REDX PHARMA PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED 30 SEPTEMBER 2017
2017
CONTENTS
KEY EVENTS & RESULTS ..................................................................................................................3
CHAIRMAN’S STATEMENT ................................................................................................................5
STRATEGIC REPORT
Operational Review ......................................................................................................................8
Principal Risks and Uncertainties ..................................................................................................11
PORCUPINE PROGRAMME ..............................................................................................................14
ROCK 1/2 ....................................................................................................................................16
GOVERNANCE
Board of Directors ......................................................................................................................17
Directors’ Report ........................................................................................................................19
Corporate Governance Report ......................................................................................................21
Directors’ Remuneration Report....................................................................................................25
Statement of Directors’ Responsibilities ........................................................................................28
Independent Auditors’ Report ......................................................................................................29
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income ........................................................................33
Consolidated Statement of Financial Position..................................................................................34
Consolidated Statement of Changes in Equity ................................................................................35
Consolidated Statement of Cash Flows ..........................................................................................36
Notes to the Financial Statements ................................................................................................37
Company Statement of Financial Position ......................................................................................59
Notes to the Individual Financial Statements..................................................................................60
COMPANY INFORMATION ..............................................................................................................69
2
KEY EVENTS & RESULTS
Corporate
21 March 2017 – Results for year ending 30 September 2016 announced including:
•
•
A Strategic Refocus initiative and a consequential head-count reduction
Completion of £12m headline funding round
• Notification that Non-Executive Director and Founder Dr Peter Jackson would be standing down on
31 March 2017 and that Non-Executive Chairman Frank Armstrong and Non-Executive Director
Mr Peter McPartland, would be standing down at the AGM in April 2017
1 May 2017 – Mr Iain Ross appointed as Non-Executive Chairman
17 May 2017 – Interim Results for 6 months ending 31 March 2017
24 May 2017 – Redx Pharma plc and subsidiary Redx Oncology are placed into Administration and shares
suspended from trading on AIM
31 July 2017 – Sale of Bruton’s tyrosine kinase (BTK) programme to Loxo Oncology, Inc. (NASDAQ: LOXO)
for US$40m in cash
10 August 2017 – Joint Administrators announce their Proposals to creditors
14 August 2017 – Director, Mr David Lawrence resigns
24 August 2017 – Joint Administrators announce creditors distribution
Research & Development
23 June 2017 – MHRA approve the clinical trial application (CTA) for porcupine inhibitor RXC004, for a phase
1/2a clinical study in hard-to-treat cancers
9 September 2017 – A poster is presented at the European Society for Medical Oncology (ESMO) identifying
a specific gastric cancer patient sub-population sensitive to RXC004, which will allow targeting of specific
patients for clinical trials
Financial results – Year ending 30 September 2017
•
Revenue:
• Operating Expenditure:
•
•
•
R&D Expenditure:
Profit after tax:
Closing Cash:
Post year end events
£30.5m
£15.8m
£8.2m
£1.5m
£23.8m
2/3 November 2017 – Exit from Administration and the Group (Redx Pharma plc and its subsidiaries),
announces it has resumed trading under the control of the Directors.
6 November 2017 – The Group updates the market on its revised strategy, share suspension from trading
on AIM is lifted and the following changes in personnel are announced:
•
CEO Dr Neil Murray resigned and left the board with immediate effect and Non-Executive Director Mr
Norman Molyneux resigned from the Board;
• Mr Iain Ross appointed Interim Executive Chairman;
• Mr Dominic Jackson appointed CFO and Executive Director;
3
KEY EVENTS & RESULTS (continued)
• Mr Peter Presland appointed as a Non-Executive Director and Chairman of the Audit, Risk and
Disclosure Committee; and
•
A search for new CEO initiated
14 November 2017 – Interim Executive Chairman buys 348,000 shares
20 December 2017 – Group announces Preliminary Results for year ending 30 September 2017
Balance Sheet at Exit from Administration 2 November 2017 – UNAUDITED
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Current assets
Trade and other receivables
Cash and cash equivalents
Current tax
Total assets
Current liabilities
Trade and other payables
Net assets
Equity
Share capital
Share premium
Share based compensation
Capital redemption reserve
Retained deficit
Equity attributable to shareholders
£’000
190
430
620
2,217
13,866
1,155
17,238
17,858
4,311
13,547
1,265
33,263
880
1
(21,862)
13,547
4
CHAIRMAN’S STATEMENT
“Re-focused; science based, commercially driven and financially sound”
Dear Shareholder,
2017 has not been a good year for the shareholders of Redx Pharma plc and the value of your investment has
reduced significantly. Having said this it has been an extraordinary year, which none of us working for,
associated with, or invested in Redx Pharma plc will ever forget.
The art of the possible
After being appointed Chairman on 1 May 2017, three weeks later, Redx Pharma plc was put into
Administration by a major long-term creditor. I was as surprised as anybody at the turn of events. However,
having worked our way through the five-month period in Administration, supported by a strong management
team and excellent advisers, I am pleased to report that your Company has emerged from Administration
stronger, leaner and ‘fit for purpose’ across all facets of the business. It is a very unusual situation whereby
a public company goes into Administration and then emerges again as a viable entity and it is a testament to
all those involved that we accomplished this and made “the impossible – possible”.
This has not, however, been a pleasant experience. Sacrifices have had to be made and some tough decisions
taken, and as a result, the Group, whilst under the control of the Administrators, had no choice but to sell off
one of the internal development programmes to raise the necessary cash to allow the business to exit
Administration as a going concern.
New leadership
The Company exited Administration after the period under review, so in November 2017, the Board has been
re-structured such that six of the seven directors who were in place at the start of the financial year under
review are no longer with the business.
Upon exit from Administration, Dominic Jackson and Peter Presland joined the Board as Chief Financial Officer
(“CFO”) and independent Non-Executive Director respectively. Both bring strong financial and City experience.
Peter Presland will chair the Audit, Risk and Disclosure Committee and Bernd Kirschbaum, who remains on
the Board, will continue to chair the Remuneration and Scientific committees.
Following the resignation of the former CEO, Dr Neil Murray, a search has been initiated for a new, suitably
qualified CEO and until such time as the new incumbent is appointed, I will take on the role of Interim
Executive Chairman and work with the senior management team to progress the development of the business
as a whole.
A new modus operandi
Over the period, there has been a fundamental shift in the way in which the business operates and I, along
with the other Directors and the senior management team, have reviewed all facets of the business, including
the financial systems, controls and procedures; reviewed and focused the Research & Development (“R&D”)
portfolio; and taken on advice from stakeholders and advisers. This has resulted in the adoption of a number
of changes to the Group to ensure a more focused approach, with an emphasis on financial rigour, throughout
the organisation.
During the year under review, the Group had already begun to focus the pipeline of development projects
and to reduce the in-house headcount and resources. However, as a result of going into Administration, this
process was further accelerated, and we now have a more focused research and development pipeline, which
consists of two prioritised development programmes and five other programmes in research.
At the time of exit from Administration, the Group had £13.9m of cash, with no loan facilities nor liabilities –
outside of those necessary for the normal course of business – which when coupled with a reduced cost base,
provides a cash runway through to early 20191.
It should be noted that this does not include any potential income from partnering/collaborations and/or the
sale or out-licensing of non-core assets. Therefore, with the reduction in the cost base already implemented,
1
Independent working capital report prepared by Crowe Clark Whitehill for the Company and Administrators supports a minimum
of 12 months working capital
5
CHAIRMAN’S STATEMENT (continued)
coupled with making further progress in refining our discovery portfolio, I remain confident that our cash
together with our partnering initiatives will enable us to achieve our medium-term objectives. In saying this,
your Board fully recognises the obligation to take the utmost care in the use of shareholder funds, and we
will not hesitate to extend the cash runway through realising further cost savings by eliminating unnecessary
expenditure if the circumstances dictate.
During the period under review, Redx’s lead programme, RXC004, a potential best-in-class porcupine inhibitor,
progressed through pre-clinical development and in June 2017 the clinical trial application (CTA) was approved
by the MHRA for a phase 1/2a clinical study that will include hard-to treat cancers such as gastric, pancreatic
and biliary. This marked the culmination of a huge effort by the Redx team and our clinical development
advisers, Novella Clinical, and as a result, it is anticipated that this drug will enter the clinic in Q1 2018.
In addition, in September 2017 the Group presented a poster at the European Society for Medical Oncology
(ESMO) identifying a specific gastric cancer patient sub-population sensitive to RXC004, which will allow us
to target specific patients for the clinical trials.
In addition, over the last 12 months, Redx has developed considerable expertise in understanding the
molecular mechanisms underlying fibrosis and the druggable targets on which to focus. The Group has several
active programmes in this area with the lead programme being a potential first-in-class ROCK inhibitor where
the targeted indication is fibrosis arising from Inflammatory Bowel Disease (IBD). A development candidate
from this programme is due to be announced in mid 2018.
The Group intends to out-license its non-core assets and with the assets that we have prioritised, will have
no hesitation in forming relevant collaborations to secure third party validation, thereby increasing the
probability of success.
Financial overview
Redx’s financial position has significantly improved with cash of £23.8m as at 30 September 2017 compared
to £5.8m at the previous year end due to the successful sale of the BTK asset for £30.5m. In addition, the
Group has no borrowings following settlement of the £2.0m loan to Liverpool City Council and agreements
with all other creditors.
The Group generated operating income of £30.5m again due to the sale of the BTK asset. Other income of
£1.3m for the year ended 30 September 2017 was down compared to £2.3m in the previous year due to the
reduction in grants receivable following settlement of the RGF Grant funding (see note 3 to the Consolidated
Financial Statements). The Company issued 32.9m shares pursuant to two share placings raising in total
£12.4 million and the issue of share options.
Going forward, the Group will benefit from a better cash position with lower ongoing costs following a major
reorganisation, active cost management as well as reduced ongoing financial costs. Redx is therefore well
placed to invest in its ongoing and now proven R&D platform.
Corporate governance
The new Board of Directors is committed to maintaining the highest standards of transparency, ethics and
corporate governance, whilst also providing leadership, controls and strategic oversight to ensure that the
Group delivers value to all shareholders. Each Director brings independence of character and judgment to
the role. Board and Committee meetings are characterised by robust constructive debate, based upon high-
quality reporting from management, and the Board will keep its performance and core governance principles
under regular review.
Outlook – focus, realism and results
In the next 12 to 18 months the Group expects to see further validation of its view of the pre-eminence of its
discovery capability. The strategy will be to continue to focus on creating potentially ‘first-in-class’ or ‘best-in-
class’ drugs. The intention is to ensure that the programmes will be highly valued by the market and
pharmaceutical industry alike.
The Board will aim to create value through organic growth, but also will remain alert to external opportunities
to accelerate the development of the business, including forming validating partnerships with third-parties.
Currently Management is in discussions with third-parties in respect of partnerships and the licensing of non-
core assets. However in the absence of value generating partnerships/collaborations being secured in a timely
6
CHAIRMAN’S STATEMENT (continued)
fashion your Board will not hesitate to seek to raise additional funds from shareholders and the investment
community should they be required to take our programmes through to significant inflection points.
The mantra for business going forward must be Focus, Realism and Results.
The Group will focus on the key assets. Having made some tough decisions and having let a number of people
leave the business, the cost base is under control. Prudent financial management will continue to be a key
driver and accordingly, the Board will not hesitate to terminate programmes which prove to be non-viable, or
to make further cost cuts should the need arise.
Realism and professionalism will be key to forming any validating partnerships and the way in which the
business is managed going forward.
Results should be transparent, measurable and time-related and, as a consequence, the Board have
established clear timelines for achieving partnering and pipeline objectives in order to achieve a sustainable
increase in market value.
Board commitment
Recently, upon exiting Administration, I made the following statement, which I would like to re-iterate in this
Annual Report on behalf of the Board.
“……….The new Board takes the view that the long-term success of the Company will depend on leveraging
scientific excellence to build a diversified portfolio of high-quality, pre-clinical and clinical-stage pharmaceutical
assets that will be prized by both potential investors and partners. Only by so doing can we reasonably hope
to grow the long-term value of the business. We return to the market with multiple “shots on goal” with two
prioritised development programmes and five other programmes in research.
We are not complacent and recognise that the Company’s long-term future and viability will depend upon our
ability to achieve timely and realistic goals. We do not underestimate the need to regain credibility and profile
in the sector and with you, our shareholders. We have a scientifically and commercially experienced
management team with a track record of success, working with Key Opinion Leaders to ensure we progress
our programmes optimally.
We have defined a clear strategy for the Company and we recognise drug development is invariably a capital-
intensive business, and any company that pursues new therapies for diseases as challenging as cancer and
fibrosis is required to make significant investments boldly in order to have any chance of success. Your Board
fully recognises the obligation this imposes upon us to take the utmost care in the use of shareholder funds,
and we will not be afraid to terminate programmes that cease to be competitive and to realise further cost
savings by eliminating unnecessary expenditure.…………”
On behalf of the Board I would like to thank Neil Murray, David Lawrence and Norman Molyneux for their
significant and valuable contributions to the business over a number of years and to wish them success in the
future.
Finally, I want to recognise the management and staff who are taking this business forward and congratulate
them on their efforts and resilience during this time of change and transition. I would also like to thank the
shareholders as a whole for their support and patience over what has been an extraordinary period in the
Group’s history.
At Redx we believe we have a world-beating discovery capability, and with a newly focused and committed
team and a targeted commercial partnership strategy, we see the next few years as exciting ones for the
Group and its shareholders. I look forward to reporting further progress over the next few months, including
the appointment of a new CEO and further announcements in respect of the development of the pipeline.
Iain Ross
Executive Chairman
7
STRATEGIC REPORT
Operational Review
The Directors present their Strategic Report on pages 8 to 13 for the year ended 30 September 2017.
The Operational Review, Key Performance Indicators and Principal Risks and Uncertainties sections form the
Strategic Report.
The principal activities of the business continue to be the discovery and development of proprietary, small
molecule drugs to address areas of high, unmet medical need.
In March 2017 the Company completed a share placing and subscription to raise £12m gross. As part of this,
Lanstead Capital LP agreed to subscribe for 11,500,000 subscription shares. Further information regarding
this transaction can be found in note 5 to the Consolidated Financial Statements.
Again, in March 2017, a strategic refocusing and restructuring of the Group was announced. The restructuring
was completed in May 2017. The costs associated with it have been separately disclosed in note 4 to the
Consolidated Financial Statements.
Following the Company entering Administration in May 2017, the entire focus thereafter was to take the steps
necessary to bring the Company out of Administration on a ‘going concern’ basis with a minimum of
12-months working capital. During this period, the Directors worked with the Administrators to resolve all
creditor claims and as a consequence the BTK programme assets were sold to Loxo Oncology for US$40m on
31 July 2017. Concurrently the Group progressed the development of its pipeline assets as outlined within
this report. The Group will continue to focus upon transitioning its programmes into the clinic as appropriate
and balance its resources to enable a steady flow of projects through the research pipeline.
Entering Administration triggered a clawback claim for RGF grant funding previously received within the Group.
This matter is further disclosed in note 3 to the Consolidated Financial Statements, and noted in the Key
Performance indicators below.
At the year end the Directors reviewed the loan to Redag Crop Protection Limited and derecognised it as an
asset as detailed in note 16.
Redx Pharma plc and Redx Oncology Limited exited Administration post year end on 2 November 2017.
Key Performance Indicators
The Group’s key performance indicators include a range of financial and non-financial measures. Details about
the progress of our research programs (non-financial measures) are included elsewhere in this Operational
Review, and below are the other indicators (financial) considered pertinent to the business.
Cash at year end
2017
£m
23.8
2016
£m
5.8
2015
£m
9.4
2014
£m
2.9
In March 2017 the Company raised £12m (gross) from a share placing and subscription. In August 2017 the
Group sold its BTK asset for $40m. Post year end £6.1m was used to settle RGF grant funding clawbacks. Full
details of cash usage can be found in the Consolidated Statement of Cash Flows.
Total operating expenditure
15.8
16.5
11.4
10.1
Expected to fall further in 2018 with a full year of benefit from the reduced headcount following the
reorganisation and cost saving initiatives.
R & D expenditure
8.2
8.1
5.1
4.0
The Group’s continuing focus is to maximise the amount of operating expenditure spent on research and
development activities.
Cash Flow
18.0
(3.7)
6.5
1.9
Reflecting both the share issue and BTK programme sale within the year. Post year end £6.1m was used to
settle RGF grant funding clawbacks.
8
STRATEGIC REPORT (continued)
Pipeline Progress
The Redx pipeline has continued to advance over the last year. Its lead programme, RXC004, a potential
best-in-class porcupine inhibitor, will enter the clinic in Q1 2018 following the recent approval by the MHRA
and Ethics Review Committee for a phase 1/2a study that will include patients with hard-to-treat cancers.
