Half-year Report
("RenalytixAI", the "Company" or the "Group")
Half-year Report
Recent Highlights
· Accelerated pathway for reimbursement coverage of KidneyIntelX with the finalization of the Medicare Coverage of Innovation Technology (MCIT) rule; national Medicare coverage upon FDA clearance of KidneyIntelX, which we anticipate in calendar 2021
· Issued the first KidneyIntelX test reports to primary care and specialist physicians in the
· Confirmed plans to expand the indicated use of KidneyIntelX for individuals with general chronic kidney disease, including the underserved African ancestry and Hispanic population groups. New indicated use, if approved, expected to increase
· Announced partnership with DaVita enabling first-of-its-kind program combining early risk assessment and comprehensive care management to improve early to late stage patient outcomes and provide meaningful cost reductions for health care providers
· Announced partnership with the
· Continued building KidneyIntelX study data with key findings to be presented at
Financial highlights
During the six months ended
Operating expense for the six months ended
General and administrative expenses increased for the six months ended
Research and development related expenses increased by
Net loss before tax was
Cash, cash equivalents and short-term investments were
Commenting on the outlook for RenalytixAI,
"Our path to establishing advanced precision prognostics to guide and inform population-wide kidney health continues to become clearer. The January finalization of the Medicare Coverage of Innovative Technology rule provides the foundation to achieve broad insurance coverage for KidneyIntelX. With our newly announced partnerships with
Investors are advised to read the results for the 3 months ended
For further information, please contact:
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Via Walbrook PR |
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Stifel (Nominated Adviser & Joint Broker) |
Tel: 020 7710 7600 |
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Tel: 020 7597 4000 |
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Tel: 020 7933 8780 or renalytix@walbrookpr.com
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Mob: 07980 541 893 / 07584 391 303 |
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About Kidney Disease
Kidney disease is now recognised as a public health epidemic affecting over 850 million people globally. The
* https://www.cdc.gov/kidneydisease/publications-resources/2019-national-facts.html
About RenalytixAI
RenalytixAI is a developer of artificial intelligence-enabled clinical in vitro diagnostic solutions for kidney disease, one of the most common and costly chronic medical conditions globally. RenalytixAI's products are being designed to make significant improvements in kidney disease diagnosis, transplant management, clinical care, patient stratification for drug clinical trials, and drug target discovery. For more information, visit www.renalytixai.com.
CHAIRMAN'S BUSINESS REVIEW
I am delighted to present the interim report for the six months ended
Company Overview
We are an artificial intelligence-enabled in vitro diagnostics company, focused on optimizing clinical management of kidney disease to drive improved patient outcomes and lower healthcare costs. KidneyIntelX, our first-in-class diagnostic platform, employs a proprietary artificial intelligence-enabled algorithm that combines diverse data inputs, including validated blood-based biomarkers, inherited genetics and personalized patient data from electronic health record ("EHR") systems, to generate a unique patient risk score. This patient risk score enables prediction of progressive kidney function decline in chronic kidney disease ("CKD") allowing physicians and healthcare systems to optimize the allocation of treatments and clinical resources to patients at highest risk. CKD affects approximately 37 million individuals in
Kidney disease is a worldwide public health crisis, resulting in more deaths per year than breast or prostate cancer.
Managing a CKD population of this scale and associated healthcare costs presents a unique social challenge. The ability to predict which patients will experience progressive kidney function decline, kidney failure, initiation of long-term dialysis or kidney transplant, is critical to changing patient outcomes and health economics. In our clinical validation studies in patients with DKD, we observed that the Kidney Disease: Improving Global Outcomes ("KDIGO") classification system, which is the standard clinical assessment to predict risk for progression of CKD, including DKD, only identified approximately 20% of patients that experienced an adverse kidney outcome as very high-risk patients with the recommendation of referral to a nephrologist, while KidneyIntelX identified nearly half of such patients.
We believe that the utilization of KidneyIntelX across large patient populations will have a significant impact on overall healthcare costs. Health economic benefits are projected to be derived from three key areas: (1) slowing progression to the next stage of CKD, (2) delaying or preventing progression to ESKD and the need for dialysis or kidney transplant and (3) avoiding dialysis crashes. We have partnered with
Several federal policy and economic events, including the
MCIT represents the culmination of a sequence of policy steps over the past decade, including finalization of the Protecting Access to Medicare Act in 2018, that have materially altered the pathway for translating innovative diagnostic technology. For emerging growth diagnostic companies such as Renalytix, MCIT can have a substantial effect in achieving comprehensive reimbursement coverage on an accelerated timeline. We believe MCIT represents one of the more significant events in the past several decades to help drive innovation in precision medicine diagnostics/prognostics.
Additionally, we have successfully completed the first stage of our statement of work with
Reimbursement and Regulatory Pathway
With the recent finalization of the MCIT rule on
As Medicare beneficiaries make up the majority of individuals with kidney disease in
Pricing for the unique CPT code for KidneyIntelX was finalized by CMS effective
We are pursuing a comprehensive Medicaid contracting program and, to date, have secured Medicaid contracts in
As reported in
We are continuing to build regulatory expertise through both direct hires and retention of key contracted experts. In
Addressable Market and Business Strategy
One of our top priorities is to build a broad distribution network and increase physician access for KidneyIntelX over the course of 2021 to serve the
We are increasingly optimistic about achieving distribution capability under our model of partnering with healthcare networks such as
We are also evaluating more aggressive growth strategies to increase distribution, sales and marketing capacities in
MCIT may also confer other material advantages including the ability for concurrent deployment of KidneyIntelX over a broader geographic footprint. Given the range of insurance payors that provide coverage in each market, the process of achieving majority population coverage can be laborious, incremental and require considerable time. With a majority of the KidneyIntelX initial indicated use population insured through a national Medicare coverage determination, risk associated with reimbursement in a given major high-concentration geography would be considerably reduced. KidneyIntelX deployment will focus on a region-by-region basis taking into consideration a number of demographic and economic factors in an effort to maximize return on capital and human resource efficiencies.
