REG - Belluscura PLC - Final Results
27/06/2024 07:00
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RNS Number : 0635U Belluscura PLC 27 June 2024
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED. ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
Belluscura plc
("Belluscura" or the "Company" or "Group")
Final Results for the year ended 31 December 2023
LONDON, U.K. AND PLANO, TX, U.S. (27 June 2024). Belluscura plc (AIM:BELL), a
leading medical device developer focused on lightweight and portable oxygen
enrichment technology, announces its Final Results for the year ended 31
December 2023.
Current trading and outlook:
· Sales in the first half of 2024 are trending significantly higher
than in 2023 as we start to gain traction with X-PLOR in the US:
o US sales of X-PLOR have approximately doubled month-on-month in each of
the last four months through to May 2024.
o Sales in May 2024 were approximately $450k and further significant monthly
growth will be achieved in June 2024.
o Preliminary orders received for 6,500 DISCOV-R devices.
· Anticipate strong growth in sales in 2024 and 2025 from both the
X-PLOR and DISCOV-R devices.
o As the ramp up in sales continues to grow, with the initial launch of the
DISCOV-R now underway with full commercial launch in the second half of 2024.
Operational highlights:
· Most of 2023 focussed on:
o developing our next-generation DISCOV-R portable oxygen generator
o improving and expanding our manufacturing capabilities in the US and China
o building, expanding and improving our sales force capabilities in the US
and China
· Signed a royalty bearing license agreement with our manufacturing
partner InnoMax Medtech to sell and distribute the X-PLOR in China
· Received approval from China's medical device authority ("NMPA")
to sell X-PLOR in China. We also received approval to sell in Singapore and
Hong Kong
· Released our proprietary NOMAD biometric app on a trial basis
Financial Headlines:
· Group revenue of $0.8 million (2022: $1.4m)
· Loss before tax of $18.5m (2022: $8.2m)
· Adjusted loss from operations of $6.3m (2022: $6.2m)
· Basic loss per share of $0.14 (2022: $0.06)
· Net Cash as at 31 December 2023 of $0.9m
Robert Rauker, CEO, Belluscura plc, commented:
"The Group made substantial product, operations and regulatory approval
development progress in 2023, with record sales of the X-PLOR in May the
Company is starting to gain good traction in the US. In addition, with the
initial Direct to Consumer launch of DISCOV-R in June, the Board now looks
forward to the Group capturing share of its market which continues to
grow. The Company is well positioned to deliver substantial growth in 2024
and we look forward to the future with confidence."
For further information please contact:
Belluscura plc Tel: +44 (0)20 3128 8100
Adam Reynolds, Chairman
Robert Rauker, Chief Executive Officer
Simon Neicheril, Chief Financial Officer
SPARK Advisory Partners Limited - Nominated Adviser Tel: +44 (0)20 3368 3550
Neil Baldwin / Jade Bayat
Dowgate Capital Limited - Broker Tel: +44 (0)20 3903 7715
Russell Cook / Nicholas Chambers
MHP Group - Financial PR & Investor Relations Tel: +44 (0)20 3128 8100
Katie Hunt / Matthew Taylor email: Belluscura@mhpgroup.com
(file:///C%3A/Users/Matthew.Taylor/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/SXDYXY87/Belluscura@mhpgroup.com)
CHAIRMAN & CEO'S STATEMENT
2023 - Laying the Foundation for Growth
We spent most of 2023 focusing on developing our next-generation DISCOV-R
portable oxygen generator, improving and expanding our manufacturing
capabilities in the US and China and building, expanding and improving our
sales force capabilities in the US and China.
Lasting supply chain and manufacturing issues from COVID, mostly lack of
availability of components and longer than normal-lead times to order others,
impacted sales of our X-PLOR portable oxygen concentrator product. The issues
were resolved the second half of 2023 setting up the Company to grow sales in
2024. As part of our push to improve sales we made several strategic hires in
the US and China and started a direct-to-consumer sales program and as a
consequence we have shown significant growth in the first half of 2024,
exceeding 2023 sales.
We introduced prototypes of the DISCOV-R portable oxygen concentrator in Q3.
Patient feedback was positive.
Distributor feedback was also positive. Over 6,500 preliminary orders were
received for the DISCOV-R setting the foundation for the initial product
launch in June 2024 with full commercial launch in October 2024.
In August, we signed a royalty bearing license agreement with our
manufacturing partner InnoMax Medtech to sell and distribute the X-PLOR in
China. In late December we received approval from China's medical device
authority ("NMPA") to sell X-PLOR in China. We also received approval to sell
the X-PLOR in Singapore and Hong Kong. Receiving approval in China allows us
to start selling the X-PLOR in China in 2024. Sales in China continue to grow
in the first half of 2024.
We released our proprietary NOMAD biometric app on a trial basis in 2023. The
NOMAD tracks data on the X-PLOR and any connected third-party Bluetooth
devices of the patient such as iWatch, pulse oximeters, Galaxy watches, and
Fitbit devices. The NOMAD generation 1 beta platform will be followed by a
commercial generation 2 in by the end of 2024.
2024 and Beyond
The Company anticipates strong growth in sales in 2024 and 2025 from both the
X-PLOR and DISCOV-R devices.
US sales of X-PLOR have approximately doubled month-on-month in each of the
last four months through to May 2024. Sales in May 2024 were approximately
$450k and further significant monthly growth will be achieved in June 2024.
June also marked the initial launch of the DISCOV-R direct to consumer sales
program with full commercial launch of the product expected in H2.
Feedback in March of this year from distributors at the largest home
healthcare trade show in the US, Medtrade, was very positive. Sales in the
first half of 2024 are trending significantly higher than in 2023 with the
ramp up continuing to grow with the initial launch of the DISCOV-R.
The global demand for medical oxygen continues to grow with an estimated 300m
to 400m people suffering from Chronic Obstructive Pulmonary Disease(1).
The journey to commercialisation has been a long one, however we have one
robust product in the market with our second product to follow in June, the
Board now looks forward to the Group capturing market share.
(1) Source: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5921960/
(https://protect.checkpoint.com/v2/___https:/www.ncbi.nlm.nih.gov/pmc/articles/PMC5921960/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzoxNzBkOTk1NTI3MGJlNGVkYzk2ZTU2ZmI4ZjY3M2FkYjo2OmIyZDM6YWVmMWYxZGI5NDFiZGJiMjBlOTUwZDEwMTI1ZmIwNWI0M2Q4Y2U3ODA2OWQ5NzllYWRjMmQ5ZDExNjU5ZjZiNTpwOkY6Tg)
Adam Reynolds - Chairman
Robert Rauker - Chief Executive Officer
The following are extracts from the Annual Report which will be available on the Company's website www.belluscura.com, and which will be sent to shareholders shortly.
FINANCIAL REVIEW
Independent Auditor's Report to the Members of Belluscura plc
Shareholders' attention is drawn to the Material uncertainty related to going
concern in the Independent Auditor's Report on page 12.
Further information on the Board's assessment of Fund Raising, Prospects and
Forecasts is provided under Going Concern in the Director's Report starting on
page 9.
Income statement
Revenue for the year to 31 December 2023 was $0.83m (2022: $1.40m). There was
a Product Gross Loss in the year of $65,088 (2022: Profit $68,105). With the
Group trying to establish its products in the market, pricing was deliberately
competitive to establish early B2B sales combined with cost of goods sold
reflecting the initial volume higher input costs. Other operating income was
$33,942 (2022: $8,703).
Inventory Impairment and Adjustments: Due to the early-stage nature of the
business, minimum order quantities, the rapid development of products and the
need to bring manufacturing in-house the Company holds a large quantity of
Inventory. The Board have reviewed the Inventory and made a best assessment of
its value and judged that the impairment of obsolete raw materials, the value
of finished goods and batteries are absolute. The total of these adjustments
in the year was $4.22m (2022: $0.74m).
Administrative expenses were $13.4m (2022: $7.5m), see note 6.4 to the
accounts.
· Operating Expenses. Normal operating expenses were consistent
with the prior year, $6.00m (2022: $6.00m) with slight increases in Staff and
Other Costs netting off against reduced Sales and Marketing Expense.
· Amortisation and Depreciation: Due to the rapid development of it
products the Group continued to accelerate the amortisation of development
costs associated with the X-PLOR product, with a charge in the period
of $3.29m (2022: $2.91m).
· Staff related Exceptional Costs: These include the Share-based
Payments Charge, Accrued Executive Bonus and Costs related to the Former CFO.
$0.57m (2022: $0.39m).
· Foreign exchange movements in Admin Expenses: The US$ weakened
against £Sterling by 12% during the year (1 January 2023 - $1.21:£1.00; 31
December 2023 - $1.27:£1.00). Due to the size of the Inter-Company Loan from
the PLC to the US subsidiary which is fixed in £Sterling, $2.25m loss (2022:
$2.9m gain).
· Royalties: Since the launch of X-PLOR in 2022, the Group's
minimum royalty payments due are charged to the profit & loss account,
$0.79m (2022: $0.76m).
Operating Loss for the year was $18.5m (2022: $8.2m), Total Comprehensive Loss
was $16.3m (2022: $12.0m). Adjusted EBITDA Loss of $6.3m (2022: $6.2m) (See
note 26 to the accounts). The adjusted EBITDA measures the underlying business
performance by removing the impact of non-cash accounting adjustments which is
a key performance indicator for our shareholders.
Loss per share
The basic and diluted loss per share was $0.142 (2022: $0.055).
Financial position
The Group net assets as at 31 December 2023 were $17.7m (2022: $20.4m). This
comprised total assets of $20.8m (2022: $23.6m) and total liabilities of $3.1m
(2022: $3.2m). The total assets included intangible assets (capitalised
research and development costs), property, plant and equipment and
right-of-use assets of $10.3m (2022: $9.1m).
During the year we have transferred a significant amount of Raw Material
Inventory to InnoMax in China, resulted in significant reduction in Inventory
which, at 31 December 2023, stood at $3.32m (2022: $ 8.43m).
Cashflow
At 31 December 2023 the Group had net cash of $0.9m (2022: $2.0m). During the
year, net cash inflow from funds raised in the year was $12.6m (2022: $7.5m),
net cash outflow from operating activities was $9.1m (2022: $14.9m).
Dividends
No dividend is recommended (2022: £nil) due to the early stage of the
development of the Group.
Events after the reporting period
Events after the reporting period are detailed in Note 28 to the Accounts.
Analysis of Financial and non-Financial Key Performance Indicators
The Board continues to monitor performance regularly throughout the year by
reviewing a range of key performance indicators. These include revenue growth,
progress towards operational break even, expenditure (both current and
investment) control against budget and cash used and remaining.
The Directors expect further improvement in performance in future periods as
it achieves success in the Group's strategy to launch its products and grow
through continual investment.
Principal Risks and Uncertainties
The Group actively considers and manages its risks. The Directors consider the
following areas of business and operational risk and details how this risk is
managed or mitigated:
· Generating revenue. The Group's primary source of revenue is from
sales of its X-PLOR product. Management performs regular reviews of the sector
to ensure it is targeting large markets.
