TIDMORPH
RNS Number : 9109N
Open Orphan PLC
07 June 2022
Open Orphan plc
("Open Orphan" or the "Company")
Final results
Record revenues and EBITDA-profitability accompanied by
significant operational progress
Open Orphan plc (AIM: ORPH), a rapidly growing specialist
contract research organisation (CRO) and the world leader in
testing infectious and respiratory disease products using human
challenge clinical trials, announces its audited final results for
the 12 months ended 31 December 2021.
Financial highlights
-- Record revenues of GBP39.0m (2020: GBP22.2m) achieved representing 76% growth
-- GBP9m improvement in EBITDA generating GBP2.9m (2020: GBP(6.1)m)
-- Cash and cash equivalents as at 31 December 2021 of GBP15.7m (2020: GBP19.2m)
-- Significant EPS improvement in 2021 to (0.01)p per share (2020: (1.80)p)
-- Order book growth of 11% to GBP46m future contracted revenue
as at 31 December 2021 (2020: GBP41.6m)
Operational highlights
-- Delivered a strong and growing pipeline of new challenge study contract wins
o Served four of the top 10 global biopharma companies in 2021
among a growing client base of over 60 clients
-- Substantially expanded the Group's offering into the
respiratory market signing an asthma study with a top three global
pharma company
-- Completed the world's first COVID-19 characterisation study
which was proven to be safe and well tolerated
-- Contract signed to manufacture a SARS-CoV-2 Delta variant
challenge agent with Imperial College London, as part of a Wellcome
Trust-funded initiative
-- Opened a new quarantine clinic on a capital efficient basis
to facilitate the growing demand for human challenge studies. This
new facility, The Whitechapel Clinic, added 19 quarantine bedrooms
for future challenge studies
-- FluCamp screened c. 84,000 volunteers for human challenge
studies in 2021 (2020: c.68,000); supported by the cost-efficient
expansion of volunteer recruitment centre
o New London FluCamp volunteer recruitment centre - converted
former coffee shop adjacent to the existing QMB facility
o New Manchester FluCamp volunteer recruitment centre
-- Significant CRO experience added to the Board with the
appointment of Yamin 'Mo' Khan as Non-Executive Director, who was
appointed CEO post period end
-- In June 2021, completed a distribution in specie to the
Company's shareholders, through the demerger of certain non-core
assets into Poolbeg Pharma
Post-period end highlights
-- Commenced development of a new influenza challenge model for
an existing top five global pharmaceutical client and signed a
GBP14.7m contract for the characterisation and challenge trial to
follow
-- GBP7.3m influenza challenge trial and GBP5m RSV challenge trial contracts signed
-- Launched a new Malaria human challenge model and was awarded
by an existing Big Pharma client to act as a vaccination site for a
Phase II field study
-- Opened a new primary FluCamp volunteer recruitment facility
in Whitechapel, increasing bed capacity by 44% from 43 beds to 62
beds, and opened a new Manchester volunteer recruitment centre at
the same cost as the old facility, but with four times the floor
space, doubling the Group's volunteer screening capacity to 1,000
per week
o Facilities expansion enables the Group to broaden the scope of
the business to offer additional clinical trial services outside of
its traditional core challenge study offering
Current trading and outlook
As at 1 June 2022, Open Orphan had an order book of signed
contracts worth GBP64.2m which is expected to be recognised across
2022, 2023 and 2024.
Open Orphan's pipeline of new opportunities continues to grow
with a number of further challenge study opportunities at advanced
negotiations across influenza, asthma, RSV, malaria and COVID-19.
This growth is driven by the increased success and awareness of
human challenge trials, and the development of new challenge
models. A significant portion of our pipeline includes returning
Big Pharma customers, in addition to a wider group of new clients
who have observed the benefits of human challenge trials.
Our Venn Life Sciences subsidiary continues to deliver
specialist drug development consultancy services across
non-clinical and clinical development, pharmacology, CMC and
biometry services, acting as a trusted partner to an extensive
range of clients.
These developments reaffirm the Board's expectations of a
profitable growing business with revenues in the region of GBP50m
in 2022.The Group is now well positioned and well capitalised to
deliver sustainable long-term profitability.
Yamin 'Mo' Khan, Chief Executive Officer of Open Orphan, said:
"2021 was a milestone year for Open Orphan; the Group achieved
record revenues, and recorded full year EBITDA-profitability for
the first time - a significant turning point for the business.
"The Group won a record number of human challenge study
contracts, serving four of the top 10 global biopharma companies
and more than 60 clients in total. We were proud to make a
significant contribution to the UK Government's response to the
pandemic by completing the world's first COVID-19 characterisation
study, which furthered our understanding of COVID-19 disease
progression. Importantly, the Group accomplished this whilst
investing in operational improvements, with volunteer screening and
quarantine capacities expanded during the year.
"Post-period end, we have continued our momentum from 2021 into
a strong start to trading and significant contract wins. We
increased our bed count from 43 to 62, doubled our volunteer
screening capacity, and also expanded the scope of our business to
offer additional clinical trial services, where we have already
signed our first contracts, establishing new revenue streams for
the business. We also launched our new Malaria Human Challenge
Model, which I believe has further consolidated our position as the
leading provider of human challenge trials in infectious and
respiratory disease. In my new role as CEO, I look forward to
driving further growth across the business this year and converting
this substantial progress into value for our shareholders."
Interested in becoming a volunteer?
hVIVO recruits many of its volunteers for its challenge study
clinical trials through its dedicated volunteer recruitment
website, www.flucamp.com . By volunteering to take part in one of
our studies in a safe, controlled, clinical environment under
expertly supervised conditions you are playing your part to further
medical research and help increase the understanding of respiratory
illnesses.
(1) Source: Citeline Trialtrove, Jan. 2022 and Pharma R&D
Annual Review; IQVIA Institute, Global Trends in R&D - Overview
Through 2021; Global Data; Evaluate Pharma; Edison Investment
Research; Pitchbook
For further information please contact:
Open Orphan plc +353 (0) 1 644 0007
Yamin 'Mo' Khan, Chief Executive
Officer
Liberum Capital (Nominated Adviser
and Joint Broker) +44 (0) 20 3100 2000
Ben Cryer/ Edward Mansfield/ Phil
Walker/ Will King
finnCap plc (Joint Broker) +44 (0) 20 7220 0500
Geoff Nash / James Thompson / Richard
Chambers
Davy (Euronext Growth Adviser and
Joint Broker) +353 (0) 1 679 6363
Anthony Farrell
Walbrook PR (Financial PR & IR) +44 (0)20 7933 8780 or openorphan@walbrookpr.com
Paul McManus / Sam Allen / +44 (0)7980 541 893 / +44 (0) 7502 558
Louis Ashe-Jepson 258 /
+44 (0)7747 515393
Notes to Editors
Open Orphan plc
Open Orphan plc (London and Euronext: ORPH) is a rapidly growing
contract research company that is a world leader in testing
infectious and respiratory disease products using human challenge
clinical trials. The Company provides services to Big Pharma,
biotech, and government/public health organisations.
The Company has a leading portfolio of human challenge study
models for infectious and respiratory diseases, including the
recently established COVID-19 model, and is developing a number of
new models, such as Malaria, to address the dramatic growth of the
global infectious disease market. The Paris and Breda offices have
over 25 years of experience providing drug development services
such as biometry, data management, statistics CMC, PK and medical
writing to third party clients as well as supporting the
London-based challenge studies.
Open Orphan runs challenge studies in London from its
Whitechapel quarantine clinic, its state-of-the-art QMB clinic with
its highly specialised on-site virology and immunology laboratory,
and its newly opened clinic in Plumbers Row. To recruit volunteers
/ patients for its studies, the Company leverages its unique
clinical trial recruitment capacity via its FluCamp volunteer
screening facilities in London and Manchester. The newly opened
facilities have expanded the scope of the business to enable the
offering of Phase I and Phase II vaccine field trials, PK studies,
bridging studies, and patient trials as part of large international
multi-centre studies.
Building upon its many years of challenge studies and virology
research, the Company is developing an in-depth database of
infectious disease progression data. Based on the Company's Disease
in Motion(R) platform, this unique dataset includes clinical,
immunological, virological, and digital (wearable) biomarkers.
Executive Chairman's Statement
For the year ended 31 December 2021
Introduction
I am pleased to report on trading for the year ended 31 December
2021, a period in which we continued our strong momentum. The Group
reported substantial revenue growth of 76%, with total revenue
(incl. other income) of GBP39.0m (2020: GBP22.2m), and more
importantly a transition to positive EBITDA of GBP2.9m (2020:
GBP(6.1)m). 2021 was also a year of considerable operational
progress; the Group conducted a record number of human challenge
trials and successfully completed the spin-off of Poolbeg Pharma
plc, which listed on the London Stock Exchange in July 2021, giving
our shareholders a stake in Poolbeg Pharma plc through the
distribution in specie shares.
In the two years since we acquired hVIVO, we have transformed
the way that it runs human challenge trials by both reducing the
time taken to complete a study, from 18 months to six months, and
substantially increasing the Company's capacity and capability to
run more studies; increasing our total quarantine capacity to 62
beds. In addition, we have focused on expanding the Company's human
challenge trials to include non-viral disease indications such as
asthma, and by making new challenge models available to our
clients, including COVID-19 and malaria.
Furthermore, as a result of the pandemic, hVIVO and the UK
received worldwide recognition as a world centre for conducting
human challenge trials. This was a direct result of successfully
completing the world's first COVID-19 human challenge trial
mid-pandemic. The pandemic also highlighted the significant value
of human challenge trials which provide human efficacy data in a
fraction of the time and cost it would take to complete a normal
field trial. As a result of these initiatives, the global market
for human challenge trials has increased significantly and as the
world leader in the provision of these studies, we expect the
business to deliver an increasing number of challenge trials year
on year going forward.
Strategic delivery 2021
Below is an outline of the Group's achievements in 2021 across
key business revenue streams and market trends.
Human challenge / clinical services
2021 was a record year for hVIVO's core human challenge trial
business, with the Company delivering a strong and growing pipeline
of challenge study contract wins across our world leading portfolio
of human challenge models. The Company is benefitting from a
significantly expanded market for infectious and respiratory
disease products, with four of the top 10 global biopharma
companies working with us in 2021.
In 2021 we successfully collaborated with a client who funded
the rapid and cost-efficient conversion of the unoccupied
Whitechapel Hotel located immediately beside our existing QMB
facility, into the Whitechapel Clinic, a 19-bedroom quarantine
clinic. Following the successful delivery of this trial to the
client, we continue to operate the Whitechapel Clinic for challenge
trials. This expanded our existing quarantine bedroom capacity to
43 (which was subsequently increased post-period end, providing us
with access to 62 beds).
We also converted a vacant lot adjacent to the existing QMB
facility into a new FluCamp volunteer recruitment screening centre.
Similarly, we expanded our FluCamp screening facilities with the
opening of new facilities in Manchester. These projects were
completed at minimal cost and the expansion enabled us to screen
84,000 volunteers for human challenge studies in 2021.
COVID-19
2021 was a pivotal year for the UK and its attempt to emerge
from the COVID-19 pandemic, and I was proud of the significant
contribution that our team made to this. As a commitment to help
the UK government to fight the pandemic, the team at hVIVO worked
tirelessly under difficult conditions in the midst of a pandemic,
to deliver a COVID-19 characterisation study to provide unique
insights into COVID-19. The results of the study were published in
the peer reviewed scientific journal 'Nature Medicine' in February
2022. It is a testament to the hVIVO team and their knowledge and
commitment that this study was completed safely and in a timely
manner. The study was conducted in partnership with the UK
Government's Vaccine Taskforce and Department of Health and Social
Care (DHSC), Imperial College London and the Royal Free London NHS
Foundation Trust. Additionally, we were contracted to manufacture a
SARS-CoV-2 Delta variant challenge agent with Imperial College
London, as part of a Wellcome Trust-funded initiative.
The extensive worldwide coverage we received as part of this
work raised Open Orphan's profile as the world leader in conducting
human challenge trials and highlighted the significant benefit of
these studies to deliver critical human efficacy data.
While effective vaccines and antiviral treatments have lessened
the impact of COVID-19 infection in human populations, the lasting
legacy of the pandemic is a significantly enlarged infectious and
respiratory disease market, which is expected to grow to in excess
of $250bn by 2025. The Group is leveraging this significant market
growth. With extensive relationships across the industry, a world
class reputation, and an ability to continue enhancing and
diversifying its offering, the Group is well placed to secure
further work as a result of this renewed investment and focus on
respiratory diseases.
Board changes
We strengthened our Board with the appointment of Yamin 'Mo'
Khan, initially as Non-Executive Director on 13 October 2021 before
he was subsequently appointed CEO, post-period end, on 24 February
2022. Mo brings 25 years of CRO experience to his role, and I have
thoroughly enjoyed working with him since he joined the Group. Mo
has had a significant impact on the business, and we were delighted
that he since accepted the position of CEO. Mo brings extensive
industry specific insights that we will leverage to deliver on our
expanding pipeline of opportunities, and I am confident Mo will
continue to drive the Group's upward trajectory.
In July 2021, Professor Brendan Buckley, Non-Executive Director,
and myself collectively purchased a further 1,320,754 ordinary
shares at 26.5 pence per ordinary share, which increased my
shareholding to 7.0% and Brendan's shareholding to 1.2% of the
Company's issued ordinary share capital. I hope this demonstrates
to our shareholders the Board's commitment to the business and our
desire to drive shareholder value to match our considerable
financial and operational growth and momentum.
In April 2022, we appointed Liberum Capital Limited as our
Nominated Adviser and Joint Broker. We are delighted to be working
with Liberum which is ideally placed to introduce Open Orphan's
fast growing, profitable and sustainable business to new
investors.
Summary
In a pandemic-hit 2021, the Group achieved record revenues,
transitioned to making an EBITDA profit, and made significant
operational progress. The business conducted a record number of
human challenge trials and has established itself as the
world-leading provider of human challenge trials in the rapidly
expanding infectious and respiratory disease market. Our work in
COVID-19 enabled us to demonstrate our unparalleled expertise to a
wider audience, and the market is now clearly recognising the value
that human challenge trials can offer.
The business is firmly profitable and remains well capitalised
with a cash balance of GBP15.7m to help drive the business forward
and to realise further value for our shareholders. I would like to
thank all of our employees for their incredible efforts this year,
and our shareholders for their continued support.
