REG-Bioventix Plc: Results for the year ended 30 June 2018
08/10/2018 07:05
Bioventix plc
(“Bioventix” or “the Company”)
Results for the year ended 30 June 2018
Bioventix plc (BVXP), a UK company specialising in the development and
commercial supply of high-affinity monoclonal antibodies for applications in
clinical diagnostics, announces its audited results for the year ended 30 June
2018.
Highlights:
* Revenue up 21% to £8.8 million
* Profit before tax up 19% to £6.9 million
* Cash up £0.8 million to £7.0 million
* Second interim dividend of 36p per share (2017: 31p)
* Special dividend of 55p per share (2017: 40p)
Introduction and Technology
Bioventix creates and supplies antibodies for use in blood testing machines
that are used in hospitals and other labs around the world. These blood
testing machines are supplied by large multinationals such as Roche
Diagnostics, Siemens Healthineers, Abbott Diagnostics & Beckman Coulter.
Antibody based tests are used in many different diagnostics in the fields of
heart disease, thyroid function, fertility, infectious disease, cancer etc.
Bioventix makes antibodies using our sheep monoclonal antibody (SMA)
technology for supply to these companies for subsequent manufacture into
reagent packs that are used on the blood testing machines. Our antibodies are
preferred for use if they confer an improved performance when compared to
other antibodies available to the machine manufacturers, which are often made
in their own antibody creation labs.
Testosterone testing is a good example of a hormone test in which a Bioventix
antibody facilitates an improvement. Testosterone tests sold by a number of
customers using our 6A3 antibody enable reliable testing of testosterone
levels not only in men, but also in women and children where testosterone
levels are much lower.
We currently sell around 10 grams of purified physical antibody per year which
is mostly exported and charged in $/mg and Euro/mg. Our list price is 550$/mg
though discounts apply for larger quantities. In addition to revenues for
physical antibody supplies, the future sale by our customers of diagnostic
products (based on our antibodies) to their downstream end users attracts a
modest royalty payable by our customers to Bioventix. These downstream
royalties are crucial to Bioventix and currently account for 70% of our annual
revenue.
Bioventix conducts own risk antibody projects which results in complete
freedom to commercialise the antibodies produced. We also engage in contract
antibody creation projects where customers supply materials, know how and
funding which results in antibodies that can only be commercialised with the
partner company. In both cases, after initiation of a new project, it takes
around a year for our scientists to create a panel of purified antibodies for
possible evaluation by our customers. The evaluation process at customers’
labs generally requires the fabrication of prototype reagent packs which can
be compared to other tests (eg the customer’s existing sales test or perhaps
another “gold standard” method) using frozen donor samples on the assay
platform being considered. The process of subsequent development thereafter at
our customers can take many years before registration or approval (eg from the
US FDA or EU authorities) is obtained and products can be sold to the benefit
of the customers – and Bioventix – through the agreed sales royalty. This
does mean that there is a gap of 4 10 years between our own research work and
tangible value with respect to revenue. It does also mean however, that after
having achieved approval of an accurate diagnostic test using a Bioventix
antibody, there is a natural continuity of use as a result of a reluctance by
a customer to change from one antibody to another.
Another consequence of the approval process is that the antibodies discussed
in the revenue review below for the current accounting period were created
many years ago. Indeed, growth over the next few years will come from research
work already carried out. By the same dynamics, the current research work
active at our labs now is more likely to influence sales in the period 2022
2030.
2017/18 Financial Results
We are pleased to report another set of excellent results for the financial
year ended 30 June 2018. Revenues for the year, including a back royalty of
£0.8M described in the interims, increased to £8.75 million (2016/17: £7.25
million). This revenue increase, (including the back royalty), when coupled to
a modest increase in costs has resulted in increased profits after tax of
£5.66 million, 15% up on the 2016/17 figure of £4.92 million. Despite
increased dividend distribution, cash balances during the year increased by
£0.8 million to £7.0 million.
Our most significant revenue stream continues to come from the vitamin D
antibody called vitD3.5H10. This antibody is used by a number of small, medium
and large diagnostic companies around the world for use in vitamin D
deficiency testing. Sales of vitD3.5H10 increased by 23% to £3.4 million
during the year. Once again, sales have surpassed our expectations based on
customer feedback during the year. Our expectation has been that, whilst
vitamin D test volumes are increasing globally, price pressure (i.e. $/test
prices achieved) would balance the increase in volume leading to a relatively
flat total market in US Dollar terms. Whilst actual royalties received were
once again in excess of expectations, we nevertheless perceive a plateauing of
the vitamin D testing market. This belief is further supported by external
analysis of the vitamin D testing market that we have seen.
