The information contained
within this announcement is deemed by the Company to constitute
inside information as stipulated under the Market Abuse (amendment)
(EU Exit) Regulations 2019/310 ("MAR"). With the publication of
this announcement via a Regulatory Information Service, this inside
information is now considered to be in the public
domain.
5 September 2024
Fusion Antibodies
plc
("Fusion"
or the "Company")
Final
results
Fusion Antibodies plc (AIM: FAB),
specialists in pre-clinical antibody discovery, engineering and
supply for both therapeutic drug and diagnostic applications,
announces its final results for the year ended 31
March 2024.
Commercial
and operational highlights
·
Audited revenues for FY24 of £1.14m (FY23: £2.90m)
·
Fundraise announced in February 2024, raising £1.37m (before
expenses) for general working capital and investment into
commercial activities
·
Significant increase in sales pipeline opportunities during
the second half of FY24, with an orderbook at 31 March 2024 of
£0.75m, representing 65 per cent. of total FY24 audited
revenues
·
Cash position as at 31 March 2024 of £1.2m (31 March 2023:
£0.2m)
Post period
end highlights
·
Increased activity in the second half of FY24,
including:
o the entry
into a collaboration agreement with the National Cancer Institute
for the use of OptiMAL®;
o a first
purchase order received under a master services agreement ("MSA")
with a leading diagnostics company; and
o a follow-on
project received with a US based biotechnology client.
Adrian
Kinkaid, CEO of Fusion Antibodies commented:
"We have had a largely
challenging FY24, with the industry experiencing
significant headwinds especially in the venture capital funded
biotech sector. A number of clients had consequently delayed
initiating their projects with us as a result of this. Having said
that, we are starting to see an improvement and we did
complete a successful fundraise for further investment into the
business in February this year.
"Since the
year end, we have increased commercial activity and had more
success, with a number of new agreements signed. The OptiMAL® programme is continuing to go well, and we are
seeing more traction in the field as the year
progresses.
"We remain positive about the future of the Company and are,
as always, thankful to our dedicated shareholders for their
constant support. As we continue to meet our objectives
on our strategy toward breakeven and profitability, we have no
plans to raise cash through an equity placement."
Investor briefing
Fusion will host an
online live presentation open to all investors on Thursday,
12 September 2024 at 3pm BST, delivered by Dr Adrian Kinkaid, CEO
and Stephen Smyth, CFO. The Company is committed to providing an
opportunity for all existing and potential investors to hear
directly from management on its results whilst additionally
providing an update on the business and current trading.
The presentation will be hosted
through the digital platform Investor Meet Company.
Investors can sign up to Investor
Meet Company for free and add to meet Fusion Antibodies plc via the
following link: https://www.investormeetcompany.com/fusion-antibodies-plc/register-investor
For those investors who have
already registered and added to meet the Company, they will
automatically be invited. Questions can be submitted pre-event via
your IMC dashboard or in real time during the presentation, via the
"Ask a Question" function. Whilst the Company may not be in a
position to answer every question it receives, it will address the
most prominent within the confines of information already disclosed
to the market through regulatory notifications. A recording of the
presentation, a PDF of the slides used, and responses to the
Q&A session will be available on the Investor Meet Company
platform afterwards.
Enquiries:
|
Fusion
Antibodies plc
|
www.fusionantibodies.com
|
|
Adrian Kinkaid, Chief Executive
Officer
Stephen Smyth, Chief Financial
Officer
|
Via Walbrook
PR
|
|
|
|
|
Fusion
Antibodies interactive investor hub
|
https://investorhub.fusionantibodies.com/
|
|
|
|
|
Allenby
Capital Limited
|
Tel: +44 (0) 20 3328
5656
|
|
James Reeve/Vivek Bhardwaj (Corporate
Finance)
Tony Quirke/Joscelin Pinnington (Sales and
Corporate Broking)
|
|
|
|
|
|
|
|
|
Shard Capital
Partners LLP
|
|
|
Damon Heath (Joint Broker)
|
Tel: +44 (0) 207 186
9952
|
|
|
|
|
|
|
|
Walbrook
PR
|
Tel:
+44 (0)20 7933 8780 or fusion@walbrookpr.com
|
|
Anna Dunphy
|
Mob:
+44 (0)7876 741 001
|
|
|
| |
About Fusion
Antibodies plc
Fusion is a Belfast based contract research
organisation ("CRO") providing a range of antibody engineering
services for the development of antibodies for both therapeutic
drug and diagnostic applications.
The Company's ordinary shares were admitted to
trading on AIM on 18 December 2017. Fusion provides a broad range
of services in antibody generation, development, production,
characterisation and optimisation. These services include antigen
expression, antibody production, purification and sequencing,
antibody humanisation using Fusion's proprietary
CDRx TM platform and the production of
antibody generating stable cell lines to provide material for use
in clinical trials. Since 2012, the Company has successfully
sequenced and expressed over 250 antibodies and successfully
completed over 200 humanisation projects and has an international,
blue-chip client base, which has included eight of the top 10
global pharmaceutical companies by revenue.
The Company was established in 2001 as a spin
out from Queen's University Belfast. The Company's mission is to
enable pharmaceutical and diagnostic companies to develop
innovative products in a timely and cost-effective manner for the
benefit of the global healthcare industry. Fusion Antibodies
provides a broad range of services in antibody generation,
development, production, characterisation and
optimisation.
Fusion Antibodies growth strategy is based on
combining the latest technological advances with cutting edge
science to deliver new platforms that will enable Pharma and
Biotech companies get to the clinic faster, with the optimal drug
candidate and ultimately speed up the drug development
process.
The global monoclonal antibody
therapeutics market was valued at $186 billion in 2021 and is
forecast to surpass $445 billion in 2028, an increase at a CAGR of
13.2 per cent. for the period 2022 to 2028. Approximately 150
monoclonal antibody therapies are approved and marketed globally as
of June 2022 with the top four antibody drugs each having sales of
more than $3 bn in 2021.
Chairman's
Statement
The financial year ended 31 March
2024 ("FY24") started the way the previous financial year had
ended, in that the markets in which we operate remained muted, and
it was commercially challenging for the Company. However, this
challenge was met head on by the board of directors of the Company
(the "Board" or the "Directors"), and in particular, through
determination and a belief that Fusion has world class skills and
expertise to create value for our shareholders, the turnaround
process began. In FY24, costs were cut, headcount reduced, Board
salaries deferred and a new strategy was developed. With
venture capital and other investments for our customers'
early-stage human therapeutic pipelines still slow, creative
solutions and antibody related new market opportunities were
explored. Fusion responded both by introducing our existing
services into new markets as well as introducing new services into
our current markets.
New markets
Antibodies play an important part
in most of our lives at some point. Obviously internally your
immune system is there to combat disease and keep you healthy. But
antibodies are used in many different healthcare related
applications, and Fusion's skills and expertise are applicable to
all of them.
Human antibody therapeutics was
our sole focus and will still be the main source of revenue in the
near term but expanding into the smaller but growing veterinary
medicine (VetMed) therapeutics market is an exciting new
opportunity. The 30-year gap between the development of
antibodies for humans and those for animals is partly because while
some other human medications can be easily adopted to use in
animals, antibody therapy is species specific. However, the
genetic differences between species is now better understood and,
in the same way as we gained a leading position in humanisation,
Fusion has the capability for producing dog and cat specific
antibodies, through processes known as caninisation and
felinisation. There is a growing need for these therapies in
veterinary medicine. For example, in the USA alone there are 6
million cases of cancer1 diagnosed each year in dogs,
with a similar number in cats, and one in four American dogs is
diagnosed with some form of arthritis1. In addition,
allergies, dermatological conditions, renal diseases, cardiac
diseases, and cancer are five key disease categories for research
into new animal specific antibody therapies2.
The global monoclonal
antibodies in veterinary health market size was estimated
at USD 700m million in 2022 and is expected to grow at a
compound annual growth rate (CAGR) of 17.1% from 2023 to
20303. Amongst other developments, in 2016, the
USDA3 approved a monoclonal antibody to treat allergic
dermatitis and atopic dermatitis in dogs and, in January 2022, the
FDA granted its first approval for an antibody for animals to
control pain associated with osteoarthritis in
cats2.
We believe that this new market
represents a strong opportunity in a strongly growing sector where
most of our current services, such as OptiPhageTM,
Rational Affinity Maturation Platform ("RAMP"), affinity
maturation, transient expression and cell
line development ("CLD") are
applicable.
1
Antibody
Therapeutics - PetMedix
2
Monoclonal antibodies show promise as new therapy for veterinary
patients | American Veterinary Medical Association
(avma.org)
3 The U.S. Department of Agriculture (USDA) approves antibodies
that target the immune system, while the FDA approves antibodies
that have other targets in VetMed
4
Monoclonal Antibodies In Veterinary Health Market Report, 2030
(grandviewresearch.com)
At some point in our lives, most
of us will have a blood or urine sample that is sent off to a
laboratory to be tested and the test will involve antibodies in one
form or another. Over the counter pregnancy tests are antibody
based and we are now all familiar with the lateral flow tests for
Covid-19, with the red coloured lines that appear being antibody
driven. With the diagnostic market becoming more competitive,
the quality, specificity and reliability of the antibody is key to
the success of that test. Diagnostic companies from small to
large are starting to look at ways of improving their tests through
the manipulation of their antibodies to which the skills that
Fusion have developed throughout the years are applicable. In
addition to improving the antibody, diagnostic companies are also
looking to improve continuity of supply as many of the tests will
be based on polyclonal antibodies (antibodies taken directly from
blood as opposed to a cell culture) which have a finite supply.
While not simple, the possibility to convert these polyclonal
antibodies to a secure cell structure-based supply exists,
presenting Fusion with a further market opportunity. Additionally,
many antibodies used in diagnostics and therapeutics start their
life in pure research laboratories and companies that supply these
products globally represent a further adjacent market for Fusion to
sell into.
The Board of Fusion believe that
this diversification strategy into the adjacent markets of VetMed,
diagnostics, and research, together with the recovering economic
climate, provides us with confidence for growth in the current year
and the prospects for the business in the future.
