Final results

RNS Number : 9109N

Open Orphan PLC

07 June 2022

Open Orphan plc

("Open Orphan" or the "Company")

Final results

Record revenues and EBITDA-profitability accompanied by significant operational progress

Open Orphan plc (AIM: ORPH), a rapidly growing specialist contract research organisation (CRO) and the world leader in testing infectious and respiratory disease products using human challenge clinical trials, announces its audited final results for the 12 months ended 31 December 2021.

Financial highlights

· Record revenues of £39.0m (2020: £22.2m) achieved representing 76% growth

· £9m improvement in EBITDA generating £2.9m (2020: £(6.1)m)

· Cash and cash equivalents as at 31 December 2021 of £15.7m (2020: £19.2m)

· Significant EPS improvement in 2021 to (0.01)p per share (2020: (1.80)p)

· Order book growth of 11% to £46m future contracted revenue as at 31 December 2021 (2020: £41.6m)

Operational highlights

· Delivered a strong and growing pipeline of new challenge study contract wins

o Served four of the top 10 global biopharma companies in 2021 among a growing client base of over 60 clients

· Substantially expanded the Group's offering into the respiratory market signing an asthma study with a top three global pharma company

· Completed the world's first COVID-19 characterisation study which was proven to be safe and well tolerated

· Contract signed to manufacture a SARS-CoV-2 Delta variant challenge agent with Imperial College London, as part of a Wellcome Trust-funded initiative

· Opened a new quarantine clinic on a capital efficient basis to facilitate the growing demand for human challenge studies. This new facility, The Whitechapel Clinic, added 19 quarantine bedrooms for future challenge studies

· FluCamp screened c. 84,000 volunteers for human challenge studies in 2021 (2020: c.68,000); supported by the cost-efficient expansion of volunteer recruitment centre

o New London FluCamp volunteer recruitment centre - converted former coffee shop adjacent to the existing QMB facility

o New Manchester FluCamp volunteer recruitment centre

· Significant CRO experience added to the Board with the appointment of Yamin 'Mo' Khan as Non-Executive Director, who was appointed CEO post period end

· In June 2021, completed a distribution in specie to the Company's shareholders, through the demerger of certain non-core assets into Poolbeg Pharma

Post-period end highlights

· Commenced development of a new influenza challenge model for an existing top five global pharmaceutical client and signed a £14.7m contract for the characterisation and challenge trial to follow

· £7.3m influenza challenge trial and £5m RSV challenge trial contracts signed

· Launched a new Malaria human challenge model and was awarded by an existing Big Pharma client to act as a vaccination site for a Phase II field study

· Opened a new primary FluCamp volunteer recruitment facility in Whitechapel, increasing bed capacity by 44% from 43 beds to 62 beds, and opened a new Manchester volunteer recruitment centre at the same cost as the old facility, but with four times the floor space, doubling the Group's volunteer screening capacity to 1,000 per week

o Facilities expansion enables the Group to broaden the scope of the business to offer additional clinical trial services outside of its traditional core challenge study offering

Current trading and outlook

As at 1 June 2022, Open Orphan had an order book of signed contracts worth £64.2m which is expected to be recognised across 2022, 2023 and 2024.

Open Orphan's pipeline of new opportunities continues to grow with a number of further challenge study opportunities at advanced negotiations across influenza, asthma, RSV, malaria and COVID-19. This growth is driven by the increased success and awareness of human challenge trials, and the development of new challenge models. A significant portion of our pipeline includes returning Big Pharma customers, in addition to a wider group of new clients who have observed the benefits of human challenge trials.

Our Venn Life Sciences subsidiary continues to deliver specialist drug development consultancy services across non-clinical and clinical development, pharmacology, CMC and biometry services, acting as a trusted partner to an extensive range of clients.

These developments reaffirm the Board's expectations of a profitable growing business with revenues in the region of £50m in 2022.The Group is now well positioned and well capitalised to deliver sustainable long-term profitability.

Yamin 'Mo' Khan, Chief Executive Officer of Open Orphan, said: "2021 was a milestone year for Open Orphan; the Group achieved record revenues, and recorded full year EBITDA-profitability for the first time - a significant turning point for the business.

"The Group won a record number of human challenge study contracts, serving four of the top 10 global biopharma companies and more than 60 clients in total. We were proud to make a significant contribution to the UK Government's response to the pandemic by completing the world's first COVID-19 characterisation study, which furthered our understanding of COVID-19 disease progression. Importantly, the Group accomplished this whilst investing in operational improvements, with volunteer screening and quarantine capacities expanded during the year.

"Post-period end, we have continued our momentum from 2021 into a strong start to trading and significant contract wins. We increased our bed count from 43 to 62, doubled our volunteer screening capacity, and also expanded the scope of our business to offer additional clinical trial services, where we have already signed our first contracts, establishing new revenue streams for the business. We also launched our new Malaria Human Challenge Model, which I believe has further consolidated our position as the leading provider of human challenge trials in infectious and respiratory disease. In my new role as CEO, I look forward to driving further growth across the business this year and converting this substantial progress into value for our shareholders."

Interested in becoming a volunteer?

hVIVO recruits many of its volunteers for its challenge study clinical trials through its dedicated volunteer recruitment website, www.flucamp.com . By volunteering to take part in one of our studies in a safe, controlled, clinical environment under expertly supervised conditions you are playing your part to further medical research and help increase the understanding of respiratory illnesses.

¹ Source: Citeline Trialtrove, Jan. 2022 and Pharma R&D Annual Review; IQVIA Institute, Global Trends in R&D - Overview Through 2021; Global Data; Evaluate Pharma; Edison Investment Research; Pitchbook

For further information please contact:

Open Orphan plc	+353 (0) 1 644 0007
Yamin 'Mo' Khan, Chief Executive Officer

Liberum Capital (Nominated Adviser and Joint Broker)		+44 (0) 20 3100 2000
Ben Cryer/ Edward Mansfield/ Phil Walker/ Will King

finnCap plc (Joint Broker)		+44 (0) 20 7220 0500
Geoff Nash / James Thompson / Richard Chambers

Davy (Euronext Growth Adviser and Joint Broker)		+353 (0) 1 679 6363
Anthony Farrell

Walbrook PR (Financial PR & IR) Paul McManus / Sam Allen / Louis Ashe-Jepson	+44 (0)20 7933 8780 or openorphan@walbrookpr.com +44 (0)7980 541 893 / +44 (0) 7502 558 258 / +44 (0)7747 515393

Notes to Editors

Open Orphan plc

Open Orphan plc (London and Euronext: ORPH) is a rapidly growing contract research company that is a world leader in testing infectious and respiratory disease products using human challenge clinical trials. The Company provides services to Big Pharma, biotech, and government/public health organisations.

The Company has a leading portfolio of human challenge study models for infectious and respiratory diseases, including the recently established COVID-19 model, and is developing a number of new models, such as Malaria, to address the dramatic growth of the global infectious disease market. The Paris and Breda offices have over 25 years of experience providing drug development services such as biometry, data management, statistics CMC, PK and medical writing to third party clients as well as supporting the London-based challenge studies.

Open Orphan runs challenge studies in London from its Whitechapel quarantine clinic, its state-of-the-art QMB clinic with its highly specialised on-site virology and immunology laboratory, and its newly opened clinic in Plumbers Row. To recruit volunteers / patients for its studies, the Company leverages its unique clinical trial recruitment capacity via its FluCamp volunteer screening facilities in London and Manchester. The newly opened facilities have expanded the scope of the business to enable the offering of Phase I and Phase II vaccine field trials, PK studies, bridging studies, and patient trials as part of large international multi-centre studies.

Building upon its many years of challenge studies and virology research, the Company is developing an in-depth database of infectious disease progression data. Based on the Company's Disease in Motion® platform, this unique dataset includes clinical, immunological, virological, and digital (wearable) biomarkers.

Executive Chairman's Statement

For the year ended 31 December 2021

Introduction

I am pleased to report on trading for the year ended 31 December 2021, a period in which we continued our strong momentum. The Group reported substantial revenue growth of 76%, with total revenue (incl. other income) of £39.0m (2020: £22.2m), and more importantly a transition to positive EBITDA of £2.9m (2020: £(6.1)m). 2021 was also a year of considerable operational progress; the Group conducted a record number of human challenge trials and successfully completed the spin-off of Poolbeg Pharma plc, which listed on the London Stock Exchange in July 2021, giving our shareholders a stake in Poolbeg Pharma plc through the distribution in specie shares.

In the two years since we acquired hVIVO, we have transformed the way that it runs human challenge trials by both reducing the time taken to complete a study, from 18 months to six months, and substantially increasing the Company's capacity and capability to run more studies; increasing our total quarantine capacity to 62 beds. In addition, we have focused on expanding the Company's human challenge trials to include non-viral disease indications such as asthma, and by making new challenge models available to our clients, including COVID-19 and malaria.

Furthermore, as a result of the pandemic, hVIVO and the UK received worldwide recognition as a world centre for conducting human challenge trials. This was a direct result of successfully completing the world's first COVID-19 human challenge trial mid-pandemic. The pandemic also highlighted the significant value of human challenge trials which provide human efficacy data in a fraction of the time and cost it would take to complete a normal field trial. As a result of these initiatives, the global market for human challenge trials has increased significantly and as the world leader in the provision of these studies, we expect the business to deliver an increasing number of challenge trials year on year going forward.

Strategic delivery 2021

Below is an outline of the Group's achievements in 2021 across key business revenue streams and market trends.

Human challenge / clinical services

2021 was a record year for hVIVO's core human challenge trial business, with the Company delivering a strong and growing pipeline of challenge study contract wins across our world leading portfolio of human challenge models. The Company is benefitting from a significantly expanded market for infectious and respiratory disease products, with four of the top 10 global biopharma companies working with us in 2021.

In 2021 we successfully collaborated with a client who funded the rapid and cost-efficient conversion of the unoccupied Whitechapel Hotel located immediately beside our existing QMB facility, into the Whitechapel Clinic, a 19-bedroom quarantine clinic. Following the successful delivery of this trial to the client, we continue to operate the Whitechapel Clinic for challenge trials. This expanded our existing quarantine bedroom capacity to 43 (which was subsequently increased post-period end, providing us with access to 62 beds).

We also converted a vacant lot adjacent to the existing QMB facility into a new FluCamp volunteer recruitment screening centre. Similarly, we expanded our FluCamp screening facilities with the opening of new facilities in Manchester. These projects were completed at minimal cost and the expansion enabled us to screen 84,000 volunteers for human challenge studies in 2021.

COVID-19

2021 was a pivotal year for the UK and its attempt to emerge from the COVID-19 pandemic, and I was proud of the significant contribution that our team made to this. As a commitment to help the UK government to fight the pandemic, the team at hVIVO worked tirelessly under difficult conditions in the midst of a pandemic, to deliver a COVID-19 characterisation study to provide unique insights into COVID-19. The results of the study were published in the peer reviewed scientific journal 'Nature Medicine' in February 2022. It is a testament to the hVIVO team and their knowledge and commitment that this study was completed safely and in a timely manner. The study was conducted in partnership with the UK Government's Vaccine Taskforce and Department of Health and Social Care (DHSC), Imperial College London and the Royal Free London NHS Foundation Trust. Additionally, we were contracted to manufacture a SARS-CoV-2 Delta variant challenge agent with Imperial College London, as part of a Wellcome Trust-funded initiative.

The extensive worldwide coverage we received as part of this work raised Open Orphan's profile as the world leader in conducting human challenge trials and highlighted the significant benefit of these studies to deliver critical human efficacy data.

While effective vaccines and antiviral treatments have lessened the impact of COVID-19 infection in human populations, the lasting legacy of the pandemic is a significantly enlarged infectious and respiratory disease market, which is expected to grow to in excess of $250bn by 2025. The Group is leveraging this significant market growth. With extensive relationships across the industry, a world class reputation, and an ability to continue enhancing and diversifying its offering, the Group is well placed to secure further work as a result of this renewed investment and focus on respiratory diseases.

