Company Registration No. 01435584 (England and Wales)
N4 Pharma Plc
Annual Report and Consolidated Financial Statements
Year Ended 31 December 2023
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N4 Pharma Plc
Table of contents
Directors, Company Secretary and Advisors
Chairman’s Report
Board of Directors
Directors’ Report
Corporate Governance Statement
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Consolidated Financial Statements
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4
9
10
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N4 Pharma plc
Directors, Company Secretary and Advisors
Company Number 01435584 (England and Wales)
Directors:
Nigel Theobald (Chief Executive Officer)
Dr David Templeton (Executive Director)
Luke Cairns (Executive Director)
Dr John Chiplin (Non-Executive Chairman) resigned on 1 August 2023
Dr Christopher Britten (Non-Executive Chairman)
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen, West Midlands
B62 8HD
United Kingdom
Accountants
MourantGS Accounting Services Limited
Fairbairn House
Rohais
St. Peter Port
Guernsey
GY1 1FE
Registered Office of the Company
6th Floor
60 Gracechurch Street
London
EC3V 0HR
United Kingdom
Company Secretary
SGH Company Secretaries Limited
6th Floor
60 Gracechurch Street
London
EC3V 0HR
United Kingdom
Nominated Adviser and Joint Broker
SP Angel Corporate Finance LLP
35-39 Maddox Street
London
W1S 2PP
United Kingdom
Joint Broker
Turner Pope Investments Limited
8 Frederick’s Place
London
EC2R 8AB
United Kingdom
Auditor
Saffery LLP
Westpoint
Peterborough Business Park
Lynch Wood
Peterborough
PE2 6FZ
United Kingdom
Company’s website www.n4pharma.com
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N4 Pharma plc
Chairman’s Report
N4 Pharma Plc ("N4 Pharma" or the “Company”), is the Parent Company for N4 Pharma UK Limited
(“N4 UK”) and Nanogenics Limited ("Nanogenics"), and together form the group (the “Group”).
N4 UK is a specialist pharmaceutical company engaged in the development of silica nanoparticle
delivery systems to improve the cellular delivery of cancer treatments, gene therapy and vaccines.
Nanogenics is a specialist pharmaceutical company engaged in the development of a Liptide@
platform to deliver a proprietary siRNA sequence to silence a fibrotic gene for the treatment of
glaucoma.
The Board has not presented a Strategic Report for the year. All relevant information on the strategy
and performance of the Group is included in the Chairman’s Report below and the Directors’ Report
on page 9.
Review of operations for the financial year ended 31 December 2023
During the year to 31 December 2023 £1,953 of revenue was generated by the Group (31 December
2022: £nil).
The operating loss for the year increased to £1,276,778 (31 December 2022: £1,029,261 loss).
Expenditure was broadly in line with budget and increased compared to prior year as more work was
undertaken on in vivo vaccine and oncology studies in 2023.
Cash at the year-end was £1,027,112 (31 December 2022: £1,919,529) having raised £350,000
towards the end of 2023 primarily to fund the investment into Nanogenics. Our cash position remains
sufficient to continue our current work streams albeit further funds may be required to expand our
activities as set our further in the Directors’ Report.
Section 172 Disclosures
In discharging their duties, the Directors of the Group give due regard to their duties to promote
the success of the Group under Section 172(1) of the Companies Act 2006.
Given the size and nature of the Group all key decisions in the promotion of the success of the Group
are taken at board level with delegation to the Executive Directors for the execution of such
decisions.
All actions and decisions taken are in good faith with the long-term success of the Group in mind
and in doing so the Directors have considered (amongst other matters):
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◼
◼
◼
◼
◼
the likely consequences of any decision in the long term – all key decisions are taken at
board level and are focussed on what is required to achieve commerciality for the Group’s
core projects, Nuvec® and ECP105, the glaucoma product being developed by Nanogenics;
the interests of the Group’s employees – save for the Directors, the Company has no other
employees. The interests of the Directors are very much aligned with the success of the
Group and Company;
the need to foster the Group’s business relationships with suppliers, customers and others –
the Group is reliant on third party providers such as clinical research organisations (“CROs”)
to progress the business and maintains good work relationships with all its counterparties;
the impact of the Group’s operations on the community and the environment – all CROs are
required to adhere to strict ethical standards particularly in the use of animals in studies;
the desirability of the Group maintaining a reputation for high standards of business
conduct; and
the need to act fairly between stakeholders of the Group.
Where or to the extent that the purposes of the Group consist of or include purposes other than the
benefit of its members, subsection (1) has effect as if the reference to promoting the success of the
Group for the benefit of its members were to achieve those purposes.
The duty imposed by this section has effect subject to any enactment or rule of law requiring
Directors, in certain circumstances, to consider or act in the interests of creditors of the Group.
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Chairman’s Report (Continued)
Key Operational Events and Opportunities
The Company has continued to add further pre-clinical proof of concept data to the significant data
accumulated in the prior periods in respect of the potential for the use of Nuvec®. For 2023, the
Company’s focus for Nuvec® was threefold:
•
•
•
to expand its knowledge around Nuvec® in oncology and gene therapy using siRNA to silence
genes;
to continue to investigate the oral delivery of Nuvec® to the intestine; and
to further investigate the use of Nuvec® to improve the performance of viral vectors.
In parallel to this ongoing work, we continued to explore potential collaborations to find appropriate
partners with whom to develop Nuvec® in a way that could lead to it being marketed to pharma
companies with commercialisation in mind. As stated previously, the Company has always been open
to adding further, complimentary assets and this was achieved through investment resulting in a
controlling stake in Nanogenics.
siRNA
The Company is focusing its research on the ability of Nuvec® nanoparticles to be loaded with, and
deliver at the same time, two different siRNA known to inhibit relevant oncology targets. This is
cutting edge research in the use of nanoparticles as delivery systems in oncology and consequently
the Company is proceeding carefully to ensure that it gains the maximum understanding of the
cellular processes involved.
Through the use of multiple different siRNA constructs, the Company has demonstrated that two
separate siRNA molecules can be loaded onto Nuvec® without changing the size or charge of Nuvec®,
both parameters being essential for successful cellular uptake.
The initial work on cell growth involved investigating the combination of inhibition of EGFR
(epidermal growth factor receptor) and BCL-2: (B-cell lymphoma 2) using PC-9 cancer cells. Each
siRNA when separately loaded onto Nuvec® achieved cell inhibition. The work identified that the
expression level of BCL-2 in PC9 cells was low even though cellular inhibition was observed. The
Company then began investigating alternative cellular pathways that may be inhibited using siRNA
loaded alongside EGFR. The first was BRD4 (Bromodomain-containing-protein 4) a target for which
inhibitors are currently being evaluated in clinical trials for the treatment of uveal melanoma,
leukemia and carcinoma. The second target was PLK1 (Polo Like Kinase 1), inhibitors of which are
in early clinical development for lymphoma and pancreatic cancer.
As with the other siRNAs explored to date, Nuvec® can be loaded with the individual siRNA, as
above, and cause knockdown of the respective targets and reduce cell viability in a dose-related
manner.
Having confirmed dual loading of Nuvec®, the Company subsequently tested the effect of both BRD4
combined with EGFR and PLK1 combined with EGFR on knockdown and cell viability. Although
individually both siRNA had demonstrated the expected results of a dose-dependent inhibition of
cell growth and target knockdown, critically when loaded together there was a synergistic effect
which resulted in a reduction in knockdown of EGFR receptor but importantly the reduction on cell
viability was retained. These findings give Nuvec® a unique position in using siRNA to treat oncology
and other diseases as multiple siRNA molecules can be loaded onto Nuvec® and different cellular
pathways inhibited at the same time, a hugely useful tool for combination therapy treatments.
Oncology Strategy
It is likely that the precise combinations of siRNA, both in terms of target and concentration of
siRNA, will vary depending on which cell type they are tested in. Both these elements will be
determined by the clinical outcome desired.
Chemotherapy treatments for cancers are broad stroked and have very high toxicity which has led
to the emergence of alternative immuno-oncology treatments. These have had remarkable success
for some cancers but have proved ineffective in curbing the progression of numerous cancers.
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Chairman’s Report (Continued)
Oncology Strategy (Continued)
Single pathway treatments can have an initial effect but many see the post treatment emergence
of cancer cells that have developed “immune escape” pathways leaving retreatment as futile.
Novel approaches to the treatment of cancer that do not rely on the immune response, nor incur
the general toxicity induced by chemotherapy or radiotherapy, but rather rely on targeting the well-
known growth factor pathways spurring tumour growth are key to addressing the shortfalls of
immunotherapeutic and chemotherapeutic approaches. Although some monoclonal antibody
treatments (mAbs) do target tumour growth dependent pathways, they have highly significant off-
target effects, must be dosed repeatedly, can be immunogenic, and target only one pathway at a
time, allowing for emergence of tumour populations that proliferate by other growth pathways.
None have been curative.
The work the Company is doing shows that Nuvec® can bind not only single, but multiple siRNAs
aimed at simultaneously targeting identified pathways responsible for cancer progression after
initial treatments. Knocking down both (or more) pathways will give a greater chance that tumours
will not develop resistance, escape and again proliferate by the emergence of a significant
alternative growth pathway, which is common in treatments blocking just one growth factor
pathway.
Oral Studies at the University of Queensland (“UQ”)
During the period UQ has, utilising the grant funding obtained by N4 Pharma and the Australian
Research Council, made considerable progress in the longer-term study on oral applications for
Nuvec®. We have demonstrated via in vivo pre-clinical studies that an enterically-coated capsule
containing Nuvec® loaded with DNA encoding ovalbumin is able to pass through the lining of the
stomach to successfully transfect the upper intestine. Using a single dose, ovalbumin expression was
observed after 3 days. In a second study a second capsule was administered on day 3 and a much
higher sustained level of expression was observed on days 4-7.
This work clearly shows that Nuvec® can be successfully used as an oral delivery system with many
potential applications such as a vaccine, a product for gastrointestinal disorders (e.g. Inflammatory
Bowel Disease, Ulcerative Colitis etc) or to treat colon cancer among many possible examples.
As recently announced further studies at UQ show that administering capsules on subsequent days
can maintain the protein expression for even longer and produce antibodies. The Company is in
active discussions with UQ as to the appropriate next steps and likely costings to maximise this
opportunity.
Viral vectors
Viral vectors remain the go to delivery vehicle for use in gene therapy but they remain fraught with
problems, most notably they are expensive to make and cause side effects due to their inflammatory
nature.
The Company has taken a novel approach to how Nuvec® might initially be used in this area. The
Company has shown that Nuvec® can be combined with the viral vector to significantly improve its
efficiency. This could mean products formulated with viral vectors could achieve their same efficacy
but from a reduced amount thereby significantly reducing the cost of manufacture and potentially
reducing the unwanted side effects from the viral vector.
Post the year end, The Company announced that it had also shown through its research programme
with the University of Brunel, that Nuvec® can deliver increased transduction efficacy, when
complexed with Adeno-Associated virus 8 (“AAV8”). AAV8 was chosen for investigation as this virus
is currently being used for products already in clinical development.
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Chairman’s Report (Continued)
Viral vectors (Continued)
The number of approvals of new gene therapies and the need for appropriate delivery systems have
reached unprecedented highs and demand is growing exponentially. For in vivo gene therapy, the
Adenovirus (AV) and Adeno-Associated virus (AAV) are acknowledged as the most used delivery
vehicles. However relatively high amounts of AV and AAV are needed to be clinically efficient and
this appears directly correlated with adverse events in patients such as unwanted immunogenicity
and potential safety implications. The incorporation of Nuvec® into the treatment protocol has the
potential to both increase efficacy and reduce side effects.
These three work streams are the focus of the Company in demonstrating both the viability and the
flexibility of Nuvec® as a unique delivery system in this space. It remains a key priority for the
Company to present this data to third parties developing novel products in this space with a view to
licensing Nuvec® to use as part of their developments.
Collaborations
The Company is at advanced stages of finalising a collaboration with an independent global leader
in R&D based in the US which, on the back of successful initial studies utilising our combined
technologies, would lead to a co-marketing agreement to allow both parties to promote the
resultant combined technology. We anticipate being able to make a further announcement on this
in the coming weeks.
