Company Registration No. 09910883
Belluscura plc
Annual report and financial statements
for the year ended 31 December 2022
Belluscura plc
Report and financial statements for the year ended 31 December 2022
TABLE OF CONTENTS
OFFICERS AND PROFESSIONAL ADVISORS
1
CHAIRMAN’S STATEMENT
2
CHIEF EXECUTIVE’S REPORT
3
FINANCIAL REVIEW
6
GOVERNANCE
9
DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2022
11
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE STRATEGIC
REPORT, THE DIRECTORS’ REPORT AND THE FINANCIAL STATEMENTS
13
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BELLUSCURA PLC
14
CONSOLIDATED STATEMENT OF PROFIT & LOSS AND OTHER COMPREHENSIVE
INCOME
19
CONSOLIDATED BALANCE SHEET
20
COMPANY BALANCE SHEET
21
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
22
COMPANY STATEMENT OF CHANGES IN EQUITY
23
CONSOLIDATED STATEMENT OF CASHFLOWS
24
NOTES TO THE ACCOUNTS
25
Belluscura plc
Report and financial statements for the year ended 31 December 2022
1
OFFICERS AND PROFESSIONAL ADVISORS
Registered Office
Belluscura plc
15 Fetter Lane
Holborn
London
EC4A 1BW
Officers
Adam Reynolds
Non-Executive Chairman
Bob Rauker
Chief Executive Officer
Tony Dyer
Chief Financial Officer and Company Secretary
Dr Patrick Strollo
Non-Executive Director
David Poutney
Non-Executive Director
Ric Piper
Non-Executive Director
Auditor
Gerald Edelman LLP
73 Cornhill
London
EC3V 3QQ
Banks
Barclays Bank Plc
JPMorganChase
1 Churchill Place
2200 Ross Ave, Floor 8
Canary Wharf
Dallas
London
Texas
E14 5HP
TX 75201
Solicitor
DWF PLC
20 Fenchurch Street
London
EC3M 3AG
Nominated Advisor
Spark Advisory Partners Limited
5 St John's Ln
London
EC1M 4BH
Broker
Dowgate Capital Ltd
15 Fetter Ln
London
EC4A 1BW
Belluscura plc
Report and financial statements for the year ended 31 December 2022
2
CHAIRMAN’S STATEMENT
I am pleased to report on the performance of Belluscura in my second year as Chairman following the Company’s
listing on AIM in May 2021.
Belluscura is a business founded on the principle of making healthcare both more affordable and more available
while making strong returns for our shareholders.
The Group’s first product, X-PLOR, received 510(k) clearance from the Food and Drug Administration (“FDA”) on 2
March 2021, and was commercially launched in September 2021. The next-generation X-PLOR was launched in
September 2022, with the latest generation launched in April 2023 gaining good momentum.
Our ground-breaking DISCOV-R device, which delivers more oxygen by weight than any device currently available,
is expected to be fully commercially launched in Q3 2023. A significant number of Distributors have already requested
access to the DISCOV-R and we expect it to have a major impact on the success of the Group.
Our products are now manufactured both in the US and China, with high quality facilities in place enabling the quality
standard accreditations required to apply for access to international markets.
We believe that the DISCOV-R and X-PLOR products will provide significant growth for the Group. The global demand
for medical oxygen continues to grow with an estimated 300m1 people suffering from Chronic Obstructive
Pulmonary Disease (“COPD”) and the disease is expected to become the leading cause of death worldwide in 15 years.
With a strong management team in place and the recently raised funds to execute on bringing Belluscura’s
category-leading technology to market, the Board looks forward with confidence in the Group’s ability to capture its
market opportunities.
Adam Reynolds
Non-Executive Chairman
29 June 2023
1 Source: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5921960/
Belluscura plc
Report and financial statements for the year ended 31 December 2022
3
CHIEF EXECUTIVE’S REVIEW
The Group is pleased to report on the considerable progress made in the year to 31 December 2022, during which it
launched the next generation X-PLOR, built up significant distribution across the US and commenced an
international roll out, while it also established high quality manufacturing facilities and developed the DISCOV-R™
for a well-received launch in 2023.
Considerable progress in 2022
Built significant US distribution and commenced international roll-out
Since the launch of the first-generation X-PLOR in September 2021, the Group is now distributing throughout the US
through multiple sales channels including through Distributors and Durable Medical Equipment Providers both
Online and Bricks and Mortar, Medical Supply Warehouses, Medical Device Intermediaries, Hospitals and Direct to
Consumer. In December 2022, we also signed our first international distribution agreement, with MedHealth
Supplies of South Africa, which sells to one of the world's leading respiratory device suppliers.
Established high quality manufacturing facilities
The Group’s continued progress has been enabled by expanding the manufacturing of the X-PLOR in the US and
China, which has provided increased capacity, much improved quality controls and, importantly, lower costs.
In March 2022, we signed a manufacturing Master Supply Agreement ("MSA") with InnoMax Medical Technology,
Ltd ("InnoMax") to manufacture the X-PLOR portable oxygen concentrator (“POC”) in China, more than doubling our
manufacturing capacity in 2023 and enabling us to accelerate our international expansion by opening up markets
in Asia and beyond. Innomax are anticipated to directly source most of their own components from the second half
of 2023, which will also result in a significant margin improvement and a reduction in the Company's inventory levels.
In April 2022, the Group took the decision to transfer its US manufacturing in-house, to increase production output
at high quality standards, and achieve a significant reduction in production costs. This was successfully completed at
the end of July 2022, enabling the achievement of ISO:13485 accreditation. The manufacturing facility is already
demonstrating the required product quality to build a significant customer base and repeat orders, underpinning
the building of a strong brand reputation for our best-in-class technology.
Following this transition and having achieved ISO13485 accreditation, we are confident in having both the quality of
manufacturing facilities and the inventory levels to increase production significantly, as we expand our sales channels
and are able to apply to distribute products internationally. In December 2022 we produced 536 units in our in-house
facility and with Innomax having started production in Q2 2023 this will more than double production of X-PLOR.
Even with the rapid increase in volumes, the production quality of our in-house facility has been outstanding, with
no units returned due to defects.
Launched the next generation X-PLOR
The next generation X-PLOR, launched in September 2022, has been well received by the market based upon its
performance and reliability. It provides more oxygen by weight than any portable oxygen concentrator in its class
and is the first POC with a mobile app that connects to phones, tablets, pulse oximeters and wearables (the NOMAD
Biometric App). By 31 December 2022, the Company had shipped or received orders for 2,850 X-PLOR units, with 1,226
units being shipped in 2022, up three-fold compared with the previous year (2021: 377).
Building on strong foundations in 2023
Good momentum with X-PLOR, as we lay foundations for international expansion
The Company is pleased with the sales momentum of the latest generation X-PLOR portable oxygen concentrator
released in April 2023, for which initial new standing purchase orders exceeding 1,000 units were secured.
Having begun its global expansion in December 2022 with sales of the X-PLOR in South Africa, Shenzhen Belluscura
Technology Company Limited was registered in April 2023 in preparation for commercial launch of the X-PLOR in
China later in 2023, once China National Medical Products Administration registration is received. The Company
expects further global expansion from late 2023 and early 2024 once CE and UKCA marks are approved and
anticipated regulatory clearances in Hong Kong, Europe, UK, Canada, Singapore and Australia are received.
Belluscura plc
Report and financial statements for the year ended 31 December 2022
4
The Company continues to evaluate several proposals with third parties interested in white labelling the X-PLOR
product for the US market. Such agreements will require the Company to evaluate the set up and potential
additional production costs with the anticipated increased sales volume.
Significant pre-launch demand for DISCOV-R™
In March 2023, the Company unveiled its new DISCOV-R portable oxygen concentrator at Medtrade in Dallas, Texas,
and was awarded the Silver Award in the Best New Product category. This is a considerable achievement when taking
account of the fact that most of the leading respiratory device companies were exhibiting at the show which is the
largest home medical equipment ("HME") trade show and conference in the US.
The Company started it premarket evaluation of the DISCOV-R POC Q2 2023, with full commercialisation anticipated
in H2 2023. DISCOV-R is the first ambulatory pulse-dose and two-litre continuous flow POC in the world. Weighing
c.40% less than any comparable dual flow oxygen concentrator on the market, the DISCOV-R produces nearly three
times the oxygen by weight than concentrators in its class. The DISCOV-R will also include the transformational
NOMAD Biometric App.
The DISCOV-R has been met with significant pre-launch demand with over 125 durable medical equipment providers
and internet retailers already requesting access to this innovative device. The Board believe that amounts to only 2%.
of the durable equipment companies in the US. With two litres of continuous flow and eight levels of pulse dose
delivery, the Company anticipates the product being covered by both Centres for Medicare & Medicaid Services
(“CMS”) codes E1390 and E1392, stationary and portable concentrator, respectively. The DISCOV-R being covered by
both CMS codes would make the device significantly more profitable for Durable Medical Equipment providers.
We believe the significant technical advantages of the DISCOV-R over its competitors, combined with the anticipated
dual CMS reimbursement codes, will result in the DISCOV-R accounting for 70 per cent of the Group’s production
volume and 80 to 85 per cent. of revenue by 2025.
Preliminary estimated unit volume demand for production is now estimated to exceed 2,000 units per month and
the profitability of a DISCOV-R device is anticipated to be approximately 250% higher than an X-PLOR.
To meet this demand, the Company has been focusing significant resources to bring the DISCOV-R™ to market as
soon as possible and to increase production and manufacturing capacity in the US and China where the product will
be manufactured.
Funds raised to enable the commercial launch of DISCOV-R
Since the beginning of 2023, the Company has raised net proceeds of £7.2m ($8.8m), through the issue of 10%
Unsecured Convertible Loan Notes, via a Placing and Broker Option in January and February, to raise £4.3m ($5.1m)
net of expenses, and an equity issue, via a Placing, a Subscription by certain Directors, and a Retail Offer in May, which
raised £2.9m ($3.7m) net of expenses.
The net proceeds will be used for finalising the development of, complete the pre-market evaluation of and
commercially launching the DISCOV-R; as well as for extending sales channels of the latest generation X-PLOR and
general working capital requirements for the Group, thereby providing the Group with the funds to capitalise on its
significant market opportunities.
Further strengthened the Board
As announced in May 2023, the Board has decided to reinforce the executive team with the addition of relevant skills
and expertise in global sales, by the appointment, subject to satisfactory completion of the requisite due diligence
and nominated adviser checks, of Robert Fary as Executive Director, who joined the Company as Senior Vice
President of Global Sales in January.
Robert’s deep knowledge of the portable oxygen concentrator sector and its channels to market will be invaluable
in driving sales of both the DISCOV-R and X-PLOR globally. He has thirty-years of experience in the respiratory
industry where he has held leadership roles at major oxygen concentrator manufacturers and durable medical
equipment companies. During the past two decades, Robert’s industry leading team was directly responsible for or
contributed to the sale of over 1 million portable oxygen concentrators, generating revenues in excess of $1 billion. He
has already had a successful impact on sales of the X-PLOR, having secured standing purchase orders exceeding
1,000 units for the next generation X-PLOR following its launch in April 2023. Robert also participated in the
Subscription as part of the previously mentioned Placing.
Belluscura plc
Report and financial statements for the year ended 31 December 2022
5
Outlook
We continue to build the foundations for significant growth in the coming years.
Trading in the first half of 2023 is in line with our expectations for the full year, with a significant second half weighting
expected, as previously stated. Demand for X-PLOR, which is predominantly a Direct to Consumer unit, is growing,
and we expect that our affiliation with GoodRX, a leading digital healthcare platform that makes healthcare
affordable and convenient for all Americans, and new internet retailers will help X-PLOR to continue to gain
momentum over the coming months.
The full commercial launch of DISCOV-R will be transformational for the Group. Having received a positive reception
at Medtrade, we are very encouraged by the fact that 125 distributors have requested access to DISCOV-R, with the
distributors indicating potentially significant demand for units.
Following the recent fundraising, and as we are now utilising the Company’s previously high inventory levels, the
Company is well positioned to deliver substantial growth in the coming years. We look forward to the future with
confidence.
Robert Rauker
Chief Executive Officer
29 June 2023
Belluscura plc
Report and financial statements for the year ended 31 December 2022
6
FINANCIAL REVIEW
Income statement
Revenue for the year to 31 December 2022 was $1.54m before discounts of $0.14m (2021: $0.42m). Revenue of $0.56m
was generated in the first 3 months of the year before the Board took the decision to bring our US manufacturing in-
house from our contract manufacturer. This decision was taken to improve the longer-term prospects for the Group
through increased manufacturing capacity, reduced manufacturing costs and giving greater scalability and agility
in manufacturing and product improvements. The transfer was successfully completed in just under three months.
Revenue in the second half of the year was $0.98m following the launch of the 2nd generation X-PLOR device in
October 2022. All revenue was generated in the US.
There was a small Product Gross Profit in the year of $68,105 (2021: Loss $52,171). With the Group trying to establish its
products in the market, pricing was deliberately competitive to establish early B2B sales combined with cost of goods
sold reflecting the initial volume higher input costs. Other operating income was $8,703 (2021: $209,690).
Administrative expenses were $8.07m, up 51% (2021: $5.34m). (See note 6.3 to the accounts) The increase of $2.73m
was primarily due to:
•
Amortisation & Inventory: Due to the rapid development of the next generation X-PLOR, launched in June this
year, the Group felt it prudent to accelerate the amortisation of development costs associated with the first
generation product, with a charge in the period of $2.91m (2021: $0.16m), along with a stock provision
of $0.61m (2021: $nil) for obsolete raw material inventory and inventory adjustments.
•
Staff, Marketing & Other Overheads: The Group continued to strengthen the team particularly in Engineering
and Quality to manage in-house manufacturing and reduce external consultancy costs. $6.00m (2021: $4.22m).