Board changes

We strengthened our Board with the appointment of Yamin 'Mo' Khan, initially as Non-Executive Director on 13 October 2021 before he was subsequently appointed CEO, post-period end, on 24 February 2022. Mo brings 25 years of CRO experience to his role, and I have thoroughly enjoyed working with him since he joined the Group. Mo has had a significant impact on the business, and we were delighted that he since accepted the position of CEO. Mo brings extensive industry specific insights that we will leverage to deliver on our expanding pipeline of opportunities, and I am confident Mo will continue to drive the Group's upward trajectory.

In July 2021, Professor Brendan Buckley, Non-Executive Director, and myself collectively purchased a further 1,320,754 ordinary shares at 26.5 pence per ordinary share, which increased my shareholding to 7.0% and Brendan's shareholding to 1.2% of the Company's issued ordinary share capital. I hope this demonstrates to our shareholders the Board's commitment to the business and our desire to drive shareholder value to match our considerable financial and operational growth and momentum.

In April 2022, we appointed Liberum Capital Limited as our Nominated Adviser and Joint Broker. We are delighted to be working with Liberum which is ideally placed to introduce Open Orphan's fast growing, profitable and sustainable business to new investors.

Summary

In a pandemic-hit 2021, the Group achieved record revenues, transitioned to making an EBITDA profit, and made significant operational progress. The business conducted a record number of human challenge trials and has established itself as the world-leading provider of human challenge trials in the rapidly expanding infectious and respiratory disease market. Our work in COVID-19 enabled us to demonstrate our unparalleled expertise to a wider audience, and the market is now clearly recognising the value that human challenge trials can offer.

The business is firmly profitable and remains well capitalised with a cash balance of £15.7m to help drive the business forward and to realise further value for our shareholders. I would like to thank all of our employees for their incredible efforts this year, and our shareholders for their continued support.

Cathal Friel

Executive Chairman

6 June 2022

CEO Statement

For the year ended 31 December 2021

Introduction

2021 has been an exceptional year for Open Orphan with our subsidiary, hVIVO, strengthening its position as the world leader in human challenge trials and our drug consultancy subsidiary, Venn Life Sciences, consolidating its position as a leading provider of integrated clinical development solutions. Since joining Open Orphan, initially as a Non-Executive Director and later transitioning into the role of CEO in Q1 2022, I am excited by the significant opportunity for the Group to capitalise on the substantial increase of investment in respiratory and infectious diseases by global pharmaceutical and biotech companies.

In this time, I have witnessed the substantial demand for hVIVO's human challenge trial models, and our ability to efficiently deliver key human efficacy data to support our clients' clinical development programmes. I am also excited by the growth prospects of Venn Life Sciences, offering a complete end-to-end service to our clients' drug development programmes, from pre-clinical to late phase clinical development.

The exceptional delivery of our services would not be possible without the commitment of the team across the Open Orphan Group. Their dedication and hard work through the challenges of the COVID-19 pandemic was exemplary and their unique knowledge and expertise sets the Group apart from our competitors. I would like to thank them for their excellent contribution to our success in 2021.

Strong financial results

The Group achieved record revenues (incl. other income) in 2021 of £39.0 million, representing a substantial increase of 76% on 2020. A large portion of this revenue is attributable to hVIVO's human challenge trials, which gained global publicity in 2021 as they continued to grow into the mainstream drug development pathway. The Company completed human challenge trials with a number of top 10 Big Pharma and smaller biotechs such as Bavarian Nordic (RSV) and SAB Therapeutics (influenza). The Company also continued to support the UK Government's Vaccine Taskforce resulting in the completion of the world's first COVID-19 challenge study and the manufacture of a SARS-CoV-2 Delta variant challenge agent with Imperial College London . In addition, Venn Life Sciences also performed strongly across its early clinical, non-clinical development, CMC, and biometry services.

The Group was EBITDA positive in 2021, with an EBITDA of £2.9m compared to a £6.1m EBITDA loss in 2020. The Group benefitted from its post-acquisition restructuring plan and a record year of revenue, while also ensuring disciplined cost management in the period. The Group remains well capitalised with cash and cash equivalents of £15.7m as at 31 December 2021. Furthermore, in June 2021, we completed a distribution in specie to the Company's shareholders, through the demerger of certain non-core assets into Poolbeg Pharma.

Customer delivery

Open Orphan has firmly established itself as the world leader in the provision of human challenge trials, offering the largest portfolio of commercial challenge models to a range of clients across Europe, North America and Asia Pacific. The Group serves a wide array of biopharma companies. We worked directly with four of the world's 10 largest biopharma companies in 2021, a number of them as repeat customers. In addition, we also worked with a variety of biotech companies, who tend to have fewer assets and thus place great importance on quickly and efficiently achieving key human efficacy data. hVIVO's challenge trials can provide a fast and cost-efficient route to efficacy data, often resulting in a key value inflection point.

Open Orphan served over 60 clients in 2021 with around 80% year-on-year repeat business. Our goal to become a long-term partner for our clients is now being realised.

The Group achieved significant contract wins in H2 2021 in influenza, RSV and asthma challenge trials. The majority of the revenue relating to these trials will be recognised in 2022, positioning the Group to deliver continued growth into 2022, and beyond.

As hVIVO's challenge studies continue to gain a foothold into the mainstream clinical pathway, a number of our clients achieved notable successes in 2021, which further validates the benefits of human challenge trials. Two of our clients obtained

Breakthrough Therapy designation from the US Food and Drug Administration ("FDA") as a consequence of the successful clinical data achieved from hVIVO challenge trials:

· Our successful Phase 2a RSV challenge trial for a Big Pharma client which completed in 2021 enabled them to obtain Breakthrough Therapy designation from the FDA for the prevention of lower respiratory tract disease caused by RSV in individuals 60 years of age or older

· The FDA granted Breakthrough Therapy designation for Bavarian Nordic's RSV vaccine candidate, MVA-BN® RSV. hVIVO successfully conducted a Phase 2, double-blinded, placebo controlled human challenge trial to assess MVA-BN® RSV using its RSV human challenge study model

Breakthrough Therapy designation can significantly shorten the time to market for recipients, enabling clients to gain a competitive advantage. The receipt of Breakthrough Therapy designation by these high-profile clients has directed further attention to our challenge trials across all indications, leading to numerous new inbound enquiries and enhanced growth of our pipeline.

It should be noted that one of the impacts of the COVID-19 pandemic has been to increase public and industry awareness across all viral pathogens and release R&D funding across a number of indications.

Outlook

As the new CEO of the Group, I am keen to build on the significant milestones the business has achieved in 2021 while also expanding the Group into new challenge models, adding new revenue streams and expanding our facilities. The future looks exceptionally bright across all areas, with evidence of the benefits already coming to fruition.

Challenge Models

The human challenge trial model will remain the core business for the hVIVO team and we will be aggressively marketing our challenge models to new and existing customers in 2022 and beyond. We expect the influenza and RSV models to continue to attract significant interest across the entire market; from smaller biotechs to larger Big Pharma customers. Funding in the development of vaccines and antivirals across the infectious disease space continues to increase as the life sciences industry looks to address the next potential pandemic. The indicators for hVIVO are very positive with huge interest across our portfolio of models and notable challenge trial wins already in 2022; one in influenza and the other in RSV, in addition to our largest ever commercial challenge programme win with an existing top five global pharmaceutical client.

This engagement will include the manufacture of an influenza challenge agent, the characterisation study to identify a dose that causes a safe and reliable infection in healthy volunteers and the challenge trial which will help determine the efficacy of a number of different vaccine candidates for the reduction in incidence of symptomatic flu infection and disease severity in healthy volunteers. This contract win helps to re-affirm our position as a "go-to" partner for an increasing number of global biopharma companies.

The HRV-asthma model will also be active in 2022 and beyond as we look to increase our position into the respiratory field, building on the landmark HRV-asthma challenge study signed with a top three global pharma company in H2 2021. In addition, we will be establishing a foothold in the anti-parasitic market as we look to establish our newly launched malaria model and target our first study in malaria or a related indication in 2022. The anti-parasitic market is experiencing an increased volume of funding and we are already witnessing the influx of enquiries from potential clients about running a challenge trial.

COVID-19 Challenge Model

hVIVO has already shown its ability to deliver a COVID-19 challenge trial safely and in a timely manner. We have pride in leading the world's first COVID-19 challenge study and helping the UK government in the fight against the pandemic.

We have also manufactured a challenge agent of the Delta variant and are working with world leading institutions to continue to research the SARS-CoV-2 virus. Our aim is to conduct further COVID-19 challenge trials in the near future. A COVID-19 challenge trial can quickly provide the crucial human efficacy data required to confirm early proof of concept.

Capacity Growth

To support Open Orphan's rapid growth and consolidate its world leading position, we have expanded our facilities including increasing our screening capacity and our number of beds. In March 2022, our London FluCamp recruitment operation moved to a new low cost 12 bed facility. This enabled us to double the Group's previous volunteer screening capacity, while significantly boosting our ability to identify and enrol study volunteers to deliver the significant volume of trials to be completed in 2022 and beyond. We also opened a new Manchester volunteer screening facility at the same cost as the old facility to increase volunteer numbers from the North-West region.

The increased capacity will ensure the Group maintains its world leading position through its volunteer recruitment arm, FluCamp.

New Revenue Streams

The increased scale of our volunteer recruitment screening facilities will allow us to broaden our offering to deliver new revenue streams, namely using the existing FluCamp infrastructure in London as a site for Phase 2 and Phase 3 field studies. The initial target will be to recruit healthy volunteers into field-based vaccines trials. We will target a range of current and new clients, leveraging FluCamp's existing infrastructure to deliver research site services. This should act as a natural follow-on to a number of our clients who have completed Phase 2a challenge studies.

2022 is shaping up to be a breakthrough year for hVIVO's highly specialised virology and immunology laboratory team, expanding its portfolio of customers to help grow the Group's business. We plan to receive CAP and IOS 17025 (UKAS) accreditation for our laboratories in 2022. This should lead to further opportunities for our world class laboratory teams to deliver virology and immunology services to a range of clients.

Venn Life Sciences

Our Venn Life Science subsidiary continues to deliver specialist drug development consultancy services across non-clinical and clinical development, pharmacology, CMC and biometry services. Venn Life Sciences is a trusted partner to an extensive range of clients, and our highly skilled scientific team have helped nurture a number of long-term client relationships. We are experiencing continued demand across our comprehensive suite of services and we expect Venn Life Sciences to continue its upward trajectory in new areas, notably in advanced therapy medicinal products (ATMPs) and consulting advice for medical device companies.

Order book and pipeline

As at 31 December 2021, Open Orphan had an order book of signed contracts worth £46m (2020: £41.6m). This order book will be recognised across 2022, 2023 and 2024. Additional new project wins in 2022 have further enhanced our order book including a landmark £14.7m contract for an influenza challenge trial that includes the characterisation and completion of a challenge trial for an existing top five global pharma customer, a £7.3m influenza challenge trial and a £5m RSV challenge trial. This has seen our order book expand to £64.2m by 1 June 2022.

These developments reaffirm the management's expectations of revenues in the region of £50m in 2022, with the Group now delivering strong sustainable long-term profitability.

Summary

I am very satisfied with the strong performance of our business across the twelve months to 2021 as the Group became EBITDA profitable. We will build on this performance into 2022 and have set challenging and achievable growth plans across all areas of the business. We believe the operational infrastructure is in place to deliver on the exceptional contracted order book and pipeline of opportunities the business has, and we can already see the strategy coming to fruition. Our strategy is to continue to enhance and diversify our core and non-core offering, solidifying our world leading position in order to capitalise on the increased demand for human challenge trials and the growth in the infectious and respiratory disease market. We believe this will deliver growth on our revenue and EBITDA for our shareholders, continuously improve our employee satisfaction and ensure an efficient operational delivery to our customers.

As a Board, we are confident that we can deliver on our growth plans for 2022 and beyond as we continue to focus on the execution of our strategy to generate value for our shareholders.

