GENI Genincode Plc

Intangible assets

(i)       Patents and licenses costs

The Group has purchased patents and licences since incorporation. The costs incurred in obtaining these patents and licenses have been capitalised. Amortisation is charged as follows:

 

Patents                                             Over estimated economic life of 10 years

Licences                                           20% (estimated useful life of 5 years)

 

The Patents and license costs are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

 

(ii)      Software costs

The Group has purchased software since incorporation. The costs incurred in obtaining the software have been capitalised as the Group uses the software platform to provide results to its customers.

 

Amortisation is charged on a straight-line basis at 25% over the useful life of the related asset. Software costs are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

 

Foreign currency

The functional currency of the Company is Sterling Pound (£) and its subsidiaries are in Euros (€) and US Dollars ($). The presentational currency of the Company is £.

 

Transactions entered by the Group's entities in a currency other than the reporting currency are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the statement of financial position date. Exchange differences arising on the re-translation of outstanding monetary assets and liabilities are also recognised in the income statement.

 

The exchange rates used in the financial statements are as follows:

	2023		2022
Sterling/euro exchange rates
Average exchange rate for the year	1.149		1.173
Exchange rate at the year end	1.153		1.128
Sterling/US dollar exchange rates
Average exchange rate for the year	1.244		1.237
Exchange rate at the year end	1.273		1.210

 

Revenue recognition

Revenue is recognised in accordance with the requirements of IFRS 15 'Revenue from Contracts with Customers'. The Group recognises revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is determined to be recognised at the point of despatch of the product or service unless there are specific provisions in the relevant contract. Revenue from the provision of testing and reporting services is recognised upon delivery of the report to the customer. Invoices are typically raised upon delivery of the products or reporting services, unless there is a different contractual requirement, for payment according to credit terms, the prices having been pre-agreed on a product and customer basis.

 

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held on call, together with other short term highly liquid investments which are not subject to significant changes in value and have original maturities of less than three months.

 

Equity

Equity comprises the following:

·        Share capital: the nominal value of equity shares.

·        Retained deficit: losses accumulated to the end of the year.

·        Share premium: excess subscribed above nominal value.

·        Share option reserve

·        Foreign exchange reserve

 

Taxation

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date.

 

Employee benefits

(i)       Short-term benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the year in which the associated services are rendered by employees of the Company.

 

Employee benefit costs

The Group operates a defined contribution pension scheme.  Contributions payable to the Group's pension scheme are charged to the income statement in the year to which they relate.

 

Research and development expenditure

Expenditure on research activity is recognised as an expense in the year in which it is incurred.

 

Share based payment

The fair value of equity-settled share-based payments to employees is determined at the date of grant and expensed on a straight line basis over the vesting period based on the Group's estimate of shares or options that will eventually vest. 

 

All equity-settled share-based payments are ultimately recognised as an expense in the profit or loss with a corresponding credit to the Share based payment reserve.  If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting.

 

Share options granted to employees of subsidiaries are recognised as an expense in the employing subsidiary and as an addition to the investment in the subsidiary for the parent company.  The costs are calculated on the same basis as above and are included upon consolidation. 

 

Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium.

Leased assets

The Group recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, which comprises of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

 

The right of use asset is subsequently depreciated using the commencement date to the end of the lease term.

 

The lease liability is initially measured at the present value of the lease payments that are paid at the commencement date, discounted using the Group's incremental borrowing rate.

 

The lease liability is measured at amortised cost using the effective interest method. It is re-measured when there is a change in future lease payments arising from a change in an index or rate, or if the group changes its assessment of whether it will exercise a purchase, extension or termination option.

 

The Group has elected not to recognise right of use assets and lease liabilities for short term leases that have a lease term of 12 months or less and leases of low value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

 

Financial instruments

IFRS 9 requires an entity to address the classification, measurement and recognition of financial assets and liabilities.

 

a)       Classification

The Group classifies its financial assets in the following measurement categories:

•        those to be measured subsequently at fair value (either through OCI or through profit or loss); and

•        those to be measured at amortised cost.

