260759 Proteome cover.qxp 01/04/2021 11:21 Page ofc1
9
5
7
0
6
2
n
a
v
i
r
e
P
Proteome Sciences plc
Registered number: 02879724
Report and Financial Statements
for the year ended 31 December 2020
260759 Proteome cover.qxp 01/04/2021 11:21 Page IBC1
ADVISERS
Allenby Capital Limited
5 St Helen’s Place
London
EC3A 6AB
BDO LLP
55 Baker Street
London
W1U 7EU
Freeths LLP
1 Vine Street
London
W1J 0AH
Barclays Bank Plc
Pall Mall Corporate Banking Group
50 Pall Mall
London
SW1Y 5AX
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Link Asset Services
+44(0) 871 664 0300
NOMINATED ADVISER
AND BROKER:
AUDITOR:
SOLICITOR:
BANKER:
REGISTRAR:
Shareholder Enquiries:
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 1
CONTENTS
BUSINESS REVIEW
Chief Executive Officer’s Statement
Strategic Report
GOVERNANCE
Board of Directors
Corporate Governance
Audit Committee Report
Remuneration Committee Report
Directors’ Report
FINANCIAL STATEMENTS
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Company Balance Sheet
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated and Company Cash Flow Statements
Notes to the Consolidated Financial Statements
AGM INFORMATION – NOTICE OF MEETING
Page
2
6
13
14
21
23
26
30
37
38
39
40
41
42
43
44
79
Proteome Sciences plc
1
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 2
CHIEF EXECUTIVE OFFICER’S STATEMENT
for the year ended 31 December 2020
This has been a challenging year for all industries
with the COVID-19 pandemic affecting the way we
do business with our clients and the way we had to
adapt how we operate our laboratories. We are
particularly proud with how we responded as an
organisation to not only survive these challenges
but also to continue to grow service revenues and
maintain post-tax profitability. Despite
the
particularly difficult trading background in 2020,
Group revenues for the full year increased by 2%
to £4.75m (2019: £4.66m). Services increased 55%
to £1.44m (2019: £0.93m) as the benefits of
expanding our salesforce started to be realised.
Sales and royalties attributable to TMT® and
TMTpro™ reagents were £3.27m (2019: £3.70m).
However when we exclude the £0.75m milestone
recognized in 2019 from the £3.70m TMT® sales in
2019 and put the total in relation to our 2020 TMT®
sales of £3.27m, the result is an underlying growth
of 11% year on year. Total costs were £4.20m
(2019: £4.36m) and resulted in a 83% improvement
in operating profits to £0.55m (2019: £0.30m) and
a profit after tax of £0.29m (2019: £0.15m). Cash
reserves at the year-end increased to £2.21m
(2019: £0.80m) that included some pre-payment for
2021 service products and early receipt of Q1
TMT® and TMTpro™ stock orders.
Services
Our services business has shown strong
performance over the year. We were fortunate that
work on projects spanned the introduction of
COVID-19 travel restrictions and allowed us time to
adapt working practices and re-design the sales
process to a fully virtual model. Due to the lack of
high-level biological containment facilities, we were
unable to handle any COVID-19 infected samples
and have not worked directly on any studies
relating to the pandemic. However, we did not have
any evidence that biopharmaceutical companies
have de-prioritised their ongoing research projects
in other therapeutic areas and we do not expect
for
any restrictions on outsourcing budgets
proteomics studies going forward.
The strength of H1 performance was maintained
during the second half of the year and whilst the
disparity in revenues was less marked, Q4
remained the strongest in terms of both revenues
received and new orders taken. In total, we took
orders worth £1.57m, a 2% increase over the
previous year (2019: £1.54m). Our results underline
the increasing use of outsourced proteomics in
pharmaceutical and biotechnology research and
we expect this to continue well into the 2020’s as
pharmaceutical and biotechnology companies look
to add more functional value to their genomic data.
During the year we continued to expand our
activities in the analysis of research samples to
discover new pharmacodynamic biomarkers,
signing up new clients and applying our
TMTcalibrator™ and Super Depletion methods,
both of which are part of our analytical methods,
in novel therapeutic areas. We also performed
several targeted assay development programs
across a range of matrices and therapeutic areas.
These should lead to the analysis of larger volume
clinical scale samples in the future.
Following the expansion of the sales team in
August 2019, we have benefitted from a much
stronger engagement across Europe with several
significant new clients in the biopharmaceutical
industry. Our sales growth in Europe was mirrored
by further increases from North America with a
more even balance between the two regions in full
year revenues. We were particularly encouraged to
receive multiple repeat orders from several clients
as we establish ourselves as the preferred partner
for mass spectrometry-based proteomic services.
Our strong sales performance came against the
backdrop of COVID-19 travel restrictions and
cancellation of essentially all scientific conferences
and trade shows as attended events. We were able
to rapidly evolve our sales and marketing tools and
we maintained virtual exhibition booths at a number
of
the major on-line business-to-business
conferences relevant to our industry sector. We
were also fortunate to have completed an extended
business development project in the United States
in February, and this resulted in a number of orders
received during the year.
With the increased focus on remote sales and
marketing activities we continue to book space at
2
Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 3
CHIEF EXECUTIVE OFFICER’S STATEMENT
for the year ended 31 December 2020
virtual based conference and trade shows where
we feel this format was effective, in the first half of
2021. Others will
in
physical/attended form in the second half of 2021.
hopefully
occur
Licences
Revenues received from our intellectual property
licensing continue to represent the majority of our
income, mainly through sales of TMT® and
TMTpro™ reagents. This remained the case in
2020, though the closure of many academic
research laboratories for part of the year inevitably
impacted the use of these reagents. Overall, this
resulted in a 12% reduction in our total revenues to
£3.27m (2019: £3.70m). However, when we exclude
the £0.75m milestone recognized in 2019 from the
£3.70m TMT® sales in 2019 and put the total in
relation to our 2020 TMT® sales of £3.27m, the
result is an underlying growth of 11% year on year.
Taken as a whole, there was a small contraction in
TMT®/TMTpro™ use in 2020 but we expect this to
rebound quickly as COVID-19 vaccination
programs allow more normal levels of activity in
research
both academic and commercial
laboratories.
Now that TMTpro™ has been in the market for over
a year we are beginning to see an impact on the
existing tag market as TMT® sales are starting to
decline. This is consistent with market demands for
higher plexing rates enabling higher-throughput
experiments and more reproducible data. Under
normal circumstances we would have expected the
combined revenues to have maintained relatively
strong growth with TMTpro™ becoming the
dominant product by the end of 2021. However,
this has been affected by COVID-19, but we still
expect total revenue growth and the TMTpro™
percentages to increase throughout this year.
Progress on development of tests for stroke by our
licensees Randox Laboratories (UK) and Galaxy
CCRO (USA) have been severely affected by the
COVID-19 pandemic, restricting patient enrolment
in the Randox clinical study and hindering product
development of the Galaxy CCRO Lateral Flow
Device as companies
focus on developing
COVID-19 tests. Whilst some progress was made
in the fourth quarter, the ongoing second wave of
cases in the Northern hemisphere will inevitably
lead to further delays with CE marking.
Research
We have focused our activities mainly in the
provision of commercial services with little spare
capacity for undertaking novel research. We have
however, continued to evaluate the tryptophan
metabolite assay within the multinational research
project PROMETOV supported by the EU ERA-NET
TRANSCAN-2 programme. The results of this study
are encouraging, and a manuscript
in
preparation. In parallel, a long-running analysis of
the assay in analysis of glioblastoma patients
performed in collaboration with several academic
research groups has now completed and a
manuscript submitted for publication.
is
for
our
The proteomic data we generated showing
drug-related changes in cerebrospinal fluid tau
phosphorylation
client Cognition
Therapeutics has also been included in a recently
published manuscript describing the development
and clinical testing of Elayta™. Citation: “Izzo NJ,
Yuede CM, LaBarbera KM, et al. Preclinical and
clinical biomarker studies of CT1812: A novel
approach to Alzheimer’s disease modification.
Alzheimer’s Dement. 2021;1-18.
Operating Environment
The dominant feature for all businesses has been
the impact of COVID-19 on their operations. For
much of the pharmaceutical industry, this has
represented a major opportunity to focus resources
on the discovery of new therapies and in some
cases the repurposing of existing drugs that
impact on different aspects of the disease.
However, in terms of proteomics, much of the early
work on COVID-19 was conducted in academic
laboratories. Whilst we were unable to participate
in this research directly due to lack of the highest
level of biological containment required, we were
pleased to see the prominent use of TMT® and
TMTpro™ reagents to unravel the virus-host
interactions to identify new drug and vaccine
targets and as such we have benefited from the
COVID-19 dynamics indirectly.
i
i
w
w
e
e
v
v
e
e
R
R
s
s
s
s
e
e
n
n
s
s
u
u
B
B
i
i
e
e
c
c
n
n
a
a
n
n
r
r
e
e
v
v
o
o
G
G
s
s
t
t
n
n
e
e
m
m
e
e
t
t
a
a
t
t
S
S
l
l
i
i
a
a
c
c
n
n
a
a
n
n
F
F
i
i
n
n
o
o
i
i
t
t
a
a
m
m
r
r
o
o
n
n
I
I
f
f
Proteome Sciences plc
3
M
M
G
G
A
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 4
CHIEF EXECUTIVE OFFICER’S STATEMENT
for the year ended 31 December 2020
Whilst most of our major markets employed some
form of temporary lock down, pharmaceutical
research activity was maintained at near-normal
levels and our clients were able to produce the
samples required for proteomic analysis with
minimal delays. As we started the year with a
strong order book and samples already at our
laboratory facility in Frankfurt, the overall impact on
operations was minimal. The quality of our services
was also unaffected by COVID-19 restrictions and
our dedicated staff ensured we did not lose any
production capacity during the year. Our clients
also continued to provide very positive feedback
and we received multiple repeat orders reflecting
our growing role as preferred suppliers.
Perhaps the biggest direct impact of COVID-19
restrictions has been on our sales and marketing
activities where the normal mix of on-site meetings
and trade shows was severely affected. Having
completed extensive business development
activities in January and February 2020, all
subsequent activities were performed virtually.
Based on our experience during the year, we have
identified several trade shows and conferences
where the virtual format is effective and virtual
booths led to strong customer interest. In addition,
we have developed an effective virtual marketing
activity through directed e-marketing and we
expect this to be a significant feature for at least the
first half of 2021.
Ian Pike was interim CEO until September 2020
when Mariola Söhngen joined as the new CEO and
we both started a review of the business to explore
identify
further operational efficiency and
complementary products and services that can
add further value to our customers. This review is
still ongoing. Overall, the strong level of interest in
our services and number of project proposals
written has shown that the demand for outsourced
proteomics services remains high.
Following the conclusion of UK’s trade deal with the
European Union on 30 December 2020 we do not
expect a major impact on our business operations
as we do not transfer products physically across
the UK border. Similarly, the process of sample
shipment for our clients outside the UK will
remain unaffected.
In common with previous years, we applied for the
R&D tax credit and payment of our 2019 claim was
received in a timely manner. As expected, our move
to more contract research projects led to a
reduction in the size of the R&D tax credit and as
we move towards sustainable profitability, we may
become ineligible to receive payments under this
scheme in future.
Volatility in foreign exchanges during the year
affected non-sterling denominated revenues as
well as costs associated with the Frankfurt
laboratory, but the overall effect on operating profit
was mostly neutral.
In this most challenging year, we are extremely
grateful to the dedication and hard work of all staff
who have remained focused on delivering the
highest volume and value of customer projects in
our history. We have managed to sustain the
positive progress of 2019 with strong growth in our
the
service revenue streams. Bolstered by
continued strong revenues from TMT®/TMTpro™
the business is well set for further growth.
Outlook
2020 was a very demanding year for our industry.
The dynamics of the pandemic are still unclear and
will depend on the speed of the vaccination
programs internationally as well as the already
seen and
further expected virus mutations
remaining responsive to the currently available
vaccinations. We continue to monitor market
developments globally and specifically in the UK
and Germany with the health and safety of our staff
being our highest priority.
In the current year we expect further growth from
both TMTpro™ and the service business, assuming
that the general economic situation will return to
more normality in the second half of 2021 and that
we will see a relevant percentage of repeat
customer business in services with the strong new
relationships established
in 2020. Retaining
satisfied clients is one part of the equation, the other
identifying new clients. This will heavily depend on
4
Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 5
CHIEF EXECUTIVE OFFICER’S STATEMENT
for the year ended 31 December 2020
The Board is confident that the progress made in
the last 2 years is a good basis for the further
development of our company. The strong order
book for 2021 and our cash position are a good
starting point to the coming year.
We would like to thank our shareholders and
employees for their continuing support and we look
forward to communicating further progress during
2021. This statement is signed by both the interim
CEO and the CEO as both were responsible for
part of 2020.
Dr. Ian Pike Dr. Mariola Söhngen
Interim CEO Chief Executive Officer
Chief Scientific Officer
31 March 2021 31 March 2021
the responsiveness of the market regarding virtual
trade shows and conferences which will remain the
main format of meeting clients in 2021. For the
development of our TMT®/TMTpro™ business the
research
speed of both commercial and
laboratories returning to more normal activity status
during the year will be important for full year revenue
growth. We will track all these developments and
intensively and adjust our market
dynamics
outreach as much as possible.
increasingly vital role
We have started an internal analysis on growing our
business further in addition to our current activities.
As much as the Contract Research Organisation
(CRO) proteomic outsource market
is highly
fragmented and dominated by a small number of
key providers, we believe that with our specialist
expertise the market for our niche services has the
potential to grow substantially as proteomics plays
in drug discovery,
an
development and in the response to current and
future medical challenges. We will evaluate the full
potential of collaborations in the market as well as
adding new products and services to our existing
portfolio. The dynamics of such activities will very
much depend on the markets returning to a more
normal pattern and
responding accordingly.
Strategically we will evaluate both organic and
external opportunities.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc
5
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 6
STRATEGIC REPORT
for the year ended 31 December 2020
Review of the Business
The principal activities of the Group involve protein
biomarker research and development. As a leader
in applied proteomics, we use high sensitivity
proprietary techniques to detect and characterise
differentially expressed proteins in biological
samples for diagnostic, prognostic and therapeutic
applications.
invented and
In addition, we
developed the technology for TMT® and TMTpro™,
and manufacture these small, protein-reactive
chemical reagents which are sold for multiplex
quantitative proteomics under exclusive license by
Thermo Scientific.
Proteome Sciences is a leading provider of
contract research services for the identification,
validation and application of protein biomarkers.
Our clients are predominantly pharmaceutical &
biotechnology companies, but we also perform
services for other sectors including academic
research. While we have several well-established
workflows that meet the needs of many customers,
we retain our science-led business focus wherever
possible, developing new analytical methods and
data analysis tools to provide greater flexibility in
the types of studies we can deliver. Our contract
remains centred on mass
service offering
is
spectrometry-based proteomics, and
becoming more widely implemented in drug
development projects as the pharmaceutical
industry seeks to expand biological knowledge
beyond genomics. These services are fully aligned
with the drug development process, can be used
in support of clinical trials and in vitro diagnostics,
and include proprietary bioinformatics capabilities.
this
Progress during 2020
Growing Our Services Business
The use of outsourcing to specialist service
laboratories within the biopharmaceutical sector
continues to grow in value, particularly in the area of
proteomics. This has been further expedited by the
ongoing COVID-19 pandemic and we see that many
of the academic core labs that have provided such
services in the past are currently closed creating a
number of new opportunities for us. To ensure we
can offer our clients the best service, we continue to
invest significantly in direct sales activities with
6
Proteome Sciences plc
intensive virtual meetings, e-marketing blasts,
participation in virtual conferences and trade shows
to attract clients to our offerings.
The competitive landscape for proteomics services
has remained stable through this year, though we
have seen some significant
funding around
companies providing new products for mass
spectrometry-based proteomics including an initial
public offering from Seer, Inc. and a private Series
B round from Newomics, Inc. towards the end of
the year, suggesting US investor interest in the
is growing. We have also seen
sector
developments from established companies such as
SomaLogic, O-Link and Quanterix relating to
aptamer and antibody products, further reflecting
the growing recognition of the importance of
protein biomarkers in precision healthcare. Our
services sit between these two ends of the
proteomics spectrum and we are exploring ways
to leverage our experience and reputation in the
service sector to build synergies with these
emerging technologies.
in
traction
is gaining more
Proteomics
biopharmaceutical research
As many biopharmaceutical companies are now
progressing genomics-based drugs through to
clinical trials, they are recognizing the need to
provide protein biomarker readouts to support
clinical assessment. It has been a particular feature
in the last 2 years that we are performing more
biomarker discovery projects in Phase 2 and 3
clinical
from pre-clinical
development. The unique combination of
TMTcalibrator™ and protein depletion strategies
have been
for
delivering pivotal biomarker candidates from these
studies and we are taking several of these targets
forward into more targeted assay development
using mass spectrometry methods.
in our success
trial cohorts
fundamental
than
It is also clear that the need to understand how
diseases and drug treatments affect the fate of
proteins both individually and at a systems level is
becoming a central aspect of much new drug
development. Preliminary analysis of
these
processes has revealed new classes of small
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 7
STRATEGIC REPORT
for the year ended 31 December 2020
targeting
the
molecules and biotherapeutics
machinery of protein stability and degradation. Our
novel workflows are well suited to supporting such
programs and we are currently working with
several customers on early pre-clinical projects in
this area.
We have also seen a growing need for integration
of protein expression data with other ‘omics, most
specifically transcriptomics. We have reorganized
our computational proteomics and bioinformatics
groups into a single unit and recruited an additional
data scientist to increase our capacities in this
rapidly evolving area.
In addition, we are
maintaining links with significant groups both in
academia and industry who are at the forefront of
designing integrative tools and require access to
our very high-quality data. We expect to see
significant progress in this area during the
coming year.
Current research activities
We have focused our activities mainly in the
provision of commercial services with little spare
capacity for undertaking novel research. We have
however, continued to evaluate the tryptophan
metabolite assay within the multinational research
project PROMETOV supported by the EU ERA-NET
TRANSCAN-2 programme. The results of this study
are encouraging, and a manuscript
in
preparation. In parallel, a long-running analysis of
the assay in analysis of glioblastoma patients
performed in collaboration with several academic
research groups has now completed and a
manuscript submitted for publication.
is
our
fluid
in cerebrospinal
for
The proteomic data we generated showing drug-
related changes
tau
phosphorylation
client Cognition
Therapeutics has also been included in a recently
published manuscript describing the development
and clinical testing of Elayta™. Citation: “Izzo NJ,
Yuede CM, LaBarbera KM, et al. Preclinical and
clinical biomarker studies of CT1812: A novel
approach to Alzheimer’s disease modification.
