SalvaRxGroupplc

(“SalvaRx”,“theCompany”or“theGroup”)

FinalResultsChairman’sStatementI ampleased topresent the audited final results for SalvaRx. As a reminder, inMarch2016, SalvaRx Limitedbecameawhollyownedsubsidiaryof3Legsviaareversetakeover(“RTO”),aspartofourplantocreateamulti-productdrugdevelopmentportfoliocompanyfocusedoncancerimmunotherapy.3LegsalsochangeditsnametoSalvaRxGroupplc(“SalvaRx”)andwasre-admittedtotradingontheAlternativeInvestmentMarket(“AIM”)oftheLondonStockExchange(AIM:SALV),on22March2016.Sincethen,theteamhasexecuteduponitsstrategytogrowapipelineofnoveltreatmentsforcancer.Thecancerimmunotherapymarketcontinuestobearapidlygrowingtherapeuticarea.Asoftoday,therearefiveapprovedanti-PD1agentsintheUnitedStates.Thisisthefirsttimeintheoncologyfieldwherefiveofthelargecappharmacompanies(Pfizer,Merck,BMS,AstraZeneca,andRoche)arecompetingwithsimilardrugs.Giventhelackofdifferentiation,eachcompanyisstrivingtocreatenovelcombinationswithsecondagentstocompetewith one another. BMS is in the lead in this areawith their proprietary combination of Opdivo and Yervoy.Collectively,largecappharmacompaniesarerunninghundredsofotherstudieslookingatcombinationsofnewagentswiththeirPD1products.FormerBMSexecutivescreatedSalvaRxwithaspecificstrategytodevelopstateoftheartcombinationagentsforthesePD1productsandtoseekexitswiththesepharmacompaniesearlyon.SincetheRTO,SalvaRxhascontinueddeliveringitsmissionbyadvancingitsproductsintotheclinicandacquiringexcitingadditionalproductsintheimmunotherapysector.TheGrouphasreviewedhundredsofopportunities,andhasnowinvestedinfourexcitingplatformcompanieswhereitisactivelyhelpingdrivestrategyandexecution.Asofthepublishingofthisreport,SalvaRxportfoliocompanieshaveatotalofeightproductsindevelopmentwithoneintheclinic.Thisistrulyremarkablegiventhetotalcapitalinvestedandreflectscreativedealmakingandstrongutilisationofnon-dilutivecapital.The loss for the year ended 31 December 2016 was £2,445,000 (2015: £466,000). This reflects continuedinvestmentinresearchanddevelopmentof£693,000(2015:£260,000)andexceptionalcostsrelatedtotheRTOof£871,000.Sincetheyearend,theCompanyhasraised$3mintheformofloannotes,ofwhich$2mhascomefromGregBaileyandmyself.Thisadditionalfundingwillhelpustosupportourcurrentbusinessandaddselectivelytoourportfolio whenwe identify the right opportunities. It is our intention to provide further financial support ifrequired.Iamencouragedbytheprogressthathasbeenmadeandamconfidentthatfurtheradvanceswillbemadeinthecurrentfinancialyear. Itwillbequiteexcitingtotracktheperformanceofourtreatments inadvancedcancerpatients.Bythistimenextyear,manymorepatientswillbegivennewoptionstohelpcombattheirdisease.TheSalvaRxteamcontinuestoinnovateandseekouttheworld’sbesttechnologiestobringtocancerpatients.JimMellonNon-executiveChairman29June2017

Enquiries

SalvaRxGroupPLC

IanWalters(ChiefExecutive) Tel:+12034415451

NorthlandCapitalPartnersLimited

NominatedAdviserandBroker

Tel:+44(0)2038616625

MatthewJohnson/EdwardHutton(CorporateFinance)

JohnHowes(CorporateBroking)

PeterhouseCorporateFinanceLimited

JointBroker

LucyWilliams/DuncanVasey

Tel:+44(0)2074690932

CEO’sStrategicReportInitssecondyearofoperations,SalvaRxhascontinuedtoexecuteonitsstrategytogrowitspipelineofproductsandhelpdevelopinnovativemedicinesforthetreatmentofcancer.Thisreportcoversactivitybothduringtheperiodunderreviewandpostperiodendandhighlightsourabilitytoadvancedrugsthroughthedevelopmentandregulatoryprocesstobegintestingonhumans. Ultimatelyourgoal is tohelpasmanycancerpatientsaspossiblewithourmedicines,andwehavebeenabletogrowourinnovativepipelinetoeightproducts.Wearecontinuing to reviewnewopportunities aswell as interfacingwith big pharma companies to discuss possiblestrategiccollaborations.iOxTherapeutics(60.49%subsidiaryundertaking)iOxhasbeenprogressingitstwoproductsthroughpreclinicaldevelopmentandmanufacturing.AlthoughtherehavebeensomechallengeswiththemanufacturingprocessforleadproductIMM60,themanagementteamanditsexpertadvisershaveresolvedtheissuesandiOxisnowprogressingtolargescalemanufacturingforclinicaltrialuse. Therearemanyactivitiesgoingoninparalleltoenablethefirsthumanpatienttobetreatedinthenearfuture.In parallel, the PRECIOUS team, a consortium of academic experts from five leading European universities,continuestomakeprogressinthedevelopmentofoursecondproduct,IMM65,acombinationofIMM60withatumorvaccine(NY-ESO1).ThesedevelopmentactivitiesarefullyfundedthroughaHorizon2020grantwiththeresultbeingthatthereisscopetomakesignificantprogresswithnocosttoiOx.WeannouncedinAugust2016thatTheLudwigInstitutehasgrantediOxtherightstousetheirNY-ESO1cancervaccineonacommercialscale,ifthegrant-fundedclinicaltrialprovestheefficacyofthenewcombinationproduct.iOxcontinuestoprosecuteandprogressitspatentapplicationsandin2016,aUSpatentwasissuedforitsleadprogram.UnderUSPatentNumber9,365,496,IMM60iscoveredasastandalonetreatment,alongwithadditionalusesinaco-formulationwithatumourvaccineorgivenasacombinationtherapyalongsideanimmunomodulatoryagent,includingPD-1pathwayinhibitors.PD-1drugswerepartofthenewvanguardofcancertherapies,allowingthehuman immunesystemtofightcancer, insteadof traditionalchemical treatments,andtherearenowfiveapprovedanti-PD1therapies.iOx’sclinicalprogramsallexploretheiriNKTtechnologyaloneandincombinationwithananti-PD1agent.Itisourgoaltoimprovetheanti-tumorimmuneresponsebytargetingmanycomponentsoftheimmunesystem.IntensityTherapeutics($2millioninvestment,representing8.5%equity)IntensityhasbeenreleasingdataoverthepastyearatmultipleinternationalcongressesalongwithitspartnersattheNationalCancer Institute (adivisionof theNational InstitutesofHealth). Most importantly, thecompanysubmittedanapplicationtobegintestingitsleadproductINT230-6incancerpatientsinbothUnitedStatesandCanada.Intensityannouncedon30May2017thatithasstartedtotreatitsfirstpatientintheclinicaltrial.ThisisanexcitingmilestonewhichrepresentsthepositiveassessmentbytheFDAofresultsofthetrialscarriedoutonanimalsandtherelatedsafetyprocedures,andvalidatestheintegrityofIntensity’smanufacturingprocedures.NewActivitiesin2017Inordertocontinueexecutingourplanstoinvestandoperateotherexcitingopportunitiesinimmunotherapy,inMarch2017SalvaRxLimitedannouncedtheissueofadebtinstrumentforupto$5million.Todateapproximately$3millionhasbeenraised,andIamdelightedtoreportthecontinuingsupportoftwoofourdirectors,GregBaileyand JimMellon,whohaveeach subscribed for$1million. Inaddition, theCompanyeffecteda reorganizationwherebyallitsinterestswereintegratedunderSalvaRxLimited,anditisanticipatedthatthisstructurewillopenadditional avenues for fundraising in the future. Thenew investment into theCompanyhas alreadyenabledSalvaRxLimitedtocompletetwonewinvestments,namelyNekonalOncologyandRiftBiotherapeutics.NekonalOncology

InFebruary2017,weannouncedajointinvestmentwithNekonalSARL,calledNekonalOncology.NekonalwasfoundedbyaformerHarvardprofessorNalânUtku,MDwhowasexploringauniqueantibodyforautoimmunediseases.Latershediscoveredthattheoppositeantibodyheldpromiseforuseinoncologyindications.SalvaRxscientificandbusinessleadershiphasjoinedforceswithDr.UtkutostartNekonalOncologywithalicencetotwooncologyantibodies.Nekonalwasabletorecruitaveryseniorbiotechexecutive,JohnEdwards,chairmanoftwoothercancerimmunotherapycompaniestojointheboardofNekonalOncology.RiftBiotherapeuticsWeadvancedtoRiftBiotherapeuticsInc.(“Rift”)bywayofconvertiblenotestotalamountof$90,000betweenDecember 2016 and January 2017 and further invested $1million in March 2017 for an initial holding ofapproximately 30% in Rift. Rift has a lab in SanDiego California, and has brought the SalvaRx portfolio newcapabilitiesinantibodyengineering.ItsmanagementteamhasbeenstrengthenedbytheappointmentofBriggsMorrison,MDtotheboard.BriggsistheCEOofSyndax(NASDAQ:SNDX)andamanagingdirectorofMPMCapital,ahealthcare-focusedventurecapitalfirmandpreviouslyheldseniorpositionsatAstraZeneca,Pfizer’sandMerck.Rift develops novel antibodies which modulate numerous suppressive factors that exist in the tumormicroenvironment.ThereissomesynergyandpossibilityforcollaborationwiththeNekonalOncologyteam.Inadditiontotheinitialequityinvestment,SalvaRxhastheoptiontoinvestanadditional$1.5millionatthesamevaluationandtoacquirealltheoutstandingsharesofRiftfornewsharesinSalvaRxonthesamebasis.OutlookWeexpectthatour iOxsubsidiaryandinvestmentswillallcontinuetheirmanufacturingandpreclinicaltestingduringtherestoftheyear.WeareanticipatingiOxtostartnewclinicaltrialsin2018andwearealsoexpectingpreliminary clinical trial data from Intensity’shuman studies also in2018. At theSalvaRx corporate level,wecontinuetoidentifypotentialinvestmentsoracquisitions.Weexpecttogrowfurtherbyacquisition,investmentorlicensingarrangementsasweidentifynovelcancerimmunotherapies.Ourhardworkispayingoff,asadvancedcancerpatientscannowparticipateinclinicaltrialsofIntensity’sfirstproduct(INT230-6).Manypeoplearestillsufferingwiththeirdiseaseandhavelimitedoptionsfortreatment.Wearestrivingtoexpediteaccesstoournovelmedicinesbyworkingcloselywithhealthauthoritiesandinnovatinghowweprepareproductsforhumantesting.WebelievethatoverthenexttwoyearsSalvaRxwillseetherewardsoftheseefforts.Thankyouforyourcontinuedsupportaswetrytoimprovethecareforpeoplewithcancer.DrIanWaltersChiefExecutiveOfficer

29June2017

Directors’reportIntroductionTheDirectorspresenttheirreportandfinancialstatementsofSalvaRxGroupPLC(“theGroup”)fortheyearended31December2016.PrincipalactivityTheGroup’sprincipalactivityisthatofdrugdiscoveryanddevelopment,focusedonimmune-oncology.BusinessandfinancialreviewandfuturedevelopmentsTheplansforthefuturearesetoutintheChairman’sStatementandCEO’sStrategicReport.ResultsanddividendsTheGroup’slossfortheyearaftertaxation,netofnon-controllinginterestwas£2.10million(2015:lossof£0.4million).TheDirectorsdonotrecommendthepaymentofadividendfortheyear.Directors TheDirectorsoftheGroupthatservedduringtheyearandsubsequentlywereasfollows:JimMellon,Non-ExecutiveChairmanDrIanWalters,ChiefExecutiveOfficer(appointed22March2016)KamShah,ChiefFinancialOfficer(appointed22March2016)DrGregBailey,Non-ExecutiveDirectorRichardArmstrong,Non-ExecutiveDirectorColinWeinberg,Non-ExecutiveDirectorBiographicaldetailsofservingDirectorscanbefoundintheBoardofDirectorssection.AnnualGeneralMeetingandre-electionofDirectorsTheAnnualGeneralMeetingwillbeheldon31July2017.Directors’InterestsThe table below sets out theDirectors interests in theCompany’sOrdinary Shares, including their connectedpersons,togetherwithdetailsofoptionsheldbythedirectorsoverNewOrdinarySharesoftheCompany:

DirectorNumberofOrdinaryshares

Percentageofissued

sharecapital

NumberofOptions

ExercisePrice

NumberofoptionsiniOx*

Exerciseprice

£

JMellon 13,320,291 36.53% 86,230 23.2p - -

GBailey 13,320,291 36.53% 86,230 23.2p - -

IWalters - - 428,786 35.5p 389 120

KShah - - 364,666 35.5p 130 120

RArmstrong 64,635 0.18% 86,230 23.2p - -

RArmstrong - - 91,166 35.5p - -

CWeinberg 43,103 0.12% 86,230 23.2p - -

CWeinberg - - 91,166 35.5p - -

26,748,320 1,320,704 519 *iOxTherapeuticsLtdisasubsidiary,inwhichtheCompanyholds60.49%equity.Note:optionswithanexercisepriceof23.2pareexercisableatanytimeuntil16February2021.Optionswithanexercisepriceof35.5pareexercisableinthreeequalannualtranchesfrom22March2017,exceptsuchoptionsgrantedtoRichardArmstrongandColinWeinbergwhichareexercisableimmediatelyineventthattheystepdownfromtheBoardinduecourseontheappointmentofnewnon-executivedirectors.

