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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Oncimmune Holdings Plc | LSE:ONC | London | Ordinary Share | GB00BYQ94H38 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.50 | 2.17% | 23.50 | 22.00 | 25.00 | 24.00 | 24.00 | 24.00 | 106,089 | 16:35:11 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Medical Laboratories | 1.47M | -6.15M | -0.0830 | -2.89 | 17.79M |
From May 2019 to May 2024
TIDMONC
RNS Number : 1368U
Oncimmune Holdings PLC
20 October 2017
20 October 2017
Oncimmune Holdings plc
("Oncimmune" or the "Company")
Results for the year ended 31 May 2017
Oncimmune Holdings plc (AIM: ONC.L), a leading early cancer detection company developing and commercialising its proprietary EarlyCDT(R) platform technology, today announces its full year results for the year ended 31 May 2017.
Financial Highlights
-- Revenues for the year were GBP0.22m (2016: GBP0.43m).
-- Operating costs before share based charges and exceptional items were GBP4.88 million (2016: GBP3.8m).
-- Net loss for the year was GBP5.0m (2016: GBP4.6m) before any exceptional items.
-- Cash balance at the year-end was GBP5.08m (2016: GBP10.2m). At the end of September, the cash balance was GBP6.5m reflecting monies raised in September 2017.
-- GBP5.0m raised by means of a conditional placing with new and existing investors. Of this, GBP1.0m remains outstanding and conditional on receipt from HM Revenues & Customs of confirmation that this investment will be a qualifying holding for the purposes of Part 6 of the Income Tax Act 2007.
Corporate & operational highlights (including post-period end)
-- EarlyCDT(R)-Lung commercial progress
o CE Mark for the EarlyCDT(R)-Lung kit received in May 2017, with first commercial batches expected to be shipped by no later than the end of October 2017.
o First distribution agreements signed by Oncimmune's Asian (including Israel) business which provide minimum payment guarantees of over GBP6.1m over the next five years.
o First distribution agreements for the EarlyCDT(R)-Lung kit in Europe for Denmark, Norway, Sweden and Poland with an aggregate minimum sales commitment of approximately GBP1.4m over the next four years.
o In September 2017, the Company entered into a four-month preliminary distribution partnership with a major US pulmonary sales force for the use of EarlyCDT(R)-Lung in assessing indeterminate lung nodules which, if successful, should lead to a distribution agreement for U.S. pulmonologists.
-- R&D and Trials
o Foundations for the commercial panel for the EarlyCDT(R)-Liver test have been laid with validation due for completion by the end of 2017 and commercial sales on track to begin in H1 2018. EarlyCDT(R)-Ovarian is expected thereafter.
o NHS Lung Cancer Screening Trial is fully recruited: 12,210 patients with final study results in 2019; latest interim data presented at the European 27th International Congress of the European Respiratory Society (ERS) in Milan in September 2017.
-- Personalised Medicine & Companion Diagnostics
o Presentation of data on the use of Oncimmune's autoantibody technology to successfully predict disease recurrence in subjects undergoing immunotherapy with Scancell Holding plc's SCIB1 immunotherapy for malignant melanoma.
o Autoantibody "fingerprint" technology development progressing well with data expected to be presented in Q4 2017.
Geoffrey Hamilton-Fairley, CEO, of Oncimmune said: "We continue to make excellent progress towards our goal of building a pioneering early cancer detection platform which can generate revenues across multiple products, regions and with different partners. Gaining CE mark for the EarlyCDT(R)-Lung kit was a key milestone and we have already seen its impact with partnerships in Asia and Europe. With a strong team in place, a fundraising completed and our R&D progressing well the board is increasingly confident that the Company is well placed to execute that plan and deliver value in the medium and long term."
-Ends-
For further information:
Oncimmune Holdings plc
Geoffrey Hamilton-Fairley, Chief Executive Officer
contact@oncimmune.co.uk
Zeus Capital Limited (Nominated Adviser and Broker)
Giles Balleny, Hugh Kingsmill Moore
+44 (0) 203 829 5000
Media enquiries:
Consilium Strategic Communications
Chris Gardner, Matthew Neal, Lindsey Neville
oncimmune@consilium-comms.com
+44 (0) 20 3709 5708
About Oncimmune
Oncimmune is a leading early cancer detection company developing and commercialising its proprietary EarlyCDT(R) platform technology. Oncimmune has pioneered the development of autoantibody tests that can detect cancer up to four years earlier than other methods and can be applied to a very wide range of solid tumour types. The Company's first product, EarlyCDT(R)-Lung, was launched in 2012, as a CLIA test in the USA and since then over 150,000 commercial tests have been sold. EarlyCDT(R)-Lung is available through physicians in the US and also privately in the UK and other regions. EarlyCDT(R)-Lung is being used in the largest ever randomised trial for the early detection of lung cancer using biomarkers, the National Health Service (NHS) Scotland ECLS study of 12,210 high-risk smokers. EarlyCDT(R) tests for liver and ovarian cancer are in development.
Oncimmune is headquartered in Nottingham, United Kingdom with testing facilities in the US and joined AIM in May 2016 under the ticker ONC.L. For more information, visit www.oncimmune.com
Chairman and Chief Executive's Review
Oncimmune's goal is to be a leader in early cancer detection and its mission is to significantly improve the outcomes of cancer patients through early detection of the disease and enhanced treatment pathways. Detecting early stage disease has two key benefits: better survival for the patients and significantly lower cost of treatment as most of these early stage patients do not need expensive therapies and treatments.
In May 2016, the Company completed an IPO listing on AIM. At that time, the Company laid out its strategy to deliver both its mission and value to shareholders. On behalf of the Board, we are pleased to present the Annual Report & Accounts for year ended 31 May 2017 and to provide an update on progress since the Company's IPO as we seek to deliver our three-year plan.
Business Update
The Company can confirm that it has made a successful start to the commercialisation plans outlined at the IPO. Our mission is to develop and commercialise accurate early cancer detection tests for multiple cancer types including our lead product, EarlyCDT(R)-Lung, which is already on the market. Our three-year commercialisation plan has to date focused on the recruitment of new senior staff to lead our activities in Asia; the UK and Europe; and in the US for Reimbursement and Sales, which we have now successfully completed. Our R&D plan has made good progress and with the EarlyCDT(R)-Lung kit test now CE marked and in production, a key element in delivering our global commercialisation plan has become a reality. The Company can now start to execute on its portfolio revenue proposition with multiple products, generating revenues in different regions and with different partners. In addition, we have an emerging companion diagnostics business and a second generation of the platform, the autoantibody "fingerprint", that we believe could bring new levels of performance and could lead to a pan-cancer test.
EarlyCDT(R)-Lung
In the US, we are proceeding with our previously outlined process of supporting our distributors to test the efficiency of our marketing approach and ensure that our partners deliver high quality and long-term sales. We appointed a new sales director at the end of last year and we have worked diligently testing a number of approaches to ensure an optimal sales and marketing cycle where a physician re-orders the EarlyCDT(R)-Lung test without the need (and expense) of a repeat sales visit. The investment programme related to this - initially scheduled to be started by the end of the first quarter of 2017 - was deferred until we were confident that our approach was gaining traction. In light of this, and the Company's general prudent approach to expenditure and cash management, the Company's year-end cash balance was better than expected at GBP5 million. The Company will invest further in sales support and marketing to support its distributors whilst ensuring that its partners deliver high quality and long-term sales as the Company gains confidence in this approach. The Company remains cautious, however, in terms of near term revenue growth from this channel as positioning of the test is key to long-term success.