Alzheimer’s Dement. 2021;1-18
Status of the Tandem Mass Tag® Product Portfolio
Revenues received from our intellectual property
licensing continue to represent the majority of our
income, mainly through sales of TMT® and
TMTpro™ reagents. This remained the case in
2020, though the closure of many academic
research laboratories for part of the year inevitably
impacted the use of these reagents. The sales of
these, excluding the £0.75m from TMT® sales in
2019, of £3.70m the underlying growth equated to
11% on sales and running royalties. There was a
in use of
change
TMT®/TMTpro™ in 2020 as customers moved
increasingly to the recently introduced TMTpro™
but overall we expect the combined use of
TMT®/TMTpro™ reagents to rebound as soon as
COVID-19 vaccination programs allow more normal
levels of activity in academic and commercial
research laboratories with TMTpro™ becoming the
dominant product by the end of 2021. This is
consistent with market demands for higher plexing
rates enabling higher-throughput experiments and
more reproducible data.
in pattern of usage
Research Organisations
We made progress in the licensing of third-party
Contract
using
TMT®/TMTpro™ and expect this activity to increase
in the coming year as we work with our licensee
Thermo Scientific
level of
engagement of their technology licensing group.
increase
the
to
Progress on development of tests for stroke by our
licensees Randox Laboratories (UK) and Galaxy
CCRO (USA) have been severely affected by the
COVID-19 pandemic, restricting patient enrolment
in the Randox clinical study and hindering product
development of the Galaxy CCRO Lateral Flow
Device as companies
focus on developing
COVID-19 tests. Whilst some progress was made
in the fourth quarter, the ongoing second wave of
cases in the Northern hemisphere will inevitably
lead to further delays with CE marking.
Patent Applications and Proprietary Rights
Patents and intellectual property rights underpin
several key aspects of our business and we
received allowance of seven patents during the
year, including cases covering the TMTpro™
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc
7
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 8
STRATEGIC REPORT
for the year ended 31 December 2020
reagents and TMTcalibrator™ in the United States
and several new biomarker panels in a range of
different territories. The costs of prosecution and
maintenance of our portfolio remains closely
controlled and was in line with expectations.
Strategic evaluation
We have started an internal analysis on how to
grow our business further and in addition to our
current activities. As much as the proteomics
market is characterized by a relatively small
number of comprehensive service providers and
as such competitors, we believe that the market for
our services has the potential to grow substantially
as proteomics plays an increasingly vital role in
drug discovery, development and in the response
to current and future medical challenges. We will
evaluate the full potential of collaborations in the
market as well as adding new products/services to
our existing portfolio. The dynamics of such
activities will very much depend on the markets
returning to normal and further players in the
market being responsive again. Strategically we will
evaluate both organic and external opportunities.
Board Changes
After Dr Jeremy Haigh, Chief Executive Officer, had
resigned in late 2019 Dr. Ian Pike, Chief Scientific
Officer, assumed the duties of the CEO in an
Interim role. He retained this role until Dr Mariola
Söhngen joined the Board mid September 2020 as
Chief Executive Officer.
Financial Review
Results and Dividends
Key Performance Indicators (KPI’s)
(cid:129)
The directors consider that revenue and profit
before/after tax are important in measuring
Group performance. The profile of the Group
has changed as a result of ongoing licensing
agreements and with the adoption/conclusion
of other commercial agreements and service
contracts. The performance of the Group is set
out in the Chief Executive Officer’s Statement.
(cid:129)
The directors believe that the Group’s rate of
cash expenditure and its effect on Group cash
resources are important. Net cash inflows from
8
Proteome Sciences plc
£0.02m).
operating activities for 2020 were £1.59m
(2019:
cost-containment
The
measures put in place in the previous years
were consolidated, and we achieved strong
growth in both TMT® and biomarker services
revenues. Consequently, we did not require
further draw down from the arranged loan from
Vulpes. Cash at 31 December £2.21m
(2019: £0.80m).
(cid:129) Contract
revenues
from our proteomics
(biomarker) services should increase both in
absolute terms and as a proportion of total
Group revenues; in 2020 we increased service
income by 55% to £1.44m (2019: £0.93m). As
a proportion of total Group revenue service
income in 2020 was 30% compared to 24% in
2019. We expect growth in revenue from
biomarker services to continue in the coming
year, along with the percentage contribution to
total revenues.
Financial Performance
For the twelve-month period ended 31 December
2020
to £4.75m
revenue
(2019: £4.66m).
increased 2%
(cid:129)
Licences, sales and services revenue increased
2% to £4.71m (2019: £4.63m). This is comprised
of two revenue streams: TMT®-related revenue
and Proteomic (Biomarker) Services. Sales and
royalties for TMT® tags increased by 11% to
£3.27m
the
exceptional TMT® sales milestone payment of
£0.75m recognized in 2019).
(2019 £3.70m)
(excluding
(cid:129) Grant income was £0.04m (2019: £0.02m).
(cid:129)
The profit after tax was £0.29m (2019: £0.15m).
Taxation
Owing to the changing nature of our services
business, with a stronger focus on commercial
activities, we have not fully assessed our available
R&D tax credit for 2020, and such amounts are only
recognised when reasonably assured. We received
a cash payment of £0.14m in the year in relation to
the R&D tax credit for 2019.
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 9
STRATEGIC REPORT
for the year ended 31 December 2020
Costs and Available Cash
(cid:129)
The Group maintained a positive cash balance
in 2020 and continues to seek improved cash
flows from commercial income streams. Our
operating costs have remained stable which
enabled positive cash
throughout
the year.
flows
(cid:129) Administrative expenses in 2020 were £2.04m
(2019: £2.65m).
(cid:129) Staff costs for the year were £2.15m (2019:
£2.11m).
(cid:129) Property costs without charges on rent of
£0.20m were in line with previous years.
(cid:129) Other administrative costs decreased
to
£0.14m (2019: £0.26m) mainly due to lower
travel expenses due to COVID-19 restrictions.
(cid:129)
Finance costs relate to interest due on loans
from two major investors in the Company and
lease interest. Costs of £0.30m were lower than
the prior year (2019: £0.34m).
(cid:129) Profit after
tax
for 2020 was £0.29m
(2019: £0.15m). The net cash inflow from
operating activities was £1.59m (2019: £0.02m).
£2.21m
the
Cash
(2019: £0.80m).
year-end was
at
Management of Risk: The Group has sought to
manage this risk by broadening its proteomic
services offering by increasing the depth of
unbiased discovery experiments and broadening
capabilities for targeted assay development,
investing in our own sales by employing a
dedicated Sales Manager in Europe, dedicating
more staff time to direct business development
activities in our principal commercial territories and
adopting conventional service-based metrics
directed at speed, cost and quality.
Dependence on Key Personnel
The Group depends on its ability to retain a limited
number of highly qualified scientific, commercial
and managerial personnel, the competition for
whom is strong. While the Group has entered into
conventional employment arrangements with key
personnel, their retention cannot be guaranteed as
evidenced by two resignations during 2020.
Management of Risk: The Group has a policy of
organising its work so that projects are not
dependent on any one individual, and we have
strong managerial oversight and support for our
laboratory-based staff. Retention is also sought
through
of
remuneration packages, performance related
bonus payments, and the opportunity for share
option grants.
role-based
reviews
annual,
Principal Risks and Uncertainties
Commercialisation Activities
It is uncertain whether our range of contract
proteomic services will generate sufficient
revenues for the Group ultimately to be successful
in an increasingly competitive commercial market
which generally favours companies with a broader
technology platform than our own. Progress in 2020
was encouraging as both interest and orders
increased quarter on quarter. This reflects the
growing recognition that proteomics requires a
high level of expertise only generally available in
specialised service providers.
Cash Limitations
Despite remaining cash positive, making a small
profit and seeing steady growth in our proteomics
services revenues in 2020 we are still reliant on
TMT® sales and royalties for the majority of our
revenues and working capital to invest in growing
the business remains limited. In our strategic
evaluations regarding shaping the company’s
financing
future we will need
such activities.
to consider
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc
9
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 10
STRATEGIC REPORT
for the year ended 31 December 2020
Management of Risk: In addition to previous cost
reduction and ongoing containment measures
which have significantly changed the cost profile
of the business over the last two years, we also
actively engage with our major creditors to manage
the Company’s debt.
Competition and Technology
The international bioscience sector is subject to
rapid and substantial technological change. There
can be no assurance that developments by others
will not render the Group’s service offerings and
research activities obsolete or otherwise
uncompetitive. Proteomics remains a growth area
where increasing demand from the pharmaceutical
industry remains ahead of the growth in service
provider capacities.
Management of Risk: The Group employs highly
experienced
research scientists and senior
managerial staff who monitor developments in
technology that might affect the viability of its
service business or research capability. This is
achieved through access to scientific publications,
attendance at conferences and collaboration with
other organisations.
Licensing Arrangements
The Group intends to continue sub-licensing new
discoveries and products to third parties, but there
can be no assurance
licensing
arrangements will be successful.
that such
Management of Risk: The Group manages this risk
by a thorough assessment of the scientific and
feasibility of proposed research
commercial
projects which is conducted by an experienced
management team. Risk has also been reduced by
decreasing the overall number of research projects
and re-distributing available resources.
Patent Applications and Proprietary Rights
The Group seeks patent protection for identified
protein biomarkers which may be of diagnostic,
prognostic or therapeutic value, for its protein-
reactive, chemical mass tags, and for its other
proprietary
successful
commercialisation of such biomarkers, chemical
tags and proteomic workflows is likely to depend
on the establishment of such patent protection.
However, there is no assurance that the Group’s
technologies.
The
10 Proteome Sciences plc
pending applications will result in the grant of
patents, that the scope of protection offered by any
patents will be as intended, or whether any such
patents will ultimately be upheld by a court of
competent jurisdiction as valid 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.
Management of Risk: The Group retains limited but
in house,
experienced patent capability
supplemented by external advice, which has
established controls to avoid the release of
patentable material before it has filed patent
applications. Maintenance of the existing patent
portfolio is subject to rigorous biannual review
ensuring that its ongoing cost is proportional to its
perceived value.
research
pharmaceutical
Coronavirus (COVID-19) Pandemic
The rapid emergence of the coronavirus pandemic
to many
has caused significant disruption
manufacturing and retail businesses where the
implementation of social distancing measures is
not practical or deemed ineffective. In many
and
countries
development has been protected from more
general restrictions on worker travel and we expect
this to remain to be the case throughout the
pandemic. However, there is a risk that we will be
forced to suspend operations in our laboratory in
Frankfurt, or that our clients cannot source and ship
samples for analysis, leading to delay in completion
of projects. We have also seen a number of
international and national
trade shows and
exhibitions be postponed or move to a virtual
format. As these events are one of the methods
to business
used
introductions there is the potential that there may
be an impact to our business development
activities. With the vaccination campaigns having
started in late 2020, it is still unclear when an
effective immunity of the population will be reached
which
the
manufacturing capacities of the vaccine producing
companies. In addition, it cannot be guaranteed
that current vaccines will be efficacious against
new variants or how quickly new vaccines could be
generated. It is, therefore, reasonable to assume
is very much dependent on
to establish business
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 11
STRATEGIC REPORT
for the year ended 31 December 2020
that 2021 (or at least the majority of the year) will
be very much affected by the pandemic and hence
businesses (including ours) will continue
to
be impacted.
Management of Risk: We have implemented social
distancing and enhanced cleaning measures for
our laboratories and implemented home working
for all UK staff and those capable of doing so in
Frankfurt. We have also cancelled all site visits
other than essential maintenance. Our sales staff
are also working from home and using our
prospect database to engage new business. We
will continue to monitor the ability to deliver client
work and ensure we are able to utilise any central
or regional Government funding available to
support businesses during the pandemic.
Section 172 statement
Recent
introduced requiring
companies to include a statement pursuant to
section 172 of the Companies Act 2006.
legislation was
The Board recognises the importance of the
Group’s wider stakeholders when performing their
duties under Section 172(1) of the Companies Act
and their duties to act in the way they consider, in
good faith, would be most likely to promote the
success of the company for the benefit of its
members as a whole, and in doing so have regard
(amongst other matters) to:
(a) the likely consequences of any decision in the
long term,
(b) the interests of the company’s employees,
(c) the need to foster the company’s business
relationships with suppliers, customers and
others,
(d) the impact of the company’s operations on the
community and the environment,
(e) the desirability of the company maintaining a
reputation for high standards of business
conduct, and
(f)
the need to act fairly as between members of
the company.
The Board considers that all their decisions are
taken with the long-term in mind, understanding
that these decisions need to regard the interests of
the company’s employees, its relationships with
suppliers, customers, the communities and the
environment in which it operates. It is the view of
the Board that these requirements are addressed
in
the Corporate Governance Statement on
page 14, which can also be found on the
company’s website www.proteomics.com.
For the purpose of this statement detailed
descriptions of the decisions taken are limited to
those of strategic importance. The Board believes
that three decisions taken during the year fall into
this category and were made with full consideration
internal and external stakeholders
of both
as follows:
(cid:129) COVID-19.
The Board took several decisions during the year
in respect of the Group’s response to COVID-19.
The Board’s aim was to ensure the safety of all its
employees whilst continuing to deliver a high level
of service to its customers.
The Board considered the health, safety and
wellbeing of the employees to be of paramount
concern especially those that were required to
remain on-site to support customer projects. The
Board approved the implementation of strict
measures for those who continued to work on-site.
Homeworking arrangements were made for those
employees that were able to do so.
The Board regularly reviewed the Group’s ability to
continue to deliver services to its customers. The
Board were satisfied that the plans in place would
enable the Group to meet the demands of
customers.
(cid:129) Annual General Meeting
Whilst the Board encourages engagement with the
Group’s shareholders the difficult decision was
taken that in the best interests of shareholders and
employees that the Annual General Meeting would
take place as a closed meeting enabling the
business of the meeting to be concluded in a safe
and timely manner.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 11
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 12
STRATEGIC REPORT
for the year ended 31 December 2020
(cid:129) Loan Agreement - First Amendment
The Board made the decision to agree an
amendment to the Loan Agreement with Vulpes
Investment Management to extend the term to
1 May 2021. The Board considered that by doing
so it would promote the success of the Company
for the benefit of the members as a whole.
By Order of the Board
Hamilton House
Mabledon Place
London WC1H 9BB
V Birse
Company Secretary
31 March 2021
12 Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 13
BOARD OF DIRECTORS
for the year ended 31 December 2020
Dr Mariola Söhngen
(appointed 15 September 2020)
Chief Executive Officer
Mariola Söhngen has established a strong and
successful career in the pharmaceutical industry
both in the US and Europe. She was a co-founder
of Paion AG which developed a clinical-stage asset
for the treatment of stroke and subsequently
delivered a novel anaesthetic that received FDA
and other national approvals in 2020. She was
instrumental in the acquisition of UK listed CeNeS
Pharmaceuticals plc by Paion AG. She has also
held roles as CEO at Mologen AG and Convert
Pharmaceuticals and most
ran a
pharmaceutical consultancy with a strong focus on
supporting Chinese companies and investors
trying to enter the European pharmaceuticals
research and development market.
recently
Dr Ian Pike
Interim Chief Executive Officer (appointed 1
January 2020 – 15 September 2020) and Chief
Scientific Officer
Ian Pike has over 30 years’ experience working in
the diagnostics and biotechnology sectors and
joined Proteome Sciences plc in November 2002.
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.
Richard Dennis
Chief Commercial Officer
Richard Dennis joined the Group in April 2017. He
has a commercial background spanning over 30
years in the global life sciences research sector.
Throughout his career he has held positions based
in both the UK and US managing international
sales teams. Prior to joining Proteome Sciences, he
had held positions of increasing responsibility and
diversity in companies such as Meso Scale
Discovery, BioScale Inc., and most recently
Quanterix Corp.
Christopher Pearce
Non-executive Chairman
Christopher Pearce has built the Group since
inception and been responsible for the formulation
and implementation of strategy, collaborative and
licensing agreements, and IP. He was co-founder
and Executive Chairman of Fitness First plc.
Roger McDowell
Non-executive Director (i) (ii)
Roger McDowell has a highly successful career as
a businessman and entrepreneur. He was Chief
Executive of Oliver Ashworth Group plc for eighteen
years before its sale to St Gobain. He is currently
the Chairman or a non-executive director of eight
listed companies, namely Avingtrans plc, Brand
Architekts Group plc, Flowtech Fluidpower plc and
Hargreaves Services Plc as Chairman, and Augean
Plc, British Smaller Companies VCT2 Plc and Tribal
Group plc as non-executive director. He brings
considerable commercial experience with him and
is a keen exponent of growing shareholder value.
Martin Diggle
Non-executive Director
Martin 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 22.30% of Proteome Sciences’
ordinary share capital.
Dr Ursula Ney
Non-executive Director (i) (ii)
Ursula Ney has more than 30 years’ experience in
the pharmaceutical and biotech industry, with
20 years in leadership roles in the biotech sector.
She was director of Development and on the Board
of Celltech plc, and later COO and executive
director of Antisoma plc. More recently she was
CEO of the private company Genkyotex SA and a
non-executive director on the board of Discuva, a
Cambridge, UK based start-up. She is currently
also a non-executive director at Scancell plc and a
Trustee of the University of Plymouth She has
broad experience of drug development across a
range of therapeutic areas and products.
(i) Member of Audit Committee
(ii) Member of Remuneration Committee
Proteome Sciences plc 13
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 14
CORPORATE GOVERNANCE
for the year ended 31 December 2020
The Chairman’s Statement on Corporate
Governance
I am pleased to present this year’s Corporate
Governance Statement.
The Company is committed to maintaining high
standards of corporate governance. It is the
responsibility of the Board and me as Chairman to
ensure that the Company has in place the
structure, strategy and people to deliver value to
shareholders in the medium to long term. The
Board recognises that an effective corporate
governance framework is important to help achieve
this aim and is fundamental to the long-term
success of the Company.
The Company adopted the Quoted Companies
Alliance Corporate Governance Code (QCA Code)
during 2018 and continues to comply with each of
the ten principles of the QCA Code. The remainder
of this statement sets out how the Company
applies the Code. Further information on the
Company’s compliance is published on our
website (www.proteomics.com/investors).
Compliance with the Quoted Companies Alliance
Corporate Governance code
The Quoted Companies Alliance has published a
corporate governance code for small and mid-sized
quoted companies, which includes a standard of
minimum best practice for AIM companies, and
corporate
recommendations
governance matters (the “QCA Code”). The
Directors of Proteome Sciences plc comply with the
QCA Code. The QCA Code sets out ten principles
which should be applied. These are listed below
together with a short explanation of how the
Company applies each of the principles. Where the
Company does not fully comply with a principle an
explanation as to why has also been provided.
reporting
for
1. Establish a strategy and business model which
promote long-term value for shareholders
Proteome Sciences plc is a contract research
organisation specializing in the analysis of proteins
by mass spectrometry, providing both discovery
and targeted proteomics services and proprietary
to biopharmaceutical and
biomarker assays
diagnostic companies engaged in the discovery
and development of precision medicines.
14 Proteome Sciences plc
Proteomics is an enabling biotechnology platform
for an increasing number of companies invested in
the identification of targeted therapeutics for the
future provision of healthcare. Offering a service to
such companies, in addition to the synthesis of
specialty chemical tags for mass spectrometry, is
an essential part of the strategy to deliver
shareholder value in the medium to long-term.
2. Seek to understand and meet shareholder
needs and expectations
The Board is committed to maintaining good
communication and having constructive dialogue
with its shareholders on a regular basis.
In normal circumstances all shareholders are
encouraged to attend the Company’s Annual
General Meeting and any other General Meetings .
Unfortunately, due to the COVID-19 movement
restrictions during 2020 and the early part of 2021
this has not been possible.
Investors also have access to current information
on
its website,
the Company
from
(https://proteomics.com).
institutional and retail shareholders are addressed
directly whenever possible by members of the
executive team.
