Oncimmune Holdings Plc
Annual Report
For the year ended 31 May 2016
Contents
Strategic Report
Highlights
02
Business Overview
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09
Our Market
Board of Directors
10
Chairman and Chief Executive’s Review
14
Chief Financial Officer’s Review
17
Principal Risks And Uncertainties
18
14
Chairman and Chief
Executive’s Review
Directors’ Report
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23
Directors’ Report
Statement of Directors’ Responsibilities
20
Directors’ Report
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Financial Statements
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Independent Auditor’s Report
Consolidated Financial Statements
Notes to the Consolidated Financial
Statements
Independent Auditor’s Report on Parent
Company Financial Statements
Parent Company Financial Statements
Notes to the Parent Company Financial
Statements
Company Information
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Financial Statements
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Oncimmune Holdings Plc
Clinical Sciences Building
Nottingham City Hospital
Hucknall Road
Nottingham
NG5 1PB
Email: contact@oncimmune.co.uk
Phone: +44 (0)115 8231869
Fax: +44 (0)115 8231958
Oncimmune (USA) LLC
8960 Commerce Drive, Building #6
De Soto
KS 66018
USA
Email: clientservices@oncimmune.com
Phone: +1 913 583 9000
Fax: +1 913 583 9001
Highlights
Financial highlights
£12.2m
raised by the issue of
equity in the year
Revenues for the year
£0.4m
(2015: £1.4m)
£4.2m
of convertible loan notes
were converted
Operating costs before
share based charges
£3.8m
(2015: £2.7m)
Cash balance at the year
end
£10.2m
(2015: £1.3m)
Corporate and
operational highlights
Corporate progress
•
•
In May 2016, AIM IPO raising gross
proceeds of £11.0 million
In September 2015, acquisition of
dedicated commercial testing facility
for EarlyCDT®-Lung from Health
Diagnostic Laboratory, Inc, with a net
cash benefit of £1.56m
Developing the Board and Senior
Management
•
•
In November 2015, appointment of Dr
Jim Jett as Chief Medical Officer
In September 2015, appointment of
Meinhard Schmidt as Non-Executive
Chairman
EarlyCDT® platform progress
•
•
In September 2015, encouraging
early interim results based on 9,654
patients out of the 12,000 patient
NHS Lung Cancer Screening Trial
using EarlyCDT®-Lung test
In May 2016, successful patent claim
covering Oncimmune’s “panel assay”
method for detection of cancer-
related autoantibodies; portfolio
consists of 275 patents in eight
patent families
EarlyCDT®-Lung distributor
agreements covering majority of
US market
• Distributors increased from three to
eight in the period and subsequently
this has increased to 14
Post-period highlights
•
•
•
•
•
•
•
In July 2016, research agreements
were signed with Egybiotech and
Aarhus University Hospital in ovarian
and liver cancer to validate panels of
autoantibodies as diagnostic tests
In July 2016, CE mark for the
reagents used in EarlyCDT®-Lung
was obtained
In August 2016, following the death of
Robert (Bob) Page, Andrew Millet was
appointed as an Executive Director
and Chief Financial Officer
In September 2016, new data was
published in the Journal of Thoracic
Oncology on the effectiveness of the
EarlyCDT®-Lung test distinguishing
between malignant and benign lung
nodules
In June 2016, appointment of Julian
Hirst as Non-Executive Director
In September 2016, appointment of
Maarten Brusse as Chief Commercial
Officer, Asia Pacific
In October 2016, appointment of
Carsten Schroeder as Non-Executive
Director
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Business Overview
Core Scientific Principle
Early cancer detection based on autoantibodies
• Produced early in tumour genesis – years ahead of clinical symptoms
• Absent or low concentrations in healthy & benign cohorts
• One abnormal (cancer) antigen will lead to many 1,000’s of
autoantibodies = early measurable signal
Normal
cell
Tumour
cell
Normal host protein
Abnormal ‘tumour associated’ antigen
Autoantibodies specific for TAA
Pioneering Proprietary Platform
Proprietary approach: autoantibodies = early cancer detection
• Detect cancers up to four years earlier than other methods
• First cancer blood test based on a panel of autoantibodies
• Simple blood test – high detection rates for early stage cancers
• Complementary to other technologies (CT scan, therapeutics)
Extensively validated, highly regarded science
• 90%+ accuracy with high specificity at 93%
• Substantial history of academic collaboration and
peer-reviewed publication
Strong IP position
• 8 patent families, 275 patents, 22 pending
• 15 territories (minimum coverage - USA and Europe)
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Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS Lead Product - EarlyCDT®-Lung
• First product from Oncimmune platform
• 120,000 patient samples run before commercial
launch
• Largest ever randomised NHS trial (12,000
patients) – ECLS study
• Early detection of lung cancer using
biomarkers
• Strong results: 50% greater early detection
Improving survival and reducing healthcare
•
costs
• Commercialised laboratory test
• Over 145,000 tests sold in the USA and UK
Growth - Broad Development Pipeline
Portfolio highlights
Lung Test
EarlyCDT® –
Current
*kit in final stages
of development ▶
• Additional opportunities include
• USA and WW post-nodule
• Screening sales in the EU and the USA
HCC (Liver)
Ovarian
Breast
Prostate
Colon,
stomach,
Esophagus
▶
▶
• Clear clinical need for this test
• Highly cost effective screening tool,
complements AFP
• Clear clinical need for this test
• Highly cost effective screening tool,
complements CA125
▶ • Addresses key challenges of mammographic
screening
▶ • Will be able to identify aggressive rather than
benign cancers
▶ • Currently no cost effective screening tools
available
Personalised
Medicine –
‘Fingerprinting’ ▶
• Process of personalised autoantibody detection
– “fingerprint”
• Greater overall accuracy (>99%)
• Earlier detection
Companion
Diagnostics
▶
• Opportunity to use Oncimmune’s blood tests for
directed therapeutic initiatives
• Development partners can explore therapeutic
applications to the fingerprinting technology
EarlyCDT® –
Proof of
concept
completed
Future
opportunities
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Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS Development and commercial plan
Our Market
Focusing on developing sales channels via distributors, licence agreements and
the sale of kits across the range of cancer diagnostic tools that we have and that
we are developing.
All 14 US distributors
expected to be fully
operational by Jan 2017
Licensing or
Distribution
$$ Royalties
Research
Development
Validation for
Commercialisation
Manufacture Kit
Distribute Kit
$$ Sold Kits
Final validation underway
CE mark expected
H1 2017
H2 2017
Scientific, operational and commercial KPIs
Commercial
• Continue to maximise value of
our extensive IP
• Introduce EarlyCDT®-Lung
test into new markets through
distribution partners
• Demonstrate sales traction of
EarlyCDT®-Lung test in the US
• Work with partners to build
commercial case for companion
diagnostics
Scientific
• Maintain scientific leadership in
early cancer detection
• Demonstrate ongoing clinical
validation of the EarlyCDT
platform
Operational
• Progress the EarlyCDT®-Lung test
from a central lab test to a “kit”
• Develop platform to allow
move into new indications and
personalised medicine
• Extend footprint and skills in Asia
Pacific
8
Global cancer diagnostics market
• A large, rapidly growing and high value market
• WHO estimates 8.2m cancer deaths in 2012 and 14m
new cases registered
• Over $100bn in 2013 expected to reach c.$170bn by 2020
• Growing at CAGR of 7.6% from 2014 - 2020
• North America & Europe represent ~70% of global market
• Growth drivers:
• Early detection, better outcomes
• Technology – ‘omics’, PoC
• Companion diagnostics
• Cost-effective care
• Personalised medicine
Early cancer diagnostics
• Lung cancer generally detected late - 5-year survival rate
is only 17.7%
• almost 80% of lung cancer is diagnosed after spread
to other organs
• when found early, while still localised, the 5-year
survival rate for lung cancer more than triples to 55%
• Breast cancer generally detected early – 5 year
survival >80%
• Colorectal cancer – when detected early 5 year
survival >90%
Global Cancer Diagnostics Market Revenue,
by Applications, 2013 (USD Million)
Total
Lung
Cancer
Breast
Cancer
Colorectal
Cancer
Prostate
Cancer
Liver
Cancer
Ovarian
Cancer
Kidney
Cancer
Pancreatic
Cancer
Blood
Cancer
Source: KOL Opinions, Company Annual Reports, Expert Interviews,
Investing Publications, Press Releases & TMR Analysis
Lung Cancer 5-Year Survival Ratesi
All stages
Distant
Tumors
Localized
i Howlader N, Noone AM, Krapcho M et al. SEER Cancer Statistics Review, 1975-2013, National
Cancer Institute. Bethesda, MD, http://seer.cancer.gov/statfacts/html/lungb.html based on
November 2015 SEER data submission, posted to the SEER web site, April 2016.
Lung Cancer #1 cancer
diagnostics need
EarlyCDT®-Lung – addresses the
#1 need for cancer detection
• Lung cancer remains the #1 killer in the USA
• Over 220,000 new cases of lung cancer diagnosed
annually
• Approximately 42 million smokers in the USA
• The only well-validated blood test available –
EarlyCDT®-Lung
Estimated Deaths in USA, 2015
Lung
Other
0
50,000
100,000
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Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016
Board of Directors
ANDREW MILLET
Chief Financial Officer
Andrew is a Chartered Accountant
and registered auditor. Andrew
qualified as a chartered accountant
with Stoy Hayward (now BDO),
following which he gained an MBA
from Henley Management College.
Andrew has spent many years at
executive level involved with the
growth and success of early stage
technology businesses. Andrew
is a director of Wisteria Chartered
Accountants, a firm he founded in
2002 and he has, since 2003, been
involved in a variety of capacities with
Oncimmune including as accountant,
company secretary, shareholder and
now CFO.
MEINHARD SCHMIDT
Non-Executive Chairman
Meinhard is a MedTech industry
executive and entrepreneur
with more than 20 years broad
international experience in the
healthcare, diagnostics and medical
devices industries. He is currently
active as the founder at Austin Life
Science Partners AG, an established
Swiss-based company providing
business and financial services to
the Diagnostics and Life Sciences
industry. Prior to this, for more than
ten years Meinhard was at Roche
Diagnostics where he held various
global senior leadership roles
in Diabetes Care, Decentralized
Solutions and was global Senior
VP at Lab Diagnostics, which
achieved the leading global position
in the laboratory industry. He has
also held executive positions with
Philips (NL) and Institute Straumann
(CH). Meinhard has strong board-
level experience, he has worked
across M&A, global operations,
sales and marketing, innovation
management, and he has held
executive management positions
in Germany, The Netherlands,
USA, Canada, Sweden, UK and
Switzerland. He currently serves as
Board Director at several healthcare/
diagnostics companies in UK, USA
and Switzerland.
GEOFFREY HAMILTON-FAIRLEY
Chief Executive Officer
Geoffrey has an entrepreneurial
career that started in 1982 when he
founded a number of companies
in the media sector backed by The
Abingdon Management Company
Limited (Abingdon) which he became
sole owner of having acquired
the Company from its institutional
shareholders. Abingdon had a
number of quoted and unquoted
investments including Fortronic,
which developed the first magnetic
strip plastic card swipe technology.
In 1998 he launched Premium TV
(PTV) securing a contractual joint
venture with Eurosport to create
“British Eurosport”. PTV was acquired
by NTL (now Virgin Media). Over
the past ten years Geoffrey has
increasingly focused his time and
energies on the health sector and
has dedicated almost all of his time in
the past 8 years to the development
of Oncimmune Limited, serving as its
Executive Chairman and now CEO.
