Company Registration No. 08183505 (England and Wales)
LABGENIUS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
LABGENIUS LIMITED
COMPANY INFORMATION
Directors
I E Haivas
E Moses
J E J Field
O J F Hardick
(Appointed 19 April 2024)
O Sims
(Appointed 4 April 2024)
Company number
08183505
Registered office
G04 Cocoa Studios
The Biscuit Factory
100 Drummond Road
London
SE16 4DG
Auditor
Shaw Gibbs (Audit) Limited
264 Banbury Road
Oxford
OX2 7DY
LABGENIUS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 25
LABGENIUS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Fair review of the business, future developments and research & development
LabGenius Limited’s ("LabGenius") principal activity is the discovery and optimisation of novel high-performing therapeutic antibodies. The company operates under a hybrid business model that involves the discovery of novel molecules in the context of both partnered and wholly owned programs.
LabGenius is leveraging its technology platform and deep scientific expertise to build a pipeline of wholly-owned therapeutics for the treatment of solid tumours.
In April 2024, LabGenius closed a £35M Series B funding round. Based on current projections, and assuming all funding milestones are met, the fundraise will capitalise the company through to the second half of 2026.
During 2023, LabGenius successfully completed a collaboration with Sanofi, the world-leading pharmaceutical company. During the collaboration, LabGenius successfully delivered multiple high-performing NANOBODY® proteins which exhibited unique combinations of non-intuitive mutations. The success of this project further validates LabGenius’ unique and differentiated discovery platform.
Principal risks and uncertainties
The key business risks and uncertainties that may have an impact on the company’s performance are common to most biotechnology companies working to discover and develop pre-clinical and clinical stage therapeutic antibodies. These risks include the operational and technical risks of building and deploying a novel platform and pipeline as well as the financial risks relating to the availability of capital. All key risks are managed by the senior leadership team and the Board through regular updates on the ongoing scientific, operational, financial and commercial developments of the business.
Key performance indicators
The Board monitors the financial performance and health of the company on an ongoing basis through regular updates. When assessing the company’s financial performance, the Board monitor generic financial metrics (eg. gross burn, cash runway) as well as more business-specific KPIs (eg. cycle time, cost per variant screened).
The Board is satisfied with respect to performance against these KPIs.
J E J Field
Director
7 August 2024
LABGENIUS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
LabGenius Limited’s principal activity is the discovery and optimisation of novel high-performing therapeutic antibodies. The company operates under a hybrid business model that involves the discovery of novel molecules in the context of both partnered and wholly owned programs.
Results and dividends
The results for the year are set out on page 7.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
No preference dividends were paid.
Going concern
The directors are of the opinion that the company has adequate resources to continue in operational existence for the foreseeable future. As a result, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
More information on how the directors arrived at this conclusion can be found in notes to the financial statements(note 1.2 on page 11).
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
I E Haivas
N Li
(Resigned 10 February 2023)
E Moses
J E J Field
S Vayda
(Resigned 4 April 2024)
R Ganeshananthan
(Appointed 10 February 2023 and resigned 4 April 2024)
O J F Hardick
(Appointed 19 April 2024)
O Sims
(Appointed 4 April 2024)
Auditor
The auditor, Shaw Gibbs (Audit) Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
LABGENIUS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic Report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments and principal risks and uncertainties.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
J E J Field
Director
7 August 2024
LABGENIUS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LABGENIUS LIMITED
- 4 -
Opinion
We have audited the financial statements of LabGenius Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
LABGENIUS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LABGENIUS LIMITED (CONTINUED)
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
At the planning stage of the audit we gain an understanding of the laws and regulations which apply to the company and how the management seek to comply with those laws and regulations. The most significant are those that relate to the financial reporting framework (FRS 102), Companies Act 2006, the tax compliance regulations and health and safety regulations. This helps us to plan appropriate risk assessments.
During the audit we focus on relevant risk areas and review the compliance with the laws and regulations by making relevant enquiries and undertaking corroboration, for example by reviewing Board Minutes and other documentation.