Business
performance
The poor global market conditions seen at the
end of the financial year ended 31 March 2023 ("FY23") continued
into FY24. FY24 showed a significant downturn in revenue from the
previous year at £1.14m (FY23: £2.9m). The headwinds of inflation,
higher interest rates, weak global growth and continued global
political instability have kept the global markets relatively quiet
throughout 2023 resulting in weak market investment conditions for
new drug discovery and development programs, particularly in SME's
and small earlier stage companies, which represented our primary
customer type during the first half of the financial year and
directly impacted the Company's revenues for the year. Most
notably was a significant downturn in venture capital ("VC")
investment into biotechnology companies, including therapeutic
antibody development programmes. As an example, in the USA VC Life
Healthcare and Life Sciences secured US$15.2 billion in fund
closures in 2023, down 52% from a high of US$28.9 billion in
20215.
Recognising the economic challenges at the
beginning of the financial year, the Company took decisive action
to re-structure the business and significantly cut the cost base
and implemented circa. £1.6m in restructuring savings, including a
significant reduction in headcount. Although business conditions
are improving, the Board will continue to closely monitor the
Company's cost base and seek to identify additional cost savings
over time. Alongside the restructuring, a new commercial
strategy was implemented, targeting the adjacent antibody-based
Diagnostic, Veterinary Medicine and Research Antibody markets, with
this diversification opening up more sales opportunities as well as
making the sales pipeline more resilient with less exposure to
individual sectors.
Whilst controlling costs tightly,
we still believe that to maintain our scientific cutting edge and
to compete in the global marketplace, we need to stay at the front
of technology. We continue to invest in R&D, and particularly
the OptiMAL® library project,
with investment in R&D of £0.3m for FY24 (FY23: £0.8m). The
downturn in revenues, together with the restructuring savings,
generated a loss for FY24 of £2.3m (FY23: loss £2.9m). It is worth
noting that whilst the Company continues to retain an interest of
longer-term future success milestone or royalty payments in many of
our client projects, there were no such payments in
FY24.
The Board would like to thank our shareholders
for their continued support and confidence in the Company and in
the growth opportunity in front of us. In particular in supporting
us through two rounds of funding in FY24, the first of which was to
supply working capital to allow us to re-structure the Company and
develop a new more diversified strategy. During H1 FY24, the
pipeline grew significantly as we entered into the adjacent markets
of Diagnostics, VetMed and research antibodies with the second
round supporting the further implementation of the strategy and in
particular the expansion of the commercial team.
5 Pitchbook's Healthcare Fund Performance Update, as reported
by Tracy Alper from Marks Sattin.
Specifically, in June 2023 the Company
successfully completed a £1.67m (before expenses) fundraise through
the placing of new ordinary shares of 4p each in the
capital of the Company ("Ordinary Share") at a price of 5 pence per
new Ordinary Share (the "Issue Price"), to provide additional
working capital. £1.56 million was raised
through a placing, £0.14m through a subscription by certain of the
directors of the Company and their closely associated persons (as
defined in UK MAR) and £0.11m through a Retail Offer
on the REX Platform, which resulted in the issue of a total of
33,438,768 new Ordinary Shares. The Issue Price
represented a discount of approximately 84 per cent. to the closing
mid-market price of an Ordinary Share on 18 May 2023.
With a new commercial strategy in place, and a
strengthened pipeline, the Company successfully raised an
additional £1,375,000 (before expenses) in March 2024 through a
placing of 34,375,000 new Ordinary shares
at a price of 4 pence. In this regard, I would like to thank our
shareholders, both new and old, who supported this round, in what
was a challenging economic environment. 2024 has so far been one of
the quietest years for investment on AIM since 2002 and yet the
issue price of the second placing was at only a small discount (~
5.88%) to the closing mid-market price of an Ordinary
Share in the Company on 13 February 2024.
Allenby Capital Limited ("Allenby
Capital") acted as broker in connection with the placing, with
Shard Capital Partners LLP acting as sub-placing agent to Allenby
Capital and following the placing the Company appointed Shard as
joint broker to Fusion. We look forward to continuing to work with
both brokers as we continue our recovery journey.
New
Services
The antibody drug discovery industry and
indeed other markets are gradually moving away from the use of
antibodies, something that as a Company we recognise and support.
Whilst animals can still be used on occasions, our R&D and new
service offerings are very much aligned to the 'Three Rs'
principle: Replacement, Reduction and Refinement*. This is the one
of the competitive edges that we offer utilising our core discovery
engines, OptiMAL®, OptiPhageTM, and
AI/ML-AbTM. The first two
are cell-based systems, while the latter is a method of designing
panels of antibodies in-silico, using software algorithms. These
discovery engines all work as the beginning of a customer's journey
with Fusion, with the potential to move onto the rest of our
services all the way through to CLD, where the final antibody of
choice is ready to be transferred externally into the production
stage.
* Three Rs
principle
·
Replacement refers to methods which avoid or replace the use of
animals
·
Reduction refers to any strategy that will result in fewer animals
being used
·
Refinement refers to the modification of husbandry or procedures to
enhance the welfare of an animal used in science
OptiMAL® is our cell-based mammalian display technology
screening library in development for the direct identification of
intact fully human antibodies against biomarkers and other targets
of interest. It will be very much positioned as a discovery
engine for human therapeutic antibodies and when fully optimised
should reduce the time required to identify a target specific
antibody or panel of antibodies and simplify the process of
reaching that goal. The Company signed a
collaboration agreement with the National Cancer Institute ("NCI")
for access to OptiMAL® over a two-year period in
the discovery of novel antibodies against targets selected by NCI,
which is the first time the library has been in external hands for
independent validation.
Whereas
OptiMAL® expresses whole antibodies, our
new OptiPhageTM
library is a phage display based version where smaller antibody
fragments, the antibody's specific binding components, are
expressed and can be screened, at which point the DNA sequences of
these fragments can be used to produce a full antibody for
downstream development and further optimisation. It may also
be the platform of choice for those wanting antibody fragments as
their end-product. As a new service available since March 2024, we
believe that the ability to provide OptiPhageTM at a
lower price point allows the Company to protect the premium pricing
of the OptiMAL® programme and to
open it up to other markets who may have greater budgetary
constraints. Our novel DNA library of antibody sequences from
OptiMAL® can be used as the
input design, as can other inputs for non-human
applications.
In conjunction with our partners,
the AI/ML-AbTM platforms
provide a method of designing panels of antibodies in-silico, with the
AI/ML-AbTM algorithms
typically producing small libraries of sequences which are an
excellent match with our Mammalian Display platform, which can
transform these designs into real protein molecules for screening
and final selection. While customer uptake to date has been slow,
we believe that this remains an important part of our broad mix of
discovery services that we offer which gives the client the choice
to select which one suits them the best from their timescales,
development plans and budgets.
Board and
Employees
August 2023 saw the appointment of Stephen
Smyth as our interim Chief Financial Officer
(CFO) and Company Secretary. Stephen has over 25
years' experience working in audit & accounting, finance, and
operations management within both the public accounting and
commercial sectors and we are delighted that he could join us. In
addition, we have outsourced some other financial management
accounting activities enabling the Company to streamline its
financial position, following which the Company intends to identify
a more permanent solution.
Prior to this we
announced that Mr James Fair, our former CFO, was stepping down
from the Board and that we would like to thank Mr James Fair for
his significant contribution to the Company over the past 14 years
and wish him well in his future endeavours. We are also grateful to
Ms Frances Johnston who temporarily stepped in as the Company
Secretary until Stephen Smyth's appointment.
One further change to the Board
during the financial year was in relation to Sonya Ferguson, who stepped down in September 2023 as a
Non-executive Director to move into another business opportunity.
Sonya was with the Company for seven years and was the Chair of the Company's Remuneration
Committee. On behalf of the Board, I would
like to thank her for all that she had done for the Company, for
her valuable insights and contributions and her balanced
views. We wish her well in her new venture.
During the first half of FY24, the
Executive team had to make some decisive and tough decisions as
part of the restructuring process, something for which the Board is
very grateful. In this respect, a big thank you to all the
staff who stuck with us through the turbulent times and worked in
the difficult transitionary environment with professionalism and
integrity and their strength and belief in the Company has allowed
us to ride the storm and to turn the Company around. With a
significantly reduced headcount, staff have received extensive
cross training to ensure that the Company can still offer its full
range of services. A true team effort.
As part of their commitment and
belief in the Company, in order to
minimise the outgoing costs until the Company had secured the funds
from the second fundraise in March 2024, the executive directors,
Adrian Kinkaid and Richard Buick, deferred 20% of their salary and
then only took half as salary with the remainder in new Ordinary
Shares at the issue price of 4 pence. Likewise, the Company's
non-executive directors deferred their fees for 10 months and were
subsequently remunerated part in salary and part in new Ordinary
Shares, a structure that will continue until the end of
FY25.
Corporate
governance
The long-term success of the business and
delivery on strategy depends on good corporate governance. The
Company complies with the Quoted Companies Alliance Corporate
Governance Code as explained more fully in the Governance
Report.
Post year end and outlook
As reported, the full year results for FY24
are lower than anticipated, but the restructuring, fundraising and
market diversification strategy has given the Company a new
foundation on which to grow. Trading has improved throughout the
year with February and March 2024 being the Company's highest
earning months of FY24. There has been a significant increase
in sales pipeline opportunities, which are now around three times
greater than they were at the beginning of the financial year, and
include new Diagnostic, VetMed and Research potential customers. In
addition to the increased sale pipeline our R&D
OptiMAL® library project hit a major milestone in H2
FY24 and signed a collaboration agreement with the NCI for the use of OptiMAL® in the discovery of
novel antibodies against targets selected by NCI post
year.
