TIDMMSYS
RNS Number : 1647N
Microsaic Systems plc
30 May 2022
30 May 2022
Microsaic Systems plc
("Microsaic" or the "Company")
Final Results for the year ended 31 December 2021
Microsaic Systems plc (AIM: MSYS), the developer of point of
need mass spectrometry ("MS") instruments and related services, is
pleased to announce its audited financial results for the year
ended 31 December 2021. The Company's Annual Report is included at
the end of this announcement and will shortly be made available on
the Company's website at www.microsaic.com .
Financial Highlights:
-- Total revenues increased 357% on the previous year to GBP0.91m (2020: GBP0.20m)
-- Orders exceeded GBP1m with order backlog of GBP125k at year-end for shipping in 2022
-- Other operating income of GBP67k (2020: GBP97k)
-- Adjusted EBITDA loss of GBP1.77m (2020: GBP2.17m) (EBITDA
before share-based payments and professional fees relating to
corporate activities)
-- Operating expenses reduced to GBP2.50m (2020: GBP2.73m)
-- Loss before tax of GBP3.40m ( 2020: GBP2.59m) after providing for:
o Share-based payments of GBP1.36m (2020: GBP52k)
o Depreciation of GBP161k (2020: GBP167k);
o Amortisation of GBP38k (2020: GBP41k)
o Professional fees of GBP66k (2020: GBP149k) relating to
corporate activities
-- February 2021: oversubscribed fundraising with gross proceeds of GBP5.5 million raised
-- Cash and cash equivalents at 31 December 2021 of GBP3.46m (2020: GBP0.40m)
Post Year-End Events:
-- March 2022: Appointment of Robert Moore to the Board, Glenn
Tracey stepped down from his role as CEO
-- April: Multi-year Manufacturing Framework Services Agreement
("MFSA") was signed with DeepVerge plc ("DeepVerge") to miniaturise
electronic engineering, alter the design and provide blueprints for
building a range of its Modern Water equipment, including the
addition of a range of "Sentinel" remote sensors to make use of
Artificial Intelligence ("AI") and in a further iteration of Modern
Water's Microtox(R)PD device worth GBP400,000. The MFSA provides
for additional iterations and upgrades to other equipment.
Outlook
New services offered under the revised strategy gives Microsaic
the ability to exploit the data generated from existing and adapted
MS equipment, something that had not previously been utilised.
AI-driven data analytics offers our distribution partners in the
environmental and life science sectors additional ongoing shared
revenue streams from our CE-marked equipment and consumables.
Predictive services are already adding value for existing
clients and expected to deliver real-time monitoring to detect
contaminants in the environment. We will soon provide medical
diagnosis at point of care. Microsaic has moved on from just
selling equipment and consumables, focusing on generating
sustainable, recurring revenues from multiple sources. We now have
improved visibility, months ahead, and are more secure in our
revenue growth expectations this year, based on equipment and
consumable sales and the recent GBP400,000 Manufacturing Framework
Services Agreement that are already above the revenues of H1
2021.
Gerry Brandon, Executive Chairman and acting CEO of Microsaic
Systems plc, commented
"2021 was transformational with a new Board, new business model
and the financial injection that has delivered significant progress
in the ongoing move from product sales to customer-centric service
solutions in Human and Environmental Health. This has resulted in
the identification of multiple sources of revenues that are
expected to maintain growth this year and into 2023."
Enquiries:
Microsaic Systems plc +44 (0) 734 0055 648
Gerry Brandon, Executive Chairman
N+1 Singer (Nominated Adviser & Joint
Broker) +44 (0)20 7496 3000
Aubrey Powell / George Tzimas (Corporate
Finance)
Tom Salvesen (Corporate Broking)
Turner Pope Investments (TPI) Limited
(Joint Broker)
Andy Thacker / James Pope +44 (0) 20 3657 0050
About Microsaic Systems
Microsaic floated on AIM in 2011 to develop and commercialise
micro-engineering chip-based mass spectrometry equipment. Having
invested c. GBP30m over 20 years of development, Microsaic has a
robust and innovative patent portfolio in cutting-edge technology
designed and developed for "Industry 4.0" application. Microsaic
serves markets in Human Health, Environmental Health and
Diversified Industries. Microsaic's system solutions enable
analytical detection and characterisation at the point-of-need,
whether within a conventional laboratory setting, or within a
bioprocessing facility for continuous MS detection data at multiple
steps in the process workflow.
Microsaic's products and systems are commercially available
through global markets via a network of regional and local
partners, targeting its core laboratory, manufacturing and point of
need applications .
Report and Accounts for the year ended 31 December 2021
CHAIRMAN'S STATEMENT
Dear Shareholders,
Following my appointment as Chairman on 5 February 2021, it is
my pleasure to present the Company's annual report and accounts for
the year ended 31 December 2021.
Our Business
Microsaic Systems plc ("Microsaic" or the "Company") was
established in 2001 to develop and commercialise point-of-need,
micro-engineering technologies to miniaturise mass spectrometry
("MS"), lower the footprint of equipment by up to 90 per cent.
compared to standard MS, and to offer online solutions to
bio-processing in pharmaceutical manufacturing. To date, more than
180 units have been supplied and installed with companies such as
Merck, which has published scientific reviews of the
micro-engineered technologies.
In the 19 years since the Company's inception, GBP30 million has
been invested towards the development of state-of-the-art compact
mass spectrometry. Following completion of the fundraise in
February 2021, a further capital injection of GBP5.5 million
(before expenses) was obtained. In connection with this fundraise,
there were a number of changes to Microsaic's board of directors
(the "Board" or the "Directors") which led to a review of the
Company's business model. Throughout the year, transitioning the
focus towards commercial delivery of services, in addition to mass
spectrometer equipment sales, has opened additional avenues of
income. Supported by a robust patent portfolio in cutting-edge
technology, the team of experts in physics, micro-electronic
engineering, software architecture and organic chemical laboratory
support, we have seen a return to higher sales coming out of the
pandemic period, as we head into 2022. Moving on from the
disappointing performance in 2020, the transformation of the
Company's business model is making a significant impact on the
prospects of the business.
Results
2021 has seen a fundamental shift in the strategic business
model which is already showing encouraging results and momentum.
The new partnership, co-operation, collaboration and commercial
development agreements signed during the year have transformed the
business. Revenue increased by 357% over the prior year, and also
surpassed 2019 levels by 5%, whilst employee headcount was lower in
2021 than 2020. The Company headed into 2022 with shared revenues
from partners and increased service opportunities. Moving on from
the disappointing performance in 2020, the transformation of the
Company's business model is making a significant impact on the
prospects of the business. This can be seen in the operational
highlights in the Strategic Report.
Financial Highlights:
-- Total revenues increased 357% on the previous year to GBP0.91m (2020: GBP0.20m);
-- Orders exceeded GBP1m, the largest increase since 2013, with
the backlog of GBP125k of orders at the year-end anticipated to be
shipped during 2022 (2020: order backlog GBPnil);
-- Other operating income of GBP67k (2020: GBP97k);
-- Operating expenses reduced to GBP2.50m (2020: GBP2.73m);
-- Adjusted EBITDA loss of GBP1.77m (2020: GBP2.17m) (EBITDA
before share-based payments and professional fees relating to
corporate activities)
-- Loss before tax of GBP3.40m ( 2020: GBP2.59m) after providing for:
o Share-based payments of GBP1.36m (2020: GBP52k)
o Depreciation of GBP161k (2020: GBP167k) and amortisation of
GBP38k (2020: GBP41k);
o Professional fees of GBP66k (2020: GBP149k) relating to
corporate activities;
-- February 2021: oversubscribed fundraising with gross proceeds of GBP5.5 million raised; and
-- Cash and cash equivalents at 31 December 2021 of GBP3.46m (2020: GBP0.40m).
Post-year end events:
-- March 2022: Appointment of Robert Moore to the Board, Glenn
Tracey stepped down from his role as CEO.
-- April 2022: Multi-year Manufacturing Framework Services Agreement ("MFSA") with DeepVerge plc ("DeepVerge") was signed to provide the design, assembly, quality and project management functions for a range of Modern Water equipment, including the addition of a range of "Sentinel" sensors to make use of Artificial Intelligence ("AI") and Internet of Things ("IoT") in a further iteration of DeepVerge, Modern Water's Microtox(R)PD device worth an initial GBP400,000. The MFSA provides for additional iterations and upgrades to other equipment with an estimated total contract value of the order of GBP1m, subject to agreement on additional Scope of Work statements, and anticipated delivery over the period until the end of 2023.
Corporate governance
I believe that good corporate governance is important to support
our future growth. The Board has extensive experience in publicly
listed companies as well as running businesses in the healthcare
and environmental sectors and is committed to maintaining the
highest standards where possible. An independent Non-Executive
Director, Robert Moore, was appointed in March 2022 and we are
exploring other candidates to bring additional balance to the
Board.
Outlook
The fresh injection of funding and the new Board has quickly
resulted in strategic changes which have presented multiple growth
opportunities. The business model has moved on from equipment-only
sales and transformed into a collaborative offering for new
products and services with a focus on design, build and commission
services with a revenue sharing commercial strategy being
established, supported by AI data analysis services. Out-sourced
production and in-licensing of AI technologies have helped reduce
development costs, increased revenues and built on the expertise
and experience of a highly skilled team of micro-engineering
equipment technology specialists.
The partnerships and alliances, derived from the new business
model have increased the capacity of our micro-engineering MS
equipment to provide surveillance against contaminants and threats
for existing clients and our partners clients in the pharma,
environmental and life science sectors.
The new services offered under the revised strategy gives the
Microsaic team the ability to fully exploit the data generated from
existing and adapted MS equipment, something that had not
previously been utilised. AI-driven data analytics offers our
distribution partners in the environmental and life science sectors
additional ongoing shared revenue streams from our CE-marked
equipment and consumables. Predictive services for quality control
in real-time are already adding value for existing and new clients
coming online to manage their production risk in active
pharmaceutical ingredients, and to detect contaminants in the
environment. We will soon add the capability to provide medical
diagnosis at point of care. Microsaic has moved on from just
selling equipment and consumables, to focusing on generating
sustainable, recurring revenues. Notwithstanding the continuing
global uncertainties in managing through the current and any future
pandemic, we now have improved visibility, months ahead, and are
more secure in our expectations of growth from a solid footing.
Gerard Brandon
Executive Chairman
27 May 2022
STRATEGIC REPORT
For the year ended 31 December 2021
Progress during 2021
2021 revenues were GBP0.9m, an increase of 357% on the prior
year (2020: GBP0.2m), with orders for the year exceeding GBP1m,
representing a significant milestone for the Company. Following the
effects of COVID-19, sales in the first half (GBP0.5m) were
predominantly a roll-over from delayed orders in 2020, but with
stronger order intake in the second half indicating newly secured
instrument and service business in Environmental and Human
Health.
Gross margin was 44% (2020: 50%), falling due to a change in
product mix. Product gross margins averaged 31% (2020: 37%) and
consumables 63% (2020: 56%). Services to customers are provided by
in house staff and their costs are included in operating expenses
and are not included in the gross margin.
Operational Highlights
-- February: Over-subscribed placing of GBP5.5m (gross
proceeds), new board and structural change to commercially focused
and collaboration-based business model.
-- Five key commercial hires to focus on:
o acceleration of revenues on environmental detection of water
contamination and in human health markets,
o delivering real-time on-site monitoring,
o data analytics with connected Internet of Things ("IoT"),
and
o AI and support services.
-- March: commercial agreement with DeepVerge. Microsaic
products and services deployed internationally in applications such
as water monitoring of chemicals and pathogens, and in support of
DeepVerge's rapidly growing Labskin division.
-- May: Collaboration with Swansea University to combine
real-time monitoring of environmental water using AI in determining
the link between environmental chemical pollution and human
health.
-- July: World first demonstration by Microsaic of real-time monitoring of on-line production of biotherapeutic drugs (vaccines and anti-cancer treatments) using Process Analytical Technology within a micro-engineered MS solution.
-- August: launched a miniaturised mass spectrometer platform to
achieve triple quadrupole limits of detection for real-time
monitoring and identification of Chemicals of Emerging Concern
("CECs") in water and soil.
-- September: signed an agreement with Jiangsu Henzhihe
Technologies Co. Ltd. ("HZH"), acting as the manufacturer,
integrator and service centre in support of distribution and
prospective OEM partnerships in China.
-- October: launch and immediate roll-out of compact MS
technology integrated with autosampler and separation technology,
wrapped in closed-loop (automated) control software, for use in the
scale-up and operation of drug manufacturing.
-- November: Microsaic's point of need platform to include Gas
Chromatography ("GC") capability, extending the Companies existing
liquid chromatography ("LC") capability to offer a platform for the
automated detection of organic chemicals in both non-volatile and
volatile compounds such as therapeutics, antibiotics, pesticides,
petrochemicals, and personal care products.
Strategic Progress
Post the placing in February 2021, the Board repositioned the
Company's business model and strategy, transitioning from selling
capital-based scientific instrumentation to scientists, towards
solving real world problems in the Environmental and Human Health
sectors. The Board believes this transition will establish higher
levels of end-user engagement, and the shift in the business model
is already leading to a greater proportion of recurring revenue
through workflows, software, and services.
Progress on this strategy has been made in 2021 contributing
towards the Company's increased order book, particularly in H2
2021, and the Board believes this progress will yield significant
sales growth in 2022 and beyond, despite the challenging business
environment.
Transition from capital instrument sales to complete workflows
in Human and Environmental Health
-- The Company launched a complete workflow for the
bioprocessing industry, targeted at contract research and
manufacturing organisations ("CRMO"), integration partners and
biopharmaceutical companies who manufacture biologic vaccines and
therapeutics for major diseases such as chronic autoimmune
diseases. Biopharmaceuticals is a well-established and rapidly
growing sector (valued at circa $200 billion in a 2020 report(1) ),
which faces significant challenges around process robustness. This
is particularly apparent within upstream processing, which relies
on fundamental biology and carries inherent product variability.
Continuous point-of-need MS would provide timely and critical
safety and quality assurance, as adverse effects would be
identified earlier in the process and mitigated upstream. The
analytical instrumentation market in upstream bioprocessing alone
was projected to be worth circa $390 million in 2020(2) . The
Company believes that its compact, easy-to-use, MS technology is
well-positioned to access a share of this market, working with
bioprocessing instrument providers, CRMOs and end-users in
biopharmaceutical manufacturing alike .
-- Microsaic's platform now offers automated detection of
organic chemicals in both non-volatile and volatile compounds such
as therapeutics, antibiotics, pesticides, petrochemicals, and
personal care products. The platform can be used in Human
Diagnostics where measurements are increasingly being made in the
doctor's clinic or during surgery, with applications including the
real time monitoring of Therapeutic Drugs. Microsaic's technologies
can also detect contaminants in soil and water in minutes and is
well suited to front line environmental monitoring of CECs at the
point of need. The latest addition to Microsaic's platform is the
integration of the Company's compact MS technology with GC and
extends Microsaic's existing applications in LC". This combination
will provide an extensive range of analysis required by end-users
for chemical detection, for use in a combined market estimated to
be worth over $1 billion (3) .
Driving the value of data, through collaborations in software
and AI in Environmental Health
-- Collaboration with DeepVerge. Microsaic is participating in
the front line water analysis portfolio of Modern Water (a division
of DeepVerge) by adding a new portable real-time sewage monitoring
capability, particularly for monitoring "organics" such as drugs of
abuse and active pharmaceutical ingredients ("APIs"). Both
companies are engaged in a collaboration to deliver complete
solutions, with a backbone of analytics delivered to end users
powered by powerful AI techniques.
-- Collaboration with Swansea Medical School. The detection
platform will combine environmental sample preparation and
epigenetic approaches with Microsaic's miniaturised MS. Through
partnership with stakeholders in the environmental sector, this
collaboration is designed to better inform pollution remediation,
improve management processes for reduced emission and promote safer
handling of PFAS chemicals. The partnership will include the
application of AI methodology to real-time water detection.
Increasing the proportion of recurring revenue through
scientific services
In October 2021, Microsaic launched its services business,
providing a suite of solutions, which provide knowledge,
applications and services, including environmental, bioprocessing
optimisation and analytics and workflow solutions, and emerging
translational medicine. Markets span industries, including
Pharmaceuticals/Biopharmaceuticals, Food Safety, Environmental and
Clinical, and this business will further augment the Company's
transition towards offering complete solutions to end-users in
Human and Environmental Health.
Partnership progress with DeepVerge plc
In October 2021, Deepverge increased orders for pathogen
monitoring equipment for shipment in 2021 to partners and customers
based in the UK, India, and China, which included upgrades to
DeepVerge Modern Water Microtox(R) PD(4) units, and Microsaic mass
spectrometer units. Configurations of the Microsaic equipment were
included in these orders to DeepVerge for the integrated detection
of PFAS (Per- and Polyfluoroalkyl Substances or 'forever
chemicals'). This monitoring capability forms part of broader
integrated solutions offered by DeepVerge for monitoring toxicity
and heavy metal pollutants as well as the prevalence of SARS-CoV-2
as part of the ongoing pandemic response.
Operations
The Company received orders exceeding GBP1m in 2021, sales of
GBP0.9m with the backlog of orders expected to ship during early
2022. The main reason for this backlog was due to global supply
constraints, mainly resulting from COVID-19. The Company is working
hard to mitigate any risks to its key supply chain such that any
future impact will be minimal.
Strategic Focus
Microsaic serves Human Health, Environmental Health and
Diversified markets with equipment and design services for mass
detection technology, which can be used at the point of need to
drive better informed, faster decisions in real time and to solve
real-world problems.
Typical point of need markets and applications include process
analytical technology for the manufacture of high value biologic
drugs, food contamination screening as well as cannabinoid
screening. The Company is also developing a longer-term capability
in point of care diagnostics.
Microsaic's technology can also be used in standard laboratory
settings, for example in the established pharmaceutical, academic
and chemical industries.
