RNS Number : 2425C
Phosphagenics Limited
29 August 2008
Phosphagenics Limited
Half Year Report
Period Ended 30 June 2008
(Previous Corresponding Period: Half year ended 30 June 2007)
Results for announcement to the market
$A*000 $A*000
6 months30 June 2008 6 months30 June 2007
Revenues from ordinary (Up 11%) 2,220 2,000
activities
(Loss) from ordinary (Up 19%) (4,121) (3,474)
activities after tax
attributable to members
Net (Loss) for the period (Up 19%) (4,121) (3,474)
attributable to members
Dividends (distributions) Amountper security Franked amount per security
6 months ended 30 June 2008N/A - N/A �
6 months ended 30 June 2007N/A - N/A �
Record date for determining N/A N/A
entitlements to the dividend
Brief explanation necessary to enable the figures above to be understood:
For the 6 months ended 30 June 2008 the Company returned an after tax loss of $4.121 million (2007: $3.474 million).
During the period, the Company continued to advance its research and development program with the following results:
1. A pre-clinical study combining the Companies APA-01 product candidate and
statin atorvastatin (LiptorTM) demonstrated a statistical significant
reduction in serum lipids and inflammatory proteins involved in the
development of atheroscierosis.
2. The joint phase 2 human clinical trial with NestlNutrition to establish
the efficacy of Phosphagenics* Phospha E�in the management of metabolic
syndrome is advancing at five sites in Australia.
3. The completion, with favourable results, of a safety and irritation human
clinical trial in the U.S. for its lead dermatological product,
TPM/tretinoin (tretinoin is also known as retinoic acid).
4. An independent panel of food safety experts unanimously concluded that
Phosphagenics* patented Phospha E�is Generally Recognised As Safe (GRAS).
5. Ethics approval to commence treating patients with Type 1 diabetes in a
phase 2 clinical trial using its patented transdermal insulin delivery
system, TPM/insulin.
6. Positive results of a pre-clinical study using TPM, the Company*s
patented drug delivery system, for the targeted delivery of lidocaine,
demonstrating increased efficacy while restricting systemic exposure.
To ensure the Company has the ability to fund its research and development program, it raised equity capital of $8.773 million during
the period and as at 30 June 2008 funds in hand totalled $15.630 million (2007: $10.715 million); refer to the Cash Flow Statement. At 30
June 2008 Shareholders Equity totalled $138.421 million (2007: $133.761 million); refer to the Statement of Changes in Equity.
To examine in detail the information referred to above please visit the Company's website at: www.phosphagenics.com or contact the
Company by telephone +613 9605 5900 or by facsimile +613 9605 5999.
Net Tangible Assets Per Security
Net tangible assets per security (with the comparative figure for the previous corresponding period):
30 June 2008 30 June 2007
Net tangible assets per security 2.69 Cents 3.19 Cents
Directors' Report
The Directors of Phosphagenics Limited submit their report for the half-year ended 30 June 2008.
Directors
The names and particulars of the Directors of Phosphagenics Limited in office at any time during or since the end of the period:
Currently in Office
Associate Professor Andrew Lancelot Vizard (Aged 50 years) BVSc (Hons) MVPM
non executive Independent Director since July 1999 and Chairman since October 2000
Last re-elected May 2007
With a background in research and agricultural consultancy, Professor Vizard is the Senior Consultant with and former Director of the
Mackinnon Project at the University of Melbourne. This enterprise is recognized as a leader in delivering practical advice to farmer and
agribusiness on a wide range of agricultural and economic issues. Professor Vizard is the author of over 50 scientific papers.
Professor Vizard is currently a Non-Executive Director of Ridley Corporation Ltd and Animal Health Australia Ltd and is a Trustee of the
Australian Wool Education Trust. In addition, Professor Vizard has been a board member of a number of statutory scientific and commercial
organisations.
Professor Vizard is a member of the Company's Audit, Compliance and Corporate Governance Committee.
Harry Rosen (Aged 61 years) BA , LLB
Executive Director appointed to the Board in June 1999
appointed managing director december 2005
Last re-elected May 2004 (* As Managing Director Mr Rosen is not required to retire by rotation)
Mr Rosen is one of the founders of Betatene Limited and Denehurst Limited, two formerly ASX listed companies which commercialised
significant research and development. Betatene is the world's largest producer of natural beta carotene. After the purchase of Betatene
Limited by Henkel Corporation, Mr Rosen served as Vice President, Corporate Development. As a Vice President of Henkel Corporation, he
worked for a number of years in the U.S. in the nutrition and health care industries.
