TIDMFAB
RNS Number : 5109W
Fusion Antibodies PLC
19 August 2020
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information for the purposes of Article 7 under the Market Abuse
Regulation (EU) No. 596/2014 ("MAR"). With the publication of this
announcement, this information is now considered to be in the
public domain.
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, is pleased to announce its final
results for the year ended 31 March 2020.
Highlights
-- Full year revenues increased by 79% to GBP3.9m (2019: GBP2.2m)
-- Loss for the year of GBP0.7m (2019: loss GBP1.3m)
-- Commercial roll out and revenues from Rational Affinity Maturation Platform (RAMP(TM) )
-- Cash position at the year-end GBP1.5m (2019: GBP2.0m)
Post year end and looking ahead
-- GBP3.0m equity fundraise post year end
-- Covid-19 programme introduced as part of the Mammalian
Antibody Library Development Plan to assist clients working towards
solutions for Covid-19
-- Partnership with MAB Discovery continues with further development work being undertaken
-- Investment in laboratory automation equipment
Paul Kerr, CEO of Fusion Antibodies commented: "We have had a
strong year with the increased revenue performance in H1 and H2
driven by the expansion of our existing services and newly
introduced RAMP(TM) . The Company has also seen strong geographical
growth in FY20 with the appointment of two new distributors in Asia
as well carrying out a RAMP(TM) project for a large indigenous
company in China. While Covid-19 has brought a lot of uncertainty
for FY21, trading so far has been in line with expectations and the
GBP3.0m fundraise in April has allowed Fusion to expand the
existing proof-of-concept work on the Mammalian Antibody Library to
include Covid-19 as a new target. We are positive about the next 12
months and are grateful to our shareholders for their continued
support."
Enquiries:
Fusion Antibodies plc www.fusionantibodies.com
Dr Paul Kerr, Chief Executive Officer Via Walbrook PR
James Fair, Chief Financial Officer
Allenby Capital Limited Tel: +44 (0)20 3328 5656
James Reeve / Asha Chotai (Corporate Finance)
Tony Quirke (Sales)
Walbrook PR Tel: +44 (0)20 7933 8780 or fusion@walbrookpr.com
Anna Dunphy Mob: +44 (0)7876 741 001
Paul McManus Mob: +44 (0)7980 541 893
Chairman's Statement
This year has seen the Company build on the success and growth
that was seen in the latter part of FY2019. Revenues grew in both
H1 and H2 to deliver year on year revenue growth of 79%. This
progress has come from both our existing services and the
introduction of the RAMP(TM) platform which generated its first
commercial projects for customers during the year. The RAMP(TM)
service has contributed materially to the revenues for the year and
we anticipate increased revenue contribution in coming years as
this unique service becomes established. The Company has continued
with its strategy to invest for growth which has resulted in a loss
for the year of GBP697,000 (FY2019: GBP1.3m loss) as is explained
in the Chief Executive Officer's report below.
Strategy and progress
The strong performance seen in the second half of FY2019 has
continued and the revenues for FY2020 were 79% higher than the
previous year. All areas of the business have grown but in
particular our humanization service remains strong and continues to
be a core foundation for us. Our new RAMP(TM) service, which can
improve the structure and performance of antibody based drugs, was
launched this year and has started to see some traction although
like any innovative technology platform, it takes time for it to
become an established methodology. As the use of antibodies as
therapeutic drugs continues to grow, we expect that our wide range
of services will continue to be the first choice for many
Pharmaceutical and Biotech companies outsourcing their R&D
activities.
As part of our core strategy we continue to invest in the
science behind the services and I am pleased to report that the
proof-of-concept R&D for our Mammalian Antibody Library
Discovery Platform (the "Library") currently under development is
on track for completion in this financial year. At that point we
expect to have demonstrated that we can create a fully human
antibody library which will allow for the screening of novel
targets and the faster identification of lead antibody drugs
compared with conventional practices .
As I have previously mentioned, it takes time for any innovative
technology platform to become an established methodology, and 2021
will be dedicated to optimization of the Library and the generation
of a body of data from a range of targets before launch and
revenues in 2022.
In addition to the R&D programme focussing on well
understood oncology targets, I can report that we will be adding
Covid-19 to the Library panel. The outbreak of this virus presents
an ideal opportunity for us to test the Library in a real-world
setting against an unmet and critical medical need. In addition to
vaccines, effective treatments, both prophylactic and therapeutic
drugs will be required to produce a long-term solution for this
disease and a neutralising antibody against Covid-19 could be one
of the solutions in the control of the virus. In addition to
validating the Library in readiness for commercialisation there is
the longer-term potential to out-licence successfully produced
human antibodies to Covid-19 to commercial partners for further
development.
In order to provide the Company with the resources required to
undertake the additional proof-of-concept work on the Library in
respect of Covid-19, as well as for the existing oncology targets,
a placing of 3,333,333 new ordinary shares in April 2020 resulted
in us raising gross cash proceeds of GBP3.0m (GBP2.8m net of
costs).
Strategically the business is organised in three core service
areas to meet our customer needs:
-- Discovery: the creation, screening and sequencing of novel
monoclonal antibodies for therapeutic and diagnostic
applications;
-- Engineering: maximising the performance of an antibody drug
including CDRx(TM) humanisation, ADD(TM) and RAMP(TM) ; and
-- Supply: the production of material for clinical production or
further research, including cGMP ready stable cell line development
and transient expression.
More details on financial performance are given in the Chief
Executive Officer's report.
Corporate governance
The long-term success of the business and delivery on strategy
depends on good governance. The Company complies with the Quoted
Companies Alliance Corporate Governance Code 2018 as explained more
fully in the Governance Report.
