
(‘TSR’, being the return earned by a shareholder over the performance
period in terms of change in the share price and assuming re-
investment of any dividends in more shares at the prevailing price
on the relevant ex-dividend date) of the Company over the three year
performance period is equal or greater than the percentage increase in
the techMARK mediscience™ index over the same period as follows:
TSR growth over the performance period
less percentage increase in the techMARK
mediscience™ index over the same period
Vesting percentage
of total number of shares
subject to award
Less than 0%
0%
10%
20%
Performance between the steps
0%
25%
50%
100%
Pro-rata on a straight-line basis
Secondly, no award will vest unless the average annual growth in the
TSR of the Company over the performance period is equal to or greater
than RPI plus 2% or, for more than 75% of an award to vest, annual
average TSR must exceed RPI by at least 5% rather than 2%.
Vesting of 2009 LTIP awards
In September 2012, the awards granted in 2009 vested in full. The TSR
growth over the three year performance period amounted to 110% and
the percentage increase in the techMARK mediscience™ index over
the same period was 34%, resulting in an outperformance by 76%,
thus meeting in full the first performance condition. Similarly, this
significantly exceeded the RPI underpin.
Qualifying Non-Employee Option Scheme (‘QNEOS’)
On 12 June 2009 shareholders in General Meeting approved the
adoption of the QNEOS. This plan is a discretionary share scheme
which enables the Committee to grant market value share options to
consultants and non-executive Directors who, in the opinion of the
Committee, make, or, in the case of new appointments, will make,
a significant contribution to the Group and where the Committee
considers it to be in the interests of shareholders to make such grants.
During the year under review no options were granted under the
QNEOS.
Vesting of 2009 QNEOS awards
In September and October 2012 the awards made in September and
October 2009 vested in full. In September 2009, an award of options
was made to a non-executive Director of the Company (Mr Clegg)
which was subject to a performance condition whereby if TSR during
the three year period exceeded 30% then the award would vest if full.
The actual TSR achieved was 110% and therefore the award vested in
full. In October 2009, an award of options was made to a consultant
to the Company with non-market performance conditions. These
conditions were achieved in full and therefore this award has also
vested in full.
(iv) Service contracts and letters of appointment
The executive Directors have entered into service agreements which can
be terminated on six months’ notice by either party.
During the year, Richard Marsden continued to act as a non-executive
Director of Southampton Asset Management Limited but did not receive
any fees with regards to this appointment. None of the other executive
Directors held non-executive directorships with other companies.
The Chairman and non-executive Directors have entered into letters of
appointment for an initial fixed period of twelve months, which renew
automatically for a further twelve month period on the anniversary of
commencement. The appointment can be terminated on three months’
notice by either party.
Directors’ interests in share options
The interests of Directors in share options over ordinary shares during
the year were as follows:
Synairgen Long-Term Incentive Plan
Date of grant
At 1 January and
31 December
2012
Exercise
price
Earliest
exercise
date
Expiry
date
Richard Marsden
7 September 2009
8 September 2010
21 September 2011
Dr Phillip Monk
7 September 2009
8 September 2010
21 September 2011
John Ward
7 September 2009
8 September 2010
21 September 2011
605,000
498,969
538,063
414,625
371,134
400,212
550,000
453,608
489,148
1p
1p
1p
1p
1p
1p
1p
1p
1p
7 Sept 2012
8 Sept 2013
21 Sept 2014
6 Sept 2019
7 Sept 2020
20 Sept 2021
7 Sept 2012
6 Sept 2019
8 Sept 2013
7 Sept 2020
21 Sept 2014
20 Sept 2021
7 Sept 2012
8 Sept 2013
21 Sept 2014
6 Sept 2019
7 Sept 2020
20 Sept 2021
The options awarded in September 2010 and 2011 under the LTIP will
only vest if the performance conditions outlined above are met. The
exercise of the options awarded in September 2009 (which vested in
2012) is generally subject to the relevant option holder continuing to be
an employee or Director of a company in the same Group as the Company
at the relevant time.
Other options granted on or before the IPO or under the Synairgen
plc Staff Option Scheme
Date of grant
Richard Marsden
11 October 2004
11 October 2004
26 October 2004
26 October 2004
Dr Phillip Monk
2 October 2006
John Ward
26 October 2004
26 October 2004
At 1 January and
31 December
2012
Exercise
price
Earliest
exercise
date
Expiry
date
280,000
140,000
140,000
140,000
10p
10p
130p
130p
11 Oct 2004
30 June 2005
30 June 2006
30 June 2007
10 Oct 2014
10 Oct 2014
25 Oct 2014
25 Oct 2014
50,000
85.5p
2 Oct 2009
1 Oct 2016
140,000
140,000
130p
130p
30 June 2005
30 June 2006
25 Oct 2014
25 Oct 2014
The vesting and exercise of these other options is generally subject to
the relevant option holder continuing to be an employee or Director of a
company in the same Group as the Company at the relevant time. There
are no further performance criteria.
21 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Synairgen Qualifying Non-Employee Option Scheme
Date of grant
Iain Buchanan
28 June 2010
Paul Clegg
7 September 2009
At 1 January and
31 December
2012
Exercise
price
Earliest
exercise
date
Expiry
date
212,765
23.5p
28 Jun 2013
27 Jun 2020
250,000
20p
7 Sept 2012
6 Sept 2019
The options awarded in June 2010 will only vest to the extent that the
percentage increase in the total shareholder return (‘TSR’) of the
Company over the three year performance period is at least 5% pa (when
25% will vest) increasingly, on a straight-line basis, to 100% of vesting
for 10% p.a. growth.
There were no other options granted to Directors or which were
exercised or lapsed during the year.
The mid-market price of the Company’s shares at 31 December 2012 was
45.5p. During the year then ended, the mid-market price ranged from
28.5p to 53.5p. On 12 February 2013 the closing price was 41.25p.
Audited information
The following section (Directors’ remuneration) contains the
disclosures required by Schedule 5 to the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008,
forms part of the financial statements for the year ended 31 December
2012 and has been audited by the Company’s auditor, BDO LLP.
Directors’ remuneration
The aggregate remuneration received by Directors who served during the year ended 31 December 2012 and the six months ended
31 December 2011 was as follows:
£’000
Note
Salary/fee
Benefits
Bonus
Year ended 31 December 2012
Total (incl.
pension)
Pension
Total (excl.
pension)
6 months ended 31 December 2011
Total (incl.
pension)
Total (excl.
pension)
Pension
Executive Directors
Richard Marsden
Dr Phillip Monk
John Ward
Non-executive Directors
Simon Shaw
Iain Buchanan
Dr Bruce Campbell
Paul Clegg
Prof. Stephen Holgate
Total
(i)
(ii)
(iii)
(iv)
128
95
117
30
25
15
30
15
455
2
-
2
-
-
-
-
-
4
44
11
40
-
-
-
-
-
174
106
159
30
25
15
30
15
12
31
11
-
-
-
-
-
186
137
170
30
25
15
30
15
63
47
58
15
13
8
15
8
6
4
5
-
-
-
-
-
69
51
63
15
13
8
15
8
95
554
54
608
227
15
242
(i) Richard Marsden was the highest paid Director during the year ended 31 December 2012
and the six months ended 31 December 2011 and he did not exercise any share options
during either period.
(ii) Dr Phillip Monk requested that £22,500 of his bonus entitlement for the year ended 31
December 2012 be paid in the form of an additional employer pension contribution.
(iii) £15,000 was paid to IP2IPO Limited for the services of Dr Bruce Campbell.
