Physiomics Plc
Annual Report and Financial Statements
For the Year Ended
30 June 2020
Company Registration No. 04225086
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Contents
OFFICERS AND PROFESSIONAL ADVISORS
HIGHLIGHTS
CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S STATEMENT
STRATEGIC REPORT
DIRECTORS’ REPORT
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF PHYSIOMICS PLC
INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2020
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020
CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS
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5
6
8
16
24
28
29
30
31
32
33
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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
REGISTRAR
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
BANKER
National Westminster Bank Plc
Norwich Gentleman’s Walk
Norwich
Norfolk
NR2 1NA
SOLICITOR
Taylor Vinters LLP
Merlin Place
Milton Road
Cambridge
CB4 0DP
Chairman
Chief Executive Officer
Chief Operating Officer
AUDITOR
Shipleys LLP
10 Orange Street
Haymarket
London
WC2H 7DQ
BANKER
Barclays Bank UK Plc
Leicester
LE87 2BB
NOMINATED ADVISER
Strand Hanson Limited
26 Mount Row
Mayfair
London
W1K 3SQ
BROKER
Hybridan LLP
2 Jardine House
The Harrovian Business Village
Bessborough Road
Harrow
Middlesex, HA1 3EX
Physiomics Plc is a limited liability company incorporated in England & Wales and domiciled in the United
Kingdom.
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Highlights
Financial Highlights
•
•
•
•
•
•
Total income (revenue and grant income) increased 7% to £841,649 (2019: £783,101), the highest
in the Company’s history
The operating loss decreased 33% to £134,385 (2019: £201,219)
The loss after taxation decreased 38% to £64,424 (2019: £104,040)
Placing and subscription in May 2020 raised £828,750 (gross) through the issue of 23,678,571 new
ordinary shares at an issue price of 3.5 pence per share
At 30 June 2020, the surplus of shareholders’ funds was £1,314,981 (30 June 2019: £607,914)
Cash and cash equivalents at 30 June 2020 of £1,047,860 (30 June 2019: £405,366)
Operational highlights
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Renewal of agreement with Merck KGaA in December 2019
Repeat contracts with clients CellCentric and Bicycle Therapeutics
Award of NIHR grant to fund clinical study relating to Physiomics’ personalised dosing tool for
prostate cancer and ongoing discussion relating to its commercialisation
Post period end, award of contract by new big-pharma client, Astellas Pharma Inc
Ongoing discussion with several large CROs relating to potential collaborations
Strongest ever business development pipeline resulting from higher marketing spend
“The Company continues to make good progress, with all key indicators of performance moving in the right
direction. We are pleased to be working with Cancer Research UK (announced July 2019) and to have repeat
contracts with both CellCentric and Bicycle Therapeutics, as well as our first contract with Astellas Pharma
Inc.
The team has also worked hard to ensure that our on-going relationship with Merck led to a renewal of the
arrangement (first announced in December 2017). We believe that the Merck team recognises the quality and
value of our modelling itself, coupled with the interpretation and guidance we are able to provide. The
relationship with Merck represents an independent endorsement of the quality of the Physiomics® package,
which has allowed Dr Millen and his team to create new relationships and to secure new contracts. This
success has led to a healthy pipeline of new opportunities going forward. It is also my firm belief that the
emerging personalised medicine package will add significantly to the Company’s portfolio, opening wholly
new opportunities. Meanwhile the team has embarked on a more extensive business development strategy
aimed at bringing in new business.
I cannot stress too highly the quality of the team. They combine an extraordinary range of skills across many
disciplines. They have evolved into an exceptional group, combining their skills, expertise and experience to
provide clients with an outstanding service. This has enabled Dr Millen to orchestrate a major business
development initiative which has achieved significant success.”
Dr Paul Harper, Non-Executive Chairman
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Chairman and Chief Executive Officer’s Statement
Introduction
The Company is pleased to report that it has continued to grow its top line and reduce its losses despite some
challenges as a result of the COVID 19 epidemic. Encouragingly, key clients Merck, CellCentric and Bicycle
Therapeutics each awarded the Company repeat contracts during the year. It was particularly pleasing that
the announcement of a further contract with Bicycle Therapeutics on 30 June 2020 represented the fourth
Bicycle asset that Physiomics has now supported. Just after the financial year end, on 31 July, the Company
was also delighted to announce that it had been retained by a major new big pharma client, Astellas Pharma
Inc., to conduct a project on an undisclosed asset utilising Physiomics’ Virtual Tumour immuno-oncology
modelling platform.
In order to capitalise on its current momentum, the Company completed an oversubscribed fundraise in May
2020, raising £829k (gross). Key uses of these funds are to increase the Company’s marketing capability, hire
new technical staff and invest further in its personalised dosing technology initiative.
In addition to achieving strong organic growth in its consulting business, the Company has also been engaging
in discussions with several contract research organisations with regard to possible collaborations. Previously
reported discussions relating to the potential commercialisation of the Company’s personalised dosing
technology also remain ongoing.
Overall, the year has been a productive one for Physiomics. The Company’s reputation amongst both investors
and clients appears to be strengthening and we continue to focus on generating shareholder value.
Financial Review
The Company’s full year total income of £841,649 reflects these achievements, being the highest in its history,
and a 7% increase on the previous full year to 30 June 2019. Total income grew to £499,037 in the second half
compared with the first half unaudited total income of £342,612. This pattern is consistent with previous years
and substantially due to both summer and Christmas holidays falling in the first half of the Company’s financial
year.
The operating loss decreased 33% to £134,385 (2019: £201,219). The loss after taxation decreased 38% to
£64,424 (2019: £104,040).
Following the Company’s fundraise in May 2020, which raised £829k (gross), the Company allocated funds to
expand the in-house team, increase marketing spend and invest further in its personalised medicine initiative,
all of which are expected to continue to help to generate and support the increased levels of business going
forwards.
Net assets at the year-end were £1,314,981 (2019: £607,914) of which £1,047,860 (2019: £405,366) comprised
cash and cash equivalents. This is the highest net asset position in the Company’s history, combined with the
lowest loss since 2009. The net cash outflow from operating activities fell by £27,402 (2019: £26,025) compared
with the previous year.
COVID 19
These results were achieved despite the ongoing COVID 19 crisis and the Company is pleased to say that there
appears to be only very minimal effects of COVID 19 on its business so far. In particular:
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• There has been no reduction in the number of new business meetings achieved, if anything such
meetings have increased; and
• The Company’s employees achieved a smooth transition to remote working, without impacting on the
quality of interactions with clients. This is currently being maintained and will be kept under review
As previously disclosed, there has been the delay in the commencement of our NIHR funded trial at the
Portsmouth Technology Trials Unit, as a result of which some grant income anticipated for the financial year
ended 30 June 2020 will now fall into the current financial year ending 30 June 2021, though it is not anticipated
that there will be any overall loss of income relating to the grant over its term.
Staff
The Company’s staff remain critical to a business which is essentially about delivering analysis to clients. This
is derived from rigorous analysis by individuals experienced in oncology drug development, applied mathematics
and from their ability to clearly communicate this analysis to the client. We believe our staff score highly on
both these fronts and remain the key to our continuing success. The Company has publicly stated its intention
to utilise some of the funds raised in its May 2020 fundraise to recruit a further full-time staff member and this
process is ongoing. In addition, the Company has decided to retain an intern for a period of around four months
starting in September 2020. For both the full-time and the intern position, the Company attracted a significant
number of applications from well-qualified individuals, which is further validation of the Company’s reputation
in the job market and of the profile it is achieving through its work. The board regularly reviews staff utilisation
rates and anticipated workload and this will continue.
The Company would like to thank all its staff for their continuing hard work and commitment during the year.
Outlook
The Company continues to develop its reputation amongst investors and clients as it moves ever closer to
profitability and cashflow break-even. With additional funding from our May 2020 fundraise applied to
marketing activities, the Company’s business development pipeline is the strongest it has ever been. The
Company expects to continue to attract both repeat business and new clients of all sizes, to develop its
personalised dosing technology and to explore innovative collaboration opportunities over the course of the
current financial year.
Dr Jim Millen, Chief Executive Officer
Dr Paul Harper, Non-Executive Chairman
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Strategic Report
Principal activities
Physiomics is engaged in providing consulting services to pharmaceutical companies in the areas of outsourced
quantitative pharmacology and computational biology, using a combination of industry standard technologies
and its own proprietary technology platform, Virtual Tumour™. In simple terms, this means helping companies
to put the right drugs together, at the right dose, in the right types of cancer to help achieve the best possible
results at the most economic cost.
