REG - Novacyt S.A. - Interim Results
26/09/2024 07:15
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RNS Number : 6900F Novacyt S.A. 26 September 2024
Novacyt S.A.
("Novacyt", the "Company" or the "Group")
2024 Interim Results
Foundations in place to deliver future growth
Paris, France, and Eastleigh and Manchester, UK - 26 September 2024 - Novacyt
S.A. (EURONEXT GROWTH: ALNOV; AIM: NCYT), an international molecular
diagnostics company with a broad portfolio of integrated technologies and
services, announces its unaudited interim results for the six-month period
ended 30 June 2024.
Financial highlights (unaudited)
· Group revenue for H1 2024 of £10.3m, of which £7.8m relates to Yourgene
Health ("Yourgene"), (H1 2023*: £3.3m, of which £0.5m relates to COVID-19)
· H1 2023 proforma revenue, excluding COVID-19 sales: £11.4m
· Encouraging growth in Reproductive Health (34% YoY increase on a proforma
basis) and Non-Invasive Prenatal Testing ("NIPT") (5% YoY increase on a
proforma basis)
· Group gross profit increased to £26.5m in H1 2024 (H1 2023*: £1.7m) due to
the reversal of a £19.8m product warranty provision following the settlement
with the Department of Health and Social Care ("DHSC")
· Underlying gross margin of the business increased to 65%
· Group operating costs increased to £32.1m in H1 2024 due to booking a £20m
bad debt write-off following the settlement with the DHSC (H1 2023*: £7.0m)
· Underlying opex cost of £12.1m compared with a proforma H1 2023 opex cost of
circa £14.7m, reflecting £5.0m annualised cost savings made following
acquisition of Yourgene
· Group EBITDA loss before exceptionals of £5.6m in H1 2024, of which £0.2m is
as a result of the DHSC settlement (H1 2023*: £5.4m)
· Exceptional costs totalling £8.1m include the £5.0m settlement to the DHSC
(paid in July post period), resulting in the loss after tax increasing to
£17.7m in H1 2024 (H1 2023*: £8.3m)
· Cash position at 30 June 2024 was £32.9m (31 December 2023: £44.1m) and the
Company remains debt free
*excludes any Yourgene results as pre-acquisition
Operational Highlights (including post period-end)
· Lyn Rees appointed Chief Executive Officer following a six-year tenure as CEO
of Yourgene Health plc, bringing over 28 years' global healthcare leadership
and commercial experience
· Steve Gibson appointed CFO, and joined the Board along with Dr Jo Mason, CSO
· John Brown CBE appointed Chairman of the Board (as announced today)
· Settled dispute with the DHSC, and successfully reclaimed £12.2m in VAT from
HMRC relating to unpaid DHSC invoices resulting in cash position at 31 August
of £36.6m
· IVDR certification: submitted application for Yourgene Cystic Fibrosis Base,
our Amplification Refractory Mutation System PCR (ARMS-PCR) test. Submitted
application for Yourgene QST*R Base Rapid Aneuploidy Analysis test using
quantitative fluorescence PCR (QF-PCR)
· Launched real-time PCR workflow for rapid onsite detection of norovirus in
oysters
· Completed disposal of Taiwanese laboratory business
Commenting on the results Lyn Rees, CEO of Novacyt, said: "We made good
progress during first half of 2024, which saw encouraging growth in our
Reproductive Health and NIPT businesses and the delivery of £5.0m of
annualised cost savings. Whilst the continued reduction of our cost base
remains our core priority, we are also investing for the future and bolstering
our R&D team who are developing an exciting pipeline of new products, to
expand our capabilities and meet the needs of our growing customer base, which
we expect to bring to market over the next three years.
"The conclusion of the DHSC dispute has enabled the management to focus on
driving the growth of the combined business and with our robust product
portfolio, first-class team and strong cash position we are well placed to
deliver future growth."
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) 596/2014.
Contacts
Novacyt SA https://novacyt.com/investors (https://novacyt.com/investors/)
Lyn Rees, Chief Executive Officer Via Walbrook PR
Steve Gibson, Chief Financial Officer
SP Angel Corporate Finance LLP (Nominated Adviser and Broker) +44 (0)20 3470 0470
Matthew Johnson / Charlie Bouverat (Corporate Finance)
Vadim Alexandre / Rob Rees (Corporate Broking)
Deutsche Numis (Joint Broker) +44 (0)20 7260 1000
Freddie Barnfield / Duncan Monteith / Michael Palser
Allegra Finance (French Listing Sponsor) +33 (1) 42 22 10 10
r.durgetto@allegrafinance.com (mailto:r.durgetto@allegrafinance.com) /
Rémi Durgetto / Yannick Petit y.petit@allegrafinance.com (mailto:y.petit@allegrafinance.com)
Walbrook PR (Financial PR & IR) +44 (0)20 7933 8780 or novacyt@walbrookpr.com (mailto:novacyt@walbrookpr.com)
Stephanie Cuthbert / Paul McManus / +44 (0)7796 794 663 / +44 (0)7980 541 893
Phillip Marriage / Alice Woodings +44 (0)7867 984 082 / +44 (0)7407 804 654
About Novacyt Group (www.novacyt.com (http://www.novacyt.com) )
Novacyt is an international molecular diagnostics company providing a broad
portfolio of integrated technologies and services, primarily focused on the
delivery of genomic medicine. The Company develops, manufactures, and
commercialises a range of molecular assays and instrumentation to deliver
workflows and services that enable seamless end-to-end solutions from sample
to result across multiple sectors including human health, animal health and
environmental.
The Company is divided into three business segments:
Clinical Broad portfolio of human clinical in vitro diagnostic products, workflows and
services focused on three therapeutic areas:
· Reproductive Health: NIPT, Cystic Fibrosis and other rapid aneuploidy
tests
· Precision Medicine: DPYD genotyping assay
· Infectious Diseases: Winterplex, multiplex winter respiratory PCR
panel
Instrumentation Portfolio of next generation size selection DNA sample preparation platforms
and rapid PCR machines, including:
· Ranger® Technology: automated DNA sample preparation and target
enrichment technology
· MyGo: real-time quantitative PCR (qPCR) instruments
Research Use Only Range of services for the life sciences industry:
· Design, manufacture, and supply of high-performance qPCR assays and
workflows for use in human health, agriculture, veterinary and environmental,
to support global health organisations and the research industry
· Pharmaceutical research services: whole genome sequencing (WGS) /
whole exome sequencing (WES)
Novacyt is headquartered in Vélizy-Villacoublay in France with offices in the
UK (in Stokesley, Eastleigh and Manchester), Singapore, the US and Canada and
has a commercial presence in over 65 countries. The Company is listed on the
London Stock Exchange's AIM market ("NCYT") and on the Paris Stock Exchange
Euronext Growth ("ALNOV").
For more information, please refer to the website: www.novacyt.com
(http://www.novacyt.com)
Chief Executive's review
The first half of 2024 showed continued progress for the Group, with our
efforts focused towards working as a single business, reducing our cost base
and delivering growth; we saw encouraging growth in areas such as Reproductive
Health and NIPT Technologies. The Group settled its dispute with DHSC in June
and subsequently reclaimed associated VAT payments, improving our cash
position by net of £7.2m. The Group is now in a stronger position with solid
foundations in place to drive the future growth of the business.
Clinical
Reproductive Health
During the period the Reproductive Health business grew 34% on a proforma
basis. As previously announced, this was largely driven by the continued
strong growth of our cystic fibrosis portfolio in Australia following
implementation of the government's nationwide reimbursement pathway.
Our Non-invasive prenatal testing ("NIPT") technology portfolio had a strong
start and year to date we have seen double digit growth. This was driven by
strong growth in India and Europe and a number of former Genomic Services NIPT
customers establishing in-house laboratories and becoming higher margin
technology customers to the Group.
