This announcement contains inside information for the purposes of Article 7 of EU Regulation No. 596/2014, which forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended).
13 September 2024
Graft Polymer (UK) PLC
Unaudited interim results for the six months to 30 June 2024
Graft Polymer (UK) Plc (the "Company" or "Graft Polymer"), an innovative biotechnology company focused on co-developing therapeutics for mental health disorders, announces its unaudited interim results for the six months to 30 June 2024.
Highlights
· Board changes undertaken, including appointment of Anthony Tennyson as Chief Executive Officer.
· Completion of an operational review, leading to a strategic focus on the healthcare industry, specifically developing intellectual property ("IP") relating to the treatment of mental health and substance use disorders, and the co-development of therapeutics for mental health disorders.
· Disposal of non-core, underperforming industrial polymer division to streamline operations and focus on higher-growth sectors.
· Successful £1.8 million fundraising, post period end, through the publication of a prospectus (the "Prospectus") and placement of new shares.
· Entered a commercial collaboration agreement with Awakn Life Sciences Corp. to co-develop a new class of therapeutics targeting trauma related mental health disorders such as Post-Traumatic Stress Disorder ("PTSD").
· Strengthening of the intellectual property portfolio with four new patent applications related to mental health and substance use disorders.
Anthony Tennyson, CEO, said: "I am confident that the strategic steps taken since my appointment positions Graft Polymer as an innovative biotechnology company focused on developing IP relating to the treatment of mental health and substance use disorders, and the co-development of therapeutics for mental health disorders. We are committed to delivering value to our shareholders as we continue this journey and I look forward to providing further updates on our progress."
Chairman's Statement
The interim financial results cover the six-month period from the 1 January 2024 to 30 June 2024. A more detailed narrative on the Company's recent activities was provided in the Prospectus, published on 3 July 2024.
I joined Graft Polymer as Chairman in March 2024, during a period of financial distress for the Company. Upon my appointment, an injection of capital was urgently needed, which led to the initiation of a comprehensive operational review to chart a sustainable path forward.
In May 2024, Anthony Tennyson joined as CEO, bringing a mandate to reduce overheads, streamline operations, and build out our IP portfolio to capitalise on the growing potential of our Graft Bio division.
The operational review is now complete, and we are repositioned as a biotechnology company with a specific focus on mental health and substance use disorders. Through various announcements, we have communicated our strategy clearly, and I am grateful for the strong support from our shareholders since the July 2024 capital raise. Our commitment to developing breakthrough therapeutics for under-addressed markets, including mental health and substance use disorders, offers a credible and significant growth opportunity.
CEO's report
Since my appointment as CEO in May 2024, Graft Polymer has achieved important milestones that underscore our evolution into a biotechnology company focused on mental health and substance use disorders. Our initial target is trauma-related mental health conditions, including PTSD, which impacts approximately 13 million adults in the U.S. and 20 million in the US, UK, and key EU markets.
On 3 May 2024, we announced the disposal of Graft Polymer Slovenia D.O.O., a non-core, underperforming industrial plastics subsidiary. This divestment was essential in refocusing the Company on our core strengths in biotechnology.
Following this, we took several crucial steps to strengthen the Company's financial and strategic position:
· 3 July 2024: The Company successfully raised £1.8 million, providing the resources needed to fuel future growth.
· 18 July 2024: The Company entered into a commercial collaboration with Awakn Life Sciences Corp. to co-develop new therapeutics targeting trauma-related mental health disorders, including PTSD.
· 30 July 2024: The Company appointed Professor David Nutt as Senior Scientific Advisor, adding world-class expertise to our development programme.
· 28 August 2024: The Company and Awakn Life Sciences Corp. selected the co-lead series for our collaboration and engaged Charnwood Discovery as the synthesis partner to advance the programme.
With these steps, we are confident in our trajectory as a key player in the development of innovative treatments for mental health and substance use disorders. We look forward to keeping our shareholders updated as we continue to execute our strategy.
