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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Abaco Capital | LSE:ABA | London | Ordinary Share | GB00B3LXPB43 | ORD 0.001P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.50 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jan 2020 to Jan 2025
TIDMABA
RNS Number : 0380K
Abaco Capital PLC
06 April 2018
6 April 2018
Abaco Capital plc
("Abaco" or the "Company")
Final Results for the year ended 31 December 2017
and
Notice of Annual General Meeting
Abaco Capital plc (AIM: ABA), today announces its results for the year ended 31 December 2017. The Company also notifies today its intention to seek Shareholders' approval for the cancellation of admission of its Shares to trading on AIM (the "Delisting") and to place the Company into a Members Voluntary Liquidation (the "Liquidation"). Further details of the proposed Liquidation and Delisting are included in a separate announcement.
The Company also gives notice of its annual general meeting (the "AGM") to be held on 8 May 2018 at 11.30 a.m. at the offices of DWF LLP at 20 Fenchurch Street, London EC3M 3AG. The Report and Accounts and a shareholder circular detailing the Delisting and liquidation and incorporating the Notice of AGM will be posted to shareholders today and both documents will be available to download at the Company's website at www.abacoplc.com.
HIGHLIGHTS
-- Loss before tax of GBP2.06m (2017: GBP1.38m) -- Cash balances at 31 December 2017 of GBP19.23m (2017: GBP21.88m) -- Net assets at 31 December 2017 of GBP19.01m (2017: GBP22.56m)
-- Post year end, and as announced today, the Board are proposing the voluntary liquidation of the Company's assets to realise shareholder value
David Norwood, Chairman of Abaco Capital plc, commented:
"Since the demerger of Oxford Pharmascience Limited (OPL) on 22 December 2017, the Company has been classified as an AIM Rule 15 cash shell, requiring an acquisition which constitutes a reverse takeover (within the meaning of AIM Rule 14).
In the first quarter of 2018, the Board evaluated several potential reverse takeover candidates but, after consultation with major shareholders, have been unable to obtain a consensus as to a preferred target meaning that completion of an investment qualifying as an AIM Rule 14 reverse takeover is not practical. The Board have therefore resolved that the most efficient way to realise shareholder value will be to liquidate the assets of the Company via a Members Voluntary Liquidation. A circular will today be sent to shareholders explaining the reasoning behind this decision and to seek their approval for the resolutions necessary to carry out the Liquidation.
Shareholders in the Company at the date of demerger continue to hold shares in OPL allowing shareholders to participate in any potential upside in the future performance of OPL.".
Contacts:
Abaco Capital plc Chris Hill, Chief Financial Officer +44 20 7554 5875 N+1 Singer Aubrey Powell +44 20 7496 3000 Jen Boorer
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR").
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S JOINT REVIEW
During the year to 31 December 2017, Abaco Capital Plc (the "Company"), demerged its 100 per cent owned subsidiary, Oxford Pharmascience Group Limited ("OPL") which held substantially all of the Group's commercial assets, drug development assets and intellectual property to shareholders of the Company in the same proportionate interest as their holdings in the Company, via a distribution in specie, thus allowing shareholders to participate in any potential upside in the future performance of OPL. As part of this process, the Company changed its name from Oxford Pharmascience Group Plc to Abaco Capital Plc (effective 21 December 2017) to reflect the fact that it no longer has clinical operations or assets and is now classified as an AIM Rule 15 cash shell. The AIM Rule 15 status means that the Company is required to make an acquisition or acquisitions which constitute a reverse takeover under Rule 14 of the AIM Rules on or before the date falling six months from completion of the demerger. It was further announced that, should the Directors be unable to identify a compelling target and complete a reverse takeover within the required timeframe, or require less than the currently available cash to fund the resulting group, they retain the option to return capital to shareholders.
Reasons for the demerger
OPL's main drug development asset is the OXPzero(TM) non-steroidal anti-inflammatory drugs (NSAIDs) platform whose primary aim is to reduce the gastrointestinal (GI) side effects of commonly used NSAIDs. The main NSAIDs on which OPL focus are Ibuprofen, Naproxen, Diclofenac and Aspirin. Since an OXPzero(TM) Aspirin product proved to be unviable due to stability issues and the proposed pathway to approval for gastric safe OXPzero(TM) Ibuprofen products in the USA, the Company's biggest potential market, became more complex than previously anticipated due to the regulatory complexities imposed by the US Food and Drug Administration, OPL decided to focus primarily on its NSAID programmes for over-the-counter markets. As such, it was deemed that it no longer required such a large capital base as provided by the Company in order to execute its streamlined business plan and operating OPL from within a public company would not offer the best means of achieving that success.
OPL update
The Company continues to believe that the OXPzero(TM) technology platform can be successful as early stage discussions with potential partners are on-going (although with uncertain outcomes) and the demerger allows shareholders to retain the potential upside from continuing interests in OPL shares. As described in the circular to shareholders, dated 10 November 2017, the Board of OPL intend to make an off-market facility for dealing in OPL shares available in order that shareholders be provided with a means to trade their shares if desired. As such, an off-market dealing facility will be set up which will be available for a limited time from the date of launch. The dealing facility will be made available periodically in the future. At the relevant time, further details of the dealing facility will be available on the OPL website - www.oxfordpharmascience.com/investors and will also be included in the OPL Annual Report and Accounts which will be posted to shareholders of OPL in the coming months.
The financial results for OPL for the date from 1 January 2017 to 22 December 2017 (the date it demerged from the Group) are presented as discontinued operations within the Consolidated Statement of Comprehensive Income. The loss recognised was GBP1.5m. This compares to a loss of GBP1.0m for the year ended 31 January 2016.
Further details regarding OPL can be found on its website www.oxfordpharmascience.com.
Abaco update
Since the date of the Demerger, the Board has evaluated several potential reverse takeover opportunities. The Board has also consulted with certain major shareholders representing, in aggregate, over 70% of the total voting rights of the Company, to better understand their objectives for a potential transaction. The result of this process is that consensus as to a preferred target cannot be reached, meaning that completion of an investment qualifying as an AIM Rule 14 reverse takeover is not deemed to be practical.