(iv) In addition to this fee for his services as a Director, Prof. Holgate received consultancy fees
amounting to £11,000 (six months ended 31 December 2011: £5,000) as disclosed in note 19
to the financial statements.
(v) The total amount paid to third parties amounted to £15,000 (six months ended
31 December 2011: £8,000).
In addition to the amounts shown above, the share-based payment
charge for the period was:
Richard Marsden
Dr Phillip Monk
John Ward
Iain Buchanan
Paul Clegg
Year ended
6 months ended
31 Dec 2012
31 Dec 2011
£000
£000
54
40
49
4
2
25
18
23
2
2
Total share-based payment in respect of key management
personnel amounted to £143,000 for the year ended 31 December
2012 (six months ended 31 December 2011: £66,000).
By order of the Board
Paul Clegg
Chairman of the Remuneration and Nomination Committee
12 February 2013
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 22
Statement of Directors’ responsibilities in respect
of the Annual Report and the Financial Statements
Website publication
The Directors are responsible for ensuring the annual report and
financial statements are made available on a website. Financial
statements are published on the Group's website in accordance with
AIM rules for companies and legislation in the United Kingdom
governing the preparation and dissemination of financial statements,
which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Group's website is the responsibility
of the Directors. The Directors' responsibility also extends to the
ongoing integrity of the financial statements contained therein.
Going concern
The Directors have prepared and reviewed financial forecasts. After
due consideration of these forecasts and current cash resources, the
Directors consider that the Company and the Group have adequate
financial resources to continue in operational existence for the
foreseeable future (being a period of at least twelve months from the
date of this report), and for this reason the financial statements have
been prepared on a going concern basis.
By order of the Board
John Ward
Company Secretary
12 February 2013
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements
for each financial period. Under that law the Directors have elected
to prepare the Group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the
European Union and the Company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law). Under company
law the Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss of the Group for that period.
The Directors are also required to prepare financial statements in
accordance with the rules of the London Stock Exchange for companies
trading securities on the Alternative Investment Market.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• state whether they have been prepared in accordance with IFRSs
as adopted by the European Union, subject to any material
departures disclosed and explained in the financial statements;
and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
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 requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and
other irregularities.
23 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Independent Auditor’s Report
to the members of Synairgen plc
We have audited the financial statements of Synairgen plc for the year
ended 31 December 2012 which comprise the Consolidated Statement
of Comprehensive Income, the Consolidated Statement of Changes
in Equity, the Consolidated Statement of Financial Position, the
Consolidated Statement of Cash Flows, the Parent Company Balance
Sheet and the related notes. The financial reporting framework that
has been applied in the preparation of the group financial statements
is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union. The financial reporting
framework that has been applied in preparation of the parent company
financial statements is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them
in an auditor’s 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 and the company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the statement of Directors’ responsibilities,
the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board’s (APB’s) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided
on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the
group’s and the parent company’s affairs as at 31 December 2012 and
of the group’s loss for the year then ended;
• the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
• the parent company’s financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ report for the
financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the parent company financial statements are not in agreement with
the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we
require for our audit.
Paul Anthony (senior statutory auditor)
For and on behalf of
BDO LLP, statutory auditor
Southampton
United Kingdom
12 February 2013
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127)
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 24
Consolidated Statement
of Comprehensive Income
for the year ended 31 December 2012
Research and development expenditure
Other administrative expenses
Total administrative expenses
Loss from operations
Finance income
Loss before tax
Tax
Loss and total comprehensive income for the period
attributable to equity holders of the parent
Loss per ordinary share
Basic and diluted loss per share (pence)
Year ended
31 December 2012
£000
6 months ended
31 December 2011
£000
Notes
(1,508)
(982)
(2,490)
(2,490)
27
(2,463)
213
(2,250)
(1,815)
(423)
(2,238)
(2,238)
20
(2,218)
251
(1,967)
(3.12)p
(2.83)p
4
6
7
8
Consolidated Statement of Changes in Equity
for the year ended 31 December 2012
Notes
At 1 July 2011
Recognition of share-based payments
Total comprehensive income for the period
At 31 December 2011
Issuance of ordinary shares
Transaction costs in respect of share issues
Recognition of share-based payments
Total comprehensive income for the year
Share
capital
£000
18a
696
-
-
696
56
-
-
-
Share
premium
£000
18b
17,128
-
-
17,128
2,445
(151)
-
-
Merger
reserve
£000
18c
483
-
-
483
-
-
-
-
At 31 December 2012
752
19,422
483
Retained
deficit
£000
18d
(13,313)
96
(1,967)
(15,184)
-
-
193
(2,250)
(17,241)
Total
£000
4,994
96
(1,967)
3,123
2,501
(151)
193
(2,250)
3,416
25 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Consolidated Statement of Financial Position
as at 31 December 2012
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Current tax receivable
Trade and other receivables
Other financial assets – bank deposits
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Total net assets
Equity
Capital and reserves attributable to equity holders of the parent
Share capital
Share premium
Merger reserve
Retained deficit
Total equity
Notes
31 December 2012
£000
31 December 2011
£000
9
10
11
12
13
14
15
17
17
332
27
359
72
210
79
1,431
1,656
3,448
3,807
(391)
(391)
3,416
752
19,422
483
(17,241)
3,416
239
48
287
85
250
113
2,455
896
3,799
4,086
(963)
(963)
3,123
696
17,128
483
(15,184)
3,123
The financial statements on pages 25 to 38 were approved and authorised for issue by the Board of Directors on 12 February 2013
and signed on its behalf by:
Richard Marsden
Chief Executive Officer
John Ward
Finance Director
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 26
Consolidated Statement of Cash Flows
for the year ended 31 December 2012
Year ended
31 December 2012
£000
6 months ended
31 December 2011
£000
(2,463)
(2,218)
(27)
30
46
5
193
(2,216)
13
30
(572)
(2,745)
254
(2,491)
30
(9)
(144)
1,024
901
2,501
(151)
2,350
760
896
1,656
(20)
15
17
-
96
(2,110)
131
4
41
(1,934)
396
(1,538)
15
(3)
(16)
946
942
-
-
-
(596)
1,492
896
Cash flows from operating activities
Loss before tax
Adjustments for:
Finance income
Depreciation
Amortisation
Loss on derecognised intangible asset
Share-based payment charge
Cash flows from operations before changes in working capital
Decrease in inventories
Decrease in trade and other receivables
(Decrease)/Increase in trade and other payables
Cash used in operations
Tax credit received
Net cash used in operating activities
Cash flows from investing activities
Interest received
Purchase of property, plant and equipment
Purchase of intangible assets
Decrease in other financial assets
Net cash generated from investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Transaction costs in respect of share issues
Net cash generated from financing activities
Increase/(Decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
27 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012
1. Accounting policies
Basis of preparation
The Group financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the
European Union (Adopted IFRSs) and with those parts of the Companies Act 2006 applicable to companies preparing their financial
statements under IFRSs.
The following new standards, amendments to standards and interpretations that have been issued by the International Accounting
Standards Board and the International Financial Reporting Interpretations Committee are to be applied to financial statements with
periods commencing on or after the following dates:
International Accounting and Financial Reporting Standards (IAS/IFRS)
IAS 1
IAS 19
IAS 27
IAS 28
IFRS 10
IFRS 11
IFRS 12
IFRS 13
IFRS 9*
Presentation of Items of Other Comprehensive Income (Amendment)
Employee Benefits
Separate Financial Statements
Investments in Associates and Joint Ventures (Amendment)
Annual Improvements to IFRSs (2009-2011 Cycle)
Consolidated Financial Statements
Joint Arrangements
Disclosure of Interests in Other Entities
Fair Value Measurement
Financial Instruments
Effective date
1 July 2012
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2015
* Not endorsed by the European Union as at the date of approval of these financial statements.
