TIDMFAB
RNS Number : 0741I
Fusion Antibodies PLC
10 August 2021
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")
Final results
Fusion Antibodies plc (AIM: FAB), specialists in pre-clinical
antibody discovery, engineering and supply for both therapeutic
drug and diagnostic applications, announces its final results for
the year ended 31 March 2021.
Commercial and operational highlights
-- Commercial roll out and revenues from Rational Affinity Maturation Platform ("RAMP(TM) ")
-- Investment in R&D increased by 57% from prior year
-- Full year revenues increased by 7% to GBP4.2m (2020: GBP3.9m)
-- Deferred tax asset of GBP1.8m derecognised, but tax losses of
GBP9.0m remain available to offset future profits
-- Loss for the year of GBP2.9m (2020: loss GBP0.7m)
-- GBP3.0m equity fundraise
-- Cash position at the year-end GBP2.7m (31 March 2020: GBP1.5m)
Post period end highlights
-- Receipt of first success milestone payment of GBP150,000 from a key client
Presentation on the results
Fusion will host an online live presentation open to all
investors on Monday, 23 August at 11am, delivered by Richard Jones,
CEO and James Fair, CFO. The presentation is open to all existing
and potential shareholders. Questions can be submitted pre-event
via your Investor Meet Company dashboard up until 9am the day
before the meeting or at any time during the meeting. The Company
is committed to providing an opportunity for all existing and
potential investors to hear directly from management on its results
whilst additionally providing an update on the business and current
trading.
Investors can sign up to Investor Meet Company for free and add
to meet Fusion Antibodies plc via the following link:
https://www.investormeetcompany.com/fusion-antibodies-plc/register-investor
Richard Jones, CEO of Fusion Antibodies commented: "We are
pleased with our performance in what has been a challenging year
for everyone. We have made significant progress with sustained
revenue growth, progress on the R&D pipeline, and continue to
expand our range of services.
"On behalf of the Board, I would like to thank our shareholders
for their continued support and we hope to be able to provide
further positive updates as we go through the year."
Enquiries:
Fusion Antibodies plc www.fusionantibodies.com
Richard Jones, Chief Executive Officer Via Walbrook PR
James Fair, Chief Financial Officer
Allenby Capital Limited Tel: +44 (0)20 3328
5656
James Reeve (Corporate Finance)
Tony Quirke (Sales and Corporate Broking)
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 contract research organisation ("CRO")
providing a range of antibody engineering services for the
development of antibodies for both therapeutic drug and diagnostic
applications.
The Company's ordinary shares were admitted to trading on AIM on
18 December 2017. Fusion provides a broad range of services in
antibody generation, development, production, characterisation and
optimisation. These services include antigen expression, antibody
production, purification and sequencing, antibody humanisation
using Fusion's proprietary CDRx (TM) platform and the production of
antibody generating stable cell lines to provide material for use
in clinical trials. Since 2012, the Company has successfully
sequenced and expressed over 250 antibodies and successfully
completed over 200 humanisation projects and has an international,
blue-chip client base, which has included eight of the top 10
global pharmaceutical companies by revenue.
The Company was established in 2001 as a spin out from Queen's
University Belfast. The Company's mission is to enable
pharmaceutical and diagnostic companies to develop innovative
products in a timely and cost-effective manner for the benefit of
the global healthcare industry. Fusion Antibodies provides a broad
range of services in antibody generation, development, production,
characterisation and optimisation.
Fusion Antibodies growth strategy is based on combining the
latest technological advances with cutting edge science to deliver
new platforms that will enable Pharma and Biotech companies get to
the clinic faster, with the optimal drug candidate and ultimately
speed up the drug development process.
The global monoclonal antibody therapeutics market was valued at
$135.4 billion in 2018 and is forecast to surpass $212.6 billion in
2022, an increase at a CAGR of 12.0 per cent. for the period 2018
to 2022. In 2017, seven of the world's ten top selling drugs were
antibody-based therapeutics with the combined annual sales of these
drugs exceeding $63.2 billion.
Chairman's Statement
Due to the pandemic, this year has been a difficult year for the
Company, our staff and many of our customers. However, our staff
have been flexible, committed and dedicated to continue to grow our
services and deliver a positive year, something for which I would
like to thank them. Where possible, staff have worked from home and
in the case of the Technical and R&D teams good social
distancing and control has allowed a challenging but safe working
environment. Overall, the Board believes that Company was able to
meet the challenges presented as a result of the pandemic which
affected the whole financial year.
Revenues increased in both H1 and H2 to deliver year on year
revenue growth of 7% with revenue of GBP4.2m for FY2021 marginally
above market expectation. This growth came from good performance
across all of the business areas with our humanisation service
significantly outperforming the previous year. The l oss for the
year was GBP2.9m (FY2020: GBP0.7m loss) as is explained in the
Chief Executive Officer's report.
Earlier in the year the Company continued with its strategy to
invest for growth and raised a further GBP3.0 million (gross
proceeds) via a placing of new ordinary shares in order to expand
the ongoing programme to develop a Mammalian Antibody Library
Discovery Platform (OptiMAL(TM) ). The Covid-19 pandemic presented
us with an opportunity to add this new target to the already
planned oncology targets and validate OptiMAL(TM) in a real-world
setting. This proof-of-concept project is ongoing with the control
models demonstrated. The next steps to optimise the screening and
selection of antibodies are in progress with the selection of
validation partners and the generation of a body of data from the
range of targets expected towards the end of the current financial
year and initial revenues from OptiMAL(TM) in 2022.
