We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ixico Plc | LSE:IXI | London | Ordinary Share | GB00BFXR4C20 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 8.75 | 8.50 | 9.00 | 8.75 | 8.725 | 8.75 | 4,627 | 08:00:07 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMIXI
RNS Number : 2983S
IXICO plc
20 December 2016
20 December 2016
IXICO plc
('IXICO' or the 'Company')
Financial Results for the year ended 30 September 2016
A growing portfolio of customers across a range of neurological indications
IXICO plc (Ticker: IXI) ('IXICO' or the 'Company'), the brain health company, today announces its final results for the year ended 30 September 2016.
Highlights
Commercial
-- Continued expansion of the customer base and launch of Assessa(R) PML platform
-- Assessa(R) PML partnership with Biogen to improve the risk profile of a multiple sclerosis drug
-- New sales wins of GBP4.7 million
o 4 new contracts in Alzheimer's disease at combined value of over GBP3.0 million
o Changing sales mix and continued expansion into other disease areas
Corporate Development
Broadening the product offering and securing growth capital:
-- Acquisition of Optimal Medicine -- Equity funding of GBP2.7 million before expenses
Financial
Performance reflects the start-up of 7 new clinical trials and integration of Optimal Medicine:
-- Revenues of GBP3.1 million (2015: GBP3.1 million) -- Other income of GBP0.8 million (2015: GBP1.1 million) -- Operating loss of GBP2.9 million (2015: GBP1.4 million) -- Loss per share 8.7 pence (2015: 7.9 pence) -- Cash of GBP3.1 million (2015: GBP1.9 million)
Post year end highlights
-- $1.2 million contract with a new, top 15 global pharmaceutical company for advanced imaging clinical trial services in progressive supranuclear palsy ('PSP').
-- EUR1.1 million funding as part of a major European consortia to address Alzheimer's disease
Derek Hill, IXICO's CEO, said:
"During the year, we continued to win and deliver on business providing our digital technology and services to customers in the pharmaceutical industry, both to support clinical development and to accompany market drugs in the clinic. The beta testing of Assessa(R) PML, with financial support from Biogen, for use alongside their multiple sclerosis drug Tysabri(R) demonstrates how our technology can translate from the clinical trial market into the market for companion products. Our new contracts should ensure revenue growth going forward, as these multi-year projects gather momentum."
IXICO also announces that its AGM will be held at 9.30am on 30 January 2017 at the offices of FTI Consulting, 200 Aldersgate Street, London EC1A 4HD.
About IXICO
IXICO's innovative and proprietary digital healthcare technologies help those involved in researching and treating serious diseases to capture and analyse clinical data to make rapid, informed decisions. In clinical research this includes the phenotyping of patients, quantification of disease pathology and measurement of patient outcomes. In clinical practice the mobile health and digital decision support technologies aid diagnosis, patient engagement and monitoring. IXICO is also collaborating with partners to develop companion digital health products targeted at improving patient outcomes.
The Company's brain health focus includes Alzheimer's disease, Huntington's disease, multiple sclerosis, Parkinson's disease, behavioural health, child and adolescent mental health.
More information is available on www.ixico.com
For further information please contact:
IXICO plc
Derek Hill, Chief Executive Officer
Susan Lowther, Chief Financial Officer
Tel: +44 20 3763 7499
Shore Capital (Nomad and Broker)
Bidhi Bhoma /Edward Mansfield Tel: +44 20 7408 4090
FTI Consulting Limited (Investor Relations)
Simon Conway/Mo Noonan/Matthew Moss Tel: +44 20 3727 1000
INTRODUCTION AND OVERVIEW
Chairman's and Chief Executive's Statement
We are pleased to report our progress made in the year and the outlook for the year ahead.
Revenue for the year was GBP3.1 million (2015: GBP3.1 million) which together with other income of GBP0.8 million (2015: GBP1.1 million), resulted in total income of GBP3.9 million for the year (2015: GBP4.2 million). Revenues were in line with the prior year and reflected the start-up of 7 new clinical trials including 5 Alzheimer's disease studies, 1 in progressive supranuclear palsy ('PSP') and a first contract in Parkinson's disease with Oxford Biomedica. The project start-up activities included the $7 million long-term contract with a leading pharmaceutical company announced in August 2015.
Revenues in the year were further characterised by a changing sales mix, including a contribution by Biogen towards the development of the Assessa(R) PML digital platform to support the early detection of progressive multifocal leukoencephalopathy ('PML'), a potentially fatal side effect of certain drug treatments for multiple sclerosis including Tysabri(R). Assessa(R) PML is in the beta testing phase and an important part of the Company's digital strategy.
Total operating expenses (including non-recurring administrative expenses of GBP0.7 million, 2015: GBP0.2 million) of GBP5.1 million for the year (2015: GBP4.3 million) reflect planned investment in product development and in particular the Assessa(R) PML digital platform. In-house research and development continues to be directly expensed when incurred.
Losses after tax and non-recurring administrative expenses were GBP2.1 million (2015: GBP1.2 million). This was materially higher than in previous years and reflected the integration of the acquisition of Optimal Medicine, planned investment in the start-up of seven new clinical trials as well as in current and future digital technologies.
The Group has a strong balance sheet following the GBP2.7 million equity placing in December 2015. Net cash at 30 September 2016 was GBP3.1 million (2015: GBP1.9 million) reflecting careful cash management and control of operating expenditure.
STRATEGIC REVIEW
Pharmaceutical companies are responding to a changing global environment which includes technology companies entering the mainstream healthcare sector and a movement towards outcome-based reimbursement. Digital technologies linked to drug treatments ('combination products') are expected to play an increasingly important role in digital healthcare markets. Pharmaceutical companies are actively seeking partners with appropriate capabilities to support their own digital healthcare strategies.
We believe that IXICO plc, together with its subsidiary undertakings ('IXICO' or 'Group') has demonstrated how we are able to meet this need through the clinical trials and companion product deals that we have announced and are starting to deliver. There are strong synergies between our clinical trial and companion product markets in the pharmaceutical sector. This means that we are able to leverage our long-standing expertise and track record in the sector to provide our new digital products. The deployment of our digital technologies during clinical trials generates commercial value and provides an opportunity to demonstrate the benefits of our platform to support marketed drugs. Data gathered during clinical trials (under appropriate collaboration agreements) further improves our digital offering allowing IXICO to strengthen both its intellectual property and product differentiation.
OPERATIONAL REVIEW
PRINCIPAL RISKS AND UNCERTAINTIES
Like all businesses we face risks and uncertainties, many of which are inherent with any company looking to establish new products as well as expand its commercial footprint. The Board continually identify, monitor and manage the risks and uncertainties of the Group. Set out below are those principal risks and uncertainties that the Board considers could have a material impact on the Group's operational results, financial condition and prospects. This list does not purport to be exhaustive.
Management and employees
The Group's future success is dependent on retention of key management and employees. The loss of key employees could weaken the Group's scientific, technical and management capabilities, resulting in delays in the development of our products and impacting negatively on our business. We have entered into employment arrangements with key staff and they are incentivised by a combination of salary, bonus, sales commission and equity participation.
Industry and competition risk
A large proportion of the Group's revenue is dependent on the pharmaceutical industry and therefore there is a risk of reduced revenues resulting from the timing or reduction of expenditure by customers in this sector. Pharmaceutical companies may change their strategic focus away from neurodegenerative diseases which would negatively impact IXICO's accessible market. We face competition in this sector from companies which may be larger and have stronger track records.
There can be no guarantee that the pharmaceutical industry will accept our recently-launched and future products and we face competition from both technology companies and service providers. We aim to strengthen our market positions and sustain competitive advantage by building collaborative, commercial partnerships, continuing to widen our customer base, investing in technology and product development, and working closely with our customers to ensure that we develop solutions tailored to their needs to continue delivering a quality service.
There can be no guarantee that the grant funding or the research and development expenditure credit ('RDEC') will continue to be available to the Group, which would affect our ability to broaden our investment into new product development and deployment opportunities.
Regulatory and reimbursement risk
Given the regulatory environment in which we operate, any change in that environment could negatively impact our growth strategy, revenues, profitability and consequently cash available for investment in new product development. We maintain oversight of local regulatory environments and participate in local industry bodies to help anticipate potential changes to the regulatory environment and ensure appropriate compliance of our products.
Like many companies we are continuing to monitor the impact of the Brexit decision both on our commercial strategy and future applications to participate in European grant funded projects.
Intellectual property risk
The Group owns a portfolio of patents and patent applications and is the authorised licensee of other patents. We actively seek to manage, develop and protect our intellectual property portfolio. However, our technologies are based on software and related analysis. Patents in respect of software-based systems are considered to be less of a barrier to competitors than other patents related to hardware devices. Copyright in the software incorporated into our products is a further form of potential protection.
We maintain business know how and knowledge in our quality management system and standard operating procedures ('SOPs').
Financial risk
The Group's financing requirements depend on numerous factors including the rate of market acceptance of our products and services and our ability to attract and retain customers. The Group may be unable to obtain adequate funding on acceptable terms, if at all.
The Group has instigated certain financial risk management policies and procedures which are set out in note 23 to the consolidated financial statements.
Integration of Optimal Medicine
The acquisition of Optimal Medicine was completed on 8 December 2015. During the year its products and technologies have been consolidated with IXICO's products and services. We have made changes to the Group's cost base as part of the integration and in the normal course of business.
The mehealth technologies are part of our commercial strategy to demonstrate that we collect, manage and can perform data analytics on real world data collected from patients or people supporting their care.
CONCLUSION AND OUTLOOK
In September, Andy Richards, who had been Non-Executive Chairman since 2009 and played a key role in IXICO's evolution from a private to public company, decided to step down from the Board. At the same time David Brister also stepped down as a Non-Executive Director following the successful integration of Optimal Medicine. We would like to thank Andy and David for the contribution they made to IXICO's development.
Charles Spicer was appointed Non-Executive Chairman in September having been Non-Executive Director since January 2016 and previously an Executive Director with responsibility for corporate development. Mark Warne joined the Board as a Non-Executive Director in September. Mark is Head of the Healthcare division of IP Group plc.
Following these Board changes we announced the appointment of Shore Capital as nominated adviser and broker in October. We would like to thank Peel Hunt LLP, our previous nominated adviser for their support following the reverse takeover of Phytopharm plc and admission to AIM on 14 October 2013 and most recently our acquisition of Optimal Medicine Limited on 8 December 2015. We look forward to working with Shore Capital in the next stage of our development.
