Accelerating in the field of immuno-diagnostics
Continuing to deliver on our growth strategy
Oncimmune Holdings plc
Annual Report 2021
For the year ended 31 May 2021
Contents
Strategic report
Business highlights
Chairman and Chief Executive Officer’s review
Chief Financial Officer’s review
Governance
Board of Directors
Principal risks and uncertainties
Directors’ report
Financial statements
Independent auditor's report
Consolidated statement of comprehensive income
Consolidated statement of finanacial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company statement of financial position
Company statement of changes in equity
Notes to the Company financial statements
Company information
Page
2
14
18
20
22
24
30
38
39
40
41
42
72
73
74
80
“We all know the prime directive in medicine is to
first do no harm and now, as therapies become more
complicated and technologies more advanced, we may
have the opportunity to predict and prevent toxicity
instead of watch and react.”
Dr Scott Chandler, Global Head, Personalised Health Care (PHC) Safety, Roche
on the promise of companion diagnostics
Oncimmune ImmunoINSIGHTS webinar, September 2020
2
Oncimmune Annual Report 2021
1
Financials at a glance
Revenue growing, costs controlled and loss for the year reduced
Revenue for the year
£3.7M
(FY2020: £0.5M)
R&D costs for the year were
£1.6M
(FY2020: £1.7M)
Administrative expenses
(excluding share-based payment charges) for the year
£5.7M
(FY2020: £8.2M)
Share-based payment charges for the year were
£1.1M
(FY2020: £0.2M)
Loss for the year was
£4.6M
(FY2020: £8.5M)
Cash balance at the year end of
£8.6M
(FY2020: £4.2M)
Net debt of £0.8M (FY2020: £4.0M) including lease liabilities
Net cash of £0.1M (FY2020: £3.0M) excluding lease liabilities
“[The UK’s] scientists and researchers are at the forefront of global
efforts to better understand COVID-19 and have been working tirelessly
to identify new and innovative therapies that will save lives. By backing
this pioneering project, we are ensuring that the best therapeutic
approaches can be offered to the right patients at the right time.”
Alok Sharma, Business Secretary, Oncimmune RNS, 6 October 2020 after Oncimmune is awarded the
IMPACTT grant by Innovate UK to develop an infectious disease research tool for use in COVID-19.
Oncimmune is a leading global immunodiagnostics group, primarily focused on the growing fields
of immuno-oncology, autoimmune disease and infectious diseases. With a partnership led approach,
Oncimmune is evolving and leveraging its technology with global pharmaceutical and biotechnology
companies, early-stage start-ups, leading academic groups, and not-for-profit companies.
ImmunoINSIGHTSTM is Oncimmune’s service to the life science industry, built off the company’s
proprietary autoantibody profiling technology. Underpinned by Oncimmune’s proprietary high
throughput immunogenic protein library, one of the largest in the world, covering more than 95%
of known human antigens, the technology can be utilised for profiling autoantibodies in patients
receiving or about to receive treatment. This unique combination of Oncimmune’s core technology and
understanding of the immune system enables life-science organisations to optimise drug development,
leading to more effective, targeted as well as safer treatments for patients.
Oncimmune's immunodiagnostic test, EarlyCDT Lung, can detect and help identify lung cancer
on average four years earlier than standard clinical diagnosis1. EarlyCDT Lung targets a vast market
estimated to grow to £3.8bn by 2024. With over 200,000 tests already performed for patients worldwide
and its use being supported by peer reviewed data in over 12,000 patients2, EarlyCDT Lung is poised to
become an integral component of future lung cancer detection programmes, globally.
1 Jett J, Healey G, Macdonald I, Parsy-Kowalska C, Peek L, Murray A. Determination of the detection lead time for autoantibody biomarkers in
early-stage lung cancer using the UKCTOCS cohort. J Thorac Oncol. 2017;12(11):S2170. doi:10.1016/j.jtho.2017.09.1360
2 Sullivan et al, Earlier diagnosis of lung cancer in a randomised trial of an autoantibody blood test followed by imaging, ERJ, 2020
2
Oncimmune Annual Report 2021
3
The science behind our tests
and service offering
ImmunoINSIGHTS
Oncimmune’s service offering
The human immune system produces autoantibodies targeting cancer cells,
which we use to diagnose cancer early and develop new therapeutic targets
Oncimmune is a pioneer and leader in the use of autoantibodies as one of
the earliest, measurable signals of disease
ImmunoINSIGHTS is Oncimmune’s autoantibody profiling service to the life science industry
in the fields of immuno-oncology, autoimmune disease and infectious diseases. This is
underpinned by our proprietary, immunogenic protein library of almost 9,000 antigens,
one of the largest in the world, covering more than 95% of known human antigens. Our
platform enables high throughput profiling of autoantibodies in patients receiving or about
to receive treatment.
Oncimmune’s core biomarker technology and expertise in the immune system enables
life-science organisations to understand the immune response to therapy, leading to more
effective, targeted as well as safer treatments for patients.
Historic
focus
Oncimmune’s
novel focus
Measurable in low
volumes of blood
“We are delighted to be partnering with such a prestigious organisation
as Cedars-Sinai on this important programme.”
Dr Adam M Hill, Oncimmune RNS, 13 October 2020 after Oncimmune wins contract with
Cedars-Sinai Medical Center to profile immune response to COVID-19.
Oncimmune’s ELISA-based EarlyCDT blood tests can
detect autoantibodies raised in response to cancer
leading to earlier diagnosis.
Leveraging our proprietary technology platform and
methodologies, to offer therapy developers actionable
insights regarding target and in-market therapies
across the development lifecycle and beyond.
4
Oncimmune Annual Report 2021
5
Antigen-presenting B cellActivated CD8+ T cellExpansion of CD8+ T cellsTumour cellCD4+ T-helper cell(cid:18)MHC class IIActivated CD4+ T cellCytokinesB-cell activationPlasma B cellAutoantibodiesCD8+cytotoxic T cellMHC class I
How ImmunoINSIGHTS creates
value for our partners
Outcome
Offering
8k
antigens
SeroTagTM
Discovery engine
1.5k-2k
NavigAIDTM
Designed, disease(cid:21)
specific arrays
60-90
Response
models
60-90
l
p
a
t
f
o
r
m
*
P
r
o
d
u
c
t
i
s
a
t
i
o
n
Discovery of
clinically(cid:21)relevant
biomarker pool
Creation of a
disease-specific
biomarker panel
Optimisation of
detection algorithms
Single draw
blood-based Dx
for early detection
of cancer
Over 8,800
antigens to
support discovery
Marker
panel optimisation
Immune-response
analytics and insights
Diagnostics
development,
production &
manufacturing
“With the increasingly global nature of our client base
and the forecast rapid growth in our business over
the next few years, the Company looks forward to
deploying this additional capital with confidence in the
growth prospects for the business.”
Dr Adam M Hill, Oncimmune RNS, 25 March 2021 after Oncimmune
announces successful oversubscribed equity placing of £9.0 million.
8-12
marker
panel
6
Oncimmune Annual Report 2021
7
Highlights
Operational and commercial highlights
• Continued to strengthen strategic relationships with Roche and Genentech as well as with
• Pilot in Norfolk and Waveney Clinical Commissioning Group initiated, representing the
other global pharmaceutical companies
first sales of the EarlyCDT Lung test into the NHS
•
Following the successful deployment of UK Government funding for the development of an
infectious diseases research tool for use in COVID-19, the period saw the launch of an infectious
diseases panel resulting in contracts with Roche and multiple contracts with Cedars-Sinai
Medical Center, Los Angeles
• Agreement signed with a leading global pharmaceutical company to utilise the NavigAID
autoimmune disease characterisation panel to explore the autoantibody profiles of patients
with four key autoimmune diseases
• Agreements with three global pharmaceutical companies to utilise the SeroTag immuno-
oncology discovery array to explore the autoantibody binding profiles of solid tumour cancer
patients treated with immunotherapy
• Renewal of existing partnership with Oncimmune continuing to provide autoantibody
biomarker services to a global pharmaceutical company, with two initial projects started to
profile patients in autoimmune trials
•
Further research published in leading journals including Arthritis Research & Therapy3 and
PLOSOne4, alongside pre-publication of the first results from collaboration with Cedars-Sinai5
•
iDx Lung6 programme launched, with 350 patients recruited to date in Southampton and
Leeds to date
• US partner for EarlyCDT Lung, Biodesix, seeing a recovery in demand, with planned
expansion of its national sales team from 32 to 76 by the end of 2022
• EarlyCDT Lung authorised for use by the Spanish Public Health Service with the Galician
Health Service (SERGAS), the first public health service in Spain to use the EarlyCDT Lung
test
• Diagnosticos da America, Latin America’s largest medical diagnostic company, to offer
EarlyCDT Lung across its extensive laboratory, private hospital and clinic network
• Successful return of the IP and distribution rights for EarlyCDT in the People's Republic of
China and Hong Kong from Genostics Company Limited, allowing Oncimmune to pursue
the optimum route to market
• Results from the ECLS study published in the European Respiratory Journal7 and pre-
publication of the three-year follow-up data8 supports a trend towards a mortality benefit
of the EarlyCDT Lung blood test, confirming the number of late-stage cancers and deaths
to be lower in patients tested with EarlyCDT Lung
• Additional results published in PLOSOne showed that EarlyCDT Lung and CT surveillance
has been found to be highly cost-effective in early detection compared to CT surveillance
alone9
3 Vordenbäumen, S., Brinks, R., Schriek, P. et al. Profiling of IgG antibodies targeting unmodified and corresponding citrullinated auto-
antigens in a multicenter national cohort of early arthritis in Germany. Arthritis Res Ther 22, 167 (2020). https://doi.org/10.1186/s13075-
020-02252-6
4 https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0241189
5 https://www.medrxiv.org/content/10.1101/2021.07.15.21260603v1
8
6 NHS Lung Health Check Programmes in Wessex and Yorkshire as part of the iDx-LUNG evaluation programme
7 https://erj.ersjournals.com/content/early/2020/07/09/13993003.00670-2020
8 https://medrxiv.org/cgi/content/short/2021.08.17.21262105v1
9 https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0237492
Oncimmune Annual Report 2021
9
Highlights continued
Financial highlights
• Revenue of £3.7M (FY2020: £0.5M) validates the Company’s core strategy of focusing on
building a leading immunodiagnostics group; with significant growth driven by conversion
from an expanding pipeline of ImmunoINSIGHTS opportunities
• The revenue reported is lower than the headline £5.6M indicated in the unaudited full-year
trading update issued on 8 June, due largely to revenue recognition relating to an invoice for
£1.7M to an historic EarlyCDT Lung distributor. The Group is unable to recognise this revenue
in the year ended 31 May 2021 as the revenue recognition requirements of IFRS 15 have not
been met at this time
• The ImmunoINSIGHTS service business showed strong growth in revenue, profitability and
cash generation during the period
• Successful equity placing in March 2021 with gross proceeds of £9M to enable a 4x scale-up
in ImmunoINSIGHTS operating capacity to meet increasing demand from customers, and the
expansion of commercial team to support customers, particularly in the US
• Continued tight management of cost base following the cost reduction programme initiated
in 2018
Recent progress and FY2022 outlook
• Scale up of the Dortmund facility now in progress and capable of handling upwards of 40,000
samples per annum by Q1 FY2023
• Continued commercial success from the infectious diseases platform across existing and
new contracts
• Commercial sales team expansion in the US underway with recent key hires on the East and
West coasts. With a clear majority of all ImmunoINSIGHTS contracts currently and historically
being awarded are from the US
• Evaluating additional expansion of scientific and bioinformatics capability in the US to deliver
US-based projects
• Second pilot to provide EarlyCDT Lung tests into the NHS already signed and expected to
commence in Q3 FY2022
• After quieter than expected summer months in which fewer new ImmunoINSIGHTS
contracts were signed than originally expected, there has been a healthy resumption of
activity and a strong rate of conversion of the commercial pipeline into service contracts,
underpinning confidence in FY2022 revenue growth from both new opportunities and
follow-on contracts
•
Longer term prospects remain compelling, with the conversion of a number of initial
services contracts into multiple projects serving to demonstrate the Group’s ability to
develop deeper and broader strategic commercial partnerships, of increasing value and
longevity
“Substantial expansion to Roche contract to
profile autoantibodies in patients undergoing
immunotherapy trials”
Oncimmune RNS, 27 July 2020 after Roche agrees to increase
the number of patient samples to be profiled in immunotherapy trails,
using Oncimmune's proprietary SeroTag discovery platform.
10
Oncimmune Annual Report 2021
11
How we create value for our stakeholders
In September 2018, Oncimmune launched a three-year strategic plan to unlock value for
stakeholders with a focus on three key pillars:
1. Accelerating the product development pipeline of indications for which Oncimmune has a
marketable diagnostic test
2. Building a service offering to biopharmaceutical companies, unlocking the latent potential
of autoantibodies in patient stratification, with a strong sales pipeline of contracts and
3. Partnering like-minded organisations with synergistic competencies, capabilities, and
channels to act as a force multiplier, minimising time to market
Since the launch of the three-year strategy, Oncimmune has grown to become a leading
immunodiagnostics developer, not only focused on the growing field of immuno-oncology, but
now also playing a key role in the characterisation and treatment of autoimmune and infectious
diseases. With a partnership led approach, Oncimmune is continuing to evolve and leverage its
technology with global pharmaceutical and biotechnology companies, early-stage start-ups,
leading academic groups, and not-for-profit companies.
To date, Oncimmune has over 8,800 proteins in its proprietary immunogenic protein library.
Profiling the immune response to disease is key to supporting our partners to predict response
to therapy, adverse events and identifying therapeutic drug targets. The Group has carried
out collaborations with seven of the ten largest pharmaceutical companies and several of the
world’s leading medical research organisations, receiving 70% repeat business over the last
five years. In FY2021, Oncimmune announced key contracts with Genentech, Roche, Cedars-
Sinai Medical Center and several leading global pharmaceutical companies.
Since Oncimmune’s inception in 2002, over 100 peer-reviewed conference abstracts have been
published validating our technology and products. Oncimmune’s platform technology is protected
by an extensive patent portfolio of over 200 granted and pending patents in 47 territories.
FY2020 saw the publication of the positive results from the ECLS trial, which further validated
Oncimmune’s technology platform, and its utility in detecting cancer early. Today, EarlyCDT Lung
has been rolled out as a pilot in Norfolk and Waveney and as part of the iDx Lung programme,
in Southampton and Leeds. Additional contracts to provide EarlyCDT tests into the NHS are
expected in FY2022. With additional results generated from the pilots, Oncimmune continues
to still be one of the few diagnostic companies to demonstrate the direct link between its
products and lives saved.
“We found a diverse and broad autoantibody response
to tumour and autoimmune disease antigens in these
pre-treatment samples. Some of the autoantibodies that
were linked with immune-related adverse events, were
linked with a clinical outcome as well.”
ImmunoINSIGHTS webinar, September 2020. Professor Jessica Hassel
presents data that demonstrates autoantibodies in patients treated
with immune checkpoint inhibitors have utility in predicting treatment
response, including immune-related adverse events.
12
Oncimmune Annual Report 2021
13
Chairman and Chief Executive Officer's review
We are pleased to report the Group's audited full year
results to 31 May 2021 and provide an update on the further
operational and strategic progress made since year end.
Oncimmune is a leading immunodiagnostics developer,
primarily focused on the growing fields of
immuno-
oncology, autoimmune disease and infectious diseases. As
a specialist immunology testing business, the Group has a
diversified and growing revenue stream from its discovery
and development service-based platform, delivering
actionable insights into therapies to its pharmaceutical
and biotech partners, as well as a portfolio of diagnostic
products to detect early-stage cancer. Oncimmune is
headquartered at its EarlyCDT product and R&D laboratory
facility
ImmunoINSIGHTS
pharma services commercial laboratory facility is based in
Dortmund, Germany. The ImmunoINSIGHTS commercial
team is based in the US and Europe.
in Nottingham, UK and
its
Our understanding of the immune system enables us to
harness its sophisticated response to disease in order to
detect cancer earlier and to support the development of
better therapies. The key to improving disease outcomes is
early detection and better selection for therapy. The Group
has two operational divisions providing immunodiagnostics
services:
•
•
Oncimmune’s ImmunoINSIGHTS platform enables life
science organisations to optimise drug development
and delivery, leading to more effective targeting as
well as safer treatments for patients. Our core immune-
profiling technology is underpinned by our library of
over 8,800 immunogenic proteins, one of the largest of
its kind. This helps identify clinical trial participants and
patients in clinically relevant subgroups, enabling the
development of targeted, and more effective treatments
with lower risk of adverse events.
Oncimmune’s immunodiagnostic technology, EarlyCDT,
can detect and help identify cancer on average four
years earlier than standard clinical diagnosis. The
Group’s lead diagnostic test, EarlyCDT Lung, targets a
vast market estimated to grow to £3.8bn by 2024. With
over 200,000 tests already performed for patients
worldwide and its use being supported by peer reviewed
data in over 12,000 patients, we believe we are poised
to become an integral component of future lung cancer
detection programmes, globally.
Business update
The 2021 financial year has been an important one for
Oncimmune, delivering our second full year of trading since
announcing the Company’s three-year strategic plan and
demonstrating its impact on the Group’s revenue. Launched
in September 2018, the strategy is intended to unlock
the latent potential of the Group’s proprietary technology
platform by establishing a pharma partnering services
business, ImmunoINSIGHTS. Core to this strategy was
the identification of commercial opportunities leveraging
Oncimmune's proprietary autoantibody-based technology
platform and the Group’s revenue growth in FY2021 is a direct
result of this service-oriented strategy.
Beyond the growth of in revenues through unlocking value in
the platform, the differentiated product and service offering
is also creating additional optionality for future growth.
Delivering high quality, differentiated results time and time
again for our customers on the ImmunoINSIGHTS side of
14
the business has allowed us to not only broaden our pipeline
of opportunities, but also deepen our engagement with
key customers, increasingly contributing to the biomarker
strategy in support of both pre-clinical and clinical drug
development as a valued partner.
As a result of the COVID-19 pandemic and subsequent
imposed globally, since March 2020 the
restrictions
Company has been working remotely where possible to
minimise the potential impact on the business, whilst
ensuring all laboratory operations are unaffected. Within our
Nottingham and Dortmund facilities we organised the staff’s
working arrangements to mitigate the possible effects on the
business and our customers and are pleased to report that
COVID-19 has not materially affected our laboratory output.
We would like to take this opportunity to thank our staff,
suppliers, and customers for their resourcefulness and
resilience over the last year in continuing to deliver against
the Group’s strategy throughout this difficult time. In addition,
we would like to thank Oncimmune’s current shareholders for
their continued support in the Group and the management
team as we continue to deliver on our three-year strategy
plan and beyond.
Services - ImmunoINSIGHTS
The Group launched the ImmunoINSIGHTS service in
February 2020 as Oncimmune's contract discovery and
development service-based platform and since then the
pipeline of signed and potential commercial projects with
major pharmaceutical and biotechnology companies has
increased substantially. The
ImmunoINSIGHTS service
business leverages Oncimmune's technology platform and
methodologies across diseases of the immune system,
infectious
including cancer, autoimmune disease and
diseases, to offer life science organisations with actionable
insights for therapies across the development and product
lifecycle.
ImmunoINSIGHTS utilises
discovery platform technology tools:
two proprietary biomarker
•
•
SeroTag discovery arrays: drawing from our library of
over 8,800 immunogenic proteins, one of the largest
of its kind, to discover and validate biomarkers which
can support life science partners in stratifying patients
in multiple cancer indications, infectious diseases and
with different autoimmune diseases. SeroTag acts as
the primary discovery engine that drives the creation of
Oncimmune’s NavigAID panels
NavigAID disease-specific characterisation panels:
thoroughly validated and containing well defined
antigens of interest for each of the disease types being
investigated, these tools can be used for targeting
identifiable patients for whom a treatment may be more
effective, whilst avoiding those patients more likely to
experience adverse drug effects
During the last financial year, the ImmunoINSIGHTS business
signed and delivered a number of contracts with leading
global pharmaceutical companies, demonstrating its ability to
provide strong growth to the Group’s revenue. Throughout the
year, we continued to strengthen strategic relationships with
partners like Roche and Genentech, as well as developing and
signing further contracts with leading biotechs and healthcare
providers across the globe.