TheinterestsofJimMelloninthetableaboveincludeOrdinarySharesintheCompanyheldbyPortErinBiopharmaInvestmentsLimitedandGallowayLimited.JimMellonholdscontrollinginterestsinthesecompanies.On21April2016,theCompanyissuedatotalofUS$1millionofzerocouponConvertibleLoanNotestoJimMellonandDr.GregBailey.TheLoanNoteshadatermofthreeyearsandwereconvertibleattheNoteholders’discretionatapriceof35.5pperOrdinaryshare.However,inFebruary2017,theentireloannoteliabilitywastransferredtoSalvaRxLimitedandtheNoteholdersagreedtoaccept4,000ordinarysharesofSalvaRxLimitedinfullsettlementoftheLoanNotes.Directors’insuranceandindemnityprovisionsSubjecttotheconditionssetoutintheIsleofManCompaniesAct2006andtheCompany’sArticlesofAssociation,theCompanyhasarrangedappropriateDirectors’insurancetoindemnifytheDirectorsagainstliabilityinrespectofproceedingsbroughtbythirdparties.TheannualcostofthecoverisnotmaterialtotheGroup.SignificantshareholdersOtherthantheDirectors’interestsshownabove,asat23June2017,theCompanyhadbeennotifiedthatthefollowingwereholdersof3%ormoreoftheCompany’sissuedOrdinarySharecapital: NumberofShares %Hon&CoHoldingsLimited 2,122,676 5.79

SharecapitalDetailsoftheissuedsharecapital,togetherwithdetailsofthemovementinissuedsharecapitalduringtheyear,areshowninnote20tothefinancialstatements.PrincipalrisksanduncertaintiesTheprincipalrisksfacedbytheCompanyandtheactionstakentomitigatethem,areshowninthetablebelow:

Risk/Description PrincipalmitigationIntellectualproperty:In common with other companies engaged inpharmaceuticaldevelopment,theCompanyfacestherisk that intellectual property rights necessary toexploititsresearchanddevelopmenteffortsmaynotbe adequately secured or defended. The Group’sintellectual property may also become obsolete,preventingcommercialexploitation.

The Company and its partners actively manage allintellectualproperty(IP)rights,engagingwithspecialiststo apply for and defend IP rights in appropriateterritories.

Researchanddevelopment:The Company may not generate further attractivedrug candidates and candidates already indevelopmentmayfailclinicaltrialsbecauseoflackofefficacy,unacceptablesideeffects,orinsurmountablechallengesinconductingstudiesadequatetosupportregulatoryapprovals.Practicalissues,suchasinabilityto devise acceptable formulations for products orinability to manufacture products at an acceptablecost, may also lead to failure of candidates indevelopment.

Theleadproductcandidatehassuccessfullycompletedacomprehensivepreclinicaldevelopmentprogrammeandthe safety and efficacy profile is well understood. Theclinicaltrialswillbedesignedbasedonthedatafromthedevelopmentprogrammecompletedtodate.

Risk/Description PrincipalmitigationRegulatory:Drug development is a highly regulated activitygoverned by different regulatory authorities indifferentjurisdictions.Itcanbedifficulttopredicttheexact requirements of different regulatory bodies.Decisions by regulators may lead to delays indevelopment and approval of drugs or lack ofmarketingauthorisationsinsomeorallterritories

The Company’s and its partners’ drug developmentteamsincludespecialistsinregulatoryaffairswhoconsultwith other experts to ensure that internal controlprocesses and clinical trial design meet currentregulatory requirements. The Company also engagesdirectlywithregulatoryauthoritieswhenappropriate.

Financial:ThesuccessfuldevelopmentoftheCompany’sassetsrequires financial investment which can come fromrevenues,commercialpartners,orinvestors.Failuretogenerate additional funding from these sourcesmaycompromise the Company’s ability to execute itsbusinessplansortocontinueinbusiness.

The Company has successfully partnered with theUniversityofOxford,whichwillconducttheclinicaltrialswithoutanychargetotheCompany.The Company has raised sufficient additionaldevelopment capital which is considered sufficient tofundcurrentplans.TheGroupoperatesrobustcontrolsoverexpendituresincludingbudgetingandauthorisationofindividualexpenditures.

Commercialandeconomic:The Company may be unable to effectivelycommercialise or license its products to partners ormaynotbeabletoexecutelicensingdealsthatprovidesignificant revenues. Development of alternativetechnologies or products may undermine theCompany’scapacitytogeneraterevenueflowingfromcommercialisationofitsassets.IftheCompany’sdrugsarecommercialised,theymaynotgeneratesignificantrevenuesiftheiruseandsaleisrestrictedbyregulatorsorbyfailureofhealthcarepayorstoprovideadequatereimbursementofdrugcosts.

The Company consults with commercial, clinical, andscientific experts to assess the payer and prescriberenvironment and the potential impact of competingproducts or changes in the economic landscapepertaining to hospital infections. The managementactively monitors performance of key competitors interms of pricing, market share, and prescribingbehaviour.

Operational:The Companymay not be able to recruit and retainappropriately qualified staff. Facilities and otherresourcesmaybecomeunavailable.

The Company’s recruitment processes are tailored toidentifyandattractthebestcandidatesforspecificroles.TheCompanyaimstoprovidecompetitiverewardsandincentives to staff and directors, and informallybenchmarksthelevelofbenefitsprovidedtoitspeopleagainstsimilarcompanies.

KeyPerformanceIndicatorsAtthisstage,thesuccessoftheGroupisdependentuponthesuccessoffutureclinicaltrials.Whentheoutcomesof these trialsareknown, ifandwhen theCompanymoves intoproduction, financial,operational,healthandsafetyandenvironmentalKPIswillbecomerelevantandbemeasuredandreportedaccordingly.PoliticaldonationsTherewerenopoliticaldonationsmadebytheGroupinthecurrentorprioryear.CharitabledonationsTherewerenocharitabledonationsmadebytheGroupinthecurrentorprioryear.GoingconcernTheDirectorshaveareasonableexpectationthattheGrouphasadequateresourcestocontinueinexistencefortheforeseeablefuture,basedonthecashraisedsubsequenttotheyear-end.Thisisexpectedtomeetthenexttwelvemonthsprojectionsoftheoperationalandresearchanddevelopmentactivitiestobecarriedout.

At31December2016,theGrouphadcashandcashequivalentsofapproximately£1.0million.Subsequenttothebalancesheetdate,theGroup’ssubsidiary,SalvaRxLimitedraisedapproximately£2.4million(US$3million)throughdebtfinancing.TheBoardhasevaluatedthecashflowandproposedbudgetandhasreachedtheconclusionthereissufficientfundingforthecurrentworkloadprojecteduntilJune2018.ThisbudgetincludessomeestimationoftheR&DtaxcreditsthatareavailabletotheGroup.Thereissomeminorriskastothetimingandtotalamountofthiscashflow,buttheboardhasconsideredtheavailabilityoffuturefunding,costdeferralandthatexistingshareholdershaveindicatedtheirintentiontoprovidefurtherfundingshouldthisberequired.Thatbeingsaid,majorcostsofdrugdevelopmentgoingforwardarecoveredbyexternalnon-dilutivefunding(collaborativeresearchagreementsandgrants).TheGroupbelievesthattheseavailableresourceswillbesufficienttomeetitscashrequirementsthroughtotheclinicaltrial,foritsoperational,portfolioexpansionthroughstrategicacquisitionsandinvestmentsinentitiesengagedinimmunotherapyandresearchanddevelopmentactivities.AstheGroupcontinuestoincurlosses,transitiontoprofitabilityisdependentuponachievingalevelofrevenuesadequatetosupporttheGroup’scoststructureandunless,anduntildoingso,intendstofundfutureoperationsthroughadditionaldebtorequityofferings.Therecanbenoassurance,however,thatadditionalfundingwillbeavailableontermsacceptabletotheGroup,ifatall.TheDirectorsthereforeconsideritappropriatetopreparethefinancialstatementsonagoingconcernbasis.PaymentofsuppliersItistheGroup’spolicythatpaymentstosuppliersaremadeinaccordancewithtermsandconditionsagreedbetweentheGroupanditssuppliers.Theaveragepaymentperiodforcreditorsfortheyearwas40days(2015:31days).PostbalancesheeteventsEventsafterthebalancesheetdatehavebeendisclosedinnote27tothefinancialstatements.StatementastodisclosureofinformationtotheauditorEachDirectorinofficeatthedateofthisreporthasconfirmed,asfarasheisaware,thatthereisnorelevantauditinformationofwhichtheauditorisunaware.EachsuchDirectorhasconfirmedthathehastakenallthestepsthatheoughttohavetakenasaDirectorinordertomakehimselfawareofanyrelevantauditinformationandtoestablishthattheauditorisawareofthatinformation.AuditorAresolutiontoreappointRSMUKAuditLLPasauditor,atafeetobeagreed,willbeproposedbytheBoard.TheDirectors’ReportwasapprovedbytheBoardofDirectorsandsignedonitsbehalfby:KamShahDirector29June2017

CorporateGovernanceStatementTheDirectorsrecognisetheimportanceoftheFinancialReportingCouncil’sUKCorporateGovernanceCode(compliancewithwhichisnotmandatoryforcompaniesadmittedtotradingonAIM)andintendtocomplywithitsprinciplessofarasispracticableandappropriategiventhenatureandsizeoftheCompanyandthesizeandconstitutionoftheBoard.TheDirectorsalsointendtocomplywiththeprinciplesoftheCorporateGovernanceGuidelinesforAIMCompaniespublishedbytheQuotedCompaniesAlliancein2010,totheextentthattheyconsideritappropriateandhavingregardtotheCompany’ssize,boardstructure,stageofdevelopmentandresources.TheDirectorsholdregularboardmeetingsandareresponsibleforformulating,reviewingandapprovingtheCompany’sstrategy,budgetandmajoritemsofcapitalexpenditure.Anauditcommittee,aremunerationcommitteeandanominationcommitteeareinplacewithformallydelegatedrulesandresponsibilities.Eachofthesecommitteesmeetsasandwhenappropriatesaveinthecaseoftheremunerationandauditcommitteeswhichmeetatleasttwiceeachyear.TheAuditCommitteecomprisesRichardArmstrong(Chairman),JimMellonandDrGregBailey.TheAuditCommittee,interalia,determinesandexaminesmattersrelatingtothefinancialaffairsoftheCompanyincludingthetermsofengagementoftheCompany’sauditorsand,inconsultationwiththeauditor,thescopeoftheaudit.ItreceivesandreviewsreportsfrommanagementandtheCompany’sauditorsrelatingtothehalfyearlyandauditedannualaccountsandtheaccountingandtheinternalcontrolsystemsinusethroughouttheEnlargedGroup.TheRemunerationCommitteecomprisesJimMellon(Chairman),RichardArmstrong,DrGregBaileyandColinWeinberg.TheRemunerationCommitteereviewsandmakesrecommendationsinrespectoftheDirectors’remunerationandbenefitspackages,includingshareoptionsandthetermsoftheirappointment.TheRemunerationCommitteealsomakerecommendationstotheBoardconcerningtheallocationofOptionsunderthePlan.TheNominationCommitteecomprisesColinWeinberg(Chairman),JimMellonandRichardArmstrong.TheNominationCommitteemonitorsthesizeandcompositionoftheBoardandtheotherBoardcommitteesandisresponsibleforidentifyingsuitablecandidatesforBoardmembership.

