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Proteome Sciences plc
Registered number: 02879724
Report and Financial Statements
for the year ended 31 December 2021
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ADVISERS
Allenby Capital Limited
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262752 Proteome p01-p36.qxp 06/04/2022 16:52 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
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CHIEF EXECUTIVE OFFICER’S STATEMENT
for the year ended 31 December 2021
Despite a generally improving situation for most of the year, the COVID-19 pandemic continued to impact
international business including ours. Participation in conferences, visiting clients and interacting within
our organisation remained largely virtual with some face-to-face conferences possible in the second part
of the year. Whilst recent events in Ukraine are of great concern, they do not currently affect our business
and we do not expect any impact to our customers’ ability to provide samples for analysis. Supply chain
problems however cannot be ruled out (consumables and instruments). Against these difficulties we
have been able to continue to gain further strong growth in our services business and TMT® revenues
remained solid. A record number of contracts were closed during 2021 including a substantial contract
with a major pharmaceutical company with a value in excess of £1m, with the majority of this revenue
expected to be generated in 2022. Group revenues for the full year increased by 8% to £5.13m (2020:
£4.75m). Services increased 32% to £1.90m (2020: £1.44m). Sales and royalties attributable to TMT®
and TMTpro™ reagents were £3.23m (2020: £3.27m).
Having made good progress and turning profitable last year, we embarked on a wider strategic analysis,
invested in new staff, and instruments to add capacity to our key workflows and awarded options which
resulted in a share based payment charge of £0.57m (2020: Nil). Consequently, total costs rose to £4.72m
(2020: £4.20m) and this has resulted in an operating profit of £0.41m (2020: £0.55m) and a profit after
tax of £0.07m (2020: £0.29m). Cash reserves at the year-end increased to £2.39m (2020: £2.21m). In
addition, Adjusted EBITDA (a non-GAAP company specific measure which is considered to be a key
performance indicator of the Group’s financial performance) increased as set out below:
2021
£’000
Revenue 5,124
Gross profit 2,960
Administrative expenses (2,334)
EBITDA 626
Other non-cash items and non-recurring costs 729
Adjusted EBITDA 1,355
2020
£’000
4,712
2,584
(1,868)
716
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725
Adjusted EBITDA increased 87% on prior year due to increased sales and tight operational cost control.
Services
Our services business continued to show strong performance over the year. The COVID-19 pandemic
continued to impact on face-to-face client meetings even though the majority of our clients were back to
full time working in their facilities. We also experienced some delays in the availability of samples for
analysis primarily due to the pandemic affecting the conduct of on-going clinical trials. Cold chain
shipping availability was also a source of some sample delay as capacity was prioritised for COVID
related samples and vaccines. Direct marketing in respect to scientific and trade conferences and
exhibitions that we use to promote our services to new accounts continued to be in virtual format but
nevertheless, we succeeded to develop both new accounts and to win repeat business from our current
and new customers. The strength of our H1 performance continued during the second half of the year,
with record sales invoiced and orders received. In total, we took orders worth £3.75m a 139% increase
over the previous year (2020: £1.57m). A particular highlight was the in excess of £1m order received
from a major pharmaceutical partner for the analysis of samples from their pending phase 3 clinical trial.
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CHIEF EXECUTIVE OFFICER’S STATEMENT
for the year ended 31 December 2021
the
increasing use of
Our results underline
outsourced proteomics in pharmaceutical and
biotechnology research, and we expect this to
continue well into 2022 as companies look to add
more functional value to their genomic data and the
general awareness that the proteome is the more
important factor to consider in drug development.
Last year we expanded our activities in the analysis
of clinical research samples to discover new
pharmacodynamic biomarkers, signing up new
clients and applying our TMTcalibrator™ combined
with abundant protein depletion to address novel
therapeutic areas. We also performed several
targeted assay development programs across a
range of matrices. These should lead to the analysis
of larger volume clinical trial samples in the future
and we expect further larger scale clinical trial related
orders to be placed.
Our sales in Europe have continued to grow and
order values are now on a par with what we receive
from North America. 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.
Licences
Revenues from sales of TMT® and TMTpro™
reagents were our source of licensing income in
2021 as no further payments relating to biomarker
licenses were received.
Tandem Mass Tags®
The overall sales pattern for TMT® reagents remained
steady with similar revenue of £3.23m compared to
2020 (2020: £3.27m) in spite of the ongoing
challenges associated with COVID. On a constant
currency basis this represents growth of 3.7%.
Sales of the 11plex TMT® reagents continued to be
robust and still account for around 50% of total
value, down from 57% in 2020 as the demand for
the newer generation TMTpro™ tags with higher
plexing rates overtook sales of 11plex TMT®
reagents. In the second half of this year we saw
TMTpro™ 18plex tags overtaking standard TMT®
accounting for 59% of all sales and we have
adapted our manufacturing and stock levels
accordingly. In March this year the first TMT® patent
expired in all territories except the USA where it
remains in force until late 2022. We have seen no
evidence of commercial development of
competing tags because the cost and lead time of
manufacturing and distribution of complex
reagents remain a significant barrier to entry. We
have a total of 8 other TMT®-related patent families
stretching out to the mid-2030s which prevent the
manufacture of generic TMT® and TMTpro™
reagents by third parties. We expect sales of all
TMT® products to show good growth in 2022 and
we continue to work closely with our licensee
Thermo Scientific to further develop and expand
the market for TMT® products.
tests. Randox remain
Stroke Biomarkers
Inevitably the ongoing COVID-19 pandemic is
affecting the ability of our licensees Randox
Laboratories (UK) and Galaxy CCRO (USA) to
further the development and clinical testing of their
stroke diagnostic
fully
committed to completing their first clinical trial to
support Conformité Européene (CE) marking and
this remains open to new patients, but a firm
completion date is not yet available. Galaxy have
made good progress
in developing new
anti-Glutathione-s-Transferase Pi (GSTP) antibodies
and this has greatly improved performance of the
lateral flow test. In parallel, they have commissioned
Proteome Sciences to develop a ‘gold standard’
mass spectrometry assay to quantify GSTP in
clinical samples and this work is nearing completion.
Research
The continued strong growth in biomarker services
has restricted the time available to perform basic
research and development activities though we
have retained active links with several academic
groups following completion of the BioCapture and
PROMETOV grants this year. We have also not yet
completed an assessment of a claim under the UK
R&D Tax Credit scheme as we clarify the impact of
group profitability on eligibility for the small- and
large-entity components of such a claim.
Nevertheless, we are focusing development into
new higher value workflow services that provide
excellent opportunities for future growth.
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CHIEF EXECUTIVE OFFICER’S STATEMENT
for the year ended 31 December 2021
Single Cell Proteomic Analyses
We have performed an initial assessment of the
ability to deliver single cell proteomics analysis at
commercial scale and are encouraged by the early
results. We will be actively pushing this forward in
the first half of 2022 and hope to be able to launch
a new workflow in H2 2022. As the process of
single cell preparation becomes standardised on
automated platforms, the potential to analyse
several hundred cells per week is becoming
practical and
the
is of great
pharmaceutical industry as they look to better
understand heterogeneity of disease process and
response to treatment. This is mostly happening in
the area of cancer drug development, but we have
also received interest from groups in other
therapeutic areas.
interest
to
SysQuant analysis of ubiquitin modified proteins
We have also successfully introduced a second
SysQuant® workflow for analysis of proteins
modified with ubiquitin which signals them for
degradation. Recently, many pharmaceutical
companies have developed methods to selectively
target proteins by recruiting this ubiquitination
machinery, and monitoring effects through mass
spectrometry is a significant new market for us. We
have already delivered several projects in this area
following our initial development activities and see
this as a major growth opportunity.
Fluid biomarker Discovery
Our expertise in fluid biomarker discovery using
TMTcalibrator™ has been recognised by many of
our clients who are using this to support their drug
development programs in pre-clinical research and
clinical trials, particularly in the neurology field and
we are actively pursuing new grant-funded
research with academic partners. We were also
able to present the results of a TMTcalibrator™
project performed for INmuneBIO to identify
response biomarkers in a Phase 1 trial of
XPro1595, a novel sTNF agonist. Our CSO Dr. Ian
Pike presented the results at the recent Clinical
Trials on Alzheimer’s Disease (CTAD) meeting held
virtually in November 2021. The proteomics data
generated, allowed a number of protein and
phospho-peptide biomarkers to be identified that
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supported the proposed therapeutic effect of
XPro1595, including re-activation of myelination,
regulation of neuroinflammation and reduction of
tau phosphorylation. Further aspects of the
research were presented at the AD/PD congress
being held in Barcelona in March 2022.
Operating Environment
The COVID-19 vaccination programs have led to
very different vaccination levels internationally.
Even in our main markets (US, EU, UK) this did not
lead to an alleviation of various restrictions in travel,
customer contacts, home working regulations etc.
We were also strongly affected by the delayed
arrival of samples from our clients whether directly
pandemic related or not. We started the year with
a strong order book which partly helped to
compensate for such delays.
We continued to perform the majority of our sales
and marketing activities in a virtual manner as the
normal mix of on-site meetings and trade shows
was severely affected. 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 remain part of
the mix of activities for at least the first half of 2022.
Overall, the strong level of interest in our services
and number of project proposals written reflects
the continued high demand
for outsourced
proteomics services as shown in the further growth
of revenues achieved in 2021. We performed a very
thorough review of strategic options accessible to
us based on the analysis of growth areas where
the company has deep expertise already or where
such areas are a logical expansion of our current
business. We have reached out to the international
markets (primarily the USA) to evaluate our options.
Based on the outcome of this review we have
devised a plan to, in the short term, develop
Proteome Sciences organically by adding the high
need, high value services that we identified (like
single cell proteomics see Research Section
above) to our portfolio and expanding our capacity
262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 5
CHIEF EXECUTIVE OFFICER’S STATEMENT
for the year ended 31 December 2021
to meet the continued growth in demand for high
level proteomics services. Building from this new
base the company will be in a stronger position in
the medium
further
internationalisation of the business.
establish
term
to
Volatility in foreign exchanges during the year
affected non-sterling denominated revenues as
well as costs associated with the Frankfurt
laboratory, the overall effect on operating profit was
slightly negative.
In this again 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 2020 with good growth in our service
revenue. Bolstered by the continued growth of
revenues from TMT®/TMTpro™ the business is well
set for further growth.
Outlook
As we start the transition towards a sustained
relaxation of COVID-related restrictions, we expect
the pace of business to accelerate throughout
2022. We successfully managed ongoing
relationships in 2021 and also attracted a solid
group of new customers undertaking pilot studies
with good potential for expansion in the coming
year. The high demand for services in the fourth
quarter, combined with the record value of orders
carried into 2022 required us to make strategic
investments in new equipment and additional staff
that have increased our capacity and revenue
generating potential.