We believe that IXICO is continuing to make steady progress with our business strategy. The new clinical trials contracts together with the expansion of the application of the Assessa(R) platform in multiple sclerosis provides us with confidence in the execution of our strategy and the year ahead.
We will continue to work closely with our customers, collaborators and business partners to realise our vision and would like to thank them as well as all our staff, shareholders and advisers for their continued commitment, enthusiasm and support.
FINANCIAL REVIEW
The financial performance for the year ended 30 September 2016 was in line with expectations. The comparatives refer to the 12 months ended 30 September 2015.
Revenue
Revenue for the period of GBP3.1 million (2015: GBP3.1 million) was generated from clinical trials services provided to pharmaceutical customers, preliminary revenues related to Assessa(R) PML and licensing revenues from VirtualScopics.
Other income
Other income for the period comprised income from grants of GBP0.6 million (2015: GBP0.9 million) and RDEC of GBP0.1 million (2015: GBP0.1 million).
Operating expenditure
Operating expenditure in the year reflected investment in people and product development following completion of the acquisition of Optimal Medicine Limited on 8 December 2015.
-- Research and development expenses of GBP1.6 million (2015: GBP1.2 million) were in line with expectations and the Group's plans to invest in new product development.
-- Sales and marketing expenses of GBP0.8 million (2015: GBP0.6 million) represented increased investment in people and business development activities
-- Administrative expenses of GBP2.0 million (2015: GBP2.2 million) were in line with expectations
Non-recurring administrative expenses of GBP0.7 million comprised intangible asset impairment charge, professional fees and restructuring costs related to the integration of Optimal Medicine Limited, The prior year comparatives of GBP0.2 million were transaction fees incurred in the acquisition.
Taxation
The Group has elected to take advantage of the RDEC, whereby a company may surrender corporation tax losses incurred on qualifying research and development expenditure for a corporation tax refund. In addition, the Group has claimed research and development tax credits under the small or medium enterprise research and development credit scheme.
The corporation tax refund due for the year of GBP0.6 million (2015: GBP0.3 million) has been recognised as a current tax receivable.
Non-current assets
Non-current assets at 30 September 2016 included property, plant and equipment of GBP0.1 million (2015: GBP0.1 million) and intangible assets of GBP0.6 million (2015: GBP0.3 million). The net book value of the behavioural health technology and marketing know-how has been reviewed as part of the Group's commercial strategy and focus. As at 30 September 2016, the recoverable amount is estimated to be GBP0.4 million, resulting in an impairment loss of GBP0.6 million being recognised for the year ended 30 September 2016.
Current assets
Current assets at 30 September 2016 of GBP5.0 million (2015: GBP3.8 million) reflected an increase in cash and cash equivalents to GBP3.1 million (2015: GBP1.9 million).
The Group holds all cash and cash equivalents in Sterling and US Dollar accounts with institutions with a recognised high rating (typically AA or above) or with one of the major clearing banks.
Current liabilities
Total current liabilities at 30 September 2016 were GBP1.5 million (2015: GBP1.5 million).
Equity
Total equity of GBP4.1 million at 30 September 2016 (2015: GBP2.7 million) reflected additional accumulated losses of GBP2.2 million and GBP2.7 million of new equity raised in the year.
Cash flow
Operating cash outflows of GBP1.5 million and investing cash inflows of GBP2.7 million in the year resulted in a closing cash balance of GBP3.1 million (2015: GBP1.9 million).
Results and dividends
The Group's net loss after tax for the year increased to GBP2.1 million (2015: GBP1.2 million).
The Directors do not recommend the payment of a dividend.
Financial risk management
The financial risk management and objectives of the Group are set out in note 23 to the consolidated financial statements.
Political donations
The Group made no political donations during the period (2015: GBPnil).
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2016 and 30 September 2015
Hot Features
Premium
Year ended Year ended
30 September 30 September
2016 2015
Note GBP'000 GBP'000
------------------------------------------ ----- ------------- -------------
Revenue 5 3,111 3,115
Cost of sales (1,680) (1,323)
------------------------------------------ ----- ------------- -------------
Gross profit 1,431 1,792
Other income 6 752 1,067
Operating expenses
Research and development expenses (1,583) (1,234)
Sales and marketing expenses (759) (584)
General and administrative expenses (2,005) (2,188)
Non-recurring administrative
expenses 7 (706) (247)
------------------------------------------ ----- ------------- -------------
Total operating expenses 10 (5,053) (4,253)
------------------------------------------ ----- ------------- -------------
Operating loss (2,870) (1,394)
Finance income 1 1
Loss on ordinary activities before
taxation (2,869) (1,393)
Taxation 11 750 199
------------------------------------------ ----- ------------- -------------
Loss and total comprehensive
expense attributable
to equity holders for the period (2,119) (1,194)
------------------------------------------ ----- ------------- ------------- Other comprehensive expense: Foreign exchange translation (66) - differences ------------------------------------------ ----- ------------- ------------- Total other comprehensive expense (66) - Total comprehensive expense attributable to equity holders for the period (2,185) (1,194) ------------------------------------------ ----- ------------- ------------- Loss per share (pence) 12 ------------------------------------------ ----- ------------- ------------- Basic loss per share (8.7) (7.9) Diluted loss per share (8.7) (7.9) ------------------------------------------ ----- ------------- -------------
Consolidated and Company Statements of Financial Position
as at 30 September 2016 and 30 September 2015
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
Note GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ----- ------------- ------------- ------------- -------------
Assets
Non-current assets
Property, plant
and equipment 13 88 116 - -
Intangible assets 14 559 300 - -
Investments in
Group undertakings 15 - - 5,505 4,979
Amounts due from
subsidiary undertakings 16 - - 5,515 3,535
--------------------------- ----- ------------- ------------- ------------- -------------
Total non-current
assets 647 416 11,020 8,514
Current assets
Trade and other
receivables 16 1,353 1,603 22 34
Current tax receivable 11 562 286 - -
Cash and cash equivalents 3,120 1,934 1,168 551
--------------------------- ----- ------------- ------------- ------------- -------------
Total current assets 5,035 3,823 1,190 585
Total assets 5,682 4,239 12,210 9,099
--------------------------- ----- ------------- ------------- ------------- -------------
Liabilities and
equity
Current liabilities
Trade and other
payables 18 1,311 1,470 73 358
Deferred consideration 3 174 - 174 -
Total current liabilities 1,485 1,470 247 358
Non-current liabilities
Deferred tax liabilities 19 112 60 - -
Amounts due to
subsidiary undertakings 18 - - 1,748 1,339
--------------------------- ----- ------------- ------------- ------------- -------------
Total non-current
liabilities 112 60 1,748 1,339
Equity
Ordinary shares 20 7,720 7,529 7,720 7,529
Share premium 20 79,421 76,804 79,421 76,804
Merger relief reserve 20 1,312 641 1,312 641
Reverse acquisition
reserve 20 (75,307) (75,229) - -
Foreign exchange (66) - - -
translation reserve
Accumulated losses (8,995) (7,036) (78,238) (77,572)
--------------------------- ----- ------------- ------------- ------------- -------------
Total equity 4,085 2,709 10,215 7,402
Total liabilities
and equity 5,682 4,239 12,210 9,099
--------------------------- ----- ------------- ------------- ------------- -------------
Consolidated Statement of Changes in Equity
for the year ended 30 September 2016 and 30 September 2015
Foreign
Merger Reverse exchange
Ordinary Share relief acquisition translation Accumulated
shares premium reserve reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- -------- -------- ------------ ------------ ------------ --------
Balance
at 30 September
2014 7,529 76,804 641 (75,229) - (5,933) 3,812
--------------------- --------- -------- -------- ------------ ------------ ------------ --------
Total comprehensive
expense
Loss for
the period - - - - - (1,194) (1,194)
--------------------- --------- -------- -------- ------------ ------------ ------------ --------
Total comprehensive
expense - - - - - (1,194) (1,194)
Transactions
with owners
Charge in
respect of
share options - - - - - 91 91
--------------------- --------- -------- -------- ------------ ------------ ------------ --------
Total transactions
with owners - - - - - 91 91
Balance at
30 September
2015 7,529 76,804 641 (75,229) - (7,036) 2,709
--------------------- --------- -------- -------- ------------ ------------ ------------ --------
Total comprehensive
expense
Loss for
the period - - - - - (2,119) (2,119)
Other comprehensive
expense:
Foreign exchange
translation - - - - (66) - (66)
--------------------- --------- -------- -------- ------------ ------------ ------------ --------
Total comprehensive
expense - - - - (66) (2,119) (2,185)
Transactions
with owners
Charge in
respect of
share options - - - - - 126 126
Exercise
of share
options 78 - - (78) - - -
Proceeds
from shares
issued 89 2,617 - - - - 2,706
Cost of acquisition 24 - 671 - - 34 729
--------------------- --------- -------- -------- ------------ ------------ ------------ --------
Total transactions
with owners 191 2,617 671 (78) - 160 3,561
Balance at
30 September
2016 7,720 79,421 1,312 (75,307) (66) (8,995) 4,085
--------------------- --------- -------- -------- ------------ ------------ ------------ --------
Company Statement of Changes in Equity
for the year ended 30 September 2016 and 30 September 2015
Merger
Ordinary Share relief Accumulated
shares premium reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- -------- -------- ------------ --------
Balance at 30 September
2014 7,529 76,804 641 (77,057) 7,917
------------------------- --------- -------- -------- ------------ --------
Total comprehensive
expense for the period - - - (606) (606)
Transactions with
owners
Charge in respect
of share options - - - 91 91
Total transactions
with owners - - - 91 91
Balance at 30 September
2015 7,529 76,804 641 (77,572) 7,402
------------------------- --------- -------- -------- ------------ --------
Total comprehensive
expense for the period - - - (802) (802)
Transactions with
owners
Charge in respect
of share options - - - 126 126
Exercise of share
options 78 - - (24) 54
Proceeds from shares
issued 89 2,617 - - 2,706
Cost of acquisition 24 - 671 34 729
------------------------- --------- -------- -------- ------------ -------- Total transactions with owners 191 2,617 671 136 3,615 Balance at 30 September 2016 7,720 79,421 1,312 (78,238) 10,215 ------------------------- --------- -------- -------- ------------ --------
Consolidated and Company Statements of Cash Flows
for the year ended 30 September 2016 and September 2015
Group Company
Year ended Year ended Year ended Year ended
30 September 30 September 30 September 30 September
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------- ------------- ------------- -------------
Cash flows from
operating activities
Loss for the period (2,119) (1,194) (802) (606)
Finance income (1) (1) - -
Taxation (750) (199) - -
Depreciation 55 49 - -
Amortisation of
acquired intangibles 292 100 - -
Impairment of acquired
intangibles 603 120 - -
Impairment of investment - - 543 -
in subsidiary undertakings
Research and development
expenditure credit (135) (131) - -
Share option charge 126 91 14 23
(1,929) (1,165) (245) (583)
Changes in working
capital
(Increase)/decrease
in trade and other
receivables 287 (442) (1,968) (1,427)
(Decrease)/increase
in trade and other
payables (323) (27) 124 575
----------------------------- ------------- ------------- ------------- -------------
Cash used in operations (1,965) (1,634) (2,089) (1,435)
Taxation received 430 318 - -
----------------------------- ------------- ------------- ------------- -------------
Net cash used in
operating activities (1,535) (1,316) (2,089) (1,435)
Cash flows from
investing activities
Cash and cash equivalents 98 - - -
acquired
Purchase of property,
plant and equipment (24) (45) - -
Finance income 1 1 - -
Net cash (used
in)/generated from
investing activities 75 (44) - -
Cash flows from
financing activities
Issue of shares 2,706 - 2,706 -
Net cash generated
from financing
activities 2,706 - 2,706 -
Movements in cash
and cash equivalents
in the period 1,246 (1,360) 617 (1,435)
----------------------------- ------------- ------------- ------------- -------------
Cash and cash equivalents
at start of period 1,934 3,294 551 1,986
Effect of exchange (60) - - -
rate fluctuations
on cash held
----------------------------- ------------- ------------- ------------- -------------
Cash and cash equivalents
at end of period 3,120 1,934 1,168 551
----------------------------- ------------- ------------- ------------- -------------
Notes to the Financial Statements
1. GENERAL INFORMATION
IXICO plc (the 'Company') is a public limited company incorporated in England and Wales; and is admitted to trading on the AIM market of the London Stock Exchange under the symbol IXI. The address of its registered office is 4th Floor, Griffin Court, 15 Long Lane, London EC1A 9PN.
