TIDMHVO
RNS Number : 2904X
hVIVO PLC
25 April 2023
hVIVO plc
("hVIVO" or the "Company")
Final results
Transformational year with record EBITDA underlining strong
operational delivery
hVIVO plc (AIM & Euronext: HVO) , (formerly Open Orphan plc)
a rapidly growing specialist contract research organisation (CRO)
and world leader in testing infectious and respiratory disease
products using human challenge clinical trials, announces its
audited results for the 12 months ended 31 December 2022.
Financial highlights
-- Revenue up 30% to GBP50.7m (2021: GBP39.0m)
-- EBITDA increased threefold to GBP9.1m (2021: GBP2.9m)
-- EBITDA margins of 17.9 % (2021: 7.4%), ahead of guidance due
to positive impacts of over GBP1m
-- Cash and cash equivalents of GBP28.4m as at 31 December 2022 (2021: GBP15.7m)
-- Adjusted diluted EPS increased to 0.90p per share (2021: (0.19)p)
-- Contracted orderbook increased by 65% to GBP76m as at 31 December 2022 (2021: GBP46m)
-- One-off special dividend of c.GBP3.0m, being 0.45p per share
reflecting strong cash generation during the year, payable on 9
June 2023 to shareholders on the register on 5 May 2023. The
corresponding ex-dividend date is 4 May 2023
Non-core assets
Due to the challenging market conditions, the Board are
providing the following updates in relation to hVIVO's non-core
assets:
-- PrEP Biopharm - hVIVO holds 62.62% of PrEP Biopharm Limited.
The directors of PrEP Biopharm Limited have made the decision to
commence the process of a solvent liquidation in the coming
months
-- Imutex - hVIVO have performed an impairment assessment on its
49% holding in Imutex Limited and have determined that a full
impairment of the carrying amount of the investment in Imutex is
prudent. This impairment reflects a write down from GBP7m to nil as
at 31 December 2022
-- Disease in Motion - the Board has decided to postpone all
activities relating to the spin-out of Disease in Motion and pursue
other growth opportunities that are more aligned with our near term
strategic objectives as a human challenge trial business
Operational highlights
-- Delivered seven challenge studies and inoculated 413
volunteers in 2022, a 32% increase on the prior year
-- Positive impact from efficiency initiatives, including
concurrent running of multiple challenge trials, a flexible booking
model, and a re-vamped FluCamp platform, resulted in improved staff
and volunteer utilisation and lead conversion. This is reflected in
the much improved EBITDA margins
-- Larger trial sizes, award of multiple unique full-service
challenge contracts, and the expansion into new markets (APAC) as a
result of increase market awareness of human challenge study
benefits
-- Expanded portfolio of human challenge models with launch of
the Malaria and development of Omicron models
-- Facilities expanded in London and Manchester, doubling
screening capacity, and increasing bed capacity
-- Broadened the scope of the business to offer Phase II / III field based studies
- First contract awarded by existing Big Pharma client to act as
a vaccination site for a Phase II field study
-- hVIVO laboratories achieved the College of American
Pathologists (CAP) accreditation, confirming high standards of
excellence and increasing the marketability of our laboratory
services
Management strengthened
-- The executive management team strengthened with appointments
of Yamin 'Mo' Khan as CEO, bringing substantial CRO experience and
expertise, and Stephen Pinkerton as CFO
-- Martin Gouldstone appointed Independent Non-Executive
Director, adding strong corporate development experience in the
CRO, healthcare and pharmaceutical sectors
Outlook
-- Revenue guidance for 2023 of GBP55m
-- Full visibility on 2023 revenue and into H1 of 2024
-- Targeting 2023 EBITDA margin in the mid-to-high teens
-- Strong contracted orderbook continues to grow into 2023
despite cancellation of recent contract win
Yamin 'Mo' Khan, Chief Executive Officer of hVIVO, said: "2022
marked a transformative year for hVIVO, as we achieved record
financial and operational performance, providing strong validation
of our sustainable growth model. With exceptional financial
strength, and an impressive orderbook, we are proud to have full
visibility of 2023 revenue guidance with strong visibility into H1
2024.
Moving forward, we will continue to leverage our world leading
position in the industry, taking advantage of favourable market
dynamics. We are expanding our services and challenge models to
better support our clients' clinical development portfolios, while
simultaneously improving our margins with impactful efficiency
initiatives. I have full confidence in the team's ability to
deliver operational excellence as well as orderbook conversions,
paving the way for long-term sustainable growth and
profitability."
Investor presentation
Yamin 'Mo' Khan, Chief Executive Officer, and Stephen Pinkerton,
Chief Financial Officer, will provide a live presentation relating
to the final results via the Investor Meet Company platform on
Tuesday 25 April 2023 at 17:00 BST. Investors can sign up to
Investor Meet Company and add to meet hVIVO here .
For further information please contact:
hVIVO plc +44 (0) 20 7756 1300
Yamin 'Mo' Khan, Chief Executive Officer
Stephen Pinkerton, Chief Financial Officer
Liberum Capital (Nominated Adviser and Joint Broker) +44 (0) 20 3100 2000
Ben Cryer, Edward Mansfield, Phil Walker, Will King
finnCap plc (Joint Broker) +44 (0) 20 7220 0500
Geoff Nash, Charlie Beeson, Nigel Birks, Harriet Ward (ECM)
Davy (Euronext Growth Adviser and Joint Broker) +353 (0) 1 679 6363
Anthony Farrell, Niall Gilchrist
Walbrook PR (Financial PR & IR) +44 (0) 20 7933 8780 or hvivo@walbrookpr.com
Stephanie Cuthbert / Phillip Marriage / +44 (0) 7796 794 663 / +44 (0) 7867 984 082 /
Louis Ashe-Jepson +44 (0) 7747 515 393
Notes to Editors
About hVIVO
hVIVO plc (ticker: HVO) (formerly Open Orphan plc) is a rapidly
growing specialist contract research organisation (CRO) and the
world leader in testing infectious and respiratory disease vaccines
and therapeutics using human challenge clinical trials. The Group
provides end-to-end early clinical development services to its
large, established and growing repeat client base, which includes
four of the top 10 largest global biopharma companies.
The Group's fast-growing services business includes a unique
portfolio of 11 human challenge models, with a number of new models
under development, to test a broad range of infectious and
respiratory disease products. The Company has world class challenge
agent manufacturing, specialist drug development and clinical
consultancy services via its Venn Life Sciences brand, and a lab
offering via its hLAB brand, which includes virology, immunology
biomarker and molecular testing. The Group offers additional
clinical field trial services such as patient recruitment and
clinical trial site services.
hVIVO runs challenge studies in London from its Whitechapel
quarantine clinic, its state-of-the-art QMB clinic with its highly
specialised on-site virology and immunology laboratory, and its
clinic in Plumbers Row. To recruit volunteers / patients for its
studies, the Company leverages its unique clinical trial
recruitment capability via its FluCamp volunteer screening
facilities in London and Manchester.
Chairman's Statement
For the year ended 31 December 2022
2022 - A Transformative Year for hVIVO
2022 was a record year for hVIVO and its subsidiaries (the
"Group"), in which we delivered another period of profitable and
significant growth, as the Group rea rmed its position as the world
leader in the testing of vaccines and therapeutics using human
challenge studies. hVIVO ended the year in a strong financial
position, with revenues up 30% year-on-year, EBITDA increasing
threefold and EBITDA margins increasing to 17.9%, substantially
above market expectations. This exceptional performance has
resulted in strong cash generation in 2022. To recognise the
Group's performance, the Group will make a one--o , special
dividend to shareholders of 0.45p per share (c. GBP3.0 million
aggregate payment).
hVIVO made excellent operational progress during the year, as
the Group delivered seven challenge trials supported by expanded
FluCamp screening facilities while building a record contracted
orderbook that provides excellent visibility on future revenues
that now stretches into H1 2024. hVIVO also broadened and
diversified its o ering to include new human challenge models, as
well as new laboratory and clinical services, which have added
additional revenue streams and improved both utilisation and
margins.
Organisational excellence
In 2022, the Group continued to deliver on its strategy to build
a world-class and focused CRO business. In February 2022, we
appointed Yamin 'Mo' Khan as CEO to continue our growth trajectory
and build upon the Group's foundations. Mo brought over 25 years of
specialist CRO experience to hVIVO and significant industry
pedigree, and I am delighted by his impact on the business. Under
his leadership, the Group has built a record orderbook of GBP76m, a
sixfold growth since 2019, and demonstrated highly e cient
operational delivery, resulting in much improved margins, continued
outstanding growth and significant momentum.
Mo has been supported by Stephen Pinkerton, who was appointed
CFO in October 2022. Stephen has been with hVIVO since 2017 and has
played a leading role in transforming hVIVO's financial position
and how we report and forecast our business model, developing
pricing models for contracts to help improve average contract value
as well as driving margin improvements across the business.
There have also been further changes to the Board, with Martin
Gouldstone joining as an Independent Non--Executive Director in
June 2022. Martin brings 30 years of corporate development
experience in the CRO, healthcare and pharmaceutical sectors. His
experience executing deals across Europe has been important as we
continue to internationalise the use of human challenge trials.
Following Mo's appointment, I have reverted to the position of
Non-Executive Chairman of the Board. I remain fully committed to
hVIVO and look forward to continuing to support Mo as he continues
to drive our growth strategy forward.
In February 2022, the results from the world's first COVID--19
human challenge trial were published in peer reviewed journal
Nature Medicine. The results provided unique insights into
COVID--19 disease progression and underlined that a COVID--19 human
challenge trial is safe in healthy young adults. The study was a
strong endorsement for human challenge trials and we believe it was
pivotal in bringing greater worldwide attention to hVIVO, acting as
a catalyst to our subsequent growth.
ESG has become an area of significant importance for UK
corporates, and I am delighted to report that the Group has
established a cross--business working group ("ESG Group"), which is
focused on identifying the risks and opportunities arising from
climate change and other social and governance topics. Mo leads the
ESG Group which contains representatives from each area of our
business and reports directly into the Audit and Risk Committee.