We have also seen the value of repeat projects
increasing, and we received a significant order
worth over £1m for analysis of clinical trials samples
that will be performed over the coming 12 months.
We are also working on a substantial commercial
opportunity from single cell proteomics where
automated sample preparation combined with
TMTpro™ can deliver high throughput analysis. We
are also seeing that the return to on-site working in
academia and the pharmaceutical industry is
driving sales of TMTpro™ reagents and we have
ensured we have sufficient stocks on hand to meet
this growing demand.
The Board is confident that the progress over the
last three years has created an excellent platform
for the further development of the company. The
strong order book and cash position in early 2022
provide a strong starting point. Proteome Sciences
is well set following the strategic investments we
are and have been making
to achieve a
step-change in growth and revenue and gives the
Board increased confidence that the business can
grow the profit in 2022.
We would like to thank our shareholders and
employees for their continuing support and we look
forward to communicating further progress during
2022.
Dr. Mariola Söhngen
Chief Executive Officer
31 March 2022
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STRATEGIC REPORT
for the year ended 31 December 2021
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.
The competitive landscape for proteomics services
has grown considerably through this year, and
there has been significant funding invested in
companies providing new products for proteomic
analysis. Initial public offerings have triggered
interest in financial markets. This reflects the
growing recognition of the importance of protein
biomarkers in precision healthcare. Our services
are well positioned in the proteomics spectrum and
we are exploring ways to leverage our experience
and reputation in the service sector to build
technologies and
synergies with emerging
maximising value for existing shareholders.
predominantly
pharmaceutical
Proteome Sciences is a major provider of contract
research services for the identification, validation
and application of protein biomarkers. Our clients
are
and
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 2021
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. To ensure we can offer our clients
the best service, we continue to invest significantly
in direct sales activities with intensive virtual
meetings e-marketing, participation in virtual
conferences and trade shows to attract clients to
our offerings.
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the significant restrictions on
Despite
travel
throughout the year, we have further improved our
methods of virtual engagement and secured the
highest level of orders with a record £2.5m of value
carried over into 2022.
Proteomics is becoming the defining technology for
enabling drug development
In 2020 we saw a sizeable shift of focus from
genomics towards proteomics in the activities of
pharmaceutical research and development groups.
In part this reflects the mature nature of genomics
research and the dawning realization that the lack of
predictability from gene sequencing studies requires
a more granular approach. In accordance with this
realization, the demand for both total protein
expression and more
for deep
specific post-translational
quantification
modifications has grown substantially through the
last year.
importantly
of
Virtually all processes within cells that keep us
healthy, and which are disrupted in disease are the
result of a complex set of protein functions and
interactions. Proteins provide the scaffold to allow
cells to form specific shapes, and to change their
morphology when needed, e.g., extended neurons,
or for immune cells to squeeze between tissue
layers to get to the site of disease. Other proteins
convert sugar and other nutrients to provide energy,
whilst others regulate how fast or slow processes
run and guide the maintenance and replication of
DNA to ensure accurate copies of cells are formed
on division. How these proteins interact is affected
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STRATEGIC REPORT
for the year ended 31 December 2021
by the addition and removal of modifying chemicals
such as phosphates, nitrates, small organic groups
and occasionally other proteins. Drug developers
now realize that understanding each target in this
context of complex post-translational modifications
(PTMs) is essential to improve productivity and
maximal responses to treatment.
of
fluid
analysis
cerebrospinal
Fluid biomarker discovery
We were already well established in the deep
profiling of changes in protein phosphorylation in
cells and tissues and have previously extended this
in
to
neurodegenerative disease. This year, we have
demonstrated
the utility of TMTcalibrator™
phosphoproteomic analysis in blood plasma and
serum, making this a key technology for the
discovery of biomarkers
in other diseases
including cancer, inflammatory and metabolic
disorders. We have also expanded our capability to
monitor other PTMs relevant to fibrotic disorders
and have delivered several biomarker studies in this
emerging therapeutic area.
is particularly useful
SysQuant for the detection of ubiquitylated proteins
This year we launched new services for analysis of
ubiquitylation, a PTM that signals proteins for
for
degradation. This
assessing the performance of a new class of drugs
called proteolysis-targeting chimera (PROTAC, or
molecular glues) that enhance ubiquitylation of
specific target proteins that are causing disease.
Once ubiquitylated, these proteins are destroyed
and their disease-causing activity is reduced and
in some cases fully removed.
is able
Whilst there are other options for monitoring PTMs
than our mass spectrometry methods, most suffer
from a lack of specificity and/or sensitivity. Only
to perform a
mass spectrometry
proteome-wide assessment of these complex
protein modifiers at a scale and specificity required
for drug development applications and we will
continue to invest in adding additional capacity and
workflows to our service business to meet this
growing demand.
Single Cell Proteomics
As with last year, we have prioritized commercial
project delivery and the level of internal research
has been relatively low. Nevertheless, we have
initiated a project to evaluate the current feasibility
of performing single cell proteomics at scale. This
has the potential to deliver strong revenues and is
an area of intense interest to both academic and
commercial scientists with significant barriers to
entry. Critical to the success of quantitative single
cell proteomics is the use of TMTpro™ reagents as
the benefits of mixing tiny amounts of protein from
16 individual cells allows greater sensitivity and
more protein identifications. We have performed
preliminary analysis of the technology for single
cell preparation and obtained promising results
with quantification of approximately 750 to 1,000
proteins. We have now installed a new mass
spectrometer (Thermo Exploris 480) which we
expect to improve performance, as well as
increasing throughput and overall capacity.
Status of the Tandem Mass Tag® Product Portfolio
Sales of TMT® and TMTpro™ reagents stood up
well to the ongoing challenges for researchers
operating under COVID restrictions during the year.
Total revenues were £3.23m (2020 £3.27m) (3.7%
increase on constant currency basis). It has also to
be taken into account that some 2021 TMT® and
TMTpro™ orders were placed in late 2020 which
artificially reduces the revenues in 2021. Whilst
for
there was a continued market demand
increased plexing rates enabling higher-throughput
experiments and more reproducible data, sales of
the 11plex TMT® reagents remained strong in the
first half of the year before dropping in the second
half that reflected the launch of the final pair of
TMTpro™ tags (completing the 18plex set), and we
expect to see a continued upward shift in use of
the higher plexing tags now available.
In March 2022 we saw the first of the TMT® patent
families expiring in all territories except the United
States, where it remains in force until the second
half of 2022. We are not aware of any competing
products having been launched in the last
9 months and will retain a watching brief with our
licensee Thermo Scientific. Other patents in the
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STRATEGIC REPORT
for the year ended 31 December 2021
TMT® portfolio that cover several alternate tag
designs as well as our TMT® and TMTpro™
products remain in full effect with the TMTpro™
patents extending out to the mid-2030s.
We continue to monitor the commercial use of
TMT® and TMTpro™ by third-party Contract
Research Organisations and work closely with our
colleagues at Thermo Scientific to maximise the
licensing of these entities, which brings us
additional revenues through their activities.
Stroke biomarkers
Unfortunately, the rate of patient recruitment in the
clinical trial of Randox’s stroke diagnostic test
continues to be extremely affected by COVID.
Randox is also deeply involved in COVID test
manufacture and provision of testing services and
this will inevitably be impacting on resources
available for stroke test development. However, they
remain committed to concluding the trial and we
expect more news in the first half of 2022. Similarly,
Galaxy CCRO (USA) has experienced delays in
initiating a trial of its GSTP Lateral Flow Device. They
are working with their first trial site to resolve these
issues and in the meantime have been able to
improve the sensitivity and linearity of the test having
developed new proprietary antibodies which will be
used in all new product development. In addition to
this activity, Galaxy has contracted Proteome
Sciences to develop a target mass spectrometry
assay for GSTP to serve as a gold-standard method
for accurate quantification of trial samples, an
important benchmark for clinical trial interpretation.
This work is proceeding well and a final test format
is expected to be available in H1 2022.
Patent Applications and Proprietary Rights
Patents and intellectual property rights underpin
several key aspects of our business and we
received allowance of 9 patents during the year,
including cases covering several biomarker panels
relating to Alzheimer’s disease, the tryptophan
metabolite assay and our TMTcalibrator™ workflow.
The costs of prosecution and maintenance of our
portfolio remains closely controlled and was in line
with expectations.
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Strategic evaluation
We performed a very thorough review of strategic
options accessible to us based on the analysis of
growth areas where the company has deep
expertise already or where such areas are a logical
expansion of our current business. We have
reached out to the international markets to evaluate
our options. Based on the outcome of the review,
we have concluded that initially the best way to
develop Proteome Sciences is to build organically
by adding high need services (like single cell
to our portfolio and expanding
proteomics)
capacity to meet the continued growth in demand
and this process has already begun. In the
mid-term we plan to evaluate further options to
internationalise our business.
Financial Review
Results and Dividends
Key Performance Indicators (KPI’s)
(cid:129)
The directors consider that revenue, Adjusted
EBITDA, and profit before/after
tax are
important in measuring Group performance.
The performance of the Group is set out in the
Chief Executive Officer’s Statement on page 2.
(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
operating activities for 2021 were £0.79m
(2020: £1.59m). The costs in 2021 were higher
when compared to 2020 due to the investment
in our strategic process, building internal
capacity, investment in new instrumentation and
share option awards resulting in a share based
payment charge. We achieved strong growth in
revenues with TMT®
biomarker services
revenues remaining broadly in line with 2020.
We did not require draw down from the
arranged
from Vulpes. Cash at
31 December is £2.39m (2020: £2.21m).
loan
(cid:129) Contract
revenues
from our proteomics
(biomarker) services should increase both in
absolute terms and as a proportion of total
Group revenues; in 2021 we increased service
income by 32% to £1.90m (2020: £1.44m). As a
proportion of total group revenue service
income in 2021 was 37% compared to 30% in
2020.
262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 9
STRATEGIC REPORT
for the year ended 31 December 2021
Financial Performance
For the twelve-month period ended 31 December
2021 revenue increased 8% to £5.13m (2020:
£4.75m).
(cid:129)
(cid:129)
Trade and other payables were £0.60m
(2020: £0.77m).
Trade and other receivables were £0.60m
(2020: £0.79m).
(cid:129)
Licences, sales and services
revenue
increased 9% to £5.12m (2020: £4.71m). This
two
is comprised of
revenue streams:
TMT®-related
Proteomic
revenue
(Biomarker) Services. Sterling values of our
sales and royalties received for TMT® tags
decreased by 1% to £3.23m (2020 £3.27m).
and
(cid:129) Grant income was £0.01m (2020: £0.04m).
(cid:129) Profit after
tax
for 2021 was £0.07m
(2020: £0.29m).
(cid:129) Adjusted EBITDA for the year was £1.35m
(2020: £0.72m).
(cid:129) Adjusted EBITDA conversion to operating cash
inflows before working capital movements was
86% (2020: 100%).