Business Model
The Company has moved from revenues in 2021 derived from the
sale of its MS instruments, consumables and spare parts to deliver
solutions for end-users, and in 2022 now operates a revenue
sharing, hardware, software and micro-engineering design services
business model. Working with collaboration partners is reducing the
Company's reliance on equipment sales (which depend on lengthy
sales cycles) and in 2022 Microsaic has quickly moved towards a
recurring revenue-based model, which is expected to increase the
proportion of revenues from AI and analytical electronic
sensor-based Internet of Things. These revenue streams are in
addition to premium services relating to 24/7 operation and support
and data analytics, in particular Industry 4.0 smart technology for
the bioprocessing industry, which are also expected to form an
increasing proportion of revenues. Other equipment developed in
collaboration with partners, will shift towards the integration of
sensors and analysers to solve specific problems for a range of
industries, which our partners already operate in.
Product Overview
The Company's existing products use miniaturised chip-based
technology and are designed to deliver application versatility,
ease of deployment and provide users with real-time information to
make decisions in a quicker and more cost-effective manner.
Throughout 2021, Microsaic introduced our In-Field Screening
solution for real-time monitoring. This was largely focused on the
environmental market and monitoring of PFAS (Perfluoroalkyl and
Polyfluoroalkyl Substances) and other CECs (Chemicals of Emerging
Concern). This real-time monitoring solution can be utilised in
other markets as diverse as water, pharmaceuticals, chemicals,
academia, and food and beverage.
Microsaic's technology development has pivoted towards more
dedicated solutions to solve specific problems in Human and
Environmental Health and Diversified Industries.
Stakeholder Engagement
Section 172 of the Companies Act 2006 ("S.172") recognises that
companies are run for the benefit shareholders, but that the
long-term success of a business is dependent on maintaining
relationships with stakeholders and considering the external impact
of the Company's activities.
Microsaic's key stakeholders are our employees, partners
(including distributors, OEMs and collaborators on new products),
and our key suppliers such as our manufacturing contractor and key
R&D subcontractors. By working with all stakeholder groups, the
Company can unlock the potential of the business and maximise the
value created. The key principles and values adopted by the Company
are detailed under Principle 8 of the QCA Corporate Governance
Code.
For Microsaic, engagement with our key stakeholders is part of
how we operate as a business. Actively seeking to understand the
concerns and aspirations of our employees, how we can better engage
with them, how we can work more closely with the partners who
distribute our products and those that we collaborate with, plus
the challenges faced by our manufacturing partner and other
suppliers.
Compared to 2020, this year was less challenging and enabled the
Company to focus on its growth. A key priority in 2021 was
redefining the commercial focus, targeting solutions to meet the
requirements of existing clients and investigating markets to
capitalise on the value of the new business model. Microsaic is now
sufficiently capitalised to take advantage of the opportunities
available to a commercial focused business and face-to-face
engagement restricted during the pandemic lock-down with
shareholders and stakeholders was eased. The Directors continue to
engage with shareholders and key stakeholders keeping them up to
date on progress.
The key decisions made by the Board during the year are outlined
below:
-- In February 2021, new directors were appointed to the Board.
The incumbent CEO and CFO remained and implemented the new business
model. In contrast to the previous year, additional staff were
hired to meet the demand for new services being offered after a
successful fundraise was completed on 5 February 2021 raising
GBP5.5 million before expenses.
Under S.172, a company's directors have a duty to discharge
their responsibilities having regard to:
a) the likely consequences of any decision in the long term -
the focus of the Board during 2021 was the reorganisation and
adjustment to a more commercial focus with emphasis on delivery of
solutions, beyond equipment sales.
b) the interests of the company's employees - following the fund
raise in February 2021, all employees who had agreed to a temporary
20 per cent. reduction during the pandemic had their salaries
restored.
c) the need to foster the company's business relationships with
suppliers, customers and others - customers were treated fairly
during the year. Suppliers continued to be paid on time.
d) the impact of the company's operations on the community and
the environment - there was no adverse impact on the community or
environment from the decisions made by the Board during the
year.
e) the desirability of the company maintaining a reputation for
high standards of business conduct - the Company acted in a
professional manner during 2021 liaising with key stakeholders and
followed the principles and values of the Company as outlined in
the Corporate Governance Report.
f) the need to act fairly as between members of the company -
the Board treated shareholders fairly and made sure it kept them up
to date through regular press releases. Significant shareholders
were given the opportunity, through a market soundings exercise to
invest in the Company. The strategic review process was undertaken
for the benefit of shareholders and other key stakeholders.
Performance Measurement
The ongoing performance of the Company is managed and monitored
using several key financial and non-financial performance
indicators as detailed below:
Revenue Year to Year to Increase/
31 December 31 December (Decrease)
2021 2020
GBP GBP %
----------------------------- ------------- ------------- ------------
Products 617,613 83,397 641
Consumables and spare parts 230,832 105,135 120
Service and support income 58,431 9,726 501
----------------------------- ------------- ------------- ------------
Total 906,876 198,258 357
----------------------------- ------------- ------------- ------------
The Company's revenue performance strengthened in 2021 following
the impact of the COVID-19 pandemic, and increased by 357% to
GBP0.91m (2020: GBP0.20m). Restrictions on travel to support
partners and customers have only recently been lifted. Revenue
comprises the sale of products, consumables and spare parts, and
service and support income. The Board reviews trading results and
monitors cash on a regular basis.
Profit/(Loss) & Cash Metrics Year to Year to Increase/
31 December 31 December (Decrease)
2021 2020
GBP GBP %
------------------------------------------ -------------- -------------- ------------
Loss from operations before share-based
payments, interest, and tax (2,034,235) (2,531,746) (15)
Net cash used in operating and investing
activities (1,937,263) (2,126,275) (9)
Cash and cash equivalents 3,464,876 397,069 773
------------------------------------------ -------------- -------------- ------------
The Company's profitability is monitored against budget on a
monthly basis. The 15 per cent. reduction in the loss from
operations before share-based payments was the result of growth in
revenue whilst keeping operating costs consistent and a reduction
in corporate transaction related costs following the restructuring.
The Company monitors its cash position closely, and forecasts are
updated on a regular basis. The year-end cash position was in line
with the Board's expectations.
Non-financial key performance indicators measure a number of key
areas, including commercial and operational targets, such as number
of sales orders, unit production, new products transferred to
manufacturing, number of collaborations, agreements signed with new
customers and quality measures from the Company's ISO 9001:2015
system. Key points to note are:
-- Sales orders for MS instruments were significantly above last year;
-- Microsaic worked with its manufacturing partner to increase production levels;
-- On the customer front, two new partner agreements were entered into during the year;
-- The Company was able to continue with two important partner
collaborations, albeit delayed, both in bioprocessing; and
-- ProteinID was successfully transferred to manufacturing,
although significantly later than originally planned while work on
the launch of our LC-MS family of products was placed on hold.
Progress on the latter has been delayed due to the worldwide supply
chain shortages of electronic components. It is anticipated that it
will be resumed towards the end of 2022, with sales commencing
during Q2 2023.
Financial Results - 2021
Profit and Loss
Total revenue of GBP906,876 increased 357 per cent. compared to
the prior year (2020: GBP198,258) which had been impacted by the
COVID-19 pandemic, and ahead of 2019 revenues of GBP872,125.
Product revenues of GBP617,613 (2020: GBP83,397) and service
revenues of GBP58,431 (2020: GBP9,726) increased by 641 per cent.
and 501 per cent. respectively. Consumables revenue of GBP230,832
(2020: GBP105,135) increased by 120 per cent.
Gross profit in 2021 of GBP395,984 (2020: GBP99,910) rose by 296
per cent. over last year following a significant increase in
product revenues, as customer investment decisions were postponed
due to the COVID-19 pandemic. The gross margin of 44 per cent
(2020: 50 per cent.) is reduced on the last year predominantly due
to an increased proportion of lower margin unit sales compared to
higher margin consumables.
Other operating income of GBP67,283 (2020: GBP96,626) relates to
a mix of Coronavirus Job Retention Scheme grant, co-development
income and insurance claim income (2020: solely Coronavirus Job
Retention Scheme grant).
Total operating expenses (excluding share-based payments) of
GBP2,497,502 (2020: GBP2,728,282), fell by 8 per cent. chiefly due
to the reduction of corporate transaction professional fees as the
restructuring completed early in 2021, new Non-executive Directors
fees and Brokers fees being settled in shares and a reduction in
research and development expenses. Corporate transactions-related
professional fees of GBP65,789 fell by GBP83,575 as the
restructuring and fundraise completed early in the year during
February 2021.
The main increase in expenditure compared to 2020 relates to
payroll costs increased by GBP137,950 to GBP1,545,368. This
reflected increasing staffing levels (after redundancies in 2020)
and the restoration of staff salaries to pre-pandemic levels
(reversing in full an agreed temporary 20 per cent. reduction
during the pandemic in 2020).
The loss from operations for the year before share-based
payments fell by 20 per cent. over last year to GBP2,034,235 (2020:
GBP2,531,746).
Share based payments of GBP1,363,764 are GBP1,311,523 higher
than the prior year (2020: GBP52,241). This follows the
cancellation of options and the issue of new options as part of the
restructuring in February 2021, together with Non-executive
Directors fees and Brokers fees settled in shares
Finance costs of GBP4,604 were less than the prior year (2020:
GBP10,775). The majority of this cost relates to interest on the
lease liability.
Finance income of GBP6,237 increased compared with the prior
year (2020: GBP4,393) due to higher cash balances offset by reduced
interest rates.
The tax credit on ordinary activities in the year was GBP267,785
(2020: GBP217,711). In 2020, expenditure on R&D projects had
been scaled back in line with the contingency plan to mitigate the
impact of the COVID-19 pandemic. The R&D tax credit claim is
GBP50,074 higher than in 2020 as there was a return to higher
levels of staff time on eligible R&D.
The total comprehensive loss for the year of GBP3,128,581 is a
32 per cent. increase over the prior year (2020: GBP2,372,658). The
increase in the total comprehensive loss by GBP755,923 was due
chiefly to the share-based payments increase of GBP1,311,523 over
the prior year which was partially offset by a GBP296,074
improvement in gross profit and other operating costs reduced
byGBP107,753. The basic loss per share fell by 89 per cent. from
0.52 pence in 2020 to 0.056 pence per share in 2021. The weighted
average number of shares in issue increased by 1,013 per cent.
(refer to note 10) as a result of the fund raise on 5 February 2021
(refer to note 18).
Balance Sheet
Total non-current assets increased GBP259,313 to GBP506,625
(2020: 247,312). The increase is due to a substantial increase in
investment in plant and equipment and the renewal of the Woking
lease.
Current assets at GBP4,648,511 are up GBP3,289,414 over last
year (2020: GBP1,359,097). The increase is mainly due to a
substantially higher cash balance of GBP3,464,876 (up GBP3,067,807)
as well as higher trade and other receivables (up GBP458,077) and
corporation tax receivable (up GBP49,217), partly off-set by lower
inventories (down GBP285,687). The increase in cash reflects the
fund-raise in February 2021, the increase in trade receivables and
lower inventories reflects the increased sales in 2021 compared to
2020. The lower inventories also relate to supply chain issues
arising from the COVID-19 pandemic.
Total assets at GBP5,155,136 are GBP3,548,727 higher than last
year (2020: GBP1,606,409), mainly due to the higher level of
current assets at the year-end given the increased cash
balance.
Total equity at GBP4,573,220 is GBP3,330,240 above last year due
to the share issue net of costs in February 2021 of GBP3,700,132
(adjusted for cash costs and the fair value of broker warrants)
plus the movement on share-based payment reserve of GBP2,564,443
offset by the reduction in retained reserves of GBP2,934,335. The
increase in the share-based payments reserve is due to fair value
of broker warrants in relation to the February 2021 share issue and
new options net charge amounting to GBP1,255,681 off-set by
share-based option credits in respect of unvested cancelled options
of GBP194,246.
Current liabilities comprise trade and other payables and lease
liability due within 12 months of the year end. Trade and other
payables at GBP354,611 (2020: GBP185,927) are GBP168,684 more than
last year and mainly reflects an increase in trade payables (up
GBP167,460), with lower level of accruals and deferred income (down
GBP32,817) offset by higher other payables, taxes and social
security (up GBP34,041). The lease liability of GBP71,187 mainly
represents the Company's leasehold property in Woking which expires
in September 2023.
Total non-current liabilities at GBP156,118 are GBP30,986 more
than last year. This is mainly due to the increase in the lease
liability by GBP55,061 reflecting the Company having renewed its
Woking lease in September 2021 offset by a reduction in provisions
of GBP24,075 reflecting lower estimated warranty claims.
Total liabilities of GBP581,916 are GBP218,487 more than in the
prior year due to the increase in current and non-current
liabilities as set out above .
Cash Flow
Net cash used in operating activities in 2021 of GBP1,609,283 is
GBP440,327 lower than last year reflecting the reduction by
GBP497,511 in the loss from operations before share-based payments
for the year. The R&D tax credit receipts fell by GBP103,016
offset by improvements in working capital movements of
GBP155,045.
Net cash used in investing activities of GBP327,980 compares
with GBP76,665 in 2020. The main movements in the year were an
increase in the purchases of property, plant and equipment of
GBP235,882 and intangible assets of GBP1,564 and interest received
lower by GBP13,869.
Net cash generated by financing activities amounted to
GBP5,005,070 and relates to the net proceeds of the fund raise in
February 2021 offset by payment of lease commitments (chiefly in
relation to the Woking site) during the year.
The net increase in cash for the year of GBP3,067,807 resulted
in a cash balance as at 31 December 2021 of GBP3,464,876.
Going Concern
The Company's resilience has improved following the equity
fundraise completed in February 2021 when the Company successfully
raised GBP5.5 million (before expenses), with improved trading
performance, a revised business strategy and the additional
Manufacturing Framework Services Agreement ("MFSA") signed with
DeepVerge for an initial value worth GBP400,000 (with no capital
costs for Microsaic). The MFSA provides for additional iterations
and upgrades to other equipment which could generate further
contracts and income for the Company in the first half of 2023.
With the recent advent of new service revenue streams, the plans
and prospects for the business are modest in projecting the pace
and quantum of new revenue and the Company is expected to continue
to be loss making in the short-term. Having taken this careful
approach, the Board believes that the Company has sufficient cash
to cover the anticipated working capital requirements for at least
the next 12 months from the date of signing of the Annual Report
and Accounts. Therefore, the Directors have adopted the going
concern basis of reporting in preparing the financial
statements. The Board's assessment of the going concern basis is
explained in more detail in note 3 to the financial statements,
including sensitivities and contingency plans.
Risk Management
The Company manages risk from an operational perspective, where
it assesses and weighs up the potential risks to the business and
how it can mitigate these risks. The Board has identified the
following risks and associated mitigating actions as follows:
Description Risk Risk Mitigating actions Risk
rating rating
pre-mitigation post-mitigation
Unable to grow Sales growth HIGH Pursuing a new strategy MEDIUM
sales required is too slow involving services and
to achieve to achieve investing in business
sustainable targets development to promote
profitability these as well as developing
new sales channels.
----------------------- ---------------- ------------------------------ -----------------
COVID-19 pandemic Low or little MEDIUM Continue dialogue remotely MEDIUM
has material demand from with partners. Increase
impact on sales affected markets collaborations regarding
and less opportunity the development of new
to visit potential products and expand
customers sales channels. Ensure
staff have a safe and
protected work environment.
----------------------- ---------------- ------------------------------ -----------------
Unable to raise Inability MEDIUM Communicate effectively MEDIUM
additional to continue with shareholders and
funds if required as a going potential investors.
in the future concern Ensure the business
plan is implemented
effectively with the
focus on expanding sales
channels and growing
revenues, whilst adjusting
variable costs in line
with actual revenues.
----------------------- ---------------- ------------------------------ -----------------
Reliance on A replacement MEDIUM Work closely with our LOW
third party manufacturer manufacturing partner
manufacturing is necessary and hold regular review
facilities meetings. Ensure contingency
plans are prepared and
reviewed.
----------------------- ---------------- ------------------------------ -----------------
Retention and Loss of key LOW Ensure the Company's LOW
recruitment employees remuneration package
of key employees and subsequent is competitive and aligned
difficulty to performance. Retain
in recruiting key staff by investing
suitable replacements in their development.
----------------------- ---------------- ------------------------------ -----------------
Loss of competitive Competitors MEDIUM The Company continues LOW
advantage in developing to innovate, invest
miniaturised competing in IP, and focus on
mass spectrometry products its core strengths around
point of care, ease
of use and simplicity
of maintenance. The
Company believes the
market is large enough
for competitors to co-exist.
----------------------- ---------------- ------------------------------ -----------------
From the analysis above there are three main risks facing the
business:
1. Although some countries have weathered the COVID-19 pandemic
better than others, the global health crisis continues to slow the
potential for improved revenues overseas, particularly in the APAC
region. However, the new business model saw sales of units increase
supported by services utilising in-house expertise and experience
which do not require travel to support installations. Restrictions
on international travel to and from partner countries has eased and
we will continue to monitor the situation very closely. The Company
will follow government guidelines in the UK and abroad to plan
international visits to customers. Restrictions on working from
home have eased and while we encourage staff to go into the
premises, we remain open to a flexible approach to ensure the
health and safety of our employees as a priority.
2. Failing to grow the sales required to achieve sustainable
profitability is a clear risk. To mitigate this, soon after the
funds raised in February 2021 the Company altered the business
model to create a substantial uplift in revenues from multiple
sales channels in products and services to provide solutions to
clients, generating recurring revenues through design, prototype
and preparation of blueprint for transfer to manufacture of
third-party equipment. Investment in business development has
already delivered positive results bringing in GBP400,000 in design
and development contracts after year end and the additional
iterations and upgrades to generate further contracts and income
for the Company into 2023. Should these not materialise as
estimated, the Directors have prepared mitigating actions which
would be undertaken if necessary as set out in note 3.
3. The inability to continue as a going concern. This has been
mitigated by the successful fundraise in February 2021 where the
Company raised GBP5.5 million before expenses, the developing
strategic relationship with DeepVerge plc and the introduction of
new services during 2022. The Board's assessment of the going
concern basis is summarised in more detail in note 3.
Key events and progress post year end
-- Multi-year Manufacturing Framework Service Agreement with
DeepVerge plc for a range of Modern Water equipment, including the
addition of a range of "Sentinel" sensors to make use of Artificial
Intelligence and Internet of Things is a further iteration of
DeepVerge, Modern Water's Microtox(R)PD device with a value to
Microsaic of GBP400,000 with an estimated total contract value of
the order of GBP1m, subject to agreement on additional Scope of
Work statements, and anticipated delivery over the period until the
end of 2023.
