Annual Audited Results and Notice of AGM

RNS Number : 8040J

Port Erin Biopharma Investments Ltd

22 December 2015

 

Port Erin Biopharma Investments Ltd

22 December 2015



Port Erin Biopharma Investments Limited

("Port Erin" or the "Company")

Annual audited results for the year ending 30 June 2015

Notice of AGM

The Board of Port Erin, the AIM quoted company focused on investing in the biotechnology and biopharmaceutical sectors, is pleased to announce its annual results for the year ending 30 June 2015.

Copies of the 2015 Audited Report and Financial Statements are being posted to shareholders and will shortly be available from the Company's website www.porterinbiopharma.com.

The Company will post its Notice of Annual General Meeting ("AGM") to Shareholders at the same time. The AGM will be held at the Sanderson Suite, Claremont Hotel, Loch Promenade, Douglas, Isle of Man IM1 2LX at 10:00 a.m. on 10 February 2016.

Financial Highlights

Total Assets                                                     £2.718 million

Shareholders' Funds                                        £2.687 million

Ordinary shares in Issue                                  23,195,558

Net Asset Value per Share                              11.6 pence

For further information, please contact:-

Port Erin Biopharma Investments Limited	Beaumont Cornish Limited	Peterhouse Corporate Finance Limited
Denham Eke	Roland Cornish / James Biddle	Lucy Williams
[phone]	[phone]	[phone]

Chairman's statement

Introduction

Clearly, the Company's asset base has changed considerably since the return of the proceeds of the sale of 116,635.177 shares of Magna Biopharma Income Fund which generated £1.2 million. As announced on 5 February 2015, this represented a payment of 15.87 pence per share to those shareholders accepting the Tender Offer.

Our remaining investment holdings have performed in line with the sector. Despite our holding of Magna Biopharma Income Fund ("MBIF") having reduced in value to £1.2 million, principally as a result of the Tender Offer (2014: pre tender offer £2.9 million), we remain confident that MBIF is well positioned to take advantage in any market upturn. Of the other investments, we remain positive about the potential for both Plethora Solutions Holdings plc ("Plethora") and Summit plc ("Summit").

Plethora is currently subject to an offer from Hong Kong listed Regent Pacific Group which places an indicative value of 12.5 pence per share, valuing Plethora's entire issued capital in excess of £100 million. Plethora's principal product PSD502™, a treatment for premature ejaculation, represents an attractive investment ahead of its full commercialisation. PSD502™ is a European Medicines Agency approved prescription treatment in the European Union and preparations by Plethora for a New Drug Application to the US Food and Drug Administration are advancing well.

Summit Therapeutics has recently announced an extremely positive outcome from a Phase 2 proof of concept clinical trial for Ridinilazole, an antibiotic designed to counter the infectious disease caused by the bacteria clostridium difficile, with the potential to both treat the initial infection and substantially reduce recurrent disease. Ridinilazole has received Qualified Infectious Disease Product, or QIDP, designation and has been granted Fast Track status from the US Food and Drug Administration.

Financial Review

The total comprehensive loss for the year was £0.6 million (2014: profit of £1.4 million). The investment loss was £0.2 million (2014: profit of £2.1 million). Expenses, with no performance fee charged, were £0.4 million (2014: £0.2 million).

Total assets stand at £2.7 million (2014: £5.0 million), of which our investment holdings represent £2.5 million (2014: £4.8 million). Cash has fallen to £0.3 million (2014: £0.5 million).

Outlook

We continue to look for value enhancing investments to add to our portfolio which provides a solid platform to continue our strategy for growth.

Jim Mellon

Chairman

Directors' report

The Directors of Port Erin Biopharma Investments Limited (the "Company") take pleasure in presenting the Directors' report and financial statements for year ended 30 June 2015.

Principal activity

The Company was formed for the purpose of investing in the biotechnology and biopharmaceutical sector. The Company was incorporated on 3 May 2011 under the Isle of Man Companies Act 2006 and has no employees other than Directors. On 15 September 2011 the Company's shares were admitted to AIM.

Results and transfer to reserves

The results and transfers to reserves for the year are set out on page 7.

The Company made a loss for the year after taxation of £601,646 (2014: profit of £1,381,475).

Dividend

The Directors do not propose the payment of a dividend (2014: £nil).

