TIDMFAB
RNS Number : 9370F
Fusion Antibodies PLC
20 November 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
Regulations (EU) No. 596/2014 ("MAR"). With the publication of this
announcement, this information is now considered to be in the
public domain.
20 November 2020
Fusion Antibodies plc
("Fusion" or the "Company")
Half year Report
Fusion Antibodies plc (AIM: FAB), specialists in pre-clinical
antibody discovery, engineering and supply for both therapeutic
drug and diagnostic applications, announces its unaudited interim
results for the six months ended 30 September 2020 ("H1
FY2021").
Highlights
Operational
-- 9% growth in revenues in H1 FY2021 over H1 FY2020
-- COVID-19 programme introduced as part of the Mammalian Antibody Library development project
-- Recruitment of a Director of Research & Development, and
additional research scientist appointments
Financial
-- Trading for the period has been in line with the Directors' expectations
-- Continued improvement in revenues: H1 FY2021 revenues of
GBP1.90 million (H1 FY2020: GBP1.75 million)
-- R&D expenditure of GBP271,000, an increase of 50% on H1 FY2020
-- Losses held at same level as same period last year: H1 FY2021
loss of GBP0.47 million (H1 FY2020: GBP0.47 million loss)
-- GBP3.0 million (gross proceeds) raised via placing of new ordinary shares
-- Cash position at 30 September 2020 was GBP3.24 million (31 March 2020: GBP1.54 million)
Commenting on the interim results, Paul Kerr, CEO of Fusion
Antibodies plc, said: "I'm pleased to report that our revenues have
grown despite the fact that the period has been dominated by the
COVID-19 pandemic. We have expanded our R&D programme to
include a COVID-19 target along with our oncology targets, with the
goal of using our Mammalian Antibody Library, which will be branded
as "OptiMAL(TM)", to produce neutralising antibodies against the
virus, and have raised capital for that purpose. We have remained
operational throughout changing levels of government restrictions
and have taken the steps to sustain the business in the coming
months. I would like to thank our shareholders and staff for all
their valued support to enable us to continue to grow in these
challenging times."
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
About Fusion Antibodies plc
Fusion is a Belfast based biotechnology company 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 for its international,
blue-chip client base, which has included eight of the top 10
global pharmaceutical companies by revenue.
Fusion is a Collaborative Research Organisation (CRO) which
provides antibody discovery, engineering and supply, through to
cell line development. At every stage, our client's vision is
central to how we work, ensuring the best molecule goes to the
clinic. Our world-class humanization and antibody optimization
platforms harness the power of the natural diversity of antibodies.
To address remaining market needs in antibody discovery, Fusion is
creating a fully human antibody library to capture the entire human
antibody repertoire.
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 and ultimately speed up the drug development
process.
The global monoclonal antibody therapeutics market was valued at
$95.5 billion in 2017 and is forecast to surpass $174.2 billion in
2026, an increase at a CAGR of 6.9 per cent. for the period 2018 to
2026. In 2018, seven of the world's ten top selling drugs were
antibody-based therapeutics with the combined annual sales of these
drugs exceeding $62 billion.
Operational Review
The period began early in the United Kingdom's COVID-19 lockdown
which was a time of high uncertainty as we and our customers
adjusted to new working arrangements. The Company continued to
operate throughout the initial lockdown and varying levels of
restrictions and has delivered a 9% increase in revenues compared
to the same period of the previous year.
The pandemic has created unusual patterns in customer needs as
businesses have adapted their working practices and their research
priorities. This has established opportunities for the Company to
provide additional services to some customers, which has balanced
out certain projects that have been delayed or paused by other
customers. In particular, our core Antibody Engineering service
continues to deliver and our Antibody Supply offering has performed
well during the period, together underpinning the revenue growth
achieved. As companies globally have adjusted to new circumstances,
we have begun to see improved customer confidence.
