Nuformix plc Annual Report 2023

Plain-text annual report

Nuformix plc Annual Report and Accounts For the Period Ended 30 September 2023 Contents 1 Company Information....................................................................................................... 2 Overview ............................................................................................................................ 3 Non-Executive Directors’ Statement ............................................................................... 4 Strategic Report ................................................................................................................ 9 Board of Directors .......................................................................................................... 16 Corporate Governance Report ....................................................................................... 17 Remuneration Report ..................................................................................................... 23 Remuneration Policy ...................................................................................................... 25 Directors’ Report ............................................................................................................. 28 Independent Auditor’s Report ........................................................................................ 31 Consolidated Statement of Comprehensive Income ................................................... 40 Consolidated Statement of Financial Position ............................................................. 41 Consolidated Statement of Changes in Equity .............................................................. 42 Consolidated Statement of Cash Flows ........................................................................ 43 Notes to the Consolidated Financial Statements ......................................................... 44 Company Statement of Financial Position ................................................................... 64 Company Statement of Changes in Equity ..................................................................... 65 Company Statement of Cash Flows .............................................................................. 66 Notes to the Company Financial Statements ............................................................... 67 2 Company Information Directors Dr Julian C Gilbert Ms Madeleine E Kennedy Dr Daniel J Gooding (appointed 1 August 2022) Company Secretary Ben Harber Registered Ofﬁce 6th Floor 60 Gracechurch Street, London EC3V 0HR Auditors Kreston Reeves LLP Brokers Registrars 168 Shoreditch High Street London E1 6RA Stanford Capital Finsgate 5-7 Cranwood Street London EC1V 9EE Link Group 10th Floor Central Square 29 Wellington Street, Leeds LS1 4DL 3 Overview About Nuformix Nuformix plc (“Nuformix” or the “Company”) and its subsidiary (together the “Group”) is a pharmaceutical development group targeting unmet medical needs in fibrosis and oncology via drug repurposing. The Group aims to use its expertise in discovering, developing and patenting novel drug forms with improved physical properties, to develop new products that are differentiated from the original product (by way of dose, delivery route or presentation), thus creating new and attractive commercial opportunities. Nuformix has an early-stage pipeline of preclinical assets with potential for significant value and early licensing opportunities. 4 Non-Executive Directors’ Statement Dear Shareholder, Introduction The key priority for the directors continues to be to focus on the Company’s early-stage pipeline of preclinical assets and ensure strength in the areas of drug development, business development and financial control within the Group. We operate a lean structure with the limited Board and bring in specialists and consultants, experts in their field, to support the business as required. Pipeline Nuformix has an early-stage pipeline of preclinical assets in development to address the high unmet medical need in fibrosis and oncology. We target solutions using our expertise to develop and file patent applications on novel crystalline forms of existing, marketed drugs, that have improved physical properties, with the aim of developing novel products in new indications to create attractive commercial opportunities. Importantly, the commercial opportunity is optimised when the repurposed product is differentiated from the original marketed drug by way of either dose, route of administration or presentation. Drug repurposing is a well-known and successful strategy for enhancing the therapeutic and commercial value of marketed drugs, and their development typically brings a greater probability of success compared to developing newly discovered drugs, due to the existing data that has been generated on the marketed drug. This existence of data may also result in lower overall development costs and shorter development timelines. The Group’s business model is to take these assets to key value inflection points before partnering or licensing. We conduct our R&D activities through out-sourcing, to enable us to access the different types of expertise that are needed for drug R&D and to minimise our operational costs. We have a strong network of external contractors, with whom we have had relationships over many years. NXP002 (novel proprietary form of tranilast) – Idiopathic Pulmonary Fibrosis (“IPF”) NXP002 is the Group's preclinical lead asset and a potential novel inhaled treatment for IPF and possibly other fibrosing interstitial lung diseases ("ILDs"). It is a proprietary, new form of the drug tranilast, which allows the drug to be delivered in an inhaled formulation. IPF is a devastating lung disease associated with a higher mortality rate than many cancers. Thus, IPF represents a high unmet medical need such that the requirement for improved treatment options represents a significant commercial opportunity. IPF is classified as a rare disease and presents a global commercial market that is forecast to grow to US$8.8bn by 2027. Sales of standard-of-care therapies OFEV and Esbriet (now off patent) achieved US$3.5bn and US$0.8bn respectively in 2022. Tranilast has a long history of safe use as an oral drug for asthma, keloids and hypertrophic scarring, but there is growing evidence that supports its potential use in other fibrotic conditions, including IPF. NXP002 is differentiated as it is a patent protected new form of tranilast that has been enabled for formulation and delivery direct to the lungs by inhalation, a new route of administration for this drug. The inhalation route is a well-known strategy for treatment of lung diseases to yield greater efficacy and reduce systemic side- effects compared to oral treatment. Discontinuation rates for standard-of-care IPF therapies can be as high as 80% in certain patient groups due to their debilitating systemic side-effects. 5 Non-Executive Directors’ Statement Effective inhalation therapies offer the potential to overcome these limitations of oral therapies. Nuformix owns granted patents protecting new forms of tranilast, in addition to a recently filed patent protecting its use with SoC in IPF, with patent prosecution progressing in major pharmaceutical territories. As a potential treatment for IPF, which is a rare disease, NXP002 is a likely candidate for Orphan Drug Designation, which could provide additional product protection against potential competitors. The positioning of NXP002 as an inhaled treatment for IPF could be either as added to Standards of Care (SoCs) or administered as a monotherapy for patients non-responsive to SoCs and those declining these therapies due to side effects which impact quality of life. The preclinical inhalation strategy, initiated by the Company has significantly progressed NXP002 demonstrating: • it can be delivered in-vivo by a range of nebulisers at the optimum particle size for delivery to the deep lung; • very high doses appear to be well-tolerated; and • an in-vivo inhalation dose response was observed for inflammatory and fibrotic biomarkers that is consistent with all ex-vivo human IPF tissue studies to date. The Company conducted studies in a new iteration of a 3D human IPF lung tissue using a disease and species relevant model that has been advanced to significantly reduce output variability. The results from these studies of NXP002 alone and in combination with current SoC, can be summarised as follows: • NXP002 is well tolerated in ex-vivo human lung tissue with no signs of toxicity events; • NXP002 alone delivers a strong, consistent anti-fibrotic and anti-inflammatory effect as demonstrated by modulation of the release of multiple biomarkers of fibrosis and inflammatio • both high and low concentrations of NXP002 show an additive anti-fibrotic and anti-inflammatory effect to SoC; • • in particular, the higher concentrations of NXP002 with SoC's deliver a near complete ablation of fibrosis biomarker release, yet at lower concentrations than have been seen in other preclinical models to date; and the clear, pronounced additive benefit of NXP002 on top of SoCs observed suggests that NXP002 will provide additional efficacy, even in patients responding to SoC therapy. This raises the possibility that NXP002 targets additional disease pathways to SoC's when increasing the combined anti-fibrotic and anti-inflammatory response. As announced on 18 May 2023, following success in suppressing biomarkers of fibrotic disease progression in human IPF lung tissue, the same samples were analysed to assess additional mechanistic and anti- inflammatory benefits on top of SoC's and the results are summarised as follows: • NXP002 alone delivers a strong, consistent anti-inflammatory effect as demonstrated by suppression of the release of inflammatory cytokines by over 90% for all cytokines studied; and 6 Non-Executive Directors’ Statement • the results further suggests that NXP002 will provide additional efficacy in combination with SoC's, even in patients responding to SoC therapy alone. Nuformix has developed a Target Product Profile (“TPP”) that is consistent with twice daily inhalation administration. To assess NXP002's duration of action in relation to the TTP, the Company initiated work in an exploratory model in healthy human lung tissue. The model also bridges the Company's successful preclinical work across a variety of LPS-challenge studies. The results are summarised as follows: • NXP002 suppresses the release of inflammatory cytokines by healthy human lung tissue following LPS challenge; and • a strong anti-inflammatory effect remains at 12 hours post drug dosing demonstrated by continued suppression of the release of inflammatory cytokines following LPS challenge, confirming NXP002 has a suitable duration of action to support its TTP of twice daily dosing. Overall, the results further strengthen NXP002's potential for development as a new inhaled treatment for IPF either in addition to existing therapies or as a monotherapy. The Board continues to be encouraged by the progress of the studies and the positive data generated to date, in particular the recent duration of action study results and is focused on next steps which include: • expansion of the current studies to include further human IPF tissue donors to demonstrate the robustness of NXP002's anti-fibrotic response alone and in SoC combinations; and • formally commencing the NXP002 partnering process. Post-period end on 23 October 2023, the Company announced that it was issued with an Official Decision to Grant Notice of Allowance for Japanese National Phase Patent Application No. 2020-555115 entitled "CRYSTALLINE TRANILAST SALTS AND THEIR PHARMACEUTICAL USE". This patent, which has already been granted in the US, describes proprietary new forms of the drug tranilast being progressed by the Company as a potential novel IPF treatment. These proprietary drug forms uniquely enable delivery via an inhaled nebulised formulation. NXP004 (novel forms of olaparib) – Oncology The Group discovered novel forms of olaparib, a drug currently marketed by AstraZeneca, as Lynparza®. Lynparza® was first approved in December 2014 for the treatment of adults with advanced ovarian cancer and deleterious or suspected deleterious germline BRCA mutation. Since then, it has secured similar approvals in breast, pancreatic and prostate cancers with further trials on-going. These approvals have propelled Lynparza® sales to US$2.6bn in 2022 with industry analysts forecasting annual sales of US$9.7bn by 2028. The Group has filed two patent applications on its novel forms of olaparib with the potential for patent life to 2040/2041. The Company demonstrated enhanced performance of NXP004 cocrystals compared to olaparib. Subsequently, further preformulation studies allowed the Company to identify lead cocrystals to be progressed for further development. 