 

The classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows.

 

For assets measured at fair value, gains and losses will be recorded either in profit or loss or in OCI.

 

The entity will recognise a financial liability in its statement of financial position when it becomes party to the contractual provisions of the instrument. At initial recognition, the entity measures a financial liability at its fair value plus or minus, in the case of a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial liability.

 

The Group classifies financial assets as amortised costs only if both of the following criteria are met:

•        the asset is held within a business model whose objective is to collect contractual cash flows; and

•        the contractual terms give rise to cash flows that are solely payment of principal and interest.

 

b) Recognition

Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Group commits to purchase or sell the asset). Financial assets are de-recognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

 

c) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.

 

Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

 

Debt instruments

Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss.

 

d) Impairment

The Group assesses, on a forward-looking basis, the expected credit losses associated with any debt

instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

 

Goodwill

Goodwill arising in a business combination is recognised as an asset at the date control is acquired (the acquisition date). Goodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the consideration payable and the fair value of the identifiable assets, liabilities and contingent liabilities acquired.

 

Goodwill is not amortised but is reviewed for impairment at least annually or more frequently if there is an indication that goodwill may be impaired. If the recoverable amount is less than the carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.

 

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

 

Inventory

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average cost method. Net realisable value represents the estimated selling price less all estimated costs of completion.

 

Taxation

Current and deferred tax is charged or credited in profit or loss, except when it relates to items charged or credited directly to equity, in which case the related tax is also dealt with in equity. Current tax is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date in the countries where the Company and its subsidiaries operate.

 

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised, except for differences arising on investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

 

Recognition of the deferred tax assets is restricted to those instances where it is probable that a taxable profit will be available against which the difference can be utilised.

 

Deferred tax is calculated based on rates enacted or substantively enacted at the reporting date and expected to apply when the related deferred tax asset is realised, or liability settled.

 

Critical accounting estimates and judgements

The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Directors to exercise their judgement in the process of applying the accounting policies which are detailed above. These judgements are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

The key estimates and underlying assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year, or in the years of the revision and future periods if the revision affects both current and future years.

 

The estimates and judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below:

 

•        Intangible assets

The assessment of the future economic benefits generated by these separately identifiable intangible assets and the determination of its amortisation profile involve a significant degree of judgement based on management estimation of future potential revenue and profit and the useful life of the assets. Reviews are performed regularly to ensure the recoverability of these intangible assets.

 

•        Share based payments

The Company has issued share options as an incentive to certain senior management. The fair value of options granted is recognised as an expense with a corresponding credit to the share-based payment reserve. The fair value is measured at grant date and spread over the year during which the awards vest.

 

For equity-settled share-based payment transactions, the goods or services received and the corresponding increase in equity are measured directly at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If it is not possible to estimate reliably the fair value of the goods or services received, the fair value of the equity instruments granted as calculated using the Black-Scholes model is used as a proxy. 

 

The fair value of share-based payments is measured by use of valuation models, which take into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on historical share price performance of a group of peer companies as historical share price performance was not available for the Company on the date of grant.

 

·        Contingent consideration

 

Contingent consideration is a financial liability recorded at fair value (note 24). The amount of contingent consideration to be paid is based on the occurrence of future events, such as the achievement of certain development, regulatory and sales milestones. Accordingly, the estimate of fair value contains uncertainties as it involves judgment about the likelihood and timing of achieving these milestones as well as the discount rate used.

 

Changes in fair value of the contingent consideration obligation result from changes to the assumptions used to estimate the probability of success for each milestone, the anticipated timing of achieving the milestones and the discount period and rate to be applied. A change in any of these assumptions could produce a different fair value, which could have a material impact on the results from operations.

 

·        Leases

The application of IFRS 16 requires the Group to make judgments that affect the valuation of the lease liabilities and the valuation of right-of-use assets (note 25). These include: determining contracts in scope of IFRS 16, determining the contract term and determining the interest rate used for discounting of future cash flows.

The lease term determined by the Group generally comprises non-cancellable period of lease contracts, periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option. The same term is applied as the economic useful life of right-of-use assets.