Signing of agreement with DeepVerge
On 24 March 2021, Microsaic signed a non-exclusive Framework
Services Agreement with DeepVerge for the distribution of its
products across the geographic markets addressed by DeepVerge. This
agreement does not restrict Microsaic from developing and engaging
with its existing or other new partners. DeepVerge offers Microsaic
the opportunity of increasing volumes substantially, from an
established global sales platform, and an extended reach into
markets beyond that for standard laboratory use of MS.
Under the terms of the agreement, DeepVerge has committed to
allocate resources up to a value of GBP150,000 to assemble a pilot
facility for Microsaic's systems at DeepVerge's York laboratories,
to provide access for potential customers and clients of DeepVerge
to verify and validate the technology in numerous application
settings beyond those historically targeted by Microsaic.
Additionally, this agreement opens the opportunity for
collaboration in several areas:
-- DeepVerge will incorporate AI software and services into
Microsaic's technology. This fits in with Microsaic's strategy in
bioprocessing, where AI enables faster decision making from complex
data sets;
-- DeepVerge will utilise and integrate Microsaic's technology
into Labskin products and services, in pursuit of human and
environmental health applications. Microsaic's technology is
ideally suited for screening applications and especially for
protein detection (e.g., with Microsaic's MiD(R) ProteinID
technology); this collaboration will also progress both companies'
respective strategies in point of care diagnostics, where the
Directors believe that combining the technologies could have a
synergistic effect;
-- Certain Microsaic employees will be located at DeepVerge's
sites in the UK, to assist with particular collaborations (e.g.,
Labskin's facility at York); and
-- Microsaic will collaborate with Modern Water Group (part of
DeepVerge) to develop solutions for point of need water quality and
pathogen testing.
The Framework Services Agreement with DeepVerge constituted a
related party transaction under Rule 13 of the AIM Rules for
Companies, by virtue of Microsaic and DeepVerge having two
directors in common. At the time of entering into the agreement,
the Independent Directors, being Glenn Tracey and Bevan Metcalf,
confirmed that they considered, having consulted with the Company's
nominated adviser, that the terms of the Framework Services
Agreement were fair and reasonable insofar as the Company's
shareholders are concerned. Additional orders received under this
agreement were similarly assessed as being consistent with the
terms of the FSA and therefore also fair and reasonable. In 2022
the FSA was amended to include additional new products and provide
for other new items to be added to the agreement, subject always to
the review by the respective companies' nominated advisers.
Outlook
The Board is targeting significant scale up of the business in
2022 which will be underpinned by:
-- The roll-out of Microsaic's scientific and micro-engineering
design services business, in particular implementation of Framework
Agreements for high-value design, prototype and blueprint
preparation for mass production of sensor-based Internet of Things
clients (via DeepVerge);
-- The extension of Microsaic's detection platform in both LC
and GC applications in Human and Environmental Health real-time
monitoring;
-- The expansion of Microsaic's revenues through its partners,
particularly through its collaborations in water detection with
DeepVerge; and
-- Significant OEM partnership deals, and strategic interest in the Company
If 2021 was about turnaround, then 2022 is about significant
business inflection. We have worked tirelessly in 2021, putting in
place the necessary building blocks in and around our technology,
extending our business model to cover services, workflows and
software.
The COVID-19 era has demonstrated the resilience of humans and
ingenuity of our scientists, and the ability for us to respond
quickly with solutions for real-world problems. Real-time detection
is a central facet of advancing this human endeavour. Microsaic is
exceptionally well placed with its capabilities in real-time
detection.
I am absolutely delighted with how Microsaic has emerged
following the COVID-19 pandemic, stronger than how we entered it. I
am very optimistic about our future.
The Strategic Report was approved by the Board of Directors on
27 May 2022 and signed on its behalf by:
Gerard Brandon
Executive Chairman
Notes
(1) 2020 Global Life Sciences Outlook , Deloitte
(2) Report on upstream bioprocessing analytical instrumentation, TDA consultants 2019
(3) SDI Report
(4) Microtox(R) PD has been designed to be retrofitted into
existing Modern Water equipment to detect and identify a range of
infectious viruses and bacteria including SARS-CoV-2, E. coli,
Legionella and Cryptosporidium, on a single chip, using AI, in
real-time
DIRECTORS' REPORT
The Directors present their report for the year ended 31
December 2021.
Principal activity, business review and business risks
The principal activity of the Company continued to be the
commercialisation and development of miniaturised micro-engineering
equipment, originally for mass spectrometry instruments but now to
include integration of AI and Internet of Things analytical sensors
for existing and new clients to generate recurring shared revenues
for monitoring across biologic bio-processing, environmental and
human health and likely to extend to aviation, the food industry
and oil & gas sectors. A review of the business is contained
within the Strategic Report.
Results and dividends
The results for the Company are given in the statement of
comprehensive income. The Company is currently making losses and
has retained losses which have to be recovered before it can pay a
dividend. Therefore, the Directors do not recommend the payment of
a dividend (2020: GBPnil).
Business Development & Sales
Revenues are made through OEM and distribution sales channels
with direct and collaboration partners currently in place, covering
North America, Europe, China, Southeast Asia and Japan.
Research and development ("R&D")
R&D is important for the Company's success and has led to
the filing of over 80 patents to date. During the year, R&D
projects and R&D expenses totalled GBP738,145 (2020:
GBP777,597) or 28.3 per cent. (2020: 28.5 per cent.) of total
operating expenses excluding share-based payments. Current plans
are to invest in commercial development associated projects that
are demanded from new and existing clients to optimise resources
through collaborations and joint ventures.
Directors
Between the 1 January 2021 and 31 December 2021, the following
Directors held office:
Gerard Brandon, Non-executive Chairman (Age 60)(1)
Peter Grant, Non-executive Chairman (Age 65)(2)
Nigel Burton, Non-executive Director (Age 64)(1)
Eric Yeatman, Non-executive Director (Age 58)(2)
Glenn Tracey, Chief Executive Officer (Age 50)(3)
Bevan Metcalf, Finance Director and Company Secretary (Age
64)(4)
(1) Appointed as a Director on 5 February 2021.
(2) Resigned as a Director on 5 February 2021.
(3) Resigned as a Director on 31 March 2022.
(4) Resigned as a Director and Company Secretary on 17 December
2021 (upon his retirement).
On 5 February 2021, Gerard Brandon and Dr Nigel Burton were
appointed to the Board as Non-executive Chairman and Non-executive
Director respectively, replacing Peter Grant and Eric Yeatman who
resigned as part of the reorganisation. Their biographies are
detailed in the Corporate Governance Report.
On 22 October 2021, Bevan Metcalf's retirement was announced,
and he resigned as a Director and Company Secretary on 17 December
2021.
Post year end on 28 January 2022, it was announced that Glenn
Tracey was stepping down to pursue a non-competitive opportunity
and he resigned as a Director on 31 March 2022. Also post year end
on 15 March 2022, Robert Moore was appointed as Independent
Non-executive Director.
Directors' interests
The Directors' interests in the shares of the Company are:
Ordinary shares Ordinary shares Ordinary shares
of 0.01p of 0.01p of 0.25p
at 31 March 2022 at 31 December at 31 December
2021 2020
Number % Number % Number %
---------------- ------------------ ------------ ------------------ ------------ ------------------ ------------
Gerard
Brandon(1) 190,000,000 2.99 140,000,000 2.30 - -
Dr Nigel Burton 300,500,000 4.72 65,500,000 1.08 - -
Robert Moore - - - - - -
---------------- ------------------ ------------ ------------------ ------------ ------------------ ------------
490,500,000 7.71 205,500,000 3.38 - -
---------------- ------------------ ------------ ------------------ ------------ ------------------ ------------
(1) This figure includes 50,000,000 shares by a person closely
associated with Gerard Brandon.
Significant shareholdings
Shareholders, excluding Directors, having a beneficial interest
of 3% or more of the Company's shares:
Ordinary shares of 0.01p
each
at 31 March 2022
Shareholder Number %
-------------------------------------- ------------------- ------
Unicorn Asset Management 750,000,000 11.79
Hargreaves Lansdown Asset Management 711,327,347 11.18
Interactive Investor 520,095,997 8.18
Jarvis Investment Management 495,791,678 7.79
Premier Miton Investors 482,129,838 7.58
ISPartners Investment Solutions 362,125,000 5.69
Halifax Share Dealing 239,526,327 3.77
Barclays Wealth 193,693,535 3.04
Intuitive Investments Group 192,000,000 3.02
Employees
The Board regards the expertise and contributions of its
employees as critical to its future success. Executive management
regularly update employees on the progress of the business. The
Board seeks to remunerate its employees fairly and has adopted a
flexible working hours policy to cater for employee needs. Full and
fair consideration is given to applications for employment received
regardless of age, gender, colour, ethnicity, disability,
nationality, religious beliefs or sexual orientation.
The Board would like to thank all its employees for their
continued contribution.
Company share ownership plans
The Company operates two Employee Share Option Schemes ("ESOS"),
an approved scheme and an unapproved scheme.
The ESOS were formed to enable the incentivisation of employees
to be aligned to the performance of the Company. Under the ESOS the
Company grants employees options to acquire the Company's ordinary
shares subject to:
-- Vesting periods (normally three years for new grants) and an
exercise period of up to ten years from the date of grant;
-- The exercise price is normally the market price of the
ordinary shares at the close of business the day before the date of
grant unless the award is linked to an equity fundraise; and
-- Performance and time-based vesting conditions as appropriate.
Options are granted up to the maximum amount allowed under the
limits of the Enterprise Management Incentive ("EMI") Scheme -
these options are called 'Approved Options'. The EMI Scheme is
subject to the provisions of Schedule 5 of the Income Tax (Earnings
and Pensions) Act 2003 and have tax advantages for the employee and
employer. There is an unapproved scheme, which has no tax
advantages, for those awards which do not qualify under the
Approved Option scheme.
On 4 and 5 February 2021, the Company cancelled all existing
options which were all out-of-the-money. Options held by Peter
Grant, former Chairman (3,500,000), Glenn Tracey, CEO (4,800,000)
and Bevan Metcalf, FD (4,620,000) on 31 December 2020 were
cancelled in February 2021. Options held by staff amounting to
3,690,000, were also cancelled in February 2021.
These cancelled options were replaced with options over 1,125
billion ordinary shares of 0.1p each following the share capital
restructuring and fund raise. This included options and warrants
over 675 million ordinary shares of 0.1p each for the directors. No
options were awarded in 2020. Options awarded to staff and
Directors are detailed in note 25.
Management of risk
The management of operational risk is covered in the Strategic
Report while financial risk is detailed under note 28 Financial
Instruments.
Health and safety and the environment
The Company is committed to providing a safe environment for its
staff and other parties for whom it has a responsibility. It has
set up systems and processes to ensure compliance with health and
safety legislation and the Board reviews an update on health and
safety matters at each main Board meeting.
The Company is also mindful of its corporate responsibilities
concerning the impact of its activities on the environment and
seeks to minimise this impact where practicable.
Quality management system
The Company's mission is to deliver miniaturised
micro-electronic equipment and Internet of Things designed to
analyse data, using AI analytical services, demanded by clients
that include, but are not exclusively related to miniaturised mass
spectrometry instruments that provide innovative compact detection
with high quality and reliability.
The Company's quality policy applies to the development,
marketing and support of our products. In all its activities the
Company is strongly focused on commitment to the requirements of
its customers including:
-- Management of risks to prevent operational and product
problems that may adversely impact customer satisfaction and the
interests of other parties; and
-- Management of any externally provided products and services
to ensure that they meet specified requirements including changing
needs.
To help management achieve its policy, the business management
system has been developed using a process approach including a
Plan-Do-Check cycle, risk-based thinking, and a fundamental
commitment to the continual improvement of the system and its
effectiveness and integration into the Company's activities.
The Company's Quality Management System is based on ISO
9001:2015. This standard puts considerable emphasis on risk
management and management involvement within the quality management
system.
Directors' indemnity and insurance
The Company has granted an indemnity to its Directors and
Officers under which the Company indemnifies them, subject to the
terms of the deed of indemnity, against costs, charges, losses,
damages and liabilities incurred by them in the performance of
their duties. The Company also maintains Directors and Officers
liability insurance against the consequences of actions brought
against them in relation to their duties for the Company.
Related party transactions
The interests of the Directors are shown in the Directors'
Report while their remuneration is detailed in the Directors'
Remuneration Report. Other related party transactions involving the
Directors during the 2021 financial year are included in note
28.
Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and Accounts 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 prepared the Company financial statements in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. 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 Company and the profit or loss of the Company for
that period.
In preparing the financial statements the Directors are required
to:
-- Select suitable accounting policies and then apply them consistently;
-- Make judgements and accounting estimates that are reasonable and prudent; and
-- State whether international accounting standards in
conformity with the requirements of the Companies Act 2006 have
been followed, subject to any material departures disclosed and
explained in the financial statements.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Statement of disclosure to auditors
So far as each Director is aware, there is no relevant audit
information of which the Company's auditors are unaware.
Additionally, the Directors have taken all the steps that they
should have taken to make themselves aware of any relevant audit
information and to establish that the Company's auditors are aware
of that information.
Auditors
Saffery Champness LLP has expressed its willingness to remain in
office as auditors of the Company, and a resolution for its
re-appointment will be proposed at the forthcoming Annual General
Meeting.
Future developments
An indication of likely future developments in the business of
the Company are included in the Strategic Report.
This Directors' Report was approved by the Board of Directors on
27 May 2022 and signed on its behalf:
Gerard Brandon
Executive Chairman
Company number 03568010
DIRECTORS' REMUNERATION COMMITTEE REPORT
For the year ended 31 December 2021
Dear Shareholders
2021, much like 2020, was a challenging year for the Company
because of the many impacts of the COVID-19 pandemic. Directors and
staff took a temporary 20 per cent. reduction in their
remuneration, effective from 1 April 2020 to 31 January 2021, with
full payment restored with effect from 1 February 2021 following
the successful placing in February 2021.
As part of the placing process, Gerard Brandon and Dr Nigel
Burton were appointed to the Board with Peter Grant and Eric
Yeatman stepping down from the Board. Both Mr Brandon and Dr Burton
sit on the Remuneration Committee and Dr Burton chairs the
Committee. Robert Moore joined the Committee on 15 March 2022 at
the time of his appointment to the Board.
This report has been prepared with reference to the Quoted
Companies Alliance guide "Remuneration Committee Guide for Small
and Mid-Size Quoted Companies." The Company has sought to comply
with the overarching principles of the guidance, although not all
recommended disclosures have been included on the basis that they
are not relevant to the current circumstances of the Company.
This report sets out the Company's policy on the remuneration of
Executive and Non-executive Directors, together with details of
Directors' remuneration packages and service contracts.
Remuneration policy
The remuneration policy for Executive Directors, determination
of their individual remuneration packages and their performance
appraisals have been delegated to the Board's Remuneration
Committee.
Remuneration of the Executive Directors
In setting the remuneration for the Executive Directors, the
Remuneration Committee considers several factors including:
-- Basic salaries and benefits available to Executive Directors of comparable companies;
-- Need to pay Executive Directors a competitive salary in line
with the nature and complexity of their work;
-- Need to attract and retain Executive Directors of an appropriate calibre;
-- Need to ensure Executive Directors' commitment to the
continued success of the Company by means of incentive schemes;
and
-- Need for the remuneration awarded to reflect performance.
The remuneration of the Executive Directors consists of basic
salary, share options, life assurance and a contributory personal
pension of 7.5 per cent. of basic salary.
Given the challenging circumstances, a discretionary bonus
scheme based on performance against individual and business
objectives did not operate during the year (2020 bonus: Nil).
As mentioned above the Executive Directors agreed to a temporary
20 per cent. reduction in their salary and benefits from 1 April
2020 to 31 January 2021, with full remuneration reinstated and new
options packages introduced in tandem with the placing.
Remuneration of the Non-executive Chairman and Non-executive
Directors
The Chairman of the Remuneration Committee discusses the
remuneration of the Non-executive Directors with the Executive
Directors. The remuneration is then discussed and agreed by the
Board (excluding Directors with a conflict of interest) following
recommendation by the Remuneration Committee, having a view to
rates paid in comparable organisations. The Non-executive Directors
do not receive any pension, bonus or other Company benefits.
Share options and shares
Options held by Peter Grant, former Chairman (3,500,000), Glenn
Tracey, CEO (4,800,000) and Bevan Metcalf, former Finance Director
(4,620,000) on 31 December 2020, were cancelled in February 2021.
All cancelled options were significantly out-of-the-money and were
cancelled prior to the issue of new options to Glenn Tracey and
Bevan Metcalf. As outlined below, new share options were awarded to
the Executive Directors to fully re-incentivise them and align
their interests with shareholders.
Details of the shares held by Directors are listed in the
Directors' Report.
Implementation of the remuneration policy in 2021
The following long term option and warrant awards were part of
the reorganisation of the Company t o incentivise the new Board
appropriately. These options and warrants will be exercisable at
the placing price of 0.1 pence per ordinary share for 5 years from
5 February 2021, provided that the ordinary shares have traded at a
Volume Weighted Average Price (VWAP) at or above a 50 per cent.
premium to the placing price for 20 consecutive business days, at
any time since their issue, or on a change of control of the
Company. The vesting conditions were met in March 2021 and these
options and warrants became exercisable in full at that point.
Director Number of Number of
Options Warrants
Glenn Tracey 150,000,000
------------ ------------
Bevan Metcalf 75,000,000
------------ ------------
Gerard Brandon 250,000,000
------------ ------------
Dr Nigel Burton 200,000,000
------------ ------------
In line with their service agreements, Gerard Brandon and Dr
Nigel Burton have taken their annual fees of GBP50,000 and
GBP35,000 respectively, for the first two years of their
appointment, in shares at the price of 0.1 pence per share being
the placing price of the equity fundraising completed in February
2021, subject to payment of all necessary employee taxes and
national insurance contributions. Thereafter, fees will be paid in
cash monthly in arrears.
It was agreed by the Committee that the Executive Director's
remuneration would be increased to their March 2020 levels on 1
February 2021.
