TIDMCPT
RNS Number : 3179D
Concepta PLC
26 April 2017
26 APRIL 2017
Concepta Plc
("Concepta", the "Company" or the "Group")
Final Results
Concepta plc (AIM:CPT), the pioneering UK healthcare company and
developer of a proprietary platform and suite of products targeted
at the personalised mobile health market with a primary focus on
women's fertility and specifically unexplained infertility,
announces its results for the year ended 31 December 2016.
2016 HIGHLIGHTS
-- Significant progress made advancing flagship myLotus
fertility product towards market launch in China and Europe
-- Manufacturing Agreement signed with a leading Chinese
manufacturer Shijiazhuang Huanzhong Biotech Limited to assemble and
package myLotus
-- Appointment of China Country Manager Kevin Su Wei to build distributor network in China
-- Opening of new UK headquarters in Bedfordshire - doubling the
size of Concepta's laboratory operational headquarters to increase
R&D capacity
-- 10 year lease signed for new manufacturing facility in Doncaster, Yorkshire
-- Achievement of ISO13485 accreditation - a key step in
attaining CE marking for EU and UK launch of myLotus
-- New product development - signing of technology transfer and
licence agreement with Selective Antibodies Limited to develop
stress test for myLotus fertility product
Financial Overview
-- EBITDA loss GBP1.82m excluding deemed reverse takeover costs
(GBP2.46m including deemed reverse takeover costs)
-- Cash at year end GBP2.7m
-- GBP3.4m (net of issue expenses) share placing secured in July 2016
A copy of the annual report & accounts for year ended 31
December 2016 will be sent to shareholders shortly and will be
available from the Company's website www.conceptaplc.com
CHAIRMAN'S STATEMENT
Business Progress
It gives me great pleasure to report a successful start for
Concepta since it joined AIM in July 2016, and on the progress it
has made during the period under review as it builds itself into a
leading health diagnostics company focused on women's fertility and
specifically unexplained infertility. It has been an exciting year
for Concepta following its reverse takeover and admission to AIM in
July 2016, having successfully raised GBP3.4 million with the aim
to launch our proprietary fertility product myLotus into China in
2017 and thereafter into the UK and Europe.
To this end, we enjoyed an active second half of 2016 which saw
us setting up product manufacturing and logistics in both the UK
and China and making a number of necessary preparations ahead of
myLotus' launch. In tandem with this we have continued to build on
the scope of our product offering through continued research and
new product development and have forged partnerships with players
in the same space in this respect.
A significant market opportunity exists to develop a 'best in
class' product to help women with unexplained infertility to
conceive. We believe our myLotus product delivers this being the
only product that allows both quantitative and qualitative
measurement of a woman's personal LH and hCG hormone levels to help
increase conception probability. Concepta's platform allows the
measurement of hormones and small molecules in the consumer's home.
The ability to see quantitative as well as qualitative results, and
the link with a mobile app, make us unique within the rapidly
growing mobile health market. It is our intention to capitalise
upon this opportunity and deliver value for shareholders as we
continue to build this Group in 2017 and beyond.
Our initial focus is on helping women / couples with unexplained
infertility, a highly motivated group but with very few medical
options available to them. myLotus provides them with unique and
personal information that allows them to increase their chances to
conceive.
Strategy underpinned by results-driven operational focus
Our growth strategy is focused on the commercial launch of our
flagship myLotus product in the highly lucrative Chinese and EU
infertility space where we see an addressable market of GBP600m. We
have a defined route to market for myLotus with regulatory
approvals for launch in China already secured and the process of
obtaining CE-Marking for the UK and Europe well underway for a 2017
launch. Our primary focus on unexplained infertility presents a
fantastic opportunity to grow our market share in the personalised
mobile health space; the issue of infertility is universal and
largely unaffected by demographics, resulting in a target consumer
that is highly driven.
As we progress towards the launch of myLotus we plan to increase
the scope of the product's applications through research and
development, creating new means by which we can capitalise on the
profitability of the mobile health sector; a huge global market
which is set to grow at an exponential rate. We remain dedicated to
engaging in partnerships which complement our business model and
further our ability to provide products that tackle the issue of
unexplained infertility.
Our platform is currently unique and offers the potential to
develop a wide range of additional tests that could dramatically
change how we look after our own health.