Cathal Friel
Executive Chairman
6 June 2022
CEO Statement
For the year ended 31 December 2021
Introduction
2021 has been an exceptional year for Open Orphan with our
subsidiary, hVIVO, strengthening its position as the world leader
in human challenge trials and our drug consultancy subsidiary, Venn
Life Sciences, consolidating its position as a leading provider of
integrated clinical development solutions. Since joining Open
Orphan, initially as a Non-Executive Director and later
transitioning into the role of CEO in Q1 2022, I am excited by the
significant opportunity for the Group to capitalise on the
substantial increase of investment in respiratory and infectious
diseases by global pharmaceutical and biotech companies.
In this time, I have witnessed the substantial demand for
hVIVO's human challenge trial models, and our ability to
efficiently deliver key human efficacy data to support our clients'
clinical development programmes. I am also excited by the growth
prospects of Venn Life Sciences, offering a complete end-to-end
service to our clients' drug development programmes, from
pre-clinical to late phase clinical development.
The exceptional delivery of our services would not be possible
without the commitment of the team across the Open Orphan Group.
Their dedication and hard work through the challenges of the
COVID-19 pandemic was exemplary and their unique knowledge and
expertise sets the Group apart from our competitors. I would like
to thank them for their excellent contribution to our success in
2021.
Strong financial results
The Group achieved record revenues (incl. other income) in 2021
of GBP39.0 million, representing a substantial increase of 76% on
2020. A large portion of this revenue is attributable to hVIVO's
human challenge trials, which gained global publicity in 2021 as
they continued to grow into the mainstream drug development
pathway. The Company completed human challenge trials with a number
of top 10 Big Pharma and smaller biotechs such as Bavarian Nordic
(RSV) and SAB Therapeutics (influenza). The Company also continued
to support the UK Government's Vaccine Taskforce resulting in the
completion of the world's first COVID-19 challenge study and the
manufacture of a SARS-CoV-2 Delta variant challenge agent with
Imperial College London . In addition, Venn Life Sciences also
performed strongly across its early clinical, non-clinical
development, CMC, and biometry services.
The Group was EBITDA positive in 2021, with an EBITDA of GBP2.9m
compared to a GBP6.1m EBITDA loss in 2020. The Group benefitted
from its post-acquisition restructuring plan and a record year of
revenue, while also ensuring disciplined cost management in the
period. The Group remains well capitalised with cash and cash
equivalents of GBP15.7m as at 31 December 2021. Furthermore, in
June 2021, we completed a distribution in specie to the Company's
shareholders, through the demerger of certain non-core assets into
Poolbeg Pharma.
Customer delivery
Open Orphan has firmly established itself as the world leader in
the provision of human challenge trials, offering the largest
portfolio of commercial challenge models to a range of clients
across Europe, North America and Asia Pacific. The Group serves a
wide array of biopharma companies. We worked directly with four of
the world's 10 largest biopharma companies in 2021, a number of
them as repeat customers. In addition, we also worked with a
variety of biotech companies, who tend to have fewer assets and
thus place great importance on quickly and efficiently achieving
key human efficacy data. hVIVO's challenge trials can provide a
fast and cost-efficient route to efficacy data, often resulting in
a key value inflection point.
Open Orphan served over 60 clients in 2021 with around 80%
year-on-year repeat business. Our goal to become a long-term
partner for our clients is now being realised.
The Group achieved significant contract wins in H2 2021 in
influenza, RSV and asthma challenge trials. The majority of the
revenue relating to these trials will be recognised in 2022,
positioning the Group to deliver continued growth into 2022, and
beyond.
As hVIVO's challenge studies continue to gain a foothold into
the mainstream clinical pathway, a number of our clients achieved
notable successes in 2021, which further validates the benefits of
human challenge trials. Two of our clients obtained
Breakthrough Therapy designation from the US Food and Drug
Administration ("FDA") as a consequence of the successful clinical
data achieved from hVIVO challenge trials:
-- Our successful Phase 2a RSV challenge trial for a Big Pharma
client which completed in 2021 enabled them to obtain Breakthrough
Therapy designation from the FDA for the prevention of lower
respiratory tract disease caused by RSV in individuals 60 years of
age or older
-- The FDA granted Breakthrough Therapy designation for Bavarian
Nordic's RSV vaccine candidate, MVA-BN(R) RSV. hVIVO successfully
conducted a Phase 2, double-blinded, placebo controlled human
challenge trial to assess MVA-BN(R) RSV using its RSV human
challenge study model
Breakthrough Therapy designation can significantly shorten the
time to market for recipients, enabling clients to gain a
competitive advantage. The receipt of Breakthrough Therapy
designation by these high-profile clients has directed further
attention to our challenge trials across all indications, leading
to numerous new inbound enquiries and enhanced growth of our
pipeline.
It should be noted that one of the impacts of the COVID-19
pandemic has been to increase public and industry awareness across
all viral pathogens and release R&D funding across a number of
indications.
Outlook
As the new CEO of the Group, I am keen to build on the
significant milestones the business has achieved in 2021 while also
expanding the Group into new challenge models, adding new revenue
streams and expanding our facilities. The future looks
exceptionally bright across all areas, with evidence of the
benefits already coming to fruition.
Challenge Models
The human challenge trial model will remain the core business
for the hVIVO team and we will be aggressively marketing our
challenge models to new and existing customers in 2022 and beyond.
We expect the influenza and RSV models to continue to attract
significant interest across the entire market; from smaller
biotechs to larger Big Pharma customers. Funding in the development
of vaccines and antivirals across the infectious disease space
continues to increase as the life sciences industry looks to
address the next potential pandemic. The indicators for hVIVO are
very positive with huge interest across our portfolio of models and
notable challenge trial wins already in 2022; one in influenza and
the other in RSV, in addition to our largest ever commercial
challenge programme win with an existing top five global
pharmaceutical client.
This engagement will include the manufacture of an influenza
challenge agent, the characterisation study to identify a dose that
causes a safe and reliable infection in healthy volunteers and the
challenge trial which will help determine the efficacy of a number
of different vaccine candidates for the reduction in incidence of
symptomatic flu infection and disease severity in healthy
volunteers. This contract win helps to re-affirm our position as a
"go-to" partner for an increasing number of global biopharma
companies.
The HRV-asthma model will also be active in 2022 and beyond as
we look to increase our position into the respiratory field,
building on the landmark HRV-asthma challenge study signed with a
top three global pharma company in H2 2021. In addition, we will be
establishing a foothold in the anti-parasitic market as we look to
establish our newly launched malaria model and target our first
study in malaria or a related indication in 2022. The
anti-parasitic market is experiencing an increased volume of
funding and we are already witnessing the influx of enquiries from
potential clients about running a challenge trial.
COVID-19 Challenge Model
hVIVO has already shown its ability to deliver a COVID-19
challenge trial safely and in a timely manner. We have pride in
leading the world's first COVID-19 challenge study and helping the
UK government in the fight against the pandemic.
We have also manufactured a challenge agent of the Delta variant
and are working with world leading institutions to continue to
research the SARS-CoV-2 virus. Our aim is to conduct further
COVID-19 challenge trials in the near future. A COVID-19 challenge
trial can quickly provide the crucial human efficacy data required
to confirm early proof of concept.
Capacity Growth
To support Open Orphan's rapid growth and consolidate its world
leading position, we have expanded our facilities including
increasing our screening capacity and our number of beds. In March
2022, our London FluCamp recruitment operation moved to a new low
cost 12 bed facility. This enabled us to double the Group's
previous volunteer screening capacity, while significantly boosting
our ability to identify and enrol study volunteers to deliver the
significant volume of trials to be completed in 2022 and beyond. We
also opened a new Manchester volunteer screening facility at the
same cost as the old facility to increase volunteer numbers from
the North-West region.
The increased capacity will ensure the Group maintains its world
leading position through its volunteer recruitment arm,
FluCamp.
New Revenue Streams
The increased scale of our volunteer recruitment screening
facilities will allow us to broaden our offering to deliver new
revenue streams, namely using the existing FluCamp infrastructure
in London as a site for Phase 2 and Phase 3 field studies. The
initial target will be to recruit healthy volunteers into
field-based vaccines trials. We will target a range of current and
new clients, leveraging FluCamp's existing infrastructure to
deliver research site services. This should act as a natural
follow-on to a number of our clients who have completed Phase 2a
challenge studies.
2022 is shaping up to be a breakthrough year for hVIVO's highly
specialised virology and immunology laboratory team, expanding its
portfolio of customers to help grow the Group's business. We plan
to receive CAP and IOS 17025 (UKAS) accreditation for our
laboratories in 2022. This should lead to further opportunities for
our world class laboratory teams to deliver virology and immunology
services to a range of clients.
Venn Life Sciences
Our Venn Life Science subsidiary continues to deliver specialist
drug development consultancy services across non-clinical and
clinical development, pharmacology, CMC and biometry services. Venn
Life Sciences is a trusted partner to an extensive range of
clients, and our highly skilled scientific team have helped nurture
a number of long-term client relationships. We are experiencing
continued demand across our comprehensive suite of services and we
expect Venn Life Sciences to continue its upward trajectory in new
areas, notably in advanced therapy medicinal products (ATMPs) and
consulting advice for medical device companies.
Order book and pipeline
As at 31 December 2021, Open Orphan had an order book of signed
contracts worth GBP46m (2020: GBP41.6m). This order book will be
recognised across 2022, 2023 and 2024. Additional new project wins
in 2022 have further enhanced our order book including a landmark
GBP14.7m contract for an influenza challenge trial that includes
the characterisation and completion of a challenge trial for an
existing top five global pharma customer, a GBP7.3m influenza
challenge trial and a GBP5m RSV challenge trial. This has seen our
order book expand to GBP64.2m by 1 June 2022.
Open Orphan's pipeline of new opportunities continues to grow
with a number of further challenge study opportunities at advanced
negotiations across influenza, asthma, RSV, malaria and COVID-19.
This growth is driven by the increased success and awareness of
human challenge trials, and the development of new challenge
models. A significant portion of our pipeline includes returning
Big Pharma customers, in addition to a wider group of new clients
who have observed the benefits of human challenge trials.
These developments reaffirm the management's expectations of
revenues in the region of GBP50m in 2022, with the Group now
delivering strong sustainable long-term profitability.
Summary
I am very satisfied with the strong performance of our business
across the twelve months to 2021 as the Group became EBITDA
profitable. We will build on this performance into 2022 and have
set challenging and achievable growth plans across all areas of the
business. We believe the operational infrastructure is in place to
deliver on the exceptional contracted order book and pipeline of
opportunities the business has, and we can already see the strategy
coming to fruition. Our strategy is to continue to enhance and
diversify our core and non-core offering, solidifying our world
leading position in order to capitalise on the increased demand for
human challenge trials and the growth in the infectious and
respiratory disease market. We believe this will deliver growth on
our revenue and EBITDA for our shareholders, continuously improve
our employee satisfaction and ensure an efficient operational
delivery to our customers.
As a Board, we are confident that we can deliver on our growth
plans for 2022 and beyond as we continue to focus on the execution
of our strategy to generate value for our shareholders.
Yamin 'Mo' Khan
CEO
6 June 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
Year to Year to
Notes 31 December 31 December
2020
2021 Restated
GBP'000 GBP'000
---------------------------------------- ----------- ------------ ------------
Operations
Revenue, from contracts with customers 5,35 36,864 20,602
Other operating income 33 2,141 1,576
Direct project and administrative
costs 6 (36,117) (28,260)
---------------------------------------- ----------- ------------ ------------
EBITDA before exceptional items 2,888 (6,082)
Depreciation & amortisation 6,16,17,37 (2,565) (2,052)
Exceptional items 7 267 (2,125)
---------------------------------------- ----------- ------------ ------------
Operating profit/(loss) 590 (10,259)
Finance expense 12 (215) (374)
Share based payment charge 32 (27) (240)
Share of loss of associate using
equity method 18b (71) (107)
---------------------------------------- ----------- ------------ ------------
Profit/(Loss) before income tax 277 (10,980)
Income tax (charge)/credit 13 (351) 189
---------------------------------------- ----------- ------------ ------------
(Loss) for the year (74) (10,791)
---------------------------------------- ----------- ------------ ------------
(Loss) for the year is attributable
to:
Owners of the parent (74) (10,791)
---------------------------------------- ----------- ------------ ------------
Other comprehensive income
Currency translation differences (111) 318
---------------------------------------- ----------- ------------ ------------
Total comprehensive (loss) for
the year (185) (10,473)
---------------------------------------- ----------- ------------ ------------
.
Earnings per share from operations
attributable to owners of the parent
during the year Note 2021 2020
-------------------------------------------- ----- -------- --------
Basic and diluted (loss) per ordinary
share
From operations 14 (0.01p) (1.80p)
For the year (0.01p) (1.80p)
-------------------------------------------- ----- -------- --------
All activities relate to continuing operations.
Consolidated and Company's Statement of Financial Position
As at 31 December 2021
Group Company
Group Company
2021 2020 2021 2020
Notes GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------- -------- --------- -------- ----------
Assets
Non-current assets
Intangible assets 17 6,219 6,127 - -
Property, plant and equipment 16 927 1,068 - -
Investment in associates 18b 7,005 7,076 - -
Investments in subsidiaries 18a - - 22,377 22,334
Right of use asset 37 2,788 4,230 - -
Total non-current assets 16,939 18,501 22,377 22,334
------------------------------- ------- -------- --------- -------- ----------
Current assets
Inventories 20 659 953 - -
Trade and other receivables 21 8,944 9,806 9,701 10,960
Current tax recoverable 38 80 - -
Cash and cash equivalents 22 15,694 19,205 8,663 8,689
Total current assets 25,335 30,044 18,364 19,649
------------------------------- ------- -------- --------- -------- ----------
Total assets 42,274 48,545 40,741 41,983
------------------------------- ------- -------- --------- -------- ----------
Equity attributable to owners
Share capital 26 671 731 671 731
Share premium account 27 1 44,480 1 44,480
Merger reserves 27 (6,856) (6,856) (2,241) (2,241)
Foreign currency reserves 27 1,331 1,442 2,014 2,573
Share option reserve 27/32 327 493 327 493
Retained earnings 27 25,206 (17,993) 36,767 (4,983)
------------------------------- ------- -------- --------- -------- ----------
Total equity 20,680 22,297 37,539 41,053
------------------------------- ------- -------- --------- -------- ----------
Liabilities
Non-current liabilities
Trade and other payables 23 - 2 - -
Lease liabilities 37 863 2,194 - -
Leasehold provision 40 20 - -
Total non-current liabilities 903 2,216 - -
------------------------------- ------- -------- --------- -------- ----------
Current liabilities
Trade and other payables 23 18,396 21,396 3,202 885
Deferred taxation 24 - 32 - -
Lease liabilities 37 1,991 2,245 - -
Leasehold provision 10
Borrowings 25 294 359 - 45
Total current liabilities 20,691 24,032 3,202 930
------------------------------- ------- -------- --------- -------- ----------
Total liabilities 21,594 26,248 3,202 930
------------------------------- ------- -------- --------- -------- ----------
Total equity and liabilities 42,274 48,545 40,741 41,983
------------------------------- ------- -------- --------- -------- ----------
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the parent Company income
statement account. The loss for the parent Company for the year was
GBP1,522,000 (2020: loss of GBP1,891,000).
