13 July 2020

Rutherford Health PLC

2020 Annual Report and Accounts

 

Rutherford Health PLC ("Rutherford Health", the "Company", or the "Group"), the holding company of a group committed to providing innovative cancer care of the highest quality, is pleased to announce today its annual results for the period ended 29 February, 2020.

A copy of the Annual Report and Accounts will be sent to shareholders shortly and will be available on the Company's website at https://www.rutherfordhealth.com/investors/reports-presentations. 

The Group's oncology centres in the UK - named the Rutherford Cancer Centres - offer a comprehensive range of cancer treatments to patients including proton beam therapy, radiotherapy, chemotherapy, imaging and ancillary wellbeing services.

Financial highlights:

§ Revenue of £5.6m with quarter on quarter growth

§ Investment in fixed asset additions: £19.6m

§ Investment resulting in in gross fixed assets: £160.8m

§ Equity inflow: £70.0m

§ New £20.0m debt facility from TP Leasing Limited, £10m of which had been drawn at year end

Operational highlights   

§ First NHS Wales patient receives proton beam therapy at the South Wales centre

§ Three cancer centres operational including proton beam therapy

§ South Wales centre awarded the Macmillan Quality Environment Mark (MQEM) for its excellence in patient care

§ Partnership with the University of Pennsylvania and IBA to train NHS oncologists to meet rising demand for proton beam therapy

Rupert Lowe, chairman of Rutherford Health PLC, commented: "COVID-19 should provide a catalyst for change, putting ideology to the side and utilising all available treatment centres, whether they be NHS or private, to reduce the number of cancer deaths expected due to delayed diagnosis.  Having been treated with PBT in USA myself, I am delighted at the quality of the service that we provide here in the UK, it compares favourably with the more experienced USA centres.  The increased demand for PBT in the UK is encouraging for the Group, as is the range of cancers now being treated at the Rutherford".

Mike Moran, chief executive officer of Rutherford Health PLC, commented: "The Company has made significant progress with three Rutherford Cancer Centres now fully operational, delivering; diagnostics and a range of cancer treatments, including proton beam therapy.  Our fourth centre, in Liverpool, is undergoing its final commissioning stages prior to clinical operations in July. We continue to provide a high-quality service offering to our patients which is evidenced by the testimonials received and the quarter on quarter growth reflected in the annual accounts.  COVID-19 didn't prevent the impressive performance of the business with all services remaining fully operational, zero staff furloughed, and patients being treated in COVID-19 free centres throughout lockdown".   

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

The directors of the Company accept responsibility for the content of this announcement.

Ends

 

Contacts

Rutherford Health PLC	Tel: +44 (0) 16 3381 0661
Michael Moran, Chief Executive Officer
Grant Thornton (NEX Exchange Corporate Adviser)	Tel: +44 (0) 20 7383 5100
Colin Aaronson/ Jamie Barklem/ Niall McDonald

Media House International Ltd                          Tel: +44 (0) 7788 414856

Ramsay Smith

 

  

CHAIRMAN'S STATEMENT

Putting past ideological differences aside

Dear Shareholder

It has been a busy year at Rutherford Health since we listed the Company on the NEX Exchange on 28 February 2019; Nex has now become Aquis Stock Exchange, itself listed on AIM.

This was achieved with support from the Woodford Funds who committed to subscribe for up to £100 million in new ordinary shares to enable the listing to take place. This equity injection has all been received during the 2020 financial year, notwithstanding the well publicised problems at the Woodford Funds, and this has allowed the Company to complete the construction of three cancer centres in Newport, Thames Valley and Northumbria.

All these three centres are now fully operational and a fourth, Liverpool, will start operating later this year. All our centres are focused on cancer treatment, are professionally staffed and are capable of delivering Proton Beam Treatment, using state of the art machines, unlike any other private sector provider. Our care plans are peer reviewed by the University of Pennsylvania, providing extra comfort for our patients, and we can now treat complex organ confined tumours with the precision which was not previously available in this country.

In August 2019 the Company reregistered as a public company and changed its name from Proton Partners International Limited to Rutherford Health plc. The cancer treatment centres trade as Rutherford Cancer centres and the Company's name change to Rutherford Health is to strengthen the Group's brand recognition. To facilitate the re-registration as a public company, a capital reduction was required and this was also completed in August 2019.

During the year, we made some limited progress with developing our relationship with the NHS. We believe the Company has an important role to play in extending the treatments on offer to cancer patients in this country without the need to travel abroad as well as providing additional resources where the NHS has capacity constraints. Cancer is a disease which strikes fear into those diagnosed and it is important that world class treatment is available in this country on a timely basis. Since the year end, the current Covid19 pandemic has stretched the NHS to the limits. This has put current cancer treatments on hold and meant that many cancer diagnoses will have been missed, or people have not sought expert consultation for fear of contracting Covid19 in hospital. There is now an opportunity for the NHS and the private sector to bury any past ideological differences, put the cancer patients first and ensure that all available treatment capacity is used to diagnose, treat and cure those people, of all ages, whose lives are in avoidable danger. The Company has now commenced dialogue with the NHS to offer services to the NHS in the coming months to help deal with the expected backlog of cancer treatments. Over two hundred people are sent abroad for Proton Beam treatment from the UK each year with all the attendant cost and dislocation. This now does not need to happen and we welcome the opportunity to work with the NHS to facilitate this.

Group revenue increased substantially compared to the prior year, from £1.5m to £5.6m. With Northumbria and Thames Valley only becoming fully operational towards the end of the year, and Liverpool opening during the next financial year we expect our financial performance to continue to improve.

At the same time as finalising our capital investment programme, we have also been focusing on developing additional routes to market. To this end, I am particularly excited about our new product, Rutherford Direct, which was launched in June 2020 and is a membership scheme which offers both individuals and companies the opportunity of securing immediate access to the Company's state of the art cancer diagnosis and treatment facilities. Treated early with the best care plan often ensures that downstream problems are substantially mitigated. Further details about Rutherford Direct, which is underwritten by insurers, can be found on the Company's website, www.rutherfordhealth.com. This is the first of what I hope will be many new initiatives for the Company to develop its business and product offerings.

I am pleased to report that during the year we strengthened the Board with several new appointments. Tim Irish, who joins as an independent non-executive director, is currently Vice Chairman of the National Institute for Health and Care Excellence and brings a wealth of life sciences and healthcare experience to the Board. Diana Dyer Bartlett, who is audit committee chairman of several public companies, is an independent non-executive director and has now been appointed Chairman of our Audit Committee. Andrew Bennett is a non-executive director, representing one of our shareholders' interests and is therefore not deemed to be independent; he has extensive financial and real estate experience. All three directors will stand for election at the forthcoming Annual General Meeting.

We welcome dialogue with our shareholders and are in regular contact with our largest shareholders. We continue to provide assistance to the manager of the remaining Woodford Funds holding while they resolve the future of that shareholding.

I would like to place on record my gratitude to the staff, for their dedication to our patients. Their commitment to achieving the best outcomes for patients despite unprecedented times should be commended.

Credit should go to the Management team for turning considerable financial investment into operating cancer centres populated with the most modern technology available. Karol Sikora, our Chief Medical Officer, has extensive experience of cancer treatment and has structured our centres so that they deliver the best available treatment to all our patients. We now need to ensure that patients, Oncologists and the wider cancer community are aware of our capabilities.

I am very proud to be associated with a company that has invested so heavily in helping patients to deal with their cancer problem in a professional, timely, supportive and effective way. We look forward to the future with confidence in what are currently uncertain times.

 

Rupert Lowe

Chairman

10 July 2020

 

  

CHIEF EXECUTIVE OFFICER'S REPORT

In the next decade, more people will be living with cancer than dying of it.

