Physiomics Plc
ANNUAL REPORT AND FINANCIAL STATEMENTS
For the Year Ended
30 June 2016
Company Registration No. 4225086
This page is intentionally blank
2
Contents
Officers and Professional Advisors
Chairman’s Statement
Chairman and Chief Executive Officer’s Statement
Strategic Report
Directors’ Report
Independent Auditors’ Report to the Shareholders of Physiomics
Plc
Income Statement for the year ended 30 June 2016
Statement of Comprehensive Income
Statement of Financial Position as at 30 June 2016
Statement of Changes in Equity for the year ended 30 June 2016
Cash Flow Statement for the year ended 30 June 2016
Notes to the Financial Statements
Page
4
5
6
8
11
17
19
20
21
22
23
24
3
Officers and Professional Advisors
DIRECTORS
Dr P B Harper
Dr J S Millen
Dr C D Chassagnole
SECRETARY
Strategic Finance Director Limited
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
Taylor Vinters LLP
Merlin Place,
Milton Road,
Cambridge
CB4 0DP
Chairman
Chief Executive Officer
Chief Operating Officer
REGISTRAR
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 2YU
NOMINATED ADVISOR
WH Ireland Limited
11 St James's Square
Manchester
M2 3WH
BROKER
Hybridan LLP
20 Ironmonger Lane
London
EC2V 8EP
Physiomics Plc is a limited liability company incorporated in England & Wales and domiciled in United
Kingdom.
4
Chairman’s Statement
Summary of Results in the year ended 30 June 2016
•
•
•
•
The turnover of the Company increased 26% to £297,120 (2015: £235,486)
The loss after net operating expenses (excluding share-based payments and operating
exceptional costs) decreased 6% to £371,381 (2015: £395,329)
The operating loss increased 4% to £431,561 (2015: £414,755)
On 30 June 2016, the surplus of shareholders’ funds was £204,153 (2015: £325,617)
This year, Physiomics continued to build out its client base and extend its modelling and
simulation services relationships with key existing clients. In addition, Physiomics appointed
a new Chief Executive Officer with significant deal making experience.
In summary the Company has:
• Appointed Professor Mark Middleton to our Scientific Advisory Board. Professor Middleton
is Lead Cancer Clinician for the Oxford University Hospitals NHS Trust and deputy director
of the Cancer Research UK Oxford Centre;
•
Signed a contract with a new speciality pharma customer to carry out PK/ PD modelling
and later in the year announced a first extension to this contract;
• Won a further large pharma customer (our 4th) for Virtual Tumour Pre-Clinical;
•
Signed three further projects as part of an on-going collaboration with a global pharma
which we first started working for in 2012;
• Appointed Dr Jim Millen as Chief Executive;
• Engaged Anthony Clayden, of Strategic Finance Director Limited, as Head of Finance and
Company Secretary.
After the end of the period the Company also:
• Completed the placing of 2,220,000,000 new ordinary shares of 0.004p each at a price of
0.025p per share to raise a total of £555,000 gross
Dr Paul Harper, Non-Executive Chairman
5
Chairman and Chief Executive Officer’s Statement
Introduction
The Company has undergone a re-structuring as part of developing a new strategy. The Chief
Executive of long-standing, Dr Mark Chadwick, was replaced by Dr Jim Millen. Dr Millen brings
new skills and contacts from his long and recent experience in global pharmaceutical
companies – the target market for our Virtual Tumour product. He adds business
development to scientific and clinical skills which he has already begun to leverage by
successfully reactivating one dormant client and reaching out to contacts at a number of
other potential new clients.
During the recent placing, we discussed with investors the alternatives of either focusing
entirely on funding the core modelling and simulation business, or doing this in combination
with the acquisition of the Company’s own drug development pipeline. There was an
appetite for both strategies but with a bias in favour of exploiting our modelling and
simulation capabilities in the near term. Virtual Tumour Clinical, which the Company has
already deployed to a major global pharma client, was of particular interest.
During the period, Physiomics significantly extended its relationship with one of its longest
standing big pharma clients by signing three further extensions of a contract to provide
services related to its Virtual Tumour Pre-Clinical model. We believe that the validation of
our technology signalled by these contract extensions has played a significant role in enabling
the Company to broaden out its customer base by signing two further clients, one big pharma
and one speciality pharma.
(i)
Focus on maximising modelling and simulation revenues from Virtual Tumour
Clinical
The Company has significant capabilities to support the R&D process from candidate selection
through to early clinical trials and has a number of product and service offerings including
DrugCard (a cancer therapeutics and drug database) and EasyAP (predicting cardiac toxicity).
Nevertheless, its main revenue driver has been the Virtual Tumour (“VT”) predictive software
as evidenced by the increase in revenue in this financial year compared with prior years.
To maximise revenue growth in the short to medium term, the Company intends to focus on
deepening its relationship with its first major VT Clinical client, moving other existing clients
up the value chain from VT Pre-Clinical to VT Clinical and acquiring new clients who could
benefit from the spectrum of its VT modelling services.
It is intended that although the focus of our business development efforts will be on VT, other
services will be sold to clients when there is a clear need.