We have strengthened our competitive position in the NIPT market with the
commenced roll out of upgrades of the IONA Nx NIPT workflow, which now has the
capability to run twice the samples in one run than previously possible. We
have a number of customer demonstration events planned for Q4'24, to drive
further awareness of our capabilities. We also installed our first NIPT
workflow in Colombia and have been working closely with our partner there to
support, the upcoming launch of their NIPT service offering to clinics in the
region.
The Group continues to focus on obtaining certification for its clinical
products under the new EU requirements of the In Vitro Diagnostic Regulation
("IVDR"). In June 2024, we submitted IVDR certification for our Yourgene®
Cystic Fibrosis Base ARMS-PCR test for both newborn screening and carrier
screening in adults.
Later in June 2024, the Company submitted the application for IVDR for its
rapid prenatal aneuploidy analysis Yourgene® QST*R Base, our QF-PCR test.
Aneuploidies are genetic disorders where there is a variation in the number of
chromosomes, such as Down's syndrome, Edwards' syndrome and Patau's syndrome.
We have also developed additional analysis capabilities, initially as a
research use only ("RUO") tool, to expand our NIPT offering, including copy
number variation ("CNV") analysis for our IONA Nx NIPT Workflow, in order to
meet the changing market needs of some of our European lab customers. The RUO
tool version is expected to be released later this month with a planned IVDR
submission next year.
Precision Medicine
We saw sales of our dihydropyrimidine dehydrogenase ("DPYD") product under
pressure as new competitors and technologies entered the market. We were
encouraged by a report from the Association for Molecular Pathology released
in July 2024, providing recommendations to help standardise the design and
validation of clinical DPYD genotyping assays, demonstrating the continued
global adoption of and need for DPYD testing.
We are working on upgrading our DPYD assay and have partnered with key opinion
leaders around the world to ensure that the next version of the product meets
the needs of the international market as clinical guidelines are being
updated.
Infectious Disease
As previously announced, we will monitor the clinical demand for our
genesig™ Real-time PCR SARS-CoV-2 Winterplex respiratory panel, over the
winter period to evaluate the opportunity and investment required to progress
the test through IVDR.
The recent surge of Mpox in Central Africa is an important health issue and
has received much media attention, though the full extent of the commercial
opportunity for our products is still unknown. Our RUO existing genesig®
Complete Kits for Mpox 2G generated some revenue in July and August but this
was not material at Group level. The market is more saturated compared to
early in the COVID-19 pandemic, with an available vaccine and several
competitors in the market. We are currently updating the assay based on
customer feedback around the clade 1b strain and will monitor the situation to
assess whether there is sufficient demand to progress the test for clinical
use.
Instrumentation
We continue to evaluate new opportunities across new human and non-human
applications for Ranger® Technology ("Ranger"), our automated DNA sample
preparation and target enrichment technology, and continue to collaborate
closely with PacBio to access more potential customers. Following customer
feedback, we have commenced work on adding additional functionality to Ranger
for long-read sequencing users.
Post-period we have seen the first sale of NIMBUS Select, our high throughput
Ranger Technology platform to a customer in Europe who will be using it in the
field of synthetic biology and the Group expects to see further LightBench
evaluations and demonstration projects to mature throughout the remainder of
the year.
Research use only (RUO)
Primer Design continues to see demand for its research only assays. In June,
we launched a real-time PCR workflow for rapid onsite detection of norovirus
in oysters, which is a serious and growing threat to oyster farmers. Testing
season starts in winter and we expect to see further demand for the workflow
in the coming months, as customers prepare. We have also been developing a
number of additional aquaculture and veterinary products, which are expected
to launch before the year end.
We have also signed a contract with a diagnostics company to develop an
extraction kit for use in a clinical trial assessing the early detection of
colorectal and bowel cancer. The extraction kit will initially be an RUO
product but could be developed further depending on the results of the trial,
which is expected to start later this year.
Genomics Services
The Group continues to see steady growth in new NIPT clinical customers across
the UK. Our pharmaceutical research services has been steady and continues to
offer whole genome sequencing ("WGS"), whole exome sequencing ("WES") and
other specialist laboratory testing services to pharma, biotech and central
laboratories for clinical studies and assay validation, as well as biomarker
discovery services.
Integration update
Since the completion of the acquisition of Yourgene Health in September 2023,
the Company has implemented actions that will deliver c.£5.0m of annualised
cost savings ahead of schedule, including the refocus of the Primer Design
business on the RUO market, the elimination of duplicate corporate functions
and other corporate costs, as well as streamlining of management and disposing
of the Taiwanese laboratory business. We are looking to implement further
significant costs savings and continue to look at ways to right size the cost
base of the business.
Board changes
There have also been a number of changes to the Board during the period and
post-period end. I was appointed CEO in May 2024 and Steve Gibson, Chief
Financial Officer and Dr Joanne Mason, Chief Scientific Officer, joined the
Board in July. As announced today, John Brown CBE has been appointed Chairman,
succeeding James Wakefield. John has a proven track record of successfully
building life sciences companies and his wealth of knowledge in capital
markets and the life sciences sector will be important as we look to execute
the strategic plan of the combined business.
On behalf of the Board, I would like to thank James for his contribution and
leadership to Novacyt, especially navigating the business through the pandemic
and its after-effects. Under James' tenure, the business has made a series of
successful acquisitions, including Primerdesign and more recently Yourgene
Health. James leaves the business in a strong financial position, debt free
and with significant cash resources.
DHSC settlement and VAT reclaim
The £5.0m settlement with the DHSC has enabled management to focus entirely
on the integration and growth of the combined business. Following the
settlement, we successfully reclaimed £12.2m in VAT from HMRC relating to the
unpaid DHSC invoices. This has resulted in the Group's net cash position
increasing by £7.2m, with cash of £36.6m at 31 August 2024.
Taiwan disposal
In July 2024, we announced that the Group was in advanced stages of disposing
of its Taiwanese laboratory business, in-line with our strategy of
rationalising our offering and focusing resources on areas of higher margin
and growth potential. The deal has now concluded for a nil upfront
consideration, with the possibility of earnouts of up to $2m on future
milestones.
Outlook
Growth has been encouraging in areas such as Reproductive Health and NIPT
Technologies; with double digit growth across our NIPT portfolio year to date
and we expect Group revenue for the full year to remain at a similar run-rate.
During the rest of the year, our priorities remain on working as a single
business, reducing our cost base and positioning the Company for long-term
growth. An important process will be the continued rationalisation of our
product and service offering to focus resources on those areas with the
highest growth potential. As previously announced, our R&D team is also
developing a pipeline of new products, which we expect to bring to market over
the next three years, ensuring we have a balanced and exciting product
portfolio that meets the needs of our customer base and allows us to expand
into new technologies and applications.
The new management team has now been in place for five months; during that
time, we have significantly derisked the business by concluding the dispute
with the DHSC, made considerable progress with integration of two complex
businesses and delivered considerable cost savings with a clear road map to
further right size the cost base of the Group. With our robust cash position
and in-house expertise, we are well placed to accelerate the growth of our
product portfolio and invest in exciting new product opportunities to deliver
shareholder value. We are working on a comprehensive growth strategy for the
combined Group and look forward to further updating the market with more
details in H1 2025.
I would like to thank our shareholders and team for their hard work and
support during the period.
Lyn Rees
Chief Executive Officer
25 September 2024
FINANCIAL REVIEW
Overview
Novacyt's H1 2024 performance delivered sales of £10.3m, an EBITDA loss of
£5.6m and a loss after tax of £17.7m following the resolution of the DHSC
commercial dispute. Novacyt continued to execute on right sizing its cost base
by reducing its opex spend by £2.6m compared with H1 2023, on a proforma
basis, and will continue to make further cost savings where possible.
Cash at 30 June 2024 was £32.9m, providing the Group with a solid foundation
on which to build and execute its future strategy. The £5.0m settlement
agreed with the DHSC was paid in early July, reducing the cash position
further.
