The measure
of personalised
medicine
Annual report and accounts 2013
Proteome Sciences in brief
Proteome Sciences is a leading protein biomarker company
specialising in proteomics and peptidomics services and applications,
and a best-in-class mass spectrometry protein analysis capability.
We have developed a broad portfolio of novel, high value protein
biomarker content addressing numerous disease areas where there
is unmet need, or where the range of existing diagnostic or therapeutics
available have severe limitations. These include neurodegenerative
diseases, stroke and cancer and where biomarker product candidates
have the potential to transform disease management and treatment.
Through our novel biomarker discovery both internally and with
collaborative partners, our goal is to improve the quality of life for
patients with debilitating and life-threatening diseases.
Mission and vision
Proteome Sciences is a life sciences company delivering content for
personalised medicine through its services, biomarkers and reagents.
We have a strong track record in discovery and innovation supported
by intellectual property.
We use high sensitivity proprietary technologies to detect biomarkers
(differentially expressed proteins from body fluids or tissue in diseases)
and to make rapid assays for testing. These are developed and
commercialised as diagnostic, monitoring or therapeutic products
through strategic alliances and out-licensing.
Our strategy is to discover, develop and implement measurably better
biomarker tools for a range of major human diseases and to provide
rapid cost effective outsourcing services and assays which enable
our partners to deliver more effective healthcare.
Proteomics explained
Proteomics is the scientific discipline which studies proteins and searches
for proteins that are associated with a disease by means of their altered
levels of expression and/or post-translational modification between control
and disease states. It enables correlations to be drawn between the range
of proteins produced by a cell or tissue and the initiation or progression
of a disease state and the effect of therapy.
The abundance of information and detailed analysis of the proteome
permits the discovery of new protein markers for diagnostic purposes
and of novel molecular targets for drug discovery. Proteomics play a major
role in biomedical research and the development of future generations
of diagnostic and therapeutic products.
Overview and strategic report
Proteome Sciences in brief
Mission and vision
Proteomics explained
(inside front cover)
01 Our science and technologies
are a valuable measure
02 Chairman’s message
03 Key performance indicators
04 Proteome Sciences at a glance
06 Our business model
07 Our measures for success...
08 Strategic report
Governance and financial statements
16 Senior management team
and board of directors
18 Directors’ report
24 Independent auditor’s report
25 Consolidated income statement
26 Consolidated statement
of comprehensive income
27 Consolidated balance sheet
28 Company balance sheet
29 Consolidated statement of changes in equity
30 Company statement of changes in equity
31 Consolidated and company
cash flow statements
32 Notes to the consolidated financial statements
Other matters
57 Advisers
58 Notice of meeting
59 Form of proxy
Cautionary statement on
forward-looking statements
This document contains certain forward-looking
statements relating to the Group. The Group
considers any statements that are not historical
facts as “forward-looking statements”. They
relate to events and trends that are subject
to risk and uncertainty that may cause actual
results and the financial performance of the
Group to differ materially from those contained in
any forward-looking statement. These statements
are made by the directors in good faith based
on information available to them and such
statements should be treated with caution due
to the inherent uncertainties, including both
economic and business risk factors, underlying
any such forward-looking information.
Our science and technologies
are a valuable measure
Our pioneering science and trusted proprietary
technologies for protein biomarker discovery,
validation and assay development are opening
new worlds for the pharmaceutical, diagnostic
and academic sectors.
We are bringing medicine closer to safer,
more effective and more quickly available
drugs. And to earlier diagnosis, better disease
management and more personalised treatment.
In a world with an ageing population and
an increasing social care burden, our work
represents a significant and long awaited
breakthrough, reducing both the financial
and personal cost attached to some of
the world’s most debilitating conditions.
01
Increased exposure expected to lead sales
The general introduction of TMT® 10-plex and the MS3 three
stage fragmentation methodology following favourable critical
exposure at the ASMS meeting from the key opinion leaders,
created a buoyant background which is expected to lead
to strong sales increases as the products start to be used
in wider applications in systems biology.
In conclusion
As key components in personalised medicine, demand for
our products and biomarker services is growing fast and
leading the field. Our TMT® chemical tags have become
market leaders and that position should be extended through
new product introductions later this year. SysQuant® has
delivered outstanding data in pancreas cancer, liver cancer
and Alzheimer’s disease. This has been as a result of the
continued creativity and commitment of our staff and
collaborators and I would like to thank them for keeping
our biomarker technologies at the forefront, driving the
growth in revenues.
Proteome Sciences is exceptionally placed to capitalise
on the development of personalised medicine through its
technology and the biomarkers, assays and services that
it has established and these should better reflect the long
term value of our business. Against this background, we
are confident that we should see continued fast growth in
revenues from our main activities for the foreseeable future.
Steve Harris
Chairman
Chairman’s message
Demand for our products and
biomarker services is growing fast
Considerable progress was made in 2013 from each
of the three main business divisions – proprietary
biomarkers, biomarker services and reagents
and this was reflected in the 86% growth in revenue
for the year from our expanding range of products
and commercial services.
Biomarkers covered by our assays continue
to grow sharply
The number of biomarkers covered by our assays grew
sharply again assisted by further developments from our
SysQuant® global phosphorylation workflow where the
coverage has increased from 2,200 to over 20,000 in a single
experiment. New tests launched included the Breast Cancer
Triplex Assay, CSF 16-plex TMT®-SRM assay and assays
in AD for Amyloid Beta, Tau and Phospho Tau. This trend
is expected to continue.
Major agreements with Thermo Fisher Scientific
and Cosmetics Europe
We concluded a strategically important $2.1m licence
and research agreement with Thermo Fisher Scientific for
MS3 TMT® under which Proteome Sciences was provided
with cash and state-of-the-art equipment. Our SensiDerm®
multiplex assay was selected by Cosmetics Europe in
the first set of in vitro priority tests for development and
optimisation as replacement for animal testing following
the EU ban in 2013.
Results of blood biomarkers in Alzheimer’s disease
We are very encouraged by the results of our blood
biomarkers for the diagnosis of early stage Alzheimer’s
disease which show positive predictive accuracy of 94%
in Alzheimer’s and 88% in mild cognitive impairment.
Furthermore, we are delighted that we have received
confirmation that the related 1,000 sample study undertaken
with Kings College Hospital is to be published in a major
peer review journal. These important developments bring
the prospect of a blood test for the early stage diagnosis
and prognosis of blood biomarkers in Alzheimer’s Disease
considerably closer.
CK1D results
Results presented at the Alzheimer’s Association International
Conference (AAIC) and at HUPO on CK1d confirmed that our
two lead compounds caused a dramatic drop in the amount
of phosphorylated tau protein in the brain, an effect
increasingly recognised as key to the development
of effective Alzheimer’s treatments.
Proteome Sciences plc Annual report and accounts 2013
02
Key financial performance indicators
2.14
1.15
2013
2012
Revenue growth (£m)
+86%
Revenue increased
86% to £2.14m
(2012: £1.15m)
£3.15m
Loss after tax at £4.25m
Excluding other gains and loses, the loss
after taxation was £3.15m (2012: £3.49m)
+137%
£0.60m
Licences, sales and contracts
revenue increased to £1.92m
Cash balance £0.60m
(2012: £0.86m)
(2012: £0.81m)
1.92
0.22
0.81
0.35
2013
2012
Revenue growth by type (£m)
— Licences/Sales/Contracts
— Grant Services
+63%
TMT® Reagent sales
increased 63% in 2013
+17
IP portfolio strengthened
Another 17 patents granted and a further
32 applications were filed in 2013
90%
10%
2013
Revenue breakdown
— Licences/Sales/Contracts
— Grant Services
Proteome Sciences plc Annual report and accounts 2013
03
Proteome Sciences
at a glance
Proteome Sciences is a leading
protein biomarker discovery
services company specialising
in proteomics and peptidomics
applications and boasts a
best-in-class mass spectrometry
protein analysis and assay
development capability.
PS Biomarker Services™
Our state-of-the-art biomarker discovery services use the
very latest in sample preparation and separation techniques,
isobarically labelled and label-free sample analysis platforms
and data analysis tools at our ISO 9001:2008 accredited facility.
Our biomarker discovery consulting services provide
access to extensive custom assay development options for
a wide range of disease model and human sample types.
The number of biomarkers covered by our assays increased
significantly in 2013 and this number is expected to continue
to grow sharply in 2014 as we complete additional mass
spectrometry assays and workflows, particularly through the
introduction of our ‘game-changing’ SysQuant® workflows.
Our customers include major pharmaceutical companies
including Johnson & Johnson, Takeda, Eisai etc., CROs
(Icon, Parexel) biotechnology companies and academia.
— We have developed a broad portfolio of novel, high
value protein biomarker content addressing numerous
disease areas which are available for licensing
— We are heavily invested in conducting novel biomarker
discovery and assay development both internally and
with key collaborative partners
— In addition to our comprehensive biomarker services
and validated protein biomarkers for discovery and
diagnostics applications, we offer an array of high
performance protein tags and assays for mass
spectrometry analysis
Case study:
Mapping protein modification to
improve biomarker performance
Virtually all proteins undergo some form of
modification after they are made in the body
and these changes can dramatically affect their
activity leading to disease and treatment failure.
None of these changes can be measured by
genomic technologies. These protein modifications
represent a potent source of early and sensitive
biomarkers and Proteome Sciences is
exploiting this across its biomarker portfolio.
Many proteins found in blood carry mutliple
sugars attached to their backbone which
often reduces the ability of antibodies
to bind to them. This makes detecting them
as diagnostic markers with traditional methods
more difficult. We have recently developed
a mass spectrometry method for specific
sugar modifications on an Alzheimer’s disease
biomarker that has a significant improvement
over traditional detection methods for prognosis
of disease severity and we are filing new
intellectual property on these specific
biomarkers.
Proteome Sciences plc Annual report and accounts 2013
04
Biomarkers
TMT® Reagents
Proteome Sciences conducts its own novel research and
discovery for new protein biomarkers in many human diseases.
We have numerous collaborations and partnerships with
leading laboratories in both industry and academia to drive
discovery, validation and implementation of novel protein
biomarkers for drug discovery and diagnostic uses. From
these, we have discovered a broad portfolio of validated
biomarkers across a variety of disease biology and
therapeutic indications and where we have established
comprehensive intellectual property coverage.
The main areas include CNS disorders, (Alzheimer’s,
Huntington’s, stroke, traumatic brain injury, TSE’s and pain)
Oncology (lung, breast, esophageal, colorectal cancers and
neuroblastoma) and organ transplant rejection (renal, cardiac).
Anyone wanting to use any of our biomarkers for a commercial
application will have to obtain a licence, from which Proteome
Sciences will obtain fees and royalties on any products sold.
TMT® works like a car tracker system to uniquely tag
proteins and peptides, radically reducing the variability
of biomarker discovery and speeding up the transition
to biomarker validation.
Through issued US and EU patents, Proteome Sciences
dominates the global isobaric mass tag space. We have
developed and are rapidly expanding a range of novel
isobaric and isotopic reagents under the Tandem Mass
Tag® (TMT®) brand which are exclusively licensed and
distributed worldwide by Thermo Scientific.
TMT® considerably enhances the performance of mass
spectrometers and delivers the ability to measure with
absolute quantitation.
Case study:
Liver cancer –
novel biomarker test
Effective treatment for two most common types
of liver cancer HCC and CC remains one of the
toughest challenges for doctors with the five-
year survival rate of only 13% barely improved
since the 1970s and where differentiation of the
sub-types, that require different treatments, has
been extremely difficult.
Using novel proprietary workflow in FFPE tissue
samples, Proteome Sciences presented in the
journal EUPA Open Proteomics in November,
a panel of differentially expressed biomarkers
from 2,864 proteins that differentiated CC
and HCC with 100% specificity. This provides
for the first time, a highly effective way of
identifying liver cancer.
A further study of 197 samples has recently
been analysed again delivering 100%
specificity as further validation before
outlicensing and moving the novel biomarker
test to widespread clinical adoption.
Case study:
CK1D –
finding the right path
in Alzheimer’s
Last year we reported the successful
outcome of testing our novel CK1D inhibitors
in a mouse model of the tau damage found in
human Alzheimer’s disease. We demonstrated
that levels of tau phosphorylation were reduced
and that several other proteins we anticipated
would be affected by CK1D inhibition behaved
as expected. This was performed using either
targeted methods with antibodies or using
Selected Reaction Monitoring mass
spectrometry.
Recent research has implicated CK1D
in a number of signalling pathway events
that may be relevant to the damage caused
in brain cells during Alzheimer’s disease.
To explore whether our inhibitors also affected
these pathways we applied our proprietary
SysQuant® workflow for the first time in a CNS
study to analyse different regions of the brains
of treated and control animals.
Read more about this on page 10.
Proteome Sciences plc Annual report and accounts 2013
05
Our business model
With a rising research and product profile,
we expect a strong performance from our
commercial business that should result in
a considerable uplift in 2014 revenue.
There are multiple drivers of commercial value accelerating our growth:
— Use of validated biomarker assays saves time and cost of development
— Biomarker discovery and validation workflows offer greater chances of success
to find new biomarkers for drug development and patient management
— Novel IP can be generated around biomarkers and add value to therapeutics
— New diagnostics products and drug companion diagnostics provide additional
revenue opportunities and economic value
— Multiplex TMT™ are the reagents of choice for latest generation mass
spectrometry applications in systems biology
Unmet need
The quest for new medicines
and treatments targetting unmet
healthcare needs and the rise
in personalised medicine drives
revenue growth
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Innovation
Research and development
Conducting novel biomarker discovery
and assay development both internally
and with collaborative partners
Intellectual property
IP portfolio underpins the value created
through research and is reflected by
licence fees, milestones and royalties
Revenue generating services
Comprehensive biomarker services
and validated protein biomarkers
for diagnostic applications and high
performance protein tags and assays
for mass spectrometry analysis
Proteome Sciences plc Annual report and accounts 2013
06
Our measures for success...
...we continue to make strong progress
We have taken our research skills in protein discovery and validation and converted
those abilities into a leading protein biomarker contract research organisation (CRO)
in great shape for tomorrow.
This has been achieved by a combination of depth and breadth of experience in
discovery, innovation, intellectual property management, business development
and finance needed to manage the Group in the current challenging environment.
Against this we expect a considerable increase in revenue growth in 2014.
With the three core areas of our business fully established with the costs of intellectual
property (IP), products and services absorbed and supported by US and European
sales teams, the risks associated with Proteome Sciences are significantly lower
than those associated with drug discovery, diagnostics or biotechnology.
...we continue to address healthcare potential
Biomarkers are key components in the process to measure and monitor changes
across the range of major human diseases and disorders and where there are
substantial and significant unmet needs and enormous economic value. By using
innovative techniques including mass spectrometry these can be addressed more
effectively and can deliver value for money for healthcare providers and reduce
the social care burden.
Prospective customers will use Proteome Sciences’ assays when suitable tests are
available due to cost and time considerations, or use biomarker discovery, validation
and assay development services if no appropriate tests exist, or if a pharmaceutical
company wants to increase IP around a drug programme by using proprietary
biomarkers associated with the drug to test and show effectiveness.
..we will keep setting the new standards
The value of Proteome Sciences’ technology and patents has been thoroughly
validated by the collaborations formed with major pharmaceutical, diagnostics,
scientific equipment companies and academic institutions. The ISO 9001
accreditation at its PS Biomarker Services™ division provides a significant
endorsement of its operations.
Pharmaceutical companies continue to cut internal R & D facilities in order to reduce
costs and increase efficiency through outsourcing and are increasingly expected
to use biomarker services more extensively due to pressure from regulators and
to improve productivity.
Proteome Sciences plc Annual report and accounts 2013
07
Strategic report
Considerable progress over the year has delivered
another significant rise in revenues
Principal activity and business review
The Company is required to set out in this report a strategic
review of the business of the Group during the financial year
ended 31st December 2013.
The principal activity of the Group is in biomarker research
and development as a global leader in applied proteomics,
using high sensitivity proprietary techniques to detect and
characterise differentially expressed proteins in diseases
for diagnostic, prognostic and therapeutic applications.
PS Biomarker Services™ provides integrated proteomic
services for biomarker discovery, validation and
measurement in clinical trials and in vitro diagnostics.
Key features include the proprietary isobaric tandem mass
tag technology TMT® for accurate and reliable biomarker
quantification and the ability to rapidly develop highly
reproducible quantitative biomarker assays.
The main focus of research is to address neurological,
neurodegenerative, cardiovascular and cancer conditions
and blood biomarkers in stroke, brain damage, solid organ
transplant rejection and Alzheimer’s disease have been
discovered.
Veri-Q Inc., a subsidiary company in which the Group has
an interest of 76.9%, is developing technologies for the
quality control of synthetic oligonucleotides and is well placed
to benefit from the anticipated expansion of antisense and
RNA interference therapeutics.
There have been no significant changes in the Group’s
principal activities in the year under review, nor are the
Directors aware, at the date of this report, of any major likely
changes in the Group’s activities in the next year.
Further details of the Group’s performance during the year
and expected future developments are contained in the
Chairman’s message.
Our strategic focus is to...
— Build on our reputation of excellence and leadership
in our field
— Commercialise extensive IP portfolio, specialist
biomarker CRO services and SysQuant® workflows
— Form new alliances including out-licensing biomarkers
to be widely used
— Build reputation and increase sales in key healthcare
markets (US/EU)
— Be cash generative and sustainably profitable
Key achievements 2013
— Strong growth for PS Biomarker Services™ and TMT®
— The expanded sales and marketing support and
insfrastructure has impacted the shift from pilot to large
scale programmes and increased the pipeline of products
and services
— SysQuant® and TMT® calibrator workflows provide
Proteome Sciences with a significant USP as a biomarker
services provider
— Significant progress with Ck1d and blood biomarkers
in Alzheimer’s Disease
— Breakthroughs in mass spectrometry development and
performance opening up new commercial opportunities
in systems biology
— New commercial contracts and strategic collaborations
— IP portfolio strengthened
Key objectives 2014
— Optimising revenue from our three core areas: PS
Biomarker Services™, proprietary biomarkers and TMT®
chemical reagents
— Maximising the value of the TMT® franchise through
new products and applications to drive growth
— Focus our main attention on PS Biomarker Services and
proprietary biomarkers to deliver significant revenue
growth in 2014 and beyond
— Expansion of SysQuant® workflows in cancer and CNS
— Monetisation of Ck1d and AD biomarkers
— Continue to focus on cash generation and being
sustainably profitable
Proteome Sciences plc Annual report and accounts 2013
08
Strategic report (continued)
Our operational structure and performance reporting
The Group’s operations are organised into three geographic
regions: UK, Germany and US. Internal reporting on
performance is allocated accordingly.
