Renalytix plc
Annual Report and
Financial Statements
FOR THE YEAR ENDED 30 JUNE 2022
Index
STRATEGIC REPORT
3-21
Chairman & CEO’s Joint Statement
Company Overview
Operational and Financial Highlights
Product Overview and Strategy
Financial Review
Risk Management Approach
Section 172 Statement
Corporate Social Responsibility Review
3
8
9
11
13
15
19
21
CORPORATE GOVERNANCE
22-52
Board of Directors
Directors’ Report
Corporate Governance Statement
Directors’ Remuneration Report and Policy
Independent Auditors’ Report
22
25
29
32
48
FINANCIAL STATEMENTS
53-87
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated and Company’s Statements of Financial Position
Consolidated and Company’s Statements of Cashflows
Consolidated Statement of Changes in Equity
Company’s Statement of Changes in Equity
Notes to the Financial Statements
Additional Financial Information
53
54
55
57
59
61
63
85
| Renalytix plc Annual Report and Financial Statements
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STRATEGIC REPORT
Chairman & CEO’s Joint Statement
TO THE MEMBERS OF RENALYTIX PLC
We are pleased to present our annual report for the twelve months ended 30 June 2022 for Renalytix plc
(“Renalytix” or the “Company”).
Our path to success is focused on five major items:
1. Achieving “super-majority” insurance coverage in key regional markets including New York, Illinois
and the Carolinas;
2. Continuing to publish on our growing real-world evidence of KidneyIntelX effectiveness;
3. FDA De Novo marketing authorization for KidneyIntelX;
4. Revenue growth from sequential onboarding of physicians, networks, and hospitals in new locations;
and
5. Continuing to lower net expense to maintain cash availability into the first half of fiscal 2024
We are making strong progress and expect to meet or exceed each of these items.
Achieving “super-majority” insurance coverage in key regional markets including New York, Illinois and the
Carolinas
We expect to cross the threshold of “super-majority” coverage in different key markets over the next several
months. We consider a super-majority as greater than 70% of patients with diabetes and kidney disease
having insurance coverage for KidneyIntelX testing in a major population region, such as New York City or
metropolitan Chicago. Establishing Medicare and Medicaid payment are two crucial pieces as collectively they
provide insurance for an estimated 60-70 percent of the KidneyIntelX eligible patient population. We recently
reported that we have secured payment for KidneyIntelX testing by Medicare through claims submitted to
National Government Services (NGS), the Medicare Administrative Contractor covering our New York
laboratory. This is in addition to KidneyIntelX claims now being paid by Medicare Advantage, Medicaid, Blue
Cross Blue Shield and other commercial insurance providers.
The Blue Cross Blue Shield (BCBS) system, covering over 114 million members or 1 in 3 Americans, is also core
to our 2023 growth strategy. To date, we are pleased to have KidneyIntelX coverage declared by BCBS Illinois
(8.1 million members), and Wellmark BCBS (South Dakota and Iowa with two million members). We have
always viewed insurance reimbursement as the most significant hurdle to KidneyIntelX adoption and consider
our building success in securing Medicare, Medicaid and BCBS payment to be unusually rapid this early in a
company’s commercial diagnostic lifecycle. Our expected KidneyIntelX contracted pricing remains at $950, in
line with our distinct Medicare CLFS pricing.
Continuing to publish on our growing real-world evidence of KidneyIntelX effectiveness
Published utility study results showed that primary care physicians using KidneyIntelX are six times more
likely to prescribe advanced medication to their high-risk patients in early-stage kidney disease where the
opportunity to prevent significant kidney damage or kidney failure is greatest. In these studies, the same
physician using KidneyIntelX was also three times more likely to make a timely referral to a specialist and
three times more likely to initiate more aggressive anti-hypertensive (blood pressure control) strategies.
In other words, these real-world results support that KidneyIntelX is driving behavior change at primary care
for high-risk patients – the key to altering the tide on kidney disease progression and reducing dialysis. We
expect additional results from our multi-year real-world evidence programs will be in print during the 2nd
quarter of fiscal 2023.
FDA De Novo marketing authorization for KidneyIntelX
We continue to work closely and constructively with the FDA on our De Novo Breakthrough Device
authorization submission. Notably, we have provided additional comprehensive data which further confirms
the performance of KidneyIntelX in risk discrimination for patients with diabetic kidney disease. We now
believe we are approaching the completion of the De Novo regulatory process and while there is no guarantee
| Renalytix plc Annual Report and Financial Statements
3
of success until the FDA has made its final determination, we are optimistic based on both the quality of
analytic and clinical evidence provided and the high level of engagement we have had with the FDA. Our
current expectations are for a decision to be made in calendar Q1 2023 but there can be no guarantee on this
timescale.
Revenue growth from sequential onboarding of physicians, networks, and hospitals in new locations
We expect revenue test volume will continue to increase through the balance of fiscal year 2023 with increased
contribution from different market channels. At Mount Sinai Health System alone, we have now generated
nearly 5,000 KidneyIntelX patient results including 835 in the quarter ended June 2022 (Q4 of FY22), and
another 974 in the most recent post-period quarter ended September 2022 (Q1 of FY23).
We issued over 1,200 patient KidneyIntelX test reports in the first quarter of fiscal 2023 (ended September 30),
which is double the testing rate from a year earlier. With expanded insurance coverage, a growing number of
these tests are now billable and revenue recognizable within 30 days.
Continuing to lower net expense
We have continued to reduce Company overhead with a keen eye toward advancing our best commercial
opportunities – primarily regions with super-majority insurance coverage in the short term. As stated in
August 2022, we have taken action to lower annual expenditures by over $12 million through program, vendor
and employee reductions, with additional opportunities to reduce expenditures under review.
In fiscal 2023, the fundamental goals are clear;
• building on diversified testing volume;
•
securing broad insurance coverage;
•
continued evidence of real-world benefit of KidneyIntelX use in the clinic; and
• FDA authorization
The early-stage kidney health market remains wide open, and we believe Renalytix is in a position to alter the
cost landscape and maintain better health for some 15 million Americans with diabetes and kidney disease.
ABOUT RENALYTIX
At Renalytix, we are introducing more accurate prognosis and effective care management for the estimated 850
million people worldwide with chronic kidney disease. In the United States alone, chronic kidney disease affects
about 37 million people and is responsible for one of the largest cost drivers in the national medical system.
Early identification, prognosis and treatment beginning with primary care is essential if we are to stem the
growing social cost and suffering associated with kidney disease.
With our lead product, KidneyIntelX, the goal is to drive the focus from kidney disease treatment to kidney
health management through a more accurate understanding of a patient’s risk for kidney failure before it
happens. KidneyIntelX leads development in the new field of bioprognosis, a biology driven approach to risk
assessment that integrates information from a simple blood draw and a patient’s health record to produce an
accurate picture of kidney health. A doctor can use KidneyIntelX results to act on patients at high risk of kidney
disease progression or failure at an early stage where active management and therapeutics have the best
opportunity to impact outcomes and cost before it is too late.
KIDNEYINTELX™
Our novel platform, KidneyIntelX, uses a machine-learning enabled algorithm to process predictive blood
biomarkers with key features from a patient’s health record to generate an early and accurate kidney health risk
score. The score identifies those patients at the most risk for kidney disease progression and/or failure and
further guides ongoing clinical decisions.
KidneyIntelX is initially indicated for use with adults who have diagnosed kidney disease and diabetes – diabetic
kidney disease or DKD. Future KidneyIntelX products in development intend to expand the indicated uses to
include broader chronic kidney disease, health equity strategies and kidney health monitoring through treatment.
Diabetes is the leading cause of chronic kidney disease, representing nearly 40% of its cases, and DKD patients are
the highest contributors to emergency room dialysis starts. Unfortunately, many DKD patients are unaware that
their kidney disease has been progressing, often uncontrolled, for many years and now find themselves making
difficult decisions about late-stage treatments.
KidneyIntelX was designed as an expandable platform able to add indicated uses and a monitoring capability, all
within an FDA regulated, insurance reimbursable framework.
| Renalytix plc Annual Report and Financial Statements
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OPERATIONAL PROGRESS
In the year ended 30 June 2022 (“FY22”) and the immediate post-period, the Company saw KidneyIntelX expand
within the Mount Sinai Health System and launch at Wake Forest Baptist Health, CDPHP, VA medical centers and
among independent primary care physicians.
A full electronic health record (EHR) integrated deployment of KidneyIntelX with population health support in the
Mount Sinai Health System has now yielded actionable reports on nearly 5,000 patients and growing. Utility
results from our first real-world deployment at scale is yielding key evidence of the benefits of KidneyIntelX,
particularly at the all-important primary care level. Patients and doctors are now clearly seeing benefits in the
short-term from advanced risk assessment and follow-on action early in the disease cycle. Our experience with
our physician-led health insurance partner, Capital District Physicians’ Health Plan (CDPHP), in upstate New York
has been equally robust.
Implementing with the veterans’ affairs (VA) medical system has been slower than planned due to the
complexities in introducing a new test and integrating its use into the VA system. However, we have now begun to
overcome implementation hurdles and are beginning to see an increasing number of orders and corresponding
testing volumes. We remain convinced that KidneyIntelX will play an important role nationally in the VA system
which serves an estimated one million veterans with diabetes and kidney disease. Again, insurance coverage
remains in place with a nationwide 10-year government insurance contract for KidneyIntelX payment throughout
the VA system.
Expert experience is reflected in the design of the KidneyIntelX test report and the newly launched product
website: www.kidneyintelx.com. We believe our education and support program will be an important resource to
help inform and improve care for early-stage DKD patients and support future hospital system deployments of
KidneyIntelX in the United States and abroad, which we believe could be achieved more rapidly as a result of the
knowledge we have derived from our hospital system implementations to date.
Financing
In July 2019, we raised gross proceeds of $17.3 million in a follow-on financing on the AIM market, and in July
2020, we raised an additional $85.1 million in gross proceeds through an offering and concurrent dual-listing
on the Nasdaq Global Market in the U.S.
In March 2022, we announced the completion of a financing package yielding $26.8 million in gross proceeds
for the Company. The financing included an $8.8 million equity subscription plus $21.2 million principal
amount of convertible bonds (net cash proceeds of $18 million). We are pleased to have achieved the financing
in an extremely challenging capital market environment, which we believe illustrates the strength of our
kidney disease testing, monitoring and informed care advantages.
Clinical Evidence
Over the past few years, we have published and presented validation, utility and health economics data
supporting KidneyIntelX adoption. Of particular note is the growing body of real-world utility evidence
building on KidneyIntelX clinical reporting in different institutions through several thousand patients.
Examples of published evidence includes:
Initial
Forum
ADA 81st
Scientific
Sessions
2020
NKF Spring
Clinical
Meeting
2020
ADA 82nd
Scientific
Sessions
2021
ISN World
Congress of
Nephrology
2021
Cohort
Findings
Mount Sinai &
UPenn
(n=1,146)
Simulation in
patients with
DKD stages 1-
3b
(n=100,000)
CANVAS
(n=1,325)
CANVAS
(n=1,026)
KidneyIntelX more accurately predicted
progressive kidney function decline and
kidney failure than clinical metrics alone
Analyses supported payer coverage for early-
stage risk assessment and care management in
the primary care office; projects significant
savings from KidneyIntelX testing at primary
care
KidneyIntelX algorithm published in
Diabetologia and currently deployed
commercially accurately predicted
progression of DKD in this multinational
clinical trial cohort
KidneyIntelX can be effective at monitoring
therapeutic response and improvements in
kidney health over time in adults with type 2
diabetes and DKD
Publication
Diabetologia
2021;64, 1504–
1515
Journal of Medical
Economics
2021;24:972-982
American Journal of
Nephrology
2022;53:21–31
American Journal of
Nephrology
2022;53:21–31
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NKF Spring
Clinical
Meetings
2021
PCPs
(n=401)
ASN Kidney
Week 2021
Mount Sinai
RWE Cohort
ISN World
Congress of
Nephrology
2022
Sinai/Penn
(n=1,146)
ADA 83rd
Scientific
Sessions
2022
ADA 83rd
Scientific
Sessions
2022
CANVAS
(n=1,325)
Mount Sinai
RWE Cohort
(n=1,112)
ASN Kidney
Week 2022
Systematic
Review and
Meta-analysis
(n=129
studies)
KidneyIntelX test had greater relative
importance than albuminuria and eGFR to
PCPs in making treatment decisions and was
second only to eGFR for nephrologist referrals.
KidneyIntelX testing enhanced patient
understanding about kidney disease and
revealed
substantial motivation to take appropriate
actions and receive further education for their
kidney health.
KidneyIntelX provided robust prognostic
information for future eGFR trajectories and
adverse kidney outcomes beyond prior
ascertainment of baseline kidney function,
injury, or historical kidney function
trajectories.
KidneyIntelX provided risk stratification for a
triple composite end point that included not
only the kidney-specific outcome of
progression, but also clinically relevant
outcomes of hospitalizations for heart failure
and all-cause mortality, even after adjusting
for several other risk factors for these
outcomes.
KidneyIntelX showed utility in driving
guideline appropriate use of therapies,
including SGLT-2 inhibitors and RAAS
inhibitor use, and timely consultation to
specialists in high-risk patients.
Systematic review and meta-analysis to
summarize the prognostic value of preclinical
plasma and urine biomarkers for CKD outcomes
(incident CKD, CKD progression, or incident
ESKD), including 129 studies in the meta-
analysis. Pooled risk ratios (RRs) and 95%
confidence intervals (Cis) among some of the
most studied CKD biomarkers were 2.17 (1.91
to 2.47) for TNFR1 (31 studies); 2.07 (95% CI,
1.82 to 2.34) for TNFR2 (23 studies); 1.51 (95%
CI, 1.38 to 1.66) for KIM-1 (18 studies).
American Journal of
Managed Care
2022;28:In Press
Journal of the
American Society of
Nephrology
32: 2021
Kidney
International
Reports
2022; 7, S1–S436
Kidney360
2022, 3;1599-1602
Pending
Journal of the
American Society of
Nephrology
2022, 33:1657-1672
ADA – American Diabetes Association; NKF – National Kidney Foundation; ASN – American Society of
Nephrology; ISN – International Society of Nephrology; RWE – Real world evidence; DKD – diabetic kidney
disease
Intellectual Property
The U.S. Patent and Trademark Office allowed claims extending the use of one of KidneyIntelX’s primary blood
biomarkers, sTNFR1, to all patients with diabetes to determine an increased risk of developing progressive
kidney disease or kidney failure. We have also completed rights to additional patent applications for use with
KidneyIntelX. We continue to build out our intellectual property portfolio and are actively evaluating in-
licensing opportunities that will enhance our competitive product positioning.
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Current trading and Outlook
Building KidneyIntelX into a standard of care in the United States and a global market with 850 million people
with chronic kidney disease requires extensive data production, regulatory approvals, physician and patient
education, and of course, comprehensive reimbursement. While it sometimes seems this set of milestones
takes a long time to accomplish, we are reminded that Renalytix is still a young company that received its first
funding less than four years ago. To have achieved real insurance coverage for KidneyIntelX testing in the
complex U.S. market in such a short time we believe is extraordinary. We believe that since the data is
comprehensive and showing clear benefit, acceleration of adoption is likely to continue to occur. The social
need could not be higher to establish innovative preventative medicine strategies such as KidneyIntelX at the
front-end of diabetes and kidney disease.
Operational progress continued into the first quarter of fiscal 2023 with over 1,200 tests performed. More than
80% of these were billable, yielding about $1.0 million revenue for the quarter. These are record amounts for
us in quarterly testing volumes and revenue.
We greatly appreciate the patience and continued support of our shareholders through these unusual times.
Christopher Mills
Chairman
James R. McCullough
Chief Executive Officer
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Company Overview
PIONEERING NEXT-GENERATION TECHNOLOGY SOLUTIONS FOR KIDNEY HEALTH
Renalytix is the global founder and leader in the new field of bioprognosisTM for kidney health. The Company has
engineered a new solution that enables early-stage chronic kidney disease progression risk assessment. The
Company’s lead product, KidneyIntelX, has been granted Breakthrough Designation by the U.S. Food and Drug
Administration (FDA) and is designed to help make significant improvements in kidney disease prognosis,
transplant management, clinical care, patient stratification for drug clinical trials, and drug target discovery.
Renalytix is focused on optimizing clinical management of kidney disease to drive improved patient outcomes
and lower healthcare costs. KidneyIntelX, our first-in-class in vitro diagnostic platform, employs a proprietary
algorithm that combines diverse data inputs, including validated blood-based biomarkers, inherited genetics and
personalized patient data from electronic health record, or EHR, systems, to generate a unique patient risk score.
This patient risk score enables prediction of rapid progressive kidney function decline in chronic kidney disease,
or CKD, allowing physicians and healthcare systems to optimize the allocation of treatments and clinical
resources to patients at highest risk.
ON A MISSION TO COMBAT A DEVASTATING AND COSTLY DISEASE
Kidney disease is a public health epidemic affecting over 850 million people globally. Managing a CKD
population of this scale and the associated healthcare spending presents a unique healthcare system
challenge, requiring a solution that provides a clearer understanding of clinical risk tied to specific guideline-
driven clinical recommendations. The ability to predict which patients will experience progressive kidney
function decline, which includes rapid kidney function decline, or RKFD, sustained significant decline in
kidney function, kidney failure, initiation of long-term dialysis or kidney transplant, is critical to changing
patient outcomes and health economics. Current methods for risk stratification of patients with CKD lack
sufficient precision in predicting progressive kidney function decline, especially at earlier stages of the
disease. This can exacerbate the occurrence of unexpected and expensive clinical events. In fact, up to 38% of
patients with CKD initiate dialysis with little or no prior clinical specialist consultation, and up to 63% of
patients with CKD initiate dialysis in an unplanned fashion with a central venous catheter and/or during
emergency hospitalization, which we refer to as “dialysis crash.” This highlights the need for an early
mechanism to identify potential instances of rapidly progressing CKD before it becomes critical to the
patient’s health and costly to healthcare providers.
We have now validated KidneyIntelX in multiple distinct studies, involving specimens from thousands of patients
with DKD. In all studies, KidneyIntelX has demonstrated the ability to more accurately identify which patients
would experience rapid progressive kidney function decline over current clinical practice. We believe early risk
stratification, using advanced technology implemented in partnership with healthcare systems and insurance
payors, can help support a fundamental shift towards optimal treatment for the over 850 million people
suffering from kidney disease worldwide.
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Operational and Financial Highlights
Including post-period events
REGULATORY & REIMBURSEMENT
▪ New commercial coverage in fiscal year 2022; 28 private insurance and network provider contracts now
executed to date including:
o Largest private payer in Illinois with 8.1 million members
o Largest independent provider network in the tristate North Carolina, South Carolina and Virginia
area, with over 100,000 health care providers in-network
▪ Achieved Medicare payment for KidneyIntelX through the individual claims review (ICR) process based on our
Medicare clinical lab fee schedule (CLFS) pricing of $950 per test
▪ 33 state Medicaid programs contracted to date
▪ Continued data generation and analysis reinforcing the benefits of KidneyIntelX as part of collaborative De
Novo process with the FDA, with anticipation that the agency’s review is nearing completion. Data supports
significant breakthrough in risk stratification for patients with diabetic kidney disease
COMMERCIAL & PARTNERSHIPS
▪
Sales and medical affairs support buildout across core, strategically-focused market channels:
o Deployed sales directors and representatives targeting large hospital systems, provider networks and
independent primary care physicians, and veterans' hospitals
o Added VP of Medical Affairs to support KidneyIntelX physician onboarding, education, and test
ordering
o Deployed market access and health systems partnership personnel to drive expansion
o Developed comprehensive physician and patient marketing and education material
▪ Launch of myIntelX provider access portal for simplified, decentralized on-line ordering of KidneyIntelX
▪ Partnered with Singing River Health System to deploy KidneyIntelX informed care management to improve
kidney health in individuals across the Mississippi Gulf Coast with type 2 diabetes and early-stage chronic
kidney disease
▪ Partnered with St. Joseph's Health, based in Syracuse, NY and part of the Trinity Health System, for
KidneyIntelX deployment and to advance value-based care
▪ Progressed through layers of vendor approval at several VA hospitals as part of nationwide 10-year payment
contract from the U.S. General Services Administration (GSA), with initial test orders and pre-payments
received
▪
Joint program with American Diabetes Association® to improve overall kidney health in patients with type 2
diabetes in the United States
▪ Kidney disease education programs in partnership with the National Kidney Foundation
▪ Continued KidneyIntelX testing volume growth
▪ Growth in number of active physicians ordering KidneyIntelX
CLINICAL & VALIDATION
▪ Published data in the American Journal of Nephrology in which KidneyIntelX successfully monitored patient
response to new drug therapy in 1,325 multinational clinical trial cohort patients
▪ KidneyIntelX showed ability to assess risk of heart failure hospitalization and death in large international
diabetic kidney disease patient cohort (published in Kidney360)
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▪ Peer-reviewed publication in Journal of Medical Economics supporting payer coverage for early-stage risk
assessment and care management in the primary care office; projecting significant five-year savings from
KidneyIntelX testing at primary care level
▪ Data results published in American Journal of Managed Care supporting adoption and clinical utility of
KidneyIntelX; 98% of 401 primary care physicians surveyed confirmed KidneyIntelX has value as a risk
decision tool
▪ Multiple data presentations at the American Diabetes Association (ADA) 82nd Scientific Sessions® meeting,
including one showing KidneyIntelX testing in 1,112 adult diabetic kidney disease (DKD) patients at Mount
Sinai Health System showed utility in driving guideline appropriate use of therapies, including SGLT-2
inhibitors and RAAS inhibitor use, and timely consultation to specialists in high-risk patients
▪ World Congress of Nephrology data showing KidneyIntelX predicted the future rate of decline in kidney
function compared with current standard diagnostics in patients with early-stage chronic kidney disease and
type 2 diabetes
▪ Ongoing clinical studies at Wake Forest / Atrium Health and Mount Sinai Health System substantiating clinical
utility of KidneyIntelX
FINANCE & OPERATIONS
▪ Commercial development progress with annual revenue growth
▪ Completion of $30.0 million equity and convertible note financing package ($26.8 million gross proceeds)
▪ Cost rationalization enacted at end of period reducing annualized spend by over $12 million with review of
other cost-savings opportunities ongoing
▪
Salt Lake and New York laboratories operating to most rigorous audited standards; CLIA, CAP, ISO, and U.S.
Food and Drug Administration audit compliant
▪ The Group had cash on hand of $41.3m (FY21: $65.2m).
