REG - Diaceutics PLC - H1 2024 Results - Continued Performance & Growth
17/09/2024 07:00
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RNS Number : 4130E Diaceutics PLC 17 September 2024
H1 2024 Results - Continued Performance & Growth
24% revenue growth, 28% on a constant currency basis
Record order book of £27.9m provides good visibility on full year revenue
55% of revenues recurring, on track to achieve 70% in 2025
26% growth in number of customer therapeutic brands and three new customer
enterprise-wide engagements added
Successfully launched PMx and secured first commercial contract as a
promotional partner with a leading biotech for the launch of a breakthrough
oncology precision medicine in the US
Two-year accelerated investment phase nearing completion - forecast shift to
profitability and cash flow generation from 2025
Strong balance sheet with cash of £16.7 million
Belfast and London, 17 September 2024 - Diaceutics PLC
(https://www.diaceutics.com/) (AIM: DXRX), a leading technology and solutions
provider to pharma and biotech companies, today announces its unaudited
results for the half-year ended 30 June 2024.
Ryan Keeling, Diaceutics' Chief Executive Officer, commented: "As we approach
the end of our two-year accelerated investment plan, we are seeing tangible
results being delivered. We are now working with more customers, across more
brands and generating increased revenue per brand. We are constantly growing
our data gathering capabilities and improving the efficacy of the DXRX
platform through the use of AI, and can now provide our customers with the
critical data insights they need within 24 hours which is hugely valuable to
their efforts to identify patients in need. We are very excited by the recent
launch of PMx which enables us to offer a full promotional solution for
customers and also allows us to retain a greater share of the value we create.
Given our strong performance in the first half, we remain confident in our
full year revenue target and our ability to deliver profitability and cash
flow generation from 2025."
Financial Highlights:
H1 2024 H1 2023 Change
Revenue £12.3m £9.9m +24%
Recurring revenue percentage of overall revenue 55% 47% +8 ppts
Annual Recurring Revenue (ARR)* £14.2m Not reported -
Subscription contract value renewal rate 93% Not reported -
Order book £27.9m £24.1m +16%
Gross Profit £10.7m £8.7m +23%
Gross Profit Margin 87% 88% -100bps
EBITDA** -£1.3m -£0.2m -£1.1m
Loss before tax -£3.3m -£2.0m -£1.3m
Free Cash Flow -£0.4m -£2.3m +£1.9m
* Annual Recurring Revenue is the value of recurring subscription revenue
at a specific point in time, that is expected to be recognised from contracts
in the next twelve months.
** EBITDA is earnings before interest, tax, depreciation, amortisation and
exceptional items.
· 24% revenue growth to £12.3 million, 28% on a constant currency basis
· 55% of revenues in the period were recurring (H1 2023: 47%), on track to
achieve 70% in 2025
· ARR of £14.2 million as at 30 June 2024 (£13.7 million at 31 December 2023),
with a contract value renewal rate on ARR contracts of 93%
· Increased visibility on future revenues - order book at 30 June 2024 of £27.9
million (H1 2023: £24.1 million), of which £8.9 million is expected to be
realised in H2 2024
· Consistent and strong Gross Profit Margin at 87% in H1 2024 (H1 2023: 88%)
· EBITDA loss of £1.3 million, reflecting accelerated investment strategy (H1
2023 loss: £0.2 million)
· Debt free with cash of £16.7 million at 30 June 2024 (31 December 2023:
£16.7 million)
H1 2024 Strategic & Commercial Highlights:
· Further expansion of lab network, data assets and capabilities in the US and
Europe
· Significant technical upgrades to DXRX platform involving best in class AI
which facilitates greater insights and utilisation of data
· Three new customer enterprise-wide engagements secured taking total to seven
(FY 2023: four)
· 26% increase to 63 customer brands worked on in H1 2024 - over 70 in the past
12 months
· DXRX is a well invested and highly scalable platform that can deliver up to
$100 in additional therapy revenue for every $1 invested by our customers
Current Trading & Outlook:
· Continued strong momentum driven by deeper customer engagement & success
using DXRX
· Successfully launched PMx and secured first commercial contract - potential to
increase annual revenue per therapeutic brand from £0.38 million to over
£2.0 million
· Launched enhanced rare-disease offering - significant expansion of lab network
will deliver more rare-disease data and a new contract signed to support the
commercialisation of a rare-disease therapy
· Accelerated investment strategy to scale for growth is on track and nearing
completion
· Global pharma and biotech continuing to accelerate their shift to precision
medicine to improve patient access, capture lost revenue and increase
profitability
· Increased level of visibility to our full year revenue targets
Analyst Presentation:
A webinar presentation for investors and analysts will be held at 1330 BST