Within Concepta PLC our structure initially centered on its
fertility focused subsidiary, Concepta Diagnostics Limited, and as
a result with cFDA product registration achieved in China, we are
starting commercialisation in this large and important market. We
aim to maximize fertility sales in China and then launch in
subsequent markets, allowing us to develop other opportunities in
parallel.
Managerial expertise
We have assembled a management team with many years of
experience in Women's Health across many areas and, in particular,
international product development within Asia.
The Sales & Marketing team has substantial experience of
gaining consumer insights and have contributed to the development
of products that are unique and highly relevant to our target
group.
Financial position
Financially, the Group is in the early stages of it's
development, and in 2016 concentrated on the steps required to
launch the myLotus product in China. The funds raised in July 2016,
supported by Mercia Technologies PLC, underpin the Group's Business
Plan for the commercialisation of its products and the R&D on
its next generation of products.
Outlook
Our strategy remains unchanged and we expect to continue to
focus our efforts on the Chinese and European launch of our myLotus
product. We believe we are well positioned to deliver strong,
organic growth from our myLotus product and also plan to continue
concentrating additional efforts on research and development to
expand the breadth and depth of the platform's features, building
ourselves as a highly cash generative healthcare company and market
leaders within the growing market for personalised mobile
health.
A key challenge for companies is the transition from
laboratory-based small volume manufacturing, to full-scale
commercial manufacturing. Concepta is setting up a dedicated
manufacturing facility in Doncaster, with initial manual assembly
progressing to automated assembly, making us far less dependent on
the lead times of our supply chain.
The Group has made huge strides since its admission to AIM in
July 2016 and it goes without saying that we couldn't have done
this without the help and support of our employees, shareholders
and advisors. We have no doubt that Concepta will continue to excel
and deliver on its objectives from here onwards.
We are building a business that has an exciting future and I
look forward to the journey of building an international mobile
health business.
Board change
We are pleased to welcome Neil Mesher to the Board as
Non-Executive Director, who joined with effect from 29 March 2017.
His experience and insight within the healthcare industry and
consumer electronics in particular will complement our existing
expertise in diagnostics and will also supplement our efforts to
diversify our offering to improve users' ability to manage a range
of conditions beyond our current core fertility business.
Finally, I would like to take this opportunity to thank Neil
Herbert for remaining as a Non-Executive Director during the
reverse takeover and over the previous 2 years.
Adam Reynolds
Chairman
CHIEF EXECUTIVE'S REVIEW
Millions of women worldwide find it difficult to conceive. The
medical profession cannot find anything physically wrong with them
or their partner. They enter an agonising and frustrating period of
waiting or contemplate IVF.
Concepta is addressing common factors that can affect fertility
in any given cycle. The initial product range offers personalised
measurement of hormones at home and the ability to see whether they
may be the cause of the lack of success.
myLotus is the only known home platform to offer both
qualitative and quantitative results.
In 2013 the idea for the products grew out of a lack of
solutions that targeted the women most at need: those with
unexplained infertility rather than the "average woman".
The idea for the product grew into a prototype and, after an
initial fundraising in April 2014, Concepta Diagnostics Limited was
formed to further develop and commercialise the product.
The myLotus brand name was created, laboratory testing refined
the product and thanks to founder member contacts we put the
products through cFDA registration in China.
We achieved product registration for China in January 2016 and
sought funding to start commercialisation. After listing on AIM in
2016 we obtained the funding to put a commercial organisation in
place. We signed a manufacturing agreement for the final products
in China, set up a manufacturing site in Doncaster to manage the
production of the medical devices in the UK and are in the final
stages of non-regulatory trials prior to obtaining our first order
from China.
Strategy
Whilst the system was designed to support fertility it became
apparent that we had a platform that fits in perfectly with the
aims of mobile health: provide better patient outcomes at home at a
reduced cost to healthcare systems.
The ability to monitor what is wrong with you and have results
sent to a medical professional through the app is appealing in a
variety of conditions.
Unexplained infertility is a global issue. We will roll the
products out to other markets after appropriate regulatory
approvals. Where possible we will handle the operations
directly.
Our product developments are initially focused on addressing
different parameters that can affect women with unexplained
infertility. We aim to offer cumulatively improved chances of
conception through an understanding of issues linked to unexplained
infertility.