This will be achieved through early diagnosis & genomics, the advancement of drug therapies and, the use of precision radiotherapy and proton beam therapy.

I am delighted to be introducing Rutherford Health's report and accounts for the financial year ended 29 February 2020, the first full year after becoming a listed company on 28 February 2019.

The financial period under review has been a period of quiet but substantial progress. At the start of the financial year, we had completed the construction of our first three Rutherford Cancer Centres with the fourth centre in Liverpool under construction at the time. Construction of the Liverpool centre was completed late in 2019 and is currently being fitted out, with an inspection by the Care Quality Commission (CQC) expected to take place in July 2020. At the start of the year, we were offering, radiotherapy, chemotherapy and imaging at all three centres, with only Newport offering Proton Beam Therapy (PBT). We now offer PBT in all three centres.

Not only does our network enable us to treat an ever-growing number of patients, it provides us with a resilience should one of our proton therapy cyclotrons require unplanned maintenance. We tested this resilience successfully this year when a cyclotron temporarily powered down which meant sending a patient to another Rutherford Cancer Centre for continuity of treatment without re-planning. We were the first proton service in the world to achieve this which showcases the benefit of the proton network.

We have now recruited over 65 NHS oncologists and provided them with practicing privileges to operate within the Rutherford Cancer Centres. Together, we have expanded the indications for proton therapy to include; lung, liver, pancreatic, oesophageal and breast cancers.

A commitment to excellence

Our company is focused above all on excellence in patient care and safety and optimizing outcomes. I believe that these priorities enable us to increase our appeal to cancer patients, private medical insurers and to NHS commissioners. They will also focus us on delivering improved financial performance over the short, medium and long-term.

We have successfully negotiated contracts with NHS Trusts in England and Wales for imaging, SACT and RT services. In addition, we continue to work with the Welsh Health Specialised Services Committee (WHSSC) on behalf of NHS Wales for adult PBT patients.

We have increased the number of insurers, signed up to refer patients, from 19 to 30 with several of them now offering PBT as routine treatments for specific cancers. The attraction of Rutherford Health is that we offer a comprehensive service making us the provider of choice for their members.

There has been a significant upward trend in the demand from self-pay patients driven by several marketing campaigns to inform patients of the services available.

We have succeeded in our aim for 2019/20 to transition the focus of the company from construction to service delivery and commercialisation. Throughout the year we treated 317 patients across all services; 88 proton beam therapy (PBT), 127 radiotherapy (RT) and 102 Systemic Anti-Cancer Therapy (SACT) a 356% increase on the previous year.

Governance

Governance remains an essential discipline and a key strength of Rutherford Health. This year we strengthened our Clinical Governance Committee by appointing the Senior Independent non-executive Director, who has a clinical background, as Chair to provide Board oversight to issues involving patient safety. This Committee reviews, analyses and assesses all activity across our clinical services, and gives clear visibility at Board level of patient safety. The adoption of a Board member as chair of the clinical governance committee demonstrates an open and fair culture within the organisation and strengthens even further, our excellence model and our ability to evidence that we are 'well-led' in line with regulatory requirements.

In 2019/20 we made sustainability a core part of how we run our business by adopting the UN's 17 Sustainable Development Goals (SDG's). We have linked the SDG's to performance and communicated our action plan to internal and external stakeholders.

Innovation

We continue to lead on innovation in cancer treatment. This year we worked with Ion Beam Applications (IBA) at the Rutherford Cancer Centre Thames Valley to be the first IBA Proteus One centre to deliver FLASH irradiation. This significant milestone has the potential to change the landscape of radiotherapy and patient care, making PBT more effective, cheaper and therefore more accessible.

In addition, we have introduced hyperfractionation across several indications to maximise the effect of radiation on cancer and minimize any negative side effects. Hyperfractionation is radiotherapy in which the total dose of radiation is divided into larger doses and given over a shorter period.

We have also taken the lead on innovation for patients wearing Cardiac Implant Electronic Devices (CIED). We are working with the manufacturers of the devices to determine safe limits of radiotherapy and proton therapy on CIED's and their leads.

Investment

On 28 February 2019, the final day of the previous financial period, Rutherford Health's shares were admitted to trading on the NEX Exchange Growth Market, now the AQSE Growth Market, securing a £100 million equity funding package of which £20 million was invested on admission. During the year a further £70 million was invested under the agreement. The Company also paid back existing loans to the value of £23 million and took out a new £20 million loan facility from TP Leasing Limited, £10m remains undrawn at year end. The funds we have raised over the last year provide a strong financial footing from which to complete the development of our Liverpool centre and to build for the future.

Post year end events

In June 2020 we launched Rutherford Direct, a membership scheme backed by the IOMA Group, a specialist provider of insurance and wealth management solutions and underwritten by a Lloyds syndicate, that offers members access to the network of Rutherford Cancer Centres for treatment following a cancer diagnosis. The balance of the Woodford commitment of £10m was invested in March 2020.

Key Performance Indicators

The key performance indicators are Revenue, Gross Fixed Assets, Cash and Patient numbers. Further information is provided in the Group Financial Review in the annual report.

Outlook

Healthcare continues to be an attractive sector; it is entering a period of significant change bringing both challenges and opportunities which Rutherford Health can meet and exploit.

The Company continues to lead in precision radiotherapy and early diagnostics, in September 2020 the Company will commission its first Elekta Unity MRLinac at the Rutherford Cancer Centre North West in Liverpool. This will enable us to treat gating tumours and adjust the treatment plan in real time. In addition, in Northumberland, Thames Valley and Liverpool the Company is introducing ultrasound and mammography services to become a leading private provider of breast diagnostics and treatment.

We intend to further develop our diagnostics offering via our Rutherford Diagnostics company which is negotiating long-term NHS contracts with several NHS Trusts in England.

Brexit

In December 2020 the UK will leave the transition period, an event for which the Company has prepared for, and considers that it is well insulated against. All major equipment coming from EU partners, such as IBA, will be delivered and commissioned or subject to pre-brexit contractual arrangements. The on-going maintenance liability to IBA is in the form of a service contract which is managed through a UK subsidiary. Exchange rate risks have been mitigated through Sterling and Euro contracts.

Covid

The COVID 19 pandemic (C19p) was a significant test of the Company's resilience plans and ability to provide patient services during the worse healthcare crisis in recent history. The Company fared very well with zero staff furloughed, full operational capability and no drop off in financial performance.

At the outset of the C19p, the Company employed retired military CBRN specialists, (Chemical, Biological, Radiological and Nuclear), to help support a COVID free environment. This measure contributed to all three Rutherford Cancer Centres remaining 100% operational capability throughout C19p.

The Company maintained a staffing profile of 98.5% available with only 1.5% shielding due to underlying health issues. Non-clinical staff worked from home during lockdown and the IT infrastructure was able to support them seamlessly.

The Company maintained pre-C19p revenue trends, despite a falloff in self-pay referrals. PMI referrals increased across all services and NHS referrals for SACT and RT also increased. Additional NHS contracts were signed and negotiations with NHS England and the Independent Healthcare Providers Network continue to support the increased demand for cancer treatment post-C19p.

Work continued on the commissioning and CQC of the Rutherford Cancer Centre North West in Liverpool. The centre remains on schedule for operations to start in July 2020.

Finally, I want to say thank you to all Rutherford Health employees, stakeholders and patients for their work and support throughout 2019. Alongside our patients, our highest priority is the health and welfare of our own staff. To this end, we successfully tested everyone in the Company for Covid-19 importing the highest quality tests available internationally and have a programme for ongoing testing. I very much look forward to working with them in 2020 and beyond, to supporting our NHS and to deliver our long-term plan of becoming a world class cancer care company by delivering the most advanced treatments available.

