SALV.L Regulatory News (SALV)

SalvaRX Group PLC

("SalvaRX" or "the Company")

Annual audited results for the year ending 31 December 2018

Final Results

The Board of SalvaRX is pleased to announce its annual results for the year ending 31 December 2018.

Copies of the 2018 Audited Report and Financial Statements will be posted to shareholders and will shortly be available from the Company's website www.salvarx.io

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

For further information, please contact

Chairman's Statement

I am pleased to present the audited final results for SalvaRx Group PLC ("SalvaRx", "the Company" or "the Group"), for the year ended 31 December 2018.

Results and business review

The total loss for the year ended 31 December 2018 was £3,366,000 (2017: loss of £2,234,000). £2,817,000 (2017: £1,776,000) of this loss relates to discontinued operations following the disposal and demerger described below. The Group's expenditure on research and development activities during the year amounted to £861,000 (2017: £1,185,000).

On 14 August 2018, the Company announced that it had entered into a conditional sale agreement for the disposal of its 94.2% interest in SalvaRx Limited to Portage Biotech Inc. ("Portage"), for a consideration of US$67.5 million, to be satisfied by Portage issuing and allotting 757,943,784 new Portage shares. The transaction was finally completed on 8 January 2019. The Company retained approximately 57 million Portage shares for its operating needs and distributed most of the remaining shares to its shareholders.

I believe that the disposal and the demerger was the best way to unlock and maximise value for shareholders without causing the dilution inherent in raising additional funds at a price which I did not believe reflected the value of the Company's underlying oncology assets.

The disposal and the demerger resulted in the divestment of substantially all of the Company's existing business, assets and investments. As such, the Company is now classified as an AIM Rule 15 cash shell and is required to make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 (or seek re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from completion of the disposal and the demerger (namely 9 July 2019). Failing which, the Ordinary Shares will be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM will be cancelled six months from the date of suspension should the reason for the suspension not have been rectified.

As a result, your board is in the process of evaluating suitable opportunities for the Company and I will make a further announcement as soon as is practicable.

Jim Mellon

Non-executive Chairman

27 June 2019

Strategic Report

As described in the Chairman's Statement, the Company disposed of its interests in SalvaRx Limited on 8 January 2019. Whilst the Company is now classified as AIM Rule 15 cash shell, the following review describes the development of the Group's interests during the year and up to the disposal date.

During the year under review, the Group continued to make progress on advancing its oncology assets.

iOx Therapeutics Limited (56.95% subsidiary undertaking)

iOx Therapeutics Ltd ("iOx") continued to advance its first set of products through development. During this period, the company was granted additional patents covering liposomal formulation of its iNKT agonist. It also worked with its contract manufacturing partners to scale up the production to enable large scale runs. In July 2018, however, the Group announced a delay to the manufacturing process of our lead candidate IMM60. iOx also made progress with its second therapy, IMM65, to enable the determination of the final formulation.

To fund its ongoing research and development activities, in March 2018 iOx announced an issue of US$1 million of unsecured convertible loan notes and a further issue of US$1 million of loan notes was announced in December 2018.

Intensity Therapeutics Inc. (8.5% equity investment)

On 22 October 2018, Intensity Terapeutics Inc. ("Intensity") announced the results from its clinical trial IT-01 at the European Society for Medical Oncology (ESMO) 2018 Congress in Munich, Germany. The preliminary data from a Phase 1/2 clinical study demonstrated that INT230-6, Intensity's novel lead product candidate designed for direct intratumoral injection, was well tolerated in patients with advanced solid tumours.

On 2 November 2018, Intensity announced the completion of a $6.5 million Series B financing. Intensity plans to use the proceeds of the financing to advance the clinical development of lead product candidate INT230-6. Intensity also intends to expand the study by adding clinical sites outside the U.S. and Canada, as well as adding combination arms with an anti-PD-1 antibody.

On 8 November 2018, Intensity announced that additional data from a phase 1/2 clinical study of INT230-6 and preclinical research highlighting the company's proprietary DfuseRx SM technology had been presented at a poster session at the Society for Immunotherapy of Cancer's 33rd annual meeting in Washington D.C.

Other portfolio companies

The remaining portfolio companies - Nekonal Oncology and Saugatuck Therapeutics - continued to characterize, manufacture and test their products to enable decision making on further development. Activities at Rift Biotherapeutics Inc. remained suspended due to a lack of funding.

Financing

During the year, iOx Therapeutics Ltd issued $2 million of loan notes (as described further in note 18). The Company also received $1 million of funding from J Mellon and G Bailey. The combined effect of these facilities enabled the Group to continue its development strategy.

Disposal of interest in SalvaRx Limited

All the Company's investments and business interests were held by SalvaRx Limited, its 94.2% owned subsidiary, following a group restructuring conducted in March 2017.

Subsequent to the year end, on 8 January 2019, the Company disposed of its interest in SalvaRx Limited to Portage Biotech Inc ("Portage"), for a consideration of US$67.5 million, satisfied by the issue of new Portage shares ("Disposal").