In July 2020, we signed a substantial extension to the Group’s
second Roche ImmunoINSIGHTS contract, increasing the
number of autoantibody samples to be profiled within the
agreed time period. Then, in late September 2020, we signed a
collaboration with Genentech, a member of the Roche Group,
to characterise the autoantibody profiles of patients in clinical
trials for rheumatological diseases, including Systemic Lupus
Erythematosus (“SLE”). As with previous contracts with Roche
and other international pharmaceutical groups, now that we
have delivered the results to Genentech, the contract has the
potential to significantly expand with additional samples being
profiled in the future under follow-on contracts.
Following the successful award of UK Government funding for
development of an infectious disease research tool for use in
COVID-19, the Group signed a deal with Cedars-Sinai Medical
Center in Los Angeles (“Cedars-Sinai”) to collaborate in the use
of the development panel to better understand, and therefore
stratify, patients infected with COVID-19. Shortly following the
contracting of Cedars-Sinai, we were pleased to announce
further work with Roche to utilise the Company’s SeroTag
infectious diseases discovery panel to profile antibody and
autoantibody responses in all patient samples from the Roche
COVACTA trial, to look for immune signals of response, non-
response and adverse events. Whilst this contract is still in its
initial stages, it has already produced scientific discoveries
that have contributed to the global effort to better understand
the evolution of COVID-19, and its potential treatment. We
expect much more to come from this collaboration in FY2022,
and from additional pharmaceutical customers looking to
accelerate their therapeutic assets in this disease.
Since the financial year end, we have continued to pursue
a growing number of commercial autoantibody profiling
contracts in the ImmunoINSIGHTS business division, with a
number of these being substantial follow-on contracts from
work previously completed in FY2020.
In September 2021 we signed an agreement with a leading
global pharmaceutical company we have worked with
previously, this time using the NavigAID autoimmune disease
characterisation panel to explore the autoantibody profiles of
patients with four key autoimmune diseases, namely systemic
lupus erythematosus, Sjögren's syndrome,
rheumatoid
arthritis, and sicca syndrome.
More recently, in October 2021, we signed three separate
contracts with leading global pharmaceutical companies
to utilise the SeroTag immuno-oncology discovery array to
explore the autoantibody binding profiles of solid tumour
cancer patients treated with immunotherapy. Additionally,
the strength of the ImmunoINSIGHTS autoantibody biomarker
profiling technology has been validated with another global
pharmaceutical company renewing their existing relationship
with Oncimmune for biomarker services.
Product - EarlyCDT
Much of FY2021 was disrupted by healthcare systems globally
dealing with the response to the COVID-19 pandemic, which
impacted many critical services, not least cancer diagnosis
and care. As such, the sale of EarlyCDT products have been
irregular and difficult for the Group to forecast. However,
during the year the potential downside has been largely
mitigated by agreements with our global distribution partners
which require minimum volume sales to continue to be
delivered under their contracts.
Since announcing the positive results of the Early detection
of Cancer of the Lung Scotland ("ECLS") in June 2019, and
particularly since the positive MedTech Innovation Briefing in
March 2020, we have been in dialogue with national health
systems globally, including the NHS in the UK, over the adoption
of EarlyCDT Lung for Indeterminate Pulmonary Nodules (“IPNs”)
screening. In the UK this has included discussions with both
Cancer Alliances and Clinical Commissioning Groups (“CCG’s”)
which has resulted in EarlyCDT Lung being chosen to support
the iDx Lung programme, run out of the lung health check
programmes in Southampton and Leeds. Following EarlyCDT
Lung being chosen as part of the iDx programme, 350 patients
have been recruited in Southampton and Leeds to date.
Our discussions over the year have also led to the signing of the
distribution of tests to Norfolk and Waveney CCG, representing
an important milestone as the first sales of the EarlyCDT Lung
test into the UK’s NHS. To date, the pilot data in Norfolk and
Waveney shows 988 smokers were booked for an EarlyCDT
Lung blood test with 277 identified as requiring further
investigation following the result of their EarlyCDT Lung test.
A full clinical evaluation will be delivered in due course, but
we are encouraged with the initial results. In addition, shortly
after the end of the reporting period, we were delighted to
sign another contract to provide EarlyCDT Lung tests into the
NHS, albeit that details of this contract are confidential until
the programme is ready to launch later in FY2022.
Further afield, we have experienced a substantial increase in
demand for the EarlyCDT Lung from our US partner, Biodesix,
which is quickly recovering from the lack of demand early
in the reporting period as a result of COVID-19. Given this
increase in demand, Biodesix announced that they are
planning to expand its national sales team from 32 to 76 by
the end of 2022.
In line with the Group’s strategy to increase the availability
of EarlyCDT Lung across the world, our Brazilian partner,
Valentech, signed an agreement with Diagnosticos da
America, Latin America’s largest medical diagnostic company,
to offer EarlyCDT Lung across its extensive laboratory,
private hospital and clinic network in South America. Then
in May 2021, we successfully agreed to return the intellectual
property and distribution rights for the EarlyCDT technology
in the People's Republic of China and Hong Kong from our
strategic partner, Genostics Company Limited, allowing us to
pursue the optimum route to market in this important territory.
Recently, EarlyCDT Lung has been authorised for use by the
Spanish Public Health Service with the Galician Health Service
(SERGAS), the first public health service in Spain to use the
EarlyCDT Lung test.
Scientific presentations and publications
In line with the Group’s core objectives, during the period
we have continued to demonstrate the leading potential
of our platforms in world class scientific publications and
presentations. The scientific and commercial potential of
ImmunoINSIGHTS was highlighted early in the reporting period
in a high-profile scientific presentation and publication. The
research publication entitled 'Profiling IgG antibodies targeting
unmodified and corresponding citrullinated autoantigens in a
multicentre national cohort of early arthritis in Germany'3 was
published in Arthritis Research & Therapy and demonstrated
the autoantibody, cTRA2B-IgG, has the potential to improve
diagnosis of early-stage rheumatoid arthritis, which to date
has been challenging due to lack of availability of diagnostics
in the therapeutic area.
Oncimmune Annual Report 2021
15
This followed a featured presentation at the American
(“ASCO”) Virtual
Society of Clinical Oncology 2020
Scientific Programme, which demonstrated that data from
profiling tumour associated antibodies in melanoma patients
receiving checkpoint inhibitors, analysed on the SeroTag
immuno-oncology discovery array, had
identified that
autoantibodies have a role in predicting clinical outcomes or
immune-related events.
individual, underpinned by compliant and ethical behaviour.
The successful delivery of our strategy is dependent on, and
bolstered by this culture, the work environment we create and
the lasting relationships we build with all our stakeholders.
Oncimmune’s approach to product development, subsequent
launches, and delivery of its long-term growth is underpinned
by a clear set of economic values aimed at protecting the
Company from risk and securing its long-term future.
More recently, the ImmunoINSIGHTS team has collaborated
with Roche to undertake a study to develop a panel of predictive
biomarkers to identify an early response in rheumatoid
(RA) patients to Methotrexate or Tocilizumab,
arthritis
Roche's interleukin-6 (IL-6) receptor inhibitor; and as a result,
‘Comprehensive exploratory autoantibody profiling in patients
with early Rheumatoid Arthritis treated with Methotrexate or
Tocilizumab' was published in PLOSOne in December 2020.4
As our business has grown and evolved, during this financial
year, and post year end, we have continued to formalise our
Corporate Social Responsibility and Sustainability strategy,
which includes adopting a new Code of Business Conduct
and Ethics, putting patients and the advancement of science
at the heart of our business, and ensuring that all our staff
are properly trained on our ethos, culture and compliance
requirements.
the
the close of
reporting period,
the
Following
ImmunoINSIGHTS team were pleased to be able to announce
the pre-publication of the first results from our collaboration
with Cedars-Sinai Medical Center in Los Angeles, entitled:
"Paradoxical Sex-Specific Patterns of Autoantibodies Response
to SARS-CoV-2 Infection".5 The pre-publication paper focuses
on the characterisation of sex-specific prevalence and
selectivity of autoantibody responses to the SARS-CoV-2 virus.
During the period under review, on the EarlyCDT side of the
business, results from the Early detection of Cancer of the
Lung Scotland ("ECLS") study were published in the European
Respiratory Journal7 demonstrating a 36% reduction in late-
stage diagnoses of lung cancer. The pre-publication of
the three-year follow-up data8 supports a trend towards a
mortality benefit of the EarlyCDT Lung blood test, confirming
the number of late-stage cancers and deaths to be lower in
patients tested with EarlyCDT Lung. Additionally, EarlyCDT
Lung and CT surveillance were found to be highly cost-effective
compared to CT surveillance alone. with results published in
PLOSOne in September 2020.9
Board changes
At the end of FY2020, Oncimmune’s Board of Directors
believed it was the right time to restructure the Board in
order to be as agile, lean and focused as possible. As such,
Geoffrey Hamilton-Fairley, Carsten Schroder and Julian Hirst
stepped down from the Board on 4 June 2020. In January
2021, the Board further reduced its number with Dr Cheung
To stepping down.
Following these changes, the Board has decreased from
nine members to five members and now comprises of one
Executive Director and four Non-Executive Directors, two of
which are Independent Non-Executive Directors. The Board
members are Meinhard Schmidt, Non-Executive Chairman;
Dr Adam M Hill, Chief Executive Officer; Dr Annalisa Jenkins,
Senior Independent Non-Executive Director; Andrew Unitt,
Independent Non-Executive Director; and Tim Bunting, Non-
Executive Director.
Corporate social responsibility and sustainability
Advancing medical science through research as well as
the provision of a simple and affordable test to detect the
earliest signs of cancer is at the core of our Company and
drives our ethos and culture. We are committed to diversity
and a culture of equal opportunities and respect for the
In June 2020 we founded The Lung Foundation, an independent
charity whose mission is the reduction of the impact of lung
disease globally, through the research and development of
effective diagnosis, treatment, and preventative strategies.
The Lung Foundation has already funded important research
into COVID-19 and is actively pursuing new projects and
funding sources.
Outlook
The year to 31 May 2021 and the period post year end have
seen significant and continuing progress for the Company,
both operationally and commercially. Our ImmunoINSIGHTS
service business is a critical enabler of this success, having
developed a pipeline of
in excess of 160 commercial
opportunities in FY2021 and continues to secure follow-on
contracts with customers of strategic importance.
Given the demand for our services and products, coupled with
the opening up of the health economy as the world emerges
from the COVID-19 pandemic, the Directors have confidence
in the continuation of Oncimmune’s positive trajectory,
underpinned by our world class technology platform, its
market leading position and expanding pipeline of contractual
discussions and future prospects.
The Board sees the potential for further step changes in
revenue growth and improving visibility, as the momentum in
the commercial ImmunoINSIGHTS pipeline is converted into
service contracts. As we are already starting to see, these
initial contracts have the scope to broaden subsequently
into multiple projects and deeper strategic commercial
partnerships, with associated opportunities for additional,
long-term revenue.
On behalf of the Board, we would like to thank our
shareholders for their continued support throughout FY2021,
and we look forward to updating the market on Oncimmune’s
further progress.
Meinhard Schmidt Chairman
Dr Adam M Hill Chief Executive Officer
2 November 2021
“This Genentech contract adds to the already
substantial pipeline of contracted revenue through
our ImmunoINSIGHTS business in FY2021 and
provides another opportunity to show how our
NavigAID technology can assist partners in
increasing their ability to better assess where their
medicines could make an impact.”
Dr Adam M Hill, Chief Executive, Oncimmune RNS,
23 September 2020 after Oncimmune wins contract to
profile samples from Genentech's rheumatology clinical trials.
16
Oncimmune Annual Report 2021
17
Chief Financial Officer’s review
A summary of the financial highlights of the year ended 31
May 2021, including post year end, is as follows:
•
•
•
•
•
•
Revenue for the year of £3.7M (FY2020: £0.5M) reflecting
the increase in ImmunoINSIGHTS contracts signed and
executed
R&D costs for the year were £1.6M (FY2020: £1.7M) as
a result of the Group’s continued focus on developing
world leading science
Administrative expenses for the year were 30% lower at
£5.7M (FY2020: £8.2M)
Share-based payment charges for the year were £1.1M
(FY2020: £0.2M)
Loss for the financial year was £4.6M (FY2020: £8.5M),
significantly reduced as a result of the growth in the
ImmunoINSIGHTS business and stated after the effect
of increased share-based payment charges of £1.1M
(FY2020: £0.2M)
Cash balance at year end of £8.6M (FY2020: £4.2M) and
net debt of £0.8M including lease liabilities (FY2020:
net debt £4.0M), with net cash of £0.1M excluding lease
liabilities (FY2020: net debt £3.0M)
Revenues and commercial progress
Revenue for the year was £3.7M (2020: £0.5M) validating
the core business strategy of focusing on building a leading
immunodiagnostics group. The Group’s commercial progress
materially benefited from the growth of the ImmunoINSIGHTS’
business reflecting the increase in the number of contracts
awarded and executed. Since the end of FY2021, in particular
following the summer period, business activity within
ImmunoINSIGHTS has remained high with further contracts
signed, and a growing pipeline of contracts nearing signing
as well as an increase in the number of proposals out with
customers.
During the year the ImmunoINSIGHTS business signed
and delivered a number of contracts, including for Roche
Pharmaceuticals (“Roche”) and Genentech, a member of the
Roche Group, as well as a number of further contracts for
global biotechs and leading healthcare providers. The launch
of the infectious diseases panel, in Q2 FY2021, facilitated
the signing of substantial contracts with Roche and Cedars-
Sinai Medical Center (“Cedars-Sinai”). The pipeline of
potential contracts across the full range of oncology,
autoimmune and infectious diseases continue to expand,
with an increasing number of these progressing to late-stage
commercial negotiation and legal documentation. Two of
these late-stage potential contracts are substantial follow-on
validation contracts with major pharmaceutical companies.
As a consequence of the current and forecast levels of
ImmunoINSIGHTS business activity, we expect further
growth in commercial revenues throughout FY2022 which
will in turn consolidate the dominance of this autoantibody
profiling services business within the Group.
In March 2021, the Company completed an equity fundraise
raising gross proceeds of £9M to provide additional funding
principally to the ImmunoINSIGHTS business. These funds are
being deployed to increase the commercial team headcount,
with a focus on the US where over 90% of all contracts are
now awarded, as well as expanding the operational capacity
at the Group’s laboratory facility in Dortmund, Germany. This
expansion programme is designed to increase capacity to
approximately 40,000 samples per annum by Q1 FY2023 to
meet the anticipated increase in demand from customers for
the ImmunoINSIGHTS service offering.
The impact of COVID-19 restrictions in countries where
we have distributors has meant that the sale of EarlyCDT
products have been irregular and therefore, more difficult
for the Group to forecast. In particular, during the year the
Group invoiced one of its historic distributors for £1.7M,
however, the commercial pressures faced by this distributor
as a consequence of the COVID-19 pandemic mean that the
invoice has not met the revenue recognition requirements of
IFRS 15 at this time and therefore is unable to be recognised
as revenue in the year ended 31 May 2021. As the COVID-19
pandemic comes under control and restrictions ease, sales
by our global distributors are expected to begin to pick up
once again.
Within the UK, sales of EarlyCDT Lung improved markedly
on the previous year. In December 2020, the Group signed
its first commercial contract with the NHS; the contract with
Norfolk and Waveney focuses on recruiting people at risk of
lung cancer from community GP practices. The aim of the
pilot study is a real-world assessment of the practicality of
introducing the EarlyCDT Lung blood test into primary and
secondary care settings within the NHS in England, to support
the earlier diagnosis of lung cancer. The positive support for
EarlyCDT Lung within the NHS has also led to a further supply
contract being signed and we expect additional contracts to
be signed over the remainder of FY2022. In December 2020,
Oncimmune was also selected to supply the EarlyCDT Lung
blood tests to the iDx Lung programme in Southampton and
Leeds. This supply contract is ongoing and is expected to last
three years.
In the US, the Group’s EarlyCDT Lung partner, Biodesix,
announced its expectation of growth in its core lung
diagnostic test service, driven by the US’s emergence from
the COVID-19 pandemic, increasing productivity from its
national salesforce, and its continued building of evidence
supporting the use of its tests. Biodesix also commented
that Nodify CDT (the name under which EarlyCDT Lung is
marketed in the US) and Nodify XL2® are the primary growth
drivers for its revenues.
Commentary on financial statements
Research and development activities remain a key priority
for the UK-based product scientific group, with a focus on
further developments to the EarlyCDT Lung blood test and
as a result, in the year the Group’s research and development
spend was £1.6M (FY2020: £1.7M).
Administrative expenses for the year were £5.7M, a substantial
reduction on the previous year (FY2020: £8.2M). The Group
is focused on managing the overall monthly operating costs
and seeks to reduce costs wherever possible. In September
2020, a new incentivisation scheme for senior management
was implemented which materially increased the IFRS 2 non-
cash charge IFRS 2 for the year to £1.1M (FY2020: £0.2M).
The loss for the year was £4.6M, a substantial reduction on the prior year
(FY2020: loss of £8.5M) and reflects the continued growth in the high
margin ImmunoINSIGHTS services business. The Group received £502k
of R&D tax credit payments in the year (FY2020: £853k), reflecting the
Group’s continued focus on new and innovative cancer diagnostic
projects, building on its library of immunogenic proteins, and validating
additional NavigAID panels to facilitate the investigation of more disease
types.
Cash balances at year end were £8.6M (FY2020: £4.2M) reflecting
the equity fundraise conducted in March 2021. Net debt was £0.8M
including lease liabilities (FY2020: net debt £4.0M) and net cash of
£0.1M excluding lease liabilities (FY2020: net debt £3.0M).
The Company entered into an €8.5M credit facility with IPF Management
SA in September 2019 which was further extended by €6.0M in October
2020, of which €3.0M has been drawn. The Company did not exercise
its option to draw down the remaining €3.0M before the deadline of 30
June 2021. Each tranche of the total loan is repayable over a four-year
term, interest-only for the first 12 months, with principal repayments
commencing thereafter. There is a cash covenant requiring the Group
to maintain nine months of cash which is tested each quarter. The total
loan has been used to support the Group’s operational activities, in
particular the growth of the ImmunoINSIGHTS service business
Financial outlook
The Group’s ImmunoINSIGHTS service business has emerged as the
growth driver for the Group, and this is expected to be increasingly the
case for the Group’s foreseeable future. The ImmunoINSIGHTS business
is a high margin business and therefore as its revenues continue to
grow, it is anticipated that the Group’s profitability and cash generation
will improve. There has been an increase in the level of business
activity since the quieter summer months. A number of contracts
have recently been signed and these will be delivered and invoiced
before the end of the current financial year (FY2022). Accordingly,
management is comfortable with its expected delivery of growth for
the ImmunoINSIGHTS business for the full year. The expansion of the
commercial team is expected to further enlarge the ImmunoINSIGHTS
commercial pipeline.
Within our EarlyCDT product business, sales in the UK continue to
grow as do sales for our US partner, Biodesix. Elsewhere, as the world
emerges from the COVID-19 pandemic we are expecting an uptick in
distributor sales activity.
The Directors are confident that current cash and other available financial
resources are sufficient to deliver the Group’s continued growth. The
Board continues to review the Group’s activities to ensure it maintains
a differentiated offering and will consider the most appropriate capital
base from which to optimise this growth at the same time as maximising
returns to stakeholders.