Geoffrey is also a senior research
fellow at the International Prevention
Research Institute. His personal
commitment to cancer detection
can be traced to his father, the first
medical oncologist in the UK.
TIM BUNTING
Deputy Chairman & Non-
Executive Director
Tim is general partner at Balderton
Capital (UK) LLP which he joined in
2007. Balderton Capital (UK) LLP is
the investment advisor to Balderton
Capital Partners III, L.P. He was
previously a partner of Goldman
Sachs where he spent 18 years. At
Goldman, Tim held various roles
including Global Head of Equity
Capital Markets (2002 to 2005) and
Vice-Chairman of Goldman Sachs
International (2005 to 2006). Tim
is also a Governor of Wellington
College and the Wellington Academy;
a Trustee of the Rainbow Trust
Children’s Charity and the Paul
Hamlyn Foundation. Tim is a graduate
of the University of Cambridge.
JULIAN HIRST
Non-Executive Director
Julian is a seasoned finance executive
with experience across a broad range
of corporate finance transactions
including equity private placements,
initial public offerings, public debt
and equity issues, mergers and
acquisitions, trade sales, strategic
partnerships and restructurings.
Julian is currently Corporate Finance
Director of Immunocore Limited, a
leading UK biotechnology company
specialising in immune-oncology. On
a part-time basis, he also runs a single
family office which represents a high
profile hedge fund manager and is the
Joint Head of Technikos, a partnership
which manages stakes in spin-out
companies from Oxford University’s
Institute on Bio-Medical Engineering.
Prior to this, Julian held senior
positions at several of the leading
global investment banks including
Panmure Gordon, UBS Warburg,
Morgan Stanley and Lehman Brothers.
CARSTEN SCHROEDER
Non-Executive Director
Carsten has over 20 years of senior
leadership experience in the medical
diagnostics sector. Since 2014 he
has been President of the Diagnostic
Division at Grifols, S.A. where he is
responsible for global commercial
operations and overall strategy,
including leading its growth and
innovation in Transfusion Medicine
and Specialty Diagnostics. Prior to
that, and before its acquisition by
Grifols, Carsten was President of
Novartis Diagnostics. Carsten joined
Novartis Diagnostics in 2010 as Vice
President of Commercial Operations
for the EMEA region where he
oversaw expansion into new markets.
During his time at Novartis he was a
member of the Vaccines & Diagnostic
Division Executive Committee and
served as Site Head for its Emeryville
campus in California. Carsten has
also held executive positions with
Boston Scientific, Mallinckrodt (now
Covidien) and Boehringer Ingelheim.
Mr. Schroeder holds an MBA from the
European School of Management in
Paris (ESCP) and a Bachelor of Arts
in Economics from the University of
Cologne in Germany.
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Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS Board of Directors (continued)
ANDREW UNITT
Non-Executive Director
Andrew was Chief Financial Officer
at the University of Nottingham, a
major shareholder in Oncimmune,
until July 2016. Prior to working in
higher education at the university,
Andrew was a finance director for 20
years in a wide range of industries.
His more recent background includes
11 years at Boots plc, where he was
Finance Director for 4 years of Boots
Healthcare International, its over the
counter medicines business. He has
also held a number of non executive
directorships in the NHS and private
sector.
RICHARD SHARP
Non-Executive Director
Richard graduated from Oxford
University and began his professional
career in 1978 working for JPMorgan
in UK Banking, then in Investment
Banking and Derivatives. In 1985,
Richard joined Goldman Sachs in
London and variously served as
Head of Capital Markets, Head of
UK investment Banking and Head
of European Private Equity and
Mezzanine Investing. Richard left
Goldman in 2007 to found and run
DII Capital LLP. Richard has been
separately a trustee of the Royal
Marsden Capital Fund and a trustee
of the Institute of Cancer Research. In
the summer of 2013, Richard became
an External Appointee of HM Treasury
on the Financial Policy Committee
of the Bank of England which is
responsible for Macro-Prudential
Supervision in the UK.
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Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS Chairman and Chief Executive’s Review
Oncimmune’s goal is to be a leader in early cancer
detection and the financial year to 2016 was an
exceptional year for the Company in moving towards
this goal. Despite what continued to be challenging
macroeconomic conditions around the world, we
delivered on our strategy and we successfully completed
an IPO on AIM in May this year. On behalf of the Board of
Oncimmune Holdings plc, we are pleased to present the
inaugural Annual Report & Accounts for year ended 31
May 2016 and provide an update on progress since the
Company’s IPO.
Overall, our performance in the year to 31 May was heavily
influenced by our focus on completing our fundraising and
IPO just before year end. Having successfully raised our
target funds, we were able to accelerate the plans which
are progressing well.
Notwithstanding the timing of the fundraising, on the
operational side we made significant progress in meeting
both our near and longer term strategic goals over the
year and have continued post IPO.
In the US, following the loss of our exclusive distributor
HDL, due to their financial situation, we set about
appointing new distributors. Using our existing commercial
relationships and previous experience of commercialising
the EarlyCDT®-Lung test in the US, we are pleased to
say that we now have 14 distributors in place, with all 14
expected to be fully operational by January 2017, covering
practically all areas of the US market. We are in the
process of training the distributors’ sales teams and we
aim to see sales build in the next half year. In the US, with
regard to price strategies and insurance, we have made
every effort to protect ourselves by having fixed price
contracts with each distributor on a per test basis. This
leaves the distributors to collect the insurance payments,
saving us considerable overhead. We believe we have
pitched this at a level where there is sufficient margin for
the distributor whilst still producing a good margin per test
for Oncimmune.
At the IPO, we stated that a key priority was to build our
commercial capabilities, particularly in Asia, in order to
implement a commercial strategy in the region for the
Company. We recently announced that Maarten Brusse will
take on the role of Chief Commercial Officer, Asia Pacific.
He has extensive previous experience in the territory
having led sales programmes for Abbott Molecular and
distribution for Luminex in Asia Pacific.
Key to this expansion into Asia is the transformation of the
test from a central lab test (CLIA in the US) to a “kit” which
can be run on-site, in nearly all hospital labs around the
world and on machines that are already installed. We are
pleased to report that the kit development is progressing
well and we have just commenced the final validation
programme that will meet regulatory requirements. In
July 2016, we announced the receipt of a CE marking,
in the EU, for the reagents of the EarlyCDT®-Lung test,
which complements our ISO 13485 registration which we
achieved in August 2015. These accreditations should
both be readily transferable to the “kit”. We anticipate CE
mark for the kit programme to be received in the first half
of 2017 with manufacturing commencing in the second half
of the year.
At IPO, we also highlighted development of the liver and
ovarian cancer tests as a key priority, providing further
market opportunities. We have recently announced a large
prospective blood sample collection agreement. This will
give us sufficient samples to finalise the validation of our
commercial panel for the EarlyCDT®-Liver test, which we
have targeted to be completed in the second half of 2017.
Our work on an ovarian cancer test, EarlyCDT®-Ovarian,
continues and we also anticipate validation of the second
generation test (the autoantibody “fingerprint”) later in
2017. This test has the potential to be highly accurate as
it enables each person to act as their own control and
thus bring personalised medicine to the field of early
diagnostics. Furthermore, we are expecting to announce
the addition of several markers to the current EarlyCDT®-
Lung test that will further enhance its sensitivity (detection
rate) whilst maintaining our excellent specificity (low false
positive rate) by the first quarter of 2017. Introducing
tests of increasing performance over time adds further
commercial protection beyond our extensive existing IP,
should any significant competitor appear.
EarlyCDT®-Lung is being used in the world’s largest
randomised trial for the early detection of lung cancer
using biomarkers ever conducted, the National Health
Service (NHS) Scotland ECLS study of 12,000 high-risk
smokers. The trial will report further interim results in
December at the World Conference for Lung Cancer
(WCLC) in Vienna in addition to the interim results
announced at the WCLC last year in Denver. The health
economics for using the test as an initial screening
tool for high-risk patients are compelling and should
the study complete as we hope after two years’ follow-
up on the last patient in June 2018, our aim will be to
commence screening high-risk lung cancer patients in new
international markets.
Finally, and of note, Oncimmune is conducting a number
of “companion diagnostic” studies which are aimed at
determining whether certain autoantibodies can help
triage cohorts of patients who will react positively (or not)
to the treatment being trialed. Having a simple tailor-made
autoantibody test that is already commercial and can be
run in a hospital lab at relatively negligible cost will be
attractive. We believe, from the data we have already, that
this will be a significant commercial opportunity for the
Company.
Organisational Review
Since becoming a public company, we have instigated a
review of our processes in order to ensure they continue
to be of the highest standard. The board commissioned
two specific pieces of work; an independent HR review
and an independent review of our US operations. Both
of these reported favourably and endorsed the current
modus operandi, whilst at the same time contributing some
interesting new ideas and suggestions, which are being
acted upon. Concurrently, we have instigated a number of
changes in our operating and reporting procedures.
On the corporate governance side, we are pleased to
announce that we have extended the Board by two new
appointments of non-executive Directors. In June this year,
Julian Hurst, who brings with him a wealth of corporate
finance experience in the sector, joined the Board.
Carsten Schroeder, who joined in October, has held senior
positions in some of the largest diagnostic companies.
With these appointments we believe the Board is now well
balanced and their active support is greatly appreciated.
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Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS As reported at the time, CFO Robert (Bob) Page died
suddenly in June. Bob had dedicated himself to
Oncimmune with gusto and expertise for many years
and we miss him and his wise counsel. Andrew Millet has
taken over the role of CFO and it is a testament to Bob’s
professionalism that this has been a seamless process.
We would like to record here, as we did at the time of his
death, the Company’s unreserved gratitude for all his work
and our sincerest sympathies for his family.
The team of people working at Oncimmune is one of
the keys to our success. A great number of the team
have been working with us for over 10 years and many
under the leadership of our Chief Operational Scientist,
Andrea Murray, to whom we owe continued thanks. The
passion and dedication that our personnel show is truly
exceptional, and without their outstanding efforts over
such a long period of time it would not have been possible
to achieve what we have to date. They are vital to making
the future plans a reality and the Board is immensely
grateful to them. In recognition of this, it is our intention
that every employee in the Company has share options,
giving them real ownership.
Strategic overview & Outlook
The Company’s strategy is to maximise the value of
its extensive IP and its in-house know-how in the field
of cancer specific autoantibody detection. Ultimately,
licensing products on a worldwide basis as they are
developed represents an ideal business model for
Oncimmune. However, the commercial reality is that one
often has to first establish the commercial and clinical bona
fides of a product in order to secure a licence of sufficient
value. That said, we expect that as we build partnerships
in various territories, we will be able to partner new
tests earlier thereby reducing the time expense to the
Company of establishing them and accelerating each test’s
penetration of the market. As indicated at the IPO, we
continue to explore areas of potential long term strategic
cooperation with larger multinationals.
The outlook for Oncimmune is very promising; we have a
number of products in a growing multibillion dollar market
and we have established performance, clinical need
and commercialisation. The Company’s clear objective
is to grow its presence in these markets over the next
few years. We are well positioned in the US market,
having widened our distributor base for our commercial
EarlyCDT®-Lung test. The development of the kit version
of our EarlyCDT® tests is important for our ability to expand
our geographical reach and we expect to make significant
progress on this in the coming period. Finally, we also
plan to expand EarlyCDT® to other cancer types and into
personalised medicine.
