Mapping the future for
personalised medicine
Annual report and accounts 2014
Overview and strategic repor t
Proteome Sciences in brief
Mission and vision
Our strategy
(inside front cover)
01 The future of healthcare
is personalised medicine
02 Chairman’s message
03 Key performance indicators
04 Proteome Sciences at a glance
06 Proteomics – the essential measure
08 Our valuable IP portfolio
10 Our business model
11 Our measures for success
12 Strategic report
Governance and financial statements
20 Senior management team
and board of directors
22 Directors’ report
28 Independent auditor’s report
29 Consolidated income statement
30 Consolidated statement
of comprehensive income
31 Consolidated balance sheet
32 Company balance sheet
33 Consolidated statement of changes
in equity
34 Company statement of changes
in equity
35 Consolidated and company
cash flow statements
36 Notes to the consolidated
financial statements
Other matters
61 Advisers
62 Notice of meeting
63 Form of proxy
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
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.
The fuTure Of heAlThcAre iS PerSOnAliSed Medicine
Our breakthrough science and trusted proprietary
technologies for protein biomarker discovery, validation
and assay development puts us in a position of great
privilege, leading the way in one of the most exciting areas
of personalised medicine.
We are pioneering a field that is opening up the possibility
of not just preventing some of the most pernicious and
debilitating diseases, but being able to treat them before
they get to the terminal stage.
In a world with an ageing population and an increasing
social care burden as we look for ways to reduce both
financial and personal costs, our pathfinding contribution
to the advancement of medical science has a significant
role to play. The satisfaction we take from the progress
we make is driving us further forward all the time.
Proteome Sciences plc Annual report and accounts 2014
01
chAirMAn’S MeSSAGe
The accelerating drive for better drugs and diagnostics
for personalised medicine has provided a buoyant
background for our biomarker services and prospects.
in conclusion
Personalised medicine is making a massive leap forward,
changing the way that drugs are developed, disease is
diagnosed and patients are treated. The publication in Nature
in May 2014 of the Protein Atlas was a major landmark. It provides
an A to Z of proteins which for the first time allows genomics
researchers to complement their research with information on
changes in protein and peptide expressions that cannot be
obtained through genomics that are central to personalised
medicine. Since the initial sequence of the human genome,
genomics has driven the growth and value of the pharmaceutical
industry over the last 10-15 years. Proteins and proteomics should
now play a much larger and more long-lasting role and will be key
value drivers for next generation drug development, diagnosis
and transforming patient care.
Through our workflows, our biomarker services, our content and
IP, Proteome Sciences is exceptionally placed to provide many
of the main components in personalised medicine. Our core
activities are all performing well against a buoyant background.
We expect to see this reflected in revenue growth and news flow
in 2015 with the prospect of this complemented by some high
profile licenses in Alzheimer’s disease and stroke.
On a final note, the Board of Proteome Sciences would like to
recognize and thank James Malthouse for the considerable
contribution that he made as Finance Director over the last
20 years, a period in which the Company’s pioneering research
has been converted into products, services and revenue.
We wish him a long and enjoyable retirement.
christopher Pearce
Chairman
Our service and main business activities made considerable
progress in 2014 even though this was not fully reflected in
revenues because of unavoidable delays of several contracts
that will fall into the current year. We have experienced high
levels of interest in our SysQuant® and TMTcalibrator™ and
TMT®-MS3 biomarker workflows which increase the quality
and number of biomarkers found in body fluids. This has been
reflected by a strong underlying growth in biomarker services.
$2m biomarker services contract
PS Biomarker Services was awarded a $2m contract in
September by Genting Tau RX Diagnostic Centre to profile
blood samples from 1000 patients in a phase 3 trial of LMTX,
a drug targeting the tau pathway in Alzheimer’s disease (AD)
and to develop a protein panel for diagnosis and monitoring
treatment efficacy. Work on the contract starts in 2015 and
Proteome Sciences will be joint owner of any companion
diagnostic developed.
excellent toxicity results for cK1d in Alzheimer’s disease
Further biological data during the year highlighted the power
of SysQuant® to identify multiple beneficial effects of our AD
compounds in tau and amyloid related pathology. Two external
toxicity tests demonstrated excellent safety characteristics for
our two compounds PS110 and PS 278-05 for CK1d. These are
important milestones in the pre-clinical development of potent
and selective inhibitors of tau, a key protein involved AD
progression and the last elements required to move the CK1d
programme to the final stages of securing a license for the
programme with a major pharmaceutical company.
Blood test for Alzheimer’s moves closer
In July we announced a major breakthrough in Alzheimer’s
disease (AD) with a panel of 10 proteins in blood that can
predict whether a person with early symptoms of memory loss
or mild cognitive impairment will go on to develop AD within
12 to 18 months with a very high accuracy rate of 87%.
The study published in Alzheimer’s and Dementia Journal with
our calibrators at King’s College, London which analysed over
1000 individuals, is the largest of its kind to date and marks a
significant step towards developing and outlicensing a simple
blood test for AD.
TMT® receives huPO award
Our TMT® mass tags received the prestigious Science and
Technology Award at the HUPO World Congress in October.
TMT® 10-plex provides the highest multiplexing capability
currently available and is the global market leader. We will
continue to deliver new reagents to expand the range and
that should create further new applications and demand
for TMT® tags.
Proteome Sciences plc Annual report and accounts 2014
02
Key finAnciAl PerfOrMAnce indicATOrS
Key finAnciAl PerfOrMAnce indicATOrS
revenue growth (£m)
(exclusive of equipment on loan)
£1.56m
£1.43m
2014
2013
revenue growth by type (£m)
licences/Sales/Services
revenue growth by type (£m)
Grant Services
£1.30m
£1.21m
2014
2013
2014
£0.27m
£0.22m
2013
revenue breakdown
licences/Sales/Services
83%
licences/Sales/Services
+9%
revenue (exclusive of equipment on loan)
increased 9% to £1.56m
(2013: £1.43m)
£3.57m
loss after taxation was £3.57m
(2013: £3.15m)
+65%
revenue from Biomarker Services £0.53m
(2013: £0.32m)
£1.87m
cash balance £1.87m
(2013: £0.60m)
+31%
TMT® reagent sales
increased 31% in 2014
+13
17%
Grant Services
iP portfolio strengthened
Another 13 patents granted and a further
20 applications were filed in 2014
Proteome Sciences plc Annual report and accounts 2014
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.
— 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, assay development and
workflows in cell signalling pathways 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
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 and workflows
increased again in 2014 and this number is expected to continue
to grow as we complete additional mass spectrometry assays
and workflows, particularly through the introduction of our
‘game-changing’ SysQuant® and TMTcalibrator™ workflows.
Customers have included major pharmaceutical companies
including Johnson & Johnson, Takeda, Eisai etc., CROs
(Icon, Parexel) biotechnology companies and academia.
cASe STudy
Personalised medicine: diagnosing disease earlier
with TMTcalibrator™
The biggest cause of poor treatment outcome is late diagnosis where treatment
is delayed until the disease is well established. To improve this situation we need
to identify proteins released by cells early in disease and which are detectable
in blood or other body fluids. However, these are very hard to find as they are
produced in low amounts and diluted to extremely low concentrations in the blood.
Using the power of TMT® 10plex reagents we have developed TMTcalibrator™
to overcome the problems of measuring very low abundant proteins in body fluids
by using diseased tissue to amplify the signal. In prototype experiments we have
measured over 100 brain proteins that are either increased or decreased in the
cerebrospinal fluid of patients with Alzheimer’s disease and these may ultimately
allow earlier diagnosis. TMTcalibrator™ can be used for any disease and we
will shortly be testing it further in blood for both Alzheimer’s and various types
of cancer.
Proteome Sciences plc Annual report and accounts 2014
04
Biomarkers
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 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.
TMT® Reagents
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.
The main areas include CNS disorders, (Alzheimer’s, Huntington’s,
stroke, traumatic brain injury), Oncology (lung, breast,
esophageal, colorectal cancers and neuroblastoma).
TMT® considerably enhances the performance of mass
spectrometers and delivers the ability to measure with
absolute quantitation.
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.
cASe STudy
cASe STudy
Personalised medicine: Tailoring drug selection
Personalised medicine: improving drug development
Everybody’s disease is unique to them and many drugs are ineffective or lose
activity after prolonged use. This is particularly common in cancer when drug
resistance occurs. By profiling individual disease better we can select the most
appropriate drug at the outset and, where necessary, pick optimal treatment
combinations to reduce the chances of resistance.
Personalised medicine is all about developing drugs that work very specifically
against a single protein target. These ‘precision medicines’ should have fewer
side effects and be better tolerated by patients. When developing precision
medicines it is important to consider their effects on the entire system, not just
look at a subset of a small number of downstream proteins.
With our proprietary SysQuant® next-generation proteomics workflow, we are
able to identify the key processes driving an individual’s disease and select the
optimum drug targets for making a tailored drug selection. We have recently
extended our pilot study in pancreatic cancer and more than doubled the number
of proteins we measure. We now have personal disease maps for 32 individual
cases of pancreatic cancer which we can map to existing drugs and we hope
to start clinical trials with SysQuant® for liver cancer later this year.
We have been developing precision medicines targeting a protein,
casein kinase 1 delta (CK1D), which is highly active in Alzheimer’s disease,
phosphorylating tau and regulating several key cellular events related to how brain
cells are killed. Using our CK1d compounds, we have improved cognitive function.
With SysQuant® we have been able to identify over 50 cellular pathways that are
regulated by CK1D inhibitors in an animal model of human tauopathy and matched
that to how those pathways perform in human AD brains. This allowed us to confirm
the relevance of our chosen model to human disease and confirm the multimodal
mechanism of action of our CK1D inhibitors. This approach can be used in all
diseases to improve molecular design and select new combinations of drugs
to maximize outcomes as well as providing a list of potential protein biomarkers
to ensure we can monitor treatment effectiveness over time.
Proteome Sciences plc Annual report and accounts 2014
05
PrOTeOMicS – The eSSenTiAl MeASure
Mapping the future of personalised medicine.
The demand for new treatments in the drive towards a
healthier world is a pressing one. We need to understand
the true causes of debilitating and life-threatening conditions
and the best way to alleviate or cure them. Yet the process
of discovering new drugs and treatments can be long
and drawn out. Speed and cost are critical factors in the
development of new, affordable medicines. We may not
know exactly what the future holds, but we do know the
way forward. Personalised medicine.
For medicine to become truly personalised, it is critical
that the right measurements are made and interpreted.
We believe that measurement is proteomics.
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.