A dual ROCK1/2 inhibitor programme (acquired from the private Belgian company, Amakem in March 2017
for the treatment of fibrosis associated with inflammatory bowel disease (IBD) is in late stage Lead
optimisation with a first in class development candidate due to be selected mid 2018. The Directors believe
pipeline progress to be the most significant non-financial Key Performance indicator.
Oncology
Porcupine program
During the financial year, the Group announced that the clinical trial application (CTA) for its lead asset,
porcupine inhibitor RXC004, was approved by the MHRA and Ethics Review Committee for a phase 1/2a clinical
study that will include hard-to-treat cancers such as gastric, pancreatic and biliary. This is one of the significant
opportunities that Redx intends to target with this drug, and expects to start the 1a portion of the study
(which will be in cancer “all comers”) in Q1 2018. On this timeline, the Group anticipates initial safety and
tolerability results from the study during H2 2018, and believes RXC004 has the potential to be used as a
biomarker-guided, targeted therapy in hard-to-treat cancers and as a combination partner in immuno-
oncology treatment paradigms with checkpoint inhibitors. Together these are multi-billion-dollar addressable
markets. Redx expects to see an increase in the number of potentially interested partners once safety data
is available from the phase 1/2a trial.
Porcupine is a key enzyme in the oncogenic Wnt signalling pathway. This pathway is implicated in a range of
hard-to-treat cancers with poor prognosis such as pancreatic, biliary and gastric cancers. The Group’s
Porcupine inhibitor, RXC004, is a potent inhibitor of this enzyme and pathway, leading to strong tumour growth
inhibitory effects in a variety of cancer models. Redx has also shown that RXC004, when administered together
with an immune checkpoint inhibitor (anti-PD-1) has a synergistic immune system modifying effect. Initial
clinical studies with RXC004 will be as a monotherapy, but we have included a combination therapy expansion
arm together with a checkpoint inhibitor in our clinical study design.
Other Pipeline Projects
Redx has several other compounds in pre-clinical profiling. The Group is in lead generation with its programme
developing allosteric inhibitors of the protein tyrosine phosphatase, SHP2. Competitive phosphatase inhibitors
that directly bind the catalytic site of the enzyme carry the risk of hitting too many vital phosphatases at the
same time. Therefore, Redx is focused on this more indirect method of achieving inhibition in order to ensure
specificity. As phosphatases are largely unexploited as pharmacological targets, Redx has an opportunity to
be at the forefront of drug development in this area. The Group also has an on-going collaboration with
AstraZeneca on an un-named target and a Pan-Raf inhibitor programme in Lead optimisation.
Fibrosis
Fibrosis is an internal scarring process, which can occur in response to injury, where excess connective tissue
is deposited in an organ or tissue, thereby impairing its function. Most chronic inflammatory diseases will
result in fibrosis, with progressive injury resulting in organ failure. Fibrotic disease can occur in nearly any
tissue in the body and contributes to 45%1 of deaths in the developed world. Solid organ fibrosis can occur
as a result of many different diseases, for example inflammatory bowel disease (IBD). Current therapeutic
options are limited for these chronic and often life-threatening diseases.
Redx’s experienced team of scientists has considerable expertise in understanding the molecular mechanisms
underlying fibrosis and hence which druggable targets to focus on. Redx are developing cutting edge therapies
that aim to stop and reverse the formation of fibrotic tissue. By targeting pathways involved in the progression
of these devastating diseases, these drugs are designed to be disease modifying rather than simply providing
symptomatic relief.
1
Bollong M. et al, Small molecule-mediated inhibition of myofibroblast transdifferentiation for the treatment of fibrosis (PNAS |
May 2, 2017 | vol. 114 | no. 18 | 4683)
9
STRATEGIC REPORT (continued)
Developing the first drug specifically designed to treat fibrosis related to inflammatory bowel
disease (IBD)
The Group’s lead programme is a potential first-in-class “soft” Rho Kinase (ROCK) 1/2 dual inhibitor where
the targeted indication is fibrosis arising from IBD. The drug is designed to work only at the site of action in
the gastrointestinal tract and degrades quickly, once absorbed, though enzyme-mediated metabolism in blood
plasma avoiding systemic exposure, which we believe will provide a clean safety window over cardiovascular
(CV) side effects seen in this target class. This differentiates Redx from other competitor dual ROCK 1/2
inhibitors which circulate in the bloodstream and have known CV safety risks. A development candidate is
expected to be announced in mid 2018. It is estimated that the direct cost to the US healthcare system of
IBD is up to $28bn [Mehta, F; Am. J. Manag. Care. 2016; 22: S51-60], suggesting that a drug for treating
(or preventing) fibrosis for this condition could have blockbuster potential. Redx recognised the potential for
this drug and acquired it from Amakem, a Belgian private company.
Other Fibrosis Projects
Idiopathic pulmonary fibrosis (IPF) is the target indication for the Group’s porcupine inhibitors, which are
currently being profiled in animal models of this disease. Redx also have a ROCK2 selective inhibitor lead
optimisation stage programme looking at kidney fibrosis associated with diabetes, and believe the
identification of a selective ROCK2 inhibitor will avoid the cardiovascular effects seen with systemically acting
dual ROCK1/2 inhibitors whilst retaining the beneficial anti-fibrotic effects of ROCK2 inhibition. This research
complements the Group’s lead ‘soft’ ROCK 1/2 inhibitor programme for IBD since both programmes exploit
the anti-fibrotic potential of ROCK inhibition with complementary differentiated approaches to provide a
favourable safety profile for the selected indication.
Strategy
Redx’s ambition is to continue to discover and develop proprietary, small molecule drugs to address areas of
high, unmet medical need. In cancer, Redx will pursue targeted therapies (i.e. where a biomarker can
potentially be used for selecting those patients that are most likely to benefit from therapy) and/or drugs
that can potentially disrupt cancer resistance pathways. In fibrosis, Redx is focused on developing treatments
that will potentially stop and reverse the formation of fibrotic tissue (i.e. the drugs are potentially disease
modifying, rather than simply providing symptomatic relief). Fibrosis is a feature of the pathology of a number
of devastating diseases with high unmet medical need. In both therapeutic areas Redx aims to develop drugs
whose profile suggests they will be best-in-class, if not first in class.
The anti-infective research unit has been closed and the Group will look to partner the assets in the near
term. With the re-focus on cancer and fibrosis, CARB-X has terminated the unused grant that was awarded
to Redx in March 2017 for the NBTI programme.
Redx will continue to seek to maximise shareholder value by advancing selected programmes through to
clinical development. The Group will aim to take products through to at least clinical proof of concept stage
at which point they can be meaningfully assessed, allowing a proper valuation of the asset for potential
partnering. Market data suggests success at this stage of development provides the most significant value
inflection in the development of a new medicine, with a significant return on investment achievable [Cortellis
Competitive Intelligence Database].
Senior Management Team
Following Dr Neil Murray’s resignation post year end when the Company came out of Administration, Iain
Ross became Interim Executive Chairman and he will remain until such time as the Company has appointed
a suitably qualified Chief Executive Officer (CEO) to lead the business. During this transition period, Iain Ross
will work closely with the executive management team comprising: Dr Richard Armer (Chief Scientific
Officer), Dr Matilda Bingham (Head of Research and Operations) and Mr Nicholas Adams (Chief Business
Officer) all of whom have made a significant contribution to enable the Company to exit Administration.
10
STRATEGIC REPORT (continued)
Financial Review
Financial position
At 30 September 2017, whilst still in Administration, the Group had cash resources of £23.8m (2016: £5.8m).
Borrowings of £2m had been repaid at the balance sheet date, and a £6.1m clawback of RGF funding was
repaid post year end in October 2017. The Group exited Administration on 2 November 2017 with a remaining
£13.9m in cash.
Impact of Administration
As detailed elsewhere in the Annual Report, two Group companies, Redx Pharma plc and Redx Oncology Ltd
were placed into administration on 24 May 2017. The principal financial impacts of this were:
• Costs of the Administration (note 1) £2.9m, including a penalty payment with regard to the derivative
financial instrument of £510k;
• Crystallisation of contingent liabilities with regard to grant funding costing £6.1m; and
• The write off of the derivative financial instrument entered into at the time of the last share issue (note 5)
costing £3.6m
Sale of BTK
Redx Oncology raised £30.5m ($40m) from the sale of its BTK programme to Loxo Oncology Inc.
Share issue
£12.4m (gross) was raised from the issue of shares during the year (2016: £10m).
Cashflows
Overall positive net cash flow of £18m, (2016: £3.7m outflow), generated from the BTK sale and the share
issue. No further grant income is expected.
Reorganisation
A major reorganisation of the Group took place in spring 2017, resulting in a significant reduction in staff
numbers. The cost of this was £0.8m. Average headcount reduced from 199 in 2016 to 131 over the year to
30 September 2017. Actual headcount at 30 September was 51.
Taxation
The group continues to claim Research and Development expenditure credits, with £1.1m due at
30 September 2017 (2016: £0.6m).
Principal Risks and Uncertainties
Redx is a biopharmaceutical company and, in common with other companies operating in this field, is subject
to a number of risks and uncertainties. The principal risks and uncertainties identified by Redx for the year
ended 30 September 2017 are below.
Research and Development
The Group is at a relatively early stage of development and may not be successful in its efforts to use and to
build a pipeline of product candidates and develop approved or marketable products. Technical risk is present
at each stage of the discovery and development process with challenges in both chemistry (including the
ability to synthesise novel molecules) and biology (including the ability to produce candidate drugs with
appropriate safety, efficacy and usability characteristics). Additionally, drug development is a highly regulated
11
STRATEGIC REPORT (continued)
environment which itself presents technical risk through the need for study designs and data to be accepted
by regulatory agencies. Furthermore, there can be no guarantee that the Group will be able to, or that it will
be commercially advantageous for the Group to, develop its intellectual property through entering into
licensing deals with emerging, midsize and large pharmaceutical companies.
Commercial
The biotechnology and pharmaceutical industries are very competitive. The Group’s competitors include major
multinational pharmaceutical companies, biotechnology companies and research institutions. Many of its
competitors have substantially greater financial, technical and other resources, such as larger numbers of
research and development staff. The Group’s competitors may succeed in developing, acquiring or licensing
drug product candidates that are more effective or less costly than any product candidate which the Group is
currently developing or which it may develop, and that competition may have a material adverse impact on
the Group.
Clinical Trials
The Group does not know whether any future clinical trials with any of its product candidates will be completed
on schedule, or at all, or whether its ongoing or planned clinical trials will begin or progress on the time
schedule it anticipates. The commencement of future clinical trials could be substantially delayed or prevented
by several factors, including:
– delays or failures to raise additional funding;
– results of future meetings with the MHRA, EMA, FDA and/or other regulatory bodies;
– a limited number of, and competition for, suitable patients with particular types of cancer for enrolment in
our clinical trials;
– delays or failures in obtaining regulatory approval to commence a clinical trial;
– delays or failures in obtaining sufficient clinical materials;
– delays or failures in obtaining approval from independent institutional review boards to conduct a clinical
trial at prospective sites; or
– delays or failures in reaching acceptable clinical trial agreement terms or clinical trial protocols with
prospective sites.
The completion of the Group’s clinical trials could be substantially delayed or prevented by several factors,
including:
– delays or failures to raise additional funding;
– slower than expected rates of patient recruitment and enrolment;
– further protocol amendments;
– failure of patients to complete the clinical trial;
– delays or failures in reaching the number of events pre-specified in the trial design;
– the need to expand the clinical trial;
– delays or failures in obtaining sufficient clinical materials;
– unforeseen safety issues;
– lack of efficacy during clinical trials;
– inability or unwillingness of patients or clinical investigators to follow our clinical trial protocols; and
– inability to monitor patients adequately during or after treatment.
12
STRATEGIC REPORT (continued)
Additionally, the Group’s clinical trials may be suspended or terminated at any time by the MHRA, other
regulatory authorities, or by the Group itself. Any failure to complete or significant delay in completing clinical
trials for the Group’s product candidates could harm its financial results and the commercial prospects for its
product candidates.
Regulatory
The Group’s operations are subject to laws, regulatory approvals and certain governmental directives,
recommendations and guidelines relating to, amongst other things, product health claims, occupational safety,
laboratory practice, the use and handling of hazardous materials, prevention of illness and injury,
environmental protection and human clinical studies. There can be no assurance that future legislation will
not impose further government regulation, which may adversely affect the business or financial condition of
the Group.
Intellectual Property (IP)
The Group’s success depends largely on its ability to obtain and maintain patent protection for its proprietary
technology and products in the United States, Europe and other countries. If the Group is unable to obtain or
maintain patent protection for its technology and products, or if the scope of the patent protection is not
sufficiently broad, competitors could develop and commercialise similar technology and products which would
materially affect the Group’s ability to successfully commercialise its technology and products. The Group is
exposed to additional IP risks, including infringement of intellectual property rights, involvement in lawsuits and
the inability to protect the confidentiality of its trade secrets which could have an adverse effect on its success.
Financial
The Group has a limited operating history, has incurred significant losses until the current year, and does not
currently have any approved or revenue-generating products. The Group expects to incur losses for the
foreseeable future, and there is no certainty that the business will generate future profits. The Group may
not be able to raise additional funds that may be needed to support its product development programs or
commercialisation efforts, and any additional funds that are raised could cause dilution to existing investors.
Operational
The Group’s future development and prospects depend to a significant degree on the experience, performance
and continued service of its senior management team, including the Directors. The Group has invested in its
management team at all levels. The Directors also believe that the senior management team is appropriately
structured for the Group’s size and is not overly dependent upon any particular individual. The Group has
entered into contractual arrangements with these individuals with the aim of securing the services of each of
them. Retention of these services or the identification of suitable replacements, however, cannot be
guaranteed. The loss of the services of any of the Directors or other members of the senior management
team and the costs of recruiting replacements may have a material adverse effect on the Group and its
commercial and financial performance and reduce the value of an investment in the Ordinary Shares.
The Board continually monitors these risks and uncertainties and take corrective action if considered
necessary.
This report was approved by the Board on 19 December 2017 and signed on its behalf by
Iain Ross
Chairman
13
PORCUPINE
Porcupine
Redx Pharma is developing a porcupine (PORCN) inhibitor drug candidate – RXC004. The Group’s scientists
have been able to demonstrate the potential for RXC004 as a cancer treatment using in vivo models of
pancreatic and gastric cancer. Importantly, an acceptable therapeutic window has been achieved in pre-clinical
models.
Since its nomination as a drug candidate in December 2015, RXC004 has successfully completed pre-clinical
development activities and Redx remains on track to initiate a first-in-human clinical trial in Q1 2018. During
this time Redx scientists have continued their research into the potential uses of RXC004 in cancer therapy.
The Wnt pathway is implicated in cancer initiation, its progression and the maintenance of cancer stem cells
(CSCs). CSCs are a tiny population of cells that chemotherapy leaves behind which allow the cancer to come
back at a later date. Similar to normal stem cells, CSCs undergo a process of self-renewal and are therefore
associated with tumorigenesis, metastasis, recurrence and resistance in cancer. Emerging research also shows
that the Wnt pathway plays a critical role in the development of fibrotic disease in different human organs,
many of which currently lack satisfactory therapies.
Despite the importance of Wnt biology in cancer and other diseases, there are currently no approved drugs
which target this pathway and there are only two other porcupine inhibitors in clinical trials. A key challenge
in developing drugs which target important pathways in humans is safety. Scientists have struggled to identify
components of the Wnt pathway that can be targeted to provide a therapeutic effect in cancer patients without
causing toxicity associated with interfering with the target in healthy cells. Much research has focussed on
different targets in the Wnt pathway but has been hindered due to the failure to demonstrate a suitable
therapeutic window – the gap between the dose needed to see the desired effect and the dose at which
toxicity is observed. Consequently, for a time it was felt that this critical pathway would be unsuitable for
drug therapy.
Targeted Therapy – Development of a predictive clinical response biomarker
Redx scientists have identified specific genetic alterations in the RNF43 gene in types of gastric, pancreatic
and biliary cancer which can be used to predict which patients are most likely to benefit from treatment with
RXC004. In order to translate these findings to the clinic, Redx scientists, working with diagnostic testing
experts at NewGene Ltd., have developed a cutting edge clinical biomarker assay which will be used to guide
patient selection during clinical trials. This test analyses small fragments of DNA released by tumour cells
into the patient’s blood to detect cancer-specific RNF43 mutations which are predictive of drug response. This
technology, which only requires a simple blood sample from patients, allows a precision medicine approach
to be taken for the RXC004 clinical programme, benefiting patients and also improving the efficiency with
which studies can be carried out. Initial data describing aspects of test development were recently presented
at the ESMO congress 2017.
Enhancing immune-oncology drug response
Immune checkpoint inhibitors, such as anti-PD-1 and anti-PD-L1 antibodies, have revolutionised the treatment
of cancer, but they do not work in all patients. Many tumours are “cold” in that the tumour-killing immune
cells are not present at the tumour site. Evidence is emerging that the Wnt signalling pathway is relevant in
this process such that inhibition of the pathway may make the tumours “hot” by facilitating tumour-killing
immune cells into the tumour.