There was an increased commercial activity and
momentum in the fourth quarter of FY24 and into the beginning of
FY25, including:
·
receipt of a first purchase order under a master services
agreement ("MSA") with a leading
diagnostics company in FY24 - with further orders having been
received in FY25 under the MSA from the customer;
·
securing an estimated $650,000 follow-on project under a
collaborative research and development agreement with a US based
biotechnology company that Fusion started working with in 2021;
and
·
A commercial contract to develop a bespoke
OptiPhageTM library for a
non-human antibody species with a leading global provider of
antibodies for use in research and diagnostics.
In July 2024, we announced that our unaudited
revenues for the first quarter ("Q1") of FY25 was c. £522k (Q1
FY24: £241k and FY24: £1.14m) with a strong sales pipeline. The
order book includes a number of multi-stage projects for its
clients and, subject to these projects progressing in line with
expectations, revenue is expected to be recognised for all projects
in the current order book in the current financial year.
The Company continues to carefully control its
cash and, as set out at the time of the fundraise in February 2024.
Based on updated internal estimates the Company now has a cash
runway into the second half of FY26. The Company continues to seek
to achieve cash neutrality during that timeframe.
The Board of Fusion believe that this momentum
and developments provide strong evidence that the Company's
diversification strategy, together with the recovering economic
climate, provide confidence for growth in FY25.
Simon
Douglas
Chairman
4 September 2024
CEO's report
and operations review
Fusion emerges from a difficult and
challenging FY24 as a much improved, more capable and more
efficient business with great prospects for growth in revenues and
value creation courtesy of our proprietary technologies.
During FY24, the Company was presented with
several commercial and financial challenges which we met robustly
and with determination. Most notable was a continued downturn in
the global market. Through 2023, many of our clients experienced
challenges in securing investment to support their research and
development activities. This was especially so for the smaller
biotechnology companies reliant on venture capital funding for
novel therapeutic discovery projects. This represented a
significant proportion of our pre-existing client base and, with
their delayed plans for early-stage development projects had
significant knock-on effects on revenues for the Company.
Remedial action was speedily taken and effectively realised. A
defined programme of cost saving measures was put in place at the
start of FY24 which included significant restructuring, reducing
various costs including a 38% reduction in headcount. At the same
time, plans to extend and diversify the client base were
implemented to address the adjacent and substantial Diagnostic,
Veterinary Medicine and Research Antibody markets. The positioning
of the Company's offerings were adjusted to improve efficiency and
have more impact with this diversification making the sales
pipeline more resilient with less exposure to individual sectors
and increasing the overall addressable market
size.
In particular, we increased our
efforts in targeting the diagnostics industry, which has been
enjoying an unprecedented level of awareness especially through the
Covid-19 related antibody enabled lateral flow devices and related
cash inflows. In the latter part of the year this resulted in
several contract wins for Fusion with both small and large
diagnostics organizations, the latter exemplified by the Master
Service Agreement announced on 14th February 2024. The
process of discovering and developing antibodies for diagnostics
applications is very similar to that for therapeutics and fits well
with our preferred business model whereby we can take
responsibility for the process from as early as antigen design for
the nominated target through to supply of antibodies. As previously
stated for therapeutics, this fully integrated approach allows us
to derive more revenue per project by assuming more responsibility
for more of the research programme. It also positions the business
to better exploit our emerging platforms for antibody discovery,
our "Discovery Engines", which we continue to develop making best
use of the different component technologies from the
OptiMAL® research
project.
Similarly for the Veterinary
Medicine market, which has an estimated global value of $46.5bn and
a forecasted compound annual growth rate of 8.3% from 2024 to 2030
[Veterinary
Medicine Market Size, Share, Growth Report 2030
(grandviewresearch.com)], the Company
identified several potential partners and projects. The requirement
for making antibodies suitable for use in companion animals such as
dogs and cats known as caninisation and felinisation respectively
is very similar in nature to the humanisation processes for which
Fusion is an established world leader. The Company is therefore
continuing to exploit this growth market and increasing its sales
and marketing efforts in the area building awareness with this
specialist client base.
The initial objective for the
research project was to create OptiMAL®, a groundbreaking and industry leading
platform for the discovery of human antibodies through a highly
diverse library of DNA sequences expressed as fully intact
antibodies, or IgG molecules, expressed on the surface of mammalian
cells. This has now been largely achieved and whilst in
beta-testing stage we were delighted to announce in November 2023,
a 2-year agreement with the NCI, part of the National Institutes of
Health in the USA, to validate OptiMAL® screening against a small number of
targets in the NCI's own laboratories. This will validate not only
the technology but also the ability to transfer it to other
organizations and so lay the path for potential licensing
agreements with, for example, big pharma and major biotechnology
companies. Furthermore, the significant prestige and kudos
associated with NCI make them an ideal partner for this process and
an organization with which we seek to strengthen our
connections.
Two further discovery platforms:
OptiphageTM and AI/ML-AbTM have also been
launched off the back of the OptiMAL® research programme.
OptiphageTM utilises a library based on the same
principles as OptiMAL®, but in
a more industry standard phage-display format, whilst the Mammalian
Display element of OptiMAL® can be combined with algorithms for the
de novo design of novel
antibodies from various artificial intelligence (AI) and Machine
Learning (ML) technologies which continue to generate interest and
excitement in the field. We were very pleased to launch
AI/ML-AbTM in August 2023 with an almost immediate
contract win. OptiphageTM also attracted significant
client attention even before launching in April 2024. This was
achieved through a contract with an early adopter seeking a
non-animal-based solution to generating non-human antibodies
primarily for research and diagnostic applications as announced on
15th April 2024. The availability of these diverse and
complementary proprietary "Discovery Engines", which can be
deployed individually or in concert, also enables us to provide a
de-risked approach to antibody discovery further benefiting our
clients and strengthening Fusion's position as the partner of
choice.
A summary of the antibody
"Discovery Engines" available to Fusion and its clients.
At Fusion, our aim is to develop a
range of services that gives our clients choice and a range of
solutions best suited to the biological needs of their targets and
applications. We understand that
'one size' does not fit all and have therefore broadened our
service menu to give the customer the best chance of meeting their
technical objectives with the least risk. We will continue to
develop further solutions to enhance the competitive advantages for
Fusion and for our clients.
The Company secured additional
investment in June 2023, raising just
under £1.7 million (before expenses) and a
further £1.37 million in March 2024 primarily to fund additional
commercial activities addressing the additional market sectors of
diagnostics and veterinary medicine. Thanks to the continued
support of our shareholders, we can move forward with establishing
our presence in these adjacent markets and maintaining investment
into our new discovery services.
Business Review
The Company's revenue in FY24 fell
by 61% vs FY23 to £1.14m due to the macroeconomic headwinds.
By 30 June 2024, orders had been received amounting to some £0.75m
forming the basis for revenue recognisable in FY25 on which we are
pleased to have continued to build upon. This is a significant
improvement on the position of the prior year and provides positive
indications that the business is recovering.
The Directors believe that the
addressable market for the Company's existing 'Fee for Service'
revenue model is sufficiently large to enable the business to
achievable profitability, but that is not the limit to the
potential value creation the Company represents. We seek to enter
into collaborative agreements which enable Fusion to share in the
downstream value of the deliverables of our services and share in
their commercial success through milestone payments and royalties.
This strategy will further enable the Company to unlock the
intrinsic value that our proprietary service platforms provide to
our clients and generate additional shareholder value.
AI/ML-AbTM, OptiphageTM and
OptiMAL® represent key
proprietary differentiators and drivers of growth for the business
which will enable the Company to access a sizeable addressable
market generating significant shareholder value. Furthermore, they
underpin our ability to secure value generating milestone and
royalty agreements.
The Company ended the year with
£1.2m of cash and cash equivalents, having used £2m of cash in
operations during the year, invested £0.1m in property, plant and
equipment and £0.1m servicing asset-based borrowings. As previously
mentioned, in June 2023 and in March 2024 the Company issued equity
for combined net proceeds of £2.7m which places Fusion in a good
position to continue its sales and marketing activities and
progress the development of new discovery platforms and services.
Despite FY24 having been a commercially challenging year, the
Company took the hard decisions, made the right choices and has
survived. As a result, the Company has emerged stronger, more
capable and more efficient with better
developed proprietary technologies and improved traction in a
broader marketplace. We also have some further exciting and
enviable technologies in development and are now in a phase of
growth from a stronger more stable foundation with three new
Discovery Engines: OptiMAL®,
OptiphageTM and AI/Ml-AbTM to power our
transition toward breakeven and profitability.
During FY24, Fusion was presented with several
commercial challenges. Most notably, a significant downturn in
venture capital investment into biotechnology companies, including
therapeutic antibody development programmes, impacted Fusion's
primary customer type going into the financial year. This directly
impacted the Company's revenues for the financial
year.
The Company took steps to meet the challenges
presented by the increasing headwinds in the first half of FY24
("H1") through a significant restructuring exercise, reducing
various costs including a 38% reduction in headcount.
Furthermore, a new commercial strategy was implemented,
additionally targeting the adjacent Diagnostic, Veterinary Medicine
and Research Antibody markets. This diversification has made the
sales pipeline more resilient with less exposure to individual
sectors.
During H2 FY24, the adverse investment
conditions, although improving, continued to impede certain clients
placing orders, with some pipeline projects yet to convert and some
being received later than anticipated. In several cases this was
due to limited availability of client provided materials. This
resulted in revenue for H2 FY24 being lower than was anticipated at
the time of announcement of the H1 FY24 interim
results.
Despite the effects of the headwinds described
above, Fusion's client conversion rate nevertheless improved
throughout FY24, with February and March of 2024 being the
Company's highest earning months of FY24. This contributed to
revenues in the fourth quarter of FY24 being approximately 47%
higher than the first quarter of FY24.
This increase in activity towards the end of
the financial year has resulted in a marked increase in the
Company's sales opportunity pipeline. The Company's order book as
at 31 March 2024 was approximately £0.75m, representing
approximately 65% of the total FY24 audited revenues.
This increase in activity and the order book
provides a foundation for revenue growth in the current financial
year ("FY25").