The present value of the lease payment is determined using the discount rate representing the base rate of 4.5%, plus a margin of 3% for general lending, giving a raise to a discount rate of 7.5%.

 

Management have assessed each lease liability for recognition under IFRS16 and recognised a right of use asset where appropriate (note 25).  The right of use asset is amortised in line with the term of the lease.  Amortisation is on a straight line basis over 5 years with discount rate 7.5% as above.

 

·        Carrying value of inter- company debtors

Management uses their judgement to assess the recoverability and value of intercompany debts, the Company has funded its subsidiaries (note 17) to assist with their growth.  Management have decided to provide for the inter-company debts in their entirety at the year end.  This is based on current forecasts and the ability of the subsidiaries to repay the debts within the foreseeable future.

 

3.         Financial risk management

The Group's risk management is controlled by the board of directors.  The board identifies, evaluates, and mitigates financial risks across the Group.  Financial risks identified and how these risks could affect the Group's future financial performance are listed below;

 

Financial instruments by category

Financial assets at amortised cost	2023		2022
	£'000		£'000
Cash and cash equivalents	2,484		9,732
Trade receivables	428		315
Financial assets	42		16
Other receivables	37		37
Financial assets at amortised cost	2,991		10,100
Financial liabilities at amortised cost	2023		2022
	£'000		£'000
Trade payables	1,194		2,694
Other payables Accruals	- 396		70 432
Lease liability	299		354
Financial liabilities at amortised costs	1,889		3,550

 

 

Financial liabilities at Fair Value	2023		2022
	£'000		£'000
Trade payables	178		155
Financial liabilities at fair value	178		155

 

Fair value hierarchy

All the financial assets and financial liabilities recognised in the financial statements which are short-term in nature are shown at the carrying value which also approximates the fair values of those short-term financial instruments. Therefore, no separate disclosure for fair value hierarchy is required for them. The disclosure on fair value hierarchy does not apply to the financial leases.

 

The Group's activities expose it to a variety of financial risks, mainly credit risk, liquidity risk and interest rate risk.

 

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. In order to minimise this risk the Group endeavours only to deal with companies which are demonstrably creditworthy.

 

The aggregate financial exposure is continuously monitored. The Group's exposure to credit risk on cash and cash equivalents is considered low as the bank accounts are with banks with high credit ratings.

 

Liquidity risk

The Group currently holds cash balances to provide funding for normal activity and is managed centrally. Trade and other payables are monitored as part of normal management routine.

 

Interest rate risk

The Group's interest-bearing assets comprise of only cash and cash equivalents. As the Group's interest-bearing assets do not generate significant amounts of interest, changes in market interest rates do not have any significant direct effect on its income. 

 

The maturity of borrowings and other financial liabilities (representing undiscounted contractual cash-flows) is as follows:

2022	Within 1 Year
	£'000
Trade and Other Payables	1,486
Lease liability	69
Total	1,555
	Over 1 Year
Trade and Other Payables	1,278
Lease liability	285
	1,563
2023	Within 1 Year
	£'000
Trade and Other Payables	1,194
Lease liability	78
Total	1,272
	Over 1 Year
Trade and Other Payables
Lease liability	221
	221

 

Capital risk management

The Group's capital management objectives are to ensure the Group's ability to continue as a going concern, and provide an adequate return to shareholders by pricing products and services commensurate with the level of risk.

 

To meet these objectives, the Company reviews the budgets and forecasts on a regular basis to ensure there is sufficient capital to meet the needs of the Company through to profitability and positive cash flow.

 

All working capital requirements are financed from existing cash resources.

 

4.          Operating segments

There is only one operating segment. The Group has disaggregated revenue into various geographic regions in the following table.