We assess the risk of material misstatement in the financial statements including as a result of fraud and undertake procedures including:
Reviewing the controls set in place by management;
Making enquiries of management as to whether they consider fraud or other irregularity may have taken place, or where such opportunity might exist;
Challenging the assumptions with regard to accounting estimates, particularly concerning the valuation of share based payments, dilapidation provision and revenue recognition via the percentage of completion method; and
Identifying and testing journal entries, particularly those which appear to be unusual by size or nature.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
LABGENIUS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LABGENIUS LIMITED (CONTINUED)
- 6 -
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Nikolaos Ioannidis
Senior Statutory Auditor
For and on behalf of Shaw Gibbs (Audit) Limited
8 August 2024
Chartered Certified Accountants
Statutory Auditor
264 Banbury Road
Oxford
OX2 7DY
LABGENIUS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
-
190,200
Cost of sales
(5,523,860)
(4,636,215)
Gross loss
(5,523,860)
(4,446,015)
Administrative expenses
(3,017,806)
(3,982,162)
Other operating income
1,315,765
133,773
Operating loss
4
(7,225,901)
(8,294,404)
Interest payable and similar expenses
7
(207,360)
(61,892)
Loss before taxation
(7,433,261)
(8,356,296)
Tax on loss
8
674,878
1,381,391
Loss for the financial year
(6,758,383)
(6,974,905)
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
There are no recognised gains and losses other than those passing through the statement of total comprehensive income.
LABGENIUS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
10
1,529,651
1,881,985
Current assets
Debtors falling due after more than one year
11
34,486
620,839
Debtors falling due within one year
11
1,820,756
2,117,812
Investments
12
6,600,000
Cash at bank and in hand
1,816,047
2,705,384
3,671,289
12,044,035
Creditors: amounts falling due within one year
13
(7,145,701)
(7,626,363)
Net current (liabilities)/assets
(3,474,412)
4,417,672
Total assets less current liabilities
(1,944,761)
6,299,657
Creditors: amounts falling due after more than one year
14
(702,387)
(2,220,417)
Net (liabilities)/assets
(2,647,148)
4,079,240
Capital and reserves
Called up share capital
19
3,632
3,632
Share premium account
22,835,214
22,835,214
Capital redemption reserve
546
546
Share options reserve
187,851
155,856
Profit and loss reserves
(25,674,391)
(18,916,008)
Total equity
(2,647,148)
4,079,240
The financial statements were approved by the board of directors and authorised for issue on 7 August 2024 and are signed on its behalf by:
J E J Field
Director
Company Registration No. 08183505
LABGENIUS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Share premium account
Capital redemption reserve
Share options reserves
Profit and loss reserves
Total
£
£
£
£
£
£
Balance at 1 January 2022 (restated)
3,632
22,835,214
546
115,584
(11,941,103)
11,013,873
Year ended 31 December 2022:
Loss and total comprehensive expense for the year
-
-
-
-
(6,974,905)
(6,974,905)
Share-based payment charge
-
-
-
40,272
40,272
Balance at 31 December 2022 (restated)
3,632
22,835,214
546
155,856
(18,916,008)
4,079,240
Year ended 31 December 2023:
Loss and total comprehensive expense for the year
-
-
-
-
(6,758,383)
(6,758,383)
Share-based payment charge
-
-
-
31,995
31,995
Balance at 31 December 2023
3,632
22,835,214
546
187,851
(25,674,391)
(2,647,148)
LABGENIUS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
25
(7,432,190)
(7,633,936)
Interest paid
(207,360)
(61,892)
Income taxes refunded
1,423,674
1,171,509
Net cash outflow from operating activities
(6,215,876)
(6,524,319)
Investing activities
Purchase of tangible fixed assets
(139,320)
(384,995)
Proceeds from disposal of tangible fixed assets
2,666
7,404
Net cash used in investing activities
(136,654)
(377,591)
Financing activities
Issue of convertible loans
5,025,961
Proceeds from new bank loans
3,000,000
Repayment of bank loans
(1,000,000)
Payment of finance leases obligations
(136,807)
(152,056)
Net cash (used in)/generated from financing activities
(1,136,807)
7,873,905
Net (decrease)/increase in cash and cash equivalents
(7,489,337)
971,995
Cash and cash equivalents at beginning of year
9,305,384
8,333,389
Cash and cash equivalents at end of year
1,816,047
9,305,384
Relating to:
Cash at bank and in hand
1,816,047
2,705,384
Short term deposits included in current asset investments
6,600,000
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
LabGenius Limited is a private company limited by shares incorporated in England and Wales. The registered office is G04 Cocoa Studios, The Biscuit Factory, 100 Drummond Road, London, SE16 4DG.
