Annual report and Financial Statements
For the year ended 31 March 2021
Registration number: 65220
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OKYO Pharma Limited
Contents
Management and administration
Strategic report (Including Chairman’s statement)
Directors’ report
Directors’ remuneration report
Independent Auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Company statement of financial position
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated statement of cash flows
Company statement of cash flows
Notes to the financial statements
1
OKYO Pharma Limited
Management and Administration
Directors
Registered office
Gabriele Cerrone (Non-Executive Chairman)
Dr Gary S Jacob (Executive Director)
Willy Simon (Non-Executive Director)
John Brancaccio (Non-Executive Director)
Martello Court
Admiral Park
St. Peter Port
Guernsey
GY1 3HB
Company Secretary
Orrick, Herrington & Sutcliffe (UK) LLP,
107 Cheapside,
London,
EC2V 6DN
Broker
Registrar
Auditor
Legal advisors
Depositary
Optiva Securities Limited,
49 Berkeley Square,
London,
W1J 5AZ
Computershare Investor Services (Guernsey) Limited
1st Floor
Tudor House
Le Bordage
St Peter Port
Guernsey
GY1 1DB
Mazars LLP
Tower Bridge House
St Katharine’s Way
London
E1W 1DD
Orrick, Herrington & Sutcliffe (UK) LLP,
107 Cheapside,
London,
EC2V 6DN
Computershare Investor Services PLC
The Pavilions
Bridgewater Road
Bristol
BS13 8AE
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OKYO Pharma Limited
Strategic report – Chairman’s report
The Directors present their report and the financial statements for the Company, OKYO Pharma Limited (“OKYO” or the
“Company”) and its subsidiary, (together the “Group”) for the year ended 31 March 2021.
Introduction
OKYO Pharma Limited (LSE: OKYO) is a preclinical biopharmaceutical company developing next-generation
therapeutics to improve the lives of patients suffering from inflammatory eye diseases and ocular pain. Our research
program is focused on a novel G protein coupled receptor (GPCR) which we believe plays a key role in the pathology of
the inflammatory eye diseases that are the target of this technology. Previously we had focused on OK-113, an agonist
for chemokine-like receptor 1, or CMKLR1 receptor, as a potential lead compound for the treatment of dry eye. However,
following further analyses of additional analogues tested in a highly regarded animal model of dry eye disease (DED),
we have determined that OK-101 gave the highest potency and best results in a number of biomarkers evaluated in the
DED animal model studies. Consequently, we have nominated OK-101 as our Investigational New Drug (“IND”)
candidate and have initiated the IND-enabling studies necessary for filing an IND. In addition to developing OK-101 for
the treatment of dry-eye, we also plan during the course of its clinical development to evaluate OK-101 to treat two
additional related ophthalmic diseases: 1) uveitis and 2) allergic conjunctivitis.
In a separate series of studies focused on developing a drug from our technology to treat neuropathic ocular pain, we
have also been evaluating OK-201, a lipidated bovine adrenal medulla (BAM) peptide analogue preclinical candidate for
the treatment of this condition. We are continuing these studies using a unique corneal neuropathic pain animal model
developed by our consultants at Tufts Medical Center (TMC). Our therapeutic approach in all of these studies has been
focused on targeting inflammatory and pain modulation pathways that drive these conditions.
We have not yet submitted an application to the Food and Drug Administration (“FDA”) for any of our product candidates.
We have however begun work on accomplishing all the studies necessary for an IND submission for OK-101 to treat dry
eye and are planning to file an IND on OK-101 to treat dry eye in the third quarter of 2022. (see Figure 1 below).
Figure 1: OKYO Pipeline
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OKYO Pharma Limited
Strategic report – Chairman’s report
OKYO R&D PROGRAMMES
1) OK-101 for Dry Eye Disease (DED)
OK-101, our lead preclinical product candidate, is focused on keratoconjunctivitis sicca, commonly referred to as DED
which is a multifactorial disease caused by an underlying inflammation resulting in the lack of lubrication and moisture in
the surface of the eye. DED is one of the most common ophthalmic conditions encountered in clinical practice. Symptoms
of DED include constant discomfort and irritation accompanied by inflammation of the ocular surface, visual impairment
and potential damage to the ocular surface. The disease affects over 35% of the population aged 50+, with women
representing approximately two-thirds of those affected. Prevalence of DED is anticipated to increase substantially in the
next 10-20 years due to aging populations in the U.S., Europe, Japan and China and use of contact lenses and increased
digital screen time in the younger population. We believe this increase in prevalence of dry eye syndrome represents a
major expanding economic burden to public healthcare.
At present, there are three different categories of approved drugs to treat DED: 1) Immunosuppressants (Restasis &
Sequa), 2) Integrin antagonists (Xiidra) and 3) corticosteroids (e.g., Eysuvis for short term use only). However, DED
continues to be a major unmet medical need due to the large number of patients not well served by the treatments
available to them through the medical community. A key driver in the development of OK-101 to treat DED was an
analysis of the inherent advantages and difficulties associated with the treatment of ocular conditions. One of the major
issues with topical administration of any drug designed for treating DED is the requirement that the drug have adequate
‘residence’ time at the ocular site to afford a pharmacologic benefit before being washed out through natural processes
of tear enhancement and lacrimal tear drainage. The drug candidates we have developed are designed to combat
washout by including a lipid ‘anchor’ within the candidate drug molecule to enhance the residence time of the drug in the
eye. We refer to our candidates for DED as “lipidated-chemerin” analogues to highlight this pharmacologic characteristic.
OK-101 is designed to target a chemokine-like receptor 1, or CMKLR1, which is a G protein-coupled receptor, or GPCR,
expressed on macrophages, monocytes, plasmacytoid/myeloid dendritic cells, natural killer cells and nonhemopoietic
cell types, such as endothelial and epithelial cells. Activation of CMKLR1 by its endogenous peptide ligand chemerin is
known to modulate inflammation, but natural ligands for CMKLR1 have short half-lives due to rapid inactivation. Discovery
of OK-101, a stable, high potency CMKLR1 agonist by On Target Therapeutics (Note: technology licensed to OKYO
Pharma) provided an important step toward the development of a new class of anti-inflammatory therapeutics that can
be applied to the treatment of ophthalmic diseases including DED, uveitis and allergic conjunctivitis. (see Figure 2)
Figure 2. OK-101 binds to CHEMR23 receptor producing an anti-inflammatory response
To further characterize the potential efficacy of OK-101 to treat DED, OK-101 was tested in a mouse model of acute dry
eye disease induced with scopolamine that showed an increase in corneal permeability relative to naïve animals. OK-
101 demonstrated a reduction of DED-induced corneal permeability (p ≤ 0.001). OK-101’s effect in reducing DED-induced
corneal permeability was virtually identical to that of the cyclosporine positive control and close to the baseline corneal
permeability observed in control animals.
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OKYO Pharma Limited
Strategic report – Chairman’s report
A separate series of experiments was also performed to evaluate ocular tolerance of OK-101 in rabbits via repeated
ocular instillation followed by clinical ophthalmic observations. Rabbit ocular tolerance tests on OK-101 showed no
adverse signs such as inflammation, chemosis or hyperemia and no signs of local irritation.
We recently completed manufacturing a 25-gram batch of OK-101 drug substance needed for initiating the IND-
enabling studies.
Future OK-101 DED Strategy
Based on the results from the DED animal model and ocular tolerance studies, we are presently moving forward with
plans to file an IND in the third quarter of 2022 on OK-101 to treat DED. This should enable us to begin clinical trials with
OK-101 as early as one month after submission of the IND to FDA. To support this work, we recently signed an agreement
with a major clinical CRO specializing in ophthalmic drug development who will be providing the following services:
• Preparation of the OK-101 Pre-IND briefing document
• Support in requesting and preparing for the OK-101 Pre-IND meeting with FDA
• Support for regulatory publishing and submission of IND in eCTD format
• Providing quality oversight for development of topical formulation for OK-101
• Providing quality oversight for development and qualification of a drug stability analysis method for OK-101
along with conducting stability studies to establish formulated drug product is stable for at least 90 days
• Support for completing animal toxicology studies in two animal species
2) OK-101 for Non-ophthalmic Indications
On January 19, 2021, we announced that we submitted a patent application to the United States Patent and Trademark
Office covering the use of chemerin and chemerin analogues to treat the cytokine release syndrome associated with
COVID-19 infections and other conditions such as acute respiratory distress syndrome (ARDS). On January 15, 2021
we signed a research and material transfer agreement with the University of Alabama at Birmingham to evaluate the
potential of chemerin analogs to minimize the inflammation triggered by SARS-CoV-2 in a model of lung inflammation.
Ex vivo lung tissue will be experimentally induced to produce inflammation, and during the course of inflammation in the
absence and presence of a chemerin analogue, respectively, a panel of cytokines including TNFα, IL-6, IL-1β will be
measured. Currently, experiments are underway at the University of Alabama, but there is nothing to report yet on the
results of this study. Assuming the results are encouraging, our plan is to advance this program as a potential prophylaxis
to treat COVID-19 infections, and other conditions such as acute respiratory distress syndrome (ARDS). We plan this
work to be under the direction of Dr. Napoleone Ferrara, a member of our Scientific Advisory Board.
3) OK-201 to treat corneal neuropathic pain
Our current focus is to develop first-in-class drug candidates as non-opioid analgesics for ocular pain management
without side effects and the potential abuse associated with opioid medications. Ocular pain occurs in several ophthalmic
conditions including DED, uveitis, diabetic retinopathy (DR), accidental trauma, surgery, and is typically treated with oral
steroids, neurotransmitters and opioids in severe cases. There is no FDA approved drug yet for ocular pain in the form
of eye drops. Damage to the ocular surface (nociceptive pain in response to inflammation) or to the somatosensory
nervous system (chronic neuropathic pain) due to the underlying pathogenesis of eye disease is the main cause of pain.
A lipidated BAM analogue (OK-201), a promising candidate for the treatment of neuropathic and inflammatory pain, was
licensed from Tufts Medical Center (TMC), Boston, MA on February 21, 2018. OK-201 is designed to activate a human
MAS-Related G Protein-coupled Receptor (MRGPR), which is a promising analgesic target. This receptor is expressed
mainly in sensory neurons and is involved in the perception of pain. Activation of MRGPR by BAM peptide inhibits pain
by modulating Ca2+ influx. On August 6, 2019 we signed a collaborative agreement with TMC and Pedram Hamrah, MD,
Professor of Ophthalmology at Tufts University School of Medicine, Boston, MA as Principal Investigator to evaluate our
proprietary lead compounds as non-opioid analgesics to suppress corneal neuropathic pain using a mouse ocular pain
model developed in Dr. Hamrah’s laboratory. Since acquiring the rights to OK-201, we have synthesized a small library
of lipidated BAM analogues. The potencies of these analogues were determined using a cell-based assay, and a small
number of these analogues were evaluated for their analgesic properties in the neuropathic pain model developed by Dr.
Hamrah’s laboratory at TMC. These collaborative studies have provided additional ‘proof-of-concept’ results for BAM
analogues as potential non-opioid analgesics. Our goal is to develop OK-201, as well as explore additional analogues
for their potential use in treating ocular pain.
Future OK-201 Strategy
During the next year, we will be continuing to conduct preclinical studies and additional animal studies to further evaluate
the OK-201 preclinical candidate to treat corneal neuropathic pain.
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OKYO Pharma Limited
Strategic report – Chairman’s report
Financial summary
Consolidated Statement of Comprehensive Income
The Group has made a loss for the year of £2,994k (2020: £1,211k). The loss is detailed in the consolidated statement
of comprehensive income on page 37.
The Group’s expenditure on research and development was £133k for the year ended March 31, 2021, as compared to
£407k for the year ended March 31, 2020. The reduction in expenditure was due an elimination of R&D costs planned
for OK-113 once the decision was made to switch to OK-101 as the preclinical candidate for filing an IND with FDA. The
activities relating to OK-101 commenced in the last few months of the period, post the recruitment of the CEO.
Other operating expenses were £2,867k for the year ended March 31, 2021 as compared to £800k for the year ended
March 31, 2020, an increase of £2,067k. The increase in cost is a result of a bonus that was awarded in the current year
to the Non-Executive Chairman for £887k, (on the basis of the co-invention of the use of Chemerin in the COVID-19
indication when he was not a director or employee of the Company (now the subject of a patent application); work carried
out in procuring, backing and completing the refinancing the Company in 2020 and actions taken to make new executive
appointments and scientific advisory appointments to the Board with the result that the Company now has a clear and
accelerated path), additional fair value charges of £375k relating to the issuance of additional options, fundraising
expenses of £453k plus additional compliance, professional fees, legal and foreign exchange costs of £352k due to
increased activity in the Company in the last 3 months of the period.
Consolidated Statement of Financial Position
At the end of the year, the Group cash balance stood at £4,991k (31 March 2020: £190k). The Group successfully raised
£6,070k during the year via the issuance of Convertible loan notes, private placements, and the exercise of options.
Fund raising
In the period, the Group successfully raised funds to further progress its pre-clinical pipeline.
On 23 May 2020, the Group announced that further to the announcement made on 23 March 2020, the Group raised
£181,346 through a placing of a further 36,269,253 new ordinary shares.
On 29 May 2020, the Group announced that it had raised £440,000 through the issue of convertible loan notes ("CLNs").
£50,000 of the CLN’s were issued to Panetta Partners Ltd, the ultimate parent company. The CLNs carry an interest rate
of 20% compounding and have maximum term of 4 years. The CLNs convert into ordinary shares at a price of 0.4p per
share and, when converted, the shares will be issued with a warrant attached at an exercise price of 0.4p (with a
maximum life of 5 years from the date of issue of the CLN, regardless of the conversion date).
On 28 July 2020, the Group announced that it had raised £3.5m through the issuance of CLN’s. The CLNs carry an
interest rate of 2.15% compounding and have maximum term of 4 years. The CLNs convert into ordinary shares at a
price of 8.5p per share.
On 17 August 2020, the Group announced that it had raised a further £1.437m through the issuance of CLN’s. The CLNs
carry an interest rate of 2.15% compounding and have maximum term of 4 years. The CLNs convert into ordinary shares
at a price of 8.5p per share.
On 8 September 2020, the Group announced that it had raised a further £0.5m through the issuance of CLN’s. The CLNs
carry an interest rate of 2.15% compounding and have maximum term of 4 years. The CLNs convert into ordinary shares
at a price of 8.5p per share.
In March 2021, additional funds of £11,250 were raised through the exercise of options.
Going Concern
The Group has experienced net losses and significant cash outflows from cash used in operating activities over the past
years, and as of March 31, 2021, had an accumulated loss of £72.5m, a net loss for the year ended March 31, 2021 of
£3m and net cash used in operating activities of £1.2m.
Based upon the current forecasts prepared by Management, the potential use of cash flows from operations from the
date of approval of these accounts until 31 December 2022 is £4.4 million, of which £2.5m is to be spent on progressing
the R&D pipeline. When compared to the current cash balance at June 10, 2021 of £4.7 million, management projects
a surplus of £0.3 million, thereby supporting Management’s assertion that the Company does have the ability to meet its
obligations as they become due until December 2022.
However, further funds will need to be raised within the foreseeable future in order to progress it’s pipeline and fund
ongoing business operations. The Directors are confident, based on the previous fund-raising history that sufficient funds
will be forthcoming and accordingly they have prepared these financial statements on a going concern basis. However,
until and unless the Group and Company secures sufficient investment to fund its pipeline, there is a material uncertainty
about the Group and Company’s ability to continue as a going concern, and therefore about the applicability of the going
concern basis of preparation.
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OKYO Pharma Limited
Strategic report – Chairman’s report
COVID-19
We remain cognisant of the potential impact of coronavirus (COVID-19) on our operations and have taken the steps
necessary to maintain the integrity of the Company's assets and the health and wellbeing of our employees. The
Company is well financed, resilient and well positioned to weather any financial downturn occurring as a result of the
outbreak. Indeed, the Company has raised additional funds through the issuance of Convertible Loan Notes.
Remote working and outsourcing of research and development activities has meant that progression of the project
pipeline is not impacted by the pandemic.
Outlook and Strategy
The development of new drugs to treat DED has been particularly challenging due to the heterogeneous nature of the
patient population suffering from DED, and due to the difficulties in demonstrating an improvement in both signs and
symptoms of the disease in well-controlled clinical trials. The evidence from over 40 years of scientific literature, however,
suggests inflammation as the most common underlying cause of DED. Consequently, development of new therapeutic
agents that target inflammatory pathways is looking to be an attractive approach in improving symptoms in DED patients.
During the next 12 months, OKYO is committed to a major effort to accomplish the IND enabling activities necessary for
filing an IND on OK-101 to treat DED. These include:
•
Topical formulation of the OK-101 drug product and initial stability studies
• Bioanalytical method development to support the OK-101 clinical program
• Engineering batch manufacture of cGMP OK-101 for clinical trials
•
•
• Clinical batch manufacturing and stability studies of OK-101
Toxicokinetic method development
Toxicology studies in rabbits and dogs
Once an IND on OK-101 to treat DED is in place, the virtue of OK-101 being formulated as a topical drug that can be
administered to patients in the form of eye drops, means that our first clinical trial after IND submission is expected to be
a Phase 1/2a trial in DED patients, potentially providing an early indication of drug efficacy in DED patients. Should drug
efficacy be borne out in this first human trial with OK-101, we will have validated proof-of-concept in this very first study.