	2023		2022
	£'000		£'000
Revenue from sale of kits and provision of support services	2,160		1,430
Primary Geographic Markets
Spain	1,644		1,207
UK	364		36
Italy	74		132
Germany	34		-
France	26		36
Rest of World	18		19
Total revenue per geographical markets	2,160		1,430

 

	2023		2022
	£'000		£'000
Non-current assets
Primary Geographic Markets
Spain	46		21
UK	667		820
US	281		471
Total non-current assets per geographical markets	994		1,312

 

5.   Loss from operations

	2023		2022
	£'000		£'000
Loss is stated after charging:
Cost of inventory	917		798
Staff costs	2,165		1,221
Royalty expense	107		67
Operating expenses-- External services	945		1,983
Directors' salaries and fees	659		650
Research expenditure	334		72
Depreciation and amortisation	351		163

 

Staff costs are allocated between Cost of sales and Administrative expenses.

 

5a. Auditor's remuneration

	2023		2022
	£'000		£'000
Fees payable to the company's auditor for the audit of the company's annual accounts	49		25
Fees payable to the company's auditor and its associates for other services:
Accounting and taxation services	-		4
Total	49		29

 

6.     Employees and directors

 

The average number of employees (including directors) in the Group during the year was made up as follows:

	2023		2022
	Number		Number
Directors (including non-executive directors)	6		7
Employees	36		28
Total	42		35

 

The cost of employees (including directors) during the year was made up as follows:

	2023		2022
	£'000		£'000
Salaries and wages (including directors)	2,779		1,859
Social security costs	510		373
Employee benefits in kind	20		17
Pension costs	25		24
Share based payment expense	71		102
Total	3,405		2,375

 

Key management personnel compensation

The compensation of key management personnel, principally directors of GENinCode Plc for the year were as follows:

	2023		2022
	£'000		£'000
Directors' salaries	584		577
Social security costs	64		77
Pension costs	13		16
Directors' fees	75		73
Share based payment expense	36		36
Total	772		779

 

The above remuneration of directors includes the following amounts paid to the highest paid Director:

	2023		2022
	£'000		£'000
Highest paid Director	280		286

 

7.         Other income

	2023		2022
	£'000		£'000
Bank interest income	174		160
Other revenue	2		13
Total	176		173

 

 

Finance cost

	2023		2022
	£'000		£'000
Discount of lease liability	24		14
Unwinding contingent consideration	24		6
Total	48		20

8.          Income tax

 

	2023		2022
	£'000		£'000
Current tax credit
R&D tax credit	-		212
Total current tax	-		-
Deferred tax
Accelerated capital allowances	7		(25)
Total current tax	7		(25)
Total tax (charge)/credit	7		187

 

The charge for the year can be reconciled to the loss in the consolidated statement of comprehensive income as follows:

	2023		2022
	£'000		£'000
Loss before taxation	(7,023)		(5,746)
Expected tax credit at the UK corporation tax rate of 25% (2022, 19%)	(1,756)		(1,091)
Movement in unrecognised deferred tax asset	1,713		1,171
Capital allowances	(2)		(41)
Spanish deferred tax recognised in excess of UK deferred tax	-		(63)
Expenses disallowed for tax	89		24
Non-trade relationship	(44)		-
Accelerated Capital Allowances	7		(25)
R&D tax credit	-		212
Total tax (charge)/credit	7		187

 

Factors affecting current and future taxation

 

Per UK adopted IA rules, unrelieved tax losses carried forward of £5,801,919 have not been recognised as a deferred tax asset as there is currently insufficient evidence that the asset will be recoverable in the foreseeable future. 

 

9.          Profit of parent company

 

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements.  The parent company's loss for the financial year was £13,841,707 (2022 - loss of £1,906,671).

 

10.        Earnings per share

 

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

 

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares.

 

Reconciliations are set out below.

2022
	Earnings	Weighted average number of shares	Per-share amount
	£'000		pence
Basic EPS
Earnings attributable to ordinary shareholders	(5,920)	95,816,866	(6.18)
Diluted EPS
Adjusted earnings	(5,920)	95,816,866	(6.18)
2023
	Earnings	Weighted average number of shares	Per-share amount
	£'000		pence
Basic EPS
Earnings attributable to ordinary shareholders	(6,682)	95,816,866	(6.97)
Diluted EPS
Adjusted earnings	(6,682)	95,816,866	(6.97)

 

The Company had options issued over 7,207,500 (2022: 8,248,000) ordinary shares.

