08
Otoño
Annual Report and Financial Statements
For the Year Ended 30 June 2011
Company Registration No. 4225086
Contents
Officers and Professional Advisers
Chairman‟s Statement
Chief Executive Officer‟s Statement
The Directors' Report
Independent Auditor‟s Report to the members
Income Statement
Balance Sheet
Statement of changes in equity
Cash Flow Statement
Notes on the Financial Statements
Notice of Annual General Meeting
Appendix
Form of Proxy
3
4
6
9
15
17
18
19
20
21
34
37
39
2
Officers and Professional Advisers
DIRECTORS
Dr P B Harper
Dr M P Chadwick
Dr C D Chassagnole
SECRETARY
R J Jones
REGISTERED OFFICE
The Magdalen Centre
Robert Robinson Avenue
Oxford Science Park
Oxford
OX4 4GA
AUDITOR
Shipleys LLP
10 Orange Street
Haymarket
London
WC2H 7DQ
BANKER
National Westminster Bank Plc
Woollen Hall
Castle Way
Southampton
SO14 2DE
SOLICITOR
Bircham Dyson Bell LLP
50 Broadway
Westminster
London
SW1H 0BL
Chairman
Chief Executive Officer
Chief Operating Officer
REGISTRAR
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 2YU
NOMINATED ADVISOR, BROKER AND
FINANCIAL ADVISER
WH Ireland Limited
11 St James's Square
Manchester
M2 3WH
Physiomics Plc is a limited liability company incorporated in England & Wales and domiciled in United
Kingdom.
3
Chairman’s Statement
Summary of Results in the year ended 30 June 2011
•
•
•
•
Successful fundraising in early 2011 generated cash of £600,000 before issue
expenses
The turnover of the Company decreased to £53,345 (2010: £152,694)
The operating loss was £693,795 (2010: £393,010)
On 30 June 2011 the surplus of shareholders‟ funds was £755,511 (2010: £786,825)
The increased spend over the past year has largely been the result of further validation studies,
which have now paid dividends. As a result of the validation study we performed in collaboration
with Oncodesign, we have shown that our technology can make the difference between success
and failure of a new drug, by increasing its effectiveness. As a result of this breakthrough, and
our business development efforts, we believe we have the best pipeline of interest and active
enquiries that we have seen in the Company‟s history to date.
In addition, we have
Undertaken projects in conjunction with major pharmaceutical companies to demonstrate the
capabilities of our model to advance their particular development programmes. We hope to be
able to publish the results of these studies shortly. The recently published data involving
compounds from Eli Lilly is an example of this.
Developed a more flexible menu-based pricing system for clients, including elements of service
and licensing.
Appointed an US-based business development specialist who is fully familiar with marketing in
silico technologies such as ours to pharma industry customers.
Had discussions with other significant players in the drug development services space, where
collaboration (such as Jubilant) would provide traction in new markets for both parties.
Successfully completed a Carbon Trust funded project to develop an advanced fermentation
process for a biofuel. This the first non-pharmaceutical application of our technology and
represents part of our diversification strategy.
Developed a drug combination oncology database, in conjunction with Pharmacometrics
Limited, to open a route into the newly developing field of personalised medicine.
Continued to investigate M&A opportunities to add either synergistic technologies or wholly new
modalities to our Virtual TumourTM model, in order to provide a more comprehensive and holistic
approach to addressing the needs of our customer base. We have established a number of
small but focused projects designed to evaluate such opportunities.
4
Chairman’s Statement - continued
Adoption of new articles of association
At the Annual General Meeting on 18 November 2011 shareholders will be asked to approve
the adoption of new articles of association to bring them into line with the requirements of the
Companies Act 2006. A summary of the changes is set out in an appendix to these financial
statements.
Dr Paul Harper
Non-Executive Chairman
5
Chief Executive Officer’s Statement
Introduction
We believe that the restructuring of the pharmaceutical industry continues to create delays and
uncertainty and accordingly formed the view that further technological validation of our Virtual
TumourTM platform was required to ignite the interest of the large pharmaceutical companies.
We therefore performed a study using two „standard of care‟ drugs, in which we demonstrated
that scheduling changes predicted by our models led to a 50% increase in the potency of the
combination. We also continue to investigate how we could further reduce the amount of
experimental data we need to calibrate our models.
In order to build the value of Physiomics still further, our growth strategy is now based around
three key principles: to increase the scope of our services in terms of modelling in new
therapeutic areas; to increase the geographic reach of our technology, especially into the US
market; and to provide laboratory-based services to complement our modelling efforts, and/or
demonstrate further reductions in the need for experimental calibration. We are actively
investigating both organic and corporate (M&A) avenues to achieve this growth and will report
on related developments in due course.
Technology Development
This year saw our Virtual TumourTM technology become fully validated in terms of the accuracy
of predictions and also the value added to pre-clinical oncology projects. The results of our
collaboration with Eli Lilly were presented in an article for Innovations in Pharmaceutical
Technology, which we previously reported on 15 June 2010. The same results were presented
as a poster at the AACR meeting in Florida, which we reported on 5 April 2011. This validation
study showed that we could accurately predict the outcome of proposed drug schedules ‟blindly‟
i.e. without seeing the final experimental outcome. We then performed a study in collaboration
with Oncodesign S.A. to demonstrate that we could actually predict improved outcomes in pre-
clinical studies. We reported the results of this study on 1 April 2011. We believe this has
proven to be a pivotal study. In addition to saving customers‟ time and money through reduced
drug development time, we have now demonstrated that we could make the difference between
success and failure for some drugs by increasing their potency without increasing toxicity.
We have established a number of programmes to establish the extent to which in vitro data can
be used to provide data to prime the Virtual TumourTM model. This would avoid the need to ask
clients for data from unreliable xenograft models, reduce the cost of generating data to drive the
models and speed up the drug development process. We believe that such data could give a
more accurate read-out of the way a drug interacts with a cancer cell and improve the quality of
the forecast data provided by the model.
In addition, we initiated a collaboration with Pharmacometrics Limited to design a new database
of anti-cancer drugs and therapeutic treatment information aimed at oncology researchers and
clinicians. This database, accessible through a web interface, will offer data on more than 130
anti-cancer drugs (small molecules and biologics) on drug combinations and also on several
hundred cancer chemotherapy regimens routinely used in the clinic. The database will help the
users to determine which standards-of-care should be used in combination with new chemical
or biological entities, given the mechanism of action and other PK/PD data. Also, it will allow
users to design new combinations and regimens that obey dosing constraints.
6
Chief Executive Officer’s Statement - continued
All of these advances should make our offering more attractive to our customers and increase
the clinical relevance of our models.
Collaborations
Our collaboration with Green Biologics Limited to optimise their biobutanol production process
demonstrated our capabilities outside of the pharmaceutical arena. The first phase of this
collaboration went well. Physiomics developed a model of microbial populations which can
provide input into how best to optimise the fermentation process. Green Biologics are currently
testing our models and software developed during the course of the project. Based on this
evaluation they will decide how to move this project forward.
We also signed a Heads of Terms with Jubilant Biosys and recently executed the full Alliance
agreement. Jubilant can now provide a global business development presence for us and also
provide a „one-stop-shop‟ for delivering predictions to customers, as their capabilities include all
of the experimental calibration services that we need. We are also currently looking at other
collaboration avenues to enhance our services.
In addition, we are in discussions with other companies, where there may be opportunities to
co-market our technologies to provide a more comprehensive package and gain presence in
territories such as the USA, supported by an established service provider to the pharma sector.
Business Development Strategy
Building the pipeline of potential customers has been a particular focus of this year. We have
undertaken a number of steps to align our offerings more closely with the needs of each
potential customer as in almost every case the drug discovery programmes have features that
are unique. Moving away from a “one size fits all” approach to a more individual approach
reflects the learning gained from very detailed discussions with potential clients, often under the
terms of a confidentiality agreement.
