REG-Bioventix Plc: Results for the year ended 30 June 2020
19/10/2020 07:05
Bioventix plc
(“Bioventix” or “the Company”)
Results for the year ended 30 June 2020
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
2020.
Highlights:
* Revenue up 11% to £10.31 million (2019: £9.29 million)
* Profit before tax up 18% to £8.23 million (2019: £6.97 million)
* Cash at year end up 27% to £8.1 million (30 June 2019: £6.5 million)
* Second interim dividend of 52p per share (2019: 43p)
* Special dividend of 53p per share (2019: 47p)
Introduction and Technology
Bioventix creates, manufactures and supplies high affinity sheep monoclonal
antibodies (SMAs) for use in diagnostic applications. Bioventix antibodies are
preferred for use when they confer an improved test performance compared to
other available antibodies.
The majority of our antibodies are used on blood-testing machines installed in
hospitals and other laboratories around the world. Bioventix makes antibodies
using our SMA technology for supply to diagnostic companies for subsequent
manufacture into reagent packs used on blood-testing machines. These
blood-testing machines are supplied by large multinational in vitro
diagnostics (IVD) companies such as Roche Diagnostics, Siemens Healthineers,
Abbott Diagnostics & Beckman Coulter. Antibody-based blood tests are used to
help diagnose many different conditions including, amongst others, heart
disease, thyroid function, fertility, infectious disease and cancer.
Over the past 15 years, we have created and supplied approximately 20
different SMAs that are used by IVD companies around the world. We currently
sell a total of 10-20 grams of purified physical antibody per year, the vast
majority of which is exported. In addition to revenues from physical antibody
supplies, the sale by our customers of diagnostic products (based on our
antibodies) to their downstream end-users attracts a modest royalty payable to
Bioventix. These downstream royalties currently account for approximately
60-70% of our annual revenue. Physical antibody sales and royalty revenues
from our multinational customers are made in either US dollars or Euros.
Bioventix has own-risk antibody creation projects which gives Bioventix the
complete freedom to commercialise the antibodies produced. We have also
engaged in contract antibody creation projects where customers supply
materials, know-how and funding which creates 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 evaluation by our customers. The evaluation process at
customers’ laboratories generally requires the fabrication of prototype
reagent packs which can be compared to other tests, for example the
customer’s existing sales test or perhaps another “gold standard”
method, on the assay machine platform being considered. The process of
subsequent development thereafter by our customers can take many years before
registration or approval from the relevant authority, for example the US FDA
or EU authorities, is obtained and products can be sold to the benefit of the
customers, and of course Bioventix, through the agreed sales royalty. This
does mean that there is a lead time of 4-10 years between our own research
work and the receipt by Bioventix of royalty revenue from product sales.
However, because of the resource required to gain such approvals, after having
achieved approval for an accurate diagnostic test using a Bioventix antibody,
there is a natural incentive for continued antibody use. This results in a
barrier to entry for potential replacement antibodies which would require at
least partial repetition of the approval process arising on a change from one
antibody to another.
Another consequence of the lengthy approval process is that the antibodies
discussed in the revenue review of the current accounting period were created
many years ago. Indeed, growth over the next few years from, for example the
troponin antibodies, will come from research work already carried out many
years ago. By the same dynamics, the current research work active at our
laboratories now is more likely to influence sales in the period 2025-2035.
2019/2020 Financial Results
We are pleased to report our results for the financial year ended 30 June 2020
which were ahead of expectations. Revenues for the year increased by 11% to
£10.31 million (2018/19: £9.29 million). This revenue increase, when coupled
to a modest increase in costs has generated an increase in profit before tax
of £8.23 million, an improvement of 18% (2018/19, £6.97 million). Following
increased dividend distribution during the year, cash balances at the year-end
stood at £8.1 million (30 June 2019 £6.5 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 10% to £4.8 million
during the year. However, as we have commented previously, there is increasing
evidence that the downstream market for vitamin D testing is flattening in US
Dollar terms, regardless of any pandemic effects.
Sales of other lead antibodies are featured below with the respective
percentage increase/decrease from 2018/19:
* NT-proBNP: £1.2 million (-4%) [this revenue stream will expire in July
2021]
* drug-testing antibodies: £0.76 million (+56%);
* T3 (tri-iodothyronine): £0.72 million (+13%);
* testosterone: £0.48 million (-41%);
* progesterone: £0.47 million (no change);
* estradiol: £0.32 million (-5%);
Total troponin sales from Siemens Healthineers and another separate technology
sub-license were £0.33 million (2018/19: £0.12 million). This significant
increase clearly demonstrates a gathering momentum of product roll-outs for
the new high sensitivity troponin assays supported by SMAs and we believe that
these revenues will continue to grow in the next financial years.