The Company achieved a number of exciting
developments in H2 FY24, including:
·
signing a collaboration agreement with the NCI for the use of
OptiMAL® in the discovery of novel antibodies against targets
selected by NCI post year end;
·
securing an estimated $650,000 follow-on project under a
collaborative research and development agreement with a US based
biotechnology company that Fusion started working with in
2021;
·
receipt of a first purchase order under a new MSA with a
leading diagnostics company - with further orders having been
received under the MSA by the customer subsequently; and
·
securing its first OptiPhageTM contract whereby
Fusion will design a phage display library using the diversity
principles behind the OptiMAL® library.
The Board believes that these developments
provide strong evidence that the Company's diversification
strategy, together with the recovering economic climate, provide
confidence for growth in FY25.
The Company's cash balance as at 31 March 2024
was £1.2m, positioning the Company well for the current economic
environment.
The 2023 calendar year was very challenging
for our clients and therefore also for us. We responded by taking
difficult but necessary action whilst also extending our traction
with adjacent markets (notably diagnostics, research antibodies and
veterinary medicine). As a result, we have secured some excellent
new clients, including global leaders in their respective fields,
who are now engaging with the Company for multiple projects,
several of which are being run in parallel. Achieving this
diversification in client base, combined with a recovery in our
core human therapeutic sector, provides a very welcomed improvement
in market conditions going forward. We remain optimistic for our
prospects and look forward to updating the market further. We
continue to be thankful to our shareholders for all their
support.
Outlook
The economic environment in which the Company
is now operating has significantly improved in recent months with
revenues now increasing and prospects being converted into orders
at a significantly improved rate. We continue to attract clients
from around the world including securing initial and follow on work
from a new client, the life sciences division of a well-known
Japanese conglomerate amongst others. The Company also continues to
further exploit its technologies to create additional value: our
Mammalian Display platform, which was designed initially for
antibodies, has recently been trialled with other proteins. One
client found a 10-30 fold increase in yield over there current
established production method.
Having made a specific effort to complement
the core therapeutics market by targeting adjacent sectors, the
push for more diagnostics business is proving fruitful with
revenues from this sector currently accounting for around 20% of
current year to date earned income.
It remains our goal to reach cash flow
breakeven by the second half of calendar year 2025, and as we
continue to meet our objectives on that path, we have no plans to
raise cash through an equity placement.
Adrian
Kinkaid
Chief Executive Officer
4 September 2024
Statement of
Profit or Loss and Other Comprehensive Income
For the year
ended 31 March 2024
|
|
Note
|
2024
|
2023
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Revenue
|
4
|
1,136
|
2,901
|
|
Cost of sales
|
|
(1,181)
|
(2,327)
|
|
Gross
profit
|
|
(45)
|
574
|
|
Other operating income
|
|
5
|
11
|
|
Administrative expenses
|
|
(2,247)
|
(3,443)
|
|
|
|
|
|
|
Operating
loss
|
5
|
(2,288)
|
(2,858)
|
|
|
|
|
|
|
Finance income
|
8
|
3
|
3
|
|
Finance expense
|
8
|
(5)
|
(4)
|
|
Loss before
tax
|
|
(2,289)
|
(2,859)
|
|
Income tax credit
|
10
|
63
|
263
|
|
Loss for the
financial year
|
|
(2,226)
|
(2,596)
|
|
Total
comprehensive expense for the year
|
|
(2,226)
|
(2,596)
|
|
|
|
|
|
|
|
|
Pence
|
Pence
|
|
Loss per
share
|
|
|
|
|
Basic
|
11
|
(3.9)
|
(10.0)
|
|
|
|
|
|
|
| |
Statement of
Financial Position
As at 31 March
2024
|
|
Notes
|
|
2024
£'000
|
|
2023
£'000
|
|
Assets
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Intangible assets
|
12
|
|
-
|
|
-
|
|
Property, plant and equipment
|
13
|
|
158
|
|
375
|
|
|
|
|
158
|
|
375
|
|
Current
assets
|
|
|
|
|
|
|
Inventories
|
15
|
|
460
|
|
539
|
|
Trade and other receivables
|
16
|
|
557
|
|
690
|
|
Current tax receivable
|
|
|
46
|
|
263
|
|
Cash and cash equivalents
|
|
|
1,199
|
|
195
|
|
|
|
|
2,262
|
|
1,687
|
|
Total
assets
|
|
|
2,420
|
|
2,062
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Trade and other payables
|
17
|
|
564
|
|
844
|
|
Borrowings
|
18
|
|
20
|
|
35
|
|
|
|
|
584
|
|
879
|
|
|
|
|
|
|
|
|
Net current
assets
|
|
|
1,678
|
|
808
|
|
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Borrowings
|
18
|
|
23
|
|
40
|
|
Provisions for other liabilities and
charges
|
19
|
|
20
|
|
20
|
|
|
|
|
43
|
|
60
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
627
|
|
939
|
|
|
|
|
|
|
|
|
Net
assets
|
|
|
1,793
|
|
1,123
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Called up share capital
|
21
|
|
3,815
|
|
1,040
|
|
Share premium reserve
|
|
|
7,743
|
|
7,647
|
|
Accumulated losses
|
|
|
(9,765)
|
|
(7,564)
|
|
Total
equity
|
|
|
1,793
|
|
1,123
|
Simon
Douglas
Adrian Kinkaid
Director
Director
Statement of
Changes in Equity
For the year
ended 31 March 2024
|
|
Notes
|
Called up share
capital
£'000
|
Share premium reserve
£'000
|
Accumulated losses
£'000
|
Total
equity
£'000
|
|
At 1 April 2022
|
|
1,040
|
7,647
|
(5,003)
|
3,684
|
|
Loss and total comprehensive expense for the
year
|
|
-
|
-
|
(2,596)
|
(2,596)
|
|
Share options - value of employee
services
|
|
-
|
-
|
35
|
35
|
|
Total transactions with owners, recognised
directly in equity
|
|
-
|
-
|
35
|
35
|
|
At 31 March 2023
|
21
|
1,040
|
7,647
|
(7,564)
|
1,123
|
|
|
|
|
|
|
|
|
At 1 April
2023
|
|
1,040
|
7,647
|
(7,564)
|
1,123
|
|
Loss and total
comprehensive expense for the year
|
|
-
|
-
|
(2,226)
|
(2,228)
|
|
Issue of share
capital
|
|
2,775
|
96
|
-
|
2,871
|
|
Share options -
value of employee services
|
|
-
|
-
|
25
|
25
|
|
Total
transactions with owners, recognised directly in
equity
|
|
2,775
|
96
|
25
|
2,896
|
|
At 31 March
2024
|
21
|
3,815
|
7,743
|
(9,765)
|
1,793
|
Statement of
Cash Flows
For the year
ended 31 March 2024
|
|
Notes
|
2024
£'000
|
2023
£'000
|
|
Cash flows from
operating activities
|
|
|
|
|
Loss for the year
|
|
(2,226)
|
(2,596)
|
|
Adjustments for:
|
|
|
|
|
Share based payment expense
|
|
86
|
35
|
|
Depreciation
|
|
220
|
372
|
|
Finance income
|
|
(3)
|
(3)
|
|
Finance costs
|
|
5
|
4
|
|
Income tax credit
|
|
(63)
|
(263)
|
|
Decrease/(Increase) in inventories
|
|
79
|
46
|
|
Decrease/(increase) in trade and other
receivables
|
|
133
|
819
|
|
(Decrease)/increase in trade and other
payables
|
|
(280)
|
(299)
|
|
Cash used in
operations
|
|
(2,049)
|
(1,885)
|
|
Income tax received
|
|
280
|
131
|
|
Net cash used
in operating activities
|
|
(1,769)
|
(1,754)
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
13
|
(2)
|
(114)
|
|
Finance income - interest received
|
8
|
3
|
3
|
|
Net cash used
in investing activities
|
|
1
|
(111)
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
Proceeds from new issue of share capital net of
transaction costs
|
|
2,808
|
-
|
|
Proceeds from new borrowings
|
18
|
-
|
69
|
|
Repayment of borrowings
|
18
|
(33)
|
(62)
|
|
Finance costs - interest paid
|
8
|
(5)
|
(4)
|
|
Net cash
generated/(used in) from financing activities
|
|
2,770
|
3
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents
|
|
1,002
|
(1,862)
|
|
Cash and cash
equivalents at the beginning of the year
|
|
195
|
2,049
|
|
Effects of exchange rate changes on cash and
cash equivalents
|
|
2
|
8
|
|
Cash and cash
equivalents at the end of the year
|
|
1,199
|
195
|
Notes to the
Financial Statements
1
General information
Fusion Antibodies plc is a company
incorporated and domiciled in the United Kingdom and is registered
in Northern Ireland having its registered office and principal
place of business at 1 Springbank Road, Springbank Industrial
Estate, Dunmurry, Belfast, BT17 0QL
The principal activity of the Company is the
research, development and manufacture of recombinant proteins and
antibodies, particularly in the areas of cancer and infectious
diseases.
2
Significant accounting policies
The principal accounting policies applied in
the preparation of these financial statements are set out below.
These policies have been consistently applied to all years
presented unless otherwise stated.
Basis of
preparation
The financial statements have been prepared on
the historical cost convention.
The financial statements are prepared in
sterling, which is the functional currency of the Company. Monetary
amounts in these financial statements are rounded to the nearest
£1,000.
The financial statements of Fusion Antibodies
plc have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006 as applicable to companies reporting under those
standards.
The preparation of financial statements in
conformity with International Financial Reporting Standards
("IFRS") requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the
process of applying the Company's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial
statements are disclosed in note 3.
Going
concern
The Company has returned a loss of
£2.2m for the year ended 31 March 2024 (Year ended 31 March 2023:
Loss of £2.6m) and at the year-end
had net current assets of £1.7m (31 March 2023:
£0.8m) including £1.2m of cash and cash
equivalents (31 March 2023: £0.2m). During
the year the Company has raised net proceeds of £2.8m from the
issue of ordinary shares and has undergone a restructuring process
to reduce annual costs. The Company continues to expend cash in a
planned manner to both grow the trading aspects of the business and
to develop new services through research and development projects.
Revenues for the year were £1.14m, significantly below market
expectations and 60% lower than revenues for the prior year.
