TIDMEDX
RNS Number : 2651O
EDX Medical Group PLC
02 October 2023
This announcement contains inside information as stipulated
under the UK version of the Market Abuse Regulation No 596/2014
which is part of English law by virtue of the European (Withdrawal)
Act 2018, as amended. On publication of this announcement via a
regulatory information service, this information is considered to
be in the public domain.
Annual Report and Financial Statements for the year ended March
31, 2023
2 October 2023
EDX Medical Group, plc ("EDX Medical", the "Company" or the
"Group"), which develops innovative digital diagnostic products and
services for the personalised treatment for cancer, heart disease
and infectious diseases, today announces publication of its Annual
Report and Financial Statements for the year ended March 31,
2023.
CHAIRMAN'S STATEMENT
Jason Holt, Chairman of the Group:
"From a standing start to the end of the financial year in March
2023, the Group has been preparing the ground for significant
business growth over the next three years. This period saw the
reverse take-over of TECC Capital plc and the registration of EDX
Medical Group plc on the London AQSE exchange on 14 November
2022".
"EDX Medical has embarked on a collaborative path with partners
to lead in diagnostic research and development to improve the lives
of many. By utilising better diagnostics, healthcare providers in
the public and private sectors can deploy improved treatments for
many common diseases that remain stubbornly difficult to treat
successfully".
"The imperative for the Group during the financial period up to
31 March 2023 was rightfully preparing for this rapid business
growth as diagnostic opportunities emerge. This preparation has
involved much due diligence of potential opportunities; assembling
the right leadership, commercial and scientific teams; as well as
raising capital to undertake the necessary steps to grow our
business".
"I am pleased to report these foundational steps are now all in
place. With the financial year ending March 2023 focused on
exploring numerous innovations to gain access to the necessary
licences and intellectual property for delivering a range of novel
diagnostic products, we are grateful for the excellent support
received from our shareholders. We have invested sensibly into a
number of very attractive new product areas that all have
attractive future markets. As the Company focuses on crystalising
the many commercial opportunities into forthcoming revenues, this
should trigger investor and shareholder responsiveness that matches
the series of announcements that we are currently finalising."
The directors of EDX Medical accept responsibility for the
contents of this announcement.
Contacts:
EDX Medical PLC
Dr Mike Hudson (Chief Executive Officer) +44 (0)7812 345 301
Oberon Capital
Nick Lovering (Corporate Adviser)
Adam Pollock (Corporate Broking)
Mike Seabrook (Corporate Broking) +44 (0)20 3179 5300
Media House International
Ramsay Smith +44 (0)7788 414856
ramsay@mediahouse.co.uk
Gary McQueen + 44 (0)7834 694609
gary@mediahouse.co.uk
About EDX Medical Group PLC ( www.edxmedical.co.uk )
EDX Medical Group plc develops innovative digital diagnostic
products and services, enabling cost effective and timely delivery
of personalised treatment for cancer, heart disease, and infectious
diseases. The company is listed on the AQSE Growth Market (TIDM:
EDX).
EDX Medical was founded by Professor Sir Christopher Evans, OBE,
a medical and life sciences entrepreneur with more than 30 years of
experience, together with CEO, Dr Mike Hudson.
By translating clinical insights into pragmatic solutions
combining advanced biological and digital technologies, EDX Medical
seeks to cost-effectively improve the detection and
characterisation of disease in order to personalise treatment in a
timely fashion. Early disease detection and biologically-based
personal treatment optimisation is considered to be the most
impactful way of reducing deaths and lowering the cost of
healthcare globally.
EDX Medical Group operates a molecular biology and diagnostics
laboratory in Cambridge, UK, and 100%-owned subsidiary companies,
Hutano Diagnostics Limited in Oxford, UK, and "Torax Biosciences
Ltd" ( www.toraxbiosciences.co.uk ) in Ireland.
EDX Medical, provides testing and genomic sequencing services,
undertakes quality assurance, conducts research & development
(R&D) and has established expertise in the design, development,
validation and sourcing of diagnostic testing solutions to ISO
13485. Key laboratory tests performed by the Company have been
accredited to ISO 15189 by the United Kingdom Accreditation Service
(UKAS).
EDX Medical Group Plc
Annual Report and Financial Statements
For the period ended 31 March 2023
Company registration number: 13277385 (England and Wales)
Page
Company Information 1
Chief Executive Officer's Report 2
Chairman's Statement 4
Strategic Report 5
Risk Management Report 13
Corporate Governance Report 18
Audit Committee Report 23
Director's Report 25
Remuneration Report 29
Statement of Directors' Responsibilities 32
Independent Auditor's Report 33
Consolidated Statement of Comprehensive 39
Income
Consolidated Statement of Financial 40
Position
Company Statement of Financial 41
Position
Consolidated Statement of Changes 42
in Equity
Company Statement of Changes in 43
Equity
Consolidated Statement of Cash 44
Flows
Company Statement of Cash Flows 46
Notes to the Consolidated and Company 47
Financial Statements
DIRECTORS C Evans
J Holt
M Hudson
T Jones
COMPANY SECRETARY ONE Advisory Limited
201 Temple Avenue
London
EC4Y 0DT
REGISTERED NUMBER 13277385 (England and Wales)
REGISTERED OFFICE 210 Cambridge Science Park
Milton Road
Cambridge, England
CB4 0WA
CORPORATE ADVISER AND Oberon Investment Group
BROKER Nightingale House, 64 Curzon St
London
W1J 8PE
INDEPENT AUDITORS PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus, Canary Wharf
London
E14 4HD
COMPANY WEBSITE https://edxmedical.co.uk/
Introduction
Within the global diagnostics industry the 'clinical' sector
offers the biggest potential economic and health impact for
successful products and is an increasingly regulated marketplace.
Furthermore, the rapid, digital data available from clinical
diagnostics holds the potential to unlock the large-scale benefits
of personalised medicine. EDX Medical is building the bioscience
capabilities and digital infrastructure to deliver a portfolio of
clinical diagnostic products and services via a 'buy & build'
strategy, involving our own developments and in-licensed or
acquired products in collaboration with key partners. We focus on
major areas of need - cancer, heart disease, neurology and
infectious diseases.
The Group operates its main ISO 15189 accredited laboratory
facility in Cambridge, UK, and in February 2023 acquired Torax
Biosciences Ltd, a satellite laboratory developing 'point-of-care'
tests operating under ISO 13485, firmly establishing our ability to
provide both laboratory and 'point-of-care' testing solutions.
The last 12 months have provided a valuable opportunity for EDX
Medical to establish and validate its strategy and to lay the
foundations for rapid growth in the coming period. The Group
strategy remains to focus on the clinical marketplace and to
provide health professionals with access to a range of innovative,
class-leading tests and digital reports to enable fast and
effective personalised treatment and improved patient outcomes.
Significant expertise and resources have been added to the
senior team in R&D, regulatory, quality, commercial and data
management in order to prepare for and support the future
commercialisation of innovative new products.
The Group is concluding a number of strategic partnerships to
ensure efficient and scalable operations including; laboratory
instrumentation, patient sample collection , and medical logistics.
Each of these relationships are expected to provide the Company
with competitive advantages in terms of scalable delivery.
We have also identified and are progressing a pipeline of
potential product acquisitions, partnerships and licensing deals to
create a powerful portfolio of both laboratory-based tests and
point-of-care tests for the clinical marketplace.
Trading Results
The Group's loss for the period was GBP3,709,363.
Outlook
Positioned in a new, high growth sector - moving into
revenues
EDX Medical is positioned to participate in and benefit from two
dominant trends in healthcare:
Ø Digitalisation of molecular biology and medicine
Ø Move of testing closer to the patient (point-of-care)
The Group has access to an active pipeline of advanced,
genomic-based laboratory tests for which there is robust data
supporting clinical utility, and as part of its growth strategy,
continues to pursue the acquisition, licensing or distribution
partnerships with the companies who have developed these assets. We
expect to be announcing details of these deals and partnerships
during the coming period.
In the coming period, EDX Medical will continue to develop its'
commercial operations. Initially launching in the United Kingdom,
expansion into the Nordic region will follow in early 2024 as part
of the expansion into
Europe. The commercial plan for North America is also expected
to be completed for board review in the final months of 2023. These
actions can confidently be expected to generate revenues in the
first half of 2024.
Building on the Torax Biosciences acquisition, coupled with
further investment, we plan to establish a specialist point-of-care
innovation team to accelerate the development and validation of new
tests addressing global needs based on an additional proprietary
technology platform to be acquired during the next year. This will
provide customers with access to reliable and sensitive tests for
direct use with the patient where previously only laboratory tests
could provide the required level of technical precision. These
innovative new products will create new markets for EDX
Medical.
Personalised Medicine remains an enormous opportunity
Growing trends in medical devices for personalised healthcare -
Medical Device Network (medicaldevice-network.com)
EDX clients are leading the adoption of personalised medicine
and healthcare. Personalised medicine provides customised
healthcare for patients based on their genetics, lifestyle, and
environmental factors. Digitalisation in the healthcare industry,
along with advances in molecular biology, medical & diagnostics
devices and wearable sensors, enables clinicians to combine and
analyse information to detect illness earlier and determine the
most cost- and clinically-effective interventions - leading to
improved outcomes. Many argue that in a world of escalating costs
and limited trained medical staff, the use of digital diagnostic
tools to enable personalised medicine is the only sustainable,
economically viable way forward.
According to Global Data, key trends impacting personalised
medicine include electronic medical records and genetic testing, as
well as remote patient monitoring and wearable technologies. They
value the global personalized medicine market size at USD 538.93
billion in 2022 and is projected to grow at a compound annual
growth rate (CAGR) of 7.20% from 2023 to 2030. (Report ID:
978-1-68038-443-7 Personalized Medicine Market Size And Share [2023
Report] (grandviewresearch.com)
Conclusions
The digital healthcare sector overall remains active and is
performing better than many other sub-sectors of the tech market.
According to CB Insights, global digital health investment funding
was $3.4B in Q2' 2023, down 3% on the first quarter, with US-based
digital health startups accounting for 65% of that funding. As
expected, this funding cycle periodically stimulates M&A
transactions when values are reduced, enabling EDX to pursue its
international M&A efforts with confidence at the current
time.
On balance, the directors believe that the UK remains a
well-established place from which to develop and validate
innovative healthcare products and technologies to the global
marketplace. EDX Medical is well placed to execute its strategy
which is now validated and promises to deliver important and
valuable innovations at scale for patients worldwide.
Dr Michael Hudson
Chief Executive Officer
1 October 2023
Embracing the future
From a standing start to the end of the financial year in March
2023, the Group has been preparing the ground for significant
business growth over the next three years. This last year saw the
reverse take-over of TECC Capital plc and the registration of EDX
Medical Group plc on the London AQSE exchange on 14 November
2022.
With the advancement in clinical diagnostics incorporating
exciting new technology - as well as the ever-onward march of
artificial intelligence boosting digital health capabilities - EDX
Medical has embarked on a collaborative path with partners to lead
in diagnostic research and development to improve the lives of
many.
By utilising better diagnostics, healthcare providers in the
public and private sectors can deploy improved treatments for many
common diseases that remain stubbornly difficult to treat
successfully. Cancer alone accounts for one in six deaths globally
but with the onset of artificial intelligence and genetic
sequencing scanning for types of DNA found in blood caused by
changes in cancer cells, we now have the opportunity to drive
forward with better, more accurate testing.
The imperative for the Group during the financial period up to
31 March 2023 was rightfully preparing for this rapid business
growth as diagnostic opportunities emerge. This preparation has
involved much due diligence of potential opportunities; assembling
the right leadership, commercial and scientific teams; as well as
raising capital to undertake the necessary steps to grow our
business. I am pleased to report these foundational steps are now
all in place.
With the financial year ending March 2023 focused on exploring
numerous innovations to gain access to the necessary licences and
intellectual property for delivering a range of novel diagnostic
products, we are grateful for the excellent support received from
our shareholders. We have invested sensibly into a number of very
attractive new product areas that all have attractive future
markets.
As the Company focuses on crystalising the many commercial
opportunities into forthcoming revenues this should trigger
investor and shareholder responsiveness that matches the series of
announcements that we are currently finalising
Finally, I would like to pay tribute to our Senior Independent
Director, Professor Trevor Jones CBE, for his wisdom and counsel
over the period as I do too to my other Board directors, Dr Michael
Hudson and Professor Sir Christoper Evans OBE. Combined, they
represent an unrivalled 150 years of scientific and healthcare
commercial leadership that offers assurance to our shareholders and
partners as the EDX Medical board continues to guide the innovative
development of the opportunities ahead. I look forward to working
with you all to move EDX Medical forward together.
Jason Holt
Chairman
1 October 2023
The Directors present their strategic report for the period
ended 31 March 2023.
Principal Activities
During the period under review, the principal activities of the
Group consisted of building the foundations for a digital
diagnostics business with global ambitions and access to a
portfolio of class-leading products and services for customers in
the clinical healthcare sector.
POST BALANCE SHEET EVENTS
Post Balance Sheet events are included in Note 32.
PRINCIPAL RISKS AND UNCERTAINTIES
Principal Risks & Uncertainties are discussed in the Risk
Management Report.
The Group ISO 15189 accreditation was maintained. Product
development and validation, supply chain audits and M&A efforts
were all active and generating results.
Business Review AND STRATEGY
EDX Medical Group Plc operates in the emerging 'digital
diagnostics' sector at the convergence of two high growth
industries - molecular biology and digital health. Providing
biological assays, interpretative analysis and digital data,
enabling healthcare professionals to deliver timely and
cost-effective personalised patient treatments, leading to improved
patient outcomes.
The period to 31 March 2023 saw a significant set up phase
including the Reverse Take Over into the AQSE market. The period
also saw the acquisition of Torax Bioscience Ltd. The loss for the
period was GBP3,709,363 which included all the costs of both these
transactions. These transactions are outlined in note 9 and are
considered to be one off and non-underlying
Our vision for digital diagnostics is to combine advanced
biology, software and digital tools (AI) to obtain, analyse and
report actionable data in real time, unlocking the clinical
potential (impact) of Personalised Medicine whilst enhancing
accuracy, traceability & regulatory compliance and
environmental impact of our products .
As the EDX Medical business enters it's commercial; growth
phase, our strategic value will be based on the quality of our
solutions, the global potential of our innovative, proprietary
assets, infrastructure to deliver secure digital services and the
associated future profits and revenues.
The Group is an exceptionally strong digital diagnostics partner
for clinical healthcare providers, payers and technology
innovators, with the global ambition to deliver an integrated
clinical diagnostics service on the world stage:
ü Exclusive focus on 'data-rich' molecular diagnostics for
clinical use
ü Deploying biological testing in both laboratory and 'point of
care' as needed
ü Validating tests and technologies against clinical needs and
future regulatory requirements including accredited tests with
digital traceability
ü Fully secure, digital data acquisition, analysis and
reporting
Personal biology drives our Product Strategy, addressing three
priority clinical needs :
ü Safety: (avoidance of adverse drug reactions)
ü Selection: (identification of the most effective
treatments)
ü Surveillance: (drug resistance, recurrence and family
screening) and priority diseases with major health and economic
impact:
ü Cancer: (variable survival rates & high treatment costs,
require biological tests to diagnose early and select effective
treatments fast).
ü Cardiology: (many patients are dying from identifiable /
modifiable risks)
ü Neurology: (high care costs drive need for early diagnosis /
personal treatment selection)
Business Model and Strategy
EDX Medical is an ambitious pioneer in digital diagnostics
intending to grow by organic innovations, acquisition/licensing and
strategic collaborations in order to provide a portfolio of
digitally enabled clinical diagnostics for the public and private
healthcare sector.
The Group is investing to secure a significant early
'bridgehead' in the UK and Europe based on providing innovative
products and services for clinical healthcare providers &
payers; whilst developing and validating a range of digital next
generation 'Point-of-care' digital diagnostics for
commercialisation in global markets.
The Group business model is based on the acquisition or
licensing of proprietary and high performing test products with
robust legacy clinical data and developing such assets into
IVDR-compliant market-ready test solutions.
Strategic partnerships with technology providers will help
translate classic laboratory tests into IVDR compliant 'kits'
de-risking scale-up and enabling rapid, low-cost expansion to other
laboratory sites globally.
The in-house development efforts to create the next generation
of point-of-care tests combined with mobile phone digital reader
will provide further opportunity to scale the business globally.
EDX Medical provides both 'laboratory tests' and 'point -of-care'
tests' the two largest sectors of the diagnostics industry:
Laboratory Tests Market
Modern molecular testing is a highly specialised field providing
detailed patient information from blood or tissue samples.
Laboratory tests are widely used to assist drug development and
select patients for clinical trials, for neonatal screening and in
cancer care due to the massive gains and cost savings of early
diagnosis in both cases.
The current diagnostic spend in this sector is estimated to be
around $2.5bn, forecast to reach over $15bn annual spend by 2030
due to the growth of out-sourcing by pharma, increasing acceptance
of biomarker data by regulators and continued cost reduction via
technology innovation, especially in the genomics sequencing
sector. The laboratory testing sector is dominated by a few large
companies who both provide products and technology to smaller
laboratories as well as offering laboratory services themselves.
EDX is familiar with these players and can add value to their core
offerings as well as provide agile market access in well-structured
partnerships.
The Point-of Care Test Market
Lateral flow testing is the dominant 'point-of-care' testing
technology and has grown globally but modestly over the years prior
to the Covid pandemic. Patient testing outside the hospital
accounted for approximately 90% of the pre-covid market, with use
in infectious diseases and fertility accounting for over $5bn
annual sales, growing to over $10bn by 2025. ( Lateral Flow Assays
Market - Global Forecast to 2025 | MarketsandMarkets
(Lateral Flow Diagnostic Tests Market 2021)
Despite improvements in components, innovation and performance
has been modest due to the historic self-certification of tests by
manufacturers, leading to a variable quality and a fragmented
marketplace. New regulations requiring improved product quality and
digital reporting provide an opportunity for consolidation and
rationalisation in the sector as barriers to entry increase. The
main areas of use for lateral flow tests currently include testing
for: Pregnancy & Fertility, Infectious Diseases, Cardiovascular
& Cholesterol, Drugs-of-Abuse, Food Safety & Environmental
Testing.
The prominent players in the global lateral flow testing market
are either US-domiciled (Abbott Laboratories, Hoffman-La Roche Ltd.
(Switzerland), Danaher Corporation, Becton, Dickinson, Thermo
Fisher Scientific) or more recent post-covid entrants from China,
Orient Gene, AN Biotech, Xiamen Boson and Getein Biotech, though
these have not yet demonstrated their plans for ongoing market
participation.
Competition and Market
Whilst most players only provide laboratory OR 'point-of-care'
tests, EDX competes in both sectors of the global in-vitro
diagnostics business, with the ambition to secure a significant
market position in Europe over the next five years. EDX is building
capabilities to compete strongly with different players in each
sector.
The market is seen as attractive but facing a period of change
driven by three main factors:
a. increased regulatory requirements leading to rationalisation
of the range of available (approved) tests in the UK and Europe
within 2-3 years;
b. increased familiarity with testing and its benefits/cost
effectiveness at both individual and population levels is
encouraging broad uptake and confidence amongst governments,
private healthcare providers and individuals.
c. significant technical improvements, reliability and ESG
credentials of lateral flow/point-of-care tests combined with
personal digital device interface for reading and reporting
data;
It is inevitable that others will also seek to consolidate in
the diagnostics sector and there will be competition for good
assets going forward.
Innovation & New Product Development - Key Driver of
Business Growth
EDX Medical is committed to providing its clients with
innovative products enabling them to deliver high quality,
cost-effective personalised patient care by investing in the
following areas:
Laboratory Testing Innovation
-- Improved sampling and extraction / processing for laboratory tests
The ability to optimise and standardise the extraction of
biological and genomic material from human samples such as blood
will provide savings in time (flexibility) and costs by
standardising laboratory procedures that will also meet future
regulatory requirements.
