REG - Fusion Antibodies - Final Results
29/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230929:nRSc0847Oa&default-theme=true
RNS Number : 0847O Fusion Antibodies PLC 29 September 2023
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse (amendment)
(EU Exit) Regulations 2019/310 ("MAR"). With the publication of this
announcement via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
29 September 2023
Fusion Antibodies plc
("Fusion" or the "Company")
Final results
Fusion Antibodies plc (AIM: FAB), a contract research organisation ("CRO")
providing discovery, design, and optimisation services for therapeutic
antibodies to the global healthcare market, announces its final results for
the year ended 31 March 2023.
Commercial and operational highlights
· Full year revenues lower by 40% to £2.9m (2022: £4.8m)
· Loss for the year of £2.6m (2022: loss £1.2m)
· Investment in R&D £0.8m (2022: £0.7m)
· Introduction of Integrated Therapeutic Antibody Service
· Introduction of Mammalian Display service
· Appointment of Adrian Kinkaid as CEO in August 2022
· Cash position at the year-end £0.2m (2022: £2.0m)
Post period end highlights
· Share proceeds of £1.5m (net of costs)
· Appointment of Stephen Smyth as interim CFO in September 2023
· Memorandum of Understanding ("MoU") signed with leading US based
AI/ML business and the first purchase order received
Separately, the Annual Report and Accounts for the year ended 31 March 2023
and the Notice of the Company's Annual General Meeting ("AGM") are being
posted to shareholders shortly. A copy of the 2023 Annual Report and Accounts,
the Notice of AGM and accompanying form of proxy will soon be available to
download from the Company website here: https://www.fusionantibodies-ir.com/
(https://www.fusionantibodies-ir.com/) .
The AGM will be held on 27 October 2023 at 11.00 am at the Company's offices
at Springbank Industrial Estate, 1 Springbank Rd, Dunmurry, Belfast BT17 0QL.
Director change
Sonya Ferguson, Non-executive Director, will not be seeking re-election at the
AGM, as she has decided to pursue another business opportunity. She will cease
to be a Director of the Company at the close of the AGM.
Adrian Kinkaid, CEO of Fusion Antibodies commented: "This has been a
challenging year for the Company and we have been through a number of changes
over the last few months. We successfully raised funds in a very difficult
market in May and implemented some additional cost saving measures to provide
us with the necessary capital we needed to progress the business.
"More recently, we announced we had signed an agreement with a US based AI/ML
business to support our antibody discovery service, AI/ML-Ab(TM) and
subsequently received our first order under the framework of this agreement.
We are continuing to work on other aspects of the OptiMAL® programme, and in
particular the development of the fully human antibody library which we remain
confident in.
"On a separate note, the Board would like to offer our sincere thanks to Sonya
Ferguson for her service to the Company as a Non-executive Director. She has
been with the Company since 2016, prior to our admission to trading on AIM.
We wish her well on her future endeavours. As a Company, we are looking
forward to better times ahead, reaching profitability and delivering value to
our shareholders."
Investor briefing
Fusion will host an online live presentation open to all investors on
Wednesday, 4 October 2023 at 11am BST, delivered by Dr Adrian Kinkaid, CEO and
Stephen Smyth, CFO. The Company is committed to providing an opportunity for
all existing and potential investors to hear directly from management on its
results whilst additionally providing an update on the business and current
trading.
The presentation will be hosted through the digital platform Investor Meet
Company.
Investors can sign up to Investor Meet Company for free and add to meet Fusion
Antibodies plc via the following
link: https://www.investormeetcompany.com/fusion-antibodies-plc/register-investor
(https://www.investormeetcompany.com/fusion-antibodies-plc/register-investor)
For those investors who have already registered and added to meet the Company,
they will automatically be invited. Questions can be submitted pre-event via
your IMC dashboard or in real time during the presentation, via the "Ask a
Question" function. Whilst the Company may not be in a position to answer
every question it receives, it will address the most prominent within the
confines of information already disclosed to the market through regulatory
notifications. A recording of the presentation, a PDF of the slides used, and
responses to the Q&A session will be available on the Investor Meet
Company platform afterwards.
Enquiries:
Fusion Antibodies plc www.fusionantibodies.com
Adrian Kinkaid, Chief Executive Officer Via Walbrook PR
Stephen Smyth, Chief Financial Officer
Richard Buick, Chief Scientific Officer
Allenby Capital Limited Tel: +44 (0)20 3328 5656
James Reeve/Vivek Bhardwaj (Corporate Finance)
Tony Quirke/Joscelin Pinnington (Sales and Corporate Broking)
Walbrook PR Tel: +44 (0)20 7933 8780 or fusion@walbrookpr.com
Anna Dunphy Mob: +44 (0)7876 741 001
About Fusion Antibodies plc
Fusion is a Belfast based contract research organisation ("CRO") providing a
range of antibody engineering services for the development of antibodies for
both therapeutic drug and diagnostic applications.
The Company's ordinary shares were admitted to trading on AIM on 18 December
2017. Fusion provides a broad range of services in antibody generation,
development, production, characterisation and optimisation. These services
include antigen expression, antibody production, purification and sequencing,
antibody humanisation using Fusion's proprietary CDRx (TM) platform and the
production of antibody generating stable cell lines to provide material for
use in clinical trials. Since 2012, the Company has successfully sequenced
and expressed over 250 antibodies and successfully completed over 200
humanisation projects and has an international, blue-chip client base, which
has included eight of the top 10 global pharmaceutical companies by revenue.
The Company was established in 2001 as a spin out from Queen's University
Belfast. The Company's mission is to enable pharmaceutical and diagnostic
companies to develop innovative products in a timely and cost-effective manner
for the benefit of the global healthcare industry. Fusion Antibodies provides
a broad range of services in antibody generation, development, production,
characterisation and optimisation.
Fusion Antibodies growth strategy is based on combining the latest
technological advances with cutting edge science to deliver new platforms that
will enable Pharma and Biotech companies get to the clinic faster, with the
optimal drug candidate and ultimately speed up the drug development process.
The global monoclonal antibody therapeutics market was valued at $186 billion
in 2021 and is forecast to surpass $445 billion in 2028, an increase at a CAGR
of 13.2 per cent. for the period 2022 to 2028. Approximately 150 monoclonal
antibody therapies are approved and marketed globally as of June 2022 with the
top four antibody drugs each having sales of more than $3 bn in 2021.
Chairman's Statement
This year has been a tough year for the Company and very commercially
challenging. The year has seen a downturn in market conditions and
investment into our customers' early-stage therapeutic pipelines Venture
capital funding, typically the primary source of investment for early-stage
biotech, has fallen to its lowest level since 2019.
The Biotechnology sector's contribution to the global R&D pipeline has
been growing in the last decade. There are more biotech companies now than
ever before, but consequently there is less investment to go around and this
lack of growth capital for many biotech companies means they must be very
cautious in their spending. This has resulted in projects being delayed and
reductions in head counts. However, we believe that the reprioritization of
pipelines and optimisation of development strategies will give Fusion more
opportunities going forward as companies could look to outsource more of their
projects to give them greater control of their fixed cost base. We believe
that Biotech companies generally are moving towards leveraging early
engagement opportunities with full-service partners like Fusion to optimise
the impact of external expertise across the development program, and to
maximise their probability of success.
With the biotechnology sector's funding environment undergoing significant
changes, creative solutions are required and Fusion has responded by
introducing our new ITAS (Integrated Therapeutic Antibody Services) strategy
which addresses this new market dynamic. ITAS pulls together all our current
solutions to provide a continuous service from target discovery to a final
stable cell line ready for larger scale production and is consistent with
Fusion's established philosophy to "begin with the end in mind". Furthermore,
we are looking at ways that the antibody drug discovery timescale can be
shortened, with the development of OptiMAL(®), our human antibody library and
also through strategic alliances with AI/ML (artificial intelligence/machine
learning) companies.
Business performance
The year showed a significant downturn in revenue from the previous year at
£2.9m (2022: £4.8m) due to a combination of factors. As mentioned, this is
primarily due to weak market investment conditions for new drug discovery and
development programs and the subsequent delays to a number of our contracts,
both large and small, combined with the reduced drug development activity of
some of our customers. Notably, a small number of valuable projects have
been suspended by clients due to delayed investment into those businesses. We
are advised by our clients that we should expect these projects to recommence
once their funding is secured, although the continued uncertainty of
timescales to win and close out contracts and to recognise the revenues
remains a challenge.
