Preliminary Results for year ended 31 March 2020

RNS Number : 6873T

Nuformix PLC

22 July 2020

 

Nuformix plc

Preliminary Results for the year ended 31 March 2020

Cambridge, UK - 22 July 2020:  Nuformix plc (LSE:NFX) ("Nuformix" or "the Group"), a pharmaceutical development company focused on unlocking the therapeutic potential and value of known drugs to develop new novel medicines to provide enhanced benefit, is pleased to announce its preliminary results for the year ended 31 March 2020.

Operational Highlights (including post-period)

· During the year, we prioritised development of our anti-fibrotic candidate, NXP002, and are developing an inhaled formulation. Our preparations for first clinical exposure are underway. We are looking at all options for deriving value from this product globally

· Having demonstrated the successful application of our proprietary cocrystal technology in humans using NXP001, we believe this product could also be of interest to third parties. Whilst it is too early to characterise this, we will be extending our business development efforts in this area over the coming 12 months. This will be greatly assisted by our network of key opinion leaders and scientific advisors

· The Group also commenced pre-clinical pilot studies to investigate the potential for NXP004 with the highly acclaimed Newcastle Fibrosis Research Group. Significant progress was being made until the inevitable operational challenges of the COVID-19 outbreak contrived to slow that progress. Evaluation of this important data on an exciting candidate that could be applicable to several disease indications is now expected to complete later this year. Again, we are looking at all options for deriving value from this product

· We have also announced two new revenue generating collaboration agreements, with Ebers Tech Inc. (Ebers) and VistaGen Therapeutics Inc. (VistaGen; post-period, May 2020)

Financial Highlights

· Net assets at year-end of £4,742,520 (2019: £3,815,330) which includes £543,772 cash at bank (2019: £4,261)

· The Group delivered a loss on ordinary activities (after tax credit) of £756,376 (2019: loss of £1,661,227) and a loss per share was 0.16p (2019: 0.36p)

· Total revenue of £535,000 (2019: £610,000) revenues were 12% down on last year reflecting the unpredictable nature of the Group's early stage revenue streams

Dr Chris Blackwell, Executive Chairman, said:

"It is a great honour to serve the Group and its shareholders as Executive Chairman. This last year has been one of challenge, change, progress and opportunity for Nuformix. Our focus over the year has been towards the treatment of patients with fibrosis. There has been an increasing need for effective products in this area for many years; with the advent of COVID-19, we only see this need increasing, and on a global basis.

Whilst we are optimistic, we remain conservative and focused on delivery for both our in-house and collaborative development programmes and with a determination to create and deliver shareholder value."

Enquiries:

Nuformix plc Dr Chris Blackwell, Executive Chairman Fleur Wood, Investor Relations Email: [e-mail]	[phone]
Novum Securities Limited Jon Belliss / Colin Rowbury	[phone]

About Nuformix

Nuformix is a pharmaceutical development company focused on unlocking the therapeutic potential and value of known drugs to develop new novel medicines which provide therapeutic and commercial advantages to the currently available drug form. Nuformix's model of repurposing drugs utilises many technologies but is focused on its acknowledged expertise in the use of cocrystal technology through which the Group has developed and patented novel forms of small molecules. Its platform is not therapy-specific but instead has broad application across a wide range of indications. Using its technology, the Group is developing proprietary medicines for its own development pipeline and in partnership with pharmaceutical and biotech companies.

Nuformix plc shares are traded on the London Stock Exchange's Official List under the ticker: NFX. For more information please visit www.nuformix.com .

References to page numbers and notes to the accounts made in this section refer to page numbers and notes to the accounts in the Company's 2020 Annual Report.

Executive Chairman's Statement

Introduction

The last year has been one of challenge, change, progress and opportunity for Nuformix. Changes to our Board and executive management team and a subsequent review of the Group and strategy in the few weeks since Dan Gooding stood down, require us to be candid about the outlook and future direction of the Group, the likely speed of progress and the financial needs of the Group to allow it to progress further. A desire to strengthen our position in negotiations in Asia for NXP002 and to pursue promising opportunities, prompted the £1.25 million placing completed in December 2019. Opportunities to generate further value from our development portfolio and in-house capabilities have increased but the current environment has slowed the pace of all aspects of deal negotiations.

We acknowledge that progress on business development deals has been slower than previously expected. In part, this is a result of the huge impact that the COVID-19 pandemic has had on business and societies across the world. We must also acknowledge that as a small emerging company, we are not in control of the pace of negotiations. This is not always a negative, as during this time, the interest in our assets and their potential in the treatment of COVID-19, as well as the resultant fibrosis, has increased. These business discussions are confidential and further announcements will be made as and when appropriate.

Strategy

The opportunities for our business are still there. Our confidence remains in our people, technology and products. Our business model is one with very low operating costs, but we must now look to diversify the means by which revenues are derived, as we have already started to do. Our strategy will therefore take three approaches, each underpinning a balance of risk and reward and timing of returns and revenue generation. We will:

1.  Undertake technology licensing agreements centred on our IP and provide fee-for-service work to third parties producing their proprietary products, providing Nuformix with short-term revenue streams

2.  Apply Nuformix's IP to produce our own proprietary product opportunities for short-term development and out-licensing, providing potentially larger, medium-term revenue streams

3.  Evaluate co-development opportunities, with third parties, of generic products where Nuformix's IP provides renewed patent protection, allowing access to more rapid development to market and risk-share appropriate for Nuformix

The following Operational Review illustrates our focus towards the treatment of patients with fibrosis. There has been an increasing need for effective products in this area for many years; with the advent of COVID-19, we only see this need increasing, and on a global basis. For our other strategic opportunities, we must be therapy-agnostic and move to where the patient need, commercial market and our scientific expertise provide compelling opportunities for generating shareholder value.

Operational highlights

During the year, we prioritised development of our anti-fibrotic candidate, NXP002, and are developing an inhaled formulation. Our preparations for first clinical exposure are underway. We are looking at all options for deriving value from this product globally.

Having demonstrated the successful application of our proprietary cocrystal technology in humans using NXP001, we believe this product could also be of interest to third parties. Whilst it is too early to characterise this, we will be extending our business development efforts in this area over the coming 12 months. This will be greatly assisted by our network of key opinion leaders and scientific advisors.

The Group also commenced pre-clinical pilot studies to investigate the potential for NXP004 with the highly acclaimed Newcastle Fibrosis Research Group. Significant progress was being made until the inevitable operational challenges of the COVID-19 outbreak contrived to slow that progress. Evaluation of this important data on an exciting candidate that could be applicable to several disease indications is now expected to complete later this year. Again, we are looking at all options for deriving value from this product.

We have also announced two new revenue generating collaboration agreements, with Ebers Tech Inc. (Ebers) and VistaGen Therapeutics Inc. (VistaGen; post-period, May 2020).

Operational Review

NXP002 - Inhaled therapy for Fibrotic Diseases

Nuformix's NXP002 programme remains the Group's priority and entails the development of an inhaled therapy, initially for the treatment of Idiopathic Pulmonary Fibrosis (IPF).

Our focus is now on the development of a formulation and delivery process that exploits the optimal means to treat fibrosis of the lungs, through nebulisation of the drug to facilitate inhalation by the patient. We are considering a number of inhalation devices that would enable rapid and deep penetration of the drug into the lungs with a view to evaluating them further.

We have also started to review and assess some emerging academic data that suggest coronaviruses can trigger hyper-inflammation through activation of the biological target known as the NLRP3 inflammasome, making this a potential novel drug target to treat COVID-19. The mechanism of NXP002 can interact directly with NLRP3, blocking the assembly of the inflammasome. Whilst this still requires clinical validation, we intend to explore the commercial potential of this attribute of our drug.

The Group previously announced that negotiations for out-licensing commercial rights for Asia markets were underway. Discussions have continued but the pace of negotiations has been limited as a result of the COVID-19 pandemic situation, closures to key sites in Asia and access to key personnel. When normal trading conditions return, with direct access to key personnel, we hope to continue these and other efforts to derive value from this product for all key world markets. The value of NXP-002 is not just confined to Asia and we intend to assess interest in regions outside Asia with additional parties.

NXP001 - Oncology supportive care

Following successful completion of initial Phase I studies, our evaluation of the balance of investment and return directs us towards looking for regional or global licencing opportunities for NXP001. We will devote business development effort to this end and update the market as and when we are able to report progress.

The positive pre-clinical and clinical data generated for NXP001 completed Nuformix's activities within the programme in accordance with its agreement with Newsummit Biopharma "NSB". In February, the Group confirmed that issues between Newsummit Biopharma and its parent company, Zheiiang Yatai Pharmaceutical, (Yatai), impacted milestone payments due to Nuformix, totalling £2.5m. Nuformix remains in dispute with NSB regarding payment. We will continue to pursue the monies owed, whilst focusing on the development of the business as a whole.