Income statement
Continuing operations H1 2024 H1 2023
£'000 £'000
Revenue 10,322 3,339
Gross profit 26,480 1,665
Gross profit % 257% 50%
OPEX (32,104) (7,040)
EBITDA (5,624) (5,375)
EBITDA % -54% -161%
Recurring operating loss* (9,016) (6,534)
Operating loss (17,104) (8,396)
Other financial income and expenses (814) 83
Income tax 219 174
Loss after tax from continuing operations (17,699) (8,139)
Loss from discontinued operations - (209)
Loss after tax attributable to the owners (17,699) (8,348)
* H1 2024 recurring operating loss is stated before £8.1m of non-recurring
charges as follows:
1. £5.0m DHSC settlement fee.
2. £2.4m costs in relation to the now settled DHSC contract dispute.
3. £0.7m of other costs including restructuring expenses and Taiwan
divestment fees.
Revenue
Revenue for H1 2024 increased to £10.3m compared with £3.3m in H1 2023,
driven by the inclusion of Yourgene sales that were not present in H1 2023.
Yourgene Health delivered sales of £7.8m, or 75% of total sales, Primer
Design delivered sales totalling £2.2m, whilst IT-IS International delivered
sales of £0.3m in H1 2024.
Gross profit
The business delivered an underlying gross profit (excluding the impact of the
DHSC settlement) of £6.7m (65%), compared with £1.7m (50%) in H1 2023. The
margin has improved significantly as there have been no major stock write
offs, following impairment of all remaining COVID-19 associated stock at
year-end.
Operating expenditure
Underlying Group operating costs (excluding the impact of the DHSC settlement)
increased by £5.1m to £12.1m in H1 2024 compared with £7.0m in H1 2023,
driven by the inclusion of Yourgene costs that were not present in H1 2023. On
a proforma basis, H1 2024 opex costs are £2.6m lower than H1 2023
predominantly as a result of the integration cost savings that have been
delivered so far post-acquisition.
Headcount at the end of June 2024 was around 240 which is largely consistent
with the position at year end (237).
EBITDA
The Group reported an EBITDA loss of £5.6m for H1 2024, compared with a loss
of £5.4m in H1 2023. The loss has increased slightly, by £0.2m, which is
driven by a £5.0m increase in the underlying gross profit, as a result of
increased sales, offset by higher underlying operating expenditure of circa
£5.1m.
Operating loss
The Group operating loss increased to £17.1m compared with a loss of £8.4m
in H1 2023. Year-on-year, depreciation and amortisation charges have increased
by £2.2m, to £3.4m, mainly due to the inclusion of charges associated with
assets acquired as part of the Yourgene acquisition.
Other operating expenses have increased from £1.9m to £8.1m in H1 2024. The
main items making up the H1 2024 charge are i) £5.0m DHSC settlement fee, ii)
£2.4m costs in relation to the now settled DHSC contract dispute, and iii)
£0.7m other costs including restructuring expenses as we continue to lower
our cost base.
Loss after tax from continuing operations
The Group reported a loss after tax of £17.7m, compared with a loss of £8.1m
in H1 2023. Other financial income and expenses netted to a £0.8m expense
compared with a £0.1m income in H1 2023. The three key items making up the
balance are i) a £1.1m net financial foreign exchange loss, mainly resulting
from revaluations of bank and intercompany accounts held in foreign currencies
(H1 2023: £1.2m net loss), ii) £0.4m of IFRS 16 lease interest payments (H1
2023: £nil), offset by iii) £0.7m interest income on deposits held in bank
accounts (H1 2023: £1.5m), reflecting the reduced cash position year-on-year.
The £0.2m taxation credit is made up of the movement in the current and
deferred tax position.
Earnings per share
The H1 2024 loss per share was £0.25 (H1 2023: £0.12 loss).
Statement of financial position
Assets Jun-24 Dec-23 Equity and Liabilities Jun-24 Dec-23
£'000 £'000 £'000 £'000
Goodwill 21,273 21,446 Share capital and premium 54,625 54,586
Right-of-use assets 10,024 11,036 Retained earnings and reserves 15,788 32,656
Property, plant and equipment 3,764 4,183 Total equity 70,413 87,242
Deferred tax assets 359 413
Other non-current assets 8,990 10,289 Lease liabilities long-term 11,791 12,495
Total non-current assets 44,410 47,367 Deferred tax liabilities 1,998 2,241
Contingent consideration long-term - 722
Inventories 3,001 3,022 Other provisions and long-term liabilities 1,589 1,550
Trade and other receivables 16,955 36,034 Total non-current liabilities 15,378 17,008
Tax receivables 423 728
Other current assets 1,671 2,610 Lease liabilities short-term 1,352 1,209
Cash and cash equivalents 32,939 44,054 Trade and other liabilities 11,541 7,183
Total current assets 54,989 86,448 Tax liabilities 11 65
Contingent consideration short-term - 193
Other provisions and short-term liabilities 704 20,915
Total current liabilities 13,608 29,565
Total Assets 99,399 133,815 Total Equity and Liabilities 99,399 133,815
Non-current assets
Right-of-use assets have decreased by £1.0m to £10.0m at 30 June 2024,
predominantly as a result of depreciation charges.
Other non-current assets have decreased by £1.3m to £9.0m at 30 June 2024,
driven by the amortisation of intangible assets.
Current assets
Trade and other receivables have fallen since December 2023 predominantly as a
result of the DHSC settlement, whereby the December 2020 unpaid invoice for
£24.0m has now been written off as it will no longer be paid.
Also included in trade and other receivables is a £13.4m VAT receivable
balance (December 2023: £8.5m), that mainly relates to VAT paid in the UK on
sales invoices that will not be paid by the DHSC as per the terms of the
settlement agreement (circa £12.2m). This has subsequently been repaid to
Novacyt in August 2024.
Tax receivables has fallen by £0.3m to £0.4m at 30 June 2024, predominantly
due to the Group receiving cash from HMRC covering FY22 research and
development tax claims. The current balance relates to research and
development tax claim accruals covering 2023 and 2024.
Other current assets have fallen by £0.9m to £1.7m at 30 June 2024, with the
key driver being the unwinding of the annual commercial insurance prepayment
charge. Prepayments at 30 June 2024 include Group commercial insurance, rent,
rates and prepaid support costs.
Current liabilities
Short-term provisions have fallen by £19.8m since December 2023 as a result
of the DHSC settlement, whereby the product warranty provision made in
relation to the dispute has been reversed.
Trade and other liabilities increased from £7.2m to £11.5m at 30 June 2024,
driven by the inclusion of the £5.0m settlement due to the DHSC which was
paid in July 2024, offset by a reduction in accruals and payroll related
liabilities.
Non-current liabilities
Lease liabilities long-term have decreased by £0.7m, to £11.8m, driven
predominantly by rental payments made in H1 2024.
Contingent consideration long-term has reduced to nil from £0.7m at December
2023, following a settlement agreement that accelerated the milestone payment
in return for a reduced fee.
Cash flow
Cash held at 30 June 2024 totalled £32.9m compared with £44.1m at 31
December 2023. Net cash used in operating activities was £9.1m for H1 2024,
made up of a working capital outflow of £3.5m and an EBITDA loss of £5.6m,
compared with a cash outflow of £5.7m in H1 2023.
Net cash from investing activities has swung from a £1.0m inflow in H1 2023
to a £1.1m outflow in H1 2024, driven by reduced interest income as a result
of a lower cash balance, the payment of outstanding contingent consideration
in relation to the historic Coastal Genomics acquisition and higher capital
expenditure.
Net cash used in financing activities in H1 2024 totalled £0.9m compared with
£0.5m in H1 2023, with the main cash outflow continuing to be lease payments.
The Group remains debt free at 30 June 2024.