Yamin 'Mo' Khan

CEO

6 June 2022

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2021

		Year to	Year to
	Notes	31 December	31 December
		2021	2020 Restated
		£'000	£'000
Operations
Revenue, from contracts with customers	5,35	36,864	20,602
Other operating income	33	2,141	1,576
Direct project and administrative costs	6	(36,117)	(28,260)
EBITDA before exceptional items		2,888	(6,082)
Depreciation & amortisation	6,16,17,37	(2,565)	(2,052)
Exceptional items	7	267	(2,125)
Operating profit/(loss)		590	(10,259)
Finance expense	12	(215)	(374)
Share based payment charge	32	(27)	(240)
Share of loss of associate using equity method	18b	(71)	(107)
Profit/(Loss) before income tax		277	(10,980)
Income tax (charge)/credit	13	(351)	189
(Loss) for the year		(74)	(10,791)
(Loss) for the year is attributable to:
Owners of the parent		(74)	(10,791)
Other comprehensive income
Currency translation differences		(111)	318
Total comprehensive (loss) for the year		(185)	(10,473)

Earnings per share from operations attributable to owners of the parent during the year	Note	2021	2020
Basic and diluted (loss) per ordinary share
From operations	14	(0.01p)	(1.80p)
For the year		(0.01p)	(1.80p)

All activities relate to continuing operations.

Consolidated and Company's Statement of Financial Position

As at 31 December 2021

		Group	Group	Company	Company
		2021	2020	2021	2020
	Notes	£'000	£'000	£'000	£'000
Assets
Non-current assets
Intangible assets	17	6,219	6,127	-	-
Property, plant and equipment	16	927	1,068	-	-
Investment in associates	18b	7,005	7,076	-	-
Investments in subsidiaries	18a	-	-	22,377	22,334
Right of use asset	37	2,788	4,230	-	-
Total non-current assets		16,939	18,501	22,377	22,334
Current assets
Inventories	20	659	953	-	-
Trade and other receivables	21	8,944	9,806	9,701	10,960
Current tax recoverable		38	80	-	-
Cash and cash equivalents	22	15,694	19,205	8,663	8,689
Total current assets		25,335	30,044	18,364	19,649
Total assets		42,274	48,545	40,741	41,983
Equity attributable to owners
Share capital	26	671	731	671	731
Share premium account	27	1	44,480	1	44,480
Merger reserves	27	(6,856)	(6,856)	(2,241)	(2,241)
Foreign currency reserves	27	1,331	1,442	2,014	2,573
Share option reserve	27/32	327	493	327	493
Retained earnings	27	25,206	(17,993)	36,767	(4,983)
Total equity		20,680	22,297	37,539	41,053
Liabilities
Non-current liabilities
Trade and other payables	23	-	2	-	-
Lease liabilities	37	863	2,194	-	-
Leasehold provision		40	20	-	-
Total non-current liabilities		903	2,216	-	-
Current liabilities
Trade and other payables	23	18,396	21,396	3,202	885
Deferred taxation	24	-	32	-	-
Lease liabilities	37	1,991	2,245	-	-
Leasehold provision		10
Borrowings	25	294	359	-	45
Total current liabilities		20,691	24,032	3,202	930
Total liabilities		21,594	26,248	3,202	930
Total equity and liabilities		42,274	48,545	40,741	41,983

The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent Company income statement account. The loss for the parent Company for the year was £1,522,000 (2020: loss of £1,891,000).

Open Orphan Plc

Cathal Friel - Executive Chairman Registered no: 07514939

Consolidated and Company's Statement of Changes in Shareholders' Equity

	Group	Share capital			Share premium		Merger reserve			Share Option reserve		Foreign currency reserve			Retained earnings	Total
		£'000			£'000		£'000			£'000		£'000			£'000	£'000
	At 1 January 2020	-			-		-			-		-			(1,463)	(1,463)
	Changes in equity for the Year ended 31 Dec 2020
	(Loss) for the year	-			-		-			-					(10,791)	(10,791)
	Currency differences	-			-		-			-		318			-	318
	Total comprehensive (loss) for the year	-			-		-			-		318			(10,791)	(10,473)
	Transactions with the owners
	Share based payment res.	-			-		-			240		-			-	240
	Shares issued	414			29,266		-			-		-			-	29,680
	Total contributions by and distributions to owners	414			29,266		-			240		-			-	29,920
	At 31 December 2020	731			44,480		(6,856)			493		1,442			(17,993)	22,297
	Changes in equity for the Year ended 31 Dec 2021
	(Loss) for the year	-			-		-			-					(74)	(74)
	Currency differences	-			-		-			-		(111)			-	(111)
	Total comprehensive (loss) for the year	-			-		-			-		(111)			(74)	(185)
	Transactions with the owners
	Share based payment res.	-			-		-			(166)		-			193	27
	Shares issued	3			37		-			-		-			-	40
	Capital reduction	(63)			(44,516)										44,579	-
	Distribution in specie (note 39)	-			-		-			-		-			(1,500)	(1,500)
	Total contributions by and distributions to owners	(60)			(44,479)		-			(166)		-			43,272	(1,433)
	At 31 December 2021	671			1		(6,856)			327		1,331			25,206	20,680
Company			Share capital			Share premium		Share option reserve			Merger reserve		Foreign currency reserve	Retained earnings			Total
			£'000			£'000		£'000			£'000		£'000	£'000			£'000
At 1 January 2020			-			-		-			-		-	(1,463)			(1,463)
Changes in equity for the year ended 31 December 2020
Total comprehensive loss for year			-			-		-			-		-	(1,891)			(1,891)
Share based payment res.			-			-		240			-		-	-			240
Currency differences			-			-		-			-		1,488	-			1,488
Shares issued			414			29,266		-			-		-	-			29,680
Total contributions by and distributions to owners			414			29,266		240			-		1,488	(1,891)			29,517
At 31 December 2020			731			44,480		493			(2,241)		2,573	(4,983)			41,053
Changes in equity for the year ended 31 December 2021
Total comprehensive loss for year				-		-			-		-		-	(1,522)			(1,522)
Share based payment res.			-			-			(166)		-		-	193			27
Currency differences			-			-			-		-		(559)	-			(559)
Shares issued			3			37			-		-		-	-			40
Capital reduction			(63)			(44,516)								44,579			-
Distribution in specie (note 39)			-			-			-		-		-	(1,500)			(1,500)
Total contributions by and distributions to owners			(60)			(44,479)			(166)		-		(559)	41,750			(3,514)
At 31 December 2021			671			1			327		(2,241)		2,014	36,767			37,539

Consolidated and Company's Statement of Cash Flows

For the year ended 31 December 2021

		Group	Group	Company	Company
		2021	2020	2021	2020
	Notes	£'000	£'000	£'000	£'000
Cash Flow from operating activities
Continuing operations
Cash used in operations	28	(2,868)	2,540	680	(6,568)
Income tax (R & D) received		1,304	1,631	-	-
Net cash used in operating activities		(1,564)	4,171	680	(6,568)

Cash flow from investing activities
Cash acquired with acquisition of subsidiary		-	2,276	-	-
Investment in new subsidiary		-	-	(43)	-
Purchase of property, plant and equipment		(329)	(818)	-	-
Purchase of intangible asset		(410)	(274)	-	-
Net cash used in investing activities		(739)	1,184	(43)	-

Cash flow from financing activities
Proceeds from issuance of ordinary shares & options	26	40	18,031	40	18,031
Costs of January and May 2020 fund raising		-	(1,335)	-	(1,335)
Exceptional Costs re RTO, Spin-out & restructuring	7	(1,169)	(2,108)	(409)	(867)
Repayment of Invoice Discounting		-	(156)	-	-
Interest (Paid)		(21)	(188)	-	(152)
Stamp Duty re capital reduction	39	-	-	(7)
Loan Note Redemptions		(45)	(1,205)	(45)	(1,205)
Net cash generated by financing activities		(1,195)	13,039	(421)	14,472

Net increase in cash and cash equivalents		(3,498)	18,394	216	7,904
Cash and cash equivalents at beginning of year		19,205	1,037	8,689	421
FX translation		(13)	(226)	(242)	364
Cash and cash equivalents at end of year	22	15,694	19,205	8,663	8,689

Notes to the Financial Statements

For the year ended 31 December 2021

1. General information

Open Orphan Plc is a company incorporated in England and Wales. The Company is a public limited company, limited by shares, listed on the AIM market of the London Stock Exchange and on Euronext Growth in Dublin. The address of the registered office is Queen Mary Bio Enterprises, Innovation Centre, 42 New Road, London, E1 2AX, UK.

The principal activity of the Group is that of a rapidly growing specialist CRO pharmaceutical services company which is the world leader in the testing of vaccines and antivirals using human challenge clinical trials. The Group has a presence in the UK, Ireland, France and Netherlands.

The financial statements are presented in GBP£'000 (except where indicated otherwise), the currency of the primary economic environment in which the Group's trading companies operate. The Group comprises Open Orphan Plc and its subsidiary companies as set out in note 18. The Board decided to change the presentation currency of the Group from Euro (€) to pounds Sterling (£) in 2020 given the increased weighting of the UK operations on the financial statements as a result of the merger between Open Orphan plc and hVIVO plc in January 2020.

The registered number of the Company is 07514939.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. The policies have been consistently applied throughout the year, unless otherwise stated.

Basis of preparation

Open Orphan Plc (formerly Venn Life Sciences Holdings Plc) completed an IPO on the London AIM Exchange and the Dublin Euronext exchange on 28 June 2019 through a reverse acquisition of Open Orphan DAC, an Irish Company, into Venn Life Sciences Holdings Plc (Venn), a UK company. Based on the accounting standards under IFRS 3 and IFRS 10, the Group has determined that the entity with control of the combined group after the combination is Open Orphan DAC. It was therefore determined that reverse acquisition accounting is to be applied for presentation of the financial statements of the Group. This means that results reported for 2019 reflected those of Open Orphan DAC for the full 12-month period and for Venn Life Sciences group Plc group from 01 July 2019 to year end 2019. The percentage of the enlarged share capital represented by the consideration shares issued to Open Orphan DAC on the reverse takeover was 40.1% which represented a fair value consideration of £5.7m.

Open Orphan Plc completed, on 17 January 2020, an acquisition of the hVIVO group. The results reported for 2020 reflected those of Open Orphan Plc and Venn Group for the full 12-month period and for hVIVO group from 17 January 2020 to year end 2020. The percentage of the enlarged share capital represented by the consideration shares issued to hVIVO group on the acquisition takeover was 33.1% which represented a fair value consideration of £12.96m.

The Balance Sheet reported for 2021 reflect those of the now fully combined group with share capital reflecting the position of the ultimate parent company Open Orphan Plc.

For information purposes, a pro forma statement of Comprehensive Income for the prior year 2020 for Open Orphan Plc on a stand-alone basis is presented in the chairman's statement to allow a comparison of a normalized presentation of Comprehensive Income for the Group during the years 2021 and 2020.

The consolidated financial statements of Open Orphan Plc have been prepared in accordance with UK adopted international accounting standards (IFRSs), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. These are the first financial statements prepared under UK adopted international accounting standards. On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. Open Orphan Plc transitioned to UK-adopted International Accounting Standards in its consolidated and parent company financial statements on 1 January 2021. This change constitutes a change in accounting framework. However, there is no change on recognition, measurement or disclosure in the financial year reported as a result of the change in framework.

The consolidated financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4.

Changes in accounting policies and disclosures

The accounting policies adopted are consistent with those of the previous financial year. Standards and amendments to IFRS effective as of 1 January 2021 have been applied by the Group, where applicable.

Summary of new accounting policies

Standards, amendments and interpretations effective and adopted in 2021

Several amendments and interpretations apply for the first time in 2021.

Standard or		Effective for annual periods beginning
Interpretation	Title	on or after

IFRS 16	COVID-19-Related Rent Concessions (Amendment to IFRS 16)	1 June 2020
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16	Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)	1 January 2021

Standards, amendments and interpretations issued and effective in 2021 but not relevant

There are no IFRSs or IFRIC interpretations that are effective and not relevant to the Group.

Standards, amendments and interpretations issued but not yet effective in 2021

There were a number of standards and interpretations which were in issue at 31 December 2021 but not effective for periods commencing 1 January 2021 and have not been adopted for these financial statements. The Directors have assessed the full impact of these accounting changes on the Company. To the extent that they may be applicable, the Directors have concluded that none of these pronouncements will cause material adjustments to the Group's financial statements. They may result in consequential changes to the accounting policies and other note disclosures. The new standards will not be early adopted by the Group and will be incorporated in the preparation of the Group financial statements from the effective dates noted below.

