Last checked at 11 Oct 2016 07:00
RNS
For release: 11 October 2016
Genedrive plc ("genedrive" or the "Company")
Preliminary Results for the year ended 30 June 2016 (unaudited)
Genedrive plc (LSE: GDR), the near patient molecular diagnostics company which recently changed its name from Epistem Holdings Plc, is pleased to announce today its unaudited preliminary results for the year ended 30 June 2016.
In 2015/16, the Company achieved significant growth in revenue driven by development income related to Genedrive®, its novel near patient PCR molecular platform, alongside the continued re-focussing of the Company on the attractive market opportunities which Genedrive® offers. The period saw the launch of the Genedrive® tuberculosis (TB) and associated antibiotic resistance test in India. David Budd has been appointed as CEO bringing strong diagnostics management experience to the Company. Shortly after the year end, in July 2016, the Company completed an oversubscribed £6.0m (net) Placing, following which, on 25 July, the Company changed its name to genedrive plc.
Financial Highlights
· Growth in turnover of 12% to £5.0m (2015: £4.5m) at the top end of previous guidance.
· Strong growth in Genedrive® development income of £1.9m (2015: £0.9m) principally driven by the US Department of Defense handheld biohazard identification programme.
· No distributor sales to India in the year (2015: £0.2m.) Our distributor continues to operate from their initial distributor stocking order of £0.2m.
· Reduced Service income of £3.1m (2015: £3.6m). Preclinical Service income of £2.0m (2015: £2.3m). Pharmacogenomics Service income of £1.1m (2015: £1.3m).
· Operating loss of £5.4m (2015: £4.0m) following increased Development and Administrative costs to support the re-focussing of the Company.
· £6.5m (£6.0m net) fundraising announced on 23 June 2016 with proceeds received by the Company after the year end.
· Cash reserves at 30 June 2016 of £1.1m (30 June 2015: £4.9m). Cash reserves at 30 June 2016 plus net proceeds of placing amounted to £7.1m.
· As part of the fundraising, the terms of $8m GHIF Convertible Bond were amended with the bond's maturity date extended to 2021 from 2019, allowing for deferral and rolling up of interest due in the periods to July 2019.
Operational Highlights
· The Indian launch of the Genedrive® MTB/RIF test commenced in April 2016. Whilst end user sales are yet to engage, early interest is in line with expectations. Work is ongoing to refine the sample preparation process as well as the training and commercialisation activities, based on in-market experience. We are pleased to report that positive post-market surveillance studies confirm that the Genedrive® MTB test is performing in line with its product performance claims.
· Development of the next Genedrive® test for Hepatitis C (HCV) remains on track. The Company undertook successful initial validation studies of the HCV test at Institut Pasteur in February 2016, paving the way for clinical testing of the assay. Initial CE-IVD approval of the HCV test is scheduled for March/April 2017.
· Successful clinical trial results of Genedrive® IL28B human-genotyping test in conjunction with Institut Pasteur at Hospital Cochin, Paris announced in May 2016. Announcement of adoption of the Genedrive® IL28B test in clinical trials being conducted by STOP-HCV campaign.
· Successful progress in the US Department of Defense Programme to Develop Genedrive® biohazard identification tests triggers commencement of next $2.9m phase.
· Successful field validation of aquaculture test for detection of White spot disease in shrimps in collaboration with the Centre for Environment, Fisheries and Aquaculture Science (CEFAS).
· Detailed strategic review of the Company's Preclinical & Pharmacogenomics Services operations commenced against a background of robust contract wins.
· David Budd joined as CEO in March 2016 bringing 20 years of international commercial and operational experience in the diagnostics and medical devices field.
· Review and redirection of Group management organisation focussing the Company on the Genedrive® molecular diagnostic product range.
· The Group was renamed genedrive plc on 22 July 2016. The Company's Services operations will continue to trade under the Epistem brand.
· Post-period end, Matthew Fowler appointed as Chief Financial Officer.