7 Non-Executive Directors’ Statement Results from in vitro dissolution studies demonstrated that the two lead NXP004 cocrystals out-performed Lynparza®, both in terms of rate and extent of dissolution and release of olaparib. Enhancement of dissolution in the currently marketed formulation of Lynparza® resulted in improved bioavailability versus the initial marketed product. Therefore, the NXP004 programme may offer potential to further increase olaparib bioavailability. In addition, the potential simplicity of NXP004-based formulations may offer improvements in product cost-of-goods versus the currently marketed product, which requires complex manufacturing methods. These attributes position NXP004 for applications in line-extensions for the currently marketed product, or for possible development in future first-to-generic products. The Company will now consider the design and execution of suitable preclinical pharmacokinetic models to further investigate and validate NXP004's potential for enhancing the oral absorption of olaparib. Securing these data will enable commencement of discussions with potential commercialisation partners. This work will direct and support future out-licensing discussions for NXP004. NXP001 (new form of aprepitant) – Oncology NXP001 is a proprietary new form of the drug aprepitant that is currently marketed as a product in the oncology supportive care setting (chemotherapy induced nausea and vomiting) exclusively licensed to Oxilio for oncology indications. On 18 September 2023, the Company announced that Oxilio had acquired ownership of its NXP001 patent estate for which Nuformix received new immediate and near-term undisclosed milestone payments, whilst retaining further development milestones and royalties capped at £2 million per year. Fundraising On 13 April 2023, the Company completed a subscription to raise gross proceeds of £70,000 through a subscription for 35,000,000 new ordinary shares of 0.1 pence each in the capital of the Company (the "New Ordinary Shares") at a price of 0.20 pence per share (the "Subscription"). The Subscription was undertaken with a single UK-based FCA regulated institutional investor. The New Ordinary Shares represented approximately 4.7 per cent. of the Company's enlarged issued share capital. In addition, the participant in the Subscription was issued with one warrant for every one New Ordinary Share subscribed for with an exercise price of 0.25 pence per warrant. These warrants are exercisable for two years from 21 April 2023 ("Warrants"). If the Warrants are exercised in full, it would result in the issue of an additional 35,000,000 new ordinary shares raising a further £87,500 for the progression of the Company's business activities. The New Ordinary Shares and Warrants were issued pursuant to the Company's existing share issuance authorities. The net proceeds of the Subscription are being used by the Company primarily to further advance its NXP002 programme for the inhaled treatment of IPF. 8 Non-Executive Directors’ Statement Lanstead Subscription and Sharing Agreements During the period the Company received proceeds from the Company’s subscription and associated sharing arrangements with Lanstead Capital Investors L.P. (“Lanstead”), as announced on 14 December 2021, 17 January 2022 and 12 April 2022. The sharing agreements ended in October 2023, concluding this arrangement and the Company is due no further funds from Lanstead. Business Development During the period the Company has switched its focus to business development activities to explore partnering opportunities for both its NXP002 and NXP004 programmes, attending both the European Respiratory Conference in Milan and the IPF Summit in Boston. Those partnering activities are ongoing. Summary and Outlook The strategy of the Group is to continue to optimise value from its existing assets while maintaining tight control of costs. The proceeds from the Lanstead Sharing Agreements, the April 2023 fundraise proceeds and the milestone payment received from Oxilio in September 2023 and post-period in December 2023 have enabled the Group to continue to advance and exploit the current assets within the portfolio through selective additional R&D and business development activities as set out above. The Group is conducting business development/licensing activities for all its assets using a structured and data-driven approach, with the goal of seeking global licensing deals. Our focus and emphasis is to progress our NXP002 and NXP004 programmes where required to complete licensing transactions and achieve value creation to generate a return for shareholders. We would like to thank all stakeholders and in particular our shareholders for their continued support and we look forward to the remainder of the year and beyond with confidence that significant value can be realised from our portfolio of assets over time. Julian Gilbert Non-Executive Chairman 2 January 2024 Madeleine Kennedy Non-Executive Director 2 January 2024 9 Strategic Report Review of the Business A review of the period of these accounts is given in the Non-Executive Directors’ Statement on pages 4 to 8. Risks and uncertainties The Group’s risk management policy is regularly reviewed and updated in line with the changing needs of the business. Risk is inherent in all business. Set out below are certain risk factors which could have an impact on the Group’s long-term performance and mitigating factors adopted to alleviate these risks. This does not purport to be an exhaustive list of the risks affecting the Group. The primary risks identiﬁed by the Board are: Strategic risks • Funding the business The biotechnology and pharmaceutical industries are very competitive, with many major players having substantial R&D departments with greater resources and ﬁnancial support. The Group aims to execute licensing deals early in the development process in order to generate revenue to support the business. The Group’s lead asset is targeted towards IPF, a disease area where there is good precedent for licensing deals at early stages of development. Without licensing revenue, reliance falls on raising funds from investors or potential M&A opportunities. Failure to generate additional funding from these sources, if required, would compromise the Group’s ability to achieve its strategic objectives as set out in the outlook on page 6. There is a material uncertainty around achieving early licensing deals and, if needed, raising additional funds. However, it is the Directors’ reasonable expectation that the Group has adequate resources to continue to operate as a going concern for at least twelve months from the date of the approval of the accounts. In forming this assessment, the Directors have prepared cashﬂow forecasts covering the period ending 31 December 2024 that take into account the likely run rate on overheads and research and development expenditure and the prudent expectations of income from out-licensing rights to its programmes or a fundraising. The proceeds from the Lanstead sharing agreements ended in October 2023. • Feasibility of drug candidates Pharmaceutical R&D is an inherently risky activity and drug candidates can fail due to a lack of efﬁcacy, lack of potency, unsuitable pharmacokinetic properties, unacceptable toxicology profile, poor stability of the drug or formulation, poor performance of the drug product, or other technical issues unforeseen at the time of candidate selection. This is the main reason that conventional pharmaceutical R&D takes many years and billions of dollars to progress a drug from discovery through to an approved medicine. It is possible that the drug candidates selected by the Group are found to be non- viable for further development although the Group’s model of repurposing and working on known drugs allows us to mitigate this risk to a certain extent. 10 Strategic Report Continued • Failure to generate and protect our IP If our IP rights are not adequately secured or defended against infringement, or conversely become subject to infringement claims by others, commercial exploitation could be completely inhibited. The Group constantly monitors its patents and is prepared to defend them rigorously. By virtue of conducting research on known drugs, competitors may file patent applications on the same drugs as the Group, and thus there is a risk of securing new granted patents. There is a delay of up to 18 months in publishing patent applications and thus it is not always known whether the Group’s inventions will be novel. This is mitigated through knowledge and expertise in identifying new IP and promptly filing patent applications. • Unrealistic goals and timeframes The Board has a duty to maintain a realistic view of the chances of success of products, deals and partnerships. Should this not be managed accurately and appropriately, the Group and its Board and staff risk ﬁnancial, business and reputational damage, whilst its shareholders become exposed to investment risk and uncertainty over the Group’s viability and status. The Board continually reviews expectations and communications in the public domain to reduce the risk of misalignment. • Reliance on partners To progress the development of a drug candidate requires resources, ﬁnancial and otherwise, that are not necessarily available to the Group. The drug candidates that the Group wishes to develop may be of interest to third parties capable of providing these resources, so a partnership (e.g., a co-development partnership) may provide mutual beneﬁts and mitigate risks for the Group. However, the speciﬁc strategic focus of a partner may not align totally with the Group’s objectives. Maintaining a balance in a partnership is therefore a risk, such as timing, cost sharing, development decisions. Currently the Group is progressing two of its three pipeline assets without external co-development partners and thus this risk is currently minimised. Operational risks • Management, employees, consultants and contractors With a fully virtual Group operating model with a reliance on consultants and contractors, the Group’s ability to manage day to day tasks and its relationships with its customers and suppliers could be undermined by failure to recruit key personnel. The Group endeavours to offer attractive remuneration and a positive working environment for all people involved in its projects. The Board are incentivised as detailed in the Directors’ Remuneration Report. 11 Strategic Report Continued • Business development risks in terms of timing and success of deal ﬂow Opportunities to generate value from the portfolio have increased, but there is a need to generate further data to make the assets as attractive as possible to potential licensees. The Group seeks to extract value from its existing pipeline through early licensing deals once sufficient data are generated, to provide revenue. Generation of more robust data packages will lead to a greater probability of successful licensing discussions. • Adapting to the external environment The ability of the Group to quickly adapt to external events such as a pandemic may impact the delivery of our strategy. The pandemic could cause further impact to external research. Our primary focus remains the safety of our employees. The Group follows Government advice whilst allowing employees to work ﬂexibly. The risks are also minimised by the Group’s virtual business model, allowing the Board to work remotely and effectively. Close liaison with contractors ensures that Group projects are progressed according to agreed timelines and costs. Financial risk management • Failure to achieve strategic plans or meet targets or expectations The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efﬁciency, prevailing and projected proﬁtability, projected operating cash ﬂows, projected capital expenditures and projected strategic investment opportunities. Further detail on the Group’s risk management policies and procedures are set out in Note 18 of the ﬁnancial statements. 12 Strategic Report Continued Financial Highlights • Net assets at year-end (18 months) of £4,195,033 (2022: £4,737,962) which includes £202,548 cash at bank (2022: £464,095) • The Group delivered a loss on ordinary activities (after tax credit) for the 18 months of £859,467 (2022: loss of £1,108,993) and a loss per share of 0.12p (2022: 0.19p). The reported loss is driven mainly by costs related to the further development of pipeline assets Future outlook The Non-Executive Directors’ Statement on pages 4 to 8 gives information on the outlook of the Group. Performance The following are the key performance indicators (“KPIs”) considered by the Board in assessing the Group’s performance against its objectives. These KPIs are: Financial KPIs The Group is currently at a stage where the Board considers availability of cash to fund the planned R&D activities to be the primary KPI. At 30 September 2023 cash balances totalled £202,548 (2022: £464,095). The Board will consider introducing additional KPIs to monitor the Group’s development as they become relevant in the future. • Meeting ﬁnancial targets: The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efﬁciency, prevailing and projected proﬁtability, projected operating cash ﬂows, projected capital expenditures and projected strategic investment opportunities. Further detail on the Group’s risk management policies and procedures are set out in Note 18 of the ﬁnancial statements. • Revenue from agreements: During the period of these accounts, the revised Oxilio agreement has provided Nuformix with new immediate and near-term undisclosed milestone payments. 13 Strategic Report Continued Non-Financial KPIs • Progress of Lead Programmes: The Group strategy is to generate revenue streams through applying and further developing its IP to produce proprietary product opportunities for short-term development and early out-licensing opportunities. Thus, progression of its assets towards licensing is crucial to the business. NXP002: During the period of these accounts the Group continued to prioritise the development of NXP002, its inhaled candidate for the treatment for IPF, and generated further preclinical data. The Group firstly initiated further preclinical studies confirming preclinical tolerability across a new range of higher doses than previously studied following inhalation of a new nebulised formulation. In response to intelligence gathered following the attendance of key conferences, the Group switched its research focus onto further investigations of NXP002 in combination with current IPF standards of care (SoC) and demonstration of NXP002’s duration of action. This was achieved via new studies in 3D human lung tissue, firstly using a disease and species relevant IPF model, focusing on NXP002 in combination with current SoC. Advancements within this model were designed to significantly reduce output variability. The results continued to confirm that NXP002 is well tolerated in ex-vivo human lung tissue with no signs of toxicity events and that NXP002 alone delivers a strong, consistent anti-fibrotic effect as demonstrated by modulation of the release of multiple biomarkers of fibrosis. Furthermore, both high and low concentrations of NXP002 show an additive anti-fibrotic effect to SoC. In particular, the higher concentrations of NXP002 with SoC's deliver a near complete ablation of fibrosis and inflammation biomarker release, yet at lower concentrations than have been seen in other preclinical models to date. The results indicated that the clear, pronounced additive benefit of NXP002 on top of SoCs observed offers the potential for additional IPF treatment efficacy, even in patients responding to SoC therapy. The results also raised the possibility that NXP002 targets additional disease pathways to SoC's when increasing the combined anti-fibrotic response. Lastly, the Group initiated work using an exploratory healthy human lung tissue model to investigate NXP002's duration of action. Demonstration of a prolonged duration of action is essential in the development of inhaled therapies, whose clearance from the lung can be rapid. Therapies requiring multiple (more than two) daily uses of inhalation devices for effective treatment are less attractive and suffer reduced patient compliance, even in life-threatening conditions such as IPF. Therefore, Nuformix has developed a TPP that is consistent with twice daily inhalation administration. The exploratory model involves an LPS challenge to healthy human lung tissue, offering numerous advantages in terms of species relevance and the ability to control tissue exposure to drug. The model also bridges the Company's previous successful preclinical