Issued capital and reserves

6 Months Ended

Jun. 30, 2022

9. Issued capital and reserves


	Number of ordinary shares		Ordinary share capital £’000		Share premium £’000
At January 1, 2021		338,953,141		1,017		161,785
Issued during the period		205,557,122		617		79,001
Transaction costs for issued share capital		—		—		(234	)
At June 30, 2021		544,510,263		1,634		240,552

At January 1, 2022 and June 30, 2022		584,908,239		1,755		247,460

Other capital reserves


	Share- based payments			Equity component of convertible loan		Other warrants issued		Merger reserve		Other reserve		Total
	£’000			£’000		£’000		£’000		£’000		£’000
At January 1, 2021		19,843			34,565		44		40,818		33,104		128,374

Share-based payments expense during the period		1,760			—		—		—		—		1,760
Share option exercise		(108	)		—		—		—		—		(108	)

At June 30, 2021		21,495			34,565		44		40,818		33,104		130,026

At January 1, 2022		23,026			32,843		44		40,818		33,104		129,835

Share-based payments expense during the period		2,446			—		—		—		—		2,446
Share option exercise		(82	)		—		—		—		—		(82	)
Issuance of warrants		—			—		70		—		—		70

At June 30, 2022		25,390			32,843		114		40,818		33,104		132,269

Share-based payments

The Company has a share option scheme under which options to subscribe for the Company’s shares have been granted to certain

executives, non-executive

directors (“NEDs”) and employees. The share-based payment reserve is used to recognize (i) the value of equity settled share-based payments provided to employees, including key management personnel, as part of their remuneration and (ii) deferred equity consideration.

The total charge for the six months to June 30, 2022 in respect of all share option schemes was £2.4 million (June 30, 2021: £1.8 million).

During the six months ended June 30, 2022, the Company granted 3,996,400 market value options over ADS under the Mereo 2019 Equity Incentive Plan to certain executives and other employees. The weighted average fair value of options granted was $1.23

per option

The weighted average exercise price is $1.39

per ADS

During the same period, the Company granted 507,987 market value options over ADS under the Mereo 2019 NED Equity Incentive Plan to

certain non-executive

directors. The weighted average fair value of options granted was $1.10

per option

The weighted average exercise price is $1.24

per ADS

Options over ADSs issued during the six months ended June 30, 2022 were valued using the Black-Scholes model with the following weighted average inputs: expected volatility of 96%; risk free interest rate of 1.79%; expected life of 10 years; and market price per ADS of $1.38.

A total of 353,183

deferred restricted stock units, with a weighted average fair value of $1.12

per restricted stock unit

were also granted

in February 2022

under the Mereo 2019 NED Equity Incentive Plan to certain non-executive directors who elected to receive restricted stock units in lieu of their cash fees for the year commencing February 1, 2022.