As a result of the above, the Board now believes that a return of capital to shareholders is the best way to maximise shareholder value. The Board has assessed the most efficient mechanism through which to return capital and it has been decided that a distribution of all of the Company's liquid assets can best be achieved through a Members Voluntary Liquidation. As such, the Company has today distributed a circular to shareholders in which the resolutions necessary to effect a Members Voluntary Liquidation are included (the "Circular"). Subject to approval by shareholders at the Annual General Meeting of the Company to be held at 11.30am on 8 May 2018 the Company will be delisted from AIM and liquidated with surplus assets distributed to shareholders. Further details of the proposed delisting and liquidation can be found in the Circular, a copy of which is available on the Company's website at www.abacoplc.com. As a result of this decision, the accounts to 31 December 2017 have been prepared on the break-up-basis. Due to ongoing cost control measures, the Company had cash balances of approximately GBP19.2 million as at 31 December 2017 with estimated funds for distribution of GBP19.0m after the estimated expenses of effecting the liquidation have been deducted.
Financial results
Fundamental to the Group's business model has always been tight cost control. As a result, cash balances stood at GBP19.2m as at 31 December 2017.
The consolidated loss for the year (including the loss for OPL up to the date of de-merger) was GBP2.1m. This includes a provision of GBP0.2m, representing the anticipated costs from 1 January 2018 up to the anticipated date of liquidating the Company's assets and closing the business.
David Norwood Chairman
STRATEGIC REPORT
Strategy and business objectives
At the start of 2017, the Group's objective was to continue engagement with potential partners to seek collaboration for the OXPzero(TM) platform assets as well as continuing development work across its other programmes. Following regulatory feedback from the US FDA in March 2017, which indicated that in order to support an improved gastro-intestinal ('GI') safety claim, a clinical outcomes study would be required, including measures such as assessment of the incidence of peptic ulcer bleeding and related complications, the decision was made to focus on OTC applications. This new business plan required less capital and therefore the decision to demerge OPL from the Group was taken.
Since the demerger (when the Company was re-classified as an AIM Rule 15 cash shell), the objective has been to identify an acquisition or acquisitions which constitute a reverse takeover under Rule 14 of the AIM Rules.
Development and performance
Since the completion of the Demerger, the Board has evaluated several potential reverse takeover opportunities. The Board has also consulted with certain major shareholders representing, in aggregate, over 70% of the total voting rights of the Company, to better understand their objectives for a potential transaction. The result of this process is that consensus as to a preferred target is unlikely to be reached, meaning that an investment qualifying as an AIM Rule 14 reverse takeover is not deemed to be practical.
Position at year end
The Group finished the year with cash and short-term investment balances of GBP19.2 million (2016: GBP21.9 million). Net assets at 31 December 2017 were GBP19.0 million compared to GBP22.6 million at 31 December 2016.
Events since the end of the financial year
Since the year end date, a decision has been taken by the Board to return all of the available capital to shareholders. The most efficient way to do this is by a Members Voluntary Liquidation (MVL) for which a shareholder circular has been distributed as of today's date. Further details regarding the proposed MVL are contained in the circular.
Key performance indicators
At this stage in its development, quantitative key performance indicators are not an effective way of measuring the Group's performance.
Principal risks and uncertainties
The Group considers that the principal risks to achieving its business objectives are as follows:
Identification of Reverse Takeover candidates
The Group has identified and researched several reverse takeover candidate companies since the date of the demerger. The risk exists that any candidate which is identified as suitable, may not perform as well as expectation. The Board mitigates this risk by employing directors with experience of investment appraisal and also by undertaking external due diligence on identified targets.
Christopher Hill
Chief Financial Officer
Consolidated Statement of Comprehensive Income
Hot Features
Premium
Year to 31 December 2017 Year to 31 December 2016
Notes GBP'000 GBP'000
------------------------------------------------------ ------ ------------------------- -------------------------
Revenues - -
Cost of sales - -
------------------------------------------------------ ------ -------------------------
Gross profit - -
------------------------------------------------------ ------ ------------------------- -------------------------
Administrative expenses (616) (480)
Operating loss 5 (616) (480)
Finance income 7 95 132
------------------------------------------------------ ------ ------------------------- -------------------------
Loss before tax (521) (348)
Taxation 8 - -
------------------------------------------------------ ------ ------------------------- -------------------------
Loss for the year from continuing operations (521) (348)
------------------------------------------------------ ------ ------------------------- -------------------------
Loss from discontinued operations 9 (1,534) (1,036)
------------------------------------------------------ ------ ------------------------- -------------------------
Loss for the year (2,055) (1,384)
------------------------------------------------------ ------ ------------------------- -------------------------
Loss after tax attributable to equity holders of the
parent (2,055) (1,384)
------------------------------------------------------ ------ ------------------------- -------------------------
Loss per share 10
Basic on loss for the period from continuing
operations (pence) (0.04) (0.03)
Basic on loss for the period from discontinued
operations (pence) (0.13) (0.09)
------------------------------------------------------ ------ ------------------------- -------------------------
Diluted on loss for the period from continuing
operations (pence) (0.04) (0.03)
Diluted on loss for the period from discontinued
operations (pence) (0.13) (0.09)
------------------------------------------------------ ------ ------------------------- -------------------------
The loss for the year arises from the Group's continuing and discontinued operations.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Based
Share Share Merger Payments Revenue Total
Capital Premium Reserve Reserve Reserve Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ---------- ------------------ ------------------ ----------------- ------------------
At 31 December
2015 1,206 31,809 714 378 (10,322) 23,785
---------------- ------------ ---------- ------------------ ------------------ ----------------- ------------------
Comprehensive
income - - - - (1,384) (1,384)
---------------- ------------ ---------- ------------------ ------------------ ----------------- ------------------
Transactions
with owners
Share based
payments - - - 163 - 163
---------------- ------------ ---------- ------------------ ------------------ ----------------- ------------------
Total
transactions
with owners - - - 163 - 163
At 31 December
2016 1,206 31,809 714 541 (11,706) 22,564
---------------- ------------ ---------- ------------------ ------------------ ----------------- ------------------
Comprehensive
income - - - - (2,055) (2,055)
---------------- ------------ ---------- ------------------ ------------------ ----------------- ------------------
Transactions
with owners
Share based
payments - - - (121) - (121)
Reserve
transfer - - - (420) 420 -
Release of
Merger Reserve - - (714) - 714 -
Share capital
reorganisation (1,194) (31,809) - - 33,003 -
Dividend
in-specie - - - - (1,375) (1,375)
---------------- ------------ ---------- ------------------ ------------------ ----------------- ------------------
Total
transactions
with owners (1,194) (31,809) (714) (541) 32,762 (1,496)
At 31 December
2017 12 - - - 19,001 19,013
---------------- ------------ ---------- ------------------ ------------------ ----------------- ------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 2017 31 December 2016