Additional Assets
We have been investigating potential assets to add to the Company for some time and after seeing
a number of opportunities, we were delighted to take a controlling stake in Nanogenics in September
2023. The RNA sector is an exciting one with a lot of investor and commercial interest. The addition
of the Liptide® delivery system and siRNA sequence adds significant potential value to our business.
As well as glaucoma, the MRTF-B gene is also responsible for fibrosis of the liver and lung, two large
areas into which Nanogenics could develop its portfolio.
Non-viral, non-lipid delivery systems are high in demand in the gene therapy space and we now have
two such delivery systems and expect considerable technical synergies in developing programmes
using both Nuvec® and Liptide®.
Since the investment Nanogenics has been working with the University of Strathclyde on the
formulation to take into in vivo studies with Kings College London. These studies are expected to
commence in May 2024. In parallel we have been looking into the preparatory work required to
undertake safety and toxicology testing and move into clinical trials, achieving pre-IND approval
from the FDA and what is required to obtain orphan designation for the product which, if achieved,
would potentially give 7 years exclusivity to market our product upon FDA approval which, in itself,
would be hugely value enhancing.
Intellectual Property
The Company has the exclusive worldwide rights for therapeutic uses in humans and animals for
technology developed by The University of Queensland (“UQ”). 2023 now sees this technology having
patents granted in Europe, Australia, Japan, China and the US and post year end the patent was also
granted in India.
The Company has also filed its own patent on using Nuvec® to enhance the performance of viral
vectors which is now entering the national phases of patent execution.
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Chairman’s Report (Continued)
Future Prospects
As the Company looks forward, we are consolidating our efforts on Nuvec® and actively seeking
commercial solutions for the product. Future development of the product as a drug delivery vehicle
requires significant capital so we are seeking a suitable partner to work with us to deliver Nuvec@’s
potential. Through the investment in Nanogenics, the Company has an additional exciting
development candidate and we will be looking to progress this opportunity towards clinical trials as
quickly as possible.
On behalf of the Board, I would like to thank all of our shareholders for their continued patient
support and look forward to providing further updates on our progress.
By order of the Board
Chris Britten
Chairman
22 April 2024
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Board of Directors
Nigel Theobald (Chief Executive Officer)
Nigel has over 25 years’ experience in healthcare and in building businesses, strategy development
and its implementation and a strong network covering all aspects of pharmaceutical product
development and commercialisation. He was the head of healthcare brands at Boots Group Plc in
2002 before leaving to set up a series of successful businesses, including Oxford Pharmascience
Group Plc, which he grew over five years into an AIM quoted company with a market capitalisation
of £40 million upon departure. Nigel formed N4 Pharma UK Limited in 2014.
Dr David Templeton (Executive Director)
David is an experienced R&D manager who has worked in major pharmaceutical, biotech and in the
generic industry with specific expertise in early clinical development and translational biology,
toxicology and safety pharmacology, lead selection, candidate characterisation, PK/PD analysis and
bioanalysis. David has worked in various pharmacology and pre-clinical drug discovery roles for
Pfizer, Xenova, Smithkline Beecham and GSK and was the head of non-clinical development at
Celltech Limited from 2003 to 2004 before moving to Merck Generics UK as head of biometrics. He
was appointed as director of clinical pharmacology of Eisai Limited in 2007 until in 2010 setting up
his own consulting business offering discovery and early development advice to several
pharmaceutical companies.
Luke Cairns (Executive Director)
Luke has spent over 20 years working in corporate finance and is a former head of corporate finance
and managing director at Northland Capital Partners, an FCA regulated stockbroking firm. Having
left Northland in 2014, Luke founded LSC Advisory Limited to provide advisory and consultancy
services to growth companies. He has worked with many growth companies across a number of
sectors and regions on a wide range of transactions, including IPOs, secondary fundraisings,
corporate restructurings and takeovers. He is an Associate of the Chartered Institute of Secretaries.
Christopher Britten (Non-Executive Chairman)
Dr Christopher Britten is an experienced pharmaceutical executive and is currently Senior Vice
President and Head of Global Business Development at Grunenthal GmbH a mid-sized specialty
pharmaceutical company. He has over 25 years’ experience in R&D, corporate development and
investment banking. Previous roles include Global Head of M&A at both Neuraxpharm and Sandoz,
Managing Director at Torreya Partners, Head of Business Development at Sanofi Pasteur MSD and
Director, Life Sciences at Deloitte Corporate Finance. Christopher also spent many years at GSK in
both drug discovery and corporate development.
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Directors’ Report
The Directors present their report together with the Consolidated Financial Statements of the
Group.
N4 Pharma Plc (the "N4 Pharma" or “Company”), is the Parent Company for N4 Pharma UK Limited
(“N4 UK”), and Nanogenics Limited ("Nanogenics"), together form the group (the “Group”).
Performance review
The Group made a total comprehensive loss of £1,276,778 during the year ended 31 December 2023
(2022: total comprehensive loss of £1,029,261). General and admin costs were up for the period
largely impacted by the costs associated with the investment in Nanogenics. It is expected the
Company will continue to be loss making in 2024.
Background and principal activities
The Company was incorporated and registered in England and Wales on 6 July 1979 as a public
limited company and its shares are admitted to trading on AIM (LSE: N4P). The Company’s registered
office is located at 6th Floor, 60 Gracechurch Street, London, EC3V 0HR.
The Company is the holding company for N4 UK and Nanogenics and provides funding for the Group
to enable business activity.
N4 UK is a specialist pharmaceutical company engaged in the development of nanoparticle silica
delivery systems to improve the cellular delivery and potency of cancer treatments and vaccines.
The nature of the business is not deemed to be impacted by seasonal fluctuations and as such
performance is expected to be consistent.
Nanogenics is a specialist pharmaceutical company engaged in the development of a Liptide@
platform to deliver a proprietary siRNA sequence to silence a fibrotic gene. The nature of the
business is not deemed to be impacted by seasonal fluctuations and as such performance is expected
to be consistent.
Further information on the research and development work and future developments is detailed in
the Chairman’s report on page 4.
Detail of the Group’s exposure to risk management and control is detailed in the Corporate
Governance statement on page 13.
Dividends
The Board has not declared a dividend for the year ended 31 December 2023 (2022: nil).
Directors
The Directors who held office during the year are listed on page 3.
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Directors’ Report (Continued)
Directors’ remuneration and interests
The below remuneration relates to the Directors of the Group. There is no other Key Management
Personnel.
2023
Director
Nigel Theobald (Chief
Executive Officer)
David Templeton
Luke Cairns
Christopher Britten
John Chiplin (resigned on 1
August 2023)
Cash-based
payments
Remuneration
Share-based
payments
£
£
Totals
£
Interests
Shares
Options
No.
No.
82,500
49,500
44,000
24,000
14,000
-
82,500
16,981,319
-
1,715
1,716
-
-
51,215
45,716
24,000
14,000
-
142,857
-
-
1,434,286
2,109,588
717,143
717,143
214,000
3,431
217,431
17,124,176
4,978,160
2022
Director
Nigel Theobald (Chief
Executive Officer)
David Templeton
Luke Cairns
Christopher Britten
John Chiplin
Significant shareholders
Cash-based
payments
Remuneration
Share-based
payments
£
£
Totals
£
Interests
Shares
Options
No.
No.
77,500
46,500
41,333
24,000
24,000
-
77,500
16,981,319
-
4,537
4,537
1,466
1,466
51,037
45,870
25,466
25,466
- 1,434,286
142,857 2,109,588
717,143
717,143
-
-
213,333
12,006
225,339
17,124,176 4,978,160
The below details the significant shareholders of the Company.
Shareholder
Number of shares held
Percentage of issued share capital
Marc Mathenz
Nigel Theobald
David Farrier
Going concern
24,600,000
16,981,319
12,540,385
9.00%
7.26%
5.36%
These Consolidated Financial Statements have been prepared on the basis of accounting principles
applicable to a going concern.
The Group currently has no significant source of operating cash inflows, other than interest and
grant income, and has incurred net operating cash outflows before tax for the year ended 31
December 2023 of £1,209,098 (2022: £828,263 outflow). At 31 December 2023, the Group had cash
balances of £1,027,112 (2022: £1,919,529) and a surplus in net working capital (current assets,
including cash, less current liabilities) of £1,132,431 (2022: £2,088,158).
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Directors’ Report (Continued)
Going concern (Continued)
The Group prepares regular business forecasts and monitors its projected cash flows, which are
reviewed by the Board. Forecasts are adjusted for reasonable sensitivities that address the principal
risks and uncertainties to which the Group is exposed, thus creating a number of different scenarios
for the Board to challenge. In those cases, where scenarios deplete the Group’s cash resources too
rapidly, consideration is given to the potential actions available to management to mitigate the
impact of one or more of these sensitivities, in particular the discretionary nature of costs incurred
by the Group, in order to ensure the continued availability of funds.
As the Group did not have access to bank debt and future funding is reliant on issues of shares in
the Parent Company, the Board has derived a mitigation plan for the scenarios modelled as part of
the going concern review. Notwithstanding such different scenarios and mitigation options available
to the Board it is highly probable that, in the absence of a commercial deal bringing in immediate
revenue, further funding will need to be raised from third parties prior to the year-end in order for
the Company to meaningfully fund operations and continue as a going concern. At this point in time
the Board plans to raise funds against delivery of further milestones and to fund specific, value
enhancing studies ideally in collaboration with partners with the ability to then commercialise the
outcomes of such studies. Any fundraising will be done on the advice of its professional advisers and
in such a way as to minimise dilution taking into account the prevailing market conditions and the
share price at the time. Any such fundraising would also rely on shareholders authorising the Board
to issue such shares as it deemed appropriate in order to raise sufficient funds for the Group.
Whilst the Board remains confident that necessary funds will be available as and when required, as
at the date of this report the future funding requirements are not secured and, accordingly, there
is material uncertainty that casts doubt over the Group’s ability to continue as a going concern.
Whilst the financial statements have been prepared on a going concern basis they do not include
the adjustments that would result if the Group was unable to continue as a going concern.
Directors’ confirmation
So far as the Directors are aware, there is no relevant audit information (as defined by Section 418
of the Companies Act 2006) of which the Group’s auditors are unaware, and each Director has taken
all the steps that he ought to have taken as a Director in order to make himself aware of any relevant
audit information and to establish that the Group's auditor is aware of that information.
Auditors
The auditors, Saffery LLP indicated their willingness to continue in office.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Directors’ Report and the Consolidated Financial
Statements in accordance with applicable law and regulations.
Company law and AIM Rules require the Directors to prepare Consolidated Financial Statements for
each financial year. Under that law, they have elected to prepare the Consolidated Financial
Statements in accordance with International Financial Reporting Standards (IFRS) in conformity with
the requirements of the Companies Act 2006. Under company law, the Directors must not approve
the Consolidated Financial Statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and the Company and of the results of the Group for that period.
In preparing these Consolidated Financial Statements, the Directors are required to:
◼
select suitable accounting policies and then apply them consistently;
◼ make judgements and estimates that are reasonable and prudent;
◼
state whether applicable accounting standards have been followed, subject to any material
departures disclosed and explained in the Consolidated Financial Statements; and
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Directors’ Report (Continued)
Statement of Directors’ responsibilities (Continued)
◼ prepare the Consolidated Financial Statements on the going concern basis unless it is
inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping proper accounting records that are sufficient to show and
explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time
the financial position of the Group and Company and enable them to ensure that the Consolidated
Financial Statements comply with the Companies Act 2006 and the AIM Rules. They are also
responsible for safeguarding the assets of the Group and Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial
information included on the Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of the Consolidated Financial Statements may differ from legislation
in other jurisdictions.
The Company is compliant with AIM Rule 26 regarding the Company’s website.
On behalf of the Board
_____________________________________
Nigel Theobald
Director
22 April 2024
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Corporate Governance Statement
The Company’s ordinary shares are admitted to trading on AIM, a market operated by the London
Stock Exchange and the Company is subject to the continuing requirements of the AIM Rules. The
UK Corporate Governance Code sets out the principles of good practice in relation to corporate
governance which should be followed by companies with a full listing on the London Stock Exchange.