Standard or		Effective for annual periods beginning
Interpretation	Title	on or after

IFRS 16	COVID-19-Related Rent Concessions beyond 30 June 2021. (Amendment to IFRS 16)	1 April 2021
IAS 37	Onerous Contracts - Cost of Fulfilling a Contract. (Amendments to IAS 37)	1 January 2022
IAS 16	Property, Plant and Equipment: Proceeds before Intended Use. (Amendments to IAS 16)	1 January 2022
IFRS	Annual Improvements to IFRS Standards 2018-2020	1 January 2022
IFRS 3	Reference to the Conceptual Framework. (Amendments to IFRS 3)	1 January 2022
IAS 1	Classification of Liabilities as Current or Non-current. (Amendments to IAS 1)	1 January 2023
IFRS 17	IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts.	1 January 2023
IAS 1	Disclosure of Accounting Policies. (Amendments to IAS 1 and IFRS Practice Statement 2)	1 January 2023
IAS 12	Deferred Tax related to Assets and Liabilities arising from a Single Transaction. (Amendments to IAS 12)	1 January 2023
IAS 8	Definition of Accounting Estimates. (Amendments to IAS 8)	1 January 2023

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

Going concern

The Directors have prepared the financial statements on a going concern basis. During the financial year ended 31 December 2021 the Group made a loss of £0.07m and had net cash outflows of £3.5m. However the Directors consider the use of the going concern basis to be appropriate given the significant cash reserves of £15.7m at year end, the level of new contracts signed in 2021, which will generate revenue in 2022 and beyond and the level of new contracts signed in the post period end to date (See CEO's statement). The Directors have prepared working capital projections which show that the Group & Company will be able to continue as a going concern.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings. Subsidiaries are all entities over which the Group has the power to govern their financial and operating policies generally accompanying a shareholding of more than fifty per cent of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Inter-Company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the group's share of the profit or loss of the associate after the date of acquisition.

The group's share of post-acquisition profit or loss is recognised in the income statement.

(a) Accounting for business combinations

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred, and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.

Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. The acquisition of the hVIVO group in January 2020 was accounted for using principles of acquisition accounting.

(b) Associates

Associates are all entities over which the group has significant influence but not control or joint control as defined under IAS28. This

is generally the case where the group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting (see equity method below), after initially being recognised at cost less any fair value adjustment.

Equity Method:

Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the group's share of the post-acquisition profits or losses of the investee in profit or loss, and the group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.

When the group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealised gains on transactions between the group and its associates and joint ventures are eliminated to the extent of the group's interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the group. The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in page 31 of financial statements.

The Group re-organisation of common control transaction is scoped out under IFRS 3. The results of the Group and all of its subsidiary undertakings affected by the group re-organisation are accounted using the merger accounting method. The method

of accounting for such business combination is treated to take place before the transition of IFRS. The investment is recorded at the nominal value of the shares issued, together with the fair value of any additional consideration paid.

Merged subsidiary undertakings are treated as if they had always been a member of the Group. This treatment is permitted under the exemption in IFRS 1 to not restate acquisitions before transition.

The corresponding figures for the previous period include its results for that period, the assets and liabilities at the previous balance sheet date and the shares issued by the company as consideration as if they had always been in issue. Any difference between the nominal value of the shares acquired by the Company and those issued by the company to acquire them is taken to reserves as re-organisation reserve.

(d) Reverse acquisition accounting

The acquisition of Venn Life Sciences Holdings Plc (renamed Open Orphan Plc) and its subsidiaries by Open Orphan DAC on 27 June 2019 has been accounted using the principles of reverse acquisition accounting. Although the Group financial statements have been prepared in the name of the legal parent, Open Orphan Plc, they are in substance a continuation of the consolidated financial statements of the legal subsidiary, Open Orphan DAC. The following accounting treatment has been applied in respect of the reverse accounting:

The assets and liabilities of the legal subsidiary, Open Orphan DAC, are recognised and measured in the Group financial statements at the pre-combination carrying amounts, without restatement of fair value. The retained earnings and other equity balances recognised in the Group financial statements reflect the retained earnings and other equity balances of Open Orphan DAC immediately before the business combination and the results of the period from 1 January 2019 to the date of the business combination are those of Open Orphan DAC. However, the equity structure appearing in the Group financial statements reflects the equity structure of the legal parent, Open Orphan Plc (formerly Venn Life Sciences Holdings Plc), including the equity instruments issued in order to affect the business combination.

Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic

environment in which the entity operates (the functional currency). The consolidated financial statements are presented in GBP£, which is the functional and presentation currency of the main operating entities.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement within 'administrative expenses', except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentational currency as follows:

· assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

· income and expenses for each income statement are translated at average exchange rates; and

· all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-makers ("CODM"), who are responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Directors who make strategic decisions.

Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and any provision for impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the asset and bringing the asset to its working condition for its intended use.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only where it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Any borrowing costs associated with qualifying property, plant and equipment are capitalised and depreciated at the rate applicable to that asset category.

Depreciation on assets is calculated using the straight-line method or reducing balances method to allocate their cost to its residual values over their estimated economic useful lives, as follows:

Leasehold Improvements the shorter of five years or the life of the lease

Plant & Machinery four years

Fixtures and fittings three to five years

The assets' residual values and useful economic lives are reviewed regularly, and adjusted if appropriate, at the end of each reporting period.

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

Gains and losses on the disposal of assets are determined by comparing the proceeds with the carrying amount and are recognised in administration expenses in the income statement.

Intangible assets

(a) Goodwill

Goodwill represents the excess amount of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired underlined businesses at the date of the acquisition. Goodwill on acquisitions of businesses is included in 'intangible assets'. In normal cases Goodwill has an indefinite useful life and is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segment.

(b) Trade secrets

Trade secrets, including technical know-how, operating procedures, contact network, methods and processes, acquired in a business combination are recognised at fair value at the acquisition date. Trade secrets have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of trade secrets over their estimated useful lives of 10 years and is charged to administrative expenses in the income statement.

c) Intellectual property rights

Intellectual property rights relate to patents acquired by the Group. Amortisation is calculated using the straight-line method over the expected life of 10 years and is charged to administrative expenses in the income statement.

d) Capitalised Software development, Licences, Preferential right to reserve a slot and wearables development

Internally generated intangible assets involving research and development expenditure.

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Development costs are capitalised when the related products meet the recognition criteria of an internally generated intangible asset, the key criteria being as follows:

· technical feasibility of the completed intangible asset has been established;

· it can be demonstrated that the intangible asset will generate probable future economic benefits;

· adequate technical, financial and other resources are available to complete the development;

· the expenditure attributable to the intangible asset can be reliably measured; and

· management has the ability and intention to use or sell the intangible asset.

Expenses for research and development include associated wages and salaries, material costs, depreciation on non ‑ current assets and directly attributable overheads. Development costs recognised as assets are amortised over their expected useful life.

Impairment of non-financial assets

Assets that have an indefinite life such as goodwill are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount.

The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of the money and the risks specific to the asset which the estimates of future cash flows have not been adjusted.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in the prior period. A reversal of an impairment loss is recognised in the income statement immediately. If goodwill is impaired however, no reversal of the impairment is recognised in the financial statements.

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

The financial assets of the group consist of trade receivables, accrued income, cash and other receivables.

Initial recognition and measurement

Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially 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. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15. Refer to the accounting policies in note 35 Revenue from contracts with customers.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

• Financial assets at amortised cost (debt instruments)

• Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)

• Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)

• Financial assets at fair value through profit or loss

However, only financial assets at amortised cost are discussed as all the Group's financial assets are measured at amortised cost, with the exception of investments in subsidiaries and associates which are held at cost less impairment.

Financial assets at amortised cost (debt instruments)

This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met:

· The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows, and

· The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

The Group's financial assets at amortised cost comprise of trade and other receivables and cash and cash equivalents.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's consolidated statement of financial position) when:

· The rights to receive cash flows from the asset have expired, OR

· The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Impairment of financial assets

Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in the consolidated statement of comprehensive income (operating profit).

Financial liabilities

The financial liabilities of the group consist of trade payables, accrued expenses, lease liabilities, borrowings, social security and other taxes payable.

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group's financial liabilities include trade and other payables and loans and borrowings.

Subsequent measurement

Loans and borrowings

This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. This category generally applies to interest-bearing loans and borrowings. For more information, refer to note 25.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Inventories

Inventories are reported at the lower of cost (purchase price and/or production cost) and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and applicable variable selling expenses.

Inventories comprise completed manufactured grade viruses, work in process in relation to the manufacture of viruses, and laboratory and clinical consumables. The cost of virus inventory is calculated using the weighted average cost method for each individual strain, with cost including direct materials and, where applicable, direct labour costs and an attributable portion of production overheads that have been incurred in bringing the inventories to their present location and condition. Adjustments are made for any inventories where net realisable value is lower than cost, or which are considered to be obsolete. Any inventories which management considers are not usable on future commercial engagements are provided against in the statement of comprehensive income.

Trade and other receivables

Trade receivables are initially recognised at fair value, being the original invoice amount, and subsequently measured at amortised cost less provision for impairment. A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivable. Trade receivables that are less than three months past due date are not considered impaired unless there are specific financial or commercial reasons that lead management to conclude that the customer will default. Older debts are considered to be impaired unless there is sufficient evidence to the contrary that they will be settled. The amount of the provision is the difference between the asset's carrying value and the present value of the estimated future cash flows. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within administrative expenses. When a trade receivable is uncollectible it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against administrative expenses in the income statement.

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of less than three months, reduced by overdrafts to the extent that there is a right of offset against other cash balances.

For the purposes of the consolidated cash flow statement, cash and cash equivalents consist of cash and short-term deposits as defined above net of outstanding bank overdrafts.

Share capital

Ordinary Shares and Deferred shares are classified as equity. Proceeds in excess of the nominal value of shares issued are allocated to the share premium account and are also classified as equity. Incremental costs directly attributable to the issue of new Ordinary Shares or options are deducted from the share premium account.

Merger reserve

The reserve represents a premium on the issue of the ordinary shares for the acquisition of subsidiary undertakings. The relief is only available to the issuing company securing at least a 90% equity holding in the acquired undertaking in pursuance of an arrangement providing for the allotment of equity shares in the issuing company on terms that the consideration for the shares allotted is to be provided by the issue to the issuing company of equity shares in the other company.

Borrowings

Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Borrowing costs are expensed in the consolidated Group income statement under the heading 'finance costs'. Arrangement and facility fees together with bank charges are charged to the income statement under the heading 'administrative costs'.

Current and deferred income tax

The tax expense comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income where the associated tax is also recognised in other comprehensive income.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax is disclosed in accordance with IAS 12 and recognised using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised in respect of all temporary differences except where the deferred tax liability arises from the initial recognition of goodwill in business combinations.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and tax losses, to the extent that they are regarded as recoverable. They are regarded as recoverable where, on the basis of available evidence, there will be sufficient taxable profits against which the future reversal of the underlying temporary differences can be deducted.

The carrying value of the amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all, or part, of the tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on the tax rates (and tax laws) that have been substantively enacted at the balance sheet date.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Right of use assets

The Group recognises right of use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right of use assets is depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right of use assets are subject to impairment.

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below $5,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Employee benefits

Pension obligations

Group companies operate a pension scheme with defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity with the pension cost charged to the income statement as incurred.

The Group has no further obligations once the contributions have been paid.

Share-based payment

Where equity settled share options and warrants are awarded to Directors and employees, the fair value of the options and warrants at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period and the corresponding entry recorded in the share-based payment reserve. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated statement of comprehensive income over the remaining vesting period.

Leasehold provision

Provisions for dilapidations and onerous lease commitments are recognised when the Company has a present or constructive obligation as a result of past events. The recognition of provision requires management to make best estimates of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. There is reasonable uncertainty around the likelihood and timing of the exit of the lease as negotiations will involve third parties. The provision is discounted for the time value of money.

Revenue recognition

(a) Revenue from Contracts in the Venn Division

The Division provides clinical consulting services and drug development services. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously. This is determined in reference to the stage of completion which is measured by labour hours incurred to the period end as a percentage of the total estimated labour hours for the contract. Where the contract outcome cannot be measured reliably, revenue is recognised to the extent of the expenses recognised that are recoverable.