 

Due to the losses incurred from continuing operations in the years reported, there is no dilutive effect from the existing share options.

 

11.        Investments

              Company

 

			£'000
Cost
At 1 January 2022			149
Share based payments			41
At 31 December 2022			221
Share based payments			10
As at 31 December 2023			231

 

             Share based payments relate to costs of employee options in the Company for employees of its subsidiary.

              Summary of subsidiaries held in investments;

 

Name of entity		Country of incorporation	Ownership held			Principal activities	Registered office
			Holding	2023 and 2022
GENinCode S.L.U.		Spain	Ordinary shares	100%		Medical and scientific research	Rambla d'Egara 235, 5ª planta C D, Terrassa 08224, Spain
GENinCode U.S. INC.		USA	Ordinary shares	100%		Medical and scientific research	1209 Orange St., Wilmington Delaware 19801
GENinCode UK Ltd		England & Wales	Ordinary shares	100%		Dormant company	1 St. Peters Square, Manchester, M2 3DE
Abcodia Ltd		England & Wales	Ordinary shares	100%		Medical and scientific research	1 St. Peters Square, Manchester, M2 3DE
Abcodia UK Ltd		England & Wales	Ordinary shares	100%- Indirectly through Abcodia Ltd		Dormant company	1 St. Peters Square, Manchester, M2 3DE
Abcodia CS Ltd		England & Wales	Ordinary shares	100%- Indirectly through Abcodia Ltd		Dormant company	1 St. Peters Square, Manchester, M2 3DE
Abcodia Inc		USA	Ordinary shares	100%- Indirectly through Abcodia Ltd		Dormant company	1209 Orange St., Wilmington Delaware 19801

 

12.             Intangible assets

                   Group

	Software	Patents & Licences	Total
	£'000	£'000	£'000
Cost
At 1 January 2022	50	211	261
Adjustment relating to 2021		(8)	(8)
Movement on retranslation	3	-	3
At 31 December 2022	53	203	256
Movement on retranslation	(1)	-	(1)
At 31 December 2023	52	203	255
Amortisation
At 1 January 2022	36	32	68
Adjustment relating to 2021	-	(8)	(8)
Charge for the year	12	20	32
Movement on retranslation	3	-	3
At 31 December 2022	51	44	95
Charge for the year	2	21	23
Movement on retranslation	(1)	-	(1)
At 31 December 2023	52	65	117
Net book value
At 31 December 2022	2	159	161
At 31 December 2023	-	138	138

 

12.             Intangible assets (continued)

 

Company
			Patents & Licences
			£'000
Cost
At 1 January 2022			211
Adjustment relating to 2021			(8)
At 31 December 2022			203
At 31 December 2023			203
Amortisation
At 1 January 2022			32
Adjustment relating to 2021			(8)
Charge for the year			20
At 31 December 2022			44
Charge for the year			21
At 31 December 2023			65
Net book value
At 31 December 2022			159
At 31 December 2023			138

In patents and licences items with a NBV of £70k had a remaining useful life of 7 years. The remaining items in patents and licences with a NBV of £68k had a useful life of 8 years.

 

13.              Property, Plant and Equipment

 

Group	Plant	Office equipment	Total
	£'000	£'000	£'000
Cost
At 1 January 2022	4	51	55
Additions	1	699	700
At 31 December 2022	5	750	755
Additions	30	8	38
Movement on retranslation	-	(26)	(26)
At 31 December 2023	35	732	767
Depreciation
At 1 January 2022	2	7	9
Charge for the year	1	92	93
At 31 December 2022	3	99	102
Charge for the year	3	243	246
Movement on retranslation	-	(6)	(6)
At 31 December 2023	6	336	342
Net book value
At 31 December 2022	2	651	653
At 31 December 2023	29	396	425

13.              Property Plant and Equipment (continued)

 