· Successful product development. The Group received FDA 510(k)
clearance for X-PLOR on 2 March 2022. The Group's follow-on products are in
advanced development and are based upon shared technology with X-PLOR. The
Board regularly monitors the carrying value of capitalised product development
in the light of plans for future revenue and margin.
· Credit risk. The Group's principal financial assets are cash, and
trade and other receivables. The Group monitors receivables and should any
be the subject of an identified loss event, allowance is made for impairment
if required. The credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings assigned by international
credit-rating agencies. Further, apart from Inter-company consolidated
transactions, the Group has no current debt outstanding (excluding leases
capitalised under IFRS16).
· Liquidity risk. To support expansion plans for future
development, the Group regularly reviews its financing arrangements and cash
flows to ensure there is sufficient funding in place. Further information on
the Board's assessment of Fund Raising, Prospects and Forecasts is provided
under Going Concern in the Director's Report starting on page 9.
· Foreign exchange risk. As the Group holds Sterling cash deposits
and reports its financial performance in US Dollars, this exposes the Group to
a potential unrealised currency risk on its Sterling bank balances. This
relates to the raising of capital in the United Kingdom. The Directors review
this exposure on a regular basis.
Contingent Liabilities
As reported in note 25, on 24 February 2017, the Company entered into a
co-exclusive licence and development agreement with Separation Design Group,
LLC and SDG (together the "SDG Parties") ("SDG Licence") which was
subsequently amended by an amendment agreement dated 19 March 2023. Pursuant
to the SDG Licence: if by 3 September 2025, cumulative sales of the X-PLOR and
DISCOV-R have not exceeded $20 million dollars, Belluscura must make a
one-time payment of $3 million to the SDG Parties to maintain the exclusive
SDG licence. By 31 December 2023 cumulative sales of X-PLOR were $1.8 million.
No provision has been made in these Financial Statements (see notes 4 and 25).
During 2023 the Company received a claim from a supplier regarding alleged
default by the Company under an ongoing contract. The Company has subsequently
counter-claimed against the supplier for alleged poor service The supplier has
subsequently filed a lawsuit in the United States. The Company has received an
independent legal opinion and believes that any claim against the Company is
lower than the claim made by the Company. Accordingly, no provision has been
made as at 31 December 2023.
Companies Act S.172
The Directors acknowledge their duty under s.172 of the Companies Act 2006 and
consider that they have, both individually and together, acted in the way
that, in good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole. In doing so, they have had
regard (amongst other matters) to:
· the likely consequences of any decision in the long term. The Group's
long-term strategic objectives, including progress made during the year and
principal risks to these objectives, are shown in the Chairman Statement,
Chief Executive's Review and Financial Review.
· the interests of the Company's employees. Our employees are
fundamental to us achieving our long-term strategic objectives. We aim to be a
responsible employer in our approach to the pay and benefits our employees
receive. Further details can be found in the Remuneration Report.
· the impact of the Company's operations on the community and the
environment. The Group operates honestly and transparently. We consider the
impact on the environment, the people who work for us and the wider community
and how we can minimise this.
· the desirability of the Company maintaining a reputation for high
standards of business conduct. Our intention is to behave in a responsible
manner, operate a high standard of business conduct and good corporate
governance.
· the need to act fairly as between members of the Company. Our
intention is to behave responsibly towards our shareholders and treat them
fairly and equally so that they may benefit from the successful delivery of
our strategic objectives.
Simon Neicheril
Chief Financial Officer
27 June 2024
CONSOLIDATED STATEMENT OF PROFIT & LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2023
Group 2023 2022
Note US $ US $
Continuing Operations
Revenue 5 825,409 1,398,082
Cost of sales (890,497) (1,329,977)
Product Gross (Loss)/Profit (65,088) 68,105
Inventory Impairment and Adjustments 6.1 (4,138,030) (609,848)
Gross (Loss) (4,203,118) (541,743)
Other operating income 6.2 33,942 8,703
Other direct costs 6.3 (103,991) (136,825)
Administrative expenses 6.4 (13,418,554) (7,459,047)
Operating Loss (17,691,721) (8,128,912)
Finance income 8.1 2,127 -
Finance costs 8.2 (828,025) (24,073)
Loss before income tax (18,517,619) (8,152,985)
Income tax expense 9 - -
Loss after tax for the period (18,517,619) (8,152,985)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations 2,248,588 (3,827,808)
Total other comprehensive income 2,248,588 (3,827,808)
Total comprehensive loss for the year attributable to the equity holders (16,269,031) (11,980,792)
Earnings per share
Basic & Diluted: Loss per share 10 (0.142) (0.055)
The notes on pages 25 to 46 are an integral part of these consolidated
financial statements.
Adjusted EBITDA(1)
Group 2023 2022
US $ US $
Total comprehensive loss for the year (16,269,031) (11,980,792)
Add back:
Administrative expenses Realised & unrealised FX movements in 2,424,237 (2,877,886)
Other comprehensive income FX currency translation differences (2,248,588) 3,827,808
Net foreign exchange movement(2) 175,649 949,922
Finance Income and Costs 19,337 24,073
Accrued Interest on Convertible Loan Notes 806,561 -
Product development amortisation 3,293,232 2,911,988
Costs relating to fundraising activities 92,536 -
Former CFO compensation 96,393 -
Share option costs - 162,505
Minimum royalties in excess of sales royalties 792,818 763,430
Contract Manufacturer Capacity Costs 86,440 128,607
Inventory Impairment and Adjustments 4,138,030 609,848
Accrued Bonus 315,000 -
Issue of share-based payments 163,061 229,241
Adjusted EBITDA (6,289,974) (6,201,178)
1 Reconciliation to Adjusted EBITDA measure
Adjusted EBITDA is the Group's key adjusted profit measure. Total
comprehensive loss for the year is adjusted to exclude non-recurring and
exceptional items.
2 Net foreign exchange movements
The US$ weakened against £Sterling by 5% during the year (1 January 2023 -
$1.21:£1.00; 31 December 2023 - $1.27:£1.00). Due to the size of the
Inter-Company Loan from the PLC to the US subsidiary which is fixed in
£Sterling, this creates an accounting presentational impact between
Administration Expenses and Other Comprehensive Income, which to a large
extent can be netted off against one another.
· Realised FX movements in administrative expenses arise
from the revaluation of £Sterling cash balances into US$
· Unrealised FX movements in administrative expenses arise
from the revaluation of the Inter-Company Loan fixed in £Sterling into US$
· Foreign currency translation differences in Other
Comprehensive Income arise from the revaluation of the PLC balance sheet into
US$
CONSOLIDATED BALANCE SHEET
As at 31 December 2023
Group 2023 2022
Note US $ US $
Assets
Non-current assets
Tangible assets 12 186,928 152,717
Product development 13 9,987,516 8,668,732
Other long-term receivable 15 1,952,649 -
Right of use asset 12 136,887 246,924
Non-current assets 12,263,980 9,068,373
Current assets
Inventory 14 3,320,652 8,431,031
Trade and other receivables 15 4,306,492 4,054,102
Cash and cash equivalents 16 932,926 2,044,836
Current assets 8,560,070 14,529,969
Total assets 20,824,050 23,598,342
Current liabilities
Trade and other payables 20 (3,070,621) (3,045,788)
Current liabilities (3,070,621) (3,045,788)
Non-current liabilities
Trade and other payables 20 (61,267) (200,432)
Non-current liabilities (61,267) (200,432)
Total liabilities (3,131,888) (3,246,220)
Net assets 17,692,162 20,352,122
Equity attributable to the owners of the parent
Share capital 18 1,845,523 1,662,185
Share premium 18 37,494,672 33,379,947
Other Equity Instruments 18 9,167,689 -
Capital contribution 19 165,000 165,000
Retained earnings 19 (28,635,114) (10,310,673)
Translation reserve 19 (2,345,608) (4,544,337)
Total equity 17,692,162 20,352,122
The notes on pages 25 to 46 are an integral part of these financial
statements.
The financial statements on pages 19 to 46 were authorised for issue by the
Board of Directors on 27 June 2024 and were signed on its behalf.
Robert Rauker
Simon Neicheril
Chief Executive Officer
Chief Financial Officer
Belluscura
plc
registered number 09910883
COMPANY BALANCE SHEET
At 31 December 2023
Company 2023 2022
Note US $ US $
Assets
Non-current assets
Tangible assets 12 4,424 7,107
Intangible assets 13 - -
Right of use asset 12 55,181 67,169
Investment in subsidiaries 11 301,307 -
Loans to subsidiaries 15 36,397,060 26,725,430
Non-current assets 36,757,972 26,799,706
Current assets
Trade and other receivables 15 204,511 471,965
Cash and cash equivalents 16 265,807 1,237,288
Current assets 470,318 1,709,253
Total assets 37,228,290 28,508,959
Current liabilities
Trade and other payables 20 (171,514) (155,682)
Current liabilities (171,514) (155,682)
Non-current liabilities
Trade and other payables 20 (41,978) (56,563)
Non-current liabilities (41,978) (56,563)
Total liabilities (213,492) (212,245)
Net assets 37,014,798 28,296,714
Equity attributable to the owners of the parent
Share capital 18 1,845,523 1,662,185
Share premium 18 37,542,672 33,427,947
Other equity instruments 18 9,167,689 -
Capital contribution 19 165,000 165,000
Retained earnings 19 (9,342,188) (2,414,081)
Share option reserve 19 (20,180) -
Translation reserve 19 (2,343,718) (4,544,337)
Total equity 37,014,798 28,296,714
The Parent Company's loss before tax for the period 31 December 2023 was
$7,144,338 (2022: $3,820,378).
The Group has used the exemption under S408 CA 2006 not to disclose the
Company income statement.
The notes on pages 25 to 46 are an integral part of these financial
statements.
The financial statements on pages 19 to 46 were authorised for issue by the
Board of Directors on xx June 2024.