Current trading
Growth throughout the year was strong as the Company continued
to deliver on the foundations laid last year. The successful
introduction of RAMP(TM) has not only contributed to revenues but
allowed the Company to maintain its position at the forefront of
innovative services for the drug discovery industry, a part of our
core ongoing strategy. The emergence of the Sars-cov-2 virus late
in the year did not have a significant impact on operations as the
Company was able to swiftly put procedures in place to maintain and
protect our laboratory services through a combination of remote
working for desk-based staff and staggered working hours for those
working in a laboratory.
Post year end trading has been in line with expectations. There
continues to be considerable uncertainty around the world as
countries ease or increase restrictions to manage the global
Covid-19 pandemic. Working with an international customer base
presents opportunities and challenges as governments and companies
respond to the immediate crisis and plan for a way forward in new
circumstances. The Board believe the Company has the expertise to
meet these challenges and capitalise on opportunities, and, having
raised capital post year end it also has the financial resources to
face the coming months with confidence.
I would like to commend our staff for their flexibility, speed
of adapting to new practices, their commitment and hard work during
this Covid-19 restrictive period and beyond, and to thank our
shareholders for their ongoing support.
Dr Simon Douglas
Chairman
19 August 2020
CEO's report and operations review
This year has been one of strong revenue growth, continued
innovation and continued investment for growth. As a result of our
ongoing investment for growth and in R&D the Company continues
to return losses which decreased this year to GBP0.7m (FY2019:
GBP1.3m loss). I am delighted to report that actions taken in the
latter half of the prior year have continued to produce improved
revenues exceeding previous expectations both for revenue and
EBITDA, as announced in January 2020.
In addition, the Company has been well placed to deal with the
uncertainties which arose in the final quarter of FY2020 as
companies and governments around the world took steps to control
the spread of the Coronavirus pandemic. Due to the inherent
uncertainties in markets around the world, the Board believes it is
not yet clear how FY2021 will develop but performance in the early
months give us some confidence for the year. The Company will
continue its strategy of investment in revenue growth and R&D
over the short to medium term, and particularly in the development
of the Mammalian Antibody Library.
Business review
Revenue performance across the financial year to 31 March 2020
has been strong with 79% annual growth coming from improved
performance in both H1 and H2. Most of this growth has come from
expansion of our existing services augmented by a material
contribution from RAMP(TM) , the most recent addition to our suite
of platforms and services. We have seen a robust introduction of
the new RAMP(TM) service and promising results achieved for our
early customers provide a good base for the wider marketing of the
service in the coming year.
Early in the year we strengthened our Business Development and
Marketing functions with new senior appointments. This has enabled
us to enhance our branding and better promote our key services:
CDRx(TM) Humanization, RAMP(TM) and Cell Line Development.
I am pleased to report that the Company saw strong growth in all
our geographical markets this year including our home UK market,
Europe and North America. We see a lot of potential in Asia and our
sales and marketing efforts have begun to translate into sales
growth and during the year members of the Fusion team made several
visits to Japan to support our distributor there. We have expanded
our presence in Asia with the appointment of two new distributors
A-Frontier in South Korea and Biotickle in India and made visits to
both those countries during the year. In addition, in China we
carried out a RAMP(TM) project for a large indigenous company.
We continue to invest in refining the RAMP(TM) platform and have
begun to develop machine learning capabilities for the current
platform.
The development of a Mammalian Antibody Library Platform is the
next phase of the R&D programme that began with RAMP(TM) .
During the year, the team was strengthened, and the initial stages
of work have continued apace testing all the elements that make up
this platform. We are very pleased with the progress made.
With the Covid-19 crisis reaching the UK towards the year end,
the Company took the decision to expand the original development
programme for the Library. Shortly after the year end we raised
additional funds to enable the Company to broaden the Library
programme testing to include Covid-19 as a new target alongside the
Immuno-oncology and GPCR targets in the existing plans, thus
accelerating the overall programme. This provides the Company with
the opportunity to showcase the application of the new platform and
may also present opportunities to out-license the novel antibodies
discovered as a result.
The MAB Discovery partnership continues as we work with them to
deliver their antibodies onward towards clinical development. We
maintain our interest in in several molecules developed by MAB
Discovery and other customers and have added new milestones for
customer projects completed during the year.
The Fusion Technical team continues to innovate and add value to
our clients' projects. We have multiple clients applying for new
patents where Fusion technical staff are listed as inventors and
authors in manuscripts under development, using both the CDRx(TM)
humanisation and RAMP(TM) platforms. The technical team has
presented the advantages of the technologies at multiple
international conferences during the year. This continuous
improvement and innovation here at Fusion Antibodies helps us stay
at the forefront of our industry.
Early in the final quarter of the financial year, it became
apparent that the Coronavirus outbreak was becoming a pandemic
which would affect all our lives and how we do business. The
Company moved swiftly to safeguard employees by limiting travel and
introducing remote working in advance of the restrictions imposed
by Government. As we operate from one building, these steps were
key to ensuring that the laboratory-based employees were able to
continue to work in a safe environment by reducing the number of
staff physically present and circulating in communal areas.
Communicating this to our customers in a timely manner has enabled
us to limit the impact on trading performance both pre and post
year end so that trading in FY2021 to date has been in line with
expectations and the pattern of customer payments is unchanged.
I am very grateful for the commitment and dedication shown both
by those staff who continued to come into work each day throughout
the lockdown and those who adjusted their working arrangements to
work remotely.
The directors remain confident that the Coronavirus pandemic
should continue to have only a limited impact on trading, however,
with the number of new cases worldwide continuing to grow the
situation remains fluid. The directors remain vigilant in
strengthening the business operations to mitigate risks and take
advantage of opportunities and greatly appreciate the support shown
by investors in the equity fundraise following the year end. Fusion
has managed the steps needed to keep our staff safe and we are well
placed to continue to provide and expand our drug discovery and
development services. Furthermore, we intend to demonstrate our
expertise and the value of our platforms on a global level by
developing key antigens and antibodies to Covid-19 for both
diagnostic testing and therapeutic use.
