Proton Partners Intl - Final Results
RNS Number : 6633A
Proton Partners International Ltd.
31 May 2019
 

31 May 2019

Proton Partners International Limited

2019 Annual Report and Accounts

 

Proton Partners International Limited (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 results for the year ended 28 February, 2019.

A copy of the Annual Report and Accounts will be sent to shareholders shortly and is available on the Company's website at https://proton-int.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 £1.5m with quarter on quarter growth

§ Investment in fixed asset additions: £42.7m

§ Investment resulting in in gross fixed assets: £141.9m

§ Equity inflow: £47.6m

§ Proton beam therapy revenue 53% of total revenue in South Wales centre

Operational highlights   

§ First patients to be treated in the UK with high energy proton beam therapy

§ Three cancer centres operational

§ Agreements in place with major health insurance companies to refer patients

§ NHS Wales referring adult patients to South Wales centre

Rupert Lowe, chairman of Proton Partners International Limited, commented: "The last year has been a momentous one for cancer patients in the UK and it is extremely gratifying so see patients now being offered the highest quality of advanced treatment rather than having to travel abroad. As someone who had to go overseas for proton beam therapy treatment, delivering the construction of our Rutherford centres has been a major achievement with management now fully focused on providing excellent treatment to an increasing number of patients who will benefit from proton beam technology and other advanced cancer treatments."

Mike Moran, chief executive officer of Proton Partners International, commented: "In 2018, we set out the critical capability we needed to position us as the most advanced cancer network in the UK and we have made good progress, particularly with our focus on precision radiotherapy. We have treated 27 patients with proton beam therapy and demand is increasing. With three Rutherford Cancer Centres now operational and a fourth under construction we are well placed to increase patient access and choice - which is at the core of our business."

 

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

Proton Partners International Limited

   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) 207 710 0020

 

Ramsay Smith, George Morris Seers

 

 

 

                                   

 

Strategic Report

Chairman's Statement

 

"Currently around two hundred patients per year are sent abroad by the NHS for proton beam therapy treatment at great expense."

Dear Shareholder

I became Chairman of Proton Partners International in February 2018 and invested in the Company at the same time. During the year under review we became the first organisation in the United Kingdom to offer proton beam therapy for the treatment of cancer. I was myself treated with proton beam therapy in California in the US in 2014 where it has been effectively used for over thirty years to treat various organ confined tumours in complicated parts of the body where conventional radiotherapy treatment causes too much damage to surrounding tissue. Protons are heavier than photons and this allows the treatment to enter the body more accurately to the site of the tumour via a pencil beam with little or no exit damage. In the light of this, it is extraordinary that it has taken such a long time to reach the UK but I believe, through my own experience, that it will soon become a very important addition to the currently available treatments in the UK in the battle against cancer and in particular against those cancers that are harder to treat. Since launching we have now so far treated 27 patients with proton beam therapy with treatment available to those with private insurance, the NHS and also self-pay patients.

I am pleased to present to you our Annual Report for the financial year ended 28 February 2019.

Treatment volumes are increasing as patients, oncology consultants and the wider community become familiar with both the arrival of proton beam and the quality of the Group's standards of care and 'patient first' approach.

Group Performance

The Group has completed the Rutherford Cancer Centre in Newport, South Wales where patients are receiving chemotherapy, radiotherapy, immunotherapy and proton beam treatment. Further centres in the North East (Newcastle) and Thames Valley (Reading) are almost complete with radiotherapy and chemotherapy underway and proton beam treatment starting in May and August, respectively. A fourth Rutherford Cancer Centre is under construction in the North West (Liverpool) and is due to be completed by the year 2020. Treatment volumes are increasing as patients, oncology consultants and the wider community become familiar with both the arrival of proton beam and the quality of the Group's standards of care and 'patient first' approach. Delivering the construction of our centres has been a major achievement with management now fully focused on delivering excellent treatment to an increasing number of patients who will benefit from proton beam technology.

NEX Listing

In February this year, four years after its incorporation, Proton Partners International Limited listed on the NEX Exchange Growth Market co-terminously raising £20m of new investment as part of a wider funding package.

Staff

I would like to sincerely thank all our staff for their contribution to the Group. It is always difficult to guide a new company to success but, through a combination of successful funding, leadership and expertise, we collectively look forward to helping deliver excellent as well as previously unavailable treatment to those suffering from various different forms of cancer.

Shareholders

I would also like to thank all our shareholders for their investment in the Company. Our largest shareholder, Woodford, particularly deserves to be singled out for supporting a young company in delivering a more effective solution to the treatment of various forms of cancer with an improved outcome and less chance of downstream complications.