Notes GBP'000 GBP'000
-------------------------------------------- ------ ----------------------------- -------------------------
Assets
Non-current assets
Intangible assets 11 - 26
Property, plant and equipment 12 - 2
-------------------------------------------- ------
- 28
-------------------------------------------- ------ ----------------------------- -------------------------
Current assets
Inventories 13 - 14
Trade and other receivables 14 28 811
Short term investments and cash on deposit 15 - 5,000
Cash and cash equivalents 15 19,231 16,878
-------------------------------------------- ------ -----------------------------
19,259 22,703
-------------------------------------------- ------ ----------------------------- -------------------------
Total Assets 19,259 22,731
-------------------------------------------- ------ ----------------------------- -------------------------
Liabilities
Current liabilities
Trade and other payables 16 (70) (167)
Provisions 17 (176) -
-------------------------------------------- ------ ----------------------------- -------------------------
Total liabilities (246) (167)
-------------------------------------------- ------ ----------------------------- -------------------------
Net Assets 19,013 22,564
-------------------------------------------- ------ ----------------------------- -------------------------
Equity
Share capital 18 12 1,206
Share premium - 31,809
Merger reserve - 714
Share based payment reserve - 541
Revenue deficit reserve 19,001 (11,706)
-------------------------------------------- ------ ----------------------------- -------------------------
Total Equity 19,013 22,564
-------------------------------------------- ------ ----------------------------- -------------------------
Approved by the Board of Directors and authorised for issue on 5 April 2018
David Norwood Christopher Hill
Chairman Chief Financial Officer
Company number : 07036758
CONSOLIDATED STATEMENT OF CASH FLOWS
Year to 31 December 2017 Year to 31 December 2016
Notes GBP'000 GBP'000
----------------------------------------------------- ------ ---------------------------- -------------------------
Operating Activities
Loss before tax including discontinued operations (2,055) (1,384)
Adjustment for non- cash items:
Amortisation of intangible assets 11 8 8
Depreciation of property, plant and equipment 12 1 2
Finance income 7 (95) (132)
Share based (credit)/payment 19 (121) 163
Decrease/(increase) in inventories 2 (5)
Decrease/(increase) in trade and other receivables 77 (130)
Increase/(decrease) in trade and other payables 41 (140)
Increase in provisions 176 -
Taxes received 362 306
----------------------------------------------------- ------ ---------------------------- -------------------------
Net cash outflow from operations (1,604) (1,312)
----------------------------------------------------- ------ ---------------------------- -------------------------
Investing Activities
Finance income 95 132
Cash element of distribution in specie 25 (1,138) -
Sale of short term investment 22 5,000 5,000
Net cash inflow from investing activities 3,957 5,132
----------------------------------------------------- ------ ---------------------------- -------------------------
Increase in cash and cash equivalents 2,353 3,820
Cash and cash equivalents at start of period 16,878 13,058
----------------------------------------------------- ------
Cash and cash equivalents at end of period 19,231 16,878
----------------------------------------------------- ------ ---------------------------- -------------------------
Short term investments at end of period - 5,000
Cash, cash equivalents and deposits at end of period 15 19,231 21,878
----------------------------------------------------- ------ ---------------------------- -------------------------
1. Authorisation of financial statements and statement of compliance with IFRSs
The financial statements of Abaco Capital Plc and its subsidiaries (the "Group") for the year ended 31 December 2017 were authorised for issue by the Board of Directors on 5 April 2018 and the Consolidated Statement of Financial Position was signed on the board's behalf by David Norwood and Christopher Hill.
Abaco Capital Plc ("the Company") is an AIM quoted company incorporated and domiciled in the UK.
The Company demerged its 100 per cent owned operating subsidiary, Oxford Pharmascience Limited on 22 December 2017. The Company is now classified as an AIM Rule 15 cash shell. Prior to the demerger, it was a specialty pharmaceutical company re-developing medicines to make them better, safer and easier to take.
The principal accounting policies adopted by the Group and parent company are set out in note 2.
2. Accounting policies
Basis of preparation
A summary of the principal accounting policies, all of which have been applied consistently throughout the year and the preceding year, are set out below. The financial statements have been prepared under the historical cost convention. As explained in the Directors Report, the Directors do not consider the Company to be a going concern (as resolutions have been circulated to place the Company in to solvent liquidation), and have therefore prepared the financial statements on a break up basis. There has been no financial impairment of assets as a result of a break up basis of valuation. The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and the Companies Act 2006.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent Company's statement of comprehensive income. The Parent Company's result for the year ended 31 December 2017 was a loss of GBP0.22m (2016: loss of GBP1.9m).
The Group financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (GBP'000) except where otherwise indicated.
Basis of consolidation
The Group financial statements consolidate the financial statements of Abaco Capital Plc and the entities it controls (its subsidiaries) drawn up to 31 December each year.
Abaco Capital Plc was incorporated on 7 October 2009. The Company was specifically created to implement a re-organisation in relation to Oxford Pharmascience Limited which would permit admission of the Group to the AIM market. Under the re-organisation, Oxford Pharmascience Limited became a wholly owned subsidiary of Oxford Pharmascience Group Plc on 27 January 2010.
Shareholders in the Company at the time of re-organisation received shares in Oxford Pharmascience Group Plc in the same proportionate interest as they had in Oxford Pharmascience Limited. The business, operations, assets and liabilities of the Oxford Pharmascience Group under the new holding company immediately after the re-organisation were no different from those immediately before the re-organisation. This was not a business combination per IFRS 3 and the Directors have therefore treated this combination as a simple re-organisation using the pooling of interests method of accounting.
Discontinued operations
A discontinued operation is a component the business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier.
Pooling of interests method of consolidation
The purchase of Oxford Pharmascience Limited ("OPL") by Oxford Pharmascience Group Plc on 27 January 2010 has been treated as a re-organisation using the pooling of interests method of accounting. It has therefore been presented as if the entities had always been combined. Therefore, on consolidation the assets and liabilities were reflected at carrying value rather than fair value. No goodwill arose on the combination, and the difference between the nominal value of shares issued by Oxford Pharmascience Group Plc and the nominal value of the ordinary shares of OPL, together with the capital and reserves of OPL at the time of the pooling of interests, are shown as "merger reserve" in the consolidated financial statements.
Following the demerger of OPL on 22 December 2017, the merger reserve has been released to the Revenue Reserve.
Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than half of the voting rights. The existence and effects of potential voting rights are considered when assessing whether the Group controls the entity. Subsidiaries are fully consolidated from the date control passes.
All intra-group transactions, balances, and unrealised gains on transactions between group companies are eliminated on consolidation. Subsidiaries' accounting policies are amended where necessary to ensure consistency with the policies adopted by the Group. All financial statements are made up to 31 December 2017.