Product Development
We are continuing development work on expanding the indicated use populations for KidneyIntelX risk assessment to the broader CKD population, which includes the important, underserved population of kidney disease patients of African and Hispanic ancestry. These populations have been disproportionate sufferers of end stange kidney disease and we intend to provide access to advanced technology embedded in the KidneyIntelX platform to level the playing field in relation to access, knowledge and clinical care through kidney disease prognosis and treatment.
We expect to broaden the indicated use of KidneyIntelX to the larger CKD population as early as calendar 2022.
Due to the large and incremental population groups that would potentially be served by expanding indicated use, we estimate the total addressable market for KidneyIntelX could increase to an estimated 37 million individuals in
The KidneyIntelX product line is classified as an in vitro prognostic and is anchored by a real-time patient blood draw and biomarker assessment. The biomarker assessment is combined with selected information from a patient's EHR, all processed by a machine-learning enabled algorithm. We believe that to achieve early and accurate disease prognosis, real-time biology accessible through a current blood or urine biomarker assessment is required.
Real-world Testing Experience
During the quarter ended
The KidneyIntelX software platform has been designed with a number of significant features to ensure efficient clinical testing implementation and, we believe, provides an outstanding platform for future feature development. KidneyIntelX cloud computing architecture couples data control and encryption protocols and has been verified to high standards. These standards ensure secure and timely access to the order information and data necessary to execute the test in accordance with all applicable regulatory requirements. Working collaboratively with an extended team of information technology professionals, we have developed a robust data pipeline that can provide access to KidneyIntelX for all clinicians across the
We have continued building KidneyIntelX study data with key findings to be presented at
COVID Effects
COVID-19 has provided a challenge to our business, particularly during the high-intensity first deployment of KidneyIntelX in the
Fortunately, with vaccinations now underway, we anticipate that these restrictions will be temporary with impact on business operations declining over the next several months.
We have approximately doubled the size of our employee headcount since our listing on Nasdaq in
We anticipate COVID-19 will have substantially less impact on our ability to scale KidneyIntelX implementation and testing in fiscal 2022 as compared to fiscal 2021.
Additional Business
The Renalytix/
In
Current outlook
We view fiscal 2021 as our business launch year and one with the following objectives: 1) increasing visibility to distribution to primary care and specialist clinicians through partnered deployment with at least three health care providers and payors; 2) continuing to generate validating health economics, real-world evidence utility and performance data for submission to peer-reviewed publication; 3) increasing insurance coverage; and 4) establishing sequential quarter revenue growth for the December, March and June reporting periods.
For the six months ending
We continue to expand our business to accommodate multiple revenue pathways from KidneyIntelX testing sales, pharma driven development programs and other strategic partnership initiatives including our recently announced partnership with DaVita (NASDAQ DVA). However, given the early stage nature of our commercial business and the challenges operating in a COVID-19 restricted environment, we do not expect any material revenue for the 12 months ended
For fiscal 2022, we expect a material inflection point for revenue growth to occur if KidneyIntelX receives FDA clearance and concurrent opt-in for national Medicare coverage, and an easing of COVID restrictions due to broad population vaccination uptake. We are targeting a blended gross margin across all lines of KidneyIntelX testing of greater than 70% as our commercial program scales in fiscal 2022. We look forward to the future with confidence.
We view fiscal 2022 as a year in which we plan to validate our ability to grow significant market share and revenue from KidneyIntelX testing, and pharmaceutical and other strategic partnerships. In addition, we expect our total addressable market will increase materially with the introduction of subsequent KidneyIntelX versions and potentially expanded indications.
Financial review
The results presented cover the six-month period from
Income statement
Revenue
In H1 FY21,
Administrative costs
In H1 FY21, administrative expenses totalled
Finance income/costs
Finance expense of
Net loss
Net loss after tax during H1 FY21 of
Balance sheet
At
Inventory
At
Fixed assets
At
Intangible assets
Deferred tax
At
Cash and equivalents
The Group had cash on hand at
Borrowings
On
Other than the loan, the Company has no lon-term debt outstanding as of
Capitalisation
In
Non-executive Chairman
CONSOLIDATED INCOME STATEMENT |
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FOR THE PERIOD ENDED |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
Unaudited (Restated) |
|
|
|
Period to |
|
Period to |
|
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
|
Pharmaceutical Services Revenue |
|
400 |
|
- |
|
|
|
|
|
|
|
Cost of Revenue |
|
(234) |
|
- |
|
|
|
|
|
|
|
Gross Profit |
|
166 |
|
- |
|
|
|
|
|
|
|
Administrative expenses |
|
(14,009) |
|
(4,998) |
|
|
|
|
|
|
|
Operating loss |
|
(13,843) |
|
(4,998) |
|
|
|
|
|
|
|
Share of net Profit (Loss) of associates and joint ventures accounted for using the equity method |
|
(221) |
|
- |
|
|
|
|
|
|
|
Finance income - net |
|
(2,093) |
|
(1,263) |
|
|
|
|
|
|