Open Orphan Plc
Cathal Friel - Executive Chairman Registered no: 07514939
Consolidated and Company's Statement of Changes in Shareholders'
Equity
Group Foreign
Share Share Option currency Retained
Share capital premium Merger reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2020 - - - - - (1,463) (1,463)
Changes in
equity for the
Year ended 31
Dec 2020
(Loss) for the
year - - - - (10,791) (10,791)
Currency
differences - - - - 318 - 318
Total
comprehensive
(loss)
for the year - - - - 318 (10,791) (10,473)
--------------- -------------------- --------------- ------------------- -------------------- --------- ---------- ---------
Transactions
with the
owners
Share based
payment res. - - - 240 - - 240
Shares issued 414 29,266 - - - - 29,680
Total
contributions
by and
distributions
to owners 414 29,266 - 240 - - 29,920
--------------- -------------------- --------------- ------------------- -------------------- --------- ---------- ---------
At 31 December
2020 731 44,480 (6,856) 493 1,442 (17,993) 22,297
--------------- -------------------- --------------- ------------------- -------------------- --------- ---------- ---------
Changes in
equity for the
Year ended 31
Dec 2021
(Loss) for the
year - - - - (74) (74)
Currency
differences - - - - (111) - (111)
Total
comprehensive
(loss)
for the year - - - - (111) (74) (185)
--------------- -------------------- --------------- ------------------- -------------------- --------- ---------- ---------
Transactions with the owners
Share based
payment res. - - - (166) - 193 27
Shares issued 3 37 - - - - 40
Capital
reduction (63) (44,516) 44,579 -
Distribution
in specie
(note 39) - - - - - (1,500) (1,500)
Total
contributions
by and
distributions
to owners (60) (44,479) - (166) - 43,272 (1,433)
--------------- -------------------- --------------- ------------------- -------------------- --------- ---------- ---------
At 31 December
2021 671 1 (6,856) 327 1,331 25,206 20,680
--------------- -------------------- --------------- ------------------- -------------------- --------- ---------- ---------
Foreign
Company Share Share option Merger currency Retained
Share capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ---------------------- ------------- ------------------- ---------- ------------- ---------- -----------
At 1 January 2020 - - - - - (1,463) (1,463)
---------------------- ---------------------- ------------- ------------------- ---------- ------------- ---------- -----------
Changes in equity for the
year
ended 31 December 2020
Total comprehensive
loss for year - - - - - (1,891) (1,891)
Share based payment
res. - - 240 - - - 240
Currency differences - - - - 1,488 - 1,488
Shares issued 414 29,266 - - - - 29,680
---------------------- ---------------------- ------------- ------------------- ---------- ------------- ---------- -----------
Total contributions
by and
distributions to
owners 414 29,266 240 - 1,488 (1,891) 29,517
At 31 December 2020 731 44,480 493 (2,241) 2,573 (4,983) 41,053
---------------------- ---------------------- ------------- ------------------- ---------- ------------- ---------- -----------
Changes in equity for
the year
ended 31 December
2021
Total comprehensive loss
for year - - - - - (1,522) (1,522)
Share based payment
res. - - (166) - - 193 27
Currency differences - - - - (559) - (559)
Shares issued 3 37 - - - - 40
Capital reduction (63) (44,516) 44,579 -
Distribution in
specie (note 39) - - - - - (1,500) (1,500)
Total contributions
by and
distributions to
owners (60) (44,479) (166) - (559) 41,750 (3,514)
---------------------- ---------------------- ------------- ------------------- ---------- ------------- ---------- -----------
At 31 December 2021 671 1 327 (2,241) 2,014 36,767 37,539
---------------------- ---------------------- ------------- ------------------- ---------- ------------- ---------- -----------
Consolidated and Company's Statement of Cash Flows
For the year ended 31 December 2021
Group Group Company Company
2021 2020 2021 2020
Notes GBP'000 GBP'000 GBP'000 GBP'000
Cash Flow from operating activities
Continuing operations
Cash used in operations 28 (2,868) 2,540 680 (6,568)
Income tax (R & D) received 1,304 1,631 - -
----------------------------------------------------- ------ -------- -------- -------- --------
Net cash used in operating activities (1,564) 4,171 680 (6,568)
----------------------------------------------------- ------ -------- -------- -------- --------
Cash flow from investing activities
Cash acquired with acquisition of subsidiary - 2,276 - -
Investment in new subsidiary - - (43) -
Purchase of property, plant and equipment (329) (818) - -
Purchase of intangible asset (410) (274) - -
Net cash used in investing activities (739) 1,184 (43) -
----------------------------------------------------- ------ -------- -------- -------- --------
Cash flow from financing activities
Proceeds from issuance of ordinary shares & options 26 40 18,031 40 18,031
Costs of January and May 2020 fund raising - (1,335) - (1,335)
Exceptional Costs re RTO, Spin-out & restructuring 7 (1,169) (2,108) (409) (867)
Repayment of Invoice Discounting - (156) - -
Interest (Paid) (21) (188) - (152)
Stamp Duty re capital reduction 39 - - (7)
Loan Note Redemptions (45) (1,205) (45) (1,205)
Net cash generated by financing activities (1,195) 13,039 (421) 14,472
----------------------------------------------------- ------ -------- -------- -------- --------
Net increase in cash and cash equivalents (3,498) 18,394 216 7,904
Cash and cash equivalents at beginning of year 19,205 1,037 8,689 421
FX translation (13) (226) (242) 364
Cash and cash equivalents at end of year 22 15,694 19,205 8,663 8,689
----------------------------------------------------- ------ -------- -------- -------- --------
Notes to the Financial Statements
For the year ended 31 December 2021
1. General information
Open Orphan Plc is a company incorporated in England and Wales.
The Company is a public limited company, limited by shares, listed
on the AIM market of the London Stock Exchange and on Euronext
Growth in Dublin. The address of the registered office is Queen
Mary Bio Enterprises, Innovation Centre, 42 New Road, London, E1
2AX, UK.
The principal activity of the Group is that of a rapidly growing
specialist CRO pharmaceutical services company which is the world
leader in the testing of vaccines and antivirals using human
challenge clinical trials. The Group has a presence in the UK,
Ireland, France and Netherlands.
The financial statements are presented in GBPGBP'000 (except
where indicated otherwise), the currency of the primary economic
environment in which the Group's trading companies operate. The
Group comprises Open Orphan Plc and its subsidiary companies as set
out in note 18. The Board decided to change the presentation
currency of the Group from Euro (EUR) to pounds Sterling (GBP) in
2020 given the increased weighting of the UK operations on the
financial statements as a result of the merger between Open Orphan
plc and hVIVO plc in January 2020.
The registered number of the Company is 07514939.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. The
policies have been consistently applied throughout the year, unless
otherwise stated.
Basis of preparation
Open Orphan Plc (formerly Venn Life Sciences Holdings Plc)
completed an IPO on the London AIM Exchange and the Dublin Euronext
exchange on 28 June 2019 through a reverse acquisition of Open
Orphan DAC, an Irish Company, into Venn Life Sciences Holdings Plc
(Venn), a UK company. Based on the accounting standards under IFRS
3 and IFRS 10, the Group has determined that the entity with
control of the combined group after the combination is Open Orphan
DAC. It was therefore determined that reverse acquisition
accounting is to be applied for presentation of the financial
statements of the Group. This means that results reported for 2019
reflected those of Open Orphan DAC for the full 12-month period and
for Venn Life Sciences group Plc group from 01 July 2019 to year
end 2019. The percentage of the enlarged share capital represented
by the consideration shares issued to Open Orphan DAC on the
reverse takeover was 40.1% which represented a fair value
consideration of GBP5.7m.
Open Orphan Plc completed, on 17 January 2020, an acquisition of
the hVIVO group. The results reported for 2020 reflected those of
Open Orphan Plc and Venn Group for the full 12-month period and for
hVIVO group from 17 January 2020 to year end 2020. The percentage
of the enlarged share capital represented by the consideration
shares issued to hVIVO group on the acquisition takeover was 33.1%
which represented a fair value consideration of GBP12.96m.
The Balance Sheet reported for 2021 reflect those of the now
fully combined group with share capital reflecting the position of
the ultimate parent company Open Orphan Plc.
For information purposes, a pro forma statement of Comprehensive
Income for the prior year 2020 for Open Orphan Plc on a stand-alone
basis is presented in the chairman's statement to allow a
comparison of a normalized presentation of Comprehensive Income for
the Group during the years 2021 and 2020.
The consolidated financial statements of Open Orphan Plc have
been prepared in accordance with UK adopted international
accounting standards (IFRSs), IFRIC interpretations and the
Companies Act 2006 applicable to companies reporting under IFRS.
These are the first financial statements prepared under UK adopted
international accounting standards. On 31 December 2020, IFRS as
adopted by the European Union at that date was brought into UK law
and became UK adopted international accounting standards, with
future changes being subject to endorsement by the UK Endorsement
Board. Open Orphan Plc transitioned to UK-adopted International
Accounting Standards in its consolidated and parent company
financial statements on 1 January 2021. This change constitutes a
change in accounting framework. However, there is no change on
recognition, measurement or disclosure in the financial year
reported as a result of the change in framework.
The consolidated financial statements have been prepared under
the historical cost convention.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements are disclosed in note 4.
Changes in accounting policies and disclosures
The accounting policies adopted are consistent with those of the
previous financial year. Standards and amendments to IFRS effective
as of 1 January 2021 have been applied by the Group, where
applicable.
Summary of new accounting policies
Standards, amendments and interpretations effective and adopted
in 2021
Several amendments and interpretations apply for the first time
in 2021.
Effective for
Standard annual
or periods beginning
Interpretation Title on or after
IFRS 16 COVID-19-Related Rent Concessions 1 June 2020
(Amendment to IFRS 16)
IFRS 9, IAS Interest Rate Benchmark Reform 1 January 2021
39, IFRS - Phase 2
7, IFRS 4 (Amendments to IFRS 9, IAS 39,
and IFRS IFRS 7, IFRS 4 and IFRS 16)
16
Standards, amendments and interpretations issued and effective
in 2021 but not relevant
There are no IFRSs or IFRIC interpretations that are effective
and not relevant to the Group.
Standards, amendments and interpretations issued but not yet
effective in 2021
There were a number of standards and interpretations which were
in issue at 31 December 2021 but not effective for periods
commencing 1 January 2021 and have not been adopted for these
financial statements. The Directors have assessed the full impact
of these accounting changes on the Company. To the extent that they
may be applicable, the Directors have concluded that none of these
pronouncements will cause material adjustments to the Group's
financial statements. They may result in consequential changes to
the accounting policies and other note disclosures. The new
standards will not be early adopted by the Group and will be
incorporated in the preparation of the Group financial statements
from the effective dates noted below.
Effective for
Standard annual
or periods beginning
Interpretation Title on or after
IFRS 16 COVID-19-Related Rent Concessions 1 April 2021
beyond 30 June 2021. (Amendment
to IFRS 16)
IAS 37 Onerous Contracts - Cost of Fulfilling 1 January 2022
a Contract. (Amendments to IAS
37)
IAS 16 Property, Plant and Equipment: 1 January 2022
Proceeds before Intended Use. (Amendments
to IAS 16)
IFRS Annual Improvements to IFRS Standards 1 January 2022
2018-2020
IFRS 3 Reference to the Conceptual Framework. 1 January 2022
(Amendments to IFRS 3)
IAS 1 Classification of Liabilities as 1 January 2023
Current or Non-current. (Amendments
to IAS 1)
IFRS 17 IFRS 17 Insurance Contracts and 1 January 2023
amendments to IFRS 17 Insurance
Contracts.
IAS 1 Disclosure of Accounting Policies. 1 January 2023
(Amendments to IAS 1 and IFRS Practice
Statement 2)
IAS 12 Deferred Tax related to Assets 1 January 2023
and Liabilities arising from a
Single Transaction. (Amendments
to IAS 12)
IAS 8 Definition of Accounting Estimates. 1 January 2023
(Amendments to IAS 8)
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
Going concern
The Directors have prepared the financial statements on a going
concern basis. During the financial year ended 31 December 2021 the
Group made a loss of GBP0.07m and had net cash outflows of GBP3.5m.
However the Directors consider the use of the going concern basis
to be appropriate given the significant cash reserves of GBP15.7m
at year end, the level of new contracts signed in 2021, which will
generate revenue in 2022 and beyond and the level of new contracts
signed in the post period end to date (See CEO's statement). The
Directors have prepared working capital projections which show that
the Group & Company will be able to continue as a going
concern.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiary undertakings.
Subsidiaries are all entities over which the Group has the power to
govern their financial and operating policies generally
accompanying a shareholding of more than fifty per cent of the
voting rights. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. Subsidiaries
are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date
that control ceases.
Inter-Company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
Associates are all entities over which the group has significant
influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting. Under the
equity method, the investment is initially recognised at cost, and
the carrying amount is increased or decreased to recognise the
group's share of the profit or loss of the associate after the date
of acquisition.
The group's share of post-acquisition profit or loss is
recognised in the income statement.
(a) Accounting for business combinations
The Group uses the acquisition method of accounting to account
for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred, and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration agreement. Acquisition related costs are expensed as
incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. On
an acquisition by acquisition basis, the Group recognises any
non-controlling interest in the acquiree either at fair value or at
the non-controlling interest's proportionate share of the
acquiree's net assets.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition date
fair value of any previous equity interest in the acquiree over the
fair value of the Group's share of the identifiable net assets
acquired is recorded as goodwill. If this is less than the fair
value of the net assets of the subsidiary acquired in the case of a
bargain purchase, the difference is recognised directly in the
income statement.
Investments in subsidiaries are accounted for at cost less
impairment. Cost is adjusted to reflect changes in consideration
arising from contingent consideration amendments. The acquisition
of the hVIVO group in January 2020 was accounted for using
principles of acquisition accounting.
(b) Associates
Associates are all entities over which the group has significant
influence but not control or joint control as defined under IAS28.
This
is generally the case where the group holds between 20% and 50%
of the voting rights. Investments in associates are accounted for
using the equity method of accounting (see equity method below),
after initially being recognised at cost less any fair value
adjustment.
