TIDMNFX
RNS Number : 6873T
Nuformix PLC
22 July 2020
Nuformix plc
Preliminary Results for the year ended 31 March 2020
Cambridge, UK - 22 July 2020: Nuformix plc (LSE:NFX) ("Nuformix"
or "the Group"), a pharmaceutical development company focused on
unlocking the therapeutic potential and value of known drugs to
develop new novel medicines to provide enhanced benefit, is pleased
to announce its preliminary results for the year ended 31 March
2020.
Operational Highlights (including post-period)
-- During the year, we prioritised development of our
anti-fibrotic candidate, NXP002, and are developing an inhaled
formulation. Our preparations for first clinical exposure are
underway. We are looking at all options for deriving value from
this product globally
-- Having demonstrated the successful application of our
proprietary cocrystal technology in humans using NXP001, we believe
this product could also be of interest to third parties. Whilst it
is too early to characterise this, we will be extending our
business development efforts in this area over the coming 12
months. This will be greatly assisted by our network of key opinion
leaders and scientific advisors
-- The Group also commenced pre-clinical pilot studies to
investigate the potential for NXP004 with the highly acclaimed
Newcastle Fibrosis Research Group. Significant progress was being
made until the inevitable operational challenges of the COVID-19
outbreak contrived to slow that progress. Evaluation of this
important data on an exciting candidate that could be applicable to
several disease indications is now expected to complete later this
year. Again, we are looking at all options for deriving value from
this product
-- We have also announced two new revenue generating
collaboration agreements, with Ebers Tech Inc. (Ebers) and VistaGen
Therapeutics Inc. (VistaGen; post-period, May 2020)
Financial Highlights
-- Net assets at year-end of GBP4,742,520 (2019: GBP3,815,330)
which includes GBP543,772 cash at bank (2019: GBP4,261)
-- The Group delivered a loss on ordinary activities (after tax
credit) of GBP756,376 (2019: loss of GBP1,661,227) and a loss per
share was 0.16p (2019: 0.36p)
-- Total revenue of GBP535,000 (2019: GBP610,000) revenues were
12% down on last year reflecting the unpredictable nature of the
Group's early stage revenue streams
Dr Chris Blackwell, Executive Chairman, said:
"It is a great honour to serve the Group and its shareholders as
Executive Chairman. This last year has been one of challenge,
change, progress and opportunity for Nuformix. Our focus over the
year has been towards the treatment of patients with fibrosis.
There has been an increasing need for effective products in this
area for many years; with the advent of COVID-19, we only see this
need increasing, and on a global basis.
Whilst we are optimistic, we remain conservative and focused on
delivery for both our in-house and collaborative development
programmes and with a determination to create and deliver
shareholder value."
Enquiries:
Nuformix plc
Dr Chris Blackwell, Executive Chairman
Fleur Wood, Investor Relations
Email: fleur.wood@nuformix.com +44 (0)1223 627222
Novum Securities Limited
Jon Belliss / Colin Rowbury +44 (0)20 7399 9427
About Nuformix
Nuformix is a pharmaceutical development company focused on
unlocking the therapeutic potential and value of known drugs to
develop new novel medicines which provide therapeutic and
commercial advantages to the currently available drug form.
Nuformix's model of repurposing drugs utilises many technologies
but is focused on its acknowledged expertise in the use of
cocrystal technology through which the Group has developed and
patented novel forms of small molecules. Its platform is not
therapy-specific but instead has broad application across a wide
range of indications. Using its technology, the Group is developing
proprietary medicines for its own development pipeline and in
partnership with pharmaceutical and biotech companies.
Nuformix plc shares are traded on the London Stock Exchange's
Official List under the ticker: NFX. For more information please
visit www.nuformix.com .
References to page numbers and notes to the accounts made in
this section refer to page numbers and notes to the accounts in the
Company's 2020 Annual Report.
Executive Chairman's Statement
Introduction
The last year has been one of challenge, change, progress and
opportunity for Nuformix. Changes to our Board and executive
management team and a subsequent review of the Group and strategy
in the few weeks since Dan Gooding stood down, require us to be
candid about the outlook and future direction of the Group, the
likely speed of progress and the financial needs of the Group to
allow it to progress further. A desire to strengthen our position
in negotiations in Asia for NXP002 and to pursue promising
opportunities, prompted the GBP1.25 million placing completed in
December 2019. Opportunities to generate further value from our
development portfolio and in-house capabilities have increased but
the current environment has slowed the pace of all aspects of deal
negotiations.
We acknowledge that progress on business development deals has
been slower than previously expected. In part, this is a result of
the huge impact that the COVID-19 pandemic has had on business and
societies across the world. We must also acknowledge that as a
small emerging company, we are not in control of the pace of
negotiations. This is not always a negative, as during this time,
the interest in our assets and their potential in the treatment of
COVID-19, as well as the resultant fibrosis, has increased. These
business discussions are confidential and further announcements
will be made as and when appropriate.
Strategy
The opportunities for our business are still there. Our
confidence remains in our people, technology and products. Our
business model is one with very low operating costs, but we must
now look to diversify the means by which revenues are derived, as
we have already started to do. Our strategy will therefore take
three approaches, each underpinning a balance of risk and reward
and timing of returns and revenue generation. We will:
1. Undertake technology licensing agreements centred on our IP
and provide fee-for-service work to third parties producing their
proprietary products, providing Nuformix with short-term revenue
streams
2. Apply Nuformix's IP to produce our own proprietary product
opportunities for short-term development and out-licensing,
providing potentially larger, medium-term revenue streams
3. Evaluate co-development opportunities, with third parties, of
generic products where Nuformix's IP provides renewed patent
protection, allowing access to more rapid development to market and
risk-share appropriate for Nuformix
The following Operational Review illustrates our focus towards
the treatment of patients with fibrosis. There has been an
increasing need for effective products in this area for many years;
with the advent of COVID-19, we only see this need increasing, and
on a global basis. For our other strategic opportunities, we must
be therapy-agnostic and move to where the patient need, commercial
market and our scientific expertise provide compelling
opportunities for generating shareholder value.
Operational highlights
During the year, we prioritised development of our anti-fibrotic
candidate, NXP002, and are developing an inhaled formulation. Our
preparations for first clinical exposure are underway. We are
looking at all options for deriving value from this product
globally.
Having demonstrated the successful application of our
proprietary cocrystal technology in humans using NXP001, we believe
this product could also be of interest to third parties. Whilst it
is too early to characterise this, we will be extending our
business development efforts in this area over the coming 12
months. This will be greatly assisted by our network of key opinion
leaders and scientific advisors.
The Group also commenced pre-clinical pilot studies to
investigate the potential for NXP004 with the highly acclaimed
Newcastle Fibrosis Research Group. Significant progress was being
made until the inevitable operational challenges of the COVID-19
outbreak contrived to slow that progress. Evaluation of this
important data on an exciting candidate that could be applicable to
several disease indications is now expected to complete later this
year. Again, we are looking at all options for deriving value from
this product.
We have also announced two new revenue generating collaboration
agreements, with Ebers Tech Inc. (Ebers) and VistaGen Therapeutics
Inc. (VistaGen; post-period, May 2020).
Operational Review
NXP002 - Inhaled therapy for Fibrotic Diseases
Nuformix's NXP002 programme remains the Group's priority and
entails the development of an inhaled therapy, initially for the
treatment of Idiopathic Pulmonary Fibrosis (IPF).
Our focus is now on the development of a formulation and
delivery process that exploits the optimal means to treat fibrosis
of the lungs, through nebulisation of the drug to facilitate
inhalation by the patient. We are considering a number of
inhalation devices that would enable rapid and deep penetration of
the drug into the lungs with a view to evaluating them further.
We have also started to review and assess some emerging academic
data that suggest coronaviruses can trigger hyper-inflammation
through activation of the biological target known as the NLRP3
inflammasome, making this a potential novel drug target to treat
COVID-19. The mechanism of NXP002 can interact directly with NLRP3,
blocking the assembly of the inflammasome. Whilst this still
requires clinical validation, we intend to explore the commercial
potential of this attribute of our drug.
The Group previously announced that negotiations for
out-licensing commercial rights for Asia markets were underway.
Discussions have continued but the pace of negotiations has been
limited as a result of the COVID-19 pandemic situation, closures to
key sites in Asia and access to key personnel. When normal trading
conditions return, with direct access to key personnel, we hope to
continue these and other efforts to derive value from this product
for all key world markets. The value of NXP-002 is not just
confined to Asia and we intend to assess interest in regions
outside Asia with additional parties.
NXP001 - Oncology supportive care
Following successful completion of initial Phase I studies, our
evaluation of the balance of investment and return directs us
towards looking for regional or global licencing opportunities for
NXP001. We will devote business development effort to this end and
update the market as and when we are able to report progress.
The positive pre-clinical and clinical data generated for NXP001
completed Nuformix's activities within the programme in accordance
with its agreement with Newsummit Biopharma "NSB". In February, the
Group confirmed that issues between Newsummit Biopharma and its
parent company, Zheiiang Yatai Pharmaceutical, (Yatai), impacted
milestone payments due to Nuformix, totalling GBP2.5m. Nuformix
remains in dispute with NSB regarding payment. We will continue to
pursue the monies owed, whilst focusing on the development of the
business as a whole.
NXP004 - Fibrosis
Nuformix commenced pre-clinical pilot studies to investigate the
potential for NXP004 as a treatment for multiple forms of fibrosis
in various human tissues with its research partner, Newcastle
Fibrosis Research Group (NFRG). As a response to COVID-19, staff
and equipment at the NFRG have been commandeered on Government
orders to support national testing efforts at Milton Keynes.
Completion of the pilot study has therefore been delayed.
Whilst this is disappointing for the Group, it is in the
national interest. Furthermore, initial data, whilst early stage,
is very encouraging. The full pilot study is expected to complete
by the end of 2020.
It is worth noting that whilst the marketed form of this drug is
very successful in its current indication, its formulation and
side-effects have posed a significant challenge to extending the
use of the drug into new indications that could also benefit from
its mechanism of action. Our instinct was to use cocrystal
technology to overcome some of the formulation issues and open up
potential new therapeutic applications. Evaluation of the
pre-clinical data alongside exploring new formulation options with
our cocrystal forms will enable us to begin to explore additional
business development options.
Collaborative pipeline programmes
The Company continues to operate a commercial model that seeks
to create both value and revenue from a combination of IP
out-licensing and collaborative development agreements.