We have now developed a menu based approach to developing technical solutions and the
pricing of our services, leading to a proposal that precisely matches what the customer requires
and is transparent in terms of cost.
A number of small biotechnology companies are interested in engaging with us when the time is
right for their project. In addition, four big pharmaceutical companies are now considering
placing projects with us. Whilst there is no guarantee that any of these will sign contracts, we
believe that this shows an increased appetite for our offerings based on the further validation
work done in the year.
It has become clear that additional business development resources are needed to accelerate
sales. To that end the Company has entered into consultancy arrangements with a sales
executive on the US West Coast.
Growth Strategy
Our growth strategy is based on achieving three key objectives and these are
Expanding the geographic reach and scope of our services.
7
Chief Executive Officer’s Statement - continued
Reducing the amount of experimental data needed to calibrate our models.
Investigating which laboratory-based technologies could be brought in-house to broaden and
deepen our business offering.
Our approach to meeting the first two objectives has been described earlier. We are putting
considerable resource into evaluating M&A and joint venture opportunities that will deliver our
growth strategy.
In addition, our collaboration with Pharmacometrics is our first step towards entering the
„personalised medicine‟ sector. The aim here is to make our models more specific to certain
groups of patients, defined by their biomarker profiles.
Outlook
The dynamics of the healthcare industry are changing and conventional research and
development needs are evolving as political, financial and competitive pressures lead to
change. The major restructuring of even the most prominent companies in the sector have been
headlined regularly in the press and media. The environment is changing and companies
operating within this space need to recognise this fact and adapt their business models to meet
new needs and approaches. This has been a key driver for Physiomics where failure to evolve
and adapt to meet the new challenge is not an option.
Whilst big pharma remains the most likely source of immediate revenues, we believe we have
developed a pipeline of potential business opportunities that exceeds anything that we have
achieved before. We believe that this is evidence that the evolution of our thinking and our
business model is proving to be attractive. We aim to undertake further revenue sharing
agreements with the smaller biotech companies, while big pharma are most likely to engage via
„fee-for-service‟ and platform licensing deals.
The Directors believe that the resource devoted to evolving the Physiomics business model was
the right strategy and that the Company is very well placed to capitalise on the business
opportunities which our pipeline of potential new business represents.
Finally, in addition to the traction we have achieved with large pharma, we continue to discuss
revenue sharing deals with smaller biotech companies (such as the recently announced deal
with ValiRx plc). We believe that this will allow us to build a pipeline of downstream revenues of
higher value than could be achieved by fee-for-service payments alone.
Dr Mark Chadwick
Chief Executive Officer
8
Directors’ Report
The Directors submit their report and the audited financial statements of Physiomics Plc for the year
ended 30 June 2011.
Principal Activities and Performance Review
The Company is principally engaged in providing services to pharmaceutical companies in the areas of
outsourced systems and computational biology.
There was a loss for the year after taxation amounting to £644,532 (2010 loss: £367,561). In view of
accumulated losses, and given the stage of the company‟s development, the Directors are unable to
recommend the payment of a dividend.
Performance Indicators
The Directors consider that the key performance indicators are those that communicate the financial
performance and strength of the company as a whole, these being revenue, profitability and
shareholders‟ funds.
The turnover of the Company decreased to £53,345 (2010: £152,694)
• The operating loss was £693,795 (2010: £393,010)
• At the 30 June 2011 the surplus of shareholders‟ funds was £755,511 (2010: £786,825)
Future Risks
The Company faces many risks on the way to building shareholder value. The process of winning major
contracts in a competitive environment is rarely simple and can be delayed for reasons outside the
Company‟s control. This means the Company faces major uncertainties in its cash flow.
Addressing the Risks
The Board addresses the financial uncertainties by careful budget monitoring and by quickly responding
to variations. If there are delays in signing contracts then recruitment and capital expenditure is frozen
until the anticipated income is achieved.
Interest rate risk
The Company finances its operations by cash and short term deposits. The Company‟s policy on interest
rate management is agreed at board level and is reviewed on an ongoing basis.
Other creditors, accruals and deferred income values do not bear interest.
Interest rate profile
The Company had no bank borrowings at the 30 June 2011.
9
Directors’ Report - continued
Liquidity risk
The Company seeks to manage financial risk by ensuring that sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably.
Fair values
Fair values of financial instruments equate to the best value as disclosed in the financial information.
There are no material differences between the fair value of financial instruments and the amount at
which they are stated in the financial statements.
Statement of Directors’ responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
UK company law requires the directors to prepare financial statements for the company in accordance
with International Financial Reporting Standards ("IFRS") as adopted by the EU. Company law requires
the directors to prepare such financial statements in accordance with IFRS, the Companies Act 2006 and
Article 4 of the IAS Regulation.
The financial statements are required by law, and IFRS as adopted by the EU, to give a true and fair
view of the state of affairs of the company.
In preparing the company financial statements, the directors are required to:
a. select suitable accounting policies and then apply them consistently;
b. make judgements and estimates that are reasonable and prudent;
c. state whether they have been prepared in accordance with IFRS as adopted by the EU;
d. prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company will continue in business.
The directors are responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the company and to 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.
The directors are also responsible for the maintenance and integrity of the Physiomics Plc website.
10
Notes to the Financial Statements - continued
There were no loans with directors at 30 June 2010 and 30 June 2011.
13 LOANS
14 SHARE CAPITAL
Ordinary shares of 0.04p each
2011
2010
Number
Number
Issued and fully paid:
£
£
Balance at 1 July 2009
249,856
149,989
Issue of share capital
As at 30 June 2010
Issue of share capital
As at 30 June 2011
149,834
99,867
----------------------
----------------------
399,690
249,856
51,730
149,834
----------------------
----------------------
451,420
399,690
=================
=================
The Company has one class of ordinary shares which carry no right to fixed income.
Between 1 April 2011 and 2 June 2011 the Company issued 9,325,000 ordinary shares of 0.04p at prices
between 0.15p and 0.40p per ordinary share for exercise of share options. Further details are included
in note 18 of the financial statements on page 32.
On 12 April 2011 the Company issued 120,000,000 ordinary shares of 0.04p at a price of 0.5p per
ordinary share for working capital purposes.
Directors’ Report - continued
Directors’ Report - continued
Directors’ Report - continued
Directors’ Report - continued
Directors’ Report - continued
Directors’ Report - continued
Substantial shareholdings
Substantial shareholdings
Substantial shareholdings
Substantial shareholdings
Substantial shareholdings
Substantial shareholdings
The Company has been informed that on 30 June 2011 the following shareholders held substantial
holdings in the issued ordinary shares of the Company.
The Company has been informed that on 30 June 2011 the following shareholders held substantial
The Company has been informed that on 30 June 2011 the following shareholders held substantial
The Company has been informed that on 30 June 2011 the following shareholders held substantial
The Company has been informed that on 30 June 2011 the following shareholders held substantial
The Company has been informed that on 30 June 2011 the following shareholders held substantial
holdings in the issued ordinary shares of the Company.
holdings in the issued ordinary shares of the Company.
holdings in the issued ordinary shares of the Company.
holdings in the issued ordinary shares of the Company.
holdings in the issued ordinary shares of the Company.