Foreign currency translation
Items included in the financial statements of each entity are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The financial statements are presented in sterling, being the Group's presentational currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the spot rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date. All differences are taken to the profit or loss.
Segment reporting
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. As at the reporting date the Group operated with only a single segment.
Revenue recognition
Revenue is recognised to the extent that it is probable that economic benefits will flow to the group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable for the sale of goods or services, excluding discounts, rebates, VAT and other sales taxes or duties.
The Group's income consists of sales of goods, licence fees, milestone and option payments.
Sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership.
Licence fees, option and milestone payments are recognised in full on the date that they are contractually receivable in those circumstances where:
-- The amounts are not time related -- The amounts are not refundable
-- The licensee has unrestricted rights to exploit the technology within the terms set by the licence
-- The group has no further contractual duty to perform any future services
Where such fees or receipts are dependent upon future performance or financial commitments on behalf of the group, the revenue is recognised pro rata to the services or commitments being performed. Funds received which have not been recognised as revenue are treated as deferred revenue and recognised in trade and other payables.
Interest income
Interest income is recognised as interest accrues using the effective interest rate method.
Research and development
Research costs are charged to profit and loss as they are incurred. Certain development costs are capitalised as intangible assets when it is probable that the future economic benefits will flow to the Group. Such intangible assets are amortised on a straight-line basis from the point at which the assets are ready for use over the period of the expected benefit, and are reviewed for impairment at each year end date. Other development costs are charged against profit or loss as incurred since the criteria for their recognition as an asset are not met.
The criteria for recognising expenditure as an asset are:
-- it is technically feasible to complete the product; -- management intends to complete the product and use or sell it; -- there is an ability to use or sell the product; -- it can be demonstrated how the product will generate probable future economic benefits;
-- adequate technical, financial and other resources are available to complete the development, use and sale of the product; and
-- expenditure attributable to the product can be reliably measured.
The costs of an internally generated intangible asset comprise all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management. Directly attributable costs include employee costs incurred on technical development, testing and certification, materials consumed and any relevant third party cost. The costs of internally generated developments are recognised as intangible assets and are subsequently measured in the same way as externally acquired intangible assets. However, until completion of the development project, the assets are subject to impairment testing only.
Financial assets and liabilities
Financial assets and liabilities are recognised when the Group becomes party to the contracts that give rise to them and are classified as financial assets at fair value through the profit and loss; loans and receivables; held-to-maturity investments; or as available-for-sale financial assets, as appropriate. The Group determines the classification of its financial assets at initial recognition and re-evaluates this designation at each financial year end.
At the year end, the Group has Trade and other receivables and cash and cash equivalents held as loans and receivables and trade and other payables held as financial liabilities at amortised cost. The Group had no financial assets or liabilities designated as at fair value through the profit and loss, held-to-maturity investments or available-for-sale financial assets (2016: nil).
De-recognition of financial assets and liabilities
A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.
Taxation
Current income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the statement of financial position date.
Deferred tax
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, except to the extent that the directors do not anticipate that the timing differences will crystallise in the foreseeable future, and with the following exceptions:
-- where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss; and
-- in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are measured on an undiscounted basis using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and which are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which differences can be utilised. An asset is not recognised to the extent that the transfer or economic benefits in the future is not probable.
Investments in subsidiaries
Investments in subsidiaries are stated in the Company statement of financial position at cost less provision for any impairment.
Plant and equipment
Plant and equipment is recognised initially at cost. After initial recognition, these assets are carried at cost less any accumulated depreciation and any accumulated impairment losses. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes cost directly attributable to making the asset capable of operating as intended.
Depreciation is computed by allocating the depreciable amount of an asset on a systematic basis over its useful life and is applied separately to each identifiable component.
Plant and machinery - 25% per annum on a reducing balance basis
Computer equipment - straight line over 3 years
The carrying values of plant and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable, and are written down immediately to their recoverable amount. Useful lives and residual values are reviewed annually and where adjustments are required these are made prospectively.
An item of plant and equipment is derecognised on disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset is included in profit or loss in the period of de-recognition.
Intangible assets
Intangible assets acquired either as part of a business combination or from contractual or other legal rights are recognised separately from goodwill provided they are separable and their fair value can be measured reliably.
Where intangible assets recognised have finite lives, after initial recognition their carrying value is amortised on a straight line basis over those lives. The nature of those intangibles recognised and their estimated useful lives are as follows:
Development costs - straight line over 10 years
Patent costs and trademarks - straight line over 10 years
Impairment of assets
At each reporting date the Group reviews the carrying value of its plant, equipment and intangible assets to determine whether there is an indication that these assets have suffered an impairment loss. If any such indication exists, or when annual impairment testing for an asset is required, the group makes an assessment of the asset's recoverable amount. Intangible assets not yet ready to use are subject to an annual impairment test.
An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying value of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used, these calculations corroborated by valuation multiples, or other available fair value indicators. Impairment losses on continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired assets.
An assessment is made at each reporting date in respect of the Group's assets, with the exception of goodwill, as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a valuation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition. Net realisable value is based on estimated selling price less any further costs expected to be incurred to disposal. Provision is made for slow moving or obsolete items.
Trade and other receivables
Trade receivables, which generally have 30 to 90 day terms, are recognised and carried at the lower of their original invoiced value and recoverable amount. The time value of money is not material.
Provision is made when there is objective evidence that the Group will not be able to recover balances in full. Significant financial difficulties faced by the customer, probability that the customer will enter bankruptcy or financial reorganisation and default in payments 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 value of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss within administrative expenses.
When a trade receivable is uncollectable, it is written off through profit or loss.
Cash, cash equivalents and short term investments
Cash and cash equivalents comprise cash at hand and deposits with an original term of not greater than 3 months. Short-term investments comprise deposits with maturities of more than three months, but no greater than 12 months.
Trade and other payables
Trade and other payables are not interest bearing and are initially recognised at fair value. They are subsequently measured at amortised cost using the effective interest rate method.
Provisions
Provisions are recognised when the group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are measured at the present value of the expected expenditures to be required to settle the obligation.
Equity and reserves
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
Merger reserve represents the fair value of the consideration given in excess of the nominal value of the ordinary shares issued on the acquisition of Oxford Pharmascience Limited to allow admission of the Group to the AIM market made by the issue of shares. Following the demerger of Oxford Pharmascience Limited, the balance of the merger reserve has been released to the revenue reserve.
Share based payment reserve includes all current and prior period share-based employee remuneration expense.