NXP004 - Fibrosis

Nuformix commenced pre-clinical pilot studies to investigate the potential for NXP004 as a treatment for multiple forms of fibrosis in various human tissues with its research partner, Newcastle Fibrosis Research Group (NFRG). As a response to COVID-19, staff and equipment at the NFRG have been commandeered on Government orders to support national testing efforts at Milton Keynes. Completion of the pilot study has therefore been delayed.

Whilst this is disappointing for the Group, it is in the national interest. Furthermore, initial data, whilst early stage, is very encouraging. The full pilot study is expected to complete by the end of 2020.

It is worth noting that whilst the marketed form of this drug is very successful in its current indication, its formulation and side-effects have posed a significant challenge to extending the use of the drug into new indications that could also benefit from its mechanism of action. Our instinct was to use cocrystal technology to overcome some of the formulation issues and open up potential new therapeutic applications. Evaluation of the pre-clinical data alongside exploring new formulation options with our cocrystal forms will enable us to begin to explore additional business development options.

Collaborative pipeline programmes

The Company continues to operate a commercial model that seeks to create both value and revenue from a combination of IP out-licensing and collaborative development agreements.

In April 2019, the Group announced a new development and licensing agreement with Ebers, enabling Ebers to use Nuformix's technology platforms in the development of Ebers' cannabinoid therapies. Post-period, we were pleased to confirm that, as a result of on-going development activities, a further patent filing had been made in relation to novel cannabinoid cocrystals that triggered an undisclosed milestone payment.

Post-period in May 2020, the Group announced a new collaboration with VistaGen Therapeutics Inc. (VistaGen), a clinical-stage biopharmaceutical company developing new generation medicines for anxiety, depression and other central nervous system "CNS" diseases and disorders with high unmet need. VistaGen will apply Nuformix's proprietary technology platform to develop patentable new crystalline forms of their AV-101 programme. If successful, Nuformix and VistaGen will consider opportunities to extend the collaboration to other CNS therapeutic candidates with a view to unlocking additional therapeutic and commercial opportunities. We hope to be in a position to announce the outcome over the next quarter.

COVID-19 response and impact

Nuformix's priority has remained the health and safety of employees on site, which has remained open, conducting research on in-house and collaborative projects. The Group has followed Government advice whilst allowing the team to work flexibly, without disruption to internal research.

Proactive measures have been taken to preserve cash during this period. This included placing uncommitted external research activities on hold and reducing administrative and operating expenditure where possible to further reduce the Group's cash-burn. 

Board changes

During the year, several changes have occurred on the Board.

In September 2019, Kirk Siderman-Wolter resigned his position from the Board, having been appointed in 2017.

In January 2020, Professor John Lidgey resigned from the Board, having made significant contributions to the business.

In February 2020, we announced that Dr Dave Tapolczay, Founder and Chairman, had resigned his position, having helped establish the Group and served to progress its development for over a decade.

Post-period, in June 2020, Dr Dan Gooding resigned as Chief Executive Officer having served in that role since 2017.

We also announced that Dr Karl Keegan had joined to further strengthen the Board as a Non-Executive Director. Karl has over 25 years' experience working in senior positions in the life sciences industry and has extensive experience in strategy, finance, corporate development and capital markets within life sciences. Karl brings a wealth of experience that is highly relevant to Nuformix at this moment as we enter new stages in the development of the Group and our assets.

From a personal perspective, having moved within the space of twelve months from a Non-executive Director to Interim Chairman and now Executive Chairman, whilst unintended, it is a great honour to serve the Group and its shareholders. Once we have navigated the above challenges, it is my intention to search for a new Chief Executive Officer to lead the Group through its next phase of development but until such time, I will be working full time in my capacity as Executive Chairman and fully committed to the success of the Group. I am currently very ably assisted by Karl Keegan and the continued support of Co-Founder and Chief Scientific Officer, Jo Holland. Together, we will not only strive to drive the value of Nuformix, but also to ensure its guidance and governance is enhanced through an appropriate Board structure and experienced executive management.

Scientific advice

In September 2019, we welcomed Dr Muhunthan Thillai as a Scientific Advisor. Dr. Thillai is the Lead Clinician for the Cambridge Interstitial Lung Disease Unit, where he is also currently appointed as a Consultant. Dr Thillai began his training in London and Oxford where he gained Membership of the Royal College of Physicians. He was awarded a personal Research Training Fellowship from the Wellcome Trust. This allowed him to undertake three years of scientific research into sarcoidosis, in which Dr Thillai specialises, in addition to IPF. Dr Thillai has, and will continue to provide, invaluable experience in the design and execution of future Nuformix clinical studies in IPF and our NXP002 programme.

Outlook

The Board has completed a business review, mapping out a sensible course through the months ahead and focussing investment on the programmes we believe will deliver short-term returns.

We have focussed expenditure on activities that deliver immediate benefit and maintain cashflow. Our efforts will focus on negotiating licensing agreements for our lead programmes and supporting new initiatives with the potential to add further value.

The Board believes the Group has sufficient cash when combined with expected income to deliver on its objectives and following the Board's recent review of the Group's cash flow needs and opportunities.

Whilst we are optimistic, we remain conservative and focused on delivery for both our in-house and collaborative development programmes and with a determination to create and deliver shareholder value.

Dr Chris Blackwell

Executive Chairman

21 July 2020

Risks and uncertainties

The Group's risk management policy is regularly reviewed and updated in line with the changing needs of the business.  Risk is inherent in all business. Set out below are certain risk factors which could have an impact on the Company's long-term performance and mitigating factors adopted to alleviate these risks. This does not purport to be an exhaustive list of the risks affecting the Company.

The primary risks identified by the Board are:

Strategic risks

· Funding the business 

o  Potential impact and mitigation:

The biotechnology and pharmaceutical industries are very competitive, with many major players having substantial R&D departments with greater resources and financial support. The Company aims to execute commercial deals generating enough revenue to sustain the business. Without this, reliance falls on investors or potential M&A opportunities. Failure to generate additional funding from these sources, if required, would compromise the Company's ability to achieve its strategic objectives as set out in the outlook on pages 6 to 7.

· Feasibility of drug candidates

o  Potential impact and mitigation:

Drug candidates can fail due to a lack of efficacy or potency, unacceptable toxicology results, insurmountable challenges in medicinal chemistry, or other technical issues unforeseen at the time of candidate selection.  This is the main reason that the conventional pharmaceutical R&D model takes many years and billions of dollars from discovery to approved medicine.  It is possible that the drug candidates selected by Nuformix are found to be non- viable for development although Nuformix's model of working only on known drugs allows us to mitigate this risk to a certain extent.

· Failure to protect our IP

o  Potential impact and mitigation:

If our IP rights are not adequately secured or defended against infringement, or conversely become subject to infringement claims by others, commercial exploitation could be completely inhibited.  The Company constantly monitors its patents and is prepared to defend them rigorously.

· Unrealistic goals and timeframes

The Company's executive management has a duty to the Board and the Company's shareholders to maintain a realistic view of the chances of success of products, deals and partnerships. Should this not be managed accurately and appropriately, the Company and its Board and staff risk financial, business and reputational damage, whilst its shareholders become exposed to investment risk and uncertainty over the Company's viability and status. The Board continually reviews executive management's expectations and communications in the public domain to reduce the risk of misalignment.

· Reliance on partners

o  Potential impact and mitigation: 

To progress the development of a drug candidate requires resources, financially or otherwise, that are not necessarily available to Nuformix. The drug candidates Nuformix wishes to develop may be of interest to third parties capable of providing these resources, so a partnership may provide mutual benefits and mitigate risks for Nuformix. However, the specific strategic focus of a partner may not align totally with Nuformix's objectives. Maintaining a balance in a partnership is therefore a risk, such as timing, cost sharing, development decisions.

Operational risks

· Management and employees

o  Potential impact and mitigation:

With a semi-virtual company model with relatively few employees, the Company's ability to manage day to day tasks, its relationships with its customers and suppliers, and the need to liaise with collaborative partners, could be undermined by failure to retain or recruit key management and employees. The Company endeavours to offer attractive remuneration and a positive working environment for executive staff. Main Board Directors are incentivised as detailed in the Directors' Remuneration Report.

· Business development risks in terms of timing and success of deal flow

o  Potential impact and mitigation:

Opportunities to generate further value from our development portfolio and in-house capabilities have increased but the current environment has slowed the pace of all aspects of deal negotiations.  However, Nuformix seeks to establish a broad range of assets, opportunities and revenue sources to help mitigate such risks.