Redx scientists have demonstrated the ability of RXC004 to enhance the immune system response to cancer
in pre-clinical models. These data suggest RXC004 in combination with checkpoint inhibitors (such as anti-
PD-1, anti-PD-L1 antibodies) may enhance the already impressive results observed for this exciting class of
therapies by increasing the response rates and the duration of the response. In line with these data, Redx is
exploring clinical opportunities for a RXC004 combination approach with anti-PD-1 and anti-PD-L1, with the
ultimate aim of increasing patient response rates to immuno-oncology therapy.
14
PORCUPINE (continued)
Phase 1 Trial of RXC004
The trial will be conducted in patients with advanced cancer and the modular approach will allow Redx to:
– Investigate additional responsive patient populations from the all-comers Phase 1a cohort
– Evaluate combination therapies which have the potential to broaden the patient populations likely to benefit
from therapy
Module 1 Part a
Module 1 Part b
Module 2
To assess the safety and tolerability of RXC004 in an all-comers cohort of
advanced cancer patients.
To assess the efficacy of RXC004 in biomarker selected gastric and pancreatic
cancer patient cohorts as well as a biliary cancer cohort.
To assess the safety tolerability and efficacy of RXC004 in combination with
standard of care therapies including checkpoint inhibitors.
“I am delighted that Redx Pharma has chosen the University of Manchester/The Christie NHS
Foundation Trust as the lead site for the first-in-man trial of their porcupine inhibitor RXC004.
We look forward to working with Redx to advance this compound towards clinical studies in some
of the hardest to treat cancers such as pancreatic (as a partner in the Precision-Panc initiative),
gastric and biliary cancer.”
Juan Valle, Professor and Honorary Consultant in Medical Oncology, The Christie NHS Foundation Trust
Fibrotic Disease
Porcupine is a key enzyme in the Wnt signalling pathway. Wnt signalling has been implicated in fibrogenesis,
and therefore inhibition of Wnt signalling is likely to prevent several mechanisms important for fibrotic disease
progression.
Anti-inflammatory therapies have limited efficacy in the treatment of fibrosis. Several recent publications
have shown that Porcupine inhibitors can be beneficial in the treatment of fibrotic indications, including renal,
heart, lung and skin conditions. The Group’s team of scientists have demonstrated efficacy in a mouse UUO
model of kidney fibrosis with our novel agent, and are also exploring activity of a Porcupine inhibitor in models
of IPF and NASH/ liver fibrosis.
15
ROCK 1/2
ROCK 1/2
Inflammatory bowel disease (IBD) is a chronic inflammatory condition of the colon and small intestine with
an estimated addressable market of 3 million patients. It can be subdivided into two main conditions:
ulcerative colitis and Crohn’s disease. Both diseases are long-term conditions that involve inflammation of
the gut.
Current drugs only target pathways involved in inflammation and are notoriously ineffective for longer-term
treatment. As inflammation persists, over time, this damage results in fibrosis of the intestine. In the USA
30-40% of patients with IBD will develop fibrosis within ten years of diagnosis. There are currently no
approved anti-fibrotic treatments. Fibrotic tissue can cause stricture formation and obstruction of the intestine
often requiring invasive surgical intervention. Fibrosis commonly recurs in these patients, necessitating further
surgery that ultimately results in short bowel syndrome.
ROCK1 and ROCK2 are intracellular kinase enzymes with multiple functions, and have shown to be implicated
at various points in pathways leading to fibrosis. However, systemic ROCK1/2 inhibitors (known as systemic
pan-Rock inhibitors) are known to induce hypotension, and are therefore unlikely to be tolerated. The Group’s
ROCK inhibitor is designed to only work at the site of action in the gastrointestinal tract and degrades quickly,
once absorbed, through enzyme-mediated metabolism in the blood, deeming it a “soft” inhibitor.
Prophylactic and therapeutic effects on fibrosis by a soft ROCK inhibitor have been demonstrated in multiple
animal models. A first in class development candidate is due to be selected 1H 2018 with first in man studies
planned for 2H 2019.
16
GOVERNANCE
Board of Directors
Mr Iain Ross (Executive Chairman)
Iain was appointed Non-Executive Chairman of Redx in May 2017 assuming the role of Interim Executive
Chairman in October 2017. In addition, he is Chairman of e-Therapeutics plc (AIM:ETX) and Kazia
Therapeutics Ltd (ASX: KZA/NASDAQ:KZIA) and also a Non-Executive Director of Anatara LifeSciences Ltd
(ASX:ANR). He is a qualified Chartered Director, and a Former Vice Chairman of the Council of Royal Holloway,
London University.
Previously, he has held significant roles in multi-national companies including Sandoz, Hoffman La Roche,
Reed Business Publishing and Celltech Group plc. He has advised banks and private equity groups on
numerous company turnarounds. These include, as CEO of Quadrant Healthcare, taking the Company public,
signing numerous collaborations before selling the business to Elan in 2001. As Chairman and Chief Executive
Officer, at Allergy Therapeutics, he re-structured the Company balance sheet to position Allergy Therapeutics
as a virtually debt free cash generative company prior to its subsequent IPO. As Executive Chairman at Silence
Therapeutics Plc (formerly SR Pharma plc), he turned the business around through M&A and established
collaborations with Pfizer, AstraZeneca and Dainippon Sumitomo before completing a merger with
Intradigm Inc.
Mr Dominic Jackson (CFO)
Dominic has worked in private equity since 2007 (DIC Europe, Merrill Lynch Global Private Equity and latterly
for multiple financial sponsors) and in M&A prior to that (Deutsche Bank, PricewaterhouseCoopers). He has
been seconded into portfolio companies as CFO on numerous occasions to stabilise distressed core businesses
and implement value initiatives.
Within the healthcare space, Dominic has completed a variety of deals as principal including the £450m sale
of IDH to Carlyle, the carve-out and €485m sale of Euromedic’s Dialysis division to Fresenius Medical Care
(14x EBITDA), and the refinancing and syndication of €565m term debt tranches within Euromedic’s diagnostic
imaging business. Dominic has extensive situational distressed experience having acquired Peverel
(UK’s largest property manager, now Knight Square) for £65m out of Administration, following which his
secondment into the business contributed to its successful turnaround and sequential refinancings with Electra
Partners and RBS. He was also heavily involved in the private equity portfolio of a recent landmark bank work-
out as well as the $8bn restructuring of a Middle Eastern sovereign wealth fund.
Dominic qualified as a Chartered Accountant with PricewaterhouseCoopers and is a member of the Chartered
Institute of Securities and Investment and the Institute for Turnaround.
Mr Peter Presland (Non-Executive Director)
Peter has nearly 45 years’ experience in business, much of that at the highest levels of management within
both public and private companies. A law graduate at King’s College, London, he also qualified as a Chartered
Accountant with Arthur Andersen. In 1980, he joined C E Heath plc, a major publicly quoted international
insurance group, as Group Accountant/Treasurer and became in 1985 the youngest ever PLC Director when
appointed Group Finance Director at the age of 34. He was promoted to become Heath’s Group Chief Executive
in 1990, and in 1996, he devised the demerger of C E Heath’s computer services operations into a separate
publicly listed company, Rebus Group plc, becoming its Chief Executive and in 1999 its Executive Chairman.
Shareholders doubled their money in three years. Since 2001, Peter has pursued a portfolio non-executive
career. These appointments include the Chairmanship in 2003 of LINK, the UK ATM network, where he led a
major corporate governance change and completed the merger of LINK with Voca, the provider of the BACS
service, becoming Chairman of VocaLink in 2007. From 2012 to 2015, he served as Chairman of the Audit
and Governance Committee of East Kent Hospitals NHS Trust and has recently joined the Audit, Governance
and Nominations Committee of The Lord’s Taverners, a high-profile charity.
17
GOVERNANCE (continued)
Dr Bernhard Kirschbaum (Non-Executive Director)
Bernd joined the Board in January 2016. Bernd has over 25 years' experience in pharmaceutical research
and drug development, having held leadership roles at Merck/Merck Serono, Sanofi-Aventis, Aventis and
Hoechst Marion Roussel. He has expertise in a broad range of disease areas including oncology,
immuno-oncology, immunology, neurological disorders and cardiometabolic diseases. In the eight years to
2013, he worked at Merck/Merck Serono, becoming a member of the Board and Executive Vice-President,
Global Research & Early Development. He was responsible for a budget of 1 billion euros and a global team
of over 2,500 associates. In his last three years at Merck Serono, he led the successful growth of the
company's R&D portfolio, with over 70 programs, doubling the number of phase II assets in this period. Bernd
is currently a board member of BioMedX, Protagen Diagnostics, OMEICOS Therapeutics and an advisor to the
board of KAHR Therapeutics.
18
GOVERNANCE (continued)
Directors’ Report
The Directors present their annual report on the affairs of the Group, together with the financial statements
and auditor’s report for the year ended 30 September 2017.
Directors
The Directors who were in office during the year and up to the date of signing the financial statements, unless
stated, were:
Executive
Dr Neil Murray – Resigned 3 November 2017
Dominic Jackson – Appointed 3 November 2017
Non-Executive
Frank Armstrong – Resigned 20 April 2017
Dr Peter Jackson – Resigned 31 March 2017
Norman Molyneux – Resigned 3 November 2017
Peter McPartland – Resigned 20 April 2017
Dr Bernhard Kirschbaum
Iain Ross – Appointed 1 May 2017 *
David Lawrence – Resigned 14 August 2017
Peter Presland – Appointed 3 November 2017
* Mr Ross appointed Interim Executive Chairman on 3 November 2017
The Company maintained Directors’ and officers’ liability insurance cover throughout the year.
Principal activities of the Group
Details of current and future trading as well as the principal risks and uncertainties are included in the
Strategic Report.
Business review
The review of the business and future developments is covered in the Strategic Report.
Financial results and dividend
The Group’s profit after tax for the year was £1.528m (2016 loss £15.521m). The Directors do not recommend
the payment of a dividend. (2016 £Nil).
Financial instruments
During the year the Group held a derivative financial instrument, details of which can be found in note 5.
Other information regarding Financial instruments can be found in note 21.
19
GOVERNANCE (continued)
Directors’ interest in share options
Details of the Directors’ interests, share options and service contracts are shown in the Directors’
Remuneration report.
Research and development
The Group is continuing to research products within its chosen area of therapeutic focus.
Employee involvement
Employee involvement in the overall performance of the Group is encouraged through both formal and
informal meetings which deal with a whole range of issues from the Group’s financial performance and future
developments to health and safety issues. Copies of both the Annual Report and Interim Report are made
available to all employees.
Information given to the Auditor
Each of the persons who is a Director at the date of approval of this Annual Report confirms that:
• So far as the Director is aware, there is no relevant audit information of which the Group’s Auditor is
unaware, and
• The Director has taken all steps that he ought to have taken as a Director to make himself aware of any
relevant audit information and to establish that the Auditor is aware of that information.
Independent Auditor
RSM UK Audit LLP have expressed their willingness to continue in office as Auditors for the financial year
under review. A resolution to appoint Auditors will be proposed at the forthcoming Annual General Meeting.
Annual General Meeting
The Annual General Meeting of the Company will be held at the Company offices on 6 March 2018.
Approved by the board of Directors and signed on behalf of the board.
Iain Ross
Chairman
19 December 2017
Redx Pharma plc
Block 33
Mereside
Alderley Park
Macclesfield
SK10 4TG
Company registration number: 7368089
20
GOVERNANCE (continued)
Corporate Governance Report
The Board believes in the importance of corporate governance and is aware of its responsibility for overall
corporate governance, and for supervising the general affairs and business of the Company and its
subsidiaries.
The Company is listed on the Alternative Investment Market (‘AIM’) of the London Stock Exchange and is
subject to the continuing requirements of the AIM Rules. Although the Company is not required to comply
with the UK Corporate Governance Code by virtue of being an AIM-listed company, the Board seeks to apply
the QCA Corporate Governance Code (as devised by the QCA in consultation with a number of significant
institutional small company investors) to the extent appropriate and practical for a Group of its nature and
size. This section provides general information on the Group’s adoption of the QCA Corporate
Governance Code.
The Board
At 30 September 2017, the Board comprised three Non-Executive Directors, and one Executive Director. At the
date of this report it comprised two Executive Directors and two Non-Executive directors.
Directors’ biographies are on pages 17 and 18.
The Board is responsible to the shareholders for the proper management of the Group and meets regularly
to set the overall direction and strategy of the Group, to review scientific, operational and financial
performance, and to advise on management appointments. The Board has also convened, when necessary,
by telephone conference during the year to review the strategy and activities of the business. All key
operational and investment decisions are subject to Board approval. The Company Secretary is responsible
for ensuring that Board procedures are followed and applicable rules and regulations are complied with.
In the short-term, the Group currently has an Interim Executive Chairman, but ordinarily there is a clear
separation of the roles of Chief Executive Officer (CEO) and Non-Executive Chairman. The Chairman is
responsible for overseeing the running of the Board, ensuring that no individual or group dominates the
Board’s decision-making and ensuring the Non-Executive Directors are properly briefed on matters. The Chief
Executive Officer has the responsibility for implementing the strategy of the Board and managing the
day-to-day business activities of the Group.
The Board considers it has sufficient independence on the Board and, that all the Non-Executive Directors are
of sufficient competence and calibre to add strength and objectivity to the Board, and bring considerable
experience in scientific, operational and financial development of biopharmaceutical products and companies.
All of the Directors are subject to election by shareholders at the first Annual General Meeting (‘AGM’) after
their appointment to the Board. Executive Directors will continue to seek re-election at least once every
three years.
Post period the CEO resigned and as a consequence the Non-Executive Chairman agreed to take on an interim
executive role until such time as a new CEO is appointed. The intention is that following the appointment of
the new CEO, the Chairman’s role will revert to being non-executive.
Performance evaluation
The Board has a process for evaluation of its own performance, that of its committees and individual Directors,
including the Chairman. These evaluations are carried out at least annually.
Board Committees
The Company has established committees with formally delegated duties and responsibilities as follows:
• Audit, Risk & Disclosure
• Remuneration
• Nomination and Corporate Governance
21
GOVERNANCE (continued)
Audit Risk & Disclosure Committee
During the year under review, the members of the Audit, Risk & Disclosure Committee were Mr Norman
Molyneux, Mr Peter McPartland and Mr David Lawrence. Mr Norman Molyneux was the Chairman of the
Committee. The responsibilities of the committee include the following:
• Monitoring the integrity of the financial statements of the Group
• Reviewing accounting policies, accounting treatment and disclosures in the financial reports
• Reviewing the Group’s internal financial controls and risk management systems
• Overseeing the Group’s relationship with external auditors, including making recommendations to the
Board as to the appointment or re-appointment of the external auditors, reviewing their terms of
engagement, and monitoring the external auditors’ independence, objectivity and effectiveness
Post year end, following the resignation of Mr Norman Molyneux, Mr Peter Presland was appointed a Director
of the Company and Chairman of the Audit, Risk & Disclosure Committee. The other members of the Audit,
Risk & Disclosure Committee are Mr Iain Ross and Dr Bernd Kirschbaum.
Remuneration Committee
During the year under review, the members of the Remuneration Committee were Mr Peter McPartland,
Dr Frank Armstrong and Mr Norman Molyneux. Mr Peter McPartland was the Chairman of the Remuneration
Committee. The responsibilities of the committee include the following:
• Determining and agreeing with the Board on the remuneration policy for all Directors.
• Within the terms of the agreed policy, determining the total individual remuneration package for Executive
Directors.
• Overseeing the evaluation of executive officers.
• Determining bonuses payable under the Group’s cash bonus scheme.
• Determining the vesting of awards under the Group’s long-term incentive plans and exercise of share options.
The Directors’ Remuneration Report is presented on pages 25 to 27.
Following the resignation of Mr Peter McPartland in April 2017, Dr Bernd Kirschbaum was appointed as
Chairman of the Remuneration Committee and subsequently following the resignation of Dr Frank Armstrong,
Mr Iain Ross was appointed a member of the Remuneration Committee in May 2017. Post period end, following
the resignation of Mr Norman Molyneux, Mr Peter Presland was appointed a member of the Remuneration
Committee.
Nominations and Corporate Governance Committee
During the year under review, the members of the Nominations and Corporate Governance Committee were
Dr Frank Armstrong, Mr Peter McPartland and Mr Norman Molyneux. Dr Frank Armstrong was the Chairman
of the Nominations and Corporate Governance Committee. The responsibilities of the committee include the
following:
• Identifying individuals qualified to become members of the Board of Directors.
• Recommending Directors to be appointed to the committees.
• Overseeing the annual evaluation of the Board and its committees.
• Reviewing and making recommendations to the Board on Board leadership structure.
• Reviewing and making recommendations to the Board on management succession planning.
• Developing and recommending to the Board appropriate corporate governance principles.