Directors

The Directors who served during the year and to date were:

Jim Mellon

Denham Eke

Alexander Anderson Stuart Whamond

Auditors

Our auditors, KPMG Audit LLC, being eligible, have expressed their willingness to continue in office.

Directors' Interests

As at 30 June 2015, the interests of the Directors and their families (as such term is defined in the AIM Rules for Companies) in the share capital of the Company are as follows:

	Number of Ordinary Shares		Percentage of Issued Capital
	Direct Interests	Other Interests
Jim Mellon(1)(2)(3)	1,273,960	5,455,313	29.01%

Notes to Directors' Interests:

(1) Galloway Limited, a company where Jim Mellon is considered to be the ultimate beneficial owner, holds 2,739,699 Ordinary Shares.

(2) Shellbay Investments Limited, a company where Jim Mellon is considered to be the ultimate beneficial owner, holds 2,715,614 Ordinary Shares.

(3) Denham Eke is a director of Shellbay Investments Limited and Galloway Limited.

Significant shareholdings

Except for the interests disclosed in this note, the Directors are not aware of any holding of ordinary shares as at 30 June 2015 representing 3% or more of the issued share capital of the Company:

	Number of ordinary shares	Percentage of total issued capital
Jim Mellon(1)	6,729,273	29.01%
Hargreaves Lansdown (Nominees) Limited HLNOM	2,221,894	9.60%
Share Nominees Ltd	1,415,137	6.26%
The Bank of New York (Nominees)	1,250,000	5.39%
Vidacos Nominees Limited	1,000,000	4.31%
Hargreaves Lansdown (Nominees) Limited VRA	946,452	4.08%

Note:

(1)   Jim Mellon's shareholding consists of 2,715,614 shares held by Shellbay Investments Limited, and 2,739,699 shares held by Galloway Limited. Shellbay Investments Limited and Galloway Limited are companies where Jim Mellon is considered to be the ultimate beneficial owner. The balance of Jim Mellon's shareholding is held in his own name.

On behalf of the Board

Denham Eke

Director                                                                                                                                                           18 Athol Street

                                                                                                                                                                                   Douglas

                                                                                                                                                                               Isle of Man

                                                                                                                                                                                   IM1 1JA

                                                                                                                                                                              British Isles

Statement of Directors' Responsibilities in Respect of the Directors' Report and the Financial Statements

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. In addition, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards, for each financial year.

The financial statements are required to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

·           select suitable accounting policies and then apply them consistently;

·           make judgements and estimates that are reasonable and prudent;

·           state whether they have been prepared in accordance with International Financial Reporting Standards, and

·           prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation governing the preparation and dissemination of financial statements may differ from one jurisdiction to another.

Report of the Independent Auditors, KPMG Audit LLC, to the members of Port Erin Biopharma Investments Limited

We have audited the financial statements of Port Erin Biopharma Investments Limited (the "Company") for the year ended 30 June 2015 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows and the Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company's members, as a body. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and Auditor

As explained more fully in the Directors' Responsibilities Statement set out on page 5, the Directors are responsible for the preparation of financial statements that give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.

Opinion on the financial statements

In our opinion the financial statements:

·    give a true and fair view of the state of the Company's affairs as at 30 June 2015 and of its loss for the year then ended; and

·    have been properly prepared in accordance with IFRSs.

KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man IM99 1HN                                                                                                         

Statement of comprehensive income

for the year ended 30 June 2015

	Notes		2015		2014
			£		£
Investment (loss)/gain	3		(190,775)		2,099,040
Operating expenses
Directors' fees	2		(7,810)		(12,231)
Performance fee	2		-		(379,057)
Other costs	4		(444,400)		(230,302)
Foreign exchange gains/(losses)			41,217		(95,961)
			────────		────────
(Loss)/profit from operating activities	5		(601,768)		1,381,489
Interest received/(paid)			122		(14)
			────────		────────
(Loss)/profit before taxation			(601,646)		1,381,475
Taxation	1(i)		-		-
			────────		────────
(Loss)/profit for the year			(601,646)		1,381,475
Other comprehensive income			-		-
			────────		────────
Total comprehensive (loss)/income for the year			(601,646)		1,381,475
			════════		════════
Basic and diluted (loss)/earnings per share (pence)	11		(2.03)		4.08
			════════		════════

The Directors consider that the Company's activities are continuing.