The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial
statements of the Group.
The Group financial statements are presented in Sterling.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
made up to the reporting date. Control is achieved where the Company has the power to govern the financial and operating policies of an
investee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on
consolidation. Business combinations that took place prior to 1 July 2006, the date of transition to IFRS, have not been restated as permitted
by IFRS 1 “First-time Adoption of International Financial Reporting”. The consolidated financial statements have been prepared using the
merger method of accounting.
Change of Accounting Reference Date in prior accounting period
During the prior accounting period the Group brought forward its financial year-end from 30 June to 31 December for administrative reasons
to expedite the production of its annual report and accounts. As a result these financial statements cover the year ended 31 December 2012
with comparative financial information being given for the six months ended 31 December 2011, and therefore the amounts presented in the
financial statements are not entirely comparable.
Research and development
All ongoing research expenditure is currently expensed in the period in which it is incurred. Due to the regulatory and other uncertainties
inherent in the development of the Group’s products, the criteria for development costs to be recognised as an asset, as set out in IAS 38
“Intangible Assets”, are not met until a product has been submitted for regulatory approval and it is probable that future economic benefit
will flow to the Group. The Group currently has no such qualifying expenditure.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 28
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012 (continued)
1. Accounting policies (continued)
Employee benefits
All employee benefit costs, notably salaries, holiday pay, bonuses and contributions to Group stakeholder or personal defined contribution pension
schemes are charged to the consolidated statement of comprehensive income on an accruals basis.
Share-based payments
Option awards and awards made under the Group’s Long-Term Incentive Plan (‘LTIP’) granted after 7 November 2002 which had not vested by
1 July 2006 are fair valued and charged to the consolidated statement of comprehensive income over the period from grant to vesting. The Group
has fair-valued option and LTIP awards using appropriate share valuation models. Options granted to non-employees are measured at the fair
value of the goods or services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value
of the equity instrument granted. At each reporting date, the Group revises its estimate of the number of options that are expected to become
exercisable. The credit for any charge is taken to equity.
Intangible assets
Intangible assets are stated at cost less any accumulated amortisation and any accumulated impairment losses. Patent and licence costs
are amortised over ten years on a straight-line basis and the amortisation cost is charged to research and development expenditure in the
consolidated statement of comprehensive income.
Property, plant and equipment
Property, plant and equipment are stated at cost less any accumulated depreciation and any accumulated impairment losses. Depreciation is
provided on a straight-line basis at rates calculated to write off the cost of property, plant and equipment, less their estimated residual value over
their expected useful lives, which are as follows:
Computer equipment:
Laboratory and clinical equipment:
3 years
5 years
The carrying values of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the
carrying value may not be recoverable.
Inventories
Inventories are stated at the lower of cost and net realisable value.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s consolidated statement of financial position when the Group becomes a
party to the contractual provisions of the instrument.
Financial assets
The Group classifies its financial assets as loans and receivables. These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are initially recognised at fair value plus transaction costs that are directly attributable to
their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty
or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable; the amount of
such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the
impaired receivable.
The Group’s loans and receivables comprise trade and other receivables, other financial assets and cash and cash equivalents in the consolidated
statement of financial position. Other financial assets comprise short-term deposits not meeting the IAS 7 definition of a cash equivalent. Cash
and cash equivalents includes cash in hand, deposits held at call with banks and other short-term bank deposits with a maturity period of three
months or less from the date of initial deposit.
Financial liabilities
The Group classifies its financial liabilities as financial liabilities held at amortised cost. Trade payables are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest rate method.
Leased assets
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an ‘operating lease’), the total rentals
payable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term.
29 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012 (continued)
1. Accounting policies (continued)
Taxation
Income tax is recognised or provided at amounts expected to be recovered or to be paid using the tax rates and tax laws that have been enacted or
substantively enacted at the reporting date. Research and development tax credits are included as an income tax credit under current assets.
Deferred tax balances are recognised in respect of all temporary differences that have originated but not reversed by the reporting date except for
differences arising on:
• investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the
difference could not reverse in the foreseeable future; and
• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction
affects neither accounting or taxable profit.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are
expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Recognition of deferred tax assets is restricted to those instances where it is probable that a taxable profit will be available against which the
temporary difference can be utilised. Deferred tax balances are not discounted.
Foreign currencies
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate
(their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are
translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities
are recognised immediately in the consolidated statement of comprehensive income.
The functional currency of all entities in the Group is Sterling.
2. Critical accounting estimates and judgements
Critical accounting estimates, assumptions and judgements are continually evaluated by management based on available information and
experience. As the use of estimates is inherent in financial reporting, actual results could differ from these estimates.
Inventory
The Group’s raw material inventory shown in note 11 comprises the Group’s biobank of human tissue, which is valued net of a provision for items
which management consider will be excess to the Group’s future research and development requirements. Inventories have been written down by
£9,000 during the year.
Share-based payment
The critical accounting estimates, assumptions and judgements underpinning the valuation of the option and LTIP awards are disclosed in note 17.
3. Segmental analysis
The Group operates in one area of activity, namely drug discovery and development. All assets of the Group are located within the United Kingdom
and all losses were generated in that territory.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 30
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012 (continued)
4. Loss from operations
The loss from operations has been arrived at after charging:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss on derecognised intangible asset
Research and development expenditure
Operating lease rentals payable
Land and buildings
Other operating lease rentals
The fees of the Group’s auditor, BDO LLP, for services provided are analysed below:
Fees payable to the Company’s auditor for the audit of the Company’s financial statements
Fees payable to the Company’s auditor for other services:
The audit of the Company’s subsidiary, pursuant to legislation
Audit-related assurance services
Tax compliance services
Tax advisory services
Total fees
5. Employee benefit expense
The average monthly number of employees (including executive Directors) was:
Research
Administration
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Total cash-settled remuneration
Accrued holiday pay
Share-based payment
Total remuneration
Year ended
31 Dec 2012
£000
6 months ended
31 Dec 2011
£000
30
46
5
1,508
79
93
15
17
-
1,815
39
47
Year ended
31 Dec 2012
£000
6 months ended
31 Dec 2011
£000
10
10
5
5
3
33
10
10
-
5
2
27
Year ended
31 Dec 2012
6 months ended
31 Dec 2011
15
3
18
24
3
27
Year ended
31 Dec 2012
£000
6 months ended
31 Dec 2011
£000
874
104
72
1,050
(2)
182
1,230
493
58
29
580
(20)
90
650
For the purpose of presentation in the Consolidated Statement of Comprehensive Income, remuneration costs of £705,000 (six months ended 31
December 2011: £453,000) are included in research and development expenditure and £525,000 (six months ended 31 December 2011: £197,000)
are included in other administrative expenses.
31 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012 (continued)
5. Employee benefit expense (continued)
Key management compensation
The Directors represent the key management personnel and details of their remuneration are given in the Directors’ Remuneration Report.
In respect of Directors’ remuneration, the disclosures required by Schedule 5 to the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 are included in the detailed disclosures in the audited section of the Remuneration Report on
page 22, which are ascribed as forming part of these financial statements.
6. Finance income
For the year ended 31 December 2012 and the six months ended 31 December 2011, Finance income represents bank interest receivable.