With cancer being an ever increasing focus for mankind
and the early detection of cancer being a key element
of reducing mortality and cost, we believe we are well
positioned to generate significant value.
Chief Financial Officer’s Review
Meinhard Schmidt
Geoffrey Hamilton-Fairley
Non Executive Chairman Chief Executive Officer
4 November 2016
Revenue in the year ended 31 May 2016 was £430,000
(2015: £1.36m). In the current year this revenue
represented the sale of commercial tests that were
performed from our own laboratory in Kansas, USA. In the
previous year the revenue was largely derived from USA
licence fees for EarlyCDT®-Lung test, however, as result
of Health Diagnostics Laboratory, Inc, then the Company’s
exclusive distributor, filing for Chapter 11 in June 2015,
revenues in the year to 31 May 2016 fell while new
distribution deals were being secured. We expect all 14
distributors that we now have agreements with to be fully
operational by January 2017.
Operating expenses before share based charges and
exceptional items in the year ended 31 May 2016 were
£3.83m (2015: £2.7m). The increase of costs reflects the
additional running cost of operating the commercial
laboratory in Kansas, USA.
Net loss for the year was £4.6m (2015: £1.9m) before any
exceptional items.
The Company raised £1.2m in January 2016 issuing 1.3
million shares, and the successful IPO in May 2016, raised
£11m (£9.8m net of expenses), the Company issuing 8.4
million shares at a price of £1.30. The cash balance at the
end of the year was £10.2m (2015: £1.3m).
As part of the IPO restructuring in May 2016, the Company
issued 34 million shares in exchange for 100% of
Oncimmune Ltd, and, in addition, the Company converted
the convertible loans and accrued interest to 6.4 million
shares, extinguishing £4.2m of liability.
Financial Outlook
The Company’s cash position was £10.2m at year end and
the cash burn since has been managed carefully whilst
implementing our growth plans. As such the management
are confident that its cash resources are sufficient for the
foreseeable future.
Exceptional items that were known and disclosed in the
Admission Document relate to:
Andrew Millet
Chief Financial Officer
4 November 2016
• During the year the Company took the cost of £4.1m
to the profit and loss account, representing the
difference of the fair value of an embedded derivative
relating to the conversion option of the convertible
loan notes at the time of conversion compared to
the fair value at the time of inception. This is an IFRS
requirement that has no impact on cash or net assets.
• During the year the Company benefited from the
waiver of a loan from Health Diagnostics Laboratory,
Inc to the value of £1.56m.
• During the year the Company incurred £1.2m relating
to IPO associated costs.
After the above exceptional items the Company incurred a
net loss of £8.4m (2015: £1.9m).
£108,000 of research and development costs have been
capitalised in the year (2015: £35,000). The decision to
capitalise these costs was made on the basis that these
were the direct costs relating to the work that went in
to the application of the CE Mark that was successfully
obtained immediately following the year end.
16
17
Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS
Principal Risks and Uncertainties
KEY PERFORMANCE INDICATORS
The Group measures its performance according to a
wide range of key performance indicators. The main key
performance indicators for the Group are as follows and
the Group’s performance against these indicators have
been discussed in the Chairman and Chief Executive’s
report and the Chief Financial Officer’s report:
• Development milestones
• Revenue and profit indicators
• Management of cash resources
Andrew Millet
Chief Financial Officer
4 November 2016
Reliance on the retention of key employees
The future success of the business is dependent on
its senior management and key personnel and there is
always a challenge to maintain back-up support in respect
of key roles or replace key staff should they leave our
organisation. The Group seeks to provide a positive
work environment with opportunities for career growth
coupled with appropriate remuneration and share option
incentives.
Risks from competitors
The Group operates in a competitive market and faces
competitors who may develop more advanced or
alternative tests for early detection of cancer. The group
mitigates this through investing significantly heavily in
research and development.
Legislation and Regulatory Change
Any change in legislation, and in particular the regulations
relating to the testing of human blood or serum as part of
a diagnostic test of disease, may have an adverse effect
on the Group’s operations and the returns available on an
investment in the Group. The Group mitigates this as far
as possible by ensuring a continuous awareness of the
legislative environment.
Foreign exchange
The Group conducts its operations principally in US Dollars
and Sterling and is consequently subject to currency risk
due to fluctuations in exchange rates. As well as direct
risk arising from transaction or translation risks, foreign
exchange movements may make products or materials
more expensive which may adversely affect the Group’s
revenues and expenditure and as a result could have a
material adverse effect on the Group’s business, results of
operations and financial condition. The Group continues to
monitor potential foreign exchange exposure.
18
19
Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS
Directors’ Report
Directors’ interests
At 31 May 2016, the Directors and family had the following interests in the Company’s ordinary shares and options to
subscribe for shares:
The Directors present their report and audited
consolidated financial statements for the year ended 31
May 2016.
Directors
The Directors of the Company who served during the year
and up to the date of this report were:
Meinhard Folkert Schmidt
Non-Executive Chairman
(appointed 9 October 2015)
Geoffrey Neil Hamilton-Fairley
Chief Executive Officer
(appointed 9 October 2015)
Andrew Millet
Chief Financial Officer
(appointed 26 August 2016)
Timothy Brian Bunting
Non-Executive Director (Deputy Chairman)
(appointed 9 October 2015)
Richard Simon Sharp
Non-Executive Director
(appointed 9 October 2015)
Andrew Vaughan Unitt
Non-Executive Director
(appointed 9 October 2015)
Julian Clement Hirst
Non-Executive Director
(appointed 23 June 2016)
Carsten Schroeder
Non-Executive Director
(appointed 11 October 2016)
The directors note with regard the passing away of Robert
Page on 3 June 2016 who was appointed on 9 October
2015.
Results and dividends
The consolidated statement of comprehensive income is
set out on page 26 and shows the loss for the year. The
loss for the year ended 31 May 2016 was £8.4m (2015: loss
of £2.0m). No dividend will be paid in respect of the year.
Corporate governance
Being AIM quoted, the Company is not required to and
does not fully comply with the UK Corporate Governance
Code. However, drawing upon best practice, the Directors
have established an Audit Committee, Remuneration
Committee and AIM Compliance Committee with formally
delegated duties and responsibilities.
The Audit Committee is comprised of Julian Hirst,
Tim Bunting and chaired by Andrew Unitt. The Audit
Committee determine and examine matters relating
to the financial affairs of the Company including the
terms of engagement of the Company’s auditors and, in
consultation with the auditors, the scope of the audit. It
receives and reviews reports from management and the
Company’s auditors relating to the half yearly (if subject
to audit) and annual accounts and the accounting and
internal control systems in use throughout the Company.
The Audit Committee meet at least twice a year.
The Remuneration Committee is comprised of Andrew
Unitt, Meinhard Schmidt, Carsten Schroeder and
chaired by Tim Bunting. The Remuneration Committee
review and make recommendations in respect of the
Directors’ remuneration and benefits packages, including
share options and the terms of their appointment. The
remuneration committee also make recommendations to
the Board concerning the allocation of share options to
employees. The Remuneration Committee meet at least
once a year and otherwise as and when necessary.
The AIM Compliance Committee comprise of Meinhard
Schmidt, Andrew Unitt and chaired by Richard Sharp.
The AIM Compliance Committee ensures, inter alia, that
procedures, resources and controls are in place to ensure
AIM Rules for Companies compliance within the Company
are operating effectively from time to time. The AIM
Compliance Committee meet at least twice a year and at
such other times as the members of the committee shall
agree.
Meinhard Folkert Schmidt
Geoffrey Neil Hamilton-Fairley
Andrew Millet
Timothy Brian Bunting
Richard Simon Sharp
Andrew Vaughan Unitt
Julian Clement Hirst
Carsten Schroeder
31 May 2016
Shares
-
3,238,070
109,954
2,806,717
3,746,072
-
-
-
Options
-
150,000
-
-
-
-
-
-
The company also issued warrants on 26 November 2015 to Geoffrey Hamilton-Fairley to subscribe for 762,500
Ordinary Shares at a subscription price of 1p per Ordinary Share and to Meinhard Schmidt to subscribe for 226,250
Ordinary Shares at 1p. These warrants had not been exercised at the year end.
Directors’ remuneration
The remuneration paid to or receivable by each person from who served as a Director during the year to 31 May 2016
was as follows:
Salary/ fees
*Other
Bonus
Pension
Benefits
31 May 2016
Total
£’000
£’000
£’000
£’000
£’000
£’000
Meinhard Folkert Schmidt
Geoffrey Neil Hamilton-Fairley
Robert Page
Andrew Millet
Timothy Brian Bunting
Richard Simon Sharp
Andrew Vaughan Unitt
Julian Clement Hirst
Carsten Schroeder
29
200
43
-
-
-
-
-
-
398
-
-
-
-
-
-
-
Total
272
398
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
598
43
-
-
-
-
-
-
670
* Geoffrey Neil Hamilton-Fairley’s other remuneration above reflects £398,200 in respect of a company waiver of an
outstanding amount on 11,000 partly paid shares and Mr Hamilton-Fairley undertook to settle any tax payable as set out
in the Admission Document.
20
21
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016
Significant shareholdings
As at the 27 October 2016, the Company has been notified (or is otherwise aware) of the following interests in 3% or
more of the issued Ordinary Share capital of the Company:
Statement of Directors’ Responsibilities
Balderton Capital III, LP
University of Nottingham
Richard Sharp
Geoffrey Neil Hamilton-Fairley
Timothy Brian Bunting
Professor John Robertson
Andrew Black
Aviva Investors Global Services Limited
Employee Benefit Trust
David Royds
Andrew Scott
No. of Ordinary Shares
Percentage of share capital
6,813,196
6,561,814
4,515,302
3,238,070
2,806,717
2,675,086
2,379,310
2,307,692
1,912,400
1,895,637
1,750,001
13.35
12.86
8.85
6.35
5.50
5.24
4.66
4.52
3.75
3.72
3.43
Going concern
Having regard to the available cash resources, tight financial control, budgets and forecasts for 2017 and beyond, the
Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for
the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group financial
statements.
Risk management
Details of the Group’s financial risk management objectives and policies, and exposure to price risk, credit risk and
liquidity risk are set out in Note 26.
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have elected to prepare the Group consolidated
financial statements in accordance with International
Financial Reporting Standards as adopted by the
European Union (IFRSs) and elected to prepare the parent
company financial statements under United Kingdom
Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable laws including FRS
101 Reduced Disclosure Framework). Under company law
the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view
of the state of affairs and of the profit or loss of the Group
and the parent company for that period.
In preparing each of the Group and parent company
financial statements, the Directors are required to:
Provision of information to the auditor
The Directors confirm that:
•
•
so far as each Director is aware, there is no relevant
audit information of which the Company’s auditor is
unaware; and
the Directors have taken all the 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 auditor is aware of that
information.
Auditor
The auditor, Grant Thornton UK LLP, has expressed
willingness to continue in office. In accordance with
section 489(4) of the Companies Act 2006, a resolution to
reappoint Grant Thornton UK LLP will be proposed at the
Annual General Meeting.