Requests
through
3. Take into account wider stakeholder and social
responsibilities and their implications for long-
term success
The Board recognises that for the long-term
success of the Company their decisions must
consider a wider stakeholder group and the
Company’s social responsibilities. The Company is
reliant upon the efforts of the employees of the
Company, its subsidiaries, contractors, suppliers
and regulators, and upon relationships with
customers and licensees. Feedback from all these
stakeholders is shared with, and reviewed by, the
executive team on a regular basis and, where
appropriate, actions are documented. The
executive team, led by the CEO, is also responsible
for identifying the resources and relationships
necessary for developing the business, and
sharing these needs with the Board.
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 15
CORPORATE GOVERNANCE
for the year ended 31 December 2020
An agreed procedure exists for directors in the
furtherance of their duties to take independent
professional advice. With the prior approval of the
Chairman, all directors have the right to seek
independent legal and other professional advice at
the Company’s expense concerning any aspect of
the Company’s operations or undertakings in order
to fulfil their duties and responsibilities as directors.
If the Chairman is unable or unwilling to give
approval, Board approval will be sufficient. Newly
appointed directors are made aware of their
responsibilities through the Company Secretary.
4. Embed effective risk management, considering
both opportunities and threats, throughout the
organisation
Risk management
The Board constantly monitors the operational and
financial aspects of the Company’s activities and
is responsible for the implementation and ongoing
review of business risks that could affect the
Company (see page 18). Duties in relation to risk
management that are conducted by the directors
include, but are not limited to:
(cid:129)
Initiate action to prevent or reduce the adverse
effects of risk
Company materiality threshold
The Board acknowledges that assessment on
materiality and subsequent appropriate thresholds
are subjective and open to change. As well as the
applicable laws and recommendations, the Board
has considered quantitative, qualitative and
cumulative factors when determining the materiality
of specific relationships of directors.
5. Maintain the board as a well-functioning,
balanced team led by the chair
The Board recognises that the Company needs to
deliver growth in long-term shareholder value and
that this requires an efficient, effective and dynamic
management
should be
framework. This
accompanied by good communication which helps
to promote confidence and trust.
The Board currently comprises three Executive
Directors:
Dr Mariola Söhngen (Chief Executive Officer –
appointed 15 September 2020)
Dr Ian Pike (Interim Chief Executive Officer –
appointed 1 January 2020 - 15 September 2020
and Chief Scientific Officer)
Richard Dennis (Chief Commercial Officer)
(cid:129) Control further treatment of risks until the level
and four Non-Executive Directors;
of risk becomes acceptable
Christopher Pearce (Chairman)
(cid:129)
(cid:129)
Identify and record any problems relating to the
management of risk
Initiate, recommend or provide solutions
through designated channels
(cid:129) Verify the implementation of solutions
(cid:129) Communicate and consult
externally as appropriate
internally and
(cid:129)
Inform investors of material changes to the
Company’s risk profile.
Conflicts of interest
The Board has instituted a process for reporting
and managing any conflicts of interest held by
the Company’s Articles of
directors. Under
Association, the Board has the authority to approve
such conflicts.
Roger McDowell
Martin Diggle
Dr Ursula Ney
Details of the qualifications, background and
responsibilities of each director are described on
page 13 and provided on the Company’s website
(https://proteomics.com/leadership).
The board is supported by Audit and Remuneration
Committees, details of which are summarised
under Principle 9 below.
–
The Board considers Roger McDowell and
Dr Ursula Ney to be independent.
– Martin Diggle, a director of Vulpes Investment
Management which manages the Vulpes Life
Sciences Fund (the largest shareholder in the
Company) is not remunerated for his role on the
Board and is not a member of any Board
sub-committee.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 15
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 16
CORPORATE GOVERNANCE
for the year ended 31 December 2020
for
time as
Non-Executive Directors are expected to devote
such
the proper
is necessary
performance of their duties, but it is anticipated that
they will spend approximately one day a month on
work for the Company. This will include attendance
of Board meetings (usually 8 per year), see page
19 for the attendance during the year, the AGM,
committee meetings and sufficient time to consider
relevant meeting papers.
the Board bring
6. Ensure that between them the directors have
the necessary up-to-date experience, skills and
capabilities
All members of
relevant
experience. The Board believes that its blend of
experience, skills, personal qualities and
capabilities is suitable to ensure it successfully
executes its strategy. The existing spectrum of
differing entrepreneurial skills continues to be
together with
represented on
considerable knowledge and expertise
from
scientific
the pharmaceutical
industry. The Board will continue to ensure that
Directors receive appropriate support and training
as required to keep them up to date with current
practices. The Board’s biographies are set out on
page 13.
research and
the Board
7. Evaluate board performance based on clear
and relevant objectives, seeking continuous
improvement
The Board considers that it is appropriate to
evaluate the performance of the Board and its
Committees annually. The 2020 evaluation is
detailed below. This is intended to make sure that
the Board remains effective, well-informed and able
to make high quality and timely decisions for the
benefit of all stakeholders in the Company with
regular meetings to discuss the strategic direction
and the terms of reference for the Committees.
Areas covered include Board structure, Board
arrangements, frequency and time, content of
Board meetings, Board culture and succession
planning. It is recognised that there continues to be
more regulation about which Directors need to be
informed and aware. The Board will continue to
ensure that Directors receive appropriate support
and training as required to keep them up to date
with current practices.
16 Proteome Sciences plc
led an annual performance
The Chairman
assessment of the Board and its Committees at the
end of 2020. The performance effectiveness
process included each Director completing a
performance evaluation questionnaire, the results
and feedback from which were collated into a
summary and discussed by the Board.
The Chairman’s summary of the Board Evaluation
has concluded that the Board worked effectively in
2020 to conclude the CEO recruitment process
and to support the business to deliver its business
goals against the difficult background of the
COVID-19 pandemic. The level of engagement was
vigorous in a professional environment with a
balance between challenge and support allowing
the management to operate within a framework of
parameters established by the Board. Practical
measures were applied to risk management where
the executives and Board worked closely together
and regular communication taking place with staff
and shareholders.
8. Promote a corporate culture that is based on
ethical values and behaviours
As part of the Board’s commitment to the highest
standard of conduct, the Company adopts a code
of conduct to guide executives, management and
employees in carrying out their duties and
responsibilities. The code of conduct covers such
matters as:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
responsibilities to shareholders
compliance with laws and regulations
relations with customers and suppliers
ethical responsibilities
employment practices
responsibility to the environment and the
community.
9. Maintain governance structures and processes
that are fit for purpose and support good decision-
making by the board
Chairman
The current Chairman of
is
Christopher Pearce who has been a director of the
the Company
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 17
CORPORATE GOVERNANCE
for the year ended 31 December 2020
Company since July 1994. The responsibilities of
the Chairman are to:
(cid:129) Declaration of any
interim dividend and
recommendation of a final dividend;
(cid:129)
Lead the Board, ensuring its effectiveness on
all aspects of its role
(cid:129) Approval of
shareholders;
formal communications with
(cid:129) Ensure that the directors receive accurate,
(cid:129) Approval of major contracts and investments;
timely and clear information
and
(cid:129) Ensure
effective
communication with
shareholders
(cid:129)
Facilitate the effective contribution of non-
executive directors
(cid:129) Act on the results of board performance
evaluation.
Chief Executive Officer
The responsibilities of the Chief Executive Officer
are to:
(cid:129) Provide
leadership and day
management of
authorities delegated by the Board.
the business within
to day
the
Board meetings
The Board meets on average 8 times a year by way
of both face to face and teleconference meetings.
Decisions concerning the direction and control of
the business are made by the Board, and a formal
schedule of matters specifically reserved for the
Board is in place. Matters reserved for the Board
include:
(cid:129) Approval of overall strategy and strategic
objectives;
(cid:129) Oversight of operations (including accounting,
planning and internal control systems);
(cid:129) Compliance with
requirements;
legal and
regulatory
(cid:129) Management/operational performance review;
(cid:129) Changes in corporate or capital structure;
(cid:129) Approval of the risk appetite of the Company;
(cid:129) Approval of the half-year and annual report and
accounts;
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
(cid:129) Approval of policies on matters such as health
and safety, corporate social responsibility
(CSR) and the environment.
Generally, the powers and obligations of the Board
are governed by the Companies Act 2006, and the
other laws of the jurisdictions in which the
Company operates. The Board is responsible,
inter alia, for setting and monitoring Group strategy,
reviewing trading performance, ensuring adequate
funding, examining major acquisition opportunities,
formulating policy on key issues and reporting to
the shareholders.
Board Committees
There are two board committees:
(cid:129) Audit Committee - members are Roger
McDowell (Chair), and Dr Ursula Ney. This
committee met twice during 2020.
(cid:129) Remuneration Committee - members are Dr
Ursula Ney (Chair) and Roger McDowell. This
committee met three times during 2020.
Audit Committee
The Committee provides a forum for reporting by
the Company’s external auditors. Meetings are held
on average two times a year and are attended, by
invitation, by the Executive Directors.
The Audit Committee is responsible for reviewing a
wide range of financial matters including the
annual and half year results, financial statements
and accompanying reports before their submission
to the Board and monitoring the controls which
ensure the integrity of the financial information
reported to the shareholders. Audit Committee
Terms of Reference are provided on
the
Company’s website.
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 17
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 18
CORPORATE GOVERNANCE
for the year ended 31 December 2020
General Meeting and any other General Meetings
that may take place throughout the year.
Copies of the annual returns, general meeting
notices and announcements made to the London
Stock Exchange are published on the Company’s
website.
Risk management
The Board has ultimate responsibility of the
Group’s risk management controls. The risk and
control management system framework includes:
(cid:129)
(cid:129)
close management of the day-to-day activities
of the Group by the Executive Directors and the
Senior Leadership Team;
a comprehensive annual budgeting process,
which is approved by the Board;
(cid:129) detailed monthly reporting of performance
against budget; and
(cid:129)
central control over key areas such as capital
expenditure authorisation and banking facilities.
Internal controls
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
the
financial
safeguarding of assets.
information and
The key features of the internal control system that
operated throughout the year are described under
the following headings:
(cid:129) Control environment: particularly the definition
the
the organisation structure and
of
appropriate delegation of responsibility to
operational management.
is
responsible
Remuneration Committee
The Committee
for making
recommendations to the Board, within agreed
terms of reference, on the Company’s framework
of executive remuneration and its cost. The
Remuneration Committee determines the contract
terms, remuneration and other benefits for the
Executive Directors, including performance related
bonus schemes, compensation payments and
option schemes. The Board itself determines the
remuneration of the Non-Executive Directors.
Remuneration Committee Terms of Reference are
provided on the Company’s website.
Nominations Committee and internal audit
The Directors consider that the Company is not
currently of a size to warrant the need for a
separate Nominations Committee or internal audit
function, although the Board has put in place
as
financial
internal
summarised below.
control procedures
Internal financial control
The Board is responsible for establishing and
maintaining the Group’s system of internal financial
controls. Internal financial control systems are
designed to meet the particular needs of the
Group and the risk to which it is exposed, and by
their very nature can provide reasonable, but not
absolute, assurance against material misstatement
or loss.
The Directors are conscious of the need to keep
effective internal financial control, particularly in
view of the cash resources of the Group. The
Directors have reviewed the effectiveness of the
procedures presently in place and consider that
they remain appropriate to the nature and scale of
the operations of the Company.
10. Communicate how the Company is governed
and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
Shareholders are regularly advised of any
significant developments in the Company through
announcements via the Regulated News Service
and are encouraged to participate in the Annual
18 Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 19
CORPORATE GOVERNANCE
for the year ended 31 December 2020
(cid:129)
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.
(cid:129) 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).
(cid:129) 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 financial statements.
Board operation
The Board is responsible for formulating, reviewing and approving the Group’s strategy, budgets and
corporate actions. The Board met eight times during the financial year. The Board has established two
Committees; the Audit Committee and Remuneration Committee each having written terms of reference.
The Board consider that the Company is not currently of a size to warrant the need for a separate
Nominations Committee or internal audit function. Reports by the Chairpersons of the two Committees
are reported separately on pages 21 for the Audit Committee and 23 for the Remuneration Committee.
Board effectiveness
The Board and Committee meetings are scheduled in advance for each calendar year. Additional
meetings are arranged as necessary. Board and Committee meetings and attendance during the year
ended 31 December 2020 were as follows:
Director
C.D.J. Pearce
R. McDowell
M. Diggle
Dr U. Ney
Dr M Söhngen (appointed 15 September 2020)
Dr I. Pike
R. Dennis
Board
Meeting
Audit Remuneration
Committee
Committee
8/8
7/8
7/8
8/8
3/3
8/8
8/8
2/2
2/2
2/2
2/2
1/1
2/2
2/2
–
3/3
–
3/3
–
–
–
The Executive Directors were all employed by the Company. The Non-Executive Directors have
commitments outside the Company. These are summarised in the Board biographies on page 13. All the
Non-Executive Directors give sufficient time to fulfil their responsibilities to the Company.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 19
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 20
CORPORATE GOVERNANCE
for the year ended 31 December 2020
The Board also strongly encourages all
shareholders to vote on the AGM resolutions by
following the instructions set out in the Notice of
Meeting Notes, please note that no Proxy Form
accompanies this document this year. It is strongly
recommended that you appoint the Chairman of
the Meeting as your proxy as no other proxy will be
admitted. The results of the AGM will be published
shortly after conclusion of the formal business.
Christopher Pearce
Chairman
31 March 2021
The Annual General Meeting (AGM)
The Annual General Meeting of the Group will take
place on 5 May 2021. Full details are included in
the Notice of Meeting on page 79 and will be
published on our website (www.proteomics.com)
Due to the Government’s restrictions currently in
force in relation to COVID-19 it is prohibited to hold
public gatherings. To comply with the restrictions
the Annual General Meeting of the Group will be
restricted to two attendees (for example myself and
one other shareholder) who will form a quorum to
conduct the business of the meeting. No other
attendees will be admitted to the meeting.
As a business, we greatly value the opportunity to
meet our shareholders in person and to receive
their questions at the AGM. We are therefore,
providing an opportunity for all shareholders to
submit written questions by sending an email to
executive.pa@proteomics.com. All questions
submitted at least 48 hours prior to the AGM date
will be reviewed and responses will be provided on
the Company website at www.proteomics.com. The
Board will endeavour to answer all questions
relevant to the business of the AGM, though similar
questions may be amalgamated to avoid repetition.
20 Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 21
AUDIT COMMITTEE REPORT
for the year ended 31 December 2020
I am pleased to present the report on behalf of the
Audit Committee.
The Committee is responsible for monitoring the
quality of internal controls and for ensuring that the
financial performance of the Group is properly
reviewed and reported. The Board considers that
the Company is not currently of the size to warrant
the need for an internal audit function although the
Board has put
financial
in place
procedures to ensure close internal controls.
internal
Committee Composition
The members of the Audit Committee are myself,
Roger McDowell, as Chair and Ursula Ney. We are
both independent Non-Executive Directors. The
Board is of the view that we have recent and
relevant experience. Meetings are held at least
twice a year. The Chief Executive Officer, the
Finance Director and the Group’s auditors attend
by invitation. I report to the Board following an
Audit Committee meeting and minutes are available
to the Board.
Committee Duties
The main duties of the Committee are set out in its
terms of reference, which are available on the
Company’s website. In this period the main items
of business included:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
reviewing and recommending to the Board in
relation to the appointment and removal of the
external auditor;
recommending
the
remuneration and terms of engagement;
external
auditor’s
reviewing the independence of the external
auditors, objectivity and the effectiveness of the
audit process, taking into account relevant
professional and regulatory requirements;
reviewing and monitoring the extent of the
non-audit work undertaken by the Group’s
external auditor;
reviewing a wide range of financial matters
including the annual and half year results,
financial statements and accompanying
reports;
(cid:129) monitoring the controls which ensure the
integrity of the financial information reported to
the shareholders.
Financial Reporting
The Committee reviews reports provided by the
external auditor on the annual results which
highlight any observation from the work they have
undertaken.
The Group does not expect any other standards
issued by the IASB, but not yet effective, to have a
material impact on the Group.
(published
Financial Reporting Council letter
In October 2020 the Company received a letter
informing it that, as part of its Thematic Review of
companies’ disclosures following the second full
year of adoption of IFRS 15 ‘Revenue from
Contracts with Customers’
in
September 2020), the Financial Reporting Council
(FRC) had carried out a limited review of the
disclosures included in its annual report and
accounts for the year ended 31 December 2019.
The letter indicated that the FRC had not identified
any matters on which it wished to raise specific
questions with the Company. The letter did,
however, make some observations relating to
certain disclosures included in the annual report.
The Company has considered these observations
and taken steps to make improvements were
relevant. The principal change resulting from these
observations is that Company has sought to
improve the disclosures in relation to the revenue
recognition accounting policy, as set out in note 3
of the financial statements.
Scope and limitations of the FRC’s review
The Company recognises that the FRC’s review
was based on a review of its annual report and
accounts for the year ended 31 December 2019
and did not benefit from detailed knowledge of the
Company’s business or an understanding of the
underlying transactions entered into. Its review did
not provide any assurance that the Company’s
annual report and accounts are correct in all
material respects. The Company also recognises
that the FRC’s letters are written on the basis that it
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 21
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 22
AUDIT COMMITTEE REPORT
for the year ended 31 December 2020
(and its officers, employees and agents) accept no
liability for reliance on them by the Company or any
third party, including but not limited to investors and
shareholders.
External Auditor
BDO was re-appointed as the Group’s auditor at
the Annual General Meeting held on the 26 June
2020. The Committee considers that its relationship
with the auditor is working well and is satisfied with
their effectiveness. The Committee is responsible
for ensuring there is a suitable policy for ensuring
that non-audit work undertaken by the auditor is
reviewed to ensure it will not impact their
independence and objectivity. The breakdown of
fees between audit and non-audit services is
provided in note 8 on page 55 of the Group’s
financial statements. The non-audit fees primarily
relate to Group taxation compliance.
As necessary the Committee held private meetings
with the auditor to review key items in its
responsibilities. Taking into account the auditor’s
knowledge of the Group and experience, the
Committee has recommended to the Board that the
auditor is re-appointed for the period ending
31 December 2021.
Roger McDowell
Chair of the Audit Committee
31 March 2021
22 Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 23
REMUNERATION COMMITTEE REPORT
for the year ended 31 December 2020
I am pleased to present the report on behalf of the Remuneration Committee.
The Committee is responsible for setting the remuneration policy of the Executive Directors and other
senior staff, including terms of employment, salaries, any performance bonuses and share option awards.
Committee Composition
The members of the Remuneration Committee are myself Ursula Ney as Chair and Roger McDowell. We
are both independent Non-Executive Directors.
Committee Duties
The Company has established a formal and transparent procedure for developing policy on executive
remuneration and for fixing the remuneration packages of individual Directors. No Director is involved in
deciding their own remuneration.
Remuneration Policy
The key principles of the Remuneration Policy include:
(cid:129)
(cid:129)
(cid:129)
the need to attract, retain and motivate executives who have capability to ensure Company achieve
its strategic objectives;
the need to ensure that short term benefits and long-term incentive plans are aligned with the interests
of shareholders;
the need to take into account the competitive landscape in the UK and German biotechnology/service
industry and current best practice in setting appropriate levels of compensation.
(cid:129)
the Committee to meet at least once per year.