(cid:129) Adjusted EBITDA
(2020: £0.72m).
increased
to £1.35m
(cid:129)
The net cash inflow from operating activities
was £0.79m (2020: £1.59m).
(cid:129)
The profit after tax was £0.07m (2020: £0.29m).
(cid:129) Cash at the year-end was £2.39m (2020:
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 2021, and such amounts are only
recognised when reasonably assured.
Costs and Available Cash
(cid:129)
The Group maintained a positive cash balance
in 2021 and continues to seek improved cash
flows from commercial income streams. Our
operating costs have remained stable which
enabled positive cash flows throughout the
year. Administrative expenses in 2021 were
£2.55m (2020: £2.04m).
(cid:129) Staff costs for the year were £2.99m (2020:
£2.15m) of which £0.57m was a share based
payment charge (2020: £0.01m).
(cid:129) Property costs without charges on rent of
£0.17m were slightly below previous years.
(cid:129) Other administrative costs remained stable at
£0.14m (2020: £0.14m) mainly due to lower
travel expenses due to COVID-19 restrictions.
(cid:129)
(cid:129)
Finance costs relate to interest due on loans
from two major investors in the Company and
lease interest. Costs of £0.29m were lower than
the prior year (2020: £0.30m).
Loans from related parties were £10.83m
(2020: £10.55m) which includes interest.
£2.21m).
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 2021
was encouraging as both interest and orders
increased substantially when compared to the
previous year. This reflects the growing recognition
that proteomics requires a high level of expertise
only generally available in specialised service
providers.
Management of Risk: The Group has sought to
manage this risk by broadening its proteomic
services offering by increasing the coverage of
unbiased discovery experiments and broadening
capabilities for analysis of very small samples
including single cells, investing in our own sales by
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.
Adding new services bears
that
competitors are already more advanced and it will
be difficult to find and retain new customers.
risk
the
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STRATEGIC REPORT
for the year ended 31 December 2021
Management of risk: We believe the technology we
are developing for single cell proteomics has a high
demand in the market and hence we believe there
is sufficient room for many players to satisfy the
demand. Moreover, Proteome Sciences has a USP
as we are the owner of TMT® which gives us a
number of advantages (including cost control) vis
a vis competitors.
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 and staff turnover is low, their retention
cannot be guaranteed as evidenced by 1
resignation during 2021.
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,
Investment Limitations
Sales and royalties from TMT® have historically
been key to revenue and working capital for the
group to invest in the business. Over the last
3 years the development and compound growth in
proteomics services revenues are starting to
generate additional working capital for further
investment
internationalisation and
expansion of the business activities. Despite
remaining cash positive, making a small profit and
seeing strong growth in our proteomics services
revenues in 2021 we are still currently reliant on
TMT® sales and royalties for the majority of our
revenues and working capital to invest in growing
the business remains limited.
through
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 three years, we also
actively engage with our major creditors to manage
the Company’s debt.
10 Proteome Sciences plc
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
research scientists and senior
experienced
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
licensing
can be no assurance
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.
for
tags, and
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 chemical
mass
its other proprietary
technologies. The 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 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
262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 11
STRATEGIC REPORT
for the year ended 31 December 2021
proprietary technology, no assurance can be given
that the Group can meaningfully protect its rights.
All patents have a limited period of validity and
competing products may be sold by third parties
on expiry in each territory. We have seen expiry of
the first patents covering TMT® in most territories in
the last year, although in the US the main patent is
valid until mid-September 2022.
Management of Risk: The Group retains limited but
experienced patent capability
in house,
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 biannual review ensuring that
its ongoing cost is proportional to its perceived
value. We seek to prolong the value of our
proprietary technologies by patenting improved
chemical tags and superior biomarker panels when
we are able to do so, and we monitor the impact of
patent expiry by monitoring of market share of
licensed products such as TMT® and TMTpro™.
Coronavirus (COVID-19) Pandemic
The world in general is learning to live with COVID
and high vaccination rates and availability of new
drugs are dramatically reducing burdens on
healthcare systems allowing society to re-open. We
continue to support staff with the provision of a
safe working environment through the use of safety
measures according to national regulations and
control of visitors. Whilst we still have contingency
planning in case of further temporary restrictions,
we are expecting all aspects of our business to
continue getting back to pre-pandemic modalities.
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. Site visits were restricted to only essential
visitors, distancing measures were in place and the
compulsory wearing of personal protective
equipment.
Section 172 statement
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
of both internal and external stakeholders as
follows:
(cid:129) Annual General Meeting
The Board encourages engagement with the
Group’s shareholders but as in 2020 the Board took
the difficult decision that the Annual General
Meeting would be held as a closed meeting to
comply with the COVID-19 regulations and in the
best interests of shareholders and employees.
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STRATEGIC REPORT
for the year ended 31 December 2021
(cid:129) Vulpes
Loan
Investment Management
Agreement Amendment to enable conversion
into ordinary shares
The Board made the decision to agree to an
amendment to the Loan Agreement with Vulpes
Investment Management on the 17 June 2021 to
enable conversion of the loan into ordinary shares.
The Board considered that by doing so it would
promote the success of the Company for the
benefit of the members as a whole.
(cid:129) Investment in new instruments
The Board made the decision during 2021 to invest
in new instruments which included a new Mass
Spectrometer. The Board considered that this was
necessary to maintain the Group’s competitive
improve performance, by
advantage would
increasing throughput and overall capacity in the
interests of its customers.
By Order of the Board
5 Dashwood Lang Road
Bourne Business Park
Addlestone, Surrey KT15 2HJ
V Birse
Company Secretary
31 March 2022
12 Proteome Sciences plc
262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 13
BOARD OF DIRECTORS
for the year ended 31 December 2021
Dr Mariola Söhngen
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
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. During 2021 he became the chair
of the board of trustees of Kidscan Children’s
Cancer Research, a charity based in Manchester.
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 seven listed companies, namely Avingtrans plc,
Brand Architekts Group plc, Flowtech Fluidpower
plc and Hargreaves Services Plc as Chairman,
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
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CORPORATE GOVERNANCE
for the year ended 31 December 2021
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).
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.
All shareholders are encouraged to attend the
Company’s Annual General Meeting and any other
General Meetings that are held throughout the year.
Investors also have access to current information
on
its website,
https://proteomics.com. Requests from institutional
and retail shareholders are addressed directly
whenever possible by members of the Executive
team.
the Company
through
their
implications
3. Take into account wider stakeholder and social
responsibilities and
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.
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
262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 15
CORPORATE GOVERNANCE
for the year ended 31 December 2021
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:
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)
Dr Ian Pike (Chief Scientific Officer)
Richard Dennis (Chief Commercial Officer)
(cid:129)
Initiate action to prevent or reduce the adverse
effects of risk
and four Non-Executive Directors;
Christopher Pearce (Chairman)
(cid:129) Control further treatment of risks until the level
of risk becomes acceptable
(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
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.
(cid:129)
Inform investors of material changes to the
Company’s risk profile.
– The Board considers Roger McDowell and
Dr Ursula Ney to be independent.
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.
– 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.
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CORPORATE GOVERNANCE
for the year ended 31 December 2021
led an annual performance
The Chairman
assessment of the Board and its Committees at the
end of 2021. 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 concluded that the Board operated
effectively and efficiently to deliver the business
goals set out for 2021 against the difficult
background of the ongoing Covid pandemic. There
was active engagement combining challenge and
support that permitted the management to operate
within a framework of agreed parameters set in
place by the Board. Practical measures were
applied to risk management with the Board and
executives working closely together to ensure
regular
and
shareholders.
communication with
staff
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)
responsibilities to shareholders
(cid:129) compliance with laws and regulations
(cid:129)
relations with customers and suppliers
(cid:129) ethical responsibilities
(cid:129) employment practices
(cid:129)
responsibility to the environment and the
community.
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 2021 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
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CORPORATE GOVERNANCE
for the year ended 31 December 2021
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
Company since July 1994. The responsibilities of
the Chairman are to:
the Company
(cid:129) Lead the Board, ensuring its effectiveness on
all aspects of its role
(cid:129) Ensure that the directors receive accurate,
timely and clear information
(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) Approval of the risk appetite of the Company;
(cid:129) Approval of the half-year and annual report and
accounts;
(cid:129) Declaration of any
interim dividend and
recommendation of a final dividend;
(cid:129) Approval of
shareholders;
formal communications with
(cid:129) Approval of major contracts and investments;
and
(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.
(cid:129) Provide
leadership and day
management of
authorities delegated by the Board.
the business within
to day
the
to
face
Board meetings
The Board meets on average 8 times a year and
usually by way of both
face and
teleconference meetings but during 2021 all Board
meetings were held via teleconference. 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;
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 2021.
(cid:129) Remuneration Committee - members are
Dr Ursula Ney (Chair) and Roger McDowell.
This committee met four times during 2021.
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.
Proteome Sciences plc 17
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CORPORATE GOVERNANCE
for the year ended 31 December 2021
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
General Meeting and any other General Meetings
that may take place throughout the year.
18 Proteome Sciences plc
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
of
the
the organisation structure and
appropriate delegation of responsibility to
operational management.
(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.
262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 19
CORPORATE GOVERNANCE
for the year ended 31 December 2021
(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 held eight scheduled meetings during the financial year, together with an
additional eight meetings held to discuss specific matters. 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 22 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 2021 were as follows:
Director
C.D.J. Pearce
R. McDowell
M. Diggle
Dr U. Ney
Dr M Söhngen
Dr I. Pike
R. Dennis
Board
Meeting
Audit Remuneration
Committee
Committee
8/8
7/8
8/8
8/8
8/8
8/8
8/8
2/2
2/2
1/2
2/2
2/2
2/2
2/2
–
4/4
–
4/4
–
–
–
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.
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CORPORATE GOVERNANCE
for the year ended 31 December 2021
The Annual General Meeting (AGM)
The Annual General Meeting of the Group will take
place on 16 May 2022. Full details are included in
the Notice of Meeting on page 82 and will be
published on our website (www.proteomics.com)
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.
Christopher Pearce
Chairman
31 March 2022
20 Proteome Sciences plc
262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 21
AUDIT COMMITTEE REPORT
for the year ended 31 December 2021
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:
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
(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.
External Auditor
BDO was re-appointed as the Group’s auditor at
the Annual General Meeting held on the 5 May
2021. 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 2022.
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;
Roger McDowell
Chair of the Audit Committee
31 March 2022
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 22
REMUNERATION COMMITTEE REPORT
for the year ended 31 December 2021
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 the capability to ensure the 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 2021.