Directors' notice periods
Details of the Director's notice periods as per their service
contract are as follows:
Contract date Term Notice period
--------------- ---------------- ----------------- --------------
Nigel Burton 5 February Three years(1) 3 months
2021
Gerard Brandon 5 February Three years(1) 3 months
2021
Robert Moore 15 March 2022 Twelve months(2) 3 months
--------------- ---------------- ----------------- --------------
(1) Notice cannot be given by the Directors during the first two
years of their appointment except to the end of the period to which
their fees have been paid in advance.
(2) The initial term is the earlier of 12 months or the first
AGM. Subject to re-elections at AGM the appointment is anticipated
to last at least 3 years.
Directors' emoluments
Directors' remuneration in 2021 is detailed below. Non-cash
payments represent life assurance premiums.
Year Year
Share- to 31 to 31
Salaries Non-cash Pension based December December
& fees payments contributions payments 2021 2020
GBP GBP GBP GBP GBP GBP
------------------- --------- ------------------ -------------------- ---------- ---------- ----------
Gerard Brandon(1) - - - 420,129 420,129 -
Nigel Burton(1) - - - 331,599 331,599 -
Glenn Tracey(3) 131,570 575 9,292 182,255 323,692 135,168
Bevan Metcalf(4) 115,777 1,427 18,033 80,245 215,482 131,634
Peter Grant(2) 15,000 - - (54,983) (39,983) 64,201
Eric Yeatman(2) 2,450 - - 112,528 114,978 23,800
Other(5) - - - - - 12,699
TOTAL 264,797 2,002 27,325 1,071,773 1,365,897 367,322
------------------- --------- ------------------ -------------------- ---------- ---------- ----------
(1) Appointed as a Director on 5 February 2021.
(2) Resigned as a Director on 5 February 2021.
(3) Resigned as a Director on 31 March 2022.
(4) Resigned as a Director and Company Secretary on 17 December
2021.
(5) Relates to a director who resigned in 2020.
The share-based payments charge in the year relates to options
awarded in February 2021 to Messrs Brandon, Burton, Tracey, Metcalf
and Yeatman less credits for cancellation of all previous options
of all directors (including Mr Grant).
The 750 million options and warrants (replacing all previous
options) granted to Directors vested during the year as the
performance criterion that the Company's ordinary shares traded at
a Volume Weighted Average Price at or above a 50 per cent. premium
to the placing price for 20 consecutive business days, was
achieved.
Directors' share options
Share options and warrants over the Company's ordinary shares
held by the Directors at the year-end were as follows:
At 31 At 31 At 31
December December December Exercise period
2020 2021 2021 Performance Exercise
Conditions price
0.25p 0.01p Vested Pence
ordinary ordinary
shares shares
Number Number
---------- ---------- ------------ ------------ -------------- ----------- -----------------------
17 April 2015 - 17
Glenn April 2025. Cancelled
Tracey 100,000 - - Yes 47.75p February 2021.
13 January 2016 -
13 January 2026.
Cancelled February
200,000 - - No 23.5p 2021.
14 September 2016
- 14 September 2026.
Cancelled February
1,000,000 - - Yes 5p 2021.
12 June 2019 - 12
June 2029.
Cancelled February
2,500,000 Yes 1.55p 2021.
5 February 2021 -
- 150,000,000 150,000,000 Yes 0.1p 4 February 2026.
Gerard 5 February 2021 -
Brandon - 250,000,000 250,000,000 Yes 0.1p 4 February 2026.
Nigel 5 February 2021 -
Burton - 200,000,000 200,000,000 Yes 0.1p 4 February 2026.
4,800,000 600,000,000 600,000,000
---------- ------------ ------------
The Company's share price started the year at 0.20 pence and
ended the year at 0.15 pence, with a close high and low over the
year of 0.39 pence and 0.14 pence respectively (with an intra-day
high and low over the year of 0.44 pence and 0.13 pence
respectively).
The share-based payment charge in relation to the share option
grants to Directors and lapsed options during the year was
GBP995,214 (2020: GBP51,753).
The Directors' Remuneration Report was approved by the Board of
Directors on 27 May 2022 and signed on its behalf by:
Dr Nigel Burton
Chairman of the Remuneration Committee
DIRECTORS' FINANCE & AUDIT COMMITTEE REPORT
For the year ended 31 December 2021
Introduction
This report details how the Finance & Audit Committee ("the
Committee") has met its responsibilities under its terms of
reference. The Committee is a sub-committee of the Board. As
Non-executive Directors, the members of the Committee are, together
with the Board as a whole, responsible for the integrity and
probity of the Company. The work of the Committee is aimed at
supporting the creation of long-term value for shareholders.
The Committee continues to act as an oversight sub-committee of
the Board, considering and challenging but not itself performing
the relevant processes. The ultimate responsibility for reviewing
and approving the Annual Report and Accounts and interim financial
statements remains with the Board.
The Committee does not believe there is a requirement for an
internal audit function due to the Company's size and level of
complexity.
Role and Responsibilities
The Board has established a Finance & Audit Committee to
monitor the integrity of the Company's nancial statements and the e
ectiveness of the Company's internal nancial controls. The
Committee's role and responsibilities are set out in the terms of
reference which are available from the Company's website. The terms
of reference are reviewed regularly and amended where appropriate.
During the year, the Committee worked with management and the
external auditors in ful lling these responsibilities.
The Committee report deals with the key areas in which it plays
an active role and has responsibility. These areas are as
follows:
i. Financial reporting and related primary areas of judgement;
ii. The external audit process;
iii. Risk management and internal controls; and
iv. Whistleblowing procedures.
The members of the Finance & Audit Committee are Dr Nigel
Burton and Gerard Brandon with Robert Moore joining on 15 March
2022 at the time of his appointment to the Board. Dr Burton became
Chairman of the Committee, following the resignation of Peter Grant
and has appropriate relevant nancial experience. The Board
considers that the Committee has an appropriate and experienced
blend of commercial, nancial and industry expertise to enable it to
ful l its duties.
Financial Reporting and External Audit Process
The Chairman of the Committee participated in the Audit Planning
meeting held in December 2021 with the external auditors to plan
the financial audit, discussed potential key audit matter(s) and
along with the Committee reviewed the Audit Strategy Document.
The Board as a whole, reviewed the going concern paper prepared
by management including detailed financial forecasts for the period
2022 to 2023, related assumptions, risks and opportunities,
sensitivities, and areas for mitigation. The outcome of the Board's
discussions on going concern is explained in more detail in note 3
.
The Committee has satis ed itself that the 2021 Annual Report
and Accounts have been prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006, are fair, balanced and provide the information
necessary for shareholders to assess the Company's performance,
business model and strategy.
Risk Management and Internal Controls
The Board considered as part of its review of risks those risks
detailed in the Strategic Report including mitigating actions.
Following the successful fundraise in February 2021 the Company
continues to be a going concern. The key risk still facing the
Company is the ongoing impact of the COVID-19 pandemic on the
results of the business.
Another key responsibility of the Committee is to review the
Company's internal control systems, including internal nancial
controls. The Finance Director reviewed and updated the Company's
Financial Procedures Manual to ensure it was in line with current
practice. There were no reported instances of fraud during the
year.
The Company's auditors are encouraged to raise comments on
internal control in their management letter following the annual
audit. The points raised and actions arising are monitored through
to completion by the Finance & Audit Committee.
Whistleblowing
The Committee had no whistleblowing incidents reported during
2021. Dr Nigel Burton has been appointed Primary Designated Officer
during the year and Gerard Brandon as Alternative Designated
Officer.
Committee Meetings
The Committee met twice in the year. Both meetings related to
the Annual Report and Accounts which the external auditors
attended.
Auditors Fees and Non-Audit Services
The Committee reviewed and agreed to the proposed audit fee of
GBP22,150 (2020: GBP20,750). Fees for other audit related services
during the year amounted to GBP1,575 (2020: GBP2,070). These fees
included the review of 2021 interims and the provision of
information around accounting standards.
Auditor Independence
The Committee satisfied itself on the auditors' independence. Mr
Roger Weston is undertaking his fourth audit of the Company, in the
capacity of partner in charge and no non-audit services have been
provided in the current financial year.
The Report of the Finance & Audit Committee was approved by
the Board of Directors on 27 May 2022 and signed on its behalf
by:
Dr Nigel Burton
Chairman of the Finance & Audit Committee
CORPORATE GOVERNANCE REPORT
For the year ended 31 December 2021
Restructuring of the Company
On 4 February 2021, shareholders passed resolutions at a General
Meeting appointing Gerard Brandon and Dr Nigel Burton to the Board
of the Company as Non-executive Chairman and Non-executive Director
respectively, with effect from 5 February 2021. Their biographies
are detailed under Principle 6 in this Report.
The Finance & Audit and Remuneration Committees are chaired
by Dr Nigel Burton, and Gerard Brandon and Robert Moore are members
of both committees. Dr Nigel Burton will assume the
responsibilities of Senior Non-executive Director.
As anticipated in the Circular published on 19 January 2021,
Peter Grant, Non-executive Chairman and Eric Yeatman, Non-executive
Director, stepped down from the Board with effect from 5 February
2021.
Chairman's Corporate Governance Statement
The full corporate governance statement is published and
maintained up to date on the Company's website at
(http://www.microsaic.com/investors/governance-new). This extract
from that statement is included in the Annual Report & Accounts
as required by the Quoted Companies Alliance's ("QCA") Corporate
Governance Code for small and mid-size quoted companies (the
"Code").
The Board is committed to maintaining high standards of
corporate governance and, with effect from 26 September 2018, the
Board adopted the Code.
The Code sets out ten broad principles of corporate governance.
It states what are considered to be appropriate corporate
governance arrangements for growing companies and requires
companies to provide an explanation about how they are meeting the
principles through certain prescribed disclosures.
The Chairman leads the Board and is responsible for its overall
effectiveness in directing the Company. He manages the Board agenda
and ensures that all Directors receive accurate, timely and clear
information and effectively contribute their various talents and
experience in the development and implementation of the Company's
strategy. He ensures that the nature and extent of the significant
risks which the Company is willing to embrace in the implementation
of its strategy are challenged and determined by the Board. The
Chairman is responsible for ensuring that the Board implements,
maintains and communicates effective corporate governance processes
and for promoting a culture of openness and debate designed to
foster a positive governance culture throughout the Company.
The Board has considered how each principle is applied and
provides below an explanation of the approach taken in relation to
each principle and how they support the Company's medium to
long-term success.
The Board agenda is regularly reviewed to ensure that all
matters which the Board should consider are addressed. This allows
for presentations from the Management Team so that the Board
benefits from their input.
The Company includes a Remuneration Committee Report and a
Finance & Audit Committee Report in its Annual Report and
Accounts.
The evaluation of the Board's effectiveness due to have been
carried out in January 2021 was postponed until January 2022
considering the restructuring of the Board carried out in February
2021. Although the process was started in early 2022, it was agreed
that it was appropriate to suspend the process until the Board is
further strengthened with the expected appointment of an additional
Non-executive Director and both a new CEO and a new Finance
Director.
Save in respect of Principle 5 in consideration of the
independence of the Non-executive Directors, which is considered in
more detail below, the Board considers that it does not depart from
any of the principles of the Code.
PRINCIPLES TO DELIVER GROWTH
PRINCIPLE 1: Establish a strategy and business model which
promote long-term value for shareholders.
Strategy:
Microsaic's strategic aim is to capitalise on its strengths in
point of need MS detection, and access high-growth and emerging
Life Science and Environmental applications, as well as niches in
traditional small molecule markets. The Company intends to achieve
its strategy with a business model built on customer focus,
collaborations, and technology innovation.
Business Model:
The Company's business model is described in the Strategic
Report.
Challenges:
Staying relevant to future customer needs
Customer needs evolve rapidly. Future product specifications are
driven by end-user requirements. This will inform Microsaic's
product strategy as its MS detectors move from the customer's
laboratory into production, and front-line operating environments.
Microsaic will ensure that its strategic product development will
remain focused on meeting demanding biopharmaceutical
applications.
Remaining innovative in an advancing technological landscape
Microsaic has successfully developed and implemented advanced
technology at the core of its design with over 80 patents to date.
This has led to a solid foundation serving scientists in the
laboratory in small molecule drug discovery, and increasingly in
support of its endeavours in life and environmental science
markets.
The Company continues to invest in product development projects,
which the Board believes will be attractive to the growing market
for laboratory-based applications with larger biological molecules,
such as peptides and small proteins.
The Company has extended its product capabilities further into
Life Science applications, such as bioprocessing, potentially
significantly reducing the cost of analysis and the cost of poor
quality.
PRINCIPLE 2: Seek to understand and meet shareholder needs and
expectations. See the website for further disclosures concerning
how the Company seeks to engage with shareholders and how
successful this has been.
PRINCIPLE 3 : Consider wider stakeholder and social
responsibilities and their implications for long-term success. See
the website for further disclosures.
PRINCIPLE 4 : Embed effective risk management, considering both
opportunities and threats, throughout the organisation.
The Board aims to ensure that the Company's risk management
framework identifies and addresses all relevant risks in order to
execute and deliver the strategy.
The Directors recognise their responsibility for the Company's
systems of internal control and have established systems to ensure
that an appropriate and reasonable level of oversight and control
is provided. The Company's systems of internal controls are
designed to help the Company meet its business objectives by
appropriately managing and wherever possible mitigating risks faced
by the Company. The controls can only provide reasonable, not
absolute, assurance against material misstatement or loss.
The Company's Management Team, which reports into the Executive,
meets regularly to review commercial, technical, operational, and
financial risks facing the business. These risks are assessed
according to their nature and magnitude based on the seriousness of
the risk and the likelihood of the risk occurring. The
effectiveness of the controls implemented to minimise the risks are
also reviewed. The aim of these reviews is to provide reasonable
assurance that material risks are identified, and appropriate
action is taken at an early stage. From this review the Company
maintains its internal risk register which is reviewed annually by
the Board.
The annual budget is reviewed and approved by the Board.
Financial results, with comparisons to budget, and latest forecasts
are reported monthly to the Board together with a report on
operational achievements, objectives and issues encountered.
Significant variances from plan are discussed at Board meetings and
actions set in place to address them.
Measures continue to be taken to review and improve internal
controls and risk management procedures. The Company has a
Financial Procedures Manual which includes approval levels for
authorisation of expenditure, potential fraud scenarios, payment
approval process, expenses guidelines etc. This is updated as
necessary.
The Company's auditors are encouraged to raise comments on
internal control in their management letter following the annual
audit. The points raised and actions arising are monitored through
to completion by the Finance & Audit Committee.
PRINCIPLES TO MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
PRINCIPLE 5: Maintain the Board as a well-functioning, balanced
team led by the Chairman.
The Board currently consists of one Executive Chairman, and two
Non-executive Directors. Bevan Metcalf, the previous Financial
Director retired on 17 December 2021. To help with a smooth
transition, the Company has appointed Mr Anthony Clayden, as
Interim Head of Finance (non-board level), until a permanent
successor is appointed. Glenn Tracey, CEO, resigned on 31 March
2022 and the Chairman has stepped into an executive role
temporarily until a suitable replacement is appointed. A formal
search process to identify an additional independent Non-executive
Director is well advanced.
The Company held 19 Board meetings during 2021. (In 2020 the
Company faced several challenges including the COVID-19 pandemic,
and ensuring that the Company remained a going concern, holding 39
meetings during the year.)
The Company has an equal opportunity policy to recruitment at
Board level and within the Company at large and seeks diversity as
opportunities arise, within the framework of selecting the most
suitable person, based on relevant skills, abilities, experience
and location, as required for the role.
The principal role of the Chairman of the Board is to manage and
provide leadership to the Board of Directors of the Company. The
Chairman is accountable to the Board and acts as a direct liaison
between the Board and the management of the Company, ordinarily
through the Chief Executive Officer. The Chairman acts as the
communicator for Board decisions where appropriate.
Given the Chairman's current capacity as an Executive Chairman
until the CEO successor is appointed, the other NEDs including the
recently appointed independent NED provide the appropriate level of
challenge to both the Chairman and management. The Chairman has
elevated the role of the senior management team within the Company
who now report to him and together developed the new services
strategy in consultation with and being rolled out by this
team.
The Chairman is responsible for the effective leadership,
operation and governance of the Board and its Committees. He
ensures that all Directors contribute effectively to the
development and implementation of the Company's strategy, while
ensuring that the nature and extent of the significant risks the
Company is willing to embrace in the implementation of its strategy
are determined and challenged.
The Chief Executive Officer is responsible for the management of
the Company, providing executive leadership and for implementing
the Company's strategy.
The Board believes that the advice, behaviour and character of
its Chairman and Non-executive Director are always in the best
interests of the Company and its shareholders. In addition, the
skills and business judgement which they possess and regularly
exercise contributes to the efficient and effective running of the
Company.
The Company appreciates that circumstances which might or might
appear to affect a Director's judgement may well include financial
dependence on the Company and whether the Director is, or
represents, a major shareholder. The Chairman and Non-executive
Director are financially independent of the Company as they have
other sources of income. Mr Brandon and Dr Burton do not represent
significant shareholders; however, they do have a material interest
in share warrants of the Company as detailed below. They are also
Directors of DeepVerge plc which, although not a shareholder of the
Company, is strategically important to the future success of
Microsaic. Under the QCA Guidelines the independence of the
Chairman and Non-executive Director could be challenged under the
following areas, but in all cases the Board believes that the
Chairman and Non-executive Director always act in an independent
manner and where a conflict of interest could arise or be perceived
to arise, they abstain from voting :
Name and position Potential issue Comments
Gerard Brandon Holds a material This award was required to attract
Chairman interest of 250 a Chairman of the appropriate
million share warrants calibre to the Company. The
in the Company. award was passed by shareholders
at a General Meeting. The performance
condition, prior to vesting,
was based on the Company's shares
trading at a VWAP at or above
a 50 per cent. premium to the
Director of DeepVerge placing price for 20 consecutive
plc business days at any time since
their issue.
Temporary Executive
Director capacity DeepVerge plc is strategically
important to the future success
of the Company.
Involving the elevated senior
management to develop and implement
strategy and consulting with
the Non-executive Directors
who have oversight during this
period.
========================= ========================================
Name and position Potential issue Comments
Dr Nigel Burton Held a material This was required to attract
Non-executive interest of 200 a Non-executive Director of
Director million share warrants the appropriate calibre to the
in the Company. Company. The award was passed
These were exercised by shareholders at a General
on 13 February Meeting. The performance condition,
2022 prior to vesting, was based
on the Company's shares trading
at a VWAP at or above a 50 per
cent. premium to the placing
price for 20 consecutive business
Director of DeepVerge days at any time since their
plc issue.