The scientific approach behind RAMP(TM) , our affinity
maturation platform, has been expanded and being marketed under the
OptiMAS(TM) brand. We now offer an exciting broader service which
encompasses the potential to improve the antibody yield from cell
culture, optimizing the manufacturing efficiency and reducing the
overall cost of goods. Additionally, in many cases the overall
stability of the antibody can be improved and the immunogenicity
reduced, with the opportunity to maximize the efficiency of a
client's therapeutic antibody drug.
As we grow our range of services, which are underpinned by world
class scientific expertise, we are attracting more new clients
looking for the ideal development partner with the flexibility and
skills to meet all of their needs. We will be targeting companies
at the earlier stage of their journey who are committed to
outsourcing much of their drug development program and we are
positioning ourselves as a partner who works and acts as an
extension of their business. To identify and attract companies at
the earlier stage of development we are also looking at extending
our global reach over the coming year through working with new
partners and distributors who can offer our services to a wider
audience.
This year has seen a change in our leadership and I am delighted
to welcome our new CEO, Dr Richard Jones, who joined the Company in
February this year. Richard Jones is an accomplished life sciences
executive with 25 years' experience in the pharmaceutical industry
both in big pharma and biotech companies as well as running a
contract development and manufacturing organisation ("CDMO"). He
replaces Dr Paul Kerr who I would like to thank for his
contribution to the business over the last 10 years and his
enthusiastic attitude in taking the business to where it is today.
I am looking forward to working with Richard for the next phase of
our exciting journey in creating a world class service company and
adding value both to customers and to you as shareholders.
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.
Current trading
Despite a uniquely challenging year we continued to see growth
and invest further in our core scientific based services. Our
commitment to new R&D projects was maintained and OptiMAL(TM)
remains on track to deliver initial revenues in 2022. The Covid-19
pandemic did not have a material impact on operations as the
Company implemented procedures to protect our laboratory services.
Again, our thanks to all the staff who, as a team, were committed
to maintaining the full operations of the Company though either
working from home or, for those in the laboratories, working
flexible hours.in controlled conditions. I would also like to thank
the shareholders for their continued support.
Post year end trading has been in line with expectations. While
conditions in the UK have improved significantly over the past few
months, there remains considerable uncertainty around the world as
countries ease or increase restrictions to manage the global
Covid-19 pandemic. Challenges remain for much of our international
customer base, but the Board believe the Company has the expertise
to meet these challenges and capitalise on opportunities as we have
done over the past year.
Dr Simon Douglas
Chairman
10 August 2021
Business model - milestone and royalty payments
Payment for current services is primarily by way of "fee for
service" revenue model. In certain circumstances, particularly when
there is a significant contribution to the client's intellectual
property, the Company will also obtain a commercial interest in the
client project. This may take the form of a milestone based success
payment or it may be by way of a royalty on future income streams.
The number and potential value of such interest increases
periodically as the Company enters into new agreements and reduces
either when a milestone is realised or when a project is ceased
before a payment milestone is reached.
At the reporting date the Company had an interest in fifteen
such client projects which it understands its clients to be
actively developing: six projects have fixed success payments with
a maximum potential income of GBP1,525,000 and nine projects carry
royalty agreements. Such payments would be expected a number of
years after the service is performed and would depend on the
successful further progression of the project by the client. Due to
the uncertainty of the success of such development programmes and
the commercial sensitivities for our clients, the Company will not
be fully aware of a project's status at any given point in time,
and therefore does not intend to regularly update the market on the
above figures nor does it estimate a potential value of future
revenues or include such a value in its Statement of Financial
Position.
After the reporting date, the Company announced in July that it
had received GBP150,000 milestone payment as a result of a
humanised antibody project which was successfully commercialised by
a key client. This was the first such payment received by the
Company and is in line with our strategic objectives of unlocking
the intrinsic value that our service offerings represent to our
clients where we have access to the downstream value of successful
projects.
Chief Executive Officer's Statement
FY 2021 was a remarkable and challenging year for all of us due
to the COVID-19 pandemic. Despite these head winds, the Company
continued to make progress on multiple fronts with continued
revenue growth and progress on the R&D pipeline. As a result of
our ongoing investment for growth and in R&D, the Company
continues to return losses which increased this year to GBP2.9m
(FY2020: GBP0.7m loss for the year). I am delighted to have joined
the Company as the CEO, building on the Company's strong
foundations and generating shareholder value from its current and
future technology platform and services. I am also proud of how,
despite the challenges throughout the year, the Company staff were
able to work diligently, delivering on the financial performance,
enabling our clients to advance their discovery and development
projects and progressing our pipeline of projects.
In addition, the Company has been well placed to deal with the
uncertainties which arose as companies and governments around the
world took steps to control the spread of the Coronavirus pandemic.
Early in the financial year, the Company successfully raised
additional capital funds of GBP3m to 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, now branded as OptiMAL(TM) .
Business review
The Company's revenue performance for the financial year to 31
March 2021 grew by 7% vs FY2020 to GBP4.2m which was marginally
ahead of market expectations. Growth was seen in both H1 and H2 of
FY2021 compared to the comparable periods in FY2020, although
growth in H2 was modest as the effects of the worldwide pandemic
continued.