-- Translation of assays into IVDR-compliant 'kits' with strategic technology partner
EDX Medical and a strategic laboratory partner are working to
reduce several of the assays that EDX Medical intends to acquire,
into simplified 'kits' meeting the pending EU and UK regulations,
enabling rapid, cost-effective transfer and scale-up at 3(rd) party
or Group's own laboratories.
Point of Care Testing Innovation
-- Improving the Performance, Accuracy and Reliability of Tests
The acquisition of Torax Biosciences was the first step in our
journey to radically improve the performance and utility of 'point
of care' tests. The Group directors believe that the acquisition of
further proprietary technologies currently under negotiation will
enable EDX Medical to deliver the performance of laboratory testing
via a new proprietary 'point-of-care' product platform, supporting
strong brand positioning amongst health professionals and
ultimately providing robust devices suitable for consumer
self-testing in due course.
-- Digitalisation - The Growing Importance of Timely and
Accurate Data - Mobile solution
Over the next 3 or so years, the 'digital reader' segment is
forecast to grow at the highest rate in the lateral flow assays
market. Lateral flow digital readers are sufficiently sensitive to
enable better accuracy than the human eye and also to provide a
quantitative readout. The EDX Medical team developed and holds the
first CE- registration for use of a covid self-test in combination
with a mobile phone reader and algorithm. This knowledge and
experience is now enabling EDX Medical to rapidly design and
develop an internationally scalable mobile phone based digital
reader solution for a number of next generation 'point-of-care'
tests.
Reducing the Environmental Impact of Lateral Flow Testing
The expansion in use of LFTs demands greater consideration of
the environmental liability and disposal of such devices. In
October 2020, the NHS set itself the challenge of becoming the
world's first 'net zero' national health service to reduce use of
plastics, reduce carbon impact and to increase re-useable and
biodegradable materials. Used tests cannot be recycled, focussing
attention on the use of alternative primary materials with improved
ESG credentials. The next generation 'point-of-care' tests from EDX
Medical will combine environmentally acceptable components with the
above performance and digital improvements.
Meeting and Exceeding Regulatory Requirements
Covid-testing 'emergency use' legislation led to delays in the
adoption of planned new regulatory standards for in-vitro
diagnostics in UK and Europe, but we are now entering a new era. In
Europe, the former 'In-Vitro Diagnostics Device Directive' ("IVDD")
under which manufacturers primarily provided self-declaration of
conformity and registered tests by notification to national health
agencies, will be replaced by new 'In-Vitro Diagnostics
Regulations' ("IVDR"), which requires manufacturers or distributors
to apply for approval based on the submission of data on the
clinical performance of tests under controlled conditions and to
provide appropriate post-marketing surveillance measures. The final
implementation of the IVDR in Europe is now delayed until 2028,
allowing legacy CE-marked tests to continue to be sold during a
transitional period. EDX Medical is selectively and systematically
moving product validation and development efforts to satisfy the
future IVDR standards, which involves digital integration.
Key Strengths of the Business
The Directors believe that the strengths of the EDX Medical
business are based on:
-- its focus on clinical testing
-- risk-mitigation strategy based on both 'laboratory tests' and 'point of care' testing
-- integration of advanced biology with digital tools to meet
future performance and regulatory requirements;
-- prior experience of scale-up of laboratory and point-of-care
tests supply lines and capabilities;
-- prior experience of digital integration with mobile device
technology and CE-mark approval, and privileged access to an
experienced industry player in software as a service design and
deployment;
-- early/first-mover advantage in the consolidating the European diagnostics sector
-- ability to leverage its recent Covid experience across a
range of technologies including genomic sequencing by its in-house
team; and
-- experienced management and industry access / knowledge to
secure products and partnerships as well as finance and company
development.
Key Performance Indicators ("KPI")
The Directors consider that there were no specific key
performance indicators during the period. Loss for the period to 31
March 2023 was GBP3,709,363 which included transactions such as the
RTO and acquisition of Torax Bioscience Ltd. 2023/24 will see more
partnerships and revenue generation.
The future goals/ KPIs are expected to be:
-- Establishing UK revenues in Q1, 2024, with a number of private and public sector clients.
-- Completing the acquisition of a company with proprietary
expertise in point of care testing with potential to form an PoC
Innovation team and accelerate additional products for PoC
deployment by the Spring of 2024.
-- Securing exclusive licenses for performing and reporting
genomics tests in cancer by Q1 2024.
-- Establishing core IT and logistics partnerships to be
operational in the UK by the end of 2023.
-- Establishing patient sample collection partnership for UK and Nordics, Q1 2024.
-- Completing Nordics business plan and establishing commercial revenues by end Q1, 2024.
Section 172 Statement
The Directors understand the importance for the business and its
stakeholders to act in good faith in a way that best promotes the
success of EDX Medical and the benefit of shareholders as a whole,
in line with its responsibilities under Section 172 of the
Companies Act 2006. In applying this, they have had regard for the
interest of EDX stakeholders, whilst preserving EDX's reputation
and ensuring long-term sustainability of the Company.
The Board believes that considering our stakeholders in key
business decisions is fundamental to our ability to drive value
creation over the longer term. The Board considers its major
stakeholders to be its employees, its suppliers, customers, and
shareholders. The Directors continue to have regard to the
interests of the Company's employees and other stakeholders,
including the impact of its activities on the community, the
environment and the Company's reputation, when making
decisions.
Acting in good faith and fairly between members, the Directors
consider what is most likely to promote the success of the Company
for its members in the long term. In today's challenging economic
environment, balancing the needs and expectations of our
stakeholders has never been a more important task.
The Board regularly reviews our principal stakeholders and how
we engage with them. The stakeholder voice is brought into the
boardroom throughout the annual cycle through information provided
by management and also by direct engagement with stakeholders
themselves. The relevance of each stakeholder group may increase or
decrease depending on the matter or issue in question, so the Board
seeks to consider the needs and priorities of each stakeholder
group during its discussions and as part of its decision
making.
Our directors are bound by their duties under the Companies Act
2006 (the Act) to promote the success of the company for the
benefit of our members as a whole taking into account the factors
listed in Section 172 of the Act as follows:
-- the likely consequences of any decision in the long term;
-- the interests of the Company's employees;
-- the need to foster the Company's business relationships with
suppliers, customers and others;
-- the impact of the Company's operations on the community and the environment;
-- the desirability of the Company maintaining a reputation for
high standards of business conduct; and
-- the need to act fairly as between members of the Company.
Key decisions taken during the year under review, following
consultations with key stakeholders, include:
-- Collaboration with Tianjin Bioscience from November 2022 -
with this partnership, EDX has received two automated digital
chemiluminescence immunoassay instruments at the Company's
laboratory in Cambridge, enabling our clients to have access to a
range of cancer biomarker tests.
-- The acquisition of Torax Biosciences in February 2023 - the
Board considered the best interests of its shareholders, including
achieving value for money. We also considered our internal
stakeholders, such as employees, in terms of how such an
acquisition would affect the culture and skillsets of the
Company.
The table below acts as our s172(1) statement by setting out the
key stakeholder groups, their interests and how EDX Medical has
engaged with them over the reporting period. However, given the
importance of stakeholder focus, long-term strategy and reputation,
these themes are also discussed throughout this Annual Report.
Stakeholder Their interests How we engage
Our
suppliers * Workers' rights * Initial meetings and negotiations
* Supplier engagement and management to prevent modern * Seek preferred partnerships and collaborative
slavery development of new materials / assays
* Fair trading and payment terms * Enter into equitable, mutual non-disclosure
undertakings
* Sustainability and environmental impact
* Feedback from suppliers
* Collaboration
* Board approval on significant changes to suppliers
* Long-term partnerships
* Direct engagement between suppliers and specified
company contact
* Supplier payment
* Prompt payment of suppliers in line with supplier
payment policy
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Our
Investors * Comprehensive review of financial performance of the * Regular reports and analysis on investors and
business shareholders
* Business sustainability * Investor roadshows
* High standard of governance * Annual Report
* Success of the business * Company website
* Ethical behaviour * Shareholder circulars
* Awareness of long-term strategy and direction * AGM
* Stock exchange announcements
* Press releases
* Investor relations strategy for shareholder liaison
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Our clients
* Timely and informative end to end service * Customer support service
* Ease of access to information * Company reports
* Legal expertise * Press engagement
* Timeliness * Marketing and communications
* Safety * Customer surveys
* Data security * Annual Report
* AGM
* Company Website
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Regulatory
bodies * Compliance with regulations * Audits and inspections
* Worker pay and conditions * Company website
* Gender Pay * Stock exchange announcements
* Health and Safety * Annual Report
* Treatment of Suppliers * Direct contact with regulators
* Brand reputation * Compliance updates at Board Meetings
* Waste and environment * Consistent risk review
* Insurance
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Community
and * Sustainability * Oversight of corporate responsibility plans
Environment
* Human Rights * Introduction of CSR initiatives
* Energy usage * Workplace recycling policies and processes
* Recycling
* Waste Management
* Community outreach and CSR
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The Strategic Report was approved by the Board of Directors on 1
October 2023.
Dr Michael Hudson - Chief Executive Officer
1 October 2023
PRINCIPAL RISKS AND UNCERTAINTIES
1. Early-stage business
EDX Medical is at a pivotal but early stage of its development
and still faces a number of operational, strategic and financial
risks frequently encountered by pioneering companies creating new
markets or bringing new products to market. There is no certainty
that anticipated outcomes and sustainable revenue streams will be
achieved. Any one or more of these risks could have a material
adverse effect on the Enlarged Group's business, financial
condition and results of operations.
The Group's strategy is to generate value through the
application of digital technology in combination with diagnostics,
in most cases based on the accelerated development and validation
of novel products being developed with third parties. The Group's
future growth and prospects thus depends on its ability to develop,
source or acquire products which have commercial appeal; to secure
arrangements with suppliers and manufacturing partners on
appropriate terms; to secure arrangements with contract sales
organisations; to manage the growth of the business; and to
continue to expand and improve operational, financial and
management information, quality control systems and its
commercialisation function on a timely basis whilst at the same
time maintaining effective cost controls.
In addition, if the Enlarged Group is unable to convince key
opinion leaders or customers within its target market of the
efficacy and economic benefits of its products, it may not achieve
widespread adoption, which might have a material adverse effect on
the Group, its business, financial situation, growth and prospects,
including delays to anticipated revenues and profits.
While the Directors believe that there is a significant
potential market for the Group's products and solutions, there can
be no guarantee of commercial success which will be affected by
various factors, some of which are beyond the Group's control,
including: (i) the emergence of newer, more advanced products or
technologies; (ii) the cost of the products (as well as
competitors' products); (iii) regulatory requirements; (iv)
clinician and patient perceptions of the validity and utility of
the products; and (v) reluctance to adopt a new clinical approach.
If the market fails to develop or develops more slowly than
anticipated, the Group's commercial operations may not become
successful and profitable.
2. High reliance on founders and other key individuals
The Group will continue to be dependent upon the contribution of
founders, Professor Sir Christopher Evans and Dr Michael Hudson,
who have recently been joined by an enlarged group of highly
experienced managers with required skills. In order to be able to
achieve its plans the Group must recruit and retain suitably
qualified personnel. Failure to retain key staff and/or to recruit
suitability experienced staff when needed may have a material
adverse effect on the Group's business, financial condition and
results of operations.
3. Reliance upon Intellectual Property and know-how
The Group's future success may in part depend on its ability to
monetise protected intellectual property rights, particularly
patents relating to proprietary products. Obtaining and exploiting
patents in the life sciences industry is legally and technically
complex. EDX Medical has engaged an external law firm with
intellectual property expertise to review its patent strategy and
to review such rights of 3(rd) party product development partners
prior to commercial engagement.
The Directors are not aware of any infringement by the Group's
existing or planned products of the intellectual property rights of
any third parties. However, it is not economically viable to
establish the existence all third-party intellectual property
rights and no formal freedom to operate search has been conducted
on behalf of EDX Medical.
Adverse judgments against the Group may give rise to significant
liabilities in monetary damages, legal fees and/or an inability to
develop, market or sell products, either in all or in particular
territories using the affected Intellectual Property. All
commercial agreements with product partners include clear
limitation to such liability exposure for EDX Medical.
Some of the Group's intellectual property rights are not capable
of registration, such cases being embodied in 'know-how', trade
secrets or software copyright. Therefore, the Group is reliant on
internal processes and systems to protect such rights as far as
possible. Whilst the Directors believe that our systems and
processes afford adequate protection, there is a risk that they may
not prevent misappropriation of the Group's intellectual property.
No assurance is given that the Group will be able to acquire or
develop products which are capable of being protected, or that any
protection gained will be sufficiently broad in scope to exclude
competitors from producing similar competing technology.
There can be no guarantee that third parties will not manage to
independently develop products with similar functionality as the
Group's products without infringing the Group's intellectual
property rights, and there can be no guarantee that any such
competing products would not have a material adverse effect on
prospects of the Group.
4. Product Development
The Group will primarily engage in product development and
validation in order to meet the needs of customers and regulators
and will itself conduct limited research. The Group will be
involved in complex scientific areas in which the founders and
senior team have significant experience delays or failure to
produce results are commonplace in this industry.
The majority of the Group's products may require regulatory
approvals. If approval is required and is not successful or takes
longer than anticipated, there may be an adverse impact on the
Group's business, financial condition and results of operations.
Clinical validation trials are costly and cannot be guaranteed to
be successful.
5. Business Development and Growth
EDX Medical intends to grow its business through the development
and acquisition of new products, Intellectual Property or
technologies. However, the Group may be unable to find suitable
opportunities on attractive terms, or it may be unable to
consummate such opportunities as a result of competition from other
prospective acquirers, or due to its inability to finance such
acquisitions.
Failure to complete any such acquisitions may have an adverse
effect on the Group's business, results of operations, financial
condition and future prospects.
Should such acquisitions proceed, there can be no assurance that
the benefits from such acquisitions or licensing opportunities will
be realised to the extent, or within the time frame, that the
Directors may have anticipated.
In addition, these opportunities may involve a number of risks,
including the diversion of management's attention to unforeseen
difficulties in relation to an acquired product, unanticipated
costs and liabilities, the implementation of new operating
procedures and disruption of the Group's ongoing business at that
point in time.
Any delays or unexpected costs incurred in connection with
product acquisitions including significant one-time capital
expenditures, may result in dilutive issues of equity securities,
increased debt or other contingent liabilities, adverse tax
consequences, deferred consideration charges and the recording and
later amortisation of amounts related to deferred consideration and
certain purchased intangible assets. Any of which items could have
an adverse effect on the Group's business, results of operations,
financial condition and future prospects.
The Group is negotiating a number of agreements or
collaborations with third parties and may also in the future enter
into further ventures, partnerships or other collaborative
arrangements with third parties. There is a risk that such
arrangements may not be commercially successful, and it is possible
that the working relationship between the parties may break down,
that substantial costs and/or liabilities may be incurred in
attempting to deliver the product or service in question, and/or
that the arrangement may not yield the returns expected.
There is a risk that parties with which the Group has business
relationships, including its partners and those with which it
collaborates, may become insolvent or may otherwise become unable
or unwilling to fulfil their obligations as part of the
arrangement. This could detrimentally affect projects upon which
the parties are collaborating and could adversely affect the
Group's ability to deliver the products or services in question,
which may in turn have a negative impact upon its business,
financial position and prospects. It may also result in the Group
having to input further capital into the project in order to ensure
that delivery of the project remains unaffected. This extra cost
could in turn adversely affect the business, revenues and
profitability of the Group.
6. Potential Liabilities
EDX Medical's activities expose it to potential product
liability and professional indemnity risks that are inherent in the
development and manufacture of medical products and devices. EDX
Medical operates under a rigorous quality management system in
accordance with its UKAS accreditation under ISO-15189, which is
partly designed to mitigate such risks. Under such accreditation, t
he Group has a validated Business Continuity Plan' in place, the
objectives of which are to re-establish a normal business activity
level or a sustainable on-going business level in as short a period
as possible following any business interruption. In order to
achieve this, EDX maintains an accurate and current record of:
Ø the critical equipment, functions and activities of the
organisation
Ø required responses to anticipated risks to the operations of
the organisation
Ø detailed, prioritised and timetabled response to an emergency
situation
Ø the key roles, responsibilities and contacts to respond to an
emergency
If the Group produces any products which are defective, or which
are alleged to be defective, it may face a product liability claim
in respect of those products. In the UK and in member states of the
European Union, consumers who suffer property damage or personal
injury because of a defective product may be able to recover
compensation (up to certain prescribed limits) from the producer of
that product, without needing to prove the producer was at fault
for the defect.
Any serious quality or safety incident may result in adverse
reporting in the media, which in turn may damage the Group's public
relations and could potentially interrupt its business. This in
turn could affect the Group's financial condition, operational
results and prospects, including damage to the Group's reputation
and/or its brands.
The Group could incur costs in connection with any such
proceedings. The Group's existing and future relationships and
reputation could also be adversely affected with consequential
adverse effects on its business development, growth and revenue
prospects.
In addition, any product liability claim brought against the
Group, with or without merit, could result in the increase of the
Group's product liability insurance rates or the inability to
secure cover in the future. There can be no assurance that future
necessary insurance cover will be available to the Group at an
acceptable cost, if at all, or that, in the event of any claim, the
level of insurance carried by the Group or in the future will be
adequate or that a product liability or other claim would not have
an adverse impact on the Group's business, prospects, results of
operations and financial condition.
7. Regulatory Risks
EDX Medical customers generally provide regulated healthcare
services, and the Group will therefore be subject to relevant
industry regulation in the countries in which it operates. When
expanding beyond the UK, its activities in its new locales will be
subject to any relevant regulations of those countries. Should the
requirements of any country in which the Group is looking to market
its products not be satisfied, the Group may be restricted from
expanding its business in that country. The regulations governing
the Group's activities in the countries in which it operates may
also be subject to change without prior notice. Any such changes or
amendments may significantly impact the business of the Group.
Where regulatory approval is required, the timescales for
regulatory approval being given can be affected by various factors,
some of which are outside the Group's control, such as: changes to
regulatory requirements, trial recruitment rates, and the results
of clinical tests. Delays in regulatory approval could impact upon
the timeline for delivery of the product and ultimately have a
financial impact upon the Group and its prospects.
If any of the Group's partners or customers, or the Group
itself, were to breach applicable regulations, the Group may incur
substantial additional costs to remedy the breach and ensure future
compliance with the regulatory requirements in order to avoid
breaching the agreement with that partner or customer. The failure
of a third party properly to comply with their contractual duties
or regulatory obligations could have an adverse effect on the
Group's ability to generate profits as well as its ability to
source premium products. Further, any action taken by a third party
that is detrimental to the Group's reputation could have a negative
impact on the Group's ability to register its trademarks and other
forms of Intellectual Property protection, and/or market and sell
its products.
8. Reputational Risk
EDX's reputation is central to its future success in terms of
the products and services it provides, the relationships it
currently has and intends to develop in the future with
distributors, partners and customers, the way in which it conducts
its business and the financial results which it achieves. The Group
may face reputational risk arising from a number of factors,
including failure to deal appropriately with legal and regulatory
requirements, ethical practices, fraud, privacy, record-keeping and
other trading practices, as well as market risks inherent in the
Group's business.
The failure, or allegations or perceptions of failure, of the
Group to deal appropriately with legal and regulatory requirements,
privacy, record-keeping, sales and trading practices or its failure
to meet the expectations of the press and the general public, as
well as its customers, suppliers, employees, shareholders and other
business partners may have a material adverse effect on the
Enlarged Group's reputation, business, results of operations,
financial condition and future prospects.
9. Additional Financing
The Group expects to incur significant costs in connection with
development, commercialisation and Intellectual Property protection
of its products and technology. The Group's financing requirements
depend on numerous factors, including the rate of market acceptance
of its products, its ability to attract distributors and customers
and other factors that may be outside of the Group's control. The
Group may require additional financing in the medium to long term,
whether from equity or debt sources, to finance working capital
requirements or to finance its growth through future stages of
development.