Our shipments of physical antibody to China continued to increase. Some sales
are made directly but the majority are made through five appointed
distributors. Regulatory approvals for domestic Chinese customers have
considerable lead times but we are now seeing additional royalty payments flow
in modest terms.
Our underlying revenues continue to be dominated by US Dollars and Euros. When
converting revenues to Sterling, in the absence of any hedging mechanisms,
they will be influenced by movements in exchange rates. Sales invoiced in
foreign currencies are recorded in Sterling at the exchange rate on the date
of sale. When Dollar and Euro monies are received, they are immediately
converted into Sterling at the exchange rate applying on the date of arrival.
Any difference in exchange rate between the date of invoice and the date of
receipt is reported in the form of an exchange rate adjustment and is recorded
in the period as a loss or gain when it is crystallised. The effect of these
adjustments during the current year has been particularly large and provided a
benefit of £0.20 million which has been crystalised and recognised in our
results for this year. Conversely, the weakening of the US Dollar from 30th
June 2020 to August 2020 (1.23 to ~1.32) will have a negative effect,
currently estimated to be approximately £0.15 million on our 2020/21 results.
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.
Included in the cost of sales are significant expenditures on external
contract services linked to the pollution exposure project described below.
This level of expenditure will be maintained in 2020/21 reflecting continued
activity with this research project. All such research costs are charged in
full in the profit and loss account when they are incurred as there is no
capitalisation of these costs.
Through our multinational in vitro diagnostics (IVD) customers, our main
business is intrinsically linked to the diagnostic pathways that exist at
hospitals and clinics around the world. The activity within these routine
diagnostic pathways has been adversely affected by the COVID-19 pandemic as
hospital resources have been diverted to cope with the additional patient
burden created by the pandemic. Even where diagnostic capability exists, there
is evidence that concerned patients have chosen not to enter diagnostic
pathways and have not presented to healthcare professionals as would normally
be expected.
There have been reports in the market that the routine global IVD market
suffered a 15-20% reduction in activity during the period April to June 2020
(eg Siemens Healthineers Q2.2020 revenues as reported on 2 August). The
six-monthly nature of our customer royalty reporting limits our visibility but
we can see clear evidence from our physical product sales during this Q2.2020
period that corroborate such a pandemic effect.
The timing of a return to normality remains uncertain. Nevertheless, we are
confident of the robustness of our business and as circumstances change and as
healthcare pathways are re-established and normalised, Bioventix sales will
revert to an established trajectory.
Cash Flows and Dividends
The strong performance of the business during the year has generated cash
balances at the year-end of £8.1 million. Whilst considering the impact of
the pandemic on the core business, the Board has determined that is
appropriate to maintain the established dividend policy in the immediate
future. For the current year, the Board is pleased to announce a second
interim dividend of 52 pence per share which, when added to the first interim
dividend of 36 pence per share makes a total of 88 pence per share for the
current year.
Our current view is that maintaining a cash balance of approximately £5
million is sufficient to facilitate operational and strategic agility both
with respect to possible corporate or technological opportunities that might
arise in the foreseeable future and to provide comfort against the ongoing
impact of the pandemic and any economic uncertainty arising from it. We have
therefore decided to distribute surplus cash that is in excess of anticipated
needs and we are pleased to announce a special dividend of 53 pence per share.
Accordingly, dividends totalling 105 pence per share will be paid in November
2020. The shares will be marked ex-dividend on 29 October 2020 and the
dividend will be paid on 13 November 2020 to shareholders on the register at
close of business on 30 October 2020.
Research and Future developments
Over the next few years, the commercial development of the new troponin assays
will have the most significant influence on Bioventix sales. There are no
antibodies in the future pipeline that are comparable to our troponin product
in clear potential value and that have the ability to influence revenues in
the next few years.
We have undertaken a range of research projects over the previous few years
and in the table below we have attempted to illustrate our current view of
their potential value and probability of success;
^ | Increasing potential value high Secretoneurin ( CardiNor) Amyloid (Pre-Diagnostics) MyC (Kings) 1
medium T H C (sandwich) Virus (contract) 2 Pollution monitoring T 4 (thyroxine) Biotin blockers
Low T h y r oglobulin ( contract) Vitamin (contract) 3 Cancer (contract)
L o w M e dium h igh
Increasing probability of success -->
Our partners at CardiNor (Oslo) have continued in their work to try and
identify the possible utility of secretoneurin in heart failure patients and
in particular those patients who might be candidates for implantable cardiac
devices (ICDs). This work is continuing and we hope to have more definitive
news in the months to come.