· Adapting to the external environment - COVID19

o  Potential impact and mitigation:

The ability of the Company to quickly adapt to external events such as the outbreak of COVID19 may impact the delivery of our strategy. The pandemic could cause further impact to external research and laboratory work. Our primary focus remains the safety of our employees and the health and safety of employees on site conducting research on in-house and working on collaborative projects. The Company follows Government advice whilst allowing the team to work flexibly, without disruption to internal research.  The risks are also mitigated by the Company's semi-virtual business model, allowing the Executive management and Board to work remotely and effectively

UK's departure from European Union ("Brexit")

The impact of the UK's departure from the European Union is not yet clear but it may significantly affect the fiscal, monetary and regulatory landscape in the UK, and could have a material impact on the UK's economy and the future growth of its industries, including the pharmaceutical and biotechnology industries. Depending on the free trade agreement terms negotiated between EU Member States and the UK following Brexit, the UK could lose access to the single European Union market and to the global trade deals negotiated by the European Union on behalf of its members. Although it is not possible at this point in time to predict fully the effects of the free trade agreement with the European Union, it could have a material adverse effect on the Group's business, financial condition and results of operations. In addition, it may impact the Group's ability to comply with the extensive government regulation to which it is subject and impact the regulatory approval processes for its product candidates. This is an area the Executive Management monitors closely.

Financial risk management

· Failure to achieve strategic plans or meet targets or expectations

o  Potential impact and mitigation:

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Further detail on the Group's risk management policies and procedures are set out in note 24 of the financial statements

Financial Highlights

· Net assets at year-end of £4,742,520 (2019: £3,815,330) which includes £543,772 cash at bank (2019: £4,261). The Group has seen a reduction in the net book value of its patents as the continued investment into its intellectual property portfolio of £32,470 was lower than amortisation of £44,961.

· The Group delivered a loss on ordinary activities (after tax credit) of £756,376 (2019: loss of £1,661,227) and a loss per share was 0.16p (2019: 0.36p). The reported loss is driven primarily by product development costs related to clinical studies. The improvement in the loss during the year is largely driven by lower share-based payment charges of £106,361 (2019: £975,926).

· Total revenue of £535,000 (2019: £610,000)

Performance

The following are the key performance indicators ("KPIs") considered by the Board in assessing the Group's performance against its objectives. These KPIs are:

Financial KPIs 

The Group is currently at a stage where the Board considers availability of cash to be the primary KPI.  At 31 March 2020 cash balances totalled £543,772 (2019: £4,261). The Board will consider introducing additional KPIs to monitor the Group's development as they become relevant in the future.

Meeting financial targets:

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Further detail on the Group's risk management policies and procedures are set out in note 24 of the financial statements

Non-Financial KPIs

· Progress of Lead Programmes:

Applying Nuformix's IP to produce its own proprietary product opportunities for short-term development and out-licensing provide potentially larger, medium term revenue streams.

NXP002: During the year the Company prioritised the development of its anti-fibrotic candidate, NXP002 and developing an inhaled formulation.  Preparations for first clinical exposure are underway and with appropriate financing, we believe this candidate can be moved through preclinical studies and into the clinic.  We are looking at all options for deriving value from this product that includes the ability to secure a development partner.

NXP001: Following successful completion of initial Phase I studies of this oncology supportive care candidate, the Company's evaluation of the balance of investment and return directs it towards looking for regional or global licencing opportunities.

NXP004: Nuformix commenced pre-clinical pilot studies to investigate the potential for NXP004 as a treatment for multiple forms of fibrosis in various human tissues with its research partner, Newcastle Fibrosis Research Group (NFRG). Evaluation of the pre-clinical data alongside exploring new formulation options with our cocrystal forms will enable us to begin to explore business development options.

· Number of collaborative technology licensing agreements:

Undertaking technology licensing agreements centred on our IP and providing fee-for-service work to third parties producing their proprietary products, provides Nuformix with short-term revenue streams.

During the year we announced a new development and licensing agreement with Ebers Tech Inc. enabling Ebers to use Nuformix's technology platforms in the development of Ebers' cannabinoid therapies and triggering milestone payments.

· Co-development with third parties:

Evaluation of co-development opportunities, with third parties, of generic products where Nuformix's IP provides renewed patent protection, allowing access to more rapid development to market and risk-share appropriate for Nuformix.

Statement of Directors' Responsibilities

The Directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that year. In preparing these financial statements, the Directors are required to:

	· Select suitable accounting policies and apply them consistently;
	· Make judgements and accounting estimates that are reasonable and prudent;
	· State whether applicable International Financial Reporting Standards (IFRSs), as adopted by the European Union, have been followed, subject to any material departures disclosed and explained in the financial statements; and
	· Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In the case of each person who was a director at the time of this report was approved:

· So far as that Director is aware, there is no relevant audit information of which the Group's auditor is unaware; and,

· That Director has taken all steps that the director ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Group's auditor is aware of that information.

Independent Auditor's Report to the Members of Nuformix plc

Opinion

We have audited the financial statements of Nuformix plc (the 'Parent Company') and its subsidiary (collectively 'the Group') for the year ended 31 March 2020 which comprise the Consolidated Income Statement and Statement of Comprehensive Income, the Consolidated and Parent Company Statement of Financial Position, the Consolidated and Parent Company Statement of Changes in Equity, the Consolidated and Parent Company Cash Flow Statement and the related notes including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion the financial statements:

· give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 March 2020 and of the Group's loss for the year then ended;

· have been properly prepared in accordance with IFRSs as adopted by the European Union; and

· have been prepared in accordance with the requirements of the Companies Act 2006.

Basis of opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty relating to going concern

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made in note 2 of the financial statements concerning the Group's ability to continue as a going concern. The disclosures indicate that there are inherent material uncertainties relating to when milestones in research will be achieved and the likely outcome of trials which will give a right to revenue and cash receipts, the successful signing of out-licensing agreements and the timing of ensuing cash receipts and finally the possibility of a successful fundraise via the placing of equity shares.  These circumstances indicate the existence of a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern. The financial statements do not include any adjustments that would result if the company or Group was unable to continue as a going concern.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Risk	Our response	Key observation
Going Concern Ongoing losses may indicate that the accounts should not be prepared on a going concern basis (see note 2 for further detail)	Review of monthly cash flow forecasts and budgets prepared by the directors up to November 2021 to assess the reasonableness of their assessment of the parent company and Group's going concern status. Discussion with Directors on future plans. Scrutinizing the sensitivities forecasted and challenging the assumptions underpinning the cash flow forecasts. Checking the accuracy and mathematical integrity of the cash flow forecasts prepared by management.	We have observed that a material uncertainty relating to going concern is present (see previous section).
Carrying value of intangible assets Losses may indicate that the intangible assets, including goodwill on consolidation, are impaired (note 14 shows that £4.2m was held on the balance sheet at year end).	Review of Directors' impairment assessment of intangibles, including goodwill on consolidation. Critically challenging the Directors' forecasts and projections used in the impairment review. Obtaining evidence of the commercial and technical feasibility of the capitalised patents.	No impairment was deemed appropriate.
Valuation of options and warrants Valuation of share options is a complex and subjective area (see note 19).	Valuation models assessed and reperformed where possible. Competence and independence of management's expert valuer appraised. Assumptions inherent to valuation models assessed as to whether they are reasonable. Review of option and warrant agreements to ensure that terms have been appropriately reflected within the calculations and assumptions.	No material misstatements were identified.

Our application of materiality

We define materiality as the magnitude of misstatement that could reasonably be expected to influence the readers and the economic decisions of the users of the financial statements. We use materiality both in planning our audit and in evaluating the results of our work.

We determined materiality for the Group to be £45,000, which is approximately 5% of loss before tax. Overall performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Group was 75% of materiality, namely £33,750.

We have agreed to report to the Audit Committee all audit differences in excess of £2,250, as well as differences below that threshold that, in our view, warrant reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the Group and its environment, including internal control, and assessing the risks of material misstatement.

The Group includes the listed parent company, Nuformix PLC, and its trading subsidiary, Nuformix Technologies Limited. The Group's accounting function is outsourced to a third party accountancy firm. We included the outsourcer in our planning discussions with management and established a dedicated portal where the outsourcer could share the accounting records and supporting documentation with us. We discussed with management events that had taken place during the year in order to obtain an understanding of any changes in the Group's environment that might impact on our audit. Our tests included, but were not limited to, discussions with the outsourcer as well as the Group management.

Both companies were audited by the same audit engagement team and, accordingly, all revenue, total assets and loss before tax of the Group were subject to audit by Haysmacintyre LLP. The main trading entity is the focus of our audit, as this comprises all the Group revenue, but, at the parent company level, we also tested the consolidation process and challenged the directors' view on the carrying value of the investment in subsidiary and the group intangible assets. We also carried out analytical procedures to confirm our conclusion that there were no significant risks of material misstatement.

We did not identify any key audit matters relating to irregularities, including fraud. We also introduced variability into our audit tests and assessed the risk of management override on internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

Based on our understanding of the Group our audit was focused on the key risks as described above.