|
Loss before tax |
|
(16,157) |
|
(6,261) |
|
|
|
|
|
|
|
Taxation |
|
2,121 |
|
626 |
|
|
|
|
|
|
|
Loss for the period |
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(14,036) |
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(5,635) |
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|
|
|
|
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|
Earnings per Ordinary share from continuing operations |
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|
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|
|
|
|
|
|
|
|
Basic and diluted |
|
$ (0.20) |
|
$ (0.10) |
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
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|
|
|
FOR THE PERIOD ENDED |
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|
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Unaudited |
|
Unaudited (Restated) |
|
|
Period to |
|
Period to |
|
|
$'000 |
|
$'000 |
|
|
|
|
|
|
Loss for the period - continuing operations |
(14,036) |
|
(5,635) |
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
Items that may be subsequently reclassified to profit or loss |
|
|
|
|
Currency translation differences |
9,495 |
|
1,964 |
|
|
|
|
|
|
Other comprehensive loss for the period |
(4,541) |
|
(3,671) |
|
Total comprehensive loss for the period |
(4,541) |
|
(3,671) |
|
CONSOLIDATED AND COMPANY'S STATEMENT OF FINANCIAL POSITION |
|
|
|
|
|
AS AT |
|
|
|
|
|
|
|
Unaudited |
|
Audited (Restated) |
|
|
As at |
As at |
|
||
|
|
$'000 |
|
$'000 |
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
1,315 |
|
580 |
|
Right of use asset |
|
341 |
|
365 |
|
Intangible assets |
|
18,103 |
|
17,118 |
|
Investment in Kantaro |
|
1,716 |
|
1,937 |
|
Investment in Verici |
|
7,852 |
|
- |
|
Note receivable - Kantaro |
|
- |
|
83 |
|
Deferred tax assets |
|
4,526 |
|
2,319 |
|
Total non-current assets |
|
33,853 |
|
22,402 |
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
Inventory |
|
494 |
|
326 |
|
Security deposits |
|
86 |
|
71 |
|
Assets held for sale |
|
- |
|
1,705 |
|
Note Receivable Kantaro |
|
167 |
|
|
|
Trade and other receivables |
|
158 |
|
18 |
|
Prepaid and other current assets |
|
3,005 |
|
2,501 |
|
Accounts Receivable |
|
400 |
|
- |
|
Financial assets |
|
- |
|
982 |
|
Cash and cash equivalents |
|
74,532 |
|
13,293 |
|
Total current assets |
|
78,842 |
|
18,896 |
|
Total assets |
|
112,694 |
|
41,298 |
|
|
|
|
|
|
|
Equity attributable to owners of the parent |
|
|
|
|
|
Share capital |
|
232 |
|
192 |
|
Share premium |
|
76,020 |
|
- |
|
Share-based payment reserve |
|
3,595 |
|
2,833 |
|
Foreign currency reserves |
|
7,580 |
|
(1,915) |
|
Retained earnings/(deficit) |
|
20,816 |
|
34,852 |
|
Total equity |
|
108,243 |
|
35,962 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
2,798 |
|
2,899 |
|
Lease liabilities |
|
86 |
|
92 |
|
SBA PPP Funding - short-term |
|
141 |
|
121 |
|
Payables due to associates |
|
824 |
|
271 |
|
Total current liabilities |
|
3,849 |
|
3,383 |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
SBA PPP Funding - long-term |
|
114 |
|
134 |
|
Lease Liabilities |
|
256 |
|
275 |
|
Payables due to associates |
|
231 |
|
1,544 |
|
Total non-current liabilities |
|
601 |
|
1,953 |
|
Total liabilities |
|
4,450 |
|
5,336 |
|
Total equity and liabilities |
|
112,694 |
|
41,298 |
|
|
|
|
|
|
|
CONSOLIDATED AND COMPANY'S STATEMENT OF CASH FLOWS |
|
|
|
|
FOR THE PERIOD ENDED |
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
Unaudited (Restated) |
|
|
Period to |
|
Period to |
|
|
|
|
|
|
|
$'000 |
|
$'000 |
Cash flow from operating activities |
|
|
|
|
Loss before income tax |
|
(16,157) |
|
(6,261) |
Adjustments for |
|
|
|
|
- Depreciation |
|
88 |
|
43 |
- Amortisation and impairment charges |
|
702 |
|
524 |
- Gain on Deconsolidation of VericiDx |
|
(481) |
|
- |
- Fair Value Adjustment to |
|
(5,018) |
|
(0) |
- Unrealized foreign exchange loss |
|
4,744 |
|
1,850 |
- Share of net loss of associate |
|
221 |
|
- |
- Share-based payments |
|
916 |
|
1,083 |
Changes in working capital |
|
|
|
|
- Trade and other receivables |
|
- |
|
- |
- Accounts Receivable |
|
- |
|
- |
- Prepaid assets and other current assets |
|
(134) |
|
(134) |
- Inventory |
|
(435) |
|
(435) |
- Security Deposits |
|
(29) |
|
(29) |
- Trade and other payables |
|
321 |
|
321 |
- Accrued Expenses and other current liabilities |
|
- |
|
- |
Cash used in operations |
|
(15,262) |
|
(3,038) |
Interest Received/(paid) |
|
- |
|
- |
Net cash used in operating activities |
|
(15,262) |
|
(3,038) |
|
|
|
|
|
Cash flow from investing activities |
|
|
|
|
Investment in subsidiary |
|
- |
|
- |
Purchase of property, plant and equipment (PPE) |
|
(723) |
|
(102) |
Software Development Costs |
|
(603) |
|
(1,036) |
Change in capital lease |
|
(50) |
|
(410) |
Proceeds from short-term investments |
|
1,000 |
|
(7,917) |
Net cash generated by/(used in) investing activities |
|
(376) |
|
(9,465) |
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
Gross Proceeds from issuance of ordinary shares |
|
79,182 |
|
- |
Gross Proceeds from issuance of ordinary shares, net offering costs |
|
|
|
16,123 |
Proceeds from loans |
|
- |
|
|
Payment of offering costs |
|
(2,305) |
|
- |
Net cash generated from financing activities |
|
76,877 |
|
16,123 |
Net increase/(decrease) in cash and cash equivalents |
|
61,239 |
|
3,620 |
Cash and cash equivalents at beginning of period |
|
13,293 |
|
9,288 |
Cash and cash equivalents at end of period |
|
74,532 |
|
12,908 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
|
|
|
|
|
|
FOR THE PERIOD ENDED 31 December 2020 |
|
|
|
|
|
|
|
Share Capital |
Share Premium |
Share-based payment reserve |
Foreign Currency Reserve |
Retained earnings |
Total equity |
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
At 30 June 2019 (Restated) |
175 |
34,032 |
1,137 |
(599) |
(6,578) |
28,167 |
Comprehensive income |
- |
- |
- |
- |
- |
- |
Loss for the period |
- |
- |
- |
- |