Despite this expectation we still have smaller vitamin D customers bringing in
new products to the market and we anticipate a modest further increase in
vitamin D antibody sales over the next year or so as these smaller customers
enjoy success with their new vitamin D products.
Sales of some other established “core” antibodies also enjoyed increased
sales in the year. Quantitatively, these were:
* NT proBNP: approximately £1.05M (+72%) Note: expires July 2021
* testosterone: approximately £0.66M (+15%);
* drug testing antibodies: approximately £ 0.64M (+32%);
* T3: approximately £0.46M ( 9%);
* progesterone: approximately £0.40M (+125%); and
* estradiol: approximately £0.29M ( 13%).
This increase in most of these core antibodies that are sold to a number of
customers in many countries does not have a single explanation over and above
the 5 10% increase in the global diagnostics industry that is reported by
third party analysts. The drug testing antibody portfolio also features a
handful of antibodies to different drugs used by different customers for
different applications, for example EtG for alcohol testing or THC for
cannabis testing. The increase in sales within this group has been accompanied
by a significant increase in physical antibody sales.
We have reported previously on the importance of our troponin project with
Siemens Healthineers. Sales during the reporting period were not significant
and below our expectation. We have no reason to question our belief that this
project will generate significant value into the future and Siemens recent US
approval from the FDA should help in this regard.
One of Siemens competitors, Beckman Coulter also offers a new high sensitivity
troponin assay. It is known through access to FDA data that this new assay
also features a sheep monoclonal antibody. In accordance with our historic
exclusivity agreement with Siemens (which we negotiated with Dade Behring, a
company later acquired by Siemens) we have played no part in the development
of this antibody. Nevertheless, the means by which the antibody was created by
another Bioventix licensee does leave us in a position whereby this product
will generate some revenue for the company in the future. It would be
reasonable to assume that, as with the new Siemens product, it will take a
while before this Beckman product gains commercial momentum.
Our shipments of physical antibody to China continued to increase. Some sales
are made directly but the majority are made through five appointed
distributors. We remain cautiously optimistic that these continued physical
antibody sales will result in increased physical product sales and royalty
payments which have started to flow in modest terms.
As with previous reporting periods, our revenues continue to be dominated by
US dollars and Euros. We have commented in recent reports on the effect of
post Brexit referendum exchange rates on our revenues in the absence of any
hedging mechanisms. We have no current plans to institute any hedging
mechanisms and therefore any future changes in exchange rates, up or down will
impact our reported Sterling revenues accordingly.
Cash Flows and Dividends
The strong performance of the business during the year has resulted in
increased cash balances (increased to £7.0 million from £6.2 million)
despite increased dividend distribution during the year. Over previous years,
the Board has followed a cautious dividend policy that embraces continuity and
it is the general intention of the Board to continue with this policy into the
future. For the current year, the Board is pleased to announce a second
interim dividend of 36 pence per share which, when added to the first interim
dividend of 25 pence per share makes a total of 61 pence per share for the
current year.
Our current view is that a cash balance of approximately £5 million is
sufficient to facilitate operational and strategic agility with respect to
possible corporate or technological opportunities that could arise in the
foreseeable future. On this occasion, we have decided to distribute some
surplus cash that is in excess of anticipated needs and accordingly, we are
pleased to announce a special dividend of 55 pence per share.
Accordingly, dividends totalling 91 pence per share will be paid in November
2018. The shares will be marked ex dividend on 25 October 2018 and the
dividend will be paid on 9 November 2018 to shareholders on the register at
close of business on 26 October 2018.
Research and Future developments
As mentioned above, we expect that the commercial development of the new
troponin test at Siemens will have a significant influence on Bioventix sales
in the next few years. There are no antibodies in the future pipeline that are
comparable to troponin in clear potential value and the ability to influence
revenues in the next few years.
We have undertaken a range of research projects over the previous few years
and have attempted to define these in terms of value and probability of
success in the tables below.