Modelling and simulation using Virtual Tumour™ and other tools
The Company’s focus is almost exclusively in the provision of modelling, simulation and data analysis services
covering the full range of oncology R&D and with a focus on quantitative pharmacology techniques. The
Company’s main commercial revenue driver is its proprietary Virtual Tumour™ predictive software in the pre-
clinical and clinical space, and in particular extensions to this software that have been developed over the last
few years to address specialist areas such as immune-oncology, DNA damage repair, radiation therapy and
others. The Company also utilises other industry standard tools, such as NONMEM and MATLAB as well as
developing its own bespoke models using the R programming language. Projects often require a blend of several
approaches to deliver the optimal insights to clients.
Working in the late discovery, preclinical and clinical phases of pharmaceutical R&D, Physiomics adds value by
helping companies to efficiently derive insights from their data. This is achieved in a variety of ways ranging
from data analysis, visualisation and interpretation to mathematical modelling of pharmacokinetic and
pharmacodynamic effects (i.e. how much drug is in the body and what effect it is having). The end result is
that our clients are in a better position to optimise the treatments they are developing by selecting the right
targets, drugs, dosages, timing and combinations. We believe that we add particular value in early
development during the transition from pre-clinical to first-in-man studies where our experience and
capabilities have been helpful in supporting clients such as UK-based CellCentric and Bicycle Therapeutics in
identifying optimal clinical trial designs and justifying this to regulatory authorities. In the 2019/20 financial
year, the Company has been able to:
•
•
Support big pharma companies in making strategic decisions about how to optimise combinations of
investigational and approved agents in mid-stage clinical development programs. The potential value
of getting these decisions right first time and hitting a target profile is significant.
Support small and medium sized biotechs by providing a full spectrum of pharmacokinetic and
pharmacodynamic modelling, analysis and interpretation services as well as by helping them to
translate their pre-clinical data to clinical settings and enable them to respond more dynamically to
new data coming out of their first human studies.
The Company is beginning to see an increased willingness for clients to allow their name to be associated with
Physiomics®, which we believe is an indication of the value that we are adding and the increased credibility
and recognition of the Physiomics® brand. We believe that this in turn further improves our ability to attract
and retain new business. The most recent example of this was the public announcement of a contract award
by Astellas Pharma Inc.
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Personalised medicine
In addition to its core modelling and simulation business, the Company has continued to develop its technology
for use in the field of personalised medicine. The term “personalised medicine” is used in many ways but is
most often associated with the use of genetic markers in the selection of drugs to treat a particular group of
patients. Physiomics’ approach has been to use its expertise in interpreting pre-clinical and clinical cancer
data to help predict when to treat patients and with what dose of drug. This approach relies more on advanced
analytical techniques, many of which (such as machine learning and neural networks) are in the field of artificial
intelligence (AI). To date this has been funded by two Innovate UK Grants and most recently by an NIHR grant
awarded in March 2020. This latest grant is being used to fund an observational trial at Portsmouth’s
Technology Trials Unit, which is intended to gather data to further validate and support the use of the
Company’s personalised dosing technology. In parallel with these ongoing research activities, the Company is
exploring how it can accelerate the commercialisation of its technology via collaboration with other companies
that are more established in this field, especially in the USA.
Business Model
The Company’s main commercial business is the provision of consulting services which rely substantially on our
Virtual Tumour™ pre-clinical and clinical models that are proprietary to the Company. Physiomics works
primarily on a fee for service basis, although we are open to and continue to explore other approaches including
risk sharing and collaboration including:
• The incorporation of success-based milestones in our consulting contracts. Examples of companies
where Physiomics has historically entered into risk-sharing arrangements include Sareum Holdings plc
and ValiRx plc;
• The embedding of our technology as part of a broader offering in collaboration with another service
provider. The Company is in several active discussions of this nature and will report further once
specific agreements have been reached; and
• The creation of a version of Virtual Tumour™ that could be licensed to a client for its own use rather
than by the Company as part of a consulting service. The Company already creates executable versions
of a number of its models on request by clients. A further step would be to develop Virtual Tumour™
into a tool whose full functionality could be utilised by a client, either alongside a consulting project
or possibly independently.
The Company will continue to explore these alternative approaches, though envisages that consulting will
continue to be the main driver of revenues in the short to medium term.
Key strengths
The consulting business is the core of the Company’s commercial activity and we believe that it is unique in a
number of respects:
• We focus almost exclusively on oncology. Our team has over 120 years of combined experience in the
development of cancer drugs and computational biology, and in particular of quantitative pharmacology
(essentially analysing how much drug to use and trying to predict what effect it will have). Over the
Company’s lifetime it has completed over 85 projects covering hundreds of targets, cell lines, drugs,
and cancer types;
• We use a proprietary in-house platform called Virtual Tumour™. Although the team can take advantage
of all commonly used modelling, simulation and data analysis techniques in the cancer field, we also
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have access to an internally developed platform that is uniquely useful when considering combinations
of cancer drugs (and most anti-cancer regimes eventually involve using multiple agents simultaneously);
and
• We provide a responsive and dedicated service. Many large companies offer services in the cancer
space though do not restrict themselves to cancer nor to quantitative pharmacology. As a result, we
believe, many of these companies cannot offer the same level of bespoke, responsive service that
Physiomics can and does.
Our strategy
Physiomics’ strategy is to grow its fee for service business model by leveraging its own proprietary modelling
and simulation technology to the benefit of its customers. Our main strategic aims are to:
• Form close partnerships with customers, attract repeat business and grow alongside them (as evidenced
by having now worked on four assets with Bicycle Therapeutics and by repeat business with Merck and
CellCentric);
• Diversify the customer base by working with a variety of commercial and not-for-profit clients (such as
the NIHR grant to fund a personalised medicine study announced in March 2020);
• Broaden our geographical presence in Europe and North America by leveraging the Company’s existing
contact base and increasing marketing efforts (our most recent new client, Astellas Pharma is based in
the US and Japan);
• Work with a mix of early pre-clinical stage projects and high value clinical development phase of
oncology (we have active translational stage projects with Merck, Bicycle Therapeutics, CellCentric
and Astellas Pharma); and
• Develop new, complementary areas of business such as immune-oncology and personalised medicine
that can add long term value to the business.
Obligations under s172 of the Companies Act
The Directors are mindful of their obligations under s172(1) of the Companies Act 2006 to act in good faith to
promote the success of the Company for the benefit of its members as a whole, and in doing so have regard
(amongst other matters) to the following:
Principle
Company’s actions
The likely consequences of any decision in the long
term.
The Company has a long term vision as set out in this
report.
The interests of the company's employees.
The Company values its employees and implements
training, offers development opportunities and has in
place appropriate incentive programs to support
their retention.
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Principle
Company’s actions
The need to
relationships with suppliers, customers and others.
foster the company’s business
The impact of the company’s operations on the
community and the environment.
The desirability of the company maintaining a
reputation for high standards of business conduct.
The need to act fairly as between members of the
company.
Review of Business
The Company spends significant effort in reaching
out to new and existing customers and in soliciting
their feedback following engagements.
The Company’s operations have minimal impact on
the community and environment. As a result of
COVID-19, home working has been implemented so
the environmental costs of commuting have been
further reduced.
The Company maintains a high standard of business
ethics, complying with the QCA code for corporate
governance.
The Company treats all members equitably and
attempts to ensure a timely and accurate flow of
information to all members.
The Company is principally engaged in providing consulting services to pharmaceutical companies in the areas
of outsourced quantitative pharmacology and computational biology.
• Total income (revenue and grant income) increased 7% to £841,649 (2019: £783,101)
• The operating loss decreased 33% to £134,385 (2019: £201,219)
• The loss after taxation decreased 38% to £64,424 (2019: £104,040)
• At 30 June 2020, the surplus of shareholders’ funds was £1,314,981 (30 June 2019: £607,914)
• Cash and cash equivalents at 30 June 2020 of £1,047,860 (30 June 2019: £405,366)
Consulting Business
Physiomics’ consulting business is at the heart of its offering to clients. The Company uses its proprietary
Virtual Tumour™ software platform but also develops mathematical models from scratch and leverages models
in the public domain. It is a combination of our technology and the oncology experience of our team that
enables us to be able to deliver clients both a targeted product offering that meets their needs whilst at the
same time delivering value for money. We believe that we are unique in offering a combination of:
• Deep experience and knowledge of oncology;
• An exclusive focus on model-based approaches to supporting our clients’ R&D projects; and
• A level of flexibility and responsiveness that is not typically found in larger organisations.
