REG - Abingdon Health PLC - Preliminary Results
24/11/2022 07:00
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RNS Number : 4276H Abingdon Health PLC 24 November 2022
Abingdon Health plc
("Abingdon" or "the Company")
Preliminary Results
York, U.K. 24 November 2022: Abingdon Health plc (AIM: ABDX), a leading
international developer and manufacturer of high quality, rapid diagnostic
tests, announces its preliminary results for the year ended 30 June 2022.
Financial highlights
· Revenue of £2.8m (2021: £11.6m) with prior year impacted by one-off
COVID-19 revenues
· Adjusted(*) EBITDA loss of £10.0m (2021: £3.3m loss) due to
significant increase in, and subsequent unwinding of, operational headcount to
meet anticipated COVID-19 demand which did not come to fruition
· Loss for the period of £21.3m (2021: £7.0m loss), includes £7.2m
impairment charge (2021: £nil)
· Cash as at 30 June 2022: £2.4m (2021: £5.0m) and as at 31 October
2022 of £4.4m
· Net cash outflow from operating activities of £7.7m (2021: £12.9m),
driven in part by a reduction year-on-year in payables.
(*) Adjusted EBITDA stated before deduction of non-recurring costs, impairment
of intangibles and share based payment
Operational highlights (including post-period end)
· Settlement agreement reached with the Department of Health and Social
Care ("DHSC") on the outstanding invoices payable by DHSC for lateral flow
tests and component stock, with £6.3m cash being received in July 2022 in
full settlement
· Outcome of Judicial Review proceedings initiated by the Good Law
Project Limited ("GLP") against DHSC in which Abingdon was an interested party
ruled in favour of the DHSC on all grounds, confirming that contract award
decisions by DHSC, for the development and manufacture of lateral flow test
kits for COVID-19 antibodies by Abingdon, were lawful and complied with the
principles of public law
· Launched e-commerce self-test site
(http://www.abingdonsimplytest.com) , marketing a range of Abingdon Simply
Test and other branded self-test products
· Strategy focused on provision of Contract Development and
Manufacturing ("CDMO") services given anticipated growth in demand within the
lateral flow market
· Strong pipeline of contract development, regulatory and technical
transfer opportunities.
Chris Yates, Chief Executive Officer, Abingdon Health plc, commented:
"The last two years within the lateral flow market have been dominated by
COVID-19 with little other contract development activity being undertaken by
customers or prospective customers. In addition, a great deal of our own focus
has been spent on successfully resolving unwarranted legal challenges which
were an unwelcome distraction and a significant use of our time and resources.
"It is pleasing to see the industry refocus on a much broader range of
applications of lateral flow technology in other health and non-health areas.
As a knowledge leader in lateral flow, and with our comprehensive contract
service offering, we believe we are well-placed to support customers in
bringing their products to market and grow our business."
Enquiries:
Abingdon Health plc www.abingdonhealth.com/investors/ (http://www.abingdonhealth.com/investors/)
Chris Yates, Chief Executive Officer Via Walbrook PR
Melanie Ross, Chief Financial Officer
Chris Hand, Non-Executive Chairman
Singer Capital Markets (Sole Broker and Nominated Adviser) Tel: +44 (0)20 7496 3000
Peter Steel, Alex Bond (Corporate Finance)
Tom Salvesen (Corporate Broking)
Walbrook PR Limited Tel: +44 (0)20 7933 8780 or abingdon@walbrookpr.com
(mailto:abingdon@walbrookpr.com)
Paul McManus / Phillip Marriage Mob: +44 (0)7980 541 893 / +44 (0)7867 984 082
Alice Woodings +44 (0)7407 804 654
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of
this announcement via the Regulatory Information Service, this inside
information is now considered to be in the public domain.
About Abingdon Health plc
Abingdon Health is a world leading developer and manufacturer of
high-quality lateral flow rapid tests
(https://www.abingdonhealth.com/services/) across all industry sectors,
including healthcare and COVID-19. Abingdon is the partner of choice for a
growing global customer base and takes projects from initial concept through
to routine and large-scale manufacturing and has also developed and marketed
its own labelled tests.
The Company offers product development, regulatory support, technology
transfer and manufacturing services for customers looking to develop new
assays or transfer existing laboratory-based assays to a lateral flow
format. Abingdon Health aims to support the increase in need for rapid
results across many industries and locations and produces lateral flow tests
in areas such as infectious disease, clinical testing including companion
diagnostics, animal health and environmental testing. Faster access to results
allows for rapid decision making, targeted intervention and can support better
outcomes. This ability has a significant role to play in improving life across
the world. To support this aim Abingdon Health has also developed AppDx(®),
a customisable image capturing technology that transforms a smartphone into a
self-sufficient, standalone lateral-flow reader.
Founded in 2008, Abingdon Health is headquartered in York, England.
For more information visit: www.abingdonhealth.com
(http://www.abingdonhealth.com/)
Chairman and CEO Joint Statement
Following a two-year period, where COVID-19 was the primary focus of the
lateral flow industry, we are now seeing growth in the market across a broad
range of other (non-COVID-19) applications, driven by reduced barriers to
adoption for the technology. In this new environment, the Board has
confidence that Abingdon Health's knowledge leadership position in the lateral
flow industry and the development and manufacturing platform we have built
will begin to yield positive momentum and revenue growth. Our key objective
is to move the Company to positive cash flow.
This financial year was dominated by the continued impact of COVID-19 on the
lateral flow industry. There was limited non-COVID-19 development activity in
financial years 2021 and 2022 as most industry participants focused on
developing and manufacturing COVID-19 tests. Whilst we participated in
providing COVID-19 solutions through our commercial contracts with, inter
alia, Avacta, Vatic and BioSure; none of these activities yielded material
revenue traction beyond the successful transfer of all three products to
manufacture (technical transfer). We had previously developed and manufactured
1 million COVID-19 antibody tests for the Department of Health and Social Care
(DHSC) in FY2021. With COVID-19 strategies across the globe, China-aside,
transitioning towards treating COVID-19 as a seasonal disease, such as flu, we
are seeing a significant increase in engagement on non-COVID-19 testing
projects and believe that our expertise in the lateral flow industry and the
development and manufacturing platform we have built will drive positive
momentum and revenue growth.
Strategy
Our mission at Abingdon is to improve life by making rapid results accessible
to all. We achieve this by supporting our customers in developing and
manufacturing lateral flow tests across a range of sectors including human
health, such as infectious disease testing, animal health, plant pathogen and
environmental testing.
COVID-19 had a significant impact on lateral flow testing; initially through
widespread adoption of lateral flow testing across many countries, including
the UK. This has reduced the "barriers to adoption" as many people are now
extremely familiar with lateral flow testing and "doing a lateral flow test"
is now part of the vernacular. There is increasing acceptance that lateral
flow testing is a viable, cost-effective alternative or complement to
laboratory testing. We strongly believe that this will drive the increased
adoption of lateral flow testing across a broad range of applications and
sectors
As a well-established knowledge leader within the area of lateral flow
testing, we are focused on providing a broad contract development and
manufacturing organisation ("CDMO") service to an international customer base.