David Budd, CEO of genedrive plc, commented: "The year has seen us take further significant strides towards realising the potential of the Genedrive® platform to bring the strength of hospital-based, central laboratory diagnostics close to the point of need and near patient setting. We have begun the launch of our MTB/RIF assay in India, our first commercial market, and, whilst this has been challenging, I am confident that we will make progress in securing support for the roll out of our TB and HCV tests during the current financial year. We also intend to make progress in the development of partnerships to bring assays to the Genedrive® platform which will see effective capital deployment in the extension of the Genedrive® range of tests."
This announcement includes inside information.
- Ends -
For further details please contact:
genedrive plc
David Budd: CEO +44 (0)161 989 0245
John Rylands: Finance Director
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
Chairman's Statement
I am very pleased to report on the progress which the Company has made since my last report.
Our key priorities during the period have been to continue the process of re-focussing the Company on the highly attractive opportunities which the Genedrive® diagnostics platform offers in the market for decentralised, near patient diagnostic tests, and ensuring the success of its commercial launch and continued development.
We have begun the launch of our MTB/RIF assay in India, our first commercial market. While we have encountered challenges not uncommon in the launch of new diagnostics products, early interest in the market has been encouraging and our post-market surveillance studies have confirmed that the Genedrive® test offers an acceptable, low cost and accessible alternative for MTB/RIF testing.
We remain confident in the potential of the Genedrive® MTB/RIF assay in what are significant market opportunities, and are working to develop further commercialisation efforts and improve certain technical aspects of the product based on our in-market experience.
We also report on the continued broader validation of the Genedrive® platform, with the development of our HCV test on track for CE Marking around March/April 2017 and significant progress seen in our US Department of Defense project for the development of Genedrive® as a handheld test for biohazard identification.
Last year, we announced the conclusion of our collaboration with University of Maryland Baltimore (UMB) in Radiation Biodefence and this has impacted our Services income. However, significant progress towards replacing this income has been achieved. Also, as previously announced, we have appointed advisors to undertake a review of our Services operations and will update on the progress of the review in the coming months.
The period has seen the appointment of David Budd as CEO, bringing over 20 years of international commercial and operational experience in the diagnostics and molecular devices field to the Company and strengthening our ability to exploit fully the opportunity which our Genedrive® platform represents. David's experience and focus is already having a significant impact across the Company.
Furthermore, the £6.5m (£6.0m net) fundraising approved in July 2016 has significantly strengthened our financial position.
On behalf of the Board, I would like to thank our staff, investors and customers for their commitment and support over the past year and we look forward to updating investors on our progress over the coming year.
Dr Ian Gilham
Chairman
11 October 2016
Chief Executive's Review
In my first Chief Executive's review, I am able to report on the considerable advances the Company has made over the period towards becoming a commercial stage molecular diagnostics business. That step change in focus has been reflected in our change of name to genedrive plc which shareholders approved in July 2016.
The Genedrive® Platform (Diagnostics)
Tuberculosis
The period under review included the Indian launch of the Genedrive® MTB/RIF assay in April 2016 under an import licence from the Drug Controller General of India (DCGI). This licence was obtained on the basis of external clinical studies approved by the DCGI.
In support of commercialisation, we have undertaken further post-market surveillance studies in India. These studies have confirmed the Genedrive® MTB/RIF test is performing in line with our product performance claims and offers an acceptable, low cost and accessible alternative for MTB/RIF testing.
Early interest from Indian laboratories post-launch is in line with our assessment of the market but the sales cycle is proving longer than we had anticipated and user sales have yet to engage. We have identified the need to establish the right user training and address some variable performance in the sample preparation process. While we expected a gradual ramp up in sales in the early months post launch, we booked no new sales to our distributor, Xcelris Laboratories Ltd, following the £0.2m stocking order in 2015.
We are working closely with Xcelris to address the commercial challenges. The product launch phase initiated a programme of product based training for Xcelris' sales team, followed up with a programme of customer site demonstrations to establish initial reference sites. In response to slower than anticipated sales, we are taking steps to further align MTB specific product training for the distributer and customers aligned to their level of experience. We now directly employ four in-country trainers (all Indian nationals) to support demonstration and post-sale processes.