•
Royalties: Since the launch of X-PLOR in 2021, the Group’s minimum royalty payments due are charged to the
profit & loss account rather than capitalised in Product Development. $0.76m (2021: $0.15m).
•
Realised and Unrealised foreign exchange movements: The US$ strengthened against £Sterling by 12% during
the year (1 January 2022 - $1.35:£1.00; 31 December 2022 - $1.21:£1.00). Due to the size of the Intercompany Loan
from the PLC to the US subsidiary which is fixed in £Sterling, this creates an accounting presentational impact
between Administration Expenses: Gain $2.88m (2021: Gain $0.73m) and Other Comprehensive Income: Loss
$3.77m (2021: Loss $1.15m), which to a large extent can be netted off against one another.
Operating Loss for the year was $8.13m (2021: $5.19m), Total Comprehensive Loss was $11.98m (2021: $6.37m).
Adjusted EBITDA Loss of $6.20m (2021: $4.18m) (See note 26 to the accounts). The Board considers that Adjusted
EBITDA to be an important key performance indicator. It is a more accurate measure of underlying business
performance as it removes the impact of non-cash accounting adjustments.
Loss per share
The basic and diluted loss per share was $0.068 (2021: $0.055).
Financial position
The Group net assets as at 31 December 2022 were $20.35m (2021: $24.67m). This comprised total assets of $23.60m
(2021: $26.00m) and total liabilities of $3.25m (2021: $1.33m). The total assets included intangible assets (capitalised
research and development costs), property, plant and equipment and right-of-use assets of $9.07m (2021: $7.05m).
Net cash at 23 June 2023 following receipt of the placing proceeds was $4.2m.
Cashflow
At 31 December 2022 the Group had net cash of $2.04m (2021: $15.89m). During the year, net cash inflow from funds
raised in the year was $7.47m (2021: $25.47m), net cash outflow from operating activities was $14.91m (2021: $7.33m).
Both the decision to bring our US manufacturing in-house from our contract manufacturer along with the initial
support of the set-up of Innomax manufacturing in China, resulted in significant investment in Raw Material
Inventory and Deposits which, at 31 December 2022, stood at $10.77m (2021: $ 1.78m).
2021 Restatement
In 2021 the Group’s established an Employee Benefit Trust (EBT). The Company loaned the EBT funds for the purpose
of buying shares with any shares held by the EBT to be distributed to employees exercising share options once
vesting conditions are satisfied. The EBT has been consolidated at 31 December 2022 and 31 December 2021. The
effect of the 2021 restatement consists of an increase in cash of $302,000 and a corresponding reduction in debtors.
Belluscura plc
Report and financial statements for the year ended 31 December 2022
7
Dividends
No dividend is recommended (2021: £nil) due to the early stage of the development of the Group.
Events after the reporting period
Events after the reporting period are detailed in Note 28 to the Accounts.
These events include fundraising of both convertible equity loan notes and equity.
Analysis of Financial and non-Financial Key Performance Indicators
The Board continues to monitor performance regularly throughout the year by reviewing a range of key performance
indicators. These include revenue growth, progress towards operational break even, expenditure (both current and
investment) control against budget and cash used and remaining.
The Directors expect further improvement in performance in future periods as it achieves success in the Group’s
strategy to launch its products and grow through continual investment.
Change of auditors
As announced on 30 March 2023, Gerald Edelman LLP, were appointed as auditor to the Company with immediate
effect, replacing Gravita Audit Limited.
Gravita Audit Limited, which was recently formed by the combination of Jeffreys Henry LLP, Arram Berlyn Gardner
LLP and Propel, notified the Company that, following a recent review in conjunction with the Institute of Chartered
Accountants in England and Wales (the "ICAEW"), it did not have sufficient capacity to satisfy its regulatory
requirements in respect of its engagement with the Company and was, therefore, required to resign as auditor with
effect from 29 March 2023.
Gravita Audit Limited confirmed that there were no circumstances connected with their resignation which they
consider should be brought to the attention of the Company's members or creditors in accordance with Section 519
of the Companies Act 2006.
Principal Risks and Uncertainties
The Group actively considers and manages its risks. The Directors consider the following areas of business and
operational risk and details how this risk is managed or mitigated:
•
Generating revenue. The Group’s primary source of revenue is from sales of its X-PLOR product. Management
performs regular reviews of the sector to ensure it is targeting large markets.
•
Successful product development. The Group received FDA 510(k) clearance for X-PLOR on 2 March 2021. The
Group’s follow-on products are in advanced development and are based upon shared technology with X-PLOR.
The Board regularly monitors the carrying value of capitalised product development in the light of plans for future
revenue and margin.
•
Credit risk. The Group’s principal financial assets are cash, and trade and other receivables. The Group monitors
receivables and should any be the subject of an identified loss event, allowance is made for impairment if
required. At the end of the period the Group had four customers. The credit risk on liquid funds is limited because
the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. Further,
apart from intercompany consolidated transactions the Group has no current debt outstanding (excluding leases
capitalised under IFRS16).
•
Liquidity risk. To support expansion plans for future development, the Group regularly reviews its financing
arrangements and cash flows to ensure there is sufficient funding in place.
•
Foreign exchange risk. As the Group holds Sterling cash deposits and reports its financial performance in US
Dollars, this exposes the Group to a potential unrealised currency risk on its Sterling bank balances. This relates
to the raising of capital in the United Kingdom. The Directors review this exposure on a regular basis.
Contingent Liabilities
On 24 February 2017, the Company entered into a co-exclusive licence and development agreement with Separation
Design Group, LLC and SDG (together the “SDG Parties”) (“SDG Licence”) which was subsequently amended by an
amendment agreement dated 19 March 2022. Pursuant to the SDG Licence: if by 3 September 2025, cumulative sales
of the X-PLOR and DISCOV-R have not exceeded $20 million dollars, Belluscura must make a one-time payment of
$3 million to the SDG Parties to maintain the exclusive SDG licence. By 31 December 2022 cumulative sales of X-PLOR
were $1.8 million. No provision has been made in these Financial Statements.
Belluscura plc
Report and financial statements for the year ended 31 December 2022
8
Companies Act S.172
The Directors acknowledge their duty under s.172 of the Companies Act 2006 and consider that they have, both
individually and together, acted in the way that, in good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole. In doing so, they have had regard (amongst other matters) to:
•
the likely consequences of any decision in the long term. The Group’s long-term strategic objectives, including
progress made during the year and principal risks to these objectives, are shown in the Chairman Statement,
Chief Executive’s Review and Financial Review.
•
the interests of the Company’s employees. Our employees are fundamental to us achieving our long-term
strategic objectives. We aim to be a responsible employer in our approach to the pay and benefits our employees
receive. Further details can be found in the Remuneration Report.
•
the impact of the Company’s operations on the community and the environment. The Group operates honestly
and transparently. We consider the impact on the environment, the people who work for us and the wider
community and how we can minimise this.
•
the desirability of the Company maintaining a reputation for high standards of business conduct. Our intention is
to behave in a responsible manner, operating a high standard of business conduct and good corporate
governance.
•
the need to act fairly as between members of the Company. Our intention is to behave responsibly towards our
shareholders and treat them fairly and equally so that they may benefit from the successful delivery of our
strategic objectives.
COVID-19 and Russia/Ukraine
The Board have reviewed and assessed the impact of the COVID-19 pandemic on the Group. Whilst we face similar
challenges to other businesses caused by COVID-19 disruption, we believe that we are in a strong position to progress,
and the pandemic actually created a larger market for our products.
The Board have reviewed and assessed the impact of the current Russia/Ukraine conflict on the Group. The Group
believe that based upon our current structure and plans that there will be minimal impact on the Group.
Tony Dyer
Chief Financial Officer
29 June 2023
Belluscura plc
Report and financial statements for the year ended 31 December 2022
9
GOVERNANCE
Board of Directors
Adam Reynolds - Non-Executive Chairman
Adam began his career in the City in 1980 and in 2000 established his own PR/IR/Corporate finance firm which listed
on AIM in November 2000 and was then later sold in 2004 via a reverse takeover. He was approached in 2005 to
become non-executive Chairman of International Brand Licensing Plc (“IBL”). The Company at this time had
substantial debt and the remit was to turn it around, and following the sale of a number global sports IP assets, IBL
became a cash shell. In 2009 Adam introduced David Evans and Julian Baines, two leading diagnostic specialists in
the UK, to the Company and the Plc changed direction. That business is today called EKF Diagnostic Holdings Plc,
and Adam remains a non-executive director and shareholder. In November 2012 Adam launched a successful agreed
bid for the trading assets and business of Autoclenz Plc alongside its management team. Adam remains a director
and shareholder. In addition, Adam is currently non-executive Chairman of Aquis-quoted OTAQ plc and
MyHealthChecked Plc, and a non-executive director of Sosandar Plc. Adam joined the Board in April 2021.
Robert “Bob” Rauker - Chief Executive Officer
Bob is a senior management executive with a track record in the medical device sector. Over his career Bob has been
involved in the valuation, acquisition and sale of multiple medical devices. Bob has served as Head of Medical Device
& Life Sciences Group for Acacia Research Group (NASDAQ) in the role of SVP, where he built the medical device
business to $30 million in revenue. Previously he served as global chief IP counsel for Synthes Inc. (SIX) and the Boston
Scientific Corporation (NYSE) Endoscopy business, both multi-billion dollar companies, where he managed the
medical products acquisition and licensing transactions along with other senior management roles. Bob has a
bachelor’s degree in mechanical engineering and an MBA from the University of Massachusetts and a juris doctorate
from the New Hampshire School of Law. Additionally, he is a registered patent attorney, a named inventor on 13
patents and pending applications in the medical device sector and joint inventor of the X-PLO2R portable oxygen
concentrator. Bob joined the Board in August 2016.
Anthony “Tony” Dyer - Chief Financial Officer
Tony has over ten years’ experience in acting as a public company chief financial officer. Between 2004 and 2017 he
led the finance function and played a key strategic role in Gattaca plc becoming one of the UK’s leading engineering
and technology recruiters growing from one office, 40 staff and revenues of £30 million in 1996 to 14 offices in ten
countries, 800 staff and global revenues of £650 million in 2017, 30 per cent. of which was generated outside the UK.
Tony was a core member of the team that completed the over-subscribed fundraising and admission to trading on
AIM of Gattaca plc (then Matchtech Group plc). He also led the successful £60 million acquisition and integration of
AIM quoted Networkers International plc. Tony joined the Board in November 2017.
Dr. Patrick Strollo - Non-Executive Director
Dr. Strollo is Professor of Medicine and Clinical and Translational Science at the University of Pittsburgh. He has been
an active member of the American Thoracic Society and the American Academy of Sleep Medicine for over 25 years.
By profession, Dr. Strollo is a pulmonologist and has been in practice for over 20 years, he has over 100 publications
that include 81 papers in peer reviewed journals in Sleep and Pulmonary Medicine, and 67 book chapters and invited
papers. Dr. Strollo also served the United States Air Force for sixteen years and ultimately rose to the rank of
Lieutenant colonel. Patrick joined the Board in April 2021.
David Poutney – Non-Executive Director
David is Chief Executive of Dowgate Capital Limited. Previously he was Head of Corporate Broking at Numis Securities
Limited and Numis Corporation Plc, where he was an Executive Director until he stood down in February 2016. He
started his career in commercial banking before becoming a number one ranked financials analyst at a number of
leading firms including BZW, James Capel and UBS. In his 20 years as a corporate broker, David worked directly on
the listings of over 30 companies. He is currently a Non-Executive Director of AIM quoted Franchise Brands plc. David
joined the Board in May 2021.
Richard (“Ric”) Piper - Non-Executive Director
Ric read Economics at Cambridge University and qualified as a Chartered Accountant in 1977. He held senior finance
roles in ICI, Citicorp, Logica and WS Atkins, where he was Group Finance Director from 1993 to 2002. He is currently a
non-executive director of AIM-quoted GRCI plc, partner at Restoration Partners Limited and a Board Advisor to a
number of privately owned businesses. Ric joined the Board in May 2021.
Belluscura plc
Report and financial statements for the year ended 31 December 2022
10
Board Governance
The Directors acknowledge the importance of high standards of corporate governance and intend, given the
Company’s size and the constitution of the Board, to comply with the principles set out by the Quoted Companies
Alliance (“QCA”) in the QCA Code.
AIM-quoted companies are required to adopt a recognised corporate governance code with effect from their
admission to trading on AIM however, there is no prescribed corporate governance regime for AIM companies. The
QCA has published the QCA Code, a set of corporate governance guidelines, which include a code of best practice,
comprising principles intended as a minimum standard, and recommendations for reporting corporate governance
matters. The Directors acknowledge the importance of high standards of corporate governance and intend, given
the Company’s size and the constitution of the Board, to comply with the principles set out in the QCA Code.
Since Admission, the Board has comprised six Directors, two executive and four non-executive directors, reflecting a
blend of different experiences and backgrounds. The Board believes that the composition of the Board brings a
desirable range of skills and experience in light of the Company’s challenges and opportunities following Admission,
while at the same time ensuring that no individual (or a small group of individuals) can dominate the Board’s decision
making. The Board meets regularly (typically monthly) to review, formulate and approve the Group’s strategy,
budgets, corporate actions and oversee the Group’s progress towards its goals.
The Company has established an Audit Committee, a Remuneration Committee and a Nomination Committee, each
with formally delegated duties and responsibilities and with written terms of reference. From time to time, separate
committees may be set up by the Board to consider specific issues when the need arises.