The next service in the Company's development pipeline is the
Mammalian Antibody Library Discovery Platform ("the Library"). The
Library will add an important new offering for antibody discovery
and the Directors believe it will represent a technologically
superior solution when compared to traditional discovery methods
and to other library offerings already available in the market. The
Company had originally planned to use three therapeutic targets in
the proof-of-concept R&D programme but early in the period
added a new COVID-19 project. We successfully completed a GBP3.0m
equity raise in April to support this and to provide additional
working capital.
We are pleased to report that development work to date has
progressed well throughout the period and potential antibodies from
the Library are currently being screened prior to being evaluated
against the COVID-19 target. This project is supported by an Invest
Northern Ireland grant with Queen's University Belfast to test the
resultant antibodies against the live virus in the University's
virology facility.
To further demonstrate the potential of the Library, the next
two development projects against oncology targets are underway. The
fourth planned project is against a challenging target, and we are
currently in discussions with a potential development partner to
collaborate on this project. The Library will complement the
Company's existing discovery services and will be offered alongside
these, thus providing a broader range of services to our customers.
Commercial collaborations are planned to commence in in FY2022,
with meaningful revenues anticipated in FY2023. To aid marketing
and promotion, the Company has registered the trademark OptiMAL(TM)
for the Library and will use this name in future reports and
marketing material.
Senior R&D scientists have been recruited to accelerate the
research programmes and a newly created post of Director of
Research and Development has recently been filled.
Financial Review
Revenues for the six-month period to 30 September 2020 were
GBP1.90 million (H1 FY2020: GBP1.75 million).
Operating loss for the first half was GBP0.56 million (H1
FY2020: GBP0.62 million). This result reflects R&D expenditure
of GBP271,000, an increase of 50% compared with H1 FY2020 and the
continued programme of expansion of capacity and development of
sales and marketing.
In April 2020, the Company raised GBP3.0 million of equity
(gross proceeds) by issuing 3,333,333 new ordinary shares in an
oversubscribed placing. The primary purpose of this raise was to
finance the additional COVID-19 project of the Library
development.
As a result of the increased number of shares in issue, basic
loss per share has further reduced to GBP0.019 per share versus
GBP0.021 loss per share in H1 FY2020.
Gross profit margin of 46% has improved on H1 FY 2020 (42%) and
is similar to that achieved for the full year FY2020. In addition
to the continued recruitment and training of scientists to enable
the Company to deliver future growth, there were added costs
arising from adjustments to working practices and higher consumable
costs as a result of COVID-19 restrictions. Revenue grants relating
to employment are included in other income.
Administrative expenses include expenditure on overheads, Board
costs, sales and marketing, research & development as well as
depreciation. Administrative expenses of GBP1.48 million have
increased compared with H1 FY2020 of GBP1.41 million as a result of
further investment in research and development.
Cash used in operations was GBP0.73 million compared with
GBP0.55 million used in H1 FY2020. This includes planned investment
of funds in research & development as well as increased working
capital requirements in H1 FY2021. The Company expects to increase
consumable stocks further to mitigate against supply chain risks
from COVID-19 and from Brexit which is an added risk for H2 FY2021.
EBITDA losses are reducing as shown in the Key Performance
Indicators below and are mainly attributable to investment in
research and development.
The Board is not recommending the payment of a dividend in
relation to the first half of the current financial year (H1
FY2020: nil).
Key Performance Indicators
The key performance indicators (KPIs) regularly reviewed by the
board are:
KPI H1 2021 H1 2020
--------------------------------------------- ------------ ------------
Revenue growth against same period in prior
year 9% 166%
EBITDA* (GBP0.218m) (GBP0.315m)
Cash used in operations (GBP0.727m) (GBP0.551m)
--------------------------------------------- ------------ ------------
* Earnings before interest, tax, depreciation and
amortisation
Outlook
The Board is pleased to report that the Company has maintained
and slightly grown revenues in the first six months of the year, in
what were unprecedented times.