Oncimmune currently has 14 distributors for EarlyCDT(R)-Lung in the US. It also has ongoing discussions with a number of pulmonology distributors including one where a preliminary distribution agreement has been signed with a focus on the second use of the EarlyCDT(R)-Lung test, namely risk stratification of CT identified nodules.
This preliminary agreement followed a detailed research study which verified the clinical attractiveness of using the EarlyCDT(R)-Lung test in aiding in the risk assessment of indeterminate pulmonary nodules. The initial partnership is expected to run until the end of February 2018 and if successful should lead to a distribution agreement covering a significant proportion of the pulmonologists in the US. The Company is also exploring further pulmonology distribution channels in the US with other parties.
Indeterminate nodules - growths in the lung which may or may not be malignant - are a major concern for pulmonologists. There are currently more than 1.5m patients with pulmonary nodules per annum in the US and the number is expected to grow rapidly with the expected increased adoption of CT screening for high risk patients in the US. 96% of positive CT scans (nodule(s) identified) are not cancer, so finding the correct ones to follow up is a large unmet need which our test can address effectively. Data published in the Journal of Thoracic Oncology from Vanderbilt University showed that a positive EarlyCDT(R)-Lung test indicates that a nodule is two to three times more likely to be cancer. Sales of EarlyCDT(R)-Lung to pulmonologists have been forecast to be greater than $400m by 2021(1) .
Outside of the US, Oncimmune is progressing well. The Company's Asian (including Israel) business has five distribution agreements in place for EarlyCDT(R)-Lung kits in Israel, South Korea, Taiwan, Hong Kong and Singapore, which provide GBP6.1m in minimum payment guarantees over the next five years.
The Company has also announced its first distribution agreements for its EarlyCDT(R)- Lung kit in Europe with exclusive agreements for Denmark, Norway, Sweden and Poland with an aggregate minimum sales commitment of approximately GBP1.4m over the next four years.
We expect to sign more distribution contracts in Asia and Europe during 2017 / 2018, with a number of these arrangements also likely to include guaranteed minimum payments that add to our confidence in our chosen distributors and enhance revenue visibility/predictability.
Oncimmune's particular focus for the Asian market has been set on China, where lung cancer remains the number one killer of both men and women with over 700,000 new cases of lung cancer diagnosed annually. The Company has entered into discussions with several diagnostic companies for collaboration opportunities including licensing and registration, marketing commercialisation, distribution and local manufacturing.
R&D and Trials
The development and completion of a kit version of the EarlyCDT(R)-Lung test was a key part of the Company's commercial growth strategy and R&D plan laid out at the time of its IPO. The CE Mark for EarlyCDT(R)-Lung test in an ELISA kit format was received in May 2017. The kit has the advantage of running on already well established ELISA-96 well-microplate-instruments that hospitals worldwide have as standard equipment in their laboratories. This milestone made possible the Asian and European distribution agreements described above with the potential for further expansion into other markets.
Beyond the kit, the R&D programme continues to progress. The Company has laid the foundations for the commercial panel for the EarlyCDT(R)-Liver test with validation due for completion by the end of 2017 and commercial sales on track to begin in H1 2018. EarlyCDT(R)-Ovarian is expected thereafter. Data relating to the EarlyCDT(R)-Liver panel was published at the International Liver Cancer Association showing that a panel of 10 autoantibodies could detect hepatocellular carcinoma with high sensitivity and specificity.
Interim data from the NHS Lung Cancer Screening Trial was also recently presented at the European 27th International Congress of the European Respiratory Society (ERS) in Milan. The results remain encouraging, most notably that over 75% of the patients being diagnosed have early stage cancers (stage 1 & 2) as opposed to the vast majority in normal practice presenting with late stage cancer - which is generally incurable. Now fully recruited, with 12,210 patients, this is the largest randomised control trial using biomarkers ever conducted in lung cancer. The final study results, including the control arm, will be published after all patients have completed two years of follow up CT scans and these are expected in 2019.
Personalised Medicine & Companion Diagnostics
In companion diagnostics, the Company recently announced the presentation of data on the use of Oncimmune's autoantibody technology to successfully predict disease recurrence in subjects undergoing immunotherapy with Scancell Holding plc's SCIB1 immunotherapy for malignant melanoma.
The collaborative study, which also included a team at the University of Nottingham, developed a method using a panel of seven tumour associated autoantibodies to predict disease recurrence in patients with resected Stage III/IV melanoma treated with SCIB1. Whilst Phase I/II trials with SCIB1 have been highly encouraging, this additional information potentially enables the identification of patients prior to commencement of therapy who are most likely to respond to treatment in future clinical trials with SCIB1.
Oncimmune is running a number of further studies alongside drug development programs and expects to be able to announce results from these in the next 12 months. The Company expects that this will support the development of this area as a separate business unit.
Finally, in the second half of 2017 Oncimmune expects to announce results relating to the second generation of tests from its autoantibody platform where patients can be their own control and thus testing is significantly more accurate. The Company believes this autoantibody "fingerprint" could bring new levels of performance and could lead to a pan-cancer test which could complement the global vision of some major companies currently investing heavily in developing personalised medicine platforms and services.
Fundraising
In September, the Company announced it had raised GBP5.0m, before expenses, by means of a conditional placing with new and existing investors. Of this, GBP1.0m remains outstanding and conditional on receipt from HM Revenues & Customs of confirmation that this investment will be a qualifying holding for the purposes of Part 6 of the Income Tax Act 2007. This further financing had been anticipated at IPO in order to fully underpin our three year commercialisation strategy.
The Placing will allow the Company to strengthen its balance sheet to complete major distribution deals in the following areas:
-- USA for EarlyCDT(R)-Lung; -- China for EarlyCDT(R)-Lung; and -- "Fingerprint" -a personalised autoantibody profiling approach
Following completion of the major distribution deals the cash is to be used for:
-- R&D
o Additional NHS studies to accelerate adoption
o Additional markers for lung test in the US to enhance its "pulmonology test"
o Validation and launch of liver test
o Further validation of fingerprinting
-- Marketing to general practices in the US
In addition, the Board intends to progress development of its other products (ovarian tests) through to commercial launch, which it considers to be another key step for the Company.
Outlook
Oncimmune continues to deliver on its plan to create value from its core autoantibody platform and the board is increasingly confident that the Company is well placed to execute that plan and deliver value in the medium and long term.
Geoffrey Hamilton-Fairley Meinhard Schmidt Chief Executive Officer Chairman
Chief Financial Officer's Review
Revenue in the year ended 31 May 2017 was GBP215k (2016: GBP430k). In the current year, this revenue represented the sale of commercial tests that were performed from our own CLIA laboratory in Kansas, USA. Focus has now been on developing the kit version of the test and finding potential new distributors. The kit is now developed and goes on sale in the autumn of 2017; exclusive distribution deals have been entered into for a number of countries, and therefore we are now anticipating an increase of revenue from autumn 2017.