Proteome Sciences plc Annual report and accounts 2014
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Cell Signaling Pathway Activity
SysQuant®, TMTcalibrator™ and our iP act as the gateway
to better treatments
01
02
03
Validate
Proteins uniquely provide
a real-time, clinically relevant
measure of individual patients.
Detailed analysis of proteins
permits the discovery of new
protein markers for diagnostic
purposes and of novel
molecular targets for drug
discovery for specific
patient populations.
discovery
Within the body, cells
constantly ‘talk’ with each
other via a complex and
myriad system involving
numerous chemical
messengers and relay systems
that communicate signals
between the cells of different
tissues and organs. When
these communications
systems and cell signaling
pathways are disrupted,
pathogenic processes such
as cancer often arise.
Apply
We are identifying the
biological cell signalling
pathways and networks
involved in disease. We are
developing a range of targeted
assays for key signaling
pathway checkpoint proteins
and other key molecules
involved in signaling events.
Signalling cascades are
proteins that can be altered,
activated or deactivated to
alter gene activation and
protein expression.
Proteome Sciences plc Annual report and accounts 2014
07
Our VAluABle iP POrTfOliO
Proteomics works with the lifesciences industry to create
real advantage.
While cancer, stroke, brain damage and Alzheimer’s remain
a major challenge, improving their diagnosis and speed
the testing of drugs to treat them cannot come soon enough.
We’re determined to address these needs. Our pioneering
science has already made us global leaders in applied
proteomics. Our established proprietary technologies
for protein biomarker discovery, validation and assay
development are opening new worlds for the biotech
and pharmaceutical industries. But most important of all,
while we constantly innovate for the future, our pathfinding
approach offers new hope today, to millions of people.
Providing in-depth expertise on protein biomarkers reduces
costs and speeds up the process of large scale clinical trials.
This brings together identifying and validating predictive
and diagnostic biomarkers with the facility to prove their
use in real life applications for individual patients. It’s opening
up a new world of breakthrough medicine. The more data
that scientists can gather from genomics and proteomics
of real individuals, the closer we are to prescribing safer,
better drugs and treatments with fewer side effects, tailored
to the medical needs of particular patient populations.
Proteome Sciences plc Annual report and accounts 2014
08
Commercial applications
Our iP acts as the gateway to better treatments
Better accuracy
Discovery and validate
disease-relevant biomarkers.
Time advantage
Using TMT® reduces study
times tenfold. In a single
experiment SysQuant® covers
>20,000 phosphorylation sites.
cost saving
Reduction of costs bringing
diagnostics and treatments
to market.
Personalised medicine
More effective treatments
tailored to specific patient
populations.
drug and treatment development
Proteome Sciences are identifying the biological cell signalling pathways
and networks involved in disease. We are developing a range of targeted
assays for key signaling pathway checkpoint proteins and other key
molecules involved in signaling events. Signalling cascades are proteins
that can be altered, activated or deactivated to alter gene activation
and protein expression.
Proteome Sciences plc Annual report and accounts 2014
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Liver CancerStrokeBreast & Colon CancerPancreas CancerAlzheimer’s Disease Our BuSineSS MOdel
With a rising research and product profile, in personalised
medicine we expect a strong performance from our
commercial business that should result in a significant
uplift in 2015 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
targeting unmet healthcare
needs and the rise in
personalised medicine
drives revenue growth.
h
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dis
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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 2014
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Our MeASureS Of SucceSS
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’ workflows and assays
when suitable methods and 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 9001:2008 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.
We continue to make good 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 personalised medicine.
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 strong increase in revenue growth in 2015.
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 typically associated with drug discovery,
diagnostics and biotechnology.
Proteome Sciences plc Annual report and accounts 2014
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STrATeGic rePOrT
Our strategic focus is to...
— Build on our reputation of excellence and leadership in our field
— Commercialise extensive IP portfolio, specialist biomarker services particularly SysQuant®
and TMTcalibrator™ workflows
— Form new alliances including out-licensing biomarkers to extend use and revenue
— Partner our CK1d compounds with pharma
— Increase sales in key healthcare markets (US/EU)
— Be cash generative and sustainably profitable
Key achievements 2014
— Growth in PS Biomarker Services™ and TMT®
— The shift from pilot to large scale programmes and the widening pipeline of customer contracts
and services
— SysQuant® and TMTcalibrator™ workflows provide Proteome Sciences with a significant USP
as a biomarker services provider
— Significant progress with Ck1d and blood biomarkers in Alzheimer’s Disease
— Advances 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 2015
— Optimising revenue from our three core areas: PS Biomarker Services™, proprietary biomarkers
and TMT® reagents
— Maximising the value of the TMT® franchise through new products and applications to drive growth
— Expansion of PS Biomarker Services and proprietary biomarkers to deliver significant revenue
growth in 2015 and beyond
— Extension of SysQuant® workflows in cancer and CNS
— Focus our main attention on outlicensing of CK1d and AD and stroke biomarkers
— Targeting cash generation and being sustainably profitable
Proteome Sciences plc Annual report and accounts 2014
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STrATeGic rePOrT (cOnTinued)
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 2014.
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.
The principal activity of the Group is in biomarker research
and development as a global leader in applied proteomics and
workflows 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 assay development for
accurate measurement for use 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 Alzheimer’s disease, stroke, brain damage,
and solid organ transplant rejection have been discovered.
Veri-Q Inc., a subsidiary company in which the Group has an
interest of 76.9%, develops 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 Statement.
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
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 and the SysQuant® and TMTcalibrator™ workflows.
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.
Proteome Sciences plc Annual report and accounts 2014
13
STrATeGic rePOrT (cOnTinued)
revenue
Strong performance expected in 2015
— Revenue increased by 9%during the year to £1.56m
(2013: £1.43m) excluding equipment on loan £nil
(2013: 0.71m).
— In the breakdown, Licences/Sales/Services rose
by 7% to £1.30m (2013: £1.21m), excluding equipment
on loan revenue
— TMT® Reagent sales increased by 31%
— Grant Services revenue was £0.27m (2013: £0.22m)
Revenue performance is managed both geographically
and by way of major products and services.
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 in 2015.
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
TMTcalibrator™ workflows.
Increased efficiency from IT processing and storage
Having installed the latest top end mass spectrometers in-house
with Orbitrap/Orbitrap Fusion instruments, it was important to
address the IT, data storage and data processing in Frankfurt
and London. The investment made last year to upgrade the
IT infrastructure has increased the data storage capacity up to
ten fold with the speed of processing trebled. This has resulted
in a significant reduction in the analysis time and provided a
commensurate improvement in the quality and quantity of data
generated allowing us to maximise the output from the powerful
new generation of mass spectrometers in our research and
biomarker services.
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
continued to grow in 2014 with a 65% increase in sales,
reflecting in part the shift from pilot studies to large scale
programmes. We signed a $2m biomarker services contract
with Genting Tau RX to process 1,000 of patient samples from
which we aim to develop a companion diagnostic. The major
part of the contract will be undertaken in 2016. The launch
of the SysQuant® and TMTcalibrator™ workflows have resulted
in a strong increase in orders and enquiries from existing
and new customers with our facilities running at full capacity
in 2015.
The commitment to showcasing the potential of our business
is resulting in increased exposure and endorsement
Proteome Sciences has a concentrated period 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)
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.
Proteome Sciences plc Annual report and accounts 2014
14
MAKinG A MeASurABle difference TO MOdern druG deVelOPMenT
SysQuant® and TMTcalibrator™: Combining
next-generation proteomics to deliver targeted
medicines for Alzheimer’s disease.
designing new drugs to treat Alzheimer’s disease has
proved very challenging and we clearly need to more fully
understand the mechanisms that lead to cell death. By
combining next-generation proteomics workflows Proteome
Sciences is delivering on its mission to find better drug targets
and biomarkers.
Treatment options for Alzheimer’s disease are currently limited
to drugs that modify the symptoms but do not delay the underlying
disease process. Several attempts to remove the build up of
toxic proteins have so far failed although reduction of tau protein
aggregates is showing promise. Proteome Sciences is taking
a different approach and developing drugs that can switch
off the production of toxic tau.
learning how tau and amyloid affect brain cells
We have applied SysQuant® to the analysis of human AD brains to
determine which proteins and pathways are changing in response
to increasing levels of toxic tau. Our data show that many cellular
processes are affected including pathways regulating memory
formation, synapse structure and function, energy production
and cell survival. Within each of these pathways we have identified
potential drug targets and biomarkers that can be used to improve
drug development.
Mapping cK1d inhibitor effects to tau-related pathways
To evaluate how our CK1D inhibitors work to improve cognitive
behaviour in a model of tau pathology we are comparing the
SysQuant® results from treated animals against the maps of tau-
dependent changes seen in human AD brains. In a preliminary
analysis we have found many of the protein changes induced
by tau toxicity in human disease are reversed by CK1D inhibitors.
This is very encouraging and provides further support to the value
of CK1D inhibitors for the treatment of AD.
Translating brain changes into biomarkers
As new disease modifying drugs for AD, including the CK1D
inhibitors, are developed, there is a need for biomarkers in blood
or cerebrospinal fluid (CSF) that confirm the drugs are working.
We recently used TMTcalibrator™ to find brain-derived proteins that
are regulated in CSF of AD patients. Of the >100 biomarkers we
discovered, several are also regulated by increasing tau toxicity
and respond to CK1D inhibitors. We are currently assessing these
as possible panels for general management of AD patients and
specifically for monitoring CK1D inhibitor effectiveness.
By combining our proprietary, next-generation proteomics workflows
we have been able to gain a much deeper insight into the pathways
that are altered in AD and how these can be measured in CSF to aid
treatment decisions and monitoring of effectiveness.
We have applied SysQuant® to the analysis of human
AD brains to determine which proteins and pathways
are changing in response to increasing levels of
toxic tau.
80% people living in care
homes in the uK have a form
of dementia or severe memory
problems
delaying the onset of dementia
by five years would reduce
deaths directly attributable
to dementia by 30,000 a year
80%
30k
estimated cost of care associated with Alzheimer’s disease
in the uS could rise to $1.1 trillion by 2050
$226m
2015
2050
Sources:
The Alzheimer’s Association 2015
and The Alzheimer’s Society 2015
$1.1tr
Proteome Sciences plc Annual report and accounts 2014
15
TAcKlinG cAncer One PATienT AT A TiMe
Developing SysQuant® for drug development
and clinical assessment in cancer.
Building on successful drug development projects for our
clients and the first study published in pancreatic cancer
we have recently completed two new programs that
further underpin the high value of SysQuant®. during 2014
we successfully rolled out SysQuant® services for drug
development to pharmaceutical customers resulting in
a strong pipeline with a good number of contracts already
signed in 2015.