Although the Company is not required to comply with the UK Corporate Governance Code by virtue
of being an AIM-quoted company, during the period under review the Board sought to apply the QCA
Corporate Governance Code for Small and Mid-Size Quoted Companies (“QCA Guidelines”) to the
extent appropriate and practical for a company of its nature and size. With effect from September
2018, the Company adopted the Quoted Companies Alliance Corporate Governance Code 2018 (the
“QCA Code”). This section provides general information on the Group’s adoption of the QCA
Guidelines and the QCA Code. In addition, further detail about how the Company complies with the
ten principles of the QCA Code can be found on the Company’s website.
The Board
The Board consists of four Directors, one of whom is Non-Executive and is considered to be
independent in character and judgement, and there are no relationships or circumstances which
could materially affect or interfere with the exercise of their judgement save only in respect of
their holding of ordinary shares and options in the Company as set out on page 9. The ordinary shares
and options held by these directors are not thought to be material, and therefore are not considered
to affect the independence of the directors. The names of the Directors, together with their
biographical details, are set out on page 8.
The roles of Chairman and Chief Executive Officer are held by separate directors and there is clear
division of responsibilities between them. The Chairman is responsible for the leadership of the
board and is pivotal in fostering a culture that adopts good corporate governance. The Chairman
together with the rest of the board sets direction for the Company through a formal schedule of
matters reserved for its decision. The executive directors have particular roles and areas of
responsibility and continually engage with the Company’s shareholders and stakeholders. The Board
has a schedule of matters reserved for its review and approval, such items include strategy, approval
of major capital expenditure projects, approval of the annual and interim results, annual budgets,
dividend policy and Board structure. It monitors the exposure to key business risks and reviews the
strategic direction of all trading subsidiaries, their annual budgets, their performance in relation to
those budgets and their capital expenditure. The Board delegates day-to-day responsibility for
managing the business to the Executive Directors and the senior management team.
In 2023, the Board met formally seven times and each Director attended each board meeting. In
addition, the Board has ad hoc meetings as required and regular management meetings. Each of the
Directors is subject to retirement by rotation and re-election in accordance with the articles of
association of the Company. Any Directors appointed by the Board are subject to election by
shareholders at the first Annual General Meeting (“AGM”) after their appointment.
Non-Executive directors are expected to devote such time as is necessary for the proper
performance of their duties. This includes attendance at Board meetings, the AGM, meetings with
the directors, meetings with shareholders, and committee meetings.
David Templeton and Luke Cairns are part time Executive Directors. Nigel Theobald is a full-time
Executive Director.
The Board composition is reviewed from time to time as appropriate. The Board considers that,
collectively the Directors have the necessary mix of experience, skills, personal qualities and
capabilities, with the appropriate balance of Executives and Non-Executives, to deliver the strategy
of the Company for the benefit of its Shareholders over the medium term. As work continues on
Nuvec® and ECP105, it is the Directors’ intention to broaden the Board’s skill set particularly in the
areas of oncology delivery systems. The non-executive director uses the board meetings to review
and assess the performance of the executive Directors.
The Directors acknowledge that succession planning is also a vital task for boards, and the
management of succession planning will represent on ongoing key responsibility of the Board.
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N4 Pharma plc
Corporate Governance Statement (Continued)
Risk management and internal control
The Directors are aware of their responsibility for establishing and communicating a system to
manage risk and implement internal controls.
Operational risks are identified and assessed by management and any significant risks are reported
to the Board. Financial and commercial risks are reviewed by the Board on a regular basis.
The Company’s internal control systems are designed to provide the directors with reasonable
assurance that any problems are identified on a timely basis and dealt with appropriately. The Board
considers the internal controls to be effective, but no system of internal control can provide absolute
assurance against material misstatement or loss.
The key risks facing the Company together with any mitigation taken are considered further in the
Principal risks and uncertainties section of this statement and notes 2 and 13 of the consolidated
financial statements.
Committees
The Audit Committee chaired by Christopher Britten. The Audit Committee, inter alia, determines
and examines matters relating to the financial affairs of the Company including the terms of
engagement of the Company’s auditors and, in consultation with the auditors, the scope of the
annual audit. It receives and reviews reports from management and the Company’s auditors relating
to the half yearly and annual accounts and the accounting and internal control systems in use
throughout the Group. It also monitors and is responsible for ongoing compliance by the Company
with the AIM Rules for Companies. The audit committee met once during the year and had full
attendance at this meeting.
The Remuneration Committee is chaired by Christopher Britten. The Remuneration Committee inter
alia, reviews and makes recommendations in respect of the Directors’ remuneration and benefits
packages, including share options and the terms of their appointment. The remuneration committee
didn't meet during the year.
Given the Company’s current size, the Board has not considered it necessary to constitute a
nomination committee and the Board, as a whole, will consider the appointment of directors and
other senior employees of the Company as and when required.
In light of the size and stage of the Company the Board has reviewed and still considers it is not
appropriate to publish an audit committee or remuneration committee report in this annual report
and accounts but will again consider the matter annually as the Company grows.
Communication with shareholders and stakeholders
Details of the Company’s current strategy and business model can be found in pages 4 to 7 of the
Consolidated Financial Statements and is reflective of where the Company sits in the research and
development cycle with Nuvec® and the newly acquired Nanogenics IP.
As an AIM company, the Company seeks to update investors on material matters through
announcements via RNS supplemented by presentations and the engagement of a PR firm. Historical
company documents can be found on the Company’s website.
In addition, all shareholders can attend the Company’s Annual General Meeting, where there is an
opportunity to question the Directors as part of the agenda, or more informally after the meeting.
Communication with shareholders is seen as an important part of the Board’s responsibilities, and
care is taken to ensure all price-sensitive information is made available to all shareholders at the
same time, in accordance with the AIM Rules, which, by definition, means the Board may not
always be able to answer questions as directly or immediately as shareholders may like.
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N4 Pharma plc
Corporate Governance Statement (Continued)
Principal risks and uncertainties
The Group is exposed to a variety of financial risks including market risk, liquidity risk, tax risk and
credit risk.
Overview
The Group has exposure to the following risks:
Liquidity risk;
• Credit risk;
•
• Tax risk;
• Market risk;
• Operational risk; and
• Regulatory and legislative risk
This note presents information about the Group’s exposure to each of the above risks, its objectives,
policies and processes for measuring and managing risk, and its management of capital. Further
quantitative disclosures are included throughout these Consolidated Financial Statements.
Risk management framework
The Board has overall responsibility for the establishment and oversight of the risk management
framework and developing and monitoring the Group’s risk management policies. Key risk areas
have been identified and the Group’s risk management policies and systems will be reviewed
regularly to reflect changes in market conditions and the Group’s activities.
The Audit Committee oversees how management monitors compliance with the Group’s risk
management policies and procedures and reviews the adequacy of the risk management framework
in relation to the risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations and arises principally from the Group’s bank
deposits and receivables. See Note 13 for further detail. The risk of non-collection is considered to
be low. This risk is deemed low at present due to the Group not yet trading and generating revenue
but is a consideration for future risks.
There is an intercompany debtor balance between the Company and N4 UK. The recoverability of
this debtor is dependent on the future profitability of the entity. As N4 UK has sustained losses and
the Statement of Financial Position is in deficit it is currently not in a position to repay this amount
and this therefore poses a credit risk to the Company, but not to the Group. As a result of this credit
risk the Directors have considered that this loan should be impaired to £nil.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated
with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation. The Group monitors cash
flow on a monthly basis through forecasting to help mitigate this risk.
Tax risk
Any change in the Group’s tax status or in taxation legislation or its interpretations could affect the
value of the investments held by the Group or the Group’s ability to provide returns to shareholders
or alter post-tax returns to shareholders.
16
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N4 Pharma plc
Corporate Governance Statement (Continued)
Market risk and competition
The Group operates as a specialist pharmaceutical Company engaged in the development of
nanoparticle silica delivery systems to improve the cellular delivery and potency of cancer
treatments and vaccines. The Group is entering into a market with existing competitors and the
prospect of new entrants entering the current market. There is no guarantee that current
competitors or new entrants to the market will not appeal to a wider portion of the Group’s target
market or command broader band awareness.
In addition, the Group’s future potential revenues from product sales will be affected by changes in
the market price of pharmaceutical drugs and could also be subject to regulatory controls or similar
restrictions.
Market risk is monitored continuously by the Group and the Board reacts to any changes in market
conditions as and when they arise.
Operational risk
The Group is at an early stage of development and is subject to several operational risks. The
commencement of the Group’s material revenues is difficult to predict and there is no guarantee
the Group will generate material revenues in the future. The Group has a limited operational history
upon which its performance and prospects can be evaluated and faces the risks frequently
encountered by developing companies. The risks include the uncertainty as to which areas of
pharmaceuticals to target for growth.
Operational risk is managed by adapting the future plans of the Group based on results and feedback
from employees, suppliers, potential licensing partners and contractors.
Regulatory and legislative risk
The operations of the Group are such that it is exposed to the risk of litigation from its suppliers,
employees and regulatory authorities. Exposure to litigation or fines imposed by regulatory
authorities may affect the Group’s reputation even though monetary consequences may not be
significant.
Any changes to regulations or legislation are reviewed by the Board on a regular basis and the Group
applies any that are relevant accordingly.
Changes to legislation, regulations, rules and practices may change and is often the case in the
pharmaceutical industry which is highly regulated and susceptible to regular change. Any changes
may have an adverse effect on the Group’s operations.
Protection of intellectual property
The Group’s ability to compete significantly relies upon the successful protection of its intellectual
property, in particular its licenced patents and owned patent applications for Nuvec®. The Group
seeks to protect its intellectual property through the filing of worldwide patent applications, as well
as robust confidentiality obligations on its employees. However, this does not provide assurance
that a third party will not infringe on the Group’s intellectual property, release confidential
information about the intellectual property or claim technology which is registered to the Group.
Capital management
The Group has no loans or borrowings and has sufficient resources for its current work streams albeit
further funds may be required to expand its work streams.
The Group manages its capital through the preparation of detailed forecasts, and tracks actual
receipts and outlays against the forecasts on a regular basis, to ensure that the Group will be able
to continue as a going concern while maximising the return to shareholders.
The capital structure of the Group consists of cash and cash equivalents and equity comprising,
capital, reserves and accumulated losses.
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N4 Pharma plc
Corporate Governance Statement (Continued)
Capital management (Continued)
Financial instruments and associated risks:
The Board of Directors is committed to effective risk management and is responsible for ensuring
that the Group has an appropriate framework in place to identify and effectively manage business
risks and to monitor business performance and the Group’s financial position. The Board is also
responsible for overseeing compliance with regulatory, prudential, legal and ethical standards.
These risks are discussed in detail in Note 13.
By order of the Board
_________
Chairman
22 April 2024
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N4 Pharma plc
Independent auditor’s report to the members
Opinion
We have audited the financial statements of N4 Pharma plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December 2023 which comprise Consolidated
Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the
Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the
Company Statement of Changes in Equity, the Consolidated Statement of Cash Flow, the Company
Statement of Cash Flows and notes to the financial statements, including significant accounting
policies. The financial reporting framework that has been applied in their preparation is applicable
law and UK-adopted international accounting standards.
In our opinion the financial statements:
•
•
•
give a true and fair view of the state of affairs of the group and of the parent company as
at 31 December 2023 and of the group’s loss for the year then ended;
have been properly prepared in accordance with UK-adopted international accounting
standards; and
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.
Our approach to the audit
We tailored the scope of our audit to ensure that we obtained sufficient evidence to support our
opinion on the financial statements as a whole, taking into account the structure of the group, the
accounting processes and controls and the industry in which the group and company operates.
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 judgements, for example in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain.
The risks of material misstatement that had the greatest effect on our audit, including the allocation
of our resources and effort, are discussed under “Key audit matters” within this report.
Our group audit scope included an audit of the group and parent company financial statements.
Based on our risk assessment, we determined that two components, N4 Pharma Plc and N4 Pharma
UK Limited, represented the principal business units within the group. A full scope audit was
undertaken on each component. The audit of both significant components was performed by the
same group audit team. The components within the scope of our audit work therefore covered 98.6%
of, group loss before tax and group net assets. Nanogenics was not considered a material component
and exemption from audit was taken via parental guarantee.