In April 2019, the Group announced a new development and
licensing agreement with Ebers, enabling Ebers to use Nuformix's
technology platforms in the development of Ebers' cannabinoid
therapies. Post-period, we were pleased to confirm that, as a
result of on-going development activities, a further patent filing
had been made in relation to novel cannabinoid cocrystals that
triggered an undisclosed milestone payment.
Post-period in May 2020, the Group announced a new collaboration
with VistaGen Therapeutics Inc. (VistaGen), a clinical-stage
biopharmaceutical company developing new generation medicines for
anxiety, depression and other central nervous system "CNS" diseases
and disorders with high unmet need. VistaGen will apply Nuformix's
proprietary technology platform to develop patentable new
crystalline forms of their AV-101 programme. If successful,
Nuformix and VistaGen will consider opportunities to extend the
collaboration to other CNS therapeutic candidates with a view to
unlocking additional therapeutic and commercial opportunities. We
hope to be in a position to announce the outcome over the next
quarter.
COVID-19 response and impact
Nuformix's priority has remained the health and safety of
employees on site, which has remained open, conducting research on
in-house and collaborative projects. The Group has followed
Government advice whilst allowing the team to work flexibly,
without disruption to internal research.
Proactive measures have been taken to preserve cash during this
period. This included placing uncommitted external research
activities on hold and reducing administrative and operating
expenditure where possible to further reduce the Group's
cash-burn.
Board changes
During the year, several changes have occurred on the Board.
In September 2019, Kirk Siderman-Wolter resigned his position
from the Board, having been appointed in 2017.
In January 2020, Professor John Lidgey resigned from the Board,
having made significant contributions to the business.
In February 2020, we announced that Dr Dave Tapolczay, Founder
and Chairman, had resigned his position, having helped establish
the Group and served to progress its development for over a
decade.
Post-period, in June 2020, Dr Dan Gooding resigned as Chief
Executive Officer having served in that role since 2017.
We also announced that Dr Karl Keegan had joined to further
strengthen the Board as a Non-Executive Director. Karl has over 25
years' experience working in senior positions in the life sciences
industry and has extensive experience in strategy, finance,
corporate development and capital markets within life sciences.
Karl brings a wealth of experience that is highly relevant to
Nuformix at this moment as we enter new stages in the development
of the Group and our assets.
From a personal perspective, having moved within the space of
twelve months from a Non-executive Director to Interim Chairman and
now Executive Chairman, whilst unintended, it is a great honour to
serve the Group and its shareholders. Once we have navigated the
above challenges, it is my intention to search for a new Chief
Executive Officer to lead the Group through its next phase of
development but until such time, I will be working full time in my
capacity as Executive Chairman and fully committed to the success
of the Group. I am currently very ably assisted by Karl Keegan and
the continued support of Co-Founder and Chief Scientific Officer,
Jo Holland. Together, we will not only strive to drive the value of
Nuformix, but also to ensure its guidance and governance is
enhanced through an appropriate Board structure and experienced
executive management.
Scientific advice
In September 2019, we welcomed Dr Muhunthan Thillai as a
Scientific Advisor. Dr. Thillai is the Lead Clinician for the
Cambridge Interstitial Lung Disease Unit, where he is also
currently appointed as a Consultant. Dr Thillai began his training
in London and Oxford where he gained Membership of the Royal
College of Physicians. He was awarded a personal Research Training
Fellowship from the Wellcome Trust. This allowed him to undertake
three years of scientific research into sarcoidosis, in which Dr
Thillai specialises, in addition to IPF. Dr Thillai has, and will
continue to provide, invaluable experience in the design and
execution of future Nuformix clinical studies in IPF and our NXP002
programme.
Outlook
The Board has completed a business review, mapping out a
sensible course through the months ahead and focussing investment
on the programmes we believe will deliver short-term returns.
We have focussed expenditure on activities that deliver
immediate benefit and maintain cashflow. Our efforts will focus on
negotiating licensing agreements for our lead programmes and
supporting new initiatives with the potential to add further
value.
The Board believes the Group has sufficient cash when combined
with expected income to deliver on its objectives and following the
Board's recent review of the Group's cash flow needs and
opportunities.
Whilst we are optimistic, we remain conservative and focused on
delivery for both our in-house and collaborative development
programmes and with a determination to create and deliver
shareholder value.
Dr Chris Blackwell
Executive Chairman
21 July 2020
Risks and uncertainties
The Group's risk management policy is regularly reviewed and
updated in line with the changing needs of the business. Risk is
inherent in all business. Set out below are certain risk factors
which could have an impact on the Company's long-term performance
and mitigating factors adopted to alleviate these risks. This does
not purport to be an exhaustive list of the risks affecting the
Company.
The primary risks identified by the Board are:
Strategic risks
-- Funding the business
o Potential impact and mitigation:
The biotechnology and pharmaceutical industries are very
competitive, with many major players having substantial R&D
departments with greater resources and financial support. The
Company aims to execute commercial deals generating enough revenue
to sustain the business. Without this, reliance falls on investors
or potential M&A opportunities. Failure to generate additional
funding from these sources, if required, would compromise the
Company's ability to achieve its strategic objectives as set out in
the outlook on pages 6 to 7.
-- Feasibility of drug candidates
o Potential impact and mitigation:
Drug candidates can fail due to a lack of efficacy or potency,
unacceptable toxicology results, insurmountable challenges in
medicinal chemistry, or other technical issues unforeseen at the
time of candidate selection. This is the main reason that the
conventional pharmaceutical R&D model takes many years and
billions of dollars from discovery to approved medicine. It is
possible that the drug candidates selected by Nuformix are found to
be non- viable for development although Nuformix's model of working
only on known drugs allows us to mitigate this risk to a certain
extent.
-- Failure to protect our IP
o Potential impact and mitigation:
If our IP rights are not adequately secured or defended against
infringement, or conversely become subject to infringement claims
by others, commercial exploitation could be completely inhibited.
The Company constantly monitors its patents and is prepared to
defend them rigorously.
-- Unrealistic goals and timeframes
The Company's executive management has a duty to the Board and
the Company's shareholders to maintain a realistic view of the
chances of success of products, deals and partnerships. Should this
not be managed accurately and appropriately, the Company and its
Board and staff risk financial, business and reputational damage,
whilst its shareholders become exposed to investment risk and
uncertainty over the Company's viability and status. The Board
continually reviews executive management's expectations and
communications in the public domain to reduce the risk of
misalignment.
-- Reliance on partners
o Potential impact and mitigation:
To progress the development of a drug candidate requires
resources, financially or otherwise, that are not necessarily
available to Nuformix. The drug candidates Nuformix wishes to
develop may be of interest to third parties capable of providing
these resources, so a partnership may provide mutual benefits and
mitigate risks for Nuformix. However, the specific strategic focus
of a partner may not align totally with Nuformix's objectives.
Maintaining a balance in a partnership is therefore a risk, such as
timing, cost sharing, development decisions.
Operational risks
-- Management and employees
o Potential impact and mitigation:
With a semi-virtual company model with relatively few employees,
the Company's ability to manage day to day tasks, its relationships
with its customers and suppliers, and the need to liaise with
collaborative partners, could be undermined by failure to retain or
recruit key management and employees. The Company endeavours to
offer attractive remuneration and a positive working environment
for executive staff. Main Board Directors are incentivised as
detailed in the Directors' Remuneration Report.
-- Business development risks in terms of timing and success of deal flow
o Potential impact and mitigation:
Opportunities to generate further value from our development
portfolio and in-house capabilities have increased but the current
environment has slowed the pace of all aspects of deal
negotiations. However, Nuformix seeks to establish a broad range of
assets, opportunities and revenue sources to help mitigate such
risks.
-- Adapting to the external environment - COVID19
o Potential impact and mitigation:
The ability of the Company to quickly adapt to external events
such as the outbreak of COVID19 may impact the delivery of our
strategy. The pandemic could cause further impact to external
research and laboratory work. Our primary focus remains the safety
of our employees and the health and safety of employees on site
conducting research on in-house and working on collaborative
projects. The Company follows Government advice whilst allowing the
team to work flexibly, without disruption to internal research. The
risks are also mitigated by the Company's semi-virtual business
model, allowing the Executive management and Board to work remotely
and effectively
UK's departure from European Union ("Brexit")
The impact of the UK's departure from the European Union is not
yet clear but it may significantly affect the fiscal, monetary and
regulatory landscape in the UK, and could have a material impact on
the UK's economy and the future growth of its industries, including
the pharmaceutical and biotechnology industries. Depending on the
free trade agreement terms negotiated between EU Member States and
the UK following Brexit, the UK could lose access to the single
European Union market and to the global trade deals negotiated by
the European Union on behalf of its members. Although it is not
possible at this point in time to predict fully the effects of the
free trade agreement with the European Union, it could have a
material adverse effect on the Group's business, financial
condition and results of operations. In addition, it may impact the
Group's ability to comply with the extensive government regulation
to which it is subject and impact the regulatory approval processes
for its product candidates. This is an area the Executive
Management monitors closely.
Financial risk management
-- Failure to achieve strategic plans or meet targets or expectations
o Potential impact and mitigation:
The Group actively and regularly reviews and manages its capital
structure to ensure an optimal capital structure and equity holder
returns, taking into consideration the future capital requirements
of the Group and capital efficiency, prevailing and projected
profitability, projected operating cash flows, projected capital
expenditures and projected strategic investment opportunities.
Further detail on the Group's risk management policies and
procedures are set out in note 24 of the financial statements
Financial Highlights
-- Net assets at year-end of GBP4,742,520 (2019: GBP3,815,330)
which includes GBP543,772 cash at bank (2019: GBP4,261). The Group
has seen a reduction in the net book value of its patents as the
continued investment into its intellectual property portfolio of
GBP32,470 was lower than amortisation of GBP44,961.
-- The Group delivered a loss on ordinary activities (after tax
credit) of GBP756,376 (2019: loss of GBP1,661,227) and a loss per
share was 0.16p (2019: 0.36p). The reported loss is driven
primarily by product development costs related to clinical studies.
The improvement in the loss during the year is largely driven by
lower share-based payment charges of GBP106,361 (2019:
GBP975,926).
-- Total revenue of GBP535,000 (2019: GBP610,000)
Performance
The following are the key performance indicators ("KPIs")
considered by the Board in assessing the Group's performance
against its objectives. These KPIs are:
Financial KPIs
The Group is currently at a stage where the Board considers
availability of cash to be the primary KPI. At 31 March 2020 cash
balances totalled GBP543,772 (2019: GBP4,261). The Board will
consider introducing additional KPIs to monitor the Group's
development as they become relevant in the future.