In addition to this the Company is working on closing a number of strategic deals in the US and China. The timing of these and the exact nature is not definite, however when and if they do happen they are expected to have a material impact on revenue.
Operating expenses before share based charges and exceptional items in the year ended 31 May 2017 were GBP4.88m (2016: GBP3.83m). The increase of costs reflects the additional running cost of operating the research and development laboratory in Nottingham, UK and the commercial laboratory in Kansas, USA.
Net loss for the year was GBP5.0m (2016: GBP4.6m) before any exceptional items.
There were no exceptional items in the current year.
After exceptional items the Company incurred a net loss of GBP5.0m (2016: GBP8.4m).
GBP415k (2016: GBP108k) of research and development costs have been capitalised in the year. The decision to capitalise these costs was made on the basis that these were the direct costs relating to the work that went in to the development of the EarlyCDT(R)-Lung kit, which is now in production and will be ready for sale in the autumn of 2017.
The Company raised a further GBP5m (GBP4.78m net of expenses) via a placement in September 2017 issuing up to 4.167 million shares. Of this, the issuance of 833,333 Ordinary Shares representing GBP1.0m remain conditional on receipt from HM Revenues & Customs of confirmation that this investment will be a qualifying holding for the purposes of Part 6 of the Income Tax Act 2007.
The cash balance at the end of the year was GBP5.075m (2016: GBP10.2m).
Financial Outlook
The Company's cash position is now strong. The cash burn continues to be managed carefully. In the meantime, we are excited about the numerous commercial opportunities open in the forthcoming year, notably:
-- First sales of EarlyCDT(R)-Lung kit; and -- closing distribution deals in the US and China; and -- closing a commercial deal relating to our "fingerprint" technology
At the same time, we will continue to invest in R&D.
As such, the management are confident that its cash resources are sufficient for the foreseeable future.
Andrew Millet
Chief Financial Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Hot Features
Premium
Year to Year to
31 May 31 May
2017 2016
GBP'000 GBP'000
Notes Total Total
Revenue 215 430
Cost of sales (532) (147)
-------- ---------
Gross (loss)/profit (317) 283
Administrative expenses 5 (3,857) (4,269)
Research and development
expenses (1,025) (789)
Share based payment charges (74) (939)
(4,956) (5,997)
Operating loss (5,273) (5,714)
Gain arising on debt settlement 5 - 1,564
Finance costs on derivative
liabilities 5 - (4,126)
Finance income 9 26 5
Finance expense 9 (69) (737)
Loss before income tax (5,316) (9,008)
Income tax 10 293 566
-------- ---------
Loss for the financial
year (5,023) (8,442)
-------- ---------
Other comprehensive income
Items that may be subsequently
reclassified to profit
or loss, net of tax
Currency translation differences 222 24
Loss after tax and total
comprehensive income for
the year attributable to
equity holders (4,801) (8,418)
Basic and diluted loss
per share 24 (9.84p) (23.54p)
======== =========
The accompanying notes form an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 May 31 May
2017 2016
GBP'000 GBP'000
Notes
ASSETS
Non-current assets
Intangible assets 12 518 131
Property, plant and equipment 11 230 253
748 384
--------- ---------
Current assets
Inventories 14 323 188
Trade and other receivables 13 261 339
Current tax assets - 100
Cash and cash equivalents 15 5,075 10,197
--------- ---------
5,659 10,824
--------- ---------
Total assets 6,407 11,208
========= =========
EQUITY AND LIABILITIES
Equity
Capital and reserves attributable
to the equity holders
Share capital 19 510 510
Share premium 16,273 16,273
Merger reserve 30,787 30,787
Other reserves 2,187 2,113
Own shares (1,926) (1,926)
Foreign currency translation
reserve 169 (53)
Retained earnings (42,996) (37,973)
--------- ---------
Total equity 5,004 9,731
========= =========
Non-current liabilities
Other Loans 17 - 395
- 395
--------- ---------
Current liabilities
Trade and other payables 16 847 529
Current tax liabilities 54 57
Other loans 17 502 496
--------- ---------
1,403 1,082
--------- ---------
Total liabilities 1,403 1,477
========= =========
Total equity and liabilities 6,407 11,208
========= =========
The accompanying notes form an integral part of the consolidated financial statements.
The financial statements were approved by the board on 18 October 2017.
Andrew Millet
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Other Merger Foreign Own Retained Total
capital premium reserves reserve currency Shares earnings
translation
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 May 2015 7 30,729 1,103 - (77) (1,926) (33,656) (3,820)
Loss for the year - - - - - (8,442) (8,442)
Other comprehensive
income:
Currency translation
differences - - - - 24 - 24
--------- --------- ---------- --------- ------------- -------- ---------- --------
Total comprehensive
income - - - - 24 - (8,442) (8,418)
Transactions with owners:
Shares issued in group
reconstruction 348 (348) - - - - - -
Reorganisation of
share
capital (7) 7 -
Creation of merger
reserve (30,787) 30,787 -
Issue of equity shares 162 20,798 - - - - - 20,959
Share option charge 939 939
Exercise of conversion
option - (4,126) 71 4,126 71
--------- --------- ---------- --------- ------------- -------- ---------- --------
Total transactions with
owners 503 (14,456) 1,010 30,787 - - 4,126 21,969
--------- --------- ---------- --------- ------------- -------- ---------- --------
As at 31 May 2016 510 16,273 2,113 30,787 (53) (1,926) (37,973) 9,731
========= ========= ========== ========= ============= ======== ========== ========
Loss for the year - - - - - - (5,023) (5,023)
Other comprehensive
income:
Currency translation
differences - - - - 222 - - 222
--------- --------- ---------- --------- ------------- -------- ---------- --------
Total comprehensive - -
income
Transactions with owners:
Share option charge - - 74 - - - - 74
As at 31 May 2017 510 16,273 2,187 30,787 169 (1,926) (42,996) 5,004
========= ========= ========== ========= ============= ======== ========== ========
The accompanying notes form an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year to Year to
31 May 31 May
2017 2016
GBP'000 GBP'000
Notes
Cash flows from operating
activities
Loss after income tax (5,023) (8,442)
Adjusted by:
Depreciation and amortisation 91 78
Share based payment charge 74 939
Gain arising on debt settlement - (1,564)
Loss on derivative financial
instrument - 4,126
Settlement of IPO costs
via equity shares - 1,142
Interest received 26 (5)
Interest expense (69) 737
Inventory (135) (8)
Trade and other receivables 177 (304)
Trade and other payables 315 133
Taxes received (293) (566)
Exchange movement 222 (11)
-------- --------
Cash generated from operations (4,615) (3,745)
Interest paid 69 -
Interest received (26)
Income tax received 293 566
-------- --------
Net cash generated from
operating activities (4,279) (3,179)
-------- --------
Cash flows from investing
activities
Purchase of property,
plant and equipment (7) (64)
Development expenditure
capitalised (415) (108)
Interest received - 5
Net cash used in investing
activities (422) (167)
-------- --------
Cash flows from financing
activities
Proceeds from share issue - 11,448
Repayment of long term
borrowings (388) (423)
New other loans - 1,250
Net cash(used in)/generated
from financing activities (388) 12,275
-------- --------
Movement in cash attributable
to foreign exchange (33) (76)
Net (decrease) / increase
in cash and cash equivalents (5,089) 8,929
Cash and cash equivalents
at the beginning of the
year 10,197 1,344
Cash and cash equivalents
at the end of the year 15 5,075 10,197
======== ========
The accompanying notes form an integral part of the consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Oncimmune Holdings Plc (the 'Company') is a limited company incorporated and domiciled in England and Wales. The registered office of the company is Clinical Sciences Building, City Hospital, Hucknall Road, Nottingham, NG5 1PB. The registered company number is 09818395.
