REG - Oxford Biomedica PLC - PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DEC 2016 <Origin Href="QuoteRef">OXB.L</Origin> - Part 2
16/03/2017 07:06
- Part 2: For the preceding part double click ID:nRSP6201Za
Loss for the year - - - - - (13,019) (13,019)
Total comprehensive expense for the year - - - - - (13,019) (13,019)
Transactions with owners:Share options
Proceeds from shares issued 82 62 - - - - 144
Value of employee services - - - - - 730 730
Vesting of deferred share award - - - 124 - (124) -
Liquidation of BioMedica inc. - - - - 682 (682) -
At 31 December 2015 25,741 141,677 2,291 (102) - (158,713) 10,894
Year ended 31 December 2016:
Loss for the year - - - - - (16,641) (16,641)
Total comprehensive expense for the year - - - - - (16,641) (16,641)
Transactions with owners:Share options
Proceeds from shares issued 20 39 - - - - 59
Value of employee services - - - - - 865 865
Issue of shares excluding options 5,118 14,445 - - - - 19,563
Cost of share issues - (2,125) - - - - (2,125)
At 31 December 2016 30,879 154,036 2,291 (102) - (174,489) 12,615
The notes on pages 19 to 25 form part of this preliminary information.
NOTES TO THE PRELIMINARY FINANCIAL INFORMATION
for the year ended 31 December 2016
1 Basis of preparation
This financial information, for the years ended 31 December 2016 and 31
December 2015, does not constitute the statutory financial statements for the
respective years, and is an extract from the financial statements. It is based
on, and is consistent with, that in the Group's statutory accounts for the
year ended 31 December 2016 and those financial statements will be delivered
to the Registrar of Companies following the Company's Annual General Meeting.
Financial statements for the year ended 31 December 2015 have been delivered
to the Registrar of Companies. The auditors' reports on the financial
statements for the years ended 31 December 2016 and 31 December 2015 were
unqualified and did not contain statements under section 498 of the Companies
Act 2006. The financial information in this report does not constitute a
statutory financial statement within the meaning of sections 434-436 of the
Companies Act 2006.
The financial statements have been prepared in accordance with IFRIC
interpretations, as applicable to companies using International Financial
Reporting Standards ('IFRS') as adopted by the European Union and with the
Companies Act 2006 under the historic cost convention. Whilst the financial
information included in this preliminary announcement has been prepared in
accordance with IFRSs adopted for use in the European Union, this announcement
does not itself contain sufficient information to comply with IFRSs.
Copies of this announcement are available from the Company Secretary, and are
on the Group's website. The audited statutory financial statements for the
year ended 31 December 2016 are expected to be distributed to shareholders by
27 April 2017 and will be available at the registered office of the Company,
Windrush Court, Transport Way, Oxford, OX4 6LT. Details can also be found on
the Group's website at: www.oxfordbiomedica.co.uk.
This announcement was approved by the Board of Oxford BioMedica plc on 15
March 2017.
Going concern
The Group held £15.3 million of cash at the end of 2016 and £15.2 million at
28 February 2017. During 2016 the cash burn was significantly reduced as a
result of improved cash flow from operations and reduced capital expenditure
and the directors expect further progress in 2017. Taking this into account,
in conjunction with currently known and probable cash flows, the Directors
consider that the Group has sufficient cash resources and cash inflows to
continue its activities for not less than twelve months from the date of these
financial statements and have therefore prepared the financial statements on a
going concern basis.
2 Critical accounting judgements and estimates
In applying the Group's accounting policies, management is required to make
judgements and assumptions concerning the future in a number of areas. Actual
results may be different from those estimated using these judgements and
assumptions. The key sources of estimation uncertainty and critical accounting
judgements that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Revenue recognition
In October 2014, the Group entered into a series of contractual arrangements
with Novartis, including a licence over the Group's existing LentiVector®
platform, a production and clinical supply agreement and an agreement covering
process development.
Under these arrangements, the Group received $9.7m (£6.1m) in upfront payments
of which $7.7m (£4.8m) was received in respect of a non-exclusive worldwide
development and commercialisation licence in oncology under the Group's
existing LentiVector® intellectual property gene delivery platform.