Enquiries:
Graft Polymer (UK) Plc
Anthony Tennyson, CEO and Executive Director
Email: anthonytennyson@graftpolymer.co.uk
Allenby Capital (Broker)
Nick Naylor / Liz Kirchner (Corporate Finance) | Guy McDougall (Sales)
+44 (0) 20 3328 5656
GRAFT POLYMER (UK) PLC - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 6 MONTH PERIOD ENDING 30 JUNE 2024
|
Note | Unaudited Six months to 30 Jun 2024 £'000 | Unaudited Six months to 30 Jun 2023 |
Continuing operations | |
|
|
Revenue | 5 | - | 240 |
Cost of sales | | - | (129) |
Gross profit | | - | 111 |
Operational costs | 6 | (18) | (80) |
Administrative expenses | 6 | (526) | (1,060) |
Gain on deconsolidation | 14 | 139 | - |
Operating loss | | (405) | (1,029) |
Depreciation | | - | (94) |
Finance costs | | (64) | (3) |
Loss before taxation | | (469) | (1,126) |
Income tax | | - | - |
Loss for the period from continuing operations | | (469) | (1,126) |
Loss from discontinuing operations | 14 | (157) | - |
Total loss for the period attributable to equity holders of the parent | | (626) | (1,126) |
Other comprehensive income | | | |
Foreign currency translation | | 76 | 38 |
Derecognition of foreign exchange reserve | 14 | (123) | - |
Other comprehensive income (net of tax) for the year |
| (673) | 38 |
Total comprehensive loss for the period attributable to equity holders of the parent | | (673) | (1,088) |
| |
|
|
Loss per share (p) | 7 | (0.38) | (1.08) |
The notes from an integral part of the Condensed Consolidated Interim Financial Statements.
CONSOLIDATED STATEMENT OF FINANNCIAL POSITION
FOR THE 6 MONTH PERIOD ENDING 30 JUNE 2024
| Note | Unaudited 30 Jun 2024 £'000 | Unaudited 30 Jun 2023 £'000 | Audited 31 Dec 2023 |
Non-current assets | | | | |
Property, plant and equipment | 8 | - | 805 | - |
Intangible assets | 9 | 2,068 | 2,068 | 2,068 |
Other non-current assets | | - | 13 | 13 |
Right of use assets | | - | 47 | 39 |
Total non-current assets | | 2,068 | 2,933 | 2,120 |
Current assets | | | | |
Cash and cash equivalents | | 27 | 522 | 155 |
Trade and other receivables | | 44 | 136 | 108 |
Inventory | | - | 114 | 51 |
Total current assets | | 71 | 772 | 314 |
TOTAL ASSETS | | 2,139 | 3,705 | 2,434 |
| | | | |
Non-current liabilities | | | | |
Lease liability | | - | 29 | 22 |
Total non-current liabilities | | - | 29 | 22 |
Current liabilities | | | | |
Trade and other payables | | 220 | 197 | 249 |
Deferred Income | | - | - | 93 |
Lease liability | | - | 13 | 12 |
Loan note | 11 | 264 | - | - |
Provisions | | - | - | 32 |
Total current liabilities | | 484 | 210 | 386 |
Total liabilities | | 484 | 239 | 408 |
NET ASSETS | | 1,655 | 3,466 | 2,026 |
| | | | |
Equity | | | | |
Issued share capital | 12 | 62 | 41 | 41 |
Share premium | 12 | 7,093 | 7,001 | 7,001 |
Share capital to issue | | 358 | - | 175 |
Share based payments reserve | | 1,233 | 858 | 1,227 |
Capital reduction reserve | | 2,500 | 2,500 | 2,500 |
Foreign exchange reserve Share based payments reserve | | - | 37 | 47 |
Accumulated losses | | (9,591) | (6,971) | (8,965) |
TOTAL EQUITY | | 1,655 | 3,466 | 2,026 |
The notes from an integral part of the Condensed Consolidated Interim Financial Statements.
The Condensed Consolidated Interim Financial Statements were approved and authorised by the Board of Directors on 13 September 2024.