Our ability to develop quantitative home tests could take us
outside the industries we are familiar with. Where this is in the
interest of creating shareholder value we will evaluate the merits
of OEM opportunities. Our structure is such that this would not
detract from our core fertility business.
Markets
Our initial product offering in fertility offers a simple
message to a motivated target group: the potential to increase your
chances to conceive if you have been trying for 6 months or
longer.
The technology of using urine tests is well established and
consumers are used to obtaining these products directly.
In many markets we can reach these women without the need for an
expensive infrastructure. We will establish learning of the sales
& marketing activities that work best before rolling out to
additional markets.
Both the rate of sale and production capacity will be managed to
avoid out of stock periods or large overcapacity.
Products
We have announced that our next product in development is a test
to differentiate chronic stress from acute stress.
The impact of chronic stress on both male and female fertility
is well documented. Monitoring this will allow the couple to help
manage their stress levels and the impact this is having on
them.
A chronic stress test would also have large applications outside
of fertility.
We will continue to develop our own Intellectual Property but
will enter into collaborative deals as and when appropriate.
Scientific support
The management team has many years of experience in Women's
Health in a variety of functions.
Our technology allows us to move outside of the classic tests
available. We plan to assemble an advisory board to stimulate
scientific debate around the areas we enter and also ensure that
all claims are supported.
Outlook
There are several independent industry reports on mobile health
and the potential benefits it can deliver to individuals,
healthcare systems and the whole of society.
This will be a multi-faceted development involving
infrastructure as well as ethical debates and control systems.
We believe that we are very well placed to play a role in this
development. We have a platform that is easy to understand, easy to
use, economical and applicable for a wide variety of tests.
We will collaborate with healthcare initiatives to make the most
of our offering in this exciting new world of personalised
healthcare.
Erik Henau
Chief Executive Officer
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
11 month Year
period ended ended
31 December 31 January
2016 2016
Notes GBP GBP
------------------------- ------ -------------- ------------
Revenue 4 - 3,730
Cost of sales (37,972) -
Gross (loss)/profit (37,972) 3,730
Other administrative
expenses (966,896) (1,240,916)
AIM admission expenses (843,448) -
Deemed cost of reverse
acquisition (640,958) -
Share-based payments (74,040) (25,959)
------------------------- ------ -------------- ------------
Administrative expenses (2,525,342) (1,266,875)
------------------------- ------ -------------- ------------
Operating loss 5 (2,563,314) (1,263,145)
Finance income 7 222 910
Finance expenses 7 (1,355) -
------------------------- ------ -------------- ------------
Loss before income tax (2,564,447) (1,262,235)
Tax credit 8 149,221 164,112
Loss for the period (2,415,226) (1,098,123)
------------------------- ------ -------------- ------------
Attributable to owners
of the parent: (2,415,226) (1,098,123)
Loss per ordinary share
- basic and diluted
(GBP) 9 (0.03) (0.04)
The accompanying notes are an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31
31 December January
2016 2016
Notes GBP GBP
------------------------------- ------ ------------ ------------
Non-current assets
Property, plant and
equipment 10 186,933 253,268
Intangible assets 11 215,993 -
Total non-current assets 402,926 253,268
------------------------------- ------ ------------ ------------
Current assets
Inventories 12 70,500 -
Trade and other receivables 13 215,103 20,011
Corporation tax receivable 96,221 178,146
Cash and cash equivalents 14 2,708,477 100,389
------------------------------- ------ ------------ ------------
Total current assets 3,090,301 298,546
------------------------------- ------ ------------ ------------
Total assets 3,493,227 551,814
------------------------------- ------ ------------ ------------
Current liabilities
Trade and other payables 15 181,957 108,443
Loans and borrowings 16 - 30,000
Total current liabilities 181,957 138,443
------------------------------- ------ ------------ ------------
Non - current liabilities
Deferred tax liability 17 - 53,000
------------------------------- ------ ------------ ------------
Total non-current liabilities - 53,000
------------------------------- ------ ------------ ------------
Total liabilities 181,957 191,443
------------------------------- ------ ------------ ------------
Net assets 3,311,270 360,371
------------------------------- ------ ------------ ------------
Share capital 18 2,740,631 425