Concurrent with the Disposal, the Company's Shareholders received 18 Demerger Shares (i.e. Portage consideration shares) for every share in SalvaRx Group plc held on the Demerger Record Date. This mechanism allowed qualifying Shareholders to retain an interest in the investments and business interests held by SalvaRx Limited (through their resultant interest in Portage following completion of the Demerger).

Portage, a company listed on the Canadian Securities Exchange, has existing interests in four promising biotech companies and cash resources of approximately $4 million which will be used to fund the ongoing development of the portfolio of oncology assets owned by SalvaRx Limited.

It is our hope that the Disposal will further facilitate our efforts to reach proof of concept and advance the products into clinical testing. Portage has a history of creating value for its shareholders - one of its portfolio companies, Biohaven Pharmaceutical Holding Company Ltd ("Biohaven") (NYSE:BHVN), was the second largest biotech IPO on NASDAQ in 2017. Portage subsequently announced a distribution in specie of its stock in Biohaven to its shareholders. Their initial US$7 million investment was worth in excess of US$100 million at the time of the IPO in 2017 and has almost doubled since then. Biohaven is now worth approximately US$1.9 billion. Portage has provided seed capital to four other biotech companies and will seek to evaluate new opportunities.

Outlook

The disposal and the demerger resulted in the divestment of substantially all of the Company's existing business, assets and investments. As such, the Company is now classified as an AIM Rule 15 cash shell and as such will be required to make an acquisition or acquisitions which constitutes a reverse takeover under AIM Rule 14 (or seek re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from completion of the disposal. Failing which, the Ordinary Shares would then be suspended from trading on AIM pursuant to AIM Rule 40.

Jim Mellon

Non-executive Chairman

27 June 2019

Directors' Report

Introduction

The Directors present their report and consolidated financial statements of SalvaRx Group plc ('the Group') for the year ended 31 December 2018.

Principal activity

The Group's principal activity was that of drug discovery and development, focused on immune-oncology. As explained in the Chairman's Statement and the Strategic Report, following disposal of SalvaRx Limited on 8 January 2019 the company is classified as a cash shell under AIM Rule 15.

Business and financial review and future developments

The plans for the future are set out in the Chairman's Statement and Strategic Report and are dependent upon the Company making an acquisition or acquisitions which constitute reverse takeover under AIM Rule 14 on or before the date falling six months from the disposal of SalvaRx Limited (namely 9 July 2019). Failing which, the Ordinary Shares will be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM will be cancelled six months from the date of suspension should the reason for the suspension not have been rectified.

Results and dividends

The Group's loss for the year after taxation was £3.37 million (2017: loss of £2.23 million). The Directors do not recommend the payment of a dividend for the year.

Directors

The Directors of the Group that served during the year and subsequently were as follows:

Jim Mellon, Non-Executive Chairman

Dr Ian Walters, Chief Executive Officer (resigned on 8 January 2019)

Kam Shah, Chief Financial Officer (resigned on 8 January 2019)

Denham Eke, Chief Financial Officer (appointed on 8 January 2019)

Dr Greg Bailey, Non-Executive Director

Richard Armstrong, Non-Executive Director (resigned on 8 January 2019)

Colin Weinberg, Non-Executive Director (resigned on 8 January 2019)

Biographical details of serving Directors can be found in the Board of Directors section.

Annual General Meeting and re-election of Directors

The date of the Annual General Meeting will be announced in due course.

Directors' Interests

The table below sets out the Directors interests in the Company's Ordinary Shares, including their connected persons, together with details of options held by the directors over New Ordinary Shares of the Company:  

Note: options with an exercise price of 23.2p are exercisable at any time until 16 February 2021. Options with an exercise price of 35.5p are exercisable in three equal annual tranches from 22 March 2017, except such options granted to Richard Armstrong and Colin Weinberg which are exercisable in event that they step down from the Board in due course on the appointment of new non-executive directors.

The interests of J Mellon in the table above include Ordinary Shares in the Company held by Agronomics Limited (formerly Port Erin Biopharma Investments Limited) and Galloway Limited. J Mellon holds controlling interests in these companies.

In the annual general meeting held on 8 January 2019, shareholders approved cancellation of the existing options and issuance of new options to acquire Portage shares from the Company. As a result, new options granted to the directors in place of their existing options were as follows:

Number of Options

Director in Portage shares granted Exercise price

I Walters 6,234,373 US$0.00001

K Shah 5,302,094 US$0.00001

R Armstrong 2,730,871 US$0.00001

C Weinberg 2,730,871 US$0.00001

New Options have the following terms and conditions:

(a) Exercise Period: the New Options are exercisable during the period commencing three months from the Date of Grant and expiring on the first anniversary of the Date of Grant, being, 5.00 p.m. on 8 January 2020; and

(b) Vesting Condition: the Portage Shares have traded above US$0.03 (three cents) for a period of at least five consecutive trading days during the Exercise Period.

The New Options will lapse irrevocably in the event that they are not exercised before the expiry of the Exercise Period.

In addition to the above, J Mellon and G Bailey hold options over shares in SalvaRx Limited relating to warrants issued on the non-convertible loan notes in the prior year. Details of the terms of these loans are included in note 18.