CURRENT QUARTER
▪ Operational progress continued into the first quarter of fiscal 2023 with over a record 1,200 tests performed
▪ More than 80% of these were billable, yielding approximately $1.0 million revenue for the quarter
| Renalytix plc Annual Report and Financial Statements
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Product Overview and Strategy
Our novel platform, KidneyIntelX, uses a machine-learning enabled algorithm to process predictive blood
biomarkers with key features from a patient’s health record to generate an early and accurate kidney health risk
score. The score identifies those patients at the most risk for kidney disease progression and/or failure and further
guides ongoing clinical decisions.
OUR STRATEGY
Our goal is to lower healthcare costs and improve patient quality of life by transforming the paradigm for kidney
disease risk assessment and clinical management through our KidneyIntelX platform. To achieve this goal, we plan to:
• Continue to Build Integrated Partnerships with Healthcare Systems on a Population Health Basis. We
are focused on building partnerships with healthcare systems and the engagement and support of their
clinical leadership teams, which will enable us to efficiently initiate and deploy our solution to patient
populations with DKD. A key aspect of this is technical integration of the KidneyIntelX software platform
with healthcare systems’ EHR systems and clinical workflow.
• Actively Market KidneyIntelX in Veterans Health Administration. Following our 10-year government-
wide contract provided in April 2021 by the U.S. General Services Administration for KidneyIntelX testing
services at $950 per reportable result, we are now staffing sales and support teams and establishing enabling
infrastructure to deploy KidneyIntelX at the Veterans Health Administration. The Veterans Health
Administration is America’s largest integrated health care system, providing care at 1,293 health care facilities,
including 171 medical centers and 1,112 outpatient sites, serving nine million enrolled veterans each year. The
veteran population has an approximately one-third higher chronic kidney disease and DKD prevalence than
the general population, which has been attributed to the significant multi-morbidity and higher mean age in
this group.
• Further Expand Insurance Payor Coverage. We believe that the potential of KidneyIntelX to improve
patient outcomes and promote benefits in health economics for patients, physicians and payors provides a
strong foundation for our reimbursement strategy. Moreover, early and ongoing engagement with insurance
payors will continue to be key to supporting the deployment of KidneyIntelX.
• Expand Medicare Coverage. Following the receipt of national Medicare pricing at $950 per reportable test
for KidneyIntelX in January 2020, we are actively pursuing multiple distinct pathways for Medicare
coverage, which would expedite the claims payment process. We estimate that Medicare currently provides
insurance coverage for approximately 14 million patients with CKD, an estimated 40% of which have DKD.
In October 2022, we announced that we achieved Medicare payment for KidneyIntelX through the
individual claims review (ICR) process.
• Obtain FDA Clearance of KidneyIntelX to Further Drive Commercial Adoption in the United States.
While not required for commercialization as an LDT, we are seeking marketing authorization from the FDA
through the De Novo pathway as part of our strategy to produce a product capable of becoming the new,
long-term standard of care for patients with CKD.
• Build Substantial Repository of Kidney Disease-Related Data. We are building a repository of kidney
disease-related data for the development of progressive KidneyIntelX product versions and additional
artificial intelligence-powered clinical applications. We are designing applications to examine disease
patterns in large patient populations and to optimize clinical care navigation and management effectiveness.
These developments are underpinned by the goals of driving patient and physician behavior changes and
ultimately improving patient outcomes. Access to current and historical patient data, combined with the
ability to analytically and clinically validate study results in a quality-controlled framework, provides us with
a powerful product development platform.
• Expand Our Product Portfolio. We believe there are significant opportunities to expand our technology platform
through incremental version releases of KidneyIntelX as well as through extending the KidneyIntelX platform into
new applications into additional populations of CKD patients beyond those with diabetes, including repeat
testing to monitor changes in risk and therapeutic response and other CKD subtypes, including patients of
African ancestry with the APOL1 high-risk genotype.
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• Real World Evidence Program. Through our growing number of health system partnerships, collaborations
and payor models, we are creating a comprehensive real-world evidence (RWE) and data generation
program including the previously announced programs at Mount Sinai, Wake Forest / Atrium Health and
Utah Health. The primary objective is to demonstrate the clinical and economic impact of KidneyIntelX
informed care management in large populations and we expect to expand the scale of this program with
extensive publication and dissemination of the results. Additionally, through these Institutional Review
Board (IRB)-approved and patient consented studies we will be amassing a vast biorepository of urine, blood
and DNA samples linked to comprehensive longitudinal patient data which will help accelerate the
development of diagnostic products and data solutions for kidney disease and related complications and co-
morbidities.
| Renalytix plc Annual Report and Financial Statements
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Financial Review
The results presented cover FY22. The presentational currency for Renalytix plc and its subsidiaries (together,
the “Group”) is the United States Dollar.
INCOME STATEMENT
Revenue
The Group recognized a total of $2.9 million in revenue in the financial year ended 30 June 2022 (“FY22”) which was
comprised of $2.7m in revenue related to testing services as well as $0.2 million related to pharmaceutical services
revenue.
Cost of Sales
The cost of sales associated with the services performed and commercial testing revenue was $2.1 million for FY22.
Administrative Costs
During FY22, administrative expenses totaled $58.3 million (financial year ended 30 June 2021 (“FY21”): $33.3
million). The major items of expenditure were general and administrative costs of which included $27.6 million in
employee- related costs (FY21: $13.8 million), $12.9 million in subcontractors, legal, accounting, and other
professional fees (FY21: $9.1 million), $6.4 million in external R&D Services, lab supplies and lab services(FY21: $1.4
million), $4.6 million in insurance (FY21: $4.6 million), $2.1 million in depreciation and amortization (FY21: $2.1
million), $1.9 million in marketing and public relations (FY21: $0.9 million), $1.7 in IT related costs (FY21: $0.6
million), $0.5 million in office related expenses including rent(FY21: $0.3 million), $0.3 million in stock exchange
listing and filing fees (FY21: $0.2 million) and $0.3 million in other expenses (FY21: $0.3 million).
Gain (loss) on financial assets at fair value through profit or loss
The Company accounts for the investment in VericiDx equity securities at fair value, with changes in fair value
recognized in the income statement. During the year ended 30 June 30 2022, we recorded a loss of $5.9 million to
adjust the VericiDx investment to fair value. During the year ended 30 June 30 2021, we recorded a gain of $6.5
million to adjust the VericiDx investment to fair value.
Fair value adjustment of convertible debt
We elected to account for the convertible notes at fair value with qualifying changes in fair value recognized through
the income statement until the notes are settled. This excludes fair value adjustments related to instrument-specific
credit risk, which are recognized in OCI. For the year ended 30 June 2022, we recorded a gain of $4.0 million to adjust
the convertible notes to fair value. There was no fair value adjustment for the year ended 30 June 2021 as we had not
issued convertible debt at that time.
Finance Income (Expense)
Finance income (expense) consists of foreign exchange gains or losses. During the year ended 30 June 2022, we
recognized a foreign currency gain of $9.6 million due to exchange rate fluctuations on transactions denominated in a
currency other than our functional currency. During the year ended 30 June 2021, we recognized foreign currency
losses of $8.8 million.
BALANCE SHEET
Inventory
Inventory consists of consumable materials used by the labs to carry out KidneyIntelX tests. During FY22, inventory
levels increased due to purchases as the company prepares for increased KidneyIntelX testing volumes. Inventory on
hand at 30 June 2022 totaled $1.2 million (FY21: $0.4 million).
Fixed Assets
Property, plant, and equipment consists of laboratory equipment being used to support testing and product
development activities. At 30 June 2022, the company held $1.4 million in net property, plant, and equipment (FY21:
$1.1 million).
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Intangible Assets
The Group held $14.0 million net book value of intangible assets held at 30 June 2022 (FY20: $18.0 million) includes
payments made primarily to Mount Sinai for license and patent costs for the intellectual property underlying
KidneyIntelX, as well as amounts capitalized as development costs. Intangible assets also include the value of the
biomarker business purchased (in exchange for ordinary shares in the Company) from EKF. Intangible assets
decreased period over period due to amortisation and the impact of foreign exchange translation at period end.
Investment in Verici
At the end of FY22 the group held 9,831,681 shares in Verici Dx, the fair value of the investment in Verici Dx was $2.7
million at 30 June 2022 (FY21: $9.3 million)
Convertible Note
In April 2022, the Company issued amortizing senior convertible bonds with a principal amount of $21.2 million in
amortizing senior convertible bonds due in April 2027 (the "Bonds"). The Bonds were issued at 85% par value with
total net proceeds of $18.0 million. The Company elected to account for the Bonds at fair value. At 30 June 2022, the
Bonds had a fair value of $12.3 million.
Cash
The Group had cash on hand of $41.3m (FY21: $65.2m). Cash and equivalents are held in several deposit accounts in
the US ($12.7m), UK ($28.3m) and IRE ($0.3m). Our expenditure plans remain sufficiently adaptable to align with
available resources.
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Risk Management Approach
We recognize that effective risk management is essential to the successful delivery of the Group’s strategy. As we
grow our business, we believe it is important to develop and enhance our risk management processes and control
environment on an ongoing basis and ensure it is fit for purpose by identifying and managing risks across the Group
in a consistent and robust manner.
Below we describe our risk management approach, the principal risks and uncertainties faced by the Group and the
controls in place to manage them.
OVERVIEW OF RISK MANAGEMENT APPROACH
The key principles that guide the Group’s risk management approach are outlined below:
• It is the employees’ responsibility to ensure they understand and comply with the Risk Management
Policy and their defined risk management roles and responsibilities.
• There is a defined risk management governance structure with clear accountabilities.
• A consistent risk management approach is used throughout the Group to identify and manage risks posed in
the AI and life sciences industries.
• Risk management is embedded in all key processes and decision-making within the Group (including
strategy setting, budgeting, planning and day-to-day operations and activities).
A risk register is maintained and updated periodically. The register includes the risk description, risk owner,
mitigation/control description and risk profile.
PRINCIPAL RISKS AND UNCERTAINTIES
Set out below are the principal risks which we believe could materially affect the Group’s ability to achieve its
financial and operating objectives and control or mitigating activities adopted to manage them. The risks are not
listed in order of significance.
THE GROUP IS DEPENDENT UPON ITS STRATEGIC COLLABORATION WITH THIRD
PARTY PARTNERS
The Group is working to develop and commercialize its products in close collaboration with strategic partners. The
Group is dependent upon third parties for resources and revenue. Failure by these strategic partners to meet its key
contractual obligations or to purchase KidneyIntelX tests, for whatever reason, would likely have a material adverse
effect on the Group and its ability to achieve its commercial objectives, potentially including the attainment of sales
volumes leading to profitability, and may ultimately result in the Group becoming unviable.
REGULATORY RISK
There can be no guarantee that any of the Group’s products will be able to obtain or maintain the necessary
regulatory approvals in any or all of the territories in respect of which applications for such approvals are made.
Where regulatory approvals are obtained, there can be no guarantee that the conditions attached to such approvals
will not be considered too onerous by the Group or its partners in order to be able to market its products effectively.
The Group seeks to reduce this risk by seeking advice from regulatory advisers, consultations with regulatory
approval bodies and by working with experienced partners.
REIMBURSEMENT LEVELS
There is no guarantee that the Company will be able to continue to sell its products or services profitably if the
reimbursement level from third party payers, including government and private health insurers, is limited or
subsequently withdrawn. Third party payers are increasingly attempting to contain health care costs through
measures that could impact the Company including challenging the prices charged for health care products and
services, limiting both coverage and the amount of reimbursement for new diagnostics products and services, and
denying or limiting coverage for products that are approved by the regulatory agencies but are considered
experimental by third party payers.
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The Company understands that due to third party dependency it is extremely difficult to eradicate this risk. However,
the Company manages this risk with constant dialogue and educating the third-party payers on the Group’s products
and also developing new technologies in order to seek additional reimbursements.
KEY EMPLOYEES
The Company’s future development and prospects depend to a significant degree on the continuing contribution of
key members of its Board, Senior Management and Scientific Advisory Board. As a small organization, the Company
relies on a core team of staff and is therefore exposed to any significant departures of key personnel. In particular, the
Company’s performance depends significantly on the continuing contribution of its CEO, James McCullough, its
President, Thomas McLain, its CTO, Fergus Fleming, its CFO, O. James Sterling and its CMO, Michael Donovan.
The Group operates in a highly competitive field and the expertise and skills of key individuals are also applicable in a
number of other fields and industries. The high level of demand for such expertise and skills means that there is
increasingly intense competition for talent. The departure of any of the key members to pursue other opportunities
or because they are no longer able to continue to perform their roles (for whatever reason) could have a negative
impact on its operations and could affect the Group’s ability to execute the Group’s business strategy.
To seek to mitigate the potential risk of departures, the Company has adopted a competitive remuneration structure,
which includes share-based incentives. The Company has also taken out key- man insurance on James McCullough.
However, there can be no assurance that this insurance will be adequate or continue to be available on appropriate
terms or at all.
OBSOLESCENCE OF GROUP’S PRODUCTS
Demand for the Group’s products could be adversely impacted by the development of alternative technology and
alternative medicines specifically intended for the identification, stratification and/ or treatment of CKD patients.
There can be no assurance that the technology and products currently being developed by the Group will not be
rendered obsolete. New AI technology may continue to emerge and develop. As a result, there is the possibility that
new technology may be superior to, or render obsolete, the technology that the Group currently is developing. Any
failure of the Company to ensure that its technology platform and products remain up to date with the latest
technology may have a material adverse impact on the Company’s competitiveness and financial performance. The
Group’s success will depend, in part, on its or its partners’ ability to develop and adapt to these technological changes
and industry trends.
THE GROUP IS SUBJECT TO INCREASINGLY STRINGENT PRIVACY AND DATA
SECURITY LEGISLATION
Regulatory, legislative or self-regulatory/standard developments regarding privacy and data security matters could
adversely affect the Group’s ability to conduct the Group’s business. The Group is subject to laws, rules, regulations
and industry standards related to data privacy and cyber security, and restrictions or technological requirements
regarding the collection, use, storage, protection, retention or transfer of data.
For the foreseeable future, the Group will only process data relating to patients in the US and will therefore be subject
to various rules and regulations, including those promulgated under the authority of the US Department of Health
and Human Services, the Federal Trade Commission, and state cybersecurity and breach notification laws, as well as
regulator enforcement positions and expectations.
If the Company begins processing personal data in the context of an establishment in a country that is subject to the
GDPR or if it offers products or services to residents of an EU country, it will have to comply with various robust
obligations.
Globally, governments and agencies have adopted and could in the future adopt, modify, apply or enforce laws,
policies, regulations, and standards covering user privacy, data security, technologies that are used to collect, store
and/or process data, marketing online, the use of data to inform marketing, the taxation of products and services,
unfair and deceptive practices, and the collection (including the collection of information), use, processing, transfer,
storage and/or disclosure of data associated with unique individual internet users. New regulation or legislative
actions regarding data privacy and security (together with applicable industry standards) may increase the costs of
doing business and could have a material adverse impact on the Group’s operations and cash flows.
Despite the Group’s ongoing efforts to ensure practices are compliant, the Group may not be successful either due to
various factors within the Group’s control, such as limited financial or human resources, or other factors outside the
Group’s control. It is also possible that local data protection authorities may have different interpretations of the
GDPR, leading to potential inconsistencies amongst various EU member states.
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16
COMPETITION
The markets in which the Group operates, which include the markets for laboratory developed tests, clinical
diagnostic support tools and clinical AI solutions, are potentially highly competitive and rapidly changing.
Competitors may have access to considerably greater financial, technical and marketing resources. The availability
and price of the Group’s competitors’ clinical AI development services could limit the demand, and the price the
Group is able to charge, for its services. New competing products may enter the market and make the Group’s
discoveries and the products developed from those discoveries obsolete.
Alternatively, a competitor’s products may be more effective, cheaper or more effectively marketed than the products
developed by the Group, which could have a material adverse effect on the Group’s profitability and/or financial
condition.
Technological competition from medical device companies, life science companies, universities and academic medical
centres is intense and can be expected to increase. Many competitors and potential competitors of the Group have
substantially greater product development capabilities and financial, scientific, marketing and human resources than
the Group. The future success of the Group depends, in part, on its ability to maintain a competitive position,
including an ability to further progress through the necessary preclinical and clinical trials to support
commercialization, marketing authorization where necessary, and coverage and reimbursement. Other companies
may succeed in commercializing products earlier than the Group or in developing products that are more effective
than those which may be produced by the Group. While the Group will seek to develop its capabilities in order to
remain competitive, there can be no assurance that research and development by others will not render the Group’s
products obsolete or uncompetitive.
RESEARCH AND DEVELOPMENT RISK
The Group operates in the life sciences sector and will look to exploit opportunities within that sector. The Group is
involved in complex clinical development processes and industry experience indicates that there may be a very high
incidence of delay or failure to produce the desired results. The Group may not be able to develop new products or to
identify specific market needs that can be addressed by technology solutions developed by the Group. The ability of
the Group to develop new technology relies, in part, on the recruitment of appropriately qualified staff as the Group
grows. The Group may be unable to find a sufficient number of appropriately highly trained individuals to satisfy its
growth rate which could affect its ability to develop as planned.
Product development timelines are at risk of delay, particularly since it is not always possible to predict the rate of
patient recruitment into clinical trials. There is a risk therefore that product development could take longer than
presently expected by the Board. If such delays occur, the Group may require further working capital. The Board shall
seek to minimize the risk of delays by careful management of projects.
In addition, research and development may be subject to various requirements, such as research subject protection
for individuals participating in clinical evaluations of new laboratory developed tests and products, institutional
review board oversight, regulatory authorizations, and design control requirements for FDA and EU-regulated
products. Failure to comply with requirements could result in penalties, delay, or prevent commercialisation of
products.
FINANCIAL REPORTING AND DISCLOSURE
Due to the nature of the Group there is a requirement to report accurate financial information in compliance with
accounting standards and applicable legislation.
This risk is mitigated through the Group’s internal controls over the financial information and reporting, overseen by
the local financial heads and then reviewed by the central finance team, including the Chief Financial Officer. The
annual financial statements are also subject to audit by the Group’s external auditors.
CYBER SECURITY RISK
The Group uses computers extensively in its operations and has an online presence but does not trade online. It is at
risk of attack through hacking or other methods. This risk is mitigated by the use of robust security measures, staff
training, and back-up systems.
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INTELLECTUAL PROPERTY RISK
The commercial success of the Group and its ability to compete effectively with other companies depends, amongst
other things, on its ability to obtain and maintain patents sufficiently broad in scope to provide protection for the
Group’s intellectual property rights against third parties and to exploit its products. The absence of any such patents
may have a material adverse effect on the Group’s ability to develop its business.
The Group mitigates this risk by developing products where legal advice indicates patent protection would be
available, seeking patent protection for the Group’s products, maintaining confidentiality agreements regarding
Group know-how and technology and monitoring technological developments and the registration of patents by
other parties. The commercial success of the Group also depends upon not infringing patents granted, now or in the
future, to third parties who may have filed applications or who have obtained, or may obtain, patents relating to
business processes which might inhibit the Group’s ability to develop and exploit its own products.
PANDEMIC RISK
The COVID-19 pandemic has created uncertainty in the market. The eventual severity and length of the economic
disruption is impossible to forecast. We believe we still have a robust plan in place to mitigate the effect of the
disruption on the business including taking the following actions (amongst others):
• Organizing for as many staff as possible to work from home
• Improving our computer networking to facilitate remote working
• Gaining designation as a company essential to basic medical care which allows our premises to remain
open even in a lockdown
• Improved social distancing by limiting physical meetings, expanding flexible working, and altering production
practices
• Preparing requests for support for short time working with local authorities in case this becomes necessary
• Banning international travel and limiting domestic travel
• Increasing supplier and customer contact so as to be able to anticipate issues and react quickly
We have insurance cover in place in case there is a loss of business, although it cannot be guaranteed that cover will
be sufficient to protect against all eventualities.
We have not yet seen any material disruption to our business as a result of COVID-19. While the eventual severity
and length of the economic disruption stemming from the pandemic is impossible to forecast these models give the
Directors reasonable confidence that the business has sufficient resources to continue as a going concern for at least
the next 12 months.
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Section 172 Statement
The Directors are required by law to act in good faith to promote the success of the Company for the benefit of the
shareholders as a whole and are also required to have regard to the following:
• the likely long-term consequences of any decision;
• the interests of the Company’s employees;
• the need to foster the Company’s business relationships with suppliers, customers and others;
• the impact of the Company’s operations on the community and the environment;
• the desirability of the Company maintaining a reputation for high standards of business conduct; and
• the need to act fairly as between shareholders of the Company.
Please see the Corporate Governance Statement in the Directors’ Report for an overview of the Company’s corporate
governance arrangements.
The Chairman and Chief Executive Officer’s joint statement and the section headed “Product Overview and Strategy”
in this Strategic Report describes the Group’s activities, strategies and future prospects, including the considerations
for long-term decision making. In particular, the Group has made significant progress towards its operational,
regulatory and reimbursement goals and is now engaged in commercial roll-out of its lead product, KidneyIntelX in
the United States. In addition, the Group is seeing an increase in strategic partnering activities which will continue to
build on the validation and commercial use cases for KidneyIntelX.
The Board has a good relationship with the Group’s employees. The Board maintains constructive dialogue with
employees through the Chief Executive Officer and other members of the executive team. Appropriate remuneration
and incentive schemes are maintained to align employees’ objectives with those of the Group. See further under
Employees in the section headed “Corporate Social Responsibility” below.
The Group endeavors to maintain good relationships with its suppliers by contracting on fair business terms, paying
within agreed timeframes, and responding promptly to inquiries.
The Group’s operations have minimal environmental impact. Please see Environment in the section headed
“Corporate Social Responsibility” below for more details.
The Board recognizes the Group’s duty to be a good corporate citizen. See Social, community and human rights in the
section headed “Corporate Social Responsibility” below for more details.
The Board recognizes the importance of maintaining high standards of business conduct. The Group operates a Code
of Business Conduct and Ethics applicable to its employees, independent contractors, executive officers and directors.
A current copy of the Code of Business Conduct and Ethics is available on our website, which is located at
www.renalytix.com.
The Board endeavors to maintain good relationships with its shareholders and treat them equally. This is described
in more detail in the Corporate Governance Statement under the heading “Relations with Shareholders.”