The Directors believe that the antibody therapeutic market
continues to grow, and that Fusion remains in a strong position to
grow and return to profitability in future years. The Company's
core services are reliant on multiple orders which the Company can
execute within two to three months, which limits the visibility of
orders and revenues beyond that timeframe. However, the current
pipeline is in line with the Board's expectations and the Directors
are confident that progress will be made.
There are two major factors of uncertainly facing the Company
and its customers in the second half of this financial year.
COVID-19 restrictions continue to play a major part in many of our
key markets with unplanned workforce and supply chain interruptions
having a global impact. However, we will continue to operate the
business and make our services available to our customers to the
extent possible which, to date, has been with limited disruption.
In addition, the United Kingdom will leave the European Union on 31
December 2020 ("Brexit"). The Company will maintain unrestricted
access to EU markets due to its location in Northern Ireland which
the Directors believe will reduce the impact of Brexit. The Board
continues to believe that the Company has the expertise and
financial resources to meet these challenges and capitalise on
opportunities in the remainder of this period and beyond.
Statement of Directors' Responsibilities
The Directors confirm, to the best of their knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS34 'Interim Financial Reporting', as adopted
by the European Union;
-- The interim management report includes a fair review of the
information required by DTR 4.2.7R of the Disclosure and
Transparency Rules of the of the United Kingdom's Financial Conduct
Authority, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the
remaining six months of the year, and gives a true and fair view of
the assets, liabilities, financial positions and profit for the
period of the company; and
-- The interim management report includes a fair review of the
information required by DTR 4.2.8R of the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority, being a disclosure of related party transactions and
changes therein since the previous annual report.
By order of the Board
Dr Simon Douglas
Non-executive Chairman
20 November 2020
Condensed Statement of Comprehensive Income
For the six months ended 30 September 2020
6 months 6 months Year to
to 30.09.20 to 30.09.19 31.03.20
Notes Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue 1,905 1,753 3,895
Cost of sales (1,032) (1,014) (2,123)
------------------------------- -------- ------------- ------------- ----------
Gross profit 873 739 1,772
Other operating income 10 43 53 56
Administrative expenses (1,479) (1,408) (2,887)
------------------------------- -------- ------------- ------------- ----------
Operating loss (563) (616) (1,059)
------------------------------- -------- ------------- ------------- ----------
Finance income 3 1 4 6
Finance costs 3 (10) (9) (20)
------------------------------- -------- ------------- ------------- ----------
Loss before tax (572) (621) (1,073)
Income tax credit 4 101 148 376
------------------------------- -------- ------------- ------------- ----------
Loss for the period (471) (473) (697)
Total comprehensive expense
for the period (471) (473) (697)
------------------------------- -------- ------------- ------------- ----------
Pence Pence Pence
Basic loss per share 5 (1.9) (2.1) (3.2)
Condensed Statement of Financial Position
As at 30 September 2020
As at As at 30.09.19 As at
30.09.20 Unaudited 31.03.20
Notes Unaudited GBP'000 Audited
GBP'000 GBP'000
---------------------------------- -------- ----------- --------------- ----------
Assets
Non-current assets
Intangible assets 3 5 4
Property, plant and equipment 6 1,401 1,558 1,470
Deferred tax assets 7 2,045 1,488 1,764
---------------------------------- -------- ----------- --------------- ----------
3,449 3,051 3,238
---------------------------------- -------- ----------- --------------- ----------
Current assets
Inventories 373 231 340
Trade and other receivables 1,171 1,200 887
Current tax receivable 69 39 38
Cash and cash equivalents 3,243 1,313 1,537
---------------------------------- -------- ----------- --------------- ----------
4,856 2,783 2,802
---------------------------------- -------- ----------- --------------- ----------
Total assets 8,305 5,834 6,040
---------------------------------- -------- ----------- --------------- ----------
Liabilities
Current liabilities
Trade and other payables 607 580 828
Borrowings 8 161 124 161
---------------------------------- -------- ----------- --------------- ----------
768 704 989