 

Mike Moran

Chief Executive Officer

10 July 2020

 

 

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME

YEAR ENDED 29 FEBRUARY 2020

 

		2020	2019
	Note	£'000	£'000
Revenue	15	5,606	1,465
Cost of sales		(5,190)	(2,872)
Gross profit/(loss)		416	(1,407)
Administrative expenses		(26,077)	(17,718)
Operating loss		(25,661)	(19,125)
Finance expense	21	(3,615)	(2,393)
Loss before taxation	16	(29,276)	(21,518)
Income tax credit	22	4,842	3,253
Loss for the financial year		(24,434)	(18,265)
Fair value gain/(loss) on investment	7	3,704	(4,163)
Total comprehensive loss		(20,730)	(22,428)

All the activities of the Group are from continuing operations.

		2020	2019
Basic and diluted earnings per share	Note	Pence	Pence
Loss per share attributable to the ordinary equity holders of the Company	29	(12.1)	(17.4)

The notes to the consolidated financial statements are an integral part of these financial statements.

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 29 FEBRUARY 2020

 

		2020	2019
	Note	£'000	£'000
ASSETS
Non-current assets
Intangible assets	6	300	541
Property, plant and equipment	5	150,317	137,014
Investments	7	3,704	-
Deferred tax asset	14	10,342	6,041
Non-current assets		164,663	143,596
Current assets
Trade and other receivables	8	9,713	6,915
Current tax receivable		510	-
Cash and cash equivalents	9	19,157	20,589
Current assets		29,380	27,504
Total assets		194,043	171,100
EQUITY ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS
Called up share capital	10	192	152
Share premium account	11	192,596	157,928
Fair Value reserve		(459)	(4,163)
Accumulated losses	11	(24,816)	(35,507)
Total equity		167,513	118,410
LIABILITIES
Non-current liabilities
Borrowings	12	10,586	24,515
Current liabilities
Trade and other payables	13	15,944	28,175
Total liabilities		26,530	52,690
Net equity and liabilities		194,043	171,100

The notes to the consolidated financial statements are an integral part of these financial statements.

These financial statements were approved by the Board of Directors and authorised for issue on 10 July 2020, and are signed on behalf of the Board by:

 

Mr M Moran MBE

Director

Company registration number: 09420705

 

 

 

 

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 29 FEBRUARY 2020

 

		2020	2019
	Note	£'000	£'000
ASSETS
Non-current assets
Intangible assets	6	300	541
Property, plant and equipment	5	294	823
Investments	7	3,935	137
Deferred tax asset	14	1,754	1,785
Non-current assets		6,283	3,286
CURRENT ASSETS
Trade and other receivables	8	199,437	141,586
Cash and cash equivalents	9	19,151	20,589
Current assets		218,588	162,175
Total assets		224,871	165,461
EQUITY ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS
Called up share capital	10	192	152
Share premium account	11	192,596	157,928
Fair Value reserve		(459)	(4,163)
Retained earnings/(accumulated losses)	11	21,194	(14,282)
Total equity		213,523	139,635
LIABILITIES
Non-current liabilities
Borrowings	12	10,049	23,934
Current liabilities
Trade and other payables	13	1,299	1,892
Total liabilities		11,348	25,826
Net equity and liabilities		224,871	165,461

The company has elected to take the exemption under Section 408 of the Companies Act 2006 not to present the Parent Company Income Statement.

The profit for the financial year of the Company was £351,000 (2019: £387,000).

The notes to the consolidated financial statements are an integral part of these financial statements.

These financial statements were approved by the Board of Directors and authorised for issue on 10 July 2020, and are signed on behalf of the Board by:

 

Mr M Moran MBE

Director

Company registration number: 09420705

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 29 FEBRUARY 2020

 

		Share
	Called up	premium	Accumulated	Fair Value	Total
	share capital	account	Losses	reserve	Equity
	£'000	£'000	£'000	£'000	£'000
AT 1 MARCH 2018	121	111,309	(17,416)	-	94,014
Loss for the year	-	-	(18,265)	-	(18,265)
Fair value loss on investment	-	-	-	(4,163)	(4,163)
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR	-	-	(18,265)	(4,163)	(22,428)
Proceeds of share issues	31	47,554	-	-	47,585
Less costs of share issues	-	(935)	-	-	(935)
Share-based payments	-	-	174	-	174
TOTAL INVESTMENTS BY AND DISTRIBUTIONS TO OWNERS	31	46,619	174	-	46,824
AT 28 February 2019	152	157,928	(35,507)	(4,163)	118,410
Loss for the year	-	-	(24,434)	-	(24,434)
Fair value gain on investment	-	-	-	3,704	3,704
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR	-	-	(24,434)	3,704	(20,730)
Issue of shares	40	69,998	-	-	70,038
Less costs of share issues	-	(330)	-	-	(330)
Capital reduction		(35,000)	35,000	-	-
Share based payment expense (net of exercise)	-	-	125	-	125
TOTAL INVESTMENTS BY AND DISTRIBUTIONS TO OWNERS	40	34,668	35,125	-	69,833
AT 29 February 2020	192	192,596	(24,816)	(459)	167,513

On 14 August 2019 a capital reduction was completed to create a distributable reserve and reregister as a public limited company.

The notes to the consolidated financial statements are an integral part of these financial statements.

 

 

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 29 FEBRUARY 2020

 

			Retained
		Share	Earnings/
	Called up	premium	(Accumulated	Fair Value	Total
	share capital	account	Losses)	reserve	Equity
	£'000	£'000	£'000	£'000	£'000
AT 1 MARCH 2018	121	111,309	(14,843)	-	96,587
Profit for the year	-	-	387	-	387
Fair value loss on investment	-	-	-	(4,163)	(4,163)
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR	-	-	387	(4,163)	(3,776)
Issue of shares	31	47,554	-	-	47,585
Less costs of share issues	-	(935)	-	-	(935)
Share-based payments	-	-	174	-	174
TOTAL INVESTMENTS BY AND DISTRIBUTIONS TO OWNERS	31	46,619	174	-	46,824
At 28 February 2019	152	157,928	(14,282)	(4,163)	139,635
Profit for the year	-	-	351	-	351
Fair value gain on investment	-	-	-	3,704	3,704
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	-	-	351	3,704	4,055
Issue of shares	40	69,998	-	-	70,038
Less costs of share issues	-	(330)	-	-	(330)
Capital reduction	-	(35,000)	35,000	-	-
Share based payment expense (net of exercise)	-	-	125	-	125
TOTAL INVESTMENTS BY AND DISTRIBUTIONS TO OWNERS	40	34,668	35,125	-	69,833
AT 29 February 2020	192	192,596	21,194	(459)	213,523

On 14 August 2019 a capital reduction was completed to create a distributable reserve and reregister as a public limited company.

The notes to the consolidated financial statements are an integral part of these financial statements.

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED 29 FEBRUARY 2020

 

		2020	2019
	Note	£'000	£'000
Cash flows from operating activities
Net cash (used in)/generated from operations	23	(34,077)	1,365
Income taxes received		31	43
Net cash (used in)/generated from operating activities		(34,046)	1,408
Cash flows from investing activities
Purchase of property, plant and equipment		(19,550)	(42,322)
Purchase of intangibles		-	(39)
Proceeds from the disposal of property plant and equipment		-	304
Net cash used in investing activities		(19,550)	(42,057)
Cash flows from financing activities
Net proceeds from issue of shares		69,708	45,968
Net (repayments)/proceeds from issue of loans		(15,349)	10,519
Lease payments		(72)	(92)
Interest paid		(2,123)	(1,852)
Net cash generated from financial activities		52,164	54,543
Net (decrease)/increase in cash and cash equivalents		(1,432)	13,894
Cash and cash equivalents at the start of the financial year		20,589	6,695
Cash and cash equivalents at the end of the financial year	9	19,157	20,589

The notes to the consolidated financial statements are an integral part of these financial statements.