Outlook

There is much work still to do to secure the Company's future as part of the solution to the growing incidence of cancer in the UK and it is our intention to work with the NHS, NHS Wales, Insurers and self-pay patients to bring hope to those who will benefit most from proton beam therapy. This will mean, especially in the case of children suffering from cancer, responding quickly to the problem with the least possible dislocation for those involved. Currently around two hundred patients per year are sent abroad by the NHS for proton beam therapy treatment at great expense with the attendant stress that this puts on the affected families. This should not be necessary in future as all of our Rutherford Cancer Centres become fully operational offering highly professional treatment with the most technically advanced equipment. Improving awareness of the significant benefits of proton beam therapy treatment amongst both medical practitioners and patients is now a priority for our Company. It is exciting to be involved with the first UK-based project that is capable of delivering better outcomes for cancer patients with certain types of cancers and we look forward to the coming year with confidence.

Rupert Lowe

Chairman

 

 

Chief Executive Officer's Statement

 

"Our overarching strategy is to 'Create a high value oncology business'.

We will achieve this through commercialisation, by advancing proton beam therapy and a continued focus on excellence."

Summary

2018 has seen a change of focus in our business, from building the capability to service delivery and commercialisation. We have started to treat patients at three of our Rutherford Cancer Centres in Newport - South Wales, Northumberland and Thames Valley with a fourth centre under construction in Liverpool.

We have treated the first patient in the UK with high-energy proton beam therapy and we have delivered treatments to over 170 patients with Systemic Anti-Cancer Therapy, Radiotherapy and Proton Beam Therapy services.

Our patients are being referred from private medical insurers - we now have 19 insurers signed up to refer patients - and Welsh Health Specialised Services Committee (WHSSC) on behalf of NHS Wales for adult Proton Beam Therapy patients. We have also treated a significant number of self-pay patients who reach us through referrals from oncologists, word of mouth, research or via our website and marketing efforts.

The quality of the service delivered across the network of Rutherford Cancer Centres is quite exceptional. A leading paediatric radiation oncologist, specialising in PBT, who visited our South Wales and Thames Valley centres has recently remarked; 'if one of your centres were placed anywhere in the US there would be no equivalent'. This statement is also supported by several testimonials from patients who have been treated across The Rutherford network. We have the very best UK oncologists signed up with practising privileges to operate within The Rutherford network.

Daily clinics take place in each centre and patients are extremely complimentary of the quality of the service and also the environment we operate in.

Recruitment of staff has been significant this year with all vacancies filled when advertised. The recruitment of nurses for SACT for Thames Valley was a particular challenge, however, all posts are now filled. We employ over 167 staff across the Company; 19% management, 32% clinical, 11% sales and marketing, 10% information technology and 28% administrative.

Staff retention levels remain high which reflects well on the culture fostered within the Company. A testimony to this is the Company's continued recognition as Investors in People Silver Award.

Governance remains an essential discipline and a key strength of the Group. We are proud that clinical governance has been assessed by both Healthcare Inspectorate Wales and Care Quality Commission with passes for the three operational centres, the Centre Managers and the Chief Medical Officer.

In 2018, we set out the critical capability we needed to position us as the most advanced cancer network in the UK and we have made good progress in executing against this, particularly with our focus on precision radiotherapy. The next twelve months will provide an opportunity to leverage the quality of the provision to increase the patient numbers across all service.

The listing attracted a further £20m investment and a further £80m by means of an irrevocable commitment from one of our leading investors.

Investment

We have continued to attract investment in our business with a further £26m having been received in a private round. On 28th February the Company listed on the NEX Exchange Growth Market with a Market Cap of £347m. The listing attracted a further £20m investment and a further £80m by means of an irrevocable commitment from one of our leading investors.

Financials

Investment in Fixed Asset Additions in year; £43m

Investment resulting in Gross Fixed Assets; £142m

Equity inflow: £46m

Outlook

Our focus in 2019 will be on developing the patient pipeline across The Rutherford network. This year we will have two more centres, Northumberland and Thames Valley, commissioned for proton beam therapy.

We are already negotiating contracts with NHS Trusts in England and Wales for the delivery of SACT and Radiotherapy services across The Rutherford network. As demand for PBT increases we are confident that our services will be in high demand from UK and International patients.

