Company registration number 11621264 (England and Wales)
NOVALGEN LIMITED
UNAUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
PAGES FOR FILING WITH REGISTRAR
NOVALGEN LIMITED
CONTENTS
Page
Balance sheet
1
Notes to the financial statements
2 - 9
NOVALGEN LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 1 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
4
2,667,000
2,667,000
Tangible assets
5
584,479
783,830
3,251,479
3,450,830
Current assets
Debtors
7
896,333
1,562,162
Cash at bank and in hand
2,688,464
2,600,995
3,584,797
4,163,157
Creditors: amounts falling due within one year
8
(481,573)
(401,052)
Net current assets
3,103,224
3,762,105
Net assets
6,354,703
7,212,935
Capital and reserves
Called up share capital
11
199
188
Share premium account
24,525,118
22,025,129
Share option reserve
396,726
186,033
Profit and loss reserves
(18,567,340)
(14,998,415)
Total equity
6,354,703
7,212,935

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

For the financial year ended 31 December 2023 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.

The members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476.

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 27 March 2024 and are signed on its behalf by:
Dr A Nathwani
Director
Company Registration No. 11621264
NOVALGEN LIMITED
BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2023
31 December 2023
- 2 -
1
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

2
Accounting policies
Company information

NovalGen Limited is a private company limited by shares incorporated in England and Wales. The registered office is Argyle House, Northside, Joel Street, Northwood Hills, Middlesex, HA6 1NW.

2.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

2.2
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

2.3
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives.

2.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

NOVALGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Accounting policies
(Continued)
- 3 -

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Plant and equipment
20% Straight line basis
Fixtures and fittings
20% Straight line basis
Office equipment
20% Straight line basis

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

2.5
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

2.6
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

2.7
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

NOVALGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Accounting policies
(Continued)
- 4 -
Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities

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 of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

2.8
Compound instruments

The component parts of compound instruments issued by the company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity net of income tax effects and is not subsequently remeasured.

2.9
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

2.10
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

NOVALGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Accounting policies
(Continued)
- 5 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

2.11
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

2.12
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

2.13
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

 

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

2.14
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

NOVALGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Accounting policies
(Continued)
- 6 -
2.15
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

3
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Total
17
19
4
Intangible fixed assets
IP Licence
£
Cost
At 1 January 2023 and 31 December 2023
2,667,000
Amortisation and impairment
At 1 January 2023 and 31 December 2023
-
0
Carrying amount
At 31 December 2023
2,667,000
At 31 December 2022
2,667,000
NOVALGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
5
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Office equipment
Total
£
£
£
£
Cost
At 1 January 2023
1,032,165
91,278
31,854
1,155,297
Additions
34,480
-
0
4,411
38,891
At 31 December 2023
1,066,645
91,278
36,265
1,194,188
Depreciation and impairment
At 1 January 2023
333,940
29,494
8,033
371,467
Depreciation charged in the year
212,754
18,255
7,233
238,242
At 31 December 2023
546,694
47,749
15,266
609,709
Carrying amount
At 31 December 2023
519,951
43,529
20,999
584,479
At 31 December 2022
698,225
61,784
23,821
783,830
6
Subsidiaries

Details of the company's subsidiaries at 31 December 2023 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Novalgen Newco Limited
UK
Ordinary shares
100.00
NextGen CAR Limited
UK
Ordinary shares
100.00
NVG-Engager Limited
UK
Ordinary shares
100.00
Bi8 Limited
UK
Ordinary Shares
100.00
7
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
4,157
-
0
Other debtors
892,176
1,562,162
896,333
1,562,162
NOVALGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
8
Creditors: amounts falling due within one year
2023
2022
£
£
Convertible loan
52,153
-
0
Trade creditors
128,031
108,129
Taxation and social security
39,387
46,437
Other creditors
262,002
246,486
481,573
401,052

On 9 June 2023 a £50,000 unsecured convertible loan note was issued by the company. The loan converts on an equity financing of at least £5,000,000 or an exit event. The loan will be converted to shares at £1.00 per share. Interest will accrue on the loan at SOFR + 2% per annum.

9
Deferred Tax

As at 31 December 2023 there existed a potential net deferred tax asset of £2,218,324 (2022: £1,788,941), in respect of unrelieved trading losses less accelerated capital allowances.

 

This has not been reflected as an asset given the uncertainty of future revenue streams and the company is committed to significant continued investment in research and development.

10
Share-based payment transactions
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 January 2023
283,986
305,137
283.98
305.13
Granted
625,718
60,000
625.72
60.00
Forfeited
(77,522)
(81,151)
77.52
81.15
Outstanding at 31 December 2023
832,182
283,986
832.18
283.98
Exercisable at 31 December 2023
-
0
-
0
-
0
-
0

The options outstanding at 31 December 2023 had an exercise price of £0.001.

 

The share option scheme adopted by the company is equity settled and a charge of £210,693 (2022: £101,597) has been charged to profit or loss relating to these options.

NOVALGEN LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
11
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of 0.001p each
6,555,000
6,555,000
66
66
Series A of 0.001p each
12,213,000
11,313,000
122
113
Growth of 0.001p each
131,200
131,200
1
1
Series A2 of 0.0001p each
9,800,000
8,200,000
10
8
28,699,200
26,199,200
199
188

During the year, a total of 900,000 series A shares with a nominal value of £0.00001 each were issued. A total of £900,000 was received for these shares.

 

During the year, a total of 1,600,000 series A2 shares with a nominal value of £0.000001 each were issued. A total of £1,600,000 was received for these shares.

12
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:

2023
2022
£
£
39,703
39,703
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