Any additional share issue may have a dilutive effect on
Shareholders, particularly if they are unable to, or choose not to,
subscribe by taking advantage of rights of pre-emption that may be
available. Debt funding may require the lender to take security
over the assets of the Group, which may be exercised if the Group
were to be unable to comply with the terms of the relevant debt
facility agreement. Failure to obtain adequate future financing on
acceptable terms, if at all, could cause the Group to delay, reduce
or abandon its development programmes or hinder commercialisation
of its product portfolio and could have a material adverse effect
on the Group's business.
10. Counterparty risk
There is a risk that parties with whom the Enlarged Group trades
or has business relationships may become insolvent, in which case
this could have an adverse impact on the Group's business, revenue,
financial condition, profitability, results, prospects and/or
future operations. This risk may be higher where the counterparty
is located or registered outside the United Kingdom, as the costs
of enforcing the Group's rights to payment or performance may be
higher than would be the case in the United Kingdom.
11. Competition
The life sciences market has become more competitive.
Established categories are becoming crowded as they mature and
there has been a significant increase in smaller companies who are
entering the industry. Even though the Existing Directors and
Proposed Directors believe that the Enlarged Group has a
competitive advantage in this space, the Enlarged Group may face
competition from organisations which have greater capital
resources. This could hinder the Enlarged Group's ability to
compete successfully in the market. In addition, the Directors
anticipate that the Enlarged Group will face increased competition
in the future as new companies enter the market and alternative
products, strategies and technologies become available. Increased
competition from new and existing companies, including as a result
of their aggressive pricing, may have a material adverse effect on
the Enlarged Group's financial results. If the Enlarged Group's
business model is successful it may be replicated by other
organisations, some of which may have greater resources than the
Enlarged Group.
12. Reliance on information technology systems
EDX Medical is highly reliant on its information technology
systems for the processing, transmission and storage of electronic
data relating to its research, operations and financial reporting.
A significant portion of communications among the Group's
personnel, partners, customers and suppliers relies on the
efficient performance of information technology systems. The
success of the Group is dependent on its technical capabilities,
and it relies to a significant extent on the efficient and
uninterrupted operation of its own and the systems of its suppliers
and partners. Despite the Group's security measures and back-up
systems, its information technology and infrastructure may be
vulnerable to attacks by hackers, computer viruses or malicious
code or may be breached due to employee error, malfeasance or
affected by other disruptions, including as a result of natural
disasters or telecommunications breakdown or other reasons beyond
the Group's control. If one or more such events occur, it could
cause material disruptions or delays to the Group's operations and
result in the loss of revenues as well as confidential information
and know-how, which could expose the Group to liability and cause
its business and reputation to suffer. The Group may also be
required to expend significant capital and other resources to
alleviate problems caused by such breaches or failures. Any of the
foregoing could have a material adverse effect on the Group's
prospects, results of operations and financial condition.
The Group mitigates this risk by having robust systems including
firewalls, multi factor authentication and other internal
controls.
Governance
Overview
As Chairman of the Board of Directors, it is my responsibility
to ensure that EDX has both sound corporate governance and an
effective Board. As Chairman, my responsibilities include
effectively leading the Board, supervising the Group's corporate
governance approach, engaging with shareholders, and ensuring that
excellent information flows freely and in a timely way between the
Executive and Non-Executive Directors. EDX has agreed to follow the
Corporate Governance Principles of the Quoted Companies Alliance
(QCA Code), which requires companies to adopt a 'comply or explain'
explain approach in respect of the application of guidance
contained within. This report refers to the framework of these
recommendations and describes how we used them. The Board elievees
that the Company conforms with the QCA Code in every way.
The Board elievees that corporate governance is more than just a
set of guidelines; rather it is a framework which underpins the
core values for running the business in which we all believe,
including a commitment to open and transparent communications with
stakeholders. We believe that good corporate governance improves
long-term success and performance. We will provide annual updates
on our compliance with the QCA Code.
QCA COMPLIANCE PRINCIPLES
1 - ESTABLISH A STRATEGY AND BUSINESS MODEL WHICH PROMOTE
LONG-TERM VALUE FOR SHAREHOLDERS
The Board of Directors has determined that the Company's growth
strategy will deliver the greatest medium and long-term value to
its shareholders.
EDX Medical provides individuals and organisations with
reliable, high-performance tools and services for predicting and
managing disease. The Company creates, develops and validates
digitally enabled diagnostic products and services to help predict
disease risk, inform clinical decision-making and accelerate the
development of new medicines in the areas of cancer, heart disease,
neurology and infectious diseases.
The Company's plan for growth is centred on extending and
improving the quality of life through smart testing. In addition,
EDX is actively introducing a range of innovative new diagnostic
tests to address a range of illnesses. These digitally enabled
products and services will set new standards in risk assessment
enable better clinical decision-making and accelerate the
development of new medicines in the areas of cancer, heart disease,
and infectious disease.
EDX will also continue to create value through acquisition,
partnerships and strategic investments. In November 2022, we
announced a collaboration with Tianjin Bioscience Diagnostic
Technology Co. Ltd to improve access to cost-effective and reliable
tests for a range of cancers in the UK and Europe. In February
2023, we were pleased to acquire Torax Biosciences Limited to
improve our innovation and product development capabilities in the
growing field of 'point of care' testing outside of the laboratory.
We have announced additional strategic investments post the period
under review and will continue to seek additional strategic
opportunities to add value and scale.
2 - SEEK TO UNDERSTAND AND MEET SHAREHOLDER NEEDS AND
EXPECTATIONS
We believe that a mutually trusting relationship between
shareholders and the Board is vital for a well-governed
organisation to fulfil its commercial goals. As a result, the Board
provide clear and transparent information to shareholders about our
financial position and strategy.
EDX seeks to provide effective shareholder communications
through periodic financial reports, along with Regulatory News
Service announcements and trading updates published on our website:
https://edxmedical.co.uk/news-media/.
The Board prioritises reviewing the efficacy of shareholder
interactions on a regular basis and ensuring that efforts are taken
to increase engagement based on shareholder feedback. The Board
also interacts with shareholders through official meetings such as
the Annual General Meeting (AGM), which allow the Board to meet,
listen to, present and provide information to shareholders. We are
looking forward to welcoming shareholders to our inaugural AGM as a
listed business and encourage shareholders to attend and ask
questions of the Board.
3 - TAKE INTO ACCOUNT WIDER STAKEHOLDER AND SOCIAL
RESPONSIBILITIES AND THEIR IMPLICATIONS FOR LONG-TERM SUCCESS
We recognise that the Board is responsible not only to its
shareholders, but to a wider group of internal (members of staff)
and external (customers, suppliers, regulators and others)
stakeholders. EDX acts with integrity and values its people, from
its members of staff to those who form the communities with which
it engages. The Board has put in place a range of processes and
systems to ensure there is close oversight and contact with its key
resources and relationships.
The Board is kept up to date on wider stakeholder engagement
feedback in order to be informed about stakeholder viewpoints on
crucial issues for them and our business. Due to the current size
and stage of development of the Company, we consider our impact on
our stakeholder network and wider society to be minimal.
At Board meetings, the Directors consider their responsibilities
under s.172 of the Companies Act 2006 in all decisions taken, as
set out in the s. 172 statement in the Strategic Report.
4 - EMBED EFFECTIVE RISK MANAGEMENT, CONSIDERING BOTH
OPPORTUNITIES AND THREATS, THROUGHOUT THE ORGANISATION
The Board is responsible for determining the nature and extent
of significant risks that may have an impact on our operations, and
for maintaining a risk management framework.
The Board has carried out a robust assessment of the principal
risks and uncertainties affecting our business, considered how
these could affect operations, performance and solvency and what
mitigating actions, if any, can be taken. The Risk Management
Report in this Annual Report outlines the principal risks to the
business.
The Audit Committee has been delegated responsibility for
monitoring risk management systems, to ensure an effective system
of financial controls is maintained to support timely and accurate
reporting of financial information for review by the Board and the
Group's external auditors
5 - MAINTAIN THE BOARD AS A WELL-FUNCTIONING, BALANCED TEAM LED
BY THE CHAIR
The Board is currently comprised of a non-executive Chairman,
Jason Holt, two Executive Directors, Michael Hudson and Christoper
Evans, and a Senior Independent Director, Trevor Jones, who has no
business dealings or material relationship with the Group apart
from this appointment and is therefore deemed independent by the
Board. Biographies of the Board can be found on the company website
at
https://edxmedical.co.uk/wp-content/uploads/2022/11/Company-Directors-2022-11-14.pdf
.
We note that the QCA Code advises that there be two independent
non-executive directors, however we feel that the current
composition of the Board is appropriate and suitable given the size
and stage of development of the Company. As EDX grows, we will
consider the merits of an additional independent non-executive
director.
The Board of Directors has a duty and legal obligation to
further the Company's interests while also establishing corporate
governance frameworks. The Chairman is ultimately responsible for
the strategy and quality of corporate governance.
Directors are required to commit as much time as deemed
reasonably appropriate to conduct their duties. Both Executive
Directors are full-time employees of the Company. For the year to
31 March 2023, the Directors' attendances at Board and Committee
meetings are as follows:
Board Audit Committee Remuneration
Committee
Prof Sir Christoper
Evans OBE(1) 2/2 - 0/0
Jason Holt(1) 2/2 0/0 2/2
Michael Hudson(1) 2/2 - -
Prof Trevor Jones
CBE(1) 2/2 0/0 2/2
Donald Stewart(2) 0/1 0/0 0/0
Alexander Barblett(2) 1/1 0/0 0/0
John Taylor(2) 1/1 - -
(1) Appointed 14 November 2022
(2) Resigned 14 November 2022
The audit committee did not meet formally in the year as it was
re-formed at the time of the RTO and the first formal meeting was
post year end. Conflicts of interest are monitored and dealt with
effectively. The Board is aware of its Directors' other
responsibilities and interests, and any changes are communicated to
and, where appropriate, agreed upon by the rest of the Board.
6 - ENSURE THAT BETWEEN THEM THE DIRECTORS HAVE THE NECESSARY
UP-TO-DATE EXPERIENCE, SKILLS AND CAPABILITIES
The Company believes that the Directors have wide-ranging
experience in relevant sectors, providing the ability to deliver
the Company's strategy for the benefit of shareholders over the
medium and long term. They also have an extensive network of
relationships to reach key decision-makers to help achieve their
strategy.
EDX's Company Secretary, ONE Advisory Limited, assist with
ensuring that Board procedures are followed and that the Company
complies with all applicable rules, regulations and obligations
governing its operation, as well as helping the Chairman maintain
excellent standards of corporate governance. ONE Advisory also
provides support and assistance with MAR compliance and shareholder
meetings.
There is no formal process to keep Directors' skill sets up to
date, however Directors are encouraged to undertake additional
training where required. The Company's lawyers, auditors, company
secretary and corporate advisor provide regular updates on
governance, financial reporting and the AQSE Growth Market Access
Rulebook and the Board is able to obtain advice from other external
bodies when necessary.
The Executive Directors will be evaluated against predefined
targets and their personal and professional development
requirements will be addressed as part of our performance and
development assessment process. The Chairman will be encouraged to
discuss any personal growth or training requirements with the Board
of Directors
7 - EVALUATE BOARD PERFORMANCE BASED ON CLEAR AND RELEVANT
OBJECTIVES, SEEKING CONTINUOUS IMPROVEMENT
The Remuneration Committee is responsible for reviewing the
performance of the Board. Internal evaluation of the Board, the
Committees and individual Directors will be undertaken on a regular
basis in the form of peer appraisal and discussions to determine
the effectiveness and performance against targets and objectives.
As a part of the appraisal, the appropriateness and opportunity for
continuing professional development, whether formal or informal,
are discussed and assessed.
8 - PROMOTE A CORPORATE CULTURE THAT IS BASED ON ETHICAL VALUES
AND BEHAVIOURS
The Board recognises that their decisions regarding strategy and
risk will impact the corporate culture of the Company as a whole,
which in turn will impact the Company's performance. The Directors
are aware that the tone and culture set by the Board will impact
all aspects of the Company and the way that advisers or other
representatives behave. The corporate governance arrangements that
the Board has adopted are designed to instil a firm ethical code to
be followed by Directors, advisers, and representatives alike
throughout the organisation.
The Company strives to achieve and maintain an open and
respectful dialogue with its professional advisers, regulators,
suppliers, and other stakeholders. Therefore, the importance of
sound ethical values and behaviours is crucial to the ability of
the Company to successfully achieve its corporate strategy. The
Directors consider that, at present, the Company has an open
culture facilitating comprehensive dialogue and feedback and
enabling positive and constructive challenge. The Company has
adopted a code for Directors' dealings in securities which is
appropriate for a company whose securities are traded on the AQSE
Growth Market and is in accordance with the requirements of the UK
Market Abuse Regulation.
9 - MAINTAIN GOVERNANCE STRUCTURES AND PROCESSES THAT ARE FIT
FOR PURPOSE AND SUPPORT GOOD DECISION- MAKING BY THE BOARD
The Company's governance structures are appropriate for a
company of its size. The Board also meets regularly, and the
Directors continuously maintain an informal dialogue between
themselves. The Chairman is responsible for the effectiveness of
the Board as well as primary contact with shareholders, while the
execution of the Company's investment strategy is a matter for all
Board members. The Board delegates authority to two Committees to
assist it with accomplishing its business objectives and maintain a
strong system of internal control and risk management. The
Committees meet separately from the Board. The current Governance
structure is outlined below:
Audit Committee
The Audit Committee comprises of Jason Holt as chairperson and
Sir Christopher Evans as a member. The Committee has primary
responsibility for monitoring the quality of internal controls and
ensuring that the financial performance of the Group is properly
measured and reported on.
Remuneration Committee
The Remuneration Committee is chaired by Professor Trevor Jones,
with Jason Holt as a member. The Committee reviews the performance
of the Board and make recommendations to the Directors on matters
relating to their remuneration and terms of employment.
The remuneration committee is also responsible for making
recommendations to the Directors on proposals for the granting of
share awards and other equity incentives pursuant to any share
award scheme, LTIP or equity incentive scheme in operation from
time to time.
Considering the size of the board of directors of the Company,
the Directors do not consider it necessary to establish a
Nomination Committee, however the Directors will keep this under
review.
10 - COMMUNICATE HOW THE COMPANY IS GOVERNED AND IS PERFORMING
BY MAINTAINING A DIALOGUE WITH SHAREHOLDERS AND OTHER RELEVANT
STAKEHOLDERS.
The Board is committed to maintaining good communication and
having constructive dialogue with its shareholders in compliance
with regulations applicable to companies quoted on AQUIS Stock
Exchange which operates the AQSE Growth Market. Shareholders are
encouraged to attend the Company's Annual General Meeting, where
they will be given the opportunity to interact with the
Directors.
Investors also have access to current information on the Company
through its website, https://edxmedical.co.uk and via any of the
Directors, who are available to answer investor relations
enquiries.
The Board maintains that if a resolution is passed by a general
meeting with 20% or more votes against it, the Board will
investigate the reason for the result and take appropriate action
if necessary.
Jason Holt
Chairman
1 October 2023
The Audit Committee comprises Jason Holt as chairman and
Professor Sir Christopher Evans as the other member. The Committee
has primary responsibility for monitoring the quality of internal
controls and ensuring that the financial performance of the Group
is properly measured and reported on. The Committee is expected to
meet at least twice a year to review annual reporting and interim
reporting and at any other times as deemed necessary.
Role and Responsibilities
Pursuant to its terms of references, the Committee is
responsible for, inter alia, the following:
-- Ensuring the Company has followed appropriate accounting
standards and made appropriate estimates and judgments.
-- Reviewing the adequacy and effectiveness of internal controls.
-- Reviewing the effectiveness of the external auditor,
including their appointment or removal.
-- Determining the remuneration of the external auditor.
-- Monitoring any significant changes to accounting policies.
Significant issues considered by the Audit Committee
Signi ficant issues considered by the Audit Committee included
the RTO of EDX Medical Ltd into EDX Medical Group plc which
included overseeing the process, including the creation of
documents and supply of information to the legal teams and the RTO
accountants.
Also considered along with the CEO, was the acquisition and
integration of Torax Bioscience Ltd which included but not limited
to review of Due Diligence work, review of Shareholder docs and
implications on financial aspects of the business.
The Committee continually reviews any risks financial or
macro-economic or otherwise to the organisation.
Risk Management and Internal Controls
The Committee reviews the effectiveness of the Company's
internal financial controls and risk management systems. On at
least an annual basis, it will review the practical implementation
of such controls. As the Company laboratory activities are
regulated under ISO accreditation, the Head of Quality, Regulatory
Affairs and Compliance provides ongoing internal supervision of
operational risks and mitigation, and reports are submitted to the
Audit Committee on a routine basis.
Whilst there is currently not considered a need for an internal
audit function due to the size and stage of development of the
Company and the adequacy of present controls, the Committee will
keep under continual review the necessity of such a role.
External Audit
The Committee meets periodically with the Company's external
auditor, without the presence of management, to discuss key audit
matters and review audit findings reports. Any recommendations made
by the external auditor are considered and, if appropriate, acted
upon.
PKF Littlejohn LLP were appointed as auditor in 2022. In line
with guidance, EDX will rotate auditor through an audit tender
process no later than 2031 and rotate audit partner by 2027.
Auditor Independence
The Committee maintains responsibility for reviewing and
monitoring the external auditor's independence and objectivity as
well as their qualifications, expertise and the effectiveness of
the audit process, taking into consideration relevant UK and other
relevant professional and regulatory requirements. The Committee
have considered the auditor's independence and continues to believe
that PKF Littlejohn LLP is independent within the meaning of all UK
regulatory and professional requirements and the objectivity of the
audit engagement partner and audit staff are not impaired.
Jason Holt
Chairman of the Audit Committee
1 October 2023
The Directors present their report with the financial statements
of the company for the period ended 31 March 2023.
Principal Activities and Business Review
The principal activities of the Company during the period under
review were the development of innovative digital diagnostic
products and services, enabling cost effective and timely delivery
of personalised treatment for cancer, heart disease, neurology and
infectious diseases.
The requirements of the business review have been considered
within the Strategic Report.
Results and dividends
An analysis of the Company's performance is contained within the
Strategic Report. The Company's income statement is set out in the
Consolidated Statement of Comprehensive Income and shows the result
for the year.
The Directors have not recommended the payment of a dividend in
respect of the financial period to 31 March 2023 (2022: GBP0.00 per
Ordinary Share).
Directors
The Directors and brief biographies are detailed on the company
website at
https://edxmedical.co.uk/wp-content/uploads/2022/11/Company-Directors-2022-11-14.pdf.
The Directors of the Company during the period were:
Prof Sir Christoper Evans OBE Appointed on 14 November 2022
Jason Holt Appointed on 14 November 2022
Michael Hudson Appointed on 14 November 2022
Prof Trevor Jones CBE Appointed on 14 November 2022
Donald Stewart Resigned on 14 November 2022
Alexander Barblett Resigned on 14 November 2022
John Taylor Resigned on 14 November 2022
In accordance with the Articles of Association, all current
directors, having been appointed during the year under review,
retire by rotation and being eligible offer themselves for
re-election at the Company's forthcoming AGM.
Director's emoluments
Directors' emoluments during the year under review are set out
in the Remuneration Committee Report.