TD Waterhouse Nominees (Europe) Limited
TD Waterhouse Nominees (Europe) Limited
TD Waterhouse Nominees (Europe) Limited
TD Waterhouse Nominees (Europe) Limited
TD Waterhouse Nominees (Europe) Limited
TD Waterhouse Nominees (Europe) Limited
Barclayshare Nominees Limited
Barclayshare Nominees Limited
Barclayshare Nominees Limited
Barclayshare Nominees Limited
Barclayshare Nominees Limited
Barclayshare Nominees Limited
HSDL Nominees Limited
HSDL Nominees Limited
HSDL Nominees Limited
HSDL Nominees Limited
HSDL Nominees Limited
HSDL Nominees Limited
LR Nominees Limited
LR Nominees Limited
LR Nominees Limited
LR Nominees Limited
LR Nominees Limited
LR Nominees Limited
James Capel (Nominees) Limited
James Capel (Nominees) Limited
James Capel (Nominees) Limited
James Capel (Nominees) Limited
James Capel (Nominees) Limited
James Capel (Nominees) Limited
Dr Paul Harper
Dr Paul Harper
Dr Paul Harper
Dr Paul Harper
Dr Paul Harper
Dr Paul Harper
Number of
Number of
Number of
Number of
Number of
Number of
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Holding
Holding
Holding
Holding
Holding
Holding
%
%
%
%
%
%
201,249,184
201,249,184
201,249,184
201,249,184
201,249,184
201,249,184
17.8%
17.8%
17.8%
17.8%
17.8%
17.8%
191,876,708
191,876,708
191,876,708
191,876,708
191,876,708
191,876,708
17.0%
17.0%
17.0%
17.0%
17.0%
17.0%
151,566,409
151,566,409
151,566,409
151,566,409
151,566,409
151,566,409
13.4%
13.4%
13.4%
13.4%
13.4%
13.4%
78,407,669
78,407,669
78,407,669
78,407,669
78,407,669
78,407,669
7.0%
7.0%
7.0%
7.0%
7.0%
7.0%
67,823,003
67,823,003
67,823,003
67,823,003
67,823,003
67,823,003
6.0%
6.0%
6.0%
6.0%
6.0%
6.0%
52,570,787
52,570,787
52,570,787
52,570,787
52,570,787
52,570,787
4.7%
4.7%
4.7%
4.7%
4.7%
4.7%
No other person has reported an interest of more than 3% in the ordinary shares.
No other person has reported an interest of more than 3% in the ordinary shares.
No other person has reported an interest of more than 3% in the ordinary shares.
No other person has reported an interest of more than 3% in the ordinary shares.
No other person has reported an interest of more than 3% in the ordinary shares.
No other person has reported an interest of more than 3% in the ordinary shares.
Directors’ remuneration
Directors’ remuneration
Directors’ remuneration
Directors’ remuneration
Directors’ remuneration
Directors’ remuneration
Details of Directors’ remuneration in the year ended 30 June 2011 is set out below:
Details of Directors’ remuneration in the year ended 30 June 2011 is set out below:
Details of Directors’ remuneration in the year ended 30 June 2011 is set out below:
Details of Directors’ remuneration in the year ended 30 June 2011 is set out below:
Details of Directors’ remuneration in the year ended 30 June 2011 is set out below:
Details of Directors’ remuneration in the year ended 30 June 2011 is set out below:
Dr P B Harper
Dr P B Harper
Dr P B Harper
Dr P B Harper
Dr P B Harper
Dr P B Harper
Dr C D Chassagnole
Dr C D Chassagnole
Dr C D Chassagnole
Dr C D Chassagnole
Dr C D Chassagnole
Dr C D Chassagnole
Dr M P Chadwick
Dr M P Chadwick
Dr M P Chadwick
Dr M P Chadwick
Dr M P Chadwick
Dr M P Chadwick
Appointed on
Appointed on
Appointed on
Appointed on
Appointed on
Appointed on
6 December 2010
6 December 2010
6 December 2010
6 December 2010
6 December 2010
6 December 2010
Total
Total
Total
Total
Total
Total
Emoluments
£
Emoluments
Emoluments
Emoluments
Emoluments
Emoluments
£
£
£
£
£
Benefits
Benefits
Benefits
Benefits
Benefits
Benefits
£
£
£
£
£
£
Pension
Pension
Pension
Pension
Pension
Pension
contributions
contributions
contributions
contributions
contributions
contributions
£
£
£
£
£
£
Total
Total
Total
Total
Total
Total
£
£
£
£
£
£
35,000
35,000
35,000
35,000
35,000
35,000
53,913
53,913
53,913
53,913
53,913
53,913
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35,000
35,000
35,000
35,000
35,000
35,000
3,030
3,030
3,030
3,030
3,030
3,030
56,943
56,943
56,943
56,943
56,943
56,943
61,775
61,775
61,775
61,775
61,775
61,775
-
-
-
-
-
-
-
-
-
-
-
-
61,775
61,775
61,775
61,775
61,775
61,775
___________
___________
___________
___________
___________
___________
______
______
______
______
______
______
___________
___________
___________
___________
___________
___________
______
______
______
______
______
______
150,688
150,688
150,688
150,688
150,688
150,688
==========
==========
==========
==========
==========
==========
-
-
-
-
-
-
======
======
======
======
======
======
3,030
3,030
3,030
3,030
3,030
3,030
==========
==========
==========
==========
==========
==========
153,718
======
153,718
153,718
153,718
153,718
153,718
======
======
======
======
======
30
11
11
11
11
11
11
Directors’ Report - continued
Payment policy
The Company pays its suppliers as it would wish to be paid and supports initiatives aimed at ensuring
good practice in this area. Trade creditors of the Company were equivalent to 57 days purchases (2010:
84 days), based on the average daily amount invoiced by suppliers to the Company during the year.
Post balance sheet events
There are no material post balance sheet events.
Statement as to disclosure of information to auditors
The directors in office on 11 October 2011 have confirmed that, as far as they are aware, there is no
relevant audit information of which the auditors are unaware. Each of the directors have confirmed
that they have taken all the steps that they ought to have taken as directors in order to make
themselves aware of any relevant audit information and to establish that it has been communicated to
the auditors.
Corporate Governance
The Board of Directors is accountable to the Company‟s shareholders for good corporate governance.
The company takes corporate governance seriously and the statement below sets out how the Board
apply the principles of good corporate governance.
Directors
The Company supports the concept of an effective Board leading and controlling the Company. The
Board is responsible for formulating and approving the strategy of the business and meets at least six
times per year. Various matters are specifically reserved for Board decision, ensuring that the Board
maintains full control over strategic, financial, organisational, risk and compliance issues. Management
supply the Board with appropriate and timely information, while the directors are encouraged to seek
any further information they consider necessary.
The Board comprises two executive directors, who fulfill the main operational roles in the Company,
and a non-executive Chairman. Due to the size of the Company, the Board does not consider the
appointment of a senior non-executive director to be necessary. A full list of the directors is shown
above.
12
Directors’ Report - continued
Accountability
The Board endeavours to present a balanced and comprehensible assessment of the Company‟s
situation and prospects in all of its published statements, including interim reports, price-sensitive
announcements, reports to regulators and information supplied to comply with statutory requirements.
The Audit Committee consists of Christophe Chassagnole and Roger Jones and is chaired by Paul Harper.
The Committee meets at least three times per year to consider matters relating to the Company‟s
financial position and financial reporting. The Audit Committee reviews the independence and
objectivity of the external auditors, as well as the amount of non-audit work undertaken by Shipleys
LLP to satisfy the Committee that this will not compromise their independence. Details of the fees paid
to Shipleys LLP during the current accounting period are given in note 3 to the accounts. There are no
areas of work where Shipleys LLP are prohibited from carrying out work.
Remuneration Committee
The Remuneration Committee has been established primarily to determine the remuneration, terms and
conditions of employment of the executive directors of the Company. The Committee comprises Mark
Chadwick and Roger Jones and is chaired by Paul Harper. It meets at least twice a year. The primary
concern of the Committee is to establish a system of rewards and incentives that aim to align the
interests of the executive directors with the long-term interests of the share-holders. These are based
on the achievement of both scientific and commercial milestones while taking no account the financial
position of the Company at this stage in its development. Any remuneration issues concerning non-
executive directors are resolved by this Committee and no director participates in decisions that
concern his own remuneration.