The ESG Group will report twice yearly to the Committee, which are
responsible for reviewing the Group's ESG reporting and making
recommendations to the Board.
Non-core assets
Due to the challenging market conditions, the Board has made a
number of updates in relation to hVIVO's non-core assets. The Group
holds 62.62% of PrEP Biopharm Limited and despite dedicating
resources to realising value from this asset over the past number
of years, due to di cult market conditions the directors of PrEP
Biopharm will commence the process of a solvent liquidation of PrEP
Biopharm in the coming months. In 2018 the Group's investment in
PrEP Biopharm was fully impaired and since then has had a nil value
in the Group's financial statements.
The Group also holds 49% of Imutex Limited with PepTcell Limited
holding 51%. Management have performed an impairment assessment of
this asset and determined that a full impairment of the carrying
amount of the investment in Imutex is prudent. This impairment
reflects a write down from GBP7,005,000 to Nil as at 31 December
2022.
The Board has decided to postpone all activities relating to the
spin-out of Disease in Motion and pursue other growth opportunities
that are more aligned with our near term strategic objectives as a
human challenge trial business.
Outlook
hVIVO has had a strong start to 2023 with the Group well
capitalised, debt free, and with full visibility for the current
financial year and into H1 2024. I believe we have a world--class
organisation led by a specialist management team that is well
placed to lead and leverage the growth in the human challenge trial
market and further strengthen our position as the world leader in
the field. While we have had one cancellation in the year, the
growing and diverse orderbook from new and existing Big Pharma and
biotech clients provides excellent forward visibility and the
ability to drive operational leverage through improved utilisation.
We remain confident that the Group will continue to leverage its
world leading position amidst favourable market dynamics and that
hVIVO will continue to deliver profitable and sustainable growth
into 2023 and beyond.
Cathal Friel
Chairman
24 April 2023
CEO Statement
For the year ended 31 December 2022
Building a long-term sustainable business model
I am pleased to report that hVIVO has delivered its most
significant year of growth to date, establishing our position as
the leading provider of human challenge trial services. Our strong
performance has resulted in record revenues and EBITDA, with no
debt and a robust cash balance of GBP28.4 million, laying a strong
foundation for building sustainable future growth. The record
contracted orderbook is indicative of the growing human challenge
market and positions us well for 2023 and beyond.
Since my appointment in February 2022, building our contracted
orderbook has been our first priority to provide a strong
foundation, increase our forward visibility and open avenues for
increased e ciencies in managing our cost base. Our contracted
orderbook and operational model of running multiple challenge
trials concurrently have enabled us to increase the utilisation of
our quarantine facility, achieve operational e ciencies, and drive
our EBITDA margins to record levels. I am also delighted with Venn
Life Sciences' solid performance, where we continue to provide drug
development consulting services to a broad range of clients. We are
now generating an increased volume of cross--selling opportunities
between Venn and hVIVO, creating an end--to--end early clinical
development service o ering.
The excellent growth and operational delivery in 2022 are a
testament to our outstanding team of world--class scientists,
clinicians and sta who are turning the human challenge trials
concept into a vital cog in the global clinical development
pathway. I would also like to take this opportunity to thank our
volunteers who unselfishly dedicate their time to improving
healthcare for the rest of society.
Record results
The Group reported record full year revenues of GBP50.7 million
(2021: GBP39.0 million), a significant increase of 30% compared to
2021. The Group's contracted orderbook increased to GBP76 million,
up 65% year--on--year (2021: GBP46 million), and over sixfold since
2020 (2019: GBP12 million). Driving this growth is the continued
expansion of the human challenge market and the increasing utility
of challenge study data. hVIVO has led the industry in creating
market awareness and educating the global biopharma industry to the
value of human challenge data as a means of de--risking late--stage
clinical trials. This has manifested in increased demand for larger
sample sizes (i.e., more volunteers) and unique full--service
contracts that include bespoke challenge agent manufacturing,
characterisation study, and human challenge trial. hVIVO is in the
unique position to deliver these end--to--end full--service
projects.
EBITDA profit margins increased to 17.9% (2021: 7.4%),
significantly ahead of previous guidance of 13--15%. This was
driven by strong trading and execution of challenge trials,
operational e ciencies achieved through running multiple concurrent
trials and the recognition of postponement and cancellation fees
(for a one--time aggregate of over GBP1 million). The advanced fees
from the orderbook growth and increased operational delivery
resulted in a record cash position of GBP28.4 million as at 31
December 2022 (2021: GBP15.7 million).
Due to the excellent financial performance in 2022, the Group
will make a one--o , special dividend to shareholders of 0.45p per
share, to be approved at the Annual General Meeting. This reflects
the Group's exceptional cash generation in the year, in addition to
its robust balance sheet.
Superb customer delivery
In 2022, hVIVO continued to solidify its position as the world
leader in human challenge trials by serving several new and repeat
customers. Our global client base has access to our unrivalled
portfolio of infectious and respiratory disease challenge models.
Most notable of these is four of the top 10 global biopharma
companies. This trend highlights the growing inclusion of human
challenge trials into the clinical development pathway of their
clinical assets. We anticipate that this year--on--year repeat
business from influential decision makers in the global biopharma
industry will continue to have a positive impact on the worldwide
demand for human challenge trials.
hVIVO also provided services to several new and repeat biotech
customers, further expanding our diverse and loyal client base
across the biopharma spectrum. As a result, there is immense
potential for growth among biotech companies, as the cost--e ective
human e cacy data generated by human challenge trials becomes
increasingly appealing in a tight funding environment. Positive e
cacy data can significantly boost the value of an asset, which can
be transformative for biotechs. Additionally, challenge trial data
can accelerate time--to--market for vaccines and antivirals by up
to three years, enabling biopharma companies to maximise revenues
for their products whilst their patents are active.
Key projects
In 2022, we delivered several landmark projects for our clients
across our world--leading portfolio of human challenge study
models. These projects included the inoculation of 413 volunteers,
representing a 32% increase from the previous year.
Two key themes among our contract wins in 2022 were the
end--to--end human challenge contracts and larger volunteer sample
size per challenge study. Notably, the trend towards larger sample
sizes indicates that the industry is recognising the value of human
challenge data as a means of achieving greater utility of data and
pursuing lower frequency trial endpoints to further de--risk their
programs ahead of late--stage field studies.
Our enhanced sales strategy and increased market awareness have
led to record sales numbers, with several significant contracts
highlighted below:
-- GBP14.7m contract for manufacture, characterisation and
challenge study for Big Pharma client
-- GBP13.6m contract for a challenge trial with a US--based biopharmaceutical client
-- GBP10.4m contract for manufacture and challenge trial for a Big Pharma client
-- GBP7.3m challenge trial for a leading biotech
-- GBP7.2m challenge trial with a Big Pharma client
The value proposition of human challenge trials has been further
reinforced by the positive results from human challenge trials
conducted by hVIVO. For example, Pfizer received FDA breakthrough
designation for its RSV vaccine candidate for older adults
following a successful Phase IIa human challenge study conducted by
hVIVO. The FDA is now expected to make a final decision on whether
to approve the candidate in 2023 as the world's first RSV vaccine.
Similarly, Bavarian Nordic received FDA breakthrough designation in
2022 for its RSV vaccine candidate, MVA--BN(R) RSV, following a
successful human challenge trial conducted by hVIVO. We are proud
to have played a significant role in advancing the clinical
development of several important RSV vaccine and antiviral
candidates that have the potential to alleviate the significant
burden of RSV on patients as well as global healthcare systems.
E ciency initiatives
The significant growth in profitability during the period can be
attributed to the implementation of operational e ciency
initiatives across the business. Previously, hVIVO conducted only
one challenge trial at a time, which heightened the financial
impact of any cancellations or postponements. However, the Group
can now concurrently run multiple human challenge trials across its
facilities and has devised a flexible booking model with quarterly
slot assignments that provides greater adaptability. This
capability enables hVIVO to maintain high levels of occupancy at
its quarantine clinics, regardless of changes or delays in clients'
programs. This will be a key driver in improving EBITDA margins
from historical levels.
The increased throughput of challenge studies is supported by
the re--vamped FluCamp platform. Enhancements to the volunteer
recruitment system include the implementation of online
self--booking, online screening, and a new CRM to manage more e
ectively the database of volunteers. These technological upgrades,
in addition to the new London and Manchester volunteer screening
sites and greater utilisation of volunteers, have resulted in more
consistent lead generation through new and existing marketing
channels, as well as improved conversion rates. A considerable
number of volunteers recruited possess pre--existing immunity to
specific strains, and we now screen volunteers against multiple
challenge agents, significantly increasing the probability of
volunteers entering our challenge trials and improving volunteer
utilisation. These changes have been vital as hVIVO continues to
expand and deliver on its growth strategy.
Diversifying our services
hVIVO has continued to expand its revenue streams by o ering
additional services which can benefit our clients' clinical
development portfolios. Our full--service o ering is a unique
proposition that involves custom challenge agent manufacturing and
characterisation followed by a human challenge trial. This has
generated significant interest from both Big Pharma and biotechs,
especially as the global biopharma industry seeks to test vaccine
and antivirals against specific virus subtypes that are circulating
in the population.
In 2022, we launched our Malaria human challenge model and
completed the manufacture of an Omicron human challenge agent in Q1
2023. We are in discussions with a number of potential customers in
relation to these new models. The continued diversification of our
portfolio of challenge models will be a key market di erentiator,
consolidating our position as the world leader in challenge trials.
We plan to add more new models in 2023 and beyond to address
growing demand from new and existing customers.
We have also expanded our CRO service o ering, increasing sta
and facility utilisation at our clinical and laboratory facilities.
Our new clinical site services include utilising the upgraded
infrastructure at our Plumbers Row facility for single site or
multi--centre Phase II--III vaccine field trials. Our first
contract in this area was signed with a global pharma company in
2022. These studies enable us to leverage our valuable database of
volunteers who are ineligible to participate in human challenge
trials.