Directors' Interests
The beneficial interests of the Directors in the Ordinary Shares
of the Company on 31 March 2023 are set out below:
Ordinary Shares
--------------------- ---------------------
Prof Sir Christoper
Evans OBE 124,000,000 42.48%
Michael Hudson 20,000,000 6.85%
Jason Holt 4,400,000 1.37%
As at 31 March 2022:
Warrants Ordinary Shares
------------------------------- ----------- ------------------
Michael Hudson - - -
Prof Sir Christoper Evans OBE - - -
Jason Holt - - -
Alexander Barblett 1,050,000 1,050,000 3.8%
John Taylor 1,050,000 1,150,000 3.8%
Donald Stewart 1,050,000 1,250,000 4.2%
Substantial shareholders
In addition to the Directors' shareholdings, the Company had
been notified of the following shareholding of 3% or more in the
ordinary share capital of the Company at 29 September 2023:
Number of shares Percentage of issued
share capital
------------------------------- ----------------- ---------------------
Bridgemere Securities Limited 32,720,000 11.2%
Countywide Developments
Ltd 20,000,000 6.9%
West Coast Capital Holdings
Ltd 16,000,000 5.5%
Intrinsic Capital 14,802,647 5.1%
As at the period end, 31 March 2023:
Number of shares Percentage of issued
share capital
------------------------------- ----------------- ---------------------
Bridgemere Securities Limited 7,720,000 3.08%
Countywide Developments
Ltd 20,000 7.97%
West Coast Capital Holdings
Ltd 16,000,000 6.38%
Intrinsic Capital 15,966,897 6.37%
Share Capital
Details of the changes in the share capital of the Company
during the period are set out in Note 25.
Employees
Given the limited number of employees, the Company undertakes a
tailored approach to employee engagement based on the needs and
skills of each employee and having regard to employees' interests
in decisions taken by the Board. As the Company grows, EDX will
look to introduce more formal employee engagement mechanisms.
Engagement with suppliers, customers and others in a business
relationship with the company
Details of the Company's engagement with its stakeholders during
the year are set out in the Section 172 statement in the Strategic
Report.
Energy and Carbon Reporting
The Company is aware that it needs to measure its operational
carbon footprint in order to limit and control its environmental
impact. However, given the very limited nature of its operations
during the year under review, it has not been practical to measure
its carbon footprint and intends to do so in time for its next
annual report.
Statement of corporate governance arrangements
The Company has adopted the QCA Corporate Governance Code. See
the Corporate Governance Report for more details.
Political and charitable donations
The Company made GBP25,000 of charitable donations during the
period ended 31 March 2023 (2022: GBP0).
The Company made no political donations during the year ended 31
March 2023 (2022: GBP0).
Post-Balance Sheet Events
See Note 32.
Share Buy Backs
The Company did not acquire any of its own shares during the
year under review.
Financial Instruments
Disclosures in respect of the Company policy regarding financial
instruments and risk management are contained in Note 28 to the
financial statements.
Directors' third-party indemnity provisions
The Company has taken the opportunity to purchase Director's
& Officers Liability Insurance.
Statement of disclosure to auditors
So far as each Director is aware, there is no relevant audit
information of which the Company's auditors are unaware.
Each Director has taken all the steps that they ought to have
taken as a Director in order to make himself or herself aware of
any relevant audit information and to establish that the Company's
auditor is aware of that information.
PKF Littlejohn LLP has expressed their willingness to continue
in office and a resolution to re-appoint them will be proposed at
the annual general meeting.
Going Concern Basis
The Board continues to adopt the going concern basis to the
preparation of the financial statements as it is confident of the
Group continuing operations into the foreseeable future.
The Board's forecasts for the Group include due consideration
for contracted minimum revenues, potential future capital in-flows,
continued operating losses, projected increase in cash-burn of the
Group for a minimum period of at least twelve months from the date
of approval of these financial statements.
However, the Group forecasts assume that further equity
fundraising will be required in the next twelve months in order to
implement its growth strategy and operate as a going concern.
Although the entity has had past success in fundraising and
continues to attract interest from investors, making the Board
confident that such fundraising will be available to provide the
required capital, there can be no guarantee that such fundraising
will be available and, accordingly, this constitutes a material
uncertainty over going concern, which the auditors have made
reference to in their audit report.
Notwithstanding the above, the Board has considered various
alternative operating strategies should these be necessary in the
light of fundraising not being available and actual trading
performance not matching the Group's forecasts given current
macro-economic conditions and is satisfied that such revised
operating strategies could be adopted, if and when necessary. This
includes the ability to call upon Sir Christopher Evans, a director
of the Company, to extend sufficient loans. Therefore, the
Directors consider the going concern basis of preparation is
appropriate.
The financial statements have been prepared on a going concern
basis and do not include the adjustments that would be required
should the going concern basis of preparation no longer be
appropriate.
This report was approved by the Board on 1 October 2023 and
signed on its behalf.
Jason Holt
Chairman
1 October 2023
Chairman's Introduction
I am pleased to present our Remuneration Committee report for
the period ended 31 March 2023.
The Remuneration Committee comprises of myself, Prof Trevor
Jones CBE, as Chairman and Jason Holt as the other member. Other
Directors may attend by invitation of the Committee, but it is a
fundamental principle that no individual should be able to
participate in discussions about their own remuneration. The
Committee's main responsibilities are to make recommendations to
the Board as to the remuneration of the Directors and the terms of
their services. The Committee also makes recommendations to the
Board relating to incentive schemes for all employees pursuant to
share options schemes or otherwise.
Role and Responsibilities
The Committee aims to meet at least twice a year and at any
other times as required. Pursuant to its terms of reference, its
responsibilities include:
-- Determining the broad framework for the remuneration of the Directors.
-- Determining the policy for and scope of pension arrangements of the Directors.
-- Approving the implementation of share options schemes,
subject to the approval of the Board, granting new share options
and overseeing other incentive arrangements for the Directors.
-- Determining the base salary and bonus arrangements of the Directors.
Share options
As outlined on admission on 14 November 2022, EDX intends to
establish a Long-Term Incentive Plan (LTIP) in order to attract,
retain and incentivise individuals who can deliver long-term value
for the Company. As set out in the admission document, the Chief
Executive is due to be granted 2,046,666 options at an exercise
price of GBP0.06, pursuant to the LTIP, vesting over a period of 18
months in total. The options at the date of this report have yet to
be granted.
The Company intends for the LTIP not to exceed 10% of the
Company's issued Ordinary Shares from time to time without the
prior approval of the shareholders.
Directors' remuneration
For the year to 31 March 2023.
Director Salary Pension Other Bonus Share-based Total
GBP contributions benefits GBP payments GBP
GBP GBP GBP
Prof Sir
Christoper
Evans OBE 361,253 NIL NIL NIL NIL 361,253
-------- --------------- ---------- ------ ------------ --------
Jason Holt 46,734 NIL NIL NIL NIL 46,734
-------- --------------- ---------- ------ ------------ --------
Michael
Hudson 222,471 NIL NIL NIL NIL 222,471
-------- --------------- ---------- ------ ------------ --------
Prof Trevor
Jones CBE 13,931 NIL NIL NIL NIL 13,931
-------- --------------- ---------- ------ ------------ --------
Donald
Stewart 17,896 NIL NIL NIL NIL 18,636
-------- --------------- ---------- ------ ------------ --------
Alexander
Barblett 18,636 NIL NIL NIL NIL 18,636
-------- --------------- ---------- ------ ------------ --------
John Taylor 18,636 NIL NIL NIL NIL 18,636
-------- --------------- ---------- ------ ------------ --------
For the year to 31 March 2022.
Director Salary Pension Other Bonus Share-based Total
GBP contributions benefits GBP payments GBP
GBP GBP GBP
Donald
Stewart 30,000 NIL NIL NIL NIL 30,000
------- --------------- ---------- ------ ------------ -------
Alexander
Barblett 30,000 NIL NIL NIL NIL 30,000
------- --------------- ---------- ------ ------------ -------
John Taylor 30,000 NIL NIL NIL NIL 30,000
------- --------------- ---------- ------ ------------ -------
Remuneration Policy
EDX's remuneration policy is designed to promote the long-term
strategy and sustainable success of the business. We are committed
to applying the recommendations of the QCA Corporate Governance
Code, QCA Remuneration Committee Guide and the Investment
Association's Principles of Remuneration. Clawback provisions are
in place in the event of financial misstatement or misconduct.
The policy of the Remuneration Committee is to ensure that the
Executive Director, Michael Hudson is fairly rewarded for his
individual contribution to the Company's overall performance and to
provide a competitive remuneration package to employees including
Long-Term option awards incentive plans (LTIP) to attract and
retain and motivate individuals of the experience and competence
required to ensure that the Company is managed successfully in the
interest of shareholders.
Directors' remuneration is made up of basic salary, benefits, a
discretionary cash bonus, LTIPs and pension arrangements.
We consider feedback from investors and encourage engagement
from our shareholders on remuneration matters.
Non-Executive Director's fee policy
The policy for the remuneration of the Non-Executive Directors
(NED) is to attract NED with a broad range of relevant experience
and skills to oversee the implementation of the Company's strategy
and are paid in 12 equal monthly instalments during the year.
Notice periods are 1 month, and notice can be given by the Company
or the NEDs pursuant to their service contracts.
Executive Directors' service contracts
The executive directors have entered into service contracts with
the Company which contain notice periods of 1 month. The service
contracts are available to inspect at the Company's registered
office.
Conclusion
This report is intended to provide shareholders with sufficient
information to judge the impact of decisions taken by the
Remuneration Committee and to assess whether remuneration packages
for Directors are fair in the context of the performance of the
Company.
The Remuneration Committee is mindful of shareholder views, and
we believe that our Directors' remuneration Policy is aligned with
the achievement of the Company's business objective and the
interest of shareholders
The Directors' Remuneration Policy and Statement of Remuneration
were approved by the Remuneration Committee and by the Board on 27
July 2022 and this Remuneration Committee Report approved on 1
October 2023.
Professor Trevor Jones CBE
Chairman of the Remuneration Committee
The Directors are responsible for preparing the directors'
report, strategic report, annual report and the financial
statements in accordance with applicable laws and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare Company financial statements in accordance
with UK adopted international accounting standards ("IFRSs") and in
accordance with the requirements of the Companies Act. Under
company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs of the Company and of the profit or loss of
the Company for that year.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable UK adopted international accounting
standards have been followed, subject to any material departures
disclosed and explained in the financial statements ; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose, with reasonable accuracy, at any time
the financial position of the Company and enable them to ensure
that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the EDX
Medical Group Plc website. The Company is compliant with the Aquis
Growth Market Rulebook regarding the Company's website.
Professor Sir Christopher Evans
Director
1 October 2023
Opinion
We have audited the financial statements of EDX Medical Group
Plc (the 'parent company') and its subsidiaries (the 'group') for
the period ended 31 March 2023 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated and Parent
Company Statements of Financial Position, the Consolidated and
Parent Company Statements of Changes in Equity, the Consolidated
and Parent Company Statements of Cash Flows and notes to the
financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international
accounting standards and as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 31
March 2023 and of the group's loss for the period then ended;
-- the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
-- the parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards and as applied in accordance with the provisions of the
Companies Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which
indicates that conditions exist that may cast doubt on the group's
ability to continue as a going concern. The group incurred a net
loss of GBP3,709,000, incurred operating cash outflows of
GBP1,163,000 and is not expected to generate positive cash outflows
in the 12 months from the date at which these financial statements
were signed. As stated in note 2 these events or conditions
indicate that a material uncertainty exists that may cast
significant doubt on the parent company's ability to continue as a
going concern. Our opinion is not modified in respect of this
matter.
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the group's and parent
company's ability to continue to adopt the going concern basis of
accounting included:
-- Reviewing the cashflow forecast and budgets for the period to
30 November 2025 and the corresponding key assumptions used. This
included but was not limited to consideration of the following:
funding arrangements and related cashflows, planned acquisitions/
expansions and capital expenditures;
-- Evaluating the group's procedures and controls for preparing
and reviewing the budgets and cash flow forecasts covering at least
the going concern period;
-- Assessing and challenging the key assumptions in the
underlying cashflow forecasts, including performing a sensitivity
analysis on plausible changes to the cashflow forecasts;
-- Discussions with management regarding future plans and
funding to support the operations of the group and parent company;
and
-- Reviewing management's going concern paper and ensuring the
underlying key assumptions are congruent to the cashflow forecast
provided, including testing the mathematical accuracy and
appropriateness of the model used to prepare the cashflows and
agreeing the cashflows to supporting documentation or
reasonableness in comparison to historic cashflows.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing
and extent of our audit procedures.
The materiality applied to the group financial statements as a
whole was GBP100,000. This was calculated based upon 2.5% of group
expenditure, which was considered to be the most appropriate
benchmark as the majority of the activity in the period was
research which is expensed. There was no group materiality in the
prior year, as the acquisitions of the subsidiaries occurred during
the period.
We use performance materiality to reduce to an appropriately low
level, the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining
sample sizes. Performance materiality of GBP70,000 was set at 70%
of materiality due to the assessed risk and our accumulated
knowledge of the group.
Materiality for the parent company financial statements as a
whole was set at GBP70,000 (2022: GBP11,500). This was calculated
based upon 2.5% of the parent company's gross assets but capped
below group materiality (2022: 5% of loss before tax). The reason
for the change is due to the acquisitions during the year, which
mean the investments in the subsidiaries are the most significant
balances within the parent company financial statements.
Performance materiality was set at GBP49,000 (2022: GBP8,000) based
on 70% of materiality (2022: 70%) for the same reasons as for the
group.
Whilst materiality for the financial statements as a whole was
set at GBP100,000, each significant component of the group was
audited to an overall materiality of GBP70,000, with performance
materiality set at 70%.
We agreed to report to the audit committee any corrected or
uncorrected identified misstatements exceeding GBP5,000 for the
group and GBP3,500 (2022: GBP575) for the parent company, in
addition to other identified misstatements that warranted reporting
on qualitative controls.
We applied the concept of materiality both in planning and
performing the audit, and in evaluating the effect of misstatement.
No significant changes have come to light during the audit which
required a revision of our materiality for the financial statements
as a whole.
Our approach to the audit
Our audit is risk based and is designed to focus our efforts on
the areas at greatest risk of material misstatement, aspects
subject to significant management judgement as well as greatest
complexity, risk and size.
As part of designing our audit, we determined materiality, as
above, and assessed the risk of material misstatement in the
financial statements. In particular, we looked at areas involving
significant accounting estimates and judgement by the directors and
considered future events that are inherently uncertain. These areas
of estimate and judgement included:
-- the recoverability of internally generated intangible assets
and investments in subsidiary undertakings, as the future research
and development results are inherently uncertain;
-- the accounting for the reverse takeover and acquisition in
the year and key judgements used in this regard;
-- the accounting for equity instruments including the
convertible loan notes and share based payments which were assessed
as an area which involved significant judgements by management.
We also addressed the risk of management override of internal
controls, including among other matters consideration of whether
there was evidence of bias that represented a risk of material
misstatement due to fraud.
We have performed an audit on the financial information of two
financially significant components and tested certain account
balances for one component identified to be a risk significant.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. In addition to
the matter described in the Material uncertainty related to going
concern section we have determined the matters described below to
be key audit matters to be communicated in our report.
Key Audit Matter How our scope addressed this
matter
Reverse Takeover Accounting
and Disclosure (Note 4)
==================================================================
On 21 November 2022, the parent Our work in this area included:
company agreed to acquire the
issued and to be issued share * Obtaining the share purchase agreement in respect of
capital of EDX Medical Limited the transaction to identify key terms and to confirm
for a consideration of LIR12,000,000 ownership;
to be satisfied by the issue
of 200,000,000 Consideration
Shares at the placing price. * Obtaining management's accounting paper and reviewing
Although the transaction resulted and challenging key assumptions, inputs, data and
in EDX Medical Limited becoming method applied in the determination of the fair
a wholly owned subsidiary of value;
the parent company, the transaction
was considered to constitute
a reverse takeover ("RTO") as * Reviewing the accounting treatment and accounting
the previous shareholders of entries in relation to the transaction against the
EDX Medical Limited now own a requirements of UK adopted IAS;
substantial majority of the ordinary
shares of the Company and the
Board of Directors of the Company * Reperforming the RTO accounting and testing the
are principally comprised of accuracy of the parent company and EDX Medical
the Directors of EDX Medical Limited trial balance as at the date of acquisition;
Limited. and
Accounting for an RTO is a complex
process and requires management
to make key judgements. As a
result, the accounting for the * Ensuring that disclosures in the financial statements
RTO is considered a key audit are in accordance with the financial reporting
matter. framework.
==================================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the group and parent company financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read the
other information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial period for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
the parent company and their environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities, the directors are responsible for the preparation
of the group and parent company financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements,
the directors are responsible for assessing the group and the
parent company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do
so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the group and parent company
and the sector in which they operate to identify laws and
regulations that could reasonably be expected to have a direct
effect on the financial statements. We obtained our understanding
in this regard through discussions with management and industry
research;
-- We obtained an understanding and evaluated the design and
implementation of controls that address fraud risks of the group
and parent company;
-- We determined the principal laws and regulations relevant to
the group and parent company in this regard to be those arising
from:
o the Companies Act 2006;
o UK tax legislation;
o Employment Law;
o Anti-Bribery and Money Laundering Regulations;
o Compliance with certain ISO certifications held; and
o General Data Protection Regulation.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the group and parent company with those laws and regulations. These
procedures included, but were not limited to:
o Enquiring of management regarding potential
non-compliance;
o Reviewing legal and professional fees to understand the nature
of the costs and the existence of any non-compliance with laws and
regulations;
o Reviewing minutes of meetings of those charged with governance
and Regulatory News Service announcements; and
o Reviewing accounting ledgers for any unusual journal entries
which may indicate non-compliance.
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that the potential for management
bias was identified in relation to the areas of judgement outlined
in the 'Our approach to the audit section,' and also in revenue
recognition. Audit testing was designed to address each of these
areas.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias;
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business; and
reviewing bank statements during the period to identify any large
and unusual transactions where the business rationale is not
clear.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Adam Humphreys (Senior Statutory Auditor) 15 Westferry
Circus
For and on behalf of PKF Littlejohn LLP
Canary Wharf
Statutory Auditor
London E14 4HD
1 October 2023
Note Period ended
31 March 2023
GBP
Continuing operations
Revenue 5 3,864
Cost of sales (3,894)
-------------
Gross loss (30)
Other income 50
Administrative expenses 7 (3,582,633)
Operating loss 7 (3,582,613)
Finance expense 6 (126,750)
Loss before taxation (3,709,363)
Taxation 11 -
-------------
Loss for the period (3,709,363)
Other comprehensive income
Other comprehensive income for the period -
Total comprehensive loss for the period attributable to owners of the parent (3,709,363)
=============
Earnings per share from continuing operations attributable to owners of the parent:
Basic and diluted loss per share (pence) 13 (3.25)
The notes on pages 47 to 83 form part of these financial
statements.
Note 31 March
2023
ASSETS GBP
Non-current assets
Intangible assets 15 91,322
Property, plant and equipment 16 422,126
Right-of-use asset 20 422,943
------------
Total non-current assets 936,391
------------
Current assets
Trade and other receivables 18 382,445
Other current assets 20 270,710
Cash and cash equivalents 21 116,176
------------
Total current assets 769,331
------------
Total assets 1,705,722
============
EQUITY AND LIABILITIES
Equity
Share capital 25 2,525,000
Share premium 25 1,929,781
Shares to be issued 26 200,000
Warrant reserve 26 17,567
Merger relief reserve 26 6,545,833
Reverse acquisition reserve 26 (8,4 61,500)
Retained losses 26 (3,709,363)
------------
Total equity (952,682)
------------
Non-current liabilities
Lease liability 23 262,775
Deferred tax 12 9,804
Borrowings 29 11,354
------------
Total non-current liabilities 283,933
------------
Current liabilities
Trade and other payables 22 718,869
Convertible loan - debt 24 1,389,268
Convertible loan - derivative 24 93,887
Borrowings 29 27,165
Lease liability 23 145,282
Total current liabilities 2,374,471
------------
Total liabilities 2,658,405
------------
Total equity and liabilities 1,705,722
============
The consolidated financial statements on pages 40 to 46 were
approved by the board of Directors on 1 October and signed by
Professor Sir Christopher Evans as Director. The notes on pages 47
to 83 form part of these financial statements.