Share premium account 8,663,326 2,305,374
Share-based payment
reserve 19 541,364 43,879
Capital redemption
reserve 1,814,674 -
Reverse acquisition
reserve (6,044,192) -
Retained earnings (4,404,533) (1,989,307)
------------------------------- ------ ------------ ------------
Total equity 3,311,270 360,371
------------------------------- ------ ------------ ------------
These financial statements were approved and authorised for
issue by the board of directors on 25 April 2017 and were signed on
its behalf by:
Erik Henau
Chief Executive Officer
The accompanying notes are an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Deferred
shares
& 'A' Capital Reverse Share-based
Share deferred Share redemption Retained acquisition payment
capital shares Premium reserve earnings reserve reserve Total
GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ---------- ------------ ---------- ------------ ------------ ------------ ------------ ------------
Concepta
Diagnostics
Limited
Equity
as at
1 February
2015 425 - 2,305,374 - (891,184) - 17,920 1,432,535
Loss for
the year - - - - (1,098,123) - - (1,098,123)
--------------- ---------- ------------ ---------- ------------ ------------ ------------ ------------ ------------
Total
comprehensive
loss - - - - (1,098,123) - - (1,098,123)
Share-based
payments - - - - - - 25,959 25,959
--------------- ---------- ------------ ---------- ------------ ------------ ------------ ------------ ------------
Equity
as at
31 January
2016 425 - 2,305,374 - (1,989,307) - 43,879 360,371
Concepta
PLC
Equity
as at
1 February
2016 361,999 1,488,875 3,672,903 - - - - 5,523,777
Loss for
the period - - - - (2,415,226) - - (2,415,226)
--------------- ---------- ------------ ---------- ------------ ------------ ------------ ------------ ------------
Total
comprehensive
loss - - - - (2,415,226) - - (2,415,226)
Issue
of shares
net of
expenses 2,433,597 - 4,611,257 - - - - 7,044,854
Loan notes
converted
to shares 270,834 - 379,166 - - - - 650,000
Reverse
acquisition
reserve - - - - - (6,044,192) - (6,044,192)
Transfer
to
'A' deferred
shares (325,799) 325,799 - - - - - -
Buyback
&
cancellation
of shares - (1,814,674) - 1,814,674 - - - -
Share-based
payments - - - - - - 497,485 497,485
--------------- ---------- ------------ ---------- ------------ ------------ ------------ ------------ ------------
Equity
as at
31 December
2016 2,740,631 - 8,663,326 1,814,674 (4,404,533) (6,044,192) 541,364 3,311,270
--------------- ---------- ------------ ---------- ------------ ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIODED 31 DECEMBER
2016
1. General information
Concepta PLC (the "Company", formerly, Frontier Resources
International PLC) is a public limited company incorporated and
domiciled in England and Wales. The registered office of the
Company is 1 Park Row, Leeds,
England, LS1 5AB. The registered company number is 06573154.
The Company was incorporated on 22 April 2008. The Company
became an AIM Rule 15 cash shell on 23 March 2016, following the
disposal or dissolution of its previous oil and gas related
subsidiaries. On 26 July 2016, the Company with its enlarged share
capital started trading on AIM, following a reverse takeover of
Frontier Resources International PLC (renamed as Concepta PLC).
The Company's principal activity is in the development and
commercialisation of mobile health diagnostics medical devices.
The consolidated financial statements comprised of the Company
and its subsidiary (together referred to as "the Group") as at and
for the period to 31 December 2016. The parent Company financial
statements present information about the Company as a separate
entity and not about its Group.
2. Accounting policies
The principal accounting policies applied in the preparation of
the consolidated financial statements are set out below. These
policies have been consistently applied to all periods presented,
unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRSs), as
adopted by the European Union ("adopted IFRSs") and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS.
The preparation of financial statements in compliance with
adopted IFRSs requires the use of certain critical accounting
estimates. It also requires Group management to exercise judgment
in applying the Group's accounting policies. The areas where
significant judgments and estimates have been made in preparing the
financial statements and their effect are disclosed below.
Basis of consolidation
The consolidated financial statements include the results of the
Company and its subsidiaries ("the Group") as if they formed a
single entity for the full period or, in the case of acquisitions,
from the date control is transferred to the Group. The Company
controls an entity, when the Company has the power, either directly
or indirectly, to govern the financial and operating policies of
another entity or business so as to obtain benefits from its
activities, it is classified as a subsidiary. Intercompany
transactions and balances between Group companies are therefore
eliminated in full.