In addition, our laboratory services have been expanded by
increasing the volume of stand--alone laboratory services
contracts. We received the College of American Pathologists (CAP)
accreditation as part of our ongoing commitment to maintaining the
best--in--class quality systems. This key accreditation provides
additional quality assurances of our laboratory services for our
clients, particularly in the US, and has increased the
marketability of our laboratory services.
A long-term market focus - APAC
While our main client base remains in the US and Europe, we have
identified the Asia Pacific (APAC) region as a key long term market
focus. The APAC clinical market is growing rapidly, with nearly
8,000 clinical trials initiated in the APAC region in 2021, with
China being the main driver. At the start of 2023, the Group signed
its first human challenge trial contract with an APAC client in
over a decade, and this region remains a key focus for our BD team.
We will continue to capitalise on opportunities from the APAC
region.
Venn Life Sciences
The Venn Life Sciences subsidiary has demonstrated solid
performance in 2022, buoyed by ongoing robust relationships with
repeat customers. The team in Breda (Netherlands) has shown steady
growth across all disciplinary areas (CMC, Non--Clinical, Clinical,
QA). The Pharmacokinetics and Biomarker PM Services in particular
have experienced a strong business expansion by providing dedicated
services. The Paris team continues to deliver Data Management and
Biostatistics services to third--party customers, as well as
increasing collaboration on hVIVO's challenge studies. We are
excited by the cross--selling opportunities with hVIVO in the areas
of clinical site and laboratory services and seamless drug
development support service ("Bench--to--Bed") through our
expertise, making it attractive for clients to conduct hVIVO
challenge studies.
Summary
I am delighted to report that the Group's performance in 2022
exceeded expectations, with hVIVO delivering record growth numbers
across the board. I am very proud of our team's adaptability and
commitment to achieving these results despite the changes we have
implemented. The financial performance for 2022 is only beginning
to reflect the commitment of the team and the excitement we have as
we start this new journey.
Looking forward, it is critical to establish a long--term
sustainable growth model. A key forward looking metric is our
record contracted orderbook, with full visibility for the current
financial year and into H1 2024. I am confident that our improved
sales and operational strategies will enable us to address the
growing human challenge market. Our focus will be on marketing our
existing challenge models, developing new models and targeting new
markets, such as the APAC region. Furthermore, we will expand our
non--challenge work including clinical consulting in new areas such
drug--device combination and ATMP, as well as Laboratory Services
and Clinical Site Services.
I strongly believe that our operational model is now optimised
to deliver long-- term, sustainable growth and improved
profitability. As the world leader in the human challenge market,
we remain confident in our ability to deliver value for our
shareholders.
Yamin 'Mo' Khan
CEO
24 April 2023
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
-------------------------------------------------- ----------- -----------
Operations
Revenue, from contracts with customers 48,477 36,864
Other operating income 2,220 2,141
Direct project and administrative costs (41,625) (36,117)
--------------------------------------------------- ----------- -----------
EBITDA before exceptional items 9,072 2,888
Depreciation & amortisation (2,930) (2,565)
Exceptional items (119) 267
--------------------------------------------------- ----------- -----------
Operating profit 6,023 590
Finance income/(expense) 617 (215)
Share based payment charge - (27)
Impairment of investment in associate (6,957) -
Share of loss of associate using equity method (48) (71)
--------------------------------------------------- ----------- -----------
(Loss)/Profit before income tax (365) 277
Income tax (charge) (411) (351)
--------------------------------------------------- ----------- -----------
(Loss) for the year (776) (74)
--------------------------------------------------- ----------- -----------
(Loss) for the year is attributable to:
Shareholders (776) (74)
--------------------------------------------------- ----------- -----------
Other comprehensive income
Currency translation di erences 27 (111)
--------------------------------------------------- ----------- -----------
Total comprehensive (loss) for the year (749) (185)
--------------------------------------------------- ----------- -----------
Earnings per share from operations attributable
to shareholders during the year:
Basic and diluted (loss) per ordinary share
From operations (0.12p) (0.01p)
--------------------------------------------------- ----------- -----------
Earnings per share from operations attributable
to shareholders during the year:
Adjusted and diluted profit/(loss) per ordinary
share
From operations 0.90p (0.19p)
--------------------------------------------------- ----------- -----------
All activities relate to continuing operations.
Consolidated and Company's Statement of Financial Position
As at 31 December 2022
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------- ------- ------- -------
Assets
Non-current assets
Intangible assets 6,023 6,219 - -
Property, plant and equipment 1,513 927 - -
Investment in associates - 7,005 - -
Investments in subsidiaries - - 22,377 22,377
Right of use asset 1,610 2,788 - -
------------------------------- ------- ------- ------- -------
Total non-current assets 9,146 16,939 22,377 22,377
------------------------------- ------- ------- ------- -------
Current assets
Inventories 499 659 - -
Trade and other receivables 12,900 8,944 11,636 9,692
Current tax recoverable 391 38 15 10
Cash and cash equivalents 28,444 15,694 2,799 8,663
------------------------------- ------- ------- ------- -------
Total current assets 42,234 25,335 14,450 18,364
------------------------------- ------- ------- ------- -------
Total assets 51,380 42,274 36,827 40,741
------------------------------- ------- ------- ------- -------
Equity attributable to owners
Share capital 671 671 671 671
Share premium account 4 1 4 1
Merger reserves (6,856) (6,856) (2,241) (2,241)
Share based payment reserve 578 327 578 327
Foreign currency reserves 1,358 1,331 2,014 2,014
Retained earnings 24,463 25,206 35,438 36,767
------------------------------- ------- ------- ------- -------
Total equity 20,218 20,680 36,464 37,539
------------------------------- ------- ------- ------- -------
Liabilities
Non-current liabilities
Lease liabilities 737 863 - -
Leasehold provision 660 40 - -
------------------------------- ------- ------- ------- -------
Total non-current liabilities 1,397 903 - -
------------------------------- ------- ------- ------- -------
Current liabilities
Trade and other payables 28,869 18,396 363 3,202
Lease liabilities 826 1,991 - -
Leasehold provision 70 10 - -
Borrowings - 294 - -
------------------------------- ------- ------- ------- -------
Total current liabilities 29,765 20,691 363 3,202
------------------------------- ------- ------- ------- -------
Total liabilities 31,162 21,594 363 3,202
------------------------------- ------- ------- ------- -------
Total equity and liabilities 51,380 42,274 36,827 40,741
------------------------------- ------- ------- ------- -------
The notes following the financial statements are an integral
part of these financial statements.
The financial statements were approved and authorised for issue
by the Board on 24 April 2023.
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the parent Company's
Statement of Comprehensive Income. The loss for the parent Company
for the year was GBP1,362,000 (2021: loss of GBP1,522,000).
hVIVO Plc (formerly Open Orphan Plc)
Yamin Mo Khan - CEO Registered no: 07514939
Consolidated and Company's Statement of Changes in Shareholders'
Equity
Share Foreign
Share Share Merger Option currency Retained
capital premium reserve reserve reserve earnings Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ------- -------- ------- ------- -------- -------- -------
At 1 January 2021 731 44,480 (6,856) 493 1,442 (17,993) 22,297
Changes in equity for
the Year ended 31 Dec 2021
Loss for the year - - - - - (74) (74)
Currency di erences - - - - (111) - (111)
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Total comprehensive losses
for the year - - - - (111) (74) (185)
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Transactions with the
owners
Share based payment res. - - - (166) - 193 27
Shares issued 3 37 - - - - 40
Capital reduction (63) (44,516) - 44,579 -
Distribution in specie - - - - - (1,500) (1,500)
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Total contributions by
and distributions to owners (60) (44,479) - (166) - 43,272 (1,433)
---------------------------------- ------- -------- ------- ------- -------- -------- -------
At 31 December 2021 671 1 (6,856) 327 1,331 25,206 20,680
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Changes in equity for
the Year ended 31 Dec 2022
Loss for the year - - - - (776) (776)
Currency di erences - - - - 27 - 27
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Total comprehensive income/(loss)
for the year - - - - 27 (776) (749)
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Transactions with the
owners
Share based payment res. - - - 251 - 33 284
Shares issued - 3 - - - - 3
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Total contributions by
and distributions to owners - 3 - 251 - 33 287
---------------------------------- ------- -------- ------- ------- -------- -------- -------
At 31 December 2022 671 4 (6,856) 578 1,358 24,463 20,218
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Share Foreign
Share Share Merger option currency Retained
capital premium reserve reserve reserve earnings Total
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ------- -------- ------- ------- -------- -------- -------
At 1 January 2021 731 44,480 (2,241) 493 2,573 (4,983) 41,053
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Changes in equity for
the year ended 31 December
2021
Total comprehensive loss
for year - - - - - (1,522) (1,522)
Share based payment res. - - - (166) - 193 27
Currency di erences - - - - (559) - (559)
Shares issued 3 37 - - - - 40
Capital reduction (63) (44,516) - - - 44,579 -
Distribution in specie - - - - - (1,500) (1,500)
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Total contributions by
and distributions to owners (60) (44,479) - (166) (559) 41,750 (3,514)
---------------------------------- ------- -------- ------- ------- -------- -------- -------
At 31 December 2021 671 1 (2,241) 327 2,014 36,767 37,539
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Changes in equity for
the year ended 31 December
2021
Total comprehensive loss
for year - - - - - (1,362) (1,362)
Share based payment res. - - - 251 - 33 284
Shares issued - 3 - - - - 3
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Total contributions by
and distributions to owners - 3 - 251 - (1,329) (1,075)
---------------------------------- ------- -------- ------- ------- -------- -------- -------
At 31 December 2022 671 4 (2,241) 578 2,014 35,438 36,464
---------------------------------- ------- -------- ------- ------- -------- -------- -------
Consolidated and Company's Statement of Cash Flows
For the year ended 31 December 2022
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ------- ------- ------- -------
Cash Flow from operating activities
Continuing operations
Cash generated/(used) in operations 14,508 (539) (5,888) 680
Income tax (R & D) received 1,473 1,304 -
---------------------------------------- ------- ------- ------- -------
Net cash generated /(used) in
operating activities 15,981 765 (5,888) 680
---------------------------------------- ------- ------- ------- -------
Cash flow from investing activities
Investment in new subsidiary - - - (43)
Purchase of property, plant and
equipment (1,275) (329) - -
Purchase of intangible asset (87) (410) -
---------------------------------------- ------- ------- ------- -------
Net cash used in investing activities (1,362) (739) - (43)
---------------------------------------- ------- ------- ------- -------
Cash flow from financing activities
Lease payments (2,178) (2,329) - -
Proceeds from issuance of ordinary
shares & options 3 40 3 40
Exceptional Costs re RTO, spin
-- out & restructuring - (1,169) - (409)
Interest & FX gains received /(paid) 635 (21) 19 -
Stamp Duty re capital reduction - - - (7)
Repayment of Convertible Debenture
Security (294) (45) - (45)
---------------------------------------- ------- ------- ------- -------
Net cash (used)/generated by
financing activities (1,834) (3,524) 22 (421)
---------------------------------------- ------- ------- ------- -------
Net increase/(decrease) in cash
and cash equivalents 12,785 (3,498) (5,866) 216
Cash and cash equivalents at beginning
of year 15,694 19,205 8,663 8,689
FX translation (35) (13) 2 (242)
---------------------------------------- ------- ------- ------- -------
Cash and cash equivalents at
end of year 28,444 15,694 2,799 8,663
---------------------------------------- ------- ------- ------- -------
Notes to the Financial Statements
For the year ended 31 December 2022
1. Presentation of the financial statements
Description of business
hVIVO Plc (formerly Open Orphan Plc) is a rapidly growing
specialist CRO pharmaceutical services group of companies which is
the world leader in the testing of vaccines and antivirals using
human challenge clinical trials. The Group has a presence in the
UK, Ireland, France and Netherlands.