Equity Method:
Under the equity method of accounting, the investments are
initially recognised at cost and adjusted thereafter to recognise
the group's share of the post-acquisition profits or losses of the
investee in profit or loss, and the group's share of movements in
other comprehensive income of the investee in other comprehensive
income. Dividends received or receivable from associates and joint
ventures are recognised as a reduction in the carrying amount of
the investment.
When the group's share of losses in an equity-accounted
investment equals or exceeds its interest in the entity, including
any other unsecured long-term receivables, the group does not
recognise further losses, unless it has incurred obligations or
made payments on behalf of the other entity. Unrealised gains on
transactions between the group and its associates and joint
ventures are eliminated to the extent of the group's interest in
these entities. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred.
Accounting policies of equity accounted investees have been
changed where necessary to ensure consistency with the policies
adopted by the group. The carrying amount of equity-accounted
investments is tested for impairment in accordance with the policy
described in page 31 of financial statements.
(c) Group re-organisation
The Group re-organisation of common control transaction is
scoped out under IFRS 3. The results of the Group and all of its
subsidiary undertakings affected by the group re-organisation are
accounted using the merger accounting method. The method
of accounting for such business combination is treated to take
place before the transition of IFRS. The investment is recorded at
the nominal value of the shares issued, together with the fair
value of any additional consideration paid.
Merged subsidiary undertakings are treated as if they had always
been a member of the Group. This treatment is permitted under the
exemption in IFRS 1 to not restate acquisitions before
transition.
The corresponding figures for the previous period include its
results for that period, the assets and liabilities at the previous
balance sheet date and the shares issued by the company as
consideration as if they had always been in issue. Any difference
between the nominal value of the shares acquired by the Company and
those issued by the company to acquire them is taken to reserves as
re-organisation reserve.
(d) Reverse acquisition accounting
The acquisition of Venn Life Sciences Holdings Plc (renamed Open
Orphan Plc) and its subsidiaries by Open Orphan DAC on 27 June 2019
has been accounted using the principles of reverse acquisition
accounting. Although the Group financial statements have been
prepared in the name of the legal parent, Open Orphan Plc, they are
in substance a continuation of the consolidated financial
statements of the legal subsidiary, Open Orphan DAC. The following
accounting treatment has been applied in respect of the reverse
accounting:
The assets and liabilities of the legal subsidiary, Open Orphan
DAC, are recognised and measured in the Group financial statements
at the pre-combination carrying amounts, without restatement of
fair value. The retained earnings and other equity balances
recognised in the Group financial statements reflect the retained
earnings and other equity balances of Open Orphan DAC immediately
before the business combination and the results of the period from
1 January 2019 to the date of the business combination are those of
Open Orphan DAC. However, the equity structure appearing in the
Group financial statements reflects the equity structure of the
legal parent, Open Orphan Plc (formerly Venn Life Sciences Holdings
Plc), including the equity instruments issued in order to affect
the business combination.
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic
environment in which the entity operates (the functional
currency). The consolidated financial statements are presented in
GBPGBP, which is the functional and presentation currency of the
main operating entities.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions where items are re-measured. Foreign exchange gains
and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in
the income statement within 'administrative expenses', except when
deferred in other comprehensive income as qualifying cash flow
hedges and qualifying net investment hedges.
(c) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyper-inflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentational currency as
follows:
-- assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
-- income and expenses for each income statement are translated at average exchange rates; and
-- all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of the net investment in foreign operations are taken
to other comprehensive income. When a foreign operation is
partially disposed of or sold, exchange differences that were
recorded in equity are recognised in the income statement as part
of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-makers ("CODM"), who are responsible
for allocating resources and assessing performance of the operating
segments, has been identified as the Executive Directors who make
strategic decisions.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
accumulated depreciation and any provision for impairment.
Historical cost includes expenditure that is directly attributable
to the acquisition of the asset and bringing the asset to its
working condition for its intended use.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only where it is
probable that future economic benefits associated with the asset
will flow to the Group and the cost of the asset can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Any borrowing costs associated with qualifying property, plant and
equipment are capitalised and depreciated at the rate applicable to
that asset category.
Depreciation on assets is calculated using the straight-line
method or reducing balances method to allocate their cost to its
residual values over their estimated economic useful lives, as
follows:
Leasehold Improvements the shorter of five years or the life of
the lease
Plant & Machinery four years
Fixtures and fittings three to five years
The assets' residual values and useful economic lives are
reviewed regularly, and adjusted if appropriate, at the end of each
reporting period.
An asset's carrying value is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on the disposal of assets are determined by
comparing the proceeds with the carrying amount and are recognised
in administration expenses in the income statement.
Intangible assets
(a) Goodwill
Goodwill represents the excess amount of the cost of an
acquisition over the fair value of the Group's share of the net
identifiable assets of the acquired underlined businesses at the
date of the acquisition. Goodwill on acquisitions of businesses is
included in 'intangible assets'. In normal cases Goodwill has an
indefinite useful life and is tested annually for impairment and
carried at cost less accumulated impairment losses. Impairment
losses on goodwill are not reversed. 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 for the purpose
of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose, identified according to operating segment.
(b) Trade secrets
Trade secrets, including technical know-how, operating
procedures, contact network, methods and processes, acquired in a
business combination are recognised at fair value at the
acquisition date. Trade secrets have a finite useful life and are
carried at cost less accumulated amortisation. Amortisation is
calculated using the straight-line method to allocate the cost of
trade secrets over their estimated useful lives of 10 years and is
charged to administrative expenses in the income statement.
c) Intellectual property rights
Intellectual property rights relate to patents acquired by the
Group. Amortisation is calculated using the straight-line method
over the expected life of 10 years and is charged to administrative
expenses in the income statement.
d) Capitalised Software development, Licences, Preferential
right to reserve a slot and wearables development
Internally generated intangible assets involving research and
development expenditure.
Expenditure on research activities is recognised as an expense
in the period in which it is incurred. Development costs are
capitalised when the related products meet the recognition criteria
of an internally generated intangible asset, the key criteria being
as follows:
-- technical feasibility of the completed intangible asset has been established;
-- it can be demonstrated that the intangible asset will
generate probable future economic benefits;
-- adequate technical, financial and other resources are available to complete the development;
-- the expenditure attributable to the intangible asset can be reliably measured; and
-- management has the ability and intention to use or sell the intangible asset.
Expenses for research and development include associated wages
and salaries, material costs, depreciation on non -- current assets
and directly attributable overheads. Development costs recognised
as assets are amortised over their expected useful life.
Impairment of non-financial assets
Assets that have an indefinite life such as goodwill are not
subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the carrying amount exceeds its
recoverable amount.
The recoverable amount is the higher of an asset's fair value
less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of the money and the risks specific
to the asset which the estimates of future cash flows have not been
adjusted.
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows. Impairment losses recognised for cash-generating units, to
which goodwill has been allocated, are credited initially to the
carrying amount of goodwill. Any remaining impairment loss is
charged pro rata to the other assets in the cash-generating
unit.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in the prior period. A
reversal of an impairment loss is recognised in the income
statement immediately. If goodwill is impaired however, no reversal
of the impairment is recognised in the financial statements.
Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial assets
The financial assets of the group consist of trade receivables,
accrued income, cash and other receivables.
Initial recognition and measurement
Financial assets are classified, at initial recognition, and
subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or
loss.
The classification of financial assets at initial recognition
depends on the financial asset's contractual cash flow
characteristics and the Group's business model for managing them.
With the exception of trade receivables that do not contain a
significant financing component or for which the Group has applied
the practical expedient, the Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing component
or for which the Group has applied the practical expedient are
measured at the transaction price determined under IFRS 15. Refer
to the accounting policies in note 35 Revenue from contracts with
customers.
In order for a financial asset to be classified and measured at
amortised cost or fair value through OCI, it needs to give rise to
cash flows that are 'solely payments of principal and interest
(SPPI)' on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument
level.
The Group's business model for managing financial assets refers
to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial
assets, or both.
Purchases or sales of financial assets that require delivery of
assets within a time frame established by regulation or convention
in the marketplace (regular way trades) are recognised on the trade
date, i.e., the date that the Group commits to purchase or sell the
asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are
classified in four categories:
-- Financial assets at amortised cost (debt instruments)
-- Financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments)
-- Financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity
instruments)
-- Financial assets at fair value through profit or loss
However, only financial assets at amortised cost are discussed
as all the Group's financial assets are measured at amortised cost,
with the exception of investments in subsidiaries and associates
which are held at cost less impairment.
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group
measures financial assets at amortised cost if both of the
following conditions are met:
-- The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows, and
-- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured
using the effective interest (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when
the asset is derecognised, modified or impaired.
The Group's financial assets at amortised cost comprise of trade
and other receivables and cash and cash equivalents.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognised (i.e., removed from the Group's consolidated statement
of financial position) when:
-- The rights to receive cash flows from the asset have expired, OR
-- The Group has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a
'pass-through' arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset
When the Group has transferred its rights to receive cash flows
from an asset or has entered into a passthrough arrangement, it
evaluates if, and to what extent, it has retained the risks and
rewards of ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the Group continues to recognise
the transferred asset to the extent of its continuing involvement.
In that case, the Group also recognises an associated liability.
The transferred asset and the associated liability are measured on
a basis that reflects the rights and obligations that the Group has
retained.
Continuing involvement that takes the form of a guarantee over
the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
Impairment of financial assets
Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach within
IFRS 9 using a provision matrix in the determination of the
lifetime expected credit losses. During this process the
probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the
expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss being recognised in
the consolidated statement of comprehensive income. On confirmation
that the trade receivable will not be collectable, the gross
carrying value of the asset is written off against the associated
provision.
From time to time, the Group elects to renegotiate the terms of
trade receivables due from customers with which it has previously
had a good trading history. Such renegotiations will lead to
changes in the timing of payments rather than changes to the
amounts owed and, in consequence, the new expected cash flows are
discounted at the original effective interest rate and any
resulting difference to the carrying value is recognised in the
consolidated statement of comprehensive income (operating
profit).
Financial liabilities
The financial liabilities of the group consist of trade
payables, accrued expenses, lease liabilities, borrowings, social
security and other taxes payable.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
The Group's financial liabilities include trade and other
payables and loans and borrowings.
Subsequent measurement
Loans and borrowings
This is the category most relevant to the Group. After initial
recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the EIR method. Gains and losses
are recognised in profit or loss when the liabilities are
derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part
of the EIR. The EIR amortisation is included as finance costs in
the statement of profit or loss. This category generally applies to
interest-bearing loans and borrowings. For more information, refer
to note 25.
Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the statement of
profit or loss.
Inventories
Inventories are reported at the lower of cost (purchase price
and/or production cost) and net realisable value. Net realisable
value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and applicable
variable selling expenses.
Inventories comprise completed manufactured grade viruses, work
in process in relation to the manufacture of viruses, and
laboratory and clinical consumables. The cost of virus inventory is
calculated using the weighted average cost method for each
individual strain, with cost including direct materials and, where
applicable, direct labour costs and an attributable portion of
production overheads that have been incurred in bringing the
inventories to their present location and condition. Adjustments
are made for any inventories where net realisable value is lower
than cost, or which are considered to be obsolete. Any inventories
which management considers are not usable on future commercial
engagements are provided against in the statement of comprehensive
income.
Trade and other receivables
Trade receivables are initially recognised at fair value, being
the original invoice amount, and subsequently measured at amortised
cost less provision for impairment. A provision for impairment 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 receivable. Trade receivables that are less than three
months past due date are not considered impaired unless there are
specific financial or commercial reasons that lead management to
conclude that the customer will default. Older debts are considered
to be impaired unless there is sufficient evidence to the contrary
that they will be settled. The amount of the provision is the
difference between the asset's carrying value and the present value
of the estimated future cash flows. The carrying amount of the
asset is reduced through the use of an allowance account, and the
amount of the loss is recognised in the income statement within
administrative expenses. When a trade receivable is uncollectible
it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against
administrative expenses in the income statement.
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 fair value and subsequently measured at amortised cost
using the effective interest method.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash
at bank and in hand and short-term deposits with an original
maturity of less than three months, reduced by overdrafts to the
extent that there is a right of offset against other cash
balances.
For the purposes of the consolidated cash flow statement, cash
and cash equivalents consist of cash and short-term deposits as
defined above net of outstanding bank overdrafts.
Share capital
Ordinary Shares and Deferred shares are classified as equity.
Proceeds in excess of the nominal value of shares issued are
allocated to the share premium account and are also classified as
equity. Incremental costs directly attributable to the issue of new
Ordinary Shares or options are deducted from the share premium
account.
Merger reserve
The reserve represents a premium on the issue of the ordinary
shares for the acquisition of subsidiary undertakings. The relief
is only available to the issuing company securing at least a 90%
equity holding in the acquired undertaking in pursuance of an
arrangement providing for the allotment of equity shares in the
issuing company on terms that the consideration for the shares
allotted is to be provided by the issue to the issuing company of
equity shares in the other company.
Borrowings
Borrowings are recognised initially at the fair value of
proceeds received, net of transaction costs incurred. Borrowings
are subsequently carried at amortised cost. 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 balance sheet date.
Borrowing costs are expensed in the consolidated Group income
statement under the heading 'finance costs'. Arrangement and
facility fees together with bank charges are charged to the income
statement under the heading 'administrative costs'.
Current and deferred income tax
The tax expense comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it
relates to items recognised in other comprehensive income where the
associated tax is also recognised in other comprehensive
income.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the Company and its subsidiaries operate and
generate taxable income. Management evaluates positions taken in
tax returns with respect to situations in which applicable tax
regulation is subject to interpretation and establishes provisions
where appropriate on the basis of amounts expected to be paid to
the tax authorities.
Deferred tax is disclosed in accordance with IAS 12 and
recognised using the liability method, on all temporary differences
at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes. Deferred tax liabilities are recognised in respect of all
temporary differences except where the deferred tax liability
arises from the initial recognition of goodwill in business
combinations.
Deferred tax assets are recognised for all deductible temporary
differences, carry-forward of unused tax assets and tax losses, to
the extent that they are regarded as recoverable. They are regarded
as recoverable where, on the basis of available evidence, there
will be sufficient taxable profits against which the future
reversal of the underlying temporary differences can be
deducted.
The carrying value of the amount of deferred tax assets is
reviewed at each balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be
available to allow all, or part, of the tax asset to be
utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on the tax rates (and
tax laws) that have been substantively enacted at the balance sheet
date.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Right of use assets
The Group recognises right of use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right of use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right of use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless the
Group is reasonably certain to obtain ownership of the leased asset
at the end of the lease term, the recognised right of use assets is
depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term. Right of use assets are
subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating a lease, if the
lease term reflects the Group exercising the option to terminate.