Other information

The other information comprises the information included in the annual report other than the financial statements and our Auditor's report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information, and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken during the audit:

· Information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

· The Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

Considering our knowledge and understanding of the Group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if in our opinion:

· Adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· The parent company financial statements are not in agreement with the accounting records and returns; or

· Certain disclosures of Directors' remuneration specified by law are not made or the part of the directors' remuneration report to be audited is not in agreement with the accounting records and returns; or

· We have not received all the information and explanations we require for our audit.

Respective responsibilities of Directors and Auditor

As explained more fully in the Statement of Directors' Responsibilities set out on pages 29 to 30, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements are free from material misstatement whether due to fraud or error, and to issue an Auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken based on these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate .

Extent to which the audit was considered capable of detecting irregularities, including fraud

We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

· the nature of the industry and sector, control environment and business performance including the design of the Group's remuneration policies, key drivers for directors' remuneration, bonus levels and performance targets;

· results of our enquiries of management and the audit committee about their own identification and assessment of the risks of irregularities;

· any matters we identified having obtained and reviewed the Group's documentation of their policies and procedures relating to:

o  identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

o  detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;

o  the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

· the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: impairment of goodwill and intangibles, revenue recognition, and valuation of share options. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. We also obtained an understanding of the legal and regulatory frameworks that the group operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and Listing Rules, UK Bribery Act as well as pensions legislation and tax legislation.

Audit response to risks identified

As a result of performing the above, we identified the following key audit matters: impairment of goodwill and intangibles and valuation of share options as key audit matters related to the potential risk of fraud. The key audit matters section of our report explains the matters in more detail and also describes the specific procedures we performed in response to those key audit matters. In addition to the above, our procedures to respond to risks identified included the following:

· reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

· enquiring of management and the audit committee concerning actual and potential litigation and claims;

· performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

· reading minutes of meetings of those charged with governance; and

· in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Other matters we are required to address

We were appointed by the Directors to audit the financial statements for the period ending 31 March 2016. Our total uninterrupted period of engagement is five years, covering the period ending 31 March 2016 and the years ended 31 March 2017, 2018, 2019 and 2020.

The non-audit services prohibited by the FRC's Ethical Standard were not provided to the Group or the Parent Company and we remain independent of the Group and the Parent Company in conducting our audit.

Our audit opinion is consistent with the additional report to the audit committee.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Ian Daniels (Senior statutory auditor) For and on behalf of Haysmacintyre LLP, Statutory Auditors Date: 21 July 2020

10 Queen Street Place London EC4R 1AG

Consolidated Income Statement and Statement of Comprehensive Income for the Year Ended 31 March 2020

	Note	2020 £	2019 £
Revenue	4	535,000	610,000
Cost of sales		(333,595)	(537,527)
Gross profit		201,405	72,473
Administrative expenses		(1,119,580)	(1,887,609)
Other operating income	5	4,130	4,624
Operating loss	6	(914,045)	(1,810,512)
Finance costs	7	(15,837)	(32,210)
Loss before tax		(929,882)	(1,842,722)
Income tax receipt	11	173,506	181,495
Loss for the year and total comprehensive income for the year		(756,376)	(1,661,227)
Loss per share - basic and diluted	12	(0.16)p	(0.36)p

The above results were derived from continuing operations.

These financial statements were approved by the board on 21 July 2020 and were signed on its behalf by:

Dr Chris Blackwell

Executive Chairman

Consolidated Statement of Financial Position as at 31 March 2020

	Note	31 March 2020 £	31 March 2019 £
Assets
Non-current assets
Property, plant and equipment	13	82,912	27,520
Intangible assets	14	4,247,862	4,260,353
		4,330,774	4,287,873
Current assets
Trade and other receivables	16	79,496	162,865
Income tax asset		172,391	179,850
Cash and cash equivalents	17	543,772	4,261
		795,659	346,976
Total assets		5,126,433	4,634,849
Equity and liabilities
Equity
Share capital	18	490,145	460,750
Share premium		4,480,400	2,932,590
Merger relief reserve		10,950,000	10,950,000
Reverse acquisition reserve		(8,005,195)	(8,005,195)
Share option reserve		1,814,613	1,708,252
Retained earnings		(4,987,443)	(4,231,067)
Total equity		4,742,520	3,815,330
Non-current liabilities
Loans and borrowings	20	37,257	-
Current liabilities
Trade and other payables	23	308,525	804,408
Loans and borrowings	20	38,131	15,111
		346,656	819,519
Total equity and liabilities		5,126,433	4,634,849

These financial statements were approved by the board on 21 July 2020 and signed on its behalf by:

Dr Chris Blackwell

Executive Chairman .

Consolidated Statement of Changes in Equity for the Year Ended 31 March 2020

	Share capital £	Share premium £	Merger relief reserve £	Reverse acquisition reserve £	Share option reserve £	Retained earnings £	Total £
At 1 April 2019	460,750	2,932,590	10,950,000	(8,005,195)	1,708,252	(4,231,067)	3,815,330
Loss for the year and total comprehensive loss	-	-	-	-	-	(756,376)	(756,376)
Issue of share capital	29,395	1,612,810	-	-	-		1,642,205
Share issue costs		(65,000)	-	-	-		(65,000)
Share and warrant based payment	-	-	-	-	106,361	-	106,361
At 31 March 2020	490,145	4,480,400	10,950,000	(8,005,195)	1,814,613	(4,987,443)	4,742,520
	Share capital £	Share premium £	Merger relief reserve £	Reverse acquisition reserve £	Share option reserve £	Retained earnings £	Total £
At 1 April 2018	460,750	2,932,590	10,950,000	(8,005,195)	724,837	(2,569,840)	4,493,142
Loss for the year and total comprehensive loss	-	-	-	-	-	(1,661,227)	(1,661,227)
Share and warrant based payment	-	-	-	-	975,926	-	975,926
Equity element of convertible loan note	-	-	-	-	7,489	-	7,489
At 31 March 2019	460,750	2,932,590	10,950,000	(8,005,195)	1,708,252	(4,231,067)	3,815,330

Consolidated Statement of Cash Flows for the Year Ended 31 March 2020

	Note	2020 £	2019 £
Cash flows from operating activities
Loss for the year		(756,376)	(1,661,227)
Adjustments to cash flows from non-cash items
Depreciation and amortisation	6	81,685	52,815
Loss on disposal of plant, property and equipment	6	31
Finance costs	7	15,837	32,208
Income tax expense	11	(173,506)	(181,495)
Share and warrant based payment	3, 6	106,361	975, 926
Equity element of convertible loan note		-	7,489
		(725,968)	(774,284)
Working capital adjustments
Decrease in trade and other receivables	16	83,369	17,457
Increase / (decrease) in trade and other payables	23	(256,178)	260,604
Cash consumed by operations		(898,777)	(496,223)
Income taxes received	11	180,965	196,881
Net cash outflow from operating activities		(717,812)	(299,342)
Cash flows from investing activities
Acquisitions of property plant and equipment	13	(10,733)	(1,277)
Disposals of property plant and equipment	13	-	149
Acquisition of intangible assets	14	(32,470)	(26,148)
Net cash flows from investing activities		(43,203)	(27,276)
Cash flows from financing activities
Issue of shares (net of costs)		1,337,500	-
Interest paid	7	(9,785)	(3,483)
Increase in other directors' loans	20	505	-
Reduction in other loans	20	(3,162)	-
Cash payment for reduction of lease liability		(23,994)	-
Foreign exchange losses	7	(538)	(3,805)
Net cash in / (out)flows from financing activities		1,300,526	(7,288)
Net increase / (decrease) in cash and cash equivalents		539,511	(333,906)
Cash and cash equivalents at 1 April		4,261	338,167
Cash and cash equivalents at 31 March		543,772	4,261

The accompanying notes to the financial statements on pages 42 to 62 form an integral part of the financial statements.
 

Notes to the Consolidated Financial Statements for the Year Ended 31 March 2020

1	General information

Nuformix plc ("the Company") and its subsidiary (together, "the Group") operate in the field of complex scientific research, specifically drug development through the use of cocrystallisation.

The Company is a public limited company which is listed on the Standard Market of the London Stock Exchange, domiciled in the United Kingdom ("the UK") and incorporated in England and Wales.

The address of its registered office is 6th Floor, 60 Gracechurch Street, London, EC3V 0HR and the company's principal place of operation is 153 Cambridge Science Park, Cambridge, CB4 0GN.

2	Accounting policies

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS Standards) and on the historical cost basis. The financial statements are presented in Pounds Sterling which is the Group's functional and presentational currency.

Statement of compliance

The Group financial statements have been prepared in accordance with International Financial Reporting Standards and its interpretations adopted by the European Union ("adopted IFRSs").

Changes in accounting policy

None of the standards, interpretations and amendments effective for the first time from 1 April 2019, other than IFRS16 Leases, have had a material effect on the financial statements.

