Shaping the  
future of
medicine
2016 Annual  
Report & Accounts What is  
an Affimer?
Affimer
®
 reagents and 
therapeutics are engineered,  
non-antibody binding proteins 
that are uniquely suited to 
a wide range of applications 
where antibodies and aptamers 
have limitations.
Contents
4 Who we are 
6  2015 / 16 at a glance
9 Strategic Report
10 Chairman’s statement
12 Chief Executive’s review
15 Team profile – Geoff Platt
16  Research & Diagnostics Reagents
21 Team profile – Philippe Cotrel
22 Therapeutics
29 Team profile – Estelle Adam
30 Board of Directors
32 Senior Leadership Team
33 Scientific Advisory Board
34 Animal Health 
37 Financial Review
38  Principal Risks and Uncertainties
39 Governance
40 Directors’ Report
42  Remuneration Committee Report
46 Corporate Governance
49  Statement of Directors’ 
Responsibilities
50 Independent Auditor’s Report
51 Financial Statements
52  Consolidated Income Statement
53 Consolidated Balance Sheet
54  Consolidated Statement of 
Changes in Equity
55  Consolidated Statement of  
Cash Flows
56  Notes to the Consolidated 
Financial Statements
76 Company Balance Sheet
77  Company Statement of  
Changes in Equity
78  Notes to the Company  
Balance Sheet
83 Shareholder Information
83 Secretary and Advisers
2 Flexible 
functionalisation
Affimer molecules can 
be easily modified by 
genetic or chemical 
means, allowing 
maximum flexibility to 
suit the required assay 
or application.
Large binding 
surface
Binding to target is 
obtained through two 9 
amino acid loops which 
enables an Affimer to 
bind with high affinity 
and exquisite specificity.
Engineered specificity
Affimer binders are selected using phage display. 
Prospective clones are evaluated in a very high 
throughput manner, allowing for a tailored 
screening approach – for example designing 
screens capable of determining wild-type from 
mutant proteins.
Ease of 
manufacturing 
Security of supply is 
guaranteed. Affimer 
binders express easily 
in very high yields 
in a simple bacterial 
expression system.
Rapid  
development
Selection and 
characterisation of  
new custom Affimer 
binders typically takes 
just 10–12 weeks.
Small size
At 12-14 kDa, Affimer 
molecules are around 
10 times smaller than 
antibodies – giving 
several performance 
advantages.
The Affimer scaffold, 
available in human or 
plant form, is stable, 
non-toxic, biologically 
neutral and contains 
no post-translational 
modifications or 
disulphide bridges.
3
Avacta Annual Report and Accounts          2016 Our mission is to shape the future 
of medicine by providing powerful 
reagents for research and 
diagnostics, and by developing 
safe and efficacious medicines.
Who we are
At Avacta we have developed Affimer 
technology, an engineered alternative to 
antibodies. Antibodies dominate therapeutic 
and other markets worth tens of billions 
of dollars despite their limitations. Affimer 
technology has been developed to overcome 
many of these limitations and provide 
solutions where antibodies struggle.
Based on a small protein, Affimer reagents 
can be quickly developed to bind with high 
specificity and affinity to a wide range of 
targets to address market opportunities  
in diagnostics, research, bioprocessing  
and therapeutics. 
Avacta is aiming to build a profitable 
business in the near term by licensing 
Affimer reagents to third parties to 
power their diagnostic or other products. 
Numerous technology evaluations  
are under way which may lead to  
the first ‘Affimer-powered’ product  
developments from 2017. 
Affimer technology  
has enormous potential  
as a next generation 
therapeutic platform.
Avacta is working to unlock this value 
through development of an in-house 
therapeutic pipeline, focused on immuno-
oncology with a view to partnering  
and licensing these therapeutic assets.  
The Company’s primary goal is to get  
the first Affimer therapeutics into human  
clinical trials from 2019.
4 5
Avacta Annual Report and Accounts          2016 2015/16 at a glance
Demonstration 
of efficacy of an 
Affimer therapeutic 
(PD-L1 blockade)  
in an animal model
Many top pharma, biotech and diagnostic 
companies trialling Affimer technology
Highlights from 
the past year
New facilities 
in both 
Cambridge 
and Wetherby 
completed 
Partnership with Glythera to develop 
new targeted drug conjugate platform
Rapid generation of highly specific 
Affimer binders for Zika diagnostics
Experienced Chief Commercial  
and Financial Officers Philippe 
Cotrel and Tony Gardiner join 
the Senior Management Team
6 £0.7M = AVACT A LIFE SCIEN CES (2015: £0.44 M)
Group  
revenues of  
£2.17 million  
(2015: £1.81 million)  
£1.46M = AVACTA ANIMAL HEALTH (2015: £1.37M) 
Cash balances  
increased to 
£19.5m 
19%  
growth in  
revenue
First Affimer animal 
study completed with no 
adverse effects observed
Excellent progress 
made in the three 
strategic reagents 
application areas 
Collaboration with Mologic to 
deliver multiple clinical assays 
incorporating Affimer reagents
Lead immuno-oncology 
programme (PD-L1 
blockade) on track
World-class Scientific 
Advisory Board appointed 
to support immuno-
oncology programme
7
Avacta Annual Report and Accounts          2016 8
“It’s hugely exciting to think that the 
Affimer technology that we have 
developed has the potential to shape 
the future of medicine through 
powerful research tools, accurate 
diagnostics and innovative new drugs.”
Alastair Smith, Chief Executive Officer 9
Avacta Annual Report and Accounts          2016
Strategic 
Report
10 Chairman’s statement
12 Chief Executive’s review
15 Team profile – Geoff Platt
16  Research & Diagnostics 
Reagents
21 Team profile – Philippe Cotrel
22 Therapeutics
29 Team profile – Estelle Adam
30 Board of Directors
32 Senior Leadership Team
33 Scientific Advisory Board
34 Animal Health 
37 Financial Review
38  Principal Risks and 
Uncertainties Strategic Report
2016 has been a year of  
significant progress for Avacta  
and its Affimer technology
Following the successful fund raising of £21 
million in August 2015, the Group is well on 
track to deliver the plans we set out at that 
time: to progress our therapeutic programmes 
and begin to commercialise Affimer reagents. 
Our knowledge of and experience with Affimers 
is expanding rapidly, enabling us to identify clear 
competitive strengths in therapeutic, diagnostic and 
research applications. On this basis, the Company is 
now targeting attractive, high value segments in each 
of these three areas.
We have made excellent progress in the Affimer 
therapeutic programmes, achieving a significant 
objective by initiating the first animal studies involving 
Affimer molecules. The dosing was well tolerated 
with no adverse effects observed and the results of a 
pharmacokinetic study of two PD-L1 Affimer inhibitors 
has read-out positively, showing that the Affimer 
constructs have good serum half lives. A parallel 
efficacy study in a mouse syngeneic tumour model 
has also produced positive results, demonstrating the 
efficacy of the PD-L1 blockade in reducing tumour 
growth rate. 
Our therapeutic partnership with Moderna 
Therapeutics continues to progress positively.
We have delivered on some important commercial 
objectives including demonstrating the performance 
of Affimer technology in our three initial areas of 
strategic focus: affinity separation, immunoassays 
and lateral flow diagnostics. We have also established 
collaborations with Mologic and Glythera to help 
validate Affimer reagents in key applications and 
continue to explore other collaboration opportunities 
to broaden the application base. 
There are a significant number of Affimer technology 
evaluations now ongoing and we continue to grow  
the pipeline of such partnerships that will ultimately 
deliver a stream of ‘Affimer-powered’ third party 
products to underpin long-term revenue growth 
through licensing royalties. 
The success of our programme to develop specific 
Affimer binders to the Zika NS-1 protein is a good 
example of the speed with which high quality Affimer 
reagents can be developed to answer an urgent  
need where there is a gap in the antibody offering. 
We also opened new laboratories and offices in 
both Cambridge and Wetherby which provide 
first-class facilities to accommodate the increased 
commercial demands and the expanding research 
and development programmes.
Our Animal Health business has also had another 
successful year, with growth in both revenues and 
margins. Development of new diagnostic solutions 
and tests via assays and algorithms has continued 
with the end customer being companion animal  
vets and laboratories. 
Our Team
During the year, Tim Sykes chose to step down as 
Chief Financial Officer, a role he had held since 2006, 
to become the full-time Chief Financial Officer of 
Proactis Holdings plc.
In January 2016, Tony Gardiner joined the Board 
as Chief Financial Officer and Philippe Cotrel was 
appointed to the role of Chief Commercial Officer, 
both bringing invaluable experience and insight to the 
business as we continue to strengthen our scientific 
and management team.
In April we established a Scientific Advisory Board, with 
Dr Mike Owen, ex-Senior Vice President and global Head 
of Research of Biopharmaceuticals at GSK, chairing this 
new board in addition to his role as a Non-executive 
Director on the Board. The Scientific Advisory Board 
has appointed Professor Terence Rabbitts, Professor 
Paul Moss and Professor Adrian Hayday to provide 
immuno-oncology target selection advice and to 
critically review the therapeutic programme progress.
10 “As a Board, we are extremely optimistic about 
2017 and beyond as we look to progress 
our Affimer therapeutic programmes and 
commercialise the Affimer research and diagnostic 
reagents with clinical and commercial partners. 
On behalf of the Board I would like to thank our 
shareholders for their continued support and we 
look forward to reporting on further progress in 
the coming months.”
Trevor Nicholls, Non-executive Chairman, 14 October 2016
11
Avacta Annual Report and Accounts          2016 Strategic Report
Avacta is a UK biotechnology company that 
is developing biotherapeutics and reagents 
based on its proprietary Affimer technology – 
an engineered alternative to antibodies. 
Since inception in 2006 Avacta’s mission has been to 
develop products and services for the life sciences 
and healthcare markets. Following the acquisition of 
the Affimer technology intellectual property from the 
University of Leeds and others in 2012 the Company 
has focused on developing and commercialising this 
technology.
The Company is committed to providing high-quality 
Affimer reagents for licensing into third-party research 
and diagnostic products, and to creating new Affimer 
medicines for partnering with large pharma.
The Company comprises around 90 employees based 
at two sites in Wetherby and Cambridge that have 
recently been fitted out to create state-of-the-art 
laboratory facilities. 
Affimer technology
An Affimer molecule is a small protein that is capable 
of binding to a target molecule (such as another 
protein, a peptide or a small molecule) in the same 
way that an antibody does. This ability to capture or 
bind a target molecule can then be used to detect 
or quantify it in a diagnostic test or research assay, 
or to enrich or purify it from a complex mixture, 
for example. Additionally, if the target is involved in 
a disease pathway and the binding by the Affimer 
molecule activates, alters or blocks its function, then 
there is potential for the Affimer molecule to provide 
therapeutic benefit as a drug. 
Antibodies are proteins that have evolved to bind to 
a target in order to stimulate an immune response in 
vivo. Over several decades this property of antibodies 
has been harnessed to develop thousands of 
reagents for laboratory assays and diagnostic  
tests, and one third of all drugs in development  
are now antibodies. 
This enormous success of antibodies is despite 
some significant limitations: 
• antibodies are often not specific to the target and 
cross-react with other targets causing uncertainty 
in the results that are obtained, for example, in a 
diagnostic test; 
• antibodies are large proteins with complex 
structures, including special internal bonds and 
external chemical modifications that are required for 
correct function, making many of them challenging 
and costly to manufacture and resulting in batch-to- 
batch variability; 
• antibodies are often generated by immunising 
an animal and purifying the antibodies that are 
produced by the immune response of the animal 
from its blood, which means that the time required 
to develop a new, high quality antibody can be 
many months and that the type of target to which 
an antibody can be raised is limited to those that 
are not toxic and cause an immune response; many 
important and commercially valuable targets do not 
fit these criteria;
• the large size of antibodies is a disadvantage in 
some applications in which, for example, tissue 
penetration is important, or a high density of 
antibodies on a sensor surface is required; and
• many applications require the antibody to be 
modified to carry a payload or signaling tag and 
their large size and complex structure makes  
these modifications more challenging.
In contrast, the small size and simple structure 
of Affimer molecules means that they are easy to 
manufacture with simple, low-cost processes that  
are reliable in their batch-to-batch consistency.  
Their simplicity also means that modifying an Affimer 
molecule for a particular application is easily carried 
out with simple biochemistry. New Affimer molecules 
Avacta’s mission is to develop 
products and services for the life 
sciences and healthcare markets
12 “We have seen solid performance in all areas  
of Affimer technology development, continuing 
the transformational progress made in 2015.  
We have made good technical progress and are 
in a strong position having laid the technical and 
commercial foundations and we are well funded 
to deliver on our strategies.”
Alastair Smith, Chief Executive Officer
13
Avacta Annual Report and Accounts          2016 Strategic Report
are generated by screening through a pre-existing 
large library of approximately ten billion Affimer 
molecules to identify those that bind to the target 
of interest. This utilises an industry standard in vitro 
process which does not use animals and therefore 
it is quick, taking a matter of weeks, and circumvents 
some limitations arising from the nature of the target. 
This screening process can also be finely controlled to 
maximise the specificity and optimise other properties 
of the Affimer molecules that are pulled out of the 
library for a particular application. Affimer molecules 
are ten times smaller than antibodies and very stable, 
being resistant to extremes of pH and temperature. 
This makes them better suited to some applications 
where harsh conditions are experienced or where 
the small size leads to better sample penetration or 
a higher density of binding sites on a surface. Their 
small size and ease with which they can be modified 
means that the amount of time a therapeutic Affimer 
molecule stays in the blood stream can be tailored to 
suit different therapeutics regimes.
Despite the limitations outlined above, antibodies 
have become the dominant technology in markets 
worth in excess of $100 billion annually. The 
opportunity therefore, for an alternative such as 
Affimer technology, is very large with the potential to 
generate near-term revenue from minimally regulated, 
low-risk life sciences research tools and diagnostics 
applications, as well as potentially generating much 
higher rewards from therapeutics but with associated 
greater development risk. 
Business model and strategy
Avacta is addressing both therapeutic and non-
therapeutic opportunities for Affimer technology. The 
Company is focused on building a profitable business 
through licensing of Affimer reagents to research tools 
and diagnostics developers to power their products, 
whilst developing a pipeline of Affimer therapeutic 
candidates for in-house development and partnering.
Ten times smaller than 
antibodies, Affimer molecules 
are very stable. Their size 
and the ease with which they 
can be modified means the 
amount of time they stay 
in the blood stream can 
be tailored to suit different 
therapeutics regimes.
14 Professional background
Geoff worked in the field of protein science 
for over 15 years in both academic and 
industrial environments. During university 
research positions in Nottingham and 
Leeds he gained experience of allying 
molecular biology techniques to biophysical 
characterisation methods to study protein 
structure, stability, folding kinetics as well  
as underlying mechanisms of aggregation. 
Since then Geoff has worked as an applications 
scientist at a number of companies that design 
and manufacture scientific instruments. 
Firstly, in Manchester, he exemplified various 
uses of a biosensor technology that provides 
detailed measurements of biomolecular 
interactions, and then he moved to Yorkshire 
to work for Avacta Analytical supporting the 
Optim product line. These roles provided 
Geoff with opportunities to visit customers 
and to promote novel applications by writing 
white papers and giving presentations at 
many conferences around the world.
Geoff’s role at Avacta
At Avacta, Geoff is a Senior Applications 
Scientist. In this role he manages a small 
team that works to develop and exemplify 
various uses of Affimer technology. They 
work closely with the operational and R&D 
teams as well as with the commercial team 
to coordinate the production of scientific 
material that can be used in product literature. 
They are also involved in meeting customers 
and collaborators as well as attending and 
presenting data at conferences.
Why you are excited by Affimer 
technology?
“I believe that Affimer reagents have great 
potential in a host of applications due to 
our ability to obtain highly specific binders 
to a wide range of target molecules. As the 
Affimer protein scaffold is small and relatively 
easy to modify, by both genetic and chemical 
means, it enables us to modulate particular 
properties of the reagents and also provides 
flexibility in the way they are functionalised. 
I think that this characteristic means that 
Affimer reagents can be tailored to suit the 
exact needs of a customer or a particular 
application and provides a distinct advantage 
for our technology.”
“Affimer reagents can  
be tailored to suit  
the exact needs of a 
customer or a particular 
application and provides 
a distinct advantage for 
our technology.”
Team profile: Geoff Platt,  
Senior Applications Scientist
15
Avacta Annual Report and Accounts          2016 Strategic Report
Providing powerful reagents  
for research and diagnostics
16 Non-therapeutic Affimer technology is being 
delivered through licensing to third-party research 
tools and diagnostic test developers.
17
Avacta Annual Report and Accounts          2016 Strategic Report
Bespoke solutions for research  
and diagnostics customers
Avacta is addressing the non-therapeutic 
opportunity for Affimer technology through 
licensing to third-party research tools and 
diagnostic test developers.
In this way the Company can focus on its strengths –  
generating high quality Affimer reagents for the 
customers’ applications – and maximise the reach 
of the technology in every application area without 
the need to build multiple routes to market. Near-
term revenues are being derived from fee-for-service 
generation of new Affimers for evaluation and product 
development by third parties, and longer-term royalties 
will be generated based on the third party sales of 
‘Affimer-powered’ products.
Market focus and competitive strengths
Affimer reagents can be developed for a very wide 
range of applications in many markets therefore 
market focus is critical in order to maximise the 
benefits of research and development (R&D) 
investment and business development effort. The 
Company has chosen areas of focus that combine 
the competitive strengths of Affimer technology with 
attractive market opportunities. 
In the near term the Company is concentrating in 
three areas: affinity separation, immunoassays and 
lateral flow diagnostics.
The Company is now working with a number of 
potential commercial partners in these markets to 
provide custom Affimer reagents which will undergo 
evaluation in their applications. Successful evaluations 
will lead to commercial licensing agreements and 
product development programmes which would be 
expected to take 12-24 months for the third party  
to complete. 
Affinity Separation 
The capturing of a target from a complex mixture 
in order to purify that target. For example, the 
purification of a clotting factor from whole blood, or  
a therapeutic protein from the output of a bioreactor. 
Market overview
• Estimated market size $500 million growing at 10% 
compound annual growth rate (CAGR).
• Concentrated market with a few major players for 
standard purification products: e.g. GE Healthcare 
(>50% market share), Pall Corp, ThermoFisher,  
EMD Millipore.
• Customised product opportunities beginning to 
emerge as bioprocessing becomes more bespoke.
• Small scale sample preparation for clinical 
diagnostics procedures.
Affimer technology competitive strengths 
• Good specificity allows for discrimination between 
protein complexes, different conformations and 
folding variants.
• Small Affimer molecule size has potential to 
increase column capacity due to higher packing 
density on surfaces.
• Affimer reagents can be tailored to withstand 
desired operating conditions.
• Short development time of Affimer reagents 
benefits custom product developments.
• Excellent stability (thermal and pH) of Affimer 
molecules leads to good product lifetimes.
• Batch-to-batch consistency and low cost of 
production of Affimer reagents.
• Reduction of use of animals meets growing 
regulatory pressures. 
18 19
Avacta Annual Report and Accounts          2016 Strategic Report
Immunoassays 
Very widely used biochemical tests that detect  
the presence of, or quantify, a target in a sample  
for research purposes or diagnostics.
Market overview
• Enzyme linked immunoassay (ELISA) is the 
prevailing assay format for protein quantitation.
• Estimated market size is over $500 million for 
research ELISAs (with R&D Systems the market 
leader) and over $3 billion for diagnostic ELISA  
tests (with a large number of both large and small  
‘in vitro immunodiagnostics’ providers).
• Most emerging protein quantification platforms 
use ‘sandwich assay formats’ (e.g. Luminex, MSD, 
Singulex) which requires pairs of antibodies that  
will both bind to the target simultaneously.
Affimer technology competitive strengths 
• Ability to identify Affimer pairs and/or 
complementary Affimer reagents to make a pair 
with an established antibody. 
• Small size of the Affimer reagents means higher 
density of capture Affimer which improves sensitivity.
• Better specificity means reduction in cross-reactivity 
and less interference in multiplex analysis.
• Short Affimer reagents development time means 
quicker assay development time and lower 
development cost.
• Batch-to-batch consistency and low cost of 
production of Affimer reagents.
• Reduction of use of animals meets growing 
regulatory pressures. 
Lateral Flow Diagnostics
A simple diagnostic test technology that uses an 
absorbent strip to draw the sample and reagents over 
lines of capture reagent to create a visual read-out 
(e.g. pregnancy test strips) in which a positive result is 
indicated by the appearance of two blue lines when a 
urine sample is applied at one end.
Market overview
• Estimated market size in the region of $5 billion 
growing at 7% CAGR.
• Broad market applications but largest market 
is clinical (>80%) including infectious disease, 
cardiovascular and toxicology.
• Alere (now part of Abbott) is the largest player 
(~30% market share).
• Opportunities for niche players to develop  
novel tests and/or improve existing tests.
• Outsourcing and contract manufacturing  
is prevalent.
Affimer technology competitive strengths 
• Ability to identify Affimer pairs and/or 
complementary Affimer reagents to make a pair 
with an established antibody. 