We believe the CDMO business model, well-established in the pharmaceutical
industry, has direct application to the medical diagnostics market and we
offer our customers a turn-key full-service offering in lateral flow which
includes research, development, scale-up, technical transfer, manufacturing,
regulatory approval, supply chain management, and commercial support. Our
long-term strategic objective is to become the leading full-service CDMO in
the lateral flow market.
In addition to our contract service business, we will continue to consider
options to develop, manufacture and commercialise, our own products. We
believe that COVID-19 is a catalyst for the expansion of self-testing across a
range of other clinical areas. However, as set out below in the current
economic environment our focus is on driving our revenues, managing our costs
and reaching a cashflow positive position as quickly as possible. Therefore,
we will focus most of our team's efforts on driving CDMO revenues for now
rather than on significant internal product development. During 2022 we have
built an ecommerce self-test site; www.abingdonsimplytest.com
(http://www.abingdonsimplytest.com) ; launched in July 2022 which markets a
range of Abingdon Simply Test branded products and other branded self-test
products. We currently have a range of 14 products on this newly launched site
and we will continue to grow this in a managed way. www.abingdonsimplytest.com
(http://www.abingdonsimplytest.com) also provides the opportunity for our
contract service customers to market their products.
We strongly believe that we are at the start of a paradigm-shift in the use
and application of rapid testing across a wide range of applications and that
Abingdon Health is well positioned to support customers in bringing new,
innovative products to market across a range of sectors.
Performance in year
Revenue for the full year was £2.8m (2021: £11.6m). In 2021 the financials
were impacted significantly by revenue of £5.2m from the Department for
Health & Social Care ("DHSC") and a one-off order for our nucleic acid
lateral flow immunoassay called PCRD. 2022 was a transition year as we moved
the business away from its focus on supporting COVID-19 solutions towards a
normalised business model where we operate as a CDMO offering our services to
customers across a wide range of sectors. We expect to see the benefits of
this transition in FY2023 and beyond, supported by the forecast growth in the
lateral flow market, which is expected to grow to $13.4 billion by 2028, at a
cumulative average growth rate of 4.7% per annum (Source: Lateral Flow Assays
Market Size & Growth Analysis By 2030 (alliedmarketresearch.com)
(https://www.alliedmarketresearch.com/lateral-flow-assay-market) ).
2022 activity was dominated by COVID-19 business with three key technical
transfers, Avacta, Vatic and BioSure, all of which were successfully
transferred into manufacturing, which was a real credit to the hard work and
diligence of the Abingdon team, but ultimately were not successfully
commercialised by our customers nor, therefore, for Abingdon. The anticipated
manufacturing volumes from these three products did not materialise and were a
key reason for the disappointing revenue performance in the financial year.
During the second half of 2022 we started to rebuild our customer pipeline
focusing on opportunities outside of COVID-19 as we started to see, firstly,
COVID-19 strategies across many countries move towards treating it as a
seasonal illness and secondly many of our prospective customers move their
product development strategies away from COVID-19 and towards more normalised
activities.
Current Activity and Pipeline
We have seen an encouraging uplift in contract development opportunities
across a range of areas and we are expanding our contract development team to
support this increase in activity. We believe our knowledge leadership
position and our integrated service offering is resonating with prospective
customers who range from small, innovative start-ups to some of the largest
global healthcare companies. We believe contract development will become a
significant driver of revenue growth in the short-term and beyond, and will
also drive increased opportunities for technical transfer and manufacturing
over time.
Technical transfer is the process of optimising and scaling up the production
processes of a developed assay for manufacture and the production of three
batches to allow validation and verification of assay performance. We
currently have two active technical transfers that should be complete in H1
2023. We stopped one transfer due to the instability of the product's
manufacturing process (due to issues with the functioning of assay as provided
to us by our customer) but we remain in contact with the customer to see what
additional support we can provide. We have a number of additional transfer
opportunities within our pipeline which we are looking to bring in during the
remainder of calendar year 2022 and in 2023.
We have continued during 2022 to manufacture lateral flow tests for customers
across human health, animal health, plant health and environmental testing. A
key objective is to grow our manufacturing base through successful transition
of tests into manufacture and importantly these will build "annuity income" to
underpin future revenues.
Team
During the financial year we reduced our average staff numbers from 151 to
130, which sadly meant that a number of valued colleagues were made redundant.
The reason for the reduction was the transition away from COVID-19 activity
and the impact of the delayed payment from DHSC. We continued to right-size
the business post FY22 year-end as manufacturing did not proceed from the
three COVID-19 projects as described above. This was despite successful
technical transfer of all three products. As at 31st October 2022 there were
71 employees within Abingdon.
We would like to thank all of the Abingdon team, both current and past, for
their hard work and support during an extremely challenging period. The Board
have been impressed by this unwavering commitment to supporting our customers
and providing a first-class contract service despite the distractions.
Cost Restructuring
As noted above we right-sized the business during the financial year and post
year-end.
This involved a significant reduction in headcount as well as a reduction in
operational footprint and discretionary expenditure. In 2020 and 2021 the
Group had been built to service the significant volume opportunities arising
from COVID-19 testing. However, these didn't materialise for various reasons
and given the uncertainty around the ongoing requirement for high volume
COVID-19 testing it was necessary to reduce the cost-base of the business to
match more closely the commercial activity. The key focus of the management
team remains reducing the Group's cash burn and driving the Company into
positive cashflow. Based on the Group's forecasts we believe that we have the
financial resources in place to reach this target.
As part of this restructuring we have limited our expenditure on new product
development. We have paused both the Flu and Hepatitis C projects and have
focused on completing the proof of concept of the Lyme disease test. We remain
enthusiastic about the commercial opportunities for self-testing but are
cognisant of the financial investment needed in, for example clinical trials
and regulatory costs, to bring these products to market. Therefore, we believe
it is sensible to limit the expenditure in these areas for now and focus the
team's efforts of driving CDMO revenues with the aim of positive cashflow.
Intellectual Property
The Company continues to protect its intellectual property position and in the
area of lateral flow device readers, particularly the Company's AppDx®
smartphone reader, has continued to file UK and international patents. During
the financial year to June 2022 a patent was granted relating to AppDx®.
Other patent applications continue including one relating to a time-resolved
fluorescence reader which has been given a notice of grant for December 2022
and another ongoing application relating to blood self-test apparatus.
Governance and People
Mary Tavener was appointed senior-independent non-executive director in
November 2020 prior to listing on AIM. Abingdon's other non-executive director
is Dr Chris Hand who is a co-founder of Abingdon and non-executive chairman.
Lyn Rees (independent non-executive director) resigned as non-executive
director of the Company effective 30 September 2022 to focus on his
responsibilities outside of the Company. We would like to place on record our
thanks and appreciation to Lyn for his support and valued advice over the past
three years.
