REG - Nanoco Group PLC - Preliminary Results <Origin Href="QuoteRef">NANON.L</Origin> - Part 2
13/10/2015 07:01
- Part 2: For the preceding part double click ID:nRSM0342Ca
attributable to the product can be reliably measured.
Development costs are currently charged against income as incurred since the
criteria for their recognition as an asset are not met.
(h) Lease payments
Rentals payable under operating leases, which are leases where the lessor
retains a significant proportion of the risks and rewards of the underlying
asset, are charged in the Consolidated statement of comprehensive income on a
straight-line basis over the expected lease term.
Lease incentives received are recognised as an integral part of the total
lease expense, over the term of the lease.
(i) Finance income and expense
Finance income comprises interest income on funds invested. Interest income is
recognised as interest accrues using the effective interest rate method.
Finance expense comprises interest expense on borrowings. All borrowing costs
are recognised using the effective interest method.
(j) Income tax
Income tax expense comprises current and deferred tax. Income tax expense is
recognised in the Consolidated statement of comprehensive income except to the
extent that it relates to items recognised directly in equity or in other
comprehensive income.
Current income tax assets and liabilities for the current and prior periods
are measured at the amount expected to be recovered from or paid to, the tax
authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the reporting date.
Deferred income tax is recognised on all temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the
financial statements with the following exceptions:
· where the temporary difference arises from the initial recognition of
goodwill or of an asset or liability in a transaction that is not a business
combination, that at the time of the transaction affects neither accounting
nor taxable profit nor loss; and
· in respect of taxable temporary differences associated with investments
in subsidiaries where the timing of the reversal of the temporary differences
can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.
Deferred income tax assets and liabilities are measured on an undiscounted
basis using the tax rates and tax laws that have been enacted or substantially
enacted by the date and which are expected to apply when the related deferred
tax asset is realised or the deferred tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable
that future taxable profits will be available against which differences can be
utilised. An asset is not recognised to the extent that the transfer or
economic benefits in the future is uncertain.
Deferred income tax assets and liabilities are offset, only if a legally
enforceable right exists to set off current tax assets against current tax
liabilities, the deferred income taxes relate to the same taxation authority
and that authority permits the Group to make a single payment.
(k) Property, plant and equipment
Property, plant and equipment assets are recognised initially at cost. After
initial recognition, these assets are carried at cost less any accumulated
depreciation and any accumulated impairment losses. Cost comprises the
aggregate amount paid and the fair value of any other consideration given to
acquire the asset and includes costs directly attributable to making the asset
capable of operating as intended.
Depreciation is computed by allocating the depreciable amount of an asset on a
systematic basis over its useful life and is applied separately to each
identifiable component.
The following bases and rates are used to depreciate classes of assets:
Laboratory infrastructure - straight
line over remainder of lease period
Fixtures and fittings -
straight line over five years
Office equipment -
straight line over three years
Plant and machinery - straight
line over five years
The carrying values of tangible fixed assets are reviewed for impairment if
events or changes in circumstances indicate that the carrying value may not be
recoverable, and are written down immediately to their recoverable amount.
Useful lives and residual values are reviewed annually and where adjustments
are required these are made prospectively.
A tangible fixed asset item is de-recognised on disposal or when no future
economic benefits are expected to arise from the continued use of the asset.
Any gain or loss arising on the de-recognition of the asset is included in the
Consolidated statement of comprehensive income in the period of
de-recognition.
(l) Intangible assets
Intangible assets acquired either as part of a business combination or from
contractual or other legal rights are recognised separately from goodwill
provided they are separable and their fair value can be measured reliably.
This includes the costs associated with acquiring and registering patents in
respect of intellectual property rights.
Where intangible assets recognised have finite lives, after initial
recognition their carrying value is amortised on a straight line basis over
those lives. The nature of those intangibles recognised and their estimated
useful lives are as follows:
Patents -
straight line over ten years
(m) Impairment of assets
At each reporting date the Group reviews the carrying value of its plant,
equipment and intangible assets to determine whether there is an indication
that these assets have suffered an impairment loss. If any such indication
exists, or when annual impairment testing for an asset is required, the
Company makes an assessment of the asset's recoverable amount.