In the UK
The company’s main country of operation is the United
Kingdom. Our executive management team, including
business development, marketing and administrative
functions, is located at its HQ in Cobham.
Proteome Sciences’ laboratory is located at the Institute
of Psychiatry, King’s College London. It provides high
sensitivity gel and gel-free protein separation and
state-of-the-art mass spectrometry (MS) capabilities
with a strong emphasis on the identification and analysis
of post-translational modification of proteins, particularly
protein phosphorylation, image analysis and bioinformatics.
It has been actively involved in the development of rapid
MS based assays (TMT®-SRM assays) for a range of
different protein biomarkers.
In Germany
Our Frankfurt facility was purpose built to accommodate
the former proteomics division of Aventis Research and
Technologies where PS Biomarker Services™ is based.
The ISO 9001:2008 facility operates at the leading edge
of high output proteomics (high throughput combined with
high sensitivity). Through this facility, Proteome Sciences
has novel, proprietary protein profiling technologies including
TMT® (Tandem Mass Tags®) which offer simultaneous,
timely and accurate relative quantitation of a large number
of proteins for the discovery of novel targets or biomarkers.
In the United States
Our sales and marketing team are strategically based in
the US. We also have collaborative research agreements
with leading institutions such as the University of Michigan,
The Buck Institute and Moffitt Cancer Center.
The Group also manages the performance of the business
according to its major products and services, as set out
in this section of the report.
Revenue
Strong performance expected in 2014
— Revenue increased by 86% during the year to £2.14m
(2012: £1.15m)
— In the breakdown, Licences/Sales/Services rose
by 137% to £1.92m (2012: £0.81m)
— From this TMT® Reagent sales increased by 63%
— Grant Services income was £0.22m (2011: £0.35m)
Revenue performance is managed both geographically
and by way of major products and services.
The drive to increase sales of our products and services
through expanded business development activities was
strongly reflected in an 86% increase in 2013 revenue.
With a growing pipeline of contracts as we continue to
raise our corporate and research profile, further strong
performance is expected from licences, products and
services income which should result in a significant increase
in revenue again in 2014.
Driving acceleration in Biomarker Services
The Group’s main focus continues to be the expansion
of PS Biomarker Services™ and the amount of assays and
services that we provide principally using our own proprietary
content. This has been considerably extended through the
rapid development and availability of SysQuant® and TMT®
calibrator workflows.
Investment in new mass spectrometer is delivering
impressive results and additional capacity
The Orbitrap Fusion mass spectrometer provided as part
of the licensing deal with Thermo Fisher Scientific last
June was installed at the end of 2013 and this is delivering
most impressive results with increases of over 100% in
the number of proteins quantified using TMT®. This has
produced considerable additional capacity to process
and expand customer contracts at PS Biomarker Services™.
By way of update we are pleased that the pilot study report
just submitted has provided stunning results and should
put Proteome Sciences in a strong position to secure
the major contract on offer. This will be further assisted
by the appointment of Dr. Chee Gee See as Director
of Personalised Medicine who has made a considerable
impact in opening new opportunities and applications
with the major pharmaceutical companies.
Proteome Sciences plc Annual report and accounts 2013
09
Strategic report (continued)
Interest in biomarker services continues to
grow resulting in new contracts with both existing
and new customers
The pipeline and level of interest in biomarker services
continues to grow in 2014, reflecting the shift from pilot
studies to large scale programmes. We signed the term
sheet for a large biomarker services contract to process
a cohort of patient samples from which we aim to develop
a companion diagnostic. A pilot study, the prelude to
a potential major contract in cancer, has been signed
and we are actively finalising a number of new biomarker
services contracts with existing and new customers.
The commitment to showcasing the potential
of our business is resulting in increased exposure
and endorsement
Proteome Sciences has an intense sequence of high profile
presentations from April to August at the major international
meetings to showcase its leading technology development
and applications, its assays and services in particular its
SysQuant® and TMT® calibrator workflows in cancer and CNS
and the expanding multiplex capabilities and growing range
of users for TMT® mass tags. These include:
April – American Association for Cancer Research (AACR)
May – American Society of Clinical Oncology (ASCO)
June – American Society for Mass Spectrometry (ASMS)
July – Alzheimer’s Association International Conference (AAIC)
August – 10th Siena Meeting – From Genome to Proteome
The increased exposure and endorsement from key opinion
leaders has created a buoyant background to our business
and services and this is expected to expand with the
increased use of our products and services in mainstream
systems biology.
Biomarkers
Alzheimer’s Disease (AD)
Advanced research results bring the prospect
of a blood test for AD considerably closer
During his key note address to the G8 Dementia Summit,
UK Prime Minister David Cameron drew attention to
the ground-breaking work Proteome Sciences is doing
discovering and validating blood biomarkers for early stage
diagnosis of Alzheimer’s disease (AD). The research is at
an advanced stage following the announcement of excellent
results in the summer showing positive predictive accuracy
of 94% in AD and 88% in mild cognitive impairment (MCI)
which brings the prospect of a blood test considerably closer.
King’s College, London are also making significant
AD progress using our Biomarkers
In parallel to our own results, we were strongly encouraged
by the news from our collaborators at King’s College,
London (KCL) that they have made a significant step forward
to develop a test which could allow doctors to detect AD
at an early stage before any noticeable warning signs.
Out of thousands of proteins in blood, the group have
identified a group of 10, based on results from over 1,000
individuals, that they believe could be used to identify
Alzheimer’s. Further details are awaited with great interest
and are expected to be in the form of a high profile detailed
scientific paper that is likely to command considerable
media attention.
The KCL research has followed a complementary
immunoassay approach to the mass spectrometry workflow
developed by Proteome Sciences and this should provide
considerable cross validation of our novel biomarkers
and workflows.
Proteome Sciences controls the valuable commercial
rights relating to both sets of discoveries
The biomarkers from these two programmes will provide
content for three major applications: for patient stratification,
for drug testing and for clinical diagnosis in AD. We are
actively marketing the results and content to pharmaceutical
and diagnostics companies to commercialise these through
licences, assays and biomarker services contracts.
Each of these applications is in a major area of unmet
need and will command substantial commercial values.
Proteome Sciences plc Annual report and accounts 2013
10
Making a measurable difference to healthcare
SysQuant® –
Looking for ways to treat the untreatable
Pancreatic cancer spreads rapidly and has a poor
prognosis. With a lack of obvious symptoms this cancer
is seldom detected in its early stages – a major factor
in why it remains a leading cause of cancer death.
Treatment choices for people with aggressive
cancers are currently limited
During the last 12 months we have continued to develop
SysQuant®, the proprietary phosphoproteomics workflow,
for the analysis of tumour biopsy samples to identify key
proteins that can be targeted with existing cancer drugs.
The current system for the approval of drugs is based on
demonstrating utility in a tumour found in a particular organ
or tissue and extending this to other sites. This requires
separate drug trials. Tumours that are particularly aggressive,
such as pancreatic cancer are rarely used to trial new drugs
and as such the treatment choices remain limited.
Comprehensive pathway profiling provides better
treatment outcomes for cancer patients
Recent understanding of the causes of cancer suggest that
rather than focus on the site of a tumour to select the most
appropriate drugs we need to look at the signalling pathways
operating in each individual. Targeting two or three of these
pathways simultaneously can then provide better treatment
outcomes, even in advanced cases. To be able to deliver this
highly personalised approach to cancer medicine requires
a tool for comprehensive pathway profiling – SysQuant®.
The results of our data suggest personalised
medicine could lead to better outcomes using
existing anti-cancer drugs
Working with the Department of Hepatobiliary Cancer
at King’s College Hospital we analysed the tumours
of 12 patients with pancreatic cancer using SysQuant®.
In total, 6,284 unique phosphorylation sites were quantified
along with 2,101 proteins, representing the largest single
data set in pancreatic cancer. Significantly, we were able
to identify multiple cancer-generating pathways that were
activated in the patients with some pathways highly active
in all 12 patients whilst others were only found in a subset
of the patients. In each case we were able to identify
unique combinations of targets for existing anti-cancer
drugs that could potentially have provided a superior
treatment outcome.
We have made further improvements to the SysQuant®
workflow since this study was published in the journal
PLOS ONE in March 2014, and we intend to start a
prospective trial of SysQuant® to predict outcomes
in liver cancer later this year.
The early stages of pancreatic cancer do
not usually produce symptoms resulting in
this disease being advanced by the time it is
diagnosed. Pancreatic cancer is almost
always fatal and the number of people
surviving 5-years very low
12th
Most common cancer worldwide
Pancreatic cancer is the twelfth most
common cancer in the world (joint position
with kidney cancer)
2nd
Rising death rates from
pancreatic cancer
Pancreatic cancer is expected to become
the second most common cause of
cancer-related death in the US by 2020,
overtaking deaths from breast and
colon cancers
Proteome Sciences plc Annual report and accounts 2013
11
Making a measurable difference to healthcare
Rapid progress –
Our biological validation is leading the way
for Alzheimer’s treatments
Early diagnosis and intervention are
important for treatment of dementia, yet
three out of four people currently suffering
have had no formal diagnosis
$604bn
Estimated financial impact
of dementia
Total estimated worldwide cost of dementia
in 2010 was US$604 billion. 70% of these
costs occur in Western Europe and the US
44.4m
People currently suffering from
Alzheimer’s
44.4 million people are believed to be living
with Alzheimer’s disease or other dementias
worldwide. Without a breakthrough
discovery, they are projected to increase
to increase to over 75 million by 2030
Alzheimer’s disease is a degeneration of the brain
which causes problems for memory, cognition and
personality. Eventually it leads to death from total brain
failure. It is currently the 5th leading cause of death
in the US and projected to continue rising.
CK1D – Finding the Right Path in Alzheimer’s
Last year we reported the successful outcome of testing our
novel CK1D inhibitors in a mouse model of the tau damage
found in human Alzheimer’s disease. We demonstrated that
levels of tau phosphorylation were reduced and that several
other proteins we anticipated would be affected by CK1D
inhibition behaved as expected. This was performed using
either targeted methods with antibodies or using Selected
Reaction Monitoring mass spectrometry.
Recent research has implicated CK1D in a number of
signalling pathway events that may be relevant to the damage
caused in brain cells during Alzheimer’s disease. To explore
whether our inhibitors also affected these pathways we
applied our proprietary SysQuant® workflow for the first
time in a CNS study to analyse different regions of the
brains of treated and control animals.
Our most comprehensive mapping analysis
to date has identified several key pathways
We mapped over 20,000 unique phosphorylation sites
and approximately 8,000 proteins, providing the most
comprehensive analysis yet seen of signalling pathway
disturbances in tau pathology. In addition to confirming a
reduction in tau phosphorylation of CK1D with our two drug
compounds PS110 and PS 27805, most interestingly we also
identified several key pathways relating to energy production,
amyloid processing and oxidative phosphorylation. These
changes support a much wider mode of action for our CK1D
compounds in preventing tau-mediated damage in the
brains of mice and endorse their development and value as
important clinical candidates in AD. Our Casein kinase 1 delta
(CK1d) inhibitors are showing great promise as reported later.
We are now undertaking the testing required
to be able optimise testing in humans
To further support our strategy of partnering the CK1d
inhibitor portfolio we are undertaking further compound
testing using computer-aided design and smart biological
testing to determine the effects that changes in chemical
structure have on the target selectivity, activity and safety,
an important step to optimise drugs prior to testing in humans.
This round of testing adds incremental value to the CK1d
portfolio and further supports the strategy to outlicense the
programme to a pharmaceutical company.
A valuable resource for pharmaceutical companies
for the development of new treatments
Combined with the outstanding biological profiling, we
are delivering detailed information showing the enormous
potential of our proprietary compounds to protect against
tau-mediated damage at a time when pharmaceutical
companies are moving away from amyloid beta and are
looking for new approaches centred on tau.
Proteome Sciences plc Annual report and accounts 2013
12
Strategic report (continued)
TMT®
Revenue –
Fast growth rate is expected to continue
— TMT® product sales increased by 63% in 2013.
— This growth has continued and should be extended in
2014 as TMT® 10-plex reagents become widely available
and the planned arrival of TMT® 20-plex and TMT®
30-plex later this year will further expand the coverage
and size of the market.
— The strong endorsement of the key opinion leaders should
further increase the visibility and penetration of TMT® into
mainstream biology and medical research groupsand the
pace of growth has accelerated where it is running close
to double 2013 levels.
Our TMT® is recognised as being central
to improved quantitation
Scientists working to discover protein-based biomedical
breakthroughs with the goal of accelerating discovery of
effective therapies are constrained by the time and cost
required to identify and quantify large numbers of proteins.
TMT® was developed by Proteome Sciences to advance
multiplexing technology – the ability to analyse multiple
protein samples in a single mass spectrometer run – to gain
new insight into complex disease mechanisms. The launch
of TMT® 10-plex in 2013, multiplexing 10 protein samples
from cells, tissues or fluids “Represented a landmark
increase. Combining new isobaric reagents with
purpose-driven instrumentation allows for proteome-
wide measurements of protein expression differences
simultaneously across 10 samples in about 24 hours.
It is simply fantastic.” according to key opinion leader
Dr. Steven Gygi at Harvard Medical School.
Collaboration between Harvard Medical School and
Thermo Fisher Scientific aims to make benefits of TMT®
expertise more available
Demonstrating the importance of TMT®, an industry-
academic collaboration has been set up between Harvard
Medical School and Thermo Fisher Scientific to develop
new ways of protein quantitation on a much larger scale
than currently possible using TMT® and to develop improved
methods and training to make this expertise available to
the greater scientific community. The combination of TMT®
with new generation mass spectrometry technology provides
the route to increase the amount of quantitation by orders
of magnitude, but importantly without sacrificing data quality.
Thermo Fisher Scientific, the global leader in mass
spectrometry, has reiterated that these advances will
usher in a new era in functional proteomics, increasing
understanding of mechanisms of disease and evaluation
of potential new therapies.
TMT® is central to these programmes and this will be
reflected through increased usage and sales globally in
mainstream systems biology. The planned launch of TMT®
20- and 30-plex in 2014 should increase and accelerate
that process.
SensiDerm® has potential for additional future revenue
streams as the EU ban on animal testing increases
pressure in Asia and the US
We were delighted the SensiDerm™ 10 protein multiplex
TMT®-SRM assay was selected by Cosmetics Europe in April
in the first set of priority tests for further development and
optimisation. Since that time, we have been actively engaged
with Cosmetics Europe and a number of industrial partners
in the process. The priority is to introduce fast, accurate
and cost effective in vitro assays not only for cosmetics but
for other products manufactured with sensitizers/allergens
including chemical ingredients and household products
all affected by the EU ban on animal testing in March 2013.
Similar policies and pressures relating to animal testing
are following close behind in the US and Asia. With a novel
in vitro SRM testing method and patents filed over 100 skin
and 100 respiratory markers for each, Proteome Sciences
now has the prospect of substantial additional revenue
streams as animal testing replacements are introduced
for a broad range of in vitro applications in industrial testing.
Although the timing and amount of funding available from
Cosmetics Europe has been delayed, further development
of SensiDerm™ is expected in 2014.
IP portfolio
Additional 17 patents added and further 32 filed
Our 600 plus patent IP portfolio of key biomarkers across
a broad range of diseases, applications and technologies
that supports our extensive asset base has been further
extended. Another 17 patents were granted in 2013 with
a further 32 applications filed over the period. Our IP estate
underpins the value that has been created through
our research and this will be reflected by license fees,
milestones and royalties.
Proteome Sciences plc Annual report and accounts 2013
13
Strategic report (continued)
Financial review
Results and dividends
The loss after tax for the year was £3,149,159 (2012 – loss:
£4,253,594). The Directors do not recommend the payment
of a dividend (2012: £nil). The Group results are stated in the
consolidated income statement on page 25, and are reviewed
in the Chairman’s message on page 2, and the Strategic
report on pages 8 to 15.
Post balance sheet events
Details of significant events since the balance sheet date
are contained in note 30 to the financial statements.
Key performance indicators (“KPIs”)
i) The Directors consider that revenue, gross profit and
profit before tax are key performance indicators in
measuring group performance, as the financial profile of
the Group changes as a result of the licensing agreements
that have already been entered into and as future licences
and other commercial arrangements are concluded.
The performance of the Group in this latter area is set
out in details in the Chairman’s message on page 2
of these accounts.
ii) In addition, the Directors also believe that a further
important KPI is the Group’s rate of cash expenditure
and its effect on Group cash resources. Details of cash
flow during 2013 are set out on page 31 of these accounts
and in notes 24 and 25.
The group maintained a positive cash balance in 2013
and continues to seek to generate improved cash flows
from commercial income.
Financial performance –
As also witnessed in the previous year, our revenues
continued to grow at considerable pace
Revenue for the twelve month period ended 31st December,
2013 increased 86% to £2.14m (2012: £1.15m). In the
breakdown of revenue, Licences/Sales/Services rose 137%
to £1.92m (2012: £0.81m) of which TMT® Reagent sales
increased 63%. Grant services were £0.22m (2012: £0.35m).
The loss before tax was £3.60m (2012: £5.20m) including
other gains and losses of £nil (2012: £0.76m).
Costs and available cash –
Despite a significant rise in revenue, our operating costs
remain constant
Administrative expenses in 2013 showed a slight fall to
£4.92m (2012: £5.01m) and are likely to remain relatively
constant in 2014. After the R&D tax credit of £0.44m, the
loss after taxation for the period was £3.15m (2012: £4.25m).
The net cash outflow from operating activities reduced
to £2.77m (2012: £3.49m).
Cash at the year-end was £0.60m (2012: £0.86m).
A placing of 17.86m ordinary shares was completed
in February 2014 which added £5.00m pre-expenses
to the Group’s cash resources.