Directors’ remuneration and transactions
The directors’ emoluments in the year ended 31 December 2021 were:
National
Basic Insurance Benefits Pension
Costs
salary Contributions
2021
2021 2021
£’000 £’000
£’000
Executive Directors
Dr M Söhngen 235 23
Dr I. Pike 208 27
R. Dennis 186 24
in kind
2021
£’000
–
15
15
–
4
–
Non-Executive Directors
C.D.J. Pearce 80 6
R. McDowell 27 3
M. Diggle – –
Dr U. Ney 20 2
756 85
6
–
–
–
10
22 Proteome Sciences plc
Total
2021
£’000
Total
2020
£’000
258
254
225
92
30
–
22
–
–
–
–
30
881
77
224
184
131
27
–
21
664
262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 23
REMUNERATION COMMITTEE REPORT
for the year ended 31 December 2021
Directors and their interests
The Directors who served during the year are as shown below:
Dr M Söhngen
Dr I.H. Pike
R. Dennis
C.D.J. Pearce
R. McDowell
M. Diggle
Dr U. Ney
Chief Executive Officer
Chief Scientific Officer
Chief Commercial Officer
Non-Executive Chairman
Non-Executive
Non-Executive
Non-Executive
In accordance with the Company's articles Dr I Pike and M Diggle retire by rotation at the next Annual
General Meeting and, being eligible, offer themselves for re-election. The directors at 31 December 2021
and their interests in the share capital of the Company were as follows:
a) Beneficial interests in Ordinary Shares:
31 December 2021
Number of Ordinary
Name of Director Shares of 1p each
%
shareholding
Dr M. Söhngen –
Dr I.H. Pike 165,583
R. Dennis 625,000
C.D.J. Pearce 36,915,059
R. McDowell 3,400,000
M. Diggle –
Dr U. Ney –
–
0.05
0.21
12.53
1.15
–
–
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 2021
Number at
31 December 2020
(i) Dr M. Söhngen
(ii) Dr I.H. Pike
(iii) R. Dennis
(a)
(a)
(a)
9,000,000 (b)
2,500,000 (b)
2,500,000 (b)
–
–
–
The options (a)(i),(ii) and (iii) were awarded to Dr M Söhngen, Dr I Pike, R Dennis on the 8 June 2021.
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REMUNERATION COMMITTEE REPORT
for the year ended 31 December 2021
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 four times during the financial year to 31 December 2021.
Ursula Ney
Chair of the Remuneration Committee
31 March 2022
24 Proteome Sciences plc
262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 25
DIRECTORS’ REPORT
for the year ended 31 December 2021
The Directors present their annual report and
financial statements
the year ended
31 December 2021. 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 UK adopted 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
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.
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
international
accordance with UK adopted
accounting 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 to prepare financial
statements in accordance with the rules of the
London Stock Exchange for companies trading
securities on AIM.
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;
(cid:129) prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the Group and 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 73).
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
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DIRECTORS’ REPORT
for the year ended 31 December 2021
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 Second Amendment
to the Agreement on the 29 March 2021 which extended the term of the loan to 1 May 2022. On the
17 June 2021 the Loan Agreement was amended to allow for conversion into ordinary shares such
that until 30 April 2022, VIM may convert part (being not less than £50,000 or a multiple thereof) or all
of the Drawn Loan and accrued interest to 31 December 2020 (being £51,538) into new ordinary
shares of the Company. The conversion price is 7.16p per share, which is the average of the closing
middle market price for the ordinary shares of the Company during the five consecutive trading days
immediately prior to entering into the Loan Amendment. 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.
On 30 March 2022, the Company signed the Third Amendment to the VIM Loan Agreement which
extended the term of the loan to 30 June 2023.
c) The market price of the Ordinary Shares at 31 December 2021 was 5.13p and the range during the
year was 3.5p to 9.9p.
Substantial shareholdings
As at 30 March 2022, 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
Number of
Ordinary
Shares
Percentage
of issued
Ordinary
Share Capital
36,915,059
65,826,157
12.53
22.30
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.
26 Proteome Sciences plc
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DIRECTORS’ REPORT
for the year ended 31 December 2021
In particular, the directors’ have considered the
potential ongoing impacts of COVID-19 may have
on the ability to achieve adequate level of sales.
The COVID-19 pandemic has reached a status
where it hits the world in waves, particularly in the
colder seasons. The vaccination rates have
generally not reached a status to allow herd
immunity to develop with the developing countries
showing very low vaccination rates. But even in
countries with high acceptance of vaccination and
resulting high vaccination rates the pandemic
waves are continuing on a high level due to the fact
that the virus is mutating quickly, and new variants
are less likely to be kept under control with the
currently available vaccines. The highly contagious
omicron variant is the prevalent virus form in Q1
2022. It seems to be a less malignant mutation, but
the sheer number of cases bears the risk that the
healthcare systems will be overwhelmed by cases
plus system relevant parts of our societies (police,
health system, fire brigades, schools, water and
electricity supply etc) might be severely affected.
Every nation is responding differently to these
challenges all with one aim: to keep the systems
going. Controlling the infection rates does not seem
to be possible without better vaccination rates and
the development of new vaccines to which the new
virus variants would be more sensitive. These
activities are ongoing
internationally. The
expectation of experts is that the development of
the pandemic will lead to waves which will show
reduced amplitudes over time (as it happened with
the influenza outbreaks 100 years ago) and we will
move into an endemic situation (as with influenza).
This process might still take a couple of years. It is
impossible to judge on the impact this will have on
our business or businesses in general. The health
and safety of our staff remains our highest priority
Despite the continuing effects of COVID-19, Group
revenues for the year ended 31 December 2021
increased by 8% to £5.13m (2020: £4.75m).
Proteomics services increased 32% to £1.90m
(2020: £1.44m). Sales and royalties attributable to
TMT® and TMTpro™ reagents were £3.23m (2020:
£3.27m). Total costs were £4.72m (2020: £4.20m)
and resulted in Operating Profits decreasing by
25% to £0.41m (2020: £0.55m) and a profit after tax
of £0.07m (2020: £0.29m). Adjusted EBITDA
increased
to £1.35m (2020: £0.72m). Cash
reserves at the year-end increased to £2.39m
(2020: £2.21m)
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. The amount owed as of 31 December
2021,
£10,054k
(2020: £9,795k). Further details of this facility are
set out in note 18(b) to the financial statements.
interest, was
including
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 15 months
from the date of approval of these financial
statements or until at least 30 June 2023.
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). On the 17 June 2021
the Loan Agreement was amended to allow for
conversion into ordinary shares such that until
30 April 2022, VIM may convert part (being not less
than £50,000 or a multiple thereof) or all of the
Drawn Loan and accrued interest to 31 December
2020 (being £51,538) into new ordinary shares of
the Company. The conversion price
is
7.16p per share, which is the average of the
closing middle market price for the ordinary shares
of the Company during the five consecutive trading
days immediately prior to entering into the Loan
Amendment. The amount owed as of 31 December
2021, including interest, was £771k (2020: £751k).
The directors have received a legally binding
written confirmation from VIM that they will not seek
repayment for at least 15 months from the date of
approval of these financial statements or until at
least 30 June 2023. On 30 March 2022, the
Company signed the Third Amendment to the
VIM Loan Agreement which extended the term of
the loan to 30 June 2023.
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DIRECTORS’ REPORT
for the year ended 31 December 2021
for the year ended 31 December 2021
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
5 Dashwood Lang Road
Bourne Business Park
Addlestone
Surrey
KT15 2HJ
V. Birse
Company Secretary
31 March 2022
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 Third Amendment to the
Loan Agreement with Vulpes
Investment
Management on the 30 March 2022 which
extended the term of the loan to 30 June 2023.
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 4) and
Strategic Report (page 8).
Auditor
Each of the persons who are directors of the
Company at the date when this report was
approved confirms that:
(cid:129)
(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
the director has taken all steps that they ought
to have taken as a director to make themself
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.
28 Proteome Sciences plc
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INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2021
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 2021 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted
international accounting standards;
the Parent Company financial statements have been properly prepared in accordance with UK
adopted international accounting standards 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 2021 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 UK adopted international accounting standards 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. 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 is set out in the key audit matters section below.
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 the Parent
Company’s ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
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262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 30
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2021
Our responsibilities and the responsibilities of the Directors with respect to going concern are described
in the relevant sections of this report.
Overview
Coverage 97% (2020: 100%) of Group profit before tax
100% (2020: 100%) of Group revenue
99% (2020:99%) of Group total assets
Key audit matters 2021 2020
Revenue Recognition
Going Concern
Materiality Group financial statements as a whole
£77,000 (2020: £59,000) based on 1.5% (2020:
1.25%) 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.
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; and
The financial information of the remaining non-significant components was subject to analytical review
procedures performed by the Group audit team for Group reporting purposes.
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.
30 Proteome Sciences plc
262752 Proteome p01-p36.qxp 06/04/2022 16:52 Page 31
INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2021
Key audit matter
Revenue recognition
(Note 3, Note 5 & Note 6)
The key audit matters related to
revenue recognition are as follows:
(cid:129)
(cid:129)
There is a risk that Group’s
revenue streams have not
been recognised appropriately
in line with their respective
performance
obligations
(existence and accuracy), and
that the revenue policy itself is
in accordance with
not
appropriate
accounting
standards.
The
risk of a material
misstatement was focused on
checking revenue around the
year end, particularly
in
relation biomarker services
recognised
in accordance
with stage of completion, was
accurate.
How the scope of our audit addressed
the key audit matter
We assessed whether the revenue recognition
policies adopted by the Group comply with
accounting standards.
We tested each revenue stream including the
following:
(cid:129) We verified 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;
(cid:129) We tested a sample of biomarker sales
transactions either side of the reporting date
and checked
revenue was only
recognised at the time the milestone event in
the agreement had been achieved;
that
(cid:129) We agreed a sample of product sales through
to supporting sales invoice, delivery order
confirmation and cash receipt;
(cid:129) We agreed a sample of royalties recognised
through to supporting invoice, external royalty
statements and cash receipt;
(cid:129) We checked a sample of revenue transaction
amounts recognised in December 2021,
January 2022 and February 2022 against the
date the performance obligation was satisfied
to check that revenue was recorded in the
correct period.
Key observations:
Based on the work performed we consider that the
Group’s revenue recognition accounting policy is
appropriate, and
revenue has been
recognised in accordance with the Group’s
revenue policy.
that
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INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2021
How the scope of our audit addressed
the key audit matter
We performed the following procedures:
and
reference
assessing
(cid:129) We analysed management’s assessment of
going concern based upon the Group’s cash
flow forecasts through to 30 June 2023. This
challenging
included
assumptions with
to historic
experience and recent contract wins made in
relation to revenues, expenses, and the
associated cash flows and any other cash
related assumptions. Further, we checked
actual results for FY 2021 against budget to
review the accuracy of management’s historic
forecasts and we compared the forecast
against available post year-end trading and
cash flow results.
(cid:129) We performed sensitivity analyses, and
reviewed management’s reverse stress testing
analysis, to consider cash flow changes if the
revenue forecasts were not achieved and the
resulting impact on going concern.