An asset's recoverable amount is the higher of an asset's or cash-generating
unit's fair value less costs to sell and its value in use and is determined
for an individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets. Where
the carrying value of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount. In
assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In
determining fair value less costs of disposal, an appropriate valuation model
is used, these calculations corroborated by valuation multiples, or other
available fair value indicators. Impairment losses on continuing operations
are recognised in the Consolidated statement of comprehensive income in those
expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or
may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there
has been a change in the assumptions used to determine the asset's recoverable
amount since the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable amount. That
increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for
the asset in prior years. Such reversal is recognised in the Consolidated
statement of comprehensive income unless the asset is carried at re-valued
amount, in which case the reversal is treated as a valuation increase. After
such a reversal the depreciation charge is adjusted in future periods to
allocate the asset's revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
The carrying values of plant, equipment and intangible assets as at the
reporting date have not been subjected to impairment charges.
(n) Investments in subsidiaries
Investments in subsidiaries are stated in the Company statement of financial
position at cost less provision for any impairment.
(o) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
based on latest contractual prices includes all costs incurred in bringing
each product to its present location and condition. Net realisable value is
based on estimated selling price less any further costs expected to be
incurred to disposal. Provision is made for slow-moving or obsolete items.
(p) Trade and other receivables
Trade receivables, which generally have 30 to 60 day terms, are recognised and
carried at the lower of their original invoiced value and recoverable amount.
The time value of money is not material.
Provision is made when there is objective evidence that the Group will not be
able to recover balances in full. Significant financial difficulties faced by
the customer, probability that the customer will enter bankruptcy or financial
reorganisation and default in payments are considered indicators that the
trade receivable is impaired. The amount of the provision is the difference
between the asset's carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate. The carrying
value of the asset is reduced through the use of an allowance account, and the
amount of the loss is recognised in the Consolidated statement of
comprehensive income within administrative expenses.
When a trade receivable is uncollectible, it is written off against the
allowance account for trade receivables.
(q) Cash, cash equivalents and short-term investments
Cash and cash equivalents comprise cash at hand and deposits with maturities
of three months or less. Short-term investments comprise deposits with
maturities of more than three months, but no greater than twelve months.
(r) Trade and other payables
Trade and other payables are non-interest bearing and are initially recognised
at fair value. They are subsequently measured at amortised cost using the
effective interest rate method.
(s) Share capital
Proceeds on issue of shares are included in shareholders' equity, net of
transaction costs. The carrying amount is not re-measured in subsequent
years.
(t) Shares held by the Employee Benefit Trust
The Employee Benefit Trust is consolidated in the financial statements and the
shares are reported as treasury shares in the Group's Statement of financial
position. Shares are treated as though they had been cancelled when
calculating earnings per share until such time that the shares are exercised.
(u) Share-based payments
Equity settled share-based payment transactions are measured with reference to
the fair value at the date of grant, recognised on a straight line basis over
the vesting period, based on the Company's estimate of shares that will
eventually vest. Fair value is measured using a suitable option pricing
model.
At each reporting date before vesting, the cumulative expense is calculated,
representing the extent to which the vesting period has expired and
management's best estimate of the achievement or otherwise of non-market
conditions and the number of equity instruments that will ultimately vest.
The movement in cumulative expense since the previous reporting date is
recognised in the Consolidated statement of comprehensive income, with a
corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new award is
designated as replacing a cancelled or settled award, the cost based on the
original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new
vesting period for the incremental fair value of any modification, based on
the difference between the fair value of the original award and the fair value
of the modified award, both as measured on the date of the modification. No
reduction is recognised if this difference is negative.
Where awards are granted to the employees of the subsidiary Company, the fair
value of the awards at grant date is recorded in the Company's financial
statements as an increase in the value of the investment with a corresponding
increase in equity via the share-based payment reserve.
(v) Defined contribution pension scheme
The Group operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the Company in an independently
administered fund. The amounts charged against profits represent the
contributions payable to the scheme in respect of the accounting period.
(w) New accounting standards and interpretations
The following new and amended IFRS, IAS and IFRIC interpretations were
mandatory for accounting periods ending 31 July 2015 and thereafter, but have
no material effect on the Group's financial statements.
· IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial
Statements
· IFRS 11 Joint Arrangements, IAS 28 Investments in Associates and Joint
Ventures
· IFRS 12 Disclosure of Interests in Other Entities
· IFRS 10, IFRS 12 and IAS 27 Investment Entities - Amendments to IFRS
10, IFRS 12 and
IAS 27
· IAS 32 Offsetting Financial Assets and Financial Liabilities
(Amendments)
· IAS 36 Recoverable Amount Disclosures for Non-Financial Assets
(Amendments)
· IAS 39 Novation of Derivatives and Continuation of Hedge Accounting
(Amendments)
· Annual Improvements to IFRSs 2010 to 2012 Cycle (endorsed for use in
the EU on 17 and
18 December 2014)
· Annual Improvements to IFRSs 2011 to 2013 Cycle (endorsed for use in
the EU on 17 and
18 December 2014)
A number of new standards, amendments to standards and interpretations are
effective for annual periods ending 31 July 2016 or thereafter and have not
been applied in preparing these consolidated financial statements and those
that are relevant to the Group are summarised below. None of these are
expected to have a significant effect on the consolidated financial statements
of the Group in the period of initial application.
The following standards and interpretations have an effective date after the
date of these financial statements.
Effective date
IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and itsAssociate or Joint Venture - Amendments to IFRS 10 and IAS 28 1 January 2016
IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the ConsolidationException - Amendments to IFRS 10, IFRS 12 and IAS 28 1 January 2016
IFRS 11 Accounting for Acquisitions of Interests in Joint Operations 1 January 2016
IAS 1 Disclosure Initiative - Amendments to IAS 1 1 January 2016
IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation andAmortisation - Amendments to IAS 16 and IAS 38 1 January 2016
IAS 27 Equity Method in Separate Financial Statements - Amendments to IAS 27 1 January 2016
IFRS 15 Revenue from Contracts with Customers 1 January 2018
IFRS 9 Financial Instruments (issued in 2013) 1 January 2018
Annual Improvements to IFRSs 2012 to 2014 Cycle 1 January 2016
4. Segmental information
Operating segments
At 31 July 2015 the Group operated as one segment, being the provision of high
performance nano- particles for research and development purposes. This is the
level at which operating results are reviewed by the chief operating decision
maker (i.e. the Chief Executive) to make decisions about resources, and for
which financial information is available. From 1 August 2015, the manner in
which operating results are reported to the CEO have been revised and now
isolate those of the newly formed lighting division. All revenues have been
generated from continuing operations and are from external customers.
31 July2015 31 July2014
£000 £000
Analysis of revenue
Products sold 445 178
Rendering of services 353 1,255
Royalties and licences 1,231 -
2,029 1,433
Included within rendering of services is revenue from one material customer
amounting to £106,000 (2014: one material customer amounting to £754,000) and
£129,000 (2014: £184,000) from government grants. Revenue from royalties and
licences is from one material customer (2014: there was no revenue from
royalties and licences).
The Group operates in four main geographic areas, although all are managed in
the UK. The Group's revenue per geographical segment based on the customer's
location is as follows:
31 July 2015 31 July 2014
£000 £000
Revenue
UK 130 159
Europe (excluding UK) - 26
Asia 395 1,139
USA 1,504 109
2,029 1,433
All the Group's assets are held in the UK and all of its capital expenditure
arises in the UK.
5. Operating loss
31 July2015 Restated31 July2014
The Group £000 £000
Operating loss is stated after charging /(crediting):
Depreciation of tangible fixed assets (see note 10) 1,106 1,181
Amortisation of intangible assets (see note 11) 269 209
Staff costs (see note 6) 6,242 5,107
Foreign exchange (gains)/losses (27) 4
Research and development expense** 5,580 4,918
Cost of inventories recognised as an expense (included in cost of sales) 106 47
Operating lease rentals (see note 22):
Land and buildings 684 674
Auditors' remuneration:Audit services:
- Fees payable to Company auditor for the audit of the parent and the consolidated accounts 17 10
- Auditing the accounts of subsidiaries pursuant to legislation 20 19
Fees payable to Company auditor for other services:
- Services in connection with the Company's move to the main market 173 -
- Other services - 2
Total auditor's remuneration 210 31
** Included within research and development expenses are staff costs totalling
£4,150,000 (Restated 2014: £3,229,000) also included in note 6.