work across a variety of LPS-challenge studies. It was found that NXP002 suppresses the release of inflammatory cytokines by healthy human lung tissue following LPS challenge. This effect was seen at one hour post treatment with NXP002, suggesting only a short time is required for lung tissue penetration and activity. In addition, a strong anti-inflammatory effect remained at 12 hours post drug dosing demonstrated by suppression of the release of inflammatory cytokines following 14 Strategic Report Continued LPS challenge, confirming NXP002 has a suitable duration of action. Lastly, results indicated that anti- inflammatory effect was still observed at 24 hours post removal of drug. Overall, the combined data generated gives the Group confidence in NXP002's potential as an inhaled therapy for IPF treatment and allows the telling of a more complete preclinical story to potential licensing partners for the first time. The Group continues to pursue opportunities to share this important new data with key players in the rare disease and respiratory disease sectors as it explore all opportunities to progress the NXP002 programme. NXP001: On 18 September 2023, the Company announced Oxilio had acquired ownership of its NXP001 patent estate for which Nuformix received new immediate and near-term undisclosed milestone payments, whilst retaining further development milestones and royalties capped at £2 million per year. NXP004: During the period of these accounts, the Group continued to perform preclinical studies investigating the enhanced performance of NXP004 cocrystals compared to various forms of olaparib. Pre- formulation studies were first completed confirming the superiority of the Group’s recently patented cocrystal forms, allowing lead cocrystals to be identified and progressed to further drug product development studies. The Group initiated in-vitro dissolution performance studies for its lead cocrystals compared to the marketed Lynparza® tablet product using a biologically relevant dissolution design and with drug loading relevant to human dosing. The results demonstrated that the two lead NXP004 cocrystals selected out-perform Lynparza®, both in terms of rate and extent of dissolution and release of olaparib. Enhancement of dissolution in the currently marketed formulation of Lynparza® resulted in improved bioavailability versus the initial marketed product. Therefore, the NXP004 programme may offer potential to further increase olaparib bioavailability. In addition, the potential simplicity of NXP004-based formulations may offer improvements in product cost-of-goods versus the currently marketed product, which requires complex manufacturing methods. These attributes position NXP004 for applications in line-extensions for the currently marketed product, or for possible development in future first-to-generic products. The Company has commenced discussions with potential commercialisation partners. Co-development with third parties: Co-development of generic products with third parties, where Nuformix’s knowhow or IP could provide extended patent protection is a potential business model although the Group is prioritising its resources on progressing its own portfolio to generate licensing revenue. Section 172 The Board considers the interests of the Group’s employees and other stakeholders, including the impact of its activities on the community, environment and the Group’s reputation, when making decisions. The Board ensures that its decisions offer the best chance to promote the success of the Group as a whole and consider the likely and long-term consequences for all stakeholders, particularly (though not exclusively) considering the following: 15 Strategic Report Continued • How the views and interests of all stakeholders were represented in the boardroom during the period of these accounts. Open and honest discussion at Board level considers the impact on the Group’s stakeholders when reviewing items ﬂowing to the Board as part of its activities, whether this is reviewing strategy, budget or a business development opportunity. • Given the size and stage of development of the Group, the Board has not formally adopted a mechanism to obtain stakeholder feedback. However, the Group’s Directors can be contacted at info@nuformix.com should any stakeholders wish to contact the Group and shareholders may contact the Company’s investor relations adviser, IFC Advisory Limited, at nuformix@investor- focus.co.uk. • The Group’s strategy and business model detailed in the Non-Executive Directors’ Statement, on pages 4 to 8. • How the Group manages risks, on pages 9 to 15. • Corporate governance, on pages 17 to 22, including how governance supported the delivery of our strategic objectives in this period. Carbon Reporting The Group has opted not to include any Streamlined Energy and Carbon Reporting (SECR) within this report as it does not meet the Large Company threshold or energy consumption threshold requiring additional reporting. The Strategic Report was approved by the Board on 2nd January 2024 and signed on its behalf by: Julian Gilbert Non-Executive Chairman 2 January 2024 Madeleine Kennedey Non-Executive Director 2 January 2024 16 Board of Directors Dr Julian Gilbert, Non-Executive Chairman Dr Julian Gilbert, Non-Executive Chairman, has more than 35 years of commercial and technical experience in the pharmaceutical industry gained at a number of companies including Chiroscience, Mundipharma International, BTG and GSK. Most recently, Julian was co-founder and CEO of Acacia Pharma Group (Acacia), a leading hospital pharmaceuticals company, raising approximately £100 million in private and public funding and leading its flotation on Euronext in 2018. Acacia launched its lead product BARHEMSYS®, repurposed amisulpride for the management of PONV, in the US in 2020. Prior to this, he was co-founder and Commercial Director of Arakis, a specialist pharmaceutical company repurposing known drugs, that was sold to Sosei in 2005 for £107 million, having licensed Seebri®/Ultibro® to Novartis. Julian is currently a Non-Executive Chairman of Exvastat and River BioMedics and a Non-Executive Director of Monument Therapeutics. Julian has a degree in pharmacy and a PhD in pharmaceutics, both from the University of Nottingham. Julian is a member of the Audit Committee. Ms Madeleine Kennedy, Non-Executive Director Madeleine (Maddy) Kennedy, FCCA, is an experienced CFO with a background in the life sciences sector in both public and private companies with experience in fundraising, financial modelling, M&A and IPO activities. Maddy is currently CFO at Arquer Diagnostics, Maxwellia and Kesmalea, her previous roles include being CFO and/or Board Director at Tetris Pharma, MyHealthChecked plc, Ieso Digital Health Ltd, PsiOxus Therapeutics Ltd and Lab21 Limited and was Finance Director at Alliance Pharma plc, taking it through its IPO. Maddy is an FCCA and has a Post Graduate Diploma in Financial Strategy from Said Business School, Oxford. Maddy is Chair of the Audit Committee. Dr Daniel Gooding, Executive Director Dr Dan Gooding, Executive Director, is a co-founder of Nuformix and instigated the Company’s NXP002 programme as an inhaled therapy for the treatment of Idiopathic Pulmonary Fibrosis (IPF). Dan has over 22 years’ experience in commercialisation and business development within the pharmaceutical industry, having received his PhD in chemistry from Leeds University. Dan began his career in commercial roles with pharmaceutical excipients companies including FMC and Dow Corning. At Accelrys Ltd, Dan was responsible for sales across the UK and Southern Europe, leading business development within the emerging nanotechnology, drug delivery and formulation sectors, achieving licensing deals with Johnson & Johnson and AstraZeneca. Dan remains close to the fields of fibrosis, oncology and drug repurposing, supporting the management team of Qureight Limited in securing funding and establishing this Cambridge-based start-up, which develops AI-based image processing methods in measuring disease progression and drug response for patients with fibrotic lung diseases including IPF. Dan has also cofounded TRx Biosciences, a company developing new oral therapies using a novel targeted delivery technology to improve treatment of various cancers and CNS diseases. Daniel is a member of the Audit Committee. 17 Corporate Governance Report We are pleased to present the Corporate Governance report for the year ended 30 September 2023 (18 months). This section of the Annual Report provides a description of our corporate governance structure and processes whilst setting out their application throughout the year ended 30 September 2023 (18 months). The Board considers that the Group has complied with all of the provisions of the UK Corporate Governance Code throughout the year ended 30 September 2023 (18 months), except as follows: • Given that the Company operates with out-sourced consultants or agency workers, the Board does not consider it appropriate to adopt the suggested methods on workforce engagement or implementing a diversity and inclusion policy as outlined within the UK Corporate Governance Code 2018. The Board believes that the arrangements in place are effective but will continue to keep this under review. • Given the changes to Board composition during the period of these accounts it was felt that a board evaluation would not provide added value. • Given the size and stage of development of the Company, all non-executive director remuneration includes share options. Given the size of the Board the Company no longer has a Senior Independent Director. • On 12 December 2022, the directors decided that, due to the current size of the board, the complete board would assume the responsibilities performed by the Nomination and Remuneration Committee. The Board considers that the areas of non-compliance are likely to continue for the medium-term. Board Leadership and Company Purpose The Board is responsible to the Group’s shareholders for the performance, overall strategic direction, values and governance of the Group. It provides the leadership necessary to enable the Group’s business objectives to be met within the framework of the internal controls detailed in the report. The Board currently comprises two Independent Non-Executive Directors, Dr Julian Gilbert and Ms Madeleine Kennedy and one Executive Director, Dr Daniel Gooding. Collectively the Board’s aim is to increase the value of the Group and ensure its guidance and governance is enhanced through an appropriate Board structure and experienced executive management. Brief biographies of the Directors appear on page 16. The Company’s Articles of Association allow the Directors to authorise conflicts of interest and a register has been set up to record all actual and potential conflict situations which have been declared. All declared conflicts have been approved by the Board. The Group has instituted procedures to ensure that Directors outside interests do not give rise to conﬂicts with its operations and strategy. Where there are any conﬂict of interests, the relevant director does not participate in Board discussions or decisions on such matters and minutes relating to such matters are not circulated to those individuals. The Board has adopted a schedule of matters reserved to it for approval. These include the approval of changes to the issued share capital, any material changes in the nature or scope of the business of the Group, any borrowing or raising of money by the Group which would result in the aggregate borrowing of the Group exceeding £100,000 and any lending or giving security on behalf of any shareholder or associate of any shareholder of the Group. If required the Board may delegate specific responsibilities to a subcommittee with defined terms of reference who will then report back to the full Board at a subsequent meeting. 18 Corporate Governance Report Continued The Board communicates with shareholders via RNS announcements, other appropriate communications platforms and where possible responding to email enquiries from shareholders. It has also engaged an independent investor relations adviser, IFC Advisory Limited, to assist with shareholder communications. Additionally, the Board uses the AGM as an occasion to communicate with all shareholders who are provided with the opportunity to ask questions. At the AGM, the level of proxy votes lodged on each resolution is made available, both at the meeting and subsequently on the Group’s website. Each substantially separate issue is presented as a separate resolution. The website also contains general information on the Group’s business, its technology, strategy, business model and R&D activities. Board meetings Eight scheduled Board meetings with weekly ad-hoc meetings to review the cashflow and cash position held during the period ended 30 September 2023. The Board currently has seven scheduled meetings for the coming ﬁnancial year. At each scheduled meeting, the Board considers a report on current operational, risk, strategic and health and safety matters, as well as a ﬁnancial and human resources report. Papers for each scheduled Board meeting are usually provided during the week before the meeting. The following were Directors of Nuformix plc during the period. The list below includes the attendance at the scheduled meetings during the period. Certain directors were appointed or resigned during the period and therefore were not eligible to attend all meetings. Figures in brackets denote the maximum number of meetings that could have been attended. Board Audit Committee Nomination Committee2 Remuneration Committee3 Meetings held Dr Julian Gilbert Ms Madeleine Kennedy Dr Daniel Gooding1 8 8 8 6(6) 4 4 4 2(2) 2 2 2 - 2 2 2 - 1 – Dr Daniel Gooding was appointed to the Board on 1st August 2022 2 & 3 - On 12 December 2022, the directors decided that, due to the current size of the board, the complete board would assume the responsibilities performed by the Nomination and Remuneration Committee. Division of Responsibilities The Directors possess a wide range of skills, knowledge and experience relevant to the strategy of the Company, including financial, legal, governance, regulatory and industry experience as well as the ability to provide constructive challenge to the views and actions of those employed by the Group in meeting agreed strategic goals and objectives. 