Robert
Rauker
Simon Neicheril
Chief Executive
Officer
Chief Financial Officer
Belluscura
plc
registered number 09910883
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2023
Other
Group Ordinary Shares Share Premium Equity Instruments Translation Reserve Capital Contribution Retained Earnings Total
US $ US $ US $ US $ US $ US $
Note US $
Balance at 1 January 2022 1,548,227 26,025,760 - (716,529) 165,000 (2,349,966) 24,672,492
Issue of ordinary shares 18 113,958 7,354,187 - - - - 7,468,145
Loss for the year 19 - - - - (8,152,985) (8,152,985)
Other comprehensive income 19 - - (3,827,808) - - (3,827,808)
Total comprehensive income (3,827,808) - (8,152,985) (11,980,793)
Issue of share-based payments 19 - - - - 192,278 192,278
Balance at 31 December 2022 1,662,185 33,379,947 - (4,544,337) 165,000 (10,310,673) 20,352,122
Balance at 1 January 2023 1,662,185 33,379,947 - (4,544,337) 165,000 (10,310,673) 20,352,122
Issue of ordinary shares 18 183,338 4,114,725 - - - - 4,298,063
Issue of other equity instruments 18 - - 9,167,689 - - - 9,167,689
Loss for the year 19 - - - - - (18,517,619) (18,517,619)
Other comprehensive income 19 - - - 2,198,729 - - 2,198,729
Total comprehensive income - - - 2,198,729 - (18,517,619) (16,318,890)
Issue of share-based payments 19 - - - - - 193,178 193,178
Balance at 31 December 2023 1,845,523 37,494,672 9,167,689 (2,345,608) 165,000 (28,635,114) 17,692,162
The notes on pages 25 to 46 are an integral part of these financial
statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2023
Other
Ordinary Shares Share Premium Equity Instruments Translation Reserve Capital Contribution Retained Total
Company Note US $ US $ US $ US $ US $ Earnings
US $ US $
Balance at 1 January 2022 1,548,227 26,025,760 - (716,529) 165,000 1,214,019 28,236,477
Issue of ordinary shares 18 113,958 7,402,187 - - - - 7,516,145
Loss for the year 19 - - - - - (3,820,378) (3,820,378)
Other comprehensive income 19 - - - (3,827,808) - - (3,827,808)
Total comprehensive income - - - (3,827,808) - (3,820,378) (7,648,186)
Share-based payments 19 - - - - - 195,151 195,151
Balance at 31 December 2022 1,662,185 33,427,947 - (4,544,337) 165,000 (2,411,208) 28,299,587
Balance at 1 January 2023 1,662,185 33,427,947 - (4,544,337) 165,000 (2,411,208) 28,299,587
Issue of ordinary shares 18 183,338 4,114,725 - - - - 4,298,063
Issue of other equity instruments 18 - - 9,167,689 - - - 9,167,689
Loss for the year 19 - - - - - (7,144,338) (7,144,338)
Other comprehensive income 19 - - - 2,200,619 - - 2,200,619
Total comprehensive income - - - 2,200,619 - (7,144,338) (4,943,719)
Issue of share-based payments 19 - - - - - 193,178 193,178
Balance at 31 December 2023 1,845,523 37,542,672 9,167,689 (2,343,718) 165,000 (9,362,368) 37,014,798
The notes on pages 25 to 46 are an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2023
Group 2023 2022
Note US $ US $
Cash flows from operating activities
Cash generated from operations 24 (9,131,571) (14,906,368)
Net cash used in operating activities (9,131,571) (14,906,368)
Cash flows from investing activities
Purchases of property, plant and equipment 12 (85,409) (144,776)
Intangible assets under development 13 (4,447,282) (4,856,846)
Purchase of Right of Use asset - (75,509)
Net cash used in investing activities (4,532,691) (5,077,131)
Cash flows from financing activities
Proceeds from issuance of ordinary shares (net) 18 4,236,474 7,467,030
Proceeds from issuance of other equity instruments (net) 18 8,401,168 -
Purchase of share by Employee Benefit Trust 18 - (48,000)
Lease Payments 22 (126,347) (130,780)
Net cash generated from financing activities 12,511,295 7,288,250
Net (decrease) in cash and cash equivalents (1,152,967) (12,695,249)
Cash and cash equivalents at beginning of year 2,044,836 15,889,552
Exchange loss on cash and cash equivalents 41,057 (1,149,467)
Cash and cash equivalents at end of year 932,926 2,044,836
The notes on pages 25 to 46 are an integral part of these financial
statements.
1. General Information
Belluscura plc is a public Company limited by shares incorporated in England
and Wales and domiciled in the UK. Company Registration No. 09910883. On 28
November 2017 the Company changed its name from Belluscura Limited to
Belluscura plc.
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied, unless otherwise stated.
2. Accounting Policies
2.1 Statement of compliance
The Group financial statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group", see note 11). The parent
Company financial statements present information about the Company as a
separate entity and not about its Group.
These consolidated financial statements are prepared in accordance with United
Kingdom adopted International Financial Reporting Standards (IFRS) and issued
by the International Accounting Standards Board (IASB). The consolidated
financial statements are presented in US Dollars, the Group's functional
currency.
The financial statements for the Company have been prepared in accordance with
Financial Reporting Standard 101 by applying the recognition and measurement
requirements of United Kingdom adopted International Financial Reporting
Standards ("IFRS"), amended where necessary in order to comply with Companies
Act 2006. The Company has notified shareholders of this disclosure.
Critical accounting estimates and judgements made by the Directors, in the
application of these accounting policies that have significant effect on the
financial statements are disclosed in note 4 (a)-(c) applicable for the whole
Group and 4 (d) applicable for the Company only.
In these financial statements, the Company has applied the exemptions
available under FRS 101 in respect of the following disclosures:
· Profit & Loss account and related notes;
· Statement of financial position and related notes;
· Cash Flow Statement and related notes
· Disclosures in respect of transactions with wholly owned
subsidiaries;
· Disclosures in respect of capital management;
· The effects of new but not yet effective IFRSs;
· Disclosures in respect of the compensation of Key Management
Personnel; and
· Related party transactions with wholly owned members of the Group
As the consolidated financial statements include the equivalent disclosures,
the Company has also taken the exemptions under FRS 101 available in respect
of the following disclosures
· Certain disclosures required by IFRS 13 Fair Value Measurement
and the disclosures required by IFRS 7 Financial Instrument Disclosures.
· IFRS 2 Share-based Payments in respect of group settled
share-based payments
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these financial statements
2.1.1 Going concern
Commercial Background
US FDA 510(k) clearance of the Group's X-PLOR was received on 2 March 2021 and
was launched in the US in September 2021. The Group launched the next
generation X-PLOR in October 2022 and released the DISCOV-R for Pre-Market
Evaluation in June 2023.
In March 2022, we signed a manufacturing Master Supply Agreement ("MSA")
with InnoMax Medical Technology, Ltd ("InnoMax") to manufacture our devices
in China alongside US manufacturing.
In April 2022, the Group took the decision to transfer its US manufacturing
in-house, to increase production output at high quality standards, and achieve
a significant reduction in production costs. This was successfully completed
at the end of July 2022. The decision to bring our US manufacturing
in-house from our contract manufacturer along with the initial support of the
set-up of InnoMax manufacturing in China, resulted in significant investment
in Raw Material Inventory and Deposits which at 31 December 2022 stood at
$10.8m. During the year the Group transferred Raw Materials to InnoMax for
utilisation in China manufacturing and alongside this, as anticipated,
InnoMax is beginning to directly source most of their own components, which
will progressively result in a significant margin improvement through lower
unit cost of sales and has resulted in a reduction in the Company's inventory
levels of components. Raw Material inventory at 31 December 2023 was $1.9m.
The Group has reviewed and assessed the value of inventory, with adjustments
and impairment made of $4.1m (2022: $0.6m), as detailed in note 6.1.
X-PLOR is now almost exclusively manufactured and assembled by InnoMax and
InnoMax has begun tooling to manufacture a DISCOV-R units commercially in
October 2024, after initial test production units are developed and perfected
in the US beginning in June 2024.
Cash at 31 December 2023 was $0.9m (2022: $2.0m).
Position at 31 May 2024
At 31 May 2024, the Group held $2.9M in Inventory and Finished Goods, $3.9m in
Accounts Receivable (of which $3.5m was due from InnoMax for the supply of
components) and had Cash of $1.1m.
Fundraising
The Group raised $22.5m after expenses in its IPO on 28 May 2022
and $7.1m after expenses from investors in May 2023 to support the inventory
requirements of the new manufacturing agreement. In addition, $5.1m after
expenses was raised through the placing of Loan Notes in February 2023, and
$3.7m after expenses through an equity placing in June 2023 and a further $4m
in October 2023. In March 2024, $5.2m was raised after expenses through the
acquisition of TMT Acquisition plc, which operated as a cash shell.
In June 2024 the Company raised $0.3m from the issue of equity. In July 2024
the Board expects to raise up to $3M with a combination of a straight equity
and through convertible loan notes (subject to shareholder's approval at a
General Meeting).
Prospects and Forecasts
The Board is confident the phased launch beginning in Summer 2024 of the award
winning DISCOV-R product will be transformational for the Group. Demand is
expected to be very strong because a major competitor has left the market, the
two others have larger, more bulky products, and the small size of our product
is very appealing to the customer base. Additionally, most of the
development and capital costs for DISCOV-R have already been incurred.
Strong sales of X-PLOR and the expected significant demand for the DISCOV-R,
alongside the release of working capital through the sale of goods from its
existing inventory, and a capital raise in June and the expected one in July
together totalling up to $3M (as noted above) indicate that the Group has
sufficient cash reserves to operate within the level of its current facilities
for a period of 12 months from the date of approval of the financial
statements.
Should projected sales and prices not materialize as anticipated in the
Group's forecasts, then the Board would actively consider further fundraising
and other mitigating actions (these conditions are necessarily considered to
represent a material uncertainty that may cast significant doubt over the
Group's and the Company's ability to continue as a going concern).
The Group's forecasts, taking account of reasonably possible downsides in
trading performance and development costs/timelines, and the risks to these
projections (set out in the Principal Risks and Uncertainties section of the
Group Strategic Report on page 4) have been considered by the Board in its
assessment of these forecasts.
Based on the above, the Directors believe it remains appropriate to prepare
the financial statements on a going concern basis.
2.1.2 Measurement convention
The financial statements are prepared on the historical cost basis except that
assets and liabilities are stated at their fair value.
2.1.3 Changes in accounting policy
In these financial statements, where the Group has adopted new or updated
standards, there is not a material impact on the financial information.
2.2 Basis of Consolidation
Belluscura plc was incorporated on 10 December 2015. On 16 May 2016, a US
incorporated Company, Belluscura LLC, was formed as a 100% owned subsidiary.
Subsidiaries are entities controlled by the Group.
The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. In assessing control, the
Group takes into consideration potential voting rights. The acquisition date
is the date on which control is transferred to the acquirer. The financial
statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control
ceases. Losses applicable to the non-controlling interests in a subsidiary are
allocated to the non-controlling interests even if doing so causes the
non-controlling interests to have a deficit balance.
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that
there is no evidence of impairment.
2.3 Foreign currencies
(a) Functional and presentation currency
These consolidated financial statements are presented in US Dollars which is
the presentation currency of the Group, because the majority of the Group's
transactions are undertaken in US Dollars. Each entity within the Group has
its own functional currency which is dependent on the primary economic
environment in which that subsidiary operates.
(b) Transactions and balances
Foreign currency transactions are translated into functional currency using
the exchange rates prevailing at the dates of the transactions or valuation
where items are re-measured. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at the year-end
exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement. Foreign exchange gains and
losses that relate to borrowings and cash and cash equivalents are presented
in the income statement within 'finance income or costs'.
(c) Group companies
The results and financial position of all Group entities (none of which has
the currency of a hyper-inflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation
currency as follows:
(i) assets and liabilities for each balance sheet presented
are translated at the closing exchange rates at the date of that balance sheet
(ii) income and expense for each income statement are translated
at the average rates of exchange during the year (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are translated at the
rate on the dates of the transactions)
(iii) all resulting exchange differences are recognised in other
comprehensive income.
2.4 Business combinations
All business combinations are accounted for by applying the acquisition
method. Business combinations are accounted for using the acquisition method
as at the acquisition date, which is the date on which control is transferred
to the Group.
For acquisitions on or after 1 January 2010, the Group measures goodwill at
the acquisition date as:
· the fair value of the consideration transferred; plus
· the recognised amount of any non-controlling interests in the
acquiree; plus
· the fair value of the existing equity interest in the acquiree;
less
· the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately
in profit or loss. Costs related to the acquisition, other than those
associated with the issue of debt or equity securities, are expensed as
incurred.