On 26 July 2016 Concepta PLC ("Company") acquired the entire
issued share capital of Concepta Diagnostics Limited ("legal
subsidiary") for a consideration of GBP3,025,916, satisfied by the
issue of shares of GBP2,275,796 and cash of GBP750,120. As the
legal subsidiary is reversed into the Company (the legal parent),
which originally was a public-listed cash shell company, this
transaction cannot be considered a business combination, as the
Company, the accounting acquiree does not meet the definition of a
business, under IFRS 3 'Business Combinations'. However, the
accounting for such capital transaction should be treated as a
share-based payment transaction and therefore accounted for under
IFRS 2 'Share-based payment'. Any difference in the fair value of
the shares deemed to have been issued by the Concepta Diagnostics
Limited (accounting acquirer) and the fair value of Concepta PLC's
(the accounting acquiree) identifiable net assets represents a
service received by the accounting acquirer.
Although the consolidated financial information has been issued
in the name of Concepta PLC, the legal parent, it represents in
substance continuation of the financial information of the legal
subsidiary.
The assets and liabilities of the legal subsidiary are
recognised and measured in the Group financial statements at the
pre-combination carrying amounts and not re-stated at fair
value.
The retained earnings and other reserves balances recognised in
the Group financial statements reflect the retained earnings and
other reserves balances of the legal subsidiary immediately before
the business combination and the results of the period from 1
February 2016 to the date of the business combination are those of
the legal subsidiary only.
The equity structure (share capital and share premium) appearing
in the Group financial statements reflects the equity structure of
Concepta PLC, the legal parent. This includes the shares issued in
order to effect the business combination.
The comparatives numbers presented in the financial statements
are the accounts of the legal subsidiary for the year ended 31
January 2016.
The difference between the aggregate deemed fair value of the
consideration paid and the identified assets and liabilities
acquired of Concepta PLC is GBP640,958 and this amount is charged
to the income statement for the period ended 31 December 2016. The
cash inflow on acquisition (net of cash acquired) is GBP872,806.
This amount is the cash and cash equivalent of Concepta PLC as at
date of acquisition (26 July 2016).
Changes in accounting policies and disclosures
(a) New and amended standards adopted by the Group
The Group has applied any applicable new standards, amendments
to standards and interpretations that are mandatory for the
financial year beginning on or after 1 February 2016. However, none
of them has a material impact on the Group's consolidated financial
statements.
(b) New, amended standards, interpretations not adopted by the
Group
A number of new standards, amendments to standards and
interpretations to existing standards have been published that are
mandatory for the Group's accounting periods beginning after 1
February 2016, or later periods, where the Group intends to adopt
these standards, if applicable, when they become effective. The
Group has disclosed below those standards that are likely to be
applicable to the Group and is currently assessing the impact of
these standards.
-- IFRS 15 Revenue from Contracts with Customers, effective date
1 January 2018, subject to the endorsement by the EU. IFRS 15 is
intended to clarify the principles of revenue recognition and
establish a single framework for revenue recognition. This standard
replaces the previous standard IAS 11 Construction Contracts, IAS18
Revenue and revenue related IFRICs. The core principle is that an
entity should recognise revenue to depict the transfer of promised
goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services.
The impact of this standard has not yet been assessed.
-- IFRS 9 Financial Instruments, effective date 1 January 2018,
subject to the endorsement by the EU. IFRS 9 is a replacement for
IAS 39 'Financial Instruments' and covers three distinct areas.
Phase 1 contains new requirements for the classification and
measurement of financial assets and liabilities. Phase 2 relates to
the impairment of financial assets and requires the calculation of
impairment on an expected loss basis rather than the current
incurred loss basis. Phase 3 relates to less stringent requirements
for general hedge accounting.
The impact of this standard has not yet been assessed.
-- IFRS 16 Lease, effective date 1 January 2019 sets out the
principles for the recognition, measurement, presentation and
disclosure of leases for both parties to a contract, i.e. the
customer ('lessee') and the supplier ('lessor'). IFRS 16 completes
the IASB's project to improve the financial reporting of leases and
replaces the previous leases Standard, IAS 17 Leases, and related
Interpretations.
The impact of this new standard has not yet been assessed.
Going concern
The Directors have prepared a cash flow forecast covering a
period extending beyond 12 months from the date of these financial
statements.