Steve Gibson
Chief Financial Officer
25 September 2024
Consolidated income statement as at 30 June 2024
Amounts in £'000 Notes (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Continuing Operations
Revenue 4 10,322 3,339
Cost of sales 6 -3,595 -1,674
Cost of sales - exceptional 7 19,753 -
Gross profit 26,480 1,665
Sales, marketing and distribution expenses -3,090 -1,506
Research and development expenses -1,499 -1,239
General and administrative expenses -10,943 -5,579
General and administrative expenses - exceptional 7 -19,964 -
Governmental subsidies - 125
Operating loss before exceptional items -9,016 -6,534
Other operating income 8 - -
Other operating expenses 8 -8,088 -1,862
Operating loss after exceptional items -17,104 -8,396
Financial income 9 2,096 1,994
Financial expense 9 -2,910 -1,911
Loss before tax -17,918 -8,313
Tax income 10 219 174
Loss after tax from continuing operations -17,699 -8,139
Loss from discontinued operations - -209
Loss after tax attributable to owners of the Company -17,699 -8,348
Loss per share (£) 11 -0.25 -0.12
Diluted loss per share (£) 11 -0.25 -0.12
Loss per share from continuing operations (£) 11 -0.25 -0.12
Diluted loss per share from continuing operations (£) 11 -0.25 -0.12
Loss per share from discontinued operations (£) 11 -0.00 -0.00
Diluted loss per share from discontinued operations (£) 11 -0.00 -0.00
Consolidated statement of comprehensive income as at 30 June 2024
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Loss for the period recognised in the income statement -17,699 -8,348
Items that may be reclassified subsequently to profit or loss:
Translation reserves 794 474
Total comprehensive loss -16,905 -7,874
Comprehensive loss attributable to:
Owners of the Company (*) -16,905 -7,874
(*) There are no non-controlling interests.
Statement of financial position as at 30 June 2024
Amounts in £'000 Notes (Unaudited) (Audited)
Six month Year ended
30 June
31 December
2024
2023
Goodwill 21,273 21,446
Other intangible assets 8,937 10,232
Property, plant and equipment 3,764 4,183
Right-of-use assets 10,024 11,036
Non-current financial assets 53 57
Deferred tax assets 359 413
Total non-current assets 44,410 47,367
Inventories and work in progress 12 3,001 3,022
Trade and other receivables 13 16,955 36,034
Tax receivables 423 728
Prepayments and short-term deposits 1,663 2,601
Investments short-term 8 9
Cash and cash equivalents 32,939 44,054
Total current assets 54,989 86,448
Total assets 99,399 133,815
Lease liabilities short-term 1,352 1,209
Contingent consideration short-term - 193
Provisions short-term 14 216 19,988
Trade and other liabilities 15 11,541 7,183
Tax liabilities 11 65
Other current liabilities 488 927
Total current liabilities 13,608 29,565
Net current assets 41,381 56,883
Lease liabilities long-term 11,791 12,495
Contingent consideration long-term - 722
Provisions long-term 14 1,586 1,547
Deferred tax liabilities 1,998 2,241
Other long-term liabilities 3 3
Total non-current liabilities 15,378 17,008
Total liabilities 28,986 46,573
Net assets 70,413 87,242
Statement of financial position as at 30 June 2024 (continued)
Amounts in £'000 Notes (Unaudited) (Audited)
Six month Year ended
30 June
31 December
2024
2023
Share capital 16 4,053 4,053
Share premium account 50,671 50,671
Own shares -99 -138
Other reserves 2,393 1,599
Equity reserves 1,155 1,155
Retained earnings 12,240 29,902
Total equity - owners of the Company 70,413 87,242
Total equity 70,413 87,242
Statement of changes in equity as at 30 June 2024
Amounts in £'000 Other Group reserves
Share capital Share premium Own shares Equity reserves Other Translation reserve OCI on retirement benefits Total Retained earnings Total equity
Balance at 1 January 2023 4,053 50,671 -91 1,155 -2,407 398 -8 -2,017 61,445 115,216
Translation differences - - - - - 363 - 363 - 363
Loss for the period - - - - - - - - -28,292 -28,292
Total comprehensive loss for the period - - - - - 363 - 363 -28,292 -27,929
Own shares acquired/sold in the period - - -47 - - - - - - -47
Other - - - - 3,253 - - 3,253 -3,251 2
Balance at 31 December 2023 4,053 50,671 -138 1,155 846 761 -8 1,599 29,902 87,242
Translation differences - - - - - 794 - 794 - 794
Loss for the period - - - - - - - - -17,699 -17,699
Total comprehensive loss for the period - - - - - 794 - 794 -17,699 -16,905
Own shares acquired/sold in the period - - 39 - - - - - - 39
Others - - - - - - - - 37 37
Balance at 30 June 2024 4,053 50,671 -99 1,155 846 1,555 -8 2,393 12,240 70,413
The Other Group reserves in column 'Other' shows the reserve related to the
acquisition of Primer Design shares and the reserve for payment in shares. The
2023 movement of £3,253k is a result of the acquisition of Yourgene Health.
The variation of £37k in the column 'Retained earnings' in 2024 is mainly the
result of the foreign exchange difference when accounting for the capital
reduction of Yourgene Health Taiwan Ltd.
Statement of cash flows as at 30 June 2024
Amounts in £'000 Notes (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Net cash used in operating activities 17 -9,087 -5,691
Operating cash flows from discontinued operations - -1,287
Operating cash flows from continuing operations -9,087 -4,404
Investing activities
Sales of property, plant and equipment - 13
Purchases of patents and trademarks -104 -35
Purchases of property, plant and equipment -738 -138
Variation of deposits -84 120
Acquisition of subsidiaries net of cash acquired -898 -2
Interest received 691 1,052
Net cash (used in)/from investing activities -1,133 1,010
Investing cash flows from discontinued operations - 88
Investing cash flows from continuing operations -1,133 922
Financing activities
Repayment of lease liabilities -900 -483
Purchase of own shares - net 39 -32
Paid interest expenses - -19
Net cash used in financing activities -861 -534
Financing cash flows from discontinued operations - -320
Financing cash flows from continuing operations -861 -214
Net decrease in cash and cash equivalents -11,081 -5,215
Cash and cash equivalents at beginning of year 44,054 86,973
Effect of foreign exchange rate changes -34 -24
Cash and cash equivalents at end of period 32,939 81,734
Notes to the interim financial
statements
for the six month period to 30 june 2024
1. CORPORATE Information
Novacyt is an international molecular diagnostics company providing a broad
portfolio of integrated technologies and services, primarily focused on the
delivery of genomic medicine. The Company develops, manufactures, and
commercialises a range of molecular assays and instrumentation to deliver
workflows and services that enable seamless end-to-end solutions from sample
to result across multiple sectors including human health, animal health and
environmental. Its registered office is located at 13 Avenue Morane Saulnier,
78140 Vélizy Villacoublay.
The financial information contained in this report comprises the consolidated
financial statements of the Group and its subsidiaries (hereinafter referred
to collectively as the "Group"). The figures in the tables are prepared and
presented in Great British Pounds ("GBP"), rounded to the nearest thousand
("£'000").
This condensed consolidated interim financial information does not constitute
full statutory accounts. It does not include all of the information required
for full annual financial statements and should be read in conjunction with
the consolidated financial statements for the twelve months ended 31 December
2023. 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 auditor's report on those accounts was unqualified. The financial
information for the half years 30 June 2024 and 30 June 2023 is unaudited and
the twelve months to 31 December 2023 is audited.
2. Summary of accounting policies applied by the Group
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRSs"). The financial statements have also
been prepared in accordance with IFRSs adopted by the European Union.
