REG - Oxford Nanopore Tech - Interim results for the 6 months ended 30 June 24
03/09/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240903:nRSC6141Ca&default-theme=true
RNS Number : 6141C Oxford Nanopore Technologies plc 03 September 2024
03 September 2024
Oxford Nanopore Technologies plc
Interim results for the six months ended 30 June 2024
Solid underlying growth despite end-market headwinds; new customer wins and
continued commercial momentum support reaffirmation of full year guidance
Oxford Nanopore Technologies plc (LSE: ONT) ("Oxford Nanopore" or the
"Group"), the company behind a new generation of molecular sensing technology
based on nanopores, today announces its interim results for the six months
ended 30 June 2024.
Gordon Sanghera, Chief Executive Officer, commented:
"Against a challenging backdrop, our financial and operational performance in
the first half was solid and in-line with our expectations, underpinning
confidence in full year guidance. We delivered robust underlying revenue
growth of 12.4% constant currency and margin expansion of 120bps.
"We continued with our high pace of innovation in the first half, with new
product launches and platform enhancements. For example, we delivered the two
product launches aimed at our regulated customer base, GridION Q-Line and
Early Access of ElysION, our fully automated samples to answer product. These
meet customer needs for routine, end-to-end analyses, for example in clinical
and applied industrial markets, particularly with Biopharma customers.
"As we look forward, our highly differentiated platform and substantial market
opportunity position us well to deliver long-term, sustainable growth. Our
growth and margin guidance for the full year remains unchanged. We enter the
second half in a strong position; new and enlarged contract wins, such as
PRECISE and Plasmidsaurus, coupled with the increased productivity of our
sales teams in the second quarter reinforces our confidence in delivering
between 20 - 30% underlying revenue growth on a constant currency basis in
full year 2024."
Summary financial performance
£ million H1 H1 Change Change
Unless otherwise stated 2024 2023 reported CC
Revenue 84.1 86.0 (2.2)% 0.6%
- EGP 0.3 4.9 (93.8)% (93.8)%
- COVID Sequencing 1.2 5.5 (78.7)% (78.1)%
Underlying revenue 82.6 75.6 9.2% 12.4%
Gross profit 49.5 49.5 0%
Gross margin 58.8% 57.6% 120bps
Adjusted EBITDA (61.6) (39.4) (22.2)
Loss for the period (74.7) (70.1) (4.6)
Notes:
1. All revenue in this document is what has previously been referred
to as 'Life Sciences Research Tools' revenue. Historically Group revenue was
split into 'LSRT' revenue (i.e. the core business) and COVID testing, to split
out short term revenue in FY20, FY21 and FY22 in relation to the COVID testing
contract with the Department of Health and Social Care (DHSC), which came to
an end in 2022. Following the conclusion of the contract with DHSC in FY22,
Group (or total) revenue is the same as 'LSRT revenue', as such, for
simplicity going forward the Group will just refer to this as revenue.
2. Underlying revenue excludes revenue from COVID sequencing and
revenue from The Emirati Genome Program (EGP). All references to underlying
growth in this document have been adjusted for COVID sequencing and EGP
revenues. Underlying growth includes currency fluctuations unless explicitly
stated at constant currency (CC).
3. Constant currency (CC) applies the same rate to the H1 24 and H1 23
non-GBP results based on H1 23 rates
4. Certain numerical figures included herein have been rounded.
Therefore, discrepancies between totals and the sums may occur due to such
rounding.
5. Adjusted EBITDA is a non-IFRS measure that may be considered in
addition to, but not as a substitute for, or superior to, information
presented in accordance with IFRS. Adjusted EBITDA is the EBITDA adjusted for
i) Share-based payment expense on founder LTIP ii) Employers' social security
taxes on pre-IPO awards, and iii) impairment of investment in associate - see
page 11 and note 5.
H1 Financial highlights
· Revenue of £84.1million was broadly flat at constant currency
(CC), down 2.2% on a reported basis, in-line with expectations.
· Underlying revenue, excluding an £8.9 million combined headwind
from COVID sequencing and the Emirati Genome Program (EGP); increased by 12.4%
CC.
o Underlying revenue growth delivered in all regions, led by the EMEAI and
APAC, with underlying growth of 16.4% and 10.6% respectively.
o Underlying revenue grew fastest across the PromethION product range(( 1
(#_ftn1) )), up 39.0% in the period to £31.9 million (H1 23: £23.0 million).
Underlying revenue from the MinION product range(( 2 (#_ftn2) )) declined by
10.8% to £27.8 million (H1 23: £31.1 million) which includes a currency
headwind and a mix of commercial and product specific factors. Other revenues,
representing kits, services revenues and other devices grew 6.4% on an
underlying basis to £22.9 million (H1 23: £21.5 million).
· Gross margin increased by 120 basis points (bps) to 58.8% (H1 23:
57.6%) driven by underlying margin improvements (380bps), particularly across
both PromethION Flow Cell and devices, offsetting product mix (140bps) and
currency (120bps) headwinds.
· Adjusted EBITDA loss of £(61.6) million (H1 23: £(39.4
million); driven by increasing operational expenses, primarily the annualised
impact of additional headcount as highlighted at FY23 results. Adjusted
operating costs were broadly flat (+2.0%) against H2 2023, demonstrating good
cost control and with EBITDA loss lower than H2 2023 (£65.6m).
· Increase in loss year-on-year to £(74.7) million (H1 23:
£(70.1) million). This was predominately driven by increasing operational
expenses associated with the increase in headcount partly offset by a lower
Founder LTIP charge of £1.0m (H1 23: £14.9 million) and a £5.5 million
credit relating to the reversal of historic employers' social security tax
charges (H1 23: £1.3 million).
· Strong balance sheet position; cash, cash equivalents and other
liquid investments of £397.1 million(( 3 (#_ftn3) )) as at 30f June 2024,
compared to £472.1 million as of 31 December 2023. Post period end the Group
raised net proceeds of £78.2 million, following the successful completion of
a multiple times oversubscribed £80.0 million equity placing, which included
a new £50.0 million strategic investment from Novo Holdings.
H1 Business highlights
· Continued commercial progress in the period, evidenced by
improving utilisation across existing customers, leading to a growing revenue
opportunity for the Group driven by the enlarged and now established
commercial infrastructure.
· New contract wins and contract expansions with larger PromethION
devices (P24 and P48), including Precision Health Research Singapore
(PRECISE), which selected Oxford Nanopore technology to sequence 10,000 long
read human genomes to gain deeper insights into Asian genetic diversity, and a
multi-million, multi-year contract expansion with Plasmidsaurus, to deliver
high-accuracy whole plasmid sequencing with fast turnaround times.
· New strategic collaborations added to develop and access new
growth markets in biopharma, clinical and industrial applications, including a
collaboration with Lonza on a novel test to accelerate analysis of mRNA
products.
· Progress was made to advance existing collaborations in H1,
including with bioMérieux. A test for determining antibiotic resistance in
tuberculosis is expected to be released as a research-use only product in Q4,
prior to seeking IVD approvals by the end of 2025.
· Early Access(( 4 (#_ftn4) )) launch of PromethION 2 Integrated
(P2i) in Q2, and continued rollout of the PromethION 2 Solo (P2S), following
its successful launch in 2023. Evidence of continued market traction and
disruption with more than 1,350 P2 devices now in the field. The P2 devices
represent a new market area of affordable, accessible and high output
sequencing.
· Strong progress against our 2024 innovation goals, with the
launch of new products from our regulated pipeline, including GridION Q-Line
and the Early Access of ElysION, our sample-to-answer automated sequencing
solution, to drive adoption in new clinical and applied industrial markets.
· Approximately 1,400 peer-reviewed research papers published by
users of Oxford Nanopore technology in H1 2024, bringing the total to
approximately 12,500 to date, showcasing breakthrough research across cancer,
human genetics and infectious disease and demonstrating continued opportunity
for growth in the genomics research market.
· Expansion of the leadership team, to support the business in its
next phase of growth: Nick Keher appointed as CFO and Director of Oxford
Nanopore in January, adding significant financial leadership experience and a
deep understanding of global capital markets. Nick succeeds Tim Cowper, who
moves into a new role as Chief Operating Officer and will lead Oxford
Nanopore's continuous improvement programmes and expanding international
footprint and operations.
See the business review section for further detail.
Outlook
FY 2024 guidance
Trading in the second half has started well and remains in-line with guidance.
Full year underlying revenue growth and margin guidance reiterated.
· Underlying revenue growth of 20-30% at constant currency (CC)
unchanged and driven by improving sales force effectiveness, increasing
customer utilisation rates, growing opportunity funnel and recent product
launches.
· COVID sequencing and EGP headwinds now expected to be
approximately £17.5 million (previously £20.0 million).
· Collectively this equates to 7-16% CC revenue growth (previously
6-15%).
o As reiterated in the Half Year Trading Update, the Group continues to
expect FY24 revenue to be second half weighted, with an approximate 45:55
split
· Gross margin is expected to be approximately 57%.
o As stated at FY23 results, the gross margin for 2024 could weaken in H2
dependent on product mix and customer mix.
Medium term guidance
No change to medium term guidance:
· Revenue is expected to grow by more than 30% CC on a compound
annual growth rate (CAGR) between FY24 and FY27 underpinned by continued
penetration in existing markets and expansion into emerging end-market
opportunities, such as Biopharma, Clinical and Applied.
· Gross margins are expected to continue to improve and exceed 62%
by FY27, supported by continued underlying improvements in manufacturing,
increased volume growth and further penetration of new end-markets.
· Operating expenses expected to grow at a CAGR of 3-8% between
FY24 and FY27, reflecting a continued focus on financial discipline to
leverage the infrastructure the Group has already built and to modulate
investment relative to the outlook.
· The Group expects to reach adjusted EBITDA breakeven in FY27 and
become cash flow positive in FY28.
Application to the ESCC segment
The Board is encouraged by the FCA's recent changes to the Listing Rules that
have combined the existing premium and standard London listing segments into
one single segment for Equity Shares in Commercial Companies (the 'ESCC').