SysQuant® enabling the move to smart combination therapies
To develop additional applications for drug development we
have been using SysQuant® to understand how different drug
combinations work in human skin cancer cells. Working with
partners at the Moffitt Cancer Center in Tampa, Florida, we have
studied two different drug combinations in three cell lines and
quantified over 9,000 proteins and 17,000 phosphorylation sites.
This depth of information is highlighting which pathways are most
affected by each combination and which cell lines respond best.
This data is not only important for the companies developing new
treatments for skin cancer, but also provides a compelling case
study for using SysQuant® across many different diseases.
Moving SysQuant® closer to the clinic
The acquisition of an Orbitrap Fusion mass spectrometer
has more than doubled the performance of SysQuant® whilst
requiring around 40% of the time for analysis making it highly
appropriate for clinical assessment prior to selecting an
individual drug treatment. We have validated this new workflow
in an additional 20 cases of pancreatic cancer, confirming
our earlier results and identifying additional drivers of disease
including several new drug targets. The next stage of clinical
development is a trial of SysQuant® for predicting outcomes
in liver cancer patients treated with Sorafenib due to start later
this year. There is currently no way to predict which patients
will respond to this highly selective drug and in liver cancer the
response rates are very low. We are testing whether SysQuant®
can identify the small number of Sorafenib responders in a
retrospective study. If successful this would allow a prospective
study where SysQuant® results would be used not only to
indicate Sorafenib use, but also identify patients for whom
alternative drugs and combination therapies would be
more appropriate.
The next stage of clinical development is a trial
of SysQuant® for predicting outcomes in liver
cancer patients treated with Sorafenib due to
start later this year.
number of people are
estimated to be diagnosed
with Pancreatic cancer each
year in the uS
Only four percent of people
survive Pancreatic cancer.
it has the worst survival
rate of all 22 of the most
common cancers
48,960
4%
Just 7.2% of those suffering
from Pancreatic cancer
survive 5 years or more
7.2%
Sources:
The American Cancer Society
and National Cancer Institute
Proteome Sciences plc Annual report and accounts 2014
16
STrATeGic rePOrT (cOnTinued)
Biomarkers
Alzheimer’s Disease (AD)
Advanced research results bring the prospect of a blood test
for AD considerably closer
Publication of the excellent results from a large group study of
our candidate AD biomarkers highlighted their utility in predicting
patients with early memory problems that would subsequently
be diagnosed with Alzheimer’s disease within 12 – 18 months.
We are in discussions with interested parties to develop a simple
test kit to measure these biomarkers routinely and expect to
complete multiple licenses to our patents around the panel of
proteins covered by our IP.
™
TMTcalibrator finding early biomarkers of brain inflammation
in neurodegeneration
One of the earliest events linked to AD is a general inflammatory
response in the brain, mediated by microglial cells. Working
jointly with several leading European academic groups we have
used TMTcalibrator™ to identify proteins that are produced when
microglial cells trigger an inflammatory response and which are
also detected in cerebrospinal fluid. We have a panel of over
100 cell-derived proteins that are either increased or decreased
in CSF from AD patients and our collaborators are in the process
of performing validation studies. If successful, these proteins
may form the basis of a novel early CSF diagnostic test for
Alzheimer’s disease.
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.
TMT®
Revenue –
Fast growth rate is expected to continue
— TMT® product sales increased by 31% in 2014.
— TMT® became the global market leader in 2014
and its profile continues to rise
Tandem Mass Tags® – International recognition
The importance of TMT® reagents in driving forward the
proteomics industry was recognized by the prestigious Human
Proteome Organisation who awarded a team from Proteome
Sciences and Thermo Scientific with the Science and Technology
Award. Through the general introduction of TMT® 10-plex helped
by considerable exposure at the American Society of Mass
Spectrometry meeting (ASMS), TMT® became the global market
leader and that position will be extended through a continuing
program of new product introductions.
Tandem Mass Tags® – Getting ready for the next level
Introduction of TMT® 10plex reagents was a major landmark
and helped drive sales growth but their use is restricted to high
resolution instruments. We are now developing next-generation
TMT® reagents with higher plexing rates that will provide users
of lower resolution mass spectrometry machines, for the
first time, a set of 10plex reagents, whilst users of premium
equipment will have substantially higher multiplexing rates.
Prototypes have been tested and we anticipate the new TMT®
product range will be commercially available in 2016.
iP portfolio
Additional 13 patents added and further 20 filed
Our 600 plus patent IP portfolio of key biomarkers across
a broad range of diseases, application and technologies that
supports our extensive asset base has been further extended.
Another 13 patents were granted in 2014 with a further
20 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 2014
17
STrATeGic rePOrT (cOnTinued)
financial review
Results and dividends
The loss after tax for the year was £3,566,481 (2013 – loss
£3,149,159). The Directors do not recommend the payment
of a dividend (2013: £nil). The Group results are stated in the
consolidated income statement on page 29, and are reviewed
in the Chairman’s message on page 02, and the Strategic report
on pages 12 to 19.
Post balance sheet events
Details of significant events since the balance sheet date are
contained in note 29 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 02
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 2014 are
set out on page 35 of these accounts and
in notes 24 and 25.
The Group maintained a positive cash balance in 2014
and continues to seek to generate improved cash flows
from commercial income.
Financial performance –
As compared to the previous year, our revenues showed
steady growth
Revenue for the twelve month period ended 31st December 2014
increased 9% to £1.56m (2013: £ 1.43m) excluding equipment
on loan revenue, 2014 nil (2013: £0.71m). In the breakdown
of revenue, Licences/Sales/Services rose 7% to £1.3m
(2013: £1.21m), excluding equipment on loan revenue, of which
TMT® Reagent sales increased 31%. Grant services were
£0.27m (2013: £ 0.22m). The loss before tax was £4.23m
(2013: £3.60m).
Costs and available cash –
Despite the rise in revenue, our operating costs
remain constant
Administrative expenses in 2014 were £4.95m similar to 2013:
£4.92m and are likely to remain relatively constant in 2015. After
tax credits of £0.66m, the loss after taxation for the period was
£3.57m (2013: £3.15). The net cash outflow from operating
activities was £3.27m (2013: £2.77m).
Cash at the year-end was £1.87m (2013: £0.60m). A placing of
13,861,112 ordinary shares was completed in June 2015 which
added £2.495m pre-expenses to the Group’s cash resources.
Outlook for 2015
We are pleased to have got off to a good start in 2015. There has
been a big increase in demand for SysQuant®, TMTcalibrator™ and
TMT®-MS3 services from major pharmaceutical customers and
this is reflected by a growing pipeline of orders and enquiries with
a further four biomarker services contracts signed since the five
that were last announced in March. The background to the services
business is very buoyant with our facilities running at full capacity
in 2015 and strong prospects for future growth.
The increasing prominence and rise of Alzheimer’s disease is
instigating considerable global media and commercial activity
together with high profile political interest as the global drive
to tackle dementia gains momentum. With the number of cases
projected to treble by 2050, the economic and social burden
has to be addressed and this is being reflected by a sharp
increase in the perceived value of successful drugs and early
diagnostic tests.
Considerable progress has been made to outlicense
two of our programmes for the treatment and diagnosis of
Alzheimer’s disease. The CK1d marketing dossier for PS110
and PS 278-05 against tau aggregation in AD continues to
generate very positive feedback, with certain of the major
pharma having been provided with the PS compounds for
further confidential evaluation and testing in their own in vivo
models of AD.
Given the paucity of advanced drug development options
currently available, Proteome Sciences intends to capitalise
on the strong interest now focused in the tau pathway in AD
through its unique position in CK1d. A license is expected to
attract considerable signature fees, milestones and royalties.
A similar background has developed for the MCI/AD diagnostic
panel of proteins in blood. Results are expected shortly from
another cohort of patient samples that should add new intellectual
property and accelerate the development of the clinical
diagnostic for MCI/AD. We have received serious engagement
and licensing interest from a number of major diagnostics
companies and these opportunities are being actively pursued.
The first stroke test will be released by Randox before the end
of the year as a research use product in clinical studies and
a CE marked product will follow in 2016. Under the license
agreement, Proteome Sciences is due to receive further
milestone payments and anticipates that additional similar
license deals for the same stroke biomarker content are likely
to be concluded with other global diagnostic companies.
TMT® tags have continued to perform strongly in 2015 as
evidenced by the largest ever order dispatched during the
quarter and that trend is expected to continue.
Through our workflows, our biomarker services, our content and
IP, Proteome Sciences is exceptionally placed to provide many
of the main components in personalised medicine. Our core
activities are all performing well against a buoyant background.
We expect to see this reflected in revenue growth and news flow
in 2015 with the prospect of this complemented by some high
profile licenses in Alzheimer’s disease and stroke.
Proteome Sciences plc Annual report and accounts 2014
18
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
licencing 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,
Geoff ellis
Finance Director
Coveham House
Downside Bridge Road
Cobham
Surrey KT11 3EP
22nd June 2015
Proteome Sciences plc Annual report and accounts 2014
19
Senior management team and board of directorS
Senior management team
christopher Pearce
Executive Chairman
geoff ellis
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, Frankfurt
board of directors
executive directors
christopher Pearce
Executive Chairman
geoff ellis
Finance Director
dr. ian Pike
Chief Operating Officer
non-executive directors
Professor William dawson
roger mcdowell
martin diggle
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.
geoff ellis
Finance Director
Geoff Ellis is a Chartered Accountant with over 30 years’
experience in a range of senior financial, general management
and sales and business development roles. He spent almost
15 years at Walt Disney where his roles included Chief Financial
Officer of Disney Channels in Europe, the Middle East and
Africa, a $500m turnover business.
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 2014
20
Senior management team and board of directorS (continued)
Senior management team:
non-executive directors:
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.
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.
roger mcdowell
Non-executive Director (i) (ii)
Roger McDowell has a highly successful career as a
businessman and entrepreneur. He was Managing Director of
Oliver Ashworth for eighteen years before its sale to St. Gobain.
He is currently the Chairman or a non-executive director of seven
listed companies, namely Avingtrans plc, Servelec Group plc,
Renovo plc, Alkane Energy plc, Swallowfield plc, IS Solutions plc
and Augean plc. He brings considerable commercial experience
with him and is a keen exponent of growing shareholder value.
martin diggle
Non-executive Director (i) (ii)
Mr. Diggle has worked in finance for over 30 years. He was a
director and partner of UBS/Brunswick in Russia until 2003, after
which he joined Vulpes Investment Management, where he is
currently a director and partner. He is an experienced specialist
investor in life sciences and manages the Vulpes Life Sciences
Fund, the registered holder of 15.6% of Proteome Sciences’
ordinary share capital.
(i) Member of Audit Committee
(ii) Member of Remuneration Committee
(iii) Member of Nomination Committee
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,
Frankfurt
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.