Mr Rosen has consulted to many technology companies assisting them with the commercialisation of new technologies. He has had
significant experience in the areas of seed capital raising, stock exchange listings, taxation and corporate law. Mr Rosen graduated from
the Australian National University (BA-Psychology) and Melbourne University (LLB).
Jonathan Lancelot Addison (Aged 55 years) BEc (Tas), ASIC, CFTP (Snr)
non executive Director since November 2002
Last re-elected May 2008
Mr Addison has over 30 years in the investment management industry, including wide experience in superannuation. Currently he is the
Investment Manager (formerly Fund Manager) of the Meat Industry Employee Superannuation Fund ("MIESF") whom he joined in June 1999 and where
he is responsible for the investment management of MIESF.
MIESF, a self-administered industry superannuation fund established in 1981 which operates nationally, currently holds 21,800,000 shares
in Phosphagenics Limited.
Prior to his appointment to MIESF, Mr Addison was a Director and Asset Consultant within the Corporate Finance section of
PricewaterhouseCoopers and in this role was responsible for establishing an investment consulting practice with clients ranging from
superannuation funds to insurance funds and funds managers. Prior to that, he was Manager Investment Consultant at Sedgwick Noble Lowndes.
Mr Addison also holds Non-Executive Directorships with Austcorp Capital Funds Management Limited, African Enterprise Limited, African
Enterprises New Zealand Limited, Hawksbridge Limited and Global Masters Fund Limited.
Mr Addison is the Chairman of the Company's Audit, Compliance and Corporate Governance Committee.
Professor John Mills (Aged 68 years) BS (HONS), MD, FACP, FRACP
Non-Executive Independent Director since March 2004
Last re-elected May 2007
Professor Mills has a long and distinguished career in medical research, clinical medicine and biomedical business. In addition to his
position as a Non-Executive Director of Phosphagenics, he is Executive Chairman of Cavidi AB, Executive Director of TissuePath Pty Ltd, a
Non-Executive Director of GBS Venture Partners Pty Ltd and, previously, a Non-Executive Director and Chairman of Amrad Corporation and
Managing Director of Narhex Life Sciences Limited. He holds professional appointments at Monash University and RMIT, and is a consulting
physician at the Alfred and Austin Hospitals in Melbourne.
Professor Mills has published over 200 scientific articles and has served as a consultant to the pharmaceutical industry and
governments, the World Health Organization and the United Nations.
Professor Mills is a member of the Company's Audit, Compliance and Corporate Governance Committee and is also a member of Phosphagenics
Limited's Scientific Advisory Board.
Dr Esra Ogru (aged 33 years) BSc (Hons) PhD
Executive Director Research & Development Since October 2005
Last re-elected May 2006
Dr Ogru is responsible for the co-ordination and management of pre-clinical, clinical and development research in Australia and
internationally. She achieves this through leadership of a team of experienced pharmaceutical scientists and chemists and strategic
collaborations.
In this role, Dr Ogru has developed commercial opportunities for both the Company's nutraceutical division and pharmaceutical
technologies, such as transdermal drug delivery and drug enhancement platforms for cancer, heart disease and chronic pain management.
Dr Ogru has many years experience in both the academic and commercial aspects of the industry and has publications in peer-reviewed
journals. Prior to joining Phosphagenics in 2001, Dr Ogru carried out significant research on obesity and diabetes. Additionally she has
considerable experience in the management and coordination of pre-clinical and clinical development of pharmaceutical products.
Michael Richard Dwyer Ashton (Aged 62 years) BPharm, MBA
Non-Executive Director Appointed to the board on 8 july 2008
Mr Ashton has more than 30 years' experience in the international pharmaceutical industry having held senior management positions with
Merck Inc. and Pfizer Inc., and executive board positions with Fauldings Inc. and SkyePharma Plc.
Mr Ashton was CEO and Director of SkyePharma Plc., initially he was responsible for the re-organisation of SkyePharma AG as a public
enterprise (1996 - 1998). In 1998 he took over responsibility of the operations of the SkyePharma Plc. group and re-organised the
international structure in Europe and the U.S. and the world wide Business Development Group.