Matthew Hall Chief Financial Officer
2 November 2021
18
Oncimmune Annual Report 2021
19
and development and executive vice president global
development and medical at Merck Serono, and several senior
positions at Bristol Myers-Squibb over 15 years - including
serving as senior vice president and head of global medical
affairs. Earlier in her career, Dr Jenkins was a medical officer in
the British Royal Navy during the Gulf Conflict, achieving the
rank of surgeon lieutenant commander. Dr. Jenkins is a board
member of several growing companies, including AVROBIO,
COMPASS Pathways, AOBiome, AgeX, Phaim Pharma, Conduit
Connect, Affimed, Genomics England, Blue Advent Ltd,
Perspectum Ltd, and Cocoon Biotech Inc (Non-Executive
Chair). She also is a medical trustee for the British Heart
Foundation and a committee member of the Science Board
to the U.S. Food & Drug Administration, which advises FDA
leadership on complex scientific and technical issues, board
member at Faster Cures a center of The Milken Institute and
Chair of The Court of The London School of Hygiene and
Tropical Medicine.
Timothy Bunting
Non-Executive Director
Mr Bunting joined Balderton as a General Partner in 2007.
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 started to work with Balderton and its portfolio of
companies in 2005.
In 2006 Tim spent a period as non-executive chairman of
Betfair. Tim is also a Trustee of the Rainbow Trust Children's
Charity, The Royal Opera House, Royal Springboard, and the
Paul Hamlyn Foundation. In addition, Tim is Vice-Chair of the
Sutton Trust.
Andrew Unitt
Independent Non-Executive Director
Mr Unitt 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 four years
of Boots Healthcare International, its over the counter
medicines business. He has also held several non-executive
directorships in the NHS and private sector.
Board of Directors
Meinhard Schmidt
Non-Executive Chairman
Mr Schmidt is an executive and entrepreneur with more
than 25 years of international experience in the Healthcare,
Diagnostics and Life Science industries. Between 1998 and
2008 he was at Roche Diagnostics where he held various
global senior leadership roles in Diabetes Care, Laboratory-
and PoC-Diagnostics. From 2008 to 2011 he worked as an
executive and CEO at Straumann Institute/Switzerland,
responsible for the world-wide “Digitalisation” of the dental
industry. He is currently active as an Independent Healthcare
Professional providing board engagement as Chairman
and NED in public and private MedTech and Life Science
companies; consulting to top management teams to improve
innovation, commercialisation and digitalisation processes;
and consulting investors (Private Equity/Venture Capital)
on identification of new investment and acquisition targets
in the global healthcare industries. He has held positions in
Germany, Netherlands, USA, Canada, UK, Sweden, France,
Ireland and Switzerland.
Dr Adam M Hill
Chief Executive Officer
Dr Adam M Hill MB PhD is a dual-qualified Clinician and
Mechanical Engineer with a career built at the interface
of industry, academia and health systems. Over the last
two decades he has trained in surgery in the British Army;
founded a successful applied research centre at Imperial
College London; provided growth strategy and investment
advice to global life science companies on behalf of the
British Government; led the global medical function of a
multinational, publicly-listed health IT company; and pivoted
a Formula One team into a developer of health technology.
Currently, Adam sits on the board of the Association of British
HealthTech Industries as Vice Chair, is a Visiting Professor in
Global Health Innovation at Imperial College London and a
Non-Executive Director of Imperial College Health Partners
and MyRecovery.ai.
Adam graduated from Imperial College London as a Medical
Doctor whilst also earning a PhD in Engineering, attending
Imperial College Business School and the Royal Military
Academy Sandhurst. He received his postgraduate clinical
training from the Royal College of Surgeons of England, and
professional engineering qualification from the Institution of
Mechanical Engineers.
Dr Annalisa Jenkins
Senior Independent Non-Executive Director
Dr Annalisa Jenkins, M.B.B.S., F.R.C.P. is a biopharmaceutical
thought leader with over 25 years of industry experience.
Dr Jenkins has extensive recent experience in building and
financing biotech companies, pursuing cures for the most
challenging rare diseases to address important medical
issues globally. She has consistently built and led teams
advancing programs from scientific research through clinical
into healthcare
development, regulatory approval, and
systems globally. In addition, she is an advocate for diversity
and inclusion, particularly for women in science. Dr Jenkins
served as president and CEO of Dimension Therapeutics,
a leading gene therapy company that she took public on
the NASDAQ and subsequently sold to Ultragenyx. Prior
leadership roles have included the head of global research
“Oncimmune signs contract with Genentech,
further demonstrating expanding global footprint
for ImmunoINSIGHTS”
Oncimmune RNS, 23 September 2020 after Oncimmune
signs contract to profile samples from
Genentech's rheumatology clinical trials.
20
Oncimmune Annual Report 2021
21
Principal risks and uncertainties
The Group’s products may not be a commercial
success
The commercial success of EarlyCDT Lung, as well as other
new products that the Group may launch in the future, will
depend on their approval and acceptance by physicians,
payers and other key decision-makers, as well as the receipt
of regulatory approvals in different countries, the time taken
to obtain such approvals, reimbursement at commercially
sustainable prices in those countries where price and
reimbursement is negotiated, and cost-effectiveness of
the product as compared to competitive products. The
Group seeks to manage these risks by ensuring clear,
open, and prompt communications with government and
other stakeholders, investing in the generation of clinical
evidence, supporting its distributor network and investing in
the generation of economic evidence of the potential cost
savings its products can generate for healthcare systems.
Manufacturing
The Group manufactures protein antigens to coat
its
diagnostic test plates and is reliant on third party contract
manufacturers to manufacture finished products. Any
disruption to the supply chain for EarlyCDT Lung or EarlyCDT
Liver may result in the Group being unable to continue
marketing or developing its products for some period of time.
The Group is progressing the dual sourcing of components
for its products, but this remains an ongoing project. Until
completed, any disruption in the Group’s internal or external
manufacturing processes may impact the Group’s ability
to develop or commercialise its products. The Group is
managing these risks by maintaining stringent safety and
access procedures to internal manufacturing sites, assessing
dual sourcing of third-party manufacturers and, wherever
possible, dual sourcing of components, and assessing a
second Group laboratory site as a manufacturing site.
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
to align its employees with the long-term success of the
Group’s business.
Research and development
The Group has had success developing cutting edge science
that produces life changing benefits. By its very nature
research and development can never be certain in terms
of its cost, its impact, regulatory requirements, and when
it will be ready for commercialisation. The Group mitigates
these inherent risks by employing leading scientists, training,
strict methodologies, and working with its Scientific Advisory
Boards and other stakeholders.
New markets
The Group’s activities comprise the manufacture and
commercialisation of its EarlyCDT products and, since the
acquisition of Protagen Diagnostics AG (now renamed
Oncimmune Germany GmbH), the delivery of a service-based
offering to the life science industry. On the product side of its
business, the Group has entered into a number of distribution
agreements in various geographical markets and is working
with its partners to progress the commercial success of its
products. These distribution agreements typically give the
distributor the exclusive rights of distribution of EarlyCDT
Lung within certain geographical boundaries for a period of
time, in consideration for minimum order requirements. The
Group remains at risk of the failure of any of its distributors in
its key markets. To mitigate this risk, the Group has dedicated
business development staff focused on monitoring
its
distributor network to optimise the success of its products.
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 in its intellectual property
portfolio and in continued research and development, as well
as through improving its manufacturing process to enable it
to reduce costs, which could allow it to reduce prices in a
highly competitive environment.
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 and by expanding it regulatory team
to meet increasing regulatory demands.
Foreign exchange
The Group conducts its operations principally in Sterling,
EUROs and US Dollars and is consequently subject to
currency risk due to fluctuations in exchange rates. As well
as the 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. As far as possible, any
foreign exchange risk is managed by maintaining sufficient
foreign currencies to avoid, as far as possible the need to
purchase these currencies to satisfy operating expenditure.
The Group continues to monitor potential foreign exchange
exposure by maintaining relationships with organisations
who provide forecasts of foreign currency prices and by
matching demand for foreign currencies with cash receipts
in those same foreign currencies.
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
Matthew Hall Chief Financial Officer
2 November 2021
“Successful Equity Placing of £9.0 million”
Oncimmune RNS, 25 March 2021 after Oncimmune raises £9m
(before expenses) to expand ImmunoINSIGHTS business.
22
Oncimmune Annual Report 2021
23
Directors’ report
The Directors present their report and audited consolidated financial statements for the year ended 31 May 2021.
Directors’ meeting attendance 2020/21
Results and dividends
The consolidated statement of comprehensive income is set out on page 38 and shows revenue for the year of £3.7M (2020: £0.5M).
The loss for the financial year was £4.6M (2020: loss of £8.5M). No dividend will be paid in respect of the financial year (2020: £Nil).
Corporate governance
The Directors comply with the requirements of the Quoted Companies Alliance (QCA) Corporate Governance Code to the extent
that they consider it appropriate and having regard to the Company’s size, board structure, stage of development and resources.
The Board considers that all Non-Executive Directors exercise independent judgement. At the beginning of the year ended 31
May 2021 the Board consisted of nine directors, four of which were considered independent Non-Executive Directors under the
QCA guidelines. At the beginning of the financial year Oncimmune’s Board of Directors was restructured in order to make it as
agile, lean and focused as possible. Geoffrey Hamilton-Fairley, Carsten Schroder and Julian Hirst therefore stepped down from
the Board on 4 June 2020. The Board further reduced its number with Dr Cheung To stepping down in January 2021. As a result
of the changes which took place in the year ended 31 May 2021, the Board currently consists of five directors, two of which are
considered independent Non-Executive Directors under the QCA guidelines.
The roles of Chairman and Chief Executive are held by separate directors with a clear division of responsibilities between them.
The Chairman has primary responsibility for leading the Board and ensuring its effectiveness. He sets the Board’s agenda and
ensures that all directors can make an effective contribution. The Senior Independent Non-Executive Director has the power
to add items to the agenda of full Board meetings. The Chief Executive has responsibility for all operational matters and the
development and implementation of Group strategy approved by the Board. The Company Secretary is responsible for advising
the Board, through the Chairman, on all corporate governance matters.
The Company holds regular Board meetings. The Directors are responsible for formulating, reviewing and approving the
Company’s strategy, budget and major items of capital expenditure. The Directors have established the Audit Committee
and the Remuneration Committee with formally delegated rules and responsibilities. The Directors have also established ad
hoc committees from time to time to be responsible for certain corporate matters, which are then reported on to the Board
as a whole.
The Board believes that good governance and a positive culture are crucial to the successful delivery of the Group’s strategic
objectives. Good standards of behaviour start with the Board and the Directors are committed to leading by example. The
Directors are also conscious of achieving a more balanced, representative, and diverse board.
Ensuring that the Board is as effective as it can, has been a priority and this will continue. The Company expects members of the
Board to bring with them appropriate behaviours and values to enable the Board to operate in a positive and effective manner.
The Board is conscious of the need to assess the performance of the Board, ensuring it is operating effectively and for the
benefit of all stakeholders. During the year ended 31 May 2021 the Board carried out an assessment of its performance, using an
anonymous survey of Board participants to measure the Board’s effectiveness against established standards. The results have
been reviewed by the Board and appropriate actions to address any outcomes have been taken.
The Board believes in setting the right tone for the Group and seeks to promote a culture that aligns itself with its strategy,
stakeholder needs and good governance. The Board feels it is important to engage with all levels within the organisation and
regularly receives reports and input from members outside of the senior management team. The Board also conducted a site visit
to the Company’s Dortmund facilities (which was conducted virtually due to ongoing travel restrictions).
Audit Committee
The Audit Committee determines and examines matters relating to the financial affairs of the Company including the terms of
engagement of the Company’s auditors and, in consultation with the auditors, the scope of the 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 meets at least twice a year.
During the financial year ended 31 May 2021 the Audit Committee was comprised of Andrew Unitt (Chair) and Dr Annalisa Jenkins.
Remuneration Committee
The Remuneration Committee reviews and makes recommendations in respect of the Directors’ remuneration and benefits
packages, including share options, and the terms of their appointment. The Remuneration Committee also makes recommendations
to the Board concerning the allocation of share options to employees. The Remuneration Committee meets at least twice a year
and otherwise as and when necessary. During the financial year ended 31 May 2021 the Remuneration Committee was comprised
of Dr Annalisa Jenkins (Chair), Tim Bunting and Meinhard Schmidt.
The Board
The Board typically meets once every month or every two months to review and discuss the operations and financial performance
of the Group. The Board also meets on an ad hoc basis, sometimes at short notice, to discuss specific transactions or material
items requiring the attention of the Directors. Directors can formally attend meetings either in person or by conference call or
video conferencing. Directors can also make decisions by considering papers circulated to them and recording their decision to
the matters contained in such papers. Since the advent of COVID-19, all meetings have been held remotely by telephone or video
conference. Dr Adam M Hill is an Executive Director and is employed on a full-time basis.
Meinhard Schmidt
Dr Adam M Hill
Timothy Bunting
Andrew Unitt
Dr Annalisa Jenkins
Dr Cheung To*
Board
Audit Committee
Remuneration Committee
9/9
9/9
9/9
9/9
9/9
2/4
-
-
-
2/2
2/2
-
3/4**
-
4/4
-
4/4
-
* Ceased to be a Director on 19 January 2021
** Excused from meeting due to conflicts
Directors’ indemnity provisions
The Company has maintained throughout the financial year directors’ and officers’ liability insurance.
Political donations
The Company has not made any political donations during the year (FY2020: £Nil).
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out
in the Strategic Report on pages 2 to 19. The Financial Review section on pages 38 to 71 describes the financial position of the Group,
its cash flows and liquidity position. In addition, note 29 to the financial statements includes the Group’s objectives, policies and
processes for managing its capital, its financial risk management objectives and its exposure to market risk, including foreign exchange
rate risk, interest rate risk and price risk, credit risk and liquidity risk.
In respect of the Group’s funding position, the Company entered into a €8.5M credit facility with IPF Management SA in September
2019 which was further extended by €6.0M in October 2020, of which €3.0M was drawn. The Company did not exercise its option to
draw down the remaining €3.0M before the deadline of 30 June 2021. Each tranche of the total loan is repayable over a four-year term,
interest-only for the first 12 months, with principal repayments commencing thereafter. There is a cash covenant requiring the Group to
maintain nine months of cash which is tested each quarter. The total loan has been used to support the Group’s operational activities, in
particular the growth of the ImmunoINSIGHTS service business. In order to monitor compliance with this financial covenant, the Board
prepares monthly financial accounts including a calculation of covenant compliance for the following 12 months.
The Group has prepared the 2021 financial statements on a going concern basis. In preparing the accounts on a going concern
basis the Directors have prepared forecasts and budgets for the period to 31 December 2022 and which also considered the Group’s
existing debt covenant obligations up until this date. These forecasts and budgets model a range of scenarios, including taking into
consideration the impact of COVID-19. The base case scenario assumes cash from contracts with customers for the forecast period
being a mix of contracted amounts, contracts currently under negotiation, repeat business from already contracted work together with
contracts from as yet unidentified opportunities. The base case scenario shows the Group is able to meet its financial obligations as
and when they fall due for the forecast period.
The Directors have also considered downside scenarios that reflect the current unprecedented uncertainty in the UK economy and
which the Directors consider to be severe but plausible. The first downside scenario took the base case scenario and removed a total
of 50% of forecast EarlyCDT Lung product revenues excluding the US with a corresponding reduction in cost of sales and a reduction
in third party R&D subcontract manufacture of EarlyCDT Lung product. The second downside scenario took the base case scenario
and removed 50% of forecast EarlyCDT Lung product revenues excluding revenues from the UK and the US as well as a 20% reduction
in ImmunoINSIGHTS’ revenues and with a corresponding reduction in cost of sales. The results of these scenarios show that the
Group has sufficient resources to meet its obligations for the forecast period and will not be in breach of its covenant under the IPF
Management SA facility.
In addition to the above the Directors have performed a more severe downside stress test. The most severe of these tests reduced
EarlyCDT Lung product revenues outside of the UK but excluding the US by 50% of forecast and reduced ImmunoINSIGHTS’ revenues
by 50% with an appropriate reduction in ImmunoINSIGHTS cost of sales. At the time of approval of the financial statements, the
revenue performance for the current financial year reflects the revenue modelled under this stress test. This may mean that under this
more severe downside stress test scenario the Group will not comply with the financial covenant attached to its external borrowings
for the duration of the going concern review period. Should the financial covenant not be met the Group’s borrowings could be
recalled by its lender. Such a scenario gives rise to a material uncertainty which may cast significant doubt about the Group’s ability to
continue as a going concern. However, as has been detailed in the Chief Financial Officer’s review, there has been an appreciable uplift
in business activity within the ImmunoINSIGHTS’ business with several contracts signed and a number of other contracts moving into
legal contracting and expected to be executed before the end of this calendar year. Furthermore, although not modelled, the Directors
have identified costs within the business which could be reduced within a relatively short time period.
After considering the above and after making appropriate enquiries, the Directors have formed a judgement at the time of approving
the financial statements that there is a reasonable expectation that the Group has sufficient resources to continue in operational
existence for the foreseeable future. For this reason, the Directors consider the adoption of the going concern basis in preparing the
Consolidated financial statements is appropriate.
24
Oncimmune Annual Report 2021
25
Risk management
The Company maintains a register of risks, which the executive management team presents to the Directors on a regular basis.
Details of the Group’s financial risk management objectives and policies, and exposure to price risk, credit risk, liquidity risk and
foreign exchange risk are set out in Note 29.
Events after the end of the reporting period
Details of post balance sheet events can be found in Note 31 to the consolidated financial statements.
Future developments
The future developments of the Group can be found in the Strategic report.
Research and development
The Group's research and development activities are set out in the Strategic report.
Directors
The Directors of the Company who served during the year, and up to the date of approval of these financial statements unless
otherwise stated, were:
Meinhard Schmidt
Non-Executive Chairman
Geoffrey Hamilton-Fairley
Non-Executive Vice-Chairman (resigned 4 June 2020)
Dr Adam M Hill
Timothy Bunting
Andrew Unitt
Julian Hirst
Chief Executive Officer
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director (resigned 4 June 2020)
Carsten Schroeder
Independent Non-Executive Director (resigned 4 June 2020)
Dr Annalisa Jenkins
Senior Independent Non-Executive Director
Dr Cheung To
Non-Executive Director (resigned 19 January 2021)
Directors' interests
At 31 May 2021, the Directors and their families had the following interests in the Company’s ordinary shares and options to subscribe
for shares:
Meinhard Schmidt
31 May 2021
31 May 2020
Shares
31,000
Options
1,076,705
Shares
18,000
Geoffrey Hamilton-Fairley (resigned 4 June 2020)*
3,238,070
798,148
3,238,070
46,677
3,490,862
32,432
Dr Adam M Hill
Timothy Bunting
Andrew Unitt
Julian Hirst (resigned 4 June 2020)*
2,956,717
-
-
Carsten Schroeder (resigned 4 June 2020)*
27,000
Dr Annalisa Jenkins
Dr Cheung To (resigned 19 January 2021)
* correct at date of resignation
-
-
Options
420,370
798,148
396,825
-
-
-
-
-
-
-
-
-
-
-
-
2,806,717
-
-
27,000
-
-
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.
Timothy Bunting is a partner of Balderton Capital (UK) LLP, the investment adviser to Balderton Capital Partners III, LP 2
Genostics Company Ltd, a private company incorporated in Hong Kong, controlled by Dr Cheung To, who holds 3,266,770 shares in
the Company.
Directors' remuneration
Introduction
As explained on page 24, remuneration of the Executive Directors and most senior employees is overseen by the Remuneration
Committee, which is chaired by Dr Annalisa Jenkins.
The Board takes the issue of remuneration extremely seriously and endeavours to ensure that remuneration is appropriate and
supports the Group’s strategy and is accordingly designed in a way to promote the best interests of shareholders.
Shareholder engagement regarding remuneration is also important and therefore, as a voluntary best practice matter, shareholders
will get the opportunity to once again vote on this Directors’ remuneration report at Oncimmune’s 2021 Annual.