The Group is in discussion with the FCA and will formally apply for
admission to the ESCC segment by the end of 2024, subject to meeting
the required eligibility criteria. The step up to the ESCC segment would make
Oxford Nanopore eligible for FTSE indexation.
Presentation of results
Management will host a conference call and webcast today, 3 September, at
10:00am BST. For details, and to register, please visit
https://nanoporetech.com/about-us/investors/reports
(https://nanoporetech.com/about-us/investors/reports) . The webcast will be
recorded and a replay will be available via the same link shortly after the
presentation.
For further details please contact ir@nanoporetech.com
(mailto:ir@nanoporetech.com)
-ENDS-
For further information, please contact:
Oxford Nanopore Technologies plc
Investors: ir@nanoporetech.com (mailto:ir@nanoporetech.com)
Media: media@nanoporetech.com
(mailto:media@nanoporetech.com)
Teneo (communications adviser to the Group)
Tom Murray, Olivia Peters
+44 (0) 20 7353 4200
OxfordNanoporeTechnologies@teneo.com
About Oxford Nanopore Technologies plc:
Oxford Nanopore Technologies' goal is to bring the widest benefits to society
through enabling the analysis of anything, by anyone, anywhere. The Group has
developed a new generation of nanopore-based sensing technology that is
currently used for real-time, high-performance, accessible, and scalable
analysis of DNA and RNA. The technology is used in more than 125 countries,
to understand the biology of humans, plants, animals, bacteria, viruses and
environments as well as to understand diseases such as cancer. Oxford
Nanopore's technology also has the potential to provide broad, high impact,
rapid insights in a number of areas including healthcare, food and
agriculture.
For more information please visit: www.nanoporetech.com
(http://www.nanoporetech.com)
Forward-looking statements
This announcement contains certain forward-looking statements. For example,
statements regarding expected revenue growth and profit margins are
forward-looking statements. Phrases such as "aim", "plan", "expect", "intend",
"anticipate", "believe", "estimate", "target", and similar expressions of a
future or forward-looking nature should also be considered forward-looking
statements. Forward-looking statements address our expected future business
and financial performance and financial condition, and by definition address
matters that are, to different degrees, uncertain. Our results could be
affected by macroeconomic conditions, delays or challenges in manufacturing or
delivering of products to our customers, suspensions of large projects and/or
acceleration of large products or accelerated adoption of pathogen
surveillance or applied uses of our products. These or other uncertainties may
cause our actual future results to be materially different than those
expressed in our forward-looking statements.
Business review
Notes: In this section, all growth rates are year-on-year unless otherwise
stated. All underlying growth rates referred to in this report have been
adjusted for EGP and COVID sequencing. Underlying revenue includes currency
fluctuations unless explicitly stated at constant currency (CC). See
reconciliation in the Financial Review section. Certain numerical figures
included herein have been rounded. Therefore, discrepancies between totals and
the sums may occur due to such rounding.
Performance summary
In the first half of 2024 the Group delivered results in-line with
expectations, delivering revenue of £84.1 million (H1 2023: £86.0 million),
broadly flat on a constant currency (CC) basis, down 2.2% on a reported basis.
On an underlying basis, excluding an £8.9 million year-on-year headwind from
the EGP and COVID sequencing, we delivered 12.4% CC revenue growth. Underlying
growth was robust against a challenging macroeconomic and end market backdrop,
particularly in the research field due to constrained funding and elongated
customer cycles. This robust growth is testament to our highly differentiated
sequencing technology platform, which is being adopted in end-markets only
suitable to Oxford Nanopore products relative to other sequencing platforms,
and the strength and dedication of our teams across the globe.
Growth continues to be driven by high quality, recurring consumables revenue,
accounting for 74% of revenue in H1 24, consistent with last year. Consumables
revenue increased 10% year-on-year on an underlying basis, driven by strong
PromethION Flow Cell demand and associated kits, partially offset by decline
in MinION Flow Cell sales. Device sales grew 7% on an underlying basis, driven
by the PromethION range.
The PromethION product range grew 39.0% year-on-year on an underlying basis,
through increasing customer flow cell utilisation and new device sales. This
helped offset softness in the MinION product range, which declined 10.8% on an
underlying basis, due to a mix of factors including currency, higher volumes
sold through distributors and the discontinuation of the Mk1C device. We
anticipate the launch of the MinION Mk1D alongside the launch of GridION
Q-Line and ElysION to support the next leg of growth for the MinION product
range.
Underlying growth was delivered across each region, and it was strongest
across EMEAI and APAC, with commercial momentum building for the second half
across all regions, supported by new product launches, a number of new and
expanded contracts, and a continued step up in sales team productivity, as
already seen in H1.
Gross margin increased by 120 basis points year-on-year to 58.8%. This margin
expansion was predominantly driven by driven by underlying margin
improvements, predominantly across both PromethION Flow Cells, but also across
devices, offsetting headwinds from mix (140bps) driven by lower MinION
revenues relative to PromethION and currency (120bps). Adjusted EBITDA loss of
£(61.6) million, an increase of £22.2 million (H1 23: £(39.4) million). The
increased loss reflects the annualised cost from investment in our headcount
and infrastructure to support our ambitions, in line with prior guidance.
Adjusted operating costs were broadly flat (+2.0%) against H2 2023,
demonstrating good cost control in the period. In-order to support improving
profitability going forwards, we continue to assess current and future
investments with a focus on greater prioritisation of activities to deliver on
our growth objectives whilst supporting a strong return on investment.
The loss for the period was £(74.7) million, a year-on-year increase of £4.6
million (H1 23 £(70.1) million).
At 30 June 2024, cash and cash equivalents and liquid investments(( 5
(#_ftn5) )) totalled £397.1 million, compared to £472.1 million at 31
December 2023. Post period end the Group raised net proceeds of £78.2
million, following the successful completion of a multiple times
oversubscribed £80.0 million equity placing, which included a new £50.0
million strategic investment from Novo Holdings.
Working capital in the period increased £8.5 million, including assets
subject to operating leases of £14.4 million. Excluding assets subject to
operating leases, working capital would have decreased £6.0 million.
Post period end the Group entered into a new arrangement with a third party
firm to provide customers with financing options to fund capex purchases in
certain markets, which could potentially help alleviate the financial burden
on Oxford Nanopore from leasing devices directly. Adoption of this service by
Oxford Nanopore customers could benefit future cashflows through reducing the
investment required in placing assets with customers (£14.4 million in H1
2024).
Alongside this, the Group remains in active discussions with third party firms
over the potential sale and leaseback for Oxford Nanopore owned assets at
customers to release invested capital to the Group as and when required.
Execution of our strategy
Commercial execution
Our commercial model focuses on driving rapid adoption and utilisation of our
products to catalyse change and growth of the sequencing and analysis market.
In the first half of 2024, we delivered underlying revenue growth in all
regions, led by EMEAI and APAC. The enlarged and now established commercial
infrastructure is driving a larger revenue opportunity funnel across all
regions which we will look to execute upon in H2 2024 and 2025. This is
further supported by the increasing number of end-to-end workflows,
applications and products to drive customer engagement and adoption.
Revenue in H1 came from a diverse group of customer types including Research,
Biopharma, Clinical and Applied Industrial customers, accounting for 69.9%,
8.8%, 9.4% and 11.9% of H1 revenue respectively. We have seen increasing
interest amongst each customer group, and in particular across Biopharma and
Applied customers given the benefits of Oxford Nanopore's platform over
existing technologies.
EMEAI (Europe, Middle East, Africa and India)
We delivered £34.1 million of revenue in EMEAI in the first half, up 16.4% on
an underlying basis (down 4.3% on a reported basis, including headwinds from
COVID sequencing and the EGP).
The strong underlying performance across the region was driven by both the
placement of new devices and increased utilisation of existing devices.
Investments made in 2023 in innovation, to improve product performance and end
to end workflows, coupled with a now established, highly experienced
commercial team, have driven customer confidence and adoption of our
technology at scale. We have also benefitted from an expanded reach via
channel partners, now covering 11 countries in Eastern Europe.
Growth in EMEAI has primarily been driven by large scale genomic initiatives.
Previously delayed projects such as the 22,000 sample human health and disease
study led by the National Institute for Health and Care Research (NIHR)
Bioresource and other large-scale projects are now ramping up.
From a customer perspective, we have seen stronger traction within clinical
labs, cancer research labs and core facilities running Human Whole Genome
Sequencing (WGS) and targeted panels using adaptive sampling. Including a
further rapid roll out of WGS in Exeter and national programmes such as the
Clinical Long-read Genome Initiative (lonGER), a national German programme to
advance the understanding of rare disease and a collaboration to advance
precision cancer medicine research with MATRIX (a national centre for clinical
cancer research in Norway). We have also seen a substantial increase in
utilisation in translational research from key public labs and diagnostic work
in private labs. We have been particularly successful in implementation of CNS
tumour sequencing, leveraging full genome epigenetics for tumour
classification, with expansion across UK, Norway and the DACH region. In the
UK we also announced the completion and expansion of a successful three-year
pilot programme with Guy's and St Thomas' (GSTT) in January to deliver a
respiratory metagenomics service with an integrated respiratory infection and
biosecurity application. The pilot programme has been expanded to ten NHS
hospital sites, with further opportunity for global adoption. GSTT have been a
leading example for the rest of the region with sites in the Nordics and Saudi
implementing similar workflows.
Across the Middle East we have also seen strong growth in adoption of our
technology for national and strategic projects, including several population
scale programmes and newborn screening projects which are driving strong
pull-through of core consumables. In India the infectious disease surveillance
market has become strategically important, and we are working with key
customers on national scale implementation of Tuberculosis projects supported
by the India Government.
APAC (Asia Pacific)
APAC revenue in the first half was £18.4 million, up 10.6% on an underlying
basis (up 4.6% on a reported basis, including the year-on-year COVID
sequencing headwind), in-line with expectations. Growth in the region has been
driven by continued adoption by commercial service providers and higher
utilisation for existing customers.