Meeting financial targets:
The Group actively and regularly reviews and manages its capital
structure to ensure an optimal capital structure and equity holder
returns, taking into consideration the future capital requirements
of the Group and capital efficiency, prevailing and projected
profitability, projected operating cash flows, projected capital
expenditures and projected strategic investment opportunities.
Further detail on the Group's risk management policies and
procedures are set out in note 24 of the financial statements
Non-Financial KPIs
-- Progress of Lead Programmes:
Applying Nuformix's IP to produce its own proprietary product
opportunities for short-term development and out-licensing provide
potentially larger, medium term revenue streams.
NXP002: During the year the Company prioritised the development
of its anti-fibrotic candidate, NXP002 and developing an inhaled
formulation. Preparations for first clinical exposure are underway
and with appropriate financing, we believe this candidate can be
moved through preclinical studies and into the clinic. We are
looking at all options for deriving value from this product that
includes the ability to secure a development partner.
NXP001: Following successful completion of initial Phase I
studies of this oncology supportive care candidate, the Company's
evaluation of the balance of investment and return directs it
towards looking for regional or global licencing opportunities.
NXP004: Nuformix commenced pre-clinical pilot studies to
investigate the potential for NXP004 as a treatment for multiple
forms of fibrosis in various human tissues with its research
partner, Newcastle Fibrosis Research Group (NFRG). Evaluation of
the pre-clinical data alongside exploring new formulation options
with our cocrystal forms will enable us to begin to explore
business development options.
-- Number of collaborative technology licensing agreements:
Undertaking technology licensing agreements centred on our IP
and providing fee-for-service work to third parties producing their
proprietary products, provides Nuformix with short-term revenue
streams.
During the year we announced a new development and licensing
agreement with Ebers Tech Inc. enabling Ebers to use Nuformix's
technology platforms in the development of Ebers' cannabinoid
therapies and triggering milestone payments.
-- Co-development with third parties:
Evaluation of co-development opportunities, with third parties,
of generic products where Nuformix's IP provides renewed patent
protection, allowing access to more rapid development to market and
risk-share appropriate for Nuformix.
Statement of Directors' Responsibilities
The Directors acknowledge their responsibilities for preparing
the Annual Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the Directors
have elected to prepare the financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. 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 Group
and Company and of the profit or loss of the Group for that year.
In preparing these financial statements, the Directors are required
to:
* Select suitable accounting policies and apply them
consistently;
* Make judgements and accounting estimates that are
reasonable and prudent;
* State whether applicable International Financial
Reporting Standards (IFRSs), as adopted by the
European Union, 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
Group will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of the Group and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
In the case of each person who was a director at the time of
this report was approved:
-- So far as that Director is aware, there is no relevant audit
information of which the Group's auditor is unaware; and,
-- That Director has taken all steps that the director ought to
have taken as a director to make himself aware of any relevant
audit information and to establish that the Group's auditor is
aware of that information.
Independent Auditor's Report to the Members of Nuformix plc
Opinion
We have audited the financial statements of Nuformix plc (the
'Parent Company') and its subsidiary (collectively 'the Group') for
the year ended 31 March 2020 which comprise the Consolidated Income
Statement and Statement of Comprehensive Income, the Consolidated
and Parent Company Statement of Financial Position, the
Consolidated and Parent Company Statement of Changes in Equity, the
Consolidated and Parent Company Cash Flow Statement and the related
notes including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
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 2020 and of the Group's
loss for the year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis of 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
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 public interest
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 relating to going concern
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosures made
in note 2 of the financial statements concerning the Group's
ability to continue as a going concern. The disclosures indicate
that there are inherent material uncertainties relating to when
milestones in research will be achieved and the likely outcome of
trials which will give a right to revenue and cash receipts, the
successful signing of out-licensing agreements and the timing of
ensuing cash receipts and finally the possibility of a successful
fundraise via the placing of equity shares. These circumstances
indicate the existence of a material uncertainty which may cast
significant doubt on the Group's ability to continue as a going
concern. The financial statements do not include any adjustments
that would result if the company or Group was unable to continue as
a going concern.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, 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) that we identified. These matters included 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.
Risk Our response Key observation
Going Concern
Review of monthly cash
Ongoing losses flow forecasts and budgets We have observed
may indicate that prepared by the directors that a material uncertainty
the accounts should up to November 2021 relating to going
not be prepared to assess the reasonableness concern is present
on a going concern of their assessment (see previous section).
basis (see note of the parent company
2 for further and Group's going concern
detail) status.
Discussion with Directors
on future plans.
Scrutinizing the sensitivities
forecasted and challenging
the assumptions underpinning
the cash flow forecasts.
Checking the accuracy
and mathematical integrity
of the cash flow forecasts
prepared by management.
----------------------------------- --------------------------------
Carrying value
of intangible Review of Directors'
assets impairment assessment No impairment was
of intangibles, including deemed appropriate.
Losses may indicate goodwill on consolidation.
that the intangible Critically challenging
assets, including the Directors' forecasts
goodwill on consolidation, and projections used
are impaired (note in the impairment review.
14 shows that
GBP4.2m was held Obtaining evidence of
on the balance the commercial and technical
sheet at year feasibility of the capitalised
end). patents.
----------------------------------- --------------------------------
Valuation of options
and warrants Valuation models assessed
and reperformed where
Valuation of share possible.
options is a complex No material misstatements
and subjective Competence and independence were identified.
area (see note of management's expert
19). valuer appraised.
Assumptions inherent
to valuation models
assessed as to whether
they are reasonable.
Review of option and
warrant agreements to
ensure that terms have
been appropriately reflected
within the calculations
and assumptions.
----------------------------------- --------------------------------
Our application of materiality
We define materiality as the magnitude of misstatement that
could reasonably be expected to influence the readers and the
economic decisions of the users of the financial statements. We use
materiality both in planning our audit and in evaluating the
results of our work.
We determined materiality for the Group to be GBP45,000, which
is approximately 5% of loss before tax. Overall performance
materiality (i.e. our tolerance for misstatement in an individual
account or balance) for the Group was 75% of materiality, namely
GBP33,750.
We have agreed to report to the Audit Committee all audit
differences in excess of GBP2,250, as well as differences below
that threshold that, in our view, warrant reporting on qualitative
grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation
of the financial statements.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Group
and its environment, including internal control, and assessing the
risks of material misstatement.
The Group includes the listed parent company, Nuformix PLC, and
its trading subsidiary, Nuformix Technologies Limited. The Group's
accounting function is outsourced to a third party accountancy
firm. We included the outsourcer in our planning discussions with
management and established a dedicated portal where the outsourcer
could share the accounting records and supporting documentation
with us. We discussed with management events that had taken place
during the year in order to obtain an understanding of any changes
in the Group's environment that might impact on our audit. Our
tests included, but were not limited to, discussions with the
outsourcer as well as the Group management.
Both companies were audited by the same audit engagement team
and, accordingly, all revenue, total assets and loss before tax of
the Group were subject to audit by Haysmacintyre LLP. The main
trading entity is the focus of our audit, as this comprises all the
Group revenue, but, at the parent company level, we also tested the
consolidation process and challenged the directors' view on the
carrying value of the investment in subsidiary and the group
intangible assets. We also carried out analytical procedures to
confirm our conclusion that there were no significant risks of
material misstatement.
We did not identify any key audit matters relating to
irregularities, including fraud. We also introduced variability
into our audit tests and assessed the risk of management override
on internal controls, including testing journals and evaluating
whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
Based on our understanding of the Group our audit was focused on
the key risks as described above.
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. Our opinion on the 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. In connection with our audit of the
financial statements, 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 audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the
financial statements or a material misstatement of other
information. If, based on the work we have performed, we conclude
that there is a material misstatement of the other information, we
are required to report that fact. We have nothing to report in this
regard.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the part of the directors' remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken during the
audit:
-- Information given in the Strategic Report and the Directors'
Report for the financial year 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
Considering our knowledge and understanding of the Group and the
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
Strategic Report and 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 the part of the directors' remuneration report
to be audited is not in agreement with the accounting records and
returns; or
-- We have not received all the information and explanations we require for our audit.
Respective responsibilities of Directors and Auditor
As explained more fully in the Statement of Directors'
Responsibilities set out on pages 29 to 30, the Directors are
responsible for the preparation of the 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 financial statements, the Directors are
responsible for assessing the Group's 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
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 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 it 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 based on these financial
statements.
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.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate .
Extent to which the audit was considered capable of detecting
irregularities, including fraud
We identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, and then
design and perform audit procedures responsive to those risks,
including obtaining audit evidence that is sufficient and
appropriate to provide a basis for our opinion.
Identifying and assessing potential risks related to
irregularities
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance with
laws and regulations, we considered the following:
-- the nature of the industry and sector, control environment
and business performance including the design of the Group's
remuneration policies, key drivers for directors' remuneration,
bonus levels and performance targets;
-- results of our enquiries of management and the audit
committee about their own identification and assessment of the
risks of irregularities;
-- any matters we identified having obtained and reviewed the
Group's documentation of their policies and procedures relating
to:
o identifying, evaluating and complying with laws and
regulations and whether they were aware of any instances of
non-compliance;
o detecting and responding to the risks of fraud and whether
they have knowledge of any actual, suspected or alleged fraud;
o the internal controls established to mitigate risks of fraud
or non-compliance with laws and regulations;
-- the matters discussed among the audit engagement team
regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities
and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following areas:
impairment of goodwill and intangibles, revenue recognition, and
valuation of share options. In common with all audits under ISAs
(UK), we are also required to perform specific procedures to
respond to the risk of management override. We also obtained an
understanding of the legal and regulatory frameworks that the group
operates in, focusing on provisions of those laws and regulations
that had a direct effect on the determination of material amounts
and disclosures in the financial statements. The key laws and
regulations we considered in this context included the UK Companies
Act and Listing Rules, UK Bribery Act as well as pensions
legislation and tax legislation.