There were a number of initiatives and strategic actions undertaken during FY22 which the Directors believe were in
the best interests of the Company and all its stakeholders as follows:
▪ New commercial insurance coverage in fiscal year 2022; 28 private insurance coverage contracts now
executed to date
▪ Achieved Medicare payment for KidneyIntelX through the individual claims review (ICR) process based on our
Medicare clinical lab fee schedule (CLFS) pricing of $950 per test
▪ Continued data generation and analysis reinforcing the benefits of KidneyIntelX as part of collaborative De
Novo process with the FDA, with anticipation that the agency’s review is nearing completion. Data supports
significant breakthrough in risk stratification for patients with diabetic kidney disease
▪
Sales and medical support buildout across multiple market channels:
▪ Launch of myIntelX provider access portal for simplified, decentralized on-line ordering of KidneyIntelX
▪ Partnered with Singing River Health System to deploy KidneyIntelX informed care management to improve
kidney health in individuals across the Mississippi Gulf Coast with type 2 diabetes and early-stage chronic
kidney disease
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▪ Partnered with St. Joseph's Health, based in Syracuse, NY and part of the Trinity Health System, for
KidneyIntelX deployment and to advance value-based care
▪
Joint program with American Diabetes Association® to improve overall kidney health in patients with type 2
diabetes in the United States
▪ Kidney disease education programs in partnership with the National Kidney Foundation
▪ Continued KidneyIntelX testing volume growth
▪ Growth in number of active physicians ordering KidneyIntelX
▪ Commercial development progress with annual revenue growth
▪ Completion of $30.0 million equity and convertible note financing package ($26.8 million gross proceeds)
▪
Salt Lake and New York laboratories operating to most rigorous audited standards; CLIA, CAP, ISO, and U.S.
Food and Drug Administration audit compliant
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Corporate Social Responsibility
ENVIRONMENT
The Directors consider that the nature of the Group’s activities is not inherently detrimental to the environment. The
Group is committed to identifying and minimizing any effect on the environment caused by its operations. As a
minimum standard, we will fully comply with all relevant legislation and, wherever possible, look for opportunities to
make a positive contribution to the environments in which we operate.
EMPLOYEES
The Group places great value on the involvement of its employees and they are regularly briefed on the Group’s
activities. The Group closely monitors staff attrition rates which it seeks to keep at low levels and aims to structure
staff compensation levels at competitive rates in order to attract and retain high calibre personnel.
DISABLED EMPLOYEES
Applications for employment by disabled persons are always fully considered, bearing in mind the specific aptitudes
of the applicant involved. It is the policy of the Group that the training, career development and promotion of
disabled persons, as far as possible, be identical to that of other employees.
SOCIAL, COMMUNITY AND HUMAN RIGHTS
The Board recognizes that the Group has a duty to be a good corporate citizen and to respect and comply with laws,
regulations, and where appropriate the customs and culture of the territories in which it operates. The Group
encourages employees to take part in charitable activities which are related to our business areas or customers. It
contributes as far as is practicable to the local communities in which it operates and takes a responsible and positive
approach to employment practices.
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CORPORATE GOVERNANCE
Board of Directors
Christopher Mills
Non-Executive Chairman (Aged 69)
Christopher Mills has served as a member of the Renalytix Board since its
inception. Christopher founded Harwood Capital Management in 2011, a
successor to its former parent company, J.O. Hambro Capital Management,
which he co-founded in 1993. He is Chief Executive and Investment
Manager of North Atlantic Smaller Companies Investment Trust plc and
Chief Investment Officer of Harwood Capital LLP. He is a Non-executive
Director of a number of companies, including EKF Diagnostics.
James McCullough
Chief Executive Officer and Director (Aged 54)
James McCullough has served as Renalytix’s co-founder and Chief Executive
Officer since its inception. James has leadership experience building
emerging technology companies in both the public and private sectors with
specific expertise in the life-sciences industry. James was most recently
Chief Executive Officer of Exosome Diagnostics, a venture-backed
personalized medicine company developing non-invasive liquid biopsy
diagnostics in cancer, which was recently acquired by Bio-Techne
Corporation. James is also a managing partner of Renwick Capital, LLC, a
management consulting firm specializing in assisting emerging healthcare
technology companies with strategic planning and business execution, and
was a co-founder of PAIGE.AI, a computational pathology spin-out from the
Memorial Sloan Kettering Cancer Center. James received his B.A. from
Boston University and an M.B.A. from Columbia Business School. James is
currently Chairman of BalletNext, a performing arts company in park city
Utah.
Fergus Fleming
Chief Technical Officer and Director (Aged 55)
Fergus Fleming has served as Renalytix’s Chief Technical Officer since its
inception. Fergus has over 25 years’ experience in the life sciences sector,
including leadership positions with Baxter Healthcare, Boston Scientific,
Trinity Biotech plc, and EKF Diagnostics. Fergus has extensive experience in
the design and manufacture of interventional medical devices, digital health
solutions, in vitro diagnostics instruments and reagents, and
electromechanical devices. He has extensive experience managing global
projects, including clinical research collaborations, product development,
acquisitions, and manufacturing site transfers
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Erik Lium Ph.D.
Non-Executive Director (Aged 54)
Erik Lium, Ph.D., has served as a member of the Renalytix Board since
November 2018. Dr. Lium is the executive vice president of Mount Sinai
Innovation Partners and is responsible for advancing Mount Sinai’s
research, instruction, and public service missions through strategic
research partnerships with industry, the management, transfer and
commercialisation of technologies, and fostering the development of
start- ups and joint ventures to advance promising early-stage
technologies. Dr. Lium also serves as a director of Amathus Therapeutics
and as a member of the Investment Review Committee for the Accelerate
NY Seed Fund.
Prior to joining Mount Sinai, Dr. Lium served as the assistant vice chancellor
of Innovation, Technology & Alliances at the University of California, San
Francisco (UCSF), and the UCSF Principal Investigator for the Bay area
National Science Foundation I-Corps node. He held previous positions at
UCSF, including assistant vice chancellor of Research and director of
Industry Contracts, and director of Business Development for the Diabetes
Center & Immune Tolerance Network. Dr. Lium served as president of
LabVelocity Inc., an Information Services Company focused on accelerating
research and development in the life sciences prior to its acquisition in
2004. He pursued post-doctoral research at UCSF, and earned a PhD with
honours from the Integrated Program in Cellular, Molecular and Biophysical
Studies at Columbia University. Dr. Lium holds a BS in Biology from
Gonzaga University.
Chirag R. Parikh, Ph.D., M.D.
Non-Executive Director (Aged 49)
Chirag R. Parikh, Ph.D., M.D., has served as a member of the Board since
October 2019. Since July 2018, Dr. Parikh has served as a Professor of
Medicine and the Division Director of Nephrology at Johns Hopkins
University. Dr. Parikh also served as a faculty member at Yale University
where he directed the Program of Applied Translational Research. Dr.
Parikh’s research focuses on the translation and validation of novel
biomarkers for the diagnosis and prognosis of kidney diseases. He has
assembled multi-centre longitudinal prospective cohorts for translational
research studies across several clinical settings of acute kidney injury and
chronic kidney disease for the efficient translation of novel biomarkers. Dr.
Parikh received his medical degree from Seth G.S. Medical College and KEM
Hospital in Mumbai, India, and subsequently completed his Nephrology
fellowship and a Ph.D. in Clinical Investigation at the University of Colorado
Health Sciences Center.
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Daniel J. Levangie
Non-Executive Director (Aged 72)
Daniel J. Levangie was appointed to the Company’s board of directors in
August 2021. He is an experienced executive and long-serving board
director in the diagnostics and medical devices industry. Mr. Levangie is co-
founder and manager of ATON Partners, a private investment firm, and
president and CEO of CereVasc, LLC, a medical device company. He has also
served on the board of directors of Exact Sciences Corporation since 2010.
From 2013 through January 2017, Mr.
Levangie served as president of Insulet Drug Delivery Systems and served
as a lead director of Insulet Corporation. From 2011 through 2013, Mr.
Levangie was chief executive officer of Dune Medical Devices, Inc., and co-
founder and managing partner of Constitution Medical Investors, Inc., a
Boston-based private investment and product development firm acquired
by Roche Diagnostics Corporation in 2013. Previously, he held executive
management positions with Cytyc Corporation including executive vice
president and chief operating officer, chief executive officer and president
until the acquisition of Cytyc by Hologic, in 2007. He served on the board of
Hologic from 2007 to 2009. Mr. Levangie holds a B.S. in Pharmacy from
Northeastern University.
Timothy J. Scannell
Non-Executive Director (Aged 58)
Timothy J. Scannell was appointed to the Company’s board of directors in
March 2022. He also serves on the boards of publicly held Insulet Corporation,
Novocure, and Molekule. Additionally, Mr. Scannell serves on the boards of
privately held Collagen Matrix, Synaptive Medical, and Cerebral Therapeutics.
Mr. Scannell also serves as an Executive Advisor at Stryker, one of the world’s
leading medical technology companies. His career at Stryker spans 32 years,
during which he held several leadership roles, including President and Chief
Operating Officer, Group President of MedSurg & Neurotechnology, President
of Spine, and Vice President & General Manager of Stryker Biotech.
Mr. Scannell brings extensive strategic, sales and marketing, and operational
skills and experience, with a track record for delivering top tier results. He
holds Bachelor of Business Administration and Master of Business
Administration degrees from the University of Notre Dame.
Ann Berman
Non-Executive Director – resigned 19 September 2022 (Aged 70)
This report was approved by the Board on 9 November 2022 and signed on behalf of the Board by:
Christopher Mills
Chairman
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Directors’ Report
The Directors present their annual report on the affairs of the Group and Parent Company, together with the
consolidated financial statements and auditor’s report for the year ended 30 June 2022. The Corporate Governance
Statement set out on pages 29 to 31 forms part of this report.
CORPORATE DETAILS
Renalytix plc is a public limited company incorporated in the under the laws of England & Wales (Registration
Number 11257655). The address of the registered office is Finsgate, 5-7 Cranwood Street, London EC1V 9EE.
DIRECTORS
The Directors, who served in office during the year and as date of signing these financial statements were as follows:
• Christopher Mills
• James McCullough
• Erik Lium
• Fergus Fleming
• Chirag Parikh
• Daniel Levangie (appointed on 31 August 2021)
• Timothy Scannell (appointed on 30 March 2022)
• Ann Berman (appointed on 28 July 2021 and resigned 19 September 2022)
Details of the Directors’ membership of committees is shown on page 30. The Company Secretary is Salim Hamir.
PRINCIPAL ACTIVITIES
The principal activity of the Group is the development of artificial intelligence-enabled clinical diagnostic solutions
for kidney disease.
GOING CONCERN
The Group and Company meet their day-to-day working capital requirements through the use of cash reserves.
The Directors have considered the applicability of the going concern basis in the preparation of the financial
statements. This included the review of internal budgets and financial results which show, taking into account
reasonably probable changes in financial performance, that the Group and Company should be able to operate within
the level of its current funding arrangements.
The Directors believe that the Group and the Company have adequate resources to continue in operation for the
foreseeable future. For this reason, they have adopted the going concern basis in the preparation of the financial
statements.
FUTURE DEVELOPMENTS AND RESEARCH AND DEVELOPMENT ACTIVITIES
Future developments and research and development activities are discussed in the Strategic Report on pages 3 to 21.
RESULTS AND DIVIDENDS
The Group recorded a loss for the year of $56.7 million (FY21: $31.0 million). When it is commercially prudent to do
so and subject to the availability of distributable reserves, the Board may approve the payment of dividends.
However, at present, the Directors consider that it is more prudent to retain cash to fund the development of the
Group and, as a result, feel it is inappropriate to give an indication of the likely level or timing of any future dividend
payment. The Directors do not recommend payment of a dividend in respect of FY22 (FY21: nil).
| Renalytix plc Annual Report and Financial Statements
25
FINANCIAL RISK MANAGEMENT
Financial risk management is discussed in Note 4 of the financial statements.
EMPLOYEE POLICIES
Employee policies are discussed in the Strategic Report on page 21.
POLITICAL CONTRIBUTIONS AND CHARITABLE CONTRIBUTIONS
Neither the Company nor any of its subsidiaries made any political donations or incurred any political expenditure
during the year ended 30 June 2022 (FY21: nil).
DIRECTORS’ INTERESTS
The interests in the share capital of the Company of those Directors serving at 30 June 2022 and as at the date of
signing of these financial statements, all of which are beneficial, were as follows:
On 30 June 2022 Ordinary Shares of
0.25p each
On 30 June 2021 Ordinary Shares of
0.25p each
Christopher Mills
James McCullough
Erik Lium
Fergus Fleming
Chirag Parikh
Ann Berman
Daniel Levangie
Timothy Scannell
9,726,125
2,746,386
-
569,481
-
39,586
-
68,964
9,197,501
2,740,110
-
569,481
-
-
-
-
Christopher Mills’ shareholding includes shares held through North Atlantic Smaller Companies Investment Trust plc
and Oryx International Growth Fund Limited. Christopher Mills is a partner and Chief Investment Officer of Harwood
Capital LLP. Harwood Capital LLP is investment manager to North Atlantic Smaller Companies Investment Trust plc
and investment adviser to Oryx International Growth Fund Limited.
| Renalytix plc Annual Report and Financial Statements
26
SUBSTANTIAL SHAREHOLDINGS
As at 30 September 2022, the following interests in 3% or more of the issued Ordinary Share capital had been
notified to the Company:
Shareholder
Number of Shares
Percentage of Issued Share Capital
Icahn School of Medicine at Mount
Sinai
Christopher Mills
James McCullough
11,854,374
9,726,125
2,746,386
15.9%
13.0%
3.7%
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL
STATEMENTS
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the Group and Company financial statements in accordance with UK-adopted
international accounting standards and the parts of the Companies Act 2006 that applies to companies applying UK-
adopted international accounting standards. 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 and profit or loss of the
Company and Group for that period. In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• for the Group and Company financial statements, state whether applicable UK-adopted international accounting
standards and the parts of the Companies Act 2006 that applies to companies applying UK-adopted international
accounting standards have been followed, subject to any material departures disclosed and explained in the
financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company and Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Group and 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 Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The Directors confirm that:
• so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is
unaware; and
• the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves
aware of any relevant audit information and to establish that the Company’s auditor is aware of that information;
and
• the Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations.
The Directors consider the Annual Report and the financial statements, taken as a whole, provides the
information necessary to assess the Company’s performance, business model and strategy and is fair, balanced
and understandable.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
DIRECTORS’ INDEMNITIES
The Company has entered into deeds of indemnity for the benefit of each Director of the Company in respect of
liabilities to which they may become liable in their capacity as Director of the Company and of any Company in the
Group. Those indemnities are qualifying third party indemnity provisions for the purposes of section 234 of the
Companies Act 2006 and have been in force during the whole of the financial period and up to the date of approval of
the financial statements.
| Renalytix plc Annual Report and Financial Statements
27
INDEPENDENT AUDITORS
PKF Littlejohn LLP has expressed their willingness to continue in office as auditors and a resolution to reappoint
them will be proposed at the forthcoming Annual General Meeting.
CORPORATE GOVERNANCE
The Company’s statement of corporate governance can be found in the Corporate Governance Statement on pages 29
to 31 of these financial statements. The Corporate Governance Statement forms part of this Report of the Directors
and is incorporated into it by cross-reference.
ANNUAL GENERAL MEETING
The resolutions to be proposed at the forthcoming Annual General Meeting are set out in a separate notice sent to the
shareholders.
RECOMMENDATION
The Board considers that the resolutions to be proposed at the Annual General Meeting are in the best interests of the
Company and it is unanimously recommended that shareholders support these proposals as the Board intends to do
in respect of their own holdings.
This report was approved by the Board on 9 November 2022 and signed on behalf of the Board by:
Christopher Mills
Chairman
| Renalytix plc Annual Report and Financial Statements
28
Corporate Governance Statement
COMPLIANCE
The Company recognizes the value of good corporate governance in every part of its business. The Board has adopted
the corporate governance principles of the 2018 Quoted Companies Governance Code (the “QCA Code”) and the
Company has continued to comply with the QCA Code throughout the reporting period. The Board believes that this
corporate governance framework is appropriate for the Company, having regard to its size and nature. Details of the
QCA Code can be obtained from the Quoted Companies Alliance’s website (www.theqca.com).
Details of how the Group seeks to address the principles underlying the QCA Code and how it leverages its principles
to support the long-term success of the Group can be found on the Company’s website.
BOARD COMPOSITION AND RESPONSIBILITY
The Board currently comprises two Executive Directors and five Non-Executive Directors.
It is the Board’s opinion that the Ann Berman and Dan Levangie are independent and have been independent in
character and judgement and that there were no relationships or circumstances which could materially affect or
interfere with the exercise of her independent judgement during the course of FY22.
All Directors are subject to election by Shareholders at the first Annual General Meeting after their appointment, and
are subject to re-election at least every three years. Non-Executive Directors are appointed for a specific term of
office which provides for their removal in certain circumstances, including under section 168 of the Companies Act
2006. The Board does not automatically re-nominate Non-Executive Directors for election by Shareholders. The
terms of appointment of the Non- Executive Directors can be obtained by request to the Company Secretary.
The Board’s primary objective is to generate value for the Group by identifying and assessing business opportunities
and ensuring that potential risks are identified, monitored and controlled. Matters reserved for Board decisions
include strategic long-term objectives and the capital structure of major transactions. The implementation of Board
decisions and day to day operations of the Group are delegated to senior management.
There is a division of responsibilities between the Non-Executive Chairman, who is responsible for the overall
strategy of the Group and running the Board, and the Chief Executive Officer, who is responsible for implementing the
strategy and day to day running of the Group. He is assisted by the Chief Technical Officer, who is a Board member,
and Chief Financial Officer who is not a Board member.
BOARD MEETINGS
Eighteen full Board meetings were held during the year, as well as four additional meetings with select executive
directors and non-executive directors to approver certain matters. The Directors’ attendance record during their period
of office is as follows:
Christopher Mills (Non-Executive Chairman)
James McCullough (Chief Executive Officer)
Erik Lium (Non-Executive Director)
Fergus Fleming (Chief Technology Officer)
Chirag Parikh (Non-Executive Director)
Dan Levangie (Non-Executive Director)
19/19
22/22
18/19
22/22
19/19
15/18
Ann Berman (Non-Executive Chairman)
18/18 (Resigned on 19 September 2022)
Timothy Scannell (Non-Executive Director)
7/7
| Renalytix plc Annual Report and Financial Statements
29
During the year, the Board conducted an evaluation of the performance of the Board and that of the Chairman, as well
as the effectiveness of the Board Committees. The Board intends to develop further its evaluation of the performance
of the Board and Committees on an annual basis. The evaluation will include Board composition, experience,
dynamics and the Board’s role and responsibilities for strategy, risk review and succession planning. The evaluations
will involve a detailed questionnaire and individual discussions between the Non-Executive Chairman and the
Directors.
AUDIT COMMITTEE
The Audit Committee comprises of Ann Berman, who acted as chair, Daniel Levangie and Erik Lium. The Audit
Committee, among other things, determines and examines matters relating to the financial affairs of the Company
including the terms of the engagement of the Company’s auditors and, in consultation with the auditors, the scope of
the audit. It receives and reviews the reports from management and the Company’s auditors relating to the half
yearly and annual forward statements and the accounting and the internal control systems in use throughout the
Company.
The committee has met formally six times during the year ended 30 June 2022. There have been no significant
matters communicated to the Committee by the auditors and no interaction with the Financial Reporting Council.
Since the year end Ann Berman resigned in September 2022 as Non-Executive Director of the Company and Daniel
Levangie will act as a chair.
REMUNERATION COMMITTEE
The Remuneration Committee comprised Daniel Levangie, who acted as chair, and Erik Lim and Ann Berman. The
Remuneration Committee reviews and makes recommendations in respect of the Executive Directors’ remuneration
and benefits packages, including share options and the terms of their appointment. The Remuneration Committee
also make recommendations to the Board concerning the allocation of share options to employees under the
intended share option schemes.
The Committee has met twice during the year ended 30 June 2022.
NOMINATION COMMITTEE
For the fiscal year ended 30 June 2022, the Nomination Committee comprised Ann Berman, who acted as chair, and
Chirag Parikh. The Nomination Committee reviews and recommends nominees as new Directors to the Board. Since
the year end Ann Berman has resigned as Non-Executive Director of the Company and Timothy Scannell will replace
Ann and act as a chair.
INTERNAL CONTROL
The Directors are responsible for ensuring that the Group maintains a system of internal control to provide them
with reasonable assurance regarding the reliability of financial information used within the business and for
publication and that the assets are safeguarded. There are inherent limitations in any system of internal control and
accordingly even the most effective system can provide only reasonable, but not absolute, assurance with respect to
the preparation of financial reporting and the safeguarding of assets.
The Group, in administering its business, has put in place strict authorization, approval and control levels within
which senior management operates. These controls reflect the Group’s organizational structure and business
objectives. The control system includes clear lines of accountability and covers all areas of the organization. The
Board operates procedures which include an appropriate control environment through the definition of the above
organization structure and authority levels and the identification of the major business risks.
INTERNAL FINANCIAL REPORTING
The Directors are responsible for establishing and maintaining the Group’s system of internal reporting and as such
have put in place a framework of controls to ensure that on-going financial performance is measured in a timely and
correct manner and that risks are identified as early as is practicably possible. There is a comprehensive budgeting
system and monthly management accounts are prepared which compare actual results against both the budget and
the previous year. They are reviewed and approved by the Board and revised forecasts are prepared on a regular
basis.
| Renalytix plc Annual Report and Financial Statements
30
RELATIONS WITH SHAREHOLDERS
The Company reports to Shareholders twice a year. The Company dispatches the notice of its Annual General
Meeting, together with a description of the items of special business, at least 21 clear days before the meeting. Each
substantially separate issue is the subject of a separate resolution and all Shareholders have the opportunity to put
questions to the Board at the Annual General Meeting.
The Chair(s) of the Audit and Remuneration Committees normally attend the Annual General Meeting and will
answer questions which may be relevant to their work. However, due to the ongoing COVID-19 pandemic, the
Committee Chairs will not be in attendance at this year’s Annual General Meeting. The Chairman advises the meeting
of the details of proxy votes cast on each of the individual resolutions after they have been voted on in the meeting.
The Chairman and the Non- Executive Directors intend to maintain a good and continuing understanding of the
objectives and views of the Shareholders.
Shareholders May Contact the Company as Follows:
Tel: +44 (0)20 7933 8790 (from USA: +1-646-217-4999) Email: investors@renalytix.com
CORPORATE SOCIAL RESPONSIBILITY
The Board recognizes that the Group has a duty to be a good corporate citizen and is conscious that its business
processes minimize harm to the environment, that it contributes as far as is practicable to the local communities in
which it operates and takes a responsible and positive approach to employment practices. The Group is subject to the
requirements of the Modern Slavery Act 2015 and published the required statement on its website. The directors
consider that the nature of the Group’s activities is not inherently detrimental to the environment. The Group is
committed to minimizing any effect on the environment caused by its operations.