The Group's principal activity is that of cancer diagnosis.
The Directors of Oncimmune Holdings Plc are responsible for the financial information and contents of the financial information.
2. Accounting policies
The principal accounting policies applied in the preparation of the consolidated financial information are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.
Basis of preparation
The Group has prepared its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted in the European Union, IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.
The Company was incorporated on 9 October 2015 and was re-registered as a public limited company on 14 December 2015. On 23 November 2015, a group re-organisation was completed, by means of a share for share exchange, as result of which the newly incorporated company, Oncimmune Holdings Plc, became the parent company of the Group.
The companies involved in the above share for share exchange have not previously been presented in the consolidated financial statements of a single legal entity. However, the underlying business was ultimately controlled and managed by the same parties before and after the share for share exchange and that control was not transitory. The transactions outlined above, therefore, meet the definition of a common control transaction in accordance with IFRS 3 Business Combinations.
IFRS does not provide any specific guidance on accounting for common control transactions and IFRS 3 excludes common control transactions from its scope; therefore the Directors have selected an accounting policy in accordance with paragraphs 10-12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The consolidated entity meets the definition of a group reconstruction under FRS 102 19,27 and has therefore been accounted for under the principals of merger accounting as outlined in FRS 102, paragraphs 19.29 - 19.33, merger accounting. The consolidated financial statements have therefore been prepared as if Oncimmune Limited and its subsidiaries had been held by Oncimmune Holdings Plc from inception and therefore the results and position of Oncimmune Limited have been reflected in the comparatives.
The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 3.
The consolidated financial statements have been prepared on a going concern basis and under the historical cost convention. After considering the year end cash position, making appropriate enquiries and reviewing budgets and profit and cash flow forecasts for the foreseeable future (and in any event for a period of at least 12 months from the approval date of these financial statements), the Directors have formed a judgement at the time of approving the financial statements that there is a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future. For this reason the Directors consider the adoption of the going concern basis in preparing the Consolidated financial statements is appropriate. The future prospects of the business has been further detailed in the Strategic Report.
The consolidated financial statements presented in sterling and has been rounded to the nearest thousand (GBP'000).
Standards, amendments and interpretations to existing standards
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group in these financial statements.
At the date of authorisation of the financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective. The Group has not early adopted any of these pronouncements. The new standards, amendments and interpretations that are expected to be relevant to the Group's financial statements in the future are as follows:
Standard/interpretation Content Applicable
for financial
years beginning
on/after
IFRS 9 Financial Instruments 1 January
2018*
IFRS 15 Revenue from Contracts 1 January
with Customers 2018*
IFRS 16 Leases 1 January
2019*
IFRS 1 First time adoption (amendments) 1 January
IFRS 2 Share based payments (amendments) 2018*
IFRS 4 Insurance contracts (amendments) 1 January
IFRS 12 Disclosure of interest 2018*
IAS 7 in other entities (amendments) 1 January
IAS 12 Statement of Cash flows 2018*
IAS 28 (amendments) 1 January
IAS 39 Income Taxes (amendments) 2017*
Investments in Associates 1 January
IAS 40 and Joint Ventures (amendments) 2017*
IFRIC 22 Financial Instruments: 1 January
Recognition and measurement 2017*
(amendments) 1 January
Investment Property (amendments) 2018*
Foreign Currency transactions 1 January
and advance consideration 2018*
(amendments)
1 January
2018*
1 January
2019*
*Not yet adopted by the EU.
The effective dates stated above are those given in the original IASB/IFRIC standards and interpretations. As the Group prepares its financial statements in accordance with IFRS as adopted by the European Union (EU), the application of new standards and interpretations will be subject to their having been endorsed for use in the EU via the EU endorsement mechanism.
The Directors are in the process of assessing the potential impact of IFRS 15 on the financial statements. The Directors do not expect the adoption of the other standards and interpretations to have a material impact on the consolidated financial statements in the period of initial adoption.
Revenue
The amount shown as revenue in the statement of comprehensive income comprises royalties received and receivable and, in addition, amounts received and receivable in respect of the provision of medical testing services, in the US and other markets, including the UK.
Revenue is recognised at the fair value of the consideration received or receivable and excludes intra-group sales, value added tax and trade discounts.
Revenue is recognised when the amount can be reliably measured and it is probable that future economic benefits associated with the transaction will flow to the entity.
Royalty income is recognised when the tests to which the royalty licences relate are completed by third parties. Amounts receivable in respect of the provision of medical testing services are recognised when these services are delivered.
Research and development
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Development expenditure, where it meets certain criteria (given below), is capitalised and amortised on a straight-line basis over its useful life which is currently five years. Asset lives are subject to regular review and an impairment exercise carried out at least once a year. Where no internally-generated intangible asset can be recognised, development expenditure is written-off in the period in which it is incurred.
An intangible asset arising from development is recognised if, and only if, the group can demonstrate the following:
- the technical feasibility of completing the intangible asset so that it will be available for use or sale;
- the intention to complete the intangible asset and use or sell it; - the ability to sell or use the intangible asset
- how the intangible asset will generate probable future economic benefits. Among other things, the group can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.
- the availability of adequate technical, financial and other resources to complete the development and to use of sell the intangible asset.
- the ability to measure reliabily the expenditure attributable to the intangible asset during itse development.
The Group has reviewed research and development expenditure, to determine whether any of that spend could qualify as development expenditure which satisfies the requirements for capitalisation set out above. As a result, GBP415,000 (2016: GBP108,000) of development expenditure has been capitalised.
Property, plant and equipment
Property, plant and equipment is stated at historic cost, including expenditure that is directly attributable to the acquired item, less accumulated depreciation and impairment losses.
Depreciation is calculated on a straight line basis over the deemed useful life of an asset and is applied to the cost less any residual value. The asset classes are depreciated on a straight line basis over the following periods:
Laboratory equipment - 3 - 7 years Office equipment - 3 - 7 years Computer equipment - 3 - 4 years
The carrying value of the property, plant and equipment is compared to the higher of value in use and the fair value less costs to sell. If the carrying value exceeds the higher of the value in use and fair value less the costs to sell the asset then the asset is impaired and its value reduced by recognising an impairment in profit or loss.
Impairment testing of non-current assets
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Those intangible assets not yet available for use and goodwill are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.
Inventories
Inventory is carried at the lower of cost or net realisable value after making due allowance for obsolete and slow moving stock. Net realisable value is calculated based on the revenue from sale in the normal course of business less any costs to sell.