(5,635) |
(5,635) |
Other comprehensive income |
|
|
|
|
|
|
Currency translation differences |
- |
- |
- |
1,964 |
- |
1,964 |
Total comprehensive income |
175 |
34,032 |
1,137 |
1,365 |
(12,213) |
24,496 |
|
|
|
|
|
|
|
Transactions with owners |
|
|
1,094 |
|
|
|
Issue of shares |
17 |
17,193 |
- |
- |
- |
17,210 |
Less issue costs |
- |
(596) |
- |
- |
- |
(596) |
Share-based payments |
- |
- |
1,094 |
- |
- |
1,094 |
Total transactions with owners of the parent, recognised directly in equity |
17 |
16,597 |
1,094 |
- |
- |
17,708 |
At 31 December 2019 (Restated) |
192 |
50,629 |
2,231 |
1,365 |
(12,213) |
42,204 |
Comprehensive income |
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
- |
(3,615) |
(3,615) |
Other comprehensive income |
|
|
|
|
|
|
Currency translation differences |
- |
- |
- |
(3,229) |
- |
(3,229) |
Total comprehensive income |
192 |
50,629 |
2,231 |
(1,864) |
(15,828) |
35,360 |
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
Issue of shares |
- |
- |
- |
- |
- |
- |
Less issue costs |
- |
- |
- |
- |
- |
- |
Share-based payments |
- |
- |
602 |
- |
- |
602 |
Reduction of Capital |
- |
(50,629) |
- |
(51) |
50,680 |
- |
Total transactions with owners of the parent, recognised directly in equity |
- |
(50,629) |
602 |
(51) |
50,680 |
602 |
At 30 June 2020 |
192 |
- |
2,833 |
(1,915) |
34,852 |
35,962 |
Comprehensive income |
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
- |
(14,036) |
(14,036) |
Other comprehensive income |
|
|
|
|
|
|
Currency translation differences |
- |
- |
- |
9,495 |
- |
9,495 |
Total comprehensive income |
192 |
- |
2,833 |
7,580 |
20,816 |
31,421 |
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
Distribution of Verici Shares at Par Value |
|
(75) |
|
|
|
(75) |
Issue of shares |
40 |
79,181 |
- |
- |
- |
79,221 |
Less issue costs |
- |
(3,087) |
- |
- |
- |
(3,087) |
Share-based payments |
- |
- |
762 |
- |
- |
762 |
Total transactions with owners of the parent, recognised directly in equity |
40 |
76,020 |
762 |
- |
- |
76,822 |
At 31 December 2020 |
232 |
76,020 |
3,595 |
7,580 |
20,816 |
108,243 |
NOTES FORMING PART OF THE INTERIM FINANCIAL STATEMENTS
1. General information and basis of presentation
Renalytix AI plc is a public limited company incorporated in the United Kingdom (Registration Number 11257655). The address of the registered office is Avon House, 19 Stanwell Road, Penarth, CF64 2EZ. The Company's shares are traded on the AIM market of the London Stock Exchange.
The principal activity of the Company and its subsidiary (together "the Group") is as a developer of artificial intelligence-enabled diagnostics for kidney disease.
The financial information in these interim results is that of the holding company and its subsidiary. It has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards as adopted for use in the EU (IFRSs), IFRS IC interpretations, and the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies applied by the Group in this financial information are the same as those applied by the Group in its financial statements for the period ended 30 June 2020 and which will form the basis of the 2020/21 financial statements except for a number of new and amended standards which have become effective since the beginning of the previous financial year. These new and amended standards are not expected to materially affect the Group.
Certain statements in this announcement constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, amongst other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this announcement should be construed as a profit forecast.
The financial information presented herein does not constitute full statutory accounts under Section 434 of the Companies Act 2006 and was not subject to a formal review by the auditors. The financial information in respect of the period ended 30 June 2020 has been extracted from the statutory accounts which have been delivered to the Registrar of Companies. The Group's Independent Auditor's report on those accounts was unqualified, did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The financial information for the half years ended 31 December 2020 and 31 December 2019 is unaudited and the period to 30 June 2020 is audited.
These interim accounts have not been prepared in accordance with IAS 34.
2. Significant accounting policies
Going concern
The Group meets its day-to-day working capital requirements through the use of cash reserves.
The Directors have considered the applicability of the going concern basis in the preparation of these interim financial statements. This included the review of internal budgets and financial results which show, taking into account reasonably probable changes in financial performance, that the Group should be able to operate within the level of its current funding arrangements
The Directors believe that the Company and the Group have adequate resources to continue in operation for the foreseeable future. For this reason they have adopted the going concern basis in the preparation of the interim financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertaking. Subsidiaries are all entities over which the Group has the power to govern their financial and operating policies generally accompanying a shareholding of more than fifty per cent of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
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 difference is recognised directly in the income statement.
Inter-Company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised gains and losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Associates are entities over which the Group has significant influence but not control over the financial and operating policies. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group's share of its associates' post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in reserves is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.