The Company is an established provider of clinical trials services to the global pharmaceutical industry. The Company provides its proprietary, innovative technologies to those involved in researching and treating serious diseases, especially dementia, to enable timely decision making and improve patient outcomes.
2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION
Basis of preparation
The consolidated financial statements have been prepared in accordance with IFRS as adopted by the EU, IFRIC interpretations and the Companies Act 2006 applicable to companies operating under IFRS.
The consolidated financial statements have been prepared under the historical cost convention modified by the revaluation of certain financial instruments.
The consolidated financial statements are presented in Sterling (GBP). This is the predominant functional currency of the Company, and is the currency of the primary economic environment in which it operates. Foreign transactions are accounted in accordance with the policies set out below.
Basis of consolidation
The consolidated financial statements incorporate the accounts of the Company and its subsidiary companies adjusted to eliminate intra-Group balances and any unrealised gains and losses or income and expenses arising from intra-Group transactions. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.
Subsidiaries are entities controlled by the Group. Control exists when the Group has the control, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain economic benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.
The results of subsidiary companies are included in the consolidated financial statements from the date that control commences until the date that control ceases. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated into Sterling at exchange rates ruling at the end of the reporting period. Income statements and cash flows of foreign operations are translated into Sterling at average quarterly exchange rates which approximate foreign exchange rates at the date of the transaction. Foreign exchange differences arising on retranslation are recognised directly in a separate translation reserve.
The acquisition method is used to account for the acquisition of subsidiaries.
Going concern
At the time of approving the consolidated financial statements, the Directors have considered the expected future performance together with the Group's estimated future cash inflows from existing long-term contracts, sales pipeline and funded collaborations. Changes to the operating cost base are made in the normal course of business, so that expenditure and investment are in line with the Group's strategy and financial resources. After due consideration and taking into account management's estimate of future revenues and expenditure, the Directors have a reasonable expectation that the Company and the Group will have adequate financial resources to continue in operation for the foreseeable future. Thus they have adopted the going concern basis of accounting in preparing the consolidated financial statements.
Significant management judgement in applying accounting policies and estimation uncertainty
When preparing the consolidated financial statements, the Directors make a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
Significant management judgements
The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the consolidated financial statements.
Revenue recognition
The Group recognises revenue with regard to amounts chargeable to customers under service contracts. The policy is to recognise testing services upon achievement of milestones set out in the related agreements. This is expected to approximate to the timing of the physical performance of the service activity on such contracts. Recognising revenue also requires significant judgement in determining actual work performed and the estimated costs to complete the work. Assessing whether the Group is acting as agent in respect of an agency relationship, depends on facts and circumstances and requires judgement. The Group identified 1 agency relationship in the year ended 30 September 2016 (2015: 1).
Capitalisation of internally developed software
Distinguishing the research and development phases of a new customised software project and determining whether the recognition requirements for the capitalisation of development costs are met requires judgement. Expenditure on the research and development is recognised as an expense as incurred.
Recovery of deferred tax assets
Deferred tax assets have not been recognised for deductible temporary differences and tax losses as the Directors consider that there is not sufficient certainty that future taxable profits will be available to utilise those temporary differences and tax losses.
Estimation uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Fair value measurements on business combinations
The measurement of fair values on a business combination requires the recognition and measurement of the identifiable assets, liabilities and contingent liabilities. The key judgements involved are the identification and valuation of intangible assets which require the estimation of future cash flows and the selection of a suitable discount rate.
Impairment of intangible assets
Amortised intangibles are tested for impairment where there are indications of impairment. These impairment tests require the Group to make an estimate of the expected cash flows and to select suitable discount rates. These require an estimation of the value in use of these assets.
Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of the options granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were granted, detailed in note 21 of the consolidated financial statements.
Changes in accounting policies
The Group has not applied any new accounting policies or made other retrospective changes that have a material effect on the consolidated statement of financial position as at 1 October 2015.
Accounting developments
At the date of approval of the consolidated financial statements, the following Standards and Interpretations which have not been applied in the consolidated financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
-- IFRS 9 Financial Instruments(1) -- IFRS 15 Revenue from contracts with customers (effective date 1 January 2018)
-- Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations (effective date 1 January 2016)
-- Clarification of Acceptable Methods of Depreciation and Amortisation - Amendments to IAS 16 and IAS 38 (effective date 1 January 2016)
-- Annual Improvements to IFRSs 2012-2014 Cycle (effective date 1 January 2016)
-- Amendments to IAS 27: Equity Method in Separate Financial Statements (effective date 1 January 2016)
-- Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception(1)
-- Disclosure Initiative: Amendments to IAS 1 Presentation of Financial Statements (effective date 1 January 2016)
-- IFRS 16 Leases(1) -- Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses(1) -- Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions(1) -- Amendments to IAS 7: Disclosure Initiative(1)
(1) Not adopted by the EU as at 30 September 2016
Apart from IFRS 15 and IFRS 16 where the Group is currently assessing how significant the effect on the reported results and financial position will be, the Directors anticipate, based on the current business, that the future introduction of the standards, amendments and interpretations listed above will not have a material impact on the consolidated and company financial statements.
Revenue
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.
Revenue from short-term professional services contracts, such as consultancy and training, is recognised as the service is performed.
Revenue on longer-term contracts for services is recognised according to the substance of the Group's obligations under a contract. Where the substance of a transaction is that the Group's contractual obligations are performed gradually over time, revenue is recognised as contract activity progresses, to reflect the Group's partial performance of its contractual obligations. Where the substance of a contract is that a right to consideration does not arise until the occurrence of a critical event, revenue is not recognised until the event occurs.
Where longer-term contracts for services allows for the reimbursement for certain expense incurred by the Group in the execution of the service contract, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered. These reimbursements are included in revenue and are subject to a nil gross margin.
Where it has been assessed that the Group is acting as agent in respect of an agency relationship, revenues are recognised on a net basis after deducting revenue earned by the principal.
Revenue relating to licence income is recognised on an accruals basis in accordance with the substance of the relevant agreement.
Revenue recognised in the income statement but not yet invoiced is held on the consolidated statement of financial position within 'trade and other receivables'. Revenue invoiced but not yet recognised in the income statement is held on the consolidated statement of financial position within 'trade and other payables'.
Other income
Government grants received relating to tangible fixed assets are treated as deferred income and released to the consolidated statement of comprehensive income over the expected useful lives of the assets concerned. Other grants received are recognised on a work done basis.
The Group has elected to take advantage of the RDEC introduced in the Finance Act 2013. A company may surrender corporation tax losses on research and development expenditure incurred on or after 1 April 2013 for a corporation tax refund. Relief is given as a taxable credit on 11% of qualifying research and development expenditure. The Group recognises research and development expenditure credit as an item of other income, taking advantage of the 'above the line' presentation.
Research and development expenditure
Research and development costs are written off to the consolidated statement of comprehensive income in the year in which they are incurred. All research and development costs, whether funded by grant or not, are included within operating expenses and classified as research and development costs.
All ongoing development expenditure is currently expensed in the year in which it is incurred. Due to the regulatory and other uncertainties inherent in the development of the Group's programmes, the criteria for development costs to be recognised as an asset, as prescribed by IAS 38 'Intangible assets', are not met until the product has been submitted for regulatory approval, such approval has been received and it is probable that future economic benefits will flow to the Group. The Group does not currently have any such internal development costs that qualify for capitalisation as intangible assets.
Exceptional items
Exceptional items are disclosed separately in the consolidated financial statements where it is necessary to do so to provide further understanding of the financial performance of the Group. They are material items of income or expense that have been shown separately due to the significance of their nature or amount. These amounts are of a non-recurring nature.
Share-based payments
Equity-settled share-based payments are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 21 of the consolidated financial statements. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions.
The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
Employee benefits
All employee benefit costs, notably holiday pay and contributions to the Group or personal defined contribution plans, are recognised in the statement of comprehensive income as they are incurred. The Group operates a defined contribution pension scheme. The assets of this scheme are held separately from those of the Group in independently administered funds. The Group does not offer any other post-retirement benefits.
Employee share trust
The Group recognises the assets and liabilities of the trust in its own accounts and shares held by the trust are recorded at cost as a deduction at arriving at total equity until such time as the shares vest unconditionally to employees. The trust is a separately administered trust, funded by contributions from employees and the Group.
Operating leases
Rentals payable under operating leases are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term.
Property, plant and equipment
Property, plant and equipment are stated at historic purchase cost less accumulated depreciation.