19 Corporate Governance Report Continued In the opinion of the Board, both Madeleine Kennedy and Julian Gilbert are considered to be independent in character and judgement and there are no relationships or circumstances that are likely to affect (or could appear to affect) their judgement. The Board is of the view that those who held ofﬁce during the 2023 financial period committed sufﬁcient time to fulﬁl their duties as members of the Board. There are agreed procedures for the Directors to take independent professional advice, if necessary, at the Group’s expense. All Directors have access to the advice and services of the Company Secretary. In addition, newly appointed Directors are provided with comprehensive information about the Group as part of their induction process. Composition, Succession and Evaluation As stated above the on 12 December 2022, the directors decided that, due to the current size of the board, the complete board would assume the responsibilities performed by the Nomination and Remuneration Committee. Prior to the 12 December 2022 the Company held two Nomination Committee meetings. The Board is responsible for determining the composition and make- up of the Board. It is also responsible for periodically reviewing the Board’s structure and identifying potential candidates to be appointed as Directors, as the need arises. The selection process is, in the Board’s view, both rigorous and transparent in order to ensure that appointments are made on merit and against objective criteria set by the Board. In reviewing potential candidates, the Board considers the beneﬁts of diversity the Board, while ensuring that appointments are made based on merit and relevant experience. The Board, in consideration of skills and succession planning, looks at the balance, structure and composition of the Board and takes into account the future challenges and opportunities facing the Group. Each Non-Executive Director is appointed for an initial term of one year. Subject to agreement, satisfactory performance and re-election by shareholders, their appointments may be renewed for further terms of one year. In order to comply with the UK Corporate Governance Code, all Directors will offer themselves for re-election by shareholders at each AGM. 20 Corporate Governance Report Continued While no formal structured continuing professional development programme has been established for the non-executive Directors, every effort is made to ensure that they are fully briefed before Board meetings on the Group’s business. In addition, they receive updates from time to time from the executive Directors on speciﬁc topics affecting the Group and from the Company Secretary on recent developments in corporate governance and compliance. The Group also arranges Director training, from time to time, on Corporate Governance topics and general Director’s responsibilities. Each of the Non-Executive Directors independently ensures that they update their skills and knowledge sufﬁciently to enable them to fulﬁl their duties appropriately. Given the changes to Board composition during the period it was deemed that a board evaluation review would not provide added value and the Board has agreed to review the need for a Board evaluation periodically. Audit, Risk and Internal Control In its obligation to establish formal and transparent arrangements for considering risk management and internal controls in addition to maintaining an appropriate relationship with the Group’s auditors, the Board has established an Audit Committee. This currently comprises Ms Madeleine Kennedy as Chair with Dr Julian Gilbert and Dr Dan Gooding as members. All members of the Committee have been deemed to possess competence relevant to the sector in which the Group operates and Madeleine Kennedy has recent and relevant ﬁnancial experience. The terms of reference for the Committee take into account the requirements of the Code and are available at www.nuformix.com. The current composition of the Committee meets the requirement set out for smaller companies. A key role of the Committee is to assist the Board with the discharge of its responsibilities in relation to the Group’s ﬁnancial statements in the areas set out below. Corporate reporting The Committee monitors the integrity of the ﬁnancial statements of the Group and formal announcements relating to the Group’s ﬁnancial performance, reviewing signiﬁcant ﬁnancial reporting judgements contained therein. It reviews the draft annual ﬁnancial statements and half year results statements prior to discussion and approval by the Board. It also reviews the external auditor’s detailed reports on these statements. The Committee then reports to the Board on matters which it believes the Board should consider in ensuring the publication of the ﬁnancial reports provide a fair, balanced and understandable assessment of the Group’s position. The Committee also considers the ﬁndings reported to it by the external auditor’s process. 21 Corporate Governance Report Continued The Group has control mechanisms in place for the engagement of the external auditor in the supply of non- audit services. These controls ensure that the objectivity and independence of the external auditor is monitored and maintained in projects of a non-audit nature. These controls are reviewed annually to consider their continued appropriateness and effectiveness. It is, however, acknowledged that, due to their detailed understanding of the Group’s business, it may sometimes be necessary or desirable to involve the external auditor in non-audit related work to the extent permitted. Internal control and risk management Risk management and internal controls is a standing agenda item for each Audit Committee meeting. The Committee reviews the effectiveness of the internal controls throughout the year and will take any necessary actions should any signiﬁcant failings or weaknesses be identiﬁed. Details of the principal risks and uncertainties potentially facing the Group can be found in the Strategic Report on pages 9 to 15. Given the size and current stage of development of the Group, the Board acknowledges that it is ultimately responsible for ensuring the Group’s systems of internal controls and risk management remain effective. The Board continues to assess: • Risks • Financial performance • Governance • Performance of the External Auditor Remuneration As stated above the on 12 December 2022, the directors decided that, due to the current size of the board, the complete board would assume the responsibilities performed by the Nomination and Remuneration Committee. Prior to the 12 December 2022 the Company held two Remuneration Committee meetings. The role of the Board is to determine and agree the broad policy for the remuneration of executives and Senior Managers as designated, as well as for setting the specific remuneration packages, including pension rights and any compensation payments of all executive Directors and the Chairman. The Company’s remuneration policies and practices are designed to support its long-term strategy and promote the long-term sustainable success of the Company. The Group’s Remuneration Report can be found on pages 23 to 27. 22 Corporate Governance Report Continued Financial Reporting The Directors have acknowledged, in the Statement of Directors’ Responsibilities set out on pages 29 and 30, their responsibility for preparing the ﬁnancial statements of the Group. The external auditor has included, in the Independent Auditor’s Report set out from page 31 to 39, a statement about its reporting responsibilities. The Directors are also responsible for the publication of a half year report for the Group, which provides a balanced and fair assessment of the Group’s ﬁnancial position for the ﬁrst six months of each accounting year. Dr Julian Gilbert Madeleine Kennedy Non-Executive Director Non-Executive Director 2 January 2024 2 January 2024 Remuneration Report Remuneration for the period ended 30 September 2023 (18 months) The remuneration tables below (which have been subject to audit) set out amounts payable to each Director during the ﬁnancial periods ended 30 September 2023 and 31 March 2022: Dr Daniel Gooding Mr Alastair Riddell TOTAL Dr Julian Gilbert Ms Madeleine Kennedy TOTAL Dr Joanne Holland Dr Anne Brindley TOTAL Dr Karl Keegan Dr Julian Gilbert Ms Madeleine Kennedy Mr Alastair Riddell TOTAL Annual salary / fees £’000 2023 (18 months) Share Based Payments £’000 Pension contributions £’000 35 18 53 45 45 90 – 6 6 6 6 12 – – – – – – Annual salary / fees £’000 2022 (12 months) Share Based Payments £’000 Pension contributions £’000 Total £’000 11 72 83 5 27 27 56 115 – – – – 1 1 1 3 Remuneration of CEO since listing: Financial Period 2023 (18 months) 2022 (12 months) 2021 (12 months) 2020 (12 months) 2019 (12 months) 2018 (12 months) Remuneration £’000 Annual bonus £’000 SBP charge £’000 35 72 120 121 126 111 - - - - 5 - - - - - 323 272 23 Total £’000 35 24 59 51 51 102 – 1 1 – – – – – 11 73 84 5 28 28 57 118 Total £’000 35 72 120 121 449 383 24 Remuneration Report Continued Non-Executive Directors’ letters of appointment The following table provides details of the Non-executive Directors’ letters of appointment: Name Date of Appointment Julian Gilbert Madeleine Kennedy 24 November 2020 2 December 2020 The Non-executive Directors’ letters of appointment provide for termination by either party by giving the other not less than one months’ notice in writing and the Executive Directors’ letters of appointment provide for termination by either party by giving the other not less than six months’ notice in writing. Each Non- Executive Director is appointed for an initial term of one year. Subject to agreement, satisfactory performance and re-election by shareholders, their appointments may be renewed for further terms of one year. Directors’ interests in shares The beneﬁcial interests of the Directors in the ordinary shares of the Company are set out below: A Riddell J Gilbert M Kennedy D Gooding As at 30 September 2023 Number of ordinary shares 750,000 250,000 250,000 As at 31 March 2022 Number of ordinary shares 750,000 250,000 250,000 37,500,000 37,500,000 * Share options disclosed in directors’ report on page 28 Except as stated above, the Company is not aware of any other interests of any Director in the ordinary share capital of the Company. There are no requirements or guidelines concerning share ownership by Directors. This report has been approved by the Board. Dr Julian Gilbert Madeleine Kennedy Non-Executive Director Non-Executive Director 2 January 2024 2 January 2024 25 Remuneration Policy The Remuneration Policy (the “Policy”) was initially approved by shareholders at the 2018 AGM of the Company. The Remuneration Committee is not proposing to make any major changes to the existing Policy however in line with industry best practice and the three-year Policy cycle the Company will be seeking shareholder approval at next year’s AGM. The effective date of this Policy is the date on which the Policy is approved by shareholders. The Remuneration Policy is designed to reﬂect remuneration trends and employment conditions across the Group, to support the Group’s business strategy and to help the Group promote and attain its objective of long- term success. The Remuneration Committee intends the Remuneration Policy to apply for a further two years and will undertake an annual review of the policy to ensure the content continues to reﬂect the Group’s business strategy. Below is a table summarising the main aspects of the Remuneration Framework. Fixed Element and Purpose Operation Base Salary Salary is paid monthly. To provide a basic salary commensurate with role and experience which is comparable with that for similar pharma/biotech, companies of a similar size in the Cambridge Region (we use Radford’s recent Cambridge Survey as a comparator). The quantum of salary is also traded off against the Group’s ﬁnancial resources and its ability to pay salary for a sustainable period. Salaries are reviewed annually by the Group’s Remuneration Committee. Factors affecting salary pay are: • • any relevant deductions (the Group offers a cycle scheme vouchers); and attainment of any bonus- related pay within a speciﬁed period in which the salary is paid. Maximum Potential Salary/Opportunity There is no maximum salary opportunity. Performance Metrics Not applicable. Salaries are paid based upon business performance and individual contributions towards this within the ﬁnancial year. Salaries will be paid in accordance with the 2017 Radford Report which provides a benchmark for pay for numerous technical and management roles within the pharma/biotech and related companies in the Cambridge area. Pensions Our purpose at present is to comply with current legislation. that In the future we are looking to provide a pension contribution role and commensurate with experience which is comparable with similar pharma/biotech, companies of a in the Cambridge similar size Region (we use Radford’s recent Cambridge Survey as a comparator) when cash resources within the business allow it. for Not applicable. Employees are automatically signed up to the Group’s pension plan. The contributions to a deﬁned contribution plan are in accordance with automatic enrolment scheme minimum sums effective from 6 April 2019. At present, the maximum employer contributions required by law are 2% (from 6th April 2018 – 5th April 2020). However, this will be increasing to 3% from 6th April 2020 where the employee will be subject to contributing a minimum of 5%. Executives cannot receive a cash equivalent or salary supplement. subject to are Contributions legislative however change employees are not restricted in their contributions. There are no maximum employee contributions. There are no cash allowances. These rules apply to all employees. Other Beneﬁts (in cash or kind) The Group aims to provide a broader beneﬁts package to employees. Cycle scheme vouchers are available to employees. Beneﬁts are limited to maximum tax-free allowances. Not applicable. 26 Maximum Potential Salary/Opportunity There is no maximum. Remuneration Policy Continued Variable Element and Purpose Bonuses The Group aims to provide an appropriate incentivised programme relating to individual performance. Operation The discretionary annual bonus scheme is designed to reward contributions made to the Group that exceed the expectations of the work levels expected and relate to commercial events, speciﬁcally income from intellectual property out-licensing, collaborative development programmes or fundraising. Executive management is currently eligible to receive bonus payments in relation to commercial transactions relating to the licensing of the Group’s patents (1% of License Fees received from the out- licensing of Nuformix patents for a period of three years from commencement). The Committee determines the annual targets and key performance indicators (“KPIs”) and assesses the performance against these targets and KPIs. Long Term Incentive Schemes (“LTIS”) The Committee determines awards under LTIS annually. There is no maximum. Bonus payments effectively provide this for three years, as do the option agreements, which provide this for ﬁve years. Proﬁt sharing and Speciﬁc Incentive Remuneration Schemes/Arrangements There are no current plans for proﬁt sharing. Share Option Schemes and Share Option Plans Speciﬁc bonus schemes awarded as disclosed. No maximum. Provide employees with tax efﬁcient means to beneﬁt as they contribute to the growth of the Group. Performance Metrics Bonuses are paid in the event of securing License fees from the out-licensing of Nuformix assets and will depend upon the financial strength of the Group. Future metrics to be agreed as the Group continues to execute its Corporate Development strategy. Bonuses are paid in the event of securing License Fees from the out-licensing of Nuformix patents. Employees must stay with the business and be good leavers. 