The variable lease payments that do not depend on an index or a
rate are recognised as expense in the period on which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group
uses the incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to
its short-term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also
applies the lease of low-value assets recognition exemption to
leases of office equipment that are considered of low value (i.e.,
below $5,000). Lease payments on short-term leases and leases of
low-value assets are recognised as expense on a straight-line basis
over the lease term.
Employee benefits
Pension obligations
Group companies operate a pension scheme with defined
contribution plans. A defined contribution plan is a pension plan
under which the Group pays fixed contributions into a separate
entity with the pension cost charged to the income statement as
incurred.
The Group has no further obligations once the contributions have
been paid.
Share-based payment
Where equity settled share options and warrants are awarded to
Directors and employees, the fair value of the options and warrants
at the date of grant is charged to the consolidated statement of
comprehensive income over the vesting period and the corresponding
entry recorded in the share-based payment reserve. Non-market
vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each reporting date so
that, ultimately, the cumulative amount recognised over the vesting
period is based on the number of options that eventually vest.
Where the terms and conditions of options are modified before
they vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged to
the consolidated statement of comprehensive income over the
remaining vesting period.
Leasehold provision
Provisions for dilapidations and onerous lease commitments are
recognised when the Company has a present or constructive
obligation as a result of past events. The recognition of provision
requires management to make best estimates of the consideration
required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties
surrounding the obligation. There is reasonable uncertainty around
the likelihood and timing of the exit of the lease as negotiations
will involve third parties. The provision is discounted for the
time value of money.
Revenue recognition
(a) Revenue from Contracts in the Venn Division
The Division provides clinical consulting services and drug
development services. Revenue from providing services is recognised
in the accounting period in which the services are rendered. For
fixed-price contracts, revenue is recognised based on the actual
service provided to the end of the reporting period as a proportion
of the total services to be provided because the customer receives
and uses the benefits simultaneously. This is determined in
reference to the stage of completion which is measured by labour
hours incurred to the period end as a percentage of the total
estimated labour hours for the contract. Where the contract outcome
cannot be measured reliably, revenue is recognised to the extent of
the expenses recognised that are recoverable.
Some contracts include multiple performance obligations in the
form of various service offerings. Where the contracts include
multiple performance obligations, the transaction price will be
allocated to each performance obligation measured by reference to
labour hours incurred to the period end as a percentage of the
total estimated labour hours to achieve a particular performance
obligation. Where the contract outcome cannot be measured reliably,
revenue is recognised to the extent of the expenses recognised that
are recoverable.
Estimates of revenues, costs or extent of progress toward
completion are revised if circumstances change. Any resulting
increases or decreases in estimated revenues or costs are reflected
in profit or loss in the period in which the circumstances that
give rise to the revision become known by management.
In case of fixed-price contracts, the customer pays the fixed
amount based on a payment schedule. If the services rendered by the
Division exceed the payment, a contract asset is recognised. If the
payments exceed the services rendered, a contract liability is
recognised.
Terms and Conditions tend to vary from contract to contract and
in general the payment terms tend to be between 30 and 90 days in
The Netherlands and between 30 and 60 days in France and
Ireland.
Some contracts include references to milestone events. Where no
fee is payable until a milestone is achieved, revenue is recognised
up to the value of the milestone event set to occur.
The Division is applying practical expedient per IFRS 15 to not
disclose the aggregate amount of the transaction price allocated to
the performance obligations that are unsatisfied (or partially
unsatisfied) as of the end of the reporting period as the entity
has a right to consideration from a customer in an amount that
corresponds directly with the value to the customer of the entity's
performance completed to date and recognise revenue in the amount
to which the entity has a right to invoice.
(b) Revenue from contracts in the hVIVO Division
Revenue from contracts with customers is recognised at an amount
that reflects the consideration to which the Division expects to be
entitled in exchange for the goods or services and is shown net of
Value Added Tax.
Service revenues
The Division primarily earns revenues by undertaking client
clinical services engagements. A client clinical services
engagement typically comprises a number of quarantine cohorts. Each
quarantine cohort lasts two to three weeks, but the timeline of
work involved in building up to undertaking a clinical study is in
the range of three to twelve months. Whether a client clinical
services engagement is for one quarantine cohort or for a number of
quarantine cohorts, the overall timeline of the engagement is much
the same, apart from the additional time for the quarantine cohorts
themselves and the time lags in between quarantine cohorts (with
some cohorts offset in parallel and some sequential), as much of
the upfront work is the same whether for one or a number of
quarantine cohorts.
Client clinical services revenue is recognised based on a
performance over time, as the performance of the clinical services
engagements do not create an asset with an alternative use to the
Division and the Division has an enforceable right to payment for
the performance completed to date.
The Division measures its progress towards the satisfaction of
performance obligations using output measures. Depending on the
contractual terms, revenue from contracts with customers is
recognised based on the level of work completed to date in respect
of each individual performance obligation of the client clinical
services contract.
Contracts generally contain provisions for renegotiation in the
event of changes in the scope, nature, duration, volume of services
or conditions of the contract (contract modifications). Contract
modifications are assessed based on the terms of the contract.
Contract modifications which are distinct and provided at a
stand-alone selling price are accounted for as a separate contract.
Where modifications are not distinct or provided at a stand-alone
selling price, the Division evaluates whether the remaining goods
or services are distinct from those already provided. If so, the
modification is accounted for as a termination of the existing
contract and the creation of a new contract. If not, the
transaction price and measure of progress is updated for the single
performance obligation and amounts are recognised as revenue by
revision to the total contract value arising as a result.
Provisions for losses to be incurred on contracts are recognised in
full in the period in which it is determined that a loss will
result from the performance of the contractual arrangement.
The difference between the amount of revenue from contracts with
customers recognised and the amount invoiced on a particular
contract is included in the statement of financial position as
contract liabilities. Normally amounts become billable in advance
upon the achievement of certain milestones, in accordance with
pre-agreed invoicing schedules included in the contract or on
submission of appropriate detail. Any cash payments received as a
result of this advance billing are not representative of revenue
earned on the contract as revenues are recognised over the period
during which the specified contractual obligations are fulfilled.
Amounts included in contract liabilities are expected to be
recognised within one year and are included within current
liabilities.
In the event of contract termination, if the value of work
performed and recognised as revenue from contracts with customers
is greater than aggregate milestone billings at the date of
termination, cancellation clauses provide for the Division to be
paid for all work performed to the termination date (enforceable
right to payment for services provided to date).
Licensing revenues
Where licensing arrangements have a single contracted
performance obligation to provide the right to use intellectual
property which exists at a certain point in time, such as the
delivery of a licence for study data, revenue from contracts with
customers is recognised when the Company has transferred to the
customer control over the intellectual property, which generally
occurs at the beginning of the period for which the customer has
the right to use the intellectual property. Licence revenue for
such arrangements is therefore generally recognised at the point of
delivery of the data when the performance obligation has been
satisfied. Until this point in time, any amount invoiced in respect
of the arrangement is presented in the statement of financial
position as a contract liability. Costs associated with development
of the study data are capitalised as a current intangible asset
from the point that it is probable future economic benefits will be
generated and are transferred to cost of sales upon handover of the
deliverable.
Where licensing arrangements are determined to have contracted
performance obligations to provide a right of access to the
intellectual property, revenue is recognised over time, in line
with the methods applied in recognising service revenues.
(c) Interest income
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable,
which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to that
asset's net carrying amount.
(d) Royalty and license income
Royalty and license income are recognised on an accruals basis
in accordance with the substance of the relevant agreements.
Exceptional items
These are items of an unusual or non-recurring nature incurred
by the Group and include transactional costs and one-off items
relating to business combinations, such as acquisition expenses,
restructuring and redundancy costs.
3. Financial risk management
Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk (foreign exchange risk and cash flow interest
rate risk), credit risk, liquidity risk, capital risk and fair
value risk. The Group's overall risk management programme focuses
on the unpredictability of the financial markets and seeks to
minimise the potential adverse effects on the Group's financial
performance. The Group does not use derivative financial
instruments to hedge risk exposures.
Risk management is carried out by the head office finance team.
It evaluates and mitigates financial risks in close co-operation
with the Group's operating units. The Board provides principles for
overall risk management whilst the head office finance team
provides specific policy guidance for the operating units in terms
of managing foreign exchange risk, credit risk and cash and
liquidity management.
a) Market risk
(i) Foreign exchange - cash flow risk
The Group's presentation currency is GBPGBP although it operates
internationally and is exposed to foreign exchange risk arising
from various currency exposures, primarily between Euro, USD$ and
the GBPGBP such that the Group's cash flows are affected by
fluctuations in the rate of exchange between GBPGBP and the
aforementioned foreign currencies.
Management do not use derivative financial instruments to
mitigate the impact of any residual foreign currency exposure not
mitigated by the natural hedge within the business model. The Group
does not speculate in foreign currencies and no operating Company
is permitted to take unmatched positions in any foreign
currency.
(ii) Foreign exchange - Fair value risk
Translation exposures that arise on converting the results of
overseas subsidiaries are not hedged. Net assets held in foreign
currencies are hedged wherever practical by matching borrowings in
the same currency. The principal exchange rates used by the Group
in translating overseas profits and net assets into GBPGBP are set
out in the table below.
Average rate Average rate Year end rate Year end rate
Rate compared to Euro 2021 2020 2021 2020
GBPGBP 0.86 0.89 0.84 0.90
USD$ 1.18 1.14 1.13 1.23
Average rate Average rate Year end rate Year end rate
Rate compared to GBPGBP 2021 2020 2021 2020
Euro 1.16 1.12 1.19 1.11
USD$ 1.37 1.28 1.35 1.26
As a guide to the sensitivity of the Group's results to
movements in foreign currency exchange rates, a one penny movement
in the GBPGBP to Euro rate would impact annual earnings by
approximately GBP19,000 due to natural hedging (2020:
GBP3,000).
(iii) Cash flow and fair value interest rate risk
The Group has assets in the form of cash and cash equivalents
and limited interest-bearing liabilities which relate to
short-term
borrowing. Where possible, the Group earns market interest rates
on cash and cash equivalents on deposit whilst interest rates on
borrowings have been fixed and therefore expose the Group to fair
value interest rate risk. The Group does not speculate on future
changes in interest rates.
It is the Group's policy not to trade in derivative financial
instruments. The Group does not use interest rate swaps.
(b) Credit risk
Credit risk is managed on a Group basis, except for credit risk
relating to accounts receivable balances. Each local subsidiary and
operating business unit is responsible for managing and analysing
the credit risk for each of their new clients before standard
payment and delivery terms and conditions are offered. It is the
Group policy to obtain prepayment deposits from customers where
possible, particularly overseas customers. In addition, the Group
will seek confirmed letters of credit for the balances due. Credit
risk is managed at the operating business unit level and monitored
at the Group level to ensure adherence to Group policies. If there
is no independent rating, local management assesses the credit
quality of the customer, taking into account its financial
position, past experience and other factors. Individual risk limits
are set based on internal or external ratings in accordance with
limits set by the board. The utilisation of credit limits is
regularly monitored.
Credit risk also arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and
financial institutions, as well as credit exposures to
customers.
(c) Liquidity risk
Cash flow forecasting is performed in the individual operating
entities of the Group and is aggregated by the Head of Finance
team. The Head of Finance team monitors cash and cash flow
forecasts and it is the Group's liquidity risk management policy to
maintain sufficient cash and available funding through an adequate
amount of cash and cash equivalents and committed credit facilities
from its bankers. Due to the dynamic nature of the underlying
businesses, the Head of Finance team aims to maintain flexibility
in funding by keeping sufficient cash and cash equivalents
available to fund the requirements of the Group.
The Group's policy in relation to the finance of its overseas
operations requires that sufficient liquid funds be maintained in
each of its territory subsidiaries to support short and medium-term
operational plans. Where necessary, short-term funding is provided
by the holding Company. In the UK, the working capital bank
facility and the management of liquid funds in excess of
operational needs are controlled centrally. Typically, excess funds
are placed as short-term deposits, to provide a balance between
interest earnings and flexibility.
The table below analyses the Group's non-derivative financial
liabilities into relevant maturity groupings based on the remaining
period at the balance sheet date to the contractual maturity date.
The amounts disclosed in the table are the contractual undiscounted
cash flows.
Less than Between Between More than
one year 1 and 2 years 2 and 5 years 5 years Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December 2021:
Borrowings 25 294 - - - 294
Leased Liabilities 37 1,991 477 386 - 2,854
Trade and other payables 23 18,396 - - - 18,396
At 31 December 2020:
Borrowings 25 359 - - - 359
Leased Liabilities 37 2,245 1,510 684 - 4,439
Trade and other payables 23 21,396 2 - - 21,398
(d) Capital risk management
The Group's objectives when managing capital are to safeguard
the ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital.
The Group monitors capital on the basis of the gearing ratio.
This ratio is calculated as net debt divided by total capital. Net
debt is calculated as total borrowings (including "current and
non-current borrowings" as shown in the consolidated balance sheet)
less cash and cash equivalents. Total capital is the sum of net
debt plus equity. The Group is currently largely un-geared, having
net cash at 31 December 2021.
4. Critical accounting estimates and judgements
In the process of applying the Group's accounting policies,
management has made accounting judgements in the determination of
the carrying value of certain assets and liabilities. Due to the
inherent uncertainty involved in making assumptions and estimates,
actual outcomes will differ from those assumptions and estimates.
The following judgements have the most significant effect on the
amounts recognised in the financial statements.
(a) Business combinations
The recognition of business combinations requires the excess of
the purchase price of acquisitions over the net book value of
assets acquired to be allocated to the assets and liabilities of
the acquired entity. The Group makes judgements and estimates in
relation to the fair value allocation of the purchase price. If any
unallocated portion is positive it is recognised as goodwill.
However, in applying the reverse acquisition accounting method this
has necessitated the Group to recognise the unallocated portion as
deemed acquisition costs as required under IFRS 3 - Business
Combinations. See also note 2 (d) regarding reverse acquisition
accounting treatment for most recent transaction.
(b) Impairment of goodwill and cost of investments
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in note
2. The recoverable amounts of cash-generating units have been
determined based on value-in-use calculations. These calculations
require the use of estimates as set out in note 17. In addition,
the Group has also considered the impairment of the investments in
the subsidiaries undertakings as set out in note 18.
(c) Impairment of receivables
Trade and other receivables are carried at the contractual
amount due less any estimated provision for non-recovery. Provision
is
made based on a number of factors including the age of the
receivable, previous collection experience and the financial
circumstances of the counterparty.