The cost of property, plant and equipment is its purchase cost, together with any directly attributable expenses of acquisition. Depreciation is calculated so as to write off the cost of property, plant and equipment, less its estimated residual value, on a straight-line basis over the expected useful economic lives of the assets concerned.
The principal rates used for this purpose are:
-- Leasehold improvements: straight-line over the shorter of 5 years or the lease term -- Fixtures and fittings: 33% straight-line -- Equipment: 33% straight-line
The assets' residual values and useful lives are reviewed, and adjusted if necessary, at each balance sheet date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within the consolidated statement of comprehensive income.
Intangible assets
Acquired intangible assets are recognised as an intangible asset if it is separable from the acquired business or arises from contractual or legal rights, is expected to generate future economic benefits and its fair value can be reliably measured.
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
Intangible assets are amortised using the straight-line method over their estimated useful economic life of 5 years. Amortisation is disclosed under administrative expenses in the consolidated statement of comprehensive income.
The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes are treated as changes in accounting estimates.
Intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired.
Impairment of assets
Non-current assets are reviewed for impairment both annually and when there is an indication that an asset may be impaired (when events or changes in circumstances indicate that carrying value may not be recoverable). An impairment loss is recognised in the consolidated statement of comprehensive income for the amount by which the asset's carrying value exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less cost to sell and value in use. Non-financial assets, other than goodwill, which have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
Investments in Group undertakings
Investments in Group undertakings are carried at cost less any impairment provision. Such investments are subject to an annual impairment review.
Trade and other receivables
Trade and other receivables are initially recognised at fair value and subsequently stated at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (exceeding credit terms) are considered indicators that the trade receivable is impaired.
The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. 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 statement of comprehensive income within 'administrative expenses'. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against 'administrative expenses' in the consolidated statement of comprehensive income.
Current tax
Current tax represents United Kingdom tax recoverable and is provided at amounts expected to be recovered using the tax rates and laws that have been enacted at the balance sheet date.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand with original maturities at inception of three months or less.
Foreign currency translation
Transactions denominated in foreign currencies are translated into Sterling at actual rates of exchange ruling at the date of transaction. Monetary assets and liabilities expressed in foreign currencies are translated into Sterling at rates of exchange ruling at the end of the financial year. All foreign currency exchange differences are taken to the consolidated statement of comprehensive income in the year in which they arise.
Trade and other payables
Trade and other payables are non-interest bearing and are initially recognised at fair value and subsequently stated at amortised cost.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Financial instruments
Financial assets and financial liabilities are recognised on the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
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 end of the reporting period.
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities; and their carrying amounts in the consolidated financial statements in accordance with IAS 12 'Income taxes'. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax asset is recognised only to the extent that it is probable that sufficient taxable profit will be available in future years to utilise the temporary difference. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither the accounting, nor taxable profit or loss.
The carrying 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 profits will be available to allow all or part of the asset to be recovered.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
3. BUSINESS COMBINATION
On 8 December 2015, the Company acquired the entire issued share capital of Optimal Medicine Limited. The aggregate consideration for the acquisition was GBP1,498,000 in consideration shares at a consideration share price of 49 pence comprising;
-- the initial issue of 2,355,295 new ordinary shares upon completion of the acquisition;
-- the issue of 590,093 deferred consideration shares on 31 December 2016, subject to the satisfaction of any claims made against warranties given by the sellers; and
-- call options over 111,401 shares which in substance reflect replacement awards issued by IXICO plc to satisfy outstanding share options under the Optimal Medicine Limited unapproved share option scheme.
Total consideration
The fair value of the new ordinary shares issued as consideration for the acquisition of Optimal Medicine Limited of GBP695,000 was determined on the basis of the Company's mid-market closing share price on 8 December 2015, being the date the Company acquired control of Optimal Medicine Limited.
The fair value of the deferred consideration shares issued as consideration for the acquisition of Optimal Medicine Limited of GBP174,000 was determined on the basis of the Company's mid-market closing share price on 8 December 2015, being the date the Company acquired control of Optimal Medicine Limited. The fair value of the deferred consideration shares has been recognised as a current liability as the warranty period expires on 31 December 2016.
There is a potential issue of 111,401 new ordinary shares in the Company to satisfy the exercise of outstanding share options under the Optimal Medicine Limited unapproved share option scheme. These share options must be exercised within 12 months or 18 months or they will lapse. The exercise of these options is at the option of the holder on completion of the acquisition with a proscribed conversion rate for the effective issue of new IXICO plc shares. The fair value of the share options of GBP33,000 was estimated using a Black-Scholes valuation model assuming a risk-free interest rate equivalent to the United Kingdom 2 year gilt yield on 8 December 2015 and a volatility equivalent to the historical volatility attributable to the IXICO plc share price. As at 30 September 2016, nil ordinary shares were issued following the exercise of share options relating to the replaced share option scheme.
The fair value of the assets and liabilities arising from the acquisition of GBP902,000 has been determined as follows:
GBP'000
-------------------------------------------------- --------
Property, plant and equipment 3
Cash and cash equivalents 98
Trade and other receivables 37
Intangible assets 1,153
Trade and other payables (158)
Deferred tax liability (231)
-------------------------------------------------- --------
Total identifiable net assets 902
-------------------------------------------------- --------
Total aggregate consideration (3,056,789 shares
at 49 pence) 1,498
-------------------------------------------------- --------
Difference between consideration share price
and fair value (3,056,789 shares at 19.5 pence) (596) Total consideration (3,056,789 shares at 29.5 pence) (902) -------------------------------------------------- --------
Intangible assets
Intangible assets were acquired through the business combination and initially recognised at cost, their fair value at the date of acquisition. Intangible assets represent technology and marketing related intangibles associated with behavioural health arising from Optimal Medicine Limited's historic research and development activities.
The fair value of the intangible assets was determined using discounted cash flow models. The key assumptions for the valuation method are those regarding future cash flows and discount rates. Cash flow projections are based on management forecasts approved by the Board covering a 5 year period. Management considered it prudent to ignore cash flows beyond the 5 year period. Management applied sensitivity analysis on certain cash flows due to the nature of future opportunities. The pre-tax discount rate of 12% was applied to the cash flow projections to reflect current market assessment of the time value of money and the risks specific to the asset.
Deferred tax liability
A deferred tax liability was recognised due to the temporary difference arising from the recognition of the intangible assets acquired through the business combination. The deferred tax liability has been measured at 20%, the tax rate that is considered to apply at the date of acquisition.
From the date of acquisition to 30 September 2016, Optimal Medicine Limited contributed GBP81,000 to revenue and GBP678,000 to loss before taxation and deducted GBP327,000 from the Group's net operating cashflows. If Optimal Medicine had been acquired as of 1 October 2015, it would have contributed GBP94,000 to revenue and GBP650,000 to loss before taxation and deducted GBP212,000 from the Group's net operating cashflows.
4. INVESTMENTS IN SUBSIDIARIES
The consolidated financial statements of the Group as at 30 September 2016 include:
Proportion Proportion
of of
Place of Principal ownership voting
rights
Name of subsidiary Class incorporation activities interest held
of share
-------------------- ----------- --------------- ------------ ----------- -----------
IXICO Technologies United
Limited Ordinary Kingdom Operations 100% 100%
United
IXITech Limited Ordinary Kingdom Operations 100% 100%
Phytodevelopments United
Limited Ordinary Kingdom Dormant 100% 100%
Members United
IXICO US LLC interest States Dormant 100% 100%
Optimal Medicine United
Limited Ordinary Kingdom Operations 100% 100%
IXICO Technologies
Inc. (formerly
Optimal Medicine United
Inc.) Ordinary States Operations 100% 100%
Optimal Medicine
SARL Ordinary France Operations 100% 100%
-------------------- ----------- --------------- ------------ ----------- -----------
5. SEGMENTAL INFORMATION
The Group's development and commercial functions operating across all the company's activities, are managed centrally and are reported internally as a single business. The chief operating decision maker has been identified as the Chief Executive Officer. The executive management review the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segment based on these reports. Accordingly, the Directors consider that there is only 1 reporting segment.
The Group is domiciled in the United Kingdom with all sales originating both in the United Kingdom and the United States.
In the year ended 30 September 2016, the Group had three customers that exceeded 10% of total revenue, being 14%, 14% and 11%. In the period ended 30 September 2015, the Group had three customers that exceeded 10% of total revenue, being 35%, 17% and 13%.
An analysis of the Group's revenue by type is as follows:
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
-------------------- ------------- -------------
Service revenues 2,924 2,930
Licencing revenues 187 185
-------------------- ------------- -------------
Revenue 3,111 3,115
-------------------- ------------- -------------
An analysis of the Group's revenue by geographic location of its customers are as follows:
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
---------------- ------------- -------------
United States 1,708 1,445
United Kingdom 857 1,377
Europe 496 240
China 50 53
---------------- ------------- -------------
Revenue 3,111 3,115
---------------- ------------- -------------
An analysis of the Group's non-current assets by geographic location are as follows:
As at As at
30 September 30 September
2016 2015
GBP'000 GBP'000
-------------------- ------------- -------------
United Kingdom 646 416
United States 1 -
Non-current assets 647 416
-------------------- ------------- -------------
6. OTHER INCOME
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
-------------- ------------- -------------
Grant income 617 936
RDEC 135 131
-------------- ------------- -------------
Other income 752 1,067
-------------- ------------- -------------
All grant income originates in the United Kingdom.
The Group recognised RDEC as an item of other income, taking advantage of the above the line presentation.
7. EXCEPTIONAL EXPENSES
During the year ended 30 September 2016, exceptional expenses are the non-recurring costs in respect of the impairment of the acquired intangible asset, professional fees incurred in the acquisition of Optimal Medicine Limited and administrative expenses relating to costs of restructuring incurred by the Group post the acquisition of Optimal Medicine Limited.
During the year ended 30 September 2015, exceptional expenses are the non-recurring costs in respect of professional fees incurred in the acquisition of Optimal Medicine Limited on 8 December 2015, which is detailed in note 3 of the consolidated financial statements.
These expenses have been recognised in the consolidated statement of comprehensive income as exceptional expenses due to their non-recurring nature.