Mike Moran

Chief Executive Officer

 

 

Financial Statements

Consolidated Statement of Total Comprehensive Income

Year ended 28 February 2019

 

 

2019

2018

 

Note

£'000

£'000

Revenue

15

1,465

18

Cost of sales

 

(2,872)

-

Gross (loss)/profit

 

(1,407)

18

Administrative expenses

 

(17,718)

(10,572)

Operating loss

 

(19,125)

(10,554)

Finance income

21

-

77

Finance expense

22

(2,393)

(1,034)

Loss before taxation

16

(21,518)

(11,511)

Income tax credit

23

3,253

2,832

Loss for the financial year

 

(18,265)

(8,679)

Fair value loss on investment

7

(4,163)

-

Total comprehensive loss

 

(22,428)

(8,679)

All the activities of the Group are from continuing operations.

Basic diluted earnings per share

 

2019

2018

Note

Pence

Pence

Earnings per share for loss attributable to the ordinary equity holders of the Company

30

(17.4)

(7.5)

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

 

 

Consolidated Statement of Financial Position

As at 28 February 2019

 

 

2019

2018

 

Note

£'000

£'000

ASSETS

 

 

 

Non-current assets

 

 

 

Intangible assets

6

541

-

Property, plant and equipment

5

137,014

98,081

Investments

7

-

4,163

Deferred tax asset

14

6,041

2,801

Non-current assets

 

143,596

105,045

Current assets

 

 

 

Trade and other receivables

8

6,915

7,210

Current tax receivable

 

 

31

Cash and cash equivalents

9

20,589

6,695

Current assets

 

27,504

13,936

Total assets

 

171,100

118,981

EQUITY ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS

 

 

 

Called up share capital

10

152

121

Share premium account

11

157,928

111,309

Fair Value reserve

 

(4,163)

 

Retained Earnings

11

(35,507)

(17,416)

Total equity

 

118,410

94,014

LIABILITIES

 

 

 

Non-current liabilities

 

 

 

Borrowings

12

24,515

13,149

Current liabilities

 

 

 

Trade and other payables

13

28,175

11,818

Total liabilities

 

52,690

24,967

Net equity and liabilities

 

171,100

118,981

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

 

 

Company Statement of Financial Position

As at 28 February 2019

 

 

2019

2018

 

Note

£'000

£'000

ASSETS

 

 

 

Non-current assets

 

 

 

Intangible assets

6

541

-

Property, plant and equipment

5

823

741

Investments

7

137

4,186

Deferred tax asset

14

1,785

2,061

Non-current assets

 

3,286

6,988

CURRENT ASSETS

 

 

 

Trade and other receivables

8

141,586

98,764

Current tax receivable

23

-

31

Cash and cash equivalents

9

20,589

6,695

Current assets

 

162,175

105,490

Total assets

 

165,461

112,478

EQUITY ATTRIBUTABLE TO THE COMPANY'S EQUITY HOLDERS

 

 

 

Called up share capital

10

152

121

Share premium account

11

157,928

111,309

Fair Value reserve

 

(4,163)

 

Retained earnings

11

(14,282)

(14,843)

Total equity

 

139,635

96,587

LIABILITIES

 

 

 

Non-current liabilities

 

 

 

Borrowings

12

23,934

12,936

Current liabilities

 

 

 

Trade and other payables

13

1,892

2,955

Total liabilities

 

25,826

15,891

Net equity and liabilities

 

165,461

112,478

The profit for the financial year of the Parent Company was £387,000 (2018: loss of £6,106,000).

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

 

 

Consolidated Statement of Changes in Equity

Year ended 28 February 2019

 

 

Share

 

 

 

 

Called up

premium

Profit and loss

 

  Fair Value

 

 

share capital

account

account

Reserve

Total

 

£'000

£'000

£'000

  £'000

£'000

AT 1 MARCH 2017

107

97,548

(8,789)

-

88,866

Loss for the year

-

-

(8,679)

-

(8,679)

TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR

-

-

(8,679)

-

(8,679)

Proceeds of share issues

14

14,486

-

-

14,500

Less costs of share issues

-

(725)

-

-

(725)

Share-based payments

-

-

52

-

52

TOTAL INVESTMENTS BY AND DISTRIBUTIONS TO OWNERS

14

13,761

52

 

-

13,827

AT 28 FEBRUARY 2018

121

111,309

(17,416)

-

94,014

Loss for the year

-

-

(18,265)

-

(18,265)

Fair value loss on investment

-

-

-

(4163)

(4,163)

TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR

-

-

(18,265)

(4,163)

(22,428)

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

(35,507)

(4,163)

118,410

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

 

 

Company Statement of Changes in Equity

Year ended 28 February 2019

 

