TIDMFAB
RNS Number : 2268V
Fusion Antibodies PLC
02 December 2019
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.
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 2019 (H1 FY2020).
Highlights
Operational
-- Increase in orders and revenues in H1 FY2020 over H1 FY2019
-- First commercial projects of the new Rational Affinity
Maturation Platform ("RAMP(TM) ") service
-- Continuing development of Mammalian Antibody Library, on track for delivery in 2020
Financial
-- Continued improvement in revenues for H1 FY2020 of GBP1.75m (H1 FY2019: GBP0.66m)
-- Continued reduction in loss for H1 FY2020 of GBP0.47m (H1 FY2019: GBP0.74m loss)
-- Cash position at 30 September 2019 was GBP1.31m (31 March 2019: GBP1.98m)
-- Trading for the year ending 31 March 2020 to date has been in line with market expectations
Commenting on the interim results, Paul Kerr, CEO of Fusion
Antibodies plc, said: "Our revenues are growing apace, and we have
seen a solid improvement in the performance of the business for
this period, compared to the previous six months. We have received
our first commercial revenues from early adopters of RAMP(TM) , and
the feedback from the service has been very promising. We are on
target to deliver significant revenue growth year on year and, as
always, I would like to thank our shareholders and staff for all
their valued 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
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 - www.fusionantibodies.com
Fusion is a Belfast based contract research organisation ("CRO")
providing a range of antibody engineering services for the
development of antibodies for both therapeutic drug and diagnostic
applications.
The Company's ordinary shares were admitted to trading on AIM on
18 December 2017. Fusion provides a broad range of services in
antibody generation, development, production, characterisation and
optimisation. These services include antigen expression, antibody
production, purification and sequencing, antibody humanisation
using Fusion's proprietary CDRx(TM) platform and the production of
antibody generating stable cell lines to provide material for use
in clinical trials. Since 2012, the Company has successfully
sequenced and expressed over 250 antibodies and successfully
completed over 150 humanisation projects for its international,
blue-chip client base, which has included eight of the top 10
global pharmaceutical companies by revenue.
The Company was established in 2001 as a spin out from Queen's
University Belfast. The Company's mission is to enable
pharmaceutical and diagnostic companies to develop innovative
products in a timely and cost-effective manner for the benefit of
the global healthcare industry. Fusion Antibodies provides a broad
range of services in antibody generation, development, production,
characterisation and optimisation.
Fusion Antibodies growth strategy is based on combining the
latest technological advances with cutting edge science to deliver
new platforms that will enable Pharma and Biotechs 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
As announced in October 2019, the Company's order levels and
revenues in the first six months of the financial year showed
significant growth on the previous six-month period and a marked
recovery from the comparable period last year. This has been
achieved by addressing a number of external competitive pressures
seen over the last two years, and by improving the Company's
marketing function and business development strategy.
In this period the Company recorded its first commercial
revenues from the new RAMP(TM) service. RAMP(TM) provides customers
with improvements to antibody affinity and other biophysical
characteristics to optimise performance of their antibody. This
service is available either as part of the suite of Fusion's
services or as a standalone service to companies with existing
antibodies with sub-optimal performance. Initial results from early
adopting customers are very promising and the commercial roll out
of the service will continue throughout the year with presentations
at scientific conferences and targeted marketing.
Having now launched the RAMP(TM) service, the next service in
the development pipeline is the Mammalian Antibody Library ("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
methods and to other library offerings already available in the
market. The Library is also expected to provide the additional
benefit of a significant reduction in the time taken for this
initial drug development phase. The Library will complement the
Company's existing discovery services and it will be offered
alongside the traditional techniques providing an improved range of
options to our customers.
It is planned that the Library will be delivered as a
technologically ready project in H1 FY2021 (i.e. April to September
2020) with presentations to key opinion leaders, targeted marketing
activity and performance of pilot studies commencing in the second
half of FY2021. The Directors expect that the Company will be in a
position to generate meaningful revenues from this service from FY
2022.
Financial Review
Revenues for the six-month period to 30 September 2019 were
GBP1.75 million (H1 FY2019: GBP0.66 million). This continues the
improvement seen in H2 FY2019 and is the Company's strongest
performance to date in a six-month period.