Company number 13277385
Note 31 March 31 March
2023 2022
ASSETS GBP GBP
Non-current assets
Investments 17 8,562,500
Property, plant and equipment 16 - 832
---------- ---------
Total non-current assets 8,562,500 832
========== =========
Current assets
Trade and other receivables 18 1, 337,236 8,068
Financial assets at fair value through profit or loss 19 600,000 -
Cash and cash equivalents 21 14,518 1,027,114
---------- ---------
Total current assets 1,951,754 1,035,182
========== =========
Total assets 10,514,254 1,036,014
========== =========
EQUITY AND LIABILITIES
Equity
Share capital 25 2,525,000 300,000
Share premium 25 1,929,781 918,933
Shares to be issued 26 200,000 -
Merger relief reserve 26 6,545,833 -
Warrant reserve 26 17,567 17,567
Retained losses 26 (824,925) (253,408)
---------- ---------
Total equity 10,393,256 983,092
========== =========
Current liabilities
Trade and other payables 22 120,998 52,922
Total current liabilities 120,998 52,922
========== =========
Total liabilities 120,998 52,922
========== =========
Total equity and liabilities 10,514,254 1,036,014
========== =========
As permitted by Section 408 of the Companies Act 2006 the
Company is exempt from the requirements to present its own
statement of comprehensive income. The Company's loss for the
financial year was GBP571,517 (2022: GBP253,408).
The financial statements on pages 40 to 46 were approved by the
board of Directors on 1 October 2023 and signed on its behalf by
Professor Sir Chrisopher Evans.
Professor Sir Christopher Evans - Director
The notes on pages 47 to 83 form part of these financial
statements.
Merger Warrant
relief reserve Reverse
Shares to reserve acquisition Retained Total
Share capital Share premium be issued reserve losses equity
GBP GBP GBP GBP GBP GBP GBP GBP
------------- ------------- ---------- --------- -------- ------------ ----------- ------------
Balance at
incorporation
of EDX
Medical Ltd 50,000 - - - - - - 50,000
------------- ------------- ---------- --------- -------- ------------ ----------- ------------
Loss for the
period - - - - - - (3,709,363) (3,709,363)
------------- ------------- ---------- --------- -------- ------------ ----------- ------------
Total
comprehensive
loss
for the
period - - - - - - (3,709,363) (3,709,363)
------------- ------------- ---------- --------- -------- ------------ ----------- ------------
Recognition of
plc equity
at
acquisition
date 300,000 918,933 - - 17,567 - - 1,236,500
------------- ------------- ---------- --------- -------- ------------ ----------- ------------
Equity of EDX
Ltd recycled
to reverse
acquisition
reserve (50,000) - - - - 50,000 - -
Reverse
acquisition 2,000,000 - - 6,500,000 - (8,511,500) - (11,500)
Issue of
placing
shares 200,000 1,000,000 - - - - - 1,200,000
Issue of
adviser
shares 8,333 41,667 - - - - - 50,000
Cost of issue
of shares - (30,819) - - - - - (30,819)
Issue of
shares for
consideration
of subsidiary 16,667 - - 45,833 - - - 62,500
Proceeds
received in
advance
of share
issuance - - 200,000 - - - - 200,000
------------- ------------- ---------- --------- -------- ------------ ----------- ------------
Total
transactions
with
owners 2,525,000 1,929,781 200,000 6,545,833 17,567 (8,461,500) - 2,756,681
------------- ------------- ---------- --------- -------- ------------ ----------- ------------
As at 31 March
2023 2,525,000 1,929,781 200,000 6,545,833 17,567 (8,461,500) (3,709,363) (952,682)
============= ============= ========== ========= ======== ============ =========== ============
The notes on pages 47 to 83 form part of these financial
statements.
Shares to be Merger relief Warrant Retained
Share capital Share premium issued reserve reserve losses Total equity
GBP GBP GBP GBP GBP GBP GBP
Balance at
incorporation 2 - - - - - 2
Loss for the
period - - - - - (253,408) (253,408)
------------- ------------- ------------- ------------- ------------- ------------- ------------
Total
comprehensive
loss for the
period - - - - - (253,408) (253,408)
------------- ------------- ------------- ------------- ------------- ------------- ------------
,
Issue of
shares 299,998 1,000,000 - - - - 1,299,998
Costs of issue
of shares - (81,067) - - - - (81,067)
Share-based
payment
expense - - - - 17,567 - 17,567
------------- ------------- ------------- ------------- ------------- ------------- ------------
Total
transactions
with owners 299,998 918,933 - - 17,567 - 1,236,498
As at 31 March
2022 300,000 918,933 - - 17,567 (253,408) 983,092
------------- ------------- ------------- ------------- ------------- ------------- ------------
Loss for the
year - - - - - (571,517) (571,517)
------------- ------------- ------------- ------------- ------------- ------------- ------------
Total
comprehensive
loss for the
year - - - - - (571,517) (571,517)
------------- ------------- ------------- ------------- ------------- ------------- ------------
Issue of
shares 2,000,000 - - 6,500,000 - - 8,500,000
Acquisition of
subsidiary 16,667 - - 45,833 - - 62,500
Issue of
placing
shares 200,000 1,000,000 - - - - 1,200,000
Costs of issue
of shares - (30,819) - - - - (30,819)
Issue of
adviser
shares 8,333 41,667 - - - - 50,000
Proceeds
received in
advance of
share issues - - 200,000 - - 200,000
------------- ------------- ------------- ------------- ------------- ------------- ------------
Total
transactions
with owners 2,225,000 1,010,848 200.000 6,545,833 - - 9,981,681
------------- ------------- ------------- ------------- ------------- ------------- ------------
As at 31 March
2023 2,525,000 1,929,781 200,000 6,545,833 17,567 (824,925) 10,393,256
============= ============= ============= ============= ============= ============= ============
The notes on pages 47 to 83 form part of these financial
statements.
31 March 2023
Note GBP
Cash flows from operating activities
Loss before taxation (3,709,363)
Adjustments for:
Amortisation - Right of use asset 20 154,533
A mortisation - Intangibles 14 1,266
Depreciation 15 124,995
Impairment of related party receivable 9 103,684
Loss on disposal of property, plant & equipment 15 633
Deemed cost of listing in reverse acquisition 4 721,245
F air value loss on convertible loan 6 93,887
Finance e xpense 6 32,863
Share-based payment - settled expenses 25 50,000
Net cash used in operating activities before changes in working capital (2,426,256)
-------------
Changes in working capital
Decrease in trade and other receivables 391,505
Increase in trade and other payables 399,262
I ncrease in supplies and materials 2 0 472,101
Net cash used in operating activities (1,163,388)
-------------
Cash flow from investing activities
Cash acquired with subsidiary 13 7 76
C ash acquired on reverse acquisition 9 5,756
Net cash flow used in investing activities 96,532
-------------
Cash flow from financing activities
Proceeds from issue of share capital 22 1, 200,000
Cost of issue of share capital 22 (30,819)
Cost of convertible loan note (15,786)
P roceeds received in advance of share issue 25 200,000
Receipts from related parties 31 145,000
Repayment of borrowings (118,027)
Other interest paid (1,166)
Lease interest paid 23 (26,643)
Principal paid on leases 23 (169,527)
-------------
Net cash generated from financing activities 1,183,032
-------------
Increase in cash and cash equivalents in the period 116,176
Cash and cash equivalents at the end of the period 116,176
=============
Major non-cash transactions
On 14 November 2022, the Company issued 200,000,000 shares of
0.1p each at a price of 0.425p per share to the shareholders of EDX
Medical Limited. as part of the RTO acquisition for a total of
GBP8,500,000. See note 4.
On 27 February 2023, the Company also issued 1,666,667 shares of
0.1p each at a price of 0.375p per share for a total value of
GBP62,500 for the acquisition of the 100% issues share capital of
Torax Biosciences Limited. See note 13
The Company also issued 833,333 shares of 0.1p each at a price
of 0.6p per share for a total value of GBP50,000 for the settlement
of services rendered by advisors to the Company.
In July 2022 the Group issued 1,400,000 convertible redeemable
loan notes ("CLNs") of GBP1.00 totalling GBP1,400,000 to replace an
outstanding liability due to Christopher Evans. The original
liability was in relation to the Company's acquisition of assets
from Christopher Evans that totalled GBP1,404,923. Only GBP200,000
of cash was received from the convertible loan note. See note
21.
The notes on pages 47 to 83 form part of these financial
statements.
31 March 2023 31 March 2022
Note GBP GBP
Cash flows from operating activities
Loss before taxation (571,517) (253,408)
Adjustments for:
Depreciation 15 200 366
Loss on disposal of property, plant & equipment 15 632 -
Share-based payment 50,000 -
Net cash used in operating activities before changes in working capital (520,685) (253,042)
------------- -------------
Changes in working capital
Decrease/(increase) in trade and other receivables 17 301 (8,068)
Increase in trade and other payables 19 68,077 52,922
------------- -------------
Net cash generated used in operating activities (452,307) (208,188)
------------- -------------
Cash flow from investing activities
Investment in property, plant and equipment - (1,198)
I nvestment in subsidiaries 17 (1, 329,470) -
Payments for financial assets at fair
value through profit or loss (600,000) -
------------- -------------
Net cash flow used in investing activities (1,929,470) (1,198)
------------- -------------
Cash flow from financing activities
Proceeds from issue of share capital 22 1, 200,000 1,300,000
Cost of issue of share capital 22 (30,819) (63,500)
P roceeds received in advance of share issue 22 200,000 -
------------- -------------
Net cash generated from financing activities 1,369,181 1,236,500
------------- -------------
( Decreases)/ increase in cash and cash equivalents in the year (1,012,596) 1,027,114
Cash and cash equivalents at beginning of year 1,027,114 -
Cash and cash equivalents at the end of the year 14,518 1,027,114
============= =============
Non-cash transaction
Non-cash transactions are as disclosed in the Group Statement of
Cash Flow, with the exception of the GBP1.4m CLN which was issued
by the subsidiary.
The notes on pages 47 to 83 form part of these financial
statements.
1 General information
EDX Medical Group Plc (the "Company") is a public limited
company, limited by shares (not guarantee) and is incorporated and
domiciled in the UK. The address of the registered office is
210-211 Milton Road, Cambridge, England, CB4 0WA The registered
number of the Company is 13277385. The Company changed its name
from TECC Capital Plc to EDX Medical Group Plc on 11 November 2022.
The consolidated financial statements consolidate those of the
Company and its subsidiaries (together the "Group"). The principal
activity of the Group is that of creating innovative health testing
solutions and developing biological and digital technologies to
improve the detection of diseases and disorders.
2 Summary of significant accounting policies
Basis of preparation
The consolidated and company financial statements have been
prepared in accordance with UK-adopted International Accounting
Standards ("IFRS") and in conformity with the requirements of the
Companies Act 2006.
The consolidated and Company financial statements are presented
in GBP ("GBP"), which is the subsidiaries' and Company's functional
and presentational currency.
The Company has guaranteed the liabilities of the following
subsidiaries in order that they qualify from audit under Section
479A of the Companies Act 2006, in respect of the year ended 31
March 2023:
-- EDX Medical Limited
-- Torax Biosciences Limited
Basis of consolidation
The consolidated financial statements consolidate the financial
statements of the Company and the results of its subsidiary
undertakings EDX Medical Limited and Torax Biosciences Limited,
made up to 31 March 2023.
Subsidiaries are entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
On 14(th) November 2022, the Company completed a reverse
acquisition of EDX Medical Limited, a company registered in England
and Wales. Further information about the transaction is disclosed
in note 4.
Although the consolidated financial information has been issued
in the name of EDX Medical Group Plc, the legal parent, it
represents in substance continuation of the financial information
of the legal subsidiary, EDX Medical Limited. EDX Medical Limited
was incorporated on 28(th) February 2022, and the financial
information represents a long period from incorporation to 31 March
2023 and there is no comparative period. As a result, no
comparative information has been shown for any of the consolidated
financial statements.
On 17 February 2023, the Company acquired 100% of the share
capital of Torax Bioscience Limited in exchange for shares in the
Company. This acquisition was accounted for using the acquisition
method of accounting in accordance with IFRS 3 Business
Combinations.
2 Summary of significant accounting policies (continued)
Principles of consolidation and equity accounting
Subsidiaries
Subsidiaries are entities over which the group has control. The
group controls an entity where the group exposed to, or has rights
to, variable returns from its involvement when the entity has the
ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the group. They are
deconsolidated from the date that control creases.
The acquisition method of accounting is used to account for
business combinations by the group (see note 13).
Inter-company transactions, balances and unrealised gains on
transaction between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence
of an impairment of the transferred asset. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with policies adopted by the group.
New accounting standards, interpretations or amendments adopted
by the Group
The adoption of the following mentioned amendments, which were
all effective for years beginning on or after 1 January 2022, have
not had a material impact on the Group's and Company's financial
statements:
-- Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use;
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments
to IFRS 1, IFRS 9, IFRS 16 and IAS 41);
-- Amendments to IFRS 3 References to Conceptual Framework);
-- Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
-- Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current and
Amendments to IAS 1: Classification of Liabilities as Current or
Non-current - Deferral of Effective Date
-- Amendments to IAS 1 Presentation of Financial Statements and
IFRS Practice Statement 2: Disclosure of Accounting Policies
-- Amendments to IAS 8 Accounting policies, Changes in
Accounting Estimates and Errors -Definition of Accounting
Estimates
-- Amendments to IAS 12 Income Taxes - Deferred Tax Related to
Assets and Liabilities arising from a Single Transaction
New standards, interpretations and amendments not yet
effective
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the Group has decided
not to adopt early.
The following amendments are effective for the period beginning
on or after 1 January 2023:
-- IFRS 17 Insurance Contracts
-- IFRS 9 Financial Instruments
-- IAS 1 Presentation of Financial Statements (Amendment - Disclosure of Accounting Policies)
-- IAS 8 Accounting Policies, Changing in Accounting Estimates
and Errors (Amendment - Definition of Accounting Estimate)
-- IAS 1 Presentation of Financial Statements (Amendment -
Non-current Liabilities with Covenants.
2 Summary of significant accounting policies (continued)
The following amendments are effective for the period beginning
on or after 1 January 2024:
-- IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback)
-- IFRS 7 Financial Instruments (Amendment - Supplier Finance Arrangements)
-- IAS 1 Presentation of Financial Statements (Amendment -
Classification of Liabilities as Current or Non-current)
-- IAS 1 Presentation of Financial Statements (Amendment -
Non-current Liabilities with Covenants)
-- IFRS 10 Consolidated Financial Statements (Amendment - Sale
or Contribution of Assets between an investor and its Associate or
Joint Venture)
The Group is currently assessing the impact of these new
accounting standards and amendments.
Going concern
The Board continues to adopt the going concern basis to the
preparation of the financial statements as it is confident of the
Group continuing operations into the foreseeable future.
The Board's forecasts for the Group include due consideration
for contracted minimum revenues, potential future capital in-flows,
continued operating losses, projected increase in cash-burn of the
Group for a minimum period of at least twelve months from the date
of approval of these financial statements.
However, the Group forecasts assume that further equity
fundraising will be required in the next twelve months in order to
implement its growth strategy and operate as a going concern.
Although the entity has had past success in fundraising and
continues to attract interest from investors, making the Board
confident that such fundraising will be available to provide the
required capital, there can be no guarantee that such fundraising
will be available and, accordingly, this constitutes a material
uncertainty over going concern, which the auditors have made
reference to in their audit report.
Notwithstanding the above, the Board has considered various
alternative operating strategies should these be necessary in the
light of fundraising not being available and actual trading
performance not matching the Group's forecasts given current
macro-economic conditions and is satisfied that such revised
operating strategies could be adopted, if and when necessary. This
includes the ability to call upon Sir Christopher Evans, a director
of the Company, to extend sufficient loans. Therefore, the
Directors consider the going concern basis of preparation is
appropriate.
The financial statements have been prepared on a going concern
basis and do not include the adjustments that would be required
should the going concern basis of preparation no longer be
appropriate.
Investment in subsidiaries
In the Company financial statements, equity investments in the
Company's subsidiaries are stated at cost, which is the fair value
of the consideration paid, less any impairment provision.
Revenue recognition
IFRS 15 Revenue from Contracts with Customers is a
principle-based model of recognising revenue from contracts with
customers. It has a five-step model that requires revenue to be
recognised when the control over goods and services is transferred
to the customer The underlying principle is a five-step approach to
identify a contract, determine performance obligations, the
consideration and the allocation thereof, and timing of revenue
recognition. IFRS 15 also includes guidance on the presentation of
assets and liabilities arising from contracts with customers, which
depends on the relationship between Group's performance and the
customers' payment.
2 Summary of significant accounting policies (continued)
Revenue recognition (continued)
The Group sells various medical items including IVDs, antigen
tests, blood glucose tests and visible latex to customers both in
the U.K and internationally. Revenue is recognised at a point in
time when the relevant performance obligation is satisfied. The
Group considers the control over goods is transferred to the
customer at the point of shipment. The performance obligation is
considered to be satisfied when the Group dispatches a product to a
customer. As the Group considers the significant risks and rewards
of ownership of the goods to be transferred at this point, revenue
is measured at this point and does not give rise to any contract
assets or liabilities.
Revenue is measured at fair value of the consideration received,
excluding discounts, rebates and sales taxes or duty.
Production-based taxes are not included in revenue, they are paid
on production and recorded within cost of sales.
Net finance expense
The Group's finance income and finance costs include interest
income, interest expense on lease liabilities and interest expenses
on borrowings and gains/losses on revaluation of derivative in
respect of convertible note. Interest income on cash deposits is
recognised in the Statement of Comprehensive Income as it is
earned.
Current and deferred t axation
Income tax credit or expense represents the sum of the current
tax and deferred tax. Tax is recognised in the Statement of
Comprehensive Income except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in
equity.
Current tax is recognised as the amount of corporation tax
payable in respect of taxable profit for the current or past
reporting periods using tax rates and laws that have been enacted
or substantively enacted by the reporting date.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes except for when they arise on the initial recognition of
goodwill. Deferred tax assets are recognized for unused tax losses,
unused tax credits and deductible temporary differences to the
extent that it is probable that future taxable profits will be
available against which they can be used. Unrecognised deferred tax
assets are reassessed at each reporting date and recognised to the
extent that it has become probable that future taxable profits will
be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of acquisition of
businesses over the fair value of new assets acquired. It is
initially recognised as an asset at cost and is subsequently
measured at cost less accumulated impairment losses. Goodwill is
considered to have an indefinite useful life.
Other intangible assets
An intangible asset, which is an identifiable non-monetary asset
without physical substance, is recognised to the extent that it is
probable that the expected future economic benefits attributable to
the asset will flow to the Group and that its cost can be measured
reliably, the asset is deemed to be identifiable when it is
separable or when it arises from contractual or other legal
rights.
Other intangible assets that are acquired by the Group are
stated at cost less accumulated amortisation and accumulated
impairment losses.
2 Summary of significant accounting policies (continued)
Intangible assets (continued)
Amortisation is charged on a straight-line basis and is included
in administrative expenses in the statement of comprehensive
income. Intangible assets with an indefinite life and goodwill are
systematically tested for impairment at each balance sheet date.
The Group has no assets with indefinite lives, other than goodwill,
throughout the reporting period. Other intangibles are amortised
from the date they are available for use.
The rates applicable, which represent the Directors' best
estimate of the useful economic life, are:
- Technology - 10 years straight line
- Trademarks - 10 years straight line
Useful lives are reconsidered if circumstances relating to the
asset change or if there is an indication that the initial estimate
requires revision. Gains and losses of disposals are determined by
comparing the proceeds with the carrying amount and are recognised
in the consolidated statement of comprehensive income.
Impairment of tangible and intangible assets and right-of-use
assets
Assets that are subject to depreciation and amortisation are
assessed at each reporting date to determine whether there is any
indication that the assets are impaired. Where there is any
indication that an asset may be impaired, the carrying value of the
asset is tested for impairment. An impairment loss is recognised
for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Goodwill is tested annually for impairment, or more frequently
is events or changes in circumstances indicate that they might be
impaired. An impairment loss is recognised for the amount by which
the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of asset's fair value less
costs of disposal and value-in-use. The value-in-use is the present
value of the estimated future cash flows relating to the asset
using a pre-tax discount rate specific to the asset to which the
asset belongs. Assets that do not have independent cash flows are
grouped together to form a cash-generating unit (CGU). For the
purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows
(CGUs).