Statement of financial position

as at 30 June 2015

	Notes		2015		2014
			£		£
Current assets
Financial assets at fair value through profit or loss	7		2,454,953		4,830,908
Trade and other receivables			7,646		24,997
Cash and cash equivalents			255,568		526,503
			────────		────────
Total assets			2,718,167		5,382,408
			════════		════════
Equity and liabilities
Capital and reserves
Share capital	6		23		34
Share premium	6		1,890,142		2,759,551
Retained earnings			796,402		2,221,841
			────────		────────
			2,686,567		4,981,426
Current liabilities
Trade and other payables	9		31,600		400,982
			────────		────────
Total equity and liabilities			2,718,167		5,382,408
			════════		════════

These financial statements were approved by the Board of Directors on 3 December 2015 and were signed on their behalf by:

Denham Eke

Director

Statement of changes in equity

for the year ended 30 June 2015

	Notes	Share Capital	Share Premium	Retained Profit	Total
		£	£	£	£
Balance at 30 June 2014		34	2,759,551	2,221,841	4,981,426
Shares cancelled under Tender Offer		(11)	(869,409)	-	(869,420)
Cash distribution under Tender Offer		-	-	(823,793)	(823,793)
Total comprehensive loss for the year		-	-	(601,646)	(601,646)
		────────	────────	────────	────────
Balance at 30 June 2015		23	1,890,142	796,402	2,686,567
		════════	════════	════════	════════

	Notes	Share Capital	Share Premium	Retained Profit	Total
		£	£	£	£
Balance at 30 June 2013		34	2,759,551	840,366	3,599,951
Total comprehensive income for the year		-	-	1,381,475	1,381,475
		────────	────────	────────	────────
Balance at 30 June 2014		34	2,759,551	2,221,841	4,981,426
		════════	════════	════════	════════

Statement of cash flows

for the year ended 30 June 2015

	Notes	2015		2014
		£		£
Cash flows from operating activities
(Loss)/profit for the year		(601,646)		1,381,475
Adjusted for:
Foreign exchange gains/(losses)		(41,217)		95,961
Interest (received)/paid		(122)		14
Realised and unrealised losses/(gains) on investments	3	190,775		(2,096,615)
		───────		───────
Operating loss before changes in working capital		(452,210)		(619,165)
Change in receivables		17,351		(17,200)
Change in payables		(369,382)		368,582
		───────		───────
Net cash outflow from operating activities		(804,241)		(267,783)
		───────		───────
Cash flows from investing activities
Purchase of investments		(124,993)		(3,476,724)
Proceeds from sale of investments		1,439,854		3,659,361
Transfer of shares in lieu of payments		870,319		-
Interest received/(paid)		122		(14)
		───────		───────
		2,185,302		182,623
		───────		───────
Cash flows from financing activities
Shares cancelled under Tender Offer		(869,420)		-
Cash distribution under Tender Offer		(823,793)		-
		───────		───────
		(1,693,213)		-
		───────		───────
Decrease in cash and cash equivalents		(312,152)		(85,160)
Cash and cash equivalents at beginning of year		526,503		707,624
Effect of exchange rate differences		41,217		(95,961)
		───────		───────
Cash and cash equivalents at the end of year		255,568		526,503
		═══════		═══════

Notes

(forming an integral part of the financial statements for the year ended 30 June 2015)

1          Accounting policies

Port Erin Biopharma Investments Limited is a Company domiciled in the Isle of Man. The Company's strategy is to create value for Shareholders through investing in companies that have the potential to generate substantial revenues through the development of biopharmaceutical drugs.

             The principal accounting policies are set out below.

             a)         Statement of compliance

The financial statements are prepared on the historical cost basis except for the valuation of financial assets and liabilities which are held at fair value through profit or loss and in accordance with International Financial Reporting Standards (IFRS) and the interpretations adopted by the International Accounting Standards Board (IASB).

                         The financial statements were approved by the Board of Directors on 3 December 2015.

             b)         Basis of preparation

                         Use of estimates and judgment

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period or in the period of the revision and future periods if the revision affects both current and future periods.

                         Going concern

The financial statements have been prepared on a going concern basis, taking into consideration the level of cash and short term investments held by the Company. The Directors have a reasonable expectation that the Company will have adequate resources for its continuing existence and projected activities for the foreseeable future, and for these reasons, continue to adopt the going concern basis in preparing the financial statements for the year ended 30 June 2015.