Increasing potential value High Secretoneurin (CardiNor) Amyloid (Pre-Diagnostics) Cardiac MyC (King’s London) Biotin (blocking Abs)
Medium virus (contract) T4 (thyroxine)
Low thyroglobulin (contract) Vitamin (contract) Cancer (contract)
Low Medium high
Increasing probability of success
We have reached a pause point in our work with secretoneurin and have
transferred a series of antibodies and assay protocols to our partners at
CardiNor and their Scandinavian collaborators. We eagerly await news of their
work to validate secretoneurin as a useful cardiac biomarker.
Work on amyloid beta continues in our lab and we expect to spend around
another year making antibodies and constructing assays for the testing of
amyloid beta fragments in human samples. Our partners at Pre Diagnostics
(coincidentally, also in Oslo) and their clinical collaborators are performing
work to identify the utility of these antibodies and assays in dementia
diagnostics.
Another project that is just starting at Bioventix features biotin. Biotin is
a vitamin supplement that is widely available and has been associated by some
people with claims relating to hair and skin health. Biotin is also part of a
“chemical Velcro” that is used in assay formats by some of our customers.
It has become clear that high dose consumption of these biotin supplements can
result in aberrant results from some clinical assays and a solution to this
problem could have value.
We have also been working with Prof Michael Marber of King’s College in
London making SMAs to cardiac myosin binding protein C (cMyC). A cMyC test,
possibly used at the point of care upon first presentation, could offer some
benefit over troponin in the ability to safely rule out heart attacks in
patients presenting at A&E with chest pain. During 2019, we plan to explore
the potential use of our antibodies on point of care platforms.
In addition to existing research activities, we continue to seek additional
opportunities to add to this portfolio so that longer term value can be
established.
Regarding our core SMA antibody technology, we have successfully generated
superior antibodies over the last 10-15 years and these antibodies are now in
routine use at our customers. The antibody technology landscape has evolved
over this time period. We are aware that rabbit monoclonal technology – a
technology which we respect – does exist at some of our customers labs and
this is likely to have resulted in some lost opportunities for our SMA
technology. In addition, the steady development of “synthetic” antibody
technology (known in the industry as “library” or “display”
technology) has continued. This technology is perhaps not so directly
competitive but is useful for targets which are fragile and liable to
dissociation upon immunisation into sheep.
We continue to be aware of such technology developments and shape our research
efforts accordingly into the future.
The Bioventix Team
The composition of the Bioventix team has remained relatively stable over the
year facilitating excellent performance and know how retention. This total
head count of 12 full time equivalents is expected to remain largely unchanged
as this adequately serves our manufacturing and research needs.
The continued outstanding performance of the Company in a globally competitive
market for antibodies is very satisfying. Our sheep monoclonal antibody
technology continually delivers high performance antibodies to our customers.
However, the operation of the antibody technology is made possible by the
efforts of our expert staff and we would like to thank them for their
remarkable achievements over the last year.
Conclusion
We are delighted to be able to report such positive news for the current year.
Looking ahead to the future, we keenly anticipate the roll out of the Siemens
troponin project and modest growth from additional vitamin D antibody sales
and royalties. Beyond that, growth will be linked not only to the troponin
project but also our continued research activities as we look to seed
additional projects that will germinate in the period 2020/2030 to create
additional shareholder value.
For further information please contact:
Bioventix plc Peter Harrison Chief Executive Officer Tel: 01252 728 001
finnCap Ltd Geoff Nash/Simon Hicks Alice Lane Corporate Finance ECM Tel: 020 7220 0500
About Bioventix plc:
Bioventix (www.bioventix.com) specialises in the development and commercial
supply of high-affinity monoclonal antibodies with a primary focus on their
application in clinical diagnostics, such as in automated immunoassays used in
blood testing. The antibodies created at Bioventix are generated in sheep and
are of particular benefit where the target is present at low concentration and
where conventional monoclonal or polyclonal antibodies have failed to produce
a suitable reagent. Bioventix currently offers a portfolio of antibodies to
customers for both commercial use and R&D purposes, for the diagnosis or
monitoring of a broad range of conditions, including heart disease, cancer,
fertility, thyroid function and drug abuse. Bioventix currently supplies
antibody products and services to the majority of multinational clinical
diagnostics companies. Bioventix is based in Farnham, UK and its shares are
traded on AIM under the symbol BVXP.
The information communicated in this announcement contains inside information
for the purposes of Article 7 of the Market Abuse Regulation (EU) No.
596/2014.