27 Remuneration Policy Continued Safeguards (i.e. clawback) The Committee has implemented a safeguard to ensure the business and remuneration targets are met in a sustainable way and performance reﬂects genuine achievement against those targets and therefore represents the delivery of value for shareholders. For each performance measure, the impact of any acquisition, divestment, out-licensing event or collaboration will be quantiﬁed and adjusted for after the event. Any major adjustment in the calculation of performance measures will be disclosed to shareholders on vesting. The Chairman of the Audit Committee and other members, who are also members of the Remuneration Committee, provide input on the Audit Committee’s review of the Group’s performance and oversight of any risk factors relevant to remuneration decisions. 28 Directors’ Report The Directors present their report and the ﬁnancial statements for the 18 months ended 30 September 2023. Results and Dividends The loss for the period, after tax, amounted to £859,467 (2022 Loss: £1,108,993). The directors do not recommend payment of a dividend (2022: £nil). Substantial shareholdings As at 2nd January 2024 the Company is aware of the following notiﬁable interests in its voting rights: Dr D J Gooding Dr J M Holland Directors of the Company Number of ordinary shares 37,500,000 37,500,000 Percentage of voting rights 5.04 5.04 The Directors, who held ofﬁce during the period, were as follows: Dr J C Gilbert Ms M E Kennedy Dr D Gooding (Appointed 1 August 2022) Dr A Riddell (Resigned 31 May 2022) Directors’ interests in shares The interests in the equity of the Company held by Directors, who were directors during the year, are set out below: As at 30 September 2023 Number of ordinary shares As at 30 September 2023 Number of share options and warrants As at 31 March 2022 Number of ordinary shares As at 31 March 2022 Number of share options and warrants J Gilbert M Kennedy A Riddell D Gooding 250,000 250,000 750,000 3,000,000 3,000,000 3,000,000 250,000 250,000 750,000 3,000,000 3,000,000 3,000,000 37,500,000 0 37,500,00 36,860,000 29 Directors’ Report continued Directors’ and ofﬁcers’ liability insurance The Group has, as permitted by s234 and 235 of the Companies Act 2006, maintained insurance cover on behalf of the Directors and Company Secretary, indemnifying them against certain liabilities which may be incurred by them in relation to the Group. Financial Risk Management Details of financial risk management are provided in the Strategic Report and Note 18 to the financial statements. Events after the reporting date Events after the reporting year are described in Note 20 to the financial statements. Research and development activities Research and development activities for the period are detailed in the Non-Executive Directors’ Statement and Strategic Report. Business Review and Future Developments The review of the operations and future developments are contained in the Non-Executive Directors’ Statement and Strategic Report. The results for the year are set out in the attached financial statements. Disclosure of information to the auditor Each Director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Group’s auditor is aware of that information. The Directors conﬁrm that there is no relevant information that they know of and of which they know the auditor is unaware. Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. The Directors are required by law to prepare the Group and Parent Company financial statements in accordance with UK-adopted international accounting standards. Under Company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and Group and of the profit or loss for that period. In preparing the Company and Group’s financial statements, Companies Act 2006 requires that Directors: • Select suitable accounting policies and apply them consistently; 30 Directors’ Report continued • Make judgements and accounting estimates that are reasonable and prudent; • State whether applicable under UK-adopted international accounting standards, have been followed, subject to any material departures disclosed and explained in the ﬁnancial statements; and • Prepare the 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 adequate accounting records that are sufﬁcient to show and explain the Group transactions and disclose with reasonable accuracy at any time the ﬁnancial position of the Group and enable them to ensure that the ﬁnancial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In the case of each person who was a director at the time of this report was approved: • So far as that Director is aware, there is no relevant audit information of which the Group’s auditor is unaware; and • That Director has taken all steps that the director ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Group’s auditor is aware of that information. Auditors Kreston Reeves LLP were appointed as auditors in the period, and a resolution to reappoint Kreston Reeves LLP as auditors will be presented to the members at the Annual General Meeting in accordance with Section 485(2) of the Companies Act 2006. On behalf of the board, Dr Julian Gilbert Non-Executive Director 2 January 2024 Madeleine Kennedy Non-Executive Director 2 January 2024 31 Independent Auditor’s Report to the Shareholders of Nuformix plc For the period ended 30 September 2023 Opinion We have audited the financial statements of Nuformix PLC (the ‘parent company’) and its subsidiaries (the ‘Group’) for the year ended 30 September 2023 which comprise the consolidated income statement, consolidated statement of comprehensive income, consolidated and company statements of financial position, consolidated and company statements of changes in equity, consolidated statements of cashflow and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom in accordance with the provisions of the Companies Act 2006. In our opinion, the financial statements: • give a true and fair view of the state of the Group’s and of the parent company's affairs as at 30 September 2023 and of the Group’s loss for the year then ended; • have been properly prepared in accordance with IFRSs adopted by the United Kingdom; 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 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. Material uncertainty relating to going concern We draw attention to note 2 in the financial statements, which indicates that there is a significant material uncertainty in relation to the going concern status of the group. Nuformix is a pharmaceutical development company that has undertaken significant research into targeting the pharmaceutical product gap needs in fibrosis and oncology via drug repurposing. In order to complete this work, the company will need to expend significant, and currently unquantifiable, amounts that will be in excess of the cash held at the balance sheet date of £203k (2022: £464k). Given the stage in the business life cycle the Group is incurring significant losses at present, totalling to £859k in the 18-month period ended 30 September 2023 (2022: year ended loss of £1,109k) resulting in the group’s accumulated losses at the balance sheet date of £8,209k (2022: accumulated losses of £7,350k). These losses are attributable to the ongoing drug research programme which is yet to reach commercial production stage where revenue could potentially be generated. The Group is therefore not in a position to self-finance and will require additional external funding which, at the date of this audit report, is unknown in quantum and not secured. Additionally, the ultimate likelihood of the development work being undertaken resulting in an effective product that is commercially viable is also unknown at this stage. 32 Independent Auditor’s Report (cont.) to the Shareholders of Nuformix plc For the period ended 30 September 2023 As a result of the material uncertainty with respect to going concern, we have completed the following audit work as part of our evaluation of going concern: • Overheads and debt costs assumptions – we considered projected overheads for the 2023/24 and 2024/25 periods to ensure that these were reasonable after considering both the current and expected future profile of the business moving forward. As part of this future profiling, the non- executive directors have elected not to take payment of their salaries until such time as the business holds sufficient funds to enable them to do so. • Credit / cash control management assumptions – we identified within the forecasting the most significant cash inflows and ensured that the valuation and timing of these were reasonable. • We performed sensitivity analysis to assess the level of working capital headroom should key assumptions be less favourable than assumed in management’s model. • We considered post year end performance data available, including the group’s future commitments, to gain additional assurance over the effectiveness of management’s plans to ensure the Company and Group remain a going concern. Based on the work we have performed we have gained sufficient assurance in order to rely on management’s forecasting in forming our assessment. We have also gained assurance over the credibility of management’s budgeting strategy over the next 12 months.. This included gaining assurance over the adequacy of working capital available in order to settle external liabilities as they fall due. With respect to further funding of development we have reviewed the director’s assessment that they can raise the funding required in the near-term through future share capital raises. However, whilst we have evaluated future cash inflows as reasonable for meeting current working capital needs, there is significant uncertainty surrounding the ultimate quantum and timing of funding required to reach the production stage and indeed the likelihood this stage will ever be reached. Should all or part of this funding not be received or one or both of their core projects NXP002 and NXP004 not succeed the valuation of the group’s goodwill £4,023,484 (2022: £4,023,484), the parent company’s valuation of the subsidiary investment £4,023,484 (2022: £4,023,484), the group’s carrying value of other intangible assets £57,793 (2022: £126,927) and ultimately the going concern assessment of the Group would be adversely affected. Management will continue to reduce non-essential costs in the 2024 financial period and has signed an agreement to sell the ownership of the NXP001 patent estate, which allows them to focus on NXP002 and NXP004. As part of this agreement two milestone payments have been achieved and received in the bank since the year end. However, there are further larger milestone payments due, which are unlikely to be received into the bank in the foreseeable future. The above indicates that a significant material uncertainty exists with respect to going concern. However, as we have obtained sufficient assurance over the availability of financial resources to settle liabilities as they fall due over a period of at least the next 12 months, our opinion is not modified in respect of this matter. 33 Independent Auditor’s Report (cont.) to the Shareholders of Nuformix plc For the period ended 30 September 2023 An overview of the scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. Group revenue Group profit/(loss) before tax Group net assets Full statutory audit (Kreston Reeves) Limited procedures Totals at 30 September 2023: 100% 0 100% 100% 0 100% 100% 0 100% We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Group and the parent company, the accounting processes and controls, and the industry in which they operate. Our scoping considerations for the Group audit were based both on financial information and risk. As noted above limited assurance audit work – which is to say the audit of balances and transactions material at a group level – was not utilised due to statutory audit requirements of all group entities. The below table summarises for the parent company and its subsidiaries, the level of assurance gained: Group component Level of assurance Nuformix PLC Full statutory audit (Kreston Reeves LLP) Nuformix Technologies Limited Full statutory audit (Kreston Reeves LLP) 34 Independent Auditor’s Report (cont.) to the Shareholders of Nuformix plc For the period ended 30 September 2023 Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Impairment of goodwill / Valuation of investment: Significance and nature of key risk How our audit addressed the key risk The Group has significant goodwill generated from an investment in subsidiary of £4,023,484. In addition, the parent company holds an equal investment value of £4,023,484 on it’s company balance sheet relating to the same subsidiary. We identified there was a risk in relation to the impairment on the goodwill / investment held with regards to the trading subsidiary. Management’s assessment of the recoverable amount of investment in a subsidiary requires estimation and judgement around assumptions used, including the cash flows to be generated from the continuing operations of the subsidiary. Changes to assumptions could lead to material changes in the estimated recoverable amount, impacting the value of investment in the subsidiary and impairment charges. During the course of the audit, we undertook the following key procedures: • assessing the appropriateness of the • • VIU calculations used by the management to estimate recoverable amount of CGU; reconciling key input data applied in the VIU calculations to reliable supporting evidence; and challenging the reasonableness of key assumptions based on our knowledge and understanding of the business and industry. • Reviewed management’s plan of future operating cashflows of the subsidiary; and • obtaining evidence of the commercial and technical feasibility of the patents owned by the subsidiary. There were also other procedures which are not deemed to be key and have therefore not been listed above. 