Going Concern
After making appropriate enquiries, the Directors have a reasonable expectation that the Company will
safeguard the Company‟s assets. The risk management process and internal control systems are
designed to manage rather than eliminate the risk of failing to achieve business objectives and can only
provide reasonable, but not absolute, assurance against material misstatement or loss. The key features
of the Company‟s system of internal control are as follows:
a clearly defined organisational structure and set of objectives
the executive directors play a significant role in the day to day operation of the business
detailed monthly management accounts are produced by an independent third party for the
Board to review and take appropriate action
13
Directors’ Report - continued
Internal Control
The Company values the views of its shareholders and recognises their interest in the Company‟s
strategy, performance and the ability of the Board. The AGM provides an opportunity for two-way
communication and all shareholders are encouraged to attend and participate. Separate resolutions will
be put to shareholders at the AGM, giving them the opportunity to discuss matters of interest. The
Company counts all proxy votes and will indicate the level of proxies lodged on each resolution, after
each has been dealt with on a show of hands.
The Company uses its website www.physiomics-plc.com as another means of providing information to
shareholders and other interested parties. The website displays the annual report and accounts, interim
results and other relevant announcements.
Annual General Meeting
The Annual General Meeting of the Company will be held at the offices of Bircham Dyson Bell, 50
Broadway, London, SW1H 0BL at 10.00 am on 18 November 2011.
By order of the board
Dr Paul Harper
Chairman
11 October 2011
14
Independent Auditors Report to the shareholders of Physiomics Plc
We have audited the financial statements of Physiomics Plc for the year ended 30 June 2011 which
comprise the income statement, the balance sheet, the cash flow statement, the statement of
changes in equity and the related notes. The financial reporting framework that has been applied in
the preparation of the financial statements is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in an auditor's report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the company's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial statements.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the company's affairs as at 30
June 2011 and of its loss for the year then ended;
the financial statements have been properly prepared in accordance with IFRSs as adopted by
the European Union;
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
15
Independent Auditor’s Report to the shareholders of Physiomics Plc –
continued
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors' report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires
us to report to you if, in our opinion:
adequate accounting records have not been kept by the company, or returns adequate for our
audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law and not made; or
we have not received all the information and explanations we require for our audit.
Benjamin Bidnell (senior statutory auditor)
For and on behalf of Shipleys LLP statutory auditor
10 Orange Street
Haymarket
London
WC2H 7DQ
11 October 2011
16
Income Statement for the year ended 30 June 2011
Revenue
Net operating expenses
Share-based compensation
Operating loss
Finance income
Finance costs
Year ended
Year ended
Notes
30-Jun-11
30-Jun-10
£
£
2
53,345
152,694
(725,746)
(495,827)
(21,394)
(49,877)
(693,795)
(393,010)
7,869
-
5,360
(2,948)
3
4
5
Loss before taxation
(685,926)
(390,598)
UK corporation tax
7
41,394
23,037
Loss for the year attributable to equity shareholders
(644,532)
(367,561)
Loss per share (pence)
Basic and diluted
8
(0.063) p
(0.043) p
17
Balance Sheet as at 30 June 2011 Company Number: 4225086
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Deferred income
Total liabilities
Net assets
Capital and reserves
Share capital
Capital reserves
Retained earnings
Equity shareholders' funds
Notes
10
11
12
9
9,12
14
15
16
Year ended
30-Jun-11
£
Year ended
30-Jun-10
£
25,759
7,473
1
33,233
104,703
729,615
834,318
30,244
1,964
1
32,209
109,741
780,054
889,795
867,551
922,004
(112,040)
-
(112,040)
(114,047)
(21,132)
(135,179)
(112,040)
(135,179)
755,511
786,825
451,420
3,407,100
(3,103,009)
755,511
399,690
2,845,612
(2,458,477)
786,825
The financial statements were approved by the Board of Directors and authorised
for issue on 11 October 2011 and are signed on its behalf by:
Dr Paul Harper
Chairman
18
Statement of changes in equity for the year ended 30 June 2011
Share
capital
£
Share
premium
account
£
Share-based
compensation
reserve
£
Retained
earnings
£
Total
shareholders'
funds
£
At 30 June 2009
249,856 1,755,713
-
(2,090,916)
(85,347)
Share issue (net of costs)
Loss for the year
Share-based compensation
149,834
-
-
1,040,022
-
-
-
-
49,877
-
(367,561)
-
1,189,856
(367,561)
49,877
At 30 June 2010
399,690 2,795,735
49,877
(2,458,477)
786,825
Share issue (net of costs)
Loss for the year
Share-based compensation
51,730
-
-
540,094
-
-
-
-
21,394
-
(644,532)
-
591,824
(644,532)
21,394
At 30 June 2011
451,420 3,335,829
71,271
(3,103,009)
755,511
19
Cash Flow Statement for the year ended 30 June 2011
Cash flows from operating activities:
Operating loss
Amortisation and depreciation
Share-based compensation
Decrease in receivables
Decrease in payables
Decrease in deferred income
Cash generated from operations
UK corporation tax received
Interest paid
Year ended
30-Jun-11
£
Year ended
30-Jun-10
£
(693,795)
6,332
21,394
13,394
(2,006)
(21,132)
(675,813)
33,037
-
(393,010)
6,298
49,877
36,729
(73,925)
(72,276)
(446,307)
19,969
(7,912)
Net cash generated from operating activities
(642,776)
(434,250)
Cash flows from investing activities:
Interest received
Purchase of non-current assets, net of grants received
Net cash used by investing activities
7,869
(7,356)
513
5,360
(1,432)
3,928
Cash outflow before financing
(642,263)
(430,322)
Cash flows from financing activities:
Issue of ordinary share capital (net of expenses)
591,824
1,115,296
Net cash from financing activities
591,824
1,115,296
Net (decrease) increase in cash and cash equivalents
(50,439)
684,974
Cash and cash equivalents at beginning of year
780,054
95,080
Cash and cash equivalents at end of year
729,615
780,054
20
Notes on the Financial Statements
Basis of preparation
Physiomics Plc has adopted International Financial Reporting Standards (“IFRS”), IFRIC interpretations
and the Companies Act 2006 as applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis. The significant accounting
policies are set out below.
Accounting policies
Revenue recognition
The revenue shown in the income statement relates to amounts received or receivable from the
provision of outsourced systems and computational biology services to pharmaceutical companies.
Revenue from the provision of its principal activities are recognised when the Company has transferred
to the buyer the significant risks and rewards of ownership, has no continuing managerial involvement
or control to the degree normally associated with ownership and can reliably measure the economic
benefits of the transaction.
Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that
are subject to risks and returns that are different from those of other business segments. A
geographical segment is engaged in providing products or services within a particular economic
environment that are subject to risks and return that are different from those of segments operating in
other economic environments.
Intangible assets
Intangible assets acquired separately from third parties are recognised as assets and measured at cost.
Following initial recognition, intangible assets are measured at cost or fair value at the date of
acquisition less any amortisation and any impairment losses. Amortisation costs are included within the
net operating expenses disclosed in the income statement.
Intangible assets are amortised over their useful lives as follows:
Useful Life
Software
15 years
Method
Straight line
Useful lives are also examined on an annual basis and adjustments, where applicable are made on a
prospective basis. The Company does not have any intangible assets with indefinite lives.
Property, plant and equipment
All items are initially recorded at cost.
21
Notes on the Financial Statements - continued
Impairment of assets
Property, plant and equipment and intangible assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset‟s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset‟s fair value less costs to sell and value in use. For
purposes of assessing impairment, assets that do not individually generate cash flows are assessed as
part of the cash generating unit to which they belong. Cash generating units are the lowest levels for
which there are cash flows that are largely independent of the cash flows from other assets or groups of
assets.