Revenue reserve includes all current and prior period retained profits/(losses).
Share-based payments
The Company undertakes equity settled share-based payment transactions with certain employees. Equity settled share-based payment transactions are measured with reference to the fair value at the date of grant, recognised on a straight line basis over the vesting period, based on the company's estimate of shares that will eventually vest. Fair value is measured using the Black Scholes model.
At each statement of financial position date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the achievement or otherwise of non-market conditions and the number of equity instruments that will ultimately vest. The movement in cumulative expense since the previous statement of financial position date is recognised in profit or loss, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if this difference is negative.
Accounting standards and interpretations issued but not yet effective
At the date of authorisation of these financial statements, the following standards and interpretations relevant to the Group that have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been endorsed by the EU):
Standard Effective date accounting periods commencing on or after ----------------------------------------------------------- --------------------------------------------------------- IFRS 9 Financial Instruments 01-Jan-18 IFRS 15 Revenue from Contracts with Customers 01-Jan-18 IFRIC Interpretation 23 Uncertainty over Income Tax 01-Jan-16 Treatments IFRIC Interpretation 22 Foreign currency transactions and 01-Jan-18 advance considerations
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group.
3. Judgements and key sources of estimation uncertainty
The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the Statement of Financial Position date and the amounts reported for revenues and expenses during the year. The nature of estimation means that actual amounts could differ from those estimates. Estimates and assumptions used in the preparation of the financial statements are continually reviewed and revised as necessary. While every effort is made to ensure that such estimates and assumptions are reasonable, by their nature they are uncertain and, as such, changes in estimates and assumptions may have a material impact on the financial statements.
The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.
Equity settled share-based payments
The estimation of share-based payment costs requires the selection of an appropriate valuation method, consideration as to the inputs necessary for the valuation model chosen and the estimation of the number of awards that will ultimately vest, inputs for which arise from judgements relating to the future volatility of the share price of comparable companies, the Company's expected dividend yields, risk free interest rates and expected lives of the options. The Directors draw on a variety of sources to aid in the determination of the appropriate data to use in such calculations.
Research and development costs
Careful judgement by the Directors is applied when deciding whether the recognition requirements for capitalising development costs have been met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems. Judgements are based on the information available at each reporting date which includes the progress with testing and certification and progress on, for example, establishment of commercial arrangements with third parties. In addition, all internal activities related to research and development of new products is continually monitored by the Directors.
Provisions for irrecoverable receivables
Provisions for irrecoverable receivables are based on historical evidence, and the best available information in relation to specific issues, but are nevertheless inherently uncertain.
4. Segmental information
At 31 December 2017 the Group operated as one segment, being the operation of an AIM Rule 15 Cash Shell. All assets and liabilities are held in the UK.
5. Operating loss
31 December 2017 31 December 2016
The Group GBP'000 GBP'000
------------------------------------------------------ ------------------ ------------------
Operating loss is stated after charging/(crediting):
Staff costs (see note 6) 217 517
Auditor's remuneration:
- Total auditor's remuneration 26 25
------------------------------------------------------ ------------------ ------------------
6. Staff costs
The average number of employees during the year (including directors) and aggregate remuneration, including directors was as follows:
Group Number Number
-------------------------------- ------------------ ------------------
Administration and management 6 10
-------------------------------- ------------------ ------------------
31 December 2017 31 December 2016
GBP'000 GBP'000
-------------------------------- ------------------ ------------------
Wages and salaries 300 318
Social security costs 33 30
Pension cost 5 6
Share based payments (note 19) (121) 163
-------------------------------- ------------------ ------------------
217 517
-------------------------------- ------------------ ------------------
Details of directors' remneration and the highest paid Director can be found in the directors' report. Key management personnel comprise only the Directors of the Company.
7. Finance income
31 December 2017 31 December 2016
GBP'000 GBP'000
-------------------------- ------------------ ------------------
Bank interest receivable 95 132
-------------------------- ------------------ ------------------
8. Taxation
Year to 31 December 2017 Year to 31 December 2016
GBP'000 GBP'000
--------------------------------------------------------------- ------------------------- --------------------------
Current tax:
UK corporation tax on losses for the year - -
Research and development tax credit receivable for the current
year - -
Prior year adjustment in respect of research and development
tax credit - -
Deferred tax:
Origination and reversal of timing differences - -
Tax on loss on ordinary activities - -
--------------------------------------------------------------- ------------------------- --------------------------
Year to 31 December 2017 Year to 31 December 2016
GBP'000 GBP'000
--------------------------------------------------------------- ------------------------- --------------------------
The tax assessed for the Year varies from the small company
rate of corporation tax as explained
below:
Loss on ordinary activities before tax (521) (348)
Tax at the standard rate of corporation tax 19.25% (2016: 20%) (100) (69)
Effects of:
Expenses not deductible for tax purposes - -
Other movements
Enhanced research and development relief - -
Share based payment relief - -
Prior year adjustments in respect of research and development
tax credit - -
Tax losses carried forward 100 69
Tax charge for the year - -
--------------------------------------------------------------- ------------------------- --------------------------
The Company has accumulated losses available to carry forward against future trading profits of GBP1.6 million (2016: GBP1.1 million). No deferred tax asset has been recognised in respect of tax losses since it is uncertain at the balance sheet date as to whether future profits will be available against which the unused tax losses can be utilised.
9. Discontinued operations
An analysis of the result of discontinued operations, and the result recognised on the consolidated income statement is as follows;
Year to 31 December 2017 Year to 31 December 2016
GBP'000 GBP'000
-------------------------------------------- ------------------------- -------------------------
Revenue 939 795
Expenses (2,776) (2,345)
-------------------------------------------- ------------------------- -------------------------
Loss before tax of discontinued operations (1,837) (1,550)
-------------------------------------------- ------------------------- -------------------------
Tax 303 514
-------------------------------------------- ------------------------- -------------------------
Loss from discontinued operations (1,534) (1,036)
-------------------------------------------- ------------------------- -------------------------
Staff costs included in discontinued operations were GBP271K (2016: GBP340k).
10. Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the period. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the period to assume conversion of all dilutive potential ordinary shares.
31 December 2017 31 December 2016
GBP'000 GBP'000
Loss attributable to the equity holders of the parent from continuing
operations (521) (348)
Loss from discontinued operations (note 9) (1,534) (1,036)
------------------------------------------------------------------------------ ------------------ ------------------
No. No.