Audit response to risks identified
As a result of performing the above, we identified the following
key audit matters: impairment of goodwill and intangibles and
valuation of share options as key audit matters related to the
potential risk of fraud. The key audit matters section of our
report explains the matters in more detail and also describes the
specific procedures we performed in response to those key audit
matters. In addition to the above, our procedures to respond to
risks identified included the following:
-- reviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with provisions of
relevant laws and regulations described as having a direct effect
on the financial statements;
-- enquiring of management and the audit committee concerning
actual and potential litigation and claims;
-- performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material
misstatement due to fraud;
-- reading minutes of meetings of those charged with governance; and
-- in addressing the risk of fraud through management override
of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in making
accounting estimates are indicative of a potential bias and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members and
remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Other matters we are required to address
We were appointed by the Directors to audit the financial
statements for the period ending 31 March 2016. Our total
uninterrupted period of engagement is five years, covering the
period ending 31 March 2016 and the years ended 31 March 2017,
2018, 2019 and 2020.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the Group or the Parent Company and we remain
independent of the Group and the Parent Company in conducting our
audit.
Our audit opinion is consistent with the additional report to
the audit committee.
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.
Ian Daniels (Senior statutory auditor) 10 Queen Street Place
For and on behalf of Haysmacintyre LLP, London
Statutory Auditors EC4R 1AG
Date: 21 July 2020
Consolidated Income Statement and Statement of Comprehensive
Income for the Year Ended 31 March 2020
2020 2019
Note GBP GBP
Revenue 4 535,000 610,000
Cost of sales (333,595) (537,527)
----------- -----------
Gross profit 201,405 72,473
Administrative expenses (1,119,580) (1,887,609)
Other operating income 5 4,130 4,624
----------- -----------
Operating loss 6 (914,045) (1,810,512)
Finance costs 7 (15,837) (32,210)
----------- -----------
Loss before tax (929,882) (1,842,722)
Income tax receipt 11 173,506 181,495
----------- -----------
Loss for the year and total comprehensive
income for the year (756,376) (1,661,227)
=========== ===========
Loss per share - basic and diluted 12 (0.16)p (0.36)p
The above results were derived from continuing operations.
These financial statements were approved by the board on 21 July
2020 and were signed on its behalf by:
Dr Chris Blackwell
Executive Chairman
Consolidated Statement of Financial Position as at 31 March
2020
31 March 31 March
2020 2019
Note GBP GBP
Assets
Non-current assets
Property, plant and equipment 13 82,912 27,520
Intangible assets 14 4,247,862 4,260,353
----------- -----------
4,330,774 4,287,873
----------- -----------
Current assets
Trade and other receivables 16 79,496 162,865
Income tax asset 172,391 179,850
Cash and cash equivalents 17 543,772 4,261
----------- -----------
795,659 346,976
----------- -----------
Total assets 5,126,433 4,634,849
=========== ===========
Equity and liabilities
Equity
Share capital 18 490,145 460,750
Share premium 4,480,400 2,932,590
Merger relief reserve 10,950,000 10,950,000
Reverse acquisition reserve (8,005,195) (8,005,195)
Share option reserve 1,814,613 1,708,252
Retained earnings (4,987,443) (4,231,067)
----------- -----------
Total equity 4,742,520 3,815,330
----------- -----------
Non-current liabilities
Loans and borrowings 20 37,257 -
----------- -----------
Current liabilities
Trade and other payables 23 308,525 804,408
Loans and borrowings 20 38,131 15,111
----------- -----------
346,656 819,519
----------- -----------
Total equity and liabilities 5,126,433 4,634,849
=========== ===========
These financial statements were approved by the board on 21 July
2020 and signed on its behalf by:
Dr Chris Blackwell
Executive Chairman .
Consolidated Statement of Changes in Equity for the Year Ended
31 March 2020
Reverse acquisition
Merger reserve Share
Share Share relief GBP option Retained
capital premium reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
At 1 April
2019 460,750 2,932,590 10,950,000 (8,005,195) 1,708,252 (4,231,067) 3,815,330
Loss for the
year and
total
comprehensive
loss - - - - - (756,376) (756,376)
Issue of share
capital 29,395 1,612,810 - - - 1,642,205
Share issue
costs (65,000) - - - (65,000)
Share and
warrant based
payment - - - - 106,361 - 106,361
At 31 March
2020 490,145 4,480,400 10,950,000 (8,005,195) 1,814,613 (4,987,443) 4,742,520
=========== =========== ============ ======================= =========== =========== ===========
Reverse acquisition
Merger reserve Share
Share Share relief GBP option Retained
capital premium reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
At 1 April
2018 460,750 2,932,590 10,950,000 (8,005,195) 724,837 (2,569,840) 4,493,142
Loss for the
year and
total
comprehensive
loss - - - - - (1,661,227) (1,661,227)
Share and
warrant based
payment - - - - 975,926 - 975,926
Equity element
of
convertible
loan note - - - - 7,489 - 7,489
----------- ----------- ------------ ----------------------- ----------- ----------- -----------
At 31 March
2019 460,750 2,932,590 10,950,000 (8,005,195) 1,708,252 (4,231,067) 3,815,330
=========== =========== ============ ======================= =========== =========== ===========
Consolidated Statement of Cash Flows for the Year Ended 31 March
2020
2020 2019
Note GBP GBP
Cash flows from operating activities
Loss for the year (756,376) (1,661,227)
Adjustments to cash flows from non-cash
items
Depreciation and amortisation 6 81,685 52,815
Loss on disposal of plant, property
and equipment 6 31
Finance costs 7 15,837 32,208
Income tax expense 11 (173,506) (181,495)
3,
Share and warrant based payment 6 106,361 975, 926
Equity element of convertible loan
note - 7,489
--------- -----------
(725,968) (774,284)
Working capital adjustments
Decrease in trade and other receivables 16 83,369 17,457
Increase / (decrease) in trade and
other payables 23 (256,178) 260,604
--------- -----------
Cash consumed by operations (898,777) (496,223)
Income taxes received 11 180,965 196,881
--------- -----------
Net cash outflow from operating activities (717,812) (299,342)
--------- -----------
Cash flows from investing activities
Acquisitions of property plant and
equipment 13 (10,733) (1,277)
Disposals of property plant and equipment 13 - 149
Acquisition of intangible assets 14 (32,470) (26,148)
--------- -----------
Net cash flows from investing activities (43,203) (27,276)
--------- -----------
Cash flows from financing activities
Issue of shares (net of costs) 1,337,500 -
Interest paid 7 (9,785) (3,483)
Increase in other directors' loans 20 505 -
Reduction in other loans 20 (3,162) -
Cash payment for reduction of lease
liability (23,994) -
Foreign exchange losses 7 (538) (3,805)
--------- -----------
Net cash in / (out)flows from financing
activities 1,300,526 (7,288)
--------- -----------
Net increase / (decrease) in cash and
cash equivalents 539,511 (333,906)
Cash and cash equivalents at 1 April 4,261 338,167
--------- -----------
Cash and cash equivalents at 31 March 543,772 4,261
========= ===========
The accompanying notes to the financial statements on pages 42
to 62 form an integral part of the financial statements.
Notes to the Consolidated Financial Statements for the Year
Ended 31 March 2020
1 General information
Nuformix plc ("the Company") and its subsidiary (together, "the
Group") operate in the field of complex scientific research,
specifically drug development through the use of
cocrystallisation.
The Company is a public limited company which is listed on the
Standard Market of the London Stock Exchange, domiciled in the
United Kingdom ("the UK") and incorporated in England and
Wales.
The address of its registered office is 6th Floor, 60
Gracechurch Street, London, EC3V 0HR and the company's principal
place of operation is 153 Cambridge Science Park, Cambridge, CB4
0GN.
2 Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS Standards) and on
the historical cost basis. The financial statements are presented
in Pounds Sterling which is the Group's functional and
presentational currency.
Statement of compliance
The Group financial statements have been prepared in accordance
with International Financial Reporting Standards and its
interpretations adopted by the European Union ("adopted
IFRSs").
Changes in accounting policy
None of the standards, interpretations and amendments effective
for the first time from 1 April 2019, other than IFRS16 Leases,
have had a material effect on the financial statements.
Adoption of new standards and amendments to existing
standards
Standards, interpretations and amendments to standards with
mandatory application for periods beginning on or after 1 April
2019
IFRS 16: "Leases". The company has elected to apply the standard
using the modified retrospective approach from 1 April 2019,
utilising certain of the practical expedients provided within the
Standard, and the cumulative effect of initial application will be
recognised in retained earnings at 1 April 2019. Comparative
figures for the year ended 31 March 2019 are not restated to
reflect the adoption of IFRS 16 but instead continue to reflect the
lessee's accounting policies under IAS 17 Leases. This is disclosed
in Note 15.
The following is a reconciliation of total operating lease
commitments at 31 March 2019 (as disclosed in the financial
statements to 31 March 2019) to the lease liabilities recognised at
1 April 2019:
2019
GBP
Operating lease commitments disclosed as at 31 March
2019 38,542
Add: additional lease commitment through non-exercise
of break clause 59,458
Discount using the lessee's incremental borrowing rate
at date of initial application (11,180)
--------
Lease liability recognised at 1 April 2019 86,820
Of which are:
Current lease liabilities 21,829
========
Non-current lease liabilities 64,991
========
The Company has adopted IFRIC 23 for the first time in the
current year. IFRIC 23 sets out how to determine the accounting tax
position when there is uncertainty over income tax treatments. Its
application had no impact on the Company's tax position.
At the date of the authorisation of these financial statements
the following Standards and Interpretations affecting the Group,
which have not been applied in these financial statements, were in
issue, but not yet effective or endorsed. The Group does not plan
to adopt these standards early:
Effective 1 January 2020:
-- Amendments to References to Conceptual Framework in IFRS Standards
-- Definition of Material (Amendments to IAS 1 and IAS 8)
-- Interest Rate Benchmark Reform
Not yet endorsed:
-- Definition of a Business (Amendments to IFRS 3)
-- IFRS 17 Insurance Contracts
-- IAS1 amendments regarding classification of liabilities
The directors do not expect that the adoption of the standards
listed above will have a material impact on the financial
statements of the Group in future periods.
Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting year. These estimates and assumptions
are based upon management's knowledge and experience of the
amounts, events or actions. Actual results may differ from such
estimates.
The critical accounting estimates are considered to relate to
the following:
Intangible assets
The Group recognises intangible assets in respect of goodwill
arising on consolidation. This recognition requires the use of
estimates, judgements and assumptions in determining whether the
goodwill is impaired at each year end.
Share options
The Group fair values equity-settled share-based payment
transactions using the Black-Scholes model and Monte Carlo
simulations where applicable. The use of the models involve
judgements and estimates including an assessment of whether the
shares will vest. Should actual future outcomes differ from these
assessments the amounts recognised on a straight-line basis would
vary from those currently recognised.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 March each year. Control is
achieved when the Company:
-- has the power over the investee;
-- is exposed, or has rights, to variable returns from its involvement with the investee; and
-- has the ability to use its power to affects its returns.