(ii)
Continue to develop Virtual Tumour to address the immuno-oncology market
With the continuing focus of many R&D based companies on immuno-oncology targets and
drugs, we aim to build on the work we have done to address this growing market. As stated
in last year’s annual report, the Company has already developed a module for Virtual Tumour
that has been used to make successful predictions of the effect of immuno-oncology drugs in
the pre-clinical setting. In the forthcoming year, we intend to explore the suitability of our
technology to make similar predictions for early immuno-oncology clinical trials in order to
expand our service offering further
6
Chairman and Chief Executive Officer’s Statement - continued
(iii)
Personalised medicine software
Physiomics is assessing the feasibility of developing a software tool to determine which
cancer treatment to provide to which groups of patients based on individual patient data. The
software would use as its inputs pharmacological information about the drugs coupled with
physiological, genomic, and metabolic information about the patient. The focus on
forecasting would be on which treatment and schedule are likely to lead to an increase in
survival. The Company is in talks with leading clinicians and collaborators regarding the
required data and is seeking grant funding to develop a prototype software tool. Further
updates will be provided in due course as appropriate.
(iv)
Acquisition
Following feedback from investors during our September 2016 placing process, many of whom
suggested that that the Company should focus on its core modelling and simulation business in
the near term, the Company decided not to proceed with the proposed acquisition of BioMoti
Limited and will instead concentrate on developing its business pipeline.
Dr Jim Millen, Chief Executive Officer
Dr Paul Harper, Non-Executive Chairman
7
Strategic Report
Our strategy
Physiomics supports the development of client drugs primarily on a fee for service basis but is
also open to risk sharing approaches. The Company’s main revenue drivers are the Virtual
Tumour Pre-Clinical and (increasingly) Virtual Tumour Clinical models. However, we also offer
modelling services in support of other stages and activities of drug discovery and development
(for example, the prediction of drug cardiotoxicity) as well as bespoke modelling, mainly
where required by existing commercial clients.
The Company has also started to explore the potential of personalised medicine. We have
strengthened our team by building up a group of external experts, some of whom form an
Advisory Board. Their role is to help build the scientific and technical bases of the Company
and to enable us to identify opportunities and exploit them successfully in a manor most
suited to our business.
Finally, the Company continues to seek possible acquisition or collaboration opportunities in
oncology drug development where a combination of our technology and a third party asset
could be synergistic.
Physiomics services and activities are summarised as follows:
• Modelling in oncology:
o Virtual Tumour:
to direct and optimise candidate selection;
saves money and time by reducing number of small animal (usually mouse
xenograft) studies required;
o Virtual Tumour Clinical:
to optimise the design of drug regimes for clinical trials;
to attempt to identify the dosing regime of drug combinations that
optimises efficacy and hence maximises the value of the program;
• Personalised medicine:
o New model in development to forecast the optimal drug regimen for treatment of
patients on an individual basis
• Drug molecule parameters:
o Models to predict potential cardiotoxicity as an aid to optimisation of drug design
and selection of viable candidate compounds;
• Acquisition or collaboration:
o
Identification of therapeutic oncology programs owned by third parties where the
Company’s technology could significantly enhance their value;
o As noted elsewhere, the Company’s strategy in this area will be reviewed in the
second half of its financial year.
8
Strategic Report - continued
Business review
The Company is principally engaged in providing services to pharmaceutical companies in the
areas of outsourced systems and computational biology.
•
•
•
•
The turnover of the Company increased 26% to £297,120 (2015: £235,486)
The loss after net operating expenses (excluding share-based payments and operating
exceptional costs) decreased 6% to £371,381 (2015: £395,329)
The operating loss increased 4% to £431,561 (2015: £414,755)
On 30 June 2016, the surplus of shareholders’ funds was £204,153 (2015: £325,617).
Strategic and financial performance indicators
The Company is focused on the creation of long-term value for its shareholders.
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 Company faces many risks on the way to building shareholder value. The process of
winning major contracts can be protracted and the Company operates in a competitive
environment. This means the Company often faces significant uncertainties in its cash flow.
Addressing the risks
The board addresses the financial uncertainties by monitoring of actual performance against
internal projections and responding to significant variances. Personnel resources are a
combination of full-time and contractors, many of the latter being ex-employees who are
familiar with the models and the clients. We can draw on this flexible resource as necessary.
Interest rate risk
The Company finances its operations by cash and short term deposits.
In the current low interest rate environment, interest rate risk management in respect of the
Company’s current cash balances is not a primary focus. Instead, the Company seeks to
ensure cash availability for working capital purposes and to reduce credit risk arising from
cash and short term deposits with banks and other financial institutions by holding deposits
with an institution with a medium grade credit rating or better.
Other creditors, accruals and deferred income values do not bear interest.
Interest rate profile
The Company had no bank borrowings at the 30 June 2016.
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.
9
Strategic Report - continued
Fair values
There are no material differences between the fair value of financial instruments and the
amount at which they are stated in the financial statements.
Regulatory risk
There is a risk that the business model is impacted by future changes in regulations in the
medical and pharmaceutical industry. Major agencies such as the FDA are actively promoting
the use of system modelling and issue advisory papers which set out their thinking. The
Company regularly reviews activity in this area through proactive discussions with key
industry officials, professional advisors and regulatory bodies where appropriate. The
Company’s customers are predominately pharmaceutical companies who require outsourced
systems and computational biology services.