Audit committee
The Audit Committee has primary responsibility for monitoring the quality of internal controls and ensuring that the
financial performance of the Company is properly measured and reported on. It will receive and review reports from
the Company’s management and auditors relating to the interim and annual accounts and the accounting and
internal control systems in use throughout the Company. The Audit Committee meets regularly in each financial
year, including ahead of the publication of the interim and annual accounts. It has unrestricted access to the
Company’s auditors, including for agreeing the audit plan. Members of the Audit Committee are Adam Reynolds,
David Poutney and Ric Piper, with Ric Piper acting as chairman.
Remuneration committee
The Remuneration Committee will review the performance of the executive Directors and make recommendations
to the Board on matters relating to their remuneration and terms of employment. It will also make recommendations
to the Board on proposals for the granting of share options and other equity incentives pursuant to any share option
scheme or equity incentive scheme in operation from time to time. In exercising this role, the Directors shall have
regard to the recommendations put forward in the QCA Code. No director is permitted to participate in discussions
or decisions concerning his own remuneration. The Remuneration Committee will meet not less than twice in each
financial year. Members of the Remuneration Committee are Adam Reynolds, David Poutney and Ric Piper, with
Adam Reynolds acting as chairman.
Nomination committee
The Nomination Committee will lead the process for board appointments and make recommendations to the Board.
The Nomination Committee shall evaluate the balance of skills, experience, independence and knowledge on the
board and, in the light of this evaluation, prepare a description of the role and capabilities required for a particular
appointment. The Nomination Committee will meet as and when necessary, but at least once each year. Members
of the Nomination Committee are Adam Reynolds, David Poutney and Ric Piper, with Adam Reynolds acting as
chairman.
Board Independence
In line with the QCA Code the Board has considers that Adam Reynolds, Dr Patrick Strollo and Ric Piper are
independent directors. David Poutney is a substantial shareholder in the Company and is not considered
independent. Mr Reynolds has assisted the Company by introducing investors since 2019. The Board does not
consider Mr Reynolds’ involvement in this capacity adversely impacts the assessment of his independence.
By order of the Board of Directors and signed on behalf of the Board
Tony Dyer
Chief Financial Officer
29 June 2023
Belluscura plc
Report and financial statements for the year ended 31 December 2022
11
DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2022
The Directors present their annual report and the audited financial statements for the year ended 31 December 2022.
The principal activity of the parent company is that of a holding management company and that of the Group is to
develop and commercialise in oxygen related medical device products. This is achieved by using its proprietary
oxygen enrichment technologies to advance the use of oxygen in medical products.
Review of the Business
Belluscura is a public English company limited by shares founded on the principle of making healthcare both more
affordable and more available while returning a strong profit to our shareholders.
In February 2017, the Company entered into a co-exclusive licence and development agreement with Separation
Design Group (“SDG”) to complete the development of the X-PLOR, a portable oxygen concentrator, used to deliver
concentrated oxygen to a patient requiring oxygen therapy. Belluscura and SDG delivered a working prototype
within five months of acquiring the X-PLOR licence. X-PLOR received 510k clearance from the FDA on 2 March 2021.
Further information about the business (including an indication of likely future developments in the business and
particulars of significant events which have occurred since the end of the financial year) is provided in the Group’s
Strategic Report, being together the Chairman’s Statement on page 2, the Chief Executive’s Review on page 3 and
the Financial Review on page 6.
Research and development
The Group continues to invest in the development of the X-PLOR range of products.
Proposed dividend
No dividend was paid or was proposed during the period ended 31 December 2022.
Directors
The following Directors held office during the period, and to the date of this report.
Appointed
Adam Reynolds
21 April 2021
Robert (“Bob”) Rauker
18 August 2016
Anthony (“Tony”) Stephen Dyer
13 November 2017
Dr Patrick Strollo
12 April 2021
David Poutney
28 May 2021
Richard (“Ric”) John Piper
28 May 2021
Going concern
Commercial Background
US FDA 510(k) clearance of the Group’s X-PLOR was received on 2 March 2021. The Group launched X-PLOR in the US
in September 2021, the next generation X-PLOR in October 2022 and released the DISCOV-R for Pre-Market
Evaluation in June 2023.
In March 2022, we signed a manufacturing Master Supply Agreement ("MSA") with InnoMax Medical Technology,
Ltd ("InnoMax") to manufacture the X-PLOR portable POC in China alongside US manufacturing. Innomax is
anticipated to directly source most of their own components from the second half of 2023, which will also result in a
significant margin improvement and reduction in the Company's inventory levels.
In April 2022, the Group took the decision to transfer its US manufacturing in-house, to increase production output
at high quality standards, and achieve a significant reduction in production costs. This was successfully completed at
the end of July 2022.
The decision to bring our US manufacturing in-house from our contract manufacturer along with the initial support
of the set-up of Innomax manufacturing in China, resulted in significant investment in Raw Material Inventory and
Deposits which, at 31 December 2022, stood at $10.77m (2021: $1.78m). Cash was $2.04m.
Fundraising
The Group raised $22.5m after expenses in its IPO on the AIM market of the London Stock Exchange on 28 May 2021
and $7.1m after expenses from investors in May 2022 to support the inventory requirements of the new
manufacturing agreement. Since 31 December 2022, $5.1m after expenses was raised through the placing of Loan
Notes in February 2023, and $3.7m after expenses through an equity placing in June 2023.
Belluscura plc
Report and financial statements for the year ended 31 December 2022
12
At 20 June 2023, the Group held approximately $9.6 in Raw Material Inventory, Inventory deposits and Finished Goods.
Cash was $4.2, including the $3.7m raised in June 2023, as referred to below.
Prospects and Forecasts
The launch in Summer 2023 of the award winning DISCOV-R product will be transformational for the Group. We
already have over 125 Distributors requesting access to the DISCOV-R, and we expect demand to be significant. The
majority of the development and capital costs for DISCOV-R have already been incurred.
The Group’s forecasts, including the expected significant demand for the DISCOV-R, alongside the release of working
capital through the sale of goods from its existing inventory, indicate that the Group has sufficient cash reserves to
operate within the level of its current facilities for a period of 12 months from the date of approval of the financial
statements.
The Group's forecasts, taking account of reasonably possible downsides in trading performance and development
costs/timelines, and the risks to these projections (set out in the Principal Risks and Uncertainties section of the Group
Strategic Report on Page 7) have been considered by the Board in its assessment of these forecasts.
Based on the above, the directors believe it remains appropriate to prepare the financial statements on a going
concern basis.
Political contributions
Neither the Company nor any subsidiaries made any political donations or incurred any political expenditure during
the period.
Remuneration Report (this is a voluntary unaudited disclosure note)
Directors’ Emoluments
Directors’ emoluments are detailed in note 7.1.
Directors’ beneficial interests in shares
As at 27 June 2023
No of Shares
As at 31 December 2022
No of Shares
Adam Reynolds
1,808,176
1,634,471
Robert Rauker
1,035,684
955,684
Anthony Dyer
778,345
778,345
Dr Patrick Strollo
-
-
David Poutney
14,255,731
11,605,731
Ric Piper
80,000
80,000
Disclosure of information to auditor
The directors who held office at the date of approval of this directors’ report confirm that, so far as they are each
aware, there is no relevant audit information of which the Company’s auditor is unaware; and each director has taken
all the steps that he ought to have taken as a director to make himself aware of any relevant audit information and
to establish that the Company’s auditor is aware of that information.
Auditor
In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of Gerald Edelman
LLP as auditor of the Company is to be proposed at the forthcoming Annual General Meeting.
By order of the Board of Directors and signed on behalf of the Board
Robert Rauker
Chief Executive Officer
29 June 2023
Belluscura plc
Report and financial statements for the year ended 31 December 2022
13
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE STRATEGIC REPORT, THE
DIRECTORS’ REPORT AND THE FINANCIAL STATEMENTS
The directors are responsible for preparing the Strategic Report, the Directors’ Report and the Group and parent
company financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial
year. Under that law they have elected to prepare the group financial statements in accordance with International
Financial Reporting Standards as adopted by the UK as adopted IFRS and applicable law and have elected to prepare
the parent company financial statements in accordance with UK accounting standards and applicable law (UK
Generally Accepted Accounting Practice), including FRS 101 Reduced Disclosure Framework.
Under company law the directors must not approve the financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and parent company and of their profit or loss for that period.
In preparing each of the Group and parent company financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
•
make judgements and estimates that are reasonable, relevant, reliable and prudent;
•
for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted
by the UK;
•
for the parent company financial statements, state whether applicable UK accounting standards have been
followed, subject to any material departures disclosed and explained in the financial statements;
•
assess the Group and parent company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and
•
use the going concern basis of accounting unless they either intend to liquidate the Group or the parent
company or to cease operations or have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent
company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are
responsible for such internal control as they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking
such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and
other irregularities.
Belluscura plc
Report and financial statements for the year ended 31 December 2022
14
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BELLUSCURA PLC
Opinion
We have audited the financial statements of Belluscura Plc (the 'parent company') and its subsidiaries (the 'group')
for the year ended 31 December 2022 which comprise the consolidated statement of profit & loss and other
comprehensive income, consolidated and company balance sheet, consolidated and company statements of
changes in equity, consolidated statement of cash flows, and notes to the financial statements, including a
summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group financial statements is
applicable law and UK adopted international accounting standards. The financial reporting framework that has
been applied in the preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United
Kingdom Generally Accepted Accounting Practice).
In our opinion:
•
the financial statements give a true and fair view of the state of the group's and of the parent company's
affairs as at 31 December 2022 and of the group's loss for the year then ended;
•
the group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
•
the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice;
•
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit
of the financial statements section of our report. We are independent of the group and the parent company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors'
assessment of the group and parent company’s ability to continue to adopt the going concern basis of accounting
included reviews of cash reserves and critical review of forecasts for a period of 12 months from when the financial
statements are authorised for issue.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group's ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all
risks identified by our audit.
•
Going Concern basis of preparation
•
Valuation of product development
These are explained in more detail below:
Belluscura plc
Report and financial statements for the year ended 31 December 2022
15
Key audit matter
How our audit addressed the key audit matter
Going concern
As disclosed in Note 2.1.1, the financial review on
page 25, the financial statements have been
prepared on a going concern basis.
There is the risk that the group may not be able to
continue as a going concern and finance its
operations for a period of at least 12 months from
the date of approval of the financial statements.
We have performed the following audit procedures:
• In auditing the financial statements, we have
concluded that the director's use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
• Our evaluation of the directors’ assessment of the
entity’s ability to continue to adopt the going concern
basis of accounting included reviews of expected cash
flows for a period of 15 months, to determine expected
cash burn, which was compared to the liquid assets
held in the entity;
• The cashflow forecasts contained ongoing running
costs of the group and committed expenditure at the
date of approving the financial statements. The key
assumptions that impacted the conclusion are the
levels of future revenue generated, and the ability to
control the operating costs;
• We ensured reliability of the forecasts by: agreeing
historical
actual
results
to
budgeted
results;
challenging the current forecast and its assumptions;
and checked the clerical accuracy of management’s
forecasts; and
• We also considered the appropriateness of the group’s
disclosures in relation to going concern in the financial
statements.
Based on the work we have performed, we have not
identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast
significant doubt on the group's ability to continue as a
going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
Valuation of product development - carrying
value of intangible assets and capitalization of
development costs.
As disclosed in Note 2.8, the financial review on
page 28, the cost of developing the product are
capitalized as intangibles and amortised from
the date products are launched, taking into
account the Directors opinion as to the expected
further development of the technology and is
regularly reassessed.
There is the risk that the group may be carrying
intangibles which is impaired and not generating
value to the group.
We have performed the following audit procedures:
• Under IAS 38 there are strict capitalization criteria,
being that the intangible assets can be measured
reliably and there is probably future economic benefit
attributable to the asset. We tested the assertions
under IAS 38.
• We have assessed the useful economic life of the asset
and indicators of impairment given the group is loss
making.
Belluscura plc
Report and financial statements for the year ended 31 December 2022
16
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures
and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a
whole.
Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
$296,000
$100,000
How we determined it
Based on 1.25% of gross assets
Based on 1.25% of gross assets capped below
group materiality
Rationale for
benchmark applied
We believe that gross assets is a primary
measure used by shareholders in assessing
the performance of the Company as it is the
holding company within the group.
We believe that gross assets is a primary
measure used by shareholders in assessing the
performance of the Company and is a generally
accepted auditing benchmarks.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components is ranged from $.
Reporting threshold
We agreed with the Audit Committee that we would report to them misstatements identified during our audit
above $14,800 (Group audit) and $5,000 (Company audit) as well as misstatements below those amounts that, in
our view, warranted reporting for qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgments, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that
are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias by the directors that represented a risk of
material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group and the Company, the accounting
processes and controls, and the industry in which they operate.
We performed audits of the complete financial information of Belluscura PLC
We conducted sufficient appropriate audit procedures on the subsidiary, Belluscura LLC, for the purposes of the
consolidation.
We have audited all components within the Group, and no unaudited components remain.
Other information
The directors are responsible for the other information. The other information comprises the information included
in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent, material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of, this other information, we are
required to report that fact. We have nothing to report in this regard.
Belluscura plc
Report and financial statements for the year ended 31 December 2022
17
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors' report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
•
the strategic report and the directors' report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and parent company and its environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors' remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on page 13, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group's and parent company's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the group or the parent company
or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
The objectives of our audit, in respect to fraud are; to identify and assess the risks of material misstatement of the
financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of
material misstatements due to fraud, through designing and implementing appropriate responses; and to
respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility
for the prevention and detection of fraud rests with both those charged with governance of the entity and
management.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations, was as follows:
•
the senior statutory auditor ensured the engagement team collectively had the appropriate competence,
capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
•
we identified the laws and regulations applicable to the company through discussions with directors and other
management, and from our knowledge and experience of the entity's activities.