Depreciation
Depreciation is calculated to write off the cost of an asset over its useful economic life as follows:
Leasehold improvements - the remaining life of the lease
Fixtures and computers
- three years, straight-line basis
Research and development expenditure
Expenditure on research activity is recognised as an expense in the period in which it is incurred.
Trade and other receivables
Trade receivables are recognised and carried at the lower of their original invoiced value and
recoverable amount. Balances are written off when the probability of recovery is considered to be
remote.
Financial liability and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in
the assets of the Company after deducting all of its liabilities.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less.
Foreign currency
Assets and liabilities denominated in foreign currencies are translated into sterling at the rates of
exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into
sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken
into account in arriving at the operating result.
22
Notes on the Financial Statements - continued
Leased assets and obligations
Where assets are financed by leasing agreements that give rights approximating to ownership (“finance
leases”), the assets are treated as if they had been purchased outright. The amount capitalised is the
present value of the minimum lease payments payable during the lease terms. The corresponding
leasing commitments are shown as obligations to the lessor. Lease payments are treated as consisting of
capital and interest elements, and the interest is charged to the profit and loss in proportion to the
remaining balance outstanding.
All other leases are „operating leases‟ and the annual rentals are charged to the income statement on a
straight-line basis over the lease term.
Government Grants
Deferred government grants in respect of capital expenditure are treated as deferred income and are
credited to the income statement over the estimated useful life of the assets to which they relate.
Government grants of a revenue nature are credited to the profit and loss account in the same period
as the related expenditure.
Share based payments
The Company issues equity settled share based payments to certain employees. Equity settled share
based payments are measured at fair value at the date of grant. The fair value determined at the grant
date is expensed on a straight-line basis over an estimated vesting period. Fair value is measured by use
of a binomial model.
Investments
Participating interests are stated at cost less amounts written off in the Company balance sheet.
Taxation
Tax currently payable is based on the taxable profit for the period which may differ from net profit
reported in the income statement.
Deferred taxation is recognised in respect of all timing differences that have originated but not
reversed at the balance sheet date where transactions or events have occurred at that date that will
result in an obligation to pay further tax, or a right to pay less tax in future. Timing differences are
differences between the Company‟s taxable profits and its results as stated in the financial statements
that arise from the gains or losses in tax assessments in period different from those in which they are
recognised in the financial statements. Deferred tax assets are recognised only to the extent that the
directors consider that it is more likely than not that there will be sufficient taxable profits from which
the future reversal of the underlying timing differences can be deducted. Deferred tax is measured at
the average tax rates that are expected to apply in the periods in which the timing differences are
expected to reverse.
23
Notes on the Financial Statements - continued
Adoption of International accounting standards
In the current financial year, the Company has adopted the following Standards and Interpretations
issued by the IASB and the International Financial Reporting Interpretations Committee:
IAS 32 (Amendment) (October 2009) – Classification of Rights Issues
IAS 39 (Amendment) (July 2008) – Eligible Hedged Items
IFRS 1 (revised November 2008) – First-Time Adoption of International Financial Reporting Standards
IFRS 1 (Amendment) (July 2009) – Additional Exemptions for First-Time Adopters
IFRS 1 (Amendment) (January 2010) – Limited Exemption from Comparative IFRS 7 Disclosures for First-
time Adopters
IFRS 3 (revised January 2008) – Business Combinations
Annual Improvements to IFRSs 2009
IFRIC 17 – Distributions of Non-cash Assets to Owners
IFRIC 18 – Transfers of Assets from Customers
IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments
Adoption of these Standards and Interpretations did not have any effect on the financial statements of
the Company, or result in changes in accounting policy or additional disclosure.
The IASB and IFRIC have issued a number of Standards and Interpretations with an effective date after
the date of these financial statements. The new Standards and Interpretations issued include:
IAS 24 – Related Party Disclosures – effective from periods beginning on 1 January 2011
IFRS 9 – Financial Instruments – effective from 1 January 2013
IFRIC 14 (Amendment) – Prepayments of a Minimum Funding Requirement – effective from periods
beginning on 1 January 2011
IFRS 7 Amendment - Financial Instrument Disclosures: Transfers of Financial Assets is effective from 1
July 2011.
IAS 12 Amendment - Deferred Tax: Recovery of Underlying Assets is effective from 1 January 2012.
IAS 27 (revised 2011) - Separate Financial Statements is effective from 1 January 2013.
IFRS 11 - Joint Arrangements is effective from 1 January 2013.
IFRS 12 - Disclosures of Interest in Other Entities is effective from 1 January 2013.
IFRS 13 - Fair Value Measurement is effective from 1 January 2013.
Annual Improvements to IFRSs 2010 is primarily effective from 1 January 2011.
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will
have no material impact on the Company‟s financial statements.
24
Notes on the Financial Statements - continued
1 CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT
There was no material accounting estimates or areas of judgements required.
2 REVENUE AND SEGMENTAL REPORTING
The principal activities are the provision of outsourced systems and computational biology services to
pharmaceutical companies.
This activity comprises a single segment of operation of a sole UK base and entirely UK based assets.
Revenue was derived in the UK and European Union from its principal activity.
3 OPERATING PROFIT
Operating loss is stated after charging
Research and development
Current year expenditure
Depreciation charge for the year
- Owned assets
Amortisation charge for the year
Audit services, refer to below
2011
£
2010
£
257,809
159,438
1,643
4,689
1,610
4,688
12,000
12,000
=================
=================
Amounts payable for both audit and non-audit
services
Audit services – Statutory audit
Shipleys LLP
10,000
10,000
Payable to:
2011
£
2010
£
Tax services – Compliance services
Shipleys LLP
2,000
2,000
-------------------------
12,000
=================
-------------------------
12,000
=================
25
Notes on the Financial Statements - continued
4 FINANCE INCOME
Bank interest receivable
5 FINANCE COSTS
Interest payable
6 STAFF COSTS
Staff costs during the year
Wages and salaries
Social security costs
Pension costs
2011
£
2010
£
7,869
=================
5,360
=================
2011
£
-
=================
2010
£
2,948
=================
2011
£
2010
£
120,971
12,492
-
139,464
14,651
-
------------------------- -------------------------
154,115
================ ================
133,463
Average number of employees
4
================= ================
4
Details of the remuneration of directors are included in the Directors‟ report on page 11.
26
Notes on the Financial Statements - continued
7 TAXATION
(a) Analysis of charge in the year
Research and Development tax credit: current year
Research and Development tax credit: prior year
Total current tax
(b) Factors affecting current tax charge
2011
£
2010
£
41,394
28,823
-
----------------------
(5,786)
----------------------
41,394
============
23,037
============
The tax assessed for the period is lower than the standard rate of corporation tax in the UK. The
timing differences are explained below:
Loss on ordinary activities before taxation
Tax on loss on ordinary activities at standard corporation tax rate of 20%
(2010: 21%)
Expenses not deductible for tax purposes
Capital allowances in excess of depreciation
Unrelieved tax losses and other deductions arising in the year
Research and Development tax credit: current and prior year
2011
£
(685,926)
=============
2010
£
(390,598)
=============
(137,185)
(82,026)
528
1,285
135,372
41,394
361
215
81,450
23,037
------------------------
------------------------
Total current tax
23,037
=============== ===============
At 30 June 2011 tax losses of approximately £2,046,000 (2010: 1,526,000) remained available to carry
forward against future taxable trading profits.
41,394
8 EARNINGS PER SHARE
The calculations of loss per share are based on the following losses and numbers of shares.
Loss on ordinary activities after tax
Weighted average no of shares:
For basic and diluted loss per share
Basic and diluted loss per share
2011
£
2010
£
(644,532)
=============
No.
(367,561)
=============
No.