Some contracts include multiple performance obligations in the form of various service offerings. Where the contracts include multiple performance obligations, the transaction price will be allocated to each performance obligation measured by reference to labour hours incurred to the period end as a percentage of the total estimated labour hours to achieve a particular performance obligation. Where the contract outcome cannot be measured reliably, revenue is recognised to the extent of the expenses recognised that are recoverable.

In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered by the Division exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

Terms and Conditions tend to vary from contract to contract and in general the payment terms tend to be between 30 and 90 days in The Netherlands and between 30 and 60 days in France and Ireland.

Some contracts include references to milestone events. Where no fee is payable until a milestone is achieved, revenue is recognised up to the value of the milestone event set to occur.

The Division is applying practical expedient per IFRS 15 to not disclose the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period as the entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity's performance completed to date and recognise revenue in the amount to which the entity has a right to invoice.

(b) Revenue from contracts in the hVIVO Division

Revenue from contracts with customers is recognised at an amount that reflects the consideration to which the Division expects to be entitled in exchange for the goods or services and is shown net of Value Added Tax.

Service revenues

The Division primarily earns revenues by undertaking client clinical services engagements. A client clinical services engagement typically comprises a number of quarantine cohorts. Each quarantine cohort lasts two to three weeks, but the timeline of work involved in building up to undertaking a clinical study is in the range of three to twelve months. Whether a client clinical services engagement is for one quarantine cohort or for a number of quarantine cohorts, the overall timeline of the engagement is much the same, apart from the additional time for the quarantine cohorts themselves and the time lags in between quarantine cohorts (with some cohorts offset in parallel and some sequential), as much of the upfront work is the same whether for one or a number of quarantine cohorts.

Client clinical services revenue is recognised based on a performance over time, as the performance of the clinical services engagements do not create an asset with an alternative use to the Division and the Division has an enforceable right to payment for the performance completed to date.

The Division measures its progress towards the satisfaction of performance obligations using output measures. Depending on the contractual terms, revenue from contracts with customers is recognised based on the level of work completed to date in respect of each individual performance obligation of the client clinical services contract.

Contracts generally contain provisions for renegotiation in the event of changes in the scope, nature, duration, volume of services or conditions of the contract (contract modifications). Contract modifications are assessed based on the terms of the contract. Contract modifications which are distinct and provided at a stand-alone selling price are accounted for as a separate contract. Where modifications are not distinct or provided at a stand-alone selling price, the Division evaluates whether the remaining goods or services are distinct from those already provided. If so, the modification is accounted for as a termination of the existing contract and the creation of a new contract. If not, the transaction price and measure of progress is updated for the single performance obligation and amounts are recognised as revenue by revision to the total contract value arising as a result. Provisions for losses to be incurred on contracts are recognised in full in the period in which it is determined that a loss will result from the performance of the contractual arrangement.

The difference between the amount of revenue from contracts with customers recognised and the amount invoiced on a particular contract is included in the statement of financial position as contract liabilities. Normally amounts become billable in advance upon the achievement of certain milestones, in accordance with pre-agreed invoicing schedules included in the contract or on submission of appropriate detail. Any cash payments received as a result of this advance billing are not representative of revenue earned on the contract as revenues are recognised over the period during which the specified contractual obligations are fulfilled. Amounts included in contract liabilities are expected to be recognised within one year and are included within current liabilities.

In the event of contract termination, if the value of work performed and recognised as revenue from contracts with customers is greater than aggregate milestone billings at the date of termination, cancellation clauses provide for the Division to be paid for all work performed to the termination date (enforceable right to payment for services provided to date).

Licensing revenues

Where licensing arrangements have a single contracted performance obligation to provide the right to use intellectual property which exists at a certain point in time, such as the delivery of a licence for study data, revenue from contracts with customers is recognised when the Company has transferred to the customer control over the intellectual property, which generally occurs at the beginning of the period for which the customer has the right to use the intellectual property. Licence revenue for such arrangements is therefore generally recognised at the point of delivery of the data when the performance obligation has been satisfied. Until this point in time, any amount invoiced in respect of the arrangement is presented in the statement of financial position as a contract liability. Costs associated with development of the study data are capitalised as a current intangible asset from the point that it is probable future economic benefits will be generated and are transferred to cost of sales upon handover of the deliverable.

Where licensing arrangements are determined to have contracted performance obligations to provide a right of access to the intellectual property, revenue is recognised over time, in line with the methods applied in recognising service revenues.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable,

which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

(d) Royalty and license income

Royalty and license income are recognised on an accruals basis in accordance with the substance of the relevant agreements.

Exceptional items

These are items of an unusual or non-recurring nature incurred by the Group and include transactional costs and one-off items relating to business combinations, such as acquisition expenses, restructuring and redundancy costs.

3. Financial risk management

Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk (foreign exchange risk and cash flow interest rate risk), credit risk, liquidity risk, capital risk and fair value risk. The Group's overall risk management programme focuses on the unpredictability of the financial markets and seeks to minimise the potential adverse effects on the Group's financial performance. The Group does not use derivative financial instruments to hedge risk exposures.

Risk management is carried out by the head office finance team. It evaluates and mitigates financial risks in close co-operation with the Group's operating units. The Board provides principles for overall risk management whilst the head office finance team provides specific policy guidance for the operating units in terms of managing foreign exchange risk, credit risk and cash and liquidity management.

a) Market risk

(i) Foreign exchange - cash flow risk

The Group's presentation currency is GBP£ although it operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily between Euro, USD$ and the GBP£ such that the Group's cash flows are affected by fluctuations in the rate of exchange between GBP£ and the aforementioned foreign currencies.

Management do not use derivative financial instruments to mitigate the impact of any residual foreign currency exposure not mitigated by the natural hedge within the business model. The Group does not speculate in foreign currencies and no operating Company is permitted to take unmatched positions in any foreign currency.

(ii) Foreign exchange - Fair value risk

Translation exposures that arise on converting the results of overseas subsidiaries are not hedged. Net assets held in foreign currencies are hedged wherever practical by matching borrowings in the same currency. The principal exchange rates used by the Group in translating overseas profits and net assets into GBP£ are set out in the table below.

Average rate Average rate Year end rate Year end rate
Rate compared to Euro 2021 2020 2021 2020

GBP£ 0.86 0.89 0.84 0.90

USD$ 1.18 1.14 1.13 1.23

Average rate Average rate Year end rate Year end rate
Rate compared to GBP£ 2021 2020 2021 2020

Euro 1.16 1.12 1.19 1.11

USD$ 1.37 1.28 1.35 1.26

As a guide to the sensitivity of the Group's results to movements in foreign currency exchange rates, a one penny movement in the GBP£ to Euro rate would impact annual earnings by approximately £19,000 due to natural hedging (2020: £3,000).

(iii) Cash flow and fair value interest rate risk

The Group has assets in the form of cash and cash equivalents and limited interest-bearing liabilities which relate to short-term

borrowing. Where possible, the Group earns market interest rates on cash and cash equivalents on deposit whilst interest rates on borrowings have been fixed and therefore expose the Group to fair value interest rate risk. The Group does not speculate on future changes in interest rates.

It is the Group's policy not to trade in derivative financial instruments. The Group does not use interest rate swaps.

(b) Credit risk

Credit risk is managed on a Group basis, except for credit risk relating to accounts receivable balances. Each local subsidiary and operating business unit is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. It is the Group policy to obtain prepayment deposits from customers where possible, particularly overseas customers. In addition, the Group will seek confirmed letters of credit for the balances due. Credit risk is managed at the operating business unit level and monitored at the Group level to ensure adherence to Group policies. If there is no independent rating, local management assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored.

Credit risk also arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers.

Cash flow forecasting is performed in the individual operating entities of the Group and is aggregated by the Head of Finance team. The Head of Finance team monitors cash and cash flow forecasts and it is the Group's liquidity risk management policy to maintain sufficient cash and available funding through an adequate amount of cash and cash equivalents and committed credit facilities from its bankers. Due to the dynamic nature of the underlying businesses, the Head of Finance team aims to maintain flexibility in funding by keeping sufficient cash and cash equivalents available to fund the requirements of the Group.

The Group's policy in relation to the finance of its overseas operations requires that sufficient liquid funds be maintained in each of its territory subsidiaries to support short and medium-term operational plans. Where necessary, short-term funding is provided by the holding Company. In the UK, the working capital bank facility and the management of liquid funds in excess of operational needs are controlled centrally. Typically, excess funds are placed as short-term deposits, to provide a balance between interest earnings and flexibility.

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 More than
one year 1 and 2 years 2 and 5 years 5 years Total
Note £'000 £'000 £'000 £'000 £'000

At 31 December 2021:

Borrowings 25 294 - - - 294

Leased Liabilities 37 1,991 477 386 - 2,854

Trade and other payables 23 18,396 - - - 18,396

At 31 December 2020:

Borrowings 25 359 - - - 359

Leased Liabilities 37 2,245 1,510 684 - 4,439

Trade and other payables 23 21,396 2 - - 21,398

(d) Capital risk management

The Group's objectives when managing capital are to safeguard the ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including "current and non-current borrowings" as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is the sum of net debt plus equity. The Group is currently largely un-geared, having net cash at 31 December 2021.

4. Critical accounting estimates and judgements

In the process of applying the Group's accounting policies, management has made accounting judgements in the determination of the carrying value of certain assets and liabilities. Due to the inherent uncertainty involved in making assumptions and estimates, actual outcomes will differ from those assumptions and estimates. The following judgements have the most significant effect on the amounts recognised in the financial statements.

(a) Business combinations

The recognition of business combinations requires the excess of the purchase price of acquisitions over the net book value of assets acquired to be allocated to the assets and liabilities of the acquired entity. The Group makes judgements and estimates in relation to the fair value allocation of the purchase price. If any unallocated portion is positive it is recognised as goodwill. However, in applying the reverse acquisition accounting method this has necessitated the Group to recognise the unallocated portion as deemed acquisition costs as required under IFRS 3 - Business Combinations. See also note 2 (d) regarding reverse acquisition accounting treatment for most recent transaction.

(b) Impairment of goodwill and cost of investments

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates as set out in note 17. In addition, the Group has also considered the impairment of the investments in the subsidiaries undertakings as set out in note 18.

Trade and other receivables are carried at the contractual amount due less any estimated provision for non-recovery. Provision is

made based on a number of factors including the age of the receivable, previous collection experience and the financial circumstances of the counterparty.

(d) Deferred tax assets

Deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. See note 24.

(e) Intangible assets

The Group amortises intangible assets over their estimated useful life. The useful lives of Trade Secrets, Intellectual Property Rights, software, licences and Preferential Right to Reserve a Slot have been estimated by the Group as stated in note 2. The Group tests annually whether there is any indication that intangible assets have been impaired.

(f) Revenue recognition

Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management. At each period end, management reviews each material individual contract to assess whether any anticipated losses should be recognised immediately. Revenue in relation to the licensing of data is recognised when data is delivered to the customer.

(g) Virus inventory

In valuing virus inventory, management is required to make assumptions in relation to the future commercial use, being both external client revenue engagements, engagements with our equity investments and internal research and development engagements, for each virus. This includes consideration of both the current business pipeline and management's estimates of the future virus requirements, based on its significant knowledge and experience in the field of virology.

(h) Research and development tax credit

The Group's research and development tax credit claims in its various jurisdictions are complex and require management to make significant assumptions, with appropriate external tax advice, in building the methodology for the claim, interpreting research and development tax legislation in relation to the Group's specific circumstances, and agreeing the basis of the Group's tax computations with relevant Tax Authorities.

(i) Leasehold provision

Provisions for dilapidations and onerous lease commitments are recognised when the Group has a present or constructive obligation as a result of past events. The recognition of provision requires management to make best estimates of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. There is reasonable uncertainty around the likelihood and timing of the exit of the lease as negotiations will involve third parties. The provision is discounted for the time value of money.

5. Segmental reporting

Management has determined the Group's operating segments based on the monthly management reports presented to the Chief Operating Decision Maker ('CODM'). The CODM is the Executive Directors and the monthly management reports are used by the Group to make strategic decisions and allocate resources.