Outlook for 2014
Revenue trend expected to continue
Strong progress has been made from the three core
activities: PS Biomarker Services™, Proprietary Biomarkers
and TMT® chemical reagents. The number of assays/
products in 2013 increased at a fast pace and was reflected
by the significant rise in revenue. This trend is expected
to continue during 2014.
The profile of TMT® continues to rise, becoming the market
leader and with growth running close to double 2013 levels.
A shift from pilot studies to large-scale projects
Our pipeline and interest in biomarker services is expanding
quickly as customers shift from pilot studies to large scale-
projects with this reflected by the contracts announced
to date in the current year and with many more to follow.
We are clearly differentiated in the marketplace
SysQuant® and TMT® calibrator significantly differentiate
Proteome Sciences in the marketplace. We believe that these
will make a considerable contribution to our assay portfolio
and revenues and firmly underpin our position in personalised
medicine as lead providers of biomarker content and
workflows for drug development and early diagnosis.
Strong growth is anticipated from Licences, Sales
and Services.
Exceptionally placed to capitalise
from personalised medicine
Proteome Sciences is exceptionally placed to capitalise
on the development of personalised medicine through
its technology and the biomarkers, assays and services
that it has established and these should better reflect the
long term value of our business. Against this background,
we are confident that we should see continued fast growth
in revenues from our main activities for the foreseeable future.
Proteome Sciences plc Annual report and accounts 2013
14
Strategic report (continued)
Principal risks and uncertainties
Licensing arrangements and uncertainty
of commercialisation
The Group intends to sub-license its discoveries and
products to third parties, but there can be no assurance
that such licensing arrangements will be successful.
It is also uncertain whether commercial tests can be
developed and will be successful in the market.
— Management of risk:
The Group manages this risk by a thorough investigation
of proposed research projects to assess their scientific
and commercial feasibility. It has an experienced board
and management team to carry out this process and also
aims to spread this risk by not concentrating its resources
on any one project.
Competition and technology
The international biotechnology industry is subject to rapid
and substantial technological change. There can be no
assurance that developments by others will not render the
Group’s developments obsolete or uncompetitive.
— Management of risk:
The Group employs highly qualified research scientists
and senior management who monitor and are aware
of developments in technology that might affect its
research capability and through their access to scientific
publications and attendance at conferences.
Dependence on key personnel
The Group depends on its ability to attract and retain
qualified management and scientific personnel. Competition
for such personnel is intense. Whilst the Group has entered
into employment arrangements with its key personnel
with the aim of securing their services for minimum terms,
the retention of their services cannot be guaranteed.
— Management of risk:
The Group has a policy of organising its research so
that its projects are not dependent on any one individual.
It also seeks to retain staff by the grant of share options
to all employees and through annual reviews of
remuneration packages.
Patent applications and proprietary rights
The Group seeks patent protection for protein biomarkers
identified which may be of diagnostic, prognostic or
therapeutic value and for its chemical mass tags. Successful
commercialisation of such biomarkers and chemical mass
tags may depend on the establishment of such patent
protection. The Group also seeks patent protection for
its proprietary technology.
There is no assurance that the Group’s pending
applications will result in the grant of patents or that the
scope of protection offered by any patents will be as planned
or whether any such patents ultimately will be upheld as
valid by a court of competent jurisdiction in the event of a
legal challenge. If the Group fails to obtain patents for its
technology and is required to rely on unpatented proprietary
technology, no assurance can be given that the Group can
meaningfully protect its rights in such unpatented proprietary
products and techniques.
— Management of risk:
The Group has an experienced patent department which
has established controls to avoid the release of patentable
material before it has filed patent applications. It also
draws heavily on external patent advisers and uses several
firms for this process, enabling it to target the firms which
have the areas of expertise relevant to each area of its
patentable activities.
By order of the Board,
J.L. Malthouse
Company Secretary
Coveham House
Downside Bridge Road
Cobham
Surrey KT11 3EP
29 May 2014
Proteome Sciences plc Annual report and accounts 2013
15
Senior management team
and board of directors
Senior Management Team
Christopher Pearce
Chief Executive
James Malthouse
Finance Director
Dr. Ian Pike
Chief Operating Officer
Glenn Barney
VP Business Development, US
Dr. Chee Gee See
Director of Personalised Medicine
Dr. Malcolm Ward
Chief Technical Officer,
London Research Facility
Dr. Josef Schwarz
Head of Projects & Production,
Proteome Sciences R&D
Board of Directors
Executive Directors
Christopher Pearce
Chief Executive
James Malthouse
Finance Director
Dr. Ian Pike
Chief Operating Officer
Non-executive Directors
Steve Harris
Chairman
Professor William Dawson
Non-executive Director
Executive Directors:
Christopher Pearce
Chief Executive
Christopher Pearce has built the Group since inception
and has been responsible for the formulation and
implementation of strategy, collaborative and licensing
agreements, and intellectual property. He was co-founder
and Executive Chairman of Fitness First plc, the international
fitness chain.
James Malthouse
Finance Director
James Malthouse joined the Group in 1993 and is a
Chartered Accountant with banking and corporate finance
experience. He was Chairman and Finance Director of
Unigroup plc and Finance Director of Harcourt Group plc.
Dr. Ian Pike
Chief Operating Officer
Ian Pike has over 20 years’ experience working in the
diagnostics and biotechnology sectors. Having gained
a PhD in Medical Microbiology, he joined Wellcome
Diagnostics as a research group leader and spent eight
years working on new diagnostic assays, particularly for
hepatitis. In December 1999, he joined the Technology
Transfer Office of the UK Medical Research Council with
responsibility for patents and commercialisation of a wide
portfolio of technologies related to the biomedical sector.
Most recently, Ian worked for Cancer Research Ventures
managing intellectual property and performing business
development activities in Europe and the US.
Proteome Sciences plc Annual report and accounts 2013
16
Senior management team
and board of directors (continued)
Senior Management Team:
Glenn Barney
VP Business Development, US
Glenn brings over 25 years of sales and business
development experience with global life sciences
companies, with strong biomarker focus. He was formerly
VP Business Development at NextGen Sciences Inc.
and held senior positions at Decision Biomarkers and
Parkin Elmer Inc. Mr. Barney holds a BA in Biology
from Boston University.
Dr Chee Gee See
Director of Personalised Medicine
Chee Gee is a biomarker and translational medicine
expert, a former Biomarker and Experimental Medicine
Leader for 5 years at Roche in multiple therapeutic
areas including CNS, cardiovascular, respiratory and
inflammation. Most notable was his role as the clinical
oncology biomarker leader for the pivotal Phase III
ToGA Herceptin trial and the co-development of the
HER2 companion diagnostic in gastric cancer. Prior
to this Chee Gee spent 11 years at Glaxo Smith Kline
where he was the European Therapeutic Area Analyst
for Genetics Research reporting to Dr Allen Roses.
He has specialist expertise in regulatory affairs
and value-based drug pricing, reimbursement
and market access.
Dr. Malcolm Ward
Chief Technical Officer, London Research Facility
Malcolm Ward joined Proteome Sciences plc in May
2001 having previously worked for GlaxoWellcome for
12 years, in protein mass spectrometry. He was involved
in the establishment of the new leading edge protein
separation and mass spectrometry facility at the Institute
of Psychiatry, King’s College London. His research team
is involved in biomarker discovery, validation and assay
development. His academic qualifications include
a Master of Science (MSc) in Molecular Biology from
the University of Hertfordshire in 1996 and a Graduateship
from the Royal Society of Chemistry (GRSC) in 1992.
He obtained a PhD in Applied Proteomics at King’s
College, London in 2009.
Dr. Josef Schwarz
Head of Projects & Production,
Proteome Sciences R&D
Joseph Schwarz joined the Group in summer 2002
when Xzillion, the former proteomics division of Aventis
Research and Technologies, was acquired by Proteome
Sciences plc. He worked for Aventis/Hoechst Research
and Technologies for 6 years, initially as head of mass
spectrometry and later as research collaboration project
leader. He was instrumental in the establishment of the
integrated high throughput 2DE/mass spectrometry
proteomics platform at the Frankfurt research facility.
Josef Schwarz holds a PhD in organic chemistry/mass
spectrometry from the Technical University of Berlin,
Germany and a MBA from the University of Durham,
UK. He is an author of a number of publications
and co-inventor of patents.
Non-executive Directors:
Steve Harris
Chairman (i) (ii) (iii)
Steve Harris is a Fellow of the Royal Pharmaceutical
Society. Until June 1995 he was Director of Development
and Licensing at Medeva plc. He has worked in the
pharmaceutical industry for 48 years including with
ICI, Merck Sharp & Dohme, Eli Lilly, Boots, Reckitt and
Colman, and Gensia. He is also a non-executive Director
of Cyprotex plc and Domainex Ltd.
Professor William Dawson
Non-executive Director (i) (ii) (iii)
Professor William Dawson retired from Eli Lilly and
Company in August 1996 after 27 years’ service, 14 as
Research Director in the UK and latterly as Director of
Technology Acquisition, Europe. He is a Director of Bionet
Limited and is a Fellow of the Royal Pharmaceutical
Society and of the Royal Society of Chemistry.
(i) Member of Audit Committee
(ii) Member of Remuneration Committee
(iii) Member of Nomination Committee
Proteome Sciences plc Annual report and accounts 2013
17
Directors’ report
for the year ended 31st December 2013
The Directors present their Annual report on the affairs
of the Group, together with the Consolidated financial
statements and Independent auditor’s report, for the year
ended 31st December 2013.
Directors’ responsibilities statement
The Directors are responsible for preparing the Annual
report and the financial statements in accordance with the
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors are required to prepare the Group financial
statements under International Financial Reporting Standards
(IFRSs) as adopted by the European Union and Article 4
of the IAS Regulation and have also chosen to prepare the
parent company financial statements under IFRSs as adopted
by the European Union. Under company law the Directors
must not approve the accounts unless they are satisfied
that they give a true and fair view of the state of affairs of the
Company and of the profit or loss of that Company for that
period. In preparing these financial statements, International
Accounting Standard 1 requires that Directors:
— properly select and apply accounting policies;
Responsibility statement
The Directors confirm that to the best of our knowledge:
— the financial statements, prepared in accordance with
International Financial Reporting Standards, give a true
and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
— the strategic report includes a fair review of the development
and performance of the business and the position of
the Company and the undertakings included in the
consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face.
Financial instruments and liquidity risks
Information about the use of financial instruments by the
Company and its subsidiaries and the Group’s financial risk
management policies are given in note 28 on pages 54 to 56.
Directors and their interests
The Directors who served during the year are as shown below:
R.S. Harris
C.D.J. Pearce
Non-Executive, Chairman
Chief Executive
Finance Director
— present information, including accounting policies, in a
J.L. Malthouse
Dr. I.H. Pike
Chief Operating Officer
Professor W. Dawson
Non-Executive
Dr. A.I. Walker
Non-Executive
(resigned 3rd March 2014)
In accordance with the Company’s articles, Prof. W. Dawson
retires by rotation at the next Annual General Meeting and,
being eligible, offer himself for re-election.
manner that provides relevant, reliable, comparable and
understandable information;
— provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the entity’s financial
position and financial performance; and
— make an assessment of the Company’s ability to continue
as a going concern.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at
any time the financial position of the Company and enable
them to ensure that the financial statements comply with
the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Proteome Sciences plc Annual report and accounts 2013
18
Directors’ report (continued)
for the year ended 31st December 2013
The Directors at 31st December 2013 and their interests in the share capital of the Company were as follows:
a) Beneficial interests in Ordinary Shares:
Name of Director
R.S. Harris
C.D.J. Pearce
J.L. Malthouse
Dr. I.H. Pike
Professor W. Dawson
Dr. A.I. Walker (resigned 3rd March 2014)
* or date of appointment, if later.
31st December 2013
Number of Ordinary
Shares of 1p each
31st December 2012*
Number of Ordinary
Shares of 1p each
177,199
31,538,075
755,031
–
20,372
–
177,199
31,538,075
755,031
–
20,372
–
On 28th February 2014 C.D.J. Pearce subscribed for 3,571,429 new ordinary shares of 1p each at a price of 28p per share
as part of the placing referred to in note 30 to these accounts. No other changes took place in the beneficial interests of the
Directors between 31st December 2013 and 29th May, 2014.
b) Number of Ordinary Shares under option:
Number
at 31st
December
2013
Number
at 31st
December
2012
Exercise
price
(pence)
Date of grant
Dr. I.H. Pike
(i)
127,986
127,986
73.91p
6th December, 2004
(i) Denotes options granted under the 2004 Share Option Plan.
127,986
127,986
Proteome Sciences plc Annual report and accounts 2013
19
Directors’ report (continued)
for the year ended 31st December 2013
c) Directors’ interests in the Long-Term Incentive Plan (“LTIP”):
The maximum number of shares to be allocated to the Directors under the 2004 and 2011 LTIP schemes, in each case for an
aggregate consideration of £1, are as follows:
(i) C.D.J. Pearce
(ii) J.L. Malthouse
(iii) Dr. I.H. Pike
* or date of appointment, if later.
Number at
31st December
2013
(a)
277,074
(b) 1,174,269
328,105
(c)
Number at
31st December
2012*
277,074
1,174,269
328,105
1,779,448
1,779,448
(a)
(b)
258,308
767,251
258,308
767,251
1,025,559
1,025,559
(a)
(b)
165,583
654,971
820,554
165,583
654,971
820,554
The entitlement to shares shown under (i)(b), (ii)(b) and (iii)(b) under the LTIP is subject to achieving the performance
conditions referred to in the LTIP section on page 22. The figures shown are maximum entitlements and the actual number
of shares (if any) will depend on these performance conditions being achieved.
Awards made have no performance retesting facility.
The numbers shown in (a)(i), (a)(ii) and (a)(iii) at the 31st December 2013 relate to awards that have vested but have not yet
been exercised.
The market price at the date of grant of the above awards numbered (a)(i), (a)(ii) and(a)(iii) was 49.75p, and for the awards
numbered (i)(b), (ii)(b) and (iii)(b) was 21.38p and for the award numbered (i)(c) was 38.25p.
d) As set out in note 20(b) (i) to (vii) to these Accounts, C.D.J. Pearce has made a loan facility available to the Company
which can be converted, at Mr. Pearce’s option, into Ordinary Shares of the Company at the lower of market price
on the date of conversion or the average price over the lowest consecutive ten day trading period since 29th June 2006
(the date on which details of the original loan agreement were disclosed).
e) The market price of the Ordinary Shares at 31st December 2013 was 29.88p and the range during the year was 28.25p
to 77.75p.
Proteome Sciences plc Annual report and accounts 2013
20
Directors’ report (continued)
for the year ended 31st December 2013
Non-executive Directors
Steve Harris is a Fellow of the Royal Pharmaceutical
Society. Until June 1995 he was Director of Development
and Licensing at Medeva plc. He has worked in the
pharmaceutical industry for 48 years including with ICI,
Merck Sharp & Dohme, Eli Lilly, Boots, Reckitt and Colman,
and Gensia. He is also a non-executive director of Cyprotex
plc and Domainex Ltd.
Professor William Dawson retired from Eli Lilly and Company
in August 1996 after 27 years’ service, 14 as Research
Director in the UK and latterly as Director of Technology
Acquisition, Europe. He is a Director of Bionet Limited and
is a Fellow of the Royal Pharmaceutical Society and of the
Royal Society of Chemistry.
Substantial shareholdings
As at 27th May, 2014, the Company had received notification
of the following significant interests in the ordinary share
capital of the Company:
Name of Holder
Number of
Ordinary Shares
Percentage of
issued Ordinary
Share Capital
C.D.J. Pearce
35,109,504
Vulpes Life Science Fund
33,400,217
9,820,829
M. Staveley
Helium Special Situations Fund 11,423,385
16.40
15.60
4.59
5.34
Disabled employees
Applications for employment by disabled persons are
always fully considered, bearing in mind the aptitudes of
the applicant concerned. In the event of members of staff
becoming disabled every effort is made to ensure that their
employment with the Group continues and that appropriate
training is arranged. It is the policy of the Group that the
training, career development and promotion of disabled
persons should, as far as possible, be identical with that
of other employees.
Employee consultation
The Group places considerable value on the involvement
of its employees and has continued its previous practice
of keeping them informed on matters affecting them
as employees and on the various factors affecting the
performance of the Group. This is achieved through formal
and informal meetings and by circulation of copies of the
interim and annual accounts. Employee representatives are
consulted regularly on a wide range of matters affecting their
current and future interests.
Corporate governance
Although, as a Company listed on the Alternative Investment
Market of the London Stock Exchange, the Company is not
required to make a formal statement setting out the extent
of its compliance with the UK Corporate Governance Code
issued by the Financial Reporting Council in 2010 and
amended in 2012 (the “Code”), the policy of the Board of
Directors of the Company (the “Board”) is to try to manage
the affairs of the Company in accordance with the principles
of the Code insofar as it considers it practical to do so and
is appropriate for a company of its size.
The Company has formalised the following matters by Board
resolution:
— a formal schedule of Board responsibilities;
— the procedure for Directors to take independent professional
advice if necessary, at the Company’s expense;
— the procedure for the nomination and appointment of
non-executive Directors, for specified periods and without
automatic re-appointment; and
— establishment of and written terms of reference for an
audit, nominations and remuneration committees.
Internal control
The Board has overall responsibility for ensuring that the
Group maintains a system of internal control to provide
its members with reasonable assurance regarding the
reliability of financial information used within the business
and for publication and that assets are safeguarded. There
are inherent limitations in any system of internal control and
accordingly even the most effective system can provide
only reasonable, and not absolute, assurance with respect
to the preparation of accurate financial information and the
safeguarding of assets.
The key features of the internal control system that operated
throughout the year are described under the following
headings:
— Control environment: particularly the definition of the
organisation structure and the appropriate delegation
of responsibility to operational management.
— Identification and evaluation of business risks and control
objectives: particularly through a formal process of
consideration and documentation of risks and controls
which is periodically undertaken by the Board.
— Main control procedures: which include the setting
of annual and longer term budgets and the monthly
reporting of performance against them, agreed treasury
management and physical security procedures, formal
capital expenditure and investment appraisal approval
procedures and the definition of authorisation limits
(both financial and otherwise).
— Monitoring: particularly through the regular review
of performance against budgets and the progress
of research activities undertaken by the Board.
