TIDMGDR
RNS Number : 9552A
Genedrive PLC
30 March 2017
For release: 30 March 2017
Interim Results for the six month period to 31 December 2016
genedrive plc (LSE: GDR), the near patient molecular diagnostics
company, announces today its unaudited interim results for the six
months to 31 December 2016. The first half of the financial year
saw the Company continue investment in its core Genedrive(R)
platform and continue preparations for launch of its test for
Hepatitis C.
Financial Highlights
-- Total revenue and other income of GBP2.9m (2015: GBP2.0m), up 45.0% on prior period
-- Genedrive(R) related income up 71.4% to GBP1.2m (2015: GBP0.7m)
-- Continued investment in Genedrive(R), giving rise to a
reported after tax loss of GBP2.7m (2015: GBP3.3m)
-- Net cash of GBP5.7m at 31 December 2016 (30 June 2016:
GBP1.1m); post GBP6.5m fund raising in July 2016
Operating Highlights
-- Proprietary Genedrive(R) Hepatitis C (HCV) test began external performance assessments
-- Continued positive progress with the US Department of Defense
(DoD) biohazard identifier programme
-- Successful field trials of Genedrive(R) aquaculture testing
programme, performed in collaboration with the Centre for
Environment, Fisheries and Aquaculture Science (CEFAS)
-- Improved first half revenues from our non-Genedrive(R) Services operations
-- Disappointing uptake of MTB/RIF assay in India, in part owing
to sample preparation problems specific to MTB
-- Name change from Epistem Holdings Plc to genedrive plc
completed to reflect strategic focus on becoming a commercial-stage
molecular diagnostics business
-- CE-IVD certification for the Genedrive(R) eIL28B SNP human genotyping test
-- Matthew Fowler appointed as Chief Financial Officer
Recent Developments
-- Genedrive(R) HCV ID test submitted for CE marking after
excellent clinical trial results yielding sensitivity greater than
99% and specificity of 100%
-- GBP0.8m tax credit received post period end
David Budd, CEO of genedrive plc, commented: "The recent period
has seen genedrive plc continue to focus on the significant
opportunity we see in molecular diagnostics with our rapid, point
of need Genedrive(R) system. In Hepatitis C, we are making very
positive progress. Our recent application for CE certification
positions us well to be first to market with a decentralised point
of need HCV qualitative test which would enable real-time treatment
and management of chronic HCV patients with the new generation of
direct acting antivirals.
"Despite the difficulties in accessing the full potential of the
Genedrive(R) system thus far through the MTB/RIF launch, the Board
remains confident of the business strategy. We are excited about
the future of the platform, especially in HCV and pathogen testing,
and its potential in the attractive near patient, decentralized
molecular diagnostics market."
For further details please contact:
genedrive plc
David Budd: CEO +44 (0)161 989 0245
Matthew Fowler: CFO
Peel Hunt LLP
James Steel +44 (0)207 418 8900
Oliver Jackson
Consilium Strategic Communications
Chris Gardner +44 (0)203 709 5700
Matthew Neal
Laura Thornton
genedrive@consilium-comms.com
INTERIM MANAGEMENT REPORT
The period to 31 December 2016 has seen continued reorganisation
and development for genedrive plc as we focus on the significant
opportunity we see in molecular diagnostics and commercialising our
rapid, point of need Genedrive(R) system.
The Genedrive(R) Platform (Diagnostics)
Diagnostics revenue was GBP1.2m up 71.4% from 2015 (2015:
GBP0.7m). This increase is primarily related to pathogen detection
projects with the DoD and with CEFAS.
For Tuberculosis, end user sales engagement in India for the
Genedrive(R) MTB/RIF assay has continued to be challenging. We have
also encountered some performance related issues which are evident
in field use and connected to sample preparation complexities that
are unique to the TB assay. The Company has isolated the issues to
a specific component of the MTB/RIF assay preparation kit and is
now rectifying the problem. There were no unit or assay sales to
our Indian distributor in the period and they continue to operate
from their initial GBP0.2m stocking order. We continue to work to
address the issues and assess our position in the Indian MTB
market.