With this success in hand, we believe that rapid further clinical development of OK-101 to treat DED will be in order. We
anticipate that OK-101, in addition to its potential to treat DED, can then also be evaluated to treat uveitis and allergic
conjunctivitis. Hence, once we are clinically evaluating OK-101 to treat dry eye, we will also undertake the plan to explore
the drug candidate’s potential to suppress the inflammation associated with uveitis and allergic conjunctivitis. In support
of this plan, we will be exploring preclinical development of OK-101 for the uveitis indication by first establishing ‘proof-
of-concept’ for this indication utilizing animal model studies of anterior uveitis to evaluate the potential of OK-101 to
suppress the inflammation associated with uveitis. We also plan on conducting ‘proof-of-concept’ studies using OK-101
for the treatment of chronic and seasonal allergic conjunctivitis using a conjunctival allergen challenge animal model to
investigate the potential of OK-101 to suppress the inflammation associated with allergic conjunctivitis.
We will also continue to explore the potential use of chemerin and chemerin analogues for prophylaxis against and
treatment of symptoms associated with, or resulting from, infection with SARS-CoV-2 virus, including inflammation due
to the cytokine storm caused by COVID-19 disease and acute respiratory distress syndrome.
Gabriele Cerrone
Non - Executive Chairman
31 July 2021
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OKYO Pharma Limited
Strategic report
Business review
A review of the business, its results and strategic outlook is included in the Executive Chairman’s Statement on page 2.
Key performance indicators
The Board monitors the Key Performance Indicators (KPIs) that it considers appropriate for the industry and stage of
development of the Group. The Group is a research and development (“R&D”) based biotechnology Group concerned
with a number of pre-clinical projects. These projects require sufficient investment to reach defined milestones by which
the Group and its investors can judge the chances of ultimate success and thereby the value of the Group. At this stage
of Group development significant sources of revenue generation are unlikely, and due to the needs of an R&D based
biotechnology-based program, the Group is cash consuming. The Group KPIs are therefore chosen to monitor the
progress of the individual scientific programmes, the external market environment for the potential drugs being developed
and the cash requirements of the Group.
Financial KPIs
Cash consumption
The cash position of the business is measured on a continual basis with reference both to the general and administrative
expenses required to run the Group, and more particularly to the cash required for ongoing research, development and
acquisition of the Group’s scientific assets. During 2020, the main use of the Group’s funds was progressing the animal
model trials for OK-101 and OK-201, which was within the budget. The cash consumption, which refers to cash used in
operating activities of the Group, during the year was £1.3m. Management monitors its cash consumption on a monthly
basis and a cash projection will be presented at every board meeting.
The Group monitors current and projected cash consumption to ensure that there are sufficient funds available to develop
the Group’s scientific assets. The Group maintains a virtual operating model resulting in low cash consumption for general
and administrative expenses during the period.
Non-financial KPIs for 2021.
Develop appropriate formulation of OK-101 for animal studies, and conduct stability studies to ensure that the
formulation is stable for at least 28 days.
The Group is working towards this KPI. Additional preclinical IND-enabling studies have been performed and peptide
manufacturing process has been scaled up to produce larger quantities of OK-101 for stability studies. A dose ranging
study in rabbit was performed to evaluate the effect of OK-101 on corneal permeability and to assess local corneal
irritation. OK-101 was found to be effective in reducing corneal permeability and to show no sign of local irritation. Rabbit
ocular tolerance tests using OK-101 showed no adverse signs such as inflammation, chemosis or hyperemia and no
signs of local irritation.
Other Considerations
External (life sciences) market environment
The Group monitors the life sciences market for a number of factors:
• New developments in drug research and development
• New medical treatment paradigms
• Patent filings by third parties pertinent to the Group’s programmes
• Existing and novel drugs in development by third parties
• Healthcare regulation and policy in the major territories
• Private and public financings of life science companies to indicate investor appetite for life science risk
The Group is developing its scientific assets within the European and US territories, but for potential global application.
The environment for life science companies was positive throughout the year.
Principal risks and uncertainties
The Group assesses and monitors the inherent risks in the life sciences industry, as well as other micro and macro-
economic factors that may present risk to the Group’s progression. The Group also considers Group-specific risks such
as research progress, personnel and operational facilities and collaborations.
There are significant risks associated with any life science business. The Board believes that the following risks are the
most significant, however, the risks listed do not necessarily comprise all those associated with an investment in the
7
OKYO Pharma Limited
Strategic report
Group. In particular, the Group’s performance may be affected by changes in market or economic conditions and in legal,
regulatory and / or tax requirements. The risks listed are not set out in any particular order of priority and this is not an
exhaustive list of risks.
If any of the following risks were to materialise, the Group’s business, financial condition, results or future operations
could be materially and adversely affected. In such cases, the Group’s share price may decline and an investor may lose
part or all of their investment.
The Board considers that the principal risks and uncertainties facing the Group may be summarised as follows:
• Clinical studies fail to generate encouraging data
The Group’s product candidates have not been evaluated in clinical trials and results in the clinic may not be
reproduced in human trials. There is a high degree of failure for product candidates as they progress through clinical
trials and clinical trial data may be interpreted in varying ways which may delay, limit or prevent future regulatory
approvals.
• Ability to scale up the Group
Growth may place significant demands on the Group’s management and resources. The Group expects to
experience growth in the number of its employees and the scope of its operations in connection with the continued
development and, in due course, the potential commercialisation of its products. This potential growth could place a
significant strain on its management and operations, and the Group may have difficulty managing this future potential
growth.
•
Intellectual property risk
The commercial success of the Group depends on its ability to obtain patent protection for its pharmaceutical
discoveries and to preserve the confidentiality of its know-how. There is no guarantee that patent applications will
succeed or be broad enough to provide protection for the Group’s intellectual property rights and exclude competitors
with similar pharmaceutical products. The success of the Group is also dependent on non-infringement of patents,
or other intellectual property rights, held by third parties. Competitors and third parties may hold intellectual property
rights which the Group may not be able to license upon favourable terms, potentially inhibiting the Group’s ability to
develop and exploit its own business. Litigation may be necessary to protect the Group’s intellectual property, which
may result in substantial costs. The Group seeks to reduce this risk by seeking patent attorney advice that patent
protection will be available prior to investing in a project, by seeking patent protection where appropriate, and by
minimising disclosure to third parties.
• Competition risk
The Group faces significant competition from pharmaceutical companies. The Group has competitors internationally,
including major multinational pharmaceutical companies, universities and research institutions. In respect of
Chemerin as an indication for the treatment of DED, there are a number of established companies engaged in the
development and marketing of preparations addressing the DED market. In addition, there is a wide range of
products addressing the DED market currently approved and marketed by a number of large and small
pharmaceutical companies.
•
Funding risk
The Group continues to consume cash resources. The Group only recently committed to its new business and its
chosen product candidates are in the early stages of development and it may be some years until the Group
generates revenue, if at all. The Group remains dependent upon securing funding through the injection of capital
from share issues. The Group may not be able to generate positive net cash flows in the future or attract such
additional funding required at all, or on suitable terms. In such circumstances, the Group’s pre-clinical programmes
may be delayed or cancelled and the business operations curtailed. The Group seeks to reduce this risk through
tight financial control, prioritising programmes which will generate the best returns, and keeping shareholders
informed on progress. Post period-end, the Group raised £3.9 million (before expenses) to fund its pre-clinical
activities and strengthen its balance sheet.
• Dependence on key personnel
The loss of one or more of its key personnel could have an adverse impact on the business of the Group.
Furthermore, it may be particularly difficult for the Group to attract and retain suitably qualified and experienced
people, given the competition from other industry participants and the relative size of the Group. The Group has
deliberately pursued a lean headcount policy to conserve financial resources. Failure to continue to attract and
retain such individuals could adversely affect the Group’s ability to conduct and grow its operations effectively. The
Group seeks to reduce this risk by recruiting additional personnel and additionally appropriate incentivisation of
personnel through participation in long term equity incentive schemes.
Gender of Directors and employees
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OKYO Pharma Limited
Strategic report
We recruit individuals who have the skills, experience and integrity needed to perform the roles to make OKYO Pharma
Ltd a successful company. We note that there are no women on the board but that we recruit without regard to sex or
ethnic origin, appointing and thereafter promoting staff based upon merit.
The profile of the Group’s directors, officers and employees at March 31, 2020, was as follows:
March 31, 2021
Male
Female
Total
Number or persons who were Directors or
officers of the Group
Number of persons who were other employees
of the Group
Total Directors and employees at March 31,
2021
5
-
5
1
-
1
6
-
6
The lean staffing structure is supported by the outsourcing of some administrative functions and the use of contract
research organisations (CROs).
Directors' duties in relation to s172 Companies Act 2006
The Board of Directors have considered the matters set out in section 172 of the United Kingdom’s Companies Act 2006
insofar as Guernsey law requires consideration of the same.
The directors consider, that they have acted in the way they believe, in good faith, to promote the success of the Company
for the benefit of its members as a whole and, in doing so, have regard (amongst other matters) to:
• the likely consequences of any decisions in the long-term,
• the interests of the Company’s employees,
• the need to foster the Company’s business relationships with suppliers, customers and others,
• the impact of the Company’s operations on the community and environment,
• the desirability of the Company maintaining a reputation for high standards of business conduct, and
• the need to act fairly between the shareholders of the Company.
Key Stakeholders and concerns
Board Considerations
Key Outcomes
Employees
Our present and future employees are
key for the future success of the
business.
Staff turnover has been very low.
Executive Directors update the Board
with details of employee changes,
concerns and recruitment prospects. An
open, collaborative working
environment with attractive
remuneration packages aligns
employees’ with shareholders’ goals.
Communication with employees is informal
and collaborative.
Investors and shareholders
OKYO is a pre-revenue Company and is
dependent upon existing and future
investors
its research and
to
development products
fund
Business Strategy clearly setting out the
progress with projects in development and
cash requirement
Use of PR consultants; interviews with
Proactive investors the release of
information through the Group’s
website; meeting individual
shareholders at AGM
Suppliers
OKYO has a wide range of suppliers for
few key
consumable
suppliers who
our
to
manufacturing of product
Contract Research Organisations
items and a
key
are
Management of
relationships
ensuring consumable and other items are
delivered on time and at right price
supplier
Key suppliers are managed in-house
with regular meetings being held with
OKYO management
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OKYO Pharma Limited
Strategic report
CROs are key to managing OKYO’s pre-
clinical trial programmes
Environment
The Group is conscious of the need to
protect the environment.
Management of clinical trials and recruitment
of patients; Regulatory and pre-clinical
services
OKYO Pharma’s operations are relatively
low in their impact on the environment.
Rigorous selection process before
engaging CRO and
regular
project meetings
During the year, employees reduced
then
their travel wherever reasonably
Reputation
Maintaining a strong reputation and
acting within laws and regulations
impacts the Group’s relationships with
Policies and procedures approved by the Board
are concentrated on maintaining the strong
reputation of the Group within its employees,
Shareholders, suppliers, regulators and other
key stakeholders.
all stakeholder
Principal decisions in 2020
practical, using virtual and telephone
conferencing facilities instead.
OKYO Pharma continuously monitors
regulatory
and
developments
that any
issues are being addressed in decision
making.
to ensure
assesses
all
We have considered the decisions taken by the Board which will have an impact on the longer-term performance and
prospects for the Group. The Board believes that the following decisions taken during the year and since the year end
fall into this category and were made with full consideration of both internal and external stakeholders. The Group’s aim
is to meet the needs of the key stakeholders who ultimately wish for us to progress our pipeline of drugs to treat rare
cancers and autoimmune and inflammatory diseases to commercial deployment.
Significant events/decisions
Raised £6m of investment from
existing and new investors, to
enable Group to progress its pre
-clinical trials
Filing of patent application
covering the use of Chemerin
and associated analogues
to
treat cytokine storm associated
with COVID-19 and ARDS
Key s172 matter(s)
affected
Shareholders
Staff and Shareholders
Actions and impact
Decisions were made by the Board to raise
additional funds enabling the company to
pursue its R&D objectives thereby meeting
core stakeholder requirements. The cash
funding
requirement offsets any dilution
experienced by the existing shareholders.
Decisions were made by the executive team in
consultation with the Board after carefully
impact upon existing staff
considering
resources and available
funding. The
application has resulted in an expanded project
focus.
Environmental matters
We currently outsource our research, development, testing and manufacturing activities. These activities are subject to
various environmental, health and safety laws and regulations, which govern, among other things, the controlled use,
handling, release and disposal of and the maintenance of a registry for hazardous materials and biological materials. If
we or our partners fail to comply with such laws and regulations, we could be subject to fines or other sanctions.
As with other companies engaged in activities similar to ours, we face a risk of environmental liability inherent in our
current and historical activities, including liability relating to releases of or exposure to hazardous or biological materials.
Environmental, health and safety laws and regulations are becoming more stringent. We may be required to incur
substantial expenses in connection with future environmental compliance or remediation activities, in which case, our
production and development efforts may be interrupted or delayed.
Gabriele Cerrone
Non-Executive Chairman
31 July 2021
Martello Court, Admiral Park, St Peter Port, Guernsey, GY1 3HB
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OKYO Pharma Limited
Director’s report
Directors
The
OKYO Pharma Limited (“OKYO” or the “Company”) and its subsidiary, together the “Group” for the year ended March 31,
2021.
statements
financial
present
report
their
and
the
the
for
Company,
Principal activity
The Group’s focus is to develop drugs for inflammatory dry eye diseases and chronic pain by targeting G protein-coupled
receptors (GPCRs). GPCRs is the largest family of membrane proteins involved in many biological processes. Targeting
GPCR is proven to be an innovative approach for treatment of a wide range of conditions including cardiovascular
disease, cancer and diabetes. Approximately 1/3 of all Food and Drug Administration (FDA) approved drugs target
members of this family.
Results and transfers to reserves
The results and transfers to reserves for the period are set out in the financial statements on pages 37 to 64.
The Group made a total comprehensive loss for the period after taxation of £2,994,329 (March 31, 2020: loss
£1,210,745).
Dividend
No dividends were declared or paid in the year (2020: £nil).
Directors
The Directors who served during the period and to date are:
Gabriele Cerrone Non- Executive Chairman (appointed January 7, 2021)
Gary Jacob Chief Executive Officer and Executive director (appointed January 7, 2021)
Willy Simon Non-Executive director
Dr Kunwar Shailubhai Non-Executive director (resigned June 17, 2021)
John Brancaccio Non-Executive director (appointed June 9, 2020)
Gregor MacRae Non-Executive director (appointed December 18, 2019, resigned June 9, 2020)
Significant shareholdings
Gabriele Cerrone has an interest of 52.13% of the ordinary share capital of the company at 31st March 2021.
The following shareholders hold an interest of 3% or more in the Company:
Panetta Partners Ltd (Gabriele Cerrone)
Veneto Seed Ventures Ltd
No of Shares
350,762,726
40,000,000
% Holding
52.13%
5.95%
Appointments
Non-Executive Directors
On 10 June 2020, the Group announced the appointment of Mr. John Brancaccio to its Board as a Non-executive
Director. Mr Brancaccio will Chair the Audit, Risk and Disclosure Committee.
Mr. Brancaccio, retired CPA, is a financial executive with extensive international and domestic experience in
pharmaceutical and biotechnology for privately and publicly held companies. From 2000 to 2002, Mr. Brancaccio was
the Chief Financial Officer/Chief Operating Officer of Eline Group, an entertainment and media company. From May 2002
until March 2004, Mr. Brancaccio was the Chief Financial Officer of Memory Pharmaceuticals Corp., a biotechnology
company. From April 2004 until May 2017, Mr. Brancaccio was the Chief Financial Officer of Accelerated Technologies,
Inc., an incubator for medical device companies. Mr. Brancaccio is currently a director of Cardiff Oncology, Inc.,Rasna
Therapeutics, Inc., Tiziana Life Sciences PLC and Hepion Pharmaceuticals, Inc.
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OKYO Pharma Limited
Director’s report
On 7 January the Group announced that Gabriele Cerrone had been appointed as a Non-Executive chairman of the
company and Dr Gary S. Jacob has been appointed as Chief Executive Officer and director of the company, both with
immediate effect.
Mr Cerrone has a successful track record and extensive experience in the financing and restructuring of micro-cap
biotechnology companies. He has founded ten biotechnology companies in oncology, infectious diseases and molecular
diagnostics, and has taken seven of these companies to the NASDAQ Market and two to the Main Market and AIM
Market in London. Mr Cerrone is Executive Chairman of dual listed Tiziana Life Sciences plc. Mr Cerrone co-founded
Cardiff Oncology, Inc. (NASDAQ: CRDF), an oncology company and served as its Co-Chairman; he was a co-founder
and served as Chairman of both Synergy Pharmaceuticals, Inc. (NASDAQ: SGYP) and Callisto Pharmaceuticals, Inc.
(OTCMKTS: CLSP), and was a Director of and led the restructuring of Siga Technologies, Inc. (NASDAQ: SIGA). Mr
Cerrone also co-founded FermaVir Pharmaceuticals, Inc. and served as Chairman of the Board until its merger in
September 2007 with Inhibitex, Inc. Mr Cerrone served as a director of Inhibitex, Inc. until its US$2.5bn sale to Bristol
Myers Squibb Co in 2012.
Mr Cerrone is the Chairman and Founder of Tiziana Life Sciences plc (NASDAQ:TLSA, AIM: TILS) an oncology focused
therapeutics company; Chairman and Co-Founder of Rasna Therapeutics Limited (OTCMKTS: RASP), a company
focused on the development of therapeutics for leukaemias; Co-Founder of Hepion Pharmaceuticals, Inc. (Nasdaq:
HEPA); Executive Chairman and Co-Founder of Gensignia Life Sciences, Inc., a molecular diagnostics company focused
on oncology using microRNA technology; and Executive Chairman and founder of Accustem Sciences plc; and founder
of BioVitas Capital Ltd.
