TIDMONC
RNS Number : 1368U
Oncimmune Holdings PLC
20 October 2017
20 October 2017
Oncimmune Holdings plc
("Oncimmune" or the "Company")
Results for the year ended 31 May 2017
Oncimmune Holdings plc (AIM: ONC.L), a leading early cancer
detection company developing and commercialising its proprietary
EarlyCDT(R) platform technology, today announces its full year
results for the year ended 31 May 2017.
Financial Highlights
-- Revenues for the year were GBP0.22m (2016: GBP0.43m).
-- Operating costs before share based charges and exceptional
items were GBP4.88 million (2016: GBP3.8m).
-- Net loss for the year was GBP5.0m (2016: GBP4.6m) before any exceptional items.
-- Cash balance at the year-end was GBP5.08m (2016: GBP10.2m).
At the end of September, the cash balance was GBP6.5m reflecting
monies raised in September 2017.
-- GBP5.0m raised by means of a conditional placing with new and
existing investors. Of this, GBP1.0m remains outstanding and
conditional on receipt from HM Revenues & Customs of
confirmation that this investment will be a qualifying holding for
the purposes of Part 6 of the Income Tax Act 2007.
Corporate & operational highlights (including post-period
end)
-- EarlyCDT(R)-Lung commercial progress
o CE Mark for the EarlyCDT(R)-Lung kit received in May 2017,
with first commercial batches expected to be shipped by no later
than the end of October 2017.
o First distribution agreements signed by Oncimmune's Asian
(including Israel) business which provide minimum payment
guarantees of over GBP6.1m over the next five years.
o First distribution agreements for the EarlyCDT(R)-Lung kit in
Europe for Denmark, Norway, Sweden and Poland with an aggregate
minimum sales commitment of approximately GBP1.4m over the next
four years.
o In September 2017, the Company entered into a four-month
preliminary distribution partnership with a major US pulmonary
sales force for the use of EarlyCDT(R)-Lung in assessing
indeterminate lung nodules which, if successful, should lead to a
distribution agreement for U.S. pulmonologists.
-- R&D and Trials
o Foundations for the commercial panel for the EarlyCDT(R)-Liver
test have been laid with validation due for completion by the end
of 2017 and commercial sales on track to begin in H1 2018.
EarlyCDT(R)-Ovarian is expected thereafter.
o NHS Lung Cancer Screening Trial is fully recruited: 12,210
patients with final study results in 2019; latest interim data
presented at the European 27th International Congress of the
European Respiratory Society (ERS) in Milan in September 2017.
-- Personalised Medicine & Companion Diagnostics
o Presentation of data on the use of Oncimmune's autoantibody
technology to successfully predict disease recurrence in subjects
undergoing immunotherapy with Scancell Holding plc's SCIB1
immunotherapy for malignant melanoma.
o Autoantibody "fingerprint" technology development progressing
well with data expected to be presented in Q4 2017.
Geoffrey Hamilton-Fairley, CEO, of Oncimmune said: "We continue
to make excellent progress towards our goal of building a
pioneering early cancer detection platform which can generate
revenues across multiple products, regions and with different
partners. Gaining CE mark for the EarlyCDT(R)-Lung kit was a key
milestone and we have already seen its impact with partnerships in
Asia and Europe. With a strong team in place, a fundraising
completed and our R&D progressing well the board is
increasingly confident that the Company is well placed to execute
that plan and deliver value in the medium and long term."
-Ends-
For further information:
Oncimmune Holdings plc
Geoffrey Hamilton-Fairley, Chief Executive Officer
contact@oncimmune.co.uk
Zeus Capital Limited (Nominated Adviser and Broker)
Giles Balleny, Hugh Kingsmill Moore
+44 (0) 203 829 5000
Media enquiries:
Consilium Strategic Communications
Chris Gardner, Matthew Neal, Lindsey Neville
oncimmune@consilium-comms.com
+44 (0) 20 3709 5708
About Oncimmune
Oncimmune is a leading early cancer detection company developing
and commercialising its proprietary EarlyCDT(R) platform
technology. Oncimmune has pioneered the development of autoantibody
tests that can detect cancer up to four years earlier than other
methods and can be applied to a very wide range of solid tumour
types. The Company's first product, EarlyCDT(R)-Lung, was launched
in 2012, as a CLIA test in the USA and since then over 150,000
commercial tests have been sold. EarlyCDT(R)-Lung is available
through physicians in the US and also privately in the UK and other
regions. EarlyCDT(R)-Lung is being used in the largest ever
randomised trial for the early detection of lung cancer using
biomarkers, the National Health Service (NHS) Scotland ECLS study
of 12,210 high-risk smokers. EarlyCDT(R) tests for liver and
ovarian cancer are in development.
Oncimmune is headquartered in Nottingham, United Kingdom with
testing facilities in the US and joined AIM in May 2016 under the
ticker ONC.L. For more information, visit www.oncimmune.com
Chairman and Chief Executive's Review
Oncimmune's goal is to be a leader in early cancer detection and
its mission is to significantly improve the outcomes of cancer
patients through early detection of the disease and enhanced
treatment pathways. Detecting early stage disease has two key
benefits: better survival for the patients and significantly lower
cost of treatment as most of these early stage patients do not need
expensive therapies and treatments.
In May 2016, the Company completed an IPO listing on AIM. At
that time, the Company laid out its strategy to deliver both its
mission and value to shareholders. On behalf of the Board, we are
pleased to present the Annual Report & Accounts for year ended
31 May 2017 and to provide an update on progress since the
Company's IPO as we seek to deliver our three-year plan.
Business Update
The Company can confirm that it has made a successful start to
the commercialisation plans outlined at the IPO. Our mission is to
develop and commercialise accurate early cancer detection tests for
multiple cancer types including our lead product, EarlyCDT(R)-Lung,
which is already on the market. Our three-year commercialisation
plan has to date focused on the recruitment of new senior staff to
lead our activities in Asia; the UK and Europe; and in the US for
Reimbursement and Sales, which we have now successfully completed.
Our R&D plan has made good progress and with the
EarlyCDT(R)-Lung kit test now CE marked and in production, a key
element in delivering our global commercialisation plan has become
a reality. The Company can now start to execute on its portfolio
revenue proposition with multiple products, generating revenues in
different regions and with different partners. In addition, we have
an emerging companion diagnostics business and a second generation
of the platform, the autoantibody "fingerprint", that we believe
could bring new levels of performance and could lead to a
pan-cancer test.
EarlyCDT(R)-Lung
In the US, we are proceeding with our previously outlined
process of supporting our distributors to test the efficiency of
our marketing approach and ensure that our partners deliver high
quality and long-term sales. We appointed a new sales director at
the end of last year and we have worked diligently testing a number
of approaches to ensure an optimal sales and marketing cycle where
a physician re-orders the EarlyCDT(R)-Lung test without the need
(and expense) of a repeat sales visit. The investment programme
related to this - initially scheduled to be started by the end of
the first quarter of 2017 - was deferred until we were confident
that our approach was gaining traction. In light of this, and the
Company's general prudent approach to expenditure and cash
management, the Company's year-end cash balance was better than
expected at GBP5 million. The Company will invest further in sales
support and marketing to support its distributors whilst ensuring
that its partners deliver high quality and long-term sales as the
Company gains confidence in this approach. The Company remains
cautious, however, in terms of near term revenue growth from this
channel as positioning of the test is key to long-term success.
Oncimmune currently has 14 distributors for EarlyCDT(R)-Lung in
the US. It also has ongoing discussions with a number of
pulmonology distributors including one where a preliminary
distribution agreement has been signed with a focus on the second
use of the EarlyCDT(R)-Lung test, namely risk stratification of CT
identified nodules.