We have been pleased with the progress on our HCV identification
assay (HCV ID), which is used to identify the presence or absence
of Hepatitis C RNA in a patient sample. Post period end,
independent validation trials performed at Institut Pasteur, Paris,
and Queen's Medical Centre, Nottingham, have yielded excellent
results with an overall sensitivity of greater than 99% and
specificity of 100% over 950 patient samples. These analytical
results served as the basis for our March submission for CE
certification under the EU Medical Devices Directive for
Genedrive(R) HCV ID Kit. We remain confident of approval in the
first half 2017. HCV represents significant potential for the
Company and we are now engaging with key stakeholders and
organisations to support additional performance trials and in
country studies following CE marking. Post approval we have the
potential to be first to market globally with a decentralised point
of need HCV qualitative test, and we intend to lever this position
with careful selection of distributor and territory pairings.
Pathogen detection projects have underpinned the revenue growth
in the period: the US DoD funded collaboration project on biohazard
tests for genedrive plc has continued to be successful and we have
now delivered Genedrive(R) units and assays for field trials in the
US. We generated revenues of GBP0.9m (2015: GBP0.6m) during the
period, and have a project pipeline of approximately GBP1.1m for
the second half of the year. We are hopeful that the project will
lead to further programmes of work.
During the period we obtained CE certification for our IL28B SNP
human genotyping assay. The certification is a further example of
how our technology platform can be put in practice in
pharmacogenomics applications.
Beyond our core human healthcare market, funded field trials of
Genedrive(R) for white-spot disease detection in farmed shrimp were
conducted in collaboration with CEFAS and had very positive
outcomes. The results demonstrate that Genedrive(R) has further
potential as a rapid and cost-effective system for the detection of
infectious diseases in animals. While the Company remains focused
on the human market, we are exploring options to partner or license
Genedrive(R) without having to directly fund or develop the product
for animal usage.
In addition to the core assays of HCV and MTB/RIF, we are
exploring further opportunities with external parties to bring
existing laboratory based tests onto the Genedrive(R) system to
exploit its unique characteristics and potential. While the Company
wishes to remain focussed on the opportunities previously described
to shareholders and investors, there is a proven potential in
adjacent market segments that other companies and specialists may
want to exploit via an 'open-source' model similar to our
achievements in biohazard and aquaculture.
Services Operations
Services revenue was GBP1.7m (2015: GBP1.3m) up 30.7% on the
same period in 2015.
The services business delivers highly specialised testing
comprising of both preclinical and clinical services. The former
involves efficacy testing of potential new drugs in various disease
models (such as inflammatory bowel diseases or various cancers),
whilst the latter involves evaluating RNA and protein biomarkers of
drug treatments. We collaborate with customers to discover and
validate new drug targets or biomarkers indicative of target
engagement. The collaborative programmes can run for several years
and generate a relatively large income, but each also has a natural
finite life cycle.
As previously highlighted, the first half revenue for the prior
year suffered from a change in activity from a major customer. We
have worked hard to replace this revenue and build new customer
collaborations. We have also sought to rebuild the EU market, which
had suffered due to business development staff turnover. Both have
proven a success and we have substantially rebuilt the revenue.
However, the market remains competitive and we remain cautious
about the full year outlook.
With modest investment, the division continued to contribute to
the Group. The board have determined that the best value for the
Group is to divest the Services business. Such divestment is
expected to provide key investment capital for the core
Genedrive(R) platform and enable all the Company's resources to be
focused on Genedrive(R). No disposal has been secured as yet, but
the Group continues to work to secure a disposal on attractive
terms.