Director’s Remuneration
The following table summarises the total gross remuneration for the qualifying services of the directors
who served during the year to 31 December 2020.
Directors’ remuneration and transactions
The directors’ emoluments in the year ended 31 December 2020 were:
National
Basic Insurance Benefits Pension
Costs
salary Contributions
2020
2020 2020
£’000
£’000 £’000
in kind
2020
£’000
Total
2020
£’000
Total
2019
£’000
Executive Directors
Dr J.R.M. Haigh
(resigned 31 December 2019) – –
Dr M Söhngen
(appointed 15 September 2020) 73 3
Dr I. Pike 181 24
R. Dennis 151 20
Non-Executive Directors
C.D.J. Pearce 120 6
R. McDowell 25 2
M. Diggle – –
Dr U. Ney 20 1
570 56
–
1
3
–
5
–
–
–
9
–
–
16
13
–
–
–
–
29
–
77
224
184
131
27
–
21
664
185
–
155
165
119
22
–
17
663
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 23
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 24
REMUNERATION COMMITTEE REPORT
for the year ended 31 December 2020
Directors and their interests
The Directors who served during the year are as shown below:
Dr M Söhngen
(appointed 15 September 2020)
Dr I.H. Pike
R. Dennis
C.D.J. Pearce
R. McDowell
M. Diggle
Dr U. Ney
Chief Executive Officer
Interim Chief Executive Officer
(1 January to 15 September 2020) and
Chief Scientific Officer
Chief Commercial Officer
Non-Executive Chairman
Non-Executive
Non-Executive
Non-Executive
In accordance with the Company’s articles Christopher Pearce, Ursula Ney and Richard Dennis retire
by rotation at the next Annual General Meeting and, being eligible, offer themselves for re-election. The
directors at 31 December 2020 and their interests in the share capital of the Company were as follows:
a) Beneficial interests in Ordinary Shares:
31 December 2020
Number of Ordinary
Name of Director Shares of 1p each
%
shareholding
Dr M Söhngen –
Dr I.H. Pike 165,583
R. Dennis –
C.D.J. Pearce 36,915,059
R. McDowell 2,500,000
M. Diggle –
Dr U. Ney –
–
0.05
–
12.53
0.85
–
–
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 22.30% of Proteome Sciences’ ordinary share capital.
b) 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:
Number at
31 December 2020
Number at
31 December 2019
(i) Dr I.H. Pike
(ii) Dr J. R. M. Haigh
(iii) R. Dennis
(a)
(a)
(a)
– (b)
– (b)
– (b)
3,750,000
9,000,000
3,250,000
The options in the table above allocated to Dr I Pike, Dr Haigh and R Dennis lapsed during 2020.
24 Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 25
REMUNERATION COMMITTEE REPORT
for the year ended 31 December 2020
Executive Directors’ Service Contracts
The Executive Directors signed service contracts on their appointment. These contracts are not of fixed
duration. Executive Directors’ contracts are terminable by either party giving three months’ written notice
with the exception of the Chief Executive Officer’s contract which is terminable by either party giving
six month’s written notice.
Non-Executive Directors
The Non-Executive Directors signed letters of appointment with the Group for the provision of
Non-Executive Directors’ services, which may be terminated by either party giving one months’ written
notice. The remuneration of the Non-Executive Directors is determined by the Board as a whole.
The Committee has met three times during the financial year to 31 December 2020.
Ursula Ney
Chair of the Remuneration Committee
31 March 2021
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 25
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 26
DIRECTORS’ REPORT
for the year ended 31 December 2020
The Directors present their annual report and
financial statements
the year ended
31 December 2020. An indication of likely future
developments in the business is set out in the
Strategic Report.
for
(cid:129)
state whether they have been prepared in
accordance with
international accounting
standards in conformity with the requirements
of the Companies Act 2006, subject to any
material departures disclosed and explained in
the financial statements;
Directors
The Directors who held office during the year and
up to the date of signature of the financial
statements were as follows:
Mariola Söhngen (appointed 15 September 2020)
Ian Pike
Richard Dennis
Christopher Pearce
Roger McDowell
Martin Diggle
Ursula Ney
Directors’ responsibilities
The directors are responsible for preparing the
annual report and the financial statements in
accordance with applicable law and regulations.
international
Company law requires the directors to prepare
financial statements for each financial year. Under
that law the directors have elected to prepare the
group and company financial statements in
accounting
accordance with
standards in conformity with the requirements of
the Companies Act 2006. 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
in
accordance with the rules of the London Stock
Exchange for companies trading securities on AIM.
financial statements
to prepare
In preparing these financial statements, the
directors are required to:
(cid:129)
select suitable accounting policies and then
apply them consistently;
(cid:129) make judgements and accounting estimates
that are reasonable and prudent;
26 Proteome Sciences plc
(cid:129) 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
from
financial statements, which may vary
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 therein.
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
24 of the financial statements (page 70).
a) As set out in note 18(b) (i) to (iii) in these
financial statements, 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
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 27
DIRECTORS’ REPORT
for the year ended 31 December 2020
market price on the date of conversion or the average price over the lowest consecutive 10 day trading
period since 29 June 2006 (the date on which details of the original loan agreement were disclosed).
Interest accrues at 2.5% per annum above the UK sterling base rate of Barclays Bank plc.
b) On 2 July 2018, Proteome Sciences plc secured a loan facility of £1.0m from Vulpes Investment
Management (VIM). Interest accrues at 2.5% per annum above the UK sterling base rate of Barclays
Bank plc and is repayable alongside the principal loan. The Company signed the First Amendment
to the Agreement on the 17 April 2020 which extended the term of the loan to 1 May 2021. This loan
is deemed a related party transaction by nature of a common director being on both the boards of
Proteome Sciences plc and VIM.
c) The market price of the Ordinary Shares at 31 December 2020 was 3.87 p and the range during the
year was 2.64 p to 4.85p.
Substantial shareholdings
As at 31 March 2021, the Company had received notification of the following significant interests in the
ordinary share capital of the Company:
Name of holder
C.D.J. Pearce
Vulpes Life Science Fund
Helium Special Situations Fund
Number of
Ordinary
Shares
Percentage
of issued
Ordinary
Share Capital
36,915,059
65,826.157
14,152,887
12.53
22.30
4.79
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 Chief Executive Officer’s Statement on page 2 and Strategic
Report on page 6. 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 43 and in notes 18(b) (Financial liabilities) and 24 (Financial instruments).
These financial statements have been prepared on the going concern basis which remains reliant on
the Group achieving an adequate level of sales in order to maintain sufficient working capital to support
its activities. The directors have reviewed the Company’s and the Group’s going concern position, taking
account of current business activities, budgeted performance and the factors likely to affect its future
development, as set out in the Annual report, and including the Group’s objectives, policies and
processes for managing its working capital, its financial risk management objectives and its exposure to
credit and liquidity risks.
In particular, the directors’ have considered the potential ongoing impacts COVID-19 may have on the
ability to achieve adequate level of sales. With the vaccination campaigns having started late 2020
internationally it is still unclear when an effective immunity of the population will be reached which is very
much dependent on the manufacturing capacities of the vaccine producing companies. In addition it
cannot be guaranteed that the virus mutations will remain sensitive to the vaccines and how quickly then
new vaccines can be generated. It is a realistic assumption that 2021 (or at least the majority of the year)
will be very much affected by the pandemic and hence businesses (including ours) will be impacted
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 27
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 28
DIRECTORS’ REPORT
for the year ended 31 December 2020
heavily due to the fact that our customers might
reduce their orders (TMT® sales and service
business) as
their own business might be
negatively impacted by the pandemic. Hence these
might make less use of our products and services.
In addition we might not be able to attract
additional clients or follow on orders for the
same reasons.
From March 2020 most of our major markets
employed some form of temporary lock down but
pharmaceutical research activity was maintained
at near-normal levels and our clients were able to
produce the samples required for proteomic
analysis with minimal delays. The Group was able
to adapt working practices to a fully virtual model.
The Group was able to rapidly evolve sales and
marketing tools and maintain virtual exhibition
booths at a number of the major on-line business-
to-business conferences relevant to the Group’s
industry sector.
Despite
the backdrop of COVID-19, Group
revenues for the year ended 31 December 2020
increased by 2% to £4.75m (2019: £4.66m).
Proteomics services increased 55% to £1.44m
(2019: £0.93m) as the benefits of expanding the
Group’s salesforce started to be realised. Sales
and royalties attributable to TMT® and TMTpro™
reagents were £3.27m (2019: £3.70m). However
when we exclude the £0.75m milestone recognized
in 2019 from the £3.70m TMT® sales in 2019 and
put the total in relation to our 2020 TMT® sales of
£3.27m, the result is an underlying growth of 11%
year on year. Total costs were at £4.20m (2019:
in Operating Profits
£4.36m) and
improving 83% to £0.55m (2019: £0.30m) and a
profit after tax of £0.29m (2019: £0.15m). Cash
reserves at the year-end increased to £2.21m
(2019: £0.80m) bolstered by some pre-payment for
2021 service products and early receipt of Q1
TMT® and TMTpro™ stock orders.
resulted
The Group is also dependent on the unsecured
loan facility provided by the Chairman of the
Group, which under the terms of the facility, is
repayable on demand. Further details of this facility
are set out in note 18(b) to the financial statements.
The directors have received a legally binding
written confirmation from the Chairman 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 13 months
from the date of approval of these financial
statements or until at least 31 May 2022.
On 29 March 2021, the loan facility with Vulpes
Investment Management Private Limited (“VIM”)
(the “Loan”) was amended such that the Loan and
all accrued interest is now repayable on 1 May
2022 (previously 1 May 2021).
Following a detailed review of forecasts, budgets,
sales order book and with the knowledge of how
the Group has traded in the first year post the
global pandemic, the directors have a reasonable
expectation the Group as a whole, has adequate
financial and other resources to continue in
operational existence for the period of at least
twelve months post approval of these financial
statements. For this reason, the Directors continue
to adopt the going concern basis in preparing the
Financial Statements.
Events after the balance sheet date
The Company signed the Second Amendment to
the Loan Agreement with Vulpes Investment
Management on the 29 March 2021 which
extended the term of the loan to 1 May 2022.
Research and development
Details of the Group’s activities on research and
development during the year are set out in the
Chief Executive Officer’s Statement (page 2) and
Strategic Report (page 6).
Auditor
Each of the persons who are directors of the
Company at the date when this report was
approved confirms that:
(cid:129)
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
28 Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 29
DIRECTORS’ REPORT
for the year ended 31 December 2020
(cid:129)
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
section 418 of the Companies Act 2006.
The directors will place a resolution before the
Annual General Meeting to appoint BDO LLP as
auditor for the following year.
Liability insurance for Company officers
As permitted by section 233 of the Companies Act
2006, the Company has purchased insurance
cover for the directors against liabilities that might
arise in relation to the Group.
By order of the Board
Hamilton House
Mabledon Place
London
WC1H 9BB
V. Birse
Company Secretary
31 March 2021
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 29
M
G
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 30
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2020
Independent auditor’s report to the members of Proteome Sciences plc
Opinion on the financial statements
In our opinion:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
the financial statements give a true and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 December 2020 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006;
the Parent Company financial statements have been properly prepared in accordance with
international accounting standards in conformity with the requirements of the Companies Act 2006
and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements of Proteome Sciences plc (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 31 December 2020 which comprise the consolidated income
statement, the consolidated statement of comprehensive income, the consolidated and company
balance sheets, the consolidated and company statements of changes in equity, the consolidated and
company cash flow statements and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is
applicable law and international accounting standards in conformity with the requirements of the
Companies Act 2006 and, as regards the Parent Company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors use of the going concern basis
of accounting in the preparation of the financial statements is appropriate. The directors’ assessment
of going concern involves a number of highly subjective judgements and was accordingly identified by
us as a Key Audit Matter. Our evaluation of the Directors’ assessment of the Group and the Parent
Company’s ability to continue to adopt the going concern basis of accounting and in response to the
key audit matter included:
(cid:129) Analysing management’s assessment of going concern based upon the Group’s cash flow forecast
and other projections through to 30 June 2022. This included assessing and challenging assumptions
made in relation to revenues, expenses and the associated cash flows and any other cash flow related
30 Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 31
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2020
assumptions, completion of lookback procedures to review accuracy of historic forecasts and
comparison against post year-end results to date.
(cid:129) Performing sensitivity analyses, and reviewing managements reverse stress testing analysis, to
consider cash flow changes if the revenue forecasts are not achieved and the resulting impact on
going concern.
(cid:129) Reviewing the terms of the Group’s financing, including a loan from Mr C.D.J Pearce (Chairman and
a related party) and reviewing the confirmation obtained by the Group and Parent Company that this
loan will not be recalled before 31 May 2022, including the Directors’ conclusion that this confirmation
is legally binding. .
(cid:129) Obtaining the loan amendment signed on 29 March 2021 in relation to the loan from Vulpes Investment
Management Private Limited which extends the term until 1 May 2022.
(cid:129) Considering whether any post-balance sheet events have occurred, which may impact going
concern.
(cid:129) Assessing the adequacy of the disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the Group and Parent
Company’s ability to continue as a going concern for a period of at least twelve months from the date
the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described
in the relevant sections of this report.
Overview
Coverage 100% (2019: 100%) of Group profit before tax
100% (2019: 100%) of Group revenue
99% (2019: 99%) of Group total assets
Key audit matters 2020 2019
Revenue Recognition
Going Concern
Materiality Group financial statements as a whole
£59,000 (2019:£ £46,565) based on 1.25%
(2019: 1%) of revenue.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including
the Group’s system of internal control, and assessing the risks of material misstatement in the financial
statements. We also addressed the risk of management override of internal controls, including assessing
whether there was evidence of bias by the Directors that may have represented a risk of material
misstatement.
In establishing the overall approach to the Group audit, we assessed the audit significance of each
reporting unit in the Group by reference to both its financial significance and other indicators of audit
risk, such as the complexity of operations and the degree of estimation and judgement in the financial
results. We identified three individually significant components.
i
i
w
w
e
e
v
v
e
e
R
R
s
s
s
s
e
e
n
n
s
s
u
u
B
B
i
i
e
e
c
c
n
n
a
a
n
n
r
r
e
e
v
v
o
o
G
G
s
s
t
t
n
n
e
e
m
m
e
e
t
t
a
a
t
t
S
S
l
l
i
i
a
a
c
c
n
n
a
a
n
n
F
F
i
i
n
n
o
o
i
i
t
t
a
a
m
m
r
r
o
o
n
n
I
I
f
f
Proteome Sciences plc 31
M
M
G
G
A
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 32
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2020
To this extent:
(cid:129)
(cid:129)
The Group audit team performed full scope audits for Proteome Sciences Plc and its subsidiaries
Electrophoretics Limited and Proteome Sciences R&D GmbH & Co. KG;
The remaining components not subject to full scope audit were reviewed for group reporting
purposes, by the Group audit team, using analytical procedures to support the conclusions reached
that there were no significant risks of material misstatement of the aggregated financial information
of these components.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. In addition to the matter described in the Conclusions relating to concern section we have
determined the matter below to be a key audit matter to be communicated in our report.
Key audit matter
Revenue recognition
(Note 3, Note 5 & Note 6)
The Group has
streams.
four revenue
ISA (UK) 240 requires us to
consider a presumed significant
fraud risk associated with the
recognition of revenues. Due to
the fact that revenue is recognised
either at a point in time and over a
period of time dependent upon
the nature of the performance
obligation, there is a significant
risk of material misstatement due
to error or fraud in relation to the
occurrence, accuracy and cut-off
of revenue recognition.
How the scope of our audit addressed
the key audit matter
We evaluated the revenue recognition policy of the
Group and determined that the revenue had been
recognised in conformity with the Group’s policy
and applicable accounting standards.
We performed specific testing over each revenue
stream including the following:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Verifying a sample of biomarker services
revenue recognised in the year to underlying
agreements, evidence of delivery of the
performance obligation and cash receipt from
the customer.
Agreeing a sample of product sales through
to supporting sales invoice, delivery order
confirmation and cash receipt.
Agreeing a sample of royalties recognised
through to supporting invoice, external royalty
statements and cash receipt.
Agreement of grant
through
subsequent payment
account
income recognised
to grant documentation and
the bank
through
A sample of revenue recognised in December
2020, January 2021 and February 2021 was
reviewed against the invoice date and the date
which the performance obligations were
satisfied to the customers to check that
revenue was recorded in the correct period.
Key observations:
Based on procedures performed, we consider that
revenue has been appropriately recognised in
accordance with the Group’s accounting policy.
32 Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 33
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2020
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the
effect of misstatements. We consider materiality to be the magnitude by which misstatements, including
omissions, could influence the economic decisions of reasonable users that are taken on the basis of
the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also
take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole
and performance materiality as follows:
Group financial statements
Parent company financial statements
2020
£
59,000
2019
£
46,565
2020
£
17,700
2019
£
20,954
1.25%
of group revenue
1%
of group revenue
30%
of Group materiality
45%
of Group materiality
Revenue has been determined to be the
most relevant performance measure to
the stakeholders of the Group given the
directors’ current focus on revenue
growth, The increase of percentage
applied against the benchmark is due to
the reducing volatility in results.
Capped at 30% (2019: 45%) of Group
materiality given the assessment of the
components’ aggregation risk.
44,000
34,924
12,000
15,715
75% of materiality - This is based upon a number of factors including but not
limited to historic adjustments identified, our understanding of the Group and its
control environment and Managements attitude towards historic adjustments
identified.
Materiality
Basis for
determining
materiality
Rationale
for the
benchmark
applied
Performance
materiality
Basis for
determining
performance
materiality
Component materiality
We set materiality for each component of the Group based on a percentage of between 30% and 90%
of Group materiality dependent on the size and our assessment of the risk of material misstatement of
that component. Component materiality ranged from £17,700 to £53,100. In the audit of each component,
we further applied performance materiality levels of 75% of the component materiality to our testing to
ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in
excess of £2,900 (2019: £2,328). We also agreed to report differences below this threshold that, in our
view, warranted reporting on qualitative grounds.
i
i
w
w
e
e
v
v
e
e
R
R
s
s
s
s
e
e
n
n
s
s
u
u
B
B
i
i
e
e
c
c
n
n
a
a
n
n
r
r
e
e
v
v
o
o
G
G
s
s
t
t
n
n
e
e
m
m
e
e
t
t
a
a
t
t
S
S
l
l
i
i
a
a
c
c
n
n
a
a
n
n
F
F
i
i
n
n
o
o
i
i
t
t
a
a
m
m
r
r
o
o
n
n
I
I
f
f
Proteome Sciences plc 33
M
M
G
G
A
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 34
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2020
Other information
The directors are responsible for the other information. The other information comprises the information
included in the report and financial statements other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the course
of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit,
we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as
described below.
Strategic report and
Directors’ report
Matters on which we are
required to report by
exception
In our opinion, based on the work undertaken in the course of the audit:
(cid:129)
(cid:129)
the information given in the Strategic report and the Directors’ report for the
financial year for which the financial statements are prepared is consistent with
the financial statements; and
the Strategic report and the Directors’ report have been prepared in accordance
with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company
and its environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
(cid:129)
(cid:129)
(cid:129)
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
(cid:129) we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to
do so.