This situation was further compounded by the several months without a CEO in
place and the unusually high turnover in the commercial group this year,
necessitating the recruitment and training of new staff which created some
short-term loss of traction with our customer base. The industry in general
has seen significant movement in staff during and after the pandemic but more
recently this situation has stabilised. It is worth noting that whilst the
Company continues to retain an interest of longer-term future success
milestone or royalty payments in many of our client projects, there were no
such payments this year.
The Company has been carefully managing costs and in particular towards the
later part of the year headcount has been reduced by 11% from an average of 54
to a headcount of 48 at the year end. To minimise the impact on capacity and
capability to deliver customers' projects, significant cross training of staff
from different laboratories has been implemented.
The focus for our R&D has continued on the OptiMAL(®) library project,
with investment in R&D increasing by 29% over the same period in the
previous year to £0.8m (2022: £0.7m).
The downturn in revenues generated an operating loss for the year of £2.6m
(2022: loss £1.2m). Post year end, the Company successfully completed a
£1.67m fundraise to provide additional working capital and we have now
implemented circa. £1.6m in restructuring savings, including a further
reduction in headcount from 48 at March 31 year end 2023 to 29. The Company
had previously announced anticipated annualised cost savings of £2.2 million
based on comparisons against the Company's budgets and plans in place at that
time. As the outrun for FY 2023 was lower than originally budgeted, the
revised annualised cost savings identified now total £1.6m. The Board will
continue to closely monitor the Company's cost base and seek to identify
additional cost savings that can be implemented without further impacting the
operating capacity of the Company.
Development of New services
While trading conditions remain challenging, the Company continues to strive
to be at the front of innovation and to provide new and cutting-edge services
to the market. We have implemented a new strategy and are introducing a
new integrated approach in response to client needs and to ultimately increase
revenues. We are re-aligning the Company's service offering to best serve our
clients who are seeking to outsource more of their work in therapeutic
antibody drug discovery and positioning ourselves as more of a collaborative
partner rather than just a fee-for-service relationship. Our Integrated
Therapeutic Antibody Service (ITAS) integrates our current Discovery,
Engineering and Supply services into one proposition which aims to enhance the
client journey with the development of high performing antibodies to their
targets. This approach has been trialled with an existing client with positive
results and the Company's aim is to build on this, while continuing to support
our smaller clients who may wish to select individual services.
The antibody drug discovery industry is gradually moving away from the use of
animals, something that as a Company we recognise and support. Our R&D
program to develop a cell-based mammalian display technology screening
library, OptiMAL(®), for the direct identification of intact fully human
antibodies against biomarkers and other targets of interest is progressing,
with key stages of the process now developed, although further optimisation
work is still required to deliver the full operational screening
parameters. We will continue to build a body of data with a view to
establishing commercial relationships for further validation and the Directors
remain optimistic about its likely reception by the market.
Since our last report, processes to transfect cells with unique sequences,
express those sequences as antibodies and screen and select antibodies have
been optimised. Work is ongoing to optimise the extraction of specific
antibodies to build a body of data with a view to establishing commercial
relationships for further validation. Already, the R&D investment is
bearing fruit with two stages of the OptiMAL(®) process adding value in that
they enable us to further broaden the Company's integrated service offering.
The OptiMAL(®) process includes a novel DNA library of antibody sequences at
the front end and a Mammalian Display platform as the final step to enable the
library antibodies to be expressed on the surface of mammalian cells as fully
intact human IgG antibodies. We have commenced the development of two further
discovery platforms utilising these two key OptiMAL(®) steps.
The Mammalian Display platform is ideally suited to be used in conjunction
with the output from artificial intelligence/machine learning (AI/ML)
discovery platforms. These AI/ML platforms provide a method of designing
panels of antibodies in-silico, with the AI/ML algorithms typically producing
small libraries of sequences which are an excellent match with our Mammalian
Display platform, which can transform these designs into real protein
molecules for screening and final selection. This is a potentially powerful
combination to speed up the discovery process and the Company is actively
engaging with leading AI/ML companies as potential partners to make these
novel approaches available to our client base. In August 2023 we announced
that the negotiations with a leading AI/ML company based in the USA have been
finalised and the first order emanating from this collaboration to generate
de-novo antibody sequences has been received.
Furthermore as previously announced a Memorandum of Understanding (MoU) with
another AI/ML company based in Europe has also been signed. These
collaborations are expected to provide for the development of partnerships
that will enable the derivation and evaluation of AI generated antibodies and
offer clients a new route to market using the AI/ML-Ab(TM) service
(pronounced AIM Lab), which will be complementary to our established discovery
methods.
The novel DNA library of antibody sequences from OptiMAL(®) will also be
used as the input design for OptiPhage(TM), a phage display based version of
the same DNA library. These DNA sequences are packaged into a more commonly
used Phage display format where smaller antibody fragments can be screened,
compared to whole antibodies via OptiMAL(®). We believe that the provision of
OptiPhage(TM) at a lower price point provides the Company with an ability to
protect the premium pricing of the OptiMAL(®) programme whilst meeting
budgetary constraints of its customers. It may also be the platform of choice
for those wanting antibody fragments as their end product.
As a Company, we are proud of our innovations and of our dedicated team of
scientists who work on the next generation of antibody discovery technologies
and we will continue to protect novel ideas through the filing of patents.
This year saw the filing of two new patents. The first one is in respect of
the Company's antigen display technology, which should increase the success
rate in identifying highly potent antibodies from Fusion's range of Antibody
Discovery technologies, although it does have a wider potential application.
The second is for a panel of antibodies that bind to an important target for
cancer therapeutics. These antibodies have the potential to inhibit the
pro-tumourigenic activity of their target in cancer, which is supported by
early pre-clinical data. The Company is exploring options to out-licence these
antibodies to a clinical development company to progress them into Phase I
clinical trials.
Board and Employees
I was very pleased to announce the arrival of our new CEO, Dr Adrian Kinkaid,
in August last year. Adrian brings a depth of experience in the life science
and biotherapeutics industries and has expertise in the development and
commercialisation of all the main classes of affinity reagents with over
twenty-five years' experience working in the bioscience sector. Adrian's
previous experience has included senior management positions in drug
discovery, reagent technology and diagnostics and joins at a time where his
strong leadership and vision will be key in the Company's turnaround
strategy.
One further change to the Board during the financial year was Mr Tim Watts,
who stepped down as a Non-Executive Director in September 2022. Tim joined
the Company at the time of the IPO in December 2017, was the Chair of the
Company's Audit Committee and has made a valuable contribution to the Company,
particularly from his knowledge and experience of public companies. On
behalf of the Board, I would like to thank him for all that he had done for
the Company and wish him well in his retirement.
Post the end of the year we announced that Mr James Fair, our Chief Financial
Officer, was stepping down from the Board effective 31 May 2023. The Board
would like to thank James for his significant contribution to the Company over
the past 14 years and wish him well in his future endeavours. We are grateful
to Ms Frances Johnston who stepped in as the Company Secretary until the
appointment in September 2023 of Mr Stephen Smyth as an interim part time CFO
and Company Secretary. Stephen Smyth was designated Company Secretary on 28
July 2023 and appointed on Companies House on 16 September 2023. We have
outsourced some other financial management accounting activities until the
point where the Company is in a stronger financial position to allow more
permanent solutions.
I would also like to mention all the staff, who at the beginning of the year
were still working under Covid-19 restrictions, with many of our business
development and financial teams continuing to work from home. The Company is
continuing to offer flexible hybrid working where possible within the employee
retention strategy.
The Fusion team has worked well under difficult conditions with a strong
collaborative team effort and disciplined commitment for which the board is
very grateful. The formation of the new Scientific Advisory Panel (the
"SAP") was announced last year and is a making a positive input into the
Companies scientific strategy. During the year there was a change in the
makeup of the group with Professor Terry Rabbitts stepping down and with Dr
Ulf Grawunder attending SAP meetings. I would like to thank Professor
Rabbitts for his contribution and welcome Dr Grawunder, who is based in Basel
and who has extensive experience in the development of antibody-based
therapeutics. He co-founded a company specializing in the development of
therapies for cancer patients and has experience in mammalian cell-based
antibody display platforms.
The appointment of these industry experts has already had an impact in our
new AI/ML focus, with Professor Charlotte Deane, Professor of Structural
Bioinformatics at the University of Oxford sharing her insights in the
development and application of future machine learning algorithms in the field
of antibody design.
Corporate governance
The long-term success of the business and delivery on strategy depends on good
corporate governance. The Company complies with the Quoted Companies Alliance
Corporate Governance Code as explained more fully in the Governance Report of
the annual report and accounts.