The company's principal activities and nature of its operations are disclosed in the Directors' Report.
1.1
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.
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 modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
In April 2024, LabGenius closed a £35M Series B funding round. Based on current projections, and assuming all funding milestones are met, the fundraise will capitalise the company through to the second half of 2026.true
At the time of approving the financial statements, and having taken into consideration various cash flow forecasts, the directors agree that the company has adequate resources to continue in operational existence for the foreseeable future. As a result, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised when the company obtains a right to consideration in exchange for its fulfilment of contractual obligations.
Turnover is recognised based on the stage of completion of the underlying contracts which is estimated by management with reference to the milestones completed and the contractual terms.
1.4
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.
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:
Land and buildings (incl capitalised dilapidations)
Straight line over the term of the lease
Plant and machinery
25% reducing balance
Fixtures and fittings
25% reducing balance
Computer equipment
25% reducing balance
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.
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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.
1.6
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.
1.7
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.
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.
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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.
Other financial liabilities
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs.
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.9
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.
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.
1.10
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.
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.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
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.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease.
1.14
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.
Government grants relating to revenue are recognised in income on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate.
1.15
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.
1.16
In preparing the company's financial statements for the year ended 31 December 2023, the management has identified an error in accounting for share options in the financial statements. The relevant error resulted in the opening profit and loss reserves being understated and opening share option reserves being overstated.
Share options with a value of £151,805 were exercised in 2019, but a corresponding reclassification from the share option reserves to the profit and loss reserves was not processed. This has therefore resulted in an adjustment to the opening profit and loss reserves and opening share option reserves at 1 January 2020. There is no impact on total equity or the reporting results for the year.
2
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.
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Revenue recognition - percentage of completion
Revenue is recognised based on the stage/ percentage of completion of the underlying contracts which is estimated by management with reference to the milestones completed and the contractual terms.
Share options
The company operates an employee share option scheme which is equity settled. The options are valued using the Black Scholes methodology with a charge to the profit and loss account and a corresponding increase in the equity being computed each year. The cost of this scheme and the fair value of the obligation depends on a number of factors, including; the value of the company's shares at each grant date, the company's risk free interest rate, the time until the expiration of the options and the company's volatility. Management estimate these factors in determining the fair value, based on historic and benchmarked information.
Dilapidations provision
The dilapidations provision relates to the lease of rooms that have been converted to laboratories. There are clauses in the underlying lease agreements that require these rooms to be put into their original condition at the end of the lease term. The dilapidations provision is calculated based on the expected costs to reinstate the relevant premises to their original condition. The management used the prevailing market rates in their assessment.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Partnership revenue
-
190,200
2023
2022
£
£
Turnover analysed by geographical market
Europe
-
190,200
2023
2022
£
£
Other revenue
Grants received
771,395
91,390
RDEC income
485,417
42,283
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
4
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange losses
2,640
7,905
Government grants
(771,395)
(91,390)
Fees payable to the company's auditor for the audit of the company's financial statements
19,250
18,000
Depreciation of owned tangible fixed assets
425,191
476,279
Depreciation of tangible fixed assets held under finance leases
65,042
78,441
Profit on disposal of tangible fixed assets
(1,245)
-
Share-based payments
31,995
40,272
Operating lease charges
273,579
241,435
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
G&A Staff
12
13
R&D Staff
39
41
Total
51
54
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,791,437
3,960,008
Social security costs
411,347
501,692
Pension costs
144,831
146,494
4,347,615
4,608,194
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
189,500
181,497
Company pension contributions to defined contribution schemes
7,123
5,323
196,623
186,820
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 2).