I Walters and K Shah both hold 1,139 and 190 options respectively over shares in iOx Therapeutics Limited, a subsidiary in which the Group holds 56.95% equity.

Directors' insurance and indemnity provisions

Subject to the conditions set out in the Isle of Man Companies Act 2006 and the Company's Articles of Association, the Company has arranged appropriate Directors' insurance to indemnify the Directors against liability in respect of proceedings brought by third parties. The annual cost of the cover is not material to the Group.

Significant shareholders

Other than the Directors' interests shown above, the Company had been notified that the following is a holder of 3% or more of the Company's issued Ordinary Share capital:

Share capital

Details of the issued share capital, together with details of the movement in issued share capital during the year, are shown in note 21 to the financial statements.

Principal risks and uncertainties

Prior to the disposal of SalvaRx Limited on 8 January 2019, the principal risks faced by the Group and the actions taken to mitigate them, are shown in the table below. After 8 January 2019, the Company is an AIM Rule 15 cash shell. The principal risk is therefore considered to relate solely to funding and finding a suitable acquisition target.

Key Performance Indicators

At this stage, the Company has divested all its operating assets by disposing of SalvaRx Limited to Portage Biotech Inc. on 8 January 2019 and has become a cash shell. If and when the Company acquires new business, KPIs will become relevant and be measured and reported accordingly.

Political donations

There were no political donations made by the Group in the current or prior year.

Charitable donations

There were no charitable donations made by the Group in the current or prior year.

Going concern

The Disposal of SalvaRx Limited on 8 January 2019 resulted in the divestment of substantially all of the Company's existing business, assets and investments. The Company has now been classified as an AIM Rule 15 cash shell and as such is required to make an acquisition or acquisitions which constitutes a reverse takeover under AIM Rule 14 (or seek re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from completion of the Disposal failing which the Ordinary Shares would then be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM would be cancelled six months from the date of suspension should the reason for the suspension not have been rectified.

Following the disposal and demerger, the Company has limited cash reserves and its principal assets are up to 56,657,531 Retained Shares in Portage Biotech Inc. worth approximately US$5,043,000 (approximately, £3,897,000), as shares in a Canadian listed entity these are readily convertible into cash and are to be set aside for general working capital requirements.

As a cash shell, the Company has a low level of underlying overhead. The Directors have prepared forecasts that demonstrate that the Company has adequate resources (comprising cash in hand and the Retained Shares) to cover these costs for at least the next twelve months from the date of this report.

Payment of suppliers

It is the Group's policy that payments to suppliers are made in accordance with terms and conditions agreed between the Group and its suppliers. The average payment period for creditors for the year was 40 days (2017: 45 days).

Post balance sheet events

Events after the balance sheet date have been disclosed in the Chairman's Statement and note 26 to the financial statements.

Statement as to disclosure of information to the auditor

Each Director in office at the date of this report has confirmed, as far as he is aware, that there is no relevant audit information of which the auditor is unaware. Each such Director has confirmed that he has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the auditor is aware of that information.

Auditor

A resolution to reappoint RSM UK Audit LLP as auditor, at a fee to be agreed, will be proposed by the Board.

The Directors' Report was approved by the Board of Directors and signed on its behalf by:

Denham Eke

Chief Financial Officer

27 June 2019

Corporate Governance Statement

All members of the board believe strongly in the value and importance of good corporate governance and in our accountability to all of SalvaRx Group plc's stakeholders, including shareholders, staff, clients and suppliers.

Changes to AIM rules on 30 March 2018 required AIM companies to apply a recognised corporate governance code by 28 September 2018.

The Directors recognize the importance of good corporate governance and have chosen to apply the Quoted Companies Alliance Corporate Governance Code (the 'QCA Code').

Full details of our Corporate Governance approach can be found on our website:

https://www.salvarx.io/investors/aim-rule-26.html  

Jim Mellon

Non-executive Chairman

27 June 2019

Statement of Directors' Responsibilities

The directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

Isle of Man company law requires the directors to prepare group financial statements in accordance with generally accepted accounting principles. The directors are required by the AIM Rules of the London Stock Exchange to prepare group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU").

The financial statements of the group are required by law to give a true and fair view of the state of the group's affairs at the end of the financial period and of the profit or loss of the group for that period and are required by IFRS as adopted by the EU to present fairly the financial position of the group and the financial performance of the group.

In preparing the financial statements, the directors should:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether they have been prepared in accordance with IFRS adopted by the EU; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.

The directors are responsible for keeping reliable accounting records which correctly explain the group's transactions and enable them to determine, with reasonable accuracy, the financial position of the group at any time and allow financial statements to be prepared. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the SalvaRx Group PLC website. Legislation in Isle of Man governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Independent Auditor's Report to the Members of SalvaRx Group plc

Opinion

We have audited the financial statements of SalvaRx Group plc and its subsidiaries (the 'group') for the year ended 31 December 2018 which comprise the consolidated statement of profit and other comprehensive income, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes of equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion the financial statements:

· give a true and fair view of the state of the group's affairs as at 31 December 2018 and of the group's loss for the year then ended;

· have been properly prepared in accordance with IFRSs as adopted by the European Union;

· have been properly prepared in accordance with the requirements of the Isle of Man 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 in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to SME listed entities and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require

us to report to you where:

· the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

· the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement 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.