This preliminary agreement followed a detailed research study
which verified the clinical attractiveness of using the
EarlyCDT(R)-Lung test in aiding in the risk assessment of
indeterminate pulmonary nodules. The initial partnership is
expected to run until the end of February 2018 and if successful
should lead to a distribution agreement covering a significant
proportion of the pulmonologists in the US. The Company is also
exploring further pulmonology distribution channels in the US with
other parties.
Indeterminate nodules - growths in the lung which may or may not
be malignant - are a major concern for pulmonologists. There are
currently more than 1.5m patients with pulmonary nodules per annum
in the US and the number is expected to grow rapidly with the
expected increased adoption of CT screening for high risk patients
in the US. 96% of positive CT scans (nodule(s) identified) are not
cancer, so finding the correct ones to follow up is a large unmet
need which our test can address effectively. Data published in the
Journal of Thoracic Oncology from Vanderbilt University showed that
a positive EarlyCDT(R)-Lung test indicates that a nodule is two to
three times more likely to be cancer. Sales of EarlyCDT(R)-Lung to
pulmonologists have been forecast to be greater than $400m by
2021(1) .
Outside of the US, Oncimmune is progressing well. The Company's
Asian (including Israel) business has five distribution agreements
in place for EarlyCDT(R)-Lung kits in Israel, South Korea, Taiwan,
Hong Kong and Singapore, which provide GBP6.1m in minimum payment
guarantees over the next five years.
The Company has also announced its first distribution agreements
for its EarlyCDT(R)- Lung kit in Europe with exclusive agreements
for Denmark, Norway, Sweden and Poland with an aggregate minimum
sales commitment of approximately GBP1.4m over the next four
years.
We expect to sign more distribution contracts in Asia and Europe
during 2017 / 2018, with a number of these arrangements also likely
to include guaranteed minimum payments that add to our confidence
in our chosen distributors and enhance revenue
visibility/predictability.
Oncimmune's particular focus for the Asian market has been set
on China, where lung cancer remains the number one killer of both
men and women with over 700,000 new cases of lung cancer diagnosed
annually. The Company has entered into discussions with several
diagnostic companies for collaboration opportunities including
licensing and registration, marketing commercialisation,
distribution and local manufacturing.
R&D and Trials
The development and completion of a kit version of the
EarlyCDT(R)-Lung test was a key part of the Company's commercial
growth strategy and R&D plan laid out at the time of its IPO.
The CE Mark for EarlyCDT(R)-Lung test in an ELISA kit format was
received in May 2017. The kit has the advantage of running on
already well established ELISA-96 well-microplate-instruments that
hospitals worldwide have as standard equipment in their
laboratories. This milestone made possible the Asian and European
distribution agreements described above with the potential for
further expansion into other markets.
Beyond the kit, the R&D programme continues to progress. The
Company has laid the foundations for the commercial panel for the
EarlyCDT(R)-Liver test with validation due for completion by the
end of 2017 and commercial sales on track to begin in H1 2018.
EarlyCDT(R)-Ovarian is expected thereafter. Data relating to the
EarlyCDT(R)-Liver panel was published at the International Liver
Cancer Association showing that a panel of 10 autoantibodies could
detect hepatocellular carcinoma with high sensitivity and
specificity.
Interim data from the NHS Lung Cancer Screening Trial was also
recently presented at the European 27th International Congress of
the European Respiratory Society (ERS) in Milan. The results remain
encouraging, most notably that over 75% of the patients being
diagnosed have early stage cancers (stage 1 & 2) as opposed to
the vast majority in normal practice presenting with late stage
cancer - which is generally incurable. Now fully recruited, with
12,210 patients, this is the largest randomised control trial using
biomarkers ever conducted in lung cancer. The final study results,
including the control arm, will be published after all patients
have completed two years of follow up CT scans and these are
expected in 2019.
Personalised Medicine & Companion Diagnostics
In companion diagnostics, the Company recently announced the
presentation of data on the use of Oncimmune's autoantibody
technology to successfully predict disease recurrence in subjects
undergoing immunotherapy with Scancell Holding plc's SCIB1
immunotherapy for malignant melanoma.
The collaborative study, which also included a team at the
University of Nottingham, developed a method using a panel of seven
tumour associated autoantibodies to predict disease recurrence in
patients with resected Stage III/IV melanoma treated with SCIB1.
Whilst Phase I/II trials with SCIB1 have been highly encouraging,
this additional information potentially enables the identification
of patients prior to commencement of therapy who are most likely to
respond to treatment in future clinical trials with SCIB1.
Oncimmune is running a number of further studies alongside drug
development programs and expects to be able to announce results
from these in the next 12 months. The Company expects that this
will support the development of this area as a separate business
unit.
Finally, in the second half of 2017 Oncimmune expects to
announce results relating to the second generation of tests from
its autoantibody platform where patients can be their own control
and thus testing is significantly more accurate. The Company
believes this autoantibody "fingerprint" could bring new levels of
performance and could lead to a pan-cancer test which could
complement the global vision of some major companies currently
investing heavily in developing personalised medicine platforms and
services.
Fundraising
In September, the Company announced it had raised GBP5.0m,
before expenses, by means of a conditional placing with new and
existing investors. Of this, GBP1.0m remains outstanding and
conditional on receipt from HM Revenues & Customs of
confirmation that this investment will be a qualifying holding for
the purposes of Part 6 of the Income Tax Act 2007. This further
financing had been anticipated at IPO in order to fully underpin
our three year commercialisation strategy.
The Placing will allow the Company to strengthen its balance
sheet to complete major distribution deals in the following
areas:
-- USA for EarlyCDT(R)-Lung;
-- China for EarlyCDT(R)-Lung; and
-- "Fingerprint" -a personalised autoantibody profiling approach
Following completion of the major distribution deals the cash is
to be used for:
-- R&D
o Additional NHS studies to accelerate adoption
o Additional markers for lung test in the US to enhance its
"pulmonology test"
o Validation and launch of liver test
o Further validation of fingerprinting
-- Marketing to general practices in the US
In addition, the Board intends to progress development of its
other products (ovarian tests) through to commercial launch, which
it considers to be another key step for the Company.
Outlook
Oncimmune continues to deliver on its plan to create value from
its core autoantibody platform and the board is increasingly
confident that the Company is well placed to execute that plan and
deliver value in the medium and long term.
Geoffrey Hamilton-Fairley Meinhard Schmidt
Chief Executive Officer Chairman
Chief Financial Officer's Review
Revenue in the year ended 31 May 2017 was GBP215k (2016:
GBP430k). In the current year, this revenue represented the sale of
commercial tests that were performed from our own CLIA laboratory
in Kansas, USA. Focus has now been on developing the kit version of
the test and finding potential new distributors. The kit is now
developed and goes on sale in the autumn of 2017; exclusive
distribution deals have been entered into for a number of
countries, and therefore we are now anticipating an increase of
revenue from autumn 2017.
In addition to this the Company is working on closing a number
of strategic deals in the US and China. The timing of these and the
exact nature is not definite, however when and if they do happen
they are expected to have a material impact on revenue.
Operating expenses before share based charges and exceptional
items in the year ended 31 May 2017 were GBP4.88m (2016: GBP3.83m).
The increase of costs reflects the additional running cost of
operating the research and development laboratory in Nottingham, UK
and the commercial laboratory in Kansas, USA.
Net loss for the year was GBP5.0m (2016: GBP4.6m) before any
exceptional items.
There were no exceptional items in the current year.