The majority of this growth has come from the expansion of our
existing services such as discovery, engineering and supply, as
well as increasing interest and uptake of our new RAMP(TM)
technology service platform which represents a key driver of growth
for the business. Over the course of the year, Fusion has initiated
and successfully completed a number of RAMP(TM) client projects
which further affirms the value contribution of this new service
offering to both the Company and to our customers. I am pleased to
report that the Company saw continued growth in our key
geographical markets, in particular in North America which
represented 41% of revenues and with an increasing number of key
client accounts. Our main Asia Pacific markets such as Japan, India
and Korea, where we have appointed distributors, continue to be
impacted by the global pandemic, although client relationships and
opportunities are increasing. However, I am pleased to report that
progress is being made with Biotickle, our distributor in India,
with the successful initiation of client projects as well as with
Bizcom, our distributor in Japan, who successfully secured a client
humanisation project.
In addition to the current 'Fee for Service' revenue model, and
where this significant contribution to the client's intellectual
property we will look to enter into a collaboration agreement
structure which will enable Fusion to access the downstream value
of the services and share in the commercial success. This will
further enable Fusion to unlock the intrinsic value that our
service platforms provide to our clients and generate additional
shareholder value.
We continued to drive investment and innovation into the R&D
pipeline of new service offerings. In the financial year, we made
further progress on the development work of OptiMAL(TM) with the
successful production of control models having been achieved and
work commencing on two further oncology targets to be developed in
addition to the SARS-CoV-2 work. I strongly believe that
OptiMAL(TM) represents a key future driver of growth for the
business and will enable the Company to access a sizeable
addressable market which will generate significant shareholder
value.
I am also pleased to report that as part of our commitment and
drive into R&D, Dr Richard Buick will assume the role of Chief
Scientific Officer, overseeing and managing the R&D platform
and pipeline. Dr Buick will be fully focused on driving the Library
and B-Cell Cloning programs as well as exploring early stage
R&D pipeline experimental work which can be further developed
into exciting new service offerings. As part of this focus on
R&D, Dr Buick will be establishing a Scientific Advisory Panel
of industry experts and thought leaders in the field of antibody
discovery and services.
As reported in October 2020, the Company received grants from
Invest Northern Ireland to support Fusion's COVID-19 Discovery
programme as part of the NI COVID-19 Antibody Development Alliance
(NICADA) a collaboration between Fusion and Queen's University
Belfast with an aim to develop and test antibodies to assist in
tackling the COVID-19 pandemic. A portion of the grant was used to
support the OptiMAL(TM) programme and to reinforce the work being
performed at Fusion to produce fully human antibodies targeting the
SARS-CoV-2 virus which could be used in therapeutic and diagnostic
applications.
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, 27%
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.
I am very grateful for the commitment, dedication and resilience
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. I also want to thank our
collaborators and partners who also had to adjust to the challenges
and enabled us to continue to operate throughout the year.
The Company held current net assets of GBP3.7m at 31 March 2021
(2020: GBP1.8m) which mainly comprised inventories and cash and
cash equivalents.
The Company ended the year with GBP2.7m of cash and cash
equivalents, having used GBP1.1m of cash in operations during the
year, invested GBP0.4m 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 FY2022.
Post year end events
-- Receipt of first success milestone payment of GBP150,000 from a key client
Financial Results
The Company has continued to build on the revenue growth in the
second half of FY2020 with revenue growth seen in both H1 and H2.
Full year revenues for the year in total were up 7% to GBP4.2m
(FY2020: GBP3.9m).
The EBITDA loss for the year was GBP0.5m (FY2020: GBP0.4m loss)
(see note 27). Continued losses are a result of ongoing investment
in operations and research which are expected to contribute towards
future revenue growth. The loss before tax increased to GBP1.3m
(FY2020: GBP1.1m loss).
An additional tax charge was incurred upon the decision to
derecognise the deferred tax asset, which has resulted in an
additional tax charge of GBP1.8m in the year. IAS12 requires that a
deferred tax asset relating to unused tax losses is carried forward
to the extent that it is probable that future taxable profits will
be available. The Company raised GBP2.8m to continue investment in
R&D and business development. After the investment period the
Board expects the Company to generate healthy profits but
considering the immediate outlook for the business, it is difficult
at this stage to reliably estimate the period over which profits
many arise in the future. The Board has therefore determined that
derecognising the asset in the current year is the most appropriate
course of action. This approach does not affect the future
availability of the tax losses for offset against future
profits.
The Company used GBP1.1m of cash in operations (2020: GBP0.2m)
and invested GBP0.4m in expenditure on capital equipment and a
further GBP0.2m servicing asset-based borrowings. Cash and cash
equivalents as at 31 March 2021 totaled GBP2.7m (2020:
GBP1.5m).
Key performance indicators
The key performance indicators (KPIs) regularly reviewed by the
Board are:
KPI FY2021 FY2020
----------------------------- ---------- ----------
Revenue change year on year 7% 79%
EBITDA (GBP0.5m) (GBP0.4m)
Cash used in operations (GBP1.1m) (GBP0.2m)
----------------------------- ---------- ----------
Corporate strategy
The Company continues to grow by following the existing
Corporate Strategy of investing for growth through market
development and the introduction of new services developed
in-house.
Fusion is at a key value inflection point in its evolution. The
Company has world class and cutting-edge Antibody Discovery,
Engineering and Supply technology platforms with the potential to
generate significant future shareholder value.
The Company's vision is to move into the next phase of its
evolution as a commercially successful antibody service provider
with a diversified range of technology platforms to enable our
customers in pharma and biotech to identify and commercialise
antibodies more cost effectively, more rapidly, with a higher
probability of success and with a more competitive profile.
Outlook
There continues to be a level of uncertainty around the world as
countries ease or increase restrictions to manage the global
COVID-19 pandemic though we are seeing the situation improving.