Directors’ remuneration for 2020
The remuneration paid to or receivable by each person who served as a Director during the year to 31 May 2021 was as follows:
Salary/
fees
Other
Bonus
Pension Benefits
31 May
2021
Total
31 May
2020
Total
£000
£000
£000
£000
£000
£000
£000
Meinhard Schmidt
Geoffrey Hamilton-Fairley (resigned 4 June 2020)
Dr Adam M Hill
Timothy Bunting
Andrew Unitt
Julian Hirst (resigned 4 June 2020)
Carsten Shroeder (resigned 4 June 2020)
Dr Annalisa Jenkins
Dr Cheung To (resigned 19 January 2021)
Total
75
1
274
-
36
1
-
36
-
423
* During the year this discretionary bonus was paid to Dr Adam M Hill
-
-
-
-
-
-
-
-
-
-
-
155*
10
-
-
-
-
-
-
-
-
-
-
-
-
155
10
-
-
-
-
-
-
-
-
-
75
1
75
65
439
385
-
36
1
-
36
-
-
18
36
41
36
-
588
656
Significant shareholdings
As at 31 May 2021, 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:
No. of ordinary shares
Percentage of share capital
Balderton Capital III, LP
Blind Trust (Richard Sharp)
Chelverton Asset Management
Credit Suisse
Dr Adam M Hill
Genostics Company Ltd **
Mr Timothy Brian Bunting*#
Barclays
Hargreaves Lansdown Asset Management
6,813,196
4,447,000
3,889,391
3,674,196
3,537,539
3,266,770
2,956,717
2,576,748
2,172,209
9.9
6.4
5.6
5.3
5.1
4.7
4.3
3.7
3.1
* Board of directors
#Timothy Bunting is a partner of Balderton Capital (UK) LLP, the investment adviser to Balderton Capital Partners III, LP 2
**Dr Cheung To (resigned as Director 19 January 2021) is a shareholder and director of Genostics Company Ltd.
26
Oncimmune Annual Report 2021
27
Managing our responsibilities to wider stakeholders
The Board recognises its prime responsibility under UK
corporate law is to promote the success of the Group for
the benefit of its members and other stakeholders as a
whole. We conduct business in an ethical way and take
seriously our responsibilities to our employees, clinical study
partners, contractors, key opinion leaders, trading partners,
research and laboratory customers, suppliers and regulatory
authorities.
The Group’s employees are critical to the delivery of the
Group’s strategic plan. The Directors ensure that the Group
complies with all UK employment laws and have implemented
appropriate standards and systems to monitor and to ensure
the welfare of those employees.
The complex nature of our products and product development
process means that we have built close working relationships
with a number of key suppliers are essential to ensure we
receive the highest quality products and services.
regulators
We operate in a highly regulated area of business. National
governments and
(Competent Authorities)
implement highly structured product certification regimes
to national, supra-national and international standards. Such
certifications are necessary by law to manufacture and market
research and clinical devices.
Notified Bodies are designated by Competent Authorities
to perform assessments to agreed standards. The Group
is subject to those assessments where appropriate to the
products manufactured and marketed by the Company.
Statement of Directors’
responsibilities under S172(1)
Companies Act 2006
Corporate Governance
In accordance with Section 172 of the Companies Act
2006, the Directors recognise the importance of our wider
stakeholders to the sustainability of our business. The Directors
behave and carry out their activities to promote the long-
term success of the Group for the benefit of the Company’s
shareholders, employees, partners, customers, suppliers and
other stakeholders such as regulatory authorities. The Group
engages with stakeholders to reflect their insights and views
when making decisions on strategy, delivering operational
effectiveness, driving initiatives and delivering outcomes.
The culture and values promoted by the Directors create a
focus across the Group on observing and maintaining high
standards of regulatory compliance, quality control and
business conduct whilst promoting the long-term success of
the Company. The impact of the Group’s operations on the
environment and community and how these enhance social
value are described above.
The Group has built and maintained relationships with
shareholders, advisers and suppliers. The Directors have
taken steps to develop and strengthen them through dialogue
and engagement. These relationships are regularly monitored
at Board level.
The Chairman ensures that he is available to discuss issues
with key shareholders outside of the shareholder meetings
which are held. The Company complies with its disclosure
obligations as set out in the AIM Rules for Companies, published
by London Stock Exchange to ensure that shareholders are
updated on key developments on a timely basis.
For more detail on the corporate governance of the Group,
see Corporate Governance section in the Directors’ Report.
Meeting shareholder needs
The Company seeks to maintain and enhance good
relations with its shareholders and analysts. The Group’s
Interim and Annual Reports are supplemented by regular
updates to investors on commercial progress. Institutional
shareholders, private client brokers, retail investors and
analysts are in contact with the Directors through a regular
programme of briefing presentations and meetings to
discuss issues and give feedback. The Board also uses
and receives formal feedback through the Company’s
joint stockbrokers, financial public relations advisor and
other advisors. Investor forums and presentation seminars
and shows provide other channels of communication to
shareholders, analysts and potential investors. Individual
shareholders are welcome to and regularly make contact
with the Company via email or telephone.
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 Company 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.
On behalf of the Board
Dr Adam M Hill
Director and Chief Executive Officer
2 November 2021
Company registration number: 09818395
(England and Wales)
Directors’ responsibilities
statement
financial statements
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
in accordance with
consolidated
International Financial Reporting Standards as adopted by
the European Union (IFRSs) and elected to prepare the Parent
Company's financial statements under the 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:
•
Select suitable accounting policies and then apply them
consistently;
• Make judgements and accounting estimates in the
financial statements 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.
responsible
The Directors are
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
UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
“Oncimmune inks contracts to supply blood-based
lung cancer test to UK's NHS”
360Dx, 14 December 2020 after EarlyCDT Lung launches into the NHS.
28
Oncimmune Annual Report 2021
29
Independent auditor’s report to the members of
Oncimmune Holdings plc
Opinion
Our opinion on the financial statements is
unmodified
the
We have audited
financial statements of
Oncimmune Holdings Plc (the ‘parent company’) and
its subsidiaries (the ‘group’) for the year ended 31 May
2021, 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 cash
flows, the Company statement of financial position, the
Company statement of changes in equity, and notes
to the financial statements, including a summary of
significant accounting policies. The financial reporting
framework that has been applied in the preparation of
the group financial statements is applicable law and
international accounting standards in conformity with
the requirements of the Companies Act 2006. The
financial reporting framework that has been applied
in the preparation of the parent company financial
statements is applicable law and United Kingdom
Accounting Standards, including Financial Reporting
Standard 101 ‘Reduced Disclosure Framework’ (United
Kingdom Generally Accepted Accounting Practice).
In our opinion:
•
•
•
•
the financial statements give a true and fair view
of the state of the group’s and of the parent
company’s affairs as at 31 May 2021 and of the
group’s loss for the year then ended;
the group financial statements have been properly
prepared
international
accounting standards
in conformity with the
requirements of the Companies Act 2006;
in accordance with
the parent company financial statements have
in accordance with
been properly prepared
United Kingdom Generally Accepted Accounting
Practice; and
the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described
in the ‘Auditor’s responsibilities for the audit of the financial
statements’ section of our report. We are independent of the
group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which
indicates that current financial year revenue performance
reflects the revenue modelled under a more severe downside
stress test. In such a scenario the group may not comply with
the financial covenant attached to its external borrowings
and as such the group’s borrowings could be recalled by its
lender. As stated in note 2, these events or conditions, along
with the other matters as set forth in note 2, indicate that a
material uncertainty exists that may cast significant doubt on
the Group’s group and parent company’s ability to continue
as a going concern. Our opinion is not modified in respect of
this matter.
In auditing the financial statements, we have concluded that
the director's use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our responsibilities
We are responsible for concluding on the appropriateness of
the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast
significant doubt on the group’s and the parent company’s
ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in
our report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify the auditor’s
opinion. Our conclusions are based on the audit evidence
obtained up to the date of our report. However, future events
or conditions may cause the group or the parent company to
cease to continue as a going concern.
The responsibilities of the directors with respect to going
concern are described in the ‘Responsibilities of directors for
the financial statements’ section of this report.
Our approach to the audit
Overview of our audit approach
Key audit matters
Materiality
Scoping
Overall materiality:
Group: £235,000, which represents approximately 4% of the
group’s loss before taxation.
Parent company: £141,000, which represents 0.4% of the parent
company’s total assets.
Key audit matters for the group were identified as:
•
•
•
•
Going concern;
Risk of fraud in revenue recognition;
Risk of error in revenue recognition; and
Impairment of goodwill and intangible assets.
The key audit matter for the company was identified as:
•
Intragroup loan impairment – expected credit
losses.
Our auditor’s report for the year ended 31 May 2020 included
no key audit matters that have not been reported as key audit
matters in our current year’s report.
Our auditor’s report for the year ended 31 May 2021 includes
one key audit matter, Risk of error in revenue recognition, which
was not included as a key audit matter in the auditor’s report
for the year ended 31 May 2020. The risk of error in revenue
recognition has been recorded as a key audit matter for the
current year due to the volume and complexity of revenue
contracts entered into by the group during the year.
We performed full scope audit procedures on the financial
information of Oncimmune Holdings Plc, Oncimmune
Limited and Oncimmune Germany GmbH and analytical
procedures on the financial information of Oncimmune
Europe GmbH and Oncimmune Americas LLC. All work
was completed by the group engagement team with the
exception of the work completed on Oncimmune Germany
GmbH where audit procedures were completed by a
component engagement team.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These
matters included those that had the greatest effect on: the
overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion
on these matters.
Audit response
Description
Key
audit
matters
Key observations/
Our results
Disclosures
In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters
described below to be the key audit matters to be communicated in our report.
In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the audit.
High
l
i
a
c
n
a
n
i
f
l
a
i
t
n
e
t
o
P
t
c
a
p
m
i
t
n
e
m
e
t
a
t
s
Low
Risk of error in
revenue recognition
Management
override of
controls
Trade
receivables
Share based
payments
Contract assets
and liabilities
Going concern
Risk of fraud in
revenue recognition
Impairment of goodwill
and intangible assets
Intragroup loans impairment
Extent of management judgement
High
Key audit matter
Significant risk
Other risk
30
Oncimmune Annual Report 2021
31
Key Audit Matter – Group
How our scope addressed the matter – Group
Key Audit Matter – Group
How our scope addressed the matter – Group
Risk of fraud in revenue recognition
We identified the risk of fraud in revenue recognition as one of the
most significant assessed risks of material misstatement due to
fraud.
Under ISA 240 (UK) there is a presumed risk that revenue may be
misstated due to the improper recognition of revenue.
We identified the potential risk of management overriding revenue
balances to inflate the reported revenue figure, through the posting
of fraudulent journal entries posted around year end.
Relevant disclosures in the Financial statements
The Group's accounting policies on revenue recognition is shown
in note 2 to the financial statements and related disclosures are
included in note 4.
In responding to the key audit matter, we performed the following
audit procedures:
•
•
•
•
conducted an assessment of the internal control environment
relating to revenue recognition. This involved assessing the
design and implementation of relevant controls in the revenue
business cycle relevant to the audit;
assessed the estimates and judgements made by management
when accounting for revenue;
identified journal entries with specific characteristics posted to
revenue accounts to highlight and corroborate any postings that
were outside of our expectations and therefore at a higher risk of
being fraudulent; and
assessed and considered any transactions that were outside the
normal course of business and transactions with related parties.
Our results
Our audit testing did not identify any material misstatements in the
revenue recognised during the year which, based on our audit work,
has been recognised in accordance with the Group’s accounting
policies.
Key Audit Matter – Group
How our scope addressed the matter – Group
Risk of error in revenue recognition
We identified the risk of error in revenue recognition as one of
the most significant assessed risks of material misstatement due
to error.
The Group enters into complex revenue agreements, the terms
of which can include minimum order levels, volumes of tests
performed, and multiple performance obligations.
Accounting for contracts of this nature requires management to
exercise a significant amount of judgement which increases the risk
of error arising in accounting for revenue transactions.
The judgements and estimates made by management when
accounting for revenue include:
In responding to the key audit matter, we performed the following
audit procedures:
• conducted an assessment of the internal control environment
relating to revenue recognition which involved assessing the
design and implementation of relevant controls in the revenue
business cycle relevant to the audit:
• assessed whether the revenue recognition accounting policies
adopted were in accordance with the financial reporting
framework, including IFRS 15, and tested whether Management
had accounted for revenue in accordance with the accounting
policies;
• obtaining Management’s assessment and corroborative
evidence to support the key
in the
recognition of revenue, particularly in relation to whether
revenue should be recognised at a point in time or over time;
judgements made
the assessment of the number of distinct performance
obligations in relation to fixed price contract based activity
revenue;
•
tested the occurrence of revenue recognised by selecting a
sample of revenue transactions throughout the year and agreed
the transaction to supporting evidence; and
•
•
•
•
the assessment of whether revenue should be recognised at a
point in time or overtime;
the assessment of revenue to be recognised under contracted
minimum numbers of test under distribution and medical
testing services; and
the assessment of revenue to be recognised based on
percentage complete calculations on projects which are not
complete at period end.
We identified that there is a risk that IFRS 15 ‘Revenue from
Contracts with Customers’ may not be applied correctly as
significant judgement is involved in applying the standard to
contracts entered into.
Relevant disclosures in the Financial statements
The Group's accounting policies on revenue recognition is shown
in note 2 to the financial statements and related disclosures are
included in note 4.
• considered the performance obligations in relation to projects
spanning the year end for which revenue is recognised over
time by looking at hours recorded against budget to verify
percentage completion.
Key observations
As a result of our work management deferred £1.7m of revenue in
respect of one customer following challenge regarding the IFRS
15 criteria on collectability. Our audit testing did not identify any
other material misstatements in the revenue recognised during
the year which, based on our audit work, has been recognised in
accordance with the group’s accounting policies.
Impairment of goodwill and intangible assets
We identified the assessment of impairment of goodwill and
intangible assets arising from the acquisition of Oncimmune
Germany GmbH as one of the most significant assessed risks of
material misstatement due to error.
At 31 May 2021, the group had goodwill and intangible assets
arising the acquisition of Oncimmune Germany GmbH of £2.3m
(2020: £2.4m).
In accordance with International Accounting Standard (IAS) 36,
‘Impairment of Assets’, an annual impairment review is required
to be performed by management for goodwill and, for other
intangible assets, if events or changes in circumstances indicate
that the carrying amount may not be recoverable.
The impairment review is based on comparing the carrying value
of the identified cash generating unit with the recoverable amount
(being the higher of value in use and fair value less costs to sell),
based on a value in use discounted cash flow model.
Management’s assessment of potential impairment incorporates
key assumptions including forecast revenues, growth rates, and
the discount rate. These involve inherent uncertainty in forecasting
and discounting future cashflows.
Relevant disclosures in the Financial statements
The Group's accounting policy on impairment of assets, including
goodwill and intangible assets, is shown in note 2 and related
disclosures are included in note 12 to the financial statements.
Key Audit Matter – Parent company
Intragroup loans impairment – expected credit losses
We identified the assessment of impairment of intragroup loans as
one of the most significant assessed risks of material misstatement
due to error.
The company had loans due from subsidiary companies of £17.4m
and there is a risk that these loans may be impaired as a result of
subsidiary companies incurring losses.
Management’s assessment of the expected credit loss of intragroup
loans requires significant judgements, such as timing, extent and
probability of future cash flows.
Relevant disclosures in the Financial statements
The Group’s accounting policy on intragroup loans is shown in note
2 to the financial statements and related disclosures are included in
notes 2 and 4 to the parent company’s financial statements.
In responding to the key audit matter, we performed the following
audit procedures:
• performed procedures to assess the design effectiveness of
controls;
• assessed whether the impairment accounting policy adopted is
in accordance with the financial reporting framework, including
IAS 36, and checked whether management applied this policy
appropriately;
• compared the carrying value of the cash generating unit to
management’s value in use calculations;
• checked the mathematical accuracy of the impairment models;
• assessed and challenged Management on the appropriateness
of the forecast growth rates when compared to historical
performance;
• evaluated the other assumptions included in the impairment
model
through comparison with historical results, our
knowledge of the business and discussions with management;
• using an auditor’s expert, assessed and challenged management
on the appropriateness of the discount rate applied to future
cash flows;
• performed sensitivity analysis on the forecasts prepared by
management; and
• assessed the adequacy of related disclosures within the
financial statements.
Our results
Our audit testing did not identify any material misstatements
relating to the impairment of goodwill or intangible assets included
on the consolidated statement of financial position.
How our scope addressed the matter– Parent
company
In responding to the key audit matter, we performed the following
audit procedures:
• performed procedures to assess the design effectiveness of
controls;
• assessed the appropriateness of the methodology applied by
management in their assessment of the expected credit loss
of intragroup loans by comparing it to the Parent company’s
accounting policy and relevant accounting standards;
• obtained and assessed management’s evaluation of the
expected credit loss of intragroup loans including checking the
impairment provisions and net asset values of components that
have intragroup debt;
• checked management’s expected credit loss model applied to
intragroup loans is mathematically accurate;
• assessed the key assumptions made by management within the
calculations and challenged if these are appropriate, such as the
discount rate applied and assumptions regarding recoverability
and timing of cash flows are appropriate, by cross reference to
available data.
Key observations
As a result of our work and challenge, management revised
their assessment of the expected credit loss against one of the
intragroup loans, resulting in a reduction in the expected credit
loss provision of £250k and corresponding increase in the carrying
value of the loan.
32
Oncimmune Annual Report 2021
33
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in
the auditor’s report.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential
uncorrected misstatements.
Overall materiality – Group
Overall materiality – Parent
Materiality was determined as follows:
Materiality measure
Group
Parent
Materiality for financial
statements as a whole
We define materiality as the magnitude of misstatement in the financial statements that, individually
or in the aggregate, could reasonably be expected to influence the economic decisions of the
users of these financial statements. We use materiality in determining the nature, timing and extent
of our audit work.
Materiality threshold
£235,000 which is 4% of loss before taxation.
£141,000 which is 0.4% of total assets
Significant judgements
made by auditor
in determining the
materiality
In determining materiality, we made the
following significant judgements:
In determining materiality, we made the
following significant judgements:
•
•
The selection of an appropriate
benchmark being loss before tax
which we have selected as it is a key
performance indicator and therefore of
interest to stakeholders,
Selection of an appropriate percentage to
apply to draft loss before tax.
•
•
The selection of an appropriate
benchmark being total assets as the
company’s purpose is that of holding
investments in subsidiary undertakings
Restricting the benchmark based on the
relative size of the component within the
group.
Materiality for the current year is lower than
the level that we determined for the year
ended 31 May 2020 to reflect a decrease in
loss before tax.
Materiality for the current year is lower than the
level that we determined for the year ended 31
May 2020
Performance materiality
used to drive the extent
of our testing
We set performance materiality at an amount less than materiality for the financial statements as
a whole to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds materiality for the financial statements as a whole.
Performance materiality
threshold
£165,000 which is 70% of financial statement
materiality.
£98,000 which is 70% of financial statement
materiality.
In determining materiality, we made the
following significant judgements:
In determining materiality, we made the
following significant judgements:
•
Our experience with auditing the group
in previous years – based on the level of
misstatements and control deficiencies
identified.
•
Our experience with auditing the company
in previous years – based on the level of
misstatements and control deficiencies
identified.
We determine specific materiality for one or more particular classes of transactions, account
balances or disclosures for which misstatements of lesser amounts than materiality for the financial
statements as a whole could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
We determined a
materiality for the following areas:
lower
level of specific
We determined a
materiality for the following areas:
lower
level of specific
•
•
Directors’ remuneration; and
Related party transactions.
•
•
Directors’ remuneration; and
Related party transactions.
We determine a threshold for reporting unadjusted differences to the audit committee.
Significant judgements
made by auditor
in determining the
performance materiality
Specific materiality
Specific materiality
Communication of
misstatements to the
audit committee
Threshold for
communication
Loss before tax
£5.7m
Draft total assets
£33.5m
FSM
£235k, 4%
PM
£165k, 70%
TFPUM
£70k,30%
FSM
£141k, 0.4%
PM
£98k, 70%
TFPUM
£43k, 30%
FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected
misstatements
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding of the group’s and the parent company’s business and in
particular matters related to:
Understanding the group, its components, and their environments, including group-wide controls
•
•
The engagement team obtained an understanding of the group and its environment, including group-wide controls, and
assessed the risks of material misstatement at the group level.