• High stability of Affimer reagents beneficial for  
field applications.
• Batch-to-batch consistency and low cost of 
production of Affimer reagents.
• Short Affimer reagents development time means 
quicker assay development time and lower 
development cost.
• Reduction of use of animals meets growing 
regulatory pressures. 
• Beneficial properties of Affimer molecules to 
improve manufacturing efficiency and shorten 
analysis time.
20 Professional background
Dr Philippe Cotrel has over twenty years’ 
commercial experience in sales, marketing 
and customer support in the life sciences 
sector having held senior positions in Abcam, 
Affymetrix, and Amersham Pharmacia 
Biotech. Prior to joining Avacta, Philippe was 
Commercial Director at Abcam plc where he 
was responsible for the sales and marketing 
strategy including the development of 
product range, the management of regional 
sales channels worldwide and business 
development activities for the service and  
in vitro diagnostics divisions of the business. 
He oversaw revenue growth from £36 million 
to £144 million over a seven year period. Prior 
to that he was responsible for the European 
commercial operations of Affymetrix.
Philippe holds a PhD in Biotechnology from 
the Institut National de Sciences Appliquées in 
Toulouse and a post graduate degree in Protein 
Biochemistry from Institut Pasteur in Paris.
Philippe’s role at Avacta
At Avacta, as Chief Commercial Officer, 
Philippe is responsible for setting the 
business priorities and helping shape 
company strategy. His role is to understand 
market trends and needs to identify the 
best commercial opportunities for Affimer 
technology and set the directions to build a 
solid basis for the future growth. On a day-to-
day basis he leads the business development 
activities, communicates the benefits of 
Affimer technology to the external world and 
ensures that the right resource is available 
to deliver the best possible service and 
experience to customers and partners.
Why you are excited by Affimer 
technology?
“Affimer technology is a truly innovative 
approach that holds the potential to solve 
unmet needs in all areas of life sciences. It can 
accelerate medical research by offering quick 
access to novel reliable reagents that can be 
used to elucidate the mechanisms of disease. 
It can yield better diagnostics by allowing 
detection of novel biomarkers, be applied to 
a wide range of detection platforms for rapid 
point of care diagnostics and to be developed 
into live imaging reagents that can be used 
in future cancer care. Finally, the Affimer 
platform can also be used to develop the next 
generation of biotherapeutics that hold the 
promise to offer novel treatment options in 
oncology and other disease areas.”
“The potential impact 
of Affimer technology 
is immense and it is a 
privilege to be part of  
the team that will make  
it a reality.”
Team profile: Philippe Cotrel,  
Chief Commercial Officer
21
Avacta Annual Report and Accounts          2016 Strategic Report
Developing the next generation 
of biotherapeutics
22 Avacta is developing the therapeutic potential of 
Affimer technology in order to service the growing 
demand for the next generation of biotherapeutics. 
23
Avacta Annual Report and Accounts          2016 Strategic Report
A next generation biotherapeutic 
platform technology
Avacta has chosen to focus its investment in 
therapeutics in the area of immuno-oncology 
(IO) because certain technical benefits of 
Affimer technology make it highly competitive 
in IO therapeutic modalities, and due to the 
intense commercial interest in IO assets at  
the present time. 
Avacta’s therapeutic strategy is to generate a 
commercially valuable pipeline that is biased 
towards ‘best-in-class’ IO medicines which target 
well-understood biology and seek to deliver 
superior medicines by way of the benefits of Affimer 
technology. This strategy balances the risks of a new 
therapeutic platform with a lower target biology risk. 
Our knowledge of how the human immune system 
interacts with the tumour microenvironment and 
how to manipulate the immune system to attack 
the tumour and improve outcomes for patients has 
increased dramatically in recent years. The inevitable 
consequence of this explosion in knowledge is the 
resulting highly competitive drug discovery and 
development environment. The use of clinically 
precedented targets decreases the risk of clinical 
attrition but ‘backloads’ the risk to reimbursement 
and it is therefore essential to develop clinically 
differentiated medicines that will be able to perform 
better than current standard of care treatments.  
In order to minimise all of these technical, intellectual 
property (IP) and commercial risks Avacta has 
appointed a world-class Scientific Advisory Board, 
chaired by Dr Mike Owen, to support the Company  
in its strategic decision making in this area. 
Clinical focus: Immuno-oncology
Cancer immunotherapy harnesses the power of the 
patient’s own immune system to attack the cancer. 
The approach relies on the fact that tumour cells have 
certain proteins on their surface that can be used for 
targeting therapies, or can be blocked or stimulated to  
create an immune attack. There are numerous proteins  
that could be targeted and, in most cases, their  
biology is not fully understood, but there have been 
many recent clinical successes with immunotherapy 
treatments, particularly with combination therapies 
that address two drug targets simultaneously. Ongoing 
clinical trials will provide further insight over the coming 
few years and Avacta’s immuno-oncology programme 
will be informed by this increasing clinical knowledge. 
In addition to these inhibitory and agonistic 
immunotherapies, a large number of companies  
are developing cellular therapies in which T-cells,  
and other immune system ‘killer’ cells, are targeted to 
tumours via binders to tumour cell surface proteins. 
For example, this targeting may take the form of a 
bispecific molecule in which one part targets the 
tumour and the other part binds a T-cell. In other 
modalities, such as CAR-T, a patient’s T-cells are 
removed from them, engineered to present a cancer 
targeting molecule on their surface, and then put back 
into the patient to attack the tumour. 
Targeting is also central to the principles of ‘cytotoxic 
drug conjugates’. A drug conjugate is a combination 
of a cytotoxic agent which kills the tumour cell and a 
targeting molecule such as an antibody to direct the 
toxin to the tumour as specifically as possible to avoid 
systemic toxicity and associated side effects. Several 
large pharmaceutical companies have drug conjugate 
programmes based on antibodies. 
Affimer technology has the potential to provide 
superior technical solutions in all of these cancer 
immunotherapies and has competitive strengths 
that Avacta is working to exemplify in-house and with 
collaborators with a view to licensing the platform or 
specific assets into third party pipelines. 
24 25
Avacta Annual Report and Accounts          2016 Strategic Report
Collaborations and partnerships
In 2015 Avacta entered into a collaboration, licensing 
and option agreement with Moderna Therapeutics.
Under the terms of the agreement, Moderna made an 
upfront payment of $500,000 which provides them with 
exclusive access to Affimer molecules that bind certain 
targets which may be extended to include additional 
targets by a further payment. Moderna is also making 
certain payments to Avacta for research services to 
deliver pre-clinical development milestones. 
Moderna has the option to enter into exclusive 
license agreements for selected therapeutic Affimer 
candidates for clinical development and in each case 
Avacta will be entitled to milestone payments. The 
total value of these payments could reach several tens 
of millions of dollars. Avacta is also entitled to royalties 
in connection with future product sales.
Avacta also has development collaborations with 
Phoremost (phenotypic screening for drug target and 
drug discovery), Glythera (Affimer drug conjugates), 
Blueberry Therapeutics (antibiotic resistance) and 
D’Liver (liver metabolism).
Our competitive strengths – Affimer technical 
benefits for Immuno-therapeutics
Ease of formatting and creation of multimeric 
structures / manufacturing yield
• Many cancer immunotherapies require multimeric 
structures such as dimers or trimers. (e.g. for 
targeting T-cells). 
• CAR-T therapies require the targeting protein to be 
fused to a signaling domain protein, produced by a 
T-cell and displayed on its surface. 
• Therapeutic proteins which have the benefit of 
small size like Affimer molecules (see diagram on 
page 27) need formatting for half-life extension. 
• Generally, these complex formats are not easy 
to achieve with antibody-based technology and 
when they are achieved they are challenging to 
manufacture with economically reasonable yields. 
• All of these formats have been demonstrated with 
ease using Affimer molecules and manufactured 
with high yields using as yet un-optimised processes 
so even greater manufacturing efficiencies are likely 
to be realised in future.
Inhibitors and agonists
• Generating inhibitory effects is straightforward 
to achieve with an antibody or other technology. 
Agonism, the stimulation of a process in a cell by 
targeting a surface protein, is more difficult to 
achieve and requires multimeric structures with 
specific structural properties. 
• Agonism has been shown with Affimer molecules  
in in vitro cell based assays.
Small size
• The much smaller size of an Affimer protein 
compared with an antibody can be an advantage  
in terms of tissue penetration. This is important 
when the target is a solid tumour, for example. 
• Small size is also important in topical delivery  
(e.g. applied to the skin or inhaled into the lung)  
for better tissue penetration and to deliver more 
drug to the site of the disease. 
• In some applications (e.g. drug conjugates), small 
size leads to rapid clearance of the therapeutic 
protein that has not bound to its target, reducing 
systemic dosing and side effects. 
Rapid development
The rapid generation of high affinity Affimer lead 
molecules shortens pre-clinical development times 
and reduces costs. The ease of manufacturing of 
Affimer proteins means that development is made 
much easier by having large quantities of material 
available, even at the very early stages of the drug 
discovery process.
26 Increasing the number of Affimer units increases binding affinity. 
BIAcore measurements show dimerization of the Affimer proteins 
increases the binding affinity by approximately ten-fold.
Format of Affimer biotherapeutic
PD-L1 Monomer
BIAcore (K
D
)  
7.56nM
HHHHHH
(G
4
S)
3
(G
4
S)
3
HHHHHH
PD-L1 Tetramer 
BIAcore (K
D
)  
Data TBC 
(G
4
S)
3
(G
4
S)
3
PD-L1 Dimer 
BIAcore (K
D
)  
0.49nM 
HHHHHH
(G
4
S)
3
HHHHHH
PD-L1 Trimer 
BIAcore (K
D
)  
0.34nM 
(G
4
S)
3
To find out more about this project, visit www.avacta.com/therapeutics
27
Avacta Annual Report and Accounts          2016 Strategic Report
Affimer technology – Transforming life 
sciences research
Dr Ramzi Ajjan is an Associate Professor 
and clinician, working with high-risk patients 
suffering from diabetes. 
An issue that many patients with diabetes 
face is an increased risk of cardiovascular 
disease, such as heart attacks and strokes. 
The formation of blood clots in blood vessels 
plays a role in causing these events and  
Dr Ajjan’s work involves trying to control the 
formation of blood clots to reduce heart 
attacks and strokes in high-risk patients.  
He and his team have analysed the effects 
of a wide range of Affimer molecules that 
bind to a protein called fibrinogen from 
which clots are formed. They have studied 
the effects of the Affimer treatment on the 
speed of formation of clots and analysed the 
final clot structure using optical and electron 
microscopy. He has also studied the ease 
with which these Affimer treated clots can be 
broken down in a process called clot ‘lysis’.  
Dr Ajjan’s observations show that certain 
Affimer molecules have a profound effect  
on these clotting processes and work is now 
continuing in close collaboration with the 
Company to understand in more detail the 
mechanisms by which the clotting process 
is being controlled with a long-term view 
towards potential therapeutic applications. 
Dr Ajjan spoke about how Affimer technology 
is transforming his research: 
“Having worked with Affimer technology for 
some time now I am absolutely astonished 
by what we can do with these molecules. 
We have been trying for years to reduce 
blood clot formation, however, this is very 
challenging because clots are made up of a 
complex network of fibrin fibres and the cells 
get trapped in this network. If the network 
can be made less compact it is easier to 
break down.”
This highly challenging area, requiring novel 
new approaches, is what prompted Dr Ajjan 
to try using Affimer technology. “After a 
screening process, we identified a number 
of Affimer reagents that are helping to break 
down clots in people with diabetes.”
The progress made has been highly 
encouraging to date. “I have been extremely 
impressed by the results we’ve got using 
Affimer technology. Other people have too. 
We recently applied for a grant to fund further 
work and were successful. In addition to 
being awarded the funds the feedback from 
the grant application was extremely positive. 
They felt Affimer reagents were a novel and 
promising way to progress research into 
reducing heart attacks and strokes in this 
high-risk population.”
“ The large number of Affimer reagents we screened 
would not have been technically possible using 
antibodies. The potential for Affimer technology to 
provide new ways of controlling blood clotting is a 
very exciting prospect.”
Collaboration  
case study:  
Ramzi Ajjan,  
Associate Professor/ 
NHS Consultant,  
Diabetes and 
Endocrinology
28 Professional background
Estelle has been working in the pharmaceutical 
industry for 13 years, mainly focused in 
immunology. She started as a scientist in 2003 
for a startup company based in Paris, developing 
a conjugate vaccine platform to be used as an 
active immunotherapy for inflammatory disease.
Estelle was involved from the early discovery 
phase right through to the assessment of  
the vaccine in clinical trials (phase IIa/IIb). Her 
role evolved as the product developed from 
early stages to clinical evaluations. She played 
a part in the development of the process, in 
the characterisation of the product for quality 
control (QC) and in tech transfer to contract 
research organisations (CRO)/contract 
manufacturing organisations (CMO). Estelle 
also developed assays to evaluate the immune 
response in preclinical models in various 
species, then developed assays to be used in 
clinical trials. In 2013 she moved to a leading 
CMO company based in the UK, working 
in the QC department on host cell protein 
assay development, then on immunogenicity 
assessment for biologics and peptides.
Estelle’s role at Avacta
At Avacta, Estelle’s role is to lead the assay 
team that characterise Affimer binders with 
therapeutic potential. She is also involved 
in the in vivo assessment of the therapeutic 
Affimer binders as pharmacokinetic studies  
or proof of concept in animal models.
Estelle’s team develop all the binding and 
competitive assays, as well as cell based 
assays to look at the biological properties 
of the Affimer and we develop some of the 
analytical methods that will be used in the 
future QC of the molecule to be assessed  
in clinical trials. Estelle tries to plan ahead  
as much as possible, to help future up-scaling 
of the production process of the Affimer 
molecules by a CMO, knowing the capabilities 
of a good manufacturing practice (GMP) 
facility and the costs associated with any  
work in a regulated environment.
Why you are excited by Affimer 
technology?
“Affimer technology is different to anything 
else on the market. This is a human scaffold 
molecule that has some unique properties 
such as small size and formatting possibilities. 
I am excited by all aspects of my role 
developing assays to measure the stability, 
the formulation, the formatting and binding. 
I think that Affimer technology has some 
potentially significant advantages in terms  
of building bi-specific therapies and immune 
cell engager technologies as well as great 
benefits arising from ease of manufacture.”
“It’s not hard to get 
excited about a platform 
technology that has the 
potential to develop 
drugs that will treat cancer 
patients and save lives.”
Team profile: Estelle Adam,  
Senior Assay Scientist 
29
Avacta Annual Report and Accounts          2016 Strategic Report
Board of Directors
Top row:  
Dr Trevor Nicholls 
Alan Aubrey 
 
Middle row:  
Dr Michael Albin 
Dr Mike Owen 
Dr Alastair Smith
Bottom row:  
Craig Slater 
Tony Gardiner
30 Dr Trevor Nicholls  
Non-executive Chairman 
Trevor is currently Chief Executive Officer 
of the not-for-profit CAB International, 
an intergovernmental organisation 
owned by 47 member countries whose 
mission is to improve lives worldwide 
by providing information and applying 
scientific expertise to solve problems  
in agriculture and the environment.  
He is also Non-executive chairman of 
Iota Sciences Limited, a company spin-
out from the University of Oxford, which 
is commercialising innovative microfluidic 
technology for the life sciences. In 
addition, he is a Non-executive director 
at hVivo plc and Conidia Bioscience.  
Trevor brings considerable experience 
in the commercialisation of life science 
systems and reagents from his  
previous roles as Chief Commercial 
Officer at Affymetrix, founder and  
Chief Executive Officer of UK biotech 
company Oxagen Ltd and Commercial 
Director of the Life Sciences business  
at Amersham International (now part  
of GE Healthcare). Trevor is Chairman  
of the Remuneration Committee and  
a member of the Audit Committee.
Alan Aubrey  
Non-executive Director
Alan is the Chief Executive Officer of IP 
Group plc, a FTSE 250 company that 
specialises in commercialising intellectual 
property. He is also a non-executive 
chairman of Ceres Power Holdings plc, 
a manufacturer of advanced solid oxide 
fuel cells, a non-executive chairman of 
PROACTIS Holdings PLC, an AIM listed 
company that provides specialist Spend 
Control software to global organisations 
and a non-executive director in a 
number of other leading technology 
companies. Alan is a fellow of the 
Institute of Chartered Accountants of 
England and Wales and the Chairman  
of the Audit Committee and a member  
of the Remuneration Committee.
Dr Michael Albin  
Non-executive Director 
Following a Ph.D. in chemistry at 
Pennsylvania State University and 
postdoctoral research in biochemistry 
at the California Institute of Technology, 
Michael worked at SYVA diagnostics 
followed by fifteen years at Applied 
Biosystems Inc. rising to the role of VP 
of Strategic Technologies of the parent 
company Applera Corp, an S&P 500 
company. Whilst at Applied Biosystems 
Inc. (now Life Technologies Inc.), he was 
responsible for R&D programmes with 
a budget in excess of US $100 million, 
overseeing the development of the 
company’s product pipeline via internal 
development, investment and acquisition. 
In recent years he has worked as a 
private consultant focusing on technical 
and strategic assessments for a wide 
range of companies in the life sciences, 
molecular diagnostics, and personalised 
medicine sectors. In addition, he carries 
out due diligence for venture capital and 
other investment organisations in the US, 
Canada and the UK. Michael is a member 
of the Remuneration Committee and the 
Audit Committee.
Dr Mike Owen  
Non-executive Director
Mike was Senior Vice President 
and global Head of Research of the 
Biopharmaceuticals R&D Unit at 
GlaxoSmithKline and was responsible 
for initiating and rapidly growing 
GSK’s robust pre-clinical and clinical 
therapeutic antibody pipeline during 
the last decade through in-house 
development as well as through 
acquisitions such as Domantis. He 
left GSK in 2010 to establish Kymab 
which is developing biotherapeutics 
using its novel transgenic mouse 
platform. Mike is an immunologist by 
training who had a highly successful 
scientific career at Imperial Cancer 
Research during which he was elected 
a member of the European Molecular 
Biology Organisation and a fellow of 
the Academy of Medical Sciences. Mike 
is also an independent board member 
at Zealand Pharma and non-executive 
director of Ossianix Inc. and Blink 
Therapeutics. He sits on the scientific 
advisory board of Kymab and also 
advises the private equity CRT Pioneer 
Fund and HS Life Sciences. Mike is 
Chairman of the Scientific Advisory Board 
and a member of the Remuneration 
Committee and the Audit Committee.
Dr Alastair Smith  
Chief Executive Officer
Alastair combines world-class scientific 
and technical knowledge with a highly 
commercial mindset. Alastair has 
been Chief Executive of Avacta since 
its inception in 2005 and has been 
responsible for the management and 
strategic development of the company, 
led the IPO and the fund raising and 
M&A activities of the Group, and has 
overseen the product development 
programmes. He has a degree and PhD 
in Physics from Manchester University 
and, after working in the US for a period, 
took up a position at Leeds University in 
1995. At the age of 38 he was awarded 
a Chair of Molecular Biophysics and had, 
over ten years, grown one of the leading 
biophysics research groups in Europe. 
He left his academic career in 2007 to 
focus full time on delivering value to 
Avacta shareholders.
Craig Slater  
Chief Operating Officer
Craig has more than 25 years’ experience 
of commercial, operational and group  
management roles in specialist 
engineering, construction, software  
and marketing groups. More specifically, 
this experience includes the supply of 
specialist equipment to Life Science 
clients, B2B service provision and the 
implementation of growth plans in SME 
businesses. Craig has been working 
with Avacta since June 2012, initially in 
a commercial and operational capacity 
within Avacta Analytical prior to its 
disposal in February 2015 and more 
recently within Avacta Animal Health.
Tony Gardiner  
Chief Financial Officer
Tony is a member of the Institute of 
Chartered Accountants of England and 
Wales and joined Avacta in January 2016 
as Chief Financial Officer and has over 20 
years’ experience of senior financial, and 
operational management roles across 
a number of different sectors. Between 
2007 and 2011, Tony was the Chief 
Financial Officer of AIM listed Fusion IP 
plc, an IP commercialisation company, 
which was subsequently acquired by IP 
Group plc in 2014. He played a key role 
in supporting the growth of the business 
and oversaw all finance activities as well 
as directly supporting life sciences and 
health technology companies in Fusion’s 
portfolio. Tony joined Avacta from 
AHR, an international architecture and 
building consultancy practice where he 
had been Finance Director since 2011. 
Tony has also held senior finance roles 
within Eversheds LLP, KCOM Group Plc 
and Hickson International Plc.
31
Avacta Annual Report and Accounts          2016 Strategic Report
Senior Leadership Team
Philippe Cotrel  
Chief Commercial Officer
Dr Philippe Cotrel, a protein chemist by 
training, has over 20 years’ commercial 
experience in sales, marketing and 
customer support in the life sciences 
sector, having held senior positions in 
Amersham Pharmacia Biotech, Oxford 
Glycosciences, Affymetrix and Abcam. 