We have continued to develop our brand through a variety of marketing and business development activities
including:
• Expansion of our digital marketing strategy with significantly increased social media activity focused
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on areas of interest to our clients;
• Use of a third-party marketing agency to conduct targeted calls to potential new clients, generating a
significantly increased volume of potential new business discussions;
• Despite the virtualisation of conferences this year due to the ongoing COVID pandemic, we have
presented at BioTrinity and AACR; and
• Development and dissemination of case studies based on actual client projects.
The Company has been successful in attracting repeat business this year from clients such as Bicycle
Therapeutics, CellCentric as well as long-standing client Merck KGaA. The Company has now worked with Merck
for over eight years and is in the third year of the major collaboration announced in November 2017.
The Company’s clients in this financial year have been located in the USA, UK and Europe. Recent marketing
efforts have targeted further business in the USA, where there is a high level of company formation and funding
and this has paid off in the form of the recently announced contract with Japan and US-based Astellas Pharma
Inc. In terms of the mix of work, we continue to work across the full spectrum of R&D from discovery to
development, though we continue to focus increasingly on translational projects involving assets entering
clinical development for the first time. This is particularly exciting, as it raises our profile and can involve
exposure to regulatory authorities. The Company continues to work in the immuno-oncology space with several
of its clients, including the recently announced Astellas Pharma, and it is anticipated that the industry focus
on this treatment approach is likely to continue for some time.
Personalised Medicine
The personalised medicine and digital health space continues to generate significant interest from both
investors and healthcare systems. Many start-ups in this area focus on the use of genetic markers or the
pattern-recognition capabilities of artificial intelligence applications. However, we believe that there is a
significant opportunity in the analysis of existing clinical data to identify better ways to treat patient using
existing drugs and procedures.
In April 2019, we completed our second Innovate UK funded project in this field in which we developed a
demonstration version of a tool to optimise dosing of docetaxel in castrate resistant, metastatic prostate cancer
patients. The key outcomes of the project were presented in a poster at the prestigious American Association
for Cancer Research Annual Meeting in March 2019. In parallel, working with the Oxford Academic Health
Sciences Network, we were able to access some of the UK’s leading clinicians in this space which culminated
in our being invited to present at an event jointly sponsored by the Royal Marsden Hospital NHS Trust, the
Institute of Cancer Research and the National Institute for Health Research. In March 2020, the Company
announced a further grant from the NIHR of up to £150k which is being used to fund an observational clinical
trial at Portsmouth’s Technology Trials Unit. The purpose of this trial is to gather additional patient data to
validate and further develop the Company’s personalised dosing tool. Subject to any restrictions imposed due
to COVID 19, the trial is now expected to start in Q4 2020 and will last up to 12 months. In parallel, the
Company is focused on finding an appropriate commercial partner to gain any required regulatory approvals to
make the tool available in a real-world clinical environment and, to this end, the Company is also in discussion
with a company with an established presence in this field.
Strategic and financial performance indicators
The Company is focused on the creation of long-term value for its shareholders.
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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. In the last four financial years (from YE June 2017 to YE June 2020) revenues have increased 264%,
losses after tax have decreased 84% and net assets increased 301%.
Principal Risks
The Company faces a number of risks on the way to building shareholder value. The Company maintains a risk
register that identifies specific risks, their potential impact, their likelihood and mitigating actions. This
register is updated as required and on an annual basis as a minimum. Some selected key risks are addressed
below.
Risk
Description
Mitigation
Loss of major
customer
Currently the business has a high
dependence on a small number of
customers. This leads to the risk that a
large customer could significantly reduce or
cancel its contracts with the Company.
Competition /
pricing
pressure
Physiomics operates in a competitive
environment which could lead to pricing
pressure. Whilst the business uses its own
proprietary technology a competitor could
attempt to replicate its Virtual Tumour™
technology.
In the last two years the Company has been successful
in growing its pipeline of business, broadening its
customer base and reducing its reliance on major
customers and has also secured an agreement with its
major customer Merck KGaA that envisages a multi-
year relationship and is currently in its third year.
Additionally, the Company has recently signed a
further big pharma client, Astellas Pharma Inc., as
well as securing repeat contracts with CellCentric and
Bicycle.
Our focus on oncology and the way in which we
employ Virtual Tumour™ requires a combination of
technology and specialised skills, which we believe is
hard to replicate.
We continually develop our model to improve the
scope and applicability of the technology, adding
further value to our clients and differentiating our
service from our competitors.
In addition, in the last two years we have developed a
personalised medicine offering that we are currently
seeking to commercialise and which would help reduce
dependency on our consulting business.
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Risk
Description
Mitigation
Personnel &
skills
The success and future growth of the
Company is in part dependent on the
continued performance and delivery of
certain Directors, managers, key staff and
contractors. The Company operates in a
highly specialised field where there is
strong competition for required skills and
talent.
Key personnel leaving the Company could
lead to a short-term reduced capacity to
service client projects.
Financial
The financial risks faced by the Company
include the ability to cover working capital
needs, raise sufficient funds to support the
Company through to profitability and failure
to secure further contracts.
The process of winning major contracts is
typically protracted and the Company
operates in a competitive environment.
This means the Company often faces
significant uncertainties in its cash flow.
The Company seeks to recruit, develop, and manage
talent on a continuous basis and have built a network
of contracted specialists who can provide additional
resource when required.
In order to attract the best talent, the Company offers
competitive packages to its staff which includes a
share option scheme, private medical insurance and
flexible working. A collegiate working environment
and opportunities for personal and professional
development also help to maintain staff satisfaction.
The Company recently took on an intern and is
recruiting for a full time position. In both cases a high
number of qualified applications have been received.
The board addresses financial uncertainties by
monitoring actual performance against internal
projections and responding to significant variances.
The Company also employs tight cost controls across
the business and has from time to time raised funds
from investors.
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.
Following completion of the recent fundraise, the
Company had cash and cash equivalents of over £1.0
million at the year end, which the board believes is
sufficient for its current needs and to enable it to
increase its marketing spend to expand its client base.
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Risk
Description
Mitigation
Regulation
Changes
The Company’s customers are
predominately pharmaceutical companies
who require outsourced quantitative
pharmacology and computational biology
services. There is a risk that the business
model is impacted by future changes in
regulations in the medical and
pharmaceutical industry.
The Company regularly reviews regulations changes
through proactive discussions with key industry
officials, professional advisors and regulatory bodies
where appropriate.
Major agencies such as the FDA are actively promoting
the use of modelling and simulation and issue advisory
papers which set out their thinking.
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.
COVID 19
The current COVID 19 pandemic has far-
reaching consequences for many companies.
By order of the board
Dr Paul Harper
Chairman
Continuity of access to data and integrity of data is
maintained through the implementation of a system of
data storage, offsite backup and monitoring of key
coding and modelling data. In the most recent
financial year, the company invested further in a
server dedicated to high speed computation which has
significantly reduced the time required to complete
complex simulations.
Despite some clients experiencing delays in clinical
trials, there has been no appreciable drop off in client
commitments to new projects.
The Company has also sought to mitigate direct risk of
COVID 19 infection by implementing home working
since March 2020. This has been achieved seamlessly
with no discernible impact on business operations.
The board reviews risks relating to COVID 19 on a
monthly basis.
The Directors have considered and assessed the
impact of COVID-19 on the Company’s projections and
cashflows. Taking into account COVID-19, the
Directors believe that the Company has sufficient
funds to operate for at least 12 months from the
signing date of these financial statements.
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Directors’ Report
The Directors submit their report and the audited financial statements of Physiomics Plc for the year ended 30
June 2020.
Results
There was a loss for the year after taxation amounting to £64,424 (2019 loss: £104,040). 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 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 (IFRS) as adopted by the European Union (EU). 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
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in the United Kingdom governing the preparation and dissemination of the financial statements may differ from
legislation in other jurisdictions.
Substantial shareholdings
The Company has been informed that as at 22 September 2020, the following shareholders had over 3% interests
in the issued ordinary shares of the Company.
Mr Zahid Ali*
Mr Paul McKillen**
Holding %
5.12%
3.08%
* Mr Zahid Ali notified the Company on 10 September 2020 that he held 4,982,142 ordinary shares (which
represents a current interest of 5.12% in the Company).