China revenue was down 1.8% on a reported basis year-on-year, including the
headwind from COVID sequencing. Excluding this headwind, underlying growth in
China was 7.5%, driven by increased utilisation, partially offset by reduced
PromethION device orders due to changing export control restrictions, as
previously highlighted, and a currency headwind of approximately 5%.
In the first half, we entered into a large-scale Asia-Pacific programme, that
will conduct whole genome sequencing on several thousand samples for novel
identification of intractable diseases, including cardiomyopathy. In Indonesia
our partnership with the Satriabudi Dharma Setia Foundation (YSDS) continues
to flourish, with now over 20 P2 Solo's deployed in field to support basic
research programmes across Indonesia, with potential for further expansion.
In the period we also signed an agreement with Precision Health Research
Singapore (PRECISE), which selected Oxford Nanopore's PromethION devices to
sequence 10,000 long read human genomes, over a period of approximately 12
months, to improve understanding of genetic architecture and diversity in
Singapore's multi-ethnic Asian population.
Post period, end we also announced agreements in the rare disease setting,
with the Hong Kong Genome Project to determine genetic drivers in suspected
cases unresolved with current testing methodologies and with the Victorian
Clinical Genetics Services (VCGS) in Australia to develop genetic screening
techniques in disorders such as Huntington's.
AMR (The Americas)
AMR revenue of £31.6 million increased by 1.9% year-on-year on an underlying
basis, down 3.7% on a reported basis when including the headwind from COVID
sequencing.
Whilst we made good traction with key accounts in the first half, primarily
across our PromethION product range, growth was tempered by continued delays
on funding for major projects across our customers and a decline in MinION
sales, which we are addressing through upcoming new launches.
We expect to see higher revenue growth from the Americas in the second half,
driven by growth in the biopharma space, continued uptake by distributors, and
improved commercial execution. The investments we have made in the commercial
team will help us drive towards significantly larger opportunities and higher
value wins.
In the first half we started to see accelerating interest from new-to-Oxford
Nanopore customers, driven by a combination of 1) increased awareness of
Oxford Nanopore's technology and its advantages over other sequencing
technologies and 2) better geographic coverage and sales led customer
interaction, reflecting the investments we made in 2023 to scale and
strengthen our commercial team, including the appointment of key strategic
hires.
In the first half we also saw strong traction with customers running
applications for which we have significant technical advantage over alternate
technologies and where we have developed end-to-end workflows, for example:
plasmid and direct RNA sequencing. We saw increased interest from new
biopharma customers across the US, including several top 10 pharmaceutical
companies driven by the introduction of new end-to-end workflows.
New customers in the first half included a major genome centre in Canada,
which is starting several large cohort genome projects for diseases of aging
and cancer. They selected Oxford Nanopore's technology platform due to its
ability to analyse methylation, RNA and other variant types enabled by long
read sequencing. We also signed a contract with a government distributor,
which will enable significantly easier purchasing options for US Government
accounts. In addition, we signed a new contract with the Canadian Food
Inspection Agency, which will use Oxford Nanopore technology for food safety
testing via microbiology.
Post period end, we announced a multi-million, multi-year contract expansion
with one of our large US customers, Plasmidsaurus, a company that provides
affordable, high-accuracy whole plasmid sequencing with fast turnaround times,
solely using Oxford Nanopore technology. With their expanded capacity they are
now expanding their menu of offerings to include other applications such as
amplicon and bacterial whole genome sequencing. The new collaboration reflects
our push into the $1.5bn synthetic biology opportunity and the opportunity for
nanopore-based sequencing to displace traditional methods such as Sanger
sequencing.
Plasmids are a critical part of the life sciences industry, serving as vectors
to introduce genetic material and utilised in 1) gene therapy 2) vaccine
development and manufacture (both DNA and mRNA) and 3) production of
therapeutic proteins.
Innovation
Our commitment to innovation is central to our strategy for growth; our
accessible technology delivers richer data and rapid insights providing both
new and improved ways for customers to answer biological questions. In line
with the strategic priorities set out earlier this year we have been focused
on the launch of new products aimed at expanding our research market including
the P2i device, and the launch of new products from our regulated pipeline,
including GridION Q-Line and ElysION, our sample to answer automated solution,
now in Early Access. In addition, our Applications and R&D teams have been
focused on developing and releasing a number of end-to-end workflows to
support our user research and simplify their sample to answer experience,
including a series of nanopore only workflows such as the Nanopore-only
Microbial Isolate Sequencing Solution (NO-MISS) workflow for microbial
sequencing and the highly awaited nanopore only telomere-to-telomere (T2T)
workflow.
New product launches to drive adoption in new clinical and applied industrial
markets
In the first half of 2024 we delivered on the launch of new products from our
regulated product pipeline. Including the upgraded Q-Line range of products,
which provides a locked-down version of hardware, software and chemistry,
enabling users to develop and deploy their assays without needing to follow
our accelerated upgrade path used by pure research customers. The Q-Line
GridION launched in May and the PromethION Q-Line will now be available during
2025.
ElysION (formerly known as Project TurBOT), which launched in Early Access in
Q2, is progressing towards becoming a regulated device for future clinical
applications, showcasing the Group's ongoing commitment to expanding and
supporting advanced research and diagnostic applications.
ElysION is designed to offer integrated and automated extraction, library
preparation, sequencing, basecalling, and data analysis for multiple samples,
all within a single device. This device will accelerate the proliferation of
workflows through health ecosystems such as the respiratory metagenomics work
pioneered by GSTT. It does this by providing a hands-free, simple workflow
from raw sample to analysis, therefore reducing the expertise required in a
hospital laboratory for example.
Enabling accessible, distributed sequencing - towards anyone, anywhere
We continue to innovate towards a new future of near-sample, real-time,
low-cost technology that can provide rapid insights to characterise biological
samples in any environment, from clinics to factories to classrooms.
Following the launch of the compact and high-output PromethION 2 Solo (P2S)
device in 2023, we launched the PromethION 2 integrated (P2i), with integrated
compute and screen, in Q2 2024. We have been pleased to see the strong
interest in both of these devices across a diverse set of customers. The P2
installed base (consisting of both P2S and P2i) is now more than 1,350 across
a broad range of users and applications.
In addition, the pocket-sized MinION has been revamped for the first time
since 2015 and the new, format, (the "Mk1D"), will provide improved
performance enabling robust, high accuracy (>99%) performance in field. The
Mk1D is with developers(( 6 (#_ftn6) ))), ahead of a wider launch in Q4 2024.
Delivering increasingly rich, high performance multiomic data:
Oxford Nanopore is reshaping the market and meeting customer needs through the
provision of multiomic (regarded as any combination of two or more 'omics
such as including genomic, transcriptomic, epigenetic, proteomic, and more)
data on a single platform, and in addition the provision of broad types of
genetic variation on the same platform, enabling customers to generate a more
accurate picture of the genome than with legacy technologies.
In the first half of 2024 we continued to focus on driving performance
improvements in the field, with our upgraded basecalling architecture. The
platform now delivers simplex accuracy (when a single strand is read by the
nanopore) of over 99% for production users and 99.75% when using our more
advanced basecalling models, as highlighted at our London Calling conference
in May. These basecalling improvements also extend to the number of epigenetic
modifications (such as methylation) that we can detect at market leading
accuracy. Our teams continue to explore methylation beyond the 5(th) base
(5mC), including 5hmC, 6mA,4mC. We also announced the release of a new,
all-in-one T2T sequencing bundle, enabling T2T sequencing of human genomes
without the need for other technologies. The capability to produce T2T
assemblies addresses the gaps left by traditional sequencing methods,
facilitating more comprehensive studies of complex genomic regions such as
centromeres and telomeres. As part of Oxford Nanopore's mission to enable the
most comprehensive human genomes, the Group announced a pathway to sequencing
whole T2T human genomes on a single flow cell, through improvements to output
and by removing homopolymer errors with new pore chemistries
Advancing direct RNA sequencing to support breakthrough science
Our teams applied all the improvements from our DNA chemistry and basecalling
and made further advancements in direct RNA (the messenger molecule that
carries genetic information from DNA and directs the synthesis of protein)
sequencing, following the successful launch of a new RNA kit and flow cell in
H2 23. This application is unique to nanopore-based sequencing,
In the first half of 2024 the Group showcased continual increases in direct
RNA sequencing accuracy, with single molecule raw-read accuracy of 98.8%
median accuracy. Improvements to run conditions protocols have also resulted
in an approximate 20% output increase in reads over runtime, delivering around
three million more total RNA reads over a 72 hour run. This update will enable
significant advancements in the RNA research market alongside novel
applications of direct single molecule sensing such as mRNA vaccine research,
where non-natural RNA bases used in their development need to be sequenced.
The Oxford Nanopore's platform can now be used for comprehensive real-time
quality control (QC) testing for mRNA vaccines, combining multiple critical
quality attributes into a single, efficient test. This integrated approach,
which is being released on GridION Q-Line - simplifies the QC process, making
it faster, simpler and more reliable. Traditional methods for mRNA vaccine QC
are often time-consuming and require multiple platforms and techniques.
New understanding of RNA's functional significance - and related emergence in
RNA-based therapies including vaccines - has underscored the importance of
RNA-related research. Nanopore-based sequencing offers the only direct RNA
sequencing technology, where other technologies rely on conversion of RNA to
cDNA, which loses important information in the process. This represents an
opportunity to provide a new generation tool and develop new applications in
RNA sequencing.
Simplifying products and workflows to support broader usage
To support different users taking advantage of nanopore sequencing,
innovations are being introduced to simplify and make more accessible the
end-to-end sequencing process. These include provision of easy-to-use data
analysis tools in EPI2ME, the analytics tool set, for increasingly broad
applications, from infectious disease, biopharma quality control testing,
human variations and single cell. This enhanced interface equips users at all
levels of expertise with the information they need, wherever they are.
Operational excellence
In the first half of 2024 we continued to focus on improving our operational
and manufacturing infrastructure and processes to enable long-term growth and
drive margin expansion. This includes optimising manufacturing processes
through innovation to drive efficiency, building a best-in-class, resilient
supply chain and strong global teams, with a focus on culture and people
development.