Proteome Sciences plc Annual report and accounts 2014
21
directorS’ rePort
for the year ended 31st December 2014
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 2014.
directors’ responsibilities
The directors are responsible for preparing the strategic
report, the director’s report and annual report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under the law the directors
have elected to prepare the Group and Company financial
statements in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union. Under
company law the directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and Company and
of the profit or loss of the Group and Company for that period.
The directors are also required to prepare financial statements
in accordance with the rules of the London Stock Exchange
for companies trading securities on the Alternative Investment
Market.
In preparing these financial statements, the directors are
required to:
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 27 on pages 57 to 59.
directors and their interests
The Directors who served during the year are as shown below:
C.D.J. Pearce
G.J. Ellis
Executive Chairman
Finance Director
(appointed 1st October 2014)
— select suitable accounting policies and then apply them
Dr. I.H. Pike
Chief Operating Officer
Professor W. Dawson
Non-Executive
R. McDowell
M. Diggle
R.S. Harris
Dr. A.I. Walker
J.L. Malthouse
Non-Executive
(appointed 1st July 2014)
Non-Executive
(appointed 16th October 2014)
Non-Executive, Chairman
(retired 1st July 2014)
Non-Executive
(resigned 3rd March 2014)
Finance Director
(retired 1st December 2014)
In accordance with the Company’s articles, C.D.J. Pearce retires
by rotation at the next Annual General Meeting and, being eligible,
offers himself for re-election. R. McDowell, M Diggle, and G Ellis
(who were appointed to the board on 1st July, 16th October and
1st October respectively) offer themselves for election at the
Annual General Meeting.
consistently;
— make judgements and accounting estimates that are
reasonable and prudent
— state whether they have been prepared in accordance with
IFRSs as adopted by the European Union, subject to any
material departures disclosed and explained in the financial
statements;
— prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the 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 requirements
of 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.
Website publication
The directors are responsible for ensuring the annual report
and the financial statements are made available on a website.
Financial statements are published on the Company’s website
in accordance with legislation in the United Kingdom governing
the preparation and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The maintenance
and integrity of the Company’s website is the responsibility of
the directors. The directors’ responsibility also extends to the
ongoing integrity of the financial statements contained herein.
Proteome Sciences plc Annual report and accounts 2014
22
directorS’ rePort (continued)
for the year ended 31st December 2014
The Directors at 31st December 2014 and their interests in the share capital of the Company were as follows:
a) Beneficial interests in Ordinary Shares:
name of director
C.D.J. Pearce
G. Ellis (appointed 1st October 2014)
Dr. I.H. Pike
Professor W. Dawson
R. McDowell (appointed 1st July 2014)
M. Diggle (appointed 16th October 2014)
31st december 2014
number of ordinary
Shares of 1p each
31st december 2013
number of ordinary
Shares of 1p each
35,109,504
–
–
20,372
500,000
–
31,538,075
–
–
20,372
–
–
Note
M. Diggle is a director and partner in Vulpes Investment Management and manages the Vulpes Life Sciences Fund which is the
registered holder of 15.99% of Proteome Sciences’ ordinary share capital.
No changes took place in the beneficial interests of the Directors between 31st December 2014 and 22nd June 2015.
b) Number of Ordinary Shares under option:
Dr. I.H. Pike
(i) Denotes options granted under the 2004 Share Option Plan.
number
at 31st
december
2014
number
at 31st
december
2013
exercise
price
(pence)
date of grant
(i)
–
–
127,986
73.91p
6th December, 2004
127,986
Proteome Sciences plc Annual report and accounts 2014
23
directorS’ rePort (continued)
for the year ended 31st December 2014
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) G.J. Ellis
(iii) Dr. I.H. Pike
(a)
(b)
(c)
(a)
(b)
(a)
(b)
number at
31st december 2014
number at
31st december 2013
277,074
–
328,105
605,179
300,000
–
300,000
165,583
–
165,583
277,074
1,174,269
328,105
1,779,448
–
–
–
165,583
654,971
820,554
The entitlement to shares shown under (i)(b), and (iii)(b) under the LTIP was subject to achieving the performance conditions referred
to in the LTIP section on pages 22 and 53 These performance conditions were not met and the awards lapsed in 2014.
Awards made have no performance retesting facility.
The numbers shown in (i)(a), and (iii)(a)at the 31st December 2014 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 (i)(a) and (iii) (a) was 49.75p, and for the award numbered (ii)(a)
was 35.75p. For the awards numbered (i)(b) and (iii)(b) the market price was 21.38p and for the award numbered (i)(c) was 38.25p.
d) As set out in note 19(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 2014 was 27p and the range during the year was 23.5p to 41.625p.
Proteome Sciences plc Annual report and accounts 2014
24
directorS’ rePort (continued)
for the year ended 31st December 2014
Substantial shareholdings
As at 19th June 2015, the Company had received notification
of the following significant interests in the ordinary share capital
of the Company:
name of Holder
number of
Percentage of issued
ordinary Shares ordinary Share capital
36,915,059
C.D.J. Pearce
36,448,125
Vulpes Life Science Fund
M. Staveley
9,820,829
Helium Special Situations Fund 15,312,273
16.19
15.99
4.3
6.72
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
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 02 and Strategic
report on pages 12 to 19 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 35 and in notes
19 (other financial liabilities) and 27 (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.
Proteome Sciences plc Annual report and accounts 2014
25
directorS’ rePort (continued)
for the year ended 31st December 2014
As at 31st December 2014 the Group had cash resources of
£1,868,653, realised a loss for the year of £3,566,481 and had a
working capital deficiency of £5,571,481. Subsequent to the year
end, on 22nd June 2015 the Group fully completed, and with the
requisite irrevocable commitments, a fund-raising transaction
which will raise a sum of up to £2.5 million (before expenses)
through a placing 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, out-licensing, grant income and R&D tax credits.
The Directors 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 under the terms of
the facility, is repayable on demand. Further details of this facility
are set out in note 20(b) to the financial statements. The Directors
have received confirmation from the Chief Executive that he has
no intention of seeking its repayment, with the facility continuing 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.
Details of the Group’s prospects and the future development
of the business are set out in the Strategic Report on pages
12 to 19.
remuneration committee report
The Remuneration Committee is made up of three non- executive
Directors, Professor W. Dawson, M Diggle and R. McDowell.
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 contract of Mr. Pearce was 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 2014 the Remuneration Committee agreed a cash bonus
scheme for the executive directors for the year to 31st December,
2014 under which a bonus of 50% of annual salary would be
paid if the Company achieved revenue in 2014 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 2014 no provision
has been made in these accounts for any bonus payments in
accordance with the terms of the bonus scheme set out in the
previous paragraph.
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 appoint BDO LLP as auditor for the ensuing year.
Proteome Sciences plc Annual report and accounts 2014
26
directorS’ rePort (continued)
for the year ended 31st December 2014
Political donations
The Group did not make any political donations in 2014
(2013:£nil).
events after the balance sheet date
Details of events after the balance sheet date are set out in note
29 on Page 60.
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
17th July 2015, as well as the routine business, the following
items will be proposed as Special Business:
i) Resolution 7 – An Ordinary Resolution (Resolution 7), as
set out in the Notice on page 62, will be proposed to renew
the Directors’ authority to allot relevant securities up to an
aggregate nominal amount of £759,889.11 which represents
approximately a third of the current issued Ordinary Share
capital of the Company as at 22nd June 2015. The authority
will lapse at the conclusion of the next Annual General
Meeting after the passing of the Resolution or on 30th June
2016, whichever is the earlier. The Directors do not have any
present intention of exercising this authority.
ii) Resolution 8 – Resolution 8, which is set out in the Notice
on page 62, 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 £455,933.46 representing 20 per cent of the current issued
Ordinary Share capital of the Company as at 22nd June 2015.
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 2016, 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,
g.J. ellis
Company Secretary
Coveham House
Downside Bridge Road
Cobham
Surrey KT11 3EP
22nd June 2015
Proteome Sciences plc Annual report and accounts 2014
27
opinion on other matters
prescribed by the companies act 2006
In our opinion the information given in the Strategic Report and
Directors’ report for the financial year for which the financial
statements are prepared is consistent with the 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.
iain Henderson (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
22nd June 2015
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
indePendent auditor’S rePort
for the year ended 31st December 2014
to the members of Proteome Sciences plc
We have audited the financial statements of Proteome Sciences
plc for the year ended 31 December 2014 which comprise the
Consolidated income statement, the consolidated statement of
comprehensive income, the Consolidated and company balance
sheets, the Consolidated and company statement of changes
in equity, the Consolidated and company cash flow statements,
and the related notes. The financial reporting framework that
has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted
by the European Union 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 auditors
As explained more fully in the statement of directors’
responsibilities, 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 the financial
statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Financial Reporting Council’s
(FRC’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial
statements is provided on the FRC’s website at
www.frc.org.uk/auditscopeukprivate.
opinion on financial statements
In our opinion:
— the financial statements give a true and fair view of the
state of the Group’s and the parent company’s affairs as
at 31 December 2014 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
— the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Proteome Sciences plc Annual report and accounts 2014
28
conSoLidated income Statement
for the year ended 31st December 2014
revenue
Licenses/sales/services
Grant services
revenue and other income
Cost of sales
gross profit
Administrative expenses
operating loss
Investment revenues
Finance costs
Loss before taxation
Tax
notes
5, 6
5, 6
7
8(i)
8(ii)
12
Year ended
31st december 2014
£
Year ended
31st december 2013
£
1,295,178
265,537
1,560,715
(604,549)
956,166
(4,949,684)
(3,993,518)
8,065
(241,844)
(4,227,297)
1,916,123
220,558
2,136,681
(592,656)
1,544,025
(4,916,540)
(3,372,515)
1,677
(225,350)
(3,596,188)
660,816
447,029
Loss for the period from continuing operations
(3,566,481)
(3,149,159)
Attributed to shareholders of the Company
(3,566,481)
(3,149,159)
Loss per share
Basic and diluted
All activities are derived from continuing operations.
13
(1.69p)
(1.62p)
Proteome Sciences plc Annual report and accounts 2014
29
conSoLidated Statement of comPreHenSive income
for the year ended 31st December 2014
Exchange differences on translation of foreign operations
other comprehensive expense for the year
Year ended
31st december 2014
£
Year ended
31st december 2013
£
(87,660)
(87,660)
(42,962)
(42,962)
Loss for the year
(3,566,481)
(3,149,159)
total comprehensive expense for the year
attributable to equity holders of the company
(3,654,141)
(3,192,121)
The accompanying notes 1 to 29 are an integral part of the financial statements.