Post year end and outlook
As mentioned previously, the significant downturn in revenues generated a
larger than anticipated operating loss for the FY23 and as this put a major
strain of the cash levels, a new round of funding was commenced at the end of
this FY and completed successfully in June 2023. Unfortunately, the need for
this fundraising materialised at a point when investor confidence, and
confidence in Fusion were at a low-point, resulting in a significant discount
in the price at which new monies could be raised.
The subscription of new shares was through a placing, a Directors subscription
and a retail offer and I would like to thank all the shareholders, both
current and new, who supported us in this round, and in particular the
Directors who subscribed for just over 8% of the shares. A total of
£1,671,938 (£1.5m net of expenses) was raised through the issue of
33,438,768 ordinary shares at 5p per share.
In light of the macro-economic headwinds which the Company and its customers
are facing, the Board identified £1.6 million of annualized savings, which
were implemented after the fund raise. This cost saving includes a
significant reduction in headcount across all levels of the Company, including
the Company's non-executive directors having agreed to forgo all
remuneration that they are entitled to and the Company's executive directors
having agreed to changes in their remuneration (which include taking shares
in place of some cash remuneration) to further conserve cash until such time
that the Company's trading has recovered to an appropriate level.
The Directors believe that, notwithstanding these cost reductions, the Company
will still be able to progress the launch of ITAS. Budgets have been
maintained for sales and marketing and travel and, where possible, the Company
will seek client contributions for further collaborative trials with a view to
full commercialization of OptiMAL(®) and the initial AI/ML-Ab(TM) and
OptiPhage(TM) projects. As mentioned, in August 2023, we were pleased to
announce that an agreement had been signed with a leading US-based AI/ML
company and the first order received, from a customer based in Australia. This
represents an important first step in delivering this strategy.
Whilst there remains a significant amount of uncertainty over the timing and
implementation of future contract wins due to reduced investment in the
broader biotech sector, we expect trading to recover incrementally over the
short to medium term both in respect of existing services and the new services
coming on stream.
Simon Douglas
Chairman
28 September 2023
CEO's report and operations review
The Therapeutics industry's need for antibodies has arguably never been
higher, with significant breakthroughs such as the approval of lecanemab,
donanemab and others for Alzheimer's disease demonstrating the applicability
of antibodies to treat central nervous system diseases and that a new set of
therapeutic targets are now to be considered viable. Similarly, the
diagnostics industry is enjoying an unprecedented level of awareness and
familiarity, especially with antibody enabled lateral flow devices having been
used extensively in the detection of Covid 19. However, largely due to
macro-economic factors, FY2023 was also a challenging year for the associated
services industry with investment into the biotech sector reducing
significantly in the principal geographical regions as Covid related
investment rebalanced. As we entered the financial year, the Company was
inevitably exposed to these factors with a high proportion of our business
directly linked to venture capital funded clients. Faced with uncertainty
about their funding, many clients opted to place projects on hold and not to
initiate new projects until the economic landscape had improved.
Transitioning to a model whereby we can derive more revenue from those clients
still actively progressing their research programmes became increasingly
important to the Company and I am pleased to say we have made significant
progress with the launch of our Integrated Therapeutic Antibody Services
(ITAS). This also positions the business to better exploit our emerging
platforms for antibody discovery, or "Discovery Engines", which we are
developing from the OptiMAL(®) research project. The initial objective for
the research project was to create OptiMAL(®), a groundbreaking and industry
leading platform for the discovery of human antibodies through a highly
diverse library of DNA sequences expressed as fully intact antibodies, or IgG
molecules, expressed on the surface of mammalian cells. We now have clear
evidence that this has been achieved with cells stained to show the antibodies
displayed on the cell surface. With the antibody on the cell surface, a cell
can be individually selected and manipulated to produce larger quantities of
the antibody of interest and it is this last stage that requires further
optimisation.
This image shows individual cells at high magnification. The cells have been
stained with a red stain that is specifically for the expressed human antibody
created by the OptiMAL(®) process. The red stain is seen predominantly on
the cellular surface showing that antibodies are being produced by the cell
and on the cell surface. Such cells can be individually selected and
manipulated to produce larger quantities of the antibody of interest and it is
this last stage that requires further optimisation.
We are also in the process of spinning out two further discovery platforms
from the same research program: AI/ML-Ab(TM) and Optiphage(TM). The
Mammalian Display element of OptiMAL(®) is being combined with algorithms
for the de novo design of novel antibodies from various artificial
intelligence (AI) and Machine Learning (ML) technologies (AI/ML-Ab(TM)) which
have very much come to the fore in the last year or two, whilst
Optiphage(TM) utilizes a library based on the same sequences as OptiMAL(®),
but modified for use in a more industry standard phage-display format. The
availability of these diverse and complementary proprietary discovery engines,
which can be deployed singly or in concert, also enables us to provide a
de-risked approach to antibody discovery, further benefiting our clients and
strengthening Fusion Antibodies' position as the partner of choice. In
August 2023 we were pleased to announce that we had a signed agreement with a
leading US-based AI/ML company. It is envisaged that both parties will
co-market the combined service offerings and as announced we have already
received the first order. This purchase order demonstrates commercial traction
for AI/ML-Ab(TM) and we believe that there is significant market potential for
this service offering.
At Fusion, our aim is to develop a range of services that gives our clients
choice and a range of solutions best suited to the biological needs of their
targets. We understand that 'one size' does not fit all and aim to broaden
our service menu to give the customer the best chance of meeting their
technical objectives with the least risk. This is already in place with our
cell line development (CLD) and stabilization services, where we offer a
number of cell lines. We offer our clients the choice of three separate cell
lines, all in-licensed, which have different biological characteristics and
financial price points. The final selection process is empirical, with the
screening process involving the assessment of yield and stability which will
vary from antibody to antibody. CLD is a service that is required towards the
end of the development process and we intend to develop and introduce a
similar choice at the beginning: at the discovery end of the development plan.
Due to the strong headwinds caused by the macro-economic conditions, the
Company ended the year looking to secure additional investment which it
successfully completed in June 2023, raising just under £1.7 million (before
expenses). Thanks to the continued support of our shareholders, we can
move forward with re-establishing our presence in the market and maintaining
investment in our new discovery services.
Business Review
The Company's revenue performance for the financial year to 31 March 2023 fell
by 40% vs 2022 to £2.9m due to the macroeconomic headwinds. Despite the
reduction in revenues, we have experienced continuing interest and uptake of
our proprietary RAMP(TM) technology service platform which represents a key
driver of revenues for the business. Over the course of the year, Fusion has
initiated and successfully completed a number of RAMP(TM) client projects,
which further affirms the valuable contribution of this service offering to
both the Company and to our customers. The key geographical region of
North America represented 50% of revenues and with a number of key client
accounts. The Asia Pacific markets such as Japan, India and Korea, where we
have appointed distributors, were also impacted by the global downturn in the
sector, although client relationships are strengthening and opportunities are
increasing. In addition to the 'Fee for Service' revenue model, and where
there is a significant contribution to the client's intellectual property, we
look to enter into a collaborative agreement structure which will enable
Fusion to access the downstream value of the services and share in the
commercial success. This will further enable the Company to unlock the
intrinsic value that our proprietary service platforms provide to our clients
and generate additional shareholder value.
We continued to drive investment and innovation into the R&D pipeline of
new service offerings. In the financial year, we made further progress on the
development work of OptiMAL(®) with successful proof of concept for the
Mammalian Display element. This has already been harnessed to support the
AI/ML-Ab(TM) offering, which is itself attracting market attention, and is
already generating new leads. I strongly believe that AI/ML-Ab(TM),
Optiphage(TM) and OptiMAL(®) represent key differentiators and future drivers
of growth for the business and will enable the Company to access a sizeable
addressable market generating significant shareholder value.
We are pleased to report that the Company filed a patent application for a
panel of antibodies that bind an important target for cancer therapeutics.
These antibodies have the potential to inhibit the pro-tumourigenic activity
of their target in cancer, which is supported by pre-clinical data. The
Company is exploring options to out-licence these antibodies to a clinical
development company to progress them into Phase I clinical trials.
Our Scientific Advisory Panel of industry experts and thought leaders in the
field of antibody discovery and services has been particularly valuable in the
development of the new platforms and it is anticipated that their continued
guidance will further support the commercialisation of these valuable assets.