35 Based on the audit work performed, we are satisfied with management’s valuation of goodwill and investment as featured within these financial statements. For the purpose of assessing impairment on goodwill arising from business combination, goodwill is allocated to a single cash generating units (‘CGU’) and the recoverable amount of the CGU was determined with reference to value-in-use (the ‘VIU’) calculations using cash flow projections. In carrying out the impairment assessment, significant management judgement was used to determine the key assumptions underlying the VIU calculations. We have identified the above matter as a key audit matter because goodwill is material to the Group and the valuation of the investment is material to the parent company. The estimation of recoverable amount of the CGU involved a significant degree of management judgement and therefore was subject to an inherent risk of error. Key observations communicated to the Audit & Risk Committee We have no significant concerns over the material accuracy of valuation / impairment of investment values recognised in the financial statements. Our application of materiality Group financial statements Parent company financial statements Overall Materiality £98,100 £95,300 How we determined it 2% of Group gross assets 2% of Company gross assets Rationale for benchmark The group is focused on the development of its Intellectual Property (IP) and the assets held in order to finance the continuing development of this IP. As such, the most appropriate basis for the group financial statements is gross assets. The parent company is principally holding subsidiary investment. The users of the financial statements will be most concerned with the value of investment. As such, the most appropriate basis for the parent company materiality is gross assets. 36 Independent Auditor’s Report (cont.) to the Shareholders of Nuformix plc For the period ended 30 September 2023 We reported all audit differences found in excess of our triviality threshold of £4,900 to the directors and the management board as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 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 our knowledge and understanding of the Group and parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the parent company, or returns adequate for our • audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit 37 Independent Auditor’s Report (cont.) to the Shareholders of Nuformix plc For the period ended 30 September 2023 Responsibilities of directors As explained more fully in the directors’ responsibilities statement (set out on pages 29 and 30), the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Group’s and parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or 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 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. Based on our understanding of the group and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, taxation and pension legislation. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure and management bias in accounting estimates and judgemental areas of the financial statements such as the valuation of intangible assets and investments. Audit procedures performed by the group engagement team included: 38 Independent Auditor’s Report (cont.) to the Shareholders of Nuformix plc For the period ended 30 September 2023 • • • • • • • • • Discussions with management and assessment of known or suspected instances of non-compliance with laws and regulations and fraud, and review of the reports made by management; and Assessment of identified fraud risk factors; and Challenging assumptions and judgements made by management in its significant accounting estimates; and Performing integrity testing to verify the legitimacy of banking records obtained from management; and Performing analytical procedures to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and Performing analytical procedures with automated data analytics tools to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and Reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with relevant tax and regulatory authorities; and Review of significant and unusual transactions and evaluation of the underlying financial rationale supporting the transactions. 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 involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • • • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. 39 Independent Auditor’s Report (cont.) to the Shareholders of Nuformix plc For the period ended 30 September 2023 • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the parent company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Use of our Report This report is made solely to the 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 company’s members those matters we are required to state to them in an auditor 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 company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Anne Dwyer BSc(Hons) FCA (Senior Statutory Auditor) For and on behalf of Kreston Reeves LLP Chartered Accountants Statutory Auditor London Date: 2 January 2024 40 Consolidated Statement of Comprehensive Income for the Period Ended 30 September 2023 Revenue Cost of sales Gross proﬁt Administrative expenses Operating loss Loss before tax Income tax credit Loss for the year and total comprehensive loss for the year Loss per share – basic and diluted The above results were derived from continuing operations. Note 3 4 8 9 Period ended 30 September 2023 £ - Year ended 31 March 2022 £ 50,000 - - (1,695) 48,305 (927,972) (1,318,577) (927,972) (1,270,272) (927,972) (1,270,272) 68,505 161,279 (859,467) (1,108,993) (0.12)p (0.19)p The accompanying notes to the ﬁnancial statements on pages 44 to 70 form an integral part of the ﬁnancial statements. Consolidated Statement of Financial Position As at 30 September 2023 Note 30 September 2023 £ 41 31 March 2022 £ 438 4,150,411 4,150,849 199,600 161,279 464,095 824,974 - 4,081,277 4,081,277 66,857 67,342 202,548 336,747 4,418,024 4,975,823 744,309 6,656,802 10,950,000 (8,005,195) 2,058,518 (8,209,400) 4,195,034 615,609 6,500,817 10,950,000 (8,005,195) 2,026,664 (7,349,933) 4,737,962 222,990 222,990 237,861 237,861 4,418,024 4,975,823 10 11 12 13 14 17 Registration number: 09632100 Assets Non-current assets Property, plant and equipment Intangible assets Current assets Trade and other receivables Income tax asset Cash and cash equivalents Total assets Equity and liabilities Equity Share capital Share premium Merger relief reserve Reverse acquisition reserve Share option reserve Retained earnings Total equity Current liabilities Trade and other payables Total equity and liabilities These ﬁnancial statements were approved by the board on 2 January 2024 and signed on its behalf by: Madeleine Kennedy Director The accompanying notes to the ﬁnancial statements on pages 44 to 70 form an integral part of the ﬁnancial statements. Consolidated Statement of Changes in Equity for the Period Ended 30 September 2023 42 At 1 April 2022 Loss for the year and total comprehensive loss Issue of share capital Share issue costs Share and warrant based payment Share capital £ 615,609 Share premium £ 6,500,817 – 128,700 – – - 160,285 (4,300) – Merger relief reserve £ 10,950,000 Reverse acquisition reserve £ (8,005,195) Share option reserve £ 2,026,664 Retained earnings £ (7,349,933) Total £ 4,737,962 – – – – – – – – – – – 31,854 (859,467) (859,467) – – – 288,985 (4,300) 31,854 At 30 September 2023 744,309 6,656,802 10,950,000 (8,005,195) 2,058,518 (8,209,400) 4,195,034 At 1 April 2021 Loss for the year and total comprehensive loss Issue of share capital Share issue costs Share and warrant based payment At 31 March 2022 Share capital £ 591,609 Share premium £ 6,384,835 – 24,000 – – – 145,982 (30,000) – Merger relief reserve £ 10,950,000 Reverse acquisition reserve £ (8,005,195) – – – – – – – – Share option reserve £ 2,005,952 – – – 20,712 Retained earnings £ (6,240,940) (1,108,993) – – – Total £ 5,686,261 (1,108,993) 169,982 (30,000) 20,712 615,609 6,500,817 10,950,000 (8,005,195) 2,026,664 (7,349,933) 4,737,962 The accompanying notes to the ﬁnancial statements on pages 44 to 70 form an integral part of the ﬁnancial statements. 43 Consolidated Statement of Cash Flows for the Period Ended 30 September 2023 Cash ﬂows from operating activities Loss for the year Adjustments to cash ﬂows from non-cash items Profit on Sale of intangibles Depreciation and amortisation Income tax credit Share and warrant based payment Working capital adjustments (Increase)/Decrease in trade and other receivables (Decrease)/Increase in trade and other payables Cash consumed by operations Income taxes received Net cash used in operating activities Cash ﬂows from investing activities Proceeds from sale of intangibles Net cash from investing activities Cash ﬂows from ﬁnancing activities Issue of shares (net of costs) Net cash from ﬁnancing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 April 2022 Cash and cash equivalents at 30 September 2023 30 September 2023 £ Note 31 March 2022 £ (859,467) (1,108,993) 10,11 8 12 17 (35,552) 55,124 (68,505) 31,854 (876,546) 132,743 (14,870) (708,674) 162,442 (546,232) 50,000 50,000 - 36,976 (161,279) 20,712 (1,212,584) (167,340) (86,763) (1,466,687) 121,020 (1,345,667) - - 284,685 139,982 284,685 (261,547) 139,982 (1,205,685) 464,095 202,548 1,669,780 464,095 The accompanying notes to the ﬁnancial statements on pages 44 to 70 form an integral part of the ﬁnancial statements 44 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 1. General information Nuformix plc (“the Company”) and its subsidiary (together, “the Group”) operate in the ﬁeld of pharmaceutical development targeting unmet medical needs in fibrosis and oncology via drug repurposing. The Company is a public limited company which is listed on the Standard List of the London Stock Exchange, domiciled in the United Kingdom (“the UK”) and incorporated in England and Wales. The address of its registered ofﬁce is 6th Floor, 60 Gracechurch Street, London, EC3V 0HR. The company operates in a virtual manner and as such does not have a principal place of business. The company extended its accounting period from 31 March 2023 to 30 September 2023 to allow sufficient time to appoint new auditors. Due to this change the current year figures included in the statement of comprehensive income, statement of cash flows and related notes represent 18 months of transactions in comparison to the 12 months represented in the previous period by the comparative. 2. Summary of Significant Accounting policies Basis of preparation Nuformix plc transitioned to UK-adopted International Accounting Standards in its Group and Parent Company financial statements on 1 April 2021. This change constitutes a change in accounting framework. However, there is no change on recognition, measurement or disclosure in the financial year reported as a result of the change in framework. These Group and Parent Company financial statements were prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The financial statements of the Group and Parent Company have been prepared on accrual basis and under historical cost convention. The ﬁnancial statements are presented in Pounds Sterling which is the Group’s functional and presentational currency. New Standards and Interpretations No new standards, amendments or interpretations, effective for the first time for the period beginning on or after 1 April 2022 have had a material impact on the Group. Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows: Standard IAS 1 IAS 1 IAS 8 IAS 12 IFRS 7 IFRS 16 IFRS 17 IAS 21 Impact on initial application Classification of liabilities as current or non-current Disclosure of accounting policies Accounting estimates Deferred tax related to assets and liabilities arising from a single transaction Supplier finance Leases on sale and leaseback Insurance contracts Lack of exchangeability Effective date Not earlier than 1 January 2024 1 January 2023 1 January 2023 1 January 2023 1 January 2024 1 January 2024 1 January 2023 1 January 2025 45 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 The Directors are evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the financial statements of the Group Going concern The ﬁnancial statements have been prepared on the going concern basis of preparation which, inter alia, is based on the Directors’ reasonable expectation that the Group and Parent Company has adequate resources to continue to operate as a going concern for at least twelve months from the date of approval of these financial statements. In forming this assessment, the Directors have prepared cashﬂow forecasts covering the period ending 31 December 2024 that take into account the likely run rate on overheads and research and development expenditure and the estimates of the possibilities of raising funds through issues of equity and have considered alternative strategies should projected income be delayed or fail to materialise. The Group is not in a position for self-financing and will require further funding which has not yet been secured. Whilst the Directors understand the risks and issues around raising further funds through an equity raise, this will be carefully considered, as and when appropriate. These circumstances indicate the existence of an inherent material uncertainty which may cast a significant doubt on the Group’s and Parent Company's ability to continue as a going concern, when in twelve - eighteen months’ time a thorough review of funding will be required. However, these scenarios have already been considered and will continue to be closely monitored by the Directors. The ﬁnancial statements do not include any adjustments that would result if the company or Group was unable to continue as a going concern. The Directors have carried out a thorough review of costs and are clear on the development work to be completed. Discretionary costs have been carefully reviewed and reduced where reasonable to do so while continuing to allow the prudent running of the business. In addition, the non-executive directors have elected not to take payment of their salaries until such time as the business holds sufficient funds to enable them to do so. After careful consideration, the Directors consider that they have reasonable grounds to believe that the Group can be regarded as a going concern and for this reason they continue to adopt the going concern basis in preparing the Group’s ﬁnancial statements. Critical Accounting Estimates and Judgements The preparation of these ﬁnancial statements under UK-adopted International Accounting Standards requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the ﬁnancial statements and the reported amounts of revenues and expenses during the reporting year. These estimates and assumptions are based upon management’s knowledge and experience of the amounts, events or actions. Actual results may differ from such estimates. 