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
--------------------------------------- ------------- -------------
Impairment of intangible asset 603 -
Professional fees 64 247
Restructuring costs 39 -
--------------------------------------- ------------- -------------
Non-recurring administrative expenses 706 247
--------------------------------------- ------------- -------------
8. AUDITORS' REMUNERATION
The analysis of the auditors' remuneration is as follows:
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
---------------------------------------- ------------- -------------
Fees payable to the Group's auditors
for the audit of the Company's annual
accounts 15 12
Fees payable to the Group's auditors
for other services:
Audit of the subsidiaries' annual
accounts 21 16
Audit related assurance services 5 6
Tax compliance services 9 7
Tax advisory services 7 6
---------------------------------------- ------------- -------------
Total auditors' remuneration 57 47
---------------------------------------- ------------- -------------
9. EMPLOYEES AND DIRECTORS
The average monthly number of persons (including Executive Directors) employed by the Group was:
Year ended Year ended
30 September 30 September
2016 2015
Number Number
-------------------------------------- ------------- -------------
Administration 13 8
Operations, research and development 56 48
-------------------------------------- ------------- -------------
Average total persons employed 69 56
-------------------------------------- ------------- -------------
As at 30 September 2016 the Group had 67 employees (2015: 61).
Staff costs in respect of these employees were:
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
----------------------- ------------- -------------
Wages and salaries 3,594 2,816
Social security costs 427 319
Other pension costs 186 164
Share-based payments 126 91
----------------------- ------------- -------------
Total remuneration 4,333 3,390
----------------------- ------------- -------------
The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the Group in independently administered funds. The amounts outstanding at 30 September 2016 in respect of pension costs are GBP43,000 (2015: GBP13,000).
Key management remuneration:
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
------------------------------ ------------- -------------
Short-term employee benefits 1,428 1,092
Post-employment benefits 71 68
------------------------------ ------------- -------------
Total remuneration 1,499 1,160
------------------------------ ------------- -------------
Key management includes Executive Directors, Non-Executive Directors and senior management who have the responsibility for planning, directing and controlling, directly or indirectly, the activities of the Group.
The Aggregate directors' remuneration is GBP646,000 (2015: GBP602,000) and aggregate pension of GBP30,000 (2015: GBP33,000).
10. OPERATING LOSS
An analysis of the Group's operating loss has been arrived at after charging:
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
--------------------------------------- ------------- -------------
Research and development expenses 1,583 1,234
Sales and marketing expenses 759 584
Operating lease charges: land and
building 131 127
Depreciation of property, plant
and equipment 55 49
Amortisation of intangible assets 292 100
Impairment of intangible assets(1) 603 120
Foreign exchange gain (299) (44)
Administrative expenses 1,826 1,836
Non-recurring administrative expenses
excluding impairment of intangible
assets(1) 103 247
--------------------------------------- ------------- -------------
Total operating expenses 5,053 4,253
--------------------------------------- ------------- -------------
(1) Impairment charge of GBP603,000 for the year ended 30 September 2016 is disclosed under exceptional expenses. See note 7 of the consolidated financial statements for further information.
11. TAXATION
The tax charge for each period can be reconciled to the loss per consolidated statement of comprehensive income as follows:
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
-------------------------------------- ------------- -------------
Loss on ordinary activities before
taxation (2,869) (1,393)
Loss before tax at the effective
rate of corporation tax
in the United Kingdom of 20.00%
(2015: 20.50%) (574) (286)
Effects of:
Expenses not deductible for tax
purposes 96 7
Temporary differences (2) (17)
Adjustment in respect of prior years (2) -
Adjustment in respect of prior years (142) -
- Optimal Medicine Limited
Tax rates other than the UK standard 27 -
rate
Research and development uplifts
net of losses surrendered for tax
credits (153) 97
-------------------------------------- ------------- -------------
Tax credit for the period (750) (199)
-------------------------------------- ------------- -------------
The tax credit for each period can be reconciled as follows:
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
-------------------------------------------- ------------- -------------
Small or medium enterprise research
and development credit (455) (182)
Deduction for corporation tax on
RDEC 27 27
Adjustment in respect of prior years (2) -
Adjustment in respect of prior years (142) -
- Optimal Medicine Limited
Tax due by foreign subsidiary undertakings 1 -
Deferred tax movement on amortisation (179) (44)
Tax credit for the period (750) (199)
-------------------------------------------- ------------- -------------
The Group has elected to take advantage of the RDEC, introduced in the Finance Act 2013 whereby a company may surrender corporation tax losses on research and development expenditure incurred on or after 1 April 2013 for a corporation tax refund. RDEC replaced the large company research and development scheme which the Group has previously claimed, which ceased on 31 March 2016.
The following is a reconciliation between the tax charge and the tax receivable within the consolidated statement of financial position:
As at As at
30 September 30 September
2016 2015
GBP'000 GBP'000
---------------------------------- ------------- -------------
Current tax receivable at start
of period 286 318
Current period credit 706 286
Corporation tax repayment (430) (318)
---------------------------------- ------------- -------------
Current tax receivable at end of
period 562 286
---------------------------------- ------------- -------------
The tax credit for each period can be reconciled to the current period credit recognised in tax receivable within the consolidated statement of financial position in each period as follows:
As at As at
30 September 30 September
2016 2015
GBP'000 GBP'000
----------------------------------------- ------------- -------------
Tax credit for the year 750 199
Deferred tax movement on amortisation (179) (44)
RDEC gross of corporation tax deduction 135 131
----------------------------------------- ------------- -------------
Current period credit 706 286
----------------------------------------- ------------- -------------
12. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss for the period attributable to equity holders by the weighted average number of ordinary shares outstanding during the period after the deduction of the weighted average number of the ordinary shares held by the employee benefit trust during the period.
For diluted loss per share, the loss for the period attributable to equity holders and the weighted average number of ordinary shares outstanding during the period is adjusted to assume conversion of all dilutive potential ordinary shares.
The potential issue of 590,093 new ordinary shares in respect of the deferred consideration as consideration for the acquisition of Optimal Medicine Limited on 8 December 2015 has been excluded from the weighted average number of ordinary shares as the warranty period expires on 31 December 2016. See note 3 of the consolidated financial statements for further information.
As at 30 September 2016 and 30 September 2015, the Group has no dilutive potential ordinary shares in issue.
The calculation of the Group's basic and diluted loss per share is based on the following data:
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
----------------------------------- ------------- -------------
Loss for the period attributable
to equity holders for basic loss
and adjusted for the effects of
dilution (2,119) (1,194)
----------------------------------- ------------- -------------
As at As at
30 September 30 September
2016 2015
Number Number
------------------------------------- ------------- -------------
Weighted ordinary shares in issue 24,350,856 15,058,982
Shares held by Trustees in respect
to the Company's Share Incentive
Plan 2007 (1,740) (1,740)
------------------------------------- ------------- -------------
Weighted average number of ordinary
shares for basis loss per share 24,349,116 15,057,242
------------------------------------- ------------- -------------
13. PROPERTY, PLANT AND EQUIPMENT
Leasehold Fixtures
and
improvement fittings Equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------ ---------- ---------- --------
Cost
-------------------------- ------------ ---------- ---------- --------
At 1 October 2014 62 7 232 301
-------------------------- ------------ ---------- ---------- --------
Additions - - 45 45
-------------------------- ------------ ---------- ---------- --------
At 30 September 2015 62 7 277 346
-------------------------- ------------ ---------- ---------- --------
Additions - other - 7 17 24
Additions - business
combination - - 7 7
At 30 September 2016 62 14 301 377
-------------------------- ------------ ---------- ---------- --------
Accumulated depreciation
-------------------------- ------------ ---------- ---------- --------
At 1 October 2014 4 7 170 181
-------------------------- ------------ ---------- ---------- --------
Charge for the period 13 - 36 49
-------------------------- ------------ ---------- ---------- --------
At 30 September 2015 17 7 206 230
-------------------------- ------------ ---------- ---------- --------
Additions - business
combinations - - 4 4
Charge for the period 12 3 40 55
At 30 September 2016 29 10 250 289
-------------------------- ------------ ---------- ---------- --------
Net book value
At 30 September 2015 45 - 71 116
-------------------------- ------------ ---------- ---------- --------
At 30 September 2016 33 4 51 88
-------------------------- ------------ ---------- ---------- --------
As at 30 September 2016 and 30 September 2015, the Company had no property, plant and equipment.
14. INTANGIBLE ASSETS
Neurodegenerative Behavioural
disease health
Registered technology technology
intellectual and marketing and marketing
property know-how know-how Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------- ------------------ -------------- --------
Cost
----------------------------- ------------- ------------------ -------------- --------
At 30 September 2014
and 30 September 2015 150 500 - 650
Additions - business
combination - - 1,154 1,154
----------------------------- ------------- ------------------ -------------- --------
At 30 September 2016 150 500 1,154 1,804
Amortisation and impairment
----------------------------- ------------- ------------------ -------------- --------
At 30 September 2014 30 100 - 130
Amortisation - 100 - 100
Impairment 120 - - 120
----------------------------- ------------- ------------------ -------------- --------
At 30 September 2015 150 200 - 350
----------------------------- ------------- ------------------ -------------- --------
Amortisation - 100 192 292
Impairment - - 603 603
At 30 September 2016 150 300 795 1,245
Net book value
At 30 September 2015 - 300 - 300
----------------------------- ------------- ------------------ -------------- --------
At 30 September 2016 - 200 359 559
----------------------------- ------------- ------------------ -------------- --------
Registered intellectual property, neurodegenerative disease technology and marketing know-how
Intangible assets were acquired through the reverse acquisition on 14 October 2013 and recognised at their fair value at the date of acquisition. Intangible assets include registered intellectual property (royalty income from a third party), technology and marketing related intangibles associated with neurodegenerative disease conditions arising from IXICO Technologies Limited's historic research and development activities.
Behavioural health technology and marketing know-how
Intangible assets were acquired through the business combination on 8 December 2015 and recognised at their fair value at the date of acquisition. Intangible assets represent technology and marketing related intangibles associated with behavioural health arising from Optimal Medicine Limited's historic research and development activities.
The Group reviewed the amortisation period and the amortisation method for the intangible assets at the end of the reporting period.
The Group continually monitors events and changes in circumstances that could indicate that the intangible assets may be impaired.
Registered intellectual property
The Group identified that the value of the registered intellectual property had diminished as the estimated future cash flows were GBPnil following the licensor's notification that the study was terminated. Following this termination there would be no further clinical development and therefore the intellectual property will not generate future cash flows from milestones or commercialisation. The Group recognised an impairment loss of GBP120,000 in the year ended 30 September 2015.
Neurodegenerative disease technology and marketing know-how
During the reporting period, the Group identified no evidence that indicate the neurodegenerative disease technology and marketing know-how intangible asset may be impaired. The assumptions in respect of the future cash flows and discount rate have not changed since initial recognition.