The Corporate Governance Statement was approved by the Board on 9 November 2022 and signed on its behalf by:
Salim Hamir
Company Secretary
| Renalytix plc Annual Report and Financial Statements
31
Director’s Remuneration Report
and Policy
For the Year Ended 30 June 2022
STATEMENT OF COMPLIANCE
This report does not constitute a Directors’ Remuneration Report in accordance with the Large and Medium-sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, the Companies (Miscellaneous
Reporting) Regulations 2018, and the Companies (Directors’ Remuneration Policy and Directors’ Remuneration
Report) Regulations 2019 which do not apply to the Company as it was not a quoted company (as defined in the
Companies Act 2006) as at the end of the financial year. This report sets out the Group policy on Directors’
remuneration, including emoluments, benefits and other share-based awards made to each Director.
REMUNERATION COMMITTEE REPORT
DANIEL J. LEVANGIE
CHAIR OF THE REMUNERATION COMMITTEE
Dear shareholder,
As the Chair of the Remuneration Committee (the “Committee”), I am pleased to present, on behalf of the board of
directors (the “Board”) of Renalytix PLC (the “Company” or “Renalytix”), the Directors’ remuneration report for the
year ended 30 June 2022 (the “Directors’ Remuneration Report”).
The Company’s Annual Report and Accounts, along with the Directors’ Remuneration Report, will be subject to an
advisory vote at the forthcoming Annual General Meeting on 19 December 2022 (the “AGM”) and the remuneration
policy section of the Directors’ Remuneration Report will be subject to a binding vote at the AGM.
Introduction
During the period covered by this Directors’ Remuneration Report, we maintained the remuneration programs and
policies that the Committee established during the financial year 2022 and implemented strategic compensation
initiatives designed to incentivise and retain key employees in the Company.
As we move into 2023 and beyond, the Committee’s role will be to ensure that Directors and senior executives at
Renalytix are appropriately compensated and incentivised to deliver growth to shareholders in a long-term and
sustainable manner. The Committee seeks to accomplish this by establishing remuneration programs that are
grounded in market practice, are effective at driving proper management behaviors, clearly link pay and performance
and are cost efficient overall.
Corporate Governance Standards
As a public company, we are subject to corporate governance standards and regulations applicable in the United
States and the United Kingdom.
The Global Marketplace for Talent
Renalytix is a biopharmaceutical company with operations in Europe and the United States. The Company plans to
expand its operations in both geographic regions in line with the growth of its clinical and manufacturing activities
and its plans to commercialize its products in these geographies. Given that the market for experienced directors and
biopharmaceutical executive management talent, particularly in the United States, is very competitive, the Committee
references the US market as the leading indicator for remuneration levels and practices. This will help attract and
retain directors and motivate the superior executive management talent needed to successfully manage the
Company’s complex global operations. Being consistent in this market view of the United States as the primary
benchmark for remuneration practices for directors and executive directors (CEO and CTO) is key for the Company
as it builds its global operations in a manner designed to deliver sustainable long-term growth and shareholder value.
| Renalytix plc Annual Report and Financial Statements
32
Committee decisions have been taken in light of the extensive benchmarking for director and executive director
compensation conducted in 2022, which included a review of compensation practices of comparable companies to
Renalytix in the US and Europe. In taking any actions, the Committee is mindful of the general UK compensation
framework, including investor bodies’ guidance, and the UK Corporate Governance Code, and has incorporated these
into its remuneration programs, policies and decisions where it believes they best serve the long-term interests of
shareholders.
Remuneration Program Highlights
While I recommend that you carefully read the disclosure on our programs and policies that follows this letter to help
with the understanding of our approach to director compensation, I want to highlight the following aspects of our
program below:
• Pay for Performance - We believe that a significant portion of remuneration of our directors and our
executive directors (CEO & CTO) should be based on achieving objectives designed to create inherent value in
the Company, and ultimately on achieving value creation for our shareholders. In line with this belief, the
compensation of our CEO includes a significant performance-based cash bonus opportunity and a large
equity incentive component. Further, our directors receive equity incentives designed to reward long-term
value creation for our shareholders.
• Shareholding requirements for Executive Directors - We believe having these requirements encourages
executive directors to build meaningful shareholding positions and furthers alignment of their interests with
those of shareholders.
• 2022 Remuneration Outcome - As outlined above, a core principle in Renalytix’s remuneration program is
the linkage between pay and performance. In financial year 2022, the annual bonus of James McCullough our
CEO and Fergus Fleming our CTO, our executive directors were based on a combination of corporate and
personal objectives. The Committee of the Board determined that while Management made progress in key
areas in financial year 2022 growing the business, the Company did not achieve 100% of its annual corporate
objectives, and therefore no bonuses for company executives will be paid. This outcome was based on
achievements versus goals in the following key areas: EHR Integration, FDA Submission,
healthcare/commercial partnerships, coverage agreements, regulatory compliance and attracting and
retaining top talent.
• Major Decisions and Substantial Changes regarding Directors’ Remuneration - During financial year
2022, there were no major decisions or substantial changes on our directors’ remuneration scheme however
the company did engage remuneration consultants in financial year 2020 to advise the Committee on all
aspects of senior executive remuneration. The remuneration consultant’s findings were relied upon when
approving salary increases for financial year 2022.
Conclusion
The Committee believes the proposals put forth in this report will properly motivate our directors and our CEO to
deliver sustainable growth and shareholder value over the long term and do so in a responsible and cost efficient
manner.
I hope that you find the information in this report helpful, and look forward to the AGM, where we hope to have your
support.
Daniel J. Levangie
Chair of the Remuneration Committee
9 November 2022
| Renalytix plc Annual Report and Financial Statements
33
DIRECTORS’ REMUNERATION POLICY
This part of the Directors’ remuneration report sets out the Directors’ remuneration policy for the Company’s
directors and executive directors and has been prepared in accordance with the Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations 2013.
The remuneration policy was approved by shareholders in a binding vote at our AGM on 19 December 2021 and took
effect from the date of approval.
The policy applies for a maximum period of three years (or until a revised policy is approved by shareholders) and
will therefore next need to be approved in a binding vote at the AGM in 2024.
Renalytix’s remuneration policy has been designed to:
• align to the Company’s strategy and business model;
• attract, retain and motivate high calibre individuals who have the potential to support the growth of the
Company;
• be competitive against appropriate market benchmarks, focusing particularly on the US bio-technology sector;
and
• take account of good governance and promote the long-term success of the Company.
EXECUTIVE DIRECTOR REMUNERATION POLICY TABLE
The table below sets out, for each element of pay, a summary of how remuneration of executive directors is
structured and how it supports the Company’s strategy.
Purpose and Link to
Strategy
To attract, retain and
motivate executive directors
of the highest calibre who
are capable of delivering the
Company’s strategic
objectives, reflecting the
individual’s experience and
role within the Company.
Base salary is designed to
provide an appropriate level
of fixed income to avoid an
over- reliance on variable pay
elements that could
encourage excessive risk
taking.
Executive Directors
Operation
Maximum Opportunity
Performance Metrics
No formal metrics, although
any increases take account
of Company performance
and the individual
performance of the
Executive Director.
BASE SALARY
Salaries are normally
reviewed annually, and
changes are generally
effective from 1 October.
The annual salary review
of the Executive Directors
takes
into consideration a
number of factors, including:
• scope of the
individual’s
responsibilities;
• abilities, experience
and performance of
the individual;
• business performance;
• salary increases
awarded to the
overall employee
population;
• market
competitiveness and
US and UK market
practice; and
• the underlying rate
of inflation.
Executive Director level
salaries are determined
considering industry
benchmarking data. There is
no prescribed maximum
annual salary or salary
increase.
Base salary increases are
awarded at the discretion
of the Committee; however,
the Committee is guided by
the general increase for the
broader employee
population but may decide
to award a lower increase
for Executive Directors or
exceed this to recognize, for
example, an increase in the
scale, scope or
responsibility of the role
and/or take account
relevant market
movements.
Salary increases will
normally Executive Director
level salaries are approved
by the Board in line with
corporate performance and
are consistent with positions
held.
BENEFITS
Benefits in kind offered to
Executive Directors are
provided on a market-
competitive basis, to assist
with their recruitment and
retention.
The Company aims to offer
benefits that are in line with
the Executive Directors’
local market and those
offered to the wider
workforce.
There is no defined
maximum value for
benefits, but the Committee
will consider the aggregate
value of any such benefits
when determining what
should be offered.
Not performance related.
| Renalytix plc Annual Report and Financial Statements
34
Executive Directors
Operation
Maximum Opportunity
Performance Metrics
Purpose and Link to
Strategy
The Company aims to
provide a contribution
towards life in retirement.
An annual bonus rewards
the achievement of
objectives that support
the Company’s
corporate goals and
delivery of the business
strategy
PENSION
Depending on their
location and comparable
benefits offered to local
employees, Executive
Directors may be eligible
to receive employer
contributions to a defined
contribution pension
scheme or a cash
supplement in lieu of
such contributions, or a
mixture of both.
The maximum employer
pension contribution or
cash in lieu amount will
be a
percentage of annual base
salary aligned with that
provided to other senior
executives in the Executive
Director’s location.
ANNUAL BONUS
Executive Director level
bonuses are approved by the
Board in line with corporate
performance and are
consistent with positions
held.
Bonuses are determined
based on objectives that
are agreed with the
Committee, and the
Board, at the start of each
financial year although
the Committee retains the
discretion to amend
objectives during the year if
it considers that objectives
are no longer appropriate.
Different performance
measures and weightings
may be used each year, as
agreed with the Committee,
to take into account changes
in the business strategy.
Bonuses are normally paid in
cash (but may be paid in the
form of an equity award, at
the discretion of the
Committee).
To attract, motivate,
retain and reward for
long-term, sustainable
performance linked to
corporate strategy and
provide alignment with
shareholders’ interests.
EQUITY INCENTIVE PLAN (‘EIP’)
There is no maximum
opportunity for equity
incentives. However, the
Committee will generally
assess the position at similar
sized comparator companies
prior to making any award to
ensure that any awards are
aligned to the market.
Equity awards granted to
Executive Directors may
take the form of options,
restricted shares,
performance share units,
restricted share units, or
other forms of awards
granted in accordance
with the discretionary EIP
that may be in place from
time to time.
The Executive Directors
received a grant under the
EIP’s predecessor plan upon
listing on AIM and it is
intended that top- up awards
shall be issued under the EIP
from time to time in the
discretion of the Committee.
Not performance related.
Performance measures are
determined by the
Committee each year and
may vary to ensure that
they promote the
Company’s business
strategy and shareholder
value. The annual bonus
will be based on corporate
measures, including, but not
limited to, financial
and/or strategic measures.
Bonus measures are reviewed
at least annually and the
Committee has the discretion
to change the measures or to
introduce new measures
when it deems appropriate.
Vesting of equity awards is
generally subject to
continued employment and
may also be subject to the
achievement of performance
conditions aligned with the
Company’s strategic plan.
Measures, their weightings
and the period over which
performance is tested will be
determined by the
Committee.
The Committee will select
the most appropriate form of
EIP for awards each year
and/or each individual grant.
Vesting of equity awards
may be accelerated in part or
in full in connection with
certain corporate events
such as a change of control.
ALL EMPLOYEE EQUITY PLANS
Encourages employee share
ownership and therefore
increases alignment of
interests with
shareholders.
The Company may, from
time to time, operate tax-
advantaged share plans for
which Executive Directors
would be eligible on the
same basis as all other
eligible employees.
Within the limits of the
relevant legislation.
Not performance related.
| Renalytix plc Annual Report and Financial Statements
35
Notes to the Executive Director Remuneration Policy Table
Legacy arrangements
For the duration of this Remuneration Policy, the Company will honour any commitments made in respect of current
or former Directors before the date on which either: (i) the Remuneration Policy becomes effective; or (ii) an
individual becomes a Director, even where not consistent with the Remuneration Policy set out in this report or
prevailing at the time such commitment is fulfilled. For the avoidance of doubt, all outstanding historic awards that
were granted in connection with, or prior to, our IPO on NASDAQ remain eligible to vest based on their original or
modified terms.
Clawback Provisions
The Company does not currently have a policy on recoupment and clawback, but the Committee will keep this under
review.
Shareholding Requirements
Executive directors are not currently required to build and retain a shareholding, but the Committee will keep this
under review.
NON-EXECUTIVE DIRECTOR REMUNERATION POLICY TABLE
The table below sets out, for each element of pay, a summary of how remuneration of non-executive directors is
structured and how it supports the Company’s strategy.
Purpose and Link to
Strategy
Set at a level that is
sufficient to attract and
retain high calibre non-
executives who contribute to
the business.
Chair and Non-Executive Directors
Operation
Maximum Opportunity
Performance Metrics
CASH FEES AND BENEFITS
Not performance related.
When reviewing fee levels
and benefits, account is
taken of market
movements in the fees and
benefits of Non-Executive
Directors, Board
Committee responsibilities
and ongoing time
commitments.
Actual fee levels are
disclosed in the annual
Directors’ Remuneration
Report for the relevant
financial year.
The Chair and the Non-
Executive Directors receive
fees paid in cash.
Fees are paid and
reviewed annually.
Non-Executive Directors
ordinarily do not
participate in any
pension, bonus or
performance-based
share incentive plans.
Travel, accommodation
and other business-
related expenses
incurred in carrying out
the
role as well as fees for tax
advice associated with
completion of international
tax returns will be paid by
the Company including, if
relevant, any gross- up for
tax and/or social security
contributions.
Tax equalization and/or
relocation benefits may be
provided to Non-
Executive Directors who
are required to relocate or
become tax resident in a
new jurisdiction.
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36
Purpose and Link to
Strategy
To facilitate share
ownership and provide
alignment with
shareholders.
Chair and Non-Executive Directors
Operation
Maximum Opportunity
Performance Metrics
EQUITY-BASED AWARDS
Non-executive directors do
not participate in
performance-based equity
incentives.
There is no maximum
number of equity incentive
awards that may be awarded
to individuals each year.
However, when reviewing
award levels, account is
taken of market movements
in equity incentive awards,
Board committee
responsibilities, ongoing time
commitments
and the general
economic environment.
Non-Executive Directors
may receive equity awards
under any equity incentive
plan operated by the
Company from time
to time which permits
their participation with
careful consideration
being given to ensuring
their independence.
Non-Executive Directors
may receive an initial
equity award upon
appointment or election.
Initial equity awards will
normally vest over a
specified period of time,
subject generally to
continued service. Vesting of
equity awards may be
accelerated in part or in
full in connection with
certain corporate events
such as a change of control.
In addition, Non-Executive
Directors may be granted an
equity award each year
which may vest in full upon
grant or over time subject to
continued service. If a new
Non-Executive Director joins
the Board following the date
of grant of this annual grant
in any calendar year, such
Non-Executive Director may
be granted a pro rata portion
of the next annual grant to
reflect his or her service
during the relevant part of
the relevant year.
REMUNERATION FOR NEW APPOINTMENTS
Where it is necessary to appoint or replace an Executive Director, the Committee has determined that the new
Executive Director will receive a compensation package in accordance with the provisions of the approved
remuneration policy in force at the time of appointment but focusing on the objective of appointing the most
appropriate person in the right geography.
In setting base salaries for new Executive Directors, the Committee will consider the existing salary package of the
new Director, the individual’s skills, level of experience and the market rate for the role.
In setting the annual performance bonus, the Committee may wish to set different performance metrics (to those of
other Executive Directors) in the first year of appointment. Where it is appropriate to offer a below-median salary on
initial appointment, the Committee will have the discretion to allow phased salary increases over a period of time for
a newly appointed Director as the Executive gains experience in their new role, even though this may involve
increases in excess of inflation and the increases awarded to the wider workforce.
Benefits and pensions will be in line with those offered to other executive directors, taking account of local market
practice with relocation expenses provided at the discretion of the Committee if necessary. Tax equalization may also
be considered if an executive is adversely affected by taxation due to their employment with the Group. Legal fees
and other costs incurred by the individual may also be met by the Company.
The ongoing incentive opportunity offered to new recruits will be in line with that offered to existing Directors.
Different measures and targets under the bonus plan or the Company’s equity incentive arrangements may be set
initially taking
| Renalytix plc Annual Report and Financial Statements
37
account of the responsibilities of the individual and the point in the financial year at which they join. A new employee
may be granted normal annual equity awards in the first year of employment in addition to any awards made with
respect to prior employment being forfeited, which shall be excluded from any annual maximum on the size of
awards.
To enable the recruitment of exceptional talent, the Committee may determine that the buy-out of remuneration
forfeit from a prior employer is necessary. Where possible, any replacement remuneration will be offered on a like-
for-like basis with the forfeited awards and may be in the form of cash or shares and depending whether the award
forgone has similar performance conditions, may or may not be subject to performance conditions. The value of any
buy-out will be limited to the value of remuneration forfeit. Where appropriate, such awards will be granted under
existing share plans, however, the Committee will have discretion to make standalone awards where appropriate.
In respect of internal appointments, any commitments entered into in respect of a prior role, including variable pay
elements, may be allowed to pay out according to their prior term, adjusted as relevant to take into account the
appointment.
The terms of appointment for a new Non-Executive Director would be in accordance with the remuneration policy
for Non- Executive Directors in force at that time.
EXECUTIVE DIRECTORS’ SERVICE CONTRACTS
James McCullough (Chief Executive Officer) is currently employed at-will pursuant to an employment agreement
entered into with Renalytix AI, Inc, dated 2 November 2018 but effective on 1 November 2018. His employment may
be terminated by either party at any time for any or no reason, with or without notice. Severance payments no more
generous than those described in this policy will be payable to him on termination. Upon termination of his
employment agreement, our Chief Executive Officer is required to resign from all other positions within the
Company’s group. Following termination of his employment, our Chief Executive Officer will be bound by certain
post-termination covenants.
As is customary for US executives, our Chief Executive Officer’s remuneration is subject to a “best-after-tax” cutback
for excise tax calculations under section 280G of the US Internal Revenue Code of 1986, with no tax gross-up.
Fergus Fleming (Chief Technology Officer) is currently employed on an indefinite term pursuant to an employment
agreement entered into with the Company dated 1 November 2018. His employment may be terminated by either
party on 12 months written notice.
At its discretion, upon receipt of his written notice, or as an alternative to providing notice, terminate the
employment with immediate effect and make a payment in lieu of notice, comprising base salary only, for the notice
period (or remainder thereof, should notice have been given). In the event of a breach of service agreement or other
summary termination of employment, no such payments will be made.
A copy of these contracts may be viewed at the Company’s head office or may be requested from the Company
Secretary at the annual general meeting.
NON-EXECUTIVE DIRECTORS’ TERMS OF ENGAGEMENT
All Non-Executive Directors, including the Chair, have specific terms of engagement which may be terminated on not
less than six months’ notice by either party.
The remuneration of Non-Executive Directors is determined by the Board within the limits set by the Company’s
articles of association and based on a review of fees and equity-based remuneration paid to Non-Executive Directors
of similar companies.
A Board evaluation has been performed and the results of this exercise confirmed that all Non-Executive Directors
were independent.
TERMINATION AND LOSS OF OFFICE PAYMENTS
Depending on market practice in the jurisdiction in which an Executive Director is employed, exit payments shall
depend on the circumstances of termination and may be made by reference to a notice period (including a payment
in lieu of notice) or employment “at-will” together with a severance payment. Where a notice period applies, this will
not exceed 12 months but may be accompanied by additional severance entitlements where applicable.
The Company’s policy on remuneration for Executive Directors who leave the Company is set out below. The
Committee will exercise its discretion when determining amounts that should be paid to leavers, taking into account
the facts and circumstances of each case.
| Renalytix plc Annual Report and Financial Statements
38
US-BASED EXECUTIVES
Termination without
cause or with Good
Reason1
Subject to the
executive executing
a release: a payment
of up to 12 months’
salary and benefits
including COBRA or
other applicable
healthcare coverage
payable in equal
monthly instalments
or as a lump sum, at
the discretion of the
Committee.
Any earned but
unpaid bonus, a pro-
rata portion of the
bonus that would
have been due for
any part year
worked, plus up to
one year’s target
bonus, or a higher
bonus at the
discretion of the
Committee, payable
as a lump sum or on
a
monthly basis.
The Company may
accelerate the
vesting of the
portion of equity
held on the
termination date that
would have vested
over the following
one year period.
Salary and benefits
Annual bonus
Equity incentive
awards
Termination for cause
No payment.
No payment.
Termination without cause or
with Good Reason1 in
connection with change in
control
Subject to the executive
executing a release: a payment
of up to 18 months’ salary and
benefits and benefits payable
in equal monthly instalments
or as a lump sum, at the
discretion of the Committee.
Any earned but unpaid bonus,
a pro-rata portion of the
bonus that would have been
due for any part year worked,
plus up to 1.5 year’s target
bonus, or a higher bonus at the
discretion of the Committee,
payable as a lump sum or on a
monthly basis.
Unvested awards lapse in full.
Full vesting on termination.
1: Includes, among others, a material diminution in role, a material reduction in base salary or mandated relocation, as defined
by contract.
NON-US BASED EXECUTIVES
When calculating termination payments for Non-US based Executives, the Committee will consider a variety of
factors, including individual and Company performance, the length of service of the Executive Directors in question
and, where appropriate, the obligation for the Executive Directors to mitigate loss. In the event of a change of control
and ownership, the Committee may exercise its discretion to provide for additional remuneration and/or benefits for
Executive Directors who leave the Company in connection with such change of control, and will take into account all
relevant circumstances when making any such determination.
In the case of a ‘good leaver’ (to be determined at the discretion of the Committee) the following policy will normally
apply, although the Committee retains the discretion to make payments which are no more generous than those
applicable to a US based Executive Director (as described above), when viewed in the round with notice / payment in
lieu of notice entitlements:
• notice period of twelve months or payment in lieu of notice;
• statutory redundancy payments will be made, as appropriate;
• Executive Directors have no entitlement to a bonus payment in the event that they cease to be employed by
the Company, however, they may be considered for a pro-rated award by the Committee in good leaver
circumstances; and
• any share-based entitlements granted to an Executive Director under the Company’s share and individual
share contracts or share option plans will be determined based upon the relevant individual share option
contracts or plan rules, and performance conditions or hurdles and vesting may be accelerated in the
discretion of the Committee.
| Renalytix plc Annual Report and Financial Statements
39
ADDITIONAL PAYMENTS
The Committee will make payment of any statutory entitlements as necessary. In addition, the Committee will retain
the discretion to make additional payments in settlement of, or to compromise, an actual or potential claim in
connection with a termination of any Executive Director as necessary.