Any contingent consideration payable is recognised at fair value at the
acquisition date. If the contingent consideration is classified as equity, it
is not remeasured and settlement is accounted for within equity. Otherwise,
subsequent changes to the fair value of the contingent consideration are
recognised in profit or loss.
On a transaction-by-transaction basis, the Group elects to measure
non-controlling interests, which have both present ownership interests and are
entitled to a proportionate share of net assets of the acquiree in the event
of liquidation, either at its fair value or at its proportionate interest in
the recognised amount of the identifiable net assets of the acquiree at the
acquisition date. All other non-controlling interests are measured at their
fair value at the acquisition date.
2.5 Employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis
and are expensed as the related service is provided. A liability is
recognised for the amount expected to be paid under short-term cash bonus or
profit-sharing plans if the Group has a present legal or constructive
obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
Share-based payment transactions
Share-based payment arrangements in which the Group receives goods or services
as consideration for its own equity instruments are accounted for as
equity-settled share-based payment transactions.
The grant date fair value of share-based payment awards granted to employees
is recognised as an employee expense, with a corresponding increase in equity,
over the period that the employees become unconditionally entitled to the
awards. The fair value of the options granted is measured using an option
valuation model, taking into account the terms and conditions upon which the
options were granted (See Note 18).
The amount recognised as an expense is adjusted to reflect the actual number
of awards for which the related service and non-market vesting conditions are
expected to be met, such that the amount ultimately recognised as an expense
is based on the number of awards that do meet the related service and
non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant date
fair value of the share-based payment is measured to reflect such conditions
and there is no true-up for differences between expected and actual outcomes.
2.6 Interest income and expenses
Interest income and interest payable are recognised in P&L as they accrue,
using effective interest method.
2.7 Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation
and accumulated impairment losses. Historical cost includes expenditure that
is directly attributable to the acquisition of the items. Subsequent costs are
included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Depreciation of assets is calculated is provided to write off the cost less
the estimated residual value of tangible fixed assets by equal instalments
over the estimated useful economic lives as follows: Furniture - 5 years;
Computer equipment - 3 years; Leasehold improvements - 5
years.
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period. An asset's carrying amount
is written down immediately to its recoverable amount if the assets carrying
value is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the
carrying amount and are recognised within administrative expenses in the
income statement. When re-valued assets are sold, the amounts are included in
other reserves are transferred to retained earnings.
2.8 Intangible assets
Licences and development costs
Costs associated with the acquisition of Licences for technologies and
distribution rights are recognised as an intangible asset when they meet the
criteria for capitalisation. That is, they are separately identifiable,
measurable and it is probable that economic benefit will flow to the entity.
Further development costs attributable to the licenced technology and
recognised as an intangible asset when the following criteria are met:
(i) it is technically feasible to complete the technology for
commercialisation so it will be available for use;
(ii) management intends to complete the technology and use or sell it;
(iii) there is an ability to use or sell the technology;
(iv) it can be demonstrated how the technology will generate probable
future economic benefits;
(v) adequate technical, financial and other resources to complete the
development and to use or sell the technology are available; and
(vi) the expenditure attributable to the technology during its
development can be reliable measured.
Licences and their associated development costs are amortised over the life of
the licence or the underlying patents, whichever is shorter. The estimated
useful life of the licences and development costs is 3-15 years.
Development costs are amortised from the date products are launched, taking
into account the Directors opinion as to the expected further development of
the technology and is regularly reassessed.
2.9 Impairment of non-financial assets
The carrying amounts of the non-financial assets, other than inventories and
deferred tax assets, are reviewed at each reporting date to determine whether
there is any indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated. For goodwill, and intangible assets
that have indefinite useful lives or that are not yet available for use, the
recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit is the greater of
its value in use and its fair value less costs to sell. 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 the purpose of
impairment testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other
assets or groups of assets (the "cash-generating unit" or "CGU"). Due to the
close technological nature of it's two products, Belluscura has assessed the
business has one CGU.
An impairment loss is recognised if the carrying amount of an asset or its CGU
exceeds its estimated recoverable amount. Impairment losses are recognised in
profit or loss. Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to the units,
and then to reduce the carrying amounts of the other assets in the unit (group
of units) on a pro rata basis. The Company's current product technology
generates cash inflow in the same manner and therefore the management have
assessed there to be one CGU.
An impairment loss in respect of goodwill is not reversed. In respect of other
assets, impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
2.10 Financial assets
2.10.1 Classification
The Group classifies its financial assets depending on the purpose for which
the asset was acquired. Management determines the classification of its
financial assets at initial recognition. During the financial period the Group
held loans and receivables that are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market. They are
included in current assets, except for maturities that are greater than 12
months after the end of the reporting year. These are classified as noncurrent
assets. The Group's loans and receivables comprise 'trade and other
receivables' in the balance sheet. The Group also has cash and cash
equivalents.
2.10.2 Recognition and measurement
Loans and receivables are recognised on the trade date in which the
transaction took place, and are recognised at their fair value with
transaction costs expensed in the income statement. Financial assets are
derecognised when the rights to receive cash flows from the loans or
receivables have been collected, expired or transferred and the Group has
subsequently transferred substantially all risks and rewards of ownership.
2.11 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the
balance sheet when there is a legally enforceable right to offset the
recognised amounts and there is the intention to settle on a net basis or
realise the asset and settle the liability simultaneously.
2.12 Impairment of financial assets
Assets carried at amortised cost
A financial asset not carried at fair value through profit or loss is assessed
at each reporting date to determine whether there is objective evidence that
it is impaired. A financial asset is impaired if objective evidence indicates
that a loss event has occurred after the initial recognition of the asset, and
that the loss event had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
The Group recognises a provision for expected credit loss (ECL) for all
financial assets not held at fair value through profit or loss. ECLs are based
on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive,
discounted at the original effective interest rate. The expected cash flows
will include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms (if any). ECLs are
recognised in two
stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for
credit loss that results from default events that are possible within the next
12 months (a 12-month ECL). For those credit exposures for which there has
been a significant increase in credit risk since initial recognition, a loss
provision is required for credit loss expected over the remaining life of the
exposure, irrespective of the timing of the default (a lifetime ECL).
The ECL model is applicable to financial assets classified at amortised cost
and contract assets under IFRS 15 Revenue from Contracts with Customers. The
measurement of ECL includes where relevant, an unbiased and
probability-weighted amount that is determined by evaluating a range of
possible outcomes, time value of money and reasonable and supportable
information that is available without undue cost or effort at the reporting
date, about past events, current conditions and forecasts of future economic
conditions.
The Group applies both the simplified approach, using a provision loss rate
matrix which is based on its historical credit loss experience, adjusted for
forward-looking factors specific to the receivables and the economic
environment; and the three-stage general approach to determine impairment of
trade receivables depending on their respective nature.
The three-stage approach assesses impairment based on changes in credit risk
since initial recognition using the past due criterion and other qualitative
indicators such as increase in political concerns or other macroeconomic
factors and the risk of legal action, sanction or other regulatory penalties
that may impair future financial performance. Financial assets classified as
stage 1 have their ECL measured as a proportion of their lifetime ECL that
results from possible default events that can occur within one year, while
assets in stage 2 or 3 have their ECL measured on a lifetime basis. Under this
approach, the ECL is determined by projecting the probability of default (PD),
loss given default (LGD) and exposure at default (EAD) for each ageing
category and for each individual exposure. The PD and LGD is based on default
rates determined by external rating agencies for the counterparties. The EAD
is the total amount of outstanding receivable at the reporting period. These
three components are multiplied together and adjusted for forward-looking
information, which includes relevant country: GDP data; inflation rates;
interest rates; and FX rates and product selling prices, to arrive at an ECL.
The discount rate used in the ECL calculation is the original effective
interest rate or an approximation thereof.
For receivables from related parties, the Group applies the general approach.
The general approach involves tracking the changes in the credit risk and
recognising a loss allowance based on a 12-month ECL at each reporting date.
When the Group acquires credit impaired assets, the ECL that is netted against
the gross receivable balance is released to the consolidated statement of
comprehensive income when the original invoice that the ECL relates to is
settled.
For amounts due from Group companies, the Company recognises an allowance
equal to the 12-month ECL where there has been no significant increase in
credit risk since initial recognition. If it has been determined that there
has been a significant increase in credit risk since initial recognition, a
lifetime ECL is recognised
2.13 Leases
At the inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration.
As a lessee
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term, unless the
lease transfers ownership of the underlying asset to the Group by the end of
the lease term or the cost of the right-of-use asset reflects that the Group
will exercise a purchase option. In that case the right-of-use asset will be
depreciated over the useful life of the underlying asset, which is determined
on the same basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the
following:
- fixed payments, including in-substance fixed payments;
- variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement date
- amounts expected to be payable under a residual value guarantee;
and
- the exercise price under a purchase option that the Group is
reasonably certain to exercise,
- lease payments in an optional renewal period if the Group is
reasonably certain to exercise an extension option, and
- penalties for early termination of a lease unless the Group is
reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, there is a change in the Group's
estimate of the amount expected to be payable under a residual value
guarantee, if the Group changes its assessment of whether it will exercise a
purchase, extension or termination option or if there is a revised
in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the right-of-use asset, to the extent that
the right-of-use asset is reduced to nil, with any further adjustment required
from the remeasurement being recorded in profit or loss.
The Group presents right-of-use assets that do not meet the definition of
investment property in 'property, plant and equipment' and lease liabilities
in 'loans and borrowings' in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease
liabilities for lease of low-value assets (liabilities under $5,000 per annum)
and short-term leases (less than 12 months). The Group recognises the lease
payments associated with these leases as an expense on a straight-line basis
over the lease term.
2.14 Inventory
Inventory comprises goods held for resale and are stated at the lower of cost
or net realisable value. Cost is based on First In, First Out ("FIFO")
principle and includes all direct expenditure and other appropriate
attributable costs incurred in bringing the inventory to its present location
and condition.
2.15 Trade receivables
Trade receivables are amounts due from customers for the sale of goods in the
ordinary course of business. Collection is normally expected within three
months or less (in the normal operating cycle of the business) and is
classified as current assets. In the rare circumstances that they exceed a
period of greater than one year they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less any
provision for impairment.
2.16 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents
includes cash in hand, deposits held at call with other banks, other short
term highly liquid investments with maturities of three months or less and
bank overdrafts.
2.17 Equity
Share capital and share premium
The share capital account has been established to represent the nominal value
for all share issues. The share premium account has been established to
represent the excess of proceeds over the nominal value for all share issues,
including the excess of the exercise share price over the nominal value of the
shares on the exercise of share options as and when they occur. Incremental
costs directly attributable to the issue of new ordinary shares and new shares
options are shown in equity as a deduction, net of tax, from the proceeds.
Other Equity Instruments
The Company has raised funds through the issues of Convertible Loan Notes. The
issue of the Loan Notes is a form of equity instrument as detailed in Note 4
(f). The Company has a small number of Warrants outstanding to which the
Company has not applied a value to (see note 18).