(d) Deferred tax assets
Deferred tax assets are only recognised to the extent that it is
probable that future taxable profits will be available against
which deductible temporary differences can be utilised. See note
24.
(e) Intangible assets
The Group amortises intangible assets over their estimated
useful life. The useful lives of Trade Secrets, Intellectual
Property Rights, software, licences and Preferential Right to
Reserve a Slot have been estimated by the Group as stated in note
2. The Group tests annually whether there is any indication that
intangible assets have been impaired.
(f) Revenue recognition
Estimates of revenues, costs or extent of progress toward
completion are revised if circumstances change. Any resulting
increases or decreases in estimated revenues or costs are reflected
in profit or loss in the period in which the circumstances that
give rise to the revision become known by management. At each
period end, management reviews each material individual contract to
assess whether any anticipated losses should be recognised
immediately. Revenue in relation to the licensing of data is
recognised when data is delivered to the customer.
(g) Virus inventory
In valuing virus inventory, management is required to make
assumptions in relation to the future commercial use, being both
external client revenue engagements, engagements with our equity
investments and internal research and development engagements, for
each virus. This includes consideration of both the current
business pipeline and management's estimates of the future virus
requirements, based on its significant knowledge and experience in
the field of virology.
(h) Research and development tax credit
The Group's research and development tax credit claims in its
various jurisdictions are complex and require management to make
significant assumptions, with appropriate external tax advice, in
building the methodology for the claim, interpreting research and
development tax legislation in relation to the Group's specific
circumstances, and agreeing the basis of the Group's tax
computations with relevant Tax Authorities.
(i) Leasehold provision
Provisions for dilapidations and onerous lease commitments are
recognised when the Group has a present or constructive obligation
as a result of past events. The recognition of provision requires
management to make best estimates of the consideration required to
settle the present obligation at the end of the reporting period,
taking into account the risks and uncertainties surrounding the
obligation. There is reasonable uncertainty around the likelihood
and timing of the exit of the lease as negotiations will involve
third parties. The provision is discounted for the time value of
money.
5. Segmental reporting
Management has determined the Group's operating segments based
on the monthly management reports presented to the Chief Operating
Decision Maker ('CODM'). The CODM is the Executive Directors and
the monthly management reports are used by the Group to make
strategic decisions and allocate resources.
The first principal activity of the Group is conducting human
challenge trials and related laboratory services as part of the
Group's hVIVO Division.
The second principal activity is that of Venn Life Sciences'
Clinical Research Division, providing a suite of consulting and
clinical trial services to pharmaceutical, biotechnology and
medical device organisations. Key services areas covered include:
Clinical PK & Pharmacometrics, Non-Clinical Development
Consultancy, Chemistry, Manufacturing and Controls (CMC)
Consultancy, Medical Writing & Regulatory Affairs, Data
Management, Statistics, Study Design & Methodology, and
Regulatory Pathways / Data Services for Rare Diseases. As many of
Venn Life Sciences business contracts are multi-country contracts,
pulling resources from different locations, the CODM considers this
one business unit.
Currently the key financial performance measures used by the
CODM are Revenue and EBITDA (before exceptional items).
The segment information provided to the Board for the reportable
segments for the year ended 31 December 2021 is as follows:
2021 2021 2021
hVIVO Venn Total
GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- --------
Income statement
External revenue and other
income 31,932 7,073 39,005
----------------------------- -------- -------- --------
EBITDA before exceptional
items 3,134 (246) 2,888
Exceptional items 267
Depreciation & amortisation (2,565)
Operating Profit 590
Finance Expense (215)
Share based payments charge (27)
Share of loss of associate
using equity method (71)
Profit before income tax 277
----------------------------- -------- -------- --------
2020 2020 2020
hVIVO Venn Total
GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- ---------
Income statement
External revenue and other
income 14,336 7,842 22,178
----------------------------- -------- -------- ---------
EBITDA before exceptional
items (3,653) (2,429) (6,082)
Exceptional items (2,125)
Depreciation & amortisation (2,052)
Operating (loss) (10,259)
Finance Expense (374)
Share based payments charge (240)
Share of loss of associate
using equity method (107)
(Loss) before income tax (10,980)
----------------------------- -------- -------- ---------
6. Expenses - analysis by nature
2021 2020
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Employee benefit expense (note 10) 15,897 15,240
PPE Depreciation (note 16) and amortisation (note 17) 523 368
Depreciation related to Right of use Assets (note 37) 2,039 1,684
Exceptional items (note 7) (267) 2,125
Inventories consumed 963 727
Professional fees 1,632 1,326
IT 1,338 1,021
Premises Costs 1,399 1,331
Volunteer costs 2,943 961
Agency, Subcontractors and freelancers 4,305 1,691
Other expenses 7,643 5,963
------------------------------------------------------- -------- --------
Total direct project and administrative costs (incl.
Depreciation, Amortisation and Exceptional costs) 38,415 32,437
------------------------------------------------------- -------- --------
7. Exceptional items
Included within note 6 above are exceptional items as shown
below:
2021 2020
GBP'000 GBP'000
-------------------------------------------------------- -------- --------
Exceptional items include:
- Transaction costs relating to business combinations,
acquisitions & Re-organisations 923 2,125
- Transaction (gain) relating to Capital Reduction (1,190) -
and spin out (note 39)
Total exceptional (Gain)/Loss (267) 2,125
--------------------------------------------------------- -------- --------
8. Auditor remuneration
Services provided by the Company's auditor and its associates.
During the year the Group (including its overseas subsidiaries)
obtained the following services from the Company's auditor and its
associates:
2021 2020
GBP'000 GBP'000
Restated
----------------------------------------------------------------- -------- ----------
Fees payable to Company's auditor for the audit of the
parent Company and consolidated financial statements 38 36
Fees payable to Company's auditor for the audit of subsidiaries
and their consolidated financial statements 39 60
----------------------------------------------------------------- -------- ----------
Total paid to the Company auditor 77 96
----------------------------------------------------------------- -------- ----------
Fees payable to the auditors of subsidiaries for services:
- The audit of Company's subsidiaries pursuant to legislation
paid to other auditors 62 48
- Other services paid to other auditors 7 10
- Tax services paid to other auditors 11 8
----------------------------------------------------------------- -------- ----------
Total paid to Other auditors 80 66
----------------------------------------------------------------- -------- ----------
Total auditor's remuneration 157 162
----------------------------------------------------------------- -------- ----------
9. Directors' emoluments
2021 2020
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Aggregate emoluments 526 576
Social Security Costs 62 69
Contribution to defined contribution pension scheme 17 20
----------------------------------------------------- -------- --------
Total Directors' remuneration 605 665
----------------------------------------------------- -------- --------
See further disclosures within the Report of the Remuneration
Committee.
2021 2020
Highest paid Director GBP'000 GBP'000
------------------------------------- -------- --------
Total emoluments received 172 178
Defined contribution pension scheme 17 -
------------------------------------- -------- --------
No share options were exercised in the year by highest paid
Director nor was there any shares awarded to that Director in the
year.
10. Employee benefit expense
2021 2020
GBP'000 GBP'000
-------------------------------- -------- --------
Wages and salaries 13,179 12,461
Social security costs 1,846 1,944
Pension costs 872 835
-------------------------------- -------- --------
Total employee benefit expense 15,897 15,240
-------------------------------- -------- --------
11. Average number of people employed
2021 2020
No No Restated
---------------------------------------------------------- ----- ------------
Average number of people (including Executive Directors)
employed was:
Administration 38 52
Clinical research 172 157
Sales and marketing 8 9
---------------------------------------------------------- ----- ------------
Total average number of people employed 218 219
---------------------------------------------------------- ----- ------------
Monthly weighted average used in above calculation. (2020
restated as simple average (of start and end of year position) used
in prior year)
12. Finance income and costs
2021 2020
GBP'000 GBP'000
----------------------------------------------------------- -------- ---------
Interest expense:
- Interest on Lease liabilities (note 37) 227 243
- Interest on other loans (7) 131
----------------------------------------------------------- -------- ---------
Finance costs 220 374
----------------------------------------------------------- -------- ---------
Finance income
- Interest income on cash and short-term deposits (5) -
----------------------------------------------------------- -------- ---------
Finance income (5) -
----------------------------------------------------------- -------- ---------
Net finance expense 215 374
----------------------------------------------------------- -------- ---------
Restated
13. Income tax expense
2021 2020
Group GBP'000 GBP'000
----------------------------------------------------------- -------- ---------
Current tax:
Current year research and development tax charge/(credit) 350 (186)
Current year Hvivo Inc US Tax charge 6 6
Total current tax charge/(credit) 356 (180)
----------------------------------------------------------- -------- ---------
Deferred tax (note 24):
Origination and reversal of temporary differences (5) (9)
----------------------------------------------------------- -------- ---------
Total deferred tax (5) (9)
----------------------------------------------------------- -------- ---------
Income tax charge/ (credit) 351 (189)
----------------------------------------------------------- -------- ---------
The income tax charge on the Group's results before tax differs
from the theoretical amount that would arise using the standard tax
rate applicable to the profits of the consolidated entities as
follows:
2021 2020
GBP'000 GBP'000
---------------------------------------------------------------- -------- ---------
Profit/(Loss) before tax 277 (10,980)
---------------------------------------------------------------- -------- ---------
Tax calculated at domestic tax rates applicable to UK standard
rate of tax of 19.00% (2020 - 19%) 53 (2,086)
Tax effects of:
- Expenses not deductible for tax purposes 168 322
- Current Year R & D Tax (credit) (108) (207)
-Temporary timing differences (182) 424
- Adjustments in respect of prior year 37 -
- Additional allowances deductible for tax purposes (79) (8)
- Losses carried forward 462 1,367
Income tax charge/(credit) 351 (189)
---------------------------------------------------------------- -------- ---------
There are no tax effects on the items in the Statement of
Comprehensive Income.
In 2020 the R & D Expenditure Credit ("RDEC") income was
recorded net of tax in other income but as hVIVO Services Limited
is now profitable in 2021, RDEC is being recorded gross in other
income (see note 33) and the related tax charge is shown above in
the tax line. Prior year comparatives have been restated
accordingly. (See note 38)
In 2020 hVIVO Services Limited was eligible for an SME tax
credit (as it was loss making). In 2021 hVIVO Services Limited is
no longer loss making so there is no SME tax credit repayable.
However, the SME related costs will be reflected in Tax losses
carried forward for hVIVO Services Limited.
14. Loss per share
(a) Basic
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year
2021 2020
GBP'000 GBP'000
(Loss) from operations (74) (10,791)
Total (74) (10,791)
------------------------------------------------------- ------------ ------------
Weighted average number of Ordinary Shares in issue 670,187,313 599,920,207
Earnings per share from operations (0.01p) (1.80p)
(b) Diluted
Due to the losses in the periods the effect of the share options
and warrants noted below were considered to be anti-dilutive.
Details of share options and warrants are given in note 32.
2021 2020
Potential dilutive ordinary shares:
Options 8,393,213 9,516,111
Warrants 2,264,427 4,185,248
------------------------------------- ----------- -----------
Total 10,657,640 13,701,359
------------------------------------- ----------- -----------
15. Dividends
There were no cash dividends paid or proposed by the Company in
either year. See note 39 for details of Distribution-in- Specie in
June 2021.
16. Property, plant and equipment
Group Leasehold Plant & Fixtures & Total
Improvements Machinery Fittings
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------------- ----------- ----------- ---------
Cost
At 1 January 2021 686 3,039 2,045 5,770
Additions 156 76 97 329
Disposals - (608) (1,012) (1,620)
Exchange differences - - (19) (19)
------------------------- -------------- ----------- ----------- ---------
At 31 December 2021 842 2,507 1,111 4,460
------------------------- -------------- ----------- ----------- ---------
Depreciation
At 1 January 2021 590 2,628 1,484 4,702
Charge for the year 116 100 190 406
Elimination on disposal - (587) (968) (1,555)
Exchange differences - - (20) (20)
At 31 December 2021 706 2,141 686 3,533
------------------------- -------------- ----------- ----------- ---------
Net book value
At 31 December 2021 136 366 425 927
------------------------- -------------- ----------- ----------- ---------
At 31 December 2020 96 411 561 1,068
------------------------- -------------- ----------- ----------- ---------
The Company had no property, plant and equipment at 31/12/2021.
(2020: nil).
17. Intangible fixed assets
Group Pref right
Intellectual to reserve WBS
Trade property Software slot develop-
Goodwill secrets rights develop-ment Licences GBP'000 ment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- --------- ------------ ------------- ------------- --------- ------------ ----------- ---------
Cost
At 1 January
2021 7,228 633 2,118 2,199 64 274 - 12,516
Additions - - - - - - 411 411
Disposals - (633) - - (64) - - (697)
At 31
December
2021 7,228 - 2,118 2,199 - 274 411 12,230
-------------- --------- ------------ ------------- ------------- --------- ------------ ----------- ---------
Amortisation
At 1 January
2021 1,628 470 2,118 2,127 - 46 - 6,389
Charge for
the year - 25 - 46 - 46 - 117
Disposals - (495) - - - - - (495)
At 31
December
2021 1,628 - 2,118 2,173 - 92 - 6,011
-------------- --------- ------------ ------------- ------------- --------- ------------ ----------- ---------
Net book
value
At 31
December
2021 5,600 - - 26 - 182 411 6,219
-------------- --------- ------------ ------------- ------------- --------- ------------ ----------- ---------
At 31
December
2020 5,600 163 - 72 64 228 - 6,127
-------------- --------- ------------ ------------- ------------- --------- ------------ ----------- ---------
Goodwill was allocated to the Group's cash-generating units
(CGUs) identified according to operating segment. An operating
segment-level summary of the goodwill allocation is presented
below.
2021 2020
GBP'000 GBP'000
Venn Division 2,821 2,821
hVIVO Division 2,779 2,779
Total 5,600 5,600
---------------- -------- --------
Goodwill is tested for impairment at the balance sheet date. The
recoverable amount of goodwill at 31 December 2021 was assessed at
GBP5,600,000 (2020: GBP5,600,000) on the basis of value in use. An
impairment loss was not recognised as a result of this review.
The key assumptions in the calculation to assess value in use
are the future revenues and the ability to generate future cash
flows. The most recent financial results and forecast approved by
management for the next two years were used followed by an
extrapolation of expected cash flows at a constant growth rate for
a further seven years. The projected results were discounted at a
rate which is a prudent evaluation of the pre-tax rate that
reflects current market assessments of the time value of money and
the risks specific to the cash-generating units.
The key assumptions used for value in use calculations in 2021
were as follows:
Longer-term growth rate (from 2023 onwards) 5%
Discount rate 15%
---------------------------------------------- ----
The impairment review is prepared on the group basis rather than
a single unit basis.
