Investment Decision Report: Analyzing Scancell Ltd.'s Financials

This report provides an in-depth analysis of Scancell Ltd., a biopharmaceutical company listed on the London Stock Exchange, to inform investment decisions. It includes a background of the biopharmaceutical industry and Scancell Ltd., qualitative analysis based on company reports, and com...Read More

Investment Decision

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Background and introduction about the industry...............................................................3
2. Introduction and background of the company Scancell Ltd...............................................4
3. Qualitative analysis on basis of various reports published by the company......................5
4. Compute the financial ratios of the company for the year 2020 and 2021.........................5
5. Do a comparative analysis of the financial performance of the company.........................6
6. Comparative analysis of company with industry...............................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The investment decision means that how the money of the company is being invested into
various assets, which can make the business earn more amount of returns for the investors. These
decisions are taken for the long term to maintain the sustainability of the business. To manage
the financial resources adequately, and to maintain a steady growth the company needs to do a
market analysis of the financial state of competitors so that it can be improved by looking at the
fiscal state of the industry (Altman and et. al., 2017). In this report, the company chosen is
Scancell Ltd., which is in a biopharmaceutical industry. It is based in UK and headquartered in
England and Wales. The report discusses about the background of the organisation and chosen
company's industry along with its background. Further the qualitative analysis of the potential
stakeholders, director's, investors, client and many more is done. Moreover, the financial ratios
of the company are calculated.
MAIN BODY
1. Background and introduction about the industry.
A subcategory of pharmaceutical is biopharmaceutical. Drugs are the other major subset of
pharmaceuticals, with their source and manufacture being non – biological chemical. These are
pharmaceuticals that are inherently biological in nature and manufactured using biotechnology
involving the use of live organisms, whereas drugs are pharmaceuticals that are chemical are
non-biological in nature (da Fonseca, 2020). These molecules are made using biotechnology
procedures, and the results clearly have biological sources, usually including live organisms or
their active components or directly involving surrogates, such as protein or gene sequences.
Biopharmaceuticals in the United States and Europe have accepted this comprehensive
definition, which encompasses all recombinant proteins, antibodies, vaccinations, blood or
plasma-derived products and cultured cells and tissues. The biopharmaceutical sector is divided
into three primary segments: diagnostics, vaccines, and recombinant therapeutic proteins. U.S is
the biggest base of the biopharmaceuticals industry. It has grown a lot over the last two decades
because of the several disease spreading all over the world. It helps in making the procurement
medicines by testing the various chemical and the human organisms which can be helpful in
detecting the viruses.

2. Introduction and background of the company Scancell Ltd.
Scancell Ltd. is ac company which is listed on the stock exchange of London. It is a
clinical-stage immuno-oncology organization which was established in 1997 on research drove
by Professor Lindy Durrant at the University of Nottingham. The establishment is working at the
cutting edge of immuno-oncology, an astonishing field of disease research which includes the
improvement of immunotherapies to outfit the body's capacity to produce and support a
successful invulnerable reaction against malignant growth (Erin and et. al., 2018).
The malignant growth immunotherapy market is perhaps the most quickly developing
market inside the biopharmaceutical business, assessed to be worth USD 100 billion constantly
2022. Immunotherapies are being assessed in most disease signs and their unmatched adequacy
and somewhat low poisonousness profile contrasted with chemotherapy is now prompting
outlook changes in the therapy of numerous tumours. Notwithstanding, growths frequently
effectively escape the body's own regular guard component, the resistant framework, and not all
patients can react to designated spot inhibitor-based immunotherapies.
The company need to work on it’s a strategy as it is suffering a continuous loss over the
years. It will affect the productivity and the operations of the organisation. The business
capability of the organisation’s items will be characterized by clinical information, either as
monotherapies or in blend with designated spot inhibitors, intended to give expanded and sturdy
reactions in patients without compromising wellbeing and to address the neglected requirements
in difficult to treat diseases. It’s three innovation stages, ImmunoBody®, Moditope® and
AvidiMab™, each offers a remarkable way to deal with disease treatment to address these
measures (Gan, 2019).
As the COVID-19 pandemic has unfurled, Scancell has assessed how it can best contribute
its mastery and assets to help in the worldwide reaction. Immunizations are the drawn out
arrangement and the organization accepts its joined high energy T cell and killing counter acting
agent approach can possibly deliver a second-age antibody that will produce a successful and
strong safe reaction to COVID-19. Scancell has accordingly started its COVIDITY program to
foster a COVID-19 antibody as a team with researchers at the University of Nottingham and
Nottingham Trent University.

3. Qualitative analysis on basis of various reports published by the company.
According to the chairperson's statement, the goal of the company to produce vaccine
which can be helpful for the people and can fight from the dangerous disease cancer and other
infectious disease. The company has achieved the target of induce the responses of immune
system against the diseases of infectious. It was also successful in designing the vaccine SARS-
COV-2 for fighting with the pandemic virus COVID -19 (Gunawardhana and Damayanthi,
2020).
The director's report states about the functions and qualification of the numerous director's
and their contribution about the strong skills of finance of the company. It also gives the
investment management of the group and also give a valuable insight about the board of
director's.
The auditor's report has discussed about the relationship of the external auditor’s report and
the report of the financial statements. It is good that the committee sits thrice in a year and
discuss about the modification and monitoring about the fiscal statements. It also discusses about
the disclosure and the accounting treatment which has to reviewed and the suggestion which are
made by the external auditor for engaging about the independence, effectiveness and objectivity
of the organisation. The audit committee was thereby satisfied by the independence of the
external auditor. It has concluded that the audit was effective and it scope was managed
appropriately (Gupta, Jha and Singh, 2021).
The annual report of the company is not effective in reading, as the presentation and font
of the report was not appropriate. The index was also not provided which can help the user to go
through it faster. The language tone of the report is positive and formal. It has elaborated and
also provided the noted for the financial statement, which can be beneficial for the decision –
makers to do an analysis. The graphs and the photos were also not provided which can give an
easy analysis in evaluating the performance and productivity of the company.
4. Compute the financial ratios of the company for the year 2020 and 2021.
Liquidity ratio -
 Current Ratio = Current Assets / Current Liabilities
For 2021 = 44668 / 2295 = 19.47: 1
For 2020 = 8818 / 1091 = 8.08: 1