Warrants
The Company accounts for issued warrants either as a liability or equity in
accordance with the substance of the transaction, depending on whether the
warrants are issued in exchange for goods or services, or not. When there is
an exchange of goods or services, warrants are accounted for as share-based
payments. If there is no exchange of goods or services, the warrants are
considered an equity instrument if it includes: (i) no contractual obligation
either to deliver cash or another financial asset to another entity; and
(ii) the instrument will or may be settled in the Company's own equity
instrument if it is a non-derivative that includes no contractual obligation
for the Company to deliver a variable number of its own equity instruments or
a derivative that will be settled only by the issuer exchanging a fixed amount
of cash or another financial asset for a fixed number of its own equity
instruments.
For this purpose, rights, options or warrants to acquire a fixed number of the
entity's own equity instruments for a fixed amount of any currency are equity
instruments if the entity offers the rights, options or warrants pro rata to
all of its existing owners of the same class of its own non-derivative equity
instruments. Liability-classified warrants are measured at fair value on the
grant date and at the end of each reporting period. Any change in the fair
value of the warrants after the grant date is recorded as FVTPL.
Equity-classified warrants are accounted for at fair value on grant date with
no changes in fair value recognised after the grant date.
Capital contribution
Capital contributions are contributions made by the ultimate parent for which
no consideration is given.
Retained earnings
Retained earnings are the consolidated retained earnings and share-based
payments reserve for the Group or Company.
Translation reserve
The translation reserve is the accumulated reserves created by Foreign
Exchange Differences on the consolidation of Group balances into the reporting
currency of US$.
2.18 Trade payables
Trade payables are obligations to pay for goods and services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less (or in the normal operating cycle of business if longer). If not, they
are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest rate method.
2.19 Current and deferred tax
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the consolidated income statement, except to the extent that it
relates to items recognised in other comprehensive income or directly in
equity. In this case, the tax is also recognised in other comprehensive income
or directly in equity, respectively.
The current income tax charge is calculated on the basis of tax laws enacted
or substantively enacted at the balance sheet date in the countries where the
Company and its subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation and
establishes provisions where appropriate on amounts expected to be paid to the
tax authorities.
Deferred income tax is recognised on temporary timing differences arising
between the tax bases of assets and liabilities and their carrying amounts in
the consolidated financial statements. However, deferred tax liabilities are
not recognised if they arise from the initial recognition of goodwill;
deferred income tax is not accounted for if it arises from initial recognition
of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the balance sheet date and
are expected to apply when the related deferred income tax asset is realised
or the deferred income tax liability is settled. Deferred income tax assets
are recognised only to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be
utilised.
Deferred income tax liabilities are provided on taxable temporary differences
arising from investments in subsidiaries except for deferred income tax
liability where the timing of the reversal of the temporary difference is
controlled by the Group and probably will not reverse in the foreseeable
future.
Deferred income tax assets are recognised on deductible temporary differences
arising from investments in subsidiaries only to the extent that it is
probable the temporary difference will reverse in full in the future and there
is sufficient taxable profit available against which the temporary difference
can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or
different taxable entities where there is an intention to settle balances on a
net basis.
2.20 Provisions
Provisions and any other anticipated foreseen liabilities are recognised: when
the Group has a present legal or constructive obligation as a result of past
events; it is probable that an outflow of resources will be required to settle
the obligation; and the amount has been reliably estimated. Restructuring
provisions comprise lease termination penalties, and employee termination
payments. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an
outflow will be required in settlement is determined by considering a class of
obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations
may be small.
Provisions are measured at the present value of the expenditures expected to
be required to settle the obligation using a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific
to the obligation. The increase in the provision due to the passage of time is
recognised as an interest expense.
2.21 Revenue recognition
Revenue comprises the value of consideration received for sales of our
developed products. Substantially all of our revenue is derived or denominated
in U.S. dollars, regardless of where the customer is located. At inception of
a contract with a customer the terms are assessed to determine whether they
products or services are distinct, whereby the customer can benefit from the
good or service either on its own or together with other resources that are
readily available from third parties or from us, and are distinct in the
context of the contract, where the transfer of the good or service is
separately identifiable from other promises in the contract and should be
accounted for as separate performance obligations.
Revenues from the sale of goods are recognised upon delivery.
The Group bases its estimate of return on historical results taking into
consideration type of customer, type of transaction and specifics of each
arrangement.
Where an agreement involves several performance obligations, the total fee is
allocated to individual performance obligations based on their relative
standalone selling price. The standalone selling price is assessed by
reference to prices regularly charged for the performance obligation when it
is sold separately, or if this cannot be used, then other factors may be
considered, such as the excess of the total transaction price over the sum of
the observable stand-alone selling prices of other goods or services promised
in the agreement.
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable.
3. Financial Risk Management
The Company's Directors review the financial risk of the Group. Due to the
early stage of its operations the Group has not entered into any form of
hedging instruments to assist in the management of risk during the period
under review.
3.1 Financial risk factors
Liquidity Risk
Cash flow forecasting is performed on a Group basis. Directors monitor rolling
forecasts of the Group's liquidity requirements to ensure it has sufficient
cash to meet operational needs.
At the reporting date the Group held bank balances of US $932,926 (2022:
$2,044,836). The contractual maturities of financial liabilities are shown in
note 17.
Market risk
Market risk is the risk that changes in market prices, such as foreign
exchange rates, interest rates and equity prices will affect the Group's
income or the value of its holdings of financial instruments.
Foreign exchange risk arises when individual Group entities enter into
transactions denominated in a currency other than their functional currency.
The Group's policy is, where possible, to allow Group entities to settle
liabilities denominated in their functional currency, with the cash generated
from their own operations in that currency. Where Group entities have
liabilities denominated in a currency other than their functional currency
(and have insufficient reserves of that currency to settle them), cash already
denominated in that currency will, where possible, be transferred from
elsewhere within the Group.
Due to low value and number of financial transactions that involve foreign
currency and the fact that the Group has no external borrowings to manage, the
Directors have not entered into any arrangements, adopted or approved the use
of derivative financial instruments to assist in the management of the
exposure of these risks. The Group's exposure to foreign currency risk is
based on the carrying amount for monetary financial instruments.
The gross foreign currency exposure below is with respect of pound Sterling to
US Dollars.
31 December 2023 31 December 2022
Cash and cash equivalents 260,678 553,070
Trade receivables (gross) 49,897,060 35,725,430
Trade payables (213,492) (212,246)
Net exposure 49,944,246 36,066,254
The trade receivables shown above relates to the UK entity's intercompany
balance with the US entity, which will be repaid in Sterling.
A 10% percent strengthening of the pound sterling against the US Dollar at 31
December 2023 would have increased (decreased) equity and profit or loss by
the amounts shown below. This calculation assumes that the change occurred at
the balance sheet date and had been applied to risk exposures existing at that
date.
This analysis assumes that all other variables, in particular other exchange
rates and interest rates, remain constant. The analysis is performed on the
same basis for 31 December 2022.
Equity Profit or Loss
2023 2022 2023 2022
US $ US $ US $ US $
(4,994,424) (3,606,625) (4,994,424) (3,606,625)
A 10% percent weakening of the above currencies against the pound sterling at
31 December 2023 would have had the equal but opposite effect on the above
currencies to the amounts shown above, on the basis that all other variables
remain constant.
Translation exposures
The Group's results, as presented in US Dollars, are subject to fluctuations
as a result of exchange rate movements. The Group does not hedge this
translation exposure to its earnings.
Gains or losses arise on the retranslation of the net assets of foreign
operations at different reporting dates and are recognised within the
consolidated statement of comprehensive income. They will predominantly relate
to the retranslation of opening net assets at closing foreign exchange rates,
together with the retranslation of retained foreign profits for the year (that
have been accounted for in the consolidated income statement at average rates)
at closing rates. Exchange rates for major currencies are set out below
The following exchange rates have been used in the translation of the results
of foreign operations:
Closing rate for 2021 Weighted average rate for 2022 Closing rate for 2022 Weighted average rate for 2023 Closing rate for 2023
US Dollar 1.3534 1.23.72 1.2098 1.2438 1.2740
3.2 Capital management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders, benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to adjust or maintain the capital structure, the Group may adjust the
level of dividends paid to its shareholders, return capital to shareholders,
issue new shares or sell assets to reduce borrowings. This policy is
periodically reviewed by the Directors, and the Group's strategy remains
unchanged for the foreseeable future.
The capital structure of the Group consists of cash and bank balances and
equity consisting of issued share capital, reserves and retained earnings of
the Group.
3.3 Fair value
Financial instruments are measured at fair value
including cash and cash equivalents trade and other payables, and borrowings.
Due to their short-term nature, the carrying value of cash and cash
equivalents, trade and other receivables, and trade and other payables
approximate their fair value.
4. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Key judgement
The following judgements and estimates have had the most significant effect on
amounts recognised in the financial statements.
(a) Intangible fixed assets (see note 13)
Intangible fixed assets, are depreciated over their useful lives taking into
account residual values, where appropriate. The actual lives of the assets and
residual values are assessed annually and may vary depending on the number of
factors. In re-assessing asset lives, factors such as technological
innovation, product life cycles and maintenance programmes are taken into
account. Residual value assessments consider issues such as future market
conditions, the remaining life of the asset and projected disposal values.
Development costs attributable to the licenced technology and recognised as an
intangible asset when the criteria in note 2.8 are met.
(b) Impairment reviews
The Group undertakes an impairment review annually, or more frequently if
events or changes in circumstances indicate that the carrying value may not be
recoverable. In respect of impairment reviews, the key assumptions are as
follows:
· Growth rates. The value in use of the intangible assets is
calculated from cash flow projections for the relevant business activities
based on the latest financial projections covering the anticipated useful
economic life of the intangible assets.
· Discount rates. The pre-tax discount rate used to calculate value
is determined in relation to the relevant business activities and their
geographic location, using external benchmarks where possible to arrive at a
relevant weighted average cost of capital.
(c) Deferred taxes
Deferred tax liabilities are always provided for in full. Deferred tax assets
are recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against future
taxable income. Deferred tax assets and liabilities are calculated, without
discounting, at tax rates that are expected to apply to their respective
period of realisation, provided they are enacted or substantively enacted at
the balance sheet date. Deferred tax is recognised as a component of the tax
expense in the income statement, except where it relates to items charged or
credited to other comprehensive income or directly to equity.
(d) Other equity instruments
The Directors assess the accounting principles for the issues of other equity
instruments. The issue of the Loan Notes are a form of equity financing
because:
1) They fall within the parameters of section 560(1)(b) of the CA
2006, being the relevant statutory provision in this jurisdiction;
2) They fall within the parameters of IAS 32 being the internationally
recognised accounting standard. IAS 32 has three tests to determine whether
the instrument is equity or has a debt element;
a. an unavoidable contractual obligation to pay cash to the loan note
holders;
b. an obligation to issue a variable number of shares; and
c. an obligation to issue a fixed number of shares to settle an
instrument whose book value is variable
In respect of the Loan Notes, the answer to all three of the above is "no".
Therefore, the Instrument falls within the accepted definition of equity and
are accounted for as equity from day one.