22
GOVERNANCE (continued)
In view of the events of the last year the Board Committees have been streamlined as follows in order to
meet the needs of the business.
• The Audit, Risk & Disclosure Committee will continue and be chaired by Peter Presland, recently appointed
independent director with Bernd Kirschbaum and Iain Ross as members.
• The Remuneration Committee will continue to be chaired by Dr Bernd Kirschbaum with Peter Presland and
Iain Ross as members.
• The R&D Committee will be chaired by Bernd Kirschbaum with Richard Armer (CSO) and Iain Ross as
members.
There will no longer be a separate Nominations and Corporate Governance Committee as these matters are
deemed important such that the full Board will address these matters going forward.
Attendance at Board meetings
The Directors attended the following Board meetings during the year:
Frank Armstrong
Dr Neil Murray
Dr Peter Jackson
Mr Norman Molyneux
Mr Peter McPartland
Dr Bernd Kirschbaum
Mr David Lawrence
Mr Iain Ross
4/9 (resigned 20 April 2017)
10/10
6/8 (resigned 31 March 2017)
10/10
7/9 (resigned 20 April 2017)
10/10
10/10
1/1 (appointed 1 May 2017)
Risk Management and Internal Control
The Board is responsible for the systems of internal controls and for reviewing their effectiveness. The internal
controls are designed to manage rather than eliminate risk and provide reasonable but not absolute assurance
against material misstatement or loss. The Board reviews the effectiveness of these systems annually by
considering the risks potentially affecting the Group.
The Group does not consider it necessary to have an internal audit function due to the small size of the
administrative function. Instead there is a detailed monthly review and authorisation of transactions by the
Chief Financial Officer and Chief Executive Officer.
A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board.
The Group’s results, compared with the budget, are reported to the Board on a monthly basis and discussed
in detail.
The Group maintains appropriate insurance cover in respect of actions taken against the Directors because
of their roles, as well as against material loss or claims against the Group. The insured values and type of
cover are comprehensively reviewed on a periodic basis.
Corporate Social Responsibility
The Board recognises the growing awareness of social, environmental and ethical matters and it endeavours
to take into account the interest of the Group’s stakeholders, including its investors, employees, suppliers
and business partners, when operating the business.
Employment
The Board recognises its legal responsibility to ensure the well-being, safety and welfare of its employees
and maintain a safe and healthy working environment for them and for its visitors.
23
GOVERNANCE (continued)
Relations with shareholders
The Board recognises the importance of communication with its shareholders to ensure that its strategy and
performance is understood and that it remains accountable to shareholders. The website, www.redxpharma.com,
has a section dedicated to investor matters and provides useful information for the Company’s shareholders.
The Board as a whole is responsible for ensuring that a satisfactory dialogue with shareholders takes place,
while the Chairman and Chief Executive Officer ensure that the views of the shareholders are communicated
to the Board as a whole. The Board ensures that the Group’s strategic plans have been carefully reviewed in
terms of their ability to deliver long-term shareholder value. Fully audited Annual Reports are published, and
Interim Results statements notified via Regulatory Information Service announcements. All financial reports
and statements are available on the Company’s website.
Shareholders are welcome to attend the Group’s AGM, where they have the opportunity to meet the Board.
All shareholders will have at least 21 days’ notice of the AGM at which the Directors will be available to discuss
aspects of the Group’s performance and question management in more detail.
24
GOVERNANCE (continued)
Directors’ Remuneration Report
This report sets out the remuneration policy operated by Redx in respect of the Executive and Non-Executive
Directors. The remuneration policy is the responsibility of the Remuneration Committee, a sub-committee of
the Board. No Director is involved in discussions relating to their own remuneration.
Remuneration policy for Executive Directors
The Remuneration Committee sets a remuneration policy that aims to align Executive Directors’ remuneration
with shareholders’ interests and attract and retain the best talent for the benefit of the Group.
The remuneration of the Executive Directors during the year 2016/17 is set out below.
Basic salary
Basic salaries are reviewed annually. The review process is managed by the Remuneration Committee with
reference to market salary data, and the Executive Directors’ performance and contribution to the Company
during the year.
Bonuses
Annual bonuses are based on achievement of Group strategic and financial targets, and personal performance
objectives.
The Non-Executive Directors believe that bonuses are an incentive to achieve the targets and objectives, and
represent an important element of the total compensation awards to the Executive Directors.
Longer term incentives
In order to further incentivise the Executive Directors and employees, and align their interests with
shareholders, the Company has granted share options in previous years. The share options will vest at various
future dates as described in the table on page 27. There are no conditions attached to vesting.
Pension
The Group operates a defined contribution pension scheme which is available to all employees. The assets of
the scheme are held separately from those of the Company in independently administered funds.
Executive Directors service contracts and termination provisions
The service contracts of Executive Directors are approved by the Board. The service contract may be
terminated by either party giving twelve months’ notice to the other. The details of the Directors’ contracts
are summarised below:
Dr Neil Murray
Non-Executive Directors’ service contracts and remuneration
Date of
Contract
26 March 2015
Notice
period
12 months
The remuneration of the Non-Executive Directors is determined by the Remuneration Committee, with regard
to market comparatives, and independent advice is sought to ensure parity is maintained with similar
businesses.
The Non-Executive Directors do not receive any pension, bonus, benefits or option grants from the Company.
The contracts of the Non-Executive Directors are reviewed by the Board annually.
25
GOVERNANCE (continued)
Directors’ remuneration
The Directors received the following remuneration during the year:
Executive
Dr N Murray1
Dr D Lindsay2
P Tottey3
Non-Executive
Iain Ross4
F Armstrong5
P Jackson6
N Molyneux7
P McPartland8
Dr B Kirschbaum9
D Lawrence10
Salaries,
bonuses
Pension
Total
and fees
contributions
2016/17
£
£
£
200,000
10,000
210,000
–
–
*83,333
33,000
19,000
*71,000
23,000
46,000
32,604
–
–
–
–
–
–
–
–
–
–
–
83,333
33,000
19,000
71,000
23,000
46,000
32,604
Salaries, Compensation
bonuses
and fees
£
165,625
59,599
149,132
–
66,000
38,000
46,000
46,000
34,500
15,297
for loss of
Pension
Total
office
contributions
2015/16
£
–
–
30,000
£
£
9,271
9,285
7,762
174,896
68,884
186,894
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
66,000
38,000
46,000
46,000
34,500
15,297
507,937
10,000
517,937
620,153
30,000
26,318
676,471
1 Dr N. Murray resigned post year end on 3 November 2017.
2 Dr D. Lindsay resigned as a director on 6 May 2016.
3 P. Tottey resigned as a director on 30 September 2016.
4 I. Ross was appointed as a director on 1 May 2017.
5 F. Armstrong resigned as a director on 20 April 2017.
6 P. Jackson resigned as a director on 31 March 2017.
7 N. Molyneux resigned post year end on 3 November 2017.
8 P. McPartland resigned as a director on 20 April 2017.
9 Dr B. Kirschbaum was appointed as a director on 1 January 2016.
10 D. Lawrence was appointed as a director on 6 May 2016, and resigned as a director on 14 August 2017.
* In addition to their non-executive directors fees, post year end, Mr I Ross and Mr N Molyneux received one-off bonuses of £50,000 and
£25,000 respectively to recognise the additional work undertaken whilst the Company was in Administration. These amounts are included
in the remuneration table above.
In addition to Mr N. Molyneux’s remuneration in 2015/16 and 2016/17 disclosed above, amounts were paid
to Norman Molyneux Consulting Ltd. and Acceleris Capital Ltd, both related parties (note 27).
In addition to Dr F Armstrong’s remuneration in 2015/16 and 2016/17 disclosed above, expenses were paid
to Dr Frank M. Armstrong Consulting Ltd., a related party as detailed in note 27.
No compensation for loss of office was paid in the year ended 30 September 2017.
Post-period events and consequential arrangements upon exiting Administration on 2 November 2017
Dr Neil Murray resigned from the Board and his contractual obligations were met. For the avoidance of doubt,
he did not receive an annual bonus for 2016/17 nor did he receive any compensation for loss of office.
Mr Norman Molyneux resigned from the Board and did not receive any compensation for loss of office.
Mr Peter Presland was appointed as non-executive director and will be paid fees of £40,000 per annum.
Mr Dominic Jackson was appointed CFO and an executive director, on a service contract that may be
terminated by either party giving six months’ notice to the other. He will be paid £100,000 per annum and
will qualify for employee benefits including participation in the annual performance bonus and option schemes.
On 3 November 2017 Iain Ross was appointed Interim Executive Chairman and will be paid an additional
monthly fee of £15,000 up until the new CEO has been appointed and has been in office for 1 month. Mr Ross
will then revert to being non-executive Chairman.
Mr Ross, Mr Presland and Dr Kirschbaum will not participate in the Group Option Scheme.
26
GOVERNANCE (continued)
Directors’ shareholdings
The Directors who served during the year, together with their beneficial interest in the shares of the Company
are as follows:
Ordinary shares of 1p each
Executive
N Murray
Non-Executive
Iain Ross
F Armstrong
P Jackson
B Kirschbaum
D Lawrence
N Molyneux
P McPartland
Directors Share options
At 30 September
2017
At 1 October
2016
1,293,671
1,293,671
–
46,586
3,345,428
–
–
283,436
80,782
–
46,586
3,345,428
–
–
283,436
80,782
Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire
Ordinary Shares in the Company granted to or held by the Directors. There are no performance conditions
attached to the vesting of these options. Details of the options are as follows:
Granted
At
during the
At 30
Price
Date
1 October
period/
September
per share
from which
Director
N Murray
F Armstrong
P Jackson
N Molyneux
Date of
grant
26-March 15
26-March 15
26-March 15
26-March-15
26-March-15
26-March-15
26-March-15
26-March-15
26-March-15
26-March-15
26-March-15
26-March-15
26-March-15
26-March-15
26-March-15
2016
25,050
24,975
24,975
75,000
78,875
78,875
78,875
78,875
78,875
78,875
473,250
551,325
24,975
24,975
601,275
200,475
24,975
24,975
250,425
(exerc’d)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2017
25,050
24,975
24,975
75,000
78,875
78,875
78,875
78,875
78,875
78,875
473,250
551,325
24,975
24,975
601,275
200,475
24,975
24,975
250,425
Expiry
date
(p)
exercisable
85.0
85.0
85.0
56.0
56.0
56.0
85.0
85.0
85.0
85.0
85.0
85.0
85.0
85.0
85.0
27-March 15 26-March-25
27-March-16 26-March-25
27-March-17 26-March-25
27-March-15 26-March-25
1-Sept-15 26-March-25
1-Sept-16 26-March-25
27-March-15 26-March-25
27-March-16 26-March-25
27-March-17 26-March-25
27-March-15 26-March-25
27-March-16 26-March-25
27-March-17 26-March-25
27-March-15 26-March-25
27-March-16 26-March-25
27-March-17 26-March-25
The options held by F. Armstrong and P. Jackson remain for a period of 5 years from their date of resignation.
27
GOVERNANCE (continued)
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Strategic Report, the Directors’ Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare group and company financial statements for each financial
year. The directors are required by the AIM Rules of the London Stock Exchange to prepare group
financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by
the European Union (“EU”) and have elected under company law to prepare the company financial statements
in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law).
The group financial statements are required by law and IFRS adopted by the EU to present fairly the financial
position and performance of the group; the Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to financial statements giving a true and fair view
are references to their achieving a fair presentation.
Under company law the directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the group and the company and of the profit or loss of
the group for that period.
In preparing each of the group and company financial statements, the directors are required to:
(a) select suitable accounting policies and then apply them consistently;
(b) make judgements and accounting estimates that are reasonable and prudent;
(c)
for the group financial statements, state whether they have been prepared in accordance with IFRSs
adopted by the EU and for the company financial statements state whether applicable UK accounting
standards have been followed, subject to any material departures disclosed and explained in the company
financial statements;
(d) prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the group and the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the group’s and the company’s transactions and disclose with reasonable accuracy at any time the financial
position of the group and 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 group and the company
and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Redx Pharma plc website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
28
GOVERNANCE (continued)
Independent Auditor’s report to the members of Redx Pharma plc
Opinion
We have audited the financial statements of Redx Pharma plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 30 September 2017 which comprise the consolidated statement of total
comprehensive income, the consolidated statement of financial position, the consolidated statement of
changes in equity, the consolidated statement of cash flows and notes to the consolidated financial statements,
including a summary of significant accounting policies, the company statement of financial position, the
company statement of changes in equity and notes to the company financial statements, including a summary
of significant accounting policies. The financial reporting framework that has been applied in the preparation
of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union. The financial reporting framework that has been applied in the preparation
of the parent company financial statements is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).”
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 30 September 2017 and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
• the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; 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 group and the parent
company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to SME 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 group’s or the parent 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.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on
the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement
29
GOVERNANCE (continued)
team. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Going concern
(Refer to pages 39 and 40 regarding the accounting policy in respect of going concern.)
The risk
It is the responsibility of the directors to form an opinion on whether the Group is a going concern. The risk
is that a material uncertainty may exist that casts doubts on group’s or the parent company’s ability to
continue as a going concern for a period of at least twelve months from the date when the financial statements
are authorised for issue and such uncertainties have not been adequately disclosed.
Our response
We obtained and reviewed forecasts prepared by management which covered the period to July 2019.
We considered whether these forecasts were consistent with the forecasts utilised in the CCW report referred
to on page 40 of the financial statements. We considered the actual cash outflows that had occurred since
the date the forecasts were prepared to determine whether the actual cashflows were in line with those
budgeted. We identified the key assumptions supporting the forecasts, comparing them to historical costs
incurred where appropriate. We also reviewed the costs incurred in the prior year and compared to forecasts
to determine whether any recurring costs had been excluded. The rationale for the assumptions supporting
the forecasts was challenged and considered in light of other evidence obtained during the course of the audit.
We identified those cash outflows that could possibly crystallise but were excluded from the cash flows and
challenged management’s rationale for excluding them, discussing the actions they would take should they
crystallise and considered whether such actions could be realistically implemented.
We discussed with management their medium-term objectives and their strategy for achieving them.
We challenged management as to the actions they would take if those strategies did not come to fruition in
the estimated time frames.
In terms of the Group and Company’s sensitivity analysis we reviewed the discretionary spend identified by
management, challenged whether the spend could realistically be avoided and checked calculations where
appropriate.
We also reviewed the disclosures surrounding the going concern basis of accounting in the financial statements
to determine whether the information provided was sufficient to enable readers to understand the
uncertainties that exist and the strategies that would be implemented to address those uncertainties should
they crystallise.
In terms of the Group and Company’s sensitivity analysis we reviewed the discretionary spend and challenged
whether the spend could realistically be avoided. Management’s judgement in relation to the likelihood of the
income arising was also challenged and the cash position reviewed to assess the impact should it not
materialise. We also considered the appropriateness of the disclosures surrounding going concern in the
financial statements.
Carrying value of intra-group balances
(Refer to page 39 regarding the accounting policy in respect of goodwill, page 44 in respect of critical
judgements and estimates applied by the Directors and note 14 to the financial statements on page 50)
The risk
The Company has material receivables from subsidiary undertakings that are currently loss making. As a
consequence, there is a significant risk that these are impaired and need to be written down. At the
30 September 2017, the carrying value of amounts due from group undertakings amounted to £4,330k (2016:
£29,509k) in the Company Statement of Financial Position.
30
GOVERNANCE (continued)
Our response
We identified amounts due from each subsidiary undertaking and discussed with management whether each
balance was recoverable taking into account the strategic plans established by the board in respect of each
subsidiary undertaking.
We also obtained management’s impairment review and underlying calculations prepared to support the
carrying value of the financial assets. We reviewed forecasts and considered whether they were consistent
with the forecasts prepared by management in relation to going concern. In addition, we reviewed the
assumptions utilised in the model and as many of these were based on publicly available information,
we agreed a sample of these back to supporting information.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature,
timing and extent of our audit procedures and to evaluate the effects of misstatements, both individually and
on the financial statements as a whole. During planning, we determined a magnitude of uncorrected
misstatements that we judge would be material for the financial statements as a whole (FSM). During planning
FSM was calculated as £349,000, which was not changed during the course of our audit. We agreed with the
Audit Committee that we would report to them all unadjusted differences in excess of £10,000 as well as
differences below those thresholds that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
The audit was scoped to ensure that the audit team obtained sufficient and appropriate audit evidence in
relation to significant operations of the Group during the year ended 30 September 2017 and the
appropriateness of the going concern assumption used in the preparation of the financial statements.
This included the performance of full statutory audits on each of the subsidiary undertakings. As part of our
planning we assessed the risk of material misstatement including those that required significant auditor
consideration at the component and group level. Procedures were designed and performed to address the
risk identified and for the most significant assessed risks of material misstatement, the procedures performed
are outlined above in the key audit matters section of this 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.
31
GOVERNANCE (continued)
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or
the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• 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 28, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either intend to liquidate the group or
the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s 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.