The engagement team obtained an understanding of the group organisational structure on the scope of the audit;
Identifying significant components
•
Three significant components were identified through consideration of total assets, revenues and results before taxation.
Type of work to be performed on financial information of parent and other components (including how it addressed the key audit
matters)
•
•
The three significant components, two in the UK (Oncimmune Holdings Plc and Oncimmune Limited) and one in Germany
(Oncimmune Germany GmbH), were required to have full scope audits.
Two components, Oncimmune Europe GmbH and Oncimmune Americas LLC, were tested through the completion of
analytical procedures.
Performance of our audit
•
The UK significant components were audited by the group engagement team and the German significant component audit
was conducted by a local component auditor.
Communications with component auditors
•
•
Communications with the component auditors in Germany were through the issue of group instructions, and assessment of
the work completed at the planning, fieldwork and completion stages of the audit;
Due to the external conditions brought about by Covid-19, we were unable to complete our fieldwork component visits, we
therefore increased the frequency of our communications with the component auditor to monitor progress and we used
video conferencing to audit working papers of the component auditor.
£11,750 and misstatements below that threshold
that, in our view, warrant reporting on qualitative
grounds.
£7,030 and misstatements below that threshold
that, in our view, warrant reporting on qualitative
grounds.
Changes in approach from previous period
•
There were no significant changes to the scope of the current year audit from the scope of that of the prior year.
Audit approach
Full-scope audit
Analytical procedures
No. of
components
% coverage
total assets
% coverage
revenue
% coverage
LBT
3
2
99
1
100
0
99
1
34
Oncimmune Annual Report 2021
35
Responsibilities of directors for the financial
statements
As explained more fully in the Directors’ responsibilities
statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not
a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the
audit of the financial statements
located on the
Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
is
including
fraud, are
Explanation as to what extent the audit was
considered capable of detecting
irregularities,
including fraud
Irregularities,
instances of non-
compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect
material misstatements in respect of irregularities, including
fraud. Owing to the inherent limitations of an audit, there is an
unavoidable risk that material misstatements in the financial
statements may not be detected, even though the audit is
properly planned and performed in accordance with the ISAs
(UK).
Other information
The directors are responsible for the other information. The
other information comprises the information included in
the Annual Report, other than the financial statements and
our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated.
inconsistencies
or apparent material misstatements, we are required to
determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
identify such material
If we
We have nothing to report in this regard.
Our opinion on other matters prescribed by the
Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the
course of the audit:
•
•
the information given in the strategic report and
the Directors’ report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
the strategic report and the Directors’ report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report under the
Companies Act 2006
In the light of the knowledge and understanding of the group
and the parent company and its environment obtained in
the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following matters
in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified
by law are not made; or
we have not received all the information and explanations
we require for our audit.
The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
•
• We obtained an understanding of the legal and regulatory
frameworks that are most applicable to the group
and industry in which it operates through our general
commercial and sector experience, discussions with
management, and inspection of legal correspondence.
We determined that the following laws and regulations
were most significant: the financial reporting framework
(international accounting standards in conformity with
the requirements of the Companies Act 2006) and
relevant tax compliance regulations.
• We understood how the group is complying with
legal and regulatory frameworks by making enquiries
of management and those responsible for legal and
compliance procedures. We corroborated our enquiries
through our review of board minutes and papers
provided to the Audit Committee.
• We enquired of management and the Audit Committee
about the group's policies and procedures relating to
the identification, evaluation and compliance with laws
and regulations and the detection and response to the
risks of fraud and the establishment of internal controls
to mitigate risks related to fraud or non-compliance with
laws and regulations including the Companies Act.
• We enquired of management and the Audit Committee,
whether they were aware of any instances of non-
compliance with laws and regulations or whether they
had any knowledge of actual, suspected or alleged fraud.
• We assessed the susceptibility of the financial statements
to material misstatement, including how fraud might
occur, by
incentives
evaluating management’s
and opportunities for manipulation of the financial
statements. This included the evaluation of the risk of
management override of controls. We determined that
the principal risks were in relation to areas of increased
management judgement as well as the risk of fraud
through the use of journal entries that increase revenues.
Our audit procedures involves:
•
•
Evaluation of the design effectiveness of controls
that management has in place to prevent and detect
fraud; and
Journal entry testing, with a focus on material
journals.
In addition, we completed audit procedures
to
conclude on the compliance of disclosures in the
financial statements with applicable financial reporting
requirements.
These audit procedures were design
to provide
reasonable assurance that the financial statements
were free from fraud or error. However, detecting
irregularities that result from fraud is inherently more
difficult than detecting those that result from error, as
those irregularities that result from fraud may involve
collusion, deliberate concealment, forgery or intentional
misrepresentations. Also, the further removed non-
compliance with laws and regulations is from events and
transactions reflected in the financial statements, the
less likely we would become aware of it.
•
The assessment of the appropriateness of the collective
competence and capabilities of the engagement team
included consideration of the engagement team’s:
•
•
•
Understanding of, and practical experience
with audit engagements of a similar nature and
complexity
training and
participation;
through appropriate
Knowledge of the industry in which the client
operates; and
Understanding of
requirements specific to the entity.
the
legal and
regulatory
•
•
•
The team communications in respect of potential non-
compliance with laws and regulations and fraud included
the potential fraud in revenue recognition through the
inflation of revenue.
In assessing the potential risk of material misstatement,
we obtained an understanding of:
•
•
The group’s operations, including the nature of
its revenue sources, products and services to
understand the classes of transactions, account
balances, expected financial statement disclosures
and business risks that may result in risk of material
misstatement; and
The group’s control environment, including:
• Management’s knowledge of relevant laws and
regulations and how the group is complying
with those laws and regulations;
•
•
The adequacy of procedures for authorisation
of transactions; and
Procedures to ensure that possible breaches of
law and regulations are appropriately resolved.
For components at which audit procedures were
performed, we requested component auditors to
report to us instances of non-compliance with laws
and regulations that gave rise to a risk of material
misstatement of the group financial statements. No such
matters were identified by the component auditors
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the company’s members those matters
we are required to state to them in an auditor’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.
Nick Jones
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Crawley
2 November 2021
36 Consolidated financial statements
Oncimmune Annual Report 2021
37
Consolidated statement of comprehensive income
Consolidated statement of financial position
Year to 31 May
2021
Year to 31 May
2020
£’000
Total
3,722
(865)
£’000
Total
509
(537)
2,857
(28)
(1,615)
(5,652)
(1,046)
-
(1,677)
(8,174)
(174)
579
(8,313)
(9,446)
311
206
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Right-of-use assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Contract assets
Cash and cash equivalents
Total assets
Equity
(5,145)
(9,268)
Capital and reserves attributable to the equity holders
Revenue
Cost of sales
Gross profit / (loss)
Research and development expenses
Administrative expenses
Share-based payment
Gain on disposal of assets
Total administrative expenses
Other income
Operating loss
Finance income
Finance costs
Finance costs - net
Loss before income tax
Income tax credit
Notes
4
24
9
5
6
10
10
11
403
(954)
(551)
(5,696)
1,068
111
(626)
(515)
(9,783)
1,324
Loss for the financial year
(4,628)
(8,459)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss,
net of tax
Currency translation differences
(91)
84
Loss after tax and total comprehensive income for the year
attributable to equity holders
(4,719)
(8,375)
Basic and diluted loss per share
28
(7.17)p
(13.36)p
All activities of the Group in the current and prior period are classed as continuing.
All of the comprehensive income for the year is attributable to the shareholders of Oncimmune Holdings Plc.
The accompanying notes form an integral part of these consolidated financial statements.
Share capital
Share premium
Other reserves
Merger reserve
Foreign currency translation reserve
Own shares
Retained earnings
Total equity
Liabilities
Non-current liabilities
Deferred tax
Lease liability
Other liabilities
Borrowings
Current liabilities
Trade and other payables
Contract liabilities
Other statutory liabilities
Lease liability
Other liabilities
Borrowings
Total liabilities
Total equity and liabilities
Notes
12
13
14
15
30
17
16
4
18
23
23
30
22
20
21
19
4
22
20
21
31 May
2021
£’000
1,578
4,116
664
930
937
8,225
143
7,079
200
8,631
16,053
24,278
691
40,497
4,094
31,882
88
(1,926)
(70,099)
5,227
374
671
2,000
6,239
9,284
1,979
5,175
55
310
-
2,248
9,767
19,051
24,278
31 May
2020
£’000
1,578
1,138
390
982
-
4,088
174
1,716
97
4,240
6,227
10,315
635
31,459
3,048
31,882
179
(1,926)
(65,471)
(194)
133
762
-
6,147
7,042
1,037
570
65
227
428
1,140
3,467
10,509
10,315
38 Consolidated financial statements
Oncimmune Annual Report 2021
39
The accompanying notes form an integral part of these consolidated financial statements.
The financial statements were approved by the board on 2 November 2021.
Dr Adam M Hill
Director and Chief Executive Officer
Company registration number: 09818395 (England and Wales)
Consolidated statement of changes in equity
Consolidated statement of cash flows
Share
capital
Share
premium
Other
reserves
Merger
reserve
Foreign
currency
translation
reserve
Own
Shares
Retained
earnings
Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Cash flows from operating activities
As at 1 June 2019
633
31,382
3,295
31,736
95
(1,926)
(57,350)
7,865
Loss before income tax
Adjusted by:
Year to 31 May
2021
Year to 31 May
2020
Notes
£’000
£’000
(5,696)
(9,783)
(8,459)
(8,459)
Depreciation and amortisation
Loss for the year
Other comprehensive income:
Currency translation
differences
Total comprehensive income
Transactions with owners:
Share warrants issued
Shares issued on acquisition
Share option charge
-
-
-
-
2
-
-
-
-
-
77
-
-
-
-
142
-
-
-
-
(563)
146
174
-
-
84
84
-
-
-
-
-
-
-
-
-
-
84
(8,459)
(8,375)
-
142
338
-
-
174
As at 31 May 2020
635
31,459
3,048
31,882
179
(1,926)
(65,471)
(194)
Loss for the year
Other comprehensive income:
Currency translation
differences
Total comprehensive income
Transactions with owners:
-
-
-
-
-
-
Shares issued in year
50
8,331
Options exercised
Shares issued in relation to
prior year acquisition
Share option charge
2
4
-
106
601
-
1,046
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(91)
(91)
-
-
-
-
-
-
-
-
-
-
(4,628)
(4,628)
-
(91)
(4,628)
(4,719)
-
-
-
-
8,381
108
605
1,046
As at 31 May 2021
691
40,497
4,094
31,882
88
(1,926)
(70,099)
5,227
The accompanying notes form an integral part of these consolidated financial statements.
13,14,15
10
10
Share-payment charge
Interest received
Interest expense
Gain on disposal of assets
Fair value movement on contingent consideration and liabilities
Changes in working capital:
Decrease in inventories
Increase in trade and other receivables
Increase / (decrease) in trade and other payables
Cash used by operations
Interest paid
Interest received
Income tax received
Net cash used by operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of assets
Net cash (used in) / generated from investing activities
Cash flows from financing activities
Net funds raised through share issues
Loan advances
Loan repayments
Principal elements of lease repayments
Net cash 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
18
The accompanying notes form an integral part of these consolidated financial statements.
740
1,046
(403)
954
-
176
31
(5,837)
4,841
(4,148)
(885)
3
503
500
174
(111)
626
(579)
78
107
(807)
591
(9,204)
(663)
111
853
(4,527)
(8,903)
(446)
(625)
215
(856)
8,489
2,728
(1,135)
(303)
9,779
(5)
4,391
4,240
8,631
(236)
-
583
347
-
7,598
-
(138)
7,460
(22)
(1,118)
5,358
4,240
40
Oncimmune Annual Report 2021
41
Consolidated financial statements Notes to the consolidated financial statements
1.
General information
Oncimmune Holdings Plc (the ‘Company’) is a limited company incorporated and domiciled in England and Wales. The registered office of the company
is MediCity – D6 Building, 1 Thane Road, Nottingham, NG90 6BH. The registered company number is 09818395.
The Group’s principal activity is the development and commercialisation of technologies that enable cancer diagnosis.
The Directors of Oncimmune Holdings Plc are responsible for the financial information and contents of the financial information.
2.
Accounting policies
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. The financial statements are for the group consisting of Oncimmune Holdings Plc
and its subsidiaries.
Basis of preparation
The Group has prepared its consolidated financial statements in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006.
The financial statements have been prepared on a historical cost basis, except certain financial assets and liabilities which are measured at fair value.
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 a 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 had 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, met 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 had selected an accounting policy in accordance with paragraphs 10-12 of IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors. The consolidated entity met the definition of a group reconstruction under FRS 102 19,27 and was therefore
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 been prepared as if Oncimmune Limited and its subsidiaries had been held by Oncimmune Holdings Plc from inception and
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 are presented in sterling and have been rounded to the nearest thousand (£’000).
The Group has prepared the 2021 financial statements on a going concern basis. In preparing the accounts on a going concern basis the Directors
have prepared forecasts and budgets for the period to 31 December 2022 and which also considered the Group’s existing debt covenant obligations
up until this date. These forecasts and budgets model a range of scenarios, including taking into consideration the impact of COVID-19. The base
case scenario assumes cash from contracts with customers for the forecast period being a mix of contracted amounts, contracts currently under
negotiation, repeat business from already contracted work together with contracts from as yet unidentified opportunities. The base case scenario
shows the Group is able to meet its financial obligations as and when they fall due for the forecast period.
The Directors have also considered downside scenarios that reflect the current unprecedented uncertainty in the UK economy and which the
Directors consider to be severe but plausible. The first downside scenario took the base case scenario and removed a total of 50% of forecast
EarlyCDT Lung product revenues excluding the US with a corresponding reduction in cost of sales and a reduction in third party R&D subcontract
manufacture of EarlyCDT Lung product. The second downside scenario took the base case scenario and removed 50% of forecast EarlyCDT Lung
product revenues excluding revenues from the UK and the US as well as a 20% reduction in ImmunoINSIGHTS’ revenues and with a corresponding
reduction in cost of sales. The results of these scenarios show that the Group has sufficient resources to meet its obligations for the forecast period
and will not be in breach of its covenant under the IPF Management SA facility.
In addition to the above the Directors have performed a more severe downside stress test. The most severe of these tests reduced EarlyCDT Lung
product revenues outside of the UK but excluding the US by 50% of forecast and reduced ImmunoINSIGHTS’ revenues by 50% with an appropriate
reduction in ImmunoINSIGHTS cost of sales. At the time of approval of the financial statements, the revenue performance for the current financial
year reflects the revenue modelled under this stress test. This may mean that under this more severe downside stress test scenario the Group will
not comply with the financial covenant attached to its external borrowings for the duration of the going concern review period. Should the financial
covenant not be met the Group’s borrowings could be recalled by its lender. Such a scenario gives rise to a material uncertainty which may cast
significant doubt about the Group’s ability to continue as a going concern. However, as has been detailed in the Chief Financial Officer’s review,
there has been an appreciable uplift in business activity within the ImmunoINSIGHTS’ business with several contracts signed and a number of other
contracts moving into legal contracting and expected to be executed before the end of this calendar year. Furthermore, although not modelled, the
Directors have identified costs within the business which could be reduced within a relatively short time period.
After considering the above and after making appropriate enquiries, the Directors have formed a judgement at the time of approving the financial
statements that there is a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable
future. For this reason, the Directors consider the adoption of the going concern basis in preparing the Consolidated financial statements is
appropriate.
New Standards and interpretations
A number of amendments to existing standards have been issued but which are not yet mandatory, and have not been adopted by the Group in these
financial statements. The Directors do not anticipate that their adoption in future periods will have a material impact on the financial statements of the
Group.
Revenue
IFRS 15 provides a single, principles based five-step model to be applied to all sales contracts based on the transfer of control of goods and services
to customers.
The amount shown as revenue in the statement of comprehensive income comprises royalties, the provision and distribution of medical testing
services and equipment and long-term contracts for the profiling of autoantibodies, in the US and other markets, including the UK.
Revenue is recognised at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the goods and services
to its customers and excludes intra-group sales, value added tax and trade discounts.
Principles of consolidation and equity accounting
Royalty income is recognised at the point in time the tests to which the royalty licences relate are completed by third parties.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities
of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that
control ceases.
The Group uses the acquisition method of accounting to account for business combinations.
Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Where a Group company has acquired an investment in a subsidiary undertaking and applies merger relief, under section 612 of the Companies Act
2006, the difference between the nominal value and fair value of the shares issued is credited to the merger reserve.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the
Strategic Report on pages 2 to 19. The Financial Review section on pages 38 to 71 describes the financial position of the Group, its cash flows and
liquidity position. In addition, note 29 to the financial statements includes the Group’s objectives, policies and processes for managing its capital,
its financial risk management objectives and its exposure to market risk, including foreign exchange rate risk, interest rate risk and price risk, credit
risk and liquidity risk.
In respect of the Group’s funding position, the Company entered into a €8.5M credit facility with IPF Management SA in September 2019 which
was further extended by €6.0M in October 2020, of which €3.0M was drawn. The Company did not exercise its option to draw down the remaining
€3.0M before the deadline of 30 June 2021. Each tranche of the total loan is repayable over a four-year term, interest-only for the first 12 months,
with principal repayments commencing thereafter. There is a cash covenant requiring the Group to maintain nine months of cash which is tested
each quarter. The total loan has been used to support the Group’s operational activities, in particular the growth of the ImmunoINSIGHTS service
business. In order to monitor compliance with this financial covenant, the Board prepares monthly financial accounts including a calculation of
covenant compliance for the following 12 months.
42 Consolidated financial statements
Amounts receivable in respect of the provision of medical testing services and equipment are recognised at the point in time when the tests are
performed.
The Group has a number of agreements in place with distributors with annual contracted minimum numbers for tests and services. The transaction
price is fixed in the agreements. The consideration due is based on looking at the volume of tests performed to date and the likelihood of the
minimum number being performed over the time of the agreement. Where the minimum tests are not performed by the distributer minimum revenues
contracted are recognised over time.
In the case of fixed price contracts, the customer pays a fixed minimum annually upfront. Where the services rendered by the Group exceed the
payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.
The ImmunoINSIGHTS operating segment provides an autoantibody profiling service with contracts which include multiple deliverables noted below.
Where the contracts include multiple performance obligations, the transaction price will be allocated to each performance obligation based on the
working hours completed per the project plan. In order to determine the revenue to recognise on these long-term contracts in a specific period,
management makes certain estimates as to the stage of completion of those contracts. Management estimates the remaining time and external costs
to be incurred in completing the contracts and the customer’s willingness and ability to pay for the services provided. Where the payment exceeds the
performance obligation a contract liability is recognised. If the services rendered by the group exceeds the payment, a contract asset is recognised.
The performance obligations as set out as milestones in the contract refer to purchasing materials, completing analysis of samples, transfer of raw
data, submission and acceptance of the QC report, and delivery of the final report.
Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary comprises the:
•
•
•
•
•
fair values of the assets transferred
liabilities incurred to the former owners of the acquired business
equity interests issued by the Group
fair value of any asset or liability resulting from a contingent consideration arrangement, and
fair value of any pre-existing equity interest in the subsidiary.
Oncimmune Annual Report 2021
43
Notes to the consolidated financial statements
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially
at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition
basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity, and acquisition-date fair value of any
previous equity interest in the acquired entity, over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date
of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
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
3 – 7 years
Computer equipment
3 – 4 years
Office equipment
3 – 7 years
The assets’ residual value and useful lives are reviewed, and adjusted if appropriate to do so, at the end of each reporting period. 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.
Gain and loss on disposal of an asset is determined by comparing the proceeds with the carrying amount and are recognised within profit or loss.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently re-measured to
fair value with changes in fair value recognised in profit or loss.
Impairment testing of non-financial assets
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is
re-measured to fair value at the acquisition date. Any gains or losses arising from such re-measurement are recognised in profit or loss.