Whilst at Affymetrix, at that time 
the inventor and market leader of 
commercial microarrays, Philippe was 
appointed General Manager and Vice 
President of Commercial Operations in 
Europe with responsibility for European 
commercial operations, generating 
approximately £65 million in sales made 
up of capital equipment, consumables 
and services. 
Philippe joined Abcam in 2008 
as Commercial Director and was 
responsible for sales and marketing 
activities, successfully growing revenue 
from £36 million to £144 million over a 
seven year period. He managed regional 
offices in Boston, Tokyo, Hong Kong 
and Shanghai and was responsible for 
all global customer-facing functions, as 
well as business development activities 
for the service and in vitro diagnostics 
divisions of the business. 
Philippe joined Avacta from Abcam and 
now leads Avacta’s commercial strategy 
and business development activities, 
and drives the commercialisation of 
Affimer technology, as both research 
reagents and biotherapeutics.
Matt Johnson  
Chief Technical Officer 
Matt studied Genetics & Microbiology 
at the University of Sheffield and 
completed a PhD in Molecular Biology, 
investigating novel surface proteins of 
the B. cereus endospore. As part of his 
PhD, he completed a fellowship at the 
Pasteur Institute in Paris with Dr Michele 
Mock. Matt took a Postdoctoral position 
in the Department of Biochemistry  
at Cambridge University. The focus 
of the project was characterising a 
novel toxin-antitoxin phage resistance 
mechanism discovered on a cryptic 
plasmid in E. carotovora. 
Matt joined Abcam in 2005 as a 
development scientist producing and 
characterising antibodies. He held 
several roles over his 8 years in the 
company, culminating in the post of 
Head of R&D. His experience at Abcam 
includes building an imaging team  
for ICC and IHC, being responsible for 
managing the antibody characterisation 
group, running a team responsible  
for process improvements and QA, 
project managing implementation of 
a new LIMS system and management 
of the Product Development & 
Manufacturing facility. As Head of 
R&D, he built and ran a research 
group with interests in recombinant 
antibody/binder technologies, 
alternative detection methodologies, 
immunoassay development and antibody 
characterisation. Matt also contributed to 
M&A strategy, licensing and technology 
scouting. To support this, he completed 
a Postgraduate Certificate in Intellectual 
Property Law in 2012.
Amrik Basran  
Chief Scientific Officer 
Dr Amrik Basran has over 14 years’ 
experience of both the biotech and 
pharma industries. He completed  
his degree and PhD at the University 
of Leicester and has a background 
in protein biochemistry/engineering. 
He then spent 6 years as a post-
doctoral researcher at the Institute of 
Biotechnology, Cambridge University 
isolating novel bacterial pathways 
involved with the metabolism of illicit 
drugs and high explosives. 
In 2002, Amrik then joined Domantis, 
a start-up biotech company based 
in Cambridge developing domain 
antibodies (dAbs), a novel antibody 
fragment technology. As Director of 
Protein Sciences, he was responsible 
for characterising the lead dAbs from 
early discovery for their suitability for 
drug development, supporting pre-
clinical evaluations and tech transfer to 
CMOs. Domantis was acquired by GSK 
in 2006, after which he became Head 
of Topical Delivery (Biopharm Discovery 
Unit), supporting the development of 
biotherapeutics across the GSK portfolio. 
The group focused on discovering and 
developing a wide range of therapeutic 
antibodies, dAbs and proteins for 
delivery into the eye, skin and lung. This 
included developing formulation and 
delivery strategies for biotherapeutics 
for Phase I clinical studies. 
Amrik left GSK in 2012 and joined 
Avacta in 2013 as Chief Scientific Officer 
to develop the Affimer platform for 
therapeutic use, focusing on immuno-
oncology where there is a high unmet 
medical need for new novel drugs to 
improve the long-term clinical outcome 
for cancer patients. 
32 Scientific Advisory Board 
Professor Terence H Rabbitts 
(FMedSci, FRS)
Professor Rabbitts is a molecular biologist, 
working at the University of Oxford John 
Radcliffe Hospital, whose examination of 
the organisation and rearrangement of 
human genes over the past four decades 
has helped to shape our understanding 
of immunity and cancer. Professor 
Rabbitts was responsible for determining 
the genetic basis of human antibody 
diversity, which enables the immune 
system to fight countless pathogens, 
and revealed genetic translocations that 
cause some cancers.
He has considerable experience in 
guiding the commercialisation of 
cutting edge biotechnology having 
been the Chairman of the Scientific 
Advisory Boards of Cambridge Antibody 
Technology and Quadrant Healthcare 
until their respective IPOs, a member of 
the Scientific Advisory Board of Domantis 
until its acquisition by GSK, Chair of the 
Medical Advisory Board of Oakes Lyman 
and he is currently a member of the 
Scientific Advisory Boards of Oryzon 
Genomics and of DiThera.
Professor Rabbitts worked in Cambridge 
from 1973-2006 in the MRC Laboratory 
of Molecular Biology where he was joint 
Head of the Division of Protein and 
Nucleic Acid Chemistry together with 
the Nobel Laureate César Milstein. He 
was the Director of the Leeds Institute of 
Molecular Medicine from 2007 to 2010. 
He has been awarded the Colworth 
Medal of the Biochemical Society and  
the CIBA Prize and was elected as a 
Member of the European Molecular 
Biology Organization (EMBO) (1981),  
a Fellow of the Royal Society (FRS) (1987) 
and a Founder Fellow of the Academy  
of Medical Sciences (FMedSci) (1998).
Professor Paul Moss  
(MRCP, FRCPath)
Professor Paul Moss leads the University 
of Birmingham’s world class cancer 
research as Director of the School of 
Cancer Sciences. His research is on the 
application of translational immunology 
in human malignancies. Professor 
Moss’s research team comprises clinical 
and non-clinical research scientists 
working on a range of projects. His 
group is particularly interested in 
developing strategies to optimise stem 
cell transplantation for patients with 
haematological malignancies. Paul also 
has a long-standing research interest 
in cytomegalovirus, a herpes virus that 
in healthy individuals is asymptomatic 
but can cause severe illness in immuno-
compromised transplant patients. His 
research is likely to facilitate design of 
improved immunotherapy strategies 
targeted at cancer.
Professor Moss is also Director of 
Research and Knowledge Transfer at  
the University of Birmingham and 
Chairman of the Infection and Immunity 
Board at the Medical Research Council.  
Here he oversees funding in research 
applied to infectious disease and 
disorders of the human immune system. 
He also serves as a member of the 
Strategy Board at the MRC. Professor 
Moss is an honorary consultant at the 
University Hospitals Birmingham NHS 
Foundation Trust and the Clinical Service 
Lead for chronic lymphocytic leukemia. 
He is also a member of the Scientific 
Advisory Board of Cell Medica Ltd and 
he has previously been the Chair of 
the Cancer Research UK Clinical and 
Translational Research Committee. 
Professor Adrian Hayday  
(FMedSci)
Adrian Hayday is Professor of 
Immunobiology at the Francis Crick 
Institute, co-Leader of the Clinical 
Academic Grouping at Guy’s Hospital, 
and a Senior Group Leader at Cancer 
Research UK. He obtained his PhD in 
tumour virology then worked at MIT, 
before his appointment to the Yale 
University faculty, becoming a full 
professor in 1997. Adrian’s research 
interests include unconventional T cells, 
the regulation of tissue inflammation and 
the control of carcinogenesis. He was 
co-discoverer of the gamma-delta T cell 
antigen receptor, generating widespread 
interest in immune cell function within 
tissues and tumour immune surveillance. 
With long-standing collaborators, 
Prof. Hayday has identified critical 
roles for gamma-delta cells in primary 
immunoprotection against solid tumours, 
and in immunoregulation, particularly 
within tissues. He is internationally 
renowned for his work in immunology, 
having published nearly 200 papers.  
He was elected a fellow of the Academy 
of Medical Sciences, won the King’s 
College Award for Business and was 
elected a fellow of the Academy of 
Medical Sciences. He has been a 
member of numerous advisory boards 
including the Scientific Advisory Board 
of Medimmune, and is currently a 
member of the Scientific Advisory 
Boards of Cerimon Pharmaceuticals, 
HS Lifesciences, ImmunQure and CIRI. 
He also advises a number of bodies, 
including the Wellcome Trust, where 
he sits on the Strategy Committee, and 
CRUK where he is Chair of the Science 
Committee – responsible for translational 
cancer research programmes.
33
Avacta Annual Report and Accounts          2016 Strategic Report
Business and strategy
Our strategy is to provide vets, directly and through 
laboratories, with solutions enabling them to diagnose 
and treat companion animals more effectively.  
To do this we develop, manufacture or source, market 
and then support diagnostic solutions and related 
treatments. We work closely with leading experts in 
academia and industry and aim to present vets with 
well-researched and evidenced tools that enable 
faster and more reliable decisions in practice.
Competitive strengths
Our aim is to be different to our competitors in a number 
of ways, each presenting value to our customers:
• we develop and manufacture most of our own 
products allowing us to provide the highest level  
of insight and support;
• we provide especially strong customer service  
first-line, with in-house veterinary support and 
specialist KOL assistance;
• we have an innovative and well-resourced research 
and development team; and
• we have access to proprietary Avacta Life Sciences 
technology.
Market focus
Our customers are companion animal vets and the 
laboratories serving them. We listen to their feedback 
through surveys, our sales and customer services 
teams and our Veterinary Advisory Board. We are 
privileged to work with Jason Atherton, Laura Playforth, 
Mark Dunning and Kirsten Pantenburg as our 
Veterinary Advisory Board members and they help  
to inform our development and commercial choices.
Development focus
Our development priorities are increasingly set by 
market feedback and then driven by our R&D team, 
either towards new assays, algorithms or delivery 
methods. We involve and work closely alongside 
industry key opinion leaders from the UK and the US 
to ensure our work is based upon the latest and best 
research available. 
One example of this link with strong KOLs is our 
relationship with Dick White Referrals, a leading UK 
referral practice. DWR partner Simon Tappin and 
his colleagues have an outstanding knowledge and 
experience of Small Animal internal medicine and 
their guidance, along with that of many other experts, 
has been invaluable during the development of the 
canine Pancreatitis test.
Management team
Our business is run by a management team with 
experience covering all aspects of the companion 
animal industry. Biographies can be accessed at  
www.avactaanimalhealth.com/about/people/ 
• Hayley Booth – Head of Commercial
• Jo Soundy – Head of Marketing
• Janice Hogg – Senior Veterinary Director
• Agata Michalak – Head of Assay Development  
and Production
• Kevin Slater – Chief Scientific Officer
• Johanna Gourlay – Senior Veterinary Technical 
Manager
• Rob Harrand – Technology and Data Science Lead
Animal Health
The Group provides diagnostic tools and services for 
veterinarians through its subsidiary, Avacta Animal Health. 
   Allergy lab tests: 45%
    Allergy kits –  
bulk sales: 24%
    Immunotherapy 
vaccines: 22%
   Other: 5%
   CRO studies: 4%
Animal Health
Sales by category
45%
4% 5%
24%
22%
34 35
Avacta Annual Report and Accounts          2016 Strategic Report
Equine allergy development
We are regarded as a leading provider of 
laboratory allergy tests and related products  
to companion animal vets and laboratories. 
We decided in 2015, following a review of the 
UK and European markets, to develop our own 
equine allergy test specific to those markets.
In less than a year, this quite complex test 
was developed, optimised and transferred to 
manufacturing for sale initially in the UK. We 
aim to grow the customer base for this test in 
the UK and also offer it to certain laboratories 
for use in Europe. This is an example of our 
ability to develop products effectively and 
efficiently based on a sound business case.
Jenny Bristow, who now runs Production 
Services, developed our Equine Allergy test 
from a standing start within 11 months under 
the guidance of Agata Michalak: “This was 
a challenging project due to the number of 
allergens involved in the test and relied on the 
R&D team working together in order to get 
the work done as efficiently as possible. The 
transfer to Production Services was straight 
forward and it is currently running well.”
World Congress of Veterinary 
Dermatology
The 8th World Congress of Veterinary 
Dermatology in Bordeaux in June 2016 was 
the third in succession at which Jen Bexley 
presented a paper, this time written with two 
of our KOLs. The Congress is held every four 
years and is the premier event of its type. 
Through a long association and our ability  
to add to debates at a high level, we play a 
part in the core business of the Congress.
The paper entitled Serological cross-reactivity 
between beef, lamb and cows’ milk allergenic 
extracts in dogs provided an insight into the 
selection of foods for the diagnosis and 
management of possible cases of adverse 
food reactions. It included guidance on the 
selection of diet and use of results from 
serological testing.
Jennifer Bexley has developed most of our 
allergy products and runs a number of 
research projects: “This year’s World Congress 
was a fantastic experience both scientifically 
and socially. Our talk was well received and 
it was a real privilege to work with and learn 
from some of the leading dermatologists in 
veterinary medicine.”
Pet Allergy Week
In its 2nd year Pet Allergy Week (PAW) 
is an initiative to raise awareness of 
allergies in dogs and cats, helping practices 
communicate with their clients by providing 
them with additional support collateral and 
waiting room displays and subsidised tests 
throughout June.
Approximately 500 practices signed up  
and during June we had 192 ‘PAW’ tests  
from 92 different practices. The majority of 
sign-ups came from the sales team using  
the promotion to help existing customers  
and re-engage with lapsed customers.
Conceived and run by Jo Soundy and Hayley 
Booth, the event is partly responsible for the 
increase in our allergy sales.
Nancy Stephenson, who has been with the 
company for 9 years, covers a large area from 
Lincoln to Essex and has a deep knowledge 
of the use of our products in first opinion 
practice: “PAW gave us a great opportunity to 
engage with customers old and new, raising 
our profile within practices and increasing 
owner understanding of allergic disease.  
Vets are already asking about PAW 2017!”
Animal Health 
Case Studies:
Left to right: 
Nancy Stephenson 
Jennifer Bexley 
Jenny Bristow
36 Reported Group revenues grew to £2.17 million, 
an increase of 19% (2015: £1.81 million). 
Revenue
Revenues for the Affimers business, Avacta Life 
Sciences, increased to £0.70 million (2015: £0.44 
million) as the number of custom Affimer projects 
increased. Revenues in Avacta Animal Health increased 
to £1.46 million (2015: £1.37 million) as a result of 
growing sales from existing allergy tests together  
with the introduction of a new equine allergy test. 
Research and development costs
During the year the Group expensed through the 
income statement £1.50 million (2015: £0.03 million) 
in relation to research and development costs. Within 
the amount expensed, £0.93 million (2015: £Nil) relates 
to the costs associated with the in-house Affimer 
therapeutic programme which has commenced in the 
current year and in line with other therapeutics based 
companies are expensed given their pre-clinical stage 
of development. In addition, an amortisation charge of 
£0.57 million (2015: £0.03 million) has been recognised 
against previously capitalised development costs 
from the custom Affimer reagents and diagnostics 
programme and new Animal Health allergy tests.
In addition, development costs amounting to £1.73 
million (2015: £3.06 million) were capitalised within 
intangible assets.
Administrative expenses
Administrative expenses have increased during the 
year to £5.43 million (2015: £4.41 million) as the scale 
of the Affimer business operations increased, with 
new laboratory facilities in Cambridge and expanded 
laboratory facilities in Wetherby, together with increased 
headcount across production and sales teams. 
Losses before taxation
Losses before taxation from continuing operations  
for the year were £5.57 million (2015: £5.54 million).
Taxation
The Group claims each year for research and 
development tax credits and, since it is loss-making, 
elects to surrender these tax credits for a cash 
rebate. The amount included within the consolidated 
income statement in respect of amounts received 
and receivable for the surrender of research and 
development expenditure was £0.92 million (2015: 
£0.65 million). The Group has not recognised any tax 
assets in respect of trading losses arising in the current 
financial year or accumulated losses in previous 
financial years.
Cash flow
The Group reported cash and short-term deposit 
balances of £19.52 million at 31 July 2016 (2015:  
£7.33 million). On 3 August 2015, the Group completed 
a placing of £22.00 million (before expenses) at a price 
of 1.25 pence per share. The proceeds from the placing 
have been placed on deposit with a range of financial 
institutions for time periods ranging between instant 
access and up to one year in maturity.
Operating cash outflows from operations amounted 
to £4.23 million (2015: £2.52 million). During the year 
capital expenditure of £2.86 million (2015: £0.81 
million) was incurred as a result of the new facilities 
and laboratory equipment at the Cambridge and 
Wetherby sites.
Financial position
Net assets as at 31 July 2016 have increased to  
£35.86 million (2015: £19.13 million) as a result of  
the increased cash balances from the placing in 
August 2015 and the subsequent increase in property, 
plant and equipment to £3.74 million (2015: £1.55 
million) following the opening of the new facilities in 
Cambridge and Wetherby.
Share consolidation and share premium 
reduction
On 26 January 2016, following approval by shareholders 
at the Annual General Meeting on 25 January 2016, 
Avacta Group Plc completed a share consolidation, 
creating 1 new ordinary share of 10p each for every  
100 existing ordinary shares of 0.1p each.
In addition, following approval by shareholders at 
the Annual General Meeting on 25 January 2016 and 
the subsequent approval of the Court, an amount of 
£55.44 million was cancelled from the share premium 
account and credited to the retained earnings reserve.
Key performance indicators
The Group’s key performance indicators include  
a range of financial and non-financial measures.  
The key measures being:
• monthly review of commercial/strategic prospects, 
revenues and forecasts;
• monitoring of cash balances and cash forecasts; and
• bi-monthly review of technical/programme 
development milestones.
Financial Review
37
Avacta Annual Report and Accounts          2016 38
Principal Risks and Uncertainties
The principal risks and uncertainties which 
could have a significant impact on the Group 
are set out below.
Research and development
The Group’s research and development activities are 
focused around Affimer technology within the reagent, 
diagnostic and therapeutic areas.
There is a risk, consistent with similar biotechnology 
companies developing new and innovative technology 
platforms, that the scientists involved are unable 
to produce the results required for their internal 
development programmes or customer related projects.
The development teams continue to work on improving 
the core Affimer technology platform, with oversight 
from the Senior Management Team and Scientific 
Advisory Board.
Timing
There is a risk that the development of Affimer 
technology may take longer than planned to meet the 
requirements of current and potential customers.
Given the proprietary nature of Affimer technology 
and its early stage development, it may take some 
time for customers to utilise the technology instead  
or more established antibody technologies.
Intellectual property
The success of the Group’s Affimer technology platform 
depends on its ability to obtain and maintain patent 
protection for its proprietary technology. The Board 
regularly review the patent portfolio and its protection.
Failure to protect the Affimer technology platform or 
if the scope of the patent protection is not sufficiently 
wide enough, could significantly impact the ability to 
commercialise the technology. 
Should the patents be challenged, there could be  
a considerable cost in defending the patent rights, 
with an uncertain outcome.
Funding
The development of the Group’s Affimer technology, 
in particular in the therapeutic areas, is resource and 
cash intensive. 
As at 31 July 2016 the Group had cash and short-
term deposits of £19.52 million which would provide 
sufficient funds beyond the next two years to continue 
the current programmes.
Should the Group decide to accelerate the Affimer 
platform development programme into additional 
therapeutic areas to increase shareholder value then 
further funding would need to be raised. As with all 
fundraising activities there are external market and 
economic factors which may impact the timing and 
amount of funding available.
Key staff
The Group has in place an experienced and motivated 
senior management team together with a growing 
number of highly skilled senior scientists.
Loss of key staff could lead to a delay in the Group’s 
plans and operations.
The Group aims to provide remuneration packages 
and working conditions which will attract and retain 
staff of the required level.
Loss of facilities
Should the Group’s facilities become damaged,  
the ability to carry on development programmes  
and meet customer deadlines may be affected.
The Group has recently relocated to purpose-built 
facilities in both Wetherby and Cambridge and has 
business continuity plans in place together with 
adequate insurance to cover any business damage  
or interruption.
 
This strategic report was approved by the Board on  
14 October 2016 and signed on its behalf.
Alastair Smith    Tony Gardiner 
Chief Executive Officer    Chief Financial Officer
Strategic Report 39
Avacta Annual Report and Accounts          2016
Governance
40 Directors’ Report
42  Remuneration Committee 
Report
46 Corporate Governance
49  Statement of Directors’ 
Responsibilities
50 Independent Auditor’s Report
39 40
Governance
The Directors present their report and the audited 
financial statements for the period ended 31 July 2016.
Principal activity
The principal activity of the Group is to provide life scientists 
with high quality, powerful and unique tools to enable them 
to work faster and smarter in accelerating the understanding 
of biology and disease, and to help apply these advances to 
diagnosis and treatment of humans and animals.
Business review and future developments
A review of the Group’s operations and future developments is 
covered in the Strategic Report on pages 10 to 38. This report 
includes sections on strategy and markets and considers key 
risks and key performance indicators.
Financial results
Details of the Group’s financial results are set out in the 
Consolidated Income Statement and other components on 
pages 52 to 75.
The Directors have reviewed the results for the years ended  
31 July 2016 and 31 July 2015, including the annual report  
and accounts, preliminary results statement and the report 
from the external auditor. In reviewing the statements 
and determining whether they were fair, balanced and 
understandable, the Directors considered the work and 
recommendations of management as well as the report  
from the external auditor.