The forecast contains certain assumptions about the performance
of the business including growth in future revenue, the cost model
and margins; and importantly the level of cash recovery from
trading. The directors are aware of the risks and uncertainties
facing the business but the assumptions used are the Directors'
best estimate of the future development of the business.
After considering the forecasts and the risks, the Directors
have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future.
For these reasons, they continue to adopt the going concern basis
of accounting in preparing the annual financial statements. The
financial statements do not include any adjustments that would
result from the going concern basis of preparation being
inappropriate.
Foreign currency
The functional currency of the Company is Sterling Pound (GBP)
and its subsidiary is also in GBP. The presentational currency of
the Company is GBP because a significant amount of its transactions
is in GBP.
Transactions entered by the Group's entities in a currency other
than the reporting currency are recorded at the rates ruling when
the transaction occur. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the statement of
financial position date. Exchange differences arising on the
re-translation of outstanding monetary assets and liabilities are
also recognised in the income statement.
Revenue recognition
Revenue is the total amount receivable by the Company for
services supplied, excluding VAT and trade discounts.
Operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the
management team including the two main directors and two
non-executive directors.
The Board considers that the Company's activity constitutes one
operating and one reporting segment, as defined under IFRS 8.
Management reviews the performance of the Company by reference to
total results against budget.
The total profit measures are operating profit and profit for
the period, both disclosed on the face of the income statement. No
differences exist between the basis of preparation of the
performance measures used by management and the figures in the
Company's financial information.
Employee benefits
(i) Short-term benefits
Wages, salaries, paid annual leave and sick leave, bonuses and
non-monetary benefits are accrued in the period in which the
associated services are rendered by employees of the Company.
(ii) Defined contribution plans
The Company operates a defined contribution pension scheme for
employees. The assets of the scheme are held separately from those
of the Company. The annual contributions payable are charged to the
income statement and they become payable in accordance with the
rules of the scheme.
Operating leases
Rentals payable under operating leases are charged against the
statement of comprehensive income on a straight-line basis over the
lease term.
Share-based payment
Where equity settled share options are awarded to employees, the
fair value of the options at the date of grant is charged to the
consolidated statement of comprehensive income over the vesting
period and the corresponding entry recorded in the share-based
payment reserve. Non-market vesting conditions are taken into
account by adjusting the number of equity instruments expected to
vest at each reporting date so that, ultimately, the cumulative
amount recognised over the vesting period is based on the number of
options that eventually vest.
Where the terms and conditions of options are modified before
they vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged to
the consolidated statement of comprehensive income over the
remaining vesting period.
Where equity instruments are granted to persons other than
employees, the consolidated statement of comprehensive income is
charged with the fair value of goods and services received.
Property, plant and equipment
Property, plant and equipment is stated at historic cost,
including expenditure that is directly attributable to the acquired
item, less accumulated depreciation and impairment losses.
Depreciation is provided to write off cost, less estimated
residual values, of all property, plant and equipment, except for
investment properties and freehold land, evenly over their expected
useful lives, calculated at the following rates:
Plant and equipment - 25% straight line
Furniture, fittings & Equipment - 25% straight line
Factory equipment - 50% straight line on second hand assets
As no finite useful life for land can be determined, related
carrying amounts are not depreciated. The useful life, the residual
value and the depreciation method is assessed annually.
The carrying value of the property, plant and equipment is
compared to the higher of value in use and the fair value less
costs to sell. If the carrying value exceeds the higher of the
value in use and fair value less the costs to sell the asset, then
the asset is impaired and its value reduced by recognising an
impairment provision.
Intangible assets
(i) Research and development
Expenditure on research activities as defined in IFRS is
recognised in the income statement as an expense as incurred.
Expenditure on the development of the platform comprising a
proprietary meter (myLotus meter), fertility hormones strips
testing and a mobile phone application and any enhancements to this
platform is recognised as intangible assets only when the following
criteria are met:
1. it is technically feasible to develop the product to be used or sold;
2. there is an intention to complete and use or sell the product;
3. the Group is able to use or sell the product;
4. use or sale of the product will generate future economic benefits;
5. adequate resources are available to complete the development; and
6. expenditure on the development of the product can be measured reliably.