Leased assets
In accordance with IAS 17 Leases, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if any.
All other leases are treated as operating leases. Payments on operating lease agreements are recognised as an expense on a straight-line basis. Associated costs, such as maintenance and insurance, are expensed as incurred. Lease incentives received are recognised in the consolidated statement of comprehensive income on a straight-line basis over the lease term.
Taxation
Income tax on the profit or loss for the year comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year, using current rates, and any adjustments to the tax payable in respect of previous years. In so far as group companies are entitled to UK tax credits on qualifying research and development expenditure, such amounts are recognised when received.
Deferred taxation is provided on all temporary differences between the carrying amount of the assets and liabilities in the financial statements and the tax base. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets and liabilities are not discounted. Deferred tax is determined using the tax rates that have been enacted or substantially enacted by the balance sheet date, and are expected to apply when the deferred tax liability is settled or the deferred tax asset is realised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Tax is recognised in profit or loss, except where it relates to items recognised directly in equity, in which case it is recognised in equity.
Share based compensation
Equity-settled share-based payments are recognised as an expense in profit or loss, based on the fair value of the option at the date of grant. Such costs are spread over the vesting period, adjusted for the best available estimate of the number of share options expected to vest, with a corresponding credit to equity, net of deferred tax where applicable. Such adjustments are only made in respect of non-market performance vesting conditions. No adjustment is made to the expense recognised in prior periods if fewer share options ultimately are exercised than originally estimated. Vesting conditions relate to continuing employment.
On the re-organisation in November 2015 the existing Onimmune Limited schemes were rolled over into the 2015 Oncimmune Holdings Plc scheme with Oncimmune Holdings Plc taking on the obligation for the exercise of the options. Modification accounting was performed resulting in the incremental fair value at the date of the modification being calculated. The incremental fair value is the excess of the fair value of the award immediately after the modification over the fair value immediately before the modificiation. Where the was an incremental fair value this was charged over the remainder of the vesting period, together with the original charge relating to the grant date of the original reward. Recognition of a cost of investment in Oncimmune Holdings Plc and a corresponding reserve in respect of the fair value of the options rolled over was considered, however no investment was recognised as the amount was not considered material.
Where the granting of share options has coincided with the issue of shares, for cash, to third party investors, the fair value of such options is based on the issue price for those shares which is considered to be an arm's length value.
Employee benefit trust
Assets, other than shares, held by the Oncimmune Limited's Employee Benefit Trust (EBT) are included in the group's balance sheet under the appropriate heading. Shares in the company held by the EBT are disclosed as a deduction from shareholder's funds and dividend income is excluded in arriving at profit before tax and deducted from aggregate dividends paid and proposed. Reflecting the substance of these arrangements any amounts which the trustees of the EBT may resolve, pursuant to their discretionary powers, to pay to any beneficiaries of the EBT are charged to the profit or loss account only when paid, subject to statutory deductions.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the main decision-making body of the Group, which collectively comprises the Executive Directors. The Executive Directors are responsible for allocating the resources and assessing the performance of the operating segments.
Exceptional items
Exceptional items are treated as such if the matters are non-recurring, material and fall outside of the operating activities of the Group.
Government grants
Government grants receivable are recognised on receipts of cash. Related expenditure is recognised as it occurs
Financial instruments
Financial instruments are assigned to their different categories by management on initial recognition, depending on the contractual arrangements.
Financial assets
The Group's financial assets fall within the heading of 'Loans and receivables'. Loans and receivables comprise trade and certain other receivables as well as cash and cash equivalents.
Loan and receivables are recognised when the Group becomes a party to the contractual provisions of the instrument and are recognised at fair value and subsequently measured at amortised cost using the effective interest method less any provision for impairment, based on the receivable ageing, previous experience with the debtor and known market intelligence. Any change in their value is recognised in the income statement.
Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.
Financial liabilities
The Group's financial liabilities comprise borrowings, a convertible loan and trade and other payables.
Financial liabilities are initially recognised at the fair value of the consideration received net of issue costs. After initial recognition borrowings are measured at amortised cost using the effective interest method. All interest-related charges are included in the income statement line item "finance expense". Financial liabilities are derecognised when the obligation to settle the amount is removed.
Convertible loan notes
Convertible loan notes where the conversion option does not meet the definition of equity are accounted for as financial liabilities. The instruments are split between:
- the "host" debt instrument being a non-convertible debt. The host contract is recognised at fair value and subsequently measured at amortised cost using the effective interest rate;
- an embedded derivative representing the conversion feature.
The valuation of the embedded derivative is performed at inception of the loan and at the end of each reporting period. The residual value is then allocated to the host debt instrument.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held on call, together with other short term highly liquid investments which are not subject to significant changes in value and have original maturities of less than three months.
Equity
Equity comprises the following:
-- Share capital: the nominal value of equity shares.
-- Share premium: includes any premium received on the sale of shares. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any income tax benefits.
-- Own shares and other reserves -- Profit and loss account: retained profits
-- Foreign currency translation reserve: differences arising from translation of investments in overseas subsidiaries
-- Merger reserve: The merger reserve represents the difference between the parent company's cost of investment and a subsidiary's share capital and share premium. The merger reserve in these accounts has arisen from a group reconstruction upon the incorporation and listing of the parent company that was accounted for as a common control transaction. Common control transactions are accounted for using merger accounting rather than the acquisition method.
Foreign currencies
Monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit. The functional currency of the group and parent company is GBP'000.
The financial statements of foreign subsidiaries are translated at the rate of exchange ruling at the statement of financial position date. The exchange differences arising from the retranslation of the opening net investment in subsidiaries are taken directly to reserves. Where exchange differences result from the translation of foreign currency borrowings raised to acquire foreign assets (including equity investments) they are taken to reserves and offset against differences arising from the translation of those assets. All other exchange differences are dealt with through the statement of comprehensive income.
3. Accounting estimates and judgements
The preparation of financial statements under IFRS requires the Group to make estimates and judgements that affect the application of policies and reported amounts. Estimates and judgements are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
The estimates and judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below:
-- Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at each reporting date. At the reporting date management assesses that the useful lives represent the expected utility of the assets to the Group. Actual results, however, may vary due to unforeseen events.
-- Inventory provision
Inventory provisions are based on an estimate of the realisable value of the inventory items.
-- Impairment
An impairment loss is recognised for the amount by which the asset's or cash generating unit's carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows management makes assumptions about future operating results. These assumptions relate to future events and circumstances. In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.
-- Capitalisation of development costs
Development expenditure, where it meets certain criteria (given below), is capitalised and amortised on a straight-line basis over its useful life. Asset lives are subject to regular review and an impairment exercise carried out at least once a year. Where no internally-generated intangible asset can be recognised, development expenditure is written-off in the period in which it is incurred. Development expenditure is only recognised when all of the criteria set out in IAS 38 are met. Management applies judgement in making this assessment and in determining attributable costs for each project.
-- Deferred tax
Judgement has been applied in respect of the non recognition of deferred tax on losses as detailed in note 10 on the basis of uncertainty over the timing of future reversal.