 

  

 

NOTES TO THE FINANCIAL STATEMENTS

YEAR ENDED 29 FEBRUARY 2020

1. General information

Rutherford Health PLC (hereinafter the 'Company', and together with its subsidiaries, the 'Group') is a public limited company incorporated and domiciled in the United Kingdom. The registered office of the Company is 15 Bridge Street, Hereford, HR4 9DF. The registered company number is 09420705. A list of the Company's subsidiaries is presented in Note 7.

The Group's principal activity is that of developing cancer centres including Proton Beam Therapy, together with facilitating the provision of clinical treatment.

2. Accounting policies

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

2.1 Basis of preparation

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS), IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared on a going concern basis under the historical cost convention, and as modified by the revaluation of certain financial liabilities at fair value through profit and loss.

The Company's individual financial statements have been prepared on a going concern basis under the historical cost convention and in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework' (FRS 101) and the Companies Act 2006.

Both the Group and Company financial statements are prepared in Pounds Sterling, rounded to the nearest thousand, unless otherwise indicated.

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts in the financial statements. The areas involving a higher degree of judgment or complexity, or areas where assumptions or estimates are significant to the financial statements are disclosed in Note 4.

The IFRS primary financial statements are presented in accordance with IAS 1 - 'Presentation of Financial Statements'.

2.2 Going Concern

The Group is funded through a combination of equity funding and a debt finance facility of £20m to support the building of its facilities and cashflow requirements during the growth phase of the business. Only three of its four centres were operational in 2019/20, and the fourth is expected to commence services in the current financial year. As a result the Group expects to continue to be loss-making in the current financial year.

The Group has prepared cashflow forecasts that take account of the current capital expenditure plans, draw down of committed funding and an expectation of increases in patient numbers across all its sites. However, the Group is still in the early stages of its revenue life cycle and the future cash flow forecasts prepared by the Group include some significant growth assumptions.

Sensitivity analysis has been prepared on the cash flow projections to evaluate the uncertainty as to the future impact on the Group of the recent COVID-19 outbreak. Thus far, we have seen a slower growth rate in patient numbers due to COVID-19 and the sensitivity analysis assumes: continued slow down in revenue growth across the centres, no reductions in overheads and forecast capital expenditure continues to plan.

This downside scenario is currently considered unlikely, not least because the current low rate of treatment of cancer in the UK does not represent a reduction in cancer in the population. However, it is difficult to predict the overall impact of COVID -19 over the coming year at this stage. A downside scenario whereby there is a significant delay in the Group achieving its planned revenue growth, it is likely that additional funding would be required. The board regularly reviews its financing options and discussions with potential funders and investors indicate that should the Group require further funding, this would be available. Only the downside scenario detailed above would indicate the existence of a material uncertainty which may cast significant doubt upon the Group's ability to continue as a going concern. The Consolidated Financial Statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

This matter will be referred to in the audit opinion.

2.3 New accounting standards and interpretations

(a) New standards, amendments and interpretations

No new standards, amendments or interpretations, effective for the first time for the financial year beginning on or after 1 March 2019 have had a material impact on the Group or Company.

New standards, amendments and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for periods beginning after 1 March 2020 and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the financial statements of the Group.

2.4 Disclosure exemptions - Parent Company individual financial statements

In preparing its individual financial statements under FRS 101, the Company has taken advantage of the following disclosure exemptions permitted by FRS 101:

●         IFRS 7, 'Financial Instruments: Disclosures';

●         Paragraphs 91 to 99 of IFRS 13 'Fair value measurement' (disclosure of valuation techniques and inputs used for fair value measurement of assets and liabilities);

●         The requirements of the second sentence of paragraph 110 and paragraphs 113(a), 114, 115, 118, 119(a) to (c), 120 to 127 and 129 of IFRS 15;

●         The requirements of paragraphs 52 and 58, the second sentence of paragraph 89, and paragraphs 90, 91 and 93 of IFRS 16 Leases;

●         The following paragraphs of IAS 1, 'Presentation of financial statements': 16 (statement of compliance with all IFRS);

●         38A (requirement for minimum of two primary statements, including cash flow statements);

●         38B-D (additional comparative information);

●         134-136 (capital management disclosures);

●         IAS 7, 'Statement of cash flows'; and

●         Paragraph 30 and 31 of IAS 8 'Accounting policies, changed in accounting estimates and errors'; Paragraph 17 of IAS 24, 'Related party disclosures' (key management compensation); and

●         The requirements in IAS 24, 'Related party disclosures' to disclose related party transactions entered into between two or more members of a group.

2.5 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (and its subsidiaries) made up to 29 February each period.

Control is achieved where the Company has power over the investee: exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor's returns.

Where necessary, adjustments are made to the reported results and financial position of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.

Intercompany transactions and balances between Group enterprises are eliminated on consolidation.

2.6 Revenue recognition

The Group generates its revenue from fees receivable from the operation of its cancer treatment centres. Revenue is recognised when the treatment is provided.

A typical treatment is broken down into planning and delivery. A planning review is completed for each patient followed by treatment delivery which is broken down into a number of "fractions" or "cycles" depending on the treatment provided.

Generally, prices are agreed separately for planning, and for each fraction or cycle.

Where a patient does not complete the course of treatment, only those fractions or cycles delivered to that point will be charged for and recognised as revenue

2.7 Foreign currency translation

Functional currency and presentation

The functional and presentation currency is Pounds Sterling ('£' or 'GBP').

Transactions and balances

Foreign currency transactions are translated into the functional currency (sterling) using the exchange rate prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of last year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

2.8 Property, plant and equipment

Property, plant and equipment is stated at historic cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. This includes the direct cost of labour and attributable overheads for assets which have been internally constructed.

Subsequent costs are included in an asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

The costs of repairs and maintenance are charged to profit or loss in the period in which they are incurred.

Depreciation on other assets is calculated using the straight-line method to allocate their cost over their estimated useful lives, as follows:

 

Class	Rates
Freehold land	Not depreciated
Freehold buildings	25 years
IT equipment	3 years
Fixtures & fittings	3 years
Motor vehicles	3 years
Machinery	10 years - 25 years
Right of Use Assets	Shorter of useful life and lease term on straight-line basis
Assets under construction	Not depreciated

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within administrative expenses in profit or loss.

2.9 Investments in subsidiary undertakings

Investments in subsidiaries are measured at cost less accumulated impairment.

2.10 Financial assets

2.10.1 Classification

The Group classifies its financial assets in the following measurement categories:

●         those to be measured subsequently at fair value (either through other comprehensive income ('OCI'), or through profit or loss), and

●         those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through OCI.

2.10.2 Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

(a) Debt instruments

Subsequent measurement of debt instruments depends on the Group's business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:

●         Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.

●         Fair value through other comprehensive income ('FVOCI'): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains and losses and impairment expenses in other expenses.

●         Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit or loss within other gains/(losses) in the period in which it arises.

(b) Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group's management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group's right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/ (losses) in the statement of total comprehensive income as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

2.10.3 Impairment

The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

2.11 Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments, with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

2.12 Share capital

Ordinary shares are classified as equity.

2.13 Dividends

Dividends distributed to the Group's shareholders are recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Group's shareholders or paid following the approval of the Directors.

2.14 Trade and other payables

Trade and other payables are non-derivative financial liabilities with fixed or determinable payments and relate to obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are included in current liabilities, except for maturities greater than twelve months after the balance sheet date. These are classified as non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.

2.15 Borrowings

Borrowings are initially recorded at fair value, including the costs incurred in raising the debt. In subsequent periods they are valued at amortised cost and the difference between the funds obtained (net of the costs involved in raising the funds) and the repayment value, as the case may be, and if it is significant, are recorded in profit or loss over the life of the debt using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre payment for liquidity services and amortised over the period of the facility to which it relates.