After exceptional items the Company incurred a net loss of
GBP5.0m (2016: GBP8.4m).
GBP415k (2016: GBP108k) of research and development costs have
been capitalised in the year. The decision to capitalise these
costs was made on the basis that these were the direct costs
relating to the work that went in to the development of the
EarlyCDT(R)-Lung kit, which is now in production and will be ready
for sale in the autumn of 2017.
The Company raised a further GBP5m (GBP4.78m net of expenses)
via a placement in September 2017 issuing up to 4.167 million
shares. Of this, the issuance of 833,333 Ordinary Shares
representing GBP1.0m remain conditional on receipt from HM Revenues
& Customs of confirmation that this investment will be a
qualifying holding for the purposes of Part 6 of the Income Tax Act
2007.
The cash balance at the end of the year was GBP5.075m (2016:
GBP10.2m).
Financial Outlook
The Company's cash position is now strong. The cash burn
continues to be managed carefully. In the meantime, we are excited
about the numerous commercial opportunities open in the forthcoming
year, notably:
-- First sales of EarlyCDT(R)-Lung kit; and
-- closing distribution deals in the US and China; and
-- closing a commercial deal relating to our "fingerprint" technology
At the same time, we will continue to invest in R&D.
As such, the management are confident that its cash resources
are sufficient for the foreseeable future.
Andrew Millet
Chief Financial Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year to Year to
31 May 31 May
2017 2016
GBP'000 GBP'000
Notes Total Total
Revenue 215 430
Cost of sales (532) (147)
-------- ---------
Gross (loss)/profit (317) 283
Administrative expenses 5 (3,857) (4,269)
Research and development
expenses (1,025) (789)
Share based payment charges (74) (939)
(4,956) (5,997)
Operating loss (5,273) (5,714)
Gain arising on debt settlement 5 - 1,564
Finance costs on derivative
liabilities 5 - (4,126)
Finance income 9 26 5
Finance expense 9 (69) (737)
Loss before income tax (5,316) (9,008)
Income tax 10 293 566
-------- ---------
Loss for the financial
year (5,023) (8,442)
-------- ---------
Other comprehensive income
Items that may be subsequently
reclassified to profit
or loss, net of tax
Currency translation differences 222 24
Loss after tax and total
comprehensive income for
the year attributable to
equity holders (4,801) (8,418)
Basic and diluted loss
per share 24 (9.84p) (23.54p)
======== =========
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 May 31 May
2017 2016
GBP'000 GBP'000
Notes
ASSETS
Non-current assets
Intangible assets 12 518 131
Property, plant and equipment 11 230 253
748 384
--------- ---------
Current assets
Inventories 14 323 188
Trade and other receivables 13 261 339
Current tax assets - 100
Cash and cash equivalents 15 5,075 10,197
--------- ---------
5,659 10,824
--------- ---------
Total assets 6,407 11,208
========= =========
EQUITY AND LIABILITIES
Equity
Capital and reserves attributable
to the equity holders
Share capital 19 510 510
Share premium 16,273 16,273
Merger reserve 30,787 30,787
Other reserves 2,187 2,113
Own shares (1,926) (1,926)
Foreign currency translation
reserve 169 (53)
Retained earnings (42,996) (37,973)
--------- ---------
Total equity 5,004 9,731
========= =========
Non-current liabilities
Other Loans 17 - 395
- 395
--------- ---------
Current liabilities
Trade and other payables 16 847 529
Current tax liabilities 54 57
Other loans 17 502 496
--------- ---------
1,403 1,082
--------- ---------
Total liabilities 1,403 1,477
========= =========
Total equity and liabilities 6,407 11,208
========= =========
The accompanying notes form an integral part of the consolidated
financial statements.
The financial statements were approved by the board on 18
October 2017.
Andrew Millet
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Other Merger Foreign Own Retained Total
capital premium reserves reserve currency Shares earnings
translation
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 May 2015 7 30,729 1,103 - (77) (1,926) (33,656) (3,820)
Loss for the year - - - - - (8,442) (8,442)
Other comprehensive
income:
Currency translation
differences - - - - 24 - 24
--------- --------- ---------- --------- ------------- -------- ---------- --------
Total comprehensive
income - - - - 24 - (8,442) (8,418)
Transactions with owners:
Shares issued in group
reconstruction 348 (348) - - - - - -
Reorganisation of
share
capital (7) 7 -
Creation of merger
reserve (30,787) 30,787 -
Issue of equity shares 162 20,798 - - - - - 20,959
Share option charge 939 939
Exercise of conversion
option - (4,126) 71 4,126 71
--------- --------- ---------- --------- ------------- -------- ---------- --------
Total transactions with
owners 503 (14,456) 1,010 30,787 - - 4,126 21,969
--------- --------- ---------- --------- ------------- -------- ---------- --------
As at 31 May 2016 510 16,273 2,113 30,787 (53) (1,926) (37,973) 9,731
========= ========= ========== ========= ============= ======== ========== ========
Loss for the year - - - - - - (5,023) (5,023)
Other comprehensive
income:
Currency translation
differences - - - - 222 - - 222
--------- --------- ---------- --------- ------------- -------- ---------- --------
Total comprehensive - -
income
Transactions with owners:
Share option charge - - 74 - - - - 74
As at 31 May 2017 510 16,273 2,187 30,787 169 (1,926) (42,996) 5,004
========= ========= ========== ========= ============= ======== ========== ========
The accompanying notes form an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year to Year to
31 May 31 May
2017 2016
GBP'000 GBP'000
Notes
Cash flows from operating
activities
Loss after income tax (5,023) (8,442)
Adjusted by:
Depreciation and amortisation 91 78
Share based payment charge 74 939
Gain arising on debt settlement - (1,564)
Loss on derivative financial
instrument - 4,126
Settlement of IPO costs
via equity shares - 1,142
Interest received 26 (5)
Interest expense (69) 737
Inventory (135) (8)
Trade and other receivables 177 (304)
Trade and other payables 315 133
Taxes received (293) (566)
Exchange movement 222 (11)
-------- --------
Cash generated from operations (4,615) (3,745)
Interest paid 69 -
Interest received (26)
Income tax received 293 566
-------- --------
Net cash generated from
operating activities (4,279) (3,179)
-------- --------
Cash flows from investing
activities
Purchase of property,
plant and equipment (7) (64)
Development expenditure
capitalised (415) (108)
Interest received - 5
Net cash used in investing
activities (422) (167)
-------- --------
Cash flows from financing
activities
Proceeds from share issue - 11,448
Repayment of long term
borrowings (388) (423)
New other loans - 1,250
Net cash(used in)/generated
from financing activities (388) 12,275
-------- --------
Movement in cash attributable
to foreign exchange (33) (76)
Net (decrease) / increase
in cash and cash equivalents (5,089) 8,929
Cash and cash equivalents
at the beginning of the
year 10,197 1,344
Cash and cash equivalents
at the end of the year 15 5,075 10,197
======== ========
The accompanying notes form an integral part of the consolidated
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Oncimmune Holdings Plc (the 'Company') is a limited company
incorporated and domiciled in England and Wales. The registered
office of the company is Clinical Sciences Building, City Hospital,
Hucknall Road, Nottingham, NG5 1PB. The registered company number
is 09818395.
The Group's principal activity is that of cancer diagnosis.
The Directors of Oncimmune Holdings Plc are responsible for the
financial information and contents of the financial
information.
2. Accounting policies
The principal accounting policies applied in the preparation of
the consolidated financial information are set out below. These
policies have been consistently applied to all years presented,
unless otherwise stated.