The financial information has been prepared on the historical cost basis
except in respect of those financial instruments that have been measured at
fair value. Historical cost is generally based on the fair value of the
consideration given in exchange for the goods and services.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date, regardless of whether that price is directly observable
or estimated using another valuation technique. In estimating the fair value
of an asset or a liability, the Group takes into account the characteristics
of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at the
measurement date.
Fair value for measurement and/or disclosure purposes in the financial
information is determined on such a basis, except for leasing transactions
that are within the scope of IFRS 16, and measurements that have some
similarities to fair value but are not fair value, such as net realisable
value in IAS 2 or value in use in IAS 36.
The areas where assumptions and estimates are material in relation to the
financial information are the measurement of goodwill (see note 15 of the 2023
Statutory Accounts for further details), the carrying amounts and useful lives
of the other intangible assets (see note 16 of the 2023 Statutory Accounts for
further details), deferred taxes (see note 19 of the 2023 Statutory Accounts
for further details), trade receivables (see note 21 of the 2023 Statutory
Accounts and note 13 of the 2024 Interim Accounts for further details) and
provisions for risks and other provisions related to the operating activities
(see note 28 of the 2023 Statutory Accounts and note 14 of the 2024 Interim
Accounts for further details).
The accounting policies set out below have been applied consistently to all
periods presented in the financial information.
The accounting policies applied by the Group in these condensed consolidated
interim financial statements are substantially the same as those applied by
the Group in its financial statements for the year ended 31 December 2023 and
which form the basis of the 2024 financial statements. The methodology for
selecting assumptions underpinning the fair value calculations has not changed
since 31 December 2023.
Basis of consolidation
All intragroup assets and liabilities, equity, income, expenses and cash flows
relating to transactions between the members of the Group are eliminated on
consolidation. The Group's scope of consolidation included the following
companies, all fully consolidated when included in the scope.
At 30 June 2024 At 30 June 2023
Companies Interest percentage Consolidation method Interest percentage Consolidation method
Biotec Laboratories Ltd - - 100% FC
IT-IS International Ltd 100% FC 100% FC
Lab21 Healthcare Ltd 100% DO 100% DO
Novacyt US Inc 100% FC 100% FC
Novacyt Inc 100% FC 100% FC
Microgen Bioproducts Ltd 100% DO 100% DO
Novacyt SA 100% FC 100% FC
Novacyt Asia Ltd 100% FC 100% FC
Novacyt China Ltd 100% FC 100% FC
Novacyt UK Holdings Ltd 100% FC 100% FC
Primer Design Ltd 100% FC 100% FC
Yourgene Health Ltd 100% FC - -
Yourgene Health UK Ltd 100% FC - -
Yourgene Genomic Services Ltd 100% FC - -
Yourgene Health SASU 100% FC - -
Yourgene Health Inc 100% FC - -
Yourgene Health GmbH 100% FC - -
Yourgene Health Canada Holdings Ltd 100% FC - -
Yourgene Health Canada Investments Ltd 100% FC - -
Yourgene Health Canada Inc 100% FC - -
Yourgene Health (Singapore) Pte. Ltd 100% FC - -
Yourgene Health (Taiwan) Co. Ltd 100% FC - -
Elucigene Ltd 100% FC - -
Delta Diagnostics Ltd 100% DO - -
Legend: FC: Full
consolidation
DO:
Discontinued operation
Biotec Laboratories Ltd was dissolved on 20 February 2024.
Going concern
The directors have, at the time of approving the financial statements, a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Thus, they adopt the going
concern basis of accounting in preparing the financial statements.
The going concern model covers the period up to and including September
2025. In making this assessment, the directors have considered the following
elements:
- The business plan for the next 12 months;
- The working capital requirements of the business;
- A positive cash balance at 30 June 2024 of £32,939k;
- Payment of £5,000k to settle the Department of Health and Social
Care "DHSC" commercial dispute in July 2024;
- Receiving £12,165k of VAT back from HMRC following conclusion of
the DHSC commercial dispute in August 2024, and;
- No additional external funding has been forecast.
As such the forecast prepared by the Group shows that it is able to cover its
cash needs during the financial year 2024 up until September 2025.
Measurement of goodwill
Goodwill is broken down by cash-generating unit ("CGU") or group of CGUs,
depending on the level at which goodwill is monitored for management purposes.
In accordance with IAS 36, none of the CGUs or groups of CGUs defined by the
Group are greater in size than an operating segment.
Impairment testing
Goodwill is not amortised but is subject to impairment testing when there is
an indication of loss of value, and at least once a year at the reporting
date.
Such testing consists of comparing the carrying amount of an asset to its
recoverable amount. The recoverable amount of an asset, a CGU or a group of
CGUs is the greater of its fair value less costs to sell and its value in use.
Fair value less costs to sell is the amount obtainable from the sale of an
asset, a CGU or a group of CGUs in an arm's length transaction between
well-informed, willing parties, less the costs of disposal. Value in use is
the present value of future cash flows expected to arise from an asset, a CGU
or a group of CGUs.
It is not always necessary to determine both the fair value of an asset less
costs to sell and its value in use. If either of these amounts exceeds the
carrying amount of the asset, the asset is not impaired and it is not
necessary to estimate the other amount.
Inventories
Inventories are carried at the lower of cost and net realisable value. Cost
includes materials and supplies, and, where applicable, direct labour costs
incurred in transforming them into their current state. It is calculated using
the weighted average cost method. The recoverable amount represents the
estimated selling price less any marketing, sales and distribution expenses.
The gross value of goods and supplies includes the purchase price and
incidental expenses.
A provision for impairment, equal to the difference between the gross value
determined in accordance with the above terms and the current market price or
the realisable value less any proportional selling costs, is recognised when
the gross value is greater than the other stated item.
Trade receivables
The Group has an established credit policy under which the credit status of
each new customer is reviewed before credit is advanced, including external
credit evaluations where possible. Credit limits are established for all
significant or high-risk customers, which represent the maximum amount
permitted to be outstanding without requiring additional approval from the
appropriate level of senior management. Outstanding debts are continually
monitored by each division. Credit limits are reviewed on a regular basis, and
at least annually. Customers that fail to meet the Group's benchmark
creditworthiness may only transact with the Group on a prepayment basis.
Trade receivables are recorded initially at fair value and subsequently
measured at amortised cost. This generally results in their recognition at
nominal value less an allowance for any doubtful debts. Trade receivables in
foreign currency are transacted in their local currency and subsequently
revalued at the end of each reporting period, with any foreign exchange
differences being recognised in the income statement as an income/expense.
The allowance for doubtful debts is recognised based on Management's
expectation of losses without regard to whether an impairment trigger happened
or not (an "expected credit loss" model). Through implementation of IFRS 9,
the Group concluded that no real historical default rate could be determined
due to a low level of historical write offs across the business. The Group
therefore recognises an allowance for doubtful debts on the basis of invoice
ageing. Once an invoice is overdue from its due date, based on agreed credit
terms, by more than 90 days, this invoice is then more likely to default than
those invoices operating within 90 days of their due date. As such, these
invoices will be provided for in full as part of an expected credit loss
model, except where Management have reviewed and judged otherwise.
Trade receivables are written off when there is no reasonable expectation of
recovery. Indicators that there may be no reasonable expectation of recovery
may include the failure of the debtor to engage in a payment plan, and failure
to make contractual payments within 365 days of the original due date.
Cash and cash equivalents
Cash equivalents are held to meet short-term cash commitments rather than for
investment or other purposes. For an investment to qualify as a cash
equivalent, it must be readily convertible into a known amount of cash and be
subject to an insignificant risk of change in value. Cash and cash equivalents
comprise cash funds, current bank accounts and marketable securities (cash
Undertakings for Collective Investment in Transferable Securities ("UCITS"),
negotiable debt securities, etc) that can be liquidated or sold within a very
short time (generally with original maturities of three months or less) and
which have a negligible risk of change in value. All such items are measured
at fair value, with any adjustments recognised in the income statement.