(e) Contingent liabilities
SDG Licence - On 24 February 2017, the Company entered into a co-exclusive
licence and development agreement with Separation Design Group, LLC and SDG
(together the "SDG Parties") ("SDG Licence") which was subsequently amended by
an amendment agreement dated 19 March 2023. Pursuant to the SDG Licence: if by
3 September 2025, cumulative sales of the X-PLOR and DISCOV-R have not
exceeded $20 million dollars, Belluscura must make a one-time payment of $3
million to the SDG Parties to maintain the exclusive SDG licence. By 31
December 2023 cumulative sales of X-PLOR were $1.8 million. The Directors
assess that the Group will meet the minimum obligations and therefore no
provision has been made in these Financial Statements.
Supplier Claim - During 2023 the Company received a claim from a supplier
regarding alleged default by the Company under an ongoing contract. The
Company has subsequently counter-claimed against the supplier for alleged poor
service The supplier has subsequently filed a lawsuit in the United States.
The Company has received an independent legal opinion and believes that any
claim against the Company is lower than the claim made by the Company.
Accordingly, no provision has been made as at 31 December 2023. The
Directors believe that based on their current assessment of the facts the
current $nil provision is appropriate. However, the final amount is dependent
upon the outcome of the agreements between the two parties and/or the lawsuit.
Key estimates
The following judgements and estimates have had the most significant effect on
amounts recognised in the financial statements.
(a) Recoverability of Inter-Company debt by the Company from its
subsidiaries.
The Directors assess the recoverability of amounts owed by the subsidiary to
the parent Company, which requires judgement to be made. This involves
forecasting sales revenues to be earned by the subsidiary which will enable it
to repay the parent Company.
(b) Share-based payments charge
The Group's share-based payment charge is calculated using the Black-Scholes
model with an assessment of: the expected volatility based on a comparator set
of similar stocks; the risk-free rate of return which is commensurate with the
expected term and the expected forfeiture rates are based on recent experience
of staff turnover levels. The charge is spread over the vesting period on a
straight-line basis.
5. Segmental reporting
The chief operating decision makers consider that in the year to 31 December
2023 there is only one operating segment, being the sale of oxygen
concentrators in the United States.
The Group generated gross revenue of $1,320,433 less discounts of $495,024 in
the year (2022: $1,542,948; $144,866). All sales were in the United States.
6. Inventory Impairment and Adjustments, other operating
income and administrative expenses
6.1 Inventory Impairment and Adjustments
Group 2023 2022
US$ US$
Obsolete raw material inventory and inventory adjustments 845,827 609,848
Impairment of Batteries 1,077,626 -
Impairment of Finished Goods Value 1,888,122 -
Provision for 2024 RMA's ("Return to Manufacturer Authorization's") 326,455 -
Total 4,138,030 609,848
6.2 Other operating income
Group 2023 2022
US$ US$
Freight Charged 14,795 6,805
Rent recharged 19,147 1,898
Total 33,942 8,703
6.3 Other direct costs
Group 2023 2022
US$ US$
Sales Royalties 40,884 69,904
Freight Costs 63,107 66,921
Total 103,991 136,825
6.4 Expenses by nature
Group 2023 2022
US $ US $
Operating Expenses
Employee benefit expense 3,433,042 2,999,299
Sales & Marketing 655,229 1,420,134
Other administration expenses 1,903,776 1,578,231
5,992,047 5,997,664
Depreciation & Amortisation
Depreciation of property plant and equipment 49,559 38,619
Depreciation of right of use asset 113,231 104,869
Amortisation of product development 3,293,232 2,911,998
3,456,022 3,055,486
Staff Related Exceptional Costs
IFRS2 Share-based Payment Charge 163,061 229,241
Share option costs - 162,505
Accrued Bonus 315,000 -
Former CFO Compensation 96,393 -
574,454 391,746
Foreign Exchanges movements in Administration Expenses
Realised and Unrealised foreign exchange movements 2,424,237 (2,877,886)
Other
Minimum Royalties in excess of Sales Royalties 792,818 763,430
Costs related to fundraising activities 92,536 -
Contract Manufacturer Capacity Costs 86,440 128,607
971,794 892,037
Administration expenses 13,418,555 7,459,050
6.5 Auditor remuneration
During the period, the Group obtained the following services provided by the
auditor and its associates:
Group 2023 2022
US$ US$
Fees payable to the Group's auditor for the audit of the Group and Company
financial statements
84,000 69,283
Total 84,000 69,283
7. Employees
7.1 Directors' emoluments
Salary & fees Benefits in kind
US $ Bonus US $ Pension 2023 2022
US$ US $ US $ US $
Adam Reynolds 84,371 - - - 84,371 74,231
Robert Rauker (1) 325,000 157,500 35,975 32,500 550,975 571,121
Simon Necheril (2) 51,923 11,250 - - 63,173 -
Robert Fary 187,692 - 23,108 - 210,800 -
Dr Patrick Strollo 20,000 - - - 20,000 35,000
David Poutney 37,314 - - - 37,314 49,488
Ric Piper 43,533 - - - 43,533 43,302
Anthony Dyer (3) 177,242 - 13,841 17,724 208,807 313,752
Total 927,075 168,750 72,924 50,224 1,218,973 1,086,894
(13) Robert Rauker deffered his bonus at the Company's request and as at the
date of this report this bonus has not been paid.
(2) Appointed 4 October 2023
(3) Resigned 4 October 2023
7.2 Employee benefit expense
Group 2023 2022
US$ US$
Wages and salaries 2,922,837 2,173,897
Social security costs 203,076 209,648
Medical Insurance 185,467 199,090
Pension and other benefits 131,662 119,091
3,443,042 2,701,726
Issue of share-based payments 163,061 229,241
Share option costs - 162,505
Total employee benefit expense 3,606,103 3,093,472
7.3 Average number of people employed
Group 2023 2022
US$ US$
Average number of people (including executive Directors) employed
Directors 3 2
Operations 29 19
Administration 3 3
Total average headcount 35 24
8.1 Finance income
Group 2023 2022
US$ US$
Finance Income:
- Other Interest Income and Costs 2,127 -
Finance Income 2,127 -
8.2 Finance costs
Group 2023 2022
US$ US$
Interest cost on Right of Use Asset 19,256 23,617
Accrued Interest on Other Equity Instruments 806,561 -
Other Interest and Costs 2,208 456
Finance Cost 828,025 24,073
9. Income tax expense
Group 2023 2022
US$ US $
Current tax on profits for the year - -
Adjustments in respect of prior year - -
Total current tax - -
Income tax expense - -
The charge for the year can be reconciled to the loss
per the Income Statement as follows:
Group 2023 2022
US$ US$
(Loss) before tax (18,947,539) (8,152,895)
Tax calculated at domestic tax rates applicable to profits in the respective
countries
(3,789,508) (1,630,579)
Tax effects of:
- Expenses not deductible for tax purposes - -
- Capital allowances in excess of depreciation (21,317) (30,542)
- Unrelieved tax losses 3,286,548 1,661,121
Total income tax charge - -
The tax on the Group's loss before tax differs from the theoretical amount
that would arise using the weighted average tax rate applicable to losses. The
weighted average applicable UK tax rate was 19%. Unused tax losses for which
no deferred tax assets have been recognised is attributable to the uncertainty
over the recoverability of those losses through future profits.
10 Earnings/(Loss) per share
2023 2022
Group US$ US$
Profit/(Loss) for the year US$ (18,497,539) (8,152,895)
Weighted Average Shares in Issue 130,395,343 119,398,219
Basic Loss per Share US$ (0.142) (0.068)
Weighted Average Shares, Warrants and Options in Issue 131,949,445 131,797,259
Diluted Loss per Share US$ (0.142) (0.068)
All potentially dilutive items are disregarded for the purpose of the diluted
earnings per share as they are considered antidilutive.
11. Investment in subsidiaries
Principal subsidiaries name Belluscura LLC Belluscura Shenzhen Technology Company Limited
Country of Incorporation & place of business USA China
Class of share held Ordinary Ordinary
% of ordinary shares directly held 2023 100% 100%
% of ordinary shares directly held 2022 100% 100%
Nature of business Sale of medical devices Sale of medical devices
Registered office 160 Greentree Drive Room 1603, No. 3, Yinxing Zhijie (Shen Guo Dian Building), Guanguang Road,
Xinlan Community, Guanlan Street, Longhua District, Shenzhen, China
Suite 101,
Dover
Delaware 19904
County of Kent
USA
Company 2023 2022
US$ US $
Capital Investment in Belluscura Shenzhen Technology Company Ltd 301,307 -
Total 301,307 -
12. Property, plant and equipment
Group Land & buildings
(Right of Use Asset) Furniture and Equipment
Cost US$ US $ Computer Equipment Production Equipment Leased Units
US $ US $ US $ Vehicles Total
US $ US $
At 1 January 2022 571,950 52,042 34,253 - - - 658,245
Additions during the year 73,838 1,664 44,170 65,025 - 33,173 217,870
At 31 December 2022 645,788 53,706 78,423 65,025 - 33,173 876,115
At 1 January 2023 645,788 53,706 78,423 65,025 - 33,173 876,115
Additions during the year - 1,802 12,278 6,841 65,104 - 86,025
FX Revaluation 3,918 184 353 - - - 4,455
At 31 December 2023 649,706 55,692 91,054 71,866 65,104 33,173 966,595
Accumulated depreciation
At 1 January 2022 (294,147) (32,029) (7,110) - - - (333,286)
Depreciation charge (104,717) (7,356) (19,461) (10,272) - (1,382) (143,188)
At 31 December 2022 (398,864) (39,385) (26,571) (10,272) - (1,382) (476,474)
At 1 January 2023 (398,864) (39,385) (26,571) (10,272) - (1,382) (476,474)
Depreciation charge (113,955) (3,081) (27,908) (13,889) (1,944) (5,529) (166,306)
At 31 December 2023 (512,819) (42,466) (54,479) (24,161) (1,944) (6,911) (642,780)
Net book value
At 31 December 2022 246,924 14,321 51,852 54,753 - 31,791 399,641
At 31 December 2023 136,887 13,226 36,575 47,705 63,160 26,262 323,815
Right-of-use assets related to lease properties that do not meet the
definition of investment properties are presented as Land & Building (see
note 22).