Functional and presentation currency

These financial statements are presented in Pound Sterling (£) which is the Company's functional currency and rounded to the nearest pound.

             c)         Investment income

Any realised and unrealised gains and losses on investments are presented within 'Investment Income'.

Interest income earned during the period, is accrued on a time apportionment basis, by reference to the principal outstanding and the effective rate applicable.

Dividend income is recognised when a security held goes ex-dividend. Dividends are shown as net cash received, after the deduction of withholding taxes.

             d)         Financial instruments

                         Classification

The Company classifies its investments in equity securities as financial assets at fair value through profit or loss. These financial assets are classified as held for trading or designated at fair value through profit or loss at inception.

             d)         Financial instruments (continued)

                         Classification (continued)

Financial assets held for trading are acquired or incurred principally for the purpose of selling in the short term.

Financial assets designated at fair value through profit or loss are those that are managed and their performance evaluated on a fair value basis in accordance with the Company's documented investment strategy.

Financial assets that are classified as loans and receivables include amounts due from brokers, other receivables.

                         Recognition/de-recognition

 Purchases and sales of investments are recognised on their trade date, which is the date on which the Company commits to purchase or sell the asset. Investments are initially measured at fair value. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership.

                         Measurement

Subsequent to initial recognition, all financial assets and financial liabilities at fair value through profit or loss are measured at fair value. Any gains and losses arising from changes in 'financial assets at fair value through profit or loss' are included in profit or loss in the period in which they arise. Interest from financial assets at fair value through profit or loss is recognised in the Statement of Comprehensive Income using the effective interest rate method. Dividend income from financial assets at fair value through profit or loss is recognised in the Statement of Comprehensive Income when the Company's right to receive payment is established.

                         Fair value measurement principles

The fair value of investment holdings is based on their quoted market prices at the reporting date on a recognised exchange or in the case of non-exchange traded instruments, sourced from a reputable counterparty, without any deduction for estimated future selling costs. Financial assets are priced at their closing bid prices, while financial liabilities are priced at their closing offer prices.

Company assets may, at any time include securities and other financial instruments or obligations that are thinly traded or for which no market exists and/or which are restricted as to their transferability under securities laws.

If a quoted market price is not available on a recognised stock exchange, or a market is not sufficiently active for the market price to be considered reliable, or if a price is not available from a reputable counterparty, fair value of the financial instruments may be estimated by the Directors using valuation techniques, including use of recent arm's length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estimate of prices obtained in actual market transactions.

                         Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in fair value.

                         Compound financial instruments

Compound financial instruments comprise convertible loans that can be converted to equity at the option of the issuer. The financial instrument is initially recognised at fair value. Subsequent to initial recognition, the derivative component is measured at fair value while the non-derivative loan component is measured at amortised cost using the effective interest method.

                         Trade and other receivables

Trade and other receivables originated by the Company are initially recognised at fair value and subsequently stated at amortised cost less impairment losses.

                         Trade and other payables

Trade and other payables are initially recognised at fair value less directly attributable transaction costs. Subsequently they are measured at amortised cost using the effective interest method.

             e)         Share capital and share premium

Ordinary shares are classified as equity. The ordinary shares of the Company have a par value of £0.000001 each. Excess proceeds received for the issue of shares has been credited to share premium. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

             f)          Warrants

The fair value of warrants is calculated using the Black-Scholes option pricing model (where no fair value of the service or assets provided is evident) and is recognised as expense over the vesting period where applicable with a corresponding increase in equity. On determining fair values, terms and conditions attaching to the warrants are taken into account. Management is also required to make certain assumptions and estimates regarding such items as the life of warrants, volatility and forfeiture rates. Changes in the assumptions used to estimate fair value could result in materially different results.

             g)         Foreign currencies

Transactions in foreign currencies are translated into the functional currency at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into functional currency at the rate of exchange ruling at the reporting date. All differences are taken to the income statement.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

             h)         New standards and interpretations not yet adopted

A number of new standards and amendments to standards are effective for annual periods beginning after 1 April 2014; however, the Group has not applied the following new or amended standards in preparing these consolidated financial statements.