We are also evaluating additional distribution arrangements, should we consider alternatives are necessary in order to drive sales of the Genedrive® platform in India.
Alongside these near-term actions in support of commercialisation, we have commenced a non-capital intensive development programme to address certain product characteristics related to MTB sputum sample preparation to ensure the full expected market is ultimately available.
Our initial focus continues to be on small and medium-sized decentralised laboratories. These are predominantly in the private sector, which is presently the largest market by revenue and is where we believe our cost will be a competitive advantage. In connection with the sample refinements above, we are also exploring appropriate expanded public markets for which we will engage further Key Opinion Leaders (KOLs) and subsequently deploy commercial teams. We remain confident in the potential of the Genedrive® MTB/RIF test in the Indian market.
Hepatitis C (HCV)
Following continued positive progress, the Company's research and development team is working to achieve CE Marking for the HCV assay in anticipation of phase 1 launch in the EU in 2017. With this approval, we will begin KOL engagement and apply for regulatory approval for product launch in resource limited settings, where access to laboratory equipment is less available. In February, we announced successful external assessment of the Genedrive® HCV test at the Institut Pasteur, Paris, which allowed for the start of performance trials required to achieve CE Marking.
A programme of independent validation trials in Scotland, England, France and Spain is planned for the test which we anticipate will yield results around which we can conclude agreements for the distribution of the test. The Company is currently in discussion with both international and country specific partners for distribution opportunities.
The Product development team is progressing new low-cost technology to develop a disposable plasma separation unit that would deliver plasma from a minimally invasive finger stick collection of blood without the need for centrifuge and the more invasive vial of blood which centrifuge requires. The successful development of this technology will remove a major barrier to tests that require plasma at the point-of-care or point-of-need used outside of a laboratory. We are pleased with progress being made with the development of this minimally invasive disposable unit and are targeting to make this available to support phase 2 of the commercial launch.
Pathogen Detection
The Company can report excellent progress in our US Department of Defense funded collaboration to develop biohazard tests for Genedrive®. We have booked revenues in the financial year of $2.2m for the first phase of the project and announced, in March 2016, the outline approval for the next $2.9m phase which, subject to continued technical progress, we expected to be largely undertaken during the current financial year. The project represents significant external validation for our development capability and processes as well as extensive enhancement of our development know-how and supply chain. The terms of reference for the programme have been set by US Department of Defence but do not indicate the level of future sales which may arise from continued successful development.
The Company is also collaborating with the Centre for Environment, Fisheries and Aquaculture Science (CEFAS) in a funded programme for the development of a diagnostic aquaculture test for White spot, a disease which is causing significant disruption of shrimp farms in Asia, in particular. The Genedrive® test successfully passed its initial field trial conducted by CEFAS in August this year. We will now seek within the CEFAS collaboration to undertake on-site trials to gather data designed to establish the possible commercial potential for the test.
Human Genotyping assay (IL28B)
The division has completed successful trials of the IL28B genotyping test and the test has been adopted by the STOP-HCV programme for inclusion in its clinical trials (http://www.stop-hcv.ox.ac.uk/stop-hcv-1-trial). The results from this field trial will allow us to market test our genotyping platform and to assess the extent to which it will complement our infectious disease product range. Genedrive is contributing 20 Genedrive® units and 400 tests for use in the STOP-HCV programme.
Business Development
In addition to addressing our Genedrive® proprietary pipeline, I am finalising a review of our commercial priorities. We will address opportunities with external parties to bring existing laboratory based tests onto the Genedrive® system to exploit its unique characteristics and potential in near patient applications. Such development would more rapidly expand the range of tests available on the Genedrive® platform and build validation in a capital efficient manner. We also see significant scope to pursue new client funded opportunities to develop new assays, along the model of our biohazard programmes.