Earlier Mr Ashton was Chairman, President and CEO of Faulding Inc., the U.S. subsidiary he opened for FH Faulding, Australia's largest
pharmaceutical company, and CEO of Purepac Inc. During that time, he supervised the start-up of David Bull in the U.S. and Canada and
oversaw restructuring of Purepac Inc., into a leader of the U.S. generic pharmaceutical industry.
In addition, Mr Ashton served with Pfizer International for 13 years in various roles, which included Director of Pharmaceutical
Business Development for Europe/Canada, Vice President of Pharmaceutical Development for Africa/Middle East, Pharmaceutical Business
Director of Nigeria and Group Product Manager for the International Division in New York.
Mr Ashton previously applied his pharmacist background to various management positions during six years at Merck Sharp and Dohme in
Sydney and the U.S.
Mr Ashton is a member of the Boards of Hikma Pharmaceuticals Plc, Proximagen Neuroscience Plc and Transition Therapeutics Inc.
Mr Ashton holds a Bachelor of Pharmacy degree from Sydney University and a Masters in Business Administration from Rutger University,
New Jersey, USA.
Former Directors:
Michael David Preston (Aged 62 years) MA, FCA
Non-Executive Director for the period November 2004 to 23 may 2008
Last re-elected May 2005
Mr Preston is a principal partner and founder of Alberdale & Co., an FSA-regulated corporate finance and business advisory firm based in
London with offices in the U.S. Alberdale specialises in media, technology and life sciences and manages a high technology venture capital
fund concentrating in life sciences. Mr Preston was previously a founder of Sterling Publishing Group Plc, a business publishing company
that was publicly listed in London in 1985. He was also a founder of the Broad Street Group Plc, a marketing services company that was
publicly listed in London in 1986 and eventually acquired by the French group BDDP. Mr Preston has extensive experience as a financial and
strategic adviser to many growing companies in the UK and U.S. He is a Fellow of the Institute of Chartered Accountants in England and Wales
and shares his time between New York and London.
As announced at the Annual General Meeting ("AGM") of shareholders in May 2008 Mr Preston, in view of the growing demands on his time
from his UK & U.S. business activities, did not seek re-election at the AGM held on 23 May 2008 and, as a consequence, automatically ceased
to be a director of the Company at the conclusion of that meeting.
Principal Activities
The principal activities of the Company are the production, sale and licensing of products for the nutraceutical and pharmaceutical
industries.
Results
For the 6 months ended 30 June 2008, the Company returned an after tax loss of $4.121 million (2007: $3.474 million). The principal
activity of Phosphagenics and its controlled entities for the half year period was the continued development of the Company's intellectual
property on which $3.705 million (2007: $2.817 million) was expended.
To ensure the Company has the ability to fund its research and development program, it raised equity capital of $8.773 million during
the period and as at 30 June 2008 funds in hand totalled $15.630 million (2007: $10.715 million); refer to the Cash Flow Statement. As at 30
June 2008 Shareholders Equity totalled $138.421 million (2007: $133.761 million); refer to the Statement of Changes in Equity.
Dividends
The Directors have not recommended the payment of any dividends and no dividends were declared, paid or reinvested in the period to 30
June 2008.
Review and results of operations
During the period, the Company continued to advance its research and development program with the following important results:
1. A pre-clinical study combining the Companies APA-01 product candidate and
statin atorvastatin (Lipitor*) demonstrated a statistical significant
reduction in serum lipids and inflammatory proteins involved in the
development of atherosclerosis.
2. The joint phase 2 human clinical trial with NestlNutrition to establish
the efficacy of Phosphagenics' Phospha E� in the management of metabolic
syndrome is advancing at five sites in Australia.
3. The completion, with favourable results, of a safety and irritation human
clinical trial in the U.S. for its lead dermatological product,
TPM/tretinoin (tretinoin is also known as retinoic acid).
4. An independent panel of food safety experts unanimously concluded that
Phosphagenics' patented Phospha E� is Generally Recognised As Safe
(GRAS).
5. Received ethics approval to commence treating patients with Type 1
diabetes in a phase 2 clinical trial using its patented transdermal
insulin delivery system, TPM/insulin.