Having completed the laboratory expansion in the previous year,
limited investment was required in laboratory equipment during
FY2020. Future investment in equipment will concentrate on
automation of processes to increase productivity and capacity.
Inventory of consumables was increased at the year end to allow
for any supply chain disruption from the UK's planned departure
from the European Union and the Coronavirus outbreak reaching
Europe in the final quarter of the financial year. In the year, 32%
of the Company's revenues arose from exports to the EU countries.
The Company continues to monitor potential risks and opportunities
arising as the future EU trade deal is negotiated. We also continue
to develop other export markets to mitigate risks of overexposure
to any one geographical market.
Net current assets of GBP1.8m at 31 March 2020 (2019: GBP2.5m)
mainly comprised inventories and cash and cash equivalents.
The Company ended the year with GBP1.5m of cash, having used
GBP0.2m of cash in operations during the year, invested GBP0.1m in
property, plant and equipment and GBP0.2m servicing asset-based
borrowings. This cash level put the Company in a strong position to
progress plans for growth in existing services in FY2021. Shortly
after the reporting date the Company raised a further GBP3.0m gross
from the issue of new shares to provide the resources to undertake
additional proof-of-concept work on the Library in respect of
Covid-19 and oncology targets as well as further working capital
for the Company.
Post-period end events
-- GBP3.0m capital (gross proceeds) raised post year end
-- Covid-19 programme introduced as part of the Mammalian Antibody Library Development Plan
-- Partnership with MAB Discovery continues with further development work being undertaken
-- Investment in laboratory automation equipment
Financial Results
The Company has continued to build on the revenue growth in the
second half of FY2019 with revenue growth seen in both H1 and H2.
Full year revenues for the year in total were up 79% to GBP3.9m
(FY2019: GBP2.2m). Revenues were higher in all geographical markets
when compared with the previous year.
The EBITDA loss for the year was GBP0.4m (FY2019: GBP1.1m loss)
(see note 30). Continued losses are a result of ongoing investment
in operations and research which are expected to contribute towards
future revenue growth. The Company reduced its loss before tax to
GBP1.1m (FY2019: GBP1.5m loss).
The Company used GBP0.2m of cash in operations (2019: GBP1.1m)
and invested GBP0.1m in expenditure on capital equipment and a
further GBP0.2m on lease and hire purchase payments. Cash and cash
equivalents as at 31 March 2020 totaled GBP1.5m (2019:
GBP2.0m).
The Company's full results are set out in the financial
statements included with this report.
Key performance indicators
The key performance indicators (KPIs) regularly reviewed by the
Board are:
KPI 2020 2019
----------------------------- ---------- ----------
Revenue change year on year 79% (19%)
EBITDA (GBP0.4m) (GBP1.1m)
Cash used in operations (GBP0.2m) (GBP1.1m)
----------------------------- ---------- ----------
Outlook
There continues to be considerable uncertainty around the world
as countries ease or increase restrictions to manage the global
Covid-19 pandemic. Working with an international customer base
presents opportunities and challenges as governments and companies
respond to the immediate crisis and plan for a way forward in new
circumstances. The Board believes the Company has the expertise to
meet these challenges and capitalise on opportunities, and having
raised capital post year end, that it also has the financial
resources to face the coming months with confidence.
Dr Paul Kerr
Chief Executive Officer
19 August 2020
Statement of Comprehensive Income
For the year ended 31 March 2020
Notes 2020 2019
GBP'000 GBP'000
----------------------------- ------ --------- ---------
Revenue 4 3,895 2,182
Cost of sales (2,123) (1,378)
----------------------------- ------ --------- ---------
Gross profit 1,772 804
Other operating income 56 86
Administrative expenses (2,887) (2,398)
----------------------------- ------ --------- ---------
Operating loss 5 (1,059) (1,508)
----------------------------- ------ --------- ---------
Finance income 8 6 13
Finance expense 8 (20) (4)
----------------------------- ------ --------- ---------
Loss before tax (1,073) (1,499)
Income tax credit 10 376 235
----------------------------- ------ --------- ---------
Loss for the financial year (697) (1,264)
----------------------------- ------ --------- ---------
Total comprehensive expense
for the year (697) (1,264)
Pence Pence
Loss per share
Basic 11 (3.2) (5.7)
The statement of comprehensive income has been prepared on the
basis that all operations are continuing operations.