34 Proteome Sciences plc
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 35
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2020
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group
and determined that the most significant frameworks which are directly relevant to specific assertions in
the financial statements are those that relate to the reporting framework, rules of the London Stock
Exchange for companies trading securities on AIM, the Companies Act 2006 and relevant tax compliance
regulations.
We focused on laws and regulations that could give rise to a material misstatement in the Company
financial statements and the susceptibility of the entity’s financial statements to material misstatement
including fraud. As part of planning procedures undertaken and discussions with management, we
obtained an understanding of the legal and regulatory framework applicable to the entity. Our tests
included, but were not limited to:
(cid:129) Evaluating and, where appropriate challenging assumptions and judgements made by management
in determining significant accounting estimates, in particular in relation to impairment of goodwill
and intangible assets, inventory provisions, and the going concern assumption;
(cid:129) Agreement of the financial statement disclosures to underlying supporting documentation;
(cid:129) Procedures to address the risk of fraud in revenue recognition (refer to the key audit matters section);
(cid:129) Review of minutes of Board meetings throughout the year;
(cid:129) Review of tax compliance and involvement of our tax specialists in the audit; and
(cid:129)
In addressing the risk of management override of control, identifying and testing journal entries which
met specific criteria.
We also communicated relevant identified laws and regulations and potential fraud risks to all
engagement team members and remained alert to any indications of fraud or non-compliance with laws
and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial
statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely we are to become aware of it.
i
i
w
w
e
e
v
v
e
e
R
R
s
s
s
s
e
e
n
n
s
s
u
u
B
B
i
i
e
e
c
c
n
n
a
a
n
n
r
r
e
e
v
v
o
o
G
G
s
s
t
t
n
n
e
e
m
m
e
e
t
t
a
a
t
t
S
S
l
l
i
i
a
a
c
c
n
n
a
a
n
n
F
F
i
i
n
n
o
o
i
i
t
t
a
a
m
m
r
r
o
o
n
n
I
I
f
f
Proteome Sciences plc 35
M
M
G
G
A
A
260759 Proteome p01-p36.qxp 01/04/2021 11:32 Page 36
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2020
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent 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 Parent Company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Leighton Thomas (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
31 March 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
36 Proteome Sciences plc
260759 Proteome p37-p43.qxp 01/04/2021 11:33 Page 37
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2020
Revenue
Licences, sales and services
Grant services
Revenue – total
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance costs
Profit/(loss) before taxation
Tax
Profit for the year
Profit per share
Basic and diluted
Notes
5, 6
8
7
11
2020
£’000
4,712
41
4,753
(2,168)
2,585
(2,036)
549
(304)
245
50
295
2019
£’000
4,634
22
4,656
(1,702)
2,954
(2,655)
299
(335)
(36)
185
149
12
0.10p
0.05p
The accompanying notes 1 to 27 are an integral part of the financial statements.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 37
M
G
A
260759 Proteome p37-p43.qxp 01/04/2021 11:33 Page 38
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 31 December 2020
Profit for the year
Other comprehensive income for the year
Items that will or may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Re-measurements of Defined Benefit Pension Schemes
Profit and total comprehensive income for the year
Owners of parent
2020
£’000
295
18
(27)
286
286
2019
£’000
149
(70)
–
79
79
The accompanying notes 1 to 27 are an integral part of the financial statements.
38 Proteome Sciences plc
260759 Proteome p37-p43.qxp 01/04/2021 11:33 Page 39
CONSOLIDATED BALANCE SHEET
as at 31 December 2020
Non-current assets
Goodwill
Property, plant and equipment
Right-of-use asset
Current assets
Inventories
Trade and other receivables
Contract assets
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease Liabilities
Net current liabilities
Non-current liabilities
Pension provisions
Total liabilities
Net liabilities
Equity
Share capital
Share premium
Share-based payment reserve
Merger reserve
Translation and others reserve
Retained loss
Total (deficit)
Notes
13
14
14
16
17(a)
5
17(b)
18(a)
5
18(b)
26
19
20
22
22
22
22
2020
£’000
4,218
58
484
4,760
878
788
457
2,210
4,333
9,093
(768)
(153)
(10,547)
(491)
(11,959)
(7,626)
(492)
(12,451)
(3,358)
2,952
51,466
3,623
10,755
(91)
(72,063)
(3,358)
2019
£’000
4,218
75
581
4,874
871
486
1,331
799
3,487
8,361
(738)
(26)
(10,262)
(584)
(11,610)
(8,123)
(403)
(12,013)
(3,652)
2,952
51,466
3,615
10,755
(109)
(72,331)
(3,652)
The financial statements of Proteome Sciences plc, registered number 02879724, were approved by the
board of directors and authorised for issue on 31 March 2021. They were signed on its behalf by:
Dr M. Söhngen
Dr I. Pike
31 March 2021
Director
Director
The accompanying notes 1 to 27 are an integral part of the financial statements.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 39
M
G
A
260759 Proteome p37-p43.qxp 01/04/2021 11:33 Page 40
COMPANY BALANCE SHEET
as at 31 December 2020
Non-current assets
Investment in subsidiaries
Current assets
Cash and cash equivalents
Total assets
Current liabilities
Payables from other group entity
Borrowings
Total liabilities
Net assets
Equity
Share capital
Share premium account
Share-based payment reserve
Retained loss
Total equity
Notes
15
17(b)
18(a)
18(b)
20
2020
£’000
8,489
8,489
406
406
8,895
(607)
(2,397)
(3,004)
5,891
2,952
51,466
3,623
(52,150)
5,891
2019
£’000
8,613
8,613
219
219
8,832
(467)
(2,331)
(2,798)
6,034
2,952
51,466
3,615
(51,999)
6,034
The Company generated a loss for the year ended 31 December 2020 of £0.15m (2019: £0.12m).
The financial statements of Proteome Sciences plc, registered number 02879724, were approved by
the board of directors and authorised for issue on 31 March 2021. They were signed on its behalf by:
Dr M. Söhngen
Dr I. Pike
31 March 2021
Director
Director
The accompanying notes 1 to 27 are an integral part of the financial statements.
40 Proteome Sciences plc
260759 Proteome p37-p43.qxp 01/04/2021 11:33 Page 41
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
for the year ended 31 December 2020
Equity
Share- attributable
Share based to owner
Share premium payment Translation Merger Retained of the Total
capital account reserve reserve reserve loss parent (deficit)
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2019 2,952 51,466 3,532 (43) 10,755 (72,480) (3,818) (3,818)
149
Profit for the year – – – – – 149 149
Exchange differences
on translation of
foreign operations – – – (66) – – (66)
Profit and total
comprehensive
income for the year – – – (66) – 149 83
Credit to equity for
share-based payment – – 83 – – – 83
83
At 31 December 2019 2,952 51,466 3,615 (109) 10,755 (72,331) (3,652) (3,652)
(66)
83
At 1 January 2020 2,952 51,466 3,615 (109) 10,755 (72,331) (3,652) (3,652)
Profit for the year – – – – – 295 295
Exchange differences
on translation of
foreign operations – – – 18 – – 18
Re-measurements of
Defined Benefit
Pension Schemes – – – – – (27) (27)
Profit and total
comprehensive
income for the year – – – 18 – 268 286
Credit to equity for
share-based payment – – 8 – – – 8
8
At 31 December 2020 2,952 51,466 3,623 (91) 10,755 (72,063) (3,358) (3,358)
(27)
295
286
18
The accompanying notes 1 to 27 are an integral part of the financial statements.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 41
M
G
A
260759 Proteome p37-p43.qxp 01/04/2021 11:33 Page 42
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
Company
At 1 January 2019
Loss and total comprehensive
income for the year
Credit to equity for
share-based payment
At 31 December 2019
Share
Share-
based
Share
capital
£’000
premium payment Retained
loss
reserve
account
£’000
£’000
£’000
Total
equity
£’000
2,952
51,466
3,532
(51,878)
6,072
–
–
–
–
–
83
(121)
(121)
–
83
2,952
51,466
3,615
(51,999)
6,034
At 1 January 2020
2,952
51,466
3,615
(51,999)
6,034
Loss and total comprehensive
income for the year
Credit to equity for
share-based payment
At 31 December 2020
–
–
–
(151)
(151)
–
2,952
–
51,466
8
3,623
(52,150)
8
5,891
The accompanying notes 1 to 27 are an integral part of the financial statements.
42 Proteome Sciences plc
260759 Proteome p37-p43.qxp 01/04/2021 11:33 Page 43
CONSOLIDATED AND COMPANY
CASH FLOW STATEMENTS
for the year ended 31 December 2020
Group
2020
£’000
Group Company Company
2020
2019
£’000
£’000
2019
£’000
Note
Profit/(loss) before tax
245
(36)
(151)
(121)
Adjustments for:
Net finance costs
Depreciation of property, plant and
equipment
Share-based payment expense
Operating cash flows before movements in
Working capital
(Decrease)/ increase in inventories
Increase/(decrease) in receivables
Increase in payables
Increase in provisions
Cash generated from/(used in) operations
Tax
Net cash inflow/(outflow) from operating
activities
Cash flows from investing activities
Purchases of property, plant and equipment
Repayments from / (Loans advanced to)
subsidiary undertakings
Net cash outflow from investing activities
Financing activities
Lease payments
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning
of year
Effect of foreign exchange rate changes
Cash and cash equivalents at
end of year
7&18c
14
21
14
18c
304
165
8
722
(6)
571
158
88
1,533
50
1,583
(13)
–
(13)
(146)
(146)
1,424
799
(13)
335
89
83
471
276
(1,169)
197
60
(165)
185
20
(58)
–
(58)
(58)
(58)
(96)
958
(63)
65
–
–
(86)
–
–
140
–
54
–
54
–
133
133
–
–
187
219
–
74
–
–
(47)
–
–
165
–
118
–
118
–
(377)
(377)
–
–
(259)
496
(18)
17b
2,210
799
406
219
The accompanying notes 1 to 27 are an integral part of the financial statements.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 43
M
G
A
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 44
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
1 GENERAL INFORMATION
Proteome Sciences plc is a company incorporated in the United Kingdom. These financial statements
are the consolidated financial statements of Proteome Sciences plc and its subsidiaries (“the Group”)
and the Company financial statements for Proteome Sciences plc (“the Company”). The financial
statements are presented in pounds sterling because that is the currency of the primary economic
environment in which the Group operates.
2 CHANGES IN ACCOUNTING POLICIES
Adoption of new and revised standards
Proteome Sciences plc has applied the same accounting policies and methods of computation in its
financial statements as in its 2019 annual financial statements. No new and revised standards were
adopted for the period commencing 1 January 2020.
3 SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
These financial statements have been prepared in accordance with International Accounting
Standards and Interpretations in conformity with the requirements of the Companies Act 2006.
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 Chief Executive Officer’s Statement on page 2 and
Strategic Report on page 6. 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 43 and in notes 18(b) (Financial liabilities) and 24
(Financial instruments).
These financial statements have been prepared on the going concern basis which remains reliant
on the Group achieving an adequate level of sales in order to maintain sufficient working capital to
support its activities. The directors have reviewed the Company’s and the Group’s going concern
position, taking account of current business activities, budgeted performance and the factors likely
to affect its future development, as set out in the Annual report, and including the Group’s objectives,
policies and processes for managing its working capital, its financial risk management objectives
and its exposure to credit and liquidity risks.
In particular, the directors’ have considered the potential ongoing impacts COVID-19 may have on
the ability to achieve adequate level of sales. With the vaccination campaigns having started late
2020 internationally it is still unclear when an effective immunity of the population will be reached
which is very much dependent on the manufacturing capacities of the vaccine producing companies.
In addition it cannot be guaranteed that the virus mutations will remain sensitive to the vaccines and
how quickly then new vaccines can be generated. It is a realistic assumption that 2021 (or at least
the majority of the year) will be very much affected by the pandemic and hence businesses (including
ours) will be impacted heavily due to the fact that our customers might reduce their orders (TMT®
sales and service business) as their own business might be negatively impacted by the pandemic.
Hence these might make less use of our products and services. In addition we might not be able to
attract additional clients or follow on orders for the same reasons.
From March 2020 most of our major markets employed some form of temporary lock down but
pharmaceutical research activity was maintained at near-normal levels and our clients were able to
produce the samples required for proteomic analysis with minimal delays. The Group was able to
adapt working practices to a fully virtual model. The Group was able to rapidly evolve sales and
marketing tools and maintain virtual exhibition booths at a number of the major on-line business-to-
business conferences relevant to the Group’s industry sector.
44 Proteome Sciences plc
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 45
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES continued
Despite the backdrop of COVID19, Group revenues for the year ended 31 December 2020 increased
by 2% to £4.75m (2019: £4.66m). Proteomic (biomarker) services increased 55% to £1.44m (2019:
£0.93m) as the benefits of expanding the Group’s salesforce started to be realised. Sales and
royalties attributable to TMT® and TMTpro™ reagents were £3.27m (2019: £3.70m). However when
we exclude the £0.75m milestone recognized in 2019 from the £3.70m TMT® sales in 2019 and put
the total in relation to our 2020 TMT® sales of £3.27m, the result is an underlying growth of 11% year
on year. Total costs were at £4.20m (2019: £4.36m) and resulted in Operating Profits improving 83%
to £0.55m (2019: £0.30m) and a profit after tax of £0.29m (2019: £0.15m). Cash reserves at the year-
end increased to £2.21m (2019: £0.80m) bolstered by some pre-payment for 2021 service products
and early receipt of Q1 TMT® and TMTpro™ stock orders.
The Group is also dependent on the unsecured loan facility provided by the Chairman of the Group,
which under the terms of the facility, is repayable on demand. Further details of this facility are set
out in note 18(b) to the financial statements.
The directors have received a legally binding written confirmation from the Chairman 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 13 months from the date of approval of these financial statements or
until at least the 31 May 2022.
On 29 March 2021, the loan facility with Vulpes Investment Management Private Limited (“VIM”) (the
“Loan”) was amended such that the Loan and all accrued interest is now repayable on 1 May 2022
(previously 1 May 2021).
Following a detailed review of forecasts, budgets, sales order book and with the knowledge of how
the Group has traded in the first year post the global pandemic, the directors have a reasonable
expectation the Group as a whole, has adequate financial and other resources to continue in
operational existence for the period of at least twelve months past approval of these financial
statements. For this reason, the directors continue to adopt the going concern basis in preparing the
Financial Statements.
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 31 December each year. The
Company controls an investee if, and only if the Company has the following:
(cid:129)
(cid:129)
(cid:129)
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 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.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 45
M
G
A
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 46
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES continued
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
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any
accumulated impairment. 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. Any
impairment is recognised immediately in the income statement and is not subsequently reversed.
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.
The majority of the Group’s revenue is derived from selling TMT® products, end customer sales-based
royalties, which are paid on a quarterly retrospective basis, milestone payments for development
work and revenue milestone payments.
TMT® product sales
TMT® revenues are recognised at the point at which the customer obtains control of the asset. Control
of an asset refers to the ability to direct the use of, and obtain substantially all of the remaining benefits
from, the asset. In relation to TMT® product sales this occurs at the point that the significant risks and
rewards of ownership have been transferred to the customer, the Company retains neither continuing
managerial involvement to the degree usually associated with ownership nor effective control over the
goods sold, revenue can be reliably measured and its probable that the economic benefits will flow to
the Company. The standard payment terms for TMT® product invoices are 45 days from receipt.
TMT® royalties
Royalty revenues are recognised on a quarterly basis at the end of each quarter retrospectively as
soon as the calculation of the royalty amount is available. Royalties are earned when other parties
generate sales that use the Group’s TMT® IP. This variable revenue is subject to the sales/usage
restriction in IFRS 15 and, as such, it is only recognised when that underlying sale of the third-party
product is made. The price is a fixed percentage of the underlying sale and payment is due on a
quarterly basis, based on the sales made in that quarter. Royalty payments are received the month
following the quarter end.
TMT® revenue milestones
Milestone revenues are due on cumulative sales-related revenues. The milestone revenue is
recognised at a point in time when the revenue milestone has been achieved. This is because the
milestone revenue is deemed variable consideration and is constrained due to factors outside the
Company’s influence. There is uncertainty as regards the variable consideration amount.
46 Proteome Sciences plc
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 47
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES continued
Biomarker services
Proteomics (biomarker) services represent a third revenue stream for the Group, with revenue
recognised typically on an over time basis. Performance obligations are described for larger service
orders in the form of work packages, which identify individual deliverable services, and each
represent a value on its own to the customer. The nature of the Group’s work is that our biomarker
contracts create an asset with no alternative use and contracts are worded in such a way that the
Group has an enforceable right to be paid for the performance completed to date including an
appropriate profit margin. Revenue is recognised over time as the biomarker services are performed.
On partially complete biomarker projects, the Group recognises revenue based on stage of
completion of the project which is estimated by reviewing the individual deliverable services
stipulated in the work package. The stage of completion is estimated based on costs to dates over
total expected costs. This is considered a faithful depiction of the transfer of services as the contracts
are initially priced on the basis of individual work packages and therefore represent the amount to
which the Group would be entitled based on its performance to date.
Determining the transaction prices and allocation of amounts to performance obligations
Most of the Group’s revenue is derived from fixed price contracts and therefore the amount of revenue
to be earned from each contract is determined by reference to those fixed prices.
For TMT® products sold there is a fixed unit price, which is applied. For the royalties a percentage
charge per product unit sold is fixed and used as the transaction price. Transactions prices for
biomarker services and grant services are determined on the basis of contractual agreements within
the purchase order / contract with fixed prices stipulated in advance.
For biomarker services revenues the Company does not use any discount or bonus schemes.
Revenue is allocated at the transaction price specified in the contract for the individual work orders
representing a distinct performance obligation.
The Group does not operate a returns or refunds policy due to the bespoke nature of its products
and services.
Research grants
Research grant income is received following the Group reporting the number of working hours carried
out on a research project at the allowable rate. Where retention of a grant is dependent on the Group
satisfying certain criteria, it is initially recognised as deferred income. When the criteria for retention
have been satisfied, the deferred income balance is released to the consolidated income statement.
Leasing
All leases are accounted for by recognising a right-of-use asset and a lease liability except for the
London office.
The rental for the London office amounts to £63k and is not considered a lease under IFRS 16.
In the case of the Group there is only one lease recognised under IFRS 16 for the Frankfurt operation
of the Group, which started in August 2019 and ends after 5 years at the end of July 2024. Its asset
class is land and building as a rental lease. It does not contain variable elements or break out options.
Similarly, there are no special restoration clauses attached, there are no restrictions or covenants in
place and it is no sale and lease back transaction.
Information of the right of use asset and its amortisation are represented in note 14. Information of
future lease payments can be found in note 23 and 26 and about financial commitments and their
timing in note 24.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 47
M
G
A
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 48
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES continued
Details of the Groups leases existing at the balance sheet date can be found in note 26.
Foreign Currencies
The individual financial statements of each Group company are prepared in the currency of their
primary economic environment in which they operate, their functional currency. For the purpose of
the consolidated financial statements, the results and financial position of each Group company are
expressed in pounds sterling.
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 that are measured in terms of historical cost in a foreign currency
are not retranslated.
Exchange differences arising on the settlement of monetary items, are included in profit or loss for
the 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 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.
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 during financial year 2002, 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.