•
we focused on specific laws and regulations which we considered may have a direct material effect on the
financial statements or the operations of the company, including Companies Act 2006, taxation legislation, data
protection, employment and health and safety legislation;
•
we assessed the extent of compliance with the laws and regulations identified above through making enquiries
of management and reviewing legal expenditure; and
•
identified laws and regulations were communicated within the audit team regularly and the team remained
alert to instances of non-compliance throughout the audit.
•
we assessed the susceptibility of the company's financial statements to material misstatement, including
obtaining an understanding of how fraud might occur, by:
•
making enquiries of management as to where they considered there was susceptibility to fraud, their
knowledge of actual, suspected and alleged fraud; and
•
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and
regulations.
Belluscura plc
Report and financial statements for the year ended 31 December 2022
18
To address the risk of fraud through management bias and override of controls, we:
•
performed analytical procedures to identify any unusual or unexpected relationships;
•
tested journal entries to identify unusual transactions;
•
assessed whether judgements and assumptions made in determining the accounting estimates were
indicative of potential bias; and
•
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures
which included, but were not limited to:
•
agreeing financial statement disclosures to underlying supporting documentation;
•
reading the minutes of meetings of those charged with governance; and
•
enquiring of management as to actual and potential litigation and claims
There are inherent limitations in our audit procedures described above. The more. removed that laws. and
regulations are from financial transactions, the less likely it is that we Would become aware of non-compliance.
Auditing standards also limit the audit procedures required to identify noncompliance with laws and regulations
to; enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if
any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they
may involve deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Councils website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor's report.
Other matters which we are required to address
The non-audit services: prohibited by the FRC's Ethical Standard were not provided to the Group or the parent
Company and we remain independent of the group and the parent company in conducting our audit. Out audit
opinion is consistent with the additional report to the audit committee.
Use of this report
This report including the opinions, has been prepared for and only for the parent company's members as a body
in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any other purpose, or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Hemen Doshi (Senior Statutory Auditor)
For and on behalf of Gerald Edelman LLP,
Chartered Accountants
Statutory Auditor
73 Cornhill
London,
United Kingdom
EC3V 3QQ
29 June 2023
Belluscura plc
19
CONSOLIDATED STATEMENT OF PROFIT & LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2022
Group
2022
2021
Note
US $
US $
Continuing Operations
Revenue
5
1,542,948
420,316
Discounts Granted
(144,866)
-
Cost of sales
(1,329,977)
(472,487)
Gross Profit/(Loss)
68,105
(52,171)
Other operating income
6.1
8,703
209,690
Other direct costs
6.2
(136,825)
(18,914)
Administrative expenses
6.3
(8,068,895)
(5,325,262)
Operating Loss
(8,128,912)
(5,186,657)
Finance costs
8
(24,073)
(26,837)
Finance costs - net
(24,073)
(26,837)
Loss before income tax
(8,152,985)
(5,213,494)
Income tax expense
9
-
-
Loss after tax for the period
(8,152,985)
(5,213,494)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences – foreign operations
(3,827,808)
(1,153,148)
Total other comprehensive income
(3,827,808)
(1,153,148)
Total comprehensive loss for the year attributable to the equity holders
(11,980,792)
(6,366,642)
Earnings per share
Basic: Loss per share
10
(0.068)
(0.055)
Diluted: Loss per share
10
(0.068)
(0.055)
Items in the statement above are disclosed net of tax.
The notes on pages 25 to 48 are an integral part of these consolidated financial statements.
Adjusted EBITDA1
Group
2022
2021
US $
US $
Total comprehensive loss for the year
(11,980,792)
(6,366,642)
Add back:
Administrative expenses Realised & unrealised FX movements in
(2,877,886)
(734,678)
Other comprehensive income FX currency translation differences
3,827,808
1,153,148
Net foreign exchange movement2
949,922
418,470
Finance Costs
24,073
26,837
Product development amortisation
2,911,988
156,774
Costs relating to fundraising activities
-
646,042
Surrendered share options and share option tax
162,505
611,947
Minimum royalties in excess of sales royalties
763,430
147,752
Obsolete raw material inventory and inventory adjustments
609,848
-
Contract Manufacturer Capacity Costs
128,607
-
Share based payments
229,241
180,091
Adjusted EBITDA
(6,201,178)
(4,178,729)
1
Reconciliation to Adjusted EBITDA measure
Adjusted EBITDA is the Group’s key adjusted profit measure. Total comprehensive loss for the year is adjusted to exclude; Foreign exchange
translation differences along with unrealised and unrealised foreign exchange movements, depreciation and amortisation of product
development, costs relating to fundraising activities, surrendered share options and share option taxes, minimum royalties in excess of sales
royalties, share based payments, obsolete 1st generation X-PLOR inventory adjustments and contract manufacturer capacity costs.
2
Net foreign exchange movements
The US$ strengthened against £Sterling by 12% during the year (1 January 2022 - $1.35:£1.00; 31 December 2022 - $1.21:£1.00). Due to the size of
the Intercompany Loan from the PLC to the US subsidiary which is fixed in £Sterling, this creates an accounting presentational impact
between Administration Expenses and Other Comprehensive Income, which to a large extent can be netted off against one another.
•
Realised FX movements in administrative expenses arise from the revaluation of £Sterling cash balances into US$
•
Unrealised FX movements in administrative expenses arise from the revaluation of the Intercompany Loan fixed in £Sterling into US$
•
Foreign currency translation differences in Other Comprehensive Income arise from the revaluation of the PLC balance sheet into US$
Belluscura plc
20
CONSOLIDATED BALANCE SHEET
As at 31 December 2022
Group
2022
Restated1 2021
Note
US $
US $
Assets
Non-current assets
Tangible assets
12
152,717
47,156
Product development
13
8,668,732
6,723,883
Right of use asset
12
246,924
277,803
Non-current assets
9,068,373
7,048,842
Current assets
Inventory
14
8,431,031
309,159
Trade and other receivables
15
4,054,102
2,757,363
Cash and cash equivalents
16
2,044,836
15,889,552
Current assets
14,529,969
18,956,074
Total assets
23,598,342
26,004,916
Current liabilities
Trade and other payables
20
(3,045,788)
(1,084,601)
Current liabilities
(3,045,788)
(1,084,601)
Non-current liabilities
Trade and other payables
20
(200,432)
(247,823)
Non-current liabilities
(200,432)
(247,823)
Total liabilities
(3,246,220)
(1,332,424)
Net assets
20,352,122
24,672,492
Equity attributable to the owners of the parent
Share capital
18
1,662,185
1,548,227
Share premium
18
33,379,947
26,025,760
Capital contribution
19
165,000
165,000
Retained earnings
19
(10,310,673)
(2,349,966)
Translation reserve
19
(4,544,337)
(716,529)
Total equity
20,352,122
24,672,492
1 Results are restated to reflect the consolidation of the Employee Benefit Trust into the Group Accounts
The notes on pages 25 to 48 are an integral part of these financial statements.
The financial statements on pages 19 to 48 were authorised for issue by the Board of Directors on 29 June 2023
and were signed on its behalf.
Robert Rauker
Tony Dyer
Chief Executive Officer
Chief Financial Officer
Belluscura plc
registered number 09910883
Belluscura plc
21
COMPANY BALANCE SHEET
At 31 December 2022
Company
Note
2022
US $
2021
US $
Assets
Non-current assets
Tangible assets
12
7,107
5,077
Intangible assets
13
-
Right of use asset
67,169
-
Loans to subsidiaries
15
26,725,430
14,570,635
Non-current assets
26,799,706
14,575,712
Current assets
Trade and other receivables
15
471,965
707,230
Cash and cash equivalents
16
1,237,288
13,063,238
Current assets
1,709,253
13,770,468
Total assets
28,508,959
28,346,180
Current liabilities
Trade and other payables
20
(155,682)
(86,677)
Current liabilities
(155,682)
(86,677)
Non-current liabilities
Trade and other payables
20
(56,563)
(23,026)
Non-current liabilities
(56,563)
(23,026)
Total liabilities
(212,245)
(109,703)
Net assets
28,296,714
28,236,477
Equity attributable to the owners of the parent
Share capital
18
1,662,185
1,548,227
Share premium
18
33,427,947
26,025,760
Capital contribution
19
165,000
165,000
Retained earnings
19
(2,414,081)
1,214,019
Translation reserve
19
(4,544,337)
(716,529)
Total equity
28,296,714
28,236,477
The Parent Company’s loss before tax for the period 31 December 2022 was $3,820,378 (2021: $3,668,779).
The Group has used the exemption under S408 CA 2006 not to disclose the company income statement.
The notes on pages 25 to 48 are an integral part of these financial statements.
The financial statements on pages 19 to 48 were authorised for issue by the Board of Directors on 29 June 2023.
Robert Rauker
Tony Dyer
Chief Executive Officer
Chief Financial Officer
Belluscura plc
registered number 09910883
Belluscura plc
22
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Attributable to equity holders of the parent company
Group
Note
Ordinary
Shares
US $
Share
Premium
US $
Translation
Reserve
US $
Capital
Contribution
US $
Retained
earnings
US $
Total
US $
Balance at 1 January 2021
823,201
556,683
436,619
165,000
2,687,361
4,668,864
Issue of ordinary shares
18
725,026
25,469,077
-
-
-
26,194,103
Reduction in capital
-
-
-
-
-
-
Loss for the year
19
-
-
-
-
(5,213,494)
(5,213,494)
Other comprehensive income
19
-
-
(1,153,148)
-
-
(1,153,148)
Total comprehensive income
-
-
(1,153,148)
-
(5,213,494)
(6,366,642)
Share based payments
19
-
-
-
-
176,167
176,167
Balance at 31 December 2021
1,548,227
26,025,760
(716,529)
165,000
(2,349,966)
24,672,492
Balance at 1 January 2022
1,548,227
26,025,760
(716,529)
165,000
(2,349,966)
24,672,492
Issue of ordinary shares
18
113,958
7,402,187
-
-
-
7,516,145
Loss for the year
19
-
-
-
-
(8,152,985)
(8,152,985)
Other comprehensive income
19
-
-
(3,827,808)
-
-
(3,827,808)
Total comprehensive income
-
-
(3,827,808)
-
(8,152,985)
(11,980,793)
Share based payments
19
-
-
-
-
192,278
192,278
Purchase of share by EBT
-
(48,000)
(48,000)
Balance at 31 December 2022
1,662,185
33,379,947
(4,544,337)
165,000
(10,310,673)
20,352,122
The notes on pages 25 to 48 are an integral part of these financial statements.
Belluscura plc
23
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Attributable to equity holders of the parent company
Group
Note
Ordinary
Shares
US $
Share
Premium
US $
Translation
Reserve
US $
Capital
Contribution
US $
Retained
earnings
US $
Total
US $
Balance at 1 January 2021
823,201
556,683
436,619
165,000
4,706,632
6,688,135
Issue of ordinary shares
18
725,026
25,469,077
-
-
-
26,149,103
Reduction in capital
-
-
-
-
-
-
Loss for the year
19
-
-
-
-
(3,668,780)
(3,668,780)
Other comprehensive income
19
-
-
(1,153,148)
-
-
(1,153,148)
Total comprehensive income
-
-
(1,153,148)
-
(3,668,780)
(4,821,928)
Share based payments
19
-
-
-
-
176,167
176,167
Balance at 31 December 2021
1,548,227
26,025,760
(716,529)
165,000
1,214,019
28,236,477
Balance at 1 January 2022
1,548,227
26,025,760
(716,529)
165,000
1,214,019
28,236,477
Issue of ordinary shares
18
113,958
7,402,187
-
-
-
7,516,145
Loss for the year
19
-
-
-
-
(3,820,378)
(3,820,378)
Other comprehensive income
19
-
-
(3,827,808)
-
-
(3,827,808)
Total comprehensive income
-
-
(3,827,808)
-
(3,820,378)
(7,648,186)
Share based payments
19
-
-
-
-
192,278
192,278
Balance at 31 December 2022
1,662,185
33,427,947
(4,544,337)
165,000
(2,414,081)
28,296,714
The notes on pages 25 to 48 are an integral part of these financial statements.
Belluscura plc
24
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
Group
2022
Restated1 2021
Note
US $
US $
Cash flows from operating activities
Cash generated from operations
24
(14,906,368)
(6,987,072)
Net cash used in operating activities
(14,906,368)
(6,987,072)
Cash flows from investing activities
Purchases of property, plant and equipment
12
(144,776)
(45,461)
Intangible assets under development
13
(4,856,846)
(2,750,997)
Purchase of ROU asset
(75,509)
-
Net cash used in investing activities
(5,077,131)
(2,796,458)
Cash flows from financing activities
Proceeds from issuance of ordinary shares (net)
18
7,467,030
25,469,077
Purchase of share by EBT
18
(48,000)
-
Lease Payments
22
(130,780)
(108,392)
Net cash generated from financing activities
7,288,250
25,360,685
Net (decrease)/increase in cash and cash equivalents
(12,695,249)
15,577,155
Cash and cash equivalents at beginning of year
15,889,552
520,070
Exchange loss on cash and cash equivalents
(1,149,467)
(207,673)
Cash and cash equivalents at end of year
2,044,836
15,889,552
1 Results are restated to reflect the consolidation of the Employee Benefit Trust into the Group Accounts
The notes on pages 25 to 48 are an integral part of these financial statements.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
25
1.
General Information
Belluscura plc is a public company limited by shares incorporated in England and Wales and domiciled in the
UK. Company Registration No. 09910883. On 28 November 2017 the Company changed its name from
Belluscura Limited to Belluscura plc.
The principal accounting policies applied in the preparation of these consolidated financial statements are set
out below. These policies have been consistently applied, unless otherwise stated.
2.
Accounting Policies
2.1
Statement of compliance
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as
the “Group”). The parent company financial statements present information about the Company as a separate
entity and not about its Group.