Services Operations
As previously stated, while the Services business has been a very valuable component of the Company's development since incorporation, it is clear that our resources do not allow the level of investment required to ensure the division's continued long-term progress and growth. In June 2016, we announced that we had appointed advisers to undertake a strategic review of our Services operations. We will keep shareholders updated with progress on this review over the coming months.
Preclinical Research Services
Preclinical Research Services delivers specialised testing services to biotechnology and international drug development companies. Last year, we reported that the US Government agencies, NIH/NIAID, would not be continuing their funding to University of Maryland, Baltimore (UMB) beyond September 2016. Running at £1m pa, our participation as a sub-contractor to UMB had historically generated a significant share of the division's income.
The division has responded to the challenge with an in-depth programme of client presentations and has made great progress in replacing the capacity recently utilised by UMB. Sales of £2.0m were booked in the period (2015: £2.3m) with continuing improvement expected in the coming year.
Pharmacogenomics Services
The Pharmacogenomics Services team engages in the application of molecular expertise towards collaborative projects for pharmaceutical and biotechnology organisations engaged in drug development and the discovery and validation of new drug and biomarker targets.
The current period saw a slight weakening of Service income to £1.1m (2015: £1.3m). This was accounted for by a change in activity by international pharma client moving from a committed Full-Time Equivalent (FTE) programme towards a service model for which we have been awarded Preferred Supplier Status. We are pleased that our FTE programme delivered first class quality results for our client and we anticipate a growth in income for the current year.
Financial Review
On June 23 we announced a proposed placing to raise £6.5m (£6.0 net) by means of conditional placing with new and existing investors of 8,125,000 shares. Calculus Capital acted as cornerstone investor, subscribing for 3,125,000 shares. The placing was approved by shareholders on 11 July 2016.
In addition to completing the Placing process, the Company has worked with the Global Health Investment Fund (the GHIF) to agree the amended terms of the Collaboration and Convertible $8m Bond agreement entered into in July 2014. These amendments, which came into effect on 25 July 2016 and will be detailed in the 2016 Annual Report, allow for a two year extension of the maturity date for the bonds as well as a deferral of interest payments otherwise due up to July 2019. The amendments also adjust to £1.50 per share (from £4.89) the fixed conversion price in respect of $2m out of the $8m bonds.
Overall we report revenue and other income for the year of £5.0m (2015: £4.5m).
Operating loss was £5.4m (2015: £4.0m) following increased investment in Genedrive® development and administrative costs to support the refocussing of the Company's activities which is highlighted in this report.
The reported loss per share was 56.2p (2015: 30.2p)
Cash reserves at 30 June 2016 were £1.1m (2015: £4.9m), prior to receiving £6.0m (net) from the Placing of shares approved on 25 July 2016.
Outlook
Our report last year highlighted the Company's achievements in developing the Genedrive® platform on very modest resources by comparison with peer developments. In this subsequent period, we have continued the process of re-focusing on the significant and fast-growing global molecular diagnostics opportunity we see as available to us. The period of scrutiny which has accompanied the management changes has increased our confidence in the technical quality of the underlying Genedrive® platform. We have strengthened our investment in delivering reliable and accurate tests for the MTB/RIF and HCV infectious disease markets. With regard to the roll out of our MTB/RIF test in India, we are early in our launch phase and cannot yet be clear about the timescale within which user acceptance in India will be demonstrated and when growth in sales will commence. However, we remain confident in the potential of the Genedrive® MTB/RIF assay in what are significant market opportunities.
With the increased funding now available to the Company, we are confident that we will deliver momentum across our programmes during the coming financial year. We see positive performance in Genedrive® in a wide range of applications and targets which gives us confidence that we can make progress in winning partnerships to develop assays for the Genedrive® platform and win new and extended development programmes to fund new Genedrive® tests. We believe that these activities will generate income for the Group in the year ahead and demonstrate the position which the Genedrive® platform can secure in the increasingly attractive near patient, decentralised molecular diagnostics market.