Accounting for the loan note instruments constituted on 8 March 2018 and 10 December 2018

As detailed in note 18, on 8 March 2018 iOx Therapeutics Limited issued US $1 million of unsecured convertible loan notes followed by a further US $1 million unsecured loan notes on 10 December 2018. The terms of the loan notes are set out in detail in note 18. 

As disclosed in the accounting policies, the Directors have presented these instruments as liabilities and measured them at fair value through profit or loss. At 31 December 2018 the fair value of the 8 March 2018 loan note instrument was £8,099,000 and the 10 December 2019 loan note instrument was £1,053,000. Due to the significance of these liabilities, and the judgements and estimates involved in determining both appropriate presentation and measurement, the treatment of these instruments is considered to be one of the most significant risks of material misstatement.

Management provided us with details of their proposed presentation and measurement of each instrument. We reviewed their proposed treatment in conjunction with a valuation specialist and considered the proposed accounting, challenging management where relevant.

Management also provided us with calculations of the fair values attributable to the instruments. We challenged these calculations and subjected them to arithmetical checking. We assessed the inputs and estimates within these calculations, consulted with valuation specialists, and considered the valuations with specific reference to the consideration received on the disposal of SalvaRx Limited on 8 January 2019.

In light of our work, we also considered the adequacy of disclosures relating to the instruments set out in notes 4 and 18 to the financial statements.

Our application of materiality

When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole could reasonably influence the economic decisions of the users we take into account the qualitative nature and the size of the misstatements. During planning materiality for the financial statements as a whole was calculated as £223,000, which was not changed during the course of our audit. We agreed with the Audit Committee that we would report to them all unadjusted differences in excess of £5,000, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

An overview of the scope of our audit

Our audit approach covered 100% of group loss and total group assets and liabilities. It was performed to the materiality levels set out above.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement set out on page 15, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's 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 to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is included in the Appendix at the end of this auditor's report. This description, which is located on page 19, forms part of our auditor's report.

Use of our report

This report is made solely, in accordance with Section 80C of the Isle of Man 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.

RSM UK AUDIT LLP, Statutory Auditor

Chartered Accountants

Central Square5th Floor

29 Wellington Street

Leeds

LS1 4DL

27 June 2019

Appendix: Auditor's responsibilities for the audit of the financial Statements

As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

· Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's internal control.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

· Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the group to cease to continue as a going concern.

· Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, including the FRC's Ethical Standard, as applied to SME listed entities, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Consolidated Statement of Profit and Loss and Other Comprehensive Income

Consolidated Balance Sheet

The financial statements of SalvaRX Group plc were approved by the Board of Directors and authorised for issue on27 June 2019. They were signed on its behalf by:

Denham Eke

Chief Financial Officer

27 June 2019

Notes 1 to 28 form part of these financial statements.

Consolidated Cash Flow Statement

Consolidated Statement of Changes in Equity Equity attributable to equity holders of the parent

Notes to the financial statements for the year ended 31 December 2018

1 General information

SalvaRx Group plc (the 'Company' and, together with its subsidiaries, the 'Group') is incorporated in the Isle of Man, British Isles under the Isle of Man Companies Act 2006. The address of the registered office is Commerce House, 1 Bowring Road, Ramsey, Isle of Man, British Isles, IM8 2LQ.

Until 8 January 2019, the principal activity of the Group was drug pre-clinical development with particular focus on developing a series of compounds for cancer immunotherapy. Following the disposal of SalvaRx Limited, the Company became an AIM Rule 15 cash shell.

These financial statements are presented in pounds sterling, which is the Group's functional and presentational currency, and all values are rounded to the nearest thousands (£000) except loss per ordinary share and certain figures in the notes.

2 Adoption of new and revised standards

3 Summary of significant accounting policies

Basis of accounting

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as issued by the International Accounting Standards Board ("IASB") and as adopted by the European Union ("EU"), and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation.

The financial statements have been prepared on the historical cost convention basis except for the valuation of certain financial instruments held at fair value through profit or loss. Historic cost is generally based on the fair value of the consideration given in exchange for the assets. The principal accounting policies adopted are set out below.

Going concern

The Group's business activities, together with the factors likely to affect its future development and position, are set out in the Directors' Report.

The consolidated financial statements of the group have been prepared on a basis which assumes that the Group will continue as a going concern, which contemplates the realisation of assets and satisfaction of liabilities and commitments in the normal course of business.

The Disposal of SalvaRx Limited on 8 January 2019 resulted in the divestment of substantially all of the Company's existing business, assets and investments. The Company has now been classified as an AIM Rule 15 cash shell and as such is required to make an acquisition or acquisitions which constitutes a reverse takeover under AIM Rule 14 (or seek re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from completion of the Disposal failing which the Ordinary Shares would then be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM would be cancelled six months from the date of suspension should the reason for the suspension not have been rectified.