New/Revised International Financial Reporting Standards (IAS/IFRS)	EU Effective Date (accounting periods commencing on or after)
IFRS 9 Financial Instruments	Not yet endorsed. IASB effective date 1 January 2018
Amendments to IAS 1: Disclosure Initiative (issued on 18 December 2014)	Not yet endorsed. IASB effective date 1 January 2016
Annual Improvements to IFRSs 2012-2014 Cycle (issued on 25 September 2014)	Not yet endorsed. IASB effective date 1 January 2016
Standards not yet effective, but available for early adoption	EU Effective Date (accounting periods commencing on or after)
Annual Improvements to IFRSs 2010-2012 Cycle (issued on 12 December 2013)	1 February 2015
Annual Improvements to IFRSs 2011-2013 Cycle (issued on 12 December 2013)	1 January 2015

The new or amended standards are not expected to have a significant impact of the Group's consolidated financial statements.

The Directors do not expect the adoption of the standards and interpretations to have a material impact on the Company's financial statements in the period of initial application.

There has been no material impact on the Company's financial statements of new standards or interpretations that have come into effect during the current reporting period.

             i)          Taxation

The Company is subject to income tax at a rate of 0% in the Isle of Man, and accordingly, no tax has been provided for in these financial statements.

The Company may be subject to withholding taxes in relation to income from investments, or investment realisation proceeds or gains, and such amounts will be accounted for as incurred.

2          Directors' and performance fees

The fees of Directors who served during the year ended 30 June 2015 were as follows:

	2015 £	2014 £
Jim Mellon	-	-
Denham Eke	-	-
Alexander Anderson Stuart Whamond	7,810	12,231
	───────	───────
	7,810	12,231
	═══════	═══════

On 6 May 2011, Shellbay Investments Limited entered into a Letter of Appointment with the Company to provide the services of Jim Mellon as Non-Executive Chairman of the Company. The Letter of Appointment was for an initial period of twelve months, from 16 May 2011 and was renewed on 1 June 2012, and may be terminated on not less than one month's notice given by either party at any time. The Letter of Appointment contains provisions for early termination, inter alia, in the event of a breach by Jim Mellon. Remuneration under the Letter of Appointment shall be payable to Shellbay Investments Limited and shall be satisfied by the issue of such number of Ordinary Shares equivalent to 15.0 per cent. of any increase in the Net Asset Value of the Company over each quarterly period, subject to an initial high watermark of 10 pence per share. This fee is recorded as a performance fee since it is based on the performance of the Company. There are no provisions providing for any benefit to Shellbay Investments Limited or Jim Mellon on the termination of the engagement. Total fees payable to Shellbay Investments Limited for the year under this arrangement were £Nil (2014: £379,057) with no balance remaining outstanding at the year-end (2014: £379,057). The balance outstanding as at 30 June 2014 was settled during the year with the transfer of Magna Biopharma Income Fund shares in lieu of Ordinary Shares in the Company to ensure that Jim Mellon's total beneficial holding did not exceed the 30.0 per cent. threshold.  No other fees are due to Jim Mellon.

Denham Eke was appointed a Director on 30 May 2012 and currently receives no remuneration for providing his services.

Alexander Anderson Stuart Whamond was appointed as a Non-Executive Director of the Company on 12 April 2013 and is entitled to receive a fee of £10,000 per annum.

3          Investment income

             Derived from financial assets held at fair value through profit or loss at initial recognition:-

	2015 £	2014 £
Dividend income	-	2,425
Net realised gains on sale of investments	374,588	966,330
Net unrealised (losses)/gains on investments	(565,363)	1,130,285
	───────	───────
	(190,775)	2,099,040
	═══════	═══════

4          Performance and other costs

	2015 £	2014 £
Auditors' fees	16,746	16,125
Bank charges	272	258
Insurance	5,551	6,300
Marketing	5,130	-
Performance fee paid to Shellbay Investments Limited (Note 2)	-	379,057
Professional fees	412,263	199,470
Sundry expenses	4,438	8,149
	───────	───────
	444,400	609,359
	═══════	═══════

             The Company has no employees other than the Directors.

5          Profit from operating activities

             Profit from operating activities is stated after charging:-

	2015 £	2014 £
Auditors' fees	16,746	16,125
Directors' fees	7,810	12,231
	═══════	═══════

6          Share capital and share premium

             Each share in the Company confers upon the shareholder:-

·   the right to one vote at a meeting of the shareholders or on any resolution of shareholders;

·   the right to an equal share in any dividend paid by the Company, and

·   the right to an equal share in the distribution of the surplus assets of the Company on its liquidation

             The Company may by resolution of Directors redeem, purchase or otherwise acquire all or any of the shares in the Company subject to regulations set out in the Company's Articles of Association.