Uncertainty in levels of investment in the sector has diminished
but still persists. The impact of this has been somewhat reduced
through the Company's targeting of wider market
sectors.
The financial statements have been
prepared on the going concern basis, which assumes that
the company will continue to be able to meet its
liabilities as they fall due for at least twelve months from the
date of signing these financial statements. The directors
have, at the time of approving the financial statements, a
reasonable expectation that the Company has adequate resources to
continue in operational existence at least for 12 months from the
reporting date. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements. To
support the going concern basis of preparation, cash flow forecasts
have been prepared which incorporate a number of assumptions upon
which sensitivities have been performed to reflect severe but
plausible downside scenarios. These assumptions include the
rate at which revenue growth can be achieved.
The directors note that there is
inherent uncertainty in any cash flow forecast, however this is
further exacerbated given the nature of the company's trade and the
industry in which it operates. Due to the risk that revenues and
the related conversion of revenue to cash inflows may not be
achieved as forecast over the going concern period, the Directors
believe that there exists a material uncertainty that may cast
significant doubt on the Company's ability to continue as a going
concern and it may be unable to realise its assets and discharge
its liabilities in the normal course of business.
The financial statements do not
include the adjustments that would result if the Company were
unable to continue as a going concern.
Revenue
recognition
Revenue comprises the fair value of
the consideration received or receivable for the provision of
services in the ordinary course of the Company's activities.
Revenue is shown net of value added tax and where a contractual
right to receive payment exists.
The Company's performance
obligations for its revenue streams are deemed to be the provision
of specific services or materials to the customer. Performance
obligations are identified on the basis of distinct activities or
stages within a given contract that the customer can benefit from,
independent of other stages in the contract. The transaction price
is allocated to the various performance obligations, based on the
relative fair value of those obligations, and then revenue is
recognised as follows:
·
Revenue is recognised over the period that
services are provided using the percentage of completion method,
based on the input method using costs incurred to date relative to
the expected total costs for each performance obligation;
and
·
Where a contract includes a payment contingent
upon the customer subsequently achieving a pre-defined milestone
with their development programme, revenue in the amount of the
total success payment due is recognised when the pre-defined
condition(s) have been met.
Contract assets arise on contracts
with customers for which performance obligations have been
satisfied (or partially satisfied on an over time basis) but for
which the related amounts have not yet been invoiced or
received.
Contract liabilities arise in
respect of amounts invoiced during the year for which the relevant
performance obligations have not been met by the year-end. The
Company's contracts with customers are typically less than one year
in duration and any contract liabilities would be expected to be
recognised as revenue in the following year.
Grant
income
Revenue grants received by the Company are
recognised in a manner consistent with the grant conditions. Once
conditions have been met, grant income is recognised in the
Statement of Comprehensive Income as other operating
income.
Research and
development
Research expenditure is written off as
incurred. Development expenditure is recognised in the Statement of
Comprehensive Income as an expense until it can be demonstrated
that the following conditions for capitalisation apply:
·
it is technically feasible to complete the scientific product
so that it will be available for use;
·
management intends to complete the product and use or sell
it;
·
there is an ability to use or sell the product;
·
it can be demonstrated how the product will generate probable
future economic benefits;
·
adequate technical, financial and other resources to complete
the development and to use or sell the product are available;
and
·
the expenditure attributable to the product during its
development can be reliably measured.
Intangible
assets
Software
Software developed for use in the business is
initially recognised at historical costs, net of amortisation and
provision for impairment. Subsequent development costs are included
in the asset's carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Company and the
cost of the item can be measured reliably.
Software is amortised over its expected useful
economic life, which is currently estimated to be 4 years.
Amortisation expense is included within administrative expenses in
the Statement of Comprehensive Income.
Property,
plant and equipment
Property, plant and equipment are initially
recognised at historical cost, net of depreciation and any
impairment losses.
Subsequent costs are included in the asset's
carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated
with the item will flow to the Company and the cost of the item can
be measured reliably. The carrying amount of the replaced part is
de-recognised. All other repairs and maintenance are charged to the
statement of comprehensive income during the financial year in
which they are incurred.
Subsequently, property plant and equipment are
measured at cost or valuation net of depreciation and any
impairment losses.
Costs associated with maintaining computer
software programmes are recognised as an expense as incurred.
Software acquired with hardware is considered to be integral to the
operation of that hardware and is capitalised with that equipment.
Software acquired separately from hardware is recognised as an
intangible asset and amortised over its estimated useful
life.
Depreciation is provided on all property,
plant and equipment at rates calculated to write off the cost less
estimated residual value of each asset on a straight line basis
over its expected economic useful life as follows:
Right of use
assets
The remaining length of the lease
Leasehold
improvements
The lesser of the asset life or the remainder of the
lease
Plant and
machinery
4 years
Fixtures, fittings &
equipment 4
years
Leases
Leases in which a significant
portion of the risks and rewards of ownership remain with the
lessor are deemed to give the Company the right-of-use and
accordingly are recognised as property, plant and equipment in the
statement of financial position. Depreciation is calculated on the
same basis as a similar asset purchased outright and is charged to
profit or loss over the term of the lease. A corresponding
liability is recognised as borrowings in the statement of financial
position and lease payments deducted from the liability. The
difference between remaining lease payments and the liability is
treated as a finance cost and taken to profit or loss in the
appropriate accounting period.
Impairment of non-financial assets
For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). As a result, some
assets are tested individually for impairment and some are tested
at cash-generating unit level.
All individual assets or cash-generating units are tested whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the amount by which the
asset's or cash-generating unit's amount exceeds its recoverable
amount. The recoverable amount is the higher of fair value,
reflecting market conditions less costs to sell, and value in use.
Value in use is based on estimated future cash flows from each
cash-generating unit or individual asset, discounted at a suitable
rate in order to calculate the present value of those cash flows.
The data used for impairment testing procedures is directly linked
to the Company's latest approved budgets, adjusted as necessary to
exclude any restructuring to which the Company is not yet
committed. Discount rates are determined individually for each
cash-generating unit or individual asset and reflect their
respective risk profiles as assessed by the directors. Impairment
losses for cash-generating units are charged pro rata to the assets
in the cash-generating unit. Cash generating units and individual
assets are subsequently reassessed for indications that an
impairment loss previously recognised may no longer exist.
Impairment charges are included in administrative expenses in the
Statement of Comprehensive Income. An impairment charge that has
been recognised is reversed if the recoverable amount of the
cash-generating unit or individual asset exceeds the carrying
amount.
Current tax
and deferred tax
The tax expense for the year comprises current
and deferred tax. Tax is recognised in the statement of
comprehensive income, except to the extent that it relates to items
recognised directly in equity.
The current tax charge is calculated on the
basis of the tax laws enacted or substantively enacted at the
reporting date in the UK, where the Company operates and generates
taxable income
Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be
paid to the tax authorities.
Deferred tax is recognised on temporary
differences arising between the carrying amounts of assets and
liabilities and their tax bases. Deferred tax is determined
using tax rates (and laws) that have been enacted, or substantively
enacted, by the reporting date and are expected to apply when the
related deferred tax asset is realised or the deferred tax
liability is settled.
Deferred tax assets are recognised only to the
extent that it is probable that future taxable profit will be
available against which the temporary differences can be
utilised.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities.
Share based
employee compensation
The Company operates equity-settled
share-based compensation plans for remuneration of its directors
and employees.
All employee services received in exchange for
the grant of any share-based compensation are measured at their
fair values. The fair value is appraised at the grant date and
excludes the impact of any non-market vesting conditions (e.g.
profitability and remaining an employee of the Company over a
specified time period).
Share based compensation is recognised as an
expense in the Statement of Comprehensive Income with a
corresponding credit to equity. If vesting periods or other vesting
conditions apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options
expected to vest.
Non-market vesting conditions are included in
assumptions about the number of options that are expected to become
exercisable. Estimates are subsequently revised if there is any
indication that the number of share options expected to vest
differs from previous estimates.
The proceeds received net of any directly
attributable transaction costs are credited to share capital and
share premium when the options are exercised.
Financial
assets
Classification
The Company classifies its
financial assets in the following measurement
categories:
§ Those to
be measured at amortised costs; and
§ Those to
be measured subsequently at fair value (either through Other
Comprehensive Income or through profit and loss).
The classification depends on the
Company's business model for managing the financial assets and the
contractual terms of the cash flows. The Company reclassifies its
financial assets when and only when its business model for managing
those assets changes.
Recognition and measurement
At initial recognition, the Company
measures a financial asset at its fair value plus transaction costs
that are directly attributable to the acquisition of the financial
asset.
Subsequent measurement of financial
assets depends on the Company's business model for managing those
financial assets and the cash flow characteristics of those
financial assets. The Company only has financial assets classified
at amortised cost. Cash and cash equivalents represent monies held
in bank current accounts and bank deposits. These assets are those
held for contractual collection of cash flows, where those cash
flows represent solely payments of principal and interest and are
held at amortised cost. Any gains or losses arising on
derecognition is recognised directly in profit or loss. Impairment
losses are presented as a separate line in the profit and loss
account.
Impairment
The Company assesses on a
forward-looking basis, the expected credit losses associated with
its debt instruments carried at amortised cost. For trade
receivables the Company applies the simplified approach permitted
by IFRS 9, which requires expected lifetime losses to be recognised
from the initial recognition of the receivables. For other
receivables the Company applies the three stage model to determine
expected credit losses.
Inventories
Inventories comprise consumables. Consumables
inventory is stated at the lower of cost and net realisable value.
Cost is determined using the first-in, first-out (FIFO) method.
Cost represents the amounts payable on the acquisition of
materials. Net realisable value represents the estimated selling
price less all estimated costs of completion and costs to be
incurred in selling and distribution.
Financial
liabilities
Financial liabilities comprise
Trade and other payables and borrowings due within one year and
after one year, which are recognised initially at fair value and
subsequently carried at amortised cost using the effective interest
method. The Company does not use derivative financial
instruments or hedge account for any transactions. Trade
payables represent obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Trade payables are classified as current
liabilities if payment is due within one year. If not, they
are presented as non-current liabilities.