Its parent company hVIVO Plc is a company incorporated in
England and Wales. The Company is a public limited company, limited
by shares, listed on the AIM market of the London Stock Exchange
and on Euronext Growth in Dublin.
Basis of preparation
The financial statements have been prepared in accordance with
the Group's accounting policies approved by the Board, 'Critical
accounting estimates and judgements. The preparation of the
financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that a ect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could di er from those estimates.
The financial statements have been prepared in accordance with
UK adopted international accounting standards ("IFRS"), and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRSFigures are presented in GBP000s.
Parent company financial statements
The financial statements of the parent company, hVIVO plc, have
been prepared in accordance with IFRS and with UK accounting
presentation.
Composition of financial statements
The consolidated financial statements are drawn up in GBPGBP,
the functional currency of hVIVO plc, and in accordance with IFRS
accounting presentation. The financial statements comprise:
-- Consolidated statement of comprehensive income
-- Consolidated statement of financial position
-- Consolidated statement of changes in equity
-- Consolidated cash flow statement
-- Notes to the financial statements
Composition of the Group
The Group comprises hVIVO Plc (formerly Open Orphan Plc) and its
subsidiary companies.
Financial period
These financial statements cover the financial year from 1
January to 31 December 2022, with comparative figures for the
financial year from 1 January to 31 December 2021.
Accounting principles and policies
Going Concern
The financial statements have been prepared using the historical
cost convention modified by the revaluation of certain items, as
stated in the accounting policies, and on a going concern basis.
The Directors consider the use of the going concern basis to be
appropriate given the significant cash reserves at year end and
strong contracted order book. The Directors have prepared working
capital projections which show that the Group & Company will be
able to continue as a going concern.
2. Summary of significant accounting policies
Consolidation
The consolidated financial statements include:
-- the assets and liabilities, the results and cash flows, of
the Company and its subsidiaries.
-- the Group's share of the results and net assets of associates.
-- the Group's share of assets, liabilities, revenue and expenses of associates.
Entities over which the Group has the power to direct the
relevant activities so as to a ect the returns to the Group,
generally through control over the financial and operating
policies, are accounted for as subsidiaries. Where the Group has
the ability to exercise significant influence over entities, they
are accounted for as associates. The results and assets and
liabilities of associates are incorporated into the consolidated
financial statements using the equity method of accounting. The
assets, liabilities, revenue and expenses of associates are
included in the consolidated financial statements in accordance
with the Group's rights and obligations. Interests acquired in
entities are consolidated from the date the Group acquires control
and interests sold are de -- consolidated from the date control
ceases.
Transactions and balances between subsidiaries are eliminated
and no profit before tax is taken on sales between subsidiaries
until the products are sold to customers outside the Group. The
relevant proportion of profits on transactions with associates is
also deferred until the products are sold to third parties.
Transactions with non -- controlling interests are recorded
directly in equity. Deferred tax relief on unrealised intra --
Group profit is accounted for only to the extent that it is
considered recoverable.
New accounting requirements
Amendments to accounting standards issued by the IASB and
adopted in the year ended 31 December 2022 did not have a material
impact on the results or financial position of the Group. Certain
new accounting standards, amendments to accounting standards and
interpretations have been published that are not mandatory for 31
December 2022 reporting periods and have not been adopted early by
the Group. These standards, amendments and interpretations are not
expected to have a material impact on the results or financial
position of the Group in future reporting periods.
Business combinations
The Group uses the acquisition method of accounting to account
for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred, and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration agreement. Acquisition related costs are expensed as
incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. On
an acquisition by acquisition basis, the Group recognises any non
-- controlling interest in the acquiree either at fair value or at
the non -- controlling interest's proportionate share of the
acquiree's net assets.
The excess of the consideration transferred, the amount of any
non -- controlling interest in the acquiree and the acquisition
date fair value of any previous equity interest in the acquiree
over the fair value of the Group's share of the identifiable net
assets acquired is recorded as goodwill. If this is less than the
fair value of the net assets of the subsidiary acquired in the case
of a bargain purchase, the di erence is recognised directly in the
Statement of Comprehensive Income.
Investments in subsidiaries are accounted for at cost less
impairment. Cost is adjusted to reflect changes in consideration
arising from contingent consideration amendments.
Associates
Associates are all entities over which the group has significant
influence but not control or joint control as defined under IAS28.
Investments in associates are accounted for using the equity method
of accounting (see equity method below), after initially being
recognised at cost less any fair value adjustment.
Equity Method:
Under the equity method of accounting, the investments are
initially recognised at cost and adjusted thereafter to recognise
the group's share of the post -- acquisition profits or losses of
the investee in profit or loss, and the group's share of movements
in other comprehensive income of the investee in other
comprehensive income. Dividends received or receivable from
associates are recognised as a reduction in the carrying amount of
the investment.
When the group's share of losses in an equity -- accounted
investment equals or exceeds its interest in the entity, including
any other unsecured long -- term receivables, the group does not
recognise further losses, unless it has incurred obligations or
made payments on behalf of the other entity. Unrealised gains on
transactions between the group and its associates are eliminated to
the extent of the group's interest in these entities. Unrealised
losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred.
Accounting policies of equity accounted investees have been
changed where necessary to ensure consistency with the policies
adopted by the group. The carrying amount of equity -- accounted
investments is tested for impairment.
Foreign currency translation
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the functional
currency). The consolidated financial statements are presented in
GBPGBP, which is the functional and presentation currency of the
main operating entities.
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions where items are re -- measured. Foreign exchange gains
and losses resulting from the settlement of such transactions and
from the translation at year -- end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in the Statement of Comprehensive Income within 'direct
project and administrative expenses', except when deferred in other
comprehensive income as qualifying cash flow hedges and qualifying
net investment hedges.
The results and financial position of all the Group entities
(none of which has the currency of a hyper -- inflationary economy)
that have a functional currency di erent from the presentation
currency are translated into the presentational currency as
follows:
-- assets and liabilities presented are translated at the
closing rate at the date of that reporting period;
-- income and expenses are translated at average exchange rates; and
-- all resulting exchange di erences are recognised in other comprehensive income.
On consolidation, exchange di erences arising from the
translation of the net investment in foreign operations are taken
to other comprehensive income. When a foreign operation is
partially disposed of or sold, exchange di erences that were
recorded in equity are recognised in the Statement of Comprehensive
Income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal monthly management reporting provided to the chief
operating decision -- makers. The chief operating decision --
makers ("CODM"), who are responsible for allocating resources and
assessing performance of the operating segments, have been
identified as the Executive Directors and Non -- Executive Chairman
who make strategic decisions.
The first principal activity of the Group is conducting human
challenge trials and related laboratory services in London though
the hVIVO Services subsidiary. This work is supported by our second
principal activity, which is providing a suite of consulting and
early clinical trial services to pharmaceutical, biotechnology and
medical device organisations, in London and also in Paris and Breda
though Venn Life sciences Biometry Services, Venn Life Sciences Ltd
and Venn Life Sciences ED B.V.
Previously the Group reported results under two segments, hVIVO
and Venn but as the Group has become more integrated, internal
management reporting provided to the CODM is on a consolidated
basis. As many of our business contracts are multi -- country
contracts, pulling resources from many di erent locations, the CODM
considers the group to be one business unit.
Management therefore considers both operating segments to form
one reporting segment for disclosure purposes.
Revenue
Revenue from contracts
The Group enter into fixed -- price and multi -- service
contracts with customers. Revenue from contracts with customers is
recognised at an amount that reflects the consideration to which
the Group expects to be entitled in exchange for the goods or
services and is shown net of Value Added Tax. Revenue is recognised
based on the actual service provided to the end of the reporting
period as a proportion of the total services to be provided because
the customer receives and uses the benefits simultaneously. This is
determined by labour hours incurred to the period end as a
percentage of the total estimated labour hours for the contract or
as considered recoverable in respect of each individual performance
obligation.
Payment terms tend to vary between 30 and 90 days.