Company			Office Equipment
			£'000
Cost
At 31 December 2022			199
Additions			-
At 31 December 2023			199
Depreciation
At 31 December 2022			35
Charge for the year			66
At 31 December 2023			101
Net book value
At 31 December 2022			164
At 31 December 2023			98

 

14.              Right of use assets

Group	Right of use asset: Buildings
	£'000
Cost
Additions	387
At 31 December 2022	387
Additions	15
At 31 December 2023	402
Depreciation
Charge for the year	38
At 31 December 2022	38
Charge for the year	82
At 31 December 2023	120
Net book value
At 31 December 2022	349
At 31 December 2023	282

 

14.              Right of use assets (continued)

 

Company	Right of use asset: Buildings
	£'000
Cost
Additions	387
At 31 December 2022	387
Adjustment relating to prior year	15
At 31 December 2023	402
Depreciation
Charge for the year		38
At 31 December 2022		39
Charge for the year		82
At 31 December 2023		120
Net book value
At 31 December 2022		349
At 31 December 2023		282

 

15.              Goodwill

Group	Goodwill
	£'000
Cost
Additions	149
At 31 December 2022	149
At 31 December 2023	149
Net book value
At 31 December 2022	149
At 31 December 2023	149

 

                    Abcodia Limited was purchased for an initial cash price of £1, the fair value of the net assets acquired were £1. In addition, a deferred consideration of up to £1m is payable to the vendors subject to the achievement of an EBIT of £1m generated by the sale of ROCA tests in the UK during the 6-year period following the date of acquisition. This is payable in two tranches; the first tranche of £350,000 is payable on the achievement of an EBIT of £350,000, and the second tranche of £650,000 is payable on the achievement of a further £650,000 of EBIT.  Goodwill has been calculated on the basis of only the first tranche of £350,000 being payable to the vendors, discounted to a present value of £149,000 using a rate of 15.3%.

 

16.              Inventory                             

Group
	2023		2022
	£'000		£'000
Inventory	84		20
Total	84		20

 

                   In 2023, a total of £917k (2022: £798k) of inventories was included in profit and loss as an expense as part of cost of sales.

 

17.              Trade and other receivables

 

Group
	2023		2022
	£'000		£'000
Trade receivables	428		315
Other receivables	81		299
Prepayments	73		103
Total	582		717

 

Company
	2023		2022
	£'000		£'000
NON-CURRENT
Intercompany receivables	-		5,668
Total	-		5,668
CURRENT
Trade receivables	33		156
Intercompany receivables	11,214		-
Provision for credit loss on Intercompany receivables	(11,194)		-
Other receivables	79		296
Prepayments	50		79
Total	182		531

 

The inter-company loans above have been provided for in full as per IFRS 9 recognition requirements for credit losses.  Although the Board are confident of all inter-company loans being collectible there is not enough evidence at the year end and projected short term to contradict the credit loss.  The Board are confident this provision will reverse as the Group grows.

 

General terms for settlement of debt with clients are 30 days from the date of invoice for private entities and 60 days with public entities.  The carrying value of trade and other receivables classified at amortised cost approximates fair value.

 

                            18.              Cash and cash equivalents

Group
	2023		2022
	£'000		£'000
Total	2,484		9,732
Company
	2023		2022
	£'000		£'000
Total	2,171		9,468

 

Where cash at bank earns interest, interest accrues at floating rates based on daily bank deposit rates.

 

The fair value of the cash & cash equivalent is as disclosed above. For the purpose of the cash flow statement, cash and cash equivalents comprise of the amounts shown above.

 

19.              Financial assets

Group
	2023		2022
	£'000		£'000
Financial assets	42		16
Total	42		16

The Financial assets relate to Spanish ring-fenced money for Tender bids and office rent.