Behavioural health technology and marketing know-how
The Group has identified that the value of the behavioural health technology and marketing know-how has diminished in value in light of events post acquisition and subsequent change in commercial strategy. As at 30 September 2016, the recoverable amount is estimated to be GBP359,000, resulting in an impairment loss of GBP603,000 being recognised for the year ended 30 September 2016. Management have maintained the pre-tax discount rate and forecast period as at acquisition.
As at 30 September 2016 and 30 September 2015, the Company had no intangible assets.
15. INVESTMENTS IN GROUP UNDERTAKINGS
Company
As at As at
30 September 30 September
2016 2015
GBP'000 GBP'000
IXITech Limited
At 1 October 2 2
At 30 September 2 2
------------------------------------------ ------------- -------------
IXICO Technologies Limited
At 1 October 4,977 4,909
Issue of 142,581 shares on 2 October 44 -
2015 for the exercise of share options
at an average share price of GBP0.302
Issue of 14,101 shares on 12 October 4 -
2015 for the exercise of share options
at an average share price of GBP0.306
Issue of 29,773 shares on 30 September 7 -
2016 for the exercise of share options
at a share price of GBP0.24
Increase in capital contribution
relating to share option charge 112 68
At 30 September 5,144 4,977
------------------------------------------ ------------- -------------
Optimal Medicine Limited
At 1 October - -
Consideration shares: 2,355,295 695 -
new ordinary shares at GBP0.295
per share
Deferred consideration shares: 590,093 174 -
new ordinary shares at GBP0.295
per share
Replacement share option scheme: 33 -
111,401 new ordinary shares at GBP0.295
per share
Impairment charge (543) -
------------------------------------------ ------------- -------------
At 30 September 359 -
------------------------------------------ ------------- -------------
Total investments in Group undertakings 5,505 4,979
------------------------------------------ ------------- -------------
IXITech Limited
The investment in IXITech Limited amounts to the par value of the ordinary share capital of GBP2,000.
IXICO Technologies Limited
The capital contribution relating to share-based payments relates to share options granted by the Company to employees of subsidiary undertakings in the Group in respect of the IXICO EMI Share Option Plan 2014. Further information of the Groups share option schemes can be found in note 21 of the consolidated financial statements.
Optimal Medicine Limited
On 8 December 2015, the Company acquired the entire issued share capital of Optimal Medicine Limited. The aggregate consideration for the acquisition was GBP1,498,000 in consideration shares at a consideration share price of 49 pence comprising;
-- the initial issue of 2,355,295 new ordinary shares upon completion of the acquisition;
-- the issue of 590,093 deferred consideration shares on 31 December 2016, subject to the satisfaction of any claims made against warranties given by the sellers; and
-- call options over 111,401 shares which in substance reflect replacement awards issued by IXICO plc to satisfy outstanding share options under the Optimal Medicine Limited unapproved share option scheme.
The fair value of the new ordinary shares issued as consideration for the acquisition of Optimal Medicine Limited of GBP695,000 was determined on the basis of the Company's mid-market closing share price on 8 December 2015, being the date the Company acquired control of Optimal Medicine Limited.
The fair value of the deferred consideration shares issued as consideration for the acquisition of Optimal Medicine Limited of GBP174,000 was determined on the basis of the Company's mid-market closing share price on 8 December 2015, being the date the Company acquired control of Optimal Medicine Limited. The fair value of the deferred consideration shares has been recognised as a current liability as the warranty period expires on 31 December 2016.
There is a potential issue of 111,401 new ordinary shares in the Company to satisfy the exercise of outstanding share options under the Optimal Medicine Limited unapproved share option scheme. These share options must be exercised within 12 months or 18 months, or they will lapse. The exercise of these options is at the option of the holder on completion of the acquisition with a proscribed conversion rate for the effective issue of new IXICO plc shares. The fair value of the share options of GBP33,000 was estimated using a Black-Scholes valuation model assuming a risk-free interest rate equivalent to the United Kingdom 2 year gilt yield on 8 December 2015 and a volatility equivalent to the historical volatility attributable to the IXICO plc share price. As at 30 September 2016, nil ordinary shares were issued following the exercise of share options relating to the replaced share option scheme.
IXICO plc has identified that the cost of investment in Optimal Medicine Limited has diminished in value in light of events post acquisition and subsequent change in commercial strategy. As at 30 September 2016, the recoverable amount is estimated to be GBP359,000, resulting in an impairment loss of GBP543,000 being recognised for the year ended 30 September 2016.
16. TRADE AND OTHER RECEIVABLES
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------- ------------- ------------- -------------
Amounts receivable
within 1 year
Trade receivables 1,014 846 - -
Other receivables 151 558 - -
Other taxation and
social security - 23 1 4
Prepayments 188 176 21 30
----------------------------- ------------- ------------- ------------- -------------
Trade and other receivables 1,353 1,603 22 34
----------------------------- ------------- ------------- ------------- -------------
Amounts receivable
after more than 1
year
Amounts due from subsidiary
undertakings - - 5,515 3,535
----------------------------- ------------- ------------- ------------- -------------
Amounts due from subsidiary
undertakings - - 5,515 3,535
----------------------------- ------------- ------------- ------------- -------------
The average credit period offered on sales of goods varies amongst customers with payment terms ranging from 30 to 95 days.
As at 30 September 2015, the Group had recognised an allowance for doubtful debts which are estimated to be irrecoverable amounts based on previous experience with one customer.
As at the year end, the provision for impairment of trade receivables is as follows:
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------- ------------- ------------- -------------
Provision for impairment
at start of period 6 16 - -
Increase in provision - - - -
Release of provision (6) (10) - -
-------------------------- ------------- ------------- ------------- -------------
Provision for impairment - 6 - -
at end of period
-------------------------- ------------- ------------- ------------- -------------
Trade receivables include amounts which are past due at the year end but against which the Group has not recognised an allowance for doubtful receivables based on previous experience of payment timings with these customers. There has not been a significant change in credit quality and the amounts (which include interest accrued on overdue receivable balances) are still considered recoverable. As at 30 September 2016, the average age of the receivables is 120 days (2015: 98 days).
As at the year end, the ageing of trade receivables which are past due but not impaired is as follows:
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------------- ------------- ------------- -------------
Less than 30 days 25 4 - -
31-60 days - 1 - -
61-90 days - 33 - -
More than 90 days - 3 - -
---------------------------- ------------- ------------- ------------- -------------
Total trade receivables
past due but not impaired 25 41 - -
---------------------------- ------------- ------------- ------------- -------------
The fair value of trade and other receivables approximate their current book values. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 23 of the consolidated financial statements.
Amounts due from subsidiary undertakings are interest bearing (2015: interest bearing), unsecured and have no fixed date of repayment but are not anticipated to be receivable until after more than one year.
17. DEFERRED TAX ASSET (UNRECOGNISED)
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------- ------------- ------------- -------------
Tax effect of temporary
differences:
Depreciation in excess
of tax allowances (101) (137) (2) (3)
Accumulated losses (11,542) (12,261) (1,442) (1,450)
Deductible temporary
differences (56) (4) (3) (7)
------------------------- ------------- ------------- ------------- -------------
Deferred tax asset
(unrecognised) (11,699) (12,402) (1,447) (1,460)
------------------------- ------------- ------------- ------------- -------------
The unrecognised deferred tax asset is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which temporary differences reverse, based on tax rates and laws enacted or substantively enacted at the latest balance date, currently 18% (2015: 20%).
The unrecognised deferred tax is based on material temporary differences that have originated but not reversed at the balance sheet date from transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future.
18. TRADE AND OTHER PAYABLES
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------- ------------- ------------- -------------
Amounts falling due
within 1 year
Trade payables 216 370 12 97
Other taxation and
social security 130 113 - -
Accrued expenses 922 973 61 261
Other payables 43 14 - -
--------------------------- ------------- ------------- ------------- -------------
Trade and other payables 1,311 1,470 73 358
--------------------------- ------------- ------------- ------------- -------------
Amounts falling due
after more than 1
year
Amounts due to subsidiary
undertakings - - 1,748 1,339
--------------------------- ------------- ------------- ------------- -------------
Amounts due to subsidiary
undertakings - - 1,748 1,339
--------------------------- ------------- ------------- ------------- -------------
Trade payables and accrued expenses principally comprise amounts outstanding for trade purchases and ongoing costs. As at 30 September 2016, the average credit period taken for trade purchases is 47 days (2015: 100 days). For all suppliers no interest is charged on the trade payables. The Company's policy is to ensure that payables are paid within the pre-agreed credit terms and to avoid incurring penalties and/or interest on late payments.
The fair value of trade and other payables approximates their current book values.
Amounts due to subsidiary undertakings are interest bearing (2015: interest bearing), unsecured and have no fixed date of repayment but are not anticipated to be payable until after more than one year.
19. DEFERRED TAX LIABILITY
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------- ------------- ------------- -------------
Balance at start of
period 60 104 - -
Deferred tax liability 231 - - -
resulting from the
business combination
Amortisation (58) (20) - -
Impairment (121) (24) - -
------------------------ ------------- ------------- ------------- -------------
Balance at end of
period 112 60 - -
------------------------ ------------- ------------- ------------- -------------
The deferred tax liability was recognised due to the temporary difference arising from the recognition of the intangible assets acquired through the reverse acquisition on 14 October 2013 and business combination on 8 December 2015. The deferred tax liability was initially measured at 20%. The deferred tax liability is being amortised using the straight-line method over five years, reflecting the estimated useful economic life of the intangible asset. Amortisation is disclosed under administrative expenses in the consolidated statement of comprehensive income.
Registered intellectual property
As at 30 September 2015, the Group identified that the value of the registered intellectual property intangible asset was impaired and recognised an impairment loss of GBP120,000 in the year ended 30 September 2015. This resulted in a GBP24,000 reduction in the associated deferred tax liability.
Neurodegenerative disease technology and marketing know-how
During the reporting period, the Group identified no evidence that indicates the neurodegenerative disease technology and marketing know-how intangible asset may be impaired.
Behavioural health technology and marketing know-how
As at 30 September 2016, the Group recognised an impairment loss of GBP603,000 in the year ended 30 September 2016. This results in a GBP121,000 reduction in the associated deferred tax liability.
Further information of the Group's intangible asset can be found in note 14 of the consolidated financial statements.