Trade payables
Trade payables are obligations to provide cash or other financial assets. They
are recognised in the statement of financial position when the Group becomes a
party to a transaction generating liabilities of this nature. Trade and other
payables are recognised in the statement of financial position at fair value
on initial recognition, except if settlement is to occur more than 12 months
after recognition. In such cases, they are measured using the amortised cost
method. The use of the effective interest rate method will result in the
recognition of a financial expense in the income statement. Trade and other
payables are eliminated from the statement of financial position when the
corresponding obligation is discharged.
Trade payables have not been discounted, because the effect of doing so would
be immaterial.
Provisions
In accordance with IAS 37 "Provisions, Contingent Liabilities and Contingent
Assets", a provision is recognised when the Group has a current obligation as
of the reporting date in respect of a third party and it is probable or
certain that there will be an outflow of resources to this third party,
without at least equivalent consideration from the said third party.
Provisions for risks and charges cover the amount corresponding to the best
estimate of the future outflow of resources required to settle the obligation.
The provisions are for the restoration of leased premises, risks related to
litigations and product warranties.
Long-Term Incentive Plan (LTIP)
The LTIP share-based scheme is accounted for in accordance with IFRS 2 -
Share-based Payment.
Share-based awards granted are measured at fair value on grant date, and the
value is recognised as share-based compensation expense over the vesting
period. The fair values of LTIP share schemes are determined by an external
valuer using the Monte Carlo simulation model. Share-based compensation
expense, when recognised, is charged to the consolidated income statement with
the corresponding entry to reserve or liability, depending on the settlement
method of the LTIP schemes within different period.
In December 2021, Novacyt implemented a cash LTIP to qualifying employees,
based on achieving certain annual EBITDA targets over a three-year qualifying
period. The plan vested on the third anniversary of the grant date and was
settled in cash.
In February 2022, a Performance Share Awards programme for executive
management was created as part of its new LTIP. This LTIP replaced the
previous phantom share award scheme which ended in November 2020.
The 2022 Performance Share Awards programme is structured as nil-cost options,
giving a right to acquire a specified number of shares at a nil exercise price
per share (i.e. for no payment) in accordance with the rules, governed by
sections L-225-197-1 and seq. of the French Commercial Code ("actions
gratuities").
The awards will vest over a three-year performance period, starting 1 January
2022 and ending on 31 December 2024, subject to the Company achieving certain
total shareholder return growth conditions. The baseline for total shareholder
return is based on the average closing price of the Company's shares in
December 2021 which was £3.54. This will be compared to the equivalent figure
in December 2024.
In April 2024, a new Performance Share Awards programme for executive
management was announced. The 2024 Performance Share Awards programme is
structured as nil-cost options, giving a right to acquire a specified number
of shares at a nil exercise price per share (i.e. for no payment) in
accordance with the rules, governed by sections L-225-197-1 and seq. of the
French Commercial Code ("actions gratuities").
The awards will vest over a three-year performance period, starting 1 January
2024 and ending on 31 December 2026, subject to the Company achieving certain
total shareholder return growth conditions. The baseline for total shareholder
return is based on the average closing price of the Company's shares in
December 2023 which was £0.63. This will then be compared to the equivalent
figure in December 2026.
Consolidated revenue
IFRS 15 "Revenue from Contracts with Customers" establishes a principles-based
approach to recognising revenue only when performance obligations are
satisfied, and control of the related goods or services is transferred. It
addresses items such as the nature, amount, timing and uncertainty of revenue,
and cash flows arising from contracts with customers. IFRS 15 applies a
five-step approach to the timing of revenue recognition and applies to all
contracts with customers except those in the scope of other standards:
· Step 1 - Identify the contract(s) with a customer
· Step 2 - Identify the performance obligations in the contract
· Step 3 - Determine the transaction price
· Step 4 - Allocate the transaction price to the performance
obligations in the contract
· Step 5 - Recognise revenue when (or as) the entity satisfies a
performance obligation
The Group principally satisfies its performance obligations at a point in time
and revenue recognised relating to performance obligations satisfied over time
is not significant. As such, revenue is generally recognised at the point of
sale, with little judgement required in determining the timing of transfer of
control.
Some contracts with customers contain a limited assurance warranty that is
accounted for under IAS 37 (see Provisions accounting policy). If a repair or
replacement is not possible under the assurance warranty, a full refund of the
product price may be given. The potential refund liability represents variable
consideration.
Under IFRS 15.53, the Group can use either:
· The expected value (sum of probability weighted amounts); or
· The most likely amount (generally used when the outcomes are binary).
The method used is not a policy choice. Management use the method that it
expects will best predict the amount of consideration based on the terms of
the contract. The method is applied consistently throughout the contract.
Variable revenue is constrained if appropriate. IFRS 15 requires that revenue
is only included to the extent that it is highly probable that there will not
be a significant reversal in future periods.
In making this assessment, Management have considered the following factors
(which are not exclusive):
· If the amount of consideration is highly susceptible to factors
outside the Group's influence;
· Whether the uncertainty about the amount of consideration is not
expected to be resolved for a long period of time;
· The Group's experience (or other evidence) with similar types of
contract;
· The Group has a practice of either offering a broad range of price
concessions or changing the payment terms and conditions of similar contracts
in similar circumstances; and
· The contract has a large number and broad range of possible
consideration amounts.
The decision as to whether revenue should be constrained is considered to be a
significant judgement as the term 'highly probable' is not defined in IFRS 15.
Management consider highly probable to be significantly more likely than
probable.
Taxation
Income tax on profit or loss for the period comprises current and deferred
tax.
· Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years, and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the end of the reporting period.
A provision is recognised for those matters for which the tax determination is
uncertain but it is considered probable that there will be a future outflow of
funds to a tax authority. The provisions are measured at the best estimate of
the amount expected to become payable. The assessment is the result of the
Group's judgement based on the advice of external tax professionals and
supported by previous experience in respect of such activities.
· Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or
from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be sufficient
taxable profits against which to utilise the benefits of the temporary
differences in the near-term.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset is realised based on tax
laws and rates that have been enacted or substantively enacted at the
reporting date.
The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at
the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Current tax and deferred tax for the year
Current and deferred tax are recognised in the income statement, except when
they relate to items that are recognised in other comprehensive income or
directly in equity, in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the accounting for the
business combination.
Research and development tax credits
Primer Design Ltd, IT-IS International Ltd and Yourgene Health UK Ltd benefit
from tax credits in respect of some of their research activities. The tax
credit is calculated per financial year and deducted from the tax payable by
the company in respect of the year during which research expenses were
incurred. Tax credits that cannot be deducted from the tax expense are
surrendered for a repayable tax credit and treated as a governmental subsidy
in the income statement.
Profit/loss per share
The Group reports basic and diluted profit/loss per ordinary share. Basic
profit/loss per share is calculated by dividing the profit/loss attributable
to ordinary shareholders of the Company by the weighted average number of
ordinary shares outstanding during the period.
Diluted profit/loss per share is determined by adjusting the profit/loss
attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding, taking into account the effects of all potential
dilutive ordinary shares, including options.
Exceptional items
Exceptional items are those costs or incomes that, in the view of the Board of
Directors, require separate disclosure by virtue of their size or incidence,
and are charged or credited in arriving at operating profit on the face of the
consolidated income statement.
3. Critical accounting judgements and key sources of estimatE uncertainty
In the application of the Group's accounting policies, the directors are
required to make judgements (other than those involving estimations) that have
a significant impact on the amounts recognised and to make estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Critical accounting judgements
· Constraint of revenue
Revenue is only constrained if it is highly probable there will not be a
significant reversal of revenue in the future. Highly probable is not defined
in IFRS 15 and so it is a significant judgement to be exercised by Management.
· Trade and other receivables
An estimate of the risks of non-receipt based on commercial information,
current economic trends and the solvency of individual customers is made to
determine the need for impairment on a customer-by-customer basis. Management
use significant judgement in determining whether a credit loss provision is
required.