46 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 The critical accounting estimates are considered to relate to the following: i) Intangible assets The Group recognises intangible assets in respect of goodwill arising on consolidation. This recognition requires the use of estimates, judgements and assumptions in determining whether the goodwill is impaired at each year end, using a NPV calculation assuming a 20% discount rate. ii) Share options The Group’s fair values equity-settled share-based payment transactions using the Black-Scholes model. The use of the models involves judgements and estimates including an assessment of whether the shares will vest. Should actual future outcomes differ from these assessments the amounts recognised on a straight-line basis would vary from those currently recognised. The total charge in the period to 30 September 2023 was £31,854. iii) Basis of consolidation The Group’s financial statements consolidate those of the parent company and its subsidiary as of 30 September 2023. Its subsidiary has a reporting date of 30 September. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra- group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of its subsidiary have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. iv) Business combinations The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. v) Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the Group’s activities. Revenue is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the Group. The Group recognises revenue when: • • • the amount of revenue can be reliably measured; it is probable that future economic beneﬁts will ﬂow to the entity; and, speciﬁc criteria have been met for each of the Group activities, such as the demonstration of milestone achievements in research or acceptance by both parties. After applying the above criteria, no revenue was recognised in the Income Statement in the period. 47 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued Segmental information Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-makers. The chief operating decision-makers, who are responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive Board of Directors. All operations and information are reviewed together so that at present there is only one reportable operating segment. In the opinion of the Directors, during the year the Group operated in the single business segment of the research and development of pharmaceutical products using technology developed by the Group. Taxation Taxation comprises current and deferred tax. Current tax is based on taxable profit or loss for the period. Taxable proﬁt differs from net proﬁt or loss as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s current tax asset is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial information and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. 48 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued Property, plant and equipment Property, plant and equipment is stated in the statement of ﬁnancial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation. Depreciation Depreciation is charged to write off the cost of assets over their estimated useful lives, as follows: Asset class Depreciation method and rate Computer equipment 33.33% straight line Goodwill and Intangible assets Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identiﬁable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each reporting year date. Goodwill is not amortised, but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units (“CGUs”) for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to beneﬁt from the business combination in which the goodwill arose. The Group currently has only one CGU. Other intangible assets, including customer relationships, licences, patents and trademarks, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is provided on the Group’s patents to write off the cost, less any estimated residual value, over their expected useful economic life on a 10% straight line basis. 49 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued Impairment testing of goodwill, other intangible assets and property, plant and equipment For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash- generating units that are expected to benefit from synergies of a related business combination and represent the lowest level within the Group at which management monitors goodwill. Cash-generating units to which goodwill has been allocated (determined by the Group’s management as equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s (or cash-generating unit’s) carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value- in-use. To determine the value-in-use, management estimates expected future cash flows from each cash- generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect current market assessments of the time value of money and asset-specific risk factors. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insigniﬁcant risk of changes in value. Financial instruments IFRS 9 requires an entity to address the classification, measurement and recognition of financial assets and liabilities. i) Classification The Company classifies its financial assets in the following measurement categories: • those to be measured at amortised cost. The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows. The Company classifies financial assets as at amortised cost only if both of the following criteria are met: 50 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued • • the asset is held within a business model whose objective is to collect contractual cash flows; and the contractual terms give rise to cash flows that are solely payment of principal and interest. ii) Recognition Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Company commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. iii) Measurement At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Debt instruments Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss. iv) Impairment The Company assesses, on a forward-looking basis, the expected credit losses associated with any debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Company applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Financial liabilities The Group’s financial liabilities include other payables. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. 51 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued Equity Equity comprises the following: • • • • • • “Share capital” represents the nominal value of equity shares. “Share premium” represents the amount paid for equity shares over the nominal value. “Reverse acquisition reserve” arises due to the elimination of the Company’s investment in Nuformix Technologies Limited. “Merger relief reserve” represents the share premium arising on issue of shares in respect of the reverse acquisition takeover. “Share option reserve” represents the fair value of options issued. “Retained earnings” represents retained earnings/losses. Deﬁned contribution pension obligation A deﬁned contribution plan is a pension plan under which ﬁxed contributions are paid into a separate entity and has no legal or constructive obligations to pay further contributions if the fund does not hold sufﬁcient assets to pay all employees the beneﬁts relating to employee service in the current and prior years. For deﬁned contribution plans contributions are paid into publicly or privately administered pension insurance plans on a mandatory or contractual basis. The contributions are recognised as employee beneﬁt expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as an asset. Share based payments Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market- based vesting conditions. Details regarding the determination of the fair value of equity-settled share- based transactions are set out in note 17. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the number of equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in proﬁt or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves. 52 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued settled share based payment transactions with parties other than employees are measured at the Equity fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. ‑ ‑ settled share For cash based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At each reporting date until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in proﬁt or loss for the year. ‑ ‑ Earnings per Ordinary Share The Company presents basic and diluted earnings per share data for its Ordinary Shares. Basic earnings per Ordinary Share is calculated by dividing the profit or loss attributable to Shareholders by the weighted average number of Ordinary Shares outstanding during the period. Diluted earnings per Ordinary Share is calculated by adjusting the earnings and number of Ordinary Shares for the effects of dilutive potential Ordinary Shares Investment in subsidiaries Investments in subsidiaries are carried in the Company’s balance sheet at cost less accumulated impairment losses. On disposal of investments in subsidiaries the difference between disposal proceeds and the carrying amounts of the investments are recognised in proﬁt or loss. 3. Revenue The analysis of the Group’s revenue for the year from continuing operations is as follows: Licensing Fees 30 Sep 2023 £ - - 31 March 2022 £ 50,000 50,000 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued 4. Operating loss Arrived at after charging Depreciation expense Amortisation expense Profit on disposal of intangible ﬁxed assets Research and development expenditure Share option and warrant charge 53 30 Sep 31 March 2023 £ 438 54,686 35,552 245,101 31,854 2022 £ 519 36,457 - 572,921 20,712 Details of the share-based payments can be found in Note 15. 5. Staff costs The aggregate payroll costs (including directors’ remuneration) were as follows: Wages and salaries Social security costs Pension costs, deﬁned contribution scheme 30 Sep 31 March 2023 £ 141,833 7,112 - 148,945 2022 £ 197,983 18,533 1,721 218,237 The average number of persons employed by the Group (including directors) during the year and analysed by category was as follows: Research and development Non-executive directors Total 30 Sep 2023 No. 1 31 March 2022 No. 3 2 3 2 5 54 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued 6. Directors’ remuneration The Directors’ remuneration for the year was as follows: Remuneration Share based payment charge 30 Sep 31 March 2023 £ 2022 £ 141,833 197,983 19,474 3,895 161,307 201,878 Further information about the remuneration of individual directors are provided in the Directors’ Remuneration Report. During the year, the number of Directors who were receiving pension beneﬁts was as follows: Accruing beneﬁts under money purchase pension scheme 30 Sep 31 March 2023 No. - 2022 No. 2 Details of the total remuneration paid for the services of the directors are set out on pages 23 to 27 in the Remuneration Report. In respect of the highest paid director: Remuneration 30 Sep 31 March 2023 £ 2022 £ 44,500 72,143 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued 7 . Auditors’ remuneration Audit of the ﬁnancial statements – Group Audit of the ﬁnancial statements – Subsidiary Income tax 8. Tax (credited) in the income statement Current taxation UK corporation tax Adjustment in respect of prior years 55 30 Sep 2023 £ 37,000 18,000 31 March 2022 £ 34,000 19,000 30 Sep 31 March 2023 £ 2022 £ (67,342) (1,163) (161,279) - (68,505) (161,279) The tax on loss before tax for the period is higher than (2022: lower than) the standard rate of corporation tax in the UK of 25% (2022: 19%). The differences are reconciled below: Loss before tax Corporation tax at standard rate 19% Excess of depreciation over capital allowances Expenses not deductible Tax losses for which no deferred tax asset was recognised Adjustment in respect of research and development tax credit Adjustment in respect of prior years Total tax credit 30 Sep 2023 £ (927,972) (176,315) 3,611 45 135,025 (29,708) (1,163) 31 Mar 2022 £ (1,270,272) (241,352) 6,932 3,935 138,601 (69,396) - (68,505) (161,279) No deferred tax asset has been recognised as the Directors cannot be certain that future proﬁts will be sufﬁcient for this asset to be realised. As at 30 September 2023 the Group has tax losses carried forward of approximately £5,535,000 (2022: £4,853,000). 56 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued 8. Income Tax (cont.) Factors that may affect future tax charges Since 1 April 2017 there has been a single rate of corporation tax of 19% in place. From 1 April 2023, the main rate of corporation tax will rise to 25% for companies with profits over £250,000. For companies with profits of £50,000 or less, they will pay corporation tax at the small profits rate of 19%. Where a company’s profits fall between £50,000 and £250,000, they will pay corporation tax at the main rate reduced by marginal relief. The upper and lower limits will be proportionally reduced for short accounting periods and where there are associated companies. 9. Loss per share Loss per share is calculated based on the weighted average number of shares outstanding during the period. Diluted loss per share is calculated based on the weighted average number of shares outstanding and the number of shares issuable as a result of the conversion of dilutive ﬁnancial instruments. Loss after tax Weighted average number of shares – basic and diluted Basic and diluted loss per share 30 Sep 2023 £ (859,467) 719,462,470 (0.12)p 31 March 2022 £ (1,108,993) 598,447,724 (0.19)p There is no difference between the basic and diluted earnings per share as the effect would be to decrease earnings per share. 10. Property, plant and equipment Cost At 1 April 2022 Disposals At 30 September 2023 Depreciation At 1 April 2022 Charge for the year Eliminated on disposal At 30 September 2023 Carrying amount At 30 September 2023 At 31 March 2022 Computer equipment £ 1,561 (1,561) - 1,123 438 (1,561) - - 438 Total £ 1,561 (1,561) - 1,123 438 (1,561) - - 438 57 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued 11. Intangible assets Cost At 1 April 2022 Additions Disposals At 30 September 2023 Amortisation At 1 April 2022 Amortisation charge On disposals At 30 September 2023 Net book value At 30 September 2023 At 31 March 2022 Goodwill £ Patents £ Total £ 4,023,484 – – 4,023,484 – – - – 364,576 – (72,915) 291,661 237,649 54,686 (58,467) 233,868 4,388,060 – (72,915) 4,315,145 237,649 54,686 (58,467) 233,868 4,023,484 57,793 4,081,277 4,023,484 126,927 4,150,411 For impairment testing purposes, management considers the operations of the Group to represent a single cash generating unit (CGU) focused on pharmaceutical development, targeting unmet medical needs in fibrosis and oncology via drug repurposing. The directors have assessed the recoverable amount of goodwill, which in accordance with IAS36 is the higher of its value in use and its fair value less cost to sell (fair value), in determining whether there is evidence of impairment. As at 30 September 2023, the Group assessed the recoverable amount of the CGU with reference to a value-in-use calculation based on cash flow projection of the subsidiary. The calculations use cash flow projection based on financial budgets approved by the Directors covering a 30-year period with a discount rate of 20% assumed. The recoverable amount of the CGU based on the value-in-use calculation exceeded its carrying amount. The Directors also assessed the market capitalisation of the Group with reference to the share price of the Company and supported the view that goodwill is not impaired. Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued 12. Trade and other receivables Prepayments Other receivables 58 30 Sep 2023 £ 17,919 48,938 66,857 31 March 2022 £ 27,941 171,659 199,600 The fair value of trade and other receivables is considered by the Directors not to be materially different to the carrying amounts. 13. Cash and cash equivalents Cash at bank 30 Sep 2023 £ 31 March 2022 £ 202,548 464,095 The Directors consider that the carrying value of cash and cash equivalents represents their fair value. 14. Share capital Allotted, called up and fully paid shares 31 Sep 2023 No. Ordinary shares of £0.001 each 744,309,368 As at 1 April 2022 Placement of new shares on the stock market As at 30 September 2023 31 March 2022 £ 744,309 No. £ 615,609,368 615,609 No. 615,609,368 128,700,000 744,309,368 On 11 April 2022 and 21 April 2023, the company completed capital increases through the issue of 128,700,000 shares of £0.001 each in share placements, with an overall share premium of £160,285. 59 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued 15. Share options and warrants The Group operates share-based payment arrangements to remunerate Directors and key employees in the form of a share option scheme. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value is determined at the grant date of the equity-settled share-based payments and is expensed on a straight- line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non- market based vesting conditions. The following share-based payments were made in the year to 30 September 2023: On 31 January 2022, the directors, A. Riddell, J. Gilbert and M. Kennedy were granted warrants to subscribe for 3,000,000 new Ordinary shares of £0.001 at an exercise price of 1.45p each. The warrants are exercisable up until November 2024. The fair value of the warrants was determined using the Black-Scholes option pricing model at 1.45p per warrant. The fair value of the options and warrants issued in 2022 were determined using the Black-Scholes option pricing model, where appropriate, and had a weighted average of 2.46p per option (2022: 2.46p). The signiﬁcant inputs into the model in respect of the options and warrants granted in the periods ended 31 March 2022 and 30 September 2023 were as follows: Grant date share price Exercise price No. of share options Risk free rate Expected volatility Expected option life 2023 Existing director warrants 2022 Existing director warrants 1p 1.45p 9,000,000 0.153% 97% 3 years 1.45-4.15p 1.45-2.80p 13,746,943 0.153-0.44% 50-97% 1-5 years 60 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued The following table sets out details of the granted warrants and options movements: Warrant/ option holder Directors during year J Holland K Keegan J Gilbert M Kennedy A Riddell Previous directors D Gooding C Blackwell Other warrants/options Novum Securities Limited Other warrants Other warrants (2023) Alex Eberlin Number of warrants / options at 31 March 2021 Issued in year Lapsed in year Number of warrants/ options at 31 March 2022 Issued in period Lapsed in peiod 36,860,000 3,000,000 - - - - - 3,000,000 3,000,000 3,000,000 - (3,000,000) - - - 36,860,000 - 3,000,000 3,000,000 3,000,000 36,860,000 3,000,000 - - - (3,000,000) 36,860,000 - - - - - - - - (36,860,000) - - - - (36,860,000) - Number of warrants/ options at 30 September 2023 - - 3,000,000 3,000,000 3,000,000 - - 580,357 580,356 - 586,229 81,466,942 - - - - 9,000,000 - - - - (6,000,000) 580,357 580,356 - 586,229 84,466,942 - - 35,000,000 - 35,000,000 - - - - (73,720,000) 580,357 580,356 35,000,000 586,229 45,746,942 Exercise price Expiry date 4-10p 6.75p 1.45p 1.45p 1.45p 4-10p 4p 2.8p 2.8p 0.2p 4.691p 16/10/2022 10/05/2021 23/11/2024 23/11/2024 23/11/2024 16/10/2022 10/05/2021 21/10/2025 21/10/2025 17/04/2025 18/12/2023 60 61 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued 16. Pension and other schemes Deﬁned contribution pension scheme The Group operates a deﬁned contribution pension scheme. The pension cost charge for the year represents contributions payable by the Group to the scheme. No contributions were made in the period to 30 September 2023 (2022: £1,721). No contributions were payable to the scheme at 30 September 2023 or 31 March 2022. 17. Trade and other payables Trade payables Accrued expenses Social security and other taxes 30 Sep 2023 69,774 152,043 1,174 222,991 31 March 2022 £ 12,351 218,202 7,308 237,861 The fair value of trade and other payables is considered by the Directors not to be materially different to the carrying amounts. All payables are due within one year. 61 62 Notes to the Consolidated Financial Statements for the Period Ended 30 September 2023 continued 18. Financial instruments Credit risk The main credit risk relates to liquid funds held at banks. The credit risk in respect of these bank balances is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. Liquidity risk The Group seeks to manage ﬁnancial risk, to ensure sufﬁcient liquidity is available to meet foreseeable needs. An analysis of trade and other payables is given in note 17. Capital risk management The Group’s objectives when managing capital are: • • • to safeguard the Group’s ability to continue as a going concern, so that it continues to provide returns and beneﬁts for shareholders to support the Group’s growth; and to provide capital for the purpose of strengthening the Group’s risk management capability. The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efﬁciency, prevailing and projected proﬁtability, projected operating cash ﬂows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes. 19. Related party transactions All transactions with related parties are conducted on an arm’s length basis. The remuneration of the key management personnel of the Group, who are deﬁned as the directors, is set out in the directors’ remuneration report. 20. Ultimate controlling party The directors do not consider there to be a single ultimate controlling party. 21. Post Balance Sheet Events The directors do not consider that any events after the balance sheet event give rise to adjusting or non- adjusting events and therefore no adjustments or disclosure are required. 62 Company Statement of Financial Position as at 30 September 2023 Registration number: 09632100 Assets Non-current assets Investment in subsidiary Current assets Trade and other receivables Cash and cash equivalents Total assets Equity and liabilities Equity Share capital Share premium Merger relief reserve Share option reserve Retained earnings Total equity Current liabilities Trade and other payables Total equity and liabilities 63 30 September 2023 £ 31 March 2022 £ Note 25 4,023,484 4,023,484 4,023,484 4,023,484 26 27 14 28 41,857 33,976 75,833 199,600 421,027 620,627 4,099,317 4,644,111 744,309 6,656,801 10,950,000 2,058,518 (16,352,994) 615,609 6,500,817 10,950,000 2,026,664 (15,561,584) 4,056,634 4,531,506 42,683 42,683 112,605 112,605 4,099,317 4,644,111 The loss attributable to the Company in the period was £791,410 (2022: loss £9,228,831). These ﬁnancial statements were approved by the board on 2 January 2024 and were signed on its behalf by: Madeleine Kennedy Director 63 64 Company Statement of Changes in Equity for the Period Ended 30 September 2023 At 1 April 2022 Loss for the year and total comprehensive income Share issued and warrant exercised Share and warrant based payment Share issue costs At 30 September 2023 At 1 April 2021 Loss for the year and total comprehensive income Share issued and warrant exercised Share and warrant based payment Share issue costs At 31 March 2022 Share capital £ 615,609 – 128,700 – – 744,309 Share premium £ Merger relief reserve £ Share option reserve £ Retained earnings £ 6,500,817 10,950,000 2,026,664 (15,561,584) – 160,284 – (4,300) – – – – – – 31,854 – (791,410) – – – 6,656,801 10,950,000 2,058,518 (16,352,994) Total £ 4,531,506 (791,410) 288,984 31,854 (4,300) 4,056,634 Share capital £ Share premium £ Merger relief reserve £ Share option reserve Retained earnings £ £ Total £ 591,509 6,384,835 10,950,000 2,005,952 (6,332,753) 13,599,643 – 24,000 – – – 145,982 – (30,000) – – – – – – 20,712 – (9,228,831) – – – (9,228,831) 169,982 20,712 (30,000) 615,609 6,500,817 10,950,000 2,026,664 (15,561,584) 4,531,506 64 Company Statement of Cash Flows for the Period Ended 30 September 2023 Cash ﬂows from operating activities Loss for the year Adjustments to cash ﬂows from non-cash items Investment Impairment Provision against inter group balance Share and warrant based payment Equity element of convertible loan note Working capital adjustments (increase)/decrease in trade and other receivables (decrease)/Increase in trade and other payables Net cash outﬂow from operating activities Cash ﬂows from investing activities Loan to subsidiary Loan repayments from subsidiary Net cash (used)/generated by investing activities Cash ﬂows from ﬁnancing activities Issue of shares (net of costs) Interest on convertible loan and exchange gains Net cash ﬂows from ﬁnancing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 April Cash and cash equivalents at 31 September 65 Note 30 Sep 2023 £ 31 March 2022 £ (791,410) (9,228,831) - 450,202 31,854 - (309,354) 7,226,516 1,696,434 20,712 - (285,169) 26 28 (292,459) (69,922) (671,735) (175,209) (92,591) (552,969) - - - (754,364) - (754,364) 284,684 - 284,684 139,982 - 139,982 (387,051) (1,167,351) 421,027 33,976 1,588,378 421,027 The accompanying notes to the ﬁnancial statements on pages 61 to 64 form an integral part of the ﬁnancial statements. 65 66 Notes to the Company Financial Statements for the Period Ended 30 September 2023 continued 22. Significant accounting policies Basis of preparation The separate ﬁnancial statements of the Company are presented as required by the Companies Act 2006. As permitted by that Act, the separate financial statements have been prepared in accordance with UK-adopted International Accounting Standards. The ﬁnancial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as those set out in note 2 to the Consolidated Financial Statements. In addition, Investments in subsidiaries are stated at cost less, where appropriate, provision for impairment. 23. Loss attributable to shareholders Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own income statement. The loss attributable to the Company in the period was £791,410 (2022: loss £9,228,831). 24. Staff costs The aggregate payroll costs (including directors’ remuneration) were as follows: Wages and salaries Social security costs 30 Sep 31 March 2023 £ – – – 2022 £ – – – The executive directors are employed by Nuformix Technologies Limited, a wholly owned subsidiary of the Company. 66 Notes to the Company Financial Statements for the Period Ended 30 September 2023 continued 25. Investment in subsidiary At 1 April 2022 Impairment At 30 September 2023 67 £ 4,023,484 - 4,023,484 The Company has the following interests in subsidiaries: Name Country of Incorporation 2023 2022 Nuformix Technologies Limited United Kingdom 100% 100% Equity Interest 26. Trade and other receivables Prepayments Other receivables 30 Sep 2023 17,919 23,938 41,857 31 March 2022 27,941 171,659 199,600 The fair value of trade and other receivables is considered by the Directors not to be materially different to the carrying amounts. 27. Cash and cash equivalents Cash at bank 30 Sep 2023 £ 33,976 31 March 2022 £ 421,027 The Directors consider that the carrying value of cash and cash equivalents represents their fair value. 67 Notes to the Company Financial Statements for the Period Ended 30 September 2023 continued 28. Trade and other payables Trade payables Accrued expenses 68 30 Sep 2023 £ 1,758 40,925 42,683 31 March 2022 £ 8,483 104,122 112,605 The fair value of trade and other payables is considered by the Directors not to be materially different to the carrying amounts. 29. Financial instruments Credit risk The main credit risk relates to liquid funds held at banks. The credit risk in respect of these bank balances is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. Liquidity risk The Company seeks to manage ﬁnancial risk, to ensure sufﬁcient liquidity is available to meet foreseeable needs. An analysis of trade and other payables is given in note 28. Capital risk management The Company’s objectives when managing capital are: • to safeguard the Company’s ability to continue as a going concern, so that it continues to provide returns and beneﬁts for shareholders; • to support the Company’s growth; and • to provide capital for the purpose of strengthening the Company’s risk management capability. 68 69 Notes to the Company Financial Statements for the Period Ended 30 September 2023 continued The Company actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Company and capital efﬁciency, prevailing and projected proﬁtability, projected operating cash ﬂows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes. 30. Related parties The Company’s related parties are the directors and other Group companies. The remuneration of the key management personnel of the Group, who are deﬁned as the directors, is set out in the directors’ remuneration report. Details of the fair value of transactions with key management and their close family members is included in note 19. All amounts outstanding with related parties are unsecured and will be settled in cash. No guarantees have been given or received in respect of amounts outstanding. In the year a provision of £3,434,636 (2022: £2,984,434) was recognised against the balance due from Nuformix Technologies Limited. No other provisions have been made for doubtful debts in respect of amounts owed by other related parties. At the balance sheet date, the gross amounts due from other Group companies were as follows: Nuformix Technologies Limited 31 March 2023 £ 31 March 2022 £ 3,434,636 2,984,434 69

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