Inventory of consumables has been maintained at relatively high levels to
allow for any supply chain disruption from the UK's departure from the
European Union and the disruption caused by the Coronavirus pandemic. In the
year, 14% of the Company's revenues arose from exports to the EU countries and
we look to build on this, supported by Northern Ireland's unique trading
position with the EU and UK. We also continue to develop other export markets
as our services find universal acclaim and to mitigate risks of overexposure
to any one geographical market.
Financial Results
Full year revenues for the year in total were down by 40% to £2.9m (2022:
£4.8m).
The EBITDA loss for the year was £2.5m (2022: £0.6m loss) (see note 26) and,
excluding the R&D expenditure of £0.8m, EBITDA for the year was a loss of
£1.5m. The loss before tax was £2.9m (2022: £1.3m loss).
The Company held current net assets of £0.8m at 31 March 2023 (2022: £3.1m)
which mainly comprised inventories and trade and other receivables.
The Company ended the year with £0.2m of cash and cash equivalents, having
used £1.7m of cash in operations during the year of which £0.8m was for
R&D, invested £0.1m in property, plant and equipment and £0.1m servicing
asset-based borrowings. As previously mentioned, in June 2023 the Company
issued equity for net proceeds of c.£1.5m which puts it in a good position to
continue its sales and marketing activities and the development of new
discovery platforms and services.
The current financial year commenced with similar conditions to those
experienced in the latter part of FY 2023, with new business significantly
lower than historic levels. In the past few months, the Company has enjoyed an
uplift in business engagement from lead generation through to quote drafting
and, pleasingly, purchase orders received. We've seen a strengthening of the
pipeline of approximately three-fold since the end of 2023. As a result,
revenues for FY2024 will be significantly weighted towards the second half of
the year. The Board is optimistic that our new services, such as AI/ML-Ab,
will contribute positively to future revenue growth.
Despite FY2023 being a commercially challenging year, I feel optimistic about
the year ahead. Since the year end we have reduced our cost base significantly
but kept a strong and broad technical base within the Company, raised finance
and are in a good cash position and have some exciting and enviable discovery
services in development. I believe that the slowdown in the market is
beginning to show a level of recovery, with our pipeline already showing
growth, and that we are in a good position to return to growth on a stronger
more stable foundation.
Adrian Kinkaid
Chief Executive Officer
28 September 2023
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 March 2023
Note 2023 2022
£'000 £'000
Revenue 4 2,901 4,799
Cost of sales (2,327) (2,333)
Gross profit 574 2,466
Other operating income 11 30
Administrative expenses (3,443) (3,821)
Operating loss 5 (2,858) (1,325)
Finance income 8 3 1
Finance expense 8 (4) (9)
Loss before tax (2,859) (1,333)
Income tax credit 10 263 133
Loss for the financial year (2,596) (1,200)
Total comprehensive expense for the year (2,596) (1,200)
Pence Pence
Loss per share
Basic 11 (10.0) (4.6)
Diluted 11 (10.0) (4.5)
Statement of Financial Position
As at 31 March 2023
Notes 2023 2022
£'000 £'000
Assets
Non-current assets
Intangible assets 12 - -
Property, plant and equipment 13 375 633
375 633
Current assets
Inventories 15 539 585
Trade and other receivables 16 690 1,517
Current tax receivable 263 131
Cash and cash equivalents 195 2,049
1,687 4,282
Total assets 2,062 4,915
Liabilities
Current liabilities
Trade and other payables 17 844 1,142
Borrowings 18 35 66
879 1,208
Net current assets 808 3,074
Non-current liabilities
Borrowings 18 40 3
Provisions for other liabilities and charges
19 20 20
60 23
Total liabilities 939 1,231
Net assets 1,123 3,684
Equity
Called up share capital 21 1,040 1,040
Share premium reserve 7,647 7,647
Accumulated losses (7,564) (5,003)
Total equity 1,123 3,684
Simon
Douglas
Adrian Kinkaid
Director
Director
Registered in Northern Ireland, number NI039740
Statement of Changes in Equity
For the year ended 31 March 2023
Called up share capital Share premium reserve Accumulated losses Total
Notes
£'000 £'000 £'000 equity
£'000
At 1 April 2021 1,024 7,547 (3,824) 4,747
Loss and total comprehensive expense for the year
- - - (1,200) (1,200)
Issue of share capital 16 100 - 116
Share options - value of employee services
- - - 21 21
Total transactions with owners, recognised directly in equity
16 100 21 137
At 31 March 2022 21 1,040 7,647 (5,003) 3,684
At 1 April 2022 1,040 7,647 (5,003) 3,684
Loss and total comprehensive expense for the year
- - - (2,596) (2,596)
Share options - value of employee services
- - - 35 35
Total transactions with owners, recognised directly in equity
- - - 35 35
At 31 March 2023 21 1,040 7,647 (7,564) 1,123
Statement of Cash Flows
For the year ended 31 March 2023
Notes 2023 2022
£'000 £'000
Cash flows from operating activities
Loss for the year (2,596) (1,200)
Adjustments for:
Share based payment expense 35 21
Depreciation 372 749
Amortisation of intangible assets - - 2
Finance income (3) (1)
Finance costs 4 9
Income tax credit (263) (133)
Decrease/(Increase) in inventories 46 (105)
Decrease/(increase) in trade and other receivables 819 (82)
(Decrease)/increase in trade and other payables (299) 309
Cash used in operations (1,885) (431)
Income tax received 131 101
Net cash used in operating activities (1,754) (330)
Cash flows from investing activities
Purchase of property, plant and equipment 13 (114) (258)
Finance income - interest received 8 3 1
Net cash used in investing activities (111) (257)
Cash flows from financing activities
Proceeds from new issue of share capital net of transaction costs - - 116
Proceeds from new borrowings 18 69 -
Repayment of borrowings 18 (62) (162)
Finance costs - interest paid 8 (4) (9)
Net cash generated/(used in) from financing activities 3 (55)
Net decrease in cash and cash equivalents (1,862) (642)
Cash and cash equivalents at the beginning of the year 2,049 2,686
Effects of exchange rate changes on cash and cash equivalents 8 5
Cash and cash equivalents at the end of the year 195 2,049
Notes to the Financial Statements
For the year ended 31 March 2023
1 General information
Fusion Antibodies plc is a company incorporated and domiciled in the United
Kingdom and is registered in Northern Ireland having its registered office at
1 Springbank Road, Springbank Industrial Estate, Dunmurry, Belfast, BT17 0QL.
The principal activity of the Company is the research, development and
manufacture of recombinant proteins and antibodies, particularly in the areas
of cancer and infectious diseases.
2 Significant accounting policies
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all years presented unless otherwise stated.
Basis of preparation
The financial information included in this preliminary announcement does not
constitute statutory accounts of the Company for the years ended 31 March 2023
and 31 March 2022 but is derived from those accounts. Statutory accounts for
the year ended 31 March 2022 have been delivered to the Registrar of Companies
and those for 2023 will be delivered following the Company's Annual General
Meeting. The auditors have reported on those accounts: their reports were (i)
unqualified, although included an emphasis of matter in respect of material
uncertainty around going concern and (ii) did not contain a statement under
section 498(2) or (3) of the Companies Act 2006.
The financial statements have been prepared on the historical cost convention.
The financial statements are prepared in sterling, which is the functional
currency of the Company. Monetary amounts in these financial statements are
rounded to the nearest £1,000.
The financial statements of Fusion Antibodies plc have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards.
The preparation of financial statements in conformity with International
Financial Reporting Standards ("IFRS") requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in
the process of applying the Company's accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed in note 3.
Going concern
The Company has returned a loss of £2.6m for the year ended 31 March 2023
(Year ended 31 March 2022: Loss of £1.2m) and at the year-end had net current
assets of £0.8m (31 March 2022: Net current assets of £3.1m) including
£0.2m (31 March 2022: £2m) of cash and cash equivalents. Since the reporting
date the Company has raised net proceeds of £1.5m from the issue of ordinary
shares and has undergone a restructuring process to reduce annual costs by
approximately £1.6m. The Company continues to expend cash in a planned manner
to both grow the trading aspects of the business and to develop new services
through research and development projects. Revenues for the year were £2.9m,
significantly below market expectations and 40% lower than revenues for the
prior year. Uncertainty in levels of investment in the sector and, therefore,
the amounts to be invested in R&D by our customers has resulted in a
number of projects being delayed in FY2023 and a continued softness in the
marketplace at the beginning of FY2024. This situation was further compounded
by the several months without a CEO in place and the unusually high turnover
of staff in the Company's commercial team in the year, necessitating the
recruitment and training of new staff which created some short-term loss of
traction with our customer base.