Proteome Sciences plc Annual report and accounts 2013
21
Directors’ report (continued)
for the year ended 31st December 2013
The Board reviews the operation and effectiveness of this
framework on a regular basis. The Directors consider that
there have been no weaknesses in internal controls that
have resulted in any losses, contingencies or uncertainties
requiring disclosures in the accounts.
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 Chairman’s message on
page 2 and Strategic report on pages 8 to 15 and the
financial position of the Group, its cash flows, liquidity position
and borrowing facilities are described in the notes to the
financial statements, in particular in the consolidated cash
flow statement on page 31 and in notes 20 (other financial
liabilities) and 28 (financial instruments).
These financial statements have been prepared on the
going concern basis. The Directors have reviewed the going
concern principle in the light of the guidance provided by the
FRC. The Group’s business activities, and the factors likely to
affect its future development, are set out in the Annual report,
and include the Group’s objectives, policies and processes
for managing its capital, its financial risk management
objectives and its exposure to credit and liquidity risks.
As at 31 December 2013 the Group had cash resources
of £600,262 and realised a loss for the year of £3,149,159.
Subsequent to the year end the Group raised a further
£5,000,000 (before expenses) through a placing to raise
further funds for the development of the Group’s activities.
As explained in the Strategic report in the Annual report
some of the Group’s products are still in the research and
development phase and as such the Directors consider that
costs could exceed income in the short term. The Group’s
projections indicate that the Group should have sufficient
resources to meet its current obligations as they fall due for
at least the 12 months from the date of signing these financial
statements, using its available cash resources together with
anticipated income from sales, services, outlicensing, grant
income and R&D tax credits. The Directors have reviewed
the progress and status of the various commercial
discussions which are underway in relation to the elements
of forecast income, and consider that they represent a
reasonable basis for the revenue as forecast, but recognise
that there is some risk surrounding the timing and quantum
of such revenue, associated with the ongoing research
and development and the nature of the business.
The Group is dependent on the unsecured loan facility
provided by the Chief Executive of the Group, which is
repayable on demand. Further details of this facility are set
out in note 20(b) to the financial statements. The Directors
are not aware of any reason to conclude that the facility
will not continue to be made available to the Group,
on the existing terms, for at least 12 months from
the date of approval of these financial statements.
Accordingly, having reviewed each of the factors that could
impact on the going concern of the Group, the Directors
have concluded that no material uncertainties exist that cast
significant doubt about the ability of the Group to continue
as a going concern for at least the next 12 months and the
financial statements have therefore been prepared on the
going concern basis.
Remuneration committee report
The Remuneration Committee is made up of two non-
executive Directors, Professor W. Dawson and R.S. Harris.
The role of the Committee is to make recommendations to
the Board, within its agreed terms of reference, on the
Company’s framework of executive remuneration and its cost
and to determine specific remuneration packages for each
of the executive Directors. The remuneration of non-executive
Directors is fixed by the Board as a whole.
The remuneration policy for Executive Directors and senior
employees is to ensure that they are rewarded competitively
and in line with their individual performance. Full details
of the remuneration packages of individual Directors
and information on share options and long-term incentive
schemes are set out in note 11 to the accounts and in
the Directors’ report.
In view of the Company’s dependence on its key executives,
the service contracts of Mr. Pearce and Mr. Malthouse were
amended during 1997 to provide for a notice period of not
less than 2 years.
The release of shares in respect of the awards still
outstanding to participants will depend upon the growth of
Proteome Sciences’ total shareholder return (“TSR”) over a
three year performance period relative to the AIM Healthcare
Index. No shares will be released unless the Company’s
TSR performance exceeds that of the Index, in which case
30% of the award will vest. The full award will vest only if the
Company’s TSR performance exceeds that of the Index by
10%, with a pro-rata award between 30% to 100% for each
percentage point of out-performance up to 10%.
Before awards vest the Remuneration Committee will satisfy
itself that the TSR performance is a genuine reflection of
the Company’s underlying performance over the three-year
performance period.
In 2013 the Remuneration Committee agreed a cash bonus
scheme for the executive directors for the year to 31st
December, 2013 under which a bonus of 50% of annual salary
would be paid if the Company achieved revenue in 2013 of
£2m. This would increase to 100% if turnover for the year
reached £4m, and to a maximum of 150% for revenue of £6m.
In view of the level of the Group’s revenue in 2013 a provision
has been made in these accounts for a bonus payment
of 50% of the executive directors’ basic salary in 2013 in
accordance with the terms of the bonus scheme set out
in the previous paragraph.
Proteome Sciences plc Annual report and accounts 2013
22
ii) Resolution 5 – Resolution 5, which is set out in the Notice
on page 58, will be proposed as a Special Resolution of
the Company. The Resolution will renew the Directors’
authority under Section 570 of the Companies Act 2006
to disapply pre-emption rights, thereby enabling the
allotment of a limited number of shares for cash up to an
aggregate nominal amount of £428,211.24 representing
20 per cent of the current issued Ordinary Share capital
of the Company as at 29th May 2014. The proposed
authority, if granted, will expire at the conclusion of the
next Annual General Meeting after the passing of the
Resolution or on 30th June 2015, whichever is the earlier.
The Directors believe that the proposed resolutions are in
the best interest of the Company and its shareholders and
unanimously recommend shareholders to vote in favour of the
proposed resolutions, as the Directors intend to do in respect
of their own beneficial shareholdings.
By order of the Board,
J.L. Malthouse
Company Secretary
Coveham House
Downside Bridge Road
Cobham
Surrey KT11 3EP
29th May 2014
Directors’ report (continued)
for the year ended 31st December 2013
Supplier payment policy
It is the policy of the Group to agree appropriate terms
and conditions for its transactions with suppliers (by means
ranging from standard written terms to individually negotiated
contracts) and that payment should be made in accordance
with those terms and conditions, provided that the supplier has
also complied with them. As the Company owed no amounts
to trade creditors at 31st December 2013, the number of days
to be shown in this Report, to comply with the provisions of
Schedule 8.12 of the Companies Act 2006, is nil (2012: nil).
The equivalent figure for the Group is 31 days (2012: 28 days).
Auditor
Each of the persons who are Directors of the Company
at the date when this report was approved confirms that:
— so far as the Director is aware, there is no relevant audit
information (as defined in the Companies Act 2006) of
which the Company’s auditor is unaware; and
— the Director has taken all steps that he ought to have taken
as a Director to make himself aware of any relevant audit
information (as defined in the Companies Act 2006) and
to establish that the Company’s auditor is aware of that
information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies
Act 2006.
The Directors will place a resolution before the Annual
General Meeting to re-appoint Deloitte LLP as auditor
for the ensuing year.
Liability insurance for Company officers
As permitted by section 233 of the Companies Act 2006,
the Company has purchased insurance cover for the
Directors against liabilities that might arise in relation
to the Group.
Special business at the Annual General Meeting
At the Annual General Meeting of the Company to be held on
30th June 2014, as well as the routine business, the following
items will be proposed as Special Business:
i) Resolution 4 – An Ordinary Resolution (Resolution 4),
as set out in the Notice on page 58, will be proposed to
renew the Directors’ authority to allot relevant securities
up to an aggregate nominal amount of £713,685.39 which
represents approximately a third of the current issued
Ordinary Share capital of the Company as at 29th May
2014. The authority will lapse at the conclusion of the
next Annual General Meeting after the passing of the
Resolution or on 30th June 2015, whichever is the earlier.
The Directors do not have any present intention
of exercising this authority.
Proteome Sciences plc Annual report and accounts 2013
23
Independent auditor’s report
for the year ended 31st December 2013
To the Members of Proteome Sciences plc
We have audited the financial statements of Proteome Sciences
plc for the year ended 31st December 2013 which comprise the
Consolidated income statement, the Consolidated statement of
comprehensive income, the Consolidated and parent company
balance sheets, the Consolidated and parent company
statements of changes in equity, the Consolidated and parent
company cash flow statements and the related notes 1 to 30.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as
regards the parent company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as
a body, for our audit work, for this report, or for the opinions
we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the 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. Our responsibility is to audit and
express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with
the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting
policies are appropriate to the Group’s and the parent
company’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all
the financial and non-financial information in the Annual report
to identify material inconsistencies with the audited financial
statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with,
the knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications
for our report.
Opinion on financial statements
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 31st December 2013 and of the Group’s loss for the year
then ended;
— the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
— the parent company financial statements have been
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance with
the provisions of the Companies Act 2006; and
— the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by
the Companies Act 2006
In our opinion 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.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you
if, in our opinion:
— adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
— the parent company financial statements are not in
agreement with the accounting records and returns; or
— certain disclosures of directors’ remuneration specified
by law are not made; or
— we have not received all the information and explanations
we require for our audit.
Tobias Wright (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Southampton, United Kingdom
29th May 2014
Proteome Sciences plc Annual report and accounts 2013
24
Consolidated income statement
for the year ended 31st December 2013
Revenue
Licences/sales/services
Grant services
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Other gains and losses
Investment revenues
Finance costs
Loss before taxation
Tax
Notes
Year ended
31st December 2013
£
Year ended
31st December 2012
£
1,916,123
220,558
808,235
344,732
2,136,681
(592,656)
1,152,967
(385,468)
1,544,025
(4,916,540)
(3,372,515)
–
1,677
(225,350)
767,499
(5,008,493)
(4,240,994)
(763,502)
8,633
(199,624)
(3,596,188)
(5,195,487)
447,029
941,893
5, 6
7
9
17
8 (i)
8 (ii)
12
Loss for the period from continuing operations
(3,149,159)
(4,253,594)
Attributed to shareholders of the Company
(3,149,159)
(4,253,594)
Loss per share
Basic and diluted
All activities are derived from continuing operations.
13
(1.62p)
(2.21p)
Proteome Sciences plc Annual report and accounts 2013
25
Consolidated statement
of comprehensive income
for the year ended 31st December 2013
Exchange differences on translation of foreign operations
Other comprehensive expense for the year
Year ended
31st December 2013
£
Year ended
31st December 2012
£
(42,962)
(42,962)
(33,074)
(33,074)
Loss for the year
(3,149,159)
(4,253,594)
Total comprehensive for the year
attributable to equity holders of the Company
(3,192,121)
(4,286,668)
Proteome Sciences plc Annual report and accounts 2013
26
Consolidated balance sheet
as at 31st December 2013
Non-current assets
Goodwill
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Short-term borrowings
Short-term provisions
Net current liabilities
Non-current liabilities
Long-term provisions
Total liabilities
Net liabilities
Equity
Share capital
Share premium account
Equity reserve
Other reserve
Translation reserve
Retained loss
Total deficit
Notes
14
15
18
19 (a)
19 (b)
20 (a)
20 (b)
20 (c)
2013
£
2012
£
4,218,241
1,055,183
5,273,424
402,581
778,944
600,262
1,781,787
7,055,211
(792,631)
(15,264)
(7,951,234)
(240,512)
(8,999,641)
(7,217,854)
4,218,241
494,633
4,712,874
331,431
1,047,347
858,249
2,237,027
6,949,901
(478,147)
(572)
(6,725,884)
(209,267)
(7,413,870)
(5,176,843)
20 (c)
(255,382)
(302,562)
21
23
23
23
23
23
(9,255,023)
(7,716,432)
(2,199,812)
(766,531)
1,962,485
42,121,558
3,185,732
10,755,000
(118,741)
(60,105,846)
1,924,985
40,602,808
2,983,142
10,755,000
(75,779)
(56,956,687)
(2,199,812)
(766,531)
Signed on behalf of the Board
The financial statements of Proteome Sciences plc, registered number 02879724, were approved by the board of directors
and authorised for issue on 29th May 2014. They were signed on its behalf by:
C.D.J. Pearce
Director
J.L. Malthouse
Director
29th May 2014. The accompanying notes are an integral part of this consolidated balance sheet.
Proteome Sciences plc Annual report and accounts 2013
27
Company balance sheet
as at 31st December 2013
Non-current assets
Investment in subsidiaries
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Loan from other group entity
Short-term borrowings
Non-current liabilities
Long-term provisions
Total liabilities
Net assets
Equity
Share capital
Share premium account
Group reconstruction reserve
Equity reserve
Retained loss
Total equity
Notes
16
19 (a)
19 (b)
20 (b)
21
23
23
23
23
2013
£
2012
£
43,611,673
43,611,673
41,874,011
41,874,011
–
486,640
486,640
–
576,301
576,301
44,098,313
42,450,312
(298,638)
(1,335,434)
(1,634,072)
(291,130)
(1,296,016)
(1,587,146)
(28,904)
(57,890)
(1,662,976)
(1,645,036)
42,435,337
40,805,276
1,962,485
42,121,558
1,082,244
3,185,732
(5,916,682)
1,924,985
40,602,808
1,082,244
2,983,142
(5,787,903)
42,435,337
40,805,276
The financial statements of Proteome Sciences plc, registered number 02879724, were approved by the board of directors
and authorised for issue on 29th May 2014. They were signed on its behalf by:
C.D.J. Pearce
Director
29th May 2014
J.L. Malthouse
Director
Proteome Sciences plc Annual report and accounts 2013
28
Consolidated statement of changes
in equity
for the year ended 31st December 2013
Share
capital
£
Share
premium
account
£
Equity
reserve
£
Translation
reserve
£
Other
reserve
£
Retained
loss
£
Total
equity/(deficit)
£
At 1st January 2012
1,921,724 40,582,138
2,785,744
(42,705) 10,755,000 (52,703,093) 3,298,808
Loss for the year
Exchange differences on
translation of foreign operations
–
–
–
–
Total comprehensive
expense for the year
Issue of share capital
Credit to equity
for share-based payment
–
3,261
–
20,670
–
–
197,398
–
–
(4,253,594)
(4,253,594)
(33,074)
–
–
–
–
–
–
–
–
–
–
–
(33,074)
(4,286,668)
23,931
197,398
At 31st December 2012
1,924,985 40,602,808
2,983,142
(75,779) 10,755,000 (56,956,687)
(766,531)
At 1st January 2013
1,924,985 40,602,808
2,983,142
(75,779) 10,755,000 (56,956,687)
(766,531)
Loss for the year
Exchange differences on
translation of foreign operations
–
–
–
–
Total comprehensive
expense for the year
Issue of share capital
Credit to equity
for share-based payment
–
37,500
–
1,518,750
–
–
202,590
–
–
(3,149,159)
(3,149,159)
(42,962)
–
–
–
–
–
–
–
–
(42,962)
–
–
–
(3,192,121)
1,556,250
202,590
–
–
–
–
–
–
–
–
At 31st December 2013
1,962,485 42,121,558
3,185,732
(118,741) 10,755,000 (60,105,846)
(2,199,812)
Proteome Sciences plc Annual report and accounts 2013
29
Company statement of changes
in equity
for the year ended 31st December 2013
Company
Share
capital
£
Share
premium
account
£
Group
reconstruction
reserve
£
Equity
reserve
£
Retained
loss
£
Total
equity
£
At 1st January 2012
Retained loss for the year
Credit to equity for share-based payment
Issue of share capital
1,921,724 40,582,138
–
–
20,670
–
–
3,261
1,082,244
–
–
–
2,785,744
–
197,398
–
(2,377,333) 43,994,517
(3,410,570)
(3,410,570)
–
197,398
23,931
–
At 31st December 2012
1,924,985 40,602,808
1,082,244
2,983,142
(5,787,903) 40,805,276
At 1st January 2013
Retained loss for the year
Credit to equity for share-based payment
Issue of share capital
1,924,985 40,602,808
–
–
1,518,750
–
–
37,500
1,082,244
–
–
–
2,983,142
–
202,590
–
(5,787,903) 40,805,276
(128,779)
202,590
1,556,250
(128,779)
–
–
At 31st December 2013
1,962,485 42,121,558
1,082,244
3,185,732
(5,916,682) 42,435,337
Proteome Sciences plc Annual report and accounts 2013
30
Consolidated and company
cash flow statements
for the year ended 31st December 2013
Notes
24
Cash flows from operating activities
Cash used in from operations
Tax refunded
Net cash inflow/(outflow)
from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Interest received
Net cash (outflow)/inflow
from investing activities
Financing activities
Proceeds on issue of shares
Loans advanced/(repaid)
Net cash inflow/(outflow)
from financing activities
Net decrease
in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Company
Year ended
Group
Year ended
Company
Year ended
31st December 31st December 31st December 31st December
2012
£
Group
Year ended
2012
£
2013
£
2013
£
(3,201,138)
434,151
(159,372)
–
(4,209,832)
856,465
(99,170)
–
(2,766,987)
(159,372)
(3,353,367)
(99,170)
(9,202)
1,677
–
1,607
(14,603)
8,633
–
8,523
(7,525)
1,607
(5,970)
8,523
1,556,244
1,000,000
1,556,244
(1,488,139)
23,930
–
23,930
(3,236,365)
2,556,244
68,105
23,930
(3,212,435)
(218,268)
858,249
(39,719)
(89,660)
576,301
–
(3,335,407)
4,064,080
129,576
(3,303,082)
3,879,383
–
Cash and cash equivalents at end of year
25
600,262
486,641
858,249
576,301
Proteome Sciences plc Annual report and accounts 2013
31
Notes to the consolidated
financial statements
for the year ended 31st December 2013
1 General information
Proteome Sciences plc is a company incorporated in England
and Wales under registration number 02879724. The address
of the registered office is given on the back cover of this
document. The nature of the Group’s operations and its
principal activities are set out in the Strategic report on pages
8 to 15. These financial statements are the consolidated
financial statements of Proteome Sciences plc and its
subsidiaries (“the Group”).
These financial statements are presented in pounds sterling
because that is the currency of the primary economic
environment in which the Group operates. Foreign operations
are included in accordance with the policies set out in note 3.
2 Adoption of new standards
In the current year, the following new and revised Standards
and Interpretations have been adopted:
IFRS 10 Consolidated Financial Statements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IAS 1 (amendments) Presentation of Financial Statements
The adoption of these interpretations has not led to any
changes in the Group’s accounting policies.