7. Taxation
Current tax
UK corporation tax credit on loss for the period
Adjustment in respect of prior periods
Total income tax credit
Year ended
31 Dec 2012
£000
6 months ended
31 Dec 2011
£000
(210)
(3)
(213)
(250)
(1)
(251)
The tax assessed on the loss on ordinary activities for the period is different to the standard rate of corporation tax in the UK of 24.5%
(six months ended 31 December 2011: 26%). The differences are reconciled below:
Loss on ordinary activities before tax
Loss on ordinary activities before tax multiplied by the standard rate of corporation tax in the UK
Effects of:
Expenses not deductible for tax purposes
Enhanced research & development relief
Variable rates on tax losses surrendered for research & development tax credit
Movement in unrecognised losses and temporary differences
Overprovision in respect of previous periods
Total tax credit for the current period
Year ended
31 Dec 2012
£000
6 months ended
31 Dec 2011
£000
(2,463)
(603)
(2,218)
(577)
48
(231)
238
338
(3)
(213)
25
(321)
270
353
(1)
(251)
Deferred taxation
Changes in tax rates and factors affecting the future tax charge
Finance Act 2012 includes provision for the main rate of corporation tax to reduce from 26% to 24% on 1 April 2012, and to 23% on 1 April
2013. It has also been announced that there will be a further 1% reduction to bring the main rate to 22% from 1 April 2014. This will reduce the
Company’s future tax charge accordingly. The rate of 24% was substantially enacted on the 26 March 2012 and the rate of 23% was substantially
enacted on 6 July 2012. Accordingly, deferred tax balances have been recognised at 23%, the rate of corporation tax enacted in Finance Act 2012
to apply from 1 April 2013.
Recognised deferred taxation
Accelerated capital allowances
Other temporary differences
Losses
Charge for the period
Year ended
31 Dec 2012
£000
6 months ended
31 Dec 2011
£000
4
(4)
-
-
9
(6)
(3)
-
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 32
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012 (continued)
7. Taxation (continued)
Unrecognised deferred taxation
At 31 December 2012 the Group has trading losses carried forward which are available for offset against future profits of the Group amounting to
£9,624,000 (31 December 2011: £8,424,000) and non-trading losses of £861,000 (31 December 2011: £635,000). At 31 December 2012 the Group
has an unrecognised deferred tax asset in respect of these losses of £2,412,000 (31 December 2011: £2,265,000). The full utilisation of these
losses in the foreseeable future is uncertain and no deferred tax asset has therefore been recognised.
The movement on the unrecognised deferred tax asset comprises the following:
Unrecognised deferred tax asset at the start of the period
Effect of tax rate change
Movement in period
Unrecognised deferred tax asset at the period-end
8. Loss per ordinary share
Loss attributable to equity holders of the Company (£000)
Weighted average number of ordinary shares in issue
Year ended
31 Dec 2012
£000
6 months ended
31 Dec 2011
£000
(2,265)
181
(328)
(2,412)
(1,990)
90
(365)
(2,265)
Year ended
31 Dec 2012
6 months ended
31 Dec 2011
(2,250)
(1,967)
72,036,917
69,560,064
The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted
earnings per ordinary share are identical to those used for basic earnings per share. This is because the exercise of share options would have the
effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS 33. At 31 December 2012, there were 7,511,635
options outstanding (31 December 2011: 7,911,787 options outstanding) as detailed in note 17.
9. Intangible assets
Cost
At 1 July 2011
Additions
At 31 December 2011
Additions
Derecognised assets
At 31 December 2012
Amortisation
At 1 July 2011
Charge for the period
At 31 December 2011
Derecognised assets
Charge for the year
At 31 December 2012
Net book amount
At 31 December 2012
At 31 December 2011
At 1 July 2011
Patent and licence costs
£000
329
16
345
144
(5)
484
89
17
106
-
46
152
332
239
240
At 31 December 2012 £332,000 (31 December 2011: £229,000) of the net book amount relates to interferon beta and lambda patent and licence
costs, which has a remaining average amortisation period of 7 years (31 December 2011: 7 years).
33 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012 (continued)
10. Property, plant and equipment
Computer
equipment
£000
Laboratory and
clinical equipment
£000
Cost
At 1 July 2011
Additions
At 31 December 2011
Additions
Derecognised assets
At 31 December 2012
Depreciation
At 1 July 2011
Charge for the period
At 31 December 2011
Derecognised assets
Charge for the year
At 31 December 2012
Net book value
At 31 December 2012
At 31 December 2011
At 1 July 2011
At 31 December 2012 the Group had no capital commitments (31 December 2011: nil).
11. Inventories
Raw materials
Raw materials comprises the Group’s biobank.
12. Trade and other receivables
Amounts receivable within one year:
Other tax and social security
Prepayments and accrued income
13. Other financial assets – bank deposits
81
2
83
9
(50)
42
71
3
74
(50)
6
30
12
9
10
172
1
173
-
(41)
132
122
12
134
(41)
24
117
15
39
50
31 Dec
2012
£000
72
31 Dec
2012
£000
22
57
79
31 Dec
2012
£000
Total
£000
253
3
256
9
(91)
174
193
15
208
(91)
30
147
27
48
60
31 Dec
2011
£000
85
31 Dec
2011
£000
42
71
113
31 Dec
2011
£000
Amounts receivable within one year:
Sterling fixed rate deposits of greater than three months’ maturity at inception
1,431
2,455
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 34
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012 (continued)
14. Cash and cash equivalents
Cash available on demand
Sterling fixed rate deposits of up to three months’ maturity at inception
15. Trade and other payables
Trade payables
Social security and other taxes
Accrued expenses
16. Financial instruments
31 Dec
2012
£000
1,656
-
1,656
31 Dec
2012
£000
97
30
264
391
31 Dec
2011
£000
746
150
896
31 Dec
2011
£000
199
35
729
963
An explanation of the Group’s objectives, policies and strategies for financial instruments and analysis of the capital structure and capital
funding of the Group can be found on page 8 in the Financial Review.
Financial assets
Loans and receivables
Trade and other receivables
Other financial assets (less than one year)
Cash and cash equivalents (less than one year)
Total
Financial liabilities
Other financial liabilities
Notes
(i)
Book
value
£000
31 Dec 2012
Fair
value
£000
Book
value
£000
31 Dec 2011
Fair
value
£000
29
1,431
1,656
3,116
29
1,431
1,656
3,116
51
2,455
896
3,402
51
2,455
896
3,402
Trade and other payables (less than one year)
(ii)
361
361
928
928
(i) Trade and other receivables shown above excludes prepayments, which are not a contractual obligation to receive cash, amounting to £50,000 (31 December 2011: £62,000).
(ii) Trade and other payables shown above excludes amounts due in respect of social security and other taxes, which are not a contractual obligation to pay cash, amounting to £30,000
(31 December 2011: £35,000).
35 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012 (continued)
16. Financial instruments (continued)
The objective of holding financial instruments is to have access to finance for the Group’s operations and to manage related risks. The main risks
arising from holding these instruments are interest rate risk, liquidity risk, and credit risk.
Interest rate risk
Interest rate risk profile of financial assets, excluding short-term debtors:
Australian Dollar
Euro
Sterling
Total
31 Dec 2012
Floating rate financial
assets
£000
31 Dec 2011
Floating rate financial
assets
£000
-
83
3,004
3,087
66
-
3,285
3,351
Floating-rate financial assets comprise cash on deposit and cash at bank. There is no difference between the carrying amount and the fair value
of the financial assets.