Corporate Developments
The period saw the completion of our name change from Epistem
Holdings Plc to genedrive plc, in July, and we also appointed
Matthew Fowler as Chief Financial Officer in September. Mathew
joined genedrive plc with over 15 years' experience in senior
financial positions in the manufacturing, power and support
services industries. John Rylands stepped down from the board in
November 2016. We thank him for his work at the Company and wish
him well for the future.
Financial Results
Results for the first six months delivered revenue and other
income of GBP2.9m (2015: GBP2.0m). Research and development costs
were GBP2.4m (2015: GBP1.9m) and the increases reflect the
continued investment in our Genedrive(R) technology. Other costs
were GBP2.9m (2015: GBP3.2m) and giving an operating loss for the
period of GBP2.4m (2015: GBP3.1m).
Financing costs of GBP0.6m (2015: GBP0.5m) relate to the dollar
denominated Global Health Investment Fund (GHIF) convertible bond
and are GBP0.2m of cash interest and GBP0.4m of foreign exchange
losses. An amendment to the GHIF convertible bond was signed in
July 2016 and gives the Group the option to defer future interest
payments; second half interest payable will be lower than the first
half. After financing costs, the loss before taxation was GBP3.0m
(2015: GBP3.6m). This reduces to GBP2.7m (2015: GBP3.3m) after
estimating the taxation credit. The basic loss per share was 14.8p
(2015: 31.7p)
Cash Resources
Operating cash outflows were GBP1.9m (2015: GBP2.5m). Working
capital contributed GBP0.6m (2015: nil) to give a net cash outflow
from operations of GBP1.3m (2015: GBP2.5m). Working capital
movements were mainly owing to debtors as the period benefitted
from a movement to monthly invoicing on the DoD contract. Interest
outflows were GBP0.2m (2015: GBP0.1m).
There was no cash movement from tax (2015: GBP nil), tax debtors
of GBP0.8m were received post period end. In July 2016 the Company
raised GBP6.0m after costs, from the placement of 8,125,000 new
ordinary shares. The Group closed the period with net cash of
GBP5.7m (30 June 2016: GBP1.1m).
Balance Sheet
Balance sheet Net assets at 31 December 2016 totalled GBP7.1m
(30 June 2016: GBP3.8m). The increase in share capital of GBP6.0m
is directly from the share issue in July 2016. Offsetting this
increase was the consolidated loss for the period GBP2.7m (2015:
GBP3.3m loss).
Principal Risks and Uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical results.
The Directors do not consider that these principal risks and
uncertainties have changed materially since publication of the
annual report for the year ended 30 June 2016; a more detailed
explanation of the risks for the Group can be found on page 19 of
that annual report.
Outlook
The Genedrive(R) HCV ID programme represents substantial
commercial potential supported by excellent clinical study results
supporting its CE Mark application. The focus to the end of the
year for HCV will be designing and defining the best routes to
market to maximise the potential HCV offering. The overall
potential for MTB/RTF will be reviewed alongside that of HCV as the
board makes decisions about where to focus the Group's resources.
The Group will continue to review the potential of the MTB/RIF
product in India. Ongoing commercial issues coupled with the recent
test-specific sample preparation problems make short term revenue
growth unlikely.
The Board will continue to explore disposal options for the
Services business as a method of funding the wider Genedrive(R)
investment. If an attractive disposal cannot be secured the Group
will seek alternative non-dilutive funding to bridge the gap to
full commercialisation of the Genedrive(R) product.
Despite the difficulties in accessing the full potential of the
Genedrive(R) system thus far through the MTB/RIF launch, the Board
remains confident of the business strategy. We are excited about
the future of the platform, especially in HCV and pathogen testing,
and its potential in the attractive near patient, decentralized
molecular diagnostics market.