David Budd
CEO
11 October 2016
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME
For the year ended 30 June 2016
Unaudited
| 2016 | 2015 | |
| £'000 | £'000 | |
Revenue | 3,094 | 3,703 | |
Other Income - development grant funding | 1,969 | 814 | |
Revenue and other income | 5,063 | 4,517 | |
|
|
| |
Contract costs | (3,285) | (3,933) | |
Research and development costs | (4,836) | (2,942) | |
Administrative costs | (2,368)
| (1,682) | |
|
|
| |
Operating loss | (5,426) | (4,040) | |
Finance (costs)/income | (1,071) | 616 | |
|
|
| |
Loss on ordinary activities before taxation | (6,497) | (3,424) | |
Taxation on ordinary activities | 582 | 399 | |
Loss on for the financial year |
| (5,915) | (3.025) |
Other Comprehensive Income for the year |
| - | - |
Total Comprehensive expense for the financial year |
| (5,915) | (3,025) |
|
|
|
|
(Loss) per share (pence) |
|
| |
Basic | (56.2)p | (30.2)p | |
Diluted | (56.2)p | (30.2)p | |
CONSOLIDATED BALANCE SHEET
As at 30 June 2016
Unaudited
|
|
|
| 2016 | 2015 |
|
|
|
| £'000 | £'000 |
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Plant and equipment |
|
|
| 713 | 805 |
Intangible assets |
|
|
| 6,273 | 7,191 |
Deferred tax assets |
|
|
| - | 30 |
|
|
| 6,986 | 8,026 | |
Current assets |
|
|
|
| |
Inventories |
|
|
| 202 | 163 |
Trade and other receivables |
|
|
| 2,797 | 2,191 |
Current tax assets |
|
| 757 | 685 | |
Cash and cash equivalents |
|
| 1,114 | 4,928 | |
|
|
| 4,870 | 7,967 | |
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Deferred revenue |
|
|
| 88 | 50 |
Trade and other payables |
|
|
| 1,774 | 1,123 |
Deferred consideration payable in shares |
|
|
| - | 1,250 |
|
|
| 1,862
| 2,423 | |
|
|
|
|
|
|
Net current assets |
|
| 3,008 | 5,544 | |
|
|
|
| ||
Total assets less current liabilities |
| 9,994 | 13,570 | ||
|
|
|
|
| |
Non-current liabilities |
|
|
|
| |
Deferred consideration payable in shares |
|
| 1,250 | - | |
Convertible Bond |
|
| 4,991 | 4,025 | |
|
|
| 6,241 | 4,025 | |
|
|
|
|
| |
Net Assets |
|
| 3,753 | 9,545 | |
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
Called-up equity share capital |
|
|
| 158 | 158 |
Share premium account |
|
|
| 20,088 | 20,088 |
Employee share incentive plan reserve |
|
|
| (240) | (196) |
Share options reserve |
|
|
| 1,281 | 1,197 |
Reverse acquisition reserve |
|
|
| (2,484) | (2,484) |
Retained earnings |
|
|
| (15,050) | (9,218) |
Total shareholders' equity |
|
|
| 3,753 | 9,545 |
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2016
| Share Capital | Share Premium Account | Employee Share incentive plan reserve | Share options reserve | Reverse acquisition reserve | Retained earnings | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
|
Balance at 1 July 2014 | 150 | 18,616 | (228) | 1,032 | (2,484) | (6,222) | 10,864 |
|
|
|
|
|
|
|
|
Allotment of ordinary shares | 7 | 1,393 | - | - | - | - | 1,400 |
Purchase of own shares (SIP) | - | - | 32 | - | - | - | 32 |
Exercise of share options | 1 | 79 | - | (29) | - | 29 | 80 |
Forfeit of share options | - | - | - | (11) | - | - | (11) |
Recognition of equity-settled share-based payments | - | - | - | 205 | - | - | 205 |
Total comprehensive expense for the year | - | - | - | - | - | (3,025) | (3,025) |
At 30 June 2015 | 158 | 20,088 | (196) | 1,197 | (2,484) | (9,218) | 9,545 |
|
|
|
|
|
|
|
|
At 1 July 2015 | 158 | 20,088 | (196) | 1,197 | (2,484) | (9,218) | 9,545 |