(cid:129) We reviewed the terms of the Group and
Parent Company’s borrowings, including loans
from Mr C.D.J Pearce (Chairman and a related
party) and Vulpes Investment Management
Private Limited (a related party) and checked
the confirmations obtained by the Group and
Parent Company that these loans will not be
recalled within the period to 30 June 2023,
including the Directors’ conclusion that these
confirmations are legally binding.
(cid:129) We made inquiries of the Directors as to their
knowledge of events or conditions beyond the
period of their assessment that may cast
significant doubt on the entity’s ability to
continue as a going concern.
(cid:129) We considered whether any post-balance
sheet events had occurred, which may impact
going concern.
(cid:129) We assessed the adequacy of the disclosures
in the financial statements (see note 3) with
reference to our knowledge of the business
and information obtained in performing our
procedures.
Key observations:
Our observations in respect of going concern are
set out in the Conclusions relating to going
concern section above.
Key audit matter
Going concern
(Note 3)
reliant on
The Group and Parent Company
are
the continued
availability of loans from related
parties. The Directors’ assessment
of going concern
involves a
number of highly subjective
judgements and because of the
significance of this matter we
determined it to be a key audit
matter.
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INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2021
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
2021
£
77,000
2020
£
59,000
2021
£
23,000
2020
£
17,700
1.5%
of group revenue
1.25%
of group revenue
30%
of Group Materiality
30%
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.
3.5% of net assets capped at 30%
(2020: 30%) of Group materiality given
the assessment of aggregation risk
54,000
44,000
16,000
12,000
70% of materiality -– this was set with
reference to the level of adjustments
identified in the prior year, level of
sampling work required and the number
of components.
70% of parent company materiality – this
was set with reference to the level of
adjustments identified in the prior year
and the level of sampling work required.
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 £23,000 to £69,000 (2020: £17,700 to £53,100). In
the audit of each component, we further applied performance materiality levels of 70% 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 £3,800 (2020: £2,900). We also agreed to report differences below this threshold that, in our
view, warranted reporting on qualitative grounds.
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INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2021
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.
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INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2021
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) 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 made enquiries of management and those responsible for
legal and compliance procedures. We corroborated our enquiries through our review of board
minutes and papers provided to the Audit Committee;
(cid:129) We assessed the susceptibility of the Group’s financial statements to material misstatement, including
how fraud might occur, by meeting with management from across the Group to understand where
they considered there was a susceptibility to fraud;
(cid:129) Our audit planning identified fraud risks in relation to management override of controls and
inappropriate or incorrect recognition of revenue (revenue recognition assessed as a Key Audit Matter
above) across the Group. We obtained an understanding of the processes and controls that the
Group has established to address risks identified, or that otherwise prevent, deter and detect fraud;
and how management monitors those processes and controls; and
(cid:129) With regards to the fraud risk in management override of controls, our procedures included journal
transaction testing, across the group, with a focus on large or unusual transactions based on our
knowledge of the business. We also performed an assessment on the appropriateness of key
judgements and estimates, for example going concern (the risk associated with going concern has
been assessed as a Key Audit Matter above), which are subject to managements’ judgement and
estimation, and could be subject to potential bias.
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INDEPENDENT AUDITOR’S REPORT
for the year ended 31 December 2021
We communicated relevant identified laws and regulations and potential fraud risks to all engagement
team members, who were all deemed to have appropriate competence and capabilities, 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.
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 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
36 Proteome Sciences plc
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CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2021
Revenue
Licences, sales and services
Grant services
Revenue – total
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance costs
Profit before taxation
Tax (charge)/credit
Profit for the year
Profit per share
Basic
Diluted
Notes
5, 6
8
7
11
12
2021
£’000
5,124
5
5,129
(2,169)
2,960
(2,548)
412
(294)
118
(46)
72
2020
£’000
4,712
41
4,753
(2,168)
2,585
(2,036)
549
(304)
245
50
295
0.02p
0.02p
0.10p
0.10p
The accompanying notes 1 to 27 are an integral part of the financial statements.
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CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 31 December 2021
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 (see note 19)
Profit and total comprehensive income for the year
Owners of parent
2021
£’000
2020
£’000
72
295
(37)
(22)
13
13
18
(27)
286
286
The accompanying notes 1 to 27 are an integral part of the financial statements.
38 Proteome Sciences plc
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CONSOLIDATED BALANCE SHEET
as at 31 December 2021
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
Lease liabilities
Pension provisions
Total non-current liabilities
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
26
19
20
22
22
22
22
2021
£’000
4,218
219
1,050
5,487
1,088
604
479
2,387
4,558
10,045
(599)
(35)
(10,825)
(260)
(11,719)
(7,161)
(602)
(499)
(1,101)
(12,820)
(2,775)
2,952
51,466
4,193
10,755
(128)
(72,013)
(2,775)
2020
£’000
4,218
58
484
4,760
878
788
457
2,210
4,333
9,093
(768)
(153)
(10,547)
(132)
(11,600)
(7,267)
(359)
(492)
(851)
(12,451)
(3,358)
2,952
51,466
3,623
10,755
(91)
(72,063)
(3,358)
The financial statements of Proteome Sciences plc, registered number 02879724, were approved by the
board of directors and authorised for issue on 31 March 2022 They were signed on its behalf by:
Dr M. Söhngen
Dr I. Pike
31 March 2022
Director
Director
The accompanying notes 1 to 27 are an integral part of the financial statements.
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COMPANY BALANCE SHEET
as at 31 December 2021
Non-current assets
Investment in subsidiaries
Current assets
Cash and cash equivalents
Total assets
Current liabilities
Payables owed to 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
2021
£’000
9,035
9,035
464
464
9,499
(696)
(2,460)
(3,156)
6,343
2,952
51,466
4,193
(52,268)
6,343
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
The Company generated a loss for the year ended 31 December 2021 of £0.12m (2020: loss £0.15m).
The financial statements of Proteome Sciences plc, registered number 02879724, were approved by
the board of directors and authorised for issue on 31 March 2022. They were signed on its behalf by:
Dr M. Söhngen
Dr I. Pike
31 March 2022
Director
Director
The accompanying notes 1 to 27 are an integral part of the financial statements.
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CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
for the year ended 31 December 2021
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 2020 2,952 51,466 3,615 (109) 10,755 (72,331) (3,652) (3,652)
295
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)
286
18
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At 1 January 2021 2,952 51,466 3,623 (91) 10,755 (72,063) (3,358) (3,358)
Profit for the year – – – – – 72 72
Exchange differences
on translation of
foreign operations – – – (37) – – (37)
Re-measurements of
Defined Benefit
Pension Schemes – – – – – (22) (22)
Profit and total
comprehensive
income for the year – – – (37) – 50 (13)
Credit to equity for
share-based payment – – 570 – – – 570
570
At 31 December 2021 2,952 51,466 4,193 (128) 10,755 (72,013) (2,775) (2,775)
(13)
(22)
(37)
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The accompanying notes 1 to 27 are an integral part of the financial statements.
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COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Company
At 1 January 2020
Loss and total comprehensive
income for the year
Credit to equity for
share-based payment
At 31 December 2020
Share
Share-
based
Share
capital
£’000
premium payment Retained
Loss
reserve
account
£’000
£’000
£’000
Total
equity
£’000
2,952
51,466
3,615
(51,999)
6,034
–
–
–
–
–
8
(151)
(151)
–
8
2,952
51,466
3,623
(52,150)
5,891
At 1 January 2021
2,952
51,466
3,623
(52,150)
5,891
Loss and total comprehensive
income for the year
Credit to equity for
share-based payment
At 31 December 2021
–
–
–
–
–
(118)
(118)
570
–
570
2,952
51,466
4,193
(52,268)
6,343
The accompanying notes 1 to 27 are an integral part of the financial statements.
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CONSOLIDATED AND COMPANY
CASH FLOW STATEMENTS
as at 31 December 2021
Group
2021
£’000
Group Company Company
2020
2021
£’000
£’000
2020
£’000
Note
Profit /(loss) after tax
72
295
(118)
(151)
Adjustments for:
Finance costs
Depreciation of property, plant and
equipment
Revaluation of lease
Tax charge/(credit)
Share-based payment expense
Operating cash flows before movements in
Working capital
Increase in inventories
Decrease in receivables
(Decrease)/Increase in payables
Increase in provisions
Cash generated from operations
Tax (paid)/received
Net cash inflow from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Loans advanced to subsidiary undertakings
Net cash (outflow)/inflow 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
26
21
14
18c
294
213
(28)
46
570
1,168
(211)
163
(287)
7
840
(46)
793
(204)
–
(204)
(400)
(400)
189
2,210
(12)
304
165
(50)
8
722
(6)
571
158
88
1,533
50
1,583
(13)
–
(13)
(146)
(146)
1,424
799
(13)
63
65
–
–
–
–
(55)
–
–
89
–
34
–
34
–
24
24
–
–
58
406
–
–
–
–
(86)
–
–
140
–
54
–
54
–
133
133
–
–
187
219
–
17b
2,387
2,210
464
406
The accompanying notes 1 to 27 are an integral part of the financial statements.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 2020 annual financial statements. No new and revised standards were
adopted for the period commencing 1 January 2021.
3 SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
These financial statements have been prepared in accordance with, UK adopted international
accounting standards and 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 ongoing impacts of COVID-19 may have on the ability
to achieve adequate level of sales. The vaccination rates have generally not reached a status to allow
herd immunity to develop with the developing countries showing very low vaccination rates. But even
countries with high acceptance of vaccination and resulting high vaccination rates the pandemic
waves are continuing a high level due to the fact that the virus is mutating quickly, and new variants
are less likely to be kept under control with the currently available vaccines. The highly contagious
omicron variant is the prevalent virus form in Q1 2022. It seems to be a less malignant mutation, but
the sheer number of cases bears the risk that the healthcare systems will be overwhelmed by cases
plus system relevant parts of our societies (police, health system, fire brigades, schools, water and
electricity supply etc) might be severely affected. Every nation is responding differently to these
challenges all with one aim: to keep the systems going. Controlling the infection rates does not seem
to be possible without better vaccination rates and the development of new vaccines to which the
new virus variants would be more sensitive. These activities are ongoing internationally. The
expectation of experts is that the development of the pandemic will lead to waves which will show
reduced amplitudes over time (as it happened with the influenza outbreaks 100 years ago) and we
will move into an endemic situation (as with influenza). This process might still take a couple of years.
It is impossible to judge on the impact this will have on our business or businesses in general. The
health and safety of our staff remains our highest priority.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
3 SIGNIFICANT ACCOUNTING POLICIES continued
The COVID-19 pandemic continued to impact on face-to-face client meetings even though the
majority of our client accounts were back to full time working in their facilities. We also experienced
some delays in the availability of samples for analysis primarily due to the pandemic affecting the
conduct of on-going clinical trials. Cold chain shipping availability was also a source of some sample
delay as capacity was prioritised for COVID related samples and vaccines. Direct marketing in
respect to scientific and trade conferences and exhibitions that we use to promote our services to
new accounts continued to take the more virtual format but nevertheless, we succeeded to develop
both new accounts and to win repeat business from our current and new customers.