Following the disposal and demerger, the Company has limited cash reserves and its principal assets are up to 56,657,531 Retained Shares in Portage Biotech Inc. worth approximately US$5,043,000 (approximately, £3,897,000), as shares in a Canadian listed entity these are readily convertible into cash and are to be set aside for general working capital requirements.

As a cash shell, the Company has a low level of underlying overhead. The Directors have prepared forecasts that demonstrate that the Company has adequate resources (comprising cash in hand and the Retained Shares) to cover these costs for at least the next twelve months from the date of this report.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

These consolidated financial statements include the accounts of the Company and the following subsidiary undertakings:

i) SalvaRx Limited, ("SalvaRx") incorporated on 6 May 2015 in the British Virgin Islands. SalvaRx Group plc owns 94.15% of the Company.

ii) IOX Therapeutics Limited ("IOX") incorporated in the U.K. as a private company (Company Number 9430782) under the Companies Act 2006 on 10 February 2015. SalvaRx Group plc holds 56.95% equity in IOX.

iii) Saugatuck Therapeutics Limited incorporated in the British Virgin Islands. SalvaRx Limited holds 70% equity in the company.

Research and development expenses

(i) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred.

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. No development costs have been capitalized to date.

Research and development expenses include all direct and indirect operating expenses supporting the products in development.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures are recognized in profit or loss as incurred.

(iii) Clinical trial expenses

Clinical trial expenses are a component of the Group's research and development costs. These expenses include fees paid to contract research organizations, clinical sites, and other organizations who conduct development activities on the Group's behalf. The amount of clinical trial expenses recognized in a period related to clinical agreements are based on estimates of the work performed using an accrual basis of accounting. These estimates incorporate factors such as patient enrolment, services provided, contractual terms, and prior experience with similar contracts.

(iv) Government grants

Government grants relate to the financial grants from governments, public authorities, and similar local, national or international bodies. These are recognised when there is reasonable assurance that the Group will comply with the conditions attaching to them, and that the grant will be received. Government grants relating to research and development are off-set against the relevant costs.

Business combinations

The Company applies the acquisition method to account for all acquired businesses, whereby the identifiable assets acquired and the liabilities assumed are measured at their acquisition-date fair values.

The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Company.

Acquisition-related costs (e.g. finder's fees, consulting fees, administrative costs, etc.) are recognized as expenses in the periods in which the costs are incurred and the services are received. On acquisition date, goodwill is measured as the excess of the aggregate of consideration transferred, any non-controlling interests in the acquiree, and acquisition-date fair value of the Company's previously held equity interest in the acquiree (if business combination achieved in stages) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

At acquisition date, non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation are measured at either fair value or the present ownership instruments' proportionate share in the recognized amounts of the acquiree's identifiable net assets. This choice of measurement is made separately for each business combination. Other components of non-controlling interests are measured at their acquisition-date fair values, unless otherwise required by IFRS.

Impairment of intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of any individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at lease annually, and wherever there is an indication that the assets may be impaired.

Recoverable amount is the higher of fair value less costs of disposal 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.

Investments in associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Under the equity method, an investment in an associate is initially recognised in the consolidated statements of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interest that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Intangible assets acquired in business combinations

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost).

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Foreign currencies

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency).

For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the functional currency of each Group company ("foreign currencies") are recorded in the functional currency at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated into the functional currency at the rates prevailing on the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interest as appropriate).

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill, or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying 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 profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Financial instruments

Recognition of financial assets and financial liabilities

Financial assets and financial liabilities are recognised on the Group's Balance Sheet when the Group becomes a party to the contractual provisions of the instrument.

Derecognition of financial assets and financial liabilities

The Group derecognises a financial asset only when the contractual rights to cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for the amount it may have to pay.

The Group derecognises financial liabilities when the Group's obligations are discharged, cancelled or expired.

Financial assets

Investments

Investments that are not held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at fair value through profit or loss. A gain or loss on such investments is recognised in profit or loss in the period in which it arises.

Trade and other receivables

Trade and other receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost less any provision for impairment.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and on-demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash with three months or less remaining to maturity and are subject to an insignificant risk of changes in value.

Derivative financial assets and liabilities

Derivative financial assets and liabilities are carried at fair value, with gains and losses arising from changes in fair value taken directly to the Statement of Profit and Loss and Other Comprehensive Income. Fair values of derivatives are determined using valuation techniques, including discounted cash flow models and option pricing models as appropriate.

Financial liabilities

Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

2017 loan notes

As detailed in note 18, the 2017 loan notes comprise a loan and a warrant over shares in SalvaRx Limited. At inception the loan element and the warrant are recorded at their respective fair values. The fair value of the loan is calculated by determining an effective rate of interest determined by reference to the interest rate applicable to comparable instruments with no warrant. The fair value of the warrant is determined as the difference between the fair value of the instrument issue price and the fair value of the loan.

At subsequent balance sheet dates the loan is measured at amortised cost and the warrant is measured at fair value.

2018 loan notes

As detailed in note 18, the whole of the 2018 convertible loan note instruments have been designated as a liability and the derivative element has not been separated from the host instrument. At inception the entire instrument is recorded at its fair value. The fair value of the liability is calculated by reference to the expected fair value of the share price on conversion and any fair value movements are recorded through profit and loss.