** Mr Paul McKillen notified the Company on the 19 July 2019 that he held 3,000,000 ordinary shares (which
represents a current interest of 3.08% in the Company).
On 22 September 2020, Dr Paul Harper held 668,564 ordinary shares, Dr Jim Millen held 1,386,747 ordinary
shares and Dr Christophe Chassagnole held 602,723 ordinary shares. The holding percentages were 0.69%, 1.42%
and 0.62% respectively.
Directors’ remuneration
Details of Directors’ remuneration in the year ended 30 June 2020 is set out below:
Emoluments
£
Bonus Benefits
£
£
Pension
Contributions
£
Total
2020
£
Total
2019
£
Dr P B Harper
37,000
Dr J S Millen
123,500
Dr C D Chassagnole
65,697
Total
226,196
-
-
-
-
-
-
37,000
35,500
1,647
10,400
135,547
142,388
1,432
9,062
76,191
76,142
3,079
19,462
248,738 254,030
Corporate governance
Physiomics Plc has chosen to comply with the Quoted Companies Alliance (“QCA”) Corporate Governance Code
published in April 2018. High standards of corporate governance are a priority for the board, and details of
how Physiomics addresses key governance principles defined in the QCA code are set out below.
1. Establish a strategy and business model which promote long-term value for shareholders
The Company’s business model is focused on helping big pharma and biotech clients to reduce costs and
optimise outcomes of their oncology R&D though modelling and analysis of client and other data. In particular,
the Company leverages its own in-house technology, Virtual Tumour™, which is specifically focused on
17
predicting the effects of combination drug treatments. The Company operates mainly on a fee for service basis
but is also open to other arrangements such as risk-based milestones and licensing although these have not
formed a material part of the Company’s revenues historically. In addition to its commercial business the
Company engages in grant driven projects which do not generate profit but which provide valuable “paid for”
R&D which can then be leveraged through the Company’s commercial activities. The Company aims to deliver
shareholder value by increasing the number and value of its commercial clients and by increasing the amount
and value of grant projects and by investigating the commercial potential of new areas such as personalised
medicine. The Company believes that its strategy will be effective in helping it to meet challenges such as
competitive pressure and the rapid pace of technological change in the pharmaceutical industry.
2. Seek to understand and meet shareholder expectations
The Company maintains a dedicated email address which investors can use to contact the Company which is
prominently displayed on its website together with the Company’s address and phone number. The Company
holds an annual general meeting (“AGM”) to which all members are invited and during the AGM, time is set
aside specifically to allow questions from attending members to any board member. As the Company is too
small to have a dedicated investor relations department, the CEO is responsible for reviewing all
communications received from members and determining the most appropriate response. In addition to these
passive measures, the CEO typically engages with members through a roadshow once or twice each year. The
Company does not take any measures beyond those outlined in this paragraph to seek to understand shareholder
voting decisions.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term
success
In addition to members, the Company believes its main stakeholder groups are its employees and clients. The
Company dedicates significant time to understanding and acting on the needs and requirements of each of
these groups via meetings dedicated to obtaining feedback (see principle 2 above).
In addition, the Company has a close relationship with the University of Oxford and the Oxford University
Hospitals NHS Foundation Trust. Prof Mark Middleton, who leads oncology research at these institutions is on
the Company’s advisory board and has been a collaborator on several grant projects. The relationship with the
Company is mutually beneficial as the University and NHS Trust also has a mandate to encourage and collaborate
with local businesses.
With regards corporate social responsibility, there is little direct impact of the Company’s day to day activities
however the Company is proud that its overarching goal is to support the treatment of cancer, a disease that
has a profound impact on society.
4. Embed effective risk management, considering both opportunities and threats, throughout the
organisation
The Company maintains a register of risks across several categories including personnel, clients, competition,
finance, technical and legal. For each risk we estimate the impact, likelihood as well as identify mitigating
strategies. This register is reviewed periodically as the Company’s situation changes and as a minimum
annually. During such reviews, each risk category is considered by the Directors with a view to understanding
(i) whether the nature, impact or likelihood of any risks has changed, (ii) whether the mitigating actions taken
by the Company should change as a result and (iii) whether any new risks or categories of risk have arisen since
the last review. The Company’s risk register is reviewed by its auditor as part of its annual audit process,
providing a degree of external assurance as to the suitability of its risk management strategy.
18
5. Maintain the board as a well-functioning, balanced team led by the Chairman
The board of Physiomics Plc currently comprises two executive directors, one independent non-executive
director (the Chairman) and a secretary (non-director). The board meets monthly for one day (except August)
and all current board members have attended all board meetings in the current financial year. Each director
is re-elected to the board on a rotating basis by a vote of members at the Company’s AGM.
Executive directors are full-time employees of the Company. Non-executive Directors’ contracts require that
directors dedicate up to one additional day per month on request. In addition, non-executive directors may
provide additional paid consulting services at rates specified in their contracts. However, no such services
have been provided by any non-executive director in the financial year ended 30 June 2020.
The Company notes that best practice under the QCA code, and for a company quoted on AIM is to have at least
half of its board as independent, and specifically a minimum of two non-executive directors. The board is
aware that Physiomics does not currently comply with this requirement, though the board believes that the
current board composition does enable it to fulfil its obligations. The Company also notes that its Chairman
Paul Harper has been in post for 13 years, however, the Company is satisfied as to his independence, especially
considering his periodic re-election that offers shareholders an opportunity to vote on his suitability.
6. Ensure that between them the directors have the necessary up-to-date experience, skills and
capabilities
The directors of the Company during the current financial year, together with their experience, skills, and
personal qualities relevant to the Company’s business is outlined below:
• Dr Paul Harper (Non-Executive Chairman) has over 35 years' experience in the life sciences industry
covering both drug development and medical devices. He was a non-executive director of Reneuron
Holdings Plc, an AIM quoted company. Paul has served as Chairman of Oval Medical Technologies and
of Sareum Holdings Plc, Chief Executive of Cambridge Antibody Technology Limited, and founded
Provensis Limited. He has also served as Corporate Development Director of Unipath Limited, then the
medical diagnostics business of Unilever Plc, and as Director of Research and Development for Johnson
& Johnson Limited. Formerly head of Antimicrobial Chemotherapy for Glaxo Plc, Paul has a PhD in
Molecular Virology and is the author of over 50 publications. Paul’s experience in the pharmaceutical
R&D process, roles as executive, non-executive and Chairman of both private and public companies and
the contacts he has developed over his career remain highly relevant in discharging his role as Chairman
of Physiomics.
• Dr Jim Millen (CEO) joined Physiomics in April 2016, bringing over 15 years’ experience in
pharmaceuticals and biotechnology gained at a number of blue-chip global companies as well as smaller
UK-based organisations. At Allergan, Jim was responsible for corporate development in its Europe,
Africa and Middle East region where he was pivotal in expanding the Company’s geographical footprint
before moving to a senior role responsible for commercial strategy and market access. Prior to that, at
GSK, Jim held business development roles of increasing responsibility including within the Company’s
innovative Centre of Excellence for External Drug Discovery. Jim has also supported a number of smaller
companies in fund raising and strategic partnering activities. Over the course of his career he has
completed an array of deals worth many hundreds of millions of dollars, spanning licencing, acquisition,
divestment, development and commercialisation. Jim studied medicine at Queens’ College, Cambridge
University and qualified as a doctor from the London Medical School. He holds an MBA from INSEAD.
Jim’s ability to develop and grow businesses and drive towards ambitious goals is of great value in his
role as CEO.
19
• Dr Christophe Chassagnole (COO) has been involved in systems biology and bio-computing projects since
the mid-nineties, with experience in both academic and industrial environments. His Doctorate was
achieved at the Victor Segalen-Bordeaux II University, and then he held a post doctorate position with
IBVT at Stuttgart University. Before Joining Physiomics Dr Chassagnole worked in France as a senior
researcher for CRITT Bio-Industries (Toulouse) for 3 years. He joined Physiomics in May 2004 as project
leader to develop the model portfolio of the Company. He was appointed Chief Operating Officer of
Physiomics in May 2007, in this capacity he has initiated and supervised the development of the Virtual
Tumour™ technology. Christophe remains the main source of scientific knowledge on the biology of
cancer and modelling/simulation as it relates to drug development. Christophe maintains his
knowledge through regular literature reviews and is highly valued by clients for this reason. Christophe
is also responsible for managing the Company’s R&D activities and in particular of our initiative in
personalized medicine.