Management judged that this amount should be recognised as a separate
deliverable in 2014 discrete from amounts to be recognised over the period of
the three year production contract. This judgement was based on management
being satisfied that the customer was able and intended to realise value from
this licence independently from any further intellectual property generated in
the collaboration and that its fair value is sufficiently reliable. In
reaching this judgement management had regard to several considerations
including:
- The existing intellectual property covered by the licence is sufficient
to allow the vector for CTL019 to be bioprocessed for commercial use, and any
intellectual property that might arise from the process development under the
contract is not a pre-requisite for its commercial manufacture
- The licence allows Novartis to use the existing intellectual property
for other oncology products apart from CTL019
- The other elements of the arrangements have an appropriate price and
fair value (the residual elements)
- The $7.7m fee is comparable with similar transactions with third parties
that the Group has previously contracted, taking into account the stage of
development and the market potential of the product
This judgement reflects both the separability of the licence for the existing
intellectual property and the assessment of the fair values of each of the
components of the Novartis agreements.
The remaining $2.0m of the $9.7m upfront payments are dependent on certain
events and activities over the 3 year period. As at 31 December 2016, $1.2m
had been recognised as revenue (2015: $0.4m).
Under the October 2014 contract, management judged that $1.2m of a $2m
incentive payment for provision of source documentation to support a proposed
BLA submission by Novartis should be recognised at year end on the basis that,
based on the level of work performed, it is certain that the economic benefits
of the transaction will flow to the entity, and the revenue and related costs
can be measured reliably.
In 2016 the Group received £1.4m in one-off payments related to IP licences.
Since these payments are non-refundable and there is no ongoing commitment
from the Group, the amounts received have been recognised as revenue in the
year. £657,000 of these items was received in the form of shares in a partner
company. These have been recognised at fair value.
Intangible asset impairment
The Group has intangible assets arising from purchases of intellectual
property rights and in-process R&D. Amortisation is charged over the assets'
patent life on a straight line basis from the date that the asset becomes
available for use. When there is an indicator of a significant and permanent
reduction in the value of intangible assets, an impairment review is carried
out. The impairment analysis is principally based on estimated discounted
future cash flows. Actual outcomes could vary significantly from such
estimates of discounted future cash flows due to the sensitivity of the
assessment to the assumptions used. The determination of the assumptions is
subjective and requires the exercise of considerable judgement. Any changes in
key assumptions about the Group's business and prospects, or changes in market
conditions affecting the Group, or its development partners, could materially
affect whether an impairment exists. This risk is now concentrated on
purchased patent rights which have been sublicensed to collaborative partners.
At 31 December 2016 the book value of intangible assets was £1.3 million of
which £1.1 million related to PrimeBoost technology.
Going concern
Management and the Directors have had to make estimates and important
judgements when assessing the going concern status of the Group. Going
concern is as stated in Note 1 and the Financial review.
3 Taxation
The Group is entitled to claim tax credits in the United Kingdom for certain
research and development expenditure. The amount included in the statement of
comprehensive income for the year ended 31 December 2016 comprises the credit
receivable by the Group for the year, less overseas tax paid in the year. The
United Kingdom corporation tax research and development credit is paid in
arrears once tax returns have been filed and agreed. The tax credit recognised
in the financial statements, but not yet received, is included in current
assets in the balance sheet. The amounts for 2016 have not yet been agreed
with the relevant tax authorities.
2016 2015
£'000 £'000
Current tax
United Kingdom corporation tax research and development credit (3,000) (2,721)
Overseas taxation 50 5
(2,950) (2,716)
Adjustments in respect of prior periods
United Kingdom corporation tax research and development credit (716) (1,247)
Taxation credit (3,666) (3,963)
4 Basic loss and diluted loss per ordinary share
The basic loss per share of 0.60p (2015:0.51p) has been calculated by dividing
the loss for the year by the weighted average number of shares in issue during
the year ended 31 December 2016 (2,778,182,534: 2015: 2,570,202,150).