Despite the continued backdrop of COVID-19, Group revenues for the year ended 31 December
2021 increased by 8% to £5.13m (2020: £4.75m). Proteomic (biomarker) services increased 32% to
£1.90m (2020: £1.44m). Sales and royalties attributable to TMT® and TMTpro™ reagents were £3.23m
(2020: £3.27m).
Total costs were £4.72m (2020: £4.20m) and resulted in Operating Profits of £0.41m (2020: £0.55m)
and a profit after tax of £72k (2020: £295k). Cash reserves at the year-end increased to £2.39m
(2020: £2.21m).
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 15 months from the date of approval of these financial statements or
until at least the 30 June 2023.
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.
On the 17 June 2021 the Loan Agreement was amended to allow for conversion into ordinary shares
such that until 30 April 2022, VIM may convert part (being not less than £50,000 or a multiple thereof)
or all of the Drawn Loan and accrued interest to 31 December 2020 (being £51,538) into new ordinary
shares of the Company. The conversion price is 7.16p per share, which is the average of the closing
middle market price for the ordinary shares of the Company during the five consecutive trading days
immediately prior to entering into the Loan Amendment. On 30 March 2022, the Company signed the
Third Amendment to the VIM Loan Agreement which extended the term of the loan to 30 June 2023.
Following a detailed review of forecasts, budgets, sales order book and with the knowledge of how
the Group has traded in the first full 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)
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
3 SIGNIFICANT ACCOUNTING POLICIES continued
(cid:129)
(cid:129)
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.
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 it is 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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 date 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
UK office.
The rental for the UK office amounted in 2021 to £30k and is not considered a lease under IFRS 16.
In the case of the Group there are two leases recognised under IFRS 16 one 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. The second lease is for equipment and the lease
commenced on the 1 November 2021 and will end in November 2025. Its asset class is machinery
and equipment. 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 does not
include an option for a sale and lease back transaction.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
3 SIGNIFICANT ACCOUNTING POLICIES continued
Information of the right of use asset and its amortisation are disclosed 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.
Details of the Group’s 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
48 Proteome Sciences plc
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
3 SIGNIFICANT ACCOUNTING POLICIES continued
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
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, 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%
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
3 SIGNIFICANT ACCOUNTING POLICIES continued
Internally-generated intangible assets – research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Development expenditure, where it meets certain criteria (given below), is capitalised and amortised
on a straight-line basis over its useful life. Asset lives are subject to regular review and an impairment
exercise carried out at least once a year.
Where no internally generated intangible asset can be recognised, development expenditure is
written-off in the period in which it is incurred.
An asset is recognised only if all of the following conditions are met:
(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 2021 or the prior year on the basis that it is uncertain whether the intangible assets will
generate future 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 recognised 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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
3 SIGNIFICANT ACCOUNTING POLICIES continued
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 of 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 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 cost. 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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
3 SIGNIFICANT ACCOUNTING POLICIES continued
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.
Fair value is measured by use of the Black Scholes model for all awards. 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.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP company specific measure which is considered to be a key
performance indicator of the Group’s financial performance. Adjusted EBITDA is calculated as operating
profit before depreciation (including right-to-use assets amortisation), amortisation, non-recurring costs,
and employee share-based payment.
As these are non-GAAP measures, they should not be considered as replacements for IFRS
measures. The Group’s definition of these non-GAAP measures may not be comparable to other
similarly titled measures reported by other companies.
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 2021 or the prior year on the basis that it is uncertain whether the intangible assets will generate
future 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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
continued
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.
Share based payment charge
The award of share options in 2021 resulted in a share based payment charge. The valuation of
these options was determined by the Company using the Black Scholes model and applying the
parameters in the grant documents of the share option awards. Details of the calculations are set
out in note 21.
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.
5 REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
Year to 31 December 2021
Biomarker TMT
services Sales
£’000 £’000
TMT
Royalties
£’000
Grant
income
£’000
Primary Geographic Markets
US 987
UK 189
EU 517
Other 203
1,896
Revenue recognised at a
point in time –
Revenue recognised over
a period 1,896
1,896
1,745
–
–
–
1,745
1,745
–
1,745
1,483
–
–
–
1,483
1,483
–
1,483
–
–
5
–
5
–
5
5
Total
£’000
4,215
189
522
203
5,129
3,228
1,901
5,129
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
5 REVENUE FROM CONTRACTS WITH CUSTOMERS continued
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
Contract Balances
2,066
–
–
2,066
2,066
–
2,066
1,202
–
–
1,202
1,202
–
1,202
–
–
41
41
–
41
41
Total
£’000
4,078
62
613
4,753
3,268
1,485
4,753
Contract Contract Contract Contract
Assets Assets Liabilities Liabilities
2021 2020 2021 2020
£’000 £’000 £’000 £’000
At 1 January/accrued in the period 457 1,331 (153) (26)
Transfer in the period from contract
assets to trade receivables (457) (1,331) – –
Amounts included in contract liabilities that
were recognised as revenue during the period – – 153 26
Excess of revenue recognised over cash
(or rights to cash) being recognised
during the period 479 457 – –
Cash received in advance of
performance and not recognised as
revenue during the period – – (35) (153)
479 457 (35) (153)
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 2022.
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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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
2021
£’000
3,228
1,896
5
5,129
2020
£’000
3,268
1,444
41
4,753
Revenues from one customer totalled £3,228k (2020: £3,268k) representing all revenues from the
TMT® income stream.
7 FINANCE COSTS
Interest on related party loans (note 18)
Lease Interest
Finance costs
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 loss/(gain)
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
Total non-audit fees
Total fees
2021
£’000
279
15
294
2021
£’000
213
287
30
119
105
211
87
3
90
29
29
119
2020
£’000
284
20
304
2020
£’000
165
202
63
90
(55)
6
61
2
63
27
27
90
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
8 OPERATING PROFIT continued
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP company specific measure which is considered to be a key
performance indicator of the Group’s financial performance. Adjusted EBITDA is calculated as operating
profit before depreciation (including right-to-use assets amortisation), amortisation, non-recurring costs,
and employee share-based payment.
As these are non-GAAP measures, they should not be considered as replacements for IFRS
measures. The Group’s definition of these non-GAAP measures may not be comparable to other
similarly titled measures reported by other companies.
Operating profit
Depreciation
Depreciation on leases
EBITDA
Other non-cash items- Share based payments (see note 21)
Non-recurring costs (cash relevant)
Adjusted EBITDA
£’000
£’000
412
40
173
626
570
159
1,355
549
33
134
716
8
–
724
Non-recurring costs relate to professional services costs associated with the assessment of strategic
options in the year (2020: £nil).
9 STAFF COSTS
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
Share based payments
No staff costs are incurred in the parent company, Proteome Sciences Plc.
2021
Number
2020
Number
21
6
27
£’000
1,958
333
136
570
2,997
19
5
24
£’000
1,673
300
174
8
2,155
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
10 DIRECTORS’ REMUNERATION AND TRANSACTIONS
The directors’ emoluments in the year ended 31 December 2021, were:
National
Basic Insurance Benefits Pension
salary Contributions in kind Costs Total Total
2021 2021 2021 2021 2021 2020
£’000 £’000 £’000 £’000 £’000 £’000
Executive Directors
Dr M Söhngen 235 23 – – 258 77
Dr I. Pike 208 27 4 15 254 224
R. Dennis 186 24 – 15 225 184
Non-Executive Directors
C.D.J. Pearce 80 6 6 – 92 131
R. McDowell 27 3 – – 30 27
M. Diggle – – – – – –
Dr U. Ney 20 2 – – 22 21
Total 756 85 10 30 881 664
(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 2021 were as follows:
Dr I. Pike
R. Dennis
2021
2020
2
2
2021
£’000
15
15
30
2020
£’000
16
13
29
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 £80,000 noted above. The balance of the fees relating to the
consultancy agreement at the year end was £280k (2020: £321k). This decrease during the year
represents the charge for consultancy during the year. According to terms the consultancy agreement
ended in May 2021.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
11 TAX
Tax (charge)/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
Overseas tax charge
Group tax charge for the year
R&D tax credit received
Group tax (charge)/credit for the year
2021
£’000
–
(46)
(46)
–
(46)
2020
£’000
–
(90)
(90)
140
50
The UK Corporation tax credit relates to research and development tax credits claimed under the
Corporation Taxes Act 2009.
At 31 December 2021 there were gross tax losses available for carry forward of approximately £44.8m
(2020: £45.7m)
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 lower than in the previous year, due to the stronger commercial focus
of the Company’s research services revenue stream. As such the Company has not recognised any
tax credit in respect of 2021. The differences are explained below:
Profit before tax
Income tax credit calculated at 19.00% (2020: 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
2021
£’000
2020
£’000
118
(22)
(8)
30
(46)
–
(46)
2021
£’000
11,190
8
–
11,198
245
(47)
(11)
58
(90)
140
50
2020
£’000
7,774
1
2
7,777
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.
58 Proteome Sciences plc
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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
2021
£’000
£’000
72
295
2021
Number of
shares
2020
Number of
shares
295,182,056 295,182,056
301,850,775 295,182,056
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 not identical to those used for
basic earnings per ordinary share. This is because the options are in the money from the vesting
date of the 15 September 2021 onwards and are therefore dilutive as of 31 December 2021.
The weighted average number of ordinary shares outstanding was calculated applying the treasury
stock method to an amount of 14.3m shares options which were in the money (see note 21 on
page 69) on the 31 December 2021.An average share price for 2021 of 5.522 p per share added by
the outstanding service amounts for these options and resulting in a number of shares of 6,668,719
added to the existing issued share stock for the purpose to calculate the diluted EPS. A number of
714.000 shares were not considered in the calculation of the weighted number of outstanding shares
used for the diluted EPS calculation as these options were at the 31 December 2021 not dilutive.
13 GOODWILL
Cost and carrying amount
1 January 2021 and 31 December 2021
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 2021, the market capitalisation for the Group was £15.1m based on the quoted
share price of the Company of 5.13p 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 2021.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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:
Laboratory
Equipment
£’000
Right of
use Asset
Building
£’000
Right of
use Asset
Equipment
£’000
Cost
1 January 2020 2,344
Exchange adjustments 79
Additions during the year 13
Disposals during the year (607)
31 December 2020 1,829
1st January 2021 1,829
Exchange adjustments (52)
Additions during the year 204
Disposals during the year (495)
31 December 2021 1,486
Depreciation
1 January 2020 2,269
Exchange adjustments 75
Charge for the year 32
Depreciation relating to disposals (605)
At 31 December 2020 1,771
At 1 January 2021 1,771
Exchange adjustments (48)
Charge for the year 40
Depreciation relating to disposals (495)
At 31 December 2021 1,268
Net book value
At 1 January 2021 58
At 31 December 2021 219
633
37
–
–
670
670
(43)
28
–
655
52
1
133
–
186
186
3
141
–
330
484
325
–
–
–
–
–
–
(4)
762
–
758
–
–
–
–
–
(1)
32
–
31
–
726
Total
£’000
2.977
116
13
(607)
2,500
2,500
(100)
994
(495)
2,899
2,321
76
165
(605)
1,958
1,958
(47)
213
(495)
1,629
542
1,270
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.