These consolidated financial statements are prepared in accordance with United Kingdom adopted
International Financial Reporting Standards (IFRS) and issued by the International Accounting Standards
Board (IASB). The consolidated financial statements are presented in US Dollars, the Group’s functional
currency.
The financial statements for the Company have been prepared in accordance with Financial Reporting
Standard 101 by applying the recognition and measurement requirements of United Kingdom adopted
International Financial Reporting Standards (“IFRS”), amended where necessary in order to comply with
Companies Act 2006. The Company has notified shareholders of this disclosure.
Critical accounting estimates and judgements made by the directors, in the application of these accounting
policies that have significant effect on the financial statements are disclosed in note 4 (a)-(c) applicable for the
whole Group and 4 (d) applicable for the Company only.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of
the following disclosures:
•
a Cash Flow Statement and related notes;
•
Disclosures in respect of transactions with wholly owned subsidiaries;
•
Disclosures in respect of capital management;
•
The effects of new but not yet effective IFRSs;
•
Disclosures in respect of the compensation of Key Management Personnel; and
•
Related party transactions with wholly owned members of the Group
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the
exemptions under FRS 101 available in respect of the following disclosures
•
Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7
Financial Instrument Disclosures.
•
IFRS 2 Share Based Payments in respect of group settled share based payments
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods
presented in these financial statements
2.1.1 Going concern
Commercial Background
US FDA 510(k) clearance of the Group’s X-PLOR was received on 2 March 2021. The Group launched X-PLOR in
the US in September 2021, the next generation X-PLOR in October 2022 and released the DISCOV-R for Pre-
Market Evaluation in June 2023.
In March 2022, we signed a manufacturing Master Supply Agreement ("MSA") with InnoMax Medical
Technology, Ltd ("InnoMax") to manufacture the X-PLOR portable POC in China alongside US manufacturing.
Innomax is anticipated to directly source most of their own components from the second half of 2023, which
will also result in a significant margin improvement and reduction in the Company's inventory levels.
In April 2022, the Group took the decision to transfer its US manufacturing in-house, to increase production
output at high quality standards, and achieve a significant reduction in production costs. This was successfully
completed at the end of July 2022.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
26
The decision to bring our US manufacturing in-house from our contract manufacturer along with the initial
support of the set-up of Innomax manufacturing in China, resulted in significant investment in Raw Material
Inventory and Deposits which, at 31 December 2022, stood at $10.77m (2021: $1.78m). Cash was $2.04m.
Fundraising
The Group raised $22.5m after expenses in its IPO on the AIM market of the London Stock Exchange on 28 May
2021 and $7.1m after expenses from investors in May 2022 to support the inventory requirements of the new
manufacturing agreement. Since 31 December 2022, $5.1m after expenses was raised through the placing of
Loan Notes in February 2023, and $3.7m after expenses through an equity placing in June 2023.
At 20 June 2023, the Group held approximately $9.6 in Raw Material Inventory, Inventory deposits and Finished
Goods. Cash was $4.2, including the $3.7m raised in June 2023, as referred to below.
Prospects and Forecasts
The launch in Summer 2023 of the award winning DISCOV-R product will be transformational for the Group.
We already have over 125 Distributors requesting access to the DISCOV-R, and we expect demand to be
significant. The majority of the development and capital costs for DISCOV-R have already been incurred.
The Group’s forecasts, including the expected significant demand for the DISCOV-R, alongside the release of
working capital through the sale of goods from its existing inventory, indicate that the Group has sufficient
cash reserves to operate within the level of its current facilities for a period of 12 months from the date of
approval of the financial statements.
The Group's forecasts, taking account of reasonably possible downsides in trading performance and
development costs/timelines, and the risks to these projections (set out in the Principal Risks and Uncertainties
section of the Group Strategic Report on Page 7) have been considered by the Board in its assessment of these
forecasts.
Based on the above, the directors believe it remains appropriate to prepare the financial statements on a going
concern basis.
2.1.2 Measurement convention
The financial statements are prepared on the historical cost basis except that assets and liabilities are stated
at their fair value.
2.1.3 Changes in accounting policy
In these financial statements, where the Group has adopted new or updated standards, there is not a material
impact on the financial information and on the Company’s future financial statements.
2.2
Basis of Consolidation
Belluscura plc was incorporated on 10 December 2015. On 16 May 2016, a US incorporated company, Belluscura
LLC, was formed as a 100% owned subsidiary. Subsidiaries are entities controlled by the Group.
The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. In assessing control, the
Group takes into consideration potential voting rights. The acquisition date is the date on which control is
transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases. Losses applicable to the
non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes
the non-controlling interests to have a deficit balance.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated. Unrealised losses are eliminated in the same way as unrealised gains, but only to
the extent that there is no evidence of impairment.
IFRS 13 did not affect any fair value measurements of the Group’s assets or liabilities and therefore had no effect
on the Group’s financial position or performance.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
27
2.3
Foreign currencies
(a) Functional and presentation currency
These consolidated financial statements are presented in US Dollars which is the presentation currency of
the Group, because the majority of the Group’s transactions are undertaken in US Dollars. Each entity within
the Group has its own functional currency which is dependent on the primary economic environment in
which that subsidiary operates.
(b) Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing
at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and
losses resulting from the settlement of such transactions and from the translation at the year-end exchange
rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are
presented in the income statement within ‘finance income or costs’.
(c) Group companies
The results and financial position of all Group entities (none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
(i)
assets and liabilities for each balance sheet presented are translated at the closing exchange rates at
the date of that balance sheet
(ii)
income and expense for each income statement are translated at the average rates of exchange
during the year (unless this average is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses are translated at the
rate on the dates of the transactions)
(iii)
all resulting exchange differences are recognised in other comprehensive income.
2.4
Business combinations
All business combinations are accounted for by applying the acquisition method. Business combinations are
accounted for using the acquisition method as at the acquisition date, which is the date on which control is
transferred to the Group.
For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:
•
the fair value of the consideration transferred; plus
•
the recognised amount of any non-controlling interests in the acquiree; plus
•
the fair value of the existing equity interest in the acquiree; less
•
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. Costs related
to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as
incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent
consideration is classified as equity, it is not remeasured and settlement is accounted for within equity.
Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or
loss.
On a transaction-by-transaction basis, the Group elects to measure non-controlling interests, which have both
present ownership interests and are entitled to a proportionate share of net assets of the acquiree in the event
of liquidation, either at its fair value or at its proportionate interest in the recognised amount of the identifiable
net assets of the acquiree at the acquisition date. All other non-controlling interests are measured at their fair
value at the acquisition date.
2.5
Employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided. A liability is recognised for the amount expected to be paid under short-term cash
bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as
a result of past service provided by the employee and the obligation can be estimated reliably.
Share-based payment transactions
Share-based payment arrangements in which the Group receives goods or services as consideration for its
own equity instruments are accounted for as equity-settled share-based payment transactions.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
28
The grant date fair value of share-based payment awards granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the period that the employees become unconditionally
entitled to the awards. 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.
The amount recognised as an expense is adjusted to reflect the actual number of awards for which the related
service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised
as an expense is based on the number of awards that do meet the related service and non-market performance
conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based
payment is measured to reflect such conditions and there is no true-up for differences between expected and
actual outcomes.
2.6
Interest income and expenses
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest
method.
2.7
Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation and accumulated impairment
losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Depreciation of assets is calculated is provided to write off the cost less the estimated residual value of tangible
fixed assets by equal instalments over the estimated useful economic lives as follows: Furniture - 5 years;
Computer equipment - 3 years; Leasehold improvements - 5 years.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the
assets carrying value is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are
recognised within administrative expenses in the income statement. When re-valued assets are sold, the
amounts are included in other reserves are transferred to retained earnings.
2.8
Intangible assets
Licences and development costs
Costs associated with the acquisition of Licences for technologies and distribution rights are recognised as an
intangible asset when they meet the criteria for capitalisation. That is, they are separately identifiable,
measurable and it is probable that economic benefit will flow to the entity.
Further development costs attributable to the licenced technology and recognised as an intangible asset
when the following criteria are met:
(i)
it is technically feasible to complete the technology for commercialisation so it will be available for use;
(ii)
management intends to complete the technology and use or sell it;
(iii) there is an ability to use or sell the technology;
(iv) it can be demonstrated how the technology will generate probable future economic benefits;
(v)
adequate technical, financial and other resources to complete the development and to use or sell the
technology are available; and
(vi) the expenditure attributable to the technology during its development can be reliable measured.
Licences and their associated development costs are amortised over the life of the licence or the underlying
patents, whichever is shorter. The estimated useful life of the licences and development costs is 10-15 years.
Development costs are amortised from the date products are launched, taking into account the Directors
opinion as to the expected further development of the technology and is regularly reassessed.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
29
2.9
Impairment of non-financial assets
The carrying amounts of the non-financial assets, other than inventories and deferred tax assets, are reviewed
at each reporting date to determine whether there is any indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite
useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same
time.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value
less costs to sell. 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. For the purpose of impairment testing, assets that cannot be tested individually are
grouped together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated
recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in
respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and
then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
2.10
Financial assets
2.10.1 Classification
The Group classifies its financial assets depending on the purpose for which the asset was acquired.
Management determines the classification of its financial assets at initial recognition. During the financial
period the Group held loans and receivables that are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are included in current assets, except for maturities
that are greater than 12 months after the end of the reporting year. These are classified as noncurrent assets.
The Group’s loans and receivables comprise ‘trade and other receivables’ in the balance sheet. The Group also
has cash and cash equivalents.
2.10.2 Recognition and measurement
Loans and receivables are recognised on the trade date in which the transaction took place, and are recognised
at their fair value with transaction costs expensed in the income statement. Financial assets are derecognised
when the rights to receive cash flows from the loans or receivables have been collected, expired or transferred
and the Group has subsequently transferred substantially all risks and rewards of ownership.
2.11
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a
legally enforceable right to offset the recognised amounts and there is the intention to settle on a net basis or
realise the asset and settle the liability simultaneously.
2.12
Impairment of financial assets
Assets carried at amortised cost
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine
whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence
indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a
negative effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s
original effective interest rate. Interest on the impaired asset continues to be recognised through the
unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through profit or loss.
Evidence of impairment may include indications of that the debtors or a group of debtors is experiencing
significant financial difficulty, default or delinquency in interest or principal payments, the probability that they
will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a
measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions
that correlate with defaults.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
30
For loans and receivables category, the amount of the loss is measured as the difference between the assets
carrying amount and the present value of estimated future cash flows (excluding future credit losses that have
not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of
the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan
or held-to maturity investment has a variable interest rate, the discount rate for measuring any impairment
loss is the current effective interest rate determined under the contract. As a practical expedient, the Group
may measure impairment on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as the improvement in the
debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the
consolidated income statement.
2.13
Leases
At the inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration.
As a lessee
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-
use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date, plus any initial direct costs incurred, less any
lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by
the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase
option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which
is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is
periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the following:
-
fixed payments, including in-substance fixed payments;
-
variable lease payments that depend on an index or a rate, initially measured using the index or rate as
at the commencement date
-
amounts expected to be payable under a residual value guarantee; and
-
the exercise price under a purchase option that the Group is reasonably certain to exercise,
-
lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension
option, and
-
penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, there is a change in the
Group's estimate of the amount expected to be payable under a residual value guarantee, if the Group changes
its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-
substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the right-of-use asset, to the extent that the right-of-use asset is reduced to nil, with any further adjustment
required from the remeasurement being recorded in profit or loss.
The Group presents right-of-use assets that do not meet the definition of investment property in 'property,
plant and equipment' and lease liabilities in 'loans and borrowings' in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for lease of low-value assets
(liabilities under $5,000 per annum) and short-term leases (less than 12 months). The Group recognises the
lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
31
2.14
Inventory
Inventory comprises goods held for resale and are stated at the lower of cost or net realisable value. Cost is
based on First In, First Out (FIFO) principle and includes all direct expenditure and other appropriate
attributable costs incurred in bringing the inventory to its present location and condition.
2.15
Trade receivables
Trade receivables are amounts due from customers for the sale of goods in the ordinary course of business.
Collection is normally expected within three months or less (in the normal operating cycle of the business) and
is classified as current assets. In the rare circumstances that they exceed a period of greater than one year they
are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less any provision for impairment.
2.16
Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at
call with other banks, other short term highly liquid investments with maturities of three months or less and
bank overdrafts.
2.17
Equity
Share capital and share premium
The share capital account has been established to represent the nominal value for all share issues. The share
premium account has been established to represent the excess of proceeds over the nominal value for all share
issues, including the excess of the exercise share price over the nominal value of the shares on the exercise of
share options as and when they occur. Incremental costs directly attributable to the issue of new ordinary
shares and new shares options are shown in equity as a deduction, net of tax, from the proceeds.
Capital contribution
Capital contributions are contributions made by the ultimate parent for which no consideration is given.
Retained earnings
Retained earnings are the consolidated retained earnings and share based payments reserve for the Group or
Company.
Translation reserve
The translation reserve is the accumulated reserves created by Foreign Exchange Differences on the
consolidation of Group balances into the reporting currency of US$.
2.18
Trade payables
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of
business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year
or less (or in the normal operating cycle of business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest rate method.
2.19
Current and deferred tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated
income statement, except to the extent that it relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity,
respectively.
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the
balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation and establishes provisions where appropriate on amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary timing differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax
liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income 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 accounting nor taxable profit or loss.
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
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
32
the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it
is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in
subsidiaries except for deferred income tax liability where the timing of the reversal of the temporary difference
is controlled by the Group and probably will not reverse in the foreseeable future.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in
subsidiaries only to the extent that it is probable the temporary difference will reverse in full in the future and
there is sufficient taxable profit available against which the temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income
taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where
there is an intention to settle balances on a net basis.