The financial statements have been prepared on the going concern basis, which
assumes that the company will continue to be able to meet its liabilities as
they fall due for at least twelve months from the date of signing these
financial statements. The directors have, at the time of approving the
financial statements, a reasonable expectation that the Company has adequate
resources to continue in operational existence at least for 12 months from the
reporting date. Thus, they continue to adopt the going concern basis of
accounting in preparing the financial statements. To support the going concern
basis of preparation, cash flow forecasts have been prepared which incorporate
a number of assumptions upon which sensitivities have been performed to
reflect severe but plausible downside scenarios. These assumptions include
the rate at which revenue growth can be achieved.
The directors note that there is inherent uncertainty in any cash flow
forecast, however this is further exacerbated given the nature of the
company's trade and the industry in which it operates. Due to the risk that
revenues and the related conversion of revenue to cash inflows may not be
achieved as forecast over the going concern period, the Directors believe that
there exists a material uncertainty that may cast significant doubt on the
Company's ability to continue as a going concern and it may be unable to
realise its assets and discharge its liabilities in the normal course of
business.
The financial statements do not include the adjustments that would result if
the Company were unable to continue as a going concern.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable
for the provision of services in the ordinary course of the Company's
activities. Revenue is shown net of value added tax and where a contractual
right to receive payment exists.
The Company's performance obligations for its revenue streams are deemed to be
the provision of specific services or materials to the customer. Performance
obligations are identified on the basis of distinct activities or stages
within a given contract that the customer can benefit from, independent of
other stages in the contract. The transaction price is allocated to the
various performance obligations, based on the relative fair value of those
obligations, and then revenue is recognised as follows:
· Revenue is recognised over the period that services are provided
using the percentage of completion method, based on the input method using
costs incurred to date relative to the expected total costs for each
performance obligation; and
· Where a contract includes a payment contingent upon the customer
subsequently achieving a pre-defined milestone with their development
programme, revenue in the amount of the total success payment due is
recognised when the pre-defined condition(s) have been met.
Contract assets arise on contracts with customers for which performance
obligations have been satisfied (or partially satisfied on an over time basis)
but for which the related amounts have not yet been invoiced or received.
Contract liabilities arise in respect of amounts invoiced during the year for
which the relevant performance obligations have not been met by the year-end.
The Company's contracts with customers are typically less than one year in
duration and any contract liabilities would be expected to be recognised as
revenue in the following year.
Grant income
Revenue grants received by the Company are recognised in a manner consistent
with the grant conditions. Once conditions have been met, grant income is
recognised in the Statement of Comprehensive Income as other operating income.
Research and development
Research expenditure is written off as incurred. Development expenditure is
recognised in the Statement of Comprehensive Income as an expense until it can
be demonstrated that the following conditions for capitalisation apply:
· it is technically feasible to complete the scientific
product so that it will be available for use;
· management intends to complete the product and use or
sell it;
· there is an ability to use or sell the product;
· it can be demonstrated how the product will generate
probable future economic benefits;
· adequate technical, financial and other resources to
complete the development and to use or sell the product are available; and
· the expenditure attributable to the product during its
development can be reliably measured.
Intangible assets
Software
Software developed for use in the business is initially recognised at
historical costs, net of amortisation and provision for impairment. Subsequent
development 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 Company and the
cost of the item can be measured reliably.
Software is amortised over its expected useful economic life, which is
currently estimated to be 4 years. Amortisation expense is included within
administrative expenses in the Statement of Comprehensive Income.
Property, plant and equipment
Property, plant and equipment are initially recognised at historical cost, net
of depreciation and any impairment losses.
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 Company and the
cost of the item can be measured reliably. The carrying amount of the replaced
part is de-recognised. All other repairs and maintenance are charged to the
statement of comprehensive income during the financial year in which they are
incurred.
Subsequently, property plant and equipment are measured at cost or valuation
net of depreciation and any impairment losses.
Costs associated with maintaining computer software programmes are recognised
as an expense as incurred. Software acquired with hardware is considered to be
integral to the operation of that hardware and is capitalised with that
equipment. Software acquired separately from hardware is recognised as an
intangible asset and amortised over its estimated useful life.
Depreciation is provided on all property, plant and equipment at rates
calculated to write off the cost less estimated residual value of each asset
on a straight line basis over its expected economic useful life as follows:
Right of use
assets The
remaining length of the lease
Leasehold
improvements
The lesser of the asset life and the remaining length of the lease
Plant and machinery 4
years
Fixtures, fittings & equipment 4 years
Leases
Leases in which a significant portion of the risks and rewards of ownership
remain with the lessor are deemed to give the Company the right-of-use and
accordingly are recognised as property, plant and equipment in the statement
of financial position. Depreciation is calculated on the same basis as a
similar asset purchased outright and is charged to profit or loss over the
term of the lease. A corresponding liability is recognised as borrowings in
the statement of financial position and lease payments deducted from the
liability. The difference between remaining lease payments and the liability
is treated as a finance cost and taken to profit or loss in the appropriate
accounting period.
Impairment of non-financial assets
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are largely independent cash inflows (cash-generating
units). As a result, some assets are tested individually for impairment and
some are tested at cash-generating unit level.
All individual assets or cash-generating units
are tested whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount
by which the asset's or cash-generating unit's amount exceeds its recoverable
amount. The recoverable amount is the higher of fair value, reflecting market
conditions less costs to sell, and value in use. Value in use is based on
estimated future cash flows from each cash-generating unit or individual
asset, discounted at a suitable rate in order to calculate the present value
of those cash flows. The data used for impairment testing procedures is
directly linked to the Company's latest approved budgets, adjusted as
necessary to exclude any restructuring to which the Company is not yet
committed. Discount rates are determined individually for each cash-generating
unit or individual asset and reflect their respective risk profiles as
assessed by the directors. Impairment losses for cash-generating units are
charged pro rata to the assets in the cash-generating unit. Cash generating
units and individual assets are subsequently reassessed for indications that
an impairment loss previously recognised may no longer exist. Impairment
charges are included in administrative expenses in the Statement of
Comprehensive Income. An impairment charge that has been recognised is
reversed if the recoverable amount of the cash-generating unit or individual
asset exceeds the carrying amount.
Current tax and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is
recognised in the statement of comprehensive income, except to the extent that
it relates to items recognised directly in equity.
The current tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the reporting date in the UK, where the Company
operates and generates taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred tax is recognised on temporary differences arising between the
carrying amounts of assets and liabilities and their tax bases. Deferred tax
is determined using tax rates (and laws) that have been enacted, or
substantively enacted, by the reporting date and are expected to apply when
the related deferred tax asset is realised or the deferred tax liability is
settled.
Deferred 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 tax assets and liabilities are offset
when there is a legally enforceable right to offset current tax assets against
current tax liabilities.
Share based employee compensation
The Company operates equity-settled share-based compensation plans for
remuneration of its directors and employees.
All employee services received in exchange for the grant of any share-based
compensation are measured at their fair values. The fair value is appraised at
the grant date and excludes the impact of any non-market vesting conditions
(e.g. profitability and remaining an employee of the Company over a specified
time period).
Share based compensation is recognised as an expense in the Statement of
Comprehensive Income with a corresponding credit to equity. If vesting periods
or other vesting conditions apply, the expense is allocated over the vesting
period, based on the best available estimate of the number of share options
expected to vest.
Non-market vesting conditions are included in assumptions about the number of
options that are expected to become exercisable. Estimates are subsequently
revised if there is any indication that the number of share options expected
to vest differs from previous estimates.
The proceeds received net of any directly attributable transaction costs are
credited to share capital and share premium when the options are exercised.
Financial assets
Classification
The Company classifies its financial assets in the following measurement
categories:
§ Those to be measured at amortised costs; and
§ Those to be measured subsequently at fair value (either through Other
Comprehensive Income or through profit and loss).
The classification depends on the Company's business model for managing the
financial assets and the contractual terms of the cash flows. The Company
reclassifies its financial assets when and only when its business model for
managing those assets changes.
Recognition and measurement
At initial recognition, the Company measures a financial asset at its fair
value plus transaction costs that are directly attributable to the acquisition
of the financial asset.
Subsequent measurement of financial assets depends on the Company's business
model for managing those financial assets and the cash flow characteristics of
those financial assets. The Company only has financial assets classified at
amortised cost. Cash and cash equivalents represent monies held in bank
current accounts and bank deposits. These assets are those held for
contractual collection of cash flows, where those cash flows represent solely
payments of principal and interest and are held at amortised cost. Any gains
or losses arising on derecognition is recognised directly in profit or loss.