Mr Cerrone will also chair the Nomination Committee of the Board.
Dr. Jacob has over 35 years of extensive experience in the pharmaceutical and biotechnology industries across multiple
disciplines, including research and development, operations, business development, capital financing activities and
senior management expertise. He has developed broad and influential contacts throughout the biopharmaceutical,
financial, banking and investor communities. Dr. Jacob is the Co-Founder and former CEO and Chairman of Synergy
Pharmaceuticals. During his time at Synergy, he served as Chairman, Chief Executive Officer and Executive Chairman,
and is the co-inventor of Synergy’s FDA-approved drug Trulance® which is currently marketed in the U.S. by Bausch
Health, Inc. to treat functional GI disorders. Dr. Jacob is also the former CEO and Managing Director of Immuron Inc.,
an Australian biotechnology company dual-listed on the Australian ASX exchange and on NASDAQ. Dr. Jacob currently
is Chairman of the Board of Hepion Pharmaceuticals, Inc., a public NASDAQ listed company with a drug in clinical
development to treat nonalcoholic steatohepatitis (NASH), and is also on the Board of Directors of Cardiff Oncology, Inc.,
a NASDAQ listed public oncology company. He served as Chief Executive Officer and Director of Callisto
Pharmaceuticals, Inc. from May 2003 until January 2013.
Prior to his involvement with Callisto and Synergy, Dr. Jacob was at Monsanto/G.D. Searle, where he was Director of
Glycobiology and a Monsanto Science Fellow, specializing in the field of Glycobiology and drug discovery. Dr. Jacob
holds over 30 patents and is the co-inventor of two pharmaceutical drugs which are FDA approved. Dr. Jacob earned a
B.S. cum laude in Chemistry from the University of Missouri – St. Louis and holds a Ph.D. in Biochemistry from the
University of Wisconsin-Madison.
Resignations
Non-Executive Directors
On 10 June 2020, the Group announced that Mr. Gregor MacRae was standing down as a director of the Company with
immediate effect to concentrate on his other business interests and activities; Mr MacRae felt his position was better
filled by an individual with a background and greater experience in the life sciences sector.
Pensions
The Group operates a defined contribution pension scheme open to all salaried Executive Directors, Non-Executive
Directors and employees. There is currently one director participating in the Defined Contribution Scheme.
Political and charitable contributions
There were no political or charitable contributions made by the Company during the year ended December 31, 2020
(2019: £nil)
Staff policy
The Group is committed to a policy of recruitment and promotion on the basis of aptitude and ability. Applications for
employment by disabled persons are given full and fair consideration having regard to their particular aptitudes and
abilities. Where existing employees become disabled, it is the Group’s policy, wherever possible, to provide continuing
employment under normal terms and conditions and to provide training, career development and promotion wherever
appropriate.
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OKYO Pharma Limited
Director’s report
Corporate governance
The Group is firmly committed to business integrity, high ethical values, and professionalism in its activities and
operations. The Board is committed to maintaining the highest standards of corporate governance and is accountable to
the Company’s shareholders. The role of the Board is to provide strategic leadership to the Group within a framework of
sensible and effective controls, which enables risk to be assessed and managed. The Board sets the Group’s strategic
aims, ensures that the necessary financial and human resources are in place for the Group to meet its objectives, and
reviews executives’ performance. The Board make certain that its obligations to its shareholders and others are
understood and met.
As a Guernsey registered Company, OKYO Pharma is not under an obligation to adopt a Governance Code on a ‘comply
or explain’ basis. However, given its status as a standard listed company on the main market for listed securities of the
London Stock Exchange plc, the directors recognise the importance of sound corporate governance have opted to comply
with QCA Corporate Governance Code, as published by the Quoted Companies Alliance, to the extent they consider
appropriate in light of the Company’s size, stage of development and resources. The code can be found at
www.theqca.com.
The Company’s corporate governance is reviewed on a regular basis by the Directors of the company. Okyo Pharma Ltd
operates within the life science sector in an effective and efficient way, with integrity and due regard for the interests of
shareholders and applies principles of general governance applicable to the size and stage of development of the Group.
How does the Board apply the ten principles set out in the QCA Code?
1. Establish a strategy and business model which promote long-term value for shareholders
The Board has a clear strategy, which is set out in the Chairman’s statement on page 2. To support the execution of this
strategy, the Board performs the following key tasks:
•
•
•
•
•
setting the Company’s values and standards;
approval of long-term objectives and strategy;
approval of revenue, expense and capital budgets and plans; a
approval for therapeutic candidate progression through key development and clinical stages;
oversight of operations ensuring that adequate systems of internal controls and risk management are in place,
ensuring maintenance of accounting and other records, and compliance with statutory and regulatory
obligations;
2. Seek to understand and meet shareholder needs and expectations
Contact with major shareholders has been principally maintained by the CEO and the Chairman during the reporting
period, and they have ensured that their views are communicated to the Board as a whole. The Board believes that
appropriate steps have been taken during the reporting period to ensure that the members of the Board, and in particular
the Non-Executive Directors, develop an understanding of the views of major shareholders about the Company. We are
holding our Annual General Meeting in Q3 2021. A Notice of Annual General Meeting will be issued in due course and
will be available on our website. Separate resolutions will be provided on each issue so that they can be given proper
consideration. Proxy votes are counted and the level of proxies lodged on each resolution reported after it has been dealt
with by a show of hands.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
OKYO is committed to engaging with and maintaining good relations with all of our stakeholders (employees, investors,
participants in clinical trials, collaboration partners and suppliers).
OKYO is also compliant with safety and other regulations in its laboratories and in treating patients on Clinical Trials.
OKYO has annual appraisals for all staff and regular meetings between staff and senior management to discuss business
related issues.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
A Risk Register is maintained for regular review by the Audit and Risk Committee and the Board. Principal risks are set
out on page 9 where mitigating activities are also explained.
Audit, Risk and Disclosure Committee
The Audit Committee of the Board comprises of John Brancaccio and Willy Simon. It is chaired by John Brancaccio, and
is responsible for:
i.
Monitoring the quality of internal controls and ensuring the financial performance of the Group is properly
measured and reported on;
13
OKYO Pharma Limited
Director’s report
ii.
iii.
iv.
v.
Consideration of the Directors’ risk assessment and suggesting items for discussion at the full Board;
Receipt and review of reports from the Company's management and external audtiors relating to the interim
and annual accounts, including a review of accounting policies, accounting treatment and disclosures in the
financial reports;
Consideration of the accounting and internal control systems in use throughout the Company and its
subsidiaries; and
Overseeing the Company’s relationship with external auditors, including making recommendations to the Board
as to the appointment or re-appointment of the external auditors, reviewing their terms of engagement, and
monitoring the external auditors’ independence, objectivity and effectiveness.
The audit committee meets not less than twice in each financial year and has unrestricted access to the Company's
auditors.
5. Maintain the Board as a well-functioning, balanced team led by the Chairman
The Board is currently comprised of four directors, the Non-executive Chairman, an Executive director and two Non-
Executive Directors. The directors of the Company have all been selected for their extensive experience in their
specialised fields, making the Board well rounded and balanced. The composition of the Board is regularly reviewed
through the Nomination committee. The wide range of skills among the directors helps to further the business and
strategic development of the Company as well as address any anticipated issued in the foreseeable future. To ensure
the Company’s future growth, all directors are subject to re-election at least once every three years, confirming the current
directors all have the necessary experience and skills. The skills of each director complement one another guaranteeing
a well-functioning balanced Board, led by the Non-executive Chairman. The Company maintains its governance structure
through the Nomination Committee, Audit, Risk and Disclosure Committee and the Remuneration Committee. These
Committees also support the Board in making the best decisions in the interest of the Company, shareholders and
employees. The Board follow a formal schedule of matters and meet quarterly every year. All Directors are expected to
provide a sufficient amount of time to the Company to fully exhibit and fulfil their duties. Each Directors time spent is
reviewed annually prior to recommending their re-election to the shareholders.
The Board is responsible to the shareholders and to ensure acceptable management to the group.
The roles of the directors differ between Executive and Non-Executive directors, while both have fiduciary duties
towards the group. The Board is made up of the non-Executive Chairman, Gabriele Cerrone, who has extensive
experience in the financing and restructuring of micro-cap biotechnology companies and has successfully taken several
companies onto the NASDAQ, AIM and LSE markets, the CEO, Gary S. Jacob who has considerable prior experience
as CEO of a number of public biotechnology companies, and two additional non-executive directors. The non-executive
Chairman and Executive director CEO are responsible for the operation and business development of the company.
The two other Non-Executive officers, Willy Simon and John Brancaccio, who have many years of experience in the
finance industry, all who act as independent directors providing objective judgment, and constructively challenge the
management to ensure all strategies are completely considered. For the Board to carry out their duties in their entirety,
they have full and timely access to all the relevant information they need. Directors, if necessary, are also permitted to
take independent professional advice to further their roles at the expense of the Group. All Board members have
access to the advice of the Company Secretary.
The Code requires that a smaller company should have at least two Independent Non-Executive Directors. As at 31
March 2021, the Board consisted of one Executive Directors and three Non-Executive Directors. The Non-Executive
Directors are interested in either ordinary shares in the Company, options over ordinary shares in the Company, or both,
and cannot therefore be considered fully independent under the Code. The remuneration of the Non-Executive Directors
includes options and this is contrary to best practice, and thus the Company is not in full compliance. However, the
Directors consider the present structure and arrangements to be adequate given the size and stage of development of
the Company, and all are considered to be independent in character and judgement.
The Company does not have an independent Chairman given the substantial shareholding of the Chairman. It is the
Board’s opinion that the current arrangements are appropriate to the Company at this stage of development and that
there are sufficient compliance structures within the Company to ensure that the governance functions that would be part
of an independent Chairman’s responsibility are met. The Board is satisfied with the balance between Executive and
Non-Executive Directors which allows it to exercise objectivity in decision making and proper control of the Company’s
business. The Board considers its composition appropriate in view of the size and requirements of the Company’s
business and the need to maintain a practical and efficient balance between Executive and Non-Executive Directors.
6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Board has delegated the tasks of reviewing Board composition, searching for appropriate candidates and making
recommendations to the Board on candidates to be appointed as Directors, to the Nomination Committee.
The Nomination Committee of the Board comprises of Gabriele Cerrone and Willy Simon. It is chaired by Gabriele
Cerrone, and is responsible for:
14
OKYO Pharma Limited
Director’s report
i.
ii.
iii.
drawing up selection criteria and appointment procedures for directors;
recommending nominees for election to our board of directors and its corresponding committees;
assessing the functioning of individual members of our board of directors and executive officers and
reporting the results of such assessment to the board of directors; and
iv.
developing corporate governance guidelines.
With regard to the re-election of Directors, the Company is governed by its Articles of Association (the Articles). Under
the Articles, the Board has the power to appoint a Director during the year, but any person so appointed must stand for
election at the next Annual General Meeting, along with the rest of the Board.
The Board understands the value in having directors of diverse gender, race and ethnicity, along with varied skills,
perspectives and experiences. We are constantly looking for opportunities to improve our diversity and inclusion
practices.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The OKYO Pharma Ltd Board remains mindful that it needs to continually monitor and identify ways in which it might
improve its performance and recognises that board evaluation is a useful tool for enhancing a board’s effectiveness.
The Remuneration Committee of the Board comprises of Willy Simon and John Brancaccio. It is chaired by Willy Simon,
and is responsible for:
i.
ii.
iii.
The review of the performance of the executive directors;
Recommendations to the Board on matters relating to the remuneration and terms of service of the executive
directors; and
Recommendations to the Board on proposals for the granting of share options and other equity incentives
pursuant to any share option scheme or equity incentive scheme in operation from time to time.
In making their recommendations the Remuneration Committee will have due regard to the interests of the Shareholders
and the performance of the Company.
8. Promote a corporate culture that is based on ethical values and behaviours
The Company is fully committed to the elimination of unlawful and unfair discrimination and values the differences that a
diverse workforce brings to the organisation. The Company endeavours to not discriminate because of age, disability,
gender reassignment, marriage and civil partnership, pregnancy and maternity, race (which includes colour, nationality
and ethnic or national origins), religion or belief, sex, or sexual orientation. The Company will undertake an annual review
of its policies and procedures to establish its position about compliance and best practice and monitor and promote a
healthy corporate culture.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by
the Board
The Board is supported by the Committees, explained above, in the task of maintaining governance processes and
structures. Furthermore, the following governance matters support good decision-making by the Board.
The Directors are responsible for the Company’s internal control and reviewing its effectiveness. The Directors confirm
that the Board has acknowledged this responsibility. The Directors confirm that there is an ongoing process for reviewing
internal controls and effectiveness as well as identifying, evaluating, and managing the significant risks facing the Group
and its subsidiaries. This process has been in place from 1 January 2017 and continues to be in place, the internal
controls are reviewed on a regular basis.
The Group’s system of internal control is designed to provide the Directors with reasonable assurance that the Group’s
assets are safeguarded, that transactions are authorised and properly recorded, and that material errors and irregularities
are either prevented or would be detected within a timely period. However, no system of internal control can eliminate
the risk of failure to achieve business objectives or provide absolute assurance against material misstatement or loss.
The key elements of the internal control system in operation are:
•
The Board meets regularly with an agenda of matters reserved for their decision and has put in place an
organisational structure with clear lines of responsibility defined and with appropriate delegation of authority.
The Board receives periodic updates from both the Audit and Remuneration Committees.
15
OKYO Pharma Limited
Director’s report
•
The Management team is responsible for the identification and evaluation of significant risks and for the design,
implementation and monitoring of appropriate internal controls, including, but not limited to, financial and
computer systems, business operations, and compliance.
• Management regularly reports to the Board on the key risks inherent in the business and on the way in which
•
these risks are managed.
There are established procedures for planning, approving, and monitoring large expenditures, including capital
expenditures, as well as processes for monitoring the Group’s financial performance.
• A comprehensive forecasting process is completed four times a year, prior to each board meeting, which is
reviewed and approved by the Board. Detailed management accounts are produced on a monthly basis, with
all significant variances investigated promptly. The management accounts are reviewed and commented on a
monthly basis by the management team.
The Group maintains appropriate insurance cover, including in respect of actions taken against the Directors
because of their roles, as well as against material loss or claims against the Group. The insured values and
type of cover are comprehensively reviewed on an annual basis.
•
10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders
and other relevant stakeholders
Contact with major shareholders is principally maintained by the Chairman and CEO, and additionally the Non-Executive
Directors are available to discuss governance and other matters directly with major shareholders, both private and
institutional.
The Company uses its corporate website (www.okyopharma.com) to communicate with institutional shareholders and
private investors, and the website also contains the latest announcements, press releases, published financial
information, current projects and other information about the Company. The annual report which includes the financial
statements is a key communication document and is available on the Company’s website.
Whistleblowing
The company has formal arrangements in place to facilitate ‘whistle-blowing’ by employees. If a complaint is made, the
content is sent anonymously by email to the Company’s Compliance Officer, so that appropriate action can be taken.
Employment
The company endeavours to appoint employees with appropriate skills, knowledge and experience for the roles they
undertake and thereafter to develop, incentivise and retain staff. The Board recognises its legal responsibility to ensure
the well-being, safety and welfare of the company's employees and maintain a safe and healthy working environment for
them and our visitors. If an employee has a concern about unsafe conditions or tasks, they are encouraged to report
their concerns immediately to their manager.
Diversity Policy
The Group is fully committed to the elimination of unlawful and unfair discrimination and values the differences that a
diverse workforce brings to the organisation. The Group endeavours to not discriminate because of age, disability, gender
reassignment, marriage and civil partnership, pregnancy and maternity, race (which includes colour, nationality and
ethnic or national origins), religion or belief, sex or sexual orientation. The Group will undertake an annual review of its
policies and procedures to establish its position about compliance and best practice and monitor and promote a healthy
corporate culture.
Statement of directors’ responsibilities
The Directors are responsible for preparing the Directors’ 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. Under that law they are
required to prepare the financial statements in accordance with International Financial Reporting Standards as adopted
by the EU and applicable law.
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 of the Group and the financial performance and cash flows
of the Group for that year. In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
•
• make judgements and accounting estimates that are reasonable and prudent;
16
OKYO Pharma Limited
Director’s report
•
•
state whether applicable accounting standards have been followed, subject to any material departures;
disclosed and explained in the financial statements;
prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’s 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 (Guernsey) Law, 2008. 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.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company's website. Legislation in Guernsey governing the preparation and dissemination of the financial statements
may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual financial report
Each of the Directors, whose names and functions are listed on page 2 confirm that, to the best of their knowledge
and belief:
•
the financial statements are prepared in accordance with IFRS as adopted by the European Union and give a
true and fair view of the assets, liabilities, financial position and loss of the Company; and
the Annual Report and financial statements, including the Strategic Report, includes a fair review of the
development and performance of the business and the position of the Company, together with a description of
the principal risks and uncertainties that they face.
•
Directors indemnity
The Group’s Articles of Association provide, subject to the provisions of Companies (Guernsey) Law 2008, an indemnity
for Directors and officers of the Group in respect of liabilities they may incur in the discharge of their duties or in the
exercise of their powers, including any liabilities relating to the defence of any proceedings brought against them which
relate to anything done or omitted, or alleged to have been done or omitted, by them as officers or employees of the
Group.