Basis of preparation
The Group has prepared its consolidated financial statements in
accordance with International Financial Reporting Standards
("IFRSs") as adopted in the European Union, IFRIC Interpretations
and the Companies Act 2006 applicable to companies reporting under
IFRS.
The Company was incorporated on 9 October 2015 and was
re-registered as a public limited company on 14 December 2015. On
23 November 2015, a group re-organisation was completed, by means
of a share for share exchange, as result of which the newly
incorporated company, Oncimmune Holdings Plc, became the parent
company of the Group.
The companies involved in the above share for share exchange
have not previously been presented in the consolidated financial
statements of a single legal entity. However, the underlying
business was ultimately controlled and managed by the same parties
before and after the share for share exchange and that control was
not transitory. The transactions outlined above, therefore, meet
the definition of a common control transaction in accordance with
IFRS 3 Business Combinations.
IFRS does not provide any specific guidance on accounting for
common control transactions and IFRS 3 excludes common control
transactions from its scope; therefore the Directors have selected
an accounting policy in accordance with paragraphs 10-12 of IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
The consolidated entity meets the definition of a group
reconstruction under FRS 102 19,27 and has therefore been accounted
for under the principals of merger accounting as outlined in FRS
102, paragraphs 19.29 - 19.33, merger accounting. The consolidated
financial statements have therefore been prepared as if Oncimmune
Limited and its subsidiaries had been held by Oncimmune Holdings
Plc from inception and therefore the results and position of
Oncimmune Limited have been reflected in the comparatives.
The preparation of financial statements in accordance with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
high degree of judgement or complexity, or areas where assumptions
and estimates are significant to the consolidated financial
statements, are disclosed in note 3.
The consolidated financial statements have been prepared on a
going concern basis and under the historical cost convention. After
considering the year end cash position, making appropriate
enquiries and reviewing budgets and profit and cash flow forecasts
for the foreseeable future (and in any event for a period of at
least 12 months from the approval date of these financial
statements), the Directors have formed a judgement at the time of
approving the financial statements that there is a reasonable
expectation that the Group has sufficient resources to continue in
operational existence for the foreseeable future. For this reason
the Directors consider the adoption of the going concern basis in
preparing the Consolidated financial statements is appropriate. The
future prospects of the business has been further detailed in the
Strategic Report.
The consolidated financial statements presented in sterling and
has been rounded to the nearest thousand (GBP'000).
Standards, amendments and interpretations to existing
standards
Standards, amendments and interpretations to existing standards
that are not yet effective and have not been early adopted by the
Group in these financial statements.
At the date of authorisation of the financial statements,
certain new standards, amendments and interpretations to existing
standards have been published but are not yet effective. The Group
has not early adopted any of these pronouncements. The new
standards, amendments and interpretations that are expected to be
relevant to the Group's financial statements in the future are as
follows:
Standard/interpretation Content Applicable
for financial
years beginning
on/after
IFRS 9 Financial Instruments 1 January
2018*
IFRS 15 Revenue from Contracts 1 January
with Customers 2018*
IFRS 16 Leases 1 January
2019*
IFRS 1 First time adoption (amendments) 1 January
IFRS 2 Share based payments (amendments) 2018*
IFRS 4 Insurance contracts (amendments) 1 January
IFRS 12 Disclosure of interest 2018*
IAS 7 in other entities (amendments) 1 January
IAS 12 Statement of Cash flows 2018*
IAS 28 (amendments) 1 January
IAS 39 Income Taxes (amendments) 2017*
Investments in Associates 1 January
IAS 40 and Joint Ventures (amendments) 2017*
IFRIC 22 Financial Instruments: 1 January
Recognition and measurement 2017*
(amendments) 1 January
Investment Property (amendments) 2018*
Foreign Currency transactions 1 January
and advance consideration 2018*
(amendments)
1 January
2018*
1 January
2019*
*Not yet adopted by the EU.
The effective dates stated above are those given in the original
IASB/IFRIC standards and interpretations. As the Group prepares its
financial statements in accordance with IFRS as adopted by the
European Union (EU), the application of new standards and
interpretations will be subject to their having been endorsed for
use in the EU via the EU endorsement mechanism.
The Directors are in the process of assessing the potential
impact of IFRS 15 on the financial statements. The Directors do not
expect the adoption of the other standards and interpretations to
have a material impact on the consolidated financial statements in
the period of initial adoption.
Revenue
The amount shown as revenue in the statement of comprehensive
income comprises royalties received and receivable and, in
addition, amounts received and receivable in respect of the
provision of medical testing services, in the US and other markets,
including the UK.
Revenue is recognised at the fair value of the consideration
received or receivable and excludes intra-group sales, value added
tax and trade discounts.
Revenue is recognised when the amount can be reliably measured
and it is probable that future economic benefits associated with
the transaction will flow to the entity.
Royalty income is recognised when the tests to which the royalty
licences relate are completed by third parties. Amounts receivable
in respect of the provision of medical testing services are
recognised when these services are delivered.
Research and development
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
Development expenditure, where it meets certain criteria (given
below), is capitalised and amortised on a straight-line basis over
its useful life which is currently five years. Asset lives are
subject to regular review and an impairment exercise carried out at
least once a year. Where no internally-generated intangible asset
can be recognised, development expenditure is written-off in the
period in which it is incurred.
An intangible asset arising from development is recognised if,
and only if, the group can demonstrate the following:
- the technical feasibility of completing the intangible asset
so that it will be available for use or sale;
- the intention to complete the intangible asset and use or sell it;
- the ability to sell or use the intangible asset
- how the intangible asset will generate probable future
economic benefits. Among other things, the group can demonstrate
the existence of a market for the output of the intangible asset or
the intangible asset itself or, if it is to be used internally, the
usefulness of the intangible asset.
- the availability of adequate technical, financial and other
resources to complete the development and to use of sell the
intangible asset.
- the ability to measure reliabily the expenditure attributable
to the intangible asset during itse development.
The Group has reviewed research and development expenditure, to
determine whether any of that spend could qualify as development
expenditure which satisfies the requirements for capitalisation set
out above. As a result, GBP415,000 (2016: GBP108,000) of
development expenditure has been capitalised.
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 calculated on a straight line basis over the
deemed useful life of an asset and is applied to the cost less any
residual value. The asset classes are depreciated on a straight
line basis over the following periods:
Laboratory equipment - 3 - 7 years
Office equipment - 3 - 7 years
Computer equipment - 3 - 4 years
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 in profit or loss.
Impairment testing of non-current assets
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows (cash-generating units). As a result, some assets are tested
individually for impairment and some are tested at cash-generating
unit level. Those intangible assets not yet available for use and
goodwill are tested for impairment at least annually. All other
individual assets or cash-generating units are tested for
impairment 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 carrying 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 based on an internal discounted cash flow evaluation. All
assets are subsequently reassessed for indications that an
impairment loss previously recognised may no longer exist.
Inventories
Inventory is carried at the lower of cost or net realisable
value after making due allowance for obsolete and slow moving
stock. Net realisable value is calculated based on the revenue from
sale in the normal course of business less any costs to sell.
Leased assets
In accordance with IAS 17 Leases, the economic ownership of a
leased asset is transferred to the lessee if the lessee bears
substantially all the risks and rewards related to the ownership of
the leased asset. The related asset is then recognised at the
inception of the lease at the fair value of the leased asset or, if
lower, the present value of the minimum lease payments plus
incidental payments, if any.
All other leases are treated as operating leases. Payments on
operating lease agreements are recognised as an expense on a
straight-line basis. Associated costs, such as maintenance and
insurance, are expensed as incurred. Lease incentives received are
recognised in the consolidated statement of comprehensive income on
a straight-line basis over the lease term.