At group level we also tested the consolidation process to confirm our conclusion that there were
no significant risks of material misstatement in the consolidated financial information.
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N4 Pharma plc
Independent auditor’s report to the members (Continued)
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.
In addition to the matter described in the Material uncertainty related to going concern section, we
have determined the matters described below to be the key audit matters to be communicated in
our report.
Key Audit Matter
How our scope addressed this matter
Capitalisation of development expenditure
The Group is incurring material expenditure in
respect of research and development.
statement. There
During the year, £618,542 was expensed to the
income
significant
judgement as to whether any of these costs
meet the recognition criteria of development
assets under IAS 38, specifically establishing
the technical and commercial feasibility of the
Nuvec project.
is
Due to the significance of the development
expenditure to the financial statements and
the judgements
involved, this has been
identified as a key audit matter.
Our audit procedures included the following:
•
Reviewing the Directors’ assessment of
compatibility with the criteria for
capitalisation set out in IAS 38,
agreeing that the requirements to
recognise a development asset had not
been met; and
•
Substantively testing a sample of
research and development expenses to
underlying records.
Based on our procedures we have not
identified any material misstatement arising
from the capitalisation of development costs.
Impairment of intercompany investments
and loan balances
The parent company has an investment in and
intercompany balance debtor due from its
subsidiary, N4 Pharma UK Limited.
Our audit procedures included the following:
•
We reviewed the directors’ assessment
of whether there were indicators of
impairment relating to these balances
and compared this to the requirements
of IFRS 9 and IAS 36;
the
During
the year,
investment and
impaired by
intercompany balance were
£866,004 and £7,696,833 respectively. N4
Pharma UK Limited has net liabilities and there
is significant estimation uncertainty over the
the
expected
subsidiary in the future.
financial performance of
Due to the significance of the impairments to
the financial statements and the estimation
uncertainty involved, this has been identified
as a key audit matter.
•
•
We discussed the directors’ future
plans for the business and viability of
the product under development upon
which the recoverability of these
balances depends;
We critically appraised the directors’
assessment of the recoverable amount
of the intercompany loan by checking
the mathematical accuracy of the
expected credit losses model, agreeing
key inputs such as probability of
default and exposure at the reporting
date to supporting documentation;
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N4 Pharma plc
Independent auditor’s report to the members (Continued)
Key audit matters (Continued)
Key Audit Matter
How our scope addressed this matter
•
•
We critically appraised the directors’
assessment of the recoverable amount
of the investment in the subsidiary by
agreeing
the
the
calculation; and
inputs
into
reviewed
the
disclosures made
We
regarding
and
impairments
compared them to the underlying
models.
Based on our procedures we have not identified
any material misstatement arising from the
impairment of intercompany investments and
loan balances.
Our application of materiality
We apply the concept of materiality in planning and performing our audit, in evaluating the effect
of misstatements and in forming our opinion. Our overall objective as auditor is to obtain reasonable
assurance that the financial statements as a whole are free from material misstatement, whether
due to fraud or error. We consider materiality to be the magnitude by which misstatements,
including omissions, could influence the economic decisions of reasonable users that are taken on
the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed
materiality, we use a lower materiality level, performance materiality, to determine the extent of
testing needed. Importantly, misstatements below this level will not necessarily be evaluated as
immaterial as we also take account of the qualitative nature of identified misstatements, and the
circumstances of their occurrence, when evaluating their effect on the financial statements as a
whole.
Based on our professional judgement and taking into account the possible metrics used by investors
and other readers of the accounts, we have determined an overall group materiality of £57,000
(2022: £50,000). This was determined with reference to a benchmark of loss before tax which we
consider to be the principal consideration in assessing the financial performance of the group.
Materiality cannot be based on revenue or assets because the group is not yet generating revenue
or capitalising development costs. In line with ISA (UK) 600 component materiality cannot exceed
the materiality of the group and as such the materiality threshold for both the parent and the
subsidiary have been capped at 90% of the group materiality (£51,000).
Performance materiality was set at 75% of the above materiality level, being £43,000 for the group
(2022: £37,500), £38,500 for the parent (2022: £33,750) and £38,500 for the subsidiary company
(2022: £30,000). We agreed with the Audit Committee that we would report to the Committee all
individual audit differences in excess of £3,000 (2022: £2,500), being 5% of group materiality. We
also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
Material uncertainty relating to going concern
We draw attention to note 1.3 in the financial statements, which indicates that while the directors
believe the Group has sufficient funds to complete its existing work programmes, its ability to
continue its research and commission new work streams is dependent on the raising of further
capital. At the reporting date, the specifics of the fundraise have not been proposed and there is
uncertainty over the timing and amount that will be obtained. As such, this condition indicates that
a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
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N4 Pharma plc
Independent auditor’s report to the members (Continued)
Material uncertainty relating to going concern (Continued)
Our evaluation of the directors’ assessment of the entity’s ability to continue to adopt the going
concern basis of accounting included:
•
obtaining and critically appraising the Directors’ formal going concern assessment for
arithmetical accuracy;
•
•
•
•
•
reviewing board minutes and publicly available information regarding the development of
the Nuvec product;
reviewing projected cash flows, post year end cash balances compared to the projections
to assess further the ability of the group and the parent company to continue in operation
for at least 12 months after the date of approval of the financial statements;
identifying key assumptions within the forecast, primarily the ability of the group to reduce
or delay expenditure and challenging the Directors’ rationale behind the appropriateness
of these;
assessing the plausibility of the Directors’ plans to raise additional funding;
discussing post balance sheet events with the Directors to assess their impact on the going
concern assumption and formal assessment; and
reviewing the disclosures in the annual report, specifically in note 1.16, to ensure that they are
consistent with the requirements of UK-adopted international accounting standards and that they
present a true and fair view to readers of the financial statements.
Other information
The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information. 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.
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 course of 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 this
gives rise to a material misstatement in the financial statements themselves. 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.
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 the parent company and their
environment obtained in the course of the audit, we have not identified material misstatements in
the Strategic report or the Directors’ Report.
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N4 Pharma plc
Independent auditor’s report to the members (Continued)
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 12, 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 and the
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
Our objectives are to obtain reasonable assurance about whether the group and parent company
financial statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud. The specific procedures for this engagement and the
extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the group and parent company’s financial statements to material
misstatement and how fraud might occur, including through discussions with the directors,
discussions within our audit team planning meeting, updating our record of internal controls and
ensuring these controls operated as intended. We evaluated possible incentives and opportunities
for fraudulent manipulation of the financial statements. We identified laws and regulations that are
of significance in the context of the group and parent company by discussions with directors and by
updating our understanding of the sector in which the group and parent company operate.
Laws and regulations of direct significance in the context of the group and parent company include
The Companies Act 2006, the AIM Rules for Companies and UK Tax legislation.
Audit response to risks identified:
We considered the extent of compliance with these laws and regulations as part of our audit
procedures on the related financial statement items including a review of group and parent company
financial statement disclosures. We reviewed the parent company’s records of breaches of laws and
regulations, minutes of meetings and correspondence with relevant authorities to identify potential
material misstatements arising. We discussed the parent company’s policies and procedures for
compliance with laws and regulations with members of management responsible for compliance.
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N4 Pharma plc
Independent auditor’s report to the members (Continued)
Auditor’s responsibilities for the audit of the financial statements (Continued)
During the planning meeting with the audit team, the engagement partner drew attention to the
key areas which might involve non-compliance with laws and regulations or fraud. We enquired of
management whether they were aware of any instances of non-compliance with laws and regulations
or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through
management override of controls by testing the appropriateness of journal entries and identifying
any significant transactions that were unusual or outside the normal course of business. We assessed
whether judgements made in making accounting estimates gave rise to a possible indication of
management bias. At the completion stage of the audit, the engagement partner’s review included
ensuring that the team had approached their work with appropriate professional scepticism and thus
the capacity to identify non-compliance with laws and regulations and fraud.
As group auditors, our assessment of matters relating to non-compliance with laws or regulations
and fraud differed at group and component level according to their particular circumstances. Our
communications included a request to identify instances of non-compliance with laws and
regulations and fraud that could give rise to a material misstatement of the group financial
statements in addition to our risk assessment.
There are inherent limitations in the audit procedures described above and the further removed
non-compliance with laws and regulations is from the events and transactions reflected in the
financial statements, the less likely we would become aware of it. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may
intentional
misrepresentations, or through collusion.
involve deliberate concealment by, for example, forgery or
A further description of our responsibilities is available on the Financial Reporting Council’s website
at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state
to the parent company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the parent company and the parent company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
…………………………………..
Gareth Norris FCA (Senior Statutory Auditor)
for and on behalf of Saffery LLP
Chartered Accountants
Statutory Auditors
Westpoint
Peterborough Business Park
Lynch Wood
Peterborough
PE2 6FZ
Date:
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Consolidated Statement of Comprehensive Income for the year ended 31 December 2023
N4 Pharma Plc
Revenue
Gross Profit
Research and development costs
General and administration costs
Costs of purchase of investments
Operating loss for the year
Net finance income
Loss for the year before tax
Taxation
Notes
15
4
5
6
2023
£
1,953
1,953
(619,392)
(717,980)
(89,175)
2022
£
-
-
(577,525)
(615,735)
-
(1,424,594)
(1,193,260)
-
1
(1,424,594)
(1,193,259)
147,816
163,998
Loss for the year after tax
(1,276,778)
(1,029,261)
Other comprehensive income net of tax
-
-
Total comprehensive loss for the year
(1,276,778)
(1,029,261)
Total comprehensive loss for the year
is attributable to:
Equity owners of N4 Pharma Plc
NCI
Loss per share attributable to owners
of the parent
12
Weighted average number of shares:
Basic
Diluted
Basic loss per share
(1,269,331)
(7,447)
(1,276,778)
(1,029,261)
-
(1,029,261)
242,889,938
242,889,938
(0.52)
186,422,541
186,422,541
(0.55)
Diluted loss per share
(0.52)
(0.55)
All results were derived from continuing operations.
The notes on pages 32 to 51 are an integral part of the Consolidated Financial Statements
25
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Consolidated Statement of Financial Position as at 31 December 2023
N4 Pharma Plc
Notes
15
8
Assets
Non-current assets
Goodwill
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Accruals and deferred income
Total liabilities
9
2023
£
61,210
61,210
187,045
1,027,112
1,214,157
1,275,367
(26,224)
(55,502)
(81,726)
2022
£
-
-
246,518
1,919,529
2,166,047
2,166,047
(40,722)
(37,167)
(77,889)
Net current assets
1,132,431
2,088,158
Total assets less current
liabilities
1,203,080
2,088,158
Net assets
Equity
1,193,641
2,088,158
Share capital
Share premium
Share option reserve
Reverse acquisition reserve
Merger reserve
Retained earnings
Non Controlling interest
11
11
11
11
11
11
16
9,345,946
14,874,469
107,385
(14,138,244)
279,347
(9,341,267)
66,005
9,205,946
14,698,569
103,954
(14,138,244)
279,347
(8,061,414)
-
Total equity
1,193,641
2,088,158
The notes on pages 32 to 51 are an integral part of the Consolidated Financial Statements.
The Consolidated Financial Statements were approved by the Board of Directors on 22 April 2024 and
signed on its behalf:
Nigel Theobald
26
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Company Statement of Financial Position as at 31 December 2023
N4 Pharma Plc
2023
£
478,843
-
478,843
20,625
697,850
718,475
1,197,318
(2,146)
(38,835)
(40,981)
2022
£
1,094,747
5,659,000
6,753,747
992,325
1,761,330
2,753,655
9,507,402
(13,381)
(20,465)
(33,846)
1,156,337
9,473,556
1,156,337
9,473,556
Assets
Non-current assets
Investments
Intercompany loan receivable
Current assets
Trade and other receivables
Cash and cash equivalents
Notes
7
14
8
Total assets
Liabilities
Current liabilities
Trade and other payables
Accruals and deferred income
Total liabilities
9
Total assets less current
liabilities
Net assets
Equity
Share capital
Share premium
Share option reserve
Merger reserve
Retained earnings
Total equity
11
11
11
11
11
9,345,946
14,874,469
107,385
279,347
(23,450,810)
9,205,946
14,698,569
103,954
279,347
(14,814,260)
1,156,337
9,473,556
The Company recorded a loss of £8,636,650 for the year (31 December 2022: £7,226 loss) primarily
attributable to impairment of the intra company loan and investment as set out in the Company
Statement of Cash Flows for the year ended 31 December 2023. The policy on impairment is dealt with
in 1.14 of the Accounting Policies.