 

Share

 

 

 

 

Called up

premium

Profit and loss

 

  Fair Value

 

 

share capital

account

account

  Reserve

Total

 

£'000

£'000

£'000

  £'000

£'000

AT 1 MARCH 2017

107

97,548

(8,789)

-

88,866

Loss for the year

-

-

(6,106)

-

(6,106)

TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR

-

-

(6,106)

-

(6,106)

Issue of shares

14

14,486

-

-

14,500

Less costs of share issues

-

(725)

-

-

(725)

Share-based payments

-

-

52

-

52

TOTAL INVESTMENTS BY AND DISTRIBUTIONS TO OWNERS

14

13,761

52

 

-

13,827

AT 28 FEBRUARY 2018

121

111,309

(14,843)

-

96,587

Profit for the year

-

-

387

-

387

Fair value loss on investment

                   -

                   -

-

(4163)

(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

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

 

 

Consolidated Statement of Cash Flows

Year ended 28 February 2019

 

 

2019

2018

 

Note

£'000

£'000

Cash flows from operating activities

 

 

 

Net cash generated from operations

24

1,365

(4,946)

Income taxes received/(paid)

 

43

(11)

Net cash generated from/ (used in) operating activities

 

1,408

(4,957)

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

 

(42,322)

(45,928)

Purchase of intangibles

 

(39)

-

Disposal of property plant and equipment

 

304

5,245

Interest received

 

-

77

Net cash used in investing activities

 

(42,057)

(40,606)

Cash flows from financing activities

 

 

 

Net proceeds from issue of shares

 

45,968

13,775

Net proceeds from issue of new loans

 

10,519

4,310

Lease payments

 

(92)

66

Interest paid

 

(1,852)

(1,034)

Net cash generated from financial activities

 

54,543

17,117

Net increase/(decrease) in cash and cash equivalents

 

13,894

(28,446)

Cash and cash equivalents at the start of the financial year

 

6,695

35,141

Cash and cash equivalents at the end of the financial year

9

20,589

6,695

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

 

 

Notes to the Financial Statements

Year ended 28 February 2019

1. General information

Proton Partners International Limited (hereinafter the 'Company', and together with its subsidiaries, the 'Group') is a private 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 under the historical cost convention, except in the cases specifically mentioned in these notes. The financial statements are also prepared on a going concern basis.

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 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 2018 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 2019 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.

2.3 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.

2.4 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the Company (and its subsidiaries) made up to 28 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.

2.5 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.

2.6 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.

2.7 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

The assets' residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater that its estimated recoverable amount.

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.

2.8 Investments in subsidiary undertakings

Investments in subsidiaries are measured at cost less accumulated impairment.

2.9 Financial assets

2.9.1 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.

2.9.2 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.

2.9.3 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.

2.10 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.

2.11 Share capital

Ordinary shares are classified as equity.

2.12 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.

2.13 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.

2.14 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.

2.15 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, but leased assets may not be used as security for borrowing purposes.

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.

2.16 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.

2.17 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 Proton Partners International Limited'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 holdings 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 Chief Financial Officer.

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

As at 28 February 2019, the Group held outstanding liabilities of $61,734 and €5,751,168 (2018: $nil and €1,655,927).

(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'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. It is planned to secure a short-term overdraft facility to be used, for example, to bridge any time gap between day-to-day cash requirements and the release of cash from deposit accounts with notice.

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 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

249

357

 

33,751

10,511

9,490

357

 

 

Less than

Between

Between

Over

 

1 year

1 and 2 years

2 and 5 years

5 years

At 28 February 2018

£'000

£'000

£'000

£'000

Trade payables and other payables

11,818

-

-

-

Borrowings

-

-

12,637

2,000

Lease liabilities

108

108

125

74

 

11,926

108

12,762

2,074

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) Fair value of the investment in Proton Partners International Healthcare Investments LLC

The fair value of investments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. The Group has used discounted cash flow analysis for its investment in Proton Partners International Healthcare Investments LLC, the detail of which is disclosed in Note 7.

b) Deferred taxation assets

As disclosed in Note 14, the Group has recognised deferred taxation assets of £6,041,000 (2018: £2,801,000), and unrecognised deferred taxation assets of £205,739 (2018: £Nil) arising predominantly from unutilised trading losses.