1,026,913,773
=================
(0.063p)
=================
855,464,575
=================
(0.043p)
=================
27
Notes on the Financial Statements - continued
9 FINANCIAL INSTRUMENTS RECOGNISED IN THE BALANCE SHEET
Held for trading
2011
£
2010
£
Current financial assets
Trade and other receivables
Cash and cash equivalents
Current financial liabilities
Trade and other payables
Deferred income
10 INTANGIBLE FIXED ASSETS
Cost
At 1 July 2010
Additions
At 30 June 2011
Amortisation
At 1 July 2010
Provided in the year
At 30 June 2011
Net book value
30 June 2011
30 June 2010
28
104,703
729,615
109,741
780,054
---------------------- ----------------------
889,795
834,318
=================
=================
112,040
-
114,047
21,132
--------------------- ---------------------
135,179
112,040
=================
=================
Patents, trade marks and
software
£
75,442
204
---------------------
75,646
---------------------
45,198
4,689
---------------------
49,887
---------------------
25,759
30,244
Notes on the Financial Statements - continued
11 PROPERTY PLANT AND EQUIPMENT
Cost
At 1 July 2010
Additions
At 30 June 2011
Depreciation
At 1 July 2010
Provided in the year
At 30 June 2011
Net book value
30 June 2011
30 June 2010
12 OTHER FINANCIAL ASSETS AND LIABILITIES
Trade and other receivables are as follows:
Trade receivables
Prepayments
Other receivables
Corporation tax recoverable
Trade and other payables are as follows:
Fixtures and
computers
£
40,321
7,152
---------------------
47,473
---------------------
38,357
1,643
---------------------
40,000
---------------------
7,473
1,964
2011
£
2010
£
-
37,225
26,084
41,394
------------------------
104,703
=============
-
41,343
35,361
33,037
------------------------
109,741
=============
Amounts payable relating to the purchase of goods and services
Other payables
Accruals
Deferred income
89,505
7,110
17,432
21,132
-------------------------
135,179
==============
Trade payables of the Company were equivalent to 57 days of purchases (2010: 84 days). The directors
consider the carrying amount of trade payables approximates to their fair value.
84,600
9,905
17,535
-
-------------------------
112,040
==============
29
Notes to the Financial Statements - continued
13 LOANS
There were no loans with directors at 30 June 2010 and 30 June 2011.
14 SHARE CAPITAL
Ordinary shares of 0.04p each
2011
2010
Number
Number
Issued and fully paid:
£
£
Balance at 1 July 2009
249,856
149,989
Issue of share capital
As at 30 June 2010
Issue of share capital
As at 30 June 2011
149,834
99,867
----------------------
----------------------
399,690
249,856
51,730
149,834
----------------------
----------------------
451,420
399,690
=================
=================
The Company has one class of ordinary shares which carry no right to fixed income.
Between 1 April 2011 and 2 June 2011 the Company issued 9,325,000 ordinary shares of 0.04p at prices
between 0.15p and 0.40p per ordinary share for exercise of share options. Further details are included
in note 18 of the financial statements on page 32.
On 12 April 2011 the Company issued 120,000,000 ordinary shares of 0.04p at a price of 0.5p per
ordinary share for working capital purposes.
30
Notes to the Financial Statements - continued
15 CAPITAL RESERVES
Balance at 1 July 2009
Issue of share capital
Share issue costs
Share-based compensation
Balance at 30 June 2010
Issue of share capital
Share issue costs
Share-based compensation
Balance at 30 June 2011
Share premium
account
£
1,755,713
1,123,204
(83,182)
Share-based
compensation
reserve
£
-
-
-
Total
£
1,755,713
1,123,204
(83,182)
-
----------------------
2,795,735
49,877
----------------------
49,877
49,877
----------------------
2,845,612
577,594
(37,500)
-
-
577,594
(37,500)
-
----------------------
3,335,829
====================
21,394
----------------------
71,271
===================
21,394
----------------------
3,407,100
====================
The share premium account consists of proceeds from the issue of shares in excess of their par value
(which is included in the share capital account).
The share-based compensation reserve represents the credit arising on the charge for share options
calculated in accordance with IFRS 2.
16 RETAINED EARNINGS
Balance at 1 July 2009
Loss for the year
Balance at 30 June 2010
Loss for the year
Balance at 30 June 2011
17 CAPITAL COMMITMENTS
At 30 June 2010 and 30 June 2011 the Company had no capital commitments.
£
(2,090,916)
(367,561)
----------------------
(2,458,477)
(644,532)
----------------------
(3,103,009)
====================
31
Notes to the Financial Statements - continued
18 SHARE BASED PAYMENT TRANSACTIONS
The Company operates a share option scheme under the Enterprise Management Initiative Scheme
(“EMI”). The following share options have been granted over ordinary shares of 0.04p each and remain
exercisable under the scheme:
The weighted average share price at the date of exercise of share options during the year was 0.673p
per ordinary share.
Certain performance conditions for EMI share options are unmet at the date of these statements. All
other options are vested in full.
The Company also operates an Unapproved share option scheme. The following share options have been
granted over ordinary shares of 0.04p each and remain exercisable under the scheme:
All performance conditions for Unapproved options have been met and are vested in full.
The fair value of share options awarded during the year was determined using the Black-Scholes pricing
model. In addition to the information disclosed above, the assumptions employed in the pricing model
were as follows – expected volatility: 23%, expected dividends: nil, risk-free interest rate: 3.75% per
annum. Were performance conditions are unmet a probability of success factor has been applied to
such awards.
32
GrantedAwardedExercisedCancelledGrantedExercise priceExpiry dateat 30 June 2010at 30 June 2011pChristophe Chassagnole7,499,453 7,499,453 0.383 06-Sep-17Christophe Chassagnole5,624,590 5,624,590 0.15 18-Dec-18Christophe Chassagnole11,856,584 11,856,584 0.40 28-Feb-20Mark Chadwick24,980,625 24,980,625 0.2705-Dec-20Other staff7,390,000 -3,900,0003,490,000 0.383 06-Sep-17Other staff8,169,484 -2,925,000-1,795,6603,448,824 0.15 18-Dec-18Other staff20,412,619 -2,500,000-7,365,00310,547,616 0.40 28-Feb-20Total60,952,73024,980,625-9,325,000-9,160,66367,447,692in yearGrantedAwardedExercisedCancelledGrantedExercise priceExpiry dateat 30 June 2010at 30 June 2011pPaul Harper2,327,710 2,327,710 0.15 18-Dec-18Paul Harper7,664,541 7,664,541 0.40 28-Feb-20in year
Notes to the Financial Statements - continued
19 FINANCIAL INSTRUMENTS
The Company‟s financial instruments comprise cash and short term deposits. The Company has various
other financial instruments, such as trade debtors and creditors that arise directly from its operations,
which have been excluded from the disclosures other than the currency disclosures.
The main risks arising from the Company‟s financial instruments are interest rate risk, liquidity risk and
foreign currency risk. The policies for managing these are regularly reviewed and agreed by the board.
It is and has been throughout the year under review, the Company‟s policy that no trading in financial
instruments shall be undertaken.
Interest rate risk
The Company finances its operations by cash and short term deposits. The Company‟s policy on interest
rate management is agreed at board level and is reviewed on an ongoing basis.
Other creditors, accruals and deferred income values do not bear interest.
Interest rate profile
The Company had no bank borrowings at the 30 June 2011.
Liquidity risk
The Company seeks to manage financial risk by ensuring that sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably.
Fair values
Fair values of financial instruments equate to the best value as disclosed in the financial information.
There are no material differences between the fair value of financial instruments and the amount at
which they are stated in the financial statements.
20 RELATED PARTY TRANSACTIONS
Remuneration of key management personnel
The remuneration of the directors, who are the key management personnel of the Company, is set out
on page 11.