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Directors' remuneration
(Continued)
- 18 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
132,500
124,500
Company pension contributions to defined contribution schemes
7,123
5,213
7
Interest payable and similar expenses
2023
2022
£
£
Other finance costs:
Interest on finance leases and hire purchase contracts
1,624
10,563
Finance costs for financial instruments measured at fair value through profit or loss
205,736
51,329
207,360
61,892
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(674,878)
(1,381,391)
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Loss before taxation
(7,433,261)
(8,356,296)
Expected tax credit based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
(1,748,303)
(1,587,696)
Tax effect of expenses that are not deductible in determining taxable profit
35,818
3,655
Change in unrecognised deferred tax assets
1,138,871
1,081,953
Effect of change in corporation tax rate
(68,463)
(259,668)
Permanent capital allowances in excess of depreciation
(392)
(29,819)
Research and development tax credit
(674,878)
(1,381,391)
Additional deduction for R&D expenditure
(637,457)
(1,029,050)
Surrender of tax losses for R&D tax credit refund
1,279,926
1,820,625
Taxation credit for the year
(674,878)
(1,381,391)
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
9
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
2,367,413
10,811,891
Carrying amount of financial liabilities
Measured at fair value through profit or loss
- Other financial liabilities
7,025,961
8,025,961
Measured at amortised cost
648,553
1,499,600
10
Tangible fixed assets
Land and buildings (incl capitalised dilapidations)
Plant and machinery
Fixtures and fittings
Computer equipment
Total
£
£
£
£
£
Cost
At 1 January 2023
82,860
2,738,495
443,308
218,960
3,483,623
Additions
109,102
10,472
19,746
139,320
Disposals
(1,421)
(1,421)
At 31 December 2023
82,860
2,846,176
453,780
238,706
3,621,522
Depreciation and impairment
At 1 January 2023
82,860
1,193,377
226,652
98,749
1,601,638
Depreciation charged in the year
400,785
56,128
33,320
490,233
At 31 December 2023
82,860
1,594,162
282,780
132,069
2,091,871
Carrying amount
At 31 December 2023
1,252,014
171,000
106,637
1,529,651
At 31 December 2022
1,545,118
216,656
120,211
1,881,985
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and machinery
195,131
335,604
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Corporation tax recoverable
1,160,295
1,423,674
Other debtors
96,392
108,316
Prepayments and accrued income
564,069
585,822
1,820,756
2,117,812
2023
2022
Amounts falling due after more than one year:
£
£
Other debtors
34,486
20,838
Prepayments and accrued income
600,001
34,486
620,839
Total debtors
1,855,242
2,738,651
12
Current asset investments
2023
2022
£
£
Short term deposits
6,600,000
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Convertible loans
15
5,025,961
5,025,961
Bank loans
15
1,333,333
1,000,000
Obligations under finance leases
16
47,022
136,957
Trade creditors
246,110
341,626
Taxation and social security
126,552
137,840
Government grants
17
140,602
821,312
Other creditors
76,680
26,059
Accruals and deferred income
149,441
136,608
7,145,701
7,626,363
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
666,667
2,000,000
Obligations under finance leases
16
46,872
Government grants
17
90,685
Other creditors
35,720
82,860
702,387
2,220,417
15
Loans and overdrafts
2023
2022
£
£
Bank loans
2,000,000
3,000,000
Convertible loans
5,025,961
5,025,961
7,025,961
8,025,961
Payable within one year
6,359,294
6,025,961
Payable after one year
666,667
2,000,000
On 23 September 2022, Silicon Valley Bank UK Limited created a fixed and floating charge over all the property and undertakings of the company.
The bank loan is repayable by monthly instalments and incurs interest at 3.50% + BoE base rate per annum. The loan is repayable in June 2025.
The convertible loans do not have an effective interest rate and were converted after the year end (see note 21).