The notes on pages 32 to 51 are an integral part of the Consolidated Financial Statements.
The Company Financial Statements were approved by the Board of Directors on 22 April 2024 and signed
on its behalf:
Nigel Theobald
27
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
N4 Pharma Plc
Consolidated Statement of Changes in Equity for the year ended 31 December 2023
(i) Year ended 31 December 2023
Share
capital
Share
premium
£
£
Share
option
reserve
£
Balance at 1 January 2023
9,205,946 14,698,569
103,954
Reverse
acquisition
reserve
£
(14,138,244)
Merger
reserve
Retained
earnings
Non-
controlling
Interest
Total equity
£
279,347
£
(8,061,414)
£
£
-
2,088,158
Non-controlling interest on acquisition of
subsidiary
Shares in subsidiary issued to NCI
Total comprehensive loss for the year
Share issue
Share issue costs
Share based payment charge
At 31 December 2023
(ii) Year ended 31 December 2022
-
-
-
-
-
-
-
-
-
-
(10,522)
-
62,930
62,930
-
140,000
-
-
-
210,000
(34,100)
-
9,345,946 14,874,469
-
-
-
3,431
107,385
-
-
-
-
(14,138,244)
-
-
-
-
279,347
(1,269,331)
-
-
-
(9,341,267)
10,522
(7,447)
-
-
-
66,005
-
(1,276,778)
350,000
(34,100)
3,431
1,193,641
Share
capital
Share
premium
£
£
Share
option
reserve
£
Reverse
acquisition
reserve
Merger
reserve
Retained
earnings
£
£
£
Non-
controlling
Interest
£
Balance at 1 January 2022
8,995,146
13,945,602
79,955
(14,138,244)
279,347
(7,032,153)
Total comprehensive loss for the year
-
-
Share issue
Share issue costs
Share based payment charge
At 31 December 2022
210,800
843,200
-
(90,233)
-
-
-
-
-
-
-
-
-
(1,029,261)
-
-
-
9,205,946
-
14,698,569
23,999
103,954
-
(14,138,244)
-
279,347
-
(8,061,414)
The notes on pages 32 to 51 are an integral part of the Consolidated Financial Statements.
28
Total equity
£
2,129,653
(1,029,261)
1,054,000
(90,233)
23,999
2,088,158
-
-
-
-
-
-
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Company Statement of Changes in Equity for the year ended 31 December 2023
N4 Pharma Plc
(i) Year ended 31 December 2023
Share capital
Share
premium
Share option
reserve
Merger
reserve
Retained
earnings
Total equity
£
£
£
£
£
£
Balance at 1 January 2023
9,205,946 14,698,569
103,954
279,347
(14,814,260)
9,473,556
Total comprehensive loss for the year
Share issue
Share issue costs
Share based payment charge
-
140,000
-
-
-
210,000
(34,100)
-
-
-
-
3,431
-
-
-
-
(8,636,550)
-
-
-
(8,636,550)
350,000
(34,100)
3,431
At 31 December 2023
9,345,946 14,874,469
107,385
279,347
(23,450,810)
1,156,337
(ii) Year ended 31 December 2022
Share capital
Share
premium
Share option
reserve
Merger
reserve
Retained
earnings
Total equity
£
£
£
£
£
£
Balance at 1 January 2022
8,995,146 13,945,602
79,955
279,347
(14,807,034)
8,493,016
Total comprehensive loss for the year
Share issue
Share issue costs
Share based payment charge
-
210,800
-
-
-
843,200
(90,233)
-
-
-
-
23,999
-
-
-
-
(7,226)
-
-
-
(7,226)
1,054,000
(90,233)
23,999
At 31 December 2022
9,205,946 14,698,569
103,954
279,347
(14,814,260)
9,473,556
The notes on pages 32 to 51 are an integral part of the Consolidated Financial Statements.
29
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
N4 Pharma Plc
Consolidated Statement of Cash Flows for the year ended 31 December 2023
Operating activities
Loss after tax
Finance expenditure and other income
Share based payment charge
Taxation credit
Operating loss before changes in working
capital
Movements in working capital:
Decrease/(increase) in trade and other
receivables
Increase/decrease in trade, other payables
and accruals
Cash used in operations
Taxation credit received
Notes
2023
£
2022
£
(1,276,778)
-
3,431
(147,816)
(1,029,261)
(1)
23,999
(163,998)
(1,421,163)
(1,169,261)
44,230
3,838
(37,312)
(134,841)
(1,373,095)
(1,341,414)
163,997
513,151
Net cash flows used in operating activities
(1,209,098)
(828,263)
Investing activities
Net cash on acquisition of Subsidiary
Net cash flows from investing activities
Financing activities
Finance expenditure and other income
Proceeds of ordinary share issue
Costs of share issue
Net cash flows from financing activities
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at beginning of the
year
781
781
-
350,000
(34,100)
315,900
(892,417)
1,919,529
-
-
1
1,054,000
(90,233)
963,768
135,505
1,784,024
Cash and cash equivalents at year end
1,027,112
1,919,529
The notes on pages 32 to 51 are an integral part of the Consolidated Financial Statements
30
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
N4 Pharma Plc
Company Statement of Cash Flows for the year ended 31 December 2023
Operating activities
Loss before tax
Interest
Share based payment charge
Impairment of investment
Impairment of Loan
2023
£
2022
£
(8,636,650)
(305,416)
3,431
866,004
6,459,000
(7,226)
(271,772)
23,999
-
-
Operating loss before changes in working capital
(1,613,631)
(254,999)
Movements in working capital:
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
1,277,116
7,135
(91,440)
5,387
Cash used in operations
(329,380)
(341,052)
Net cash flows used in operating activities
(329,380)
(341,052)
Investing activities
Acquisition of investment
Loan receivable advancements
(250,000)
(800,000)
-
(400,000)
Net cash flows used in investing activities
(1,050,000)
(400,000)
Financing activities
Net proceeds of ordinary share issue
Costs of share issue
350,000
(34,100)
1,054,000
(90,233)
Net cash flows from financing activities
315,900
963,767
Net (decrease)/increase in cash and cash
equivalents
(1,063,480)
222,715
Cash and cash equivalents at beginning of the year
1,761,330
1,538,615
Cash and cash equivalents at year end
697,850
1,761,330
The notes on pages 32 to 51 are an integral part of the Consolidated Financial Statements
31
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Notes to the Consolidated Financial Statements for the year ended 31 December 2023
N4 Pharma Plc
1.
Accounting policies
1.1
Reporting entity
N4 Pharma Plc (the “Company”), is the holding Company for N4 Pharma UK Limited (“N4 UK”), and
Nanogenics Limited ("Nanogenics"), and together form the Group (the “Group”). N4 Pharma UK Limited
is a specialist pharmaceutical company engaged in the development of mesoparticulate silica delivery
systems to improve the cellular delivery and potency of vaccines. The nature of the business is not
deemed to be impacted by seasonal fluctuations and as such performance is expected to be consistent.
Nanogenics is a specialist pharmaceutical company engaged in the development of a Liptide platform to
deliver a proprietary siRNA sequence to silence a fibrotic gene. The nature of the business is not deemed
to be impacted by seasonal fluctuations and as such performance is expected to be consistent.
The Company was incorporated and registered in England and Wales on 6 July 1979 as a public limited
company and its shares are admitted to trading on AIM (LSE: N4P). The Company’s registered office is
located at 6th Floor, 60 Gracechurch Street, London, EC3V 0HR.
The Consolidated Financial Statements have been prepared in accordance with International Financial
Reporting Standards and applied to the Parent Company Accounts in accordance with the provisions of
the Companies Act 2006.
The Consolidated Financial Statements are presented in Great British Pounds (“GBP” or “£”), rounded to
the nearest £.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all
periods presented in these Consolidated Financial Statements.
The Company has taken advantage of the exemption granted by Section 408 of the Companies Act 2006
from presenting its own Statement of Comprehensive Income. The loss generated by the Company is
disclosed under the Company Statement of Financial Position.
1.2
Measurement convention
The Consolidated Financial Statements are prepared on the historical cost basis, except for the following
items:
•
•
•
Share-based payments related to investment acquisition are measured at fair value shown in the
Merger Reserve.
Share-based payments related to employee costs are measured at fair value shown in the
Statement of Comprehensive Income.
Share-based payments related to share issue costs are measured at fair value shown in Share
Premium.
• The associated Share Options and Warrants are measured at fair value using the Black Scholes
model (see note 10).
1.3
Going concern
These Consolidated Financial Statements have been prepared on the basis of accounting principles
applicable to a going concern.
The Group currently has no source of operating cash inflows, other than interest, grant income and
license fees, and has incurred net operating cash outflows before tax for the year ended 31 December
2023 of £1,209,098 (2022: £828,263 outflow). At 31 December 2023, the Group had cash balances of
£1,027,112 (2022: £1,919,529) and a surplus in net working capital (current assets, including cash, less
current liabilities) of £1,132,430 (2022: £2,088,158).
The Group prepares regular business forecasts and monitors its projected cash flows, which are reviewed
by the Board. Forecasts are adjusted for reasonable sensitivities that address the principal risks and
uncertainties to which the Group is exposed, thus creating a number of different scenarios for the Board
to challenge.
32
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
1.
Accounting policies (Continued)
1.3
Going concern (Continued)
In those cases, where scenarios deplete the Group’s cash resources too rapidly, consideration is given to
the potential actions available to management to mitigate the impact of one or more of these
sensitivities, in particular the discretionary nature of costs incurred by the Group, in order to ensure the
continued availability of funds.
As the Group did not have access to bank debt and future funding is reliant on issues of shares in the
Parent Company, the Board has derived a mitigation plan for the scenarios modelled as part of the going
concern review. Notwithstanding such different scenarios and mitigation options available to the Board
it is highly probable that, in the absence of a commercial deal bringing in immediate revenue, further
funding will need to be raised from third parties prior to the year-end in order for the Company to
meaningfully fund operations and continue as a going concern. At this point in time the Board plans to
raise funds against delivery of further milestones and to fund specific, value enhancing studies ideally in
collaboration with partners with the ability to then commercialise the outcomes of such studies. Any
fundraising will be done on the advice of its professional advisers and in such a way as to minimise
dilution taking into account the prevailing market conditions and the share price at the time. Any such
fundraising would also rely on shareholders authorising the Board to issue such shares as it deemed
appropriate in order to raise sufficient funds for the Group.
Whilst the Board remains confident that necessary funds will be available as and when required, as at
the date of this report the future funding requirements are not secured and, accordingly, there is
material uncertainty that casts doubt over the Group’s ability to continue as a going concern. Whilst the
financial statements have been prepared on a going concern basis they do not include the adjustments
that would result if the Group was unable to continue as a going concern.
1.4
Basis of consolidation
The consolidated Group financial statements consist of the financial statements of the Company together
with the entities controlled by the parent company (its subsidiaries), N4 UK and Nanogenics.
The financial statements for N4 UK are made up to 31 December 2023. Nanogenics prepares individual
financial statements to 31 May 2023. These consolidated financial statements for N4 Pharma include the
results of Nanogenics from the date of acquisition to 31 December 2023 based on interim management
accounts. Where necessary, adjustments are made to the financial statements of N4 UK and Nanogenics
to bring the accounting policies used into line with those used by the Group.
All intra-group transactions, balances and unrealised gains on transactions between Group companies are
eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the Group’s financial statements from the date that control commences
until the date that control ceases. Nanogenics was acquired by the Company on 27 September 2023.
1.5
Revenue
The Group recognises revenue based on the consideration specified in a contract with a customer and
excludes amounts collected on behalf of third parties. The Group follows a 5 steps process in recognising
revenue:
Identifying the contract with a customer.
Identifying the performance obligations.