Provisions for losses to be incurred on contracts are recognised
in full in the period in which it is determined that a loss will
result from the performance of the contractual arrangement.
The di erence between the amount of revenue from contracts with
customers recognised and the amount invoiced on a particular
contract is included in the statement of financial position as
deferred income. Amounts become billable in advance upon the
achievement of certain milestones, in accordance with pre -- agreed
invoicing schedules included in the contract or on submission of
appropriate detail. Any cash payments received as a result of this
advance billing are not representative of revenue earned on the
contract as revenues are recognised over the period during which
the specified contractual obligations are fulfilled. Amounts
included in deferred income are expected to be recognised within
one year and are included within current liabilities.
In the event of contract termination, if the value of work
performed and recognised as revenue from contracts with customers
is greater than aggregate milestone billings at the date of
termination, cancellation clauses provide for the Group to be paid
for all work performed to the termination date.
Other operating income (mainly research & development tax
credits/R&D tax credits)
R&D tax credits are multi -- government backed tax incentive
that allows companies to claim back some of the costs they have
incurred on research, development and innovation. These are non
taxable and involve high level of management judgement.
Interest income
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the e ective interest rate
applicable.
Exceptional items
These are items of an unusual or non -- recurring nature
incurred by the Group and include transactional costs and one -- o
items relating to business combinations, such as acquisition
expenses, restructuring and redundancy costs.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less
accumulated depreciation and any provision for impairment.
Historical cost includes expenditure that is directly attributable
to the acquisition of the asset and bringing the asset to its
working condition for its intended use.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only where it is
probable that future economic benefits associated with the asset
will flow to the Group and the cost of the asset can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the Statement of
Comprehensive Income during the financial period in which they are
incurred. Any borrowing costs associated with qualifying property,
plant and equipment are capitalised and depreciated at the rate
applicable to that asset category.
Depreciation on assets is calculated using the straight -- line
method or reducing balances method to allocate their cost to its
residual values over their estimated economic useful lives, as
follows:
Leasehold Improvements the shorter of five years or the life of the lease
Plant & Machinery four years
Fixtures and fittings three to five years
The assets' residual values and useful economic lives are
reviewed regularly, and adjusted if appropriate, at the end of each
reporting period.
An asset's carrying value is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on the disposal of assets are determined by
comparing the proceeds with the carrying amount and are recognised
in direct project administration expenses in the Statement of
Comprehensive Income.
Intangible assets
(a) Goodwill
Goodwill represents the excess amount of the cost of an
acquisition over the fair value of the Group's share of the net
identifiable assets of the acquired underlying businesses at the
date of the acquisition. Goodwill on acquisitions of businesses is
included in intangible assets. In normal cases goodwill has an
indefinite useful life and is tested annually for impairment and
carried at cost less accumulated impairment losses. Impairment
losses on goodwill are not reversed. Gains and losses on the
disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash -- generating units for the
purpose of impairment testing. The allocation is made to those cash
-- generating units or groups of cash -- generating units that are
expected to benefit from the business combination in which the
goodwill arose.
(b) Intellectual property rights
Intellectual property rights relate to patents acquired by the
Group. Amortisation is calculated using the straight -- line method
over the expected life of no more than 10 years and is charged to
direct project and administrative expenses in the Statement of
Comprehensive Income.
(c) Capitalised Software development and wearables
development
Internally generated intangible assets involving research and
development expenditure.
Expenditure on research activities is recognised as an expense
in the period in which it is incurred. Development costs are
capitalised when the related products meet the recognition criteria
of an internally generated intangible asset, the key criteria being
as follows:
-- technical feasibility of the completed intangible asset has been established;
-- it can be demonstrated that the intangible asset will
generate probable future economic benefits;
-- adequate technical, financial and other resources are
available to complete the development;
-- the expenditure attributable to the intangible asset can be reliably measured; and
-- management has the ability and intention to use or sell the intangible asset.
Expenses for research and development include associated wages
and salaries, material costs, depreciation on non -- current assets
and directly attributable overheads. Development costs recognised
as assets are amortised over their expected useful life.
Impairment of non-financial assets
Assets that have an indefinite life such as Goodwill are not
subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation are reviewed for impairment
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 carrying amount exceeds its
recoverable amount.
The recoverable amount is the higher of an asset's fair value
less costs to sell and value in use. 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 which the estimates of future cash flows have not been
adjusted.
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows. Impairment losses recognised for cash -- generating units,
to which Goodwill has been allocated, are credited initially to the
carrying amount of Goodwill. Any remaining impairment loss is
charged pro rata to the other assets in the cash -- generating
unit.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash -- generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash -- generating unit) in the prior period. A
reversal of an impairment loss is recognised in the Statement of
Comprehensive Income immediately. If Goodwill is impaired however,
no reversal of the impairment is recognised in the financial
statements.
Investments in associates
Investments in associates are carried in the Consolidated
Statement of Financial Position at the Group's share of their net
assets at date of acquisition and of their post -- acquisition
retained profits or losses and other comprehensive income together
with any goodwill arising on the acquisition. The Group recognises
the assets, liabilities, revenue and expenses of joint operations
in accordance with its rights and obligations.
As of 31 December 2022, in view of little progress made to move
either of Imutex's portfolio towards commercialisation, management
does not consider carrying value of the investment in Imutex
Limited of GBP6.9m supported. Full impairment is therefore
considered appropriate.
Right of use assets
The Group recognises right of use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right of use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right of use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless the
Group is reasonably certain to obtain ownership of the leased asset
at the end of the lease term, the recognised right of use assets is
depreciated on a straight -- line basis over the shorter of its
estimated useful life and the lease term.
Short-term leases and leases of low-value assets
The Group applies the short -- term lease recognition exemption
to its short -- term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option). It also
applies the lease of low -- value assets recognition exemption to
leases of o ce equipment that are considered of low value (i.e.,
below $5,000). Lease payments on short -- term leases and leases of
low -- value assets are recognised as expense on a straight -- line
basis over the lease term.
Inventories
Inventories are reported at the lower of cost (purchase price
and/or production cost) and net realisable value. Net realisable
value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and applicable
variable selling expenses.
Financial instruments
Financial assets
The financial assets of the group consist of trade receivables,
accrued income, cash and other receivables. Financial assets are
measured at amortised cost, fair value through other comprehensive
income or fair value through profit or loss. The measurement basis
is determined by reference to both the business model for managing
the financial asset and the contractual cash flow characteristics
of the financial asset. A lifetime expected credit loss (ECL)
allowance is recorded on initial recognition of a financial asset.
If there is subsequent evidence of a significant increase in the
credit risk of an asset, the allowance is increased to reflect the
full lifetime ECL. If there is no realistic prospect of recovery,
the asset is written o . ECLs are recognised in the Statement of
Comprehensive Income.
Cash and cash equivalents
Cash and short -- term deposits in the Statement of Financial
Position comprise cash at bank and in hand and short -- term
deposits with an original maturity of less than three months,
reduced by overdrafts to the extent that there is a right of o set
against other cash balances.
Financial liabilities
The financial liabilities of the group consist of trade
payables, accrued expenses, lease liabilities, and borrowings.
Financial liabilities are classified as financial liabilities at
fair value through profit or loss, loans and borrowings, payables,
or as derivatives designated as hedging instruments in an e ective
hedge, as appropriate.
Borrowings
Borrowings are recognised initially at the fair value of
proceeds received, net of transaction costs incurred. Borrowings
are subsequently carried at amortised cost. Borrowings are
classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at
least 12 months after the reporting period date.
Borrowing costs are expensed in the consolidated Statement of
Comprehensive Income under the heading 'finance costs'. Arrangement
and facility fees together with bank charges are charged to the
Statement of Comprehensive Income under the heading 'direct project
and administrative costs'.
Current and deferred income tax
The tax expense comprises current and deferred tax. Tax is
recognised in the Statement of Comprehensive Income, except to the
extent that it relates to items recognised in other comprehensive
income where the associated tax is also recognised in other
comprehensive income.
The current income tax charge is calculated on the basis of the
tax laws enacted at the reporting period date in the countries
where the Company and its subsidiaries operate and generate taxable
income. Management evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject
to interpretation and establishes provisions where appropriate on
the basis of amounts expected to be paid to the tax
authorities.
Deferred tax assets are recognised for all deductible temporary
di erences, carry -- forward of unused tax assets and tax losses,
to the extent that they are regarded as recoverable. They are
regarded as recoverable where, on the basis of available evidence,
there will be su cient taxable profits against which the future
reversal of the underlying temporary di erences can be
deducted.
The carrying value of the amount of deferred tax assets is
reviewed at each reporting period date and reduced to the extent
that it is no longer probable that su cient taxable profit will be
available to allow all, or part, of the tax asset to be
utilised.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on the tax rates (and
tax laws) that have been substantively enacted at the reporting
period date.
Deferred income tax assets and liabilities are o set when there
is a legally enforceable right to o set current tax assets against
current tax liabilities and when the deferred income tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or di erent taxable entities
where there is an intention to settle the balances on a net
basis.
Share capital
Ordinary Shares and Deferred shares are classified as equity.
Proceeds in excess of the nominal value of shares issued are
allocated to the share premium account and are also classified as
equity. Incremental costs directly attributable to the issue of new
Ordinary Shares or options are deducted from the share premium
account.
Merger reserve
The reserve represents a premium on the issue of the ordinary
shares for the acquisition of subsidiary undertakings. The relief
is only available to the issuing company securing at least a 90%
equity holding in the acquired undertaking in pursuance of an
arrangement providing for the allotment of equity shares in the
issuing company on terms that the consideration for the shares
allotted is to be provided by the issue to the issuing company of
equity shares in the other company.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in -- substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating a lease, if the
lease term reflects the Group exercising the option to terminate.
The variable lease payments that do not depend on an index or a
rate are recognised as expense in the period on which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group
uses the incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the in --
substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
Employee benefits
Pension obligations
Group companies operate a pension scheme with defined
contribution plans, under which the Group pays fixed contributions
into a separate entity with the pension cost charged to the
Statement of Comprehensive Income as incurred.