Profitability ratio: The company is earning no revenue in both the year 2020 and 2021. So he
profitability and the productivity of the organisation cannot be calculated.
Solvency ratio -
 Debt to equity Ratio = Total debt / Shareholders funds
For 2021 = 29573 / 19485 = 1.52: 1
For 2020 = 1170 / 7648 = 0.15: 1
 Interest Coverage Ratio = Income before payment of interest / Interest
For 2021 = -16805 / 1651 = -10.17
For 2020, no interest has been paid by the company. So, for this year the ratio cannot be
calculated.
Activity ratio: The turnover ratios for both the years also cannot be calculated as the company
has made no sales and no purchases. So, it is not possible to calculate the ratios.
Valuation Ratios: These ratios cannot be calculated because the company has not [paid any
dividends the company suffered the losses in both the years.
5. Do a comparative analysis of the financial performance of the company.
The comparative analysis of Scancell Ltd. can be performed by evaluating the fiscal ratios
of the organisation from the previous years. By analysing the liquidity position of the company
through the current ratio, it can be analysed that the current assets of the company are way too
high comparative from the year 2020. The current ratio of 2020 is 19.47 and 2019 is 8.08. It
means that the existing assets of the company is very large than the current liability of both
years. It shows that the company is efficient enough to pay off its short – term debts. Further, the
profitability ratio evaluates the company’s efficiency to earn the benefits based on the revenue.
But, in the case of Scancell Ltd., it has no revenue, that is why it is incurring losses. It also
indicates that the company is insufficient in paying return to its shareholders. The solvency ratio
represents how the company is able of meet its debt obligations. The debt – to – equity ratio of
the enterprise of the year 2020 is 0.15 and for 2021 it is 1.52. It means that in 2019, the debt is
less than the total equity. It means the firm is showing a moderate result. The activity ratio of the
company cannot be calculated, because it has not earned any revenue and not done any purchase
through which the ratio can be calculated. The valuation ratio also cannot be calculated as it is
not earning any profit, even though it is it cannot pay off its dividend to its shareholders.

6. Comparative analysis of company with industry.
The Scancell holding is a big name in the biopharmaceuticals industry. But it is needs to amend
its strategy to earn revenue from it test and research conducted. The current ratio of the
biopharmaceuticals industry is approximately 13.87, which means that the company Scancell is
doing well comparative from the industry. The debt to equity ratio of the industry is 31.7 which
is so high. In this also the company is doing well in comparison from the industry as it has a ratio
of 1.52 in 2021. But the profitability ratio, solvency ratio, valuation, activity ratio cannot be
calculated of the company. But the industry is doing well and the company needs to focus and
revise the terms and policies of the company and focus on the financial reporting.
CONCLUSION
Based on the foregoing analysis, it can be stated that ratios play a critical part in determining
a company's market position. They also assist in identifying areas that require improvement or
special attention. Companies can assess their performance by comparing their results to those of
other companies in the same industry or to their own prior year ratios. From the analysis and the
ratios calculated above, it can be analysed that the company is suffering huge losses over the
years. So, it is recommended to not invest in the company, as it not efficient to pay off its debts
on time. Even it will be a high risk for the investor to invest in the organisation as it will not be
able to pay the dividends on the investments of the investors.

REFERENCES
Books and Journals
Altman, E.I. and et. al., 2017. Financial distress prediction in an international context: A review
and empirical analysis of Altman's Z‐score model. Journal of International Financial
Management & Accounting. 28(2). pp.131-171.
da Fonseca, J.S., 2020. Performance Ratios for Selecting International Portfolios: A Comparative
Analysis Using Stock Market Indices in the Euro Area. Available at SSRN 3567140.
Erin, O. and et. al., 2018. Does International Financial Reporting Standards (IFRS) Impact
Profitability Ratios of Listed Banks in Nigeria?. Journal of accounting, business and
finance research. 2(2). pp.79-90.
Gan, H., 2019. Does CEO managerial ability matter? Evidence from corporate investment
efficiency. Review of Quantitative Finance and Accounting. 52(4). pp.1085-1118.
Gunawardhana, C.S. and Damayanthi, M., 2020. Factors Influencing the Capital Adequacy
Ratios of Sri Lankan Banks-A Panel Data Analysis. Available at SSRN 3844279.
Gupta, S., Jha, B. and Singh, R.K., 2021. Decision making framework for foreign direct
investment: Analytic hierarchy process and weighted aggregated sum product
assessment integrated approach. Journal of Public Affairs. p.e.2771.
Lv, Y. and Yang, X., 2020, December. Research on grid precision investment strategy of grid
companies considering multidimensional economic and social factors. In 2020 IEEE 9th
Joint International Information Technology and Artificial Intelligence Conference
(ITAIC). (Vol. 9, pp. 128-132). IEEE.
Sun, J. and et. al., 2017. Dynamic financial distress prediction with concept drift based on time
weighting combined with Adaboost support vector machine ensemble. Knowledge-
Based Systems. 120. pp.4-14.