Proteome Sciences plc Annual report and accounts 2014
30
conSoLidated baLance SHeet
as at 31st December 2014
non-current assets
Goodwill
Property, plant and equipment
Equipment on loan
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 – equity
notes
14
15
17
18 (a)
18 (b)
19 (a)
19 (b)
19 (c)
19 (c)
20
22
2014
£
4,218,241
314,300
473,333
5,005,874
344,458
1,072,415
1,868,653
3,285,526
8,291,400
(317,161)
(34,348)
(8,193,078)
(312,420)
(8,857,007)
(5,571,481)
(312,948)
(9,169,955)
2013
£
4,218,241
345,183
710,000
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)
(255,382)
(9,255,023)
(878,555)
(2,199,812)
2,141,056
46,736,905
3,367,212
10,755,000
(206,401)
(63,672,327)
1,962,485
42,121,558
3,185,732
10,755,000
(118,741)
(60,105,846)
(878,555)
(2,199,812)
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 22nd June 2015. They were signed on its behalf by:
dr i. Pike
Director
g. ellis
Director
22nd June 2015. The accompanying notes 1 to 29 are an integral part of the financial statements.
Proteome Sciences plc Annual report and accounts 2014
31
comPanY baLance SHeet
as at 31st December 2014
non-current assets
Investment in subsidiaries
current assets
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
18 (b)
19 (b)
20
2014
£
2013
£
46,240,605
46,240,605
43,611,673
43,611,673
1,512,592
1,512,592
486,640
486,640
47,753,197
44,098,313
(278,568)
(1,376,052)
(1,654,620)
(26,118)
(1,680,738)
(298,638)
(1,335,434)
(1,634,072)
(28,904)
(1,662,976)
46,072,459
42,435,337
2,141,056
46,736,905
1,082,244
3,367,212
(7,254,958)
1,962,485
42,121,558
1,082,244
3,185,732
(5,916,682)
46,072,459
42,435,337
The financial statements of Proteome Sciences plc, registered number 02879724, were approved by the board of directors and
authorised for issue on 22nd June 2015. They were signed on its behalf by:
dr i. Pike
Director
g. ellis
Director
22nd June 2015. The accompanying notes 1 to 29 are an integral part of the financial statements.
Proteome Sciences plc Annual report and accounts 2014
32
conSoLidated Statement of cHangeS in equitY
for the year ended 31st December 2014
Share
capital
£
Share
premium
account
£
equity
reserve
£
translation
reserve
£
other
reserve
£
retained
loss
£
total
equity/(deficit)
£
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
–
(42,962)
–
–
–
–
–
–
–
–
(3,149,159)
(3,149,159)
–
–
–
–
(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)
At 1st January 2014
1,962,485
42,121,558
3,185,732
(118,741) 10,755,000
(60,105,846)
(2,199,812)
Loss for the year
Exchange differences on
translation of foreign operations
–
–
–
–
Total comprehensive
expense for the year
Issue of share capital
Share issue expenses
Credit to equity
for share-based payment
–
178,571
–
–
4,821,429
(206,082)
–
–
181,480
–
(87,660)
–
–
–
–
–
–
–
–
–
–
(3,566,481)
(3,566,481)
–
–
–
–
–
(87,660)
(3,654,141)
5,000,000
(206,082)
181,480
–
–
–
–
–
–
–
–
–
At 31st December 2014
2,141,056
46,736,905
3,367,212
(206,401) 10,755,000
(63,672,327)
(878,555)
The accompanying notes 1 to 29 are an integral part of the financial statements.
Proteome Sciences plc Annual report and accounts 2014
33
comPanY Statement of cHangeS in equitY
for the year ended 31st December 2014
company
Share
capital
£
Share
premium
account
£
group
reconstruction
reserve
£
equity
reserve
£
retained
loss
£
total
equity
£
At 1st January 2013
Retained loss for the year
Credit to equity for share-based payment
Issue of share capital
1,924,985
–
–
37,500
40,602,808
–
–
1,518,750
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
At 1st January 2014
Retained loss for the year
Credit to equity for share-based payment
Issue of share capital
Share issue expenses
1,962,485
–
–
178,571
–
42,121,558
–
–
4,821,429
(206,082)
1,082,244
–
–
–
–
3,185,732
–
181,480
–
–
(5,916,682) 42,435,337
(1,338,276)
(1,338,276)
181,480
–
5,000,000
–
(206,082)
–
At 31st December 2014
2,141,056
46,736,905
1,082,244
3,367,212
(7,254,958) 46,072,459
Proteome Sciences plc Annual report and accounts 2014
34
conSoLidated and comPanY caSH fLoW StatementS
for the year ended 31st December 2014
notes
23
cash flows from operating activities
Cash used in operations
Tax refunded
net cash outflow
from operating activities
cash flows from investing activities
Purchases of property, plant and equipment
Loans advanced
Interest received
net cash (outflow)/inflow
from investing activities
financing activities
Proceeds on issue of shares
Loans advanced
net cash inflow
from financing activities
net increase/(decrease)
in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
group
Year ended
company
Year ended
company
Year ended
31st december 31st december 31st december 31st december
2013
£
group
Year ended
2014
£
2014
£
2013
£
(3,958,394)
688,595
(96,660)
–
(3,201,138)
434,151
(159,372)
–
(3,269,799)
(96,660)
(2,766,987)
(159,372)
(155,289)
–
8,065
–
(3,679,371)
8,065
(9,202)
–
1,677
–
(1,488,139)
1,607
(147,224)
(3,671,306)
(7,525)
(1,486,532)
4,793,918
–
4,793,918
–
1,556,244
1,000,000
1,556,244
–
4,793,918
4,793,918
2,556,244
1,556,244
1,376,895
600,262
(108,504)
1,025,952
486,640
–
(218,268)
858,249
(39,719)
(89,660)
576,301
–
cash and cash equivalents at end of year
24/25
1,868,653
1,512,592
600,262
486,641
Proteome Sciences plc Annual report and accounts 2014
35
noteS to tHe conSoLidated financiaL StatementS
for the year ended 31st December 2014
1 general information
Proteome Sciences plc is a company incorporated in the United
Kingdom under registration number 02879724. The address of
the registered office is given on the back cover. The nature of the
Group’s operations and its principal activities are set out in the
Directors report on pages 22 to 27. 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 and revised standards
New standards and amendments to existing standards that
have been published and are mandatory for the first time for the
financial year 1 January 2014 have been adopted but had no
significant impact on the Group. New standards, amendments
to standards and interpretations which have been issued but
are not effective (and in some cases had not been adopted by
the EU) for the financial year beginning 1 January 2014 have not
been early adopted in preparing these financial statements. The
main accounting standard which may be relevant to the Group is
set out below and will be effective in the Group’s 2015 financial
report. The Group does not plan to adopt this standard early.
ifrS 9 “financial instruments”
This standard is applicable retrospectively and includes
revised requirements for the classification and measurement of
financial instruments, as well as recognition and de-recognition
requirements for financial instruments.
The key changes made to accounting requirements which may
be relevant to Proteome Sciences Plc, include:
— simplifying the classifications of financial assets into those
carried at amortised cost and those carried at fair value;
— requiring financial assets to be reclassified where there is
a change in an entity’s business model as they are initially
classified based on: (a) the objective of the entity’s business
model for managing the financial assets; and (b) the
characteristics of the contractual cash flows; and
— requiring an entity that choses to measure a financial liability
at fair value to present the portion of the change in its fair
value due to changes in the entity’s own credit risk in other
comprehensive income, except when that would create an
accounting mismatch. If such a mismatch would be created
or enlarged, the entity is required to present all changes in fair
value (including the effects of changes in the credit risk of the
liability) in profit or loss.
The objective of the Standard is to establish principles for the
financial reporting of financial assets and financial liabilities that
will present relevant and useful information to users of financial
statements for their assessment of the amounts, timing and
uncertainty of an entity’s future cash flows. Proteome Sciences
plc is already presenting information about financial instruments
in the Financial Instruments sections of the accounting policies
and note 27.
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 31st December 2014 the Group had cash resources of
£1,868,653, realised a loss for the year of £3,566,481 and had a
working capital deficiency of £5,571,481. Subsequent to the year
end, on 22nd June 2015 the Group fully completed, and with the
requisite irrevocable commitments, a fund-raising transaction
which will raise a sum of up to £2.5 million (before expenses)
through a placing 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,
out-licensing, grant income and R&D tax credits. The Directors
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 under the terms of
the facility, is repayable on demand. Further details of this facility
are set out in note 19(b) to the financial statements. The Directors
have received confirmation from the Chief Executive that he has
no intention of seeking its repayment, with the facility continuing 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 2014
36
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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 when the Company is exposed, or has
rights, to variable returns from its involvement with the investee
and has the ability to effect those returns through its power over
the investee. Specifically, the Company controls an investee if,
and only if the Company has the following:
— Power over the investee (i.e. existing rights that give it the
current ability to direct the relevant activities of the investee);
— Exposure of rights, to variable returns from its involvement
with the investee; and
— The ability to use its power over the investee to affect its returns.
The Company reassess whether or not it controls an investee
if facts and circumstances indicate that there are changes to
one or more of the three elements of control listed above. In
assessing control, the Group takes into consideration potential
voting rights that currently are exercisable.
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.
In preparing the accounts for the year 31st December 2013, the
Directors considered the requirements of IFRS in determining
how to account for the licence and research collaboration
agreement concluded with Thermo Fisher Scientific in that year.
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 concluded that the fair value of the MS3 licence
transferred at the commencement of the agreement was
represented by the cash and loan of the machine elements of the
consideration, and 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 and other income is described below.
Grants
Government grants relating to property, plant and equipment are
treated as deferred income and released to the income statement
over the expected useful lives of the assets concerned. Other
grants are recognised where 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 and other income category on the face of the income
statement, taking account of the grant’s terms and conditions.
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.
Proteome Sciences plc Annual report and accounts 2014
37
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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. 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 and 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.
Operating (loss)/profit
Operating (loss)/profit is stated before investment income and
finance costs.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes
are charged as an expense as they fall due. Payments made
to state-managed retirement benefit schemes are dealt with as
payments to defined contribution schemes where the Group’s
obligations under the schemes are equivalent to those arising in
a defined contribution retirement benefit scheme.
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 funded defined benefit plan. These plans are
operated in their entirety by the Pensionskasse der Mitarbeiter
der Hoechst-Gruppe VVaG (Hoechst Group), 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 a 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.
Funding contributions paid by the Group are based on annual
contributions determined by Hoechst Group, the administrator
for the pension plans. The Group does not have any information
about any deficit or surplus in the defined benefit plan that may
affect the amount of future contributions, including the basis
used to determine that deficit or surplus and the implications, if
any for the entity.