Weighted average number of ordinary shares in issue during the period 1,205,661,619 1,205,661,619
------------------------------------------------------------------------------ ------------------ ------------------
Basic loss per share
Basic on loss for the period from continuing operations (0.04) (0.03)
Basic on loss for the period from discontinued operations (0.13) (0.09)
------------------------------------------------------------------------------ ------------------ ------------------
Diluted loss per share
Diluted on loss for the period from continuing operations (0.04) (0.03)
Diluted on loss for the period from discontinued operations (0.13) (0.09)
------------------------------------------------------------------------------ ------------------ ------------------
The Company has issued employee options over nil (2016: 99,700,000) ordinary shares which are potentially dilutive. There is, however, no dilutive effect of these issued options as there is a loss for each of the periods concerned.
11. Intangible assets
Patents and trademarks Development costs Total
GBP000 GBP000 GBP000
--------------------------------------------- ----------------------- -------------------------- ------------------
Cost
At 31 December 2015 and 2016 60 27 87
--------------------------------------------- ----------------------- -------------------------- ------------------
Eliminated on de-merger of subsidiary (60) (27) (87)
As at 31 December 2017 - - -
--------------------------------------------- ----------------------- -------------------------- ------------------
Amortisation
At 31 December 2015 33 20 53
Charge for the year 5 3 8
--------------------------------------------- ----------------------- -------------------------- ------------------
At 31 December 2016 38 23 61
Charge for the year (discontinued
operations) 5 3 8
Eliminated on de-merger of subsidiary (43) (26) (69)
---------------------------------------------
At 31 December 2017 - - -
--------------------------------------------- ----------------------- -------------------------- ------------------
Net book value
--------------------------------------------- ----------------------- -------------------------- ------------------
At 31 December 2017 - - -
--------------------------------------------- ----------------------- -------------------------- ------------------
At 31 December 2016 22 4 26
--------------------------------------------- ----------------------- -------------------------- ------------------
At 31 December 2015 27 7 34
--------------------------------------------- ----------------------- -------------------------- ------------------
12. Property, plant and equipment
Plant and machinery Computer equipment Total
GBP000 GBP000 GBP000
------------------------------------------- -------------------------- ------------------------- ------------------
Cost
At 31 December 2015 and 2016 2 13 15
------------------------------------------- -------------------------- ------------------------- ------------------
Eliminated on de-merger of subsidiary (2) (13) (15)
As at 31 December 2017 - - -
------------------------------------------- -------------------------- ------------------------- ------------------
Depreciation
At 31 December 2015 1 10 11
Charge for the year - 2 2
------------------------------------------- -------------------------- ------------------------- ------------------
At 31 December 2016 1 12 13
Charge for the year (discontinued
operations) - 1 1
Eliminated on de-merger of subsidiary (1) (13) (14)
-------------------------------------------
At 31 December 2017 - - -
------------------------------------------- -------------------------- ------------------------- ------------------
Net book value
------------------------------------------- -------------------------- ------------------------- ------------------
At 31 December 2017 - - -
------------------------------------------- -------------------------- ------------------------- ------------------
At 31 December 2016 1 1 2
------------------------------------------- -------------------------- ------------------------- ------------------
At 31 December 2015 1 3 4
------------------------------------------- -------------------------- ------------------------- ------------------
13. Inventories
31 December 2017 31 December 2016
GBP'000 GBP'000
Raw materials and consumables - 14
------------------------------- ------------------ -----------------
The inventory expensed to cost of sales during the year is GBPnil (2016: GBP534k) and there has been no write off of stock in the year (2016: nil). Manufacturing is outsourced to third party suppliers.
14.Trade and other receivables
31 December 2017 31 December 2016
GBP000 GBP000
-------------------------------- ------------------ ------------------
Trade receivables - 343
Other receivables 24 58
Current tax receivable - 362
Prepayments and accrued income 4 48
-------------------------------- ------------------ ------------------
28 811
-------------------------------- ------------------ ------------------
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value. Trade receivables are all denominated in sterling.
At 31 December the analysis of trade receivables that were past due but not impaired was as follows:
Total Neither due or impaired <60 days Past due but not impaired 30 to 60 days
GBP'000 GBP'000 GBP'000 GBP'000
------ -------- ------------------------- --------- -----------------------------------------
2017 - - - -
2016 343 74 267 2
------ -------- ------------------------- --------- -----------------------------------------
At the year ended 31 December 2017 there was no requirement for a provision for doubtful debts (2016: nil) and there were no movements in the year (2016: nil).
15. Cash, cash equivalents and short term investments
31 December 2017 31 December 2016
GBP'000 GBP'000
------------------------------------------------------------------- ----------------- -----------------
Cash at bank and in hand 19,231 11,878
Short-term investments with maturity dates less than three months - 5,000
------------------------------------------------------------------- ----------------- -----------------
Total cash and cash equivalents 19,231 16,878
------------------------------------------------------------------- ----------------- -----------------
Short-term investments with maturity dates more than three months - 5,000
------------------------------------------------------------------- ----------------- -----------------
Total cash, cash equivalents and short term investments 19,231 21,878
------------------------------------------------------------------- ----------------- -----------------
An analysis of cash, cash equivalents and short term investments by currency is provided in note 22.
16. Trade and other payables
31 December 2017 31 December 2016
GBP'000 GBP'000
--------------------------- ------------------ ------------------
Trade payables - 91
Taxes and social security 12 22
Accruals 58 54
--------------------------- ------------------ ------------------
70 167
--------------------------- ------------------ ------------------
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
17. Provisions
The Group has established a provision in the year ended 31 December 2017 of GBP176k (2016: nil) related to the estimated costs associated with the proposed Members Voluntary Liquidation of the Company, including staff termination payments and professional fees for the period from 1 January 2018 to the point when the liquidation is expected to be completed (subject to shareholder approval). The provision charge is recognised in the Consolidated Statement of Comprehensive Income within administrative expenses.