The Board believes that the Company has the expertise to meet
these challenges and capitalise on opportunities and, having raised
capital in the year, that it also has the financial resources to
face the coming months with confidence. We will continue to build
on our current commercial performance accessing additional value
generating opportunities, advancing the OptiMAL R&D program in
preparation for commercialisation and growing the value from our
current proprietary service platforms.
Dr Richard Jones
Chief Executive Officer
10 August 2021
Statement of Comprehensive Income
Notes 2021 2020
GBP'000 GBP'000
------------------------------ ------ --------- ---------
Revenue 4 4,165 3,895
Cost of sales (2,141) (2,123)
------------------------------ ------ --------- ---------
Gross profit 2,024 1,772
Other operating income 194 56
Administrative expenses (3,467) (2,887)
Operating loss 5 (1,249) (1,059)
------------------------------ ------ --------- ---------
Finance income 8 3 6
Finance expense 8 (18) (20)
------------------------------ ------ --------- ---------
Loss before tax (1,264) (1,073)
Income tax (charge)/credit 10 (1,635) 376
------------------------------ ------ --------- ---------
Loss for the financial year (2,899) (697)
------------------------------ ------ --------- ---------
Total comprehensive expense
for the year (2,899) (697)
Pence Pence
Loss per share
Basic 11 (11.4) (3.2)
The statement of comprehensive income has been prepared on the
basis that all operations are continuing operations.
Statement of Financial Position
Notes 2021 2020
GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 12 2 4
Property, plant and equipment 13 1,123 1,470
Deferred tax assets 15 - 1,764
---------------------------------- ------ --------- ---------
1,125 3,238
---------------------------------- ------ --------- ---------
Current assets
Inventories 16 480 340
Trade and other receivables 17 1,440 887
Current tax receivable 99 38
Cash and cash equivalents 2,686 1,537
---------------------------------- ------ --------- ---------
4,705 2,802
---------------------------------- ------ --------- ---------
Total assets 5,830 6,040
Liabilities
---------------------------------- ------ --------- ---------
Current liabilities
Trade and other payables 18 833 828
Borrowings 19 163 161
---------------------------------- ------ --------- ---------
996 989
---------------------------------- ------ --------- ---------
Net current assets 3,709 1,813
---------------------------------- ------ --------- ---------
Non-current liabilities
Borrowings 19 67 219
Provisions for other liabilities
and charges 20 20 20
---------------------------------- ------ --------- ---------
87 239
---------------------------------- ------ --------- ---------
Total liabilities 1,083 1,228
Net assets 4,747 4,812
---------------------------------- ------ --------- ---------
Equity
Called up share capital 22 1,024 884
Share premium reserve 7,547 4,872
Accumulated losses (3,824) (944)
---------------------------------- ------ --------- ---------
Total equity 4,747 4,812
---------------------------------- ------ --------- ---------
Statement of Changes in Equity
Called Share premium Accumulated Total
up share reserve losses equity
capital GBP'000 GBP'000 GBP'000
GBP'000
------------------------------ ----------- --------------- ------------- ----------
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 charge 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
------------------------------ ----------- --------------- ------------- ----------
At 1 April 2020 884 4,872 (944) 4,812
Loss and total comprehensive
expense for the year - - (2,899) (2,899)
------------------------------ ----------- --------------- ------------- ----------
Issue of share capital 140 2,879 - 3,019
Cost of issuing share
capital - (204) - (204)
Share options - value
of employee services - - 19 19
------------------------------ ----------- --------------- ------------- ----------
Total transactions
with owners, recognised
directly in equity 140 2,675 19 2,834
------------------------------ ----------- --------------- ------------- ----------
At 31 March 2021 1,024 7,547 (3,824) 4,747
------------------------------ ----------- --------------- ------------- ----------
Statement of Cash Flows
2021 2020
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Cash flows from operating activities
Loss for the year (2,899) (697)
Adjustments for:
Share based payment expense 19 83
Depreciation 712 620
Amortisation of intangible assets 2 2
Finance income (3) (6)
Finance costs 18 20
Income tax charge/(credit) 1,635 (376)
Increase in inventories (140) (97)
(Increase)/decrease in trade and other receivables (553) 169
Increase in trade and other payables 5 99
---------------------------------------------------- --------- ---------
Cash used in operations (1,204) (183)
Income tax received 68 23
---------------------------------------------------- --------- ---------
Net cash used in operating activities (1,136) (160)
Cash flows from investing activities
Purchase of property, plant and equipment (365) (109)
Finance income - interest received 3 6
---------------------------------------------------- --------- ---------
Net cash used in investing activities (362) (103)
Cash flows from financing activities
Proceeds from issue of share capital net 2,815 -
of transaction costs
Proceeds from new borrowings 14 -
Repayment of borrowings (164) (172)
Finance costs - interest paid (18) (12)
---------------------------------------------------- --------- ---------
Net cash generated from/(used in) financing
activities 2,647 (184)
Net increase/(decrease) in cash and cash
equivalents 1,149 (447)
Cash and cash equivalents at the beginning
of the year 1,537 1,984
---------------------------------------------------- --------- ---------
Cash and cash equivalents at the end of the
year 2,686 1,537
---------------------------------------------------- --------- ---------
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 2021 and 31 March 2020 but is derived
from those accounts. Statutory accounts for the year ended 31 March
2020 have been delivered to the Registrar of Companies and those
for 2021 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 include 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 accounting standards in conformity with the Companies
Act 2006.
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 GBP2,899,000 for the year and
at the year-end had net current assets of GBP3,709,000 including
GBP2,686,000 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 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, grant income is recognised in the Statement of
Comprehensive Income as other operating income.