2.16 Leases

The Group and Company lease various office premises and land. Rental contracts are typically made for fixed periods of three to five years for office premises and 98 years for land. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants.

Leases are recognised as a right-of-use asset and corresponding liability at the date on which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of:

●         fixed payments (including in-substance fixed payments), less any lease incentives receivable;

●         variable lease payments that are based on an index or rate;

●         amounts expected to be payable by the lessee under residual guarantees;

●         the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

●         payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the Group's incremental borrowing rate.

Right-of-use assets are measured at cost comprising the following:

●         the amount of the initial measurement of the lease liability;

●         any lease payments made at or before the commencement date;

●         any initial direct costs; and

●         restoration costs

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of twelve months or less. Low-value assets comprise IT equipment.

2.17 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the Statement of Total Comprehensive Income, except to the extent that it relates to items recognised in OCI or directly in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation, it establishes provisions, when appropriate, as the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

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 taxes assets and liabilities relate to income taxes levied by the same taxation authority.

2.18 Employee benefits

a) Post-employment obligations:

The Group operates a defined contribution plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

b) Share-based compensation benefits

Share-based compensation benefits are provided to employees via Rutherford Health PLC's Company Share Option Plan.

The fair value of options granted under the Company Share Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:

●         including any market performance conditions (e.g. the entity's share price);

●         excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period); and

●         including the impact of any non-vesting conditions (e.g. the requirement for employees to save or hold shares for a specific period of time).

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

 

 

 

 

3. Financial risk factors

3.1 Financial risk factors

The Group's operations may expose it to a variety of financial risks that include the market risk, credit risk, operational risk and liquidity risk. The Group, through its Board of Directors, seeks to limit the adverse effects on the financial performance of the Group as follows:

a) Market risk

Market risk for the Group encompasses all those market risk factors that impact the value of the Group's assets and liabilities and the expected value in base currency of the Group's revenues and costs. The main risk factors are currency risk, inflation risk and interest rate risk. The Group's policies for managing these are as follows:

(i) Currency risk

The Group is exposed to translational and transactional foreign exchange risk as it operates in various currencies, including US Dollars and the Euro, which affect the management and levels of working capital.

Any contract in which the settlement amount is in excess of £100,000 and is expressed in a currency other than Sterling, or in which a domestic currency payment amount is calculated using an exchange rate which has not been fixed and agreed in advance must be approved in advance by the Finance Director.

Currency hedging strategy for specific large projects or acquisitions in excess of £5 million is agreed in advance by the Board.

As at 29 February 2020, the Group held outstanding liabilities of $6,824 and €8,408 (2019: $61,734 and €5,751,168).

(ii) Inflation risk

The Group has exposure to the inflationary effect in countries in which it operates. This exposure could affect the Group's cost and/or investment base. The Group's cost base is mainly exposed to the inflation rates and changes in payroll taxes in the UK.

No specific hedging of inflation risk has been carried out although any forecast movement in inflation forecasts is modelled within the Group's financial forecasts for adverse effects and to ensure adequate working capital is available for operations.

(iii) Interest rate risk

Interest rate risk arises primarily on the Group's borrowings or on its investment of the cash balances. In particular, interest on the majority of the Group's borrowings is affected by LIBOR.

The Group finances its operations through retained cash reserves and, potentially, overdraft facilities. The policy of the Group is to monitor exposure to interest rate risk and take into account potential movements in interest rates as well as liquidity considerations when selecting methods of financing.

b) Credit risk

Credit risk is the risk that a third party might fail to fulfil its performance obligations under the terms of a financial instrument. For cash and cash equivalents and trade and other receivables, credit risk represents the carrying amount on the balance sheet.

The Group has three main classes of Payor - Self Pay Patients, Private Medical Insurers and the NHS.

Private Medical Insurers and the NHS are deemed to be of low credit risk. There are relatively few Private Medical Insurers in the market, and have sufficient credit ratings to support credit terms. The NHS is a state backed institution. Credit terms for Private Medical Insurers and the NHS range from 30 to 60 days.

Self pay patients inherently carry a higher risk profile, and the Group therefore insists on cleared funds in advance before any treatment is delivered.

The Group's business will be predominantly with companies with a low inherent bad debt risk. The Group is therefore unlikely to take out credit insurance in the foreseeable future.

The Group will only invest surplus funds in UK bank/building society deposits, denominated in Pounds Sterling. Furthermore, funds will only be invested with Prudential Regulatory Authority regulated UK financial institutions. In addition, only banks or building societies obtaining a satisfactory rating - at least a B+ grade (high quality/upper medium grade/strong) - with Standard and Poors, Fitch and Moody's will be selected.

c) Operational risk

The Group has numerous operational risks, ranging from control over bank accounts to its processes for delivering and supporting patient care centres to a required level of quality, safety and on a timely basis and retention and recruitment of key personnel. A key risk, as for any Group, is the reputational risk that might arise from poor execution, non-delivery or late delivery of a high profile project or breach of confidentiality for sensitive data.

The Group's Directors regularly review controls over certain aspects of the operations of the Group. In addition, the Directors maintain an operational risk register. The Board attaches importance to maintaining appropriate internal controls to help identify financial risk and treasury management implications.

d) Liquidity risk

Liquidity risk is the risk of loss from not having access to sufficient funds to meet both expected and unexpected cash demands.

The Group seeks to manage financial risk by ensuring that sufficient liquidity is available to meet foreseeable needs and by investing cash assets safely as well as profitably. The Group's working capital report shows forecast monthly movements in working capital and cash for the following year.

The table below analyses the Group's non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows:

 

	Less than	Between	Between	Over
	1 year	1 and 2 years	2 and 5 years	5 years
At 29 February 2020	£'000	£'000	£'000	£'000
Trade payables and other payables	15,944	-	-	-
Borrowings	249	1,325	8,426	-
Lease liabilities	103	44	117	442
	16,296	1,369	8,543	442

 

	Less than	Between	Between	Over
	1 year	1 and 2 years	2 and 5 years	5 years
At 28 February 2019	£'000	£'000	£'000	£'000
Trade payables and other payables	28,175	-	-	-
Borrowings	5,457	10,457	9,241	-
Lease liabilities	119	54	248	357
	33,751	10,511	9,489	357

3.2 Capital management

The objective of the Group in terms of capital management is to safeguard its capacity to continue as a going concern in order to ensure value for its shareholders and profit for other holders of its net equity instruments and to maintain an optimum capital structure and reduce its cost.

Management regards the capital of the Group to comprise the issued share capital and retained earnings. Management will use dividends as the main tool of managing and returning surplus capital to shareholders and to make such returns as and when surplus capital is identified.

 

 

4. Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

4.1 Critical judgments in applying the entity's accounting policies

(a) Investment in Proton Partners International Healthcare Investments LLC

Management has assessed the level of influence that the Group has on Proton Partners International Healthcare Investments LLC and determined that it does not have significant influence or control over its operations. Consequently this investment is recognised as a trade investment.