18. Issued equity capital and reserves
Share Share Merger
capital premium reserve Total
Number GBP'000 GBP'000 GBP'000 GBP'000
Abaco Capital
Plc
Ordinary shares
of 0.1p each
----------------------------------- -------------------- ---------- ------------------ ---------
Total Ordinary
shares of 0.1
p each as at
31 December
2012 730,869,952 731 3,758 714 5,203
---------------- ----------------------------------- -------------------- ---------- ------------------ ---------
Issued for cash
20 March 2013 166,666,667 167 4,833 - 5,000
Expense of
issue - - (30) - (30)
---------------- ----------------------------------- -------------------- ---------- ------------------ ---------
Issued for cash
5 November
2013 100,000,000 100 3,900 - 4,000
Expense of
issue - - (40) - (40)
---------------- ----------------------------------- -------------------- ---------- ------------------ ---------
Total Ordinary
shares of 0.1
p each as at
31 December
2013 997,536,619 998 12,421 714 14,133
---------------- ----------------------------------- -------------------- ---------- ------------------ ---------
Share options
exercised 17
April 2014 8,125,000 8 149 - 157
---------------- ----------------------------------- -------------------- ---------- ------------------ ---------
Total Ordinary
shares of 0.1
p each as at
31 December
2014 1,005,661,619 1,006 12,570 714 14,290
---------------- ----------------------------------- -------------------- ---------- ------------------ ---------
Issued for cash
25 June 2015 42,915,000 43 4,249 - 4,292
Issued for cash
26 June 2015 157,085,000 157 15,551 - 15,708
Expense of
issue - - (561) - (561)
---------------- ----------------------------------- -------------------- ---------- ------------------ ---------
Total Ordinary
shares of 0.1
p each as at
31 December
2015
and 2016 1,205,661,619 1,206 31,809 714 33,729
---------------- ----------------------------------- -------------------- ---------- ------------------ ---------
Share capital
reduction
December
2017 - (1,194) - - (1,194)
Cancellation
of share
premium - - (31,809) - (31,809)
Release of
merger
reserve - - - (714) (714)
Total ordinary
shares of
0.001p
at 31 December
2017 1,205,661,619 12 - - 12
---------------- ----------------------------------- -------------------- ---------- ------------------ ---------
The acquisition of Oxford Nutrascience Limited (now Oxford Pharmascience Limited) in 2010 was accounted for as a re-organisation using the pooling of interests method of accounting as set out in note 2 to these financial statements and under which the shares issued by the company were recorded at nominal value together with an amount established as Merger reserve in order to replicate the total issued capital of Oxford Pharmascience Limited as at the acquisition date.
Following the demerger of Oxford Pharmascience Limited on 22 December 2017, the Merger Reserve has been released to the Revenue Reserve.
19. Share based payments
The Group operates a share option plan, under which certain directors have been granted options to subscribe for ordinary shares. All options are equity settled. New options of nil (2016: 7,000,000) ordinary shares were granted in the year. The options granted in previous years had exercise prices of between 3.8p - 11.9p and the vesting period was generally 1 or 3 years. If the options remain unexercised after a period of 10 years from the date of grant, the options expire. During the year ended 31 December 2017, all of the options were forfeited/surrendered as part of the demerger process.
The number and weighted average exercise prices of share options are as follows:
Weighted average exercise price per
Number of share options share
--------------------------------- ------------------------------------------ ---------------------------------------
At 31 December 2009 300,000 40.0
Granted in the year - -
Adjustment on re-organisation 7,200,000 (38.4)
---------------------------------
Outstanding at 31 December 2010 7,500,000 1.6
--------------------------------- ------------------------------------------ ---------------------------------------
Granted in the year 2,000,000 1.0
------------------------------------------ ---------------------------------------
Outstanding at 31 December 2011 9,500,000 1.5
--------------------------------- ------------------------------------------ ---------------------------------------
Granted in the year - -
--------------------------------- ------------------------------------------ ---------------------------------------
Outstanding at 31 December 2012 9,500,000 1.5
--------------------------------- ------------------------------------------ ---------------------------------------
Granted in the year 5,000,000 2.7
--------------------------------- ------------------------------------------ ---------------------------------------
Outstanding at 31 December 2013 14,500,000 1.9
--------------------------------- ------------------------------------------ ---------------------------------------
Exercised in the year (8,125,000) (1.9)
Expired in the year (4,375,000) (2.2)
Granted in the year 77,000,000 4.0
--------------------------------- ------------------------------------------ ---------------------------------------
Outstanding at 31 December 2014 79,000,000 3.9
--------------------------------- ------------------------------------------ ---------------------------------------
Granted in the year 16,200,000 7.8
--------------------------------- ------------------------------------------ ---------------------------------------
Outstanding at 31 December 2015 95,200,000 4.6
--------------------------------- ------------------------------------------ ---------------------------------------
Granted in the year 7,000,000 4.6
Forfeited/lapsed in the year (2,500,000) 4.6
Outstanding at 31 December 2016 99,700,000 4.6
--------------------------------- ------------------------------------------ ---------------------------------------
Forfeited/surrendered in the
year (99,700,000) (4.6)
--------------------------------- ------------------------------------------ ---------------------------------------
Outstanding at 31 December 2017 - -
--------------------------------- ------------------------------------------ ---------------------------------------
On 27 January 2010, the Company acquired 100 per cent of the issued share capital of Oxford Nutrascience Limited in a share for share exchange on the basis of 25 for 1 exchange ratio. As part of the re-organisation and share for share exchange, share options in Oxford Nutrascience Limited were substituted by share options in the Company as increased by a multiple of 25 and at an exercise price reduced by a multiple of 25.
There were nil (2016: 15,733,333) share options outstanding at 31 December 2017 which were eligible to be exercised. During the year ended 31 December 2017, no options were exercised (2016: nil) and 99,700,000 options lapsed or were forfeited (2016: 2,500,000).
The fair value of equity settled share options granted is estimated at the date of grant based on the Black Scholes model which is considered most appropriate considering the effects of the vesting conditions, expected exercise price and the payment of the dividends by the Company. The following table lists the inputs to the model used for the year ended 31 December 2016 and the year ended 31 December 2017, market conditions are assumed to be met during the vesting period:
Granted year to 31 December Granted year to 31 December
2017 2016
----------------------------------------------- ----------------------------- -----------------------------------
Dividend yield - -
Expected volatility - 50%
Risk free interest rate - 0.5%
Expected vesting life of options - 1-3 years
Weighted average exercise price - 4.58p
Weighted average share price at date of grant - 4.63p
----------------------------------------------- ----------------------------- -----------------------------------
*expected volatility is based on the rate used by similar start-up technology companies
A share based payments credit has been recognised in the statement of comprehensive income of GBP121k for the year (year to 31 December charge of 2016: GBP163k). The share based payment reserve at the year end is GBPnil (2016: GBP541k) after the balance of the reserve of GBP420k was transferred to the Revenue Reserve.
20. Commitments
Operating lease commitments
The Group has no commitments under non-cancellable operating lease agreements.
21. Subsidiary Companies
At 31 December 2017 the Company has investments in subsidiaries where it holds 50 per cent or more of the issued ordinary share capital of the following companies:
% of issued
ordinary
share capital
Country of and voting
Undertaking Sector incorporation rights
-------------- --------- ---------------- ---------------
Oxford Nutra England and
Limited Dormant Wales 100
-------------- --------- ---------------- ---------------
During the year ended 31 December 2017, the company's 100% owned subsidiary, Oxford Pharmascience Limited was demerged from the group.