Research and development
Research expenditure is written off as incurred. Development
expenditure is recognised in the Statement of Comprehensive Income
as an expense until it can be demonstrated that the following
conditions for capitalisation apply:
-- it is technically feasible to complete the scientific product
so that it will be available for use;
-- management intends to complete the product and use or sell it;
-- there is an ability to use or sell the product;
-- it can be demonstrated how the product will generate probable future economic benefits;
-- adequate technical, financial and other resources to complete
the development and to use or sell the product are available;
and
-- the expenditure attributable to the product during its
development can be reliably measured.
Intangible assets
Software
Software developed for use in the business is initially
recognised at historical costs, net of amortisation and provision
for impairment. Subsequent development costs are included in the
asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of
the item can be measured reliably.
Software is amortised over its expected useful economic life,
which is currently estimated to be 4 years. Amortisation expense is
included within administrative expenses in the Statement of
Comprehensive Income.
Property, plant and equipment
Property, plant and equipment are initially recognised at
historical cost, net of depreciation and any impairment losses.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Company and the cost of the item can be measured
reliably. The carrying amount of the replaced part is
de-recognised. All other repairs and maintenance are charged to the
statement of comprehensive income during the financial year in
which they are incurred.
Subsequently, property plant and equipment are measured at cost
or valuation net of depreciation and any impairment losses.
Costs associated with maintaining computer software programmes
are recognised as an expense as incurred. Software acquired with
hardware is considered to be integral to the operation of that
hardware and is capitalised with that equipment. Software acquired
separately from hardware is recognised as an intangible asset and
amortised over its estimated useful life.
Depreciation is provided on all property, plant and equipment at
rates calculated to write off the cost less estimated residual
value of each asset on a straight line basis over its expected
economic useful life as follows:
Right of use assets The remaining length of the lease
Leasehold improvements The lesser of the asset life and the
remaining length of the lease
Plant and machinery 4 years
Fixtures, fittings & equipment 4 years
Leases
Leases in which a significant portion of the risks and rewards
of ownership remain with the lessor are deemed to give the Company
the right-of-use and accordingly are recognised as property, plant
and equipment in the statement of financial position. Depreciation
is calculated on the same basis as a similar asset purchased
outright and is charged to profit or loss over the term of the
lease. A corresponding liability is recognised as borrowings in the
statement of financial position and lease payments deducted from
the liability. The difference between remaining lease payments and
the liability is treated as a finance cost and taken to profit or
loss in the appropriate accounting period.
Impairment of non-financial assets
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are largely independent cash
inflows (cash-generating units). As a result, some assets are
tested individually for impairment and some are tested at
cash-generating unit level.
All individual assets or cash-generating units are tested
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the
asset's or cash-generating unit's amount exceeds its recoverable
amount. The recoverable amount is the higher of fair value,
reflecting market conditions less costs to sell, and value in use.
Value in use is based on estimated future cash flows from each
cash-generating unit or individual asset, discounted at a suitable
rate in order to calculate the present value of those cash flows.
The data used for impairment testing procedures is directly linked
to the Company's latest approved budgets, adjusted as necessary to
exclude any restructuring to which the Company is not yet
committed. Discount rates are determined individually for each
cash-generating unit or individual asset and reflect their
respective risk profiles as assessed by the directors. Impairment
losses for cash-generating units are charged pro rata to the assets
in the cash-generating unit. Cash generating units and individual
assets are subsequently reassessed for indications that an
impairment loss previously recognised may no longer exist.
Impairment charges are included in administrative expenses in the
Statement of Comprehensive Income. An impairment charge that has
been recognised is reversed if the recoverable amount of the
cash-generating unit or individual asset exceeds the carrying
amount.
Current tax and deferred tax
The tax expense for the year comprises current and deferred tax.
Tax is recognised in the statement of comprehensive income, except
to the extent that it relates to items recognised directly in
equity.
The current tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the reporting date in the
UK, where the Company operates and generates taxable income.
Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred tax is recognised on temporary differences arising
between the carrying amounts of assets and liabilities and their
tax bases. Deferred tax is determined using tax rates (and laws)
that have been enacted, or substantively enacted, by the reporting
date and are expected to apply when the related deferred tax asset
is realised or the deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilised.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities.
Share based employee compensation
The Company operates equity-settled share-based compensation
plans for remuneration of its directors and employees.
All employee services received in exchange for the grant of any
share-based compensation are measured at their fair values. The
fair value is appraised at the grant date and excludes the impact
of any non-market vesting conditions (e.g. profitability and
remaining an employee of the Company over a specified time
period).
Share based compensation is recognised as an expense in the
Statement of Comprehensive Income with a corresponding credit to
equity. If vesting periods or other vesting conditions apply, the
expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to
vest.
Non-market vesting conditions are included in assumptions about
the number of options that are expected to become exercisable.
Estimates are subsequently revised if there is any indication that
the number of share options expected to vest differs from previous
estimates.
The proceeds received net of any directly attributable
transaction costs are credited to share capital and share premium
when the options are exercised.
Financial assets
Classification
The Company classifies its financial assets in the following
measurement categories:
-- Those to be measured at amortised costs; and
-- Those to be measured subsequently at fair value (either
through Other Comprehensive Income 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 year to
which they relate.
Foreign currency translation
The Company's functional currency is the pound sterling.
Transactions in foreign currencies are translated at the exchange
rate ruling at the date of transaction. Monetary assets and
liabilities in foreign currencies are translated at the rates of
exchange ruling at the reporting date. Exchange differences arising
on the settlement or on translating monetary items at rates
different from those at which they were initially recorded are
recognised in administrative expenses in the Statement of
Comprehensive Income in the year in which they arise.