---------------------------------- -------- ----------- --------------- ----------
Net current assets 4,088 2,079 1,813
Non-current liabilities
Borrowings 8 148 170 219
Provisions for other liabilities
and charges 20 20 20
---------------------------------- -------- ----------- --------------- ----------
Total liabilities 936 894 1,228
---------------------------------- -------- ----------- --------------- ----------
Net assets 7,369 4,940 4,812
---------------------------------- -------- ----------- --------------- ----------
Equity
Called up share capital 13 1,017 884 884
Share premium reserve 7,535 4,872 4,872
(Accumulated losses)/retained
earnings (1,183) (816) (944)
---------------------------------- -------- ----------- --------------- ----------
Equity 7,369 4,940 4,812
---------------------------------- -------- ----------- --------------- ----------
Condensed Statement of Changes in Equity
For the six months ended 30 September 2020
6 months ended 30 September Called Share premium
2020 up share reserve Accumulated
Unaudited capital GBP'000 losses Equity
GBP'000 GBP'000 GBP'000
------------------------------- ----------- ---------------- -------------- ----------
At 1 April 2020 884 4,872 (944) 4,812
Loss for the period - - (471) (471)
------------------------------- ----------- ---------------- -------------- ----------
Issue of share capital 133 2,867 - 3,000
Cost of issuing share capital - (204) - (204)
Share options - value of
employee services - - 21 21
Tax credit relating to
share option scheme - - 211 211
------------------------------- ----------- ---------------- -------------- ----------
Total transactions with
owners, recognised directly
in equity 133 2,663 232 3,028
------------------------------- ----------- ---------------- -------------- ----------
At 30 September 2020 1,017 7,535 (1,183) 7,369
------------------------------- ----------- ---------------- -------------- ----------
6 months ended 30 September Called Share premium
2019 up share reserve Retained
Unaudited capital GBP'000 earnings Equity
GBP'000 GBP'000 GBP'000
------------------------------- ----------- ---------------- -------------- ----------
At 1 April 2019 884 4,872 (402) 5,354
Loss for the period - - (473) (473)
------------------------------- ----------- ---------------- -------------- ----------
Share options - value of
employee services - - 46 46
Tax credit relating to
share option scheme - - 13 13
------------------------------- ----------- ---------------- -------------- ----------
Total transactions with
owners, recognised directly
in equity - - 59 59
------------------------------- ----------- ---------------- -------------- ----------
At 30 September 2019 884 4,872 (816) 4,940
------------------------------- ----------- ---------------- -------------- ----------
Year ended 30 March 2020 (Accumulated
Audited Called Share premium losses)/
up share reserve Retained
capital GBP'000 earnings Equity
GBP'000 GBP'000 GBP'000
------------------------------- ----------- ---------------- -------------- ----------
At 1 April 2019 884 4,872 (402) 5,354
Loss 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 six months ended 30 September 2020
6 months 6 months Year to
to to 30.09.19 31.03.20
30.09.20 Unaudited Audited
Unaudited GBP'000 GBP'000
GBP'000
--------------------------------------- ----------- ------------- ----------
Cash flows from operating activities
Loss for the period (471) (473) (697)
Adjustments for:
Share based payment expense 21 46 83
Depreciation 344 300 620
Amortisation of intangible assets 1 1 2
Finance income (1) (4) (6)
Finance costs 10 9 20
Income tax credit (101) (148) (376)
Decrease/(increase) in inventories (33) 11 (97)
(Increase)/decrease in trade and
other receivables (276) (144) 169
(Decrease)/increase in trade and
other payables (221) (149) 99
--------------------------------------- ----------- ------------- ----------
Cash used in operations (727) (551) (183)
Income tax received - - 23
--------------------------------------- ----------- ------------- ----------
Net cash used in operating activities (727) (551) (160)
Cash flows from investing activities
Purchase of intangible assets - - -
Purchase of property, plant and
equipment (275) (44) (109)
Finance income - interest received 1 4 6
--------------------------------------- ----------- ------------- ----------
Net cash used in investing activities (274) (40) (103)
Cash flows from financing activities
Proceeds from issue of share capital 2,796 - -
Repayments of borrowings (85) (71) (172)
Finance costs - interest paid (4) (9) (12)
--------------------------------------- ----------- ------------- ----------
Net cash generated from/(used in)
financing activities 2,707 (80) (184)