Statement of Financial Position
As at 31 March 2020
Notes 2020 2019
GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 12 4 6
Property, plant and equipment 13 1,470 1,588
Deferred tax assets 15 1,764 1,343
---------------------------------- ------ --------- ---------
3,238 2,937
---------------------------------- ------ --------- ---------
Current assets
Inventories 16 340 243
Trade and other receivables 17 887 1,056
Current tax receivable 38 23
Cash and cash equivalents 1,537 1,984
---------------------------------- ------ --------- ---------
2,802 3,306
---------------------------------- ------ --------- ---------
Total assets 6,040 6,243
Liabilities
---------------------------------- ------ --------- ---------
Current liabilities
Trade and other payables 18 828 729
Borrowings 19 161 67
---------------------------------- ------ --------- ---------
989 796
---------------------------------- ------ --------- ---------
Net current assets 1,813 2,510
---------------------------------- ------ --------- ---------
Non-current liabilities
Borrowings 19 219 73
Provisions for other liabilities
and charges 20 20 20
---------------------------------- ------ --------- ---------
239 93
---------------------------------- ------ --------- ---------
Total liabilities 1,228 889
Net assets 4,812 5,354
---------------------------------- ------ --------- ---------
Equity
Called up share capital 22 884 884
Share premium reserve 4,872 4,872
Accumulated losses (944) (402)
---------------------------------- ------ --------- ---------
Total equity 4,812 5,354
---------------------------------- ------ --------- ---------
Statement of Changes in Equity
For the year ended 31 March 2020
Called Share premium (Accumulated Total
up share reserve losses)/retained equity
capital GBP'000 earnings GBP'000
GBP'000 GBP'000
------------------------------ ----------- --------------- ------------------- ----------
At 1 April 2018 884 4,872 795 6,551
Loss and total comprehensive
expense for the year - - (1,264) (1,264)
------------------------------ ----------- --------------- ------------------- ----------
Share options - value
of employee services - - 98 98
Tax charge relating
to share option scheme - - (31) (31)
------------------------------ ----------- --------------- ------------------- ----------
Total transactions
with owners, recognised
directly in equity - - 67 67
------------------------------ ----------- --------------- ------------------- ----------
At 31 March 2019 884 4,872 (402) 5,354
------------------------------ ----------- --------------- ------------------- ----------
At 1 April 2019 884 4,872 (402) 5,354
Loss and total comprehensive
expense for the year - - (697) (697)
------------------------------ ----------- --------------- ------------------- ----------
Share options - value
of employee services - - 72 72
Tax credit relating
to share option scheme - - 83 83
------------------------------ ----------- --------------- ------------------- ----------
Total transactions
with owners, recognised
directly in equity - - 155 155
------------------------------ ----------- --------------- ------------------- ----------
At 31 March 2020 884 4,872 (944) 4,812
------------------------------ ----------- --------------- ------------------- ----------
Statement of Cash Flows
For the year ended 31 March 2020
2020 2019
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Cash flows from operating activities
Loss for the year (697) (1,264)
Adjustments for:
Share based payment expense 83 98
Depreciation 620 429
Amortisation of intangible assets 2 2
Finance income (6) (13)
Finance costs 20 4
Income tax credit (376) (235)
Increase in inventories (97) (161)
Decrease/(increase) in trade and other receivables 169 (158)
Increase in trade and other payables 99 193
---------------------------------------------------- --------- ---------
Cash (used in)/generated from operations (183) (1,105)
Income tax received 23 7
---------------------------------------------------- --------- ---------
Net cash (used in)/generated from operating
activities (160) (1,098)
Cash flows from investing activities
Purchase of intangible assets - (8)
Purchase of property, plant and equipment (109) (1,373)
Finance income - interest received 6 13
---------------------------------------------------- --------- ---------
Net cash used in investing activities (103) (1,368)
Cash flows from financing activities
Repayment of borrowings (172) (37)
Finance costs - interest paid (12) (4)
---------------------------------------------------- --------- ---------
Net cash (used in)/generated from financing
activities (184) (41)
Net (decrease)/increase in cash and cash
equivalents (447) (2,507)
Cash and cash equivalents at the beginning
of the year 1,984 4,491
---------------------------------------------------- --------- ---------
Cash and cash equivalents at the end of the
year 1,537 1,984
---------------------------------------------------- --------- ---------
Notes to the Financial Statements
1. General information
Fusion Antibodies plc is a company incorporated and domiciled in
the UK, having its registered office at Marlborough House, 30
Victoria Street, Belfast BT1 3GG.
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 information included in this preliminary
announcement does not constitute statutory accounts of the company
for the years ended 31 March 2020 and 31 March 2019 but is derived
from those accounts. Statutory accounts for 2019 have been
delivered to the Registrar of Companies and those for 2020 will be
delivered following the Company's Annual General Meeting. The
auditors have reported on those accounts: their reports were (i)
unqualified , (ii) did not included a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
The financial statements have been prepared on the historical
cost convention, modified to include certain financial instruments
at fair value.
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 GBP1.
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) and IFRS
Interpretations Committee (IFRIC) as adopted by the European Union
and with the Companies Act 2006 applicable to companies reporting
under IFRS.
The preparation of financial statements in conformity with 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 GBP697,000 for the year and
at the year-end had net current assets of GBP1,813,000 including
GBP1,537,000 of cash and cash equivalents. The impact of the
Covid-19 pandemic has had limited impact on trading and the Company
was able to remain open and operational throughout the period of
most stringent Government restrictions. 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. The Directors expect the Company to return to
underlying profitability excluding R&D expenditure by the end
of FY2022. Following the reporting date, the Company raised net
cash proceeds of GBP2.8m from an issue of 3,333,333 Ordinary
shares. 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 for 12 months from
the reporting date. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements. In
arriving at this conclusion, the directors have reviewed detailed
forecast models for the Company. These models are based on best
estimates of future performance and have been adjusted to reflect
various scenarios and outcomes that could potentially impact the
forecasts.
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.
The Company's performance obligations for its revenue streams
are deemed to be the provision of specific services or materials to
the customer. Revenue billed to the customer is allocated to the
various performance obligations, based on the relative fair value
of those obligations, and is then recognised as follows:
-- Where a contractual right to receive payment exists, revenue
is recognised over the period services are provided using the
percentage of completion method, based on the input method using
time spent; and
-- Where no contractual right to receive payment exists, revenue
is recognised upon completion of each separate performance
obligation, which is typically when implementation services are
complete or data has been provided to the customer.
Grant income
Revenue grants received by the Company are recognised in a
manner consistent with the grant conditions. Once conditions have
been met, revenue is recognised in the Statement of Comprehensive
Income and shown 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.
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 period 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:
Leasehold improvements The lesser of the asset life and
the remaining length of the lease
Plant and machinery 4 years
Fixtures, fittings 4 years
& equipment
Leases 2020
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.
Leases 2019
Leases in which a significant portion of the risks and rewards
of ownership remain with the lessor are classified as operating
leases and are charged to the Statement of Comprehensive Income on
a straight-line basis over the period of the lease.
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 period 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 of 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 assets
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.
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 end 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 period 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 period 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 represents retained profits and losses.
3. Critical accounting estimates and judgements
Many of the amounts included in the financial statements invoice
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
The directors do not consider there are any critical judgements
in applying accounting policies.