1.
2.
3. Determining the transaction price.
4. Allocating the transaction price to the performance obligations.
5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is recognised over time, when (or as) the Group satisfies the performance obligations by
transferring the promised services to its customers.
33
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
1.
Accounting policies (Continued)
1.5. Revenue (Continued)
If the Group satisfies a performance obligation before it received the consideration, the Group recognises
either a contract asset or a receivable in its Consolidation Statement of Financial Position.
The Group generates license fees for the licencing of its products. Fee income is recognised on the
accruals basis.
1.6
Government grant income
Government grants are recognised only when there is reasonable assurance that the Group will comply
with the conditions attaching to them and that the grants will be received.
Government grants are recognised in the Consolidated Statement of Comprehensive Income on a
systematic basis over the periods in which the Group recognises and expenses the related costs for which
the grants are intended to compensate.
Government grants that are receivable as compensation for expenses or losses already incurred or for
the purpose of giving immediate financial support to the Group with no future related costs are
recognised in Consolidated Statement of Comprehensive Income in the period in which they become
receivable, and against the associated cost.
1.7
Expenses
Financing income and expenses
Financing expenses comprise interest expense and finance charges. Financing income comprises interest
receivable on funds invested.
Financing income and expenses are recognised in the Consolidated Statement of Comprehensive Income
as it accrues, using the effective interest method.
Research and development
Research costs are charged against the Consolidated Statement of Comprehensive Income as they are
incurred. Certain development costs will be capitalised as intangible assets when it is probable that the
future economic benefits will flow to the Group. Such intangible assets will be amortised on a straight-
line basis from the point at which the assets are ready for use, over the period of the expected benefit,
and are reviewed for impairment at each year end date. Other development costs are charged against
income as incurred since the criteria for their recognition as an asset is not met.
The criteria for recognising expenditure as an asset are:
It is technically feasible to complete the product;
▪
▪ Management intends to complete the product and use or sell it;
▪ There is an ability to use or sell the product;
▪
It can be demonstrated how the product will generate probable future economic benefits;
▪ Adequate technical, financial and other resources are available to complete the development,
use and sale of the product; and
▪ Expenditure attributable to the product can be reliably measured.
The costs of an internally generated intangible asset comprise all directly attributable costs necessary
to create, produce and prepare the asset to be capable of operating in the manner intended by
management. Directly attributable costs include employee costs incurred on technical development,
testing and certification, materials consumed and any relevant third-party cost. The costs of internally
generated developments are recognised as intangible assets and are subsequently measured in the same
way as externally acquired intangible assets. However, until completion of the development project, the
assets are subject to impairment testing only.
To date, the criteria for recognition of an internally generated intangible asset have not been met as
explained in note 1.17.
34
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
1.
Accounting policies (Continued)
1.8
Taxation
Taxation
Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated
Statement of Comprehensive Income, except to the extent that it relates to items recognised directly in
equity.
Current or deferred taxation assets and liabilities are not discounted.
Current tax
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been
enacted or substantively enacted by the Consolidated Statement of Financial Position date.
Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the
Consolidated Statement of Financial Position date.
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different
from those in which they are recognised in the Consolidated Financial Statements. Deferred tax is measured
using tax rates and laws that have been enacted or substantively enacted by the year end and that are
expected to apply to the reversal of the timing difference.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable
that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
1.9
Foreign Currencies
Monetary assets and liabilities denominated in foreign currencies are translated into Sterling at the rate of
exchange ruling at the Consolidated Statement of Financial Position date. Transactions in foreign currencies
are translated at the rate of exchange ruling at the date of the transaction. Foreign exchange gains and
losses are included in the Consolidated Statement of Comprehensive Income.
1.10
Earnings per share
The Group presents basic and diluted earnings or loss per share data for its ordinary shares. Basic
earnings/loss per share is calculated by dividing the profit or loss attributable to ordinary shareholders
of the Company by the weighted average number of ordinary shares outstanding during the period,
adjusted for own shares held. Diluted earnings/loss per share is determined by adjusting the profit or
loss attributable to ordinary shareholders and the weighted average number of ordinary shares
outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which
comprise of share options granted.
1.11 Operating segments
The Group operated in one business segment, that of the development and commercialisation of
medicines via its delivery system called Nuvec® and its liptide platform called ECP105.
The Directors consider that there are no identifiable business segments that are subject to risks and
returns different to the core business. The information reported to the Directors, for the purposes of
resource allocation and assessment of performance, is based wholly on the overall activities of the Group.
1.12
Presentation and classification of financial instruments issued by the Group
In accordance with IAS 32, financial instruments issued by the Group are treated as equity only to the
extent that they meet the following two conditions:
(a)
they include no contractual obligations upon the Group to deliver cash or other financial assets
or to exchange financial assets or financial liabilities with another party under conditions that
are potentially unfavourable to the Group; and
35
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
1.
Accounting policies (Continued)
1.12
Presentation and classification of financial instruments issued by the Group (Continued)
(b)
where the instrument will or may be settled in the Company’s own equity instruments, it is either
a non-derivative that includes no obligation to deliver a variable number of the Company’s own
equity instruments or is a derivative that will be settled by the Company exchanging a fixed
amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability.
Where the instrument so classified takes the legal form of the Company’s own shares, the amounts
presented in these Consolidated Financial Statements for called up share capital and share premium
account exclude amounts in relation to those shares.
Where a financial instrument that contains both equity and financial liability components exists these
components are separated and accounted for individually under the above policy.
1.13 Non-derivative financial instruments
Non-derivative financial instruments comprise investments, trade and other receivables, cash and cash
equivalents and trade and other payables.
Investments
Investments are investments held in subsidiaries accounted for at cost less provision for impairment
under IAS 27.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they
are measured at amortised cost less impairment.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and comprise of cash at bank. Any overdrafts are
shown within borrowings in current liabilities.
1.14
Impairment
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 the Consolidated
Statement of Comprehensive Income.
The carrying amounts of the Group’s non-financial 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.
The recoverable amount of an asset 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.
36
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
1.
Accounting policies (Continued)
1.14
Impairment (Continued)
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 cash generating unit exceeds
its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses
recognised in respect of cash generated units 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.
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.
1.15
Share based payment arrangements
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,
regardless of how the equity instruments are obtained by the Group.
Share-based payment transactions, other than those with employees, are measured at the value of goods
or services received where this can be reliably measured. Where the services received are not
identifiable, their fair value is determined by reference to the grant date fair value of the equity
instruments provided. Should it not be possible to measure reliably the fair value of identifiable goods
and services received, their fair value shall be determined by reference to the fair value of the equity
instruments provided measured over the period of time that the goods and services are received.
The expense is recognised in the Consolidated Statement of Comprehensive Income or capitalised as part
of an asset when the goods are received or as services are provided, with a corresponding increase in
equity.
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.
Share-based payment transactions in which the Group receives goods or services by incurring a liability
to transfer cash or other assets that is based on the price of the Group’s equity instruments are accounted
for as cash-settled share-based payments. The fair value of the amount payable to recipients is
recognised as an expense, with a corresponding increase in liabilities, over the period in which the
recipients become unconditionally entitled to payment. The liability is re-measured at each Consolidated
Statement of Financial Position date and at settlement date. Any changes in the fair value of the liability
are recognised in the Consolidated Statement of Comprehensive Income.
37
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Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
1.
Accounting policies
1.16 Adoption of new and revised International Financial Reporting Standards
The following IFRS standards, amendments or interpretations became effective during the year ended
31 December 2023 but have not had a material effect on this Consolidated Financial Information:
Standard
Amendments to IAS 1 Disclosure of accounting policies
Amendments to IAS 8 Definition of accounting estimates
Amendments to IAS 12 Deferred tax related to assets and liabilities arising from
a single transaction
Effective date
1 January 2023
1 January 2023
1 January 2023
All new standards and amendments to standards and interpretations effective for annual periods
beginning on or after 1 January 2023 that are applicable to the Group have been applied in preparing
these Consolidated Financial Statements.
The standards and interpretations that are issued and relevant to the Group, but not yet effective, up
to the date of issuance of the Consolidated Financial Statements are disclosed below. The Group intends
to adopt these standards, if applicable, when they become effective.
Standard
Amendments to IFRS
Amendments to IAS 1 Non-current liabilities with covenants
Amendments to IAS 7 Supplier finance
and IFRS 7
Leases on sale and leaseback
Effective date
1 January 2024
1 January 2024
1 January 2024
At the date of authorisation of these financial statements, the following standards and interpretations
relevant to the Group and which have not been applied in these financial statements, have not been
endorsed for use in the UK and will not be adopted until such time as endorsement is confirmed.
Standard
Amendments to IAS 21 Lack of Exchangeability
Effective date
1 January 2025
The Directors are continuing to assess the potential impact that the adoption of the standards listed
above will have on the Consolidated Financial Statements for the year ended 31 December 2023.
1.17 Use of estimates and judgements
The preparation of Consolidated Financial Statements in conformity with IFRSs requires management to
make certain judgements, estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expenses during the period. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimates are revised and in any future periods
affected.
In the process of applying the Group’s accounting policies, the Directors have decided the following
estimates and assumptions are material to the carrying amounts of assets and liabilities recognised in
the Consolidated Financial Statements.
38
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Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
1. Accounting policies (Continued)
1.17 Use of estimates and judgements (Continued)
Critical judgements
Research and development expenditure
The key judgements surrounding the Research & Development expenditure is whether the expenditure
meets the criteria for capitalisation. Expenditure will only be capitalised when the recognition criteria
is met and is otherwise written off to the Consolidated Statement of Comprehensive Income. The
recognition criteria include the identification of a clearly defined project with separately identifiable
expenditure where the outcome of the project, in terms of its technical feasibility and commercial
viability, can be measured or assessed with reasonable certainty and that sufficient resources exist to
complete a profitable project. In the event that these criteria are met, and it is probable that future
economic benefit attributable to the product will flow to the Group, then the expenditure will be
capitalised.
Impairment of investments and intercompany debtors
N4 UK has sustained losses and the Statement of Financial position is in deficit. The recoverability of the
intercompany debtor and the cost of investment is dependent on the future profitability and success of
the entity, which is in a research phase and has not therefore generated any revenue to date. Having
considered research progress during the year and future prospects of N4 UK, the Directors consider that
there are indicators of impairment in respect of these balances. This is a significant judgement.
2.
Risk management
Overview
The Group has exposure to the following risks:
Liquidity risk;
• Credit risk;
•
• Tax risk;
• Market risk; and
• Operational risk
• Regulatory and legislative risk
This note presents information about the Group’s exposure to each of the above risks, its objectives,
policies and processes for measuring and managing risk, and its management of capital. Further
quantitative disclosures are included throughout these Consolidated Financial Statements.
Risk management framework
The Board has overall responsibility for the establishment and oversight of the risk management
framework and developing and monitoring the Group’s risk management policies. Key risk areas have
been identified and the Group’s risk management policies and systems will be reviewed regularly to
reflect changes in market conditions and the Group’s activities.
The Audit Committee oversees how management monitors compliance with the Group’s risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the
risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations and arises principally from the Group’s bank deposits and
receivables. See Note 13 for further detail. The risk of non-collection is considered to be low. This risk
is deemed low at present due to the Group not yet trading and generating revenue but is a consideration
for future risks.
39
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Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
2.
Risk management (Continued)
There is an intercompany debtor balance between the Company and N4 UK. The recoverability of this
debtor is dependent on the future profitability of the entity. As N4 UK has sustained losses and the
Statement of Financial Position is in deficit it is currently not in a position to repay this amount and this
therefore poses a credit risk to the Company, but not to the Group.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated
with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation. The Group monitors cash flow on a
monthly basis through forecasting to help mitigate this risk.
Tax risk
Any change in the Group’s tax status or in taxation legislation or its interpretations could affect the value
of the investments held by the Group or the Group’s ability to provide returns to shareholders or alter
post-tax returns to shareholders.
Market risk and competition
The Group operates as a specialist pharmaceutical Company engaged in the development of
mesoparticulate silica delivery systems to improve the cellular delivery and potency of vaccines. The
Group is entering into a market with existing competitors and the prospect of new entrants entering the
current market. There is no guarantee that current competitors or new entrants to the market will not
appeal to a wider portion of the Group’s target market or command broader band awareness.