Graham Bond FCA (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
3 Hardman Street
Manchester
M3 3HF
19 December 2017
32
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2017
Note
Year ended
30 September
2017
£’000
Year ended
30 September
2016
£’000
(3,560)
(2,930)
30,474
(15,768)
–
(6,086)
(6,490)
(791)
(641)
(13)
1,291
1,976
(368)
38
1,646
(118)
–
(16,527)
(556)
–
–
–
–
(245)
2,380
(14,948)
(526)
67
(15,407)
(114)
1,528
(15,521)
1.4
1.4
(19.8)
(19.8)
Continuing operations
Revenue
Operating expenses
Non-recurring relocation costs
RGF clawback
Costs of Administration
Write-off of derivative instrument
Other Administration costs
Non-recurring reorganisation costs
Derecognition of non-current asset
Share based compensation
Other operating income
Profit/(loss) from operations
Finance costs
Finance income
Profit/(loss) before taxation
Income tax
Total comprehensive profit/(loss)
for the year attributable to
owners of Redx Pharma plc
Earnings/(loss) per share (pence)
From continuing operations
Basic
Diluted
2
9
9
3
5
1
4
16
6
7
8
8
10
11
11
33
FINANCIAL STATEMENTS (continued)
Consolidated Statement of Financial Position
At 30 September 2017
Company No. 7368089
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Other receivables
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Current tax
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Total liabilities
Net assets
Equity
Share capital
Share premium
Share-based compensation
Capital redemption reserve
Retained deficit
Equity attributable to shareholders
Note
13
14
16
17
18
19
20
23
24
2017
£’000
222
430
–
652
2,588
23,806
643
27,037
27,689
13,362
–
13,362
14,327
2016
£’000
533
309
605
1,447
1,553
5,758
637
7,948
9,395
5,675
2,000
7,675
1,720
1,265
33,263
880
1
(21,082)
14,327
936
22,526
867
1
(22,610)
1,720
The financial statements were approved and authorised for issue by the Board on 19 December 2017 and
were signed on its behalf.
Iain Ross
Director
34
FINANCIAL STATEMENTS (continued)
Consolidated Statement of Changes in Equity
For the year ended 30 September 2017
Share
capital
£’000
Share
premium
£’000
Share
Capital
based Redemption
Reserve
£’000
payment
£’000
At 1 October 2015
650
13,516
622
Share issue
Share issue costs
Transactions with owners
in their capacity as owners
Loss and total comprehensive
income for the year
Share based compensation
Movement in year
At 30 September 2016
Share options exercised
Share issue
Share issue costs
Transactions with owners
in their capacity as owners
Profit and total comprehensive
income for the period
Share based compensation
286
–
9,714
(704)
286
9,010
–
–
286
936
1
328
–
–
–
9,010
22,526
69
11,966
(1,298)
329
10,737
–
–
–
–
Movement in year
329
10,737
–
–
–
–
245
245
867
–
–
–
–
–
13
13
At 30 September 2017
1,265
33,263
880
1
–
–
–
–
–
–
1
–
–
–
–
–
–
–
1
Retained
Deficit
£’000
Total
Equity
£’000
(7,089)
7,700
–
–
–
10,000
(704)
9,296
(15,521)
–
(15,521)
245
(15,521)
(5,980)
(22,610)
1,720
–
–
–
–
1,528
–
1,528
70
12,294
(1,298)
11,066
1,528
13
12,607
(21,082)
14,327
35
FINANCIAL STATEMENTS (continued)
Consolidated Statement of Cash Flows
For the year ended 30 September 2017
Net cash flows from operating activities
Profit/(loss) for the year
1,528
(15,521)
Year ended
30 September
2017
£’000
Year ended
30 September
2016
£’000
Note
Adjustments for:
Income tax
Finance costs
Finance income
Depreciation and amortisation
Share based compensation
Derecognition of non-current asset
Write-off of derivative asset
Profit on disposal of assets
Movements in working capital
Increase in trade and other receivables
Increase in trade and other payables
Cash generated by/(used in) operations
Tax credit received
Interest received
Net cash generated by/(used in) operations
Cash flows from investing activities
Purchase of Intangible assets
Sale of property, plant and equipment
Purchase of property, plant and equipment
Net cash (used in) investing activities
Cash flows from financing activities
Proceeds from share issue
Share issue costs
Purchase of derivative financial instrument
Receipt from derivative financial instrument
Interest paid
Loan repaid/(granted)
LCC loan repaid (see note 20)
Net cash from financing activities
Net increase/(decrease) in cash
and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
18
118
368
(38)
327
13
641
3,560
(107)
(1,185)
8,871
14,096
–
2
14,098
(121)
124
(33)
(30)
12,364
(1,298)
(3,666)
106
(1,551)
25
(2,000)
3,980
18,048
5,758
23,806
114
526
(67)
262
245
–
–
–
(124)
1,272
(13,293)
750
36
(12,507)
–
2
(444)
(442)
10,000
(704)
–
–
–
(25)
–
9,271
(3,678)
9,436
5,758
As at 30 September 2017, £23.7m of the above amount was held in bank accounts operated by FRP Advisory LLP.
(2016: Nil). All cash from these accounts was returned to the control of the directors of the relevant companies
on exit from Administration.
36
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
Accounting Policies
The principal accounting policies adopted in the preparation of these financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
Redx Pharma plc (“Redx” or “the Company”) is a public limited company incorporated in the UK as Redx
Pharma Ltd on 7 September 2010, and domiciled in the UK. Its shares are listed on AIM, a market operated
by The London Stock Exchange. The principal activity of the Group is drug discovery, pre-clinical development
and licensing.
The Group financial statements are presented in pounds Sterling, which is the Group’s presentational currency,
and all values are rounded to the nearest thousand (£000) except where indicated otherwise.
They have been prepared under the historical cost convention and in accordance with International Financial
Reporting Standards as adopted by the European Union (IFRS) and with those parts of the Companies Acts
2006 applicable to entities reporting under IFRS.
New standards, amendments and interpretations adopted during the year ended 30 September 2017.
The IASB and IFRIC have issued the following standards and interpretations which the directors consider
relevant to the group and have been adopted during the year. The adoption of these standards and
interpretations has not had a material impact on the Group.
Standard
Key requirements
Annual Improvements to
IFRSs 2012-14 cycle
The 2014 Annual improvements cycle covered amendments to IFRS 5
Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial
Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim
Financial Reporting.
Amendments to IAS 1:
Disclosure initiatives
The amendments aim at clarifying IAS 1 to address perceived impediments to
preparers exercising their judgement in presenting their financial reports.
New standards, amendments and interpretations issued but not effective for the financial year
beginning 1 October 2016 and not early adopted.
The IASB and IFRIC have issued the following standards and interpretations with effective dates as noted below:
Standard
Key requirements
IFRS 9, Financial
Instruments
Annual IFRS
Improvements Process
(2015-17)
This standard replaces IAS 39. Whilst the standard
changes the basis of measurement of financial assets,
introduces a new impairment model and changes the
hedge accounting provisions the directors do not
expect the implementation of the new standard to
have a material impact on our reported results or
financial position.
The 2017 Annual improvements cycle covered
amendments to IFRS 1 First-time Adoption of
International Financial Reporting Standards, IAS 28
Investments in Associated and Joint Ventures and
IFRS 12 Disclosure of Interests in Other Entities.
Effective date (for
annual periods
beginning on or after)
1 January 2018
1 January 2019
37
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
Accounting Policies (continued)
Standard
Key requirements
IFRS 15, Revenue from
Contracts with
Customers
IFRS 16, Leases
Amendments to IAS 7,
Disclosure Initiative
Amendments to IAS 12,
Recognition of Deferred
Tax
IFRIC 22, Foreign
Currency Transactions
and Advance
Consideration
The standard specifies how and when a company will
recognise revenue as well as requiring such entities
to provide users of financial statements with more
informative, relevant disclosures. The standard
provides a single, principles based, five-step model to
be applied to all contracts with customers. Having
considered the impact of the new standard on the
recognition of the income from the sale of the BTK
programme, the directors do not expect the
implementation of the new standard to have a
material impact on how it is recognised and measured
revenue in the current period.
The standard requires lessees to account for all leases
under a single on-balance sheet model in a similar way
to finance leases under IAS 17. At the commencement
date of a lease, a lessee will recognise a liability to make
lease payments and an asset representing the right to
use the underlying asset during the lease term. Lessees
will be required to separately recognise the interest
expense on the lease liability and the depreciation
expense on the right of use asset. The group is still
assessing the impact of this standard on the financial
statements and have not yet quantified this.
The amendments require additional disclosures to be
made regarding changes in liabilities arising from
financing activities to enable users of financial
statements to better understand changes in the
Group’s debt. Having reviewed the Group’s liabilities,
the Directors do not expect adoption of these
amendments to have a material impact on the Group.
The amendments clarify that an entity needs to
consider whether tax law restricts the sources of
taxable profits against which it may make deductions
on the reversal of unrealised losses on debt
instruments measured at fair value. As the Group
currently has no debt instruments measured at fair
value, the Directors do not expect adoption of these
amendments to have an impact on the Group.
The interpretation clarifies that in determining the spot
exchange rate to use on initial recognition of a related
asset, expense or income on the derecognition of a
non-monetary asset or liability relating to advance
consideration, the date of the transaction is the date
on which an entity initially recognises the non-
monetary asset or liability arising from the advance
consideration. As the Group has not been involved in
any transactions including advance consideration in
foreign currencies, the Directors do not expect
adoption of this interpretation to have an impact on
the Group.
Effective date (for
annual periods
beginning on or after)
1 January 2018
1 January 2019
1 January 2017
1 January 2017
1 January 2018
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have
a material impact on the Group.
38
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company. Control is achieved when the Company has the power over the investee; is
exposed, or has rights, to variable return from its involvement with the investee; and, has the ability to use
its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control listed above. Consolidation of a subsidiary begins
when the Company obtains control over the subsidiary and ceases when the Company loses control of the
subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the period are included in
the Consolidated Statement of Comprehensive Income from the date the Company gains control until the
date when the Company ceases to control the subsidiary. During the period of Administration, Redx Pharma
plc retained control of all its’ subsidiary undertakings within the elements of control listed above.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting
policies used into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between
the members of the Group are eliminated on consolidation.
Business Combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value, which is calculated as the sum of the
acquisition‑date fair values of assets transferred by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree.
Acquisition related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair
value at the acquisition date, except that:
–
–
deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are
recognised and measured in accordance with IAS 12 ‘Income Taxes’ and IAS 19 ‘Employee Benefits’
respectively; and
assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current
Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in
the acquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and the
liabilities assumed. If, after reassessment, the net of the acquisition date amounts of the identifiable assets
acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the
acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Going concern
As part of their going concern review the Directors have followed the guidelines published by the Financial
Reporting Council entitled “Guidance on Risk Management and Internal Control and Related Financial and
Business Reporting”.
The Group made a net profit of £1.5m during the year, following the sale of its BTK programme, and after
taking into account all the costs associated with two Group companies, Redx Pharma Plc and Redx Oncology
Limited, entering Administration in May 2017. The Directors are satisfied, based on detailed cash flow
projections and after the consideration of reasonable sensitivities, that sufficient working capital is available
to meet the Group’s needs as they fall due, and at least 12 months from the date of signing the accounts.
39
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
Accounting Policies (continued)
The detailed cash flow assumptions are based on the Group’s working capital projections, prepared and
approved by the Board, which reflects a number of key assumptions in respect of project costs, overheads
and discretionary spend, underpinned by the current pipeline. As detailed in the Chairman’s statement the
Group’s internal projections and assumptions were subject to an independent review by Crowe Clark Whitehill
and the forecasts provide a cash runway to early 2019.
No revenue has been assumed in the forecasts, save for that generated from subletting unused space.
As detailed in the Chairman’s Statement, the Group is already in discussions with third-parties in respect of
partnerships and the licensing of non-core assets. In addition, no corporation tax expense has been accrued
in respect of the disposal of the BTK Program because, as detailed in the announcement of the completion of
administration on 3 November 2017 various reliefs are thought to be available. This is on the basis that the
Administrators and CCW took tax counsel’s opinion that the methodology applied is correct and the reliefs
utilised are available. The forecasts indicate that the Group has a cash runway through to February 2019 and
its ability to continue to develop its programmes thereafter is dependent on entering a partnership agreement
or an additional fund raise. The Group is already in discussions with third-parties in respect of partnerships
and the licensing of non-core assets and furthermore, the Group continues to have the ability to seek to raise
additional funds on capital markets.
In the absence of such opportunities in relation to partnerships and the licensing of non-core assets coming
to fruition, the ability to raise additional funds on capital markets before February 2019 or the unlikely event
of the Group becoming liable to pay tax on the disposal of the BTK Program, management has identified
further discretionary spending areas which can be reduced to allow the Group to extend its cash runway to
early May 2019. These can be made without impinging on the ability of key programmes to reach value
inflection points, such as data from clinical trials which are expected to be completed in late 2018.
On the basis of the above review, the Directors are confident that the Group has sufficient working capital to
honour all of its obligations to creditors as and when they fall due. Accordingly, the Directors continue to adopt
the going concern basis in preparing the Financial Statements.
Segmental information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The Board of Directors and the Chief Financial Officer are together considered the
chief operating decision-maker and as such are responsible for allocating resources and assessing performance
of operating segments.
The Directors consider that there are no identifiable business segments that are subject to risks and returns
different to the core business. The information reported to the Directors, for the purposes of resource
allocation and assessment of performance is based wholly on the overall activities of the Group. Therefore,
the Directors have determined that there is only one reportable segment under IFRS8.
Currencies
(a) Functional and presentational currency
Items included in the Financial Statements are measured using the currency of the primary economic
environment in which the Group operates (“the functional currency”) which is UK sterling (£).
The Financial Statements are accordingly presented in UK sterling.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions or at an average rate for a period if the rates do not fluctuate
significantly. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the Consolidated Statement of Comprehensive income. Non-monetary items
that are measured in terms of historical cost in a foreign currency are not retranslated.
40
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
Revenue
Revenue is measured at the fair value of the consideration received or receivable.
Revenues from the sale of intellectual property, where there are no obligations subsequent to delivery, are
recognised when significant risks and rewards have transferred which is considered to be the point at which
all patents and other information in accordance with the substance of the agreement are handed over.
Income received as a contribution to on-going costs, together with grant income, is treated as Other operating
income within the Consolidated Statement of Comprehensive income.
Government grants
Government grants are recognised as Other operating income on a systematic basis over the periods in which
the associated expenses are recognised. Grants that are receivable as compensation for expenses or losses
previously incurred or for the purpose of giving immediate financial support with no future related costs are
recognised in the period in which they become receivable.
Current and deferred tax
The tax expense or credit represents the sum of the tax currently payable or recoverable and the movement
in deferred tax assets and liabilities.
(a) Current tax
Current tax is based on taxable income for the period and any adjustment to tax from previous periods.
Taxable income differs from net income in the Consolidated Statement of Comprehensive Income because
it excludes items of income or expense that are taxable or deductible in other periods or that are never
taxable or deductible. The calculation uses the latest tax rates for the period that have been enacted by
the reporting date.
(b) Deferred tax
Deferred tax is calculated at the latest tax rates that have been substantially enacted by the reporting
date that are expected to apply when any deferred tax assets or liabilities are settled. It is charged or
credited in the Consolidated Statement of Comprehensive Income, except when it relates to items
credited or charged directly to equity, in which case it is also dealt with in equity.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial information and the corresponding tax bases used in the
computation of taxable income, and is accounted for using the liability method. It is not discounted.
Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable income will be available in future accounting
periods against which the asset can be utilised. Such assets are reduced to the extent that it is no longer
probable that the asset can be utilised.
Deferred tax assets and liabilities are offset when there is a right to offset current tax assets and liabilities
and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.
Impairment of non-current assets
At each reporting date, the Directors review the carrying amounts of property, plant and equipment assets,
Intellectual property (IP) and goodwill to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the Directors estimate the recoverable amount of the
cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to
sell and value in use. Furthermore, the Directors review at each reporting date the carrying value of Goodwill
in accordance with IAS 36.
41
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
Accounting Policies (continued)
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of
an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as
an expense immediately.
Property, plant and equipment
Property, plant and equipment and leasehold improvements are stated at cost less accumulated depreciation
and any impairment losses. Cost includes the original purchase price of the asset and the costs attributable
to bringing the asset to its working condition for its intended use. Such assets acquired in a business
combination are initially recognised at their fair value at acquisition date.
Depreciation is charged so as to write off the costs of assets over their estimated useful lives, on a straight-line
basis starting from the month they are first used, as follows:
–
–
–
Laboratory Equipment – 2 or 3 years
Computer Equipment – 2 or 3 years
Leasehold improvements – over the term of the lease
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in the Consolidated Statement of Comprehensive
Income.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Rentals payable under operating leases (net of any incentives received from
the lessor) are charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over
the term of the relevant lease.