20. ISSUED CAPITAL AND RESERVES
Ordinary shares and share premium
Group and Company
Ordinary
shares Share Share
of
1 pence capital premium
Number GBP'000 GBP'000
------------------------------ ----------- -------- --------
At 30 September 2014 and
30 September 2015 15,058,982 7,529 76,804
Issued on 2 October 2015
for the exercise of share
options 142,581 71 -
Issued on 12 October 2015
for the exercise of share
options 14,101 7 -
Issued on 8 December 2015
for placement 8,872,459 89 2,617
Issued on 8 December 2015
for the cost of acquisition 2,355,295 24 -
Issued on 30 September 2016 29,773 - -
for the exercise of share
options
------------------------------ ----------- -------- --------
At 30 September 2016 26,473,191 7,720 79,421
------------------------------ ----------- -------- --------
Exercise of share options
On 2 October 2015, 142,581 ordinary shares were issued following the exercise of share options relating to the replaced share option scheme. The difference between the cash amount received by IXICO Technologies Limited in respect of the shares issued by the company and the market value of the subsequent issue of replacement shares in IXICO plc has been booked in ordinary share and reverse acquisition reserve accounts.
Exercise of share options
On 12 October 2015, 14,101 ordinary shares were issued following the exercise of share options relating to the replaced share option scheme. The difference between the cash amount received by IXICO Technologies Limited in respect of the shares issued by the company and the market value of the subsequent issue of replacement shares in IXICO plc has been booked in ordinary share and reverse acquisition reserve accounts.
Share capital restructuring
On 8 December 2015, the Company effected a restructuring of the share capital of the Company whereby each existing ordinary share was sub-divided and re-designated each into 1 ordinary share of 1 pence and 1 deferred share of 49 pence.
The ordinary shares retain all the rights currently attaching to the existing ordinary shares in respect of dividends, voting and any return on capital. Other than the change in nominal value therefore, the ordinary shares are identical to the existing ordinary shares.
The deferred shares carry minimal rights thereby rendering them effectively valueless. The rights attaching to the deferred shares can be summarised as follows:
-- the holders thereof do not have any right to participate in the profits or income or reserves of the Company;
-- on a return of capital on a winding up the holders thereof will only be entitled to an amount equal to the nominal value of the deferred shares but only after the holders of ordinary shares have received GBP10,000,000 in respect of each ordinary share;
-- the holders thereof have no right to receive notice of or attend or vote at any general meeting of the Company; and
-- the Company may acquire the deferred shares for a nominal consideration at any time.
No application will be made to the London Stock Exchange for the deferred shares to be admitted to trading on the AIM market or any other stock exchange.
On completion of the share capital restructuring the nominal value of each ordinary share is 1 pence.
Placing
On 8 December 2015, the Company raised approximately GBP2,706,000 before expenses, comprising a placing of 8,852,459 ordinary shares and 20,000 ordinary shares pursuant to the exercise of a broker option, at a price of 30.5 pence.
Business combination: Optimal Medicine Limited
On 8 December 2015, the Company acquired the entire issued share capital of Optimal Medicine Limited. The aggregate consideration for the acquisition was GBP1,498,000 in consideration shares at a consideration share price of 49 pence comprising:
-- the initial issue of 2,355,295 new ordinary shares upon completion of the acquisition:
-- the issue of 590,093 deferred consideration shares on 31 December 2016, subject to the satisfaction of any claims made against warranties given by the sellers; and
-- call options over 111,401 shares which in substance reflect replacement awards issued by IXICO plc to satisfy outstanding share options under the Optimal Medicine Limited unapproved share option scheme
In accordance with IAS 27, the Company has valued the investment in Optimal Medicine Limited at cost and the share price of 29.5 pence on 8 December 2015 has been applied to determine the fair value.
Exercise of share options
On 30 September 2016, 29,773 ordinary shares were issued following the exercise of share options relating to the replaced share option scheme. The difference between the cash amount received by IXICO Technologies Limited in respect of the shares issued by the company and the market value of the subsequent issue of replacement shares in IXICO plc has been booked in ordinary share and reverse acquisition reserve accounts.
The Group and Company does not have an authorised share capital as provided by the Companies Act 2006.
Merger relief reserve
In accordance with Section 612 of the Companies Act 2006 'Merger Relief', the company issuing shares as consideration for a business combination, accounted at fair value, is obliged, once the necessary conditions are satisfied, to record the share premium to the merger relief reserve.
Reverse acquisition reserve
Reverse accounting under IFRS 3 'Business Combinations' requires the difference between the equity of the legal parent and the issued equity instruments of the legal subsidiary pre-combination is recognised as a separate component of equity.
IXICO Share Incentive Plan 2007
Netted against the accumulated loss is the share based payment reserve including the purchases of shares in IXICO plc, which relate to the IXICO Share Incentive Plan 2007, under which the Company issued 1 'Matching Share' for every one 'Partnership Share' purchased by the employee. All shares are held by the scheme Trustees until the shares vest unconditionally with the employee. As at 30 September 2016 and 30 September 2015, 1,740 ordinary shares of 1 pence were held by the scheme Trustees. The IXICO Share Incentive Plan 2007 was closed on 15 November 2013.
21. SHARE-BASED PAYMENTS
Certain Directors and employees of the Group hold options to subscribe for shares in the Group under share option schemes. The number of shares subject to options, the periods in which they were granted and the period in which they may be exercised are given below.
The Group operates 3 share option schemes (2015: 2). Options granted under the schemes are for GBPnil consideration and are exercisable at a price determined at the date of the grant.
IXICO plc replacement share option scheme: IXICO Technologies Limited
In the prior period, IXICO plc established a replacement share option scheme to satisfy the exercise of outstanding share options under the IXICO Technologies Limited unapproved share option scheme granting 465,350 restated ordinary shares (29,700 shares). These share options were required to be exercised by 14 October 2015 or they lapsed. The exercise of these options was at the option of the holder with a proscribed conversion rate for the effective issue of new IXICO plc shares.
As part of the reverse acquisition the following took place:
-- by a deed of variation dated 20 September 2013, the period in which the unapproved option holders can exercise their options following the acquisition was extended from 6 months to 2 years from 14 October 2015, and
-- at the same time IXICO plc issued a letter to each such option holder committing to exchange all the shares in IXICO Technologies Limited arising from the exercise of such options for ordinary shares in IXICO plc at the acquisition price.
In the consolidated financial statements, IXICO Technologies Limited share options have been restated based on the exchange ratio of 15:67 established on acquisition to reflect the number of shares of the legal parent issued in the reverse acquisition.
As at 2 October 2015, 142,581 restated ordinary shares (9,100 shares) were issued following the exercise of share options relating to the replaced share option scheme.
As at 12 October 2015, 14,101 restated ordinary shares (900 shares) were issued following the exercise of share options relating to the replaced share option scheme.
As at 30 September 2016, 29,773 restated ordinary shares (1,900 shares) were issued following the exercise of share options relating to the replaced share option scheme.
As at 30 September 2016, the remaining 172,350 restated ordinary shares (11,000 shares) in respect of the IXICO plc replacement share option scheme were not exercised and subsequently lapsed.
As at 30 September 2015, 106,545 restated ordinary shares (6,800 shares) were issued following the exercise of share options relating to the replaced share option scheme.
IXICO EMI Share Option Plan 2014
On 1 October 2014, the Group granted 662,588 share options to employees of the Group under the IXICO EMI Share Option Plan 2014. On 28 October 2014, the Group granted 481,882 share options to the Directors of the Group under the IXICO EMI Share Option Plan 2014. In total, 1,144,470 share options where granted under the IXICO EMI Share Option Plan 2014. The granted share options will vest and are exercisable in 3 equal tranches at the end of years 1, 2 and 3. Vesting is conditional on achievement of individual employee and Group performance criteria determined by the Board.
On 29 March 2016, the Group granted 1,778,274 share options to employees of the Group under the IXICO EMI Share Option Plan 2014. The granted share options contain standard and enhanced vesting conditions which are subject to the achievement of individual employee and Group performance criteria as determined by the Board. Of the share options granted:
-- 838,274 share options will vest and are exercisable in 2 equal tranches at the end of years 1 and 2,
-- 470,000 share options granted have enhanced vesting conditions which have been assumed to vest at the end of year 1, and
-- 470,000 share options granted have enhanced vesting conditions which have been assumed to vest at the end of year 3.
If the options remain unexercised after a period of 10 years from the date of grant, the options expire. The options lapse if an employee leaves the company before the options vest.
During the year ended 30 September 2016, 710,277 share options granted under the IXICO EMI Share Option Plan 2014 did not meet the vesting condition, therefore were not exercisable and subsequently lapsed.
IXICO plc replacement share option scheme: Optimal Medicine Limited
IXICO plc established a replacement share option scheme to satisfy the exercise of outstanding share options under the Optimal Medicine Limited unapproved share option scheme granting 111,401 restated ordinary shares (2,948 shares). These share options must be exercised by either 7 December 2016 or 7 June 2017 or they will lapse. The exercise of these options is at the option of the holder with a proscribed conversion rate for the effective issue of new IXICO plc shares. IXICO plc issued a letter to each option holder committing to exchange all the shares in Optimal Medicine Limited arising from the exercise of such options for ordinary shares in IXICO plc at the acquisition price.
In the consolidated financial statements, Optimal Medicine Limited share options have been restated based on the exchange ratio of 37:79 established on acquisition to reflect the number of shares of the legal parent issued in the business combination.
As at the year end, the reconciliation of share option scheme movements is as follows:
As at 30 September As at 30 September
2016 2015
Weighted Weighted
average average
exercise exercise
Number price Number price
----------------------- ---------- --------- ---------- ---------
Outstanding at start
of period 1,473,159 GBP0.94 358,806 GBP2.32
Granted 1,889,675 GBP0.29 1,144,470 GBP0.49
Exercised (186,454) GBP0.01 - -
Lapsed (882,627) GBP1.33 (30,117) GBP0.49
----------------------- ---------- --------- ---------- ---------
Outstanding at end of
period 2,293,753 GBP0.33 1,473,159 GBP0.94
Exercisable at end of
period 111,401 GBP0.00 358,806 GBP2.32
----------------------- ---------- --------- ---------- ---------
During the year ended September 2016, the options were exercised at a weighted average share price of GBP0.30. No share options were exercised during the year ended 30 September 2015.