(0830 ET) on Tuesday, 17 September 2024. Those wishing to attend can register
using the following link:
https://sparklive.lseg.com/Diaceutics/events/30b6a0fa-97bd-4e8e-b03e-69b2ee50e3ea/diaceutics-h1-2024-results-analyst-investor-call
(https://sparklive.lseg.com/Diaceutics/events/30b6a0fa-97bd-4e8e-b03e-69b2ee50e3ea/diaceutics-h1-2024-results-analyst-investor-call)
Investor Meet Presentation:
A webinar presentation for investors will be held via the Investor Meet
platform at 1630 BST (1130 ET) on Tuesday, 17 September 2024. 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)
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
Ryan Keeling, Chief Executive Officer Tel: +44 (0)28 9040 6500
Nick Roberts, Chief Financial Officer investorrelations@diaceutics.com (mailto:investorrelations@diaceutics.com)
Canaccord Genuity Limited (Nomad & Broker) Tel: +44 (0)20 7523 8000
Simon Bridges, Andrew Potts, Harry Rees
Alma Strategic Communications Tel: +44(0)20 3405 0205
Caroline Forde, Kinvara Verdon diaceutics@almastrategic.com
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
Strategic Milestone: PMx
2024 has seen Diaceutics make remarkable progress in advancing its accelerated
investment strategy (announced January 2023) across its four value drivers. A
major highlight has been the commercial launch of PMx, which through
significant investment over the past 2 years, represents an inflection point
as the Company moves from being a data vendor to becoming a promotional
partner for pharmaceutical companies launching precision medicines in the US.
The launch of PMx also corresponded with its first commercial contract win and
the Company's seventh enterprise-wide customer engagement.
We remain resolutely driven by our purpose; ensuring every patient should get
the right test and the right therapy to positively impact their disease
outcome. This shapes the strategic decisions we make and ultimately the
shareholder value we deliver.
Value Drivers
Data
Our competitive advantage continues to be reinforced through our unrivalled
depth of data. The expansion of our data supply network in 2024 has
significantly augmented our data coverage.
In February, the Company expanded its data supply network, significantly
increasing the number of labs through which it is sourcing data in Europe and
broadening the Company's European data coverage. This data facilitates the
rollout of the DXRX Signal products in key EU markets of Germany, France,
Italy, Spain and the UK and the Company is currently initiating trials with
pharma customers in some of these markets.
More recently, Diaceutics announced a number of new rare-disease genomic lab
data partners having joined the DXRX network. These partners specialise in
genetic testing, including the largest recognised testing lab in the US for
genetically acquired rare diseases. These partners will enable Diaceutics to
identify more rare disease patients, and earlier, helping pharma customers to
better commercialise gene therapies for rare diseases.
Lab network
Expanding our lab partner network has empowered labs to improve the patient
diagnostic and treatment journeys. Over the last six months, Diaceutics has
produced and promoted a range of exciting content to engage these labs and
encourage a beneficial two-way relationship. Most recently the Company
launched a virtual event named "Precision medicine in oncology". This
groundbreaking event consisted of a series of eight live webinars, culminating
in a full day of immersive, true-to-life virtual experiences, and was tailored
for laboratory professionals, pathologists, and anyone involved in oncology
diagnostics and treatment.
DXRX platform
To solidify our market leading position, we continually enhance our
capabilities. Development of new functionality for the DXRX platform,
including patient level linkable data, generative AI (Diaceutics Large
Language Model, DLLM), and comprehensive US data sets that include data on
social determinants of health, underscores our commitment to innovation.
The deployment of generative AI in the form of Diaceutics' Large "Lab" Model
has enabled the platform to ingest large unstructured data sources from
multiple sources on a daily basis, where it is sorted, labelled and
communicated on to customers as insights within 24 hours.
The successful launch of new subscription offerings and the securing of seven
enterprise-wide engagements to date align with our objective to transition
larger customers onto the DXRX platform, driving platform-based subscription
contracts. 55% of our revenue is now subscription based, with ultimately 70%
of our business expected to be subscription based and platform enabled by the
end of 2025. Crucially, we are seeing increasing traction for our
enterprise-wide engagements, which enables Diaceutics to increase the average
revenue per therapeutic brand and market opportunity it can capture.
Our team
At Diaceutics, our purpose - to ensure each patient receives the right test
and right treatment - guides every endeavour.