Foreign currency translation
(a) Functional and presentational currency
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 United States Dollars, which is the Group's presentational currency. The functional currency of the Parent Company is GB Pounds.
(b) Transactions and balances
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 income statement within 'administrative expenses'.
(c) Group companies
The results and financial position of all the Group entities that have a functional currency different from the presentational currency are translated into the presentational currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
• income and expenses for each income statement are translated at average exchange rates; and
• all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences 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 differences that were recorded in equity are recognised in the income statement 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 reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Directors who make strategic decisions. At present the Directors consider the business to operate in a single segment.
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 income statement during the financial period in which they are incurred.
Depreciation on assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Plant and machinery 20%
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 administration expenses in the income statement.
Intangible assets
(a) Trademarks, trade names and licences
Separately acquired trademarks and licences are shown at historical cost. Trademarks and licences acquired in a business combination are recognised at fair value at the acquisition date. Trademarks and licences have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of trademarks and licences over the contractual licence period of 10 to 15 years and is charged to administrative expenses in the income statement.
(b) Development costs and trade secrets
Development costs have a finite useful life and are carried at cost less accumulated amortisation.
Expenditure incurred on the development of new or substantially improved products or processes is capitalised, provided that the related project satisfies the criteria for capitalisation, including the project's technical feasibility and likely commercial benefit. All other research and development costs are expensed to profit or loss as incurred.
Development costs are amortised over the estimated useful life of the products with which they are associated, currently 5 to 10 years. Amortisation commences when a new product is in commercial production. The amortisation is charged to administrative expenses in the income statement. The estimated remaining useful lives of development costs are reviewed at least on an annual basis.
The carrying value of capitalised development costs is reviewed for potential impairment at least annually and if a product becomes unviable and an impairment is identified the deferred development costs are immediately charged to the income statement.
Trade secrets, including technical know-how, operating procedures, methods and processes, are recognised at fair value at the acquisition date. Trade secrets have a finite useful life and are carried at cost less accumulated amortisation.
Impairment of non-financial assets
Assets that have an indefinite life or where amortisation has not yet commenced 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 for 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 income statement immediately. If goodwill is impaired however, no reversal of the impairment is recognised in the financial statements.
Financial assets
Classification
The Company classifies its financial assets in the following categories: loans and receivables at amortised cost and financial assets at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired and management determines the classification of its financial assets at initial recognition.
(a) Loans and receivables
Financial assets are classified as at amortised cost only if both of the following criteria are met: the asset is held within a business model whose objective is to collect contractual cash flows, and the contractual terms give rise to cash flows that are solely payments of principal and interest. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Company's loans and receivables comprise 'trade and other receivables' and cash and cash equivalents in the balance sheet.
(b) Financial assets at fair value through profit or loss
The Group classifies the following financial assets at fair value through profit or loss (FVPL):
· debt investments that do not qualify for measurement at either amortised cost or fair value through Other Comprehensive Income;
· equity investments that are held for trading, and
· equity investments for which the entity has not elected to recognise fair value gains and losses through Other Comprehensive Income.
(c) Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income comprise equity securities that are not held for trading and which the Group has irrevocably elected at initial recognition to recognise in this category. The Group considers this category to be more relevant for assets of this type.
Inventories
Inventories and work in progress are stated at the lower of cost and net realisable value. Cost is calculated on a first in and first out basis and includes direct costs and attributable overheads, where appropriate. Net realisable value represents the estimated selling price less all estimated costs of completion and applicable selling costs. Where necessary, provision is made for slow-moving and obsolete inventory. Inventory on consignment and their related obligations are recognised in current assets and payables respectively.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short- term deposits with an original maturity of three months or less.
For the purposes of the consolidated cash flow statement, cash and cash equivalents consist of cash and short-term deposits as defined above.
Share capital
Ordinary 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.
Other reserves - equity
The share-based payment reserve is used to recognise the fair value of equity settled share-based payment transactions.
Foreign currency reserve is used to record the exchange differences on translation of entities in the Group which have a functional currency different to the presentation currency.
Retained earnings includes all current and prior period results as disclosed in the income statement.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Revenue
Revenue is accounted for in accordance with the principles of IFRS 15.
Revenue for the sale of goods and services is measured at the fair value of the consideration received or receivable and represents the invoiced value for the sale of the goods and services net of sales taxes, rebates and discounts. Revenue from the sale of goods and services is recognised when the performance obligation has been satisfied and collectability of the related receivables is reasonably assured. A receivable is recognised when performance obligation related to the goods or services has been satisfied as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. Where contracts contain multiple deliverables, and the volume of each deliverable can be determined with reasonable certainty, then the transaction price will be allocated to each performance obligation based on the expected cost of each item.
Pharmaceutical services revenue
Pharmaceutical services revenue is generated from the provision of analytical services to customers. Contracts with customers generally include an initial upfront payment and additional payments upon achieving performance milestones. Revenue is recognized when control of the promised services is transferred to customers and the performance obligation is fulfilled in an amount that reflects the consideration that the Company expects to be entitled in exchange for those services. The Company uses present right to payment and customer acceptance as indicators to determine the transfer of control to the customer which may occur at a point in time or over time depending on the individual contract terms. Sales tax and other similar taxes are excluded from revenues.
During the six months ended December 31, 2020 the Company recognized $0.4 million of pharmaceutical services revenue where performance obligations are satisfied at a point in time.
Current and deferred income tax
Income tax comprises current and deferred tax. Tax is recognised in the income statement, 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 or substantively enacted at the balance sheet date in the countries where the Company and its subsidiary 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 is recognised, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised in respect of all temporary differences except where the deferred tax liability arises from the initial recognition of goodwill in business combinations.
Deferred tax assets are recognised for all deductible temporary differences, 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 sufficient taxable profits against which the future reversal of the underlying temporary differences can be deducted.