The minimum term of the lease is estimated if it is not clear.
Intangible assets
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
All on-going development expenditure is currently expensed in the period in which it is incurred. Due to the
regulatory and other uncertainties inherent in the development of the Group’s programmes, the criteria for
development costs to be recognised as an asset, as prescribed by IAS 38, ‘Intangible assets’, are not met
until the product has been submitted for regulatory approval, such approval has been received and it is
probable that future economic benefits will flow to the Group. The Group does not currently have any such
internal development costs that qualify for capitalisation as intangible assets.
Development costs are capitalised when the related products meet the recognition criteria of an internally
generated intangible asset, the key criteria being as follows:
–
–
–
–
–
technical feasibility of the completed intangible asset has been established;
it can be demonstrated that the asset will generate probable future economic benefits;
adequate technical, financial and other resources are available to complete the development;
the expenditure attributable to the intangible asset can be reliably measured; and
the Group has the ability and intention to use or sell the asset.
Expenses for research and development include associated wages and salaries, material costs, depreciation
on non-current assets and directly attributable overheads.
42
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
All research and development costs, whether funded by third parties under licence and development
agreements or not, are included within operating expenses and classified as such.
The cost of a purchased intangible asset is the purchase price plus any cost directly attributable to bringing
the asset to the location and condition necessary for it to be capable of operating in the manner intended.
Purchased intangible assets are capitalised even if they have not yet demonstrated technical feasibility.
The intangible asset relating to intellectual property rights for the programme purchased from Amakem is
estimated to have a useful life of 20 years, and will be amortised over this period.
Pension costs
The Group operates a defined contribution pension scheme for the benefit of its employees. The Group pays
contributions into an independently administered fund via a salary sacrifice arrangement. The costs of
providing these benefits are recognised in the Consolidated Statement of Comprehensive Income and consist
of the contributions payable to the scheme in respect of the period.
Share-based compensation
The Group issues share-based payments to certain employees and directors. Equity-settled share-based
payments are measured at fair value at the date of grant and, if material, are expensed immediately or on a
straight-line basis over any vesting period, along with a corresponding increase in equity.
At each reporting date, the Directors revise their estimate of the number of equity instruments expected to
vest as a result of the effect of non-market-based vesting conditions. The impact of any revision is recognised
in the Consolidated Statement of Comprehensive Income, with a corresponding adjustment to equity reserves.
The fair value of share options is determined using a Black-Scholes model, taking into consideration the best
estimate of the expected life of the option and the estimated number of shares that will eventually vest.
The cost of each option is spread evenly over the period from grant to expected vesting.
When options expire or are cancelled, a corresponding credit is recognised.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s Statement of Financial Position when
the Group becomes party to the contractual provisions of the instrument. Financial assets are de-recognised
when the contractual rights to the cash flows from the financial asset expire or when the contractual rights
to those assets are transferred. Financial liabilities are de-recognised when the obligation specified in the
contract is discharged, cancelled or expired.
(a) Other receivables
Other receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method less provision for impairment. Appropriate provisions for estimated
irrecoverable amounts are recognised in the Consolidated Statement of Comprehensive Income when
there is objective evidence that the assets are impaired. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when the recognition of interest would be
immaterial.
(b) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and at bank, demand deposits, and other short-term
highly liquid investments that are readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
(c) Trade and other payables
Trade and other payables are initially measured at their fair value and are subsequently measured at
their amortised cost using the effective interest rate method; this method allocates interest expense
over the relevant period by applying the “effective interest rate” to the carrying amount of the liability.
43
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
Accounting Policies (continued)
Critical accounting estimates and judgements
Details of significant accounting judgements and critical accounting estimates are set out in the Financial
Information and include:
(a) Share based compensation
The Group has issued a number of share options to certain employees. The Black-Scholes model was
used to calculate the appropriate charge for the period of issue and subsequent periods.
The use of this model to calculate a charge involves using a number of estimates and judgements to
establish the appropriate inputs to be entered into the model, covering areas such as the use of an
appropriate interest rate and dividend rate, exercise restrictions and behavioural considerations.
A significant element of judgement is therefore involved in the calculation of the charge.
The total charge recognised and further information on share options can be found in Notes 6 and 25.
(b) Goodwill
The goodwill arose on the original purchase of the business and assets of Bradford Pharma in 2012.
The Directors consider the goodwill to be intrinsic to the whole Group’s on-going business. Goodwill is
not amortised but each year the directors undertake a review for potential impairment, which requires
them to make assumptions about key variables and forecasts.
1. Administration
On 24 May 2017, two companies within the Group, Redx Pharma plc and Redx Oncology Limited were
placed into Administration as a result of the default on repaying a loan from Liverpool City Council
detailed in note 20. FRP Advisory LLP were appointed as Administrators. Dealing in the shares of the
Group on the AIM market was suspended on 24 May 2017. As at 30 September 2017 those companies
remained in Administration. As detailed in note 30 [PBSE], those Group companies exited Administration
on 2 November 2017, when control was returned to the Directors. The costs directly associated with the
Administration (including a provision for costs up to the end of the Administration), principally
Administrators’ costs, legal costs and taxation costs, have been separately disclosed on the face of the
Consolidated Statement of Comprehensive income, and total £2.93m. (2016: Nil).
2. Revenue
In August 2017, the Group sold its BTK inhibitor drug development programme and related IP to Loxo
Oncology Inc. for $40m. The sale included certain patents, intellectual property, contracts for product
manufacture, and physical materials relating to that program.
Sale of scientific programme and related IP
3.
Clawback of Regional Growth Fund grant funding
2017
£’000
30,474
2016
£’000
–
The Group has, in both the current and past years, received Regional Growth Funds (RGF) grants
administered by the Department of Business, Energy and Industrial Strategy of the UK Government.
At the end of the year the Group had received total grants as follows:
RGF 2
RGF 3
RGF 5
2017
£’000
5,920
4,700
3,007
2016
£’000
5,920
4,700
2,630
13,627
13,250
44
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
Under the terms of the grant awards, clawback amounts totalling £9.7m became repayable on Redx
Pharma plc entering Administration. During the course of the Administration, a full and final settlement
was reached in the sum of £6.1m. This amount is disclosed within Trade and other payables, Note 19. It
was repaid in October 2017, as part of the exit from Administration.
4. Reorganisation costs
In March 2017, the Board of directors agreed a proposal to undertake a restructuring of the Group,
leading to a significant reduction in headcount across all areas of operation. The non- recurring costs
incurred in implementing this proposal were £791,000 (2016: Nil).
5. Write off of Derivative financial instrument
On 1 March 2017 the Company issued 11,500,000 new ordinary shares of 0.1p each (“Ordinary Shares”)
at a price of 37.5p per share to Lanstead Capital for £4,312,500. The Company simultaneously entered
into an equity swap with Lanstead for 85 per cent of these shares with a reference price of 50p per share
(the “Reference Price”). The equity swap was for an 18-month period ending in October 2018.
All 11,500,000 Ordinary Shares were allotted with full rights on the date of the transaction.
Of the subscription proceeds of £4,312,500 received from Lanstead, £3,665,625 (85 per cent) was
invested by the Company in the equity swap.
Investment in the equity swap was a condition of the placing with Lanstead.
In the period to 24 May 2017, which was the date of Redx Pharma plc entering Administration, £106,000
had been received by the Group under the terms of the swap.
As a consequence of entering Administration, the terms of the equity swap were such that it terminated
with no further benefit to the Company. The remaining balance of £3.56m has therefore been written
off. (2016: £Nil).
6.
Share-based compensation
Share options have been issued to certain Directors and staff, and the charge arising is shown below.
The fair value of the options granted has been calculated using a Black-Scholes model. There are no
further conditions attached to the vesting of the options. Further information on options is given in Note 25.
Outstanding at the beginning of the year
Options granted and vested in period
Options exercised in period
Options forfeited in period
Options granted and vesting in future periods
2017
Number
3,907,784
–
(145,319)
(799,048)
–
2016
Number
2,735,775
35,294
–
(226,282)
1,362,997
Outstanding at the end of the year
2,963,417
3,907,784
Weighted average exercise price information is given in Note 25.
The weighted average share price at the date of exercise of options was 56.43p
Charge to Statement of Comprehensive Income in period
£’000
13
£’000
245
45
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
6.
Share-based compensation (continued)
Assumptions used were an option life of 5 years, a risk free rate of 2% and no dividend yield. Other
inputs were as follows:
Volatility
Assumed share price at grant date
Exercise price
7. Other operating income
Reimbursement of costs
Government grants receivable
RDEC income
8.
Finance expense and finance income
Finance expense
Loan interest
Adjustment to non-current asset
Other interest and similar charges
Finance income
Bank and other short term deposits
Loan interest
9. Profit/(loss) before taxation
The following items have been included in arriving at
profit/(loss) before taxation
Research and development
Staff costs – Note 12 (excluding share based compensation,
reorganisation & relocation costs)
Establishment and general:
Depreciation of owned property, plant and equipment
Operating leases on land and buildings
Operating leases – other
Exchange losses on translation
Amounts payable to RSM UK Audit LLP and their associates
by the Company and its subsidiaries amounted to:
Audit of subsidiaries
Audit of parent Company and consolidation
Other services – interim review
40%
£
0.415 to 0.85
0.33 to 0.85
40%
£
0.415 to 0.85
0.33 to 0.85
2017
£’000
278
377
636
1,291
2017
£’000
319
–
49
368
2
36
38
2017
£’000
8,168
5,321
327
1,423
143
329
13
34
10
2016
£’000
162
2,218
–
2,380
2016
£’000
346
180
–
526
32
35
67
2016
£’000
8,067
7,120
262
824
212
–
15
17
10
During the prior year, the Group relocated certain aspects of its operations from Liverpool to Alderley
Park in Cheshire. The total non-recurring costs (which included staff benefit packages and site removal
costs) associated with this move were £556,000.
46
15,768
16,527
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
10. Income tax
Current income tax
Corporation tax
Research and Development Expenditure credit
Prior year adjustment
Income tax charge per the Consolidated Statement of Change in Income
2017
£’000
124
–
(6)
118
2016
£’000
–
(637)
751
114
The difference between the total tax shown above and the amount calculated by applying the standard
rate of UK corporation tax to the profit/(loss) before tax is as follows:
Profit/(loss) before tax
Profit/(loss) on ordinary activities multiplied by standard rate of
corporation tax in the UK of 19.5% (2016: 20%)
Effects of:
R&D expenditure credits
Expenses not deductible for tax purposes
Adjustment in respect of previous periods
RDEC recognised in tax account
Deferred tax losses (utilised)/not recognised
Total taxation
11. Earnings/(loss) per share
2017
£’000
1,646
321
124
1,015
(6)
–
(1,336)
118
2016
£’000
(15,407)
(3,081)
159
94
751
(637)
2,828
114
Basic earnings/(loss) per share is calculated by dividing the net income for the period attributable to
ordinary equity holders by the weighted average number of ordinary shares outstanding during the
period.
In the case of diluted amounts, the denominator also includes ordinary shares that would be issued if
any dilutive potential ordinary shares were issued following exercise of share options.
The basic and diluted calculations are based on the following:
Profit/(loss) for the period attributable to the owners of the Company
2017
£’000
1,528
2016
£’000
(15,521)
Number
Number
Weighted average number of shares – basic
113,022,840
78,360,552
Weighted average number of shares – diluted
113,046,401
78,360,552
Earnings/(loss) per share – basic
Earnings/(loss) per share – diluted
Pence
1.4
1.4
Pence
(19.8)
(19.8)
The loss and the weighted average number of shares used for calculating the diluted loss per share in
2016 are identical to those for the basic loss per share. This is because the outstanding share options
would have the effect of reducing the loss per share and would therefore not be dilutive under IAS 33
Earnings per Share.
47
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
12. Employees and key management
Staff costs (including directors) comprise
Wages and salaries
Social security costs
Pension costs
Non-recurring reorganisation costs
Total employee related costs
Number of employees
Average number of employees (including directors)
Management & Admin
R&D – Chemistry
R&D – Biology
R&D – Analytical
Directors’ remuneration
Short term remuneration
Compensation for loss of office
Pension costs
Retirement benefits are accruing to 1 director (2016: 1).
Key management (including directors)
Short term remuneration
Compensation for loss of office
Social security costs
Pension costs
Share based compensation
2017
£’000
4,538
467
231
5,236
791
6,027
2016
£’000
6,591
641
296
7,528
–
7,528
2017
Number
2016
Number
23
57
36
15
131
2017
£’000
508
–
10
518
2017
£’000
1,243
–
154
61
18
1,476
29
85
52
33
199
2016
£’000
620
30
26
676
2016
£’000
1,069
30
128
53
20
1,300
Key management are considered to be the Directors and other members of the Executive Management
Team. Payments to directors consist of basic salaries, fees and pension.
The amounts in respect of the highest paid director are as follows:
Short term employment benefits
Compensation for loss of office
Pension contributions
2017
£’000
200
–
10
210
2016
£’000
149
30
8
187
48
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
13. Property, plant and equipment
Leasehold
Improvements
£’000
Laboratory
equipment
£’000
Computer
equipment
£’000
Cost
At 1 October 2015
Additions
Disposals
At 30 September 2016
At 1 October 2016
Additions
Disposals
At 30 September 2017
Depreciation
At 1 October 2015
Charge for the year
Disposals
At 30 September 2016
At 1 October 2016
Charge for the year
Disposals
At 30 September 2017
Net book value
At 30 September 2017
At 30 September 2016
At 1 October 2015
–
114
–
114
114
–
–
114
–
2
–
2
2
11
–
13
101
112
–
879
199
(6)
1,072
1,072
32
(191)
913
562
228
(4)
786
786
243
(174)
855
58
286
317
179
131
–
310
310
1
(22)
289
143
32
–
175
175
73
(22)
226
63
135
36
Total
£’000
1,058
444
(6)
1,496
1,496
33
(213)
1,316
705
262
(4)
963
963
327
(196)
1,094
222
533
353
49
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
14. Intangible Assets
Cost
At 1 October 2015
At 30 September 2016
Cost
At 1 October 2016
Additions
At 30 September 2017
Accumulated impairment
At 1 October 2015
Impairment
At 30 September 2016
At 1 October 2016
Impairment
At 30 September 2017
Net carrying value
At 30 September 2017
At 30 September 2016
Intellectual
property
£’000
Goodwill
£’000
–
–
–
121
121
–
–
–
–
–
–
121
–
309
309
309
–
309
–
–
–
–
–
–
309
309
Total
£’000
309
309
309
121
430
–
–
–
–
–
–
430
309
The goodwill arose on the original purchase of the business and assets of Bradford Pharma in 2012. The
Directors consider the goodwill to be intrinsic to the whole Group’s on-going business, and as such the
calculations have been made based on forecasts and predictions relating to the Group as a single entity.
The Directors undertook a detailed review by preparing a discounted cash flow model, using the agreed
budgets and forecasts for the coming years. The key variables that were used included:
A terminal growth rate thereafter of 2%.
A pre-tax discount rate of 11.5%, which the Directors believe to be prudent.
Based on the results of the above detailed testing, the Board do not believe that any impairment under
IAS 36 is required.
Purchased intellectual property is estimated to have a useful life of 20 years. Because of the date
of purchase, and the sums involved, the Directors have decided to commence amortisation from
1 October 2017.
15. Subsidiaries
A list of the significant investments in subsidiaries, including the name, country of incorporation,
proportion of ownership interest is given in note 8 to the Company’s separate financial statements.
50
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
16. Other non-current receivables
Loan
Derecognition
2017
£’000
641
(641)
–
2016
£’000
605
–
605
The loan of £714k was granted to Redag Crop Protection Ltd as part of the sale of the former subsidiary.
It bears interest at 5% repayable with the principal sum. The loan is unsecured, and is only repayable
on the sale, listing, or change of control of Redag Crop Protection Ltd.
At 30 September 2017, the total amount outstanding (including accrued interest), was £821k.
At 30 September 2016, that amount was £785k before a fair value adjustment was made to reflect the
non-current nature of the asset, amounting to £180k. Following review, and as a result of the
conditionality attached to the repayment of the loan, the Directors have derecognised it as an asset in
accordance with International Accounting Standards.
Whilst the loan has been de-recognised as an asset, the Directors do not consider it to be extinguished
and will continue to seek full repayment under its terms.
17. Trade and other receivables
VAT recoverable
Other receivables
Accrued income
Prepayments
2017
£’000
915
712
–
961
2,588
2016
£’000
132
151
469
801
1,553
The Directors believe that the carrying value of other receivables represents their fair value.
Details of the Group’s credit risk management policies are shown in Note 21. The Group does not hold
any collateral as security for its other receivables.
18. Cash and cash equivalents
Cash at bank and in hand
2017
£’000
23,806
23,806
2016
£’000
5,758
5,758
No interest is earned on immediately available cash balances. Short term deposits are made for varying
periods of up to 90 days, and earn interest at the respective short-term deposit rates.