Nicholas Nelson - Chairman
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE 6 MONTH PERIOD ENDING 30 JUNE 2024
|
Unaudited Six months to 30 Jun 2024 £'000 | Unaudited Six months to 30 Jun 2023 | |
Cash flow from operating activities | | |
|
Loss before tax | (626) | (1,126) |
|
Adjustments for: | | |
|
Depreciation - property, plant & equipment | 57 | 90 |
|
Depreciation - right of use asset | - | 4 |
|
Finance charge | 64 | 3 |
|
Share based payments | 7 | - |
|
Gain on deconsolidation | (139) | - |
|
Impairment of fixed asset | (57) | - |
|
Foreign exchange movements | 75 | 39 |
|
Changes in working capital: | | |
|
Decrease in trade and other receivables | 34 | 175 |
|
Increase / (decrease) in in trade and other payables | 123 | (151) |
|
Increase in inventories | 39 | 73 |
|
Net cash outflow from operating activities | (423) | (893) |
|
| | |
|
Cash flow from investing activities | | |
|
Purchase of property, plant and equipment | - | (237) |
|
Repayments on right of use assets | (4) | - |
|
Disposed subsidiary cash balance | (13) | - |
|
Net cash outflow from investing activities | (17) | (237) |
|
| | |
|
Cash flows from financing activities | | |
|
Net proceeds from issue of shares | 112 | - |
|
Proceeds from issue of convertible note | 200 | |
|
Net cash inflow from financing activities | 312 | - |
|
| | |
|
Net (decrease) in cash and cash equivalents | (128) | (1,130) |
|
Cash and cash equivalents at beginning of period | 155 | 1,640 |
|
Foreign exchange impact on cash | - | 12 |
|
Cash and cash equivalents at the end of the period | 27 | 522 |
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 30 JUNE 2024
| Share capital | Shares to be issued | Share premium | Capital Reduction reserve | SBP reserve | Foreign exchange Reserve | Retained earnings | Total equity |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 31 December 2022 | 41 | - | 7,001 | 2,500 | 858 | (1) | (5,845) | 4,554 |
| | | | | | | | |
Loss for period | - | - | - | - | - | - | (1,126) | (1,126) |
Other comprehensive income | - | - | - | - | - | 38 | - | 38 |
Total comprehensive loss for year | - | - | - | - | - | 38 | (1,126) | (1,088) |
Transactions with owners in own capacity |
| | | | | | | |
Transactions with owners in own capacity | - | - | - | - | - | - | - | - |
Balance at 30 June 2023 | 41 | - | 7,001 | 2,500 | 858 | 37 | (6,971) | 3,466 |
|
|
|
|
|
| |
|
|
Loss for period | - | - | - | - | - | - | (1,994) | (1,994) |
Other comprehensive income | - | - | - | - | - | 10 | - | 10 |
Total comprehensive loss for year | - | - | - | - | - | 10 | (1,994) | (1,984) |
Transactions with owners in own capacity | | | | | | | | |
Waiver of Director and advisor fees | - | 175 | - | - | - | - | - | 175 |
Employee options | - | - | - | - | 369 | - | - | 369 |
Transactions with owners in own capacity | - | 175 | - | - | 369 | - | - | 544 |
Balance at 31 December 2023 | 41 | 175 | 7,001 | 2,500 | 1,227 | 47 | (8,965) | 2,026 |
|
|
|
|
|
|
|
|
|
Loss for period | - | - | - | - | - | - | (626) | (626) |
Other comprehensive income | - | - | - | - | - | 76 | - | 76 |
Total comprehensive loss for year | - | - | - | - | - | 76 | (626) | (551) |
Transactions with owners in own capacity | | | | | | | | |
Shares issued during the year | 21 | 183 | 92 | - | - | - | - | 296 |
Disposal of subsidiary | - | - | - | - | - | (123) | - | (123) |
Employee options | - | - | - | - | 6 | - | - | 6 |
Transactions with owners in own capacity | 21 | 183 | 92 | - | 6 | (123) | - | 179 |
Balance at 30 June 2024 | 62 | 358 | 7,093 | 2,500 | 1,233 | - | (9,591) | 1,655 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 6 MONTH PERIOD ENDING 30 JUNE 2024
1. GENERAL INFORMATION
Graft Polymer (UK) Plc ("the Company" or "Graft") was incorporated in England and Wales as a limited company on 18 May 2017 as Graft Polymer (UK) Limited and was re-registered as a public limited company on 1 July 2021. The Company is domiciled in England and Wales with its registered office at Eccleston Yards, 25 Eccleston Place, London, SW1W 9NF. The Company's registered number is 10776788.
At the beginning of the period the principal activities of the Company and all of its subsidiaries (collectively referred to as "the Group") were the research and development of polymer modification technologies and polymer modification techniques. However towards the end of the period the board of directors undertook a review of its business and operations, pursuant to which it was decided that Graft Polymer Slovenia ("Graft Polymer D.O.O") (principally, an industrial polymer products manufacturer) was considered no longer commercially viable due to forecasted negative cashflow as a result of falling sales and rising costs, with no immediate prospect of becoming profitable in the short to medium term and as a result the decision was made to dispose of Graft Polymer D.O.O on 2 May 2024.