The carrying value of the amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient 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 balance sheet date.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset 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 different taxable entities where there is an intention to settle the balances on a net basis.
Leases
Leases are recognised as a right-of-use asset and a corresponding lease liability at the date on which the
leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
· Fixed payments (including in-substance fixed payments), less any lease incentives receivable
· Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date
· Amounts expected to be payable by the group under residual value guarantees
· The exercise price of a purchase option if the group is reasonably certain to exercise that option, and
· Payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit within the lease. If that rate cannot be
readily determined, the Group's incremental borrowing rate is used, being the rate that the Group would
have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security, and conditions.
Where the Group is exposed to potential future increases in variable lease payments based on an index or rate, amounts are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
· The amount of the initial measurement of lease liability
· Any lease payments made at or before the commencement date less any lease incentives received
· Any initial direct costs
· Restoration costs
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on straight line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.
Performance of contract liability to affiliate
In May 2020, the Company and the Icahn School of Medicine at Mount Sinai entered into an operating agreement ("Kantaro Operating Agreement") to form a joint venture, Kantaro Biosciences LLC ("Kantaro"), for the purpose of developing and commercializing laboratory tests for the detection of antibodies against SARS-CoV-2 originally developed by Mount Sinai. Kantaro has partnered with Bio-Techne Corporation to develop and launch the new test which are designed for use in any authorized clinical testing laboratory without the need for proprietary equipment. During the three months ended September 30, 2020, the Company recognized $0.5 million related to the performance of the contract liability with Kantaro. This represents the allocation of costs for performing services on behalf of Kantaro.
Equity Method Investment
As the Company can exert significant influence over, but does not control, Kantaro's operations through voting rights or representation on Kantaro's board of directors, the Company accounts for the investment using the equity method of accounting. The Company records its share in Kantaro's earnings and losses in the condensed consolidated statement of operations. The Company assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognize an impairment loss to adjust the investment to its then-current fair value.
Employee benefits
(a) Pension obligations
The Group makes contributions to defined contribution pension plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity with the pension cost charged to the income statement as incurred. The Group has no further obligations once the contributions have been paid.
(b) Share-based compensation
The Group operates an equity-settled, share-based compensation plan, under which the Group receives services from employees and others as consideration for equity instruments of the Group. Equity-settled share-based payments are measured at fair value at the date of grant and are expensed over the vesting period based on the number of instruments that are expected to vest. For plans where vesting conditions are based on share price targets, the fair value at the date of grant reflects these conditions. Where applicable the Group recognises the impact of revisions to original estimates in the income statement, with a corresponding adjustment to equity for equity-settled schemes. Fair values are measured using appropriate valuation models, taking into account the terms and conditions of the awards.
When the share-based payment awards are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
(C) Employee Stock Purchase Plan
The Group's 2020 Employee Share Purchase Plan (the ESPP) became effective on August 17, 2020. The ESPP authorizes the issuance of up to 850,000 shares of the Company's ordinary shares (American Depository Shares) . The number of shares of the Company's ordinary shares that may be issued pursuant to rights granted under the ESPP shall automatically increase on January 1st of each year, commencing on January 1, 2021 and continuing for ten years, in an amount equal to the lesser of one percent of the total number of shares of the Company's ordinary shares outstanding on December 31st of the preceding calendar year, and 2,000,000 ordinary shares, subject to the discretion of the board of directors or renumeration committee to determine a lesser number of sharesshall be added for such year.
Under the ESPP, eligible employees can purchase the Company's ordinary shares through accumulated payroll deductions at such times as are established by the board of directors or renumeration committee. Eligible employees may purchase the Company's common stock at 85% of the lower of the fair market value of the Company's ordinary shares on the first day of the offering period or on the purchase date. Eligible employees may contribute up to 15% of their eligible compensation. Under the ESPP, a participant may not purchase more than $25,000 worth of the Company's ordinary shares for each calendar year in which such rights is outstanding. Share-based compensation expense is determined based on the option's grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the withholding period.
National insurance on share options
To the extent that the share price at the balance sheet date is greater than the exercise price on options granted to UK citizens under unapproved share-based payment compensation schemes, provision for any National Insurance Contributions has been based on the prevailing rate of National Insurance. The provision is accrued over the performance period attaching to the award.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
Exceptional items
These are items of an unusual or non-recurring nature incurred by the Group and include transactional costs and one-off items relating to business combinations, such as acquisition expenses.
3. Segmental reporting
The Group operates as a single segment.
4. Income Tax
|
Unaudited |
|
Unaudited |
|
Audited |
|
Period ended 31 December 2020 |
|
Period ended 31 December 2019 |
|
Period ended 30 June 2020 |
|
|
|
|
|
|
|
$'000 |
|
$'000 |
|
$'000 |
|
|
|
|
|
|
Deferred tax |
4,526 |
|
1,585 |
|
2,319 |
Total deferred tax |
4,526 |
|
1,585 |
|
2,319 |
Income tax credit |
4,526 |
|
1,585 |
|
2,319 |
5. Earnings Per Share
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of ordinary share in issue during the period.