Research work on amyloid beta has been on-going for four years and will
continue at Bioventix into 2021 as we work with our partners at
Pre-Diagnostics (also in Oslo) and their clinical collaborators. The goal of
the project is to identify fragments of amyloid beta in patient samples that
would be helpful in dementia diagnostics. Pre- Diagnostics have completed
development on their first amyloid fragment assay and plan to seek clinical
research projects where the assay could provide pharmaceutical companies with
additional data on amyloid biology during their clinical trials. We made a
further investment in Pre-Diagnostics of £0.19 million during the year.
We have now made a number of biotin “blocker” antibodies that are intended
to mitigate the interference that biotin vitamin supplements can have on
certain blood tests supplied by some IVD manufacturers. Early evaluation
samples have had mixed results at different customers. We will pursue this
further during the coming year both with existing antibodies and some new
candidates.
We are particularly pleased with the progress of the pollution exposure
project. We now have a prototype ELISA kit that is entering manufacturing
development at a third party contractor. During 2021, we plan to distribute
this kit to academic researchers working in the field of pollution research.
We have also had success with a lateral flow prototype format that would be
suited to field use, perhaps linked to an optical reader or even a mobile
phone app that uses the phone camera to quantify the pollution exposure result
line. This field use format could have utility in worker biomonitoring within
a health and safety setting and we will explore this further in 2021. The
creation, manufacture and supply of final assay products is outside our normal
focus of bulk antibody sales. However, we believe that through our own efforts
we can substantiate the viability of such products and generate demand,
thereby stimulating the interest of future commercial partners.
The MyC project with King’s 1 has produced interesting assays for
experimental use but these come at a time in which troponin assays are
becoming increasingly dominant in cardiac diagnostics and so MyC will not
feature in the 2021 table. The contracts in the table that feature antibodies
and diagnostics for a certain virus 2 and a vitamin 3 have been
technically successful. However, these projects have been deprioritised at the
customers and will also not feature in the 2021 table.
Regarding our core SMA antibody technology, we have successfully generated
superior antibodies over the last
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 competitive antibody technology –
does exist at some of our customers laboratories 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 antibody “library” 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.
During 2020, we have used this library technology by contracting work at a
third party to make a “sandwich” assay format for THC/cannabis using
parental SMAs that we created many years ago. This has yielded antibody
“pair” candidates that we plan to offer to customers during 2021 who are
interested in more sensitive tests for THC/cannabis in saliva.
The Bioventix Team
We were delighted to welcome Bruce Hiscock to Bioventix in July 2020 as our
part-time Executive Finance Director. Bruce has over 30 years experience in
board roles at fast-growing listed and private companies, including as CFO and
then CEO at Protec plc, an AIM listed security and technology services
business. Most recently Bruce was CFO and CEO for everyLIFE Technologies
Limited a software developer delivering digital care planning for social care
providers. Bruce will not only add breadth and specific expertise to Bioventix
but will also bring a fresh perspective on our business and strategy.
More recently Treena Turner, non-executive finance director, has stepped down
from the Board. Treena has been a key constituent of our team for many years
and we would like to thank Treena for all that she has done for our business
and wish her well in the future.
The composition of the remainder of the Bioventix team of 12 full-time
equivalents has remained relatively stable over the year facilitating
excellent performance and know how retention.
During March, we implemented COVID-19 secure working practices and have
developed these over the year as Government guidance has evolved. The staff
have responded with dedication and flexibility such that manufacturing,
research and support/admin functions were not materially affected.
Development of the lab facilities continued during the year with the
refurbishment of the antibody technology lab. New lab furniture and lab
equipment were acquired which will assist our technology development
activities, including a significant expansion of our e.coli (bacterial)
fermentation capability. This capability is particularly well suited to the
library antibodies such as the THC sandwich candidates mentioned above. This
further underlines our long-term commitment to the Farnham facility.
Conclusion and Outlook
We are delighted to be able to report such excellent financial results for the
year despite the negative impact of the global pandemic during April-June
2020. The core business is linked to routine testing at hospitals around the
world and this has undoubtedly been affected by the COVID-19 pandemic. The
timing of a return to normality is uncertain but when it does, we expect our
business will revert to an established trajectory, albeit without the income
from NT-proBNP which will cease from July 2021. Regardless of the pandemic
effects, we anticipate the continued roll-out of the high sensitivity troponin
assays and the royalties associated with this. Remarkable technical progress
has been made with the pollution exposure project and we anticipate that this
project and others in our pipeline will create additional shareholder value in
the period 2025 to 2035.