The Company reassesses whether it controls an investee if facts
and circumstances indicate that there are changes to one or more of
the three elements of control listed above. When the Company has
less than a majority of the voting rights of an investee, it
considers that it has power over the investee when the voting
rights are sufficient to give it the practical ability to direct
the relevant activities of the investee unilaterally. The Company
considers all relevant facts and circumstances in assessing whether
the Company's voting rights in an investee are sufficient to give
it power, including:
-- the size of the Company's holding of voting rights relative
to the size and dispersion of holdings of the other vote
holders;
-- potential voting rights held by the Company, other vote holders or other parties;
-- rights arising from other contractual arrangements; and
-- any additional facts and circumstances that indicate that the
Company has, or does not have, the current ability to direct the
relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, the results of
subsidiaries acquired or disposed of during the year are included
in profit or loss from the date the Company gains control until the
date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income
are attributed to the owners of the Company and to the
non-controlling interests. Total comprehensive income of the
subsidiaries is attributed to the owners of the Company and to the
non-controlling interests even if this results in the
non-controlling interests having a deficit balance. Where
necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with
the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses
and cash flows relating to transactions between the members of the
Group are eliminated on consolidation.
Going concern
The financial statements have been prepared on the going concern
basis of preparation which, inter alia, is based on the Directors'
reasonable expectation that the Group has adequate resources to
continue to operate as a going concern for at least twelve months
from the date of their approval. In forming this assessment, the
Directors have prepared cashflow forecasts covering the period
ending 30 November 2021 that take into account the likely run rate
on overheads and research expenditure and the prudent expectations
of income from out-licensing rights to its lead programmes.
Whilst there can be no guarantee of the successful outcome of
on-going out-licensing negotiations or the successful outcome of
future trials, in compiling the cashflow forecasts the Directors
have made estimates of the likely outcome of such negotiations and
trials, including when income might be generated from other means,
including raising funds through issues of equity, and have
considered alternative strategies should projected income be
delayed or fails to materialise.
Whilst the Directors anticipate revenue generating out-licensing
contracts will be signed, they recognise that there are inherent
material uncertainties as to when out-licensing transactions will
be completed and the timing of ensuing cash receipts, when research
milestones will be achieved and the likely outcome of trials which
will give a right to revenue and cash receipts and finally the
possibility of a successful fundraise via the placing of equity
shares. These circumstances indicate the existence of a material
uncertainty which may cast significant doubt on the Group's ability
to continue as a going concern. The financial statements do not
include any adjustments that would result if the company or Group
was unable to continue as a going concern.
The Directors have considered alternative strategies, which
include cost control measures, postponing uncommitted research
expenditure, securing alternative licensing arrangements from those
currently planned and utilising the Group's established network of
licensed brokers for fundraising.
After careful consideration, the Directors consider that they
have reasonable grounds to believe that the Group can be regarded
as a going concern and for this reason they continue to adopt the
going concern basis in preparing the Group's financial
statements.
Exceptional items
Exceptional items are defined as items which are non-recurring
in nature and material.
Revenue recognition
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods and provision of services in
the ordinary course of the Group's activities. Revenue is shown net
of sales/value added tax, returns, rebates and discounts and after
eliminating sales within the Group.
The Group recognises revenue when:
-- the amount of revenue can be reliably measured;
-- it is probable that future economic benefits will flow to the entity; and,
-- specific criteria have been met for each of the Group
activities, such as the demonstration of milestone achievements in
research or acceptance by both parties.
Segmental information
There is one continuing class of business, being the research
and experimental development of biotechnology.
Given that there is only one continuing class of business,
operating within the UK, no further segmental information has been
provided.
Taxation
The tax income represents the sum of tax credits currently
receivable and deferred tax. Tax currently receivable is based on
taxable profit for the year. Taxable profit differs from net profit
or loss as reported in the income statement because it excludes
items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or
deductible. The Group's current tax asset is calculated using tax
rates that have been enacted or substantively enacted at the
balance sheet date.
Deferred income taxes are calculated using the liability method
on temporary differences. Deferred tax is generally provided on the
difference between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not provided on the
initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting
profit.
Temporary differences include those associated with shares in
subsidiaries and joint ventures and are only not recognised if the
Group controls the reversal of the difference and it is not
expected for the foreseeable future. In addition, tax losses
available to be carried forward as well as other income tax credits
to the Group are assessed for recognition as deferred tax
assets.
Deferred tax liabilities are provided in full, with no
discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences
will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective year of realisation,
provided they are enacted or substantively enacted at the statement
of financial position date. Changes in deferred tax assets or
liabilities are recognised as a component of tax expense in the
income statements, except where they relate to items that are
charged or credited to equity in which case the related deferred
tax is also charged or credited directly to equity.
Property, plant and equipment
Property, plant and equipment is stated in the statement of
financial position at cost, less any subsequent accumulated
depreciation and subsequent accumulated impairment losses.
The cost of property, plant and equipment includes directly
attributable incremental costs incurred in their acquisition and
installation.
Depreciation
Depreciation is charged to write off the cost of assets, other
than land and properties under construction over their estimated
useful lives, as follows:
Depreciation method and
Asset class rate
Land and buildings 20% straight line
Computer equipment 33.33% straight line
Lab equipment 25% straight line
Intangible assets
Goodwill arising on the acquisition of an entity represents the
excess of the cost of acquisition over the Group's interest in the
net fair value of the identifiable assets, liabilities and
contingent liabilities of the entity recognised at the date of
acquisition. Goodwill is initially recognised as an asset at cost
and is subsequently measured at cost less any accumulated
impairment losses. Goodwill is held in the currency of the acquired
entity and revalued to the closing rate at each reporting year
date.
Goodwill is not amortised, but it is tested for impairment
annually, or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Gains and losses on the disposal of
an entity include the carrying amount of goodwill relating to the
entity sold.
Goodwill is allocated to cash-generating units ("CGUs") for the
purpose of impairment testing. The allocation is made to those CGUs
or groups of CGUs that are expected to benefit from the business
combination in which the goodwill arose. The Group currently has
only one CGU.
Separately acquired trademarks and licences are shown at
historical cost. Trademarks, licences (including software) and
customer-related intangible assets acquired in a business
combination are recognised at fair value at the acquisition
date.
Trademarks, licences and customer-related intangible assets have
a finite useful life and are carried at cost less accumulated
amortisation and any accumulated impairment losses.
Amortisation
Amortisation is provided on intangible assets to write off the
cost, less any estimated residual value, over their expected useful
economic life as follows:
Amortisation method and
Asset class rate
Patents 10% straight line
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Trade receivables
Trade receivables are amounts due from customers for services
performed in the ordinary course of business. If collection is
expected in one year or less (or in the normal operating cycle of
the business if longer), they are classified as current assets. If
not, they are presented as non-current assets.
Trade receivables are recognised initially at the transaction
price. They are subsequently measured at amortised cost using the
effective interest method, less provision for impairment. A
provision for the impairment of trade receivables is established
when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of the
receivables.
Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at the transaction price
and subsequently measured at amortised cost using the effective
interest method.
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 year of the relevant borrowing.
Interest expense is recognised based on 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.
Leases - After adoption of IFRS 16
IFRS 16 Leases was issued in January 2016 and is effective for
an entity's financial statements for annual reporting periods
beginning on or after 1 January 2019. IFRS 16 sets out the
principles for the recognition, measurement, presentation and
disclosure of leases. IFRS 16 introduces significant changes to
lessee accounting: it removes the distinction between operating and
finance leases under IAS 17 and requires a lessee to recognise a
right-of-use asset and a lease liability at lease commencement for
all leases, except for short-term leases and leases of low value
assets.
-- The right-of-use asset is initially measured at cost and
subsequently measured at cost less accumulated depreciation and
impairment losses, adjusted for any remeasurement of the lease
liability
-- The lease liability is initially measured at the present
value of the future lease payments discounted using the discount
rate implicit in the lease (or if that rate cannot be readily
determined, the lessee's incremental borrowing rate). Subsequently,
the lease liability is adjusted for interest and lease payments, as
well as the impact of lease modifications, amongst others.
IFRS 16's transition provisions permit lessees to use either a
full retrospective or a modified retrospective approach for leases
existing at the date of initial application of the standard, with
options to use certain transition reliefs.
The company has elected to apply the standard using the modified
retrospective approach from 1 April 2019, utilising certain of the
practical expedients provided within the Standard. The company
recognised right-of-use assets and lease liabilities in the
statement of financial position, initially measured at the present
value of the future lease payments, with the right-of-use asset
adjusted by the amount of any prepaid or accrued lease payments.
Comparative figures for the year ended 31 March 2019, are not
restated to reflect the adoption of IFRS 16 but instead continue to
reflect the lessee's accounting policies under IAS 17 Leases.
The company has elected to apply the following practical
expedients allowed for entities adopting IFRS 16 using the modified
retrospective approach:
-- Reassessment of contract - The company has made use of the
possibility not to reassess whether a contract is or contains a
lease. Accordingly, the definition of a lease in accordance with
IAS 17 and IFRIC 4 will continue to be applied to those leases
entered or changed before 1 April 2019.
-- Discount rate - Instead of requiring a lessee to determine
the incremental borrowing rate for every single lease, IFRS 16
allows a lessee to apply a single discount rate to a portfolio of
leases with reasonably similar characteristics (such as leases with
a similar remaining lease term for a similar class of underlying
asset in a similar economic environment).
-- Initial direct costs - As a practical expedient, IFRS 16
allows a lessee to exclude initial direct costs from the
measurement of the right of use (ROU) asset on transition.
-- Use of hindsight for lease term - A lessee is required to
determine the lease term at the date of initial application, which
includes purchase and renewal options reasonably expected to be
exercised and excludes termination options reasonably expected to
be exercised. To alleviate the burden of reconstructing a lessee's
initial assessment of the lease term and subsequent changes
thereafter, IFRS 16 allows a lessee to use hindsight to determine
which renewal and termination options to include or exclude.
-- Onerous lease determination - Similar to other non-financial
assets, ROU assets are subject to impairment testing under IAS 36
Impairment of Assets and a lessee is required to perform an
impairment review for each of its ROU assets at date of initial
application. IFRS 16 allows a lessee to use its onerous contract
assessment under IAS 37 Provisions, Contingent Liabilities and
Contingent Assets immediately before transition instead of
performing an impairment review under IAS 36. The ROU asset is then
reduced by any existing provision for related onerous leases -
there were no onerous contracts within the Group at 1 April
2019.