|
|
|
|
|
|
|
|
Purchase of own shares (SIP) | - | - | (44) | - | - | - | (44) |
Lapsed share options | - | - | - | (83) | - | 83 | - |
Forfeit of share options | - | - | - | (6) | - | - | (6) |
Recognition of equity-settled |
|
|
|
|
|
|
|
share-based payments share-based payments | - | - | - | 173 | - | - | 173 |
Total comprehensive |
|
|
|
|
|
|
|
expense for the year for the year | - | - | - | - | - | (5,915) | (5,915) |
Balance at 30 June 2016 | 158 | 20,088 | (240) | 1,281 | (2,484) | (15,050) | 3,753 |
(unaudited) |
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2016
|
| Unaudited |
| ||||
|
| 2016 | 2015 | ||||
|
| £'000 | £'000 | ||||
Cash flows from operating activities |
|
|
| ||||
| Operating loss for the year |
| (5,426) | (4,040) | |||
| Depreciation, amortisation and impairment |
| 1,174 | 387 | |||
| ATL Research Credits |
| (151) | (202) | |||
| Share based payment expense |
| 167 | 194 | |||
Operating (loss) before changes in working capital and provisions |
|
|
| ||||
| (4,236) | (3,661) | |||||
| (Increase) in inventories |
| (39) | (163) | |||
| (Increase) in trade and other receivables |
| (606) | (1,066) | |||
| Increase/(decrease) in deferred revenue |
| 38 | (36) | |||
| Increase in trade and other payables |
| 651 | 107 | |||
Net cash (outflow) from operations |
| (4,192) | (4,819) | ||||
|
|
|
|
| |||
| Tax received |
| 691 | 1,513 | |||
Net cash (outflow) from operating activities |
|
|
| ||||
| (3,501) | (3,306) | |||||
Cash flows from investing activities |
|
|
| ||||
| Finance income |
| 7 | 16 | |||
| Acquisition of plant and equipment & intangible assets |
| (164) | (178) | |||
Net cash (outflow) from investing activities |
|
|
| ||||
| (157) | (742) | |||||
Cash flows from financing activities |
|
|
| ||||
| Proceeds from issue of convertible bond |
| - | 4,700 | |||
| Cost of issue of convertible bond |
| - | (100) | |||
| Finance cost- interest paid |
| (304) | (212) | |||
| Exercise of share options |
| - | 80 | |||
| Share Investment Plan - purchase of own shares |
| (44) | (22)
| |||
Net cash (outflow)/inflow from financing activities |
| (348) | 4,446 | ||||
|
|
|
| ||||
Net (decrease)/increase in cash equivalents |
| (4,006) | 398 | ||||
Effects of exchange rate changes on cash equivalents |
| 192 | 292 | ||||
Cash and cash equivalents at beginning of year |
| 4,928 | 4,238 | ||||
Cash and cash equivalents at end of year |
| 1,114 | 4,928 | ||||
Analysis of net funds |
|
|
| ||||
| Cash at bank and in hand |
| 1,114 | 4,928 | |||
Net funds
|
| 1,114 | 4,928
| ||||
|
|
|
|
| |||
NOTES TO THE UNAUDITED PRELIMINARY RESULTS TO 30 JUNE 2016
1. General Information
Genedrive Plc (the "Company" or Group") is a publicly traded company incorporated and domiciled in the UK. The address of its registered office is 48 Grafton Street, Manchester M13 9XX.
The Annual Report and Financial Statements for the year ended 30 June 2015 have been delivered to the Registrar of Companies and are available on the Company's website www.genedrive.com . The Auditors have reported on the accounts for the year ended 30 June 2015; their report was unqualified, did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.The Annual Report and Financial Statements for the year ended 30 June 2016 will be posted to shareholders and made available on the Company's website in October 2016.