Dividends
The Directors do not recommend the payment of a dividend.
Going concern
After making enquiries, the Directors have confidence that  
the Company and the Group have adequate resources to 
continue in operational existence for the foreseeable future. 
For this reason, they continue to adopt the going concern 
basis in preparing the Report and Accounts. This is described  
in more detail at Note 1.
Directors
The Directors who were in office during the year and up to 
the date of signing the Report and Accounts, unless otherwise 
stated were:
• Dr Trevor Nicholls
• Alan Aubrey
• Dr Michael Albin
• Dr Mike Owen – Appointed 17 September 2015
• Dr Alastair Smith
• Craig Slater
• Tim Sykes – Resigned 9 December 2015
• Tony Gardiner – Appointed 4 January 2016.
Under the Articles of Association of the Company, two of the 
directors are required to retire at the forthcoming Annual 
General Meeting, notice of which accompanies this Report & 
Accounts. The Directors retiring by rotation at the forthcoming 
Annual General Meeting are Alastair Smith and Michael Albin. 
Each of these directors, being eligible, offers themselves for  
re-election. In relation to the re-elections of each of the 
Directors, the Board is satisfied that each of these Directors 
continues to be effective and to demonstrate commitment 
to the Company. Details of the Directors offering themselves 
for re-election or re-appointment at the forthcoming Annual 
General Meeting can be found on pages 30 and 31.
The Directors benefited from qualifying third party indemnity 
provisions in place during the financial year and at the date of 
this report.
Substantial shareholders
The Company is informed that, at 14 October 2016, individual 
registered shareholdings of more than 3% of the Company’s 
issued share capital were as follows:
 
Number of 
shares
% of issued 
ordinary  
share capital
IP Group plc 16,949,783 24.8%
Henderson Global Investors 8,062,935 11.8%
Aviva Investors 6,669,468 9.8%
Baillie Gifford & Co 5,239,025 7.7%
Ruffer LLP 4,841,909 7.1%
Fidelity Worldwide Investment 4,028,374 5.9%
Avacta Employees Share Trust 3,232,306 4.7%
J O Hambro Capital Management 3,216,843 4.7%
NFU Mutual 2,390,000 3.5%
Directors’ shareholdings
The beneficial interests of the Directors in the share capital  
of the Company at 31 July 2016 and at 14 October 2016 was 
as follows:
 
Number of 
shares
% of issued 
ordinary  
share capital
Non-executive Directors
Trevor Nicholls 35,000 0.1%
Alan Aubrey 191,334 0.3%
Michael Albin 4,292 -
Mike Owen - -
Executive Directors -
Alastair Smith 537,281 0.8%
Craig Slater 8,632 -
Tony Gardiner - -
Directors’ Report 41
Avacta Annual Report and Accounts          2016
In addition, Alastair Smith has a joint interest in 1,640,000 
shares, Craig Slater has a joint interest in 340,820 shares and 
Tony Gardiner has a joint interest in 150,000 shares in the 
share capital of the Company. Such shares are jointly held by 
themselves individually and Avacta Group Trustee Limited in 
its capacity as trustee of The Avacta Employees’ Share Trust. 
The precise nature of the joint interest is described within Joint 
Share Ownership Agreements between Alastair Smith (dated 
9 January 2012 and 15 February 2016), Craig Slater (dated 21 
February 2014) or Tony Gardiner (dated 15 February 2016), 
as the case may be, and Avacta Group Trustee Limited and 
Avacta Group Plc in both cases. 
None of the Directors had any interest in the share capital of 
any subsidiary company. Further details of options held by the 
Directors are set out in the Remuneration Committee Report 
on pages 42 to 45.
The middle market price of the Company’s ordinary shares  
on 31 July 2016 was 84.5p and the range during the year was 
83.5p to 152.0p with an average price of 121.5p.
Information on Directors’ remuneration and share option 
rights is given in the Remuneration Committee Report on 
pages 42 to 45.
Research and development
During the year the Group expensed through the income 
statement £1.50 million (2015: £0.03 million) in relation 
to research and development costs. Within the amount 
expensed, £0.93 million (2015: £Nil) relates to the costs 
associated with the in-house Affimer therapeutic programme 
which has commenced in the current year and in-line with 
other therapeutics based companies are expensed given their 
pre-clinical stage of development. In addition, an amortisation 
charge of £0.57 million (2015: £0.03 million) has been 
recognised against previously capitalised development  
costs from the custom Affimer reagents and diagnostics 
programme and new Animal Health allergy tests.
In addition, development costs amounting to £1.73 million 
(2015: £3.06 million) were capitalised within intangible assets.
Derivatives and financial instruments
The Group’s policy and exposure to derivatives and financial 
instruments is set out at Note 20.
Employee involvement
It is the Group’s policy to involve employees in its progress, 
development and performance. Applications for employment 
by disabled persons are fully considered, bearing in mind the 
respective aptitudes and abilities of the applicants concerned. 
The Group is a committed equal opportunities employer 
and has engaged employees with broad backgrounds and 
skills. It is the policy of the Group that the training, career 
development and promotion of a disabled person should, 
as far as possible, be identical to that of a person who is 
fortunate enough not to suffer from a disability. In the event  
of members of staff becoming disabled, every effort is made  
to ensure that their employment with the Group continues.
Supplier payment policy and practice
The Group does not operate a standard code in respect  
of payments to suppliers. The Group agrees terms of  
payment with suppliers at the start of business and then 
makes payments in accordance with contractual and other  
legal obligations.
The ratio, expressed in days, between the amount invoiced  
to the Company by its suppliers during the year to 31 July  
2016 and the amount owed to its trade creditors at 31 July 
2016, was 32 days (2015: 43 days).
Disclosure of information to auditor
The directors who held office at the date of approval of this 
directors’ report confirm that, so far as they are aware, there is 
no relevant audit information of which the Company’s auditor 
is unaware; and each director has taken all the steps that he 
or she ought to have taken to make himself or herself aware 
of any relevant audit information and to establish that the 
Company’s auditor is aware of that information.
Re-appointment of auditors
A resolution for the re-appointment as auditors of KPMG LLP  
and the fixing of their remuneration will be put to the forthcoming 
Annual General Meeting to be held on 20 January 2017.
By order of the Board
Tony Gardiner 
Company secretary
Avacta Group Plc (Registered number – 04748597) 
14 October 2016 42
Governance
The remuneration of the executive directors is 
determined by the Remuneration Committee (‘the 
Committee’) in accordance with the remuneration 
policy set by the Board upon recommendation from 
the Committee. 
General policy
The Committee, which consists solely of the non-executive 
directors of the Company determines the detailed terms 
of service of the executive directors, including basic salary, 
incentives and benefits and the terms upon which their service 
may be terminated. Non-executive directors have no personal 
financial interest in the Company, except the holding of shares, 
no potential conflict of interest arising from cross directorships 
and no day-to-day involvement in the running of the Company. 
Details of the Directors individual and joint (where applicable) 
shareholdings are given on pages 40 and 41.
Avacta’s remuneration policy for executive directors is 
designed to attract, retain and motivate executives of the 
highest calibre to ensure the Group is managed successfully 
to the benefit of shareholders. The policy is to pay base 
salary at lower quartile levels with attractive short-term and 
longer-term performance incentives. Share ownership is 
encouraged and all of the executive directors are interested in 
the share capital or share options over the share capital of the 
Company. In setting remuneration levels, the Committee takes 
into consideration remuneration within the Group and the 
remuneration practices in other companies of a similar size in 
the markets and locations in which Avacta operates. Avacta is 
a dynamic, growing company which operates in a specialised 
field and positions are benchmarked against comparable roles 
in AIM companies. 
Executive Directors – Short-term incentives
Basic salary
Basic salary is based on a number of factors including market 
rates together with the individual director’s experience, 
responsibilities and performance. Individual salaries of 
directors are subject to review annually on 1 November.
Performance related bonus
The Company operates an annual performance related 
bonus scheme for executive directors. The bonus scheme is 
discretionary and is based around significant value creation 
milestones, covering financial, commercial, technical and 
operational parameters. The maximum bonus that can be 
earned by an executive director is 100% of basic salary. 
Benefits in kind
The Company provides life assurance cover, private medical 
cover and critical illness cover for the executive directors. 
Pensions
The Company makes payments into defined contribution 
Personal Pension Plans (‘the Plans’) on behalf of the executive 
directors. These payments are at a rate of 5% of basic salary.
Executive Directors – Long-term incentives
Share interests
The Committee considers that the long-term motivation of  
the executive directors is secured by their interests in the 
share capital of the Company. The individual interests and joint 
interests (where applicable) of the Directors in the share capital 
of the Company are set out on page 40 and their interests in 
options held over shares in the Company are set out on page 44. 
Executive Directors’ service agreements
The Board’s policy on setting notice periods for directors is 
that these should not exceed one year. All executive directors 
have service agreements terminable on six months’ notice.
The details of the service contracts of the executive directors 
are shown below.
Date of  
service  
contract
Initial 
term of 
contract
Notice period 
following  
initial term 
Alastair Smith 9 January 2012 Nil 6 months
Craig Slater 20 December 2013 Nil 6 months
Tony Gardiner 4 January 2016 Nil 6 months
Non-executive directors
The Board determines the fees paid to non-executive 
directors, the aggregate limit for which is laid down in the 
Articles of Association. The fees, which are reviewed annually, 
are set in line with prevailing market conditions and at a level 
which will attract individuals with the necessary experience and 
ability to make a significant contribution to the Group’s affairs. 
Non-executive directors are not involved in any discussion or 
decision about their own remuneration. The same applies to 
the Chairman of the Board whose remuneration is determined 
by the Board on the recommendation of the Committee.
The non-executive directors do not participate in any of the 
Company’s pension schemes or bonus arrangements nor do 
they have service agreements. Alan Aubrey was appointed 
for an initial term of one year by letter of appointment dated 
13 July 2006 and is entitled to three months’ notice following 
that initial term. Trevor Nicholls was appointed on 2 August 
2013 with no initial term and is entitled to one months’ notice. 
Michael Albin was appointed on 5 February 2014 with no initial 
term and is entitled to one months’ notice. Mike Owen was 
appointed on 17 September 2015 with no initial term and is 
entitled to one months’ notice.
External appointments
The Committee recognises that its Directors may be invited 
to become executive or non-executive directors of other 
companies or to become involved in charitable or public service 
organisations. As the Committee believes that this can broaden 
the knowledge and experience of the Company’s Directors to 
the benefit of the Group, it is the Company’s policy to approve 
such appointments provided there is no conflict of interest 
and the commitment required is not excessive. The Director 
concerned can retain the fees relating to any such appointment.
Remuneration Committee Report 43
Avacta Annual Report and Accounts          2016
Total remuneration – Audited
The remuneration of each of the Directors of the Company for 
the year ended 31 July 2016 is set out below. These values are 
included within the audited accounts. 
Salary  
and fees 
£000
Bonus 
£000
Pensions⁶ 
£000
Benefits 
£000
Share-based 
payment charge 
£000
Total  
2016 
£000
Total  
2015 
£000
Non-executive Directors
Trevor Nicholls 31 - - - - 31 20
Alan Aubrey 22 - - - - 22 15
Michael Albin
1
38 - - - - 38 54
Mike Owen
2
22 - - - - 22 -
Gwyn Humphreys
3
- - - - - - 8
Executive Directors
Alastair Smith 174 31 2 2 19 228 156
Craig Slater 130 24 8 - 40 202 205
Tony Gardiner⁴ 85 5 4 - 29 123 -
Tim Sykes⁵ 54 - 1 - 2 57 84
556 60 15 2 90 723 542
The above emoluments include all payments paid to the directors whilst directors of the Group. 
1  Michael Albin’s fees are paid for his services as a director but also for his 
services as a consultant at a rate of US $2,500 per day. The total fees for 
his services as a director were £22,000 and his total consultancy fees were 
£16,000. Following an amendment to the appointment letter for Michael 
Albin dated 22 February 2016, with effect from 1 March 2016, 50% of the 
fee for his services as a director is used to purchase shares in the Group at 
the average mid-market closing share price for the five trading days prior 
to each quarter end.
2 Mike Owen was appointed on 17 September 2015.
3 Gwyn Humphreys resigned as a director on 23 January 2015.
4 Tony Gardiner was appointed on 4 January 2016.
5 Tim Sykes resigned as a director on 8 December 2015. 
6  The number of Directors accruing benefits under money purchase pension 
schemes was 3 (2015: 3).  44
Governance
Details of Directors’ interests in share options 
in the Executive Share Option Schemes
At 31  
Jul 2015 Granted Waived Exercised
At 31  
July 2016
Exercise 
price  
pence
Date  
from which 
exercisable
Date  
of grant
Expiry  
date
Alastair Smith 141,176¹ - - - 141,176 50.0p Note 2 9 Jan 2012 9 Jan 2022
Alastair Smith - 128,764 - - 128,764 118.5p Note 2 15 Feb 2016 15 Feb 2026
Craig Slater 200,000¹ - - - 200,000 118.0p Note 2 21 Feb 2014 22 Dec 2023 
Tony Gardiner - 210,968 - - 210,968 118.5p Note 2 15 Feb 2016 15 Feb 2026
1  On 26 January 2016, following a 100 for 1 share consolidation exercise, 
the original option agreements over 0.1p shares in the Company were 
varied to options over 10p shares in the Company and the number of 
options reduced by a factor of 100, so that there was no overall change  
to the directors’ interests in share options.
2   This option provides that, unless waived at the discretion of the 
remuneration committee of the board, it can, if it has not lapsed, be 
exercised as to one quarter after each anniversary of the date of grant  
up to and including the fourth anniversary of the date of grant.
The aggregate gain made by directors on the exercise of share  
options was £Nil (2015: £Nil).
The Non-executive directors do not hold any interest in share  
options of the Company. 
Details of Directors’ joint interests in the  
Joint Share Ownership Plan (‘JSOP’) 
At 31 July 2015 Granted Waived Exercised At 31 July 2016 Date of agreement
Alastair Smith 1,144,149¹ - - - 1,144,149 9 January 2012
Alastair Smith - 495,851 - - 495,851 15 February 2016
Craig Slater 340,820¹ - - - 340,820 21 February 2014
Tony Gardiner - 150,000 - - 150,000 15 February 2016
1  On 26 January 2016, following a 100 for 1 share consolidation exercise, 
the original number of JSOP shares was reduced by a factor of 100 so that 
there was no overall change to the directors’ interests in JSOP shares.
Alastair Smith, Craig Slater and Tony Gardiner hold an interest 
in the shares of the Company, which are jointly held by 
themselves individually and Avacta Group Trustee Limited in its 
capacity as trustee of The Avacta Employees’ Share Trust. The 
precise nature of the joint interest is described within the Joint 
Share Ownership Agreements between the individual, Avacta 
Group Trustee Limited and Avacta Group Plc.
The Non-executive directors do not hold any interest in the 
joint share ownership plan of the Company.
Remuneration Committee Report  
(continued…) 45
Avacta Annual Report and Accounts          2016
Performance graph
The following graph shows the Company’s performance, 
measured by total shareholder return, compared with the 
performance of the FTSE AIM (rebased) for the year ended  
31 July 2016.
03-Aug-15
03-Sept-15
03-Oct-15
03-Nov-15
03-Dec-15
03-Jan-16
03-Feb-16
03-Mar-16
03-Apr-16
03-May-16
03-Jun-16
03-Jul-16
Avacta (rebased) AIM All Share (rebased)
0.000
0.200
0.400
0.800
0.600
1.000
1.200
The Remuneration Committee has selected the above index 
because it is most relevant for the Company’s size and sector.
This report was approved by the Board of Directors and 
authorised for issue on 14 October 2016 and was signed on its 
behalf by:
Dr Trevor Nicholls 
Chairman of the Remuneration Committee
14 October 2016 46
Governance
The Board of Directors recognise the importance of good 
corporate governance to protect shareholder value. 
Code on Corporate Governance
Whilst the Company is listed on AIM, it is not required to 
report against the 2014 UK Corporate Governance Code (the 
‘Code’). The Board however supports the principles contained 
within the Code and has sought to apply them where they are 
appropriate given the size and market capitalisation of the 
Company throughout the year. 
Avacta Group Plc is subject to the UK City Code on Takeovers 
and Mergers.
The Board of Directors and Committees of the 
Board of Directors
The Board, which is headed by the Chairman who is non-
executive, comprises three other non-executive and three 
executive members as at 14 October 2016. This ensures 
compliance with the Combined Code which states that a 
smaller company should have at least two independent 
directors. The Board met regularly throughout the year with 
ad hoc meetings also being held. The role of the Board is to 
provide leadership of the Company and to set strategic aims 
but within a framework of prudent and effective controls  
which enable risk to be managed. The Board has agreed the 
Schedule of Matters reserved for its decision which includes 
ensuring that the necessary financial and human resources 
are in place to meet its obligations to its shareholders  
and others. It also approves acquisitions and disposals  
of businesses, major capital expenditure, annual financial 
budgets and recommends interim and final dividends.  
It receives recommendations from the Audit Committee in 
relation to the appointment of auditors, their remuneration 
and the policy relating to non-audit services. The Board agrees 
the framework for executive directors’ remuneration with  
the Remuneration Committee and determines fees paid to 
non-executive directors. Board papers are circulated before 
Board meetings in sufficient time to be meaningful.
The division of responsibilities between the Chairman and 
the Chief Executive Officer is clearly defined. The Chairman’s 
primary responsibility is ensuring the effectiveness of the Board 
and setting its agenda. The Chairman has no involvement in 
the day-to-day business of the Group. The Chief Executive 
has direct charge of the Group on a day-to-day basis and is 
accountable to the Board for the financial and operational 
performance of the Group.
The performance of the Board is evaluated on an ongoing 
basis informally with reference to all aspects of its operation 
including, but not limited to: the appropriateness of its skill 
level; the way its meetings are conducted and administered 
(including the content of those meetings); the effectiveness 
of the various Committees; whether Corporate Governance 
issues are handled in a satisfactory manner; and, whether 
there is a clear strategy and objectives.
A new director, on appointment, is briefed on the activities of 
the Company. Professional induction training is also given as 
appropriate. The Chairman briefs non-executive directors on 
issues arising at Board meetings if required and non-executive 
directors have access to the Chairman at any time. Ongoing 
training is provided as needed. Directors are continually 
updated on the Group’s business and on insurance and on 
issues covering pensions, social, ethical, environmental and 
health and safety by means of Board presentations.
In the furtherance of his duties or in relation to acts carried 
out by the Board or the Company, each director has been 
informed that he is entitled to seek independent professional 
advice at the expense of the Company. The Company 
maintains appropriate cover under a Directors and Officers 
insurance policy in the event of legal action being taken against 
any director.
Each director is appraised through the normal appraisal 
process. The Chief Executive is appraised by the Chairman, the 
executive Board members by the Chief Executive and the non-
executive Board members by the Chairman. Each director has 
access to the services of the Company Secretary if required.
The non-executive directors are considered by the Board 
to be independent of management and are free to exercise 
independence of judgement. The non-executive directors 
have never been employees of the Company nor do they 
participate in any of the Company’s pension schemes or bonus 
arrangements. They receive no other remuneration from the 
Company other than the directors’ fees. 
It is recognised that the Combined Code does not treat 
the Chairman as independent after appointment and it is 
considered best practice that he should not sit on the Audit 
or Remuneration Committees. In addition, one of the non-
executive directors represents a significant shareholder but is 
considered by the Board to be independent. The Board take 
the view that as the number of non-executive directors is only 
four, including the Chairman, their participation will continue as 
the Committees gain the benefit of their external expertise and 
experience in areas which the Company considers important. 
Corporate Governance 47
Avacta Annual Report and Accounts          2016
The table below shows the number of Board meetings and 
Audit Committee and the Remuneration Committee meetings 
held during the year and the attendance of each director.
Board meetings Committee meetings
Audit Remuneration
Possible Attended Possible Attended Possible Attended
Non-executive Directors
Trevor Nicholls 9 9 1 1 2 2
Alan Aubrey 9 8 1 1 2 2
Michael Albin 9 9 1 1 2 2
Mike Owen 9 9 1 1 2 2
Executive Directors
Alastair Smith 9 9 - - - -
Craig Slater 9 9 - - - -
Tony Gardiner 5 5 - - - -
Tim Sykes 3 3 - - - -
The Audit Committee
The Audit Committee (‘the Committee’) is established by and  
is responsible to the Board. It has written terms of reference. 
Its main responsibilities are:
• to monitor and be satisfied with the truth and fairness of 
the Company’s financial statements before submission to 
the Board for approval, ensuring their compliance with the 
appropriate accounting standards, the law and the Listing 
Rules of the Financial Services Authority;
• to monitor and review the effectiveness of the Company’s 
system of internal control;
• to make recommendations to the Board in relation 
to the appointment of the external auditors and their 
remuneration, following appointment by the shareholders 
in general meeting, and to review and be satisfied with the 
auditors’ independence, objectivity and effectiveness on an 
ongoing basis; and
• to implement the policy relating to any non-audit services 
performed by the external auditors.