Adoption of new standards and amendments to existing standards

Standards, interpretations and amendments to standards with mandatory application for periods beginning on or after 1 April 2019

IFRS 16: "Leases". The company has elected to apply the standard using the modified retrospective approach from 1 April 2019, utilising certain of the practical expedients provided within the Standard, and the cumulative effect of initial application will be recognised in retained earnings at 1 April 2019. Comparative figures for the year ended 31 March 2019 are not restated to reflect the adoption of IFRS 16 but instead continue to reflect the lessee's accounting policies under IAS 17 Leases. This is disclosed in Note 15.

The following is a reconciliation of total operating lease commitments at 31 March 2019 (as disclosed in the financial statements to 31 March 2019) to the lease liabilities recognised at 1 April 2019:

				2019 £
Operating lease commitments disclosed as at 31 March 2019				38,542
Add: additional lease commitment through non-exercise of break clause				59,458
Discount using the lessee's incremental borrowing rate at date of initial application				(11,180)
Lease liability recognised at 1 April 2019				86,820
Of which are:
Current lease liabilities				21,829
Non-current lease liabilities				64,991

The Company has adopted IFRIC 23 for the first time in the current year. IFRIC 23 sets out how to determine the accounting tax position when there is uncertainty over income tax treatments. Its application had no impact on the Company's tax position.

At the date of the authorisation of these financial statements the following Standards and Interpretations affecting the Group, which have not been applied in these financial statements, were in issue, but not yet effective or endorsed. The Group does not plan to adopt these standards early:

Effective 1 January 2020:

· Amendments to References to Conceptual Framework in IFRS Standards

· Definition of Material (Amendments to IAS 1 and IAS 8)

· Interest Rate Benchmark Reform

Not yet endorsed:

· Definition of a Business (Amendments to IFRS 3)

· IFRS 17 Insurance Contracts

· IAS1 amendments regarding classification of liabilities

The directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group in future periods.

Critical Accounting Estimates and Judgements

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. These estimates and assumptions are based upon management's knowledge and experience of the amounts, events or actions. Actual results may differ from such estimates.

The critical accounting estimates are considered to relate to the following:

Intangible assets

The Group recognises intangible assets in respect of goodwill arising on consolidation. This recognition requires the use of estimates, judgements and assumptions in determining whether the goodwill is impaired at each year end.

Share options

The Group fair values equity-settled share-based payment transactions using the Black-Scholes model and Monte Carlo simulations where applicable. The use of the models involve judgements and estimates including an assessment of whether the shares will vest. Should actual future outcomes differ from these assessments the amounts recognised on a straight-line basis would vary from those currently recognised.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March each year. Control is achieved when the Company:

• has the power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affects its returns.

The Company reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the Company has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether the Company's voting rights in an investee are sufficient to give it power, including:

• the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

• potential voting rights held by the Company, other vote holders or other parties;

• rights arising from other contractual arrangements; and

• any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in profit or loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation.

Going concern

The financial statements have been prepared on the going concern basis of preparation which, inter alia, is based on the Directors' reasonable expectation that the Group has adequate resources to continue to operate as a going concern for at least twelve months from the date of their approval. In forming this assessment, the Directors have prepared cashflow forecasts covering the period ending 30 November 2021 that take into account the likely run rate on overheads and research expenditure and the prudent expectations of income from out-licensing rights to its lead programmes.

Whilst there can be no guarantee of the successful outcome of on-going out-licensing negotiations or the successful outcome of future trials, in compiling the cashflow forecasts the Directors have made estimates of the likely outcome of such negotiations and trials, including when income might be generated from other means, including raising funds through issues of equity, and have considered alternative strategies should projected income be delayed or fails to materialise.

Whilst the Directors anticipate revenue generating out-licensing contracts will be signed, they recognise that there are inherent material uncertainties as to when out-licensing transactions will be completed and the timing of ensuing cash receipts, when research milestones will be achieved and the likely outcome of trials which will give a right to revenue and cash receipts and finally the possibility of a successful fundraise via the placing of equity shares. These circumstances indicate the existence of a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern. The financial statements do not include any adjustments that would result if the company or Group was unable to continue as a going concern.

The Directors have considered alternative strategies, which include cost control measures, postponing uncommitted research expenditure, securing alternative licensing arrangements from those currently planned and utilising the Group's established network of licensed brokers for fundraising.

After careful consideration, the Directors consider that they have reasonable grounds to believe that the Group can be regarded as a going concern and for this reason they continue to adopt the going concern basis in preparing the Group's financial statements.

Exceptional items

Exceptional items are defined as items which are non-recurring in nature and material.

Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the Group's activities. Revenue is shown net of sales/value added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when:

· the amount of revenue can be reliably measured;

· it is probable that future economic benefits will flow to the entity; and,

· specific criteria have been met for each of the Group activities, such as the demonstration of milestone achievements in research or acceptance by both parties.

Segmental information

There is one continuing class of business, being the research and experimental development of biotechnology.

Given that there is only one continuing class of business, operating within the UK, no further segmental information has been provided.

Taxation

The tax income represents the sum of tax credits currently receivable and deferred tax. Tax currently receivable is based on taxable profit for the year. Taxable profit differs from net profit or loss as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's current tax asset is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.

Temporary differences include those associated with shares in subsidiaries and joint ventures and are only not recognised if the Group controls the reversal of the difference and it is not expected for the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective year of realisation, provided they are enacted or substantively enacted at the statement of financial position date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statements, except where they relate to items that are charged or credited to equity in which case the related deferred tax is also charged or credited directly to equity.

Property, plant and equipment

Property, plant and equipment is stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class	Depreciation method and rate
Land and buildings	20% straight line
Computer equipment	33.33% straight line
Lab equipment	25% straight line

Intangible assets

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is held in the currency of the acquired entity and revalued to the closing rate at each reporting year date.

Goodwill is not amortised, but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. 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 ("CGUs") for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose. The Group currently has only one CGU.

Separately acquired trademarks and licences are shown at historical cost. Trademarks, licences (including software) and customer-related intangible assets acquired in a business combination are recognised at fair value at the acquisition date.

Trademarks, licences and customer-related intangible assets have a finite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses.

Amortisation

Amortisation is provided on intangible assets to write off the cost, less any estimated residual value, over their expected useful economic life as follows:

Asset class	Amortisation method and rate
Patents	10% straight line

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Trade receivables

Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade receivables 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 receivables.

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 the transaction price and subsequently measured at amortised cost using the effective interest method.

Borrowings

All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the income statement over the year of the relevant borrowing.

Interest expense is recognised based on the effective interest method and is included in finance costs.

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 reporting date.

Leases - After adoption of IFRS 16

IFRS 16 Leases was issued in January 2016 and is effective for an entity's financial statements for annual reporting periods beginning on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. IFRS 16 introduces significant changes to lessee accounting: it removes the distinction between operating and finance leases under IAS 17 and requires a lessee to recognise a right-of-use asset and a lease liability at lease commencement for all leases, except for short-term leases and leases of low value assets.

· The right-of-use asset is initially measured at cost and subsequently measured at cost less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability

· The lease liability is initially measured at the present value of the future lease payments discounted using the discount rate implicit in the lease (or if that rate cannot be readily determined, the lessee's incremental borrowing rate). Subsequently, the lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications, amongst others.

IFRS 16's transition provisions permit lessees to use either a full retrospective or a modified retrospective approach for leases existing at the date of initial application of the standard, with options to use certain transition reliefs.

The company has elected to apply the standard using the modified retrospective approach from 1 April 2019, utilising certain of the practical expedients provided within the Standard. The company recognised right-of-use assets and lease liabilities in the statement of financial position, initially measured at the present value of the future lease payments, with the right-of-use asset adjusted by the amount of any prepaid or accrued lease payments. Comparative figures for the year ended 31 March 2019, are not restated to reflect the adoption of IFRS 16 but instead continue to reflect the lessee's accounting policies under IAS 17 Leases.

The company has elected to apply the following practical expedients allowed for entities adopting IFRS 16 using the modified retrospective approach:

· Reassessment of contract - The company has made use of the possibility not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with IAS 17 and IFRIC 4 will continue to be applied to those leases entered or changed before 1 April 2019.

· Discount rate - Instead of requiring a lessee to determine the incremental borrowing rate for every single lease, IFRS 16 allows a lessee to apply a single discount rate to a portfolio of leases with reasonably similar characteristics (such as leases with a similar remaining lease term for a similar class of underlying asset in a similar economic environment).

· Initial direct costs - As a practical expedient, IFRS 16 allows a lessee to exclude initial direct costs from the measurement of the right of use (ROU) asset on transition.

· Use of hindsight for lease term - A lessee is required to determine the lease term at the date of initial application, which includes purchase and renewal options reasonably expected to be exercised and excludes termination options reasonably expected to be exercised. To alleviate the burden of reconstructing a lessee's initial assessment of the lease term and subsequent changes thereafter, IFRS 16 allows a lessee to use hindsight to determine which renewal and termination options to include or exclude.