The Group also has a direct pension obligation (defined benefit
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.
Taxation
The Group is entitled to make claims for UK tax credit income
on qualifying R&D expenditure each year under the Corporation
and Taxes Act 2009. As an SME qualifying entity, tax credits
are claimed at the rate of 225% of the tax effect of tax losses
generated from qualifying R&D expenditure. Tax credits income
is recognised on an accruals basis through profit and loss within
taxation benefit/expense when there is reasonable assurance
that the tax credits will be received from the UK Tax Authorities.
A corresponding R&D Tax credits receivable is recognised in
Receivables until such time as the receivable is settled in cash.
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.
Proteome Sciences plc Annual report and accounts 2014
38
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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.
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.
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.
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.
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.
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.
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.
Proteome Sciences plc Annual report and accounts 2014
39
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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.
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 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.
Trade payables
Trade payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective
interest rate method.
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.
Proteome Sciences plc Annual report and accounts 2014
40
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
In determining how the equipment should be treated in the
Group’s accounts, the Directors took into account the fact that
the machine was provided to the Group with no restriction 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 were therefore
transferred to the Group, and recognised the equipment within
the Property, Plant and Equipment asset category accordingly.
The value at which the directors recognised the asset was
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 and other income
An analysis of the Group’s revenue and other income
is as follows:
revenue
Commercial revenue
Equipment on loan
Licenses/Sales/Services
Grant services income
2014
£
1,295,178
–
1,295,178
265,537
1,560,715
2013
£
1,206,123
710,000
1,916,123
220,558
2,136,681
During 2013 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
related 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 concluded that the fair value of the
MS3 licence transferred at the commencement of the agreement
was represented by the cash and loan of the machine elements
of the consideration, and have valued this element of the revenue
at the agreed total contract value less the element relating to the
ongoing research collaboration agreement.
Fair value is measured by use of the Black Scholes model and
for the LTIP awards the Monte Carlo model has been used. 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
The Directors do not consider that any Research and
Development intangible assets have been created in 2014.
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. From a review
of these projections, which can cover periods up to ten years,
the Directors have made a provision 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.
Licence and research collaboration agreement
During 2013 a licence and research collaboration agreement
was concluded with Thermo Fisher Scientific. Revenue
recognised in 2013 under this agreement related 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 concluded that the fair value of the MS3 licence
transferred at the commencement of the agreement was
represented by the cash and loan of the machine elements
of the consideration, and therefore valued this element of the
revenue at the agreed total contract value less the element
relating to the ongoing research collaboration agreement.
Proteome Sciences plc Annual report and accounts 2014
41
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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.
Geographical segments: Sales by origin
united Kingdom
2014
£
2013
£
2014
£
germany
2013
£
revenue and other income
Licences/sales/
services
Equipment on loan
Grant services
1,295,178
–
158,236
1,206,123
710,000
101,081
–
–
107,301
–
–
119,477
Revenue and other
income – all external
1,453,414
2,017,204
107,301
119,477
2014
£
–
–
–
–
uS
2013
£
consolidated
2014
£
2013
£
–
–
–
1,295,178
–
265,537
1,206,123
710,000
220,558
–
1,560,715
2,136,681
operating Loss
Investment revenues
Finance costs
(2,407,465) (1,640,403)
1,607
(225,350)
8,065
(241,844)
(1,581,811) (1,701,889)
–
–
–
–
(4,242)
–
–
(30,223) (3,993,518) (3,372,515)
1,677
8,065
(225,350)
(241,844)
–
Loss before tax
Tax
(2,641,244) (1,864,146)
457,520
671,914
(1,581,811) (1,701,819)
(10,491)
(11,098)
(4,242)
–
(30,223) (4,227,297) (3,596,188)
660,816
447,029
–
Loss after tax
(1,969,330) (1,406,626) (1,592,909) (1,712,310)
(4,242)
(30,223) (3,566,481) (3,149,159)
united Kingdom
2014
£
2013
£
2014
£
germany
2013
£
other information
Capital additions
30,181
712,237
125,108
6,965
Depreciation
271,990
33,021
134,988
134,777
2014
£
–
–
uS
2013
£
–
–
consolidated
2014
£
2013
£
155,289
719,202
406,978
167,798
assets
Current assets
Non-current assets
3,138,602
4,795,591
1,550,953
5,037,399
132,553
210,283
226,849
236,025
14,371
–
3,985
–
3,285,526
5,005,874
1,781,787
5,273,424
Segment assets
7,934,193
6,588,352
342,836
462,874
14,371
3,985
8,291,400
7,055,211
united Kingdom
2014
£
2013
£
2014
£
germany
2013
£
2014
£
uS
2013
£
consolidated
2014
£
2013
£
Liabilities
Current liabilities
Non-current
liabilities
(8,679,051) (8,571,812)
(177,475)
(417,539)
(481)
(10,290) (8,857,007) (8,999,641)
(26,118)
(28,904)
(286,830)
(226,478)
–
–
(312,948)
(255,382)
Segment liabilities
(8,705,169) (8,600,716)
(464,305)
(644,017)
(481)
(10,290) (9,169,955) (9,255,023)
Proteome Sciences plc Annual report and accounts 2014
42
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
revenues from major products and services
The Group’s revenues from its major products and services were
as follows:
8 (i) investment revenues
2014
£
2013
£
2014
£
770,780
524,398
–
2013
£
Investment revenues represent
income arising from bank deposits
8,065
1,677
588,347
617,776
710,000
(ii) finance costs
Interest on loans (note 19)
241,844
225,350
2014
£
2013
£
Continuing operations
TMT® revenues
Other
Equipment on loan
Revenues from licenses,
sales and services
1,295,178
1,916,123
geographical information
The Group’s revenue from external customers by their
geographical location is derived as follows:
UK
US
EU
Other
2014
£
86,466
1,004,439
92,049
112,224
1,295,178
2013
£
110,387
1,750,901
47,347
7,488
1,916,123
Grant services income
265,537
220,558
Revenues and other income
from major products and services 1,560,715
2,136,681
Included in revenues arising from the US market are revenues of
approximately £1,004,439 (2013: £1,298,347) which arose from
sales to the Group’s largest customer: Thermo Fisher Scientific
Inc. The figure for 2013 included £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
2014
£
2013
£
3,390,162
2,997,258
1,559,522
4,949,684
1,919,282
4,916,540
9 operating loss
Operating loss is stated after charging/(crediting):
Depreciation charge
– owned
– on loan
Research and
development costs
Operating lease rentals
– other
Auditor’s remuneration
(see below)
Staff costs (note 10)
Foreign exchange gains
Cost of inventories charged
as an expense
2014
£
2013
£
170,311
236,667
167,798
–
1,559,522
1,919,282
283,332
284,019
71,900
2,617,901
(22,056)
95,699
2,738,723
(2,735)
342,350
283,793
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 – VAT, grants,
share schemes, income tax advice
total non-audit fees
total fees
2014
£
2013
£
38,400
38,750
13,500
51,900
17,700
1,500
19,200
71,100
22,000
60,750
32,409
2,540
34,949
95,699
The fees set out above for 2013 were payable to Deloitte LLP.
The 2014 fees are payable to BDO LL.
Proteome Sciences plc Annual report and accounts 2014
43
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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 notes 26(b) and 26(c))
2014
number
2013
number
28
8
36
28
5
33
£
£
2,075,180
330,070
212,651
2,237,744
328,957
172,022
2,617,901
2,738,723
Social security costs shown above include a credit of £2,786 (2013 charge: £28,986) from the provision for notional National Insurance
contributions payable upon the exercise of vested LTIP options.
11 directors’ remuneration and transactions
The Directors’ emoluments in the year ended 31st December 2014, excluding pension costs, were:
Executive Directors
C.D.J. Pearce
G. Ellis (appointed 1st October 2014)
J.L. Malthouse (retired 1st December 2014)
Dr. I. Pike
Non-Executive Directors
Prof. W. Dawson
R. McDowell (appointed 1st July 2014)
M. Diggle (appointed 16th October 2014)
R.S. Harris (resigned 1st July 2014)
Dr. A. Walker (resigned 3rd March 2014)
basic
salary
2014
£
incentive
Payments
2014
£
288,533
47,115
161,533
140,000
27,500
12,500
–
19,000
–
696,181
–
–
–
–
–
–
–
–
–
–
benefits
in kind
2014
£
11,030
717
2,940
3,413
total
2014
£
total
2013
£
299,563
47,832
164,473
143,413
387,730
–
249,262
213,543
–
–
–
–
–
27,500
12,500
–
19,000
–
27,500
–
–
38,000
27,000
18,100
714,281
943,035
(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 (2013: 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 page 24.
(v) In 2013 incentive payments of £277,500 were awarded pursuant to the bonus scheme set out in the Remuneration Committee
report on page 26 of these accounts. No such payments were made in 2014.
(vi) The number of Directors in pension schemes is as follows:
Proteome Sciences plc Annual report and accounts 2014
44
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
Money purchase pension schemes
2014
4
2013
3
Pension costs in the year ended 31st December 2014 were as
follows:
C.D.J. Pearce
G. Ellis
J.L. Malthouse
Dr. I. Pike
2014
£
5,625
4,712
4,200
14,000
28,537
2013
£
22,500
–
16,800
14,000
53,300
Directors’ transactions
(a) Professor W. Dawson is a shareholder in Bionet Ltd. which
provided consultancy services to the Company during the
year at a cost of £1,852 (2013: £5,127).
(b) Save as disclosed in (a) above and in note 19(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
2014
£
613,178
(11,098)
602,080
58,736
660,816
2013
£
495,513
(10,491)
485,022
(37,993)
447,029
The UK Corporation tax credit relates to research and
development tax credits claimed under the Corporation Taxes
Act 2009.
At 31st December 2014 there were tax losses available for carry
forward of approximately £42.8 million (2013: £41.4 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 (2013: lower) than the standard
rate of corporation tax in the UK. The differences are explained
below:
2014
£
2013
£
Loss from operations
(4,227,297)
(3,596,188)
Income tax (charge)/credit
calculated at 21.5%
(2013: 23.25%%)
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)/R&D relief
(Unrecognised tax losses
carried forward)/brought forward
losses utilised
Effect of overseas tax
R&D tax credit claimed
Other taxable income
Group tax credit/(charge)
for the year
Adjustment re prior year
908,869
836,114
(40,712)
(58,478)
537,546
(915)
(99,083)
(7,677)
581,852
20,376
(967,582)
(1,047,334)
(314,257)
(11,098)
613,178
(64,471)
602,080
58,736
660,816
(220,310)
(10,491)
495,513
(63,937)
485,023
(37,994)
447,029
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
2014
2013
8,569,160
9,625,974
(9,933)
6,797
776
(19,759)
21,346
1,541
Total
8,566,800
9,629,102
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.