22. Risk management of financial assets and liabilities
The Group's activities expose it to a variety of financial risks: market risk (specifically interest rate risk), credit risk, liquidity risk and foreign currency risk. The Group's risk management programme seeks to minimise potential adverse effects on the Group's financial performance. The management of these risks is vested in the Board of Directors. The policies for managing each of these risks are summarised below:
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders. The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued share capital, reserves and retained earnings as disclosed in note 18 and in the Group Statement of Changes in Equity. Total equity was GBP19.0 million at 31 December 2017 (2016: GBP22.6 million).
The Group's principal financial liabilities comprise trade and other payables. The main purpose of these financial liabilities is to raise finance for the Group's operations. The Group has various financial assets such as trade receivables and cash, which arise directly from its operations. The Group does not currently enter into derivative transactions such as interest rate swaps and forward currency contracts.
Liquidity risk
The Group's approach to managing liquidity is to ensure that, as far as possible, it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
The Group manages all of its external bank relationships centrally and in accordance with its treasury policies which include minimum acceptable credit ratings and maximum holdings limits. The Group seeks to limit the risk of banking failure losses by ensuring that it maintains relationships with a number of institutions. At the reporting date, the Group was cash positive and had no outstanding borrowings.
Categorisation of financial instruments
Financial liabilities at amortised
Loans and receivables cost Total
GBP'000 GBP'000 GBP'000
--------------------------- ---------------------- ------------------------------------- --------------------------
At 31 December 2017
Trade and other
receivables 24 - 24
Other short-term
investments - - -
Cash and cash equivalents 19,231 - 19,231
Provisions - (176) (176)
19,255 (176) 19,079
--------------------------- ---------------------- ------------------------------------- --------------------------
At 31 December 2016
Trade and other
receivables 402 - 402
Other short-term
investments 5,000 - 5,000
Cash and cash equivalents 16,878 - 16,878
Trade and other payables - (91) (91)
22,280 (91) 22,189
--------------------------- ---------------------- ------------------------------------- --------------------------
The group had no financial instruments measured at fair value through profit and loss.
The main risks arising from the Group's financial instruments are credit risk and interest rate risk. The Board of Directors reviews and agrees policies for managing risks which are summarised below.
Maturity profile
The Group's policy regarding liquidity risk is set out above. As all of the Group's financial assets and liabilities are expected to mature within the twelve months an aged analysis of financial assets and liabilities has not been presented.
Credit risk
The Group's principal financial assets are cash and short-term investments. The Group seeks to limit the level of credit risk on the cash balances by only depositing surplus liquid funds with counterparty banks that have high credit ratings.
The company trades only with recognised, creditworthy third parties. Receivable balances are monitored on an ongoing basis with the result that the group's exposure to bad debts is not significant. The Group's maximum exposure is the carrying amount as disclosed in note 14.
Interest rate risk
As the Group has no external financing facilities interest rate risk is limited to the reduction of interest received on cash surpluses held at bank which receive a floating rate of interest. Interest rate risk is managed in accordance with the liquidity requirement of the Group, with a minimum of 30 per cent. of its cash surpluses held within an instant access account, which has a variable interest rate attributable to it, to ensure that sufficient funds are available to cover the working capital requirements of the Group.
The principal impact to the Group is the result of interest-bearing cash and short-term investment balances held as set out below:
31 December 2017 31 December 2016
Fixed rate Floating rate Total Fixed rate Floating rate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----------- ----------------- -------- ----------- ----------------- --------
Cash and cash equivalents 19,231 - 19,231 11,878 5,000 16,878
Other short-term investments - - - 5,000 - 5,000
------------------------------- ----------- ----------------- -------- ----------- ----------------- --------
At 31 December 2017, the impact of a 10 per cent increase or decrease in interest rates would have decreased/increased loss for the year by GBP19k (2016: GBP22k) as a result of higher/lower interest received on floating rate cash deposits.
Foreign currency risk
The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than sterling (GBP). These are primarily made in Euros including sales to Brazil. Transactions in other currencies are limited.
A majority of the Group's sales are denominated in Euros. The Group purchases raw materials and certain associated services in Euros which partly offsets the Euro denominated revenue, thereby reducing net foreign exchange exposure.
The split of Group assets between Sterling and other currencies at the year-end is analysed as follows:
31 December 31 December
2017 2016
The Group GBP Eur Total GBP Total
GBP'000 GBP'000 GBP'000 GBP'000 Eur GBP'000 GBP'000
------------- ------------------------------- ------------------------------------- ------------------- -------------------------- ----------------------------- -----------------
Trade and
other
receivables 28 - 28 468 343 811
Other
short-term
investments - - - 5,000 - 5,000
Cash and
cash
equivalents 19,231 - 19,231 15,827 1,051 16,878
Trade and
other
payables (70) - (70) (120) (47) (167)
Provisions (176) - (176)
19,013 - 19,013 21,175 1,347 22,522
------------- ------------------------------- ------------------------------------- ------------------- -------------------------- ----------------------------- -----------------
Sensitivity analysis to movements in exchange rates
The following table demonstrates the sensitivity to a reasonably possible change in the Sterling against Euro exchange rate with all other variables held constant, on the Group's loss before tax (due to foreign exchange translation of monetary assets and liabilities) and the Group's equity.
31 December 2017 31 December 2016
Increase/(decrease) in GBP vs. Eur rate % GBP GBP'000 GBP GBP'000
------------------------------------------ ----------------- -----------------
10% - (123)
5% - (64)
(5%) - 71
(10%) - 150
23. Related party transactions
Terms and conditions of transactions with related parties:
The Group:
There are no sales or purchases to or from related parties.
Directors' remuneration - The remuneration of the individual Directors is provided in the Directors' Remuneration Report within the Directors' Report and disclosed in note 6 of the financial statements.
24. Ultimate controlling party
The directors do not believe an ultimate controlling party exists.
25. Demerger of Oxford Pharmascience Limited
The Group demerged Oxford Pharmascience Limited on 22 December 2017. The assets and liabilities demerged were as follows;
GBP GBP'000
------------------------------- ------------
Intangible fixed assets 18
Property, plant and equipment 1
Inventories 12
Trade and other receivables 344
Cash and cash equivalents 1,138
Trade and other payables (138)
Total 1,375
------------------------------- ------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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April 06, 2018 02:00 ET (06:00 GMT)
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