The judgment of the Directors is that it is now appropriate to recognise the deferred tax asset as it is likely that the Group will be able to utilise the losses in the permissible timeframe.

c) Carrying value of property, plant and equipment

As the Group remains in a construction phase the annual depreciation charge for property, plant and equipment is sensitive to the date that the asset is brought into use and over what period the asset should be depreciated. Assets under construction are reviewed on a regular basis and reclassified to the relevant class of asset when they are brought into use; at which point depreciation commences. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilization and the physical condition of the assets. See note 2.7 for the economic useful lives for each class of assets.

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 2016

3,315

-

696

26

11

46

21,269

25,363

Additions

-

-

262

136

-

309

32,754

33,461

Disposals

 

 

 

 

 

 

(22)

(22)

At 29 February 2017

3,315

-

958

162

11

355

54,001

58,802

Additions

947

3,718

380

215

 

135

40,533

45,928

Disposals

-

 

 

 

 

 

(5,245)

(5,245)

At 28 February 2018

4,262

3,718

1,338

377

11

490

89,289

99,485

Accumulated depreciation

 

 

 

 

 

 

 

 

At 1 March 2016

-

-

77

3

1

1

-

82

Charge for the period

-

-

279

22

4

14

-

319

At 29 February 2017

-

-

356

25

5

15

-

401

Charge for the year

383

99

361

80

4

74

-

1,001

At 28 February 2018

383

99

717

105

9

89

-

1,402

Net book value

 

 

 

 

 

 

 

 

At 28 February 2018

3,879

3,619

621

272

2

401

89,289

98,083

At 28 February 2017

-

 

602

137

6

340

57,316

58,401

At 1 March 2016

-

 

619

23

10

45

24,584

25,281

 

               

 

 

Freehold

Plant &

IT

Fixtures &

Motor

Right of use

Assets 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

Reclass

-

66,872

-

-

-

-

(66,872)

-

Disposals

-

(48)

-

(6)

-

-

(250)

(304)

At 28 February 2019

4,262

70,542

1,915

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

11

222

-

4,886

Net book value

 

 

 

 

 

 

 

 

At 28 February 2019

4,055

67,514

765

-

667

63,530

137,014

At 28 February 2018

3879

3619

621

2

401

89,289

98,083

 

 

 

 

 

 

 

 

 

 

 

IT

Fixtures &

Right of use

 

 

 

 

equipment

fittings

assets

Total

Company

 

 

£'000

£'000

£'000

£'000

Cost

 

 

 

 

 

 

At 28 February 2018

 

 

1,187

21

278

1,486

Additions

 

 

477

-

14

491

At 28 February 2019

 

 

1,664

21

292

1,977

Accumulated depreciation

 

 

 

 

 

 

At 28 February 2018

 

 

672

14

59

745

Charge for the year

 

 

360

5

44

409

At 28 February 2019

 

 

1,032

19

103

1,154

Net book value

 

 

 

 

 

 

At 28 February 2019

 

 

632

2

189

823

At 28 February 2018

 

 

515

7

219

741

6. Intangible assets

 

Intellectual

 

Property

Group and Company

£'000

Cost

 

At 1 March 2018

-

Additions

721

At 28 February 2019

721

Amortisation

 

At 1 March 2018

-

Charge for the year

180

At 28 February 2019

180

Carrying amount

 

At 28 February 2019

541

At 28 February 2018

-

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

7. Investments

Group

Trade

investments

£'000

Fair value

 

At 1 March 2016

-

Additions

4,163

At 28 February 2017

4,163

Additions

-

At 28 February 2018

4,163

 

Group

Other investments

other than loans

£'000

Fair value

 

At 28 February 2018

4,163

Impairment

 

Impairment

(4,163)

At 28 February 2019

-

Carrying amount

 

At 28 February 2019

-

At 28 February 2018

4,163

 

 

 

 

Other

 

 

Shares in

investments

 

 

Group

other than

 

 

undertakings

loans

Total

Company

£'000

£'000

£'000

Cost/Fair value

 

 

 

At 28 February 2018

23

4,163

4,186

Additions

114

                    -

114

Impairment

-

(4,163)

(4,163)

At 28 February 2019

137

-

137

Carrying amount

 

 

 

At 28 February 2019

137

-

137

At 28 February 2018

23

4,163

4,186

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:

Name of subsidiary

Class of share

Percentage of

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

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.

Trade investments

Trade investments are classified as financial assets at FVOCI.

Trade investments comprise of £Nil (2018 - £4,163,000) relating to Proton Partners International Healthcare Investments LLC.

Management has decided to impair in full due to the current performance of the trade investment, and the delays in construction of the proton beam therapy facility located there.

For the year ended 28 February 2017, trade 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 discounted cash flows expected to arise from the investment.