Provisions
A provision is recognised in the Statement of
Financial Position when the Company has a present legal or
constructive obligation as a result of a past event, that can be
reliably measured and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a
pre-tax rate that reflects risks specific to the liability. The
increase in the provision due to the passage of time is recognised
as a finance cost. Provisions for dilapidation charges that will
crystallise at the end of the period of occupancy are provided for
in full.
Employee
benefits - Defined contribution plan
The Company operates a defined contribution
pension scheme which is open to all employees and directors. The
assets of the schemes are held by investment managers separately
from those of the Company. The contributions payable to these
schemes are recorded in the Statement of Comprehensive Income in
the accounting year to which they relate.
Foreign
currency translation
The Company's functional currency is the pound sterling.
Transactions in foreign currencies are translated at the exchange
rate ruling at the date of transaction. Monetary assets and
liabilities in foreign currencies are translated at the rates of
exchange ruling at the reporting date. Exchange differences arising
on the settlement or on translating monetary items at rates
different from those at which they were initially recorded are
recognised in administrative expenses in the Statement of
Comprehensive Income in the year in which they arise.
Equity
Equity comprises the following:
Called up
share capital
Share capital represents the nominal value of
equity shares.
Share
premium
Share premium represents the excess over
nominal value of the fair value of consideration received of equity
shares, net of expenses of the share issue.
Accumulated
losses
Accumulated losses represent retained profits and
losses.
Adoption of
new and revised standards and changes in accounting
policies
In the current year the following new and
revised Standards and Interpretations have been adopted by the
company. The adoption has had no impact on the current period
however may have an effect on future periods.
|
IFRS 17
|
Insurance contracts
|
1 January
2023
|
|
IAS 1 and IFRS Practice Statement 2
|
Disclosure of accounting policies
|
1 January
2023
|
|
IAS 8 (Amendment)
|
Definition of accounting estimates
|
1 January
2023
|
|
IAS 12 (Amendment)
|
Deferred tax related to assets and liabilities
arising from a single transaction
|
1 January
2023
|
Standards
which are in issue but not yet effective
At the date of authorisation of these
financial statements, the Company has not applied the following new
and revised IFRS Standards that have been in issue but are not yet
effective. The Directors do not expect that the adoption of the
other Standards listed below will have a material impact on the
financial statements of the Company aside from additional
disclosures:
|
IAS 1 (Amendment)
|
Classification of liabilities as current or
non-current - deferral of effective date
|
1 January
2024
|
|
IAS 1 (Amendment)
|
Non-current liabilities with
covenants
|
1 January
2024
|
|
IFRS 16 (Amendment)
|
Liability in a Sale and Leaseback
|
1 January
2024
|
|
IAS 7 and IFRS 7 (Amendments)
|
Statement of Cashflows and Supplier finance
agreements
|
1 January
2024
|
|
IFRS S1
|
General requirements for disclosure of
sustainability-related financial information
|
1 January
2024
|
|
IFRS S2
|
Climate-related disclosures
|
1 January
2024
|
|
IAS 21
|
Clarification of currency exchanges
|
1 January
2025
|
|
|
|
|
3 Critical
accounting estimates and judgements
Many of the amounts included in the financial
statements involve the use of judgement and/or estimates. These
judgements and estimates are based on management's best knowledge
of the relevant facts and circumstances, having regard to prior
experience, but actual results may differ from the amounts included
in the financial statements. Information about such judgements and
estimation is contained in the accounting policy and/or the notes
to the financial statements and the key areas are summarised
below:
Critical
judgements in applying accounting policies
·
Revenue
recognition. The Company typically enters into
a contract comprising one or more stages for each customer project.
In the application of IFRS 15 "Revenue from Contracts with
Customers" and the accounting policy set out in Note 2 to these
financial statements, significant judgement is required to identify
the individual performance obligations contained within each
contract, particularly when a set-up charge is made relating to the
initial collaboration with the customer to formulate a programme of
development work, or when the pattern of sales invoices does not
align with those stages explicit in the contract.
Customer contracts may contain a
non-refundable set up charge of up to 30% of contract value which
becomes payable upon commencement of the project. This represents
the value of the transfer of knowledge involved in design, planning
and preparation for the work to be done, and for the time and
consumables committed to commence work on the project. As this work
is distinct and of benefit to the customer independent of later
stages within the contract, it is therefore judged to be a separate
performance obligation within the meaning of IFRS 15 and is
recognised as revenue in line with the accounting policy. The
remaining performance obligations are based on the stages with
defined deliverables which are explicitly outlined in the customer
contracts.
During the process of delivering the contract,
where delivery is part way through a stage at the reporting date,
an estimate is made of the amount of revenue to recognise for that
stage to reflect the work performed up to that date. This amount is
estimated on a percentage completion basis.
Critical
accounting estimates and assumptions
Deferred
Taxation. The Company has accumulated tax
losses of £14,359k (2023: £13,000k). In principle these losses
would support a deferred tax asset of approximately £3,590k (2023:
£2,500k). IAS 12 requires that a deferred tax asset relating to
unused tax losses is carried forward to the extent that future
taxable profits will be available. The company is in an investment
phase, expecting to have increased expenditure on R&D and
business development over the next two years which will increase
the tax losses. After the investment period the Board expects the
Company to generate healthy profits but it is difficult at this
stage to reliably estimate the period over which profits may arise
in the future. The Board has therefore determined to not recognise
the asset at the reporting date. This approach does not affect the
future availability of the tax losses for offset against future
profits.
Share
Options. The Company offers share options to
employees in recognition of their service. These share options are
valued using the Black Scholes model and accounted for under IFRS
2. Key estimates and judgements in the valuation model are the
probability of exercise, as well as the volatility of the share
price. For valuation, the Company has assumed that all outstanding
options will vest and become exercisable. The Company has estimated
volatility of the share price to be 24% which is based on
historical movement in the Company's share price.
Dilapidations. The
company leases space under an operating lease. A condition of the
lease is to maintain the rented space and return the space in a
suitable condition at the end of the lease period. The company
maintain a dilapidation provision to account for any wear and tear
during the lease period and to return the property to its original
condition. At the time of leasing, the Company estimated future
cost not to exceed £20k. This amount is reviewed annually. No
adjustment was considered necessary for the year ended 31 March
2024.
4
Revenue
All of the activities of the Company fall
within one business segment, that of research, development and
manufacture of recombinant proteins and antibodies.
|
Geographic
analysis
|
2024
£'000
|
2023
£'000
|
|
UK
|
195
|
621
|
|
Rest of Europe
|
95
|
409
|
|
North America and Rest of World
|
846
|
1,871
|
|
|
1,136
|
2,901
|
In the year there were two customers (2023:
three) to whom sales exceeded 10% of revenues, those customers
together accounted for £485k or 43% of revenues (2023: £1,040k or
36% of revenues).
5
Operating loss is stated after
charging/(crediting):
|
|
2024
£'000
|
2023
£'000
|
|
Employee benefit costs
|
|
|
|
-wages and salaries
|
1,191
|
2,201
|
|
-social security costs
|
122
|
247
|
|
-other pension costs
|
61
|
110
|
|
-share based payments
|
86
|
35
|
|
|
1,460
|
2,595
|
|
|
|
|
|
Depreciation of property, plant and equipment
(owned)
|
217
|
347
|
|
Depreciation of property, plant and equipment
(leased)
|
2
|
25
|
|
|
|
|
|
Other operating expenses
|
|
|
|
Rates, utilities and property
maintenance
|
155
|
168
|
|
IT costs
|
52
|
30
|
|
|
|
|
|
Fees payable to the Company's
auditors
|
|
|
|
-
for the audit of the financial statements
|
45
|
73
|
|
|
|
|
|
Raw materials and consumables used
|
296
|
1,129
|
|
Decrease/(increase) in inventories
|
81
|
47
|
|
Patent costs
|
31
|
30
|
|
Marketing costs
|
123
|
223
|
|
Loss/(gain) on foreign exchange
|
15
|
(36)
|
|
Other expenses
|
951
|
1,139
|
|
|
|
|
|
Total cost of sales and administrative
expenses
|
3,429
|
5,770
|
Included in the costs above is expenditure on
research and development totalling £254k (2023: £806k). Non-audit
fees of £173k (2023: £9k) were paid in the year and are included in
other expenses above, none of which were paid to the Company's
auditor Kreston Reeves LLP
6 Average
staff numbers
|
|
2024
|
2023
|
|
|
Monthly Avg Number
|
Monthly Avg
Number
|
|
Employed in UK
(including executive directors)
|
27
|
50
|
|
Non-executive directors
|
4
|
4
|
|
|
31
|
54
|
7
Remuneration of directors and key senior
management
Directors
|
|
2024
£'000
|
2023
£'000
|
|
Emoluments
|
349
|
470
|
|
Pension contributions
|
18
|
21
|
|
|
367
|
491
|
Highest paid
director
The highest paid director received the
following emoluments:
|
|
2024
£'000
|
2023
£'000
|
|
Emoluments
|
169
|
120
|
|
Pension contributions
|
10
|
7
|
|
|
179
|
127
|
The highest paid director did not exercise any
share options in the year. (2023: £nil).
Key senior
management personnel
Key senior management is considered to
comprise the directors of the Company with total remuneration for
the year of £367k (2023: £491k). Share based payments for the year
attributable to key senior management totalled £24k (2023:
£10k).
8
Finance income and expense
|
Income
|
2024
£'000
|
2023
£'000
|
|
Bank interest receivable
|
3
|
3
|
|
Expense
|
2024
£'000
|
2023
£'000
|
|
Interest expense on other borrowings
|
5
|
4
|
9
Share based payments
At the reporting date the Company had three
share based reward schemes: two schemes under which options were
previously granted and are now closed to future grants and a third
scheme in place in which grants were made in the current
year:
· A
United Kingdom tax authority approved scheme for executive
directors and senior staff;
·
An unapproved scheme for awards to those, such as
non-executive directors, not qualifying for the approved scheme;
and
· A
United Kingdom tax authority approved scheme for executive
directors and senior staff which incorporates unapproved options
for grants to be made following listing of the Company shares,
"2017 EMI and Unapproved Employee Share Option Scheme".