StatementofDirectors’ResponsibilitiesThedirectorsareresponsibleforpreparingtheDirectors’Reportandthefinancialstatementsinaccordancewithapplicablelawandregulations.Companylawrequiresthedirectorstopreparegroupfinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples.ThedirectorsarerequiredbytheAIMRulesoftheLondonStockExchangetopreparegroupfinancialstatementsinaccordancewithInternationalFinancialReportingStandards(“IFRS”)asadoptedbytheEuropeanUnion(“EU”).Thefinancialstatementsofthegrouparerequiredbylawtogiveatrueandfairviewofthestateofthegroup’saffairsattheendofthefinancialyearendandoftheprofitorlossofthegroupforthatperiodandarerequiredbyIFRSasadoptedbytheEUtopresentfairlythefinancialpositionofthegroupandthefinancialperformanceofthegroup.Inpreparingthestatements,thedirectorsshould:

• selectsuitableaccountingpoliciesandthenapplythemconsistently;• makejudgementsandaccountingestimatesthatarereasonableandprudent;• statewhethertheyhavebeenpreparedinaccordancewithIFRSadoptedbytheEU;and• preparethefinancialstatementsonagoingconcernbasisunlessitisinappropriatetopresumethatthe

groupwillcontinueinbusiness.

Thedirectorsareresponsibleforkeepingreliableaccountingrecordswhichcorrectlyexplainthegroup’stransactionsandenablethemtodetermine,withreasonableaccuracy,thefinancialpositionofthegroupatanytimeandallowfinancialstatementstobeprepared.Theyarealsoresponsibleforsafeguardingtheassetsofthegroupandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.ThedirectorsareresponsibleforthemaintenanceandintegrityofthecorporateandfinancialinformationincludedontheSalvaRxGroupPLCwebsite.LegislationinIsleofMangoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.

SALVARXGROUPPLCINDEPENDENTAUDITOR’SREPORTTOTHEMEMBERSOFSALVARXGROUPPLC

OpiniononfinancialstatementsWehaveauditedthegroupfinancialstatements(“thefinancialstatements”)whichcomprisetheConsolidatedStatementofComprehensiveIncome,ConsolidatedBalanceSheet,ConsolidatedCashFlowStatement,ConsolidatedStatementofChangesinEquityandtherelatednotes.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEuropeanUnion.Inouropinion,thefinancialstatements:• giveatrueandfairviewofthestateoftheGroup’saffairsasat31December2016andoftheGroup’sloss

fortheyearthenended;• havebeenproperlypreparedinaccordancewithIFRSsasadoptedbytheEuropeanUnion;and• havebeenproperlypreparedinaccordancewiththerequirementsoftheIsleofManCompaniesAct2006.OthermatterDuetotheapplicationofreverseacquisitionaccounting(asexplainedinnote3),theconsolidatedcomparativefiguresareunaudited.ScopeoftheauditofthefinancialstatementsAdescriptionofthescopeofanauditof financialstatementsarisingfromtherequirementsof InternationalStandards on Auditing (UK and Ireland) is provided on the Financial Reporting Council’s website athttp://www.frc.org.uk/auditscopeukprivateRespectiveresponsibilitiesofdirectorsandauditorAs more fully explained in the Directors’ Responsibilities Statement set out on page 13, the directors areresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview. Our responsibility is to audit and express an opinion on the financial statements in accordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’s(APB’s)EthicalStandardsforAuditors.We read the other financial and non-financial information contained in the annual report and consider theimplicationsforourreportifwebecomeawareofanymaterialinconsistencywiththefinancialstatementsorwithknowledgeacquiredbyusinthecourseofperformingtheaudit,oranymaterialmisstatementoffactwithintheotherinformation.Wealsoreadtheinformationinthedirectors'reportandconsidertheimplicationsforourreportifwebecomeawareofanymaterialinconsistencywiththefinancialstatements.Thisreportismadesolelyinaccordancewithsection80CoftheIsleofManCompaniesAct2006.Ourauditworkhasbeenundertakensothatwemightstatetothecompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthanthecompanyandthecompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

MICHAELTHORNTON(SeniorStatutoryAuditor)ForandonbehalfofRSMUKAUDITLLP,StatutoryAuditorCharteredAccountants2WhitehallQuayLeedsLS14HG29June2017

ConsolidatedStatementofComprehensiveIncomeFortheyearended31December2016

*Inaccordancewithnote3,andtheadoptionofreservetakeoveraccountingprinciples,comparativesarefortheconsolidatedresultsofSalvaRxLimited

Notes

Yearended31December

2016£’000

Unaudited

*6May2015to31

December2015£’000

Researchanddevelopment (693) (260)Exceptionalitems 7 (871) -Otheroperatingcosts (913) (221) Operatingloss 8 (2,477) (481) Financingincome 17 1 - Lossbeforetax (2,476) (481)Tax 11 31 15 Lossandcomprehensivelossfortheyear (2,445) (466) Lossandcomprehensivelossattributableto: Equityholdersoftheparent (2,038) (326)Non-controllinginterest (407) (140) ___________ __________ (2,445) (466) Lossperordinaryshare Basicanddiluted,pencepershare 12 (0.06p) (0.01p)

ConsolidatedBalanceSheetAsat31December2016

Notes

2016£’000

Unaudited2015*£’000

Assets Non-currentassets Investments 13 1,431 -Intangibleassets 14 1,184 1,366 2,615 1,266 Currentassets Tradeandotherreceivables 15 34 236Cashandcashequivalents 16 967 567 1,001 803 Totalassets 3,616 2,169 Liabilities Currentliabilities Tradeandotherpayables 18 (295) (244) (295) (244) Non-currentliabilities Equityoptiononconvertibleloan 17 (78) -Convertibleloannotes 17 (616) -Deferredtaxliabilities 11 (201) (232) ________ _________ (895) (232) ________ _________Totalliabilities (1,190) (476)

Netassets 2,426 1,693 Equity Sharecapital 20 911 155Sharepremiumaccount 22 - 52,533Reverseacquisitionreserve 23 3,065 (51,748)Ownshares 21 (215) -Share-basedpaymentreserves 24 382 25Accumulateddeficit (2,364) (326) Equityattributabletoequityholdersoftheparent 1,779 639Non-controllinginterests 647 1,054 _________ __________Totalequity

2,426

1,693

*Inaccordancewithnote3,andtheadoptionofreversetakeoveraccountingprinciples,comparativesarefortheconsolidatedfinancialpositionofSalvaRxLimited.

ThefinancialstatementsofSalvaRXGroupplcwereapprovedbytheBoardofDirectorsandauthorisedforissueon29June2017.Theyweresignedonitsbehalfby:

KamShahChiefFinancialOfficer

Notes1to27formpartofthesefinancialstatements.

ConsolidatedCashFlowStatementFortheyearended31December2016

Yearended31December

2016£'000

Unaudited*6May2015

to31December

2015£'000

Lossfortheyear (2,445) (466)

Adjustmentsfor: Deferredtaxation (31) (15)Amortisation 182 91Share-basedpayments 357 25Financecost (1) -Noncashexceptionalitems(note7) 563 -

Operatingcashflowsbeforemovementsinworkingcapital (1,375) (365)

Decrease/(increase)inreceivables 202 (237)

(Decrease)/increaseinpayables (332) 229

Cashusedinoperations (1,505) (373)

Taxationpaid - -

Netcashoutflowfromoperatingactivities (1,505) (373)

Investingactivities

Cashacquiredthroughreverseacquisition 2,564 -Purchaseoftradinginvestment (1,431) -

Netcashobtainedininvestingactivities 1,133 -

Financingactivities

Proceedsfromtheissueofsharecapital - 940

Proceedsonissueofconvertibleloannotes 760 -

Netcashfromfinancingactivities 760 940

Netincreaseincashandcashequivalents 388 567

Cashandcashequivalentsatbeginningofyear 567 -

Effectofexchangerateoncashflow 12 -

Cashandcashequivalentsatendofyear 967 567

*Inaccordancewithnote3,andtheadoptionofreversetakeoveraccountingprinciples,comparativesarefortheconsolidatedcashflowsofSalvaRxLimited.

ConsolidatedStatementofChangesinEquityFortheyearended31December2016

Equityattributabletoequityholdersoftheparent

Sharecapital(note20)

Sharepremium(note22)

Reverseacquisition

reserve(note23)

Ownshares(note21)

Share-based

paymentreserves

Accumulateddeficit Total

Non-controlling

interest

Totalequity

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000At1January2016 155

52,533 (51,748)

-

25

(326) 639

1,054

1,693

Netlossoftheyear - - - - - (2,038) (2,038) (407) (2,445)

Totalcomprehensiveincome - - - - - (2,364) (1,399) 647 (752)

Transactionswithownersintheircapacityasowners:

-Issueofequityforcash 136 1,813 (1,949) - - - - - - -Costofshareissue - (173) 173 - - - - - --Reverseacquisition 620

8,180 (5,764)

(215)

-

- 2,821

-

2,821

Cancellationofsharepremiumaccount - (62,353) 62,353 - - - - - - Sharebasedpaymentcharge - - - - 357 - 357 - 357

Totaltransactionswithownersintheircapacityasowners 756

(52,533) 54,813

(215)

357

- 3,178

-

3,178

At31December2016 911 - 3,065 (215) 382 (2,364) 1,779 647 2,426

Equityattributabletoequityholdersoftheparent

Sharecapital(note20)

Sharepremium(note22)

Reverseacquisition

reserve(note23)

Ownshares(note21)

Share-based

paymentreserves

Accumulateddeficit Total

Non-controlling

interest

Totalequity

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Balanceasat6May2015 155 52,533 (52,688) - - - - - - Netlossfortheperiod - - - - - (326) (326) (140) (466)

Totalcomprehensiveincome - - - - - (326) (326) (140) (466)

Transactionswithownersintheircapacityasowners:

-SharecapitalissuedbySalvaRxLimited - - 940 - - - 940 - 940-Non-controllinginterestarisingonacquisitionofiOxTherapeuticsLimited(note14) -

- -

-

-

- -

1,194

1,194-Share-basedpaymentcharge -

- -

-

25

- 25

-

25

Totaltransactionswithownersintheircapacityasowners -

- 940

-

25

- 965

1,194

2,159

At31December2015 155 52,533 (51,748) - 25 (326) 639 1,054 1,693

NotestotheconsolidatedfinancialstatementsFortheyearended31December2016

1 GeneralinformationSalvaRxGroupPLC(the‘Company’and,togetherwithitssubsidiaries,the‘Group’)isincorporatedintheIsleofMan,BritishIslesundertheIsleofManCompaniesAct2006.TheaddressoftheregisteredofficeisCommerceHouse,1BowringRoad,Ramsey,IsleofMan,BritishIsles,IM82LQ.On22March2016,theCompanyacquiredthe88.9%ofthesharecapitalofSalvaRxLimitednotalreadyownedbyitforaconsiderationof£8.8msatisfiedbytheissueof24,788,732NewOrdinaryShares.TheAcquisitionwasofsufficientsizetoconstituteareversetakeoverundertheAIMRulesandisaccountedforasareverseacquisitionin these financial statements (note3).As a result, SalvaRx Limited is anaccountingacquirer and comparativefiguresprovidedinthesefinancialstatementsarethoseofSalvaRxLimited.Inconjunctionwiththeabove,thenameoftheCompanywaschangedtoSalvaRxGroupPLC,theshareswereconsolidatedon thebasisof1newOrdinaryShare forevery100OrdinaryShares, and therewasaplacingof5,492,958newOrdinarySharesatapriceof35.5ppersharetoraise£1.95mbeforeexpenses.The principal activity of the Group is drug development, pre-clinical development with particular focus ondevelopingseriesofcompoundsforcancerimmunotherapy.Thesefinancialstatementsarepresentedinpoundssterling,whichistheGroup’sfunctionalandpresentationalcurrency,andallvaluesareroundedtothenearestthousands(£’000)exceptlossperordinaryshareandcertainfiguresinthenotes.2 AdoptionofnewandrevisedStandardsStandardsaffectingpresentationanddisclosureFor the preparation of these consolidated financial statements, the following newor amended standards aremandatoryforthefirsttimeforthefinancialyearbeginning1January2016:• AmendmentstoIAS1titledDisclosureInitiative(issuedinDecember2014)–Theamendments,applicableto

annual periods beginning on or after 1 January 2016, clarify guidance onmateriality and aggregation, thepresentationofsubtotals,thestructureoffinancialstatementsandthedisclosureofaccountingpolicies.TheamendmentshadnomaterialeffectontheGroup’sconsolidatedfinancialstatements.