As at 30 September 2017, £23.7m of the above amount was held in bank accounts operated by
FRP Advisory LLP. All cash from these accounts was returned to the control of the Directors of the relevant
companies on exit from Administration.
51
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
19. Trade and other payables
Trade payables
Employee taxes and social security
Other payables
RGF Clawback (see Note 3)
Accruals
2017
£’000
3,991
201
151
6,085
2,934
13,362
2016
£’000
1,632
235
180
–
3,628
5,675
Trade and other payables principally consist of amounts outstanding for trade purchases and on-going
costs. They are non-interest bearing and are normally settled on 30 to 45 day terms.
20. Financial liabilities – borrowings
Current
Convertible loan due within one year
2017
£’000
–
–
2016
£’000
2,000
2,000
A convertible loan facility of £2m was agreed with Liverpool City Council in June 2012. The maturity date
of the loan was 31 March 2017. Interest was charged at 12% per annum and was payable upon
repayment of the loan. As a result of the default in repaying the loan, Redx Pharma plc and Redx
Oncology Limited were placed in Administration by the Council on 24 May 2017. The loan together with
accrued interest of £1.551m was repaid in full by the Administrators in August 2017.
The loan was secured by a fixed and floating charge over the assets of the business and was denominated
in sterling.
21. Financial instruments
The Group’s financial instruments comprise cash and cash equivalents, and various items such as other
receivables and trade and other payables arising directly from the Group’s operations. The main purpose
of these financial instruments is to finance the Group’s operations.
Classes and fair values of financial instruments are as follows:
Loans and receivables
Loans
Other receivables
Cash and cash equivalents
Financial liabilities measured at amortised cost
Current borrowings
Trade payables
Other payables
RGF clawback
52
Carrying value
2017
£’000
Carrying value
2016
£’000
–
200
23,806
24,006
–
3,991
151
6,085
10,227
605
620
5,758
6,983
2,000
1,632
180
–
3,812
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
The principal financial risks faced by the Group are:
Currency risk
The Group’s exposure to foreign currency risk is limited; as most of its invoicing and payments are
denominated in Sterling. Accordingly, no sensitivity analysis is presented in this area as it is considered
immaterial. Revenue generated from the disposal of the BTK programme was originally denominated in
US$. It was converted to Sterling by the Administrators at the rate ruling on the day of receipt.
Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange
rates and interest rates. In the year, both these risks are considered to have been minimal.
Credit risk
The Group gives careful consideration to which organisations it uses for banking in order to minimise
credit risk. The Group holds cash with one large bank in the UK, an institution with an A credit rating
(long term, as assessed by Moody’s). The amounts of cash held with that bank at the reporting date can
be seen in the financial assets table. All of the cash and cash equivalents held with the bank were
denominated in Sterling.
Liquidity risk and capital management
Liquidity risk
The Directors manage liquidity risk by regularly reviewing the Group’s cash requirements by reference
to short term cash flow forecasts and medium term working capital projections. In view of the
Administration, the directors have also commissioned an independent working capital review by Crowe
Clark Whitehill to further strengthen management in this area.
Capital management
The Group considers capital to be its equity. The Group’s objective when managing capital is to safeguard
the Group’s ability to continue as a going concern. The Group is currently meeting this objective. In order
to maintain or adjust the capital structure the Group may issue new shares or sell assets to reduce debt.
Financial risk factors
Accounts receivable and accounts payable, arising from normal trade transactions, are expected to be
settled within normal credit terms.
All of the Group’s financial liabilities have a contractual maturity within one year. (2016: all within
one year).
22. Deferred tax
Liabilities
At 30 September 2016 and 2017
Accelerated
capital
allowances
£’000
–
Other
£’000
–
Total
£’000
–
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of
17% (2016:17%).
Deferred tax assets in relation to losses carried forward of £5.1m, (2016: £6.1m) which represent trading
losses carried forward, have not been recognised on the grounds that there is insufficient evidence of
sufficient taxable trading profits arising in the future to allow recovery.
53
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
23. Share Capital
Number of shares in issue
Ordinary Shares of £0.01
Share Capital at par, fully paid
Ordinary Shares of £0.01
Movement in year
Ordinary shares of £0.01
Total movement in year
Share issues
2017
Numbers
2016
Numbers
126,477,914
93,552,638
£’000
1,265
329
329
£’000
936
286
286
On 11 October 2016, pursuant to the exercise of options, 145,319 Ordinary shares were issued (110,025
at £0.50 each and 35,294 at £0.425 each). The weighted average share price on this date was £0.56.
On 15 February 2017, the Company issued 5,999,999 Ordinary shares at £0.375 each pursuant to a
placing and admission to trading on AIM. On 1 March 2017, the Company issued a further 26,779,958
Ordinary shares pursuant to a placing and open offer, and admission to trading on AIM. The gross amount
raised being £12.36m.
24. Share premium
Brought forward
Share issue
Share issue costs
Exercise of share options
Description of other reserves:
2017
£’000
22,526
11,966
(1,298)
69
33,263
2016
£’000
13,516
9,714
(704)
–
22,526
Share premium
Amount subscribed for share capital in excess of nominal value.
Share based payment
The share based payment reserve arises as the expense of issuing
share-based payments is recognised over time (share option grants).
Capital redemption reserve
A statutory, non-distributable reserve into which amounts are
transferred following the redemption or purchase of a company’s own
shares.
Retained deficit
The retained deficit records the accumulated profits and losses less any
subsequent elimination of losses, of the Group since inception.
54
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
25. Share based payments
Movements on share options during the period were as follows:
Exercise
Price per 30 September
2016
share
Granted
Exercised
Lapsed/
Cancelled
30 September
2017
50p
50p
50p
50p
50p
50p
50p
56p
56p
56p
85p
85p
85p
33.2p
42.5p
42.5p
42.5p
42.5p
Total
Weighted
average
exercise price
36,675
36,675
36,675
191,650
161,650
161,650
110,025
78,875
78,875
78,875
1,239,950
187,100
178,775
1,095,040
66,666
66,667
66,667
35,294
3,907,784
59.59p
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(110,025)
–
–
–
–
–
–
–
–
–
–
(35,294)
–
–
–
(60,000)
(30,000)
(30,000)
–
–
–
–
(16,650)
–
–
(662,398)
–
–
–
–
36,675
36,675
36,675
131,650
131,650
131,650
–
78,875
78,875
78,875
1,223,300
187,100
178,775
432,642
66,666
66,667
66,667
–
(145,319)
(799,048)
2,963,417
48.18p
36.80p
66.29p
Date from
which
exercisable
27.03.2015
17.06.2015
17.06.2016
26.03.2016
26.03.2017
26.03.2018
26.03.2015
27.03.2015
01.09.2015
01.09.2016
27.03.2015
27.03.2016
27.03.2017
01.05.2019
01.04.2017
01.04.2018
01.04.2019
01.04.2016
Expiry date
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.02.2026
26.03.2025
26.03.2025
26.03.2025
26.03.2025
The number of exercisable share options at 30 September 2017 was 2,265,791, their weighted average
exercise price was 74.95p. The weighted average share price at the date of exercise of options was 56.43p.
Movements on share options during the period were as follows:
During the prior year:
Exercise
Price per 30 September
2015
share
Granted
Exercised
Lapsed/
Cancelled
30 September
2016
50p
50p
50p
50p
50p
50p
50p
56p
56p
56p
85p
85p
85p
33.2p
42.5p
42.5p
42.5p
42.5p
42.5p
Total
36,675
36,675
36,675
221,650
221,650
221,650
110,025
78,875
78,875
78,875
1,239,950
187,100
187,100
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,145,350
66,666
66,667
66,667
35,294
17,647
2,735,775
1,398,291
Weighted
average
exercise price
71.17p
34.88p
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(30,000)
(60,000)
(60,000)
–
–
–
–
–
–
(8,325)
(50,310)
–
–
–
–
(17,647)
36,675
36,675
36,675
191,650
161,650
161,650
110,025
78,875
78,875
78,875
1,239,950
187,100
178,775
1,095,040
66,666
66,667
66,667
35,294
–
(226,282)
3,907,784
51.03p
59.59p
Date from
which
exercisable
27.03.2015
17.06.2015
17.06.2016
26.03.2016
26.03.2017
26.03.2018
26.03.2015
27.03.2015
01.09.2015
01.09.2016
27.03.2015
27.03.2016
27.03.2017
01.05.2019
01.04.2017
01.04.2018
01.04.2019
01.04.2016
01.04.2017
Expiry date
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.02.2026
26.03.2025
26.03.2025
26.03.2025
26.03.2025
26.03.2025
The number of exercisable share options at 30 September 2016 was 2,110,669, their weighted average
exercise price was 74.21p.
55
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
25. Share based payments (continued)
The Group has accounted for the charge arising from the issue of share options as below:
The total charge recognised in the year to 30 September 2017 is £13,000 (2016: £245,000). The fair
values of the options granted have been calculated using a Black-Scholes model.
Assumptions used were an option life of 5 years, a risk free rate of 2 per cent, a volatility of 40 per cent
and no dividend yield. Other inputs are shown in Note 6.
The share options are exercisable with no further conditions to be met.
26. Operating lease arrangements – minimum lease payments
Property
Plant and equipment
2017
£’000
2016
£’000
2017
£’000
2016
£’000
Outstanding commitments for
future minimum lease payments
under non-cancellable operating
leases expiring:
Within one year
In the second to fifth years
In greater than five years
27. Related Parties
2,027
5,137
4,386
11,550
1,000
5,512
5,413
11,925
–
–
–
–
160
–
–
160
Balances and transactions between the Company and its subsidiaries, which are related parties, have
been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and
other related parties are disclosed below:
Trading transactions
The Group has purchased services in the normal course of business from the following companies related
to individuals who are or were Directors of the Group:
Acceleris Capital Ltd – of which Mr N. Molyneux is a Director
Norman Molyneux Consultancy Ltd – owned by Mr N. Molyneux
Dr Frank M Armstrong Consulting Ltd – owned by Dr F. Armstrong
The Group has also purchased administration services from Mrs. J. Murray, who is the wife of Dr N. Murray.
The Group has purchased other services, and has paid deal fees and commissions, in connection with
external fundraising from Acceleris Capital Ltd. These are also set out below, and were charged to the
share premium account.
The Group has provided services in the normal course of business to the following companies related to
individuals who are or were Directors of the Group:
Redag Crop Protection Ltd – of which Mr N. Molyneux is a Director. A loan has also been granted as part
of the sale of this company (See Note 16).
AMR Centre Ltd – of which P Jackson is a Director.
The amounts outstanding are unsecured.
As detailed in Note 16 the Group has a loan of £821k due from Redag Crop Protection Ltd. Mr N. Molyneux,
Dr N. Murray, Dr P. Jackson and Mr P. McPartland are all shareholders in Redag Crop Protection Ltd.
Whilst the loan has been de-recognised as an asset, the Directors do not consider it to be extinguished
and will continue to seek full repayment under its terms.
56
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
On 10 June 2016, a short term, interest free loan of £25,000 was made to AMR Centre Ltd, of which
P. Jackson is a Director. This loan was repaid on 18 August 2017.
Purchases from/(charges to) related parties
Redag Crop Protection Ltd
Acceleris Capital Ltd
Acceleris Capital Ltd (fundraising items)
Norman Molyneux Consultancy Ltd
Dr Frank M Armstrong Consulting Ltd (expenses)
AMR Centre Ltd
Mrs J Murray
Amounts owed to/(by) related parties
Redag Crop Protection Ltd
Redag Crop Protection Ltd – loan
Acceleris Capital Ltd
AMR Centre Ltd – short term loan
AMR Centre Ltd
Norman Molyneux Consultancy Ltd
Dr Frank M Armstrong Consulting Ltd
Mrs J Murray
2017
£’000
(257)
90
139
–
2
(110)
24
(112)
2017
£’000
(71)
–
77
–
(16)
–
–
12
2
2016
£’000
(163)
88
309
10
5
–
24
273
2016
£’000
(33)
(605)
18
(25)
–
–
1
2
(642)
Amounts owed to/by related parties are disclosed in other receivables (Note 17), other non-current
receivables (Note 16), and within trade payables (Note 19).
28. Capital Commitments
At 30 September 2017, the Group had no capital commitments (30 September 2016: £Nil).
29. Contingent liabilities
The Group has previously disclosed a contingent liability with regard to Regional Growth Fund grants
administered by the Department of Business, Energy and Industrial Strategy of the UK Government in
support of its research programs around early stage proprietary small molecule therapeutics. As a result
of the entry into Administration of Redx Pharma plc, this liability crystallised. A full description of the
outcome of this can be found in Note 3.
As at 30 September 2017, the Group had no contingent liabilities.
57
FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
30. Events after the reporting period
2/3 November 2017 – Exit from Administration and the Group (Redx Pharma plc and its subsidiaries),
announces it has resumed trading under the control of the Directors.
6 November 2017 – the Group updates the market on its revised strategy, share suspension from
trading on AIM is lifted and the following changes in personnel are announced:
• CEO Dr Neil Murray resigned and left the board with immediate effect and Non-Executive Director
Mr Norman Molyneux resigned from the Board;
• Mr Iain Ross appointed Interim Executive Chairman;
• Mr Dominic Jackson appointed CFO and Executive Director;
• Mr Peter Presland appointed as a Non-Executive Director and Chairman of the Audit, Risk and
Disclosure Committee; and
• A search for new CEO initiated.
14 November 2017 – Interim Executive Chairman buys 348,000 shares.
20 December 2017 – Group announces Preliminary Results for year ending 30 September 2017.
58
FINANCIAL STATEMENTS (continued)
Company Statement of Financial Position
At 30 September 2017
Company registration number 7368089
Fixed assets
Intangible assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
Total current assets
Creditors: amounts falling due
within one year
Net current assets
Net assets
Capital and reserves
Share capital
Share premium
Capital redemption reserve
Share based payments reserve
Profit and loss account
Shareholders’ funds
Notes
6
7
8
9
2017
£’000
322
150
225
697
6,490
23,065
29,555
10
(12,288)
17,267
17,964
1,265
33,263
1
880
(17,445)
17,964
11
12
12
13
2016
£’000
217
207
206
630
30,388
5,472
35,860
(6,197)
29,663
30,293
936
22,526
1
867
5,963
30,293
The Company has taken advantage of s408 of the Companies Act 2006 and has not included its own profit
and loss account in these financial statements. The Company’s result for the year was a loss of £23,408,000
(2016 loss: £180,000).
The financial statements were approved and authorised for issue by the board and signed on its behalf by:
Iain Ross
Director
19 December 2017
59
FINANCIAL STATEMENTS (continued)
Notes to the individual Financial Statements of Redx Pharma plc
1. Accounting Policies
(i) Basis of preparation
The Company’s financial statements have been prepared in accordance with Financial Reporting
Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and the
Companies Act 2006. The financial statements have been prepared under the historical cost convention.
Financial Reporting Standard 102 – reduced disclosure exemptions
The company has taken advantage of the following disclosure exemptions in preparing these financial
statements, as permitted by FRS 102 “The Financial Reporting Standard applicable in the UK and Republic
of Ireland”:
•
•
•
•
•
the requirements of Section 7 Statement of Cash Flows;
the requirement of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 11 Financial Instruments paragraphs 11.39 to 11.48A;
the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and
26.23; and
the requirement of Section 33 Related Party Disclosures paragraph 33.7.
(ii) Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at
the balance sheet date, where transactions or events that result in an obligation to pay more, or a right
to pay less tax in the future have occurred at the balance sheet date. Deferred tax assets are recognised
only to the extent that the directors consider that it is more likely than not that there will be suitable
taxable profit from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the
periods in which timing differences reverse, based on tax rates and laws enacted or substantially enacted
at the balance sheet date.
(iii) Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Rentals payable under operating leases (net of any incentives received
from the lessor) are charged to the Statement of Comprehensive Income on a straight-line basis over
the term of the relevant lease.
The minimum term of the lease is estimated if it is not clear.
(iv) Goodwill
Goodwill, being the amount paid in connection with the acquisition of a business in 2010, is being
amortised evenly over its estimated useful life of twenty years. It is reviewed annually by the Directors
for potential impairment.
Purchased intangible assets
The cost of a purchased intangible asset is the purchase price plus any cost directly attributable to
bringing the asset to the location and condition necessary for it to be capable of operating in the manner
intended. Purchased intangible assets are capitalised even if they have not yet demonstrated technical
feasibility. The intangible asset relating to intellectual property rights for the programme purchased from
Amakem is estimated to have a useful life of 20 years, and it will be amortised over this period,
commencing on 31 October 2017.
(v) Going Concern
As part of their going concern review the Directors have followed the guidelines published by the Financial
Reporting Council entitled “Guidance on Risk Management and Internal Control and Related Financial
and Business Reporting”.