8. Trade and other receivables

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Trade debtors

175

-

 

-

-

Amounts due from subsidiary companies

-

-

 

137,473

93,983

Prepayments and accrued income

1,997

644

 

397

274

Other debtors

3,649

3,181

 

3,645

3,162

VAT Recoverable

1,094

3,385

 

71

1,345

Total trade and other receivables

6,915

7,210

 

141,586

98,764

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.

9. Cash and cash equivalents

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Cash at bank and in hand

20,589

4,693

 

20,589

4,693

Restricted cash balances

-

2,002

 

-

2,002

Net cash and cash equivalents

20,589

6,695

 

20,589

6,695

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

10. Called up share capital

Issued, called up and fully paid

 

Number of Shares

 

£'000

 

 

Ordinary

Growth

Deferred

 

Ordinary

Growth

Deferred

 

 

shares

shares

shares

 

shares

shares

shares

Total

At 1 March 2017

107,195,652

-

-

 

107

-

-

107

Issued in Year

35,652,174

5,188,833

-

 

36

4

-

40

Redesignated

(22,173,913)

-

22,173,913

 

(22)

-

22

-

Repurchased

-

-

(22,173,913)

 

-

-

(22)

(22)

At 1 March 2018

120,673,956

5,188,833

-

 

121

4

-

125

Issued in Year

26,293,132

740,558

-

-

26

1

-

27

Repurchased

-

(194,582)

-

-

 

-

-

 

Redesignated

5,734,809

(5,734,809)

-

-

5

(5)

-

-

At 28 February 2019

152,701,897

-

-

-

152

-

-

152

On 26 March 2018, the Company allotted 4,782,609 £0.001 ordinary shares for £1.15 each. On 30 April 2018, the Company allotted 869,565 £0.001 ordinary shares for £1.15 each. On 17 September 2018, the Company allotted 740,558 growth shares. These were allotted at a price of 0.458 per share. On 3 October 2018, the Company allotted 2,750,000 £0.001 ordinary shares for £2.00 each. On 26 October 2018, the Company allotted 2,500,000 £0.001 ordinary shares for £2.00 each. On 30 November 2018, the Company allotted 500,000 £0.001 ordinary shares for £2.00 each. On 3 December 2018, the Company allotted 300,000 £0.001 ordinary shares for £2.00 each. On 6 December the Company allotted 1,250,000 £0.001 ordinary shares for £2.00 each. On 4 January 2019, the Company allotted 2,500,000 £0.001 ordinary shares for £2.00 each. On 14 February 2019, the Company allotted 341,000 £0.001 ordinary shares for £2.00 each.

On 14 February 2019 the Company repurchased 194,582 Growth shares, On 28 February 2019 5,734,809 Growth shares converted to ordinary shares,

On 28 February 2019 the Company allotted 10,000,000 £0.001 ordinary shares for £2.00 each.

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

On 28 February 2019 the Company allotted 500,000 £0.001 ordinary shares as a fee to Woodford Equity Income Fund.

Ordinary shares of the Company hold full entitlement to vote, receive dividends and distribution of capital.

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

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

12. Borrowings

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Non-current

 

 

 

 

 

Loans

23,737

12,734

 

23,737

12,704

Lease liabilities

778

415

 

197

232

 

24,515

13,149

 

23,934

12,936

Loans

Non current loans consist of nine loan agreements attracting fixed interest ranging from 5% to 7.9% with a maturity profile as follows:

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Repayable in:

 

 

 

 

 

Less than one year

5,457

-

 

5,457

-

One to two years

10,457

-

 

10,457

-

Two to five years

9,241

12,637

 

9,241

12,637

More than five years

-

2,000

 

-

2,000

Total repayable

25,155

14,637

 

25,155

14,637

Less: unamortised debt issue costs

(1,418)

(1,903)

 

(1,418)

(1,933)

Carrying value

23,737

12,734

 

23,737

12,704

The carrying value of loans approximates to their fair value.

The loans are secured by means of debenture, fixed and floating charges over all property and assets of the Company and Group.

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

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Repayable in:

 

 

 

 

 

Less than one year

119

108

 

65

62

One to two years

54

108

 

38

62

Two to five years

248

125

 

94

94

More than five years

357

74

 

-

14

Total repayable

778

415

 

197

232

Carrying value

778

415

 

197

232

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

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Freehold property

667

401

 

189

219

Additions to right-of-use assets were £399,000 (2018: £135,000).

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

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Freehold property

133

74

 

44

45

Details of finance charges expensed in profit and loss in respect of lease liabilities are disclosed in Note 22.