Critical accounting estimates and assumptions
-- Deferred Taxation. The Company has taxable losses of
GBP8,489,000 which are able to be carried forward to be offset
against future profits of the Company. A deferred tax asset has
been calculated based on estimates of future profits against which
these losses can be utilized. Deferred tax represents a significant
financial asset of the Company and therefore movements being
charged through the Statement of Comprehensive Income also have the
potential to affect reported profit or loss. The Company has
reported a loss for the year ended 31 March 2020. Shortly after the
reporting date the Company raised a further GBP2.8m net of capital
to invest in research and development and to finance growth and as
a consequence this will increase those tax losses in the next two
to three years. The directors have prepared forecasts indicating a
return to profitability in the future and they have an expectation
that the Company will make sufficient future taxable profits
against which the tax losses can be deducted and accordingly, a
deferred tax asset has been recognised in the financial
statements.
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 2020 2019
GBP'000 GBP'000
---------------------- --------- ---------
UK (domicile) 561 203
Rest of Europe 1,246 658
North America 1,435 1,009
Rest of World 653 312
3,895 2,182
---------------------- --------- ---------
In the year there were no customers (2019: none) to whom sales
exceeded 10% of revenues.
5. Operating loss is stated after charging/(crediting):
2020 2019
GBP'000 GBP'000
------------------------------------------------------- --------- ---------
Employee benefit costs
-wages and salaries 1748 1,247
-social security costs 169 118
-other pension costs 76 49
-share based payments 72 98
------------------------------------------------------- --------- ---------
2,065 1,512
------------------------------------------------------- --------- ---------
Depreciation of property, plant and
equipment 620 429
Other operating expenses
Operating lease rentals - land &
buildings - 75
Rates, utilities and property maintenance 64 66
IT costs 25 16
Fees payable to the Company's auditors
* for the audit of the financial statements 19 19
* non-audit assurance services 7 7
26 26
------------------------------------------------------- --------- ---------
Raw materials and consumables used 1,337 913
Increase in inventories (97) (161)
Patent costs 20 7
Marketing costs 134 162
Loss on foreign exchange 1 -
Other expenses 815 732
Total cost of sales and administrative
expenses 5,010 3,777
------------------------------------------------------- --------- ---------
Included in the costs above is expenditure on research and
development totalling GBP391,000 (2019: GBP240,000).
6. Average staff numbers
2020 2019
---------------------------------- ----- -----
Employed in UK
(including executive directors) 42 33
Non-executive directors 5 5
---------------------------------- ----- -----
47 38
---------------------------------- ----- -----
7. Remuneration of directors and key senior management
Directors
2020 2019
GBP'000 GBP'000
----------------------- --------- ---------
Emoluments 486 426
Pension contributions 19 16
505 442
----------------------- --------- ---------
Highest paid director
The highest paid director received the following emoluments:
2020 2019
GBP'000 GBP'000
----------------------- --------- ---------
Emoluments 121 112
Pension contributions 6 5
127 117
----------------------- --------- ---------
Key senior management
Key senior management is considered to comprise the directors of
the Company with total remuneration for the year of GBP505,000
(2019: GBP442,000). Share based payments for the year attributable
to key senior management totalled GBP38,000 (2019: GBP67,000).
8. Finance income and costs
Income 2020 2019
GBP'000 GBP'000
-------------------------- --------- ---------
Bank interest receivable 6 13
-------------------------- --------- ---------
Costs 2020 2019
GBP'000 GBP'000
-------------------------------------- --------- ---------
Interest expense on other borrowings 20 4
Bank interest payable - -
-------------------------------------- --------- ---------
20 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 unapproved 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 prior to the vesting date, except under certain
circumstances such as leaving by reason of redundancy.
The total share-based remuneration recognised in the Statement
of Comprehensive Income was GBP72,000 (2019: GBP98,000). 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 35.0% and a compound
risk free rate assumed of 0.88%.
2020 2020 2019 2019
Weighted Number Weighted Number
average average
exercise exercise
price price
GBP GBP
--------------------------- ---------- ---------- ---------- ----------
Outstanding at beginning
of the year 0.401 1,718,750 0.040 505,000
--------------------------- ---------- ---------- ---------- ----------
Granted during the year - - 0.545 1,230,000
Exercised during the year - - - -
Lapsed during the year 0.545 (33,333) 0.040 (16,250)
--------------------------- ---------- ---------- ---------- ----------
Outstanding at the end
of the year 0.400 1,685,417 0.401 1,718,750
--------------------------- ---------- ---------- ---------- ----------
The options outstanding at the end of each year were as
follows:
Expiry Nominal Exercise 2020 2019
share price Number Number
value GBP
--------------- --------- --------- ---------- ----------
May 2027 GBP0.04 0.040 488,750 488,750
December 2028 GBP0.04 0.545 1,196,667 1,230,000
--------------- --------- --------- ---------- ----------
Total 1,685,417 1,718,750
-------------------------- --------- ---------- ----------
Of the total number outstanding 895,416 (2019: 244,375) had
vested at the year end.