Alan Aubrey is the Chairperson of the Committee. The other 
members of the Committee, Trevor Nicholls, Michael Albin  
and Mike Owen, all of whom are non-executive directors,  
have gained wide experience in regulatory and risk issues.
The Committee is authorised by the Board to seek and obtain 
any information it requires from any officer or employee of the 
Company and to obtain external legal or other independent 
professional advice as is deemed necessary by it.
Meetings of the Committee are held once per year (usually 
during October) to coincide with the review of the scope of 
the external audit and observations arising from their work 
in relation to internal control and to review the financial 
statements. The external auditors are invited to these 
meetings and meet with the Audit Committee at least once  
a year. At its meeting, it carries out a full review of the year-
end financial statements and of the audit, using as a basis 
the Report to the Audit Committee prepared by the external 
auditors and taking into account any significant accounting 
policies, any changes to them and any significant estimates 
or judgements. Questions are asked of management of any 
significant or unusual transactions where the accounting 
treatment could be open to different interpretations.
The external auditors are required to give the Committee 
information about policies and processes for maintaining  
their independence and compliance regarding the rotation 
of audit partners and staff. The Committee considers all 
relationships between the external auditors and the  
Company to ensure that they do not compromise the  
auditors’ judgement or independence particularly with the 
provision of non-audit services.
The Remuneration Committee
The Remuneration Committee is chaired by Trevor Nicholls 
and the other members of the Committee are Alan Aubrey, 
Michael Albin and Mike Owen, all of whom are non-executive 
directors. The Committee meets at least once a year with the 
Chief Executive in attendance as appropriate. It has written 
terms of reference. The Committee agrees the framework for 
executive directors’ remuneration with the Board.
Re-election
Directors are subject to re-election at the Annual General 
Meeting following their appointment. In addition, at each 
Annual General Meeting one third (or whole number less  
than one third) of the directors will retire by rotation. 48
Governance
Shareholder communications
The Chairman and the Chief Executive Officer regularly 
meet with institutional shareholders to foster a mutual 
understanding of objectives. 
The directors encourage the participation of all shareholders, 
including private investors, at the Annual General Meeting  
and as a matter of policy the level of proxy votes (for, against 
and vote withheld) lodged on each resolution is declared at 
the meeting.
The Annual Report & Accounts is published on the Company’s 
website, www.avacta.com, and can be accessed by shareholders.
Internal controls
The Board is responsible for the Group’s system of internal 
controls and for reviewing its effectiveness. Such a system is 
designed to manage rather than eliminate the risk of failure to 
achieve business objectives, and can only provide reasonable and 
not absolute assurance against material misstatement or loss.
The Group highlights potential financial and non-financial risks 
which may impact on the business as part of the monthly 
management reporting procedures. The Board receives these 
monthly management reports and monitors the position at 
Board meetings.
The Board confirms that there are ongoing processes for 
identifying, evaluating and mitigating the significant risks  
faced by the Group. The processes in place are consistent  
with the guidance for directors on internal control issued by 
the Turnbull Committee.
The Group’s internal financial control and monitoring 
procedures include:
• clear responsibility on the part of line and financial 
management for the maintenance of good financial 
controls and the production of accurate and timely financial 
management information;
• the control of key financial risks through appropriate 
authorisation levels and segregation of accounting duties;
• detailed monthly budgeting and reporting of trading results, 
balance sheets and cash flows, with regular review by 
management of variances from budget;
• reporting on any non-compliance with internal financial 
controls and procedures; and
• review of reports issued by the external auditors.
The Audit Committee on behalf of the Board reviews reports 
from the external auditors together with management’s 
response regarding proposed actions. In this manner they 
have reviewed the effectiveness of the system of internal 
controls for the period covered by the accounts.
Corporate Governance (continued…) 49
Avacta Annual Report and Accounts          2016
The directors are responsible for preparing the 
Strategic Report, the Directors’ Report and the 
group and parent company financial statements in 
accordance with applicable law and regulations. 
Company law requires the directors to prepare group and 
parent company financial statements for each financial year. 
As required by the AIM Rules of the London Stock Exchange 
they are required to prepare the group financial statements 
in accordance with IFRSs as adopted by the EU and applicable 
law and have elected to prepare the parent company financial 
statements in accordance with UK Accounting Standards and 
applicable law (UK Generally Accepted Accounting Practice), 
including FRS 102 The Financial Reporting Standard applicable  
in the UK and Republic of Ireland. 
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 group and 
parent company and of their profit or loss for that period.  
In preparing each of the group and parent company financial 
statements, the directors are required to: 
• select suitable accounting policies and then apply  
them consistently; 
• make judgements and estimates that are reasonable  
and prudent; and
• for the group financial statements, state whether they have 
been prepared in accordance with IFRSs as adopted by the EU. 
The directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the parent 
company’s transactions and disclose with reasonable accuracy 
at any time the financial position of the parent company and 
enable them to ensure that its financial statements comply 
with the Companies Act 2006. They have general responsibility 
for taking such steps as are reasonably open to them to 
safeguard the assets of the group and to prevent and detect 
fraud and other irregularities. 
The directors are responsible for the maintenance and 
integrity of the corporate and financial information included  
on the company’s website. Legislation in the UK governing  
the preparation and dissemination of financial statements  
may differ from legislation in other jurisdictions. 
Statement of Directors' Responsibilities in  
respect of the Strategic Report, the Directors'  
Report and the Financial Statements 50 50
Independent Auditor’s Report to 
the Members of Avacta Group Plc
We have audited the financial statements of Avacta 
Group Plc for the year ended 31 July 2016 set out on 
pages 52 to 82. 
The financial reporting framework that has been applied in 
the preparation of the group financial statements is applicable 
law and International Financial Reporting Standards (IFRSs) 
as adopted by the EU. The financial reporting framework that 
has been applied in the preparation of the parent company 
financial statements is applicable law and UK Accounting 
Standards (UK Generally Accepted Accounting Practice), 
including FRS 102 The Financial Reporting Standard applicable  
in the UK and Republic of Ireland. 
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.
Respective responsibilities of directors  
and auditor
As explained more fully in the Directors’ Responsibilities 
Statement set out on page 49, the directors are responsible 
for the preparation of the financial statements and for being 
satisfied that they give a true and fair view. Our responsibility 
is to audit, and express an opinion on, the financial statements 
in accordance with applicable law and International Standards 
on Auditing (UK and Ireland). Those standards require us to 
comply with the Auditing Practices Board’s Ethical Standards 
for Auditors. 
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements  
is provided on the Financial Reporting Council’s website at 
www.frc.org.uk/auditscopeukprivate 
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state 
of the group’s and of the parent company’s affairs as at 31 
July 2016 and of the group’s loss for the year then ended; 
• the group financial statements have been properly prepared 
in accordance with IFRSs as adopted by the EU; 
• the parent company financial statements have been 
properly prepared in accordance with UK Generally 
Accepted Accounting Practice; and
• the financial statements have been prepared in accordance 
with the requirements of the Companies Act 2006. 
Opinion on other matter prescribed by  
the Companies Act 2006
In our opinion 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. 
Matters on which we are required to report  
by exception
We have nothing to report in respect of the following matters 
where the Companies Act 2006 requires us to report to you if, 
in our opinion: 
• adequate accounting records have not been kept by the 
parent company, or returns adequate for our audit have  
not been received from branches not visited by us; or 
• the parent company financial statements are not in 
agreement with the accounting records and returns; or 
• certain disclosures of directors’ remuneration specified  
by law are not made; or 
• we have not received all the information and explanations 
we require for our audit.  
Johnathan Pass (Senior Statutory Auditor) 
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants 
1 Sovereign Square 
Sovereign Street 
Leeds  
LS1 4DA
14 October 2016 
Governance
50 51
Avacta Annual Report and Accounts          2016
Financial 
Statements
52  Consolidated Income 
Statement
53 Consolidated Balance Sheet
54  Consolidated Statement of 
Changes in Equity
55  Consolidated Statement of 
Cash Flows
56  Notes to the Consolidated 
Financial Statements
76 Company Balance Sheet
77  Company Statement of  
Changes in Equity
78  Notes to the Company  
Balance Sheet
51 52
Financial Statements
 
Note
2016  
£000
2015  
£000
Revenue 2,165 1,813
Cost of sales (895) (526)
Gross profit 1,270 1,287
Research and development costs (1,500) (33)
Administrative expenses (5,434) (4,414)
Impairment of intangible assets 9 - (2,407)
Operating loss 5 (5,664) (5,567)
Financial income 6 99 26
Loss before taxation from continuing operations (5,565) (5,541)
Taxation 7 918 648
Loss after taxation from continuing operations (4,647) (4,893)
Loss from discontinued operations, net of tax 25 - (5,098)
Loss and total comprehensive loss for the  
year attributable to equity shareholders
(4,647) (9,991) 
Loss per ordinary share:
• Basic and diluted 8 (6.86p) (20.09p)
The notes on pages 56 to 75 form an integral part of these 
financial statements.
Consolidated Income Statement 
for the year ended 31 July 2016 53
Avacta Annual Report and Accounts          2016
Consolidated Balance Sheet  
as at 31 July 2016
 
Note
2016  
£000
2015  
£000
Non-current assets
Intangible assets 9 11,480 10,360
Property, plant & equipment 10 3,738 1,546
15,218 11,906
Current assets
Inventories 11 268 333
Trade and other receivables 12 1,128 767
Income taxes 1,418 1,066
Short-term deposits 13 10,000 -
Cash and cash equivalents 14 9,521 7,330
22,335 9,496
Total assets 37,553 21,402
Current liabilities
Trade and other payables 15 (1,357) (1,407)
Contingent consideration 16 (315) (395)
(1,672) (1,802)
Non-current liabilities
Contingent consideration 16 (25) (468)
(25) (468)
Total liabilities (1,697) (2,270)
Net assets 35,856 19,132
Equity attributable to equity holders of the Company
Share capital 18 6,915 5,057
Share premium 19 621 35,756
Capital reserve 19 1,899 2,669
Other reserve 19 (1,729) (1,729)
Reserve for own shares 19 (2,651) (1,590)
Retained earnings 19 30,801 (21,031)
Total equity 35,856 19,132
The notes on pages 56 to 75 form an integral part of these 
financial statements. The financial statements on pages 52 to 
82 were approved by the Board of Directors on 14 October 
2016 and signed on its behalf by:
Alastair Smith                   Tony Gardiner  
Chief Executive Officer                  Chief Financial Officer 54
Financial Statements
Consolidated Statement of Changes in 
Equity for the year ended 31 July 2016 
Share  
capital 
£000
Share 
premium 
£000
Other  
reserve 
£000
Capital 
reserve 
£000
Reserve  
for own 
shares 
£000
Retained 
earnings 
£000
Total  
equity  
£000
At 1 August 2014 5,045 35,747 (1,729) 2,669 (1,590) (11,305) 28,837
Total transactions with owners, recorded directly in equity:
Exercise of share options 12 9 - - - - 21
12 9 21
Total comprehensive loss for the period - - - - - (9,991) (9,991)
Share-based payment charges - - - - - 265 265
At 31 July 2015 5,057 35,756 (1,729) 2,669 (1,590) (21,031) 19,132
Total transactions with owners, recorded directly in equity:
Placing net of related expenses 1,760 19,255 - - - - 21,015
Exercise of share options 8 76 - - - 84
Share premium cancellation - (55,437) - - - 55,437 -
Own shares acquired 90 971 - - (1,061) - -
1,858 (35,135) - - (1,061) 55,437 21,099
Total comprehensive loss for the period - - - - - (4,647) (4,647)
Share-based payment charges - - - - - 272 272
Transfer¹ - - - (770) - 770 -
At 31 July 2016 6,915 621 (1,729) 1,899 (2,651) 30,801 35,856
Details of the nature of each component of equity are given at Note 19. 
1 The transfer of equity from the capital reserve to retained earnings relates to share option warrants which have expired. 55
Avacta Annual Report and Accounts          2016
Consolidated Statement of Cash Flows 
for the year ended 31 July 2016
 
 
2016 
£000
 
 
2015 
£000
Cash flow from operating activities
Loss for the year (4,647) (9,991)
Loss on disposal and impairment of goodwill on discontinued operations - 4,793
Amortisation and impairment losses 642 2,465
Depreciation 604 518
Loss on disposal of property, plant and equipment 67 33
Reduction of contingent consideration (443) -
Equity settled share-based payment charges 272 265
Financial income (99) (26)
Income tax credit (918) (648)
Operating cash outflow before changes in working capital (4,522) (2,591)
Decrease/(increase) in inventories 65 (210)
(Increase)/decrease in trade and other receivables (361) 197
(Decrease)/increase in trade and other payables (80) 56
Operating cash outflow from operations (4,898) (2,548)
Finance income received 99 26
Income tax received 566 7
Cash flows from operating activities (4,233) (2,515)
Cash flows from investing activities
Purchase of plant and equipment (2,863) (806)
Development expenditure capitalised (1,762) (3,060)
Increase in balances on short-term deposit (10,000) -
Disposal of discontinued operations - 2,210
Net cash flow from investing activities (14,625) (1,656)
Cash flows from financing activities
Proceeds from issue of shares 21,049 21
Net cash flow from financing activities 21,049 21
Net increase/(decrease) in cash and cash equivalents 2,191 (4,150)
Cash and cash equivalents at the beginning of the year 7,330 11,480
Cash and cash equivalents at the end of the year 9,521 7,330 56
Financial Statements
Notes to the Consolidated  
Financial Statements
1 Accounting policies
Significant accounting policies
Avacta Group Plc (the ‘Company’) is a company incorporated  
in the United Kingdom. The consolidated financial statements 
of the Company for the year ended 31 July 2016 comprise  
the Company and its subsidiaries (together referred to as  
the ‘Group’). 
The following paragraphs summarise the significant accounting 
policies of the Group, which have been applied consistently in 
dealing with items which are considered material in relation to 
the Group’s consolidated financial statements.
Basis of preparation
The Group consolidated financial statements have been 
prepared in accordance with International Financial Reporting 
Standards (’IFRSs’) as adopted by the European Union. 
The Company has elected to prepare its parent company 
financial statements in accordance with applicable United 
Kingdom accounting standards, including Financial Reporting 
Standard 102 – ‘The Financial Reporting Standard applicable 
in the United Kingdom and Republic of Ireland’ (‘FRS 102’), 
and with the Companies Act 2006. These parent company 
financial statements and notes appear after the notes to the 
consolidated financial statements. 
The financial statements have been prepared under the 
historical cost convention except for derivative financial 
instruments that are stated at fair value.
The accounting polices set out below have been applied 
consistently throughout the Group and to all periods presented 
for the purposes of these consolidated financial statements.
The consolidated financial statements are presented in 
sterling, rounded to the nearest thousand.
The preparation of financial statements in conformity with IFRSs 
requires management to make judgements, estimates and 
assumptions that affect the application of policies and reported 
amounts of assets and liabilities, income and expenses. The 
estimates and associated assumptions are based on historical 
experience and various other factors that are believed to be 
reasonable under the circumstances, the results of which form 
the basis of making the judgements about carrying values of 
assets and liabilities that are not readily apparent from other 
sources. Actual results may differ from those 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 if the 
revision affects only that period, or in the period of the revision 
and future periods if the revision affects both the current and 
future periods.
Judgements made by management in the application of IFRSs 
that have a significant effect on the Group financial statements 
and estimates with a significant risk of material adjustment in 
the next year are discussed at Note 22.
Going concern
The Strategic review on pages 10 to 38 outlines the business 
activities of the Group along with the factors which may affect 
its future development and performance. The Group’s financial 
position is discussed in the Financial review on page 37 
along with details of its cash flow and liquidity. Note 20 to the 
financial statements sets out the Group’s financial risks and 
the management of those risks.
Management prepares detailed working capital forecasts which 
are reviewed by the Board on a regular basis. The forecasts 
include assumptions regarding the status of customer 
development projects and sales pipeline, future revenues and 
costs together with various scenarios which reflect growth 
plans, opportunities, risks and mitigating actions. The forecasts 
also include assumptions regarding the timing and quantum 
of investment in the Affimer research and development 
programme. Whilst there are inherent uncertainties regarding 
the cash flows associated with the development of the Affimer 
platform, together with the timing of signature and delivery 
of customer development projects and future collaboration 
transactions, the Directors are satisfied that there is sufficient 
discretion and control as to the timing and quantum of cash 
outflows to ensure that the Company and Group are able to 
meet their liabilities as they fall due for the foreseeable future.
The Financial Reporting Council issued ‘Going Concern and 
Liquidity Risk: Guidance for Directors of UK Companies’ in 
2009, and the Directors have considered this when preparing 
these financial statements. These have been prepared on a 
going concern basis, notwithstanding the loss for the period 
ended 31 July 2016. The Directors have taken steps to ensure 
that they believe the going concern basis of preparation 
remains appropriate, and that the carrying value of intangibles 
remains supported by future cash flows. The key conclusions 
are summarised below.
• The Group continues to develop its Affimer platform 
technology. This is expected to generate significant revenues 
for the Group over the coming years, aiding both profitability 
and cash flows.
• As at 31 July 2016 the Group’s short-term deposits and cash 
and cash equivalents were £19.52 million (2015: £7.33 million).
• The Directors have prepared sensitised cash flow forecasts 
extending to the end of the financial year ended 31 July 2018. 
These show that the Group has sufficient funds available to 
meet its obligations as they fall due over that period. 
• The Group does not have external borrowings or any 
covenants based on financial performance.
• The Directors have considered the position of the individual 
trading companies in the group to ensure that these 
companies are also in a position to continue to meet their 
obligations as they fall due. 
• The markets in which the business operates are not 
considered to be at significant risk due to the ongoing global 
economic recession. 
• There are not believed to be any contingent liabilities which 
could result in a significant impact on the business if they 
were to crystallise. 57
Avacta Annual Report and Accounts          2016
Following this assessment, the Directors have reasonable 
expectation that the Group has adequate resources to 
continue for the foreseeable future and that carrying values  
of intangible assets are supported. Thus, they continue to 
adopt the going concern basis of accounting in preparing 
these financial statements. 
New standards and interpretations not applied
The following Adopted IFRSs have been issued but have  
not been applied by the Group in these financial statements.  
Their adoption is not expected to have a material effect on  
the financial statements unless otherwise indicated:
• Clarification of Acceptable Methods of Depreciation  
and Amortisation – Amendments to IAS 16 and IAS 38 
(effective date 1 January 2016).
• Annual Improvements to IFRSs – 2012-2014 Cycle  
(effective date 1 January 2016).
• IFRS 9 Financial Instruments (effective date 1 January 2018).
• IFRS 15 Revenue from Contract with Customers  
(effective date 1 January 2018). The Group has commenced 
an assessment of the impact likely from adopting the 
standard and does not expect the impact will be material  
to the Group’s reported results or financial position.
• Clarification of and Measurement of Share-based Payment 
Transactions – Amendments to IFRS 2 (effective date to  
be confirmed).
• IFRS 16 Leases (effective date 1 January 2019, subject to  
EU endorsement).
No new standards becoming effective and applied in the current 
year have had a material impact on the financial statements.
The Group continues to monitor the potential impact of other 
new standards and interpretations which may be endorsed  
by the European Union and require adoption by the Group  
in future reporting periods.
The following principal accounting policies have been applied 
consistently to all periods presented in the Group financial 
statements.
Basis of consolidation
Subsidiaries are entities controlled by the Company. Control 
exists when the Company has the power, directly or indirectly, 
to govern the financial and operating policies of an entity so 
as to obtain benefits from its activities. In assessing control, 
potential voting rights that presently are exercisable or 
convertible are taken into account. The financial statements 
of subsidiaries are included in the consolidated financial 
statements from the date that control commences until the 
date that control ceases.
Where the acquisition is treated as a business combination, 
the purchase method of accounting is used to account for the 
acquisition of subsidiaries by the Group. 
The cost of an acquisition is measured as the fair value of  
the assets given, equity instruments issued and liabilities 
incurred or assumed at the date of exchange, plus costs 
directly attributable to the acquisition. Identifiable assets 
acquired and liabilities and contingent liabilities assumed  
in a business combination are measured initially at their fair 
values at the acquisition date, irrespective of the extent of 
any minority interest. The excess of the cost of acquisition over 
the fair value of the Group’s share of the identifiable net assets 
acquired is recorded as goodwill. If the cost of acquisition is 
less than the fair value of net assets of the subsidiary acquired, 
the difference is recognised directly in the income statement.
All intra-group balances and transactions, including unrealised 
profits arising from intra-group transactions, are eliminated 
fully on consolidation.
Property, plant and equipment
Property, plant and equipment are held at cost less 
accumulated depreciation and impairment charges.
Depreciation is provided at the following annual rates in order 
to write off the cost less estimated residual value, which is 
based on up to date prices, of property, plant and equipment 
over their estimated useful lives as follows:
• Laboratory equipment – 5 to 10 years
• Fixtures and fittings – 3 to 10 years
• Leasehold improvements – 5 to 10 years.
Intangible assets – Goodwill
Goodwill represents the excess of the cost of an acquisition 
over the fair value of the net identifiable assets, liabilities and 
contingent liabilities of the acquired subsidiary at the date of 
acquisition. Goodwill on acquisition of subsidiaries is included 
in intangible assets. Goodwill is tested annually for impairment 
and carried at cost less accumulated impairment losses.