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been
applied in these financial statements were in issue but not yet
effective (and in some cases had not yet been adopted by
the EU):
IFRS 9
Financial Instruments
IAS 27 (revised)
Separate Financial Statements
IAS 36 (amendments)
IAS 32 (amended)
Recoverable Amount Disclosures
for Non-Financial Assets
Offsetting Financial Assets and
Liabiltiies
IAS 39 (amendments) Novation of Derivatives and
Continuation of Hedge Accounting
IFRIC Interpretation 21 Levies
The directors do not expect that the adoption of the
Standards and Interpretations listed above will have a
material impact on the financial statements of the Group in
future periods, except as that IFRS 9 will impact both the
measurement and disclosures of Financial Instruments.
Beyond the information above, it is not practicable to provide
a reasonable estimate of the effect of these standards until a
detailed review has been completed.
3 Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRSs).
The financial statements have also been prepared in
accordance with the IFRSs adopted by the European Union
and therefore the Group financial statements comply with
Article 4 of the EU IAS Regulation.
The financial statements have been prepared on the historical
cost basis. The principal accounting policies adopted are set
out below.
In line with IAS 1 the exemption from the preparation of a
company only income statement has been adopted.
Basis of preparation – going concern
These financial statements have been prepared on the
going concern basis. The Directors have reviewed the going
concern principle in the light of the guidance provided by the
FRC. The Group’s business activities, and the factors likely to
affect its future development, are set out in the Annual report,
and include the Group’s objectives, policies and processes
for managing its capital, its financial risk management
objectives and its exposure to credit and liquidity risks.
As at 31 December 2013 the Group had cash resources
of £600,262 and realised a loss for the year of £3,149,159.
Subsequent to the year end the Group raised a further
£5,000,000 (before expenses) through a placing to raise
further funds for the development of the Group’s activities.
As explained in the Strategic report in the Annual report
some of the Group’s products are still in the research and
development phase and as such the Directors consider that
costs could exceed income in the short term. The Group’s
projections indicate that the Group should have sufficient
resources to meet its current obligations as they fall due for
at least the 12 months from the date of signing these financial
statements, using its available cash resources together with
anticipated income from sales, services, outlicensing, grant
income and R&D tax credits. The Directors have reviewed
the progress and status of the various commercial
discussions which are underway in relation to the elements
of forecast income, and consider that they represent a
reasonable basis for the revenue as forecast, but recognise
that there is some risk surrounding the timing and quantum
of such revenue, associated with the ongoing research
and development and the nature of the business.
The Group is dependent on the unsecured loan facility
provided by the Chief Executive of the Group, which is
repayable on demand. Further details of this facility are set
out in note 20(b) to the financial statements. The Directors are
not aware of any reason to conclude that the facility will not
continue to be made available to the Group, on the existing
terms, for at least 12 months from the date of approval of
these financial statements.
Proteome Sciences plc Annual report and accounts 2013
32
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Accordingly, having reviewed each of the factors that could
impact on the going concern of the Group, the Directors
have concluded that no material uncertainties exist that cast
significant doubt about the ability of the Group to continue
as a going concern for at least the next 12 months and the
financial statements have therefore been prepared on the
going concern basis.
Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and entities controlled
by the Company (its subsidiaries) made up to 31st December
each year. Control is achieved where the Company has the
power to govern the financial and operating policies of an
investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during
the year are included in the consolidated income statement
from the effective date of acquisition or up to the effective
date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies
used into line with those used by the Group.
All intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Goodwill arising on consolidation represents the excess of
the cost of acquisition over the Group’s interest in the fair
value of the identifiable assets and liabilities of a subsidiary,
associate or jointly controlled entity at the date of acquisition.
Goodwill
Goodwill is initially recognised as an asset at cost and
is subsequently measured at cost less any accumulated
impairment. Goodwill which is recognised as an asset is
reviewed for impairment at least annually. Any impairment
is recognised immediately in the income statement and
is not subsequently reversed.
For the purpose of impairment testing, goodwill is allocated
to each of the Group’s cash-generating units expected
to benefit from the synergies of the combination. Cash-
generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less
than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit
pro-rata on the basis of the carrying amount of each asset
in the unit. An impairment loss recognised for goodwill is not
reversed in a subsequent period.
On disposal of a subsidiary, associate or jointly controlled
entity, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable
for goods and services provided in the normal course of
business, net of discounts, VAT and other sales-related taxes.
Sales of goods are recognised when goods are delivered
and title has passed. Licence income is recognised when
the benefit has been transferred to the licensee. Royalty
revenue is recognised on an accruals basis in accordance
with the substance of the relevant agreement (provided that
it is probable that the economic benefits will flow to the Group
and the amount of revenue can be recognised reliably).
Interest income is accrued on a time basis by reference
to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount.
The directors have considered the requirements of IFRS
in determining how to account for the licence and research
collaboration agreement concluded with Thermo Fisher
Scientific in 2013. Under this agreement the Group was
provided with cash and also with the loan of equipment for a
period of at least three years, as consideration for the transfer
of the licence to a three-stage mass spectrometry (MS3)
fragmentation methodology. The Directors have concluded
that the fair value of the MS3 licence transferred at the
commencement of the agreement is represented by the cash
and loan of the machine elements of the consideration, and
have therefore valued the revenue at the agreed total contract
value less the element relating to the ongoing research
collaboration agreement.
The Group’s policy for the recognition of grant income within
revenues is described below.
Leasing
Rentals payable under operating leases are charged to income
on a straight-line basis over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into
an operating lease are also spread on a straight-line basis
over the same term.
Foreign Currencies
The individual financial statements of each Group company
are presented in the currency of the primary economic
environment in which it operates (its functional currency).
For the purpose of the consolidated financial statements,
the results and financial position of each Group company
are expressed in pounds sterling which is the functional
currency of the Company and the presentation currency
for the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the
rates of exchange prevailing on the dates of the transactions.
Proteome Sciences plc Annual report and accounts 2013
33
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
At each balance sheet date, monetary assets and liabilities
that are denominated in foreign currencies are retranslated at
the rates prevailing on the balance sheet date. Non-monetary
items carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date
when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency
are not retranslated.
Exchange differences arising on the settlement of monetary
items, are included in profit or loss for the exchange differences
arising on the retranslation of non-monetary items carried at
fair value are included in profit or loss for the period except for
differences arising on the retranslation of non-monetary items
in respect of which gains and losses are recognised directly in
equity. For such non-monetary items, any exchange component
of that gain or loss is also recognised directly in equity.
For the purpose of presenting consolidated financial
statements, the assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing on the
balance sheet date. Income and expense items are translated
at the average exchange rates for the period, unless
exchange rates fluctuate significantly during that period,
in which case the exchange rates at the date of transactions
are used. Exchange differences arising, if any, are classified
as equity and transferred to the Group’s translation reserve.
Such translation differences are recognised as income or as
expenses in the period in which the operation is disposed of.
Borrowing costs
All borrowing costs are recognised in profit or loss in the
period in which they are incurred with the exception of
borrowing costs related to the construction of a fixed asset
which are capitalised during the construction phase.
Grants
Government grants relating to property, plant and equipment
are treated as deferred income and released to income
statement over the expected useful lives of the assets
concerned. Other grants are not recognised until there is
reasonable assurance that the Group will comply with the
conditions attached to them and that the grants will be received.
Grants released to the income statement are recognised within
the revenue category on the face of the income statement.
Operating (loss)/profit
Operating (loss)/profit is stated before investment income
and finance costs.
Retirement benefit costs
As a result of the acquisition of Proteome Sciences R&D
Verwaltungs GmbH and Proteome Sciences R&D GmbH &
Co KG from Aventis Research & Technologies GmbH & Co.
KG, the Group makes contributions in Germany to a funded
defined contribution plan and to a partially funded defined
benefit plan. These plans are operated in their entirety by the
Pensionskasse der Mitarbeiter der Hoechst-Gruppe VVaG,
an independent German mutual insurance company,
which is required to comply with German insurance company
regulations. This company does not prepare a plan valuation
on an IAS 19 basis.
The schemes assets are held in multi-employer funds, and
the other employers who contribute to the schemes are not
members of the Group. The Group has not been able to identify
its share of the underlying assets and liabilities of the defined
benefit scheme and accordingly it has also been accounted
for as defined contribution scheme. The Group’s contributions
to the schemes are included within the amount charged to the
income statement in respect of pension contributions.
The Group also has a direct pension obligation for which
it provides in full at the balance sheet date. This scheme
has no separable assets.
Taxation
Any tax payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group’s liability
for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and
is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can
be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and
associates, and interests in joint ventures, except where
the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference
will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled or the asset
is realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Proteome Sciences plc Annual report and accounts 2013
34
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation
of assets over their estimated useful lives, using the straight-
line method, on the following bases:
— Laboratory equipment, fixtures and fittings 20%
The gain or loss arising on the disposal or retirement of an
asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is
recognised in income.
As noted in the Revenue Recognition accounting policy
above, in December 2013 the Company was provided with
mass spectrometry equipment for a period of at least three
years, pursuant to the licence and research collaboration
agreement made with Thermo Fisher Scientific earlier in the
year. The directors have considered the requirements of IFRS
in determining how this equipment should be treated in the
Group’s accounts. The directors have taken into account the
fact that the machine has been provided to the Group with
no restrictions on its use, and the fact that the three year
period of the loan is considered to represent substantially
the entire useful economic life of the asset. The directors
have concluded that the economic risks and rewards of
ownership of the equipment have therefore been transferred
to the Group, and have recognised the equipment within the
Property, Plant and Equipment asset category accordingly.
The value at which the directors have recognised the asset
is considered to be represented by the fair value of the MS3
licence transferred at the commencement of the agreement
less the cash consideration received. The equipment is being
depreciated over the three year period of the loan agreement.
Internally-generated intangible assets – research and
development expenditure
Expenditure on research activities is recognised as an
expense in the period in which it is incurred.
Development expenditure, where it meets certain criteria
(given below), is capitalised and amortised on a straight-line
basis over its useful life. Asset lives are subject to regular
review and an impairment exercise carried out at least once
a year. Where no internally-generated intangible asset can
be recognised, development expenditure is written-off in
the period in which it is incurred.
An asset is recognised only if all of the following conditions
are met:
— the product is technically feasible and marketable;
— the Company has adequate resources to complete the
development of the product;
— it is probable that the asset created will generate future
economic benefits; and
— the development cost of the asset can be measured
reliably.
Patents
Patents are measured initially at purchase cost and are
amortised on a straight-line basis over their estimated useful
lives if they meet the measurement and recognition criteria of
IAS 38 Intangible Assets. Otherwise, patent costs are written
off in the year of expenditure.
Impairment of tangible and intangible assets
excluding goodwill
At each balance sheet date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss (if any). Where
the asset does not generate cash flows that are independent
from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset
belongs. An intangible asset with an indefinite useful life
is tested for impairment annually and whenever there
is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have
not been adjusted.
If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately, unless the relevant
asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to
the revised estimate of its recoverable amount, but so that
the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment
loss been recognised for the asset (cash-generating unit) in
prior years. A reversal of an impairment loss is recognised as
income immediately, unless the relevant asset is carried at a
re-valued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
Proteome Sciences plc Annual report and accounts 2013
35
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Financial instruments
Financial assets and financial liabilities are recognised in the
Group’s balance sheet when the Group becomes a party to
the contractual provisions of the instrument.
Trade payables
Trade payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective
interest rate method.
Trade receivables
Trade receivables are measured at initial recognition at fair
value, and are subsequently measured at amortised cost
using the effective rate method. Appropriate allowances
for estimated irrecoverable amounts are recognised in the
income statement when there is objective evidence that the
asset is impaired. The allowance recognised is measured as
the difference between the asset’s carrying amount and the
present value of estimated future cash flows discounted at
the effective rate computed at initial recognition.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where
appropriate, provisions for impairment.
Other investments
Other investments comprise unquoted investments
recognised at fair value. Where it is not possible to establish
a reliable fair value, such investments are recognised at cost
less, where appropriate, provisions for impairment.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads that have been
incurred in bringing the inventories to their present location
and condition. Cost is calculated using the weighted average
method. Net realisable value represents the estimated selling
price less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and
demand deposits, and other short-term highly liquid
investments that are readily convertible to a known amount of
cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements
entered into. An equity instrument is any contract that
evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
Borrowings
Interest-bearing loans and overdrafts are recorded at
the proceeds received, net of direct issue costs. Finance
charges, including premiums payable on settlement or
redemption and direct issue costs, are accounted for on
an accrual basis in profit or loss using the effective interest
rate method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period
in which they arise.
Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the Directors’ best estimate of the expenditure
required to settle the obligation at the balance sheet date and
are discounted to present value where the effect is material.
Share-based payments
The Group issues equity-settled share-based payments
to certain employees. Equity-settled share-based payments
are measured at fair value (excluding the effect of non
market-based vesting conditions) at the date of grant.
The fair value determined at the grant date of the equity-
settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate
of shares that will eventually vest and adjusted for the effect
of non-market-based vesting conditions.
Fair value is measured by use of the Black Scholes model.
The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of
non-transferability, exercise restrictions, and behavioural
considerations.
4 Critical accounting judgements and key sources of
estimation uncertainty
Key sources of estimation uncertainty
The key assumptions concerning the future and other key
sources of estimation uncertainty at the balance sheet date
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year, are discussed below.
Internally-generated intangible assets – research and
development expenditure
Expenditure on research activities is recognised as an
expense in the period in which it is incurred.
An internally-generated intangible asset arising from the
Group’s research and development is recognised only if all
of the following conditions are met:
— an asset is created that can be identified (such as software
and new processes);
— it is probable that the asset created will generate future
economic benefits; and
— the development cost of the asset can be measured
reliably.
Proteome Sciences plc Annual report and accounts 2013
36
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Internally-generated intangible assets are amortised on a
straight-line basis over their useful lives. Where no internally-
generated intangible asset can be recognised, development
expenditure is recognised as an expense in the period in
which it is incurred.
The Directors do not consider that any such intangible assets
have been created in 2013.
Impairment of goodwill
Determining whether goodwill is impaired requires an
estimation of the value in use of the cash-generating units to
which goodwill has been allocated. The value in use calculation
requires the entity to estimate the future cash flows expected
to arise from the cash-generating unit and a suitable discount
rate in order to calculate present value. The carrying amount
of goodwill at the balance sheet date was £4,218,241.
Details of the judgements used in the calculation are set out
in note 14.
Investments in subsidiary companies
The carrying cost of the Company’s investments in subsidiary
companies is reviewed at each balance sheet date by
reference to the income that is projected to arise therefrom.
These income streams have been discounted using the
5 years to perpetuity model for Electrophoretics Ltd and over
10 years for Proteome Sciences Inc and Veri-Q Inc. From
a review of these projections, which can cover periods up
to ten years, the Directors do not consider that any provision
should be made against their carrying costs as shown in note
16 to the accounts and the Directors therefore believe that
the investments concerned will generate sufficient economic
benefits to justify their revised carrying costs, despite the
inevitable uncertainties over timing of the receipt of income
and the size of the markets from which income is anticipated.
Other investments
In the continuing absence of any recent financial information
on the Company’s investment in VIRxSYS it is still not possible
at this stage to determine an appropriate fair value and
the Directors believe that it is therefore prudent to maintain
the provision against the carrying cost of this investment
at 31st December, 2013.
Licence and research collaboration agreement
During the year a licence and research collaboration
agreement was concluded with Thermo Fisher Scientific.
Revenue recognised in 2013 under this agreement relates to
the transfer of the licence to a three-stage mass spectrometry
(MS3) fragmentation methodology. This was represented
by consideration comprising cash and the loan of equipment
by Thermo Fisher Scientific for a period of at least three years.
The Directors have concluded that the fair value of the MS3
licence transferred at the commencement of the agreement is
represented by the cash and loan of the machine elements of
the consideration, and have therefore valued this element of
the revenue at the agreed total contract value less the element
relating to the ongoing research collaboration agreement.
In determining how the equipment should be treated in the
Group’s accounts, the directors have taken into account the
fact that the machine has been provided to the Group with
no restrictions on its use, and the fact that the three year
period of the loan is considered to represent substantially
the entire useful economic life of the asset. The directors have
concluded that the economic risks and rewards of ownership
of the equipment have therefore been transferred to the
Group, and have recognised the equipment within the
Property, Plant and Equipment asset category accordingly.
The value at which the directors have recognised the asset
is considered to be represented by the fair value of the
MS3 licence transferred at the commencement of the
agreement less the cash consideration received.
Share based payments
Calculation of the amount to be charged to the income
statement for share based payments involves the exercise
of judgement in determining some of the key inputs for this
process, for example in respect of the expected life of the
relevant options. Whilst the Directors have based such
judgements on the basis of past experience in this area
there can be no certainty that such patterns will continue.
5 Revenue
An analysis of the Group’s revenue is as follows:
Licences/sales/services
Grant services
2013
£
1,916,123
220,558
2,136,681
2012
£
808,235
344,732
1,152,967
During the year a licence and research collaboration
agreement was concluded with Thermo Fisher Scientific, with
a total value of $2.1m. Revenue recognised in 2013 under this
agreement relates to the transfer of the licence to a three-stage
mass spectrometry (MS3) fragmentation methodology. This
was represented by consideration comprising cash and the
loan of equipment by Thermo Fisher Scientific for a period of
at least three years. The Directors have concluded that the fair
value of the MS3 licence transferred at the commencement
of the agreement is represented by the cash and loan of the
machine elements of the consideration, and have therefore
valued this element of the revenue at the agreed total contract
value less the element relating to the ongoing research
collaboration agreement.
6 Segment information
The Group’s operations are organised into three geographic
regions: United Kingdom, Germany and US. Internal reporting
on costs and performance is segregated into these segments.
In identifying the operating segments, management has
considered internal reports about components of the Group
that are used by the Chief Executive, who is the Chief
Operating decision maker, to determine allocation of
resources and to assess their performance.