Our Audit Committee and Remuneration Committee currently comprises Mary
Tavener (Chair) with Chris Hand (non-executive chairman) and the executive
directors Chris Yates and Melanie Ross invited to attend as required from
time-to-time. The Board has concluded that at this time the Group does not
currently require a Nominations Committee but will review this assessment on a
regular basis including discussing the matter with its Nominated Advisor.
Scott Page, Company Secretary and Finance Director, left Abingdon Health in
July 2022. The Board would like to place on record their thanks to Scott for
his hard work and contribution over the past three years and wish him well for
the future. Melanie Ross, Chief Financial Officer, has taken over Company
Secretary responsibilities.
The Board remains focused on ensuring its own effectiveness and that of the
governance processes throughout the Group, and that these governance
structures remain fit for purpose as the Group develops and grows over time.
Mary Tavener is Abingdon's only independent non-executive director and, as
such, the Board's current composition does not comply with the requirements
for a minimum of two independent non-executive directors under the QCA
Corporate Governance Code, being the corporate governance code that the
Company has chosen to apply. The Board believes, however, that its current
composition is appropriate for the current size of the business and will
continue to review its structure periodically as the needs of the business
change.
DHSC Dispute
We were pleased that in June 2022 we were able to reach a settlement in
relation to the dispute with the Department of Health and Social Care
("DHSC"). The dispute resolution process arose due to the lack of payment by
DHSC for goods and services provided by Abingdon.
It is disappointing that we, alongside many other UK diagnostic companies,
have had to spend time and money recovering monies owed despite responding to
a "call to arms" by the UK Government. The Group believed at all times that
there were no legal grounds as to why these monies were not being paid in full
by DHSC but the reality was that it was important to reach a settlement with a
counter-party that effectively had unlimited time and financial resources at
its disposal to prolong the dispute. Given the UK Government's initial aim at
the start of the pandemic was to build a British diagnostics industry their
behaviours have been quite the opposite, both in terms of how they have dealt
with established UK businesses and their preference to order significant
quantities of tests, through recently established intermediaries,
predominantly from Chinese companies.
The settlement agreement was in full and final settlement of the outstanding
debt of £8.9m (excluding interest) and comprised:
i) A contractually required cash payment of £6.3m from DHSC to Abingdon,
which was paid as required to the Company on or before 22 July 2022;
ii) £1.5m of this cash payment was held under charge until the outcome of a
judicial review brought by the Good Law Project Limited in challenge to the
Secretary of State for Health and Social Care, was known; this payment was
subsequently released in full to Abingdon;
iii) transfer to the Company of ownership of the outstanding component stock
that it had procured on behalf of DHSC in 2020/21;
iv) joint-ownership, alongside DHSC, of the intellectual property of the
AbC-19™ COVID-19 antibody test; and
v) a lower royalty payable to DHSC on sales of the AbC-19™ COVID-19 antibody
test, with this royalty time limited to one year from the date of the
settlement agreement.
The settlement of the DHSC dispute has led to an overall exceptional write-off
of £1.6m in the 2022 financial accounts. This included legal costs of £0.2m
in 2022 and £1.4m in total in relation to writing off the outstanding
balances relating to the DHSC dispute. This is further broken down in note 5
below.
Judicial Review Process
In October 2022 Mr Justice Waksman issued his judgment in relation to the
Judicial Review proceedings initiated by the Good Law Project Limited ("GLP")
against the Secretary of State for Health and Social Care in which Abingdon
was an interested party. Mr Justice Waksman ruled in favour of DHSC on all
grounds, including lack of state aid to Abingdon and dismissed all claims
brought by the GLP. GLP did not appeal the judgement.
Whilst we were pleased with the outcome, the impact that this has had on
Abingdon and its employees since late-2020 should not be underestimated.
Throughout the process the GLP made a number of disparaging statements and
unsubstantiated assertions about Abingdon that have yet to be corrected,
despite attempts being made by Abingdon through its advisors inviting GLP to
do so.
Abingdon fully supports both openness and accountability relating to the award
of public contracts; however, this particular case brought by the GLP was
comprehensively dismissed on all grounds. Despite the Company's best efforts
to cooperate and demonstrate to the GLP that there was no bias or assistance
in these contracts being awarded, and to illustrate the impressive credentials
and experience of the Company and its employees in lateral flow test
development and manufacture, in the Board's opinion, the proceedings continued
long after they could have been halted. This is particularly the case in view
of the material facts made available to GLP by Abingdon well over a year
before judgment with a view to informing the GLP of the factual background.
Abingdon incurred exceptional legal costs in 2022 of £0.2m, and in total
£0.3m in relation to the judicial review.
Outlook & Funding
Having raised £6.5m via a successful placing and oversubscribed open offer in
December 2021, the Company has no current requirement for additional funding.
Cash at the end of the financial year was £2.4m and as of the end of October
2022 was £4.4m. We believe we have sufficient cash resources to fund progress
beyond 12 months from the signing date of the accounts, with our priority
being to move the Company to a positive cashflowposition.
Our strategic focus is on growing our CDMO business particularly in
non-COVID-19 markets in human health, animal health, plant pathogen and
environmental testing; particularly given the COVID-19 market outlook remains
uncertain and volatile and appears to be moving towards a seasonal infectious
disease in a similar manner to flu.
We are seeing our CDMO customer base expand and we are encouraged by the
growth in the range of potential opportunities. Our key priorities are to grow
our revenues and alongside this, given the economically uncertain outlook,
reduce our cash-burn through continued close cost management. To this end we
will focus our team's activities on CDMO business and near-term revenues with
own-product development being given less priority until we are closer to
break-even.
The lateral flow testing market is forecast to strongly grow for the next
decade and Abingdon as a knowledge leader in the sector with a
well-established track record of bringing products from "idea to market" is
well-placed to support a broad range of customers. We believe our full-service
contract service proposition strongly resonates with customers and we look
forward to building our business after an extremely challenging two years
during where COVID-19 dominated our industry.
We would like to thank all our employees for their hard work, dedication and
commitment during the past year despite the challenges we have faced in an
uncertain economic climate. We are confident with our contract services
customer base and our current growing pipeline means we are well positioned to
grow our business and deliver shareholder value going forward. We would like
to thank shareholders for their support.
Stakeholder Engagement
The Board of Directors of the Abingdon group of companies (the "Group")
considers that, individually and collectively, it has acted in the way which
in good faith would be most likely to promote the success of the Group for the
benefit of its stakeholders, employees, customers, suppliers, local government
and communities in accordance with the stakeholder and matters noted in
S172(1)(a-f) of the Act in the decisions taken during the year reported on,
having regard to:
• The likely consequences of any decision in the long term;
• The interests of the Group's employees;
• The need to foster the Group's business relationships with suppliers,
customers and others;
• The need to regularly communicate with our shareholders;
• The impact of the Group's operations on the community and the environment;
• The desirability of the Group in maintaining a reputation for high
standards of business conduct; and
• The need to act fairly between members of the Group.