4. Segmental information
Management has determined the operating segments based on the reports reviewed by the strategic decision maker comprising the Board of Executive Directors. The segmental information is split on the basis of geographical analysis however, management report only the contents of the income statement and therefore no statement of financial position information is provided on a segmental basis in the following tables:
Revenue 31 May 31 May
2017 2016
GBP'000 GBP'000
Class of business
Distribution of testing products 215 262
Royalties - 168
Total revenues 215 430
-------- --------
Geographical analysis by destination
United Kingdom 80 133
North America 135 294
Rest of the world - 3
Total revenues 215 430
-------- --------
Geographical analysis by origin
United Kingdom - -
North America 215 427
Rest of the world - 3
Total revenues 215 430
-------- --------
Operating segments
As at 31 May 2017
UK USA Holdings Consolidated
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 80 135 - 215
Cost of
sales (247) (284) - (531)
Gross margin (167) (149) - (316)
-------- -------- --------- -------------
Operating
loss (3,279) (1,171) (823) (5,273)
Net finance
and other
costs (43)
Loss before
tax (5,316)
-------------
Taxation 293
(5,023)
-------------
As at 31 May 2016
UK USA Holdings Consolidated
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 304 126 - 430
Cost of
sales - (147) - (147)
Gross margin 304 (21) - 283
-------- -------- --------- -------------
Operating
loss (2,748) (801) (2,165) (5,714)
Net finance
and other
costs (3,294)
Loss before
tax (9,008)
-------------
Taxation 566
(8,442)
-------------
Assets are not reported by business segment to the Chief Operating Decision Maker.
Information about major customers
In the year to 31 May 2017, the group had three customers who contributed more than 10% of group revenue individually. These three customers contributed approximately 83% of group revenue.
In the year to 31 May 2016, the group had three customers who contributed more than 10% of group revenue individually. These three customers contributed approximately 80% of group revenue.
5. Exceptional items
May May
2017 2016
GBP'000 GBP'000
Exceptional items in the year
comprise the following:
Costs associated with the IPO
Charged in profit or loss - 1,226
Charged directly to equity - 8
Gain on debt waiver - (1,564)
Fair value loss on derivatives
(Note 23) - 4,126
Costs directly attributable to the issuing of shares are charged to the share premium account.
6. Loss before income tax
May May
2017 2016
GBP'000 GBP'000
Loss before taxation has been
arrived at after charging:
Depreciation of owned property,
plant and equipment 63 71
Amortisation of intangible
assets 28 7
Research and development 1,025 789
Share based payments expense 74 939
Employee costs (Note 8) 2,202 2,828
Operating lease rentals
* Other operating leases 116 51
- -
* Plant and machinery
Audit and non-audit services:
Fee payable to the company's
auditor:
Fee for the audit of the parent
company 15 15
Fees payable to the Company's
auditor and its associates
for other services:
The audit of the Company's
subsidiaries pursuant to legislation 24 23
Tax compliance services 6 6
Tax advisory services 6 21
Audit related assurance services 4 -
All other assurance services 1 1
Fees for other assurance services
- accounting - 17
Fees for other assurance services
- reporting accountant - 150
======== ========
7. Remuneration of key personnel
The Group consider that the Directors are the key personnel;
May May
2017 2016
GBP'000 GBP'000
Share based payments expense 74 850
Salary, fees, bonuses and other
short term emoluments 409 670
Social security costs 44 87
-------- -------------
527 1,607
======== =============
Details of Director's remuneration are disclosed in the Directors' report.
8. Employees
The average number of employees (including Directors) during the period was as follows:
May May
2017 2016
47 33
====== ======
The cost of employees (including directors) during the period was made up as follows:
May May
2017 2016
GBP'000 GBP'000
Wages and salaries 2,021 1,739
Social security costs 106 150
Pension cost 1 -
Share based payments 74 939
-------- --------
2,202 2,828
======== ========
9. Net finance costs
May May
2017 2016
GBP'000 GBP'000
Finance revenue 26 5
Fair value loss on embedded
derivatives (note 23) - (4,126)
Finance costs (convertible
loan and other loans) (69) (737)
-------- --------
(43) (4,858)
======== ========
10. Income tax credit
May May
2017 2016
GBP'000 GBP'000
Current tax:
UK corporation tax credit at
rates: 2017 - 19.83% 2016 -20% (293) (566)
Prior period adjustment - -
-------- --------
(293) (566)
Tax recoverable for the period (293) (566)
======== ========
Factors affecting current tax charge:
The tax assessed on the profit for the period is different to the standard rate of corporation tax in the UK. The differences are explained below:
May May
2017 2016
GBP'000 GBP'000
Loss before income tax (5,316) (9,008)
Loss for the year multiplied
by the standard rate of corporation
tax (1,054) (1,801)
Expenses not deductible for
tax purposes 6 1,414
Adjustment in respect of prior
periods - (1)
Income not assessable for tax - (313)
Tax uplift in R&D expenditure (295) (281)
Losses surrendered for R&D
claims 228 136
Losses carried forward 822 280
(293) (566)
========== ==========
The group has unrelieved UK tax losses of GBP12,247,000 (2016: GBP9,882,000) and unrelieved overseas tax losses of GBP17,917,000 (2016: GBP14,007,000). Deferred tax of GBP5,118,000 has not been provided given the uncertainty over the timing of a future reversal.
11. Property, plant and equipment
Laboratory Computer Office Total
Equipment Equipment Equipment
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 May 2016 980 18 30 1,028
Additions - 7 - 7
Foreign exchange
movement 38 - - 38
----------- ----------- ------------- ----------
At 31 May 2017 1,018 25 30 1,073
----------- ----------- ------------- ----------
Depreciation
At 31 May 2016 729 16 30 775
Charge for the year 61 2 - 63
Foreign exchange
movement 5 - - 5
----------- ----------- ------------- ----------
At 31 May 2017 795 18 30 843
----------- ----------- ------------- ----------
Net book values
At 31 May 2017 223 7 - 230
=========== =========== ============= ==========
At 31 May 2016 251 2 - 253
=========== =========== ============= ==========
There were no assets held under finance leases during 2017 or 2016. The amount of depreciation expense charged to the income statement in respect of such assets was GBPnil in 2017 and 2016.
12. Intangible Assets
Intangible
Assets
GBP'000
Cost
At 31 May 2016 143
Additions 415
Disposals
-----------
At 31 May 2017 558
-----------
Depreciation
At 31 May 2016 12
Charge for the year 28
-----------
At 31 May 2016 40
-----------
Net book values
At 31 May 2017 518
===========
At 31 May 2016 131
===========
All intangible assets are from internal development.
13. Trade and other receivables
May May
2017 2016
GBP'000 GBP'000
Trade receivables 50 116
Other debtors 191 142
Prepayments and accrued income 20 81
-------- --------
261 339
======== ========
At 31 May 2017 trade receivables were stated net of provisions of GBPnil (2016 - GBPnil). The remaining balances were considered recoverable on normal trade terms. There is no material difference between the fair value and the varying value of these assets. The maximum credit risk exposure at the reporting date equated to the fair value of trade receivables as stated net of provisions. Standard payment terms are 30 days net.
14. Inventories
May May
2017 2016
GBP'000 GBP'000
Diagnostic testing materials 323 188
-------- --------
323 188
======== ========
Inventory is stated net of a GBP501,000 provision (2016: GBP509,000).