DeepVerge plc is strategically
important to the future success
of the Company.
========================= ======================================
The Board recognises the importance of good governance
arrangements. Currently, the Board does not include two independent
Non-executive Directors. A process is underway to appoint a second
independent Non-executive Director with relevant experience.
The Board has an established Finance & Audit Committee and
Remuneration Committee. The Company believes it is currently too
small to have a separate Nominations Committee, so this role is
taken on by the Board of Directors as a whole.
Details and links to the terms of reference of the Finance &
Audit Committee and Remuneration Committee are set out under
Principle 9 on the website.
Details of Directors and their time commitment are set out under
Principle 6 below. The attendance of the Directors at the regular
Board and Committee Meetings during the year ended 31 December 2021
were as follows.
Name Position Regular Finance Remuneration
Board Meetings & Audit Committee
Committee
Peter Grant(1) Non-executive Chairman 5 (5) - -
========================= ================= ============ ==============
Gerard Brandon(2) Non-executive Chairman 11 (13) 2(2) 1(1)
========================= ================= ============ ==============
Glenn Tracey Chief Executive 19 (19) n/a n/a
Officer
========================= ================= ============ ==============
Bevan Metcalf(3) Finance Director 19 (19) n/a n/a
========================= ================= ============ ==============
Eric Yeatman(1) Non-executive Director 5 (5) - -
========================= ================= ============ ==============
Nigel Burton(2) Non-executive Director 11 (13) 2(2) 1(1)
========================= ================= ============ ==============
(1) Peter Grant and Eric Yeatman resigned as Directors on 5
February 2021.
(2) Gerard Brandon and Nigel Burton were appointed Directors on
5 February 2021.
(3) Bevan Metcalf resigned as a Director upon his retirement on
17 December 2021
Numbers in brackets denote the total number of meetings that
each Director was eligible to attend during the year.
PRINCIPLE 6: Ensure that between them the Directors have the
necessary up-to-date experience, skills and capabilities.
Biographical details of the Board of Directors, their skills,
suitability and availability are set out below.
Gerard Brandon, Executive Chairman
Term of office: Appointed a Director on 5 February 2021. Gerard
is also a member of the Finance & Audit Committee and the
Remuneration Committee.
Background and suitability for the role: Gerard Brandon is Chief
Executive Officer of both DeepVerge plc and Cellulac plc. In 1996
he became founder and CEO of Alltracel Pharmaceuticals plc
("Alltracel"), where he built a team which oversaw numerous patents
granted on refined cellulose. Alltracel was admitted to trading on
AIM in 2001. In 2004, he was appointed as a Managing Partner for
Farmabrand Private Equity. In March 2020, he was appointed as a
Non-executive Chairman to Modern Water plc, which was subsequently
acquired by DeepVerge plc (formerly Integumen plc) in November
2020. Gerard is a Fellow of the Ryan Academy of Entrepreneurs in
Dublin.
Dr Nigel Burton, Non-executive Director
Term of office: Appointed a Director on 5 February 2021 at a
General Meeting of the Company. Dr Burton is also Chairman of the
Finance & Audit Committee and the Remuneration Committee.
Background and suitability for the role: Nigel spent over 14
years as an investment banker at leading City institutions
including UBS Warburg and Deutsche Bank, including as the Managing
Director responsible for the energy and utilities industries. Nigel
also spent 15 years as Chief Financial Officer or Chief Executive
Officer of a number of private and public companies.
Mr Robert Moore, Non-executive Director
Term of office: Appointed a Director on 15 March 2022 by the
Board of directors of the Company. Mr Moore is also a member of the
Finance & Audit Committee and the Remuneration Committee.
Background and suitability for the role: Robert is a UK
qualified lawyer and brings over 35 years' commercial and legal
experience to the Board. Robert has acted as Head of International
Legal Affairs at Enterprise Oil plc (a UK FTSE 100 company prior to
its acquisition by Shell in 2002) and as co-founder and Commercial
Director of Granby Oil & Gas plc, which was listed on AIM from
2005 until its sale in 2008. Robert subsequently co-founded, and is
Managing Director of, private oil and gas exploration company
Ardent Oil Ltd (operating in the UK, Denmark and Luxembourg).
Robert also acts as Non-executive Chairman of Mobile Streams plc,
an AIM listed company, having been appointed to the role in July
2021.
The Company uses external advisers.
The Board has retained the services of the following
advisers:
-- Singer Capital Markets as Nominated Adviser and Joint Broker;
-- Turner Pope Investments as Joint Broker;
-- Saffery Champness LLP for annual audit;
-- Dorsey and Whitney Europe LLP as solicitors for the Company;
-- Neville Registrars Ltd as the Company's registrar; and
-- Menzies LLP for ongoing advice on, Corporation tax, VAT and PAYE.
PRINCIPLE 7: Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement.
Board Evaluation Process
The Board believes that, in addition to dealing with any matters
as they arise, it is appropriate to carry out a formal evaluation
of the performance of the Board each year. This is intended to
ensure that the Board remains effective, well-informed and able to
make high quality and timely decisions for the benefit of all
stakeholders in the Company.
The usual evaluation involves each Director completing an
evaluation questionnaire which covers effectiveness from multiple
angles including: Board structure and committees; Board
arrangements, frequency and time; content of Board meetings; Board
culture; Board evaluation and succession; and individual
contributions. The completed questionnaires are anonymised and
collated independently into a summary, and comments and any areas
of concern are highlighted for discussion with the Board.
The last evaluation was carried out in January 2020. This
process has been suspended during the current period and in the
absence of a replacement CEO and Finance Director and will be
resumed following their appointment.
The evaluation of the Board's effectiveness due to have been
carried out in January 2021 was postponed until January 2022 in
light of the restructuring of the Board carried out in February
2021. Although the process was started in early 2022, it was agreed
that it was appropriate to suspend the process until the Board is
further strengthened with the expected appointment of an additional
Non-executive Director and both a new CEO and a new Finance
Director.
Succession Planning
As is common with many small AIM quoted companies, the Company
does not have internal candidates to succeed the existing Executive
Directors. This will be kept under review, especially when
recruiting for senior roles as vacancies arise. However, the Board
does not believe it is appropriate to recruit additional Directors
or senior personnel solely for the purpose of Board succession
planning.
Training of Directors
It is recognised that there continues to be more regulation of
which Directors need to be aware. The Board will continue to ensure
that Directors receive appropriate support to keep up to date.
PRINCIPLE 8: Promote a culture that is based on ethical values
and behaviours.
The Company is committed to achieving the highest possible
ethical standards in conducting its business. The Company expects
all employees and Directors to maintain the same high standards. To
achieve these ends, Microsaic encourages freedom of expression and
speech whilst not accepting prejudice of any kind.
Ethics is based on a set of principles and clear moral and
ethical values. The Company takes its principles and values very
seriously and expects staff at all levels to look to these
principles and values for guidance.
Principles:
The Board has adopted the following four principles:
1. Management must lead by example. Good ethics should be most
noticeable at the top. Every employee must be accountable to the
same rules.
2. Corporate values must be implemented throughout the Company.
Every forum and medium should be used to spread the message and,
most of all, the Company must practice what it preaches.
3. Meetings with staff (both one on one and group) to discuss
the values and what they mean to each employee must be undertaken
when implementing a value system. This will help to get everyone in
the Company on the same page and committed.
4. The values of the Company must endure changes in leadership.
The longer ethical values last, the more ingrained they will
become.
Values
The Company conducts its business around seven core values:
1. Integrity - applying high ethical standards and being honest.
The Company will conduct its business with honesty to all
stakeholders and will uphold high moral principles.
2. Mutual respect, empathy and trust in dealing with others . An
environment of mutual respect, empathy and trust is necessary to
promote integrity. Trust in the workplace is critical to
organisational success.
3. Innovation - a passion to experiment and deliver new
solutions . A focus on research and development is very important
to the future success of the Company. The Company is continually
looking to deliver innovative solutions and has a collaborative
approach to meeting customer needs.
4. Teamwork - drives high performance. Microsaic relies heavily
on teamwork. A team approach is more efficient, faster, benefits
from multi-skills especially in problem solving, increases learning
opportunities and encourages a sense of belonging, which often
translates to a greater sense of ownership and accountability for
the work.
5. Quality - we take pride in everything we do . The Company is
strongly focused on quality from the products it produces to the
processes it operates. The Company is ISO 9001:2015 compliant.
6. Customer focus - go the extra mile for our customers. The
Company assigns the highest priority to customer satisfaction. We
listen to our customers and create solutions for unmet customer
needs.
7. Shareholder value - striving to deliver value to shareholders
. The key objective of the Company is achieving sustainable
profitability. Every employee understands how they fit into the
profitability picture. Everyone's common goal is to build a strong,
profitable Company that will endure and provide a reasonable return
to shareholders.
PRINCIPLE 9: Maintain governance structures and processes that
are fit for purpose and support good decision-making by the
Board.
See the website for further disclosures at
https://www.microsaic.com/investors/governance-new/
PRINCIPLE 10: Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders and other
relevant stakeholders.
The following committee reports are included in these Annual
Report & Accounts. They include details of the work of those
committees:
-- The Directors' Remuneration Committee Report; and
-- The Directors' Finance & Audit Committee Report.
The Corporate Governance Report was approved by the Board of
Directors on 27 May 2022 and signed on its behalf by:
Gerard Brandon
Executive Chairman
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF MICROSAIC SYSTEMS
PLC
For the year ended 31 December 2021
Opinion
We have audited the financial statements of Microsaic Systems
plc for the year ended 31 December 2021 which comprise Statement of
Comprehensive Income, the Statement of Financial Position, the
Statement of Changes in Equity, the Statement of Cash Flows and
notes to the financial statements, including significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted international
accounting standards.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 December 2021 and its loss for the year then
ended;
-- have been properly prepared in accordance with UK-adopted
international accounting standards; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for 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 Company
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, 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.
Our approach to the audit
We tailored the scope of our audit to ensure that we obtained
sufficient evidence to support our opinion on the financial
statements as a whole, taking into account the structure of the
Company, the accounting processes and controls, and the industry in
which it operates.
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at areas where the Directors
made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, 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) we identified, including 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.
Key Audit Matter How our scope addressed this
matter
Going concern Our audit procedures included
The going concern assumption the following:
is a fundamental principle in * reviewing projected cashflows and other available
the preparation of financial evidence to assess the ability of the Company to
statements. continue in operation for at least 12 months from the
Given the historic operating date of signing this report;
losses and the inherent uncertainty
of sale forecasts, it was concluded
at the planning stage that there * reconciled projections to the audited financial
was a risk of material uncertainty statements, management accounts and bank statements;
in the going concern assessment.
As such, significant audit time
was devoted to testing of the * performed a sensitivity analysis on key assumptions
going concern assessment, and underlying the directors' going concern assessment,
the going concern assumption including the forecast revenue streams and levels of
is considered to be a key audit sales, gross margin achieved and cost base required
matter. to service sales;
* considered the impact of the agreements signed with
DeepVerge plc both in the year and post year end on
potential cashflows and operations.
Additional procedures considered
are set out below in the section
Conclusions relating to going
concern
Based on our procedures, we
concluded that there is no material
uncertainty in relation to going
concern and that the continued
adoption of the going concern
basis of accounting in these
financial statements remains
appropriate.
-------------------------------------------------------------
Our application of materiality
The scope of our audit was influenced by our application of
materiality. An audit is designed to obtain reasonable assurance
whether the financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They
are considered material if individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain
quantitative thresholds for materiality, as set out below. These,
together with qualitative considerations, helped us to determine
the scope of our audit and the nature, timing and extent of our
audit procedures and to evaluate the effect of misstatements, if
any, both individually and in aggregate on the financial statements
as a whole.
We have applied a materiality of GBP50,000 (2020: GBP50,000).
This is based on 2% of operating expenditure for the year ended 31
December 2021. Performance materiality was set at 80% of
materiality.
Our triviality level was set at GBP2,500 which is 5% of planning
materiality, and any uncorrected audit differences below this level
were not reported to management, unless warranted under qualitative
grounds.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the Company's ability to
continue to adopt the going concern basis of accounting
included:
-- obtaining, critically appraising and assessing for
arithmetical accuracy the directors' formal going concern
assessment;
-- reviewing projected cashflows and other available evidence,
including bank statements and the Company's framework agreement and
scheme of works with Deepverge plc, to assess the ability of the
Company to continue in operation for at least 12 months from the
date of signing this report;
-- performing a sensitivity analysis on key assumptions
underlying the directors' going concern assessment;
-- discussion of events after the reporting date with the
directors to assess their impact on the going concern assumption,
including comparison of the post year end cash balances and
financial performance to forecast positions.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. 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.
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 course of 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 this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the 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
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the Strategic Report or
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, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the 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
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors' Responsibilities
Statement, 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 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 as a whole 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 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 on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The specific
procedures for this engagement and the extent to which these are
capable of detecting irregularities, including fraud are detailed
below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the Company's financial
statements to material misstatement and how fraud might occur,
including through discussions with the directors, discussions
within our audit team planning meeting, updating our record of
internal controls and ensuring these controls operated as intended.
We evaluated possible incentives and opportunities for fraudulent
manipulation of the financial statements. We identified laws and
regulations that are of significance in the context of the Company
by discussions with directors and updating our understanding of the
sector in which the Company operates.
Laws and regulations of direct significance in the context of
the Company include The Companies Act 2006, the AIM Rules for
Companies and UK Tax legislation, particularly with reference to
Research Development Expenditure Credits.
Audit response to risks identified:
We considered the extent of compliance with these laws and
regulations as part of our audit procedures on the related
financial statement items including a review of financial statement
disclosures. We reviewed the company's records of breaches of laws
and regulations, minutes of meetings and correspondence with
relevant authorities to identify potential material misstatements
arising. We discussed the company's policies and procedures for
compliance with laws and regulations with members of management
responsible for compliance.
During the planning meeting with the audit team, the engagement
partner drew attention to the key areas which might involve
non-compliance with laws and regulations or fraud. We enquired of
management whether they were aware of any instances of
non-compliance with laws and regulations or knowledge of any
actual, suspected or alleged fraud. We addressed the risk of fraud
through management override of controls by testing the
appropriateness of journal entries and identifying any significant
transactions that were unusual or outside the normal course of
business. We assessed whether judgements made in making accounting
estimates gave rise to a possible indication of management bias. At
the completion stage of the audit, the engagement partner's review
included ensuring that the team had approached their work with
appropriate professional scepticism and thus the capacity to
identify non-compliance with laws and regulations and fraud.
There are inherent limitations in the audit procedures described
above and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely we would become aware of it.
Also, the risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from
error, as fraud may involve deliberate concealment by, for example,
forgery or intentional misrepresentations, or through
collusion.
A further description of our responsibilities is available on
the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities . This description forms
part of our auditor's report.
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.
.........................................
Roger Weston (Senior Statutory Auditor)
for and on behalf of Saffery Champness LLP
Chartered Accountants
Statutory Auditors
71 Queen Victoria Street
London
EC4V 4BE
27 May 2022
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
Year to 31 Year to 31
Notes December December
2021 2020
GBP GBP
-------------------------------------------- -------- ------------ ------------
Revenue 5 906,876 198,258
Cost of sales (510,892) (98,348)
-------------------------------------------- -------- ------------ ------------
Gross profit 395,984 99,910
Other operating income 6 67,283 96,626
Research and development expenses (738,145) (777,597)
Professional fees - Corporate transactions (65,789) (149,364)
Other operating expenses (1,693,568) (1,801,321)
Total operating expenses 7 (2,497,502) (2,728,282)
-------------------------------------------- -------- ------------ ------------
Loss from operations before share-based
payments (2,034,235) (2,531,746)
Share-based payments 25 (1,363,764) (52,241)
-------------------------------------------- -------- ------------ ------------
Loss from operations after share-based
payments 7 (3,397,999) (2,583,987)
Financial cost 8 (4,604) (10,775)
Finance income 8 6,237 4,393
-------------------------------------------- -------- ------------ ------------
Loss before tax (3,396,366) (2,590,369)
Tax on loss on ordinary activities 9 267,785 217,711
-------------------------------------------- -------- ------------ ------------
Total comprehensive loss for the
year (3,128,581) (2,372,658)
-------------------------------------------- -------- ------------ ------------
Loss per share attributable to
the equity holders of the Company
Basic and diluted loss per ordinary
share (pence) 10 (0.056)p (0.52)p
-------------------------------------------- -------- ------------ ------------
The notes form part of these financial statements.
STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
31 December 31 December
Notes 2021 2020
GBP GBP
------------------------------- -------- ------------- -------------
ASSETS
Non-current assets
Intangible assets 11 74,405 83,763
Property, plant and equipment 12 305,687 114,145
Right of use assets 13 126,533 49,404
Total non-current assets 506,625 247,312
------------------------------- -------- ------------- -------------
Current assets
Inventories 14 283,902 569,589
Trade and other receivables 15 631,948 173,871
Corporation tax receivable 9 267,785 218,568
Cash and cash equivalents 3,464,876 397,069
Total current assets 4,648,511 1,359,097
------------------------------- -------- ------------- -------------
TOTAL ASSETS 5,155,136 1,606,409
------------------------------- -------- ------------- -------------
EQUITY AND LIABILITIES
Equity
Share capital 19 1,702,913 1,140,913
Share premium 21 28,006,018 24,867,886
Share-based payment reserve 2,888,707 324,264
Retained losses (28,024,418) (25,090,083)
Total equity 4,573,220 1,242,980
------------------------------- -------- ------------- -------------
Current liabilities
Trade and other payables 16 354,611 185,927
Lease liability 13 71,187 52,370
------------------------------- -------- ------------- -------------
Total current liabilities 425,798 238,297
------------------------------- -------- ------------- -------------
Non-current liabilities
Provisions 17 99,960 124,035
Lease liability 13 56,158 1,097
------------------------------- -------- ------------- -------------
Total non-current liabilities 156,118 125,132
------------------------------- -------- ------------- -------------
Total liabilities 581,916 363,429
------------------------------- -------- ------------- -------------
TOTAL EQUITY AND LIABILITIES 5,155,136 1,606,409
------------------------------- -------- ------------- -------------
The financial statements were approved for issue by the Board of
Directors on 27 May 2022 and signed on its behalf by:
Gerard Brandon
Executive Chairman
Company number 03568010
The notes form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Share
-based Total
Share Share payment Retained
Notes capital premium reserve Losses equity
GBP GBP GBP GBP GBP
---------------------------- ------ ---------- ------------ ---------- ------------- ------------
At 1 January
2020 1,140,913 24,867,886 412,539 (22,857,941) 3,563,397
---------------------------- ------ ---------- ------------ ---------- ------------- ------------
Total comprehensive
loss for the year - - - (2,372,658) (2,372,658)
Transaction with
owners:
Shares issued - - - - -
Share issue costs - - - - -
Transfer in respect
of lapsed share
options - - (140,516) 140,516 -
Share-based payments-share
options 25 - - 52,241 - 52,241
At 31 December
2020 1,140,913 24,867,886 324,264 (25,090,083) 1,242,980
---------------------------- ------ ---------- ------------ ---------- ------------- ------------
Total comprehensive
loss for the year - - - (3,128,581) (3,128,581)
Transaction with
owners:
Shares issued
- placing 19 562,000 5,058,000 - - 5,620,000
Share issue costs 21 - (1,919,868) 1,503,008 - (416,860)
Transfer in respect
of lapsed share
options - - (194,246) 194,246 -
Share-based payments
options 25 - - 1,255,681 - 1,255,681
At 31 December
2021 1,702,913 28,006,018 2,888,707 (28,024,418) 4,573,220
---------------------------- ------ ---------- ------------ ---------- ------------- ------------
The notes form part of these financial statements.
STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Year to 31 Year to 31
December December
2021 2020
GBP GBP
Cash flows from operating activities
Cash absorbed by operations 31 (1,827,851) (2,371,194)
Corporation tax received 218,568 321,584
Net cash used in operating activities (1,609,283) (2,049,610)
------------------------------------------- ---- ------------ ------------
Cash flows from investing activities
Purchases of intangible assets 11 (28,883) (27,319)
Purchases of property, plant and
equipment 12 (305,334) (69,452)
Interest received 6,237 20,106
Net cash used in investing activities (327,980) (76,665)
------------------------------------------- ---- ------------ ------------
Cash flows from financing activities
Proceeds from share issues 5,500,000 -
Share issue costs (416,860) -
Repayment of lease liabilities 13 (78,070) (97,414)
Net cash generated by / (used in)
financing activities 5,005,070 (97,414)
------------------------------------------- ---- ------------ ------------
Net decrease in cash and cash equivalents 3,067,807 (2,223,689)
Cash and cash equivalents at the
beginning of the year 397,069 2,620,758
Cash and cash equivalents at the
end of the year 3,464,876 397,069
------------------------------------------- ---- ------------ ------------
The notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021
The principal activity of the public limited company continues
to be the research, development and commercialisation of
miniaturised mass spectrometry instruments that are designed to
improve the efficiency of pharmaceutical R&D. The Company is
incorporated in England and its registered address is GMS House,
Boundary Road, Woking, Surrey, GU21 5BX. The Company has no
subsidiaries, so the financial information relates to the Company
only.
1. Accounting policies
The following principal accounting policies have been used
consistently in the preparation of these financial statements.
Basis of preparation
These financial statements have been prepared in accordance with
UK-adopted international accounting standards in conformity with
the requirements of the Companies Act 2006.
These financial statements have been prepared under the
historical cost basis except where financial instruments are
required to be carried at fair value under IFRS.
Revenue recognition
IFRS 15 provides a single, principles based five-step model to
be applied to all contracts with customers. The five-step framework
includes:
1) Identify the contract(s) with a customer;
2) Identify the performance obligations in the contract;
3) Determine the transaction price;
4) Allocate the transaction price to the performance obligations in the contract; and
5) Recognise revenue when the entity satisfies a performance obligation.
The Company recognises revenue from the following three
sources:
1) Sale of products;
2) Sale of consumables and spare parts; and
3) Service and support income.
All revenues and trade receivables arise from contracts with
customers. Revenue is measured based on the consideration which the
Company expects to be entitled in a contract with a customer and
excludes amounts collected on behalf of third parties. The sale of
products, consumables and spare parts is recognised when the sole
performance obligation is met which is usually on delivery to the
customer. For service and support income revenue, the performance
obligation is satisfied over the duration of the service period and
revenue is recognised in line with the satisfaction of the
performance obligation.
Sale of products
The Company sells compact mass spectrometers (Microsaic 4500 MiD
(R) ) mainly through OEMs and Distributors. A small proportion of
its sales are direct to the customer. Discounts are offered and
agreed as part of the contractual terms. Terms are generally Ex
Works so control passes when the customer collects the goods.
Payment terms are generally 30 days from the date of invoice.
Sales of consumables and spare parts
The Company sells consumables and spare parts mainly through
OEMs and Distributors. Terms are generally Ex Works so control
passes when the customer collects the goods. Discounts are offered
and agreed as part of the contractual terms. Payment terms are
generally 30 days from the date of invoice.
Service and support income
Service and support to our OEMs and Distributors includes
training their sales and service teams and servicing the products
from time to time. Discounts are offered and agreed as part of the
contractual terms.
Terms are Ex Works so control passes when the customer receives
the service. Payment terms are generally 30 days from the date of
invoice.
Generally, t here is no obligation on the Company for returns,
refunds or similar arrangements. Also, the Company does not
manufacture specific items to a customer's specification and no
financing component is included in the terms with customers.
The Company provides assurance warranties which are 15 months
from the date of shipment for OEMs and Distributors. These
warranties confirm that the product complies with agreed-upon
specifications. The Company is looking to provide service
warranties in the future to direct Europe customers, where the
revenue from such warranties will be recognised over the period of
the service agreement.
Other operating income
Other operating income includes grant income, insurance income
arising from a claim and income from development contracts. The
Company's management assesses the contracts at each balance sheet
date, including the costs to completion, which are subject to
estimation uncertainty. Grant income is recognised when there is
reasonable assurance that the grant will be received, and the
Company will comply with any attached conditions. Grants are
recognised in the profit or loss in line with the expenditure they
are intended to compensate and are shown gross of the underlying
expense. The Company received CJRS grants during the year, which
has been recognised in line with the corresponding payroll
expenditure. There are no unfulfilled conditions attached to the
grant that the Company is aware of.
Segmental reporting
The Company currently has one business segment, being the
research, development and commercialisation of scientific
instruments. This is undertaken wholly within the United Kingdom.
Revenue by geographical market is analysed in note 5.
Intangible assets
Trademarks and patents are stated at historic cost of
registration less accumulated amortisation and any accumulated
impairment losses. Amortisation is charged to operating expenses
and calculated to write off the cost in equal annual instalments
over five years, which is a prudent estimate of their useful
economic lives.
Certain software is stated at historic cost less accumulated
amortisation and any accumulated impairment losses. Amortisation is
charged to operating expenses and calculated to write off the cost
in equal annual instalments over three years, which is considered
to be a prudent estimate of its useful economic life.
Property, plant and equipment
Items of property, plant and equipment are stated at cost of
acquisition or production costs less accumulated depreciation and
impairment losses. Depreciation is charged to the statement of
comprehensive income on a straight-line basis to write-off the
carrying value of each asset to residual value over its estimated
useful economic life as follows:
Plant and equipment - 33.3% on a straight line basis
Fixtures and fittings - 33.3% on a straight line basis
Software - 33.3% on a straight line basis
Pensions
The Company has an auto-enrolment pension scheme for employees.
Contributions are charged to the statement of comprehensive income
in the period they are payable.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is based on the first-in first-out principle and
includes expenditure incurred in acquiring the inventories and
bringing them to their present location and condition. The cost of
finished goods and work in progress comprises raw materials, direct
labour and other direct costs. Net realisable value is the
estimated selling price in the ordinary course of business less
applicable selling expenses. The inventory provision is based on
identifying slow moving stock items from recent historic and
anticipated future sales and providing where appropriate for those
items which may be surplus to anticipated or identifiable
demand.
Provisions
Provisions are established where the Directors have identified
an obligation which is probable and where the amount can be
estimated reliably.
Taxation
Current taxes are based on the results of the Company and are
calculated according to local tax rules using the tax rates that
have been enacted by the balance sheet date.
The Company recognises research and development tax credits
receivable in cash as a current asset under the heading corporation
tax receivable. Any difference to amounts received are dealt with
as adjustments to prior period tax.
Deferred tax is provided in full using the balance sheet
liability method for all taxable temporary differences arising
between the tax bases of assets and liabilities and their carrying
values for financial reporting purposes. Deferred tax is measured
using currently enacted or substantially enacted tax rates.
Deferred tax assets are recognised to the extent the temporary
difference will reverse in the foreseeable future and that it is
probable that future taxable profit will be available against which
the asset can be utilised.
Foreign currency translation
Monetary assets and liabilities denominated in foreign
currencies are translated into sterling at the rates of exchange
ruling at the balance sheet date. Transactions in foreign
currencies are recorded at the rate ruling at the date of
transaction, or forward contract rate, if applicable. All
differences are taken to the statement of comprehensive income.
Financial instruments
Financial assets and financial liabilities are recognised in the
Company's statement of financial position when the Company becomes
a party to the contractual provisions of the instrument. Examples
of the Company's financial instruments include:
Cash and cash equivalents
The fair value of cash and cash equivalents is considered to be
their carrying amount due to their short-term maturity.
Trade receivables
The Company's trade receivables do not carry a significant
financing element as defined by IFRS 15. Therefore, trade
receivables are recorded at transaction price (e.g., invoice amount
excluding costs collected on behalf of third parties) and
throughout the life of the receivable at an amount equal to
lifetime expected credit losses ("ECL"). The Company has applied a
simplified "provision matrix" for calculating expected credit
losses as a practical expedient. The percentage ranges are applied
to the receivable balance.
Current 1-30 days 31-60 61-90 91-120 121-150 151-180 181 days
past due days past days past days past days past days past + past
due due due due due due
0%-1% 1%-2% 1%-2% 1%-2% 2%-5% 5%-10% 10%-20% 10%-50%
---------- ----------- ----------- ----------- ----------- ----------- ---------
Other points:
-- The Company determines whether trade receivables are impaired
through regular meetings between finance and business
development.
-- The credit situation of new customers is reviewed before the
first shipment. If possible, a credit report is obtained. If there
is any concern over the credit worthiness of the customer, the
Company may ask the customer to pay an amount in advance or enter
into a confirmed letter of credit (Non-UK/Europe) etc.
-- Trade receivables are considered low risk at initial
recognition but this changes if they have an overdue invoice(s).
Depending on the value of the shipment, the customer may be placed
on hold until the overdue amount is paid. Discussions as to why an
invoice is overdue are held promptly between finance and business
development and the customer.
-- The provision is monitored at customer level by business development and finance.
-- If the Company is having ongoing dialogue with the customer
regarding their overdue balance the debt will not be written off.
It may be that a payment plan can be agreed or more time is given
to the customer to sell the product. If the customer is not
actively engaging with the Company legal action may be taken.
-- Forward looking information from business development is
taken into account when preparing the provision matrix including
geographical risk, changes in customer circumstances and
macro-economic factors.
Under IFRS 9 impairment for receivables including trade
receivables is assessed using an expected loss model. For trade
receivables this focuses on the risk that, and an extent to which,
a receivable will default. Accordingly, the Company calculates the
allowance for credit losses by considering the cash shortfalls it
would incur in various default scenarios and multiplying the
shortfalls by the probability of each scenario occurring. The
Company only has short-term receivables and has adopted a
"simplified approach" in assessing impairment.
The Company has applied a simplified "provision matrix" for
calculating expected losses as a practical expedient (e.g., for
trade receivables), as the Directors believe that this is
consistent with the general principles for measuring expected
losses. The provision matrix is based on an entity's historical
default rates over the expected life of the trade receivables and
is adjusted for forward-looking estimates.
In preparing the provision matrix the Company looks at the
geographic base of its trade receivables and whether they are
existing or new customers. Finally, management considered forward
looking information that may affect the default rates applied in
the matrix.
Financial liability and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Company after deducting all
its liabilities.
Bank borrowings
The Company had no bank borrowings at 31 December 2021 and
2020.
Trade payables
Trade payables are not interest bearing and are stated at their
nominal value.
Equity instruments
Equity instruments issued by the Company are recorded at the
value of the proceeds received net of direct issue costs including
the fair value of any warrants issued in lieu of issue costs. The
Company has no derivative financial assets or investments in equity
instruments.
Leases
For all leases, the Company recognises a right of use asset and
corresponding lease liability on the balance sheet, which are
depreciated and amortised respectively over the lease term.
However, where leases are low value or of less than 12 months old,
the Company has taken advantage of the practical expedient allowing
the expense to be recognised on a straight line basis over the
lease term.
Research and development
Expenditure on research is recognised as an expense in the
period in which it is incurred.
Development costs incurred on specific projects are capitalised
when all the following conditions are satisfied:
-- Completion of the intangible asset is technically feasible so
that it will be available for use or sale;
-- The Company intends to complete the intangible asset and use or sell it;
-- The Company has the ability to use or sell the intangible asset;
-- The intangible asset will generate probable future economic
benefits. Among other things, this requires that there is a market
for the output from the intangible asset or for the intangible
asset itself, or, if it is to be used internally, the asset will be
used in generating such benefits;
-- There are adequate technical, financial and other resources
to complete the development and to use or sell the intangible
asset; and
-- The expenditure attributable to the intangible asset during
its development can be measured reliably.
Costs incurred which do not meet all of the above criteria are
expensed as incurred. No development costs have been capitalised to
date.
Share-based payments
In accordance with IFRS 2 "Share-based payments", the Company
reflects the economic cost of awarding shares and share options to
Directors, employees and advisors by recording an expense in the
statement of comprehensive income equal to the fair value of the
benefit awarded; fair value being determined by reference to option
pricing models. The expense is recognised in the statement of
comprehensive income over the vesting period of the award.
The fair value of warrants issued to advisors as remuneration
for their services in a fundraising will be charged to share
premium over the vesting period of the award.
1. Adoption of new and revised standards
During the financial year, the Company has adopted the following
new IFRSs (including amendments thereto) and IFRIC interpretations,
that became effective for the first time.
Standard Effective date,
annual period
beginning on or
after
Interest Rate Benchmark Reform - Phase 2 (Amendments 1 January 2021
to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
-----------------
Covid 19-Related Rent Concessions (Amendment 1 April 2021
to IFRS 16 Leases)
-----------------
Their adoption has not had any material impact on the
disclosures or amounts reported in the financial statements.
Standards issued but not yet effective
At the date of authorisation of these financial statements, the
following standards and interpretations relevant to the Company and
which have not been applied in these financial statements, were in
issue but were not yet effective. In some cases, these standards
and guidance have not been endorsed for use in the UK and will not
be adopted until such time as endorsement is confirmed.
Standard Effective date,
annual period
beginning on or
after
Reference to the Conceptual Framework (Amendments 1 January 2022
to IFRS 3 Business Combinations)
------------------
Property, Plant and Equipment: Proceeds before 1 January 2022
Intended Use (Amendments to IAS 16)
------------------
Onerous Contracts - Cost of Fulfilling a Contract 1 January 2022
(Amendments to IAS 37 Provisions, Contingent
Liabilities and Contingent Assets)
------------------
Annual improvements 2018-2020 cycle 1 January 2022
------------------
IFRS 17 - Insurance Contracts 1 January 2023
------------------
Amendments to IFRS 17 - Insurance Contracts; 1 January 2023
and Extension of the Temporary Exemption from
Applying IFRS 9 (Amendments to IFRS 4 Insurance
Contracts)
------------------
Disclosure of Accounting Policies (Amendments 1 January 2023
to IAS 1 Presentation of Financial Statements
and IFRS Practice Statement 2 Making Materiality
Judgements)
------------------
Definition of Accounting Estimates (Amendments 1 January 2023
to IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors)
------------------
Deferred Tax related to Assets and Liabilities 1 January 2023
arising from a Single Transaction (Amendments
to IAS 12 Income Taxes)
------------------
Classification of Liabilities as Current or Non-Current: 1 January 2024(1)
amendments to IAS 1
------------------
(1) In November 2021 it was proposed that the amendment be
deferred until not earlier than 1 January 2024.
The Directors are evaluating the impact that these standards
will have on the financial statements of Company, but at this stage
the impact is not expected to be material.
3. Going concern
The Company is loss making and has raised funds in the past by
issuing equity in discrete tranches. The most recent fundraise was
completed on 5 February 2021 where the Company raised GBP5.2
million after expenses
from new and existing shareholders. As of 31 December 2021, the
Company had GBP 3.5 million in cash and bank balances.
During 2022, the Company has introduced new services taking
advantage of its depth of expertise in mass spectrometry,
analytical techniques and related technologies to serve existing
and new markets alongside its historic product and service
offerings. Accordingly, the cash and financial projections of the
business
incorporate this expansion of revenue sources and the Directors
have reviewed them under various scenarios to assess the
sensitivity of the Company's going concern position.
With the recent advent of new service revenue streams, the plans
and prospects for the business are modest in projecting new revenue
and do not yet forecast break even. The key sensitivities
considered include changes to the projected sales of the various
product or service lines and corresponding adjustments to costs
which could be delayed, reduced or not incurred at all if the
related projected sales were not to materialise. Accordingly, the
Company monitors actual versus expected performance and retains a
contingency plan, if required, to preserve cash and bank
balances.
Having taken this careful approach, the Board believes that the
Company has enough cash to cover its anticipated working capital
requirements for at least the next 12 months from the date of
signing of the Annual Report and Accounts. On this basis, the
Directors have concluded that it is appropriate to prepare the
financial statements on a going concern basis.
4. Critical accounting estimates and judgements
Accounting estimates and judgements are continually evaluated
and are based on past experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
The Company makes estimates and assumptions concerning the
future. The resulting accounting estimates could, by definition,
differ from the actual outcome.
The estimates and assumptions that have a risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year are summarised
below:
Share-based payments
The calculation of the share-based payment expense utilises
assumptions and estimates (for example volatility, future exercise
rates etc) which may differ from actual results. Details of the
assumptions are set out in note 25. The Company uses the Black
Scholes Option pricing model to determine a theoretical option call
price. If there are market related conditions (e.g., realising
certain share price targets before vesting) then the Company uses
external advisers to apply more advanced modelling techniques. In
terms of inputs volatility is the most difficult input to estimate
and is probably the key input where management has had to use its
discretion.