• AmendmentstoIAS27titledEquityMethodinSeparateFinancialStatements(issuedinAugust2014)–The

amendments,applicabletoannualperiodsbeginningonorafter1January2016,reinstatetheequitymethodoptionallowingentitiestousetheequitymethodtoaccountforinvestmentsinsubsidiaries,jointventuresandassociates in their separate financial statements. This amendment has no effect on consolidated financialstatements.

• Amendment to IFRS 5 (Annual Improvements to IFRSs 2012–2014 Cycle, issued in September 2014) - The

amendment,applicableprospectivelytoannualperiodsbeginningonorafter1January2016,addsspecificguidancewhenanentityreclassifiesanasset(oradisposalgroup)fromheldforsaletoheldfordistributiontoowners,orviceversa,andforcaseswhereheld-for-distributionaccountingisdiscontinued.ThisamendmenthadnoeffectontheGroup’sconsolidatedfinancialstatements.

• Amendment to IFRS 7 (Annual Improvements to IFRSs 2012–2014 Cycle, issued in September 2014) - The

amendment, applicable to annual periods beginning on or after 1 January 2016, adds guidance to clarifywhetheraservicingcontractiscontinuinginvolvementinatransferredasset.TheamendmenthadnoeffectontheGroup’sconsolidatedfinancialstatements.

2 AdoptionofnewandrevisedStandards(continued)• AmendmentstoIFRS10,IFRS12andIAS28titledInvestmentEntities:ApplyingtheConsolidationException

(issuedinDecember2014)–Theamendments,applicabletoannualperiodsbeginningonorafter1January2016,clarifytheapplicationoftheconsolidationexceptionforinvestmententitiesandtheirsubsidiaries.The

amendmentshadnoeffectontheGroup’sconsolidatedfinancialstatements.

Atthedateofauthorisationofthefinancialstatements,thefollowingStandardsandInterpretationswhichhavenotbeenappliedinthefinancialstatementswereinissuebutnotyeteffective(andinsomecaseshadnotyetbeenadoptedbytheEU):• Amendments to IAS7 titledDisclosure Initiative (issued in January2016)–Theamendments,applicable to

annualperiodsbeginningonorafter1January2017.• AmendmentstoIAS12titledRecognitionofDeferredTaxAssetsforUnrealisedLosses(issuedinJanuary2016)

–Theamendments,applicabletoannualperiodsbeginningonorafter1January2017.• AmendmentstoIFRS2titledClassificationandMeasurementofShare-basedPaymentTransactions(issuedin

June2016)-Theamendments,applicabletoannualperiodsbeginningonorafter1January2018.• IFRS 9 Financial Instruments (issued in July 2014) – This standardwill replace IAS 39 (and all theprevious

versionsofIFRS9)effectiveforannualperiodsbeginningonorafter1January2018.• AmendmentstoIFRS10andIAS28titledSaleorContributionofAssetsbetweenanInvestoranditsAssociate

orJointVenture(issuedinSeptember2014).Theeffectivedateoftheamendments, initiallysetforannualperiods beginning on or after 1 January 2016, is now deferred indefinitely but earlier application is stillpermitted.

• IFRS15RevenuefromContractswithCustomers(issuedinMay2014andamendedforclarificationsinApril2016)-Thenewstandard,effectiveforannualperiodsbeginningonorafter1January2018,replacesIAS11,IAS18andtheirinterpretations.

• IFRS16Leases(issuedinJanuary2016)-Thenewstandard,effectiveforannualperiodsbeginningonorafter1January2019,replacesIAS17anditsinterpretations.

TheDirectorsdonotexpectthattheadoptionoftheseStandardsorInterpretationsinfutureperiodswillhaveamaterialimpactonthefinancialstatementsoftheGroup.3 ReverseacquisitiontransactionOn30September2015,theCompanyacquired11.14%oftheissuedsharecapitalofSalvaRxLimited(“SalvaRx”),aprivatecompanyincorporatedintheBritishVirginIslands.On22March2016,theCompanyacquiredtheremaining issuedsharecapitalofSalvaRxby issuing24,788,732ordinarysharesoftheCompany.

AlthoughthetransactionresultedinSalvaRxbecomingawhollyownedsubsidiaryoftheCompany,thetransactionconstitutes a reverse acquisition in asmuch as the shareholders of SalvaRxowna substantialmajority of theoutstandingordinarysharesoftheCompanyandfouroutofsixmembersoftheBoardofDirectorsoftheCompanyareSalvaRxshareholdersandmanagement.

Insubstance,theshareholdersofSalvaRxacquiredacontrollinginterest intheCompanyandthetransactionhasthereforebeenaccountedforasareverseacquisitioninaccordancewithguidanceprovidedinIFRS2Share-basedpaymentandIFRS3BusinessCombinations.AstheCompanypreviouslydiscontinueditsinvestmentactivitiesandwasengagedinacquiringSalvaRxandraisingequityfinancingtoprovidetherequiredfundingfortheoperationsoftheproposedacquisitionandre-listingonAIM,itdidnotmeetthedefinitionofabusinessaccordingtothedefinitioninIFRS3.Accordingly,thisreverseacquisitiondoesnotconstituteabusinesscombinationandinaccordancewithIFRICguidancethedifferencebetweentheequityvaluegivenupbytheSalvaRxshareholdersandtheshareofthefairvalueofnetassetsgainedbytheSalvaRxshareholdersischargedtothestatementofcomprehensiveincomerepresentingthecostofacquiringanAIMquotedlisting.Inaccordancewithreverseacquisitionaccountingprinciples,theseconsolidatedfinancialstatementsrepresentacontinuationoftheconsolidatedfinancialstatementsofSalvaRxandinclude:a. TheassetsandliabilitiesofSalvaRxandiOxTherapeuticsLimited(its60.49%ownedsubsidiaryacquiredon24

June2015)(“iOx”)attheirpre-acquisitioncarryingamountsandtheirresultsforbothperiods;andb. Theassetsand liabilitiesof theCompanyasat31December2016and it’s results from23March2016to31

December2016,

ThefairvalueofnetassetsoftheCompanyacquiredbySalvaRxwasasfollows: £’000 Cash 2,564Otherassets 14Liabilities (309) 2,269

ThedeemedcostoftheacquisitionrepresentsthedifferencebetweenthefairvalueoftheshareholdinggivenupbySalvaRxLimitedshareholdersandtheshareofthefairvalueoftheassetsandliabilitiesoftheCompanygainedbythoseshareholders.Whilstthedeemedcostofacquisitionisrecordedinequity,thesharecapitalandsharepremiummustreflectthatoftheCompanyandthereforethedifferencearisingisrecordedinthereverseacquisitionreserve(note23).Consequently,basedonanassessmentofthepurchaseconsiderationforan88.9%holdinginSalvaRxof£8.8m,thedeemedcostoftheacquisitionoftheCompanybySalvaRxis£2,832,000.Thedifferencebetweenthisdeemedcostandthefairvalueofthenetassetsacquired(above)of£563,000hasbeenexpensedinaccordancewithIFRS2,Sharebasedpayments,reflectingtheeconomiccosttotheSalvaRxshareholdersofacquiringaquotedentity.Givenitssignificance,thiscosthasbeentreatedasanexceptionalitem(note7).Atthepointofacquisition,thenetassetsofthecompanyincludeda£215,000investmentinSalvaRxLimited.AsSalvaRxLimitedistheacquirerunderreverseaccountingprinciples,thisinvestmenthasbeentreatedasapurchaseofownsharesandrecordedinequity(note21).4 SummaryofsignificantaccountingpoliciesBasisofaccountingThe financial statements have been prepared in accordancewith International Financial Reporting Standards(“IFRSs”)as issuedby the InternationalAccountingStandardsBoard (“IASB”)andasadoptedby theEuropeanUnion(“EU”),andthereforetheGroupfinancialstatementscomplywithArticle4oftheEUIASRegulation.Thefinancialstatementshavebeenpreparedonthehistoricalcostconventionbasisexceptfortherevaluationofcertain financial instruments. Historic cost is generally based on the fair value of the consideration given inexchangefortheassets.Theprincipalaccountingpoliciesadoptedaresetoutbelow.GoingconcernTheGroup’sbusinessactivities,togetherwiththefactorslikelytoaffectitsfuturedevelopmentandposition,aresetoutintheDirectors’Report.TheconsolidatedfinancialstatementsofthegrouphavebeenpreparedonabasiswhichassumesthattheGroupwillcontinueasagoingconcern,whichcontemplatestherealisationofassetsandsatisfactionofliabilitiesandcommitmentsinthenormalcourseofbusiness.At31December2016,theGrouphadcashandcashequivalentofapproximately£1.0million.Subsequenttothebalance sheetdate, theGroup’s subsidiary, SalvaRxLimited raisedapproximately£2.4million (US$3.0million)throughdebtfinancing.TheBoardhasevaluatedthecashflowandproposedbudgetandhasreachedtheconclusionthereissufficientfundingforthecurrentworkloadprojecteduntilJune2018.ThisbudgetincludessomeestimationoftheR&DtaxcreditsthatareavailabletotheGroup.Thereissomeminorrisktothetimingandtotalamountofthiscashflow,buttheboardhasconsideredtheavailabilityoffuturefunding,costdeferralandthatexistingshareholdershaveindicatedtheirintentiontoprovidefurtherfundingshouldthisberequired.Thatbeingsaid,majorcostsofdrugdevelopmentgoingforwardarecoveredbyexternalnon-dilutivefunding(collaborativeresearchagreementsandgrants).TheGroupbelievesthattheseavailableresourceswillbesufficienttomeetitscashrequirementsthroughtotheclinical trial, for its operational, portfolio expansion through strategic acquisitions and investments in entitiesengagedinimmunotherapyandresearchanddevelopmentactivities.