2.20 Provisions
Provisions and any other anticipated foreseen liabilities 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. Restructuring provisions comprise lease
termination penalties, and employee termination payments. Provisions are not recognised for future operating
losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering a class of obligations as a whole. A provision is recognised even if the likelihood
of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an
interest expense.
2.21
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts
receivable for the goods supplied, stated net of discounts, and value added taxes. The Group recognises
revenue when the amount of revenue can reliably be measured; when it is probable that future economic
benefits will flow to the Group; and when specific criteria have been met for each of the Group’s activities,
described below. The Group bases its estimate of return on historical results taking into consideration type of
customer, type of transaction and specifics of each arrangement.
Income is recognised from on the sale of goods when the goods have been shipped to the customer.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable.
2.22
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable
assurance that the grant conditions will be met and the grants will be received. A grant that specifies
performance conditions is recognised in income when the performance conditions are met. Where a grant
does not specify performance conditions it is recognised in income when the proceeds are received or
receivable. A grant received before the recognition criteria are satisfied is recognised as a liability
3.
Financial Risk Management
The Company’s Directors review the financial risk of the Group. Due to the early stage of its operations the
Group has not entered into any form of hedging instruments to assist in the management of risk during the
period under review.
3.1
Financial risk factors
Liquidity Risk
Cash flow forecasting is performed on a Group basis. Directors monitor rolling forecasts of the Group’s liquidity
requirements to ensure it has sufficient cash to meet operational needs.
At the reporting date the Group held bank balances of US $1,790,836. The contractual maturities of financial
liabilities are shown in note 17.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
33
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments.
Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency
other than their functional currency. The Group’s policy is, where possible, to allow Group entities to settle
liabilities denominated in their functional currency, with the cash generated from their own operations in that
currency. Where Group entities have liabilities denominated in a currency other than their functional currency
(and have insufficient reserves of that currency to settle them), cash already denominated in that currency will,
where possible, be transferred from elsewhere within the Group.
Due to low value and number of financial transactions that involve foreign currency and the fact that the Group
has no borrowings to manage, the Directors have not entered into any arrangements, adopted or approved
the use of derivative financial instruments to assist in the management of the exposure of these risks. The
Group’s exposure to foreign currency risk is based on the carrying amount for monetary financial instruments.
The gross foreign currency exposure below is with respect of pound Sterling to US Dollars.
31 December 2022
31 December 2021
Cash and cash equivalents
553,070
5,579,784
Trade receivables (gross)
35,725,430
20,945,635
Trade payables
(212,246)
(109,704)
Net exposure
36,066,254
26,415,715
The trade receivables shown above relates to the UK entity’s intercompany balance with the US entity, which
will be repaid in Sterling.
A 10% percent strengthening of the pound sterling against the US Dollar at 31 December 2022 would have
increased (decreased) equity and profit or loss by the amounts shown below. This calculation assumes that
the change occurred at the balance sheet date and had been applied to risk exposures existing at that date.
This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain
constant. The analysis is performed on the same basis for 31 December 2021.
Equity
Profit or Loss
2022
US $
2021
US $
2022
US $
2021
US $
(3,606,625)
(2,641,571)
(3,606,625)
(2,641,571)
A 10% percent weakening of the above currencies against the pound sterling at 31 December 2022 would have
had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all
other variables remain constant.
Translation exposures
The Group’s results, as presented in US Dollars, are subject to fluctuations as a result of exchange rate
movements. The Group does not hedge this translation exposure to its earnings.
Gains or losses arise on the retranslation of the net assets of foreign operations at different reporting dates and
are recognised within the consolidated statement of comprehensive income. They will predominantly relate
to the retranslation of opening net assets at closing foreign exchange rates, together with the retranslation of
retained foreign profits for the year (that have been accounted for in the consolidated income statement at
average rates) at closing rates. Exchange rates for major currencies are set out below
The following exchange rates have been used in the translation of the results of foreign operations:
Closing rate
for 2020
Weighted
average rate
for 2021
Closing rate
for 2021
Weighted
average rate
for 2022
Closing rate
for 2022
US Dollar
1.3652
1.3751
1.3534
1.2372
1.2098
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
34
3.2
Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to adjust or maintain the capital structure, the Group may adjust the level of dividends paid to its
shareholders, return capital to shareholders, issue new shares or sell assets to reduce borrowings. This policy is
periodically reviewed by the Directors, and the Group’s strategy remains unchanged for the foreseeable future.
The capital structure of the Group consists of cash and bank balances and equity consisting of issued share
capital, reserves and retained earnings of the Group.
3.3
Fair value
Financial instruments are measured at fair value including cash and cash equivalents trade and other payables,
and borrowings.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables,
and trade and other payables approximate their fair value.
4.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Key judgement
The following judgement (apart from those involving estimates) have had the most significant effect on
amounts recognised in the financial statements.
(a) Intangible fixed assets (see note 13)
Intangible fixed assets, are depreciated over their useful lives taking into account residual values, where
appropriate. The actual lives of the assets and residual values are assessed annually and may vary
depending on the number of factors. In re-assessing asset lives, factors such as technological innovation,
product life cycles and maintenance programmes are taken into account. Residual value assessments
consider issues such as future market conditions, the remaining life of the asset and projected disposal
values. Development costs attributable to the licenced technology and recognised as an intangible asset
when the criteria in note 2.8 are met.
(b) Impairment reviews
The Group undertakes an impairment review annually, or more frequently if events or changes in
circumstances indicate that the carrying value may not be recoverable. In respect of impairment reviews,
the key assumptions are as follows:
•
Growth rates. The value in use of the intangible assets is calculated from cash flow projections for the
relevant business activities based on the latest financial projections covering the anticipated useful
economic life of the intangible assets.
•
Discount rates. The pre-tax discount rate used to calculate value is determined in relation to the
relevant business activities and their geographic location, using external benchmarks where possible
to arrive at a relevant weighted average cost of capital.
(c) Deferred taxes
Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences will be able to be offset against future
taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are
expected to apply to their respective period of realisation, provided they are enacted or substantively
enacted at the balance sheet date. Deferred tax is recognised as a component of the tax expense in the
income statement, except where it relates to items charged or credited to other comprehensive income
or directly to equity.
(d) Recoverability of intercompany debt by the Company from its subsidiaries.
The directors assess the recoverability of amounts owed by the subsidiary to the parent company, which
requires judgement to be made. This involves forecasting sales revenues to be earned by the subsidiary
which will enable it to repay the parent company.
5.
Segmental reporting
The chief operating decision makers consider that in the year to 31 December 2022 there is only one operating
segment, being the sale of oxygen concentrators in the United States. The Group generated gross revenue of
$1,542,948 less discounts of $144,866 in the year (2021: $420,316; nil). All sales were in the United States.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
35
6.
Other operating income and administrative expenses
6.1
Other operating income
Group
2022
US$
2021
US$
Freight Charged
6,805
-
Other Direct Income
1,898
-
Grants
-
6,876
SBA Loan forgiveness
-
202,814
Total
8,703
209,690
6.2
Other direct costs
Group
2022
US$
2021
US$
Sales Royalties
69,904
18,914
Freight Costs
66,921
-
Total
136,825
18,914
6.3
Expenses by nature
Group
2022
2021
US $
US $
Depreciation of property plant and equipment
38,619
14,531
Depreciation of right of use asset
104,869
98,049
Amortisation of product development
2,911,998
156,774
Costs related to fundraising activities
-
646,042
Realised and Unrealised foreign exchange movements
(2,877,886)
(734,678)
Employee benefit expense
2,999,299
1,838,779
IFRS2 Share Based Payment Charge
229,241
180,091
Surrendered Share Options and Share Option Tax
162,505
611,947
Sales & Marketing
1,420,134
1,118,472
Obsolete raw material inventory and inventory adjustments
609,848
-
Minimum Royalties in excess of Sales Royalties
763,430
147,753
Contract Manufacturer Capacity Costs
128,607
-
Other administration expenses
1,578,231
1,247,502
Administration expenses
8,068,895
5,325,262
As disclosed in the Admission Document, published ahead of admission to trading on AIM in May 2022,
Robert Rauker agreed to surrender part of the options over 439,373 ordinary shares granted on 29 October
2019 and over 815,496 ordinary shares granted on 7 May 2021 in exchange for a cash payment. The
consideration paid by the Company to Mr Rauker in relation to the surrender of the respective parts of Mr
Rauker’s options was calculated based on the difference between the Placing Price of 45p per share and the
exercise price per Share payable by the Option Holder for the respective option multiplied by the number
of Shares that are being surrendered. This amount is included within Employee Benefit Expense.
6.4
Auditor remuneration
During the period, the Group (including its subsidiaries) obtained the following services provided by the
auditor and its associates:
Group
2022
US$
2021
US$
Fees payable to the Group’s auditor and its associates for the audit of
the Group and Company financial statements
69,283
35,753
Fees payable to the Company’s auditor for other services
-
Tax advisory services
-
1,375
Total
69,283
37,128
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
36
7.
Employees
7.1
Directors’ emoluments
Salary &
fees
US $
Bonus
US$
Benefits in
kind
US $
Pension
US $
2022
US $
2021
US $
Adam Reynolds
74,231
-
-
-
74,231
47,414
Robert Rauker
327,790
193,648
16,799
32,884
571,121
375,339
Anthony Dyer
235,066
43,302
11,877
23,507
313,752
310,249
Dr Patrick Strollo
35,000
-
-
-
35,000
28,333
David Poutney
49,488
-
-
-
49,488
24,285
Ric Piper
43,302
-
-
-
43,302
28,333
Total
764,877
236,950
28,676
56,391
1,086,894
813,953
No Directors received share options during the year. On 10 August 2022 CEO, Robert Rauker exercised
options over 690,395 ordinary shares at an average exercise price of 11.7 pence. The net 455,064 shares,
after deduction of appropriate taxes, were subsequently transferred to Mr Rauker's ex-wife pursuant to a
divorce settlement. On 7 December 2022 Robert Rauker exercised 179,537 Warrant Shares at an average
price of 13.45 pence per share and Tony Dyer exercised 141,404 Warrant Shares at a price of 13.00 pence
per share.
7.2
Employee benefit expense
Group
2022
US$
2021
US$
Wages and salaries
2,173,897
1,536,707
Social security costs
209,648
122,759
Medical Insurance
199,090
130,961
Pension and other benefits
119,091
48,352
2,701,726
1,838,779
Share based payments
229,241
180,091
Surrendered Share Options & Share Option Taxes
162,505
611,947
Total employee benefit expense
3,093,472
2,630,817
7.3
Average number of people employed
Group
2022
US$
2021
US$
Average number of people (including executive directors) employed
Directors
2
2
Operations
19
7
Administration
3
2
Total average headcount
24
11
8.
Finance income and costs
Group
2022
US$
2021
US$
Finance Cost:
-
Interest cost on Right of Use Asset
23,617
26,837
-
Other Interest Income and Costs
456
-
Finance Cost
24,073
26,837
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
37
9.
Income tax expense
Group
2022
US$
2021
US $
Current tax on profits for the year
-
-
Adjustments in respect of prior year
-
-
Total current tax
-
-
Income tax expense
-
-
The charge for the year can be reconciled to the loss per the Income Statement as follows:
Group
2022
US$
2021
US$
(Loss) before tax
(8,152,895)
(5,213,493)
Tax calculated at domestic tax rates applicable to profits in the
respective countries
(1,630,579)
(1,042,493)
Tax effects of:
-
Expenses not deductible for tax purposes
-
(129,212)
-
Capital allowances in excess of depreciation
(30,542)
(9,431)
-
Unrelieved tax losses and other deductions
1,661,121
1,181,342
Total income tax charge
-
-
The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the
weighted average tax rate applicable to losses. The weighted average applicable UK tax rate was 19%.
Unused tax losses for which no deferred tax assets have been recognised is attributable to the uncertainty
over the recoverability of those losses through future profits.
10
Earnings/(Loss) per share
Group
2022
US$
2021
US$
Profit/(Loss) for the year US$
(8,152,895)
(5,213,494)
Weighted Average Shares in Issue
119,398,219
94,724,153
Basic Loss per Share US$
(0.068)
(0.055)
Weighted Average Shares, Warrants and Options in Issue
131,797,259
109,794,921
Diluted Loss per Share US$
(0.068)
(0.055)
All potentially dilutive items are disregarded for the purpose of the diluted earnings per share as they are
considered antidilutive.
11.
Investment in subsidiaries
Principal
subsidiaries
name
Country of
Incorporation &
place of business
Class of
share
held
% of ordinary
shares directly held
2022 2021
Nature of business
Belluscura LLC
USA
Ordinary
100% 100%
Sale of medical devices
Registered office of Belluscura LLC is 160 Greentree Drive, Suite 101, Dover, Delaware 19904, County of Kent
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
38
12.