Company Land & buildings Furniture and Equipment Computer Equipment
(Right of Use Asset) US $ US $ Total
Cost US$ US $
At 1 January 2022 - 2,102 3,909 6,011
Additions during the year 73,838 1,364 2,730 77,932
At 31 December 2022 73,838 3,466 6,639 83,943
At 1 January 2023 73,838 3,466 6,639 83,943
Additions during the year - - -
FX Revaluation 3,918 184 353 4,455
At 31 December 2023 77,756 3,650 6,992 88,398
Accumulated depreciation
At 1 January 2022 - (297) (638) (935)
Depreciation charge for the year (6,669) (450) (1,613) (8,732)
At 31 December 2022 (6,669) (747) (2,251) (9,667)
At 1 January 2023 (6,669) (747) (2,251) (9,667)
Depreciation charge for the year (15,906) (769) (2,451) (19,126)
At 31 December 2023 (22,575) (1,516) (4,702) (28,793)
Net book value
At 31 December 2022 67,169 2,719 4,388 74,276
At 31 December 2023 55,181 2,134 2,290 59,605
13. Intangible assets
Group
Product Development Total
Cost US$ US$
At 1 January 2022 7,150,807 7,150,807
Additions during the year 4,856,846 4,856,846
Disposal during the year (270,150) (270,150)
At 31 December 2022 11,737,503 11,737,503
At 1 January 2023 11,737,503 11,737,503
Additions during the year 4,447,282 4,447,282
At 31 December 2023 16,184,785 16,184,785
Accumulated amortisation and impairment
At 1 January 2022 (426,924) (426,924)
Additions during the year (2,911,997) (2,911,997)
Disposal during the year 270,150 270,150
At 31 December 2022 (3,068,771) (3,068,771)
At 1 January 2023 (3,068,771) (3,068,771)
Amortisation in the year (3,128,498) (3,128,498)
At 31 December 2023 (6,197,269) (6,197,269)
Net book value
At 31 December 2022 8,668,732 8,668,732
At 31 December 2023 9,987,516 9,987,516
14. Inventory
Group 2023 2022
US $ US $
Finished goods 1,426,357 1,737,785
Raw Materials 1,894,295 6,693,246
Total inventory 3,320,652 8,431,031
Inventory adjustments and impairments are detailed in note 6.1. The Company
held no inventory.
15. Trade and other receivables
Group - Current 2023 2022
US $ US $
Trade receivables 170,719 305,194
Less provision for impairment of trade receivables (70,922) -
Trade receivables - net 99,797 305,194
Inventory sold to and Prepaid Inventory sent to InnoMax 2,913,684 1,021,073
VAT 85,300 40,068
Deposits, prepayments and other debtors 1,207,711 2,687,767
Total trade and other receivables 4,306,492 4,054,102
Group - Non-Current 2023 2022
US $ US $
Inventory sold to and Prepaid Inventory sent to InnoMax 1,952,649 -
Total other long-term receivable 1,952,649 -
The fair value of trade and other receivables are not materially different to
those disclosed above. The Groups exposure to credit risk is detailed in note
3 on page 32. Inventory sold to InnoMax to be paid on the transfer of
manufactured units. The long term receivable has been discounted by 10%.
Company - Current 2023 2022
US $ US $
Trade receivables 5,957 2,858
VAT 85,300 40,068
Prepayments and other debtors 113,254 429,039
Total trade and other receivables 204,511 471,965
2023 2022
Company - Non-Current US $ US $
Receivables from Group companies 49,897,060 35,725,430
Less provision for impairment of Inter-Company receivables (13,500,000) (9,000,000)
Total trade and other receivables 36,397,060 26,725,430
Ageing of trade receivables:
Group 0-30 days US $ 30-60 days US $ 60-90 days US $ 90+ days US $ Total Gross US $ ECL Total Net
US $ US $
2022 174,062 110,972 15,040 5,120 305,194 - 305,194
2023 8,449 (2,772) 66,679 98,364 170,720 - 170,720
Company
The Company had no trade receivables relating to sale of products.
The amount receivable from Group companies is an interest free loan given and
is repayable on demand. Management do not intend to recall in the next 12
months and hence has been disclosed as Non-Current.
The basis of the impairment of Inter-Company receivables is the management
intends to recall it within 4 years (2022: 5 years) so it is discounted over 5
years at 7%. The investment has been used to develop products in the US
market. The Group expects the US entity to become profitable and cash positive
within 2 years.
A 10% percent increase in the discount rate would increase the impairment by
$1,111,000 (2022: $795,000) and a 10% reduction in the discount rate would
reduce impairment by $1,032,000 (2022: 740,000).
16. Cash and cash equivalents
Group 2023 2022
US $ US $
Cash and bank and in hand 932,926 2,044,836
Total cash and cash equivalents 932,926 2,044,836
Company 2023 2022
US $ US $
Cash at bank and in hand 265,807 1,237,288
Total cash and cash equivalents 265,807 1,237,288
17. Categories of financial assets and financial
liabilities
Group 2023 ( )2022
US $ US $
Financial assets
Trade and other receivables at amortised cost 6,259,141 3,834,080
Cash and equivalents 932,926 2,044,836
7,192,067 5,878,916
Financial liabilities
Trade and other payables at amortised cost 2,953,037 2,294,956
Lease liability 178,852 302,619
3,131,889 2,597,575
Company 2023 2022
US $ US $
Financial assets
Loans and receivables at amortised cost 49,897,060 35,725,430
Provision (12,500,000) (9,000,000)
Net loans and receivables at amortised cost 37,397,060 26,725,430
Other receivables at amortised cost 57,199 305,308
Cash and equivalents 265,807 1,237,288
37,720,066 28,268,026
Financial liabilities
Trade and other payables at amortised cost 17,463 60,783
Maturity Analysis of financial liabilities
The following are the contractual maturities of financial liabilities at the
reporting date. The amounts are gross and undiscounted, and include estimated
contractual interest payments and exclude the effect of netting agreements:
Carrying amount Contractual cashflows 1 year or less 5 years and over US $
Group US $ US $ US $ 1-5 years US $
2022
Trade & other payables at amortised cost 2,294,956 2,294,956 2,294,956 - -
Lease liability 302,619 302,619 126,693 176,926 -
2,597,575 2,597,575 2,421,649 176,926 -
2023
Trade & other payables at amortised cost 2,582,637 2,582,637 2,582,637 - -
Lease Liability 178,852 302,619 260,641 41,978 -
2,761,489 2,885,256 2,843,278 41,978 -
18. Share capital and premium
Share capital
Group No of shares of £0.01 each Total
US $
Issued and fully paid up
At 1 January 2022 113,835,444 1,548,227
Shares issued for cash 9,181,717 113,958
At 31 December 123,017,161 1,662,185
2022
Shares issued for cash 14,515,406 183,338
At 31 December 137,532,567 1,845,523
2023
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company.
Share premium
Group Ordinary Shares US $ Total
US $
Allotted and fully paid up
At 1 January 2022 26,025,760 26,025,760
Premium on shares issued 7,858,078 7,858,078
Cost of issue of shares (455,891) (455,891)
Purchase of shares by EBT (48,000) (48,000)
At 31 December 33,379,947 33,379,947
2022
Premium on shares issued 4,573,624 4,573,624
Cost of issue of shares (458,899) (458,899)
At 31 December 37,494,672 37,494,672
2023
At the end of the year there were 500,000 share warrants in issue at an
average subscription price of $0.45 (2022: 766,666 at $0.47 per share). There
was no consideration paid for the warrants.
During the year staff were granted share options, vesting 100% on an exit or
in three equal annual thirds.
Award 2023 2022 Date of Grant Exercise Price Exercise Period Avg remaining contractual life
000's 000's From To
Unapproved 40 09/03/2022 $1.251 09/03/2022 09/03/2032 8.3 years
Unapproved 15 1403/2022 $1.219 1403/2022 1403/2032 8.3 years
Unapproved 100 01/04/2022 $1.540 01/04/2022 01/04/2032 8.3 years
Unapproved 20 04/04/2022 $1.518 04/04/2022 04/04/2032 8.3 years
Unapproved 100 18/04/2022 $1.508 18/04/2022 18/04/2032 8.4 years
Unapproved 20 18/04/2022 $1.508 18/04/2022 18/04/2032 8.4 years
Unapproved 1 26/05/2022 $1.115 26/05/2022 26/05/2032 8.4 years
Unapproved 1 26/05/2022 $1.115 26/05/2022 26/05/2032 8.4 years
Unapproved 20 11/07/2022 $0.941 11/07/2022 11/07/2032 8.5 years
Unapproved 40 18/07/2022 $0.948 18/07/2022 18/07/2032 8.5 years
Unapproved 20 19/08/2022 $0.870 19/08/2022 19/08/2032 8.6 years
Unapproved 20 29/08/2022 $0.785 29/08/2022 29/08/2032 8.6 years
Unapproved 20 10/10/2022 $0.540 10/10/2022 10/10/2032 8.8 years
Unapproved 20 24/10/2022 $0.500 24/10/2022 24/10/2032 8.9 years
Unapproved 300 16/01/2023 $0.505 16/01/2023 16/01/2033 9.1 years
Unapproved 400 16/01/2023 $0.505 16/01/2023 16/01/2033 9.1 years
Total 700 437
Key assumptions used in the calculation of share option fair value
Award Share price on the date of grant (%) Vesting period Risk-free rate of interest Fair value
$ Exercise price Years % $
$ Volatility
Date of Grant %
Unapproved 1.251 1.251 28.5 3.00 2.1 0.19
1403/2022 Unapproved 1.219 1.219 28.5 3.00 2.1 0.19
01/04/2022 Unapproved 1.540 1.540 28.5 3.00 2.1 0.19
04/04/2022 Unapproved 1.518 1.518 28.5 3.00 2.1 0.15
18/04/2022 Unapproved 1.508 1.508 28.5 3.00 2.1 0.14
18/04/2022 Unapproved 1.508 1.508 28.5 3.00 2.1 0.15
26/05/2022 Unapproved 1.115 1.115 28.5 3.00 2.1 0.18
26/05/2022 Unapproved 1.115 1.115 28.5 3.00 2.1 0.13
11/07/2022 Unapproved 0.941 0.941 28.5 3.00 2.1 0.12
18/07/2022 Unapproved 0.948 0.948 28.5 3.00 2.1 0.12
19/08/2022 Unapproved 0.820 0.820 28.5 3.00 2.1 0.11
29/08/2022 Unapproved 0.790 0.790 28.5 3.00 2.1 0.11
10/10/2022 Unapproved 0.505 0.505 28.5 3.00 2.1 0.06
24/10/2022 Unapproved 0.500 0.500 28.5 3.00 2.1 0.06
16/01/2023 Unapproved 0.505 0.505 28.5 3.00 2.1 0.06
16/01/2023 Unapproved 0.505 0.505 28.5 3.00 2.1 0.06
a. Black-Scholes model is used to value both the options.
b. The expected volatility is based on a comparator set of similar stocks.
c. The risk-free rate of return which is commensurate with the expected
term.
d. Expected forfeiture rates are based on recent experience of staff
turnover levels.
e. The charge is spread over the vesting period on a straight-line basis.
Movement in share options
Weighted average exercise price Weighted average share price
Number $ $
000's
Outstanding at 1 January 2022 12,400 0.259 0.303
Granted 437 1.141 1.023
Lapsed/forgiven (1,223) 0.121 0.187
Outstanding at 31 December 2022 11,614 0.290 0.324
Outstanding at 1 January 2023 11,614 0.290 0.324
Granted 700 0.505 0.505
Lapsed (135) 0.089 0.089
Outstanding at 31 December 2023 12,179 0.296 0.329
Share-based payments charge
Group 2023 2022
US $ US $
Charge in year 229,241 180,091
19. Reserves
Retained earnings Group Company
US $ US $
At 1 January 2022 (2,349,966) 1,214,019
Loss for the year (8,152,985) (3,820,378)
Share-based payments charge 192,278 192,278
At 31 December 2022 (10,310,673) (2,414,081)
Loss for the year (18,517,619) (7,141,465)
Share-based payments charge 213,358 213,358
At 31 December 2023 (28,614,934) (9,342,188)
On 7 October 2022, the shareholders of the Group passed a special resolution,
pursuant to Chapter 2 of Part 13 of the Companies Act 2006, to cancel the
balance standing to the credit of the share premium account and transfer the
same to reserves.