Skills risk
The success and future growth of the Company is in part dependent on the continued
performance and delivery of certain Directors, managers and key staff and contractors.
The Company seeks to recruit, develop, and manage talent in order to meet the continuing
demand for innovative and leading edge developments in specialised modelling solutions
within the pharmaceutical industry. The ability of the Company to attract and retain highly
skilled employees requires the Company to offer and maintain competitive employment
packages and personal development opportunities. It is considered essential to implement a
system of succession planning processes to ensure key roles are identified and career
development opportunities established. The Company therefore invests in the recruitment
of highly skilled individuals and operates a proactive system of training and performance
management across the business. The Company has built a network of contracted specialists
who can contribute a unique combination of skills as required.
Systems & infrastructure
The Company is dependent on its IT technical infrastructure and systems for the management
of its core operations and research and development programmes. Continuity of access to
data and integrity of data is maintained through the implementation of a system of data
storage, backup and monitoring of key coding and modelling data.
By order of the board
Dr Paul Harper
Chairman
27 October 2016
10
Directors’ Report
The Directors submit their report and the audited financial statements of Physiomics Plc for the year
ended 30 June 2016.
Results
There was a loss for the year after taxation amounting to £378,697 (2015 loss: £357,656). 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.
Directors
The directors who served during the year were:
Dr P B Harper
Dr J S Millen
Dr M P Chadwick (resigned 25 October 2016)
Dr C D Chassagnole
Statement of 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 financial statements in accordance with International
Financial Reporting Standards as adopted by the European Union. Under company law the Directors
must not approve the financial statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Company and the financial performance and cash flows of the Company for
that year.
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 in preparation of the financial statements the Company has complied with
IFRS as adopted by the EU, subject to any material departures disclosed and explained in
the financial statements; and
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 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
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.
Legislation in the United Kingdom governing the preparation and dissemination of the financial
statements may differ from legislation in other jurisdictions.
11
Directors’ Report - continued
Substantial shareholdings
The Company has been informed that on 26 October 2016 the following shareholders held substantial
holdings in the issued ordinary shares of the Company.
Number of Ordinary shares
Holding %
W B Nominees Limited
Barclayshare Nominees Limited
HSDL Nominees Limited
Hargreaves Lansdown (Nominees)
SVS (Nominees) Limited
TD Direct Investing Nominees
Peel Hunt Holdings Limited
Investor Nominees Limited
Nomura PB Nominees Limited
HSBC Client Holdings Nominee (UK)
661,670,000
631,458,960
573,690,107
488,804,396
476,500,336
435,382,619
357,634,865
278,271,527
260,000,000
185,024,920
11.6%
11.1%
10.1%
8.6%
8.4%
7.6%
6.3%
4.9%
4.6%
3.2%
No other person has reported an interest of more than 3% in the ordinary shares.
On 26 October 2016, Dr Paul Harper held 52,570,787 ordinary shares, Dr Mark Chadwick (resigned 25
October 2016) held 3,970,151 ordinary shares and Dr Christophe Chassagnole held 15,189,740 ordinary
shares. The holding percentages were 0.92%, 0.07% and 0.26% respectively.
Directors’ remuneration
Details of Directors’ remuneration in the year ended 30 June 2016 is set out below:
Emoluments
Benefits
£
35,000
26,667
60,479
£
-
204
611
Pension
Contributions
£
Total
2016
£
Total
2015
£
-
-
35,000
35,000
26,871
-
3,030
64,120
64,603
Dr P B Harper
Dr J S Millen
Dr C D Chassagnole
Dr M P Chadwick
95,800
1,081
-
96,881
112,596
Total
217,946
1,896
3,030
222,872
212,199
_________
______
________
_______
_______
12
_________
______
________
_______
_______
13
Directors’ Report - continued
Post balance sheet events
The Company completed a successful placing on the 21 September 2016, raising £550,000 gross.
Statement as to disclosure of information to auditors
The Directors in office on 27 October 2016 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 fulfil the main operational roles in the Company,
and a non-executive Chairman. From 25 April 2016 until 25 October 2016, Dr Mark Chadwick also served
as a non-executive Director following his resignation as Chief Executive. 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.
Accountability
The board endeavours to present a balanced and comprehensible assessment of the Company’s situation
and prospects
interim reports, price-sensitive
announcements, reports to regulators and information supplied to comply with statutory requirements.
its published statements,
in all of
including
The board reviews the independence and objectivity of the external auditors, as well as the amount of
non-audit work undertaken by Shipleys LLP to satisfy itself 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.
14
Directors’ Report - continued
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 the CEO,
the Company Secretary and is chaired by the Company Chairman. It meets at least once 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 shareholders. These are based on
the achievement of both scientific and commercial milestones while taking into 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, responsibilities and disclosure
After making appropriate enquiries, the Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the financial statements.
Internal controls and risk management
The board is responsible for the Company’s system of internal control and risk management and for
reviewing its effectiveness. 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 for the board to review and take
appropriate action.
Annual General Meeting
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.
The Annual General Meeting of the Company will be held at the offices of Physiomics plc, The
Magdalen Centre, Oxford Science Park, Oxford OX4 4GA at 10.00 am on Friday 16 December 2016.