The Committee reserves the right to make reasonable legal, relocation and outplacement costs, if deemed necessary.
REMUNERATION COMMITTEE (THE “COMMITTEE”)
Governance
In its decision-making process, the Committee takes account of information from both internal and independent
sources and Compensia surveys. Compensia were appointed as remuneration consultants by the Committee based on
their expertise in the field via a competitive tender process. Compensia advises the Committee on all aspects of
senior executive remuneration. Compensia has kept the Committee up to date on remuneration trends and corporate
governance best practice. Compensia does not have any other connection with the Company and is considered to be
independent and objective by the Committee. During the year ended 30 June 2022, fees charged by Compensia
amounted to approximately USD 16,000 and this was charged on a time spent basis.
The current members of the Committee are Daniel J. Levangie (Chair), and Dr. Erik Lium.
Remuneration Committee report (continued)
The Company’s Chief Human Resources Officer provides updates to the Committee, as required, to ensure that the
Committee is fully informed about pay and performance issues throughout the Company. The Committee takes these
factors into account when determining the remuneration of the Executive Directors and senior executives.
No Executive Director or employee can participate in any discussion directly relating to their own personal
conditions of service or remuneration.
No conflicts of interest have arisen during the year and none of the members of the Committee has any personal
financial interest in the matters discussed, other than as option holders. The fees of the Non-Executive Directors are
approved by the Board on the joint recommendation of the Committee and the Chief Executive Officer.
Director
Meetings attended
Daniel J. Levangie
Dr. Erik Lium
The Committee met twice in the year to 30 June 2022.
Discretions retained by the Committee
2
2
The Committee operates under the powers it has been delegated by the Board. In addition, it complies with rules that
require certain matters to be put to either shareholder or Board approval. These rules provide the Committee with
certain discretions which serve to ensure that the implementation of the Remuneration Policy is fair, both to the
individual director and to the shareholders. The Committee operates the Company’s remuneration plans in
accordance with their rules from time to time. To maintain an efficient administrative process, the Committee retains
the following discretions to apply its judgement in setting remuneration:
• the eligibility to participate in the plans;
• the timing of grant of awards and any payments;
• the size of awards and payments (subject to any maximum limits set out in the policy table above and the respective
plan rules);
• the determination of whether the performance conditions have been met;
• determining a good or bad leaver under the terms of the plan and the treatment of such leaver’s cash and equity
remuneration;
• dealing with a change of control or restructuring of the Group;
• adjustments required in certain capital events such as rights issues, corporate restructuring, events and
special dividends and certain other out-of-the-ordinary events;
• the annual review of performance and other vesting conditions for the annual bonus plan and equity awards.
| Renalytix plc Annual Report and Financial Statements
40
In certain circumstances, such as a material acquisition/divestment of a Group business, which mean the original
performance conditions are no longer appropriate, the Committee may adjust the targets, alter weightings or set
different measures as necessary, to ensure the conditions achieve their original purpose and are not materially less
difficult to satisfy.
The Committee may make minor amendments to the Remuneration Policy (for regulatory, exchange control, tax or
administrative purposes or to take account of a change in legislation) without obtaining shareholder approval for
that amendment.
ILLUSTRATION OF APPLICATION OF THE POLICY
Pay-for-performance scenario analysis
The charts below have been updated to reflect the intended application of the policy for the 2023 financial year. A
copy of the shareholder approved policy (including the scenario charts for the 2021 financial year) is in the Annual
Report for the year ended 30 June 2021, which is available on the Company’s website. The charts below provide an
estimate of the potential future reward opportunities for the Executive Directors, and the potential split between
different elements of remuneration under different performance scenarios:
• Minimum - fixed pay only.
• Target (performance in line with expectations) - fixed pay, plus bonus and equity payouts at
threshold level (50% of maximum).
• Maximum (performance meets or exceeds maximum) - fixed pay, plus the maximum bonus payout and full
vesting of any equity awards, based on grant-date face value of awards to be granted in financial year 2023.
Fixed pay comprises:
• Salaries - salary effective at 1 July 2021.
• Benefits - an estimated value of all benefits receivable in the 2023 financial year.
• Pension - 5% of salary for the CEO and CTO.
Pay-for-Performance Scenarios
(USD 000s)
James McCullough
Fergus Fleming
1,800
1,600
1,400
1,200
1,000
800
600
400
200
-
Minimum
Target
Maximum
Amounts are shown in thousands (USD).
Values do not include the impact of any share price appreciation over the vesting period. The reporting regulations
require the disclosure of maximum total pay including the impact of a 50% increase in share price over the vesting
period for equity awards subject to multi-year performance measures which is not applicable to any of our current
equity awards. The equity award amounts shown above relate to share options vesting during the year using the
Company’s AIM closing price at the end of the quarter in which the award vested less associated exercise price.
| Renalytix plc Annual Report and Financial Statements
41
Statement of consideration of employees’ pay and remuneration conditions elsewhere in
the Group
The Company does not formally consult with employees on the matters of Executive Director remuneration.
However, the Committee is made aware of employment conditions in the wider Group. The same broad principles
apply to the remuneration policy for both Executive Directors and the wider employee population. However, the
remuneration for Executive Directors has a stronger emphasis on performance-related pay than for other employees.
Salaries, benefits and pensions are compared to appropriate market rates in the jurisdiction in which the Executive
Director is employed and is set at an appropriate level with allowance for role, responsibilities and experience.
Statement of consideration of Shareholders’ views
The Committee will consider any Shareholder feedback received at the Annual General Meeting and at meetings
throughout the year, when reviewing the overall remuneration policy each year. The guidance from relevant
shareholder representative bodies is also considered on an ongoing basis.
More specifically the Committee will consult with major Shareholders when proposing any significant changes to
the policy in the future.
ANNUAL REPORT ON REMUNERATION
This section of the remuneration report provides details of how our remuneration policy was implemented
during the financial year ended 30 June 2022, and how it will be implemented during the year ending 30 June
2023.
This report splits certain information into that for Executive Directors and that for Non-Executive Directors.
Directors’ Remuneration – financial year ended 30 June 2022
The total remuneration of the individual Directors who served during the period is shown below. Total
remuneration is the sum of emoluments for the period in service as a director plus Company pension
contributions, and the value of long-term incentive awards vesting by reference to performance in the twelve
months to 30 June 2022.
Directors’ Remuneration – financial year ended 30 June 2022
Year
Base Salary
($000s)a
Benefits
($000s)b
Bonus
($000s)c
EIPd
Pension
($000s)e
Total
Remuneration
($000s)
Total Fixed
Remuneration
($000s)
Total Variable
Remuneration
($000s)
Executive
Directors
James
McCullough
Fergus Fleming
Non-Executive
Directors
Erik Lium
(Mount Sinai
representative)1
Christopher Mills
Chirag Parikh2
Ann Berman3
Daniel Levangie4
Timothy Scannell5
2022
601
2021
2022
2021
586
378
366
2022
27
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
27
27
27
88
87
20
-
27
-
7
-
20
62
16
17
-
-
-
-
-
-
-
-
-
-
-
-
-
742
-
211
-
-
-
2,379
27
15
75
24
-
-
-
-
-
-
-
-
-
-
-
-
-
904
-
-
-
548
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
648
1,405
469
2,997
27
931
27
27
88
635
20
-
27
-
7
-
648
663
469
407
27
27
27
27
88
87
20
-
27
-
7
-
-
742
-
2,590
-
904
-
-
-
548
-
-
-
-
-
-
| Renalytix plc Annual Report and Financial Statements
42
Notes to the remuneration table
a. All amounts presented were earned in respect of the financial period.
b. This is the taxable value of benefits paid or payable in respect of the financial period. For Non-Executive
Directors, the taxable benefits comprise travel costs (and the gross-up for associated income tax and
employees’ National Insurance Contributions which will be settled on behalf of the Non-Executive
Directors) for attendance at Board meetings. For executive directors, benefits include health, dental,
vision, life and long-term disability insurance paid for by the Company
c. The remuneration committee has concluded that executive bonuses will not be paid out for the fiscal year
ended 30 June 2022.
d. The amount shown relates to the market value of the EIP and other equity awards vesting during the year
using the Company’s AIM closing price at the end of the quarter in which the award vested less associated
exercise price.
e. The amount shown relates to Company contributions to the defined contribution scheme, plus any cash in
lieu.
1. Dr. Lium sits on our board as a representative of the Icahn School of Medicine at Mount Sinai. This fee is
invoiced annually by Mt. Sinai.
2.
In addition to $26,621 in board fees Chirag Parikh’s remuneration includes consulting services performed
for Renalytix. Chirag received $500/hr for consulting services in both financial year 2021 and financial
year 2022.
3. Ann Berman joined the board in August 2021 therefore he did not receive remuneration for the 2021
financial year. Ann Berman resigned from the board in September 2022.
4. Daniel Levangie joined the board in August 2021 therefore he did not receive remuneration for the 2021
financial year.
5. Timothy Scannell joined the board in February 2022 therefore he did not receive remuneration for the
2021 financial year.
ANNUAL PERFORMANCE BONUS – 2021/2022 FINANCIAL YEAR
In the 2022 financial year, all employees were eligible for an annual discretionary cash bonus, whereby
performance objectives were established at the beginning of the financial year by reference to suitably
challenging corporate goals.
For the 2022 financial year, the company refined the annual bonus calculation as annual bonuses for all staff
(including Executive Directors and Non-Executive Directors) were calculated and achieved by reference to both
corporate and individual performance.
The achievement against the scorecard of corporate goals was as follows:
Corporate goals
Weighting %
2022 Achievement %
Achieve first implementation and associated building
blocks for future implementations
FDA Submission for KidneyIntelX
Announced Events with Healthcare Systems / Payer
Groups
Payor coverage agreements
Pass Regulatory Audits and Certifications
Attract and Retain Top Talent
Total
20%
20%
20%
20%
10%
10%
100%
0%
50%
50%
25%
100%
50%
40%
| Renalytix plc Annual Report and Financial Statements
43
Specific targets associated with each corporate goal are commercially sensitive and have been omitted to protect
competitive information. However, full details of the targets will be disclosed when they are no longer
considered commercially sensitive.
Achievement against objectives is given careful consideration by the Committee prior to finalisation of bonus
outcomes. The Committee reviewed the formulaic outcome of the scorecard and concluded that 40% of
corporate goals were met and the scorecard outcome, as shown above, reflected the performance of the
Executive Directors in the year. As a result of corporate performance, the following bonuses were calculated for
the Company’s executive directors and will be presented to the Board for approval.
Bonus scorecard
Outcome ($000s)
% of salary
James McCullough
Fergus Fleming
-
-
0%
0%
Maximum
opportunity Cash
amount ($000s)
1,080
504
% of salary
180%
133%
During the year ended 30 June 2022, no Executive Directors or non-executive directors were awarded bonus or
options under the EIP scheme. There was no change in the exercise price or date of existing options.
EXECUTIVE DIRECTORS’ SHARE AWARDS
Directors’ interests in shares at 30 June 2022
Director
Total shares
owned outright
plus vested
options
Shares owned
outright
Percentage of
issued share
capital
Vested but not
exercised
Unvested but
subject to
performance
Unvested and
not subjected to
performance
Current
Directors
James
McCullough1
Fergus
Fleming
Mount Sinai
(Board Seat)
Christopher
Mills2
Chirag
Parikh
2,746,386
2,746,386
1,107,642
569,481
170,418
-
3.7%
1.5%
0.3%
-
538,161
204,501
9,726,125
9,726,125
13.0%
-
Daniel Levangie
-
107,394
-
-
Timothy
Scannell
68,967
68,967
0.1%
0.0%
0.1%
107,394
-
-
-
-
-
-
-
-
-
-
89,694
-
-
8,330
40,000
40,000
1. James McCullough shareholding includes 2,746,386 shares held through his family trust, The McCullough
2020 Irrevocable Trust (the “Trust”).
2. Christopher Mills is partner and Chief Investment Officer of Harwood Capital LLP. Harwood Capital LLP is
Investment Manager to North Atlantic Smaller Companies Investment Trust plc and investment adviser to
Oryx International Growth Fund Limited. Christopher’s shareholding is made up of 6,145,001 ordinary
shares held by North Atlantic Smaller Companies Investment Trust PLC, 2,780,000 ordinary shares are held
by Oryx International Growth Fund Limited and 801,124 ordinary shares are held by Harwood Capital LLP.
| Renalytix plc Annual Report and Financial Statements
44
REMUNERATION COMMITTEE REPORT (CONTINUED)
Performance graph and table
The following graph shows Renalytix’s cumulative Total Shareholder Return (“TSR”) from the Company’s
November 2018 IPO on AIM relative to the FTSE AIM All Share Index and the Nasdaq Biotech Index. These two
indices were chosen due to Renalytix’s listing on both exchanges and the sector in which it operates. For the
period from 6 November 2018 to 30 June 2022 Renalytix Plc data relates to AIM TSR, and from 17 July 2020 the
data relates to Nasdaq TSR (as show by the separate line).
TSR is defined as the return on investment obtained from holding a company’s shares over a period. It includes
dividends paid, the change in capital value of the shares and any other payment made to or by shareholders
within the period.
Renalytix Performance
1000%
800%
600%
400%
200%
0%
11/1/2018
-200%
11/1/2019
11/1/2020
11/1/2021
AIM
RENX
RNLX
NBI
ALIGNING PAY WITH PERFORMANCE
CEO remuneration compared with annual growth in TSR:
The total 2021/22 remuneration figure for the CEO (James McCullough) is shown in the table below, along with
the value of bonuses paid in respect of the year, and EIP vesting, as a percentage of the maximum opportunity. As
this is the first year reported since listing on Nasdaq and therefore the first year for which this disclosure is
required, it is not possible to provide meaningful comparative data. However, full disclosure of the year on year
movement will be provided in future remuneration reports.
James McCullough
Total remuneration
Actual bonus as a % of the maximum
Actual share award vesting as % of the maximum
2022
($000s)
648
0%
-
2021
($000s)
1,193
50%
-
| Renalytix plc Annual Report and Financial Statements
45
Percentage change in remuneration of the Directors and employees
Set out below is the change over the prior period in base salary, benefits, pension and annual performance bonus for
all the directors and the Company’s employees.
Salary % change
2020/21 vs 2021/22
Benefits % change
2020/21 vs 2021/22
Bonus % change
2020/21 vs 2021/22
James McCullough
Fergus Fleming
Mount Sinai
Christopher Mills
Chirag Parikh
Dan Levangie
Timothy Scannell
Ann Berman1
3%
3%
-
-
-
-
-
-
(68%)
(8%)
-
-
-
-
-
-
(100%)
(100%)
-
-
-
-
-
-
1. Ann Berman joined the board in August 2021 therefore he did not receive remuneration for the 2021
financial year. Ann Berman resigned from the board in September 2022.
Relative importance of spend on pay
Total revenue and administrative expenditures have been selected as comparators for the employee costs as these
two financial measures are strong indicators of the activity within the Company and of its performance.
Year
ended 30
June
2022
26,527
93
2,970
58,290
-
Year
ended 30
June
2021
12,416
47
1,491
33,298
-
Change
($000’s)
14,111
46
1,479
24,992
-
Change
(%)
114%
98%
99%
75%
Total employee remuneration ($000s)
Average number of employees
Revenue ($000s)
Administrative expenditures ($000s)
No dividends distributions or share
buyback transactions occurred in
either 2021 or 2020
Statement of Implementation of Policy in 2022/23
Base salary: There was no change in James McCullough’s or Fergus Fleming’s base salary for the 2022/2023
financial year. The 2022/2023 target base salary increases for other employees are expected to be in line with
market rates for all of eligible employees, being those that had joined the business prior to 1 July 2022.
Pension and benefits: In 2022/2023, Executive Directors are eligible for the same benefits as provided to all senior
employees. The Executive Directors are each entitled to the maximum employer pension contribution of 5% of their
respective base salary which is paid into a defined contribution pension scheme / paid in cash in lieu of pension
contributions.
Annual performance bonus: For 2022/2023, the Executive Directors’ annual cash bonus target payouts are still
being determined by the Committee as the benchmarking process is ongoing and will be disclosed in next year’s
report. The Committee considers overall corporate performance and individual performance when determining the
final bonus amount to be awarded to an Executive Director. Performance will be tested against targets set by the
Committee at the start of the year and will comprise a combination of corporate goals and individual goals for James
McCullough and Fergus Fleming.
Specific targets are commercially sensitive and therefore are not disclosed in advance. However, full details of the
targets and performance against them will be disclosed when they are no longer considered commercially sensitive.
The Chairman and non-executive directors will continue to be paid their current level of fees.
| Renalytix plc Annual Report and Financial Statements
46
Payments for loss of office (audited information)
There were no loss of office payments in 2021/2022.
Payments to past Directors (audited information)
The Company made payments of $20,000 to Ann Berman for her service as a director for the fiscal year ended 30
June 2022. Ann Berman resigned from the board in September 2022.
Daniel J. Levangie
Chair of the Remuneration Committee
9 November 2022
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47
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RENALYTIX PLC
Opinion
We have audited the financial statements of Renalytix Plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 30 June 2022 which comprise the Consolidated Income Statement, the
Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statements of
Financial Position, the Consolidated and Parent Company Statements of Cash Flows, the Consolidated and
Parent Company Statements of Changes in Equity and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has been applied in their preparation is
applicable law and UK-adopted international accounting standards and as regards the parent company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
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 June 2022 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
the parent company financial statements have been properly prepared in accordance with UK-
adopted international accounting standards and as applied in accordance with the provisions of the
Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
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 parent company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. 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
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of
accounting included:
• a consideration of the inherent risks to the group’s business model and an analysis of how those risks
might affect the group’s financial resources or ability to continue operations covering a period of at
least 12 months from the date of approval of financial statements or the date the financial statements
are authorised for issue.
•
Identification of the risks that we considered most likely to affect the group’s financial resources or
ability to continue operations over the going concern period, which were adverse circumstances
impacting the forecast growth in revenues, timely conversion of trade receivables to cash, reduction
in expenses and operating cash outflows, and access to financial resources in the form of equity and
debt facilities, if required. We considered this through a review of the application of reasonably
foreseeable downside scenarios and challenging the key assumptions by management.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the group's or parent company’s
ability to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
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Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect
of misstatements. At the planning stage, materiality is used to determine the financial statement areas that
are included within the scope of our audit.
Materiality for the group financial statements as a whole was $743,000 (2021: $1,005,000) with performance
materiality set at $445,800 (2021: $603,000), being 60% of group materiality. Materiality for the financial
statements as a whole was based upon 1% of the group’s gross assets.
In determining materiality, we considered gross assets a key benchmark for the group as the group holds
product trademarks and licences and product development costs are capitalised in the group. We consider
gross assets to be a key metric used by shareholders owing to the historic investment in the product
technology held by the group, and the early stages of commercialisation. We have also set a separate, lower
materiality, for revenue to reflect the early stages of revenue generation which would not be captured
sufficiently using group materiality. We have determined materiality for revenue as $59,000 (2021: $32,000)
and performance materiality as $35,400 (2021: $19,200), calculated at 2% of total revenue.
The percentages applied to these benchmarks have been selected to bring into scope all significant classes of
transactions, account balances and disclosures relevant for the shareholders, and also to ensure that matters
that would have a significant impact on the reported result were appropriately considered.
In determining performance materiality, significant judgements made were in respect our experience with
auditing the financial statements of the group in previous years, based on the number and quantum of
identified misstatements in prior period audits.
We agreed with the audit committee that we would report all individual audit differences identified for the
group during the course of our audit in excess of $37,150 (2021: $50,250) together with any other audit
misstatements below that threshold that we believe warrant reporting on qualitative grounds.
Materiality applied to the company’s financial statements was $328,000 (2021: $470,000) with performance
materiality set at $197,000 (2021: $282,000), being 60% of the company materiality.
The benchmark for materiality of the parent company was 1% of the company’s gross assets. The significant
judgements used by us in determining this were that total assets are the primary measure used by the
shareholders in assessing the performance of the company. The percentage applied to this benchmark has
been selected to bring into scope all significant classes of transactions, account balances and disclosures
relevant for the shareholders, and also to ensure that matters that would have a significant impact on the
reported profit were appropriately considered.
In determining performance materiality, significant judgements made were in respect of our experience with
auditing the financial statements of the company in previous years.
We agreed with the audit committee that we would report all individual audit differences identified for the
company during the course of our audit in excess of $16,000 (2021: $23,500) together with any other audit
misstatements below that threshold that we believe warrant reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at areas involving significant accounting estimates and
judgement by the Directors such as the recoverability of intangible fixed assets and eligibility of capitalised
development costs, as outlined in the Key Audit Matter section below, and considered events that are
inherently uncertain.
We also addressed the risk of management override of controls, including among other matters consideration
of whether there was evidence of bias that represented a risk of material misstatement due to fraud. All
significant and/or material subsidiary undertakings were audited directly by PKF Littlejohn LLP.
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49
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
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.
Key Audit Matter
How our scope addressed this matter
Recoverability of
eligibility of capitalised development costs
intangible
fixed assets and
Intangible assets comprise the following categories:
Our work on this matter included:
• Trademarks, trade names and licenses
• Trade secrets
• Product development costs
Intangible assets that are subject to amortisation are
assessed for indicators of impairment.
Estimated recoverable amounts using value in use
inherent
calculations are subjective due to the
uncertainty involved in forecasting and discounting
future cash flows. Judgement is also required when
estimating useful economic lives.
The eligibility for capitalisation of expenditure is
assessed in accordance with the criteria in IAS 38
Intangible Assets. There is a risk that these assets have
been capitalised incorrectly and are not recoverable.
Given the judgements and estimates involved these
were a key focus for our audit.
• Confirming the group held legal title to the
trademarks, trade names and licenses.
• Assessing whether
any
indicators
(including
regulatory
of
impairment
issues,
progress on obtaining milestones towards
commercialisation, development of competing
technology and products entering the market)
existed which required an impairment charge
to be recognised in profit or loss.
intangible asset categories
• Performing substantive testing of additions in
all
including
agreeing to supporting documentation. We also
reperformed the amortisation calculations.