Equity
Equity comprises the following;
Called up share capital
Share capital represents the nominal value of equity shares.
Share premium
Share premium represents the excess over nominal value of the
fair value of consideration received of equity shares, net of
expenses of the share issue.
Accumulated losses
Accumulated losses 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 accumulated tax losses of
GBP9,042,000. In principle these losses would support a deferred
tax asset of approximately GBP2,000,000. IAS 12 requires that a
deferred tax asset relating to unused tax losses is carried forward
to the extent that future taxable profits will be available. In the
year the Company raised GBP2,800,000 of capital (net of costs) and
the company is in an investment phase, expecting to have an
increase in expenditure on R&D and business development over
the next two years which will increase the tax losses. After the
investment period the Board expects the Company to generate healthy
profits but it is difficult at this stage to reliably estimate the
period over which profits may arise in the future. The Board has
therefore determined that derecognising the asset in the current
year is the most appropriate course of action. This approach does
not affect the future availability of the tax losses for offset
against future profits.
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 2021 2020
GBP'000 GBP'000
---------------------- --------- ---------
UK 711 561
Rest of Europe 1,125 1,246
North America 1,714 1,435
Rest of World 615 653
4,165 3,895
---------------------- --------- ---------
In the year there were no customers (2020: none) to whom sales
exceeded 10% of revenues.
5 Operating loss is stated after charging/(crediting):
2021 2020
GBP'000 GBP'000
-------------------------------------------------- --------- ---------
Employee benefit costs
-wages and salaries 2,005 1,748
-social security costs 194 169
-other pension costs 113 76
-share based payments 18 72
-------------------------------------------------- --------- ---------
2,330 2,065
-------------------------------------------------- --------- ---------
Depreciation of property, plant and
equipment 712 620
Other operating expenses
Rates, utilities and property maintenance 66 64
IT costs 23 25
Fees payable to the Company's auditors
* for the audit of the financial statements 30 19
* non-audit assurance services - 7
30 26
-------------------------------------------------- --------- ---------
Raw materials and consumables used 1,245 1,337
Increase in inventories (140) (97)
Patent costs 2 20
Marketing costs 143 134
Loss on foreign exchange 64 1
Other expenses 1,133 815
Total cost of sales and administrative
expenses 5,608 5,010
-------------------------------------------------- --------- ---------
Included in the costs above is expenditure on research and
development totalling GBP613,000 (2020: GBP391,000).
6 Average staff numbers
2021 2020
---------------------------------- ----- -----
Employed in UK No. No.
(including executive directors) 49 42
Non-executive directors 5 5
---------------------------------- ----- -----
54 47
---------------------------------- ----- -----
7 Remuneration of directors and key senior management
Directors
2021 2020
GBP'000 GBP'000
----------------------- --------- ---------
Emoluments 562 486
Pension contributions 23 19
585 505
----------------------- --------- ---------
Highest paid director
The highest paid director received the following emoluments:
2021 2020
GBP'000 GBP'000
--------------------------------- --------- ---------
Emoluments 151 121
Compensation for loss of office 30 -
Pension contributions 9 6
190 127
--------------------------------- --------- ---------
During the year the highest paid director exercised options over
125,000 ordinary shares at an exercise price of GBP0.04 per
share.
Key senior management
Key senior management is considered to comprise the directors of
the Company with total remuneration for the year of GBP586,000
(2020: GBP505,000). Share based payments for the year attributable
to key senior management totalled GBP5,000 (2020: GBP38,000).
8 Finance income and expense
Income 2021 2020
GBP'000 GBP'000
-------------------------- --------- ---------
Bank interest receivable 3 6
-------------------------- --------- ---------
Expense 2021 2020
GBP'000 GBP'000
-------------------------------------- --------- ---------
Interest expense on other borrowings 18 20
-------------------------------------- --------- ---------
9 Share based payments
At the reporting date the Company had three share based reward
schemes: two schemes under which options were previously granted
and are now closed to future grants and a third scheme in place in
which grants were made in the current year:
-- A United Kingdom tax authority approved scheme for executive directors and senior staff;
-- An unapproved scheme for awards to those, such as
non-executive directors, not qualifying for the approved scheme;
and
-- A United Kingdom tax authority approved scheme for executive
directors and senior staff which incorporates unapproved options
for grants to be made following listing of the Company shares,
"2017 EMI and Unapproved Employee Share Option Scheme".
9 Share based payments continued
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 GBP18,000 (2020: GBP72,000). 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%.
2021 2021 2020 2020
Weighted Number Weighted Number
average average
exercise exercise
price price
GBP GBP
--------------------------- ---------- ---------- ---------- ----------
Outstanding at beginning
of the year 0.400 1,685,417 0.0401 1,718,750
--------------------------- ---------- ---------- ---------- ----------
Granted during the year - - - -
Exercised during the year 0.510 (185,834) - -
Lapsed during the year 0.103 (232,917) 0.545 (33,333)
--------------------------- ---------- ---------- ---------- ----------
Outstanding at the end
of the year 0.421 1,266,666 0.400 1,685,417
--------------------------- ---------- ---------- ---------- ----------
The options outstanding at the end of each year were as
follows:
Expiry Nominal Exercise 2021 2020
share price Number Number
value GBP
--------------- --------- --------- ---------- ----------
May 2027 GBP0.04 0.040 310,000 488,750
December 2028 GBP0.04 0.545 956,666 1,196,667
--------------- --------- --------- ---------- ----------
Total 1,266,666 1,685,417
-------------------------- --------- ---------- ----------
Of the total number outstanding 939,996 (2020: 895,416) had
vested at the reporting date.