2. Basis of Preparation
This announcement was approved by the Board of Directors on 10 October 2016. The financial information in this announcement does not constitute the Group's statutory accounts for the years ended 30 June 2015 or 30 June 2016 but is derived from those accounts, which for the year ended 30 June 2016 are unaudited.
As at the date of this announcement, the Auditors have not reported on the Group Financial Statements for the year ended 30 June 2016 and therefore the financial information in respect of that period is unaudited. The unaudited consolidated Financial Statements from which these results are extracted have been prepared under the historical cost convention in accordance with IFRS (International Financial Reporting Standards) as adopted by the EU, IFRS IC interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The unaudited Group Financial Statements have been prepared on a going concern basis, as the Directors confirm that they have reasonable expectation that the Group has adequate resources to fund its operations for a period of at least 12 months from the date that the Financial Statements were approved, given the cash resources available to the Group and the future cash flow forecasts.
3. Statement of Directors' Responsibilities
Each of the Directors conforms that to the best of their knowledge:
· The Financial Statement from which the financial information within these Preliminary Results announcement has been extracted have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Group included in the consolidation taken as a whole; and
· The Chairman's Statement and the Chief Executive's Review include a fair review of the development and performance of the business and the position of the Group, taken together with their description of the principal risks and uncertainties that it faces.
4. Business segments
| Preclinical | Pharmaco |
| Admin |
|
| Research | genomics | Diagnostics | istrative |
|
| Services | Services | Segment | Costs | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 |
Twelve months ended 30 June 2016 |
|
|
|
|
|
Income | 2,010 | 1,147 | 1,906 | - | 5,063 |
Segment trading result | 49 | (79) | (1,918) | (2,287) | (4,235) |
Add ATL Research Credits | 83 | 68 | - | - | 151 |
less depreciation and amortization | (62) | (141) | (885) | (85) | (1,173) |
less equity-settled share-based payments | (19) | (27) | (77) | (46) | (169) |
Operating profit/(loss) | 51 | (179) | (2,880) | (2,418) | (5,426) |
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended 30 June 2015 |
|
|
|
|
|
Income | 2,322 | 1,266 | 929 | - | 4,517 |
Segment trading result | 135 | 62 | (2,266) | (1,593) | (3,662) |
Add Research Credits | 111 | 91 | - | - | 202 |
less depreciation and amortization | (163) | (71) | (102) | (50) | (386) |
less equity-settled share-based payments | (15) | (27) | (113) | (39) | (194) |
Operating profit/(loss) | 68 | 55 | (2,481) | (1,682) | (4,040) |
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5. Geographical segments |
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| 2016 | 2015 |
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| £'000 | £'000 |
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United Kingdom |
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| 1,035 | 912 |
Europe |
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| 365 | 1,061 |
United States of America |
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| 3,529 | 2,034 |
Asia |
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| 134 | 510 |
Revenue |
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| 5,063 | 4,517 |
6. Earnings per share
Basis of Calculation
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 less the weighted average number of Matching Shares held by the Epistem Share Investment Plan which are not yet vested.
The diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares in relation to share options and share warrants and also the weighted average Matching Shares held by the Epistem SIP which are not yet vested. The number of share options has been adjusted to take into account the issue price and the fair value, consistent with IAS 33, "Earnings per share".
The adjusted weighted average number of shares in issue during the year was 10,531,615 (2015: 10,011,341)
The dilutive weighted average number of shares in issue during the year was 10,544,541 (2015: 10,314,444)
Due to the company being loss making during the year, the "dilutive weighted average number of shares" has not been used in the dilutive EPS calculation.