•
select suitable accounting policies and then apply
them consistently;
On behalf of the Board
Andrew Millet
Director
4 November 2016
Company registration number:
09818395 (England and Wales)
• make judgements and accounting estimates that are
reasonable and prudent;
•
•
state whether applicable IFRSs or UK Accounting
Standards have been followed, subject to any material
departures disclosed and explained; and
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group and the parent company will continue in
business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the parent company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the parent company and the Group and enable them
to ensure that the financial statements comply with the
Companies Act 2006. They are also generally responsible
for taking steps as are reasonably open to them to (i)
safeguard the assets of the Group and (ii) prevent and
detect 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. Information
published on the website is accessible in many countries
and legislation in the United Kingdom governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
22
23
Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS
Independent Auditor’s Report
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion the information given in the Strategic Report
and Directors’ Report for the financial year for which the
consolidated financial statements are prepared is consistent
with the consolidated financial statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report
to you if, in our opinion:
•
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.
Other matter
We have reported separately on the parent company
financial statements of Oncimmune Holdings Plc for the
year ended 31 May 2016.
Giles Mullins
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Milton Keynes
4 November 2016
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF ONCIMMUNE HOLDINGS PLC
We have audited the consolidated financial statements
of Oncimmune Holdings Plc for the year ended 31 May
2016 which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes
in Equity, the Consolidated Statement of Cashflows and
the related notes. The financial reporting framework that
has been applied in their preparation is applicable law
and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’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 Company and the Company’s members as a
body, for our audit work, for this report, or for the opinions
we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors’
Responsibilities, the Directors are responsible for the
preparation of the consolidated financial statements and
for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the
consolidated financial statements in accordance with
applicable law and International Standards on Auditing (UK
and Ireland). Those standards require us to comply with
the Auditing Practices Board’s (APB’s) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council’s website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the consolidated financial statements:
•
•
•
give a true and fair view of the state of the Group’s
affairs as at 31 May 2016 and of its loss for the year
then ended;
have been properly prepared in accordance with IFRS
as adopted by the European Union; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
24
25
Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS
31 May 2016
31 May 2015
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Notes
Year to 31 May 2016
£’000
Before
exceptional
items
£’000
Exceptional
items
(note 5)
430
(147)
283
(3,043)
(789)
(939)
(4,771)
(4,488)
-
-
5
(737)
(5,220)
566
-
-
-
(1,226)
-
-
(1,226)
(1,226)
1,564
(4,126)
-
-
(3,788)
-
5
5
5
9
9
10
£’000
Total
430
(147)
283
(4,269)
(789)
(939)
(5,997)
(5,714)
1,564
(4,126)
5
(737)
(9,008)
566
Revenue
Cost of sales
Gross profit
Administrative expenses
Research and development expenses
Share based payment charges
Operating loss
Gain arising on debt settlement
Finance costs on derivative liabilities
Finance income
Finance expense
Loss before income tax
Income tax
Loss for the financial year
(4,654)
(3,788)
(8,442)
Year to
31 May 2015
£’000
1,345
(3)
1,342
(2,082)
(616)
(25)
(2,723)
(1,381)
-
-
15
(646)
(2,012)
-
(2,012)
Other comprehensive income
Items that may be subsequently reclassified to
profit or loss, net of tax
Currency translation differences
24
-
24
46
Loss after tax and total comprehensive income for
the year attributable to equity holders
(4,630)
(3,788)
(8,418)
(1,966)
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
Total assets
EQUITY AND LIABILITIES
Equity
Capital and reserves attributable to the equity holders
Share capital
Share premium
Merger reserve
Other reserves
Own shares
Foreign currency translation reserve
Retained earnings
Total equity
Non-current liabilities
Derivative financial instruments
Convertible Loans
Other Loans
Current liabilities
Trade and other payables
Current tax liabilities
Other loans
Notes
12
11
14
13
15
19
17
17
16
17
Basic and diluted loss per share
25
(12.97p)
(23.54p)
(8.67p)
Total liabilities
The accompanying notes form an integral part of these consolidated financial statements.
Total equity and liabilities
£’000
131
253
384
188
339
100
10,197
10,824
11,208
510
16,273
30,787
2,113
(1,926)
(53)
(37,973)
9,731
-
-
395
395
529
57
496
1,082
1,477
11,208
26
The accompanying notes form an integral part of the consolidated financial statements.
The financial statements were approved by the board on 4 November 2016.
Andrew Millet
Director
£’000
30
48
78
-
528
1,344
1,872
1,950
7
30,729
-
1,103
(1,926)
(77)
(33,656)
(3,820)
71
1,828
2,230
4,129
1,079
-
562
1,641
5,770
1,950
27
Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
As at 1 June 2014
Loss for the year
Other comprehensive income:
Currency translation differences
Total comprehensive income
Transactions with owners:
Share option charge
Total transactions with owners
As at 31 May 2015
Loss for the year
Other comprehensive income:
Currency translation differences
Total comprehensive income
Share
capital
Share
premium
Other
reserves
Merger
reserve
Foreign
currency
translation
reserve
Own
Shares
Retained
earnings
Total
£’000
7
-
£’000
30,729
-
£’000
1,077
-
£’000
-
-
£’000
(123)
-
£’000
(1,926)
-
£’000
(31,644)
(2,012)
£’000
(1,880)
(2,012)
-
-
-
-
7
-
-
-
-
-
-
-
-
26
26
30,729
1,103
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
46
46
-
-
-
-
-
-
(2,012)
46
(1,966)
-
-
26
26
(77)
(1,926)
(33,656)
(3,820)
-
-
-
-
-
(8,442)
(8,442)
-
(8,442)
24
(8,418)
-
-
4,126
4,126
-
-
-
20,959
939
71
21,969
24
24
-
-
-
Transactions with owners:
Shares issued in group reconstruction
Reorganisation of share capital
Creation of merger reserve
Issue of equity shares
Share option charge
Exercise of conversion option
Total transactions with owners
348
(7)
162
-
503
(348)
7
(30,787)
20,798
(4,126)
(14,456)
30,787
-
30,787
-
939
71
1,010
As at 31 May 2016
510
16,273
2,113
30,787
(53)
(1,926)
(37,973)
9,731
The accompanying notes form an integral part of the consolidated financial statements.
28
Year to 31 May 2016
Year to 31 May 2015
Notes
Cash flows from operating activities
Loss after income tax
Adjusted by:
Depreciation and amortisation
Share based payment charge
Gain arising on debt settlement
Loss on derivative financial instrument
Settlement of costs via equity shares
Interest received
Interest expense
Inventory
Trade and other receivables
Trade and other payables
Taxes received
Exchange movement
Cash generated from operations
Interest paid
Income tax received
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Development expenditure capitalised
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from share issue
Repayment of long term borrowings
New other loans
Net cash(used in)/generated from financing activities
Movement in cash attributable to foreign exchange
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
15
The accompanying notes form an integral part of the consolidated financial statements.
£’000
(8,442)
78
939
(1,564)
4,126
1,142
(5)
737
(8)
(304)
133
(566)
(11)
(3,745)
-
566
(3,179)
(64)
(108)
5
(167)
11,448
(423)
1,250
12,275
(76)
8,929
1,344
10,197
£’000
(2,012)
37
26
-
(15)
646
-
320
(358)
-
(40)
(1,396)
(124)
-
(1,520)
(17)
(35)
15
(37)
-
(203)
1,449
1,246
87
(224)
1,568
1,344
29
Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS General information
1.
Oncimmune Holdings Plc (the ‘Company’) is a limited company incorporated and domiciled in England and Wales. The
registered office of the company is Clinical Sciences Building, City Hospital, Hucknall Road, Nottingham, NG5 1PB. The
registered company number is 09818395.
The Group’s principal activity is that of cancer diagnosis.
The Directors of Oncimmune Holdings Plc are responsible for the financial information and contents of the financial
information. This is the first financial statements to be prepared by the Group under International Financial Reporting
Standards.
Accounting policies
2.
The principal accounting policies applied in the preparation of the consolidated financial information are set out below. These
policies have been consistently applied to all years presented, unless otherwise stated.
Basis of preparation
The Group has prepared its consolidated financial statements in accordance with International Financial Reporting
Standards (“IFRSs”) as adopted in the European Union, IFRIC Interpretations and the Companies Act 2006 applicable to
companies reporting under IFRS.
The Company was incorporated on 9 October 2015 and was re-registered as a public limited company on 14 December
2015. On 23 November 2015, a group re-organisation was completed, by means of a share for share exchange, as result
of which the newly incorporated company, Oncimmune Holdings Plc, became the parent company of the Group.
The companies involved in the above share for share exchange have not previously been presented in the consolidated
financial statements of a single legal entity. However, the underlying business was ultimately controlled and managed
by the same parties before and after the share for share exchange and that control was not transitory. The transactions
outlined above, therefore, meet the definition of a common control transaction in accordance with IFRS 3 Business
Combinations.
IFRS does not provide any specific guidance on accounting for common control transactions and IFRS 3 excludes
common control transactions from its scope; therefore the Directors have selected an accounting policy in accordance
with paragraphs 10-12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The consolidated entity
meets the definition of a group reconstruction under FRS 102 19,27 and has therefore been accounted for under the
principals of merger accounting as outlined in FRS 102, paragraphs 19.29 – 19.33, merger accounting. The consolidated
financial statements have therefore been prepared as if Oncimmune Limited and its subsidiaries had been held by
Oncimmune Holdings Plc from inception and therefore the results and position of Oncimmune Limited have been
reflected in the comparatives.
The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The
areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to
the consolidated financial statements, are disclosed in note 3.
The consolidated financial statements have been prepared on a going concern basis and under the historical cost
convention. The consolidated financial statements presented in sterling and has been rounded to the nearest thousand
(£’000).
Standards, amendments and interpretations to existing standards
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early
adopted by the Group in these financial statements.
At the date of authorisation of the financial statements, certain new standards, amendments and interpretations to
existing standards have been published but are not yet effective. The Group has not early adopted any of these
pronouncements. The new standards, amendments and interpretations that are expected to be relevant to the Group’s
financial statements in the future are as follows:
Standard/interpretation
Content
Applicable for financial
years beginning on/after
IFRS 9
IFRS 15
IAS 16 and IAS 38
(amendment)
IFRS 10 and IAS 28
(amendment)
All
IAS 1
IFRS 16
*Not yet adopted by the EU.
Financial Instruments
Revenue from Contracts with Customers
Clarification of Acceptable Methods of Depreciation and
Amortisation
Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture
Annual improvements to IFRS 2012-2014 Cycle
Disclosure Initiative: Amendments to IAS 1 Presentation
to Financial Statements
Leases
1 January 2018*
1 January 2018*
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2019*
The effective dates stated above are those given in the original IASB/IFRIC standards and interpretations. As the Group
prepares its financial statements in accordance with IFRS as adopted by the European Union (EU), the application of new
standards and interpretations will be subject to their having been endorsed for use in the EU via the EU endorsement
mechanism.
The Directors do not expect the adoption of these standards and interpretations to have a material impact on the
consolidated financial statements in the period of initial adoption.
Revenue
The amount shown as revenue in the statement of comprehensive income comprises royalties received and receivable
and, in addition, amounts received and receivable in respect of the provision of medical testing services, in the USA and
other markets, including the UK.
Revenue is recognised at the fair value of the consideration received or receivable and excludes intra-group sales, value
added tax and trade discounts.
Revenue is recognised when the amount can be reliably measured and it is probably that future economic benefits
associated with the transaction will flow to the entity.
Royalty income is recognised when the tests to which the royalty licences relate are completed by third parties. Amounts
receivable in respect of the provision of medical testing services are recognised when these services are delivered.
30
31
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016 Research and development
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Development expenditure, where it meets certain criteria (given below), is capitalised and amortised on a straight-line
basis over its useful life. Asset lives are subject to regular review and an impairment exercise carried out at least once a
year. Where no internally-generated intangible asset can be recognised, development expenditure is written-off in the
period in which it is incurred.