Proteome Sciences plc Annual report and accounts 2013
37
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Geographical segments:
United Kingdom
2013
£
2012
£
2013
£
Germany
2012
£
Revenue
Licences/sales/services 1,916,123
101,081
Grant services
808,235
278,202
–
119,477
–
66,530
Total
2,017,204 1,086,437
119,477
66,530
Operating loss
Provision for impairment
Investment revenues
Finance costs
Loss before tax
Tax
(1,640,403) (2,319,702) (1,701,889) (1,887,668)
–
110
–
–
8,523
(199,624)
–
1,607
(225,350)
–
70
–
(1,864,146) (2,510,803) (1,701,819) (1,887,558)
(11,708)
(10,491)
457,520
953,601
2013
£
–
–
–
(30,223)
–
–
–
(30,223)
–
US
2012
£
Consolidated
2013
£
2012
£
– 1,916,123
220,558
–
808,235
344,732
– 2,136,681 1,152,967
(33,388) (3,372,515) (4,240,994)
(763,502)
8,633
(199,624)
–
1,677
(225,350)
–
–
(236)
(33,624) (3,596,188) (5,195,487)
(447,029)
941,893
–
Loss after tax
(1,406,626) (1,557,202) (1,712,310) (1,899,266)
(30,223)
(33,624) (3,149,159) (4,253,594)
United Kingdom
2013
£
2012
£
2013
£
Germany
2012
£
Other information
Capital additions
712,237
3,466
6,965
11,137
Depreciation
33,021
34,593
134,777
131,844
United Kingdom
2013
£
2012
£
2013
£
Germany
2012
£
2013
£
–
–
2013
£
US
2012
£
Consolidated
2013
£
2012
£
–
–
721,439
14,603
167,798
166,437
US
2012
£
Consolidated
2013
£
2012
£
Assets
Current assets
Non-current assets
1,550,953 1,981,399
5,037,399 4,358,183
226,849
236,025
231,525
354,961
3,985
-
23,833 1,781,787 2,236,757
- 5,273,424 4,713,144
Segment assets
6,588,352 6,339,582
462,874
586,486
3,985
23,833 7,055,211 6,949,901
United Kingdom
2013
£
2012
£
2013
£
Germany
2012
£
2013
£
US
2012
£
Consolidated
2013
£
2012
£
Liabilities
Current liabilities
Non current liabilities
(8,571,812) (6,984,617)
(93,295)
(28,904)
417,539
(226,478)
(418,768)
(209,267)
(10,290)
–
(10,485) (8,999,641) (7,413,870)
(302,562)
(255,382)
–
(8,600,716) (7,077,912)
(644,017)
(628,035)
(10,290)
(10,485) (9,255,023) (7,716,432)
Proteome Sciences plc Annual report and accounts 2013
38
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Revenues from major products and services
The Group’s revenues from its major products and services
were as follows:
8 (i) Investment revenues
2013
£
2012
£
Continuing operations
TMT® revenues
Other commercial income
Grant services
Revenues from major
products and services
2013
£
588,347
1,327,776
220,558
2012
£
Investment revenues
represent income arising
from bank deposits
431,492
376,743
344,732
(ii) Finance costs
1,677
8,633
2013
£
2012
£
2,136,681
1,152,967
Interest on loans (note 20)
225,350
199,624
Geographical Information
The Group’s revenue from external customers by
geographical location is derived as follows:
UK
US
EU
Other
Grant services income
Revenues from major
products and services
2013
£
110,387
1,750,901
47,347
7,488
1,916,123
220,558
2012
£
166,677
640,214
447
897
808,235
344,732
2,136,681
1,152,967
Included in revenues arising from the US segment are
revenues of approximately £1,298,347 (2012: £431,492)
which arose from sales to the Group’s largest customer:
Thermo Fisher Scientific Inc. This figure includes £710,000
in respect of equipment on loan to the Company from
Thermo Fisher Scientific Inc.
7 Administrative expenses
Administrative expenses
excluding research and
development
Research and development
expenses
2013
£
2012
£
2,997,258
2,578,434
1,919,282
4,916,540
2,430,059
5,008,493
9 Operating loss
Operating loss is stated after charging/(crediting):
Depreciation charge
– owned
Research and
development costs
Operating lease rentals
– other
Auditor’s remuneration
(see below)
Staff costs (note 10)
Net foreign exchange
(gains)/loss
Cost of inventories
charged as an expense
2013
£
2012
£
167,798
166,437
1,919,282
2,430,059
284,019
214,113
95,699
2,738,723
109,000
2,451,176
(2,735)
1,513
283,793
199,381
The analysis of auditor’s remuneration is as follows:
Fees payable to the
Company’s auditor for
the audit of the Company’s
annual accounts
Fees payable to the
Company’s auditor for
other services to the Group
– The audit of the
Company’s subsidiaries
pursuant to legislation
Total audit fees
Tax services
Other services –
Income tax advice
Total non-audit fees
Total fees
2013
£
2012
£
38,750
29,000
22,000
60,750
32,409
2,540
34,949
95,699
22,000
51,000
58,000
–
58,000
109,000
Proteome Sciences plc Annual report and accounts 2013
39
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
10 Staff costs
The average monthly number of employees (including executive Directors) was:
Research and development
Administration
Their aggregate remuneration (including that of executive Directors) comprised:
Wages and salaries
Social security costs
Other pension costs (see note 26(b))
2013
Number
28
5
33
2013
£
2012
Number
30
5
35
2012
£
2,237,744
328,957
172,022
1,899,118
336,826
215,232
2,738,723
2,451,176
Social security costs shown above include a credit of £28,986 (2012 charge: £24,212) for a provision for notional National
Insurance contributions payable upon the future exercise of vested LTIP options.
11 Directors’ remuneration and transactions
The Directors’ emoluments in the year ended 31st December 2013, excluding pension costs, were:
Executive Directors
C.D.J. Pearce
J.L. Malthouse
Dr. I. Pike
Non-Executive Directors
Prof. W. Dawson
R.S. Harris
Dr. A. Walker
Basic
salary
2013
£
Incentive
Payments
2013
£
Benefits
in kind
2013
£
Total
2013
£
Total
2012
£
251,000
164,000
140,000
125,500
82,000
70,000
11,230
3,262
3,543
387,730
249,262
213,543
261,830
158,659
143,106
27,500
38,000
27,000
–
–
–
–
–
–
27,500
38,000
27,000
27,500
38,000
27,000
647,500
277,500
18,035
943,035
656,095
(i) The remuneration of the executive directors is decided by the Remuneration Committee.
(ii) Aggregate emoluments disclosed above do not include any amounts for the value of options to subscribe for Ordinary
Shares in the Company granted to or held by the Directors.
(iii) No options were exercised by Directors during the year (2012: none).
(iv) Details of the options in place and of awards under the Company’s Long-Term Incentive Plan are given in the Directors’
report on pages 19 to 20.
(v) With effect from 1st May, 2011 J.L. Malthouse entered into a salary sacrifice agreement by which the amount of his basic
salary was reduced by 20% in return for the Company’s making a similar additional contribution to his pension scheme.
This agreement was revoked on the 20th March 2012.
(vi) The incentive payments for 2013 were awarded pursuant to the bonus scheme set out in the Remuneration Committee
report on page 22 of these accounts.
Proteome Sciences plc Annual report and accounts 2013
40
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
(vii) The number of Directors in pension schemes is as follows:
Money purchase pension schemes
3
2013
2012
3
Pension costs in the year ended 31st December 2013 were as
follows:
C.D.J. Pearce
J.L. Malthouse
Dr. I. Pike
2013
£
22,500
16,800
14,000
53,300
2012
£
22,500
22,787
14,000
59,287
(a) Professor W. Dawson is a shareholder in Bionet Ltd.
which provided consultancy services to the Company
during the year at a cost of £5,127 (2012: £nil).
(b) Directors’ transactions
Save as disclosed in (a) above and in note 20(b),
no Director had a material interest in any contract
of significance with the Company in either year.
12 Tax credit on loss before taxation
on ordinary activities
UK Corporation tax –
R&D tax credit
Overseas tax charge
Group tax credit for the year
Adjustment re previous year
2013
£
2012
£
495,513
(10,491)
485,022
(37,993)
447,029
625,478
(11,708)
613,770
328,123
941,893
The UK Corporation tax credit relates to research and
development tax credits claimed under the Corporation Taxes
Act 2009.
In 2012 the adjustment for the prior year included a tax
credit for the year ended 31st December 2010 following the
re-submission of the tax computations for that year.
At 31st December 2013 there were tax losses available for carry
forward of approximately £41.4 million (2012: £40.3 million).
The tax credit and trading losses to be carried forward for the
year are subject to the agreement of HM Revenue & Customs.
Factors affecting the tax credit/(charge) for the year
The tax credit for the year is lower (2012: lower) than the
standard rate of corporation tax in the UK. The differences
are explained below:
Loss from operations
(3,596,188)
(5,195,487)
2013
£
2012
£
836,114
1,272,894
Income tax credit
calculated at 23.25%
(2012: 24.5%)
Effects of:
Expenses that are not deductible
in determining taxable profit
Fixed asset timing differences
Effect of concessions
(Research and Development)
Short-term timing differences
Losses surrendered for
R&D tax credit
Unrecognised tax losses
carried forward
Effect of overseas tax
R&D tax credit claimed
Other taxable income
(99,083)
(7,677)
581,852
20,376
(1,047,334)
(220,310)
(10,491)
495,513
(63,937)
Group tax credit for the year
Adjustment re prior years
485,023
(37,994)
447,029
(241,016)
(8,475)
733,386
(5,267)
(1,351,003)
(400,519)
(11,708)
625,478
–
613,770
328,123
941,893
2013
£
2012
£
Unrecognised deferred tax
The following deferred tax
assets and liability have
not been recognised at the
balance sheet date:
Tax losses – revenue
Depreciation in excess
of capital allowances
Provisions
Share-based payments
9,625,974
9,263,241
(19,759)
21,346
1,541
(27,142)
23,669
125,911
Total
9,629,102
9,385,739
The deferred tax assets have not been recognised as the
Directors are uncertain of their recovery. The assets will be
recovered if the Group makes sufficient taxable profits in the
future against which losses can be utilised.
Future tax legislation
In the UK, the Finance Act 2012 included legislation to reduce
the main rate of corporation tax from 24% to 23% from 1st April
2013. This gives an effective tax rate of 23.25% for the current
tax for the year ended 31st December 2013.
The Finance Act 2013, which provides for a reduction in the
main rate of corporation tax from 23% to 21% effective from
1st April 2014 and to 20% effective from 1st April 2015 was
substantively enacted on 2nd July 2013. Deferred tax has been
provided at the rate prevailing when the temporary differences
are expected to reverse.
Proteome Sciences plc Annual report and accounts 2013
41
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
13 Loss per ordinary share
The calculations of basic and diluted loss per ordinary share
are based on the following losses and numbers of shares.
Basic and Diluted
2013
£
2012
£
Loss for the financial year
(3,149,159)
(4,253,594)
2013
Number of
shares
2012
Number of
shares
Weighted average number
of ordinary shares for the
purposes of basic earnings
per share:
194,015,055
192,452,555
In 2013 and 2012 the loss attributable to ordinary shareholders
and weighted average number of ordinary shares for the
purpose of calculating the diluted earnings per ordinary share
are identical to those used for basic earnings per ordinary
share. This is because the exercise of share options that are
out of the money would have the effect of reducing the loss per
ordinary share and is therefore not dilutive under the terms
of the International Financial Reporting Standard 33.
14 Intangible fixed assets – goodwill
Cost and carrying amount
1st January 2013 and 31st December 2013
Goodwill
£
4,218,241
Goodwill, which is allocated to the United Kingdom cash
generating unit (“CGU”), on the basis that this is the CGU
that benefits from the synergies of this business combination
relates to the acquisition of Proteome Sciences R&D GmbH
& Co. KG in the year ended 31st December 2002.
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be
impaired. Further details of the Group’s accounting policy for
goodwill are set out in note 3 on page 33.
The Group regards the United Kingdom segment as a single CGU
for the purpose of testing goodwill and the recoverable amounts of
the CGUs are determined from value in use calculations. The key
assumptions for the value in use calculations are those regarding
the discount rates, growth rates and expected changes to selling
prices and direct costs during the period. Management estimates
discount rates using pre-tax rates that reflect current market
assessments of the time value of money and the risks specific
to the CGUs. The growth rates are based on industry growth
forecasts. Changes in selling prices and direct costs are based on
past practices and expectations of future changes in the market.
The Group prepares cash flow forecasts derived from the most
recent financial budgets approved by management. The cash
flow projections are a long-term view and cover a period of up
to ten years based on the anticipated time taken for the CGU’s
products to penetrate the markets. The growth rate used to
extrapolate the cash flows is 5%.
This rate does not exceed the average long-term growth rate for
the relevant markets.
The Group has used the 5 years to perpetuity model to
discount the forecast cash flows from the United Kingdom
at a discount rate of 10% CGU (2012: 10 per cent). The Group
has conducted sensitivity analysis on the impairment test of
the CGU carrying value. This includes varying the discount
rate and the forecasted growth, but retaining the assumption
that the CGU’s products will successfully penetrate the
markets. This analysis indicates sufficient headroom such that
a reasonably possible change to key assumptions is unlikely
to result in an impairment of the related goodwill.
15 Property, plant and equipment
Property, plant and equipment comprise laboratory equipment,
fixtures and fittings and motor vehicles held by and equipment
on loan to the Group. The movement in the year was as follows:
Laboratory equipment,
fixtures and fittings
£
Cost
1st January 2012
Exchange adjustments
Additions during the year
Disposals during the year
1st January 2013
Exchange adjustments
Additions during the year
Disposals during the year
31st December 2013
Depreciation
1st January 2012
Exchange adjustments
Disposals during the year
Charge for the year
1st January 2013
Exchange adjustments
Disposals during the year
Charge for the year
At 31st December 2013
Carrying amount
31st December 2012
31st December 2013
3,723,239
(73,277)
14,603
(7,130)
3,657,435
63,303
719,202
(24,846)
4,415,094
3,062,557
(59,062)
(7,130)
166,437
3,162,802
54,157
(24,846)
167,798
3,359,911
494,633
1,055,183
Included within Property, Plant and Equipment is mass
spectrometry equipment with a net book value of £710k, which was
provided to the Group for a period of at least three years, pursuant
to the licence and research collaboration agreement made with
Thermo Fisher Scientific earlier in the year. The equipment is being
depreciated over the three year period of the loan agreement. See
the tangible fixed asset accounting policy note for further details.
The Company owned no fixed assets during either the current
or preceding financial year.
Proteome Sciences plc Annual report and accounts 2013
42
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
16 Non-current investments
Company
Cost of shares
in subsidiary
undertakings
£
At 1st January 2012
Additional investment in the year
Provision for impairment (Note 17)
5,580,310
197,398
(828,316)
At 31st December 2012
4,949,392
At 1st January 2013
Additional investment in the year
4,949,392
202,590
Loans to
subsidiary
undertakings
£
35,362,494
3,227,660
(1,665,535)
36,924,619
36,924,619
1,535,072
At 31st December 2013
5,151,982
38,459,691
Other
Investments
£
763,502
–
(763,502)
–
–
–
–
Total
£
41,706,306
3,425,058
(3,257,353)
41,874,011
41,874,011
1,737,662
43,611,673
(i) The increase in the cost of shares in subsidiary undertakings of £202,590 (2012: £197,398) represents a capital
contribution between the Company and certain of its subsidiaries, reflecting the provision of equity instruments in the
Company to subsidiary company employees under IFRS 2.
(ii) The increase in loans to subsidiary companies in 2013 arose from the provision of further funds to the Company’s trading
subsidiary and German subsidiary company.
(iii) For further details of other investments and the basis of their valuation see note 17.
(iv) Foreign exchange differences arising on the translation of inter company loans at the balance sheet date are adjusted
through the statement of comprehensive income.
Principal Group investments
The Company has investments in the following subsidiary undertakings, which contribute to the net assets of the Group:
Principal subsidiary undertakings
Proteome Sciences R&D
Verwaltungs GmbH
Proteome Sciences R&D
GmbH & Co. KG
Country of
incorporation
and operation
Germany
Germany
Xzillion GmbH & Co. KG
Germany
Principal
activity
Description and proportion
of shares held by the
Company
Group
Administrative
Company
100% Share 100% Share
Capital
Capital
Research
Company
Administrative
Company
100%
100%
Partnership Partnership
Interest
Interest
100%
100%
Partnership Partnership
Interest
Interest
Proteome Sciences, Inc.
Electrophoretics Limited
Veri-Q Inc.
Phenomics Limited
United
States
Research
Company
United
Kingdom
Administrative and
Research Company
United
States
Research
Company
United
Kingdom
Dormant
100%
Common
Stock
100%
Ordinary
Shares
76.9%
Common
Stock
100%
Ordinary
Shares
100%
Common
Stock
100%
Ordinary
Shares
76.9%
Common
Stock
100%
Ordinary
Shares
(i) The investments in Proteome Sciences, Inc., Electrophoretics Limited and Phenomics Limited comprise the entire issued
share capital of each subsidiary undertaking and carry 100% of the voting rights.
Proteome Sciences plc Annual report and accounts 2013
43
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
17 Other investments
Group
Cost at 1st January 2013 and 31st December 2013
Amounts written off at 1st January 2013
Amounts written off at 31st December 2013
Net Book Value:
At 31st December 2013
At 31st December 2012
Company
Cost at 1st January 2013
Amount written off in previous year
Net book value at 31st December 2013
Net book value at 31st December 2012
£
989,258
989,258
989,258
–
–
£
763,502
(763,502)
–
–
The Company’s investment in VIRxSYS consisted of 1,173,712 (2012: 1,173,712) Series G-1 Preferred Stock.
VIRxSYS is an unlisted company and the Directors have therefore valued the Company’s shareholding therein with reference
to recent share issues, but after applying an appropriate discount to reflect the illiquidity of the shares. The investment was
recorded at a nil value in the Group and Company balance sheets as at 31st December, 2012. At this stage it is still not
possible to determine an appropriate fair value and the Directors believe that it is therefore prudent to continue to provide
against the carrying cost of this investment at 31st December, 2013.
The Group owns shares of $0.001 common stock of Geneva Proteomics Inc which is incorporated in Delaware, US and shares
of CHF 100 in Europroteome SA, which is incorporated in Switzerland. Geneva Proteomics Inc is currently closing down its
operations, and filed a certificate of dissolution in March 2005. As at 31st December 2013 it is not possible to determine the
extent of any repayment of capital to shareholders, and therefore the Directors believe that it is prudent to continue to hold
a provision against the carrying cost of this investment.