At 30 June 2024, the Group had trade receivables of £3,694k against which a
credit loss provision of £406k has been applied.
Key sources of estimation uncertainty
The Group has a number of key sources of estimation uncertainty. Of these
items, only the measurement of goodwill is considered likely to result in a
material adjustment. Where there are other areas of estimates these have been
deemed not material.
· Measurement of goodwill
Goodwill is tested for impairment on an annual basis. The recoverable amount
of goodwill is determined mainly on the basis of forecasts of future cash
flows. The total amount of anticipated cash flows reflects Management's best
estimate of the future benefits and liabilities expected for the relevant CGU.
The assumptions used and the resulting estimates sometimes cover very long
periods, taking into account the technological, commercial and contractual
constraints associated with each CGU. These estimates are mainly subject to
assumptions in terms of volumes, selling prices and related production costs,
and the exchange rates of the currencies in which sales and purchases are
denominated. They are also subject to the discount rate used for each CGU.
The value of the goodwill is tested whenever there are indications of
impairment and reviewed at each annual closing date or more frequently should
this be justified by internal or external events.
4. Revenue
The table below shows revenue on a geographical basis:
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Geographical area
United Kingdom 2,288 814
France 1,299 196
Rest of Europe 1,902 584
America 1,474 764
Asia-Pacific 2,748 749
Africa 280 192
Middle East 331 40
Total revenue 10,322 3,339
Revenue has increased as a result of the inclusion of sales from Yourgene
Health post-acquisition, that were not present in H1 2023.
The breakdown of revenue by operating segment and geographic area is presented
in note 5.
5. Operating segments
Segment reporting
Pursuant to IFRS 8, an operating segment is a component of an entity:
- that engages in business activities from which it may earn revenues
and incur expenses (including revenues and expenses relating to transactions
with other components of the same entity);
- whose operating results are regularly reviewed by the Group's Chief
Executive to make decisions regarding the allocation of resources to the
segment and to assess its performance; and
- for which discrete financial information is available.
The Group has identified four operating segments whose performance and
resources are monitored separately:
o Yourgene Health
This segment represents the activities of Yourgene Health and its
subsidiaries, a genomics technology and services business, focussed on
delivering molecular diagnostic and screening solutions, across reproductive
health and precision medicine, based throughout the world but with its
headquarters in Manchester, UK.
o Primer Design
This segment represents the activities of Primer Design Ltd, which is a
designer, manufacturer and marketer of molecular 'real-time' qPCR testing
devices and reagents in the area of infectious diseases based in Eastleigh,
UK.
o IT-IS International
This segment represents the activities of IT-IS International Ltd, a
diagnostic instrument development and manufacturing company specialising in
the development of PCR devices for the life sciences and food testing industry
based in Stokesley, UK.
o Corporate
This segment represents Group central/corporate costs. Where appropriate,
costs are recharged to individual business units via a management recharge
process.
o Intercompany eliminations
This column represents intercompany transactions across the Group that have
not been allocated to an individual operating segment. It is not a discrete
segment.
The Chief Operating Decision Maker is the Chief Executive Officer.
Reliance on major customers and concentration risk
In H1 2024 and H1 2023 the Group was not dependent on one particular customer
and there were no customers generating sales accounting for over 10% of
revenue.
Breakdown of revenue by operating segment and geographic area
o At 30 June 2024
Amounts in £'000 Primer Design IT-IS International Yourgene Health Total
Geographical area
United Kingdom 565 25 1,698 2,288
France 127 29 1,143 1,299
Rest of Europe 391 98 1,413 1,902
America 415 94 965 1,474
Asia-Pacific 401 102 2,245 2,748
Africa 193 1 86 280
Middle East 91 - 240 331
Total revenue 2,183 349 7,790 10,322
o At 30 June 2023
Amounts in £'000 Primer Design IT-IS International Total
Geographical area
United Kingdom 796 18 814
France 159 37 196
Rest of Europe 379 205 584
America 689 75 764
Asia-Pacific 555 194 749
Africa 172 20 192
Middle East 28 12 40
Total revenue 2,778 561 3,339
Breakdown of result by operating segment
o 6 month ended 30 June 2024
Amounts in £'000 Primer Design IT-IS International Corporate Yourgene Health Intercompany Total
Eliminations
Revenue 2,183 349 - 7,790 - 10,322
Cost of sales -362 -299 - -2,937 3 -3,595
Cost of sales - exceptional 19,753 - - - - 19,753
Sales and marketing costs -724 -122 -254 -1,990 - -3,090
Research and development -382 -233 -130 -820 66 -1,499
General and administrative -1,576 -511 -346 -5,118 - -7,551
General and administrative - exceptional -19,964 - - - - -19,964
Earnings before interest, tax, depreciation and amortisation as per management -1,072 -816 -730 -3,075 69 -5,624
reporting
Depreciation and amortisation -639 -67 -43 -2,660 17 -3,392
Operating (loss)/profit before exceptional items -1,711 -883 -773 -5,735 86 -9,016
Other operating income - - - - - -
Other operating expenses -7,734 -52 -91 -211 - -8,088
Operating (loss) / profit after exceptional items -9,445 -935 -864 -5,946 86 -17,104
Financial income 4,940 4 1,210 107 -4,165 2,096
Financial expense -13 -93 -5,563 -1,406 4,165 -2,910
Loss before tax -4,518 -1,024 -5,217 -7,245 86 -17,918
o 6 month ended 30 June 2023
Amounts in £'000 Primer Design IT-IS International Corporate Intercompany Total
Eliminations
Revenue 2,778 561 - - 3,339
Cost of sales -1,309 -374 - 9 -1,674
Sales and marketing costs -1,281 -202 -23 - -1,506
Research and development -1,047 -192 - - -1,239
General and administrative -3,007 -729 -684 - -4,420
Governmental subsidies 154 -29 - - 125
Earnings before interest, tax, depreciation and amortisation as per management -3,712 -965 -707 9 -5,375
reporting
Depreciation and amortisation -935 -209 -33 18 -1,159
Operating (loss)/profit before exceptional items -4,647 -1,174 -740 27 -6,534
Other operating income - - - - -
Other operating expenses -757 -13 -1,092 - -1,862
Operating (loss) / profit after exceptional items -5,404 -1,187 -1,832 27 -8,396
Financial income 3,058 69 1,650 -2,783 1,994
Financial expense -749 -28 -3,917 2,783 -1,911
Loss before tax -3,095 -1,146 -4,099 27 -8,313
6. Cost of sales
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Cost of inventories recognised as an expense 3,491 1,157
Change in stock provision -991 -175
Freight costs 23 32
Direct labour (including subcontractor costs) 992 664
Other 80 -4
Total cost of sales 3,595 1,674
In H1 2024, the stock provision has decreased by a net £991k (H1 2023:
decreased by £175k). Stock, which had previously been provided for, has been
written off and disposed of during H1 2024, with the cost being charged to
'Cost of inventories recognised as an expense' and a corresponding release of
the stock provision being made.
Direct labour (including subcontractor costs) has increased year-on-year in
line with the growth in sales.
7. COST OF SALES - EXCEPTIONAL & GENERAL AND ADMINISTRATIVE EXPENSES -
EXCEPTIONAL
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Reversal of DHSC related product warranty provision -19,753 -
Total cost of sales - exceptional -19 753 -
DHSC bad debt write off 19,964 -
Total general and administrative expenses - exceptional 19,964 -
Cost of sales - exceptional is a credit balance as a result of releasing the
DHSC product warranty provision for £19,753K, following the settlement.
General and administrative expenses - exceptional relates to the bad debt
write off of £19,964k in relation to the DHSC December 2020 invoice, that as
per the terms of the settlement agreement in June 2024 will not be paid.