David Budd
Chief Executive
Dr I Gilham
Chairman
30 March 2017
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2016
Six months Six months
ended ended Year Ended
31 December 31 December 30 June
2016 2015 2016
Unaudited Unaudited Audited
Notes GBP000 GBP000 GBP000
Revenue 1,645 1,177 3,094
Other Income - development
grant funding 1,237 793 1,969
----------- ----------- ----------
Revenue & other income (3) 2,882 1,970 5,063
Contract costs (1,837) (1,904) (3,285)
Discovery and development
costs (2,360) (1,851) (4,836)
General administrative
costs (1,094) (1,330) (2,368)
Operating loss (4) (2,409) (3,115) (5,426)
Net financing costs (5) (614) (512) (1,071)
----------- ----------- ----------
Loss on ordinary
activities before
taxation (3,023) (3,627) (6,497)
Taxation on ordinary
activities 320 278 582
----------- ----------- ----------
Total Comprehensive
Income for
----------- ----------- ----------
the financial period (2,703) (3,349) (5,915)
----------- ----------- ----------
Loss per share (pence)
Basic (6) ( 14.8)p (31.7)p (56.2)p
Diluted (6) ( 14.8)p (31.7)p (56.2)p
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2016
Employee
Share
Share Incentive Share Reverse
Share Premium Plan Options Acquisitions Retained
Capital Account Reserve Reserve Reserve Earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 July 2015 158 20,088 (196) 1,197 (2,484) (9,218) 9,545
------- ------- --------- ------- ------------ -------- -------
Exercise of options - - - - - - -
Purchase of own shares (SIP) - - - - - - -
Equity-settled share-based payments - - - 98 - - 98
Total comprehensive expense for the financial
period - - - - - (3,349) (3,349)
------- ------- --------- ------- ------------ -------- -------
At 31 December 2015 158 20,088 (196) 1,295 (2,484) (12,567) 6,294
------- ------- --------- ------- ------------ -------- -------
Forfeit of options - - - (6) - - (6)
Purchase of own shares (SIP) - - (44) - - - (44)
Lapsed share options - - - (83) - 83 -
Equity- settled share-based payments - - - 75 - - 75
Total comprehensive expense for the financial period - - - - - (2,566) (2,566)
--- ------ ----- ----- ------- -------- -------
At 1 July 2016 158 20,088 (240) 1,281 (2,484) (15,050) 3,753
--- ------ ----- ----- ------- -------- -------
Issue of shares 122 5,899 - - - - 6,021
Equity -settled share based payments & SIP scheme - - 37 16 - (37) 16
Total comprehensive expense for the financial period - - - - - (2,703) (2,703)
--- ------ ----- ----- ------- -------- -------
At 31 December 2016 280 25,987 (203) 1,297 (2,484) (17,790) 7,087
--- ------ ----- ----- ------- -------- -------
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 31 December 2016
31 December 31 December 30 June
2016 2015 2016
(unaudited) (unaudited) (audited)
Note GBP000 GBP000 GBP000
Non-current assets
Intangible assets 5,806 6,726 6,273
Plant and equipment 635 750 713
Deferred taxation - 30 -
----------- ----------- ---------
6,441 7,506 6,986
Current assets
Inventories 243 276 202
Trade and other receivables 2,288 2,494 2,797
Tax receivables 1,161 1,047 757
Cash and cash equivalents 5,664 2,293 1,114
----------- ----------- ---------
9,356 6,110 4,870
----------- ----------- ---------
Liabilities
Current liabilities
Deferred income (205) (60) (88)
Trade and other payables (1,800) (1,535) (1,774)
Deferred consideration
payable in shares (7) - (1,250) -
(2,005) (2,845) (1,862)
----------- ----------- ---------
Net current assets 7,351 3,265 3,008
Total assets less current
liabilities 13,792 10,771 9,994
----------- ----------- ---------
Non-current liabilities
Deferred consideration
payable in shares (1,250) - (1,250)
Convertible bond (8) (5,455) (4,477) (4,991)
(6,705) (4,477) (6,241)
----------- ----------- ---------
Net assets 7,087 6,294 3,753
----------- ----------- ---------
Capital and reserves
Called-up equity share
capital 280 158 158
Share premium account 25,987 20,088 20,088
Employee share incentive
plan reserve (203) (196) (240)
Share options reserve 1,297 1,295 1,281
Reverse acquisition
reserve (2,484) (2,484) (2,484)
Retained earnings (17,790) (12,567) (15,050)
----------- ----------- ---------
Total shareholders'
equity 7,087 6,294 3,753
----------- ----------- ---------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 December 2016
31 December 31 December 30 June