The first principal activity of the Group is conducting human challenge trials and related laboratory services as part of the Group's hVIVO Division.

The second principal activity is that of Venn Life Sciences' Clinical Research Division, providing a suite of consulting and clinical trial services to pharmaceutical, biotechnology and medical device organisations. Key services areas covered include: Clinical PK & Pharmacometrics, Non-Clinical Development Consultancy, Chemistry, Manufacturing and Controls (CMC) Consultancy, Medical Writing & Regulatory Affairs, Data Management, Statistics, Study Design & Methodology, and Regulatory Pathways / Data Services for Rare Diseases. As many of Venn Life Sciences business contracts are multi-country contracts, pulling resources from different locations, the CODM considers this one business unit.

Currently the key financial performance measures used by the CODM are Revenue and EBITDA (before exceptional items).

The segment information provided to the Board for the reportable segments for the year ended 31 December 2021 is as follows:

	2021	2021	2021
	hVIVO	Venn	Total

	£'000	£'000	£'000
Income statement
External revenue and other income	31,932	7,073	39,005
EBITDA before exceptional items	3,134	(246)	2,888
Exceptional items			267
Depreciation & amortisation			(2,565)
Operating Profit			590
Finance Expense			(215)
Share based payments charge			(27)
Share of loss of associate using equity method			(71)
Profit before income tax			277

	2020	2020	2020
	hVIVO	Venn	Total

	£'000	£'000	£'000
Income statement
External revenue and other income	14,336	7,842	22,178
EBITDA before exceptional items	(3,653)	(2,429)	(6,082)
Exceptional items			(2,125)
Depreciation & amortisation			(2,052)
Operating (loss)			(10,259)
Finance Expense			(374)
Share based payments charge			(240)
Share of loss of associate using equity method			(107)
(Loss) before income tax			(10,980)

6. Expenses - analysis by nature

	2021	2020
	£'000	£'000
Employee benefit expense (note 10)	15,897	15,240
PPE Depreciation (note 16) and amortisation (note 17)	523	368
Depreciation related to Right of use Assets (note 37)	2,039	1,684
Exceptional items (note 7)	(267)	2,125
Inventories consumed	963	727
Professional fees	1,632	1,326
IT	1,338	1,021
Premises Costs	1,399	1,331
Volunteer costs	2,943	961
Agency, Subcontractors and freelancers	4,305	1,691
Other expenses	7,643	5,963
Total direct project and administrative costs (incl. Depreciation, Amortisation and Exceptional costs)	38,415	32,437

7. Exceptional items

Included within note 6 above are exceptional items as shown below:

	2021	2020
	£'000	£'000
Exceptional items include:
- Transaction costs relating to business combinations, acquisitions & Re-organisations	923	2,125
- Transaction (gain) relating to Capital Reduction and spin out (note 39)	(1,190)	-
Total exceptional (Gain)/Loss	(267)	2,125

8. Auditor remuneration

Services provided by the Company's auditor and its associates. During the year the Group (including its overseas subsidiaries) obtained the following services from the Company's auditor and its associates:

	2021	2020
	£'000	£'000 Restated
Fees payable to Company's auditor for the audit of the parent Company and consolidated financial statements	38	36
Fees payable to Company's auditor for the audit of subsidiaries and their consolidated financial statements	39	60
Total paid to the Company auditor	77	96
Fees payable to the auditors of subsidiaries for services:
- The audit of Company's subsidiaries pursuant to legislation paid to other auditors	62	48
- Other services paid to other auditors	7	10
- Tax services paid to other auditors	11	8
Total paid to Other auditors	80	66
Total auditor's remuneration	157	162

9. Directors' emoluments

	2021	2020
	£'000	£'000
Aggregate emoluments	526	576
Social Security Costs	62	69
Contribution to defined contribution pension scheme	17	20
Total Directors' remuneration	605	665

See further disclosures within the Report of the Remuneration Committee.

	2021	2020
Highest paid Director	£'000	£'000
Total emoluments received	172	178
Defined contribution pension scheme	17	-

No share options were exercised in the year by highest paid Director nor was there any shares awarded to that Director in the year.

10. Employee benefit expense

	2021	2020
	£'000	£'000
Wages and salaries	13,179	12,461
Social security costs	1,846	1,944
Pension costs	872	835
Total employee benefit expense	15,897	15,240

11. Average number of people employed

	2021	2020
	No	No Restated
Average number of people (including Executive Directors) employed was:
Administration	38	52
Clinical research	172	157
Sales and marketing	8	9
Total average number of people employed	218	219

Monthly weighted average used in above calculation. (2020 restated as simple average (of start and end of year position) used in prior year)

12. Finance income and costs

	2021	2020
	£'000	£'000
Interest expense:
- Interest on Lease liabilities (note 37)	227	243
- Interest on other loans	(7)	131
Finance costs	220	374
Finance income
- Interest income on cash and short-term deposits	(5)	-
Finance income	(5)	-
Net finance expense	215	374
13. Income tax expense		Restated
	2021	2020
Group	£'000	£'000
Current tax:
Current year research and development tax charge/(credit)	350	(186)
Current year Hvivo Inc US Tax charge	6	6
Total current tax charge/(credit)	356	(180)
Deferred tax (note 24):
Origination and reversal of temporary differences	(5)	(9)
Total deferred tax	(5)	(9)
Income tax charge/ (credit)	351	(189)

The income tax charge on the Group's results before tax differs from the theoretical amount that would arise using the standard tax rate applicable to the profits of the consolidated entities as follows:

	2021	2020
	£'000	£'000
Profit/(Loss) before tax	277	(10,980)
Tax calculated at domestic tax rates applicable to UK standard rate of tax of 19.00% (2020 - 19%)	53	(2,086)
Tax effects of:
- Expenses not deductible for tax purposes	168	322
- Current Year R & D Tax (credit)	(108)	(207)
-Temporary timing differences	(182)	424
- Adjustments in respect of prior year	37	-
- Additional allowances deductible for tax purposes	(79)	(8)
- Losses carried forward	462	1,367
Income tax charge/(credit)	351	(189)

There are no tax effects on the items in the Statement of Comprehensive Income.

In 2020 the R & D Expenditure Credit ("RDEC") income was recorded net of tax in other income but as hVIVO Services Limited is now profitable in 2021, RDEC is being recorded gross in other income (see note 33) and the related tax charge is shown above in the tax line. Prior year comparatives have been restated accordingly. (See note 38)

In 2020 hVIVO Services Limited was eligible for an SME tax credit (as it was loss making). In 2021 hVIVO Services Limited is no longer loss making so there is no SME tax credit repayable. However, the SME related costs will be reflected in Tax losses carried forward for hVIVO Services Limited.

14. Loss per share

(a) Basic

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year

	2021	2020
	£'000	£'000
(Loss) from operations	(74)	(10,791)
Total	(74)	(10,791)
Weighted average number of Ordinary Shares in issue	670,187,313	599,920,207
Earnings per share from operations	(0.01p)	(1.80p)

(b) Diluted

Due to the losses in the periods the effect of the share options and warrants noted below were considered to be anti-dilutive.

Details of share options and warrants are given in note 32.

	2021	2020

Potential dilutive ordinary shares:
Options	8,393,213	9,516,111
Warrants	2,264,427	4,185,248
Total	10,657,640	13,701,359

15. Dividends

There were no cash dividends paid or proposed by the Company in either year. See note 39 for details of Distribution-in- Specie in June 2021.

16. Property, plant and equipment

Group	Leasehold Improvements £'000	Plant & Machinery £'000	Fixtures & Fittings £'000	Total £'000

Cost
At 1 January 2021	686	3,039	2,045	5,770
Additions	156	76	97	329
Disposals	-	(608)	(1,012)	(1,620)
Exchange differences	-	-	(19)	(19)
At 31 December 2021	842	2,507	1,111	4,460

Depreciation
At 1 January 2021	590	2,628	1,484	4,702
Charge for the year	116	100	190	406
Elimination on disposal	-	(587)	(968)	(1,555)
Exchange differences	-	-	(20)	(20)
At 31 December 2021	706	2,141	686	3,533

Net book value
At 31 December 2021	136	366	425	927
At 31 December 2020	96	411	561	1,068

The Company had no property, plant and equipment at 31/12/2021. (2020: nil).

17. Intangible fixed assets

Group	Goodwill £'000	Trade secrets £'000	Intellectual property rights £'000	Software develop-ment £'000	Licences £'000	Pref right to reserve slot £'000	WBS develop- ment £'000	Total £'000
Cost
At 1 January 2021	7,228	633	2,118	2,199	64	274	-	12,516
Additions	-	-	-	-	-	-	411	411
Disposals	-	(633)	-	-	(64)	-	-	(697)
At 31 December 2021	7,228	-	2,118	2,199	-	274	411	12,230
Amortisation
At 1 January 2021	1,628	470	2,118	2,127	-	46	-	6,389
Charge for the year	-	25	-	46	-	46	-	117
Disposals	-	(495)	-	-	-	-	-	(495)
At 31 December 2021	1,628	-	2,118	2,173	-	92	-	6,011
Net book value
At 31 December 2021	5,600	-	-	26	-	182	411	6,219
At 31 December 2020	5,600	163	-	72	64	228	-	6,127

Goodwill was allocated to the Group's cash-generating units (CGUs) identified according to operating segment. An operating segment-level summary of the goodwill allocation is presented below.

	2021	2020
	£'000	£'000
Venn Division	2,821	2,821
hVIVO Division	2,779	2,779
Total	5,600	5,600

Goodwill is tested for impairment at the balance sheet date. The recoverable amount of goodwill at 31 December 2021 was assessed at £5,600,000 (2020: £5,600,000) on the basis of value in use. An impairment loss was not recognised as a result of this review.

The key assumptions in the calculation to assess value in use are the future revenues and the ability to generate future cash flows. The most recent financial results and forecast approved by management for the next two years were used followed by an extrapolation of expected cash flows at a constant growth rate for a further seven years. The projected results were discounted at a rate which is a prudent evaluation of the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the cash-generating units.

The key assumptions used for value in use calculations in 2021 were as follows:

Longer-term growth rate (from 2023 onwards)		5%
Discount rate		15%

The impairment review is prepared on the group basis rather than a single unit basis.

The Directors have made significant estimates on future revenues and EBITDA growth over the next ten years based on the Group's budgeted investment in recruiting key employees and marketing the services.

The Directors have performed a sensitivity analysis to assess the impact of downside risk of the key assumptions underpinning the projected results of the Group. The projections and associated headroom used for the group is sensitive to the EBITDA growth assumptions that have been applied. The Company has no intangible assets.

18a. Investments in subsidiaries

Company	2021	2020
Shares in Group undertakings	£'000	£'000
At 1 January	22,334	8,195
Investment in VLS Biometry Services S.A.S	43	-
Investment in hVIVO Plc	-	14,161
Impairment of Investment in VLS Germany GmbH	-	(22)
At 31 December	22,377	22,334

Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid. Following review an impairment provision of Nil (2020: £22k) has been made to the investment in subsidiaries.

The subsidiaries of Open Orphan Plc are as follows:

Name of Company	Country of Registration	Nature of Business
Active Trading Companies:
hVIVO Services Limited**	England & Wales	Viral challenge and related laboratory services
Venn Life Sciences (EDS) B.V.*	Netherlands	Pre-clinical & Early Clinical Research services
Venn Life Science Biometry Services S.A.S.*	France	Data Management & Statistics services
Open Orphan DAC*	Ireland	Regulatory Pathways for Rare/Orphan diseases
hVIVO INC**	USA	Sales & Marketing services
Venn Life Sciences Limited*	Ireland	Intermediate holding company
hVIVO Limited*	England & Wales	Intermediate holding company
Dormant Companies - Dissolved or in the process of being dissolved:
Venn Life Sciences (NI) Limited*(1)	England & Wales	Clinical Research Organisation
Venn Life Sciences (Germany) Gmbh *(2)	Germany	Clinical Research Organisation
Venn Life Sciences B.V.**(2)	Netherlands	Clinical Research Organisation
Venn Life Science (France) S.A.S.* (2)	France	Data Management & randomisation Systems

*100% Direct Ordinary Shareholding; **100% Indirect Ordinary shareholding

(1) Company dissolved January 2022; (2) Company in process of being dissolved post year end.