The Group has no further obligations once the contributions have
been paid.
Share-based payment
Where equity settled share options and warrants are awarded to
Directors and employees, the fair value of the options and warrants
at the date of grant is charged to the consolidated statement of
comprehensive income over the vesting period and the corresponding
entry recorded in the share -- based payment reserve. Non -- market
vesting conditions are reflected by adjusting the number of equity
instruments expected to vest at each reporting date so that, the
cumulative amount recognised over the vesting period is based on
the number of options that eventually vest.
Leasehold provision
Provisions for dilapidations and onerous lease commitments are
recognised when the Group has a present or constructive obligation
as a result of past events. The recognition of a provision requires
management to make best estimates of the consideration required to
settle the present obligation at the end of the reporting period,
reflecting the risks and uncertainties surrounding the obligation.
There is reasonable uncertainty around the likelihood and timing of
the exit of the lease as negotiations will involve third
parties.
3. Expenses - analysis by nature
The following items have been included in operating profit:
2022 2021
GBP'000 GBP'000
---------------------------------------------------- ------- -------
Employee benefit expense 18,081 15,897
Other expenses 23,544 20,220
---------------------------------------------------- ------- -------
Total direct project and administrative costs 41,625 36,117
---------------------------------------------------- ------- -------
Also included within operating profit are the below
depreciation and amortisation charges:
PPE Depreciation and amortisation 999 523
Depreciation related to Right of use Assets 1,931 2,039
---------------------------------------------------- ------- -------
Also included within operating profit are exceptional items as
shown below:
2022 2021
GBP'000 GBP'000
------------------------------------------------------- ------- -------
Exceptional items include:
- Transaction costs relating to business combinations,
acquisitions & Re -- organisations 119 923
- Transaction gain relating to Capital Reduction and
spin out - (1,190)
------------------------------------------------------- ------- -------
Total exceptional items 119 (267)
------------------------------------------------------- ------- -------
Services provided by the Company's auditor and its associates.
During the year the Group (including its overseas subsidiaries)
obtained the following services from the Company's auditor and its
associates:
2022 2021
GBP'000 GBP'000
-------------------------------------------------------------- ------- -------
Fees payable to Company's auditor for the audit of
the parent Company and consolidated financial statements 52 38
Fees payable to Company's auditor for the audit of
subsidiaries and their consolidated financial statements 37 39
-------------------------------------------------------------- ------- -------
Total paid to the Company auditor 89 77
-------------------------------------------------------------- ------- -------
Fees payable to the auditors of subsidiaries for services:
- The audit of Company's subsidiaries pursuant to legislation
paid to other auditors 55 62
- Other services paid to other auditors 1 7
- Tax services paid to other auditors 2 11
-------------------------------------------------------------- ------- -------
Total paid to other auditors 58 80
-------------------------------------------------------------- ------- -------
Total auditor's remuneration 147 157
-------------------------------------------------------------- ------- -------
4. Directors' emoluments
2022 2021
GBP'000 GBP'000
---------------------------------------------------- ------- -------
Aggregate emoluments 995 526
Social Security Costs 119 62
Contribution to defined contribution pension scheme 42 17
---------------------------------------------------- ------- -------
Total Directors' remuneration 1,156 605
---------------------------------------------------- ------- -------
See further disclosures within the Report of the Remuneration
Committee.
2022 2021
Highest paid Director GBP'000 GBP'000
------------------------------------ ------- -------
Total emoluments received 518 172
Defined contribution pension scheme 27 17
------------------------------------ ------- -------
A Long -- Term Incentive Plan ("LTIP") was agreed with the
highest paid director during the year. No options were exercised
during the year by the highest paid director.
5. Employee benefit expense
2022 2021
GBP'000 GBP'000
------------------------------- ------- -------
Wages and salaries 15,077 13,179
Social security costs 2,100 1,846
Pension costs 904 872
------------------------------- ------- -------
Total employee benefit expense 18,081 15,897
------------------------------- ------- -------
6. Average number of people employed
2022 2021
No No
--------------------------------------------------------- ---- ----
Average number of people (including Executive Directors)
employed was:
Administration 43 38
Clinical research 161 172
Sales and marketing 6 8
--------------------------------------------------------- ---- ----
Total average number of people employed 210 218
--------------------------------------------------------- ---- ----
Monthly weighted average used in above calculation.
7. Finance income and costs
2022 2021
GBP'000 GBP'000
----------------------------------------------------- ------- -------
Interest expense:
- Interest on Lease liabilities (133) (227)
- Interest on other loans 1 7
----------------------------------------------------- ------- -------
Finance costs (132) (220)
----------------------------------------------------- ------- -------
Finance income
- FX gain on sales & expenses 613 -
- Interest income on cash and short -- term deposits 136 5
----------------------------------------------------- ------- -------
Finance income 749 5
----------------------------------------------------- ------- -------
Net finance income/(expense) 617 (215)
----------------------------------------------------- ------- -------
8. Income tax expense
2022 2021
Group GBP'000 GBP'000
------------------------------------------------- ------- -------
Current tax:
Current year research and development tax charge 352 350
Current year other 50 -
Current year hVIVO Inc US tax charge 9 6
------------------------------------------------- ------- -------
Total current tax charge 411 356
------------------------------------------------- ------- -------
Deferred tax (note 20):
Origination and reversal of temporary di erences - (5)
------------------------------------------------- ------- -------
Total deferred tax - (5)
------------------------------------------------- ------- -------
Income tax charge 411 351
------------------------------------------------- ------- -------
The income tax charge on the Group's results before tax di ers
from the theoretical amount that would arise using the standard tax
rate applicable to the profits of the consolidated entities as
follows:
2022 2021
GBP'000 GBP'000
---------------------------------------------------- ------- -------
(Loss)/Profit before tax (365) 277
---------------------------------------------------- ------- -------
Tax calculated at domestic tax rates applicable to
UK standard rate of tax of 19.00% (2021: 19%) (69) 53
Tax e ects of:
- Expenses not deductible for tax purposes 1,488 168
- VLS Germany tax risk on liquidation 51 -
- Current Year R & D Tax (credit) (194) (108)
- Temporary timing di erences (153) (182)
- Adjustments in respect of prior year 33 37
- Additional allowances deductible for tax purposes 125 (79)
- Losses carried forward (870) 462
---------------------------------------------------- ------- -------
Income tax charge 411 351
---------------------------------------------------- ------- -------
There are no tax e ects on the items in the Statement of
Comprehensive Income.
9. Earnings/(Losses) per share
(a) Basic
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year.
2022 2021
GBP'000 GBP'000
---------------------------------------------------- ----------- -----------
Losses for the year (776) (74)
---------------------------------------------------- ----------- -----------
Total (776) (74)
---------------------------------------------------- ----------- -----------
Weighted average number of Ordinary Shares in issue 670,943,918 670,187,313
Losses per share from operations (0.12p) (0.01p)
---------------------------------------------------- ----------- -----------
(b) Adjusted
Adjusted Profit/(Loss) per share is calculated by dividing the
Profit/(Loss) attributable to equity holders of the Company
excluding one -- o large non -- recurring items by the weighted
average number of ordinary shares in issue during the year. In 2022
the impairment of the investment in Imutex is excluded. In 2021 the
net gain on the spin out of the Pilau license asset is
excluded.
2022 2021
GBP'000 GBP'000
---------------------------------------------------- ----------- -----------
Losses for the year (776) (74)
Add back Imutex impairment (2022) / Deduct net gain
re Pilau (2021) 6,957 (1,190)
Adjusted profit/(Loss) for the year 6,181 (1,264)
---------------------------------------------------- ----------- -----------
Total 6,181 (1,264)
---------------------------------------------------- ----------- -----------
Weighted average number of Ordinary Shares in issue 670,943,918 670,187,313
Earnings/(loss) per share from operations 0.92p (0.19p)
---------------------------------------------------- ----------- -----------
(c) Diluted Basic
Due to the losses in the periods the e ect of the share options
and warrants noted below were considered to be anti --
dilutive.
2022 2021
------------------------------------ ---------- ----------
Potential dilutive ordinary shares:
Options 15,502,029 8,393,213
Warrants 2,264,427 2,264,427
------------------------------------ ---------- ----------
Total 17,766,456 10,657,640
------------------------------------ ---------- ----------
(d) Diluted Adjusted
Due to adjusted losses in the prior year the e ect of the share
options and warrants noted above were considered to be anti --
dilutive.
2022 2021
GBP'000 GBP'000
------------------------- ------- -------
Earning/(loss) per share 0.90p (0.19p)
------------------------- ------- -------
10. Property, plant and equipment
Fixtures
Leasehold Plant & & 2022 2021
Improvements Machinery Fittings Total Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------ --------- -------- ------- -------
Cost
At 1 January 2022 842 2,507 1,111 4,460 5,770
Additions 450 540 286 1,276 329
Disposals - (90) - (90) (1,620)
Exchange di erences - - 44 44 (19)
------------------------ ------------ --------- -------- ------- -------
At 31 December 2022 1,292 2,957 1,441 5,690 4,460
------------------------ ------------ --------- -------- ------- -------
Depreciation
At 1 January 2022 706 2,141 686 3,533 4,702
Charge for the year 333 166 217 716 406
Elimination on disposal - (90) - (90) (1,555)
Exchange di erences - - 18 18 (20)
------------------------ ------------ --------- -------- ------- -------
At 31 December 2022 1,039 2,217 921 4,177 3,533
------------------------ ------------ --------- -------- ------- -------
Net book value
At 31 December 2022 253 740 520 1,513
------------------------ ------------ --------- -------- -------
At 31 December 2021 136 366 425 927
------------------------ ------------ --------- -------- -------
The Company had no property, plant and equipment at 31 December
2022 (2021: Nil).