Changes to tax legislation
Legislation was passed in July 2012 to reduce the main rate of
UK corporation tax from 24% to 23% from 1st April 2013 and 21%
from the 1st April 2014. The UK government has announced that
it intends to introduce further reductions to the main tax rate, with
the rate falling 20% from 1st April 2015. This further reduction to
the tax rate has not been substantively enacted at the balance
sheet date and is therefore not reflected in these financial
statements.
Proteome Sciences plc Annual report and accounts 2014
45
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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:
equipment
on loan
£
-
-
710,000
-
710,000
-
-
710,000
-
-
-
-
-
-
236,667
236,667
710,000
473,333
Laboratory
equipment,
fixtures and
fittings
£
3,657,435
63,303
9,202
(24,846)
3,705,094
(168,008)
155,289
3,692,375
3,162,802
54,157
(24,846)
167,798
3,359,911
(152,147)
170,311
3,378,075
345,183
314,300
cost
1st January 2013
Exchange adjustments
Additions during the year
Disposals during the year
1st January 2014
Exchange adjustments
Additions during the year
31st December 2014
depreciation
1st January 2013
Exchange adjustments
Disposals during the year
Charge for the year
1st January 2014
Exchange adjustments
Charge for the year
At 31st December 2014
carrying amount
31st December 2013
31st December 2014
Included within Property, Plant and Equipment is mass
spectrometry equipment with a net book value of £473,333, 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 in 2013. 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.
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
2014
£
2013
£
Loss for the financial year
(3,566,481)
(3,149,159)
2014
number of
shares
2013
number of
shares
Weighted average number
of ordinary shares for the
purposes of calculating basic
earnings per share:
211,129,430
194,015,055
In 2014 and 2013 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 2014 and 31st December 2014
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 37.
The Group regards the UK segment as a single CGU for the
purpose of testing goodwill and the recoverable amounts of the
CGUs are determined from fair value less estimated costs of
disposal. In assessing fair value of the CGU, management and the
directors have considered and assessed the following evidence:
(a) As at 31 December 2014, the market capitalisation for the
Group was £57.8m based on the quoted share price of the
Company of 27p per ordinary share;
(b) During the year raised new equity finance of £5m at 28p per
ordinary share;
(c) Subsequent to reporting date the Group announced it has
been successful in raising £2.495m of new equity finance at
18p per ordinary share.
The directors have concluded that based on the above,
recoverable value exceeds the carrying value of the goodwill
at 31 December 2014.
Proteome Sciences plc Annual report and accounts 2014
46
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
16 non-current investments
company
At 1st January 2013
Additional investment in the year
At 31st December 2013
At 1st January 2014
Additional investment in the year
Provisions for impairment during the year
At 31st December 2014
cost of shares
in subsidiary
undertakings
£
Loans to
subsidiary
undertakings
£
total
£
4,949,392 36,924,619 41,874,011
1,737,662
1,535,072
202,590
5,151,982 38,459,691 43,611,673
5,151,982 38,459,691 43,611,673
3,840,783
3,659,303
(254,758) (1,211,851)
181,480
(957,093)
4,376,369 41,864,236 46,240,605
(i) The increase in the cost of shares in subsidiary undertakings of £181,480 (2013: £202,590) 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 2014 arose from the provision of further funds to the Company’s trading
subsidiary and German subsidiary company.
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
Xzillion GmbH & Co. KG
Proteome Sciences, Inc.
Electrophoretics Limited
Veri-Q Inc.
Phenomics Limited
country of
incorporation
and operation
Germany
Germany
Germany
U.S.A.
United
Kingdom
U.S.A.
United
Kingdom
Principal
activity
Administrative
Company
Research
Company
Administrative
Company
Research
Company
Administrative
and Research
Company
Research
Company
Dormant
description and proportion
of shares held by the
company
group
100% Share 100% Share
Capital
Capital
100%
100%
Partnership Partnership
Interest
Interest
100%
100%
Partnership Partnership
Interest
Interest
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 2014
47
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
17 inventories
Work-in-progress
Finished goods
18 other financial assets
a) Trade and other receivables
Trade debtors
R&D tax credit recoverable
Other debtors
Prepayments
No allowance for doubtful debts was recognised in 2014 or 2013.
b) Cash and cash equivalents
2014
£
2013
£
182,153
162,305
240,276
162,305
344,458
402,581
group
2014
£
company
2014
£
group
2013
£
company
2013
£
206,519
647,338
175,467
43,091
1,072,415
–
–
–
–
–
89,324
495,513
123,891
70,216
778,944
–
–
–
–
–
group
2014
£
company
2014
£
group
2013
£
company
2013
£
Cash and cash equivalents
1,868,653
1,512,592
600,262
486,640
19 other financial liabilities
(a) Trade and other payables
Trade creditors
Other provisions and accruals
group
2014
£
company
2014
£
group
2013
£
company
2013
£
28,387
288,774
317,161
–
–
–
27,171
765,460
792,631
–
–
–
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
2014
£
company
2014
£
group
2013
£
company
2013
£
Loan from related party
8,193,078
1,376,052
7,951,234
1,335,434
Proteome Sciences plc Annual report and accounts 2014
48
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
Notes:
(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.
(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) 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
Additional provision in the year
Utilisation of provision
At 31st December
Included in short-term provisions
Included in long-term provisions
Pensions
provisions
£
226,478
60,352
–
other
provisions
£
269,416
69,122
–
2014
total
£
2013
total
£
495,894
129,474
–
511,829
33,051
(48,986)
286,830
338,538
625,368
495,894
312,420
240,512
312,948
255,382
Proteome Sciences plc Annual report and accounts 2014
49
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
company – long term provision
At 1st January
Reduction in provision in the year
At 31st December
£
28,904
(2,786)
26,118
£
57,890
(28,986)
28,904
(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
(i) Other provisions consist of provisions for various professional
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 26(b). This provision will be utilised as members of the
scheme reach retirement age and draw down their pensions.
(iii) Long term provisions include £26,118 (2013: £28,904) for
notional National Insurance contributions payable upon the
exercise of vested LTIP options.
20 Share capital
i) Authorised
330,000,200 (2013: 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)
2014
£
2013
£
3,300,002
3,300,002
49,998
49,998
1,063,822
1,063,822
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 cent per annum.
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
(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. No Redeemable Preference
shares of either class had been allotted and called up at the
31st December 2014 and 2013. At the 31st December 2019 any
redeemable preference shares then in issue must be redeemed
at par by 31st December 2019. The redeemable preference
shares have been classified as equity as the substance and
legal form of the arrangement is equity, with no debt component.
2014
£
2013
£
Ordinary Shares of 1p each
(2014: 214,105,620)
2,141,056
1,962,485
The increase in the number of shares in issue in 2014 arose as
follows:
As at 1st January 2014
Issued in share placing February 2014
At 31st December 2014
2014
number
196,248,477
17,857,143
214,105,620
786,178
5,200,000
786,178
5,200,000
ii) Allotted and called-up
Proteome Sciences plc Annual report and accounts 2014
50
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
iii) Options
At 31st December 2014 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:
number
of shares
amount
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) 2004 and 2011 Long-Term Incentive Plan (“LTIP”)
At 31st December 2014, 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
2013
awarded
in the year
exercised
in the year
Lapsed
in the year
number at
31st december
2014
first vesting
date
700,965
2,596,491
328,105
–
–
–
–
300,000
–
–
– (2,596,491)
–
–
–
–
700,965
–
328,105
300,000
–
7th November, 2014
24th February, 2015
2nd October, 2017
Latest exercise
date
2nd July, 2017
–
–
–
3,625,561
300,000
– (2,596,491)
1,329,070
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
2013
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
2014
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
–
–
(v) 2004 Share Option Plan
At 31st December 2014 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
13,530
20,295
67,650
40,590
12,177
56,826
33,825
244,893
135.30
202.95
676.50
405.90
121.77
568.26
338.25
2,448.93
68.37
31.78
36.77
36.77
27.72
27.72
15.52
15.7.08 – 15.7.15
9.6.09 – 9.6.16
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
Proteome Sciences plc Annual report and accounts 2014
51
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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
37.77
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 2014 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
167,000
90,000
50,000
25,000
332,000
1,710.00
900.00
500.00
250.00
3,320.00
36.5
49.8
33.75
36.25
17.2.15 – 17.2.22
25.6.16 – 25.6.26
9.6.17 – 9.6.24
25.6.17 – 25.6.24
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 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
21 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 2014 and 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 20(iv) above. The performance conditions attaching to these awards are set out in the Directors’
Report on page 26 and below. Awards are usually forfeited if the employee leaves the Group before the vesting date.
A new Long Term Incentive Plan was introduced in 2011 and the maximum award under this scheme is 628,105 shares. A charge
to the income statement of £181,480 (2013: £179,205) was made during the year in respect of both schemes.
Proteome Sciences plc Annual report and accounts 2014
52
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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.
Outstanding at 1st January, 2013
Exercised in the year
Forfeited in the year
options
479,390
–
(52,950)
Outstanding at 31st December 2013
426,440
Forfeited in 2014
Exercisable at 31st December 2014
Exercisable at 31st December 2013
(181,547)
244,893
426,440
No LTIP awards were exercised during the period.
Outstanding at 1st January, 2013
Granted in the year
Forfeited during the year
Outstanding at 1st January 2014
Granted in the year
Forfeited during the year
Outstanding at 31st December 2014
Exercisable at 31st December 2014
Exercisable at 31st December 2013
2004 Share option Plan
2004 LtiP
Weighted average
exercise price (p)
maximum number
of shares
Weighted average
fair value per share (p)
53.50
–
14.78
46.44
65.71
32.62
46.44
700,965
–
–
700,965
–
700,965
700,965
options
186,000
90,000
(15,000)
261,000
75,000
(4,000)
332,000
–
–
31.70
–
–
–
–
31.70
31.70
2011 Share option Plan
Weighted average
exercise price (p)
36.5
49.9
36.5
47.3
34.6
36.5
39.7
–
–
Proteome Sciences plc Annual report and accounts 2014
53
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
Outstanding at 1st January, 2013
Granted in the year
Outstanding at 31st December 2013
Granted in the year
Lapsing in the year
Outstanding at 31st December, 2014
Exercisable at 31st December, 2014
Exercisable at 31st December, 2013
options
2,924,596
–
2,924,596
300,000
(2,596,491)
628,105
–
–
2011 LtiP
Weighted average
exercise price (p)
18.7
–
18.7
21.7
18.7
23.6
–
–
The options outstanding at 31st December 2014 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
Notes:
2013
no. of months no of months
2014
31.8
96.4
23.8
32.8
102.9
16.5
2014
2013
36.6p
36.6p
60.1% – 52%
4 years
1.13% – 0.60%
none
33.7p
33.7p
60.1% – 58%
4 years
1.47% – 0.87%
None
(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 2014
54
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
22 reserves description and purpose
Share premium
Amount subscribed for share capital in excess of nominal value.