As at the year end, the share options outstanding have the following expiry dates and exercise price:
Number Number
of of
Weighted shares shares
average outstanding outstanding
exercise as at as at
30 30
Share option scheme Expiry date price September September
2016 2015
----------------------- -------------- ---------- ------------ ------------
IXICO plc replacement
share option scheme:
IXICO Technologies 14 October
Limited 2015 - - 358,806
IXICO EMI Share
Option Plan 2014 7 May 2024 GBP0.33 2,182,352 1,114,353
IXICO plc replacement 7 December GBP0.00 111,401 -
share option scheme: 2016 and
Optimal Medicine 7 June 2017
Limited
----------------------- -------------- ---------- ------------ ------------
Outstanding at end
of period GBP0.33 2,293,753 1,473,159
--------------------------------------- --------- ------------ ------------
During the year ended 30 September 2016, 1,778,274 options were granted under the IXICO EMI Share Option Plan 2014 (2015: 1,144,470). The estimated fair value of the options granted is GBP244,000 (2015: GBP247,000). The inputs used in the measurement of fair value at grant date of the share options issued are as follows:
IXICO plc IXICO plc
As at 30 September As at 30 September
2016 2015
--------------------------- --------------------- ---------------------
Weighted average share GBP0.39 GBP0.49
price
Weighted average exercise GBP0.31 GBP0.49
price
Expected volatility 42.8% 89.1%
Expected life 10 years 10 years
Expected dividends 0% 0%
Risk free interest
rate 1.5% 2.8%
Model used Monte Carlo followed Monte Carlo followed
by 'Hull White' by 'Hull White'
trinomial lattice trinomial lattice
--------------------------- --------------------- ---------------------
Note to assumptions:
Expected volatility
-- Expected volatility is based on historical performance of the share price using exponentially weighted moving average model function.
Expected life
-- The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
Expected dividends
-- The historical dividend yield is 0.0%.
Risk free interest rate
-- Risk free rate has been taken from the United Kingdom gilts over the expected life of the share options.
Total share options outstanding have a range of exercise prices from GBP0.00 to GBP0.49 per option and the weighted average contractual life is 7.3 years (2015: 5.8 years).
The total charge for each period relating to employee share-based payments plans for continuing operations is disclosed in note 9 of the consolidated financial statements.
22. OPERATING LEASE ARRANGEMENTS
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
---------------------------------------- ------------- -------------
Minimum lease payments under operating
leases recognised as an expense
in the period 131 127
---------------------------------------- ------------- -------------
As at the year end, the Group has outstanding commitments under non-cancellable operating leases, which fall due as follows:
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------------- ------------- ------------- -------------
Within 1 year 130 130 130 130
In the 2(nd) to 5(th)
years inclusive 192 321 192 321
After 5 years - - - -
----------------------- ------------- ------------- ------------- -------------
Operating lease payments represent rentals payable by the Group for its registered office. As at 30 September 2016, the lease has 2.5 years to run.
23. FINANCIAL RISK MANAGEMENT
The main risks arising from the Group's financial instruments are cash flow and liquidity, interest rate, foreign currency and credit risk. The Group's financial instruments comprise cash and various items such as trade receivables and trade payables, which arise directly from its operations.
Cash flow and liquidity risk
Management monitors the level of cash on a regular basis to ensure that the company has sufficient funds to meet its commitments as they fall due. The table below analyses the company's financial assets and liabilities:
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
----------------------------- ------------- ------------- ------------- -------------
Loans Loans Loans Loans
and and and and
receivables receivables receivables receivables
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ------------- ------------- ------------- -------------
Assets as per statement
of financial position
Trade and other receivables
excluding prepayments 1,165 1,404 5,515 3,535
Cash and cash equivalents 3,120 1,934 1,168 551
----------------------------- ------------- ------------- ------------- -------------
4,285 3,338 6,683 4,086
----------------------------- ------------- ------------- ------------- -------------
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
-------------------------- ------------- ------------- ------------- -------------
Financial Financial Financial Financial
liabilities liabilities liabilities liabilities
at at at at
amortised amortised amortised amortised
cost cost cost cost
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------- ------------- ------------- -------------
Liabilities as per
statement of financial
position
Trade and other payables
excluding statutory
liabilities 1,181 1,357 1,821 1,697
Deferred consideration 174 - 174 -
-------------------------- ------------- ------------- ------------- -------------
1,355 1,357 1,995 1,697
-------------------------- ------------- ------------- ------------- -------------
The Group's financial liabilities are all due within three months of the balance sheet date.
Interest rate risk
The Group operates an interest rate policy designed to optimise interest costs and reduce volatility in reported earnings.
The Group does not have any committed interest bearing borrowing facilities. Consequently, there is no material exposure to interest rate risk in respect of financial liabilities.
The Group holds all cash and cash equivalents with institutions with a recognised high rating. Interest rates on current accounts are floating. Changes in interest rates may increase or decrease the Group's finance income.
Foreign currency risk
The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's overseas operating activities, primarily denominated in US Dollars, Euro and Swiss Franc. The Group's exposure to foreign currency changes for all other currencies is not material.
The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities as at 30 September are as follows:
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
US Dollar exposure USD'000 USD'000 USD'000 USD'000
---------------------- ------------- ------------- ------------- -------------
Balance at end of
period
Monetary assets 1,124 1,250 - -
Monetary liabilities (53) (11) - -
---------------------- ------------- ------------- ------------- -------------
Total exposure 1,071 1,239 - -
---------------------- ------------- ------------- ------------- -------------
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
Euro exposure EUR'000 EUR'000 EUR'000 EUR'000
---------------------- ------------- ------------- ------------- -------------
Balance at end of
period
Monetary assets 353 57 - -
Monetary liabilities (7) (17) - -
---------------------- ------------- ------------- ------------- -------------
Total exposure 346 40 - -
---------------------- ------------- ------------- ------------- -------------
Group Company
As at As at As at As at
30 September 30 September 30 September 30 September
2016 2015 2016 2015
Swiss Franc exposure CHF'000 CHF'000 CHF'000 CHF'000
---------------------- ------------- ------------- ------------- -------------
Balance at end of
period
Monetary assets 79 58 - -
Monetary liabilities (47) - - -
---------------------- ------------- ------------- ------------- -------------
Total exposure 32 58 - -
---------------------- ------------- ------------- ------------- -------------
At present the Group does not make use of financial instruments to minimise any foreign exchange gains or losses so any fluctuations in foreign exchange movements may have a material adverse impact on the results from operating activities.
Foreign currency sensitivity analysis
As at 30 September 2016, the sensitivity analysis assumes a +/-10% change of the USD/GBP, EUR/GBP and CHF/GBP exchange rates which represents management's assessment of a reasonably possible change in foreign exchange rates ( 2015: 10%).
If Sterling had been 10% (2015: 10%) weaker in relation to the US Dollar, Euro and Swiss Franc then the impact would have been as follows:
Group
GBP'000 GBP'000 GBP'000 GBP'000
USD EUR CHF Total
------------------------------ -------- -------- -------- --------
Year ended 30 September 2016 (75) (27) (2) (104)
Year ended 30 September 2015 (75) (3) (4) (82)
------------------------------ -------- -------- -------- --------
If Sterling had been 10% (30 September 2015: 10%) stronger in relation to the US Dollar, Euro and Swiss Franc then the impact would have been as follows:
Group
GBP'000 GBP'000 GBP'000 GBP'000
USD EUR CHF Total
------------------------------ -------- -------- -------- --------
Year ended 30 September 2016 92 33 3 128
Year ended 30 September 2015 91 3 4 98
------------------------------ -------- -------- -------- --------
Fair value of financial assets and liabilities
There is no material difference between the fair value and the carrying values of the financial instruments because of the short maturity period of these financial instruments or their intrinsic size and 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. The Group's financial assets are cash and cash equivalents and trade and other receivables. The carrying value of these assets represent the Group's maximum exposure to credit risk in relation to financial assets.
The Group's policy is to minimise the risks associated with cash and cash equivalents by placing these deposits with institutions with a recognised high rating.
The Group's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables, estimated by the Group's management based on prior experience and their assessment of the current economic environment. An allowance for impairment is made where there is an identified loss event, which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The Group continually reviews customer credit limits based on market conditions and historical experience. Note 16 in the consolidated financial statements sets out the impairment provision for credit losses on trade receivables and the ageing analysis of overdue trade receivables.
Capital risk management
The Group considers capital to be shareholders' equity as shown in the consolidated statement of financial position, as the Group is primarily funded by equity finance. The Group is not yet in a position to pay a dividend.
The objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and for other stakeholders. In order to maintain or adjust the capital structure the Group may return capital to shareholders and issue new shares.
24. RELATED PARTY TRANSACTIONS
Group
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Key management compensation is disclosed in note 9 of the consolidated financial statements. Director emoluments are disclosed in the Directors' Report.
During the year ended 30 September 2016, the Group sold project management services totalling GBP39,000 (2015: GBP62,000) to University College London Business plc, a shareholder. The amount owed by University College London Business plc at 30 September 2016 was GBP5,700 (2015: GBP11,000).
During the year ended 30 September 2016, the Group purchased services totalling GBP34,000 (2015: GBP161,000) from University College London Business Plc, a shareholder. The amount owed to University College London Business Plc at 30 September 2016 was GBP2,000 (2015: GBP50,000).
During the year ended 30 September 2016, the Group purchased services totalling GBPnil (2015: GBP5,000) from King's College London, a shareholder. The amount owed to King's College London at 30 September 2016 was GBPnil (2015: GBPnil).
During the year ended 30 September 2016, the Group was charged GBP10,000 (2015: GBPnil) from Imperial Innovations Businesses LLP, a shareholder in respect of a joint intellectual property licence agreement. The amount owed to Imperial Innovations Businesses LLP at 30 September 2016 was GBPnil (2015: GBPnil).
During the year ended 30 September 2016, the Group was charged monitoring fees totalling GBP1,000 from IP Group plc, a shareholder. The amount owed to IP Group plc at 30 September 2016 was GBPnil. IP Group plc became a shareholder of the Group on 8 December 2015.
Company
The Company is responsible for financing and setting Group strategy. The Company's subsidiaries carried out the Group's research and development strategy, employed all the staff including the Executive Directors and managed the Group's intellectual property. The Company provides interest bearing and unsecured funding to its subsidiaries with no fixed date of repayment. The Company manages the Group's funds and makes payments, including managing the payments of the Parent Company.
During the year ended 30 September 2016, the Company has been charged GBP260,000 (2015: GBP299,000) for corporate services provided by subsidiary undertakings. Details of the inter-company balances can be found on the face of the company statement of financial position.
25. POST BALANCE SHEET EVENTS
On 28 October 2016, 220,863 share options granted under the IXICO EMI Share Option Plan 2014 did not meet the vesting condition and therefore lapsed.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GGBDDCBDBGLG
(END) Dow Jones Newswires
December 20, 2016 02:00 ET (07:00 GMT)
1 Year Ixico Chart |
1 Month Ixico Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