Operating loss for the first half was GBP0.62 million (H1
FY2019: GBP0.89 million). This result reflects that the Company has
continued to invest in research and development of new services,
expansion of capacity and development of sales and marketing, with
a view to continued growth.
Basic loss per share has further reduced to GBP0.021 per share
versus GBP0.034 loss per share in H1 FY2019.
Gross profit margin of 42% has improved on H1 FY 2019 (17%)
although slightly below that seen in H2 FY2019 (45%) due to
continued recruitment and training of scientists to enable the
Company to deliver future growth. Revenue grants relating to
employment are included in other income.
Administrative expenses include expenditure on overheads, board
costs, sales and marketing, research and development as well as
depreciation. Administrative expenses of GBP1.4 million have
increased compared with H1 FY2019 of GBP1.1 million as a result of
further investment in research and development, sales and marketing
and an increase in depreciation arising from the investment in
capital equipment throughout FY2019.
Cash used in operations was GBP0.55 million compared with
GBP0.45 million used in H1 FY2019. The planned investment of funds
in research and development, business development and marketing was
expected to increase cash usage in H1 FY2020 and therefore this is
in line with the Board's expectations. EBITDA losses are reducing
as shown in the Key Performance Indicators below and, as the
laboratory expansion is complete, capital expenditure for the
period reduced to GBP0.04 million compared with GBP1.22 million in
H1 FY 2019. The cash at bank figure of GBP1.31million at 30
September 2019 is in line with Company plans. 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.
The Board is not recommending the payment of a dividend in
relation to the first half of the current financial year.
Key Performance Indicators
The key performance indicators (KPIs) regularly reviewed by the
board are:
KPI H1 2020 H1 2019
------------------------- ------------ ------------
Revenue growth 166% (53%)
EBITDA* (GBP0.315m) (GBP0.712m)
Cash used in operations (GBP0.551m) (GBP0.446m)
------------------------- ------------ ------------
* Earnings before interest, tax, depreciation and
amortisation
Outlook
The Board is pleased to report that the company has restored
revenues in all areas of its services, and is confident of
sustained performance for the remainder of this year. The uptake of
RAMP(TM) has been promising to date and the Company is optimistic
for this to continue in the second half of the year.
The Directors believe that the antibody therapeutic market
continues to grow, and that Fusion Antibodies remains in a strong
position to grow and return to profitability.
However, the Company relies on multiple orders which, on
average, are each worth below GBP100k and which the Company can
execute within 2-3 months. The consequence of this is that the
Board has limited visibility of orders and revenues beyond a
three-month horizon. However, the Directors continue to be
confident that growth in order levels for existing and new services
will continue.
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
2 December 2019
Condensed Statement of Comprehensive Income
For the six months ended 30 September 2019
6 months 6 months Year to
to 30.09.19 to 30.09.18 31.03.19
Notes Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue 1,753 658 2,182
Cost of sales (1,014) (545) (1,378)
------------------------------- -------- ------------- ------------- ----------
Gross profit 739 113 804
Other operating income 10 53 58 86
Administrative expenses (1,408) (1,063) (2,398)
------------------------------- -------- ------------- ------------- ----------
Operating loss (616) (892) (1,508)
------------------------------- -------- ------------- ------------- ----------
Finance income 3 4 7 13
Finance costs 3 (9) (2) (4)
------------------------------- -------- ------------- ------------- ----------
Loss before tax (621) (887) (1,499)
Income tax credit 4 148 145 235
------------------------------- -------- ------------- ------------- ----------
Loss for the period (473) (742) (1,264)
Total comprehensive expense
for the period (473) (742) (1,264)
------------------------------- -------- ------------- ------------- ----------
Pence Pence Pence
Basic loss per share 5 (2.1) (3.4) (5.7)
Condensed Statement of Financial Position
As at 30 September 2019
As at As at 30.09.18 As at
30.09.19 Unaudited 31.03.19
Notes Unaudited GBP'000 Audited
GBP'000 GBP'000
---------------------------------- -------- ----------- --------------- ----------
Assets
Non-current assets
Intangible assets 5 7 6
Property, plant and equipment 6 1,558 1,592 1,588
Deferred tax assets 7 1,488 1,277 1,343
---------------------------------- -------- ----------- --------------- ----------
3,051 2,876 2,937