· Onerous lease determination - Similar to other non-financial assets, ROU assets are subject to impairment testing under IAS 36 Impairment of Assets and a lessee is required to perform an impairment review for each of its ROU assets at date of initial application. IFRS 16 allows a lessee to use its onerous contract assessment under IAS 37 Provisions, Contingent Liabilities and Contingent Assets immediately before transition instead of performing an impairment review under IAS 36. The ROU asset is then reduced by any existing provision for related onerous leases - there were no onerous contracts within the Group at 1 April 2019.

· Short-term leases - For leases with a remaining term of less than one year at the date of initial application, the lessee may choose to apply the short-term lease exemption in IFRS 16 and expense lease payments rather than recognize an ROU asset and a lease liability. When using the short-term lease exemption, a lessee is required to disclose the amount of lease payments expensed as a result of using this expedient.

Equity

Equity comprises the following:

· "Share capital" represents the nominal value of equity shares.

· "Share premium" represents the amount paid for equity shares over the nominal value.

· "Reverse acquisition reserve" arises due to the elimination of the Company's investment in Nuformix Technologies Limited.

· "Merger relief reserve" represents the share premium arising on issue of shares in respect of the reverse acquisition takeover.

· "Share option reserve" represents the fair value of options issued.

· "Retained earnings" represents retained earnings/losses.

Defined contribution pension obligation

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

For defined contribution plans contributions are paid into publicly or privately administered pension insurance plans on a mandatory or contractual basis. The contributions are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as an asset.

Financial assets and liabilities

The Group's financial assets comprise intangible and tangible fixed assets, trade and other receivables and cash and cash equivalents.
 

The Group's financial liabilities comprise trade payables. Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instruments.

Share based payments

Equity-settled share based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 19.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.

Equity ‑ settled share ‑ based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

For cash ‑ settled share ‑ based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value of the liability. At each reporting date until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.

Convertible loan note

The fair value of the liability portion of a convertible loan note is determined using a market interest rate for an equivalent non-convertible loan note. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the conversion option. This is recognised and included in shareholders' equity, net of income tax effects.

Investment in subsidiaries

Investments in subsidiaries are carried in the Company's balance sheet at cost less accumulated impairment losses. On disposal of investments in subsidiaries the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

3	Exceptional items

The analysis of the Group's exceptional items for the year is as follows.

		2020 £	2019 £
Share option charge		-	828,427
Warrant charge		-	147,499
		-	975,926
Share option and warrant charges in the year ended 31 March 2019 were deemed exceptional as they related to the successful completion of the reverse acquisition. In the current financial year, the charges are deemed to be recurring in nature and have been classified as administrative expenses.
4	Revenue

The analysis of the Group's revenue for the year from continuing operations is as follows:

	2020 £	2019 £
Rendering of services	535,000	610,000

5	Other operating income

The analysis of the Group's other operating income for the year is as follows:

		2020 £	2019 £
Miscellaneous other operating income		4,130	4,624
6	Operating loss
Arrived at after charging		2020 £	2019 £
Depreciation expense (including lease depreciation)		36,724	11,100
Amortisation expense		44,961	41,715
Loss on disposal of tangible fixed assets		31	151
Research and development expenditure		524,979	1,449,210
Share option charge		41,521	-
Warrant charge		64,840	-
Operating lease expense - property		-	29,400
Details of the share-based payments can be found in note 19.

7	Finance income and costs
		2020 £	2019 £
Finance costs
Interest expense on other financing liabilities		(9,785)	(28,405)
Interest on lease liabilities		(5,514)	-
Foreign exchange losses		(538)	(3,805)
Total finance costs		(15,837)	(32,210)

8	Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

	2020 £	2019 £
Wages and salaries	421,077	314,000
Social security costs	41,787	35,682
Pension costs, defined contribution scheme	4,306	2,703
	467,170	352,385

The average number of persons employed by the Group (including directors) during the year and analysed by category was as follows:

	2020 No.	2019 No.
Research and development	3	3

The Company has one employee (2019: one), other than the executive directors, who are employed by Nuformix Technologies Limited. The non-executive directors are engaged under service, not employment, contracts. 

9	Directors' remuneration

The Directors' remuneration for the year was as follows:

	2020 £	2019 £
Remuneration	347,077	373,114

During the year, the number of Directors who were receiving pension benefits was as follows:

	2020 No.	2019 No.
Accruing benefits under money purchase pension scheme	2	2

Details of the total remuneration paid for the services of the directors are set out on pages 21 and 22 in the remuneration report.

In respect of the highest paid director:

		2020 £	2019 £
Remuneration		120,000	125,000
10	Auditors' remuneration
		2020 £	2019 £
Audit of the financial statements - Group		38,000	29,450
Audit of the financial statements - Company		10,000	10,000
Audit related assurance service		10,000	5,250

11	Income tax

Tax (credited) in the income statement

	2020 £	2019 £
Current taxation
UK corporation tax	(173,506)	(181,495)

The tax on loss before tax for the year is the same as the standard rate of corporation tax in the UK of 19% (2019: 19%).

The differences are reconciled below:

	2020 £	2019 £
Loss before tax	(929,882)	(1,842,722)
Corporation tax at standard rate	(176,678)	(350,117)
Excess of capital allowances over depreciation	111	1,725
Expenses not deductible	24,280	189,661
Tax losses for which no deferred tax asset was recognised	53,380	76,298
Adjustment in respect of research development tax credit	(74,599)	(99,062)
Total tax credit	(173,506)	(181,495)

No deferred tax asset has been recognised as the Directors cannot be certain that future profits will be sufficient for this asset to be realised. As at 31 March 2020 the Group has tax losses carried forward of approximately £3,350,000 (2019: £3,070,000).

The UK rate of corporation tax is 19%. The Finance (No 2) Act 2017 provided that this rate should be reduced to 17% with effect from 1 April 2020, but this was subsequently changed in the 2020 Budget, meaning that the rate of UK corporation tax will remain at 19%.

As deferred tax assets and liabilities are measured at the rates that are expected to apply in the periods of the reversal, deferred tax balances at 31 March 2020 have been calculated at 19% which is the rate at which the relevant balance is expected to be recovered or settled.

12 Loss per share

Loss per share is calculated based on the weighted average number of shares outstanding during the period. Diluted loss per share is calculated based on the weighted average number of shares outstanding and the number of shares issuable as a result of the conversion of dilutive financial instruments.

				2020 £		2019 £
Loss after tax				(756,376)		(1,661,227)
Weighted average number of shares - basic and diluted				477,064,822		460,750,000
Basic and diluted loss per share				(0.16)p		(0.36)p
13	Property, plant and equipment
		Land and buildings £	Computer equipment £		Lab equipment £		Total £
Cost or valuation
At 1 April 2019		32,204	17,487		9,732		59,423
Adoption of IFRS 16		81,414	-		-		81,414
Additions		-	3,381		7,352		10,733
Disposals		-	(3,235)		-		(3,235)
At 31 March 2020		113,618	17,633		17,084		148,335
Depreciation
At 1 April 2019		11,807	12,017		8,079		31,903
Charge for the year		31,143	3,938		1,643		36,724
Eliminated on disposal		-	(3,204)		-		(3,204)
At 31 March 2020		42,950	12,751		9,722		65,423
Carrying amount
At 31 March 2020		70,668	4,882		7,362		82,912
At 31 March 2019		20,396	5,471		1,653		27,520

14	Intangible assets
		Goodwill £	Patents £	Total £
Cost
At 1 April 2019		4,023,484	417,141	4,440,625
Additions		-	32,470	32,470
At 31 March 2020		4,023,484	449,611	4,473,095
Amortisation
At 1 April 2019		-	180,272	180,272
Amortisation charge		-	44,961	44,961
At 31 March 2020		-	225,233	225,233
Net book value
At 31 March 2020		4,023,484	224,378	4,247,862
At 31 March 2019		4,023,484	236,869	4,260,353

For impairment testing purposes, management considers the operations of the Group to represent a single cash generating unit (CGU) focused on research and development of drugs through the use of cocrystallisation. Consequently, the goodwill is effectively allocated and considered for impairment against the business as a whole, being the single CGU.

The fair value of the CGU as at 31 March 2020 is considered to be the market value of Nuformix plc. The share price of Nuformix plc as at 31 March 2020 was 3.70p per share and there were 490,145,081 shares giving a fair value of £18,135,368 substantially in excess of the Group's net assets, including goodwill, of £4,808,843.

As such, the Directors do not consider there to be any indication that the goodwill is impaired.

15

Leases

The Group has elected to apply IFRS 16 using the modified retrospective approach from 1 April 2019, utilising certain of the practical expedients provided within the Standard.