At subsequent balance sheet dates the liability is measured at fair value.

Share-based payments

The Group has applied the requirements of IFRS 2 Share-based Payment for all grants of equity instruments.

The Group operates an equity-settled share option plan to certain shareholders. The fair value of the service received in exchange for the grant of options and warrants is recognised as an expense. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of equity-settled share-based payment is expensed on a graded vesting basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. 

Fair value is measured by use of the Black-Scholes model. The expected life used in the models has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

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 and making strategic decision, has been identified as the Board of Directors.

Discontinued operations

A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the Statement of Profit or Loss and Other Comprehensive Income.

Non-current assets or disposal groups classified as held for sale

Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be classified as held for sale, they must be available for immediate sale in their present condition and their sale must be highly probable.

An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of disposal of a non-current assets and assets of disposal groups, but not in excess of any cumulative impairment loss previously recognised.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognised.

4 Critical accounting judgements and key sources of estimation and uncertainty

In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of the assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both the current and future periods.

The following are the critical judgements and estimations that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements:

2017 loan note warrant (note 18)

The disposal of SalvaRx Limited on 8 January 2019 is a qualifying event under the terms of the warrant and the exercise price is at a 70% discount to market price. The Directors have used their judgement in determining fair value for this liability with reference to the disposal on 8 January 2019.

The warrant is stated at fair value based on a diluted share price of $1,031 per share. This has been calculated based on the market value allocated to SalvaRx Limited on its sale to Portage Biotech Inc. on 8 January 2019.

2018 loan notes (note 18)

The directors have considered the treatment of the convertible loan notes issued during the year, taking into account the terms of the individual loan instruments as set out in note 18 and the consequences of the subsequent disposal of SalvaRx Limited on 8 January 2019.

The loan note instrument issued on 8 March 2018 has no repayment terms and due to the cross currency between the loan and the share price, the number of shares that will be issued is variable. Therefore, the instrument should be classified as a liability and as there is no loan element the whole instrument has been valued at fair value through profit and loss. The value attributed to iOx on disposal of SalvaRx Limited on 8 January 2019 evidences that there is substantial intrinsic value in the backstop option as it values each share at approximately £1,200 per share. At fair value, the liability is £8,099,000.

The loan note instrument issued on 10 December 2018 has no repayment terms and has been treated as a liability because a variable number of shares will be issued, since the number of shares issued is based on the share price at the date of issue and the amount of discount, which increases over the passage of time. As there is no loan element the whole instrument has been valued at fair value through profit and loss. However, in this case there is a day one loss as if the qualifying event happened on the day after issue the holder would receive shares with a fair value of $1.33m. This represents a liability of £1,053,000 at 31 December 2018.

Investment in Intensity Therapeutics Inc.

The fair value of investments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. The group has determined the fair value of the investment in Intensity Therapeutics Inc. using the valuation agreed on disposal of SalvaRx Limited of £9,919,000.

Share-based payment expense

The estimation of share-based payment expense requires the selection of an appropriate valuation method, consideration as to the inputs necessary for the valuation model chosen and the estimation of the number of awards that will ultimately vest. Inputs subject to judgement relate to the future volatility of the share price based on the historic share price performance of the Group, the Group's expected dividend yields, risk free interest rates and expected lives of the options. The Directors draw on a variety of sources to aid in the determination of the appropriate data to use in such calculations.

5 Business and geographical segments

Throughout the year, the Directors consider there to be only one business and operating segment, namely research and development of compounds for cancer immunotherapy.

6 Operating loss (continuing operations)

7 Net finance cost (continuing operations)

The loan note interest charge for the prior year includes a notional interest of £13,000.

Other interest relates to loans provided to the company by J Mellon and G Bailey of US$500,000 each. Interest is payable on the loans at 7% per annum and the loans are unsecured and repayable on 20 June 2019.

8 Auditor's remuneration

Amounts payable to RSM UK Audit LLP and its associates in respect of both audit and non-audit services:

9 Staff costs

The average monthly number of employees and senior management (including Executive Directors) was:

Directors remuneration (all representing fees) and share based payments (continuing and discontinued operations)

Details of shares and options held by the Directors are disclosed in the Directors' report.

10 Tax (continuing operations)

The Company is subject to income tax at a rate of 0% in the Isle of Man and, accordingly, no tax has been provided in these financial statements.

11 Loss per ordinary share

Basic loss per ordinary share is calculated by dividing the net loss for the year attributable to Ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. The calculation of the basic and diluted loss per ordinary share is based on the following data:

Dilutive loss per ordinary share equals basic loss per ordinary share as there is no dilutive effect from the subsisting share options.

12 Investments

On 22 April 2016, the Group acquired 1 million Series A preferred stock in Intensity Therapeutics Inc., a Delaware corporation ("Intensity") for US$2m in cash. All Series A Preferred stock is convertible into equal number of common shares in Intensity. The Company's holdings represent less than 10% of the equity of Intensity.