Supplies and materials
Supplies and materials acquired or generated for the use of
research and development for use in the production process or for
general operational purposes that do not meet the definition on
inventory are recognised as assets on the balance sheet when the
Group has control over the assets, meaning that the Group has the
ability to use them in its production process or operational
activities, it is probable that future economic benefits will flow
to the entity as a result of these assets and the cost of the
assets can be reliably measured. Supplies and materials are
initially measured at cost less any attributable costs incurred to
bring the assets to a condition for use.
Leases
At inception of a contract, the Group assess whether a contract
is, or contains, a lease. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
To assess whether a contract conveys the right to control the
use of an identified asset, the Group assesses whether: a
physically distinct asset can be identified; and the Group has the
right to obtain substantially all of the economic benefits from the
asset throughout the period of use and has the ability to direct
the use of the asset over the lease term, being able to restrict
the usage of third parties as applicable.
2. Summary of significant accounting policies (continued)
Leases (continued)
The Group applies the short-term lease recognition exemption to
those leases that have a lease term of twelve months or less from
the commencement date and do not contain a purchase option. It also
applies the low-value asset recognition exemption to leases of
assets below GBP5,000. Lease payments on short-term leases and
leases of low-value assets are recognised as an expense on a
straight-line basis over the lease term.
Lease liabilities are initially measured at the present value of
the lease payments that are due over the lease term, discounted
using the Group's incremental borrowing rate. The Group's
incremental borrowing rate is the rate that would have to be paid
for a loan of a similar term, and with similar security, to obtain
an asset of similar value. The Group's borrowing rate is
appropriate as all Group companies are able to borrow from the
Group company.
On initial recognition, the carrying value of the lease
liability also includes:
-- amounts expected to be payable under any residual value guarantee;
-- the exercise price of any purchase option granted in favour
of the Group if it is reasonably certain to take that option;
and
-- any penalties payable for terminating the lease, if the term
of the lease has been estimated on the basis of the termination
option being exercised.
Right-of-use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
-- lease payments made at or before commencement of the lease;
-- initial direct costs incurred; and
-- the amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased
asset.
Subsequent to initial measurement, lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term. When
the Group revises its estimate of the term of any lease (because,
for example, it reassesses the probability of a lessee extension or
termination option being exercised), it adjusts the carrying amount
of the lease liability to reflect the payments to make over the
revised term, which are discounted at the same discount rate that
applied on lease commencement. An equivalent adjustment is made to
the carrying value of the right-of-use asset, with the revised
carrying amount being amortised over the remaining (revised) lease
term.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks and other short-term highly liquid investments that
are readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
2. Summary of significant accounting policies (continued)
Borrowings
All borrowings are initially recorded at the amount of proceeds
received, net of transaction costs. Borrowings are subsequently
carried at amortised cost with the difference between the proceeds,
net of transaction costs and the amount due on redemption, being
recognised as a charge to the income statement over the period of
the relevant borrowing.
Interest expense is recognised on the basis of the effective
interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
Financial instruments
Financial assets
The Group classifies its financial assets in the following
measurement categories:
-- Those to be measured at amortised cost
-- Those to be measured subsequently at fair value through profit or loss
At initial recognition, the Group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit of loss ("FVPL"), transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed
in the statement of comprehensive income.
Subsequent measurement of debt instruments depends on the
Group's business model for managing the asset and the cash flow
characteristics for the asset. There are two measurement categories
into which the Group classifies its debt instruments:
Amortised cost
Assets that are held for collection of contractual cash flows,
where those cash flows represent solely payments of principal and
interest, are measured at amortised cost. Interest income from
these financial assets is included in finance income using the
effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in the statement of
comprehensive income.
Financial assets held at amortised costs comprise of all loans
and other receivables. Financial assets do not comprise
prepayments.
FVPL
Assets that do not meet the criteria for amortised cost are
measured at FVPL. A gain or loss on a debt investment that is
subsequently measured at FVPL is recognised in the statement of
comprehensive income presented net within other gains/(losses) in
the period in which it arises.
Financial assets held at FVPL comprise convertible loan
notes
Assets that are held for collection of contractual cash flows,
where those cash flows represent solely payments of principal and
interest, are measured at amortised cost. Interest income from
these financial assets is included in finance income using the
effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in the statement of
comprehensive income.
2. Summary of significant accounting policies (continued)
Financial instruments (continued)
Financial liabilities
The Group classifies its financial liabilities in the following
measurement categories:
-- Those to be measured at amortised cost
-- Those to be measured subsequently at fair value through profit or loss
Management determines the classification of its financial
liabilities at initial recognition. At initial recognition, the
Group measures a financial liability at its fair value plus, in the
case of a financial liability not at FVPL, transaction costs that
are directly attributable to the acquisition of the financial
liability. Transaction costs of financial liabilities carried at
FVPL are expensed to the statement of comprehensive income.
Financial liabilities are classified as measured at amortised
cost or FVPL. A financial liability is classified as at FVPL if it
is classified as held-for-trading, it is a derivative or it is
designated as such on initial recognition. Financial liabilities at
FVPL are measured at fair value and net gains and losses, including
any interest expense, are recognised in the statement of
comprehensive income. Other financial liabilities are subsequently
measured at amortised cost using the effective interest method.
Interest expense and foreign exchange gains and losses are
recognised in profit or loss.
The Group's financial liabilities held at amortised costs
comprise trade payables and other short-dated monetary liabilities
in the consolidated statement of financial position. Trade payables
and other short-dated monetary liabilities are initially recognised
at fair value and subsequently carried at amortised cost using the
effective interest rate method. For the purpose of each financial
liability, interest expense includes initial transaction costs and
any premium payable on redemption, as well as any interest or
coupon payable while the liability is outstanding. Unless otherwise
indicated, the carrying values of the Group's financial liabilities
measured at amortised cost represents a reasonable approximation of
their fair values.
The Group's financial liabilities held at FVPL comprise the
embedded derivative in conjunction with the ordinary host liability
of the convertible loan note. The derivative element has been
measured at fair value using the Black
Scholes option pricing model. All instruments for which fair
value is recognised or disclosures are categorised within the fair
value hierarchy, which costs of the following 3 levels:
- Quoted prices (unadjusted), in active markets for identical assets or liabilities (level 1)
- Inputs other than quoted prices included in level 1 that are
observable for the asset or liability, either directly or
indirectly (level 2);
- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs).
The financial liabilities held at FVPL falls under level 3 of
the hierarchy.
2. Summary of significant accounting policies (continued)
Fair value measurement
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For
non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
Assets and liabilities measured at fair value are classified
into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements.
Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest
level of input that is significant to the fair value
measurement.
Research and Development expenditure
Research and development expenditure that does not meet the
criteria of an intangible asset is recognised as an expense as
incurred. Development costs are only capitalised after technical
and commercial feasibility of the asset for sale or use have been
established. The Group must intend to complete the asset and either
use it or sell it and be able to demonstrate how the asset will
generate future economic benefit. To date, all activities have been
research in nature and as such costs expenses as incurred.
Share-based payments
Where share options are awarded to directors or employees, the
fair value of the options at the date of grant is charged to the
statement of comprehensive income the vesting period. Non-market
vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each balance sheet date
so that, ultimately, the cumulative amount recognised over the
vesting period is based on the number of options that eventually
vest. Market vesting conditions are factored into the fair value of
the options granted.
As long as all other vesting conditions are satisfied, a charge
is made irrespective of whether the market vesting conditions are
satisfied. The cumulative expense is not adjusted for failure to
achieve a market vesting condition.
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 income statement over the remaining vesting period. Where
equity instruments are granted to persons other than employees, the
income statement is charged with fair value of goods and services
received.
Convertible loans
The proceeds received on the issue of the Company's convertible
notes are allocated into their liability and equity components
where the fixed-for-fixed criterion is met. Where this is not met,
the conversion feature is accounted for as a derivative liability
and accounted for separately from the host instrument with the fair
value of the embedded derivative liability being calculated first
and residual value being assigned to the host instrument, which is
accounted for at amortised cost.
On initial recognition, convertible loan notes were recorded at
fair value net of issue costs. The initial fair value of the debt
host was determined using the market interest rate applied by a
market participant for an equivalent non-convertible debt
instrument. Subsequent to initial recognition, the debt host was
recorded using the effective interest method until extinguished on
conversion or maturity of the notes.
2. Summary of significant accounting policies (continued)
Convertible loans (continued)
The amortisation of the debt host and the interest payable in
each accounting period is expensed as a finance cost.
Equity derivatives embedded in the convertible instruments which
were required to be recorded as financial liabilities are initially
recognised at fair value. At each reporting date, or immediately
prior to them being exercised, the fair values of the derivative
were reassessed by management. Where there is no market for such
derivatives, the Company used option pricing models to measure the
fair value.
Derivatives
Derivatives are initially recognised at fair value at the date a
derivative contract in entered into and are subsequently remeasured
to fair value at each reporting end date. The resulting gain or
loss is recognised in the statement of comprehensive income
immediately unless the derivative is designated and effective as a
hedging instrument, in which event the timing of the recognition in
profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a
financial asset, whereas a derivative with a negative fair value is
recognised as a financial liability. A derivative is presented as a
non-current asset or liability if the remaining maturity of the
instrument is more than 12 months, and it is not expected to be
realised or settled within 12 months. Other derivatives are
classified as current.
An embedded derivative is a component of a hybrid contract that
also included a non-derivative host - with the effect that some of
the cash flows of the combined instrument vary in a way similar to
a standalone derivative. Derivatives embedded in a hybrid contract
with financial liability hosts are treated as separate derivatives
when they meet the definition of a derivative, their risks and
characteristics are not closely related to those of the host
contracts and the host contracts are not measured at fair value
through profit or loss.
Derivative assets embedded within financial liability hosts are
combined with the corresponding financial liability host and are
shown net in the statement of financial position.
Equity
An equity instrument is any contract that evidences a residual
interest in the assets of a company after deducting all of its
liabilities. Equity liabilities issued are recorded at the proceeds
received net of direct issue cost.
Business combinations
The acquisition method of accounting is used to account for
business combinations regardless of whether equity instruments or
other assets are acquired. The consideration transferred is the sum
of the acquisition-date fair values of the assets transferred,
equity instruments issued, or liabilities incurred by the acquirer
to former owners of the
acquiree and the amount of any non-controlling interest in the
acquiree. For each business combination, the non-controlling
interest in the acquiree is measured at either fair value or as the
proportionate share of the acquiree's identifiable net assets. All
acquisition costs are expensed as incurred to the statement of
comprehensive income.
On the acquisition of a business, the consolidated entity
assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the
contractual terms, economic conditions, the consolidated entity's
operating or accounting policies and other pertinent conditions in
existence at the acquisition date.
2. Summary of significant accounting policies (continued)
Business combinations (continued)
The difference between the acquisition-date fair value of assets
acquired, liabilities assumed and any non-controlling interest in
the acquiree and the fair value of the consideration transferred
and the fair value of any pre-existing investment in the acquiree
is recognised as goodwill. If the consideration transferred and the
pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase to the
acquirer, the difference is recognised as a gain directly in profit
or loss by the acquirer on the acquisition date, but only after a
reassessment of the identification and measurement of the net
assets acquired, the non-controlling interest in the acquiree, if
any, the consideration transferred and the acquirer's previously
held equity interest in the acquirer.
Impairment of fixed asset investments
Fixed asset investments are assessed for the presence of
impairment indicators, if any indicators are present then an
impairment review is conducted. An impairment review of Goodwill is
conducted annually, any resulting impairment loss is measured and
recognised on a consistent basis.
3 Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated on
historical experience and other factors, including expectations of
future events that are believed to be reasonable. In the future,
actual experience may differ from these estimates and assumptions.
The estimates and assumptions that 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.
Key accounting judgements
Reverse acquisition accounting - identifying the accounting
acquirer
As disclosed in the basis of preparation, management has used
judgement to determine an appropriate accounting policy to account
for the business combination in the period. The most significant
judgement is in determining the accounting acquiror as the
conclusion of this has a fundamental impact on the presentation of
the financial statements. In arriving at the judgement management
had reverted to the guidance in IFRS 3 to identify the accounting
acquirer and on the basis determined that EDX Medical Limited was
the accounting acquirer and there presented the financial
statements as disclosed in note 4.
Reverse acquisition accounting - deemed acquisition cost
The deemed acquisition cost represents the value attributed to
the assets and liabilities of the legal acquiree (the legal entity
that is the acquirer for legal purposes) as if it were the acquirer
for accounting purposes. In determining the deemed acquisition cost
judgement is required is determining the fair values of the
individual assets and liabilities of the legal acquiree at the
acquisition date. In determining that the assets and liabilities
were held at fair value at the date of acquisition management
confirmed that all financial instruments were held at amortised
cost and that any effective interest was accounted for, that all
bookkeeping had been completed to the date of acquisition and
enquired with management that there were no indicators of
impairment on any classes of assets and that the carrying values
were the same as their fair values.
In calculating the deemed acquisition costs, the fair value of
the shares acquired is required to be determined. The placing price
per share was GBP0.06 on the date of the reverse acquisition,
however, share price upon completion of the reverse acquisition was
GBP0.0425. The fair value should reflect the price that a willing
buyer would pay, and a willing seller would accept in an arm's
length transaction in the open market so it has been determined
that the share price on the acquisition date should be used.
3 Critical accounting estimates and judgements (continued)
Key accounting estimates and assumptions
Convertible loan notes - valuation of embedded derivatives
Derivative financial liabilities are recognised at fair value at
the date of grant of the convertible debt instrument with which
they are associated. The inputs used in establishing the fair value
of the derivative component and the convertible debt instrument
used are not market observable and are based on estimates derived
from available data and professional judgement surrounding future
events. A significant change in these estimates could have a
material impact on the value of the derivative liabilities and
corresponding fair value gain or loss recognised in the profit and
loss. See note 21 for the carrying value of the derivative.
IFRS 16 - Discount rates
IFRS 16 states that the lease payments shall be discounted using
the lessee's incremental borrowing rate where the rate implicit in
the lease cannot be readily determined. Accordingly, all lease
payments have been discounted using the incremental borrowing rate
("IBR"). The IBR has been determined by management using a range of
data including current economic and market conditions, review of
current debt and capital within the Group, lease length and
comparisons against seasoned corporate bond rates and other
relevant data points. A range between 4.20% - 5% has been adopted
based on existing loans that the Group have. See note 20 for the
carrying value of the leases.
Fair value and ongoing impairment of acquired intangible
assets
The fair value of technology intangible assets and trade names
separately acquired through business combinations involves the use
of valuation techniques and the estimation of future cash flows to
be generated over several years. The estimation of the future cash
flows requires a combination of assumptions including assumptions
for growth rate, EBITDA and discount rates. The relief from royalty
rate is estimated based on historic benchmarking numbers.
The following assumptions were built into the valuation model
that valued the intangible assets:
- A discount rate of 4.39% based on the weighted cost of capital of the acquired business
- A growth rate of 10.4% which was based on the consumer price
inflation 12-month rate on acquisition
- A royalty rate which was based on the lower quartile from an external benchmarking guide
See note 13 for the carrying value of the assets.
Useful economic lives of intangible and tangible assets
Annual amortisation and depreciation charge for intangible and
tangible assets is sensitive to changes in the estimated useful
economic lives and residual values of the assets. The useful
economic lives and residual values are re-assessed annually. They
are amended when necessary to reflect current estimates, based on
cash generating unit performance, technological advances, future
investments, economic utilisation and the physical condition of the
assets. See notes 14 and 15 for the carrying value of the tangible
and intangible assets.
Impairment of investment in subsidiary undertakings of the
Company
At the end of the period, the Company considers whether there
are any indications that the investments in its subsidiary
undertakings are impaired. Some indications of impairment are both
external such as changes in technology and interest rates on the
subsidiary undertaking and internal such as losses incurred in the
year. In the event indicators of impairment are identified, the
Group performs stress-tested net cash flow assessments on the
forecasted cash flow projections on the subsidiary undertaking and
provide for any shortfall in the carry value of the subsidiary
undertaking against future cashflow projections
3 Critical accounting estimates and judgements (continued)
Research and development expenditure
The Group makes certain estimates and assumptions in order to
establish whether costs relate to the research phase or the
development phase. If the Group cannot distinguish between research
and development phase, then all costs are expensed as research
costs.
4 Reverse acquisition
On 14 November 2022, the Company acquired through a share for
share exchange the entire shares of EDX Medical Ltd, a
privately-owned business who principal activity was that of
creating innovative health testing solutions and developing
biological and digital technologies.
Although the transaction resulted in EDX Medical Ltd becoming a
wholly owned subsidiary of the Company, the transaction constitutes
a reverse acquisition as the previous shareholders of EDX Medical
Ltd own a substantial majority of the Ordinary Shares of the
Company and the executive management of EDX Medical Ltd became the
executive management of EDX Medical Group Plc, previously TECC
Capital Plc.
In substance, the shareholders of EDX Medical Ltd acquired a
controlling interest in the Company and the transaction has
therefore been accounted for as a reverse acquisition. The Company
held no material assets or liabilities within its balance sheet
other than cash. Additionally, the Company had no income stream and
the only relevant costs incurred were listing fees and general
administrative fees each period. Therefore, the Company did not
meet the definition of a business in accordance with IFRS 3 for the
purpose of these consolidated financial statements of the
Group.
Accordingly, in these consolidated financial statements, the
reverse acquisition did not constitute a business combination and
was accounted for in accordance with IFRS 2 "Share-based Payments"
and the associated IFRIC guidance. Although, the reverse
acquisition is not a business combination, the Company has become a
legal parent and is required to apply IFRS 10 and prepare
consolidated financial statements using the reverse acquisition
methodology, but rather than recognising goodwill, the difference
between the equity value given up by the EDX Medical Ltd
shareholders and the share of the fair value of net assets gained
by the EDX Medical Ltd shareholders is charged to the statement of
comprehensive income as a share-based payment on reverse
acquisition and represents in substance the cost of acquiring an
admission to the AQSE Growth Market.
In accordance with reverse acquisition accounting principles,
these consolidated financial statements represent a continuation of
the statements of EDX Medical Ltd and include:
-- The assets and liabilities of EDX Medical Ltd at their
carrying value amounts and the results for the period from
incorporation; and
-- The assets and liabilities of the Company as at 14 November
2022 and its results from the date of the reverse acquisition (14
November 2022) to 31 March 2023.
On 14 November 2022, the Company issued 200,000,000 ordinary
shares to acquire the whole of the share capital of EDX Medical
Ltd. The prospectus dated 14 November 2022 had an issue price of
GBP0.0425 per share of the Company's share capital to be issued and
therefore valued the investment in EDX Medical Ltd at
GBP8,500,000.
Because the legal subsidiary, EDX Medical Ltd, was treated on
consolidation as the accounting acquirer and the then legal Parent
Company, EDX Medical Group Plc, was treated as the accounting
subsidiary, the fair value of the shares deemed to have been issued
by EDX Medical Ltd was determined to be GBP1,275,000, being the
number of shares in issue of EDX Medical Group Plc of 30,000,000
valued at GBP0.0425 share price.
4 Reverse acquisition (continued)
The fair value of the net assets of EDX Medical Group PLC at
acquisition was as follows:
GBP
Computer equipment 632
Cash and cash equivalents 95,756
Receivables 781,883
Payables (324,695)
----------
Total net assets 553,576
----------
The difference between the deemed cost (GBP1,275,000) and the
fair value of the net liabilities assumed per above of GBP553,576
resulted in GBP721,425 being expensed within "reverse acquisition
expenses" in accordance with IFRS 2, Share-Based Payments,
reflecting the economic cost to EDX Medical shareholders of
acquiring a quoted entity.