6. Staff costs
31 July 2015 31 July 2014
£000 £000
Wages and salaries 4,833 3,777
Social security costs 508 424
Pension contributions 282 333
Share-based payments 619 573
6,242 5,107
Directors' remuneration (including benefits-in-kind) included in the aggregate remuneration above comprised:
Emoluments for qualifying services 1,012 749
Directors' emoluments (excluding social security costs and long term
incentives, but including benefits in kind) disclosed above include £322,000
paid to the highest paid director (2014: £293,000).
Aggregate gains made by directors during the year following the exercise of
share options and jointly owned EBT shares were £27,000 (2014: £nil).
An analysis of the highest paid director's remuneration is included in the
Directors' remuneration report.
The average number of employees during the year (including directors), was as
follows:
31 July 2015 31 July 2014
The Group Number Number
Directors 8 7
Laboratory and administrative staff 101 97
109 104
7. Finance income and expense
31 July2015 31 July2014
The Group £000 £000
Finance income:
Bank interest receivable 119 194
Finance expense:
Loan interest payable (3) (5)
116 189
Bank interest receivable includes £44,000 (2014: £25,000) which is receivable
after the year end.
8. Income tax
The tax credit is made up as follows:
31 July2015 31 July2014
The Group £000 £000
Current income tax:
UK corporation tax losses in the year - -
Research and development income tax credit receivable (1,800) (1,210)
Adjustment in respect of prior years (113) (48)
Overseas corporation tax 7 9
Total current income tax (1,906) (1,249)
The adjustments in respect of prior years relate to research and development income tax credits. The research and development income tax for the year ended 31 July 2014 was submitted in January 2015 and repayment received in February 2015.
The tax assessed for the year varies from the standard rate of corporation tax as explained below: 31 July2015 31 July2014
The Group £000 £000
Loss on ordinary activities before taxation (10,881) (9,060)
Tax at standard rate of 20.67% (2014: 22.33%) (2,249) (2,023)
Effects of:
Expenses not deductible for tax purposes 194 43
Additional reduction for research and development expenditure (1,456) (1,390)
Surrender of research and development relief for repayable tax credit 2,609 2,471
Research and development tax credit receivable (1,800) (1,210)
Share options exercised (CTA 2009 Pt 12 deduction) (155) -
Overseas corporation tax 7 9
Losses and share-based payment charges carried forward not recognised in deferred tax 1,001 934
Adjustment in respect of prior years (113) (48)
Effect of changes in tax rate/other adjustments 56 (35)
Tax credit in income statement (1,906) (1,249)
The Group has accumulated losses available to carry forward against future
trading profits of £19.2m (2014: £15.3m).
31 July2015 31 July2014
Deferred tax liabilities/(assets) provided/recognised are as follows: £000 £000
Accelerated capital allowances 336 464
Share-based payments (336) (464)
Tax losses - -
- -
The Group also has deferred tax assets, measured at a standard rate of 20%
(2014: 20%) in respect of share based payments of £247,000 (2014: £18,000) and
tax losses of £3,842,000 (2014: £3,070,000) 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.
9. Earnings per share
31 July 2015 31 July2014
The Group £000 £000
Loss for the financial year attributable to equity shareholders (8,975) (7,811)
Cost of the move to the main market 926 -
Share-based payments 619 573
Loss for the financial year before the cost of the move to the main market and share-based payments (7,430) (7,238)
Weighted average number of shares:
Ordinary shares in issue 221,360,893 214,248,996
Adjusted loss per share before the cost of the move to the main market and share-based payments (pence) (3.36) (3.38)
Basic loss per share (pence) (4.05) (3.65)
Diluted loss per share has not been presented above as the effect of share
options issued is anti-dilutive.