The Company has one category of dilutive potential ordinary share, being share options. The potential shares were not dilutive in the period as the Group made a loss per share.
|
Unaudited |
|
Unaudited |
|
Audited |
|
Period ended 31 December 2020 |
|
Period ended 31 December 2019 |
|
Period ended 30 June 2020 |
|
|
|
|
|
|
|
$'000 |
|
$'000 |
|
$'000 |
Loss attributable to owners of the parent |
|
|
|
|
|
(14,036) |
|
(5,635) |
|
(9,250) |
|
Weighted average number of ordinary shares in issue |
|
|
|
|
|
70,932,808 |
|
58,563,960 |
|
59,416,134 |
|
|
|
|
|
|
|
Basic and diluted loss per share |
$ (0.20) |
|
$ (0.10) |
|
$ (0.16) |
6. Property, Plant and Equipment
|
|
|
Fixtures and fittings |
|
|
|
|
$'000 |
|
|
|
|
|
|
|
Cost |
|
|
|
|
At beginning of period |
|
309 |
|
|
Additions |
|
471 |
|
|
|
|
|
|
|
At 31 December 2019 |
|
780 |
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
At beginning of period |
|
31 |
|
|
Charge for the period |
|
27 |
|
|
|
|
|
|
|
At 31 December 2019 |
|
58 |
|
|
|
|
|
|
|
Net book value at 31 December 2019 |
|
722 |
|
|
|
|
|
|
|
Cost |
|
|
|
|
At 1 July 2019 |
|
780 |
|
|
Additions |
|
391 |
|
|
Verici-Assets held for sale |
|
(522) |
|
|
Foreign translation |
|
1 |
|
|
At 30 June 2020 |
|
650 |
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
At 1 July 2019 |
|
58 |
|
|
Charge for the period |
|
47 |
|
|
Verici - Assets Held for Sale Depreciation |
|
(36) |
|
|
Foreign translation |
|
1 |
|
|
At 30 June 2020 |
|
70 |
|
|
|
|
|
|
|
Net book value at 30 June 2020 |
|
580 |
|
|
|
|
|
|
|
Cost |
|
|
|
|
At 1 July 2020 |
|
650 |
|
|
Additions |
|
853 |
|
|
Foreign translation |
|
|
|
|
At 31 December 2020 |
|
1,503 |
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
At 1 July 2020 |
|
70 |
|
|
Charge for the period |
|
118 |
|
|
Foreign translation |
|
|
|
|
At 31 December 2020 |
|
188 |
|
|
|
|
|
|
|
Net book value at 30 June 2020 |
|
1,315 |
|
|
||||
|
||||
7. Intangible Assets
|
|
Trademarks trade names & licences |
Trade secrets |
Development costs |
Total |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
At beginning of period |
|
11,002 |
6,641 |
2,732 |
20,375 |
Additions |
|
- |
- |
546 |
546 |
Transfer to Assets Held for Sale |
|
(1,261) |
- |
- |
(1,261) |
Foreign translation |
|
(275) |
(239) |
(55) |
(569) |
At 30 June 2020 |
|
9,466 |
6,402 |
3,223 |
19,091 |
|
|
|
|
|
|
Amortisation |
|
|
|
|
|
At beginning of period |
|
1,620 |
- |
- |
1,620 |
Charge for the period |
|
584 |
- |
- |
584 |
Transfer to Assets Held for Sale |
|
(114) |
- |
- |
(114) |
Foreign translation |
|
(117) |
- |
- |
(117) |
At 30 June 2020 |
|
1,973 |
- |
- |
1,973 |
|
|
|
|
|
|
Net book value |
|
|
|
|
|
At 30 June 2020 |
|
7,493 |
6,402 |
3,223 |
17,118 |
|
|
|
|
|
|
Cost |
|
|
|
|
|
At beginning of period |
|
9,466 |
6,402 |
3,223 |
19,091 |
Additions |
|
- |
- |
488 |
488 |
Foreign translation |
|
739 |
342 |
84 |
1,165 |
At 31 December 2020 |
|
10,205 |
6,744 |
3,795 |
20,744 |
|
|
|
|
|
|
Amortisation |
|
|
|
|
|
At beginning of period |
|
1,973 |
- |
- |
1,973 |
Charge for the period |
|
510 |
- |
- |
510 |
Foreign translation |
|
158 |
- |
- |
158 |
At 31 December 2020 |
|
2,641 |
- |
- |
2,641 |
|
|
|
|
|
|
Net book value |
|
|
|
|
|
At 31 December 2020 |
|
7,564 |
6,744 |
3,795 |
18,103 |
|
|
|
|
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|
8. Dividends
No dividends to shareholders of the holding company were provided or paid during the six months to 31 December 2020 (six months to 31 December 2019 and period to 30 June 2020: both nil). The Board's policy is to enhance shareholder value mainly through the growth of the Group, which is currently in the early stages of its development. The Board will however consider the payment of dividends if and when appropriate.
Additional Financial Information: IFRS to US GAAP reconciliation
Since RenalytixAI's initial listing on Nasdaq, the Company has followed accounting principles generally
accepted in the United States of America ('US GAAP'), both for internal as well as external purposes.
Renalytix's Q2 6-k, which is based on US GAAP, contains differences from its Half Year report, which
is based on IFRS. Both the Form 6-K and Half Year Report are available on the Company's website (www.