We completed the build-out of development laboratories in Sherard Building,
which are now fully operational to support launch of Q-line. In addition, the
build out of the 57,000 sq ft Spectrum Building is expected to be completed
and operational from Q4 2024 with flexible expansion space to support
continued growth.
In-line with our priority to expand our global logistics network to make it an
easier and more predictable customer purchasing experience, we further
expanded logistics and operations in Japan, Canada and Singapore to improve
the customer experience in APAC and North America. We continued to make
significant investment in customer experience across all regions, and expanded
our teams in North America, EMEAI and APAC, with staff in three hubs and seven
countries, covering eight languages. Our regional expansion has been supported
by a global Customer Success learning and development programme which has led
to a double-digit growth in the number of customer service certified
professionals in our customer facing teams.
A new Global Customer Operations team has been established to drive customer
centred process changes, initially focused on large, complex accounts and
orders. The roadmap to drive the strategic improvement of our customer
support systems is well underway, with new digital tools to triage customer
questions in real-time, new web platform and store journeys (for plug and play
devices such as MinION) delivered in H1 2024. In 2024 we will see the first
phase of our next generation order management platform delivered.
Our Channel Partner programme has supported sales growth, enhanced customer
experience, and facilitated improved export processes. We have delivered a
comprehensive set of tools to enable our partners to be successful, our
tooling facilitates both pipeline and customer management directly by the
partner.
In-line with our objective to strengthen key supplier relationships to further
drive reliability and resilience of supply, we conducted comprehensive reviews
leading to improved risk-based scenario planning to drive improvements in
resilience of supply.
Sustainability - Product, Planet, People
A commitment to sustainable impact is core to Oxford Nanopore's mission. Last
year, we formalised that commitment by introducing our sustainability strategy
- product, planet, people - that supports our commitments to progress
initiatives across environmental, social, and governance (ESG). We built on
that strategy this year by publishing our Net Zero Transition Plan, outlining
the targets we have set to ensure progress is being made to contain global
warming to 1.5C. In the first half of 2024 we published our second
sustainability report
(chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https%3A/a.storyblok.com/f/196663/x/947e918766/fy_23_sustainability_report-v2.pdf)
, detailing updated ESG commitments, which include:
Product
· Strengthening our relationships and collaborations with the
education landscape, utilising these examples to showcase student research
impact across demographics and geographies
· Continue to establish global support and logistics to fulfil our
vision to enable anyone, anywhere to use Oxford Nanopore products
Planet
· Reduce the carbon intensity of our operations by identifying
projects to reduce carbon emissions; repeating our target to reduce the tonnes
of Scope 1 and 2 CO2 e emitted per £m revenue by 2.5% again in 2024
· As part of net zero commitments a dedicated Supply Chain
Engagement programme will be developed and launched during 2024
People
· Embed the Values in Action programme to support an
employee-engagement culture, where employees have a voice to contribute ideas
that support key decisions
· Increase our Board gender diversity to at least 40% female
representation by FY24
Summary and Outlook
First half financial performance was solid, despite a challenging backdrop and
represents a strong step towards our full year guidance. We delivered robust
underlying revenue growth of 12.4% CC and a 120 bps margin expansion despite
currency headwinds.
From an outlook perspective, we are confident in being able to deliver the
full year guidance that we set out in March. We expect to deliver underlying
revenue of growth of between 20-30% CC and gross margin of approximately 57%.
As we look forward, our highly differentiated platform and substantial
market opportunity position us well to deliver long-term, sustainable growth.
We are focused on key strategic initiatives to drive value, including
disciplined investments in our technology and commercial operations where
appropriate to unlock key opportunities in priority markets.
Over the medium-term we see significant opportunities ahead, reflected both in
the progress we have made in the current research market and the steps we are
taking to address many potential uses for our technology in biopharma,
clinical and applied industrial markets. Our rich innovation pipeline and the
investments we have made in scaling our commercial infrastructure put us in a
strong position to deliver over the medium term and we expect revenue growth
to return to more than 30% CC on a compound annual growth rate between FY24
and FY27.
Financial review
All 'underlying revenue' throughout this document is adjusted for COVID
sequencing and the EGP revenues. Underlying revenues include fluctuations in
currency unless explicitly stated otherwise.
Certain numerical figures included herein have been rounded. Therefore,
discrepancies in between totals and the sums may occur due to such rounding.
Performance Summary
The Group delivered revenue for the six months ended 30 June 2024 of £84.1
million (H1 23: £86.0 million), broadly flat year-on-year at constant
currency; marginally down (2%) on a reported basis, including foreign exchange
headwinds.
Underlying revenue growth, excluding revenue from the Emirati Genome Program
(EGP) and COVID sequencing, was 12.4% on a constant currency basis.
Results - at a glance
£million H1 24 H1 23 Change (%)
Revenue 84.1 86.0 (2.2)%
Gross profit 49.5 49.5 0%
Gross margin (%) 58.8% 57.6% 120bps
Operating loss (77.0) (74.8) (3.0)%
Adjusted EBITDA (61.6) (39.4) (22.2)
Loss for the period (74.7) (70.1) (4.6)
£million 30 June 31 December Change (%)
2024 2023
Cash, cash equivalents and other liquid investments(( 7 (#_ftn7) )) 397.1 472.1 (15.9)%
Underlying revenue by product range
Underlying revenues grew fastest across the PromethION product range,
representing all devices and flow cell sales from the PromethION range,
reaching £31.9 million from £23.0 million in H1 23, representing underlying
growth of 39.0% when stripping out the impact of EGP.
Revenues from our MinION product range, representing all sales of MinION Flow
Cells and devices that run MinION Flow Cells (GridION and MinION) reduced to
£27.8 million from £31.1 million in H1 23, representing a reduction of 10.8%
when stripping out the impact of COVID sequencing.
Other revenues, representing kits, service revenues and other devices grew
6.4% underlying to £22.9 million when stripping out the impact of EGP and
COVID sequencing.
£million H1 24 H1 23 Change ( %)
PromethION product range 32.0 27.4 +16.7%
Less EGP (0.1) (4.5)
Underlying PromethION product range 31.9 23.0 +39.0%
MinION product range 28.5 34.3 (17.0)%
Less COVID Sequencing (0.7) (3.2)
Underlying MinION product range 27.8 31.1 (10.8)%
Other 23.6 24.3 (2.8)%
Less EGP (0.2) (0.5)
Less COVID sequencing (0.5) (2.3)
Underlying Other 22.9 21.5 6.4%
Revenue 84.1 86.0 (2.2)%
Less EGP (0.3) (4.9)
Less COVID Sequencing (1.2) (5.5)
Underlying Revenue 82.6 75.6 9.2%
Geographical trends
The Group aims to make its technology available to a broad range of scientific
users, and currently supports users in more than 125 countries. In some
territories the Group works with distributors to achieve or enhance its own
commercial presence.
Reported revenue is down on H1 23 in AMR and EMEAI impacted by the reduction
in EGP and COVID sequencing revenue in H1 24. Underlying revenue growth was
delivered across each region, and it was strongest across EMEAI and APAC, with
commercial momentum building for the second half, supported by new product
launches, a number of new and expanded contracts, and a step up in sales team
productivity in the second quarter.
Reconciliation of reported revenue to underlying revenue by geographical
region:
£million H1 24 H1 23 Growth (%)
AMR 31.6 32.8 (3.7)%
Less COVID Sequencing (0.2) (2.0)
Underlying Americas revenue 31.3 30.8 1.9%
APAC 18.4 17.6 4.6%
Less COVID Sequencing (0.2) (1.1)
Underlying APAC revenue 18.3 16.5 10.6%
EMEAI 34.1 35.6 (4.3)%
Less EGP (0.3) (4.9)
Less COVID Sequencing (0.8) (2.3)
Underlying EMEAI revenue 33.0 28.4 16.4%
The Group's Gross profit of £49.5 million was in line with H1 23.
% H1 24 H1 23 Change
Gross margin % 58.8% 57.6% +120bps
Gross margin improved from 57.6% in H1 23, to 58.8% in H1 24. This margin
expansion was predominantly driven by driven by underlying margin improvements
across both PromethION Flow Cells and devices, offsetting headwinds from mix
(140bps) and currency (120bps).
Impact of headcount
Average headcount (FTEs) H1 24 H1 23 Change (%)
Research and development 504 445 13.3%
Production 156 150 4.4%
Selling, general & administration 621 455 36.5%
Total 1,281 1,049 22.1%
In H1 24, the Group increased its average headcount by 22.1% from H1 23. This
increase was predominantly across research and development and in the
commercial and marketing teams.
The Group invested in bringing onboard new research and development staff to
support the later stage development activities across its disruptive platform.
In H1 24 the Group's manufacturing headcount has increased by 4.4% from H1 23.
This follows the significant expansion of the team in 2021, when staff
covering all manufacturing stages and processes expansion were recruited to
cater for increased demand from a growing client base.
The largest increase in the Group's average headcount took place in the
selling, general and administration functions including legal functions and
corporate executives, with an increase of 36.5%. The significant expansion of
the commercial teams in key geographic regions supports the Group's business
growth objectives globally. In addition, the investment in in-field and
customer support teams was necessary to maintain and increase customer loyalty
and customer retention.
Research and development expenses
The Group's research and development expenditure is recognised as an expense
in the period as it is incurred, except for the development costs that meet
the criteria for capitalisation as set out in IAS 38 (intangible assets).
Capitalised development costs principally comprise qualifying costs incurred
in developing the Group's core technology platform.
£million H1 24 H1 23
Research and development expenses 48.0 48.2
Adjusting Items
Employers' social security taxes on pre-IPO share awards 1.4 0.6
Adjusted R&D Expenses 49.4 48.8
Amortisation of capitalised development costs (10.1) (8.7)
Capitalised development expenses 15.3 8.9
Total R&D Expenses and Capitalised development expenses 54.7 49.0
The net increase of £0.6 million in Adjusted Research and development
expenses reflects the groups continued investment in innovation and was
principally due to:
· a 13.3% increase in average headcount leading to a £2.8 million
increase in payroll costs and a £5.8 million increase in materials and other
costs, partly offset by a £1.7 million increase in the RDEC tax credit.