4.2 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

a)    Carrying value of property, plant and equipment (Group)

The Group determines whether property, plant and equipment are impaired when indicators of impairments exist or based on the annual impairment trigger assessment. The annual impairment trigger assessment requires an estimate of the value in use of the CGUs to which the tangible fixed assets are allocated, which is predominantly at the individual cancer centre site level. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from each cancer centre andand discount these to their net present value at a discount rate. The resulting calculation is sensitive to the assumptions in respect of future cash flows and the discount rate applied. The Directors consider that the assumptions made represent their best estimate of the future cash flows generated by the CGUs and that the discount rates used are appropriate given the risks associated with the specific cash flows. A sensitivity analysis is performed over the assumptions used to ascertain how sensitive the analysis is to an potential impairment trigger. Based on the sensitivity analysis performed, the Directors conclude that no impairment triggers have been identified. However, it is considered appropriate to disclose this as an area of significant estimation due to the size of the balance and the fact that it could change as a result of future events.

b)    Recognition of deferred tax assets (Group)

The recognition of deferred tax assets is subject to estimations of the future available taxable profits that the Directors consider to be more likely than not to occur, based on the Group's future forecasts. As disclosed in Note 14, the Group has recognised deferred taxation assets of £10,342,000 (2019: £6,041,000), and unrecognised deferred taxation assets of £355,890 (2019: £205,739) arising predominantly from unutilised trading losses. The Directors believe it is probable that the Group will be able to utilise all losses (recognised & unrecognised) within a five year period. However, it is considered appropriate to disclose this as an area of significant estimation due to the size of the balance and the fact that it could change as a result of future events.

c)     Recoverability of intercompany balances (Company only)

The Company determines whether intercompany balances, which are all repayable on demand and interest free, are recoverable based on the recovery strategies in place. These recovery strategies include an assessment of whether the Company will experience an expected credit loss which in turn is based on the current financial position of the borrower, the future financial outlook of the borrower, the interest rate on the borrowing and the time it would take to fully recover the outstanding balance from the borrower.  The Directors have considered the recovery strategies in place at the year end and concluded that the Company will recover the outstanding balances  without experiencing any credit / impairment loss. However, it is considered appropriate to disclose this as an area of significant estimation due to the size of the balance and the fact that it could change as a result of future events.5. Property, plant and equipment.

 

 

5. Property, plant and equipment

 

							Assets
	Freehold	Plant &	IT	Fixtures &	Motor	Right of use	under
	property	machinery	equipment	fittings	vehicles	assets	construction	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Cost
At 1 March 2018	4,262	3,718	1,338	377	11	490	89,289	99,485
Additions	-	-	577	380	-	399	41,363	42,719
Disposals	-	(48)	-	(6)	-	-	(250)	(304)
Reclass	-	66,872	-	-	-	-	(66,872)	-
At 28 February 2019	4,262	70,542	1,915	751	11	889	63,530	141,900
Accumulated depreciation
At 1 March 2018	383	99	717	105	9	89	-	1,402
Reclass	(307)	307	-	-	-	-	-	-
Charge for the year	131	2,622	433	163	2	133	-	3,484
At 28 February 2019	207	3,028	1,150	268	11	222	-	4,886
Net book value
At 28 February 2019	4,055	67,514	765	483	-	667	63,530	137,014
At 28 February 2018	3879	3619	621	272	2	401	89,289	98,083

 

							Assets
	Freehold	Plant &	IT	Fixtures &	Motor	Right of use	under
	property	machinery	equipment	fittings	vehicles	assets	construction	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Cost
At 1 March 2019	4,262	70,542	1,915	751	11	889	63,530	141,900
Additions	9	-	451	139	-	45	18,906	19,550
Reclass	-	37,572	-	-	-	-	(37,572)	-
Disposals	-	(501)	-	-	(11)	(168)	-	(680)
At 29 February 2020	4,271	107,613	2,366	890	-	766	44,864	160,770
Accumulated depreciation
At 1 March 2019	207	3,028	1,150	268	11	222	-	4,886
Charge for the year	131	4,856	438	213	-	141	-	5,779
On disposal	-	(36)	-	-	(11)	(165)	-	(212)
At 29 February 2020	338	7,848	1,588	481	-	198	-	10,453
Net book value
At 29 February 2020	3,933	99,765	778	409	-	568	44,864	150,317
At 28 February 2019	4,055	67,514	765	483	-	667	63,530	137,014

 

	IT	Fixtures &	Right of use
	equipment	fittings	assets	Total
Company	£'000	£'000	£'000	£'000
Cost
At 1 March 2019	1,664	21	292	1,977
Additions	283	8	43	334
Disposals	(1,050)	(7)	(104)	(1,161)
At 29 February 2020	897	22	231	1,150
Accumulated depreciation
At 1 March 2019	1,032	19	103	1,154
Charge for the year	287	4	68	359
On Disposal	(549)	(7)	(101)	(657)
At 29 February 2020	770	16	70	856
Net book value
At 29 February 2020	127	6	161	294
At 28 February 2019	632	2	189	823

6. Intangible assets

 

	Intellectual
	Property
Group and Company	£'000
Cost
At 1 March 2019	721
At 29 February 2020	721
Amortisation
At 1 March 2019	180
Charge for the year	241
At 29 February 2020	421
Carrying amount
At 29 February 2020	300
At 28 February 2019	541

Acquisition represents Intellectual Property as part of insourcing the IT functions. The asset is being amortised over three years.

There is no further commitment to acquire Intangible Assets going forward.

7. Investments

 

	Other
	investments
	other than
	loans
Group	£'000
Fair value
At 1 March 2019	-
Impairment
Reversal of Impairment	3,704
At 29 February 2020	3,704
Carrying amount
At 29 February 2020	3,704
At 28 February 2019	-

 

		Other
	Shares in	investments
	Group	other than
	undertakings	loans	Total
Company	£'000	£'000	£'000
Cost/Fair value
At 1 March 2019	137	-	137
Additions	94	-	94
Reversal of Impairment	-	3,704	3,704
At 29 February 2020	231	3,704	3,935
Carrying amount
At 29 February 2020	231	3,704	3,935
At 28 February 2019	137	-	137

Subsidiaries, associates and other investments

Details of the investments in which the group and the parent company have an interest of 20% or more are as follows:

 

		Percentage of
Name of subsidiary	Class of share	shares held	Principal Activity
Rutherford Cancer Care Limited	Ordinary	100	Medical practice activities
Rutherford Diagnostics Limited	Ordinary	100	Medical practice activities
Rutherford Estates Limited	Ordinary	100	Development of property
Rutherford Innovations Limited	Ordinary	100	Development activity
Proton Partners International Limited	Ordinary	100	Dormant
Rutherford Infrastructures Limited	Ordinary	100	Development of property

All subsidiaries are directly held by the Company. The registered office of Rutherford Diagnostics Limited is Accelerator, 1 Daulby Street, Liverpool, L7 8XZ. All other subsidiaries registered offices are 15 Bridge Street, Hereford, HR4 9DF.

Other investments - Group and Company

Other investments are classified as financial assets at FVOCI.

Other investments comprise of £3,704,000 (2019 - £Nil) relating to Proton Partners International Healthcare Investments LLC.

The Company has reached agreement to sell the investment to a third party. Management has therefore decided to adjust the fair value of the investment to reflect the sales price agreed.

For the year ended 29 February 2020, Other investments were classified as assets held for sale. On the adoption of IFRS 9, the Group has made the irrevocable election to classify these as held at FVOCI.

Upon disposal of these equity investments, any balance within the OCI reserve is reclassified to retained earnings and is not reclassified to profit or loss.

There is no quoted market price in an active market and so the fair value has been measured using an alternative valuation technique being the value of the share sale agreement.

8. Trade and other receivables

 

	Group			Company
	2020	2019		2020	2019
	£'000	£'000		£'000	£'000
Trade debtors	591	175		-	-
Amounts due from subsidiary companies	-	-		195,815	137,473
Prepayments and accrued income	3,911	1997		451	397
Other debtors	3,232	3,649		3,171	3,645
VAT Recoverable	1,979	1,094		-	71
Total trade and other receivables	9,713	6,915		199,437	141,586

The debtor balances are shown at their amortised cost and there are no significant differences with respect to their fair value. There were no provisions for impairment made during the year.

The carrying amounts of the receivables are all denominated in Pounds Sterling.

Amounts due from subsidiary companies are interest free and repayable on demand.