• Our testing on the forecasts and value in use
calculations included:
o Evaluation and challenge of the key
assumptions used by management;
o The performance of a sensitivity
to
analysis
reasonably possible changes in key
assumptions.
the headroom
on
• We tested and verified the eligibility for
in
capitalisation of development
accordance with the criteria under IAS 38, in
particular technical feasibility, the ability to
commercialise the asset and the availability of
technical and financial resources to complete
development.
costs
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information
contained within the annual report. Our opinion on the group and parent company financial statements does
not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
| Renalytix plc Annual Report and Financial Statements
50
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the 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, the directors are responsible for the
preparation of the group and parent company 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 group and parent company financial statements, the directors are responsible for assessing
the group 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
• We obtained an understanding of the group and parent company and the sector in which they operate
to identify laws and regulations that could reasonably be expected to have a direct effect on the
financial statements. We obtained our understanding in this regard through discussions with
management, and experience of the AI diagnostics sector.
| Renalytix plc Annual Report and Financial Statements
51
• We determined the principal laws and regulations relevant to the group and parent company in this
regard to be those arising from:
o Companies Act 2006
o AIM listing rules
o General Data Protection Regulation
o Quoted Companies Alliance compliance
o Food and Drug Administration Agency
o Local laws and regulations in UK and the USA where the group operates; and
o Local tax and employment law where each member of the group operates
• We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group and parent company with those laws and regulations.
These procedures included, but were not limited to:
o Enquires of management
o Review of Board minutes
o Review of legal expenses
o Review of RNS announcements
• We also identified the risks of material misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management
override of controls, the potential for management bias was identified in relation to the impairment
of intangible fixed assets and as noted above, we addressed this by challenging the assumptions and
judgements made by management when auditing that significant accounting estimate.
• As in all of our audits, we addressed the risk of fraud arising from management override of controls
by performing audit procedures which included, but were not limited to: the testing of journals;
reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of business.
• All significant components of the group were audited by PKF Littlejohn LLP. Our work in relation to
the points noted above considers all aspects of the group.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law or regulation is removed from the events
and transactions reflected in the financial statements, as we will be less likely to become aware of instances
of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error,
as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the 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.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
Date: 9 November 2022
15 Westferry Circus
Canary Wharf
London E14 4HD
| Renalytix plc Annual Report and Financial Statements
52
FINANCIAL STATEMENTS
Consolidated Income Statement
FOR THE YEAR ENDED 30 JUNE 2022
Note
Year to 30 June 2022
Year to 30 June 2021
Continuing operations
Revenue
Cost of Sales
Gross Profit
Administrative expenses
Operating loss
Share of Net loss in Associate accounted for
using the equity method
Impairment of Investment of associate
Gain (loss) on financial assets at fair value
through profit or loss
Gain on distribution of assets classified as
held for sale
Fair value adjustment of convertible debt
Finance (costs) income - net
Loss before tax
Taxation
Loss for the period
Earnings per Ordinary share from
continuing operations
Basic
Diluted
8
9
34
23
30
14
15
16
16
$’000
2,970
(2,052)
918
(58,290)
(57,372)
9
-
(5,900)
-
3,998
9,637
(49,628)
(7,104)
(56,732)
$ (0.78)
$ (0.82)
$’000
1,491
(804)
687
(33,298)
(32,611)
(199)
(1,913)
6,483
402
-
(7,950)
(35,788)
4,778
(31,010)
$ (0.43)
$ (0.43)
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Consolidated Statement of
Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2022
Year to 30 June 2022
Year to 30 June 2021
Loss for the period – continuing operations
Other comprehensive income:
Items that may be subsequently reclassified to
profit or loss
Changes in the fair value of the convertible notes
Currency translation differences
Other comprehensive (loss)/income for the period
Total comprehensive loss for the period
$’000
(56,732)
536
(11,742)
(11,206)
(67,938)
$’000
(31,010)
-
11,616
11,616
(19,394)
Items stated above are disclosed net of tax. The income tax relating to each component of other comprehensive
income is disclosed in note 15.
| Renalytix plc Annual Report and Financial Statements
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Consolidated and Company’s Statements
of Financial Position
AS AT 30 JUNE 2022
Notes
Group
Group
Company
Company
As at 30 June
2022
As at 30 June
2021
As at 30 June
2022
As at 30 June
2021
$’000
$’000
$’000
$’000
Assets
Non-current assets
Property, plant and equipment
Right of use asset
Intangible assets
Investment in subsidiaries
Investments accounted for using the
equity method
Note receivable
Deferred tax assets
Total non-current assets
Current Assets
Inventory
Security deposits
Financial asset at fair value through profit
or loss
Trade and other receivables
Prepaid and other current assets
Cash and cash equivalents
Total current assets
Total assets
Equity attributable to owners
of the parent
Share capital
Share premium
Share-based payment reserve
Accumulated other comprehensive
income
Retained earnings/(deficit)
Total equity
17
18
19
20
34
24
15
22
23
23
24
25
26
27
27
28
1,368
355
1,081
297
14,020
18,021
-
9
75
-
15,827
1,160
141
2,744
901
1,152
-
-
75
7,097
26,571
353
86
594
520
-
-
13,605
89,112
-
-
-
-
-
17,524
4,588
-
-
-
102,717
22,112
-
-
-
-
234
299
28,313
31,590
84,686
271
15,063
109,315
9,295
2,744
9,295
41,333
65,159
47,431
76,007
63,258
102,578
134,307
131,427
241
233
241
233
85,444
76,457
85,444
76,457
11,954
(1,509)
4,940
9,701
11,840
(5,119)
4,940
9,687
(52,961)
3,771
23,763
38,917
43,169
95,102
116,169
130,234
| Renalytix plc Annual Report and Financial Statements
55
Notes
Group
As at 30 June
2022
Group
As at 30 June
2021
Company As
at 30 June
2022
Company As
at 30 June
2021
$’000
$’000
$’000
$’000
Liabilities
Current liabilities
Trade and other payables
Deferred Revenue
Current lease liabilities
Borrowings
Note payable current
Current due to affiliated company
Total current liabilities
Non-current liabilities
Note payable non-current
Non-current lease liabilities
Total non-current liabilities
Total liabilities
Total equity and liabilities
29
8
18
30
31
30
18
46
163
-
4,660
55
12,205
7,682
202
7,884
7,281
6,652
5,796
1,193
122
86
53
-
350
7,263
-
-
-
4,660
-
-
-
-
-
-
10,456
1,193
-
7,682
213
213
-
7,682
18,138
-
-
-
1,193
20,089
7,476
63,258
102,578
134,307
131,427
The notes on pages 63 to 84 are an integral part of these financial statements.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the
Parent Company income statement. The loss for the Parent Company for the year was ($15,154,820). (Year ended 30
June 2021: loss of $7,718,000).
The financial statements were approved and authorized for issue by the Board on 9 November 2022 and signed on its
behalf by:
Christopher Mills
Chairman
James R. McCullough
Chief Executive Officer
Company number: 11257655
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56
Consolidated and Company’s Statements
of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2022
Note
Group
Group
Company
Company
As at 30 June
2022
$’000
As at 30 June
2021
$’000
As at 30 June
2022
$’000
As at 30 June
2021
$’000
Cash flow from operating activities
Loss before income tax
Adjustments for
Depreciation
Amortization and impairment charges
Share-based payments
Share of net (profit)/loss of associate
Reversal of Kantaro Liability
Gain on Sale of assets
Forgiveness of PPP Loan
Unrealized loss (Gain) on financial asset
at fair value through profit or loss
Fair value adjustment of convertible
debt
Foreign Exchange Loss (Gain)
Impairment of Investment in
Subsidiary
Changes in working capital
Trade and other receivables
Prepaid assets and other current assets
Inventory
Security Deposits
Trade and other payables
Deferred Revenue
Payable to affiliated company
Cash used in operations
Interest received
Net cash used in operating activities
Cash flow from investing activities
Purchase of property, plant and
equipment (PPE)
Lease Payments
Purchase of intangibles
Proceeds (purchase) of financial assets
(49,628)
(35,788)
(15,154)
(7,718)
304
2,309
7,010
(9)
(295)
-
-
138
1,958
2,180
2,112
(495)
(449)
(255)
-
2,100
63
-
-
-
-
-
1,806
75
-
-
-
-
5,900
(6,483)
5,900
(6,483)
(3,998)
-
(3,998)
-
(7,354)
8,832
-
-
(307)
(698)
(807)
-
1,904
(76)
-
(576)
1,981
(27)
(15)
3,753
122
(1,623)
-
-
-
253
-
-
2,939
517
(60,624)
2,137
-
-
1,417
943
-
-
-
-
(45,745)
(24,635)
(9,419)
(66,408)
-
3
-
2
(45,745)
(24,632)
(9,419)
(66,406)
(591)
-
(103)
-
(783)
(93)
(847)
982
-
-
(103)
-
-
-
(358)
-
| Renalytix plc Annual Report and Financial Statements
57
Net cash generated by/(used in)
investing activities
Cash flow from financing activities
Proceeds from convertible notes
Payment of debt issuance costs
Payments of issuance costs for the
Securities Purchase Agreement
Issue of shares (net of issue costs)
Proceeds from the issuance of ordinary
shares under employee share purchase
plan
Proceeds from exercise of stock options
Lease payments
Note
Group
Year to
30 June 2022
Group
Year to
30 June 2021
Company
Year to
30 June 2022
Company Year
to
30 June 2021
$’000
(694)
18,020
(1,382)
(218)
$’000
(741)
-
-
-
$’000
(103)
18,020
(1,382)
(218)
$’000
(358)
-
-
-
8,804
76,876
8,804
79,023
211
198
(118)
111
252
-
211
198
-
111
252
-
Net cash generated from financing activities
25,515
77,239
25,633
79,386
Net increase/(decrease) in cash and
cash equivalents
Cash and cash equivalents at beginning
of period
Effect of exchange rate changes on
cash
Cash and cash equivalents at end of
period
(20,924)
51,866
16,111
12,622
65,159
13,293
15,063
2,441
(2,902)
-
(2,861)
-
22
41,333
65,159
28,313
15,063
| Renalytix plc Annual Report and Financial Statements
58
Consolidated Statement of Changes
in Equity
FOR THE YEAR ENDED 30 JUNE 2022
Share-based
payment
reserve
Accumulated
other
comprehensive
income
Retained
earnings
Total equity
$’000
2,833
$’000
(1,915)
$’000
$’000
34,856
35,966
-
(31,010)
(31,010)
11,616
-
11,616
-
11,616
(31,010)
(19,394)
Share Capital
Share
Premium
$’000
$’000
192
-
-
-
-
-
-
-
40
85,101
-
-
-
1
-
(9,007)
-
111
252
-
-
-
-
-
2,107
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(75)
85,141
(9,007)
2,107
111
253
(75)
(75)
78,530
41
76,457
2,107
233
76,457
4,940
9,701
3,771
95,102
-
-
-
-
-
-
-
-
-
-
4
4
-
(56,732)
(56,732)
536
(11,746)
-
-
536
(11,742)
(11,210)
(56,732)
(67,938)
At 30 June and 1 July
2020
Comprehensive income
Loss for the period
Other comprehensive
income
Currency translation
differences
Total comprehensive
income
Transactions with
owners
Issuance of Ordinary
Shares in US
Less issue costs
Share-based payments
Shares issued under the
ESPP
Exercise of Stock Options
Verici Ordinary Share
Repurchase
Total transactions with
owners of the parent,
recognized directly in
equity
At 30 June and 1 July
2021
Comprehensive income
Loss for the period
Other comprehensive
income
Changes in fair value of
convertible notes
Currency translation
differences
Total comprehensive
income
| Renalytix plc Annual Report and Financial Statements
59
Share Capital
Share
Premium
Share-based
payment
reserve
Accumulated
other
comprehensive
income
Retained
earnings
Total equity
$’000
$’000
$’000
$’000
$’000
$’000
Transactions with
owners
Issuance of Ordinary
Shares in US
Less issue costs
Share-based payments
Shares issued under the
ESPP
Exercise of Stock
Options
Total transactions with
owners of the parent,
recognized directly in
equity
At 30 June 2022
8
-
-
-
-
8
8,796
(218)
-
211
198
-
-
7,010
-
-
8,987
7,010
-
-
-
-
-
-
-
-
-
-
-
-
8,804
(218)
7,010
211
198
16,005
241
85,444
11,954
(1,509)
(52,961)
43,169
| Renalytix plc Annual Report and Financial Statements
60
Company’s Statement of Changes
in Equity
FOR THE YEAR ENDED 30 JUNE 2022
Share Capital
Share
Premium
Share-based
payment
reserve
Accumulated
other
comprehensive
income
Retained
earnings
Total equity
$’000
$’000
$’000
$’000
$’000
$’000
2,833
(1,970)
46,710
47,765
At 30 June and 1 July
2020
Comprehensive
income
Loss for the period
Other
comprehensive
income
Currency translation
differences
Total comprehensive
income
Transactions with
owners
Issuance of Ordinary
Shares in US IPO
Less issue costs
Share-based payments
Shares issued under the
ESPP
Exercise of Stock Options
Verici Ordinary Share
Repurchase
Total transactions with
owners of the parent,
recognized directly in
equity
At 30 June 2021
Comprehensive income
Loss for the period
Other comprehensive
income
Changes in the fair value
of the convertible notes
Currency translation
differences
Total comprehensive
income
192
-
-
-
-
-
-
-
40
85,101
-
-
-
1
-
(9,007)
-
111
252
-
-
-
-
-
-
2,107
-
-
-
-
(7,718)
(7,718)
11,657
-
11,657
11,657
(7,718)
3,939
-
-
-
-
-
-
-
-
-
-
-
-
(75)
85,141
(9,007)
2,107
111
253
(75)
(75)
78,530
41
76,457
2,107
233
76,457
4,940
9,687
38,917
130,234
-
-
-
-
-
-
-
-
-
-
-
-
-
(15,154)
(15,154)
536
(15,342)
-
-
536
(14,806)
(14,806)
(15,154)
(29,960)
| Renalytix plc Annual Report and Financial Statements
61
Share Capital
Share Premium
Share-based
payment reserve
Accumulated
other
comprehensive
income
Retained
earnings
Total equity
$’000
$’000
$’000
$’000
$’000
$’000
Transactions with
owners
Issuance of Ordinary
Shares in US
Less issue costs
Share-based payments
Shares issued under
the ESPP
Exercise of Stock
Options
Total transactions with
owners of the parent,
recognized directly in
equity
At 30 June 2022
8
-
-
-
-
8
8,796
(218)
-
211
198
-
-
6,900
-
-
8,987
6,900
-
-
-
-
-
-
-
-
-
-
-
-
8,804
(218)
6,900
211
198
15,895
241
85,444
11,840
(5,119)
23,763
116,169
| Renalytix plc Annual Report and Financial Statements
62
Notes to the Financial Statements
1. GENERAL INFORMATION AND BASIS OF PRESENTATION
Renalytix Plc (the “Company”) is a company incorporated in the United Kingdom. The Company is a public limited
company, which is listed on the AIM market of the London Stock Exchange and Nasdaq global market. The address of
the registered office is Finsgate, 5-7 Cranwood Street, London, United Kingdom, EC1V 9EE. The Company was
incorporated on 15 March 2018 and its registered number is 11257655.
The principal activity of the Company and its subsidiaries (together “the Group”) is as a developer of artificial
intelligence- enabled diagnostics for kidney disease.
The financial statements are presented in United States Dollars (“USD”) because that is the currency of the primary
economic environment in which the Group operates.
2. BASIS OF PRESENTATION
The Group and Company’s financial statements have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act 2006.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies.
New Standards, amendments, and interpretations not adopted by the group
The group did not adopt any new standards, amendments or interpretations in year as they did not have a material
impact on the financial statements.
New standards, amendments, and interpretations issued but not effective for the
period ended 30 June 2022, and not early adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods
beginning on or after 1 January 2022 and have not been applied in preparing these financial statements. None of
these is expected to have a significant effect on the financial statements of the Group or Parent Company.
• Amendments to IFRS 3: Business Combination
• Amendments to IAS 16: Property, Plant and Equipment
• Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets
• Amendments to IAS 1: Presentation of Financial Statements, Disclosure of Accounting Policies
• Amendments to IAS 8: Definition of Accounting Estimates
3. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below.
Going concern
The Group and Company meet their day-to-day working capital requirements through the use of cash reserves.
The Directors have considered the applicability of the going concern basis in the preparation of these financial
statements. This included the review of internal budgets and financial results which show, taking into account
reasonably probable changes in financial performance, that the Group and Company should be able to operate within
the level of its current funding arrangements.
We have not yet seen any material disruption to our business as a result of the COVID-19 pandemic and current
trading suggests that our base case forecasts are still applicable.
The Directors believe that the Group and the Company have adequate resources to continue in operation for the
foreseeable future. For this reason, they have adopted the going concern basis in the preparation of the financial
statements.
| Renalytix plc Annual Report and Financial Statements
63
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiary
undertakings. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. The
existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and
the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration agreement. Acquisition related costs are expensed as incurred. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date.
Inter-company transactions, balances and unrealized gains on transactions between Group companies are
eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Associates are entities over which the Group has significant influence but not control over the financial and operating
policies. Investments in associates are accounted for using the equity method of accounting and are initially
recognized at cost. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss,
and its share of post-acquisition movements in reserves is recognized in other comprehensive income. The
cumulative post-acquisition movements are adjusted against the carrying amount of the investment.
Foreign currency translation
(a) Functional and presentational currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the functional currency). The consolidated financial
statements are presented in United States Dollars, which is the Group’s presentational currency. The functional
currency of the Parent Company is GB Pounds.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions where items are re-measured. 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 recognized in the income statement within ‘administrative expenses’.
(c) Group companies
The results and financial position of all the Group entities that have a functional currency different from the
presentational currency are translated into the presentational currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance
sheet;
• income and expenses for each income statement are translated at average exchange rates; and
• all resulting exchange differences are recognized in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are
taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences
that were recorded in equity are recognized in the income statement as part of the gain or loss on sale.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision- maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Executive Directors who make strategic decisions.
At present the Directors consider the business to operate in a single segment.
| Renalytix plc Annual Report and Financial Statements
64
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any provision for
impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the asset and
bringing the asset to its working condition for its intended use.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only
where it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the
asset can be
measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are
charged to the income statement during the financial period in which they are incurred.
Depreciation on assets is calculated using the straight-line method to allocate their cost to their residual values over
their estimated useful lives, as follows:
Fixtures and fittings 20%
The assets’ residual values and useful economic lives are reviewed regularly, and adjusted if appropriate, at the end
of each reporting period.
An asset’s carrying value is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on the disposal of assets are determined by comparing the proceeds with the carrying amount and
are recognized in administration expenses in the income statement.
Intangible assets
(a) Trademarks, trade names and licenses
Separately acquired trademarks and licenses are shown at historical cost. Trademarks and licenses acquired in a
business combination are recognized at fair value at the acquisition date. Trademarks and licenses have a finite
useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line
method to allocate the cost of trademarks and licenses over the contractual license period of 10 to 15 years and is
charged to administrative expenses in the income statement.
(b) Development costs and trade secrets
Development costs have a finite useful life and are carried at cost less accumulated amortization.
Expenditure incurred on the development of new or substantially improved products or processes is capitalized,
provided that the related project satisfies the criteria for capitalisation, including the project’s technical feasibility
and likely commercial benefit. All other research and development costs are expensed to profit or loss as incurred.
Development costs are amortized over the estimated useful life of the products with which they are associated.
Amortization commences when a new product is in commercial production. The amortization is charged to
administrative expenses in the income statement. The estimated remaining useful lives of development costs are
reviewed at least on an annual basis.
The carrying value of capitalized development costs is reviewed for potential impairment at least annually and if a
product becomes unviable and an impairment is identified the deferred development costs are immediately charged
to the income statement. Amortization has not yet commenced.
Trade secrets, including technical know-how, operating procedures, methods and processes, are recognized at fair
value at the acquisition date. Trade secrets have a finite useful life and are carried at cost less accumulated
amortization. Amortization has not yet commenced.
Impairment of non-financial assets
Assets that have an indefinite life or where amortization has not yet commenced are tested annually for impairment.
Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which
the carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. 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.
| Renalytix plc Annual Report and Financial Statements
65
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows. Impairment losses recognized for cash-generating units, to which goodwill has been allocated,
are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the
other assets in the cash-generating unit.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset
(cash-generating unit) in the prior period. A reversal of an impairment loss is recognized in the income statement
immediately. If goodwill is impaired however, no reversal of the impairment is recognized in the financial statements.
Financial assets
Classification
The Company classifies its financial assets in the following categories: loans and receivables at amortized cost and
financial assets at fair value through profit or loss. The classification depends on the purpose for which the financial
assets were acquired and management determines the classification of its financial assets at initial recognition.
(a) Loans and receivables
Financial assets are classified as at amortized cost only if both of the following criteria are met: the asset is held
within a business model whose objective is to collect contractual cash flows, and the contractual terms give rise to
cash flows that are solely payments of principal and interest. Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted on an active market. They are included in current
assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current
assets. The Company’s loans and receivables comprise ‘trade and other receivables’ and cash and cash equivalents in
the balance sheet.
(b) Financial assets at fair value through profit or loss
The Group classifies the following financial assets at fair value through profit or loss (“FVPL”):
• equity investments that are held for trading, and
• equity investments for which the entity has not elected to recognize fair value gains and losses
through Other Comprehensive Income.
(c) Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income comprise equity securities that are not held for
trading and which the Group has irrevocably elected at initial recognition to recognize in this category. The Group
considers this category to be more relevant for assets of this type.
(d) Financial liabilities at fair value through profit or loss
The Group classifies the following financial assets at fair value through profit or loss (“FVPL”):
• Convertible debt recorded at fair value through profit or loss.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short- term deposits with
an original maturity of three months or less.
For the purposes of the cash flow statements, cash and cash equivalents consist of cash and short-term deposits as
defined above.
Share capital and premium
Ordinary Shares are classified as equity. Proceeds in excess of the nominal value of shares issued are allocated to the
share premium account and are also classified as equity. Incremental costs directly attributable to the issue of new
Ordinary Shares or options are deducted from the share premium account.
Other reserves - equity
The share-based payment reserve is used to recognize the fair value of equity settled share-based payment
transactions.
| Renalytix plc Annual Report and Financial Statements
66
Foreign currency reserve is used to record the exchange differences on translation of entities in the Group which
have a functional currency different to the presentation currency.
Retained earnings includes all current and prior period results as disclosed in the income statement.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less
(or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade
payables are recognized initially at fair value and subsequently measured at amortized cost using the effective
interest method.