60 Proteome Sciences plc
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
15 INVESTMENT IN SUBSIDIARIES
Company
At 1 January 2020
Share based payment expense
Repayment of loan by subsidiary
At 31 December 2020
At 1 January 2021
Share based payment expense
Repayment of loan by subsidiary
At 31 December 2021
Loans to
Cost of shares
in subsidiary
subsidiary
undertakings undertakings
£’000
£’000
112
8
–
121
121
570
–
691
8,501
–
(133)
8,368
8,368
–
(24)
8,344
Total
£’000
8,613
8
(133)
8,489
8,489
570
(24)
9,035
(i)
(ii)
The increase in the cost of shares in subsidiary undertakings of £570k (2020: £8k) 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 2021 of £24k (2020: £133k) 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 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.
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 2020 and 2021 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 £8,344k (1 January 2020: £8,368k).
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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, -
Altenhöferallee 3, 60438 Frankfurt am Main, Germany
Proteome Sciences plc, Electrophoretics Limited and Phenomics Limited, 5 Dashwood Lang Road,
Bourne Business Park, Addlestone, Surrey KT15 2HJ 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
62 Proteome Sciences plc
Group
2021
£’000
368
720
1,088
Group
2020
£’000
161
717
878
262752 Proteome p63-p81.qxp 06/04/2022 16:53 Page 63
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
17 OTHER CURRENT ASSETS
(a) Trade and other receivables
Trade receivables
Less: provision for impairment of trade receivables
Trade receivables – net
Other Debtors
Prepayments
Total
Group
2021
£’000
Group
2020
£’000
473
(25)
448
53
103
604
685
(13)
672
63
53
788
At 31 December 2021 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 – –
Gross carrying amount 247 180 46 – –
Loss provision – 18 7 – –
Total
£’000
473
25
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 2021 trade receivables of £226,002 (2020: £130,085) 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.
The maturity profile of any due debt is presented below.
0 to 3 months
3 to 9 months
9 to 12 months
> 12 months
2021
£’000
426
46
–
–
2020
£’000
130
–
–
–
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
17 OTHER CURRENT ASSETS continued
(b) Cash and cash equivalents
Cash and cash equivalents
Group
2021
£’000
2,387
Company
2021
£’000
Group
2020
£’000
Company
2020
£’000
464
2,210
406
The directors consider that the carrying amount of trade receivables and cash and cash equivalents
approximates their fair value.
18 FINANCIAL LIABILITIES
(a) Trade and other payables
Due within one year
Trade and other payables
Accruals
Payables due to group entities
Group
2021
£’000
Company
2021
£’000
Group
2020
£’000
Company
2020
£’000
375
224
–
599
–
–
696
696
519
249
–
768
–
–
607
607
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
2021
£’000
Company
2021
£’000
Group
2020
£’000
Company
2020
£’000
Loans from related parties
10,825
2,460
10,547
2,397
The directors consider that the carrying amount of borrowings approximates to their fair value.
Note:
(i) The loan from related parties includes a loan of £10,054k (2020: £9,795k) including interest,
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.
Interest accrued on the loan was £258k for the FY2021 (2020: £266k). 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 £10,054k (2020: £9,795k) of which £1,688k is owed by the
Company (2020: £1,645k).
64 Proteome Sciences plc
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
18 FINANCIAL LIABILITIES continued
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 15 months from signing of these financial statements or until at least
30 June 2023.
(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). On the 17 June 2021 the Loan Agreement was amended
to allow for conversion into ordinary shares such that until 30 April 2022, VIM may convert part
(being not less than £50,000 or a multiple thereof) or all of the Drawn Loan and accrued interest
to 31 December 2020 (being £51,538) into new ordinary shares of the Company. The conversion
price is 7.16p per share, which is the average of the closing middle market price for the ordinary
shares of the Company during the five consecutive trading days immediately prior to entering
into the Loan Amendment. On 30 March 2022, the Company signed the Third Amendment to the
VIM Loan Agreement which extended the term of the loan to 30 June 2023.
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
2021 amounts drawn down and owed by the Company were £700k, and interest of £71k was
accrued (2020: loan £700k, interest £51k).
(iii) The amounts shown above as outstanding under short term for both loans include accrued
interest.
(c) Changes in liabilities arising from financing activities
Group
Note supporting the cash flow statement - movement in net debt
Interest
accruing
1 January Cash Non-cash
addition
Flow
£,000
£,000
2021
£,000
in the Foreign 31 December
2021
period exchange
£,000
£,000 £,000
Short term borrowings
Lease Liabilities
Total
10,547
491
11,037
–
(400)
(400)
–
784
784
278 –
16 (28)
294 (28)
10,825
862
11,687
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
18 FINANCIAL LIABILITIES continued
Company
Note supporting the cash flow statement – movement in net debt
Short term borrowings
Total
Interest
accruing
1 January
2021
£,000
Cash
Flow
£,000
in the 31 December
2021
period
£,000
£,000
2,397
2,397
–
–
63
63
2,460
2,460
Group
Note supporting the cash flow statement - movement in net debt
1 January
2020
£,000
Cash Non-cash
Flow addition
£,000
£,000
Interest
accruing
in the
period exchange
£,000
£,000
Foreign 31 December
2020
£,000
Short term borrowings
Lease Liabilities
Total
10,262
584
10,846
–
(146)
(146)
–
–
–
284
20
304
–
33
33
10,547
491
11,037
Company
Note supporting the cash flow statement – movement in net debt
Short term borrowings
Total
Interest
accruing
1 January
2020
£,000
Cash
Flow
£,000
in the 31 December
2020
period
£,000
£,000
2,331
2,331
–
–
65
65
2,397
2,397
66 Proteome Sciences plc
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
19 PENSION PROVISIONS
Group
At 1 January
Additional provision in the year
Exchange movement
At 31 December
2021
£’000
492
39
(32)
499
2020
£’000
403
89
–
492
(i) Pension Provision
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.
(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 2021, funding
contributions payable by the Group are based on employee contributions at the rate of 1.5 % - 2.5%
(2020:1.5% - 2.5%) of wages and salaries and employer contributions at the rate of 6 times
(2020: 6 times) employee contributions. The Company expects pension costs for 2022 in relation to
the defined benefit scheme of £40,742 (2020: £25,159).
The amount charged to the income statement in respect of the contributions to the scheme in 2021
was £100,300 (2020: £136,496).
As at 31 December 2021, an actuarial deficit did not exist for the multi-employer scheme. The Group’s
contributions to the scheme during 2021 represented 0.05% of total contributions to the scheme by
employers and employees (2020: 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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
19 PENSION PROVISIONS continued
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 1.2% (2020: 0.7%). The Company has
assumed an income increase of 2.5% (2020: 2.25%) and German inflation of 2.0 % (2020: 1.5%).
Provisions for future unfunded pension liabilities at 31st December 2021 amounted to £498,687
(2020: £491,743). Amounts recognised through the consolidated income statement for the year to
31st December 2021 included service costs of £14,697 (2020: £35,892), interest costs of £3,218
(2020: £4,243) and an actuarial loss of £21,511 (2020: £26,939) excluding any exchange effects.
Other pension costs in relation to defined contribution schemes for United Kingdom employees
amounted to £35,458 (2020: £38,682).
20 SHARE CAPITAL
(i) Allotted and called-up
Ordinary Shares of 1p each
The number of shares in issue in 2021 was:
2021
£’000
2020
£’000
2,952
2,952
2021
Number
2020
Number
As at 1 January 2021 and 31 December 2021
295,182,056 295,182,056
68 Proteome Sciences plc
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 2021, 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 Dec
2020
Awarded
in the
year
Exercised Lapsed Number at
in the in the 31 Dec
year year 2021
Number of
Options
Vesting
Date
–
–
–
–
–
–
–
9,000,000
– – 9,000,000
3,000,000
3,000,000
3,000,000
2,500,000
– – 2,500,000
1,000,000
1,000,000
500,000
2,500,000
– – 2,500,000
1,000,000
100,000
100,000
100,000
14,300,000
– – 100,000
– – 100,000
– – 100,000
– – 14,300,000
1,000,000
500,000
100,000
100,000
100,000
15 September
2021
15 September
2022
15 September
2023
15 September
2021
15 September
2022
15 September
2023
15 September
2021
15 September
2022
15 September
2023
8 June 2024
8 June 2024
8 June 2024
Latest
Exercise
Date
8 June
2031
8 June
2031
8 June
2031
8 June
2031
8 June
2031
8 June
2031
8 June
2031
8 June
2031
8 June
2031
8 June 2031
8 June 2031
8 June 2031
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 Dec
2019
Awarded Exercised Lapsed
in the in the in the
year year year
Number at
31 Dec
2020
Vesting
Date
4,000,000
5,000,000
7,000,000
16,000,000
– – 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
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
21 SHARE OPTIONS AND SHARE BASED PAYMENTS continued
(iii) 2011 Share Option Plan
At 31 December 2021 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
63,000
43,000
48,000
560,000
714,000
630
430
480
5600
7,140
36.50
49.87
16.75
7.83
17.2.15
25.6.16
18.3.19
8.6.24
17.2.15 – 17.2.22
25.6.16 – 25.6.23
18.3.19 – 18.3.26
8.6.24 -8.6.31
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
17.2.15 – 17.2.22
25.6.16 – 25.6.23
18.3.19 – 18.3.26
164,000 1,640
17.2.15
25.6.16
18.3.19
73,000
43,000
48,000
36.50
49.87
16.75
730
430
480
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.
At the 31 December 2021, awards over 154,000 shares (2020: 164,000) had vested and were capable
of exercise.
A Long-Term Incentive Plan was introduced in 2011. Awards made during the year are stated in
note 21(ii) and are on the condition of continued employment. Any exercised options are settled by
the Company issuing shares. As a result of the awards a charge to the income statement of £570k,
(2020: £8k) was recognised during the year in respect of all schemes. The 2011 Plans closed in
July 2021 and no further awards will be made under that scheme.