Impairment losses are presented as a separate line in the profit and loss
account.
Impairment
The Company assesses on a forward-looking basis, the expected credit losses
associated with its debt instruments carried at amortised cost. For trade
receivables the Company applies the simplified approach permitted by IFRS 9,
which requires expected lifetime losses to be
recognised from the initial recognition of the receivables. For other
receivables the Company applies the three stage model to determine expected
credit losses.
Inventories
Inventories comprise consumables. Consumables inventory is stated at the lower
of cost and net realisable value. Cost is determined using the first-in,
first-out (FIFO) method. Cost represents the amounts payable on the
acquisition of materials. Net realisable value represents the estimated
selling price less all estimated costs of completion and costs to be incurred
in selling and distribution.
Financial liabilities
Financial liabilities comprise Trade and other payables and borrowings due
within one year and after one year, which are recognised initially at fair
value and subsequently carried at amortised cost using the effective interest
method. The Company does not use derivative financial instruments or hedge
account for any transactions. Trade payables represent obligations to pay
for goods or services that have been acquired in the ordinary course of
business from suppliers. Trade payables are classified as current
liabilities if payment is due within one year. If not, they are presented as
non-current liabilities.
Provisions
A provision is recognised in the Statement of Financial Position when the
Company has a present legal or constructive obligation as a result of a past
event, that can be reliably measured and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate
that reflects risks specific to the liability. The increase in the provision
due to the passage of time is recognised as a finance cost. Provisions for
dilapidation charges that will crystallise at the end of the period of
occupancy are provided for in full.
Employee benefits - Defined contribution plan
The Company operates a defined contribution pension scheme which is open to
all employees and directors. The assets of the schemes are held by investment
managers separately from those of the Company. The contributions payable to
these schemes are recorded in the Statement of Comprehensive Income in the
accounting year to which they relate.
Foreign currency translation
The Company's functional currency is the pound
sterling. Transactions in foreign currencies are translated at the exchange
rate ruling at the date of transaction. Monetary assets and liabilities in
foreign currencies are translated at the rates of exchange ruling at the
reporting date. Exchange differences arising on the settlement or on
translating monetary items at rates different from those at which they were
initially recorded are recognised in administrative expenses in the Statement
of Comprehensive Income in the year in which they arise.
Equity
Equity comprises the following;
Called up share capital
Share capital represents the nominal value of equity shares.
Share premium
Share premium represents the excess over nominal value of the fair value of
consideration received of equity shares, net of expenses of the share issue.
Accumulated losses
Accumulated losses represent retained profits
and losses.
Adoption of new and revised standards and changes in accounting policies
In the current year the following new and revised Standards and
Interpretations have been adopted by the company. The adoption has had no
impact on the current period however may have an effect on future periods.
IFRS 3 (Amendments) Reference to conceptual framework 1 January 2022
IAS 16 (Amendments) Property, plant and equipment - proceeds before intended use 1 January 2022
IAS 37 (Amendments) Onerous contracts - costs of fulfilling a contract 1 January 2022
IFRIC Amendments to IFRS 1 (subsidiary as a first-time adopter), IFRS 9 (fees in the 1 January 2022
'10 liabilities), IFRS 16 (lease incentives), IAS 41 (taxation in the fair
value measurements)
Standards which are in issue but not yet effective
At the date of authorisation of these financial statements, the following
Standards and Interpretations, which have not yet been applied in these
financial statements, were in issue but not yet effective (and in some cases
had not yet been adopted by the United Kingdom):
IFRS 17 Insurance contracts 1 January 2023
IAS 1 and IFRS Practice Statement 2 Disclosure of accounting policies 1 January 2023
IAS 8 (Amendment) Definition of accounting estimates 1 January 2023
IAS 12 (Amendment) Deferred tax related to assets and liabilities arising from a single 1 January 2023
transaction
IFRS 16 (Amendment) Liability in a Sale and Leaseback 1 January 2023
IAS 1 (Amendment) Classification of liabilities as current or non-current - deferral of 1 January 2023
effective date
IAS 1 (Amendment) Non-current liabilities with covenants 1 January 2023
The directors do not expect that the adoption of the other Standards listed
above will have a material impact on the financial statements of the Company
aside from additional disclosures.
3 Critical accounting estimates and judgements
Many of the amounts included in the financial statements involve the use of
judgement and/or estimates. These judgements and estimates are based on
management's best knowledge of the relevant facts and circumstances, having
regard to prior experience, but actual results may differ from the amounts
included in the financial statements. Information about such judgements and
estimation is contained in the accounting policy and/or the notes to the
financial statements and the key areas are summarised below:
Critical judgements in applying accounting policies
· Revenue recognition. The Company typically enters into a contract
comprising one or more stages for each customer project. In the application of
IFRS 15 "Revenue from Contracts with Customers" and the accounting policy set
out in Note 2 to these financial statements, significant judgement is required
to identify the individual performance obligations contained within each
contract, particularly when a set-up charge is made relating to the initial
collaboration with the customer to formulate a programme of development work,
or when the pattern of sales invoices does not align with those stages
explicit in the contract.
Many customer contracts contain a non-refundable set up charge of up to 30% of
contract value which becomes payable upon commencement of the project. This
represents the value of the transfer of knowledge involved in design, planning
and preparation for the work to be done, and for the time and consumables
committed to commence work on the project. As this work is distinct and of
benefit to the customer independent of later stages within the contract, it is
therefore judged to be a separate performance obligation within the meaning of
IFRS 15 and is recognised as revenue in line with the accounting policy.
The remaining performance obligations are based on the stages with defined
deliverables which are explicitly outlined in the customer contracts.
During the process of delivering the contract, where delivery is part way
through a stage at the reporting date, an estimate is made of the amount of
revenue to recognise for that stage to reflect the work performed up to that
date. This amount is estimated on a percentage completion basis.
Critical accounting estimates and assumptions
Deferred Taxation. The Company has accumulated tax losses of £13,000k (2022:
£10,000k). In principle these losses would support a deferred tax asset of
approximately £2,500k (2022: £2,000k). IAS 12 requires that a deferred tax
asset relating to unused tax losses is carried forward to the extent that
future taxable profits will be available. The company is in an investment
phase, expecting to have increased expenditure on R&D and business
development over the next two years which will increase the tax losses. After
the investment period the Board expects the Company to generate healthy
profits but it is difficult at this stage to reliably estimate the period over
which profits may arise in the future. The Board has therefore determined to
not recognise the asset at the reporting date. This approach does not affect
the future availability of the tax losses for offset against future profits.
4 Revenue
All of the activities of the Company fall within one business segment, that of
research, development and manufacture of recombinant proteins and antibodies.
2023 2022
Geographic analysis £'000 £'000
UK 621 724
Rest of Europe 409 1,394
North America 1,496 2,000
Rest of World 375 681
2,901 4,799
In the year there were three customers (2022: one) to whom sales exceeded 10%
of revenues, those customers together accounted for £1,040k or 36% of
revenues (2022: £693k or 14.4% of revenues).
5 Operating loss is stated after
charging/(crediting):
2023 2022
£'000 £'000
Employee benefit costs
-wages and salaries 2,201 2,126
-social security costs 247 205
-other pension costs 110 103
-share based payments 35 21
2,595 2,455
Depreciation of property, plant and equipment 347 678
Depreciation of property, plant and equipment (leased) 25 71
Other operating expenses
Rates, utilities and property maintenance 168 100
IT costs 30 16
Fees payable to the Company's auditors
- for the audit of the financial statements 73 40
Raw materials and consumables used 1,129 1,276
Decrease/(increase) in inventories 47 (105)
Patent costs 30 84
Marketing costs 223 115
Gain on foreign exchange (36) (23)
Other expenses 1,139 1,447
Total cost of sales and administrative expenses 5,770 6,154
Included in the costs above is expenditure on research and development
totalling £806k (2022: £699k). Non-audit fees of £9k (2022: £23k) were
paid in the year and are included in other expenses above.
6 Average staff numbers
2023 2022
Monthly Avg Number Monthly Avg Number
Employed in UK 50 53
(including executive directors)
Non-executive directors 4 5
54 58
7 Remuneration of directors and key senior
management
Directors
2023 2022
£'000 £'000
Emoluments 470 518
Pension contributions 21 22
491 540
Highest paid director
The highest paid director received the following emoluments:
2023 2022
£'000 £'000
Emoluments 120 153
Pension contributions 7 9
127 162
The highest paid director did not exercise any share option in the year.