Property, plant and equipment
Group
Cost
Land & buildings
(Right of Use
Asset)
US$
Furniture
and
Equipment
US $
Computer
Equipment
US $
Production
Equipment
US $
Vehicles
US $
Total
US $
At 1 January 2021
571,950
35,880
9,581
-
-
617,411
Additions during the year
-
16,162
31,706
-
-
47,868
Disposals during the year
-
-
(7,034)
-
-
(7,034)
At 31 December 2021
571,950
52,042
34,253
-
-
658,245
At 1 January 2022
571,950
52,042
34,253
-
-
658,245
Additions during the year
73,838
1,664
44,170
65,025
33,173
217,870
Disposals during the year
-
-
-
-
-
-
At 31 December 2022
645,788
53,706
78,423
65,025
33,173
876,115
Accumulated depreciation
At 1 January 2021
(196,098)
(23,400)
(8,243)
-
-
(227,741)
Depreciation charge for the year
(98,049)
(8,629)
(5,902)
-
-
(112,580)
Depreciation charge on disposals
-
-
7,035
-
-
7,035
At 31 December 2021
(294,147)
(32,029)
(7,110)
-
-
(333,286)
At 1 January 2022
(294,147)
(32,029)
(7,110)
-
-
(333,286)
Depreciation charge for the year
(104,717)
(7,356)
(19,461)
(10,272)
(1,382)
(143,188)
Depreciation charge on disposals
-
-
-
-
-
-
At 31 December 2022
(398,864)
(39,385)
(26,571)
(10,272)
(1,382)
(476,474)
Net book value
At 31 December 2021
277,803
20,013
27,143
-
-
324,959
At 31 December 2022
246,924
14,321
51,852
54,753
31,791
399,641
Right-of-use assets related to lease properties that do not meet the definition of investment properties are
presented as Land & Building (see note 22).
Company
Cost
Land & buildings
(Right of Use Asset)
US$
Furniture and
Equipment
US $
Computer
Equipment
US $
Total
US $
At 1 January 2021
-
-
-
-
Additions during the year
-
2,102
3,909
6,011
Disposals during the year
-
-
-
-
At 31 December 2021
-
2,102
3,909
6,011
At 1 January 2022
-
2,102
3,909
6,011
Additions during the year
73,838
1,364
2,730
77,932
Disposals during the year
-
-
-
-
At 31 December 2022
73,838
3,466
6,639
83,943
Accumulated depreciation
At 1 January 2021
-
-
-
-
Depreciation charge for the year
-
(297)
(638)
(935)
Depreciation charge on disposals
-
-
-
-
At 31 December 2021
-
(297)
(638)
(935)
At 1 January 2022
-
(297)
(638)
(935)
Depreciation charge for the year
(6,669)
(450)
(1,613)
(8,732)
Depreciation charge on disposals
-
-
-
-
At 31 December 2022
(6,669)
(747)
(2,251)
(9,667)
Net book value
At 31 December 2021
-
1,805
3,271
5,076
At 31 December 2022
67,169
2,719
4,388
74,276
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
39
13.
Intangible assets
Group
Purchased intangible assets
Cost
Licences
US $
Product
Development
US$
Total
US$
At 1 January 2021
189,506
4,399,810
4,589,316
Additions during the year
-
2,750,997
2,750,997
Disposal during the year
(189,506)
-
(189,506)
At 31 December 2021
189,506
7,150,807
7,150,807
At 1 January 2022
-
7,150,807
7,150,807
Additions during the year
-
4,856,846
4,856,846
Disposal during the year
(270,150)
(270,150)
At 31 December 2022
-
11,737,503
11,737,503
Accumulated amortisation and impairment
At 1 January 2021
(189,506)
(270,150)
(459,656)
Additions during the year
-
(156,774)
(156,774)
Disposal during the year
189,506
-
189,506
At 31 December 2021
-
(426,924)
(426,924)
At 1 January 2022
-
(426,924)
(426,924)
Amortisation in the year
-
(2,911,997)
(2,911,997)
Disposal during the year
270,150
270,150
At 31 December 2022
-
(3,068,771)
(3,068,771)
Net book value
At 31 December 2021
-
6,723,883
6,723,883
At 31 December 2022
-
8,668,732
8,668,732
Company
Purchased intangible assets
Cost
Licences
US $
Total
US$
At 1 January 2021
189,506
189,506
Disposal during the year
(189,506)
(189,506)
At 31 December 2021
-
-
At 1 January 2022
-
-
At 31 December 2022
-
-
Accumulated amortisation and impairment
At 1 January 2021
(189,506)
(189,506)
Disposal during the year
189,506
189,506
At 31 December 2021
-
-
At 1 January 2022
-
-
At 31 December 2022
-
-
Net book value
At 31 December 2021
-
-
At 31 December 2022
-
-
14.
Inventory
Group
2022
US $
2021
US $
Raw Materials and Finished goods
8,431,031
309,159
Total inventory
8,431,031
309,159
In addition to Raw Materials and Finished Goods Inventory, the Group had $2,335,971 (2021: $1,472,578) in
inventory deposits with suppliers.
Company
The Company held no inventory.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
40
15.
Trade and other receivables
Group
2022
US $
Restated1 2021
US $
Trade receivables
305,194
224,918
Less provision for impairment of trade receivables
-
-
Trade receivables – net
305,194
224,918
Inventory sold to Innomax
1,021,073
-
VAT
40,068
216,136
Deposits, prepayments and other debtors
2,687,767
2,316,309
Total trade and other receivables
4,054,102
2,757,363
1 Results are restated to reflect the consolidation of the Employee Benefit Trust into the Group Accounts
The fair value of trade and other receivables are not materially different to those disclosed above. The
Groups exposure to credit risk related to trade receivables is detailed in note 3 on page 32. Inventory sold to
Innomax to be paid on the transfer of manufactured units.
Company – Current
2022
US $
2021
US $
Trade receivables
2,858
-
Less provision for impairment of trade receivables
-
-
Trade receivables – net
2,858
-
VAT
40,068
216,136
Prepayments and other debtors
429,039
491,094
Total trade and other receivables
471,965
707,230
Company – Non-Current
2022
US $
2021
US $
Receivables from Group companies
35,725,430
20,945,635
Less provision for impairment of Intercompany receivables
(9,000,000)
(6,375,000)
Total trade and other receivables
26,725,430
14,570,634
Ageing of trade receivables:
Group
0-30 days
US $
30-60 days
US $
60-90 days
US $
90+ days
US $
Total Gross
US $
ECL
US $
Total Net
US $
2021
142,778
78,920
3,210
-
224,918
-
224,918
2022
174,062
110,972
15,040
5,120
305,194
-
305,194
Company
The Company had no trade receivables.
The amount receivable from Group companies is an interest free loan given and is repayable on demand.
Management do not intend to recall in the next 12 months and hence has been disclosed as Non-Current.
The basis of the impairment of intercompany receivables is the management intends to recall it within 4
years (2021: 5 years) so it is discounted over 5 years at 7%. The investment has been used to develop products
in the US market. The Group expects the US entity to become profitable and cash positive within 2 years.
A 10% percent increase in the discount rate would increase the impairment by $795,000 (2021: $540,000) and
a 10% reduction in the discount rate would reduce impairment by $740,000 (2021: 505,000).
16.
Cash and cash equivalents
Group
2022
US $
Restated1 2021
US $
Cash and bank and in hand
2,044,836
15,889,552
Total cash and cash equivalents
2,044,836
15,889,552
Company
2022
US $
2021
US $
Cash at bank and in hand
1,237,288
317,606
Total cash and cash equivalents
1,237,288
317,606
1 Results are restated to reflect the consolidation of the Employee Benefit Trust into the Group Accounts
The Groups exposure to foreign exchange risk is detailed in note 3 to the accounts on page 32.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
41
17.
Categories of financial assets and financial liabilities
Group
2022
US $
Restated1 2021
US $
Financial assets
Trade and other receivables at amortised cost
3,834,080
2,083,689
Cash and equivalents
2,044,836
15,889,552
5,926,916
17,973,241
Financial liabilities
Trade and other payables at amortised cost
2,294,956
768,314
Lease liability
302,619
335,830
COVID-19 Loan
-
33,834
2,597,575
1,137,978
1 Results are restated to reflect the consolidation of the Employee Benefit Trust into the Group Accounts
Company
2022
US $
2021
US $
Financial assets
Loans and receivables at amortised cost
35,725,430
20,945,635
Provision
(9,000,000)
(6,375,000)
Net loans and receivables at amortised cost
26,725,430
14,570,635
Other receivables at amortised cost
305,308
338,343
Cash and equivalents
1,237,288
13,063,239
28,268,026
27,972,217
Financial liabilities
Trade and other payables at amortised cost
60,783
1,983
Maturity Analysis of financial liabilities
The following are the contractual maturities of financial liabilities at the reporting date. The amounts are
gross and undiscounted, and include estimated contractual interest payments and exclude the effect of
netting agreements:
Group
Carrying
amount
US $
Contractual
cashflows
US $
1 year or
less
US $
1-5 years
US $
5 years
and over
US $
2021
Trade & other payables at amortised cost
768,314
768,314
768,314
-
-
Lease liability
335,830
335,830
111,033
224,797
-
COVID-19 SBA Loan
33,834
33,834
4,629
29,205
-
1,137,978
1,137,978
883,976
254,002
-
2022
Trade & other payables at amortised cost
2,294,956
2,294,956
2,294,956
-
-
Lease Liability
302,619
302,619
126,693
176,926
-
2,597,575
2,597,575
2,421,649
176,926
-
18.
Share capital and premium
Share capital
Group
No of shares
of £0.01 each
Total
US $
Issued and fully paid up
At 1 January 2021
62,905,761
823,201
Shares issued for cash
50,929,683
725,026
At 31 December 2021
113,835,444
1,548,227
At 1 January 2022
113,835,444
1,548,227
Shares issued for cash
9,181,717
113,958
At 31 December 2022
123,017,161
1,662,185
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the Company.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
42
Share premium
Group
Ordinary Shares
US $
Total
US $
Allotted and fully paid up
At 1 January 2021
556,683
556,683
Premium on shares issued
Cost of issue of shares
26,795,879
(1,326,802)
26,795,879
(1,326,802)
At 31 December 2021
26,025,760
26,025,760
At 1 January 2022
26,025,760
26,025,760
Premium on shares issued
7,858,078
7,858,078
Cost of issue of shares
(455,891)
(455,891)
Purchase of shares by EBT
(48,000)
(48,000)
At 31 December 2022
33,379,947
33,379,947
At the end of the year there were 766,666 share warrants in issue at an average subscription price of $0.47
(2021: 1,666,665 at $0.50 per share). There was no consideration paid for the warrants.
Share options
During the year staff were granted share options, vesting 100% on an exit or in equal annual thirds
following Grant Date.
Award
2022
000’s
2021
000’s
Date of
Grant
Exercise
Price
Exercise Period
From To
Avg remaining
contractual life
Unapproved
100
07/04/2021
$0.195
07/04/2022
07/04/2031
8.3 years
Unapproved
60
12/04/2021
$0.618
12/04/2022
12/04/2031
8.3 years
EMI
10
28/05/2021
$0.639
28/05/2022
28/05/2031
8.4 years
Lapsed
100
01/06/2021
$0.779
01/06/2022
01/06/2031
8.5 years
Unapproved
100
14/06/2021
$0.699
14/06/2022
14/06/2031
8.5 years
Lapsed
20
23/08/2021
$1.365
23/08/2022
23/08/2031
8.7 years
Lapsed
20
23/08/2021
$1.365
23/08/2022
23/08/2031
8.7 years
Unapproved
20
13/09/2021
$1.287
13/09/2022
13/09/2031
8.7 years
Unapproved
40
20/09/2021
$1.167
20/09/2022
20/09/2031
8.7 years
Unapproved
20
25/10/2021
$1.390
25/10/2022
25/10/2031
8.8 years
Unapproved
1,000
08/11/2021
$1.431
08/11/2022
08/11/2031
8.7 years
Unapproved
20
22/11/2021
$1.328
22/11/2022
22/11/2031
8.9 years
Unapproved
20
01/12/2021
$1.285
01/12/2022
01/12/2031
8.9 years
Unapproved
40
09/03/2022
$1.251
09/03/2023
09/03/2032
9.3 years
Unapproved
15
1403/2022
$1.219
1403/2023
1403/2032
9.3 years
Unapproved
100
01/04/2022
$1.540
01/04/2023
01/04/2032
9.3 years
Unapproved
20
04/04/2022
$1.518
04/04/2023
04/04/2032
9.3 years
Unapproved
100
18/04/2022
$1.508
18/04/2023
18/04/2032
9.4 years
Unapproved
20
18/04/2022
$1.508
18/04/2023
18/04/2032
9.4 years
Unapproved
1
26/05/2022
$1.115
26/05/2023
26/05/2032
9.4 years
Unapproved
1
26/05/2022
$1.115
26/05/2023
26/05/2032
9.4 years
Unapproved
40
11/07/2022
$0.941
11/07/2023
11/07/2032
9.5 years
Unapproved
40
18/07/2022
$0.948
18/07/2023
18/07/2032
9.5 years
Unapproved
20
19/08/2022
$0.870
19/08/2023
19/08/2032
9.6 years
Unapproved
20
29/08/2022
$0.785
29/08/2023
29/08/2032
9.6 years
Unapproved
20
10/10/2022
$0.540
10/10/2023
10/10/2032
9.8 years
Unapproved
20
24/10/2022
$0.500
24/10/2023
24/10/2032
9.9 years
Total
457
2,530
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
43
Key assumptions used in the calculation of share option fair value
Date of
Grant
Award
Share
price on
the date
of grant
$
Exercise
price
$
Volatility
%
Expected
Dividend
Yield
%
(%)
Vesting
period
Years
Risk-free
rate of
interest
%
Fair
value
$
07/04/2021
Unapproved
0.195
0.195
28.5
0%
3.17
2.1
0.03
12/04/2021
Unapproved
0.618
0.618
28.5
0%
3.17
2.1
0.08
28/05/2021
EMI
0.639
0.639
28.5
0%
3.00
2.1
0.08
01/06/2021
Unapproved
0.779
0.779
28.5
0%
3.00
2.1
0.09
14/06/2021
Unapproved
0.699
0.699
28.5
0%
3.00
2.1
0.08
23/08/2021
Unapproved
1.365
1.365
28.5
0%
3.00
2.1
0.17
13/09/2021
Unapproved
1.287
1.287
28.5
0%
3.00
2.1
0.16
20/09/2021
Unapproved
1.167
1.167
28.5
0%
3.00
2.1
0.14
25/10/2021
Unapproved
1.390
1.390
28.5
0%
3.00
2.1
0.17
08/11/2021
Unapproved
1.431
1.431
28.5
0%
3.00
2.1
0.17
22/11/2021
Unapproved
1.328
1.328
28.5
0%
3.00
2.1
0.16
01/12/2021
Unapproved
1.285
1.285
28.5
0%
3.00
2.1
0.15
09/03/2022
Unapproved
1.251
1.251
28.5
0%
3.00
2.1
0.19
1403/2022
Unapproved
1.219
1.219
28.5
0%
3.00
2.1
0.19
01/04/2022
Unapproved
1.540
1.540
28.5
0%
3.00
2.1
0.19
04/04/2022
Unapproved
1.518
1.518
28.5
0%
3.00
2.1
0.15
18/04/2022
Unapproved
1.508
1.508
28.5
0%
3.00
2.1
0.14
18/04/2022
Unapproved
1.508
1.508
28.5
0%
3.00
2.1
0.15
26/05/2022
Unapproved
1.115
1.115
28.5
0%
3.00
2.1
0.18
26/05/2022
Unapproved
1.115
1.115
28.5
0%
3.00
2.1
0.13
11/07/2022
Unapproved
0.941
0.941
28.5
0%
3.00
2.1
0.12
18/07/2022
Unapproved
0.948
0.948
28.5
0%
3.00
2.1
0.12
19/08/2022
Unapproved
0.820
0.820
28.5
0%
3.00
2.1
0.11
29/08/2022
Unapproved
0.790
0.790
28.5
0%
3.00
2.1
0.11
10/10/2022
Unapproved
0.505
0.505
28.5
0%
3.00
2.1
0.06
24/10/2022
Unapproved
0.500
0.500
28.5
0%
3.00
2.1
0.06
The key assumptions used in calculating the share-based payments were as follows:
a. The Black-Scholes model is used to value both the options.