Taxation
Income tax on the profit or loss for the year comprises current
and deferred tax.
Current tax is the expected tax payable on the taxable income
for the year, using current rates, and any adjustments to the tax
payable in respect of previous years. In so far as group companies
are entitled to UK tax credits on qualifying research and
development expenditure, such amounts are recognised when
received.
Deferred taxation is provided on all temporary differences
between the carrying amount of the assets and liabilities in the
financial statements and the tax base. Deferred tax assets are
recognised only to the extent that it is probable that future
taxable profits will be available against which the temporary
difference can be utilised. Deferred tax assets and liabilities are
not discounted. Deferred tax is determined using the tax rates that
have been enacted or substantially enacted by the balance sheet
date, and are expected to apply when the deferred tax liability is
settled or the deferred tax asset is realised.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries except where the timing of the reversal
of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Tax is recognised in profit or loss, except where it relates to
items recognised directly in equity, in which case it is recognised
in equity.
Share based compensation
Equity-settled share-based payments are recognised as an expense
in profit or loss, based on the fair value of the option at the
date of grant. Such costs are spread over the vesting period,
adjusted for the best available estimate of the number of share
options expected to vest, with a corresponding credit to equity,
net of deferred tax where applicable. Such adjustments are only
made in respect of non-market performance vesting conditions. No
adjustment is made to the expense recognised in prior periods if
fewer share options ultimately are exercised than originally
estimated. Vesting conditions relate to continuing employment.
On the re-organisation in November 2015 the existing Onimmune
Limited schemes were rolled over into the 2015 Oncimmune Holdings
Plc scheme with Oncimmune Holdings Plc taking on the obligation for
the exercise of the options. Modification accounting was performed
resulting in the incremental fair value at the date of the
modification being calculated. The incremental fair value is the
excess of the fair value of the award immediately after the
modification over the fair value immediately before the
modificiation. Where the was an incremental fair value this was
charged over the remainder of the vesting period, together with the
original charge relating to the grant date of the original reward.
Recognition of a cost of investment in Oncimmune Holdings Plc and a
corresponding reserve in respect of the fair value of the options
rolled over was considered, however no investment was recognised as
the amount was not considered material.
Where the granting of share options has coincided with the issue
of shares, for cash, to third party investors, the fair value of
such options is based on the issue price for those shares which is
considered to be an arm's length value.
Employee benefit trust
Assets, other than shares, held by the Oncimmune Limited's
Employee Benefit Trust (EBT) are included in the group's balance
sheet under the appropriate heading. Shares in the company held by
the EBT are disclosed as a deduction from shareholder's funds and
dividend income is excluded in arriving at profit before tax and
deducted from aggregate dividends paid and proposed. Reflecting the
substance of these arrangements any amounts which the trustees of
the EBT may resolve, pursuant to their discretionary powers, to pay
to any beneficiaries of the EBT are charged to the profit or loss
account only when paid, subject to statutory deductions.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the main decision-making body of the
Group, which collectively comprises the Executive Directors. The
Executive Directors are responsible for allocating the resources
and assessing the performance of the operating segments.
Exceptional items
Exceptional items are treated as such if the matters are
non-recurring, material and fall outside of the operating
activities of the Group.
Government grants
Government grants receivable are recognised on receipts of cash.
Related expenditure is recognised as it occurs
Financial instruments
Financial instruments are assigned to their different categories
by management on initial recognition, depending on the contractual
arrangements.
Financial assets
The Group's financial assets fall within the heading of 'Loans
and receivables'. Loans and receivables comprise trade and certain
other receivables as well as cash and cash equivalents.
Loan and receivables are recognised when the Group becomes a
party to the contractual provisions of the instrument and are
recognised at fair value and subsequently measured at amortised
cost using the effective interest method less any provision for
impairment, based on the receivable ageing, previous experience
with the debtor and known market intelligence. Any change in their
value is recognised in the income statement.
Derecognition of financial assets occurs when the rights to
receive cash flows from the investments expire or are transferred
and substantially all of the risks and rewards of ownership have
been transferred. An assessment for impairment is undertaken at
least at each balance sheet date whether or not there is objective
evidence that a financial asset or a group of financial assets is
impaired.
Financial liabilities
The Group's financial liabilities comprise borrowings, a
convertible loan and trade and other payables.
Financial liabilities are initially recognised at the fair value
of the consideration received net of issue costs. After initial
recognition borrowings are measured at amortised cost using the
effective interest method. All interest-related charges are
included in the income statement line item "finance expense".
Financial liabilities are derecognised when the obligation to
settle the amount is removed.
Convertible loan notes
Convertible loan notes where the conversion option does not meet
the definition of equity are accounted for as financial
liabilities. The instruments are split between:
- the "host" debt instrument being a non-convertible debt. The
host contract is recognised at fair value and subsequently measured
at amortised cost using the effective interest rate;
- an embedded derivative representing the conversion feature.
The valuation of the embedded derivative is performed at
inception of the loan and at the end of each reporting period. The
residual value is then allocated to the host debt instrument.
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: includes any premium received on the sale of
shares. Any transaction costs associated with the issuing of shares
are deducted from share premium, net of any income tax
benefits.
-- Own shares and other reserves
-- Profit and loss account: retained profits
-- Foreign currency translation reserve: differences arising
from translation of investments in overseas subsidiaries
-- Merger reserve: The merger reserve represents the difference
between the parent company's cost of investment and a subsidiary's
share capital and share premium. The merger reserve in these
accounts has arisen from a group reconstruction upon the
incorporation and listing of the parent company that was accounted
for as a common control transaction. Common control transactions
are accounted for using merger accounting rather than the
acquisition method.
Foreign currencies
Monetary assets and liabilities in foreign currencies are
translated into sterling at the rates of exchange ruling at the
statement of financial position date. Transactions in foreign
currencies are translated into sterling at the rate of exchange
ruling at the date of the transaction. Exchange differences are
taken into account in arriving at the operating profit. The
functional currency of the group and parent company is GBP'000.
The financial statements of foreign subsidiaries are translated
at the rate of exchange ruling at the statement of financial
position date. The exchange differences arising from the
retranslation of the opening net investment in subsidiaries are
taken directly to reserves. Where exchange differences result from
the translation of foreign currency borrowings raised to acquire
foreign assets (including equity investments) they are taken to
reserves and offset against differences arising from the
translation of those assets. All other exchange differences are
dealt with through the statement of comprehensive income.
3. Accounting estimates and judgements
The preparation of financial statements under IFRS requires the
Group to make estimates and judgements that affect the application
of policies and reported amounts. Estimates and judgements are
based on historical experience and other factors including
expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these
estimates.
The estimates and judgements which have a significant risk of
causing a material adjustment to the carrying amount of assets and
liabilities are discussed below:
-- Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at
each reporting date. At the reporting date management assesses that
the useful lives represent the expected utility of the assets to
the Group. Actual results, however, may vary due to unforeseen
events.
-- Inventory provision
Inventory provisions are based on an estimate of the realisable
value of the inventory items.
-- Impairment
An impairment loss is recognised for the amount by which the
asset's or cash generating unit's carrying amount exceeds its
recoverable amount. To determine the recoverable amount, management
estimates expected future cash flows from each cash-generating unit
and determines a suitable discount rate in order to calculate the
present value of those cash flows. In the process of measuring
expected future cash flows management makes assumptions about
future operating results. These assumptions relate to future events
and circumstances. In most cases, determining the applicable
discount rate involves estimating the appropriate adjustment to
market risk and the appropriate adjustment to asset-specific risk
factors.