· There was a further £1.4 million benefit from lower share-based
payments and associated costs.
· These increased costs have led to a £6.4 million increase in
capitalised development costs to £15.3 million. This included £7.6 million
of staff costs and £7.7 million of third-party costs. This is partly offset
by £1.4 million higher amortisation costs to £10.1 million for the period.
Selling, general and administration costs
The Group's selling, general and administrative expenses increased by £2.4
million to £78.5 million. On an adjusted basis, selling, general and
administrative expenses increased by £19.6 million in H1 24 to £81.5 million
(H1 23: £61.9 million).
H1 24 H1 23
Selling, general and administrative expenses 78.5 76.1
Adjusting items:
Share based payments expense on Founder LTIP (1.0) (14.9)
Employers' social security taxes on pre-IPO share awards 4.1 0.7
Adjusted selling, general and administrative expenses 81.5 61.9
The main changes were:
· The total increase in the average headcount in Selling, general and
administrative of 36.5%, this was primarily driven by our planned increase in
headcount in the commercial teams (46.7% increase compared to H1 23). Coupled
with inflationary pressures of salaries, this resulted in a £9.7 million
increase in payroll costs.
· An increase in depreciation of £0.1 million to £6.5 million in H1
24 from £6.4 million in H1 23.
Total share-based payment charge included in Selling, general and
administrative expenses decreased by £14.3 million in H1 24 to £4.8 million
compared to £19.1 million in H1 23. The reduction was primarily driven by a
decrease in the Founder LTIP charge (from £14.9 million in H1 23 to £1.0
million in H1 24).
Adjusted EBITDA
£million H1 24 H1 23
Loss for the period (74.7) (70.1)
Income tax expense 3.3 3.5
Finance income (7.7) (7.2)
Interest on lease 1.9 1.1
Depreciation and amortisation 19.8 19.9
EBITDA (57.3) (52.9)
Adjusting items:
Share based payments expense on Founder LTIP 1.0 14.9
Employers' social security taxes on pre-IPO share awards (5.5) (1.3)
Impairment of investment in associate 0.1 (0.1)
Adjusted EBITDA (61.6) (39.4)
Adjusted EBITDA losses increased from £39.4 million to £61.6 million. This
was primarily driven by increasing operational expenses associated with the
increase in headcount partly offset by a lower Founder LTIP charge and a
credit relating to the employers social security tax charges.
Exchange gains and losses
As the Group receives a significant amount of revenue in US Dollars, we seek
to reduce the exposure of the Group to fluctuations in currency by entering
into a range of derivative forward contracts.
During H1 24 this resulted in a loss of £0.1m. In H1 23 the strengthening of
the USD resulted in a gain of £2.1 million. These amounts are presented in
other gains and losses.
Balance sheet
Key elements of change in the balance sheet during the period comprised the
following:
· the net book value of Property, plant and equipment was £56.9
million at 30 June 2024 an increase of £7.0 million since 31 December 2023.
This has been driven primarily by purchases of assets subject to operating
leases £5.1 million, which includes the purchase of NVIDIA's A-series on new
PromethION devices.
· Intangible assets of £38.0 million at 30 June 2024 has increased
by £5.1 million from £32.9 million at 31 December 2023 as a result of
additional projects having passed through the capitalisation criteria in the
period.
· Inventory of £108.0 million at 30 June 2024 has increased by
£6.5 million from £101.5 million at 31 December 2023. This has been driven
primarily by an increase in PromethION Flow Cell inventory.
· Net decrease of £15.3 million in Other Financial Assets between
current and non-current is due to the redemption of maturing investment bonds
since 31 December 2023.
Cash flow
· Cash, cash equivalents and other liquid investments were £397.1
million at 30 June 2024, a decrease of £75.0 million since 31 December 2023
(see note 5).
· Both H1 24 and H1 23 had a net cash outflow of £60.0 million
from operations.
· Increase in working capital of £8.5 million includes an increase
in inventory £6.4 million and assets subject to operating leases of £14.4
million partly offset by a decrease in payables of £12.5 million. Excluding
assets subject to operating leases, working capital would have decreased £5.9
million.
· Post period end the Group entered into a new arrangement with a
third party firm to provide customers with financing options to fund capex
purchases in certain markets, which could potentially help alleviate the
financial burden on Oxford Nanopore from leasing devices directly.
· Adoption of this service by Oxford Nanopore customers could
benefit future cashflows through reducing the investment required in placing
assets with customers (£14.4 million in H1 2024).
· Alongside this, the Group remains in active discussions with
third party firms over the potential Sale and leaseback for Oxford Nanopore
owned assets at customers to release invested capital to the Group as and when
required.
· Net Cash inflows from investing activities of £4.3 million (H1
23: £40.9 million) includes:
o The proceeds from other financial assets of £19.3 million (investment
bonds)
o Interest received of £5.1 million
Partly offset by:
o The purchase of property, plant & machinery of £4.8 million
o The capitalisation of development costs of £15.3 million
· Net Cash outflows from financing activities of £1.9 million (H1
23: £1.9 million) includes:
o Lease and interest payments of £3.3 million partially offset by
o Proceeds from the issue of shares of £1.6 million
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2024
6 months to June 2024 6 months to June 2023
£000 £000
Revenue 4 84,082 86,002
Cost of sales (34,620) (36,455)
Gross profit 49,462 49,547
Research and development expenses (47,999) (48,230)
Selling, general and administrative expenses (78,486) (76,101)
Loss from operations (77,023) (74,784)
Finance income 7,666 7,239
Finance expense (1,948) (1,069)
Other gains and losses 143 2,139
Share of loss of associate (49) (228)
(Impairment) / write-back of investment in associate (145) 144
Loss before tax (71,356) (66,559)
Taxation 8 (3,296) (3,540)
Loss for the period (74,652) (70,099)
Other comprehensive income / (loss):
Items that may be reclassified subsequently to profit or loss:
Fair value gains/(losses) on other financial assets 1,111 (1,236)
Exchange losses arising on translation on foreign operations (129) (4,079)
Taxation 8 (278) -
Other comprehensive income / (loss) for the period, net of tax 704 (5,315)
Total comprehensive loss (73,948) (75,414)
2024 2023
Pence Pence
Loss per share 6 9 8
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
30 June 31 December
2024 2023
Note £000 £000
Assets
Non‑current assets
Property, plant and equipment 9 56,890 49,890
Intangible assets 10 38,008 32,910
Investment in associate 11 548 742
Right of use assets 36,155 32,526
Other financial assets 13 145,581 208,325
Deferred tax assets 8 3,730 5,486
280,912 329,879
Current assets
Inventory 12 108,024 101,548
Trade and other receivables 61,059 61,475
Current tax assets 8 1,160 1,030
R&D tax credit recoverable 12,545 12,819
Other financial assets 13 96,936 49,514
Derivative financial assets - 261
Cash and cash equivalents 162,017 220,536
441,741 447,183
Total assets 722,653 777,062
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
30 June 31 December
2024 2023
Note £000 £000
Liabilities
Non‑current liabilities
Lease liabilities 41,578 37,333
Share-based payment liabilities 182 141
Provisions 14 3,082 6,538
44,842 44,012
Current liabilities
Trade and other payables 90,569 78,447
Lease liabilities 5,126 4,322
Provisions 14 3,536 6,430
99,231 89,199
144,073
Total liabilities 133,211
Net assets 578,580 643,851
Issued capital and reserves attributable to owners of the parent
Share capital 15 87 86
Share premium reserve 15 700,179 698,553
Share-based payment reserve 210,149 203,099
Translation reserve (302) (173)
Accumulated deficit (331,533) (257,714)
Total equity 578,580 643,851
The notes on pages 19 to 32 form an integral part of the condensed
consolidated interim financial information.
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Share capital Share premium Share-based payment reserve Foreign exchange reserve Accumulated Total equity
deficit
£000 £000 £000 £000 £000 £000
Note 15 15
At 1 January 2024 86 698,553 203,099 (173) (257,714) 643,851
Loss for the period - - - - (74,652) (74,652)
Other comprehensive income - - - (129) 833 704
Comprehensive loss for the 6 months to June 2024 - - - (129) (73,819) (73,949)
Issue of share capital 1 1,626 - - - 1,627
Employee share-based payments - - 7,194 - - 7,194
Tax in relation to share-based payments - - (144) - - (144)
Total contributions by and distributions to owners 1 1,626 7,050 - - 8,677
At 30 June 2024 87 700,179 210,149 (302) (331,533) 578,580
At 1 January 2023 83 627,557 168,200 3,707 (105,991) 693,556
Loss for the period - - - - (70,099) (70,099)
Other comprehensive loss - - - (4,079) (1,236) (5,315)
Comprehensive loss for the 6 months to June 2023 - - - (4,079) (71,335) (75,414)
Issue of share capital - 1,379 - - - 1,379
Employee share-based payments - - 21,807 - - 21,807
Tax in relation to share-based payments - - (118) - - (118)
Total contributions by and distributions to owners - 1,379 21,689 - - 23,068
At 30 June 2023 83 628,936 189,889 (372) (177,326) 641,210
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 6 MONTHS TO 30 JUNE 2024
30 June 30 June
2024 2023
Restated *
Note £000 £000
Net cash outflow from operating activities 17 (59,971) (60,034)
Investing activities
Purchase of property, plant and equipment * (4,802) (6,181)
Capitalisation of development costs (15,321) (8,940)
Investment in associate - (3,000)
Interest received 5,069 7,511
Purchase of other financial assets - (49,794)
Proceeds from sale of derivatives 118 -
Proceeds from sale of other financial assets 19,263 101,274
Net cash inflow in investing activities 4,327 40,870
Financing activities
Proceeds from issue of shares 1,630 1,412
Costs of share issue (200) -
Principal elements of lease payments (2,344) (2,247)
Interest paid on leases (1,055) (1,045)
Net cash outflow from financing activities (1,969) (1,880)
Net decrease in cash and cash equivalents before foreign exchange (57,613) (21,044)
movements
Effect of foreign exchange rate movements (906) (922)
Cash and cash equivalents at beginning of period 220,536 356,778
Cash and cash equivalents at the end of period 17 162,017 334,812
* See note 7 for details of the restatement.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TO 30 JUNE 2024
1 General information
The condensed consolidated interim information for the period does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006.