The Board looked to promote the success of the Group, having regard to the
long term, whilst considering the interests of all stakeholders. Our strategy
is designed to secure the long-term financial viability of the Group to the
benefit of its members and all stakeholders. A main feature of this is to
continue to operate the business within tight budgetary controls and in line
with regulatory requirements. During the year this was done by reference to:
• our continued and ongoing communication with our employees;
• our continued and ongoing communication with our shareholders;
• our continued priority for health and safety improvement measured through
ongoing risk assessments;
• the approval of our strategic objectives ('our strategy') for the Group;
and
• the business plan for the next financial year ('our plan').
Stakeholder interests are considered by the Board through a combination of
methods.
Shareholders
We communicate with our shareholders through planned investor relation
activities, Regulatory News Service ("RNS") announcements and the publication
of our annual and half year reports. Through this we ensure our shareholders
are provided with insight into the Group strategy and how we create value that
will generate strong and sustainable results. We also engage with shareholders
through the AGM, one on one investor meetings and discussions with
shareholders where appropriate. The Board were mindful to inform shareholders
of the progress of both the DHSC dispute and the GLP legal case throughout.
Customers
Our customers are central to the strategic goals of the Group, and we strive
to deliver products that meet not only their specific needs, but the highest
applicable regulatory standards. We engage regularly with our customer base
and conduct annual customer experience surveys, taking action where
appropriate. We also meet our customers' needs by maintaining facilities that
are compliant to appropriate quality and regulatory standards and have dual
site capability as part of our disaster recovery planning.
Employees
We appreciate the value of diversity within our employee base and recognise
that the skills and knowledge of our employees is a key part of creating value
within the organisation. We strive to create a friendly and open culture
within the Group, holding regular all-staff calls led by either the CEO, CFO
or COO and encourage career progression within the Group.
The Group conducts an annual employee feedback survey, the results of which
are reported to the Board and fed back to the employees along with any
resulting actions. The Group has also encouraged the creation of an Employee
Forum to more directly communicate both employee thoughts, considerations and
needs to the senior management.
Open door sessions have also been conducted during the year to ensure open
communication regarding matters such as health and safety and COVID-19
concerns.
The business had hopes that the changes made to the people infrastructure
during the last fiscal year would see an end to the reduction in our
headcount, but unfortunately we reluctantly entered into additional redundancy
consultations with employees in roles that were identified 'at risk' during
the 2021/22 fiscal year. This process has enabled the business to right size
itself for the short- and medium-term opportunities that it predicts most
likely to occur, whilst remaining nimble enough to respond to changes in
forecasts going forwards. At every stage of the process employees were kept
informed and provided with appropriate support.
Dr Chris
Hand
Chris Yates
Non-Executive Chairman Chief Executive
Officer
24 November 2022
Operating and Financial Review
Revenue and Margins
In the year revenue fell 76% to £2.8m (2021: £11.6m). Excluding DHSC
revenue from the prior year, revenue fell 56%.
Revenue by Geographical Market
2022 £m % 2021 £m % Growth/
Geographical Market (Decrease)
UK 1.4 50% 6.6 57% (79)%
USA/Canada 0.2 6% 3.4 29% (95)%
Europe 1.0 38% 1.5 13% (31)%
ROW 0.2 6% 0.1 0% 185%
Total 2.8 100% 11.6 100% (76)%
Revenue by Operating Segment
Operating Segment 2022 £m % 2021 £m % Growth/
(Decrease)
Products 0.4 16% 8.3 72% (95)%
Contract Manufacturing 1.1 40% 1.7 15% (37)%
Contract Development 1.3 44% 1.6 13% (14)%
Total 2.8 100% 11.6 100% (76)%
Contract Manufacturing (manufacture of products to a defined specification
leading to recurring revenues, secured by customer contracts) fell 34% over
the period, predominantly due to two customer products and their
customer-supplied components requiring additional design activity, leading to
a £0.4m year on year reduction in sales. Both products are scheduled to
return to production in H2 22/23.
Product sales (own products that are part of our product catalogue that can be
ordered via the website or through a network of distributors) reduced to
£0.4m in the relevant period. 21/22 sales include DHSC revenue of £5.2m
and £2.8m of sales to a customer in the USA of our PCRD product for
incorporation into their own device. Excluding these non- repeating
customers, like for like sales fell 7%.
Contract Development (R&D activity based on a day rate, developing and
scaling up customer products as a fee for service) decreased 21%, It is
important to note that whilst revenue for scale up to manufacture would
typically be expected to lead to meaningful Contract Manufacturing revenue,
three customers in this area subsequently failed to move into manufacture for
customer-related reasons.
Gross margin in the financial year was (116)%, though this includes provisions
for stock write off of £3.7m, mainly relating to Abingdon owned AbC-19 stock
and an increase in provisions for obsolete items. Adjusting for this one-off
charge, underlying gross margin was 3%. This direct gross profit margin
continued to be impacted by the reduced level of manufacturing output in
relation to the labour overhead, carried due the expectation that contracts
would transition into contract manufacturing in the early new year. As
previously explained, this did not happen and this overhead has since been
reduced.
Adjusted EBITDA
The Group uses adjusted EBITDA as this excludes items which can distort
comparability as well as being the measure of profit that most accurately
reflects the cash generating activities of the Group. The reconciliation of
these adjustments is as follows:
Year Ended 30 June 2022 Year Ended 30 June 2021
£'000 £'000
Adjusted EBITDA (9,997) (3,256)
Share based payment expense (231) (1,367)
Impairment charges (7,192)
Non-recurring legal and professional fees (688) (257)
Non-recurring employee costs (198) (188)
Listing costs (903)
DHSC related costs (1,585)
Net Finance costs (65) (234)
Statutory EBITDA (19,956) (6,205)
Amortisation (121) (42)
Depreciation (1,516) (707)
Operating Loss (21,593) (6,954)
Adjusted EBITDA loss in the period was £10.0m (2021: loss £3.3m).
Headcount in the Group was an average of 130 (2021: 151) peaking at 133 in the
reporting period. Consequently, staff costs overall reduced to £5.3m (2021:
£7.4m) reflecting the full year impact of the reduction in heads implemented
during the previous year, and the savings associated with the second
redundancy programme in the current fiscal year. Exceptional costs of £0.2m
were incurred in the year due to this redundancy programme.
Professional costs in the year were £1.5m (2021: £1.9m). This falls to
£0.6m when excluding non-recurring costs associated with the fund raise,
completed in December 2021, legal costs associated with the DHSC and the GLP
challenge and costs incurred in pursuing acquisition opportunities,
subsequently aborted. Legal costs within the financial year relating to the
contractual dispute with the DHSC totalled £0.2m, and the costs associated
with the GLP legal case were £0.3m.
Obsolescence provisions totalling £3.7m have been made in the period. These
predominantly fall into two categories, being those non AbC-19™ raw
materials (£1.0m) that fall into ageing categories under which we
automatically provide against and certain finished goods and semi-finished
goods relating to AbC-19™ (£2.7m) which are flagged as obsolete as we
continue to review this product's place in the current market. Stock holding
continues to be an area of focus to both support customer requirements and
control working capital. Separate provisions have been made in exceptional
costs for the DHSC owned stock which transferred to Abingdon as part of the
settlement agreement (see Note 5).