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 its German subsidiary
for which it provides in full at the balance sheet date. This scheme has no separable assets. The
48 Proteome Sciences plc
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 49
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES continued
Company uses the projected unit credit method to determine the present value of its unfunded
defined benefit obligation.
Taxation
Any tax payable is based on taxable profit for the year. Taxable profit differs from net profit as reported
in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The
Group’s liability for current tax is calculated using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases used
in the computation of taxable profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets and liabilities are not recognised
if the temporary difference arises from the initial recognition of goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control
the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Research and development tax credit
Companies within the Group may be entitled to claim special tax allowances in relation to qualifying
research and development expenditure (e.g. R&D tax credits). The Group accounts for such
allowances as tax credits, which means that they are recognised when it is probable that the benefit
will flow to the Group and that benefit can be reliably measured. R&D tax credits are measured on a
cash basis due to the uncertainty over the amount and timing of receipt. R&D tax credits reduce
current tax expense and, to the extent the amounts due in respect of them are not settled by the
balance sheet date, reduce current tax payable.
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
Mass spectrometers
20%
33%
Internally-generated intangible assets – research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Development expenditure, where it meets certain criteria (given below), is capitalised and amortised
on a straight-line basis over its useful life. Asset lives are subject to regular review and an impairment
exercise carried out at least once a year.
Where no internally generated intangible asset can be recognised, development expenditure is
written-off in the period in which it is incurred.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 49
M
G
A
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 50
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES continued
An asset is recognised only if all of the following conditions are met:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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.
The directors do not consider that any Research and Development intangible assets have been
created in 2020 or the prior year on the basis that it is uncertain whether the intangible assets will
generate future revenue cash flows.
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.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 through profit or loss.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment. Any
impairment is reflected through the consolidated income statement.
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.
Financial instruments
The Group classifies its financial assets into one of three measurement categories (fair value through
profit or loss, fair value through other comprehensive income or amortised cost) depending on the
purpose for which the asset was acquired and the nature of the contractual cash flows. As all of the
Group’s financial assets are held in order to collect contractual cash flows and the contractual cash
flows are solely payments of principal and interest, all financial assets are measured at amortised cost.
Amortised cost
Financial assets classified under the amortised cost model are Trade and other receivables, Cash
and cash equivalents, Trade and other payables and Loans to subsidiaries.
Impairment provisions for trade receivables are recognised based on the simplified approach within
IFRS 9 using the lifetime expected credit loss. During this process the probability the non-payment
of the trade receivable is assessed and multiplied by expected amount of credit loss resulting from
credit default. The Company has set up a matrix using the time a debtor is overdue as a criterion to
50 Proteome Sciences plc
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 51
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES continued
determine the default probability using five categories ranging from 0% to 90% probability. Provisions
are recorded in a separate provision account and the movements in the ECL provision are recognised
in profit or loss. On notice of a realised default the gross carrying amount of the asset is written off
against the provision, The Company’s loans to its subsidiaries are interest free and under terms which
would technically provide the Company the right to demand immediate repayment. The current
financial situation of the subsidiaries is such that they would be unable to repay the amounts due if
demanded and, in consequence, they are considered to be credit-impaired and lifetime expected
credit losses are recognised. As part of the assessment of the lifetime expected credit losses of
these intercompany loan receivables, the directors have considered the cash flows that may be
generated from a number of different scenarios, including through an orderly sale of the underlying
business.
Contract assets
Contract assets are recognised on the face of the balance sheet and are defined as the right to
consideration in exchange for goods or services that have been transferred to a customer when that
right is conditional on something other than the passage of time (for example, the entity’s future
performance). Contract assets are considered within the expected loss calculation under IFRS 9, but
usually do not fulfil the recognition criteria.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term
highly liquid investments with an original maturity date of fewer than three months that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Borrowings
Interest-bearing loans are recorded initially at fair value, net of direct issue costs and subsequently
at amortised costs. Finance charges, including premiums payable on settlement or redemption and
direct issue costs, are accounted for on an accruals 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. Further details of the pension
provision policy are set out in the paragraph above headed Retirement benefit costs.
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 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 based on the effect of non-market vesting conditions. Share based
payments are recognised as an additional cost of investment in subsidiary undertakings in the
Company where the Company issues share options to executives employed by its subsidiaries.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 51
M
G
A
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 52
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
3 SIGNIFICANT ACCOUNTING POLICIES continued
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. The Group makes
certain estimates and assumptions regarding the future. Estimates and judgements are continually
evaluated based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and assumptions 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 2020 or the prior year on the basis that it is uncertain whether the intangible assets will generate
future revenue cash flows due to economic feasibility not being established until late in the process.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the fair value less costs to sell
the cash-generating units to which goodwill has been allocated. The fair value less costs to sell
calculation requires the entity to estimate the future cash flows expected to arise from the
cash-generating unit. As the recoverable amount of goodwill at the balance sheet date exceeded
the goodwill amount as shown in the balance sheet of £4.22m an impairment was not undertaken.
Details of the estimates used in the calculation are set out in note 13.
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 the directors have not made a provision against their carrying values as shown in note 15 to
the financial statements and the directors therefore believe that the investments concerned will generate
sufficient economic benefits to justify their revised carrying values, despite the inevitable uncertainties
over timing of the receipt of income and the size of the markets from which income is anticipated.
Leases
Leases accounted under IFRS16 require judgement in respect of interest rates applied. The Group
uses the internal rate of return equating to the interest rate agreed for the Group’s major loans granted
by the shareholders of the Group and considers this to be most appropriated discount rate as the
Group does not use other external financing.
Pension
The Group operates for its German employees a defined benefit retirement scheme and treats, where
appropriate, payments to the scheme similar to payments to a defined contribution scheme. Valuation
of the scheme is based on the annual report of an independent actuary. The Group considers this is
sufficient to guarantee appropriate valuation of the scheme and to consider all resulting financial liabilities.
52 Proteome Sciences plc
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 53
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
5 REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
Year to 31 December 2020
Biomarker TMT
services Sales
£’000 £’000
TMT
Royalties
£’000
Grant
income
£’000
Primary Geographic Markets
US 810
UK 62
EU 572
1,444
Revenue recognised at a
point in time –
Revenue recognised over
a period 1,444
1,444
2,066
–
–
2,066
2,066
–
2,066
1,202
–
–
1,202
1,202
–
1,202
–
–
41
41
–
41
41
Year to 31 December 2019
Biomarker TMT
services Sales
£’000 £’000
TMT
Royalties
£’000
Grant
income
£’000
Primary Geographic Markets
US 665
UK 10
EU 216
Rest of the World 39
930
Revenue recognised at a
point in time –
Revenue recognised over
a period 930
930
1,768
–
–
–
1,768
1,768
–
1,768
1,936
–
–
–
1,936
1,936
–
1,936
22
–
–
–
22
22
–
22
Total
£’000
4,078
62
613
4,753
3,268
1,485
4,753
Total
£’000
4,391
10
216
39
4,656
3,726
930
4,656
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 53
M
G
A
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 54
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
5 REVENUE FROM CONTRACTS WITH CUSTOMERS continued
Contract Balances
Contract Contract Contract Contract
Assets Assets Liabilities Liabilities
2020 2019 2020 2019
£’000 £’000 £’000 £’000
At 1 January/accrued in the period 1,331 328 (26) (25)
Transfer in the period from contract assets
to trade receivables (1,331) (328) – –
Amounts included in contract liabilities that
were recognised as revenue during the period – – 26 25
Excess of revenue recognised over cash
(or rights to cash) being recognised during
the period 457 1,331 – –
Cash received in advance of performance and
not recognised as revenue during the period – – (153) (26)
457 1,331 (153) (26)
Contract assets
Contract assets and contract liabilities arise from the Group’s biomarker services where contracts
may not be completed at the year end and because payments received from customers at each
balance sheet date do not necessarily equal the amount of revenue recognised on the contracts.
The Group expects to recognise this revenue in 2021.
Remaining performance obligations
The vast majority of the Group’s contracts are for the delivery of goods within the next 12 months for
which the practical expedient of IFRS 15 applies.
6 SEGMENT INFORMATION
For executive management purposes, the Group has one reportable segment which is the sale of goods
and biomarker services. All revenue from its operations is reported to this one segment and the two
income streams form the two categories reported in a manner consistent with the internal reporting
provided to the Chief Operating Decision Maker. These two categories are TMT® revenues and Biomarker
services and other license income. 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.
Revenues from major products and services
The Group’s revenues from its major products and services were as follows:
TMT® revenues
Biomarker services and other licence income
Grant income
Total
2020
£’000
3,268
1,444
41
4,753
2019
£’000
3,704
930
22
4,656
Revenues from one customer totalled £3,268k (2019: £3,704k) representing all revenues from the
TMT® income stream.
54 Proteome Sciences plc
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 55
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
7 FINANCE COSTS
Interest on loans (note 18)
8 OPERATING PROFIT
Operating profit is stated after charging/(crediting):
Depreciation charge
Research and development costs
Operating lease rentals
– other
Auditor’s remuneration (see below)
Foreign exchange gains
Net increase in inventories
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 compliance services
Other tax compliance services – VAT, grants, share schemes, income
tax advice
Total non-audit fees
Total fees
9 STAFF COSTS
2020
£’000
304
2020
£’000
165
202
63
90
18
6
61
2
63
27
–
27
90
2019
£’000
335
2019
£’000
89
355
60
80
2
(276)
55
–
55
25
–
25
80
The Group 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
No staff costs are incurred in the parent company, Proteome Sciences Plc.
2020
Number
2019
Number
19
5
24
£’000
1,673
300
174
2,147
20
5
25
£’000
1,657
269
181
2,107
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 55
M
G
A
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 56
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
10 DIRECTORS’ REMUNERATION AND TRANSACTIONS
The directors’ emoluments in the year ended 31 December 2020, were:
National
Basic Insurance Benefits Pension
salary Contributions in kind Costs Total Total
2020 2020 2020 2020 2020 2019
£’000 £’000 £’000 £’000 £’000 £’000
Executive Directors
Dr J.R.M. Haigh
(resigned 31 December 2019) – – – – – 185
Dr M. Söhngen
(appointed 15 September 2020) 73 3 1 – 77 –
Dr I. Pike 181 24 3 16 224 155
R. Dennis 151 20 – 13 184 165
Non-Executive Directors
C.D.J. Pearce 120 6 5 – 131 119
R. McDowell 25 2 – – 27 22
M. Diggle – – – – – –
Dr U. Ney 20 1 – – 21 17
Total 570 56 9 29 664 663
(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) Details of the options in place and of awards under the Company’s Long-Term Incentive Plan are
given in note 21.
(iv) The number of directors in pension schemes is as follows:
Defined contribution pension schemes
Pension costs in the year ended 31 December 2020 were as follows:
Dr I. Pike
R. Dennis
2020
2019
2
2
2020
£’000
16
13
29
2019
£’000
10
13
23
Directors’ transactions
(a) Other than as disclosed note 18(b) no director had a material interest in any contract of significance
with the Company in either year.
(b) C.D.J. Pearce has a consultancy agreement with the Company at a rate of £70,000 per annum; this
amount is included in the salary of £120,000 noted above. The balance of the fees relating to the
consultancy agreement at the year end was £321k (2019: £251k). This increase during the year
represents the charge for consultancy during the year.
56 Proteome Sciences plc
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 57
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
11 TAX
Credit on profit before taxation on ordinary activities
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 can be
claimed in respect of the tax effect of tax losses generated from qualifying R&D expenditure. From
2018 the Group recognised R&D tax claims on a receipt basis.
UK Corporation tax – R&D tax credit
Overseas tax charge
Group tax charge for the year
R&D tax credit received
Group tax credit for the year
2020
£’000
2019
£’000
(90)
(90)
140
50
–
(54)
(54)
239
185
The UK Corporation tax credit relates to research and development tax credits claimed under the
Corporation Taxes Act 2009.
At 31 December 2020 there were tax losses available for carry forward of approximately £45.7m
(2019: £46.5m).
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 for the year
R&D tax credit entitlements are significantly smaller than in the previous year, due to the stronger
commercial focus of the Company’s research activities. As such the Company has not recognised
any tax credit in respect of 2020. The differences are explained below:
Profit before tax
Income tax credit calculated at 19.00% (2019: 19.00%)
Effects of:
Fixed asset timing differences
Unrecognised tax losses carried forward
Effect of overseas tax
R&D tax received
Tax Unrecognised deferred tax
The following deferred tax assets have not been recognised
at the balance sheet date:
Tax losses
Depreciation in excess of capital allowances
Provisions
Total
2020
£’000
2019
£’000
245
(47)
(11)
58
(90)
140
50
2020
£’000
7,774
1
2
7,777
(36)
7
(14)
43
(54)
239
185
2019
£’000
7,894
2
18
7,914
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 57
M
G
A
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 58
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
11 TAX continued
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
A reduction in the UK tax rate from 19% to 17% (effective 1 April 2020) was substantively enacted on
6 September 2016. The March 2020 Budget announced that a rate of 19% would continue to apply
from 1 April 2020, and this was substantively enacted on 17 March 2020.
12 PROFIT PER ORDINARY SHARE
The calculations of basic and diluted loss per ordinary share are based on the following losses and
numbers of shares.
Profit for the financial year
Weighted average number of ordinary shares for the purposes of
calculating basic earnings per share:
Weighted average number of ordinary shares and outstanding
options for the purposes of calculating diluted earnings per share
Basic and Diluted
2020
2019
£’000
£’000
295
149
2020
Number of
shares
2019
Number of
shares
295,182,056 295,182,056
295,182,056 295,182,056
The profit 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 none of the issued share options are in the money
and are therefore not dilutive as of 31 December 2020 and 2019.
13 GOODWILL
Cost and carrying amount
1 January 2020 and 31 December 2020
Goodwill
£’000
4,218
The Group comprises a single CGU, which comprises the business carried out by Electrophoretics
Limited and Proteome Sciences R&D GmbH & Co KG. For the purpose of testing goodwill, the
recoverable value of the CGU is determined from fair value less estimated costs of disposal. In
assessing the fair value of the CGU, management and the directors have considered and assessed
the following evidence:
As at 31 December 2020, the market capitalisation for the Group was £11.42m based on the quoted
share price of the Company of 3.87p per ordinary share.
The directors have concluded that based on the above, recoverable value (on a fair value less cost
to sell basis) of the goodwill exceeds the carrying value of the goodwill at 31 December 2020.
58 Proteome Sciences plc
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 59
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
14 PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSET
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:
Cost
1 January 2019
Exchange adjustments
Additions during the year
Disposals during the year
31 December 2019
1st January 2020
Exchange adjustments
Additions during the year
Disposals during the year
31 December 2020
Depreciation
1 January 2019
Exchange adjustments
Charge for the year
Depreciation relating to disposals
At 31 December 2019
At 1 January 2020
Exchange adjustments
Charge for the year
Depreciation relating to disposals
At 31 December 2020
Net book value
At 1 January 2020
At 31 December 2020
Laboratory
equipment,
fixtures and
fittings
£’000
Right of
use asset
£’000
2,370
(79)
58
(5)
2,344
2,344
79
13
(607)
1,829
2,314
(77)
36
(4)
2,269
2,269
75
32
(605)
1,771
75
58
–
–
633
–
633
633
37
–
–
670
–
–
52
–
52
52
1
133
–
186
581
484
Total
£’000
2,370
(79)
691
(5)
2,977
2,977
116
13
(607)
2,500
2,314
(77)
88
(4)
2,321
2,321
76
165
(605)
1,958
656
542
In August 2019 the Group entered into in a 5-year lease contract for the Frankfurt operation, which is
due to finish in July 2024.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 59
M
G
A
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 60
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
15 INVESTMENT IN SUBSIDIARIES
Company
At 1 January 2019
Share based payment expense
Loan to subsidiary
Provisions for impairment during the year
At 31 December 2019
At 1 January 2020
Share based payment expense
Repayment of loan by subsidiary
Provisions for impairment during the year
At 31 December 2020
Loans to
Cost of shares
in subsidiary
subsidiary
undertakings undertakings
£’000
£’000
29
83
–
–
112
8
–
–
121
8,125
–
376
–
8,501
–
(133)
–
8,368
Total
£’000
8,154
83
376
–
8,613
8
(133)
–
8,489
(i)
(ii)
The increase in the cost of shares in subsidiary undertakings of £8,232 (2019: £83,443) 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.
The decrease in loans to subsidiary companies in 2020 of £133k (2019: £376k) arose from the return
of funds by the Company’s trading subsidiary.
(iii) The Company’s loans to its subsidiaries are interest free and under terms which would technically
provide the Company to demand immediate repayment. The current financial situation of the
subsidiaries is such that they would be unable to repay the amounts due if demanded and, in
consequence, they are considered to be credit-impaired and lifetime expected credit losses are
recognised. As part of the assessment of the lifetime expected credit losses of these intercompany
loan receivables, the directors have considered the cash flows that may be generated from a number
of different scenarios, including through an orderly sale of the underlying business.
The Company’s loans to subsidiaries were assessed as credit impaired at the date of initial
application of IFRS 9, 1 January 2018, and again at the current year-end. As a consequence of the
improved financial situation of the subsidiaries no further impairment in 2019 and 2020 were
undertaken. Paragraphs (i) and (ii) above provide a reconciliation of movements in relation to the
carrying value of the investments at year-end.
The carrying amount of the Company’s loans to subsidiaries was £8,368k (1 January 2019: £8,613k).
60 Proteome Sciences plc
260759 Proteome p44-p61.qxp 01/04/2021 11:35 Page 61
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
15 INVESTMENT IN SUBSIDIARIES continued
Company investments
The Company has investments in the following subsidiary undertakings, which contribute to the net
assets of the Group:
Subsidiary undertakings
Proteome Sciences R&D
Verwaltungs GmbH
Proteome Sciences R&D
GmbH & Co. KG
Country of
incorporation
and operation
Germany
Principal activity
Description and proportion
of shares held by the
Company
Group
Administrative
Company
100% Share 100% Share
Capital
Capital
Germany
Research Company
100%
100%
Partnership Partnership
Interest
Interest
Proteome Sciences, Inc.
U.S.A.
Research Company
Electrophoretics Limited
United
Kingdom
Administrative
and Research
Company
Veri-Q Inc.
U.S.A.
Research Company
Phenomics Limited
United
Kingdom
Dormant
100%
Common
Stock
100%
Ordinary
Shares
76.9%
Common
Stock
100%
Ordinary
Shares
100%
Common
Stock
100%
Ordinary
Shares
76.9%
Common
Stock
100%
Ordinary
Shares
(i)
The investments in Proteome Sciences, Inc., Electrophoretics Limited and Phenomics Limited
comprise the entire issued share capital of each subsidiary undertaking and carry 100% of the
voting rights.
The registered offices of the companies above are:
Proteome Sciences R&D Verwaltungs GmbH, Proteome Sciences R&D GmbH & Co. KG, -
Althenhöferallee 3, 60438 Frankfurt am Main, Germany
Proteome Sciences plc, Electrophoretics Limited and Phenomics Limited, Hamilton House, Mabledon
Place, London WC1H 9BB, UK
Proteome Sciences Inc PO Box 2767 Humble, Texas, 77347. USA
Veri-Q Inc 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808-1645, USA
16 INVENTORIES
Work-in-progress
Finished goods
2020
£’000
161
717
878
2019
£’000
158
713
871
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 61
M
G
A
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 62
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
17 OTHER CURRENT ASSETS
a) Trade and other receivables
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Other Debtors
Financial assets other than cash and cash equivalents classified as
loans and receivables
Prepayments
Total
Group
2020
£’000
Group
2019
£’000
685
(13)
672
63
53
788
358
(24)
334
71
81
486
At 31 December 2020 the lifetime expected loss provision for trade receivables is as follows:
More than More than More than More than
30 days 90 days 270 days 364 days
Current past due past due past due past due
Expected loss rate % 0% 10% 15% 60% 90%
Gross carrying amount 555 130 – – –
Loss provision – 13 – – –
Total
£’000
685
13
As at 31 December 2020 trade receivables of £130,085 (2019: £23,882) were past due and
partially impaired.