On 23 July 2018, the Group has determined the fair value of the investment to be US$12.64m based on a valuation agreed on the sale of SalvaRx Limited (see note 27). The full amount of the investment relates to SalvaRx Limited group and was transferred to the disposal group classified as held for sale (note 28).

13 Intangible assets

On 1 July 2015, iOx Therapeutics Limited ("iOx") entered into an Investment Agreement with The University of Oxford, ISIS, the Ludwig Institute, and Professor Cerundolo. As part of this agreement, iOx also entered into a Clinical Trials Sponsorship agreement with The University of Oxford and entered into a licence agreement with the Ludwig Institute to access intellectual property rights and know-how relating to cell agonists. The Directors determined that the excess of consideration over identifiable assets and liabilities arising on the acquisition of iOx on that date related entirely to this in-process research asset.

The asset is being amortised over 8 years, being the Directors assessment of the period over which the technologies are likely to be developed and at the end of which commercial products will hopefully be available for sale. The remaining life of the intangible asset is 4.5 years. In the opinion of the Directors, the progress of iOx is satisfactory and there is therefore no indication of impairment. The full amount of the asset relates to SalvaRx Limited group and was transferred to the disposal group classified as held for sale (note 28).

14 Investments in associates

Details of the Group's material associates at the end of the reporting period are as follows:

All of the above associates are accounted for using the equity method in these consolidated financial statements.

Rift Biotherapeutics Inc. ("RIFT")

On 13 December 2016, SalvaRx Limited, a wholly owned subsidiary of the Company, invested US$45,000 in cash in convertible promissory note issued by Rift Biotherapeutics Inc., a Delaware corporation ('RIFT").

On 9 February 2017, SalvaRx Limited advanced a further US$45,000 and on 20 March 2017, SalvaRx invested US$ 1 million in RIFT. The total investment of US$1,090,000 in RIFT was converted into a 33% equity holding.

On 6 December 2017, SalvaRx Limited acquired a further 251,798 of Series A preferred stock for a total consideration of US$349,999. This increased the Group's interest to 34.99%.

Subject to RIFT achieving certain development milestones, SalvaRx Limited has an obligation to acquire a further 467,626 of Series A preferred stock for a total consideration of US$650,000. As the directors currently consider the achievement of the development milestones to be possible but not certain this obligation has been accounted for as a contingent liability, see note 27.

In addition, SalvaRx Limited also has the option to invest up to an additional US$500,000 at the same value of its original investment. SalvaRx Limited has also entered an option to acquire all outstanding shares of RIFT in exchange for new shares in SalvaRx Limited on the same basis within 90 days of the milestone investment referred to above being achieved.

Nekonal Oncology Limited ("Nekonal Oncology")

SalvaRx Limited, a subsidiary of the Group, has entered into an agreement to invest in and form a collaboration with Nekonal SARL ("Nekonal"), a Luxembourg-based company holding intellectual property rights for therapeutics and diagnostics in the field of autoimmune disorders and oncology. As part of the agreement, SalvaRx and Nekonal have formed Nekonal Oncology, which will utilise SalvaRx's management and drug development expertise to exclusively explore the applications of Nekonal's technology in cancer immunotherapy.

SalvaRx Limited has made a nominal equity investment and a capital contribution of €300,000 in Nekonal Oncology. Nekonal Oncology has been treated as an associate company by the Group as the equity interest is 33%.

SalvaRx Limited has an obligation to make a further capital contribution of €300,000 once certain development milestones have been achieved, as the milestones were expected to be achieved when the investment was made this obligation of £269,000 has been included in other creditors see note 19. 

SalvaRx Limited also has acquired an option from Nekonal SARL for a one-time fee of €300,000 that gives SalvaRx the right to acquire option shares in any qualifying subsidiary of Nekonal. Further disclosure is provided in note 15.

Summarised financial information in respect of each of the associates is set out below.

Reconciliation of the above summarised financial information to the carrying amount of the interest in RIFT:

Reconciliation of the above summarised financial information to the carrying amount of the interest in Nekonal Oncology Limited:

15 Prepayment - non-current

SalvaRx Limited has acquired an option from Nekonal SARL for a one-time fee of €300,000 that gives SalvaRx the right to acquire option shares in any qualifying subsidiary of Nekonal for €50 per share subject to SalvaRx having made a total of €600,000 of capital contributions to Nekonal Oncology Limited. As at 31 December 2018 SalvaRx Limited has made €300,000 of capital contributions and has an obligation to make a further capital contribution of €300,000 once certain development milestones have been achieved. This obligation of £269,000 has been included in other creditors. Subject to this further investment the option is exercisable at any time within four years of the option agreement dated 27 February 2017. The full amount of the prepayment relates to the SalvaRx Limited group and was transferred to the disposal group classified as held for sale (note 28).

16 Trade and other receivables

Trade and other receivables that relate to the SalvaRx Limited group were transferred to the disposal group classified as held for sale (note 28).

17 Cash and cash equivalents

Cash and cash equivalents as at 31 December 2018 of approximately £1 million (2017: £0.57 million) comprise cash held by the Group. The full amount of cash and cash equivalents relates to the SalvaRx Limited group and was transferred to the disposal group classified as held for sale (note 28). The Directors consider that the carrying amount of these assets approximates to their fair value.