An asset is recognised only if all of the following conditions are met:
•
•
•
•
the product is technically feasible and marketable;
the Company has adequate resources to complete the development of the product;
it is probable that the asset created will generate future economic benefits; and
the development cost of the asset can be allocated and measured reliably
The Group has reviewed research and development expenditure, to determine whether any of that spend could qualify
as development expenditure which satisfies the requirements for capitalisation set out above. As a result, £108,000 (2015:
£35,000) of development expenditure has been capitalised.
Property, plant and equipment
Property, plant and equipment is stated at historic cost, including expenditure that is directly attributable to the acquired
item, less accumulated depreciation and impairment losses.
Depreciation is calculated on a straight line basis over the deemed useful life of an asset and is applied to the cost less
any residual value. The asset classes are depreciated on a straight line basis over the following periods:
Laboratory equipment
Office equipment
Computer equipment
3 - 7 years
3 - 7 years
3 - 4 years
The carrying value of the property, plant and equipment is compared to the higher of value in use and the fair value less
costs to sell. If the carrying value exceeds the higher of the value in use and fair value less the costs to sell the asset then
the asset is impaired and its value reduced by recognising an impairment in profit or loss.
Impairment testing of non-current assets
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some
are tested at cash-generating unit level. Those intangible assets not yet available for use and goodwill are tested for
impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to
sell, and value in use based on an internal discounted cash flow evaluation. All assets are subsequently reassessed for
indications that an impairment loss previously recognised may no longer exist.
Inventories
Inventory is carried at the lower of cost or net realisable value after making due allowance for obsolete and slow moving
stock.
Net realisable value is calculated based on the revenue from sale in the normal course of business less any costs to sell.
Leased assets
In accordance with IAS 17 Leases, the economic ownership of a leased asset is transferred to the lessee if the lessee
bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then
recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum
lease payments plus incidental payments, if any.
All other leases are treated as operating leases. Payments on operating lease agreements are recognised as an expense
on a straight-line basis. Associated costs, such as maintenance and insurance, are expensed as incurred. Lease incentives
received are recognised in the consolidated statement of comprehensive income on a straight-line basis over the lease
term.
Taxation
Income tax on the profit or loss for the year comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year, using current rates, and any adjustments to
the tax payable in respect of previous years. In so far as group companies are entitled to UK tax credits on qualifying
research and development expenditure, such amounts are recognised when received.
Deferred taxation is provided on all temporary differences between the carrying amount of the assets and liabilities in the
financial statements and the tax base. Deferred tax assets are recognised only to the extent that it is probable that future
taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets and liabilities
are not discounted. Deferred tax is determined using the tax rates that have been enacted or substantially enacted by
the balance sheet date, and are expected to apply when the deferred tax liability is settled or the deferred tax asset is
realised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the
reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not
reverse in the foreseeable future.
Tax is recognised in profit or loss, except where it relates to items recognised directly in equity, in which case it is
recognised in equity.
Share based compensation
Equity-settled share-based payments are recognised as an expense in profit or loss, based on the fair value of the
option at the date of grant. Such costs are spread over the vesting period, adjusted for the best available estimate of the
number of share options expected to vest, with a corresponding credit to equity, net of deferred tax where applicable.
Such adjustments are only made in respect of non-market performance vesting conditions. No adjustment is made to
the expense recognised in prior periods if fewer share options ultimately are exercised than originally estimated. Vesting
conditions relate to continuing employment.
Where the granting of share options has coincided with the issue of shares, for cash, to third party investors, the fair
value of such options is based on the issue price for those shares which is considered to be an arm’s length value.
32
33
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016
Employee benefit trust
Assets, other than shares, held by the Oncimmune Limited’s Employee Benefit Trust (EBT) are included in the group’s
balance sheet under the appropriate heading. Shares in the company held by the EBT are disclosed as a deduction
from shareholder’s funds and dividend income is excluded in arriving at profit before tax and deducted from aggregate
dividends paid and proposed. Reflecting the substance of these arrangements any amounts which the trustees of the
EBT may resolve, pursuant to their discretionary powers, to pay to any beneficiaries of the EBT are charged to the profit
or loss account only when paid, subject to statutory deductions.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the main decision-
making body of the Group, which collectively comprises the Executive Directors. The Executive Directors are responsible
for allocating the resources and assessing the performance of the operating segments.
Exceptional items
Exceptional items are treated as such if the matters are non-recurring, material and fall outside of the operating activities
of the Group.
Government grants
Government grants receivable are recognised on receipts of cash. Related expenditure is recognised as it occurs.
Financial instruments
Financial instruments are assigned to their different categories by management on initial recognition, depending on the
contractual arrangements.
Financial assets
The Group’s financial assets fall within the heading of ‘Loans and receivables’. Loans and receivables comprise trade and
certain other receivables as well as cash and cash equivalents.
Loan and receivables are recognised when the Group becomes a party to the contractual provisions of the instrument
and are recognised at fair value and subsequently measured at amortised cost using the effective interest method less
any provision for impairment, based on the receivable ageing, previous experience with the debtor and known market
intelligence. Any change in their value is recognised in the income statement.
Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are
transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for
impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial
asset or a group of financial assets is impaired.
Financial liabilities
The Group’s financial liabilities comprise borrowings, a convertible loan and trade and other payables.
Financial liabilities are initially recognised at the fair value of the consideration received net of issue costs. After initial
recognition borrowings are measured at amortised cost using the effective interest method. All interest-related charges
are included in the income statement line item “finance expense”. Financial liabilities are derecognised when the
obligation to settle the amount is removed.
Convertible loan notes
Convertible loan notes where the conversion option does not meet the definition of equity are accounted for as financial
liabilities. The instruments are split between:
•
•
the “host” debt instrument being a non-convertible debt. The host contract is recognised at fair value and
subsequently measured at amortised cost using the effective interest rate;
an embedded derivative representing the conversion feature.
The valuation of the embedded derivative is performed at inception of the loan and at the end of each reporting period.
The residual value is then allocated to the host debt instrument.
Warrants to purchase shares
Warrants to purchase shares that do not meet the definition of equity instruments are accounted for as derivative
liabilities. The valuation is performed at inception and at each subsequent reporting with movements recognised in profit
or loss.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held on call, together with other short term highly liquid
investments which are not subject to significant changes in value and have original maturities of less than three months.
Equity
Equity comprises the following:
•
•
Share capital: the nominal value of equity shares.
Share premium: includes any premium received on the sale of shares. Any transaction costs associated with the
issuing of shares are deducted from share premium, net of any income tax benefits.
• Own shares and other reserves
•
•
Profit and loss account: retained profits
Foreign currency translation reserve: differences arising from translation of investments in overseas subsidiaries
• Merger reserve: The merger reserve represents the difference between the parent company’s cost of investment
and a subsidiary’s share capital and share premium. The merger reserve in these accounts has arisen from a group
reconstruction upon the incorporation and listing of the parent company that was accounted for as a common
control transaction. Common control transactions are accounted for using merger accounting rather than the
acquisition method.
Foreign currencies
Monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the
statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange
ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit.
The financial statements of foreign subsidiaries are translated at the rate of exchange ruling at the statement of financial
position date. The exchange differences arising from the retranslation of the opening net investment in subsidiaries
are taken directly to reserves. Where exchange differences result from the translation of foreign currency borrowings
raised to acquire foreign assets (including equity investments) they are taken to reserves and offset against differences
arising from the translation of those assets. All other exchange differences are dealt with through the statement of
comprehensive income.
34
35
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016
Accounting estimates and judgements
3.
The preparation of financial statements under IFRS requires the Group to make estimates and judgements that affect
the application of policies and reported amounts. Estimates and judgements are based on historical experience and
other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates.
The estimates and judgements which have a significant risk of causing a material adjustment to the carrying amount of
assets and liabilities are discussed below:
• Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at each reporting date. At the reporting date
management assesses that the useful lives represent the expected utility of the assets to the Group. Actual results,
however, may vary due to unforeseen events.
•
Inventory provision
Inventory provisions are based on an estimate of the realisable value of the inventory items.
•
Impairment
An impairment loss is recognised for the amount by which the asset’s or cash generating unit’s carrying amount
exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future
cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present
value of those cash flows. In the process of measuring expected future cash flows management makes assumptions
about future operating results. These assumptions relate to future events and circumstances. In most cases,
determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the
appropriate adjustment to asset-specific risk factors.
• Capitalisation of development costs
Development expenditure, where it meets certain criteria (given below), is capitalised and amortised on a straight-
line basis over its useful life. Asset lives are subject to regular review and an impairment exercise carried out at least
once a year. Where no internally-generated intangible asset can be recognised, development expenditure is written-
off in the period in which it is incurred. Development expenditure is only recognised when all of the criteria set out in
IAS 38 are met. Management applies judgement in making this assessment and in determining attributable costs for
each project.
• Measurement of derivative liabilities carried at fair value through profit and loss
Management uses valuation techniques to determine the fair value of financial instruments (where active market
quotes are not available). This involves developing estimates and assumptions consistent with how market
participants would price the instrument. Management bases its assumptions on observable data as far as possible
but this is not always available. In that case management uses the best information available. Estimated fair values
may differ from the actual prices that would be achieved in an arm’s length transaction at the reporting date. See
notes 23 and 24.
36
Segmental information
4.
Management has determined the operating segments based on the reports reviewed by the strategic decision maker
comprising the Board of Executive Directors. The segmental information is split on the basis of geographical analysis
however, management report only the contents of the income statement and therefore no statement of financial position
information is provided on a segmental basis in the following tables:
Revenue
Class of business
Distribution of testing products
Royalties
Total revenues
Geographical analysis by destination
United Kingdom
North America
Rest of the world
Total revenues
Geographical analysis by origin
United Kingdom
North America
Rest of the world
Total revenues
31 May 2016
31 May 2015
£’000
£’000
262
168
430
133
294
3
430
-
427
3
430
77
1,268
1,345
76
1,268
1
1,345
-
1,344
1
1,345
37
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016 Operating segments
As at 31 May 2016
Revenue
Cost of sales
Gross margin
Operating loss
Net finance and other costs
Loss before tax
Taxation
As at 31 May 2015
Revenue
Cost of sales
Gross margin
Operating loss
Net finance costs
Loss before tax
Taxation
UK
£’000
304
-
304
(2,748)
USA
£’000
126
(147)
(21)
(801)
UK
£’000
1,344
-
1,344
(1,277)
Holdings
Consolidated
£’000
£’000
-
-
-
(2,165)
USA
£’000
1
(3)
(2)
(104)
430
(147)
283
(5,714)
(3,294)
(9,008)
566
(8,442)
Consolidated
£’000
1,345
(3)
1,342
(1,381)
(631)
(2,012)
-
(2,012)
Assets are not reported by business segment to the Chief Operating Decision Maker.
Information about major customers
In the year to 31 May 2016, the group had three customers who contributed more than 10% of group revenue individually.
These three customers contributed approximately 80% of group revenue.
In the year to 31 May 2015, the group had one customer who contributed more than 10% of group revenue. That
customer contributed more than 90% of group revenue.
38
5.
Exceptional items
Exceptional items in the year comprise the following:
Costs associated with the IPO
Charged in profit or loss
Charged directly to equity
Gain on debt waiver (Note 16)
Fair value loss on derivatives (Note 24)
May 2016
May 2015
£’000
£’000
1,226
8
(1,564)
4,126
-
-
-
-
Costs directly attributable to the issuing of shares are charged to the share premium account.