Carrying value of inventories
It is the intention of the directors that the Company will move
away from the sale of goods as its primary revenue stream, instead
developing new lines of service revenue. As such, there is a risk
that the inventory holding may not recover its full carrying
value.
The directors believe that all inventories held at 31 December
2021 will ultimately be sold above their purchase price. However,
in light of the uncertainty in these forecasts, and the potential
for stock turnover days to significantly increase, a provision of
GBP90,139 has been made for stock obsolescence. There is
significant uncertainty in this estimate, but the directors believe
it is an appropriate estimate for potential future write off of
inventories.
The detailed breakdown of inventories can be seen in note
14.
These assumptions are reviewed at each balance sheet date and
amended if required.
4. Revenue
Throughout 2021, the Company operated in one business segment,
that of research, development and commercialisation of mass
spectrometry instruments. Products are sold ex-works: The
attribution of revenue is based on the country or group of
countries to where the goods are shipped. In 2021 our largest
customers had the following revenues as a percentage of total
revenues:
Customer number 1 - 42.5 per cent.
Customer number 2 - 10.6 per cent.
Customer number 3 - 9.0 per cent.
Customer number 4 - 8.5 per cent.
The geographical analysis of revenue (by shipment destination)
was as follows:
Year to Year to
31 December 31 December
2021 2020
GBP GBP
------------- ------------- -------------
UK 532,364 2,225
USA 187,673 41,346
China 106,076 126
EU 71,887 57,280
ROW 4,214 5,128
South Korea 3,662 83,397
Japan 1,000 8,756
------------- ------------- -------------
906,876 198,258
------------- ------------- -------------
6. Other operating income
Year to Year to
31 December 31 December
2021 2020
GBP GBP
---------------------------------------- ------------- -------------
Coronavirus Job Retention Scheme Grant 20,829 96,626
Co-development income 26,204 -
Insurance claims 20,250 -
---------------------------------------- ------------- -------------
67,283 96,626
---------------------------------------- ------------- -------------
7. Expenses by nature
Year to Year to
31 December 31 December
2021 2020
Loss from operations after share-based payments GBP GBP
is stated after charging/(crediting):
-------------------------------------------------- ------------- -------------
Amortisation of intangible assets 38,241 40,767
Depreciation of right of use assets 70,499 87,237
Expected credit losses (46,746) 64,281
Movement in inventory provision 32,535 17,650
Inventory items expensed 2,249 (3,318)
Staff benefit expense 2,807,699 1,466,342
Depreciation of property, plant and equipment 90,628 80,034
Provision for warranty (24,075) (12,713)
Material costs including R&D 50,293 58,071
Professional fees (including audit fees detailed
below) 161,791 182,069
Pension costs 173,051 153,476
Exchange loss/(gain) 1,216 2,897
Directors' emoluments (before pensions and
share based payments) 266,799 292,140
-------------------------------------------------- ------------- -------------
Year to Year to
31 December 31 December
2021 2020
GBP GBP
--------------------------------------------- ------------- -------------
Services provided by the Company's auditors
Fees payable to the Company's auditors for
the audit of the financial statements 22,150 20,750
Fees payable to the Company's auditors for
other services
* Audit related services 1,575 2,070
--------------------------------------------- ------------- -------------
23,725 22,820
--------------------------------------------- ------------- -------------
8. Finance income and Finance cost
Year to Year to
31 December 31 December
2021 2020
GBP GBP
-------------------------- ------------- -------------
Bank interest receivable 6,237 4,393
-------------------------- ------------- -------------
Interest cost under IFRS 16 (4,433) (9,041)
Other interest (171) (1,734)
----------------------------- -------- ---------
(4,604) (10,775)
----------------------------- -------- ---------
9. Tax on loss on ordinary activities
Year to Year to
31 December 31 December
2021 2020
Domestic current period tax GBP GBP
------------------------------------ ------------- -------------
UK corporation tax receivable (267,785) (218,568)
Adjustment for prior periods - 857
------------------------------------ ------------- -------------
Current tax credit (267,785) (217,711)
------------------------------------ ------------- -------------
Tax on loss on ordinary activities (267,785) (217,711)
------------------------------------ ------------- -------------
Factors affecting the current tax credit for Year to Year to
the period: 31 December 31 December
2021 2020
GBP GBP
----------------------------------------------------- ------------- -------------
Loss before tax (3,396,366) (2,590,369)
----------------------------------------------------- ------------- -------------
Loss before tax multiplied by standard rate
of UK corporation tax of 19% (2020: 19%) (645,310) (492,170)
Effects of:
Non-deductible expenses 251,679 6,774
Depreciation 17,219 15,206
Capital allowances (54,317) (13,363)
Profit on disposal of property, plant and
equipment (2,130) (16)
Research and development expenditure (116,399) (94,045)
RDEC 484 -
Tax losses carried forward 279,259 359,046
Previous period research and development adjustment - 857
Chargeable gain 1,730 -
----------------------------------------------------- ------------- -------------
Current tax credit (267,785) (217,711)
----------------------------------------------------- ------------- -------------
The Company has estimated tax losses of GBP25,056,703 (2020:
GBP23,587,006) available for carry forward against future trading
profits. Deferred tax is detailed in note 17.
10. Basic and diluted loss per ordinary share
Year to Year to
31 December 31
2021 December
2020
---------------------------------------------------- -------------- --------------
Loss after tax attributable to equity shareholders
GBP (3,128,581) (2,372,658)
Weighted average number of ordinary 0.25p
shares for the purpose of basic and diluted
loss per share - 456,365,146
Weighted average number of ordinary 0.01p 5,537,461,036 -
shares for the purpose of basic and diluted
loss per share
Basic and diluted loss per ordinary share (0.056)p (0.52)p
---------------------------------------------------- -------------- --------------
The basic loss per share reduced by 89 per cent. from 0.52p per
share to 0.056p per share. Whilst there was an increase in the loss
after tax to equity shareholders this was more than offset by the
share reorganisation and issue of equity as set out in Note 18.
Potential ordinary shares are not treated as dilutive as the
Company is loss making, therefore the weighted average number of
ordinary shares for the purposes of the basic and diluted loss per
share are the same.
11. Intangible assets
Intangible assets comprise patents, trademarks and software
owned by the Company. The cost is amortised on a straight-line
basis over their estimated useful life.
Year ended 31 December 2021: GBP
------------------------------ --------
Cost
At 1 January 2021 592,296
Additions 28,883
At 31 December 2021 621,179
------------------------------- --------
Amortisation
At 1 January 2021 508,533
Charge for the year 38,241
At 31 December 2021 546,774
------------------------------- --------
Net book value
At 31 December 2021 74,405
------------------------------- --------
Year ended 31 December 2020 GBP
----------------------------- --------
Cost
At 1 January 2020 564,977
Additions 27,319
At 31 December 2020 592,296
------------------------------ --------
Amortisation
At 1 January 2020 467,766
Charge for the year 40,767
At 31 December 2020 508,533
------------------------------ --------
Net book value
At 31 December 2020 83,763
------------------------------ --------
12. Property, plant and equipment
Year ended 31 December 2021:
Plant and Fixtures Total
equipment and fittings
GBP GBP GBP
--------------------- ----------- -------------- ----------
Cost
At 1 January 2021 850,596 178,307 1,028,903
Additions 305,334 - 305,334
Disposals (64,246) - (64,246)
Transfers (25,270) - (25,270)
--------------------- ----------- -------------- ----------
At 31 December 2021 1,066,414 178,307 1,244,721
--------------------- ----------- -------------- ----------
Plant and Fixtures Total
equipment and fittings
GBP GBP GBP
--------------------- ----------- -------------- ---------
Depreciation
At 1 January 2021 736,472 178,286 914,758
Charge for the year 90,607 21 90,628
Disposals (64,246) - (64,246)
Transfers (2,106) - (2,106)
--------------------- ----------- -------------- ---------
At 31 December 2021 760,727 178,307 939,034
--------------------- ----------- -------------- ---------
Net book value
At 31 December 2021 305,687 - 305,687
--------------------- ----------- -------------- ---------
Year ended 31 December 2020:
Plant and Fixtures Total
equipment and fittings
GBP GBP GBP
--------------------- ----------- -------------- ----------
Cost
At 1 January 2020 787,487 185,038 972,525
Additions 69,452 - 69,452
Disposals (6,343) (6,731) (13,074)
At 31 December 2020 850,596 178,307 1,028,903
--------------------- ----------- -------------- ----------
Depreciation
At 1 January 2020 663,015 184,783 847,798
Charge for the year 79,802 232 80,034
Disposals (6,345) (6,729) (13,074)
At 31 December 2020 736,472 178,286 914,758
--------------------- ----------- -------------- ----------
Net book value
At 31 December 2020 114,124 21 114,145
--------------------- ----------- -------------- ----------
Transfers from plant and equipment were moved to stock and then
sold to a customer.
13. Lease reporting
IFRS 16 was effective for annual reporting periods on or after 1
January 2019 and removes the distinction between finance and
operating leases for lessees. For lessees, all leases are now
recorded on the balance sheet as liabilities, at the present value
of the future lease payments, along with an asset reflecting the
right of use of the asset over the lease term. This information
aims to provide users of financial statements with the basis to
assess the effect leases have on the financial position, financial
performance and cash flows of an entity.
Right of use lease assets
Property Equipment Total
GBP GBP GBP
--------------------------- --------- ---------- --------
Cost
At 1 January 2021 179,763 8,441 188,204
Additions 138,933 9,961 148,894
Disposals - (8,441) (8,441)
At 31 December 2021 318,696 9,961 328,657
--------------------------- --------- ---------- --------
Depreciation
At 1 January 2021 133,816 4,984 138,800
Charge for the year 67,643 2,856 70,499
Disposals - (7,175) (7,175)
--------------------------- --------- ---------- --------
At 31 December 2021 201,459 665 202,124
--------------------------- --------- ---------- --------
Carrying amount
At 31 December 2021 117,237 9,296 126,533
--------------------------- --------- ---------- --------
Lease liability Property Equipment Total
GBP GBP GBP
-------------------------------- --------- ---------- ---------
At 1 January 2021 49,831 3,636 53,467
Repayment of lease liabilities (74,997) (3,073) (78,070)
Additions 138,933 9,961 148,894
Interest on lease liabilities 4,326 107 4,433
Disposals - (1,379) (1,379)
At 31 December 2021 118,093 9,252 127,345
-------------------------------- --------- ---------- ---------
Lease liability maturity
analysis
2021 2020
Property Equipment Property Equipment
Gross lease payments
due: GBP GBP GBP GBP
--------- ------------ ----------- -----------
Within one year 75,000 3,279 51,577 2,637
Between two and five
years 51,666 6,609 - 1,111
--------- ------------ ----------- -----------
126,666 9,888 51,577 3,748
Less future financing
charges (8,573) (636) (1,746) (112)
118,093 9,252 49,831 3,636
--------- ------------ ----------- -----------
14. Inventories
Year to Year to
31 December 31 December
2021 2020
GBP GBP
--------------------------- ------------- -------------
Raw materials 177,212 262,506
Finished goods 196,829 364,687
---------------------------
Subtotal 374,041 627,193
--------------------------- ------------- -------------
Provision for inventories (90,139) (57,604)
Total 283,902 569,589
--------------------------- ------------- -------------
Inventories are lower in 2021 following a significantly higher
level of sales during the year and production challenges due to a
global shortage of components. The provision increased in 2021,
mainly due to a small number of units of finished goods.
15. Trade and other receivables
Year to Year to
31 December 31 December
2021 2020
GBP GBP
-------------------------------------- ------------- -------------
Amounts falling due within one year
Trade receivables 327,061 108,529
Provision for expected credit losses (2,762) (68,587)
Other receivables 307,649 123,385
Other taxes and social security - 10,544
-------------------------------------- ------------- -------------
631,948 173,871
-------------------------------------- ------------- -------------
Year to Year to
31 December 31 December
2021 2020
GBP GBP
----------------------- ------------- -------------
Not past due 299,160 37,849
1 to 30 days past due 901 2,506
270 days past due 27,000 68,174
----------------------- ------------- -------------
327,061 108,529
----------------------- ------------- -------------
Year to Year to
31 December 31 December
2021 2020
GBP GBP
----------------------------------------------- ------------- -------------
Provision for expected credit losses on trade
receivables:
Balance brought forward (68,587) (4,306)
Written back to P&L during the year 68,587 4,306
Provided during the year (2,762) (68,587)
Balance carried forward (2,762) (68,587)
----------------------------------------------- ------------- -------------
The provision for expected credit losses is entirely in respect
of not past due invoices. For trade receivables the loss allowance
is mandatorily measured at an amount equal to the lifetime expected
credit losses.
16. Trade and other payables
Year to Year to
31 December 31 December
2021 2020
GBP GBP
------------------------------------- ------------- -------------
Amounts falling due within one year
Trade payables 230,494 63,034
Other taxes and social security 43,514 29,174
Other payables 30,979 11,278
Accruals and deferred income 49,624 82,441
------------------------------------- ------------- -------------
354,611 185,927
------------------------------------- ------------- -------------
17. Provisions
Dilapidations Warranties TOTAL
GBP GBP GBP
----------------------------------- -------------- ----------- ---------
Balance at 1 January 2021 75,779 48,256 124,035
Provided for/(reduced) during the
year - (24,075) (24,075)
Balance at 31 December 2021 75,779 24,181 99,960
----------------------------------- -------------- ----------- ---------
The provision for anticipated dilapidations is in respect of the
Company's leasehold premises at Woking. The amount carried forward
of GBP75,779 is based on the potential future cost which could be
incurred at the end of the lease.
The Company provides OEMs and distributors with a 15-month
warranty on MS products. The provision represents the anticipated
cost of servicing those warranty claims. The provision is based on
historical costs including product, replacement parts and the
cost-of-service engineers that may have to be incurred over the
warranty period. The provision for warranty at the end of the year
is GBP24,181. There were no significant claims during the year.
18. Deferred tax
Deferred taxation provided in the financial GBP
statements:
-------------------------------------------- ------------------
Balance at 1 January and 31 December 2021 -
-------------------------------------------- ------------------
Year to Year to
31 December 31 December
2021 2020
GBP GBP
-------------------------------- ------------- --------------
Accelerated capital allowances 61,741 21,688
Tax losses carried forward (61,741) (21,688)
- -
-------------------------------- ------------- --------------
A deferred tax asset in respect of tax losses has only been
recognised to the extent of the deferred tax liability in respect
of accelerated capital allowances at a tax rate of 25 per cent.
(2020: 19 per cent.). The Company has estimated tax losses of
GBP25,056,703 (2020: GBP23,587,006) available for carry forward
against future trading profits. The deferred tax asset that would
arise on these losses if it were recognised at 25% is GBP6,264,176
(2020: GBP4,481,531 based on 19%).
19. Share capital
The total share capital of the Company comprises Ordinary and
Deferred shares as follows:
2021 2021 2020 2020
Allotted, called up and Number GBP Number GBP
fully paid:
Ordinary shares of 0.25p
each - - 456,365,146 1,140,913
Ordinary shares of 0.01p
each 6,076,365,146 607,637 - -
Deferred shares of 0.24p
each 456,365,146 1,095,276 - -
As at 31 December 6,532,730,292 1,702,913 456,365,146 1,140,913
-------------------------- ------------- --------- ----------- ---------
The Ordinary share capital of the Company comprises:
2021 2021 2020 2020
Allotted, called up and Number GBP Number GBP
fully paid:
Ordinary shares of 0.25p
each as at 1 January 456,365,146 1,140,913 456,365,146 1,140,913
Effect of share split
and deferment - (1,095,276) - -
Issue of ordinary share
capital of 0.01p each 5,620,000,000 562,000 - -
As at 31 December 6,076,365,146 607,637 456,365,146 1,140,913
-------------------------- ------------- ----------- ----------- ---------
On 4 February 2021 the Company undertook a share reorganisation
and split each ordinary share of 0.25p each into one (1) ordinary
share of 0.01p each and twenty-four (24) deferred shares of 0.01p
each followed by the immediate consolidation of every twenty-four
(24) deferred shares of 0.01 pence each into one (1) deferred share
of 0.24 pence.
Each ordinary share of 0.01p each carries the same rights as the
ordinary shares of 0.25p each did before the share reorganisation.
That is, each ordinary share has the right to one vote and is
entitled to participate in any distribution made by the Company
including the right to receive a dividend, and on a winding up of
the Company. The ordinary shares are not redeemable or liable to be
redeemed at the option of the Company or the shareholder.
Each deferred share of 0.24p has no right to receive notice of,
or attend or vote at, any general meeting of the Company, no right
to participate in the profits of the Company whether by dividend,
other distribution, return of capital (whether or not upon a
winding up) or otherwise, save that, upon a return of capital upon
a winding up, the holders of deferred shares shall be entitled to
the return of the nominal value of each deferred share held after
GBP10,000,000 has been returned on each ordinary share, nor are the
deferred shares redeemable or liable to be redeemed at the option
of the Company or the shareholder.
In addition, the Company issued 5,620,000,000 ordinary shares of
0.01p each as follows:
-- 5,000,000,000 ordinary shares of 0.01p each to raise GBP5.0
million before expenses at the placing price of 0.1 pence per new
ordinary share;
-- 500,000,000 ordinary shares of 0.01p each to raise GBP500,000
to the Company's Broker Turner Pope at the Placing Price of 0.1
pence per new ordinary share to meet additional demand for the
shares;
-- 35,000,000 ordinary shares of 0.01p each at the placing price
of 0.1 pence per new ordinary share in respect of the first year of
fees due to Turner Pope for the provision of its broking services
to the Company; and
-- 85,000,000 ordinary shares of 0.01p each at the placing price
of 0.1 pence per new ordinary share in settlement of the
Non-executive Directors' first year's fees in respect of Gerard
Brandon (50,000,000 shares) and Dr Nigel Burton (35,000,000
shares).