13. Intangible fixed assets
Pref right 2021
Software to WBS 2022
reserve Total
Goodwill development slot development Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP.000
-------------------- -------- ----------- ---------- ----------- ------- -------
Cost
At 1 January 2022 7,228 2,199 274 411 10,112 9,701
Additions - 87 - - 87 411
-------------------- -------- ----------- ---------- ----------- ------- -------
At 31 December 2022 7,228 2,286 274 411 10,199 10,112
-------------------- -------- ----------- ---------- ----------- ------- -------
Amortisation
At 1 January 2022 1,628 2,173 92 - 3,893 3,801
Charge for the year - 19 182 82 283 92
-------------------- -------- ----------- ---------- ----------- ------- -------
At 31 December 2022 1,628 2,192 274 82 4,176 3,893
-------------------- -------- ----------- ---------- ----------- ------- -------
Net book value
At 31 December 2022 5,600 94 - 329 6,023
-------------------- -------- ----------- ---------- ----------- ------- -------
At 31 December 2021 5,600 26 182 411 6,219
-------------------- -------- ----------- ---------- ----------- ------- -------
Goodwill was allocated to the Group's single cash -- generating
unit (CGU) identified according to a single operating segment.
2022 2021
GBP'000 GBP'000
------------ ------- -------
hVIVO Group 5,600 5,600
------------ ------- -------
Goodwill is tested for impairment at the Statement of Financial
Position date. The recoverable amount of goodwill at 31 December
2022 was assessed at GBP5,600,000 (2021: GBP5,600,000) on the basis
of value in use. An impairment loss was not recognised as a result
of this review.
The key assumptions in the calculation to assess value in use
are the future revenues and the ability to generate future cash
flows. The most recent financial results and forecast approved by
management for the next two years were used followed by an
extrapolation of expected cash flows at a constant growth rate for
a further seven years. The projected results were discounted at a
rate which is a prudent evaluation of the pre -- tax rate that
reflects current market assessments of the time value of money and
the risks specific to the cash -- generating units.
The key assumptions used for value in use calculations in 2022
were as follows:
Longer -- term growth rate (from 2023 onwards) 7.5%
Discount rate 15%
----------------------------------------------- ----
The impairment review is prepared on the group basis rather than
a single unit basis.
The Directors have performed a sensitivity analysis to assess
the impact of downside risk of the key assumptions underpinning the
projected results of the Group. The projections and associated
headroom used for the group is sensitive to the EBITDA growth
assumptions that have been applied.
The Company has no intangible assets.
11a. Investments in subsidiaries
2022 2021
Company GBP'000 GBP'000
----------------------------------------------------------- ------- -------
Shares in Group undertakings
At 1 January 22,377 22,334
Transfer of services, knowhow and assets from Venn
Life Sciences (VLS) France S.A.S to VLS Biometry Services
S.A.S - 43
----------------------------------------------------------- ------- -------
At 31 December 22,377 22,377
----------------------------------------------------------- ------- -------
Investments in Group undertakings are recorded at cost, which is
the fair value of the consideration paid. Following review an
impairment provision of Nil (2021: Nil) has been made to the
investment in subsidiaries.
VLS Biometry Services S.A.S, a new subsidiary in France,
acquired from VLS France S.A.S all of their advisory services and
global services to enterprises for the integration of computer,
statistics, data management techniques, study design and
methodology. The assets sold included the benefit and the liability
of all on -- going contracts and agreements in relation with the
activity, and the various contracts concluded with the customers
and suppliers.
VLS France S.A.S subsequently ceased trading.
The subsidiaries of hVIVO Plc (formerly Open Orphan Plc) are as
follows:
100% direct/
Active/ indirect Country of
Name of Company Dormant shareholding Registration Nature of business
------------------------- -------- ------------- --------------- ------------------------
hVIVO Holdings Limited Active Direct England & Wales Intermediate holding
(formerly hVIVO Limited) company
hVIVO Services Limited Active Indirect England & Wales Viral challenge and
related laboratory
services
hVIVO INC Active Indirect USA Sales & marketing
services
Venn Life Sciences Active Direct Netherlands Pre -- clinical &
ED B.V early clinical research
services
Venn Life Science Active Direct France Data management &
Biometry Services statistics services
S.A.S
Open Orphan DAC Active Direct Ireland Group services company
Venn Life Sciences Active Direct Ireland Intermediate holding
Limited company
Venn Life Sciences Dormant Direct Germany Clinical research
(Germany) Gmbh organisation
Venn Life Sciences Dormant Direct France Data management &
(France) S.A.S randomisation systems
------------------------- -------- ------------- --------------- ------------------------
All the subsidiaries are included in the consolidation. The
proportions of voting shares held by the parent Company do not di
er from the proportion of Ordinary Shares held.
11b. Investments in associates
The group, via its holding in hVIVO Holdings Limited, has
investments in two associated companies as follows:
Name of Company Country of Registration Nature of Business
------------------------ ----------------------- --------------------
Imutex Limited(1) England & Wales Clinical development
PrEP Biopharm Limited(2) England & Wales Clinical development
------------------------ ----------------------- --------------------
(1) hVIVO Holdings Limited owns 49% of the Ordinary Shares and
after adjusting for share of loss in 2022 of GBP48,000. the
investment was fully impaired and is valued at Nil at 31 December
2022 (2021: GBP7,005,000).
(2) hVIVO Holdings Limited owns 62.62% of Ordinary Shares. In
2018 the carrying value was fully impaired so the investment has a
value of Nil at 31 December 2022.
12. Inventories
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------- ------- ------- -------
Beginning of the year 659 953 - -
Laboratory and clinical consumables
-- movement 38 (92) - -
Virus - movement (198) (202) - -
------------------------------------ ------- ------- ------- -------
End of the year 499 659 - -
------------------------------------ ------- ------- ------- -------
Inventories expensed in the consolidated Statement of
Comprehensive income are shown within direct project and
administrative costs. All inventories are carried at the lower of
cost or net realisable value in the consolidated statement of
financial position. No provision against inventories was required
during 2022.
13. Trade and other receivables
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ------- ------- ------- -------
Trade receivables 8,276 4,774 - -
Prepayments 992 855 346 335
Accrued income 1,505 1,008 - -
Amounts owed by subsidiary undertakings - - 11,280 9,356
Other receivables (incl. R& D tax
credits) 2,127 2,307 10 1
---------------------------------------- ------- ------- ------- -------
Total 12,900 8,944 11,636 9,692
---------------------------------------- ------- ------- ------- -------
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
The majority of the Group's contracts are based on milestone
payments and the Group seeks to ensure that contract milestones are
timed to result in invoicing occurring in advance where at all
possible, prior to the satisfaction of performance obligations.
Therefore, projects that are in progress are typically in a
deferred income position. However, some smaller contracts are on a
time and materials basis and consequently work is undertaken
initially and invoiced subsequently, and this gives rise to the
accrued income balance noted above. The costs incurred to obtain or
fulfil a contract which has been recognised as accrued income have
been determined with reference to labour hours incurred to the
period end as a percentage of the total estimated labour hours to
complete specified performance obligations as stipulated by the
relevant contracts. Accrued income is not amortised as it is of a
short -- term nature.
Contractual payment terms are typically 30 to 90 days from date
of invoice.
The carrying amounts of the Group's trade and other receivables
denominated in all currencies were as follows:
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- ------- -------
GBPGBP 9,553 6,746 632 1,467
Euro 2,066 2,198 11,004 8,225
USD$ 1,281 - - -
------- ------- ------- ------- -------
Total 12,900 8,944 11,636 9,692
------- ------- ------- ------- -------
14. Trade and other payables
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ------- ------- ------- -------
Trade payables 2,701 2,055 105 306
Amounts due to subsidiary undertakings - - - 2,761
Social security and other taxes 738 857 50 13
Other payables 718 436 - 2
Accrued expenses 3,946 1,856 208 120
Deferred income 20,766 13,192 - -
--------------------------------------- ------- ------- ------- -------
28,869 18,396 363 3,202
--------------------------------------- ------- ------- ------- -------
All balances are due within 1 year.
The Group seeks to ensure that study contract milestones are
timed to result in invoicing occurring in advance where at all
possible, prior to the satisfaction of performance obligations.
Therefore, projects that are in progress are typically in a
contract liability position which gives rise to the deferred income
balance above. Performance obligations of contracts with customers
are satisfied on the delivery of study data to the customer along
with a final study report. Due to the nature of the business, there
are no warranties or refunds expected or provided for.
The Group is using the practical expedient not to adjust the
amount of consideration for the e ects of a significant financing
component as the period between when the promised services are
transferred and when the customer pays for the service is less than
twelve months.
15. Borrowings
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ------- ------- ------- -------
Current - falling due within 1 year
Convertible debenture securities ("CDS") - 294 - -
----------------------------------------- ------- ------- ------- -------
Total borrowings - 294 - -
----------------------------------------- ------- ------- ------- -------
The Company and Group do not have any borrowings.
As at 31 December 2021, there were 2 remaining CDS holders and
they were entitled to interest of 7% per annum on their securities.
Neither of these CDS holders chose to convert their securities into
Ordinary shares in hVIVO Plc (formerly Open Orphan Plc) at the time
of the reverse takeover of the Venn Group in June 2019.
Consequently, these CDS holdings were redeemed by Open Orphan DAC
at redemption dates in April 2022 and October 2022
respectively.
16. Share capital
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ ------- ------- ------- -------
671,047,771 (2021 - 670,929,314) Ordinary
shares of GBP0.001 671 671 671 671
------------------------------------------ ------- ------- ------- -------
The Company exercised its right in July 2021 to acquire all
deferred shares for an aggregate price of GBP1.
Subsequently, the share capital of hVIVO Plc (formerly Open
Orphan Plc) consists only of fully paid ordinary shares. All shares
are equally eligible to share in declared dividends, appoint
Directors, receive notice of, attend, speak and vote at any general
meeting of the Company.
During the year the Company issued 118,457 shares @
GBP0.02/Share as a result of share options being exercised by
former employees.