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018
2018 2017
£ £
Turnover 7,979,217 7,245,862
Back dated royalty income 772,391 -
Total turnover 8,751,608 7,245,862
Cost of sales (573,204) (494,880)
Gross profit 8,178,404 6,750,982
Administrative expenses (1,177,711) (998,797)
Share option charge (136,127) (67,005)
Difference on foreign exchange (71,901) 5,747
Research & development tax credit adjustment 40,223 25,335
Operating profit 6,832,888 5,716,262
Interest receivable and similar income 33,825 55,578
Interest payable and expenses (15) -
Profit before tax 6,866,698 5,771,840
Tax on profit (1,203,351) (849,551)
Profit for the financial year 5,663,347 4,922,289
Total comprehensive income for the year 5,663,347 4,922,289
Earnings per share:
2018 2017
Basic 110.21p 96.36p
Diluted 108.31p 94.70p
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018
2018 2017
£ £
Fixed assets
Tangible assets 497,802 449,312
Investments 291,424 195,560
789,226 644,872
Current assets
Stocks 283,093 226,174
Debtors: amounts falling due within one year 3,816,790 3,342,692
Cash at bank and in hand 6,986,514 6,166,940
11,086,397 9,735,806
Creditors: amounts falling due within one year (838,432) (219,944)
Net current assets 10,247,965 9,515,862
Total assets less current liabilities 11,037,191 10,160,734
Provisions for liabilities
Deferred tax (26,225) (16,114)
(26,225) (16,114)
Net assets 11,010,966 10,144,620
Capital and reserves
Called up share capital 256,934 256,934
Share premium account 395,108 395,108
Capital redemption reserve 1,231 1,231
Profit and loss account 10,357,693 9,491,347
11,010,966 10,144,620
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018
Called up share capital Share premium account Capital redemption reserve Profit and loss account Total equity
£ £ £ £ £
At 1 July 2017 256,934 395,108 1,231 9,491,347 10,144,620
Comprehensive income for the year
Profit for the year - - - 5,663,347 5,663,347
Other comprehensive income for the year - - - - -
Total comprehensive income for the year - - - 5,663,347 5,663,347
Dividends: Equity capital - - - (4,933,128) (4,933,128)
Share option charge - - - 136,127 136,127
Total transactions with owners - - - (4,797,001) (4,797,001)
At 30 June 2018 256,934 395,108 1,231 10,357,693 11,010,966
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017
Called up share capital Share premium account Capital redemption reserve Profit and loss account Total equity
£ £ £ £ £
At 1 July 2016 252,547 78,426 1,231 7,875,169 8,207,373
Comprehensive income for the year
Profit for the year - - - 4,922,289 4,922,289
Other comprehensive income for the year - - - - -
Total comprehensive income for the year - - - 4,922,289 4,922,289
Dividends: Equity capital - - - (3,373,116) (3,373,116)
Shares issued during the year 4,387 316,682 - - 321,069
Share option charge - - - 67,005 67,005
Total transactions with owners 4,387 316,682 - (3,306,111) (2,985,042)
At 30 June 2017 256,934 395,108 1,231 9,491,347 10,144,620
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018
2018 2017
£ £
Cash flows from operating activities
Profit for the financial year 5,663,347 4,922,289
Adjustments for:
Depreciation of tangible assets 58,498 39,479
Loss on disposal of tangible assets 353 -
Interest paid 15 -
Interest received (33,825) (55,578)
Taxation charge 1,203,351 849,551
(Increase) in stocks (56,918) (27,240)
(Increase) in debtors (509,732) (621,581)
Increase in creditors 27,237 78,840
Corporation tax (paid) (566,356) (1,265,505)
Share option charge 136,127 67,005
Other tax movements - (30,323)
Net cash generated from operating activities 5,922,097 3,956,937
Cash flows from investing activities
Purchase of tangible fixed assets (107,591) (21,703)
Sale of tangible fixed assets 250 -
Purchase of unlisted and other investments (95,864) (152,230)
Interest received 33,825 55,578
Net cash from investing activities (169,380) (118,355)
Cash flows from financing activities
Issue of ordinary shares - 321,069
Dividends paid (4,933,128) (3,373,116)
Interest paid (15) -
Net cash used in financing activities (4,933,143) (3,052,047)
Net increase in cash and cash equivalents 819,574 786,535
Cash and cash equivalents at beginning of year 6,166,940 5,380,405
Cash and cash equivalents at the end of year 6,986,514 6,166,940
Cash and cash equivalents at the end of year comprise:
Cash at bank and in hand 6,986,514 6,166,940
6,986,514 6,166,940
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
1. Accounting policies
1.1 Basis of preparation of financial statements
The financial statements have been prepared under the historical cost
convention unless otherwise specified within these accounting policies and in
accordance with Financial Reporting Standard 102, the Financial Reporting
Standard applicable in the UK and the Republic of Ireland and the Companies
Act 2006.