---------------------------------- -------- ----------- --------------- ----------
Current assets
Inventories 231 96 243
Trade and other receivables 1,200 650 1,056
Current tax receivable 39 13 23
Cash and cash equivalents 1,313 2,803 1,984
---------------------------------- -------- ----------- --------------- ----------
2,783 3,562 3,306
---------------------------------- -------- ----------- --------------- ----------
Total assets 5,834 6,438 6,243
---------------------------------- -------- ----------- --------------- ----------
Liabilities
Current liabilities
Trade and other payables 580 521 729
Borrowings 8 124 35 67
---------------------------------- -------- ----------- --------------- ----------
704 556 796
---------------------------------- -------- ----------- --------------- ----------
Net current assets 2,079 3,006 2,510
Non-current liabilities
Borrowings 8 170 26 73
Provisions for other liabilities
and charges 20 20 20
---------------------------------- -------- ----------- --------------- ----------
Total liabilities 894 602 889
---------------------------------- -------- ----------- --------------- ----------
Net assets 4,940 5,836 5,354
---------------------------------- -------- ----------- --------------- ----------
Equity
Called up share capital 884 884 884
Share premium reserve 4,872 4,872 4,872
(Accumulated losses)/retained
earnings 13 (816) 80 (402)
---------------------------------- -------- ----------- --------------- ----------
Equity 4,940 5,836 5,354
---------------------------------- -------- ----------- --------------- ----------
Condensed Statement of Changes in Equity
For the six months ended 30 September 2019
6 months ended 30 September Called Share premium
2019 up share reserve Accumulated
Unaudited capital GBP'000 losses 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 charge 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
------------------------------ ----------- ---------------- -------------- ----------
6 months ended 30 September Called Share premium
2018 up share reserve Retained
Unaudited capital GBP'000 earnings Equity
GBP'000 GBP'000 GBP'000
------------------------------ ----------- ---------------- -------------- ----------
At 1 April 2018 884 4,872 819 6,575
Restatement (see note 12) - - (24) (24)
------------------------------ ----------- ---------------- -------------- ----------
At 1 April 2018 restated 884 4,872 795 6,551
Loss for the period - - (742) (742)
------------------------------ ----------- ---------------- -------------- ----------
Share options - value of
employee services - - 47 47
Tax credit relating to
share option scheme - - (20) (20)
------------------------------ ----------- ---------------- -------------- ----------
Total transactions with
owners, recognised directly
in equity - - 27 27
------------------------------ ----------- ---------------- -------------- ----------
At 30 September 2018 884 4,872 80 5,836
------------------------------ ----------- ---------------- -------------- ----------
Year ended 30 March 2019 (Accumulated
Audited Called Share premium losses)/
up share reserve Retained
capital GBP'000 earnings Equity
GBP'000 GBP'000 GBP'000
------------------------------ ----------- ---------------- -------------- ----------
At 1 April 2018 884 4,872 819 6,575
Restatement (see note 12) - - (24) (24)
------------------------------ ----------- ---------------- -------------- ----------
At 1 April 2018 restated 884 4,872 795 6,551
Loss for the year - - (1,264) (1,264)
------------------------------ ----------- ---------------- -------------- ----------
Share options - value of
employee services - - 98 98
Tax credit 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
------------------------------ ----------- ---------------- -------------- ----------
Cash Flow Statement
For the six months ended 30 September 2019
6 months 6 months Year to
to to 30.09.18 31.03.19
30.09.19 Unaudited Audited
Unaudited GBP'000 GBP'000
GBP'000
------------------------------------------- ----------- ------------- ----------
Cash flows from operating activities
Loss for the period (473) (742) (1,264)
Adjustments for:
Share based payment expense 46 46 98
Depreciation 300 179 429
Amortisation of intangible assets 1 1 2
Finance income (4) (7) (13)
Finance costs 9 2 4
Income tax credit (148) (145) (235)
Decrease/(increase) in inventories 11 (14) (161)
(Increase)/decrease in trade and
other receivables (144) 248 (158)
(Decrease)/increase in trade and
other payables (149) (15) 193
------------------------------------------- ----------- ------------- ----------
Cash used in operations (551) (447) (1,105)
Income tax received - 2 7
------------------------------------------- ----------- ------------- ----------
Net cash used in operating activities (551) (445) (1,098)
Cash flows from investing activities
Purchase of intangible assets - (8) (8)
Purchase of property, plant and
equipment (44) (1,224) (1,373)