10 Income tax credit
2021 2020
GBP'000 GBP'000
----------------------------------- --------- ---------
Current tax - UK corporation tax (129) (38)
Deferred tax - origination
and reversal of temporary
differences - (338)
Deferred tax asset written 1,764 -
off
Income tax charge/(credit) 1,635 (376)
----------------------------------- --------- ---------
The difference between loss before tax multiplied by the
standard rate of 19% (2020: 19%) and the income tax credit is
explained in the reconciliation below:
2021 2020
GBP'000 GBP'000
Factors affecting the tax credit for the
year
Loss before tax (1,264) (1,073)
------------------------------------------- --------- ---------
Loss before tax multiplied by standard
rate of UK corporation tax of 19% (2020:
19%) (240) (204)
------------------------------------------- --------- ---------
Provisions and expenditure not deductible
for tax purposes - permanent - 23
Provisions and expenditure not deductible
for tax purposes - temporary - (2)
Deferred tax not recognised on current 240 -
year losses
Deferred tax not recognised on prior year
losses 1,764
Increase in deferred tax asset due to
increase in the enacted rate - (155)
RDEC/R&D tax credit (99) (38)
RDEC/R&D tax credit - adjustment relating (30) -
to prior year
Total income tax charge/(credit) 1,635 (376)
------------------------------------------- --------- ---------
11 Loss per share
2021 2020
GBP'000 GBP'000
----------------------------- --------- ---------
Loss for the financial year (2,899) (697)
Loss per share pence Pence
Basic (11.4) (3.2)
----------------------------- --------- ---------
Number Number
----------------------------------- ----------- -----------
Issued ordinary shares at the end
of the year 25,610,359 22,091,192
Weighted average number of shares
in issue during the year 25,458,761 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
2021 2020
Software Software
GBP'000 GBP'000
-------------------------- ---------- ----------
Cost
At 1 April 2020 8 8
At 31 March 2021 8 8
----------------------------- ---------- ----------
Accumulated amortisation
At 1 April 2020 4 2
Amortisation charged
in the year 2 2
At 31 March 2021 6 4
----------------------------- ---------- ----------
Net book value
At 31 March 2 4
----------------------------- ---------- ----------
At 1 April 4 6
----------------------------- ---------- ----------
The amortisation expense is included in administrative expenses
in the statement of comprehensive income in each of the financial
years shown.
13 Property, plant and equipment
Right of Leasehold Plant Fixtures, Total
use assets improvements & fittings GBP'000
GBP'000 GBP'000 machinery & equipment
GBP'000 GBP'000
-------------------------- ------------- --------------- ------------ ------------- ----------
Cost
At 1 April 2020 226 725 1,916 220 3,087
Additions 14 59 265 27 365
At 31 March 2021 240 784 2,181 247 3,452
-------------------------- ------------- --------------- ------------ ------------- ----------
Accumulated depreciation
At 1 April 2020 68 425 1,015 109 1,617
Depreciation
charged in the
year 71 158 431 52 712
At 31 March 2021 139 583 1,446 161 2,329
-------------------------- ------------- --------------- ------------ ------------- ----------
Net book value
At 31 March 2021 101 201 735 86 1,123
-------------------------- ------------- --------------- ------------ ------------- ----------
At 31 March 2020 158 300 901 111 1,470
-------------------------- ------------- --------------- ------------ ------------- ----------
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
16 226 - - - 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
--------------------------- ---------- --------------- ------------ ------------- ----------
Plant & machinery with a net book value of GBP216,000 is
held under hire purchase agreements or finance leases (2020:
GBP331,000).
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:
2021 2020
GBP GBP
---------------------------------------- ----- -----
Fusion Contract Services Limited 1 1
100% subsidiary
Dormant company
Marlborough House, 30 Victoria Street,
Belfast BT1 3GG
---------------------------------------- ----- -----
Group financial statements are not prepared on the basis that
the subsidiary company is dormant and not material to the financial
statements.
15 Deferred tax assets
GBP'000 GBP'000
-------------------------------------- --------- --------
At 1 April 2020/2019 1,764 1,343
(Charged)/credited to the statement
of comprehensive income in the year (1,764) 338
Credited to equity in the year on
share based payments - 83
At 31 March 2121/2020 - 1,764
-------------------------------------- --------- --------
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 2019 (72) 1,388 20 7 1,343
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
(Charged)/credited
to Statement
of Comprehensive
Income 6 (1,614) (140) (16) (1,764)
-------------------------- ------------------ ------------ ---------- --------- ----------
At 31 March 2021 - - - - -
-------------------------- ------------------ ------------ ---------- --------- ----------
16 Inventories
2021 2020
GBP'000 GBP'000
------------------------------- --------- ---------
Raw materials and consumables 480 340
------------------------------- --------- ---------
The cost of inventories recognised as an expense for the year
was GBP1,105,000 (2020: GBP1,240,000).
17 Trade and other receivables
2021 2020
GBP'000 GBP'000
-------------------------------- --------- ---------
Trade receivables 673 542
Loss allowance (81) (1)
-------------------------------- --------- ---------
Trade receivables - net 592 541
Other receivables 90 49
Prepayments and accrued income 758 297
-------------------------------- --------- ---------
1,440 887
-------------------------------- --------- ---------
The fair value of trade and other receivables approximates to
their carrying value.