Goodwill
Goodwill on acquisitions of subsidiaries is disclosed as a separate line item in the Consolidated statement of financial position and is carried at cost
less accumulated impairment losses. Goodwill represents the excess of the fair value of the consideration over the fair values of the identifiable net
tangible and intangible assets acquired and is allocated to cash generating units. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Under IFRS 3 “Business Combinations”, goodwill arising on acquisitions is not subject to amortisation but is subject to annual impairment testing or
more frequently if events or changes in circumstances indicate that it might be impaired. Any impairment is recognised immediately in the Statement
of consolidated comprehensive income and is not subsequently reversed. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows from other assets or groups of assets (cash generating units).
Intangible assets
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 which
is currently five years. Asset lives are subject to regular review and an impairment exercise carried out once a year. Where no internally-generated
intangible asset can be recognised, the expenditure is written-off in the period in which it is incurred.
An intangible asset arising from development is recognised if, and only if, the Group can demonstrate the following:
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to sell or use the intangible asset;
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.
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting
period. The reversal would be limited to the carrying amounts of the non-financial assets had no impairment been recognised.
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.
Trade receivables
Trade receivables are recognised at the amount of consideration that is unconditional, unless they contain significant financing components when
they are recognised at fair value. In accordance with IFRS 15 and subsequently measured at amortised cost using the effective interest method, less
provision for impairment. The balances are subject to the expected credit loss model, and are written off where there is no expectation of recovery.
Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the
Group, and a failure to make contractual payments for a significant period past the due date. Impairment losses on trade receivables are presented as
net impairment losses within operating loss. Subsequent recoveries of amounts previously written off are credited against the same line item.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit
risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics
as the trade receivables for the same types of contracts. The group has therefore concluded that the expected loss rates for trade receivables are a
reasonable approximation of the loss rates for the contract assets.
how the intangible asset will generate probable future economic benefits. Among other things, the Group can demonstrate the existence of a
market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;
the availability of adequate technical, financial and other resources to complete the development and to use of sell the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts
are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not
due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the
effective interest method.
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. No such expenditure has been capitalised (2020: nil).
Other intangible assets
Intangible assets are stated at historic cost, less accumulated amortisation and impairment losses. Amortisation 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 amortised on a straight line basis over
the following periods:
Internal developments
Technology platform
Intellectual property rights
5 years
5 years
5 years
Property, plant and equipment
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit and loss over the period of the borrowings
using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that
it is probable that some or all of the facility will be drawn down.
Borrowings are removed from the Consolidated statement of financial position when the obligation specified in the contract is discharged, cancelled
or expired.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after
the reporting period.
Provisions
Provisions for legal claims and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.
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.
Provisions are not recognised for future operating losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognised. All other repairs and maintenance are charged to profit or loss in the financial period in which they are incurred.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of
the reporting period.
44 Consolidated financial statements
Oncimmune Annual Report 2021
45
•
•
•
•
•
•
Notes to the consolidated financial statements
Leased assets
For any new contracts entered into on or after 1 June 2019, the Group considers whether a contract is, or contains a lease. A lease is defined as ‘a
contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the statement of financial position. The right-of-use
asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate
of any costs to dismantle and remove the asset, or restore a property, at the end of the lease, lease payments to be made under reasonably certain
extension options and any lease payments made in advance of the lease commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using
the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments
based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to
be exercised and payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It will also be remeasured to reflect any
reassessment or modification, or if there are changes in the in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is
already reduced to zero.
On the re-organisation in November 2015 the existing Oncimmune Limited schemes were rolled over into the 2015 Oncimmune Holdings Plc
scheme with Oncimmune Holdings Plc taking on the obligation for the exercise of the options. Modification accounting was performed resulting
in the incremental fair value at the date of the modification being calculated. The incremental fair value is the excess of the fair value of the award
immediately after the modification over the fair value immediately before the modification. Where the was an incremental fair value this was charged
over the remainder of the vesting period, together with the original charge relating to the grant date of the original reward.
Employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave, and accumulating sick leave that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to
the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
Contributions to the Group’s defined contribution pension scheme and employees’ personal pension plans are charged to the income statement as
employee benefit expenses when they are due. The Group has no further payment obligation once the contributions have been paid.
Employee benefit trust
Assets, other than shares, held by the Oncimmune Limited's Employee Benefit Trust (EBT) are included in the Group's statement of financial position
under the appropriate heading. Shares in the company held by the EBT are disclosed as a deduction from shareholders’ funds. 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 chief operating decision maker of the Group, which
collectively comprises the Executive Director and CFO. The Executive Director and CFO are responsible for allocating the resources and assessing the
performance of the operating segments.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-
use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
Exceptional items
Taxation
Income tax on the profit or loss for the year comprises current and deferred tax. The tax expense or credit for the period is the tax payable on the
current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
Current tax is the expected tax payable on the taxable income for the year, and is calculated on the basis of the tax laws enacted or substantively
enacted at the end of the reporting period for each jurisdiction, 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 based on the weighted
probability of possible outcomes. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
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 substantively enacted by the statement of financial position 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.
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 at their fair value and are recognised when the group will comply with all attached conditions. The grants
relate to expenditure and are therefore recognised at the point at which the expenditure is incurred that they are intended to compensate. Government
grants received in advance of expenditure are treated as deferred income.
Financial instruments
The Group’s financial instruments comprise cash and various items such as trade receivables and trade payables that arise directly from its operations.
Finance payments associated with financial liabilities are dealt with as part of finance expenses.
Financial assets
The Group’s financial assets comprise trade and certain other receivables as well as cash and cash equivalents.
Financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument and are recognised at fair value, except
trade receivables which are initially measured at transaction price, and subsequently measured at amortised cost using the effective interest method
less any provision for expected credit losses, based on the receivable ageing, previous experience with the debtor and known market intelligence.
Any change in their value is recognised in the statement of comprehensive income. Unless otherwise indicated, the carrying amounts of the Group’s
financial assets are a reasonable approximation of their fair values.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax
balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset
and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
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 expected credit losses is undertaken at least at each statement of financial
position date.
Tax is recognised in profit or loss, except where it relates to items recognised in other comprehensive income or directly in equity, in which case the
tax is also recognised in other comprehensive income or directly in equity respectively.
Financial liabilities
The Group’s financial liabilities comprise trade and other payables.
Share-based compensation
The Group operates a number of share schemes under which it makes equity-settled share-based payments to certain employees. The fair value of
employee services received in exchange for the grant of the options is recognised as an expense and a credit to the employee share scheme reserve.
The total amount to be expensed is determined by reference to the fair value of the options granted: including any market performance conditions and
any non-vesting conditions but excluding the impact of any service and non-market performance vesting conditions (for example profitability targets
and remaining an employee of the Group for a specified period).
Non-market conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the
vesting period, which is the period over which all of the specified vesting conditions are satisfied. At each statement of financial position date, the
Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact
of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
Where the Group is obliged to pay employer’s National Insurance contributions on the difference between the market value of the underlying shares
and their exercise price when the options are exercised. A liability is measured using the value of the Company’s shares at the statement of financial
position date and charged to the income statement over the vesting period of the share options.
Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued
are allocated to share capital with any excess being recorded as share premium. The liability for social security costs arising in relation to the awards is
measured at each reporting date based upon the share price at the reporting date and the elapsed portion of the relevant vesting periods to the extent
that it is considered that a liability will arise.
Financial liabilities are initially recognised at the fair value of the consideration received net of issue costs and subsequently measured at amortised
cost using the effective interest method.
All interest-related charges are included in the statement of comprehensive income line item “finance expense”. Financial liabilities are derecognised
when the obligation to settle the amount is removed.
The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature.
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.
46 Consolidated financial statements
Oncimmune Annual Report 2021
47
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.
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:
•
•
•
•
•
•
Notes to the consolidated financial statements
Equity
Equity comprises the following:
Share capital: financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial
liability. The Group’s ordinary shares are classified as equity instruments.
Other reserve: relates to the cumulative charge for share-based payments in accordance with IFRS2.
Own share reserve: arose on creation of a Joint Share Ownership Plan in 2010.
Retained earnings: accumulated losses.
Foreign currency translation reserve: differences arising from translation of investments in overseas subsidiaries. The differences arise from the
translation of foreign operations’ results and financial positions from their respective functional currencies to the Group’s presentation currency.
• 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. The merger reserve includes (i) amounts that arose on a Group reconstruction in 2015 as described in the basis
of preparation and (ii) amounts arising from merger relief applied on the acquisition of Protagen Diagnostics AG in 2019.
Foreign currencies
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment
in which the entity operates (the “functional currency’). The consolidated financial statements are presented in sterling (£), which is the Company’s
functional and the Group’s presentational currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the retranslation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are generally recognised in profit or loss.
Foreign exchange gains and losses that relate to cash are presented in the consolidated statement of comprehensive income within ‘finance income
or cost’. All other foreign exchange gains and losses are presented in the consolidated statement of comprehensive income within operating loss.
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation currency as follows:
•
•
Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial
position,
Income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average exchange rates
(unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions), and
•
All resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and
translated at the closing rate if material.
Earnings per share
The basic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of
ordinary shares in issue during the year, excluding those held in Treasury.
The diluted earnings per share would be calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of
shares in issue during the year, adjusted for potentially dilutive shares that are not anti-dilutive. A diluted earnings per share has not been presented
as the Group is loss making.
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.
Sources of estimation uncertainty
•
Revenue stage of completion
Where the contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on
the working hours completed per the project plan. In order to determine the revenue to recognise on these long-term contracts providing
autoantibody profiling services in a specific period, management makes certain estimates as to the stage of completion of those contracts.
Management estimates the remaining time and external costs to be incurred in completing the contracts and the customer’s willingness and
ability to pay for the services provided. A different assessment of the outturn on a contract may result in a different revenue for the work.
•
Estimated goodwill and financial asset impairment
The determination of the value of any impairment of goodwill and financial assets requires an estimation of the value in use of the Cash generating
Units (CGUs) to which goodwill has been allocated. The value in use calculation requires an estimate of the future cash flows expected from
these CGUs, including the anticipated growth rate of revenue and costs as well as resulting operating margin and requires the determination of
a suitable discount rate to calculate the present value of the cash flows. Goodwill is tested for impairment at least annually. 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. Goodwill is subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows from other
assets or groups of assets (cash generating units).
•
Share-based compensation
The Group has a number of share-based payment arrangements, principally with its employees. These awards are valued at the point of grant for
the purpose of computing the share-based payment charge. The charge is spread over the vesting period. The charge is reduced for known leavers
whose awards will not vest and an estimate of future forfeitures is taken into account following management review of historical forfeitures. The
outturn of these awards may differ from estimates made at the point of preparing these financial statements and will be incorporated into future
accounting periods in line with IFRS2.
Determining the value of share-based payments to be expensed requires management to estimations of the key variables used in the selected
valuation model. These include:
•
•
•
•
Expected life
Expected volatility
Expected dividend yield
Interest rate
Further details on the assumptions used can be found in note 24.
Judgements in applying accounting policies
•
Revenue recognition: identification of performance obligations
Determining the number of performance obligations in the contractual arrangements with customers sometimes involves significant
judgement. If performance obligations were determined differently then this could affect both the timing and extent of the revenue recognised
in a financial period.
•
IFRS16 Leases
The following critical accounting estimates have been made in relation to right of use assets and liabilities in the year:
•
Lease term
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend or
terminate the lease if the outcome is considered reasonably certain.
The Group applies judgment in evaluating whether it is reasonably certain whether or not to extend or terminate the lease. This includes
consideration of all economic factors such as incentives or penalties, along with the relative importance of the underlying asset to the Group’s
operations and possible disruption caused by replacement. This is reassessed following significant events or changes in circumstances.
The Group has several lease contracts for land and buildings that include extension and terminations options. The Group applies judgement
in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all
relevant factors that create an economic incentive for it to exercise either the renewal or termination, including: the costs and business
disruption required to replace the leased asset.
Renewal periods have not been included as part of the lease but periods covered by termination options have been included as part of the
lease term for leases of land and buildings. The leases have been entered into in the last two years and the group has not exercised its option
to terminate as this would have a negative effect to the business.
•
Incremental borrowing rate (IBR) 3% being the rate of interest that was judged the company would have to pay to borrow over a similar term
and with a similar security in the current economic environment.
48 Consolidated financial statements
Oncimmune Annual Report 2021
49
Notes to the consolidated financial statements
•
Deferred tax asset
The deferred tax asset recognised of £736,000 relates to carried forward tax losses of Oncimmune Germany GmbH. The subsidiary has incurred
losses over the last two years. The business has now commenced an autoantibody profiling service and does not expect losses to recur in the
future. The group has concluded that the deferred assets will be recoverable using the estimated future taxable income based on the forecast
future profit from the forecasts. The subsidiary is expected to generate taxable income from 2022 onwards. The losses can be carried forward
indefinitely and have no expiry date.
Segmental information
4.
Management has determined the operating segments based on the reports reviewed by the chief operating decision maker comprising the Executive
Director and CFO. The business has two segments. Early CDT Lung which is the production and sale of kits for the early detection of lung cancer
via a blood test and ImmunoINSIGHTS an autoantibody profiling service. The segmental information is split on the basis of geographical analysis
however, management report only the contents of the statement of comprehensive income and therefore no additional statement of financial position
information is provided on a segmental basis in the following tables:
2021
Early CDT Lung
ImmunoINSIGHTS
Segment revenue from
external customers
Timing of revenue recognition
At a point in time
Over time
United Kingdom
Rest of World
£’000
£’000
Europe
£’000
156
1,122
2,316
156
-
156
433
689
1,122
2,316
-
2,316
Rest of World
£’000
128
128
-
128
2020
Early CDT lung
ImmunoINSIGHTS
United Kingdom
Rest of World
£’000
£’000
Europe
£’000
Rest of World
£’000
Segment revenue from
external customers
Timing of revenue recognition
At a point in time
Over time
44
44
-
44
353
-
353
353
112
112
-
112
-
-
-
-
Total
£’000
3,722
3,033
689
3,722
Total
£’000
509
156
353
509
Assets and liabilities related to contracts with customers
The Group has recognised the following assets and liabilities related to contracts with customers:
Current contract assets relating to:
Early CDT Lung
ImmunoINSIGHTS
Loss allowance
Total contract assets
Current contract liabilites relating to:
Early CDT
ImmunoINSIGHTS
Total contract liabilites
31 May 2021
31 May 2020
£’000
£’000
200
-
-
200
5,094
81
5,175
97
-
-
97
570
-
570
Contract assets have increased as the Company entered into a purchase agreement in January 2020 to supply minimum numbers of tests with
increasing numbers of tests over the period of the agreement. This is the first full year of that agreement being in place.
Contract liabilities have increased due to the invoicing in advance of minimum distribution agreements that had been held back during the pandemic.
Revenue recognised in relation to contract liabilities
The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward contract liabilities and how
much relates to performance obligations that were satisfied in the prior year.
Revenue recognised that was included in the contract liability balance at the beginning on the
period
Early CDT Lung
ImmunoINSIGHTS
Revenue recognised from performance obligations satisfied in previous periods
Revenue
Geographical analysis by origin
United Kingdom
Europe
North America
Rest of the World
Total revenues
31 May 2021
31 May 2020
£’000
£’000
97
-
-
-
-
-
31 May 2021
31 May 2020
£’000
£’000
1,278
2,444
-
-
3,722
270
97
142
-
509
50 Consolidated financial statements
Oncimmune Annual Report 2021
51
Notes to the consolidated financial statements
£’000
468
272
1,615
1,046
3,648
176
-
41
41
6
130
870
£’000
206
294
1,677
174
3,424
78
(579)
40
40
6
51
4,035
Operating segments
As at 31 May 2021
Revenue
Cost of sales
Gross profit
Operating (loss) / profit
Finance costs - net
Loss before tax
Income tax credit
Loss for the financial year
EarlyCDT Lung
ImmunoINSIGHTS
£’000
1,278
(407)
871
(3,222)
£’000
2,444
(458)
1,986
944
Holdings
£’000
-
-
-
(2,867)
Total
£’000
3,722
(865)
2,857
(5,145)
(551)
(5,696)
1,068
(4,628)
Depreciation of property, plant and equipment and right-of-use assets
Amortisation of intangible assets
Research and development
Share-based payment expense
Employee costs (excluding share-based payment expense)
Fair value movement on contingent consideration
Profit on disposal of assets
Audit and non-audit services:
Fee payable to the company's auditor:
Note
14,15
13
8
8
5.
Expenses – analysis by nature
May 2021
May 2020
The costs of sales for Early CDT Lung represents the cost of production including materials and staff costs. The cost of sales for ImmunoINSIGHTS
represents the proportion of working hours spent on the projects to date.
Fee for the audit of the parent company and consolidated financial
statements
Operating segments
As at 31 May 2020
Revenue
Cost of sales
Gross (loss) / profit
Operating loss
Finance costs - net
Loss before tax
Income tax credit
Loss for the financial year
EarlyCDT Lung
ImmunoINSIGHTS
£’000
397
(498)
(101)
(5,113)
£’000
112
(39)
73
(1,174)
Holdings
£’000
-
-
-
(2,981)
Total
£’000
509
(537)
(28)
(9,268)
(515)
(9,783)
1,324
(8,459)
Operational expenditure for non-revenue generating segments, such as the management expense of the parent company, are reported under the
Holdings segment.
Assets are not reported by business segment.
Fee payable for audit of the subsidiary
Fee payable for audit-related assurance services
Net foreign exchange losses
Other administrative expenses
Total administrative expenses
8,313
9,446
6.
Other income
Other income relates entirely to government grants. These include the following amounts:
Compensation for foregone commercial actvity
Profit on disposal of property, plant and equipment
Coronavirus Job Retention Scheme
Innovation Grants
May 2021
May 2020
£’000
-
32
40
239
311
£’000
170
36
-
206
In the year to 31 May 2021, the Group had two customers (2020: one) who contributed more than 10% of Group revenue individually these customers
contributed 61% (2020:12.8%) of Group revenue.
There are no unfulfilled conditions or other contingencies attached to grant income.
52 Consolidated financial statements
Oncimmune Annual Report 2021
53
Notes to the consolidated financial statements
Remuneration of key management personnel
7.
The Group consider that the Directors of Oncimmune Holdings Plc and Frank Matthew Sunderland Hall, Andrea Murray and Andrew Stewart who are
directors of Oncimmune Ltd and Ron Kirschner to be key personnel.
10.
Net finance costs
Salary, fees, bonuses and other short term emoluments
Social security costs
Pensions
Share-based payments expense
Details of Directors’ remuneration are disclosed in the Directors’ report.
8.
The average number of employees (including Directors) during the year was as follows:
Employees
Directors
Lab staff
Sales and administration
The cost of these employees (including Directors) during the year was made up as follows:
Wages and salaries
Social security costs
Pension cost
Share-based payments
May 2021
May 2020
£’000
1,105
125
14
1,035
2,279
£’000
1,052
115
-
101
1,268
May 2021
May 2020
£’000
£’000
5
28
19
52
9
38
25
72
May 2021
May 2020
£’000
3,100
463
85
1,046
4,694
£’000
2,969
370
85
174
3,598
Finance income
Interest receivable
Net exchange gains on foreign currency borrowings
Finance costs
Interest payable on borrowings
Lease interest
Arrangement fees amortised
Finance costs expensed
Net finance costs
11.
Income tax credit
Current tax
Current tax on losses for the year
Adjustments for current tax of prior periods
Total current tax credit
Deferred income tax
Decrease in deferred tax liabilities
Increase in deferred tax assets
Total deferred tax credit
Tax credit in the period
Factors affecting current tax credit:
The tax assessed on the loss for the period is different to the standard rate of corporation tax in the UK. The differences are explained below:
May 2021
May 2020
Gain on disposal of assets
9.
During the prior year, the Group sold the US subsidiary’s laboratory assets to Biodesix for a consideration of $1M (£798,000). The gain has been treated
as an exceptional item in the Statement of comprehensive income and as such is shown separately within administrative expenses.