6. Positive results of a pre-clinical study using TPM, the Company's
patented drug delivery system, for the targeted delivery of lidocaine,
demonstrating increased efficacy while restricting systemic exposure.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
During the period to 30 June 2008 there was no significant change in the state of affairs of the consolidated entity other than that
referred to in the half-year report or notes thereto.
SIGNIFICANT EVENTS AFTER BALANCE DATE
There has not been any matter or circumstance, other than that referred to in the half-year report and notes thereto, that has arisen
since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the consolidated
entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.
Likely Developments and Future Results
Disclosure of information regarding likely developments in the operations of the consolidated entity in future financial years and the
expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Accordingly this information
has not been disclosed in this report.
ROUNDING
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (unless stated otherwise) under
the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies.
REGISTERED OFFICE
Level 2, 90 William Street, Melbourne, Victoria 3000
Signed in accordance with a resolution of the Board of Directors:
Associate Professor Andrew Lancelot Vizard
Chairman and Independent Director
Dated this 28th day of August 2008
Auditor's Independence Declaration
Auditor's Independence Declaration to the Directors of Phosphagenics Limited
In relation to our review of the financial report of Phosphagenics Limited for the half-year ended 30 June 2008, to the best of my
knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any
applicable code of professional conduct.
Ernst & Young
Don Brumley
Partner
28 August 2008
Income Statement
for the half-year ended 30 June 2008
Consolidated
30 June 2008 30 June 2007
Notes $'000 $'000
Revenue
Sale of Goods 3a 446 92
Income from Government Grants 3a 457 335
Royalties 3a 539 860
Finance Revenue 3a 406 550
Total Revenue 1,848 1,837
Cost of Sales (160) (3)
Gross Profit 1,688 1,834
Rental Revenue 3a 49 43
Other income 3a 323 120
Employee and Directors benefits expenses 3b (1,078) (839)
Occupancy and communications expenses (298) (266)
Consulting and professional expenses (470) (734)
Administration expenses (223) (264)
Research expenses (3,705) (2,817)
Other expenses 3c (407) (551)
Loss before income tax (4,121) (3,474)
Income tax (expense)/credit 4 - -
Loss attributable to members of the parent (4,121) (3,474)
entity
Earnings per share for profit from
continuing operations attributable to the
ordinary equity holders of the parent
- basic earnings per share
(0.70 cents) (0.58 cents)
- diluted earnings per share
(0.70 cents) (0.58 cents)
Balance Sheet
as at 30 June 2008
Consolidated
As at As at
30 June 31 December
2008 2007
Notes $'000 $'000
ASSETS
Current Assets
Cash and cash equivalents 6 15,630 10,715
Trade and other receivables 1,000 1,577
Inventories 9 15
Prepayments 189 64
Total Current Assets 16,828 12,371
Non-current Assets
Intangible Assets 123,251 122,987
Goodwill 34,261 34,261
Property, plant and equipment 1,869 1,902
Total Non-current Assets 159,381 159,150
TOTAL ASSETS 176,209 171,521
LIABILITIES
Current Liabilities
Trade and other payables 615 818
Provisions 255 23
Total Current Liabilities 870 841
Non-Current Liabilities
Deferred tax liabilities 36,918 36,918
Total Non-current Liabilities 36,918 36,918
TOTAL LIABILITIES 37,788 37,759
NET ASSETS 138,421 133,762
EQUITY
Contributed Equity 11 170,316 161,544
Retained earnings (60,163) (50,042)
Reserves 28,268 28,260
Total Equity 138,421 133,762
Cash Flow Statement
for the half-year ended 30 June 2008
Consolidated
30 June 2008 30 June 2007
Notes $'000 $'000
Cash flows from operating activities
Receipts from customers and related 1,628 499
parties
Receipts of Government grants 457 42
Payments to suppliers and employees (6,099) (6,058)
Net cash flows from used in operating (4,014) (5,517)
activities
Cash flows from investing activities
Interest received 286 567
Purchase of property, plant and equipment (130) (108)
Net cash flows from investing activities 156 459
Cash flows from financing activities
Proceeds from share issues 8,773 6,935
Net cash flows from financing activities 8,773 6,935
Net increase in cash and cash equivalents 4,915 1,877
Cash and cash equivalents at beginning of 10,715 14,425
the period
Cash and cash equivalents at end of the 6 15,630 16,302
period
Statement of Changes in Equity
for the half-year ended 30 June 2008
Consolidated
Ordinary Shares Employee Benefits Revaluation Retained Losses Total
Reserve Reserve
$'000
$'000 $'000
$'000
$'000
Balance at
1 January 2008 161,543 448 27,812 (56,042) 133,761
Loss for the period * - - - (4,121) (4,121)
Employee equity settled - 8 - - 8
benefits
Issue of shares 8,773 - - - 8,773
Balance at
30 June 2008 170,316 456 27,812 (60,163) 138,421
Balance at
1 January 2007 154,608 208 27,812 (47,154) 135,474
Loss for the period * - - - (3,474) (3,474)
Employee equity settled - 156 - - 156
benefits
Issue of shares 6,935 - - - 6,935
Balance at
30 June 2007 161,543 364 27,812 (50,628) 139,091
* Balances represent the total recognised income and expense for the period
Condensed Notes to the Financial Statements
for the half-year ended 30 June 2008
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Basis of preparation
This general purpose condensed financial report for the half year ended
30 June 2008 has been prepared in accordance with AASB 134 Interim
Financial Reporting and the Corporations Act, 2001.