Short-term deposits are placed with banks for periods of up to twelve months and are categorised as floating-rate financial assets. Contracts
in place at 31 December 2012 had a weighted average period to maturity of 48 days and a weighted average annualised rate of interest of 1.09%
(31 December 2011: 83 days, 1.31%).
Sensitivity analysis
It is estimated that a decrease of half of one percentage point in interest rates would have increased the Group’s loss before taxation by
approximately £16,000 (six months ended 31 December 2011: £11,000).
Liquidity risk
The Group’s policy is to maintain adequate cash resources to meet liabilities as they fall due. All Group payable balances as at 31 December 2012
and 31 December 2011 fall due for payment within one year. Cash balances are placed on deposit for varying periods with reputable banking
institutions to ensure there is limited risk of capital loss. The Group does not maintain an overdraft facility.
Credit risk
The Group’s credit risk is attributable to its banking deposits. The Group places its deposits with reputable financial institutions to minimise
credit risk.
17. Share capital and premium
At 1 July 2011 and 31 December 2011
Issuance of ordinary shares
Costs of issuance of shares
At 31 December 2012
Note
Number
of shares
69,560,064
(i) (ii)
5,624,272
-
75,184,336
Ordinary shares
of 1p each
£000
696
56
-
752
Share
premium
£000
17,128
2,445
(151)
19,422
Total
£000
17,824
2,501
(151)
20,174
(i) 5,555,556 ordinary shares of 1p were issued on 23 July 2012 at a premium of 44p per share to finance the Company’s ongoing interferon beta programme and to provide working capital for
the Company. Funds raised net of expenses amounted to £2,349,000.
(ii) 68,716 ordinary shares of 1p were issued on 28 September 2012 at par following the exercise of share options under the Company’s Long Term Incentive Plan (LTIP).
The total authorised number of ordinary shares is 125 million shares (31 December 2011: 125 million shares) with a par value of 1p per share (31
December 2011: 1p per share). All issued shares are fully paid.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 36
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012 (continued)
17. Share capital and premium (continued)
Options
At 31 December 2012 there were options outstanding over 7,511,635 un-issued ordinary shares, equivalent to 10.0% of the issued share
capital, as follows:
Date of grant
Number of shares
Exercise price
Earliest exercise date
Latest exercise date
Approved EMI scheme
26 October 2004
26 October 2004
26 October 2004
12 May 2005
2 October 2006
29 October 2007
Unapproved schemes
11 October 2004
11 October 2004
26 October 2004
26 October 2004
26 October 2004
7 September 2009 (LTIP)
7 September 2009 (QNEOS)
16 October 2009 (QNEOS)
28 June 2010 (QNEOS)
8 September 2010 (LTIP)
21 September 2011 (LTIP)
64,515
64,515
42,000
14,000
119,159
29,848
280,000
140,000
75,485
215,485
140,000
1,855,431
250,000
250,000
212,765
1,815,250
1,943,182
7,511,635
130p
130p
130p
136.5p
85.5p
61.5p
10p
10p
130p
130p
130p
1p
20p
20p
23.5p
1p
1p
30 June 2005
30 June 2006
26 October 2007
12 May 2008
2 October 2009
29 October 2010
11 October 2004
30 June 2005
30 June 2005
30 June 2006
30 June 2007
25 October 2014
25 October 2014
25 October 2014
11 May 2015
1 October 2016
28 October 2017
10 October 2014
10 October 2014
25 October 2014
25 October 2014
25 October 2014
7 September 2012
6 September 2019
7 September 2012
6 September 2019
16 October 2012
15 October 2019
28 June 2013
27 June 2020
8 September 2013
7 September 2020
21 September 2014
20 September 2021
The Group has no legal or constructive obligation to repurchase or settle the options in cash. The movement in the number of share options is set
out below:
Outstanding at start of period
Granted during the period
Exercised during the period
Lapsed during the period
Number of outstanding options at period-end
Year ended
31 Dec 2012
Weighted average
exercise price
15.2p
1.0p
9.6p
15.6p
Number
7,911,787
-
(68,716)
(331,436)
7,511,635
6 months ended
31 Dec 2011
Weighted average
exercise price
18.9p
1.0p
1.0p
15.2p
Number
6,283,487
2,126,469
-
(498,169)
7,911,787
At 31 December 2012, 3,540,438 share options were capable of being exercised (31 December 2011: 1,214,576) and had an average exercise price of
30.6p (31 December 2011: 81.7p). The options outstanding at 31 December 2012 had a weighted average remaining contractual life of 6.7 years
(31 December 2011: 7.8 years).
37 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Notes to the Consolidated Financial Statements
for the year ended 31 December 2012 (continued)
17. Share capital and premium (continued)
The Group uses a number of share-based incentive schemes as detailed above. The fair value per award granted and the assumptions used in the
calculations for the 6,671,635 options which had not vested at 30 June 2006 (being the date after which IFRS 2 has been applied) are as follows:
Date of grant
Type of award
Number of
shares
Exercise
price (p)
Share price at
date of grant (p)
Fair value per
option (p)
Award life
(years)
Risk
free rate
26 Oct 2004
Unapproved
140,000
26 Oct 2004
12 May 2005
2 Oct 2006
29 Oct 2007
7 Sept 2009
7 Sept 2009
16 Oct 2009
28 Jun 2010
8 Sept 2010
21 Sept 2011
EMI
EMI
EMI
EMI
42,000
14,000
119,159
29,848
LTIP
1,855,431
QNEOS
QNEOS
QNEOS
LTIP
LTIP
250,000
250,000
212,765
1,815,250
1,943,182
6,671,635
130p
130p
155p
155p
136.5p
135.5p
85.5p
61.5p
1p
20p
20p
23.5p
1p
1p
85.5p
61.5p
18.5p
18.5p
20p
23.5p
24.25p
22.5p
57.7p
57.7p
36.9p
24.4p
17.8p
7.1p
4.0p
6.3p
5.6p
12.1p
13.4p
5
5
5
5
5
3
5
5
5
3
3
4.59%
4.59%
4.35%
4.75%
4.95%
2.09%
2.67%
2.65%
2.09%
0.92%
0.79%
Expected
volatility
rate
Performance
conditions
20%
20%
20%
20%
20%
30%
30%
None
None
None
None
None
Market
Market
30% Non-market
30%
40%
56%
Market
Market
Market
In accordance with IFRS 2, the Company has applied IFRS 2 to all share-based payments granted after 7 November 2002 which had not vested by
1 July 2006. The following comments apply to those options which have been fair valued in accordance with IFRS 2.
(i) Stochastic valuation methodology was used for the LTIP awards and the QNEOS awards with market performance conditions and Black-Scholes methodology for the other awards.
(ii) Expected dividend yield is nil, consistent with the Directors’ view that the Group’s model is to generate value through capital growth rather than payment of dividends.
(iii) The risk free rate is equal to the prevailing UK Gilts rate at grant date that most closely matches the expected term of the grant.
(iv) The fair value charge is spread evenly over the expected vesting period.
(v) The charge for the year ended 31 December 2012 for share-based payment amounted to £193,000 (six months ended 31 December 2011: £96,000).
18. Capital and reserves
18a Share capital
Share capital represents the nominal value of shares issued.
18b Share premium
Share premium represents amounts subscribed for share capital in excess of nominal value less the related costs of share issues.
18c Merger reserve
The merger reserve represents the reserve arising on the acquisition of Synairgen Research Limited on 11 October 2004 via a share for share
exchange accounted for as a Group reconstruction using merger accounting under UK GAAP.