Net increase/(decrease) in cash
and cash equivalents 1,706 (671) (447)
Cash and cash equivalents at the
beginning of the period 1,537 1,984 1,984
--------------------------------------- ----------- ------------- ----------
Cash and cash equivalents at the
end of the period 3,243 1,313 1,537
--------------------------------------- ----------- ------------- ----------
Notes to the Interim Results
For the six months ended 30 September 2020
1 Basis of Preparation
The condensed financial statements comprise the unaudited
results for the six months to 30 September 2020 and 30 September
2019 and the audited results for the year ended 31 March 2020. The
financial information for the year ended 31 March 2020 does not
constitute the full statutory accounts for that period. The Annual
Report and Financial Statements for the year ended 31 March 2020
have been filed with the Registrar of Companies. The Independent
Auditor's Report on the Annual Report and Financial Statements for
2020 was unmodified and did not contain a statement under s498(2)
or s498(3) of the Companies Act 2006.
The condensed financial statements for the period ended 30
September 2020 have been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority
and with IAS 34 'Interim Financial Reporting' as adopted by the
European Union. The information in these condensed financial
statements does not include all the information and disclosures
made in the annual financial statements.
Going concern
At 30 September 2020 the Company had a cash balance of GBP3.24
million. The Directors have reviewed detailed projections for the
Company. These projections are based on estimates of future
performance and have been adjusted to reflect various scenarios and
outcomes that could potentially impact the forecast outturn. Based
on these estimates, the Directors have a reasonable expectation
that the company has adequate resources to continue in operational
existence for 12 months from the reporting date. Accordingly, they
have prepared these condensed financial statements on the going
concern basis.
Accounting policies
The condensed financial statements have been prepared in a
manner consistent with the accounting policies set out in the
financial statements for the year ended 31 March 2020 and on the
basis of the International Financial Reporting Standards (IFRS) as
adopted for use in the EU that the company expects to be applicable
at 31 March 2021. IFRS are subject to amendment and interpretation
by the International Accounting Standards Board (IASB) and there is
an ongoing process of review and endorsement by the European
Commission.
2 Segmental information
For all the financial periods included in these condensed
financial statements, all the revenues and costs relate to the
single operating segment of research, development and manufacture
of recombinant proteins and antibodies.
3 Finance income and costs
6 months to 6 months Year to
30.09.20 to 30.09.19 31.03.20
Unaudited Unaudited Audited
Income GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------- ----------
Bank interest receivable 1 4 6
--------------------------- ------------ ------------- ----------
6 months to 6 months Year to
30.09.20 to 30.09.19 31.03.19
Unaudited Unaudited Audited
Cost GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------- ----------
Interest expense on other
borrowings 10 9 20
--------------------------- ------------ ------------- ----------
4 Income tax credit
6 months 6 months Year to
to 30.09.20 to 30.09.19 31.03.20
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------ ------------- ------------- ----------
Current tax (31) (16) (38)
Deferred tax (70) (132) (338)
------------------ ------------- ------------- ----------
Total tax credit (101) (148) (376)
------------------ ------------- ------------- ----------
5 Earnings per share
The calculation of earnings per share is based on loss after tax
from continuing operations for six months to 30 September 2020 of
GBP471,000 (6 months to 30 September 2019: GBP473,000 loss, year to
31 March 2019: GBP697,000 loss).
The weighted average number of shares used in the calculation of
the basic earnings per share are as follows:
6 months 6 months Year to
to 30.09.20 to 30.09.19 31.03.20
Unaudited Unaudited Audited
Number Number Number
---------------------------- ------------- ------------- -------------
Issued ordinary shares at
the end of the period 25,437,025 22,091,192 22,091,192
Weighted average number
of shares in issue during
the period 24,875,220 22,091,192 22,091,192
---------------------------- ------------- ------------- -------------
Basic earnings per share is calculated by dividing the basic
earnings for the period by the weighted average number of shares in
issue during the period.