All the subsidiaries are included in the consolidation. The proportions of voting shares held by the parent Company do not differ from the proportion of Ordinary Shares held.

18b. Investments in associates

The group, via its holding in hVIVO Limited, has investments in two associated companies as follows:

Name of Company	Country of Registration	Nature of Business
Imutex Ltd (1)	England & Wales	Clinical development services
PrEP Biopharm Limited (2)	England & Wales	Clinical development services

(1) hVIVO Limited owns 49% of the Ordinary Shares and the investment is valued at £7,005,000 at 31 December 2021 after adjusting for share of loss in 2021 of £71,000.

(2) hVIVO Limited owns 62.62% of Ordinary Shares. In 2018 the carrying value was fully impaired so the investment has a value of Nil at 31 December 2021.

19. Financial instruments by category

(a) Assets

	Group	Restated Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
31 December
Assets as per balance sheet
Trade and other receivables	8,089	8,967	9,357	10,847
Cash and cash equivalents	15,694	19,205	8,663	8,689
Total	23,783	28,172	18,020	19,536

Assets in the analysis above are all categorised as 'other financial assets at amortised cost' for the Group and Company.

(b) Liabilities

	Group	Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
31 December
Liabilities as per balance sheet
Borrowings	294	359	-	45
Lease Liabilities (note 37)	2,854	4,439	-	-
Trade and other payables	5,205	6,376	441	885
Total	8,352	11,174	441	930

Liabilities in the analysis above are all categorised as 'other financial liabilities at amortised cost' for the Group and Company.

The Group is exposed to credit risk from its operating activities (primarily for trade receivables and other receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

The Group's maximum exposure to credit risk, due to the failure of counter parties to perform their obligations as at 31 December 2021 and 31 December 2020, in relation to each class of recognised financial assets, is the carrying amount of those assets as indicated in the accompanying balance sheets.

Trade receivables

The credit quality of trade receivables that are neither past due date nor impaired have been assessed based on historical information about the counterparty default rate. The Group does not hold any other receivable balances with customers, whose past default has resulted in the non-recovery of the receivables balances.

Cash at bank

The credit quality of cash has been assessed by reference to external credit ratings, based on reputable credit agencies' long-term issuer ratings:

	2021	2020
Rating	£'000	£'000
A - AAA	15,605	19,158
Sub-A rating	89	47
Total	15,694	19,205

The balance categorised as Sub-A rating relate to balances held with Allied Irish Banks p.l.c. and Ulster Bank ROI (Both Guaranteed by Irish government as key shareholder)

20. Inventories

	Group	Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
Beginning of the year	953	-	-	-
Laboratory and clinical consumables	(92)	168	-	-
Virus - finished goods	(202)	785
End of the year	659	953	-	-

Inventories expensed (2021: £963,000; 2020 £727,000) in the consolidated statement of comprehensive income are shown within Direct project and administrative costs (See note 6). All inventories are carried at the lower of cost or net realisable value in the consolidated statement of financial position. No provision against inventories was required during 2021.

21. Trade and other receivables

	Group	Restated Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
Trade receivables	4,774	5,316	-	-
Less: provision for impairment of trade receivables	-	-	-	-
Trade receivables - net	4,774	5,316	-	-
Prepayments and accrued income (note 35)	1,863	2,560	335	112
Amounts owed by subsidiary undertakings	-	-	9,356	10,778
Other receivables (incl. R& D credit income)	2,307	1,930	1	70
	8,944	9,806	9,692	10,960

The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

The carrying amounts of the Group's trade and other receivables denominated in foreign currencies were as follows:

	Group	Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
GBP£	6,746	5,481	1,467	2,756
Euros	2,198	4,325	8,225	8,204
	8,944	9,806	9,692	10,960

22. Cash and cash equivalents

Cash and cash equivalents include the following for the purposes of the statement of cash flows:

	Group	Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
Cash at bank and on hand	15,694	19,205	8,663	8,689
Cash and cash equivalents (excluding bank overdrafts)	15,694	19,205	8,663	8,689

The Group's cash and cash equivalents are held in non-interest-bearing accounts. The Directors consider that the carrying amount of cash and cash equivalents approximates to their fair value.

23. Trade and other payables

	Group	Restated Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
Trade payables	2,055	2,271	306	72
Amounts due to subsidiary undertakings	-	-	2,762	543
Social security and other taxes	857	695	13	-
Other payables *	438	353	2	64
Accrued expenses and deferred income	15,047	18,079	120	206
	18,397	21,398	3,203	885

*There are no other payables due after one year after year end 2021 (2020: £2,000). All other balances are due within 1 year.

24. Deferred income tax

Deferred tax balances were as follows:

	Group	Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
Deferred tax liabilities were made up as follows:
Accelerated tax depreciation	-	32	-	-
	-	32	-	-

Deferred tax assets

Deferred income tax assets are recognised to the extent that the realisation of the related tax benefit through future taxable profits is probable. There was no deferred tax asset recognised for the Company. The gross movement on the deferred income tax account is as follows:

	Group	Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
At 1 January	32	41	-	-
Exceptional Item	(27)	-
Income statement movement (note 13)	(5)	(9)	-	-
At 31 December	-	32	-	-

The asset to which this deferred tax asset applied was written down to Nil on 1 July 2021 and consequently the write off of the balance in the deferred tax asset was accelerated.

25. Borrowings

	Group	Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
Current - falling due within 1 year Loan Notes	-	45	-	45
Convertible debenture securities("CDS")	294	314	-	-
Total borrowings	294	359	-	45

The Company and Group do not have bank borrowings. All Borrowings due within one year.

Loan Notes for £1m issued on 11 December 2018 with a two-year term and a 10% coupon rate were available for redemption in Dec 2020. All but one Loan Note for £45k was redeemed by 31 Dec 2020. The final Loan Note was redeemed in February 2021.

There are 2 remaining Convertible debenture securities holders and they are entitled to interest of 7% per annum on their securities. Neither of these CDS holders chose to convert their securities into Ordinary shares in Open Orphan DAC at the time of the reverse takeover of the Venn Group in June 2019. Consequently, these CDS holdings can be redeemed by the company at any time from June 2020 up to their redemption dates in March 2022 and September 2022 respectively. Following reverse acquisition, the holders lost their right to convert.

26. Share capital

	Group	Group	Company	Company
	2021	2020	2021	2020
	£'000	£'000	£'000	£'000
670,929,314 (2020 - 668,052,261) Ordinary shares of £0.001	671	668	671	668
Nil (2020 - 62,833,339) Deferred shares of £0.001	-	63	-	63
Total	671	731	671	731

The Company exercised its right in July 2021 to acquire all deferred shares for an aggregate price of £1 (see note 39).

Subsequently, the share capital of Open Orphan Plc consists only of fully paid ordinary shares. All shares are equally eligible to share in declared dividends, appoint Directors, receive notice of, attend, speak and vote at any general meeting of the Company.

During the year the Company issued 2,877,053 shares.:

621,015	£0.001/Share
1,133,140	£0.022/Share
1,122,898	£0.02/Share

27. Other reserves

Group and Company

Share Premium

Share premium is the difference between the nominal value of share capital and the actual cash received on fund-raising less any costs associated with the fund-raising. (See also note 39).

Merger Reserves

This includes reverse acquisition reverse which resulted from the reverse acquisition of Venn Life Sciences Holdings Plc by Open Orphan DAC on 28 June 2019. See note 2 (d). Also includes a Group re-organisation reserve relating to previous re-organisation of the Old Venn Group.

Foreign Currency Reserve

The presentation currency of the group became GBP£ in 2020. Previously the presentation currency was Euro. This reserve arises from the translation of the opening balance sheet balances from Euro to GBP£ and also from the translation of the subsidiaries which are denominated in Euro into GBP£ on consolidation.

The Euro denominated subsidiaries are Venn Life Sciences Limited, Venn Life Sciences Germany GmbH, Venn Life Sciences France S.A.S, Venn Life Sciences B.V, Venn Life Sciences E.D. B.V., Venn Life Sciences Biometry Services and Open Orphan DAC. Hence the Foreign Currency Reserve arises.

Share Option Reserve

A share option reserve of £151,000 was created in June 2019, prior to the reverse takeover of Venn Life Sciences Holdings PLC by Open Orphan DAC, in relation to the share options and warrants issued in June 2019. After the reverse takeover, further provisions of £102,000 in 2019 and £240,000 in 2020 were made. In 2021 an additional provision of £27,000 was made.

Retained Earnings

For the Group and Company, earnings for the prior year reflect the earnings of Open Orphan Plc including Open Orphan DAC for the full year plus the earnings of hVIVO Group from date of acquisition 17 January 2020 to year end 2020.

28. Cash used in operations

	Group		Group	Company	Company
	2021		2020 Restated	2021	2020
	£'000		£'000	£'000	£'000
Profit/(Loss) before income tax	277		(10,980)	(1,522)	(1,891)
Adjustments for:
- Depreciation and amortisation (note 6)	2,565		2,052	-	-
- Exceptional Items (note 7)	(267)		2,125	409	867
- Net loss on disposals of PPE, Intangible Assets & leases		189	-	-	-
- Net finance costs/(Income) (note 12)	215		374	(768)	(651)
- Share Based Payment charge (note 32)	27		240	-	50
- R & D Credit incl. in other Income	(1,842)		(961)	-	-
- Share of Imutex loss (note 18.b)	71		107	-	-
Changes in working capital
- Impairments on Investments/Loans (note 18a)	-		-	485	22
- Lease Payments (note 37)	(2,329)		(1,999)	-	-
- (Increase)/Decrease Trade and other receivables	904		(2,800)	(241)	(4,491)
- (Increase)/Decrease Inventories	294		(28)	-	-
- (Decrease)/Increase Trade and other payables	(2,972)		14,410	2,317	(474)
Net cash used in operations	(2,868)		2,540	680	(6,568)

29. Related Party Disclosures

Directors

Directors' emoluments are set out in the Report of the Remuneration Committee Report.

Key management compensation for the year was as follows:

	2021	2020
	€'000	€'000
Aggregate emoluments	526	576
Employer contribution to pension scheme	17	20
	543	596

Key management includes the Directors only.

Group

On 10 November 2016 the Group signed a contract worth €2.5m with Sedana Medical AB ("Sedana Medical").

The then CEO of Sedana Medical, Michael Ryan, was also a Director of Venn Life Sciences at that time. Accordingly, Michael Ryan was a related party of Venn Life Sciences as defined in the AIM Rules and ESM Rules. As a result, the contract was treated as a "related party transaction" under the AIM Rules and the ESM Rules.

The Independent Directors, at that date, being Allan Wood, Anthony Richardson, Jonathan Hartshorn, Gracielle Schutjens, Cornelius Groen, Paul Kennedy and Mary Sheahan, who are not related parties under the AIM Rules and ESM Rules for the purpose of the contract, consulted with Davy, the Company's NOMAD and ESM adviser at the time of consultation. For the purpose of the AIM Rules and ESM Rules, Davy considered the contract to be fair and reasonable insofar as the shareholders of the Company are concerned. Michael Ryan did not take part in the Board's consideration of these matters. Michael Ryan resigned as a Director on 17 January 2020. The contract with Sedana Medical concluded in early 2021.

Executive Chairman, Cathal Friel, held a share of £108,642 of the £1m Loan Note issued in December 2018 through his pension vehicle. This Loan Note was redeemed in full in December 2020. Cathal Friel also held all of the £250,000 Loan Note issued in April 2019. This Loan Note was redeemed in full in April 2020. Gross Loan Note interest of Nil (2020: £15,000) was due in 2021. Cathal Friel is also a Director of Raglan Road Capital Limited and Raglan Professional Services Limited which has rented office space and provided advisory and office related services to Open Orphan DAC (2021 charge €23,175; 2020 charge €108,000). The balance owed by the Group to Raglan Road Capital Limited and Raglan Professional Services Limited at year end 2021 was €16,901 (2020: €3,780). Cathal Friel is also a Director of Poolbeg Pharma (Ireland) Limited which is now renting office space and providing advisory and office related services to Open Orphan DAC (2021 charge €96,049; 2020 charge Nil). The balance owed by the Group to Poolbeg Pharma (Ireland) Limited at year end 2021 was €14,651 (2020: Nil). As part of reciprocal agreement, Open Orphan DAC also provides advisory and office related services to Poolbeg Pharma (Ireland) Limited (2021 revenue € 158,085;2021 revenue Nil). The balance owed to the Group by Poolbeg Pharma (Ireland) Limited at year end 2021 was €13,805 (2020: Nil).