• Anthony Clayden, of Strategic Finance Director Ltd (Secretary) is Head of Finance and Company
Secretary with over 21 years’ experience directing or advising over 40 high growth potential businesses
of differing size and complexity and brings broad experience of strategic, operational, and financial
matters. His career encompasses numerous businesses in the life sciences and healthcare sector
including 6 years as Chief Financial Officer of AIM quoted Futura Medical Plc where he was involved in
its IPO and a series of placings. Previously, Anthony worked with KPMG and PwC on a range of corporate
finance matters including fundraisings, company sales and acquisition advice. Anthony has a B.Sc.
(Hons) in Natural Sciences from Durham University and is a Qualified Chartered Accountant. Although
Anthony is not a director of the Company, he provides invaluable advice on all matters financial.
The Company holds annual briefings for the board covering regulations that are relevant to their role as
directors of an AIM-quoted company.
The Company has not to date sought external advice on keeping directors skills up to date but believes that
their blend of past and ongoing experience provides them with the relevant up to date skills needed to act as
board members for a small company.
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Evaluation of the performance of the board has historically been implemented in an informal manner. The
board will formally review and consider the performance of each director at or around the time of the
Company’s annual general meeting.
On an ongoing basis, board members maintain a watching brief to identify relevant internal and external
candidates who may be suitable additions to or backup for current board members, however, the directors
consider that the Company is too small to have either an internal succession plan and that it would not be cost
effective to maintain an external candidate list prior to the need arising.
8. Promote a corporate culture that is based on ethical values and behaviours
The board believes that the promotion of a corporate culture based on sound ethical values and behaviours is
essential to maximise shareholder value. The Company maintains and annually reviews a handbook that
includes clear guidance on what is expected of every employee and officer of the Company. Adherence of
these standards is a key factor in the evaluation of performance within the Company, including during annual
performance reviews. In addition, staff matters are a standing topic at every board meeting and the CEO
reports on any notable examples of behaviours that either align with or are at odds with the Company’s stated
values. The directors believe that the Company culture encourages collaborative, ethical behaviour which
20
benefits employees, clients and shareholders. The directors further believe that all employees and consultants
have worked in line with the Company’s values during this financial year.
9. Maintain governance structures and processes that are fit for purpose and support good decision-
making by the board
The board of the Company, together with its sub-committees, is responsible for the following:
• The setting of and execution of the overall strategy of the Company;
• The setting of financial targets and monitoring of the Company’s performance vs these targets on a
monthly basis;
• The preparation and approval of interim and final results for the Company;
• The commissioning and oversight of the audit of the Company’s full year results;
• The preparation and approval of the Company’s annual report;
• The preparation of resolutions to be voted upon in the Company’s Annual General Meeting;
• Approval of regulatory communications;
• The setting of guidelines for remuneration of employees, directors and consultants, including where
appropriate long-term incentives such as share option schemes;
• The approval and oversight of any changes to the capital structure of the Company such as the raising
of capital through placings
• The identification, evaluation and monitoring of key strategic risks to the Company’s business; and
• The employment of key officers and directors of the Company (the latter as recommendations to be
voted on at the Company’s AGM)
The key board roles are as follows:
• Chairman: The primary responsibility of the chair is to lead the board effectively and to oversee the
adoption, delivery and communication of the Company’s corporate governance model. The chair has
sufficient separation from the day-to-day business to be able to make independent decisions. The chair
is also responsible for making sure that the board agenda concentrates on the key issues, both
operational and financial, with regular reviews of the Company’s strategy and its overall
implementation
• CEO: Charged with the delivery of the business model within the strategy set by the board. Works with
the chair in an open and transparent way. Keeps the chair and board up-to-date with operational
performance, risks and other issues to ensure that the business remains aligned with the strategy
The board has two sub-committees appointed by the board of directors. They are as follows:
• Audit Committee: The Committee meets to consider matters relating to the Company's financial
position and financial reporting. The Committee reviews the independence and objectivity of the
external auditors, Shipleys LLP, as well as the amount of non-audit work undertaken by them, 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 the notes to the accounts. The Audit Committee currently
comprises Paul Harper (Chairman) and Christophe Chassagnole, with Strategic Finance Director Ltd
(Company Secretary) attending as secretary
• 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. Any
remuneration issues concerning non-executive directors are resolved by this Committee and no director
21
participates in decisions that concern his own remuneration. The Remuneration Committee comprises
Paul Harper (Chairman) and Jim Millen, with Strategic Finance Director Ltd (Company Secretary)
attending as secretary
The Company will give regular consideration to how best to evolve its governance framework as it grows. Such
evolution could include, for example, increase in the size of the board and in particular the number of Non-
executive members and external review of board members performance.
10. Communicate how the Company is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
On the Company’s website shareholders can find all historical RNS announcements, interim reports and annual
reports. Annual Reports and Annual General Meeting Circulars are posted directly to all registered shareholders
or nominees and results of Annual General Meeting votes are also published on the Company’s website. The
Company’s website allows shareholders and other interested parties to sign up to a mailing list to enable them
to directly receive regulatory and other company releases. As described earlier, the Company also maintains
email and phone contacts which shareholders can use to make enquiries or requests.
Post balance sheet events
The only material post-balance sheet event was the award of a contract by Astellas Pharma Inc. on 31 July
2020.
Statement as to disclosure of information to auditors
The Directors in office on 29 September 2020 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.
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; and
• detailed monthly management accounts are produced for the board to review and take appropriate
action.
22
Annual General Meeting
The Company is closely monitoring the COVID-19 situation, including UK Government guidance and will continue
to do so in the lead up to the AGM. The health of our shareholders, employees and stakeholders remains
extremely important to us and accordingly, the board has taken into consideration the current UK government
stay at home measures as well as ICSA guidance. Should these directives remain in place up to the AGM,
shareholders, advisors and other guests will not be allowed to attend the AGM in person and anyone seeking to
attend the meeting will be refused entry. As such, shareholders should note they are not entitled to attend
the AGM in person unless notified otherwise via the Company's website at www.physiomics.co.uk.
Shareholders are requested to therefore submit their votes, in respect of the business to be discussed, via
proxy as early as possible. Shareholders should appoint the Chair of the meeting as their proxy. If a shareholder
appoints someone else as their proxy, that proxy will not be able to attend the meeting in person or cast the
shareholder's vote.
The business at the AGM will be curtailed to the formal business section only, with no wider presentations on
business performance or Q&A. If any shareholder has a question they would like to pose to the board, this
should be submitted to the Chair via info@physiomics.co.uk. In addition, as detailed in our announcement of
23 September 2020, the Company will be holding an investor presentation at 11.00 a.m. on 5 October 2020.
Please see this announcement for details of how to register for this event.
In the event that further disruption to the 2020 AGM becomes unavoidable, we will announce any changes to
the meeting (such as timing or venue). The website also provides links to the annual report and accounts,
interim results and other relevant announcements immediately after they have been made available via RNS.
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 a.m. on 17 November 2020.
By order of the board
Dr Paul Harper, Chairman
23
Independent Auditors’ Report to the Members of Physiomics Plc
Opinion
We have audited the financial statements of Physiomics Plc for the year ended 30 June 2020 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 notes to the financial statements, including significant
accounting policies. The financial reporting framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the Company’s affairs as at 30
June 2020 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
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent of the Company in accordance with
the ethical requirements that are relevant to our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties
that may cast significant doubt about the Company’s ability to continue to adopt the going concern
basis of accounting for a period of at least twelve months from the date when the financial
statements are authorised for issue.
Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are those that had the greatest effect on our
audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team.
24
Risk
Management override of controls
Journals can be posted that significantly alter
the Financial Statements.
How the Scope of our audit responded to the risk
We examined journals posted around the year end,
specifically focusing on areas which are more easily
manipulated such as accruals, prepayments, investment
valuation and the bank reconciliation.
Going Concern and COVID-19
There is a risk that the Company is not a going
concern and have been impacted from COVID-19
materially.
Fraud in Revenue Recognition
There is a risk that revenue is materially
understated due to fraud.
Accounting Estimates
Potential risk of
inappropriate accounting
estimates giving rise to misstatement in the
accounts.