The summary of results for the year ended 31 December 2023 is an extract from
the published Annual Report and Financial Statements which were approved by
the Board of Directors on 18 March 2024, which has been reported on by the
Group's auditors and delivered to the Registrar of Companies. The audit report
on the Annual Report and Financial Statements was unqualified, did not contain
an emphasis of matter paragraph and did not contain any statement under s498
(2) or (3) of the Companies Act 2006.
2 Significant Accounting Policies
2.1. Basis of preparation
The annual financial statements of Oxford Nanopore Technologies plc ("Oxford
Nanopore" / "the Company") are prepared in accordance with United Kingdom
adopted International Financial Reporting Standards. The condensed set of
financial statements included in this half yearly financial report has been
prepared in accordance with United Kingdom adopted International Accounting
Standard 34 'Interim Financial Reporting'.
The condensed interim financial statements have been prepared in accordance
with the accounting policies set out in our Annual Report and Financial
Statements for the year ended 31 December 2023.
2.2 Going concern
As at 30 June 2024, the Group held £397.1 million in cash, cash equivalents
and other liquid investments on the Statement of Financial Position.
The going concern assessment period is at least 12 months to the 30 September
2025.
In order to satisfy the going concern assumption, the Directors of the Group
review its budget periodically, which is revisited and revised as appropriate
in response to evolving market conditions.
The Directors have considered the budget and forecast prepared through to 30
September 2025, the going concern assessment period, and the impact of a range
of severe, but plausible, scenarios, including supply chain issues driven by
demand, logistics interruptions, heightened geopolitical tension; particularly
the war in Ukraine and the Middle East. In particular, the impact of key
business risks on revenue, profit and cash flow are as follows:
• Reduced revenues due to decline in customer demand,
regulatory and research and development ("R&D") delays; and
• Increased costs due to supply chain restrictions,
rising utilities costs, rising wages & salary costs, additional R&D
requirements and rising costs of component parts.
Under all scenarios, the Group had sufficient funds to maintain trading before
taking into account any mitigating actions that the Directors could take.
Accordingly, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operation for the foreseeable future and at
least one year from the date of approval of the condensed consolidated interim
information. On the basis of these reviews, the Directors consider it remains
appropriate for the going concern basis to be adopted in preparing these
condensed consolidated interim information.
3. Critical accounting judgements and sources of estimation uncertainty
In applying the Group's accounting policies, the Directors are required to
make judgements, 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.
Critical judgements in applying the Group's accounting policies
The following are the critical judgements and estimates that the Directors
have made in the process of applying the Group's accounting policies and that
have the most significant effect on the amounts recognised in the financial
information.
Judgements
i. Internally Generated Intangible Assets - research and
development expenditure ("R&D")
Critical judgements are required in determining whether development spend
meets the criteria for capitalisation of such costs as laid out in IAS 38
"Intangible Assets", in particular whether any future economic benefit will be
derived from the costs and flow to the Group. The Directors believe that the
criteria for capitalisation as per IAS 38 paragraph 57 for specific projects
were met during the period and accordingly all amounts in relation to the
development phase of those projects have been capitalised as an intangible
asset during the period. All other spend on R&D projects has been
recognised within R&D expenses in the income statement during the period.
Management do not have a formal timesheet process for monitoring time spent by
employees on projects in their development stage. Instead, Management consults
with the relevant project leaders on a regular basis to understand and
estimate the time spent on projects in their development stage. When a
percentage allocation has been agreed, in line with the estimation process
described below at Estimates iii), this is then applied to other, non-employee
related development costs to ensure that costs are consistently and
appropriately capitalised. The net book value of internally generated
capitalised assets at 30 June 2024 is £36.0 million (31 December 2023: £30.8
million).
Estimates
i. Non-standard customer contracts
As noted in the revenue recognition accounting policy, revenue contracts for
the sale of bundled goods and services require the allocation of the total
contract price to individual performance obligations based on their stand
alone selling prices. The Group occasionally enters into larger bespoke
contracts which might include a clause linked to the performance of the
products and options on the total units of certain consumables to be purchased
under the contract. This requires Management to estimate the number of items
likely to be delivered under these contracts.
ii. Share-based payments
Details of the share-based payment schemes operated by the Group are disclosed
in note 16. In 2021, awards were granted to the Executive Directors of the
Company under the Oxford Nanopore Technologies Limited Long Term Incentive
Plan 2021 (Founder LTIP). Half of the awards are subject to a non-market
revenue performance condition which drives number of awards expected to vest
depending on when certain revenue targets are met. At each reporting date,
management make an estimate as to the extent to which the revenue condition is
expected to be achieved by the end of each future reporting period. This is
driven by revenue forecasts. Whilst management may make an appropriate
estimate of the annual revenue target on grant date, this estimate might
change in future periods. If the annual revenue forecast over the year
decreased/increased by 20%, the Group recognised total expenses of £7.2
million relating to equity-settled share-based payment transactions would
decrease/increase by £0.5 million.
In addition, the Founder LTIP awards in issue give rise to an associated
employer's social security liability. Management update the estimate for this
liability at each reporting period with reference to both the expected number
of awards vesting and their expected value, using the share price at the
period end date. For Founder LTIP awards linked to a share price condition,
the assumptions used in determining the IFRS 2 charge are determined at the
point of granting the awards and are not subsequently adjusted over the
vesting period. However, management have estimated the proportion likely to
vest for the purposes of assessing the employer's social security
contributions to accrue at each period end using a Monte Carlo simulation
model which requires a number of assumptions and a large number of randomly
generated projections of the Company's future share price. At 30 June 2024,
the expected vesting of the share price linked awards was estimated at 48.1%
(54.3% June 2023), which is reflective of the reduction in share price, which
has contributed to the employer's social security provision credit of £6.1
million in the period.
iii. Internally Generated Intangible Assets research and
development expenditure ("R&D")
Critical estimates are made in determining the capitalisation of costs in
relation to the development phase of R&D projects. Management capitalises
development costs in relation to R&D projects based on an estimate of the
percentage of time spent on the project by employees while the project is in
its development phase. Development costs capitalised during the 6 months ended
30 June 2024 was £15.3 million (6 months ended 30 June 2023: £8.9 million).
If the percentage of time spent on the projects were to change by 5% then
capitalisation of development costs would have varied between £16.1 million
and £14.5 million (6 months ended 30 June 2023: £8.5 million and £9.4
million).
iv. Inventory
The Group holds inventory across a number of locations for the purposes of
fulfilling sales orders and contractual obligations. Additionally, certain
components of inventory are held for use within research and development. Net
inventory at 30 June 2024 was £108.0 million (31 December 2023: £101.5
million). In line with the requirements of IAS 2 Inventories, inventory is
stated at the lower of cost and net realisable value.
Management is required to make a number of estimates around the net realisable
value of inventory, which represents the estimated selling price less all
estimated costs of completion. In cases where the net realisable value is
below cost, management records a provision such that inventory is held at the
lower of cost and net realisable value.
To estimate the inventory provision, Management uses inputs based on the
location and status of inventory held by the Group. This includes the intended
use of the inventory, including whether it is expected to be sold or used for
research and development purposes.
Management makes assumptions around the net realisable value of each category
of inventory. These estimates are then applied to the inventory balance, based
on its cost, location and intended use, to record a provision in cases where
the net realisable value is below cost.
If the provisioning estimate had decreased by 6%, then the net realisable
value of inventory would have increased by £3.1 million and the revised stock
value would have been £111.1 million (31 December 2023: £1.5 million and
£103.0 million respectively). If the provisioning against inventory had
increased by a further 3%, then the net realisable value of inventory would
have decreased by £3.5 million and the revised stock value would have been
£104.5 million (31 December 2023: £1.5 million and £100.0 million
respectively).
4. Segment information
30 June 30 June
2024 2023
£000 £000
Category
Sale of 71,587 72,269
goods
Rendering of 8,088 8,523
services
Lease 4,407 5,210
income
Total revenue from contracts with 84,082 86,002
customers
The information reported to the Group's senior management team, which is
considered the chief operating decision maker ("CODM"), for the purposes of
resource allocation and assessment of segment performance is defined by market
rather than product type.
The CODM consider that the only Group reportable segment under IFRS 8
Operating Segments.. Oxford Nanopore generates revenue from providing products
and services for research use, including research and development expenditure
and corporate expenditure.
5. Alternative performance measures
The Group's performance is assessed using a number of financial measures which
are not defined under IFRS and therefore comprise alternative (non-GAAP)
performance measures. These are as follows:
Metric Definition Rationale
Underlying revenue growth Revenue growth excluding Emirati Genome Program (EGP) and COVID sequencing Helps evaluate growth trends, establish budgets and assess operational
revenue. Includes currency fluctuations unless stated at constant currency. performance.
Underlying revenue growth on a constant currency basis Revenue growth excluding EGP and COVID sequencing revenue, on a constant Helps evaluate growth trends, establish budgets and assess operational
currency basis. performance.
Adjusted research and development expenses Research and development expenses after adjusting for employer's social Adjusted research and development expenses is a measure that shows the
security taxes on pre-IPO share awards. underlying R&D expenditure.
Adjusted selling, general and administrative expenses Selling, general and administrative expenses after adjusting for share-based Adjusted selling, general and administrative expenses is a measure that shows
payments expense (Founder LTIP), employer's social security taxes on Founder the underlying selling, general and administrative expenses.
LTIP and pre-IPO share awards expensed.
EBITDA Loss for the period before income tax expense, finance income, loan interest, EBITDA is used as a profit measure because it shows the shows the results of
interest on lease, depreciation and amortisation. normal, core operations exclusive of income or charges that are not considered
to represent the underlying operational performance.
