REG - Nanoco Group PLC - Interim Results <Origin Href="QuoteRef">NANON.L</Origin> - Part 2
04/04/2017 07:06
- Part 2: For the preceding part double click ID:nRSD4547Ba
2016
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Finance income
Bank interest receivable 35 130 193
Finance expense
Loan interest payable - (2) (12)
35 128 181
6. Taxation
The tax credit is made up as follows:
Six months to Six months to Year to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Current income tax:
UK corporation tax losses in the year - - -
Research and development income tax credit receivable (975) (975) (1,970)
Adjustment in respect of prior years - (50) (30)
Overseas corporation tax - 4 7
Income tax credit (975) (1,021) (1,993)
The Group has accumulated losses available to carry forward against future
trading profits of £26.3 million (2016: £22.1 million).
Deferred tax liabilities/(assets) provided/recognised are as follows:
Six months to Six months to Year to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Accelerated capital allowances 138 238 189
Share-based payments (138) (238) (189)
Tax losses - - -
- - -
The Group also has deferred tax assets, measured at a standard rate of 18%
(2016: 20%) in respect of share-based payments of £454,000 (2016: £307,000)
and tax losses of £4,728,000 (2016: £3,970,000) which have not been recognised
as an asset as it is not probable that future taxable profits will be
available against which the assets can be utilised.
7. Loss per share
Six months to Six months to Year to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Loss for the period attributable to equity shareholders (5,428) (5,237) (10,607)
Share-based payments 240 113 270
Loss for the period (5,188) (5,124) (10,337)
Weighted average number of shares No. No. No.
Ordinary shares in issue (1) 238,120,572 236,535,267 237,077,578
Adjusted loss per share before share-based payments (pence) (2.18) (2.17) (4.36)
Basic loss per share (pence) (2.28) (2.21) (4.47)
(1) Excludes the 12,222 shares held in Treasury.
Diluted loss per share has not been presented above as the effect of share
options issued is anti-dilutive. The adjusted loss is presented as the Board
measures overall performance taking into account IFRS 2 charges and any
material one-off costs incurred in a reporting period.
No interim dividend has been recommended.
8. Intangible assets
Six months to Six months to Year to
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
Cost £'000 £'000 £'000
At the beginning of the period 3,703 2,803 2,803
Additions in the period 583 386 900
At the end of the period 4,286 3,189 3,703
Amortisation
At the beginning of the period 1,280 982 982
Provided in the period 186 139 298
At the end of the period 1,466 1,121 1,280
Net book value 2,820 2,068 2,423
The expenditure on patents is amortised on a straight-line basis over ten
years. Amortisation provided during the period is recognised in administrative
expenses. The Group does not believe that any of its patents in isolation is
material to the business.
To date the Group has not capitalised any of its development costs and all
such costs are written off as incurred. Careful judgement by the Directors is
applied when deciding whether the recognition requirements for development
costs have been met. This is necessary as the economic success of any product
development is uncertain until such time as technical viability has been
proven and commercial supply agreements are likely to be achieved. Judgements
are based on the information available at each reporting date which includes
the progress with testing and certification and progress on, for example,
establishment of commercial arrangements with third parties. In addition, all
internal activities related to research and development of new products are
continuously monitored by the Directors.
9. Trade and other receivables
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Trade receivables 94 37 1,455
Prepayments and accrued income 650 642 422
Other receivables 269 176 168
1,013 855 2,045
10. Deferred revenue
31 January 31 January 31 July
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Current 207 - 531
Non-current 597 - 648
804 - 1,179
Deferred revenue arises under IFRSs where upfront licence fees are accounted
for on a straight-line basis over the initial term of the contract or where
performance criteria have not been satisfied in the accounting period.