10. Property, plant and equipment
Laboratory infrastructure Office equipment, fixtures and fittings Plant and machinery Total
The Group £000 £000 £000 £000
Cost:
At 31 July 2013 2,431 390 3,991 6,812
Additions 70 35 389 494
Disposals - (117) - (117)
At 31 July 2014 2,501 308 4,380 7,189
Additions 77 36 272 385
Disposals - (114) - (114)
At 31 July 2015 2,578 230 4,652 7,460
Depreciation:
At 31 July 2013 1,274 271 1,797 3,342
Provided during the year 371 75 735 1,181
Eliminated on disposal - (117) - (117)
At 31 July 2014 1,645 229 2,532 4,406
Provided during the year 362 46 698 1,106
Eliminated on disposal - (114) - (114)
At 31 July 2015 2,007 161 3,230 5,398
Net book value:
At 31 July 2015 571 69 1,422 2,062
At 31 July 2014 856 79 1,848 2,783
11. Intangible assets
Patents
The Group £000
Cost:
At 31 July 2013 1,734
Additions 536
At 31 July 2014 2,270
Additions 533
At 31 July 2015 2,803
Amortisation:
At 31 July 2013 504
Provided during the year 209
At 31 July 2014 713
Provided during the year 269
At 31 July 2015 982
Net book value:
At 31 July 2015 1,821
At 31 July 2014 1,557
Intangible assets are 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.
12. Investment in subsidiaries
Shares Loans Loan impairment Total
The Company £000 £000 £000 £000
At 31 July 2013 63,235 21,911 (20,286) 64,860
Increase in respect of share-based payments - 573 - 573
At 31 July 2014 63,235 22,484 (20,286) 65,433
Increase in respect of share-based payments - 619 - 619
At 31 July 2015 63,235 23,103 (20,286) 66,052
By subsidiary
Nanoco Tech Limited 63,235 - - 63,235
Nanoco Life Sciences Limited - 20,286 (20,286) -
Nanoco Technologies Limited - 2,817 - 2,817
At 31 July 2015 63,235 23,103 (20,286) 66,052
Loans to subsidiary undertakings carry no interest and are repayable on
demand. Further information in relation to these loans is given in note 24.
Share of issued ordinary share capital
Subsidiary undertakings Country of incorporation Principal activity 31 July 2015 31 July 2014
Nanoco Life Sciences Limited England and Wales Research and development 100% 100%
Nanoco Tech Limited England and Wales Holding company 100% 100%
Nanoco Technologies Limited* England and Wales Research and development of nano particles 100% 100%
Nanoco US Inc.** USA Management services 100% 100%
With the exception of the companies noted below all other shareholdings are
owned by Nanoco Group plc.
*Share capital is owned by Nanoco Tech Limited.
**Nanoco US Inc. is a wholly owned subsidiary of Nanoco Tech Limited. It was
formed in July 2013 primarily in order to provide the services of U.S. located
staff to the rest of the Group.
13. Inventories
31 July 2015 31 July 2015 31 July 2014 31 July 2014
Group Company Group Company
£000 £000 £000 £000
Raw materials and consumables 208 - 134 -
14. Trade and other receivables
31 July 2015 31 July 2015 31 July 2014 31 July 2014
Group Company Group Company
£000 £000 £000 £000
Trade receivables 107 - 116 -
Prepayments 430 43 375 -
Inter-company short-term loan to subsidiary - 31,823 - 27,500
Other receivables 365 - 142 -
902 31,866 633 27,500
The directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
Trade receivables are denominated in the following currency:
31 July 2015 31 July 2015 31 July 2014 31 July 2014
Group Company Group Company
£000 £000 £000 £000
US Dollars 106 - 116 -
Sterling 1 - - -
107 - 116 -
At 31 July the analysis of trade receivables that were past due but not
impaired was as follows:
Total Neither past due nor impaired Past due but not impaired >90 days Past due but not impaired 120 to 150 days
£000 £000 £000 £000
2015 107 107 - -
2014 116 89 18 9
15. Cash, cash equivalents and deposits
31 July 2015 31 July 2015 31 July 2014 31 July 2014
Group Company Group Company
£000 £000 £000 £000
Short-term investments and cash on deposit deposit 20,000 20,000 5,791 -
Cash and cash equivalents 4,311 12 6,391 3,733
24,311 20,012 12,182 3,733
Under IAS 7, cash held on long-term deposits (being deposits with maturity of
greater than three months and no more than twelve months) that cannot readily
be converted into cash has been classified as a short-term investment. The
maturity on this investment was less than twelve months at the reporting
date.