In addition, the Group’s future potential revenues from product sales will be affected by changes in the
market price of pharmaceutical drugs and could also be subject to regulatory controls or similar
restrictions.
Market risk is monitored continuously by the Group and the Board reacts to any changes in market
conditions as and when they arise.
Operational risk
The Group is at an early stage of development and is subject to several operational risks. The
commencement of the Group’s material revenues is difficult to predict and there is no guarantee the
Group will generate material revenues in the future. The Group has a limited operational history upon
which its performance and prospects can be evaluated and faces the risks frequently encountered by
developing companies. The risks include the uncertainty as to which areas of pharmaceuticals to target
for growth.
Operational risk is managed by adapting the future plans of the Group based on results and feedback
from employees, suppliers and contractors.
Regulatory and legislative risk
The operations of the Group are such that it is exposed to the risk of litigation from its suppliers,
employees and regulatory authorities. Exposure to litigation or fines imposed by regulatory authorities
may affect the Group’s reputation even though monetary consequences may not be significant.
Any changes to regulations or legislation are reviewed by the Board on a regular basis and the Group
applies any that are relevant accordingly.
Changes to legislation, regulations, rules and practices may change and is often the case in the
pharmaceutical industry which is highly regulated and susceptible to regular change. Any changes may
have an adverse effect on the Group’s operations.
Regulatory and legislative risk will become more significant once the current research generates revenue.
40
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Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
2. Risk management (Continued)
Protection of intellectual property
The Group’s ability to compete significantly relies upon the successful protection of its intellectual
property, in particular its licenced and owned patent applications for Nuvec® and ECP105. The Group
seeks to protect its intellectual property through the filing of worldwide patent applications, as well as
robust confidentiality obligations on its employees. However, this does not provide assurance that a third
party will not infringe on the Group’s intellectual property, release confidential information about the
intellectual property or claim technology which is registered to the Group.
Capital management
The Group has no loans or borrowings and has sufficient resources, in the view of the Directors, to meet
its working capital requirements for the next 12 months.
The Group manages its capital through the preparation of detailed forecasts, and tracks actual receipts
and outlays against the forecasts on a regular basis, to ensure that the Group will be able to continue as
a going concern while maximising the return to shareholders.
The capital structure of the Group consists of cash and cash equivalents and equity comprising, capital,
reserves and accumulated losses.
3.
Employees and directors
The average monthly number of employees during the year was 5 (2022: 5). The Directors of the Group
are employed by both the Company and N4 UK and as such are included in the employee figure. Total
Directors' remuneration is detailed in Note 14 of these Consolidated Financial Statements.
2023
£
2022
£
214,000
213,333
17,778
17,562
231,778
230,895
2023
£
-
2023
£
2022
£
1
2022
£
26,985
10,015
28,640
5,940
Wages and Salaries
Social security costs
4.
Net finance income and (expenditure)
Interest received on financial assets measured at
amortised cost
5.
Loss before tax
Loss before taxation is arrived after charging:
Fees payable to the Group’s auditors for the audit
of the Group’s Consolidated Financial Statements
Fee payable for audit of subsidiaries
41
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Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
6.
Taxation
Current tax
Research and development tax credit receivable for the
current period
Adjustments in respect of prior periods
Deferred tax
Origination and reversal of temporary differences
2023
£
2022
£
(147,816)
(163,998)
-
-
(147,816)
(163,998)
-
-
Tax in Statement of Comprehensive Income
(147,816)
(163,998)
The tax charge for the year can be reconciled to the loss in the Consolidated Statement of Comprehensive
Income as follows:
Loss before taxation
2023
£
2022
£
(1,276,778)
(1,029,261)
Tax at the UK corporation tax rate of 25% (2022: 19%)
(319,195)
(195,560)
Net Research and development tax credits
Changes in unrecognised deferred tax
Adjustments in respect of prior periods
Tax charge for the year
(147,816)
319,195
-
(163,998)
195,560
-
(147,816)
(163,998)
At the year end the Group had trading losses carried forward of £11,357,986 (2022: £9,969,504) for use
against future profits. There are no other factors which may impact future tax charges. A deferred tax
asset has not been recognised on unrelieved trading losses as the timing, extent and availability of future
profits is not yet certain.
7.
Investments
Investment in subsidiaries
Company
Cost
Balance at 1 January
Impairment of investment in subsidiary
Investment in Nanogenics Limited
Balance at 31 December
2023
£
2022
£
1,094,747
1,094,747
(866,004)
250,000
-
-
478,843
1,094,747
The Directors have considered the carrying amount for the investment in N4 UK and decided to impair
this to £228,743 in accordance with the accounting policies.
In 2023 the Company acquired 75% (subsequently diluted to 70.82% following the issuance of management
shares) of the issued shares of Nanogenics Limited. The information related to this acquisition is stated
in the note 15.
42
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Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
7. Investments (Continued)
Details of the Company’s subsidiaries at 31 December 2023 are as follows:
Registered Office
Principal activity
N4 Pharma UK Limited
Nanogenics Limited
The Mills, Canal
Street, Derby, DE1
2RJ
Delivery of
vaccines and
therapeutics
6th Floor 60
Gracechurch
Street, London,
United Kingdom,
EC3V 0HR
Research and
experimental
development on
biotechnology
Proportion of
ownership and
voting rights held
100%
70.82%
8.
Trade and other receivables
Prepayments
VAT due
Group
2023
£
10,613
24,972
Group
2022
£
36,888
18,632
R&D tax credits receivable
147,816
163,998
Interest receivable
Other debtors
-
3,644
187,045
-
27,000
246,518
Loan interest receivable relates to the intra-group loan disclosed in Note 14.
9.
Trade and other payables
Company
2023
£
9,916
10,709
-
-
-
20,625
Group
2023
£
20,202
6,022
26,224
Group
2022
£
35,756
4,966
40,722
Company
2023
£
961
1,185
2,146
Trade payables
Other payables
10. Share-based payments
Options
Company
2022
£
36,029
13,352
-
883,610
59,334
992,325
Company
2022
£
12,196
1,185
13,381
The Company has the ability to issue options to Directors to compensate them for services rendered and
incentivize them to add value to the Group’s longer-term share value. Equity settled share-based
payments are measured at fair value at the date of grant. The fair value determined is charged to the
Consolidated Statement of Comprehensive Income on a straight-line basis over the vesting period based
on the Group’s estimate of the number of shares that will vest.
43
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Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
10. Share-based payments (Continued)
Options (Continued)
The vesting period is defined as the period in which the options are unable to be exercised. The period
commences on the date the options are issued. For the options to vest, the holder must remain an
employee of the group throughout the vesting period. Once the vesting period is complete the options
may be exercised on any date up to the lapse date.
Cancellations of equity instruments are treated as an acceleration of the vesting period and any
outstanding charge is recognised in full immediately.
Fair value is measured using a Black Scholes pricing model. The key assumptions used in the model at
the grant date were adjusted based on management’s best estimate for the effects of non-
transferability, exercise restrictions and behavioural considerations.
As at 31 December 2023, there were 7,046,513 (2022: 7,046,513) options in existence over ordinary
shares of the Company. Options in existence during the current and/or previous financial year are as
follows:
Name
2015 Options
Gavin Burnell
Luke Cairns
2017 Options
Luke Cairns
David Templeton
Paul Titley
2019 Options
John Chiplin
Christopher
Britten
2020 Options
David Templeton
Luke Cairns
Date of
Grant
Ordinary
shares
under
option
Vesting
Date
Expiry Date
Exercise
Price £
14.10.15
14.10.15
1,351,210
675,302
14.10.15
14.10.15
14.10.25
14.10.25
03.05.17
03.05.17
03.05.17
717,143
717,143
717,143
03.05.20
03.05.20
03.05.20
03.05.27
03.05.27
03.05.27
0.0280
0.0280
0.0700
0.0700
0.0700
21.05.19
717,143
21.05.22
21.05.29
0.0355
21.05.19
717,143
21.05.22
21.05.29
0.0355
18.05.20
18.05.20
717,143
717,143
18.05.23
18.05.23
18.05.30
18.05.30
0.0480
0.0480
Total options
7,046,513
The weighted average remaining contractual life of the share options outstanding as at 31 December
2023 was 3.93 years (2022: 4.93 years).
Weighted average exercise price of options outstanding as at 01 January 2023 and as at 31 December
2023 was £0.05 (as at 01 January 2022 and as at 31 December 2022: £0.05).
Each option entitles the holder to subscribe for one ordinary share in the Company. Options do not confer
any voting rights on the holder.
An amount of £3,431 has been recognised in the Consolidated Statement of Comprehensive Income and
in the Share Option Reserve in relation to the share options (2022: £12,006).
44
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Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
10. Share-based payments (Continued)
The aggregate fair value of the share options in issue was £95,391 (2022 £91,961), with amounts recorded
at each reporting date being as follows:
2015 Options
2017 Options
2019 Options
2020 Options
Warrants
2023
£
18,492
26,884
22,793
27,222
95,391
2022
£
18,492
26,884
22,793
23,792
91,961
As part of the placing in November 2022 which raised £1,054,000 before fees and expenses, the Company
issued 3,162,000 warrants at an exercise price of 2p per warrant to the Company’s brokers on the
transaction as part of their fees.
The warrants entitle holders to subscribe for new ordinary shares at any time in the period of three years
following the grant of the warrants. The expiry date for the warrants is 23 November 2025.
Fair value is measured using a Black Scholes pricing model.
An amount of £11,993 was recognised in the year ended 31 December 2022 in the Share Premium and in
the Share Option Reserve in relation to the warrants. There was no amount in the year ended 31
December 2023 in the Share Premium and in the Share Option Reserve in relation to the warrants.
11.
Capital and reserves
Issued, allotted and fully paid
268,780,349 Ordinary Shares of 0.4p each (2022:
233,780,349)
137,674,431 Deferred Shares of 4p each (2022:
137,674,431)
279,176,540 Deferred Shares of 0.99p each (2022:
279,176,540)
2023
£
1,075,121
2022
£
935,121
5,506,977
5,506,977
2,763,848
2,763,848
9,345,946
9,205,946
All ordinary shares rank equally in all respects, including for dividends, shareholder attendance and
voting rights at meetings, on a return of capital and in a winding-up.
Authorised ordinary shares at 31 December 2023 totalled 334,682,497 (2022:334,682,497).
During the year 35,000,000 new ordinary shares of 0.4p each were issued through a placing in September
2023 at a share price of 1p per share.
The 137,674,431 deferred shares of 4p, have no right to dividends nor do the holders thereof have the
right to receive notice of or to attend or vote at any general meeting of the Company. On a return of
capital or on a winding up of the Company, the holders of the deferred shares shall only be entitled to
receive the amount paid up on such shares after the holders of the ordinary shares have received their
return on capital.
45
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Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
11.
Capital and reserves (Continued)
The 279,176,540 deferred shares of 0.99p shall be entitled to receive a special dividend, which is payable
upon the repayment to the Company of any amount owed under certain loan agreements, after which
the Company shall, in priority to any distribution to any other class of share, pay to the holders of the
Special Deferred Shares an aggregate amount equal to the amount repaid pro rata according to the
number of such shares paid up as to their nominal value held by each shareholder. They shall be entitled
to no other distribution save for a special dividend and shall not be entitled to receive notice of or attend
or vote at a general meeting of the Company. On a return of capital on a winding up of the Company,
they shall only be entitled to receive the amount paid up on such shares up to a maximum of 0.9 pence
per share after the holders of the Ordinary Shares and the Deferred Shares have received their return on
capital.
Reserves
The equity structure presented in the Consolidated Financial Statements reflects the equity structure of
the Group, including the equity instruments issued as part of the Reverse Takeover transaction which
occurred in 2017 and followed accounting treatment in accordance with IFRS 2.
The reverse acquisition reserve and the merger reserve are derived as part of the Reverse Takeover
transaction and the balances within these reserves have had no movement since the point of the Reverse
takeover in 2017.
Share premium reserve
The share premium reserve comprises the excess of consideration received over the par value of the
shares issued, plus the nominal value of share capital at the date of redesignation at no par value.