The reverse acquisition reserve which arose from the reverse
takeover is made up as follows:
GBP
Pre-acquisition equity (1) (732,925)
EDX Medical Ltd equity at acquisition (2) 50,000
Investment in EDX Group Plc (3) (8,500,000)
Reverse acquisition expense (4) 721,425
------------
Total acquisition reserve (8,461,500)
------------
Notes:
1. Recognition of pre-acquisition equity of EDX Medical Group
Plc as at 14 November 2023.
2. EDX Medical Ltd had issued equity of GBP50,000. As these
consolidated financial statements present the capital structure of
the legal parent entity, the equity of EDX Medical Ltd is
eliminated.
3.The value of the shares issued by the Company in exchange for
the entire share capital of EDX Medical Limited. The above entry is
required to eliminate the statement of financial position impact of
this transaction.
4. The reverse acquisition expense represents the difference
between the value of the equity issued by the Company, and the
deemed consideration given by EDX Medical Ltd to acquire the
Company.
5 Revenue and operating segments
The Chief Operating Decision Maker ("CODM") has been identified
as the board of directors. The CODM reviews the Group's internal
reporting in order to assess performance and allocate
resources.
The CODM has determined that there was one single operating
segment during the period being the provision of medical goods in
the UK. This assessment will be reviewed periodically as the
business grows.
All revenue was derived from the UK.
Period ended 31 March
2023
GBP
------------------------
Medical goods 3,864
------------------------
Total revenue 3,864
========================
There were no contract liabilities with customers or no contract
assets as at 31 March 2023:
6 Net finance expense
Period ended 31 March
2023
GBP
Convertible loan - revaluation of derivative 93,887
-----------------------
Convertible loan - interest 5,054
-----------------------
Interest on lease liabilities 26,643
-----------------------
Other finance expense 1,166
-----------------------
126,750
-----------------------
7 Operating loss
Operating loss for the period has been arrived at after changing
the following items:
Period ended
31 March
2023
GBP
Employee benefit expenses (note 10) 1,280,309
Listing costs - deemed cost of listing (note 9) 721,425
Related party loan write off - Excalibur Healthcare Limited 103,684
Depreciation 124,995
Amortisation - intangibles 1,266
Amortisation - right of use 154,533
Laboratory consumables 475,355
Accountancy fees 36,086
Auditors' remuneration (note 8) 47,500
--------------
8 Auditors' remuneration
Company Company
Period ended Period ended
31 March 31 March
2023 2022
GBP GBP
The audit of the Parent Company and consolidated financial statements 45,000 22,000
Other services - agreed upon procedures for the interim accounts 2,500 15,000
47,500 37,000
--------------- ---------------
9 One off IPO costs - included in administrative expenses
Period ended
31 March
2023
GBP
Listing costs - deemed cost of listing 721,425
Related party loan write off - Excalibur Healthcare Limited 103,684
825,109
--------------
Included within administrative expenses are one-off costs
incurred by the Group in connection with the admission to the AQSE
Growth Market on 14 November 2022. The amount of GBP721,425
represents the deemed cost of listing in the period, being the
excess fair value of the shares deemed to have been issued to
acquire TECC Capital Plc over its net assets acquired. See note 4
for further information.
During the period to 31 March 2023, the Company wrote off a
related party loan receivable from Excalibur Healthcare Limited, a
company in which Christopher Evans was a Director until his
resignation on 28 February 2022. On 17 July 2023, Excalibur
Healthcare Limited appointed a voluntary liquidator.
10 Employee benefits and expenses
Group Company Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Wages and salaries 1,210,648 55,909 90,000
Social security costs 69,661 1,577 8,960
1,280,309 57,486 98,960
=========== ========== =========
The average number of people employed by the Group (including
directors) amount to 15 Employees
10 Employee benefits and expenses (continued)
Key management compensation
The Directors consider that the key management comprises the
Directors of the Group; their emoluments are set out below:
Group Company Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Wages and salaries 690,672 55,909 90,000
Social security costs 69,661 1,577 8,960
Total 760,333 57,486 98,960
----------- ---------- ---------
Disclosure of individual Directors' remuneration, share
interests, share options, long-term incentive schemes, pension
contributions and pension entitlements required by the Companies
Act 2006 are shown in the tables in the Remuneration Committee
report on pages 29 to 31 and form part of these financial
statements.
Highest paid director
Group Company Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Salaries and fees 361,253 - 30,000
Social security costs - - 2,987
Total 361,253 - 32,987
----------- ---------- ---------
11 Taxation
The current tax charge is reconciled to the result for the
period as follows:
31 March
2023
GBP
Current tax expense
Current year -
--------
-
--------
Deferred tax expense -
--------
Tax expense for the period -
========
11 Taxation (continued)
Reconciliation of effective tax rate
Tax assessed for the period is GBPNil. The standard rate
corporation tax of 19%. The differences are explained below:
Group
31 March
2023
GBP
Loss before tax (3,709,363)
Tax using the UK corporation rate of 19% (704,779)
Fixed asset differences (66,305)
Deferred tax not recognised 771,084
Total tax charge -
===========
The Group has estimated tax losses of GBP3,074,201 to carry
forward against future taxable profits.
No deferred tax asset has been recognised in relation to the
trading losses available for offset against future taxable profits.
The Group has not recognised deferred tax asset due to there being
insufficient evidence of short-term recoverability.
Deferred tax liabilities are presented within provisions for
liabilities and deferred tax assets within debtors. Deferred tax
assets and deferred tax liabilities are offset only if:
- the Group has a legally enforceable right to set off current
tax assets against current tax liabilities, and
- the deferred tax assets and deferred tax liabilities relate to
corporation tax levied by the same taxation authority on either the
same taxable entity or different taxable entities which intend
either to settle current tax liabilities and assets on a net basis,
or to realise the assets and settle the liabilities
simultaneously.
- Research and Development Tax Credits are recognised as
receivables when an inflow of economic benefit is certain, until
then a contingent asset in respect of probable Corporation Tax is
disclosed.
12 Deferred tax
Acquisitions - business Recognised in profit or loss Net Deferred tax liability
combinations GBP GBP
GBP GBP
Intangible assets (9,804) - (9,804) (9,804)
(9,804) - (9,804) (9,804)
------------------------------- ----------------------------- -------- -----------------------
13 Loss per share
Basic and diluted loss per share
The calculation of basic and diluted loss per share is based on
the loss attributable to equity holders divided by the weighted
average number of shares in issue during the period.
The loss incurred by the Group means that the effect of any
outstanding warrants and options would be considered anti-dilutive
and is ignored for the purposes of the loss per share
calculation.
Period ended
31 March 2023
GBP
--------------
Loss for the period from continuing activities (3,709,363)
--------------
Period ended
31 March 2023
No
--------------
Weighted average number of ordinary shares 114,001,831
--------------
Period ended
31 March 2023
GBP
--------------
Basic and diluted loss per share (3.25)
==============
14 Business Combinations
Summary of acquisition
The entire issued share capital of Torax Biosciences Limited was
acquired by EDX Medical Group Plc on 17 February 2023, (the
"Acquisition Date") making EDX Medical Group Plc the legal acquirer
by the way of issuing 1,666,667 new ordinary shares in the capital
of the Company at a deemed price of GBP0.06 per share. On the
Acquisition Date, one ordinary share of the Company was worth
GBP0.0375 in the market, establishing a fair value of the
acquisition shares at GBP62,500.
Purchase consideration GBP
Ordinary consideration shares issued at fair value 1,666,667 @ GBP0.0375 pence 62,500
=======
Acquisition costs of GBP9,233 have been expensed to the
Statement of Comprehensive Income and are within administrative
expenses.
14 Business Combinations (continued)
The assets and liabilities recognised as a result of the
acquisition are as follows:
Carrying value Fair value adjustments Fair value
GBP GBP
GBP
Intangible Asset - Technology (material contracts) - 36,722 36,722
Intangible Asset - Trade names - 39,217 39,217
Property, plant and equipment 21,171 - 21,171
Right of use assets 8,802 - 8,802
Inventories 12,500 - 12,500
Trade and other receivables 28,340 - 28,340
Cash 776 - 776
Trade and other payables (41,418) - (41,418)
Overdraft and other borrowings (41,546) - (41,546)
Lease liabilities (8,909) - (8,909)
Deferred tax liability - (9,804) (9,804)
--------------- ----------------------- -----------
Net identifiable assets acquired (20,284) 66,135 45,851
--------------- ----------------------- -----------
Fair value of consideration paid 62,500
Goodwill 16,649
-----------
The fair values include recognition of intangible assets trade
names and the technology, which will be amortised over a 10-year
period on a straight-line basis.
Goodwill of GBP16,649 was recognised on acquisition of the
business. Goodwill represents the know-how of how the material
contracts can be utilised to promote future revenue generating
opportunities.
Since the acquisition date, Torax Biosciences ("Torax") has
contributed GBP3,864 to Group revenues and a loss of GBP12,382 to
the Group's comprehensive income. If the acquisition had occurred
on 1 April 2022, Group revenue would have increased by GBP72,581,
however, the Group loss would have also increased by GBP43,522.
The net cash sum expended on acquisition is as follows:
GBP
Cash paid on consideration on acquisition -
Less cash acquired at acquisition 776
------
Net cash movement (776)
======
15 Intangible assets
Goodwill Trade names Technology Total
GBP GBP GBP GBP
Cost
Acquired in business combinations 16,649 39,217 36,722 92,588
At 31 March 2023 16,649 39,217 36,722 92,588
Amortisation
Charge - 654 612 1,266
At 31 March 2023 - 654 612 1,266
Net book value
-------- ----------- ---------- ------
At 31 March 2023 16,649 38,563 36,110 91,322
======== =========== ========== ======
15 Intangible assets (continued)
Amortisation has been charged to the Statement of Comprehensive
Income.
During the period, the Group acquired Torax resulting in
additions to goodwill of GBP16,649.
Impairment tests for goodwill
In accordance with the Group's accounting policy, goodwill is
tested at least annual for impairment and when events or
circumstances indicate that the carrying amount may not be
recoverable. An impairment test was performed for all CGU groups
during the period ended 31 March 2023.
The recoverable amounts of all CGU groups were determined based
on the higher of the fair value less costs to sell and value in use
calculations. The recoverable amount is determined firstly through
value in use calculations. Where this is insufficient to cover the
carrying value of the relevant asset being tested, fair value less
costs to sell is also determined.
If the carrying amount of a CGU or CGU group exceeds its
recoverable amount, an impairment loss is recognised in the
following order: first, to reduce the carrying amount of any
goodwill allocated to the CGU, and then, to the other assets of the
CGU pro rata on the basis of the carrying amount of each asset in
the CGU unless assessing individual assets.
The value in use calculations use cash flow projections based on
four-year financial forecasts prepared by management. The key
assumptions for these forecasts relate to revenue, gross margins,
overheads, the level of working capital required to support trading
and capital expenditure, and the discount rate used. A terminal
value calculation is used to estimate the cash flows after year 4
using a growth rate.
Based on the key assumptions, management do not believe that the
goodwill balance is impaired.
16 Property, plant and equipment - Group
Furniture Computer equipment Plant and Total
and fittings machinery
GBP GBP GBP GBP
Cost
Additions 26,317 57,527 442,738 526,582
Acquired in business combinations 21,171 - - 21,171
Disposals - (1,198) - (1,198)
At 31 March 2023 47,488 56,329 442,738 546,555
Depreciation
Charge 10,181 20,554 94,260 124,995
Disposals - (566) - (566)
------------- ------------------ ---------- -------
At 31 March 2023 10,181 19,988 94,260 124,429
Net book value
------------- ------------------ ---------- -------
At 31 March 2023 37,307 36,341 348,478 422,126
------------- ------------------ ---------- -------
Depreciation has been charged to the Statement of Comprehensive
Income.
Of the total additions of GBP526,582 during the period,
GBP470,000 were sold to the Company by Christopher Evans as part of
the GBP1,400,000 convertible loan subscribed to by Christopher
Evans and GBP632 were acquired as part of the RTO.
17 Investments - Company
Investments in subsidiaries
GBP
Cost
At 1 April 2022 -
Additions 8,562,500
At 31 March 2023 8,562,500
Impairment
At 1 April 2022 -
Charge -
---------------------------------------
At 31 March 2023 -
---------------------------------------
Net book value
At 31 March 2023 8,562,500
=======================================
Principal subsidiary undertakings of the Company
On 14 November 2022, the Company issued 200,000,000 ordinary
shares to acquire the whole of the share capital of EDX Medical
Ltd. The prospectus dated 14 November 2022 had an issue price of
GBP0.0425 per share of the Company's share capital to be issued and
therefore valued the investment in EDX Medical Ltd at GBP8,500,000.
Further details can be found in note 4.
On 17 February 2023, the Company acquired the entire issued
share capital of Torax Biosciences Limited by the issue of
1,666,667 shares in the capital of the Company at a deemed price of
GBP0.06 per share. The share price at the date of acquisition was
GBP0.0375. Therefore, the fair value of the consideration has been
determined to be GBP62,500. Further details can be found in note
13.
The Company has applied the statutory relief as prescribed by
Companies Act 2006 in respect of both acquisitions as the issuing
company has secured more than 90% equity in the other entity. The
carrying value of the investment is carried at the nominal value of
the shares issued.
The subsidiary undertaking of the Company is presented
below:
Country of Proportion of ordinary shares held
Subsidiaries incorporation Registered address at period end
Unit 1 212-218 Upper Newtonwnards
Road, Belfast, United Kingdom, BT4
Torax Biosciences Limited United Kingdom 3ET 100%
---------------- ----------------------------------- -----------------------------------
Unit 210-211 Cambridge Science
Park, Milton Road, Cambridge,
EDX Medical Ltd United Kingdom United Kingdom, CB4 0WA 100%
---------------- ----------------------------------- -----------------------------------
The principal activity of EDX Medical Ltd is the development of
a digital diagnostics business.
The principal activity of Torax Biosciences Limited is the
design, development and manufacture of IVD reagents.
18 Trade and other receivables
Group Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Trade receivables 3,864 - -
Prepayments 51,795 252 4,990
Amounts receivable from Group undertakings - 1, 329,470 -
Loan from Christopher Evans 224,396 - -
Other receivables 102,390 7,514 3,078
382,445 1,337,236 8,068
======== ========== ========
The fair values of trade receivables are the same as their book
values.
No provision against trade receivables has been made, the
overdue receivables relate to a customer for whom there is no
recent history of default and no other indication that settlement
will not be forthcoming.
As at 31 March 2023, GBP224,396 was due from Christopher Evans,
a director of the Company. The amount has no interest and is
repayable on demand.
19 Financial assets at fair value through profit or loss
Group Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Convertible loan note - 600,000 -
- 600,000 -
======== ========= =========
Prior to the reverse acquisition, the Company subscribed to
GBP600,000 convertible loan notes in EDX Medical Limited. There was
no interest to accrue on the notes and redemption was 12 months
from the date of issue but could be repaid early. The CLNs were
convertible at any point after the earlier of completion of the
reverse acquisition and 31 October 2022. The conversion rate was
fixed at GBP1.50 per share. The CLN is a financial asset at fair
value through profit or loss. At initial recognition as at 31 March
2023, the fair value of the CLN approximated to its principal
amount. Following the reverse acquisition, the CLN forms part of
the intercompany balance between the two entities.
20 Other current assets
Group Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Supplies and materials 270,710 - -
270,710 - -
======== ========= =========
Supplies and materials relate to supplies and materials used in
research and development but do not meet the definition of
inventory. Supplies and materials are initially measured at cost
less any attributable costs incurred to bring the assets to a
condition for us.
In July 2022 the Group issued 1,400,000 CLNs of GBP1.00
totalling GBP1,400,000 to replace an outstanding liability due to
Christopher Evans. The original liability was in relation to the
sale of assets to the Company by Christopher Evans of which
GBP730,000 related to supplies and materials sold to the
company.
GBP12,500 supplies and materials was acquired on the acquisition
of Torax Biosciences Ltd.
21 Cash and cash equivalents
Group Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Cash and cash equivalents 116,176 14,518 1,027,114
116,176 14,518 1,027,114
======== ======== ===============
Cash and cash equivalents comprise current accounts held by the
Group with immediate access. The credit risk on such funds is
limited because the counterparties are banks with high credit
ratings assigned by international credit rating agencies.
22 Trade and other payables
Group Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Trade payables 288,939 39,512 6,855
Taxation and social security 44,528 - 12,825
Other payables 119,665 - 242
Accruals 265,737 81,486 33,000
718,869 120,998 52,922
-------- -------- --------
The fair values of trade payables are the same as their book
values.
Included in other payables is an amount of GBP85,257 due from
Merlin Scientific Consulting Ltd, a company in which Christoper
Evans is a director.
Included in other payables is an amount of GBP28,115 due from
Lawrence McGrath, a director of Torax Biosciences Limited.
As disclosed in Note 2, the Company's subsidiaries have taken
advantage of the exemption available under Section 479A of the
Companies Act 2006 in respect of the requirement for audit. As a
condition of the exemption, the Company has guaranteed the year-end
liabilities of the relevant subsidiaries until they are settled in
full. The liabilities of the subsidiaries for the year-end was
GBP597,872.
23 Leases
The Group leases two properties for office and laboratory use.
Information about the leases for which the Group is a lessee is
presented below.
Right-of-use assets
Leasehold property Total
GBP GBP
Cost
Additions 568,676 568,676
------------------ -------
Acquired through business combinations 8,802 8,802
------------------ -------
At 31 March 2023 577,478 577,478
Amortisation
Charge 154,533 154,533
------------------ -------
At 31 March 2023 154,533 154,533
Net book value
------------------ -------
At 31 March 2023 422,943 422,943
================== =======
Reconciliation of change in lease liability
Leasehold property Total
GBP
GBP
Additions 568,676 568,676
------------------ ---------
Acquired through business combinations 8,908 8,908
------------------ ---------
Interest expense 26,643 26,643
------------------ ---------
Lease payments (196,170) (196,170)
------------------ ---------
At 31 March 2023 408,057 408,057
------------------ ---------
31 March
2023
GBP
---------
Non-current
Lease liability 262,775
---------
262,775
---------
Current
Lease liability 145,282
---------
145,282
---------
Total lease liability 408,057
=========
23 Leases (continued)
Reconciliation of minimum lease payments and present value
31 March
2023
GBP
---------
Within one year 162,992
Later than one year and less than five years 276,043
---------
Total including interest cash flows 439,035
---------
Less interest cash flows (30,978)
---------
Total principal cash flows 408,057
=========
24 Convertible loan
Convertible Loan Note 2022
In July 2022 the Group issued 1,400,000 convertible redeemable
loan notes ("CLNs") of GBP1.00 totalling GBP1,400,000 to replace an
outstanding liability due to Christopher Evans. The original
liability was in relation to the sale of assets to the Company by
Christopher Evans that totalled GBP1,404,923.
The CLNs were issued at par value and no interest is accrued on
the CLNs, unless an administration order is made in relation to the
Company, or the Company becomes insolvent.
The CLNs contain various conversion and redemption features. The
noteholder is able to convert the CLNs on any business date on or
after the 31 October 2022. The condition to be satisfied to enable
the noteholder to convert was for the Company to successfully be
admitted on the AQSE Growth Market, which occurred on 14 November
2022 ("Proposed Transaction").
The noteholder is able to convert at a rate of one Company share
per GBP0.06 nominal of CLN or, if higher, reflecting a price per
Company share equal to a 20% discount to the volume weighted
average price ("VWAP") of Company shares over the period of 3
months prior to the conversion date.
The CLN agreement contains an embedded derivative in conjunction
with the host debt liability. As a result, the convertible loan
notes are shown in the Consolidated Statement of Financial Position
in two separate components, being the 'Convertible loan - debt' and
'Convertible loan - derivative'.
Additionally, the noteholder has the option to partially convert
the CLNs at their discretion, though did not do so during the
period.
At issuance, the total inception value was GBP1,400,000. The
fair value at inception of the derivative element was deemed to be
nil as at the date of issuance there was an uncertainty, out of the
company's control, as to whether the Proposed Transaction would go
ahead. Therefore, the initial carrying value of GBP1,400,000 was
held as the debt liability element at amortised cost. Transaction
costs of GBP15,786 have been fully allocated to the debt liability
component at inception as the derivative liability was considered
to have a value of nil. This adjusted the carrying value of the
debt liability at inception.