The half-year financial report does not include all notes of the type
normally included within the annual financial report and therefore cannot
be expected to provide as full an understanding of the financial
performance, financial position and financing and investing activities of
the entity as the full financial report.
It is recommended that the half-year financial report be read in
conjunction with the annual report for the year ended 31 December 2007
and be considered together with any public announcements made by
Phosphagenics Limited during the half-year ended 30 June 2008 in
accordance with the continuous disclosure obligations of the ASX Listing
rules.
Changes in Accounting Policy
Since 1 January 2008 The Group has adopted the following Standards and
Interpretations mandatory for annual periods beginning on or after 1
January 2008. Adoption of these Standards and Interpretations did not
have any effect on the financial position or performance of the Group.
- AASB 2005-10 Amendments to Australian Accounting Standards (AASB
132,101,114,117,133,139,1,4,1023 and 1038)
Interpretation 8 Scope of AASB 2 Share-based payments
-
Interpretation 9 Reassessment of Embedded Derivatives
-
Interpretation 10 Interim Financial Reporting
-
2. SEGMENT REPORTING
The Group comprises the following business segments:
Nutraceuticals - licensing of dietary supplements, production and sale of
products for the personal care industry.
Pharmaceuticals - licensing of pharmaceuticals and transdermal
technologies.
Business Segments
The following table presents revenue and profit information regarding business segments for the half-year periods ended 30 June 2008 and
30 June 2007.
Continuing Operations Total Operations
Nutraceuticals Pharmaceuticals Unallocated Consolidated
$'000 $'000 $'000 $'000
Half-year ended 30 June 2008
Segment revenue 1,308 457 455 2,220
Segment result 553 (3,262) (1,412) (4,121)
Half-year ended 30 June 2007
Segment revenue 1,069 335 596 2,000
Segment result 970 (2,682) (1,762) (3,474)
3. REVENUES AND EXPENSES
Consolidated
30 June 2008 30 June 2007
$'000 $'000
a) Revenue & Income
Sales revenue 446 92
Income from Commercial Ready grant 457 335
Royalties 539 860
1,442 1,287
Interest revenue 406 550
Total finance revenue 406 550
Rental Revenue 49 43
Other income 323 120
Total revenue and income 2,220 2,000
b) Salaries and employee benefits expense
Salaries and wages (966) (589)
Superannuation (104) (94)
Employee equity settled benefits (8) (156)
Total salaries and employee benefits expense (1,078) (839)
c) Other expenses
Other operating expenses (407) (551)
Total other expenses (407) (551)
d) Seasonality of Operations
Phosphagenics Limited operations are not affected by seasonality
* INCOME TAX
The major components of income tax expense for the half-year ended 30 June 2008 and 30 June 2007 are:
Consolidated
30 June 2008 30 June 2007
$'000 $'000
Consolidated Income Statement
Current income tax
Current income tax credit/(expense) - -
Adjustments in respect of current income tax of - -
previous years
Deferred income tax
Relating to origination and reversal of temporary - -
differences
Income tax reported in the consolidated income - -
statement
5. DIVIDENDS PAID AND PROPOSED
There were no dividends declared or paid during the half year ended 30 June 2008. (2007: NIL)
6. CASH AND CASH EQUIVALENTS
Consolidated
30 June 2008 31 December 2007
$'000 $'000
For the purposes of the half-year condensed
cash flow statement, cash and cash
equivalents are comprised of the following:
Cash at bank and in hand 582 1,715
Short-term deposits 15,048 9,000
15,630 10,715
Total Cash and Cash Equivalents 15,630 10,715
7. SHARE BASED PAYMENTS
During the six months ended 30 June 2008, no share options were granted under the Employee Share Option Plan (2007: 900,000). The
following table lists the inputs to the model used for the half-year ended 30 June 2008.