Impairment of Assets
The Directors have compared the projected results of the Group to the carrying
value of its property, plant and equipment, which is considered to form a
single cash generating unit ("CGU") for impairment testing purposes. The Group
had invested heavily in growing the capacity of the Group in anticipation of
the DHSC contract fulfilment, along with associated contracts.
The future cashflows were tested on a group basis, which showed an estimated
present value of future cashflows into perpetuity of £1.8m, representing an
overall impairment of £7.2m. This was discounted at a rate of 23.7% and with
a long-term growth normalising at 3.0%. The Directors also performed a
complementary check of the expected capacity modelling for each key machine,
which approximated to the outcome of the cashflow model.
The impairment has been charged first to goodwill to eliminate this, with the
remainder of the charge allocated first to reduce the value of right of use
assets and leasehold improvements to a fixed level, and then pro-rated across
all other assets, excluding new intangible assets in two subsidiaries.
Cash Resources
Net cash outflow from operating activities was £7.7m (2021: outflow £12.9m).
A reduction year-on-year in payables and the unwinding of the DHSC contract
stock and payable amounts following the conclusion of the dispute being the
main drivers.
The net proceeds from financing activities were from the completion of the
fundraise in December 2021 when the Group raised money through a placing.
Altogether this represented a net cash decrease of £2.6m when compared to the
prior year, with a closing cash position of £2.4m (2021: £5.0m).
Financing
Post-year-end, the dispute with the DHSC was concluded and in July 2022 the
business received £6.3m cash in full settlement of the disputed amounts.
Cash at the end of October was £4.4m.
Earnings per Share
Earnings per share was a loss of 7.29p in the period and adjusted EPS was a
loss of 3.43p in the same period.
EPS
Basic EPS (7.29)p
Loss attributable to Shareholders £(21.6)m
Add: Share Based Payments £0.2m
Add: Non recurring legal fees £0.7m
Add: Non recurring employment costs £0.2m
Add: impairment charge £7.2m
Add: Other Costs relating to DHSC Settlement £1.6m
Add: Depreciation and Amortisation £1.6m
Add: Finance Costs £0.1m
Adjusted Loss attributable to Shareholders £(10.0)m
Adjusted EPS (3.43)p
Principal Risks and Uncertainties
Indication of risk on prior year
Risk Impact and description Mitigating actions
Funding risk and material uncertainty in relation to Going Concern Risk decrease vs prior year The cash position as at 31 October 2022 is £4.4m £6.3m was received from the DHSC, with £1.5m of this put in a blocked
account pending the result of the Good Law Project court case. This has now
concluded and the funds have been released.
The Business continues to grow its revenue generating opportunities and has a
strategy in place to develop long term relationships from Contract Development
through to Contract Manufacturing.
Costs are also regularly reviewed to ensure that they are line with the needs
of the business and continue to give the business sufficient runway.
Infectious Risk remains the same vs prior year A future escalation in the spread of COVID-19 or another pandemic type disease Dual site manufacturing capability across the primary manufacturing process in
in the UK poses a threat to the continuation of business operations if there both York and Doncaster.
Diseases and is a widespread infection in any of our facilities or amongst the workforce.
business
Cross functional teams and shift rotations creating bubble environments to
interruption mitigate the risk of people being unable to complete activities in either
R&D or Operations.
This would also apply to risk in the Customer and Supplier profiles where
crucial components and raw materials become scarce and difficult to import.
Supply chain activities are focused on managing both our relationships with
suppliers, as well as these risks through supply chain diversification and
dual sourcing considerations.
Indication of risk on prior year
Risk Impact and description Mitigating actions
Regulatory Approval Risk remains same vs prior year As a business that supplies to international Customers a significant We have a team of Quality and Regulatory specialists in house who can work on
proportion of the products where we are acting as Legal Manufacturer require multiple registrations in parallel to increase the likelihood of approvals.
registration from multiple regulatory bodies prior to being offered for sale.
Our EU representative for our products, Advena, have offices in Malta and the
There is no guarantee that any product registration by the Group will be UK and advise on EU specific matters and IVDR.
successful and failure to do so could have a major impact upon the Group's
ability to sell products in the relevant country.
Revenue Risk remains the same vs prior year If Revenue Growth is not continuously achieved there is a risk that capacity Strategic plan to bring more Research and Technical Transfer stage projects
will be under utilised. through the R&D Team. This generates revenue in the short term and will
Growth
lead to longer term sustainable relationships with customers. The number and
quality of customers in this area is high, giving the Board sufficient
confidence in achieving sales growth.
Use of automated lateral flow assembly equipment with versatile equipment
which can changeover product types and increase the throughput in Operations.
Indication of risk on prior year
Risk Impact and description Mitigating actions
Key Employees Risk remains same vs prior year The Group operates in an industry where recruitment and retention of talented The Group offers competitive salary and benefits packages to employees.
employees is crucial in being able to deliver the strategic objectives.
Our personal development review process aids in both identifying areas of
Talent pools in the industry are not as immediately available as they may have focus and success, as well as identifying talented individuals and the program
been 12-24 months ago so the Group must be proactive in talent attraction. of training that is needed to help them and the business achieve its highest
potential
Recent redundancies have meant that the Group have had to work harder to
retain and attract in an already difficult market.
Supply Chain Risk remains same vs prior year The supply chain is subject to price movements due to inflationary pressure as Contractual arrangements in place offer some mitigation for component pricing.
well as other potential factors such as COVID related transport cost
increases.
Suppliers are measured with robust key performance indicators, with our
highest-level suppliers being audited by our quality assurance team annually.
This may lead to increasing prices for goods as well as increased lead times Supply of stock to achieve on time delivery to customers is managed robustly
for critical components to ensure that we meet our customers' needs without holding unrequired amounts
of stock.
Where managing supply chain activities for new products and customers, the
team recognise that there is a balance between the pricing of components and
their availability due to location of manufacture. This is managed
accordingly with appropriate stockholding or dual sourcing where possible.
Going concern
The Directors have prepared cash flows for the foreseeable future, being a
period of at least 12 months from the expected date of approval of the
financial statements and continue to evaluate financial forecasts. The Group
continues to focus on securing sales of existing and new products, partnering
with other Companies to develop products for manufacture and transition these
in a timely manner. At 30 June 2022 the bank balance was £2.4m. Post year
end, £6.3m was received from the DHSC in full settlement of the outstanding
monies owed from the three contracts in dispute. Cash at the end of October
was £4.4m. This draws to a conclusion all the contractual commitments in
those relationships.
The Board is satisfied that based on current forecasts, there is sufficient
headroom and concluded that it is appropriate to prepare the Annual Report and
Accounts on a going concern basis.
Events after the reporting date
Following the signing of the settlement agreement on the 22nd June, the monies
agree, being £6.3m, were paid in full with £1.5m being put aside in a
blocked account pending the conclusion of the judicial review. This money
has now been released in full to Abingdon.
Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2022
Year ended 30 June 2022 Year ended 30 June 2021
Notes
£'000 £'000
Revenue 1 2,835 11,618
Cost of sales (6,427) (7,475)
Gross (loss)/profit (3,592) 4,143
Administrative expenses (6,645) (7,547)
Other income 240 148
Adjusted EBITDA (before adjusting items) (9,997) (3,256)
Amortisation (121) (42)
Depreciation (1,516) (707)
Impairment charges (7,192) -
Share based payment expense (231) (1,367)
Non-recurring legal, professional and fundraising fees (688) (257)
Listing costs - (903)
Non-recurring redundancy costs (198) (188)
Other exceptional costs relating to DHSC settlement 5 (1,585) -
Operating loss (21,528) (6,720)
Finance income 4 -
Finance costs (69) (234)
Loss before taxation (21,593) (6,954)
Taxation credit/(charge) 2 331 (19)
Loss for the financial period (21,262) (6,973)
- -
Other comprehensive income for the year net of tax
Total comprehensive loss for the year (21,262) (6,973)
Attributable to: (21,262) (6,973)
Equity holders of the parent
Basic earnings per share (pence) 4 (7.29) (2.65)
Diluted earnings per share (pence) 4 (7.29) (2.65)
Consolidated Statement of Financial Position
As at 30 June 2022
Notes 30 June 30 June 2021
2022
£'000 £'000
Non-current assets
Goodwill - 763
Other intangible assets 36 465
Property, plant, and equipment 1,777 9,041
1,813 10,269
Current assets
Inventories 534 7,888
Trade and other receivables 7,844 9,978
Income tax receivable 183 115
Cash and cash equivalents 2,397 4,977
10,958 22,958
Total assets 12,771 33,227
Current liabilities 5,059 10,405
Trade and other payables
Borrowings 115 125
Obligations under leases 150 227
5,324 10,757
Non-current liabilities
Borrowings 435 367
Obligations under leases 580 776
1,015 1,143
Total liabilities 6,339 11,900
Net assets 6,432 21,327
Equity
Attributable to the owners of the parent:
Share capital 6 76 69
Share premium 30,309 24,180
Share based payment reserve 6 153 44
Retained losses (24,106) (2,966)
Total equity 6,432 21,327
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2022
Share Capital Share premium Share based payment reserve Retained earnings Total equity attributable to owners of the parent
£'000 £'000 £'000 £'000 £'000
Balance at 1 July 2020 15 13,195 70 (10,531) 2,749
Year ended 30 June 2021:
Profit and loss - - - (6,973) (6,973)
Total comprehensive loss for the year - - - (6,973) (6,973)
Other movements:
Capital reduction - (13,145) - 13,145 -
Bonus share allotment 46 (46) - - -
Share option expenses - - 1,367 - 1,367
Share options vested 1 - (973) 973 1
Share options cancelled - - (420) 420 -
Conversion of loan notes 1 3,481 - - 3,482
Shares issued on listing 6 21,994 - - 22,000
Cost of issue of shares - (1,299) - - (1,299)
Balance at 30 June 2021 69 24,180 44 (2,966) 21,327
Year ended 30 June 2022:
Profit and loss - - - (21,262) (21,262)
Total comprehensive loss for the year - - - (21,262) (21,262)
Other movements:
Share option expense - - 231 - 231
Share options exercised - - (10) 10 -
Share options cancelled - - (112) 112 -
Issue of shares 7 6,493 - - 6,500
Cost of issue of shares - (364) - - (364)
Balance at 30 June 2022 76 30,309 153 (24,106) 6,432
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2022
30 June 30 June
2022
2021
£'000 £'000
Cash flows from operating activities:
Loss for the year (21,262) (6,973)
Adjustments for:
Other income (240) (148)
Net finance costs 65 234
Tax (credit)/charge (331) 19
Amortisation and impairment of intangible assets 1,270 42
Share based payments 231 1,367
Depreciation and impairment of property, plant and equipment 7,559 707
Loss on disposal of property, plant and equipment 240 -
Impairment of Inventories (including DHSC) 9676 -
Changes in working capital:
Decrease/(increase) in inventories 2.322 (7,109)
Decrease/(increase) in trade and other receivables 2,134 (8,103)
(Decrease)/increase in trade and other payables (5,170) 7,033
Cash used in operations (8,150) (12,931)
Interest paid (including leases) (58) (51)
Income taxes received 323 106
Insurance claim proceeds 146 -
Net cash outflow from operating activities (7,739) (12,876)
Interest received 4 -
Purchase of intangible assets (78) (71)
Internally capitalised development costs - (419)
Purchase of property, plant and equipment (682) (6,761)
Proceeds on disposal of property, plant and equipment - 8
Payment of deferred consideration - (32)
Net cash used in investing activities (756) (7,275)
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2022 (continued)
30 June 30 June
2022
2021
£'000 £'000
Financing activities
Proceeds from issue of own shares (net of costs *) 6,136 20,702
Cash withheld for SAYE scheme (7) 9
Proceeds from new bank loans and borrowings 167 250
Payment of loans (125) (19)
Payment of lease obligations (144) (222)
Payment on settlement of accrued lease obligations (112) -
Proceeds from issue of loan notes - 20
Net cash generated from financing 5,915 20,740
(2,580) 589
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year 4,977 4,388
Cash and cash equivalents at end of the year 2,397 4,977
Recognised in the Statement of Financial Position as:
Cash at bank and in hand 2,397 4,977
Overdrafts - -
2,397 4,977
* Net of costs of £364,000 (2021 - £1,298,000) set against the share premium
account only. In the prior year additional costs of admission to AIM are
included within exceptional costs in the Statement of Comprehensive Income and
are shown as Operating cashflows.
Abingdon Health PLC
Notes to the Financial Statements
For the Year Ended 30 June 2022
Company information
Abingdon Health PLC ("the Company") is a public limited company domiciled and
incorporated in England and Wales. The Company is quoted on the London Stock
Exchange's Alternative Investment Market ("AIM"). The registered office is
York Biotech Campus, Sand Hutton, York, YO41 1LZ. The consolidated financial
information (or "financial statements") incorporates the financial information
of the Company and entities (its subsidiaries) controlled by the Company
(collectively comprising the "Group").
The principal activity of the Group is to develop, manufacture and distribute
diagnostic devices and provide consultancy services to businesses in the
diagnostics sector.
Basis of preparation
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined by section 434 of the Companies Act
2006.
The financial information for the year ended 30 June 2022 and the year ended
30 June 2021 does not constitute the Company's statutory accounts for those
years. Statutory accounts for the year ended 30 June 2021 have been delivered
to the Registrar of Companies. The statutory accounts for the year ended 30
June 2022 were approved by the Board on 23 November 2022 and will be delivered
to the Registrar of Companies in due course. The statutory accounts for the
period ended 30 June 2022 will be posted to shareholders at least 21 days
before the Annual General Meeting and made available on the Group's website
(https://www.abingdonhealth.com/) .