Post the divestment the Company will focus its attention and resources on its Graft Bio division, which represents strong prospectivity through its intellectual property (IP), licensing agreements, and sales contracts.
The condensed consolidated interim financial statements ("interim financial statements") were approved for issue by the Board of Directors on 13 September 2024.
2. ACCOUNTING POLICIES
IAS 8 requires that management shall use its judgement in developing and applying accounting policies that result in information which is relevant to the economic decision-making needs of users, that are reliable, free from bias, prudent, complete and represent faithfully the financial position, financial performance and cash flows of the entity.
3. BASIS OF PREPARATION
The interim financial statements of Graft Polymer (UK) Plc for the six-month period ended 30 June 2024 have been prepared in accordance with Accounting Standard IAS 34 Interim Financial Reporting.
The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2023, which was prepared in accordance with UK adopted International Accounting Standards (IFRS) and the Companies Act 2006, and any public announcements made by Graft Polymer (UK) plc during the interim reporting period and since.
These interim financial statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2023 prepared under IFRS have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) of the Companies Act 2006.
The functional currency for each entity in the Group is determined as the currency of the primary economic environment in which it operates. The functional currency of the Company's subsidiary (which was disposed of on 2 May 2024) was the Euro. The presentational currency of the Group is Pounds Sterling as this is the functional currency of the parent entity and also the currency in which equity fundraising has been facilitated. Amounts have been rounded to the nearest £'000.
The interim financial statements have not been audited.
The business is not considered to be seasonal in nature.
3.1 GOING CONCERN
These interim financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business.
As disclosed in the interim financial statements, the consolidated entity incurred a net loss before taxation for the period ended 30 June 2024 from continuing operations of approximately £469,000 (30 June 2023: approximately £1,126,000) and had net cash outflows of approximately £128,000 (30 June 2023: approximately £1,130,000) for the period ended 30 June 2024. As at period end, the consolidated entity had net current liabilities of approximately £413,000 (30 June 2023: net current assets of approximately £562,000) and had cash and cash equivalents equal to approximately £27,000 (30 June 2023: approximately £522,000).
In the Group's last annual report the Group's auditors noted that there was a material uncertainty relating to going concern due to an uncertainty over a potential fundraise. Since period end, the Group has successfully raised £1.8m (before expenses) via a placing of new ordinary shares which has boosted the liquidity of the Group.
As a result, the Directors have assessed that the Group now has sufficient working capital to execute its operations over the next 12 months. Accordingly, the Directors believe that the Group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the interim financial statements.
3.2 PRINCIPAL RISK AND UNCERTAINTIES
The principal risks and uncertainties of the Group have changed materially since the publication of the Group's last annual report. A new risk assessment was performed alongside the prospectus that was published on 3 July 2024 and the key risks are highlighted below:
- The Group is currently loss making, recording a financial loss of approximately £469,000 (30 June 2023: approx. £1,126,000) for the period and the Group has no clear source of revenue.
- The existing license of the Group's drug delivery systems may ultimately fail to deliver revenues through royalty and distribution payments in accordance with management's expectations or at all; and
- A core asset of the Group is the intellectual property rights in its drug delivery system. A failure to protect those intellectual property rights and its portfolio of intellectual property rights, more generally, may have an adverse impact on the financial condition of the Group
These risks are deemed by the Directors to be within the normal risk appetite of the Group and are comfortable that the risks are properly mitigated where required.
3.3 CRITICAL ACCOUNTING ESTIMATES
The preparation of these interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses, and disclosure of contingent assets and liabilities at the end of the reporting period.
In preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were similar to those that applied to the financial statements for the period ended 31 December 2023 (unless specifically detailed below) with the nature and amounts of such estimates have not changed significantly during the interim period. New critical accounting estimates considered by management for the interim period were:
Disposal of Graft Polymer D.O.O
On 2 May 2024, the board of directors undertook a review of its business and operations, pursuant to which it was decided to dispose of Graft Polymer D.O.O on 2 May 2024. On contemplation of various factors relating to Graft Polymer D.O.O the board decided there was not significant value in the subsidiary and hence decided to dispose of it for nominal consideration.