17. Other reserves
Group and Company
Share premium
Share premium is the di erence between the nominal value of
share capital and the actual cash received on fund -- raising less
any costs associated with the fund -- raising.
Merger reserve
This includes reverse acquisition reserve which resulted from
the reverse takeover of Venn Life Sciences Holdings Plc by Open
Orphan DAC on 28 June 2019. Also included is a Group re --
organisation reserve relating to previous re -- organisation of the
Venn Group.
Foreign currency reserve
The presentation currency of the Group became GBPGBP in 2020.
Previously the presentation currency was Euro. This reserve arises
from the translation of the opening balances from Euro to GBPGBP
and also from the translation of the subsidiaries which are
denominated in Euro into GBPGBP on consolidation.
The Euro denominated subsidiaries are Venn Life Sciences
Limited, Venn Life Sciences Germany GmbH, Venn Life Sciences France
S.A.S, Venn Life Sciences E.D. B.V., Venn Life Sciences Biometry
Services and Open Orphan DAC.
Share based payments reserve
A share option reserve of GBP151,000 was created in June 2019,
prior to the reverse takeover of Venn Life Sciences Holdings PLC by
Open Orphan DAC, in relation to the share options and warrants
issued in June 2019. After the reverse takeover, further provisions
of GBP102,000 (2019), GBP240,000 (2020), GBP27,000 (2021) were made
and an additional provision of GBP284,000 was made in 2022 and
expensed to direct project and administration expenses. To date
GBP226,000 has been released from the share based payments reserve
back to retained earnings in respect of share options that have
since been exercised.
Retained earnings
For the Group and Company, earnings reflect the earnings of
hVIVO Plc (formerly Open Orphan Plc).
18. Cash used in operations
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ------- ------- ------- -------
(Loss)/Profit before income tax (365) 277 (1,311) (1,522)
Adjustments for:
- Depreciation and amortisation 2,930 2,565 - -
- Exceptional Items 119 (267) - 409
- Impairment of associate 6,957 - - -
- Net (gain)/loss on disposals of PPE (12) 189 - -
- Net finance (Income)/costs (617) 215 (834) (768)
- Share based payment charge 284 27 - -
- R & D Credit incl. in other income (1,851) (1,842) - -
- Share of Imutex loss 48 71 - -
Changes in working capital
Impairments on intercompany balances - - 282 485
- (Increase)/Decrease trade and other
receivables (4,309) 904 (1,135) (241)
- Decrease inventories 172 294 - -
- Increase/(Decrease) trade and other
payables 11,152 (2,972) (2,890) 2,317
---------------------------------------- ------- ------- ------- -------
Net cash generated/(used) in operations 14,508 (539) (5,888) 680
---------------------------------------- ------- ------- ------- -------
25. Related Party Disclosures
Directors
Directors' emoluments are set out in the Report of the
Remuneration Committee Report.
Key management compensation for the year was as follows:
2022 2021
EUR'000 EUR'000
---------------------------------------- ------- -------
Aggregate emoluments 994 526
Employer contribution to pension scheme 42 17
---------------------------------------- ------- -------
1,036 543
---------------------------------------- ------- -------
Report of the Key management includes the Directors only.
Group
Non -- Executive Group Chairman, Cathal Friel, is a Director of
Raglan Road Capital group companies which has provided advisory and
o ce related services to Open Orphan DAC (2022 charge EUR9,798;
2021 charge EUR23,175). The balance owed by Open Orphan DAC to
Raglan Road Capital group companies at year end 2022 was EUR2,000
(2021: EUR16,901).
There were no other related party transactions during the
year.
The Company
During the year the Company absorbed net management charges of
GBP141,598 (2021 - GBP109,547) from its subsidiaries. At 31
December 2022 the Company was owed GBP11,280,000 (2021 -
GBP6,594,000) by its subsidiaries.
19. Discontinued operations
Venn Life Sciences (NI) Ltd, Venn Life Sciences B.V. and Venn
Life Sciences Germany GmbH ceased to trade from 1 January 2021
onwards. Venn Life Sciences (NI) Ltd and Venn Life Sciences B.V.
were dissolved in 2022. Venn Life Sciences Germany GmbH commenced a
liquidation process in early 2022 and that is expected to conclude
in early 2023. There were no new discontinued operations during
2022.
20. Share options and warrants
Share options
The Group has various share option plans under which it has
granted share options to certain Directors and senior management of
the Group.
The number of outstanding share options remaining at 31 December
2022 are as follows:
# Options # Options
Exercise Date at # of Options # of Options at
Date of Issue Price of Expiry 01/01/2022 Exercised Granted 31/12/2022
-------------- -------- --------- ---------- ------------ ------------ ----------
2015 13p 2025 280,000 - - 280,000
2019 5.6p 2024 7,716,964 - - 7,716,964
2020 2p 2024 396,249 (118,457) - 277,792
2022 0.1p 2025 - - 7,227,273 7,227,273
-------------- -------- --------- ---------- ------------ ------------ ----------
8,393,213 (118,457) 7,227,273 15,502,029
-------------- -------- --------- ---------- ------------ ------------ ----------
The weighted -- average exercise price of all options
outstanding at year end is 3.1p and the weighted -- average
remaining contractual life is 1.8 years.
Share based payment charge for the year was GBP284,000 included
in direct project and administration costs (2021 - GBP27,000). The
only new share options granted during the year relate to the
implementation of a Long -- Term Incentive Plan ("LTIP"). A reserve
of GBP250,000 has been created in 2022 in respect of this award.
The following key assumptions were factored into the model when
valuing these options at the date of grant:
- expected volatility of 74%
- option life of 3 years
- expected dividends yield of 0%
- risk -- free interest rate of 0.72%
An additional GBP33,000 charge has been created in relation to
the vesting of shares under the existing SIP scheme.
Due to share options being exercised during the year GBP33,000
(2021: GBP193,000) of the existing share -- based payment reserve
was released back to retained earnings.
The Company has used the Black Scholes model to value the
options at 31 December 2022 and 31 December 2021.
Warrants
2,264,427 warrants existed at 31 December 2022 (2021:
2,264,427).
232,696 warrants were granted on 11 December 2018 and are
exercisable from the date of grant to 10 December 2023. The
exercise price is 0.1p per ordinary share under warrant. 424,589
warrants were granted on 11 December 2018 and are exercisable from
the date of grant to 10 December 2023. The exercise price is 2.2p
per ordinary share under warrant.
1,607,142 warrants were granted on 28 June 2019 and are
exercisable from the date of grant to 27 June 2024. The exercise
price is 5.6p per ordinary share under warrant.
21. Other operating income
Other operating income represents government grants received to
fund research and development activities around the group.
2022 2021
GBP'000 GBP'000
------ ---------------------- ------- -------
hVIVO Gross RDEC credit 1,851 1,842
Venn R & D related credits 369 299
------ ---------------------- ------- -------
Total 2,220 2,141
------------------------------ ------- -------
The subsidiary, hVIVO Services Limited, can claim UK R&D
incentives under both the RDEC scheme (noted above) and the SME
scheme (when the Company is loss making). Venn Life Sciences
Biometry services S.A.S. can claim Credit Tax Research ('CIR')
payments in France and Venn Life Sciences ED B.V. can claim R &
D credits against payroll taxes in the Netherlands.
21. Post reporting period date events
The following events have taken place since the year end:
a) The Directors propose a special, one o dividend of 0.45 pence
per share. The payment is subject to approval by shareholders at
the Company's Annual General Meeting on 23 May 2023.
b) On 28 March 2023 the Company issued 7,716,964 shares @
GBP0.056/Share as a result of share options being exercised by a
former employee.
c) hVIVO Holdings Limited owns 62.62% of PrEP Biopharm Limited.
In 2018 the carrying value was fully impaired so the investment has
a value of Nil at 31 December 2022. The Directors of PrEP Biopharm
have made a decision to commence the process of a solvent
liquidation. The liquidation is expected to complete in 2023.
22. Pensions
The Group operates a number of defined contribution pension
schemes whose assets are held in independently administered funds.
The pension charge represents contributions payable by the Group
and amounted to GBP904,000 for the year (2021: GBP872,000).
Contributions of GBP98,000 were payable to the funds at the year
end and are included within trade and other payables (2021:
GBP79,000).
23. Leases
Amounts recognised in the Statement of Financial Position
Right of Lease
use assets liabilities
2022 2021 2022 2021
GBP'000 GBP,000 GBP'000 GBP,000
--------------------- -------- -------- -------- --------
As at 1 January 2,788 4,230 2,854 4,439
New leases acquired 740 1,399 739 1,399
Leases exited (8) (738) (20) (816)
Depreciation expense (1,931) (2,039) - -
Interest expense - - 133 227
Payments - - (2,178) (2,329)
Exchange di erences 21 (64) 35 (66)
--------------------- -------- -------- -------- --------
As at 31 December 1,610 2,788 1,563 2,854
--------------------- -------- -------- -------- --------
Current - - 826 1,991
Non -- current 1,610 2,788 737 863
--------------------- -------- -------- -------- --------
Maturity of lease liabilities
31 December 31 December
2022 2021
GBP'000 GBP.000
------------------------------------------- ----------- -----------
Current - Within one year 826 1,991
Non -- current - Between one to two years 271 477
Non -- current - Between two to five years 466 386
------------------------------------------- ----------- -----------
1,563 2,854
------------------------------------------- ----------- -----------
Short -- term lease payments expensed during year ended 31
December 2022: GBP47,000 (2021: GBP32,000 (re -- stated)).
24. Leasehold provision
Leasehold provision relates to dilapidation.
Leasehold
provision
GBP'000
----------------------- ---------
As at 1 January 2022 -
----------------------- ---------
Addition 730
----------------------- ---------
As at 31 December 2022 730
----------------------- ---------
Current 70
Non -- current 670
----------------------- ---------
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FR NKQBDCBKDKQB
(END) Dow Jones Newswires
April 25, 2023 02:00 ET (06:00 GMT)
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