In application of IFRS 16 as from 1 April 2019, the group has recognised on the statement of financial position some "right-of-use" assets and lease liabilities.

An operating lease exists at 153 Cambridge Science Park which has a mixed use for office and laboratory purposes. This commenced in July 2017 and will run until July 2022. There is a rent review clause in July 2020. The annual charge for the site is £27,930 per annum.

The liabilities recognized in accordance with IFRS 16 at 31 March 2020 amount to £62,934, of which £25,677 is due within one year and £37,257 is due after more than one year. To determine the amount of these liabilities, future lease payments were discounted at the incremental borrowing rate of the company which was 7.5%.

The table below presents by nature the "right-of-use" assets included in the fixed assets of the company in 2020:

				Buildings £
Cost or valuation
At 1 April 2019				-
Adoption of IFRS 16				81,414
Disposals				-
At 31 March 2020				81,414
Depreciation
At 1 April 2019				-
Charge for the year				24,702
Eliminated on disposal				-
At 31 March 2020				24,702
At 31 March 2020				56,712
At 31 March 2019				-

16	Trade and other receivables
			31 March 2020 £	31 March 2019 £
Trade receivables			2,690	887
Accrued income			-	10,934
Prepayments			44,692	15,052
Other receivables			32,114	135,992
			79,496	162,865

The fair value of trade and other receivables is considered by the Directors not to be materially different to the carrying amounts. No trade receivables are overdue or impaired.

17	Cash and cash equivalents
		31 March 2020 £	31 March 2019 £
Cash at bank		543,772	4,261
The Directors consider that the carrying value of cash and cash equivalents represents their fair value.
18	Share capital

Allotted, called up and fully paid shares

	31 March 2020		31 March 2019
	No.	£	No.	£
Ordinary shares of £0.001 each	490,145,081	490,145	460,750,000	460,750

No share transactions took place during the year ended 31 March 2019.

			No.
As at 1 April 2018 and 1 April 2019			460,750,000
Loan conversation and warrants exercised			10,216,510
Placement of new shares on the stock market			19,178,571
As at 31 March 2020			490,145,081

On 30 September 2019, the company completed a capital increase when a convertible loan from Mr A Miller was converted into 8,716,510 shares of £0.001 each at a price of £0.275 per share, with a share premium of £230,988. This constituted a material non-cash transaction.

On 15 October 2019, the company completed a capital increase when warrants were exercised for 250,000 shares of £0.001 each at an exercise price of £0.039 by Whitman Howard, with a share premium of £9,750.

On 23 December 2019, the company completed a capital increase through the issue of 19,178,571 shares of £0.001 each in a share placement at a price of £0.07 per share, with a share premium of £1,323,321.

On 7 January 2020, the company completed a capital increase through the exercise by Shakespeare Martineau of warrants for 1,250,000 shares of £0.001 each at an exercise price of £0.04 per share, with a share premium of £48,750.

19	Share options and warrants

The Group operates share-based payment arrangements to remunerate Directors and key employees in the form of a share option scheme. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value is determined at the grant date of the equity-settled share-based payments and is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.

The following share-based payments were made in the year to 31 March 2020:

· On 10 May 2019, Dr Chris Blackwell was granted warrants to subscribe for 3,000,000 new Ordinary shares of £0.001 at an exercise price of 4p each and exercisable at any time within two years under the terms of his appointment as Director of the Group. The fair value of the warrants was determined using the Black-Scholes option pricing model at 1.085p per warrant.

· On 16 May 2019, warrants to subscribe for 8,716,510 new Ordinary shares of £0.001 were issued at 2.75p each exercisable at any time within five years under the terms of a Convertible Loan Agreement dated 18 April 2017 (as amended). 134,694 of these warrants were awarded during this period and the fair value of the warrants was determined using the Black-Scholes option pricing model and was an average of 4.515p per warrant.

· On 3 September 2019, the Group agreed to grant Dr Muhunthan Thillai options to subscribe for up to 6,000,000 new ordinary shares of £0.001 at an exercise price of 50% of the 30 day average share price prior to the date of grant, conditional upon the achievement of various clinical development milestones. The Directors' assessment of the accounting value of the likelihood of achievement attributable to the period from 3 September 2019 to 31 March 2020 is £41,521.

· On 17 February 2020, Karl Keegan was granted warrants to subscribe for 3,000,000 new Ordinary shares of £0.001 at an exercise price of 4p each. The warrants vest on the first anniversary of the grant date and are exercisable at any time within two years from the vesting date. The fair value of the warrants was determined using the Black-Scholes option pricing model at 3.996p per warrant.

The fair value of the options and warrants issued in 2020 were determined using the Black-Scholes option pricing model and Monte Carlo simulations, where appropriate, and had a weighted average of 2.51p per option (2019: 1.86p).

The significant inputs into the model in respect of the options and warrants granted in the years ended 31 March 2019 and 31 March 2020 were as follows:

	2019	2020
	Convertible loan note	Existing director warrants
Grant date share price	2.55p	3.55-6.75p
Exercise price	2.75p	4.00-6.75p
No. of share options	8,581,818	6,000,000
Risk free rate	0.5%	0.44-1.00%
Expected volatility	95%	50-95%
Expected option life	5 years	3 years

The following table sets out details of the granted warrants and options movements:

Warrant/ option holder	Number of warrants/ options at 1 April 2018	Issued in year	Expired in year	Number of warrants/ options at 31 March 2019	Issued in year	Exercised in year	Lapsed in year	Number of warrants/ options at 31 March 2020	Exercise price	Expiry  date
Directors during the year
David Tapolczay	18,430,000			18,430,000			(18,430,000)	-	4p	16/10/22
Joanne Holland	36,860,000			36,860,000				36,860,000	4-10p	16/10/22
Daniel Gooding	36,860,000			36,860,000				36,860,000	4-10p	16/10/22
Pascal Hughes	5,000,000		(5,000,000)	-				-
Pascal Hughes	1,625,000			1,625,000				1,625,000	4p	16/10/20
Anthony Reeves	1,000,000		(1,000,000)	-				-
Chris Blackwell	-			-	3,000,000			3,000,000	4p	10/5/21
Karl Keegan					3,000,000			3,000,000	6.75p	10/5/21
Success warrants
Whitman Howard	250,000			250,000		(250,000)	-	-
Shakespeare Martineau	1,250,000			1,250,000		(1,250,000)	-	-
Other warrants	44,000,000		(44,000,000)	-
Convertible loan note warrants
Issued April 2017	5,450,000		(5,450,000)	-
Issued August 2018		8,581,818		8,581,818		(8,581,818)	-	-
Issued May 2019	-			-	134,692	(134,692)	-	-
	150,725,000	8,581,818	(55,450,000)	103,856,818	6,134,692	(10,216,510)	(18,430,000)	81,345,000

20	Loans and borrowings
		31 March 2020 £	31 March 2019 £
Current loans and borrowings
Lease liabilities		25,677	-
Directors' loan		8,890	8,385
Other borrowings		3,564	6,726
		38,131	15,111

Non-current loans and borrowings
Lease liabilities	37,257	-

The fair value of other borrowings is considered by the Directors not to be materially different to the carrying amounts. Non-current lease liabilities are all due within 5 years.

21	Obligations under leases and hire purchase contracts

Operating leases

The Group signed a lease for rental of business premises for 5 years from 17 July 2017. There is a break clause in the lease allowing notice to be given at the 3 year mark. The total future value of minimum lease payments is as follows:

	31 March 2020 £	31 March 2019 £
Within 1 year	-	29,400
In two to five years	-	9,142

Following the adoption of IFRS 16, the amount of non-cancellable operating lease payments recognised as an expense during the year was £nil (2019: £27,930).

22	Pension and other schemes

Defined contribution pension scheme

The Group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the Group to the scheme and amounted to £4,306 (2019: £2,703).

Contributions totalling £2,928 (2019: £1,156) were payable to the scheme at the end of the year and are included in creditors.

23	Trade and other payables
		31 March 2020 £	31 March 2019 £
Trade payables		131,011	322,126
Accrued expenses		134,721	90,033
Social security and other taxes		28,527	145,736
Outstanding defined contribution pension costs		2,928	1,156
Other payables		11,338	245,357
		308,525	804,408

The fair value of trade and other payables is considered by the Directors not to be materially different to the carrying amounts. All payables are due within one year.

Included within other payables is £nil (2019: £239,705) in respect of convertible loan notes which give rise to a material non-cash movement in the year ended 31 March 2020 due to the issue of equity in full settlement of the loan notes. 24 Financial instruments
Credit risk

The main credit risk relates to liquid funds held at banks. The credit risk in respect of these bank balances is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

Liquidity risk

The Group seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs.

An analysis of trade and other payables is given in note 23.

Capital risk management

The Group's objectives when managing capital are:

· to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;

· to support the Group's growth; and

· to provide capital for the purpose of strengthening the Group's risk management capability.

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes.