The preparation of financial statements in compliance with FRS 102 requires
the use of certain critical accounting estimates. It also requires management
to exercise judgment in applying the Company accounting policies.
The following principal accounting policies have been applied:
1.2 Revenue
Turnover is recognised for product supplied or services rendered to the extent
that it is probable that the economic benefits will flow to the Company and
the turnover can be reliably measured. Turnover is measured as the fair value
of the consideration received or receivable, excluding discounts, rebates,
value added tax and other sales taxes. The following criteria determine when
turnover will be recognised:
Direct sales
Direct sales are recognised at the date of dispatch.
R&D income
Subcontracted R&D income is recognised based upon the stage of completion at
the year end.
Licence revenue and royalties
Annual licence revenue is recognised, in full, based upon the date of the
invoice, and royalties are accrued over the period to which they relate.
Revenue is recognised based on the returns and notifications received from
customers and in the event that subsequent adjustments are identified, they
are recognised in the period in which they are identified.
1.3 Foreign currency translation
Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the
closing rate. Non monetary items measured at historical cost are translated
using the exchange rate at the date of the transaction and non monetary items
measured at fair value are measured using the exchange rate when fair value
was determined.
1.4 Interest income
Interest income is recognised in the Statement of comprehensive income using
the effective interest method.
1.5 Finance costs
Finance costs are charged to the Statement of comprehensive income over the
term of the debt using the effective interest method so that the amount
charged is at a constant rate on the carrying amount. Issue costs are
initially recognised as a reduction in the proceeds of the associated capital
instrument.
1.6 Pensions
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined
contribution plan is a pension plan under which the Company pays fixed
contributions into a separate entity. Once the contributions have been paid
the Company has no further payment obligations.
The contributions are recognised as an expense in the Statement of
comprehensive income when they fall due. Amounts not paid are shown in
accruals as a liability in the Statement of financial position. The assets of
the plan are held separately from the Company in independently administered
funds.
2.7 Current and deferred taxation
The tax expense for the year comprises current and deferred tax. Tax is
recognised in the Statement of comprehensive income, except that a charge
attributable to an item of income and expense recognised as other
comprehensive income or to an item recognised directly in equity is also
recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws
that have been enacted or substantively enacted by the reporting date in the
countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that
have originated but not reversed by the Statement of financial position date,
except that:
* The recognition of deferred tax assets is limited to the extent that it is
probable that they will be recovered against the reversal of deferred tax
liabilities or other future taxable profits; and
* Any deferred tax balances are reversed if and when all conditions for
retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences
except in respect of business combinations, when deferred tax is recognised on
the differences between the fair values of assets acquired and the future tax
deductions available for them and the differences between the fair values of
liabilities acquired and the amount that will be assessed for tax. Deferred
tax is determined using tax rates and laws that have been enacted or
substantively enacted by the reporting date.
2.8 Research and development
Research and development expenditure is written off in the year in which it is
incurred.
2.9 Intangible assets
Intangible assets are initially recognised at cost. After recognition, under
the cost model, intangible assets are measured at cost less any accumulated
amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a
reliable estimate of the useful life cannot be made, the useful life shall not
exceed ten years.
The estimated useful lives range as follows:
Goodwill 10
years
Know how 10 years
2.10 Tangible fixed assets
Tangible fixed assets under the cost model are stated at historical cost less
accumulated depreciation and any accumulated impairment losses. Historical
cost includes expenditure that is directly attributable to bringing the asset
to the location and condition necessary for it to be capable of operating in
the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their
residual value over their estimated useful lives on the following basis:
Freehold property ? 2% straight line
Plant and equipment ? 25% reducing balance
Motor Vehicles ? 25% straight line
Equipment ? 25% straight line
2.11 Valuation of investments
Investments in unlisted Company shares, whose market value can be reliably
determined, are remeasured to market value at each balance sheet date. Gains
and losses on remeasurement are recognised in the Statement of comprehensive
income for the period. Where market value cannot be reliably determined, such
investments are stated at historic cost less impairment.