2016 2015 2016
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Cash flows from operating
activities
Operating loss for
the period/ year (2,409) (3,115) (5,426)
Depreciation, amortisation
and impairment 577 590 1,174
Research tax credits (85) (84) (151)
Share based payment
expense 20 98 167
Operating (loss) before
changes in working capital
and provisions (1,897) (2,511) (4,236)
Increase in inventories (41) (113) (39)
Decrease/(increase)
in trade and other
receivables 506 (303) (606)
Increase in deferred
income 117 10 38
Increase in trade and
other payables 27 412 651
------------ ------------ ----------
Net cash outflow from
operations (1,288) (2,505) (4,192)
Tax received - - 691
------------ ------------ ----------
Net cash outflow from
operating activities (1,288) (2,505) (3,501)
Cash flows from investing
activities
Finance income - interest
received 9 11 7
Acquisition of fixed
assets (33) (21) (164)
------------ ------------ ----------
Net cash outflow from
investing activities (24) (10) (157)
------------ ------------ ----------
Cash flows from financing
activities
Proceeds from share
issue 6,021 - -
Finance costs - interest
paid (159) (132) (304)
Purchase of own shares - - (44)
Net cash inflow/(outflow)
from financing activities 5,862 (132) (348)
------------ ------------ ----------
Net increase/(decrease)
in cash equivalents 4,550 (2,647) (4,006)
Foreign exchange adjustments - 12 192
Cash and cash equivalents
at beginning of period/
year 1,114 4,928 4,928
------------ ------------ ----------
Cash and cash equivalents
at end of period/ year 5,664 2,293 1,114
------------ ------------ ----------
Analysis of net funds
Cash at bank and in
hand 5,664 2,293 1,114
------------ ------------ ----------
Net funds 5,664 2,293 1,114
------------ ------------ ----------
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS
1. General information
The interim financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union and therefore comply with
Article 4 of the EU IAS Regulation, International Financial
Reporting Interpretations Committee ("IFRIC") interpretations and
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The interim financial statements have not
been prepared in accordance with IAS 34, Interim Financial
Reporting, which has not been adopted by the Group. No new IFRS
standards or amendments or interpretations have become effective in
the period covered by this Interim Report.
These interim financial statements have not been audited or
reviewed in accordance with International Standard on Review
Engagement 2410, issued by the Auditing Practices Board and do not
constitute statutory accounts within the meaning of section 435 of
the Companies Act 2006. The comparative figures for the financial
year ended 30 June 2016 are not the statutory accounts for the
financial year but are abridged from those accounts which have been
reported on by the Group's auditors and delivered to the Registrar
of Companies. The report of the auditors was unqualified.
These interim financial statements were approved by the Board of
Directors on 30 March 2016.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods represented in
these consolidated financial statements.
2. Significant accounting policies
Basis of consolidation
The consolidated financial statements consolidate those of the
Company and its subsidiaries (together referred to as the "Group").
They are presented in pounds sterling and all values are rounded to
the nearest one thousand pounds (GBPk) except where otherwise
indicated.
Subsidiaries are entities controlled by the Group. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the
date that control ceases. Transactions between Group companies are
eliminated on consolidation.
On 16 March 2007, Epistem Holdings Plc merged with Epistem
Limited, when the shareholders of Epistem Limited exchanged their
shares for equivalent shares in Epistem Holdings Plc. As Epistem
Holdings Plc was newly incorporated at the time of the transaction
under the terms of IFRS 3 'Business Combinations', this transaction
has been accounted for as a reverse acquisition, on the basis that
the shareholders of Epistem Limited gained a controlling interest
in the Group. The financial statements therefore represent a
continuation of the financial statements of Epistem Limited.
Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation were the same as those
that applied to the consolidated financial statements for the year
ended 30 June 2016, with the exception of changes in estimates that
are required in determining the provision for taxation.
Revenue recognition
a. Contract revenue
Contract revenue is recognised by reference to the stage of
completion of the transaction at the end of the reporting
period.
b. Collaboration & licensing revenue
Contractually agreed upfront payments and similar non-refundable
payments in respect of collaboration or licence agreements which
are not directly related to on-going research activity are recorded
as deferred income and recognised as revenue over the anticipated
duration of the agreement. Where the anticipated duration of the
agreement is modified, the period over which revenue is recognised
is also modified.
Non-refundable milestone and other payments that are linked to
the achievement of significant and substantive technological or
regulatory hurdles in the research and development process are
recognised as revenue upon the achievement of the specified
milestone.
Income which is related to on-going research activity is
recognised as the research activity is undertaken, in accordance
with the contract.
c. Other Income - development grant funding
Income receivable in the form of government grants to fund
product development is recognised as development grant funding over
the periods in which the Group recognises, as expenses, the related
eligible costs which the grants are intended to compensate and when
there is reasonable assurance that the Group will comply with the
conditions attaching to them and that the income will be received.
Government grants whose primary condition is that the Group should
purchase or otherwise acquire non-current assets are recognised as
deferred revenue in the Consolidated Balance Sheet and transferred
to the Consolidated Statement of Comprehensive Income on a
systematic and rational basis over the useful lives of the related
assets.
Research and development
Research expenditure is written off as it is incurred.
Development expenditure is written off as it incurred up to the
point of technical and commercial validation. Thereafter, costs are
carried forward as intangible assets, subject to having met the
following criteria - technical feasibility, intention and ability
to sell the product or model and the availability of resources to
complete the development. All intangible assets are subject to
impairment review and amortisation in each financial reporting
period. In assessing value in use, the estimated future cash flows
are discounted to their net present values using a pre-tax discount
rate that reflects current market assessments of the time value of
money and the risks specific to that asset.
Intangible assets
Intangible assets are stated at cost less accumulated
amortisation and any accumulated impairment losses. Amortisation is
calculated so as to write off the cost of an intangible asset, less
its estimated residual value, over the useful economic life of that
asset. All intangible assets are subject to impairment review and
amortisation in each financial reporting period.
Foreign currencies
Transactions in foreign currencies are translated at the
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the balance sheet
date. Non-monetary items carried at fair value and denominated in
foreign currencies are retranslated at the rates prevailing on the
date when fair value is determined.
Exchange differences arising on the settlement of monetary items
and on the retranslation of monetary items are taken to the
Consolidated Statement of Comprehensive Income. Exchange
differences arising on non-monetary items, carried at fair value,
are included in the income statement, except for such non-monetary
items in respect of which gains and losses are recorded in
equity.
Share-based payments
The Group issues equity settled and cash-settled share-based
payments to certain employees (including directors). Equity settled
share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the equity
settled share-based payments is expensed on a straight-line basis
over the vesting period, together with a corresponding increase in
equity, based upon the Group's estimate of the shares that will
eventually vest.
Fair value is measured using the Black-Scholes pricing model.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Where the terms of an equity settled transaction are modified,
as a minimum an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any increase in
the value of the transaction as a result of the modification, as
measured at the date of modification.
Where an equity settled transaction is cancelled, it is treated
as if it had vested on the date of the cancellation, and any
expense not yet recognised for the transaction is recognised
immediately. However, if a new transaction is substituted for the
cancelled transaction, and designated as a replacement transaction
on the date that it is granted, the cancelled and new transactions
are treated as if they were a modification of the original
transaction, as described in the previous paragraph.