Foreign exchange translation reserve
Gains/losses arising on retranslating the net assets of overseas operations into Sterling.
Retained earnings
All other net gains and losses and transactions with owners (e. g. dividends) notrecognised elsewhere.
Other Reserves
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 Verwaltungs GmbH (now Proteome Sciences R&D Verwaltungs GmbH) and Xzillion Proteomics GmbH & Co KG.
Equity Reserves
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.
Group Reconstruction Reserve
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.
The Company has taken advantage of Group reconstruction relief as allowed by section 611 of the Companies Act 2006.
23 notes to the consolidated cash flow statement
Operating loss
Adjustments for:
Depreciation of property, plant
and equipment
Impairment of investments in subsidiaries
Non cash item
Share-based payment expense
Operating cash flows before movements
in working capital
Increase in inventories
(Increase)/Decrease in receivables
(Decrease)/Increase in payables
(Increase)/Decrease in provisions
group
2014
£
company
2014
£
group
2013
£
company
2013
£
(3,993,518) (1,305,725) (3,372,515)
(90,968)
406,978
–
–
181,480
–
1,211,851
–
–
167,798
–
(710,000)
202,590
–
–
–
–
(3,405,060)
58,123
(281,384)
(459,547)
129,474
(93,874) (3,712,127)
(71,150)
284,977
313,097
(15,935)
–
–
–
(2,786)
(90,968)
–
–
(39,418)
(28,986)
cash used in operations
(3,958,394)
(96,660) (3,201,138)
(159,372)
Proteome Sciences plc Annual report and accounts 2014
55
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
24 analysis and reconciliation of net debt
1st January 2013
Non-cash items
Cash flow
Effect of foreign exchange rate changes
debt due cash at bank
and in hand
£
within 1 Year
£
net funds/
(debt)
£
(6,725,884)
(225,350)
(1,000,000)
–
858,249
–
(5,867,635)
(225,350)
(218,268) (1,218,268)
(39,719)
(39,719)
31st December 2013
(7,951,234)
600,262
(7,350,972)
1st January 2014
Non-cash items
Cash flow
Effect of foreign exchange rate changes
31st December 2014
25 analysis and reconciliation of net debt – company
1st January 2013
Cash flow
31st December 2013
1st January 2014
Cash flow
31st December 2014
(7,951,234)
(241,844)
–
–
600,262
–
1,376,895
(108,504)
(7,350,972)
(241,844)
1,376,895
(108,504)
(8,193,078) 1,868,653
(6,324,425)
debt due cash at bank
and in hand
£
within 1 Year
£
net funds/
(debt)
£
(1,587,146)
(46,926)
576,301
(89,661)
(1,010,845)
(136,587)
(1,634,072)
486,640
(1,147,342)
(1,634,072)
486,640
(20,548) 1,025,952
(1,147,432)
1,005,404
(1,654,620) 1,512,592
(142,028)
26 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
2014
£
222,432
638,173
company
2014
£
61,500
61,500
group
2013
£
141,046
119,062
company
2013
£
59,531
119,062
860,605
123,000
260,108
178,593
Operating lease payments represent rentals payable by the Group for its laboratory and office properties.
Proteome Sciences plc Annual report and accounts 2014
56
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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 funded defined benefit plan. These plans are
operated in their entirety by the Pensionskasse der Mitarbeiter
der Hoechst-Gruppe VVaG (Hoechst Group), 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
scheme are included within the amount charged to the income
statement in respect of pension contributions.
Funding contributions paid by the Group are based on annual
contributions determined by Hoechst Group, the administrator
for the pension plans. For the year ending 31 December 2015,
funding contributions payable by the Group are based on
employee contributions at the rate of 1.5%–2.5% of wages
and salaries and employer contributions at the rate of 4 times
employee contributions.
The amount charged to the income statement in respect of the
contributions to the scheme in 2014 was £63,984 (2013: £59,096).
The Group does not have any information about any deficit or
surplus in the defined benefit plan that may affect the amount of
future contributions, including the basis used to determine that
deficit or surplus and the implications, if any, for the entity.
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 2%
(2013: 3%). The Company has assumed an income increase of
2.75% (2013: 2.75%) and inflation of 2.25% (2013: 2.25%).
Provisions for future unfunded pension liabilities at 31st December
2014 amounted to £286,830 (2013: £226,478). Amounts
recognised through the consolidated income statement for FY
2014 included service costs of £23,587, interest costs of £6,325
and an actuarial loss of £46,167
(c) Other pension costs in relation to defined contribution
schemes for United Kingdom employees amounted to £148,667
(2013: £112,926)
27 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 19(b), cash and cash equivalents and equity attributable
to equity holders of the parent, comprising issued capital,
reserves and retained earnings as disclosed in the consolidated
statement of changes in equity on page 33.
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:
2014
£
2013
£
Debt
Cash and cash equivalents
(8,193,078)
1,868,653
(7,951,234)
600,262
Net debt
Deficit in equity
(6,324,425)
(7,350,972)
(878,555)
(2,199,812)
Net debt to equity ratio
N/A
N/A
Debt is defined as long and short term borrowings, as detailed
in note 19(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.
Proteome Sciences plc Annual report and accounts 2014
57
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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
2014
£
company
2014
£
group
2013
£
company
2013
£
1,868,653
206,519
1,512,592
–
600,262
89,324
486,640
–
(28,387)
(34,348)
–
–
(8,193,078) (1,376,052) (7,951,234) (1,335,434)
(298,638)
(27,171)
(15,264)
(278,568)
–
–
–
–
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 19(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.
Proteome Sciences plc Annual report and accounts 2014
58
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
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
2014 would have increased by £40,307 (2013: increase in loss by £37,558).
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.
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.
2013
Variable interest rate instruments
2014
Variable interest rate instruments
Weighted average
effective interest
rate
%
Less than 1 month
group
£
company
£
3.00
7,951,234
1,335,434
3.00
8,193,078
1,376,042
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.
2013
Non-interest bearing
Interest bearing
2014
Non-interest bearing
Interest bearing
Weighted average
effective interest
rate
%
Less than 1 month
group
£
company
£
–
0.23
113,622
486,640
486,640
–
0.81
356,061
1,512,592
1,512,592
Proteome Sciences plc Annual report and accounts 2014
59
noteS to tHe conSoLidated financiaL StatementS (continued)
for the year ended 31st December 2014
28 related party transactions
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 19 on page 48.
c) Details of the remuneration of the Directors is set out in note 11 on pages 44 to 45, 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 22 to 23.
d) Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the Group. Key management personnel for the year-ended 31 December 2014 and the comparative period were
as follows:
Christopher Pearce (Executive Chairman)
Geoff Ellis/James Malthouse (Finance Director)
Ian Pike (Chief Operating Officer)
Key management personnel renumeration was as follows:
Salary
Other long-term benefits
Defined benefit scheme costs
Compensations for loss of office
Share based payment expense
2014
£
637,181
28,537
–
–
165,034
2013
£
832,500
53,300
–
–
182,495
830,752
1,068,295
The amounts charged to the income statement relating to Directors in respect of the share-based payment charge was as follows:
2014
£
2013
£
165,034
182,495
29 events after the balance sheet date
(a) On 19th June 2015 the Company completed a placing of 13,861,112 new ordinary shares of 1p each at a price of 18p per share
to raise £ 2.495m before expenses to provide additional working capital for the Group.
Proteome Sciences plc Annual report and accounts 2014
60
adviSerS
nominated advisers and Stockbrokers
Cenkos Securities plc
6,7,8 Tokenhouse Yard
London EC2R 7AS
finnCap
60, New Broad Street
London EC2R 7AS
auditor
BDO LLP
55 Baker Street
London W1U 7EU
Solicitors
Freeth’s LLP1 Heddon Street
Mayfair
London
W1B 4BD
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 Enquiries:
+44(0) 871 664 0300
Proteome Sciences plc Annual report and accounts 2014
61
notice of meeting
Notice is hereby given that the 21st Annual General Meeting
of Proteome Sciences plc will be held at The Law Society,
113 Chancery Lane, London WC2A 1PL on 17th July, 2015 at
12:00 midday, for the purpose of considering and, if thought fit,
passing the following Resolutions of which numbers 1 to 7 will
be proposed as ordinary Resolutions and number 8 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 2014.
2 To re-appoint C.D.J. Pearce as a Director.
3 To appoint BDO 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.
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
(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 £455,933.46.
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
2016, 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.
4 To appoint R.H. McDowell as a Director.
5 To appoint M. Diggle as a Director.
6 To appoint G.Ellis as a Director.
Special business
By order of the Board
Coveham House
Downside Bridge Road
Cobham
Surrey KT11 3EP
Ordinary Resolution
7 THAT the directors of the Company be hereby authorised
g.J. ellis
Secretary
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 £759,889.11
until the conclusion of the next Annual General Meeting of the
Company or 30th June 2016, 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.
22nd June 2015
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 Wednesday 15th July 2015 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.
Special Resolution
8 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:
2.
3.
(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
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.
Proteome Sciences plc Annual report and accounts 2014
62
form of ProxY
for use by holder of Ordinary Shares at the 21st Annual General Meeting
of Proteome Sciences plc to be held on 17th July 2015 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
Annual General Meeting to be held on 17th July 2015 at 12:00 midday, at The Law Society, 113, Chancery Lane, London WC2A 1PL,
and at any adjournment thereof.
as my/our proxy and to vote for me/us and on my/our behalf at the Company’s
Dated this
Signature(s)
day of
2015
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
ordinary business
1. To receive the financial statements
2. To re-appoint C.D.J Pearce as a Director
3. To appoint BDO LLP as auditors
4. To appoint R.H. McDowell as a Director
5. To appoint M. Diggle as a Director
6. To appoint G.Ellis as a Director
for
against
Withheld
Special business
7. To renew the Directors’ authority to allot shares
8. 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 Wednesday 15th July 2015 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 2014
63
form of ProxY
for use by holder of Ordinary Shares at the 21st Annual General Meeting
of Proteome Sciences plc to be held on 17th July 2015 at 12:00 midday
Proxy should be returned to our
registrars, capita asset Services at:
PXS
34 Beckenham Road
Beckenham
Kent BR3 4TU
Proteome Sciences plc Annual report and accounts 2014
64
#
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.
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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