2.12 Stocks
Stocks are stated at the lower of cost and net realisable value, being the
estimated selling price less costs to complete and sell. Cost includes all
direct costs and an appropriate proportion of fixed and variable overheads.
At each balance sheet date, stocks are assessed for impairment. If stock is
impaired, the carrying amount is reduced to its selling price less costs to
complete and sell. The impairment loss is recognised immediately in profit or
loss.
2.13 Debtors
Short term debtors are measured at transaction price, less any impairment.
Loans receivable are measured initially at fair value, net of transaction
costs, and are measured subsequently at amortised cost using the effective
interest method, less any impairment.
2.14 Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions
repayable without penalty on notice of not more than 24 hours. Cash
equivalents are highly liquid investments that mature in no more than three
months from the date of acquisition and that are readily convertible to known
amounts of cash with insignificant risk of change in value.
In the Statement of cash flows, cash and cash equivalents are shown net of
bank overdrafts that are repayable on demand and form an integral part of the
Company's cash management.
2.15 Creditors
Short term creditors are measured at the transaction price. Other financial
liabilities, including bank loans, are measured initially at fair value, net
of transaction costs, and are measured subsequently at amortised cost using
the effective interest method.
2.16 Provisions for liabilities
Provisions are made where an event has taken place that gives the Company a
legal or constructive obligation that probably requires settlement by a
transfer of economic benefit, and a reliable estimate can be made of the
amount of the obligation.
Provisions are charged as an expense to the Statement of comprehensive income
in the year that the Company becomes aware of the obligation, and are measured
at the best estimate at the Statement of financial position date of the
expenditure required to settle the obligation, taking into account relevant
risks and uncertainties.
When payments are eventually made, they are charged to the provision carried
in the Statement of financial position.
2.17 Financial instruments
The Company only enters into basic financial instrument transactions that
result in the recognition of financial assets and liabilities like trade and
other debtors and creditors, loans from banks and other third parties, loans
to related parties and investments in non puttable ordinary shares.
2.18 Dividends
Equity dividends are recognised when they become legally payable. Interim
equity dividends are recognised when paid. Final equity dividends are
recognised when approved by the shareholders at an annual general meeting.
2.19 Employee benefits share based compensation
The company operates an equity settled, share based compensation plan. The
fair value of the employee services received in exchange for the grant of the
options is recognised as an expense over the vesting period. The total amount
to be expensed over the vesting period is determined by reference to the fair
value of the options granted. At each balance sheet date, the company will
revise its estimates of the number of options are expected to be exercisable.
It will recognise the impact of the revision of original estimates, if any, in
the profit and loss account, with a corresponding adjustment to equity. The
proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the options
are exercised.
2. Judgments in applying accounting policies and key sources of estimation
uncertainty
In the application of the company's accounting policies, management is
required to make judgments, estimates and assumptions. These estimates and
underlying assumptions are reviewed on an ongoing basis.
As noted in the Chairman and Chief Executive's statement, additional royalty
income of £0.8M has been received during the year. Management have considered
this and due to the fact that this amount could not have been known
previously, management are of the opinion that this does not require a prior
year adjustment to the accounts.
3. Turnover
An analysis of turnover by class of business is as follows:
2018 2017
£ £
Product revenue and R&D income 2,487,049 1,925,059
Royalty and licence fee income 5,492,168 5,320,803
Back dated royalty income 772,391 -
8,751,608 7,245,862
2018 2017
£ £
United Kingdom 619,714 305,609
Other EU 1,522,545 2,378,988
Rest of the world 6,609,348 4,561,265
8,751,607 7,245,862
4. Operating profit
The operating profit is stated after charging:
2018 2017
£ £
Depreciation of tangible fixed assets 58,498 39,479
Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements 10,150 9,654
Exchange differences 71,901 (5,747)
Research and development costs 868,515 764,480
5. Taxation
2018 2017
£ £
Corporation tax
Current tax on profits for the year 1,193,240 851,386
1,193,240 851,386
Total current tax 1,193,240 851,386
Deferred tax
Origination and reversal of timing differences 10,111 (1,835)
Total deferred tax 10,111 (1,835)
Taxation on profit on ordinary activities 1,203,351 849,551
Factors affecting tax charge for the year
The tax assessed for the year is lower than (2017 ? lower than) the standard rate of corporation tax in the UK of 19% (2017 ? 19 %). The differences are explained below:
2018 2017
£ £
Profit on ordinary activities before tax 6,866,698 5,771,840
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2017 ? 19%) 1,304,673 1,096,650
Effects of:
Expenses not deductible for tax purposes, other than goodwill amortisation and impairment 284 12,946
Capital allowances for year in excess of depreciation (9,448) 3,146
Short term timing difference leading to an increase (decrease) in taxation - (1,835)
Adjustment in research and development tax credit leading to a decrease in the tax charge (128,131) (131,939)
Tax deduction arising from exercise of employee options 25,864 (161,775)
Other differences leading to an increase (decrease) in the tax charge 10,109 32,358
Total tax charge for the year 1,203,351 849,551
Factors that may affect future tax charges
There were no material factors that may affect future tax charges.