33
Notice of Annual General Meeting
Notice is hereby given that the annual general meeting (AGM) of Physiomics Plc (the Company) will be held on 18
November 2011 at 10.00am at the offices of Bircham Dyson Bell, 50 Broadway, London SW1H 0BL for the following
purposes
ORDINARY BUSINESS
To consider and, if thought fit, pass the following ordinary resolutions:
1. To receive and adopt the Directors‟ Report and Financial Statements for the year ended 30 June
2011.
2. To re-elect Mark Chadwick who retires pursuant to article 72 of the Articles of Association as a
Director.
3. To re-elect Christophe Chassagnole who retires by rotation under Section 76 and 77 of the Articles
of Association, and who being eligible, offers himself for re-election as Director.
4.
To confirm the appointment of Shipleys LLP as auditors of the Company to hold office until the end
of the next period for appointing auditors under section 485(2) of the Companies Act 2006 (the
2006 Act) and to authorize the Directors to fix their remuneration.
SPECIAL BUSINESS
To consider and, if thought fit, pass the resolutions set out in paragraphs 5 to 7 (inclusive):
Ordinary resolution – power to allot securities
5. That the Directors be and they are generally and unconditionally authorised to exercise all the
powers of the Company to allot shares in the Company, or to grant rights to subscribe for or to
convert any security into shares in the Company (relevant securities), up to an aggregate nominal
amount of £150,000 provided that this authority is for a period expiring at the Company's next AGM
but the Company may before such expiry make offers or agreements which would or might require
relevant securities to be allotted after such expiry and the Directors may allot relevant securities in
pursuance of such offer or agreement notwithstanding that the authority conferred by this
resolution has expired. This authority is in substitution for all previous authorities conferred on the
Directors in accordance with section 80 of the Companies Act 1985 (the 1985 Act) or section 551 of
the 2006 Act, but without prejudice to the allotment of any shares already made or to be made
pursuant to such authorities.
Special resolution – disapplication of pre-emption rights
6. That subject to the passing of the previous resolution the Directors be given the general power to
allot equity securities (as defined by section 560 of the 2006 Act) for cash pursuant to the authority
conferred by the previous resolution as if section 561(1) of the 2006 Act did not apply to any such
allotment, provided that this power shall be limited to the allotment of equity securities:
(a)
in connection with an offer of such securities by way of rights or other pro-rata offer to
holders of ordinary shares in proportion (as nearly as may be practicable) to their respective
holdings of such shares, but subject to such exclusions or other arrangements as the Directors
may deem necessary or expedient in relation to fractional entitlements, record dates or any
legal or practical problems under the laws of any territory, or the requirements of any
regulatory body or stock exchange; and
(b)
otherwise than pursuant to sub-paragraph (a) above up to an aggregate nominal amount of
£150,000;
34
and shall expire on the conclusion of the next AGM of the Company after the passing of this resolution,
save that the Company may before such expiry, make offers or agreements which would or might
require equity securities to be allotted after such expiry and the Directors may allot equity securities in
pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution
has expired.
This resolution revokes and replaces all unexercised powers previously granted to the Directors to allot
equity securities as if either section 89(1) of the 1985 Act or section 561(1) of the 2006 Act did not
apply but without prejudice to any allotment of equity securities already made or agreed to be made
pursuant to such authorities.
Special resolution – adoption of new articles of association
7. That:
7.1 the articles of association of the Company be amended by deleting all the provisions formerly in the
Company‟s memorandum of association which, by virtue of section 28 of the 2006 Act, are treated
as provisions of the Company‟s articles of association; and
7.2 the draft articles of association in the form produced to the meeting and signed by the Chairman
for identification purposes, be adopted as the articles of association of the Company in substitution
for, and to the exclusion of, the existing articles of association of the Company.
By order of the Board
Roger Jones
Company Secretary
11 October 2011
NOTES
1. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those members
registered on the Company's register of members at:
•
•
6.00pm on 16 November 2011; or,
if this Meeting is adjourned, at 6.00pm on the day two business days prior to the adjourned meeting,
shall be entitled to attend and vote at the Meeting.
2.
If you are a member of the Company at the time set out in note 1 above, you are entitled to appoint a proxy to exercise all or
any of your rights to attend, speak and vote at the Meeting and you should have received a proxy form with this notice of meeting.
You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.
3. The return of a completed Proxy Form, other such instrument or any CREST Proxy Instruction (as described in note 11) will not
prevent a shareholder attending the AGM and voting in person if he/she wishes to do so.
4. A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how to
appoint the Chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy
form. If you wish your proxy to speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the
Chairman) and give your instructions directly to them.
5. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You
may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact
the Company.
6. 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.
7. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To
appoint a proxy using the proxy form, the form must be completed, signed and sent or delivered to the Company's Registrars, Capita
Registrars, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU and received no later than 10.00am on 16 November
2011.
35
In the case of a member who is a company, the proxy must be executed under its common seal or signed on its behalf by an officer
of the company or an attorney for the company.
8.
In the case of joint holders the signature of any one holder is sufficient. If more than one joint holder of any share is present at
the meeting personally or by proxy, that one present whose name stands first on the register of members in respect of that share is
alone entitled to vote in respect of that share.
9. To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-
off time for receipt of proxy appointments (see below) also apply in relation to amended instructions; any amended proxy
appointment received after the relevant cut-off time will be disregarded.
Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hard-
copy proxy form, please contact the Company at its registered office.
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of
proxies will take precedence.
10. In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly stating
your intention to revoke your proxy appointment to the Company‟s registered office. In the case of a member which is a company,
the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney
for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy
of such power or authority) must be included with the revocation notice.
The revocation notice must be received by the Company no later than 16 November 2011 at 10.00am.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the
paragraph directly below, your proxy appointment will remain valid.
If you have appointed a proxy and attend the Meeting in person, your proxy appointment will automatically be terminated.
11. CREST members who wish to appoint a proxy or proxies by using the CREST electronic proxy appointment service may do so for
the Meeting and any adjournment of it by using the procedures described in the CREST Manual. In order for a proxy appointment
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 Capita (ID RA10) not later than 48 hours
before the time fixed for the AGM. For this purpose, the time of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Applications Host) from which Capita is able to retrieve the message by enquiry to
CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee
through other means. Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular
messages and normal system timings and limitations will apply in relation to the input of a CREST Proxy Instruction. It is the
responsibility of the CREST member concerned to take such action as shall be necessary to ensure that a message is transmitted by
means of the CREST system by any particular time. 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. In order to be valid, any form of proxy, power of attorney or other authority under which it is signed, or a notarially certified
or office copy of such power or authority, must reach the Company‟s Registrars, Capita Registrars, PXS, The Registry, 34 Beckenham
Road, Beckenham, Kent BR3 4TU not later than 48 hours before the time of the meeting.
13. A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its
powers as a member provided that no more than one corporate representative exercises powers over the same share.
14. You may not use any electronic address provided either in this notice of annual general meeting, or any related documents
(including the chairman's letter and proxy form), to communicate with the Company for any purposes other than those expressly
stated.
15. On 10 October 2011, the Company's issued share capital comprised 1,128,550,074 ordinary shares of 0.04p each. Each ordinary
share carries the right to vote at the AGM and, therefore, the total number of voting rights in the Company on 18 November 2011 is
1,128,550,074 ordinary shares.
16. The Directors' letters of appointment and service contracts will be available for inspection at 50 Broadway, London SW1H 0BL
from 12 October 2011 until the time of the Meeting.
36
Appendix
Explanatory notes of principal changes to the Company’s articles of association by the
adoption of new articles of association
At the Company‟s AGM on 18 November 2011 shareholders will be asked to approve a
resolution to adopt new articles of association (the New Articles). These are intended to
replace the Company‟s current articles of association (the Current Articles). The main reason
for the New Articles is to take account of changes in UK company law brought about by the
Companies Act 2006 (the 2006 Act) which is now fully in force and replaces the Companies
Act 1985 (the 1985 Act). The New Articles will come into effect once the resolution is
passed.