18 Inventories
Work-in-progress
Finished goods
19 Other financial assets
a) Trade and other receivables
Amount receivable for the sale of goods
R&D tax credit recoverable
Other debtors
Prepayments
2013
£
240,276
162,305
402,581
2012
£
227,721
103,710
331,431
Group
2013
£
Company
2013
£
Group
2012
£
Company
2012
£
89,324
495,513
123,891
70,216
–
–
–
–
181,004
625,478
139,788
101,077
778,944
– 1,047,347
–
–
–
–
–
No allowance for doubtful debts was made in 2013 or 2012 and thus no further disclosures on this matter are required in this note.
Proteome Sciences plc Annual report and accounts 2013
44
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
b) Cash and cash equivalents
Group
2013
£
Company
2013
£
Group
2012
£
Company
2012
£
Cash and cash equivalents
600,262
486,640
858,249
576,301
20 Other financial liabilities
a) Trade and other payables
Trade creditors
Other provisions and accruals
Group
2013
£
Company
2013
£
Group
2012
£
Company
2012
£
27,171
765,460
792,631
–
–
–
23,257
454,890
478,147
–
–
–
Trade creditors and accruals principally comprise amounts outstanding for trade purchases and continuing costs. The average
credit period taken for trade purchases is between 30 and 45 days. For most suppliers no interest is charged on the trade
payables for the first 30 days from the date of the invoice. The Group has financial risk management policies in place to ensure
that all payables are paid within the credit time frame. The Directors consider that the carrying amount of trade payables
approximates to their fair value.
b) Short term borrowings
Group
2013
£
Company
2013
£
Group
2012
£
Company
2012
£
Loan from related party
7,951,234 1,335,434 6,725,884 1,296,016
Note:
(i) On 29th June 2006 the Company entered into an agreement with C.D.J. Pearce, the Chief Executive of the Company,
under which he agreed to provide an unsecured loan facility of up to £2m to the Company. The loan facility was available
from the 1st August, 2006 and carries interest at 2.5% above the base rate of Barclays Bank Plc.
It is repayable on seven days notice, or immediately in the event of:
(a) C.D.J. Pearce ceasing to be an executive director of the Company. As noted in the Directors’ report on page 16,
C.D.J. Pearce has a service contract with a notice period of not less than two years.
(b) A general offer to the shareholders of the Company being announced to acquire its issued share capital.
(c) The occurrence of any of the usual events of default attaching to this sort of agreement.
(ii) On 21st February 2007 it was announced that C.D.J. Pearce had agreed to increase the total size of the facility to up
to £4m, on the same terms, save that in view of the size of the loan facility, it was agreed that security for the loan should
be charged against the Company’s patent portfolio up to the value of the loan outstanding and that the loan should be
convertible, at Mr. Pearce’s option, into ordinary shares of the Company at the lower of market price on the date
of conversion or the average price over the lowest consecutive ten day trading period since the 29th June 2006
(the date on which details of the original loan agreement were disclosed).
(iii) On the 29th June 2007 the Company entered into a further loan agreement, on the same terms as the agreement dated
21st February 2007, with C.D.J. Pearce, the Chief Executive of the Company, which increased the total size of the facility
to up to £6m.
(iv) On 24th June 2008 the Company entered into a further loan agreement with C.D.J. Pearce, the Chief Executive of the
Company, on the same terms as the agreement dated 21st February 2007, (save that security for the total loan facility
includes a floating charge over the Company’s stock-in-trade), which increased the total size of the facility to up to £8m.
(v) On 18th June 2009 the Company entered into a further loan agreement with C.D.J. Pearce, the Chief Executive of the Company
on the same terms as the agreement dated 24th June 2008, which increased the total size of the facility to up to £10m.
Proteome Sciences plc Annual report and accounts 2013
45
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
(vi) On 7th June 2010 C.D.J. Pearce entered into a novation agreement with the Company under which its main trading
subsidiary, Electrophoretics Ltd, agreed to assume all the obligations of its parent company. The Company will guarantee
the subsidiary’s payment obligations and the existing security granted by the Company in favour of C.D.J. Pearce
remains in place.
(vii) On 30th June 2010 C.D.J. Pearce converted £5m of the outstanding loan into 25,000,000 ordinary shares of 1p each.
(viii) The amounts shown above as outstanding under short term borrowings include accrued interest.
(ix) As set out in note 30, on 19th April 2013 the Company entered into a further loan agreement with C.D.J. Pearce to
provide a loan facility of up to £1m on the same terms as the agreement dated 18th June 2009 save that the loan is not
convertible into ordinary shares of the Company.
(c) Provisions
Group
At 1st January, 2013
Additional provision in the year
Utilisation of provision
At 31st December 2013
Included in short-term provisions
Included in long-term provisions
Company – long term provision
At 1st January 2013
Reduction in provision in the year
At 31st December 2013
Pensions
provisions
£
209,267
17,211
–
Other
provisions
£
Total
£
302,562
15,840
(48,986)
511,829
33,051
(48,986)
226,478
269,416
495,894
240,512
253,382
£
57,890
(28,986)
28,904
(i) Other provisions consist of provisions for various professional and other costs, and will be utilised as the relevant
expenditure is incurred within the next 12 months.
(ii) The pension provision relates to pension costs which may become payable in connection with the Company’s Frankfurt
employees, under the pension scheme arrangements set out in note 27(b). This provision will be utilised as members
of the scheme reach retirement age and draw down their pensions.
(iii) Long term provisions include £28,904 (2012: £57,890) for notional National Insurance contributions payable upon
the exercise of vested LTIP options.
21 Share capital
i) Authorised
330,000,200 (2012: 330,000,200) Ordinary Shares of 1p each
49,998 Redeemable Ordinary Shares of £1 each
1,063,822 5% (gross) Redeemable Preference Shares of £1 each (voting)
786,178 5% (gross) Redeemable Preference Shares of £1 each (non-voting)
2013
£
2012
£
49,998
3,300,002 3,300,002
49,998
1,063,822 1,063,822
786,178
786,178
The 5% (gross) Redeemable Preference Shares (voting) and the 5% (gross) Redeemable Preference Shares
(non-voting) entitle the holders in priority to any payment of dividend to the holders of Ordinary Shares to payment
of a fixed non-cumulative preferential dividend at the gross rate of 5% per annum. There are no preference shares
of either class in issue.
Proteome Sciences plc Annual report and accounts 2013
46
5,200,000 5,200,000
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Every registered holder of the 5% (gross) Redeemable Preference Shares (voting) and the 5% (gross) Redeemable
Preference Shares (non-voting) has the right to receive notice of and to attend but not to speak or vote at any general meeting
unless, in the case of a registered holder of 5% (gross) Redeemable Preference Shares (voting), either:
(i) any of the 5% (gross) Redeemable Preference Shares (voting) required to be redeemed have not been redeemed
on the due date (in which case the holder of such Preference Shares has the right to speak and vote on any Resolution
at a general meeting of the Company): or
(ii) the business of the general meeting includes a Resolution varying the rights attaching to the 5% (gross) Redeemable
Preference Shares (voting) (in which case the holders of such Preference Shares shall be entitled to speak and vote
on that Resolution only): or
(iii) the business of the general meeting includes consideration of a Resolution for winding-up the Company or reducing
its share capital or any share premium account or capital redemption reserve.
In the circumstances described in (i) to (iii) above, registered holders of 5% (gross) Redeemable Preference Shares (voting)
are entitled to one vote each on a show of hands or, on a poll, to one vote in respect of each fully paid 5% (gross) Redeemable
Preference Share and any registered holder of 5% (gross) Redeemable Preference Shares may call a poll.
All members of the Company shall rank pari passu with each other in respect of any distribution on a return of capital save
that the holders of the 5% (gross) Redeemable Preference Shares (voting) and the 5% (gross) Redeemable Preference
Shares (non-voting) shall only be entitled to receive up to a sum equal to the amount paid up thereon and are not entitled
to any further rights of participation in the assets of the Company.
Both classes of 5% (gross) Redeemable Preference Shares are redeemable at the option of the Company, at any time
on written notice to the holders of those shares but, in any event must be redeemed at par by 31st December 2019.
ii) Allotted and called-up
2013
£
2012
£
196,248,477 Ordinary Shares of 1p each (2012: 192,498,477)
1,962,485 1,924,985
In August 2013 the Company issued 3,750,000 new ordinary shares of 1p each in a placing at 41.5p per share.
iii) Options
At 31st December 2013 options had been granted and were still outstanding in respect of the Company’s Ordinary Shares
of 1p under the Company’s share option schemes as follows:
Amount
Number
of shares
of capital Subscription
price
£
Dates normally
exercisable
Granted under Separate Option Deed
150,000
1,500
29.75p
1.10.2013 – 1.10.2020
Options under both schemes may also be exercised from the date on which any shares in the Company are first admitted
to the Official List of the London Stock Exchange.
The above option was granted in the year to the 31st December, 2010.
(iv) Long-Term Incentive Plan (“LTIP”)
At 31st December 2013, the maximum number of the Company’s Ordinary Shares of 1p each to be potentially allocated
or issued under the LTIP was as follows:
Number at
31st December
2012
700,965
2,596,491
328,105
3,625,561
Awarded
in the year
Exercised
in the year
Lapsed
in the year
Number at
31st December
2013
First Vesting
Date
–
–
–
–
–
–
–
–
–
–
–
–
700,965
2,596,491
328,105
–
7th November, 2014
24th February, 2015
3,625,561
Latest Exercise
Date
2nd July, 2017
–
–
Proteome Sciences plc Annual report and accounts 2013
47
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
(v) 2004 Share Option Plan
At 31st December 2013 options had been granted and were still outstanding in respect of the Company’s Ordinary Shares
of 1p each under the Company’s 2004 Share Option Plan as follows:
Number of Shares
Amount of Capital (£)
Subscription Price (p)
Dates Normally Exercisable
127,986
13,530
18,383
20,295
67,650
40,590
27,060
16,236
60,885
33,825
426,440
1,279.86
135.30
183.83
202.95
676.50
405.90
270.60
162.36
608.85
338.25
4,264,40
73.91
68.37
68.00
31.78
36.77
36.77
36.77
27.72
27.72
15.52
6.12.07 – 6.12.14
15.7.08 – 15.7.15
19.7.08 – 19.7.15
9.6.09 – 9.6.16
2.7.10 – 2.7.17
2.7.10 – 2.7.17
2.7.10 – 2.7.17
10.4.11 – 10.4.18
10.4.11 – 10.4.18
14.7.11 – 14.7.18
(vi) 2011 Share Option Plan
At 31st December 2012 options had been granted and were still outstanding in respect of the Company’s Ordinary Shares
of 1p each under the Company’s 2011 Share Option Plan as follows:
Number of Shares
Amount of Capital (£)
Subscription Price (p)
Dates Normally Exercisable
171,000
90,000
261,000
1,710.00
900.00
2,610.00
36.5
49.8
14.2.12 – 14.2.22
25.6.16 – 25.6.26
22 Share based payments
The Company issues equity-settled share based payments under the 2004 and 2011 Share Option Plans. The vesting period
is three years. If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Options
are usually forfeited if the employee leaves the Group before the options vest.
In addition, in 2004 the Company entered into a Long Term Incentive Plan for its directors and some of its staff. The plan
was accounted for as an equity settled scheme and had potential vesting dates from 2nd July 2010 to 31st July 2011 with any
award being linked to share performance related targets.
At the 31st December 2013 awards over 700,965 shares had vested and were capable of exercise.
The 2004 LTIP closed during 2009 and no further awards can be made under this scheme. Details of all the remaining awards
that have not yet vested are set out in note 21(iv) above, and the performance conditions attaching to these awards are set out
in the Directors’ report on page 22. Awards are usually forfeited if the employee leaves the Group before the vesting date.
Proteome Sciences plc Annual report and accounts 2013
48
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
A new Long Term Incentive Plan was introduced in 2011 and the maximum award under this scheme is 2,924,596 shares.
A charge to the income statement of £179,205 (2012: £197,398) was made during the year in respect of both schemes.
Outstanding at 1st January 2012
Forfeited during the year
Outstanding at 1st January 2013
Outstanding at 31st December 2013
Exercisable at 31st December 2013
Options
81,587
(81,587)
–
–
–
Approved Scheme
Weighted average
exercise price (p)
36.77
36.77
–
–
–
The weighted average share price at the date of exercise for share options exercised during the period was nil (2012: 37.33p).
Outstanding at 1st January, 2012
Exercised in the year
Forfeited in the year
Options
686,216
(150,000)
(56,826)
Outstanding at 31st December 2012
479,390
Forfeited in the year
(52,950)
Exercisable at 31st December 2013
426,440
Exercisable at 31st December 2012
479,390
2004 Share Option Plan
2004 LTIP
Weighted average
exercise price (p)
Maximum Number
of shares
Weighted average
fair value per share (p)
33.60
14.78
18.50
53.50
14.78
46.44
53.50
877,034
(176,069)
–
700,965
–
700,965
700,965
–
36.20
–
–
–
31.70
31.70
The share price at the date of exercise for the LTIP exercised during the period was 30p (2011: nil).
No LTIP awards were exercised during the period.
Outstanding at 1st January, 2012
Granted in the year
Forfeited during the year
Outstanding at 1st January 2013
Granted in the year
Forfeited during the year
Outstanding at 31st December 2013
Exercisable at 31st December 2013
Exercisable at 31st December 2012
Proteome Sciences plc Annual report and accounts 2013
49
2011 Share Option Plan
Weighted average
exercise price (p)
–
36.5
36.5
36.5
49.9
36.5
47.3
–
–
Options
–
217,000
(31,000)
186,000
90,000
(15,000)
261,000
–
–
2011 LTIP
Weighted average
exercise price (p)
17.9
25.6
18.7
–
18.7
–
–
Number of Months
32.8
102.9
16.5
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Outstanding at 1st January, 2011
Granted in the year
Outstanding at 31st December 2012
Granted in the year
Outstanding at 31st December, 2013
Exercisable at 31st December, 2013
Exercisable at 31st December, 2012
Options
2,596,491
328,105
2,924,596
–
2,924,596
–
–
The options outstanding at 31st December 2013 had a weighted average remaining contractual life as follows:
2004 Share Option Plan
2011 Share Option Plan
LTIP
The inputs into the Black-Scholes model were as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk free rate
Expected dividends
2013
2012
33.7p
33.7p
60.1% – 58%
4 years
1.47% – 0.87%
None
33.7p
33.7p
60.1% – 52%
4 years
1.47% – 0.60%
None
Notes
(i) Expected volatility is a measure of the tendency of a security price to fluctuate in a random, unpredictable manner and
is determined by calculating the historical volatility of the Company’s share price over the previous years.
(ii) The expected life has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
(iii) The Company has used the Monte Carlo model to value the LTIP awards, which simulates a wide range of possible future
share price scenarios and calculates the average net present value of the option across those scenarios and which
captures the effect of the market-based performance conditions applying to such awards.
Proteome Sciences plc Annual report and accounts 2013
50
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
23 Reserves
Group
Other
reserve
£
Equity
reserve
£
Share
premium
account
£
Profit
and loss
account
£
Translation
reserve
£
Total
£
At 1st January 2012
10,755,000
2,785,744 40,582,138 (52,703,093)
(42,705) 1,377,084
Loss on foreign currency translation
Issue of share capital
Retained loss for the year
Credit to equity for share-based payment
–
–
–
–
–
–
–
197,398
–
20,670
–
–
–
–
(4,253,594)
–
(33,074)
–
–
–
(33,074)
20,670
(4,253,594)
197,398
At 31st December 2012
10,755,000
2,983,142 40,602,808 (56,956,687)
(75,779)
(2,691,516)
At 1st January 2013
10,755,000
2,983,142 40,602,808 (56,956,687)
(75,779)
(2,691,516)
Loss on foreign currency translation
Issue of share capital
Retained loss for the year
Credit to equity for share-based payment
–
–
–
–
–
–
–
202,590
–
1,518,750
–
–
–
–
(3,149,159)
–
(42,962)
–
–
–
(42,962)
1,518,750
(3,149,159)
202,590
At 31st December 2013
10,755,000
3,185,732 42,121,558 (60,105,846)
(118,741)
(4,162,297)
The other reserve arose in the year ended 31st December 2002 and represented the premium on the allotment of shares issued
for the acquisition of Xzillion Proteomics Verwaltungs GmbH (now Proteome Sciences R&D Verwaltungs GmbH) and Xzillion
Proteomics GmbH & Co. KG.
The amounts transferred to the Equity Reserve are for charges made in respect of the requirements of IFRS 2 share-based
payment. The other reserve arises from the combination of Group companies.
Company
At 1st January 2012
Group
Share premium reconstruction
reserve
£
account
£
Equity
Reserve
£
Profit
and loss
account
£
Total
£
40,582,138
1,082,244
2,785,744
(2,377,333) 42,072,793
Retained loss for the year
Issue of share capital
Credit to equity for share-based payment
–
20,670
–
–
–
–
–
–
197,398
(3,410,570)
–
–
(3,410,570)
20,670
197,398
At 31st December 2012
40,602,808
1,082,244
2,983,142
(5,787,903) 38,880,291
At 1st January 2013
40,602,808
1,082,244
2,983,142
(5,787,903) 38,880,291
Retained loss for the year
Issue of share capital
Credit to equity for share-based payment
–
1,518,750
–
–
–
–
–
–
202,590
(128,779)
–
–
(128,779)
1,518,750
202,590
At 31st December 2013
42,121,558
1,082,244
3,185,732
(5,916,682) 40,472,852
The Group reconstruction reserve arose in the period to the 11 November 1994 and represents the premium on the allotment
of new ordinary shares issued in a share exchange agreement entered into by the shareholders of Monoclonetics International
Inc, now Proteome Sciences Inc.
Proteome Sciences plc Annual report and accounts 2013
51
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Of total reserves shown in the Company’s balance sheet, the following amounts are regarded as non-distributable or otherwise:
Non-distributable
– share premium
– group reconstruction reserve
Distributable
– equity reserve
– profit and loss account
Total reserves
2013
£
2012
£
42,121,558
1,082,244
40,602,808
1,082,244
3,185,732
(5,916,682)
2,983,142
(5,787,903)
40,472,852
38,880,291
The Company has taken advantage of Group reconstruction relief as allowed by section 611 of the Companies Act 2006.