As the Group is loss-making, there were no potentially dilutive options in
either year. There is therefore no difference between the basic loss per
ordinary share and the diluted loss per ordinary share.
5 Intangible assets
Intangible assets comprise Intellectual Property rights.
2016 2015
£'000 £'000
At 1 January and 31 December 5,591 5,591
Accumulated amortisation and impairment
At 1 January 3,848 3,485
Amortisation charge for the year 335 363
Impairment charge for the year 78 -
At 31 December 4,261 3,848
Net book amount at 31 December 1,330 1,743
For intangible assets regarded as having a finite useful life, amortisation
commences when products underpinned by the intellectual property rights become
available for use. Amortisation is calculated on a straight line basis over
the remaining patent life of the asset. Amortisation of £335,000 (2015:
£363,000) is included in 'Research, development and bioprocessing' in the
statement of comprehensive income.
6 Property, plant and equipment
Freehold property Shortleasehold improve-ments Office equipment and computers Manufac-turing and Laboratory equipment Assets under constru-ction1 Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2016 6,938 7,397 1,374 7,574 9,744 33,027
Additions at cost - 206 506 1,526 4,220 6,458
Reclassifications 13,964 - - - (13,964) -
Disposals - (633) (229) (2,612) - (3,474)
At 31 December 2016 20,902 6,970 1,651 6,488 - 36,011
Accumulated depreciation
At 1 January 2016 921 2,909 753 4,048 - 8,631
Charge for the year 1,385 522 353 1,080 - 3,340
Disposals - (633) (229) (2,612) - (3,474)
At 31 December 2016 2,306 2,798 877 2,516 - 8,497
Net book amount at 31 December 2016 18,596 4,172 774 3,972 - 27,514
Freehold property Shortleasehold improve-ments Office equipment and computers Manufac-turing and Laboratory equipment Assets under constru-ction1 Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2015 6,887 2,623 820 5,335 646 16,311
Additions at cost 51 863 554 2,239 13,009 16,716
Disposals - 3,911 - - (3,911) -
At 31 December 2015 6,938 7,397 1,374 7,574 9,744 33,027
Accumulated depreciation
At 1 January 2015 698 2,579 595 3,495 - 7,367
Charge for the year 223 330 158 553 - 1,264
At 31 December 2015 921 2,909 753 4,048 - 8,631
Net book amount at 31 December 2015 6,017 4,488 621 3,526 9,744 24,396
1 Assets under construction represent the capitalisation of construction
works at the Harrow House and Yarnton manufacturing facilities, and the
Windrush Court laboratories.
7 Investments
On 29 November 2016, as part of a strategic alliance with Orchard
Therapeutics, the Group received a 1.95 % equity stake in Orchard. This
investment has been classified at fair value through the profit & loss (2016:
£657,000; 2015: £nil). As Orchard Therapeutics is a private company, the
equity investment has not been valued based on observable market data.
8 Inventories
2016 2015
£'000 £'000
Raw Materials 2,120 2,217
Work in progress 82 489
Total inventory 2,202 2,706
Inventories constitute raw materials held for commercial bioprocessing
purposes, and work-in-progress inventory related to contractual bioprocessing
obligations.
During 2016, the Group wrote down £29,000 of inventory which is not expected
to be used in production or sold onwards.
9 Trade and other receivables
2016 2015
£'000 £'000
Trade receivables 1,969 7,374
Accrued income 2,919 1,155
Other receivables 238 31
Other tax receivable 1,330 1,522
Prepayments 448 848
Total trade and other receivables 6,904 10,930
The fair value of trade and other receivables are the current book values.
Included in the Group's trade receivable balance are debtors with a carrying
amount of £47,000 (2015: £826,000) which were past due at the reporting date,
all of which have since been received.
10 Trade and other payables
2016 2015
£'000 £'000
Trade payables 1,576 3,588
Other taxation and social security 442 384
Accruals 3,985 5,314
Total trade and other payables 6,003 9,286
11 Deferred income
Deferred income arises when the Group has received payment for services in
excess of the stage of completion of the service being provided.