16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
47,022
136,957
In two to five years
46,872
47,022
183,829
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
17
Government grants
2023
2022
£
£
Government grants
140,602
911,997
Included in the financial statements as follows:
Current liabilities
140,602
821,312
Non-current liabilities
90,685
140,602
911,997
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
144,831
146,494
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 0.19p each
550,856
550,856
1,033
1,033
2023
2022
2023
2022
Preference share capital
Number
Number
£
£
Issued and fully paid
Series seed Preference Shares of 0.19p each
228,322
228,322
428
428
Series A1 of 0.19p each
184,522
184,522
346
346
Series A2 of 0.19p each
973,477
973,477
1,825
1,825
1,386,321
1,386,321
2,599
2,599
Preference shares classified as equity
2,599
2,599
Total equity share capital
3,632
3,632
The company's ordinary shares, which carry no right to fixed income, each carry the right to one vote at general meetings of the company and rank equally for any dividends declared and distributions on winding up.
Series seed preference shares, Series A1 and Series A2 shares each has full rights in the company in respect of voting, dividends and distributions.
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
20
Share-based payment transactions
In 2017, the company established an Enterprise Management Incentive share option plan under which it has granted rights for its equity instruments to its employees. The share options vest over 4 years from the option grant date and may only be exercised upon an IPO or a change of control of the company.
Number of share options
Outstanding at 1 January 2023 (Restated)
160,406
Granted
89,944
Forfeited
(2,858)
Outstanding at 31 December 2023
247,492
Exercisable at 31 December 2023
The options outstanding at 31 December 2023 had an exercise price of £0.001875.
The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. The fair value of employee share options is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the instruments were granted.
Inputs were as follows:
Weighted average share price (£)
1.31
Weighted average exercise price (p)
0.19
Expected life (years)
4.00
The services received and a liability to pay for those services are recognised over the expected vesting period. The fair value of options expensed in the year ended 31 December 2023 was £31,995 (2022: £40,272).
21
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
210,468
121,235
Between one and five years
35,267
245,736
121,235
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
22
Events after the reporting date
In April 2024, the company closed a £35m Series B funding round. The first tranche was received immediately following the closing of the round in April 2024, with the second tranche contingent on future milestones. As a result of this transaction, the company issued 1,419,439 Series B2 Preference shares for £14.09 each.
The above transaction also triggered the conversion of the outstanding loan notes that are presented within creditors due within one year. The loan notes were converted at a 20% discount resulting in 445,874 Series B1 Preference shares being issued for £11.27 each.
The nominal value of the Series B1 and B2 preference shares is £0.19p each.
After the year end date, the company received an interest free loan of £500,000 from a director which was subsequently repaid.
In June 2024, the company entered into a finance lease agreement to purchase laboratory equipment resulting in a total commitment of £2.4m payable over a 5-year period.
23
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2023
2022
£
£
Aggregate compensation
1,076,886
1,430,331
24
Ultimate controlling party
The company does not have an ultimate controlling party.
LABGENIUS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
25
Cash absorbed by operations
2023
2022
£
£
Loss for the year after tax
(6,758,383)
(6,974,905)
Adjustments for:
Taxation credited
(674,878)
(1,381,391)
Finance costs
207,360
61,892
RDEC income
(485,417)
(Gain)/loss on disposal of tangible fixed assets
(1,245)
1,675
Depreciation and impairment of tangible fixed assets
490,233
554,720
Equity settled share based payment expense
31,995
40,272
Movements in working capital:
Decrease/(increase) in debtors
620,030
(998,851)
(Decrease)/increase in creditors
(90,490)
150,655
(Decrease)/increase in deferred income including government grants
(771,395)
911,997
Cash absorbed by operations
(7,432,190)
(7,633,936)
26
Analysis of changes in net funds/(debt)
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash and cash equivalents
9,305,384
(7,489,337)
1,816,047
Borrowings excluding overdrafts
(3,000,000)
794,264
(2,000,000)
Obligations under finance leases
(183,829)
136,807
(47,022)
Convertible loan notes
(5,025,961)
-
(5,025,961)
1,095,594
(6,558,266)
(5,256,936)
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