The Directors have made significant estimates on future revenues
and EBITDA growth over the next ten years based on the Group's
budgeted investment in recruiting key employees and marketing the
services.
The Directors have performed a sensitivity analysis to assess
the impact of downside risk of the key assumptions underpinning the
projected results of the Group. The projections and associated
headroom used for the group is sensitive to the EBITDA growth
assumptions that have been applied. The Company has no intangible
assets.
18a. Investments in subsidiaries
Company 2021 2020
Shares in Group undertakings GBP'000 GBP'000
---------------------------------------------- -------- --------
At 1 January 22,334 8,195
Investment in VLS Biometry Services S.A.S 43 -
Investment in hVIVO Plc - 14,161
Impairment of Investment in VLS Germany GmbH - (22)
---------------------------------------------- -------- --------
At 31 December 22,377 22,334
---------------------------------------------- -------- --------
Investments in Group undertakings are recorded at cost, which is
the fair value of the consideration paid. Following review an
impairment provision of Nil (2020: GBP22k) has been made to the
investment in subsidiaries.
The subsidiaries of Open Orphan Plc are as follows:
Name of Company Country of Registration Nature of Business
Active Trading Companies:
hVIVO Services Limited** England & Wales Viral challenge and related
laboratory services
Venn Life Sciences (EDS) Netherlands Pre-clinical & Early Clinical
B.V.* Research services
Venn Life Science Biometry France Data Management & Statistics
Services S.A.S.* services
Open Orphan DAC* Ireland Regulatory Pathways for Rare/Orphan
diseases
hVIVO INC** USA Sales & Marketing services
Venn Life Sciences Limited* Ireland Intermediate holding company
hVIVO Limited* England & Wales Intermediate holding company
Dormant Companies - Dissolved
or in the process of being
dissolved:
Venn Life Sciences (NI) England & Wales Clinical Research Organisation
Limited*(1)
Venn Life Sciences (Germany) Germany Clinical Research Organisation
Gmbh *(2)
Venn Life Sciences B.V.**(2) Netherlands Clinical Research Organisation
Venn Life Science (France) France Data Management & randomisation
S.A.S.* (2) Systems
*100% Direct Ordinary Shareholding; **100% Indirect Ordinary
shareholding
(1) Company dissolved January 2022; (2) Company in process of
being dissolved post year end.
All the subsidiaries are included in the consolidation. The
proportions of voting shares held by the parent Company do not
differ from the proportion of Ordinary Shares held.
18b. Investments in associates
The group, via its holding in hVIVO Limited, has investments in
two associated companies as follows:
Name of Company Country of Registration Nature of Business
Imutex Ltd (1) England & Wales Clinical development services
PrEP Biopharm Limited England & Wales Clinical development services
(2)
(1) hVIVO Limited owns 49% of the Ordinary Shares and the
investment is valued at GBP7,005,000 at 31 December 2021 after
adjusting for share of loss in 2021 of GBP71,000.
(2) hVIVO Limited owns 62.62% of Ordinary Shares. In 2018 the
carrying value was fully impaired so the investment has a value of
Nil at 31 December 2021.
19. Financial instruments by category
(a) Assets
Group Restated Company Company
Group
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- --------- -------- --------
31 December
Assets as per balance sheet
Trade and other receivables 8,089 8,967 9,357 10,847
Cash and cash equivalents 15,694 19,205 8,663 8,689
Total 23,783 28,172 18,020 19,536
----------------------------- -------- --------- -------- --------
Assets in the analysis above are all categorised as 'other
financial assets at amortised cost' for the Group and Company.
(b) Liabilities
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- -------- -------- --------
31 December
Liabilities as per balance sheet
Borrowings 294 359 - 45
Lease Liabilities (note 37) 2,854 4,439 - -
Trade and other payables 5,205 6,376 441 885
Total 8,352 11,174 441 930
---------------------------------- -------- -------- -------- --------
Liabilities in the analysis above are all categorised as 'other
financial liabilities at amortised cost' for the Group and
Company.
(c) Credit quality of financial assets
The Group is exposed to credit risk from its operating
activities (primarily for trade receivables and other receivables)
and from its financing activities, including deposits with banks
and financial institutions, foreign exchange transactions and other
financial instruments.
The Group's maximum exposure to credit risk, due to the failure
of counter parties to perform their obligations as at 31 December
2021 and 31 December 2020, in relation to each class of recognised
financial assets, is the carrying amount of those assets as
indicated in the accompanying balance sheets.
Trade receivables
The credit quality of trade receivables that are neither past
due date nor impaired have been assessed based on historical
information about the counterparty default rate. The Group does not
hold any other receivable balances with customers, whose past
default has resulted in the non-recovery of the receivables
balances.
Cash at bank
The credit quality of cash has been assessed by reference to
external credit ratings, based on reputable credit agencies'
long-term issuer ratings:
2021 2020
Rating GBP'000 GBP'000
-------------- -------- --------
A - AAA 15,605 19,158
Sub-A rating 89 47
Total 15,694 19,205
-------------- -------- --------
The balance categorised as Sub-A rating relate to balances held
with Allied Irish Banks p.l.c. and Ulster Bank ROI (Both Guaranteed
by Irish government as key shareholder)
20. Inventories
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Beginning of the year 953 - - -
Laboratory and clinical consumables (92) 168 - -
------------------------------------- -------- -------- -------- --------
Virus - finished goods (202) 785
------------------------------------- -------- -------- -------- --------
End of the year 659 953 - -
------------------------------------- -------- -------- -------- --------
Inventories expensed (2021: GBP963,000; 2020 GBP727,000) in the
consolidated statement of comprehensive income are shown within
Direct project and administrative costs (See note 6). All
inventories are carried at the lower of cost or net realisable
value in the consolidated statement of financial position. No
provision against inventories was required during 2021.
21. Trade and other receivables
Group Restated Company Company
Group
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- -------- --------- -------- --------
Trade receivables 4,774 5,316 - -
Less: provision for impairment of trade - - - -
receivables
---------------------------------------------- -------- --------- -------- --------
Trade receivables - net 4,774 5,316 - -
Prepayments and accrued income (note 35) 1,863 2,560 335 112
Amounts owed by subsidiary undertakings - - 9,356 10,778
Other receivables (incl. R& D credit income) 2,307 1,930 1 70
8,944 9,806 9,692 10,960
---------------------------------------------- -------- --------- -------- --------
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
The carrying amounts of the Group's trade and other receivables
denominated in foreign currencies were as follows:
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- -------- --------
GBPGBP 6,746 5,481 1,467 2,756
Euros 2,198 4,325 8,225 8,204
8,944 9,806 9,692 10,960
-------- -------- -------- -------- --------
22. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes
of the statement of cash flows:
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- -------- -------- -------- --------
Cash at bank and on hand 15,694 19,205 8,663 8,689
Cash and cash equivalents (excluding bank
overdrafts) 15,694 19,205 8,663 8,689
------------------------------------------- -------- -------- -------- --------
The Group's cash and cash equivalents are held in
non-interest-bearing accounts. The Directors consider that the
carrying amount of cash and cash equivalents approximates to their
fair value.
23. Trade and other payables
Group Restated Company Company
Group
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- -------- --------- -------- --------
Trade payables 2,055 2,271 306 72
Amounts due to subsidiary undertakings - - 2,762 543
Social security and other taxes 857 695 13 -
Other payables * 438 353 2 64
Accrued expenses and deferred income 15,047 18,079 120 206
18,397 21,398 3,203 885
---------------------------------------- -------- --------- -------- --------
*There are no other payables due after one year after year end
2021 (2020: GBP2,000). All other balances are due within 1
year.
24. Deferred income tax
Deferred tax balances were as follows:
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- -------- -------- -------- --------
Deferred tax liabilities were made up as follows:
Accelerated tax depreciation - 32 - -
- 32 - -
--------------------------------------------------- -------- -------- -------- --------
Deferred tax assets
Deferred income tax assets are recognised to the extent that the
realisation of the related tax benefit through future taxable
profits is probable. There was no deferred tax asset recognised for
the Company. The gross movement on the deferred income tax account
is as follows:
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- -------- -------- -------- --------
At 1 January 32 41 - -
Exceptional Item (27) -
Income statement movement (note 13) (5) (9) - -
------------------------------------- -------- -------- -------- --------
At 31 December - 32 - -
------------------------------------- -------- -------- -------- --------
The asset to which this deferred tax asset applied was written
down to Nil on 1 July 2021 and consequently the write off of the
balance in the deferred tax asset was accelerated.
25. Borrowings
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- -------- -------- -------- --------
Current - falling due within 1 year
Loan Notes - 45 - 45
Convertible debenture securities("CDS") 294 314 - -
Total borrowings 294 359 - 45
----------------------------------------- -------- -------- -------- --------
The Company and Group do not have bank borrowings. All
Borrowings due within one year.
Loan Notes for GBP1m issued on 11 December 2018 with a two-year
term and a 10% coupon rate were available for redemption in Dec
2020. All but one Loan Note for GBP45k was redeemed by 31 Dec 2020.
The final Loan Note was redeemed in February 2021.
There are 2 remaining Convertible debenture securities holders
and they are entitled to interest of 7% per annum on their
securities. Neither of these CDS holders chose to convert their
securities into Ordinary shares in Open Orphan DAC at the time of
the reverse takeover of the Venn Group in June 2019. Consequently,
these CDS holdings can be redeemed by the company at any time from
June 2020 up to their redemption dates in March 2022 and September
2022 respectively. Following reverse acquisition, the holders lost
their right to convert.
26. Share capital
Group Group Company Company
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- -------- --------
670,929,314 (2020 - 668,052,261) Ordinary
shares of GBP0.001 671 668 671 668
Nil (2020 - 62,833,339) Deferred shares of
GBP0.001 - 63 - 63
Total 671 731 671 731
-------------------------------------------- -------- -------- -------- --------
The Company exercised its right in July 2021 to acquire all
deferred shares for an aggregate price of GBP1 (see note 39).
Subsequently, the share capital of Open Orphan Plc consists only
of fully paid ordinary shares. All shares are equally eligible to
share in declared dividends, appoint Directors, receive notice of,
attend, speak and vote at any general meeting of the Company.
During the year the Company issued 2,877,053 shares.:
621,015 GBP0.001/Share
1,133,140 GBP0.022/Share
1,122,898 GBP0.02/Share
27. Other reserves
Group and Company
Share Premium
Share premium is the difference between the nominal value of
share capital and the actual cash received on fund-raising less any
costs associated with the fund-raising. (See also note 39).
Merger Reserves
This includes reverse acquisition reverse which resulted from
the reverse acquisition of Venn Life Sciences Holdings Plc by Open
Orphan DAC on 28 June 2019. See note 2 (d). Also includes a Group
re-organisation reserve relating to previous re-organisation of the
Old Venn Group.
Foreign Currency Reserve
The presentation currency of the group became GBPGBP in 2020.
Previously the presentation currency was Euro. This reserve arises
from the translation of the opening balance sheet balances from
Euro to GBPGBP and also from the translation of the subsidiaries
which are denominated in Euro into GBPGBP on consolidation.
The Euro denominated subsidiaries are Venn Life Sciences
Limited, Venn Life Sciences Germany GmbH, Venn Life Sciences France
S.A.S, Venn Life Sciences B.V, Venn Life Sciences E.D. B.V., Venn
Life Sciences Biometry Services and Open Orphan DAC. Hence the
Foreign Currency Reserve arises.
Share Option Reserve
A share option reserve of GBP151,000 was created in June 2019,
prior to the reverse takeover of Venn Life Sciences Holdings PLC by
Open Orphan DAC, in relation to the share options and warrants
issued in June 2019. After the reverse takeover, further provisions
of GBP102,000 in 2019 and GBP240,000 in 2020 were made. In 2021 an
additional provision of GBP27,000 was made.
Retained Earnings
For the Group and Company, earnings for the prior year reflect
the earnings of Open Orphan Plc including Open Orphan DAC for the
full year plus the earnings of hVIVO Group from date of acquisition
17 January 2020 to year end 2020.
28. Cash used in operations
Group Group Company Company
2020
2021 Restated 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ---------------- ---------- -------- --------
Profit/(Loss) before income tax 277 (10,980) (1,522) (1,891)
Adjustments for:
- Depreciation and amortisation
(note 6) 2,565 2,052 - -
- Exceptional Items (note 7) (267) 2,125 409 867
- Net loss on disposals of PPE, 189 - - -
Intangible Assets & leases
- Net finance costs/(Income)
(note 12) 215 374 (768) (651)
- Share Based Payment charge
(note 32) 27 240 - 50
- R & D Credit incl. in other
Income (1,842) (961) - -
- Share of Imutex loss (note
18.b) 71 107 - -
Changes in working capital
- Impairments on Investments/Loans
(note 18a) - - 485 22
- Lease Payments (note 37) (2,329) (1,999) - -
- (Increase)/Decrease Trade and
other receivables 904 (2,800) (241) (4,491)
- (Increase)/Decrease Inventories 294 (28) - -
- (Decrease)/Increase Trade and
other payables (2,972) 14,410 2,317 (474)
------------------------------------ ---------------- ---------- -------- --------
Net cash used in operations (2,868) 2,540 680 (6,568)
------------------------------------ ---------------- ---------- -------- --------
29. Related Party Disclosures
Directors
Directors' emoluments are set out in the Report of the
Remuneration Committee Report.
Key management compensation for the year was as follows:
2021 2020
EUR'000 EUR'000
----------------------------------------- -------- --------
Aggregate emoluments 526 576
Employer contribution to pension scheme 17 20
543 596
----------------------------------------- -------- --------
Key management includes the Directors only.
Group
On 10 November 2016 the Group signed a contract worth EUR2.5m
with Sedana Medical AB ("Sedana Medical").
The then CEO of Sedana Medical, Michael Ryan, was also a
Director of Venn Life Sciences at that time. Accordingly, Michael
Ryan was a related party of Venn Life Sciences as defined in the
AIM Rules and ESM Rules. As a result, the contract was treated as a
"related party transaction" under the AIM Rules and the ESM
Rules.
The Independent Directors, at that date, being Allan Wood,
Anthony Richardson, Jonathan Hartshorn, Gracielle Schutjens,
Cornelius Groen, Paul Kennedy and Mary Sheahan, who are not related
parties under the AIM Rules and ESM Rules for the purpose of the
contract, consulted with Davy, the Company's NOMAD and ESM adviser
at the time of consultation. For the purpose of the AIM Rules and
ESM Rules, Davy considered the contract to be fair and reasonable
insofar as the shareholders of the Company are concerned. Michael
Ryan did not take part in the Board's consideration of these
matters. Michael Ryan resigned as a Director on 17 January 2020.