Options awarded during the year under the 2017
EMI and Unapproved Employee Share Option Scheme have no performance
conditions other than the continued employment within the Company.
Options vest one, two and three years from the date of grant, which
may accelerate for a change of control. Options lapse if not
exercised within ten years of grant, or if the individual leaves
the Company, except under certain circumstances such as leaving by
reason of redundancy.
The total share-based remuneration recognised
in the Statement of Comprehensive Income was £86k (2023: £35k). The
most recent options granted in the year were valued using the
Black-Scholes method. The share price on grant used the share price
of open market value, expected volatility of 24.0% and a compound
risk free rate assumed of 3.47% based on historical
experience.
|
|
2024
Weighted average exercise price
£
|
2024
Number
|
2023
Weighted average
exercise price £
|
2023
Number
|
|
Outstanding at beginning of the year
|
0.481
|
2,317,883
|
0.478
|
787,083
|
|
Granted during the year
|
0.043
|
3,760,700
|
0.483
|
1,745,800
|
|
Exercised during the year
|
-
|
-
|
-
|
-
|
|
Lapsed during the year
|
0.466
|
(1,548,433)
|
0.486
|
(215,000)
|
|
Surrendered during the year
|
0.515
|
(730,700)
|
-
|
-
|
|
Outstanding at the end of the year
|
0.047
|
3,799,450
|
0.481
|
2,317,883
|
The options outstanding at the end of each
year were as follows:
|
Expiry
|
Nominal share value
|
Exercise price £
|
2024
Number
|
2023
Number
|
|
May 2027
|
£0.04
|
0.040
|
3,750
|
103,750
|
|
December 2028
|
£0.04
|
0.545
|
-
|
648,333
|
|
September 2032
|
£0.04
|
0.520
|
-
|
300,000
|
|
September 2032
|
£0.04
|
0.475
|
35,000
|
1,265,800
|
|
February 2034
|
£0.04
|
0.0425
|
3,760,700
|
-
|
|
Total
|
|
|
3,799,450
|
2,317,883
|
Of the total number of shares outstanding,
3,750 were exercisable at the reporting date at a weighted average
price of £0.04p/share (2023: 752,083 at a weighted average price of
£0.48p/share).
10
Income tax (credit)
|
|
2024
£'000
|
2023
£'000
|
|
Current tax - UK corporation tax
|
(63)
|
(263)
|
|
Income tax credit
|
(63)
|
(263)
|
The difference between loss before tax
multiplied by the standard rate of 25% (2023: 19%) and the income
tax credit is explained in the reconciliation below:
|
|
2024
£'000
|
2023
£'000
|
|
Factors
affecting the tax credit for the year
Loss before tax
|
(2,290)
|
(2,859)
|
|
|
|
|
|
Loss before tax multiplied by standard rate of
UK corporation tax of 25% (2023: 19%)
|
(573)
|
(545)
|
|
Deferred tax not recognised on current year
losses
|
573
|
545
|
|
RDEC/R&D tax credit
|
(46)
|
(263)
|
|
RDEC/R&D tax credit - adjustment relating to
prior year
|
(17)
|
-
|
|
Total income tax credit
|
(63)
|
(263)
|
Impact of future tax changes are not expected
to materially impact the position of the Company, and no corporate
tax liability is expected in the subsequent period.
11
Loss per share
|
|
2024
£'000
|
2023
£'000
|
|
Loss for the financial year
|
(2,190)
|
(2,596)
|
|
|
|
|
|
Loss per share
|
pence
|
pence
|
|
Basic
|
(3.9)
|
(10.0)
|
|
|
Number
|
Number
|
|
Issued ordinary shares at the end of the
year
|
95,365,564
|
26,014,946
|
|
Weighted average number of shares in issue
during the year
|
55,556,020
|
26,014,946
|
Basic earnings per share is calculated by
dividing the basic earnings for the year by the weighted average
number of shares in issue during the year. Diluted earnings per
share is calculated by dividing the basic earnings for the year by
the diluted weighted average number of shares in issue inclusive of
share options outstanding at year end. As the Company is loss
making for current and prior year, diluted earnings per share is
not presented.
12
Intangible assets
|
|
|
|
|
2024/2023
Software
£'000
|
2023/2022
Software
£'000
|
|
Cost
|
|
|
|
|
|
|
At 1 April
|
|
|
|
8
|
8
|
|
At 31 March
|
|
|
|
8
|
8
|
|
|
|
|
|
|
|
|
Accumulated amortisation
|
|
|
|
|
|
|
At 1 April
|
|
|
|
8
|
8
|
|
Amortisation charged in the year
|
|
|
|
-
|
-
|
|
At 31 March
|
|
|
|
8
|
8
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
At 31 March
|
|
|
|
-
|
-
|
|
At 31 March
|
|
|
|
-
|
-
|
Amortisation is included in administrative
expenses on the statement of comprehensive income.
13
Property, plant and equipment
|
|
Right of use assets
£'000
|
Leasehold
improvements
£'000
|
Plant &
machinery
£'000
|
Fixtures, fittings &
equipment
£'000
|
Total
£'000
|
|
Cost
|
|
|
|
|
|
|
At 1 April 2023
|
14
|
844
|
2,396
|
277
|
3,531
|
|
Additions
|
-
|
-
|
2
|
-
|
2
|
|
Disposals
|
-
|
-
|
-
|
-
|
-
|
|
At 31 March 2024
|
14
|
844
|
2,398
|
277
|
3,533
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
At 1 April 2023
|
9
|
812
|
2,112
|
223
|
3,156
|
|
Depreciation charged in the year
|
2
|
32
|
159
|
26
|
219
|
|
Disposals
|
-
|
-
|
-
|
-
|
-
|
|
At 31 March 2024
|
11
|
844
|
2,271
|
249
|
3,375
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
At 31 March 2024
|
3
|
-
|
127
|
28
|
158
|
|
At 31 March 2023
|
5
|
32
|
284
|
54
|
375
|
|
|
Right of use assets
£'000
|
Leasehold
improvements
£'000
|
Plant &
machinery
£'000
|
Fixtures, fittings &
equipment
£'000
|
Total
£'000
|
|
Cost
|
|
|
|
|
|
|
At 1 April 2022
|
240
|
814
|
2,356
|
301
|
3,711
|
|
Additions
|
-
|
30
|
72
|
12
|
114
|
|
Disposals
|
(226)
|
-
|
(32)
|
(36)
|
(294)
|
|
At 31 March 2023
|
14
|
844
|
2,396
|
277
|
3,531
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
At 1 April 2022
|
210
|
752
|
1,891
|
225
|
3,078
|
|
Depreciation charged in the year
|
25
|
60
|
253
|
34
|
372
|
|
Disposals
|
(226)
|
-
|
(32)
|
(36)
|
(294)
|
|
At 31 March 2023
|
9
|
812
|
2,112
|
223
|
3,156
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
At 31 March 2023
|
5
|
32
|
284
|
54
|
375
|
|
At 31 March 2022
|
30
|
62
|
465
|
76
|
633
|
Plant & machinery with a net book value of
£49k is held under hire purchase agreements or finance leases
(2023: £49k).
The carrying value of right of use assets at
the reporting date comprises fixtures, fittings and equipment of
£3k (2023: £5k).
The depreciation expense is included in
administrative expenses in the statement of comprehensive income in
each of the financial years shown.
14
Investment in subsidiary
The Company has the following investment in a
subsidiary:
|
|
2024
£
|
2023
£
|
|
Fusion Contract Services Limited
|
1
|
1
|
|
100% subsidiary
|
|
|
|
Dormant company
|
|
|
|
1 Springbank Road, Belfast, BT17 0QL
|
|
|
Under section 402, group financial statements
are not prepared on the basis that the subsidiary company is
dormant and not material to the financial statements for the
purpose of giving a true and fair
view.
15
Inventories
|
|
2024
£'000
|
2023
£'000
|
|
Raw materials and consumables
|
460
|
539
|
The cost of inventories recognised as an
expense for the year was £400k (2023: £1,129k).
16
Trade and other receivables
|
|
2024
£'000
|
2023
£'000
|
|
Trade receivables
|
584
|
511
|
|
Loss allowance
|
(147)
|
(151)
|
|
Trade receivables - net
|
437
|
360
|
|
Other receivables
|
8
|
72
|
|
Prepayments and accrued income
|
112
|
258
|
|
|
557
|
690
|
The fair value of trade and other receivables
approximates to their carrying value.
At the reporting date trade receivables loss
allowance/impairment as follows:
|
|
2024
£'000
|
2023
£'000
|
|
Individually impaired
|
102
|
122
|
|
Expected credit loss allowance
|
45
|
29
|
|
|
147
|
151
|
The carrying amount of trade and other
receivables are denominated in the following currencies:
|
|
2024
£'000
|
2023
£'000
|
|
UK pound
|
282
|
273
|
|
Euros
|
30
|
-
|
|
US dollar
|
272
|
238
|
|
|
584
|
511
|
The expected credit loss allowance has been
calculated as follows:
|
31 March 2024
|
Current
|
More than 30 days
past due
|
More than 60 days
past due
|
More than 90 days
past due
|
More than 120 days
past due
|
Total
|
|
Expected loss rate
|
1.9%
|
2.1%
|
2.7%
|
4.9%
|
26.6%
|
|
|
Gross carrying amount (£'000)
|
280
|
97
|
74
|
-
|
133
|
584
|
|
Loss allowance (£'000)
|
5
|
2
|
2
|
-
|
36
|
45
|
|
31 March 2023
|
Current
|
More than 30 days
past due
|
More than 60 days
past due
|
More than 90 days
past due
|
More than 120 days
past due
|
Total
|
|
Expected loss rate
|
1.9%
|
2.1%
|
2.7%
|
4.9%
|
26.6%
|
|
|
Gross carrying amount (£'000)
|
113
|
87
|
68
|
43
|
78
|
389
|
|
Loss allowance (£'000)
|
2
|
2
|
2
|
2
|
21
|
29
|
Movements on trade receivables loss allowance
is as follows:
|
|
£'000
|
£'000
|
|
At 1 April 2023/2022
|
29
|
53
|
|
Movement in loss allowance
|
16
|
(24)
|
|
At 31 March 2024/2023
|
45
|
29
|
The creation and release of the loss allowance
for trade receivables has been included in administrative expenses
in the Statement of Profit or Loss and Other Comprehensive Income.