12 Loans
In May 2015, the Group entered into the $50 million Oberland Facility. The
Group has used $40 million (£26.1 million) of the facility to finance the
Group's expansion of its bioprocessing and laboratory capacity in order to
enable it to deliver on commitments under its bioprocessing agreement with
Novartis. The Group drew down $25 million (£16.3 million) of the loan in May
2015 and a further $15 million (£9.8 million) in September 2015 to ensure
adequate finance for the ongoing capacity expansion programme. The remaining
funds under the Oberland Facility are available to be drawn down in minimum
tranches of $5 million at the Group's option prior to 31 March 2017 and the
proceeds of such drawdowns may be used only for certain permitted acquisitions
and licensing activities as approved by Oberland in its sole discretion. The
Oberland Facility is repayable not later than 1 May 2022 and may be prepaid at
any time. Over the course of the loan term, interest is payable quarterly at
an annual interest rate of 9.5 per cent. plus the greater of 1 per cent. and
three month LIBOR. Under the terms of the Oberland Facility, loans are issued
at an original discount of 2.5 per cent. In addition to interest, a repayment
fee is also payable upon any repayment including on exit. Oxford BioMedica
will also pay an additional amount of 0.35 per cent. of its annual worldwide
net revenue, as calculated from the Group's financial statements, from 1 April
2017 to 31 December 2025 for each $5 million of loan drawn down over $30
million. This revenue participation may be retired at any time upon payment of
an exit fee. In the event that the loan is repaid after the second anniversary
there may be a true-up payment payable to Oberland in the event that the
aggregate of the interest payments, revenue participation payments and exit
fee do not in aggregate provide a return of 15 per cent. per annum to
Oberland. The outstanding balance at year end is £34.4 million (2015: £27.3
million).
The Group is required to maintain a cash balance not less than $10 million
(approximately £8.1 million) while the Oberland Facility is outstanding. The
Oberland Facility is secured by a pledge over substantially all of the Group's
assets. Drawdowns of additional tranches are subject to certification by
Oxford BioMedica that representations and warranties under the Oberland
Facility agreement remain true and correct as of the drawdown date, and
certifications relating to no default or material adverse effect.
In 2013, the Group was awarded a funding package of £7.1 million under the UK
Government's Advanced Manufacturing Supply Chain Initiative. Of this package,
£5.3 million was a loan facility bearing interest at 6 per cent., and £1.8
million was in the form of grant finance. In April 2014, the Group drew down
£1 million from the AMSCI facility. In March 2015, the Group drew down a
further £2 million from the AMSCI facility. During May 2015, the loan facility
was terminated and the outstanding balance was repaid.
13 Provisions
Dilapidations£'000
At 1 January 2016 1,371
Unwinding of discount 5
Utilisation of provision (833)
Additional provision recognised 79
At 31 December 2016 622
At 1 January 2015 535
Unwinding of discount 3
Additional provision recognised 833
At 31 December 2015 1,371
The dilapidations provision relates to anticipated costs of restoring the
leasehold Medawar and Yarnton properties in Oxford, UK to their original
condition at the end of leases in 2016 and 2024 respectively, discounted using
the rate per the Bank of England nominal yield curve. The equivalent rate was
used in 2015. The provisions will be utilised at the end of the leases if they
are not renewed, and for that reason, the provision in respect of the Medawar
Centre was released in 2016 at the end of the lease.
14 Cash flows from operating activities
Reconciliation of loss before tax to net cash used in operations:
2016 2015
£'000 £'000
Continuing operations
Operating loss (11,313) (14,083)
Adjustment for:
Depreciation 3,340 1,264
Amortisation of intangible assets 335 363
Charge for impairment 78 -
Charge in relation to employee share schemes 865 730
Non-cash revenues (657) -
Changes in working capital:
Decrease / (increase) in trade and other receivables 4,026 (5,777)
(Decrease) / increase in trade and other payables (3,283) 2,982
Increase in deferred income 268 118
(Decrease) / increase in provisions (749) 836
Increase in investments 657 -
Decrease / (Increase) in inventory 504 (1,299)
Net cash used in operations (5,929) (14,866)
This information is provided by RNS
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