Cash settled share based payments are fair valued at the date
services are delivered. A liability is created on the balance sheet
for the value received. Until the liability is settled, the fair
value is adjusted at each accounting period with changes reported
in the profit and loss for that period.
Financial instruments (including Convertible bond)
Financial instruments are classified and accounted for,
according to the substance of the contractual arrangement, as
either financial assets, financial liabilities or equity
instruments. An equity instrument is any contract that evidences a
residual interest in the assets of the Company after deducting all
of its liabilities.
The Company has in issue a convertible bond which is a compound
financial instrument comprising a liability component, or debt
host, and an equity derivative component.
On initial recognition, convertible bonds are recorded at fair
value net of issue costs. The initial fair value of the debt host
is determined using the market interest rate applied by a market
participant for an equivalent non-convertible debt instrument.
Subsequent to initial recognition, the debt host is recorded using
the effective interest method until extinguished on conversion or
maturity of the bonds.
Equity derivatives embedded in the convertible instruments which
are required to be recorded as financial liabilities are initially
recognized at fair value. At each reporting date, the fair values
of the derivative are reassessed by management. Where there is no
market for such derivatives, the Company uses option pricing models
to measure the fair value.
Finance costs of the debt host are included in Finance costs and
income. Similarly, gains or losses on the value of the derivative
are also included in Finance costs and income.
The Group's convertible bond is a compound financial instrument,
comprising a liability component and an equity component. The fair
value of the liability component was estimated using the prevailing
interest rate at the date of issue for similar non-convertible
instruments. The difference between the proceeds of issue of the
convertible bond and the fair value assigned to the liability
component, representing the embedded option to convert the
liability into Company's ordinary shares, is included in
equity.
The interest expense on the liability component is calculated by
applying applicable market rates for similar non-convertible debt
prevailing at the dates of issue to the liability components of the
instruments.
The difference between this amount and the actual interest paid
is added to the carrying amount of the liability component and is
included in finance charges together with the interest payable.
3. Revenue and Other Income
Income receivable in the form of Government grants to fund
product development is recognised as development grant funding when
the related eligible costs are incurred and recognised, as detailed
below.
31 December cember 31 December 30 June
2016 2015 2016
GBP000 GBP000 GBP000
Revenue 1,645 1,177 3,094
Other income - development grant funding 1,237 793 1,969
------------------- ------------ --------
Revenue & other income 2,882 1,970 5,063
------------------- ------------ --------
4. Business segments
Preclinical Research Pharmaco- genomics Diagnostic Segment Admin-istrative Total
Services Services Costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 31
December 2016
--------------------- --------------------- ------------------- ---------------- ----------
Revenue and other
income 903 742 1,237 - 2,882
--------------------- --------------------- ------------------- ---------------- ----------
Trading result 53 65 (767) (1,183) (1,832)
Less depreciation
and amortization (62) (28) (441) (46) (577)
Operating (loss)/
profit (9) 37 (1,208) (1,229) (2,409)
Net Finance costs (614)
--------------------- --------------------- ------------------- ---------------- ----------
Loss on ordinary
activities before
taxation (3,023)
Taxation
Loss for the
financial 320
--------------------- --------------------- ------------------- ---------------- ----------
Loss for the
financial year (2,703)
--------------------- --------------------- ------------------- ---------------- ----------
Preclinical Research Pharmaco- genomics Diagnostic Segment Admin-istrative Total
Services Services Costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 31
December 2015
--------------------- --------------------- ------------------- ---------------- ----------
Revenue and other
income 1,001 271 698 1,970
--------------------- --------------------- ------------------- ---------------- ----------
Trading result 58 (331) (945) (1,294) (2,525)
Less depreciation
and amortization (74) (30) (443) (36) (590)