		2015	2014
		£	£
Authorised
2,000,000,000 Ordinary shares of £0.000001		2,000	2,000
		════════	════════

	No. of Shares	Share Capital	Share Premium
Issued
Balance at 01 July 2014	33,864,836	34	2,759,551
Shares cancelled under tender offer	(10,669,278)	(11)	(869,409)
	────────	────────	────────
Balance at 30 June 2015	23,195,558	23	1,890,142
	════════	════════	════════
	────────	────────	────────
Balance at 30 June 2014	33,864,836	34	2,759,551
	════════	════════	════════

Subject to the terms of a Tender Offer (the "Tender Offer") in respect of the Company's interest in the Magna Biopharma Income Fund set out in a circular (the "Circular") dated 13 January 2015, the Company received acceptances in respect of up to 17,164,238 shares ("Eligible Shares") of the Company, representing in aggregate 50.68 per cent. of the issued share capital.

As specified in the market announcement dated 6 February 2015 detailing the close of the Tender Offer, the Tender Entitlement (as defined in the Circular) of each shareholder accepting the Tender Offer was accordingly set at 62.16 per cent. of the Company's net asset value as at 31 December 2014 (adjusted for expenses of the Tender Offer). Consequently, on completion of the Tender Offer, the Company redeemed and cancelled in aggregate 10,669,278 shares (the "Tender Shares").

On 5 February 2015, the Company completed the sale and transfer of 163,341.177 Fund Shares (Shares in Magna Biopharma Income Fund, a sub fund of Magna Umbrella Fund, as defined in the Circular, representing 58.56 per cent. of the Company's total holding of Fund Shares). The net proceeds, after expenses, from the sale of 116,635.177 Fund Shares amounted to £1,202,269 being distributed in cash, with the remaining 46,706 Fund Shares to be distributed in specie to Shellbay Investments Limited by way of consideration. Thus, the Tender Price (as defined in the Circular) for each Tender Share (taking into account the expenses of the Tender Offer) was set at £0.1587 (15.87 pence).

After payment of pro rata costs, Jim Mellon and any related parties were transferred 46,706 Fund Shares by the Company by way of consideration for the tender of 3,095,563 shares of the Company by Jim Mellon and any related parties. Jim Mellon remains interested in 6,729,273 shares, maintaining his shareholding at 29.01 per cent. of the issued shares.

Following completion of the Tender Offer the Company has a total of 23,195,558 issued shares.

Capital management

The Company manages its capital to maximise the return to shareholders through the optimisation of equity. The capital structure of the Company as at 30 June 2015 consists of equity attributable to equity holders of the Company, comprising issued capital, reserves and retained earnings as disclosed.

The Company manages its capital structure and makes adjustments to it in the light of economic conditions and the strategy approved by shareholders. To maintain or adjust the capital structure, the Company may make dividend payments to shareholders, return capital to shareholders or issue new shares and release the share premium account. No changes were made in the objectives, policies or processes during the year under review.

7          Financial assets at fair value through profit or loss

	2015 £	2014 £
Quoted	2,145,661	4,454,788
Unquoted	309,292	376,120
	───────	───────
	2,454,953	4,830,908
	═══════	═══════

Equities	2,377,468	4,684,117
Warrants	77,485	146,791
	───────	───────
	2,454,953	4,830,908
	═══════	═══════

             These financial instruments were designated as at fair value through profit or loss on initial recognition.

8          Financial instruments

             Financial Risk Management

The Company has risk management policies that systematically view the risks that could prevent it from achieving its objectives. These policies are intended to manage risks identified in such a way that opportunities to deliver the Company's objectives are achieved. The Company's risk management takes place in the context of day-to-day operations and normal business processes such as strategic and business planning. The Directors have identified each risk and are responsible for coordinating and continuously improving risk strategies, processes and measures in accordance with the Company's established business objectives.

             The Company's principal financial instruments consist of cash, receivables and payables arising from its operations and activities. The main risks arising from the Company's financial instruments and the policies for managing each of these risks are summarised below.