15. Cash and cash equivalents
Cash balances at the end of each year are as follows:
May May
2017 2016
GBP'000 GBP'000
Cash and cash equivalents per
statement of financial position 5,075 10,197
-------- --------
Cash per statement of cash
flows 5,075 10,197
======== ========
16. Trade and other payables
May May
2017 2016
GBP'000 GBP'000
Trade payables 590 379
Other taxation and social security - -
Other creditors 122 69
Accruals and deferred income 135 81
847 529
======== ========
17. Borrowing
The Group uses bank overdrafts, bank and other loans to finance acquisitions; the following balances remain outstanding as shown:
May May
2017 2016
GBP'000 GBP'000
Non-current
Other loans - 395
-------- --------
- 395
======== ========
Current
Other loans 502 496
502 496
======== ========
Other loans at 31 May 2017 also include a venture loan facility originally of EUR1,862,649 (approximately GBP1.5m), from Harbert European Speciality Lending Company Limited ('Harbert'), repayable in equal instalment over the period to 31 January 2018 at an interest rate of 10%, plus a further 3% to be paid with the final instalment. The facility is secured by a fixed and floating charge over the company's assets and undertaking. As at the year end GBP502,281 was falling due within one year and GBPnil was falling due after one year (2016: GBP495,920 and GBP394,882 respectively).
18. Lease commitments
At the end of each period the Group had total minimum annual payment commitments under non-cancellable operating lease agreements as set out below:
May May
2017 2016
GBP'000 GBP'000
Land and buildings
Operating leases which expire:
Within one year 21 51
In two to five years - 21
In over five years - -
-------- --------
21 72
======== ========
19. Share capital
May 2017 May 2016
Shares GBP Shares GBP
Authorised:
Ordinary shares
of GBP0.01 each 57,115,594 571,155 57,115,594 571,155
Preference shares - - - -
of GBP0.01 each
A Preference shares - - - -
of GBP0.01 each
----------- -------- ----------- --------
571,155 571,155
=========== ======== =========== ========
Allotted, called
up and fully paid:
Ordinary shares
of GBP0.01 each 51,024,404 510,244 51,024,404 510,244
Preference shares - - - -
of GBP0.01 each
----------- -------- ----------- --------
51,024,404 510,244 51,024,404 510,244
=========== ======== =========== ========
20. Share based payments
The Group has granted options to certain directors and employees in respect of Ordinary shares
The Group has the following share options schemes in place:
The 2005 Share Option Scheme
The 2005 Share Option Scheme has the following principal terms:
-- the scheme is limited to eligible persons, being employees, officers, SAB members and consultants of the Group;
-- the scheme provides for options to be granted to eligible persons to subscribe for ordinary shares of 0.01p each in the capital of Oncimmune Holdings Plc;
-- the scheme was limited to options over 14,500 ordinary shares in Oncimmune Limited (now 725,000 options over Ordinary shares of Oncimmune Holdings Plc), all of which have been granted and options may be issued under the Enterprise Management Incentive (EMI) rules or as unapproved options;
-- no option may be exercised later than the tenth anniversary of the date of grant, extended to 20 years for certain option holders;
-- each option issued under the scheme had a vesting period commencing for employees, officers and consultants on the first anniversary of the date of the grant and expiring on the fourth anniversary of the date of grant and for SAB members commencing on the second anniversary and expiring on the fourth anniversary of the date of grant;
-- options issued under the scheme are non-transferable;
-- vested options must be exercised (i) within 24 months of an option holder's death; (ii) within 3 months of an option holder ceasing to hold office for reasons of disability, redundancy or retirement (unless otherwise agreed by the Directors); and (iii) within 6 months of an option holder's resignation (if an employee, officer or consultant of the Operating Group) and within 24 months of an option holder's resignation (if an SAB member), or in each case the options shall lapse
-- If an option holder shall leave the Operating Group for any reason, options granted to that option holder shall only be exercisable in the Directors' discretion;
-- on 'takeover' of Oncimmune Holdings Plc where a general offer is made to acquire the whole of the issued share capital of Oncimmune Holdings Plc (or any class of share capital of Oncimmune Holdings Plc), the acquiring company may make a 'rollover' offer to the option holders, which the option holders shall be deemed to accept, such that their options shall rollover into options in the acquiring company upon the same terms; and
-- Oncimmune Holdings Plc may at any time add to or vary the scheme rules provided that this does not affect the liabilities of any option holder.
The 2007 Share Option Scheme
The 2007 Share Option Scheme is on the same principal terms as the 2005 Share Option Scheme save that:
-- the scheme was limited to an additional 25,029 (increased to 68,056 options over ordinary shares in Oncimmune Limited and which rolled over 3,402,800 options over Ordinary Shares), of which 23,511 options over ordinary shares in Oncimmune Limited (rolled over into 1,175,550 options over Ordinary Shares of Oncimmune Holdings Plc) have been granted;
-- the vesting period for all options issued under the scheme commenced on the first anniversary of the date of grant and expired on the third anniversary of the date of grant, and;
-- vested options must be exercised (i) within 12 months of an option holders death; (ii) within 3 months of an option holder ceasing to hold office for reasons of disability, redundancy or retirement (unless otherwise agreed by the Directors) and (iii) on or before an option holders resignation, or in each case the options shall lapse.
In November 2015, the two existing option schemes were rolled over into the 2015 Oncimmune Holdings Scheme on the terms set out above.
May 2017 May 2016
Number Number
of options of options*
Options
in grant 3,650,550 1,825,550
============ =============
Weighted GBP0.77 GBP0.83
average
exercise
price
Weighted
average
life remaining
in years 5 3
*Share options issued by Oncimmune Limited
The fair value of options granted by the Company has been arrived at using the Black-Scholes model. The assumptions inherent in the use of this model are as follows:
May 2017 May 2016
Volatility 20% 12%
Dividend yield 0% 0%
Risk free rate 3% 1%
Discount factors 10% 0%
-- The option life is assumed to be at the end of the allowed period
-- Historical staff turnover is taken into account when determining the proportion of granted options that are likely to vest by the end of the period
-- Following the application of the vesting probability assumptions, there are no further vesting conditions other than remaining in employment with the Company during the vesting period
-- No variables change during the life of the option (e.g. dividend yield) -- Volatility has been estimated as there is no history of the Company's share price.
At the period end each year the Group had the following options at the weighted average exercise prices (WAEP) shown:
WAEP May WAEP May
2017 2016
Expiry date Number Number
Outstanding at
1 June 0.83 1,825,550 37.00 36,511
Granted - 1,825,000 - -
Lapsed
Modified (36.17) 1,789,039
Exercised
Outstanding at
31 May 0.77 3,650,550 0.83 1,825,550
===== ========== ======== ==========
Weighted average
remaining contractual
life in years 5 3
===== ========== ======== ==========
The options are subject to the rules of 2016 Share Option plan (an amalgamation of the Company's 2005 and 2007 Share option Plans).
The Group recognised total expenses in respect of the option schemes above of GBP74,435 (2016: GBP939,000) related to equity-settled share based payment transactions during the year.