By order of the board
Dr Paul Harper
15
Chairman
27 October 2016
16
Independent Auditors’ Report to the Shareholders of Physiomics Plc
We have audited the financial statements of Physiomics Plc for the year ended 30 June 2016 which
comprise the income statement, the statement of comprehensive income, the statement of financial
position, 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 and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board's (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. In addition, we read all the
financial and non-financial information in the Annual Report to identify material inconsistencies with
the audited financial statements and to identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material misstatements or inconsistencies we consider the
implications for our report.
Opinion on financial statements
In our opinion the financial statements:
•
•
give a true and fair view of the state of the Company's affairs as at 30 June 2015 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; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
17
Independent Auditors’ 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 strategic report and the Directors' report for the financial
year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires
us to report to you if, in our opinion:
•
•
•
adequate accounting records have not been kept, 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 are not made; or
• we have not received all the information and explanations we require for our audit.
Joseph Kinton (senior statutory auditor)
For and on behalf of Shipleys LLP statutory auditor
10 Orange Street
Haymarket
London
WC2H 7DQ
27 October 2016
18
Income Statement for the year ended 30 June 2016
Year ended
Year ended
Notes
30-Jun-16
30-Jun-15
Revenue
Net operating expenses
Share-based compensation
Operating exceptional costs
Operating loss
Presented as:
Loss after net operating expenses
Share-based compensation
Operating exceptional costs
Operating loss
Finance income
Finance costs
£
1, 2
297,120
(668,501)
(37,233)
(22,947)
£
235,486
(630,815)
(19,426)
-
(431,561)
(414,755)
(371,381)
(37,233)
(22,947)
(395,329)
(19,426)
-
(431,561)
(414,755)
143
(8)
304
-
17
3
3
3
17
3
4
Loss before taxation
(431,426)
(414,451)
UK corporation tax
6
52,729
56,795
Loss for the year attributable to equity
shareholders
Loss per share (pence)
Basic and diluted
(378,697)
(357,656)
7
(0.013) p
(0.017) p
19
Statement of Comprehensive Income
Net loss for the year
Other comprehensive income
30-Jun-16
30-Jun-15
£
£
(378,697)
(357,656)
-
-
Total comprehensive (expense) for the year
(378,697)
(357,656)
Attributable to:
Equity shareholders
(378,697)
(357,656)
20
Statement of Financial Position as at 30 June 2016
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Current assets
Trade and other receivables
Taxation recoverable
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Total liabilities
Net assets
Capital and reserves
Share capital
Capital reserves
Retained earnings
Equity shareholders' funds
Notes
9
10
11
Year ended
30-Jun-16
£
Year ended
30-Jun-15
£
2,381
1,557
1
3,939
107,856
52,606
138,910
299,372
7,025
2,242
1
9,268
47,851
55,000
266,746
369,597
303,311
378,865
11,12
(99,158)
(53,248)
(99,158)
(53,248)
204,153
325,617
13
14
15
1,032,663
4,476,621
(5,305,131)
204,153
992,663
4,259,388
(4,926,434)
325,617
The financial statements were approved by the Board of Directors and authorised
for issue on 27 October 2016 and are signed on its behalf by:
Dr Paul Harper
Chairman
21
Statement of Changes in Equity for the year ended 30 June 2016
Share
Share-based
Total
Share
premium
compensation
Retained
shareholders'
capital
account
reserve
earnings
£
£
£
£
funds
£
At 1 July 2014
687,663
3,925,213
92,389
(4,568,778)
136,487
Share issue (net of costs)
305,000
222,360
Loss for the year
Share-based compensation
-
-
-
-
-
-
-
527,360
(357,656)
(357,656)
19,426
-
19,426
At 30 June 2015
992,663
4,147,573
111,815
(4,926,434)
325,617
Share issue (net of costs)
40,000
180,000
Loss for the year
Share-based compensation
-
-
-
-
-
-
37,233
-
(378,697)
-
220,000
(378,697)
37,233
At 30 June 2016
1,032,663
4,327,573
149,048
(5,305,131)
204,153
22
Cash Flow Statement for the year ended 30 June 2016
Cash flows from operating activities:
Operating loss
Amortisation and depreciation
Share-based compensation
Decrease in receivables
Decrease in payables
Year ended
30-Jun-16
£
Year ended
30-Jun-15
£
(431,561)
6,439
37,233
(60,005)
45,910
(414,755)
6,616
19,426
3,725
(54,458)
Cash generated from operations
(401,984)
(439,446)
UK corporation tax received
Interest paid
55,123
(8)
46,795
-
Net cash generated from operating activities
(346,869)
(392,651)
Cash flows from investing activities:
Interest received
Sale of non-current assets
Purchase of non-current assets
Net cash received by investing activities
143
725
(1,835)
(967)
304
-
(625)
(321)
Cash outflow before financing
(347,836)
(392,972)
Cash flows from financing activities:
Issue of ordinary share capital (net of expenses)
220,000
527,360
Net cash from financing activities
220,000
527,360
Net increase / (decrease) cash and cash equivalents
(127,836)
134,388
Cash and cash equivalents at beginning of year
266,746
132,358
Cash and cash equivalents at end of year
138,910
266,746
23
Notes to the Financial Statements
Basis of preparation
The financial statements of Physiomics Plc have been prepared in accordance with applicable law and
International Financial Reporting Standards incorporating International Accounting Standards and
Interpretations (collectively “IFRS”) as endorsed by the European Union.