             Credit Risk

Credit risk is the risk of loss associated with the counterparty's inability to fulfil its obligations. The Company's credit risk is primarily attributable to investments, receivables and cash balances with the maximum exposure being the reported balance in the statement of financial position. The Company has a nominal level of debtors and as such the Company believes that the credit risk to these is minimal. The Company holds available cash and securities with licensed banks and financial institutions. The Company considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. The funds are available on demand.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

	Carrying amount	Carrying amount
	2015	2014
	£	£
Investments and loans
Quoted	2,145,661	4,454,788
Unquoted	309,292	376,120
Cash and cash equivalents	255,567	526,503
	───────	───────
	2,710,520	5,357,411
	═══════	═══════

             Market price risk

Market price risk is the risk that the market price will fluctuate due to macro-economic issues such as changes in market factors specific to that security, market interest rates and foreign exchange rates.

The Company is exposed to significant market price risks as financial instruments recognised are linked to market price volatility.

A 1% increase/decrease in market value of investments would increase/decrease equity and profit by £24,550.

             Cash flow and funding risk

The Company is exposed to liquidity risk to the extent that it holds investments that it may not be able to sell quickly at close to fair value.

The risk is managed by the Company by means of cash flow planning to ensure that future cash requirements are anticipated and, where financial instruments have to be sold to meet these requirements, the process is carried out in a controlled manner intended to minimise the liquidity risk involved.

             Interest rate risk

A significant share of the Company's assets can be comprised of cash held at banks. As a result, the Company is subject to risk due to fluctuations in the prevailing level of market interest rates. However, income earned from bank interest is not considered material to the Company's performance or financial position.

             Fair values of financial instruments

At 30 June 2015 the carrying amounts of cash resources, trade and other receivables, and trade and other payables approximate fair value due to their short-term maturities.

Foreign currency risk

The Company is exposed to foreign currency risk on fluctuations related to financial assets and liabilities that are denominated in a number of currencies.

	GBP equivalents as at 30 June 2015
			Investments	Cash at bank	Total by currency
			£	£	£
USD			86,922	226,951	313,873
CAD			155,479	-	155,479
EUR			1,238,846	-	1,238,846
			───────	───────	───────
			1,481,247	226,951	1,708,198
			═══════	═══════	═══════

	GBP equivalents as at 30 June 2014
			Investments	Cash at bank	Total by currency
			£	£	£
USD			128,201	490,334	618,535
CAD			211,857	-	211,857
EUR			2,901,683	-	2,901,683
			───────	───────	───────
			3,241,741	490,334	3,732,075
			═══════	═══════	═══════

The following significant exchange rates applied during the year:

	Average rate for active year 2015	Average rate for active year 2014
EUR	1.4033	1.1986
USD	1.5778	1.6265
CAD	1.9429	1.8214

	Year-end rate 2015	Year-end rate 2014
EUR	1.416	1.2487
USD	1.572	1.7048
CAD	1.962	1.8260

Sensitivity analysis

A 5% percent strengthening of Sterling against the Euro, US Dollar and Canadian Dollar at 30 June 2015 would have decreased equity and profit for the year by the amounts shown below. The analysis assumes that all other variables, in particular interest rates, remain constant.

	Equity	Profit or loss
EUR	(£59,015)	(£59,015)
USD	(£14,946)	(£14,946)
CAD	(£7,404)	(£7,404)

For example, a 5% percent weakening of Sterling against the Euro and US Dollar at 30 June 2015 would have the equal but opposite effect on the basis that all other variables, in particular interest rates, remain constant.

Fair value of financial instruments

The fair values of financial assets and financial liabilities that are traded in an active market are based on quoted market prices. For all other financial instruments, the Group determines fair values using other valuation techniques, based on the BVCA and IPEV rules.

For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:-

• Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical instruments;

•  Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices).This category includes instruments valued using; quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data;

•  Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments but for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments. All of the Company's underlying investments held by equity accounted investees are deemed as level 3 in the fair value hierarchy.