The main factors considered by the finance function in determining that the amounts due are impaired
are the length of time outstanding and additionally background information provided by the sales
and production department.
There were no trade debts outstanding by the end of the period 2020, which were ultimately not
recovered; the maturity profile of any due debt is presented below.
0 to 3 months
3 to 9 months
9 to 12 months
> 12 months
b) Cash and cash equivalents
Cash and cash equivalents
2020
£’000
130
–
–
–
2019
£’000
–
–
–
22
Group
2020
£’000
2,210
Company
2020
£’000
Group
2019
£’000
Company
2019
£’000
406
799
219
The directors consider that the carrying amount of trade receivables and cash and cash equivalents
approximates to their fair value.
62 Proteome Sciences plc
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 63
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
18 FINANCIAL LIABILITIES
(a) Trade and other payables
Due within one year
Other payables
Accruals
Payables due to group entities
Group
2020
£’000
Company
2020
£’000
Group
2019
£’000
Company
2019
£’000
519
249
–
768
–
–
607
607
514
224
–
738
–
–
467
467
Trade creditors and other payables 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
2020
£’000
Company
2020
£’000
Group
2019
£’000
Company
2019
£’000
Loans from related parties
10,547
2,397
10,262
2,331
The directors consider that the carrying amount of borrowings approximates to their fair value.
Note:
(i) The loan from related party represents a loan from Mr C. D. J. Pearce, Non-Executive Chairman
of the Company. The loan is secured by a fixed charge over the Company’s patent portfolio and
a floating charge over the Company’s inventory. The loan bears interest at 2.5% above the base
rate of Barclays Bank plc. Loan amounts representing £5m may be converted into ordinary share
capital at the option of Mr Pearce at the lower of market price on the date of conversion or the
average price over the lowest consecutive ten day trading period since 29 June 2006. The
conversion option is immaterial to the financial statements. The balance owed by the Group was
£9,795k of which £1,645k is owed by the Company. (2019: £9,532k).
The loan is repayable on seven days notice, or immediately in the event of:
(a) A general offer to the shareholders of the Company being announced to acquire its issued
share capital, or
(b) The occurrence of any of the usual events of default attaching to this sort of agreement.
The Company has received a legally binding written confirmation from Mr Pearce that he will not
seek repayment for 13 months from signing of these Financial Statements or until at least 31 May
2022.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 63
M
G
A
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 64
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
18 FINANCIAL LIABILITIES continued
(ii) On 2 July 2018, Proteome Sciences plc secured a loan facility of £1.0m from Vulpes Investment
Management (VIM). Interest accrues at 2.5% per annum above the UK sterling base rate of
Barclays Bank plc and is repayable alongside the principal loan. The Company signed the
First Amendment to the Agreement on the 17 April 2020 which extended the term of the loan to
1 May 2021. On 29 March 2021, the loan facility with Vulpes Investment Management Private
Limited (“VIM”) (the “Loan”) was amended such that the Loan and all accrued interest is now
repayable on 1 May 2022 (previously 1 May 2021). This loan is deemed a related party transaction
by nature of a common director being on both the boards of Proteome Sciences plc and Vulpes
Investment Management. At 31 December 2020 amounts drawn down and owed by the Company
were £700k, and interest of £51k was accrued (2019: loan £700k interest £30k).
(iii) The amounts shown above as outstanding under short term borrowings include accrued interest.
(c) Changes in liabilities arising from financing activities
Group
Note supporting the cash flow statement
Interest
accruing
in the
period exchange
£,000
£,000
–
284
33
20
Foreign 31 December
2020
£,000
10,547
491
304
33
11,037
Cash
Flow
£,000
–
(146)
(146)
1 January
2020
£,000
10,262
584
10,846
Short term borrowings
Lease Liabilities
Total
Company
Note supporting the cash flow statement
Short term borrowings
Total
19 PENSION PROVISIONS
Group
At 1 January
Additional provision in the year
At 31 December
Interest
accruing
1 January
2020
£,000
Cash
Flow
£,000
in the 31 December
2020
period
£,000
£,000
2,331
2,331
–
–
65
65
2020
£’000
403
89
492
2,397
2,397
2019
£’000
343
60
403
(i) The pension provision relates to pension costs which may become payable in connection with
the Group’s Frankfurt employees, under the pension scheme arrangements set out in note 19 (iii).
This provision will be utilised as members of the scheme reach retirement age and draw down
their pensions.
64 Proteome Sciences plc
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 65
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
19 PENSION PROVISIONS continued
(ii) 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.
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 2020, funding
contributions payable by the Group are based on employee contributions at the rate of 1.5% - 2.5%
(2019:1.5% - 2.5%) of wages and salaries and employer contributions at the rate of 6 times (2019: 6
times) employee contributions. The Company expects pension costs for 2021 in relation to the defined
benefit scheme of £25,159 (2019: £59,596).
The amount charged to the income statement in respect of the contributions to the scheme in 2020
was £136,496 (2019: £144,958).
As at 31 December 2020, an actuarial deficit did not exist for the multi-employer scheme. The Group’s
contributions to the scheme during 2020 represented 0.05% of total contributions to the scheme by
employers and employees (2019: 0.01%). Under the terms of the multi-employer plan, the Group’s
obligations are limited to the original promise/commitment that it has given to its own employees.
The Group does not have an exposure to liability in relation to other third-party employers’ obligations.
The Group does not have any information about how the actuarial status of the plan may affect the
amounts of future contributions to the plan.
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 0.7% (2019: 1.0%). The Company has
assumed an income increase of 2.25% (2019: 2.5%) and German inflation of 1.5 % (2019: 1.75%).
Provisions for future unfunded pension liabilities at 31st December 2020 amounted to £491,743 (2019:
£402,914). Amounts recognised through the consolidated income statement for the year to
31st December 2020 included service costs of £35,892 (2019: £11,341), interest costs of £4,243
(2019: £6,431) and an actuarial loss of £26,939 (2019: £63,180).
Other pension costs in relation to defined contribution schemes for United Kingdom employees
amounted to £38,682 (2019: £35,759).
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 65
M
G
A
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 66
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
20 SHARE CAPITAL
(i) Allotted and called-up
Ordinary Shares of 1p each
The number of shares in issue in 2020 was:
2020
£’000
2,952
2019
£’000
2,952
2020
Number
2019
Number
As at 1 January 2020 and 31 December 2020
295,182,056 295,182,056
21 SHARE OPTIONS AND SHARE BASED PAYMENTS
(i) Options
Options under the schemes noted below may be exercised from the date on which any shares in the
Company are first admitted to the Official List of the London Stock Exchange.
(ii) 2011 Long-Term Incentive Plan (“LTIP”)
At 31 December 2020, 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
31 December
2019
4,000,000
5,000,000
7,000,000
16,000,000
Awarded Exercised Lapsed
Number at
in the in the in the 31 December
2020
year year year
Vesting
Date
– – 4,000,000
– – 5,000,000
– – 7,000,000
– – 16,000,000
– 1 June 2019
– 1 June 2019
– 3 April 2020
–
Latest
Exercise
Date
3 April 2027
3 April 2027
3 April 2027
At 31 December 2019, the maximum number of the Company’s Ordinary Shares of 1p each to be
potentially allocated or issued under the LTIP was as follows:
Awarded Exercised Lapsed
Number at
in the in the in the 31 December
2019
year year year
Vesting
Date
Latest
Exercise
Date
– – –
– – –
– – –
– – –
4,000,000 1 June 2019
5,000,000 1 June 2019
7,000,000 3 April 2020
3 April 2027
3 April 2027
3 April 2027
16,000,000
Number at
31 December
2018
4,000,000
5,000,000
7,000,000
16,000,000
66 Proteome Sciences plc
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 67
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
21 SHARE OPTIONS AND SHARE BASED PAYMENTS continued
(iii) 2011 Share Option Plan
At 31 December 2020 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
(£)
Exercise Price
(p)
Vesting Date
Dates
Exercisable
73,000
43,000
48,000
164,000
730.00
430.00
480.00
1,640.00
36.50
49.87
16.75
17.2.15
25.6.16
18.3.19
17.2.15 – 17.2.22
25.6.16 – 25.6.23
18.3.19 – 18.3.26
At 31 December 2019 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
(£)
Exercise Price
(p)
Vesting Date
Dates
Exercisable
830.00
480.00
250.00
630.00
219,000 2,190.00
83,000
48,000
25,000
63,000
36.50
49.87
36.25
16.75
17.2.15
25.6.16
25.6.17
18.3.19
17.2.15 – 17.2.22
25.6.16 – 25.6.23
25.6.17 – 25.6.24
18.3.19 – 18.3.26
The Company issues equity-settled share-based payments under the 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 equity settled scheme and had potential vesting dates
from 2 July 2010 to 31 July 2011 with any award being linked to share performance related targets.
At the 31 December 2020, awards over 164,000 shares (2019: Nil) 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. Awards are
usually forfeited if the employee leaves the Group before the vesting date.
A new Long-Term Incentive Plan was introduced in 2011. A charge to the income statement of £8,232
(2019: £83,443) was recognised during the year in respect of all schemes. The 2011 Plans will end
in July 2021. It is the intention of the Board that a new plan is introduced during 2021.
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%.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 67
M
G
A
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 68
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
21 SHARE OPTIONS AND SHARE BASED PAYMENTS continued
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 1 January 2019
Granted in the year
Forfeited during the year
Outstanding at 31 December 2019
Granted in the year
Lapsing in the year
Outstanding at 31 December 2020
Exercisable at 31 December 2020
Exercisable at 31 December 2019
Outstanding at 1 January 2019
Granted in the year
Lapsing in the year
Outstanding at 31 December, 2019
Granted in the year
Lapsing in the year
Outstanding at 31 December, 2020
Exercisable at 31 December, 2020
Exercisable at 31 December, 2019
2011 Share Option Plan
Weighted
average
exercise
price (p)
Options
219,000
–
–
219,000
–
55,000
164,000
164,000
194,000
33.72
–
–
33.72
–
32.22
34.23
34.23
33.34
2011 LTIP
Maximum
Number of
Weighted
average
fair value
Shares per share (p)
16,000,000
–
–
16,000,000
–
16,000,000
–
–
–
4.25
–
–
4.25
–
4.25
–
–
–
The options outstanding at 31st December 2020 had a weighted average remaining contractual life
as follows:
2011 Share Option Plan
LTIP
68 Proteome Sciences plc
2020
No. of
months
25.1
–
2019
No. of
months
46.8
87.0
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 69
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
21 SHARE OPTIONS AND SHARE BASED PAYMENTS continued
The inputs into the Black-Scholes model were:
2020
2019
Weighted average share price 4.9p
4.9p
Weighted average exercise price 4.9p
4.9p
Expected volatility 63.56% - 56.05% 63.56% - 56.05%
Expected life 4 years
4 years
Risk free rate 1.13% - 0.15%
1.13% - 0.15%
Notes
(i) Expected volatility is a measure of the tendency of a security price to fluctuate in a random,
unpredictable manner and is determined by calculating the historical volatility of the Company’s share
price over the previous years.
(ii) The expected life has been adjusted, based on management’s best estimate, for the effects of non-
transferability, exercise restrictions and behavioural considerations.
(iii) The Company has used the Monte Carlo model to value the LTIP awards granted before 2020, 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. For the LTIP awards granted during 2020 the Black
Scholes model was used as there was only a non – performance condition attached.
22 RESERVES DESCRIPTION AND PURPOSE
Share premium
Amount subscribed for share capital in excess of nominal value.
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) not recognised
elsewhere.
Share based payment Reserve
The amounts transferred to the Equity Reserve are for charges recognised in respect of the
requirements of IFRS 2 “Share-based payments”.
Merger Reserve
The merger reserve arose in the period to the 11 November 1994 and represented 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.).
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 69
M
G
A
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 70
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
23 GUARANTEES AND OTHER FINANCIAL COMMITMENTS
Operating lease arrangement
The Group leases one office space on a short-term operating lease which renews on a six monthly
basis ending in May 2021 and there is no control over the asset. The Group pays insurance,
maintenance and repairs of this property.
At the balance sheet date 31 December 2020 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
> 5 years
Group
2020
£’000
Company
2020
£’000
Group
2019
£’000
Company
2019
£’000
27
–
–
27
27
–
–
27
26
–
–
26
26
–
–
26
24 FINANCIAL INSTRUMENTS
Capital risk management
The Group monitors “adjusted capital” which comprises all components of equity (i.e. share capital,
share premium, non-controlling interest, retained earnings, and revaluation reserve).
The Group’s objectives when maintaining capital are:
(cid:129)
(cid:129)
to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide
returns for shareholders and benefits for other stakeholders, and
Provide an adequate return to shareholders by pricing products and services commensurately
with the level of risk
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital
structure and makes adjustments to it in the light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group
does not pay dividends to shareholders.
Due to recent market uncertainty the Group’s strategy is to preserve a strong cash base and to
maintain a positive cash flow for at least 15 months in advance.
The Board has overall responsibility for the determination of the Group's risk management objectives
and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for
designing and operating processes that ensure the effective implementation of the objectives and
policies to the Group's finance function. The Board receives monthly management reports from the
Group’s finance function and bi-monthly cash flow calculations through which it reviews the
effectiveness of the processes put in place and the appropriateness of the objectives and policies
it sets. The overall objective of the Board is to set policies that seek to reduce risk as far as possible
without unduly affecting the Group's competitiveness and flexibility. Further details regarding these
policies are set out below.
The capital structure of the Group consists of the financial instruments listed below which determine
the financial risk and an according risk management.
70 Proteome Sciences plc
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 71
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
24 FINANCIAL INSTRUMENTS continued
Financial instruments for the Group comprise:
(cid:129)
Trade receivables
(cid:129) Cash and cash equivalents
(cid:129)
Trade and other payables
(cid:129) Borrowing from major investors of the Company at floating rate
(cid:129)
Leases liability
For the Company:
(cid:129) Cash and cash equivalents
(cid:129)
Investment in quoted and unquoted securities
(cid:129) Borrowing from major investors of the Company at floating rate
Categories of financial instruments
Financial assets
Cash and cash equivalents*
Trade and other receivables*
Investment in subsidiaries
Total financial assets
Financial liabilities
Trade and other payables and accruals*
Short-term borrowings*
Lease liabilities
Total financial liabilities
Group
2020
£’000
Company
2020
£’000
Group
2019
£’000
Company
2019
£’000
2,210
788
–
2,998
(921)
(10,547)
(491)
(11,959)
406
–
8,489
8,895
799
486
–
1,285
219
–
8,613
8,832
–
(764)
–
(2,397)
(10,262)
(2,331)
–
(584)
–
(2,397)
(11,610)
(2,331)
The described financial instruments are measured applying the following methodologies:
* measured at amortised costs through the consolidated income statement
The Group is exposed to the following financial risks:
(cid:129) Credit risk
(cid:129)
(cid:129)
Fair value or cash flow interest rate risk
Foreign exchange risk
(cid:129) Other market price risk
(cid:129)
Liquidity risk
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 71
M
G
A
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 72
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
24 FINANCIAL INSTRUMENTS continued
Credit risk
Group
Electrophoretics Limited, the main trading company in the Group, has a credit policy in place and
the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on
customers as deemed necessary based on the nature of the prospective customer and size of order.
To minimize any credit risk upfront payment for service orders are requested when orders require
larger pre-financing of consumables needed for order fulfilment. Further for any larger service orders
interim payments are requested based on work order related performance obligations. The overall
structure with the majority of our customers being B2B and to a lesser extent institutional customers
like universities or state funded research institutions minimizes credit risk as well.
For trade receivables and other receivables further explanation and calculation of ECL (Expected
credit loss) provisions relating to credit risk are presented in note 17.
At the reporting date, the largest exposure was represented by the carrying value of trade receivables
and contract assets of £1.24m (2019: trade receivables and contract assets £1.82m). A minor
provision for impairment was recognised for 2020: £13k (2019: £24k) on the basis that the Company’s
customers are typically large companies and there is a long-standing relationship and history of
payment by customers so there is no history of credit defaults. The Group does have significant
concentrations of credit risk on its trade receivables, with the largest debtor/contracted asset
amounting to £552k (2019: £1,144k).
Credit risk arising from cash and cash equivalents held with banking institutions is controlled by using
only good rated Institutions as presented in the table. Nevertheless, the economic challenges created
by the COVID-19 pandemic might result in a strain on the liquidity of the individual banking institutions.
As such the company follows the developments in the financial markets closely. As a consequence,
a more even allocation of funds between the different banks might be adopted and we will consider
reallocation of funds to better rated institutions in case of larger changes in credit rating by more
than one of the big credit rating agencies (such as Moody’s, S&P, Fitch). Due to fluctuating cash
flows we inevitably need to hold a larger amount of cash deposits to fund the operational business
requirements and only limited risk mitigation is possible here.
Group
2020
£’000
2,005
200
5
2,210
Company
2020
£’000
Group
2019
£’000
Company
2019
£’000
406
–
–
406
603
181
15
799
219
–
–
219
Barclays plc
Commerzbank AG
Other
72 Proteome Sciences plc
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 73
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
24 FINANCIAL INSTRUMENTS continued
Company
The Company is exposed to credit risk on loans provided to related parties. At the reporting date, the
largest exposure was represented by the carrying value of loans to Proteome Sciences R&D GmbH
& Co. KG of £8.0m. At 31 December 2020, the carrying value of loans owed by Electrophoretics
Limited to the Company was £Nil (2019: £0.17m), of loans owed by Proteome Sciences R&D GmbH
& Co. KG to the Company was £8.5m (2019: £8.6m). Refer to Note 15 for further detail.
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).
Fair value and cash flow interest rate risk
The Group is exposed to cash flow interest rate risk from long term borrowings. The level of
borrowings is determined by the capital requirements of the Group as it was operational in a net
cash outflow position. As such usual gearing ratios to assess debt risk levels are not applicable.
Borrowings are managed centrally under direct involvement and supervision of the Board.
All borrowings are in the functional currency of the Group.
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 18(b).
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the
liquidity risk management section of this note.
Interest rate sensitivity analysis
The Group analyses interest sensitivity on a yearly basis. 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 31 December 2020 would have increased by £34,163 (2019: £50,255), for a
decrease of 0.5% in interest rate the loss would have reduced by the same amount.
The Group’s sensitivity to interest rates has remained stable due to the rise in the amount being offset
by lower interest rates.
Foreign exchange risk
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.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 73
M
G
A
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 74
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
24 FINANCIAL INSTRUMENTS continued
Foreign currency sensitivity analysis
The Group is mainly exposed to the currency of Germany (the Euro) and of the US (the US dollar).