6. Dividends
2018 2017
£ £
Dividends paid 4,933,128 3,373,116
4,933,128 3,373,116
7. Share capital
2018 2017
£ £
Allotted, called up and fully paid
5,138,674 ? Ordinary shares of £0.05 each 256,934 256,934
The holders of ordinary shares are entitled to receive dividends as declared
and are entitled to one vote per share at meetings of the Company. All
ordinary shares rank equally with regard to the Company's residual assets.
8. Share based payments
During the year the company operated an Approved Share Option Scheme (the
"Option Scheme"), to incentivise employees.
The company has applied the requirements of FRS 102 Section 26 Share based
Payment to all the options granted. The Option Scheme provides for a grant
price equal to the market value of the Company's shares on the date of the
grant, as agreed with HMRC Shares and Assets Valuation Division.
The contractual life of an option is 10 years from the date of grant. Options
granted become exercisable on the third anniversary of the date of grant.
Exercise of an option is normally subject to continued employment, but there
are also considerations for good leavers. All share based remuneration is
settled in equity shares.
Weighted average exercise price (pence) 2018 Number 2018 Weighted average exercise price Number 2017
(pence) 2017
Outstanding at the beginning of the year 13.40 89,938 £3.99 91,743
Granted during the year - £13.50 85,938
Exercised during the year - £3.66 (87,743)
Outstanding at the end of the year 13.40 89,938 £13.40 89,938
2018 2017
Option pricing model used Black Scholes Black Scholes
Issue price £3.12?£13.50 £3.12?£13.50
Exercise price (pence) £3.12?£13.50 £3.12?£13.50
Option life 10 years 10 years
Expected volatility 25.15% 25.15%
Fair value at measurement date £1.72?£4.66 £1.72?£4.66
Risk?free interest rate 1.02% 1.02%
Expected volatility was based on past volatility since the shares have been
listed on AIM.
The expense recognised for share based payments during the year ended 30 June
2018 was £136,127 (Year ended 30 June 2017 : £67,005).
The number of staff and officers holding share options at 30 June 2018 was 15.
The share options have been issued to underpin staff service conditions.
9. Earnings per share
The weighted average number of shares in issue for the basic earnings per
share calculation is 5,138,674 (2017: 5,108,026) and for the diluted earnings
per share, assuming the exercise of all share options is 5,228,609 (2017:
5,197,961).
The calculation of the basic earnings per shares is based on the profit for
the period of £5,663,347 (2017: £4,922,289) divided by the weighted average
number of shares in issue of 5,138,674 (2017: 5,108,026), the basic earnings
per share is 110.21p (2017: 96.36p). The diluted earnings per share, assuming
the exercise of all of the share options is based on 5,228,609 (2017:
5,197,961) shares and is 108.31p (2017: 94.70p).
10. Publication of Non-Statutory Accounts
The financial information set out in this preliminary announcement does not
constitute the Group's financial statements for the year ended 30 June 2018.
The financial statements for the year ended 30 June 2017 have been delivered
to the Registrar of Companies. The financial statements for the year ended 30
June 2018 will be delivered to the Registrar of Companies following the
Company's Annual General Meeting. The auditors' report on both accounts was
unqualified, did not include references to any matters to which the auditors
drew attention by way of emphasis without qualifying their report and did not
contain statements under sections 498(2) or (3) of the Companies Act 2006. The
audited financial statements of Bioventix plc for the period ended 30 June
2018 are expected to be posted to shareholders shortly, will be available to
the public at the Company's registered office, 7 Romans Business Park, East
Street, Farnham, Surrey, GU9 7SX and available to view on the Company's
website at www.bioventix.com once posted.
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