4. SEGEMENT REPORTING
The Chief Operating Decision Maker is the Board of Directors. The Board reviews the Group's internal reporting in order to assess performance of the Group. Management has determined the operating segments based on the reports reviewed by the Board.
The Board considers that during the six month period ended 30 June 2024, the Group operated in two segments being the corporate function in the United Kingdom and polymer development and production in Slovenia.
However, due to the disposal of the Slovenian operations on 2 May 2024, the contributions from the Slovenian operating segment are not reported in the loss from continuing operations in the statement of comprehensive income. For details of the contribution of the Slovenian operations during the period up until the point of disposal, refer to Note 14.
5. REVENUE
|
| Period to 30 Jun 2024 £'000 | Period to 30 Jun 2023 £'000 |
Sales revenue | | - | 240 |
| | - | 240 |
For details of the revenue from the Slovenian operations during the period up until the point of disposal refer to Note 14.
6. OPERATING LOSS
Operating loss from continued operations is stated after (charging):
|
| Period to 30 Jun 2024 £'000 | Period to 30 Jun 2023 £'000 |
Operational costs | | (18) | (80) |
Director and employee costs | | (241) | (620) |
Professional and consulting fees | | (248) | (163) |
Travel expenses | | - | (2) |
Corporate and administrative costs | | (30) | (150) |
Other expenses | | (7) | (31) |
Foreign exchange | | - | (94) |
Gain on deconsolidation | | 139 | - |
| | (405) | (1,140) |
7. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is calculated by dividing the profit or loss for the period by the weighted average number of ordinary shares in issue during the period.
|
| Unaudited Period to 30 Jun 2024 | Unaudited Period to 30 Jun 2023 |
Loss for the period from continuing operations - £ '000s | | (469) | (1,126) |
Weighted number of ordinary shares in issue | | 124,309,754 | 104,097,229 |
Loss per share from continuing operations - p | | (0.38) | (1.08) |
Share options and warrants could potentially dilute basic earnings per share in the future. These were not included in the calculation and no diluted earnings per share presented as the Group is loss making and additional equity instruments are anti-dilutive for the periods presented.
8. PROPERTY, PLANT AND EQUIPMENT
| Leasehold Improvements £'000 | Plant & Equipment £'000 | Total £'000 |
Cost | | | |
At 1 July 2023 | 90 | 1,135 | 1,225 |
Additions | 14 | 6 | 20 |
Disposals | - | (27) | (27) |
Impairment | (107) | (1,117) | (1,224) |
Exchange impact | 3 | 3 | 6 |
At 31 December 2023 (audited) | - | - | - |
Impairment | 107 | 1,117 | 1,224 |
Disposal on derecognition of subsidiary | (107) | (1,117) | (1,224) |
At 30 June 2024 (unaudited) | - | - | - |
|
|
|
|
Depreciation | | | |
At 1 July 2023 | (48) | (372) | (420) |
Charge for the year | - | (73) | (73) |
Disposals | - | 6 | 6 |
Impairment | 40 | 463 | 503 |
Exchange impact | 8 | (24) | (16) |
At 31 December 2023 (audited) | - | - | - |
Impairment | (40) | (463) | (503) |
Disposal on derecognition of subsidiary | 40 | 463 | 503 |
At 30 June 2024 (unaudited) | - | - | - |
|
|
|
|
Net book value at 31 December 2023 (audited) | - | - | - |
Net book value at 30 June 2023 (unaudited) | 42 | 763 | 805 |
Net book value at 30 June 2024 (unaudited) | - | - | - |
9. INTANGIBLE ASSETS
|
| Unaudited 30 Jun 2024 £'000 | Unaudited 30 Jun 2023 | Audited 31 Dec 2023 |
Opening balance | | 2,068 | 2,068 | 2,068 |
| | 2,068 | 2,068 | 2,068 |
Intangible assets relate to the issue of 22,500,000 shares to founding director Victor Bolduev on the acquisition of his "Know-how" and patents that have been transferred to the Group.
At each period end, the Directors assess the intangible assets for any indicators of impairment and have concluded no presence of such indicators. Consequently no impairment charge has been processed during the period (31 Dec 2023: £nil).