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 £96,000 (2018: £20,000).

13. Trade and Other Payables

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Trade payables

25,992

11,007

 

1,211

2,471

Accrued expenses

2,163

791

 

661

464

Other creditors

20

20

 

20

20

 

28,175

11,818

 

1,892

2,955

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

14. Deferred tax

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

Group

 

Accelerated

capital

allowances

£'000

Short term

temporary

differences

£'000

Pension and

post

retirement

benefits

£'000

Tax losses

carried

forward and

other

deductions

£'000

Total

£'000

At 1 March 2017

-

-

-

-

-

Credit to profit or loss

103

3

2

2,693

2,801

At 28 February 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

The Group has unrecognised deferred tax assets of £205,739.

Company

 

 

Pension and

Tax losses

carried

 

 

Accelerated

post

forward and

 

 

capital

retirement

other

 

 

allowances

benefits

deductions

Total

 

£'000

£'000

£'000

£'000

At 1 March 2017

-

-

-

-

Credit to profit or loss

117

2

1,942

2,061

At 28 February 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

Deferred tax assets

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

To be recovered after more than 12 months

6,041

2,801

 

1,785

2,061

Deferred tax is calculated on the temporary differences under the liability method using a tax rate of 17% (2018: 17%).

15. Revenue from cancer treatment

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

 

2019

2018

 

£'000

£'000

Revenue from cancer treatment

1,465

18

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):

 

2019

2018

 

£'000

£'000

Depreciation charges:

 

 

- Owned assets

3,351

929

- Right-of-use assets

133

74

Operating lease charges:

 

 

- Expense relating to low-value assets not on short-term leases

3

33

Foreign exchange gains

(155)

(119)

Other receivables written off directly to profit and loss

-

402

Employee benefit costs (see Note 18)

7,798

4,600

17. Auditor's remuneration

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

 

2019

2018

 

£'000

£'000

Fees payable for the audit of the financial statements of the Company

23

19

Fees payable for the audit of the financial statements of the subsidiaries

5

5

Other services

4

6

 

32

30

18. Employee benefit expense

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Wages and salaries

6,674

4,559

 

2,612

2,271

Social security costs

734

443

 

281

263

Pension costs - defined contribution

651

388

 

262

235

Share-based payment

174

52

 

174

52

 

8,233

5,442

 

3,329

2,821

Less: capitalised labour costs

(435)

(842)

 

-

-

Employee benefit expense

7,798

4,600

 

3,329

2,821

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

 

Group

 

Company

 

2019

2018

 

2019

2018

 

No.

No.

 

No.

No.

Managerial

31

29

 

12

17

Clerical

93

39

 

22

19

 

124

68

 

34

36

The number of employees in the Group at 28 February 2019 was 167 (2018: 80).

19. Directors' remuneration

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

 

2019

2018

 

£'000

£'000

Remuneration

628

676

Company contributions to defined contribution pension plans

38

51

 

666

727

Retirement benefits accrued to 4 (2018: 4) directors.

The aggregate emoluments for the highest paid Director was £183,518 (2018: £220,441) and the pension contributions for that Director were £19,800 (2018: £19,800).

20. Share-based payment benefits

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

 

2019

 

2018

 

Average

 

 

Average

 

 

exercise price

 

 

exercise price

 

 

of options

Number of

 

of options

Number of

 

£

options

 

£

options

As at 1 March

1.01

2,229,351

 

 

 

Granted

1.57

1,123,687

 

1.01

2,229,351

As at 28 February

1.20

3,353,038

 

1.01

2,229,351

1,496,007 of the options vested on 28 February 2019 (2018: Nil). None were exercised during the year ended 28 February 2019 (2018: Nil).

No options expired during the year ended 28 February 2019 (2018: Nil). 163,961 options lapsed during the year due to leavers (2018: 16,551).

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

 

 

Exercise

 

 

 

 

price

2019

2018

Grant Date

Expiry date

£

Number

Number

6 March 2017

6 March 2027

1.00

1,859,297

2,023,258

1 September 2017

1 September 2027

1.15

189,543

189,543

24 April 2018

24 April 2028

1.50

515,819

-

21 May 2018

21 May 2028

1.50

404,380

-

1 June 2018

1 June 2028

1.50

38,858

-

24 September 2018

24 September 2028

2.00

164,630

-

The weighted average remaining contractual life of options at 28 February 2019 was 9 years (2018: 9 years).