6.
Loss before income tax
Loss before taxation has been arrived at after charging:
Depreciation of owned property, plant and equipment
Amortisation of intangible assets
Research and development
Share based payments expense
Employee costs (Note 8)
Operating lease rentals
-
-
Other operating leases
Plant and machinery
Audit and non-audit services:
Fee payable to the company’s auditor:
Fee for the audit of the parent company
Fees payable to the company’s auditor and its associates for other services:
The audit of the company’s subsidiaries pursuant to legislation
Tax compliance services
Tax advisory services
Fees for other assurance services – accounting
Fees for other assurance services – reporting accountant
May 2016
May 2015
£’000
£;000
71
7
789
939
2,828
51
-
15
23
6
22
17
150
34
3
615
25
925
-
-
-
17
3
-
-
-
39
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016
7.
The Group consider that the Directors are the key personnel;
Remuneration of key personnel
10.
Income tax credit
Share based payments expense
Salary, fees, bonuses and other short term emoluments
Social security costs
8.
The average number of employees (including Directors) during the period was as follows:
Employees
The cost of employees (including directors) during the period was made up as follows:
Wages and salaries
Social security costs
Pension cost
Share based payments
9.
Net finance costs
Finance revenue
Fair value loss on embedded derivatives (note 24)
Finance costs (convertible loan and other loans)
May 2016
May 2015
£’000
850
670
87
1,607
£’000
-
226
29
255
May 2016
May 2015
£’000
£’000
33
19
May 2016
May 2015
£’000
£’000
1,739
150
-
939
2,828
823
76
-
26
925
May 2016
May 2015
£’000
5
(4,126)
(737)
(4,858)
£’000
15
-
(646)
(631)
Current tax:
UK corporation tax credit at rates: 2016 – 20% 2015 -20.83%
Prior period adjustment
Tax recoverable for the period
Factors affecting current tax charge:
May 2016
May 2015
£’000
(566)
-
(566)
(566)
£’000
-
-
-
-
The tax assessed on the profit for the period is different to the standard rate of corporation tax in the UK. The differences
are explained below:
Loss before income tax
Loss for the year multiplied by the standard rate of corporation tax
Expenses not deductible for tax purposes
Adjustment in respect of prior periods
Income not assessable for tax
Tax uplift in R&D expenditure
Losses surrendered for R&D claims
Losses carried forward
May 2016
May 2015
£’000
(9,008)
(1,801)
1,414
(1)
(313)
(281)
136
280
(566)
£’000
(2,012)
(426)
25
-
-
(231)
-
632
-
The group has unrelieved UK tax losses of £11,280,000 (2015: £9,688,000) and unrelieved overseas tax losses of
£14,007,000 (2015: £13,836,000). Deferred tax of £5,057,000 has not been provided given the uncertainty over the
timing of a future reversal.
40
41
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016 11.
Property, plant and equipment
13.
Trade and other receivables
Cost
At 31 May 2015
Additions
At 31 May 2016
Depreciation
At 31 May 2015
Charge for the year
At 31 May 2016
Net book values
At 31 May 2016
At 31 May 2015
704
276
980
659
70
729
251
45
Laboratory
Equipment
£’000
Computer
Equipment
£’000
Office
Equipment
£’000
Total
£’000
752
276
1,028
Trade receivables
Other debtors
Prepayments and accrued income
May 2016
May 2015
£’000
£’000
116
142
81
339
265
152
111
528
18
-
18
30
-
30
15
1
16
30
-
30
704
71
775
At 31 May 2016 trade receivables were stated net of provisions of £nil (2015 - £305,000). The remaining balances
were considered recoverable on normal trade terms. There is no material difference between the fair value and the
varying value of these assets. The maximum credit risk exposure at the reporting date equated to the fair value of trade
receivables as stated net of provisions. Standard payment terms are 30 days net.
2
3
0
0
253
48
14.
Inventories
There were no assets held under finance leases during 2015 or 2016. The amount of depreciation expense charged to
the income statement in respect of such assets was £nil in 2015 and 2016.
12.
Intangible Assets
Cost
At 31 May 2015
Additions
Disposals
At 31 May 2016
Depreciation
At 31 May 2015
Charge for the year
At 31 May 2016
Net book values
At 31 May 2016
At 31 May 2015
42
Intangible
Assets
£’000
35
108
143
5
7
12
131
30
Diagnostic testing materials
Inventory is stated net of a £509,000 provision (2015: £nil).
15.
Cash balances at the end of each year are as follows:
Cash and cash equivalents
Cash and cash equivalents per statement of financial position
Cash per statement of cash flows
16.
Trade and other payables
Trade payables
Other taxation and social security
Other creditors
Accruals and deferred income
May 2016
May 2015
£’000
188
188
£’000
-
-
May 2016
May 2015
£’000
10,197
10,197
£’000
1,344
1,344
May 2016
May 2015
£’000
379
-
69
81
529
£’000
200
18
22
839
1,079
43
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016
Other loans at 31 May 2015 included £140,349 being the portion of the loan formerly provided to Oncimmune (USA) LLC
by the Kansas Biotechnology Authority of which £140,349 was due within one year and £1,423,810 was due after one
year. As part of the transaction with Health Diagnostic Laboratory (HDL) in the year to 31 May 2014, that liability had been
assumed by HDL and the company assumed an equal liability to HDL. In September 2015, Oncimmune Limited reached
agreement with Health Diagnostic Laboratory Inc for the reacquisition of the Kansas Laboratory assets from HDL. As part
of the transaction, Oncimmune Limited gave up claims to unpaid royalties (including £225,00 accrued receivable at 31
May 2015) and future guaranteed royalties from HDL, in exchange for the release of the outstanding element of the loan
previously made to Oncimmune Limited by HDL of £1,564,000 in aggregate (of which £140,000 was a current liability at 31
May 2015) and the reacquisition of the assets of the Kansas Laboratory assets having a fair value of £393,000 including
£213,000 of fixed assets and £180,000 of inventory. The gain on the extinguishment of the loan has been presented as an
exceptional item.
Other loans at 31 May 2016 also include a venture loan facility originally of €1,862,649 (approximately £1.5m), from Harbert
European Speciality Lending Company Limited (‘Harbert’), repayable in equal instalment over the period to 31 January 2018
at an interest rate of 10%, plus a further 3% to be paid with the final instalment. As part of this arrangement, Harbert receive
a warrant entitling them to subscribe for shares, likely to represent less than 1% of the company’s expanded capital at the
date of issue, at a subscription price linked to the price achieved on immediate past or immediate future investment. The
facility is secured by a fixed and floating charge over the company’s assets and undertaking. As at the year end £495,920)
was falling due within one year and £394,882 was falling due after one year (2015: £421,249 and £806,456 respectively).
Borrowing
17.
The Group uses bank overdrafts, bank and other loans to finance acquisitions; the following balances remain outstanding
as shown:
Non-current
Convertible loans
Other loans
Current
Other loans
May 2016
May 2015
£’000
-
395
395
496
496
£’000
1,899
2,230
4,129
562
562
At 31 May 2015 convertible loan notes due after more than one year totalled £1,899,000, comprising both principal
amounts and accrued interest. In October 2015, the Group obtained a further £1,250,000 of funding in the form of
convertible loan notes. Upon successful completion of the IPO, these loan notes converted to equity shares at 0.66p per
share. Refer to note 24 for further details.
Lease commitments
18.
At the end of each period the Group had total minimum annual payment commitments under non-cancellable operating
lease agreements as set out below:
May 2016
May 2015
£’000
£’000
Land and buildings
Operating leases which expire:
Within one year
In two to five years
In over five years
19.
Share capital
Authorised:
Ordinary shares of £0.01 each
Preference shares of £0.01 each
A Preference shares of £0.01 each
Allotted, called up and fully paid:
Ordinary shares of £0.01 each
Preference shares of £0.01 each
51
21
-
72
May 2016
May 2015
Shares
57,115,594
-
-
51,024,404
-
51,024,404
£
Shares
571,155
-
-
571,155
510,244
-
510,244
648,000
257,000
95,000
1,000,000
464,072
231,714
695,786
-
-
-
-
£
6,480
2,570
950
10,000
4,641
2,317
6,958
During the period, the company undertook the following transactions:
•
•
•
34,789,300 shares were issued at par value of £0.01 in a share for share exchange to obtain control of Oncimmune
Limited as part of a group reconstruction.
In January 2016, the company issued 1,379,310 Ordinary shares of £0.01 for a consideration of £0.87 per share.
In May 2016, 6,394,255 Ordinary shares were issued under the terms of the conversion option in respect of loan
liabilities and accrued interest of £4,243,739 at £0.66 per share.
• On listing, 8,461,539 shares of £0.01 were issued at £1.30 per share.
44
45
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016 20.
Share based payments
The Group has granted options to certain directors and employees in respect of Ordinary shares.
The Group has the following share options schemes in place:
The 2005 Share Option Scheme
The 2005 Share Option Scheme has the following principal terms:
•
•
•
•
•
•
•
•
•
the scheme is limited to eligible persons, being employees, officers, SAB members and consultants of the Group;
the scheme provides for options to be granted to eligible persons to subscribe for ordinary shares of 0.01p each in
the capital of Oncimmune Holdings Plc;
the scheme was limited to options over 14,500 ordinary shares in Oncimmune Limited (now 725,000 options over
Ordinary shares of Oncimmune Holdings Plc), all of which have been granted and options may be issued under the
Enterprise Management Incentive (EMI) rules or as unapproved options;
no option may be exercised later than the tenth anniversary of the date of grant, extended to 20 years for certain
option holders;
each option issued under the scheme had a vesting period commencing for employees, officers and consultants on
the first anniversary of the date of the grant and expiring on the fourth anniversary of the date of grant and for SAB
members commencing on the second anniversary and expiring on the fourth anniversary of the date of grant;
options issued under the scheme are non-transferable;
vested options must be exercised (i) within 24 months of an option holder’s death; (ii) within 3 months of an option
holder ceasing to hold office for reasons of disability, redundancy or retirement (unless otherwise agreed by the
Directors); and (iii) within 6 months of an option holder’s resignation (if an employee, officer or consultant of the
Operating Group) and within 24 months of an option holder’s resignation (if an SAB member), or in each case the
options shall lapse
if an option holder shall leave the Operating Group for any reason, options granted to that option holder shall only
be exercisable in the Directors’ discretion;
on ‘takeover’ of Oncimmune Holdings Plc where a general offer is made to acquire the whole of the issued share
capital of Oncimmune Holdings Plc (or any class of share capital of Oncimmune Holdings Plc), the acquiring
company may make a ‘rollover’ offer to the option holders, which the option holders shall be deemed to accept,
such that their options shall rollover into options in the acquiring company upon the same terms; and
• Oncimmune Holdings Plc may at any time add to or vary the scheme rules provided that this does not affect the
liabilities of any option holder.
The 2007 Share Option Scheme
The 2007 Share Option Scheme is on the same principal terms as the 2005 Share Option Scheme save that:
the scheme was limited to an additional 25,029 (increased to 68,056 options over ordinary shares in Oncimmune
Limited and which rolled over 3,402,800 options over Ordinary Shares), of which 23,511 options over ordinary shares
in Oncimmune Limited (rolled over into 1,175,550 options over Ordinary Shares of Oncimmune Holdings Plc) have
been granted;
the vesting period for all options issued under the scheme commenced on the first anniversary of the date of grant
and expired on the third anniversary of the date of grant, and;
vested options must be exercised (i) within 12 months of an option holders death; (ii) within 3 months of an option
holder ceasing to hold office for reasons of disability, redundancy or retirement (unless otherwise agreed by the
Directors) and (iii) on or before an option holders resignation, or in each case the options shall lapse.