21. Related party transactions
During the year, the University of Nottingham, a significant shareholder, provided support and facilities to the group to enable it to undertake research:
May May
2017 2016
GBP'000 GBP'000
Costs incurred 174 138
Accrued at year end 40 20
======== ========
22. Categories of financial instruments
May May
2017 2016
GBP'000 GBP'000
Current financial assets
Loans and receivables 261 258
Cash and cash equivalents 5,075 10,197
-------- --------
Total financial assets 5,336 10,445
Non-financial assets - 81
-------- --------
Total 5,336 10,536
======== ========
Non-current financial liabilities
At amortised cost - borrowings - 395
======== ========
Current financial liabilities
At amortised cost - borrowings 502 496
At amortised cost - payables 901 529
-------- --------
Total current financial liabilities 1,403 1,025
Non financial liabilities - 57
-------- --------
Total current liabilities 1,403 1,082
======== ========
23. Convertible loan note
In October 2013, Oncimmune Ltd received a GBP1.8 million loan from under the terms of a convertible loan note, which accrued interest at rates of 25%. Monthly repayments of capital plus accrued interest over a 24 month period commenced on 1 May 2014 or earlier under specified circumstances, albeit subordinated to the Harbert loan (note 16 above).
The terms of the loan included the following conversion options:
- on a relevant fund raising the holder may convert at, a price per share being a 20% discount to the price per share of the class of share being issued and paid by investors on that relevant fund raising;
- on a change of control, a price per share being a 20% discount to the price per A Preference share received in connection with the acquisition of shares on the change of control;
- on a voluntary conversion at the voluntary conversion price.
Management carried out an assessment of the terms of the loan and have judged that the instrument consisted of two components:
- a host instrument, held at amortised cost
- a single compound embedded derivative that comprises multiple embedded derivatives (comprising the various prepayment options and the conversion option) that expose Oncimmune Ltd to inter-related risks. The compound embedded derivative has been recognised separately as a derivative financial instrument at fair value through profit and loss.
A fair value exercise to determine the value of the components was performed at inception of the loan (October 2013). The valuation takes into account the share price of the issuer and the time value of the option.
The embedded derivative is defined as the value of the derivative liability comprising the various prepayment options and the conversion option. The valuation takes into account the share price of the issuer and the time value of the option.
Valuation techniques were selected based on the characteristics of each instrument, with the overall objective of maximising the use of market based information. The valuation technique for the single compound embedded derivative, which is a level 3 item, is as follows:
The fair value of the compound embedded derivative recognised separately from the host convertible loan was estimated using a present value technique. The fair value at each date is estimated by probability weighting the prepayment feature, adjusting for risk and discounting at 20 per cent, based upon commercially applicable rates, and by reference to the value of the equity instruments associated with the conversion feature. During the period to 31 May 2016 the loans were converted to equity. Finance costs in respect of the fair value movement of GBP4,125,000 were recognised and the fair value of the instrument on extinguishment was GBP4,196,000.
May May
2017 2016
Fair value of net proceeds GBP'000 GBP'000
Net proceeds - -
Embedded derivative - -
Liability component - -
--------- --------
- -
========= ========
Liability component - -
Interest charge for the year - 402
--------- --------
- 402
======================================== ========
24. Loss per share
The basic per share is calculated by dividing the loss attributable to the owners of Oncimmune Holdings Plc by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share has not been calculated as the entity is loss making.
May May
2017 2016
Earnings
Loss on ordinary activities
for the purposes of basic and
fully diluted loss per share
(GBP'000) (5,023) (8,442)
Loss on ordinary activities
for the purposes of basic and
fully diluted loss per share
(GBP'000) (before highlighted
items) - (4,654)
----------- -----------
Number of shares
Weighted average number of
shares for calculating basic
and fully diluted earnings
per share 51,024,404 35,866,356
----------- -----------
Loss per share
Basic and fully diluted loss
per share 9.84p 23.54p
----------- -----------
Basic and fully diluted loss
per share (before exceptional
items) 9.84p 12.97p
----------- -----------
25. Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (interest rate risk), credit risk and liquidity risk.
Market risk - Foreign exchange risk
As disclosed in note 4 in the years to 31 May 2017 and 31 May 2016 over 60% of the Group's income by destination was into the North American market and denominated in US dollars. The Group's income stream is exposed to fluctuations in the US dollar exchange rate against Sterling.
Market risk - Interest rate risk
The Group carries borrowings in the form of other loans as all borrowings are on fixed interest terms, the Directors consider that no risk arises in respect of future cash flows.
Market risk - Price risk
The Group is not exposed to either commodity or equity securities price risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. In order to minimise this risk the Group endeavours only to deal with companies which are demonstrably creditworthy. In addition, a significant proportion of revenue results from cash transactions. The aggregate financial exposure is continuously monitored. The maximum exposure to credit risk is the value of the outstanding amount of trade receivables. The management do not consider that there is any concentration of risk within either trade or other receivables.
Liquidity risk
The Group currently holds cash balances to provide funding for normal trading activity. The Group also has access to both short term and long term borrowings . Trade and other payables are monitored as part of normal management routine.
Borrowings and other liabilities mature according to the following schedule:
2017 Within One to
1 year five
years
GBP'000 GBP'000
Trade payables 590 -
Other taxation and social 57 -
security
Other creditors 122 -
Accruals and deferred 135 -
income
Convertible loans - -
Other loans 502 -
========
2016 Within One to
1 year five
years
GBP'000 GBP'000
Trade payables 496 -
Other taxation and social 57 -
security
Other creditors 69 -
Accruals and deferred 81 -
income
Convertible loans - -
Other loans 496 395
========
Capital risk management
The Group' s capital management objectives are:
-- to ensure the Group's ability to continue as a going concern; and -- to provide an adequate return to shareholders
by pricing products and services commensurate with the level of risk.
The Group monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of the statement of financial position.
May May
2017 2016
GBP'000 GBP'000
Total equity 5,064 9,731
Cash and cash equivalents 5,075 10,197
--------- ---------
Capital 10,139 19,928
========= =========
Total financing
Borrowings 502 891
--------- ---------
Overall financing 502 891
========= =========
Capital to overall financing
ratio 2,019.7% 2,236.6%
========= =========
26. Events after the balance sheet date
The Company raised a further GBP5m (GBP4.78m net of expenses) via a placement in September 2017 issuing up to 4.167 million shares. Of this, the issuance of 833,333 Ordinary Shares representing GBP1.0m remain conditional on receipt from HM Revenues & Customs of confirmation that this investment will be a qualifying holding for the purposes of Part 6 of the Income Tax Act 2007.
27. Subsidiaries consolidated
The subsidiaries included in the consolidated financial statements of the Group are detailed below. No subsidiary undertakings have been excluded from the consolidation.
Company Holding
Country of Class of Direct Indirect
incorporation share capital % %
held
Oncimmune Limited United Kingdom Ordinary 100
United States
Oncimmune (USA) LLC of America Ordinary 100
28. Ultimate controlling
party
There is no ultimate
controlling party
of the Company.
(1) Health Advances, Boston 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GGGQPUUPMGMB
(END) Dow Jones Newswires
October 20, 2017 02:00 ET (06:00 GMT)
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