Cash and cash equivalents at 31 July 2015 include deposits with original
maturity of three months or less of £4,311,000 (2014: £6,391,000).
An analysis of cash, cash equivalents and deposits by denominated currency is
given in note 23.
16. Trade and other payables
31 July 2015 31 July 2015 31 July 2014 31 July 2014
Group Company Group Company
£000 £000 £000 £000
Current
Current payables 862 - 760 -
Other payables 137 - 98 -
Deferred revenue - - 119 -
Accruals 910 - 471 -
` 1,909 - 1,448 -
Non-current
Long-term loan from subsidiary - 450 - 450
- 450 - 450
The directors consider that the carrying amount of trade and other payables
approximates to their fair value.
17. Financial liabilities
31 July2015 31 July 2015 31 July 2014 31 July2014
Group Company Group Company
£000 £000 £000 £000
Other loan:
Current 63 - 63 -
Non-current 32 - 95 -
95 - 158 -
-
The directors consider that the carrying amount of financial liabilities
approximate to their fair value, in so far as this is an arm's length
transaction taken out at a market rate of interest.
The loan is unsecured, bears interest at 2% above base rate, is repayable in
quarterly instalments and will be fully repaid in 2017.
18. Issued equity capital
Share capital Share premium Reverse acquisition reserve Total
The Group Number £000 £000 £000 £000
Allotted, called up and fully paid ordinary shares of 10p:
As at 31 July 2013 210,161,009 21,016 84,906 (77,868) 28,054
Shares issued in placing 6,369,427 637 9,363 - 10,000
Expenses of placing - - (263) - (263)
As at 31 July 2014 216,530,436 21,653 94,006 (77,868) 37,791
Shares issued on exercise of options 1,499,523 150 676 826
Shares issued in placing 19,047,619 1,905 18,095 - 20,000
Expenses of placing - - (560) - (560)
As at 31 July 2015 237,077,578 23,708 112,217 (77,868) 58,057
The Company raised gross proceeds of £20,000,000 from a placing on 1 May 2015
through the issue of 19,047,619 new ordinary shares at an issue price of 105
pence per share. Issue costs associated with the placing totalled £560,000.
The balances classified as share capital and share premium include the total
net proceeds (nominal value and share premium respectively) on issue of the
Company's equity share capital, comprising ordinary shares.
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.
Shares issued on exercise of options
The Company issued 784,947 shares on 22 October 2014, 15,000 shares on 5
November 2014 and a further 699,576 on 26 June 2015 on the exercise of
options, the shares issued had an average exercise price of 55.1 pence (2014:
no shares were issued on the exercise of options).
Share capital Share premium Total
The Company Number £000 £000 £000
Allotted, called up and fully paid ordinary shares of 10p:
As at 31 July 2013 210,161,009 21,016 84,906 105,922
Shares issued in placing 6,369,427 637 9,363 10,000
Expenses of placing - - (263) (263)
As at 31 July 2014 216,530,436 21,653 94,006 115,659
Shares issued on exercise of options 1,499,523 150 676 826
Shares issued in placing 19,047,619 1,905 18,095 20,000
Expenses of placing - - (560) (560)
As at 31 July 2015 237,077,578 23,708 112,217 135,925
19. Share-based payment reserve
The Group and Company £000
At 31 July 2013 1,253
Share-based payments 573
At 31 July 2014 1,826
Share-based payments 619
At 31 July 2015 2,445
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 Consolidated statement of changes in equity.
A charge of £619,000 has been recognised in the Consolidated statement of
comprehensive income for the year (2014: £573,000).
Share option schemes
The Group operates the following share option schemes all of which are
operated as Enterprise Management Incentive ("EMI") schemes in so far as the
share options being issued meet the EMI criteria as defined by HM Revenue &
Customs. Share options issued that do not meet EMI criteria are issued as
unapproved share options, but are subject to the same exercise performance
conditions.