18d Retained deficit
The retained deficit represents cumulative net gains and losses recognised in the consolidated statement of comprehensive income, adjusted for
cumulative recognised share-based payments.
19. Related party transactions and balances
During the year ended 31 December 2012, the Group incurred consultancy fees with Prof. Stephen Holgate, a Director of the Company, amounting
to £11,000 (six months ended 31 December 2011: £5,000) in addition to his Director’s remuneration disclosed on page 22. At the reporting date, the
amount unpaid in respect of these charges was £11,000 (31 December 2011: £1,000).
During the year ended 31 December 2012, the Group incurred consultancy fees with Ms Emma Toman, partner of Richard Marsden, a Director of
the Company, amounting to £1,000 in connection with risk assessments (six months ended 31 December 2011: £nil). At the reporting date, there was
no amount unpaid in respect of these charges (31 December 2011: £nil).
Details of key management personnel and their compensation are given in note 5 and on page 22 of the Directors’ Remuneration Report.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 38
Parent Company Balance Sheet
as at 31 December 2012
Company number: 5233429
Fixed assets
Investments
Current assets
Debtors
Investments: short-term deposits
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Shareholders’ funds
Notes
31 December 2012
£000
31 December 2011
£000
5
6
7
8
8
9
9
17,761
15,405
9
1,431
1,632
3,072
(36)
3,036
20,797
752
19,422
623
20,797
20
2,455
647
3,122
(48)
3,074
18,479
696
17,128
655
18,479
The financial statements on pages 39 to 42 were approved and authorised for issue by the Board of Directors on 12 February 2013 and signed on its
behalf by:
Richard Marsden
Chief Executive Officer
John Ward
Finance Director
39 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Notes to the Parent Company Financial Statements
for the year ended 31 December 2012
1. Basis of preparation
Synairgen plc’s Parent Company balance sheet has been prepared under the historical cost convention and in accordance with UK Generally
Accepted Accounting Practice (‘UK GAAP’).
As permitted by FRS 1 “Cash Flow Statements”, no cash flow statement for the Company has been included on the grounds that the Group
includes the Company in its own published consolidated financial statements. The Company has taken advantage of the exemption in FRS 8
“Related Party Disclosures” not to disclose related party transactions with wholly-owned subsidiaries.
2. Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material to the Company’s
financial statements.
Investment in subsidiary undertakings
Investments in subsidiary undertakings where the Company has control are stated at cost less any provision for impairment. Control is
achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from
its activities.
Short-term deposits
Short-term deposits comprise deposits with UK banks for periods of up to twelve months. Short-term deposits are measured initially at cost
and subsequently at cost or recoverable amount if lower. Interest is accrued evenly on an accruals basis.
Share-based payments
In accordance with FRS 20, when the Company grants options over equity instruments directly to the employees of a subsidiary
undertaking, the effect of the share-based payment is capitalised as part of the investment in the subsidiary as a capital contribution,
with a corresponding increase in equity.
Taxation
The charge for taxation is based on the loss for the period and takes into account taxation deferred.
Current tax is measured at amounts expected to be paid using the tax rates and laws that have been enacted or substantively enacted by the
balance sheet date. Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the
balance sheet date, except that the recognition of deferred tax assets is limited to the extent that the company anticipates making sufficient
taxable profits in the future to absorb the reversal of the underlying timing differences.
Deferred tax balances are not discounted.
3. Loss attributable to member of the Parent Company
As permitted by Section 408 of the Companies Act 2006, the Company’s profit and loss account has not been included in these financial
statements. The loss dealt with in the financial statements of the Parent Company for the year ended 31 December 2012 was £225,000
(six months ended 31 December 2011: loss of £113,000).
4. Directors’ remuneration
The only employees of the Company are the executive Directors and all their costs are borne by its subsidiary undertaking.
In respect of Directors’ remuneration, the disclosures required by Schedule 5 to the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 are included in the detailed disclosures in the audited section of the Directors’ Remuneration
Report on page 22, which are ascribed as forming part of these financial statements.
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 40
Notes to the Parent Company Financial Statements
for the year ended 31 December 2012 (continued)
5. Investments
At 1 January 2012
Additions
At 31 December 2012
Investment in
subsidiary
undertaking
£000
140
-
140
Loan to
subsidiary
undertaking
£000
14,543
2,163
16,706
Capital
contribution
£000
722
193
915
Total
£000
15,405
2,356
17,761
At 31 December 2012, the Company has an investment in the following subsidiary undertaking:
Name of company
Synairgen Research Limited
Country of
incorporation
England
Proportion of voting rights
and ordinary share capital held
Nature of business
100% Drug discovery and development
6. Debtors
Other tax and social security
Prepayments and accrued income
All amounts fall due for payment within one year.
7. Creditors: amounts falling due within one year
Trade creditors
Accruals and deferred income
8. Share capital and share premium
At 1 July 2011 and 31 December 2011
Issuance of ordinary shares
Costs of issuance of shares
At 31 December 2012
Note
(i) (ii)
Number
of shares
69,560,064
5,624,272
-
75,184,336
Ordinary shares
of 1p each
£000
696
56
-
752
31 Dec 2012
£000
31 Dec 2011
£000
2
7
9
3
17
20
31 Dec 2012
£000
31 Dec 2011
£000
5
31
36
Share
premium
£000
17,128
2,445
(151)
19,422
24
24
48
Total
£000
17,824
2,501
(151)
17,824
(i) 5,555,556 ordinary shares of 1p were issued on 23 July 2012 at a premium of 44p per share to finance the Company’s ongoing interferon beta programme and to provide working capital for
the Company. Funds raised net of expenses amounted to £2,349,000.
(ii) 68,716 ordinary shares of 1p were issued on 28 September 2012 at par following the exercise of share options under the Company’s long term incentive plan (LTIP).
Details of the Company’s share option schemes and long term incentive plan can be found in note 17 to the Group accounts on pages 37 and 38.