Investing in our people remains a priority. We have strengthened the team
significantly through recruitment and investment in training and development.
At a senior leadership level, we have recruited a number of VPs many of whom
are in the US, close to our clients, and enhancing our industry expertise and
supporting our strategic growth.
Market opportunity
Growing market opportunity and reach
The rapid expansion of the precision medicine market offers significant
opportunities for Diaceutics. As global pharma intensifies their focus and
dedicates more resources to this field, aiming to improve patient access,
capture lost revenue and increase profitability, Diaceutics is well-positioned
to capitalise on these trends. Over the past 12 months, we have had regular
engagement with over 70 individual therapeutic brands out of an estimated 257
brands(1) that could avail of Diaceutics' solutions. With the launch of PMx we
have demonstrated how we can evolve the revenue expectation from the current
average of £0.38 million annually per brand in 2023, to potentially in excess
of £2.0 million annually per brand in the case of customer deploying
Diaceutics' PMx solution.
Diaceutics has further solidified its central position as a thought leader
within the precision medicine industry, announcing in April the formation of a
landmark Economic Forum, aiming to urgently address the specific economic gaps
limiting the advancement of precision medicine, and in early June 2024, we
were honoured to be invited to present a poster titled "Effect of real time
data-driven physician engagement on appropriate precision oncology testing" at
the American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago.
Our recent strategic alliance with KPMG exemplifies our commitment to
expanding our commercialisation solutions to life science customers launching
precision medicine. The strategic alliance will combine Diaceutics' and KPMG's
extensive knowledge, expertise and industry reputation, and enable Diaceutics
and KPMG to engage their life science customers, through a new sales channel,
and with a broader and more comprehensive range of precision medicine
services.
¹ The number of precision medicine brands available is an estimate based on
Diaceutics market data.
Capturing the opportunity
The Board is confident that Diaceutics has the right offering and competitive
advantage to capitalise upon the growing market opportunity. With our
infrastructure investments (our data, lab network, platform and people)
largely complete, we are poised for the next phase of growth, extending our
market reach through partnerships and sales and marketing initiatives.
PMx represents a novel commercialisation solution which allows pharma and
biotech companies to launch precision medicines in a lean and agile way while
still maximising patient recruitment to drug - an approach that Diaceutics
believes is revolutionary for the precision medicine market. PMx was launched
in H1 2024, and in August, the Company announced that it had reached agreement
with a leading biotech to become its primary promotional partner for the
launch of a breakthrough oncology precision medicine in the US. This agreement
is to deploy PMx through to the end of 2025 and is worth at least £2.5
million in service revenue to Diaceutics, with additional milestone fees
estimated to be worth another £1.9 million payable during that period based
on successful patient recruitment onto therapy - a significant uplift on the
annual revenue per therapeutic brand achieved to date.
The Company announced that the number of enterprise engagements had increased
from four to seven in the period, across 31 separate therapeutic brands, and
with a total ARR of £10.6 million. These enterprise-wide engagements
encapsulate the successful execution of Diaceutics' strategy to offer more
products and services to existing customers.
Additional real-world data sales channels have been accessed in 2024 and have
resulted in promising sales traction. These sales channels give the
opportunity for the business to commercialise existing data assets and
products for use within different, non-competitive, industries and customer
groups.
The DXRX platform is well invested, highly scalable and can deliver up to $100
in additional therapy revenue for every $1 invested by our customers.
FINANCIAL REVIEW
Diaceutics has continued to deliver strong financial performance in the first
six months of 2024, the seventh consecutive period of growth for the Group.
With strong cash reserves of £16.7 million and a record order book of £27.9
million at 30 June 2024, the Company enters the second half of the year with
an increasing level of visibility to its full year revenue as it continues to
complete its two year accelerated investment strategy and deliver upon a
forecast shift to profitability and cash flow generation from 2025.
Revenue Growth and Order Book Visibility
Diaceutics' 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 2024. Despite the ever increasing currency
headwinds, revenue grew 24% to £12.3 million in H1 2024 (H1 2023: £9.9
million), 28% on a constant currency basis. This most recent period of growth
means that the Company has achieved a 3-year revenue CAGR of 27%.
Revenue growth has been especially strong within the insight and engagement
solutions ('IES'), growing 34% to £9.3 million in H1 2024 (H1 2023: £7.0
million). The IES platform-based solutions now represent 76% of all revenues -
a transition which has been achieved in just over three years and a standing
start in 2021. Scientific and advisory services ('SAS') revenues were £3.0
million in H1 2024, growing slightly on the comparative period of £2.9
million in H1 2023. The growth in these services were impacted by some
internal reorganisations and contract losses early in the year. Despite these
challenges, SAS remain a fundamental offering of the business and the recently
launched PMx precision medicine commercialisation offering.
The Total Contract Value ('TCV') secured by way of sales in the period was
£13.8 million, lower than the value of contracts secured in the comparative
period (H1 2023: £16.9 million), and predominately driven by change orders
reducing the scope and value of some large enterprise-engagement services,
lost subscription renewals for non-Signal products and the large enterprise
win in H1 2023 which disproportionately skewed those results favourably.
The Company continues to improve the quality of its earnings, with 55% of all
revenue in the period being recurring (H1 2023: 47%), and the visibility of
its future earnings, with the order book at 30 June 2024 growing 16% to £27.9
million, up from £24.1 million at 30 June 2023.
As at 30 June 2024, the order book that will be realised as revenue in H2 2024
was approximately £8.9 million and gives circa 71% visibility on FY 2024
analyst consensus estimates (H1 FY23: 70% visibility on FY 2023 revenue).
These metrics are in line with the Board's expectations for this point in the
year, providing good levels of revenue visibility as the Company enters its
traditionally stronger second half of the year.
Annual Recurring Revenue (ARR) was £14.2 million as at 30 June 2024 (£13.7
million at 31 December 2023). ARR is the value of recurring subscription
revenue at a specific point in time, that is expected to be recognised from
contracts in the next twelve months. The value renewal rate for ARR contracts
in the 12 months ending 30 June 2024 was 93%. The volume renewal rate for the
same period was 80%, and increases to 94% for Signal ARR contracts.
Diaceutics continues to work with 17 of the top 20 global pharma companies and
has increased the number of enterprise-wide engagements it has with pharma and
biotech customers from four to seven engagements, including the Company's
first PMx engagement, where Diaceutics is the primary partner for a customer
launching an oncology precision medicine. These enterprise-wide engagements
demonstrate the successful execution of Diaceutics' accelerated investment
strategy to offer more products and services to existing customers.
The Group's customer base is heavily weighted towards blue chip pharma
companies, with 92% of revenue generated by customers based in the USA (H1
2023: 83%). Diaceutics increased the number of customers it worked with in H1
2024 by 19% to 44 (H1 2023: 37) and worked across 63 individual customer
brands in H1 2024, an increase of 26% on the comparative period (H1 2023: 50).
In 2023 the revenue weighting first vs. second half of the year was 42:58
compared to 38:62 in 2022.
Although it is anticipated that the second half revenue weighting will reduce
in future years as a result of the Group's shift to an increasingly recurring
revenue model, approximately 60% of the Group's full year 2024 revenue is
expected to occur in the second half of 2024.
Gross Profit and Margins
The gross profit for the first six months of 2024 increased 23% to £10.7
million (H1 2023: £8.7 million). The gross margin remained strong for H1 2024
at 87%, down one percentage point from the gross margin in H1 2023 of 88%, and
above management's expected margin of 85%.
The high gross margin is enabled by Diaceutics' investment in the DXRX
platform. The primary direct selling costs of the business relate to platform
and compute power, time and materials relating to project-based work and some
customer pass-through costs.
EBITDA and Loss Before Tax Performance
In line with management's expectations, the Company generated an EBITDA loss
of £1.3 million, higher than the comparative period loss of £0.2 million.
The increased 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 2024 (headcount up to 206 vs. 161 in
H1 2023) as well as a higher proportion of platform development costs expensed
during the period.
Loss before tax increased from £2.0 million in H1 2023 to £3.3 million in H1
2024. This was driven by an increases in operating overheads as well as an
increase in amortisation costs which rose by £0.4 million in the period. The
increasing amortisation costs were the result of the capitalisation of
material internal development costs in prior years, purchased data costs in
the current and prior years, and a reduction in the useful economic life of
purchased data costs - a change in accounting estimate implemented in H2 2023.
Reconciliation of Operating Loss to EBITDA
2024 2023
£m's £m's
Operating Loss (3.6) (2.2)
Depreciation & Amortisation 2.3 2.0
EBITDA (1.3) (0.2)
Balance sheet strength
At 30 June 2024, the Company reported a strong net asset position of £38.7
million (31 December 2023: £40.8 million).
During the period, the Group invested in its customer service capabilities,
platform development and its data repository.
Platform development spend, in the form of technology stack capacity and
scale, was £1.8 million of which £0.3 million was capitalised in the year
(2023: £1.8 million of total platform development spend of which £0.8
million was capitalised). As set out in our accelerated investment strategy,
the intensity of platform development spend has remained relatively consistent
with comparative periods, however the proportion of development costs which
are capitalised has decreased from £0.8 million in 2023 to £0.3 million as
the platform reaches maturity.
The business continues to prioritise the investment in its proprietary data
repository, focusing on opportunities identified through its lab network and
existing data supply chain. The investment has enabled the Company to procure
a richer, more unique and more timely data dataset. The value of data acquired
has reduced from £1.8 million in H1 2023 to £1.1 million in H1 2024. The
reduction in spend was a timing difference between periods, and the Company
expects the overall level of data expenditure for the year to be higher than
2023, but for future increases to be more proportionately linked to increases
in the overall level of IES commercial engagements.
Cash at 30 June 2024 was £16.7 million, unchanged compared to the reported
cash of £16.7 million at 31 December 2023, with the overall cash position
remaining strong and underpinning the Company's ability to continue to execute
against its ambitious growth plans.
CURRENT TRADING & OUTLOOK
The market opportunity available to Diaceutics is significant and continues to
grow. In June, Diaceutics launched PMx, an innovative commercialisation
solution enabling pharmaceutical and biotech companies to launch precision
medicines more efficiently while still optimising patient recruitment for
these drugs. This approach aims to maximise the value per brand opportunity
available to Diaceutics. The first PMx contract was signed in 2024, and the
Company is actively pursuing more of these enterprise-wide engagements. A
significant benefit of PMx is that it allows Diaceutics to significantly boost
the average revenue generated per brand it works on.
The Board will continue to monitor economic factors which could enhance or
detract from the Company's revenue performance, including pharma industry
spending trends, the geopolitical backdrop and the strengthening of sterling
against the US dollar. However, given the strategic progress made against the
accelerated investment strategy and the positive momentum in H1 2024, the
Board has confidence over its full year revenue expectations and the Company's
ability to deliver upon a forecast shift to profitability and cash flow
generation from 2025.
Condensed Profit and Loss Account
for the six months ended 30 June 2024
Notes Six months to Six months to Year ended
30 June 2024 (Unaudited) 30 June 2023 (Unaudited) 31 December 2023
£000's £000's (audited)
£000's
Revenue 2 12,320 9,924 23,699
Cost of sales (1,589) (1,224) (3,993)
Gross profit 10,731 8,700 19,706
Administrative expenses (14,324) (10,873) (22,784)
Other operating income 3 8 7 60
Operating loss (3,585) (2,166) (3,018)
Finance Income 349 253 646
Finance costs (28) (42) (66)
Loss before tax (3,264) (1,955) (2,438)
Income tax credit 4 680 470 692
Loss for the financial period (2,584) (1,485) (1,746)
All activities in the current and prior periods relate to continuing
operations.
Condensed Statement of Comprehensive Income
for the the six months ended 30 June 2024
Six months to Six months to Year ended
30 June 2024 (Unaudited) 30 June 2023 (Unaudited) 31 December 2023 (audited)
£000's £000's £000's
Loss for the financial period (2,584) (1,485) (1,746)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations (7) (121) (378)
Total comprehensive loss for the period, net of tax (2,591) (1,606) (2,124)
All activities in the current and prior periods relate to continuing
operations.
Earnings per share
for the six months ended 30 June 2024
Note Six months to Six months to Year ended
30 June 2024 (Unaudited) 30 June 2023 (Unaudited) 31 December 2023 (audited)
Pence Pence Pence
Basic 6 (3.06) (1.76) (2.07)
Diluted 6 (3.06) (1.76) (2.07)
Condensed Balance Sheet
as at 30 June 2024
Notes 30 June 2024 30 June 2023 31 December
(Unaudited) (Unaudited) 2023
(Audited)
ASSETS £000's £000's £000's
Non-current assets
Intangible assets 7 14,522 16,070 15,262
Right of use assets 1,103 1,257 1,180
Property, plant and equipment 8 700 737 719
Deferred tax asset 1,872 96 1,143
18,197 18,160 18,304
Current assets
Trade and other receivables 9 9,750 9,164 11,367
Income tax receivable 730 917 6
Cash and cash equivalents 16,749 17,880 16,667
27,229 27,961 28,040
TOTAL ASSETS 45,426 46,121 46,344
EQUITY AND LIABILITIES
Equity
Equity share capital 12 169 169 169
Share premium 37,261 37,126 37,126
Treasury shares (312) (293) (312)
Translation reserve (247) 17 (240)
Profit and loss account 1,869 4,040 4,043
TOTAL EQUITY 38,740 41,059 40,786
Non-current liabilities
Lease liability 984 1,132 1,059
Provision for dilapidations 89 88 88
Deferred tax liability - 341 28
1,073 1,561 1,175
Current liabilities
Trade and other payables 10 5,463 3,365 4,237
Lease liability 150 128 146
Income tax payable - 8 -
5,613 3,501 4,383
TOTAL LIABILITIES 6,686 5,062 5,558
TOTAL EQUITY AND LIABILITIES 45,426 46,121 46,344
Condensed Statement of Changes in Equity
for the six months ended 30 June 2024
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
Loss for the period - - - - (261) (261)
Other comprehensive loss - - - (257) - (257)
Total comprehensive loss for the period - - - (257) (261) (518)
Transactions with owners recorded directly in equity
Share based payments - - - - 264 264
Treasury Shares - - (19) - - (19)
Total transactions with owners - - (19) - 264 245
At 31 December 2023 (audited) 169 37,126 (312) (240) 4,043 40,786
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 2024 169 37,126 (312) (240) 4,043 40,786
Loss for the period - - - - (2,584) (2,584)
Other comprehensive loss - - - (7) - (7)
Total comprehensive loss for the period - - - (7) (2,584) (2,591)
Transactions with owners recorded directly in equity
Share based payment - - - - 410 410
Exercise of Warrants - 135 135
Total transactions with owners - 135 - - 410 545
At 30 June 2024 (unaudited) 169 37,261 (312) (247) 1,869 38,740
Condensed Statement of Cash Flows
for the six months ended 30 June 2024
Notes Six months to 30 June 2024 (Unaudited) Six months to 30 June 2023 (Unaudited) Year ended 31 December 2023 (audited)
£000's £000's £000's
Loss before tax (3,264) (1,955) (2,438)
Adjustments to reconcile loss before tax to net cash flows from operating
activities
Net finance income (321) (211) (580)
Amortisation of intangible assets 7 2,118 1,774 4,459
Depreciation of right to use asset 77 78 153
Depreciation of property, plant and equipment 8 80 81 161
Research and development tax credits - - (42)
Decrease/(increase) in trade and other receivables 1,616 45 (2,158)
Increase/(decrease) in trade and other payables 1,226 (265) 618
Loss on disposal of fixed asset - 3
Share based payments 410 181 445
Cash generated/(used) from operations 1,942 (272) 621
Tax (paid)/received (790) 970 690
Net cash inflow from operating activities 1,152 698 1,311
Investing activities
Purchase of intangible assets (1,385) (2,885) (4,730)
Purchase of property, plant and equipment (61) (61) (125)
Finance interest received 349 253 646
Net cash outflow from investing activities (1,097) (2,693) (4,209)
Financing activities
Interest paid - (13) (11)
Leasehold repayments (98) (98) (179)
Purchase of treasury shares 12 - (30) (49)
Issue of shares on exercise of a warrant 12 135 - -
Net cash inflow/(outflow) from financing activities 37 (141) (239)
Net increase/(decrease) in cash and cash equivalents 92 (2,136) (3,137)
Net foreign exchange movements (10) 175 (37)
Opening cash and cash equivalents 16,667 19,841 19,841
Closing cash and cash equivalents 16,749 17,880 16,667
Notes to the Condensed Financial Statements
for the six months ended to 30 June 2024
1. Summary of material 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 2023. 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
2023.
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 2023 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 ten years, platform algorithms six years and Data three years. In December
2023, the Group changed the estimated useful life of its datasets from 4 years
to 3 years. The revised useful life is based on management's assessment of the
period that more accurately reflect the weighted average timeframes of the
data commercial and internal use cases. The change in useful lives were
accounted for prospectively. There were no changes in useful lives of other
intangible assets.
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 2023. 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 2024
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 2024.
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.
Revenue In revenue recognition for certain Scientific & Advisory Services where
the input method is used to determine the revenue over a period of time, a key
source of estimation will be the total budgeted hours to completion for
comparison with the actual hours spent.
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 In determining the performance obligations for the data consultancy service
component of Insight & Engagement Solutions, judgment may be required in
interpreting the contract wording and customer expectation of the data
consultancy as a separately identifiable and distinct service, if the contract
is not explicit.
The transaction price associated with the performance obligation components of
Insight & Engagement Solution services is determined by reference to the
contract and change orders. Where the contract does not determine the
transaction price for performance obligations, judgement may be required to
determine the transaction price. These judgements include allocating
transaction prices to data consultancy services based on an adjusted market
assessment approach with the residual transaction price allocated to the
retrospective and prospective data license performance obligations pro-rated
depending on the data license period of coverage.
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 2024 along
with a range of scenario plans to 31 December 2026 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 2026 and therefore the Directors
have satisfied themselves that the Group has adequate funds in place to
continue operational existence for the foreseeable future. Accordingly, the
Group continues to adopt the going concern basis in preparing its financial
statements.
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 2024 Six months to 30 June 2023 Year ended 31 December 2023
£000's £000's £000's
Insight & Engagement Solutions 9,348 6,989 17,150
Scientific & Advisory services 2,972 2,935 6,549
12,320 9,924 23,699
b) Revenue by geographical area
Six months to 30 June 2024 Six months to 30 June 2023 Year ended 31 December 2023
£000's £000's £000's
North America 11,292 8,261 20,832
UK 38 195 352
Europe 900 1,115 2,470
Asia and rest of world 90 353 45
12,320 9,924 23,699
c) Revenue by timing of recognition
Six months to 30 June 2024 Six months to 30 June 2023 Year ended 31 December 2023
£000's £000's £000's
Point in time 3,840 2,464 9,359
Over time and input method 8,480 7,460 14,340
12,320 9,924 23,699
The receivables, contract assets and liabilities in relation to contracts with customers are as follows:
Six months to 30 June 2024 Six months to 30 June 2023 Year ended 31 December 2023
£000's £000's £000's
Contract assets
Accrued revenue 3,887 3,370 2,402
Contract liabilities
Deferred revenue 973 1,283 305
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:
As at June 2024
2024 2025 2026+ Total
£000's £000's £000's £000's
Insight & Engagement Solutions 7,727 10,255 8,333 26,316
Scientific & Advisory services 1,200 203 160 1,562
8,927 10,458 8,493 27,878
As at June 2023
2023 2024 2025+ Total
£000's £000's £000's £000's
Insight & Engagement Solutions 5,420 7,565 9,510 22,495
Scientific & Advisory services 1,333 251 - 1,584
6,753 7,816 9,510 24,079
3. Other operating income
Six months to 30 June 2024 Six months to 30 June 2023 Year ended 31 December 2023
£000's £000's £000's
Government grants 8 7 18
Research and developments credits - - 42
8 7 60
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 2024 was 20.8% (six months ended
30 June 2023 was 24.1%).
The difference to the corporation tax rate of 25% reflects UK Research &
Development credits under the SME R&D tax regimes of £26,000,
disallowable expenses of £133,000, £11,000 movement in deferred tax not
recognised, £15,000 of higher rate taxes and a prior period adjustment
totalling a credit of £76.
UK corporation tax is calculated at 25% (2023: 23.52%) of the taxable profit
or loss for the period. Taxation for other jurisdictions is calculated at the
rates prevailing in the respective jurisdictions. the UK tax rate increased
from 19% to 25% on 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 £2,943,957 (H1 2023: £1,678,000) within
Diaceutics PLC. 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 £116,000 (H1
2023: £402,000) 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 2024 Six months to 30 June 2023 Year ended 31 December 2023
£000's £000's £000's
Operating loss: (3,585) (2,166) (3,018)
Adjusted for:
Depreciation and amortisation 2,275 1,933 4,772
EBITDA (1,310) (233) 1,754
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 2024 Six months to 30 June 2023 Year ended 31 December 2023
£000's £000's £000's
Earnings for the purposes of basic and diluted earnings per share being net (2,584) (1,485) (1,746)
loss attributable to owners of the Company
Adjusted earnings for the purposes of basic and diluted earnings per share (2,584) (1,485) (1,746)
Number of shares
Six months to 30 June 2024 Six months to 30 June 2023 Year ended 31 December 2023
Number Number Number
Ordinary Shares in issue at the end of the period 84,720,076 84,472,431 84,501,390
Weighted average number of shares in issue 84,703,311 84,472,431 84,478,882
Less Treasury Shares (252,063) (245,729) (252,063)
Weighted average number of shares for basic 84,451,248 84,226,702 84,226,819
earnings per share
Effect of dilution of share options and warrants granted - 2,646,772 -
Weighted average number of shares for diluted 84,451,248 86,873,474 84,226,819
earnings per share
Earnings and Diluted Earnings per share
Six months to Six months to Year ended
30 June 2024 30 June 2023 31 December 2023
Pence Pence Pence
Basic (3.06) (1.76) (2.07)
Diluted (3.06) (1.76) (2.07)
The group has outstanding share options that could potentially dilute basic
earnings per share in the future. These were not included in the calculation
of diluted earnings per share during the year because these are antidilutive
for the period.
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 2023 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
8 26 8 9 - 51
Foreign exchange
Transfer from Development expenditure to Platform - - 745 (745) - -
Additions - 1,711 (753) 918 (31) 1,845
At 31 December 2023 1,179 10,636 - 13,366 975 26,156
Foreign exchange (19) 16 - (30) - (33)
Transfer from Development expenditure to Platform - - - - - -
Additions - 1,067 - 272 46 1,385
At 30 June 2024 1,160 11,719 - 13,608 1,021 27,508
Patents and trademarks Datasets Total
Development expenditure
Platform Software
£000's £000's £000's £000's £000's £000's
Amortisation
At 1 January 2023 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
Foreign exchange 8 5 - 6 - 19
Charge for the period 1 1,991 - 666 27 2,685
At 31 December 2023 1,174 5,962 - 3,157 601 10,894
Foreign Exchange (20) 1 - (7) - (26)
Charge for the period 4 1,386 - 680 48 2,118
At 30 June 2024 1,158 7,349 - 3,830 649 12,986
Net book value
At 30 June 2024 2 4,370 - 9,778 372 14,522
At 31 December 2023 5 4,674 - 10,209 374 15,262
At 30 June 2023 6 4,933 - 10,699 432 16,070
On reviewing the useful life of the datasets in December 2023, it was
determined that based on latest information on commercial and technical use,
that three years represented the best estimate of the useful life of such
assets, as this reflects the period over which this data can provide
meaningful insights to support client projects. However, the actual asset
useful life may be shorter or longer than three years depending on technical
innovations and other external factors. At 30 June 2023, the closing value of
datasets is based on a four year useful economic life. At 31 December 2023
and 30 June 2024, values are based on a three year useful economic life.
8. Property, plant and equipment
Office Equipment Leasehold Improvements Total
£000's £000's £000's
Cost
At 1 July 2023 667 532 1,199
Disposals (3) - (3)
Additions 64 - 64
At 31 December 2023 728 532 1260
Foreign exchange translation 1 - 1
Disposals - - -
Additions 61 - 61
At 30 June 2024 790 532 1,322
Depreciation
At 1 July 2023 368 94 462
Charge for the period 53 27 80
Disposal (2) - (2)
Foreign exchange translation 1 - 1
At 31 December 2023 420 121 541
Foreign exchange translation 1 - 1
Disposals - - -
Charge for the period 54 26 80
At 30 June 2024 475 147 622
Net book value
At 30 June 2024 315 385 700
At 31 December 2023 308 411 719
At 30 June 2023 299 438 737
9. Trade and other receivables
30 June 2024 30 June 2023 31 Dec 2023
£000's £000's £000's
Trade receivables 4,851 4,698 7,430
Accrued revenue 3,887 3,370 2,402
Other receivables 216 222 294
Prepayments 796 845 1,241
Derivative asset - Foreign currency forward contact - 29 -
9,750 9,164 11,367
10. Trade and other payables
30 June 2024 30 June 2023 31 Dec 2023
£000's £000's £000's
Creditors: falling due within one year
Trade payables 610 287 1,065
Accruals 3,135 1,215 2,255
Other tax and social security 589 418 471
Deferred revenue 973 1,283 305
Deferred Grant Income 109 110 103
Other Payables 47 52 38
5,463 3,365 4,237
11. Financial instruments
30 June 2024 30 June 2023 31 Dec 2023
£000's £000's £000's
Financial assets at amortised cost
Trade receivables 4,851 4,698 7,430
Other receivables 216 222 294
Cash at bank and in hand 16,749 17,880 16,667
Financial liabilities at amortised cost
Trade payables (610) (287) (1,065)
Lease liability (1,134) (1,260) (1,292)
Financial assets at fair value
Derivative financial instrument - Foreign currency forward contract - 29 -
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 £nil
(30 June 2023: £3,200,000) 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 £nil (30
June 2023: £29,000).
12. Share capital
30 June 2024 30 June 2023 31 Dec 2023
£000's £000's £000's
Allotted, called up and fully paid
84,720,076 (June 2023: 84,472,431; Dec 2023: 84,501,390) 169 169
Ordinary shares of £0.002 each
169
On 25th January 2024 the warrant holder exercised their remaining 177,915
warrant shares at a price of £0.76 per share. At 30 June 2024, no further
warrant shares remain outstanding (30 June 2023: 177,915).
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.
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