10. INVESTMENTS
Company subsidiary undertakings
The Group owned interests in the following subsidiary undertakings, which are included in the financial statements:
Name | Business Activity | Country of Incorporation | Registered Address | Percentage Holding |
Graft Polymer IP Limited | Intellectual property | England and Wales | Eccleston Yards, 25 Eccleston Place, London, SW1W 9NF | 100% |
GRAFTBIO Limited | Bio-Polymer development and production | England and Wales | Eccleston Yards, 25 Eccleston Place, London, SW1W 9NF | 100% |
11. LOAN NOTE
|
| Unaudited 30 Jun 2024 £'000 | Unaudited 30 Jun 2023 £'000 | Audited 31 Dec 2023 £'000 |
Opening balance | | - | - | - |
Principal drawn down | | 200 | - | - |
Interest charged | | 64 | - | - |
Principal repaid | | - | - | - |
| | 264 | - | - |
On 15 March 2024, the Company entered into a £100,000 working capital loan facility, which was subsequently increased by a further £100,000 in April 2024. The facility has been drawn down in full and attracts an interest rate of 10% per month. The loan is repayable on demand, together with accumulated interest.
12. SHARE CAPITAL
|
| Unaudited 30 Jun 2024 | Unaudited 30 Jun 2023 | Audited 31 Dec 2023 |
Number of shares | | 124,763,966 | 104,097,299 | 104,097,299 |
Nominal value (£'000) | | 62 | 41 | 41 |
Issued and fully paid ordinary shares with a nominal value of £0.001 (2023: £0.001)
Change in issued Share Capital and Share Premium:
| Number of shares | Share capital | Share premium | Total |
Ordinary shares |
| £'000 | £'000 | £'000 |
Opening balance at 31 December 2023 | 104,097,299 | 41 | 7,001 | 7,042 |
Issue of shares at placing price of 0.6 pence | 20,666,667 | 21 | 103 | 124 |
Share issue costs | - | - | (11) | (11) |
Closing balance at 30 June 2024 | 124,763,966 | 62 | 7,093 | 7,155 |
13. SHARE BASED PAYMENT RESERVE
Warrants
| As at 30 June 2024 | |
| Weighted average exercise price | Number of warrants |
Brought forward at 1 January 2024 | 22p | 2,031,008 |
Granted in period | 1p | 10,333,333 |
| 0.6p | 1,500,000 |
Expired during period | 22p | (775,194) |
Outstanding at 30 June 2024 | 2.9p | 13,089,147 |
Exercisable at 30 June 2024 | 2.9p | 13,089,147 |
The weighted average time to expiry of the warrants as at 30 June 2024 is 515 days.
The following table lists the Black Scholes inputs to the model used for valuation of the warrants:
| 1p warrants | 0.6p warrants |
Dividend yield (%) | 0% | 0% |
Expected volatility (%) | 92.4% | 92.4% |
Risk-free interest rate (%) | 3.6% | 3.6% |
Time to maturity | 2 years | 2 years |
Exercise price (£) | 0.01 | 0.006 |
Share price at grant date (£) | 0.006 | 0.006 |
14. BUSINESS COMBINATIONS
Discontinued operations
A discontinued operation is a component of the Group that has been disposed of or classified as held for sale and that represents a separate major line of business or geographical area of operation, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the Statement of Comprehensive Income.
The Board recently undertook a review of its business and operations, pursuant to which it was decided that the Slovenian operation, Graft Polymer D.O.O (principally, an industrial polymer products manufacturer), was considered no longer commercially viable due to forecasted negative cashflow as a result of falling sales and rising costs, with no immediate prospect of becoming profitable in the short to medium term. The Group disposed of Graft Polymer D.O.O on 2 May 2024.
A gain on deconsolidation as at date of disposal of £139k was recognised and taken to the Statement of Comprehensive Income.