41 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
Notes to the Parent Company Financial Statements
for the year ended 31 December 2012 (continued)
9. Reconciliation of movements in reserves and shareholders’ funds
At 1 July 2011
Loss for the period
Share-based payment credit
At 31 December 2011
Issuance of ordinary shares
Transaction costs in respect of share issues
Loss for the year
Share-based payment credit
At 31 December 2012
Share
capital
£000
696
-
-
696
56
-
-
-
Share premium
account
£000
Profit and loss
account
£000
Shareholders’
funds
£000
17,128
-
-
17,128
2,445
(151)
-
-
672
(113)
96
655
-
-
(225)
193
623
18,496
(113)
96
18,479
2,501
(151)
(225)
193
20,797
752
19,422
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 42
Corporate
Directory
Company number
5233429
Directors
Executive: Richard Marsden,
Dr Phillip Monk, John Ward
Non-executive: Simon Shaw (Chairman),
Iain Buchanan, Dr Bruce Campbell,
Paul Clegg, Prof. Stephen Holgate
Secretary
John Ward
Head office and Registered office
Mailpoint 810, Level F, South Block,
Southampton General Hospital,
Tremona Road, Southampton SO16 6YD
Telephone and fax: +44 (0) 2380 512 800
Website
www.synairgen.com
E-mail
info@synairgen.com
Advisers
Independent auditor
BDO LLP
Arcadia House, Maritime Walk,
Ocean Village, Southampton
SO14 3TL
Bankers
HSBC Bank plc
165 High Street, Southampton SO14 2NZ
Financial public relations
Newgate Threadneedle
33 King William Street,
London EC4R 9AS
Nominated adviser and broker
FinnCap Limited
60 New Broad Street, London EC2M 1JJ
Registrars
Capita Registrars
Northern House, Woodsome Park,
Fenay Bridge, Huddersfield HD8 0GA
Solicitors
Fasken Martineau LLP
17 Hanover Square, London W1S 1HU
Glossary
2' - 5' OAS
A protein produced within cells
in response to IFN-β to prevent
viral replication
Adenovirus
A virus that can cause respiratory
disease (eg. the common cold),
conjunctivitis and gastroenteritis
Airways (or bronchial tubes)
The tubes that carry air in and out of
the lungs
Antibiotic
A drug that inhibits bacterial growth or
kills bacteria
Anti-viral
Any substance that can either destroy
viruses or suppress their growth
Apoptosis
A naturally occurring form of
programmed cell death
Assay
A laboratory test to determine
parameters such as the strength of a
solution, the proportion of a compound
in a mixture, the potency of a drug or
the purity of a preparation
Asthma
A disorder in which the airways
become episodically narrowed, leading
to wheeze, shortness of breath, cough
and chest tightness
B cell
A type of white blood cell that can
produce antibodies
Biobank
A collection of samples from clinically-
characterised volunteers comprising
blood, induced sputum, bronchial
biopsies and epithelial cells. These
samples are used to develop the
complex in vitro human disease models
Biomarker
A biomarker is a biochemical feature
or facet that can be used to measure
the progress of disease or the effects
of treatment
Bioterrorism
Terrorism involving the intentional
release or dissemination of biological
agents
British Thoracic Society (BTS)
Step classification system
A stepwise treatment regime (from
steps 1 to 5, with 5 being the most
severe) for treating asthma in Britain
aiming to achieve optimum control
without excessive medication
Broad spectrum antibiotic
An antibiotic that acts against a wide
range of disease-causing bacteria
Bronchodilators
Medicines which relax the muscles
around the airways, helping the
airways to open up, so making it easier
to breathe. There are several types
of bronchodilators, of which short-
acting beta-agonist drugs are the most
commonly used
CD8+ T cell
A specialised type of white blood cell
that can destroy virally-infected cells.
The CD8 nomenclature refers to a
particular type of receptor expressed
on the cell surface
Chronic bronchitis
An inflammation of the airways
accompanied by coughing and
production of phlegm. The symptoms
are present for at least three months in
each of two consecutive years.
See COPD
Clinical Trial Authorisation or CTA
An authorisation from the MHRA to
conduct a clinical trial
Compliance
The level of adherence to a
recommended course of treatment or
prescribed regimen
COPD
Chronic obstructive pulmonary
disease covers two conditions:
chronic bronchitis and emphysema.
COPD usually results from long-term
exposure to irritants to the lungs, of
which the most prevalent is tobacco
smoke. Unlike asthma, where airflow
obstruction varies, in COPD airflow
obstruction is usually irreversible
Coronavirus
A virus that can cause respiratory
disease such as the common cold
or SARS (depending on the type of
coronavirus) and gastroenteritis
43 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
DNA
Nucleic acid that carries genetic
information in the cell
Emphysema
A destructive process involving
the air spaces (alveoli) of the
lungs, which leads to over-
inflation of the lung and, when
sufficiently advanced, causes
breathlessness and lack of
oxygenation of blood. See COPD
Epithelium
In the lung, the epithelium is a
thin layer of cells which lines
the airway tubes in order to
protect and regulate the tissue
underneath
Exacerbation
A rapid deterioration of a chronic
disease that makes the symptoms
worse
Gene
A hereditary unit consisting of a
sequence of DNA that determines
a particular characteristic of a
living organism
H1N1
A subtype of influenza A and the
most common cause of ‘flu’ in
humans. The recent ‘swine flu’
is a H1N1 virus. The ‘H’ stands
for haemagglutinin, which is a
protein on the surface of influenza
which allows the virus to enter
the cell, thus causing infection.
The ‘N’ stands for neuraminidase,
a protein on the surface of
influenza, which allows the
newly-formed virus particles to be
released from the cell
H5N1
Also known as ‘bird flu’ or ‘avian
influenza’ is a subtype of the
influenza A virus which can cause
serious illness in humans
Hepatitis
Inflammation of the liver that
can occur as a result of a viral
infection or exposure to harmful
substances such as alcohol
IFN-β
Interferon beta is a natural protein
found in the body which helps
to regulate the immune system
and fight off viruses. IFN-β is
currently marketed by a number of
companies as an injectable therapy
for the treatment of multiple
sclerosis
Influenza-like illness
Set of symptoms presenting
similar to those for influenza of
which influenza may or may not
be the cause
Influenza
A contagious viral infection of the
respiratory tract, leading to fever,
headaches, sore throat, congestion
of the nose and body aches
Interferon stimulated genes
(ISG)
Genes up-regulated by interferon
In vitro
Carried out in the laboratory, e.g.
in a test tube or culture plate
In vitro model (complex)
A research model which contains
more than one cell type and allows
the study of interactions between
different cell types and ‘test’
agents relevant to the disease
or a therapy
IP-10
A protein released by cells in
response to IFN-β which attracts
other cell types involved in anti-
viral defence of the lungs
Long acting beta agonist
An asthma drug that acts to relax
(open) the airways for 12 or more
hours
Lower airway
The airway tubes in the lung
running from the throat down,
ending in the air spaces (alveoli)
where gas exchange occurs
Macrophages
Phagocytic (i.e. cells that can
engulf other cells and cell
components) white blood cells
involved in cellular clearance and
inflammation
MHRA
The Medicines and Healthcare
products Regulatory Agency; a
UK government body tasked with
ensuring that medicines and
medical devices work and are safe
mITT population
Modified intention to treat
population. In SG005, mITT was
defined as the population who
were randomised with at least one
dose of study medication and had a
common cold as confirmed by the
Jackson Cold Score
Morbidity
Incidence or prevalence
of a disease
Mucus
A gelatinous substance normally
produced by the airway cells to
protect and hydrate the airway
surface from harmful agents
Multiple sclerosis (MS)
A disease affecting nerves in the
brain and spinal cord, causing
problems with muscle movement,
balance and vision
MxA
A protein produced within cells
in response to IFN-β to prevent
viral replication
Natural Killer (NK) cell
A specialised type of white blood
cell that can respond to virus
infection
Neuraminidase inhibitor
A class of drug used to treat
influenza by interfering with
virus release from the infected
cell by blocking neuraminidase
(a protein found on the virus cell
surface), of which Tamiflu® and
Relenza® are examples
Neopterin
An anti-viral biomarker
Pandemic influenza
An influenza pandemic occurs
when a new influenza virus
appears against which the human
population has no immunity,
resulting in epidemics worldwide
with enormous numbers of deaths
and illness (definition on world
health organization website)
Parainfluenza
A virus that can cause the
common cold. Parainfluenza is also
responsible for 75% of croup cases
in children
Patent Cooperation Treaty
or PCT
A system by which a patent
application can be filed in many
different countries at once. A
single international application is
filed initially at a receiving office.