-- Capitalisation of development costs
Development expenditure, where it meets certain criteria (given
below), is capitalised and amortised on a straight-line basis over
its useful life. Asset lives are subject to regular review and an
impairment exercise carried out at least once a year. Where no
internally-generated intangible asset can be recognised,
development expenditure is written-off in the period in which it is
incurred. Development expenditure is only recognised when all of
the criteria set out in IAS 38 are met. Management applies
judgement in making this assessment and in determining attributable
costs for each project.
-- Deferred tax
Judgement has been applied in respect of the non recognition of
deferred tax on losses as detailed in note 10 on the basis of
uncertainty over the timing of future reversal.
4. Segmental information
Management has determined the operating segments based on the
reports reviewed by the strategic decision maker comprising the
Board of Executive Directors. The segmental information is split on
the basis of geographical analysis however, management report only
the contents of the income statement and therefore no statement of
financial position information is provided on a segmental basis in
the following tables:
Revenue 31 May 31 May
2017 2016
GBP'000 GBP'000
Class of business
Distribution of testing products 215 262
Royalties - 168
Total revenues 215 430
-------- --------
Geographical analysis by destination
United Kingdom 80 133
North America 135 294
Rest of the world - 3
Total revenues 215 430
-------- --------
Geographical analysis by origin
United Kingdom - -
North America 215 427
Rest of the world - 3
Total revenues 215 430
-------- --------
Operating segments
As at 31 May 2017
UK USA Holdings Consolidated
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 80 135 - 215
Cost of
sales (247) (284) - (531)
Gross margin (167) (149) - (316)
-------- -------- --------- -------------
Operating
loss (3,279) (1,171) (823) (5,273)
Net finance
and other
costs (43)
Loss before
tax (5,316)
-------------
Taxation 293
(5,023)
-------------
As at 31 May 2016
UK USA Holdings Consolidated
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 304 126 - 430
Cost of
sales - (147) - (147)
Gross margin 304 (21) - 283
-------- -------- --------- -------------
Operating
loss (2,748) (801) (2,165) (5,714)
Net finance
and other
costs (3,294)
Loss before
tax (9,008)
-------------
Taxation 566
(8,442)
-------------
Assets are not reported by business segment to the Chief
Operating Decision Maker.
Information about major customers
In the year to 31 May 2017, the group had three customers who
contributed more than 10% of group revenue individually. These
three customers contributed approximately 83% of group revenue.
In the year to 31 May 2016, the group had three customers who
contributed more than 10% of group revenue individually. These
three customers contributed approximately 80% of group revenue.
5. Exceptional items
May May
2017 2016
GBP'000 GBP'000
Exceptional items in the year
comprise the following:
Costs associated with the IPO
Charged in profit or loss - 1,226
Charged directly to equity - 8
Gain on debt waiver - (1,564)
Fair value loss on derivatives
(Note 23) - 4,126
Costs directly attributable to the issuing of shares are charged
to the share premium account.
6. Loss before income tax
May May
2017 2016
GBP'000 GBP'000
Loss before taxation has been
arrived at after charging:
Depreciation of owned property,
plant and equipment 63 71
Amortisation of intangible
assets 28 7
Research and development 1,025 789
Share based payments expense 74 939
Employee costs (Note 8) 2,202 2,828
Operating lease rentals
* Other operating leases 116 51
- -
* Plant and machinery
Audit and non-audit services:
Fee payable to the company's
auditor:
Fee for the audit of the parent
company 15 15
Fees payable to the Company's
auditor and its associates
for other services:
The audit of the Company's
subsidiaries pursuant to legislation 24 23
Tax compliance services 6 6
Tax advisory services 6 21
Audit related assurance services 4 -
All other assurance services 1 1
Fees for other assurance services
- accounting - 17
Fees for other assurance services
- reporting accountant - 150
======== ========
7. Remuneration of key personnel
The Group consider that the Directors are the key personnel;
May May
2017 2016
GBP'000 GBP'000
Share based payments expense 74 850
Salary, fees, bonuses and other
short term emoluments 409 670
Social security costs 44 87
-------- -------------
527 1,607
======== =============
Details of Director's remuneration are disclosed in the
Directors' report.
8. Employees
The average number of employees (including Directors) during the
period was as follows:
May May
2017 2016
47 33
====== ======
The cost of employees (including directors) during the period
was made up as follows:
May May
2017 2016
GBP'000 GBP'000
Wages and salaries 2,021 1,739
Social security costs 106 150
Pension cost 1 -
Share based payments 74 939
-------- --------
2,202 2,828
======== ========
9. Net finance costs
May May
2017 2016
GBP'000 GBP'000
Finance revenue 26 5
Fair value loss on embedded
derivatives (note 23) - (4,126)
Finance costs (convertible
loan and other loans) (69) (737)
-------- --------
(43) (4,858)
======== ========
10. Income tax credit
May May
2017 2016
GBP'000 GBP'000
Current tax:
UK corporation tax credit at
rates: 2017 - 19.83% 2016 -20% (293) (566)
Prior period adjustment - -
-------- --------
(293) (566)
Tax recoverable for the period (293) (566)
======== ========
Factors affecting current tax charge:
The tax assessed on the profit for the period is different to
the standard rate of corporation tax in the UK. The differences are
explained below:
May May
2017 2016
GBP'000 GBP'000
Loss before income tax (5,316) (9,008)
Loss for the year multiplied
by the standard rate of corporation
tax (1,054) (1,801)
Expenses not deductible for
tax purposes 6 1,414
Adjustment in respect of prior
periods - (1)
Income not assessable for tax - (313)
Tax uplift in R&D expenditure (295) (281)
Losses surrendered for R&D
claims 228 136
Losses carried forward 822 280
(293) (566)
========== ==========
The group has unrelieved UK tax losses of GBP12,247,000 (2016:
GBP9,882,000) and unrelieved overseas tax losses of GBP17,917,000
(2016: GBP14,007,000). Deferred tax of GBP5,118,000 has not been
provided given the uncertainty over the timing of a future
reversal.
11. Property, plant and equipment
Laboratory Computer Office Total
Equipment Equipment Equipment
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 May 2016 980 18 30 1,028
Additions - 7 - 7
Foreign exchange
movement 38 - - 38
----------- ----------- ------------- ----------
At 31 May 2017 1,018 25 30 1,073
----------- ----------- ------------- ----------
Depreciation
At 31 May 2016 729 16 30 775
Charge for the year 61 2 - 63
Foreign exchange
movement 5 - - 5
----------- ----------- ------------- ----------
At 31 May 2017 795 18 30 843
----------- ----------- ------------- ----------
Net book values
At 31 May 2017 223 7 - 230
=========== =========== ============= ==========
At 31 May 2016 251 2 - 253
=========== =========== ============= ==========
There were no assets held under finance leases during 2017 or
2016. The amount of depreciation expense charged to the income
statement in respect of such assets was GBPnil in 2017 and
2016.
12. Intangible Assets
Intangible
Assets
GBP'000
Cost
At 31 May 2016 143
Additions 415
Disposals
-----------
At 31 May 2017 558
-----------
Depreciation
At 31 May 2016 12
Charge for the year 28
-----------
At 31 May 2016 40
-----------
Net book values
At 31 May 2017 518
===========
At 31 May 2016 131
===========
All intangible assets are from internal development.
13. Trade and other receivables
May May
2017 2016
GBP'000 GBP'000
Trade receivables 50 116
Other debtors 191 142
Prepayments and accrued income 20 81
-------- --------
261 339
======== ========
At 31 May 2017 trade receivables were stated net of provisions
of GBPnil (2016 - GBPnil). The remaining balances were considered
recoverable on normal trade terms. There is no material difference
between the fair value and the varying value of these assets. The
maximum credit risk exposure at the reporting date equated to the
fair value of trade receivables as stated net of provisions.