Intangible assets – Research and development
Expenditure on research activities is recognised as an  
expense in the period in which it is incurred. Where no 
internally generated intangible asset can be recognised, 
development expenditure is recognised as an expense in the 
period in which it is incurred. Development expenditure on 
the pipeline of therapeutic Affimers is expensed in the period 
it is incurred, consistent with pharmaceutical industry practice, 
as there is significant risk through the product development 
stages up to regulatory approval that a commercial product 
may not materialise. 
An intangible asset arising from development (or from the 
development phase of an internal project) is recognised if,  
and only if, the Group can demonstrate all of the following:
• that completion of the intangible asset so that it will be 
available for use or sale is technically feasible;
• that it intends to complete the intangible asset and use  
or sell it;
• that it has the ability to use or sell the intangible asset;
• that it can demonstrate how the intangible asset will 
generate probable future economic benefits. Among other 
things, the Group can demonstrate the existence of a market 
for the output of the intangible asset or the intangible asset 
itself or, if it is to be used internally, the usefulness of the 
intangible asset;
• that there is an availability of adequate technical, financial 
and other resources to complete the development and to 
use or sell the intangible asset; and
• that it can measure reliably the expenditure attributable to 
the intangible asset during its development. 58
Financial Statements
Development expenditure relating to reagent or diagnostic 
products in the Life Sciences business is amortised based 
on the number of custom Affimer projects completed in the 
period with the amortisation charge spread over a period 
up to 10 years. Development expenditure relating to the 
new diagnostic tests within the Animal Health business are 
amortised over a period up to 5 years from when the tests  
are first launched.
Acquired intangible assets – Business combinations
Intangible assets that are acquired as a result of a business 
combination are recognised separately from goodwill when 
their fair value can be reliably measured.
Intangible assets that have an indefinite useful life are not 
subject to amortisation and are tested annually for impairment 
and whenever events or circumstances indicate that the 
carrying amount may not be recoverable, impairment losses 
are recognised within the consolidated income statement. 
Assets that are subject to amortisation are tested for 
impairment when events or a change in circumstances 
indicate that the carrying amount may not be recoverable.
Impairment
The carrying amount of the Group’s non-financial assets is 
reviewed at each balance sheet date to determine whether 
there is any indication of impairment. If any such indication 
exists, the asset’s recoverable amount is estimated.
For goodwill, assets that have an indefinite useful life and 
intangible assets that are not yet available for use, the 
recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying 
amount of an asset or its cash generating unit (‘CGU’) exceeds 
its recoverable amount. Impairment losses are recognised in 
the consolidated income statement.
The recoverable amount is the higher of the asset’s fair value 
less costs to sell and the value in use. For the purposes of 
assessing impairments, assets are grouped at the lowest  
levels for which there are separately identifiable cash flows.
Where individual assets are not capable of generating cash 
flows independently from other assets, they are grouped 
together into CGUs.
Financial instruments
In accordance with IAS32 ‘Financial instruments: presentation’, 
financial instruments issued by the Group are treated as equity 
only to the extent that they meet the following two conditions:
• they include no contractual obligations upon the group 
to deliver cash or other financial assets or to exchange 
financial assets or financial liabilities with another party under 
conditions that are potentially unfavourable to the Group; and
• where the instrument will or may be settled in the Company’s 
own equity instruments, it is either a non-derivative that 
includes no obligation to deliver a variable number of the 
Company’s own equity instruments or is a derivative that will 
be settled by the Company’s exchanging a fixed amount of 
cash or other financial assets for a fixed number of its own 
equity instruments.
To the extent that this definition is not met, the proceeds of 
issue are classified as a financial liability. Where the instrument 
so classified takes the legal form of the Company’s own shares, 
the amounts presented in these financial statements for called 
up share capital and share premium account exclude amounts 
in relation to those shares. 
Finance payments associated with financial liabilities are dealt 
with as part of finance expenses. Finance payments associated 
with financial instruments that are classified in equity are 
treated as distributions and are recorded directly in equity.
Inventories
Inventories are recognised at the lower of cost and net 
realisable value. Cost is determined using the first in, first out 
method. Appropriate provisions for estimated irrecoverable 
amounts are recognised in the income statement when there 
is objective evidence that the assets are impaired.
Financial assets
The Group classifies its financial assets into one of the 
following categories:
• Loans and receivables: These assets are non-derivative 
financial assets with fixed and determinable payments that are 
not quoted in an active market. They arise principally through 
the provision of services to customers (trade receivables)  
or amounts held on deposit with third party institutions  
(short-term deposits and cash and cash equivalents). 
• Trade and other receivables: Trade receivables are 
recognised initially at fair value and subsequently measured 
at amortised cost using the effective interest method, less 
provision for impairment. A provision for impairment of 
trade receivables is established when there is objective 
evidence that the Group will not collect all amounts due 
according to the original terms of the receivables.
• Short-term deposits: Short-term deposits comprise money 
market deposits which are convertible to known amounts 
of cash and have an original maturity of between three and 
twelve months.
• Cash and cash equivalents: Cash and cash equivalents 
comprise cash in hand, demand deposits, and other 
short-term highly liquid investments that are readily 
convertible to a known amount of cash and are subject to 
an insignificant risk of changes in value. The carrying amount 
of these assets approximates their fair value.
Financial liabilities
Financial liabilities are comprised of trade payables and 
other short-term monetary liabilities, which are recognised at 
amortised cost. Such liabilities are classified as other liabilities 
in accordance with IAS39 for compliance with IFRS7.
Segmental reporting
The Group determines and presents operating segments 
based on the information that internally is provided to the 
Board of Directors, which is the Group’s chief operating 
decision maker (‘CODM’). This accounting policy is in 
accordance with IFRS 8 ‘Operating Segments’.
Notes to the Consolidated  
Financial Statements (continued…) 59
Avacta Annual Report and Accounts          2016
An operating segment is a component of the Group that 
engages in business activities from which it may earn revenues 
and incur expenses, including revenues and expenses that relate 
to transactions with any of the Group’s other components. An 
operating segment’s operating results are reviewed regularly by 
the CODM to make decisions about resources to be allocated to 
the segment and assess its performance, and for which discrete 
financial information is available.
IFRS 8 requires consideration of the CODM within the Group. 
In line with the Group’s internal reporting framework and 
management structure, the key strategic and operating 
decisions are made by the Board of Directors, which reviews 
internal monthly management reports, budget and forecast 
information as part of this. Accordingly, the Board of Directors 
is deemed to be the CODM.
Revenue recognition
The Group derives revenue from the sale of products, granting 
of licences and the provision of services. Revenue represents 
the fair value of consideration received or receivable in 
respect of products, licences or services supplied to third 
parties in the period, excluding sales related taxes and trade 
discounts. Revenue is recognised on sale of products when 
the significant risks and rewards of ownership of the products 
are transferred to the customer, this is usually when products 
are delivered and title passes to the customer. Revenue from 
the provision of services is recognised on services when the 
service has been performed. Revenue from licenses comprises 
exclusivity arrangements, technology access fees and similar 
arrangements, milestone income and royalties. The accounting 
policies for the licensing revenue stream are as follows: (i) 
Exclusivity arrangements, technology access fees and similar 
agreements are recognised as revenue in the accounting 
period in which the related services, or required activities, are 
performed or specified conditions are fulfilled in accordance 
with the terms of completion of the specific transaction; (ii) 
Certain services include milestone and royalty payments which 
are recognised as the service is provided to the extent that it is 
probable they will be received.
Share-based payments
The fair value of awards to employees or other parties that 
take the form of shares or rights to shares is recognised as  
an employee expense with a corresponding increase in equity. 
The fair value is measured at grant date and spread over the 
period during which the employees become unconditionally 
entitled to the options. The fair value of the options granted  
is measured using an option valuation model, taking into 
account the terms and conditions upon which the options 
were granted. The amount recognised as an expense is 
adjusted to reflect the actual number of share options that 
vest except where forfeiture is due only to share prices not 
achieving the threshold for vesting.
Non-recurring items
Non-recurring items are material items in the Income 
Statement which derive from events or transactions which 
fall within the ordinary activities of the Group and which 
individually or, if of a similar type, in aggregate the Group has 
highlighted as needing to be disclosed by virtue of their size  
or incidence if the financial statements are to give a true and 
fair view. They are recognised within operating profit. 
Leases
Leases where the lessor retains substantially all of the risks 
and rewards of ownership are classified as operating leases. 
Rentals payable under operating lease rentals are charged to 
the income statement on a straight line basis over the term of 
the lease.
Leases where the Group retains substantially all of the risks 
and rewards of ownership are classified as finance leases or 
hire purchase agreements. Assets held under finance leases 
or hire purchase agreements are capitalised and depreciated 
over the shorter of their useful economic lives or the length 
of the lease. The capital element of the future obligations 
under finance leases and hire purchase contracts are included 
as liabilities in the balance sheet. The interest elements of 
the rental obligations are charged to the income statement 
over the periods of the finance leases and hire purchase 
agreements and represent a constant proportion of the 
balance of capital outstanding. 
Post-retirement benefits
The Group operates a defined contribution pension scheme. 
The assets of the scheme are held separately from those 
of the Group in an independently administered fund. The 
amount charged to the income statement represents the 
contributions payable to the scheme in respect of the 
accounting period.
Taxation
Tax on the profit or loss for the year comprises current and 
deferred tax. Income tax is recognised in the income statement 
except to the extent that it relates to items recognised directly 
in equity, in which case it is recognised in equity.
Current tax is the expected tax payable based on the taxable 
income for the year, using tax rates enacted or substantively 
enacted at the balance sheet date, and any adjustment to tax 
payable in previous years.
Deferred tax is provided using the balance sheet liability 
method providing for all temporary differences between the 
carrying amounts of assets and liabilities for financial reporting 
purposes and the amounts used for taxation purposes except 
when they arise on the initial recognition of goodwill or the 
initial recognition of assets and liabilities that is not a business 
combination and that affects neither accounting nor taxable 
profits. A deferred tax asset is recognised only to the extent 
that it is probable that future taxable income will be available 
against which an asset can be utilised.  60
Financial Statements
2 Segment reporting
Operating segments
In the view of the Board of Directors, the Group has two 
distinct reportable segments; Life Sciences and Animal Health, 
and segment reporting has been presented on this basis.  
The Directors recognise that the operations of the Group  
are dynamic and therefore this position will be monitored  
as the Group develops. 
The principal activities of each reportable segment are  
as follows:
• Animal Health: provision of tools and contract services to 
assist diagnosis of conditions in animals to enable faster 
treatment for veterinarians.
• Life Sciences: provision of custom Affimers for reagents 
and diagnostics, drug and biomarker discovery in biotech 
research and development. 
• Segment revenue represents revenue from external 
customers arising from sale of goods and services, plus 
inter-segment revenues. Inter-segment transactions are 
priced on an arm’s length basis. Segment results, assets and 
liabilities include items directly attributable to a segment as 
well as those that can be allocated on a reasonable basis.
• Substantially all of the Group’s revenue originates from the 
UK. The Group’s revenue to destinations outside the UK 
amounted to 48% (2015: 44%) of total revenue. 
Operating segment analysis 2016 Animal Health 
£000
Life Sciences 
£000
Total 
£000
Sale of goods 674 - 674
Provision of services 787 704 1,491
Licence related income - - -
Revenue 1,461 704 2,165
Cost of goods sold (444) (451) (895)
Gross profit 1,017 253 1,270
Research and development costs (194) (1,306) (1,500)
Administrative expenses (1,113) (2,671) (3,784)
Segment operating loss (290) (3,724) (4,014)
Corporate and other unallocated items (1,650)
Impairment of intangible assets -
Operating loss (5,664)
Finance income 99
Loss before taxation (5,565)
Taxation 918
Amount attributable to equity holders of the Company (4,647)
Segment intangible assets 3,999 7,481 11,480
Segment other assets 362 5,986 6,348
Segment assets 4,361 13,467 17,828
Corporate and other unallocated items 19,725
Total assets 37,553
Segment liabilities (173) (946) (1,119)
Corporate and other unallocated items (578)
Total liabilities (1,697)
Notes to the Consolidated  
Financial Statements (continued…) 61
Avacta Annual Report and Accounts          2016
Operating segment analysis 2015
Animal Health 
£000
Life Sciences 
£000
Total 
£000
Sale of goods 706 - 706
Provision of services 668 113 781
Licence related income - 326 326
Revenue 1,374 439 1,813
Cost of goods sold (452) (74) (526)
Gross profit 922 365 1,287
Research and development costs - (33) (33)
Administrative expenses (1,124) (1,546) (2,670)
Segment operating loss (202) (1,214) (1,416)
Corporate and other unallocated items (1,744)
Impairment of intangible assets (2,407)
Operating loss (5,567)
Finance income 26
Loss before taxation from continuing operations (5,541)
Taxation 648
Discontinued operations
1
(5,098)
Amount attributable to equity holders of the Company (9,991)
Segment intangible assets 3,843 6,484 10,327
Segment other assets 307 2,371 2,678
Segment assets 4,150 8,855 13,005
Corporate and other unallocated items 8,397
Total assets 21,402
Segment liabilities (992) (1,001) (1,993)
Corporate and other unallocated items (277)
Total liabilities (2,270)
1  The Group’s Analytical operating segment was disposed of on 11 February 2015 at which point selected assets and liabilities were sold. The financial 
performance of this operating segment and the impact of the disposal is set out at Note 25.
3 Employees
Staff costs:
2016 
£000
2015  
£000
Wages and salaries 3,636 3,068 
Social security costs 391 309
Pension charges 126 98
Share-based payment charges 272 265
4,425 3,740
Average number of employees (including directors) during the year:
Commercial and operational 76 72
Administrative 11 11
87 83 62
Financial Statements
4 Share-based payments
The Group operates a Joint Share Ownership Plan (‘JSOP’), 
an Inland Revenue approved executive incentive plan (‘EMI 
scheme’) and an unapproved share option plan (‘Unapproved 
scheme’). Options have also been granted to certain individuals 
dependent upon the performance of Avacta Health Limited 
(formerly Oxford Medical Diagnostics Limited), to replace 
existing options in respect of the acquisition of Curidium 
Medica Limited (formerly Curidium Medica plc) and dependent 
upon the future sales performance of any products or services 
resulting from certain acquired intellectual property and assets 
related to the development of the Group’s animal health 
diagnostic test menu. Details of the options currently granted 
and unexercised are given below.
Grant date
Employees 
entitled
Number of 
options
Vesting  
conditions
Exercise  
price (p)
Earliest  
exercise date
Expiry  
date
Options granted as employee (or consultant) benefits
8 August 2006 1 72,182 Time served 225.0 Note 1 7 August 2016
23 June 2009 2 50,666 Time served 187.5 Note 2 22 June 2019
12 November 2010 1 35,913 Time served and  
share price performance
76.0 Note 3 11 November 2020 
 
12 November 2010 1 16,000 Time served 76.0 Note 4 11 November 2020
9 January 2012 1 141,176 Time served 50.0 Note 5 9 January 2022
12 January 2012 1 20,689 Contractual performance 72.5 12 January 2012 12 January 2022
21 December 2012 20 10,000 Unconditional 106.5 21 December 2012 21 December 2022
8 March 2013 1 12,269 Time served 120.0 Note 6 8 March 2023
16 September 2013 1 250,000 Time served 81.5 Note 7 16 September 2023
4 November 2013 5 125,000 Time served 88.5 Note 8 4 November 2023
4 November 2013 19 15,500 Unconditional 88.5 4 November 2013 4 November 2023
16 June 2014 1 200,000 Time served 118.0 Note 9 16 June 2024
16 June 2014 1 111,607 Time served and  
commercial performance
118.0 Note 10 16 June 2024 
21 September 2014 1 18,000 Time served 86.0 Note 11 21 September 2024
3 November 2014 1 18,000 Time served 75.0 Note 12 3 November 2024
4 November 2014 2 50,000 Time served 88.5 Note 13 4 November 2024
10 November 2014 1 25,000 Time served 73.0 Note 14 10 November 2024
25 November 2014 29 24,000 Unconditional 66.0 25 November 2014 25 November 2024
15 May 2015 1 138,366 Time served 85.5 Note 15 15 May 2025
13 November 2015 3 75,000 Time served 134.5 Note 16 13 November 2025
13 November 2015 52 55,000 Unconditional 134.5 13 November 2015 13 November 2025
15 February 2016 4 589,172 Time served 118.5 Note 17 15 February 2026
Options granted to individuals combining employee benefits and as consideration for business combinations
3 March 2009 3 16,002 Time served 414.0 Note 18 2 March 2019
Options granted to individuals in consideration for business combinations
14 December 2007 1 27,675 Note 19 319.0 14 December 2007 13 December 2017
14 December 2007 4 270,453 Note 20 10.0 14 December 2007 13 December 2017
14 May 2013 2 297,450 Note 21 10.0 14 May 2013 14 May 2018
8 December 2014 1 854 Note 21 10.0 8 December 2014 7 December 2015
28 July 2015 2 2,419 Note 21 10.0 28 July 2015 27 July 2016
21 June 2016 2 4,438 Note 21 10.0 21 June 2016 20 June 2017
Notes to the Consolidated  
Financial Statements (continued…) 63
Avacta Annual Report and Accounts          2016
1  Each of the options provides that they can, if they have not lapsed,  
be exercised as to 72,182 at 31 July 2016.
2  Each of these options provides that they can, if they have not lapsed,  
be exercised as to 50,666 at 31 July 2016. 
3  Each of these options provides that they can, if they have not lapsed,  
be exercised as to one half of the share price of the Company increases 
to 160p for a continuous period of three calendar months and as to one 
half if the share price of the Company increases to 200p for a continuous 
period of three calendar months, each within a period of three years from 
the date of grant. 
4  This option provides that they can, if they have not lapsed, be exercised as 
to 16,000 at 31 July 2016.
5  This option provides that they can, if they have not lapsed, be exercised as 
to 141,176 at 31 July 2016. 
6   This option provides that they can, if they have not lapsed, be exercised as 
to 12,269 at 31 July 2016.
7  This option provides that they can, if they have not lapsed, be exercised as 
to 250,000 at 31 July 2016.
8  This option provides that they can, if they have not lapsed, be exercised as 
to 125,000 at 31 July 2016.
9  This option provides that they can, if they have not lapsed, be exercised 
as to 100,000 at 31 July 2016, as to 50,000 on or after 21 February 2017 
and as to 50,000 on or after 21 February 2018.
10  This option provides that they can be exercised as to 111,607 at 31 July 2016. 
11  This option provides that they can, if they have not lapsed, be exercised as 
to 8,000 at 31 July 2016 and 10,000 on or after 21 September 2016.
12  This option provides that they can, if they have not lapsed, be exercised as 
to 8,000 at 31 July 2016 and 10,000 on or after 3 November 2016.
13  This option provides that they can, if they have not lapsed, be exercised as 
to 20,000 at 31 July 2016 and 30,000 on or after 4 November 2016.
14  This option provides that they can, if they have not lapsed, be exercised as 
to 10,000 at 31 July 2016 and 15,000 on or after 10 November 2016.
15  This option provides that they can, if they have not lapsed, be exercised as 
to 46,122 at 31 July 2016, as to 46,122 on or after 15 May 2017 and as to 
46,122 on or after 15 May 2018.
16  This option provides that they can, if they have not lapsed, be exercised as 
to 30,000 on or after 14 November 2016 and as to 45,000 on or after 14 
November 2017.
17  This option provides that they can, if they have not lapsed, be exercised 
as to 147,293 on or after 15 February 2017, as to 147,293 on or after 
15 February 2018, as to 147,293 on or after 15 February 2019 and as to 
147,293 on or after 15 February 2020.
18  Each of these options provides that they can, if they have not lapsed, be 
exercised as to 16,002 as at 31 July 2016. These options were granted as 
replacement options to certain individuals that had held options over the 
ordinary shares of Curidium Medica Limited (formerly Curidium Medica 
plc) at the date that the Company acquired Curidium Medica Limited. As 
such, the calculated value of those options that had vested at the date of 
the acquisition have been capitalised under IFRS3 and the value of those 
options that have vested during the period since the acquisition date was 
charged to the income statement under IFRS2.
19  These options were granted to an individual at the date of the acquisition 
of Avacta Health Limited (formerly Oxford Medical Diagnostics Limited) 
to reflect the estimated value of the equity issued at that date and the fair 
value of those options has been capitalised under IFRS3. 
20  Each of these options provides that they can, if they have not lapsed, 
be exercised subject to the achievement of certain milestones set by the 
Company within the Share Purchase Agreement dated 14 December 2007.
21  These options were granted to certain individuals as a result of the post-
acquisition sales performance of animal health diagnostic tests developed 
from intellectual property acquired, the fair value of which was estimated 
at the date of the acquisition and capitalised under IFRS3.