10. Income tax credit
2020 2019
GBP'000 GBP'000
----------------------------------------- --------- ---------
Current tax - UK corporation tax (38) (22)
Deferred tax - origination and reversal
of temporary differences (338) (213)
Income tax credit (376) (235)
----------------------------------------- --------- ---------
The difference between loss before tax multiplied by the base
rate of 19% and the income tax credit is explained in the
reconciliation below:
2020 2019
GBP'000 GBP'000
Factors affecting the tax credit for the
year
Loss before tax (1,073) (1,499)
------------------------------------------- --------- ---------
Loss before tax multiplied by standard
rate of UK corporation tax of 19% (204) (285)
------------------------------------------- --------- ---------
Provisions and expenditure not deductible
for tax purposes - permanent 23 14
Provisions and expenditure not deductible
for tax purposes - temporary (2) (32)
Increase in deferred tax asset due to
increase in the enacted rate (155)
RDEC/R&D tax credit (38) (22)
Adjustment in recognition of deferred
tax - 90
------------------------------------------- --------- ---------
Income tax credit (376) (235)
------------------------------------------- --------- ---------
11. Earnings per share
2020 2019
GBP'000 GBP'000
----------------------------- --------- ---------
Loss for the financial year (697) (1,264)
Loss per share pence Pence
Basic (3.2) (5.7)
----------------------------- --------- ---------
Number Number
----------------------------------- ----------- -----------
Issued ordinary shares at the end
of the year 22,091,192 22,091,192
Weighted average number of shares
in issue during the year 22,091,192 22,091,192
----------------------------------- ----------- -----------
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.
12. Intangible assets
Software
GBP'000
-------------------------- ----------
Cost
At 1 April 2019 8
Additions -
At 31 March 2020 8
------------------------------ ----------
Accumulated amortisation
At 1 April 2019 2
Amortisation charged
in the year 2
At 31 March 2020 4
------------------------------ ----------
Net book value
At 31 March 2020 4
------------------------------ ----------
At 31 March 2019 6
------------------------------ ----------
13. Property, plant and equipment
Right Leasehold Plant Fixtures, Total
of use Improve-ments & fittings GBP'000
Assets GBP'000 machinery & equipment
GBP'000 GBP'000 GBP'000
-------------------------- ---------- --------------- ------------ ------------- ----------
Cost
At 1 April 2019 - 712 1,707 202 2,621
Adoption of IFRS
16 (note 29) 226 - - - 226
--------------------------- ---------- --------------- ------------ ------------- ----------
Additions - 13 245 18 276
Disposals - - (36) - (36)
--------------------------- ---------- --------------- ------------ ------------- ----------
At 31 March 2020 226 725 1,916 220 3,087
--------------------------- ---------- --------------- ------------ ------------- ----------
Accumulated depreciation
At 1 April 2019 - 283 691 59 1,033
Depreciation charged
in the year 68 142 360 50 620
Disposals - - (36) - (36)
--------------------------- ---------- --------------- ------------ ------------- ----------
At 31 March 2020 68 425 1,015 109 1,617
--------------------------- ---------- --------------- ------------ ------------- ----------
Net book value
At 31 March 2020 158 300 901 111 1,470
--------------------------- ---------- --------------- ------------ ------------- ----------
At 31 March 2019 - 429 1,016 143 1,588
--------------------------- ---------- --------------- ------------ ------------- ----------
Assets under Leasehold Plant & Fixtures, Total
construction improvements machinery fittings GBP'000
GBP'000 GBP'000 GBP'000 & equipment
GBP'000
----------------- --------------- --------------- ------------ ------------- ----------
Cost
At 1 April 2018 205 156 691 108 1,160
Additions - 351 1,017 103 1,471
Brought into
use (205) 205 - - -
Disposals - - (1) (9) (10)
----------------- --------------- --------------- ------------ ------------- ----------
At 31 March
2019 - 712 1,707 202 2,621
----------------- --------------- --------------- ------------ ------------- ----------
Accumulated
depreciation
At 1 April 2018 - 156 431 26 613
Depreciation
charged in the
year - 127 261 41 429
Disposals - - (1) (8) (9)
----------------- --------------- --------------- ------------ ------------- ----------
At 31 March
2019 - 283 691 59 1,033
----------------- --------------- --------------- ------------ ------------- ----------
Net book value
At 31 March
2019 - 429 1,016 143 1,588
----------------- --------------- --------------- ------------ ------------- ----------
At 31 March
2018 205 - 260 82 547
----------------- --------------- --------------- ------------ ------------- ----------
Plant & machinery with a net book value of GBP331,000 is
held under hire purchase agreements or finance leases (2019:
GBP186,000).
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:
2020 2019
GBP GBP
---------------------------------------- ----- -----
Fusion Contract Services Limited 1 1
100% subsidiary
Dormant company
Marlborough House, 30 Victoria Street,
Belfast BT1 3GG
---------------------------------------- ----- -----
Group accounts are not prepared on the basis that the subsidiary
company is dormant and not material to the financial
statements.
15. Deferred tax assets
2020 2019
GBP'000 GBP'000
-------------------------------------------- --------- ---------
At 1 April 1,343 1,161
Credited to the statement of comprehensive
income in the year 338 213
Credited/(charged) to equity in
the year 83 (31)
At 31 March 1,764 1,343
-------------------------------------------- --------- ---------
The movement in deferred tax assets and liabilities during the
financial year, without taking into consideration the offsetting of
balances within the same tax jurisdiction, is as follows:
Deferred tax Accelerated Tax losses Share RDEC Total
assets and liabilities tax depreciation GBP'000 based tax GBP'000
GBP'000 payments credit
GBP'000 GBP'000
-------------------------- ------------------ ------------ ---------- --------- ----------
At 1 April 2018 (40) 1,143 56 2 1,161
(Charged)/credited
to Statement
of Comprehensive
Income (32) 245 (5) 5 213
Credited to equity - - (31) - (31)
-------------------------- ------------------ ------------ ---------- --------- ----------
At 1 April 2019 (72) 1,388 20 7 1,343
(Charged)/credited
to Statement
of Comprehensive
Income 66 226 37 9 338
Credited to equity - - 83 - 83
-------------------------- ------------------ ------------ ---------- --------- ----------
At 31 March 2020 (6) 1,614 140 16 1,764
-------------------------- ------------------ ------------ ---------- --------- ----------
Deferred tax assets are recognised for the carry forward of
corporation tax losses to the extent that the realisation of a
future benefit is probable. The deferred tax asset arising from
future utilisation of taxable losses of GBP8,489,000 (2019:
GBP8,165,000) is dependent on future taxable profits arising in the
UK. The Company has reported a loss for the year ended 31 March
2020. Shortly after the reporting date the Company raised a further
GBP2.8m net of capital to invest in research and development and to
finance growth and as a consequence this will increase those tax
losses in the next two to three years. The directors have prepared
forecasts indicating a return to profitability in the future and
they have an expectation that the Company will make sufficient
future taxable profits against which the tax losses can be deducted
and accordingly, a deferred tax asset has been recognised in the
financial statements.