8. Other operating income and expenses
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Other operating income - -
Total other operating income - -
Acquisition related expenses -29 -666
DHSC contract dispute costs -7,372 -640
Restructuring expenses -379 -543
Other expenses -308 -13
Total other operating expenses -8,088 -1,862
DHSC contract dispute costs relate to legal and professional fees and product
storage costs incurred in the resolution of the commercial dispute. The
settlement figure of £5,000k agreed with the DHSC is included within this
category.
Restructuring expenses in 2024 relate to Group-wide restructuring charges, as
the Group continues to reduce its cost base.
2023 acquisition related expenses were associated with the acquisition of
Yourgene Health plc.
9. Financial income and expense
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Financial foreign exchange gains 1,380 519
Interest received from discontinued operations - 415
Other financial income 716 1,060
Total financial income 2,096 1,994
Interest on IFRS 16 liabilities -361 -19
Financial foreign exchange losses -2,471 -1,731
Discount of financial instruments -42 -3
Interest paid to discontinued operations - -158
Oher financial expense -36 -
Total financial expense -2,910 -1,911
Financial foreign exchange gains and losses are driven by revaluations of bank
and intercompany accounts held in foreign currencies.
Interest received from or paid to discontinued operations relates to interest
on intercompany balances with Microgen Bioproducts Ltd and Lab21 Healthcare
Ltd.
Other financial income relates to interest received on cash balances.
10. Tax income
The main rate of corporation tax in the UK increased to 25% from 1 April 2023.
The H1 2024 financials have been calculated using a corporation tax rate of
25%.
Taxation for other jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
The Group's tax is the sum of the total current and deferred tax.
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Current tax income
Current year tax income 52 123
Deferred tax income
Deferred tax income 167 51
Total tax income in the income statement 219 174
The tax income for the period can be reconciled to the loss before tax as
follows:
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Loss before taxation -17,918 -8,313
Tax at the UK corporation tax rate (2024: 25%, 2023: 19%) 4,480 1,580
Effect of different tax rates of subsidiaries operating in other jurisdictions -49 159
Change of the tax rate for the calculation of deferred tax - 272
Effect of non-deductible expenses and non-taxable income -562 -40
Change in unrecognised deferred tax assets -3,737 -1,761
Other adjustments 87 -36
Total tax income for the period 219 174
11. Loss per share
The loss per share is calculated based on the weighted average number of
shares outstanding during the period. The diluted loss per share is calculated
based on the weighted average number of shares outstanding and the number of
shares issuable as a result of the conversion of dilutive financial
instruments. At 30 June 2024, there are no outstanding dilutive instruments.
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Net loss attributable to owners of the Company -17,699 -8,348
Weighted average number of shares 70,626,248 70,626,248
Loss per share (£) -0.25 -0.12
Diluted loss per share (£) -0.25 -0.12
Loss per share from continuing operations (£) -0.25 -0.12
Diluted loss per share from continuing operations (£) -0.25 -0.12
Loss per share from discontinued operations (£) -0.00 -0.00
Diluted loss per share from discontinued operations (£) -0.00 -0.00
12. Inventories and work in progress
Amounts in £'000 (Unaudited) (Audited)
Six month
Year ended
30 June
2024 31 December
2023
Raw materials 10,482 10,691
Work in progress 1,406 1,751
Finished goods 3,168 3,631
Stock provisions -12,055 -13,051
Total inventories and work in progress 3,001 3,022
13. Trade and other receivables
Amounts in £'000 (Unaudited) (Audited)
Six month
Year ended
30 June
2024 31 December
2023
Trade and other receivables 3,694 27,509
Expected credit loss provision -406 -223
Tax receivables - Value Added Tax 13,390 8,541
Other receivables 277 207
Total trade and other receivables 16,955 36,034
Trade and other receivables has fallen since December 2023 predominantly as a
result of the DHSC settlement, whereby the December 2020 unpaid invoice for
£23,957k has now been written off as it will no longer be paid.
The 'Tax receivables - Value Added Tax' balance included £12,165k relating to
VAT paid in the UK on sales invoices that will not be paid by the DHSC as per
the terms of the settlement agreement. This has subsequently been repaid to
Novacyt in August 2024.
Trade receivables balances are due within one year. Once an invoice is more
than 90 days overdue, it is deemed more likely to default and as such, these
invoices have been provided for in full as part of an expected credit loss
model, except where Management have reviewed and judged otherwise.
14. Provisions
The table below shows the nature of and changes in provisions for risks and
charges for the period from 1 January 2024 to 30 June 2024:
Amounts in £'000 (Audited) Increases Reversals Impact of foreign exchange (Unaudited)
At 1 January At 30 June
2024
2024
Provision for retirement benefits 7 - - - 7
Provisions for restoration of premises 1,540 43 - -4 1,579
Provisions long-term 1,547 43 - -4 1,586
Provisions for restoration of premises 36 - -36 - -
Provision for litigation 157 - - - 157
Provisions for product warranty 19,795 17 -19,753 - 59
Provisions short-term 19,988 17 -19,789 - 216
Provisions short term has fallen since December 2023 predominantly as a result
of the DHSC settlement, whereby the product warranty provision made in
relation to the dispute, totalling £19,753k, has been reversed.
15. Trade and other liabilities
Amounts in £'000 (Unaudited) (Audited)
Six month
Year ended
30 June
2024 31 December
2023
Trade payables 2,384 2,311
Accrued invoices 3,091 3,585
Payroll related liabilities 885 1,114
Tax liabilities - Value Added Tax 168 159
Other liabilities 5,013 14
Total trade and other liabilities 11,541 7,183
Other liabilities in 2024 includes the £5,000k settlement due to the DHSC.
This was subsequently paid in July 2024.
16. Share capital
Amount of share capital in £'000 Amount of share capital in €'000 Unit value per share Number of shares issued
in €
(Audited) At 31 December 2023 4,053 4,708 0.07 70,626,248
(Unaudited) At 30 June 2024 4,053 4,708 0.07 70,626,248
As of 30 June 2024 and 31 December 2023, the Company's share capital of
€4,708,416.54 was divided into 70,626,248 shares with a par value of 1/15th
of a Euro each.
The Company's share capital consists of one class of share. All outstanding
shares have been subscribed, called and paid.
17. Notes to the cash flow statement
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Loss for the period -17,699 -8,348
Loss from discontinued operations - -209
Loss from continuing operations -17,699 -8,139
Adjustments for:
Depreciation, amortisation, impairment loss and provisions -16,356 877
Losses on disposal of assets - 89
Other revenues and charges without cash impact 361 -
Income tax credit -219 -299
Operating cash flows before movements of working capital -33,913 -7,681
Decrease in inventories (*) 1 568
Decrease in receivables 20,058 908
Increase in payables 5,154 758
Cash used in operations -8,700 -5,447
Income taxes received 304 789
Finance income -691 -1,033
Net cash used in operating activities -9,087 -5,691
Operating cash flows from discontinued operations - -1,287
Operating cash flows from continuing operations -9,087 -4,404
(*) The variation of the inventories value results from the following
movements:
Amounts in £'000 (Unaudited) (Unaudited)
Six month
Six month
30 June
30 June
2024
2023
Decrease in the gross value of inventory 992 743
Decrease in the stock provision -991 -175
Total variation of the net value of inventories 1 568
The details for the change in the stock provision are covered in notes 6 and
12.
18. Subsequent events
In July 2024, Novacyt paid the DHSC £5,000k as per the terms of the
settlement agreement, as communicated in the press release on 11 June 2024.
Novacyt divested Yourgene Health Taiwan on 31 July 2024 for an upfront
consideration of nil dollars, with the possibility of earnouts totalling up to
$2,000k upon hitting certain targets.
In August 2024, Novacyt successfully reclaimed £12,165k in VAT from HMRC, in
relation to invoices that will no longer be paid by the DHSC as per the terms
of the settlement agreement.
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