------------------------------------------- ----------- ------------- ----------
Net cash used in investing activities (44) (1,232) (1,381)
Cash flows from financing activities
Repayments of borrowings (71) (16) (37)
Finance income - interest received 4 7 13
Finance costs - interest paid (9) (2) (4)
------------------------------------------- ----------- ------------- ----------
Net cash used in financing activities (76) (11) (28)
Net decrease in cash and cash equivalents (671) (1,688) (2,507)
Cash and cash equivalents at the
beginning of the period 1,984 4,491 4,491
------------------------------------------- ----------- ------------- ----------
Cash and cash equivalents at the
end of the period 1,313 2,803 1,984
------------------------------------------- ----------- ------------- ----------
Notes to the Interim Results
For the six months ended 30 September 2019
1 Basis of Preparation
The condensed financial statements comprise the unaudited
results for the six months to 30 September 2019 and 30 September
2018 and the audited results for the year ended 31 March 2019. The
financial information for the year ended 31 March 2019 does not
constitute the full statutory accounts for that period. The Annual
Report and Financial Statements for the year ended 31 March 2019
have been filed with the Registrar of Companies. The Independent
Auditor's Report on the Annual Report and Financial Statements for
2019 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 2019 have been prepared in accordance with the Disclosure
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 2019 the Company had a cash balance of GBP1.3
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 2019 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 2020. 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.
Of the new standards, amendments or interpretations that have
become effective in the period IFRS 16 'Leases' has had a material
effect on the company. The changes in accounting policies and
resultant adjustments to the financial statements are set out in
note 13.
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
30.09.19 to 30.09.18 31.03.19
Unaudited Unaudited Audited
Income GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------- ----------
Bank interest receivable 4 7 13
--------------------------- ------------ ------------- ----------
6 months to 6 months Year to
30.09.19 to 30.09.18 31.03.19
Unaudited Unaudited Audited
Cost GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------- ----------
Interest expense on other
borrowings 9 2 4
--------------------------- ------------ ------------- ----------
4 Income tax credit
6 months 6 months Year to
to 30.09.19 to 30.09.18 31.03.19
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------ ------------- ------------- ----------
Current tax (16) (8) (22)
Deferred tax (132) (137) (213)
------------------ ------------- ------------- ----------
Total tax credit (148) (145) (235)
------------------ ------------- ------------- ----------
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 2019 of
GBP0.473 million (6 months to 30 September 2018: GBP0.742 million,
year to 31 March 2019: GBP1.264 million).
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 30.09.19 to 30.09.18 31.03.19
Unaudited Unaudited Audited
Number Number Number
---------------------------- ------------- ------------- -------------
Issued ordinary shares at
the end of the period 22,091,192 22,091,192 22,091,192
Weighted average number
of shares in issue during
the period 22,091,192 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
Fixtures,
Leasehold Plant & fittings
property machinery & equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------ ------------ ------------- ----------
Cost
At 1 April 2019 712 1,707 202 2,621
Restatement (see note
13) 226 - - 226
-------------------------- ------------ ------------ ------------- ----------
At 1 April 2019 as
restated 938 1,707 202 2,847
Additions 13 27 4 44
Disposals - (36) - (36)
-------------------------- ------------ ------------ ------------- ----------
At 30 September 2019 951 1,698 206 2,855
-------------------------- ------------ ------------ ------------- ----------
Accumulated depreciation
At 1 April 2019 283 691 59 1,033
Disposals - (36) - (36)
Depreciation charged
in the period 105 171 24 300
-------------------------- ------------ ------------ ------------- ----------
At 30 September 2019 388 826 83 1,297
-------------------------- ------------ ------------ ------------- ----------
Net book value
At 30 September 2019 563 871 123 1,558
-------------------------- ------------ ------------ ------------- ----------
At 31 March 2019 429 1,016 143 1,588
-------------------------- ------------ ------------ ------------- ----------
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 GBP8.7 million (Sep 2018: GBP7.7
million) is dependent on future taxable profits arising in the UK.