•
•
•
46
In November 2015, the two existing option schemes were rolled over into the 2015 Oncimmune Holdings Scheme on the
terms set out above.
Options in grant
Weighted average exercise price
Weighted average life remaining in years
*Share options issued by Oncimmune Limited
May 2016
May 2015
Number of options Number of options*
1,825,550
£0.83
3.0
36,511
£37
7.30
The fair value of options granted by the Company has been arrived at using the Black-Scholes model. The assumptions
inherent in the use of this model are as follows:
Deemed market value at date of grant
Option exercise price
Expected life of options
Volatility
Dividend yield
Risk free rate
Discount factors
May 2016
May 2015
£0.87
£0.82
12%
0%
1%
0%
£41.48
£41.48
3
45%
0%
3%
0%
2015 comparatives relate to options granted by Oncimmune Limited prior to the transfer of options to Oncimmune
Holdings Plc.
•
The option life is assumed to be at the end of the allowed period.
• Historical staff turnover is taken into account when determining the proportion of granted options that are likely to
vest by the end of the period.
•
Following the application of the vesting probability assumptions, there are no further vesting conditions other than
remaining in employment with the Company during the vesting period.
• No variables change during the life of the option (e.g. dividend yield).
• Volatility has been estimated as there is no history of the Company’s share price.
47
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016
At the period end each year the Group had the following options at the weighted average exercise prices (WAEP) shown:
22.
Categories of financial instruments
Expiry date
Outstanding at 1 June
Granted
Lapsed
Modified
Exercised
Outstanding at 31 May
Weighted average remaining
contractual life in years
WAEP
May 2016
WAEP
May 2015
37.00
-
(36.17)
0.83
Number
36,511
-
1,789,039
1,825,550
3.0
36.00
41.48
-
-
37.00
Number
34,511
2,000
-
-
36,511
7.30
The options are generally exercisable in the event of either a listing or sale of the Company’s shares. In the absence of
such an exercise, the options will lapse at the end of their weighted average life.
The Group recognised total expenses in respect of the option schemes above of £89,000 (2015: £25,000) related to
equity-settled share based payment transactions during the year. The Group issued warrants on 26 November 2015 to
directors of the company: Geoffrey Hamilton-Fairley to subscribe for 762,500 Ordinary Shares at a subscription price of
1p per Ordinary Share and to Meinhard Schmidt to subscribe for 226,250 Ordinary Shares at 1p. A share based payment
charge of £850,000 has been recognised in respect of these warrants.
21.
Related party transactions
During the year, the University of Nottingham, a significant shareholder, provided support and facilities to the group to
enable it to undertake research:
Current financial assets
Loans and receivables
Loans and receivables - cash and cash equivalents
Total financial assets
Non-financial assets
Total
Non-current financial liabilities
At amortised cost - borrowings
Current financial liabilities
At amortised cost - borrowings
At amortised cost - payables
Total current financial liabilities
Non financial liabilities
Costs incurred
Accrued at year end
May 2016
May 2015
Total current liabilities
£’000
138
20
£’000
165
10
May 2016
May 2015
£’000
£’000
258
10,197
10,445
81
10,536
395
496
529
1,025
57
1,082
418
1,344
1,762
110
1,872
4,129
562
222
784
857
1,641
48
49
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016
Fair Value Measurement
23.
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into
three levels of fair value hierarchy. This grouping is determined based on the lowest level of significant inputs used in fair
value measurement., as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Embedded derivatives
May 2016
May 2015
£’000
-
£’000
71
Convertible loan note
24.
In October 2013, Oncimmune Ltd received a £1.8 million loan from under the terms of a convertible loan note, which
accrues interest at rates of 25%. Monthly repayments of capital plus accrued interest over a 24 month period commence
on 1 May 2014 or earlier under specified circumstances, albeit subordinated to the Harbert loan (note 15 above).
The terms of the loan include the following conversion options:
•
•
•
on a relevant fund raising the holder may convert at, a price per share being a 20% discount to the price per
share of the class of share being issued and paid by investors on that relevant fund raising;
on a change of control, a price per share being a 20% discount to the price per A Preference share received
in connection with the acquisition of shares on the change of control;
on a voluntary conversion at the voluntary conversion price.
Management have carried out an assessment of the terms of the loan and have judged that the instrument consists of
two components:
•
•
a host instrument, held at amortised cost;
a single compound embedded derivative that comprises multiple embedded derivatives (comprising the
various prepayment options and the conversion option) that expose Oncimmune Ltd to inter-related risks.
The compound embedded derivative has been recognised separately as a derivative financial instrument at
fair value through profit and loss.
A fair value exercise to determine the value of the components was performed at inception of the loan (October 2013).
The valuation takes into account the share price of the issuer and the time value of the option.
The embedded derivative is defined as the value of the derivative liability comprising the various prepayment options
and the conversion option. The valuation takes into account the share price of the issuer and the time value of the
option.
Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of
maximising the use of market based information. The valuation technique for the single compound embedded derivative,
which is a level 3 item, is as follows:
The fair value of the compound embedded derivative recognised separately from the host convertible loan is estimated
using a present value technique. The fair value at each date is estimated by probability weighting the prepayment
feature, adjusting for risk and discounting at 20 per cent, based upon commercially applicable rates, and by reference to
the value of the equity instruments associated with the conversion feature.
The valuation of the compound embedded derivative is performed at the inception of the loan (October 2013) and at
each reporting date thereafter. During the period to 31 May 2016, finance costs in respect of the fair value movement of
£4,125,703 were recognised. The fair value of the instrument on extinguishment was £4,196,678.
Fair value of net proceeds
Net proceeds
Embedded derivative
Liability component
Liability component
Interest charge for the year
May 2016
May 2015
£’000
-
-
-
-
-
402
402
£’000
1,824
71
1,753
1,824
1,753
285
2,038
Loss per share
25.
The basic per share is calculated by dividing the loss attributable to the owners of Oncimmune Holdings Plc by
the weighted average number of ordinary shares in issue during the year. Diluted earnings per share has not been
calculated as the entity is loss making.
Earnings
Loss on ordinary activities for the purposes of basic and fully diluted loss per share
(£’000)
Loss on ordinary activities for the purposes of basic and fully diluted loss per share
(£’000) (before highlighted items)
Number of shares
Weighted average number of shares for calculating basic and fully diluted earnings
per share
Loss per share
Basic and fully diluted loss per share
Basic and fully diluted loss per share (before exceptional items)
May 2016
May 2015
(8,442)
(4,654)
(2,012)
(2,012)
35,866,356
23,203,600
23.54p
12.97p
8.67p
8.67p
50
51
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016
26.
The Group’s activities expose it to a variety of financial risks: market risk (interest rate risk), credit risk and liquidity risk.
Financial risk management
Capital risk management
The Group’ s capital management objectives are:
Market risk - Foreign exchange risk
As disclosed in note 4 in the years to 31 May 2016 and 31 May 2015 over 60% of the Group’s income by destination was
into the North American market and denominated in US dollars. The Group’s income stream is exposed to fluctuations in
the US dollar exchange rate against Sterling.
Market risk - Interest rate risk
The Group carries significant borrowings used to finance acquisitions in the form of bank and other loans as all
borrowings are on fixed interest terms, the Directors consider that no risk arises in respect of future cash flows.
Market risk - Price risk
The Group is not exposed to either commodity or equity securities price risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. In order to minimise this risk the Group endeavours only to deal with companies which are demonstrably
creditworthy. In addition, a significant proportion of revenue results from cash transactions. The aggregate financial
exposure is continuously monitored. The maximum exposure to credit risk is the value of the outstanding amount of
trade receivables. The management do not consider that there is any concentration of risk within either trade or other
receivables.
Liquidity risk
The Group currently holds cash balances to provide funding for normal trading activity. The Group also has access to
both short term and long term borrowings . Trade and other payables are monitored as part of normal management
routine.
Borrowings and other liabilities mature according to the following schedule:
•
•
to ensure the Group’s ability to continue as a going concern; and
to provide an adequate return to shareholders
by pricing products and services commensurate with the level of risk.
The Group monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on
the face of the statement of financial position.
Total equity
Cash and cash equivalents
Capital
Total financing
Borrowings
Overall financing
May 2016
May 2015
£’000
9,731
10,197
19,928
891
891
£’000
(3,818)
1,344
(2,474)
4,620
4,620
Capital to overall financing ratio
2236.6%
(53.5%)
Within 1 year
One to five years
27.
Events after the balance sheet date
2016
Trade payables
Other taxation and social security
Other creditors
Accruals and deferred income
Convertible loans
Other loans
£’000
496
57
69
81
-
496
£’000
-
-
-
-
-
395
2015
Within 1 year
One to five years
Trade payables
Accruals
Other taxation and social security
Other creditors
Accruals and deferred income
Convertible loans
Other loans
£’000
562
200
18
22
839
-
-
£’000
-
-
-
-
-
1,899
2,230
In July 2016 the Company obtained the CE mark for the reagents used in EarlyCDT-Lung, an autoantibody blood test that
can detect cancer up to four years earlier than other methods.
28.
Subsidiaries consolidated
The subsidiaries included in the consolidated financial statements of the Group are detailed below. No subsidiary
undertakings have been excluded from the consolidation.
Company
Holding
Country of incorporation
Class of share capital held
Direct %
Indirect %
Oncimmune Limited
United Kingdom
Oncimmune (USA) LLC
United States of America
Ordinary
Ordinary
100
100
52
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STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Consolidated Financial Statementsfor the Year Ended 31 May 2016
Independent Auditor’s Report
Opinion on other matter prescribed by the Companies
Act 2006
In our opinion the information given in the Strategic Report
and Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
parent company financial statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you
if, in our opinion:
•
•
•
adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Other matter
We have reported separately on the consolidated financial
statements of Oncimmune Holdings Plc for the year ended
31 May 2016.
Giles Mullins
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Milton Keynes
4 November 2016
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF ONCIMMUNE HOLDINGS PLC
We have audited the parent company financial statements of
Oncimmune Holdings Plc for the period ended 31 May 2016,
which comprise the balance sheet, statement of changes
in equity and the related notes. The financial reporting
framework that has been applied in their preparation is
applicable law and United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice),
including FRS 101 ‘Reduced Disclosure Framework’.
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’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 company and the company’s members as a
body, for our audit work, for this report, or for the opinions
we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’
Responsibilities, the directors are responsible for the
preparation of the parent company financial statements
and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the
parent company financial statements in accordance with
applicable law and International Standards on Auditing (UK
and Ireland). Those standards require us to comply with
the Auditing Practices Board’s (APB’s) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council’s website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the parent company financial statements:
•
•
•
give a true and fair view of the state of the company’s
affairs as at 31 May 2016;
have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice; and
have been prepared in accordance with the
requirements of the Companies Act 2006.
54
55
Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS Company Statement of Financial Position
for the Period Ended 31 May 2016
Company Statement of Changes in Equity
for the Period Ended 31 May 2016
Fixed Assets
Investment
Current assets
Debtors
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Capital and reserves
Called up share capital
Share premium account
Profit and loss reserve
Other reserves
Shareholders’ funds
Notes
3
4
5
31 May 2016
£’000
348
14,947
59
14,888
15,236
510
16,273
(2,486)
939
15,236
In accordance with the exemptions permitted by section 408 of the Companies Act 2006, the profit and loss account of
the parent company has not been presented.