Current and deferred income tax
Income tax comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it
relates to items recognized in other comprehensive income where the associated tax is also recognized in other
comprehensive income.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
balance sheet date in the countries where the Company and its subsidiary operate and generate taxable income.
Management evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is
subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid
to the tax authorities.
Deferred tax is recognized, using the liability method, on all temporary differences at the balance sheet date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax
liabilities are recognized in respect of all temporary differences except where the deferred tax liability arises from
the initial recognition of goodwill in business combinations.
Deferred tax assets are recognized for all deductible temporary differences, carry-forward of unused tax assets and
tax losses, to the extent that they are regarded as recoverable. They are regarded as recoverable where, on the basis
of available evidence, there will be sufficient taxable profits against which the future reversal of the underlying
temporary differences can be deducted.
The carrying value of the amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all, or part, of the tax asset
to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realized or the liability is settled, based on the tax rates (and tax laws) that have been substantively enacted at the
balance sheet date.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
Leases
Leases are recognized as a right-of-use asset and a corresponding lease liability at the date on which the leased asset
is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index or
rate as at the commencement date
• amounts expected to be payable by the group under residual value guarantees
• the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
| Renalytix plc Annual Report and Financial Statements
67
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability.
The lease payments are discounted using the interest rate implicit within the lease. If that rate cannot be readily
determined, the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to
borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security, and conditions.
Where the Group is exposed to potential future increases in variable lease payments based on an index or rate,
amounts are not included in the lease liability until they take effect. When adjustments to lease payments based on an
index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the income
statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs
• restoration costs
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on straight
line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over
the underlying asset’s useful life.
Revenue Recognition
The Group recognizes revenue when a customer obtains control of contracted goods or services. The Group records
the amount of revenue that reflects the consideration that it expects to receive in exchange for those goods or
services. The Group applies the following five-step model in order to determine this amount: (i) identification of the
promised goods or services in the contract; (ii) determination of whether the promised goods or services are
performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the
transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the
performance obligations; and (v) recognition of revenue when (or as) the Group satisfies each performance
obligation.
The Group only applies the five-step model to contracts when it is probable that it will collect the consideration to
which it is entitled in exchange for the goods or services that it transfers to the customer. The Group reviews the
contract to determine which performance obligations it must deliver and which of these performance obligations are
distinct. Certain contracts have options for the customer to acquire additional services. The Group evaluates these
options to determine if a material right exists. If, after that evaluation, it determines a material right does exist, it
assigns value to the material right based upon the renewal option approach. The Group recognizes as revenue the
amount of the transaction price that is allocated to each performance obligation when that performance obligation is
satisfied or as it is satisfied. The Group uses present right to payment and customer acceptance as indicators to
determine the transfer of control to the customer occurs at a point in time. Sales tax and other similar taxes are
excluded from revenues.
Cost of revenue
Cost of revenue consists of costs directly attributable to the services rendered, including labor costs directly related
to revenue generating activities.
Employee benefits
(a) Pension obligations
The Group makes contributions to defined contribution pension plans. A defined contribution plan is a pension plan
under which the Group pays fixed contributions into a separate entity with the pension cost charged to the income
statement as incurred. The Group has no further obligations once the contributions have been paid.
(b) Share-based compensation
The Group operates an equity-settled, share-based compensation plan, under which the Group receives services from
employees and others as consideration for equity instruments of the Group. Equity-settled share-based payments are
measured at fair value at the date of grant and are expensed over the vesting period based on the number of
instruments that are expected to vest. For plans where vesting conditions are based on share price targets, the fair
| Renalytix plc Annual Report and Financial Statements
68
value at the date of grant reflects these conditions. Where applicable the Group recognizes the impact of revisions to
original estimates in the income statement, with a corresponding adjustment to equity for equity-settled schemes.
Fair values are measured using appropriate valuation models, taking into account the terms and conditions of the
awards.
When the share-based payment awards are exercised, the Company issues new shares. The proceeds received net of
any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
National insurance on share options
To the extent that the share price at the balance sheet date is greater than the exercise price on options granted to UK
citizens under unapproved share-based payment compensation schemes, provision for any National Insurance
Contributions has been based on the prevailing rate of National Insurance. The provision is accrued over the
performance period attaching to the award.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount.
Exceptional items
These are items of an unusual or non-recurring nature incurred by the Group and include transactional costs and
one-off items relating to business combinations, such as acquisition expenses.
Assets Classified as Held for Sale
Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction
rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their
carrying value and fair value less costs to sell. An impairment loss is recognized for any subsequent write-down of
the asset to fair value less costs to sell.
4. FINANCIAL RISK MANAGEMENT
Financial Risk Factors
The Company’s activities expose it to a variety of financial risks. The Company’s Board monitors and manages the
financial risks relating to the operations of the Company.
(a) Market Risk
Foreign Exchange Risk
The Company operates internationally and is exposed to foreign exchange risk primarily with respect to the US Dollar
and the Pounds Sterling. Foreign exchange risk arises from future commercial transactions and recognized assets and
liabilities.
(b) Credit Risk
Credit risk relates mainly to cash at bank. The Company only deposits cash with major banks with high quality credit
standing and limits exposure to any one counterparty.
(c) Liquidity Risk
The Company’s continued future operations depend on its ability to raise sufficient working capital through the issue
of share capital and generate revenue.
5. CAPITAL RISK MANAGEMENT
The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the
return to stakeholders. The Company’s capital structure primarily consists of equity attributable to the owners,
comprising issued capital, reserves and retained losses.
| Renalytix plc Annual Report and Financial Statements
69
6. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The Company makes estimates and assumptions regarding the future. Estimates and judgments are continually
evaluated based on historical experience and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. In the future, actual results may differ from these estimates and
assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year relate to:
• Capitalisation and recoverability of intangible assets (note 19);
• Share based payments (note 28).
• Convertible debt recorded at fair value through profit or loss (note 30).
7. SEGMENTAL REPORTING
The Group operates as a single segment.
8. REVENUE
Testing services revenue
Testing services revenue is generated from the KidneyIntelX platform, which provides analytical services to
customers. Each individual test is a performance obligation that is satisfied at a point in time upon completion of the
testing process (when results are reported) which is when control passes to the customer and revenue is recognized.
During the year ended June 30, 2022, the Company recognized $2.7 million of testing services revenue. Sales tax and
other similar taxes are excluded from revenues. There was $0.4 million of testing services revenue recognized in the
2021 accounting period.
Pharmaceutical services revenue
Pharmaceutical services revenue is generated from the provision of analytical services to customers. Contracts with
customers generally include an initial upfront payment and additional payments upon achieving performance
milestones. The Company uses present right to payment and customer acceptance as indicators to determine the
transfer of control to the customer which may occur at a point in time or over time depending on the individual
contract terms. Sales tax and other similar taxes are excluded from revenues. During the year ended June 30, 2022,
the Company recognized $0.2 million of pharmaceutical services revenue. There was $1.1 million of pharmaceutical
services revenue recognized in the 2021 accounting period
Deferred revenue
Deferred revenue represents the allocated transaction price to the material right which will be recognized as revenue
when the renewal options are exercised which is expected to occur over the next 24 months.
The following table summarizes the changes in deferred revenue:
Balance, beginning of period
Deferral of revenue
Revenue recognized
Balance, end of period
Year ended 30 June 2022
Year ended 30 June 2021
$'000
122
150
(227)
45
$'000
-
250
(128)
122
| Renalytix plc Annual Report and Financial Statements
70
9. EXPENSES – ANALYSIS BY NATURE
Year ended 30 June 2022
Year ended 30 June 2021
Employee benefit expense
Contract labor
Depreciation and amortization
Professional fees
Laboratory supplies
Other expenses
Total administrative expenses
$'000
26,527
6,245
2,254
12,951
851
9,462
58,290
$'000
12,416
3,393
2,053
8,374
326
6,736
33,298
10. AUDITOR’S REMUNERATION
Year ended 30 June 2022
Year ended 30 June 2021
$'000
$'000
Fees payable to the Company’s auditor for the audit
of the parent Company and consolidated financial
statements
Total
71
71
53
53
11. DIRECTORS’ REMUNERATION
Aggregate emoluments
Share based payments
Contribution to defined contribution pension
scheme
Total
Year ended 30 June 2022
Year ended 30 June 2021
$'000
1,189
292
102
1,583
$'000
1,832
206
39
2,077
Retirement benefits are accruing to two current executive directors under a defined contribution scheme. See further
disclosures within the Remuneration Report on pages 32. The highest paid director received aggregate emoluments,
excluding the effect of the share based payments charge, totaling $648,000 (2021: $1,405,000).
12. EMPLOYEE BENEFIT EXPENSE
Group Year
ended 30 June
2022
Group Year
ended 30 June
2021
Company Year
ended 30 June
2022
Company Year
ended 30 June
2021
$'000
$'000
$'000
Wages, salaries and Bonus
Social security costs and
Benefits
Share based
payment expenses
Total
$'000
15,006
4,511
7,010
8,902
1,334
2,180
26,527
12,416
345
286
61
692
168
9
74
251
| Renalytix plc Annual Report and Financial Statements
71
13. MONTHLY AVERAGE NUMBER OF PEOPLE EMPLOYED
The monthly average number of people (including Executive Directors) employed was:
Group Year
ended 30 June
2022
Group Year
ended 30
June 2021
Company Year
ended 30 June
2022
Company Year
ended 30 June
2021
Administration
Research and development
Total
68
25
93
27
20
47
6
-
6
6
6
12
The total number of employees (FTEs) in the Group at 30 June 2022 was 110 (2021: 53), and in the Company was 8
(2021: 2).
14. FINANCE INCOME AND COSTS
Year ended 30 June 2022
Year ended 30 June 2021
$'000
$'000
Finance costs:
Interest expense
Royalty Expense
Finance income:
Interest income
Gain on debt forgiveness
Reduction in contractual liability
Gain/(Loss) on Foreign Exchange
Other Income
Net finance income/(loss)
15. INCOME TAX
Group
Deferred tax
Total deferred tax
Income tax (charge)/credit
(2)
(169)
12
-
-
9,677
119
9,637
(3)
236
255
495
(8,933)
-
(7,950)
Year ended 30 June 2022
Year ended 30 June 2021
$'000
(7,104)
(7,104)
(7,104)
$'000
4,778
4,778
4,778
No deferred asset is calculated on losses in FY22 as the probability of future utilization is considered too remote.
Factors affecting the future tax charge
The standard rate of corporation tax in the UK is 19%.
Changes to UK Corporation tax rates were enacted as part of The Finance (No.2) Act 2021 which received Royal
Assent on 10 June 2021. The main rate will remain at 19% before increasing to 25% from 1 April 2023.
| Renalytix plc Annual Report and Financial Statements
72
Year ended 30 June 2022
Year ended 30 June 2021
Loss before Tax
Tax Calculated at domestic tax rates applicable to
the UK Standard of tax at 19%
Tax effects of:
Expenses not deductible for tax purposes
Losses on which no deferred tax asset is
recognized
Tax Credit for the Year
Current year Valuation Allowance
Prior year Deferred Tax
Reversal of tax asset at 30 June
Tax Expense
Total Income Tax (Expense)/Credit
$'000
49,628
9,429
4,490
(578)
13,341
(13,341)
7,097
(7,097)
(7)
(7,104)
$'000
35,788
6,800
(487)
(1,535)
4,778
4,778
2,319
7,097
-
4,778
Deferred tax assets are recognized based on subsidiary net losses based on the US corporate tax rate of 21%. Net
losses can be carried forward indefinitely to offset future taxable profits however management has concluded that
the realization of deferred tax assets to be less than probable and recorded an impaired the deferred tax asset in
current year. No deferred asset is calculated on losses in the UK totaling $15,155,000 where the probability of future
utilization is considered too remote.
16. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted
average number of ordinary shares in issue during the period.
Loss attributable to owners of the parent
Weighted average number of ordinary
shares in issue
Basic and diluted loss per share
Year ended 30 June 2022
Year ended 30 June 2021
$'000
(56,648)
72,861,251
$ (0.78)
$'000
(31,010)
71,484,934
$ (0.43)
The Company has two categories of dilutive potential ordinary share, being share options and convertible debt. The
potential shares were not dilutive the period and prior period as the Group made a loss. For the fiscal year ended
June 30, 2022, the diluted net loss per share calculation included the dilutive effect of convertible debt as well as the
impact of the $3.9 million fair value gain related to the convertible debt, which further increase net loss used in the
diluted loss per share calculation. For the year ended June 30, 2022, the basic and diluted loss per share calculation
excluded shares related to stock options, as the exercise price of these options was greater than their market value.
For the fiscal years ended June 30, 2021 the basic and diluted loss per share excluded shares related to stock options
as the inclusion of the stock options had an antidilutive effect.
The following is a reconciliation of basic net loss per share to diluted net loss per share for the fiscal years ended June
30, 2022 and 2021.
| Renalytix plc Annual Report and Financial Statements
73
Year ended 30 June 2022
Year ended 30 June 2021
Basic earnings per share
Average shares outstanding – basic
Convertible debt shares
Adjusted average shares outstanding – diluted
Diluted earnings per share
$ (0.78)
72,861,251
976,048
73,837,496
$ (0.82)
$ (0.43)
71,484,934
-
71,484,934
$ (0.43)
The Company was incorporated on 15 March 2018 with 50,000 ordinary shares of £1.00 each, and as a result of
subdivisions (100:1 on 4 May 2018 and then 4:1 on 24 October 2018), the resulting founding shares became
20,000,000 at £0.0025 each.
17. PROPERTY, PLANT AND EQUIPMENT
Group
Fixtures and fittings
$'000
Cost
At 1 July 2020
Additions
Reclass to computer software
Foreign translation
At 30 June 2021
Depreciation
At 1 July 2020
Charge for the period
Foreign translation
At 30 June 2021
Net book value at 30 June 2021
Cost
At 1 July 2021
Additions
Foreign translation
At 30 June 2022
Depreciation
At 1 July 2021
Charge for the period
At 30 June 2022
Net book value at 30 June 2022
650
782
(146)
1,286
70
138
(3)
205
1,081
1,286
591
-
1,877
205
304
509
1,368
The depreciation charge of $304k related to Property, Plant and Equipment has been charged to administration
expenses ($272k) and cost of goods sold ($32k).
| Renalytix plc Annual Report and Financial Statements
74
18. LEASES
(i) Amounts recognized in the statement of financial position
The balance sheet shows the following amounts relating to leases:
Group
As at 30 June 2022
Group
As at 30 June 2021
Company
As at 30 June 2022
Company
As at 30 June 2021
$'000
$'000
$'000
$'000
Right-of-use assets
Properties
Total right-of-use assets
Lease liabilities
Current
Non-current
Total lease liabilities
355
355
163
202
365
297
297
86
213
299
-
-
-
-
-
-
-
-
-
-
Right-of-use assets have been measured at the amount equal to the lease liability.
Lease liabilities were measured at the present value of the remaining lease payments, discounted using the
Group’s incremental borrowing rate.
(ii) Amounts recognized in the Statement of Comprehensive income
The statement of profit or loss shows the following amounts relating to leases:
Group
As at 30 June 2022
Group
As at 30 June 2021
Company
As at 30 June 2022
Company
As at 30 June 2021
$'000
$'000
$'000
$'000
Depreciation charge -
right-of-use assets
Properties
Total right-of-use
Interest expense (included
in finance cost)
126
126
2
155
155
3
-
-
-
-
-
-
The total cash outflow for leases in the year to 30 June 2022 was $119k (2021: $155k) for the Group and $Nil
(2021: $nil) for the Company.
(iii) The group’s leasing activities and how these are accounted for
The group leases various offices. Rental contracts for offices are made for fixed periods of between 1 and 5
years, but may have extension options as described below.
Lease payments to be made under reasonably certain extension options are also included in the measurement
of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the group, the lessee’s incremental cash rate is used, being
the rate that the individual lessee would forego to release the funds necessary to obtain an asset of similar
value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
| Renalytix plc Annual Report and Financial Statements
75
19. INTANGIBLE FIXED ASSETS
Trademarks, Trade
Names & Licenses
Trade Secrets
$'000
$'000
Development
Costs
$'000
9,466
-
1,087
10,553
1,973
1,030
251
3,254
6,402
-
734
7,136
-
529
6
535
3,223
847
359
4,429
-
305
3
308
Total
$'000
19,091
847
2,180
22,118
1,973
1,864
260
4,097
7,299
6,601
4,121
18,021
10,553
-
(1,274)
9,279
3,254
1,018
(483)
3,789
7,136
-
(861)
6,275
535
688
(125)
1,098
4,429
103
(477)
4,055
308
459
(65)
702
22,118
103
(2,612)
19,609
4,097
2,165
(672)
5,589
5,490
5,177
3,353
14,020
Cost
At 1 July 2020
Additions
Foreign translation
At 30 June 2021
Amortization
At July 2020
Charge for the period
Foreign translation
At 30 June 2021
Net book value
At 30 June 2021
Cost
At 1 July 2021
Additions
Foreign translation
At 30 June 2022
Amortization
At 30 June 2021
Charge for the period
Foreign translation
At 30 June 2022
Net book value
At 30 June 2022
Amortization expense of $2,060,485 has been charged to administration costs and $104,294 has been charged
to cost of goods sold. Amortization expense of $1,864,016 was charged in the prior year ended 30 June 2021.
Licenses entail agreements with Icahn School of Medicine at Mount Sinai for rights to intellectual property and
data to support the KidneyIntelX diagnostic assay. Trade secrets refer to the Company’s acquisition of the
biomarker business from EKF, which includes intellectual property licensed from Joslin Diabetes Centre and
forms a key component of the KidneyIntelX product. Development costs include proprietary software
development and diagnostic assay design for KidneyIntelX.
Assets that are subject to amortization are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for
the amount by which the carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. 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.
| Renalytix plc Annual Report and Financial Statements
76
The Group has tested the carrying value for impairment at the balance sheet date. The recoverable amount was
assessed in the basis of value in use. The assessed value exceeded the carrying value and no impairment loss
was recognized. The key
assumptions in the calculation to assess value in use are future revenues and costs and the ability to generate
future cash flows. Recent working capital projections approved by the Board were used as well as forecasts for
a further four years, followed by an extrapolation of expected cash flows and the calculation of a terminal value.
For prudence the expected growth rate used for longer term growth was zero. The projected results were
discounted at a rate which is a prudent evaluation of the pre-tax rate which reflects current market
assessments of the value of money and the risks specific to the business, reflecting an assessment of the risk-
adjusted weighted average cost of capital of 20%. The headroom in the value in use calculation is not sensitive
to changes in key assumptions.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows. Any impairment loss is charged pro rata to the other assets in the cash
generating unit.
The remaining average useful lives of the intangible assets is as follows:
Trademarks trade names & licenses
Trade secrets
Development Costs
10-15 years
15 years
15 years
The Company holds capitalized development costs with a cost of $4,055,060and net value of $3,352,629 these
projects were placed into service in FY21.
20. INVESTMENTS IN SUBSIDIARIES
Company
At beginning of Period
Capital Contribution relating to share based
payment
Conversion of intercompany loan to equity
investment
Shares in Verici Dx Ltd
At End of Period
Year ended 30 June 2022
Year ended 30 June 2021
$'000
4,588
2,824
81,700
-
89,112
$'000
2,264
2,325
-
(1)
4,588
Investments in Group undertakings are recorded at cost which is the fair value of the consideration paid, less any
impairment. The Company had the following subsidiaries as of 30 September 2022.
Name of Company
Proportion held
Class of shareholding
Nature of business
Renalytix AI Inc.1
100%
Ordinary
Renalytix AI Limited2
100%
Ordinary
Developer of artificial
intelligence-enabled
clinical diagnostic solutions
for kidney disease
Developer of artificial
intelligence-enabled
clinical diagnostic
solutions for kidney
disease
1. Renalytix AI Inc. is incorporated in the United States of America and has their principal place of business at
1460 Broadway, New York, New York 10036. Renalytix AI Inc. is included in the consolidation. The
proportions of voting shares held by the parent company do not differ from the proportion of Ordinary
Shares held.
2. Renalytix AI Limited is incorporated in the Republic of Ireland and has their principal place of business at
29 Lower Patrick Street, Kilkenny, Ireland. Renalytix AI Ltd. is included in the consolidation. The
proportions of voting shares held by the parent company do not differ from the proportion of Ordinary
Shares held.
| Renalytix plc Annual Report and Financial Statements
77
22. INVENTORY
Finished goods
Group
As at 30 June 2022
Group
As at 30 June 2021
Company
As at 30 June 2022
Company
As at 30 June 2021
$'000
1,160
$'000
353
$'000
-
$'000
-
The Directors are of the opinion that the replacement values of inventories are not materially different to the
carrying values stated above. The carrying values above are stated net of impairment provisions of $Nil (30 June
2021: $Nil).
The cost of inventories recognized as expense and included in ‘cost of sales’ amounted to $266k (Year to 30 June
2021: $60k). The Company held no inventories at 30 June 2022 and 30 June 2021.
23. FINANCIAL INSTRUMENTS
(a) Assets at amortized cost
Group
30 June 2022
$'000
Group
30 June 2021
$'000
Company 30
June 2022
Company 30
June 2021
$'000
$'000
Assets as per balance sheet
Security deposits
Intragroup receivable
Cash and cash equivalents
Total
141
-
41,333
41,474
86
-
65,159
65,245
-
-
28,313
28,313
-
84,686
15,063
99,749
Receivables in the analysis above are all categorized as “loans and receivables” for the Group and Company.
(b) Assets at fair value
Assets as per balance sheet
Investment in Verici Dx
Total
Group
30 June 2022
$'000
Group
30 June 2021
$'000
Company 30
June 2022
Company 30
June 2021
$'000
$'000
2,744
2,744
9,295
9,295
2,744
2,744
9,295
9,295
(c) Liabilities at amortized cost
Group
30 June 2022
$'000
Group
30 June 2021
$'000
Company 30
June 2022
Company 30
June 2021
$'000
$'000
Liabilities as per balance sheet
Accounts payable
Accrued expenses
Lease Liabilities
Total
2,460
4,821
365
7,646
1,765
4,887
299
6,951
400
695
-
1,095
622
571
-
1,193
| Renalytix plc Annual Report and Financial Statements
78
(d) Liabilities at fair value
Group
30 June 2022
$'000
Group
30 June 2021
$'000
Company 30
June 2022
Company 30
June 2021
$'000
$'000
Liabilities as per balance sheet
Note Payable
Total
12,342
12,342
-
-
12,342
12,342
-
-
(e) Credit Quality of Financial Assets
The Group is exposed to credit risk from its operating activities and from its financing activities, including
deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
The Group’s maximum exposure to credit risk, due to the failure of counterparties to perform their obligations as
at 30 June 2022, in relation to each class of recognized financial assets, is the carrying amount of those assets as
indicated in the accompanying balance sheets.