After a search and publication, the
application may be converted to a
series of national applications in
different countries
Peak expiratory flow
A lung function test that measures
a person's ability to breathe out air
Phase I Clinical Trial
A study conducted in volunteers
to determine the biological effects
of a drug, especially safety and
tolerability
Phase II Clinical Trial
A study in patients with the
aim of making a preliminary
determination of the efficacy of a
drug to provide proof of concept
and/or to study drug dose ranges
Phase IIa Clinical Trial
Used to describe a Phase II clinical
trial evaluating efficacy, adverse
effects and safety risks
Phase IIb Clinical Trial
Used to describe a subsequent
Phase II clinical trial that also
evaluates dosage tolerance and
optimal dosage frequency in a
larger number of patients than
enrolled in a Phase IIa trial
Phase III Clinical Trial
A full scale clinical trial to
determine drug efficacy and safety
prior to seeking marketing approval
Phlegm
See Sputum
Placebo
An inactive substance or
preparation used as a control/
comparator (in a clinical trial
for example) to determine the
effectiveness of a medicinal drug
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 44
Glossary (continued)
Primary endpoint
The most important measure
(endpoint) assessed in a clinical
trial
Prognostic biomarker
A biomarker that can predict
the future course of a disease or
response to a therapy
Prophylaxis
A measure taken for the prevention
of a disease or condition
Protein
Large molecules made of smaller
biological units known as ‘amino
acids’. Proteins are responsible for
the majority of the function and
much of the structure of living
things, including humans
Pulmonary
Relating to, functioning like,
or associated with the lungs
Rhinovirus
Rhinoviruses are the most
common viral infective agents in
humans. The most well known
disease caused by rhinoviruses
is the common cold
RNA
Nucleic acid that is involved
in protein synthesis and
transmission of genetic
information
RSV
Respiratory syncytial virus (RSV)
can cause both mild respiratory
illness (e.g. the common cold)
and serious respiratory tract
infections (such as bronchiolitis
and pneumonia). More severe
infections can occur in the very
young, the very old and those with
weakened immune systems
Safety study
See Phase I Clinical Trial
SARS
Severe Acute Respiratory
Syndrome (SARS) is a type
of coronavirus that can cause
potentially fatal respiratory
illness. SARS was first reported
in Asia in 2002
Seasonal Influenza
Seasonal flu is a yearly outbreak of
flu infection, caused by a flu virus.
The seasonal flu is somewhat
different every year, as flu viruses
are always changing
Secondary/exploratory
endpoint
The second most important (or
additional) measure (or endpoint)
assessed in a clinical trial
SG004
A double-blinded, placebo-
controlled, single and multiple
dose-escalating Phase I study to
assess the safety and tolerability
of inhaled IFN-β in controlled
asthmatic male and female
subjects
SG005
A randomised, double-blinded,
placebo-controlled Phase II
study, comparing the efficacy
and safety of inhaled IFN-β
to placebo administered to
asthmatic subjects after the onset
of a respiratory viral infection
for the prevention or attenuation
of asthma symptoms caused by
respiratory viruses
Sputum
The thick mucus which is coughed
up by a person. Sputum contains
cells and soluble substances
secreted into the airways (bronchi),
some of which can mediate disease
if present in amounts different to
normal. Sputum is also commonly
called phlegm
Steroids
A group of chemicals that is
produced naturally in the body
by the adrenal gland. In asthma,
steroids are given by inhalation
or by mouth to reduce the
inflammation of the airways
Systemic absorption
The fraction of drug that reaches
the systemic circulation
Upper airway
The tubes in the nose and neck
which conduct air into the lung
Toll-like receptor agonists
Novel anti-viral drugs that
activate Toll-like receptors (TLRs).
TLRs regulate the immune system
in response to pathogens
Type I IFNs
A classification of interferon that
includes IFN-β
Virion
A virus particle which has the
ability to infect cells, consisting
of an outer protein shell called a
capsid and an inner core of nucleic
acid
Virus
A virus is a non-living small
particle that infects cells in
biological organisms. Viruses can
reproduce only by invading and
controlling other cells as they lack
the cellular machinery for self-
reproduction
Wheeze
A whistling sound made by
a person who has airflow
obstruction when breathing
45 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
15812_SY_AnnualReport_2012_full_v11.indd 44
02/04/2013 17:12
Synairgen is a respiratory drug discovery
and development company with a focus on viral
defence of the lungs. It is developing inhaled
interferon beta (‘IFN-β’) in two programmes:
• To prevent asthma and COPD patients
suffering severe exacerbations as a result
of cold or flu infections
• To treat other patients who have been
hospitalised with severe viral lung infections
Patents protecting the use of inhaled iFN-β to treat exacerbations
of asthma and CoPD induced by rhinovirus (the common cold)
have been granted in the USA, the EU and Japan.
in 2012 Synairgen announced positive data from its Phase ii
proof of concept trial of inhaled iFN-β in asthma and is
aiming to secure the right partnership arrangement to enable
commencement of follow-on clinical trial activity during the
2013-14 virus season.
Exacerbations (acute deteriorations of symptoms) represent the
greatest unmet clinical need in asthma and CoPD. The common
cold plays a major role in exacerbations, causing up to 80% of
asthma exacerbations. For CoPD patients 50% of colds result
in exacerbations. The annual direct healthcare cost of treating
asthma and CoPD is very significant. in the USA it amounts
to $54 billion1, of which $16 billion is for hospitalisations and
Emergency Room visits.
Viruses are parasites which take over cells and use the cells’
‘machinery’ to replicate. The normal host cell response to viral
infection is to trigger iFN-β production, which in turn orchestrates
an anti-viral response (see page 10). Deficiencies in iFN-β
production following infection explain why some patient groups
(such as those with asthma and CoPD) are more susceptible to
infection. many pathogenic respiratory viruses, such as
influenza and SARS, can suppress iFN-β production, allowing
infections to spread to the lungs and cause severe illness.
By delivering iFN-β to the lungs, Synairgen aims to overcome
the iFN-β deficiency and restore/boost the lungs’ anti-viral
defence mechanism.
Reference
1. National Heart, Lung, and Blood Institute. Morbidity & Mortality: 2012
Chart Book on Cardiovascular, Lung, and Blood Diseases.
www.synairgen.com
Contents
Introduction
Overview of interferon beta programmes
Operational and financial highlights
Business Review
Chairman’s and Chief Executive
Officer’s Report
Financial Review
Scientific Review
Governance
Directors
Synairgen’s Founders and
Scientific Advisors
Directors’ Report
Corporate Governance
Directors’ Remuneration Report
Financials
Statement of Directors’ responsibilities
in respect of the Annual Report and the
Finanicial Statements
Independent Auditor’s Report
Consolidated Statement
of Comprehensive Income
Consolidated Statement of
Changes in Equity
16
18
20
23
24
25
25
1
2
3
8
9
13
15
Consolidated Statement of
Financial Position
Consolidated Statement of Cash Flows
Notes to the Consolidated
Financial Statements
Parent Company Balance Sheet
Notes to the Parent Company
Financial Statements
Other
Corporate Directory
Glossary
26
27
28
39
40
43
43
1 | Synairgen plc annual report and accounts 2012 | www.synairgen.com | LSE:SNG
LSE:SNG | www.synairgen.com | Synairgen plc annual report and accounts 2012 | 46
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Synairgen plc, Mailpoint 810, Level F, South Block, Southampton General Hospital, Tremona Road, Southampton, SO16 6YD United Kingdom
© Synairgen plc
Annual Report
and Accounts
2012
Targeting the causes
of respiratory disease
When I get a cold…
GEoRGE, AGED 74
who hAS CoPD
G A i L ,
A G E D 3 9
w h o h A S A S T h m A
“It wears me
down and drains
my energy”
“I have to take
days off work”
PoLLy, AGED 16
who hAS ASThmA
“I have to have
time off school”
Stock symbol: LSE:SNG
www.synairgen.com