-- Short-term leases - For leases with a remaining term of less
than one year at the date of initial application, the lessee may
choose to apply the short-term lease exemption in IFRS 16 and
expense lease payments rather than recognize an ROU asset and a
lease liability. When using the short-term lease exemption, a
lessee is required to disclose the amount of lease payments
expensed as a result of using this expedient.
Equity
Equity comprises the following:
-- "Share capital" represents the nominal value of equity shares.
-- "Share premium" represents the amount paid for equity shares over the nominal value.
-- "Reverse acquisition reserve" arises due to the elimination
of the Company's investment in Nuformix Technologies Limited.
-- "Merger relief reserve" represents the share premium arising
on issue of shares in respect of the reverse acquisition
takeover.
-- "Share option reserve" represents the fair value of options issued.
-- "Retained earnings" represents retained earnings/losses.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed
contributions are paid into a separate entity and has no legal or
constructive obligations to pay further contributions if the fund
does not hold sufficient assets to pay all employees the benefits
relating to employee service in the current and prior years.
For defined contribution plans contributions are paid into
publicly or privately administered pension insurance plans on a
mandatory or contractual basis. The contributions are recognised as
employee benefit expense when they are due. If contribution
payments exceed the contribution due for service, the excess is
recognised as an asset.
Financial assets and liabilities
The Group's financial assets comprise intangible and tangible
fixed assets, trade and other receivables and cash and cash
equivalents.
The Group's financial liabilities comprise trade payables.
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Group becomes a party
to the contractual provisions of the instruments.
Share based payments
Equity-settled share based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. The fair value excludes the
effect of non-market-based vesting conditions. Details regarding
the determination of the fair value of equity-settled share-based
transactions are set out in note 19.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of the
number of equity instruments that will eventually vest. At each
reporting date, the Group revises its estimate of the number of
equity instruments expected to vest as a result of the effect of
non-market-based vesting conditions. The impact of the revision of
the original estimates, if any, is recognised in profit or loss
such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to reserves.
Equity -- settled share -- based payment transactions with
parties other than employees are measured at the fair value of the
goods or services received, except where that fair value cannot be
estimated reliably, in which case they are measured at the fair
value of the equity instruments granted, measured at the date the
entity obtains the goods or the counterparty renders the
service.
For cash -- settled share -- based payments, a liability is
recognised for the goods or services acquired, measured initially
at the fair value of the liability. At each reporting date until
the liability is settled, and at the date of settlement, the fair
value of the liability is remeasured, with any changes in fair
value recognised in profit or loss for the year.
Convertible loan note
The fair value of the liability portion of a convertible loan
note is determined using a market interest rate for an equivalent
non-convertible loan note. This amount is recorded as a liability
on an amortised cost basis until extinguished on conversion or
maturity of the bonds. The remainder of the proceeds is allocated
to the conversion option. This is recognised and included in
shareholders' equity, net of income tax effects.
Investment in subsidiaries
Investments in subsidiaries are carried in the Company's balance
sheet at cost less accumulated impairment losses. On disposal of
investments in subsidiaries the difference between disposal
proceeds and the carrying amounts of the investments are recognised
in profit or loss.
3 Exceptional items
The analysis of the Group's exceptional items for the year is as
follows.
2020 2019
GBP GBP
Share option charge - 828,427
Warrant charge - 147,499
--------- --------------
- 975,926
--------- --------------
Share option and warrant charges in the year ended 31 March
2019 were deemed exceptional as they related to the successful
completion of the reverse acquisition. In the current financial
year, the charges are deemed to be recurring in nature and
have been classified as administrative expenses.
4 Revenue
The analysis of the Group's revenue for the year from continuing
operations is as follows:
2020 2019
GBP GBP
Rendering of services 535,000 610,000
======= =======
5 Other operating income
The analysis of the Group's other operating income for the year
is as follows:
2020 2019
GBP GBP
Miscellaneous other operating income 4,130 4,624
======= =========
6 Operating loss
2020 2019
Arrived at after charging GBP GBP
Depreciation expense (including lease depreciation) 36,724 11,100
Amortisation expense 44,961 41,715
Loss on disposal of tangible fixed assets 31 151
Research and development expenditure 524,979 1,449,210
Share option charge 41,521 -
Warrant charge 64,840 -
Operating lease expense - property - 29,400
======= =========
Details of the share-based payments can be found in note 19.
7 Finance income and costs
2020 2019
GBP GBP
Finance costs
Interest expense on other financing liabilities (9,785) (28,405)
Interest on lease liabilities (5,514) -
Foreign exchange losses (538) (3,805)
------------ ------------
Total finance costs (15,837) (32,210)
============ ============
8 Staff costs
The aggregate payroll costs (including directors' remuneration)
were as follows:
2020 2019
GBP GBP
Wages and salaries 421,077 314,000
Social security costs 41,787 35,682
Pension costs, defined contribution scheme 4,306 2,703
------- -------
467,170 352,385
======= =======
The average number of persons employed by the Group (including
directors) during the year and analysed by category was as
follows:
2020 2019
No. No.
Research and development 3 3
==== ====
The Company has one employee (2019: one), other than the
executive directors, who are employed by Nuformix Technologies
Limited. The non-executive directors are engaged under service, not
employment, contracts.
9 Directors' remuneration
The Directors' remuneration for the year was as follows:
2020 2019
GBP GBP
Remuneration 347,077 373,114
======= =======
During the year, the number of Directors who were receiving
pension benefits was as follows:
2020 2019
No. No.
Accruing benefits under money purchase
pension scheme 2 2
==== ====
Details of the total remuneration paid for the services of the
directors are set out on pages 21 and 22 in the remuneration
report.
In respect of the highest paid director:
2020 2019
GBP GBP
Remuneration 120,000 125,000
10 Auditors' remuneration
2020 2019
GBP GBP
Audit of the financial statements - Group 38,000 29,450
Audit of the financial statements - Company 10,000 10,000
Audit related assurance service 10,000 5,250
11 Income tax
Tax (credited) in the income statement
2020 2019
GBP GBP
Current taxation
UK corporation tax (173,506) (181,495)
========= =========
The tax on loss before tax for the year is the same as the
standard rate of corporation tax in the UK of 19% (2019: 19%).
The differences are reconciled below:
2020 2019
GBP GBP
Loss before tax (929,882) (1,842,722)
========= ===========
Corporation tax at standard rate (176,678) (350,117)
Excess of capital allowances over depreciation 111 1,725
Expenses not deductible 24,280 189,661
Tax losses for which no deferred tax asset
was recognised 53,380 76,298
Adjustment in respect of research development
tax credit (74,599) (99,062)
--------- -----------
Total tax credit (173,506) (181,495)
========= ===========
No deferred tax asset has been recognised as the Directors
cannot be certain that future profits will be sufficient for this
asset to be realised. As at 31 March 2020 the Group has tax losses
carried forward of approximately GBP3,350,000 (2019:
GBP3,070,000).
The UK rate of corporation tax is 19%. The Finance (No 2) Act
2017 provided that this rate should be reduced to 17% with effect
from 1 April 2020, but this was subsequently changed in the 2020
Budget, meaning that the rate of UK corporation tax will remain at
19%.
As deferred tax assets and liabilities are measured at the rates
that are expected to apply in the periods of the reversal, deferred
tax balances at 31 March 2020 have been calculated at 19% which is
the rate at which the relevant balance is expected to be recovered
or settled.
12 Loss per share
Loss per share is calculated based on the weighted average
number of shares outstanding during the period. Diluted loss per
share is calculated based on the weighted average number of shares
outstanding and the number of shares issuable as a result of the
conversion of dilutive financial instruments.
2020 2019
GBP GBP
Loss after tax (756,376) (1,661,227)
Weighted average number of shares - basic
and diluted 477,064,822 460,750,000
Basic and diluted loss per share (0.16)p (0.36)p
13 Property, plant and equipment
Land and
buildings Computer equipment Lab equipment Total
GBP GBP GBP GBP
Cost or valuation
At 1 April 2019 32,204 17,487 9,732 59,423
Adoption of IFRS 16 81,414 - - 81,414
Additions - 3,381 7,352 10,733
Disposals - (3,235) - (3,235)
----------------------------- ------------------ ------------- -------
At 31 March 2020 113,618 17,633 17,084 148,335
----------------------------- ------------------ ------------- -------
Depreciation
At 1 April 2019 11,807 12,017 8,079 31,903
Charge for the year 31,143 3,938 1,643 36,724
Eliminated on disposal - (3,204) - (3,204)
----------------------------- ------------------ ------------- -------
At 31 March 2020 42,950 12,751 9,722 65,423
----------------------------- ------------------ ------------- -------
Carrying amount
At 31 March 2020 70,668 4,882 7,362 82,912
============================= ================== ============= =======
At 31 March 2019 20,396 5,471 1,653 27,520
============================= ================== ============= =======
14 Intangible assets
Goodwill Patents Total
GBP GBP GBP
Cost
At 1 April 2019 4,023,484 417,141 4,440,625
Additions - 32,470 32,470
----------- ------- ---------
At 31 March 2020 4,023,484 449,611 4,473,095
----------- ------- ---------
Amortisation
At 1 April 2019 - 180,272 180,272
Amortisation charge - 44,961 44,961
----------- ------- ---------
At 31 March 2020 - 225,233 225,233
----------- ------- ---------
Net book value
At 31 March 2020 4,023,484 224,378 4,247,862
=========== ======= =========
At 31 March 2019 4,023,484 236,869 4,260,353
=========== ======= =========
For impairment testing purposes, management considers the
operations of the Group to represent a single cash generating unit
(CGU) focused on research and development of drugs through the use
of cocrystallisation. Consequently, the goodwill is effectively
allocated and considered for impairment against the business as a
whole, being the single CGU.
The fair value of the CGU as at 31 March 2020 is considered to
be the market value of Nuformix plc. The share price of Nuformix
plc as at 31 March 2020 was 3.70p per share and there were
490,145,081 shares giving a fair value of GBP18,135,368
substantially in excess of the Group's net assets, including
goodwill, of GBP4,808,843.
As such, the Directors do not consider there to be any
indication that the goodwill is impaired.
15 Leases
The Group has elected to apply IFRS 16 using the modified
retrospective approach from 1 April 2019, utilising certain of the
practical expedients provided within the Standard.