25	Related party transactions
All transactions with related parties are conducted on an arm's length basis. The remuneration of the key management personnel of the Group, who are defined as the directors, is set out in the directors' remuneration report. Transactions with directors

During the year the Group made the following related party transactions:

Dr D Gooding (Director)

Included in creditors due in less than one year is an interest free loan from Dr D Gooding. At the balance sheet date, the amount owed to Dr D Gooding was £95 (2019: £4,435).

Dr J Holland (Director)

Included in creditors due in less than one year is an interest free loan from Dr J Holland. At the balance sheet date, the amount owed to Dr J Holland was £nil (2019: £3,950).

Dr C P Blackwell (Director)

Included in creditors due in less than one year is an interest free loan from Dr C P Blackwell. At the balance sheet date, the amount owed to Dr C P Blackwell was £4,146 (2019: £nil).

Dr K Keegan (Director)

Included in creditors due in less than one year is an interest free loan from Dr K Keegan. At the balance sheet date, the amount owed to Dr K Keegan was £4,648 (2019: £nil).

26	Ultimate controlling party

The Directors do not consider there to be a single ultimate controlling party.

27 Post balance sheet events

The COVID-19 outbreak has developed rapidly in 2020, with a significant number of infections. While the outbreak began before the year end, its severity and the economic impact has increased significantly since the balance sheet date. Measures taken by various governments to contain the virus have affected economic activity.

The directors will continue to monitor the effects of COVID-19 and take steps to mitigate them where possible. These steps include health and safety measures for our employees such as social distancing at work for operational staff and home working for those able to do so and ensuring controls are maintained while new work practices are followed. The directors will continue to follow the various national advice and also ensure continuity of operations in the safest way possible.

The impact of COVID-19 on the business is considered to be a non-adjusting event after the period end under IAS 10. At this stage we are not aware of any adverse impact on the carrying value of the Group's assets, including goodwill, or liabilities as a result of the outbreak.

However, given the ongoing uncertainty around the scope, duration and impact of the pandemic, we are not able to forecast the consequences of the pandemic. There may be a potential future impact on the carrying value of goodwill and acquisition related intangibles which cannot be foreseen at this time.

Company Statement of Financial Position as at 31 March 2020

	Note	31 March 2020 £	31 March 2019 £
Assets
Non-current assets
Investment in subsidiary	31	11,250,000	11,250,000
		11,250,000	11,250,000
Current assets
Trade and other receivables	32	1,770,066	1,127,454
Cash and cash equivalents	33	507,417	2,245
		2,277,483	1,129,699
Total assets		13,527,483	12,379,699
Equity and liabilities
Equity
Share capital	18	490,145	460,750
Share premium		4,480,400	2,932,590
Merger relief reserve		10,950,000	10,950,000
Share option reserve		1,814,613	1,708,252
Retained earnings		(4,380,472)	(4,015,779)
Total equity		13,354,686	12,035,813
Current liabilities
Trade and other payables	34	172,797	343,886
		172,797	343,886
Total equity and liabilities		13,527,483	12,379,699

The loss attributable to the Company in the year was £364,693 (2019: loss £1,392,674)

These financial statements were approved by the board on 21 July 2020 and were signed on its behalf by:

Dr Chris Blackwell

Executive Chairman

The accompanying notes to the financial statements on pages 66 to 68 form an integral part of the financial statements.

Company Statement of Changes in Equity for the Year Ended 31 March 2020

	Share capital £	Share premium £	Merger relief reserve £	Share option reserve £	Retained earnings £	Total £
At 1 April 2019	460,750	2,932,590	10,950,000	1,708,252	(4,015,779)	12,035,813
Loss for the year and total comprehensive income	-	-	-	-	(364,693)	(364,693)
Share issued and warrant exercised	29,395	1,612,810	-	-	-	1,642,205
Share and warrant based payment	-			106,361	-	106,361
Share issue costs	-	(65,000)	-	-	-	(65,000)
At 31 March 2020	490,145	4,480,400	10,950,000	1,814,613	(4,380,472)	13,354,686
	Share capital £	Share premium £	Merger relief reserve £	Share option reserve £	Retained earnings £	Total £
At 1 April 2018	460,750	2,932,590	10,950,000	724,837	(2,623,105)	12,445,072
Loss for the year and total comprehensive income	-	-	-	-	(1,392,674)	(1,392,674)
Share and warrant based payment	-	-	-	975,926	-	975,926
Equity element of convertible loan note	-	-	-	7,489	-	7,489
At 31 March 2019	460,750	2,932,590	10,950,000	1,708,252	(4,015,779)	12,035,813

The accompanying notes to the financial statements on pages 66 to 68 form an integral part of the financial statements.

Company Statement of Cash Flows for the Year Ended 31 March 2020

	Note	2020 £	2019 £
Cash flows from operating activities
Loss for the year		(364,693)	(1,392,674)
Adjustments to cash flows from non-cash items
Finance costs		4,340	24,920
Share and warrant based payment		106,361	975,926
Equity element of convertible loan note		-	7,489
		(253,992)	(384,339)
Working capital adjustments
Decrease / (increase) in trade and other receivables	32	106,024	(54,272)
Increase in trade and other payables	34	68,616	36,526
Net cash outflow from operating activities		(79,352)	(402,085)
Cash flows from investing activities
Loan to subsidiary		(748,636)	-
Loan repayments from subsidiary		-	403,763
Net cash (used) / generated by investing activities		(748,636)	403,763
Cash flows from financing activities
Issue of shares (net of costs)		1,337,500	-
Interest on convertible loan and exchange gains		(4,340)
Net cash flows from financing activities		1,333,160	-
Net increase in cash and cash equivalents		505,172	1,678
Cash and cash equivalents at 1 April		2,245	567
Cash and cash equivalents at 31 March		507,417	2,245

The accompanying notes to the financial statements on pages 66 to 68 form an integral part of the financial statements.

Notes to the Company Financial Statements for the Year Ended 31 March 2020

28	Significant accounting policies

Basis of preparation

The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by that Act, the separate financial statements have been prepared in accordance with IFRSs as adopted by the EU.

The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as those set out in note 2 to the Consolidated Financial Statements. In addition, Investments in subsidiaries are stated at cost less, where appropriate, provision for impairment.

29	Loss attributable to shareholders

Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own income statement. The loss attributable to the Company in the year was £364,693 (2019: loss £1,392,674).

30	Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

	2020 £	2019 £
Wages and salaries	117,077	133,114
Social security costs	7,679	4,377
	124,756	137,491

The average number of persons employed by the Company (including directors) during the year was as follows:

			2020 No.		2019 No.
			-		-
The executive directors are employed by Nuformix Technologies Limited, a wholly owned subsidiary of the company.
31	Investment in Subsidiary
						£
As at 1 April 2019 and 31 March 2020						11,250,000

The Company has the following interests in subsidiaries:

Name  Country of Incorporation	Equity interest
	2020	2019
Nuformix Technologies Limited (United Kingdom)	100%	100%

32	Trade and other receivables
			31 March 2020 £	31 March 2019 £
Amount owed by Group undertakings			1,734,241	985,605
Prepayments			26,433	5,857
Other receivables			9,392	135,992
			1,770,066	1,127,454

The fair value of trade and other receivables is considered by the Directors not to be materially different to the carrying amounts.

33	Cash and cash equivalents
		31 March 2020 £	31 March 2019 £
Cash at bank		507,417	2,245
The Directors consider that the carrying value of cash and cash equivalents represents their fair value.

34	Trade and other payables
		31 March 2020 £	31 March 2019 £
Trade payables		68,767	43,616
Accrued expenses		102,691	64,739
Other payables		1,339	235,531
		172,797	343,886

The fair value of trade and other payables is considered by the Directors not to be materially different to the carrying amounts.

35 Financial instruments

Credit risk

The main credit risk relates to liquid funds held at banks. The credit risk in respect of these bank balances is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

Liquidity risk

The Company seeks to manage financial risk, to ensure sufficient liquidity is available to meet foreseeable needs.

An analysis of trade and other payables is given in note 34.

Capital risk management

The Company's objectives when managing capital are:

· to safeguard the Company's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;

· to support the Company's growth; and

· to provide capital for the purpose of strengthening the Company's risk management capability.

The Company actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Company and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes.

36	Related parties

The Company's related parties are the directors and other Group companies.

The remuneration of the key management personnel of the Group, who are defined as the directors, is set out in the directors' remuneration report. Details of the fair value of transactions with key management and their close family members is included in note 25.

All amounts outstanding with related parties are unsecured and will be settled in cash. No guarantees have been given or received in respect of amounts outstanding. No provisions have been made for doubtful debts in respect of the amounts owed by the related parties.

At the balance sheet date, the amounts due from other Group companies were as follows:

	31 March 2020 £	31 March 2019 £
Nuformix Technologies Limited	1,734,241	985,605

 

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