7. Finance Income and Costs |
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| 2016 | 2015 |
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| £'000 | £'000 |
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Gain on issue of convertible bond |
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| - | 1,004 |
Movement in fair value of derivative embedded in Convertible Bond |
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| 37 | 73 |
Finance cost of Convertible Bond |
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| (304) | (212) |
Accounting adjustment to Convertible Bond finance cost |
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| (272) | (205) |
Foreign exchange movement in Convertible Bond |
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| (731) | (298) |
Interest receivable |
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| 7 | 16 |
Foreign exchange gains |
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| 192 | 238 |
Finance (costs)/income |
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| (1,071) | 616 |
8. Convertible Bond
The Convertible Bond relates to the Collaboration and Convertible Bond Purchase Agreement entered into on 22 July 2014 with the Global Health Investment Fund 1 LLC ("GHIF" or the "bond holder"). Under the terms of the Agreement, the Company issued to GHIF a five-year Convertible Bond totalling $8.0m (£4.7m on conversion to GBP.) Further, as part of the Agreement, GHIF and the Company entered into a Global Access Commitment. An amendment to the Agreement came into effect on 11 July 2016. The purpose of the Agreement is to fund the Company's development, production and commercialization of Genedrive® to address Global Health Challenges and achieve Global Health Objectives. An outline (only) of the terms of the Agreement is detailed below:
Convertible Bond Agreement terms in place at 30 June 2016
Unless previously converted or redeemed, the Convertible Bond will mature on 21 July 2019 and interest will be payable half yearly at the rate of 5% per annum.
The Bond Holder has a Purchaser Optional Conversion Period which runs from 15 January 2015 to 15 May 2019 (or earlier in the event of a change of control of the Company). The bond holder has the option to convert all (but not part only) of the Convertible Bond at the Conversion Price, initially £4.89 per Ordinary Share at the Fixed Rate of Exchange of $1.6913:£1. ("The Fixed Rate of Exchange") (The Conversion Price may be adjusted to take account of changes by the Company of its capital structure or payment of dividends etc.).
The Company has an option conversion period running from 22 January 2015 to 08 July 2019, during which the Company may convert all (but not part only) of the Convertible Bond into Ordinary Shares at the Conversion Price of £4.89 per Ordinary Share at the Fixed Rate of Exchange of $1.6913:£1 if the current market prices equals or exceeds 1.2 times the Conversion Price. (The Conversion Price may be adjusted to take account of changes by the Company of its capital structure or payment of dividends etc.).
The Company may redeem the whole of the Convertible Bond on any interest payment date from 22 July 2016. In this event, the bond holder may elect to receive full payment in Ordinary Shares based on a conversion ratio calculated around the market price at the time of notice of Redemption. Without such an election, the bond will be redeemed at par in US dollars.
Global Access Commitment
Under the Global Access Agreement, the Company will undertake appropriate regulatory strategy and registrations to secure access for Genedrive® in Developing Countries in tuberculosis, malaria or other infectious diseases agreed between the parties.
The Company agrees to establish a tiered pricing framework that is commercially reasonable and reflects the needs of poor patients in Developing Countries. The Company agrees, taking into account its profitability and other commercial interests, to allocate sufficient resources.
Terms of Amendment to Convertible Bond Agreement which came into effect on 11 July 2016
The maturity date of the GHIF Bond will be extended by two years to 21 July 2021 and the GHIF Bond will be split into two tranches, with the first tranche of US$2m having a Conversion Price of £1.50 per Ordinary Share and the second tranche of US$6m having a Conversion Price remaining at £4.89 per Ordinary Share.
In respect of the Company conversion option, the Company will have the option to convert the first tranche of US$2m into new Ordinary Shares in circumstances where the average closing price of the Company's Ordinary Shares is greater than or equal to £2.50 per ordinary Share for a period of 20 consecutive days.
In addition, for interest periods ending on or before (but not after) 21 January 2019, the Company may elect to pay none or a portion of the 5% interest payable semi-annually on the accrued and outstanding principal amount of the GHIF Bond and instead capitalise and compound some or all of such outstanding interest due until the earlier of the date on which the GHIF Bond is repaid if converted into Ordinary Shares.
The amendment became effective on 11 July 2016 and, as a result has no impact on the results and balances for the current financial year. The effect of the changes on the financial statements for the forthcoming year will be outlined in the 2016 Annual Report and Accounts.