The contract with Sedana Medical concluded in early 2021.
Executive Chairman, Cathal Friel, held a share of GBP108,642 of
the GBP1m Loan Note issued in December 2018 through his pension
vehicle. This Loan Note was redeemed in full in December 2020.
Cathal Friel also held all of the GBP250,000 Loan Note issued in
April 2019. This Loan Note was redeemed in full in April 2020.
Gross Loan Note interest of Nil (2020: GBP15,000) was due in 2021.
Cathal Friel is also a Director of Raglan Road Capital Limited and
Raglan Professional Services Limited which has rented office space
and provided advisory and office related services to Open Orphan
DAC (2021 charge EUR23,175; 2020 charge EUR108,000). The balance
owed by the Group to Raglan Road Capital Limited and Raglan
Professional Services Limited at year end 2021 was EUR16,901 (2020:
EUR3,780). Cathal Friel is also a Director of Poolbeg Pharma
(Ireland) Limited which is now renting office space and providing
advisory and office related services to Open Orphan DAC (2021
charge EUR96,049; 2020 charge Nil). The balance owed by the Group
to Poolbeg Pharma (Ireland) Limited at year end 2021 was EUR14,651
(2020: Nil). As part of reciprocal agreement, Open Orphan DAC also
provides advisory and office related services to Poolbeg Pharma
(Ireland) Limited (2021 revenue EUR 158,085;2021 revenue Nil). The
balance owed to the Group by Poolbeg Pharma (Ireland) Limited at
year end 2021 was EUR13,805 (2020: Nil).
Elaine Sullivan, Non-Executive Director, through the company
Dargle Therapeutics Limited, provided specialist consultancy advice
specifically in relation to a development asset, at a cost to the
Group of GBP38,125 (excl. V.A.T).
There were no other related party transactions during the
year.
The Company
During the year the Company absorbed net management charges of
GBP109,547 (2020 - GBP324,475) from its subsidiaries. At 31
December 2021 the Company was owed GBP6,594,000 (2020 -
GBP10,234,000) by its subsidiaries.
30. Capital commitments
The Group had no capital commitments at 31 December 2021 or at
31 December 2020.
31. Discontinued Operations
A decision to close the clinical operations division across
Europe was made during 2020 and Venn Life Sciences (NI) Ltd, Venn
Life Sciences B.V. and Venn Life Sciences Germany GmbH consequently
ceased to trade from 1 January 2021 onwards. Venn Life Sciences
(NI) Ltd, as well as dormant companies Venn Life Sciences UK Ltd
and Venn Life Sciences (Ireland) Ltd, were dissolved consequently
in 2021. Venn Life Sciences Germany GmbH is currently undergoing a
liquidation process in 2022 and arrangements to dissolve Venn Life
Sciences B.V. will be undertaken later in 2022. There were no new
discontinued operations during 2021.
32. Share options and warrants
The Group has share option plans under which it grants share
options to certain Directors and senior management of the
Group.
Some share options have vested. Some share options have been
forfeited as a result of the Director or employee leaving the Group
before options vested.
Number of outstanding share options remaining at 31 December
2021:
Date of # Options # of Options # of Options # Options
Grant at Exercised Forfeited at 31/12/2021
01/01/2021
28/01/2015 280,000 - - 280,000
28/06/2019 7,716,964 - - 7,716,964
17/01/2020 1,519,147 1,122,898 - 396,249
------------ ------------ ------------- ------------- ---------------
Total 9,516,111 1,122,898 - 8,393,213
------------ ------------ ------------- ------------- ---------------
The weighted-average exercise price of all options outstanding
at year end is 5.7p and the weighted-average remaining contractual
life is 1 year.
The pricing and vesting criteria of the share options in
existence at 31 December 2021 are as follows:
In relation to the Options granted in 2015:
Options in issue 31/12/2021 280,000
Exercise price (in equal thirds
when price 25p/35p/45p) 13p
Expected volatility 28%
Expected dividend 0%
Contractual life 1.5 years
Risk free rate 95%
Estimated fair value of each GBP0.00
option
In relation to the Options granted in 2019:
Options in issue 31/12/2021 7,716,964
Exercise price 5.6p
Expected volatility 60%
Expected dividend 0%
Contractual life 0.5 years
Risk free interest rate 1.84%
Estimated fair value of each GBP0.02
option
In relation to the Options granted in 2020:
Options in issue 31/12/2021 396,249
Exercise price 2p
Expected volatility 72.8%
Expected dividend 0%
Contractual life 1 years
Risk free interest rate 0.57%
Estimated fair value of each GBP0.04
option
Share based payment charge for the year was GBP27,000 (2020 -
GBP240,000). No new share options were granted in 2021. However,
due to share options being exercised GBP193,000 (2020: Nil) of the
share-based payment reserve was released back to retained
earnings.
The share option reserve (GBP151,000) was initially created
before the reverse takeover by Open Orphan DAC in 2019 in relation
to the shares and warrants granted in June 2019. Further reserves
were made of GBP102,000 (year end 2019) and GBP240,000 (year end
2020) bringing total opening 2021 reserve to GBP493,000.
The share options granted in 2015 have no value given the
vesting conditions when issued.
The Company has used the Black Scholes model to value the
options at 31 December 2021. This method simulates a range of
possible future share price scenarios and calculates the average of
net present value of the option across those scenarios and which
captures the effect of the market-based performance conditions
applying to such awards. The expected volatility was calculated
with refence to historic share price movements.
Warrants
2,264,427 warrants existed at 31 December 2021 (2020:
4,185,248).
232,696 warrants were granted on 11 December 2018 and are
exercisable from the date of grant to 10 December 2023. The
exercise price is 0.1p per ordinary share under warrant. 424,589
warrants were granted on 11 December 2018 and are exercisable from
the date of grant to 10 December 2023. The exercise price is 2.2p
per ordinary share under warrant.
1,607,142 warrants were granted on 28 June 2019 and are
exercisable from the date of grant to 27 June 2024. The exercise
price was 5.6p per ordinary share under warrant.
33. Other operating income
Other operating income represents government grants received to
fund Research and Development activities around the group. (In 2020
it also included specific COVID-19 related government support
grants)
2021 2020
GBP'000 GBP'000
hVIVO Gross RDEC credit 1,842 960
hVIVO COVID-19 supports - 224
Venn R & D Related credits 299 380
Venn COVID-19 supports - 12
------------- -------------------------- --------- ------------ ------------
Total 2,141 1,576
---------------------------------------------------- ------------ ------------
Note: The subsidiary, hVIVO Services Limited, can claim UK
R&D incentives under both RDEC scheme (noted above) and the SME
scheme (when company is loss making). The SME scheme (when claimed)
appears on the tax line as a tax credit. Venn Division can claim
Credit Tax Research ('CIR') payments in France and can claim R
& D credits against payroll taxes in the Netherlands.
34. Post balance sheet events
The following events have taken place since the year end:
1. Yamin 'Mo' Khan, then a non-Executive Director, was appointed
as Chief Executive Officer on 24 February 2022.
2. Appointment of Liberum Capital Limited as Nominated Advisor
("NOMAD") and Joint Broker on 28 April 2022.
35. Revenue, Assets and Liabilities related to contracts with
customers
(a) hVIVO Division
The Group carries out its activities through hVIVO Services
Limited in the United Kingdom. All revenue from contracts with
customers is derived from activities undertaken in the United
Kingdom.
During the period ended 31 December 2021, the Company had four
customers, out of more than 30 customers, who each generated
revenue greater than 10% of total revenue which was GBP30m. These
customers generated 34%, 14%, 13% and 11% of revenue
respectively.
The value of contract liabilities has decreased by GBP1.7
million to GBP12.8m at 31 December 2021 from GBP14.5 million at 31
December 2020. Contract assets have decreased by GBP0.5 million to
GBP0.3m at 31 December 2021 from GBP0.8 million at 31 December
2020.
Net accrued income, related to contracts with customers in hVIVO
Division
2021 2020
Total Total
GBP'000 GBP'000
--------------------------------------------------------- --------------- ---------
Net Accrued Income brought forward (13,703) -
--------------------------------------------------------------- --------- ---------
Net Accrued Income acquired on acquisition of hVIVO
group - (1,689)
--------------------------------------------------------------- --------- ---------
Movement in the period:
* arising from a change in the measure of progress 1,206 (12,014)
--------------------------------------------------------- --------------- ---------
Net Accrued Income carried forward (12,497) (13,703)
Split:
Accrued Income 275 821
Deferred Income (12,772) (14,524)
--------------------------------------------------------- --------------- ---------
Net Accrued Income (12,497) (13,703)
--------------------------------------------------------- --------------- ---------
The majority of the contract liabilities balance is expected to
be recognised within six months, as follows:
Analysis of expected realisation of revenue within contract
liabilities
31 December 31 December
2021 2020
GBP'000 GBP'000
-------------------------------- ----------- -----------
Within six months 10,248 14,469
Between six months and one year 2,524 55
After one year - -
-------------------------------- ----------- -----------
12,772 14,524
-------------------------------- ----------- -----------
The Division seeks to ensure that contract milestones are timed
so as to result in invoicing occurring in advance, prior to the
satisfaction of performance obligations. Therefore, projects that
are in progress are typically in a contract liability position.
Performance obligations of contracts with customers are satisfied
on the delivery of study data to the customer along with a final
study report. Due to the nature of the business there are no
warranties or refunds expected or provided for. Contractual payment
terms are typically 30 to 45 days from date of invoice.
The Division considers whether there are other obligations in
the contract that are separate performance obligations to which a
portion of the transaction price needs to be allocated. The
Division's data and intellectual property may be made available to
the client but solely to the extent that this is necessary to the
satisfaction of the client contract. This is not considered a
distinct performance obligation but an obligation in conjunction
with the client study. Therefore, the full transaction price is
allocated to performing the client study.
The Division is using the practical expedient not to adjust the
amount of consideration for the effects of a significant financing
component due to the fact that the period between when the promised
services are transferred and when the customer pays for the service
is less than twelve months. The entity does not, in the normal
course of business, incur incremental costs to obtain a contract
and has therefore not recognised any assets in this regard.
(b) Venn Division
The Division derives revenues from external customers from the
provision of clinical consulting services and drug development
services split into various service offerings across various
geographical regions.
Venn Life Sciences E.D B. V, based in Breda in the Netherlands,
provides Early clinical, Non-Clinical and CMC services to a wide
variety of customers. Venn Life Sciences France S.A.S. and Venn
Life Sciences Biometry Services S.A.S both based in Paris, France
and Venn Life Sciences Ltd, based in Ireland, provide Data
management, Bio Statistics, Medical Methodology and Randomisation
services. Revenue in 2021 for Venn Division was GBP6.8m.
Net accrued income, related to contracts with customers in Venn
Division
2021 2020
Total Total
GBP'000 GBP'000
------------------------------ ---------------------------------- --------
Net Accrued Income brought
forward 382 601
------------------------------ ---------------------------------- --------
Movement in the period:
* arising from a change in the measure of progress (68) (219)
----------------------------------------------------------- ----- --------
Net Accrued Income carried
forward 314 382
Split:
Accrued Income 733 900
Deferred Income (419) (518)
------------------------------ ---------------------------------- --------
Net Accrued Income 314 382
------------------------------ ---------------------------------- --------
The costs incurred to obtain or fulfil a contract which has been
recognised as contract assets have been determined with reference
to labour hours incurred to the period end as a percentage of the
total estimated labour hours to complete specified performance
obligations as stipulated by the relevant contracts. Contract
assets are not amortised as they are of a short- term nature.
36. Pensions
The Group operates a number of defined contribution pension
schemes whose assets are held separately from those of the Group in
independently administered funds. The pension charge represents
contributions payable by the Group and amounted to GBP872,000 for
the year (year ended 31 December 2020: GBP861,000). Contributions
totalling GBP79,000 were payable to the funds at the year end and
are included within trade and other payables (31 December 2020:
GBP77,000 - restated).
37. Leases
Amounts recognised in the Statement of Financial Position
Right of use assets Lease liabilities
GBP'000 GBP'000
------------------------------ --------------------- ------------------
As at 1 January 2021 4,230 4,439
New Leases Acquired 1,399 1,399
Leases Exited (738) (816)
Depreciation expense (note
6) (2,039) -
Interest expense (note 12) - 227
Payments (note 28) - (2,329)
Exchange differences (64) (66)
As at 31 December 2021 2,788 2,854
Current - 1,991
Non-current 2,788 863
----------------------- ----------------------------- ------------------
Maturity of leases
31 December
2021
GBP'000
---------------------------------------- -----------
Current - Within one year 1,991
Non-Current - Between one to two years 477
Non-Current - Between two to five years 386
2,854
---------------------------------------- -----------
Short-term Lease payments expensed in year ended 31/12/21:
GBP8,000 (2020 GBP25,000).
38. Prior period re-statement
In 2020, and prior years when hVIVO Services Limited was
loss-making, the Research and Development Expenditure Credit
('RDEC') was recorded net of tax in the Other operating income line
in the published Statement of Comprehensive Income. In 2021, it was
decided that this RDEC should be shown gross of tax, now that Hvivo
Services Limited is profitable, in Other operating income and the
tax impact should appear on the Taxation line in the Statement of
Comprehensive Income. Consequently, the 2020 Other operating income
and Tax figures have been restated to reflect this new treatment.
This change also impacts the 2020 comparatives in note 28.
Note 2020 2020
Restated As originally
Published
GBP'000 GBP'000
Statement of Comprehensive
Income:
Other operating income 33 1,576 1,393
Taxation 13 189 372
Cash Used in Operations:
Loss before tax 28 (10,980) (11,163)
R & D credit incl. in
Other income 28 (961) (778)
39. Capital Reduction and Distribution-in-Specie
On 19 May 2021, the Company received Court approval for a
reduction in its share capital. Consequently, the deferred share
capital balance of GBP62,833 (see note 26) was bought back by the
Company and the then balance in the Share Premium account of
GBP44,516,591 of the Company was transferred in full to retained
earnings.
On 18 June 2021, Open Orphan Plc made a distribution-in-specie
to all shareholders on the share register at close of business on
17 June 2021. Shareholders received shares in Poolbeg Pharma Ltd.
These shares were to be held in trust by Croft Nominees Limited for
a period of 9 months following Poolbeg Pharma Ltd.'s admission to
the AIM market of the London Stock Exchange. Poolbeg Pharma Ltd
changed its name to Poolbeg Pharma Plc on 23 June 2021. Following a
successful period of fund-raising, Poolbeg Pharma Plc was admitted
to AIM on 17 July 2021.
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