9. Cash and cash equivalents

 

	Group			Company
	2020	2019		2020	2019
	£'000	£'000		£'000	£'000
Cash at bank and in hand	19,157	20,589		19,151	20,589
Net cash and cash equivalents	19,157	20,589		19,151	20,589

All balances were held at a financial institution with a suitable credit rating.

10. Called up share capital

Issued, called up and fully paid

 

	Group and Company
	Number of Shares				£'000
	Ordinary	Growth	Deferred		Ordinary	Growth	Deferred
	shares	shares	shares		shares	shares	shares		Total
At 1 March 2018	120,673,956	5,188,833	-		121	4	-		125
Issued in Year	26,293,132	740,558	-		26	1	-		27
Redesignated	5,734,809	(5,734,809)	-		5	(5)	-		-
Repurchased	-	(194,582)	-		-	-	-		-
At 28 February 2019	152,701,897	-	-		152	-	-		152
Issued in Year	39,794,600				40	-	-		40
At 29 February 2020	192,496,497	-	-		192	-	-		192

On 17 May 2019, the Company allotted 5,681,818 £0.001 ordinary shares for £1.76 each.

On 10 June 2019, the Company allotted 1,420,454 £0.001 ordinary shares for £1.76 each.

On 17 June 2019, the Company allotted 1,420,454 £0.001 ordinary shares for £1.76 each.

On 4 July 2019, the Company allotted 11,363,637 £0.001 ordinary shares for £1.76 each.

On 14 August 2019, the Company allotted 10,000 £0.001 ordinary shares for £1.00 each.

On 13 September 2019, the Company allotted 7,102,274 £0.001 ordinary shares for £1.76 each.

On 22 October 2019, the Company allotted 11,873 £0.001 ordinary shares for £1.00 each.

On 24 December 2019, the Company allotted 8,522,727 £0.001 ordinary shares for £1.76 each.

On 31 January 2020, the Company allotted 4,261,363 £0.001 ordinary shares for £1.76 each.

In all instances of issues of Ordinary shares, consideration was satisfied by cash.

Post year end, on 11 March 2020, the Company allotted 5,476,742 £0.001 ordinary shares for £1.76 each.

11. Reserves

Share premium account

The share premium account represents amounts raised on the initial allotment of share capital in excess of the nominal value of the shares issued.

Retained earnings/(accumulated losses)

Retained earnings/(accumulated losses) represent the accumulated profits and losses of the Group and Company less any distributions made.

12. Borrowings

 

	Group			Company
	2020	2019		2020	2019
	£'000	£'000		£'000	£'000
Non-current
Loans	9,880	23,737		9,880	23,737
Lease liabilities	706	778		169	197
	10,586	24,515		10,049	23,934

Loans

Non current loans consist of one loan agreement (2019: 2) attracting fixed interest of 6.25% with a maturity profile as follows:

 

	Group			Company
	2020	2019		2020	2019
	£'000	£'000		£'000	£'000
Repayable in:
Less than one year	249	5,457		498	5,457
One to two years	1,325	10,457		2,651	10,457
Two to five years	8,426	9,241		6,851	9,241
More than five years	-	-		-	-
Total repayable	10,000	25,155		10,000	25,155
Less: unamortised debt issue costs	(120)	(1,418)		(120)	(1,418)
Carrying value	9,880	23,737		9,880	23,737

The carrying value of loan approximates to their fair value.

The loan is secured by means of composite debenture, fixed and floating charges over all property and assets of the Company and Group. A further £10m is available in October 2020.

Leases

The Group and Company lease various office premises and land. Rental contracts are typically made for fixed periods of three to ten years for office premises and ten to 98 years for land. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.

Lease liabilities are repayable as follows:

 

	Group			Company
	2020	2019		2020	2019
	£'000	£'000		£'000	£'000
Repayable in:
Less than one year	103	119		80	65
One to two years	44	54		28	38
Two to five years	117	248		61	94
More than five years	442	357		-	-
Total repayable	706	778		169	197
Carrying value	706	778		169	197

Included within property, plant and equipment are right-of-use assets with a net book value as follows:

	Group			Company
	2020	2019		2020	2019
	£'000	£'000		£'000	£'000
Freehold property	568	667		161	189

Additions to the Group's right-of-use assets were £45,000 (2019: £399,000).

The depreciation charges recognised in profit and loss on right-of-use assets are as follows:

	Group			Company
	2020	2019		2020	2019
	£'000	£'000		£'000	£'000
Freehold property	141	133		68	44

Details of finance charges expensed in profit and loss in respect of lease liabilities are disclosed in Note 21.

Details of expenses relating to short-term leases, leases of low-value assets and variable lease payments are given in Note 16.

Details of total cash outflow for leases in the Group are given in the consolidated cash flow statement. The total cash outflow for the Group was £72,000 (2019: £92,000).

13. Trade and other payables

 

	Group			Company
	2020	2019		2020	2019
	£'000	£'000		£'000	£'000
Trade payables	13,123	25,992		402	1,211
Accrued expenses	1,987	2163		408	661
VAT payable	-	-		24	-
Other creditors	834	20		465	20
	15,944	28,175		1,299	1,892

All trade and other payables are classified as other financial liabilities held at amortised cost.

14. Deferred tax asset

The movement in deferred income tax assets during the year is as follows:

Group

 

				Tax losses
			Pension and	carried
	Accelerated	Short term	post	forward and
	capital	temporary	retirement	other
	allowances	differences	benefits	deductions	Total
	£'000	£'000	£'000	£'000	£'000
At 1 March 2018	103	3	2	2,693	2,801
Credit to profit or loss	408	45	-	2,787	3,240
At 28 February 2019	511	48	2	5,480	6,041
Credit to profit or loss	456	68	-	3,777	4,301
At 29 February 2020	967	116	2	9,257	10,342

The Group has unrecognised deferred tax assets of £355,890 (2019: £205,739).

The Group expects to utilise the assets more than 12 months after the balance sheet date.

Company

 

			Tax losses
		Pension and	carried
	Accelerated	post	forward and
	capital	retirement	other
	allowances	benefits	deductions	Total
	£'000	£'000	£'000	£'000
At 1 March 2018	117	2	1,942	2,061
Credit to profit or loss	29	2	-	31
Charge to profit or loss	-	-	(307)	(307)
At 28 February 2019	146	4	1,635	1,785
Charge to profit or loss	-	-	(31)	(31)
At 29 February 2020	146	4	1,604	1,754

Deferred tax assets

	Group			Company
	2020	2019		2020	2019
	£'000	£'000		£'000	£'000
To be recovered after more than 12 months	10,342	6,041		1,754	1,785

Deferred tax is calculated on the temporary differences under the liability method using a tax rate of 17% (2019: 17%).

15. Revenue

The Group has recognised the following amounts relating to revenue in the Consolidated Statement of Total Comprehensive Income:

 

	2020	2019
	£'000	£'000
Revenue from cancer treatment	5,606	1,465

All revenues arose in the United Kingdom and from the principal activity of the Group.

16. Loss before taxation

Loss before taxation is stated after charging/(crediting):

 

	2020	2019
	£'000	£'000
Depreciation charges:
- Owned assets	5,638	3,351
- Right-of-use assets	141	133
Operating lease charges:
- Expense relating to low-value assets not on short-term leases	12	3
Foreign exchange gains	193	(155)
Other receivables written off directly to profit and loss	-	-
Employee benefit costs (see Note 18)	10,131	7,798

17. Auditor's remuneration

During the period the following services were obtained from the Company's auditor:

 

	2020	2019
	£'000	£'000
Fees payable for the audit of the financial statements of the Company	32	23
Fees payable for the audit of the financial statements of the subsidiaries	14	5
Other services	3	4
	49	32

18. Employee benefit expense

 

	Group			Company
	2020	2019		2020	2019
	£'000	£'000		£'000	£'000
Wages and salaries	8,405	6,674		3,019	2,612
Social security costs	894	734		327	281
Other pension costs - defined contribution	825	651		307	262
Share-based payment	141	174		141	174
	10,265	8,233		3,794	3,329
Less: capitalised labour costs	(134)	(435)		-	-
Employee benefit expense	10,131	7,798		3,794	3,329

The average monthly number of persons (including Executive Directors) employed during the year was:

 

	Group			Company
	2020	2019		2020	2019
	No.	No.		No.	No.
Managerial	47	31		19	12
Clerical	123	93		28	22
	170	124		47	34

The number of employees in the Group at 29 February 2020 was 183 (2019: 167).