Trade Receivables
The credit quality of trade receivables that are neither past due nor impaired have been assessed based on
historical information about the counterparty default rate.
Cash at Bank
The credit quality of cash has been assessed by reference to external credit ratings, based on reputable credit
agencies’ long- term issuer ratings:
AA+
Total
Group
At 30 June 2022
Group
At 30 June 2021
Company
At 30 June 2022
Company
At 30 June 2021
$'000
41,333
41,333
$'000
65,159
65,159
$'000
28,313
28,313
$'000
15,063
15,063
24. TRADE AND OTHER RECEIVABLES
Group
As at 30 June 2022
$'000
Group
As at 30 June 2021
$'000
Company
As at 30 June 2022
$'000
Company
As at 30 June 2021
$'000
Trade Receivables
Due from subsidiaries
Due from affiliates
Total
901
-
75
976
594
-
-
594
-
-
-
-
-
84,686
-
84,686
Due to their short term nature, the Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
| Renalytix plc Annual Report and Financial Statements
79
25. PREPAIDS AND OTHER CURRENT ASSETS
Group
As at 30 June 2022
$'000
Group
As at 30 June 2021
Company
As at 30 June 2022
Company
As at 30 June 2021
$'000
$'000
$'000
1,116
36
1,152
520
-
520
284
16
300
271
-
271
Prepaids
Deferred
Nasdaq Offering
Costs
Prepaids and Other
Current Assets
26. CASH AND CASH EQUIVALENTS
Cash at Bank
Cash and cash equivalents
Group
As at 30 June 2022
Group
As at 30 June 2021
Company
As at 30 June 2022
Company
As at 30 June 2021
$'000
41,333
41,333
$'000
65,159
65,159
$'000
28,313
28,313
$'000
15,063
15,063
The Directors consider that the carrying value of cash and cash equivalents approximates to their fair value.
27. SHARE CAPITAL
Group and Company
Movement
Total Number of
Shares
Ordinary
Shares
$’000
Share Premium
$’000
Total
$’000
15-Mar-18 Formation
4-May-18
100:1 subdivision
24-Oct-18 4:1 subdivision
24-Oct-18 Biomarker business acquisition
6-Nov-18 Placing & offer (listing on AIM)
At 30 June 2019
29-Jul-19 Placing & Secondary Offering
(AIM)
50,000
-
-
50,000
5,000,000
20,000,000
15,427,704
35,427,704
18,388,430
53,816,134
53,816,134
5,600,000
59,416,134
15-May-20 Cancellation of Share premium
-
59,419,134
59,416,134
12,613,500
72,029,634
17,652
150,000
72,047,286
72,197,286
66
-
-
49
60
175
17
-
192
40
-
1
-
-
-
6,547
27,485
34,032
16,597
(50,629)
-
76,094
111
252
66
-
-
6,596
27,545
34,207
17,210
-
192
76,136
111
253
At 30 June 2020
17-Jul-20 Placing & Offering (Nasdaq)
4-Mar-21 Shares issued under the ESPP
25-Jun-21 Exercise of Stock Options
At 30 June 2021
7-Jul-21 Exercise of Stock Options
17-Jul-21 Exercise of Stock Options
31-Aug-21 Shares issued under the ESPP
1-Nov-21 Exercise of Stock Options
31-Mar-22 Shares issued under the ESPP
6-Apr-22 Private Placement
At 30 June 2022
72,197,286
233
76,457
76,500
27,500
5,000
10,920
68,224
22,814
72,224,786
72,229,786
72,240,706
72,308,930
72,380,014
2,428,688
74,760,432
74,760,432
-
-
-
-
-
8
241
46
40
121
112
90
46
40
121
112
90
8,578
85,444
8,586
85,685
Ordinary Shares have a par value of £0.0025 each. All issued shares are fully paid.
| Renalytix plc Annual Report and Financial Statements
80
28. SHARE OPTIONS AND SHARE-BASED PAYMENTS
In November 2018, Company established the Renalytix AI plc Share Option Plan (the “Plan”) and a U.S. Sub-Plan
and Non-Employee Sub-Plan. The Plan provides for the Company to grant options, restricted share awards and
other share-based awards to employees, directors and consultants of the Company. As of June 30, 2021, there
were 2,937,005 shares available for future issuance under the Plan.
The Plan is administered by the board of directors. The exercise prices, vesting and other restrictions are
determined at their discretion, except that all options granted have exercise prices equal to the fair value of the
underlying ordinary shares on the date of the grant and the term of stock option may not be greater than ten
years from the grant date.
With respect to the options granted as of June 30, 2022, 2,984,801 vest equally over twelve quarters following
the grant date, 1,070,100 options which vest 25% on the one year anniversary and equally over twelve quarters
following the one year anniversary and 500,000 which vest 1/12th immediately and the remainder equally over
the remaining eleven quarters. If options remain unexercised after the date one day before the tenth anniversary
of grant, the options expire. On termination of employment, any options that remain unexercised are either
forfeited immediately or after a delayed expiration period, depending on the circumstances of termination. Upon
the exercise of awards, new ordinary shares are issued by the Company.
Details of the share options outstanding during the period are as follows:
General employee share option plan
As at 30 June 2021
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 30 June 2022
Exercisable at 30 June 2022
Vested and expected to vest at 30 June 2022
Average exercise
price per share
(USD)
4.73
10.34
1.89
7.34
5.34
3.72
5.34
Number of
Options
4,265,958
555,000
(100,724)
(165,333)
4,554,901
3,368,195
4,554,901
The fair value of each share option granted has been estimated using a Black-Scholes model and is £1.73 - £6.04
($2.26 - $8.14). The inputs into the model are a weighted average share price of £7.27 ($9.74), exercise price of
£7.16 ($9.59), expected volatility of 66.24%, no expected dividend yield, weighted-average term of 6.0 years and
weighted-average risk-free interest rate of 1.55%. As of 30 June 2022, none of the granted stock options have
been exercised.
The aggregate fair value of the outstanding options is $24,336,546. The Group recognized total expenses of
$6,896,721 ($338,625 within R&D expense and $6,558,096 within G&A expense) relating to equity-settled share-
based payment transactions during the period to 30 June 2022. The weighted average remaining contractual
term of the options is 8.1 years.
29. TRADE AND OTHER PAYABLES
Accounts payable
Due to subsidiaries
Payroll taxes payable
Accrued expenses
Group
As at 30 June 2022
Group
As at 30 June 2021
Company
As at 30 June 2022
Company
As at 30 June 2021
$'000
2,460
-
139
4,682
7,281
$'000
$'000
1,765
-
638
4,249
6,652
400
4,701
-
695
5,796
$'000
623
-
-
571
1,194
The carrying amount of the trade and other payables balances denominated in GBP are £37k for the Group and
Company (2021 - £4k).
| Renalytix plc Annual Report and Financial Statements
81
30. CONVERTIBLE DEBT
In April 2022, the Company issued amortizing senior convertible bonds with a principal amount $21.2 million
due in April 2027 (the "Bonds"). The Bonds were issued at 85% par value with total net proceeds of $18.0
million and accrue interest at an annual rate of 5.5%, payable quarterly in arrears, in cash or ADSs valued at the
ADS Settlement Price at the option of the Company. The Bonds contain various conversion and redemption
features. The initial conversion price for the Convertible Bonds of $8.70 has been set at a 20 per cent. premium
to the Reference ADS Price. The Conversion Price may reset down at 12, 24 and 36 months, depending on share
price performance and save in limited circumstances, the Bonds have a hard floor in the conversion price of
$7.25. Between amortization dates, the Convertible Bond Investor retains the right to advance future
amortization payments, provided that (a) there shall be no amortization advancements during the first 12
months, (b) no more than 2 amortization advancements may occur in any 12 month period, and (c) no more than
1 amortization advancement may occur in any 3 month period.
The Convertible Bond Investor is also permitted to defer up to two amortization payments to a subsequent
amortization date. The Company retains the option to repay any deferred amortization in cash at 100 per cent. of
the nominal amount As of June 20, 2022, the entire principal amount was outstanding. The classification of the
liability between non-current and current reflects management’s expected level of amortization payments
during the year ended 30 June 2023.
On issuance, the Company elected to account for the Bonds at fair value with qualifying changes in fair value
being recognized through the statements of operations until the Bonds are settled. Changes in fair value related
to instrument-specific credit risk are recognized through comprehensive loss until the Bonds are settled. The fair
value of the bonds is determined using a scenario-based analysis that estimates the fair value based on the
probability-weighted present value of expected future investment returns, considering each of the possible
outcomes available to the noteholders, and therefore falls under level 3 of the fair value hierarchy. Significant
assumptions used in the fair value analysis include the volatility rate, risk-free rate, dividend yield and risky
yield. The fair value of the Bonds was determined to be $16.9 million on issuance, which is the principal amount
of the Bonds. On issuance, total debt issuance costs of $1.2 million were immediately expensed as a component
of general and administrative expense in consolidated statement of operations during the year end June 30,
2022. The Company recognized a change in fair value of the Notes related to the instrument-specific credit risk
of $0.5 million in the comprehensive loss and a change in fair value related to non-instrument specific credit risk
of $4.0 million in the consolidated statement of operations during the year ended June 30, 2022.
31. RELATED PARTY TRANSACTIONS
In May 2018, the Company secured its cornerstone license agreement with ISMMS for research and clinical study
work and intended commercialization by the Company. As part of the collaboration, ISMMS became a
shareholder in the Company and has subsequently made equity investments both in the Company’s IPO in
November 2018 and the subsequent sale of ordinary shares in July 2019.
In connection with the formation of Kantaro, the Company entered into a five-year Advisory Services Agreement
(“Advisory Agreement”) pursuant to which the Company has agreed to provide certain advisory services to
Kantaro.
Pursuant to the Kantaro Operating Agreement, Kantaro issued 750 Class A Units to Mount Sinai in exchange for
Mount Sinai granting licenses to Kantaro under certain intellectual property rights of Mount Sinai and 250 Class A
Units to the Company as the sole consideration for the services to be rendered by the Company under the
Advisory Agreement. A portion of the Company’s units are subject to forfeiture if, prior to December 31, 2020,
Kantaro terminates the Advisory Agreement as a result of an uncured material breach of the Advisory Agreement
or in the event the Company is acquired by a hospital or health system that serves all or any portion of the service
areas served by Mount Sinai. The Company determined the fair value of the services at June 30, 2022 to be
provided under the Advisory Agreement was $0.1 million. A gain of $0.01 million was recognized within equity in
gain (losses) of affiliate the accompanying consolidated statements of operations and comprehensive loss.
In addition to the equity granted at formation, the Company and Mount Sinai each committed to making a loan to
Kantaro. Mount Sinai committed to lend an initial amount of $0.3 million and an additional $0.5 million thereafter.
The Company committed to lend an initial amount of $83,333 and an additional $0.2 million thereafter. Each loan
bears interest at a per annum rate equal to 0.25%, compounded monthly, until repaid, and is repayable from the
first amounts that would otherwise constitute cash available for distribution to the members of Kantaro (provided
that each loan repayment will be made, 75% to Mount Sinai and 25% to the Company). In the year ended 30 June
2021, the Company loaned Kantaro the full $250,000 however later recorded a reserve of $175,000 based on
uncertainty regarding collectability and had a remaining $75,000 note receivable at June 30, 2022.
In June 2020, we and Mount Sinai entered into a registration rights agreement pursuant to which we have
granted Mount Sinai the following registration rights:
• Demand Registration on Form F-3 – Mount Sinai is entitled to demand registrations on Form F-3, if we
are then eligible to register shares on Form F-3, including up to two underwritten offerings in any 12-
month period.
• Demand Registration on Form F-1 or Form S-1 – At any time following one year after the completion of
the global offering, if we are not eligible to register shares on Form F-3 or S-3, Mount Sinai is entitled to a
maximum of one demand registration on Form F-1 or Form S-1 during any 12-month period, subject to
specified exceptions.
| Renalytix plc Annual Report and Financial Statements
82
• Piggyback Registration – Mount Sinai is entitled to certain piggyback registration rights, subject to certain
marketing and other limitations in the context of an underwritten offering.
• Expenses – We will pay all registration expenses incident to the performance of our obligations under the
registration rights agreement.
Mount Sinai’s registration rights will terminate at such time as Rule 144, or another similar exception under the
Securities Act, is available for the unlimited public sale of all of Mount Sinai’s registrable securities without any
volume or manner of sale limitations, subject to specified exceptions.
Additionally, Mount Sinai participated in our April 2022 equity offering and purchased 551,724 ADSs. This
purchase was made through the underwriters at the offering price of $7.25 per ADS.
32. CONTINGENT LIABILITIES
The Group has a contract with Icahn School of Medicine at Mount Sinai which give rise to contingent liabilities:
Mount Sinai Collaboration Agreement
The Group is subject to the following one-off milestone payment obligations:
• $1.5 million once worldwide sales of Licensed Products reach $50 million; and
• $7.5 million once worldwide sales of Licensed Products reach $300 million.
In addition, royalties of 4-5% are payable to Mount Sinai on net sales of KidneyIntelX™, and 15% or 25%
(depending on timing) of income from sublicensing. The Group is also subject to an annual data transfer fee of
$50,000.
Joslin Diabetes Center Agreement
The Group has a contract with Joslin Diabetes Center under which the Group is liable for the following costs and
payments:
• 5% royalty on net sales of Joslin Licensed Products and Joslin Licensed Processes;
• 25% of royalties received by the Group from sublicensing;
• A one-off milestone payment of $300,000 once total net sales reach $2 million; and
• A one-off milestone payment of $1 million once total net sales reach $10 million
The aforementioned contingencies have not been recognized as of June 30, 2022 as the probability was deemed
too remote as of the balance sheet date.
33. ULTIMATE CONTROLLING PARTY
The Directors believe there to be no ultimate controlling party.
34. EQUITY METHOD INVESTMENTS
In May 2020, the Group and Mount Sinai entered into the Kantaro Operating Agreement in order to form Kantaro
Biosciences LLC (“Kantaro”) for the purpose of developing and commercializing laboratory tests for the
detection of antibodies against SARS-CoV-2 originally developed by Mount Sinai. In connection with the
formation of Kantaro, the Group entered into the Advisory Agreement, pursuant to which the Group has agreed
to provide certain advisory services to Kantaro.
Pursuant to the Kantaro Operating Agreement, Kantaro issued 750 Class A Units to Mount Sinai in exchange for
Mount Sinai granting licenses to Kantaro under certain intellectual property rights of Mount Sinai and 250 Class
A Units to the Group in respect of the services to be rendered by the Group under the Advisory Agreement. A
portion of the units are subject to forfeiture if, prior to December 31, 2020, Kantaro terminates the Advisory
Agreement as a result of the uncured material breach of the Advisory Agreement or in the event we are acquired
by a hospital or health system that serves all or any portion of the service areas served by Mount Sinai. The
Group account for the investment in Kantaro using the equity method of accounting as the Group can exert
significant influence over, but do not control, Kantaro.
In addition to the equity granted at formation, the Group and Mount Sinai each committed to making a loan to
Kantaro.
Mount Sinai committed to lend an initial amount of $250,000 and an additional $500,000 thereafter. The Group
committed to lend an initial amount of $83,333 and an additional $166,667 thereafter. Each loan bears interest
at a per annum rate equal to 0.25%, compounded monthly, until repaid, and is repayable from the first amounts
that would otherwise constitute cash available for distribution to the members of Kantaro (provided that each
loan repayment will be made, 75% to Mount Sinai and 25% to us). All services provided by the Group under the
Advisory Agreement are subject to the oversight and direction of the board of managers of Kantaro.
Based on sales forecasts, the Company concluded that its equity method investment in Kantaro was impaired
| Renalytix plc Annual Report and Financial Statements
83
due to a shift in focus from COVID antibody testing to promoting vaccination in the United States and European
Union. The forecasts indicate there is a prolonged period of time that Kantaro’s fair value is below the carrying
value of the investment.
(A) Interest in associates and joint ventures
Set out below are the associates and joint ventures of the Group as of 30 June 2022 which, in the opinion of the
directors, are material to the Group. The entities listed below have share capital consisting solely of ordinary
shares, which are held directly by the Group. The country of incorporation or registration is also their principal
place of business, and the proportion of ownership interest is the same as the proportion of voting rights held.
Name of the Entity
Place of
Business/
Country of
Incorporation
% of
Ownership
Interest
Nature of
Relationship
Method of
Measurement
Quoted Fair
Value
Carrying Amount
2022 2021
2022
2021
2022
2021
USA
25% 25%
Joint Venture
Equity
Method
(*)
(*)
$9.5
-
-
-
-
-
-
-
-
-
Kantaro
Biosciences LLC
Total equity
accounted
investments
(*) - Private Entity
- No quoted price
available
(B) Interest in associates and joint ventures
As at
30 June 2022
As at
30 June 2021
Commitments - Joint Ventures
Commitment to provide additional loan to
Kantaro
Total
-
-
-
-
-
-
| Renalytix plc Annual Report and Financial Statements
84
Additional Financial Information
RECONCILIATION OF IFRS TO US GAAP
Since Renalytix’s initial listing on Nasdaq, the Company has followed accounting principles generally accepted in
the United States of America (‘US GAAP’), both for internal as well as external purposes. The information below
is unaudited and does not form part of the statutory accounts.
Renalytix Form 20-F, which is based on US GAAP, contains differences from its Annual Report, which is based on
IFRS.
The Form 20-F and Annual Report are available on the Company’s website (www.renalytix.com). In order to help
readers to understand the difference between the Group’s two sets of financial statements, Renalytix has provided,
on a voluntary basis, a reconciliation from IFRS to U.S. GAAP as follows:
BALANCE SHEET
(in thousands except share and per share amounts)
Assets
Cash
Accounts receivable
Prepaid expenses and other current
assets
Note receivable – Kantaro
Property, plant and equipment, net
Intangibles, net
Investment in Verici
Investment in Kantaro
Right of use asset
Total assets
Liabilities and stockholders’ equity
Current Liabilities:
Note payable – current
Accounts payable
Accrued expenses and other current
liabilities
Accrued expenses – related party
Current lease liability
Payable to Kantaro - current
Deferred Revenue
Note payable – noncurrent
Noncurrent lease liabilities
Total Liabilities
GAAP
As at
30 June 2022
IFRS
As at
30 June 2022
$'000
41,333
901
2,445
75
2,558
-
2,744
9
-
$'000
41,333
901
2,453
75
1,368
14,020
2,744
9
355
50,065
63,258
4,660
2,459
3,060
1,496
-
55
46
7,682
-
19,458
4,660
7,281
-
-
163
55
46
7,682
202
20,089
GAAP vs IFRS
Difference
$'000
-
-
(8)
-
1,190
(14,020)
-
-
(355)
(13,193)
-
4,822
(3,060)
(1,496)
163
-
-
-
202
631
(a)
(b)
(c)
(d)
(e)
(e)
(e)
(d)
(d)
| Renalytix plc Annual Report and Financial Statements
85
Stockholders’ (deficit) equity:
Ordinary shares,
Additional paid in capital
Accumulated other comprehensive
(loss) income
Accumulated deficit
Total stockholders' (deficit) equity
Total liabilities and stockholders’ (deficit)
equity
GAAP
As at
30 June 2022
IFRS
As at
30 June 2022
GAAP vs IFRS
Difference
$'000
228
164,012
(915)
(132,718)
30,607
50,065
$'000
241
97,398
(1,509)
(52,961)
43,169
63,258
(f)
(g)
(h)
(i)
$'000
13
(66,614)
(594)
79,757
12,562
13,193
a. Represents other immaterial presentation differences between US GAAP & IFRS
b. Differences is attributable to capitalized software costs which are recorded as property and equipment under
U.S. GAAP and Intangibles under IFRS.
c. Under IFRS, the acquisition of licenses and subsequent development efforts are capitalized and presented as
intangible assets. Under U.S. GAAP, such costs are expensed as incurred until technological feasibility has been
achieved or the assets are deemed to have future alternative use. In addition to capitalized software costs which
are recorded as property and equipment under US GAAP and Intangibles under IFRS.
d. Represents the adoption of IFRS 16 in connection with the Company’s commercial laboratory in Utah. The
Company has deferred the adoption of ASC 842 under U.S. GAAP until July 1, 2022.
e. Accounts payable and other current liabilities are presented in the aggregate within the Annual report while
broken out separately on the US GAAP 20-F. Difference represents other immaterial presentation differences and
audit adjustments.
f. Represents other immaterial audit adjustments
g. Represents cancellation of share premium account and reduction in accumulated deficit under IFRS in
anticipation of a distribution of FractalDx net assets to the shareholders of Verici in prior year. In addition, stock
based compensation is recognized on a straight line basis under U.S. GAAP and a graded vesting basis under IFRS
which creates timing differences as to when expenses are recorded.
h. Represents the difference in weighted average foreign exchange rates and spot rates used for translation of
financial statements under IFRS and U.S. GAAP.
i. Represents cancellation of share premium and reduction in accumulated deficit under IFRS in anticipation of a
distribution of FractalDx net assets to the shareholders of Verici and differences noted within the Company’s
consolidated statement of operations and comprehensive loss.
| Renalytix plc Annual Report and Financial Statements
86
RECONCILIATION OF NET LOSS
($ thousands)
Net loss in accordance with IFRS
Deferred tax assets
Stock compensation expense
Amortization of intangibles
Other adjustments
Net loss in accordance with US GAAP
Year ended June 2022
(56,732)
7,104
2,389
1,981
(18)
(45,276)
(j)
(k)
(l)
(m)
j. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit
will not be realized based on available evidence. Historically, under U.S. GAAP, a full valuation allowance has
been applied. Historically, under IFRS a partial valuation allowance was applied however a full valuation
allowance was booked in the current year which resulted in the increased tax expense.
k. Stock based compensation is recognized on a straight line basis under U.S. GAAP and a graded vesting basis
under IFRS which creates timing differences as to when expenses are recorded.
l. Amortization expense is higher on the IFRS books as a result of the higher intangible asset balance. Under IFRS,
the acquisition of licenses and subsequent development efforts are capitalized and presented as intangible
assets. Under U.S. GAAP, such costs are expensed as incurred until technological feasibility has been achieved or
the assets are deemed to have future alternative use.
m. The remaining difference represents the aggregation of other immaterial audit adjustments and small
accounting standard difference.
| Renalytix plc Annual Report and Financial Statements
87
Perivan 264681