Deferred tax liabilities and assets expected to reverse after
more than 12 months: GBP1,595,000 (2019: GBP1,343,000).
16. Inventories
2020 2019
GBP'000 GBP'000
------------------------------- --------- ---------
Raw materials and consumables 340 243
------------------------------- --------- ---------
The cost of inventories recognised as an expense for the year
was GBP1,240,000 (2019: GBP752,000).
17. Trade and other receivables
2020 2019
GBP'000 GBP'000
-------------------------------- --------- ---------
Trade receivables 542 728
Loss allowance (1) (2)
-------------------------------- --------- ---------
Trade receivables - net 541 726
Other receivables 49 90
Prepayments and accrued income 297 240
-------------------------------- --------- ---------
887 1,056
-------------------------------- --------- ---------
The fair value of trade and other receivables approximates to
their carrying value.
At the reporting date trade receivables loss
allowance/impairment as follows:
2020 2019
GBP'000 GBP'000
-------------------------------- --------- ---------
Individually impaired - -
Expected credit loss allowance 1 2
-------------------------------- --------- ---------
1 2
-------------------------------- --------- ---------
The carrying amount of trade and other receivables are
denominated in the following currencies:
2020 2019
GBP'000 GBP'000
----------- --------- ---------
UK pound 497 610
Euros 12 95
US dollar 81 111
590 816
----------- --------- ---------
The expected credit loss allowance has been calculated as
follows:
Current More than More More More than Total
30 days than than 120 days
past due 60 days 90 days past due
past past
due due
---------------- --------- ----------- ---------- --------- ----------- ---------
Expected
loss rate 0.1% 0.1% 0.2% 0.3% 1.6%
Gross carrying
amount
(GBP) 316,407 149,448 69,372 - 27,483 562,710
Loss allowance
(GBP) 346 182 110 - 429 1,067
---------------- --------- ----------- ---------- --------- ----------- ---------
Movements on trade receivables loss allowance is as follows:
2020 2019
GBP GBP'000
---------------------------- ----- ---------
At 1 April 2 6
Movement in loss allowance (1) (1)
Write off as uncollectible - (3)
---------------------------- ----- ---------
At 31 March 1 2
---------------------------- ----- ---------
The creation and release of the loss allowance for trade
receivables has been included in administrative expenses in the
Statement of 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.
18. Trade and other payables
2020 2019
GBP'000 GBP'000
--------------------------------- --------- ---------
Trade payables 415 462
Social security and other taxes 73 -
Other payables 22 25
Accruals and deferred income 318 242
828 729
--------------------------------- --------- ---------
The fair value of trade and other payables approximates to their
carrying value.
Invest Northern Ireland hold a mortgage dated 9 December 2009
for securing all monies due or to become due from the Company on
any account. At the reporting date a balance of GBPnil (2019:
GBP25,000) was due to Invest Northern Ireland.
19. Borrowings
Lease liabilities Hire Purchase Total 2019
GBP'000 Contracts GBP'000 GBP'000
GBP'000
--------------------- ------------------- -------------- ---------- ----------
At 1 April 140 140 78
Adoption of IFRS 16
(note 29) 226 - 226 -
Additions in year - 166 166 98
Interest charged in
year 11 9 20 4
Repayments (82) (90) (172) (40)
--------------------- ------------------- -------------- ---------- ----------
At 31 March 155 225 380 140
--------------------- ------------------- -------------- ---------- ----------
Amounts due in less
than 1 year 67 94 161 67
Amounts due after
more than 1 year 88 131 219 73
--------------------- ------------------- -------------- ---------- ----------
155 225 380 140
--------------------- ------------------- -------------- ---------- ----------
All borrowings are denominated in UK pounds. Using a discount
rate of 5.5% per annum the fair value of borrowings at the
reporting date is GBP359,000 (2019: GBP132,000 discounted at
6.0%).
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.
20. Provisions for other liabilities and charges
2020 2019
GBP'000 GBP'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 expiring 31 July 2022. The costs of
dilapidations would be incurred on vacating the premises.
21. 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 periods 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:
As at 31 March 2020 Amortised
cost
GBP'000
--------------------------- ----------
Trade receivables 541
Other receivables 49
Accrued income 9
Cash and cash equivalents 1,537
------------------------------ ----------
Total 2,136
------------------------------ ----------
As at 31 March 2019 Amortised
Cost
GBP'000
--------------------------- -----------
Trade receivables 726
Other receivables 90
Accrued income 3
Cash and cash equivalents 1,984
--------------------------- -----------
Total 2,803
--------------------------- -----------
As at 31 March 2020 Other financial
liabilities
at amortised
cost
GBP'000
---------------------- ----------------
Trade payables 415
Other payables 95
Accruals 318
Borrowings 380
---------------------- ----------------
Total 1,268
---------------------- ----------------
As at 31 March 2019 Other financial
liabilities
at amortised
cost
GBP'000
---------------------- -----------------
Trade payables 462
Other payables 25
Accruals 242
Borrowings 140
------------------------ -----------------
Total 869
------------------------ -----------------
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.
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 (GBPSterling). 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 GBP7,000 (2019: GBP14,000)
higher/lower and GBP1,000 (2019: GBP16,000) higher/lower
respectively.
22. Called up share capital
2020 2019
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Allotted, called up and fully paid
* 22,091,192 Ordinary shares of GBP0.04 884 884
--------------------------------------------------- --------- ---------
There were no changes in the issued share capital during the
year.