60
FINANCIAL STATEMENTS (continued)
Notes to the individual Financial Statements of Redx Pharma plc
The Group made a net profit of £1.5m during the year, following the sale of its BTK programme, and
after taking into account all the costs associated with two Group companies, Redx Pharma Plc and Redx
Oncology Limited, entering Administration in May 2017. The Directors are satisfied, based on detailed
cash flow projections and after the consideration of reasonable sensitivities, that sufficient working capital
is available to meet the Group’s needs as they fall due, and at least 12 months from the date of signing
the accounts.
The detailed cash flow assumptions are based on the Group’s working capital projections, prepared and
approved by the Board, which reflects a number of key assumptions in respect of project costs, overheads
and discretionary spend, underpinned by the current pipeline. As detailed in the Chairman’s Statement
the Group’s internal projections and assumptions were subject to an independent review by Crowe Clark
Whitehill and the forecasts provide a cash runway to early 2019.
No revenue has been assumed in the forecasts, save for that generated from subletting unused space.
As detailed in the Chairman’s Statement, the Group is already in discussions with third-parties in respect
of partnerships and the licensing of non-core assets. In addition, no corporation tax expense has been
accrued in respect of the disposal of the BTK Program because, as detailed in the announcement of the
completion of Administration on 2 November 2017 various reliefs are thought to be available. This is on
the basis that the Administrators and CCW took tax counsel’s opinion that the methodology applied is
correct and the reliefs utilised are available. The forecasts indicate that the Group has a cash runway
through to February 2019 and its ability to continue to develop its programmes thereafter is dependent
on entering a partnership agreement or an additional fund raise. The Group is already in discussions
with third-parties in respect of partnerships and the licensing of non-core assets and furthermore, the
Group continues to have the ability to seek to raise additional funds on capital markets.
In the absence of such opportunities in relation to partnerships and the licensing of non-core assets
coming to fruition, the ability to raise additional funds on capital markets before February 2019 or the
unlikely event of the Group becoming liable to pay tax on the disposal of the BTK Programme,
management has identified further discretionary spending areas which can be reduced to allow the Group
to extend its cash runway to early May 2019. These can be made without impinging on the ability of key
programmes to reach value inflexion points, such as data from clinical trials which are expected to be
completed in late 2018.
On the basis of the above review, the Directors are confident that the Group has sufficient working capital
to honour all of its obligations to creditors as and when they fall due. Accordingly, the Directors continue
to adopt the going concern basis in preparing the Financial Statements.
(vi) Property, plant and equipment
All property, plant and equipment are stated at historical cost less depreciation. Cost includes the original
purchase price of the asset and the costs attributable to bringing the assets to its working condition for
its intended use. Finance costs are not included.
Depreciation is calculated on the straight-line method to write off the cost of assets to their residual
values over their estimated useful lives as follows.
Laboratory equipment
– 2 or 3 years
Computer equipment
– 2 or 3 years
Leasehold improvements – Over the term of the lease
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written
down immediately to its recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are
included in operating profit.
Repairs and maintenance are charged to the profit and loss account during the financial period in which
they are incurred.
61
FINANCIAL STATEMENTS (continued)
Notes to the individual Financial Statements of Redx Pharma plc
1. Accounting Policies (continued)
(vii) Financial instruments
Financial assets and financial liabilities 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
de-recognised when the contractual rights to the cash flows from the financial asset expire or when the
contractual rights to those assets are transferred. Financial liabilities are de-recognised when the
obligation specified in the contract is discharged, cancelled or expired.
(a) Trade and other receivables and group debtors
Trade and other receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method less provision for impairment. Appropriate
provisions for estimated irrecoverable amounts are recognised in the Statement of Comprehensive
Income when there is objective evidence that the assets are impaired. Interest income is recognised
by applying the effective interest rate, except for short-term receivables when the recognition of
interest would be immaterial.
(b) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and in bank, demand deposits, and other short-
term highly liquid investments that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
(c) Trade and other payables and group creditors
Trade and other payables are initially measured at their fair value and are subsequently measured
at their amortised cost using the effective interest rate method; this method allocates interest
expense over the relevant period by applying the “effective interest rate” to the carrying amount of
the liability.
(viii) Investments
Investments in subsidiaries are stated at cost less provision for impairment in value, and are detailed in
Note 8.
(ix) Share-based compensation
The Company issues share-based payments to certain employees and Directors. Equity-settled share-
based payments are measured at fair value at the date of grant and if material are expensed immediately
or on a straight-line basis over any vesting period, along with a corresponding increase in equity.
Where such payments are made to employees of subsidiary undertakings, but relate to the shares of
the parent, they are recognised as additional capital contributions to the subsidiary, along with a
corresponding increase in equity.
At each reporting date, the Directors revise their estimate of the number of equity instruments expected
to vest as a result of the effect of non-market-based vesting conditions. The impact of any revision is
recognised in Statement of Comprehensive Income, with a corresponding adjustment to equity reserves.
The fair value of share options is determined using a Black-Scholes model, taking into consideration the
best estimate of the expected life of the option and the estimated number of shares that will eventually
vest. The cost of each option is spread evenly over the period from grant to expected vesting.
When options expire or are cancelled, a corresponding credit is recognised.
(x) Critical accounting estimates and judgements
Details of significant accounting judgements and critical accounting estimates are set out in this Financial
Information and include:
(a) Share-based compensation
The Company has issued a number of share options to certain employees. The Black-Scholes model
was used to calculate the appropriate charge for the period of issue and subsequent periods.
62
FINANCIAL STATEMENTS (continued)
Notes to the individual Financial Statements of Redx Pharma plc
The use of this model to calculate a charge involves using a number of estimates and judgements
to establish the appropriate inputs to be entered into the model, covering areas such as the use of
an appropriate interest rate and dividend rate, exercise restrictions and behavioural considerations.
A significant element of judgement is therefore involved in the calculation of the charge.
The total charge recognised and further information on share options can be found in Notes 6 and
25 to the Consolidated Financial Statements.
(b) Group balances
The directors are required to make judgements regarding the recoverability of balances due from
subsidiary companies and decide if any impairment is appropriate. In making these judgements
they review potential revenue streams and other information.
(c) Loan to Redag Crop Protection Limited
The decision on whether to derecognise the loan requires the Directors to make judgements
regarding the future timings of repayments and likelihood of repayment criteria being met.
2. Administration
On 24 May 2017, Redx Pharma plc was placed into Administration as a result of the default on repaying
a loan from Liverpool City Council (“LCC”) by its subsidiary undertaking Redx Oncology Limited.
FRP Advisory LLP were appointed as Administrators by LCC. Dealing in the shares of the Company on
the AIM market was suspended on 24 May 2017. As at 30 September 2017 the Company remained in
Administration. As detailed in Note 15 [PBSE], the Company exited Administration on 2 November 2017,
when control was returned to the Directors. Those costs directly associated with the Administration
(including a provision for costs up to the end of the Administration), principally Administrators costs,
legal costs and taxation costs are included in the Company’s loss for the year, and total £2,814,000.
(2016: Nil).
3.
Clawback of Regional Growth Fund grant funding
The Group has, in both the current and past years, received Regional Growth Funds grants administered
by the Department of Business, Energy and Industrial Strategy of the UK Government. At the end of the
year the Group had received total grants as follows:
RGF 2
RGF 3
RGF 5
2017
£’000
5,920
4,700
3,007
2016
£’000
5,920
4,700
2,630
13,627
13,250
Under the terms of the grant awards, clawback amounts totalling £9.7m became repayable by the
Company on entering Administration. During the course of the Administration, a full and final settlement
was reached in the sum of £6.1m. This amount is disclosed within Creditors – amounts falling due within
one year, Note 10. It was repaid in October 2017, prior to the exit from Administration.
4. Write off of derivative financial instrument
In March 2017 the Company issued 11,500,000 new ordinary shares of 0.1p each (“Ordinary Shares”)
at a price of 37.5p per share to Lanstead for £4,312,500. The Company simultaneously entered into an
equity swap with Lanstead for 85 per cent of these shares with a reference price of 50p per share
(the “Reference Price”). The equity swap was for an 18-month period ending in October 2018.
All 11,500,000 Ordinary Shares were allotted with full rights on the date of the transaction.
Of the subscription proceeds of £4,312,500 received from Lanstead, £3,665,625 (85 per cent) was
invested by the Company in the equity swap.
63
FINANCIAL STATEMENTS (continued)
Notes to the individual Financial Statements of Redx Pharma plc
4. Write off of derivative financial instrument (continued)
Investment in the equity swap was a condition of the placing with Lanstead.
In the period to 24 May 2017, £106,000 had been received under the terms of the swap.
As a consequence of entering Administration, the terms of the equity swap were such that it terminated
with no further benefit to the company. The remaining balance of £3.56m has therefore been written
off. (2016: £Nil)
5.
Staff Costs
Staff costs (including directors) comprise
Wages and salaries
Social security costs
Pension costs
Non-recurring reorganisation costs
Total employee related costs
Number of employess
Average number of employees (including directors)
Management & Admin
6.
Intangible fixed assets
2017
£’000
1,043
126
51
1,220
10
1,230
2017
Number
10
2016
£’000
1,021
118
49
1,188
–
1,188
2016
Number
10
Cost
At 1 October 2016
Additions
At 30 September 2017
Amortisation
At 1 October 2016
Charge for the year
At 30 September 2017
Net book value
At 30 September 2017
At 30 September 2016
Intellectual
property
£’000
Goodwill
£’000
Total
£’000
–
121
121
–
–
–
121
–
309
–
309
92
16
108
201
217
309
121
430
92
16
108
322
217
64
FINANCIAL STATEMENTS (continued)
Notes to the individual Financial Statements of Redx Pharma plc
7.
Tangible fixed assets
Laboratory
equipment
£’000
Computer
equipment
£’000
Leasehold
Improvements
£’000
Cost
At 1 October 2016
Additions
At 30 September 2017
Depreciation
At 1 October 2016
Charge for the year
At 30 September 2017
Net book value
At 30 September 2017
At 30 September 2016
79
8
87
66
11
77
10
13
8.
Investments in subsidiaries
95
–
95
13
43
56
39
82
114
–
114
2
11
13
101
112
Total
£’000
288
8
296
81
65
146
150
207
During the year the Company made additional capital contributions to subsidiary undertakings by way
of share based compensation to employees of those companies.
At 1 October
Additional capital contribution – Redx Oncology Ltd
Additional capital contribution – Redx Anti-Infectives Ltd
Additional capital contribution – Redx Immunology Ltd
At 30 September
2017
£’000
206
19
–
–
225
At 30 September 2017 the Company held share capital in the following subsidiaries:
Name
Redx Oncology Limited
Block 33, Mereside, Alderley Park,
Macclesfield SK10 4TG
Redx Anti-Infectives Limited
Block 33, Mereside, Alderley Park,
Macclesfield SK10 4TG
Redx Immunology Limited
Block 33, Mereside, Alderley Park,
Macclesfield SK10 4TG
Redx MRSA Limited
Block 33, Mereside, Alderley Park,
Macclesfield SK10 4TG
Country of
incorporation
Percentage
held
Nature of
business
England & Wales 100%
England & Wales 100%
England & Wales 100%
Pre-clinical drug
development
licensing
Pre-clinical drug
development
licensing
Pre-clinical drug
development
licensing
England & Wales 100%
Dormant
Indirect
65
2016
£’000
118
20
50
18
206
Direct/
Indirect
holding
Direct
Direct
Direct
FINANCIAL STATEMENTS (continued)
Notes to the individual Financial Statements of Redx Pharma plc
9. Debtors
Amounts falling due within one year:
VAT recoverable
Amounts due from Group undertakings
Other debtors
Prepayments
Amounts falling due after more than one year
Other Debtor – Loan
Total
2017
£’000
644
5,578
184
84
6,490
–
6,490
2016
£’000
22
29,509
147
105
29,783
605
30,388
Amounts due from Group undertakings: Following a review by the Directors of the forecasts of one of its
Group undertakings, it was considered that the balance owed is unlikely to be recovered in the
foreseeable future due to a decision to focus on oncology and immunology assets, as such they have
decided to impair the balance owed in relation to this undertaking in the sum of £10,307,000.
(2016: £Nil).
The loan of £714k was granted to Redag Crop Protection Ltd as part of the sale of the former subsidiary.
It bears interest at 5% repayable with the principal sum. The loan is unsecured, and is only repayable
on the sale, listing, or change of control of Redag Crop Protection Ltd.
At 30 September 2017, the total amount outstanding (including accrued interest), was £821k.
At 30 September 2016, that amount was £785k before an adjustment was made to reflect the non-
current nature of the asset, amounting to £180k. Following review, and as a result of the conditionality
attached to the repayment of the loan, the Directors have derecognised it as an asset.
Whilst the loan has been de-recognised as an asset, the Directors do not consider it to be extinguished
and will continue to seek full repayment under its terms.
10. Creditors: Amounts falling due within one year
Trade creditors
Social security and other taxes
Amounts owed to Group undertakings
Other creditors
RGF Clawback (see Note 3)
Accruals
2017
£’000
2,399
64
2,953
127
6,085
660
12,288
2016
£’000
394
84
5,226
151
–
342
6,197
66
FINANCIAL STATEMENTS (continued)
Notes to the individual Financial Statements of Redx Pharma plc
11. Share Capital
Number of shares in issue
Ordinary Shares of £0.01
Share Capital at par, fully paid
Ordinary Shares of £0.01
Movement in year
Ordinary shares of £0.01
Total movement in year
Share issues
2017
Number
2016
Number
126,477,914
93,552,638
£’000
1,265
329
329
£’000
936
286
286
On 11 October 2016, pursuant to the exercise of options, 145,319 Ordinary shares were issued (110,025
at £0.50 each and 35,294 at £0.425 each) for a total consideration of £70,262.
On 15 February 2017, the Company issued 5,999,999 Ordinary shares at £0.375 each pursuant to a
placing and admission to trading on AIM. On 1 March 2017, the Company issued a further 26,779,958
Ordinary shares pursuant to a placing and open offer, and admission to trading on AIM. The gross amount
raised was £12.36m.
12. Reserves
Share Profit & loss
account
£’000
premium
£’000
Share based
payments
reserve
£’000
Capital
redemption
reserve
£’000
As at 1 October 2016
Loss for the year
On issue of shares
Share-based compensation
22,526
–
10,737
–
5,963
(23,408)
–
–
As at 30 September 2017
33,263
(17,445)
867
–
–
13
880
1
–
–
–
1
13. Reconciliation in movement in equity shareholders’ funds
Opening shareholders’ funds
Loss for the year
On issue of shares
Exercise of share options
Share-based payments
Closing shareholders’ funds
2017
£’000
30,293
(23,408)
10,996
70
13
17,964
Total
£’000
29,357
(23,408)
10,737
13
16,699
2016
£’000
20,932
(180)
9,296
–
245
30,293
67
FINANCIAL STATEMENTS (continued)
Notes to the individual Financial Statements of Redx Pharma plc
14. Operating lease arrangements – minimum lease payments
Outstanding commitments for
future minimum lease payments
under non-cancellable operating
leases expiring:
Within one year
In the second to fifth years
In greater than five years
2017
£’000
1,026
4,480
4,387
9,893
15. Post Balance sheet events
Property
Plant and equipment
2016
£’000
–
4,480
5,413
9,893
2017
£’000
2016
£’000
–
–
–
–
38
–
–
38
2/3 November 2017 – Exit from Administration and the Company announces it has resumed trading
under the control of the Directors.
6 November 2017 – The Company updates the market on its revised strategy, share suspension from
trading on AIM is lifted and the following changes in personnel are announced:
• CEO Dr Neil Murray resigned and left the board with immediate effect and Non-Executive Director
Mr Norman Molyneux resigned from the Board;
• Mr Iain Ross appointed Interim Executive Chairman;
• Mr Dominic Jackson appointed CFO and Executive Director;
• Mr Peter Presland appointed as a Non-Executive Director and Chairman of the Audit, Risk and
Disclosure Committee; and
• A search for new CEO initiated.
14 November 2017 – Interim Executive Chairman buys 348,000 shares.
20 December 2017 – Group announces Preliminary Results for year ending 30 September 2017.
16. Contingent liabilities
The Company has agreed to support its subsidiary undertakings for 12 months from the signing of these
financial statements.
17. Ultimate controlling party
There is no ultimate controlling party.
68
COMPANY INFORMATION
Directors
Iain G Ross (Executive Chairman)
Dominic Jackson (Chief Financial Officer)
Dr Bernhard Kirschbaum (Non-Executive Director)
Peter Presland (Non-Executive Director)
Secretary
Andrew Booth
Company number
7368089
Principal place of business
& registered office
Auditor
Nomad
Broker
Block 33
Mereside
Alderley Park
SK10 4TG
RSM UK Audit LLP
3 Hardman Street
Manchester
M3 3HF
Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London
E14 5RB
W G Partners LLP
85 Gresham Street
London
EC2V 7NQ
Annual General Meeting
The Annual General Meeting of the Company will be held at Alderley Park, Macclesfield, SK10 4TG on
6 March 2018.
69
Perivan Financial Print 248060