The number and weighted average exercise price of share  
options are as follows:
Year ended 31 July 2016 Year ended 31 July 2015
Options
Weighted average 
exercise price (p) Options
Weighted average 
exercise price (p)
At start of period *2,184,360 76.70 199,404,872 0.78
Granted during the year 727,110 120.78 29,832,289 0.80
Exercised during the year (73,463) 41.59 (4,500,000) 0.85
Forfeited or lapsed during the year (165,176) 66.06 (6,300,000) 0.88
Outstanding at end of period 2,672,831 90.33 218,437,161 0.77
Exercisable at end of period 1,715,502 77.97 141,618,089 0.71
*  Opening position at 1 August 2015 adjusted to reflect the share consolidation on 26 January 2016 which created 1 new ordinary share of 10p each for every 100 
existing ordinary shares of 0.1p each (see Note 19).
These options are share-based payments and are measured 
at fair value at the date of grant. Where the options have 
been granted as employee benefits the fair value determined 
at the grant date of equity-settled share-based payments 
is expensed on a straight-line basis over the vesting period, 
based on the Group’s estimate of shares that will eventually 
vest. Where the options have been granted to replace existing 
options in respect of the acquisition of Curidium Medica 
Limited (formerly Curidium Medica plc), the vested proportion 
of the options is included as part of the consideration in 
the business combination accounting and the unvested 
proportion has been expensed on a straight-line basis over 
the vesting period, based on the group’s estimate of shares 
that will eventually vest. If options remain unexercised after a 
period of 10 years from the date of grant, the options expire. 
Furthermore, options are forfeited if the employee leaves the 
Group before the options vest.  64
Financial Statements
In addition, certain employees have a joint interest in shares 
with Avacta Group Trustee Limited as trustee of The Avacta 
Employees’ Share Trust. At 31 July 2016, six employees  
(2015: three) had joint interests in 3,232,306 (2015: 1,986,455) 
ordinary shares in the Company. The precise nature of the 
joint interest is described within Joint Share Ownership 
Agreements dated 15 February 2016, or 21 February 2014,  
or 9 January 2012 between each employee individually, Avacta 
Group Trustee Limited and Avacta Group Plc. These joint 
interests have been treated as employee benefits and the fair 
value at the date of issue of the shares based on the Group’s 
estimate of the number of shares that will eventually be sold 
and the price at which they will be sold on a straight line basis 
from the date that a sale becomes probable to the date at 
which they are anticipated to be sold.
Fair value is measured by use of the Black-Scholes or Monte 
Carlo option pricing model depending on which is most 
appropriate to the conditions attached to the employee benefit.
The Group recognised a charge to the income statement of 
£272,000 (2015: £265,000) of which £272,000 (2015: £249,000) 
was charged within administrative expenses.
The options outstanding at 31 July 2016 had a weighted average 
exercise price of 90.33p (2015: 0.77p), and a weighted average 
remaining contractual life of 6 years and 17 weeks (2015: 6 years 
and 4 weeks).
The inputs into the Black-Scholes models for the options 
granted during the year are as follows:
2016 2015
Weighted average share 
price at date of grant
120.78p 0.80p
Weighted average  
exercise price
120.78p 0.80p
Expected volatility 165.5% 95.5%
Expected life 4.5 years 4.5 years
Risk free rate 1.0% 1.0%
Expected dividends Nil Nil
 
Expected volatility was determined by calculating the 
historical volatility of the Group’s share price over a period 
commensurate with the expected life of the option. The 
expected life used in the model has been adjusted, based 
on management’s best estimate at the date of grant, for 
the effects of non-transferability, exercise restrictions and 
behavioural considerations.
 
5 Operating loss
Operating loss is stated after charging/(crediting):
2016  
£000
2015  
£000
Grant Income (123) (119)
Release of deferred consideration (443) -
Operating lease rentals:
• Land and buildings 285 131
Depreciation of property, plant and equipment (see Note 10):
• On owned assets 604 567
Amortisation of intangible fixed assets (see Note 9) 642 58
Employee benefit expense, including share-based payment charges (see Note 3) 4,425 3,740
Auditors remuneration:
• Audit services in respect of the Company’s financial statements 15 15
• Audit services in respect of the Company’s subsidiaries’ financial statements 15 15
• Tax services 13 6
6 Finance income
2016 
£000
2015 
£000
Interest received 99 26
Notes to the Consolidated  
Financial Statements (continued…) 65
Avacta Annual Report and Accounts          2016
7 Taxation on loss on ordinary activities
2016 
£000
2015 
£000
Corporation tax:
Current year (700) (500)
Prior years (218) (148)
Deferred taxation:
Current year - -
Tax on loss on ordinary activities (918) (648)
Factors affecting the tax charge for the current period
The current tax credit for the year is lower (2015: lower) than 
the standard rate of corporation tax in the UK of 20% (2015: 
20.7%). The differences are explained below. 
2016 
£000
2015 
£000
Loss on ordinary activities before taxation (5,565) (5,541)
Loss on ordinary activities before taxation multiplied by the  
standard rate of corporation tax in the UK of 20% (2015: 20.7%)
(1,113) (1,142)
Effects of:
• Difference between capital allowances and depreciation 144 105
• Expenses not deductible for tax purposes 91 90
• Utilisation of tax losses (10) (178)
• Other timing differences (principally tax losses not recognised) 888 1,125
• Government tax incentives (918) (648)
• Deferred tax (Note 17) - -
(918) (648)
8 Earnings per ordinary share
The calculation of earnings per ordinary share is based on the 
profit or loss for the period and the weighted average number 
of equity voting shares in issue. The earnings per ordinary 
share are the same as the diluted earnings per ordinary share 
because the effect of potentially issuable shares is anti-dilutive.
2016 2015
Loss (£000) (4,647) (9,991)
Underlying loss
1
 (£000) (4,647) (2,486)
Weighted average number of shares² (number) 67,713,817 49,729,816
Basic and diluted loss per ordinary share (pence) (6.86p) (20.09p)
Underlying basic and diluted loss per ordinary share
1
 (pence) (6.86p) (5.00p)
1 Excluding discontinued operations and impairment charges.
2  Weighted average number of shares adjusted to reflect the share consolidation on 26 January 2016 which created 1 new ordinary share of 10p each for every 
100 existing ordinary shares of 0.1p each (see Note 18). 66
Financial Statements
9 Intangible fixed assets
Goodwill 
£000
Customer related 
intangible assets 
£000 
Development 
costs 
£000
Patents 
£000
Total 
£000
Cost
At 31 July 2014 9,596 210 7,040 53 16,899
Transfers from property, plant and 
equipment (see note 10)
- - 54 - 54
Internally developed - - 3,060 - 3,060
Disposals (4,941) - (2,032) - (6,973)
At 31 July 2015 4,655 210 8,122 53 13,040
Internally developed - - 1,726 - 1,726
Additions - - - 36 36
Disposals - - (2,381) (33) (2,414)
At 31 July 2016 4,655 210 7,467 56 12,388
Amortisation and impairment
At 1 August 2014 - 210 389 11 610
Impairment - - 2,381 26 2,407
Charge for the year - - 57 1 58
Disposals - - (395) - (395)
At 31 July 2015 - 210 2,432 38 2,680
Charge for the year - - 637 5 642
Disposals - - (2,381) (33) (2,414)
At 31 July 2016 - 210 688 10 908
Net book value
At 31 July 2016 4,655 - 6,779 46 11,480
At 31 July 2015 4,655 - 5,690 15 10,360
At 31 July 2014 9,596 - 6,651 42 16,289
Development costs
Development costs relate to the internally generated 
intangible asset associated with the development of:
• the Affimer affinity reagent based technologies;
• the additional companion animal diagnostic testing capability. 
Development expenditure relating to reagent or diagnostic 
products in the Life Sciences business is amortised based 
on the number of custom Affimer projects completed in the 
period with the amortisation charge spread over a period 
up to 10 years. Development expenditure relating to the 
new diagnostic tests within the Animal Health business are 
amortised over a period up to 5 years from when the tests  
are first launched.
The disposal of £2.38 million and associated depreciation  
of £2.38 million relates to development costs which were  
fully impaired as at 31 July 2015. 
Notes to the Consolidated  
Financial Statements (continued…) 67
Avacta Annual Report and Accounts          2016
Patents
The amortisation period applied to the patent expenditure is 
the same period as the length of the life of the patent, being 
either 14 or 15 years.
Goodwill
Goodwill arising on business combinations is allocated to 
the Group’s separate Cash Generating Units (CGUs) based 
on an assessment of which CGUs will derive benefit from 
each acquisition. A CGU is the smallest group of assets which 
generate cash inflows independently from other assets.  
A CGU can be smaller than an Operating Segment. In the view 
of the Directors, the Group currently has two (2015: two) CGUs 
reflecting the core areas of technological focus. Goodwill is not 
amortised, but tested annually for impairment. The goodwill 
can be allocated, on an operating segment (see Note 2) basis, 
as follows:
2016 
£000
2015 
£000
Animal Health 3,117 3,117
Life Sciences 1,538 1,538
Goodwill 4,655 4,655
Impairment review
An impairment review of the Group’s intangible and tangible 
non-current assets was conducted at 31 July 2016. The 
tangible and intangible non-current assets at 31 July 2016  
can be allocated as follows:
Tangible 
£000
Goodwill 
£000
Development costs 
£000
Patents 
£000
Total 
£000
Animal Health 62 3,117 882 - 4,061
Life Sciences 3,652 1,538 5,896 46 11,132
3,714 4,655 6,778 46 15,193
In each case the recoverable amount of each CGU is 
compared against the carrying value of assets allocated to 
each CGU. The recoverable amount is estimated based on 
value in use calculations. Centrally held assets are considered 
against the aggregate value in use of the whole Group. 
Value in use calculations include detailed budgets and three 
year forecasts, followed by modelling of expected cash 
flows reflecting the expected life cycle of each product and 
extrapolation of ‘steady state’ performance at growth rates 
given below. The long-term growth rates reflect the long-term 
expectation for each CGU and have been estimated at 2.5% 
 
 
(2015: 2.5%) in each case. Gross and operating margins have 
been assumed to remain constant based on budget and past 
experience. All cash flows are discounted back to present value 
using a pre-tax discount rate of between 12.5% and 15.0% 
(2015: between 12.5% and 15.0%) that takes into account the 
individual risks of each particular asset and revenue stream. 
The Directors’ key assumptions relate to short-term revenue 
growth and discount rates applied. Gross and operating 
margins have been assumed to remain constant and are 
based on budget. 68
Financial Statements
10 Property, plant and equipment
Assets in the course 
of construction 
£000
Leasehold 
improvements 
£000
Laboratory 
equipment 
£000
Office fixtures  
& fittings 
£000
Total 
£000
Cost
At 1 August 2014 71 208 1,937 154 2,370
Transfers to intangible fixed 
assets (see note 9)
(54) - - - (54)
Additions - - 793 44 837
Disposals (17) - (382) (22) (421)
At 31 July 2015 - 208 2,348 176 2,732
Additions 1,060 531 1,193 79 2,863
Disposals - (138) (207) (58) (403)
At 31 July 2016 1,060 601 3,334 197 5,192
Depreciation
At 1 August 2014 - 67 796 106 969
Charge for the year - 46 434 38 518
Disposals - - (284) (17) (301)
At 31 July 2015 - 113 946 127 1,186
Charge for the year - 61 505 38 604
Disposals - (104) (177) (55) (336)
At 31 July 2016 - 70 1,274 110 1,454
Net book value
At 31 July 2016 1,060 531 2,060 87 3,738
At 31 July 2015 - 95 1,402 49 1,546
At 1 August 2014 71 141 1,141 48 1,401
11 Inventories
2016 
£000
2015 
£000
Raw materials and components (net of impairment of £Nil, 2015: £Nil) 259 324
Finished goods (net of impairment of £Nil, 2015: £Nil) 9 9
268 333
Notes to the Consolidated  
Financial Statements (continued…) 69
Avacta Annual Report and Accounts          2016
12 Trade and other receivables
2016  
£000
2015 
£000
Trade receivables 161 213
Prepayments and accrued income 626 432
Other taxes and social security 341 122
1,128 767
Trade and other receivables denominated in currencies other 
than sterling comprise £17,000 (2015: £Nil) of trade receivables 
denominated in US Dollars. The fair values of trade receivables 
are the same as their book values.
The Group does not maintain a provision for impairment 
against trade receivables. Trade receivables that are past due 
are considered individually for impairment. The Group uses 
a monthly ageing profile as an indicator of impairment. The 
summarised ageing analysis of trade receivables past due but 
not impaired is as follows: 
2016 
£000
2015 
£000
Under 30 days overdue 30 52
Between 30 and 60 days overdue (4) 4
Over 90 days overdue 21 (13)
47 43
The other classes within trade and other receivables do not 
contain impaired assets.
13 Short-term deposits
2016 
£000
2015 
£000
Short-term deposits 10,000 -
Balances held on short-term deposits have maturity dates  
between three and twelve months at the time of investment.
14 Cash and cash equivalents
2016 
£000
2015 
£000
Cash 9,521 7,330
15 Trade and other payables
2016 
£000
2015 
£000
Trade payables 403 664
Other taxes and social security 167 125
Accruals and other creditors 787 618
1,357 1,407
Trade and other payables denominated in currencies other  
than sterling comprise £10,000 (2015: £95,000) of trade  
payables denominated in US dollars and £19,000 (2015: £22,000)  
denominated in Euros. The fair values of trade payables are the  
same as their book values. 70
Financial Statements
16 Contingent consideration
2016 
£000
2015 
£000
Contingent consideration 340 863
Maturity of debt:
• Payable on demand or within one year 315 395
• Payable between one and two years 6 25
• Payable after more than two years 19 443
340 863
Contingent consideration amounting to £822,000 arose on the  
acquisition of certain assets relating to the development of the  
animal health diagnostic test menu on 14 May 2013 and the  
amount payable is related to actual and estimated revenues  
generated over the five year period ended 14 May 2018. 
17 Deferred tax liabilities
Deferred tax liabilities are attributable as set out below and 
are disclosed as non-current liabilities in the balance sheet: 
2016 
£000
2015 
£000
Deferred tax asset/(liability)
Development costs (1,359) (1,138)
Trading losses 993 785
Other items 366 353
- -
Movement in deferred tax year ended 31 July 2016 At 1 August 2015 
£000
Income statement 
£000
At 31 July 2016 
£000
Development costs (1,138) (221) (1,359)
Trading losses 785 208 993
Other items 353 13 366
- - -
There is no liability to corporation tax in the year.  
There is an unprovided deferred tax asset of approximately  
£4,159,000 due to trading losses in prior financial years  
(2015: £3,274,000). This asset has not been recognised 
because of uncertainty around future utilisation of losses.
Notes to the Consolidated  
Financial Statements (continued…) 71
Avacta Annual Report and Accounts          2016
18 Share capital
2016 
£000
2015 
£000
Allotted, called up and fully paid:
• 68,379,282 Ordinary shares of 10p each 6,838 -
• 4,979,649,550 Ordinary shares of 0.1p each - 4,980
• 19,327,344 Deferred shares of 0.4p each 77 77
6,915 5,057
Share consolidation
On 26 January 2016, following approval by shareholders at the  
Annual General Meeting on 25 January 2016, Avacta Group Plc  
completed a share consolidation, creating 1 new ordinary share 
of 10p each for every 100 existing ordinary shares of 0.1p each.
Share issues
On 3 August 2015, 1,760,000,000 Ordinary shares of 0.1p each 
were allotted and issued at a price of 1.25p per share further 
to a placing of shares. Placing costs of £985,000 were incurred 
and offset against the share premium reserve. 
On various dates between 1 August 2015 and 25 January 2016, 
6,646,404 Ordinary shares of 0.1p each were allotted and 
issued at a weighted average price of 0.41p per share further 
to exercising of options by employees or former employees of 
the Company.
On 15 February 2016, 905,031 Ordinary shares of 10p each 
were allotted and issued at a price of 118.5p per share to five 
employees and Avacta Group Trustee Limited as trustee for 
The Avacta Employees’ Share Trust.
On various dates between 26 January 2016 and 31 July 2016, 
7,000 Ordinary shares of 10p each were allotted and issued 
at a weighted average price of 45.2p per share further to 
exercising of options by employees of former employees of 
the Company.
On 6 April 2016 and 7 July 2016, 4,292 Ordinary shares of 10p 
each in total were allotted and issued at a weighted average 
price of 97.1p per share to Michael Albin, a non-executive 
director in settlement of 50% of the fees due for the services of 
Michael Albin as a non-executive director between 1 March 2016 
and 31 June 2016 as per an agreement dated 22 February 2016.
Respective rights of Ordinary and Deferred shares
The rights of the Ordinary shareholders are dealt with in  
the Articles of Association of the Company which is available 
from the Company’s registered office at Unit 20, Ash Way, 
Thorp Arch Estate, Wetherby, LS23 7FA or from its website, 
www.avacta.com. The holders of the Deferred shares shall 
not, by virtue or in respect of their holdings of Deferred 
shares, have the right to receive notice of any General 
Meeting, nor the right to attend, speak or vote at any such 
General Meeting. Save as required by law, the Company need 
not issue share certificates to the holders of the Deferred 
shares in respect of their holding thereof. The Deferred shares 
shall not entitle their holders to receive any dividend or other 
distribution. The Deferred shares shall on a return of assets in 
a winding up entitle the holders only to the repayment of the 
amounts so paid up on such Deferred shares after repayment 
of the capital paid up on the Ordinary shares plus the payment 
of £10,000,000 per Ordinary share. The Company shall have 
irrevocable authority at any time to appoint any person to 
execute on behalf of the holders of the Deferred shares a 
transfer thereof and/or an agreement to transfer the same to 
such person as the Company determines as custodian thereof, 
without making any payment to the holders thereof, and/or 
to cancel the same (in accordance with the provisions of the 
Companies Acts) without making any payment to or obtaining 
the sanction of the holders thereof, and pending such transfer 
and/or cancellation, to retain the certificate for such shares. 
The Company may, at its option at any time purchase all or any 
of the Deferred shares then in issue, at a price not exceeding  
1 pence for each holding of Deferred shares so purchased. 72
Financial Statements
19 Capital and reserves
Share premium
The share premium account of £621,000 (2015: £35,756,000) 
arose from the issue of shares at a premium to their nominal 
value less certain allowable cost of issue. Following approval 
by shareholders at the Annual General Meeting on 25 January 
2016 and the subsequent approval of the Court, an amount of 
£55,437,000 was cancelled from the share premium account. 
The remaining share premium reserve is not distributable.
Capital reserve
The capital reserve of £1,899,000 (2015: £2,669,000) arose 
from the application of acquisition accounting principles to  
the financial statements at the time of the acquisition of Avacta 
Health Limited (formerly Oxford Medical Diagnostics Limited). 
The reserve represents the value of Ordinary shares of 10p  
to be issued as part of the contingent consideration subject  
to the achievement of certain milestone objectives in the  
case of Avacta Health Limited (£1,899,000). This reserve is  
not distributable. 
Other reserve
The other reserve of negative £1,729,000 (2015: negative 
£1,729,000) arose from the application of reverse acquisition 
accounting principles to the financial statements at the time 
of the reverse takeover of Avacta Group Plc by Avacta Limited. 
This reserve is not distributable.
Reserve for own shares
The reserve for own shares of negative £2,651,000 (2015: 
negative £1,590,000) arose as a result of 3,232,306 (2015: 
2,327,275) Ordinary shares of 10p each being subscribed 
for jointly by certain employees, each individually with Avacta 
Group Trustee Limited. This reserve is not distributable.
Retained earnings
Retained earnings arise from the cumulative profits or losses 
of the Group less the cancellation of £55,437,000 from the 
share premium account during the year. The charge and 
associated credits in respect of cumulative share-based 
payment charges (where appropriate) are also included.
20 Capital and financial risk management
Capital management
The Group’s main objective when managing capital is to 
protect returns to shareholders by ensuring the Group 
develops such that it trades profitably in the foreseeable 
future. The Group recognises that, because it is an early 
stage development Group with limited current revenues and 
significant continued investment that does not support debt 
within its capital structure, its capital structure is largely limited 
to equity based capital which the Group uses to finance most 
of its acquisition strategy.
The Group has two forms of debt, credit card debt and 
finance leases. Credit card debt is used to finance incidental 
expenditure, is short-term and settled in the month following 
the incurring of the related expenditure. Finance leases are 
long-term and used where finance can be found for significant 
items of capital expenditure, against which the debt is secured. 
The Group does not have long-term gearing ratio targets.
Whilst the Group uses debt in the forms described above, 
this debt is immaterial to the Group’s capital structure and its 
capital management strategy. The Group manages its capital 
with regard to the risks inherent in the business and the sector 
within which it operates. It does not impact the dividend policy 
of the Group as the current strategy is to invest capital in the 
business. The Group has not made any changes to its capital 
management during the year.
The Group considers its capital to include share capital, 
share premium, capital reserve, retained earnings and other 
reserves. The Group does not have any externally imposed 
capital requirements. 
Financial risk management
The financial risks faced by the Group comprise credit risk, 
interest rate risk and currency risk. This note presents 
information about the Group’s exposure to each of these 
risks and the Group’s objectives and processes for managing 
this risk. Further disclosures are included throughout these 
consolidated financial statements. 