AstheGroupcontinuestoincurlosses,transitiontoprofitabilityisdependentuponachievingalevelofrevenuesadequatetosupporttheGroup’scoststructureandunlessanduntildoingso,intendstofundfutureoperationsthroughadditionaldebtorequityofferings.Therecanbenoassurance,however,thatadditionalfundingwillbeavailableontermsacceptabletotheGroup,ifatall.BasisofconsolidationTheconsolidatedfinancialstatementsincorporatethefinancialstatementsoftheCompanyandentitiescontrolledbytheCompany(itssubsidiaries)madeupto31Decembereachyear.ControlisachievedwheretheCompanyhasthepowertogovernthefinancialandoperatingpoliciesofan investeeentitysoastoobtainbenefitsfromitsactivities.The results of subsidiaries acquired or disposed of during the year are included in the consolidated incomestatementfromtheeffectivedateofacquisitionoruptotheeffectivedateofdisposal,asappropriate.Wherenecessary,adjustmentsaremadetothefinancialstatementsofsubsidiariestobringaccountingpoliciesusedintolinewiththoseusedbytheGroup.Allintra-Grouptransactions,balances,incomeandexpensesareeliminatedonconsolidation.TheseconsolidatedfinancialstatementsincludetheaccountsoftheCompanyand:i. SalvaRxLimited,(“SalvaRx”)incorporatedon6May2015intheBritishVirginIslands.SalvaRxisawhollyowned

subsidiaryoftheCompany.ii iOxTherapeuticsLimited(“iOx”)incorporatedintheU.K.asaprivatecompany(CompanyNumber9430782)

undertheCompaniesAct2006on10February,2015.SalvaRxholds60.49%equityiniOx.Theseconsolidatedfinancialstatementshavebeenpreparedusingreverseacquisition,asdetailedinnote3.SignificantaccountingpoliciesResearchandDevelopmentExpenses(i) ResearchanddevelopmentExpenditureonresearchactivities,undertakenwiththeprospectofgainingnewscientificortechnicalknowledgeandunderstanding,isrecognisedinprofitorlossasincurred.Developmentactivitiesinvolveaplanordesignfortheproductionofneworsubstantiallyimprovedproductsandprocesses.Developmentexpendituresare capitalisedonly ifdevelopment costs canbemeasured reliably, theproduct or process is technically and commercially feasible, future economic benefits are probable, and theCompany intends to, and has sufficient resources to, complete development and to use or sell the asset.Nodevelopmentcostshavebeencapitalisedtodate.Researchanddevelopmentexpensesincludealldirectandindirectoperatingexpensessupportingtheproductsindevelopment(ii) SubsequentexpenditureSubsequent expenditure is capitalized only when it increases the future economic benefits embodied in thespecificassettowhichitrelates.Allotherexpendituresarerecognizedinprofitorlossasincurred.(iii) ClinicaltrialexpensesClinicaltrialexpensesareacomponentoftheCompany’sresearchanddevelopmentcosts.Theseexpensesincludefeespaid to contract researchorganizations, clinical sites, andotherorganizationswho conductdevelopmentactivitiesontheCompany’sbehalf.Theamountofclinicaltrialexpensesrecognizedinaperiodrelatedtoclinicalagreementsarebasedonestimatesoftheworkperformedusinganaccrualbasisofaccounting.Theseestimatesincorporatefactorssuchaspatientenrolment,servicesprovided,contractualterms,andpriorexperiencewithsimilarcontracts.(iv) GovernmentgrantsGovernmentgrantsrelatetofinancialgrantsfromgovernments,publicauthorities,andsimilarlocal,nationalorinternationalbodies.ThesearerecognisedwhenthereisareasonableassurancethattheCompanywillcomplywiththeconditionsattachingtothem,andthatthegrantwillbereceived.Governmentgrantsrelatingtoresearchanddevelopmentareoff-setagainsttherelevantcosts.

BusinessCombinationsTheCompanyapplies the acquisitionmethod to account for all acquiredbusinesses,whereby the identifiableassetsacquiredandtheliabilitiesassumedaremeasuredattheiracquisition-datefairvalues(withfewexceptionsasrequiredbyIFRS3BusinessCombinations).Theconsiderationtransferredinabusinesscombinationismeasuredatfairvalue,whichiscalculatedasthesumoftheacquisition-datefairvaluesoftheassetstransferred,theliabilitiesincurredandtheequityinterestsissuedbytheCompany.Acquisition-relatedcosts(e.g.finder’sfees,consultingfees,administrativecosts)arerecognizedasexpensesintheperiodsinwhichthecostsareincurredandtheservicesarereceived.Onacquisitiondate,goodwillismeasuredas theexcessof theaggregateofconsideration transferred,anynon-controlling interests in theacquiree,andacquisition-date fair value of the Company's previously held equity interest in the acquiree (if businesscombinationachievedinstages)overthenetoftheacquisition-dateamountsoftheidentifiableassetsacquiredandtheliabilitiesassumed.If,afterappropriatereassessment, theamountascalculatedabove isnegative, it is recognized immediately inprofitorlossasabargainpurchasegain.Atacquisitiondate,non-controllinginterestsintheacquireethatarepresentownershipinterestsandentitletheirholderstoaproportionateshareoftheentity'snetassetsintheeventofliquidationaremeasuredateitherfairvalueor thepresentownership instruments’proportionateshare in the recognizedamountsof theacquiree'sidentifiable net assets. This choice ofmeasurement ismade separately for each business combination.Othercomponents of non-controlling interests are measured at their acquisition-date fair values, unless otherwiserequiredbyIFRS.The acquisition-date fair value of any contingent consideration is recognised as part of the considerationtransferredbytheCompanyinexchangefortheacquiree.Changesinthefairvalueofcontingentconsiderationthatresultfromadditionalinformationobtainedduringthemeasurementperiod(maximumoneyearfromtheacquisitiondate)aboutfactsandcircumstancesthatexistedattheacquisitiondateareadjustedretrospectivelyagainstgoodwill.IntangibleAssetsAcquiredinbusinesscombinationsIntangible assets acquired in a business combination and recognised separately from goodwill are initiallyrecognisedattheirfairvalueattheacquisitiondate(whichisregardedastheircost).Subsequenttoinitialrecognition,intangibleassetsacquiredinabusinesscombinationarereportedatcostlessaccumulatedamortisationandaccumulated impairment loses,on the samebasisas intangibleassets thatareacquiredseparately.ForeigncurrenciesTheindividualfinancialstatementsofeachGroupcompanyarepresentedinthecurrencyoftheprimaryeconomicenvironment in which it operates (its functional currency). For the purpose of the consolidated financialstatements,theresultsandfinancialpositionofeachGroupcompanyareexpressedinpoundsterling,whichisthefunctionalcurrencyoftheCompany,andthepresentationcurrencyfortheconsolidatedfinancialstatements.In preparing the financial statements of the individual companies, transactions in currencies other than thefunctionalcurrencyofeachGroupcompany(“foreigncurrencies”)arerecordedinthefunctionalcurrencyattheratesofexchangeprevailingonthedatesofthetransactions.Ateachbalancesheetdate,monetaryassetsandliabilities thataredenominated in foreigncurrenciesare retranslated into the functionalcurrencyat theratesprevailingonthebalancesheetdate.Non-monetaryassetsandliabilitiescarriedatfairvaluethataredenominatedinforeigncurrenciesaretranslatedattheratesprevailingatthedatewhenthefairvaluewasdetermined.Non-monetaryitemsthataremeasuredintermsofhistoricalcostinaforeigncurrencyarenotretranslated.Forthepurposeofpresentingconsolidatedfinancialstatements,theassetsandliabilitiesofthegroup’sforeignoperationsaretranslatedatexchangeratesprevailingonthebalancesheetdate.Incomeandexpenseitemsaretranslatedattheaverageexchangeratesfortheperiod,unlessexchangeratesfluctuatesignificantlyduringtheperiod,inwhichcasetheexchangeratesatthedateoftransactionsareused.Exchangedifferencesarising,ifany,arerecognisedinothercomprehensiveincomeandaccumulatedinequity(attributedtonon-controllinginterestasappropriate).

TaxationThetaxexpenserepresentsthesumofthetaxcurrentlypayableanddeferredtax.Thetaxcurrentlypayableisbasedontaxableprofitfortheyear.Taxableprofitdiffersfromnetprofitasreportedintheincomestatementbecauseitexcludesitemsofincomeorexpensethataretaxableordeductibleinotheryears,anditfurtherexcludesitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeenenactedorsubstantivelyenactedbythebalancesheetdate.Deferredtaxisthetaxexpectedtobepayableorrecoverableondifferencesbetweenthecarryingamountsofassets and liabilities in the financial statements and the corresponding tax bases used in the computation oftaxableprofit,andisaccountedforusingthebalancesheetliabilitymethod.Deferredtaxliabilitiesaregenerallyrecognisedforalltaxabletemporarydifferences,anddeferredtaxassetsarerecognisedtotheextentthatit isprobablethattaxableprofitswillbeavailableagainstwhichdeductibletemporarydifferencescanbeutilised.Suchassetsandliabilitiesarenotrecognisedifthetemporarydifferencearisesfromtheinitialrecognitionofgoodwill,orfromtheinitialrecognition(otherthaninabusinesscombination)ofotherassetsandliabilitiesinatransactionthataffectsneitherthetaxprofitnortheaccountingprofit.Deferredtaxliabilitiesarerecognisedfortaxabletemporarydifferencesarisingoninvestmentsinsubsidiariesandassociates,andinterestsinjointventures,exceptwheretheGroupisabletocontrolthereversalofthetemporarydifferenceanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.Thecarryingamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatit is no longer probable that sufficient taxable profitswill be available to allow all or part of the asset to berecovered.Deferredtaxiscalculatedatthetaxratesthatareexpectedtoapplyintheperiodwhentheliabilityissettledortheassetisrealised.Deferredtaxischargedorcreditedintheincomestatement,exceptwhenitrelatestoitemschargedorcrediteddirectlytoequity,inwhichcasethedeferredtaxisalsodealtwithinequity.DeferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandwhentheyrelatetoincometaxesleviedbythesametaxationauthorityandtheGroupintendstosettleitscurrenttaxassetsandliabilitiesonanetbasis.FinancialinstrumentsRecognitionoffinancialassetsandfinancialliabilitiesFinancialassetsandfinancial liabilitiesarerecognisedontheGroup’sbalancesheetwhentheGroupbecomespartytothecontractualprovisionsoftheinstrument.DerecognitionoffinancialassetsandfinancialliabilitiesTheGroupderecognisesafinancialassetonlywhenthecontractualrightstocashflowsfromtheassetexpire,orit transfers the financialassetandsubstantiallyall therisksandrewardsofownershipof theasset toanotherentity.IftheGroupneithertransfersnorretainssubstantiallyalltherisksandrewardsofownershipandcontinuestocontrolthetransferredasset,theGrouprecognisesitsretainedinterestintheassetandanassociatedliabilityfortheamountitmayhavetopay.TheGroupderecognisesfinancialliabilitieswhentheGroup’sobligationsaredischarged,cancelledorexpired.Financialassetsa)Investments-AvailableforsalefinancialassetsAFS financial assets are non-derivatives that are not classified as loans and receivables, held-to-maturityinvestmentsorfinancialassetsatfairvaluethroughprofitorloss.TheGroup’sAFSinvestmentdoesnothaveaquotedmarketpriceinanactivemarketandtheDirectorsareoftheopinionthatfairvaluecannotbereliablybemeasured.Theinvestmentisthereforemeasuredatcost,lessanyidentifiedimpairmentloss.b)LoansandreceivablesTradeandotherreceivablesTradeandotherreceivablesaremeasuredatinitialrecognitionatfairvalue,andaresubsequentlymeasuredatamortisedcostlessanyprovisionforimpairment.