Various valuation techniques may be applied in determining the fair value of investments held as Level 3 in the fair value hierarchy. The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

Fair value hierarchy measurement at 30 June 2015

Investments in securities at fair value

	Total	Quoted prices In active markets for identical assets (Level 1)	Significant other observable inputs (Level 2)	Significant unobservable Inputs (Level 3)
Investments
Quoted	2,145,661	2,145,661	-	-
Unquoted	309,292	-	77,485	231,807
	───────	───────	───────	───────
	2,454,953	2,145,661	77,485	231,807
	═══════	═══════	═══════	═══════

Reconciliation of Level 3 investments

Opening balance	376,120
Changes due to fluctuations in foreign currency	618
Transfers in fair value hierarchy	(144,931) ───────
Closing balance	231,807 ═══════

During the year the Company's warrants were transferred from Level 3 to Level 2 by the use of Bloomberg's Black-Scholes model for valuing certain warrants, and valuing certain other warrants by using the output from a similar instruments, adjusted for their expiry date. As a consequence, the Directors do not consider these investments to be Level 3.  

There have been no disposals or reclassifications of investments classified as Level 3 during the financial year ending 30 June 2014.

Where applicable, the Company's Level 3 investments are valued at the price of each funding round of the respective companies entered into with their shareholders. From the date of acquisition of the investments, no additional funding rounds occurred to the date of these financial statements, and thus the investments are held at cost. The only change in the value of these occur if the investments are not denominated in Sterling, and will thus be subject to foreign exchange rate fluctuations.  The Directors do not consider any of the investments to be impaired and due to the nature of the investments deem them to be at fair value.

IFRS 13 requires disclosure, by class of financial instrument, if the effect of changing one or more inputs to reasonably possible alternative assumptions would result in a significant change to the fair value measurement. The information used in determination of the fair value of Level 3 investments is chosen with reference to the specific underlying circumstances and position of the investee company. On that basis, the Directors believe that the impact of changing one or more of the inputs to reasonably possible alternative assumptions would not change the fair value significantly.

9          Trade and other payables

	2015 £	2014 £
Due to related party (notes 2 and 12)	-	379,057
Provision for audit fee	15,000	15,000
Other provisions	5,771	-
Trade creditors	10,829	6,925
	──────	───────
	31,600	400,982
	═══════	═══════

10         Related party transactions

Under an agreement dated 1 December 2011, Burnbrae Limited, a Company related to both Jim Mellon and Denham Eke, provide certain services, principally accounting and administration, to the Company. This agreement may be terminated by either party on three months' notice. The charge for services provided in the year in accordance with the contract was £30,000 (2014: £30,000) of which £3,024 was outstanding as at the year-end (2014: £Nil).

Under an agreement dated 6 May 2011, Shellbay Investments Limited, a Company related to both Jim Mellon and Denham Eke, provide the services of Jim Mellon as Non-Executive Chairman of the Company (see note 2). The charge for services provided in the year was £Nil (2014: £379,057) of which £Nil was outstanding at the year-end (2014: £379,057). The balance outstanding as at 30 June 2014 was settled during the year under review with the transfer of shares in lieu of the payment.

As described in Note 6, on 5 February 2015 the Company completed the sale and transfer of 163,341.177 Magna Biopharma Income Fund Shares (as defined in the Circular dated 13 January 2015). 46,706 Fund Shares is to be distributed in specie to Shellbay by way of consideration. After payment of pro rata costs, Jim Mellon and any related parties were transferred 46,706 Fund Shares by the Company by way of consideration for the tender of 3,095,563 shares of the Company by Jim Mellon and any related parties. Jim Mellon remains interested in 6,729,273 shares, maintaining his shareholding at 29.01 per cent. of the issued shares.

The Company paid Burnbrae Media Limited £4,200 for a stand at the Master Investor Show on 24 April 2015. Burnbrae Media Limited is beneficially owned by Jim Mellon and Denham Eke is a director.

The Company has entered into a Letter of Engagement with Mediqventures Limited in July 2014 to research and propose potential investment opportunities for the Company. Under the agreement, Mediqventures Limited is paid US$ 60,000 per annum. Jim Mellon is a controller of Mediqventures Limited and both Jim Mellon and Denham Eke are directors.

11         Basic and diluted earnings per share

The calculation of basic earnings per share of the Company is based on the loss for the year of £601,646 and the weighted average number of shares of 29,626,356 in issue during the year.

Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares such as warrants and options. There is no dilutive effect as at 30 June 2015.

12         Subsequent events

There have been no significant events after the year end.

13         Commitments and contingent liabilities

There are no known commitments or contingent liabilities as at the year-end.

 

END

 

 

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