Appropriate Directors and officer’s liability insurance cover is in place in respect of all Group Directors.
DISCLOSURES REQUIRED BY PUBLICLY TRADED COMPANIES UNDER RULE 7.2.6R OF THE UK LISTING
AUTHORITY’S DISCLOSURE GUIDANCE AND TRANSPARENCY RULES
The following disclosures are made pursuant to Rule 7.2.6.R of the UK Listing Authority’s Disclosure Guidance and
Transparency Rules (DTR). As at 31 March 2021:
a) Details of significant direct or indirect holdings of securities of the Company are set out in the Directors Report outlined
in this document. The Company is not aware of any agreements between shareholders which may result in restrictions
on the transfer of securities or on voting rights.
b) There are no persons who hold securities carrying special rights regarding control of the Company.
c) All ordinary shares carry one vote per share without restriction.
d) The Company’s rules about the appointment and replacement of Directors are contained in the Company’s constitution
and accord with the Companies Act 2006. Amendments to the Company’s constitution must be approved by the
Company’s shareholders by passing a special resolution.
e) The Company may exercise in any manner permitted by the Companies Act 2006 any power which a public company
limited by shares may exercise under the Companies Act 2006. The business of the Company is managed by or under
the direction of the Directors. The Directors may exercise all the powers of the Company except any powers that the
Companies Act 2006 or the constitution requires the Company to exercise.
f) Subject to any rights and restrictions attached to a class of shares and in compliance with the Companies Act 2006,
the Company may allot and issue unissued shares and grant options over unissued shares, on any terms, at any time
and for any consideration, as the Directors resolve. This power of the Company can only be exercised by the Directors.
The Company may reduce its share capital and buy-back shares in itself on any terms and at any time. However, the
Companies Act 2006 sets out certain procedures which must be followed in relation to reductions in share capital and
the buy-back of shares.
17
OKYO Pharma Limited
Director’s report
Assessment of the impact of COVID-19
The COVID-19 virus has swept the globe and has claimed many thousands of lives. It is clear that the pandemic has had
a far more severe impact on markets than previous virus outbreaks, with governments having taken strict measures to
contain the virus.
Despite the risks of a global recession with associated volatility in world stock markets, the Company believes that
healthcare as a defensive sector should fare better than other parts of the economy and it does not believe that the recent
outbreak of COVID-19 pandemic will have an adverse effect on the Company’ operations. Indeed, the Company has
raised substantial funds during the pandemic to enable it to continue its pre-clinical pipeline, which includes the use of
potential use of chemerin and chemerin analogues for prophylaxis against and treatment of symptoms associated with
COVID-19 .
Disclosure of information to the auditor
So far as the Directors are aware, there is no relevant audit information of which the Company’s auditor is unaware, and
they have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant
audit information and to establish that the Company’s auditors are aware of that information.
Auditor
Mazars LLP have indicated their willingness to continue in office as auditor for another year. In accordance with section
257 of the Companies (Guernsey) Law 2008, a resolution proposing that Mazars LLP be reappointed as auditors of the
Group will be put to the Annual General Meeting.
Future developments
The Strategic Report on pages 3 to 8 provides a summary of future developments of the Group.
Research and development activities
The research and development activities of the Group are described in Strategic Report on pages 3 to 8.
Post balance sheet events
Events after the year end are outlined in note 23 to the financial statements.
Financial instruments
The use of financial instruments is considered by the Board and the exposure of the Group to price, credit, liquidity and
cash flow risks are considered. Details of the risks and mitigation can be found in note 17 to the financial statements.
Greenhouse Gas Emissions
We are a company with a small number of employees. We have serviced offices and we currently outsource our research,
development, testing and manufacturing activities. As a result, we do not emit greenhouse gases from our own activities,
nor do we purchase electricity, heat or steam for our own use. (Scope 1 and scope 2 disclosures).
Accordingly, there are no greenhouse gas emissions to report from the Company’s operations, nor does it have
responsibility for any other emissions. Further, for the same reason, the Company considers that it is a ‘low energy user’
under the Streamlined Energy & Carbon Reporting regulations and therefore a disclosure on energy and carbon
emissions is not required.
Post balance sheet events
Events after the year end are outlined in note 23 to the financial statements.
18
OKYO Pharma Limited
Director’s report
By order of the Board
Willy Simon
Director
31 July 2021
Martello Court
Admiral Park
St. Peter Port
Guernsey
GY1 3HB
19
OKYO Pharma Limited
Directors’ Remuneration report
Letter from the Chair of the Remuneration Committee
Dear Shareholders,
On behalf of the Remuneration Committee, I am pleased to present our Directors’ Remuneration Report for the
year ended March 31, 2021 which will be subject to an advisory vote under a resolution to be proposed at the 2021
Annual General Meeting (“AGM”). Shareholders approved the Remuneration Policy at the 2019 AGM.
I hope that you will be supportive of our remuneration approach and will vote in favour of the Directors'
Remuneration Report.
Key activities and decisions in the year ended March 31 2021:
Since April 1, 2020, the Committee has undertaken the following key decisions and activities.
•
•
Following the appointment of Gabriele Cerrone as non-executive chairman of the company and Dr Gary
S. Jacob as Chief Executive Officer and director of the company, compensation levels were set and
confirmed.
The Committee approved a bonus to be paid to the Non-Executive Chairman. The bonus payment was
awarded on the basis of the co-invention of the use of Chemerin in the COVID-19 indication when he was
not a director or employee of the Company (now the subject of a patent application); work carried out in
procuring, backing and completing the refinancing the Company in 2020 and actions taken to make new
executive appointments and scientific advisory appointments to the Board with the result that the Company
now has a clear and accelerated path to the clinic.
The Committee acknowledged that these bonuses would not be paid out in cash but would be used to
fund the exercise of warrants that were issued in May 2021, upon conversion of convertible loan notes
held by Planwise and Panetta Partners (of which Gabriele Cerrone is the beneficial owner). Exercise of
these warrants would remove a significant proportion of debt from the capital structure of the Group which
would be advantageous for future fundraisings.
The Group has made progress during the financial year in the pre-clinical development on OK-101 and OK-201.
Yours faithfully,
Willy Simon
Chair of the Remuneration Committee
31 July, 2021
20
OKYO Pharma Limited
Directors’ Remuneration report
Single total figure of remuneration of each Director (Audited)
The Directors received the following remuneration for the years ended 31 March 2021 and 31 March 2020:
Base
Salary
Bonus
Share-
based
payment (6)
Other (7)
Year Ended
March 31, 2021
£’000
Executive
Gary Jacob (2)
Non - Executive
Gabriele
Cerrone (1)
Willy Simon
Kunwar
Shailubhai
Gregor MacRae
(4)
John Brancaccio
(3)
61
27
32
28
10
24
30
887
-
-
-
-
358
-
2
13
-
12
Total
182
917
385
2021
Total
449
914
36
41
12
36
Total fixed
renumeration
Total variable
renumeration
61
27
34
28
12
24
388
887
2
13
-
12
1,488
186
1,302
-
-
2
-
2
-
4
Year Ended
March 31, 2020
£’000
Executive
Willy Simon
Non - Executive
Kunwar
Shailubhai
Leopoldo
Zambeletti(5)
Gregor MacRae
(4)
Total
Base
Salary
Bonus
Share-
based
payment (3)
Other (4)
2020
Total
Total fixed
renumeration
Total variable
renumeration
32
31
27
6
96
-
-
-
-
-
3
24
5
-
32
-
-
-
-
-
35
55
32
6
128
32
31
27
6
96
3
24
5
-
32
(1) Gabriele Cerrone’s bonus awarded for £887kwas awarded on the basis of the co-invention of the use of
Chemerin in the COVID-19 indication when he was not a director or employee of the Company (now the
subject of a patent application); work carried out in procuring, backing and completing the refinancing the
Company in 2020 and actions taken to make new executive appointments and scientific advisory
appointments to the Board with the result that the Company now has a clear and accelerated path to the
clinic.
(2) Gary Jacob became an employee and Director of the Company on 7 January 2021 and has elected not
to take healthcare benefits
(3) John Brancaccio was appointed as Director on 10 June 2020
(4) Gregor Macrae was appointed as Director on 18 December 2019 and resigned on 10 June 2020
(5) Leopoldo Zambeletti resigned as Director on 18 December 2019
(6) Shares based payments represent the fair value of options that vested during the years ended March 31,
2021 and 2020
(7) Other benefits represent healthcare benefits and pension contributions.
No payments were made towards a pension plan for our executive directors, £2,220 was made for our salaried non-
executive director, who receives the same pension benefit as the UK based employees, namely a matching
contribution of 6% of salary, if a 3% minimum contribution is made.
21
OKYO Pharma Limited
Directors’ Remuneration report
Statement of Directors’ shareholding and share interests (Audited)
The table below details the total number of shares owned (including their beneficial interests), the total number of
share options held and the number of share options vested but not yet exercised as at March 31 2021:
Year ended March 31
2021
Executive
Gary Jacob
Non - Executive
Gabriele Cerrone
Kunwar Shailubhai
Willy Simon
John Brancaccio
Shares
Options – not yet
vested
Options – vested
not yet exercised
Total (Shares and
options)
-
40,000,000
-
40,000,000
350,762,726
-
307,100
-
-
8,250,000
1,000,000
450,000
-
8,250,000
1,000,000
-
350,762,726
16,500,000
2,307,100
450,000
Total
351,069,826
49,700,000
9,250,000
410,019,826
The interests of the Directors in the Company’s share options are as follows:
Director
Granted
Willy Simon
2,000,000
of
Date
grant
6 July 2018
Price per
share £
0.045
Kunwar
Shailubhai
16,500,000 6 July 2018
0.045
John
Brancaccio
450,000
20 August
2020
0.155
Gary Jacob
40,000,000 6
January
0.05
2021
Vesting Criteria
25 per cent. Will vest on
each
of
appointment.
anniversary
25 per cent. Will vest on
each
of
appointment.
anniversary
Vested as at
March 31, 2021
1,000,000
Expiry Date
6 July 2025
8,250,000
6 July 2025
25 per cent. Will vest on
each
of
appointment.
anniversary
25 per cent. Will vest on
each
of
appointment.
anniversary
-
-
19 August 2028
5 January 2031
Total Shareholder Return
The graph below shows the Company’s performance, measured by total shareholder return, of the Company’s
movement in share price compared to the FTSE All share pharmaceuticals and Biotechnology index for the year
ended March 31, 2020.
Total Shareholder Return
(Source: Investing.com)
22
OKYO Pharma Limited
Directors’ Remuneration report
200%
150%
100%
50%
0%
-50%
Pharma & Biotech sector
OKYO TSR
Payments to past Directors
In the period there were no payments to past Directors.
Payments for loss of office
No payments were made to Directors for loss of office in the period.
Relative Importance of spend on pay
The Committee considers the company’s research and development expenditure relative to salary expenditure for
all employees, to be the most appropriate metric for assessing overall spend on pay due to the nature and stage of
the company’s business. Dividend distribution and share buy-back comparators have not been included as the
company has no history of such transactions. The graph below illustrates the gross pay to all employees per year
as compared to research and development expenditure and illustrates the year-on-year change.
23
OKYO Pharma Limited
Directors’ Remuneration report
£000
2,500
2,000
1,500
1,000
500
0
£000
2,500
2,000
1,500
1,000
500
0
Research and Development
2021
2020
Research and Development
2021
2020
Labour costs
Labour costs
Employment conditions across the Group
The Committee is kept regularly updated on pay and conditions across the Group, although when setting the
Directors’ remuneration policy, the wider employee group is not formally consulted. In determining any adjustments
to the pay of the Executive Directors and the senior executive salaries, the Committee considers the increases to
pay levels across the broader employee population.
Consideration of shareholder views
The Committee considers shareholder feedback received in relation to the Annual General Meeting each year at
its first meeting following the Annual General Meeting. This feedback, as well as any additional feedback received
during other meetings with shareholders and representative bodies, is then considered when reviewing
remuneration policy. When any material changes are proposed by the Group to the remuneration policy, the
Committee will consult major shareholders.
Illustration of application of remuneration policy
The charts below set out the minimum (i.e. ‘fixed’) remuneration receivable by the Executive Director and the Non-
Executive Chairman as at the date of this Annual Report, as well as the potential remuneration for ‘on-target’ and
‘maximum’ performance, as a result of the remuneration paid in or awarded for the year ending March 31, 2021.
24
OKYO Pharma Limited
Directors’ Remuneration report
Chief Executive (£000s)
700
600
500
400
300
200
100
-
250
200
150
100
50
-
254
100%
317
20%
80%
380
33%
67%
Fixed
On target
Maximum
Fixed
Annual Bonus
Chairman (£000s)
120
120
120
100%
100%
100%
Fixed
On target
Maximum
Fixed
Annual Bonus
The scenarios set out in the above charts reflect or assume the following:
•
‘Fixed’ remuneration comprises:
base salary to be provided in 2021/22
o
o A base salary of £120,000 for the Chairman for the full financial year to March 2021 (although
such salary will be effective from 1 August 2020).
•
•
The ‘on-target’ remuneration assumes an annual bonus payment of 50% of the maximum opportunity.
The ‘maximum’ remuneration assumes maximum performance is achieved and therefore awards under
the annual bonus pay out at their maximum levels.
Executive remuneration is not directly linked to share price so this metric cannot be illustrated.
25
OKYO Pharma Limited
Directors’ Remuneration report
The following table sets out the Company’s performance objectives for the next 12 months to 31 March
2022:
Objective Weighting
Weighting
Work towards filing an IND in the third quarter of 2022 on OK-101 to treat DED
Continue to conduct preclinical studies and additional animal studies to further
evaluate both OK-101 to treat uveitis and allergic conjunctivitis, and OK-201 to treat
corneal neuropathic pain
Secure additional funding
60%
30%
10%
100%
Structure and role of Remuneration Committee
The Remuneration Committee of the Board comprises of Willy Simon and John Brancaccio. It is chaired by Willy
Simon, and is responsible for:
i.
ii.
iii.
The review of the performance of the executive Directors;
recommendations to the Board on matters relating to the remuneration and terms of service of the
executive Directors; and
recommendations to the Board on proposals for the granting of share options and other equity incentives
pursuant to any share option scheme or equity incentive scheme in operation from time to time.
In making their recommendations the Remuneration Committee will have due regard to the interests of the
Shareholders and the performance of the Company.
Directors' remuneration policy
The Company's policy is to maintain levels of remuneration sufficient to attract, motivate and retain senior
executives of the highest calibre who can deliver growth in shareholder value. Executive Directors’ remuneration
currently consists of basic salary, bonus and benefits. The Company will seek to strike an appropriate balance
between fixed and performance-related reward so that the total remuneration package is structured to align a
significant proportion to the achievement of performance targets, reinforcing a clear link between pay and
performance. The performance targets for staff, senior executives and the Executive Directors will be aligned to the
key drivers of the business strategy, thereby creating a strong alignment of interest between staff, Executive
Directors and shareholders.
The Remuneration Committee will continue to review the Company's remuneration policy and make amendments,
as and when necessary, to ensure it remains fit for purpose and continues to drive high levels of executive
performance and remains both affordable and competitive in the market.
The policy, as outlined below, was approved by shareholders at the 2019 AGM. Upon approval, the company will
continue to put forward the remuneration policy to be approved every three years, however the company will update
it when necessary and will be sent for approval before the three-year approval.
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OKYO Pharma Limited
Directors’ Remuneration report
Policy Table
Element of reward - Base Salary
Purpose and Link to
Strategy
To provide fixed remuneration to
■
■
help recruit and retain key individuals;
reflect the individual's experience, role and contribution within the Company.
Operation
The Remuneration Committee considers a number of factors when setting salaries,
including:
■
■
■
■
scope and complexity of the role
the skills and experience of the individual
salary levels for similar roles within the industry
pay elsewhere in the Company
Performance
conditions
Salaries are reviewed, but not necessarily increased, annually.
None.
Maximum opportunity Salary increases are normally made with reference to the average increase for the
wider Company. The Board retains discretion to make higher increases in certain
circumstances, for example, following an increase in the scope and/or responsibility
of the role or the development of the individual in the role or by benchmarking.
Element of reward- Other benefits
Purpose and Link to
Strategy
To provide a basic benefits package.
Operation
The Company provides Executive Directors with medical insurance for themselves and
their family.
Performance conditions None.
Maximum opportunity Maximum opportunity will be whatever it costs to provide the benefit.
27
OKYO Pharma Limited
Directors’ Remuneration report
Element of reward - Annual Bonus
Purpose and Link to
Strategy
To incentivise and reward the achievement of annual financial, operational and individual
objectives which are key to the delivery of the Company's short-term strategy.
Operation
• Executive Directors and staff are eligible to participate in a discretionary bonus
plan.
• The Remuneration Committee will determine on an annual basis the level of
deferral, if any, of the bonus payment into Company shares.
• Maximum bonus levels and the proportion payable for on target performance are
considered in the light of market bonus levels for similar roles among the
industry sector.
• Bonuses are not pensionable.
• The Remuneration Committee sets targets which require appropriate levels of
performance, considering internal and external expectations of performance.
• As soon as practicable after the year-end, the Remuneration Committee meets
to review performance against objectives and determines payout levels.
• From 2019 in terms of bonus targets a balanced scorecard approach will be
operated which focuses on a mixture of strategic, operational, financial and
non-financial metrics.
Performance conditions
• At least 50% of the award will be assessed against Company metrics including
operational, financial and non-financial performance. The remainder of the award
will be based on performance against individual objectives.
• A scale between 0% and 100% of the maximum award is paid dependent on the
level of performance.