The capitalised expenditure represents costs directly
attributable to the development of the asset from the point at
which the above criteria are met up to the point at which the
product is ready to use. If the qualifying conditions are not met,
such development expenditure is recognised as an expense in the
period in which it is incurred.
Capitalised development expenditure is measured at cost less
accumulated amortization and accumulated impairment costs.
Amortisation is charged on a straight-line basis over the useful
life of the related asset which management estimated to be five
years.
Development costs that are subject to amortisation are reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
(ii) Patent costs
The Group has looked to obtain intellectual property through
patents, Company know-how, design rights and trademarks. The Group
has a portfolio of patent applications which is currently being
pursued.
The costs incurred in obtaining these patents have been
capitalised as the Group is confident that the patent applications
will be successful.
Amortisation is charged on a straight-line basis over the useful
life of the related asset which management estimated to be ten
years. The patent costs are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may
not be recoverable.
Deferred taxation
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the statement of
financial position differs from its tax base, except for
differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- investments in subsidiaries where the Group is able to
control the timing of the reversal of the difference and it is
probable that the difference will not reverse in the foreseeable
future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantially enacted by the
balance sheet date and are expected to apply when the deferred tax
liabilities or assets are settled or recovered. Deferred tax
balances are not discounted.
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities.
The Group is entitled to a tax deduction on the exercise of
certain employee share options. A share-based payment expense is
recorded in the income statement over the period from the grant
date to the vesting date of the relevant options. As there is a
temporary difference between the accounting and tax bases, a
deferred tax asset may be recorded. The deferred tax asset arising
on share option awards is calculated as the estimated amount of tax
deduction to be obtained in the future (based on the Group's share
price at the balance sheet date) pro-rated to the extent that the
services of the employee have been rendered over the vesting
period. If this amount exceeds the cumulative amount of the
remuneration expense at the statutory rate, the excess is recorded
directly in equity, against retained earnings. Similarly, current
tax relief in excess of the cumulative amount of the Share-based
payments expense at the statutory rate is also recorded in retained
earnings.
Inventory
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the first-in, first-out (FIFO)
method. Net realisable value is the estimated selling price in the
ordinary course of business, less applicable variable selling
expenses.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
on call, together with other short term highly liquid investments
which are not subject to significant changes in value and have
original maturities of less than three months.
Equity
Equity comprises the following:
-- Share capital: the nominal value of equity shares
-- Share premium
-- Share-based payment reserve
-- Capital redemption reserve
-- Reverse acquisition reserve and
-- Retained earnings.
Equity instruments
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from proceeds.
Dividends on ordinary shares are recognised as liabilities when
approved for distribution.
Financial assets
On initial recognition, financial assets are classified as
either financial assets at fair value through income statement,
held-to-maturity investments, loans and receivables financial
assets, or available-for-sale financial assets, as appropriate.
Loans and receivables
The Group classifies all its financial assets as Trade and
receivables. The classification depends on the purpose for which
the financial assets were acquired.
Trade receivables and other receivables that have fixed or
determinable payments that are not quoted in an active market are
classified as loans and receivables financial assets. Loans and
receivables financial assets are measured at amortised cost using
the effective interest method, less any impairment loss. Interest
income is recognised by applying the effective interest rate,
except for short-term receivables when the recognition of interest
would be immaterial.
The Group's loans and receivables financial assets comprise
other receivables (excluding prepayments) and cash and cash
equivalents included in the Statement of Financial Position.
Financial liabilities
Financial liabilities are recognised when, and only when, the
Company becomes a party to the contracts which give rise to them
and are classified as financial liabilities at fair value through
the profit and loss or loans and payables as appropriate. The
Company's loans and payable comprise trade and other payables
(excluding other taxes and social security costs and deferred
income).
When financial liabilities are recognised initially, they are
measured at fair value plus directly attributable transaction costs
and subsequently measured at amortised cost using the effective
interest method other than those categorised as fair value through
income statement.
Fair value through the income statement category comprises
financial liabilities that are either held for trading or are
designated to eliminate or significantly reduce a measurement or
recognition inconsistency that would otherwise arise. Derivatives
are also classified as held for trading unless they are designated
as hedges. There were no financial liabilities classified under
this category.
The Company determines the classification of its financial
liabilities at initial recognition and re-evaluate the designation
at each financial year end.
A financial liability is de-recognised when the obligation under
the liability is discharged, cancelled or expires.