24 Notes to the consolidated cash flow statement
Operating loss
Adjustments for:
Depreciation of property, plant and equipment
Non cash item – equipment provided to the Group
Share-based payment expense
Operating cash flows before movements in working capital
Increase in inventories
Decrease/(increase) in receivables
Increase/(decrease) in payables
(Decrease)/Increase in provisions
Group
2013
£
Company
2013
£
Group
2012
£
Company
2012
£
(3,372,515)
(293,558) (4,240,994)
(320,780)
167,798
(710,000)
202,590
–
–
202,590
166,437
–
197,398
–
–
197,398
(3,712,127)
(71,150)
284,977
313,097
(15,935)
(90,968) (3,877,159)
(30,910)
(79,427)
(341,284)
118,948
–
–
(39,418)
(28,986)
(123,382)
–
–
–
24,212
Cash used in operations
(3,201,138)
(159,372) (4,209,832)
(99,170)
25 Analysis and reconciliation of net debt
1st January 2012
Non-cash items
Cash flow
Effect of foreign exchange rate changes
Debt due
within 1 Year
£
(6,526,260)
(199,624)
–
–
Cash at bank
and in hand
£
4,064,080
–
(3,335,407)
129,576
Net funds/
(debt)
£
(2,462,180)
(199,624)
(3,335,407)
129,576
31st December 2012
(6,725,884)
858,249
(5,867,635)
1st January 2013
Non-cash items
Cash flow
Effect of foreign exchange rate changes
(6,725,884)
(225,350)
(1,000,000)
–
858,249
–
(218,268)
(39,719)
(5,867,635)
(225,350)
(1,218,268)
(39,719)
31st December 2013
(7,951,234)
600,262
(7,350,972)
Proteome Sciences plc Annual report and accounts 2013
52
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
26 Analysis and reconciliation of net debt – Company
1st January 2012
Cash flow
31st December 2012
1st January 2013
Cash flow
31st December 2013
Debt due
within 1 Year
£
(1,557,493)
(29,653)
Cash at bank
and in hand
£
3,879,383
(3,303,082)
Net funds/
(debt)
£
2,321,890
(3,332,735)
(1,587,146)
576,301
(1,010,845)
(1,587,146)
(39,418)
576,301
(89,660)
(1,010,845)
(129,078)
(1,626,564)
486,641
(1,139,923)
27 Guarantees and other financial commitments
a) Operating lease arrangements
The Group leases certain land and buildings on short-term operating leases. The rents payable under these leases
are subject to renegotiation at various intervals specified in the leases. The Group pays insurance, maintenance and repairs
of these properties.
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable
operating leases, which fall due as follows:
Within 1 year
Within 2 – 5 years
Group
2013
£
141,046
119,062
Company
2013
£
59,531
119,062
Group
2012
£
Company
2012
£
195,756
258,058
59,531
178,593
260,108
178,593
453,814
238,124
Operating lease payments represent rentals payable by the Group for its laboratory and office properties.
b) Pension arrangements
As a result of the acquisition of Proteome Sciences R&D Verwaltungs GmbH and Proteome Sciences R&D GmbH & Co KG
from Aventis Research & Technologies GmbH & Co. KG, the Group makes contributions in Germany to a funded defined
contribution plan and to a partially funded defined benefit plan. These plans are operated in their entirety by the Pensionskasse
der Mitarbeiter der Hoechst-Gruppe VVaG, an independent German mutual insurance company, which is required to comply
with German insurance company regulations. This company does not prepare a plan valuation on an IAS 19 basis.
The schemes assets are held in multi-employer funds, and the other employers who contribute to the schemes are not
members of the Group. The Group has not been able to identify its share of the underlying assets and liabilities of the defined
benefit scheme and accordingly it has also been accounted for as defined contribution scheme. The Group’s contributions
to the schemes are included within the amount charged to the income statement in respect of pension contributions.
The amount charged to the income statement in respect of the contributions to the schemes amounts to £59,096
(2012: £209,267).
The Group also has a direct pension obligation for which it provides in full at the balance sheet date. This scheme has no
separable assets. The company uses the projected unit credit method to determine the present value of its unfunded defined
benefit obligation. Demographic assumptions are based on Prof. Klaus Heubeck’s mortality table “Richttafeln 2005 G”, the
standard German actuarial table, with full recognition for fluctuations in mortality rates on account of gender and current age.
Pensionable age has been set at 60.
The company has applied a discount rate for the year of 3% (2012: 3.25%). The company has assumed an income increase
of 2.75% (2012: 2.75%) and inflation of 2.25% (2012: 2.25%).
Provisions for future unfunded pension liabilities at 31st December 2013 amounted to £226,478 (2012: £212,748).
Proteome Sciences plc Annual report and accounts 2013
53
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
28 Financial instruments
The notes to the accounts provide an explanation of the role that financial instruments have had during the year in creating
or changing the risks the Group faces in its activities. The explanation summarises the objectives and policies for holding or
issuing financial instruments and similar contracts and the strategies for achieving those objectives that have been followed
during the period.
The numerical disclosures in this note deal with financial assets and financial liabilities as defined in IFRS 7 Financial
Instruments: Disclosures.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the
Group consists of debt, which includes borrowing disclosed in note 20, cash and cash equivalents and equity attributable
to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in note 23.
Gearing Ratio
The Board reviews the capital structure on a semi-annual basis. As part of this review, the committee considers the cost
of capital and the risks associated with each class of capital.
The gearing ratio at the year end is as follows:
Debt
Cash and cash equivalents
Net debt
Deficit
Net debt to equity ratio
2013
£
(7,951,234)
600,262
(7,350,972)
(2,199,812)
2012
£
(6,725,884)
858,249
(5,867,635)
(766,531)
N/A
N/A
Debt is defined as long and short term borrowings, as detailed in note 20(b).
Equity includes all capital and reserves of the Group attributable to equity holders of the parent company.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurements and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 3 to the financial statements.
Categories of financial instruments
Financial assets
Cash
Trade receivables
Financial liabilities
Trade and other payables
Current tax liabilities
Short-term borrowings
Loan from other Group entity
Group
2013
£
Company
2013
£
Group
2012
£
Company
2012
£
600,262
486,640
858,249
576,301
89,324
–
181,004
(792,631)
(15,264)
–
–
(478,147)
(572)
–
–
–
(7,951,234) (1,335,434) (6,725,844) (1,296,016)
–
(298,638)
–
(291,130)
Proteome Sciences plc Annual report and accounts 2013
54
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Financial risk management objectives
The Group’s operations expose it to a variety of risks including interest risk and liquidity risk. Neither the Company
nor the Group have material exposures in any of these areas and consequently they do not use derivative instruments
to manage these exposures.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest
rates (see below).
Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations
arise. The Group’s principal exposure is to movement in the Euro exchange rate, but it anticipates that a significant proportion
of its future income will be received in this currency, thus helping to reduce its exposure in this area.
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of Germany (the Euro) and to the US dollar currency.
None of the Group’s companies has any assets or liabilities that are denominated in a currency other than the functional
currency in which the companies operate and therefore a foreign currency sensitivity analysis would not be appropriate.
Interest rate risk management
The Group is exposed to interest rate risk arising from its short-term borrowings, details of which are set out in note 20(b).
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management
section of this note.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to floating rate liabilities. The analysis is prepared
assuming the amount of liability outstanding at balance sheet date was outstanding for the whole year. A 0.5% increase or
decrease is used when reporting interest rate risk internally to key management personnel and represents management’s
assessment of the reasonably possible change in interest rates.
If interest rates had been 0.5% higher and all other variables were held constant, the Group’s loss for the year ended
31st December 2013 would have increased by £37,558 (2012: increase in loss by £33,271).
The Group’s sensitivity to interest rates has increased slightly during the current year due to the rise in the amount of its short
term borrowings over the year.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity
management requirements. The Group manages liquidity risk by maintaining adequate reserves and borrowing facilities,
by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets
and liabilities.
Proteome Sciences plc Annual report and accounts 2013
55
Notes to the consolidated
financial statements (continued)
for the year ended 31st December 2013
Liquidity and interest risk tables
a) The following tables detail the Group and Company’s remaining contractual maturity for its non-derivative financial
liabilities. The tables have been drawn up based on the discounted cash flows of financial liabilities based on the earliest
date on which the Group and Company can be required to pay.
The table includes both interest and principal cash flows.
2012
Variable interest rate instruments
2013
Variable interest rate instruments
Weighted average
effective interest
rate
%
Less than 1 month
Group
£
Company
£
3.00 6,725,884 1,296,016
3.00 7,951,234 1,335,434
b) The following table details the Group and Company’s expected maturity date for its non-derivative financial assets.
The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets including
interest that will be earned on these assets except where the Group and Company anticipates that the cash flow will
occur in a different period.
2012
Non-interest bearing
Interest bearing
2013
Non-interest bearing
Interest bearing
29 Related party transactions
Weighted average
effective interest
rate
%
Less than 1 month
Group
£
Company
£
–
–
–
0.39
576,301
576,301
–
–
–
0.23
486,640
486,640
a) Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note.
b) C.D.J. Pearce, a director of the Company and therefore a related party, has made a loan facility available to the Company
full details of which are set out in note 20 on pages 45 and 46.
c) Details of the remuneration of the Directors is set out in note 11 on pages 40 and 41, including details of pension
contributions made by the Company and information in connection with their long-term benefits is shown in the Directors’
report under the heading ’Directors and their interests’ on pages 19 and 20.
The amounts charged to the income statement relating to Directors in respect of the share-based payment charge was as
follows:
2013
£
182,495
2012
£
178,773
30 Events after the balance sheet date
(a) On 28th February 2014 the Company completed a placing of 17,857,143 new ordinary shares of 1p each at a price
of 28p per share to raise £5m before expenses to provide additional working capital for the Group.
(b) Dr. A. Walker resigned as a director of the Company on the 3rd March, 2014.
Proteome Sciences plc Annual report and accounts 2013
56
Advisers
Nominated Advisers and Stockbrokers
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London EC2R 7AS
Auditor
Deloitte LLP
Statutory Auditor
Mountbatten House
1 Grosvenor Square
Southampton SO15 2BZ
Solicitors
Edwin Coe LLP
2 Stone Buildings
Lincoln’s Inn
London WC2A 3TH
Bankers
Barclays Bank Plc
Pall Mall Corporate Banking Group
50 Pall Mall
London SW1Y 5AX
Registrars
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Shareholder Enquires telephone:
+44(0) 871 664 0300
Proteome Sciences plc Annual report and accounts 2013
57
Notice of meeting
Notice is hereby given that the 20th Annual General Meeting
of Proteome Sciences plc will be held at The Law Society,
113 Chancery Lane, London WC2A 1PL on Monday 30th
June 2014 at 12:00 midday, for the purpose of considering
and, if thought fit, passing the following Resolutions of which
numbers 1 to 5 will be proposed as ordinary Resolutions
and number 6 as a special Resolution.
Ordinary Business
1 To receive the financial statements and the reports
of the Directors and of the auditors for the year ended
31st December 2013.
2 To re-appoint Professor W. Dawson as a Director.
3 To re-appoint Deloitte LLP as auditors of the Company
in accordance with section 489 of the Companies Act
2006 until the conclusion of the next general meeting of
the Company at which audited accounts are laid before
the members and to authorise the Directors to fix their
remuneration.
Special Business
(b) the allotment (otherwise than pursuant to sub-
paragraph (a) and (b)) of equity securities which are
or are to be wholly paid up in cash up to an aggregate
nominal amount of £428,211.24.
and provided further that the authority and power
conferred by this Resolution shall expire at the conclusion
of the next Annual General Meeting of the Company or
on 30th June 2015, whichever is the earlier, unless such
authority is renewed or extended at or prior to such time,
save that the Company may before such expiry make any
offer, agreement or other arrangement which would or
might require equity securities to be allotted after the expiry
of this authority and the directors may then allot equity
securities in pursuant of such an offer or agreement as if
the authority and power hereby conferred had not expired.
By order of the Board
Coveham House
Downside Bridge Road
Cobham
Surrey KT11 3EP
Ordinary Resolution
4 THAT the directors of the Company be hereby authorised
J.L. Malthouse
Secretary
29th May 2014
Notes:
1.
A member entitled to attend and vote at the meeting is entitled to appoint
more than one proxy, to exercise all or any of his rights to attend, speak and
vote in his place on a show of hands or on a poll provided that each proxy is
appointed to a different share or shares. Such proxy need not be a member
of the Company. In accordance with Article 90, any such appointment is valid
only if the instrument of proxy is deposited with the Company’s registrars
not less than forty eight hours before the time for holding by 12:00 midday
on Thursday 26th June 2014 or any adjourned meeting. A proxy need not
also be a member of the Company. A form of proxy and return envelope are
enclosed; completion of an instrument of proxy will not prevent members
from attending and voting in person should they wish to do so.
2.
3.
Copies of executive directors’ service agreements, and copies of the terms
and conditions of appointment of non-executive directors are available for
inspection at the Company’s registered office during normal business hours
from the date of this notice until the close of the Annual General Meeting
(Saturday, Sundays and public holidays excepted) and will be available for
inspection at the place of the Annual General Meeting for at least 15 minutes
prior to and during the meeting.
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001,
the Company specifies that in order to have the right to attend and vote at the
meeting (and also for the purpose of calculating how many votes a person
entitled to attend and vote may cast), a person must be entered on the
register of members of the Company by no later than the close of business
two days before the date of the meeting. Changes to entries on the register
of members after this time shall be disregarded in determining the rights
of any person to attend or vote at the meeting.
generally and unconditionally pursuant to and in
accordance with section 551 of the Companies Act 2006
to exercise all the powers of the Company to allot shares
or to grant rights to subscribe for or convert any security
into shares in the Company up to an aggregate nominal
amount of £713,685.39 until the conclusion of the next
Annual General Meeting of the Company or 30th June
2015, whichever is the earlier, but so that this authority shall
allow the Company to make offers or agreements before
the expiry of this authority which would, or might, require
shares to be allotted or rights to subscribe for or to convert
securities into shares to be granted after such expiry.
Special Resolution
5 THAT subject to, and upon Resolution 4 above, having
been passed and becoming effective, the Directors be
and are hereby authorised and empowered pursuant to
section 570 of the Companies Act 2006 (the “Act”) to allot
equity securities, as defined in section 560 of the Act,
as if section 561(1) of the Act did not apply to any such
allotment, provided that this power shall be limited to:
(a) the allotment of equity securities in connection with an
offer by way of a rights issue, or any other pre-emptive
offer, to the holders of ordinary shares in proportion (as
nearly as may be) to their respective holdings of ordinary
shares on a record date fixed by the directors and to the
holders of other equity securities as required by the rights
of those securities or as the directors otherwise consider
necessary but subject to such exclusions or other
arrangements as the directors may deem necessary
or expedient in relation to treasury shares, fractional
entitlements, record dates, legal or practical problems
in or under the law of any territory or the requirements
of any regulatory body or stock exchange; and
Proteome Sciences plc Annual report and accounts 2013
58
Form of proxy
for use by holder of Ordinary Shares at the 20th Annual General Meeting
of Proteome Sciences plc to be held on 30th June 2014 at 12:00 midday
I/WE (1)
of
being (a) member(s) of the above-named company hereby appoint the chairman of the meeting (2)
or
as my/our proxy and to vote for me/us and on my/our behalf at the Company’s
Annual General Meeting to be held on 30th June, 2014 at 12:00 midday, at The Law Society, 113, Chancery Lane, London
WC2A 1PL, and at any adjournment thereof.
Dated this
Signature(s)
day of
2014
Please indicate with an X in the space below how you wish your votes to be cast. If no instructions are given as to how the proxy
shall vote, on any particular matter, the proxy will abstain or vote as he thinks fit.
Resolution
For
Against
Withheld
Ordinary Business
1. To receive the financial statements
2. To re-appoint Professor W. Dawson as a Director
3. To re-appoint Deloitte LLP as auditors
Special Business
4. To renew the Directors’ authority to allot shares
5. To renew the Directors’ authority to disapply pre-emption rights for the allotment of shares
(1) Fill in your name(s) and address(es) in block capitals.
(2) A member may appoint a proxy of his own choice and if any other proxy is preferred, strike out ’the chairman of the
meeting’ and add the name of the proxy or proxies desired and initial the alteration.
Notes:
(a) This form of proxy duly completed must, to be valid for use at the meeting, be deposited, together with the power of attorney or other authority (if any) under
which it is signed or a notarially certified copy thereof, with the Company’s registrars by 12:00 midday on Thursday 20th June 2014 or not less than forty eight
hours before the time for holding any adjourned meeting. A proxy may only vote on a poll.
(b) A corporation may execute either under seal or under the hand of an officer or attorney so authorised.
(c) In the case of joint holders of shares, any one of such holders may vote but, if two or more joint holders are present in person or by proxy, the vote of the
senior will be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority is determined by the order in which the names
stand in the register.
(d) A member entitled to attend and vote at the meeting is entitled to appoint more than one proxy, to exercise all or any of his rights to attend, speak and vote
in his place on a show of hands or on a poll provided that each proxy is appointed to a different share or shares. Such proxy need not be a member of the
Company. In accordance with Article 90, any such appointment is valid only if the instrument of proxy is deposited with the Company’s registrars not less
than forty eight hours before the time for holding the meeting or adjourned meeting. A proxy need not also be a member of the Company. Completion
of an instrument of proxy will not prevent members from attending and voting in person should they wish to do so. Appointment of a proxy will not preclude
a member from attending and voting in person at the meeting.
(e) To appoint more than one proxy you may photocopy this form. Please indicate the proxy holder’s name and the number of shares in relation to which they
are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the proxy instruction
is one of multiple instructions being given.
#
Proteome Sciences plc Annual report and accounts 2013
59
Form of proxy (continued)
for use by holder of Ordinary Shares at the 20th Annual General Meeting
of Proteome Sciences plc to be held on 30th June 2014 at 12:00 midday
Proxy should be returned to our
Registrars, Capita Asset Services at:
PXS 1
34 Beckenham Road
Beckenham
Kent BR3 4ZF
Proteome Sciences plc Annual report and accounts 2013
60
#
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Proteome Sciences plc
Coveham House
Downside Bridge Road
Cobham
Surrey KT11 3EP
United Kingdom
Email: info@proteomics.com
Tel: +44 (0)1932 865065
Fax: +44 (0)1932 868696
www.proteomics.com
Registered number: 02879724