Maximum opportunity The maximum potential bonus entitlement for Executive Directors under the plan will be
equal to 50% of the base salary.
Element of reward - Long Term Incentive Plan (LTIP)
Purpose and Link to
Strategy
•
•
To incentivise and reward the creation of long-term shareholder value.
To align the interests of the Executive Directors with those of shareholders.
Operation
•
Under the terms of the non-tax advantaged share option plan (the "Share Option Plan"),
the Remuneration Committee may issue options over shares up to 15% of the issued share
capital of the Company from time to time. Directors and employees are eligible for awards.
The exercise of options may be subject to the satisfaction of such performance
conditions, if any, as may be specified and subsequently varied and/or waived by the
Remuneration Committee.
The Remuneration Committee determines on an annual basis, and from time to time
as needed (i.e., new employee or promotion), the type of awards to be granted to
executives and other employees under the plan.
•
Performance conditions Vesting of the awards is dependent on financial, operational and/or share price measures,
as set by the Remuneration Committee, which are aligned with the long-term strategic
objectives of the Company. The relevant performance conditions will be set by the
Remuneration Committee on the award of each grant but will include a mixture of strategic,
operational, financial and non-financial metrics.
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OKYO Pharma Limited
Directors’ Remuneration report
Notes on Table
The Remuneration Committee may make minor amendments to the Policy set out above for regulatory, exchange
control, tax or administrative purposes or to take account of a change in legislation without obtaining shareholder
approval for that amendment. Any major changes will be put to a shareholder vote at the next AGM or an EGM.
The Policy was approved by shareholders at the 2019 AGM and, will remain in force until the AGM in 2022 with no
requirement to vote again on the Policy in the intervening years provided that no changes are proposed.
Policy on payment for loss of office
In the event that the employment of an Executive Director is terminated, any compensation payable will be
determined in accordance with the terms of the service contract between the Company and the employee, as well
as the rules of any incentive plans. Notice periods are set at up to a maximum of twelve months by either party.
The Company considers a variety of factors when considering leaving arrangements for an Executive Director,
including individual and business performance, the obligation for the Director to mitigate loss (for example by gaining
new employment) and other relevant circumstances (e.g. ill health).
If the Executive Director's employment is terminated by the Company, the Executive Director may receive a time
pro-rated bonus to the period worked subject to performance in that period, subject to the Remuneration
Committee's discretion.
The treatment of outstanding share awards is governed by the relevant share plan rules. The following table
summarises the leaver provisions of share plans under which Executive Directors may currently hold awards.
Leaving Event
Time period
Conditions
Injury, disability, ill-health,
redundancy
Option may be exercised within
3 months of leaving.
Exercise and time vesting provisions per the
option certificate.
Death
Option may be exercised by
personal representatives within
12 months of death.
Board can waive if satisfied that such waiver
is not rewarding failure.
Exercise and time vesting provisions per the
option certificate.
Board can waive if satisfied that such waiver
is not rewarding failure.
Resignation or any other
reason
not mentioned
above.
Lapse of option unless
If allowed to exercise;
Board exercises discretion to
allow exercise of option in which
case within 3 months of
leaving/notice.
Exercise and time vesting provisions per the
option certificate.
Board can waive if satisfied that such waiver
is not rewarding failure.
Annual report on approach to remuneration on recruitment
In determining remuneration for new appointments to the Board, the Board will consider all relevant factors
including, but not limited to, the calibre of the individual and their existing package, the external market and the
existing arrangements for the Company's current Executive Directors, with a view that any arrangements offered
are in the best interests of the Company and shareholders and without paying any more than is necessary.
Where the new appointment is replacing a previous Executive Director, salaries and total remuneration opportunity
may be higher or lower than the previous incumbent. If the appointee is expected to develop into the role, the Board
may decide to appoint the new Executive Director to the Board at a lower than typical salary. Larger increases
(above those of the wider company) may be awarded over time to move closer to the market level as their
experience develops.
29
OKYO Pharma Limited
Directors’ Remuneration report
Benefits and other elements of remuneration will normally be limited to those outlined in the remuneration policy
table above. However, additional benefits may be provided by the Company where the Board considers it
reasonable and necessary to do so.
It is expected that the structure and various pay elements would reflect those set out in the policy table above.
However, the Board recognises that, as an independent life sciences company, it is competing with global firms for
its talent. As a result, the Board considers it important that the recruitment policy has sufficient flexibility in order to
attract the calibre of individual that the Company requires to grow a successful business. The Company recognises
that in many cases, an external appointee may forfeit significant cash bonuses and/or share awards from a prior
employer. The Board believes that it needs the ability to compensate new hires for bonuses and/ or incentive awards
lost on joining the Company. The Board will use its discretion in settling any such compensation, which will be
decided on a case-by-case basis, provided that in no event shall such compensation exceed the value of
compensation forfeited by the external appointee, as confirmed by the appointee in a written agreement with the
Company.
30
OKYO Pharma Limited
Auditors report
Independent Auditor's Report to the members of OKYO Pharma Limited
Opinion
We have audited the financial statements of Okyo Pharma Limited (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 March 2021 which comprise the Consolidated Statement of Comprehensive Income; the
Consolidated and Company Statements of Financial Position; the Consolidated and Company Statements of Changes
in Equity; the Consolidated and Company Statements of Cash Flows and notes to the financial statements, including a
summary of significant accounting policies. The financial reporting framework that has been applied in their preparation
is applicable law and international accounting standards in conformity with the Companies (Guernsey) Law 2008 and, as
regards the parent company financial statements, as applied in accordance with the provisions of the Companies
(Guernsey) Law 2008 and, as regards the group financial statements, international financial reporting standards adopted
by the European Union.
In our opinion, the financial statements have been prepared in accordance with the requirements of the Companies
(Guernsey) Law 2008 and give a true and fair view of the state of the group’s and of the parent company’s affairs as at
31 March 2021 and of the group’s loss for the year then ended; and have been properly prepared in accordance with
international accounting standards in conformity with the requirements of the Companies (Guernsey) Law 2008 and, as
regards the group financial statements, international financial reporting standards adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the group and the parent company in accordance with
the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard, as applied to public interest 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 related to going concern
We draw attention to note 2 in the financial statements, which indicates that the Group and Parent Company are pre-
revenue and its business model requires significant ongoing expenditure on research and development. For the year
ended 31 March 2021, the Group incurred losses after taxation of £2,997,429. Although the net assets of the Group at
31 March 2021 are £3,854,176, with a cash position of £4,991,663, the forecast prepared by management indicate that
the current cash position will be sufficient to cover the general and administrative expenses for the foreseeable future,
leaving a very small cash availability by the end of 2022, by when further funds will be required in order to support the
ongoing researches. These conditions indicate that a material uncertainty exists that may cast significant doubt on the
Group’s and Parent Company’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
Our audit procedures to evaluate the directors’ assessment of the group’s and the parent company's ability to continue
to adopt the going concern basis of accounting included but were not limited to:
• Undertaking an initial assessment at the planning stage of the audit to identify events or conditions that may
cast significant doubt on the group’s and the parent company’s ability to continue as a going concern;
• Making enquiries of the directors to understand the period of assessment considered by them, the assumptions
they considered and the implication of those when assessing the group’s future financial performance;
• Evaluating the appropriateness of the directors’ key assumptions in their cash flow forecasts, as described in
Note 2, by reviewing supporting and contradictory evidence in relation to these key assumptions and assessing
the directors’ consideration of severe but plausible scenarios;
Testing the accuracy and functionality of the model used to prepare the directors’ forecasts;
•
• Assessing and evaluating key assumptions and mitigating actions put in place in response to COVID-19; and
• Evaluating the appropriateness of the directors’ disclosures in the financial statements relating to going concern.
•
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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
31
OKYO Pharma Limited
Auditors report
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.
We summarise below the key audit matters in forming our audit opinion above, together with an overview of the
principal audit procedures performed to address each matter and key observations arising from those procedures. The
matters set out below are in addition to the “Material uncertainty related to going concern” above which, by its nature, is
also a key audit matter.
These matters, together with our findings, were communicated to those charged with governance through our Audit
Completion Report.
Key Audit Matter
Valuation and accounting of options, warrants, and
convertible loan notes
How our scope addressed this matter
Our audit procedures over options, warrants, and
convertible loan notes included but were not restricted
to:
to
remunerate
The Group operates
share-based payments
and
arrangements
employees in the form of share options. Additionally,
warrants were granted as part of incentives attached
to the convertible loans notes. These warrants are
exercisable over a certain number of years, according
to the agreement.
directors
With regards to the convertible loan notes, IAS 32
to be
liability and equity components
requires
presented separately in the Statement of Financial
Position. As a result, particular attention is required
when reviewing the contractual obligations of the
notes in order to conclude as to their accounting as
debt or equity classified.
The nature of certain of the Group’s options, warrants
and convertible loan notes are complex requiring both
judgement and probability analysis to determine their
valuation and accounting.
• Obtaining management’s valuation of
options and warrants, evaluating the
appropriateness of management’s model
and reviewing for completeness and
accuracy of information used;
• Reviewing the mathematic integrity of the
options and warrants calculations;
• Reviewing of the reasonableness and
challenge of the management assumptions
used in the models
•
• Obtaining and reviewing the option and
warrant agreements for all current year
issuances and challenged the
determination of whether or not they were
to be accounted for under IFRS 2 Share-
Base Payments;
;
•
• Examining the contractual obligations of the
convertible loan note to ensure that
management’s accounting for the
aforementioned notes under IAS 32
Financial Instruments as debt classified
was appropriate;
• Reviewing the calculation for convertible
debt instruments and ensured the loan note
principal and accrued interest are recorded
appropriately on the financial statements;
and
• Reviewing the disclosure in the financial
statements to ensure disclosure is sufficient
and appropriate.
In performing the work above where appropriate we
used internal valuation and accounting technical
experts.
Our observations
The audit team have not identified any material issue
to be reported.
32
OKYO Pharma Limited
Auditors report
Our application of materiality and an overview of the scope of our audit
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and on the financial statements as a whole. Based on our professional
judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
Performance materiality
Reporting threshold
Group: £151,000
Parent: £146,000
Materiality is based on 5% of the Group’s and the Parent
Company’s losses before tax.
We believe that the benchmark of losses before tax is most
appropriate for both Group and Parent Company as the users of
the accounts are likely to be most concerned with the annual and
accumulated losses of the Group and Parent Company and the
Group’s and Parent Company’s ability to continue as a going
concern. Losses are also representative of
the Group’s
its
investment
objectives. Having considered factors such as the Group’s LSE
listing, we determined materiality at 5% of Group and Parent
Company’s losses before tax to be appropriate.
Performance materiality is set to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
into research and development
to deliver
Performance materiality was set at £106,000 (£103,000 for the
parent company), being 70% of overall materiality.
We agreed with the directors that we would report misstatements
identified during our audit above £5,000 (£4,000 for the parent
company) as well as misstatements below that amount that, in
our view, warranted reporting for qualitative reasons.
As part of designing our audit, we assessed the risk of material misstatement in the financial statements, whether due to
fraud or error, and then designed and performed audit procedures responsive to those risks. In particular, we looked at
where the directors made subjective judgements such as making assumptions on significant accounting estimates.
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. We used the outputs of a risk assessment, our understanding of the group and the
parent company, its environment, controls and critical business processes, to consider qualitative factors in order to
ensure that we obtained sufficient coverage across all financial statement line items.
Our group audit scope included an audit of the group and parent financial statements of Okyo Pharma Limited. Based
on our risk assessment, only the parent company within the group was subject to full scope audit which was performed
by the group audit team. For the group’s subsidiaries review procedures were performed by the Group audit team as
deemed necessary based on Group materiality.
At the parent level we also tested the consolidation process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material misstatement of the aggregated financial information.
Other information
The other information comprises the information included in the annual report other than the financial statements and
our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
33
OKYO Pharma Limited
Auditors report
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 course of 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
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 those reports have been
prepared in accordance with applicable legal requirements;
the information about internal control and risk management systems in relation to financial reporting processes
and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Guidance
and Transparency Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is consistent
with the financial statements and has been prepared in accordance with applicable legal requirements; and
information about the parent company’s corporate governance code and practices and about its administrative,
management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA
rules.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the 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; or
the information about internal control and risk management systems in relation to financial reporting processes
and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules
We have nothing to report in respect of the following matters in relation to which the Companies (Guernsey) Law 2008
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 and the part of the directors’ remuneration report to be audited 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; or
•
a corporate governance statement has not been prepared by the parent company
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement set out on pages 18 and 19, 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 the parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the 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.
34
OKYO Pharma Limited
Auditors report
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Based on our understanding of the group and the parent company and its industry, we identified that the principal risks
of non-compliance with laws and regulations related to the anti-bribery, corruption and fraud, money laundering, and we
considered the extent to which non-compliance might have a material effect on the financial statements.
In identifying and assessing risks of material misstatement in respect to irregularities including non-compliance with laws
and regulations, our procedures included but were not limited to:
• At the planning stage of our audit, gaining an understanding of the legal and regulatory framework applicable
to the group and parent company, the structure of the group, the industry in which they operate and
considered the risk of acts by the group and the parent company which were contrary to the applicable laws
and regulations;
• Discussing with the directors and management the policies and procedures in place regarding compliance
with laws and regulations;
• Discussing amongst the engagement team the identified laws and regulations, and remaining alert to any
indications of non-compliance; and
• During the audit, focusing on areas of laws and regulations that could reasonably be expected to have a
material effect on the financial statements from our general commercial and sector experience and through
discussions with the directors (as required by auditing standards), from inspection of the company’s and
group’s regulatory and legal correspondence and review of minutes of directors’ meetings in the year. We also
considered those other laws and regulations that have a direct impact on the preparation of financial
statements.
Our procedures in relation to fraud included but were not limited to:
• Making enquiries of the directors and management on whether they had knowledge of any actual, suspected
or alleged fraud;
• Gaining an understanding of the internal controls established to mitigate risks related to fraud;
• Discussing amongst the engagement team the risks of fraud such as opportunities for fraudulent manipulation
of financial statements, and determined that the principal risks were related to posting manual journal entries
to manipulate financial performance, management bias through judgements and assumptions in significant
accounting estimates; and
• Addressing the risks of fraud through management override of controls by performing journal entry testing.
The primary responsibility for the prevention and detection of irregularities including fraud rests with both those charged
with governance and management. As with any audit, there remained a risk of non-detection of irregularities, as these
may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
As a result of our procedures, we did not identify any key audit matters relating to irregularities. The risks of material
misstatement that had the greatest effect on our audit, including fraud, are discussed under “Key audit matters” within
this report.
further description of our responsibilities
A
www.frc.org.uk/auditorsresponsibilities.
is available on
the Financial Reporting Council’s website at
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the directors on 22 June 2020 to audit the
financial statements for the year ending 31 March 2021 and subsequent financial periods. The period of total
uninterrupted engagement is 5 years, covering the year ending 31 March 2021.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company
and we remain independent of the group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of the audit report
This report is made solely to the parent company’s members as a body in accordance with the Companies (Guernsey)
Law 2008. Our audit work has been undertaken so that we might state to the parent company’s members those matters
we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the parent company and the parent company’s members
as a body for our audit work, for this report, or for the opinions we have formed.
35
OKYO Pharma Limited
Auditors report
Robert Neate (Senior Statutory Auditor) for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
Tower Bridge House
St Katharine’s Way
London
E1W 1DD
31 July 2021
36
OKYO Pharma Limited
Consolidated statement of comprehensive income
for the year ended 31 March 2021
Notes
Year ended
31 March 2021
£
Year ended
31 March 2020
£
-
-
4
9
9
18
8
(132,860)
(1,987,367))
(886,909)
───────
(3,007,136)
(858)
-
(8,539)
───────
(3,016,533)
19,104
───────
(2,997,429)
3,100
───────
(2,994,329)
═══════
(0.00)
═══════
(407,478)
(799,503)
-
───────
(1,206,981)
(911)
37,850
(104,342)
───────
(1,274,384)
60,000
───────
(1,214,384)
3,639
───────
(1,210,745)
═══════
(0.00)
═══════
Continuing operations
Income
Operating expenses
Research and development
Operating expenses
Chairman’s bonus
Total operating loss
Finance expense
Finance income
Impairment of loan
Loss before income tax
Taxation
Loss for the year
Other comprehensive income - foreign currency
translation
Total comprehensive loss for the period
Basic and diluted loss per share
19
The notes on pages 44 to 64 form an integral part of these financial statements.
The Directors consider that all results derive from continuing activities.