Elaine Sullivan, Non-Executive Director, through the company Dargle Therapeutics Limited, provided specialist consultancy advice specifically in relation to a development asset, at a cost to the Group of £38,125 (excl. V.A.T).

There were no other related party transactions during the year.

The Company

During the year the Company absorbed net management charges of £109,547 (2020 - £324,475) from its subsidiaries. At 31 December 2021 the Company was owed £6,594,000 (2020 - £10,234,000) by its subsidiaries.

30. Capital commitments

The Group had no capital commitments at 31 December 2021 or at 31 December 2020.

31. Discontinued Operations

A decision to close the clinical operations division across Europe was made during 2020 and Venn Life Sciences (NI) Ltd, Venn Life Sciences B.V. and Venn Life Sciences Germany GmbH consequently ceased to trade from 1 January 2021 onwards. Venn Life Sciences (NI) Ltd, as well as dormant companies Venn Life Sciences UK Ltd and Venn Life Sciences (Ireland) Ltd, were dissolved consequently in 2021. Venn Life Sciences Germany GmbH is currently undergoing a liquidation process in 2022 and arrangements to dissolve Venn Life Sciences B.V. will be undertaken later in 2022. There were no new discontinued operations during 2021.

32. Share options and warrants

The Group has share option plans under which it grants share options to certain Directors and senior management of the Group.

Some share options have vested. Some share options have been forfeited as a result of the Director or employee leaving the Group before options vested.

Number of outstanding share options remaining at 31 December 2021:

Date of Grant	# Options at 01/01/2021	# of Options Exercised	# of Options Forfeited	# Options at 31/12/2021

28/01/2015	280,000	-	-	280,000
28/06/2019	7,716,964	-	-	7,716,964
17/01/2020	1,519,147	1,122,898	-	396,249
Total	9,516,111	1,122,898	-	8,393,213

The weighted-average exercise price of all options outstanding at year end is 5.7p and the weighted-average remaining contractual life is 1 year.

The pricing and vesting criteria of the share options in existence at 31 December 2021 are as follows:

In relation to the Options granted in 2015:

Options in issue 31/12/2021				280,000
Exercise price (in equal thirds when price 25p/35p/45p)				13p
Expected volatility				28%
Expected dividend				0%
Contractual life				1.5 years
Risk free rate				95%
Estimated fair value of each option				£0.00

In relation to the Options granted in 2019:

Options in issue 31/12/2021				7,716,964
Exercise price				5.6p
Expected volatility				60%
Expected dividend				0%
Contractual life				0.5 years
Risk free interest rate				1.84%
Estimated fair value of each option				£0.02

In relation to the Options granted in 2020:

Options in issue 31/12/2021				396,249
Exercise price				2p
Expected volatility				72.8%
Expected dividend				0%
Contractual life				1 years
Risk free interest rate				0.57%
Estimated fair value of each option				£0.04

Share based payment charge for the year was £27,000 (2020 - £240,000). No new share options were granted in 2021. However, due to share options being exercised £193,000 (2020: Nil) of the share-based payment reserve was released back to retained earnings.

The share option reserve (£151,000) was initially created before the reverse takeover by Open Orphan DAC in 2019 in relation to the shares and warrants granted in June 2019. Further reserves were made of £102,000 (year end 2019) and £240,000 (year end 2020) bringing total opening 2021 reserve to £493,000.

The share options granted in 2015 have no value given the vesting conditions when issued.

The Company has used the Black Scholes model to value the options at 31 December 2021. This method simulates a range of possible future share price scenarios and calculates the average of net present value of the option across those scenarios and which captures the effect of the market-based performance conditions applying to such awards. The expected volatility was calculated with refence to historic share price movements.

Warrants

2,264,427 warrants existed at 31 December 2021 (2020: 4,185,248).

232,696 warrants were granted on 11 December 2018 and are exercisable from the date of grant to 10 December 2023. The exercise price is 0.1p per ordinary share under warrant. 424,589 warrants were granted on 11 December 2018 and are exercisable from the date of grant to 10 December 2023. The exercise price is 2.2p per ordinary share under warrant.

1,607,142 warrants were granted on 28 June 2019 and are exercisable from the date of grant to 27 June 2024. The exercise price was 5.6p per ordinary share under warrant.

33. Other operating income

Other operating income represents government grants received to fund Research and Development activities around the group. (In 2020 it also included specific COVID-19 related government support grants)

		2021	2020
		£'000	£'000
hVIVO	Gross RDEC credit	1,842	960
hVIVO	COVID-19 supports	-	224
Venn	R & D Related credits	299	380
Venn	COVID-19 supports	-	12
Total		2,141	1,576

Note: The subsidiary, hVIVO Services Limited, can claim UK R&D incentives under both RDEC scheme (noted above) and the SME scheme (when company is loss making). The SME scheme (when claimed) appears on the tax line as a tax credit. Venn Division can claim Credit Tax Research ('CIR') payments in France and can claim R & D credits against payroll taxes in the Netherlands.

34. Post balance sheet events

The following events have taken place since the year end:

1. Yamin 'Mo' Khan, then a non-Executive Director, was appointed as Chief Executive Officer on 24 February 2022.

2. Appointment of Liberum Capital Limited as Nominated Advisor ("NOMAD") and Joint Broker on 28 April 2022.

35. Revenue, Assets and Liabilities related to contracts with customers

(a) hVIVO Division

The Group carries out its activities through hVIVO Services Limited in the United Kingdom. All revenue from contracts with customers is derived from activities undertaken in the United Kingdom.

During the period ended 31 December 2021, the Company had four customers, out of more than 30 customers, who each generated revenue greater than 10% of total revenue which was £30m. These customers generated 34%, 14%, 13% and 11% of revenue respectively.

The value of contract liabilities has decreased by £1.7 million to £12.8m at 31 December 2021 from £14.5 million at 31 December 2020. Contract assets have decreased by £0.5 million to £0.3m at 31 December 2021 from £0.8 million at 31 December 2020.

Net accrued income, related to contracts with customers in hVIVO Division

	2021		2020
	Total		Total
	£'000		£'000
Net Accrued Income brought forward		(13,703)	-
Net Accrued Income acquired on acquisition of hVIVO group		-	(1,689)
Movement in the period: - arising from a change in the measure of progress	1,206		(12,014)
Net Accrued Income carried forward	(12,497)		(13,703)
Split:
Accrued Income	275		821
Deferred Income	(12,772)		(14,524)
Net Accrued Income	(12,497)		(13,703)

The majority of the contract liabilities balance is expected to be recognised within six months, as follows:

Analysis of expected realisation of revenue within contract liabilities

	31 December	31 December
	2021	2020
	£'000	£'000
Within six months	10,248	14,469
Between six months and one year	2,524	55
After one year	-	-
	12,772	14,524

The Division seeks to ensure that contract milestones are timed so as to result in invoicing occurring in advance, prior to the satisfaction of performance obligations. Therefore, projects that are in progress are typically in a contract liability position. Performance obligations of contracts with customers are satisfied on the delivery of study data to the customer along with a final study report. Due to the nature of the business there are no warranties or refunds expected or provided for. Contractual payment terms are typically 30 to 45 days from date of invoice.

The Division considers whether there are other obligations in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. The Division's data and intellectual property may be made available to the client but solely to the extent that this is necessary to the satisfaction of the client contract. This is not considered a distinct performance obligation but an obligation in conjunction with the client study. Therefore, the full transaction price is allocated to performing the client study.

The Division is using the practical expedient not to adjust the amount of consideration for the effects of a significant financing component due to the fact that the period between when the promised services are transferred and when the customer pays for the service is less than twelve months. The entity does not, in the normal course of business, incur incremental costs to obtain a contract and has therefore not recognised any assets in this regard.

(b) Venn Division

The Division derives revenues from external customers from the provision of clinical consulting services and drug development services split into various service offerings across various geographical regions.

Venn Life Sciences E.D B. V, based in Breda in the Netherlands, provides Early clinical, Non-Clinical and CMC services to a wide variety of customers. Venn Life Sciences France S.A.S. and Venn Life Sciences Biometry Services S.A.S both based in Paris, France and Venn Life Sciences Ltd, based in Ireland, provide Data management, Bio Statistics, Medical Methodology and Randomisation services. Revenue in 2021 for Venn Division was £6.8m.

Net accrued income, related to contracts with customers in Venn Division

	2021		2020
	Total		Total
	£'000		£'000
Net Accrued Income brought forward	382		601
Movement in the period: - arising from a change in the measure of progress		(68)	(219)
Net Accrued Income carried forward	314		382
Split:
Accrued Income	733		900
Deferred Income	(419)		(518)
Net Accrued Income	314		382

The costs incurred to obtain or fulfil a contract which has been recognised as contract assets have been determined with reference to labour hours incurred to the period end as a percentage of the total estimated labour hours to complete specified performance obligations as stipulated by the relevant contracts. Contract assets are not amortised as they are of a short- term nature.

36. Pensions

The Group operates a number of defined contribution pension schemes whose assets are held separately from those of the Group in independently administered funds. The pension charge represents contributions payable by the Group and amounted to £872,000 for the year (year ended 31 December 2020: £861,000). Contributions totalling £79,000 were payable to the funds at the year end and are included within trade and other payables (31 December 2020: £77,000 - restated).

37. Leases

Amounts recognised in the Statement of Financial Position

		Right of use assets	Lease liabilities
		£'000	£'000
As at 1 January 2021		4,230	4,439
New Leases Acquired		1,399	1,399
Leases Exited		(738)	(816)
Depreciation expense (note 6)		(2,039)	-
Interest expense (note 12)		-	227
Payments (note 28)		-	(2,329)
Exchange differences		(64)	(66)
As at 31 December 2021		2,788	2,854
Current	-		1,991
Non-current	2,788		863

Maturity of leases

	31 December
	2021
	£'000
Current - Within one year	1,991
Non-Current - Between one to two years	477
Non-Current - Between two to five years	386
	2,854

Short-term Lease payments expensed in year ended 31/12/21: £8,000 (2020 £25,000).

38. Prior period re-statement

In 2020, and prior years when hVIVO Services Limited was loss-making, the Research and Development Expenditure Credit ('RDEC') was recorded net of tax in the Other operating income line in the published Statement of Comprehensive Income. In 2021, it was decided that this RDEC should be shown gross of tax, now that Hvivo Services Limited is profitable, in Other operating income and the tax impact should appear on the Taxation line in the Statement of Comprehensive Income. Consequently, the 2020 Other operating income and Tax figures have been restated to reflect this new treatment. This change also impacts the 2020 comparatives in note 28.

	Note	2020 Restated	2020 As originally Published
		£'000	£'000
Statement of Comprehensive Income:
Other operating income	33	1,576	1,393
Taxation	13	189	372

Cash Used in Operations:
Loss before tax	28	(10,980)	(11,163)
R & D credit incl. in Other income	28	(961)	(778)

39. Capital Reduction and Distribution-in-Specie

On 19 May 2021, the Company received Court approval for a reduction in its share capital. Consequently, the deferred share capital balance of £62,833 (see note 26) was bought back by the Company and the then balance in the Share Premium account of £44,516,591 of the Company was transferred in full to retained earnings.

On 18 June 2021, Open Orphan Plc made a distribution-in-specie to all shareholders on the share register at close of business on 17 June 2021. Shareholders received shares in Poolbeg Pharma Ltd. These shares were to be held in trust by Croft Nominees Limited for a period of 9 months following Poolbeg Pharma Ltd.'s admission to the AIM market of the London Stock Exchange. Poolbeg Pharma Ltd changed its name to Poolbeg Pharma Plc on 23 June 2021. Following a successful period of fund-raising, Poolbeg Pharma Plc was admitted to AIM on 17 July 2021.

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