The Group’s companies hold asset and liabilities denominated in different than their functional
currency. As the nature of these assets is in their majority short term and usually any assets held in
a foreign currency are used to match liabilities denominated in this currency the overall effect of any
currency fluctuations does not result in a material exposure to foreign exchange risk. Therefore,
a foreign currency sensitivity analysis would not be appropriate.
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
The following tables detail the Group and Company’s remaining contractual maturity for its
non-derivative financial liabilities including both interest and principal cash flows and the interest
rates applied. The tables have been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest date on which the Group and Company can be required to pay.
Payments relating to lease liabilities under IFRS 16 are shown under note 26.
Up to 3
Months
As at December 2020 £’000
Trade and other payables 921
Loans and borrowings 10,547
Short term lease 17
Total 11,485
Liquidity risk management
Between
3 and 12
months
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Over
5 years
£’000
–
–
10
10
–
–
–
–
–
–
–
–
–
–
–
–
Up to 3
Months
As at December 2019 £’000
Between
3 and 12
months
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Over
5 years
£’000
Trade and other payables 764
Loans and borrowings 10,262
Short term lease 16
Total 11,042
–
–
10
10
–
–
–
–
–
–
–
–
–
–
–
–
There are pension provisions existing for the German entity of the Group, which amounted at
31 December 2020 to £0.49m (2019: £0.40m), which do not result in future Cash outflows from
the Group.
74 Proteome Sciences plc
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 75
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
25 RELATED PARTY TRANSACTIONS
a) Transactions between the Company and its subsidiaries, which are related parties, have been
eliminated on consolidation and were as follows:
1) Loans advanced to subsidiary undertakings:
At 1 January 2019
Additional loan advanced in the year
Provision for impairment
At 31 December, 2019
At 1 January 2020
Loan repayment in the year
At 31 December, 2020
2) Loan from subsidiary undertaking:-
At 1 January, 2019
Exchange adjustment
At 31 December, 2019
At 1 January, 2020
Exchange adjustment
At 31 December, 2020
Proteome
Sciences R&D
£’000
7,549
–
–
7,549
7,549
–
7,549
486
(19)
467
589
18
607
Electrophoretics
Ltd
£’000
576
376
–
952
952
(133)
819
–
–
–
–
–
–
Total
£’000
8,125
376
–
8,501
8,501
(133)
8,368
486
(19)
467
589
18
607
Further details of the Company’s shares in and loans to its subsidiary undertakings are set out in
note 15.
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 18 on page 63.
c) M Diggle, a Director of the Company, and therefore a related party, is also a Director of Vulpes
Investment Management (VIM) a substantial shareholder of the Company, and VIM has made a
loan facility available to the Company full details of which are set out in note 18 on page 63.
d) Details of the remuneration of the directors is set out in note 10, 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’.
e) Key management personnel compensation.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 75
M
G
A
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 76
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
25 RELATED PARTY TRANSACTIONS continued
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 2020 and the comparative period were as follows:
Mariola Söhngen (Chief Executive Officer) (appointed 15 September 2020)
Jeremy Haigh (Chief Executive Officer (resigned 31 December 2019)
Ian Pike (Interim (Chief Executive Officer 1 January – 14 September 2020) and (Chief Scientific Officer)
Richard Dennis (Chief Commercial Officer)
Stefan Fuhrmann (Finance Director)
Christopher Pearce Chairman (Non-Executive Director)
Roger McDowell (Non-Executive Director)
Martin Diggle (Non-Executive Director)
Ursula Ney (Non-Executive Director)
Key management personnel remuneration was as follows:
Salary
National Insurance Contributions
Other long-term benefits
Defined benefit scheme costs
Share based payment expense
Consultancy fee
2020
£’000
2019
£’000
679
71
–
–
8
70
828
620
75
83
–
–
70
848
The amounts charged to the income statement relating to Directors in respect of the share-based
payment charge were as follows:
2020
£’000
8
2019
£’000
–
76 Proteome Sciences plc
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 77
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
26 LEASES
In the case of the Group there is only one lease recognised under IFRS 16 comprising the lease for
the Frankfurt operation of the Group, which started in August 2019 and ends after 5 years at the end
of July 2024.
As it is a rental lease the resulting right-of-use asset is classified as land and buildings. It does not
contain variable elements or break out options. Similarly there are no special restoration clauses
attached, there are no restrictions or covenants in place and it is no sale and lease back transaction.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over
the term of the lease term, with the discount rate determined by reference to the Groups internal rate
of return, as there is no inherent rate to the lease readily determinable. The internal rate of return
(ICR) which is the average Barclays interbank rate for the year + 0.75%, (overall 3.25%) which will be
applied over the duration of the lease reflects the refinancing rate agreed for the loans made available
by its major shareholders, which are its main source of external finance and reflects the incremental
borrowing rate.
Right-of-use asset
At January 2020
Additions
Amortisation
Foreign exchange movements
At 31 December 2020
Land and
buildings
£’000
581
–
(134)
37
484
Interest on lease liability for the period amounted to £20k (2019: £9k). This results in slightly higher
costs at the beginning of the lease and lower costs at the end of the lease in comparison to the
actual lease payments.
Lease Liability
At January 2020
Interest accruing for the year
Lease payments
Foreign exchange movements
At 31 December 2020
Land and
buildings
£’000
584
20
(146)
33
491
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 77
M
G
A
260759 Proteome p62-p78.qxp 01/04/2021 11:37 Page 78
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2020
26 LEASES continued
Maturity analysis of undiscounted lease payments
Up to 3
Months
As at December 2020 £’000
Between
3 and 12
months
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Over
5 years
£’000
Lease liabilities 37
110
147
233
–
Information of the right-of-use asset and its amortisation are represented in note 14 as well.
The rent for the London office, which amounts to a total liability of £27k, is not considered a lease
under IFRS 16 because there is no control over the asset.
27 EVENTS AFTER THE BALANCE SHEET DATE
The Company signed the Second Amendment to the Loan Agreement with Vulpes Investment
Management on the 29 March 2021 which extended the term of the loan to 1 May 2022.
78 Proteome Sciences plc
260759 Proteome p79-end.qxp 01/04/2021 11:38 Page 79
NOTICE OF ANNUAL GENERAL MEETING
(Registered in England No: 02879724)
The UK Government’s restrictions currently in force in relation to COVID-19 prohibits holding public
gatherings. To comply with the restrictions, physical attendance at the Company’s Annual General Meeting
(“AGM”) will not be permitted. The AGM will be held with a quorum of members only at the physical
location. Shareholders are encouraged to vote in advance by proxy and to appoint the Chairman of the
Meeting as their proxy by following the instructions set out in the Notice of Meeting Notes, please note
that no Proxy Form accompanies this document this year.
Notice is hereby given that the 27th Annual General Meeting of Proteome Sciences plc will be held at
Nicholson House, Thames Street, Weybridge, Surrey KT13 8JG on Wednesday 5 May 2021 at 11.00 am
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 will be proposed 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 31 December 2020.
2 To re-appoint Christopher Pearce as a director of the Company in accordance with Article 109(b) of
the Articles of Association of the Company
3 To re-appoint Dr Ursula Ney as a director of the Company in accordance with Article 109(b) of the
Articles of Association of the Company.
4 To re-appoint Richard Dennis as a director of the Company in accordance with Article 109(b) of the
Articles of Association of the Company
5 To re-appoint Dr Mariola Söhngen as a director of the Company in accordance with Article 114 of
the Articles of Associations of the Company.
6 To re-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.
SPECIAL BUSINESS
ORDINARY RESOLUTION
7 THAT in substitution for all existing authorities the directors of the Company be and are hereby
authorised 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 £983,940.19 until the conclusion of the next Annual General Meeting of the Company or
30 June 2022, 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.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 79
M
G
A
260759 Proteome p79-end.qxp 01/04/2021 11:38 Page 80
NOTICE OF ANNUAL GENERAL MEETING
(Registered in England No: 02879724)
SPECIAL RESOLUTION
8 THAT subject to, and upon Resolution 7 above, having been passed and becoming effective, the
directors be and are hereby authorised and empowered pursuant to section 570 of the Companies
Act 2006 (the “Act”) to allot equity securities, as defined in section 560 of the Act, as if section 561(1)
of the Act did not apply to any such allotment, provided that this power shall be limited to:
(a) the allotment of equity securities in connection with an offer by way of a rights issue, or any other
pre-emptive offer, to the holders of ordinary shares in proportion (as nearly as may be) to their
respective holdings of ordinary shares on a record date fixed by the directors and to the holders
of other equity securities as required by the rights of those securities or as the directors otherwise
consider necessary but subject to such exclusions or other arrangements as the directors may
deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates,
legal or practical problems in or under the law of any territory or the requirements of any
regulatory body or stock exchange; and
(b) the allotment (otherwise than pursuant to sub- paragraph (a) of equity securities which are or are
to be wholly paid up in cash up to an aggregate nominal amount of £590,364.11.
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 30 June 2022, whichever is
the earlier, unless such authority is renewed or extended at or prior to such time, save that the
Company may before such expiry make any offer, agreement or other arrangement which would or
might require equity securities to be allotted after the expiry of this authority and the directors may
then allot equity securities in pursuant of such an offer or agreement as if the authority and power
hereby conferred had not expired.
By order of the Board
Registered office
Hamilton House
Mabledon Place
London WC1H 9BB
V. Birse
Company Secretary
31 March 2021
80 Proteome Sciences plc
260759 Proteome p79-end.qxp 01/04/2021 11:38 Page 81
NOTICE OF ANNUAL GENERAL MEETING
(Registered in England No: 02879724)
Notes:
The following notes explain your general rights as a shareholder and your right to attend and vote at this
Meeting or to appoint someone else to vote on your behalf.
1. To be entitled to attend and vote at the Meeting (and for the purpose of the determination by the
Company of the number of votes they may cast), shareholders must be registered in the Register of
Members of the Company at close of trading on 30 April 2021. Changes to the Register of Members
after the relevant deadline shall be disregarded in determining the rights of any person to attend and
vote at the Meeting.
2. While in normal circumstances executive directors’ service agreements and copies of the terms and
conditions of appointment of non-executive directors would be available for inspection at the
registered office of the Company current restrictions prohibits this. Should any member wish to
receive a copy of
the Company Secretary at
victoria.birse@proteomics.com.
these documents please e-mail
3. Shareholders are entitled to appoint another person as a proxy to exercise all or part of their rights
to attend and to speak and vote on their behalf at the Meeting. A shareholder may appoint more than
one proxy in relation to the Meeting provided that each proxy is appointed to exercise the rights
attached to a different ordinary share or ordinary shares held by that shareholder. A proxy need not
be a shareholder of the Company.
4.
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy,
only the appointment submitted by the most senior holder will be accepted. Seniority is determined
by the order in which the names of the joint holders appear in the Company’s Register of Members
in respect of the joint holding (the first named being the most senior).
5. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation
of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain
from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit
in relation to any other matter which is put before the Meeting.
6. You can vote either:
(cid:129) by logging on to www.signalshares.com and following the instructions;
(cid:129) You may request a hard copy form of proxy directly from the registrars, Link Group 0371 664
0300 Calls are charged at the standard geographic rate and will vary by provider. Calls outside
the United Kingdom will be charged at the applicable international rate. Lines are open between
09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales.
(cid:129)
in the case of CREST members, by utilising the CREST electronic proxy appointment service in
accordance with the procedures set out below.
In order for a proxy appointment to be valid a form of proxy must be completed. In each case the
form of proxy must be received by Link Group, PXS, Central Square, 29 Wellington Street, LEEDS,
LS1 4DL by 11am on 30th April 2021.
7.
If you return more than one proxy appointment, either by paper or electronic communication, the
appointment received last by the Registrar before the latest time for the receipt of proxies will take
precedence. You are advised to read the terms and conditions of use carefully. Electronic
communication facilities are open to all shareholders and those who use them will not be
disadvantaged.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 81
M
G
A
260759 Proteome p79-end.qxp 01/04/2021 11:38 Page 82
NOTICE OF ANNUAL GENERAL MEETING
(Registered in England No: 02879724)
8. The return of a completed form of proxy, electronic filing or any CREST Proxy Instruction (as
described in note 11 below) will not prevent a shareholder from attending the Meeting and voting in
person if he/she wishes to do so.
9. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy
appointment service may do so for the Meeting (and any adjournment of the Meeting) by using the
procedures described in the CREST Manual (available from www.euroclear.com/site/public/EUI).
CREST Personal Members or other CREST sponsored members, and those CREST members who
have appointed a service provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their behalf.
10. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate
CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with
Euroclear UK & Ireland Limited’s specifications and must contain the information required for such
instructions, as described in the CREST Manual. The message must be transmitted so as to be
received by the issuer’s agent (ID RA10) by 11am on 30th April 2021. For this purpose, the time of
receipt will be taken to mean the time (as determined by the timestamp applied to the message by
the CREST application host) from which the issuer’s agent is able to retrieve the message by enquiry
to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies
appointed through CREST should be communicated to the appointee through other means.
11. CREST members and, where applicable, their CREST sponsors or voting service providers should
note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for
any particular message. Normal system timings and limitations will, therefore, apply in relation to the
input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a
voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s))
such action as shall be necessary to ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST members and, where applicable, their
CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST
Manual concerning practical limitations of the CREST system and timings. The Company may treat
as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
12. Any corporation which is a shareholder can appoint one or more corporate representatives who may
exercise on its behalf all of its powers as a shareholder provided that no more than one corporate
representative exercises powers in relation to the same shares.
As at 31 March 2021 (being the latest practicable business day prior to the publication of this Notice),
the Company’s ordinary issued share capital consists of 295,182,056 ordinary shares, carrying one
vote each. Therefore, the total voting rights in the Company as at 31 March 2021 are 295,182,056.
13. Under Section 527 of the Companies Act 2006, shareholders meeting the threshold requirements
set out in that section have the right to require the Company to publish on a website a statement
setting out any matter relating to: (i) the audit of the Company’s financial statements (including the
Auditor’s Report and the conduct of the audit) that are to be laid before the Meeting; or (ii) any
circumstances connected with an auditor of the Company ceasing to hold office since the previous
meeting at which annual financial statements and reports were laid in accordance with Section 437
of the Companies Act 2006 (in each case) that the shareholders propose to raise at the relevant
meeting. The Company may not require the shareholders requesting any such website publication
82 Proteome Sciences plc
260759 Proteome p79-end.qxp 01/04/2021 11:38 Page 83
NOTICE OF ANNUAL GENERAL MEETING
to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006. Where the
Company is required to place a statement on a website under Section 527 of the Companies Act
2006, it must forward the statement to the Company’s auditor not later than the time when it makes
the statement available on the website. The business which may be dealt with at the Meeting for the
relevant financial year includes any statement that the Company has been required under Section
527 of the Companies Act 2006 to publish on a website.
14. Any shareholder attending the Meeting has the right to ask questions. The Company must cause to
be answered any such question relating to the business being dealt with at the Meeting but no such
answer need be given if: (a) to do so would interfere unduly with the preparation for the Meeting or
involve the disclosure of confidential information; (b) the answer has already been given on a website
in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the
good order of the Meeting that the question be answered.
15. You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act
2006) provided in either this Notice or any related documents to communicate with the Company for
any purposes other than those expressly stated.
Explanatory notes on the resolutions:
Resolution 1
The directors must present to members the accounts and the reports of the directors and auditors in
respect of each financial year.
Resolution 2
Under the provisions of Article 109(b) of the Articles of Association of the Company directors are required
to retire at the third Annual General Meeting after they were last elected or re-elected. Accordingly,
Christopher Perce is due to retire at this Annual General Meeting and offers himself for re-appointment.
Resolution 3
Under the provision of Article 109(b) of the Articles of Association of the Company directors are required
to retire at the third Annual General Meeting after they were last elected or re-elected. Accordingly,
Dr Ursula Ney is due to retire at this Annual General Meeting and offers herself for re-appointment.
Resolution 4
Under the provision of Article 109(b) of the Articles of Association of the Company directors are required
to retire at the third Annual General Meeting after they were last elected or re-elected. Accordingly,
Richard Dennis is due to retire at this Annual General Meeting and offers himself for re-appointment.
i
w
e
v
e
R
s
s
e
n
s
u
B
i
e
c
n
a
n
r
e
v
o
G
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
n
o
i
t
a
m
r
o
n
I
f
Proteome Sciences plc 83
M
G
A
260759 Proteome p79-end.qxp 01/04/2021 11:38 Page 84
NOTICE OF ANNUAL GENERAL MEETING
Resolution 5
Dr M Söhngen was appointed as a director of the Company on 15 September 2020. Article 114 of the
Articles of Association requires that any director appointed between Annual General Meetings must
retire at the next following Annual General Meeting.
Biographical details of the directors offering themselves for re-election are included on page 13 of the
annual report and accounts.
The Board of Directors considers the performance of each of the Directors standing for re-election at
the Annual General Meeting to be fully effective and they each demonstrate the commitment and
behaviours expected of a director of Proteome Sciences plc and accordingly recommend that
shareholders vote in favour of resolutions 2 to 5.
Resolution 6
BDO LLP are being proposed for re-appointment as the auditors of the Company until the conclusion
the next general meeting at which accounts are presented. The directors are to be given authority to fix
the remuneration of the auditors.
Resolution 7
The Company's power to issue additional securities is exercised by the directors. The directors must be
authorised by ordinary resolution of the shareholders to exercise that power. The resolution will give the
directors a general authority to allot shares up to an aggregate nominal value of £983,940.18 being the
equivalent of one-third of the Company’s issued ordinary share capital at the date of this notice. The
authority shall expire at the next Annual General Meeting or on 30 June 2022, whichever is earlier.
The directors are seeking the annual renewal of this authority in accordance with best practice and to
ensure the Company has maximum flexibility in managing its capital resources.
Resolution 8
When shares are to be allotted for cash, Section 561 of the Companies Act 2006 provides that existing
shareholders have pre-emption rights and that any new shares are offered first to such shareholders in
proportion to their existing shareholdings. This resolution is seeking to authorise the directors to allot
shares of up to an aggregate nominal amount of £590,364.11 otherwise than on a pro-rata basis. This
represents approximately 20% of the Company’s issued share capital at the date of this notice. The
authority shall expire at the next Annual General Meeting or on 30 June 2022, whichever is earlier.
The directors are seeking the annual renewal of this authority in line with the authorities granted to
dis-apply the pre-emption provisions in previous years and to ensure the Company has maximum
flexibility in managing its capital resources.
84 Proteome Sciences plc
260759 Proteome cover.qxp 01/04/2021 11:21 Page IBC1
ADVISERS
Allenby Capital Limited
5 St Helen’s Place
London
EC3A 6AB
BDO LLP
55 Baker Street
London
W1U 7EU
Freeths LLP
1 Vine Street
London
W1J 0AH
Barclays Bank Plc
Pall Mall Corporate Banking Group
50 Pall Mall
London
SW1Y 5AX
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Link Asset Services
+44(0) 871 664 0300
NOMINATED ADVISER
AND BROKER:
AUDITOR:
SOLICITOR:
BANKER:
REGISTRAR:
Shareholder Enquiries:
260759 Proteome cover.qxp 01/04/2021 11:21 Page ofc1
9
5
7
0
6
2
n
a
v
i
r
e
P
Proteome Sciences plc
Registered number: 02879724
Report and Financial Statements
for the year ended 31 December 2020