In application of IFRS 16 as from 1 April 2019, the group has
recognised on the statement of financial position some
"right-of-use" assets and lease liabilities.
An operating lease exists at 153 Cambridge Science Park which
has a mixed use for office and laboratory purposes. This commenced
in July 2017 and will run until July 2022. There is a rent review
clause in July 2020. The annual charge for the site is GBP27,930
per annum.
The liabilities recognized in accordance with IFRS 16 at 31
March 2020 amount to GBP62,934, of which GBP25,677 is due within
one year and GBP37,257 is due after more than one year. To
determine the amount of these liabilities, future lease payments
were discounted at the incremental borrowing rate of the company
which was 7.5%.
The table below presents by nature the "right-of-use" assets
included in the fixed assets of the company in 2020:
Buildings
GBP
Cost or valuation
At 1 April 2019 -
Adoption of IFRS 16 81,414
Disposals -
---------
At 31 March 2020 81,414
---------
Depreciation
At 1 April 2019 -
Charge for the year 24,702
Eliminated on disposal -
---------
At 31 March 2020 24,702
---------
At 31 March 2020 56,712
=========
At 31 March 2019 -
=========
16 Trade and other receivables
31 March 31 March
2020 2019
GBP GBP
Trade receivables 2,690 887
Accrued income - 10,934
Prepayments 44,692 15,052
Other receivables 32,114 135,992
---------------------------- --------
79,496 162,865
============================ ========
The fair value of trade and other receivables is considered by
the Directors not to be materially different to the carrying
amounts. No trade receivables are overdue or impaired.
17 Cash and cash equivalents
31 March 31 March
2020 2019
GBP GBP
Cash at bank 543,772 4,261
================== ==================
The Directors consider that the carrying value of cash and cash
equivalents represents their fair value.
18 Share capital
Allotted, called up and fully paid shares
31 March 31 March
2020 2019
No. GBP No. GBP
Ordinary shares of GBP0.001
each 490,145,081 490,145 460,750,000 460,750
No share transactions took place during the year ended 31 March
2019.
No.
As at 1 April 2018 and 1 April 2019 460,750,000
Loan conversation and warrants exercised 10,216,510
Placement of new shares on the stock
market 19,178,571
-----------
As at 31 March 2020 490,145,081
-----------
On 30 September 2019, the company completed a capital increase
when a convertible loan from Mr A Miller was converted into
8,716,510 shares of GBP0.001 each at a price of GBP0.275 per share,
with a share premium of GBP230,988. This constituted a material
non-cash transaction.
On 15 October 2019, the company completed a capital increase
when warrants were exercised for 250,000 shares of GBP0.001 each at
an exercise price of GBP0.039 by Whitman Howard, with a share
premium of GBP9,750.
On 23 December 2019, the company completed a capital increase
through the issue of 19,178,571 shares of GBP0.001 each in a share
placement at a price of GBP0.07 per share, with a share premium of
GBP1,323,321.
On 7 January 2020, the company completed a capital increase
through the exercise by Shakespeare Martineau of warrants for
1,250,000 shares of GBP0.001 each at an exercise price of GBP0.04
per share, with a share premium of GBP48,750.
19 Share options and warrants
The Group operates share-based payment arrangements to
remunerate Directors and key employees in the form of a share
option scheme. Equity-settled share-based payments are measured at
fair value (excluding the effect of non-market based vesting
conditions) at the date of grant. The fair value is determined at
the grant date of the equity-settled share-based payments and is
expensed on a straight line basis over the vesting period, based on
the Group's estimate of shares that will eventually vest and
adjusted for the effect of non-market based vesting conditions.
The following share-based payments were made in the year to 31
March 2020:
-- On 10 May 2019, Dr Chris Blackwell was granted warrants to
subscribe for 3,000,000 new Ordinary shares of GBP0.001 at an
exercise price of 4p each and exercisable at any time within two
years under the terms of his appointment as Director of the Group.
The fair value of the warrants was determined using the
Black-Scholes option pricing model at 1.085p per warrant.
-- On 16 May 2019, warrants to subscribe for 8,716,510 new
Ordinary shares of GBP0.001 were issued at 2.75p each exercisable
at any time within five years under the terms of a Convertible Loan
Agreement dated 18 April 2017 (as amended). 134,694 of these
warrants were awarded during this period and the fair value of the
warrants was determined using the Black-Scholes option pricing
model and was an average of 4.515p per warrant.
-- On 3 September 2019, the Group agreed to grant Dr Muhunthan
Thillai options to subscribe for up to 6,000,000 new ordinary
shares of GBP0.001 at an exercise price of 50% of the 30 day
average share price prior to the date of grant, conditional upon
the achievement of various clinical development milestones. The
Directors' assessment of the accounting value of the likelihood of
achievement attributable to the period from 3 September 2019 to 31
March 2020 is GBP41,521.
-- On 17 February 2020, Karl Keegan was granted warrants to
subscribe for 3,000,000 new Ordinary shares of GBP0.001 at an
exercise price of 4p each. The warrants vest on the first
anniversary of the grant date and are exercisable at any time
within two years from the vesting date. The fair value of the
warrants was determined using the Black-Scholes option pricing
model at 3.996p per warrant.
The fair value of the options and warrants issued in 2020 were
determined using the Black-Scholes option pricing model and Monte
Carlo simulations, where appropriate, and had a weighted average of
2.51p per option (2019: 1.86p).
The significant inputs into the model in respect of the options
and warrants granted in the years ended 31 March 2019 and 31 March
2020 were as follows:
2019 2020
Convertible loan Existing director
note warrants
Grant date share price 2.55p 3.55-6.75p
Exercise price 2.75p 4.00-6.75p
No. of share options 8,581,818 6,000,000
Risk free rate 0.5% 0.44-1.00%
Expected volatility 95% 50-95%
Expected option life 5 years 3 years
The following table sets out details of the granted warrants and
options movements:
Number Number Number
of of warrants/ of
warrants/ options warrants/
options at options Exercise Expiry
Warrant/ at 31 March at price date
option 1 April Issued Expired 2019 Issued Exercised Lapsed 31 March
holder 2018 in year in year in year in year in year 2020
Directors
during the
year
David
Tapolczay 18,430,000 18,430,000 (18,430,000) - 4p 16/10/22
Joanne
Holland 36,860,000 36,860,000 36,860,000 4-10p 16/10/22
Daniel
Gooding 36,860,000 36,860,000 36,860,000 4-10p 16/10/22
Pascal
Hughes 5,000,000 (5,000,000) - -
Pascal
Hughes 1,625,000 1,625,000 1,625,000 4p 16/10/20
Anthony
Reeves 1,000,000 (1,000,000) - -
Chris
Blackwell - - 3,000,000 3,000,000 4p 10/5/21
Karl Keegan 3,000,000 3,000,000 6.75p 10/5/21
Success
warrants
Whitman
Howard 250,000 250,000 (250,000) - -
Shakespeare
Martineau 1,250,000 1,250,000 (1,250,000) - -
Other
warrants 44,000,000 (44,000,000) -
Convertible
loan note
warrants
Issued April
2017 5,450,000 (5,450,000) -
Issued
August
2018 8,581,818 8,581,818 (8,581,818) - -
Issued May
2019 - - 134,692 (134,692) - -
=========== ========= ============ ================ ========= ============= ============ ==========
150,725,000 8,581,818 (55,450,000) 103,856,818 6,134,692 (10,216,510) (18,430,000) 81,345,000
=========== ========= ============ ================ ========= ============= ============ ==========
20 Loans and borrowings
31 March 31 March
2020 2019
GBP GBP
Current loans and borrowings
Lease liabilities 25,677 -
Directors' loan 8,890 8,385
Other borrowings 3,564 6,726
---------- ----------
38,131 15,111
========== ==========
Non-current loans and borrowings
Lease liabilities 37,257 -
======
The fair value of other borrowings is considered by the
Directors not to be materially different to the carrying amounts.
Non-current lease liabilities are all due within 5 years.
21 Obligations under leases and hire purchase contracts
Operating leases
The Group signed a lease for rental of business premises for 5
years from 17 July 2017. There is a break clause in the lease
allowing notice to be given at the 3 year mark. The total future
value of minimum lease payments is as follows:
31 March 31 March
2020 2019
GBP GBP
Within 1 year - 29,400
In two to five years - 9,142
Following the adoption of IFRS 16, the amount of non-cancellable
operating lease payments recognised as an expense during the year
was GBPnil (2019: GBP27,930).
22 Pension and other schemes
Defined contribution pension scheme
The Group operates a defined contribution pension scheme. The
pension cost charge for the year represents contributions payable
by the Group to the scheme and amounted to GBP4,306 (2019:
GBP2,703).
Contributions totalling GBP2,928 (2019: GBP1,156) were payable
to the scheme at the end of the year and are included in
creditors.
23 Trade and other payables
31 March 31 March
2020 2019
GBP GBP
Trade payables 131,011 322,126
Accrued expenses 134,721 90,033
Social security and other taxes 28,527 145,736
Outstanding defined contribution pension
costs 2,928 1,156
Other payables 11,338 245,357
------------ ------------
308,525 804,408
============ ============
The fair value of trade and other payables is considered by the
Directors not to be materially different to the carrying amounts.
All payables are due within one year.
Included within other payables is GBPnil (2019: GBP239,705) in
respect of convertible loan notes which give rise to a material
non-cash movement in the year ended 31 March 2020 due to the issue
of equity in full settlement of the loan notes.
24 Financial instruments
Credit risk
The main credit risk relates to liquid funds held at banks. The
credit risk in respect of these bank balances is limited because
the counterparties are banks with high credit ratings assigned by
international credit rating agencies.
Liquidity risk
The Group seeks to manage financial risk, to ensure sufficient
liquidity is available to meet foreseeable needs.
An analysis of trade and other payables is given in note 23.
Capital risk management
The Group's objectives when managing capital are:
-- to safeguard the Group's ability to continue as a going
concern, so that it continues to provide returns and benefits for
shareholders;
-- to support the Group's growth; and
-- to provide capital for the purpose of strengthening the Group's risk management capability.
The Group actively and regularly reviews and manages its capital
structure to ensure an optimal capital structure and equity holder
returns, taking into consideration the future capital requirements
of the Group and capital efficiency, prevailing and projected
profitability, projected operating cash flows, projected capital
expenditures and projected strategic investment opportunities.
Management regards total equity as capital and reserves, for
capital management purposes.