The Group's statutory financial statements for the year ended 30 June 2022,
from which the financial information presented in this announcement has been
extracted, were prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006. The financial
statements have been prepared on the historical cost basis with the exception
of certain items which are measured at fair value as disclosed in the
principal accounting policies set out in the Group's Annual Report. These
policies have been consistently applied to all years presented.
The preparation of financial statements in conformity with IFRS requires the
use of estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Although these
estimates are based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from these estimates.
The auditor's reports on the accounts for 30 June 2022 and 30 June 2021 were
unqualified and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006. The auditor's report for the year ended 30 June 2021 did
include a reference to a material uncertainty related to going concern,
drawing attention to the fact that the Company was dependent on the
recoverability of amounts owed by the Department of Health and Social Care
which was being pursued through a dispute resolution process in the Contract,
or was required to investigate further funding and reduce costs further in the
near term, without qualifying their report. The opinion was not modified in
respect of this matter. The auditor's report for the year ended 30 June 2020
did not draw attention to any matters by way of emphasis.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
Critical judgements
The following judgements (apart from those involving estimates) have had the
most significant effect on amounts recognised in the financial statements:
Right of use asset
recognition
Management have assessed each lease liability for recognition under IFRS 16
and recognised a right of use asset where appropriate.
One lease includes a material component of service charge by comparison to the
headline rental payments, where this service charge partially covers shared
areas and facilities which would normally form part of a rental price. The
Directors have applied judgement in splitting this service charge into
rent-like components of £24,000 per annum (which qualify for capitalisation
as a right of use asset), utility fees of £104,000 per annum, and ongoing
shared costs of £72,000 per annum (which the latter two do not qualify for
capitalisation as a right of use asset, nor recognition as a lease liability).
The lease runs for a 7-year term and the total value of rent-like components
capitalised (prior to amortisation) is £161,000.
Revenue recognition
In line with IFRS 15 management are required to determine appropriate revenue
recognition points for all revenue streams. Where multiple contracts are
entered into with a single counterparty any instalment payments are not
considered to be a key indicator of the satisfaction of a performance
obligation, although linked contracts with a counterparty are considered in
conjunction when identifying the appropriate point for revenue recognition.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a
material adjustment to the carrying amount of assets and liabilities are as
follows:
Valuation of intangible assets (Group 2022: £36,000; 2021: £465,000)
Management judgements are required to estimate the useful lives of intangible
assets, having reference to future economic benefits expected to be derived
from use of the asset. Economic benefits are based on the fair values of
estimated future cash flows.
Management further test the assets for impairment on an annual basis, by
reference to future plans and expectations for group revenues and profits. An
impairment of £386,000 has been recognised against intangible assets during
the year
Valuation and impairment of cash generating units (including goodwill)
Goodwill is tested annually for impairment as part of a cash generating unit
("CGU"). The test considers future cash flow projections of each CGU on a
group basis, as the group as a whole is considered to be a single CGU. In the
current year, two tests have been performed, a discounted cash flow model and
a value-in-use model, which have both approximated to the same value.
Where the discounted cash flows are less than the carrying value of the CGU,
an impairment charge is recognised for the difference.
Share based payments
The determination of the fair values of EMI and SAYE options has been made by
reference to the Black-Scholes model.
Going concern
In their assessment of the Group's ability to continue as a going concern, the
Directors have considered the principal risks and uncertainties facing the
business, along with the Group's objectives, policies and processes for
managing its exposure to financial risk. In making this assessment the
Directors have prepared cash flows for the foreseeable future, being a period
through to 30 June 2024, and continue to evaluate financial forecasts for
revenue, expenditure and cash flows.
Net cash at the end of the year was £2.4m, and the group received £6.3m in
full and final settlement of the DHSC outstanding amounts in July (post
year-end). Cash at the end of October was £4.4m.
As set out above, the business continues to focus on securing sales of
existing and new products, and in particular are seeing an uplift in the
amount of CDMO customers we are in meaningful discussions with, which should
lead to repeatable revenue, driving top line growth in the Group.
Having considered all the above, the Directors have prepared the financial
statements on a going concern basis.
Non-recurring income and costs
The Group seeks to highlight certain items as exceptional operating income or
costs. These are considered to be exceptional in size, frequency and/or nature
rather than indicative of the underlying day to day trading of the Group.
These may include items such as acquisition costs, restructuring costs,
obsolescence costs, employee exit and transition costs, legal costs, profits
or losses on the disposal of subsidiaries, and loan impairments. All of these
items are charged or credited before calculating operating profit or loss.
The Directors apply judgement in assessing the particular items, which by
virtue of their size and nature are disclosed separately in the Statement of
Comprehensive Income and the notes to the financial statements as
non-recurring income and costs. The Directors believe that the separate
disclosure of these items is relevant to understanding the Group's financial
performance.
Guarantees, commitments and contingent liabilities
At 30 June 2022, the Group and Company had no contingent liabilities (2021 -
none).
At 30 June 2022 the Group had contracted for capital commitments of
approximately £nil (2021 - £0.8 million). These amounts have not been
reflected in the financial statements.
1. Revenue
The Group applies IFRS 15 'Revenue from contracts with customers'. Under IFRS
15, the Group applies the 5-step method to identify contracts with its
customers, determine performance obligations arising under those contracts,
set an expected transaction price, allocate that price to the performance
obligations, and then recognises revenues as and when those obligations are
satisfied.
Segmental analysis of revenue
2022 2021
£'000 £'000
Product sales 465 8,360
Contract Manufacturing 1,124 1,690
Contract Development 1,246 1,568
Total revenue from contracts with customers 2,835 11,618
Revenue analysed by geographical market
2022 2021
£'000 £'000
United Kingdom 1,417 6,596
Europe 1,072 1,560
USA & Canada 182 3,405
Rest of World 164 57
2,835 11,618
All revenue received in the current and comparative years has been recognised
at a point in time in accordance with the Group's revenue recognition policy.
2. Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
2022 2021
£'000 £'000
Current tax
UK Corporation tax on profits for the current year - 19
Adjustments in respect of prior years (331) -
Total current tax (331) 19
Deferred tax
Origination and reversal of temporary differences - -
Impact of change in tax rates - -
Total deferred tax - -
Total tax (credit)/charge (331) 19
The charge for the year can be reconciled to the profit per the Consolidated
Statement of Comprehensive Income as follows:
2022 2021
£'000 £'000
(Loss) before taxation (21,593) (6,954)
Expected tax (credit) based on a corporation tax rate of 19% (2021 - 19%) (4,103) (1,321)
(2019 - 19%)
Tax effect of expenses that are not deductible in determining taxable profit 717 228
Depreciation on assets not qualifying for tax allowances 316 94
Change in unrecognised deferred tax asset 3,072 1,629
Share based payments 44 (705)
Prior Year Adjustment (331) -
Other differences (46) 94
Total tax (credit)/charge (331) 19
The UK corporation tax rate was 19% throughout the year.