The Deferred share capital of the Company comprises:
2021 2021 2020 2020
Allotted, called up and Number GBP Number GBP
fully paid:
Deferred shares of 0.24p - - - -
each as at 1 January
Effect of share split on
4 February 2021 to deferred
shares of 0.24p each 456,365,146 1,095,276 - -
------ ----
As at 31 December 456,365,146 1,095,276 - -
------------------------------ ----------- --------- ------ ----
20. Reserves
The share premium account represents the excess over the nominal
value for shares allotted less issue costs. The share option
reserve represents accumulated charges made under IFRS 2 in respect
of share-based payments. Where share options that have vested
expire, lapse or are exercised, the amounts within the share-based
payments reserve relating to those options are transferred to
retained earnings as shown in the Statement of Changes in
Equity.
21. Share premium
Year to Year to
31 December 31 December
2021 2020
GBP GBP
------------------------------------- ------------- -------------
Opening balance brought forward 24,867,886 24,867,886
Share issue in the year 5,058,000 -
Share issue costs - Cash (416,860) -
Share issue costs - Broker Warrants (1,503,008) -
------------------------------------- ------------- -------------
Closing balance carried forward 28,006,018 24,867,886
------------------------------------- ------------- -------------
The fundraising on 5 February 2021 raised a total of GBP5.5
million (before expenses) at a placing price of 0.1p per share. The
placing raised GBP5.0 million and the broker warrant GBP0.5
million, before expenses. The share premium on the fundraising was
the placing price of 0.1p per share less the nominal value of 0.01p
per share multiplied by the number of shares issued. The cash costs
amounted to GBP416,860 including broker commissions and fees, legal
fees etc. In addition, 997,000,000 broker warrants were issued to
Turner Pope Investments (TPI) Ltd at a fair value of
GBP1,503,008.
At the same time as the fundraising on 5 February 2021,
120,000,000 ordinary shares of 0.01p were issued in lieu of fees in
respect of the first year of fees due to Turner Pope Investments
(TPI) for the provision of its broking services to the Company and
of the first year of fees for the Non-executive Directors.
Further details of the share issues are set out in note 18.
22. Commitments
Year to Year to
31 December 31 December
2021 2020
GBP GBP
-------------------------------------------------- ------------- -------------
Contracted for but not provided in the financial
statements 781,990 426,595
-------------------------------------------------- ------------- -------------
The commitment above relates to purchase orders placed on, and
related contractual arrangements and obligations, with our
third-party manufacturers.
23. Directors' emoluments
Year to Year to
31 December 31 December
2021 2020
GBP GBP
----------------------------------------- ------------- -------------
Salaries and fees 264,797 291,086
Non-cash payments 2,002 1,054
Pension costs 27,325 23,429
Employment related share-based payments 1,071,773 51,753
----------------------------------------- ------------- -------------
1,365,897 367,322
----------------------------------------- ------------- -------------
In the year to 31 December 2021 the two Executive Directors that
served during the year accrued benefits under the Company's
auto-enrolment pension scheme. The employment related share-based
payments comprise the charges arising from the grant of options on
5 February 2021 plus non-executive directors fees settled by the
issue of 85,000,000 ordinary shares of 0.01p each for a full year
in advance, reduced by the credits to the income and expenditure
statement in relation to unvested charges in respect of the
cancellation of share options granted in prior years.
There are no key management personnel other than the Directors.
The highest paid Director, Mr Glenn Tracey, received emoluments of
GBP323,445 as disclosed in the Directors' Remuneration Report,
which included a share-based payment charge of GBP182,255.
There were no gains on the exercise of share options in the
year.
24. Employees
Year to Year to
31 December 31 December
2021 2020
Number Number
-------------------- ------------- -------------
Directors 4 5
Other staff 18 21
Average Headcount 22 26
-------------------- ------------- -------------
Year to Year to
31 December 31 December
2021 2020
GBP GBP
----------------------------------------- ------------- -------------
Employment costs (including Directors)
Wages and salaries 1,123,276 1,081,201
Social security costs 160,902 121,141
Termination payments 18,189 58,283
Pension costs 173,051 153,476
Employment related share-based payments 1,332,240 52,241
----------------------------------------- ------------- -------------
2,807,699 1,466,342
----------------------------------------- ------------- -------------
25. Share-based payments
The share-based payments charge comprises Year to Year to
31 December 31 December
2021 2020
GBP GBP
------------------------------------------- ------------- -------------
Directors' fees settled in shares 76,559 -
Share options granted 1,255,681 52,241
------------------------------------------- ------------- -------------
Employment related share-based payments 1,332,240
Brokers' fees settled in shares 31,524 -
1,363,764 52,241
------------------------------------------- ------------- -------------
The Directors' fees settled in shares and Broker's fees settled
in shares are both in respect of paying annual fees in advance from
5 February 2021 at the placing price of that date being a valuation
of 0.1p per ordinary share of 0.01p nominal value.
Share option schemes
The Company operates an EMI and an unapproved share option
scheme as a means of encouraging ownership and aligning interests
of staff and shareholders. The table below shows the number of
options outstanding and exercisable at 31 December 2021 and the
weighted average exercise price.
Year to 31 December Year to 31 December
2021 2020
Number of Weighted Number of Weighted
options average options average exercise
exercise price
price
------------------------------ -------------- ----------- ------------ -------------------
Outstanding at the beginning
of the year 17,475,000 5.1p 18,644,000 5.2p
Granted during the year 1,125,000,000 0.1p - -
Forfeited/expired during
the year (17,475,000) (5.1p) (1,169,000) 6.0p
Exercised during the - - - -
year
------------------------------ -------------- ----------- ------------ -------------------
Outstanding at 31 December 1,125,000,000 0.1p 17,475,000 5.1p
------------------------------ -------------- ----------- ------------ -------------------
Exercisable at 31 December 750,000,000 0.1p 4,375,000 9.8p
------------------------------ -------------- ----------- ------------ -------------------
Staff and Directors agreed to cancel existing options prior to
the award of new options as these options were all
out-of-the-money. Existing options held by Directors and staff
amounting to 13,110,000 were cancelled on 4 February 2021. A
further 3,500,000 options held by Peter Grant were cancelled on 5
February 2021, and 865,000 options related to previous leavers.
Options and warrants over 1,125 million ordinary shares were
awarded to Directors, staff and a consultant on 5 February 2021
(2020: nil), at the time of the fundraising. The new options
granted are exercisable at the placing price of 0.1p for five years
from the 5 February 2021.
The 750 million options and warrants granted to Directors and a
consultant vested during the year, as the performance criterion
that the Company's ordinary shares traded at a Volume Weighted
Average Price at or above a 50 per cent. premium to the placing
price for 20 consecutive business days, was achieved. The
share-based payment charge is estimated at GBP1,125,281 and has
been recognised in full in 2021.
The 375 million options granted to staff have no performance
conditions associated with them but there is a two-year holding
period before the options can vest. The share-based payment charge
is estimated at GBP577,826 vesting over two years from the date of
grant.
Details of options in issue at the year-end are:
Date of grant Exercise Latest exercise Estimated Number of Number of
price date fair value options 31 options 31
December December
2021 2020
--------------- --------- ---------------- ------------ -------------- ------------
July 2012 42.00p July 2022 12.1p - 190,000
May 2014 46.80p May 2024 11.4p - 90,000
November 2014 49.50p November 2024 11.9p - 100,000
April 2015 47.75p May 2025 10.5p - 100,000
January 2016 23.50p January 2026 11.7p - 395,000
September
2016 5.00p September 2026 2.0p - 2,000,000
September
2016 5.00p September 2026 0.6p - 2,000,000
January 2018 4.05p January 2028 1.3p - 2,100,000
January 2018 4.05p January 2028 2.2p - 5,500,000
June 2019 1.55p June 2029 0.7p - 5,000,000
February 2021 0.1p February 2026 0.150p 750,000,000 -
February 2021 0.1p February 2026 0.153p 375,000,000 -
--------------- --------- ---------------- ------------ -------------- ------------
1,125,000,000 17,475,000
--------------- --------- ---------------- ------------ -------------- ------------
The weighted average share price at the date of grant for share
options granted in the year was 0.25 pence. The options outstanding
at 31 December 2021 were all granted at an exercise price of 0.1p
with an exercise period of five years from the date of grant and a
remaining contractual life of 4 years and 1 month.
The fair value of the 375 million options granted to staff on 5
February 2021 was estimated at 0.153p per share and for the 750
million options granted to Directors was estimated at 0.150p per
share on the measurement date.
The estimated fair values of the share options were calculated
by applying the Black Scholes or Monte Carlo models in all cases
except for the 750 million options granted to Directors. In respect
of the 750 million options granted to the Directors, a binomial
model was used since the options were significantly in the money at
the grant date and there was a very high probability of achieving
the share price hurdle condition.
The period of exercise for all options granted up to 31 December
2020 is ten years from the date of grant and the vesting period is
normally three years from the date of grant. Prior to 2016 the
expected volatility had been determined by calculating the
historical volatility of the share price over the previous year.
From September 2016, and consistent with the application guidance
in IFRS 2, the Directors considered the most appropriate method to
calculating volatility to be the use of the historical volatility
of comparable listed companies. The model inputs are detailed
below.
The model inputs using Black Scholes were:
Date of grant Exercise Share price Risk free Expected Gross dividend
price rate volatility yield
-------------------------- ----------- ------------ ---------- ------------ ---------------
July 2012 42.00p 42.00p 0.50% 33% -
May 2014 46.80p 46.80p 2.69% 16% -
November 2014 49.50p 49.50p 2.05% 18% -
April 2015 47.75p 47.75p 1.58% 17% -
January 2016 23.50p 23.50p 1.74% 38% -
September 2016 5.00p 5.12p 0.87% 30% -
January 2018 (staff) 4.05p 4.29p 0.79% 31% -
January 2018 (directors) 4.05p 4.29p 1.29% 39% -
June 2019 1.55p 1.55p 0.87% 34% -
February 2021 0.10p 0.25p 0.03% 29% -
The expected volatility for the February 2021 grant is based on
the 5-year volatility of comparable companies.
Total expenses of GBP1,332,280 related to equity settled
share-based payment transactions were recognised in the Statement
of Comprehensive Income the year (2020: GBP52,241) comprising
charges in respect of new options granted totalling GBP1,385,700
(2020: GBP52,241) plus directors' fees settled in shares totalling
GBP76,599 less credits in respect of cancelled options that had not
vested totalling GBP130,019 (GBPnil).
In respect of cancelled options that had vested, GBP194,246
(2020: GBP140,516 comprising GBP10,819 in respect of cancelled
staff options and GBP129,697 in respect of lapsed warrants per note
26) was transferred from share-based payment reserve to the
retained losses reserve.
26. Warrants
Broker warrants to subscribe for up to 997,000,000 ordinary
shares, which represented 20 per cent of the placing shares, were
granted to Turner Pope Investments (TPI) Ltd as part of the
fundraising on 5 February 2021. The broker warrants are capable of
exercise for a period of two years from 5 February 2021. The fair
market value of the warrants charged to share based payment
reserved was calculated at GBP1,503,008 based on the following
inputs:
Date of grant Exercise Share price Risk free Expected Gross dividend
price rate volatility yield
--------------- --------- ------------ ---------- ------------ ---------------
February 2021 0.01p 0.25p 0.03% 33% -
The expected volatility for the February 2021 grant is based on
the 2-year volatility of comparable companies.
27. Financial instruments
The Company's financial instruments comprise cash and various
trade receivables and trade payables that arise directly from its
operations. No trading in financial instruments is undertaken. The
main risks arising from the Company's financial instruments are
liquidity, currency and interest rate. The Board oversees the
management of these risks, which are summarised below.
Liquidity risk
The Company finances its operations from equity funding provided
by shareholders and revenues generated by the business. The Company
seeks to manage liquidity risk to ensure enough funds are available
to meet working capital requirements. The Company successfully
raised GBP5.5 million before expenses through the issue of new
shares in February 2021.
The Company invests its cash reserves in bank and money market
deposits as a liquid resource to fund its operations. The Company's
strategy for managing cash is to balance interest income with
counterparty risk ensuring the availability of cash to match the
profile of the Company's cash flows.
The GBP5.5 million raised in February 2021 is anticipated by the
Board of Directors to take the Company through to profitability. In
reviewing the Company as a going concern, as outlined in note 3,
management prepared alternative business scenarios where
performance falls below management expectation. Contingency plans
and mitigating actions have been identified in case actual results
differ from the Company's business plans. There can be no guarantee
that the commercial objectives of the Company will be achieved.
Interest rate risk
The Company does not face any significant interest rate risk as
it has no borrowings. Surplus funds are invested to maintain a
balance between accessibility of funds, competitive rates, and
counterparty risk while investing funds safely.
Credit risk
The Company manages its credit risk in cash and cash equivalents
by spreading surplus funds between creditworthy financial
institutions. The Company is also exposed to credit risk
attributable to trade and other receivables. The maximum credit
risk in respect of the financial assets at each period end is
represented by the balance outstanding on trade and other
receivables. The Company monitors the credit worthiness of its
customers on a regular basis.
Foreign currency risk
The majority of the Company's transactions are denominated in
pounds sterling. The Company has no long-term commitments to
purchase goods or services in foreign currencies. Purchases
denominated in foreign currency are expensed at the exchange rate
prevailing at the date of the transaction and represents an
immaterial proportion of the Company's total expenditure.
The only assets and liabilities denominated in foreign
currencies relate to trade receivables and trade payables with
overseas counterparties together with small balances of US dollar
and Euro currencies to settle these liabilities. The risks and sums
involved are immaterial.
Fair values
The Directors consider that there is no material difference
between the book value and the fair value of the financial
instruments on 31 December 2021 and 31 December 2020.
Capital management
The Company's capital base comprises equity attributable to
shareholders. As the Company's focus has been on establishing
itself as a successful supplier of equipment design and engineering
services, the primary objective in managing cash spend has been to
achieve progress on product development and commercialisation in a
cost-efficient manner and in managing liquidity risk to ensure the
Company continues as a going concern.
28. Related party transactions
Microsaic and DeepVerge plc ("DeepVerge") have two directors in
common: Gerard Brandon and Nigel Burton. In particular, Gerard
Brandon is Chairman of Microsaic and CEO of DeepVerge.
In March 2021, the two companies signed a three-year technology
and commercial agreement, via DeepVerge's subsidiary, Innovenn UK
Limited, whereby Microsaic will supply its products and services on
a non-exclusive basis across DeepVerge's global sales, marketing
and distribution channels, delivering portable solutions for
healthcare diagnostic evaluation and environmental contamination
detection of samples. This included an initial order by DeepVerge
for three units with a total value of GBP100,000, plus a commitment
of up to GBP150,000 from DeepVerge for equipment and services to be
installed at pilot facilities in DeepVerge's laboratories based in
York.
In July 2021, Microsaic processed a further smaller purchase
order from DeepVerge under the Agreement, supplying certain
additional mass spectrometry equipment for quality and
contamination detection in a range of markets including water and
soil analysis. The value of this order was approximately
GBP72,000.
In December 2021, Microsaic received a further order from
DeepVerge for additional miniaturised MS equipment and services
with a total order value of approximately GBP262k. Of this, GBP109k
was pursuant to the March 2021 agreement. Additionally, GBP153k of
the order includes a number of units of Microsaic's newly developed
SPE-LC Systems and related consumables which will be used for
quality and contamination detection in a range of markets including
water and soil analysis.
The SPE-LC System is expected to be used to detect CECs in
water, and will be supplied to DeepVerge to form part of
DeepVerge's third generation solution of multiplex pathogen
detection and the launch of its Modern Water Mobile Services, which
will facilitate auto-sampling at wastewater sites to reduce the
time and cost of detection.
In summary for the year ended 31 December 2021, revenue from
DeepVerge sales totalled GBP385,593 and purchases from DeepVerge
totalled GBP210,600. At 31 December 2021, GBP247,412 was owed by
DeepVerge to Microsaic in relation to the December 2021 orders and
GBP65,610 was owed by Microsaic to DeepVerge.
29. Control
As at 31 December 2021, no individual shareholder had a
controlling interest in the Company.
30. Events after the Reporting Date
Subsequent to 31 December 2021:
-- On 14 February 2022, Dr Nigel Burton, Non-executive Director,
exercised warrants relating to 200 million Ordinary Shares,
reflecting an investment of GBP200,000 in Microsaic;
-- On 19 April 2022, Microsaic signed a new Manufacturing
Services Framework Agreement ("MSFA") with Innovenn UK Limited, a
division of DeepVerge plc ("DeepVerge"), to refine and miniaturise
existing monitoring equipment for environmental and human health
diagnostics, together with an initial contract worth GBP400,000.
The MSFA framework sets out the terms and conditions for Microsaic
to improve and manufacture certain DeepVerge products and to
provide the design, assembly, quality, and project management
functions necessary to produce and ship equipment based on
DeepVerge approved specifications, design, and quality
requirements. DeepVerge is a related party and further details
regarding the relationship are set out in the Related party
transactions note 28.
31. Cash absorbed by operations
Year to 31 Year to 31
December December
2021 2020
GBP GBP
------------------------------------- ------------ ------------
Total comprehensive loss for the
year (3,128,581) (2,372,658)
Adjustments for:
Amortisation of intangible assets 38,241 40,767
Depreciation of right of use assets 70,499 87,237
Depreciation of property, plant
and equipment 90,628 80,034
Transfer of property, plant and 23,164 -
equipment to cost of goods
Profit on disposal of right of use
assets (113) (1,426)
Decrease in provision for warranty (24,075) (12,713)
(Decrease)/Increase in provision
for expected credit losses (65,825) 64,281
Share-based payments 1,363,764 52,241
Increase/(Decrease) in inventory
provision 32,535 17,650
Tax on loss on ordinary activities (267,785) (217,711)
Interest on lease liability 4,433 9,041
Interest received (6,237) (4,393)
Movements in working capital
Decrease /(Increase) in inventories 253,152 (200,998)
(Increase)/Decrease in trade and
other receivables (398,083) 209,838
Increase/(Decrease) in trade and
other payables 168,684 (104,636)
Accrued furlough income 17,748 (17,748)
-------------------------------------- ------------ ------------
Cash absorbed by operations (1,827,851) (2,371,194)
-------------------------------------- ------------ ------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR ALMMTMTATTPT
(END) Dow Jones Newswires
May 30, 2022 02:01 ET (06:01 GMT)
Microsaic Systems (AQSE:MSYS.GB)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Microsaic Systems (AQSE:MSYS.GB)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024