The Company is proposing the adoption of the New Articles rather than amendments to the
Current Articles due to the extent of the changes. The principal changes being proposed in
the New Articles are summarised below. Other changes, which are of a minor, technical or
clarifying nature, and also some more minor changes which merely reflect changes made by
the 2006 Act, have not been noted.
A copy of the New Articles and a copy of the Current Articles marked up to show the changes
are available for inspection at the Company‟s registered office and at www.physiomics-
plc.com in the “Investors” section. It will also be available at the Annual General Meeting.
Authorised Share Capital
The 1985 Act required a company limited by shares to state in its memorandum of association
the amount of its share capital with which the company proposed to be registered and the
number and nominal value of the shares into which it was divided (known as its authorised
share capital). The authorised share capital could subsequently be increased at any time by
an ordinary resolution of the shareholders.
The 2006 Act abolishes the requirement for a company to have an authorised share capital.
However, a company remains restricted in its ability to issue shares as shareholder consent is
still necessary to (i) give the directors authority to allot a fresh issue of shares and (ii)
disapply statutory pre-emption rights. The New Articles reflect the changes made by the 2006
Act.
Timing of Annual General Meeting
The Current Articles require the Company to hold an Annual General Meeting within 15
months after the date of the previous Annual General Meeting. The 2006 Act requires the
Company to hold its Annual General Meeting within six months from the day following the
Company‟s accounting reference date in each year. The New Articles reflect the requirements
of the 2006 Act.
Transfer of Shares
Under the 2006 Act, a company must either register a transfer of shares or give the transferee
notice of, and reasons for, its refusal to register a transfer. Any registration of transfer or
notice must be made or given as soon as practicable and in any event at the earlier of either
the time required by the Rules of the London Stock Exchange or within two months from the
37
Appendix - continued
date that the transfer is lodged with the Company. The New Articles reflect these
requirements.
Types of Meetings
The Current Articles refer to Annual General Meetings and Extraordinary General Meetings.
The concept of the Extraordinary General Meeting has not been retained by the 2006 Act.
Pursuant to the 2006 Act any general meeting other than an Annual General Meeting shall be
referred to as a General Meeting. The New Articles reflect this amendment.
Notice of General Meetings
The provisions in the New Articles dealing with the convening of General Meetings and the
length of notice required to convene General Meetings has been amended to reflect the
requirements of the 2006 Act. In particular, a General Meeting (other than an Annual General
Meeting) to consider a special resolution can be convened on 14 days‟ notice whereas
previously 21 days‟ notice was required.
Conflicts of Interest
Pursuant to the 2006 Act, from 1 October 2008, a director must avoid a situation where he
has, or can have, a direct or indirect interest that conflicts, or possibly may conflict with a
company‟s interest. The requirement is very broad and could apply, for example, if a director
becomes a director of another company or a trustee of another organisation where such
appointment conflicts or possibly may conflict with a company‟s interest. The 2006 Act allows
directors of public companies to authorise conflicts and potential conflicts, where
appropriate, where a company‟s Articles of Association contain a provision to this effect. The
New Articles give the directors authority to approve such situations.
There are safeguards which will apply when directors decide whether to authorise a conflict
or potential conflict. First, any directors who do not have an interest in the matter being
considered will be able to take the relevant decision, and secondly, in taking the decision the
directors must act in good faith and in a way in which they consider will be most likely to
promote the company‟s success. The directors will be able to impose limits or conditions
when giving such authorisation if they think this is appropriate.
38
Form of Proxy
I/We (block capital)……………………………………………………………………………………………………………….……………………….…………….……………..…….……………..………..……,
of (block capital)…………………………………………………………………………………………………………………………………………………………………………………….……………………………..
Being a member/members of Physiomics Plc hereby appoint the chairman of the meeting or (see note 1 and 2)
………………………………………………………………………………………………………………………………………in respect of ………………………………………………………Ordinary Shares
□ (Please indicate here with an „X‟ if this appointment is one of multiple appointments being made.)
as my/our proxy to attend and on a poll to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held 18
November 2011 at 10.00am and at any adjournment thereof. I/we direct, by inserting a cross or other mark in the appropriate box below, how
my/our votes are to be cast on each of the resolutions to be proposed at the meeting as indicated below. If no indication is given, the proxy will
exercise his/her discretion as to how he/she votes and as to whether or not he/she abstains from voting. Please complete, sign and date this form
where indicated below (see notes below).
ORDINARY RESOLUTIONS
1. To receive and adopt the Directors' report and financial statements for the year ended 30 June 2011.
2. To re-elect Mark Chadwick as a Director.
3. To re-elect Christophe Chassagnole as a Director.
4. To confirm the appointment of Shipleys LLP as auditors of the Company to hold office until the end of the next
period for appointing auditors and to authorise the Directors to fix their remuneration.
5. That the Directors be and they are generally and unconditionally authorised to exercise all the powers of the
Company to allot relevant securities up to an aggregate nominal amount of £150,000.
SPECIAL RESOLUTIONS
6. That the Directors be given the general power to allot equity securities for cash pursuant to the authority
conferred by the previous resolution as if section 561(1) of the Act did not apply to any such allotment.
7. To adopt new articles of association in substitution for, and to the exclusion of, the existing articles of
association.
For
Against Withheld
Signature(s)……………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………….
Date …………………………………………………………………………………………………….………… 2011
NOTES
1. As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at a general
meeting of the Company. You can only appoint a proxy using the procedures set out in these notes.
2. Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy and attend the
meeting in person, your proxy appointment will automatically be terminated.
3. A proxy does not need to be a member of the Company but must attend the meeting to represent you. To appoint as your proxy a person other
than the Chairman of the meeting, insert their full name in the box. If you sign and return this proxy form with no name inserted in the box, the
Chairman of the meeting will be deemed to be your proxy. Where you appoint as your proxy someone other than the Chairman, you are responsible
for ensuring that they attend the meeting and are aware of your voting intentions. If you wish you proxy to make any comments on your behalf, you
will need to appoint someone other than the Chairman and give them the relevant instructions directly.
4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint
more than one proxy to exercise rights attached to any one share. To appoint more than one proxy you may photocopy this form. Please indicate the
proxy holder‟s name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed
the number of shares held by you). Please also indicate if the proxy is one of multiple instructions being given.
5. To direct your proxy how to vote on the resolutions mark the appropriate box with an 'X'. To abstain from voting on a resolution, select the
relevant "Vote withheld" box. 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. Any alteration to the form of proxy should be initialled.
7. All forms of proxy should be signed by the appointer or his attorney duly authorised in writing or, if the appointer is a Company, either under seal
or under hand of a duly authorised officer or attorney of the Company and returned in the same envelope.
8. In the case of joint holders the signature of any one holder is sufficient. If more than one joint holder of any share is present at the meeting
personally or by proxy, that one present whose name stands first on the register of members in respect of that share is alone entitled to vote in
respect of that share.
9. To be valid this form of proxy and any power of attorney or other authority under which it is signed or a notarially certified copy of such power of
authority must be lodged at the offices of the Company's Registrars, Capita Registrars, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent BR3
4TU not later than 48 hours before the time of the meeting.
10. CREST members should use the CREST electronic proxy appointment service and refer to Note 10 of the Notice of Annual General Meeting in
relation to the submission of a proxy appointment via CREST.
11. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take
precedence.
12. For details of how to change your proxy instructions or revoke your proxy appointment see the notes to the notice of meeting.
13. You may not use any electronic address provided in this proxy form to communicate with the Company for any purposes other than those
expressly stated.
39