 

                            20.              Share capital

 

	2023		2022
	£'000		£'000
95,816,866 Ordinary shares of £0.01	958		958
Total	958		958

 

21.              Reserves

                   The following describes the nature and purpose of each reserve within equity:

 

Share capital	Amount subscribed for share capital fully paid.
Retained earnings	Retained earnings represents all other net gains and losses and transactions with shareholders (example dividends) not recognised elsewhere.
Share premium	Excess subscribed above nominal value of shares. Included within share premium are share issue costs which relate to commissions and other directly attributable costs.
Foreign currency translation reserve	This represents the net effect of translation of the subsidiaries whose functional currencies are EUR and USD into GBP the reporting currency.
Share based payment reserve	This reserve compromises the fair value of options share rights recognised as an expense. Upon exercise of options or performance share rights, any proceeds received are credited to share capital and where appropriate share premium.

 

22.              Share based payments

The Company has issued share options as an incentive to certain senior management.  All share options granted during the year were granted under individual agreements and are subject to market and service vesting conditions. The exercise price is 44 pence on 772,000 shares and the rest are at 15.83 pence.

 

Each share option converts into one ordinary share of GENinCode plc on exercise and are accounted for as equity-settled share-based payments. The equity instruments granted carry neither rights to dividends nor voting rights.

 

	No. options		Weighted average exercise price (pence)
Balance as at 31 December 2022	8,248,000		18.47
Lapsed in 2023	1,040,500		15.83
Balance as at 31 December 2023	7,207,500		16.61
Exercisable at 31 December 2023	-		-

 

                    The vesting conditions are as follows:-

·      Staff and Board - based on market conditions, estimated 5 at years vesting period

·      Advisors - three years following grant date

                           

                    The value of share based payments charged to administrative expenses was £71,112 (2022, £101,894).

Employers' national insurance relating to the share based options has been accrued amounting to £22,642 (2022: £13,761).

 

The share-based payment charge was calculated on the basis that the average time period that the options are expected to remain unexercised is 36 months.

The fair value is estimated at the date of grant using the Black-Scholes pricing model, taking into account the terms and conditions attached to the grant. The following are the inputs to the model for the equity instruments granted during the period:

                   

Expected life	3-5 years
Expected Volatility	50%
Risk-free interest rate	0.35%
Share price at grant	12.2p to 15.83p
Fair value per award	4.27p to 7.92p

 

23.              Trade and other payables

 

Group
	2023		2022
	£'000		£'000
NON-CURRENT
Contingent consideration (note 24)	178		155
Trade payables	-		1,279
Total	178		1,434
CURRENT
Trade payables	1,194		1,416
Accruals	396		432
Tax payable	183		154
Other payables	622		76
Total	2,395		2,078

 

 

Company
	2023		2022
	£'000		£'000
NON-CURRENT
Contingent consideration (note 24)	178		155
Total	178		155
CURRENT
Trade payables	196		454
Accruals	252		262
Tax payable	30		28
Other payables	622		5
Total	1,100		749

 

Included in Other payables for the Company and Group is £609,993 of funds held on account in advance of a share issue.  The share issue and raise were completed in January 2024, see note 30.

 

General terms for settlement of debt are 60 days in general, after the invoice has been remitted from supplier.

 

The carrying value of trade and other payables classified at amortised cost approximates fair value.

 

24.              Contingent consideration

Group
	2023		2022
	£'000		£'000
NON-CURRENT
Contingent consideration	178		155
Total	178		155

 

Company
	2023		2022
	£'000		£'000
NON-CURRENT
Contingent consideration	178		155
Total	178		155

 

The contingent consideration relates to the acquisition of Abcodia Limited which has a deferred consideration of up to £1m, payable to the vendors subject to the achievement of an EBIT of £1m generated by the sale of ROCA tests in the UK during the 6-year period following the date of acquisition. This is payable in two tranches; the first tranche of £350,000 is payable on the achievement of an EBIT of £350,000, and the second tranche of £650,000 is payable on the achievement of a further £650,000 of EBIT.  Contingent consideration has been calculated on the basis of only the first tranche of £350,000 being payable to the vendors, discounted to a present value of £178,000 using a rate of 15.3%.

During the year an expense of £23,664 (2022: £5,698) was recognised on unwinding the contingent consideration at a rate of 15.3%.