CashandcashequivalentsCashandcashequivalentscomprisecash inhandandon-demanddeposits,andothershort-termhighly liquidinvestments that are readily convertible to a known amount of cashwith threemonths or less remaining tomaturityandaresubjecttoaninsignificantriskofchangesinvalue.FinancialliabilitiesTradeandotherpayablesTradepayablesareinitiallymeasuredatfairvalue,andaresubsequentlymeasuredatamortisedcost,usingtheeffectiveinterestratemethod.ConvertibleloannotesThe component parts of compound instruments (convertible loan notes) issued by the Group are classifiedseparatelybetweentheloanandequityoptionelements.TheGrouphasoneconvertibleloannoteinissuewhichisdenominatedinacurrencydifferenttothecurrencyoftheequityoptionandaccordinglyatinceptiontheequityoptionistreatedasanembeddedderivativeandrecordedatfairvalueasafinancialliability(the“equityoption”)andthefairvalueoftheinstrumentasawholelessthevalueoftheequityoptionisrecordedasafinancialliability(the“loanelement”).Atsubsequentbalancesheetdatesthefairvalueoftheequityoptionisremeasuredwithmovementsinfairvaluebeingrecordedintheincomestatement.Theloanelementisrecordedatamortisedcostandissubjecttoanotionalinterestchargeineachreportingperiodwhichisrecordedintheincomestatement.Share-basedpaymentsTheGrouphasappliedtherequirementsofIFRS2Share-basedPaymentforallgrantsofequityinstruments.TheGroupoperates an equity-settled share optionplan to certain shareholders. The fair valueof the servicereceivedinexchangeforthegrantofoptionsandwarrantsisrecognisedasanexpense.Equity-settledshare-basedpaymentsaremeasuredatfairvalue(excludingtheeffectofnon-marketbasedvestingconditions)atthedateofgrant.Thefairvaluedeterminedatthegrantdateofequity-settledshare-basedpaymentisexpensedonagradedvesting basis over the vesting period, based on the Group’s estimate of shares that will eventually vest andadjustedfortheeffectofnon-marketbasedvestingconditions.FairvalueismeasuredbyuseoftheBlack-Scholesmodel.Theexpectedlifeusedinthemodelshasbeenadjusted,basedonmanagement’sbestestimate,fortheeffectsofnon-transferability,exerciserestrictions,andbehaviouralconsiderations.SegmentalreportingOperating segments are reported in a manner consistent with the internal reporting provided to the chiefoperatingdecisionmaker.Thechiefoperatingdecisionmaker,who is responsible forallocating resourcesandassessingperformanceoftheoperatingsegmentsandmakingstrategicdecision,hasbeenidentifiedastheBoardofDirectors.5 CriticalaccountingjudgementsandkeysourcesofestimationanduncertaintyIntheapplicationoftheGroup’saccountingpolicies,whicharedescribedinnote4,theDirectorsarerequiredtomakejudgements,estimatesandassumptionsaboutthecarryingamountsoftheassetsandliabilitiesthatarenotreadilyapparentfromothersources.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandotherfactorsthatareconsideredtoberelevant.Actualresultsmaydifferfromtheseestimates.Theestimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiodorintheperiodoftherevisionandfutureperiodsiftherevisionaffectsboththecurrentandfutureperiods.ThefollowingarethecriticaljudgementsandestimationsthattheDirectorshavemadeintheprocessofapplyingthe Group’s accounting policies and that have the most significant effect on the amounts recognised in thefinancialstatements:Convertibleloannotes(note17)Theconvertiblenoteshaveanembeddedderivativeintheformofequityconversionrights.Thefairvalueofderivativesisdeterminedbyusingappropriatevaluationtechniquesandinputstothemodel.TheGrouphasdeterminedthatitisappropriatetousetheBlack-Scholesmodeforthisoptiongiventhattheinstrumenthasbeenconvertedaftertheyearendon2March2017.Thekeyassumptionsmadeindrawingthisconclusionrelatetoforeignexchangeandtimetoexercise.Furtherdetailsaresetoutinnote17.

Share-basedpaymentsTheGrouphasanequity-settledshareoptionschemeavailabletocertainDirectorsandconsultants.Inaccordancewith IFRS2Share-basedpayment, indeterminingthe fairvalueofoptionsgranted, theGrouphasappliedtheBlack-Scholesmodel.Asaresult,theGroupmakesassumptionsforexpectedvolatilityandexpectedlife.Thefairvalueofoptionsgrantedintheyearsreportedisshowninnote24.6 BusinessandgeographicalsegmentsThroughouttheyear,theDirectorsconsidertheretobeonlyonebusinessandoperatingsegmentfromcontinuingoperations,namelyresearchanddevelopment.TheGrouphasnorevenueandthereforenogeographicalanalysisispresented.7 Exceptionalitems

Yearended

31December2016

£’000

Unaudited6May2015

to31December

2015£’000

Excessofdeemedcostoverfairvalueofassetsacquiredunderreversetakeovertransaction(Note3)

(563)

-

Legalandotherprofessionalfeesrelatingtoreversetakeovertransaction (308) - (871) - 8 OperatinglossTheoperatinglosshasbeenarrivedatafter(crediting)/charging:

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

Researchanddevelopmentcosts 693 260Amortisationofintangibleassets 182 91Staffcosts(note10) 203 80Share-basedpayments(note24) 357 25Auditfees(note9) 37 -Netforeignexchange(gains)/losses (95) 1

9 Auditor’sremuneration

AmountspayabletoRSMUKAuditLLPanditsassociatesinrespectofbothauditandnon-auditservices:AmountspayabletoRSMUKAuditLLPandit’sassociates

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

Auditfees FeespayabletotheGroup’sauditorforthestatutoryauditoftheGroup’sannualaccounts

29

-

Feespayabletothegroup’sauditorforthestatutoryauditofsubsidiaryundertakings

8

-

Totalauditfees 37 - Non-auditfees Taxservices 2 -Otherassuranceservices - - Totalnon-auditfees 2 -

10 Staffcosts

Theaveragemonthlynumberofemployeesandseniormanagement(includingExecutiveDirectors)was:

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

Non-executiveDirectors 4 2ExecutiveDirectorsofGroupcompanies 2 - 6 2

Theaggregateremunerationcomprised:

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

Salariesandconsultingfee 203 80Share-basedpayments(note24) 138 25Non-Executivedirectorsfee 52 - 393 105

Directorsremuneration(allrepresentingfees)

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

JMellon(from22March2016) 8 -GBailey(from22March2016) 8 -RArmstrong(from22March2016) 26 -CWeinberg(from22March2016) 26 -IWalters(from1January2016) 220 -KShah(from22March2016) 105 - 393 -

DetailsofsharesandoptionsheldbytheDirectorsaredisclosedintheDirectors’report.

11 TaxThetaxcreditfortheyearof£31,000(2015:£15,000)relatesentirelytothereleaseofdeferredtaxliabilitiesinrespectofintangibleassets.ThetaxassessedfortheyearisatthestandardrateofcorporationtaxintheIsleofManof0%(2015:0%)andiscalculatedasfollows:

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

Lossonordinaryactivitiesbeforetax (2,476) (481) Lossonordinaryactivitiesbythestandardrateoftax - -Foreigntax - -Releaseofdeferredtaxrelatedtosubsidiariesoperatinginotherjurisdictions (31) (15)

Taxcreditfortheyear (31) (15) TheCompany’ssubsidiary,iOXTherapeuticsltd(“IOX”)issubjecttotaxintheUK.Thereisnotaxchargeforthereportingperiodsduetolosses.

IOXhaspotentialresearchanddevelopmentcashcreditsofapproximately£244,000consistingof£53,000for2015and£191,000for2016.ThecreditswillberecognisedwhentheyareacceptedbytheUKtaxauthorities,giventhatthesearethefirstclaimsmadebythecompany.DeferredTaxationAsat31December2016,iOxtaxlosseswereapproximately£1,045,000(2015:£54,000).Taxlosseswillbecarriedforward and are potentially available for utilisation against taxable profits in future years. The Group has notrecognisedadeferredtaxassetinrespectofthesetaxlossesasthereisinsufficientevidenceofsuitablefutureprofitbeingavailableagainstwhich these lossescanbeoffset.Theassetwillbe recognised in futureperiodswhen itsrecovery(againstappropriatetaxableprofits)isconsideredprobable.At31December2016theGrouphadadeferredtaxliabilityof£201,000(2015:£232,000)recognisedinrespectofintangibleassetsarisingontheacquisitionofiOx.TheintangibleassetrelatestoinprocessresearchresidingintheUKandthereforedeferredtaxhasbeenrecordedat17%beingtherateapplicableinthatcountry.TheGrouphasnootherprovidedorunprovideddeferredtaxliabilities.Thereductionintheliabilityintheyearof£31,000(2015:£15,000)hasbeenrecordedinfullintheincomestatement

12 LossperOrdinaryShare

Basic lossperOrdinaryShare iscalculatedbydividingthenet loss for theyearattributabletoOrdinaryequityholders of the parent by theweighted average number of Ordinary Shares outstanding during the year. ThecalculationofthebasicanddilutedlossperOrdinaryShareisbasedonthefollowingdata:

Theweightedaveragenumberofsharesisadjustedfortheimpactofthereverseacquisitionasfollows:

• Priortothereversetakeover,thenumberofsharesisbasedonSalvaRxLimited,adjustedusingtheshareexchangeratioarisingonthereversetakeover;and

• Fromthedateofthereversetakeover,thenumberofshareisbasedontheCompany.

DilutivelossperOrdinaryShareequalsbasiclossperOrdinaryShareas,duetothelossesincurredin2016and2015,thereisnodilutiveeffectfromthesubsistingshareoptions.

13 Investments

2016£’000

Unaudited2015£’000

Available-for-saleinvestmentsInvestmentinIntensity(i)

1,395

-

Loanreceivableatamortisedcost RIFTloan(ii) 36 - 1,431 - (i) On 22 April 2016, the Company acquired 1million Series A preferred stock in Intensity Therapeutics Inc., a

Delawarecorporation(“Intensity”)forUS$2mincash.AllSeriesAPreferredstockisconvertibleintoequalnumberofcommonsharesinIntensity.TheCompany’sholdingsrepresentlessthan10%oftheequityofIntensity.

13 Investments(continued)

(ii)On13December2016,SalvaRxLimited,awhollyownedsubsidiaryoftheCompany,investedUS$45,000incash

inconvertiblepromissorynote issuedbyRiftBiotherapeutics Inc.,aDelawarecorporation (“Rift”). TheNotecarriesinterestat5%andmaturesontheearliestof31December2017andachangeincontrolatRift.SalvaRx

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

LossesLossforthepurposesofbasiclosspersharebeingnetlossattributabletoequityholdersoftheparent

2,038

326 NumberWeightedaveragenumberofOrdinarySharesforthepurposesofbasiclosspershare

Number

34,561,950

Number

27,883,852 2016

£2015

£LossperOrdinaryShare Basicanddiluted,pencepershare (0.06p) (0.01p)

Limitedmadefurther investments intoRiftsubsequenttothebalancesheetdateandagreedtoconvert intoequityinRiftasexplainedinnote27(a).

Asat31December2016,theCompanyhasdeterminedthattherewasnoevidenceofanyimpairmentinthecarryingvalueofinvestmentsandasaresultnoadjustmentwasconsiderednecessaryinitscarryingvalue.14 Intangibleassets Inprocess

research£’000

Cost At6May2015 -Additions 1,457 At31December2015and2016 1,457 Amortisation At1January2016 -Chargefortheyear (91) At31December2015 (91) Chargefortheyear (182) At31December2016 (273) Carryingamounts At6May2015 - At31December2015 1,366 At31December2016 1,184 On1July2015,SalvaRxacquired15,313newSeedPreferredSharesiniOxatapriceof£120perSeedPreferredShare,whichrepresents60.49%.equityiniOxfor£1,837,560.ExceptforapreferenceoverOrdinarySharesonwindingup,SeedPreferredShareshavethesamevotingrightsasOrdinarySharesandareconvertibleintoequalnumberofordinaryshares.SalvaRxhasamajorityequityinterestandalsohassignificantcontroloverthemanagementofiOx.Asaresult,managementhaveconcludedthatiOxisasubsidiaryundertakingandthesefinancialstatementsincluderesultsofoperationsforiOxfortheyearended31December2016andassetsandliabilitiesasat31December2016andcomparativefiguresincluderesultsofoperationsforIOXfrom1July2015to31December2015andassetsandliabilitiesasatDecember2015.14 Intangibleassets(continued)Thenon-controllinginterestiniOxonthedateofacquisitionwasvaluedat£1.2million,basedontheir39.51%equitybeingvaluedonthebasisofthepriceSalvaRxpaidfor60.49%equityiniOx.Asat1July2015,netassetsacquiredweredeterminedasperIFRS3–businesscombinations,asfollows: £’000 £’000 Intangibleassets 1,458Othernetassets Liabilityassumed (10) Assetsassumed* 1,838

1,828Deferredtaxliability(note11) (248) Netassetsacquired 3,038 Allocatedto Cashconsiderationpaidforcompany’sinterest 1,838Non-controllinginterest(39.51%)** 1,200 3,038 *ConsiderationwaspaidfornewSeedPreferredSharesiniOx.AsSalvaRxhascontroloveriOxandtheconsiderationpaidbySalvaRxwillremainwithintheGroup,thenetcashimpactoftheacquisitionontheGroupis£nil.**Non-controllinginteresthasbeenvaluedbasedon39.51percent.ofthegrossedupconsiderationpaidbySalvaRx((£1,837,560/60.49percent.)x39.51percent.)Aspartofthisbusinesscombination,andalsoon1July2015,iOxTherapeuticsLimited(“iOx”)enteredintoanInvestmentAgreementwithTheUniversityofOxford, ISIS, theLudwig Institute,SalvaRxLimitedandProfessorCerundolo. As part of this agreement, iOx also entered into a Clinical Trials Sponsorship agreementwith TheUniversityofOxfordandalsoentered intoa licenceagreementwiththeLudwig Institutetoaccess intellectualpropertyrightsandknow-howrelatingtocellagonists.Accordingly,theDirectorshavedeterminedthattheexcessofconsiderationoveridentifiableassetsandliabilitiesrelatesentirelytoanin-processresearchintangibleasset.Theintangibleassetthusarisingisbeingamortisedover8years,beingtheDirectorsassessmentoftheperiodoverwhichthetechnologiesarelikelytobedevelopedandattheendofwhichcommercialproductswillhopefullybeavailable for sale. The remaining life of the intangible asset is 6.5 years. Given that the progress of iOx issatisfactory,thereisnoindicationofimpairment.