A new Long-Term Incentive Plan was introduced in 2021.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 2020
Granted in the year
Forfeited during the year
Outstanding at 31 December 2020
Granted in the year
Lapsing in the year
Outstanding at 31 December 2021
Exercisable at 31 December 2021
Exercisable at 31 December 2020
Outstanding at 1 January 2020
Granted in the year
Lapsing in the year
Outstanding at 31 December, 2020
Granted in the year
Lapsing in the year
Outstanding at 31 December, 2021
Exercisable at 31 December, 2021
Exercisable at 31 December, 2020
2011 Share Option Plan
Weighted
average
exercise
price (p)
Options
164,000
–
–
164,000
560,000
10,000
714,000
154,000
164,000
34.23
–
–
34.23
7.83
36.50
34.01
34.01
34.23
2011 LTIP
Maximum
Number of
Weighted
average
fair value
Shares per share (p)
–
–
–
–
–
14,300,000
5,000,000
–
–
–
–
–
–
1.00
1.00
–
The options outstanding at 31st December 2021 had a weighted average remaining contractual life
as follows:
2011 Share Option Plan
LTIP
2021
No. of
months
93
113
2020
No. of
months
46.8
87.0
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
21 SHARE OPTIONS AND SHARE BASED PAYMENTS continued
The inputs into the Black-Scholes model were:
2021
2020
4.9p
Weighted average share price 7.80p
Weighted average exercise price 1.59p
4.9p
Expected volatility 86.02% - 56.05% 63.56% - 56.05%
4 years
Expected life 9 years
1.13% - 0.15%
Risk free rate 1.13% - 0.01%
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 2021, 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 2021 the Black Scholes model was used as there was only one
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.).
72 Proteome Sciences plc
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 2021, 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
2021
£’000
Company
2021
£’000
Group
2020
£’000
Company
2020
£’000
4
–
–
4
4
–
–
4
27
–
–
27
27
–
–
27
24 FINANCIAL INSTRUMENTS
Capital risk management
The Group monitors “adjusted capital” which comprises all components of equity (i.e., share capital,
share premium translation reserve and merger reserve, 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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
24 FINANCIAL INSTRUMENTS continued
Financial instruments for the Group comprise:
(cid:129)
Trade and other 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 *
Total financial assets
Financial liabilities
Trade and other payables and accruals*
Short-term borrowings*
Lease liabilities
Total financial liabilities
Group
2021
£’000
Company
2021
£’000
Group
2020
£’000
Company
2020
£’000
2,387
503
2,890
(634)
(10,825)
(862)
(12,321)
464
–
464
–
2,210
735
2,945
(921)
406
–
406
–
(2,460)
(10,547)
(2,397)
–
(491)
–
(2,460)
(11,959)
(2,397)
The described financial instruments are measured applying the following methodologies:
* measured at amortised cost 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
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 they 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
of our client base with the majority 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 £1.08m (2020: trade receivables and contract assets £1.24m). A minor
provision for impairment was recognised for 2021 £25k (2020: £13k) 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 a very low 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 £479k (2020: £552k).
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 global events such as the COVID-19 pandemic and the Russian-Ukraine conflict 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.
Barclays plc
Commerzbank AG
Other
Group
2021
£’000
2,182
201
5
2,387
Company
2021
£’000
464
–
–
464
Group
2020
£’000
2,005
200
5
2,210
Company
2020
£’000
406
–
–
406
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 2021, the carrying value of loans owed by Electrophoretics
Limited to the Company was £0.38m (2020: £0.5m), of loans owed by subsidiaries to the Company
was £8.4m (2020: £8.5m). 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 profit
for the year ended 31 December 2021 would have decreased by £56,489 (2020: £34,163), for a
decrease of 0.5% in interest rate the profit would have increased 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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 currencies 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 is not considered to 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 2021 £’000
Trade and other payables 632
Loans and borrowings 10,825
Short term lease 2
Total 11,459
Liquidity risk management
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
Between
3 and 12
months
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Over
5 years
£’000
–
–
2
2
–
–
–
–
–
–
–
–
–
–
–
–
Between
3 and 12
months
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Over
5 years
£’000
–
–
10
10
–
–
–
–
–
–
–
–
–
–
–
–
There are pension provisions existing for the German entity of the Group, which amounted at
31 December 2021 to £0.50m (2020: £0.49m), which can result in future Cash outflows from
the Group.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 2020
Provision for impairment
At 31 December, 2020
At 1 January 2021
Loan repayment in the year
At 31 December, 2021
2) Loan from subsidiary undertaking:
At 1 January, 2020
Exchange adjustment
At 31 December, 2020
At 1 January, 2021
Loan advances during the year
Exchange adjustment
At 31 December, 2021
Proteome
Sciences R&D
£’000
7,549
–
7,549
7,549
–
7,549
589
18
607
321
–
(20)
301
Electrophoretics
Ltd
£’000
952
(133)
819
819
(24)
795
–
–
–
287
102
–
389
Total
£’000
8,501
(133)
8,368
8,368
(24)
8,344
589
18
607
607
102
(20)
690
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 64.
(c) M Diggle, a Director of the Company, a Director of Vulpes Investment Management (VIM) and is
therefore a related party, VIM has made a loan facility available to the Company full details of
which are set out in note 18 on page 64.
(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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 2021 and the comparative period were as follows:
Mariola Söhngen (Chief Executive Officer)
Ian Pike (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
2021
£’000
917
98
–
–
570
30
1,615
2020
£’000
679
71
–
–
8
70
828
The amounts charged to the income statement relating to Directors in respect of the share-based
payment charge were as follows:
2021
£’000
570
2020
£’000
8
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
26 LEASES
In the case of the Group there are two leases 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 and a lease for a mass spectrometry instrument located in Frankfurt starting in November
2021 and ends after 4 years in November 2025.
The rental lease and the resulting right-of-use asset is classified as land and buildings the laboratory
instrument lease is classified as fixture and fittings. Both leases do 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 they do not include an option for a 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 2021
Additions
Amortisation
Foreign exchange movements
At 31 December 2021
Right-of-use asset
At January 2020
Additions
Amortisation
Foreign exchange movements
At 31 December 2020
Land and
buildings
£’000
Equipment
£’000
484
28
(141)
(46)
324
–
762
(32)
(3)
726
Land and
buildings
£’000
Equipment
£’000
581
–
(134)
37
484
–
–
–
–
–
Total
£’000
484
790
(173)
(49)
1,050
Total
£’000
581
–
(134)
37
484
Interest on lease liability for the period amounted to £15k (2020: £20k). 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.
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NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 31 December 2021
26 LEASES continued
Lease Liability
At January 2021
Additions
Interest accruing for the year
Lease payments
Foreign exchange movements
At 31 December 2021
At January 2020
Interest accruing for the year
Lease payments
Foreign exchange movements
At 31 December 2020
Land and
buildings
£’000
Equipment
£’000
491
22
13
(144)
(30)
352
–
762
3
(256)
2
510
Land and
buildings
£’000
Equipment
£’000
584
20
(146)
33
491
–
–
–
–
–
Total
£’000
491
784
16
(400)
(28)
862
Total
£’000
584
20
(146)
33
491
Maturity analysis of discounted lease payments
Up to 3
Months
As at December 2021 £’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 66
199
265
332
–
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 UK office, which amounts to a total liability of £4k, 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 Third Amendment to the Loan Agreement with Vulpes Investment
Management on the 30 March 2022 which extended the term of the loan to 30 June 2023.
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NOTICE OF ANNUAL GENERAL MEETING
NOTICE OF ANNUAL GENERAL MEETING
(Registered in England No: 02879724)
Notice is hereby given that the 28th Annual General Meeting of Proteome Sciences plc will be held at
Allenby Capital Limited, 5 St Helen’s Place, London, EC3A 6SB on Monday 16 May 2022 at 12 noon and
the Company will also provide access online through the Investor Meet Company platform (see notes) for
the purpose of considering and, if thought fit, passing the following Resolutions of which numbers 1 to 5
will be proposed as Ordinary Resolutions and number 6 will be proposed as a Special Resolution.
ORDINARY RESOLUTIONS
1 To receive the financial statements and the reports of the directors and of the auditors for the year
ended 31 December 2021.
2 To re-appoint Dr I Pike as a director of the Company in accordance with Article 109(b) of the Articles
of Association of the Company
3 To re-appoint M Diggle as a director of the Company in accordance with Article 109(b) of the Articles
of Association of the Company.
4 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.
5 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
2023, whichever is the earlier, but so that this authority shall allow the Company to make offers or
agreements before the expiry of this authority which would, or might, require shares to be allotted or
rights to subscribe for or to convert securities into shares to be granted after such expiry.
SPECIAL RESOLUTION
6 THAT subject to, and upon Resolution 5 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.
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NOTICE OF ANNUAL GENERAL MEETING
NOTICE OF ANNUAL GENERAL MEETING
(Registered in England No: 02879724)
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 2023, 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
V. Birse
Company Secretary
31 March 2022
Registered office
5 Dashwood Lang Road
Bourne Business Park
Addlestone
Surrey
KT15 2HJ
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NOTICE OF ANNUAL GENERAL MEETING
NOTICE OF ANNUAL GENERAL MEETING
(Registered in England No: 02879724)
Notice of Meeting Notes:
To ensure that shareholders are able to follow the proceedings of the AGM, the Company will provide
access online through the Investor Meet Company platform. However, shareholders will not be able to
vote online during the Meeting and are therefore urged to submit their votes via proxy as early as possible.
Shareholders are also invited to submit questions for the Board to consider. Questions can be pre
submitted in advance of the AGM via the Investor Meet Company Platform up to 9am on 12 May 2022,
or via the Investor Meet Platform at any time during the AGM itself. The Board will respond to key questions
during the meeting and will provide all such answers on the Investor Meet Company as soon as possible
thereafter.
Shareholders who wish to attend the AGM online should register for the event in advance via the following
Investor Meet link:
https://www.investormeetcompany.com/proteome-sciences-plc/register-investor
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 12 May 2022. 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. Executive directors’ service agreements and copies of the terms and condition of appointment of
non-executive directors will be available for inspection at the registered office of the Company from
the date of this notice and at the AGM venue for 15 minutes prior to the commencement of the
meeting.
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.
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NOTICE OF ANNUAL GENERAL MEETING
NOTICE OF ANNUAL GENERAL MEETING
(Registered in England No: 02879724)
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 12 noon 12 May 2022.
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.
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 12 Noon on 12 May 2022. 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.
13. As at 31 March 2022 (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 2022 are 295,182,056.
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NOTICE OF ANNUAL GENERAL MEETING
(Registered in England No: 02879724)
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, Dr I Pike
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,
M Diggle is due to retire at this Annual General Meeting and offers himself for re-appointment.
Resolution 4
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 5
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 2023, whichever is earlier.
Resolution 6
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.
When shares are to be allotted for cash, Section 561 of the Companies Act 2006 provides that existing
shareholder 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 2023, 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.
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Proteome Sciences plc
Registered number: 02879724
Report and Financial Statements
for the year ended 31 December 2021