The Directors expect profits to be generated from future sales
growth which will be underpinned by RAMP(TM) and the mammalian
antibody library. Therefore, the Directors are of the opinion that
is more likely than not that there will be sufficient future
taxable profits against which the tax losses can be deducted and
accordingly, a deferred tax asset has been recognised.
8 Borrowings
At 30 At 30 September At 31
September 2018 March
2019 GBP'000 2019
GBP'000 GBP'000
----------------------------- ----------- ---------------- ---------
At 1 April 140 77 77
Restatement (see note 226 - -
13)
----------------------------- ----------- ---------------- ---------
At 1 April 2019 as restated 366 77 77
Additions in period - - 99
Interest 9 2 4
Repayments (81) (18) (40)
----------------------------- ----------- ---------------- ---------
At 30 September 294 61 140
----------------------------- ----------- ---------------- ---------
Amounts due in less than
1 year 124 35 67
Amounts due after more
than 1 year 170 26 73
----------------------------- ----------- ---------------- ---------
294 61 140
----------------------------- ----------- ---------------- ---------
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 is a shareholder in the company. The
company leases its premises from Invest Northern Ireland and was
charged for rent and estate services amounting to GBP46,000 (6
months ended 30 September 2018: GBP42,000, year ended 31 March
2019: GBP86,000) of which GBP44,000 has been accounted for as
repayment of borrowings on the lease capitalised under IFRS 16. A
balance of GBPnil (30 September 2018: GBPnil, 31 March 2019:
GBP7,000) was due and payable to Invest NI at the reporting date.
The company received various grants during the period from Invest
NI amounting to GBP53,000 (6 months ended 30 September 2018:
GBP58,000, year ended 31 March 2019 GBP86,000).
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
As a result of the adoption of IFRS 9 and IFRS 15 and the
corresponding changes in the company's accounting policies at 1
April 2018 a restatement of prior year financial statements was not
required. The reclassifications and the adjustments arising from
adoption of these standards are therefore recognised in the opening
Statement of Financial Position on 1 April 2018.
Impact on the opening balance on the statement of financial as
at 1 April 2018:
Balance sheet 31 March 1 April
extract 2018 IFRS 9 IFRS 15 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------------- --------------------------------- --------------------------------- -----------
As originally
presented Accounting Presentation/ Accounting Presentation/
adjustment reclassification adjustment reclassification Restated
------------------- -------------- ------------- ------------------ ------------- ------------------ -----------
Non-current
assets
Deferred tax
assets 1,156 - - 4 - 1,160
Current assets
Trade receivables 511 (4) - - - 507
Contract assets - - - (24) 24 -
Other receivables 133 - - (24) 109
Equity
Retained earnings 819 (4) - (20) - 795
------------------- -------------- ------------- ------------------ ------------- ------------------ -----------
13 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
As a result of changes in the company's accounting policies, a
restatement of prior year financial statements was not required. As
explained later in this note, IFRS 16 was adopted without restating
comparative information. 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.
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
--------------------- -------------- ---------------------------------- -----------
As originally
presented Accounting Presentation/ Restated
31 March adjustment Reclassification 1 April
2019 GBP'000 GBP'000 2019
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 20198 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 13(c) below. 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 13(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 six months ending 30
September 2019 is an increase of approximately GBP36,000 in
reported earnings or an additional GBP0.002 per share.
As a result of adopting IFRS 16 EBITDA reported will be
GBP75,000 higher per annum.
(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.
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
IR FEDFWUFUSEEF
(END) Dow Jones Newswires
December 02, 2019 02:00 ET (07:00 GMT)
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