Loss before income tax
The gain recognised on disposal of assets was determined as follows:
Selling price
Inventory
Fixed assets
Construction in progress
Deposits
May 2021
May 2020
£’000
£’000
-
-
-
-
-
-
798
(11)
(128)
(75)
(5)
579
Loss for the year multiplied by the standard rate of corporation tax 19% (2019 19%)
Adjustments in respect of prior periods
Expenses not deductible for tax purposes
Losses surrendered for R&D claims
Research and development tax credit
Losses carried forward
The Group has unrelieved UK tax losses with no expiry date of £25,296,000 (2020: £23,179,000) and unrelieved overseas tax losses with no expiry
date of £88,716,000 (2020: £85,900,000). Deferred tax has not been provided given the uncertainty over the timing of a future reversal. At year end
management have recognised an estimated research and development tax credit of £292,500 as calculated in line with IFRIC 23.
54 Consolidated financial statements
Oncimmune Annual Report 2021
55
May 2021
May 2020
£’000
£’000
3
400
403
(791)
(46)
(117)
(954)
(551)
111
111
(291)
(23)
(312)
(626)
(515)
May 2021
May 2020
£’000
£’000
293
54
347
(216)
937
721
1,068
853
448
1,301
23
23
1,324
£’000
(5,696)
(1,082)
(54)
232
(125)
-
2,097
1,068
£’000
(9,783)
(1,859)
-
337
-
1,301
876
1,324
Notes to the consolidated financial statements
12.
Goodwill
13.
Intangible assets
Cost
At 1 June 2020
Additions
Foreign exchange movement
At 31 May 2021
Impairment
At 1 June 2020
Impairment
Foreign exchange movement
At 31 May 2021
Net book values
At 31 May 2021
At 31 May 2020
Goodwill
£’000
1,578
-
-
1,578
-
-
-
-
1,578
1,578
Cost
At 1 June 2020
Additions
At 31 May 2021
Accumulated amortisation
At 1 June 2020
Charge for the year
At 31 May 2021
Net book values
At 31 May 2021
At 31 May 2020
Intellectual
property rights
Internal
developments
Technology
platform
£’000
£’000
£’000
-
3,250
3,250
-
20
20
3,230
-
849
-
849
493
160
653
196
356
920
-
920
138
92
230
690
782
Total
£’000
1,769
3,250
5,019
631
272
903
4,116
1,138
Intellectual property rights additions during the year relate to IP rights from Genostics Company Limited for the EarlyCDT Lung product in Peoples
Rebublic of China and Hong Kong and the transfer of all EarlyCDT Lung materials (mainly samples) held by Genostics Company Limited.
Goodwill of £1.58M was recognised on the acquisition of Oncimmune Germany Gmbh, being the excess of the purchase consideration over the
fair value of net assets acquired and represents key customer relationships, employee knowledge and skills and the acceleration of bringing the
technology to our platform rather than building in-house.
Goodwill arising on business combinations is not amortised but is reviewed for impairment on an annual basis, or more frequently if there are indications
that goodwill may be impaired. Goodwill acquired in a business combination is allocated, at acquisition, to cash generating units (CGUs) that are
expected to benefit from that business combination.
The carrying amount of goodwill relates to the Oncimmune Germany GmbH’s trading activities. This has been tested for impairment during the current
period by comparison with the recoverable amounts of the CGU. Recoverable amounts for the CGU is based on the higher of value in use and fair
value less costs to sell. The recoverable amounts of the CGU have been determined from value in use calculations. These calculations use post-tax
cash flow projections based on financial budgets approved by management covering a five-year period. These cash flows are discounted using a
discount rate of 20% (2020: 20%) post-tax per annum, calculated by reference to year end data on equity values and interest, dividend and tax rates.
Changes in income and expenditure are based on past experience and expectations of the future changes in the market. An annual percentage growth
rate of revenue of 21.5% (2020: 33.2%) and a forecast gross margin of 83.5% (2020: 85%) have been assumed in the calculations. The directors have
considered the sensitivity of the key assumptions, including the discount rate and long-term growth rate of 2% (2020: 2%), and have concluded that
any possible changes they may be reasonably contemplated in these key assumptions would not result in the value falling below the carrying value of
goodwill, given the amount of headroom available.
14.
Property, plant and equipment
Laboratory
equipment
Computer
equipment
Office
equipment
£’000
£’000
£’000
Cost
At 1 June 2020
Additions
Disposals
Foreign exchange movement
At 31 May 2021
Accumulated depreciation
At 1 June 2020
Charge for the year
Disposals
Foreign exchange movement
At 31 May 2021
Net book values
At 31 May 2021
At 31 May 2020
1,090
424
(279)
(5)
1,230
768
134
(279)
-
623
607
322
76
12
-
-
88
33
14
-
-
47
41
43
63
10
(18)
-
55
38
19
(18)
-
39
16
25
Total
£’000
1,229
446
(297)
(5)
1,373
839
167
(297)
-
709
664
390
56 Consolidated financial statements
Oncimmune Annual Report 2021
57
Notes to the consolidated financial statements
15.
Right-of-use assets
Cost
At 1 June 2020
Additions
At 31 May 2021
Accumulated depreciation
At 1 June 2020
Charge for the year
At 31 May 2021
Net book values
At 31 May 2021
At 31 May 2020
16.
Trade and other receivables
Trade receivables
Other debtors
Prepayments
Current tax asset
Office
equipment
Land and
buildings
£’000
£’000
97
-
97
10
24
34
63
87
1,013
249
1,262
118
277
395
867
895
Total
£’000
1,110
249
1,359
128
301
429
930
982
May 2021
May 2020
£’000
6,273
87
427
292
7,079
£’000
871
374
23
448
1,716
Trade receivables represents amounts due from contracts with customers. At 31 May 2021 trade receivables were stated net of provisions of £25,000
(2020 - £1,000). The remaining balances were considered recoverable on normal trade terms. Due to their short term nature of these assets there is no
material difference between their fair value and the carrying value of these assets. The maximum credit risk exposure at the reporting date equated to
the carrying value of trade receivables as stated net of provisions. Standard payment terms are 30 days net.
Cash and cash equivalents
18.
Cash balances at the end of each year are as follows:
Cash at bank and in hand per statement of financial position
Cash per statement of cash flows
19.
Trade and other payables
Trade payables
Other creditors
Accruals
20.
Other liabilties
Contingent consideration – current
Other contingent liabilities – current
Other contingent liabilities – non-current
May 2021
May 2020
£’000
8,631
8,631
£’000
4,240
4,240
May 2021
May 2020
£’000
768
53
1,158
1,979
£’000
420
54
563
1,037
May 2021
May 2020
£’000
£’000
-
-
2,000
2,000
181
247
-
428
The remaining settlement to the former shareholders of Oncimmune Germany GmbH (formerly Protagen AG) was settled in March 2021 via the issue
of shares.
The Company also settled a liability to two former directors with a fair value of £152,000 payable via the issue of Ordinary shares due to the partners
of Protagen AG recognised on acquisition.
The contingent consideration relates to amounts due under the contract with Genostics Company Limited for the IP rights to the EarlyCDT Lung
product in Peoples Rebublic of China and Hong Kong.
21.
Borrowings
17.
Inventories
Finished goods (at cost)
May 2021
May 2020
Loan payable – current
£’000
143
£’000
174
Loan payable – non current
May 2021
May 2020
£’000
2,248
6,239
8,487
£’000
1,140
6,147
7,287
No provision was made for inventory at the year end (2020: £nil). During the year, no inventory was written off due to obsolescence. Inventories
expenses through cost of sales during the year were £144,000 (2020: £269,000).
During the year, the Group increased its credit facility with IPF Management SA by drawing down a further €3.0m. The loan is a four-year term with
Tranche 1 and Tranche 2 repayable on 29 September 2023 and Tranche 3 repayable on 31 0ctober 2024 all tranches being interest-only for the first
12 months, with principal repayments commencing thereafter. The facility includes a financial covenant obligation which requires the Group (on a
quarterly basis for the term of the facility) to be able to demonstrate that it holds a minimum amount of cash equal to the next nine months’ of operating
cash flow, including the amounts required to service the credit facility. In order to monitor compliance with this financial covenant, the Board prepares
monthly financial accounts including a calculation of covenant compliance for the following 12 months. All covenants were complied with in year. The
facility includes a floating charge over the assets of Oncimmune Holding Plc and Oncimmune Ltd.
The fair value of the loan is not materially different to the carrying value, as the interest payable is close to the current market rate.
58 Consolidated financial statements
Oncimmune Annual Report 2021
59
Notes to the consolidated financial statements
Leases
22.
Amounts recognised in the statement of financial position
Right-of-use assets
Details of the Right-of-use assets held at the year end can be found in note 15, the land and building additions relate to leased properties that do not
meet the definition of investment property.
Share capital and Share premium
23.
Group and Company
Authorised:
May 2021
May 2020
Shares
£
Shares
£
31 May 2021
31 May 2020
Ordinary shares of £0.01 each
69,121,949
691,219
64,102,560
641,026
Lease liabilities
Current
Non-current
Future minimum lease payments are as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
Total gross payments
Impact of finance expenses
Carrying amount of liability
£’000
£’000
310
671
981
316
697
-
1,013
(32)
981
227
762
989
234
832
-
1,066
(77)
989
Lease liabilities have been recognised on the incremental borrowing rate for Land and Buildings and Office Equipment.
Amounts recognised in the statement of comprehensive income
Depreciation charge
Interest on lease liabilities
Rental payments with lease term less than 12 months
Amounts recognised in the statement of cash flows
Principal elements of lease payments
Interest on lease liabilities
Rental payments with lease term less than 12 months
31 May 2021
31 May 2020
£’000
(301)
(46)
(17)
(364)
£’000
(128)
(23)
(483)
(634)
31 May 2021
31 May 2020
£’000
(211)
(46)
(17)
(274)
£’000
(144)
(23)
(483)
(650)
Allotted, and fully paid:
Ordinary shares of £0.01 each
69,121,949
691,219
63,500,047
635,000
Movements in the year were as follows:
Opening balance
New placing
Exercise of options
Settlement of deferred consideration
Less: transaction costs arising on share issue
Balance 31 May 2021
Number of shares
Share capital
Share Premium
(thousands)
£’000
63,500
5,000
234
387
69,121
69,121
635
50
2
4
691
691
£’000
31,459
8,950
106
601
41,116
(619)
40,497
Total
£’000
32,094
9,000
108
605
41,807
(619)
41,188
Ordinary shares have a par value of £0.01. They entitle the holder to participate in dividends, and to share in the proceeds of the winding up of the
company in proportion to the number of shares held. Each share is entitled to one vote in any circumstance.
24.
The Group has granted options to certain directors and employees in respect of Ordinary shares.
Share-based payments
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, Scientific Advisory Board (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 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.
60 Consolidated financial statements
Oncimmune Annual Report 2021
61
Notes to the consolidated financial statements
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.
In November 2015, the two existing option schemes were rolled over into the 2016 Oncimmune Holdings Plc Scheme on the terms set out above.
Set out below are summaries of options granted under the plans:
Outstanding at 1 June (2020, 2019)
Granted
Lapsed
Exercised
Outstanding at 31 May (2021, 2020)
Vested and exercisable at 31 May
WAEP
0.83
0.11
0.45
0.45
0.46
May 2021
Number
4,663,066
4,930,991
(217,772)
(228,955)
9,147,330
WAEP
May 2020
0.91
0.74
1.13
0.83
4,216,301
Number
4,609.976
568,194
(506,104)
-
4,663,066
3,663,461
Share options outstanding at the year end have the following expiry dates and exercise prices:
Grant date
Expiry date
Exercise price
Share options
Share options
8 November 2016
30 November 2016
31 March 2017
21 April 2017
16 May 2017
25 October 2017
22 April 2018
25 July 2018
24 September 2018
24 January 2019
24 April 2019
1 July 2019
24 October 2019
29 November 2019
30 April 2020
5 June 2020
10 September 2020
11 November 2020
Total
Weighted average remaining contractual life of
outstanding options
62 Consolidated financial statements
7 November 2026
£0.01 - £1.08
2,578,773
3,026,330
29 November 2026
£1.185
48,865
48,865
31 May 2021
31 May 2020
30 March 2027
20 April 2027
15 May 2027
24 October 2027
21 April 2028
24 July 2028
23 September 2028
23 January 2029
23 April 2029
30 June 2029
23 October 2029
28 November 2029
29 April 2030
4 June 2030
9 September 2030
10 November 2030
£1.19
£1.31
£1.475
£1.215
£1.26
£1.225
£1.285
£1.09
£1.08
£1.09
£0.02
£0.51
£0.76
£1.195
£0.01
£1.675
20,000
30,534
13,339
380,000
451,403
47,883
6,225
192,660
44,929
41,651
7,500
29,649
322,368
388,386
4,510,509
32,656
9,147,330
20,000
30,534
13,339
380,000
451,403
47,883
6,225
192,660
44,659
41,651
7,500
29,649
322,368
-
-
-
4,663,066
7.6 years
4 years
The assessed fair value of all options granted by the Company has been arrived at using the Black-Scholes model except those granted on 10 September
2020 which used the Monte Carlo valuation model. The assumptions inherent in the use of the Black-Scholes model for options granted during the
year ended 31 May 2021 are shown below:
388,386 share options: Grant date
Expected volatility
Expected dividend yield
Risk free rate
Discount factors
Fair value of options granted in the year
20,119 share options: Grant date
Expected volatility
Expected dividend yield
Risk free rate
Discount factors
Fair value of options granted in the year
12,537 share options: Grant date
Expected volatility
Expected dividend yield
Risk free rate
Discount factors
Fair value of options granted in the year
5 June 2020
20.0%
0%
0.01%
10%
£103,699
11 November 2020
20.0%
0%
0.01%
10%
£8,719
11 November 2020
15%
0%
0.01%
10%
£2,521
•
•
•
•
•
The option life is assumed to be at the end of the allowed period of exercise
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 after reviewing the history of the Company’s share price.
The options are subject to the rules of 2016 Share Option plan (an amalgamation of the Company’s 2005 and 2007 Share option plans).
On 10 September 2020 the company put in place a new incentivisation scheme for senior management and options to subscribe for an aggregate
of up to 4,510,509 ordinary shares of £0.01 each were granted to the Chairman, CEO, CFO and Company Secretary. The options granted have a
exercise price of £0.01 and will vest based on the Company’s share price during the course of the following three years, between £2 and £3.50 per
share as set out below. The minimum number of options to vest is over 1,125,315 Ordinary shares and the maximum number of options to vest is over
4,523,046Ordinary shares. Once vested, options must be held for a further two years, subject to certain exceptions and acceleration events. The Target
share prices and vesting are as follows:
£2.00
25%
£2.50
50%
Target Share Price
£2.75
Vesting
62.5%
£3.00
75%
£3.50
100%
The assumptions inherent in the use of the Monte Carlo model for options granted on 10 September 2020 included:
•
•
•
•
•
•
•
Stock Price - £1.53 at 10 September 2020
Exercise Price - £0.01
Vesting schedule – as per the performance conditions above
Expiry date – 10 September 2030
Volatility – 50% as at 10 September 2020
Risk free rate – 0.12%
Dividend yield – 0%
Oncimmune Annual Report 2021
63
Notes to the consolidated financial statements
Expenses arising from share-based payment transactions
26.
Categories of financial instruments
Total expenses arising from share-based payment transaction recognised during the year as part of employee benefit expense are follows:
Options issued under employee option plan
The Group has warrants outstanding as follows, over the £0.01 Ordinary Shares:
Outstanding at 1 June 2020:
Directors
Harbert European Growth Fund
Zeus Capital Investment Ltd
IPF Investco II Sarl
Outstanding at 31 May 2021:
May 2021
Average
1,046
1,046
May 2020
Average
174
174
Grant date
Number
Subscription price
November 2015
May 2016
May 2016
September 2019
988,750
282,515
1,041,314
2,036,015
4,348,594
£0.01
£0.66368
£1.30
£0.87091
Related party transactions
25.
Other than remuneration paid to Directors and key management there were no related party transaction in the year. In the prior year, in addition to the
remuneration paid to the Directors and Key management the University of Nottingham - a shareholder, provided facilities and services to enable the
Company to undertake research. Geoffrey Hamilton-Fairley – a former director, provided consultancy services.
Geoffrey Hamilton-Fairley
University of Nottingham
Current financial assets
At amortised cost - Trade and other receivables
At amortised cost - Cash and cash equivalents
Total financial assets
Non-financial assets
Total
Current financial liabilities
At amortised cost – Trade and other payables
At amortised cost – Lease liabilities
At fair value - Other contingent liabilities
At fair value - Contingent consideration
At amortised cost - Borrowings
Total current financial liabilities
Non-financial current liabilities
Total current liabilities
May 2021
May 2020
May 2021
May 2020
Non-current financial liabilities
Costs incurred
Outstanding at year end
£’000
£’000
£’000
-
-
117
-
-
-
£’000
182
2
At amortised cost - Contingent liability
At amortised cost - Borrowings
At amortised cost – Lease liabilities
Total non-current financial liabilities
Non-financial liabilities
Total non-current liabilities
Note
16
18
19
20
20
21
21
May 2021
May 2020
£’000
£’000
6,227
8,631
14,908
9,370
24,278
2,034
310
-
-
2,248
4,592
5,175
9,767
2,000
6,239
671
8,910
374
9,284
1,245
4,240
5,485
4,830
10,315
1,102
227
247
181
1,140
2,897
570
3,467
-
6,147
762
6,909
133
7,042
64
Oncimmune Annual Report 2021
65
Consolidated financial statements Notes to the consolidated financial statements
27.
Cash flow information
This sets out an analysis of net debt and the movements in net debt for each of the years presented.
Loss per share
28.
The basic earnings 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.
May 2021
May 2020
£'000
£'000
Earnings
May 2021
May 2020
Net debt reconciliation
Cash and cash equivalents
Borrowings – non-current liability (fixed interest rates)
Borrowings – current liability (fixed interest rates)
Lease liability – non-current liability
Lease liability – current liability
Net debt
8,631
(6,239)
(2,248)
(671)
(310)
(837)
Liabilities from financing activities
Borrowings
Leases
Subtotal
Cash &
equivalents
-
(6,935)
-
-
(352)
(7,287)
(1,593)
-
400
(7)
(8,487)
£’000
-
138
(1,110)
-
(17)
(989)
303
(249)
-
(46)
(981)
£’000
-
(6,797)
(1,110)
-
(369)
(8,276)
(1,290)
(249)
400
(53)
£’000
5,358
(1,096)
-
(22)
-
4,240
4,396
-
(5)
-
(9,468)
8,631
Net debt as at 1 June 2019
Cash flows
New leases
Foreign exchange adjustments
Other changes
Net debt as at 31 May 2020
Cash flows
New leases
Foreign exchange adjustments
Other changes
Net debt as at 31 May 2021
4,240
(6,147)
(1,140)
(762)
(227)
(4,036)
Total
£’000
5,358
(7,893)
(1,110)
(22)
(369)
(4,036)
3,106
(249)
395
(53)
(837)
Other changes include non-cash movements including accrued interest expense which will be presented as operating cash flows in the statement of
cashflows when paid.
Non-cash activities
Non-cash investing and financing activity disclosed in other notes are:
Acquisition of right-of-use assets – note 15
Settlement of deferred consideration through the issue of shares – note 20
Options issued to employees – note 24
•
•
•
66
Loss for the purposes of basic loss per share (£'000)
(4,628)
(8,459)
Number of shares
Weighted average number of shares for calculating basic earnings per share
64,571,180
63,300,183
Loss per share
Basic loss per share
7.17p
13.36p
Financial risk management
29.
The Group’s activities expose it to a variety of financial risks: market risk (foreign exchange rate risk, interest rate risk and price risk), credit risk and liquidity
risk.
Market risk - Foreign exchange risk
The Group has exposure to market risk – foreign exchange risk arising from future commercial transactions and recognised financial assets and
liabilities not denominated in Sterling. In the years to 31 May 2021 and 31 May 2020 over 55% of the Group's income by destination was into the North
American and European markets and denominated in US dollars and Euros respectively. The Group's income stream is exposed to fluctuations in the
US dollar exchange rate and the Euro exchange rate against Sterling.