Adjusted EBITDA EBITDA adjusted for: i) share-based payment expense on Founder LTIP awards; Adjusted EBITDA is used as a key profit measure because it shows the results
ii) employer's social security taxes on Founder LTIP and pre-IPO share awards; of normal, core operations exclusive of income or charges that are not
and iii) impairment of investment in associate. considered to represent the underlying operational performance, excluding
exceptional items.
Cash and cash equivalents and other liquid investments Total cash and cash equivalents, which comprise cash in hand, deposits held at Cash and cash equivalents and other liquid investments is a measure that shows
call and other short-term highly liquid investments with a maturity of three the underlying cash reserves.
months or less at the date of acquisition. Other liquid investments comprise
investment bonds in which a fixed sum is invested in an asset-backed fund.
Gross profit % Gross profit divided by revenue. Helps evaluate growth trends, establish budgets and assess operational
performance and efficiencies.
The following table presents the adjusted underlying revenue growth:
30 June 30 June
2024 2023
£000 £000
Revenue 84,082 86,002
Adjusting items:
EGP revenue (304) (4,911)
COVID sequencing revenue (1,163) (5,454)
Underlying revenue 82,615 75,637
Growth 9.2%
Impact of foreign exchange 2,416
Underlying revenue on a constant currency basis 85,031
Growth 12.4%
The following table presents the adjusted research and development expenses:
30 June 30 June
2024 2023
£000 £000
Research and development expenses 47,999 48,230
Adjusting items:
Employer social security taxes on pre-IPO share awards 1,448 558
Adjusted research and development expenses 49,447 48,788
Amortisation of capitalised development costs (10,106) (8,675)
Capitalised development costs 15,321 8,940
Adjusted R&D expenses and capitalised development costs 54,662 49,053
The following table presents the adjusted selling, general and administrative
expenses:
30 June 30 June
2024 2023
£000 £000
Selling, general and administrative expenses 78,486 76,101
Adjusting items:
Share-based payment expense on Founder Long Term Incentive Plan (LTIP) (1,037) (14,908)
Employer social security taxes on Founder LTIP and pre-IPO share awards 4,059 719
Adjusted selling, general and administrative expenses 81,508 61,912
The following table presents the Group's EBITDA and Adjusted EBITDA, together
with a reconciliation
to loss for the period:
30 June 30 June
2024 2023
£000 £000
Loss for the (74,652) (70,099)
period
Tax 3,296 3,540
expense
Finance (7,666) (7,239)
income
Interest on lease 1,948 1,069
Depreciation and 19,782 19,869
amortisation
EBITDA (57,292) (52,860)
Share-based payments (Founder LTIP) 1,037 14,908
Employer social security credit on Founder LTIP and pre-IPO share-based awards (5,507) (1,277)
Impairment of investment in associate 145 (144)
Adjusted (61,617) (39,373)
EBITDA
The following table presents cash, cash equivalents and other liquid
investments:
30 June 31 December
2024 2023
£000 £000
Cash and cash equivalents 162,017 220,536
Investment bonds 241,199 256,534
Unrealised fair value movements on investment bonds (6,071) (4,960)
Cash, cash equivalents and other liquid investments 397,145 472,110
6. Loss per share
30 June 30 June
2024 2023
Pence Pence
(a) Basic and diluted loss per
share
Total basic and diluted loss per share attributable to the ordinary equity 9 8
holders of the Group from continuing
operations
2024 2023
£000 £000
(b) Reconciliation of earnings used in calculating earnings per
share
Loss attributable to the ordinary equity holders of the Group used in (74,652) (70,099)
calculating basic and diluted loss per share from continuing
operations
2024 2023
Number Number
(c) Weighted average number of shares used as the
denominator
Weighted average number of ordinary shares and potential ordinary shares used 861,556,494 826,750,269
as the denominator in calculating basic and diluted earnings per
share
Options
Options granted to employees under the Oxford Nanopore Technologies Share
Option Scheme and the Oxford Nanopore Technologies Limited Share Option Plan
2018 are considered to be potential ordinary shares. These options have not
been included in the determination of the basic and diluted loss per share as
shown above, because they are anti-dilutive for the period ended 30 June 2024
and 30 June 2023. These options could potentially dilute basic earnings per
share in the future. Details relating to the share options are set out in note
15.
There have been no events that have caused any retrospective adjustments to
the weighted average number of shares used as the denominator between the date
of the Statement of Financial Position and the date of issuance of the
Condensed Consolidated Financial Statements.
7. Restatement of assets subject to operating leases in operating cash flows
In 2023, the Group identified that the cash outflows associated with additions
to assets subject to operating leases of £7.8 million had been incorrectly
classified in the cashflow statement within the 30 June 2023 interim statement
as cash used within investing activities. Following a review of relevant
accounting requirements, the Group has restated these 30 June 2023 cash
outflows to be presented as cash used in operations to correct the
presentation in the 2023 financial statements. The presentation of the cash
flow to 30 June 2024 is consistent with the restated presentation. See below
for details regarding this restatement of comparatives. There is no effect on
the net cash position or total cash outflow of the Group.
30 June Adjustment 30 June
2023 2023
Restated
£000 £000 £000
Cash used in operations
Increase in inventory (17,685) (7,835) (25,520)
Total cash used in operations (53,344) (7,835) (61,179)
Net cash outflow from investing activities
Purchase of property, plant and equipment (14,016) 7,835 (6,181)
Total cash inflow from investing activities 33,035 7,835 40,870
Total cash outflow (21,044) - (21,044)
8. Tax on loss on ordinary activities
8.1 Income tax recognised in profit or loss
30 June 30 June
2024 2023
£000 £000
Current tax
Notional tax on R&D expenditure credit (RDEC) 1,527 1,004
Tax payable on foreign subsidiary 379 1,058
1,906 2,062
Total current tax
Deferred tax
Prior year adjustment in respect of deferred tax - 983
Origination and reversal of temporary differences 1,390 495
Total deferred tax
1,390 1,478
Total tax in statement of comprehensive income 3,296 3,540
Income tax recognised in OCI
Deferred tax on investment bonds 278 -
Total tax in other comprehensive income
278 -
Current tax balances have been calculated at the rates enacted for the period.
The effective rate of corporation tax is -4.62% (30 June 2023: -5.32%) of the
loss before tax for the Group.
8.2 Current tax asset / (liability)
Recognised current tax asset balances are made up as follows:
30 June 31 December
2024 2023
£000 £000
Corporation tax asset 1,160 1,030
Corporation tax payable - -
8.3 Recognised deferred tax assets and liabilities
Recognised deferred tax balances are made up as follows:
30 June 31 December
2024 2023
£000 £000
Deferred tax assets
Provisions 1,279 1,498
Losses 9,851 8,127
Share awards 5,057 6,052
Share awards (equity) 38 180
Total recognised deferred tax assets
16,225 15,857
30 June 31 December
2024 2023
£000 £000
Deferred tax liabilities
Accelerated capital allowances (2,644) (2,276)
Investment bond unrealised gain (1,518) (1,240)
Intangibles (8,333) (6,855)
Total recognised deferred tax liabilities
(12,495) (10,371)
Net recognised deferred tax asset
3,730 5,486
Deferred tax balances have been recognised at the rate expected to apply when
the deferred tax attribute is forecast to be utilised based on substantively
enacted rates at the balance sheet date. The rate of UK corporation tax
increased to 25% from 1 April 2023. Taxation for other jurisdictions is
calculated at the rates prevailing in the respective territories. £3.4m (31
December 2023: £5.2m) of the recognised net Deferred Tax Asset relates to
Oxford Nanopore Technologies Inc., the US subsidiary, which is profitable.
In relation to share-based payments, to the extent that the tax deduction (or
estimated future tax deduction) exceeds the amount of the related cumulative
IFRS2 expense the excess of the associated current or deferred tax, has been
recognised in equity and not in the statement of comprehensive income. For
current tax this has no impact on the charge to the consolidated statement of
comprehensive income (31 December 2023: increase of £0.2m). For deferred tax
this reduces the debit to the Statement of Comprehensive Income by £0.1m.(31
December 2023: £0.3m).
A deferred tax asset of £6.4m (31 December 2023: £7.7m) has been recognised
in relation to future share option exercises and other timing differences in
Oxford Nanopore Technologies Inc and other overseas subsidiaries, because it
is probable that the asset will be utilised in the foreseeable future. A
Deferred Tax Asset has been recognised in relation to Oxford Nanopore
Technologies Plc of £9.8m (31 December 2023: £8.1m), being the amount equal
to the deferred tax liability in the same entity.
9. Property, plant and equipment
Leasehold improvements Plant and machinery Assets under construction Assets subject to operating leases Equipment Total
£000 £000 £000 £000 £000 £000
Cost or valuation
At 31 December 2023 11,733 28,169 1,498 54,758 19,830 115,988
Additions 24 104 4,644 14,365 780 19,916
Disposals - - - (11,140) - (11,140)
Transfers between classes 13 2,517 (2,530) - - -
Foreign exchange movements (2) (4) - 106 11 111
At 30 June 2024 11,768 30,786 3,612 58,089 20,621 124,875
Accumulated depreciation
At 31 December 2023 6,209 17,706 - 27,133 15,050 66,098
Charge for the period 763 1,474 - 3,038 1,420 6,695
Disposals - - - (4,892) - (4,892)
Transfers between classes - - - - - -
Foreign exchange movements - - - 76 8 84
At 30 June 2024 6,972 19,180 - 25,355 16,478 67,985
Net book value
At 31 December 2023 5,524 10,463 1,498 27,625 4,780 49,890
At 30 June 2024 4,796 11,606 3,612 32,734 4,143 56,890
The Group leases some of its devices to customers. Lease payments in relation
to these devices are received either in advance or within the year. Therefore,
no maturity analysis of lease payments has been included.
10. Intangible assets
During the period, the Group capitalised £15.3 million (6 months ended 30
June 2023: £8.9 million) of development costs.
Investment in associate
11.