--------------------- --------------------- ------------------- ---------------- ----------
Operating loss (16) (381) (1,388) (1,330) (3,115)
--------------------- --------------------- ------------------- ---------------- ----------
Net Finance costs (512)
--------------------- --------------------- ------------------- ---------------- ----------
Loss on ordinary
activities before
taxation (3,627)
Taxation
Loss for the
financial 278
--------------------- --------------------- ------------------- ---------------- ----------
Loss for the
financial period (3,349)
--------------------- --------------------- ------------------- ---------------- ----------
Preclinical Research Pharmaco- genomics Diagnostic Segment Admin-istrative Total
Services Services Costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Twelve months ended
30 June 2016
--------------------- ---------------------- ------------------- ---------------- --------
Revenue and other
income 2,010 1,147 1,906 - 5,063
--------------------- ---------------------- ------------------- ---------------- --------
Trading result 113 (38) (1,995) (2,332) (4,252)
Less depreciation and
amortization (62) (141) (885) (86) (1,174)
--------------------- ---------------------- ------------------- ---------------- --------
Operating profit/
(loss) 51 (179) (2,880) (2,418) (5,426)
--------------------- ---------------------- ------------------- ---------------- --------
Net Finance costs (1,071)
--------------------- ---------------------- ------------------- ---------------- --------
Loss on ordinary
activities before
taxation (6,497)
Taxation
Loss for the
financial 582
--------------------- ---------------------- ------------------- ---------------- --------
Loss for the
financial period (5,915)
--------------------- ---------------------- ------------------- ---------------- --------
5. Finance costs
31 December cember 31 December 30 June
2016 2015 2016
GBP000 GBP000 GBP000
Movement in fair value of derivative embedded in convertible bond - - 37
Finance cost of convertible bond including interest payable (159) (252) (304)
Foreign exchange movement in convertible bond (464) (199) (272)
Foreign exchange surplus/losses - (68) (731)
Accounting adjustment to Convertible Bond finance cost - - 192
Interest receivable 9 7 7
Financing income and costs (614) (512) (1,071)
------------------- ------------ --------
6. Earnings per share
The basic earnings per share is calculated by dividing the
earnings attributable to ordinary shareholders for the year by the
weighted average number of ordinary shares in issue during the
year. The weighted average number of shares in issue during the
period was 18,245,457 (2015: 10,010,564,446).
7. Deferred consideration payable in shares
The deferred consideration relates to the provision of
GBP1,250,000 in respect of shares in the Company which is
anticipated to be due following the revaluation of the earn-out
payable in respect of the acquisition of Visible Genomics Limited
in 2010. The details of the acquisition of Visible Genomics Limited
is detailed more fully in the Annual Report and Accounts for the
Group.
At 30 June 2016 the Directors reviewed the terms of the earn-out
payable and considered that the criteria would be met during a
period greater than 12 months but less than five years following
the balance sheet date. The liability was therefore reclassified as
non-current at this date.
8. Convertible Bond
On 23 June 2016, the Company and the Global Health Investment
Fund 1 LLC ("GHIF" or the "bond holder") entered into a Deed of
Amendment and Restatement of the 2014 Convertible Bond Purchase
Agreement ("Agreement"). The principal effect of the Deed of
Amendment are:
The maturity date of the GHIF bond is extended by two years to
21 July 2021. The GHIF bond is split into two tranches, with the
first tranche of $2.0m having a conversion price of GBP1.50 per
ordinary share. The second tranche of $6.0m has a conversion price
remaining at GBP4.89 per ordinary share.
In addition, for interest periods ending on or before 21 January
2019 the Company can elect to pay none or a portion of the 5%
interest payable on the accrued and outstanding principal amount of
the GHIF bond and instead capitalise and compound such outstanding
interest until the date on which the GHIF bond is repaid or
converted into ordinary share. During the period the Company
elected to pay no interest on the bond and instead capitalised the
outstanding interest.
The details of the GHIF bond and the Deed of Amendment entered
into during July 2016 can be found in the 2016 Annual Report and
Accounts for the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUWCWUPMPWB
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