18 Loan notes and borrowings

On 2 March 2017, the Company announced an offering by its subsidiary SalvRx Limited of unsecured loan notes of up to US $5 million, carrying a coupon of 7% and repayable in four years. The loan notes were subscribed in tranches during the year. The holders of the loan notes were issued US $7,500 of warrant in respect of each US $10,000 loan note. The warrants vest in the event of a qualifying transaction (including the disposal on 8 January 2018) and are exercisable at a 30% discount to the implied valuation of SalvaRx Limited. SalvaRx Limited raised US $3,960,000 in unsecured loan notes from the offering reflecting a sterling value of £3,134,000 on issue. 

The coupon interest of 7% arising on the 2017 loan notes is included within accruals.

On 8 March 2018, iOx Therapeutics Limited has issued US $1 million of unsecured convertible loan notes. The Notes have the following key terms:

1. the Notes entitle the holder thereof to interest of 7% per annum on the principal amount of the Notes;

2. the Notes are convertible into ordinary shares in iOx on the earlier of the first anniversary of the effective date or the date on which iOx conducts a sale or listing or it undertakes an eligible third party fundraising of not less than US$2M;

3. the conversion price of the Notes would be either (a) 25% discount to the next financing, (b) the price per share of the relevant sale, or, in the case of event that both (a) or (b) do not occur within one year (c), GBP120 per share.

4. the Notes do not have any provision for repayment (other than in an event of default).

On 10 December 2018, iOx Therapeutics Limited has issued an additional US $1 million of unsecured convertible notes. The Notes have the following key terms:

1. the Notes entitle the holders thereof to interest of 7% per annum on the principal amount of the Notes;

2. the Notes are convertible into ordinary shares of iOx only on the date on which iOx conducts a sale or listing or it undertakes an eligible third party fundraising of not less than US$2 million (a "Qualifying Event"), or in the event of a default;

3. the conversion price of the Notes will be:

a. If a Qualifying Event occurs within 1 year of the issue of the relevant Notes - the Qualifying Event price with a 25% discount;

b. If a Qualifying Event occurs after 1 year of the issue of the Notes - the Qualifying Event price with a 25% discount plus 5% discount for each additional full year since the first anniversary of the issue of the relevant Notes;

c. If there is an event of default, the higher of (i) the price on the last Qualifying Event and (ii) £120 per share (if the Noteholder chooses to convert rather than redeem the Notes for cash).

4. the Notes do not have any provision for repayment (other than in an event of default).

19 Trade and other payables

Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going costs. The average credit period taken for trade purchases is 40 days (2017: 45 days). The Group has financial risk management policies to ensure that all payables are paid within the credit timeframe. The Directors consider that the carrying amount of trade and other payables approximates to their fair value. No interest is generally charged on balances outstanding. Other creditors comprise funding obligations to Nekonal Oncology Limited, as disclosed in note 15.

On 26 June 2018, J Mellon and G Bailey made loans to the company of US$500,000 each. Interest is payable on the loans at 7% per annum and the loans are unsecured and repayable on 20 June 2019.

Trade and other payables that relate to the SalvaRx Limited group were transferred to the disposal group classified as held for sale (note 28).

20 Financial instruments

Capital risk management

The Group manages its capital resources so as to ensure that entities in the Group will be able to continue as a going concern.

Following the disposal of SalvaRx Limited on 8 January 2019, the capital resources of the Group consist of cash and cash equivalents and shares in Portage Biotech Inc. arising from equity attributable to equity holders of the parent.

Externally imposed capital requirement

The Group is not subject to externally imposed capital requirements.

The financial assets and liabilities attributed to discontinued are included in the disposal group set out in note 28.

Financial risk management objectives

Following the disposal on 8 January 2019, the financial risk management objective of the Group is to utilise capital resources whilst seeking a suitable acquisition.

Foreign exchange risk and foreign currency risk management

Given the disposal of SalvaRx Limited on 8 January 2019, and the formation of a disposal group, the following disclosure is presented for continuing operations only:

Credit risk management

Following the disposal on 8 January 2019, the Directors consider that there is no material credit risk. The primary asset held after this date are shares in Portage Biotech Inc.

Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long- term funding and liquidity management requirements.

The following tables analyse financial liabilities by remaining contractual maturity. The balances for 2018 relate to continuing group only, as the assets and liabilities within the disposal group were disposed of on 8 January 2019.

The Group expects to pay all liabilities at their contractual maturity.

21 Share capital and share premium

The parent company has one class of Ordinary Shares, which carry no right to fixed income.

Movements during the year:

During the year, 233,000 Ordinary Shares with a nominal value of 2.5p each were issued for a cash consideration of £62,000, resulting in a share premium reserve of £56,000 (2017: £nil).

22 Reverse acquisition reserve

The reverse acquisition reserve of £3,065,000 (2017: £3,065,000) arose when SalvaRx Limited completed a reverse takeover of 3 Legs Resources plc during 2016.

23 Share-based payment reserves

Share options outstanding are as follows: