REG - Diaceutics PLC - Diaceutics PLC – Half Year Results
26/09/2023 07:00
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RNS Number : 5982N Diaceutics PLC 26 September 2023
Diaceutics PLC - Half Year Results
Diaceutics reports 32% growth in revenue and reaffirms full year outlook
66% growth in recurring revenues to £4.6 million, representing 47% of
revenues in H1 2023
Order book growth of 43% to £24.1 million providing good forward visibility
Four enterprise-wide engagements secured by end H1 2023
Core DXRX platform adoption by large pharma customers driving business
momentum
Daily alerts launched for DXRX Signal enabling pharma clients to identify
patients previously not receiving the most appropriate treatment due to lack
of timely data
Diaceutics becoming the primary commercialisation partner for pharma launching
precision medicines, with 21 of the top 30 global pharma companies as
Diaceutics' customers
First of its kind virtual lab conference was successfully held in July 2023 -
labs on the DXRX platform grows to 900
Strong balance sheet with cash of £17.9 million - fully funded to execute
significant growth plans
Peter Keeling stepping down as CEO - will remain with the Company to advance
corporate development
Ryan Keeling appointed as CEO Designate
Belfast and London, 26 September 2023 - Diaceutics PLC (AIM: DXRX), a leading
technology and solutions provider to the pharmaceutical industry, today
announces continued strong performance and growth across its business and its
unaudited half year results for the six months ended 30 June 2023.
H1 2023 Financial Highlights:
H1 2023 H1 2022 Change
Revenue £9.9m £7.5m +32%
Platform based revenue 83% 76% +7 ppts
Recurring revenue percentage of overall revenue 47% 37% +10 ppts
Gross Profit £8.7m £6.3m +38%
Gross Profit Margin 88% 84% +4 ppts
EBITDA -£0.2m £0.3m -£0.5m
Loss before tax -£2.0m -£1.1m -£0.9m
Cash inflow from operations £0.7m £3.3m -£2.6m
Net cash £17.9m £20.4m -£2.5m
Order book* £24.1m £10.2m +£13.9m
· Revenue for the six months to 30 June 2023 increased 32% to £9.9 million
(H1 2022: £7.5 million), 25% on a constant currency basis
· Recurring revenue grew 66% to £4.6 million and represents 47% of revenues in
the period (H1 2022: £2.8 million and 37% of revenue in the period)
· 43% increase in order book* at 30 June 2023 to £24.1 million, up from £16.9
million at December 2022, with £6.8 million of the order book expected to be
realised in H2 2023
· Recurring revenue now represents 94% or £22.7 million of the order book
· EBITDA loss of -£0.2 million in line with accelerated investment strategy
announced in January 2023
· Cash at 30 June 2023 was £17.9 million (31 December 2022: £19.8 million),
reflecting the acceleration in platform and data investment
H1 2023 Operational Highlights:
· Diaceutics worked with 50 therapies in H1 2023, up 22%, across 37 customers
(H1 2022: 41 therapies across 34 customers)
· Four enterprise-wide engagements secured by 30 June 2023 with a total contract
value of $20.1 million to deliver insight data solutions for up to three years
across 25 pharma therapies. An enterprise-wide engagement is characterised by
a customer deploying the DXRX platform across three or more of the precision
medicines in their portfolio
· DXRX Signal product enhanced and now providing daily alerts. This
ground-breaking innovation will provide Diaceutics' customers with even more
timely data to identify patients who would benefit from their therapies and
improve their commercial success. For patients, it means their chances of
receiving the optimal therapy within the window of effectiveness is
significantly improved
· DXRX Signal has identified over 46,000 potential US patients so far in 2023
for its pharma customers
· Data tokenisation, which involves the joining of testing and treatment data
integral to new products being launched, completed and on track to be launched
in H2 2023 - this will deliver enhanced patient insights and value to
customers
· First of its kind virtual lab conference was successfully held in July 2023,
targeted at US labs and physicians, driving better platform network engagement
and recruitment with over 1,000 labs and physicians in attendance. A European
conference event is set to be launched in H1 2024
· 49 labs added to the DXRX platform, taking the total to 900 across 44
countries, increasing DXRX global platform reach with further recruitment
expected from the virtual lab events in H2 2023
· Experienced Non-Executive Director, Graham Paterson, joins the Board as a
Non-Executive Director and Audit and Remuneration Committees' chair on 1
October 2023
Peter Keeling, CEO of Diaceutics commented:
"As our pharma customers continue to evolve their investment to precision
medicines, we are extremely well positioned to deliver the data insights and
lab network they need to find patients in need of appropriate therapies. We
are pleased to report that the strong momentum we enjoyed in 2022 has
continued into 2023 and delivered a very positive first half performance, with
recurring revenue and order book growth, continued expansion of our lab
network and therapy brand growth in line with our strategic roadmap. Pharma
companies are increasingly recognising the importance of utilising our data
technology and lab network to significantly improve their commercial success.
"Most encouraging is the positive feedback we continue to receive from our
clients as they increasingly use the DXRX platform to support the digital
commercialisation of therapies delivered to patients in need worldwide. We
remain confident in our proven growth strategy and ability to perform and
deliver future growth as we continue to hit our key milestones for the DXRX
platform expansion and introduce new products to profile and target suitable
patients."
Planned CEO Transition
The Company this morning announced separately details of its planned CEO
transition. Having co-founded the Company and spent 18 years as its CEO, Peter
Keeling has informed the Board of his intention to step back as CEO of
Diaceutics on 1 January 2024. He will continue to serve on the Board as an
Executive Director, to support the CEO transition. Thereafter, Peter's primary
focus will be to accelerate the corporate development of Diaceutics. This will
further strengthen Diaceutics leadership position as the primary partner for
pharmaceutical companies as they seek to commercialise the new generation of
precision therapeutics across a range of disease areas over the coming months
and years.
Peter Keeling co-founded Diaceutics in 2005 and has led the growth of the
Company from a niche consulting service provider to a high margin, high growth
diagnostic commercialisation platform. The Company now serves 21 of the top 30
global pharma companies, with 161 people across Europe and North America and a
network of 900 laboratories worldwide. Peter also led the Company's public
listing in 2019.
Ryan Keeling, current Chief Innovation Officer, has today been appointed CEO
Designate and will become CEO on 1 January 2024. Ryan joined Diaceutics in
2006 and became a member of the Board on IPO in 2019. His current
responsibilities as Chief Innovation Officer will be split between the Chief
Commercial Officer and Chief Data Officer during the transition period.
Ryan is an expert in the commercialisation of diagnostics and associated
technology, with over 17 years' experience in the field. He is the architect
of the Company's data capabilities and DXRX platform, leading the development
and commercialisation of the Group's technology, including its proprietary
data lake. During his tenure with Diaceutics, Ryan has underpinned the
Company's growth, holding the key roles of Chief Commercial Officer, Chief
Operating Officer and most recently, Chief Innovation Officer where he has led
the Group's product innovation, with a near term focus on the development of
DXRX.
Outlook
We observed the pharmaceutical industry spending cautiously during H1 2023,
predominately attributed to general uncertainties around macroeconomic and
political pressures, particularly reorganisations and drug pricing policies.
Despite this, Diaceutics has seen continued strong demand from new customers
and renewals of its insight and engagement solutions leading to order book
growth and increases in recurring revenues.
The market opportunity available to Diaceutics is significant, larger than
ever and continues to grow at pace as global pharma accelerates the shift to
precision medicine to improve patient access, capture lost revenue and
increase profitability. The successes of 2023 to date and the significant
momentum achieved across the period serve to validate the Group's growth
strategy, with trading in line with management expectations. The Board is
confident that Diaceutics can continue to execute its growth strategy and
seize the market opportunity as we become the primary commercialisation
partner for pharma companies launching precision medicines, and today
reaffirms its full year outlook.
Analyst Presentation
A webinar presentation for analysts will be held at 10.00 am on Tuesday, 26
September 2023 via the London Stock Exchange's SparkLive platform. Those
wishing to attend can register using the following link:
https://www.lsegissuerservices.com/spark/Diaceutics/events/3e138a9b-2f9d-4adf-b5e0-790cb1f39b49
(https://www.lsegissuerservices.com/spark/Diaceutics/events/3e138a9b-2f9d-4adf-b5e0-790cb1f39b49)
Investor Presentation
Peter Keeling (CEO), Nick Roberts (CFO) and Ryan Keeling (CEO Designate) will
also provide a live presentation relating to the Company's results via the
Investor Meet Company platform on Tuesday 26 September 2023 at 4.30 pm. The
presentation is open to all existing and potential shareholders and
registration can be completed via the following link:
https://www.investormeetcompany.com/diaceutics-plc/register-investor
(https://www.investormeetcompany.com/diaceutics-plc/register-investor)
*Order book is the value of future contracted revenue not yet recognised
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance
with the Company's obligations under Article 17 of MAR. The person responsible
for making this announcement on behalf of the Company is Nick Roberts, Chief
Financial Officer.
Enquiries:
Diaceutics PLC Tel: +44 (0)28 9040 6500
Peter Keeling, Chief Executive Officer investorrelations@diaceutics.com
Ryan Keeling, Chief Executive Officer Designate
Nick Roberts, Chief Financial Officer
Stifel Nicolaus Europe Limited (Nomad & Broker) Tel: +44 (0)20 7710 7600
Ben Maddison
Nick Harland
Kate Hanshaw
Alma PR Tel: +44(0)20 3405 0205
Caroline Forde diaceutics@almapr.co.uk
Matthew Young
Kinvara Verdon
About Diaceutics
At Diaceutics we believe that every patient should get the opportunity to
receive the right test and the right therapy to positively impact their
disease outcome.
We provide the world's leading pharma and biotech companies with an end-to-end
commercialisation solution for precision medicines through data analytics,
scientific and advisory services enabled by our platform DXRX - The
Diagnostics Network ®.
Strategic and Operational Review
Business and Strategic Overview
We have continued to build on the momentum from 2022 with encouraging
financial and operational progress in the six months to 30 June 2023. The
successes in the period have underpinned a strong financial performance which
includes revenue growth of 32% to £9.9m, improved visibility of revenues with
47% now recurring and significant order book growth of 43% to £24.1 million,
providing excellent forward visibility; these all support our sustainable
growth as we continue to deliver against our strategic roadmap.
Growth during the period has been driven by a number of factors including the
increased adoption of our DXRX platform by large pharma customers. A key
pillar of the platform is our extensive lab network. In the six months to 30
June 2023, we have added 49 labs to the platform network, taking the total to
900, and we also launched the first of two virtual lab conferences in July
2023. These virtual events deliver specialist thought leadership content to
labs and physicians, driving better platform network engagement and
recruitment, and allowing us to continue to leverage the platform network as a
key differentiator and growth accelerator.
We remain committed to investing in the expansion of our unique assets and key
value drivers: our partner network, data repository, and platform product
offering. During H1 2023 we have made good progress against our accelerated
investment strategy; we have expanded the partner network, enhanced the value
of the data repository and successfully launched a number of new capabilities
on the DXRX platform. We continue to ensure that the customer is at the
centre of everything we do and that we are ideally positioned to capitalise on
the increasing precision medicine market and grow Diaceutics' presence within
our customers' commercialisation strategy budgets.
The Group's therapy brand engagement remains consistently strong with
Diaceutics working with 50 therapies in H1 2023 (up 22%) across 37 customers
(H1 2022: 41 brands across 34 customers).
Customer centricity is fundamental to our growth strategy, and we are
embedding our customer centricity framework across the organisation. The
investment in this strategy includes developing processes to capture the voice
of our customers and having dedicated customer account teams to promote
integrated cross-functional working. These enable continuous customer focused
improvements and seamless delivery of our solutions. We have been delighted
with the feedback we have had to date from our customers as a result of this
framework, with exceptionally strong engagement and feedback.
Overall, we are pleased with the progress made against the strategic
milestones set out in our accelerated investment strategy at the beginning of
2023 and this progress is summarised in the milestone tracker below:
Accelerated investment strategy - milestones set for 2023 Progress and impact in 2023
Secure best-in-class organic revenue growth of between 20-25%. Revenue growth of 32% with underlying constant currency growth of 25% (H1
2022: 25% with CCY growth of 18%).
Transition of business onto the DXRX platform and increase the value of 83% of revenue derived from the DXRX platform (H1 2022: 76%).
multi-year recurring revenue contacts.
Recurring revenue grew 66% to £4.6 million and represents 47% of revenues in
the period (H1 2022: £2.8 million and 37% of revenue in the period).
Order book increased 43% to £24. 1 million (H1 2022: £10.2 million).
Secure additional enterprise-wide* engagements. Secured 4 enterprise-wide engagements across 25 therapies (as at 31 December
2022: 2 engagements across 8 therapies).
Enrich data and product offerings DXRX Signal product enhanced in H1 2023 and launched in H2 2023 providing
daily alerts.
Invest in platform scale and capability.
Tokenisation and joining of testing and treatment data completed and on track
to be launched in H2 2023.
Accelerate growth and engagement of the laboratory network and platform-based We expanded our lab network to include 900 laboratories across 44 countries
community. (as at 31 December 2022: 851 across 38 countries).
Launched first virtual lab conference in July 2023 targeted at US labs and
physicians with 1,018 participants.
Expand the number of therapy brands generating revenue and the average revenue We worked with 50 brands during the period with an average revenue per brand
per brand. of £198,000 (H1 2022: 41 brands at an average of £184,000 per brand) - 8%
increase in revenue per brand.
Transform our customer experience and service. Added 4 Vice Presidents, enhancing strength and depth of senior management,
bolstering industry expertise and facilitating a sharper emphasis on
operational success.
Added 10 employees (inc. VPs) to take the total to 161 at 30 June 2023 and
reorganised customer experience and service staff into 9 core customer centric
account teams, creating a more efficient and effective structure to support
our strategy.
* An enterprise-wide engagement is characterised by a customer deploying the
DXRX platform across three or more of the precision medicines in their
portfolio
Three Unique Assets: Investing in our Value Drivers
We have made good progress against our accelerated investment strategy. Seven
of eight core insight and engagement platform solutions now available on the
DXRX platform, of which, four are available as recurring revenue contracts. As
we continue to execute against our roadmap, we expect to continue converting
our solutions to our recurring revenue contract model and innovating in our
product offering, ensuring that they are platform based, and target our
customer needs increase recurring revenues. Ultimately, we anticipate 70% of
our revenue will be platform-based and recurring by 2025, with peak adoption
expected to reach around 80% by 2028.
We are pleased to report that strong progress has been made across the Group's
unique asset value drivers detailed below.
DXRX Partner Network
Labs that are better equipped and well-informed have the capacity to
significantly impact the diagnostic and treatment journey for patients.
Leveraging our extensive partner lab network, we offer various multi-year lab
engagement modules to our pharmaceutical and biotech clients, with the goal of
enhancing patient diagnostic and treatment experiences.
The number of labs on the DXRX platform has continued to increase with 49
joining in the past six months, bringing the total to 900 across 44 countries,
increasing the DXRX global platform reach and enhancing our data supply chain
and disease coverage.
Diaceutics continues to position itself as a thought leader in the space and
we were pleased to host a first of its kind virtual lab conference in July
2023. Targeted at delivering specialist content to US labs and physicians,
this event was aimed at driving better platform network engagement and
recruitment, which was successfully achieved with over 1,000 labs and
physicians attending on the day and that number continues to grow as further
labs access the archived conference recordings. Following the success of the
conference, we are pleased to build on this with the launch of a European
equivalent in H1 2024 and will report on the accelerated engagement and
recruitment of labs as a result of these events at the end of the year.
DXRX Data
The Group's unrivalled depth of data continues to consolidate its competitive
advantage and serves as a key driver of new client and therapy brand
acquisition. During the period, new testing and treatment patient records were
added, further widening the Group's competitive moat as it establishes itself
as the primary commercialisation partner for pharma and biotech companies
launching precision medicine.
As the number of patient records on the platform continues to increase, so too
does the requirement for automation and the application of machine learning
and AI within our systems. In order to enhance patient insights and the value
we can deliver to customers; we have completed the tokenisation of our entire
dataset and are on track to launch tokenised data products in H2 2023. The
tokenisation of our testing data allows us to join it with other data sets,
such as treatment data, which considerably enhances the patient insights and
value to customers. We have also embedded natural language processing
technology into our platform data capabilities which helps us to accelerate
the processing and enrich the quality of the insights derived from the vast
amount of data received on a daily basis.
DXRX Platform Products
In line with our strategic investment strategy, we have continued to develop
and expand our product offering in the DXRX platform. These developments allow
Diaceutics to further embed within our customers' commercialisation efforts
and take full advantage of the current opportunity to expand our portion of
the customer budget.
Enhancements made to the DXRX Signal product have continued to resonate well
with clients and our recently launched daily signal capability now provides
customers with even more timely data to identify patients who would benefit
from therapies and improve their commercial success.
Available only through the Diaceutics' platform, DXRX Signal utilises our
partner network data to identify physicians with a patient who has tested
positive for a specific biomarker of interest, which may be eligible for
therapy. This signal is seamlessly integrated within a customers' operations
within as little as 48 hours of the positive test result. From this, they are
able to target that physician with a well-informed engagement before a
treatment decision has been made so that they can offer a more effective drug
or therapy sooner; a key goal for all involved in precision medicine.
For patients, it means their chances of receiving the optimal therapy within
the window of effectiveness is significantly improved. So far in 2023, DXRX
Signal has identified over 46,000 potential US patients that may not have
otherwise been recognised as suitable candidates for treatment with
personalised medicines. The updated version of Signal is very important to
Diaceutics and its customers, as having early access to the diagnostic data
will mean that patients not only get the most appropriate treatment, but also
will potentially start on that treatment earlier. In H1 2023 six of seven DXRX
Signal customer contracts renewed for another 12 months (an 86% renewal rate,
albeit on low volumes). The one customer contract non-renewal was for a single
therapy brand and as a result of the customer ceasing commercialisation spend
on that asset. DXRX Signal now supports in excess of 30 therapy brands.
Capitalising on a Growing Market Opportunity
The global precision medicine market continues to grow at pace and is
estimated to increase at 11.5% CAGR to $175.6bn by 2030 (Precedence Research:
Precision Medicine Market Size, Share, Report 2022 to 2030). Through strategic
investment and developments in our network, data, products and people,
Diaceutics is better placed than ever to grow alongside the market as a whole
and capitalise on this significant opportunity.
Precision medicines currently represent 51% of oncology medicine annual sales.
However, pharma is losing over 50% of potential patients due to suboptimal
diagnosis practices, meaning that patients do not receive the most effective
medicines. The reality of this was evidenced in the jointly published November
2022 Diaceutics Practice Gaps study in the peer reviewed JCO Precision
Oncology, which found that 64% of non-small cell lung cancer patients in the
US in 2019 did not receive access to the medicines most suitable to them, and
therefore did not benefit from personalised medicine treatment.
This hurdle in the diagnostic process is both harmful for patients not
receiving the most suitable diagnosis and treatments for their illness, and
for pharma who are currently seeing up to an estimated $5bn of lost precision
medicine oncology sales over the lifecycle of a therapy. Diaceutics' unique
network, data and product assets are ideally positioned to meet both of these
needs and ensure that patients receive the right treatment at the right time.
We are well positioned to capitalise on this growing marketing opportunity as
the pharma industry becomes increasingly aware of the need to understand the
diagnostic infrastructure and the communication between lab and physician and
physician and prescribing. This is hugely valuable for us, and we continue to
develop innovative commercialisation solutions for pharma and biotech.
We have evidenced that pharma is willing to spend in excess of $6 million over
the therapy lifetime addressing these opportunities and are confident that
ultimately this should be US$10-15 million per brand to maximise the
addressable patient treatment population.
Diaceutics has already established itself as a trusted partner to pharma, and
to date we have identified over 46,000 potential patient candidates who are
not yet being offered precision medicines and bridging this gap for both
patients and pharma.
We have made good progress towards capitalising on this opportunity, working
across 50 therapies in H1 2023 with 37 customers, up 22% on H1 2022 and
increasing the value of addressable lifetime therapy brand spend secured with
33 brands with lifetime brand spend over $1 million. As we continue to
consolidate our position as a trusted partner to pharma and execute against
our strategic investment program, we are confident in further capitalising on
the significant opportunity available to us within the market.
Our Team
Diaceutics' commitment to its people is at the centre of what we do, in our
drive to ensure that every patient receives the right test at the right time,
and in how we work to achieve that goal. Our successes to date would not be
possible without the hard work and dedication of our team for which we
sincerely grateful.
We continue to invest in our team to ensure we remain both an attractive, and
enjoyable, place to work for current and future employees. In H1 2023, we have
added four Vice Presidents to enhance the strength and depth of the senior
management team, bolster our industry expertise, and in turn facilitate our
business' emphasis on operational success. Our customer centric growth
strategy led to us reorganising our customer experience and service staff into
9 core customer account teams and we continue to add people and skills in key
roles to facilitate the company's growth and scale plans for 2024 and beyond,
adding six new employees in H1 2023.
From 1 October 2023, experienced Non-Executive Director, Graham Paterson, will
be appointed to the Board of Diaceutics as a Non-Executive Director. Graham
brings extensive leadership and board experience to Diaceutics and we look
forward to working with him as we progress on the next stage of our growth
journey. At the same time, Charles Hindson will be stepping down from his
position as a Non-Executive Director at Diaceutics. The Board thanks Charles
for his hard work, dedication and much valued counsel during the past four
years and wishes him all the best in his future endeavours.
In addition, we have today announced that CEO, Peter Keeling, has informed the
Board of his intention to step back from his role as CEO of Diaceutics on 1
January 2024. Peter will continue to serve on the Board as an Executive
Director, to support the CEO transition. Thereafter, Peter's primary focus
will be to accelerate the corporate development of Diaceutics. This will
further strengthen Diaceutics leadership position as the primary partner for
pharmaceutical companies as they seek to commercialise the new generation of
precision therapeutics across a range of disease areas over the coming months
and years.
We are delighted that Ryan Keeling, current Chief Innovation Officer, has
today been appointed CEO Designate and will become CEO on 1 January 2024. Ryan
joined Diaceutics in 2006 and became a member of the Board on IPO in 2019.
Ryan is the architect of the Company's data capabilities and DXRX platform,
leading the development and commercialisation of the Group's technology,
including its proprietary data lake. During his tenure with Diaceutics, Ryan
has held the key roles of Chief Commercial Officer, Chief Operating Officer
and most recently, Chief Innovation Officer, where he has led the Group's DXRX
product innovation.
Financial Review
We are pleased to report that despite the challenging macroeconomic trading
conditions impacting all sectors, Diaceutics has delivered a strong financial
performance in the first six months of 2023, the fifth consecutive period of
growth for the Group. With strong cash reserves of £17.9 million at 30 June
2023, the Company enters the second half of the year reaffirming its full year
outlook as it continues to pursue its accelerated investment strategy and
drive to become the primary precision medicine commercialisation partner to
the global pharma and biotech industries.
Revenue Growth and Order Book Visibility
Our comprehensive suite of data driven insight and engagement solutions,
designed to serve the precision medicine commercialisation requirements of
pharma and biotech companies, have continued to experience strong organic
growth in H1 2023. Revenue for the period grew 32%
to £9.9 million (H1 2022: £7.5 million), a 25% increase on a
constant currency basis. The strong revenue growth continues to be maintained
whilst transitioning a significant proportion of customer products and
contracts to recurring revenue, which saw £4.6 million (47%) of recurring
revenues in the period, up 66% from £2.8 million and 37% in H1 2022.
Revenue growth has been especially strong within the platform-based insight
and engagement solutions, growing 44% to £8.2 million. Platform based
solutions now represent 83% of all revenues (up from 76% for the comparative
period), a transition which has been achieved in just two and a half years
since the platform launch and tracking roughly a year ahead of management's
expectations. Advisory service revenues were £1.7 million in the year, down
slightly on the comparative period (H1 2022: £1.8 million).
During H1 2023, we observed a slowing in pharmaceutical industry spending,
predominately discretionary spend, which was attributed to general
uncertainties around macroeconomic and politics pressures, particularly drug
pricing policies. These pressures materialised as lower spending across the
shorter-term strategic consultancy services, impacting our advisory service
business, but demand remained strong for forward contracted platform-based
insight and engagement solutions which are more embedded into pharma
go-to-market commercialisation critical pathways.
The Total Contract Value (TCV) secured by way of sales in the period
was £16.9 million and was slightly ahead of the value of contracts secured
in the comparative period (H1 2022: £16.5 million). The quality of TCV was
aided by the Company's continued progress towards securing enterprise-wide
engagements, which is characterised by a customer deploying the DXRX platform
across three or more of the precision medicines in their portfolio.
The success in securing enterprise-wide engagements has continued to build
future visibility through a multi-year recurring revenue order book. By 30
June 2023 the Company had secured four enterprise-wide engagements with a TCV
of $20.1 million and delivering insight data solutions for up to three years
across 25 pharma therapies. The order book at 30 June 2023 grew to £24.1
million, representing 43% growth in the period (£16.9 million at 31 December
2022), with around £6.8 million expected to be realised as revenue in H2 2023
and giving the business around 70% visibility of the full year consensus
revenue number at the mid-year point. Recurring revenue now represents 94% or
£22.7 million of the future order book.
The Group's customer base is heavily weighted towards blue chip pharma
companies, with 83% of revenue generated by customers based in the USA (H1
2022: 72%). The Group worked with a total of 37 customers during the H1 2023
(H1 2022: 34) across 50 therapies (H1 2022: 41). Diaceutics has increased its
average revenue per brand for the first six months of 2023 to £198,000, up
from £184,000 in H1 2022, and continues to increase the value of addressable
lifetime therapy brand spend secured with 33 therapy brands with lifetime
spend over $1 million (26 therapy brands as at 31 December 2022).
The Group continues to expect a higher weighting of revenue, and therefore
profitability, in the second half of the financial year. In 2022 the revenue
weighting first vs. second half of the year was 38:62 compared to 43:57 in
2021. This weighting has historically been driven by pharma customers'
propensity to spend more of its allocated annual budget in the second half of
the year, particularly quarter four, as it reaches the end of its own budget
and financial years. Although we see this second half revenue weighting
reducing in future years as a result of the Company's shift to recurring
revenue contracts, the strong growth rates experienced by the Company and
lower level of spend observed by pharma in H1 2023 means that this second half
revenue weighting trend is expected again for the 2023 full year.
Gross Profit and Margins
The gross profit for the first six months of 2023 increased 38% to £8.7
million (H1 2022: £6.3 million). The gross margin for H1 2023 was 88%, up
four percentage points from the gross margin in H1 2022 of 84%. The increase
in margin was primarily the result of sales mix with a higher concentration of
revenue generated from platform-based solutions and a reduction in lower
margin pass-through costs associated with some engagement solution
deliverables.
EBITDA and Loss Before Tax Performance
In line with expectations, the Company generated an EBITDA loss of £0.2
million, lower than the comparative period profit of £0.3 million. The EBITDA
loss reflects the impact of the Company's planned accelerated investment
strategy which predominately materialised as increased headcount and people
related costs in H1 2023 (headcount up to 161 vs. 138 in H1 2022) as well as a
higher proportion of platform development costs expensed during the period and
foreign exchange losses from strengthening GBP.
The loss before tax increased from £1.1 million in H1 2022 to £2.0 million
in H1 2023. This was a result of the increasing operating loss (see commentary
on EBITDA above) as well as an increase in amortisation costs which rose by
approximately £0.5 million in the period, with the increasing amortisation
costs being the result of the capitalisation of internal development costs in
prior years and increasing data purchasing costs.
The intensity of development costs being capitalised will continue to curtail
over the coming years, instead being expensed to the income statement. Data
acquisition costs will continue to increase as additional opportunities are
identified to acquire data through our lab network and existing data supply
chain and to accelerate the depth and breadth of our data repository.
Increasing the total data acquisition spend in future years is a key strategic
goal and driver of both growth and value, and as a result, the total level of
amortisation will continue to rise as a result of this capitalised spend.
Reconciliation of Operating Loss to EBITDA
2023 2022
£m's £m's
Operating Loss (2.2) (1.1)
Depreciation & Amortisation 2.0 1.4
EBITDA (0.2) 0.3
Financial Strength
At 30 June 2023, the Company reported a strong net asset position of £41.1
million (31 December 2022: £42.5 million).
Cash at 30 June 2023 was £17.9 million (31 December 2022: £19.8 million),
reflecting the acceleration in investment announced in the January 2023
Strategy Update, and the Company has sufficient financial resources in place
to fully execute its ambitious growth plans.
During the year, the Company continued to invest in the development of its
platform technology, with £1.9 million of a total platform development spend
for H1 2023, of which £0.8 million was capitalised in the year (H1 2022:
£1.8 million of a total platform development spend of which £1.4 million was
capitalised). As planned and set out in the accelerated investment strategy,
total platform development costs have increased on comparative periods as the
business looks to accelerate the development of the platform products,
capability and scale. However, the proportion of development costs which are
capitalised has decreased as the platform reaches maturity. Data expenditure,
which is capitalised and amortised over the period of its use, has increased
around double over H1 2023 to £1.8 million compared with £0.9 million in H1
2022. In line with the strategy, the increase in spend will enhance our
proprietary data repository through expanding the geographical coverage, the
frequency of the data received and the disease coverage.
The free cash flow (Net cash inflow from operating activities less capital
expenditure less the payment of lease liabilities) for H1 2023 was an outflow
of £2.3 million (H1 2022: inflow £0.8 million). Cash received operating
activities for H1 2023 was £0.7 million (H1 2022: £3.3 million),
demonstrating the Company's ability to continually generate cash from its
operating activities, and which has only reversed back to a free cash outflow
in H1 2023 as a result of the enhanced investment in data and lower proportion
of capitalised platform development costs.
Based on the increasing cost of servicing debt and the low probability of
forecast utilisation the Company's Revolving Credit Facility (RCF), the
Company has not renewed the £4 million facility that ended in July 2023. The
Company retains strong relationships with its primary banking partners and is
satisfied that it can arrange an RCF of equal or greater quantum if
required.
Condensed Profit and Loss Account
for the six months ended 30 June 2023
Notes Six months to Six months to Year ended
30 June 2023 (Unaudited) 30 June 2022* (Unaudited) 31 December 2022
£000's £000's (audited)
£000's
Revenue 2 9,924 7,528 19,504
Cost of sales (1,224) (1,221) (2,763)
Gross profit 8,700 6,307 16,741
Administrative expenses (10,873) (7,466) (16,280)
Other operating income 3 7 96 114
Operating (loss)/profit (2,166) (1,063) 575
Finance Income 253 - 111
Finance costs (42) (68) (122)
(Loss)/profit before tax (1,955) (1,131) 564
Income tax credit 4 470 364 160
(Loss)/profit for the financial period (1,485) (767) 724
All activities in the current and prior periods relate to continuing
operations.
*The Group has restated the classification of amortisation of intangible
assets for the period ending 30 June 2022 to conform with the current year
presentation. Further details of this reclassification are detailed in note 13
to these financial statements.
Condensed Statement of Comprehensive Income
For the the six months ended 30 June 2023
Six months to Six months to Year ended
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (audited)
£000's £000's £000's
(Loss)/profit for the financial period (1,485) (767) 724
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (121) 639 440
Total comprehensive (loss)/profit for the period, net of tax (1,606) (128) 1,164
All activities in the current and prior periods relate to continuing
operations.
Earnings per share
for the six months ended 30 June 2023
Note Six months to Six months to Year ended
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022 (audited)
Pence Pence Pence
Basic 6 (1.76) (0.91) 0.86
Diluted 6 (1.76) (0.91) 0.84
Condensed Balance Sheet
as at 30 June 2023
Notes 30 June 2023 30 June 2022 31 December
(Unaudited) (Unaudited) 2022
(Audited)
ASSETS £000's £000's £000's
Non-current assets
Intangible assets 7 16,070 14,189 15,222
Right of use assets 1,257 1,339 1,333
Property, plant and equipment 8 737 704 759
Deferred tax asset 96 99 46
18,160 16,331 17,360
Current assets
Trade and other receivables 9 9,164 7,290 9,209
Income tax receivable 917 1,519 1,846
Cash and cash equivalents 17,880 20,388 19,841
27,961 29,197 30,896
TOTAL ASSETS 46,121 45,528 48,256
EQUITY AND LIABILITIES
Equity
Equity share capital 12 169 169 169
Share premium 37,126 37,125 37,126
Treasury shares (293) (255) (263)
Translation reserve 17 337 138
Profit & loss account 4,040 3,574 5,344
TOTAL EQUITY 41,059 40,950 42,514
Non-current liabilities
Leasehold liability 1,132 1,284 1,205
Provision for dilapidations 88 - 79
Deferred tax liability 341 424 706
1,561 1,708 1,990
Current liabilities
Trade and other payables 10 3,365 2,740 3,628
Leasehold liability 128 130 124
Income tax payable 8 - -
3,501 2,870 3,752
TOTAL LIABILITIES 5,062 4,578 5,742
TOTAL EQUITY AND LIABILITIES 46,121 45,528 48,256
Condensed Statement of Changes in Equity
for the six months ended 30 June 2023
Equity share capital Share Treasury Translation reserve Profit and loss account Total
equity
premium shares
£000's £000's £000's £000's £000's £000's
At 1 January 2022 168 36,864 (165) (302) 4,084 40,649
Loss for the period - - - - (767) (767)
Other comprehensive loss - - - 639 - 639
Total comprehensive loss for the period - - - 639 (767) (128)
Transactions with owners recorded directly in equity
Share based payment - - - - 257 257
Treasury shares - - (90) - - (90)
Conversion of convertible loan notes 1 133 - - - 134
Exercise of warrants - 129 - - - 129
Total transactions with owners 1 262 (90) - 257 430
At 30 June 2022 (unaudited) 169 37,126 (255) 337 3,574 40,951
Profit for the period - - - - 1,491 1,491
Other comprehensive loss - - - (199) - (199)
Total comprehensive profit for the period - - - (199) 1,491 1,292
Transactions with owners recorded directly in equity
Share based payments - - - - 279 279
Treasury Shares - - (8) - - (8)
Total transactions with owners - - (8) - 279 271
At 31 December 2022 (audited) 169 37,126 (263) 138 5,344 42,514
Equity share capital Share Treasury Translation reserve Profit and loss account Total
equity
premium shares
£000's £000's £000's £000's £000's £000's
At 1 January 2023 169 37,126 (263) 138 5,344 42,514
Loss for the period - - - - (1,485) (1,485)
Other comprehensive loss - - - (121) - (121)
Total comprehensive loss for the period - - - (121) (1,485) (1,606)
Transactions with owners recorded directly in equity
Share based payment - - - - 181 181
Treasury shares - - (30) - - (30)
Total transactions with owners - - (30) - 181 151
At 30 June 2023 (unaudited) 169 37,126 (293) 17 4,040 41,059
Condensed Statement of Cash Flows
for the six months ended 30 June 2023
Notes Six months to 30 June 2023 (Unaudited) Six months to 30 June 2022 (Unaudited) Year ended 31 December 2022 (audited)
£000's £000's £000's
(Loss)/profit before tax (1,955) (1,131) 564
Adjustments to reconcile profit before tax to net cash flows from operating
activities
Net finance (income)/costs (211) 68 11
Amortisation of intangible assets 7 1,774 1,193 2,704
Depreciation of right to use asset 78 73 157
Depreciation of property, plant and equipment 8 81 70 147
Research and development tax credits - (75) (86)
Decrease/(increase) in trade and other receivables 45 778 (1,594)
(Decrease)/increase in trade and other payables (265) 293 1,266
Unrealised currency translation gain - 193 -
Share based payments 181 257 536
Cash generated from operations (272) 1,719 3,705
Tax received 970 1,545 1,391
Net cash inflow from operating activities 698 3,264 5,096
Investing activities
Purchase of intangible assets (2,885) (2,324) (4,684)
Purchase of property, plant and equipment (61) (56) (186)
Finance interest received 253 - 111
Net cash outflow from investing activities (2,693) (2,380) (4,759)
Financing activities
Borrowing costs (13) (35) (59)
Leasehold repayments (98) (49) (163)
Purchase of treasury shares 12 (30) (90) (98)
Issue of shares on exercise of a warrant 12 - 129 129
Net cash outflow from financing activities (141) (45) (191)
Net (decrease)/increase in cash and cash equivalents (2,136) 839 146
Net foreign exchange movements 175 (126) 20
Opening cash and cash equivalents 19,841 19,675 19,675
Closing cash and cash equivalents 17,880 20,388 19,841
Notes to the Condensed Financial Statements
for the six months ended to 30 June 2023
1. Summary of significant accounting policies
Basis of preparation
The condensed financial statements have been prepared in accordance with the
recognition and measurement requirements of UK adopted International
Accounting Standard 34, 'Interim Financial Reporting'.
The condensed financial statements should be read in conjunction with the
Group's last annual consolidated financial statements as at and for the year
ended 31 December 2022. Selected explanatory notes are included to explain
events and transactions that are significant to an understanding of the
changes in the Group's financial position and performance since the last
annual financial statements.
The condensed financial statements have been prepared under the historical
cost convention, except for the fair value of certain financial instruments
which are further detailed in note 11.
The same accounting policies, presentation and methods of computation have
been followed in these condensed financial statements as were applied in the
preparation of the Group's financial statements for the year ended 31 December
2022.
These condensed financial statements do not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. Statutory accounts for
the year ended 31 December 2022 were approved by the Board of Directors and
have been delivered to the Registrar of Companies. The audit report on those
accounts was unqualified, did not draw attention to any matters by way of
emphasis and did not contain any statement under section 498(2) or (3) of the
Companies Act 2006.
There have been no significant related party transactions in the period which
have materially affected the financial position or performance of the Company,
or changes to related party transactions in the period which were disclosed in
the prior annual report.
Critical accounting judgements and key sources of estimation uncertainty
In preparing these condensed financial statements, management has made
judgements and estimates that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and expense.
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those described in the last annual financial statements and are
summarised below.
Sources of estimation uncertainty
Source of estimation uncertainty Description
Useful economic life (UEL) of intangible assets The assessment of UEL of data purchases and platform require estimation over
the period in which these assets will be utilised and is based on information
on the estimated technical obsolescence of such assets and latest information
on commercial and technical use. The platform has been assessed to have a UEL
of 10 years, platform algorithms six years and data four years.
Impairment of assets The assessment of the recoverable amount of property plant and equipment,
intangible assets and right-of-use assets is made in accordance with IAS 36
Impairment of Assets. The Group performs an annual review in respect of
indicators of impairment, and if any such indication exists, the Group is
required to estimate the recoverable amount of the asset. Following this
assessment, no impairment indicators were present at 31 December 2022. The
Group's policy is to test non-financial assets for impairment annually, or if
events or changes in circumstances indicate that the carrying amount of these
assets may not be recoverable. The Group has considered whether there have
been any indicators of impairment during the six-month period to 30 June 2023
which would require an impairment review to be performed. Based upon this
review, the Group has concluded that there are no such indicators of
impairment as 30 June 2023.
Discount rate Application of IFRS 16 requires the Group to make significant estimates in
assessing the rate used to discount the lease payments in order to calculate
the lease liability. The incremental borrowing rate depends on the term,
currency and start date of the lease and is determined based on a series of
inputs including the Group commercial borrowing rate.
Attrition rate In the calculation of Share Based Payments and related costs charge an
assessment of expected employee attrition is used based on expected employee
attrition and where possible actual employee turnover from the inception of
the share option plan.
Critical accounting judgements
Accounting policy Description of critical judgement
Revenue With respect to revenue recognition, where the input method is used to
determine recognition over time, a key source of estimation will be the total
budgeted hours to completion for comparison with the actual hours spent.
Deferred tax In assessing the requirement to recognise a deferred tax asset, management
carried out a forecasting exercise in order to assess whether the Group will
have sufficient future profits on which the deferred tax asset can be
utilised. This forecast required management's judgment as to the future
performance of the Group.
Intangible assets The Group capitalises costs associated with the development of the DXRX
platform and data lake. These costs are assessed against IAS 38 Intangible
Assets to ensure they meet the criteria for capitalisation.
Going Concern
The financial performance and balance sheet position at 30 June 2023 along
with a range of scenario plans to 31 December 2025 has been considered,
applying different sensitives to revenue. Across these scenarios, including at
the lower end of the range, there remains significant headroom in the minimum
cash balance over the period to 31 December 2024 and therefore the Directors
have satisfied themselves that the Group has adequate funds in place to
continue to meet its obligations as they fall due.
2. Revenue and segmental analysis
For all periods reported the Group operated under one reporting segment but
revenue is analysed under three separate products/service lines.
a) Revenue by major product/service line
Six months to 30 June 2023 Six months to 30 June 2022 Year ended 31 December 2022
£000's £000's £000's
Insight Solutions (Data) 6,989 4,798 12,653
Engagement Solutions (Tech enabled services) 1,251 910 2,227
Advisory Services (Professional services) 1,684 1,820 4,624
9,924 7,528 19,504
b) Revenue by geographical area
Six months to 30 June 2023 Six months to 30 June 2022 Year ended 31 December 2022
£000's £000's £000's
North America 8,261 5,424 14,454
UK 195 222 561
Europe 1,115 1,348 2,696
Asia and rest of world 353 534 1,793
9,924 7,528 19,504
c) Revenue by timing of recognition
Six months to 30 June 2023 Six months to 30 June 2022 Year ended 31 December 2022
£000's £000's £000's
Point in time 2,464 3,685 9,370
Over time and input method 7,460 3,843 10,134
9,924 7,528 19,504
The receivables, contract assets and liabilities in relation to contracts with customers are as follows:
Six months to 30 June 2023 Six months to 30 June 2022 Year ended 31 December 2022
£000's £000's £000's
Contract assets
Accrued revenue 3,370 3,109 2,582
Contract liabilities
Deferred revenue 1,283 379 411
Order book
The aggregate amount of the transaction price allocated to product and service
contracts that are partially or fully unsatisfied as at the reporting date
('order book') are as follows:
2023 2024 2025+ Total
£000's £000's £000's £000's
Platform based products and services 6,300 7,816 9,510 23,626
Advisory services 453 - - 453
6,753 7,816 9,510 24,079
3. Other operating income
Six months to 30 June 2023 Six months to 30 June 2022 Year ended 31 December 2022
£000's £000's £000's
Government grants 7 19 28
Research and developments credits - 77 86
7 96 114
4. Income tax
Income tax expense is recognised at an amount determined by multiplying the
profit before tax for the interim reporting period by management's best
estimate of the weighted-average annual income tax rate, adjusted for the tax
effect of certain items recognised in full in the interim period. As such, the
effective tax rate in the condensed financial statements may differ from
management's estimate of the effective tax rate for the annual financial
statements.
The Group's consolidated effective tax rate in respect of continuing
operations for the six months ended 30 June 2023 was 24.1% (six months ended
30 June 2022: 32.2%).
The difference to the corporation tax rate of 23.52% reflects UK Research
& Development credits under the SME R&D tax regimes of £82,000,
disallowable expenses of £9,000, £58,000 movement in deferred tax not
recognised, £43,000 of higher rate taxes, prior period adjustments totalling
a credit of £35,000 and a credit of £4,000 arising as a result of the impact
of the change in the future UK tax rate on the Group's deferred tax assets.
UK corporation tax is calculated at 23.52% (2022: 19%) of the taxable profit
or loss for the period. Taxation for other jurisdictions is calculated at the
rates prevailing in the respective jurisdictions. In the March 2021 budget, it
was announced that the UK tax rate will increase to 25% from 1 April 2023.
This will have a consequential effect on the group's future tax charge. The
deferred tax asset is recognised on the basis that the Group has forecasted
sufficient profits on which the deferred tax asset will be utilised in future
periods.
Tax losses carried forward amount to £1,678,000 (H1 2022: £1,998,000) within
Diaceutics PLC, £266,000 in Diaceutics Inc and £96,000 in Diaceutics
Ireland. The Group has tax losses carried forward arising in subsidiary
undertakings. Due to the uncertainty of the recoverability of the tax losses
within these subsidiaries, a potential deferred tax asset of £402,000 (H1
2022: £277,000) has not been recognised. All other deferred tax assets and
liabilities have otherwise been recognised as they arise.
5. EBITDA
Six months to 30 June 2023 Six months to 30 June 2022 Year ended 31 December 2022
£000's £000's £000's
Operating (loss)/profit: (2,165) (1,063) 575
Adjusted for:
Depreciation and amortisation 1,933 1,336 3,008
EBITDA (232) 273 3,583
6. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings attributable to shareholders
Six months to 30 June 2023 Six months to 30 June 2022 Year ended 31 December 2022
£000's £000's £000's
Earnings for the purposes of basic and diluted earnings per share being net (1,485) (767) 724
(loss)/profit attributable to owners of the Company
Number of shares
Six months to 30 June 2023 Year ended 31 December 2022
Number Six months to 30 June 2022 Number
Number
Ordinary Shares in issue at the end of the period 84,472,431 84,472,431 84,472,431
Weighted average number of shares in issue 84,472,431 84,242,344 84,357,387
Less Treasury Shares (245,729) (133,000) (207,791)
Weighted average number of shares for basic 84,226,702 84,109,344 84,149,596
earnings per share
Effect of dilution of Convertible Loan Notes - 503 -
Effect of dilution of share options and warrants granted 2,646,772 1,766,949 1,939,925
Weighted average number of shares for diluted 86,873,474 85,876,796 86,089,521
earnings per share
Earnings and diluted Earnings per share
Six months to Six months to Year ended
30 June 2023 30 June 2022 31 December 2022
Pence Pence Pence
Basic (1.76) (0.91) 0.86
Diluted (1.76) (0.91) 0.84
7. Intangible assets
Patents and trademarks Datasets Development expenditure Total
Platform Software
£000's £000's £000's £000's £000's £000's
Cost
At 1 January 2022 1,144 4,849 216 9,727 562 16,498
Foreign exchange 32 163 3 222 1 421
Transfer from Development expenditure to Platform - - (959) 959 - -
Additions - 853 1,387 - - 2,240
At 30 June 2022 1,176 5,865 647 10,908 563 19,159
27 65 1 79 - 172
Foreign exchange
Transfer from Development expenditure to Platform - - (1,442) 1,442 - -
Additions 1 1,316 972 - 155 2,444
At 31 December 2022 1,204 7,246 178 12,429 718 21,775
Foreign exchange (33) (190) (8) (168) (1) (400)
Transfer from Development expenditure to Platform - - (923) 923 - -
Additions - 1,843 753 - 289 2,885
At 30 June 2023 1,171 8,899 - 13,184 1,006 24,260
Patents and trademarks Datasets Total
Development expenditure
Platform Software
Amortisation £000's £000's £000's £000's £000's £000's
At 1 January 2022 1,085 1,692 - 721 179 3,677
Foreign exchange 32 47 - 21 - 100
Charge for the period 20 605 - 513 55 1,193
At 30 June 2022 1,137 2,344 - 1,255 234 4,970
Foreign exchange 27 30 - 14 1 72
Charge for the period 21 708 - 599 183 1,511
At 31 December 2022 1,185 3,082 - 1,868 418 6,553
Foreign Exchange (34) (69) - (33) (1) (137)
Charge for the period 14 953 650 157 1,774
At 30 June 2023 1,165 3,966 - 2,485 574 8,190
Net book value
At 30 June 2023 6 4,933 - 10,699 432 16,070
At 31 December 2022 19 4,164 178 10,561 300 15,222
At 30 June 2022 39 3,521 647 9,653 329 14,189
8. Property, plant and equipment
Office equipment Leasehold Total
improvements
£000's £000's £000's
Cost
At 1 July 2022 540 478 1,018
Foreign exchange translation 3 - 3
Additions 76 54 130
At 31 December 2022 619 532 1,151
Foreign exchange translation (2) - (2)
Disposals (11) - (11)
Additions 61 - 61
At 30 June 2023 667 532 1,199
Depreciation
At 1 July 2022 274 40 314
Charge for the period 52 26 78
At 31 December 2022 326 66 392
Foreign exchange translation (2) - (2)
Disposals (9) - (9)
Charge for the period 53 28 81
At 30 June 2023 368 94 462
Net book value
At 30 June 2023 299 438 737
At 31 December 2022 293 466 759
At 30 June 2022 266 438 704
9. Trade and other receivables
30 June 2023 30 June 2022 31 Dec 2022
£000's £000's £000's
Trade receivables 4,698 3,331 5,792
Accrued revenue 3,370 3,109 2,582
Other receivables 222 132 207
Prepayments 845 718 628
Derivative asset - Foreign currency forward contract 29 - -
9,164 7,290 9,209
10. Trade and other payables
30 June 2023 30 June 2022 31 Dec 2022
£000's £000's £000's
Creditors: falling due within one year
Trade payables 287 239 759
Accruals 1,325 1,629 1,996
Other tax and social security 418 337 423
Deferred revenue 1,283 379 411
Other Payables 52 - 39
Derivative liability - Foreign currency forward contract - 156 -
3,365 2,740 3,628
11. Financial instruments
30 June 2023 30 June 2022 31 Dec 2022
£000's £000's £000's
Financial assets at cost
Trade receivables 4,698 3,331 5,792
Other receivables 222 132 207
Cash at bank and in hand 17,880 20,388 19,841
Financial liabilities at cost
Trade payables (287) (239) (759)
Leasehold liability (1,260) (1,414) (1,329)
Financial assets/(liabilities) at fair value
Derivative financial instrument - Foreign currency forward contract 29 (156) -
Derivative financial instrument - Foreign currency forward contract
The group has entered into a number of foreign currency derivative contracts
during the period. The nominal value of the Group's forward contracts is
£3,200,000 (2022: £1,896,000) principally to sell US Dollars.
The foreign currency forward contracts are categorised as level 2 within
the fair value hierarchy.
The Group's foreign currency forward contracts are not traded in active
markets. These contracts have been fair valued using observable forward
exchange rates and interest rates corresponding to the maturity of the
contract. The effects of non-observable inputs are not significant for foreign
currency forward contracts.
Fair value measurement on these derivatives as at the period end are £29,000
(30 June 2022: -£156,000).
12. Share capital
30 June 2023 30 June 2022 31 Dec 2022
£000's £000's £000's
Allotted, called up and fully paid
84,472,431 (June 2022 and Dec 2022: 84,472,431) 169 169
Ordinary shares of £0.002 each
169
No warrants exercised during the period (01 January 2023 - 30 June 2023).
Warrant balance of 177,915 with an exercise price of £0.76 will potentially
provide the Company with proceeds of £135,215.
Treasury shares are shares in Diaceutics PLC that are acquired and held by the
Diaceutics Employee Share Trust for the purpose of issuing shares under
relevant employee share option plans.
13. Change in accounting policy
At the end of 2022, the Directors have voluntarily changed the accounting
policy in respect of presentation of amortisation of Intangible assets on the
face of the Group Profit and Loss account. The Group has made a decision to
disclose the amortisation of intangible assets in administrative expenses
instead of Cost of sales.
The change was implemented to better align Diaceutics' Group Profit and Loss
account presentation with peers in the pharma tech industry, allowing
investors and analysts to benchmark the Group's results more readily. This has
resulted in the H1 2022 gross profit and gross profit margin increasing.
Operating profit and profit before and after tax for the H1 2022 reporting
period have not changed. Accordingly, the prior year comparatives have been
restated to reflect this change in accounting policy.
The following table summarises the impact of change in accounting policy on
the Group's Profit and Loss account as at 30 June 2022 for each of the
financial statement lines affected. Please note that there is no impact on the
Group Statement of Comprehensive Income, Group Statement of Financial
Position, Group Statement of Cash Flow and as at 30 June 2022.
As reported Adjustments As restated
30 June 2022 £000's 30 June 2022
£000's £000's
Revenue 7,528 - 7,528
Cost of sales (2,414) 1,193 (1,221)
Gross profit 5,114 1,193 6,307
Administrative expenses (6,273) (1,193) (7,466)
Other operating income 96 - 96
Operating loss (1,063) - (1,063)
Finance Income - - -
Finance costs (68) - (68)
Loss before tax (1,131) - (1,131)
Income tax credit 364 - 364
Loss for the financial period (767) - (767)
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