The assessed fair value at grant date of options granted during the year ended 28 February 2019 was 7.37 pence per option (2018: 10.32 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 28 February 2019 included:

 

Date of grant

 

24 April

21 May

1 June

24 September

 

2018

2018

2018

2018

Expected vesting period (years)

3

3

3

3

Share value at date of grant (£)

0.9

0.9

0.9

1.2

Volatility (%)

33.3

33.3

33.3

33.3

Risk-free interest rate (%)

0.5

0.5

0.5

0.75

21. Finance income

 

2019

2018

 

£'000

£'000

Short-term bank deposits

-

77

22. Finance expenses

 

2019

2018

 

£'000

£'000

Loans

2,294

1,001

Lease liabilities

99

33

Total finance expense

2,393

1,034

 

23. Income tax credit

 

2019

2018

 

£'000

£'000

Current tax:

 

 

Adjustment in respect of prior years

(13)

(31)

Total current tax

(13)

(31)

Deferred tax:

 

 

Origination and reversal of temporary differences

(3,240)

(2,801)

Total deferred tax

(3,240)

(2,801)

Total tax (credit)/charge

(3,253)

(2,832)

 

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:

 

2019

2018

 

£'000

£'000

Loss before tax

(21,518)

(11,511)

Notional credit at UK corporation tax rate of 19.08% (2018: 19.08%)

(4,105)

(2,196)

Tax effects of:

99

 

- Expenses not deductible for tax purposes

216

- Adjustments due to changes in tax rates

405

114

- Other differences

156

2

- R&D expenditure

(12)

(12)

- Adjustment in respect of prior years

62

(31)

- Deferred tax asset not recognised

142

(925)

Tax credit for the period

(3,253)

(2,832)

 

Factors that may affect future tax charges

Deferred tax has been calculated using a tax rate of 17% (2018: 17%).

24. Cash generated from operations

 

2019

2018

 

£'000

£'000

Loss before income tax

(21,518)

(11,511)

Adjustments for:

3,664

 

- Depreciation and amortisation

1,003

- Finance income

-

(77)

- Finance costs

2,393

1,034

- Non-cash employee benefits expense - share-based payments

174

52

Changes in working capital

295

 

- Trade and other receivables

(4,523)

- Trade and other payables

16,357

9,076

Cash generated from operations

1,365

(4,946)

 

25. Reconciliation of liabilities arising from financing activities

 

 

 

Non-cash changes

 

 

At

 

 

At

 

1 March

 

 

28 February

 

2018

Cash

 

2019

 

£'000

flows

PPE

£'000

Non-current

 

 

 

23,737

Loans

12,734

11,003

-

Lease liabilities

415

96

267

778

Total liabilities arising from financing activities

13,149

11,099

267

24,515

 

26. Financial instruments by category

Group

 

 

At amortised cost

FVOCI

Total

At 28 February 2019

 

£'000

£'000

£'000

Assets as per balance sheet

 

-

-

-

Trade and other receivables excluding prepayments

 

4,918

-

4,918

Cash and cash equivalents

 

20,589

-

20,589

 

 

25,507

-

25,507

 

 

 

 

 

 

At amortised

 

 

 

 

cost

 

 

 

 

£'000

Liabilities as per balance sheet

 

 

 

23,737

Borrowings

 

 

 

Lease liabilities

 

 

 

778

Trade and other payables excluding non-financial liabilities

 

 

 

28,175

 

 

 

 

52,690

 

 

At amortised cost

FVOCI

Total

At 28 February 2018

£'000

£'000

£'000

Assets as per balance sheet

 

 

 

Investments

-

4,163

4,163

Trade and other receivables excluding prepayments

6,566

-

6,566

Cash and cash equivalents

6,695

-

6,695

 

13,261

4,163

17,424

 

 

At amortised

 

cost

 

£'000

Liabilities as per balance sheet

 

Borrowings

12,734

Lease liabilities

415

Trade and other payables excluding non-financial liabilities

11,818

 

24,967

 

27. Capital commitments

The Company had £106,420,240 (2018:£45,956,308) of capital expenditure contracted but not incurred at the year end.

28. 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 19 includes £47,000 (2018: £44,000) paid to the related employees.

29. Ultimate controlling party

There is no ultimate controlling party

30. Earnings per share

 

2019

2018

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share

128,758,285

115,314,115

Total comprehensive loss for the period

£22,428,000

£8,679,000

Basic and diluted earnings per share (pence)

(17.4)

(7.5)

 

31. Post Balance Sheet Events

On 17th May 2019 £5m was repaid to Western Provident Association Limited in settlement of an outstanding debt facility.

 

 

 

 

 


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