Other receivables are considered to have low credit risk and the
loss allowance recognised during the year was therefore limited to
trade receivables.
The maximum exposure to credit risk at the
reporting date is the carrying value of each class of receivables
mentioned above. The Company does not hold any collateral as
security.
17
Trade and other payables
|
|
2024
£'000
|
2023
£'000
|
|
Trade payables
|
283
|
480
|
|
Social security and other taxes
|
43
|
136
|
|
Other payables
|
11
|
51
|
|
Accruals and deferred income
|
208
|
177
|
|
|
546
|
844
|
The fair value of trade and other payables
approximates to their carrying value.
The Company hold an operating lease with
Invest Northern Ireland (note 24). At the reporting date a balance
of £11k (2023: £45k) was due to Invest Northern Ireland.
18
Borrowings
|
|
Lease liabilities
£'000
|
Hire Purchase
Contracts
£'000
|
Total
£'000
|
|
At 1 April 2023
|
6
|
69
|
75
|
|
Additions
|
-
|
-
|
-
|
|
Interest charged in year
|
-
|
5
|
5
|
|
Repayments
|
(3)
|
(34)
|
(37)
|
|
At 31 March 2024
|
3
|
40
|
43
|
|
|
|
|
|
|
Amounts due in less than 1 year
|
3
|
20
|
23
|
|
Amounts due after more than 1 year
|
-
|
20
|
20
|
|
|
3
|
40
|
43
|
|
|
Lease
liabilities
£'000
|
Hire
Purchase
Contracts
£'000
|
Total
£'000
|
|
At 1 April 2022
|
27
|
42
|
69
|
|
Additions
|
-
|
69
|
69
|
|
Interest charged in year
|
3
|
1
|
4
|
|
Repayments
|
(24)
|
(43)
|
(67)
|
|
At 31 March 2023
|
6
|
69
|
75
|
|
|
|
|
|
|
Amounts due in less than 1 year
|
5
|
30
|
35
|
|
Amounts due after more than 1 year
|
1
|
39
|
40
|
|
|
6
|
69
|
75
|
All borrowings are denominated in UK pounds.
Using a discount rate of 8.5% per annum the fair value of
borrowings at the reporting date is £40k (2023: £69k discounted at
8.5%).
Borrowings are secured by a fixed and floating
charge over the whole undertaking of the Company, its property,
assets and rights in favour of Northern Bank Ltd trading as Danske
Bank.
19
Provisions for other liabilities and charges
|
|
2024
£'000
|
2023
£'000
|
|
Due after more than 1 year
|
20
|
20
|
Leasehold dilapidations relate to the
estimated cost of returning a leasehold property to its original
state at the end of the lease in accordance with the lease terms.
The Company's premises are held under a lease which is renewed
annually. The costs of dilapidations would be incurred on vacating
the premises.
20
Financial instruments
The Company is exposed to risks that arise
from its use of financial instruments. This note describes the
Company's objectives, policies, and processes for managing those
risks and methods used to measure them. There have been no
substantive changes in the Company's exposure to financial
instrument risks and the methods used to measure them from previous
years unless otherwise stated in this note.
The principal financial instruments used by
the Company, from which the financial instrument risk arises, are
trade receivables, cash and cash equivalents and trade and other
payables. The fair values of all the Company's financial
instruments are the same as their carrying values.
Financial
instruments by category
Financial instruments categories are as
follows:
|
Financial
assets at amortised cost
|
|
|
As at March 2024
£ '000
|
As at March
2023
£ '000
|
|
Trade receivables
|
|
|
437
|
360
|
|
Other receivables
|
|
|
32
|
72
|
|
Accrued income
|
|
|
77
|
26
|
|
Cash and cash equivalents
|
|
|
1,199
|
195
|
|
Total
|
|
|
1,745
|
653
|
|
Financial
Liabilities at amortised cost
|
|
As at March 2024
£ '000
|
As at March
2023
£ '000
|
|
Trade payables
|
|
284
|
480
|
|
Other payables
|
|
180
|
100
|
|
Accruals
|
|
125
|
127
|
|
Borrowings
|
|
43
|
75
|
|
Total
|
|
607
|
782
|
Capital
management
The Company's objectives when managing capital
are to safeguard its ability to continue as a going concern in
order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital
structure, the Company may issue new shares or sell assets to
provide working capital.
Consistent with others in the industry at this
stage of development, the Company has relied on issuing new shares
and cash generated from operations.
General
objectives, policies and processes - risk
management
The Company is exposed through its operations
to the following financial instrument risks: credit risk; liquidity
risk and foreign currency risk. The policy for managing these risks
is set by the Board following recommendations from the Chief
Financial Officer. The overall objective of the Board is to set
policies that seek to reduce risk as far as possible without unduly
affecting the Company's competitiveness and flexibility. The policy
for each of the above risks is described in more detail
below.
Credit
risk
Credit risk arises from the Company's trade
and other receivables, and from cash at bank. It is the risk that
the counterparty fails to discharge their obligation in respect of
the instrument.
The Company is mainly exposed to credit risk
from credit sales. It is Company policy to assess the credit risk
of new customers before entering contracts. Also, for certain new
customers the Company will seek payment at each stage of a project
to reduce the amount of the receivable the Company has outstanding
for that customer.
At the year end the Company's bank balances
were all held with Northern Bank Ltd trading as Danske Bank
(Moody's rating P-1).
Liquidity
risk
Liquidity risk arises from the Company's
management of working capital, and is the risk that the Company
will encounter difficulty in meeting its financial obligations as
they fall due.
At each Board meeting, and at the reporting
date, the cash flow projections are considered by the Board to
confirm that the Company has sufficient funds and available funding
facilities to meet its obligations as they fall due.
The table below analyses the company's
financial liabilities into relevant maturity groupings based on
their contractual maturities. The amounts presented are the
undiscounted cash flows:
|
|
Less than 6 months
|
6 to 12 months
|
Between 1 and 2 years
|
Between 2 and 5 years
|
|
|
£000
|
£000
|
£000
|
£000
|
|
31 March
2024
|
|
|
|
|
|
Trade and other payables
|
463
|
-
|
-
|
-
|
|
Accruals
|
125
|
-
|
-
|
-
|
|
Borrowings
|
-
|
30
|
13
|
-
|
|
|
564
|
30
|
13
|
-
|
|
31 March
2023
|
|
|
|
|
|
Trade and other payables
|
716
|
-
|
-
|
-
|
|
Accruals
|
127
|
-
|
-
|
-
|
|
Borrowings
|
-
|
35
|
40
|
-
|
|
|
843
|
35
|
40
|
-
|
Foreign
currency risk
Foreign currency risk is the risk that the
fair value of future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates.
The Company seeks to transact the majority of
its business in its reporting currency (£Sterling). However, many
customers and suppliers are outside the UK and a proportion of
these transact with the Company in US Dollars and Euros. For that
reason, the Company operates current bank accounts in US Dollars
and Euros as well as in its reporting currency. To the maximum
extent possible receipts and payments in a particular currency are
made through the bank account in that currency to reduce the amount
of funds translated to or from the reporting currency. Cash flow
projections are used to plan for those occasions when funds will
need to be translated into different currencies so that exchange
rate risk is minimised.
If the exchange rate between Sterling and the
Dollar or Euro had been 10% higher/lower at the reporting date the
effect on profit and equity would have been approximately £34,000
(2023: £34,000) higher/lower and £4,000 higher/lower (2023:
immaterial) respectively.
21
Called up share capital
|
|
2024
£'000
|
2023
£'000
|
|
Allotted, called up and fully paid
|
|
|
|
-
95,365,564 (2023: 26,014,946) Ordinary shares of
£0.04
|
3,815
|
1,040
|
The company is authorised to issue 104,902,120
shares
No dividends were paid (2023: £nil). The
directors do not recommend payment of a final dividend (2023:
£nil).
22
Capital commitments
At 31 March 2024 the Company had contracted
for but not incurred capital expenditure of £nil (2023:
£nil).
23
Retirement benefits obligations
The Company operates a defined contribution
scheme, the assets of which are managed separately from the
Company. During the year the Company charged £61,000 to the
Statement of Profit or Loss and Other Comprehensive Income (2023:
£96,000) in respect of Company contributions to the scheme. At the
reporting date there was £11,000 (2023: £19,000) payable to the
scheme and included in other payables.
24
Transactions with related parties
The Company had the following transactions
with related parties during the year:
Invest Northern Ireland ("Invest NI") is a
shareholder in the Company. The Company received invoices for rent
and estate services amounting to £79,000 (2023: £79,000). A balance
of £11,000 (2023: £45,000) was due and payable to Invest NI at the
reporting date.
Walsh Strategic Management Limited("Walsh") is
a company wholly owned by Colin Walsh, a director of the Company.
The Company received strategic management consultancy services from
Walsh amounting to £27,000 (2023: £27,000). A balance of £27,000
(2023: £nil) was accrued at year end and payable to Walsh as at the
reporting date.
25
Ultimate controlling party
There is no ultimate controlling
party.
26
Post balance sheet events
There have been no significant events
affecting the company since the year end.
27
Reconciliation of loss to EBITDA
|
|
2024
£'000
|
2023
£'000
|
|
Loss before tax
|
(2,289)
|
(2,859)
|
|
Finance income
|
(3)
|
(3)
|
|
Finance expense
|
5
|
4
|
|
Depreciation and amortisation
|
219
|
372
|
|
EBITDA
|
(2,068)
|
(2,486)
|