The following entity has been included in the condensed consolidated financial
statements using the equity method:
Name of associate Country of incorporation Proportion of ownership interest held as at (%)
Principal activities
30 June 31 December
2024 2023
1) Veiovia Limited Technology Development UK 26.1 26.1
The carrying value is calculated as follows:
30 June 31 December
2024 2023
£000 £000
Investment cost 4,548 4,548
Share of loss (579) (530)
Impairment (3,421) (3,276)
Carrying value of the interest in the associate
548 742
The above associate is accounted for using the equity method in these
condensed consolidated financial statements as set out in the Group's
accounting policies.
i) Pursuant to a shareholder agreement, the Company has the right to
cast 24.9% of the votes of Veiovia Limited (30 June 2023: 24.9%).
ii) The Group holds more than 20% of the equity shares of Veiovia
Limited and exercises significant influence by virtue of its contractual right
to appoint one director to the board of directors of that entity.
iii) For the purposes of applying the equity method of accounting, the
management accounts of Veiovia Limited for the period ended 30 June 2024 have
been used. The Company's share of the net asset value of the investment is
significantly below the investment amount. Management has recorded an
impairment loss of the investment to the recoverable amount.
iv) Veiovia Limited's registered office is The University of York,
Biology B/A/039, Wentworth Way, York, UK, YO10 5DD.
12. Inventory
30 June 31 December
2024 2023
£000 £000
Raw 47,140 50,888
materials
Work in 45,216 39,154
progress
Finished 15,668 11,506
goods
108,024 101,548
The carrying amount of inventory was not materially different from its
replacement cost.
13. Other financial assets
30 June 31 December
2024 2023
£000 £000
Investment bonds 241,199 256,534
Other financial 1,318 1,305
assets
242,517 257,839
Current 96,936 49,514
Non-current 145,581 208,325
242,517 257,839
Investment bonds are classified as financial assets at fair value through
other comprehensive income (FVOCI).
14. Provisions
Dilapidation provisions Employer taxes Other Total
provisions
£000 £000 £000 £000
Balance at 31 December 2,384 9,913 671 12,968
2023
Movements in Provision for the period 27 (6,112) (49) (6,134)
Payments - (210) - (210)
Foreign exchange 1 (1) (6) (6)
movements
Balance at 30 June 2,412 3,590 616 6,618
2024
Current - 2,920 616 3,536
Non-current 2,412 670 - 3,082
At 30 June 2,412 3,590 616 6,618
2024
Current - 5,759 671 6,430
Non-current 2,384 4,154 - 6,538
At 31 December 2,384 9,913 671 12,968
2023
The dilapidation provisions relate to the leased properties, representing an
obligation to restore the premises to their original condition at the time the
Group vacates the related properties. The provision is non-current and
expected to be utilised between two and 20 years.
Employer social security taxes relate to the expected employer taxes on
share-based payments. This is expected to be utilised in between one and ten
years. The provision is based on the best estimate of the liability, which is
reviewed and updated at each reporting period. The provision is accrued over
the vesting period to build up to the required liability at the point it is
ultimately due.
15. Share capital and Share premium
Share capital comprised the following:
Nominal value Number of shares issued Aggregate nominal value
At 30 June 2024
Share
class
Ordinary Shares (fully £0.0001 873,921,325 87,392
paid)
Issued Class A Limited Anti‑takeover share of £1 £1 1 1
Issued Class B Limited Anti‑takeover share of £1 £1 1 1
Issued Class C Limited Anti‑takeover share of £1 £1 1 1
87,395
Nominal value Number of shares issued Aggregate nominal value
At 31 December 2023
Share
class
Ordinary Shares (fully £0.0001 859,224,047 85,922
paid)
Issued Class A Limited Anti‑takeover share of £1 £1 1 1
Issued Class B Limited Anti‑takeover share of £1 £1 1 1
Issued Class C Limited Anti‑takeover share of £1 £1 1 1
85,925
In the course of 2024,14,697,278 ordinary shares (6 months to 30 June 2023:
3,218,198) were issued as a result of employee share schemes. This resulted in
an increase in the share premium reserve of £1.6m (6 months to 30 June 2023:
£1.4m).
The Class A, B and C Antitakeover shares were issued on admission of the
Company to the London Stock Exchange on 5 October 2021. These rights
attributable to these shares are due to cease on 5 October 2024 at which time
the shares will be capable of being repurchased or cancelled by the Company.
16. Share‑based payments
30 June 30 June
2024 2023
£000 £000
Expense arising from share‑based payment
transactions:
Included in research & development expenses 2,019 2,734
Included in selling, general & administrative expenses 4,784 19,073
6,803 21,807
Equity settled share‑based payment transactions 7,194 21,807
Cash settled share‑based payment transactions (391) -
6,803 21,807
17. Notes to the cash flow statements
30 June 30 June
2024 2023
£000 £000
Cash and cash 162,017 334,812
equivalents
Cash and cash equivalents comprise cash and short‑term bank deposits with an
original maturity of three months or less. The carrying amount of these assets
is approximately equal to their fair value. Cash and cash equivalents at the
end of the reporting period as shown in the consolidated statement of cash
flows can be reconciled to the related items in the consolidated reporting
position as shown above.
30 June 30 June
2024 2023
Restated *
£000 £000
Loss before tax (71,356) (66,559)
Adjustments for:
Depreciation on property, plant and equipment 6,695 8,720
Depreciation on right-of-use assets 2,892 2,449
Amortisation on intangible assets 10,195 8,700
Research and development expense tax credit (6,110) (4,428)
Loss on disposal of property, plant and equipment 6,248 1,248
Foreign exchange movements 261 (2,390)
Interest on leases 1,948 1,069
Interest income (7,666) (7,239)
Movement on investment bonds 24 -
Non‑cash movements on derivatives 143 (97)
Impairment / (write-back) of investment in associate 145 (144)
Share of losses in associate 49 228
Employee share benefit costs including employer's social security taxes 693 20,715
Operating cash flows before movements in working capital (55,839) (37,728)
Decrease in receivables 553 3,015
Increase in inventory and assets subject to operating leases * (21,501) (25,520)
Increase / (decrease) in payables 12,477 (946)
Cash used in operations (64,310) (61,179)
Income taxes - R&D tax credit received 4,857 4,088
Foreign tax paid (518) (2,943)
Net cash outflow from operating activities (59,971) (60,034)
* See note 7 for details of the restatement.
18. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are
related parties of the Company, have been eliminated on consolidation and are
not disclosed in this note. Details of transactions between the Group and
other related parties are disclosed below.
At 30 June 2024, the Company had invested a total of £4.5 million in its
associate, Veiovia Limited, which is related to the Company by the shared
directorship of J P Willcocks. During the period, an impairment loss of £0.1
million has been recognised through the statement of comprehensive income.
During the reporting period, the Company paid Academic Research costs of £0.1
million (30 June 2023: £0.3 million) to the University of Oxford which is
related to the Company through W Becker, who is a member of the executive
governing body at University of Oxford and a Director of the Company up until
the AGM, when she resigned.
19. Events after the reporting period
On 1 August 2024, the Group announced an increase in the capital of the
Company by placement of new ordinary shares of £0.0001 ("New Ordinary
Shares"), followed by subscription from Novo Holdings A/S ("Novo Holdings"),
alongside other investors. This placing and subscription of New Ordinary
Shares raised total gross proceeds of £80 million (net proceeds of £78.2
million after deducting advisory fees).
A total of 41,666,667 New Ordinary Shares were subscribed by Novo Holdings A/S
at a Placing Price of 120 pence per Placing Share ("Placing Price"), raising
gross proceeds of £50 million. In addition and in connection with the above,
a total of 25,000,000 New Ordinary Shares were placed by Citigroup Global
Markets Limited ("Citi"), J.P. Morgan Securities plc (which conducts its UK
investment banking business as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove")
and Joh. Berenberg, Gossler & Co. KG ("Berenberg") at the 120 pence,
raising gross proceeds of approximately £30 million.
DIRECTORS' RESPONSIBILITIES STATEMENT
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements have been prepared in accordance
with UK-adopted IAS 34 'Interim Financial Reporting';
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events and their impact during
the first six months and description of principal risks and uncertainties for
the remaining six months of the year); and
(c) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
Dr Gordon Sanghera Nicholas Keher
Director Director
INDEPENDENT REVIEW REPORT TO
OXFORD NANOPORE TECHNOLOGIES PLC
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2024 which comprises the condensed consolidated income statement,
statement of financial position, the statement of changes in equity, the
condensed consolidated cash flow statement and related notes 1 to 19.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2024 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 2.1, the annual financial statements of the group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the company a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410.
Our work has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work,
for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
2 September 2024
1 (#_ftnref1) The PromethION product range includes all PromethION devices
(P2S, P2i, P24 and P48) and PromethION flow cells
2 (#_ftnref2) The MinION product range includes all MinION and GridION
devices and MinION flow cells
3 (#_ftnref3) Cash, cash equivalents and other liquid investments includes
cash and cash equivalents, treasury deposits and investment bonds.
4 (#_ftnref4) Early Access: Products are available to order in the main or
private store. Products are subject to availability and regular changes.
5 (#_ftnref5) Cash, cash equivalents and other liquid investments includes
cash and cash equivalents, treasury deposits and investment bonds.
6 (#_ftnref6) Developer access: Trial release of new innovations to a small
group of developers to confirm functionality and explore early use cases.
Available by request only.
7 (#_ftnref7) Cash, cash equivalents and other liquid investments includes
cash and cash equivalents and investment bonds.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR EASNDEAALEEARecent news on Oxford Nanopore Technologies
See all newsREG - Oxford Nanopore Tech - Issue of Equity and Total Voting Rights
AnnouncementREG - Oxford Nanopore Tech - Founder LTIP - Director/PDMR Notification
AnnouncementREG - Oxford Nanopore Tech - Publication of Annual Report and Notice of AGM
AnnouncementREG - Oxford Nanopore Tech - Holding(s) in Company
AnnouncementREG - Oxford Nanopore Tech - Director/PDMR Shareholding - LTIP and DBP awards
Announcement