15 Tradeandotherreceivables

2016£’000

Unaudited2015£’000

VATrecoverable 5 6Prepaymentsandotherreceivables 29 230 34 236 16 Cashandcashequivalents

Cash and cash equivalents as at 31 December 2016 of approximately £1.0million (As at 31 December 2015(unaudited):£0.6million)comprisecashheldbytheGroup.

17 ConvertibleLoanNotes

2016£’000

Unaudited2015£’000

Convertibleloannotes

(616)

-

Equityoptiononconvertibleloan (78) - (694) - On21April 2016, the Company issuedUS$1million of zero coupon convertible unsecured loan notes (“LoanNotes”)toJimMellon,theNon-ExecutiveChairmanandGregBailey,aNon-ExecutiveDirector(“theNoteholders”),whoarebothsubstantialshareholdersintheCompany.MrMellonandDrBaileysubscribedforUS$0.5millionofLoanNoteseach.TheLoanNoteshaveatermofthreeyears,withazerocouponandmaybeconvertedinwholeorinpartattheNoteholder’sdiscretionatapriceof35.5pperordinaryshare.TheNoteholdershaveundertakennot toconvert their LoanNotes incircumstanceswhere (i) theconversionwould result in theConcertParty’s

holdingintheCompanyexceeding74.66%onafullydilutedbasisor(ii)thepercentageofsharesinpublichandswouldfallbelow10%.On2March2017,TheNote liabilitywastransferredtoSalvaRxLimitedandthenoteholdersagreedtoaccept4,000sharesofSalvaRxLimitedatapriceof$250pershareinsettlementoftheloannotes,whichwouldgivethem5.85%equityinSalvaRxLimited.Therecognitionofthisinvestment,andthemovementstothebalancesheetdate,canbesummarisedasfollows: EquityOption

£’000Loan£’000

Onissue–21April2016(Credit)/chargetofinanceincomeMovementinfairvalueNotionalinterest

211

(133)-

484-

46Foreignexchangeloss - 86 At31December2016 78 616 ThesenoteshaveanembeddedderivativeintheformoftheequityconversionrightswhosevaluewasdefinedduetotheconversionintoSalvaRxLimitedsharessubsequenttothebalancesheetdateasexplainedabove.ThefairvalueofthederivativehasbeenestimatedusingaBlack-Scholespricingmodelwiththefollowingassumptions: 21April

201631December

2016Riskfreeinterestrate 1% 1%Expecteddividend Nil NilExpectedvolatility 102.75% 102.75%Expectedlife 315days 61daysMarketprice £0.32 £0.31

TheCompanyhasthereforedeterminedthefairvalueofthederivativeatthebalancesheetdatetobe£78,094.Thedifferenceinderivativevaluefromthepreviousvalueof£211,267atthedateofinceptionhasbeencreditedtotheincomestatementasafinancingcost.TheDirectorshavevaluedtheoptionusingtheBlackScholesmodel.IndeterminingthevaluationtheDirectorshaveassumed:

• Anoptionlifeconsistentwiththeactualexercisedateof2March2017reflectingtheiroriginalassessmentoftimetoexercise,and

• SpotFXrateatbothmeasurementdate.Inmakingthisassumption,theDirectorshaveconsideredtheimpactonthevaluationofareasonablerangeofpossibleexchangeratesandnotedthattheimpactonvaluationisreasonablysmall.

Thevalueoftheoptionatissuehasbeendeductedfromtheoverallfairvalueoftheconvertibleloannoteandisaccountedforseparatelyonthebalancesheet.ItwillbesubjecttorevaluationoneachbalancesheetdatethroughtheincomestatementinaccordancewithIAS39.Theresidualloanbalanceof£484,000atinceptionisheldatamortisedcostandissubjecttoanotionalinterestat12.83%,whichfortheyearto31December2016was£46,000.Theinterestamountisexpensedasfinancecostandincludedwithintheloanbalance.Theloanbalanceissubjecttorevaluationatthespotexchangerate.18 Tradeandotherpayables

2016£’000

Unaudited2015£’000

Tradepayables 224 244Accruals 71 - 295 244

Tradepayablesandaccrualsprincipallycompriseamountsoutstandingfortradepurchasesandon-goingcosts.The average credit period taken for trade purchases is 40 days (2015: 31 days). The Group has financial riskmanagementpoliciestoensurethatallpayablesarepaidwithinthecredittimeframe.TheDirectorsconsiderthatthecarryingamountoftradeandotherpayablesapproximatestotheirfairvalue.Nointerestisgenerallychargedonbalancesoutstanding.19 FinancialinstrumentsCapitalriskmanagementTheGroupmanagesitscapitalresourcessoastoensurethatentitiesintheGroupwillbeabletocontinueasagoingconcern,whilemaximisingthereturntoshareholders.Untilitachievespositivecash-flow,theGroupexpectstofunditsoperationsthroughacombinationofequitycapitalraisedfromthemarketand,whereappropriate,debtfinance.ThecapitalresourcesoftheGroupconsistofcashandcashequivalentsarisingfromequityattributabletoequityholdersoftheparent,comprisingissuedcapital,reservesandretainedearningsasdisclosedintheConsolidatedStatementofChangesinEquity.ExternallyimposedcapitalrequirementTheGroupisnotsubjecttoexternallyimposedcapitalrequirements.Categoriesoffinancialinstruments

2016£’000

Unaudited2015£’000

Financialassets:AvailableforsaleInvestments

1,395

-

Financialassets:LoansandReceivables InvestmentsCashandcashequivalents

36967

-567

Tradeandotherreceivables - 215 2,398 782 Financialliabilities:Atamortisedcost

Tradeandotherpayables 295 244Convertibleloannotes 616 - FinancialLiabilities:Atfairvaluethroughprofitorloss Equityoptiononconvertibleloan 78 - 989 244

FinancialriskmanagementobjectivesManagementprovidesservicestothebusiness,co-ordinatesaccesstodomesticandinternationalfinancialmarkets,andmonitorsandmanagesthefinancialrisksrelatingtotheoperationsoftheGroup.Theserisksincludeforeigncurrencyrisk,creditriskandliquidityrisk.TheGroupdoesnotenterintoortradefinancialinstruments,includingderivativefinancialinstruments,forspeculativepurposesandanycurrencyhedgingtransactions.Inordertoeffectivelymanagetheserisks,theBoardofDirectorshasapprovedstrategiesforthemanagementoffinancialrisks,whichareinlinewithcorporateobjectives.ThesestrategiessetupguidelinesfortheshorttermandlongtermobjectivesandactiontobetakeninordertomanagethefinancialrisksthattheGroupfaces.Themajorguidelinesarethefollowing:

• Maximise the use of “natural hedge” favouring asmuch as possible the natural off-setting of costs,

payablesandreceivablesdenominatedinthesamecurrency.• AllfinancialriskmanagementactivitiesarecarriedoutandmonitoredcentrallevelanddiscussedatBoard

level.• TheGroupwillnotinvesttemporaryexcessliquidityinsharesorsimilarinstrumentsunlessauthorisedby

theBoardofDirectors.ForeignexchangeriskandforeigncurrencyriskmanagementTheGroupisexposedtocurrencyrisksinceitsmainsourceoffundingisinBritishpoundswhileasignificantpartofitsexpensesareinUSdollars.WhiletheGroupaimstominimiseexposuretoforeignexchangeriskbymatchingthecurrencyofincomeandrelatedexpenditureflowswherepossible,fluctuationsintheexchangeratebetweenthesetwocurrenciescanhavesignificanteffect.Financialassetsbycurrency:

Investments

Tradeand

otherreceivable

Cashand

cashequivalent

Total

£’000 £’000 £’000 £’000Currency Britishpounds - - 729 729USdollars 1,431 - 238 1,669 Balanceat31December2016 1,431 - 967 2,398 Currency Britishpounds - 215 567 782USdollars - - - - Balanceat31December2015 - 215 567 782 Financialliabilitiesbycurrency:

Borrowings

Tradeand

otherpayables

Total £’000 £’000 £’000Currency Britishpounds - 78 78USdollars 694 217 911 Balanceat31December2016 694 295 989 Currency Britishpounds - 134 134USdollars - 110 110 Balanceat31December2015 - 244 244

SensitivityanalysisA10%increase/decreaseinexchangerateoftheBritishPoundagainsttheUSDwouldreduce/increasethelossaftertaxby£67,300.

CreditriskmanagementCreditriskreferstotheriskthatacounterpartywilldefaultonitscontractualobligations,resultinginfinanciallosstotheGroup.TheGrouphasminimaltradeandotherreceivablesattheyearend.TheGroupmakesallowancesforimpairmentofreceivableswherethereisanidentifiedeventwhich,basedonpreviousexperience,isevidenceofareductionintherecoverabilityofcashflows.The credit risk on liquid funds (cash) is considered to be limited because the counterparties are financialinstitutions with good credit ratings assigned by international credit-rating agencies. The carrying amount offinancialassetsrecordedinthefinancialstatementsrepresentstheGroup’smaximumexposuretocreditrisk.Therearenosignificantconcentrationsofcreditrisk.Thecredit riskarising in respectof investments is inevitablyhigher risk.Thenatureof theGroup’sbusiness isdeveloping innovative solutions for the treatment of cancer and there is no guarantee that any individualinvestmentwillbesuccessful.ThisriskispartlymitigatedthroughrepresentationonitsBoardofDirectorsandtheGroup’sCEOmonitorsitsprogressonaregularbasis.ThemaximumcreditrisktowhichtheGroupisexposedissummarisedinthefollowingtable.