11. Share capital
Reverse
Share Share acquisition
capital premium reserve Total
Number £'000 £'000 £'000 £'000
Allotted, called up and fully paid ordinary shares of 10p:
At 31 July 2015, 31 July 2016 and 31 January 2016 (unaudited) 237,077,578 23,708 112,217 (77,868) 58,057
Shares issued on exercise of options 1,159,250 116 429 - 545
At 31 January 2017 238,236,828 23,824 112,646 (77,868) 58,602
The retained loss and other equity balances recognised in the Group financial
statements reflect the consolidated retained loss and other equity balances of
Nanoco Tech Limited immediately before the business combination which was
reported in the year ended 31 July 2009. The consolidated results for the
period from 1 August 2008 to the date of the acquisition by the Company are
those of Nanoco Tech Limited. However, the equity structure appearing in the
Group financial statements reflects the equity structure of the legal parent,
including the equity instruments issued under the share for share exchange to
effect the transaction. The effect of using the equity structure of the legal
parent gives rise to an adjustment to the Group's issued equity capital in the
form of a reverse acquisition reserve.
12. Share-based payment reserve
Total
£'000
At 31 July 2015 2,445
Share-based payments 113
At 31 January 2016 2,558
Share-based payments 157
At 31 July 2016 2,715
Share-based payments 240
At 31 January 2017 2,955
The share-based payment reserve accumulates the corresponding credit entry in
respect of share-based payment charges. Movements in the reserve are
disclosed in the Condensed consolidated statement of changes in equity.
A charge of £240,000 has been recognised in the Statement of comprehensive
income for the half year (2016: £113,000).
Share option schemes
Full details of the Group's share option schemes are detailed in note 21 of
the 2016 Annual Report.
Shares held in the Employee Benefit Trust ("EBT")
On 2 August 2016, the remaining holder of Jointly Owned shares exercised their
option to convert the holding to sole beneficiary. As a result, there are no
shares held by the EBT
Fair value benefit
The fair value benefit is independently measured using Binomial or
Black-Scholes valuation models where there are non-market performance
conditions and Stochastic (Monte Carlo) models for options with market based
performance conditions taking into account the terms and conditions upon which
the options were granted.
Grant of options
On 22 November 2016 the Company granted a total of 3,818,149 nil-cost options
over ordinary shares in the Company under the Nanoco Group 2015 Long Term
Incentive Plan to the Executive Directors and all other eligible employees.
The vesting of the options granted under the LTIP is subject to the
achievement of performance conditions based upon share price growth and
revenue targets over the three-year performance period commencing with
Nanoco's 2016/2017 financial year. Ordinarily, the options will vest (subject
to the achievement of the performance conditions) following the announcement
of Nanoco's results for its 2018/2019 financial year and be released to the
participants following the end of a two-year holding period.
In addition, on 22 November 2016, a total of 340,672 nil-cost options were
granted under the Deferred Bonus Plan.
13. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are
related parties, have been eliminated upon consolidation.
The Company has intercompany loans and accounts with its subsidiary
undertakings, details of which are set out in the 2016 Annual Report and
Accounts.
14. Post-balance sheet events
There have been no reportable events from the balance sheet date to the
approval of these interim condensed consolidated financial statements.
Independent Review Report to Nanoco Group Plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
January 2017 which comprises the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Statement of Changes in
Equity, the Condensed Consolidated Statement of Financial Position, the
Condensed Consolidated Cash Flow Statement and the related notes 1 to 14. We
have read the other information contained in the half yearly financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK and
Ireland) "Review of Interim Financial Information Performed by the Independent
Auditor of the Entity" issued by the Auditing Practices Board. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company, for our work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with IFRS as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 January 2017 is not prepared, in
all material respects, in accordance with International Accounting Standard 34
as adopted by the European Union.
Emphasis of matter - going concern
In reaching our conclusion, which is not qualified, we have also considered
the adequacy of the disclosures made in note 2 to the interim financial
statements concerning the Company's ability to continue as a going concern.
The conditions described in note 2 indicate the existence of a material
uncertainty which may cast significant doubt about the Company's ability to
continue as a going concern. The condensed set of financial statements in the
half-yearly financial report do not include the adjustments that would result
if the Company was unable to continue as a going concern.
Ernst & Young LLP
Manchester
4 April 2017
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