Nanoco Tech Share Incentive Plan
Share options issued under the Nanoco Tech Share Incentive Plan had been
issued to staff who were employed by Nanoco Tech Limited in the period from 1
September 2006 up to the date of the reverse take-over on 1 May 2009. These
options were conditional on achievement of share price performance criteria
and either a sale or listing of the Company. All of the relevant vesting
conditions have been successfully met and options are capable of being
exercised at any time from 1 August 2010 to 31 August 2016. Following the
reverse take-over the number of share options in issue were increased in line
with the terms of the reverse acquisition by a factor of 4.55 times and the
exercise price decreased by 4.55 times. This was reflected as a reverse
acquisition adjustment in the 2009 accounts.
As at 31 July 2015 no share options remain exercisable under the Nanoco Tech
Share Incentive Plan.
Nanoco Group plc Long Term Incentive Plan ("LTIP")
- Grant in November 2011
Share options were granted to staff and executive directors on 25 November
2011. The options granted to executive directors were subject to commercial
targets being achieved. The exercise price was set at 50 pence, being the
average closing share price on the day preceding issue of the share options.
The fair value benefit is measured using a binomial model, taking into account
the terms and conditions upon which the share options were issued. Share
options issued to staff vest over a three year period from the date of grant
but are not subject to performance conditions.
- Grant in October 2012
Share options were granted to staff and executive directors on 22 October
2012. The options granted to executive directors were subject to commercial
targets being achieved. The exercise price was set at 57 pence, being the
average closing share price on the day preceding issue of the share options.
The fair value benefit is measured using a binomial model, taking into account
the terms and conditions upon which the share options were issued. Share
options issued to staff vest over a three year period from the date of grant
but are not subject to performance conditions.
- Grant in May 2014
Share options were granted to certain staff on 23 May 2014. The exercise price
was set at 89 pence, being the average closing share price on the day
preceding issue of the share options. The fair value benefit is measured using
a binomial model, taking into account the terms and conditions upon which the
share options were issued. The options vest at the end of three years from the
date of grant and are exercisable until the tenth anniversary of the award.
The awards are not subject to performance conditions. Exercise of the award is
subject to the employee remaining a full time member of staff at the point of
exercise. No options were granted to executive directors.
- Grant in October 2014
Share options were granted to an executive director on 14 October 2014. The
exercise price was set at 10 pence, being the nominal value of the share. The
fair value benefit is measured using a binomial model, taking into account the
terms and conditions upon which the share options were issued. The options
vest at the end of three years from the date of grant and are exercisable
until the tenth anniversary of the award. The awards are subject to
performance conditions which have been amended so as to be in line with the
new LTIPs scheme. Exercise of the award is subject to the employee remaining a
full time member of staff at the point of exercise.
- Other awards
Share options are awarded to management and key staff as a mechanism for
attracting and retaining key members of staff. The options are issued at
either market price on the day preceding grant or in the event of abnormal
price movements at an average market price for the week preceding grant date.
These options vest over a three year period from the date of grant and are
exercisable until the tenth anniversary of the award. Exercise of the award is
subject to the employee remaining a full time member of staff at the point of
exercise. The fair value benefit is measured using a binomial valuation model,
taking into account the terms and conditions upon which the share options were
issued.
Shares held in the Employee Benefit Trust ("EBT")
The Group operates a jointly owned EBT share scheme for senior management
under which the trustee of the Group-sponsored EBT has acquired shares in the
Company jointly with a number of employees. The shares were acquired pursuant
to certain conditions set out in jointly owned agreements ("JOA"). Subject to
meeting the performance criteria conditions set out in the JOA, the employees
are able to exercise an option to acquire the trustee's interests in the
jointly owned EBT shares at the option price. The jointly owned EBT shares
issued on 1 September 2006 had met the option conditions on 1 August 2010 and
are capable of being exercised at any time until 31 August 2016.
The fair value benefit is measured using a binomial valuation model, taking
into account the terms and conditions upon which the jointly owned shares were
issued.
The following tables illustrate the number and weighted average exercise
prices of, and movements in, share options and jointly owned EBT shares during
the year.
Share options EBT 2015 total 2014 total
The Group and Company Number Number Number Number
Outstanding at 1 August 13,373,756 850,500 14,224,256 13,915,256
Granted during the year 380,000 - 380,000 444,000
Exercised during the year (1,499,523) (320,411) (1,819,934) -
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