When an existing financial liability is replaced by another from
the same party on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as a de-recognition of the original
liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognised in the
income statement.
Summary of critical accounting estimates and judgements
The preparation of financial information in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires the Directors to exercise their judgement in the process
of applying the accounting policies which are detailed above. These
judgements are continually evaluated by the Directors and
management and are based on historical experience and other
factors, including expectations of future events that are believed
to be reasonable under the circumstances.
The key estimates and underlying assumptions concerning the
future and other key sources of estimation uncertainty at the
statement of financial position date, that have a significant risk
of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial period are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
The estimates and judgements which have a significant risk of
causing a material adjustment to the carrying amount of assets and
liabilities within the next financial year are discussed below:
Useful lives of depreciable assets
Management reviews the useful lives and residual value of
depreciable assets at each reporting date to ensure that the useful
lives represent a reasonable estimate of likely period of benefit
to the Group. Tangible fixed assets are depreciated over their
useful lives taking into account of residual values, where
appropriate. The actual lives of the assets and residual values are
assessed annually and may vary depending on a number of factors. In
re-assessing asset lives, factors such as technological innovation,
product life cycles and maintenance programmes are taken into
account. Residual value assessments consider issues such as future
market conditions, the remaining life of the asset and projected
disposal values.
Intangible assets (including capitalised development costs)
The assessment of the future economic benefits generated by
these separately identifiable intangible assets and the
determination of its amortisation profile involve a significant
degree of judgement based on management estimation of future
potential revenue and profit and the useful life of the assets.
Reviews are performed regularly to ensure the recoverability of
these intangible assets.
Share-based payments
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. Estimating fair value for
share-based payment transactions requires determining the most
appropriate valuation model, which is dependent on the terms and
conditions of the grant. This estimate also requires determining
the most appropriate inputs to the valuation model including the
expected life of the share option, volatility and dividend yield
and making assumptions about them. The assumptions and models used
for estimating fair value for share-based payment transactions are
disclosed in Note 19 Share-based payments.
Taxation
In recognising income tax assets and liabilities, management
makes estimates of the likely outcome of decisions by tax
authorities on transactions and events whose treatment for tax
purposes is uncertain. Where the final outcome of such matters is
different, or expected to be different, from previous assessments
made by management, a change to the carrying value of income tax
assets and liabilities will be recorded in the period in which such
a determination is made. In recognising deferred tax assets and
liabilities management also makes judgements about likely future
taxable profits. The carrying values of current tax and deferred
tax assets and liabilities are disclosed separately in the
statement of financial position.
S
Enquiries:
Concepta plc
Adam Reynolds, Chairman
Tel: +44 (0) 7785 908158
SPARK Advisory Partners Limited (NOMAD)
Neil Baldwin / Mark Brady
Tel: +44 (0)20 368 3550
Beaufort Securities Limited (Broker)
Jon Belliss
Tel: +44 (0)20 7382 8300
Yellow Jersey PR Limited (Financial PR)
Felicity Winkles / Joe Burgess / Francesca Hillier
Tel: +44 (0) 7748 843 871
About Concepta Plc:
Concepta plc is a pioneering UK healthcare company that has
developed a proprietary platform and products targeted at the
personalised mobile health market with a primary focus on women's
fertility and specifically unexplained infertility*.
Founded in 2013, Concepta has developed a revolutionary flagship
product 'myLotus' for home self-testing that helps women with
unexplained infertility to conceive.
myLotus is the only consumer product which allows both
quantitative and qualitative measurements of a woman's personal hCG
and LH hormone levels in an easy to use home test to facilitate
higher conception rates and early diagnosis of any fertility
problems. Competitor products currently only allow qualitative
measurement and are based on the 'average woman'.
Concepta has a defined route to market for its new 'myLotus'
product with Regulatory approvals for launch in China in place for
H1 2017 and CE-Marking for UK and Europe to follow later in 2017,
where the revenue potential of the Chinese and EU infertility
market is worth c.GBP600m per annum for the company.
*Unexplained infertility refers to women that have been unable
to conceive after 6 months of trying. This highly motivated target
group of consumers won't typically be offered medical intervention
until 12 months of unsuccessfully trying, with IVF not offered
until two years. Research indicates couples start to take positive
action ahead of this time and there is little medical support to
help them do so.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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