 

 

25.              Lease liability

                    Maturity analysis- contractual undiscounted cash flows:

Group
	2023		2022
	£'000		£'000
Less than one year (undiscounted)	96		91
One to five years (undiscounted)	240		320
More than 5 years (undiscounted)	-		-

 

                    Lease liability included in the financial statements:

 

Group
	2023		2022
	£'000		£'000
NON-CURRENT
Lease liability	221		285
Total	221		285
CURRENT
Lease liability	78		69
Total	78		69

 

25.              Lease liability (Cont.)

                     Maturity analysis- contractual undiscounted cash flows:

Company
	2023		2022
	£'000		£'000
Less than one year (undiscounted)	96		91
One to five years (undiscounted)	240		320
More than 5 years (undiscounted)	-		-

 

                    Lease liability included in the financial statements:

Company
	2023		2022
	£'000		£'000
NON-CURRENT
Lease liability	221		285
Total	221		285
CURRENT
Lease liability	78		69
Total	78		69

 

Lease liability reconciliation:
	2023
	£'000
Total balance brought forward	354
Payments	(79)
Interest	24
Total balance carried forward	299

 

 

An interest expense of £24,080 with regards to the lease liability has been included in the accounts (2022: £13,807). A discount rate of 7.5% is used in the calculation of the liability and right of use asset. The lease term is 5 years ending in August 2027.

 

26.              Provisions and contingencies

 

Group
	2023		2022
	£'000		£'000
Deferred tax	25		31
Total	25		31
Company
	2023		2022
	£'000		£'000
Deferred tax	25		31
Total	25		31

 

                    Deferred tax relates to accelerated capital allowances.

 

27.              Capital commitments

There is no capital expenditure contracted at this year-end reporting.

 

28.              Related Party Transactions

During the year the Group and Company entered into the following transactions with related parties:

		2023	2022
Related party	Transaction	£'000	£'000
Felix Frueh	Fees, £5,000 was outstanding (2022, £5,000)	30	23
Huon Gray	Fees (pre-Directorship)	-	5
William Rhodes	Chairman's fees, £3,765 outstanding (2022, £3,765)	45	45

 

Compensation of key management personnel of the Group

Key management are those persons having authority and responsibility for planning, controlling and directing the activities of the Company. In the opinion of the Board, the Company's key management are the Directors of GENinCode plc.

 

Amounts included in the Financial Statements, in aggregate, by category of related party are as follows:

 

	Group	Group
	31 December 2023	31 December 2022
Directors	£'000	£'000
Directors' remuneration (short term benefits)	659	650
Directors' remuneration (pension cost)	13	16
Directors' remuneration (employers NI)	58	77
Share based payments	28	36
Total	758	779

 

29.              Contingent liability

As per note 24 there is a contingent consideration relating to the Abcodia Limited's deferred consideration. The contingent liability is for the second tranche of £650,000 being payable on the achievement of £1m of EBIT generated by the sale of ROCA tests in the UK during a 6-year period following the date of acquisition. Due to current performance and predictions the Board believes it is extremely unlikely to become due, therefore this has not been provided for in the financial statements.   

 

                            30.              Events after the reporting date

On 10 January 2024 the Company issued 81m shares as a result of a fund raising £4m in capital for the Group.  Part of this capital was received during the year on account and is held in Other payables, see note 23.  This represents a non-adjusting event.

 

On 26 April 2024, the Company announced that it had approved and granted (on 14 April 2024) new options over an aggregate of 19,380,630 new ordinary shares of 1 pence each in the Company to certain directors and employees of the Company, representing 10.95 per cent. of the Company's existing share capital; 8,642,500 of the new options have an exercise price of 5 pence per share and are exercisable on the second anniversary of the date of grant and 10,738,130 of the new options have an exercise price of 10 pence per share and are exercisable on the second anniversary of the date of grant. Additionally, on 8 April 2024, 6,984,500 of the options previously granted were surrendered for nil consideration. Following the grant of the new options and the options surrender, there are options over a total of 19,580,630 ordinary shares in the Company.

 

                    There are no significant adjusting events after the reporting date.

 

                            31.              Ultimate controlling party

                    The Group does not have an ultimate controlling party.