Standard payment terms are 30 days net.
14. Inventories
May May
2017 2016
GBP'000 GBP'000
Diagnostic testing materials 323 188
-------- --------
323 188
======== ========
Inventory is stated net of a GBP501,000 provision (2016:
GBP509,000).
15. Cash and cash equivalents
Cash balances at the end of each year are as follows:
May May
2017 2016
GBP'000 GBP'000
Cash and cash equivalents per
statement of financial position 5,075 10,197
-------- --------
Cash per statement of cash
flows 5,075 10,197
======== ========
16. Trade and other payables
May May
2017 2016
GBP'000 GBP'000
Trade payables 590 379
Other taxation and social security - -
Other creditors 122 69
Accruals and deferred income 135 81
847 529
======== ========
17. Borrowing
The Group uses bank overdrafts, bank and other loans to finance
acquisitions; the following balances remain outstanding as
shown:
May May
2017 2016
GBP'000 GBP'000
Non-current
Other loans - 395
-------- --------
- 395
======== ========
Current
Other loans 502 496
502 496
======== ========
Other loans at 31 May 2017 also include a venture loan facility
originally of EUR1,862,649 (approximately GBP1.5m), from Harbert
European Speciality Lending Company Limited ('Harbert'), repayable
in equal instalment over the period to 31 January 2018 at an
interest rate of 10%, plus a further 3% to be paid with the final
instalment. The facility is secured by a fixed and floating charge
over the company's assets and undertaking. As at the year end
GBP502,281 was falling due within one year and GBPnil was falling
due after one year (2016: GBP495,920 and GBP394,882
respectively).
18. Lease commitments
At the end of each period the Group had total minimum annual
payment commitments under non-cancellable operating lease
agreements as set out below:
May May
2017 2016
GBP'000 GBP'000
Land and buildings
Operating leases which expire:
Within one year 21 51
In two to five years - 21
In over five years - -
-------- --------
21 72
======== ========
19. Share capital
May 2017 May 2016
Shares GBP Shares GBP
Authorised:
Ordinary shares
of GBP0.01 each 57,115,594 571,155 57,115,594 571,155
Preference shares - - - -
of GBP0.01 each
A Preference shares - - - -
of GBP0.01 each
----------- -------- ----------- --------
571,155 571,155
=========== ======== =========== ========
Allotted, called
up and fully paid:
Ordinary shares
of GBP0.01 each 51,024,404 510,244 51,024,404 510,244
Preference shares - - - -
of GBP0.01 each
----------- -------- ----------- --------
51,024,404 510,244 51,024,404 510,244
=========== ======== =========== ========
20. Share based payments
The Group has granted options to certain directors and employees
in respect of Ordinary shares
The Group has the following share options schemes in place:
The 2005 Share Option Scheme
The 2005 Share Option Scheme has the following principal
terms:
-- the scheme is limited to eligible persons, being employees,
officers, SAB members and consultants of the Group;
-- the scheme provides for options to be granted to eligible
persons to subscribe for ordinary shares of 0.01p each in the
capital of Oncimmune Holdings Plc;
-- the scheme was limited to options over 14,500 ordinary shares
in Oncimmune Limited (now 725,000 options over Ordinary shares of
Oncimmune Holdings Plc), all of which have been granted and options
may be issued under the Enterprise Management Incentive (EMI) rules
or as unapproved options;
-- no option may be exercised later than the tenth anniversary
of the date of grant, extended to 20 years for certain option
holders;
-- each option issued under the scheme had a vesting period
commencing for employees, officers and consultants on the first
anniversary of the date of the grant and expiring on the fourth
anniversary of the date of grant and for SAB members commencing on
the second anniversary and expiring on the fourth anniversary of
the date of grant;
-- options issued under the scheme are non-transferable;
-- vested options must be exercised (i) within 24 months of an
option holder's death; (ii) within 3 months of an option holder
ceasing to hold office for reasons of disability, redundancy or
retirement (unless otherwise agreed by the Directors); and (iii)
within 6 months of an option holder's resignation (if an employee,
officer or consultant of the Operating Group) and within 24 months
of an option holder's resignation (if an SAB member), or in each
case the options shall lapse
-- If an option holder shall leave the Operating Group for any
reason, options granted to that option holder shall only be
exercisable in the Directors' discretion;
-- on 'takeover' of Oncimmune Holdings Plc where a general offer
is made to acquire the whole of the issued share capital of
Oncimmune Holdings Plc (or any class of share capital of Oncimmune
Holdings Plc), the acquiring company may make a 'rollover' offer to
the option holders, which the option holders shall be deemed to
accept, such that their options shall rollover into options in the
acquiring company upon the same terms; and
-- Oncimmune Holdings Plc may at any time add to or vary the
scheme rules provided that this does not affect the liabilities of
any option holder.
The 2007 Share Option Scheme
The 2007 Share Option Scheme is on the same principal terms as
the 2005 Share Option Scheme save that:
-- the scheme was limited to an additional 25,029 (increased to
68,056 options over ordinary shares in Oncimmune Limited and which
rolled over 3,402,800 options over Ordinary Shares), of which
23,511 options over ordinary shares in Oncimmune Limited (rolled
over into 1,175,550 options over Ordinary Shares of Oncimmune
Holdings Plc) have been granted;
-- the vesting period for all options issued under the scheme
commenced on the first anniversary of the date of grant and expired
on the third anniversary of the date of grant, and;
-- vested options must be exercised (i) within 12 months of an
option holders death; (ii) within 3 months of an option holder
ceasing to hold office for reasons of disability, redundancy or
retirement (unless otherwise agreed by the Directors) and (iii) on
or before an option holders resignation, or in each case the
options shall lapse.
In November 2015, the two existing option schemes were rolled
over into the 2015 Oncimmune Holdings Scheme on the terms set out
above.
May 2017 May 2016
Number Number
of options of options*
Options
in grant 3,650,550 1,825,550
============ =============
Weighted GBP0.77 GBP0.83
average
exercise
price
Weighted
average
life remaining
in years 5 3
*Share options issued by Oncimmune Limited
The fair value of options granted by the Company has been
arrived at using the Black-Scholes model. The assumptions inherent
in the use of this model are as follows:
May 2017 May 2016
Volatility 20% 12%
Dividend yield 0% 0%
Risk free rate 3% 1%
Discount factors 10% 0%
-- The option life is assumed to be at the end of the allowed period
-- Historical staff turnover is taken into account when
determining the proportion of granted options that are likely to
vest by the end of the period
-- Following the application of the vesting probability
assumptions, there are no further vesting conditions other than
remaining in employment with the Company during the vesting
period
-- No variables change during the life of the option (e.g. dividend yield)
-- Volatility has been estimated as there is no history of the Company's share price.
At the period end each year the Group had the following options
at the weighted average exercise prices (WAEP) shown:
WAEP May WAEP May
2017 2016
Expiry date Number Number
Outstanding at
1 June 0.83 1,825,550 37.00 36,511
Granted - 1,825,000 - -
Lapsed
Modified (36.17) 1,789,039
Exercised
Outstanding at
31 May 0.77 3,650,550 0.83 1,825,550
===== ========== ======== ==========
Weighted average
remaining contractual
life in years 5 3
===== ========== ======== ==========
The options are subject to the rules of 2016 Share Option plan
(an amalgamation of the Company's 2005 and 2007 Share option
Plans).