In addition, borrowings are denominated in Euros and the Group therefore is exposed to foreign exchange risk on the interest, which is at a fixed rate
and also the repayments.
These risks are managed via cash flow forecasting and sensitivity analysis. The risk management is predominantly controlled by policies approved by
the board of directors. Market risks are identified and evaluated in close co-operation with the Group’s operating units. The board provides written
principles for overall risk management as well as policies covering specific areas. These are reviewed monthly from the information contained with the
board packs and discussions at the board meetings.
The Group’s exposure to foreign currency risk at the end or the reporting period, expressed in GBP was as follows:
31 May 2021
31 May 2020
Trade receivables
Trade payables
Bank loans
USD
£’000
-
(1)
-
EUR
£’000
655
(223)
(8,488)
The aggregate net foreign exchange gains/losses recognised in profit or loss were:
Exchange gains/ losses on foreign currency borrowing included in net finance costs
Net foreign exchange gains/losses included in administrative expenses
Total net foreign exchange gains/loss recognised in profit before tax
USD
£’000
-
(16)
-
2021
£’000
(400)
130
(270)
EUR
£’000
597
(538)
(7,287)
2020
£’000
-
51
51
Sensitivity
As noted above, the Group is primarily exposed to changes in EUR/GBP exchange rate. The sensitivity of profit or loss to changes in the exchange rates
arises mainly from EUR denominated borrowings. A 10% shift in the rate would be expected to have an impact of +/-£81k on loss before tax.
Oncimmune Annual Report 2021
67
Consolidated financial statements Notes to the consolidated financial statements
Market risk - Interest rate risk
Liquidity risk
Prudent liquidity risk management implies management maintaining sufficient cash and the availability of funding through committed credit facilities
to meet obligations when due. At the year end the group had net debt of £838,000 (2020: Net debt £4,036,000). The Group has a credit facility with
IPF Management SA. Each tranche of the total loan is repayable over a four-year term, interest-only for the first 12 months, with principal repayments
commencing thereafter. The loan can be repaid early. The facility includes a financial covenant obligation which requires the Group (on a quarterly
basis for the term of the facility to be able to demonstrate that it holds a minimum amount of cash equal to the next nine months of operating cash flow,
including the amounts required to service the credit facility. In order to monitor compliance with this financial covenant, the Board prepares monthly
financial accounts including a calculation of covenant compliance for the following 12 months.
Trade and other payables are monitored as part of normal management routine.
Other liabilities mature according to the following schedule:
2021
Less than
six months
Within six to
twelve months
Trade payables, statutory liabilities, and accruals
Contract liabilities
Contingent consideration
Lease liability
Borrowings
£’000
2,034
56
-
155
950
3,195
£’000
-
5,119
-
155
1,298
6,572
2020
Less than
six months
Within six to
twelve months
Trade payables, statutory liabilities and accruals
Contract liabilities
Other loans
Contingent consideration
Lease liability
Borrowings
£’000
1,102
570
-
-
113
375
2,160
£’000
-
-
247
181
114
765
1,307
One to
two years
£’000
-
-
2,000
310
3,885
6,195
One to
two years
£’000
-
-
-
-
227
2,219
2,446
Two to
five years
£’000
-
-
-
361
2,354
2,715
Two to
five years
£’000
-
-
-
-
535
3,928
4,463
Borrowings are denominated in Euros and the Group interest is at a fixed rate and therefore the directors consider 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 arises from cash and contract assets that have been accrued where minimum amounts are due contractually, and 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
banks with a minimum rating of ‘A’. The credit value of customer is assessed, taking into account its financial position, past experience and other
factors. The compliance with credit limits by customers is regularly monitored by line management, and the aggregate financial exposure continuously
monitored. The maximum exposure to credit risk is the value of the outstanding amount of trade receivables, cash and cash equivalents and contract
assets. Management have considered the concentration of risk within trade or other receivables and have provided prudently.
The Group applies the IFRS9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for all trade
receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and
the days past due. The contract assets relate to unbilled minimum revenue due and have substantially the same risk characteristics as the trade
receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for the trade receivables are a reasonable
approximation of the loss rates for the contract assets.
Loss rates are based on the payment profiles over the preceding two years.
Current
30-60 days
past due
60-120 days
past due
Over 120 days
past due
Total
£’000
£’000
£’000
£’000
31 May 2021
Gross carrying amount – trade receivables
Gross carrying amount – contract assets
Loss allowance
31 May 2020
Gross carrying amount – trade receivables
Gross carrying amount – contract assets
Loss allowance
5,573
200
-
872
97
1
-
-
-
-
-
-
-
-
-
-
-
-
725
-
25
-
-
-
The loss allowances for trade receivables and contract assets as at 31 May reconcile to the opening loss allowances as follows:
Opening loss allowance at 1 June
Increase in loss allowance recognised in profit or loss in year
Receivables written off during the year
Unused amount reversed
Closing loss allowance at 31 May
Contract assets
Trade receivables
2021
£’000
2020
£’000
-
-
-
-
-
-
-
-
-
2021
£’000
1
24
-
-
25
6,298
200
25
872
97
1
2020
£’000
-
-
-
-
-
Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, a failure to engage in a repayment plan, and from discussions with the customer as payment of
the debt.
68
Oncimmune Annual Report 2021
69
Consolidated financial statements Notes to the consolidated financial statements
Capital risk management
The Group's capital management objectives are:
•
•
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 plus cash and cash equivalents as presented on the face of the statement of
financial position.
Subsidiaries consolidated
32.
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
May 2021
May 2020
Place of business/
Country of
incorporation
Class of share
capital held
Direct
%
Indirect
%
Principal
activities
Total equity
Cash and cash equivalents
Capital
Total financing
Other contingent liabilities
Contingent consideration
Borrowings
Lease liabilities
Overall financing
£’000
5,227
8,631
13,858
-
2,000
8,487
981
£’000
(194)
4,240
4,046
247
181
7,287
989
Oncimmune Limited
Medicity – D6 Building, 1 Thane Road,
Nottingham, UK NG90 6BH
United Kingdom
Ordinary
100
-
Sale of blood test to identify
people with a heightened risk of
lung cancer and related research
activities
Oncimmune (USA) LLC
112 SW 7th Street Suite 3C, Topeka, KS 66603
United States of
America
Ordinary
-
100
Promotion of blood test for early
detection of lung cancer to the
US market
11,468
8,704
Otto-Hahn-Str 15, 44227 Dortmund Germany
Germany
Ordinary
100
Oncimmune Germany GmbH
-
-
Autoantibody profiling service
Distribution of blood test for
early detection of lung cancer to
the European market
Capital to overall financing ratio
121.34%
46.48%
Oncimmune Europe GmbH
30.
Deferred tax
Deferred tax assets
As at 1 June
Credit to income statement
As at 31 May
Deferred tax liabilities
As at 1 June
Movement on recognition of intangibles on acquisition
Foreign exchange
Charge to income statement
As at 31 May
31.
Events after the end of the reporting period
No events to report after the balance sheet date.
Otto-Hahn-Str 15, 44227 Dortmund Germany
Germany
Ordinary
100
Ultimate controlling party
33.
There is no ultimate controlling party of the Company.
34.
The Group has no capital commitments at the year end (2020: £nil).
Commitments
May 2021
May 2020
£’000
£’000
-
937
937
133
-
25
216
374
-
-
-
156
(23)
-
-
133
70
Oncimmune Annual Report 2021
71
Consolidated financial statements Financial statements of the Company
Company statement of financial position
For the year ended 31 May 2021
Fixed assets
Investment
Current assets
Debtors
Cash and cash equivalents
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after one year
Total assets less total liabilities
Capital and reserves
Called up share capital
Share premium account
Other reserves
Merger reserve
Profit and loss reserve
Shareholders’ funds
31 May
2021
31 May
2020
Notes
£’000
£’000
3
4
5
6
6
8
2,561
2,561
18,106
83
18,189
2,449
2,449
11,458
6
11,464
(979)
(1,217)
17,210
10,247
19,771
12,696
-
(70)
19,771
12,626
691
40,497
2,920
1,095
635
31,459
1,874
1,095
(25,432)
(22,437)
19,771
12,626
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 parent company loss for the year ended 31 May 2021 was £2,995,000 (2020: £13,883,000).
The accompanying notes on pages 74 to 79 form an integral part of the company financial statements.
The parent company financial statements were approved by the board on 2 November 2021.
Dr Adam M Hill
Director and Chief Executive Officer
Oncimmune Holdings Plc, Registered no. 09818395
Company statement of changes in equity
For the year ended 31 May 2021
As at 1 June 2019 (restated)
Loss for the year
Total comprehensive income
Transactions with owners:
Shares issued on debt settlement
Shares issued during the year
Share option charge
As at 31 May 2020
Loss for the year
Total comprehensive income
Transactions with owners:
Shares issued in settlement of contingent
consideration
Shares issued in year
Options exercised in year
Share option charge
Share
capital
Share
premium
Other
reserves
Merger
reserve
Retained
earnings
£'000
633
£'000
31,382
£'000
2,121
£'000
£'000
949
(8,892)
Total
£'000
26,193
-
-
2
-
-
-
-
77
-
-
-
-
-
-
(13,883)
(13,883)
(13,883)
(13,883)
(563)
146
338
142
174
-
-
-
-
-
142
174
635
31,459
1,874
1,095
(22,437)
12,626
-
-
4
50
2
-
-
-
601
8,331
106
-
-
-
-
-
-
1,046
-
-
-
-
-
-
(2,995)
(2,995)
(2,995)
(2,995)
-
-
-
-
605
8,381
108
1,046
As at 31 May 2021
691
40,497
2,920
1,095
(25,432)
19,771
The accompanying notes on pages 74 to 71 form an integral part of the company financial statements.
72 Parent Company financial statements
Oncimmune Annual Report 2021
73
Notes to the Company financial statements
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’ and the Companies Act 2006. They have been prepared under the historical cost convention, modified in respect of the revaluation of
certain financial assets and liabilities at fair value and share-based payments that have been measured at fair value.
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:
•
•
•
•
•
•
•
•
•
The requirements of IFRS 7 Financial Instruments: Disclosures, as equivalent disclosures are included in the consolidated financial statements of
the group in which the entity is consolidated.
The requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of:
•
•
paragraph 73 of IAS 16 Property, Plant and Equipment; and
paragraph 118 of IAS 38 Intangible Assets;
The requirements of paragraphs 10(d) and 111 (statement of cash flows), 134 to 136 (managing capital), and 16 (statement of compliance with IFRS)
of IAS 1 Presentation of Financial Statements.
The requirements of IAS 7 Statement of Cash Flows and related notes.
The requirements of paragraph 17 of IAS 24 Related Party Disclosures.
The requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group,
provided that any subsidiary which is a party to the transaction is wholly owned by such a member.
The requirements of paragraphs 130(f)(ii), 130(f)(iii), 134(d) to 134(f) and 135(c) to 135(e) of IAS 36 Impairment of Assets, provided that equivalent
disclosures are included in the consolidated financial statements of the group in which the entity is consolidated.
The requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 Share Based Payments, provided that equivalent disclosures are included in the
consolidated financial statements of the group in which the entity is consolidated.
The effects of future accounting standards not adopted.
The preparation of financial statements in accordance with FRS101 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 2.
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).
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 based on the weighted probability of possible outcomes.
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 statement of financial position 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 statement of comprehensive income, 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.
On the re-organisation in November 2015 the existing Oncimmune Limited schemes were rolled over into the 2015 Oncimmune Holdings Plc scheme with
Oncimmune Holdings Plc taking on the obligation for the exercise of the options. Modification accounting was performed resulting in the incremental
fair value at the date of the modification being calculated. The incremental fair value is the excess of the fair value of the award immediately after the
modification over the fair value immediately before the modification. Where there was an incremental fair value this was charged over the remainder of
the vesting period, together with the original charge relating to the grant date of the original reward.
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.
Further details on the going concern basis can be found in note 2 of the consolidated financial statements.
Financial assets
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. 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.
The Company’s financial assets comprise trade and certain other receivables as well as cash and cash equivalents.
Financial assets are recognised when the Company 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 statement of comprehensive income.
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 statement of financial position date
whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.
Financial liabilities
The Company’s financial liabilities comprise contingent consideration 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 contingent considerations
are measured at amortised cost using the effective interest method. All interest-related charges are included in the statement of comprehensive income
line item “finance expense”. Financial liabilities are derecognised when the obligation to settle the amount is removed. The contingent consideration and
the contingent liability are measured on the fair value of the shares that are contingent.
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.
Other reserve: relates to the cumulative charge for share-based payments in accordance with IFRS2.
Merger reserve: this recognises the excess over par value of the shares issued as part of the share-for -share exchange with the previous
shareholders of Oncimmune Limited.
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).
74 Parent Company financial statements
Oncimmune Annual Report 2021
75
Notes to the Company financial statements
Accounting estimates and judgements
2.
The preparation of financial statements under FRS101 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 key estimate and judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities is
discussed below:
Share-based compensation
Determining the value of share-based payments to be expensed requires management to estimations of the key variables used in the selected valuation
model. These include:
3.
Investments
At 1 June 2020
Additions
At 31 May 2021
Investments in subsidiary
£’000
2,449
112
2,561
•
•
•
•
Expected life
Expected volatility
Expected dividend yield
Interest rate
Further details on the assumptions used can be found in note 24 of the consolidated financial statements.
Impairment
As at 31 May 2021, the Company has a gross amount due from its subsidiary Oncimmune Limited totalling £28,576,000 (2020: £23,714,000). This
amount is repayable on demand and does not incur interest. Management have assessed the recoverability of this loan as at 31 May 2021 and found
that given the resources available to Oncimmune Limited it would be unable to repay the full amount on demand.
In accordance with the requirements of IFRS 9 “Financial Instruments”, management have assessed the credit risk of the loans to subsidiary undertakings
and have evaluated how this has changed since the prior year. In arriving at an expected credit loss on loans to subsidiary undertakings, management
have performed an unbiased probability-weighted calculation, evaluating a range of possible outcomes and incorporating the time value of money.
Management estimated four scenarios, a base case scenario based on the discounted cashflows of the business to determine a recoverable amount
and three further scenarios, two upside and one downside. Each scenario was based on assumptions at the year-end date, taking into account forward-
looking information and the macroeconomic environment. Each scenario was given a probability weighting percentage in determining the overall
recoverable amount. Management has concluded that a reversal of impairment of £250,000 is appropriate but acknowledges that the impairment
assessment is sensitive to movement in the key inputs.
Details of subsidiary undertakings as at 31 May 2021 are as follows:
Company
Holding
Country of
incorporation
Class of
share capital
held
Direct
%
Indirect
%
Principal
activity
Oncimmune Limited
Medicity – D6 Building, 1 Thane Road,
Nottingham, UK NG90 6BH
United Kingdom
Ordinary
100
-
a heightened risk of lung cancer and
related research activities
Sale of blood test to identify people with
Oncimmune (USA) LLC
112 SW 7th Street Suite 3C, Topeka, KS 66603
United States
of America
Ordinary
-
100
Promotion of blood test for early
detection of lung cancer to the US
market
Loss allowance as at 1 June 2020
Changes in models/risk parameters
Loss allowance as at 31 May 2021
Gross carrying amount as at 1 June 2020
Other changes
Gross carrying amount as at 31 May 2021
76
Credit-impaired financial assets
(lifetime expected credit losses)
Oncimmune Germany Gmbh
Otto-Hahn-Str 15, 44227 Dortmund Germany
Germany
Ordinary
100
£’000
12,417
(250)
12,167
Oncimmune Europe Gmbh
Otto-Hahn-Str 15, 44227 Dortmund Germany
Germany
Ordinary
100
Credit-impaired financial assets
(lifetime expected credit losses)
4.
Trade and other receivables
£’000
23,714
6,156
29,870
Loan to subsidiary undertakings
Other debtors
-
-
Autoantibody profiling service
Distribution of blood test for early
detection of lung cancer to the
European market
May 2021
May 2020
£’000
17,703
403
18,106
£’000
11,297
161
11,458
At 31 May 2021 a reversal of impairment of £250,000 was recognised on the balance due from Oncimmune Limited. There is no material difference
between the fair value and the carrying value of these assets. The assessment of impairment has been carried out under IFRS 9 using the expected
credit loss model. There are no specific terms relating to the loan to subsidiary undertakings.
5.
Cash and cash equivalents
Cash at bank and in hand
May 2021
May 2020
£’000
83
£’000
6
Oncimmune Annual Report 2021
77
Parent Company financial statements Notes to the Company financial statements
6.
Trade and other payables
8.
Share capital
May 2021
£’000
May 2020
£’000
May 2021
May 2020
Shares
£
Shares
£
Creditors: amounts falling due within one year
Trade payables
Amounts owed to group undertakings
Other creditors
Accruals
Contingent consideration – current
Other contingent liabilities – current
Right of use lease liability (see note 7)
Creditors: amounts falling due after more than one year
Right of use lease liability (see note 7)
374
466
35
104
-
-
-
979
-
-
177
455
43
97
181
247
17
1,217
70
70
The amounts owed to group undertakings relate to expenses incurred for Oncimmune Holdings Plc by Oncimmune (USA) LLC. There are no specific
terms relating to this loan.
Leases
7.
Amounts recognised in the statement of financial position
Right-of-use assets
The asset additions and associated leases are recognised within the subsidiary Oncimmune Limited this year due to the alignment of equipment use
and lease payments. The lease is for equipment for use by the subsidiary in its business activities.
Authorised:
Ordinary shares of £0.01 each
69,121,949
691,219
64,102,560
641,026
Allotted, and fully paid:
Ordinary shares of £0.01 each
69,121,949
691,219
63,500,047
635,000
Detail of the movements in the year, and rights attached to the ordinary shares can be found in note 23 of the consolidation financial statements.
9.
Employee remuneration
Salary, fees, bonuses and other short term emoluments
Social security costs
Share-based payments expense
10.
No events to report after the balance sheet date.
Events after the reporting period
May 2021
May 2020
£’000
1,175
125
1,001
2,301
£’000
1,052
115
174
1,341
Lease liabilities
Current
Non-current
Future minimum lease payments as at 31 May 2021 are as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
Total gross payments
Impact of finance expenses
Carrying amount of liability
Amounts recognised in the statement of comprehensive income
Interest on lease liabilities
78
31 May 2021
31 May 2020
11.
Ultimate controlling party
£’000
£’000
There is no ultimate controlling party of the Company.
-
-
-
-
-
-
-
-
-
17
70
87
24
80
-
104
(17)
87
31 May 2021
31 May 2020
£’000
(14)
£’000
(6)
Oncimmune Annual Report 2021
79
Parent Company financial statements Company information
Company registration number
09818395
Registered office
MediCity – D6 Building
1 Thane Road
Nottingham NG90 6BH
Website
www.oncimmune.com
Directors
Meinhard Schmidt – Non-Executive Chairman
Dr Adam M Hill – Chief Executive Officer
Timothy Bunting – Non-Executive Director
Andrew Unitt – Non-Executive Director
Dr Annalisa Jenkins – Non-Executive Director
Company Secretary
Ron Kirschner
Nominated adviser
Zeus Capital Limited
10 Old Burlington Street,
London W1S 3AG
Joint Brokers
Singer Capital Markets
1 Bartholomew Lane,
London EC2N 2AX
WG Partners
85 Gresham Street,
London EC2V 7NQ
Financial PR
FTI Consulting
200 Aldersgate, Aldersgate Street,
London EC1A 4HD
Registrars
Link Group
10th floor, Central Square, 29 Wellington Street,
Leeds LS1 4DL
Auditor
Grant Thornton UK LLP
Chartered Accountants, Statutory Auditor
2nd Floor, St John's House, Haslett Avenue West,
Crawley RH10 1HS
“Oncimmune snags government funding for
COVID-19 immune profiling”
Bioworld, 13 October 2020 after Oncimmune is awarded the IMPACTT
grant to develop and validate an infectious disease panel designed to
predict COVID-19 disease severity and therapeutic response.
80
Oncimmune Annual Report 2021
81
www.oncimmune.com
Oncimmune Annual Report 2021
82