19. Directors' remuneration

The Directors' aggregate remuneration in respect of qualifying services was:

 

	2020	2019
	£'000	£'000
Remuneration	586	628
Company contributions to defined contribution pension plans	32	38
	618	666

Retirement benefits accrued to 4 (2019: 4) directors.

The aggregate emoluments for the highest paid Director was £183,655 (2019: £183,518) and the pension contributions for that Director were £19,800 (2019: £19,800).

20. Share-based payment benefits

Set out below is a summary of options granted under the plan:

 

	2019/2020			2018/2019
	Average			Average
	exercise price			exercise price
	of options	Number of		of options	Number of
	£	options		£	options
As at 1 March	1.2	3,353,038		1.01	2,229,351
Granted	2.39	1,198,288		1.57	1,123,687
As at 29 February/28 February	1.51	4,551,326		1.2	3,353,038

1,496,007 of the options vested on 29 February 2020 (2019: 1,496,007). 21,873 were exercised during the year ended 29 February 2020 (2019: Nil). The share price at date of exercise was £2.27.

No options expired during the year ended 29 February 2020 (2019: Nil). 606,620 options lapsed during the year due to leavers (2019: 163,961).

Share options at the end of the year have the following expiry date and exercise prices:

 

		Exercise
		price	2020	2019
Grant Date	Expiry date	£	Number	Number
6 March 2017	5 March 2027	1	1,568,437	1,859,297
1 September 2017	31 August 2027	1.15	154,139	189,543
24 April 2018	23 April 2028	1.5	451,383	515,819
21 May 2018	20 May 2028	1.5	249,327	404,380
1 June 2018	31 May 2028	1.5	38,858	38,858
24 September 2018	23 September 2028	2	127,931	164,630
14 June 2019	13 June 2029	2.39	1,132,747	-
20 July 2019	19 July 2029	2.39	19,500	-

2,590,075 of the outstanding options were exercisable as at 29 February 2020.

The weighted average remaining contractual life of options at 29 February 2020 was 8 years (2019: 9 years).

The assessed fair value at grant date of options granted during the year ended 29 February 2020 was 22.96 pence per option (2019: 7.37 pence). The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest rate for the term of the option and the correlations and volatilities of the peer group companies.

The key model inputs for options granted during the year ended 29 February 2020 included:

 

	Date of grant
	14-Jun	20-Jul
	2019	2019
Expected vesting period (years)	3	3
Share value at date of grant (£)	1.76	1.76
Volatility (%)	33.3	33.3
Risk-free interest rate (%)	0.75	0.75

21. Finance expense

 

	2020	2019
	£'000	£'000
Loans	2,063	1,809
Amortisation of debt fees	1,492	485
Lease liabilities	60	99
Total finance expense	3,615	2,393

22. Income tax credit

 

	2020	2019
	£'000	£'000
Current tax:
UK corporation tax	(246)	-
Adjustment in respect of prior years	(295)	(13)
Total current tax	(541)	(13)
Deferred tax:
Origination and reversal of temporary differences	(4,378)	(3,240)
Adjustment in respect of prior years	77	-
Total deferred tax	(4,301)	(3,240)
Total tax credit	(4,842)	(3,253)

The tax on the Group's loss before tax differs from the theoretical amount that would arise using the tax rate applicable to losses of the Group as follows:

	2020	2019
	£'000	£'000
Loss before tax	(29,276)	(21,518)
Notional credit at UK corporation tax rate of 19% (2019: 19.08%)	(5,562)	(4,105)
Tax effects of:
- Expenses not deductible for tax purposes	64	99
- Adjustments due to changes in tax rates	537	405
- Other differences	355	156
- R&D expenditure	(168)	(12)
- Adjustment in respect of prior years	(218)	62
- Deferred tax asset not recognised	150	142
Tax credit for the period	(4,842)	(3,253)

Factors that may affect future tax charges

Deferred tax has been calculated using a tax rate of 17% (2019: 17%).

A reduction in the UK corporation tax rate from 19% to 17% (effective from 1 April 2020) was substantively enacted on 6 September 2016, and the UK deferred tax asset as at 29 February 2020 has been calculated based on this rate. In the 11 March 2020 Budget it was announced that the UK tax rate will remain at the current 19% and not reduce to 17% from 1 April 2020. This will have a consequential effect on the company's future tax charge. If this rate change had been substantively enacted at the current balance sheet date the deferred tax asset would have increased by £710,000.

23. Cash (used in)/generated from operations

 

	2020	2019
	£'000	£'000
Loss before income tax	(29,276)	(21,518)
Adjustments for:
- Depreciation and amortisation	6,020	3,664
- Finance costs	3,615	2,393
- Loss on disposal of Fixed Assets	468	-
- Non-cash employee benefits expense - share-based payments	125	174
Changes in working capital
- Trade and other receivables	(2,798)	295
- Trade and other payables	(12,231)	16,357
Cash (used in)/generated from operations	(34,077)	1,365

24. Reconciliation of liabilities arising from financing activities

 

	At			At
	1 March	Cash	Loan Fees	29 February
	2019	flows	(Non-cash)	2020
	£'000	£'000	£'000	£'000
Non-current
Loans	23,737	(15,349)	1,492	9,880
Lease liabilities	778	(72)	-	706
Total liabilities arising from financing activities	24,515	(15,421)	1,492	10,586

25. Financial instruments by category

Group

 

	At amortised
	cost	FVOCI	Total
At 29 February 2020	£'000	£'000	£'000
Assets as per balance sheet
Trade and other receivables excluding prepayments	5,802	-	5,802
Investments		3,704	3,704
Cash and cash equivalents	19,157	-	19,157
	24,959	3,704	28,663

 

	At amortised
	cost
	£'000
Liabilities as per balance sheet
Borrowings	9,880
Lease liabilities	706
Trade and other payables excluding non-financial liabilities	15,944
	26,530

Company

 

	At amortised
	cost	FVOCI	Total
At 29 February 2020	£'000	£'000	£'000
Assets as per balance sheet
Trade and other receivables excluding prepayments	198,986	-	198,986
Cash and cash equivalents	19,151	-	19,151
	218,368	3,704	222,072

 

	At amortised
	cost
	£'000
Liabilities as per balance sheet
Borrowings	9,880
Lease liabilities	169
Trade and other payables excluding non-financial liabilities	1,299
	11,348

26. Capital commitments

The Company had £43,684,077 (2019:£106,420,240) of capital expenditure contracted but not incurred at the year end.

27. Related party transactions

Group

Key management compensation

The compensation paid or payable to key management for employee services is the same as Directors emoluments as disclosed in Note 19.

Transactions with other related parties

Two of the Group's employees are non-dependent children of the Chief Executive Officer. The employee benefit expense disclosed in Note 18 includes £66,000 (2019: £47,000) paid to the related employees.

28. Ultimate controlling party

There is no ultimate controlling party.

29. Loss per share

 

	2020	2019
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share	171,885,768	128,758,285
Total comprehensive expense for the period	£(20,761,000)	£(22,428,000)
Basic and diluted loss per share (pence)	12.1	17.4