Overstatement of Administrative Expenses
There
administrative expenses are overstated.
the Company’s
is a
that
risk
We reviewed the Directors’ assessment of the risks and
impacts of COVID-19 on the business. We compared this
assessment to our own understanding of the risks, and the
nature of the Company’s operations and customer base.
We then conducted a review of going concern in respect
of COVID-19, which included reviewing forecasts and
current trading performance, and carrying out stress
testing. The work undertaken considered a period of at
least 12 months from the date of approving these financial
statements.
The disclosures in the financial statements adequately
reflect the Directors’ conclusions around the uncertainties
and impact of COVID-19 and, that the going concern
assumption remains appropriate.
Income was tested on a sample basis from contracts. No
evidence of fraud or other understatement was identified.
All areas were examined to identify any potential
accounting estimates. These estimates were then
reviewed and tested for adequacy.
A proof in total calculation and substantive testing were
both undertaken and no evidence of overstatement was
identified.
Grant Income
There is a risk that grant income may be
materially misstated.
Grant income was reviewed and a sample basis from
contracts. No evidence of misstatement was identified.
Our audit procedures relating to these matters were designed in the context of our audit of the Financial
Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Our application of materiality
We define materiality as the magnitude of misstatement in the Financial Statements that of materiality makes
it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced.
25
We use materiality both in planning and in the scope of our audit work and in evaluating the results of our
work.
We determined materiality for the Company to be £16,560. We agreed with the Audit Committee that we would
report to them all audit differences in excess of 5% of materiality, as well as differences below that which
would, in our view, warrant reporting on a qualitative basis. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall presentation of the Financial Statements.
An overview of the scope of our audit
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 misstatement or inconsistencies
we consider the implications for our report.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of
the audit, we have not identified material misstatements in the strategic report or the directors’ report.
26
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
•
•
•
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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 16, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Our responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements in located on the Financial
Reporting Council’s website at www.frc.org.uk/auditorsreponsibilities. This description forms part of our
auditor’s report.
Use of our report
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.
Benjamin Bidnell (Senior Statutory Auditor)
For and on behalf of Shipleys LLP,
Chartered Accountants and Statutory Auditor
10 Orange Street
Haymarket
London WC2H 7DQ
27
Income Statement for the year ended 30 June 2020
Revenue
Other operating income
Total income
Net operating expenses
Operating loss
Finance Income
Loss before taxation
Income tax income
Year
ended
30 June
2020
£
799,055
42,594
841,649
(976,034)
(134,385)
679
Year
ended
30 June
2019
£
718,965
64,136
783,101
(984,320)
(201,219)
470
(133,706)
(200,749)
69,282
96,709
Notes
3
3
4
7
9
for the year attributable to equity
Loss
shareholders
26
(64,424)
(104,040)
Earnings per share (shown in pence)
10
Basic
Diluted
(0.09)p
(0.09)p
(0.14)p
(0.14)p
28
Statement of Comprehensive Income
Loss for the year
Other comprehensive income
Year ended
30 June
2020
£
(64,424)
Year ended
30 June
2019
£
(104,040)
-
-
Total comprehensive income/ (expense) for the year
(64,424)
(104,040)
Attributable to:
Equity holders
(64,424)
(104,040)
29
Statement of Financial Position as at 30 June 2020
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 revenue
Net current assets
Net assets
Equity
Called up share capital
Share premium account
Other reserves
Retained earnings
Total equity
Notes
12
13
14
15
19
20
23
24
25
26
2020
£
3,864
11,536
-
15,400
2019
£
1,373
18,438
-
19,811
383,238
1,047,860
269,110
405,366
1,431,098
674,476
1,446,498
694,287
123,819
7,698
131,517
1,299,581
1,314,981
1,275,752
5,896,737
199,954
(6,057,462)
85,123
1,250
86,373
588,103
607,914
1,181,038
5,228,172
191,742
(5,993,038)
1,314,981
607,914
The financial statements were approved by the board of directors and authorised for issue on 30 September 2020.
Signed on its behalf by:
Dr P B Harper - Chairman
Company Registration No. 04225086
30
Statement of Changes in Equity for the year ended 30 June 2020
Share
capital
Share
premium
account
Share-based
com-
pensation
on reserve
Retained
earnings
Total
Balance at 1 July 2018
1,181,038
5,228,172
169,814
(5,888,998)
690,026
Notes
£
£
£
£
£
Loss and total comprehensive
Income/(expense) for the year
Issue of share capital (net of costs)
Transfer to other reserves
Balance at 30 June 2019
Loss and total comprehensive
income/ (expense) for the year
Issue of share capital (net of costs)
Transfer to other reserves
23
25
23
25
-
-
-
-
-
-
-
-
21,928
(104,040)
-
-
(104,040)
-
21,928
1,181,038
5,228,172
191,742 (5,993,038)
607,914
-
94,714
-
-
668,565
-
-
-
8,212
(64,424)
-
-
(64,424)
763,279
8,212
Balance at 30 June 2020
1,275,752
5,896,737
199,954 (6,057,462)
1,314,981
31
Cash Flow Statement for the year ended 30 June 2020
Notes
£
£
£
£
2020
2019
Cash flows from operating activities
Cash absorbed by operations
33
Tax refunded
Net cash outflow from operating
activities
Investing activities
Purchase of intangible assets
Purchase of tangible fixed assets
Interest received
(200,008)
83,638
(226,244)
82,472
(116,370)
(143,772)
(2,913)
(2,181)
679
(1,385)
(21,816)
470
Net cash used in investing activities
(4,415)
(22,731)
Financing activities
Proceeds from issue of shares
Share issue costs
Net cash generated from financing
activities
Net increase in cash and cash
equivalents
Cash and cash equivalents at beginning of
year
Cash and cash equivalents at end of year
828,750
(65,471)
-
-
763,279
-
642,494
(166,503)
405,366
1,047,860
571,869
405,366
32
Notes to the Financial Statements
1
Accounting policies
Company information
Physiomics Plc is a company limited by shares incorporated in England and Wales. The registered office is
The Magdalen Centre, Oxford Science Park, Robert Robinson Avenue, Oxford, OX4 4GA. The Company’s
ordinary shares of 0.4p each are admitted to trading on the AIM market of the London Stock Exchange plc.
1.1 Accounting convention
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted for use in the European Union and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS, except as otherwise stated.
The financial statements have been prepared on the historical cost basis. The principal accounting policies
adopted are set out below.
1.2 Going concern
The accounts have been prepared on the going concern basis. The Company primarily operates in the
relatively defensive pharmaceutical industry which the board expects to be less affected by current
economic conditions, including the potential consequences of Brexit, compared to other industries.
The Company had £1,047,860 of cash and cash equivalents as at 30 June 2020 (2019 £405,366).
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 at least the next 12 months. In coming to this conclusion, the board notes
that current cash and currently contracted projects are projected to more than cover budgeted expenses
for this period.
After reviewing the Company’s projections, the Directors believe that the Company is adequately placed
to manage its business and financing risks for the next twelve months. Accordingly, they continue to adopt
the going concern basis in preparing the annual report and accounts.
1.3 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.
1.4
Intangible assets other than goodwill
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
33
expenses disclosed in the income statement.
Intangible assets are amortised over their useful lives as follows:
Patents and licenses
Trademarks
Useful life
15 years
10 years
Method
Straight line
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.
1.5 Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of
depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over
their useful lives on the following bases:
Fixtures and fittings
IT Equipment
3 years straight line
3 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale
proceeds and the carrying value of the asset and is recognised in the profit and loss account.
1.6 Research and development expenditure
Expenditure on research activity is recognised as an expense in the period in which it is incurred.
1.7
Impairment of tangible and intangible 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.
1.8 Fair value measurement
IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change
when an entity is required to use fair value, but rather provides guidance on how to measure fair value
under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the
principles that the Company uses to assess the fair value, but the assessment of fair value under IFRS 13
has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures
of the Company. It requires specific disclosures about fair value measurements and disclosures of fair
values, some of which replace existing disclosure requirements in other standards.
1.9 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid
investments with original maturities of three months or less.
34
1.10 Financial assets
Financial assets are recognised in the Company’s statement of financial position when the Company
becomes party to the contractual provisions of the instrument.
Financial assets are classified into specified categories. The classification depends on the nature and
purpose of the financial assets and is determined at the time of recognition.
Financial assets are initially measured at fair value plus transaction costs, other than those classified as fair
value through the income statement, which are measured at fair value.
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.