Share option reserve
The share option reserve comprises the fair value of options granted, less the fair value of lapsed and
expired options.
Retained earnings
Retained earnings comprises of accumulated results to date.
12.
Earnings per share
The calculation of basic loss per share at 31 December 2023 was based on the loss of £1,269,331 (2022:
£1,029,261), and a weighted average number of ordinary shares outstanding of 242,889,938 (2022:
186,422,541), calculated as follows:
2023
£
2022
£
Losses attributable to ordinary shareholders
(1,269,331)
(1,029,261)
Weighted average number of ordinary shares
Issued ordinary shares at 1 January
Effect of shares issued during the year
233,780,349
9,109,589
181,080,349
5,342,192
Weighted average number of shares at 31 December
242,889,938
186,422,541
Basic loss per share
2023 pence
per share
2022 pence
per share
(0.52)
(0.55)
46
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
N4 Pharma Plc
Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
12.
Earnings per share (Continued)
Diluted loss per share
Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding
to assume conversion of all potential dilutive shares, namely share options and warrants which could be
bought for less than a market price. The calculation of diluted loss per share at 31 December 2023 was
based on the loss of £1,269,331 (31 December 2022: £1,029,261), and a weighted average number of
ordinary shares outstanding of 242,889,938 (2022: 186,422,541).
Diluted loss per share
13.
Risk management and analysis
(a) Credit risk
2023 pence
per share
2022 pence
per share
(0.52)
(0.55)
Financial risk management
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations and arises principally from the Group’s receivables and cash and
cash equivalents. The carrying amount of cash, cash equivalents and term deposits represents the
maximum credit exposure on those assets. The cash and cash equivalents are held with UK bank and
financial institution counterparties which are rated by S&P at least A-2.
There is an intercompany debtor balance between the Company and N4 UK. The recoverability of this
debtor is dependent on the future profitability of the entity. As N4 UK has sustained losses and the
Statement of Financial Position is in deficit it is currently not in a position to repay this amount and this
therefore poses a credit risk to the Company, but not to the Group.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. Therefore, the
maximum exposure to credit risk at the reporting date of the Group was £1,214,157 (2022: £2,166,047),
being the total of the carrying amount of financial assets, shown in the Consolidated Statement of
Financial Position.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The following are the contractual maturities of financial liabilities, including estimated interest
payments and excluding the impact of netting agreements.
Group:
Financial liabilities
31 December 2023
Trade and other payables
31 December 2022
Trade and other payables
Company:
Financial liabilities
31 December 2023
Trade and other payables
31 December 2022
Trade and other payables
Carrying
amount
£
Contractual
cash flows
£
6 months or
less
£
6-12
months
£
1 -2 years
£
25,024
25,024
25,024
40,722
40,722
40,722
-
-
-
-
Carrying
amount
£
Contractual
cash flows
£
6 months or
less
£
6-12
months
£
1 -2 years
£
2,146
2,146
2,146
13,381
13,381
13,381
-
-
-
-
47
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
13.
Risk management and analysis (Continued)
(c) Currency risk
The Group does not have significant exposure to foreign currency risk at present. The Group does not
have any monetary financial instruments which are held in a currency that differs from that entity’s
functional currency.
(d) Interest rate risk
Profile
At the reporting date the interest rate profile of interest-bearing financial instruments was:
Group:
Variable rate instruments
Cash and cash equivalents
Company:
Variable rate instruments
Cash and cash equivalents
Carrying amount
2023
£
2022
£
1,027,112
1,919,529
Carrying amount
2023
£
2022
£
697,850
1,761,330
Cash flow sensitivity analysis for variable rate instruments
The Group’s interest-bearing assets at the reporting date were invested with financial institutions in the
United Kingdom with a S&P rating of A-2 and comprised solely of bank accounts.
A change in interest rates would have increased/(decreased) profit or loss by the amounts shown below.
This analysis assumes that all other variables remain constant. This analysis is performed on the same
basis for 2022.
Group:
Variable rate instruments
Company:
Variable rate instruments
2023
Profit or loss
2022
Profit or loss
100 bp
increase
10,271
100 bp
decrease
(10,271)
100 bp
increase
19,195
100 bp
decrease
(19,195)
2023
Profit or loss
2022
Profit or loss
100 bp
increase
6,979
100 bp
decrease
(6,979)
100 bp
increase
17,613
100 bp
decrease
(17,613)
48
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
14.
Related parties
Key management personnel
The below remuneration relates to key management personnel, there are no key management personnel
employed by the Group in addition to the Directors.
Short-term employee benefits
Share based payments
2023
£
231,778
3,431
235,209
2022
£
230,895
12,006
242,901
Directors’ remuneration and interests
The below remuneration relates to the Directors of the Group.
2023
Director
Nigel Theobald (Chief
Executive Officer)
David Templeton
Luke Cairns
Christopher Britten
John Chiplin (resigned on 1
August 2023)
Cash-based
payments
Remuneration
Share-based
payments
£
£
Totals
£
Interests
Shares
Options
No.
No.
82,500
49,500
44,000
24,000
14,000
-
82,500
16,981,319
-
1,715
1,716
-
-
51,215
45,716
24,000
14,000
- 1,434,286
142,857 2,109,588
717,143
717,143
-
-
214,000
3,431
217,431
17,124,176 4,978,160
2022
Director
Nigel Theobald (Chief
Executive Officer)
David Templeton
Luke Cairns
Christopher Britten
John Chiplin (resigned on 1
August 2023)
Cash-based
payments
Remuneration
Share-based
payments
£
£
Totals
£
Interests
Shares
Options
No.
No.
77,500
46,500
41,333
24,000
24,000
-
77,500
16,981,319
-
4,537
4,537
1,466
1,466
51,037
45,870
25,466
25,466
- 1,434,286
142,857 2,109,588
717,143
717,143
-
-
213,333
12,006
225,339
17,124,176 4,978,160
No contributions are paid by the Group to a pension scheme on behalf of the Directors.
Nigel Theobald is the Group’s highest paid director (2022: Nigel Theobald). His remuneration in each
year is disclosed above.
49
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
14.
Related parties (Continued)
N4 Pharma Plc has a loan receivable from N4 Pharma UK Limited at 31 December 2023 of £6,459,000
(2022: £5,659,000). It is repayable in December 2025, accrues interest at a rate of 5% and is unsecured.
The Directors have considered the carrying amount for the loan to subsidiary and decided to impair this
loan together with the accrued interest balance to £nil in accordance with the accounting policies.
There are no further related parties identified. There is no ultimate controlling party of the Company or
Group.
15. Interests in other entities
The Group’s principal subsidiaries at 31 December 2023 are set out below. Unless otherwise stated, they
have share capital consisting solely of ordinary shares that are held directly by the Group, and the
proportion of ownership interests held equals the voting rights held by the Group. The country of
incorporation or registration is also their principal place of business.
Name of
entity
Place of
business/country
of incorporation
Ownership interest
held by the group
Ownership interest
held by non-
controlling interests
Principal
activities
Nanogenics
Limited
UK
2023
%
2022
%
70.82
-
2023
%
29.18
N4 Pharma
UK Limited
UK
100
100
-
2022
%
-
-
Research and
experimental
development
on
biotechnology
Delivery of
vaccines and
therapeutics
On 27 September 2023 the Company acquired 75% of the issued shares of Nanogenics Limited. The fair
value of assets and liabilities acquired were equal to the net book value therefore no fair value
adjustments are required. In connection with the subsequent issue of shares the Company's ownership
interest was reduced to 70.82%.
Below is a financial information for Nanogenics and calculation of Non-controlling interest and Goodwill
on acquisition date 27 September 2023.
Current assets
Current liabilities
Net assets
Consideration paid
Non-Controlling Interest, 25% of Net assets
Goodwill
The Goodwill represents the knowledge of ECP105.
50
£
252,470
(750)
251,720
(250,000)
(62,930)
61,210
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Notes to the Consolidated Financial Statements for the year ended 31 December 2023 (Continued)
N4 Pharma Plc
15. Interest in other entities (Continued)
Below is the information about the costs incurred that related to the investment in Nanogenics.
Broker commission
Advisory fee
Settlement fees
Survey of designated patent rights
Exclusivity payment
Legal services
£
21,000
12,500
600
8,075
25,000
22,000
89,175
Nanogenics is exempt from audit under s479a of the companies act (parental guarantee).
16. Non-controlling interest
Below is financial information for Nanogenics given that it has non-controlling interest that is material
to the group. The amounts disclosed are before inter-company eliminations and relate to results after
27 September 2023.
Statement of Financial Position
Current Assets
Current liabilities
Current Net assets
Accumulated NCI
Statements of Comprehensive
Income
Revenue
Expenses
Loss for the period
Loss allocated to NCI
17.
Subsequent events
2023
£
239,833
(13,633)
226,200
66,005
2023
£
1,953
(27,475)
(25,522)
(7,447)
2022
£
-
-
-
-
2022
£
-
-
-
-
There have been no material events subsequent to the Consolidated Statement of Financial Position date
that require adjustment or disclosure in these Consolidated Financial Statements.
51
DocuSign Envelope ID: 2BF22183-E762-4931-A091-C3956F8EBEE6
Certificate Of CompletionEnvelope Id: 2BF22183E7624931A091C3956F8EBEE6Status: CompletedSubject: Complete with DocuSign: N4P FS 2023 v9.pdfSource Envelope: Document Pages: 51Signatures: 6Envelope Originator: Certificate Pages: 5Initials: 0Gary ChickAutoNav: EnabledEnvelopeId Stamping: EnabledTime Zone: (UTC) Dublin, Edinburgh, Lisbon, London22 Grenville StreetSt Helier, Jersey JE4 8PXGary.Chick@mourant.comIP Address: 85.255.27.169 Record TrackingStatus: Original 4/22/2024 9:45:24 PMHolder: Gary Chick Gary.Chick@mourant.comLocation: DocuSignSigner EventsSignatureTimestampChris Brittenchris.britten@btinternet.comSecurity Level: Email, Account Authentication (None)Signature Adoption: Pre-selected StyleUsing IP Address: 212.117.76.114Signed using mobileSent: 4/22/2024 9:50:43 PMViewed: 4/22/2024 11:57:02 PM Signed: 4/22/2024 11:57:22 PMElectronic Record and Signature Disclosure: Accepted: 4/22/2024 11:57:02 PM ID: d8f54cdd-05e7-4d4d-9987-45755f9bd068Gareth Norrisgareth.norris@saffrey.comSecurity Level: Email, Account Authentication (None)Signature Adoption: Pre-selected StyleUsing IP Address: 31.94.64.100Signed using mobileSent: 4/22/2024 9:50:44 PMViewed: 4/22/2024 9:56:37 PM Signed: 4/22/2024 10:56:41 PMElectronic Record and Signature Disclosure: Accepted: 4/22/2024 9:56:37 PM ID: 26273d32-d3ee-4fad-9dc2-5c49a6824a00Nigel Theobaldnigel@n4pharma.co.ukSecurity Level: Email, Account Authentication (None)Signature Adoption: Pre-selected StyleUsing IP Address: 86.143.197.221Sent: 4/22/2024 9:50:44 PMViewed: 4/22/2024 9:51:27 PM Signed: 4/22/2024 9:52:06 PMElectronic Record and Signature Disclosure: Accepted: 4/22/2024 9:51:27 PM ID: befe19f5-5e0a-4aef-8232-54aeca33c0eeIn Person Signer EventsSignatureTimestampEditor Delivery EventsStatusTimestampAgent Delivery EventsStatusTimestampIntermediary Delivery EventsStatusTimestampCertified Delivery EventsStatusTimestamp Carbon Copy EventsStatusTimestampWitness EventsSignatureTimestampNotary EventsSignatureTimestampEnvelope Summary EventsStatusTimestampsEnvelope SentHashed/Encrypted4/22/2024 9:50:44 PMCertified DeliveredSecurity Checked4/22/2024 9:51:27 PMSigning CompleteSecurity Checked4/22/2024 9:52:06 PMCompletedSecurity Checked4/22/2024 11:57:22 PMPayment EventsStatusTimestampsElectronic Record and Signature Disclosure ELECTRONIC RECORD AND SIGNATURE DISCLOSURE
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