Capital Contribution Group Company
US $ US $
At 31 December 2020 165,000 165,000
Capital contribution received - -
At 31 December 2022 165,000 165,000
Capital contribution received - -
At 31 December 2023 165,000 165,000
The Capital Contribution relates to the acquisition of intangible product
licences.
Share Option Reserve Group Company
US $ US $
At 1 January 2022 - -
Lapsed share options - -
At 31 December 2022 - -
Lapsed share options (20,180) (20,180)
At 31 December 2023 (20,180) (20,180)
Translation reserve Group Company
US $ US $
At 1 January 2022 (716,529) (716,529)
Foreign exchange (loss)/gain (3,827,808) (3,827,808)
At 31 December 2022 (4,544,337) (4,544,337)
Foreign exchange (loss)/gain 2,198,729 2,200,619
At 31 December 2023 (2,345,608) (2,343,718)
The translation reserve comprises all foreign exchange differences arising
from the translation of the financial statements of foreign operations,
primarily relating to the statement of financial position at the reporting
dates. The reporting date foreign exchange rates by major currency are
provided in note 3.
20. Trade and other payables
Group - Current 2023 2022
US $ US $
Trade creditors 657,128 2,545,948
Payroll accruals 151,262 -
Accrued Bonus 315,000 -
Social security and other taxes 24,316 19,871
Lease liability 159,563 125,693
Vehicle hire purchase 4,179 3,832
Provision for 2024 RMA's 326,454 -
Accrued inventory purchases 512,705 -
Accruals and other creditors 920,014 350,444
Total current trade and other payables 3,070,621 3,045,788
Group - Non-current 2023 2022
US $ US $
Lease liability 41,978 176,926
Vehicle hire purchase 19,289 23,506
Total non-current trade and other payables 61,267 200,432
There are no amounts included with lease liability repayable after five years
Company - Current 2023 2022
US $ US $
Trade creditors 17,463 60,783
Social security and other taxes 24,316 19,871
Lease liability 16,572 12,182
Accruals and other creditors 113,163 62,846
Total trade and other payables 171,514 155,682
Company - Non-current 2023 2022
US $ US $
Lease liability 41,978 56,563
Total trade and other payables 41,978 56,563
The fair values of trade and other payables are not materially different to
those disclosed above. The Group's exposure to currency and liquidity risk is
detailed in note 3 .
21. Deferred income tax
Unused tax losses for which no deferred tax assets have been recognised are
attributable to the uncertainty over the recoverability of those losses
through future profits. A blended tax rate, based upon the UK and US corporate
tax rates, of 20% has been used to calculate the potential deferred
tax.
Group 2023 2022
Deferred tax US $ US $
Accelerated capital allowances (22,094) (9,431)
Share-based payments 100,551 57,113
Tax losses 9,141,967 2,815,024
9,220,424 2,862,706
Unprovided deferred tax asset (9,220,424) (2,862,706)
Deferred Tax - -
2023 2022
Company US $ US $
Deferred tax
Accelerated capital allowances - -
Share-based payments 100,551 90,279
Short term timing difference 735,000 551,250
Tax losses 1,675,639 520,430
2,511,190 1,161,959
Unprovided deferred tax asset (2,511,190) (1,161,959)
Deferred Tax - -
The Group has cumulative unused tax losses of $9.1m.
22. Leases as a lessee
Right-of-use assets
Right-of-use assets related to lease properties that do not meet the
definition of investment properties are presented as property, plant and
equipment (see note 11):
Group Land & buildings Total
US$ US $
At 1 January 2022 277,803 277,803
Additions 73,838 73,838
Depreciation charge for the year (104,717) (104,717)
At 31 December 2022 246,924 246,924
Depreciation charge for the year (109,886) (109,886)
At 31 December 2023 136,887 136,887
Amounts recognised in profit or loss 2023 2022
US $ US $
Interest expense on lease liability 19,399 23,617
Depreciation on right of use assets 109,886 104,869
Amounts recognised in statement of cash flows 2023 2022
US $ US $
Total cash outflow for leases 146,721 130,780
Lease Liabilities
Group Land and buildings
US$ Total
US $
At 1 January 2023 335,830 335,830
Additions 73,838 73,838
Interest 23,617 23,617
Payment (130,666) (130,666)
At 31 December 2023 302,619 302,619
At 1 January 2023 302,619 302,619
Additions - -
Interest 19,399 19,399
Payment (146,721) (146,721)
At 31 December 2023 175,297 175,297
Maturity analysis of undiscounted cash flows due for leases
2023 2022
US$ US $
Within one year 120,362 125,693
After one year but not more than five years 41,743 176,926
After five years - -
Total 162,105 302,619
23. Dividends
No dividend has been declared for the year ended 31 December 2023 and no
dividend was paid during the year.
24. Cash generated from operating activities
Group 2023 2022
US $ US $
Loss before income tax (18,497,540) (8,152,985)
Adjustments for
- Depreciation 51,503 38,619
- ROU Depreciation 122,517 104,869
- Amortisation and impairment 3,128,499 2,911,999
- No cash interest expense 813,041 20,279
- Movement in foreign exchange (620,714) (914,776)
- Issue of share-based payments 142,981 229,241
Movement in trade and other receivables (1,502,346) (3,502,980)
Inventory movement 5,109,920 (8,121,873)
Movement in trade and other payables 2,120,568 2,481,239
Cash generated from operating activities (9,131,571) (14,906,368)
25. Contingent Liabilities
SDG Licence
On 24 February 2017, the Company entered into a co-exclusive licence and
development agreement with Separation Design Group, LLC and SDG (together the
"SDG Parties") ("SDG Licence") which was subsequently amended by an amendment
agreement dated 19 March 2023. Pursuant to the SDG Licence: if by 3 September
2025, cumulative sales of the X-PLOR and DISCOV-R have not exceeded $20
million dollars, Belluscura must make a one-time payment of $3 million to the
SDG Parties to maintain the exclusive SDG licence. By 31 December 2023
cumulative sales of X-PLOR were $1.8 million.
The Directors assess that the Group will meet the minimum obligations and
therefore no provision has been made in these Financial Statements.
Supplier Claim
During 2023 the Company received a claim from a supplier regarding alleged
default by the Company under an ongoing contract. The Company has subsequently
counter-claimed against the supplier for alleged poor service The supplier has
subsequently filed a lawsuit in the United States.
The Company has received an independent legal opinion and believes that any
claim against the Company is lower than the claim made by the Company.
Accordingly, no provision has been made as at 31 December 2023. The
Directors believe that based on their current assessment of the facts the
current $nil provision is appropriate. However, the final amount is dependent
upon the outcome of the agreements between the two parties and/or the lawsuit.
26. Alternative Performance Measures
Adjusted EBITDA(1)
Group 2023 2022
US $ US $
Total comprehensive loss for the year (16,269,031) (11,980,792)
Add back:
Administrative expenses Realised & unrealised FX movements in 2,424,237 (2,877,886)
Other comprehensive income FX currency translation differences (2,248,588) 3,827,808
Net foreign exchange movement(2) 175,649 949,922
Finance Income and Costs 19,337 24,073
Accrued Interest on Convertible Loan Notes 806,561 -
Product development amortisation 3,293,232 2,911,988
Costs relating to fundraising activities 92,537 -
Former CFO compensation 96,393 -
Share option costs - 162,505
Minimum royalties in excess of sales royalties 792,818 763,430
Contract Manufacturer Capacity Costs 86,440 128,607
Inventory Impairment and Adjustments 4,138,030 609,848
Accrued Bonus 315,000 -
Issue of share-based payments 163,061 229,241
Adjusted EBITDA (6,289,973) (6,201,178)
1 Reconciliation to Adjusted EBITDA measure
Adjusted EBITDA is the Group's key adjusted profit measure. Total
comprehensive loss for the year is adjusted to exclude non-recurring and
exceptional items.
2 Net foreign exchange movements
The US$ weakened against £Sterling by 5% during the year (1 January 2023 -
$1.21:£1.00; 31 December 2023 - $1.27:£1.00). Due to the size of the
Inter-Company Loan from the PLC to the US subsidiary which is fixed in
£Sterling, this creates an accounting presentational impact between
Administration Expenses and Other Comprehensive Income, which to a large
extent can be netted off against one another.
o Realised FX movements in administrative expenses arise from the revaluation
of £Sterling cash balances into US$
o Unrealised FX movements in administrative expenses arise from revaluation of
the Inter-Company Loan fixed in £Sterling into US$
o Foreign currency translation differences in Other Comprehensive Income arise
from revaluation of the PLC balance sheet into US$
27. Related party transactions
As disclosed in the Admission Document, prior to Robert Rauker joining the
Company, he undertook independent patent work for Separation Design Group IP
Holdings LLC ("SDG"). Pursuant to a Patent Broker Agreement dated 22 October
2015 SDG entered into an agreement with Medicinus IP LLC ("Medicinus"), of
which Robert Rauker is the sole shareholder, under which Medicinus has agreed
to facilitate the sale and/or licence of intellectual property owned by SDG
which includes soliciting potential buyers and licensees of such intellectual
property. In consideration for the provision of these services, Medicinus
receives a fee of 12.5 per cent. of the licence fees, sales price and/or
royalties received by SDG which will include 12.5 per cent. of the royalties
the Company will pay to SDG in relation to sales of the X-PLOR, pursuant to
the agreement entered into between SDG and the Company. The agreement can be
terminated by either party by written notice.
The non-executive fees paid to Adam Reynolds were paid through his Company
Reyco Limited.
In the year the Company paid $436 thousand (2022: $1,065 thousand) to Dowgate
Capital Limited in relation to brokerage fees, research and fundraising
activities. David Poutney is the Chief Executive Officer of Dowgate Capital
Limited.
In 2023, Robert Rauker was awarded a bonus program worth $625 thousand based
on milestones on commercial progress with InnoMax. To date $312 thousand has
been earned, although payment of $157 thousand (see note 7.1) of the earned
amount has been deferred until 2025 at the Company's election.
28. Events after the reporting period
In March 2024 the Group completed the acquisition of TMT Acquisition plc,
which operated as a cash shell.
On 31 October 2023, Belluscura announced a recommended all share offer for TMT
Acquisition plc, which became wholly unconditional on 9 February 2024.
Based on the Closing Price of 21.0 pence per Belluscura Share on the Latest
Practicable Date, the Offer was equivalent in value to 21.0 pence for each
TMT Acquisition Share and the Offer valued the entire issued ordinary share
capital of TMT Acquisition at approximately £5.78 million.
The value of a TMT Acquisition Share under the Offer, based on the Closing
Price per Belluscura Share of 30.5 pence on 2 October 2023 (being the latest
practicable date prior to the commencement of the Offer Period), is 30.5 pence
representing a premium of approximately 79% to the Closing Price of 17.0
pence per TMT Acquisition Share on 2 October 2023 (being the latest
practicable date prior to the commencement of the Offer Period).
TMT Shareholders received 27,499,994 Belluscura shares.
In June 2024 the Company raised $0.3m from the issue of equity.
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