(2022: £nil).
Key senior management personnel
Key senior management is considered to comprise the directors of the Company
with total remuneration for the year of £491k (2022: £540k). Share based
payments for the year attributable to key senior management totalled £10k
(2022: £15k).
8 Finance income and expense
2023 2022
Income £'000 £'000
Bank interest receivable 3 1
2023 2022
Expense £'000 £'000
Interest expense on other borrowings 4 9
9 Share based payments
At the reporting date the Company had three share based reward schemes: two
schemes under which options were previously granted and are now closed to
future grants and a third scheme in place in which grants were made in the
current year:
· A United Kingdom tax authority approved scheme for executive
directors and senior staff;
· An unapproved scheme for awards to those, such as non-executive
directors, not qualifying for the approved scheme; and
· A United Kingdom tax authority approved scheme for executive
directors and senior staff which incorporates unapproved options for grants to
be made following listing of the Company shares, "2017 EMI and Unapproved
Employee Share Option Scheme".
Options awarded during the year under the 2017 EMI and Unapproved Employee
Share Option Scheme have no performance conditions other than the continued
employment within the Company. Options vest one, two and three years from the
date of grant, which may accelerate for a change of control. Options lapse if
not exercised within ten years of grant, or if the individual leaves the
Company, except under certain circumstances such as leaving by reason of
redundancy.
The total share-based remuneration recognised in the Statement of
Comprehensive Income was £35k (2022: £21k). The most recent options granted
in the year were valued using the Black-Scholes method. The share price on
grant used the share price of open market value, expected volatility of 24.0%
and a compound risk free rate assumed of 3.47% based on historical experience.
2023 2022
Weighted average exercise price £ Weighted average exercise price £
2023 2022
Number Number
Outstanding at beginning of the year 0.478 787,083 0.421 1,266,666
Granted during the year 0.483 1,745,800 1.275 250,000
Exercised during the year - - 0.288 (404,587)
Lapsed during the year 0.486 (215,000) 1.107 (324,996)
Outstanding at the end of the year 0.481 2,317,883 0.478 787,083
The options outstanding at the end of each year were as follows:
Expiry Nominal share value Exercise price £ 2023 2022
Number Number
May 2027 £0.04 0.040 103,750 103,750
December 2028 £0.04 0.545 648,333 683,333
September 2032 £0.04 0.520 300,000 -
September 2032 £0.04 0.475 1,265,800 -
Total 2,317,883 787,083
Of the total number of shares outstanding, 752,083 were exercisable at the
reporting date at a weighted average price of £0.48p/share (2022: 787,083 at
a weighted average price of £0.48p/share).
10 Income tax (credit)
2023 2022
£'000 £'000
Current tax - UK corporation tax (263) (133)
Income tax credit (263) (133)
The difference between loss before tax multiplied by the standard rate of 19%
(2022: 19%) and the income tax credit is explained in the reconciliation
below:
2023 2022
£'000 £'000
Factors affecting the tax credit for the year
Loss before tax (2,859) (1,333)
Loss before tax multiplied by standard rate of UK corporation tax of 19%
(2022: 19%)
(545) (253)
Deferred tax not recognised on current year losses 545 253
RDEC/R&D tax credit (263) (131)
RDEC/R&D tax credit - adjustment relating to prior year - (2)
Total income tax credit (263) (133)
Impact of future tax changes are not expected to materially impact the
position of the Company, and no corporate tax liability is expected in the
subsequent period.
11 Loss per share
2023 2022
£'000 £'000
Loss for the financial year (2,596) (1,200)
Loss per share pence pence
Basic (10.0) (4.6)
Diluted (10.0) (4.5)
Number Number
Issued ordinary shares at the end of the year 26,014,946 26,014,946
Weighted average number of shares in issue during the year 26,014,946 25,945,780
Basic earnings per share is calculated by dividing the basic earnings for the
year by the weighted average number of shares in issue during the year.
Diluted earnings per share is calculated by dividing the basic earnings for
the year by the diluted weighted average number of shares in issue inclusive
of share options outstanding at year end.
12 Intangible assets
2023/2022 2022/2021
Software Software
£'000 £'000
Cost
At 1 April 8 8
At 31 March 8 8
Accumulated amortisation
At 1 April 8 6
Amortisation charged in the year
- 2
At 31 March 8 8
Net book value
At 31 March - -
At 31 March - 2
Amortisation is included in administrative expenses on the statement of
comprehensive income.
13 Property, plant and equipment
Fixtures, fittings & equipment
Right of use assets Leasehold Plant & £'000
£'000 improvements machinery Total
£'000 £'000 £'000
Cost
At 1 April 2022 240 814 2,356 301 3,711
Additions - 30 72 12 114
Disposals (226) - (32) (36) (294)
At 31 March 2023 14 844 2,396 277 3,531
Accumulated depreciation
At 1 April 2022 210 752 1,891 225 3,078
Depreciation charged in the year
25 60 253 34 372
Disposals (226) - (32) (36) (294)
At 31 March 2023 9 812 2,112 223 3,156
Net book value
At 31 March 2023 5 32 284 54 375
At 31 March 2022 30 62 465 76 633
Fixtures, fittings & equipment
Right of use assets Leasehold Plant & £'000
£'000 improvements machinery Total
£'000 £'000 £'000
Cost
At 1 April 2021 240 784 2,181 247 3,452
Additions - 30 175 54 259
At 31 March 2022 240 814 2,356 301 3,711
Accumulated depreciation
At 1 April 2021 139 583 1,446 161 2,329
Depreciation charged in the year
71 169 445 64 749
At 31 March 2022 210 752 1,891 225 3,078
Net book value
At 31 March 2022 30 62 465 76 633
At 31 March 2021 101 201 735 86 1,123
Plant & machinery with a net book value of £49k is held under hire
purchase agreements or finance leases (2022: £85k).
The carrying value of right of use assets at the reporting date comprises
fixtures, fittings and equipment of £6k (2022: £34k). In the prior year
right of use assets comprised fixtures, fittings and equipment and the leased
office space.
The depreciation expense is included in administrative expenses in the
statement of comprehensive income in each of the financial years shown.
14 Investment in subsidiary
The Company has the following investment in a subsidiary:
2023 2022
£ £
Fusion Contract Services Limited 1 1
100% subsidiary
Dormant company
1 Springbank Road, Belfast, BT17 0QL
Under section 402, group financial statements are not prepared on the basis
that the subsidiary company is dormant and not material to the financial
statements for the purpose of giving a true and fair
view.
15 Inventories
2023 2022
£'000 £'000
Raw materials and consumables 539 585
The cost of inventories recognised as an expense for the year was £1,129k
(2022: £1,276k).
16 Trade and other receivables
2023 2022
£'000 £'000
Trade receivables 511 900
Loss allowance (151) (124)
Trade receivables - net 360 776
Other receivables 72 117
Prepayments and accrued income 258 624
690 1,517
The fair value of trade and other receivables approximates to their carrying
value.
At the reporting date trade receivables loss allowance/impairment as follows:
2023 2022
£'000 £'000
Individually impaired 122 71
Expected credit loss allowance 29 53
151 124
The carrying amount of trade and other receivables are denominated in the
following currencies:
2023 2022
£'000 £'000
UK pound 273 664
Euros - 1
US dollar 238 235
511 900
The expected credit loss allowance has been calculated as follows:
31 March 2023 More than 90 days past due
More than 30 days past due More than 60 days past due More than 120 days past due
Current Total
Expected loss rate 1.9% 2.1% 2.7% 4.9% 26.6%
Gross carrying amount (£'000)
113 87 68 43 78 389
Loss allowance (£'000)
2 2 2 2 21 29
31 March 2022 More than 90 days past due
More than 30 days past due More than 60 days past due More than 120 days past due
Current Total
Expected loss rate 1% 1.1% 1.4% 2.5% 13.8%
Gross carrying amount (£'000)
304 133 19 - 373 829
Loss allowance (£'000)
3 1 - - 49 53
Movements on trade receivables loss allowance is as follows:
£'000 £'000
At 1 April 2022/2021 53 10
Movement in loss allowance (24) 43
At 31 March 2023/2022 29 53
The creation and release of the loss allowance for trade receivables has been
included in administrative expenses in the Statement of Profit or Loss and
Other Comprehensive Income. Other receivables are considered to have low
credit risk and the loss allowance recognised during the year was therefore
limited to trade receivables.
The maximum exposure to credit risk at the reporting date is the carrying
value of each class of receivables mentioned above. The Company does not hold
any collateral as security.
17 Trade and other payables
2023 2022
£'000 £'000
Trade payables 480 466
Social security and other taxes 136 68
Other payables 51 47
Accruals and deferred income 177 561
844 1,142
The fair value of trade and other payables approximates to their carrying
value.
Invest Northern Ireland hold a mortgage dated 9 December 2009 for securing all
monies due or to become due from the Company on any account. At the reporting
date a balance of £45k (2022: £nil) was due to Invest Northern Ireland.
18 Borrowings
Lease liabilities Hire Purchase
£'000 Contracts Total
£'000 £'000
At 1 April 2022 27 42 69
Additions - 69 69
Interest charged in year 3 1 4
Repayments (24) (43) (67)
At 31 March 2023 6 69 75
Amounts due in less than 1 year 5 30 35
Amounts due after more than 1 year 1 39 40
6 69 75
Lease Hire Purchase
liabilities Contracts Total
£'000 £'000 £'000
At 1 April 2021 100 130 230
Interest charged in year 4 5 9
Repayments (77) (93) (170)
At 31 March 2022 27 42 69
Amounts due in less than 1 year 24 42 66
Amounts due after more than 1 year 3 - 3
27 42 69
All borrowings are denominated in UK pounds. Using a discount rate of 8.5% per
annum the fair value of borrowings at the reporting date is £69k (2022: £65k
discounted at 5.5%).
Borrowings are secured by a fixed and floating charge over the whole
undertaking of the Company, its property, assets and rights in favour of
Northern Bank Ltd trading as Danske Bank.
19 Provisions for other liabilities and charges
2023 2022
£'000 £'000
Due after more than 1 year 20 20
Leasehold dilapidations relate to the estimated cost of returning a leasehold
property to its original state at the end of the lease in accordance with the
lease terms. The Company's premises are held under a lease which is renewed
annually. The costs of dilapidations would be incurred on vacating the
premises.
20 Financial instruments
The Company is exposed to risks that arise from its use of financial
instruments. This note describes the Company's objectives, policies and
processes for managing those risks and methods used to measure them. There
have been no substantive changes in the Company's exposure to financial
instrument risks and the methods used to measure them from previous years
unless otherwise stated in this note.
The principal financial instruments used by the Company, from which the
financial instrument risk arises, are trade receivables, cash and cash
equivalents and trade and other payables. The fair values of all the Company's
financial instruments are the same as their carrying values.
Financial instruments by category
Financial instruments categories are as follows:
Amortised
cost
As at 31 March 2023 £'000
Trade receivables 360
Other receivables 72
Accrued income 26
Cash and cash equivalents 195
Total 653
Amortised
cost
As at 31 March 2022 £'000
Trade receivables 776
Other receivables 117
Accrued income 397
Cash and cash equivalents 2,049
Total 3,339
Other financial liabilities at amortised cost
£'000
As at 31 March 2023
Trade payables 480
Other payables 100
Accruals 127
Borrowings 75
Total 782
Other financial liabilities at amortised cost
£'000
As at 31 March 2022
Trade payables 466
Other payables 47
Accruals 279
Borrowings 69
Total 861
Capital management
The Company's objectives when managing capital are to safeguard its ability to
continue as a going concern in order to provide returns for shareholders and
benefits for other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may issue
new shares or sell assets to provide working capital.
Consistent with others in the industry at this stage of development, the
Company has relied on issuing new shares and cash generated from operations.
General objectives, policies and processes - risk management
The Company is exposed through its operations to the following financial
instrument risks: credit risk; liquidity risk and foreign currency risk. The
policy for managing these risks is set by the Board following recommendations
from the Chief Financial Officer. The overall objective of the Board is to set
policies that seek to reduce risk as far as possible without unduly affecting
the Company's competitiveness and flexibility. The policy for each of the
above risks is described in more detail below.
Credit risk
Credit risk arises from the Company's trade and other receivables, and from
cash at bank. It is the risk that the counterparty fails to discharge their
obligation in respect of the instrument.
The Company is mainly exposed to credit risk from credit sales. It is Company
policy to assess the credit risk of new customers before entering contracts.
Also, for certain new customers the Company will seek payment at each stage of
a project to reduce the amount of the receivable the Company has outstanding
for that customer.
At the year end the Company's bank balances were all held with Northern Bank
Ltd trading as Danske Bank (Moody's rating P-1).
Liquidity risk
Liquidity risk arises from the Company's management of working capital, and is
the risk that the Company will encounter difficulty in meeting its financial
obligations as they fall due.
At each Board meeting, and at the reporting date, the cash flow projections
are considered by the Board to confirm that the Company has sufficient funds
and available funding facilities to meet its obligations as they fall due.
The table below analyses the company's financial liabilities into relevant
maturity groupings based on their contractual maturities. The amounts
presented are the undiscounted cash flows.
Less than 6 months 6 to 12 months Between 1 and 2 years Between 2 and 5 years
£000 £000 £000 £000
31 March 2023
Trade and other payables 716 - - -
Accruals 127 - - -
Borrowings - 35 40 -
843 35 40 -
31 March 2022
Trade and other payables 581 - - -
Accruals 279 - - -
Borrowings - 66 3 -
860 66 3 -
Foreign currency risk
Foreign currency risk is the risk that the fair value of future cash flows of
a financial instrument will fluctuate because of changes in foreign exchange
rates.
The Company seeks to transact the majority of its business in its reporting
currency (£Sterling). However, many customers and suppliers are outside the
UK and a proportion of these transact with the Company in US Dollars and
Euros. For that reason, the Company operates current bank accounts in US
Dollars and Euros as well as in its reporting currency. To the maximum extent
possible receipts and payments in a particular currency are made through the
bank account in that currency to reduce the amount of funds translated to or
from the reporting currency. Cash flow projections are used to plan for those
occasions when funds will need to be translated into different currencies so
that exchange rate risk is minimised.
If the exchange rate between Sterling and the Dollar or Euro had been 10%
higher/lower at the reporting date the effect on profit and equity would have
been approximately £34,000 (2022: £32,000) higher/lower and immaterial given
the value of the balance of £158 (2022: £5,000) higher/lower respectively.
21 Called up share capital
2023 2022
£'000 £'000
Allotted, called up and fully paid
- 26,014,946 (2022: 26,014,946) Ordinary shares of £0.04 1,040 1,040
The company is authorised to issue 33,809,960 shares
No dividends were paid (2022: £nil). The directors do not recommend payment
of a final dividend (2022: £nil).
22 Capital commitments
At 31 March 2023 the Company had contracted for but not incurred capital
expenditure of £nil (2022: £17,000).
23 Retirement benefits obligations
The Company operates a defined contribution scheme, the assets of which are
managed separately from the Company. During the year the Company charged
£96,000 to the Statement of Profit or Loss and Other Comprehensive Income
(2022: £103,000) in respect of Company contributions to the scheme. At the
reporting date there was £19,000 (2022: £18,000) payable to the scheme and
included in other payables.
24 Transactions with related parties
The Company had the following transactions with related parties during the
year:
Invest Northern Ireland ("Invest NI") is a shareholder in the Company. The
Company received invoices for rent and estate services amounting to £79,000
(2022: £78,000). A balance of £45,000 (2022: £nil) was due and payable to
Invest NI at the reporting date.
25 Ultimate controlling party
There is no ultimate controlling party.
26 Post balance sheet events
Since the reporting date the Company has raised net proceeds of £1.5 million
from the issue of ordinary shares. Additionally, the Company has undergone a
restructuring process contributing to a reduction in costs in the current
financial year of approximately £1.6m. These cost savings were primarily
achieved due to staff redundancies and resulting payroll cost savings.
Subsequent to the reporting date, the Company has introduced a new revenue
stream from the AI/ML-AB service offering.
27 Reconciliation of loss to EBITDA
2023 2022
£'000 £'000
Loss before tax (2,859) (1,333)
Finance income (3) (1)
Finance expense 4 9
Depreciation and amortisation 372 751
EBITDA (2,486) (574)
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR LPMBTMTTTTAJRecent news on Fusion Antibodies
See all newsREG - Fusion Antibodies - Change of auditor
AnnouncementREG - Fusion Antibodies - Contract to develop a bespoke OptiPhage library
AnnouncementREG - Fusion Antibodies - Block admission six monthly return
AnnouncementREG - Fusion Antibodies - Total Voting Rights
AnnouncementREG - Fusion Antibodies - Holding(s) in Company
Announcement