Impairment of financial assets
Financial assets, other than those at fair value through the income statement, are assessed for indicators
of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events
that occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been affected.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
1.11 Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through the income statement or
other financial liabilities.
Financial liabilities are classified according to the substance of the contractual arrangements entered into.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the Company’s obligations are discharged,
cancelled, or they expire.
1.12 Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after
deducting all of its liabilities.
1.13 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as
35
reported in the income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the
reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts
of assets and liabilities in the financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period
when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited directly to equity, in which case the deferred
tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the Company has a
legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities
relate to taxes levied by the same tax authority.
1.14 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services
are received.
Termination benefits are recognised immediately as an expense when the Company is demonstrably
committed to terminate the employment of an employee or to provide termination benefits.
1.15 Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as
they fall due.
1.16 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.
1.17 Leases
At inception, the Company assesses whether a contract is, or contains, a lease within the scope of IFRS 16.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset
for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the
Company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-
use assets are included within tangible fixed assets, apart from those that meet the definition of investment
36
property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date plus any initial direct costs
and an estimate of the cost of obligations to dismantle, remove, refurbish, or restore the underlying asset
and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The
estimated useful lives of right-of-use assets are determined on the same basis as those of other tangible
fixed assets. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for
certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the company's incremental borrowing rate. Lease payments included in the
measurement of the lease liability comprise fixed payments, variable lease payments that depend on an
index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any
options that the company is reasonably certain to exercise, such as the exercise price under a purchase
option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of
machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT
equipment. The payments associated with these leases are recognised in profit or loss on a straight-line
basis over the lease term.
In the comparative period, as a lessee applying IAS 17, the company classified leases as finance leases
whenever the terms of the lease transferred substantially all the risks and rewards of ownership to the
lessees. All other leases were classified as operating leases. Assets held under finance leases were
recognised as assets at the lower of the assets’ fair value at the date of inception and the present value of
the minimum lease payments. The related liability was included in the balance sheet as a finance lease
obligation. Lease payments were treated as consisting of capital and interest elements and the interest was
charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of
the liability. Rentals payable under operating leases, less any lease incentives received, were charged to
profit or loss on a straight line basis over the term of the relevant lease except where another more
systematic basis was more representative of the time pattern in which economic benefits from the leased
asset were consumed.
1.18 Government grants
Government grants are recognised when there is reasonable assurance that the grant conditions will be
met and the grants will be received.
Government grants of a revenue nature are credited to the profit and loss account in the same period as
the related expenditure.
1.19 Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at
the dates of the transactions. At each reporting end date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains
37
and losses arising on translation are included in the income statement for the period.
1.20 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.
2
Critical accounting estimates and judgements
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.
3
Revenue & segmental reporting
An analysis of the Company's revenue is as follows:
Revenue
Other operating income
Grant income
2020
£
2019
£
799,055
718,965
42,594
42,594
64,137
64,137
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, European Union and USA (2019: UK, European Union and USA) from its
principal activity.
38
4
Operating loss
Operating loss for the period is stated after charging/(crediting):
Net foreign exchange losses/(gains)
Research and development costs
Government grants
Fees paid to the Company's auditor, refer to below
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share-based payments
5
Auditors remuneration
Fees payable to the Company's auditor and associates:
For audit services
Audit of the Company's financial statements
For other services
Taxation compliance services
Audit-related assurance services
Other taxation services
Innovate UK grant related services
Total fees
2020
£
169
-
(42,594)
14,000
9,083
422
8,212
2019
£
(276)
-
(64,137)
14,433
8,381
12
21,928
2020
£
2019
£
10,000
10,000
2,000
-
2,000
-
2,000
-
1,183
1,250
14,000
14,433
39
6
Employees
The average monthly number of persons (including directors) employed by the Company during the year
was:
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension and insurance benefit costs
Details of the remuneration of Directors are included in the Directors Report.
7
Finance income
Interest income
Bank deposits
8
Finance costs
2020
Number
2019
Number
7
7
2020
£
408,051
44,785
35,636
2019
£
420,315
48,361
22,662
488,472
491,338
2020
£
2019
£
679
470
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 revenue values do not bear interest.
Interest rate profile
The Company had no bank borrowings at the 30 June 2020 and 30 June 2019.
40
9
Income tax expense
Current tax
Research and development tax credit: current year
Adjustment in respect of prior years’ research and development
The charge for the year can be reconciled to the loss per the income statement as follows:
Loss before taxation
Continuing operations
2019
£
2020
£
(81,786)
(96,142)
12,504
(567)
(69,282)
(96,709)
2020
£
2019
£
(133,706)
(200,749)
Expected tax charge based on a corporation tax rate of 19.00%
(25,404)
(38,142)
Expenses not deductible in determining taxable profit
Unutilised tax losses carried forward
Adjustment in respect of prior years’ research and development
Research and development expenditure tax credit
Deferred / (accelerated) capital allowances
Research and development enhancement
Research and development enhancement
Tax charge for the period
1,271
-
12,504
(81,786)
1,562
(48,254)
70,825
4,645
-
(567)
(7,280)
(2,613)
(52,752)
-
(69,282)
(96,709)
At 30 June 2020 tax losses of £3,846,025, (2019: £3,811,775) remained available to carry forward against
future taxable trading profits. These amounts are in addition to any amounts surrendered for Research and
Developments tax credits. There is an unrecognised deferred tax asset of £729,527, (2019: £648,002).
10 Earnings per share
Number of shares
Weighted average number of ordinary shares for basic earnings per share
Earnings - Continuing operations
2020
£
2019
£
73,721,869
71,910,394
Loss for the period from continued operations
(64,424)
(104,040)
Earnings for basic and diluted earnings per share being net profit attributable to equity
shareholders of the Company for continued operations
(64,424)
(104,040)
41
Earnings per share for continuing operations
Basic and diluted earnings per share (shown in pence)
Basic and diluted earnings per share
From continuing operations (shown in pence)
(0.09)
(0.14)
(0.09)
(0.09)
(0.14)
(0.14)
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’.
11
Financial instruments recognised in the statement of financial position
Held for trading:
Current financial assets
Trade and other receivables
Cash and cash equivalents
Current financial liabilities
Trade and other payables
Deferred revenue
2020
£
2019
£
78,863
107,622
1,047,860
1,126,723
405,366
512,988
109,029
70,626
7,698
116,727
1,250
71,876
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.
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 periodically 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.
42
12
Intangible assets
Cost
At 1 July 2018
At 30 June 2019
Additions - purchased
Disposals
At 30 June 2020
Amortisation and impairment
At 1 July 2018
At 30 June 2019
Charge for the year
Eliminated on disposals
At 30 June 2020
Carrying amount
At 30 June 2020
At 30 June 2019
Trademarks
£
-
Patents &
Licenses
£
Total
£
75,646
75,646
1,385
2,913
-
4,298
-
12
422
-
434
3,864
1,373
-
-
-
-
1,385
2,913
-
4,298
75,646
75,646
-
-
-
-
-
-
12
422
-
434
3,864
1,373
43
13 Tangible fixed assets
Cost
At 1 July 2018
Additions
Disposals
At 30 June 2019
Additions
Disposals
At 30 June 2020
Accumulated depreciation and impairment
At 1 July 2018
Charge for the year
Eliminated on disposal
At 30 June 2019
Charge for the year
Eliminated on disposal
At 30 June 2020
Carrying amount
At 30 June 2020
At 30 June 2019
At 30 June 2018
14
Investments
Investment in subsidiaries
Impairment of investment
Fixtures and
fittings
£
2,206
1,154
(411)
2,949
79
-
3,028
2,206
96
(411)
1,891
408
-
2,300
728
1,058
-
IT equipment
£
43,400
20,662
(7,525)
56,537
2,102
-
58,640
38,397
8,285
(7,525)
39,157
8,675
-
47,832
10,808
17,380
5,003
Total
£
45,606
21,816
(7,936)
59,486
2,181
-
61,668
40,603
8,381
(7,936)
41,048
9,083
-
50,132
11,536
18,438
5,003
Current
Non-current
2020
£
-
-
-
2019
£
-
-
-
2020
£
-
-
-
2019
£
1
(1)
-
The Company owned 100% of E-Phen Limited, a dormant company incorporated in the England and Wales.
E-Phen Limited was dissolved on 7 September 2019.
The Company has not designated any financial assets that are not classified as held for trading as financial
assets at fair value through profit or loss.