renalytixai.com). In order to help readers to understand the difference between the Group's two sets of
financial information, Renalytix has provided, on a voluntary basis, a reconciliation from IFRS to U.S. GAAP
as follows:
Balance Sheet
|
|
|
GAAP |
IFRS |
GAAP vs IFRS |
|
|
|
|
December 30, |
|
||
|
|
|
2020 |
2020 |
Difference |
|
Assets |
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
|
Cash |
|
$ 74,532 |
$ 74,532 |
|
|
|
Short-term investments |
- |
- |
|
|
|
|
Accounts Receivable |
400 |
400 |
|
|
|
|
Prepaid expenses and other current assets |
3,587 |
3,585 |
2 |
( a ) |
|
|
Note Receivable - Kantaro |
167 |
167 |
|
|
|
|
Related-party receivable |
158 |
158 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
78,844 |
78,842 |
|
|
||
Property and equipment, net |
2,603 |
1,315 |
1,288 |
( b ) |
||
Intangibles, net |
|
- |
18,103 |
(18,103) |
( c ) |
|
Deferred tax assets |
- |
4,526 |
(4,526) |
( d ) |
||
Investment in Verici |
7,852 |
7,852 |
|
|
||
Investment in Kantaro |
1,716 |
1,716 |
|
|
||
Right of use asset |
- |
341 |
(341) |
( e ) |
||
Total assets |
|
$ 91,015 |
$ 112,695 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
|
Note payable - current |
141 |
141 |
|
|
|
|
Accounts payable |
864 |
2,798 |
(43) |
( f ) |
|
|
Accrued expenses and other current liabilities |
1,608 |
- |
|
|
|
|
Accrued expenses - related party |
283 |
- |
|
|
|
|
Current lease liability |
- |
86 |
(86) |
( g ) |
|
|
Payable to Kantaro - current |
824 |
824 |
|
|
|
Total current liabilities |
3,720 |
3,849 |
|
|
||
|
|
|
|
|
|
|
|
Note payable - Noncurrent |
114 |
114 |
|
|
|
|
Payable to Kantaro - noncurrent |
231 |
231 |
|
|
|
|
Non-current lease liabilities |
- |
256 |
(256) |
( h ) |
|
|
Other liabilities |
53 |
- |
|
|
|
Total liabilites |
|
4,118 |
4,450 |
|
|
|
Stockholders' (deficit) equity : |
|
|
|
|
||
|
Ordinary shares, £0.10 nominal value: 56,011,831 shares authorized; 20,000,000 and 53,816,134 shares issued and outstanding at June 30, 2018 and 2019, respectively |
219 |
232 |
13 |
( i ) |
|
|
Additional paid-in capital |
148,408 |
79,615 |
(68,793) |
( j ) |
|
|
Accumulated other comprehensive (loss) income |
7,116 |
7,580 |
464 |
( k ) |
|
|
Accumulated deficit |
(68,846) |
20,816 |
89,662 |
( l ) |
|
Total stockholders' (deficit) equity |
86,897 |
108,243 |
|
|
||
Total liabilities and stockholders' (deficit) equity |
$ 91,015 |
$ 112,693 |
|
|
(a) Immaterial difference
(b) Differences is attributable to $1.2 million of capitalized software costs which are recorded as property and equipment under U.S. GAAP and Intangibles under IFRS.
(c) Under IFRS, the acquisition of licenses and subsequent development efforts are capitalized and presented as intangible assets. Under U.S. GAAP, such costs are expensed as incured until technological feasability has been achieved or the assets are deemed to have future alternative use. In addition, $1.2 million of capitalized software costs which are recorded as property and equipment under US GAAP and Intangibles under IFRS.
(d) Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized based on available evidence. Under U.S. GAAP, a full valuation allowance has been applied. Under IFRS, a partial valuation allowance has been applied.
(e) Represents the adoption of IAS 17 in connection with the Company's commercial laboratory in Utah. he Comapny has deferred the adoption of ASC 842 under U.S. GAAP until July 1, 2022.
(f) Accounts payable and other current liabilites are presented in the aggregate within the Half Year report while broken out separately on the US GAAP 6-k. Difference represents other immaterial audit adjustments.
(g) Represents the adoption of IAS 17 in connection with the Company's commercial laboratory in Utah. he Comapny has deferred the adoption of ASC 842 under U.S. GAAP until July 1, 2022.
(h) Represents the adoption of IAS 17 in connection with the Company's commercial laboratory in Utah. he Comapny has deferred the adoption of ASC 842 under U.S. GAAP until July 1, 2022.
(i) Represents other immaterial audit adjustments.
(j) Represents cancellation of share premium account and reduction in accumulated deficit under IFRS in anticipation of a distribtuion of FractalDx net assets to the shareholders of Verici. In addition, stock based compensation is recognized on a straight line basis under U.S. GAAP and a graded vesting basis under IFRS.
(k) Represents the difference in weighted average foreign exchange rates and spot rates used for translation of financial statements under IFRS and U.S. GAAP.
(l) Represents cancellation of share premium and reduction in accumulated deficit under IFRS in anticipation of a distribtuion of FractalDx net assets to the shareholders of Verici and differences noted within the Company's consolidated statement of operations and comprehensive loss.
Income Statement
Reconciliation of Net Loss |
|
|
|
|
|
($ thousands) |
|
|
|
|
December 30, 2020 |
Net loss in accordance with IFRS |
|
|
|
(14,036) |
|
(a) Deferred tax assets |
|
|
|
(2,121) |
|
(b) Stock compensation expense |
|
|
|
(107) |
|
(c) Amortization of intangibles |
|
|
|
667 |
|
(d) Verici transaction |
|
|
|
(434) |
|
(e) Other adjustments |
|
|
|
(98) |
|
Total adjustments |
|
|
|
(2,093) |
|
Net loss in accordance with US GAAP |
|
|
|
(16,129) |
|
(a) Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized based on available evidence. Under U.S. GAAP, a full valuation allowance has been applied. Under IFRS, a partial valuation allowance has been applied.
(b) Stock based compensation is recognized on a straight line basis under U.S. GAAP and a graded vesting basis under IFRS.
(c) Amortization expense is higher on the IFRS books as a result of the higher intangible asset balance. Under IFRS, the acquisition of licenses and subsequent development efforts are capitalized and presented as intangible assets. Under U.S. GAAP, such costs are expensed as incured until technological feasability has been achieved or the assets are deemed to have future alternative use.
(d) Attributable to the differences in accounting treatment of the Verici Dx transaction specifically the distribution in specie and subsequent deconsolidation of the Verici entity under IFRS vs. US GAAP.
(e) The remaining difference of $0.1 million represents other immaterial audit adjustments and small accounting differences.
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