The Group recognised total expenses in respect of the option
schemes above of GBP74,435 (2016: GBP939,000) related to
equity-settled share based payment transactions during the
year.
21. Related party transactions
During the year, the University of Nottingham, a significant
shareholder, provided support and facilities to the group to enable
it to undertake research:
May May
2017 2016
GBP'000 GBP'000
Costs incurred 174 138
Accrued at year end 40 20
======== ========
22. Categories of financial instruments
May May
2017 2016
GBP'000 GBP'000
Current financial assets
Loans and receivables 261 258
Cash and cash equivalents 5,075 10,197
-------- --------
Total financial assets 5,336 10,445
Non-financial assets - 81
-------- --------
Total 5,336 10,536
======== ========
Non-current financial liabilities
At amortised cost - borrowings - 395
======== ========
Current financial liabilities
At amortised cost - borrowings 502 496
At amortised cost - payables 901 529
-------- --------
Total current financial liabilities 1,403 1,025
Non financial liabilities - 57
-------- --------
Total current liabilities 1,403 1,082
======== ========
23. Convertible loan note
In October 2013, Oncimmune Ltd received a GBP1.8 million loan
from under the terms of a convertible loan note, which accrued
interest at rates of 25%. Monthly repayments of capital plus
accrued interest over a 24 month period commenced on 1 May 2014 or
earlier under specified circumstances, albeit subordinated to the
Harbert loan (note 16 above).
The terms of the loan included the following conversion
options:
- on a relevant fund raising the holder may convert at, a price
per share being a 20% discount to the price per share of the class
of share being issued and paid by investors on that relevant fund
raising;
- on a change of control, a price per share being a 20% discount
to the price per A Preference share received in connection with the
acquisition of shares on the change of control;
- on a voluntary conversion at the voluntary conversion
price.
Management carried out an assessment of the terms of the loan
and have judged that the instrument consisted of two
components:
- a host instrument, held at amortised cost
- a single compound embedded derivative that comprises multiple
embedded derivatives (comprising the various prepayment options and
the conversion option) that expose Oncimmune Ltd to inter-related
risks. The compound embedded derivative has been recognised
separately as a derivative financial instrument at fair value
through profit and loss.
A fair value exercise to determine the value of the components
was performed at inception of the loan (October 2013). The
valuation takes into account the share price of the issuer and the
time value of the option.
The embedded derivative is defined as the value of the
derivative liability comprising the various prepayment options and
the conversion option. The valuation takes into account the share
price of the issuer and the time value of the option.
Valuation techniques were selected based on the characteristics
of each instrument, with the overall objective of maximising the
use of market based information. The valuation technique for the
single compound embedded derivative, which is a level 3 item, is as
follows:
The fair value of the compound embedded derivative recognised
separately from the host convertible loan was estimated using a
present value technique. The fair value at each date is estimated
by probability weighting the prepayment feature, adjusting for risk
and discounting at 20 per cent, based upon commercially applicable
rates, and by reference to the value of the equity instruments
associated with the conversion feature. During the period to 31 May
2016 the loans were converted to equity. Finance costs in respect
of the fair value movement of GBP4,125,000 were recognised and the
fair value of the instrument on extinguishment was
GBP4,196,000.
May May
2017 2016
Fair value of net proceeds GBP'000 GBP'000
Net proceeds - -
Embedded derivative - -
Liability component - -
--------- --------
- -
========= ========
Liability component - -
Interest charge for the year - 402
--------- --------
- 402
======================================== ========
24. Loss per share
The basic per share is calculated by dividing the loss
attributable to the owners of Oncimmune Holdings Plc by the
weighted average number of ordinary shares in issue during the
year. Diluted earnings per share has not been calculated as the
entity is loss making.
May May
2017 2016
Earnings
Loss on ordinary activities
for the purposes of basic and
fully diluted loss per share
(GBP'000) (5,023) (8,442)
Loss on ordinary activities
for the purposes of basic and
fully diluted loss per share
(GBP'000) (before highlighted
items) - (4,654)
----------- -----------
Number of shares
Weighted average number of
shares for calculating basic
and fully diluted earnings
per share 51,024,404 35,866,356
----------- -----------
Loss per share
Basic and fully diluted loss
per share 9.84p 23.54p
----------- -----------
Basic and fully diluted loss
per share (before exceptional
items) 9.84p 12.97p
----------- -----------
25. Financial risk management
The Group's activities expose it to a variety of financial
risks: market risk (interest rate risk), credit risk and liquidity
risk.
Market risk - Foreign exchange risk
As disclosed in note 4 in the years to 31 May 2017 and 31 May
2016 over 60% of the Group's income by destination was into the
North American market and denominated in US dollars. The Group's
income stream is exposed to fluctuations in the US dollar exchange
rate against Sterling.
Market risk - Interest rate risk
The Group carries borrowings in the form of other loans as all
borrowings are on fixed interest terms, the Directors consider that
no risk arises in respect of future cash flows.
Market risk - Price risk
The Group is not exposed to either commodity or equity
securities price risk.
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. In order to minimise this risk the Group endeavours only to
deal with companies which are demonstrably creditworthy. In
addition, a significant proportion of revenue results from cash
transactions. The aggregate financial exposure is continuously
monitored. The maximum exposure to credit risk is the value of the
outstanding amount of trade receivables. The management do not
consider that there is any concentration of risk within either
trade or other receivables.
Liquidity risk
The Group currently holds cash balances to provide funding for
normal trading activity. The Group also has access to both short
term and long term borrowings . Trade and other payables are
monitored as part of normal management routine.
Borrowings and other liabilities mature according to the
following schedule:
2017 Within One to
1 year five
years
GBP'000 GBP'000
Trade payables 590 -
Other taxation and social 57 -
security
Other creditors 122 -
Accruals and deferred 135 -
income
Convertible loans - -
Other loans 502 -
========
2016 Within One to
1 year five
years
GBP'000 GBP'000
Trade payables 496 -
Other taxation and social 57 -
security
Other creditors 69 -
Accruals and deferred 81 -
income
Convertible loans - -
Other loans 496 395
========
Capital risk management
The Group' s capital management objectives are:
-- to ensure the Group's ability to continue as a going concern; and
-- to provide an adequate return to shareholders
by pricing products and services commensurate with the level of
risk.
The Group monitors capital on the basis of the carrying amount
of equity less cash and cash equivalents as presented on the face
of the statement of financial position.
May May
2017 2016
GBP'000 GBP'000
Total equity 5,064 9,731
Cash and cash equivalents 5,075 10,197
--------- ---------
Capital 10,139 19,928
========= =========
Total financing
Borrowings 502 891
--------- ---------
Overall financing 502 891
========= =========
Capital to overall financing
ratio 2,019.7% 2,236.6%
========= =========
26. Events after the balance sheet date
The Company raised a further GBP5m (GBP4.78m net of expenses)
via a placement in September 2017 issuing up to 4.167 million
shares. Of this, the issuance of 833,333 Ordinary Shares
representing GBP1.0m remain conditional on receipt from HM Revenues
& Customs of confirmation that this investment will be a
qualifying holding for the purposes of Part 6 of the Income Tax Act
2007.
27. Subsidiaries consolidated
The subsidiaries included in the consolidated financial
statements of the Group are detailed below. No subsidiary
undertakings have been excluded from the consolidation.
Company Holding
Country of Class of Direct Indirect
incorporation share capital % %
held
Oncimmune Limited United Kingdom Ordinary 100
United States
Oncimmune (USA) LLC of America Ordinary 100
28. Ultimate controlling
party
There is no ultimate
controlling party
of the Company.
(1) Health Advances, Boston 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GGGQPUUPMGMB
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