Gain on deconsolidation of Graft Polymer D.O.O |
|
| |
|
| 2 May 2024 £'000 |
|
Consideration received | |
|
|
Cash | | - | |
Carrying amount of net liabilities sold | | 16 | |
| | 16 |
|
Reclassification of foreign exchange reserve | 123 | | |
Gain on deconsolidation |
| 139 | |
| | | |
Financial Performance for Graft Polymer D.O.O | | | |
| | Unaudited Four months to 2 May 2024 £'000 | Unaudited Six months to 30 Jun 2023 |
Revenue | | 221 | 240 |
Cost of sales | | (162) | (128) |
Gross profit | | 59 | 112 |
Operational costs | | (17) | (80) |
Depreciation | | (57) | (92) |
Administrative expenses | | (141) | (288) |
Operating loss | | (156) | (348) |
Finance costs | | (1) | (3) |
Loss before taxation | | (157) | (351) |
Income tax | | - | - |
Loss for the period from discontinuing operations | (157) | (351) |
Assets and liabilities of Graft Polymer D.O.O | | | |
| | Unaudited 2 May 2024 £'000 | Audited 31 Dec 2023 |
Non-current assets | | | |
Right of use assets | | 38 | 39 |
Other non-current assets | | 13 | 13 |
Total non-current assets | | 51 | 52 |
Current assets | |
|
|
Cash and cash equivalents | | 13 | 143 |
Trade and other receivables | | 44 | 78 |
Inventory | | 11 | 50 |
Total current assets | | 68 | 271 |
TOTAL ASSETS | | 119 | 323 |
| | | |
Non-current liabilities | | | |
Lease liability | | - | 22 |
Total non-current liabilities | | - | 22 |
Current liabilities | | | |
Trade and other payables | | 71 | 132 |
Deferred Income | | 36 | 93 |
Lease liability | | 28 | 12 |
Total current liabilities | | 135 | 237 |
Total liabilities | | 135 | 259 |
NET ASSETS | | (16) | 64 |
15. RELATED PARTY TRANSACTIONS
Payments to Directors
In the period Directors accrued fees as per below which were outstanding at period end:
| Fees accrued in the period (£) | Outstanding Fees as at 30.06.24 (£) |
Victor Bolduev | 84,870 | 135,175 |
Pavel Kobzev | 22,270 | 52,160 |
Roby Zomer | 30,050 | 66,666 |
Yifat Steuer | 50,050 | 90,270 |
Alex Brooks | 7,430 | 16,865 |
Anthony Tennyson | 8,335 | 8,335 |
Nicholas Nelson | 10,500 | 10,500 |
The outstanding fees were settled through a mix of cash and share consideration post period end.
16. EVENTS SUBSEQUENT TO PERIOD END
Placement of New shares and issue of warrants
On 10 July 2024, the Company raised £1.8 million (before expenses) through a placing of 2,171,166,667 new ordinary shares. A breakdown of the placement is detailed below:
Type of shares | No. of shares |
Placing shares | 1,800,000,000 |
Conversion shares1 | 264,000,000 |
Management shares2 | 59,666,667 |
Fee shares3 | 47,500,000 |
Total | 2,171,166,667 |
1 Shares issued as full repayment of working capital loan and accrued interest
2 Shares issued in satisfaction of fees owed to Directors as at 31 March in connection to the July 24 transaction
3 Shares issued to various directors and advisors in lieu of fees owed
In addition to the above, on 10 July 2024, 294,500,000 warrants were also issued.
Resignation of Pavel Kobzev
On 15 July 2024, Mr. Pavel Kobzev resigned from the board of directors with immediate effect. This followed the Company's recent divestiture of its industrial plastics business unit, Graft Polymer D.O.O., announced on 3 May 2024.
Resignation of Victor Bolduev
On 1 August 2024, Mr. Victor Bolduev resigned from the board of directors and from his role as the Company's Chief Technology Officer with immediate effect. This followed the Company's recent divestiture of its industrial plastics business unit, Graft Polymer D.O.O., announced on 3 May 2024.
Resignation of Yifat Steuer
On 12 August 2024, Ms. Yifat Steuer resigned from the board of directors and from her role as the Company's Chief Financial Officer with immediate effect.
Issue of options to Professor David Nutt
In consideration for becoming the Company's Senior Scientific Adviser, Professor Nutt was granted 10,000,000 nominal cost options (with an exercise price of £0.001 and expiry life of 3 years) over the Company's ordinary shares under the Company's Long Term Incentive Plan. The options vest in 3 equal tranches with one tranche vesting immediately and the remaining two tranches on the 1 and 2 year anniversary of grant date respectively.
Impairment of Intangible Assets
Subsequent to period end the board of directors reviewed the current financial position of the Company and, following the resignation of Victor Bolduev on 1 August 2024 the directors will assess the recoverability of intangible assets linked to his intellectual property and "Know-how." As there were no indicators of the potential resignation of Mr Bolduev at period end the Directors are comfortable that the assets were not impaired at this stage.
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.