37
OKYO Pharma Limited
Consolidated statement of financial position
As at 31 March 2021
Notes
At
31 March 2021
£
At
31 March 2020
£
Property, plant, and equipment
Right of use asset
Total non-current assets
Cash and cash equivalents
Other receivables
Related party receivable
Taxation receivable
Total current assets
Total assets
Equity
Share capital
Share premium
CLN reserve
Share options reserve
Warrants reserve
Foreign currency translation reserve
Retained deficit
Shareholders’ equity
Lease liability non-current
Total non-current liabilities
Trade and other payables
Related party payable
Lease Liability current
Total current liabilities
Total current and non-current liabilities
Total equity and liabilities
10
20
11
18
8
13
13
16
15
15
20
12
18
20
4,389
71,425
───────
75,814
───────
4,991,663
31,424
20,044
19,072
───────
5,062,203
───────
5,138,017
═══════
-
67,148,029
6,474,832
462,428
2,347,236
5,844
(72,584,193)
───────
3,854,176
───────
46,815
───────
46,815
1,212,284
-
24,742
───────
1,237,026
───────
1,283,841
───────
5,138,017
═══════
512
24,278
───────
24,790
───────
189,941
191,120
17,092
60,000
───────
458,153
───────
482,943
═══════
-
67,518,700
68,233
1,721,625
2,744
(69,424,317)
───────
(113,015)
───────
21,454
───────
21,454
535,000
35,398
4,106
───────
574,504
───────
595,958
───────
482,943
═══════
The notes on pages 44 to 64 form an integral part of these financial statements
These financial statements were approved by the board of Directors on 31 July 2021 and were signed on their behalf by:
Willy Simon
Director
38
OKYO Pharma Limited
Company statement of financial position
for the year ended 31 March 2021
Notes
At
31 March 2021
£
At
31 March 2020
£
Property, plant and equipment
Investment in subsidiary
Total non-current assets
Cash and cash equivalents
Intercompany receivable
Other receivables
Related party receivable
Taxation receivable
Total current assets
Total assets
Equity
Share capital
Share premium
CLN Reserve
Share options reserves
Warrants reserve
Retained deficit
Shareholders’ equity
Current Liabilities
Trade and other payables
Related party payable
Total liabilities
Total equity and liabilities
10
14
14
11
18
8
13
13
16
15
15
12
18
1,894
-
───────
1,894
───────
4,837,723
91,552
25,990
20,044
19,072
───────
4,994,381
───────
4,996,275
═══════
-
67,148,029
6,474,832
462,428
2,347,236
(72,608,918)
───────
3,823,607
───────
1,172,668
───────
1,172,668
───────
4,996,275
═══════
512
-
───────
512
───────
162,277
-
190,784
17,092
60,000
───────
430,153
───────
430,665
═══════
-
67,518,700
68,233
1,721,625
(69,430,027)
───────
(121,469)
───────
516,736
35,398
───────
552,134
───────
430,665
═══════
The Company reported a loss for the financial year ended 31 March 2021 of £3,016,444 (2020: £1,371,923).
These financial statements were approved by the board of Directors on 31 July 2021 and were signed on their behalf by:
Willy Simon
Director
39
OKYO Pharma Limited
Consolidated statement of changes in equity
for the year ended 31 March 2021
Balance at 1 April 2020
Total comprehensive loss for the period
Loss for the period
Exchange differences on translating foreign operations
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Shares issued
CLN Issued
CLN Interest
Options charge
Options exercised
Options forfeiture
Warrant’s charge
Balance at 31 March 2021
Balance at 1 April 2019
Total comprehensive loss for the period
Loss for the period
Exchange differences on translating foreign operations
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Shares issued
Options charge
Warrant’s charge
Balance at 31 March 2020
Notes
Share
premium
£
67,518,700
13
16
16
15
15
15
15
-
-
181,346
-
-
-
11,250
-
(563,267)
───────
67,148,029
═══════
68,403,220
-
-
CLN
Reserve
£
Share options
reserve
£
Warrants
reserve
£
Translation
reserve
£
Retained
deficit
£
Total
shareholders’
equity
£
-
-
-
68,233
1,721,625
2,744
(69,424,317)
(113,015)
-
-
-
-
-
3,100
(2,997,429)
-
(2,997,429)
3,100
-
6,311,287
163,545
-
-
-
-
───────
6,474,832
═══════
-
-
-
399,460
(1,098)
(4,167)
-
───────
462,428
═══════
-
-
-
-
-
-
625,611
───────
2,347,236
═══════
-
-
-
-
-
-
-
───────
5,844
═══════
-
-
(163,545)
-
1,098
-
-
────────
(72,584,193)
════════
181,346
6,311,287
0
399,460
11,250
(4,167)
62,344
───────
3,854,176
═══════
-
-
-
38,744
24,281
(895)
(68,209,933)
255,417
-
-
-
-
-
3,639
(1,214,384)
-
(1,214,384)
3,639
13
15
15
779,126
-
(1,663,646)
───────
67,518,700
═══════
-
-
───────
-
═══════
-
29,489
-
───────
68,233
═══════
-
-
1,697,344
───────
1,721,625
═══════
-
-
-
───────
2,744
═══════
-
-
-
────────
(69,424,317)
════════
779,126
29,489
33,698
───────
(113,015)
═══════
40
OKYO Pharma Limited
Company statement of changes in equity
for the year ended 31 March 2021
Balance at 1 April 2020
Total comprehensive loss for the period
Loss for the period
Shares issued
CLN Issue
CLN Interest
Options charge
Options exercised
Options forfeiture
Warrants charge
Balance at 31 March 2021
Balance at 1 April 2019
Total comprehensive loss for the period
Loss for the period
Shares issued
Options charge
Warrants charge
Balance at 31 March 2020
Notes
Share
premium
£
67,518,700
-
CLN
Reserve
£
-
-
Share
options
reserve
£
Share
warrants
reserve
£
Retained
deficit
£
Total
shareholders’
equity
£
68,233
1,721,625
(69,430,027)
(121,469)
-
-
(3,016,444)
(3,016,444)
13
16
16
15
15
15
15
181,346
-
-
-
11,250
-
(563,267)
───────
67,148,029
═══════
68,403,220
-
-
6,311,287
163,545
-
-
-
-
───────
6,474,832
═══════
-
-
-
399,460
(1,098)
(4,167)
-
───────
462,428
═══════
-
-
(163,545)
-
1,098
-
-
-
-
-
-
625,611
-
─────── ────────
(72,608,918)
═══════ ════════
2,347,236
181,346
6,311,287
0
399,460
11,250
(4,167)
62,344
───────
3,823,607
═══════
-
-
38,744
24,281
(68,058,104)
408,141
-
-
(1,371,923)
(1,371,923)
-
-
1,697,344
-
-
-
─────── ────────
(69,430,027)
═══════ ════════
1,721,625
779,126
29,489
33,698
───────
(121,469)
═══════
13
15
15
779,126
-
(1,663,646)
───────
67,518,700
═══════
-
-
-
───────
-
═══════
-
29,489
-
───────
68,233
═══════
41
OKYO Pharma Limited
Consolidated statement of cash flows
for the year ended 31 March 2021
Cash flows from operating activities
Loss for the year before taxation
Adjusted for non-cash and non-operating items:
Share options charge
Warrants charge
Forfeiture of options
CLN issued in lieu of fees
Depreciation of property, plant, and equipment
Amortisation of right-of-use asset
Loss on disposal of right of use asset
Impairment on loan to West African Minerals Ltd
Loss on foreign exchange
Net (increase) in related party receivables
Net (decrease)/ increase in related party payables
Net decrease/ (increase) in other receivables
Net increase in trade and other payables
Cash used in operating activities
Cash inflow from taxation
Net Cash From Operating Activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Loan to West African Minerals Ltd
Cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Proceeds from issuance of convertible loan notes
Proceeds from options exercised
Repayment of leasing liabilities
Interest on leasing liabilities
Cash generated from financing activities
Notes
Year ended 31
March 2021
£
Year ended 31
March 2020
(restated)*
£
(3,016,533)
(1,274,384)
15
15
16
10
20
20
18
16
15
399,460
62,345
(4,167)
434,183
1,154
8,867
(592)
8,539
3,100
(2,952)
(35,398)
159,696
677,283
───────
(1,305,015)
29,489
33,698
-
-
335
4,367
-
104,342
10,944
(17,093)
29,925
(96,101)
213,310
───────
(961,168)
60,032
-
(1,244,983)
(961,168)
(5,031)
(8,539)
───────
(13,570)
181,346
5,877,104
11,250
(10,283)
858
───────
6,060,275
-
(104,342)
───────
(104,342)
779,126
-
-
(4,828)
-
───────
774,298
Increase/(decrease) in cash and cash equivalents
4,801,722
(291,212)
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
189,941
───────
4,991,663
═══════
481,153
───────
189,941
═══════
•
The prior year has been restated to show issuance and impairment of the loan to West African Minerals Ltd, the
net impact of which is nil.
42
OKYO Pharma Limited
Company statement of cash flows
for the year ended 31 March 2021
Cash flows from operating activities
Loss for the year before taxation
Adjusted for non-cash and non-operating items:
Share options charge
Warrants charge
Forfeiture of options
CLN issued in lieu of fees
Impairment on loan to West African Minerals Ltd
Depreciation of property, plant, and equipment
Loss on foreign exchange
Net (increase)/decrease in intercompany receivables
Net (increase) in related party receivables
Net (decrease)/ increase in related party payables
Net decrease in other receivables
Net increase in trade and other payables
Cash used in operating activities
Cash inflow from taxation
Net Cash from Operating Activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Loan to West African Minerals Ltd
Cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Proceeds from issuance of convertible loan notes
Proceeds from options exercised
Cash generated from financing activities
Notes
Year ended 31 March
2021
£
Year ended 31 March
2020 (restated)*
£
(3,035,548)
(1,431,923)
15
15
16
10
18
16
15
399,460
62,345
(4,167)
434,183
8,539
1,117
-
(91,552)
(2,952)
(35,398)
164,795
655,930
───────
(1,443,248)
60,032
29,489
33,698
-
-
104,342
335
17,387
128,102
(17,092)
29,925
(96,363)
210,475
───────
(991,625)
-
(1,383,216)
(991,625)
(2,499)
(8,539)
───────
(11,038)
181,346
5,877,104
11,250
───────
6,069,700
-
(104,342)
───────
(104,432)
779,126
-
-
───────
779,126
Increase/(decrease) in cash and cash equivalents
4,675,446
(316,841)
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
162,277
───────
4,837,723
═══════
479,118
───────
162,277
═══════
* The prior year has been restated to show issuance and impairment of the loan to West African Minerals Ltd, the
net impact of which is nil.
43
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
1. Reporting Entity
OKYO Pharma Limited (the “Company” or “OKYO”) is a company domiciled in Guernsey and listed on the standard
market of the London Stock Exchange (LON: OKYO).
The Company is developing next-generation therapeutics to improve the lives of patients with inflammatory eye diseases
and chronic pain. Our goal is to develop first in class drug candidates that prevent the disease instead of controlling it,
and we achieve this through our collaboration with pioneer scientists in the field.
The ultimate parent of the group is Planwise Group Limited, incorporated in the British Virgin Islands.
2. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.
These policies have been applied consistently to all the years presented unless otherwise stated.
Basis of preparation
The consolidated financial statements of the Group and Company have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC interpretations and the Companies
(Guernsey) Law 2008 as applicable to companies reporting under IFRS. These accounts have been prepared under the
historical cost convention, except for share based payments and other financial instruments, which are initially recorded
at fair value.
Basis of measurement
Functional and Presentation Currency
The financial statements of the Group and Company are presented in Pound Sterling (£) which is the Parent Company’s
functional currency. All financial information presented in Pound Sterling has been rounded to the nearest pound.
In preparing these financial statements, the significant judgements made by management in applying the Group and
Company’s accounting policies and the key accounting estimates are accruals and the non-recognition of a deferred tax
asset. The deferred tax asset has not been recognised as the Directors do not deem it probable that there will be sufficient
taxable temporary differences against which the deferred tax asset will be uitlised in future, as it is not anticipated that
the company will make profits for the foreseeable future
Going Concern
The Group and Company incurred losses during the year and has net assets at the year end.
As discussed in the Strategic Report, the Group and Company is in the early stages of developing its business focusing
on drug candidates for the treatment of dry-eye, uveitis, ocular and chronic pain. The Directors expect the Group and
Company to incur further losses and to require significant capital expenditure in continuing towards the clinical stage for
these candidates. The Group and Company has successfully secured additional investment funds to date.
The Directors have prepared cash flow projections that include the costs associated with the continued clinical trials and
additional investment to fund that operation. On the basis of those projections, the directors conclude that the company
will be able to meet its liabilities as they fall due a period beyond the next 12 months from the date when these financial
statements are issued and accordingly the Directors have prepared the financial statements on a going concern basis.
Until and unless the Group and Company secures sufficient investment to fund their clinical pipeline, there is a material
uncertainty about the Group and Company’s ability to continue as a going concern after December 20222, and therefore
about the applicability of the going concern basis of preparation. The financial statements do not include the adjustments
that would be required if the going concern basis of preparation was considered inappropriate.
New and Revised Standards
Standards in effect in 2020
An amendment to IFRS 3 ‘Definition of a business’ has come into effect from January 1, 2020. The Company has applied
the new definition to any relevant transactions and the impact to the financial statements is immaterial.
44
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
IFRS in issue but not applied in the current financial statements
The directors do not expect that the adoption of new IFRS Standards, Interpretations and Amendments that have been
issued but are not yet effective will have a material impact on the financial statements of the Group in future periods.
Several IFRS and IFRIC interpretations are also currently in issue which are not relevant for the Group’s activities and
which have not therefore been adopted in preparing these financial statements.
Basis of consolidation
Subsidiary undertakings are all entities over which the Group exercises control. The Group has control when it can
demonstrate all of the following: (a) power over the investee; (b) exposure, or rights, to variable returns from its
involvement with the investee; and (c) the ability to use its power over the investee to affect the amount of the investor’s
return.
The existence and effect of both current voting rights and potential voting rights that are currently exercisable or
convertible are considered when assessing whether control of an entity is exercised. Subsidiaries are consolidated from
the date at which the Group obtains control and are de-consolidated from the date at which control ceases.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated
upon consolidation. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board. The Board
allocates resources to and assess the performance of the segments. The Board considers there to be only one operating
segment being the research and development of biotechnological and pharmaceutical products.
Taxation
The tax credit for the year represents the total of current taxation and deferred taxation. The credit in respect of current
taxation is based on the estimated taxable loss for the year. Taxable profit or loss for the year is based on the profit or
loss as shown in the statement of comprehensive income, as adjusted for items of income or expenditure which are not
deductible or chargeable for tax purposes. The current tax asset for the year is calculated using tax rates which have
either been enacted or substantively enacted at the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined
using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and expected to
apply when the related deferred tax is realised, or the deferred liability is settled. Deferred tax assets are recognised to
the extent that it is probable that the future taxable profit will be available against which the temporary differences can
be utilised.
Research and Development tax credits are provided for in the year that the costs are incurred. These are estimated
based on eligible research and development expenditure. Any difference rebated are recognized in the following year,
when the cash is received from the UK tax authorities.
Foreign currency translation
Foreign currency transactions are translated using the rate of exchange applicable at the date of the transaction. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the re-translation at the year end
of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
On consolidation, the assets and liabilities of foreign subsidiaries are translated into Pound Sterling at the rate of
exchange prevailing at the reporting date and their statements of comprehensive income are translated at exchange
rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are
recognised in other comprehensive income. On disposal of a foreign subsidiary, the component of other comprehensive
income relating to that particular foreign subsidiary is recognised in profit or loss.
License fees
Payments related to the acquisition of rights to a product or technology are capitalised as intangible assets if it is probable
that future economic benefits from the asset will flow to the entity and the cost of the asset can be reliably measured.
Payments made which provide the right to perform research are carefully evaluated to determine whether such payments
are to fund research or acquire an asset. Licence fees expenses are recognised as incurred.
45
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
Research and development
All on-going research and development expenditure is currently expensed in the period in which it is incurred. Due to the
regulatory environment inherent in the development of the Group’s products, the criteria for development costs to be
recognised as an asset, as set out in IAS 38 ‘Intangible Assets’, are not met until a product has been granted regulatory
approval and it is probable that future economic benefit will flow to the Group. The Group currently has no qualifying
expenditure.
Financial instruments
The Group classifies a financial instrument, or its component parts, as a financial liability, a financial asset or an
equity instrument in accordance with the substance of the contractual arrangement and the definitions of a
financial liability, a financial asset and an equity instrument.
The Group evaluates the terms of the financial instrument to determine whether it contains an asset, a liability or
an equity component. Such components shall be classified separately as financial assets, financial liabilities or
equity instruments.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
(a) Financial assets, initial recognition and measurement and subsequent measurement
The initial recognition and measurement of financial assets depends on their classification. Financial assets such as
receivables and deposits are subsequently measured at amortised cost using the effective interest method, less loss
allowance.
The Group does not hold any financial assets at fair value through profit or loss or fair value through other
comprehensive income.
(b) Financial liabilities, initial recognition and measurement and subsequent measurement
The initial recognition and measurement of financial liabilities depends on their classification. All financial liabilities are
subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange
gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
The Group’s financial liabilities include trade and other payables.
Impairment
Impairment of financial assets measured at amortised cost
At each reporting date the Group recognises a loss allowance for expected credit losses on financial assets measured
at amortised cost.
In establishing the appropriate amount of loss allowance to be recognised, the Group applies either the general approach
or the simplified approach, depending on the nature of the underlying group of financial assets.
General approach
The general approach is applied to the impairment assessment of refundable lease deposits and other refundable lease
contributions, restricted cash and cash and cash equivalents.
Under the general approach the Group recognises a loss allowance for a financial asset at an amount equal to the 12-
month expected credit losses, unless the credit risk on the financial asset has increased significantly since initial
recognition, in which case a loss allowance is recognised at an amount equal to the lifetime expected credit losses.
Simplified approach
The simplified approach is applied to the impairment assessment of trade receivables.
Under the simplified approach the Group always recognises a loss allowance for a financial asset at an amount equal to
the lifetime expected credit losses.
46
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
Impairment of non financial assets
i) Non-financial assets are tested for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
ii) Non-financial assets are impaired when its carrying amount exceed its recoverable amount. The
recoverable amount is measured as the higher of fair value less cost of disposal and value in use. The
value in use is calculated as being net projected cash flows based on financial forecasts discounted
back to present value.