2016£’000

Unaudited2015£’000

Investments 1,431 -Cashandcashequivalents

967 567

Tradeandotherreceivables - 215 Balanceat31December 2,398 782

Asexplainedinnote16,cashandcashequivalentsbalancesrepresentbankbalances.TheGroupdoesnotholdcollateralforanyofitsreceivables.Therewerenopastduereceivables.InvestmentsareintheformofequityinvestmentinprivatecompaniesinwhichtheGroupisrepresentedonitsBoardofDirectorsandtheGroup’sCEOmonitorsitsprogressonaregularbasis.LiquidityriskmanagementUltimate responsibility for liquidity risk management rests with the Board of Directors, which has built anappropriateliquidityriskmanagementframeworkforthemanagementoftheGroup’sshort,mediumandlong-termfundingandliquiditymanagementrequirements.TheGroupmanagesliquidityriskbymaintainingadequatecashreservesandbycontinuouslymonitoringforecastandactualcashflows.AllfinancialliabilitiesheldbytheGrouparenon-interestbearing.Thefollowingtablesanalysefinancialliabilitiesbyremainingcontractualmaturity.Financialliabilitiesbycontractualmaturity

Convertibleloannote

Tradeandother

payables

Total £’000 £’000 £’000 Lessthan1year - 295 2951–3years 694 - 694

Balanceat31December2016 694 295 989 Lessthan1year - 244 2441–3years - - - Balanceat31December2015 - 244 244

With the exception of the convertible loan note, the Group expects to pay all liabilities at their contractualmaturity.Asdescribedinnote27(c),theconvertibleloannotewasconvertedintoequityshortlyaftertheyearend.However,asabiotechcompanyatanearlystageofdevelopmentandwithoutsignificantinternallygeneratedcashflows,thereareinherentliquidityrisks,includingthepossibilitythatadditionalfinancingmaynotbeavailabletotheCompany,orthatactualdrugdevelopmentexpendituresmayexceedthoseplanned.Thecurrentuncertaintyin global markets could have an impact on the Company’s future ability to access capital on terms that areacceptabletotheCompany.TherecanbenoassurancethatrequiredfinancingwillbeavailabletotheCompany.20 SharecapitalAuthorisedandissuedequitysharecapital

2016Unaudited

2015

Number’000

£’000

Number’000

£’000

Authorised OrdinarySharesof2.5peach(2015:0.025p) 80,000 2,000 1,040,000 260 Issuedandfullypaid OrdinarySharesof2.5peach(2015:0.025p) 36,467 911 618,493 155 TheCompanyhasoneclassofOrdinaryShares,whichcarrynorighttofixedincome.Movementsduringtheyear:

Yearended31December2016

Unaudited6May2015

to31December2015

Number’000

£’000

Number’000

£’000

Balanceatbeginningofyear 618,493 155 618,493 155Shareconsolidation (612,308) - - -Issuedduringtheyearforcash 5,493 136 - -Issuedonreverseacquisition(note3) 24,789 620 - - Issuedandfullypaid OrdinarySharesof2.5peach 36,467 911 618,493 155 InMarch2016,theCompanycompletedashareconsolidationonthebasisof1newOrdinaryShareforevery100OrdinaryShares.

InMarch2016,theCompanyraisedapproximately£1.9millionbeforeexpensesinaprivateplacementinvolvingissuanceof5,492,958ordinarysharesatapriceof35.5ppershare.InMarch2016, theCompany issued24,788,732 sharesatamarketpriceof35.5p inexchange fora88.9%ofSalvaRxLimited.Thisresultedinthereversetakeoverdescribedinnote3.21 Equity,purchaseofownsharesInSeptember2015,theCompanysubscribed£215,000toacquire11.1%oftheissuedsharecapitalofSalvaRx.InMarch2016,TheCompanyacquired the remaining issuedsharecapitalofSalvaRx throughshareexchange,whichwasconsideredareversetakeovertransactionasexplainedinNote3.Asaresult,theexistinginvestmentof£215,000hasbeentransferredtoequityandtreatedasapurchaseofownshares.22 Sharepremium £’000 At6May2015andat31December2015 52,533IssueofOrdinarySharesinaprivateplacement(note20) 1,813IssueofOrdinarySharesinareversetakeovertransaction(note3) 8,180CostsdirectlyrelatedtoissueofOrdinaryShares (173) -------------CancellationofSharePremiumaccount

62,353(62,353)

At31December2016 -

The shareholders of the Company in theirmeeting of 4 August 2016 approved the cancellation of the sharepremiumaccount.WhilstthisgaverisetodistributablereservesfortheCompany,inthesefinancialstatementsthecreditentryisrecordedinthereverseacquisitionreserve.

23 Reverseacquisitionreserve

£’000 At6May2015¹ (52,688)CapitalofSalvaRxtransferredtoreverseacquisitionreserve² 940

At31December2015 (51,748)IssueofequitybyCompany(netofcosts)³ (1,776)Reverseacquisition4 (5,764)Sharepremiumcancellation(note22)5 62,353 At31December2016 3,065

ThemovementsontheReverseacquisitionreserveareasfollows:

1) TheseconsolidatedfinancialstatementspresentthelegalcapitalstructureoftheCompany.However,underreverseacquisitionaccountingrules,theCompanywasnotacquireduntil21March2016andthereforetheentryaboveisrequiredtoeliminatetheinitialequityoftheCompany.

2) SalvaRxLimitedwasincorporatedon6May2015andonthisdateissuedsharecapitalofequivalentto£940,000.Asthesefinancialstatementspresentthecapitalstructureoftheparententity,theissueofequitybySalvaRxLimitedhasbeenrecordedinthisreserve.

3) Immediatelypriortothereverseacquisition,theCompanyraised£1,776,000throughaplacing(netofcostsof£173,000).AstheCompanywasnotpartoftheconsolidatedSalvarRxLimitedgroupatthattime,theaboveentryisrequiredtoeliminatethebalancesheetimpactofthistransaction.

4) Thereverseacquisitionaccountingisdescribedindetailinnote3.TheentryaboverepresentsthedifferencebetweenthevalueoftheequityissuedbytheCompany,andthedeemedconsiderationgivenbySalvaRxLimitedtoacquiretheCompany.

5) Asdescribedinnote22,theCompanycancelledtheSharePremiumaccountatthe2016AGM.WhistthisgivesrisetodistributablereservesoftheCompany,itisnotdistributablewithintheseconsolidatedfinancialstatementsandthereforethecreditentryhasbeenrecordedwithinthisreserve.

24 Share-basedpaymentreserves

Shareoptionsoutstandingareasfollows:

SalvaRxGroupplc 2016 2015

Options’000

Weightedaverageexerciseprice£

Options’000

Weightedaverageexerciseprice£

Outstandingat1January/6May 474 23.2p - Grantedduringtheyear 2,752 37.9p 474 23.2p Outstandingat31December 3,226 35.74p 474 23.2p

iOxTherapeuticsLimited 2016 2015

Options

’000

Weightedaverageexerciseprice£

Options’000

Weightedaverageexerciseprice£

Outstandingat1January/6May

0.7

120

-

-

Grantedduringtheyear 0.6 120 0.7 120 Outstandingat31December 1.3 120 0.7 120

24 Share-basedpaymentreserves(continued)

The Company and its subsidiary do not operate a formal stock option scheme, however certain options tosubscribefortheCompany’soritssubsidiary’sshareshavebeengrantedtoselectedDirectorsandconsultantsonanadhocbasispursuanttoindividualoptionagreements(the‘Non-PlanOptions’).

(A)iOxTherapeuticsLtdDetailsoftheOptionsareasfollows:Dateofgrant

Dateofexpiry

Exerciseprice£

Vestingterms

#ofOptions

Valuebasedon

Black-Scholesoptionpricingmodel£’000

Gradedvestingin2016£’000

Gradedvestingin

2015£’000

14-Dec-15 14-Dec-20 120 25%ongrantand25%eachanniversary 675 57

23 25

28-Nov-16 28-Nov-21 120 vested 649 60 60 -

1,324 117

83 25

(B)TheCompany

Dateofgrant

Dateofexpiry

Exerciseprice£

Vestingterms

#ofOptions

Valuebasedon

Black-Scholesoptionpricingmodel£’000

Gradedvestingin2016£’000

Gradedvestingin

2015£’000

April2015toJuly2015

16-Feb-21 0.232 vested 431,153* -- -

16-Feb-15 16-Feb-18 0.232 vested 43,115* - - -

22-Mar-16 22-Mar-21 0.355

Threeequaltranches-1ston22March2017,2ndon22March2018and3rdon22March

2019

2,508,777 509

233 -

22-Mar-16 22-Mar-21 0.71 vested 182,333 31 31 -22-Mar-16 22-Mar-19 0.355 vested 60,563 10 10 -

3,225,941 550

274 -

*TheseoptionsintheCompanyvestedinfullpriortothereversetakeoverandaccordinglythereisnosharebasedpaymentchargefortheseoptionsinthesefinancialstatements.

24 Share-basedpaymentreserves(continued)

TheaboveOptionsinclude519OptionsiniOxand1,320,704OptionsintheCompanygrantedtothedirectors.

ThefairvalueoftheoptionshasbeencalculatedusingtheBlackScholesmodel.ThesignificantinputsintothemodelfortheIFRS2valuationwereasfollows:

Grants 14

December2015

28November

2016

22March

2016

22March

2016 #ofOptions 675 649 2,691,110 60,563Riskfreeinterestrate 1% 1% 1% 1%Expectedvolatility 91.60% 106.48% 92.91% 94.33%Expectedlifeindays 1,850 1,825 1,825 1,095Marketprice £120 £120 £0.30 £0.30

25 Relatedpartytransactions

Transactions between the Company and its subsidiary, which are related parties, have been eliminated onconsolidationandarenotdisclosedinthisnote.

Paymentstokeymanagementpersonnel

TheremunerationoftheNon-ExecutiveDirectors,ExecutiveDirectorsandseniormanagement,whoarethekeymanagementpersonneloftheGroup,issetoutbelowinaggregateforeachofthecategoriesspecifiedinIAS24RelatedPartyDisclosures.

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

Salaryandconsultingfee 203 80Sharebasedpayments 138 25Non-Executivedirectorsfee 52 - 393 105

26 Non-controllinginterest

TheCompany’smaterialnon-controllinginterests(“NCI”)at31December2016and2015wereassociatedwithTherapeuticsLimited(“iOx”) inwhichtheNCI is39.51%.Therewerenodividendspaidby iOxduring2016and2015.

ThemovementintheNCIisasfollows:

£’000At6May2015 -Onacquisition 1,194LossattributabletoNCI (140)

At31December2015 1,054LossattributabletoNCI (407) At31December2016 647

Summarisedfinancial informationbasedonthoseamountsincludedintheseconsolidatedfinancialstatementsforiOxisasfollows:

Statementoffinancialposition:

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

Currentassets 263 412Currentliabilities (217) (172) Netassets 47 240

Statementofcomprehensiveloss:

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

Researchanddevelopment (815) (260)Otheroperatingcosts (63) (20) Netlossandcomprehensiveloss (878) (280)

26 Non-controllinginterest(continued)

Statementofcashflows:

Yearended31December

2016£’000

Unaudited6May2015

to31December

2015£’000

Cashflowsusedforoperations (566) (105)Cashflowsfromfinancingactivities 430 510 Net(decrease)/increaseincashandcashequivalent (147) 405

27 Eventsafterthebalancesheetdate

a. On9February2017,SalvaRxLimitedadvancedafurtherUS$45,000andon16March2016,SalvaRxLimitedannouncedaninvestmentofUS$1millioninRIFTBiotechnologiesInc.Total investmentofUS$1,090,000inRIFTistobeconvertedintoanequityofapproximately30%inRIFT.

b. On28February2017,SalvaRxLimitedagreedtoinvest€300,000convertibleloaninNekonalSARLtoparticipateinthefundingofitsauto-immuneprogramsanda€300,000equityinvestmentinNekonalOncologyInc.,whichwillbeajointventurebetweenSalvaRxLimitedandNekonalSARL.

c. On2March2017, theCompany announced that its investment in Intensity Therapeutics Inc. andConvertiblenotesofUS$1millionwere transferred toSalvaRxLimited.Theconvertible loannoteswere converted into shares of SalvaRx Limited at a price of US$250 a share, thus reducing theCompany’sinterestinSalvaRxLimitedto94.2%.

d. On2March2017, theCompanyalsoannouncedanofferingbySalvaRxLimitedofunsecured loannotesofuptoUS$5million,carryingcouponof7%andrepayableinfouryears.TheholdersoftheloanwillbeissuedUS$7,500ofWarrantinrespectofeachUS$10,000ofloannotes.TheWarrantswillvestintheeventofaqualifyingtransactionandareexercisableatapriceofthehigherofUS$250pershareandapricereflectingdiscounttotheimpliedvaluationofSalvaRxLimited.SalvaRxLimitedhassofarraisedUS$3millioninunsecuredloannotes.