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 2020
2020 2019
Turnover £ 10,313,576 £ 9,290,029
Cost of sales (821,823) (875,089)
Gross profit 9,491,753 8,414,940
Administrative expenses (1,416,766) (1,268,937)
Difference on foreign exchange 202,668 (99,559)
Research and development tax credit 21,817 17,906
Share option charge (115,481) (133,490)
Operating profit 8,183,991 6,930,860
Interest receivable and similar income 41,068 34,628
Profit before tax 8,225,059 6,965,488
Tax on profit (1,022,362) (1,103,825)
Profit for the financial year 7,202,697 5,861,663
Total comprehensive income for the year 7,202,697 5,861,663
Earnings per share:
Basic 2020 pence 139.41 2019 pence 114.04
Diluted 137.93 112.12
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020
2020 2019
£ £
Fixed assets
Tangible assets 718,496 514,821
Investments 610,039 388,377
1,328,535 903,198
Current assets
Stocks 245,423 239,295
Debtors: amounts falling due within one year 3,649,369 3,933,915
Cash at bank and in hand 8,076,468 6,537,322
11,971,260 10,710,532
Creditors: amounts falling due within one year (728,630) (756,573)
Net current assets 11,242,630 9,953,959
Total assets less current liabilities 12,571,165 10,857,157
Provisions for liabilities
Deferred tax (50,238) (30,854)
(50,238) (30,854)
Net assets 12,520,927 10,826,303
Capital and reserves
Called up share capital 260,392 257,134
Share premium account 1,312,323 435,908
Capital redemption reserve 1,231 1,231
Profit and loss account 10,946,981 10,132,030
12,520,927 10,826,303
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020
Called up share capital Share premium account Capital redemption reserve Profit and loss account Total equity
£ £ £ £ £
At 1 July 2019 257,134 435,908 1,231 10,132,030 10,826,303
Comprehensive income for the year
Profit for the year - - - 7,202,697 7,202,697
Dividends: Equity capital - - - (6,503,227) (6,503,227)
Shares issued during the year 3,258 876,415 - - 879,673
Share option charge - - - 115,481 115,481
Total transactions with owners 3,258 876,415 - (6,387,746) (5,508,073)
At 30 June 2020 260,392 1,312,323 1,231 10,946,981 12,520,927
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019
Called up share capital Share premium account Capital redemption reserve Profit and loss account Total equity
£ £ £ £ £
At 1 July 2018 256,934 395,108 1,231 10,357,693 11,010,966
Comprehensive income for the year
Profit for the year - - - 5,861,663 5,861,663
Dividends: Equity capital - - - (6,220,816) (6,220,816)
Shares issued during the year 200 40,800 - - 41,000
Share option charge - - - 133,490 133,490
Total transactions with owners 200 40,800 - (6,087,326) (6,046,326)
At 30 June 2019 257,134 435,908 1,231 10,132,030 10,826,303
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020
2020 £ 2019 £
Cash flows from operating activities
Profit for the financial year Adjustments for: 7,202,697 5,861,663
Depreciation of tangible assets 133,569 67,499
Loss on disposal of tangible assets 2,376 -
Interest received (41,068) (34,628)
Taxation charge 1,022,362 1,103,825
(Increase)/decrease in stocks (6,128) 43,797
Decrease/(increase) in debtors 284,546 (117,124)
Increase in creditors 133,976 26,047
Corporation tax (paid) (1,164,897) (1,207,102)
Share option charge 115,481 133,490
Net cash generated from operating activities 7,682,914 5,877,467
Cash flows from investing activities
Purchase of tangible fixed assets (339,620) (84,518)
Purchase of unlisted and other investments (221,662) (96,953)
Interest received 41,068 34,628
Net cash from investing activities (520,214) (146,843)
Cash flows from financing activities
Issue of ordinary shares 879,673 41,000
Dividends paid (6,503,227) (6,220,816)
Net cash used in financing activities (5,623,554) (6,179,816)
Net increase/(decrease) in cash and cash equivalents 1,539,146 (449,192)
Cash and cash equivalents at beginning of year 6,537,322 6,986,514
Cash and cash equivalents at the end of year 8,076,468 6,537,322
Cash and cash equivalents at the end of year comprise:
Cash at bank and in hand 8,076,468 6,537,322
8,076,468 6,537,322
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
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's 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 generally recognised at the date of dispatch unless
contractual terms with customers state that risk and title pass on delivery of
goods, in which case revenue is recognised on delivery.