Investments
Investments are held as non-current assets and comprise investments in subsidiary undertakings and are stated at cost
less provision for any impairment.
Share capital
Ordinary shares of the Company are classified as equity.
Property, plant and equipment
(i)
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment
losses. Costs include expenditures that are directly attributable to the acquisition of the asset. Purchased software that
is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and equipment, and are recognised in profit or loss.
(ii)
Depreciation
Depreciation is calculated on the depreciable amount, which is the cost of an asset, less its residual value.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful life of each part of an item
of property, plant and equipment.
The estimated useful lives for the current period and the comparative period are as follows.
Fixtures and fittings 5 years
IT and equipment
3 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date. Depreciation is allocated to
the operating expenses line of the statement of comprehensive income.
Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
•
•
Leases of low value assets; and
Leases with a duration of 12 months or less.
The Group has leases for its offices. Each lease is reflected on the balance sheet as a right-of-use asset and a lease
liability. The Group does not have any short-term leases or leases of low value assets. Variable lease payments which
do not depend on an index or a rate (such as lease payments based on a percentage of Group sales) are excluded from
the initial measurement of the lease liability and asset. The Group classifies its right-of-use assets in a consistent manner
to its property, plant and equipment (see Note xx).
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability in its consolidated
statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle
47
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement
date (net of any incentives received).
The Group depreciates the right-of-use asset on a straight-line basis from the lease commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses
the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the Group’s incremental borrowing rate because as the lease contracts are
negotiated with third parties it is not possible to determine the interest rate that is implicit in the lease. The
incremental borrowing rate is the estimated rate that the Group would have to pay to borrow the same amount over
a similar term, and with similar security to obtain an asset of equivalent value. This rate is adjusted should the
lessee entity have a different risk profile to that of the Group.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in
substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual
value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced by lease payments that are allocated between
repayments of principal and finance costs. The finance cost is the amount that produces a constant periodic rate
of interest on the remaining balance of the lease liability.
Fair Value Measurement
Management have assessed the categorisation of the fair value measurements using the IFRS 13 fair value hierarchy.
Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the
fair value measurement of the relevant asset as follows;
Level 1 - valued using quoted prices in active markets for identical assets;
Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within
Level 1;
Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.
Share based payments
The calculation of the fair value of equity-settled share based awards and the resulting charge to the statement of
comprehensive income requires assumptions to be made regarding future events and market conditions. These
assumptions include the future volatility of the Company's share price. These assumptions are then applied to a
recognised valuation model in order to calculate the fair value of the awards.
Where employees, Directors or advisers are rewarded using share based payments, the fair value of the employees',
Directors' or advisers' services are determined by reference to the fair value of the share options/warrants awarded. Their
value is appraised at the date of grant and excludes the impact of any nonmarket vesting conditions (for example,
profitability and sales growth targets). Warrants issued in association with the issue of Convertible Loan Notes or private
placements are also considered as share based payments and a payment charge is calculated for these too.
In accordance with IFRS 2, a charge is made to the statement of comprehensive income for all share-based payments
including share options based upon the fair value of the instrument used. A corresponding credit is made to a share
based payment reserve - options, in the case of options awarded to employees, Directors, advisers and other consultants.
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to vest. Non market vesting conditions are included in
assumptions about the number of options that are expected to become exercisable.
Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs
from previous estimates. No adjustment is made to the expense or share issue cost recognised in prior periods if fewer
share options ultimately are exercised than originally estimated.
Upon exercise of share options, the proceeds received are allocated to share capital with any excess being recorded as
share premium.
Where share options are cancelled, this is treated as an acceleration of the vesting period of the options. The amount
that otherwise would have been recognised for services received over the remainder of the vesting period is recognised
immediately within the Statement of comprehensive income.
48
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
All goods and services received in exchange for the grant of any share based payment are measured at their fair value.
Warrants
Warrants are issued by the Group in return for services and as part of a financing transaction.
Warrants issued in return for services.
Warrants issued in return for services fall within scope of IFRS 2. The financial liability component is measured at fair
value and charged to the Consolidated Statement of Income. There is no remeasurement of fair value.
Warrants issued as part of a financing transaction.
Warrants issued as part of a financing transaction fall outside the scope of IFRS 2. These are classified as equity
instruments because a fixed amount of cash is exchanged for a fixed amount of equity. The fair value is recognised within
equity and is not remeasured.
Classification of these instruments is governed by the so-called ‘fixed’ test for non-derivatives, and the ‘fixed for fixed’
test for derivatives. Under the fixed test, a non-derivative contract will qualify for equity classification only where there is
no contractual obligation for the issuer to deliver a variable number of its own equity instruments. Under the fixed for fixed
test, a derivative will qualify for equity classification only where it will be settled by the issuer exchanging a fixed amount
of cash or another financial asset for a fixed number of its own equity instruments.
Warrants issued by the Group are classified as equity instruments because a fixed amount of cash is exchanged for a
fixed amount of equity of the Group. No other features exist that would result in financial liability classification.
Equity is measured at the residual between the subscription price for the entire instrument and the liability component
and is not remeasured.
Convertible loan notes
Where there is no option to repay in cash or the Company has the choice of settlement, and the interest rate is fixed
The Group considers these to be convertible equity instruments and records the principal of the loan note as an equity
in a Convertible loan note reserve. The accrued interest on the principal amount, for which there is no obligation to settle
in cash, is also recorded in the Convertible loan note reserve. Upon redemption of the instrument and the issue of share
capital, the amount is reclassified from the convertible loan note reserve to share capital and share premium.
Where the above conditions are not met
The Group considers these to be convertible debt instruments and records the principal of the loan note as a debt liability
in the liabilities section of the statement of financial position. The accrued interest on the principal amount is recorded in
the income statement and as an increase in the debt liability. Upon redemption of the instrument and the issue of share
capital, the amount is reclassified from the debt liability to share capital and share premium.
Under IAS 32 the liability and equity components of convertible loan notes must be presented separately on the statement
of financial position. The Group has examined the terms of each issue of convertible loan notes and determined their
accounting treatment accordingly.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial information in accordance with generally accepted accounting practice, in the case of the
Group being International Financial Reporting Standards as adopted by the European Union, requires the directors to
make estimates and judgements that affect the reported amount of assets, liabilities, income and expenditure and the
disclosures made in the financial statements. Such estimates and judgements must be continually evaluated based on
historical experience and other factors, including expectations of future events.
The following are considered to be critical accounting estimates:
Share-based payments
The Group accounts for share-based payment transactions for employees in accordance with IFRS 2 Share-based
Payment, which requires the measurement of the cost of employee services received in exchange for the options on our
ordinary shares, based on the fair value of the award on the grant date.
The Directors selected the Black-Scholes-Merton option pricing model as the most appropriate method for determining
the estimated fair value of our share-based awards without market conditions. For performance-based options that
include vesting conditions relating to the market performance of our ordinary shares, a Monte Carlo pricing model was
used in order to reflect the valuation impact of price hurdles that have to be met as conditions to vesting.
49
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
The resulting cost of an equity incentive award is recognised as expense over the requisite service period of the award,
which is usually the vesting period. Compensation expense is recognised over the vesting period using the straight-line
method..
The assumptions used for estimating fair value for share-based payment transactions are disclosed in note 27 to our
consolidated financial statements.
The following are considered to be critical accounting judgments:
Research and development costs
Research and development costs are charged to expense as incurred and are typically made up of clinical and preclinical
activities, drug development and manufacturing costs, and third-party service fees, including for clinical research
organizations and investigative sites. When entering into agreements with third parties which provide the rights to
conduct research into specific biological processes the Group accounts for these agreements as an expense if the
agreements are 'milestone' in nature and relate to the Group's own research and development costs. Such agreements
involve periodic payments and are evaluated as representing payments made to fund research.
Leases
IFRS 16 defines the lease term as the non-cancellable period of a lease together with the options to extend or terminate
a lease, if the lessee were reasonably certain to exercise that option. This will take into account the length of time
remaining before the option is exercisable, current trading, future trading forecasts as to the ongoing profitability of the
organisation and the level and type of planned future capital investment. The judgement is reassessed at each
reporting period. A reassessment of the remaining life of the lease could result in a recalculation of the lease liability
and a material adjustment to the associated balances.
4. OPERATING LOSS
Operating loss is stated after charging:
Group
Director fees including bonus
Chairman’s bonus
Audit fees
FX Gains and losses
Depreciation
5. SEGMENTAL REPORTING
31 March 2021
£
212,660
886,909
45,000
152,916
1,156
══════
31 March 2020
£
96,031
-
42,000
10,944
4,702
══════
During the year under review management identified the Group’s only operating segment as the research and development
of biotechnological and pharmaceutical products. This one segment is monitored and strategic decisions are made based
upon it and other non-financial data collated from industry intelligence. The form of financial reporting reported to the Board
is consistent with those presented in the annual financial statements.
6. EMPLOYEES
Group and Company
Staff costs comprised:
Directors’ salaries (including bonus)
Wages and salaries (including bonus)
Social security costs
Recruitment expenses
2021
£
1,099,569
7,294
9,877
1,209,763
2020
£
96,031
180,379
54,063
-
330,473
93,023
The average monthly number of employees, including Directors, employed
by the Group during the year was:
Research and development
Corporate and administration
1
5
6
1
3
4
50
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
The Group and Company made £2,220 (2020: £2,182) of payments to a defined contribution pension schemes on behalf
of Directors or employees.
7. REMUNERATION OF KEY MANAGEMENT PERSONNEL
Directors of the Group and Company received the following remuneration during the period:
Director
G. Cerrone (1)
G Jacob (2)
W Simon
K. Shailubhai
J Brancaccio (3)
G Macrae (4)
L Zambeletti (5)
31 March 2021
Salary
Bonus
£’000
£’000
Directors'
fee
£’000
27
-
32
28
24
10
-
887
30
-
-
-
-
-
61
-
-
-
-
Share
based
payments
£’000
-
358
2
13
12
-
121
917
61
385
31 March 2020
Directors'
fee
£’000
Bonus
£’000
Salary
£’000
-
-
32
30
-
6
28
96
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share
based
payments
£’000
-
-
3
24
-
-
5
32
(1) Gabriele Cerrone’s bonus awarded for £887kwas awarded on the basis of the co-invention of the use of Chemerin in
the COVID-19 indication when he was not a director or employee of the Company (now the subject of a patent
application); work carried out in procuring, backing and completing the refinancing the Company in 2020 and actions
taken to make new executive appointments and scientific advisory appointments to the Board with the result that the
Company now has a clear and accelerated path to the clinic.
(2) Gary Jacob became an employee and Director of the Company on 7 January 2021
(3) John Brancaccio was appointed as Director on 10 June 2020
(4) Gregor Macrae was appointed as Director on 18 December 2019 and resigned on 10 June 2020
(5) Leopoldo Zambeletti resigned as Director on 18 December 2019
The following share options were granted to Directors in the year:
Director
J Brancaccio
G Jacob
2021
Number of
options
450,000
40,000,000
40,450,000
2020
Number of
options
-
-
-
The key management personnel of the Group are considered to be represented by the Directors and officers of the
Company.
No director has yet benefitted from any increase in the value of share capital since issuance of the options and no director
exercised share options in the year.
51
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
8. TAXATION
Group
Current year tax (credit)
Adjustments in respect of prior periods
Deferred tax
Origination and reversal of timing differences
Total tax (credit) for period
The tax charge for the year is different from the standard rate of
corporation tax in the United Kingdom of 19%. The difference can
be reconciled as follows:
2021
£
2020
£
(19,072)
(32)
-
(60,000)
-
-
(19,104)
(60,000)
Loss before taxation
(3,016,532)
(1,274,384)
Loss charged at standard rate of corporation tax 19%
(573,141)
(242,133)
Tax losses arising in the year not recognised
Expenses not deductible for taxation
Tax increase from effect of capital allowances and depreciation
Research and Development tax claim
Adjustments to tax charge in respect of previous periods
Consolidation adjustment
movements
Loans written off
relation
to
in
foreign exchange
587,418
-
(255)
(33,197)
(32)
103
-
(19,104)
267,519
114
64
-
(60,000)
(25,564)
-
(60,000)
No deferred tax asset has been recognised in respect of trading losses carried forward because of uncertainty as to
when these losses will be recoverable.
The Group has tax losses of £7,193,677 (2020: £4,213,974) to carry forward for use against future profits.
9. FINANCE INCOME AND COSTS
Group
Finance Income
Finance income interest received on loan
Total finance income
Finance Expenses
Interest expense on lease liabilities
Total finance expenses
2021
£
-
-
(858)
(858)
2020
£
37,850
37,850
(911)
(911)
52
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
10. PROPERTY, PLANT AND EQUIPMENT
Details of the Group and Company’s property, plant and equipment are as follows:
Group
Cost
At 1 April 2020
Additions
Disposals
At 31 March 2021
Depreciation
At 1 April 2020
Charge in year
At 31 March 2021
Net book value as at 31 March 2021
Cost
At 1 April 2019
Additions
Disposals
At 31 March 2020
Depreciation
At 1 April 2019
Charge in year
At 31 March 2020
Net book value as at 31 March 2020
Company
Cost
At 1 April 2020
Additions
Disposals
At 31 March 2021
Depreciation
At 1 April 2020
Charge in year
At 31 March 2021
Net book value as at 31 March 2021
IT equipment
£
1,014
5,031
-
6,045
502
1,154
1,656
4,389
1,014
-
-
1,014
167
335
502
512
IT equipment
£
1,014
2,499
-
3,513
502
1,117
1,619
1,894
53
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
Cost
At 1 April 2019
Additions
Disposals
At 31 March 2020
Depreciation
At 1 April 2019
Charge in year
At 31 March 2020
Net book value as at 31 March 2020
11. OTHER RECEIVABLES
Group
Other receivables
VAT receivable
Prepayments
Company
Other receivables
VAT receivable
Prepayments
1,014
-
-
1,014
167
335
502
512
31 March 2021
£
31 March 2020
£
3,260
12,896
15,268
179,461
6,536
5,123
31,424
191,120
31 March 2021
£
31 March 2020
£
-
12,895
13,095
179,125
6,536
5,123
25,990
190,784
There are no differences between the carrying amount and fair value of any of the trade and other receivables above.
12. TRADE AND OTHER PAYABLES
Group
Trade payables
Accruals
Chairman’s Bonus accrual
Other creditors
31 March 2021
£
31 March 2020
£
152,874
172,501
886,909
-
479,970
32,474
-
22,556
1,212,284
535,000
54
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
Company
Trade payables
Accruals
Chairman’s Bonus accrual
Other creditors
13. CAPITAL AND RESERVES
Capital Management
31 March 2021
£
31 March 2020
£
143,679
142,080
886,909
-
462,600
32,474
-
21,662
1,172,668
516,736
For the purpose of the Group’s capital management, capital includes called up share capital, share premium, share based
payments for options, share based payments for warrants and all other equity reserves attributable to the equity holders
of the parent as reflected in the statement of financial position.
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern
and to maximise shareholder value through the optimisation of the debt and equity balance.
The Group manages its capital to maximise the return to the shareholders through the optimisation of equity. The capital
structure of the Group at 31 March 2021 consists of equity attributable to equity holders of the Company, comprising
issued capital, reserves and retained deficit as disclosed.
The Group manages its capital structure and makes adjustments to it, in light of economic conditions and the strategy
approved by shareholders. To maintain or adjust the capital structure, the Group may adjust the dividend payment to
shareholders, return capital to shareholders or issue new shares and release the Company’s share premium account.
No changes were made in the objectives, policies or processes during the year ended 31 March 2021 and 31 March
2020.
Share capital and premium
The Company is authorised to issue an unlimited number of nil par value shares of a single class. The Company may
issue fractional shares and a fractional share shall have the corresponding fractional rights, obligations and liabilities of
a whole share of the same class or series of shares. Shares may be issued in one or more series of shares as the
Directors may by resolution determine from time to time.
Each share in the Company confers upon the shareholder:
•
•
•
the right to one vote at a meeting of the shareholders or on any resolution of shareholders;
the right to an equal share in any dividend paid by the Company; and
the right to an equal share in the distribution of the surplus assets of the Company on its liquidation.
The Company may by resolution of the Directors redeem, purchase or otherwise acquire all or any of the shares in the
Company subject to regulations set out in the Company’s Articles of Incorporation.
Authorised
The Company is authorised to issue an unlimited number of nil par value shares of a single class.
55
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
Issued ordinary shares of £0.00 each
At 31 March 2020
Shares issued - private placement
Fair value charge for warrants issued in
conjunction with private placement
Options exercised
At 31 March 2021
Issuance of ordinary shares
Shares
Number
Share
capital
£
Share
premium
£
636,297,049
════════
-
═══════
67,518,700
════════
36,269,253
-
250,000
-
-
181,346
(563,267)
11,250
672,816,302
════════
-
═══════
67,148,029
════════
In May 2019, 36,363,636 ordinary shares were issued at an issue price of 1.1p per ordinary share by way of a placing of
ordinary shares to raise finance.
In March 2020, 75,825,130 ordinary shares were issued at an issue price of 1.1p per ordinary share by way of a further
placing of ordinary shares to raise finance.
In June 2020, 36,269,253 ordinary shares were issued at an issue price of 0.005p per ordinary share by way of a placing
of ordinary shares to raise finance.
In March 2021, 250,000 ordinary shares were issued in relation to an exercise of options at an issue price of 0. 045p per
ordinary share.
Share options reserve
These reserves comprise the cumulative share-based payment charge on outstanding options in issue as at 31 March
2021
Warrant’s reserve
These reserves comprise the cumulative share-based payment charge on outstanding warrants in issue as at 31 March
2021.