24 Convertible loan (continued)
As at 31 March 2023, the Company measured the derivative element
at fair value using the Black-Scholes option pricing model based on
the exercise price of GBP0.06. The fair value at the period-end
date was GBP93,887 resulting in a loss on revaluation of the
derivative being recognised of GBP93,887. Significant assumptions
used in the fair value analysis include the volatility rate and the
estimated date of conversion. A volatility of 74.23% was used in
the determination of the fair value at 31 March 2023. A reduction
of 10% would have resulted in a reduction in the fair value at 31
March 2023 by GBP28,653 with an increase of 10% resulting in an
increase in the fair value at 31 March 2023 of GBP30,498.
Given the option of the noteholder to convert the CLNs at their
discretion, the debt and derivative liability elements have been
classified as current liabilities.
Convertible loan - derivative Convertible loan - debt
GBP
GBP
At inception - 1,384,214
----------------------------- -----------------------
Interest expense - 5,054
----------------------------- -----------------------
Revaluation of derivative 93,887 -
----------------------------- -----------------------
At 31 March 2023 93,887 1,389,268
----------------------------- -----------------------
25 Share capital and reserves
Allotted, called up and fully paid Ordinary 0.01p shares Share capital Share Premium
No. GBP GBP
Parent company reflected on reserve acquisition 30,000,000 300,000 918,933
Share issue 22,500,000 225,000 1,041,667
Cost of share issue - - (30,819)
Reverse acquisition of EDX Medical Ltd 200,000,000 2,000,000 -
As at 31 March 2023 252,500,000 2,525,000 1,929,781
================================================ ===================== ============= ==============
On 14 November 2022, the Group completed a reverse acquisition
transaction with EDX Medical Ltd. It was considered that EDX
Medical Ltd was the accounting acquirer in the transaction. The
share capital set out above is that of EDX Medical Group Plc which
is the legal acquirer.
New shares allotted
During the period, 200,000,000 ordinary shares were issued as
consideration for the acquisition of EDX Medical Ltd on 14 November
2022 of GBP0.0425 per share.
On 14 November 2022, 20,000,000 ordinary shares were issued for
cash at the placing price of GBP0.06 per share.
On 14 November 2022, 833,333 ordinary shares were issued to
Sports Resource Group Limited who provided services in connection
with the reverse takeover at the placing price of GBP0.06. Sports
Resource Group Limited in controlled by Christoper Akers, a person
with significant control.
On 17 February 2023, 1,666,667 ordinary shares were issued as
consideration for the acquisition of Torax Biosciences Limited at
GBP0.375 each.
25 Share capital and reserves (continued)
Shares to be allotted
On 26 April 2023, 28,750,000 ordinary shares were issued in the
Company at a placing price of GBP0.06. On 20 January 2023.
GBP200,000 was received in advance from a shareholder to subscribe
in the placing.
Rights, preferences and restrictions
All ordinary shares are equally eligible to receive dividends
and the repayment of capital and represent equal votes at meetings
of Shareholders. There are no rights of redemption attaching to the
ordinary shares.
26 Capital reserves
The following describes the nature and purpose of each reserve
within owner's equity:
Share capital : Amount subscribed for shares at nominal
value.
Share premium : Amount subscribed for share capital in excess of
nominal value, less costs of share issue. This reserve is not
distributable.
Merger relief reserve: Represents the excess of the value of the
consideration shares issued to the shareholders of EDX Medical
Group Plc upon the reverse takeover over the fair value of the
assets acquired and the fair value of the consideration given in
excess of the nominal value of the ordinary shares issued in the
acquisition of Torax Biosciences Limited.
Reverse acquisition reserve: The reverse acquisition reserve
arose from the application of reverse acquisition accounting
principles to the financial statements at the time of the reverse
takeover of TECC Capital Plc by EDX Medical Ltd. This reserve is
not distributable.
Warrant reserve: The warrant reserve comprises the cumulative
expense representing the extent to which the vesting period of
warrants has passed and management's best estimate of the
achievement or otherwise of non-market conditions and the number of
equity instruments that will ultimately vest.
Shares to be issued : Represents monies received for the issue
of new ordinary shares in the Company not yet issued.
Retained losses : Cumulative realised losses of the Group. As a
result of the reverse takeover and the acquisition of Torax
Biosciences Limited, the consolidated figures include the retained
losses of the Group only from the date of the reverse takeover
together with the brought forward losses of EDX Medical Ltd.
27 Share options and warrants
LTIPs
Included within the admission document the Group intended to set
up a Long-Term Incentive Plan ("LTIP") and grant 2,046,666 LTIP
awards to Michael Hudson. The LTIP options would have been
exercisable by the option holder at the placing price of GBP0.06
for a period between three and ten years from the date of
admission, vesting over a period of 18 months.
As at 31 March 2023 the LTIP scheme has yet to be formally
agreed. The intention is to set up the LTIP scheme and grant
Michael Hudson 2,046,666 LTIP awards, however management are
considering changing the vesting conditions and as such no options
have been issued.
The Group have accrued an estimated share-based payment charge
of GBP8,986 in relation to the proposed LTIPs to be grated. Once
the scheme has been formalised and the vesting conditions
confirmed, the options will be valued using a valuation model with
the any difference between the estimated share-based payment charge
and actual share-based payment charge being charged to the
statement of comprehensive income immediately, and the accrued
amount reallocated to a share-based payment reserve.
Warrants
Prior to the reverse acquisition on 11 November 2022, the
Company issued the follow warrants:
On 30 March 2021, the Company issued 5,000,000 warrants to the
founders of the Company. Of this issue, 1,050,000 were issued to
Arwon Capital (UK) Limited, a company in which former director
Sandy Barblett is a director, 1,050,000 warrants were issued to
John Taylor and 1,050,000 were issued to Ruscombe Management
Services Limited, a Company in which former director Donald Stewart
is a director. The warrants have an exercise price of 5p, vested
immediately and expire on the 5th anniversary of the grant date.
Exercise of such right is not subject to the satisfaction of any
performance or other conditions.
On 30 April 2021, the Company issued 370,000 warrants to
Peterhouse Capital Limited. The warrants have an exercise price of
5p, vested immediately and expire on the 5th anniversary of the
grant date.
On 30 April 2021, the Company issued warrants to investors to
subscribe for 12,500,000 new Ordinary shares of GBP0.01 at 10p per
share and for 12,500,000 new Ordinary shares of GBP0.01 at 20p per
share. Exercise of such rights are not subject to the satisfaction
of any performance or other conditions and expire on the 5th
anniversary of the grant date.
Details of the number of share options and warrants granted,
exercised, lapsed and outstanding at the end of the period, as well
as the weighted average exercise prices in GBP ("WAEP") as
follow:
31 March 2023
Weighted Average
Number Exercise Price
GBP
Outstanding on date of reverse acquisition 30,370,000 0.13
Granted during the period - -
Forfeited during the period - -
At 31 March 2023 30,370,000 0.13
---------- ----------------
Total exercisable at 31 March 2023 30,370,000 0.13
---------- ----------------
The weighted average remaining contractual life of the options
is 3 years and 54 days
.
28 Financial Instruments and risk management
The Group and Company's financial instruments comprise cash and
cash equivalents, loans, trade and other receivables, trade and
other payables, and lease liabilities. An analysis of the financial
assets and liabilities recognised on the balance sheet, each of
which is at amortised costs unless stated, is set out below.
The Group and Company hold the following financial
instruments:
Group Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Financial assets
Cash and cash equivalents 116,176 14,518 1,027,114
Trade receivables 3,864 - -
Loan from Christoper Evans 224,396 - -
Amount receivable from - 1,329,470 -
Group undertakings
Convertible loan - held
at FVPL 600,000
344,436 1,943,988 1,027,114
----------- ---------- ----------
Group Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Financial liabilities
Trade payables 288,938 39,512 6,855
Accruals 265,738 81,486 33,000
Amounts due from related 85,257 - -
party
Directors loan account 28,115 - 242
Bank loans and overdrafts 27,165 - -
Lease liability 408,057 - -
Convertible loan - debt 1,389,268 - -
component
Convertible loan - derivative 93,887 - -
component (measured at
fair value)
----------- ---------- ----------
2,586,425 120,998 40,097
=========== ========== ==========
The significant accounting policies regarding financial
instruments are disclosed in note 2.
Financial risk management
The fair value hierarchy of financial instruments measure at
fair value is provided below. The different levels have been
defined as follows:
- Quoted prices (unadjusted), in active markets for identical
assets or liabilities (level 1);
- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly or
indirectly (level 2);
- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs), (level
3).
28 Financial Instruments and risk management (continue)
Financial risk management (continued)
There have been no transfers between levels during the
period.
Level Level Level Total
1 2 3
GBP GBP GBP GBP
Derivative financial liabilities
held at fair value through
profit or loss (see note ( 93,887 ( 93,887
24) - - ) )
------- ------- --------- ---------
Financial assets held at
fair value through profit
or loss (see note 19) - - 600,000 600,000
------- ------- --------- ---------
- - 506,113 506,113
======= ========================================== ========= =========
Capital management
The Group's main objective when managing capital is to protect
returns to shareholders by ensuring the Group develops such that it
trades profitably in the foreseeable future. The Group recognises
that because it is an early-stage development Group with limited
current revenues, and significant continued investment that does
not support debt within its capital structure, its capital
structure is largely limited to equity-based capital which the
Group uses to finance most of its strategy.
The Group manages its capital with regard to the risks inherent
in the business and the sector within which it operates.
The Group is exposed through its operations to the following
risks:
- Credit risk
- Liquidity risk
- Interest rate risk
In common with all other businesses, the Group is exposed to
risks that arise from is use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
- Convertible loans
28 Financial Instruments and risk management
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining responsibility for them, it has delegated the authority
for designing and operating processes that ensure the effective
implementation of the objectives and policies to the Group's
finance function. The Board receives regular updates from the CFO
through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it
sets. The overall objective of the Board is to set policies that
seek to reduce as far as possible without unduly affective the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below.
Credit risk
The Group's principal financial assets are the cash and cash
equivalents and loans and receivables, as recognised in the
statement of financial position, and which represent the Group's
maximum exposure to credit risk in relation to financial assets.
The Group and Company policy for managing its exposure to credit
risk with cash and cash equivalents is to restrict the maximum
value of cash held with any one financial institution. The Group
does not require collateral in respect of financial assets.
The Company has made unsecured interest-free loans to its
subsidiaries. Although they are repayable on demand, they are
unlikely to be repaid until the projects becomes successful and the
subsidiaries start to generate revenues.
Liquidity risk
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. However, the Group continues to absorb cash in its
operations for the time being and management recognises the risk of
insufficient cash and capital to carry on its activities and
safeguard the Group's ability to continue as a going concern.
The Board receives cash flow projections on a regular basis,
which are monitored regularly. The Board will not commit to
material expenditure in respect of its ongoing development
programme prior to being satisfied that sufficient funding is
available to the Group to finance the planned programmes. Regular
reviews will ensure that further steps will be taken if
necessary.
The Group has an overdraft balance on a bank account at period
end. Shortly after the period-end, the Group cleared the overdraft
balance. The Group does not have any long-term gearing targets.
Interest rate risk
Interest rate risk is the risk that future cash flows of a
financial instrument will fluctuate because of changes in interest
rates. The Group manages its cash position in a manner designed to
maximise interest income, while at the same time minimising any
risks to these funds. The convertible loan does not have a fixed
interest coupon rate attached to it. The Group has an outstanding
loan that attracts interest of 4.20% per 30 days on any credit
balances between GBP0 and GBP15,000. At period end, the outstanding
balance was GBP5,724. The Group do not intend to extend any further
credit from the creditor.
Sensitivity analysis
The Group is not materially exposed to change in interest or
exchange rates at 31 March 2023.
29 Borrowings
Group Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Non-current
Bank borrowings 11,354 -
11,354 - -
----------- --------- ---------
Group Company
31 March 31 March 31 March
2023 2023 2022
GBP GBP GBP
Current
Other loans 27,165 - -
27,165 - -
=========== ========= =========
The directors consider the value of all financial liabilities to
be equivalent to their fair value. The Group's exposure to
liquidity and cash flow risk in respect is disclosed in the
financial risk management note, see note 28.
30 Changes in liabilities arising from financing activities
Financing cash Repayment Other-non cash
flows changes Interest New leases At 31 March 2023
-----------
GBP GBP GBP GBP GBP GBP
------------------- ------------ ------------------- --------- ----------- -----------------
Lease liabilities (196,170) - - 26,643 577,584 408,057
Short-term
borrowings (2,663) - 29,828 - 27,165
---------
Long-term
borrowings (364) - 11,718 - - 11,354
---------
Directors loan - C
Evans 145,000 (115,000) ( 254,396 ) (224,396)
---------
Directors loan - L
McGrath - - 28,115 - - 28,115
---------
CLN - - 1,483,155 - - 1,483,155
---------
Total liabilities
from financing (54,197) (115,000) 1,298,420 26,643 577,584 1,733,450
------------------- ------------ ------------------- --------- ----------- -----------------
31 Related party transactions
Transactions with subsidiaries
During the period, cash advances of GBP11,000 (2022: GBPnil)
were made to Torax Biosciences Limited. The advances are held on an
interest free inter-group loan which has no terms for repayment. As
at the period end, Torax Biosciences Limited owed GBP11,000 to EDX
Medical Ltd.
During the period, cash advances of GBP1,329,470 (2022: GBPnil)
were made to EDX Medical Ltd. The advances are held on an interest
free inter-group loan which has no terms for repayment. As at the
period end, EDX Medical Ltd owed GBP1,329,470 to EDX Medical Group
Plc in addition to the convertible loan amount described below.
During the period, prior to the reverse acquisition the Company
subscribed to GBP600,000 convertible loan notes in EDX Medical Ltd.
As at 31 March 2023, following the reverse acquisition, the
convertible loan forms part of the intercompany balance between the
two entities.
During the period, the Group made payments totalling GBP216,667
(2022: GBPnil) to Health Ventures Limited, a company in which Dr
Michael Hudson is a director. The payments were for services
undertaken by Dr Michael Hudson in the Group.
During the period, the Group made payments totalling GBP260,000
(2022: GBPnil) to Merlin Scientific Consulting Limited, a company
in which Professor Christopher Evans is director. The payments were
for services undertaken by Professor Christopher Evans in the
Group.
Transactions with other related parties
On 5 March 2022, the Company and Christopher Evans, a director
of the Company, entered into a sale and purchase of assets
agreement for Christopher to sell assets to the Company for the sum
of GBP1,404,923. The sum was recorded as a debtor loan to
Christopher Evans. On 22 July 2022, the Company entered into an
agreement in which the outstanding debt was replaced by issuing
GBP1,400,000 CLNs. Further details of the CLN can be found in note
21. The remaining balance of GBP4,923 is still outstanding as at
the period end.
During the period, an amount due from Excalibur Healthcare
Limited of GBP 103,684 (2022: GBPnil), a company in which
Christopher Evans was a director of until his resignation on 28
February 2022, was written off due to the company going into
liquidation. The cost has been included within administrative costs
and was in relation to costs incurred on behalf of the Company.
During the period, an amount was due to Merlin Scientific
Consulting Limited, a company in which Christopher Evans is a
director, of GBP85,257 (2022: GBPnil) in relation to a working
capital loan and expenses incurred. The amount was outstanding at
the period end.
As at 31 March 2023, an amount of GBP28,115 due from Lawrence
McGrath, a director of Torax Biosciences Limited was
outstanding.
As at 31 March 2023, an amount of GBP224,396 (2022: GBPnil) was
due from Christopher Evans, a director of the Company. The
outstanding balance due included the following transactions:
- Cash advances of GBP145,000 were made to the Group as part of
a working capital loan. The balance was interest free and had no
terms for repayment. At the period end, the amount owed by
Christopher Evans in relation to this working capital loan is
GBP24,396.
- During the period the Company and Christopher Evans entered
into a sale and purchase of assets agreement for a sum of
GBP1,404,923. Included within the sale and purchase of assets
agreement was a loan from the Company to Christopher Evans of
GBP200,000. As at the period end, the outstanding loan owed by
Christoper Evans was still outstanding.
31 Related party transactions (continued)
During the period to 31 March 2023, GBP16,250 (2022: GBPnil) was
donated to Cancer Awareness Trust, a charity in which Christopher
Evans is a director.
32 Ultimate controlling party
At 31 March 2023 there was no individual controlling party.
33 Events after the reporting period
Bridgemere Securities Ltd ("Bridgemere Securities")
On 26 April 2023 the Company raised a total of GBP1,725,000 via
the issue of 28,750,000 new ordinary shares in the Company at
GBP0.06 per share. Bridgemere Securities Ltd invested GBP1,500,000
in the placing and bought a further 7,720,000 ordinary shares in
the market between 20 and 21 April 2023 making Bridgemere
Securities Ltd the second largest shareholder in the Company.
Seerave Enterprises Ltd ("Seerave Enterprises").
The Company received a strategic investment of GBP350,000 from
Seerave Enterprises via a subscription of 4,375,000 ordinary shares
of GBP0.01 in the Company at a price of GBP0.08 per share.
Seerave Enterprises is a wholly owned subsidiary of the Seerave
Foundation, a philanthropic non-profit organisation which has a
global commitment to improving patient access to personalised
cancer treatment. The Seerave Foundation awards traditional grants
to academic researchers and makes selective equity investments into
developing companies via its investment arm, Seerave
Enterprises.
Hutano Diagnostics Limited ("Hutano")
On 27 September 2023 ("Acquisition Date") the Group acquired the
entire issued share capital of Hutano.
The initial consideration was 9,090,909 new ordinary shares of
GBP0.01 each in the Company at a price of GBP0.11 per share. Up to
1,818,182 additional consideration shares will be issued to the
sellers on achievement of certain commercial milestones. The
initial consideration shares will rank pari passu in all respects
with the existing share capital of the Company.
32 Events after the reporting period (continued)
A summary balance sheet of Hutano at 31 August 2023 is included
below.
31 August
2023
ASSETS GBP
Non-current assets
Intangible assets 4,740
Property, plant and equipment 22,598
Total non-current assets 27,338
---------
Current assets
Cash and cash equivalents 316,021
---------
Total current assets 316,021
---------
Total assets 343,359
=========
EQUITY AND LIABILITIES
Equity
Share capital 2,121
Share premium 886,950
Retained losses (554,612)
Total equity 334,459
---------
Current liabilities
Trade and other payables 8,900
Total current liabilities 8,900
---------
Total liabilities 8,900
---------
Total equity and liabilities 343,359
=========
At the Acquisition Date the cash and cash equivalents balance of
Hutano was GBP217,068. Between 1 September 2023 and the Acquisition
Date no significant transactions have been entered in to and the
balance sheet of Hutano at 31 August 2023 is representative of the
fair values acquired at the Acquisition Date.
On the Acquisition Date, one ordinary share of the Company was
worth GBP0.028 per share in the market. The fair value of the
initial consideration of the 9,090,909 ordinary shares was
GBP245,545.
The contingent consideration in shares to the sellers of up to
1,818,182 ordinary shares is contingent on the achievement of
certain commercial milestones. Management's expectation at the
Acquisition Date was that the performance criteria would be met in
full and have forecasted as such and therefore the contingent
consideration has been included in the total consideration payable
with no discount for the probability of the performance criteria
not being delivered.
The fair value of the contingent consideration of up to
1,818,182 ordinary shares was GBP50,909.
32 Events after the reporting period (continued)
Details of the approximate net assets acquired, and purchase
price allocation are as follows:
GBP
Consideration - shares 245,545
Contingent consideration - shares 50,909
---------
Total consideration 296,454
---------
Net assets acquired (334,459)
---------
Bargain purchase 38,005
---------
The Group have not completed a full purchase price allocation
exercise under IFRS 3. The Group has 12 months to finalise the
purchase price allocation and adjust the provisional amounts stated
above.
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