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 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.
1.6 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.
1.7 Research and development
Research and development expenditure is written off in the year in which it is
incurred.
1.8 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.
Land is not depreciated. Depreciation on other assets is charged so as to
allocate the cost of assets less their residual value over their estimated
useful live
Freehold
property
- 2% straight line
Plant and equipment
- 25% reducing balance
Motor
Vehicles
- 25% straight line
Fixtures &
Fittings
- 25% reducing balance
Equipment
- 25% straight line
1.9 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.
1.10 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.
1.11 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.
1.12 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.
1.13 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.
1.14 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.
1.15 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 ordinary shares.
1.16 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.
1.17 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 (as described in note
1), management is required to make judgments, estimates and assumptions. These
estimates and underlying assumptions and are reviewed on an ongoing basis.
There were no areas requiring significant management judgment during the year
ended 30 June 2020.
3. Turnover
An analysis of turnover by class of business is as follows:
2020 £ 2019 £
Product revenue and R&D income 4,048,847 3,010,496
Royalty and licence fee income 6,264,729 6,279,533
10,313,576 9,290,029
2020 £ 2019 £
United Kingdom 832,895 468,692
Other EU 1,206,854 1,759,224
Rest of the world 8,273,827 7,062,113
10,313,576 9,290,029
4. Operating profit
The operating profit is stated after charging:
2020 £ 2019 £
Depreciation of tangible fixed assets 133,569 67,499
Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements 10,650 10,350
Exchange differences (202,668) 99,559
Research and development costs 1,175,602 1,116,210
5. Taxation
2020 2019
£ £
Corporation tax
Current tax on profits for the year 1,002,978 1,099,196
1,002,978 1,099,196
Total current tax 1,002,978 1,099,196
Deferred tax
Origination and reversal of timing differences 19,384 4,629
Total deferred tax 19,384 4,629
Taxation on profit on ordinary activities 1,022,362 1,103,825
Factors affecting tax charge for the year
The tax assessed for the year is lower than (2019 - lower than) the standard rate of corporation tax in the UK of 19% (2019 - 19%). The differences are explained below:
2020 £ 2019 £
Profit on ordinary activities before tax 8,225,059 6,965,488
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2019 - 19%) 1,562,761 1,323,443
Effects of:
Expenses not deductible for tax purposes, other than goodwill amortisation and impairment 559 403
Capital allowances for year in excess of depreciation (21,325) (3,390)
Research and development tax credit (246,383) (238,848)
Share based payments (292,634) 17,588
Other differences leading to an increase in the tax charge 19,384 4,629
Total tax charge for the year 1,022,362 1,103,825
Factors that may affect future tax charges
There were no material factors that may affect future tax charges.
6. Dividends
2020 £ 2019 £
Dividends paid 6,503,227 6,220,816
6,503,227 6,220,816
7. Share capital
2020 2019
£ £
Allotted, called up and fully paid
5,207,835 (2019 - 5,142,674) Ordinary shares of £0.05 each 260,392 257,134
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 2 share option schemes; an Approved EMI Share Option Scheme and an Unapproved Share Option Scheme to incentivise employees. The company has applied the requirements of FRS 102 Section 26 Share-based Payment to all the options granted under both schemes. The terms for granting share options under both schemes are the same and provide for an option price equal to the market value of the Company's shares on the date of the grant and for the Approved EMI Share Option Scheme this price is subsequently agreed with HMRC Shares and Assets Valuation Division. The contractual life of an option under both schemes 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) 2020 Number 2020 Weighted average exercise price (pence) 2019 Number 2019
Outstanding at the beginning of the year 1350 85,938 1340 89,938
Granted during the year 3153 50,401 -
Forfeited during the year 1350 (14,075) -
Exercised during the year 1350 (66,659) 1025 (4,000)
Outstanding and exercisable at the end of the year 2985 55,605 1350 85,938
2020 2019
Option pricing model used Black Scholes Black Scholes
Issue price £13.50 - £38.55 £3.12 - £13.50
Exercise price (pence) £13.50 £3.12 - £13.50
Option life 10 years 10 years
Expected volatility 25.15% 25.15%
Fair value at measurement date £4.66 - £26.91 £1.72 - £4.66
Risk-free interest rate 0.18% 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 2020 was £115,481 (2019: £133,490). The number of staff and officers holding share options at 30 June 2020 was 17 (2019: 15). The share options have been issued to underpin staff service conditions.
9. 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 2020.
The financial statements for the year ended 30 June 2019 have been delivered
to the Registrar of Companies. The financial statements for the year ended 30
June 2020 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
2020 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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