The accompanying notes for an integral part of the company financial statements.
The parent company financial statements were approved by the board on 4 November 2016.
Andrew Millet
Director
Loss for the year
Total comprehensive income
Transactions with owners:
Issue of equity shares
Exercise of conversion option
Share option charge
Total transactions with owners
Share
capital
£’000
Share
premium
£’000
Other
reserves
£’000
-
-
510
-
510
-
-
20,399
(4,126)
16,273
-
-
-
-
939
939
Retained
earnings
£’000
(6,612)
(6,612)
-
4,126
-
4,126
Total
£’000
(6,612)
(6,612)
20,909
-
939
21,848
As at 31 May 2016
510
16,273
939
(2,486)
15,236
The accompanying notes form an integral part of the company financial statements.
56
57
Oncimmune Holdings Plc | Annual Report Year Ended 31 May 2016STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTS Oncimmune Holdings Plc | Annual Report
Year Ended 31 May 2016
1.
The principal accounting policies applied in the preparation of the Company’s financial statements are set out below.
Accounting policies
Taxation
Income tax on the profit or loss for the year comprises current and deferred tax.
Statement of compliance
The separate financial statements of the Company are presented in accordance with Financial Reporting Standard 101
– ‘The Reduced Disclosure Framework’. They have been prepared under the historical cost convention. The principal
accounting policies of adopted in the preparation of these financial statements are set out below. These policies have
been applied consistently throughout the year.
Adoption of FRS 101
This Company is included in the consolidated financial statements of Oncimmune Holdings Plc for the year ended 31 May
2016. These accounts are available from the registered office address of the Company.
Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of all disclosure exemptions available under
FRS 101. Therefore these financial statements do not include:
• A statement of cash flows and related notes.
•
The requirements of IAS 24 Related Party Disclosures to disclose related party transactions entered into between
two or more wholly owned members of the group.
• Disclosure of key management personnel compensation.
• Capital management disclosures.
•
•
Presentation of comparative reconciliation of the number of shares outstanding at the beginning and at the end of
the period.
The effect of future accounting standards not adopted.
• Disclosures in respect of financial instruments and fair value measurement.
The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The
areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to
the consolidated financial statements, are disclosed in note 3.
The financial statements of the Company have been prepared on a going concern basis and under the historical cost
convention. The financial statements are presented in sterling and have been rounded to the nearest thousand (£’000).
Investments
Investments in subsidiaries are valued at cost less impairment.
Impairment testing of non-current assets
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some
are tested at cash-generating unit level. All other individual assets or cash-generating units are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to
sell, and value in use based on an internal discounted cash flow evaluation. All assets are subsequently reassessed for
indications that an impairment loss previously recognised may no longer exist.
Current tax is the expected tax payable on the taxable income for the year, using current rates, and any adjustments to
the tax payable in respect of previous years. In so far as group companies are entitled to UK tax credits on qualifying
research and development expenditure, such amounts are recognised when received.
Deferred taxation is provided on all temporary differences between the carrying amount of the assets and liabilities in the
financial statements and the tax base. Deferred tax assets are recognised only to the extent that it is probable that future
taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets and liabilities
are not discounted. Deferred tax is determined using the tax rates that have been enacted or substantially enacted by
the balance sheet date, and are expected to apply when the deferred tax liability is settled or the deferred tax asset is
realised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the
reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not
reverse in the foreseeable future.
Tax is recognised in the income statement, except where it relates to items recognised directly in equity, in which case it
is recognised in equity.
Share based compensation
Equity-settled share-based payments are recognised as an expense in profit or loss, based on the fair value of the
option at the date of grant. Such costs are spread over the vesting period, adjusted for the best available estimate of the
number of share options expected to vest, with a corresponding credit to equity, net of deferred tax where applicable.
Such adjustments are only made in respect of non-market performance vesting conditions. No adjustment is made to
the expense recognised in prior periods if fewer share options ultimately are exercised than originally estimated. Vesting
conditions relate to continuing employment.
Where the granting of share options has coincided with the issue of shares, for cash, to third party investors, the fair
value of such options is based on the issue price for those shares which is considered to be an arm’s length value.
Financial instruments
Financial instruments are assigned to their different categories by management on initial recognition, depending on the
contractual arrangements.
Financial assets
The Company’s financial assets fall within the heading of ‘Loans and receivables’. Loans and receivables comprise trade
and certain other receivables as well as cash and cash equivalents.
Loan and receivables are recognised when the Group becomes a party to the contractual provisions of the instrument
and are recognised at fair value and subsequently measured at amortised cost using the effective interest method less
any provision for impairment, based on the receivable ageing, previous experience with the debtor and known market
intelligence. Any change in their value is recognised in the income statement.
Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are
transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for
impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial
asset or a group of financial assets is impaired.
58
58
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STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Financial Statements of the Companyfor the Year Ended 31 May 2016
Oncimmune Holdings Plc | Annual Report
Year Ended 31 May 2016
Financial liabilities
The Company’s financial liabilities comprise borrowings, a convertible loan and trade and other payables.
Financial liabilities are initially recognised at the fair value of the consideration received net of issue costs. After initial
recognition borrowings are measured at amortised cost using the effective interest method. All interest-related charges
are included in the income statement line item “finance expense”. Financial liabilities are derecognised when the
obligation to settle the amount is removed.
Convertible loan notes
Convertible loan notes where the conversion option does not meet the definition of equity are accounted for as financial
liabilities. The instruments are split between:
•
•
the “host” debt instrument being a non-convertible debt. The host contract is recognised at fair value and
subsequently measured at amortised cost using the effective interest rate;
an embedded derivative representing the conversion feature.
The valuation of the embedded derivative is performed at inception of the loan and at the end of each reporting period.
The residual value is then allocated to the host debt instrument.
Warrants to purchase shares
Warrants to purchase shares that do not meet the definition of equity instruments are accounted for as derivative
liabilities. The valuation is performed at inception and at each subsequent reporting with movements recognised in profit
or loss.
Accounting estimates and judgements
2.
The preparation of financial statements under IFRS requires the Company to make estimates and judgements that affect
the application of policies and reported amounts. Estimates and judgements are based on historical experience and
other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates.
The estimates and judgements which have a significant risk of causing a material adjustment to the carrying amount of
assets and liabilities are discussed below:
•
Impairment
An impairment loss is recognised for the amount by which the asset’s or cash generating unit’s carrying amount
exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future
cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present
value of those cash flows. In the process of measuring expected future cash flows management makes assumptions
about future operating results. These assumptions relate to future events and circumstances. In most cases,
determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the
appropriate adjustment to asset-specific risk factors.
• Measurement of derivative liabilities carried at fair value through profit and loss
Management uses valuation techniques to determine the fair value of financial instruments (where active market
quotes are not available). This involves developing estimates and assumptions consistent with how market
participants would price the instrument. Management bases its assumptions on observable data as far as possible
but this is not always available. In that case management uses the best information available. Estimated fair values
may differ from the actual prices that would be achieved in an arm’s length transaction at the reporting date.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held on call, together with other short term highly liquid
investments which are not subject to significant changes in value and have original maturities of less than three months.
3.
Investments
Equity
Equity comprises the following:
•
•
Share capital: the nominal value of equity shares.
Share premium: includes any premium received on the sale of shares. Any transaction costs associated with the
issuing of shares are deducted from share premium, net of any income tax benefits.
• Other reserves – accumulated share based payment expense.
Cost
Additions
At 31 May 2016
Investments in subsidiary
£’000
348
348
Profit and loss account: retained profits.
The company has applied S612 merger relief by treating the cost of investment arising from the reorganisation as
equal to the nominal value of shares issued (thus disregarding any premium arising).
Details of subsidiary undertakings as at 31 May 2016 are as follows:
Company
Holding
Country of incorporation Class of share capital held
Direct %
Indirect %
Oncimmune Limited
United Kingdom
Ordinary
100
Oncimmune (USA) LLC
United States of America
Ordinary
100
•
•
60
60
61
61
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Financial Statements of the Companyfor the Year Ended 31 May 2016
Oncimmune Holdings Plc | Annual Report
Year Ended 31 May 2016
4.
Trade and other receivables
Loan to subsidiary undertakings
Other debtors
May 2016
£’000
14,944
3
14,947
At 31 May 2016 receivables were stated net of provisions of £nil. There is no material difference between the fair value
and the varying value of these assets. The maximum credit risk exposure at the reporting date equated to the fair value
of trade receivables as stated net of provisions.
5.
Trade and other payables
Current tax
6.
Share capital
Authorised:
Ordinary shares of £0.01 each
Preference shares of £0.01 each
A Preference shares of £0.01 each
Allotted, called up and fully paid:
Ordinary shares of £0.01 each
Preference shares of £0.01 each
May 2016
£’000
59
£
571,115
-
-
571,115
510,244
-
510,244
May 2016
Shares
57,115,594
-
-
57,115,594
51,024,404
-
51,024,404
During the period, the company undertook the following transactions:
•
•
34,789,300 shares were issued at par value of £0.01 in a share for share exchange to obtain control of Oncimmune
Limited as part of a group reconstruction.
in January 2016, the company issued 1,379,310 Ordinary shares of £0.01 for a consideration of £0.87 per share.
•
In May 2016, 6,394,255 Ordinary shares were issued under the terms of the conversion option in respect of loan
liabilities and accrued interest of £4,243,739 at £0.66 per share.
• On listing, 8,461,539 shares of £0.01 were issued at £1.30 per share.
62
62
6363
STRATEGIC REPORTDIRECTORS’ REPORT FINANCIAL STATEMENTSOncimmune Holdings Plc | Annual Report Year Ended 31 May 2016Notes to the Financial Statements of the Companyfor the Year Ended 31 May 2016 Oncimmune Holdings Plc Annual Report
Year Ended 31 May 2016
Company Information
Company registration number
09818395.
Registered office
Clinical Sciences Building
City Hospital
Hucknall Road
Nottingham
NG5 1PB
Website
www.oncimmune.co.uk
Directors
Meinhard Folkert Schmidt
Non-Executive Chairman
Geoffrey Neil Hamilton-Fairley
Chief Executive Officer
Andrew Millet
Chief Financial Officer
Timothy Brian Bunting
Non-Executive Director (Deputy Chairman)
Richard Simon Sharp
Non-Executive Director
Andrew Vaughan Unitt
Non-Executive Director
Julian Clement Hirst
Non-Executive Director
Carsten Schroeder
Non-Executive Director
Secretary
Andrew Millet
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Nominated Adviser and Broker
Zeus Capital Limited
41 Conduit Street
London
W1S 2YQ
Legal adviser
Peachey & Co LLP
95 Aldwych
London
WC2B 4JF
Auditor
Grant Thornton UK LLP
Chartered Accountants
Statutory Auditor
Grant Thornton House
202 Silbury Boulevard
Central Milton Keynes
MK9 1LW
Financial PR
Consilium Strategic Communications
41 Lothbury
London
EC2R 7HG
Registrars
Capita Asset Service
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
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Oncimmune Holdings Plc
Registered Address:
Clinical Sciences Building
Nottingham City Hospital
Hucknall Road
Nottingham
NG5 1PB
Email: contact@oncimmune.co.uk
Phone: +44 (0)115 8231869
Fax:
+44 (0)115 8231958
Website: www.oncimmune.co.uk