Financial instruments policy
Treasury and financial risk policies are approved by the 
Board. All instruments utilised by the Group are for financing 
purposes. Short-term deposits are placed for a period of no 
longer than 12 months with institutions with a ‘superior or 
strong’ ability to repay short-term debt obligations. In order 
to manage financial exposure between different financial 
institutions no more than £10 million is placed on short-term 
deposit with any one financial institution. The day-to-day 
financial management and treasury function is controlled 
centrally for all operations. During the year, the Group had  
no derivative transactions.
Notes to the Consolidated  
Financial Statements (continued…) 73
Avacta Annual Report and Accounts          2016
Financial assets and liabilities
The Group’s financial instruments comprise cash and liquid 
resources, short-term deposits, and various items such as 
trade receivables and trade payables that arise directly from 
its operations. An analysis of the financial assets and liabilities 
recognised on the balance sheet, each of which is at amortised 
cost is set out below.
2016 
£000
2015 
£000
Financial assets
Trade receivables 161 213
Short-term deposits 10,000 -
Cash 9,521 7,330
19,682 7,543
Financial liabilities
Trade payables 403 664
Contingent consideration 340 863
743 1,527
Maturity profile of financial liabilities
In one year or on demand 718 1,059
Between one and five years 25 468
743 1,527
The financial liabilities due for repayment within one year 
relate to trade payables and other short-term liabilities. 
Interest rate risk
The Group continues to manage the cash position in a manner 
designed to maximise interest income, while at the same time 
minimising any risk to these funds. Surplus cash funds are 
deposited with commercial banks that meet credit criteria 
approved by the Board, for periods between one week and  
six months.
Interest rate and currency profile
At 31 July 2016 and throughout the year, the Group maintained 
Sterling cash at bank and short-term deposits. The current book 
value of interest bearing assets and liabilities is as follows: 
2016 
£000
2015 
£000
Financial assets
Short-term deposits 10,000 -
Cash at bank (floating interest rate) 9,521 7,330
Cash at bank attracted interest at floating rates, which were 
between Nil% and 0.5% at 31 July 2016 (2015: Nil% and 0.5%). 
Short-term deposits attracted interest at fixed rates which 
were between 0.85% and 1.25% at 31 July 2016. 74
Financial Statements
Credit risk
Management has a credit policy in place and the exposure to 
credit risk is monitored on an ongoing basis. Credit evaluations 
are performed on all customers requiring credit over a certain 
amount. The Group does not require collateral in respect 
of financial assets. At the balance sheet date there were no 
significant concentrations of credit risk. The maximum exposure 
to credit risk is represented by the carrying amount of each 
financial asset in the balance sheet.
Fair value of financial instruments
At 31 July 2016 the difference between the book value and the 
fair value of the Group’s financial assets and liabilities was £Nil 
(2015: £Nil).
Sensitivity analysis
The Group is not materially exposed to changes in interest or 
exchange rates at 31 July 2016.
21 Pensions
The Group operates a defined contribution pension scheme 
for its employees. The pension cost charge for the year 
represents contributions payable by the Group to the scheme 
and other personal pension plans and amounted to £126,000 
(2015: £98,000). There were outstanding contributions at  
31 July 2016 of £24,000 (2015: £16,000).
22 Accounting estimates and judgements
The Directors discussed with the Audit Committee the 
development, selection and disclosure of the Group’s critical 
accounting policies and estimates and the application of these 
policies and estimates. The accounting policies are set out at 
Note 1.
The Directors consider that the key judgements and sources of 
estimation made in preparation of the financial statements are:
Going concern
After making enquiries, the Directors have confidence that the 
Company and the Group have adequate resources to continue 
in operational existence for the foreseeable future. For this 
reason, they continue to adopt the going concern basis in 
preparing the Report and Accounts. This is described in more 
detail at Note 1.
Intangible assets
The carrying value of intangible assets has been tested for 
impairment. Tests have been undertaken using commercial 
judgements and a number of assumptions and estimates 
have been made in order to estimate the assets’ value in use 
in order to test the carrying amounts as described within 
Note 9. No impairment was recorded, but reasonably possible 
changes in inputs to the value in use calculations could have 
led to a different conclusion being drawn. 
Further judgements have been taken to capitalise 
development costs in respect of specific products and services 
that it is intended will be introduced to the Group’s markets in 
the future and to allocate the surplus of fair value paid by the 
Group as consideration over the fair value of the net assets 
acquired. In capitalising development costs, the Directors have 
identified only the direct costs associated with the people and 
the bought-in tools and services required to develop those 
specific products and services.
Share-based payments
The Group has equity settled share-based remuneration 
schemes for employees. The fair value of share options is 
estimated by using the Black-Scholes valuation model, on the 
date of grant based on certain assumptions. These assumptions 
include, among others, expected volatility, expected life of the 
options and the number of options expected to vest.
Revenue recognition
Fees invoiced in respect of upfront fees have been recognised as 
revenue in the period when all criteria for revenue recognition 
have been met. Revenue from the provision of services is 
recognised on services when the service has been performed.
Deferred tax recognition
The Directors consider it probable that the Group will become 
profitable at some stage in the future but given the uncertainty of 
when this will occur a deferred tax asset has not been recognised. 
Notes to the Consolidated  
Financial Statements (continued…) 75
Avacta Annual Report and Accounts          2016
23 Commitments
(a) Capital commitments
At 31 July 2016, the Group had £Nil capital commitments 
(2015: £Nil). 
(b) Operating lease commitments for land and buildings
The Group maintains non-cancellable operating lease 
commitments on three properties.
2016 
£000
2015 
£000
Non-cancellable operating lease rentals are payable as follows:
• Less than one year 254 130
• Between one and five years 481 45
• Over five years 290 -
1,025 175
24 Related party transactions
Intra Group transactions
Transactions between the Company and its subsidiaries, which  
are related parties, have been eliminated on consolidation and  
have, therefore, not been disclosed.
Remuneration of key management personnel
The Group considers the directors to be its key management  
personnel. Full details of their compensation are set out in the  
Directors’ Remuneration Report on pages 42 to 45.
25 Discontinued operations
On 11 February 2015, the Group sold its entire Analytical 
business unit. The Group was previously committed to a plan 
to sell the division due to a change in strategic direction. Upon 
sale for $3.5 million in cash (£2.21 million equivalent), a pre-tax 
gain of £148,000 was recorded. The attributable tax was £Nil 
due to losses brought forward being utilised, leaving a gain 
after tax of £148,000.
Results of discontinued operations
2016 
£000
2015 
£000
Revenue - 175
Expenses - (480)
Loss before tax - (305)
Gain recognised on disposal - 148
Impairment of goodwill - (4,941)
Tax on gain on disposal - -
Loss for the year - (5,098)
Cash flows used in discontinued operations
Net cash used in operating activities - (305)
Net cash used in investing activities - (4)
Net cash used in discontinued operations - (309)
Consideration received, satisfied in cash - 2,210 76
Financial Statements
Note
2016 
£000
2015 
£000
Fixed assets
Property, plant and equipment 26 45 165
Investments 27 5,489 5,624
5,534 5,789
Current assets
Debtors 28 22,518 12,621
Cash at bank 19,292 6,935
41,810 19,556
Current liabilities 29 (2,451) (2,551)
Net current assets 39,359 17,005
Total assets less current liabilities 44,893 22,794
Non-current liabilities 30 (25) (161)
Net assets 44,868 22,633
Capital and reserves
Called up share capital 31 6,915 5,057
Share premium account 32 1,027 36,162
Capital reserve 32 1,899 2,669
Reserve for own shares 32 (2,651) (1,590)
Retained earnings 32 37,678 (19,665)
Shareholders’ funds 44,868 22,633
The notes on pages 78 to 82 form an integral part of these 
financial statements.
The balance sheet above was approved by the Board of 
Directors and authorised for issue on 14 October 2016  
and signed on its behalf by: 
Alastair Smith   Tony Gardiner 
Chief Executive Officer  Chief Financial Officer
Company Balance Sheet as at 31 July 2016 – 
Registered number 04748597  77
Avacta Annual Report and Accounts          2016
Share  
capital 
£000
Share  
premium  
£000
Capital  
reserve  
£000
Reserve for  
own shares 
£000
Retained  
earnings 
£000
Total  
equity 
£000
At 1 August 2014 5,045 36,153 2,669 (1,590) (3,492) 38,785
Exercise of share options 12 9 - - - 21
Total comprehensive loss for  
the period
- - - - (16,263) (16,263)
Share-based payment charges - - - - 90 90
At 31 July 2015 5,057 36,162 2,669 (1,590) (19,665) 22,633
Placing net of related expenses 1,760 19,255 - - - 21,015
Exercise of share options 8 76 - - 84
Share premium cancellation - (55,437) - - 55,437 -
Own shares acquired 90 971 - (1,061) - -
Transfer¹ (770) 770 -
Total comprehensive profit/(loss) for 
the period
- - - - 1,020 1,020
Share-based payment charges - - - - 116 116
At 31 July 2016 6,915 1,027 1,899 (2,651) 37,678 44,868
 
1 The transfer of equity from the capital reserve to retained earnings relates to share option warrants which have expired.
Company Statement of Changes in Equity  
for the year ended 31 July 2016 78
Financial Statements
Basis of preparation
As used in the financial statements and related notes, the term 
‘Company’ refers to Avacta Group Plc. 
These financial statements have been prepared in accordance 
with applicable United Kingdom accounting standards, 
including Financial Reporting Standard 102 – ‘The Financial 
Reporting Standard applicable in the United Kingdom and 
Republic of Ireland’ (‘FRS 102’), and with the Companies Act 
2006. The financial statements have been prepared on the 
historical cost basis except for the modification to a fair value 
basis for certain financial instruments as specified in the 
accounting policies below. 
This is the first year in which the financial statements 
have been prepared under FRS 102. There have been no 
adjustments made to comparative figures as a result of 
adopting FRS102.
The Company has taken advantage of section 408 of the 
Companies Act 2006 and has not included its own profit  
and loss account in these financial statements. The individual 
accounts of the Company have also adopted the following 
disclosure exemptions: 
• the requirement to present a statement of cash flows and 
related notes. 
• financial instrument disclosures, including: categories of 
financial instruments, items of income, expenses, gains or 
losses relating to financial instruments, and exposure to  
and management of financial risks.
• the requirement to disclose related party transactions  
with wholly owned subsidiaries of the Company.
• the requirement to disclose Group settled share-based 
payment transactions.
Property, plant & equipment
Property, plant & equipment are held at cost less accumulated 
depreciation and impairment charges.
Depreciation is provided at the following annual rates in order 
to write off the cost less estimated residual value, which is 
based on up to date prices, of property, plant and equipment 
over their estimated useful lives as follows:
• Fixtures and fittings – 3 to 10 years
• Leasehold improvements – 5 to 10 years
Investments
Fixed asset investments are stated at cost less provision 
for impairment where appropriate. The Directors consider 
annually whether a provision against the value of investments 
on an individual basis is required. Such provisions are charged 
to the profit and loss account in the year.
Taxation
The charge for taxation is based on the result for the year 
and takes into account taxation deferred because of timing 
differences between the treatment of certain items for 
taxation and accounting purposes.
Deferred tax is provided for all temporary differences between 
the carrying amounts of assets and liabilities for financial 
reporting purposes and the amounts used for taxation 
purposes except when they arise on the initial recognition of 
goodwill or the initial recognition of assets and liabilities that is 
not a business combination and that affects neither accounting 
nor taxable profits. A deferred tax asset is recognised only to 
the extent that it is probable that future taxable income will be 
available against which an asset can be utilised. 
Share-based payments
The fair value of awards to employees or other parties that 
take the form of shares or rights to shares is recognised as an 
employee expense with a corresponding increase in equity. 
The fair value is measured at grant date and spread over the 
period during which the employees become unconditionally 
entitled to the options. The fair value of the options granted  
is measured using an option valuation model, taking into 
account the terms and conditions upon which the options 
were granted. The amount recognised as an expense is 
adjusted to reflect the actual number of share options that 
vest except where forfeiture is due only to share prices not 
achieving the threshold for vesting.
Notes to the Company Balance Sheet 79
Avacta Annual Report and Accounts          2016
26 Property, plant & equipment
Leasehold  
improvements 
£000
Office fixtures  
& fittings 
£000
Total 
£000
Cost
At 31 July 2015 208 163 371
Additions 6 30 36
Transfers (77) (40) (117)
Disposals (137) (53) (190)
At 31 July 2016 - 100 100
Depreciation
At 31 July 2015 113 93 206
Charge for the year 46 35 81
Transfers (56) (22) (78)
Disposals (103) (51) (154)
At 31 July 2016 - 55 55
Net book value
At 31 July 2016 - 45 45
At 31 July 2015 95 70 165
27 Investments
Total 
£000
Cost
At 1 August 2015 14,688
Disposals (500)
Adjustment to contingent consideration (135)
At 31 July 2016 14,053
Provision
At 1 August 2015 9,064
Disposals (500)
At 31 July 2016 8,564
Net book value
At 31 July 2016 5,489
At 31 July 2015 5,624
The disposal relates to a dormant subsidiary, Oriental Fine Foods Limited, which was dissolved. 80
Financial Statements
The companies in which Avacta Group Plc’s interest is more  
than 20% at 31 July 2016 are as follows:
Principal  
activity
Class and percentage  
of voting shares held Holding
Subsidiary undertakings
Avacta Limited Technology development Ordinary 100% Direct
Avacta Analytical Limited Non-trading Ordinary 100% Indirect
Avacta Analytical Inc. Dormant Ordinary 100% Indirect
Avacta Health Limited Non-trading Ordinary 100% Direct
Preference Nil% N/A
TheraGenetics Limited Dormant Ordinary 100% Direct
TheraGenetics Inc. Dormant Ordinary 100% Indirect
Crossco (1127) Limited Intermediate holding company Ordinary 100% Direct
Avacta Animal Health Limited Contract services Ordinary 100% Indirect
Avacta Animal Health Inc. Contract services Ordinary 100% Indirect
Curidium Medica Limited Intermediate holding company Ordinary 100% Direct
Curidium Limited Dormant Ordinary 100% Indirect
Reactivlab Limited Non-trading Ordinary 100% Direct
Avacta Life Sciences Limited Technology development Ordinary 100% Direct
Avacta Life Sciences Inc. Dormant Ordinary 100% Direct
Avacta Nottingham Asset Limited Non-trading Ordinary 100% Indirect
Promexus Limited Non-trading Ordinary 100% Indirect
Avacta Group Trustee Limited Dormant Ordinary 100% Direct
Avacta Analytical Limited is a subsidiary of Avacta Limited. 
TheraGenetics Inc. is a subsidiary of TheraGenetics Limited. 
Avacta Animal Health Limited is a subsidiary of Crossco (1127) 
Limited. Curidium Limited is a subsidiary of Curidium Medica 
Limited. Avacta Nottingham Asset Limited is a subsidiary of 
Avacta Animal Health Limited. Promexus Limited is a subsidiary 
of Avacta Life Sciences Limited (formerly Aptuscan Limited).
All of the companies were incorporated in England and 
Wales except Avacta Animal Health Inc., Avacta Analytical Inc., 
Avacta Life Sciences Inc. and TheraGenetics Inc. which were 
incorporated in the United States and Reactivlab Limited which 
was incorporated in Scotland.
28 Debtors
2016 
£000
2015 
£000
Other taxes and social security 60 28
Prepayments and accrued income 119 116
Amounts owed by subsidiary undertakings 22,339 12,477
22,518 12,621
Notes to the Company Balance Sheet 
(continued…) 81
Avacta Annual Report and Accounts          2016
29 Current liabilities
2016 
£000
2015 
£000
Trade creditors 111 136
Other taxes and social security 35 23
Amounts owed to subsidiary undertakings 1,898 1,898
Accruals and deferred income 92 99
Contingent consideration 315 395
2,451 2,551
30 Non-current liabilities
2016 
£000
2015 
£000
Contingent consideration 25 161
Maturity of debt:
• Payable between one and two years 6 25
• Payable after more than two years 19 136
25 161
31 Share capital
2016 
£000
2015 
£000
Allotted, called up and fully paid:
• 68,379,282 Ordinary shares of 10p each 6,838 -
• 4,979,649,550 Ordinary shares of 0.1p each - 4,980
• 19,327,344 Deferred shares of 0.4p each 77 77
6,915 5,057
Share consolidation
On 26 January 2016, following approval by shareholders at the 
Annual General Meeting on 25th January 2016, Avacta Group 
Plc completed a share consolidation, creating 1 new ordinary 
share of 10p each for every 100 existing ordinary shares of 
0.1p each.
Share issues
On 3 August 2015, 1,760,000,000 Ordinary shares of 0.1p each 
were allotted and issued at a price of 1.25p per share further.
On various dates between 1 August 2015 and 25 January 2016, 
6,646,404 Ordinary shares of 0.1p each were allotted and 
issued at a weighted average price of 0.41p per share further 
to exercising of options by employees or former employees of 
the Company.
On 15 February 2016, 905,031 Ordinary shares of 10p each 
were allotted and issued at a price of 118.5p per share to five 
employees and Avacta Group Trustee Limited as trustee for 
The Avacta Employees’ Share Trust.
On various dates between 26 January 2016 and 31 July 2016, 
7,000 Ordinary shares of 10p each were allotted and issued 
at a weighted average price of 45.2p per share further to 
exercising of options by employees of former employees of 
the Company.
On 6 April 2016 and 7 July 2016, 4,292 Ordinary shares of 10p 
each in total were allotted and issued at a weighted average 
price of 97.1p per share to Michael Albin, a non-executive 
director in settlement of 50% of the fees due for the services of 
Michael Albin as a non-executive director between 1 March 2016 
and 31 June 2016 as per an agreement dated 22 February 2016.
Respective rights of Ordinary and Deferred shares
The rights of the Ordinary shareholders are dealt with in  
the Articles of Association of the Company which is available  
from the Company’s registered office at Unit 20, Ash Way, 
Thorp Arch Estate, Wetherby, LS23 7FA or from its website, 
www.avacta.com. The rights of the holders of the Deferred 
shares is set out at Note 18. 82
32 Reserves
Share premium
The share premium account of £1,027,000 (2015: £36,162,000) 
arose from the issue of shares at a premium to their nominal 
value less certain allowable cost of issue. Following approval 
by shareholders at the Annual General Meeting on 25 January 
2016 and the subsequent approval of the Court, an amount of 
£55,437,000 was cancelled from the share premium account. 
The remaining share premium reserve is not distributable.
Capital reserve
The capital reserve of £1,899,000 (2015: £2,669,000) arose 
from the application of acquisition accounting principles to  
the financial statements at the time of the acquisition of  
Avacta Health Limited (formerly Oxford Medical Diagnostics 
Limited). The reserve represents the value of Ordinary shares 
of 10p to be issued as part of the contingent consideration 
subject to the achievement of certain milestone objectives in 
the case of Avacta Health Limited (£1,899,000). This reserve  
is not distributable. 
Reserve for own shares
The reserve for own shares of negative £2,651,000 (2015: 
negative £1,590,000) arose as a result of 3,232,306 (2015: 
2,327,275) Ordinary shares of 10p each being subscribed 
for jointly by certain employees, each individually with Avacta 
Group Trustee Limited. This reserve is not distributable.
Retained earnings
Retained earnings arise from the cumulative profits or losses 
of the Company less the cancellation of £55,437,000 from 
the share premium account during the year. The charge 
and associated credits in respect of cumulative share-based 
payment charges (where appropriate) are also included.
33 Commitments
(a) Capital commitments
At 31 July 2016, the Company had £Nil capital commitments 
(2015: £Nil). 
(b) Contingent liabilities
The Company has guaranteed the overdrafts of its 
subsidiaries, the amount outstanding at 31 July 2016 was  
£Nil (2015: £Nil).
(c) Operating lease commitments
The Company maintains non-cancellable 
operating lease commitments on three properties. 
2016 
£000
2015 
£000
Non-cancellable operating lease rentals are payable as follows:
•  Less than one year 254 130
•  Between one and five years 481 45
•  Over five years 290 -
1,025 175
Financial Statements
Notes to the Company Balance Sheet 
(continued…) 83
Avacta Annual Report and Accounts          2016
Secretary and  
Registered Office
Tony Gardiner 
Avacta Group Plc 
Unit 20 
Ash Way 
Thorp Arch Estate 
Wetherby 
LS23 7FA 
Nominated Adviser  
and Joint Broker
finnCap Limited 
60 New Broad Street 
London 
EC2M 1JJ
Joint Broker
WG Partners 
85 Gresham Street 
London 
EC2V 7NQ
Legal Adviser 
Walker Morris 
Kings Court 
12 King Street 
Leeds  
LS1 2HL
Independent Auditor
KPMG LLP 
1 Sovereign Square 
Sovereign Street 
Leeds 
LS1 4DA
Banker
National Westminster Bank Plc 
4th Floor 
2 Whitehall Quay 
Leeds 
LS1 4HR
Registrar
Capita IRG Plc 
Bourne House 
34 Beckenham Road 
Beckenham 
Kent 
BR3 4TU
Investor and  
Media Relations
FTI Consulting 
200 Aldersgate 
London 
EC1A 4HD
Designed by weareglidden.com
Secretary and Advisers