44
15 Trade and other receivables
Trade debtors
Other receivables
Corporation tax recoverable
VAT recoverable
Prepayments and accrued income
16
Fair value of trade receivables
Due within one year
2020
£
75,085
3,778
81,786
10,475
212,114
2019
£
103,844
3,778
96,142
22,518
42,828
383,238
269,110
There are no material differences between the fair value of financial assets and the amount at which they are stated in the financial
statements.
17
Fair value of financial liabilities
There are no material differences between the fair value of financial liabilities and the amount at which they are stated in the
financial statements.
18
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.
19
Trade and other payables
Trade creditors
Accruals and deferred income
Social security and other taxation
Other creditors
Due within one year
2020
£
27,932
78,618
14,790
2,479
123,819
2019
£
26,479
41,712
14,497
2,435
85,123
45
20 Deferred revenue
Arising from invoices in advance
2020
£
7,698
Analysis of deferred revenue
Deferred revenues are classified based on the amounts that are expected to be settled within the next 12 months and
after more than 12 months from the reporting date, as follows:
Current liabilities
21 Retirement benefit schemes
Defined contribution schemes
2020
£
7,698
2019
£
1,250
2019
£
1,250
The Company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held
separately from those of the Company in an independently administered fund.
The total costs charged to income in respect of defined contribution plans is £29,719 (2019: £16,334).
As at the statement of financial position date the Company had unpaid pension contributions totalling £2,479 (2019: £2,435).
46
22
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. Some options are subject to performance criteria relating to either share
price performance or the achievement of certain corporate milestones. The contractual life of the options is 10 years from the
date of issue.
A summary of the options at the start and end of period for directors and all other employees is presented in the following table:
Granted during
period
Forfeited
during period
Exercised during
period
Outstanding at
end of period
Exercisable at
end of period
Exercise
price (p)
Date of
grant
Date of
expiry
Holder
Dr. C. Chassagnole
Dr. C. Chassagnole
Dr. C. Chassagnole
Dr. C. Chassagnole
Dr. C. Chassagnole
Dr. C. Chassagnole
Dr. C. Chassagnole
Dr. J. Millen
Dr. J. Millen
Dr. J. Millen
Dr. P. Harper
Dr. P. Harper
Dr. P. Harper
Dr. P. Harper
Dr. P. Harper
Dr. P. Harper
Other staff
Other staff
Other staff
Other staff
Other staff
Other staff
Other staff
Other staff
Total
Outstanding
at start of
period
118,565
32,331
129,381
322,615
659,641
350,000
267,000
1,453,923
520,000
400,000
76,645
12,932
51,752
129,046
258,092
140,000
41,648
91,107
77,628
188,605
54,596
403,781
490,000
533,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
118,565
-
-
-
-
-
-
-
-
-
76,645
-
-
-
-
-
41,648
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,331
129,381
322,615
659,641
350,000
-
40.00
28-Feb-10
28-Feb-20
16,166
34.00
09-Nov-11
09-Nov-21
129,381
13.20
11-Feb-13
11-Feb-23
322,615
6.20
24-Mar-15
24-Mar-25
659,641
2.50
28-Feb-17
28-Feb-27
350,000
5.35
26-Mar-18
26-Mar-28
267,000
267,000
3.16
26-Mar-19
26-Mar-29
1,453,923
1,453,923
2.50
28-Feb-17
28-Feb-27
520,000
400,000
-
12,932
51,752
129,046
258,092
140,000
-
91,107
77,628
520,000
5.35
26-Mar-18
26-Mar-28
400,000
3.16
26-Mar-19
26-Mar-29
-
40.00
28-Feb-10
28-Feb-20
6,466
34.00
09-Nov-11
09-Nov-21
51,752
13.20
11-Feb-13
11-Feb-23
129,046
6.20
24-Mar-15
24-Mar-25
258,092
3.50
21-Dec-15
21-Dec-25
140,000
5.35
26-Mar-18
27-Mar-28
-
40.00
28-Feb-10
28-Feb-20
45,554
34.00
09-Nov-11
09-Nov-21
77,628
13.20
11-Feb-13
11-Feb-23
188,605
188,605
6.20
24-Mar-15
24-Mar-25
54,596
403,781
490,000
533,000
54,596
3.50
21-Dec-15
21-Dec-25
403,781
2.50
28-Feb-17
28-Feb-27
490,000
5.35
26-Mar-18
26-Mar-28
533,000
3.16
26-Mar-19
26-Mar-29
6,565,430
5,297,245
6,802,288
-
236,858
The weighted average share price at the date of the grant for share options granted in the year was £Nil as no share options were
granted during the current year (2019: £0.0316).
The options outstanding at 30 June 2020 had an exercise price ranging from £0.025 to £0.40, and a remaining contractual life of
8 years.
During 2020, no options were granted. Options vest according to time and performance-based criteria.
During 2019, options were granted on 26 March 2019. The weighted average fair value of the options on the measurement date
was £0.011366. Options vest according to time and performance-based criteria.
The options were granted with an exercise price of £0.032.
47
Fair value was measured using Black-Scholes share option pricing model. Inputs were as follows:
Expected volatility
Expected life
Risk free rate
2020
2019
60.18%
2.34 years
0.664%
60.18%
2.34 years
0.664%
The expected volatility is based on the sixty day average 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. The risk free rate of return is
derived from UK treasury yields at 2 and 3 years.
Total expenses of £8,212 related to equity settled share-based payment transactions were recognised in the year. (2019 -£21,928).
23
Share capital
Ordinary share capital, issued and fully paid
95,588,965 Ordinary of 0.4p each (2019: 71,910,394)
2,481,657,918 Deferred of 0.036p each
2020
£
2019
£
382,355
287,641
893,397
893,397
1,275,752
1,181,038
The ordinary shares carry no rights to fixed income. The deferred shares have no voting rights and have no rights to receive
dividends or other income.
Reconciliation of movements during the year:
Ordinary Number
Deferred Number
At 1 July 2019
Issue of fully paid shares
At 30 June 2020
71,910,394
2,481,657,918
23,678,571
-
95,588,965
2,481,657,918
Current year changes to Ordinary share capital
On 3 June 2020, the Company issued 23,678,571 ordinary shares of 0.4p at a price of 3.5p per ordinary share for working capital
purposes.
48
24
Share premium account
At 30 June 2018 & at 30 June 2019
Issue of new shares
Share issue expenses
At 30 June 2020
£
5,228,172
734,036
(65,471)
5,896,737
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).
25 Other reserves: share-based compensation reserve
At 30 June 2018
Additions
At 30 June 2019
Additions
At 30 June 2020
£
169,814
21,928
191,742
8,212
199,954
The share-based compensation reserve represents the credit arising on the charge for share options calculated in accordance with
IFRS 2.
26 Retained earnings
At 1 July 2018
Loss for the period
At 30 June 2019
Loss for the period
At 30 June 2020
£
(5,888,998)
(104,040)
(5,993,038)
(64,424)
(6,057,462)
Retained earnings includes an amount of £237,889 (2019: £237,889) in relation to the Equity Swap Agreement in 2014 which
under the Companies Act is not distributable.
49
27 Operating lease commitments
Lessee
Amounts recognised in the income statement as an expense during the period in respect of operating lease arrangements are as
follows:
Minimum lease payments under operating leases
2020
£
59,293
2019
£
57,331
At the reporting end date, the Company had outstanding commitments for future minimum lease payments under non-
cancellable operating leases, which fall due as follows:
Within one year
28 Capital commitments
At 30 June 2020 and 30 June 2019 the Company had no capital commitments.
2020
£
6,013
2019
£
4,818
6,013
4,818
29 Capital risk 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 23 to 26.
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 managing 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.
30 Events after the reporting date
The only material post-balance sheet event was the award of a contract by Astellas Pharma Inc. on 31 July 2020.
31 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 17.
50
32 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.
33 Cash generated from operations
Loss for the year after tax
Adjustments for:
Taxation credited
Finance costs
Investment income
Amortisation and impairment of intangible assets
Depreciation and impairment of tangible fixed assets
Equity settled share-based payment expense
Movements in working capital:
Increase in debtors
Decrease in creditors
Increase/(decrease) in deferred revenue
2020
£
2019
£
(64,424)
(104,040)
(69,282)
-
(679)
422
9,083
8,212
(128,484)
38,696
6,448
(96,709)
-
(470)
13
8,381
21,928
(13,515)
25,358
(67,190)
Cash absorbed by operations
(200,008)
(226,244)
51