Consolidated
30 June 2008 30 June 2007
Dividend yield (%) - -
Expected volatility (%) - 43.00
Risk-free interest rate (%) - 6.08
Early exercise multiple / expected life - 5.00
Contractual life (years) - 5.00
8. INVENTORIES
There were no inventory write-downs recognised as an expense during the half-year ended 30 June 2008 (2007: NIL).
9. PROPERTY, PLANT & EQUIPMENT
Acquisitions and disposals
During the half-year ended 30 June 2008, the Group acquired assets with a cost of $142,625 (2007: $568,063).
10. COMMITMENTS AND CONTINGENCIES
Lease Commitments
At 30 June 2008 the Group has commitments of $154,920 (2007: $221,539) relating to non-cancellable operating leases over the office and
production facilities, which expire in 2008 and 2009.
11. CONTRIBUTED EQUITY
Consolidated
30 June 2008 31 December 2007
$'000 $'000
Issued and paid up capital
Ordinary shares fully paid (i) 170,316 161,544
(i) Ordinary shares
Fully paid ordinary shares carry one vote per share and carry the right to receive
dividends
Movement in ordinary shares on (No. '000's) ($'000's)
issue
At 1 January 2008 603,440 161,544
Issue of shares 60,102 9,015
Transaction costs on share - (243)
issue
At 30 June 2008 663,542 170,316
At 1 January 2007 580,105 154,608
Issue of shares 23,333 7,001
Exercise of options 2 -
Transaction costs on share - (65)
issue
At 31 December 2007 603,440 161,544
(ii) Share options
There were no options - -
exercised during the period.
12. EVENTS AFTER THE BALANCE SHEET DATE
No events occurred between the balance sheet date and the date when these financial statements were authorised for issue.
Directors' Declaration
In accordance with a resolution of the directors of Phosphagenics Limited, we state that:
In the opinion of the directors:
(a) the financial statements and notes of the consolidated entity are in accordance
with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity's
financial position as at 30 June 2008 and of its performance
for the year ended on that date; and
(ii) complying with Accounting Standards AASB 134: Interim
Financial Reporting and Corporations Regulations 2001.
(b) there are reasonable grounds to believe that the company will be able to pay its
debts as and when they become due and payable.
On behalf of the Board
Melbourne, 28th August 2008
Audit Review
To the members of Phosphagenics Limited
Report on the Half-Year Financial Report
We have reviewed the accompanying half year financial report of Phosphagenics Limited, which comprises the balance sheet as at 30 June
2008, and the income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, other selected
explanatory notes and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the
half-year end.
Directors' Responsibility for the Half-Year Financial Report
The directors of the Company are responsible for the preparation and fair presentation of the half-year financial report in accordance
with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This
responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the half-year
financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
Auditor's Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in
accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor
of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe
that the financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the consolidated
entity's financial position as at 30 June 2008 and its performance for the half year ended on that date; and complying with Accounting
Standards AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Phosphagenics Limited and the
entities it controlled during the half-year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the
annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance
with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We have given to the
directors of the company a written Auditor's Independence Declaration, a copy of which is included in the Directors' Report.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial
report of Phosphagenics Limited is not in accordance with the Corporation Act 2001, including:
(i) giving a true and fair view of the consolidated entity's financial
position as at 30 June 2008 and of its performance for the half-year
ended on that date; and
(ii) complying with Accounting Standard AASB 134 Interim Financial Reporting
and the Corporations Regulations 2001.
Ernst & Young
Don Brumley
Partner
Melbourne
28 August 2008
Section 4: Audit Alert
As at 30 June 2008 and as the date of this Report there are no matters of dispute or qualification or likely dispute or qualification.
- Ends -
Collins Stewart Europe Limited (Nomad) Hugh Field Tel: +44 (0)20 7523 8325
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