At the reporting date trade receivables loss
allowance/impairment as follows:
2021 2020
GBP'000 GBP'000
-------------------------------- --------- ---------
Individually impaired 71 -
Expected credit loss allowance 10 1
-------------------------------- --------- ---------
81 1
-------------------------------- --------- ---------
The carrying amount of trade and other receivables are
denominated in the following currencies:
2021 2020
GBP'000 GBP'000
----------- --------- ---------
UK pound 418 497
Euros - 12
US dollar 264 81
682 590
----------- --------- ---------
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 1% 1.1% 1.4% 2.5% 13.8%
Gross carrying
amount
(GBP'000) 373 68 118 - 28 587
Loss allowance
(GBP'000) 4 1 1 - 4 10
---------------- --------- ----------- ---------- --------- ----------- -------
Movements on trade receivables loss allowance is as follows:
GBP'000 GBP'000
---------------------------- -------- --------
At 1 April 2020/2019 1 2
Movement in loss allowance 9 (1)
At 31 March 2021/2020 10 1
---------------------------- -------- --------
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
2021 2020
GBP'000 GBP'000
--------------------------------- --------- ---------
Trade payables 344 415
Social security and other taxes 71 73
Other payables 45 22
Accruals and deferred income 373 318
833 828
--------------------------------- --------- ---------
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 GBP23,000 (2020:
GBPnil) was due to Invest Northern Ireland.
19 Borrowings
Lease liabilities Hire Purchase Total
GBP'000 Contracts GBP'000
GBP'000
-------------------------- ------------------ -------------- ----------
At 1 April 2020 155 225 380
Additions in year 14 - 14
Interest charged in year 8 10 18
Repayments (77) (105) (182)
-------------------------- ------------------ -------------- ----------
At 31 March 2021 100 130 230
-------------------------- ------------------ -------------- ----------
Amounts due in less than
1 year 75 88 163
Amounts due after more
than 1 year 25 42 67
-------------------------- ------------------ -------------- ----------
100 130 230
-------------------------- ------------------ -------------- ----------
Lease Hire Purchase Total
liabilities Contracts GBP'000
GBP'000 GBP'000
-------------------------- ------------- -------------- ----------
At 1 April 2019 - 140 140
Adoption of IFRS 16 226 - 226
Additions in year 166 166
Interest charged in year 11 9 20
Repayments (82) (90) (172)
-------------------------- ------------- -------------- ----------
At 31 March 2020 155 225 380
-------------------------- ------------- -------------- ----------
Amounts due in less than
1 year 67 94 161
Amounts due after more
than 1 year 88 131 219
-------------------------- ------------- -------------- ----------
155 225 380
-------------------------- ------------- -------------- ----------
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 GBP219,000 (2020: GBP359,000 discounted at
5.5%).
Borrowings are secured by a fixed and floating charge over the
whole undertaking of the Company, its property, assets and rights
in favour of Northern Bank Ltd trading as Danske Bank.
20 Provisions for other liabilities and charges
2021 2020
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 years unless
otherwise stated in this note.
The principal financial instruments used by the Company, from
which the financial instrument risk arises, are trade receivables,
cash and cash equivalents and trade and other payables. The fair
values of all the Company's financial instruments are the same as
their carrying values.
Financial instruments by category
Financial instruments categories are as follows:
As at 31 March 2021 Amortised
cost
GBP'000
--------------------------- ----------
Trade receivables 592
Other receivables 90
Accrued income 504
Cash and cash equivalents 2,686
------------------------------ ----------
Total 3,872
------------------------------ ----------
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 2021 Other financial
liabilities
at amortised
cost
GBP'000
---------------------- ----------------
Trade payables 344
Other payables 116
Accruals 252
Borrowings 230
---------------------- ----------------
Total 942
---------------------- ----------------
As at 31 March 2020 Other financial
liabilities
at amortised
cost
GBP'000
---------------------- ----------------
Trade payables 415
Other payables 95
Accruals 318
Borrowings 380
------------------------ ----------------
Total 1,208
------------------------ ----------------
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 GBP34,000 (2020: GBP7,000)
higher/lower and GBP4,000 (2020: GBP1,000) higher/lower
respectively.
22 Called up share capital
2021 2020
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Allotted, called up and fully paid
* 22,091,192 Ordinary shares of GBP0.04 884
* 25,610,359 Ordinary shares of GBP0.04 1,024
--------------------------------------------------- --------- ---------
During the year the Company issued and allotted 3,519,167
ordinary shares for gross proceeds of GBP3,019,000.
23 Capital commitments
At 31 March 2021 the Company had contracted for but not incurred
capital expenditure of GBPnil (2020: GBPnil).
24 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 GBP113,000 to the Statement of Comprehensive
Income (2020: GBP76,000) in respect of Company contributions to the
scheme. At the reporting date there was GBP20,000 (2020: GBP18,000)
payable to the scheme and included in other payables.
25 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 (2020: GBP78,000). A balance of GBP23,000
(2020: GBPnil) was due and payable to Invest NI at the reporting
date. The Company claimed various grants during the year from
Invest NI amounting to GBP194,000 (2020: GBP56,000). A balance of
GBP47,000 was due on submitted claims from Invest NI (2020:
GBPnil).
26 Ultimate controlling party
There is no ultimate controlling party.
27 Reconciliation of loss to EBITDA
2021 2020
GBP'000 GBP'000
------------------------------- --------- ---------
Loss before tax (1,264) (1,073)
------------------------------- --------- ---------
Finance income (3) (6)
Finance expense 18 20
Depreciation and amortisation 714 620
------------------------------- --------- ---------
EBITDA (535) (439)
------------------------------- --------- ---------
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END
FR PLMPTMTBMBFB
(END) Dow Jones Newswires
August 10, 2021 02:00 ET (06:00 GMT)
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