On 3 March 2021, the Chancellor of the Exchequer announced that the main rate
of corporation tax in the United Kingdom will rise to 25% with effect from 1
April 2023 for companies earning annual taxable profits in excess of
£250,000. Deferred tax balances at the reporting date are therefore measured
at 25% (2021: 25%; 2020: 19%).
3. Dividends
No dividends were paid in the current or prior year.
4. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
2022 2021
Earnings used in calculation (£'000) (21,262) (6,973)
Weighted average number of ordinary shares 291,622,638 262,926,110
Basic EPS (pence/share) (7.29) (2.65)
Weighted average number of dilutable shares 291,622,638 262,926,110
Diluted EPS (pence/share) (7.29) (2.65)
The diluted EPS is the same as the Basic EPS as there is a loss for each of
the periods concerned.
In each period there were share options outstanding. As at 30 June 2022,
options which are out of the money are excluded from the calculation of the
weighted average number of dilutable shares.
The Directors use adjusted earnings before certain non-recurring costs
("Adjusted Earnings") as a measure of ongoing performance and profitability.
These non-recurring costs are presented as separate items on the face of the
Consolidated Income Statement.
The calculated Adjusted Earnings for the current and comparative periods are
as follows:
2022 2021
£'000 £'000
Loss before taxation attributable to equity owners of the Parent (21,593) (6,954)
Share-based payment costs 231 1,367
Impairment charges 7,192 -
Non-recurring legal fees 688 257
Listing costs - 903
Non-recurring employee redundancy costs 198 188
Exceptional costs relating to settlement of DHSC contract (see note 5) 1,585 -
Depreciation and amortisation 1,638 749
Finance costs 69 234
Adjusted Earnings (9,992) (3,256)
Basic and diluted Adjusted Earnings per share (pence/share) (3.43) (1.25)
The calculation of Adjusted Earnings is consistent with the presentation of
Adjusted Earnings before Interest, Tax, Depreciation, and Amortisation, as
presented on the face of the Statement of Comprehensive Income. This adjusted
element also removes non-recurring items, as explained further above. The
Directors have presented this Alternative Performance Measure ("APM") because
they feel it most suitably represents the underlying performance and cash
generation of the business, and allows comparability between the current and
comparative period in light of the rapid changes in the business (most notably
its admission to AIM and associated costs), and will allow an ongoing trend
analysis of this performance based on current plans for the business.
5. Impact of Department of Health and Social Care
("DHSC") Contract on the Income Statement (IS) and the Statement of Financial
Position ("SFP")
Following the long-standing dispute between the Company and DHSC, which was
disclosed in note 16 to the prior year's financial statements, the Company and
DHSC signed a settlement agreement in June 2022. This resulted in the full and
final payment of monies owed to the Company on 7 July 2022.
However, the settlement included a number of adjustments to the outstanding
monies owed to the Company. All such adjustments have been recognised within
the current year's financial statements as follows:
Description of adjustment Location in financial statements IS Amount £'000
Acquisition and impairment of inventories Exceptional costs - DHSC (5,536)
Relinquishing of payable to DHSC for components Exceptional costs - DHSC 4,579
Credit loss arising on the outstanding receivable from DHSC Exceptional costs - DHSC (600)
Cancellation of accrued royalty payments Exceptional costs - DHSC 6
Interest received on overdue payment Exceptional costs - DHSC 168
Other legal fees (see below) Exceptional costs - DHSC (202)
Net (expense) to IS (1,585)
Other legal fees include significant legal costs in defending the Company's
position totalling £202,000, which have also been recognised within
exceptional costs relating to the DHSC contract.
Following the adjustments described above, the Company has the following
inclusions on its SFP as at the year end in relation to DHSC:
2022 2021
Group £'000 £'000
Inventories - 3,987
Trade receivables (inclusive of VAT but after irrecoverable amounts) 6,266 6,410
Contract liability - (5,308)
Net impact on SFP 6,266 5,089
The total net exposure was received in cash on 7 July 2022. The Company does
not believe it has any further exposure to future costs or risks associated
with this contract.
6. Share capital and reserves
2022 2021
Ordinary share capital
Authorised Number Number
Ordinary shares of 0.025p each 121,711,614 95,699,114
Deferred shares of 0.025p each 182,316,812 182,316,812
304,028,426 278,015,926
Allotted and fully paid Number Number
Ordinary shares of 0.025p each 121,711,614 95,699,114
Deferred shares of 0.025p each 182,316,812 182,316,812
304,028,426 278,015,926
£'000 £'000
Ordinary shares of 0.025p each 31 24
Deferred shares of 0.025p each 45 45
76 69
On 21 December 2021 the Company raised £6.5 million (before expenses) by way
of issuing 26,000,000 ordinary shares of 0.025 pence each at a premium of 25
pence per share.
On 25 May 2022 there was an exercise of options over 12,500 Ordinary shares of
0.025 pence each.
Reconciliation of movements during the year:
Number
At 1 July 2021 278,015,926
Issue of shares 26,000,000
Exercise of share options 12,500
At 30 June 2022 304,028,426
Reserves of the Company represent the following:
Share capital - Shares in the Company held by shareholders at a proportional
level with equal voting rights per share.
Share premium - Excess over share capital of any investments.
Retained earnings - This comprises the accumulated trading results of the
Group.
Share-based payment reserve - This reserve comprises the fair value of options
share rights recognised as an expense. Upon exercise of options or performance
share rights, any proceeds received are credited to share capital.
7. Share options
Group & Company Number of share options Weighted average exercise price
30 June 2022 30 June 2021 30 June 2022 30 June 2021
Number Number £ £
Outstanding at 1 July 2021 729,467 287,440 0.5071 0.0010
Granted - 2,049,275 - 0.2191
Forfeited (497,186) (204,808) 0.5755 0.3355
Lapsed - (80,000) - 0.0010
Exercised (12,500) (1,322,440) 0.0003 0.0080
Outstanding at 30 June 2022 219,781 729,467 0.3997 0.5071
Exercisable at 30 June 2022 - - - -
12,500 options were exercised during the year.
The options outstanding at 30 June 2022 had an exercise price ranging from
£0.00025 to £0.70 and a remaining contractual life of 1 year and 9 months.
The options exist at 30 June 2022 across the following share option schemes:
Number of shares Exercise price per share (£) Fair value of scheme Vesting period
Options issued in April 2021 104,174 0.00025 215,449 1 year
SAYE scheme commenced in March 2021 138,608 0.70 368,211 3 years
242,782 583,660
The fair value of the scheme is being expensed over the vesting period. All
share options expire 10 years after the date of issue.
Group Company
30 June 2022 30 June 2021 30 June 2022 30 June 2021
£'000 £'000 £'000 £'000
Expenses recognised in the year
Arising from equity settled share-based payment transactions 231 1,367 87 1,238
8. Annual Report & Accounts
The Company's Annual Report and Accounts for the year ended 30 June 2022 will
be sent to shareholders on 28 November 2022 and is available on the Company's
website www.abingdonhealth.com (http://www.abingdonhealth.com/) along with
the Company's Notice of Annual General Meeting, which was sent to shareholders
on 23 November 2022.
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