25 Related party transactions
All transactions with related parties are conducted on an arm's
length basis.
The remuneration of the key management personnel of the Group,
who are defined as the directors, is set out in the directors'
remuneration report.
Transactions with directors
During the year the Group made the following related party
transactions:
Dr D Gooding (Director)
Included in creditors due in less than one year is an interest
free loan from Dr D Gooding. At the balance sheet date, the amount
owed to Dr D Gooding was GBP95 (2019: GBP4,435).
Dr J Holland (Director)
Included in creditors due in less than one year is an interest
free loan from Dr J Holland. At the balance sheet date, the amount
owed to Dr J Holland was GBPnil (2019: GBP3,950).
Dr C P Blackwell (Director)
Included in creditors due in less than one year is an interest
free loan from Dr C P Blackwell. At the balance sheet date, the
amount owed to Dr C P Blackwell was GBP4,146 (2019: GBPnil).
Dr K Keegan (Director)
Included in creditors due in less than one year is an interest
free loan from Dr K Keegan. At the balance sheet date, the amount
owed to Dr K Keegan was GBP4,648 (2019: GBPnil).
26 Ultimate controlling party
The Directors do not consider there to be a single ultimate
controlling party.
27 Post balance sheet events
The COVID-19 outbreak has developed rapidly in 2020, with a
significant number of infections. While the outbreak began before
the year end, its severity and the economic impact has increased
significantly since the balance sheet date. Measures taken by
various governments to contain the virus have affected economic
activity.
The directors will continue to monitor the effects of COVID-19
and take steps to mitigate them where possible. These steps include
health and safety measures for our employees such as social
distancing at work for operational staff and home working for those
able to do so and ensuring controls are maintained while new work
practices are followed. The directors will continue to follow the
various national advice and also ensure continuity of operations in
the safest way possible.
The impact of COVID-19 on the business is considered to be a
non-adjusting event after the period end under IAS 10. At this
stage we are not aware of any adverse impact on the carrying value
of the Group's assets, including goodwill, or liabilities as a
result of the outbreak.
However, given the ongoing uncertainty around the scope,
duration and impact of the pandemic, we are not able to forecast
the consequences of the pandemic. There may be a potential future
impact on the carrying value of goodwill and acquisition related
intangibles which cannot be foreseen at this time.
Company Statement of Financial Position as at 31 March 2020
31 March 31 March
2020 2019
Note GBP GBP
Assets
Non-current assets
Investment in subsidiary 31 11,250,000 11,250,000
----------- -----------
11,250,000 11,250,000
----------- -----------
Current assets
Trade and other receivables 32 1,770,066 1,127,454
Cash and cash equivalents 33 507,417 2,245
----------- -----------
2,277,483 1,129,699
----------- -----------
Total assets 13,527,483 12,379,699
=========== ===========
Equity and liabilities
Equity
Share capital 18 490,145 460,750
Share premium 4,480,400 2,932,590
Merger relief reserve 10,950,000 10,950,000
Share option reserve 1,814,613 1,708,252
Retained earnings (4,380,472) (4,015,779)
----------- -----------
Total equity 13,354,686 12,035,813
----------- -----------
Current liabilities
Trade and other payables 34 172,797 343,886
----------- -----------
172,797 343,886
----------- -----------
Total equity and liabilities 13,527,483 12,379,699
=========== ===========
The loss attributable to the Company in the year was GBP364,693
(2019: loss GBP1,392,674)
These financial statements were approved by the board on 21 July
2020 and were signed on its behalf by:
Dr Chris Blackwell
Executive Chairman
The accompanying notes to the financial statements on pages 66
to 68 form an integral part of the financial statements.
Company Statement of Changes in Equity for the Year Ended 31
March 2020
Merger relief Share option
Share capital Share premium reserve reserve Retained earnings Total
GBP GBP GBP GBP GBP GBP
At 1 April 2019 460,750 2,932,590 10,950,000 1,708,252 (4,015,779) 12,035,813
Loss for the year and
total comprehensive
income - - - - (364,693) (364,693)
Share issued and
warrant
exercised 29,395 1,612,810 - - - 1,642,205
Share and warrant
based
payment - 106,361 - 106,361
Share issue costs - (65,000) - - - (65,000)
--------------- ------------- --------------- -------------- ----------------- -----------
At 31 March 2020 490,145 4,480,400 10,950,000 1,814,613 (4,380,472) 13,354,686
--------------- ------------- --------------- -------------- ----------------- -----------
Merger relief Share option
Share capital Share premium reserve reserve Retained earnings Total
GBP GBP GBP GBP GBP GBP
At 1 April 2018 460,750 2,932,590 10,950,000 724,837 (2,623,105) 12,445,072
Loss for the year and
total comprehensive
income - - - - (1,392,674) (1,392,674)
Share and warrant
based
payment - - - 975,926 - 975,926
Equity element of
convertible
loan note - - - 7,489 - 7,489
--------------- ------------- --------------- -------------- ----------------- -----------
At 31 March 2019 460,750 2,932,590 10,950,000 1,708,252 (4,015,779) 12,035,813
--------------- ------------- --------------- -------------- ----------------- -----------
The accompanying notes to the financial statements on pages 66
to 68 form an integral part of the financial statements.
Company Statement of Cash Flows for the Year Ended 31 March
2020
2020 2019
Note GBP GBP
Cash flows from operating activities
Loss for the year (364,693) (1,392,674)
Adjustments to cash flows from non-cash
items
Finance costs 4,340 24,920
Share and warrant based payment 106,361 975,926
Equity element of convertible loan
note - 7,489
========= ===========
(253,992) (384,339)
Working capital adjustments
Decrease / (increase) in trade and
other receivables 32 106,024 (54,272)
Increase in trade and other payables 34 68,616 36,526
--------- -----------
Net cash outflow from operating activities (79,352) (402,085)
--------- -----------
Cash flows from investing activities
Loan to subsidiary (748,636) -
Loan repayments from subsidiary - 403,763
--------- -----------
Net cash (used) / generated by investing
activities (748,636) 403,763
--------- -----------
Cash flows from financing activities
Issue of shares (net of costs) 1,337,500 -
Interest on convertible loan and exchange
gains (4,340)
--------- -----------
Net cash flows from financing activities 1,333,160 -
--------- -----------
Net increase in cash and cash equivalents 505,172 1,678
Cash and cash equivalents at 1 April 2,245 567
--------- -----------
Cash and cash equivalents at 31 March 507,417 2,245
========= ===========
The accompanying notes to the financial statements on pages 66
to 68 form an integral part of the financial statements.
Notes to the Company Financial Statements for the Year Ended 31
March 2020
28 Significant accounting policies
Basis of preparation
The separate financial statements of the Company are presented
as required by the Companies Act 2006. As permitted by that Act,
the separate financial statements have been prepared in accordance
with IFRSs as adopted by the EU.
The financial statements have been prepared on the historical
cost basis. The principal accounting policies adopted are the same
as those set out in note 2 to the Consolidated Financial
Statements. In addition, Investments in subsidiaries are stated at
cost less, where appropriate, provision for impairment.
29 Loss attributable to shareholders
Under section 408 of the Companies Act 2006 the Company is
exempt from the requirement to present its own income statement.
The loss attributable to the Company in the year was GBP364,693
(2019: loss GBP1,392,674).
30 Staff costs
The aggregate payroll costs (including directors' remuneration)
were as follows:
2020 2019
GBP GBP
Wages and salaries 117,077 133,114
Social security costs 7,679 4,377
------- -------
124,756 137,491
======= =======
The average number of persons employed by the Company (including
directors) during the year was as follows:
2020 2019
No. No.
- -
========= ============================================
The executive directors are employed by Nuformix Technologies
Limited, a wholly owned subsidiary of the company.
31 Investment in Subsidiary
GBP
As at 1 April 2019 and 31 March
2020 11,250,000
--------------
The Company has the following interests in subsidiaries:
Name Country of Incorporation Equity interest
2020 2019
Nuformix Technologies Limited (United Kingdom) 100% 100%
32 Trade and other receivables
31 March 31 March
2020 2019
GBP GBP
Amount owed by Group undertakings 1,734,241 985,605
Prepayments 26,433 5,857
Other receivables 9,392 135,992
---------------------------- ---------
1,770,066 1,127,454
============================ =========
The fair value of trade and other receivables is considered by
the Directors not to be materially different to the carrying
amounts.
33 Cash and cash equivalents
31 March 31 March
2020 2019
GBP GBP
Cash at bank 507,417 2,245
================== ==================
The Directors consider that the carrying value of cash and cash
equivalents represents their fair value.
34 Trade and other payables
31 March 31 March
2020 2019
GBP GBP
Trade payables 68,767 43,616
Accrued expenses 102,691 64,739
Other payables 1,339 235,531
------------ ------------
172,797 343,886
============ ============
The fair value of trade and other payables is considered by the
Directors not to be materially different to the carrying
amounts.
35 Financial instruments
Credit risk
The main credit risk relates to liquid funds held at banks. The
credit risk in respect of these bank balances is limited because
the counterparties are banks with high credit ratings assigned by
international credit rating agencies.
Liquidity risk
The Company seeks to manage financial risk, to ensure sufficient
liquidity is available to meet foreseeable needs.
An analysis of trade and other payables is given in note 34.
Capital risk management
The Company's objectives when managing capital are:
-- to safeguard the Company's ability to continue as a going
concern, so that it continues to provide returns and benefits for
shareholders;
-- to support the Company's growth; and
-- to provide capital for the purpose of strengthening the Company's risk management capability.
The Company actively and regularly reviews and manages its
capital structure to ensure an optimal capital structure and equity
holder returns, taking into consideration the future capital
requirements of the Company and capital efficiency, prevailing and
projected profitability, projected operating cash flows, projected
capital expenditures and projected strategic investment
opportunities. Management regards total equity as capital and
reserves, for capital management purposes.
36 Related parties
The Company's related parties are the directors and other Group
companies.
The remuneration of the key management personnel of the Group,
who are defined as the directors, is set out in the directors'
remuneration report. Details of the fair value of transactions with
key management and their close family members is included in note
25.
All amounts outstanding with related parties are unsecured and
will be settled in cash. No guarantees have been given or received
in respect of amounts outstanding. No provisions have been made for
doubtful debts in respect of the amounts owed by the related
parties.
At the balance sheet date, the amounts due from other Group
companies were as follows:
31 March 31 March
2020 2019
GBP GBP
Nuformix Technologies Limited 1,734,241 985,605
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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