6 Property, plant and equipment
Right Fixtures,
of use Leasehold Plant fittings
assets property & & equipment Total
GBP'000 GBP'000 machinery GBP'000 GBP'000
GBP'000
-------------------------- --------- ------------ ------------ ------------- ----------
Cost
At 1 April 2020 226 725 1,916 220 3,087
Additions 14 - 253 8 275
Disposals - - - - -
-------------------------- --------- ------------ ------------ ------------- ----------
At 30 September 2020 240 725 2,169 228 3,362
-------------------------- --------- ------------ ------------ ------------- ----------
Accumulated depreciation
At 1 April 2020 68 425 1,015 109 1,617
Disposals - - - - -
Depreciation charged
in the period 34 72 214 24 344
-------------------------- --------- ------------ ------------ ------------- ----------
At 30 September 2020 102 497 1,229 133 1,961
-------------------------- --------- ------------ ------------ ------------- ----------
Net book value
At 30 September 2020 138 228 940 95 1,401
-------------------------- --------- ------------ ------------ ------------- ----------
At 31 March 2020 158 300 901 111 1,470
-------------------------- --------- ------------ ------------ ------------- ----------
7 Deferred tax assets
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 arising from future
utilisation of taxable losses of GBP8.8 million (30 September 2019:
GBP8.7 million) is dependent on future taxable profits arising in
the UK. During the period the Company raised GBP2.8m (net proceeds)
of capital to invest in research and development and to finance
growth and as a consequence this will increase taxable 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.
8 Borrowings
At 30 At 30 September At 31
September 2019 March
2020 GBP'000 2020
GBP'000 GBP'000
-------------------------- ----------- ---------------- ---------
At 1 April 380 140 140
Adoption of IFRS 16 (see
note 12) - 226 226
Additions in period 14 - 166
Interest 10 9 20
Repayments (95) (81) (172)
-------------------------- ----------- ---------------- ---------
At period end 309 294 380
-------------------------- ----------- ---------------- ---------
Amounts due in less than
1 year 161 124 161
Amounts due after more
than 1 year 148 170 219
-------------------------- ----------- ---------------- ---------
309 294 380
-------------------------- ----------- ---------------- ---------
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.
9 Retirement benefits obligations
The company operates a defined contribution scheme, the assets
of which are managed separately from the company.
10 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 leases its premises from Invest Northern
Ireland and received invoices for rent and estate services
amounting to GBP40,000 (6 months ended 30 September 2019:
GBP46,000, year ended 31 March 2020: GBP78,000). A balance of
GBPnil (30 September 2019: GBPnil, 31 March 2020: GBPnil) was due
and payable to Invest NI at the reporting date. The Company
received various grants during the period from Invest NI amounting
to GBP43,000 (6 months ended 30 September 2019: GBP53,000, year
ended 31 March 2020 GBP56,000).
11 Events after the reporting date
There have been no events from the reporting date to the date of
approval which need to be reported.
12 Changes in accounting policies in the prior period
This note explains the impact of the adoption of IFRS 16
'Leases' on the Company's financial statements and discloses the
new accounting policies applied from 1 April 2019, where they are
different to those applied before that date.
(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 12(c) below.
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 12 (c). 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 12(a) above.
Leases
The directors considered all leases 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.
(c) IFRS 16 Leases - Accounting policies applied from 1 April
2019
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.
13 Share capital
During the period the Company issued 3,345,833 Ordinary Shares
of 4 pence each for gross proceeds of GBP3,000,000 before related
expenses. Costs of the share issue totalled GBP204,000 and have
been deducted from the Share Premium Reserve.
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END
IR FFEFWUESSEFF
(END) Dow Jones Newswires
November 20, 2020 02:00 ET (07:00 GMT)
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