b. The expected volatility is based on a comparator set of similar stocks.
c. The risk-free rate of return which is commensurate with the expected term.
d. Expected forfeiture rates are based on recent experience of staff turnover levels.
e. The charge is spread over the vesting period on a straight-line basis.
Movement in share options
Number
000’s
Weighted average
exercise price
$
Weighted average
share price
$
Outstanding at 1 January 2021
12,325
0.143
0.191
Granted
1,530
1.205
1.205
Lapsed/forgiven
(1,455)
0.270
0.187
Outstanding at 31 December 2021
12,400
0.259
0.303
Outstanding at 1 January 2022
12,400
0.259
0.303
Granted
457
1.141
1.023
Exercised
(1,223)
0.121
0.187
Outstanding at 31 December 2022
11,634
0.290
0.324
Share based payments charge
Group
2022
US $
2021
US $
Charge in year
229,241
180,091
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
44
19.
Reserves
Retained earnings
Group
US $
Company
US $
At 1 January 2021
2,687,361
4,706,632
Loss for the year
(5,213,494)
(3,668,780)
Share based payments charge
176,167
176,167
At 31 December 2021
(2,349,966)
1,214,019
Loss for the year
(8,152,985)
(3,820,378)
Share based payments charge
192,278
192,278
At 31 December 2022
(10,310,673)
(2,414,081)
On 7 October 2021, the shareholders of the group passed a special resolution, pursuant to Chapter 2 of Part 13
of the Companies Act 2006, to cancel the balance standing to the credit of the share premium account and
transfer the same to reserves.
Capital Contribution
Group
US $
Company
US $
At 31 December 2020
165,000
165,000
Capital contribution received
-
-
At 31 December 2021
165,000
165,000
Capital contribution received
-
-
At 31 December 2022
165,000
165,000
The Capital Contribution relates to the acquisition of intangible product licences.
Translation reserve
Group
US $
Company
US $
At 1 January 2021
436,619
436,619
Foreign exchange (loss)/gain
(1,153,148)
(1,153,148)
At 31 December 2021
(716,529)
(716,529)
Foreign exchange (loss)/gain
(3,827,808)
(3,827,808)
At 31 December 2022
(4,544,337)
(4,544,337)
The translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations, primarily relating to the statement of financial position at the reporting
dates. The reporting date foreign exchange rates by major currency are provided in note 3.
20.
Trade and other payables
Group – Current
2022
US $
2021
US $
Trade creditors
2,545,948
768,314
Social security and other taxes
19,871
20,269
Lease liability
125,693
111,033
Vehicle hire purchase
3,832
-
COVID-19 Loans
-
10,808
Accruals and other creditors
350,444
174,177
Total current trade and other payables
3,045,788
1,084,601
Group – Non-current
2022
US $
2021
US $
COVID-19 Loans
-
23,026
Lease liability
176,926
224,797
Vehicle hire purchase
23,506
-
Total non-current trade and other payables
200,432
247,823
There are no amounts included with lease liability repayable after five years
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
45
Company – Current
2022
US $
2021
US $
Trade creditors
60,783
1,983
Social security and other taxes
19,871
20,269
Lease liability
12,182
-
COVID-19 Loans
-
10,808
Accruals and other creditors
62,846
53,617
Total trade and other payables
155,682
86,677
Company – Non-current
2022
US $
2021
US $
COVID-19 Loans
-
23,026
Lease liability
56,563
-
Total trade and other payables
56,563
23,026
The fair values of trade and other payables are not materially different to those disclosed above. The Group’s
exposure to currency and liquidity risk is detailed in note 3 to the accounts on page 32.
21.
Deferred income tax
Unused tax losses for which no deferred tax assets have been recognised are attributable to the uncertainty
over the recoverability of those losses through future profits. A blended tax rate of 20% has been used to
calculate the potential deferred tax.
Group
Deferred tax
2022
US $
2021
US $
Accelerated capital allowances
(30,542)
(9,431)
Share based payments
90,279
57,113
Short term timing differences
-
-
Tax losses
2,889,065
2,815,024
2,948,802
2,805,593
Unprovided deferred tax asset
(2,948,802)
(2,805,593)
Deferred Tax
-
-
Company
Deferred tax
2022
US $
2021
US $
Accelerated capital allowances
-
-
Share based payments
90,279
57,113
Short term timing difference
551,250
470,400
Tax losses
520,430
433,772
(1,161,959)
961,285
Unprovided deferred tax asset
1,161,959
(961,285)
-
-
22.
Leases as a lessee
Right-of-use assets
Right-of-use assets related to lease properties that do not meet the definition of investment properties are
presented as property, plant and equipment (see note 11):
Group
Land and
buildings
US$
Total
US $
At 1 January 2021
375,852
375,852
Depreciation charge for the year
(98,049)
(98,049)
At 31 December 2021
277,803
277,803
Additions
73,838
73,838
Depreciation charge for the year
(104,868)
(104,868)
At 31 December 2022
246,773
246,773
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
46
Amounts recognised in profit or loss
2022
US $
2021
US $
Interest expense on lease liability
23,617
26,837
Depreciation on right of use assets
104,869
98,049
Amounts recognised in statement of cash flows
2022
US $
2021
US $
Total cash outflow for leases
130,780
108,391
Lease Liabilities
Group
Land and
buildings
US$
Total
US $
At 1 January 2021
417,384
417,384
Interest
26,837
26,837
Payment
(108,391)
(108,391)
At 31 December 2021
335,830
335,830
At 1 January 2022
335,830
335,830
Additions
73,838
73,838
Interest
23,617
23,617
Payment
(130,666)
(130,666)
At 31 December 2022
302,619
302,619
Maturity analysis of undiscounted cash flows due for leases
2022
US$
2021
US $
Within one year
125,693
111,033
After one year but not more than five years
176,926
224,797
After five years
-
-
Total
302,619
335,830
23.
Dividends
No dividend has been declared for the year ended 31 December 2022 and no dividend was paid during the
year.
24.
Cash generated from operating activities
Group
2022
US $
Restated1 2021
US $
Loss before income tax
(8,152,985)
(5,213,494)
Adjustments for
-
Depreciation
38,619
14,531
-
ROU Depreciation
104,869
98,049
-
Amortisation and impairment
2,911,999
156,774
-
No cash interest expense
20,279
26,837
-
Movement in foreign exchange
(914,776)
333,842
-
Share based payments
229,241
180,091
Movement in trade and other receivables
(3,502,980)
(1,877,894)
Inventory movement
(8,121,873)
(309,159)
Movement in trade and other payables
2,481,239
(396,649)
Cash generated from operating activities
(14,906,368)
(6,987,072)
1 Results are restated to reflect the consolidation of the Employee Benefit Trust into the Group Accounts
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
47
25.
Contingent Liability
On 24 February 2017, the Company entered into a co-exclusive licence and development agreement with
Separation Design Group, LLC and SDG (together the “SDG Parties”) (“SDG Licence”) which was subsequently
amended by an amendment agreement dated 19 March 2022. Pursuant to the SDG Licence: if by 3 September
2025, cumulative sales of the X-PLOR have not exceeded $20 million dollars, Belluscura must make a one-time
payment of $3 million to the SDG Parties to maintain the exclusive SDG licence.
26.
Alternative Performance Measures
Adjusted EBITDA1
Group
2022
2021
US $
US $
Total comprehensive loss for the year
(11,980,792)
(6,366,642)
Add back:
Administrative expenses Realised & unrealised FX movements in
(2,877,886)
(734,678)
Other comprehensive income FX currency translation differences
3,827,808
1,153,148
Net foreign exchange movement2
889,846
418,470
Finance Costs
24,073
26,837
Product development amortisation
2,911,988
156,774
Costs relating to fundraising activities
-
646,042
Surrendered share options and share option tax
162,505
611,947
Minimum royalties in excess of sales royalties
763,430
147,752
Obsolete raw material inventory and inventory adjustments
609,848
-
Contract Manufacturer Capacity Costs
128,607
-
Share based payments
229,241
180,091
Adjusted EBITDA
(6,201,179)
(4,178,729)
1
Reconciliation to Adjusted EBITDA measure
Adjusted EBITDA is the Group’s key adjusted profit measure. Total comprehensive loss for the year is adjusted to exclude; Foreign exchange
translation differences along with unrealised and unrealised foreign exchange movements, depreciation and amortisation of product
development, costs relating to fundraising activities, surrendered share options and share option taxes, minimum royalties in excess of sales
royalties, share based payments, obsolete 1st generation X-PLOR inventory adjustments and contract manufacturer capacity costs.
2
Net foreign exchange movements
The US$ strengthened against £Sterling by 12% during the year (1 January 2022 - $1.35:£1.00; 31 December 2022 - $1.21:£1.00). Due to the size of
the Intercompany Loan from the PLC to the US subsidiary which is fixed in £Sterling, this creates an accounting presentational impact
between Administration Expenses and Other Comprehensive Income, which to a large extent can be netted off against one another.
•
Realised FX movements in administrative expenses arise from the revaluation of £Sterling cash balances into US$
•
Unrealised FX movements in administrative expenses arise from the revaluation of the Intercompany Loan fixed in £Sterling into US$
•
Foreign currency translation differences in Other Comprehensive Income arise from the revaluation of the PLC balance sheet into US$
27.
Related party transactions
As disclosed in the Admission Document, prior to Robert Rauker joining the Company, he undertook
independent patent work for Separation Design Group IP Holdings LLC (“SDG”). Pursuant to a Patent Broker
Agreement dated 22 October 2015 SDG entered into an agreement with Medicinus IP LLC (“Medicinus”), of
which Robert Rauker is the sole shareholder, under which Medicinus has agreed to facilitate the sale and/or
licence of intellectual property owned by SDG which includes soliciting potential buyers and licencees of such
intellectual property. In consideration for the provision of these services, Medicinus receives a fee of 12.5 per
cent. of the licence fees, sales price and/or royalties received by SDG which will include 12.5 per cent. of the
royalties the Company will pay to SDG in relation to sales of the X-PLOR, pursuant to the agreement entered
into between SDG and the Company. The agreement can be terminated by either party by written notice.
The non-executive fees paid to Adam Reynolds were paid through his company Reyco Limited.
In the year the Company paid $435,989 (2021: $1,065,781) to Dowgate Capital Limited in relation to brokerage
fees, research and fundraising activities. David Poutney is the Chief Executive Officer of Dowgate Capital
Limited.
Belluscura plc
NOTES TO THE ACCOUNTS
For the year ended 31 December 2022
48
28.
Events after the reporting period
The Group announced on the 27 January 2023 the conditional placing of $5.0 million (£4.1 million) of Loan Notes
and a further $0.8 million (£0.6 million) of Loan Notes on 10 February 2023, with the required authority
resolutions being passed at a General Meeting held on 16 February 2023.
The Group announced the conditional placing of 12,000,000 New Ordinary Shares on 25 May 2023 and a further
386,240 New Ordinary Shares on 1 June 2023, resulting in a total of 12,386,240 New Ordinary Shares being issued
pursuant, raising total gross proceeds of approximately £3.1 million, with the required authority resolutions
being passed at a General Meeting held on 14 June 2023.
On 30 March 2023 the Group announced that Gerald Edelman LLP were appointed as auditor to the company
with immediate effect, replacing Gravita Audit Limited.
Gravita Audit Limited, which was recently formed by the combination of Jeffreys Henry LLP, Arram Berlyn
Gardner LLP and Propel, notified the Company that, following a recent review in conjunction with the Institute
of Chartered Accountants in England and Wales (the "ICAEW"), it did not have sufficient capacity to satisfy its
regulatory requirements in respect of its engagement with the Company and was, therefore, required to resign
as auditor with effect from 29 March 2023.
Gravita Audit Limited confirmed that there were no circumstances connected with their resignation which
they consider should be brought to the attention of the Company's members or creditors in accordance with
Section 519 of the Companies Act 2006.