Dividends
The Directors paid no dividend during the year to 31 March 2021 and 31 March 2020.
14. INVESTMENT IN SUBSIDIARIES
Company
Cost
At 1 April 2020
Additions
At 31 March 2021
Impairment
At 1 April 2020
Charge in year
At 31 March 2021
Net book value as at 31 March 2021
Capital
Contribution
£
128,102
-
128,102
(128,102)
-
(128,102)
-
56
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
Cost
At 1 April 2019
Additions
Transfer pricing recharge
At 31 March 2020
Impairment
Charge in year
At 31 March 2020
Net book value as at 31 March 2020
139,629
246,352
(257,879)
128,102
(128,102)
(128,102)
-
The capital contribution represents the funding of operations of the subsidiaries by the parent, with the Company acting
as the Group’s holding company. The parent has 20 shares in the group’s undertakings.
During the year, the Company was party to a transfer pricing agreement with its subsidiary whereby all costs incurred by
the subsidiary were recharged back to the Company who paid a 10% mark up. Any excess in funding is recognised as
an intercompany receivable in the Company and will be used to cover expenses in future years.
The Company’s interest in subsidiary undertakings is as follows:
Name
Principal activity Registered
OKYO Pharma US Inc
Clinical stage
biotechnology
company
Address
108 West 13th
Street,
Wilmington
Delaware
19801
Percentage
shareholding
100%
Country of
incorporation
USA
OKYO Pharma US Inc was incorporated on 2 July 2018. This entity was set up to house the Company’s US operations.
During the prior year, the Company undertook an impairment review of its investments in subsidiaries. The Company
had been funding its subsidiary operations from funds raised by the Company for the development of its project portfolio.
The subsidiary’s activities had all been to support the Company in achieving its goals for progression of the project
portfolio. The funding provided to the subsidiaries prior to 2020 had been recognised in the Company as investment in
its subsidiaries, and the Company did not expect the amounts to be repaid. The IP relating to the project portfolio belongs
to the Company and hence any future benefits will also belong to the Company. It is highly unlikely that these benefits
would be distributed to the subsidiaries. The Company therefore determined in the prior year that the investment should
be impaired.
57
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
15. SHARE OPTIONS AND WARRANTS
Group and Company
Options
The Company operates share-based payment arrangements to remunerate Directors and key employees in the form of
a share option scheme. It also issues options in lieu of fees to key suppliers and collaborators. The exercise price of the
option is normally equal to the market price of an ordinary share in the Company at the date of grant.
2021
Options
Weighted
Average
exercise price
(pence)
2020
Options
Weighted
Average
exercise price
(pence)
Outstanding at 1 April
Granted
Forfeited
Exercised
19,500,000
42,250,000
(750,000)
(250,000)
Outstanding at 31 March
60,750,000
Exercisable at 31 March
9,250,000
4.5
5.3
(4.5)
(4.5)
5.0
4.5
23,000,000
-
(3,500,000)
-
19,500,000
4,875,000
4.5
-
(4.5)
-
4.5
4.5
During the year ending 31 March 2021, 250,000 options were exercised. No options were exercised in the year to 31
March 2020.
The total outstanding fair value charge of the share option instruments is deemed to be approximately £1,963,721 (2020:
£399,460). A share based payment charge for the year of £399,460 (2020: £29,489) has been expensed in the statement
of comprehensive income.
The weighted average contractual life of options outstanding at March 31, 2021 is 8.07 years. (2020: 5.27 years).
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Grant Date
Expiry Date
Exercise Price
6 July 2018
20 August 2020
6 January 2021
12 January 2021
Total
Fair value of options granted
6 July 2025
19 August 2028
5 January 2031
11 January 2031
4.5p
15.5p
5p
7.9p
Share Options as at
31 March 2021
(‘000)
18,500
750
40,000
1,500
60,750
The Directors have used the Black-Scholes option pricing model to estimate the fair value of most of the options applying
the assumptions below.
Historical volatility relies in part on the historical volatility of a group of peer companies that management believes is
generally comparable to the Company.
The Company has not paid any dividends on share capital since its inception and does not anticipate paying dividends
on its share capital in the foreseeable future.
The Company has estimated a forfeiture rate of zero.
58
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
The model inputs for options granted during the year ended 31 March 2021 valued under the Black Scholes Valuation
model included:
20 August
2020
6 January
2021
12 January
2021
15.5p
15.5p
25% each
year
0.8p
0.5p
25% each
year
0.79p
0.79p
33% in 6
months and
67% in 1
year
0.15%
77.4%
5 years
-0.01%
77.5%
5 years
0.4%, 0.6%
66.7%, 83.7%
6 months to 1
year
Grant date share price
Exercise share price
Vesting periods
Risk free rate
Expected volatility
Expected option life
Warrants
As part of the acquisition of the Chemerin project, the underlying scientific founders of the Chemerin Project (inukshuk
Holdings), who will continue to be involved in the development of the Project, received 35,000,000 warrants as
consideration. The warrants are exercisable at a price of 4.5 pence each and are split into four distinct tranches and each
tranche becomes exercisable upon satisfaction of a specific developmental milestone. The warrants are exercisable until
17 July 2023.
In May 2019, warrants were granted over 36,363,636 shares at an exercise price of 1.35p per share in connection with
a private placement. The warrants are exercisable until 19 May 2024.
In March 2020, warrants were granted over 40,000,000 shares at an exercise price of 0.55p per share in connection with
a private placement. The warrants are exercisable until 23 March 2025.
In March 2020, warrants were granted over 35,825,130 shares at an exercise price of 0.55p per share in connection with
a private placement. The warrants are exercisable until 28 May 2025.
In April 2020, warrants were granted over 36,174,870 shares at an exercise price of 0.55p per share in connection with
a private placement. The warrants are exercisable until 28 May 2025.
In May 2020, warrants were granted over 909,090 shares at an exercise price of 2.75p per share in in lieu of professional
fees. The warrants are exercisable until 21 May 2023.
In July 2020, warrants were granted over 750,000 shares at an exercise price of 14p per share in in lieu of broker fees.
The warrants are exercisable until 20 July 2022.
2021
Warrants
Weighted
Average
exercise price
(pence)
2020
Warrants
Weighted
Average
exercise price
(pence)
Outstanding at 1 April
147,188,766
Granted
Forfeited
Cancelled
37,833,960
-
-
Outstanding at 31 March
185,022,726
Exercisable at 31 March
149,568,181
1.5
0.9
-
-
1.5
0.8
35,000,000
112,188,766
-
-
147,188,766
-
4.5
0.8
-
-
1.5
-
59
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
The Directors have estimated the fair value of the warrants in services provided using the Black-Scholes valuation model
based on the assumptions below.
July 2020
May 2020
April 2020
Grant date share price
Exercise share price
Vesting periods
8.3p
14p
2.8p
2.8p
Fully vested 50% of these warrants shall only vest if the 5-day
1.8p
0.5p
Fully vested
VWAP of the Company exceeds a 100% premium
to the Exercise Price, and the remainder shall only
vest if the 5-day VWAP of the Company exceeds a
200% premium to the Exercise Price
Risk free rate
Expected volatility
Option life
0.68%
88.1%
2 years
0.95%
79.6%
3 years
0.22%
82.4%
5 years
The remaining fair value of the warrant instruments is deemed to be approximately £78,884 (2020: £95,709). For the
consideration warrants, the charge has been expensed over the vesting period. For all other warrants, the charge has
been expensed over the service period. A share-based payment charge for the year of £62,344 (2020: £33,698) has
been expensed in the statement of comprehensive income.
16. CONVERTIBLE INSTRUMENTS CLASSIFIED AS EQUITY
In May 2020, the Company decided to raise convertible equity finance from supportive existing shareholders. £440,000
was raised from the issuance of Convertible Loan Notes. The four year Loan Notes carry a coupon of 20% per annum
and are convertible (together with all accrued interest) into ordinary shares of nil par value each in the capital of the
Company at a conversion price of 0.4p, they are not convertible into cash. The Loan Notes are convertible at the election
of the noteholder until the maturity date of the Notes, at which point they will convert automatically, or at the election of
the noteholder on completion of the next non-qualifying equity financing or on the making of a takeover offer for the
Company (as defined in the City Code on Takeovers and Mergers), and such election may be made on an immediate
basis or conditional on any such takeover offer being declared, or becoming, unconditional.
The May Convertible Loan Notes also have attached an obligation to receive warrants on a one for one basis when the
notes convert.
£26,400 of commission was due on these notes has been satisfied by the issuance of an identical convertible instrument.
Between July 2020 and September 2020, a further £5,437,104 was raised from the issuance of Convertible Loan Notes.
These three-year Loan Notes are short term instruments and carry a coupon of 2.15% per annum and are convertible
(together with all accrued interest) into ordinary shares of nil par value each in the capital of the Company at a conversion
price of 8.5p, they are not convertible into cash. All conversion conditions are the same as the notes above. £407,783 of
commission was due on these notes has been satisfied by the issuance of identical convertible instruments.
The principal amount of the Convertible Equity Instrument that was recorded as in the convertible loan note reserve is
as follows:
Par value of:
Convertible loan notes issued for cash
Convertible loan notes issued in lieu of commission
Accrued interest
Total convertible loan note reserve
2021
5,877,104
434,183
6,311,287
163,545
6,474,832
60
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
17. FINANCIAL INSTRUMENTS
The main risks arising from the Group’s financial instruments are liquidity risk, interest rate and credit risk. The Directors
regularly review and agree policies for managing each of these risks which are summarised below.
Liquidity risk
The Group’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient
reserves of cash to meet its liquidity requirements in the short and long term. The Group ordinarily finances its activities
through cash generated from by private and public offerings of equity and debt securities.
The table below summarises the maturity profile of the Group and Company’s financial liabilities based on contractual
undiscounted payments:
Group
£
Less than 3 months 3 to 12 months
Total
2021
Trade and other payables
Related party payables
79,830
-
79,830
73,044
-
73,044
152,874
-
152,874
Group
£
Less than 3 months 3 to 12 months
Total
2020
Trade and other payables
Related party payables
114,257
4,670
118,927
388,249
30,728
418,977
502,506
35,398
537,904
Company
£
Trade and other payables
Related party payables
Company
£
Trade and other payables
Related party payables
Credit risk
Less than 3 months
72,464
-
72,464
2021
3 to 12
months
71,215
-
71,215
2020
Total
143,679
-
143,679
Less than 3 months 3 to 12 months
Total
98,232
4,670
102,902
386,030
30,728
416,758
484,262
35,398
519,660
Credit risk is managed on a Group basis. Credit risk arises principally from cash and cash equivalents and deposits with
banks and financial institutions.as well as outstanding receivables. The Group reviews its banking arrangements carefully
to minimise such risks and currently has no customers and therefore this risk is viewed as minimal. Management monitor
loans between members of the Group as part of their internal reporting and assess outstanding receivables for ability to
be repaid. The maximum exposure to credit risk equates to the carrying value on the statement of financial position.
61
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
Interest rate risk
The Group has limited exposure to interest-rate risk arising from its bank deposits. These deposit accounts are held at
variable interest rates based on Allied Irish Bank base rate.
The Directors do not consider the impact of possible interest rate changes based on current market conditions to be
material to the net result for the year or the equity position at the year-end for either the year ended 31 March 2021 or
31 March 2020.
18. RELATED PARTY TRANSACTIONS
All related party transactions occurred on an arm’s length basis and in the normal course of operations.
West African Minerals Limited (“WAML”)
WAML is a related party of the Company as it shares a common director, Willy Simon. In 2018, the Company disposed
of it Cameroon operations by way of an in specie distribution of all of its shares in Ferrum Resources Limited (renamed
West African Minerals Limited) to shareholders. As part of this transaction, the Group had agreed to a deed of release
with WAML whereby it agreed to write off $17,056,070 of loans in exchange for shares in WAML to be distributed as part
of the in-specie distribution. A remaining amount of $3,400,000 was outstanding from WAML, however, after careful
consideration of the operations of WAML and its subsidiaries, the Company decided to impair this receivable down to
£nil in 2018 as it does not expect to recover any of this outstanding debt. In addition to the $3,400,000 outstanding was
a working capital loan advance of $600,000 which has been impaired as the Group does not expect to recover any of
this outstanding debt.
During the year ended March 31, 2021, the Group had funded £8,539 (2020: £104,342) towards this $600,000 loan
facility and as at the year-end no further amounts were payable under this facility. The amounts funded in the year have
been immediately written off as the Group has no reasonable expectation of recovering the contractual cash flows of the
loan in its entirety.
Tiziana Life Sciences PLC
Tiziana Life Sciences PLC is a related party as it shares common Directors and officers. The Company share premises
and other resources with Tiziana Life Sciences PLC and there is a shared services agreement in place between Company
and Tiziana Life Sciences PLC. As at 31st March 2021, the Company had incurred £66,167 (2020: £92,622) worth of
costs in relation to this agreement and at 31st March 2021 £20,044 was receivable from Tiziana Life Sciences PLC. At
31st March 2020, £35,398 was due to Tiziana Life Sciences PLC.
The Company had also extended a short-term loan facility of £400k to Tiziana Life Sciences PLC in 2018 with interest
payable of 20% per annum. This loan was fully repaid during the year and no amounts were owing as at 31st March 2021,
£17,092 was due as of March 31, 2020.
Panetta Partners Limited
Panetta Partners Limited is a related party as it is a shareholder of the Company and also a vendor. The Company has
entered into a Deed of Assignment with Panetta Partners whereby the Company has the licence and sub-licence of
certain research and development assets in relation to the Chemerin product, assigned to it.
19. BASIC AND DILUTED LOSS PER SHARE
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average
number of ordinary shares in issue during the year.
2021
2020
(Loss) attributable to equity holders of the Group (£)
(2,997,628)
(1,214,384)
Weighted average number of ordinary shares in issue
672,767,629
595,474,039
Basic loss per share (pence per share)
(0.00)
(0.00)
62
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
As the Group is reporting a loss from continuing operations for the year then, in accordance with IAS 33, the share
options are not considered dilutive because the exercise of the share options would have an anti-dilutive effect. The basic
and diluted earnings per share as presented on the face of the Comprehensive statement of income are therefore
identical. All earnings per share figures presented above arise from continuing and total operations and therefore no
earnings per share for discontinued operations are presented.
20. LEASES
In December 2020, the group terminated from its lease early resulting in the right of use asset of £19,613 and lease
liability of £20,205 being written off to the profit and loss.
A new lease was subsequently entered into in January 2021. The initial recognition resulted in a right of use asset and a
lease liability of £75,627 respectively.
Right-of-use assets
31 March 2021
At 1 April 2020
Depreciation of early terminated lease
Early Termination write off
Additions
Depreciation of new lease
Lease Liabilities
At 1 April 2020
Interest expense
Lease payments
Early Termination write off
Additions
Interest expense
Lease payments
£
£24,278
(4,665)
(19,613)
75,627
(4,202)
71,425
31 March 2021
£
25,560
566
(5,921)
(20,205)
75,627
292
(4,362)
71,557
Lease liabilities are presented in the statement of financial position as follows:
Current
Non-current
31 March
2021
£
24,742
46,815
31 March
2020
£
4,106
21,454
71,557
25,560
The lease liabilities are secured by the related underlying assets. Future minimum lease payments as at 31 March 2021
were as follows:
63
OKYO Pharma Limited
Notes to the consolidated financial statements
for the year ended 31 March 2021
Within 1 year
1-2 years
2-5 years
Over 5 years
Total
Minimum lease payment due
31 March 2020
Lease payments
Finance charges
Net present values
26,084
(1,342)
24,742
26,084
(785)
25,298
21,737
(220)
21,516
-
-
-
73,904
(2,529)
71,556
The total net cash outflow for leases in the year to 31 March 2021 was £10,283 (2020: £4,347).
21. COMMITMENTS AND CONTINGENCIES
The Group’s main financial commitments relate to the contractual payments in respect of its licensing agreements. Due
to the uncertain nature of scientific research and development and the length of time required to reach commercialisation
of the products of this research and development, pre-clinical, clinical and commercial milestone obligations are not
detailed until there is a reasonable certainty that the obligation will become payable. Contractual commitments are
detailed where amounts are known and certain.
• BAM8 – The Group are committed to paying an annual license maintenance fee until the first commercial sale.
The annual license maintenance fee is $15,000 until May 2021, and $10,000 thereafter.
• OK-101 – The Group has retained the services of of Ora, Inc., a world-class ophthalmology contract research
organization ("CRO") to work with Group towards an IND submission for OK-101. As yet,there are no firm
financial commitments for this contract.
The Group also has a commitment to issue warrants on a one-to-one basis when Convertible Loan Notes issued in
May 2020 are converted. The warrants have the same exercise price as the Convertible Loan Note. Some notes were
converted post year end and the associated warrants were issued (see note 22).
22. POST BALANCE SHEET EVENTS
On 7 May 2021, the Company announced that 297,869,806 additional Ordinary Shares had been admitted to trading on
the main market for listed securities of London Stock Exchange plc as the result of the conversion of certain loan notes
and exercise of certain warrants as detailed in the prospectus of the Company published on 5 May 2021.
On 17 June 2021, the Group announced that Dr Kunwar Shailubhai had decided to stand down as a director of the
Company with immediate effect to focus on his other executive appointments.
On 29 June 2021, the Group announced it had retained the services of Ora, Inc., a world-class ophthalmology contract
research organization ("CRO"), to guide the company's upcoming product development and lead the regulatory strategy
of OK-101 for the treatment of dry eye.
64