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 services associated with outsourced systems and computational biology services to
pharmaceutical companies.
Revenue from the provision of the principal activities is recognised by reference to the stage of
completion of the transaction at the balance sheet date where the amount of revenue can be measured
reliably and sufficient work has been completed with certainty to ensure that the economic benefit will
flow to the Company.
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.
Going concern
The accounts have been prepared on the going concern basis. The Company primarily operates in the
relatively defensive pharmaceutical industry which we expect to be less affected by current economic
conditions, including the potential consequences of Brexit, compared to other industries.
The Company had £138,910 of cash and cash equivalents as at 30 June 2016 (2015 £266,746). After the
year end on 21 September 2016, the Company completed a placing raising a total of £555,000 gross
proceeds.
The board operates an investment policy under which the primary objective is to invest in low-risk cash
or cash equivalent investments to safeguard the principal. The Company’s projections, taking into
account anticipated revenue streams, show that the Company has sufficient funds to operate for the
foreseeable future.
After reviewing the Company’s projections, the Directors believe that the Company is adequately
placed to manage its business and financing risks successfully despite the current uncertain economic
outlook. Accordingly, they continue to adopt the going concern basis in preparing the annual report and
accounts.
24
Notes to the Financial Statements - continued
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.
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.
25
Notes to the Financial Statements - continued
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position 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.
Government Grants
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 the vesting period. Fair value is measured by use of a
Black-Scholes 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 temporary 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. Temporary 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 temporary differences can be deducted. Deferred tax is measured
at the average tax rates that are expected to apply in the periods in which the temporary differences
are expected to reverse.
26
Notes to the Financial Statements – continued
Adoption of international accounting standards
No Standards or Interpretations adopted in the year had any material impact on the financial
statements of the Company.
The following Standards and Interpretations were issued with an effective date after the date of these
financial statements. These have not been applied as they are not yet effective or endorsed.
Effective for accounting
periods starting on or after
1 January 2018
1 January 2018
1 January 2019
IFRS 9
IFRS 15
IFRS 16
Financial Instruments
IFRS 9 replaces the existing guidance in IAS 39 Financial
Instruments Recognition and Measurement. It includes
revised guidance on the classification and measurement
of financial instruments.
Revenue from contracts with customers
IFRS 15 establishes a comprehensive framework for
determining whether, how much and when revenue is
recognised. It replaces existing revenue recognition
guidance, including IAS 18 Revenue, IAS 11 Construction
Contracts and IFRIC 13 Customer Loyalty Programmes.
Leases
IFRS 16 replaces IAS 17 Leases. It eliminates the
classification of leases as either operating leases or
finance leases. Any leases with more than 12 months’
term are to be recognised as a lease asset on the
balance sheet and the related future lease obligations
as a liability.
The Directors anticipate that the adoption of these Standards and Interpretations in future period will
have no material impact on the Company’s financial statements.
27
Notes to the Financial Statements - continued
1 CRITICAL ACCOUNTING ESTIMATES AND AREAS OF JUDGEMENT
Revenue for projects started and completed during the financial year is recognised in full during the
year. Revenue from a project which commences in one financial year and is completed in a subsequent
financial year is recognised over the life of the project based on the expected period to completion as
anticipated at each balance sheet date less what has already been recognised during a previous
financial period or periods.
There were no other 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 LOSS
Operating loss is stated after charging
Research and development
Current year expenditure
Depreciation charge for the year - Owned assets
Amortisation charge for the year
Difference on foreign exchange
2016
£
2015
£
165,516
168,117
1,795
4,644
1,972
4,644
(118)
(7,773)
Fees paid to the Company’s auditor, refer to below
13,500
14,975
Operating exceptional costs, refer to below
22,947
=================
-
=================
Amounts payable for both audit and non-audit
services
Fees payable for the audit of the Company’s
financial statements
Payable to:
Shipleys LLP
10,000
Taxation compliance services
Shipleys LLP
-
Audit-related assurance services
Shipleys LLP
3,500
10,000
4,975
-
-------------------------
13,500
=================
-------------------------
14,975
=================
28
Notes to the Financial Statements - continued
3 OPERATING LOSS (CONTINUED)
Operating exceptional costs comprise due diligence and other legal and professional costs in relation to
the anticipated acquisition of Biomoti Limited. After the year end, the Board decided not to proceed
with this acquisition.
4 FINANCE INCOME
Bank interest receivable
5 STAFF COSTS
Staff costs, including Directors’ remuneration during the year:
Fees, wages and salaries
Social security costs
Other pension and insurance benefit costs
2016
£
143
=================
2015
£
304
=================
2016
£
2015
£
344,095
32,889
3,030
333,058
31,035
3,030
------------------------- ------------------------------------
367,123
================ ================
380,014
Average number of employees including Directors
6
================= ================
6
Details of the remuneration of Directors are included in the Directors’ report on page 12.
29
Notes to the Financial Statements - continued
6 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
2016
£
2015
£
52,606
55,000
123
1,795
------------------
------------------
52,729
=============
56,795
=============
The tax assessed for the period is lower than the standard rate of corporation tax in the UK.