23. Capital commitments
At 31 March 2020 the Company had contracted for but not incurred
capital expenditure of GBPnil (2019: GBP28,000).
24. Operating lease commitments
2019
GBP'000
------------------------------------------ ---------
Minimum operating lease payments falling
due:
Within 1 year - land and property 75
In 1 to 2 years - land and property 75
In 2 to 5 years - land and property 100
------------------------------------------ ---------
250
------------------------------------------ ---------
Lease commitments are not disclosed for the current year as a
result of the adoption of IFRS 16. Using a discount rate of 4.7%
per annum the fair value of total lease payments at 31 March 2019
was GBP226,000.
25. 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 GBP76,000 to the Statement of Comprehensive
Income (2019: GBP49,000) in respect of Company contributions to the
scheme. At the reporting date there was GBP18,000 (2019: GBP8,000)
payable to the scheme and included in other payables.
26. 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 GBP78,000 (2019: GBP86,000). A balance of GBPnil
(2019: GBP25,000) was due and payable to Invest NI at the reporting
date. The Company claimed various grants during the year from
Invest NI amounting to GBP56,000 (2019: GBP86,000). A balance of
GBPnil was due on submitted claims from Invest NI (2019:
GBP64,000).
Director Colin Walsh is also a director of Crescent Capital NI
Limited. During the year Crescent Capital NI Limited charged the
Company GBPnil (2019: GBP3,000) for other consultancy work and at
the reporting date an amount of GBPnil (2019: GBPnil) was payable
to Crescent Capital NI Limited.
27. Events after the reporting date
After the reporting date the Company issued 3,333,333 ordinary
shares for cash proceeds net of costs of GBP2.8m.
28. Ultimate controlling party
There is no ultimate controlling party.
29. Changes in accounting policies
This note explains the impact of the adoption of IFRS 16
'Leases' on the Company's financial statements and discloses the
new accounting policies that have been applied from 1 April 2019,
where they are different to those applied in prior periods.
(a) Impact on financial statements
The adoption of IFRS 16 'Leases' from 1 April 2019 resulted in
changes in accounting policies and adjustments to the amounts
recognised in the financial statements. The new accounting policies
are set out in note 2.
In adopting IFRS 16 the modified retrospective approach has been
used such that the right of use assets arising is equal in value to
the lease liabilities recognised as borrowings. In accordance with
the transitional provisions of IFRS 16, a restatement of prior year
financial statements was not required. The reclassifications and
the adjustments arising from adoption of this standard are
therefore not reflected in Statement of Financial Position as at 31
March 2019, but are recognised in the opening Statement of
Financial Position on 1 April 2019.
GBP'000
------------------------------------ --------
Lease liabilities at 31 March 2019 250
Effect of discounting (24)
Right of use asset at 1 April 2019 226
------------------------------------ --------
The following table shows the adjustments recognised for each
individual line item. Line items that were not affected by the
changes have not been included. As a result, the sub-totals and
totals disclosed cannot be recalculated from the numbers provided.
The adjustments are explained in more detail below.
Impact on the opening balance on the statement of financial as
at 1 April 2019:
Balance sheet extract
------------------------- --------- -----------------------------
31 March Adoption of 1 April 2019
2019 IFRS 16 GBP'000
GBP'000 GBP'000
------------------------- --------- ------------ -------------
Non-current assets
Property, plant and
equipment 1,588 226 1,814
Current liabilities
Borrowings (67) (64) (131)
Non-current liabilities
Borrowings (73) (162) (235)
Equity
Accumulated losses (402) - (402)
------------------------- --------- ------------ -------------
(b) Impact of adoption
IFRS 16 'Leases' replaces IAS17 'Leases' and related
interpretations. It introduces a single lessee accounting model,
eliminating the previous classification of leases as either
operating or finance. This has resulted on operating leases
previously treated solely through profit or loss being recorded in
the statement of financial position in the form of a right-of-use
asset and a lease liability, subject to certain exemptions.
The adoption of IFRS 16 'Leases' from 1 April 2019 resulted in
changes in accounting policies and adjustments to the amounts
recognised in the financial statements. The new accounting policies
are set out in note 2. In accordance with the transitional
provisions in IFRS 16, comparative figures have not been
restated.
The total impact on the Company's retained earnings was GBPnil
as shown in 29(a) above.
Leases
The directors considered all leases currently in place at 31
March 2019 and the only lease identified for adjustment under IFRS
16 is for the Company's premises in Belfast. At 31 March 2019 this
lease had 40 months remaining and annual lease payments of
GBP75,000. The Company was required to recognise a right-of-use
asset at 1 April 2019 for this asset of GBP226,000 and a
corresponding liability in borrowings.
Rental payments will no longer be charged to profit or loss,
however, a depreciation charge for the asset and an interest charge
on the borrowings will be charged to profit or loss.
The following judgements have been made by the directors:
-- The agreement for the use of the premises constitutes a lease under IFRS 16;
-- The lease term was assessed as ending on the expiry of the agreement as set out in the lease;
-- The discount rate used of 4.7% was judged by the directors to
be the rate at which the Company would be able to borrow a similar
amount for the purposes of acquiring premises.
The impact on earnings per share for the year ended 31 March
2020 is a reduction of approximately GBP3,000 in reported earnings
or an additional GBP0.0001 per share.
30. Reconciliation of profits to EBITDA
2020 2019
GBP'000 GBP'000
----------------- --------- ---------
Loss before tax (1,073) (1,499)
----------------- --------- ---------
Finance income (6) (13)
Finance expense 20 4
Depreciation 620 429
----------------- --------- ---------
EBITDA (439) (1,079)
----------------- --------- ---------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR PPMLTMTIBBTM
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August 19, 2020 02:00 ET (06:00 GMT)
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