The temporary differences are explained below:
Loss on ordinary activities before taxation
Tax on loss on ordinary activities at standard corporation tax rate of 20%
(2015: 20%)
Research and Development enhancement
Expenses not deductible for tax purposes
Depreciation in excess of capital allowances
Adjustment to prior year Research and Development credit
Unrelieved tax loss carried forward
Total current tax
2016
£
(431,426)
=============
2015
£
(414,451)
=============
(86,285)
(82,890)
(21,880)
(21,500)
7,748
260
3,962
275
(123)
(1,795)
47,551
45,153
--------------------
(52,729)
==============
-----------------
(56,795)
===============
At 30 June 2016 tax losses of approximately £3,636,770 (2015: £3,400,000) remained available to carry
forward against future taxable trading profits. These amounts are in addition to any amounts
surrendered for Research and Development tax credits. There is an unrecognised deferred tax asset of
£727,354 (2015: £679,803).
30
Notes to the Financial Statements - continued
7 LOSS PER SHARE
Calculations are based on the losses and number of shares
below:
Loss on ordinary activities after tax
Weighted average no of ordinary shares:
At 1 July
Effect of Shares issued in the year
Weighted average number of ordinary shares in the year for
basic and diluted loss per share
Basic and diluted loss per share
2016
£
(378,697)
==============
No.
2015
£
(357,656)
==============
No.
542,786,885
2,481,657,919 1,719,157,921
408,321,917
---------------------------
-
-------------------------------
3,014,444,804 2,127,479,838
======================
=====================
(0.017) p
(0.013) p
The loss attributable to equity holders (holders of ordinary shares) of the Company for the purpose of
calculating the fully diluted loss per share is identical to that used for calculating the loss per share.
The exercise of share options would have the effect of reducing the loss per share and is therefore
anti-dilutive under the terms of IAS 33 ‘Earnings per Share’.
8 FINANCIAL INSTRUMENTS RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION
Current financial assets
Trade and other receivables
Cash and cash equivalents
Current financial liabilities
Trade and other payables
Held for trading
2016
£
2015
£
160,462
138,910
----------------------
299,372
===============
102,851
266,746
----------------------
369,597
==================
99,158
-----------------------
99,158
===============
53,248
----------------------
53,248
==================
31
Patents, trade marks and
software
£
75,646
-
------------------------
75,646
-
------------------------
75,646
------------------------
63,977
4,644
------------------------
68,621
4,644
------------------------
73,265
------------------------
2,381
------------------------
7,025
------------------------
Notes to the Financial Statements - continued
9 INTANGIBLE FIXED ASSETS
Cost
At 1 July 2014
Additions
At 30 June 2015
Additions
At 30 June 2016
Amortisation
At 1 July 2014
Provided in the year
At 30 June 2015
Provided in the year
At 30 June 2016
Net book value
30 June 2016
30 June 2015
32
Notes to the Financial Statements - continued
10 PROPERTY PLANT AND EQUIPMENT
Cost
At 1 July 2014
Additions
Disposals
At 1 July 2015
Additions
Disposals
At 30 June 2016
Depreciation
At 1 July 2014
Provided in the year
Disposals
At 1 July 2015
Provided in the year
Disposals
At 30 June 2016
Net book value
30 June 2016
30 June 2015
11 OTHER FINANCIAL ASSETS AND LIABILITIES
Trade and other receivables are as follows:
Trade receivables
Prepayments and accrued income
Other receivables
Trade and other payables are as follows:
Amounts payable relating to the purchase of goods and services
Other payables
Accruals and deferred income
Fixtures and
computers
£
53,030
625
-
------------------------
53,655
1,835
(19,012)
--------------------------
36,478
--------------------------
49,441
1,972
-
------------------------
51,413
1,795
(18,287)
------------------------
34,921
------------------------
1,557
------------------------
2,242
------------------------
2016
£
2015
£
2,563
74,398
30,895
------------------------
107,856
=============
38,581
11,604
48,973
-------------------------
99,158
==============
-
37,183
10,668
------------------------
47,851
================
21,504
10,125
21,619
-------------------------
53,248
================
33
Notes to the Financial Statements - continued
12 LOANS
There were no loans with Directors at 30 June 2016 and 30 June 2015.
13 SHARE CAPITAL
The Ordinary share capital of the Company comprises:
Allotted, called up and fully
paid:
Ordinary shares of 0.04p each
as at 1 July
Effect of share split on 14
December 2015 to deferred
shares of 0.036p each
Ordinary shares of 0.004p
each
Issue of ordinary share capital
of 0.004p each
2016
Number
2016
£
2015
Number
2015
£
2,481,657,918
992,663
1,719,157,921
687,663
-
(893,397)
2,481,657,918
99,266
-
-
-
-
1,000,000,000
40,000
762,499,998
305,000
As at 30 June
3,481,657,918
139,266
2,481,657,918
992,663
-------------------------------
-----------------------
-------------------------------
-----------------------
==================
============== ==================
================
Current year changes to Ordinary share capital
On 14 December 2016 the Company split each ordinary share of 0.04p each into one ordinary share of
0.004p each and one deferred share of 0.036p each.
On 18 December 2016 the Company issued 1,000,000,000 ordinary shares of 0.004p at a price of 0.025p
per ordinary share for working capital purposes.
The ordinary shares carry no right to fixed income.
34
Notes to the Financial Statements - continued
13 SHARE CAPITAL (CONTINUED)
Prior year changes to Ordinary share capital
On 30 July 2014 the Company issued 312,500,000 ordinary shares of 0.04p each at a price of 0.18p per
ordinary share, which was the quoted market price of the Company’s shares at the time, giving total
consideration of £562,500. In a connected transaction, the Company also entered into an Equity Swap
Agreement, making a swap payment of £289,688. The Equity Swap Agreement provided for a series of
payments to the Company based on its future share price. During the term of the agreement the
Company received a further £51,799 and the agreement was terminated on 30 January 2015 at which
time all remaining obligations were extinguished.
In view of the terms of the agreement, the Directors considered that the initial fair value of the Equity
Swap Agreement was significantly lower than the amount allocated to it in the above linked
transactions. The Directors estimated the initial fair value of the Equity Swap Agreement to be not
materially different to the £51,799 eventually received under the agreement, by considering the
discount which would otherwise have typically been applicable to a traditional placing of the
Company’s shares, bearing in mind the circumstances of the Company and the market at the time. This
discount was estimated at 43%.
Overall, in respect of the placing on 30 July 2014, the Company recognised during the year to 30 June
2015 share capital of £125,000 and share premium of £165,861, being premium accounted for on the
issue of £199,611 less costs of £33,750.
On 30 March 2015 the Company issued 449,999,998 ordinary shares of 0.04p at a price of 0.06p per
ordinary share for working capital purposes.
The deferred share capital of the Company comprises:
Allotted, called up and fully
paid:
Deferred shares of 0.036p
each as at 1 July
Effect of share split on 14
December 2015 from ordinary
shares
2016
Number
-
2016
£
-
2,481,657,919
893,397
2015
Number
2015
£
-
-
-
-
-------------------------------
-----------------------
-------------------------------
-----------------------
As at 30 June
2,481,657,918
893,397
-
-
The deferred shares have no voting rights and have no rights to receive dividends or other income.
==================
============== ==================
================
35
Notes to the Financial Statements - continued
14 CAPITAL RESERVES
Balance at 1 July 2014
Issue of share capital
Share issue costs
Share premium
account
£
Share-based
compensation
reserve
£
Total
£
3,925,213
92,389
4,017,602
289,611
(67,251)
-
-
289,611
(67,251)
Share-based compensation
-
19,426
19,426
Balance at 30 June 2015
Issue of share capital
Share issue costs
----------------------
----------------------
----------------------
4,147,573
111,815
4,259,388
210,000
(30,000)
-
-
210,000
(30,000)
Share-based compensation
-
37,233
37,233
Balance at 30 June 2016
----------------------
4,327,573
===================
----------------------
149,048
====================
----------------------
4,476,621
===================
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.
15 RETAINED EARNINGS
Balance at 1 July 2014
Loss for the year
Balance at 30 June 2015
Loss for the year
Balance at 30 June 2016
£
(4,568,778)
(357,656)
-------------------------
(4,926,434)
(378,697)
-------------------------
(5,305,131)
====================
Retained earnings includes an amount of £237,889 (2015: £237,889) in relation to the Equity Swap
Agreement in 2014 which under the Companies Act is not distributable.
36
Notes to the Financial Statements - continued
16 CAPITAL COMMITMENTS
At 30 June 2016 and 30 June 2015 the Company had no capital commitments.
17 SHARE BASED PAYMENT TRANSACTIONS
The Company operates two share option schemes: (1) under the Enterprise Management Initiative
Scheme (“EMI”) and (2) an unapproved share option scheme. Both are equity settled. Options are
granted with a fixed exercise price equal to the market price of the shares under option at the date of
grant. The contractual life of the options is 10 years.
Holder
Outstanding
at beginning
of period
Granted
during
period
Forfeited
during
period
Outstanding
at end of
period
Exercisable
at end of
period
Exercise price
(p)
Date of grant
Date of expiry
Christophe Chassagnole1
Christophe Chassagnole1
Christophe Chassagnole1
Christophe Chassagnole1
Christophe Chassagnole1
Christophe Chassagnole1
Christophe Chassagnole1
Mark Chadwick1
Mark Chadwick1
Mark Chadwick1
Mark Chadwick1
Mark Chadwick1
Mark Chadwick1
Paul Harper2
Paul Harper2
Paul Harper2
Paul Harper2
Paul Harper2
Paul Harper2
Other staff1
Other staff1
Other staff1
Other staff1
Other staff1
Other staff1
Other staff1
7,499,453
5,624,590
11,856,584
3,233,125
12,938,121
32,261,553
-
19,984,500
3,233,127
4,996,125
12,938,121
32,261,553
-
2,327,710
7,664,541
1,293,250
5,175,248
12,904,621
-
3,490,000
3,448,824
10,547,614
10,727,314
14,231,932
34,991,376
-
-
-
-
-
-
-
64,523,106
-
-
-
-
-
64,523,106
-
-
-
-
-
25,809,242
-
-
-
-
-
-
69,982,752
253,629,282
224,838,206
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,499,453
5,624,590
11,856,584
3,233,125
12,938,121
32,261,553
64,523,106
19,984,500
3,233,127
4,996,125
12,938,121
32,261,553
64,523,106
2,327,710
7,664,541
1,293,250
5,175,248
12,904,621
25,809,242
3,490,000
3,448,824
10,547,614
10,727,314
14,231,932
34,991,376
69,982,752
7,499,453
5,624,590
11,856,584
0
12,938,121
32,261,553
64,523,106
14,988,375
0
0
12,938,121
32,261,553
64,523,106
2,327,710
7,664,541
0
5,175,248
12,904,621
25,809,242
3,490,000
3,448,824
10,547,614
0
14,231,932
34,991,376
69,982,752
478,467,488
449,988,422
0.383
0.150
0.400
0.340
0.132
0.062
0.035
0.270
0.340
0.293
0.132
0.062
0.035
0.150
0.400
0.340
0.132
0.062
0.035
0.383
0.150
0.400
0.340
0.132
0.062
0.035
07 Sep 2007
18 Dec 2008
28 Feb 2010
09 Nov 2011
11 Feb 2013
24 Mar 2015
21 Dec 2015
06 Dec 2010
09 Nov 2011
19 Dec 2011
11 Feb 2013
24 Mar 2015
21 Dec 2015
18 Dec 2008
28 Feb 2010
09 Nov 2011
11 Feb 2013
24 Mar 2015
21 Dec 2015
07 Sep 2007
18 Dec 2008
28 Feb 2010
09 Nov 2011
11 Feb 2013
24 Mar 2015
21 Dec 2015
07 Sep 2017
18 Dec 2018
28 Feb 2020
09 Nov 2021
11 Feb 2023
24 Mar 2025
21 Dec 2025
06 Dec 2020
09 Nov 2021
19 Dec 2021
11 Feb 2023
24 Mar 2025
21 Dec 2025
18 Dec 2018
28 Feb 2020
09 Nov 2021
11 Feb 2023
24 Mar 2025
21 Dec 2025
07 Sep 2017
18 Dec 2018
28 Feb 2020
09 Nov 2021
11 Feb 2023
24 Mar 2025
21 Dec 2025
No options were exercised or expired during the year. Some of the options granted are subject to
performance criteria relating to either share price performance or the achievement of certain
corporate milestones.
Options have been valued at grant date using the Black-Scholes option pricing model. The options
granted during the current year vest three months after grant (prior year vesting period was six months)
with no additional performance criteria attached. There were no market vesting conditions within the
terms of the grant of the share options.
The expected volatility is based on historical volatility of the company over 3 years. The expected life
of options is now based on the share option exercise history with the company (previously it was based
on the contractual exercise period). The risk free rate of return is derived the yield curve on
government borrowing at 2.5 years (previously the yield on zero-coupon UK government bonds over 10
years).
37
Notes to the Financial Statements - continued
17 SHARE BASED PAYMENT TRANSACTIONS (CONTINUED)
Inputs to Black-Scholes share option pricing model
2016
2015
Grant date
Number of shares under option
Share price at date of grant
Option exercise price
Expected life of options
Expected volatility
Dividend yield: no dividends assumed
Risk-free rate
21 December 2015
224,838,206
0.035 pence
0.035 pence
2.5 years
40.08%
0%
0.72% p.a.
26 March 2015
112,419,103
0.062 pence
0.062 pence
10 years
40.00%
0%
2.00% p.a.
Outputs from Black-Scholes share option pricing model
2016
2015
Fair value per share under option
Total expected charge over the vesting period
0.0089 pence
£20,011
0.0326 pence
£36,649
Analysis of share based payment charge for year
2016
2015
Share options granted in current year
Share options granted in prior year
Total share-based payments charge in the year
£20,011
£17,233
----------------------
£37,233
=================================
£19,426
-
----------------------
£19,426
=================================
38
Notes to the Financial Statements - continued
18 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.
Capital management
The capital structure of the Company consists of cash and cash equivalents and equity attributable to
equity holders of the Company, comprising issued capital, reserves and retained earnings as disclosed in
notes 13 to 15.
The board’s policy is to maintain an appropriate capital base so as to maintain investor and creditor
confidence and to sustain future development of the business. The Company’s objectives when
managing capital are to safeguard the Company’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
The Company has a record of positive operating cash flows as well as significant ability to manage the
timing and extent of discretionary expenditure in the business. In order to maintain or adjust the
capital structure the Company may issue new shares.
Interest rate profile
The Company had no bank borrowings at the 30 June 2016.
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
There are no material differences between the fair value of financial instruments and the amount at
which they are stated in the financial statements.
39
Notes to the Financial Statements - continued
19 POST BALANCE SHEET EVENTS
The Company completed a successful placing on the 21 September 2016, raising £550,000 gross.
20 INTEREST IN OTHER ENTITIES
The Company has a wholly owned subsidiary E-PHEN Limited, a company incorporated in England. The
company is dormant and has not traded in the period.
21 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 12.
22 ULTIMATE CONTROLLING PARTY
The Company does not currently have an ultimate controlling party and did not have one in this
reporting year or the preceding reporting year.
40